EXHIBIT 2.1(a)
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
MOTIENT CORPORATION,
MR ACQUISITION CORP.
and
RARE MEDIUM GROUP, INC.
Dated as of May 14, 2001
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of May 14, 2001 (the
"Merger Agreement"), by and among MOTIENT CORPORATION, a Delaware
corporation ("Acquiror"), MR ACQUISITION CORP., a Delaware corporation and
wholly-owned subsidiary of Acquiror ("Merger Sub"), and RARE MEDIUM GROUP,
INC., a Delaware corporation (the "Company");
WHEREAS, Merger Sub, upon the terms and subject to the
conditions of this Merger Agreement and in accordance with the General
Corporation Law of the State of Delaware ("Delaware Law"), will merge with
and into the Company (the "Merger");
WHEREAS, upon the recommendation of the Special
Committee, the Board of Directors of the Company has (i) determined that
the Merger is advisable, is fair to its common stockholders and is in the
best interests of such stockholders and (ii) unanimously approved and
adopted this Merger Agreement and the transactions contemplated hereby and
recommended approval and adoption of this Merger Agreement by the
stockholders of the Company (the "Company Stockholders");
WHEREAS, the Board of Directors of Acquiror has (i)
determined that this Merger Agreement and the transactions contemplated
hereby are advisable, fair to its stockholders and in the best interests of
such stockholders (the "Acquiror Stockholders") and (ii) unanimously
approved and declared advisable this Merger Agreement and the transactions
contemplated hereby and recommended approval and adoption of the Restated
Charter and the Required Acquiror Stockholders Consent by the Acquiror
Stockholders;
WHEREAS, the Board of Directors of Merger Sub has (i)
determined that the Merger is advisable, is fair to its sole stockholder
and is in the best interests of such stockholder (the "Merger Sub
Stockholder") and (ii) unanimously approved and adopted this Merger
Agreement and the transactions contemplated hereby and recommended approval
and adoption of this Merger Agreement by the Merger Sub Stockholder; and
WHEREAS, concurrently with the execution and delivery of
this Merger Agreement and as a condition and inducement to Acquiror's and
the Company's willingness to enter into this Merger Agreement, concurrently
herewith certain stockholders of each of Acquiror and the Company are
entering into voting agreements (the "Voting Agreements") pursuant to which
each such stockholder agrees to vote in favor of this Merger Agreement and
the Merger.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
in this Merger Agreement, and intending to be legally bound hereby, the
parties hereto agree as follows.
ARTICLE I
THE MERGER
SECTION 1.01. The Merger.
Upon the terms and subject to the conditions set forth in this
Merger Agreement, and in accordance with Delaware Law, at the Effective
Time (as defined in Section 1.02) Merger Sub shall be merged with and into
the Company. As a result of the Merger, the separate corporate existence of
Merger Sub shall cease and the Company shall continue as the surviving
corporation of the Merger (the "Surviving Corporation").
SECTION 1.02. Effective Time.
On the Closing Date (as defined in Section 2.08), the
parties hereto shall cause the Merger to be consummated by filing a
certificate of merger (the "Certificate of Merger") with the Secretary of
State of the State of Delaware, in such form as required by, and executed
in accordance with the relevant provisions of, Delaware Law (the date and
time of such filing being the "Effective Time").
SECTION 1.03. Effect of the Merger.
At the Effective Time, the effect of the Merger shall be
as set forth herein and as provided in the applicable provisions of
Delaware Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, all the property, rights, privileges,
powers and franchises of Merger Sub and the Company shall vest in the
Surviving Corporation, and all debts, liabilities and duties of Merger Sub
and the Company shall become the debts, liabilities and duties of the
Surviving Corporation.
SECTION 1.04. Certificate of Incorporation; Bylaws.
At the Effective Time, the certificate of incorporation
and bylaws of the Company shall be the certificate of incorporation and
bylaws, respectively, of the Surviving Corporation, until thereafter
changed or amended as provided therein or by applicable law, except that
such certificate of incorporation shall be amended in the Merger to read as
nearly as practicable the same as the certificate of incorporation of
Merger Sub except as follows: "The name of the Corporation shall be Rare
Medium Group, Inc."
SECTION 1.05. Acquiror Restated Charter.
Immediately prior to the Effective Time, the Certificate
of Incorporation of the Acquiror shall be amended and restated to read in
its entirety as set forth on Exhibit A (the "Restated Charter"), until
thereafter changed or amended as provided therein or by applicable law. The
Restated Charter shall create (i) non-voting common stock (the "Acquiror
Non-Voting Common Stock") and shall consist of ten million (10,000,000)
shares having a par value of $.01 per share, (ii) a series of preferred
stock designated as Series A Voting Convertible Preferred Stock (the
"Acquiror Series A Preferred Stock") and shall consist of ten million
(10,000,000) shares having a par value of $.01 per share and (iii) a series
of preferred stock designated as Series A Non-Voting Convertible Preferred
Stock (the "Acquiror Series A Non-Voting Preferred Stock") and shall
consist of one million five hundred thousand (1,500,000) shares having a
par value of $.01 per share. The Restated Charter shall contain the rights,
preferences, privileges and restrictions of the Acquiror Non-Voting Common
Stock, the Acquiror Series A Preferred Stock and the Acquiror Series A
Non-Voting Preferred Stock.
SECTION 1.06. Directors and Officers.
As of the Effective Time, (a) the officers of the Company
and the directors of Merger Sub shall be the officers and directors of the
Surviving Corporation and each shall hold office from the Effective Time
until their respective successors are duly elected or appointed and
qualified and (b) Acquiror shall take such actions reasonably necessary or
appropriate to cause to be appointed to Acquiror's board of directors (i)
six persons designated by Acquiror prior to the filing of the Joint Proxy
Statement and (ii) three persons designated by the Company prior to the
filing of the Joint Proxy Statement who currently serve as directors of the
Company (the "Company Designees"). Subject to the fiduciary duties of the
board of directors of Acquiror, Acquiror shall take such actions as shall
be necessary to cause the Company Designees to be nominated for election at
Acquiror's annual meeting to be held in 2002 and shall support such persons
for election.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES AND OTHER INSTRUMENTS
SECTION 2.01. Conversion of Securities.
At the Effective Time, as provided in this Merger
Agreement, by virtue of the Merger and without any action on the part of
Acquiror, the Acquiror Stockholders, the Company, the Company Stockholders,
Merger Sub or the Merger Sub Stockholder:
(a) Company Common Stock. Each share of common stock,
$.01 par value per share, of the Company ("Company Common Stock") issued
and outstanding immediately prior to the Effective Time (other than any
shares of Company Common Stock to be canceled pursuant to Section 2.01(c)),
shall be converted, subject to Section 2.02(e), into the right to receive
one-tenth of one share of Acquiror Series A Preferred Stock (the "Common
Stock Merger Consideration"). All such shares of Company Common Stock shall
no longer be outstanding and shall automatically be canceled and shall
cease to exist, and each certificate or other instrument previously
representing any such shares shall thereafter represent the right to
receive a certificate representing the shares of Acquiror Series A
Preferred Stock into which such shares of Company Common Stock were
converted pursuant to the Merger and any cash, without interest and subject
to the payment of any withholding taxes, in lieu of fractional shares.
Certificates or other instruments which prior to the Effective Time
represented shares of Company Common Stock shall be exchanged for
certificates representing whole shares of Acquiror Series A Preferred Stock
issued in consideration therefor upon the surrender of such certificates or
instruments in accordance with the provisions of Section 2.02, without
interest. No fractional share of Acquiror Series A Preferred Stock shall be
issued, and, in lieu thereof, a cash payment shall be made pursuant to
Section 2.02(e) hereof. In any event, if between the date of this Merger
Agreement and the Effective Time the outstanding shares of Acquiror Common
Stock shall have been changed into a different number of shares or a
different class, by reason of any stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of
shares, the nature of the consideration to be received by the Company
Stockholders and the Common Stock Merger Consideration shall be
appropriately and correspondingly adjusted to reflect such stock dividend,
subdivision, reclassification, recapitalization, split, combination or
exchange of shares.
(b) Company Preferred Stock. (i) Each share of preferred
stock, $.01 par value per share, of the Company (the "Company Preferred
Stock"), issued and outstanding immediately prior to the Effective Time
(other than any shares of Company Preferred Stock to be canceled pursuant
to Section 2.01(c)), shall be converted into the right to receive from the
Acquiror:
(A) (i) a number of shares of XM Class A Stock
equal to 9 million divided by the number of outstanding
shares of Company Preferred Stock issued and outstanding
immediately prior to the Effective Time and (ii) any cash
dividends or other distributions declared or made between
the date of this Merger Agreement and the Effective Time
with respect to the shares of XM Class A Stock referred
to in clause (A)(i);
(B) an amount of cash equal to (x) the sum of
the following amounts (the "Guaranteed Amount"): (i) the
principal amount, if any, of each of the Tranche B Term
Loans and the Tranche C Term Loans (as such terms are
defined in the Term Credit Agreement) under the Term
Credit Agreement outstanding immediately prior to the
Effective Time minus (ii) the Term Loan Reduction Amount
plus (iii) the aggregate amount, if any, of each of the
Tranche B Commitments and the Tranche C Commitments (as
such terms are defined in the Revolving Credit Agreement,
and, in each case, whether utilized or unutilized) under
the Revolving Credit Agreement outstanding immediately
prior to the Effective Time minus (iv) the Revolving Loan
Reduction Amount, divided by (y) the number of
outstanding shares of Company Preferred Stock issued and
outstanding immediately prior to the Effective Time; and
(C) if required by the next sentence, a
Discrepancy Note (the consideration described in clauses
(A), (B) and (C), collectively, the "Preferred Stock
Merger Consideration" and together with the Common Stock
Merger Consideration, the "Merger Consideration").
In the event that (i) the product of (x) the XM Share Price as of the
Closing Date and (y) 9 million plus (ii) the value of cash dividends and
other distributions received, if any, pursuant to clause (A)(ii) above plus
(iii) the Guaranteed Amount (the "Original Consideration Value") is less
than $115 million, then each share of Company Preferred Stock shall be
entitled to receive (in addition to the consideration set forth in (A) and
(B) above), a promissory note (the "Discrepancy Note") in substantially the
form to be attached to the Discrepancy Note Agreement as Exhibit A thereto
in the principal amount (rounded up or down to the nearest whole cent) of
the excess of $115 million over the Original Consideration Value (the
"Principal Amount") multiplied by a fraction the numerator of which is one
and the denominator of which is the aggregate number of shares of Company
Preferred Stock issued and outstanding immediately prior to the Effective
Time. Each Discrepancy Note will be subject to the terms and conditions set
forth in, and shall be secured as provided in, the Note, Pledge and
Security Agreement which shall be based on the summary of terms and
conditions set forth in Exhibit B and which shall be in form and substance
reasonably satisfactory to the Acquiror and the Preferred Stockholders (the
"Discrepancy Note Agreement").
(ii) Effective at the Effective Time, subject to
satisfaction or waiver of each of the conditions precedent set forth in
Article VII (with any waivers of conditions set forth in Section 7.04 to be
consented in writing by the Preferred Stockholders), all such shares of
Company Preferred Stock shall no longer be outstanding and shall
automatically be canceled and shall cease to exist. Certificates or other
instruments which prior to the Effective Time represented shares of Company
Preferred Stock shall be exchanged for the Preferred Stock Merger
Consideration in consideration therefor upon the surrender of such
certificates or instruments without interest. The holders of certificates
or other instruments which prior to the Effective Time represented shares
of Company Preferred Stock shall cease to have any rights with respect
thereto except as otherwise provided herein or by law. No fractional share
of XM Class A Stock shall be paid, and, in lieu thereof, a cash payment
shall be made pursuant to Section 2.02(e) hereof. In any event, if between
the date of this Merger Agreement and the Effective Time the outstanding
shares of XM Class A Stock shall have been changed into a different number
of shares or a different class, by reason of any stock dividend,
subdivision, reclassification, recapitalization, split, combination or
exchange of shares, the nature of the consideration to be received by the
holders of the Company Preferred Stock shall be appropriately and
correspondingly adjusted to reflect such stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of
shares.
(c) Cancellation of Treasury Stock. Any shares of Company
Common Stock and Company Preferred Stock held in the treasury of the
Company and any shares of Company Common Stock and Company Preferred Stock
owned by Acquiror or by any Acquiror Subsidiary immediately prior to the
Effective Time shall be canceled and extinguished without any conversion
thereof and no payment shall be made with respect thereto.
(d) Merger Sub Shares. At the Effective Time, each share
of common stock of Merger Sub issued and outstanding immediately prior to
the Effective Time shall be converted into and become one fully paid and
nonassessable share of common stock of the Surviving Corporation.
SECTION 2.02. Exchange of Certificates or Instruments.
(a) Exchange Agent. Promptly after the Effective Time,
Acquiror shall deposit, or shall cause to be deposited, with First Chicago
Trust Company of New York, a Division of Equiserve, or another bank or
trust company designated by Acquiror and reasonably acceptable to the
Company (the "Exchange Agent"), for the benefit of the holders of issued
and outstanding Company Common Stock and Company Preferred Stock, as
applicable, for exchange through the Exchange Agent in accordance with this
Article II, (i) certificates representing the number of shares of Acquiror
Series A Preferred Stock equal to the product of (x) the number of shares
of Company Common Stock issued and outstanding immediately prior to the
Effective Time (other than any shares of Company Common Stock canceled
pursuant to Section 2.01(c)) and (y) one-tenth, rounded up to the nearest
whole share, (ii) certificates representing the number of whole shares of
XM Class A Stock payable to holders of Company Preferred Stock pursuant to
Section 2.01(b), (iii) if applicable, Discrepancy Notes issuable to holders
of Company Preferred Stock pursuant to Section 2.01(b), and (iv) cash in an
amount sufficient to permit payment of the cash payable to the holders of
Company Preferred Stock pursuant to Section 2.01(b) (such amounts of cash,
Discrepancy Notes (if any), and certificates for shares of Acquiror Series
A Preferred Stock and XM Class A Stock, together with any dividends or
distributions with respect thereto, being hereafter referred to as the
"Exchange Fund"). The Exchange Agent shall, pursuant to irrevocable
instructions from Acquiror, deliver out of the Exchange Fund the Merger
Consideration to be issued and paid.
(b) Exchange Procedures. Promptly after the Effective
Time, Acquiror shall use its reasonable efforts to cause the Exchange Agent
to mail to each holder of record of a certificate or certificates of
Company Preferred Stock or Company Common Stock which immediately prior to
the Effective Time represented outstanding shares of Company Preferred
Stock or Company Common Stock (the "Certificates") (i) 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 proper delivery
of the Certificates to the Exchange Agent and which shall be in customary
form) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for the Common Stock Merger Consideration or the
Preferred Stock Merger Consideration, as the case may be. Upon surrender of
a Certificate for cancellation to the Exchange Agent, as specified in such
letter of transmittal, together with such letter of transmittal, duly
executed, and such other Documents as may reasonably be required pursuant
to such instructions, the holder of such Certificate shall be entitled to
receive promptly in exchange therefor, as applicable, the Common Stock
Merger Consideration or the Preferred Stock Merger Consideration which such
holder has the right to receive in respect of such Certificate together
with any dividends or other distributions to which such holder is entitled
pursuant to Section 2.02(c) and cash in lieu of fractional shares of
Acquiror Series A Preferred Stock or XM Class A Stock to which such holder
is entitled pursuant to Section 2.02(e). The Certificates so surrendered
shall forthwith be canceled. In the event of a transfer of ownership of
shares of Company Preferred Stock or Company Common Stock which is not
registered in the transfer records of the Company, the proper Common Stock
Merger Consideration or the proper Preferred Stock Merger Consideration, as
the case may be, may be issued and the proper amount of cash may be paid
pursuant hereto to a transferee if the Certificates representing such
shares of Company Preferred Stock or Company Common Stock, properly
endorsed or otherwise in proper form for transfer, are presented to the
Exchange Agent, accompanied by all Documents required to evidence and
effect such transfer and by evidence that any applicable stock transfer
taxes have been paid. Until surrendered as contemplated by this Section
2.02, each Certificate shall be deemed at any time after the Effective Time
to represent only the right to receive upon such surrender the Common Stock
Merger Consideration or the Preferred Stock Merger Consideration, as the
case may be, together with any dividends or other distributions to which
such holder is entitled pursuant to Section 2.02(c) and cash in lieu of any
fractional shares of Acquiror Series A Preferred Stock or XM Class A Stock
to which such holder is entitled pursuant to Section 2.02(e). No interest
will be paid or will accrue on any cash payable pursuant to Section
2.01(b)(i)(B), Section 2.02(c) or Section 2.02(e).
(c) Distributions with Respect to Unexchanged Shares. No
principal or interest on any Discrepancy Notes, and no dividends or other
distributions declared or made after the Effective Time with respect to
Acquiror Series A Preferred Stock or XM Class A Stock with a record date
after the Effective Time, shall be paid to the holder of any unsurrendered
Certificate with respect to the Discrepancy Notes or the whole shares of
Acquiror Series A Preferred Stock or XM Class A Stock represented thereby,
until the holder of record of such Certificate shall surrender such
Certificate. Subject to the effect of escheat, tax or other applicable
Laws, following surrender of any such Certificate, there shall be paid to
the record holder of the certificates representing whole shares of Acquiror
Series A Preferred Stock issued in exchange therefor, without interest, (i)
promptly, the amount of any cash payable with respect to a fractional share
of Acquiror Series A Preferred Stock to which such holder is entitled
pursuant to Section 2.02(e) and the amount of dividends or other
distributions with a record date after the Effective Time and theretofore
paid with respect to such whole shares of Acquiror Series A Preferred
Stock, and (ii) at the appropriate payment date, the amount of dividends or
other distributions, with a record date after the Effective Time but prior
to surrender and a payment date occurring after surrender, payable with
respect to such whole shares of Acquiror Series A Preferred Stock. Subject
to the effect of escheat, tax or other applicable Laws, following surrender
of any such Certificate, there shall be paid to the record holder of the
certificates representing whole shares of XM Class A Stock issued in
exchange therefor, without interest, (i) promptly, the amount of any cash
payable with respect to a fractional share of XM Class A Stock to which
such holder is entitled pursuant to Section 2.02(e) and the amount of
dividends or other distributions with a record date after the Effective
Time and theretofore paid with respect to such whole shares of XM Class A
Stock, and (ii) at the appropriate payment date, the amount of dividends or
other distributions, with a record date after the Effective Time but prior
to surrender and a payment date occurring after surrender, payable with
respect to such whole shares of XM Class A Stock. Subject to the effect of
escheat, tax or other applicable laws, promptly following surrender of any
such Certificate there shall be paid to the holder of any Discrepancy Notes
issued in exchange therefor, any principal and/or interest theretofore due
under such Discrepancy Notes.
(d) No Further Rights in Company Preferred Stock or
Company Common Stock. The Merger Consideration issued upon exchange of the
shares of Company Preferred Stock or Company Common Stock in accordance
with the terms hereof (including any cash paid pursuant to Section 2.02(c)
or Section 2.02(e)) shall be deemed to have been issued and paid in full
satisfaction of all rights pertaining to such shares of Company Preferred
Stock or Company Common Stock, as the case may be.
(e) No Fractional Shares.
--------------------
(i) No fractional shares of Acquiror Series A
Preferred Stock shall be issued upon surrender for exchange of the
Certificates, and any such fractional share interests will not entitle the
owner thereof to vote or to any rights of a stockholder of Acquiror, but in
lieu thereof each holder of shares of Company Common Stock who would
otherwise be entitled to receive a fraction of a share of Acquiror Series A
Preferred Stock, shall receive an amount in cash as set forth in this
Section 2.02(e).
(ii) As promptly as practicable following the
Effective Time, the Exchange Agent shall determine the difference between
(x) the number of full shares of Acquiror Series A Preferred Stock
delivered to the Exchange Agent by Acquiror, which shall equal the product
of (A) the number of shares of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than any shares of Company
Common Stock canceled pursuant to Section 2.01(c)) and (B) one-tenth,
rounded up to the nearest whole share, and (y) the sum of the number of
full shares of Acquiror Series A Preferred Stock to be distributed to each
holder of Company Common Stock (such excess being herein called the "Excess
Shares"). As soon after the Effective Time as practicable, the Exchange
Agent, as agent for such holders of Series A Preferred Stock, shall sell
the Excess Shares at the then prevailing prices on the Nasdaq National
Market, all in the manner provided in Section 2.02(e)(iii).
(iii) The sale of the Excess Shares by the
Exchange Agent shall be executed on the Nasdaq National Market through one
or more member firms of the NASD and shall be executed in round lots to the
extent practicable. The Exchange Agent shall use all reasonable efforts to
complete the sale of the Excess Shares as promptly following the Effective
Time as, in the Exchange Agent's reasonable judgment, is practicable
consistent with obtaining the best execution of such sales in light of
prevailing market conditions. Until the net proceeds of any such sale or
sales have been distributed to such holders of Company Common Stock, the
Exchange Agent will hold such proceeds in trust for such holders of Company
Common Stock. Acquiror shall pay all commissions, transfer taxes and other
out-of-pocket transaction costs of the Exchange Agent incurred in
connection with such sale or sales of Excess Shares. In addition, Acquiror
shall pay the Exchange Agent's compensation and expenses in connection with
such sale or sales. The Exchange Agent shall determine the portion of such
net proceeds to which each holder of Company Common Stock shall be
entitled, if any, by multiplying the amount of the aggregate net proceeds
by a fraction the numerator of which is the number of the fractional shares
to which such holder of Company Common Stock is entitled and the
denominator of which is the aggregate number of fractional shares to which
all holders of Company Common Stock are entitled.
(iv) As soon as practicable after the
determination of the amount of cash, if any, to be paid to holders of
Company Common Stock with respect to any fractional share interests, the
Exchange Agent shall promptly pay such amounts to such holders of Company
Common Stock.
(v) No fractional shares of XM Class A Stock
shall be issued upon surrender for exchange of the Certificates, and any
such fractional share interests will not entitle the owner thereof to vote
or to any rights of a stockholder of XM, but in lieu thereof each holder of
shares of Company Preferred Stock who would otherwise be entitled to
receive a fraction of a share of XM Class A Stock, after aggregating all
Certificates delivered by such holder, and rounding down to the nearest
whole share, shall receive an amount in cash equal to the closing price of
XM Class A Stock on the Closing Date (as defined in Section 2.08)
multiplied by the fraction of a share of XM Class A Stock to which such
holder would otherwise be entitled. Such payments in lieu of fractional
shares shall be administered by the Exchange Agent pursuant to the
procedures set forth in Section 2.02(b).
(f) Termination of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the holders of Company Common
Stock and Company Preferred Stock for six (6) months after the Effective
Time shall be delivered to Acquiror, upon demand. Any holders of Company
Preferred Stock or Company Common Stock who have not theretofore complied
with this Article II shall thereafter look only to Acquiror for the Merger
Consideration to which they are entitled pursuant to Section 2.01, any
dividends or other distributions with respect to Acquiror Series A
Preferred Stock or XM Class A Stock to which they are entitled pursuant to
Section 2.02(c), any principal or interest with respect to Discrepancy
Notes to which they are entitled pursuant to Section 2.02(c) and any cash
in lieu of fractional shares of Acquiror Series A Preferred Stock or XM
Class A Stock to which they are entitled pursuant to Section 2.02(e).
(g) No Liability. None of Acquiror, the Company, Merger
Sub, the Surviving Corporation or the Exchange Agent shall be liable to any
Person for any Merger Consideration (or dividends or distributions with
respect thereto) or cash delivered to a public official pursuant to any
abandoned property, escheat or similar Laws.
(h) Lost, Stolen or Destroyed Certificates or
Instruments. In the event any certificate evidencing shares of Company
Preferred Stock or Company Common Stock shall have been lost, stolen or
destroyed, the Exchange Agent shall issue in exchange for such lost, stolen
or destroyed certificate, upon the making of an affidavit of that fact by
the holder thereof, such Merger Consideration payable in respect of such
shares and cash, if any, as may be required pursuant to this Article II;
provided, however, that the Exchange Agent or Acquiror may, in its
reasonable discretion and as a condition precedent to the issuance thereof,
require the owner of such lost, stolen or destroyed certificate or
instrument to deliver a bond in such sum as it may reasonably direct as
indemnity against any claim that may be made against Acquiror or the
Exchange Agent with respect to the certificate or instrument alleged to
have been lost, stolen or destroyed.
SECTION 2.03. Stock Transfer Books.
At the Effective Time, the stock transfer books of the
Company shall be closed and there shall be no further registration of
transfers of shares of Company Securities thereafter on the records of the
Company. From and after the Effective Time, the holders of certificates
representing shares of Company Securities outstanding immediately prior to
the Effective Time shall cease to have any rights with respect to such
shares of Company Securities except as otherwise provided herein or by Law.
SECTION 2.04. Company Stock Options
Prior to the Effective Time, the Company and Acquiror
shall take such action as may be necessary or appropriate for Acquiror to
assume, or, at its option, to issue a substitute option with respect to,
each outstanding unexpired and unexercised option to purchase shares of
Company Common Stock (collectively, the "Company Stock Options") under the
Company's Amended and Restated 1998 Long-Term Incentive Plan, Amended and
Restated Non-Qualified Stock Option Plan and Amended and Restated Equity
Plan for Directors and those options issued not pursuant to such plans
(collectively, the "Company Stock Plans") so that at the Effective Time
each Company Stock Option will become or be replaced by an option to
purchase a number of whole shares of Acquiror Series A Preferred Stock
equal to the product of one-tenth (0.1) and the number of shares of Company
Common Stock subject to such Company Stock Options under the Company Stock
Option (and rounding any fractional share down to the nearest whole share),
at an exercise price per share equal to the product of the shares of
Company Common Stock subject to such Company Stock Option and the exercise
price per share of such Company Stock Option, divided by the number of
whole shares of Acquiror Series A Preferred Stock deemed to be purchasable
pursuant to such Company Stock Option rounded up to the nearest whole cent;
provided, however, that upon an Automatic Conversion Event (as such term is
defined in the Restated Charter), each Company Stock Option will become or
be replaced by an option to purchase a number of whole shares of Acquiror
Common Stock equal to the product of the number of shares of Acquiror
Series A Preferred Stock then subject to the Company Stock Options and the
number of shares of Acquiror Common Stock issuable upon the Automatic
Conversion Event with respect to a share of Acquiror Series A Preferred
Stock (and rounding any fractional share down to the nearest whole share),
at an exercise price per share equal to the product of the shares of
Acquiror Series A Preferred Stock subject to such Company Stock Option and
the exercise price per share of such Company Stock Option, divided by the
number of whole shares of Acquiror Common Stock deemed to be purchasable
pursuant to such Company Stock Option rounded up to the nearest whole cent
(each, an "Acquiror Option"). The date of grant of each substituted
Acquiror Option for purposes of such terms and conditions shall be deemed
to be the date on which the corresponding Company Stock Option was granted.
As to each assumed Company Stock Option, at the Effective Time (a) all
references to the Company in the stock option agreements with respect to
the Company Stock Options being assumed shall be deemed to refer to
Acquiror; (b) Acquiror shall assume all of the Company's obligations with
respect to the related Company Stock Option; and (c) Acquiror shall issue
to each holder of a Company Stock Option a document evidencing the
foregoing assumption by Acquiror. Nothing in this Section 2.04 shall affect
the schedule of vesting with respect to the Company Stock Options in
accordance with the terms of such Company Stock Options. It is the purpose
and intention of the parties that, subject to applicable Law, the
assumption of such Company Stock Options or the substitution of Acquiror
Options for the Company Stock Options shall meet the requirements of
Section 424(a) of the Code and that each assumed Company Stock Option or
the substituted Acquiror Option shall qualify immediately after the
Effective Time as an incentive stock option as defined in Section 422 of
the Code to the extent that the related Company Stock Option so qualified
immediately before the Effective Time and the foregoing provisions of this
Section 2.04 shall be interpreted to further such purpose and intention.
The Company represents and warrants that the assumption of the Company
Stock Options or substitution of Acquiror Options therefor, as contemplated
by this Section 2.04, may be effected pursuant to the terms of the Company
Stock Options and the Company Stock Plans without the consent of any holder
of a Company Stock Option and without liability to any such holder.
SECTION 2.05. Company Warrants.
At the Effective Time, Acquiror shall assume each warrant
to purchase shares of Company Common Stock (collectively, the "Company
Warrants") so that at the Effective Time each Company Warrant will (a)
become a warrant to purchase a number of whole shares of Acquiror Series A
Non-Voting Preferred Stock equal to (i) one-tenth (0.1) times (ii) the
number of shares of Company Common Stock for which such Company Warrant was
exercisable at the Effective Time (and rounding any fractional share down
to the nearest whole share), and (b) have an exercise price per share equal
to (i) the exercise price for the shares of Company Common Stock subject to
such Company Warrant immediately prior to the Effective Time divided by
(ii) one-tenth (0.1); provided, however, that upon an Automatic Conversion
Event (as such term is defined in the Restated Charter), each Company
Warrant will (A) become a warrant to purchase a number of whole shares of
Acquiror Non-Voting Common Stock equal to the product of the number of
shares of Acquiror Non-Voting Series A Preferred Stock then subject to the
Company Warrants and the number of shares of Acquiror Non-Voting Common
Stock issuable upon the Automatic Conversion Event with respect to a share
of Acquiror Non-Voting Series A Preferred Stock (and rounding any
fractional share down to the nearest whole share), and (B) have an exercise
price per share equal to the product of the shares of Acquiror Non-Voting
Series A Preferred Stock subject to such Company Warrant and the exercise
price per share of such Company Warrant divided by the number of whole
shares of Acquiror Non-Voting Common Stock deemed to be purchasable
pursuant to such Company Warrant rounded up to the nearest whole cent
(each, an "Acquiror Warrant"). As to each assumed Company Warrant, at the
Effective Time (x) all references to the Company in the warrant agreements
with respect to the Company Warrants being assumed shall be deemed to refer
to Acquiror; (y) Acquiror shall assume all of the Company's obligations
with respect to the related Company Warrant; and (z) Acquiror shall issue
to each holder of a Company Warrant a document evidencing the foregoing
assumption by Acquiror.
SECTION 2.06. Purchase of Tranche B and Tranche C Interests.
(a) New Lenders. At the Effective Time, the Preferred
Stockholders, any of their affiliates or any of their designees (any such
purchaser, a "New Lender") shall purchase:
(i) Tranche B Term Loans and the Tranche C Term Loans
(as such terms are defined in the Term Credit Agreement) under the Term
Credit Agreement (collectively, the "Term Loans"), if any, in an aggregate
principal amount equal to (A) the aggregate principal amount of Tranche B
Term Loans and the Tranche C Term Loans outstanding immediately prior to
the Effective Time plus any accrued and unpaid interest thereon minus (B)
the Term Loan Reduction Amount; and
(ii) Tranche B Commitments (including any Tranche B
Loans outstanding with respect to such Tranche B Commitments) and Tranche C
Commitments (including any Tranche C Loans outstanding with respect to such
Tranche C Commitments) (collectively, the "Revolver Commitments"), as all
such terms are defined in the Revolving Credit Agreement, if any, in an
aggregate principal amount equal to (A) Tranche B Commitments (including
any Tranche B Loans outstanding with respect to such Tranche B Commitments)
and Tranche C Commitments (including any Tranche C Loans outstanding with
respect to such Tranche C Commitments) as in effect immediately prior to
the Effective Time plus any accrued and unpaid interest thereon minus (B)
the Revolving Loan Reduction Amount;
provided, that the aggregate amount of such Term Loans and
Revolver Commitments so purchased shall in no event exceed the Guaranteed
Amount; provided, further, that immediately prior to the Effective Time,
Acquiror shall have paid (or caused its applicable Acquiror Subsidiary to
pay) in full in cash all unpaid interest (as of the Effective Time) on, and
any other fees, claims, indemnifications or other amounts accrued and owing
up to and as of the Effective Time, whether or not then required to be
paid, (1) in respect of all of the Tranche B Term Loans and the Tranche C
Term Loans under the Term Credit Agreement or otherwise to the holders
thereof (other than any New Lenders) under the Term Credit Agreement and
the documents and instruments relating thereto, and (2) in respect of the
Tranche B Commitments and the Tranche C Commitments (including all
outstanding the Tranche B Loans and the Tranche C Loans) under the
Revolving Credit Agreement or otherwise to the holders thereof (other than
any New Lenders) under the Revolving Credit Agreement and the documents and
instruments relating thereto.
(b) New Guarantors. At the Effective Time, (i) if any
Term Loans are purchased as contemplated by Section 2.06(a)(i) above,
(A) the Baron/Singtel Guaranties (as such term
is defined in the Bank Waiver) in respect of such Term Loans shall
have been terminated as contemplated by the Bank Waiver, and
(B) one or more Persons selected by the New
Lenders (which Persons may be affiliates of any New Lenders, any
such Person, a "New Guarantor") shall have guaranteed the
obligations in respect of such Term Loans to the New Lenders
pursuant to documentation substantially similar to the Shareholder
Guaranties and the Shareholder Guarantor Security Agreement (as
such terms are defined in the Term Credit Agreement) and all other
documents, agreements and instruments relating thereto or in
connection therewith (collectively, the "Term Guaranty
Documents"), including, without limitation, the benefit of all
Acquiror and Acquiror Subsidiary reimbursement arrangements and
security interests; and
(ii) if any Revolver Commitments are purchased
as contemplated by Section 2.06(a)(ii) above,
(A) the Baron/Singtel Guaranties (as such term
is defined in the Bank Waiver) in respect of such Revolver
Commitments shall have been terminated as contemplated by the Bank
Waiver, and
(B) the New Guarantors shall have guaranteed the
obligations in respect of such Revolver Commitments to the New
Lenders pursuant to documentation substantially similar to the
Shareholder Guaranties and the Shareholder Guarantor Security
Agreement (as such terms are defined in the Revolving Credit
Agreement) and all other documents, agreements and instruments
relating thereto or in connection therewith (collectively, the
"Revolver Guaranty Documents"), including, without limitation, the
benefit of all Acquiror and Acquiror Subsidiary reimbursement
arrangements and security interests
(c) Documentation. Each of the transactions contemplated
by Sections 2.06(a) and (b) shall be effected pursuant to such documents,
instruments and agreements as shall be reasonably required by, and in form
and substance satisfactory to, the New Guarantors and the New Lenders
(collectively, the "Tranche B and C Documents") and the Acquiror shall have
obtained the consent of each other Person that may be required to effect
such transactions.
SECTION 2.07. Stock Options.
The Company and Acquiror agree to discuss in good faith
potential modifications to outstanding options under the Company Stock
Plans and the Acquiror Stock Plans, which modifications would better ensure
that employees of both companies are treated fairly and appropriately
incented. Acquiror and the Company agree to amend the provisions of this
Merger Agreement to provide for any modifications agreed to by the parties
pursuant to this Section 2.07.
SECTION 2.08. Closing.
Subject to the terms and conditions of this Merger
Agreement, the closing of the Merger (the "Closing") will take place as
soon as practicable (but, in any event, within five (5) business days)
after satisfaction of the latest to occur or, if permissible, waiver of the
conditions set forth in Article VII hereof (the "Closing Date"), at the
offices of Xxxxx & Xxxxxxx L.L.P., 0000 Xxxxxxxxxx Xxxxx, Xxxxx 0000,
XxXxxx, Xxxxxxxx 00000, unless another date or place is agreed to in
writing by the parties hereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THe company
Except as disclosed in the Company Disclosure Schedule
(the "Company Disclosure Schedule") delivered to Acquiror separately prior
to, or contemporaneously with, the date hereof (which disclosure schedule
shall make a specific reference to the particular Section or subsection of
this Merger Agreement to which exception is being taken), the Company
represents and warrants to Acquiror that:
SECTION 3.01. Corporate Existence and Power.
The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware, and
has all corporate powers required to carry on its business as now
conducted. The Company is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of its
activities makes such qualification necessary, except where the failure to
be so qualified, individually or in the aggregate, would not be reasonably
likely to have a Company Material Adverse Effect. Schedule 3.01 of the
Company Disclosure Schedule sets forth a complete and correct list of the
states in which the Company is qualified to do business as a foreign
corporation. The Company has heretofore made available to Acquiror true and
complete copies of the Company's certificate of incorporation and bylaws as
currently in effect.
SECTION 3.02. Corporate Authorization.
The execution, delivery and performance by the Company of
this Merger Agreement and the consummation by the Company of the
transactions contemplated hereby are within the Company's corporate powers
and, except for the Company Stockholder Approval, have been duly authorized
by all necessary corporate action. Assuming that this Merger Agreement
constitutes the valid and binding obligation of Acquiror and Merger Sub,
this Merger Agreement constitutes a valid and binding agreement of the
Company, enforceable in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and similar laws, now or hereafter
in effect, relating to or affecting creditors' rights and remedies and to
general principles of equity.
SECTION 3.03. Governmental Authorization.
The execution, delivery and performance by the Company of
this Merger Agreement and the consummation by the Company of the
transactions contemplated hereby require no action by or in respect of, or
filing with, any Governmental Entity other than (a) the filing of (i) a
certificate of merger in accordance with Delaware Law and (ii) appropriate
documents with the relevant authorities of other states or jurisdictions in
which the Company or any Company Subsidiary is qualified to do business;
(b) compliance with any applicable requirements of the HSR Act; (c)
compliance with any applicable requirements of the Securities Act and the
Exchange Act; (d) compliance with any applicable state securities or blue
sky laws; and (e) such other consents, approvals, actions, orders,
authorizations, registrations, declarations and filings that, if not
obtained or made, would not, individually or in the aggregate, (i) be
reasonably likely to have a Company Material Adverse Effect, or (ii)
prevent or materially impair the ability of the Company to consummate the
transactions contemplated by this Merger Agreement.
SECTION 3.04. Non-Contravention.
The execution, delivery and performance by the Company of
this Merger Agreement and the consummation by the Company of the
transactions contemplated hereby do not and will not (a) contravene or
conflict with the Company's or any Company Subsidiary's certificate of
incorporation or bylaws, (b) assuming compliance with the matters referred
to in Section 3.03, contravene or conflict with or constitute a violation
of any provision of any law, regulation, judgment, injunction, order or
decree binding upon or applicable to the Company or any Company Subsidiary,
(c) constitute a default under or give rise to a right of termination,
cancellation or acceleration of any right or obligation of the Company or
any Company Subsidiary or to a loss of any benefit or status to which the
Company or any Company Subsidiary is entitled under any provision of any
Agreement binding upon the Company or any Company Subsidiary or any
license, franchise, permit or other similar authorization held by the
Company or any Company Subsidiary, or (d) result in the creation or
imposition of any Lien on any asset of the Company or any Company
Subsidiary other than, in the case of each of (b), (c) and (d), any such
items that would not, individually or in the aggregate (i) be reasonably
likely to have a Company Material Adverse Effect or (ii) prevent or
materially impair the ability of the Company to consummate the transactions
contemplated by this Merger Agreement.
SECTION 3.05. Capitalization.
(a) As of the date hereof, the authorized capital stock
of the Company consists of 300,000,000 shares of Company Common Stock,
including 200,000,000 shares of voting common stock and 100,000,000 shares
of non-voting common stock, and 10,000,000 shares of Company Preferred
Stock. As of May 8, 2001, there were outstanding (i) 63,667,797 shares of
Company Common Stock, (ii) 996,171 shares of the Company Preferred Stock,
all of which are Series A Convertible Preferred Stock, (iii) stock options
to purchase an aggregate of 12,816,950 shares of Company Common Stock (of
which options to purchase an aggregate of 4,851,175 shares of Company
Common Stock are exercisable as of May 8, 2001), and (iv) warrants to
purchase an aggregate of 12,991,506 shares of Company Common Stock,
including 53,997.3 Series 1-A warrants and 12,262,542 Series 2-A warrants.
All outstanding shares of capital stock of the Company have been duly
authorized and validly issued and are fully paid and nonassessable.
(b) As of the date hereof, except (i) as set forth in
Section 3.05(a), and (ii) for changes since May 8, 2001, resulting only
from the exercise of stock options or warrants outstanding on such date and
referred to in Section 3.05(a)(iii) or Section 3.05(a)(iv), there are no
outstanding (x) shares of capital stock or other voting securities of the
Company, (y) securities of the Company convertible into or exchangeable for
shares of capital stock or voting securities of the Company, or (z) except
in connection with the resolution of the matters set forth on Schedule 3.11
of the Company Disclosure Schedule, options or other rights to acquire from
the Company, and no obligation of the Company to issue, any capital stock,
voting securities or securities convertible into or exchangeable for
capital stock or voting securities of the Company (the items in clauses
(x), (y) and (z) being referred to collectively as the "Company
Securities"). There are no outstanding obligations of the Company or any
Company Subsidiary to repurchase, redeem or otherwise acquire any Company
Securities. There are no outstanding Agreements or other understandings or
commitments of any kind of the Company or any Company Subsidiary to provide
funds to, or make any investment (in the form of a loan, capital
contribution or otherwise) in, any other Person, including, without
limitation, any Portfolio Company. Except as contemplated by this Merger
Agreement, there are no stockholder agreements, voting trusts or other
agreements or understandings to which the Company or any Company Subsidiary
is a party relating to voting, registration or disposition of any shares of
capital stock of the Company or any Company Subsidiary or granting to any
person or group of persons the right to elect, or to designate or nominate
for election, a director to the board of directors of the Company.
(c) The Company does not own any Acquiror Securities.
SECTION 3.06. Subsidiaries.
(a) Each Company Subsidiary is a corporation duly
incorporated or an entity duly organized, and is validly existing and in
good standing under the laws of its jurisdiction of incorporation or
organization, has all powers and authority and all material governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted and is duly qualified to do business as a foreign
entity and is in good standing in each jurisdiction where the character of
the property owned or leased by it or the nature of its activities makes
such qualification necessary, in each case with such exceptions as,
individually or in the aggregate, would not be reasonably likely to have, a
Company Material Adverse Effect. Schedule 3.06(a) of the Company Disclosure
Schedule sets forth a complete and correct list of (i) the ownership
interests of the Company in each Company Subsidiary, (ii) any stockholder
agreements, voting trusts or other agreements or understandings to which
the Company or any Company Subsidiary is a party relating to voting,
registration or disposition of any shares of capital stock of any Company
Subsidiary, (iii) the states in which each of the Company Subsidiaries is
qualified to do business as a foreign corporation and (iv) all equity
holders of the Company Subsidiaries other than the Company, including the
classes of equity securities held by such Persons and their percentage
ownership of the Company Subsidiaries.
(b) All of the outstanding shares of capital stock of, or
other ownership interest in, each Company Subsidiary has been validly
issued and is fully paid and nonassessable. All of the outstanding capital
stock of, or other ownership interest in, each Company Subsidiary, that is
owned, directly or indirectly, by the Company, is owned free and clear of
any Encumbrance and free of any other limitation or restriction (including
any limitation or restriction on the right to vote, sell or otherwise
dispose of such capital stock or other ownership interests). There are no
outstanding (i) securities of the Company or any Company Subsidiary
convertible into or exchangeable or exercisable for shares of capital stock
or other voting securities or ownership interests in any Company
Subsidiary, (ii) options, warrants or other rights to acquire from the
Company or any Company Subsidiary, and no other obligation of the Company
or any Company Subsidiary to issue, any capital stock, voting securities or
other ownership interests in, or any securities convertible into or
exchangeable or exercisable for any capital stock, voting securities or
ownership interests in, any Company Subsidiary or (iii) obligations of the
Company or any Company Subsidiary to repurchase, redeem or otherwise
acquire any outstanding securities of any Company Subsidiary or any capital
stock of, or other ownership interests in, any Company Subsidiary.
(c) All of the outstanding capital stock of, or other
ownership interest in, each Portfolio Company, that is owned, directly or
indirectly, by the Company, is owned free and clear of any Encumbrance and
free of any other limitation or restriction (including any limitation or
restriction on the right to vote, sell or otherwise dispose of such capital
stock or other ownership interests). There are no outstanding obligations
of the Company or any Company Subsidiary to repurchase, redeem or otherwise
acquire any outstanding securities of any Portfolio Company or any capital
stock of, or other ownership interests in, any Portfolio Company. Schedule
3.06(c) of the Company Disclosure Schedule sets forth a complete and
correct list of (i) the ownership interests of the Company in each
Portfolio Company, (ii) any stockholder agreements, voting trusts or other
agreements or understandings to which the Company or any Company Subsidiary
is a party relating to voting, registration or disposition of any shares of
capital stock of any Portfolio Company and (iii) the states in which each
Portfolio Company is organized.
(d) There are no outstanding obligations of the Company
or any Company Subsidiary requiring the Company or any Company Subsidiary
to make any investment in any other Person.
SECTION 3.07. Company SEC Documents.
(a) The Company has made available to Acquiror the
Company SEC Documents. The Company has filed all reports, filings,
registration statements and other documents required to be filed by it with
the SEC since January 1, 1999. No Company Subsidiary is subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act and no
Company Subsidiary is an investment company registered or required to be
registered under the Investment Company Act of 1940.
(b) As of its filing date, each Company SEC Document
complied as to form in all material respects with the applicable
requirements of the Securities Act and/or the Exchange Act, as the case may
be.
(c) No Company SEC Document filed pursuant to the
Exchange Act contained, as of its filing date, any untrue statement of a
material fact or omitted to state any material fact necessary in order to
make the statements made therein, in the light of the circumstances under
which they were made, not misleading. No Company SEC Document, as amended
or supplemented, if applicable, filed pursuant to the Securities Act
contained, as of the date such document or amendment became effective, any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading.
SECTION 3.08. Financial Statements; No Material Undisclosed
Liabilities.
(a) The audited consolidated financial statements and
unaudited consolidated interim financial statements of the Company included
in the Company 10-K and the Company 10-Q fairly present in all material
respects, in conformity with generally accepted accounting principles
applied on a consistent basis ("GAAP") (except as may be indicated in the
notes thereto and except that financial statements included in the Company
10-Q do not contain all GAAP notes to such financial statements), the
consolidated financial position of the Company and its consolidated Company
Subsidiaries as of the dates thereof and their consolidated results of
operations and changes in financial position for the periods then ended
(subject to normal year-end adjustments in the case of any unaudited
interim financial statements).
(b) There are no liabilities of the Company or any
Company Subsidiary of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise, in each case, that are
required by GAAP to be set forth on a consolidated balance sheet of the
Company, other than:
(i) liabilities or obligations disclosed or
provided for in the Company Balance Sheet or disclosed in the notes
thereto;
(ii) liabilities or obligations under this
Merger Agreement or incurred in connection with the transactions
contemplated hereby;
(iii) liabilities or obligations incurred in the
Ordinary Course of Business; provided, that, any such liabilities or
obligations, whether or not incurred in the Ordinary Course of Business,
constituting Indebtedness shall be disclosed pursuant to Section 3.08(b)(i)
to the extent that such Indebtedness matures or requires scheduled payments
to be made on or before the date which is 365 days after the End Date; and
(iv) liabilities or obligations not required to
be disclosed (due solely to materiality, knowledge or other applicable
qualifiers or dollar limitations) in the Company Disclosure Schedule
pursuant to the terms of the applicable provisions requiring such
disclosure; provided, that, such liabilities or obligations in the
aggregate do not result in a Company Material Adverse Effect.
SECTION 3.09. Information to Be Supplied.
(a) The information to be supplied by the Company
expressly for inclusion or incorporation by reference in the Joint Proxy
Statement will (i) in the case of the Registration Statement, at the time
it becomes effective, not 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 and (ii)
in the case of the remainder of the Joint Proxy Statement, at the time of
the mailing thereof, and at the time of the Company Stockholders Meeting,
not 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. The Joint Proxy Statement will comply (with respect
to information relating to the Company) as to form in all material respects
with the provisions of the Securities Act and the Exchange Act.
(b) Notwithstanding the foregoing, the Company makes no
representation or warranty with respect to any statements made or
incorporated by reference in the Joint Proxy Statement based on information
supplied by Acquiror.
SECTION 3.10. Absence of Certain Changes.
Since December 31, 2000, except as otherwise expressly
contemplated by this Merger Agreement, the Company and the Company
Subsidiaries have conducted their business only in the ordinary course
consistent with past practice and, since such date, there has not been (a)
any damage, destruction or other casualty loss (whether or not covered by
insurance) affecting the business or Assets of the Company or any Company
Subsidiary that, individually or in the aggregate, has had or would be
reasonably likely to have a Company Material Adverse Effect, (b) any change
in the business, operations, properties, condition (financial or
otherwise), Assets or liabilities (including, without limitation,
contingent liabilities) of the Company or any Company Subsidiary having,
individually or in the aggregate, a Company Material Adverse Effect, (c)
any action, event, occurrence, development or state of circumstances or
facts that, individually or in the aggregate, has had or would be
reasonably likely to have a Company Material Adverse Effect, or (d) any
Agreement by the Company or any Company Subsidiary to take any of the
actions described in this Section 3.10 except as expressly contemplated by
this Merger Agreement. Except for the payment of scheduled non-cash
dividends in accordance with the terms of the Company Preferred Stock,
between December 31, 2000 and the date of this Merger Agreement, neither
the Company nor any Company Subsidiary has taken, or agreed to take, any
action that would constitute a material breach of Section 5.01 (except for
clauses (j), (m) or (n) thereof) if taken after the date of this Merger
Agreement.
SECTION 3.11. Litigation.
As of the date hereof, there is no action, suit,
investigation, arbitration or proceeding pending against, or to the
knowledge of the Company threatened against, the Company or any Company
Subsidiary or any of their respective assets or properties before any
arbitrator or Governmental Entity that is not identified on Schedule 3.11
of the Company Disclosure Schedule, which would reasonably be expected to
result in monetary damages in excess of $100,000 or any restriction, in any
material respect, on the business or operations of the Company or any
Company Subsidiary. None of the foregoing matters would be reasonably
likely to have a Company Material Adverse Effect. There are no outstanding
injunctions against the Company or any Company Subsidiary, and there are no
outstanding judgments, decrees, awards, or orders with respect to the
Company or any Company Subsidiary which have not been satisfied and
complied with in full or which require the Company or any Company
Subsidiary to take, or refrain from taking, action in the future.
SECTION 3.12. Contracts.
(a) As of the date hereof, the exhibit index to the
Company's most recently filed Annual Report on Form 10-K, as supplemented
by Schedule 3.12(a) of the Company Disclosure Schedule, includes each
contract (including all amendments thereto) to which the Company or any
Company Subsidiaries is a party or by which any of them is bound and (i)
which would be required, pursuant to the Exchange Act and the rules and
regulations thereunder, to be filed as an exhibit to an Annual Report of
the Company on Form 10-K, a Quarterly Report of the Company on Form 10-Q or
a Current Report of the Company on Form 8-K (without regard to whether such
report is now due to be filed) or (ii) involves payments by or to the
Company or any Company Subsidiary in excess of $1 million in calendar year
2001 or any subsequent calendar year (collectively, the "Company
Contracts"). Schedule 3.12(a) of the Company Disclosure Schedule indicates
which of the Company Contracts have terminated, and which of the Company
Contracts are scheduled to terminate in accordance with their respective
terms, in 2001.
(b) Each Company Contract is in full force and effect,
constitutes a valid and binding obligation of and is legally enforceable in
accordance with its terms against the Company or Company Subsidiary, as
applicable and, to the knowledge of the Company, (i) the Company Contracts
are valid, binding and enforceable obligations of the other parties
thereto, except as such enforceability may be subject to the effects of any
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or similar Laws affecting creditors' rights generally or subject
to the effects of general equitable principles (whether considered in a
proceeding in equity or at law); (ii) the Company and/or each Company
Subsidiary, as the case may be, has complied with all of the provisions of
such Company Contracts and is not in default thereunder, and there has not
occurred any event which (whether with or without notice, lapse of time, or
the happening or occurrence of any other event) would constitute such a
default, and the execution of this Merger Agreement by the Company and its
performance hereunder will not cause, or result in, a breach or default
under any Company Contract; (iii) there has not been (A) any failure by the
Company or any Company Subsidiary or, to the knowledge of the Company or
any Company Subsidiary, any other party to any such Company Contract to
comply with all material provisions thereof, (B) any default by the Company
or any Company Subsidiary or, to the knowledge of the Company or any
Company Subsidiary, any other party thereunder or (C) to the knowledge of
the Company (1) any cancellation thereof in writing which has not been
cured or (2) any outstanding dispute thereunder which has not been cured.
(c) Neither the Company nor any Company Subsidiary is a
guarantor or otherwise liable for any liability or obligation (including
Indebtedness) of any Portfolio Company or other Person other than a wholly
owned subsidiary of the Company.
(d) No officer, director or significant stockholder of
the Company or any Company Subsidiary, or affiliate of such officer,
director or significant stockholder, is currently a party to any
transaction, understanding or commitment with the Company or any Company
Subsidiary, including, without limitation, any Agreement providing for the
employment of, furnishing of services by, rental of Assets from or to,
requiring payments on a change of control of the Company or otherwise
requiring payments to, any such officer, director, significant stockholder
or affiliate, except for the payment of benefits to officers or directors
in the Ordinary Course of Business.
(e) Neither the Company nor any Company Subsidiary is a
party to any contract with the United States government or to any other
material Government Contract.
SECTION 3.13. Taxes.
Except as would not be reasonably expected to have a
Company Material Adverse Effect:
(a) All Company Tax Returns required to be filed with any
Taxing authority by, or with respect to, the Company and the Company
Subsidiaries have been filed in substantial compliance with all applicable
laws.
(b) The Company and the Company Subsidiaries have timely
paid all Taxes shown as due and payable on the Company Tax Returns that
have been so filed and all other Taxes not subject to reporting
obligations, and, as of the time of filing, the Company Tax Returns were
complete and correct (other than Taxes that are being contested in good
faith and for which adequate reserves are reflected on the Company Balance
Sheet in accordance with GAAP).
(c) The Company and the Company Subsidiaries have made
adequate provision in accordance with GAAP for all Taxes payable by them
for which no Company Tax Return has yet been filed.
(d) The Company and the Company Subsidiaries have
complied in all material respects with all applicable laws, rules and
regulations relating to the payment and withholding of Taxes.
(e) The Company has not received any written notice of
any action, suit, proceeding, audit or claim now proposed or pending
against or with respect to the Company or any Company Subsidiary in respect
of any Tax that would have a Company Material Adverse Effect
(f) Neither the Company nor any Company Subsidiary has
been a member of an affiliated, consolidated, combined or unitary group
other than one of which the Company was the common parent.
(g) Neither the Company nor any Company Subsidiary holds
any asset subject to a consent under Section 341(f) of the Code.
(h) The federal income Tax Returns have been examined and
settled with the IRS (or the applicable statutes of limitation for the
assessment of federal income Taxes for such periods have expired) for all
years through 1996. The parties acknowledge that certain net operating loss
carry overs generated prior to 1997 may be unavailable in either 1997 or in
subsequent years.
(i) There are no material Encumbrances for Taxes on any
of the assets of the Company or any Company Subsidiary.
(j) Neither the Company nor any Company Subsidiary is a
party to any tax allocation, tax sharing, tax indemnity or similar
agreement (whether or not in writing), arrangement or practice with respect
to Taxes (including any adverse pricing agreement, closing agreement or
other agreement relating to Taxes with any taxing authority), except among
themselves.
SECTION 3.14. Employee Benefits.
(a) Schedule 3.14(a) of the Company Disclosure Schedule
sets forth a correct and complete list identifying each material "employee
benefit plan," as defined in Section 3(3) of ERISA, each employment,
severance or similar contract, plan, arrangement or policy and each other
plan or arrangement (written or oral) providing for compensation, bonuses,
profit-sharing, stock option or other stock related rights or other forms
of incentive or deferred compensation, vacation benefits, insurance
coverage (including any self-insured arrangements), health or medical
benefits, disability benefits, workers' compensation, supplemental
unemployment benefits, severance benefits and post-employment or retirement
benefits (including compensation, pension, health, medical or life
insurance benefits) that is maintained, administered or contributed to by
the Company or any ERISA Affiliate (as defined below) and covers any
employee, former employee, officer, director or other service provider of
the Company or any Company Subsidiary. Copies of such plans (and, if
applicable, related trust agreements) and all amendments thereto and
written interpretations thereof have been furnished to Acquiror together
with the most recent annual report (Form 5500 including all applicable
schedules thereto) and summary plan description prepared in connection with
any such plan. Such plans are referred to collectively herein as the
"Company Benefit Plans." For purposes of this Section 3.14, "ERISA
Affiliate" of any Person means any other Person which, together with such
Person, would be treated as a single employer under Section 414 of the
Code.
(b) No Company Benefit Plan constitutes a "multiemployer
plan," as defined in Section 3(37) of ERISA (a "Multiemployer Plan") and no
Company Benefit Plan is subject to Title IV of ERISA (a "Retirement Plan"),
including any terminated Company Benefit Plans. Neither the Company nor any
of its ERISA Affiliates has incurred any liability under Title IV of ERISA
arising in connection with the termination of, or complete or partial
withdrawal from, any plan covered or previously covered by Title IV of
ERISA. Nothing has been done or omitted to be done and no transaction or
holding of any asset under or in connection with any Company Benefit Plan
has occurred that will make the Company or any Company Subsidiary, or any
officer or director of the Company or any Company Subsidiary, subject to
any liability under Title I of ERISA or liable for any tax pursuant to
Section 4975 of the Code (assuming the taxable period of any such
transaction expired as of the date hereof) that would be reasonably likely
to have a Company Material Adverse Effect.
(c) Each Company Benefit Plan that is intended to be
qualified under Section 401(a) of the Code is so qualified and has been so
qualified during the period from its adoption to date, and each trust
forming a part thereof is exempt from tax pursuant to Section 501(a) of the
Code. The Company has furnished to Acquiror copies of the most recent
Internal Revenue Service determination letters, if any, with respect to
each such Company Benefit Plan. Each Company Benefit Plan has been
maintained in compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations,
including but not limited to ERISA and the Code, which are applicable to
such Company Benefit Plan, except for any compliance failures that are not
reasonably likely to have a Company Material Adverse Effect.
(d) There is no contract, agreement, plan or arrangement
that, as a result of the Merger, would obligate the Company to make any
payment of any amount that would not be deductible pursuant to the terms of
Section 162(m) or Section 280G of the Code.
(e) There has been no amendment to, written
interpretation or announcement (whether or not written) relating to, or
change in employee participation or coverage under, any Company Benefit
Plan that would increase the expense of maintaining such Company Benefit
Plan above the level of the expense incurred in respect thereof for the
fiscal year ended December 31, 2000 except for any increase that is not
reasonably likely to have a Company Material Adverse Effect.
(f) Neither the Company nor any ERISA Affiliate has any
liability under any Company Benefit Plan that is not a Retirement Plan that
provides for continuing benefits or coverage for any participant or any
beneficiary of a participant after such participant's termination of
employment, except as may be required by Section 4980B of the Code or
Section 601 (et seq.) of ERISA, or under any applicable state law, and at
the expense of the participant or the beneficiary of the participant. No
Company Benefit Plan is a Voluntary Employees' Beneficiary Association
("VEBA") within the meaning of Section 501(c)(9) of the Code. No Company
Benefit Plan is an Employee Stock Ownership Plan ("ESOP") within the
meaning of Section 4975(e)(7) of the Code.
(g) The Company and the Company Subsidiaries have not
received notice of any pending unfair labor practice charges, contract
grievances under any collective bargaining agreement, other administrative
charges, claims, grievances or lawsuits before any court, governmental
agency, regulatory body, or arbiter arising under any Law governing any
Company Benefit Plan, and, to the Company's knowledge, there exist no facts
that could give rise to such a claim.
(h) There are no arrangements, agreements or plans
pursuant to which cash and non-cash payments will become payable to any
current or former employee, officer or director of the Company or any
Company Subsidiary as a result of the Merger or a termination of service
subsequent to the consummation of the Merger. There is no Company Benefit
Plan requiring payments, cancellation of Indebtedness or other obligation
to be made on a change of control or otherwise as a result of the
consummation of any of the transactions contemplated by this Merger
Agreement or as a result of a termination of service subsequent to the
consummation of any of the transactions contemplated by this Merger
Agreement, with respect to any current or former employee, officer or
director of the Company or any Company Subsidiary.
(i) Schedule 3.14(i) of the Company Disclosure Schedule
sets forth a true and correct description of the restructuring actions
(including downsizing actions) undertaken by the Company and the Company
Subsidiaries between January 1, 2001 and the date hereof.
(j) Schedule 3.14(j) of the Company Disclosure Schedule
sets forth a true and correct description of the option exchange program
which was implemented by the Company commencing in the fourth quarter of
2000.
SECTION 3.15. Compliance with Laws; Licenses, Permits and
Registrations.
(a) Neither the Company nor any Company Subsidiary is in
violation of, or has violated, any applicable provisions of any laws,
statutes, ordinances, regulations, judgments, injunctions, orders or
consent decrees, except for any such violations that, individually or in
the aggregate, would not be reasonably likely to have a Company Material
Adverse Effect.
(b) Each of the Company and the Company Subsidiaries has
all permits, licenses, approvals, authorizations of and registrations with
and under all federal, state, local and foreign laws, and from all
Governmental Entities required by the Company and the Company Subsidiaries
to carry on their respective businesses as currently conducted, except
where the failure to have any such permits, licenses, approvals,
authorizations or registrations, individually or in the aggregate, would
not be reasonably likely to have a Company Material Adverse Effect.
SECTION 3.16. Title to Properties.
(a) The Company and each Company Subsidiary have good and
marketable title to, or valid leasehold interests in, all their properties
and assets except for such as are no longer used or useful in the conduct
of their businesses or as have been disposed of in the Ordinary Course of
Business and except for defects in title, easements, restrictive covenants
and similar Liens, encumbrances or impediments that, in the aggregate, do
not materially interfere with the ability of the Company and the Company
Subsidiaries to conduct their business, taken as a whole, as currently
conducted. All such assets and properties, other than assets and properties
in which the Company or any Company Subsidiary has leasehold interests, are
free and clear of all Liens.
(b) The Company and each Company Subsidiary are in
compliance with the terms of all leases to which they are a party and under
which they are in occupancy, and all such leases are in full force and
effect and the Company and each Company Subsidiary enjoy peaceful and
undisturbed possession under all such leases.
SECTION 3.17. Intellectual Property.
(a) "Intellectual Property" means trademarks, service
marks, trade names, URLs, domain names, mask works, net lists, schematics,
inventions, patents, trade secrets, copyrights, know-how, ideas,
algorithms, processes, software, technology (including any registrations or
applications for registration of any of the foregoing) or any other similar
type of proprietary intellectual property right. "Company Intellectual
Property" means Intellectual Property necessary or useful to carry on the
business of the Company and the Company Subsidiaries, taken as a whole, as
currently conducted. Schedule 3.17(a) of the Company Disclosure Schedule
sets forth a complete and correct list of the Company Intellectual Property
which is not readily obtainable on the open market for such Intellectual
Property at market prices and is materially necessary for the operation of
the Company and the Company Subsidiaries in the Ordinary Course of
Business.
(b) The Company and the Company Subsidiaries have good
and valid title to or have a valid and enforceable license to use the
Company Intellectual Property, free and clear of all Encumbrances.
(c) The operation of the business of the Company and each
Company Subsidiary as currently conducted does not, and will not, assuming
such business is conducted by the Surviving Corporation in substantially
the same manner following the Closing, infringe on any Intellectual
Property rights of others, violate any right of any Person (including any
right to privacy or publicity), or constitute unfair competition or trade
practices under the laws of any jurisdiction in any material respect.
Neither the Company nor any Company Subsidiary has received any written
notice of infringement, misappropriation, or violation of or challenge to,
and there are no claims pending or, to the Company's knowledge, threatened
with respect to the rights of others to the use of, any Company
Intellectual Property that, in any such case, individually or in the
aggregate, would be reasonably likely to have a Company Material Adverse
Effect. The Company Intellectual Property is not subject to any outstanding
injunction, judgment, order, decree, ruling or charge.
(d) To the best of the Company's knowledge, no third
party is infringing upon any of the Company Intellectual Property, and the
Company has not notified any third party that it believes such third party
is interfering with, infringing, or misappropriating any of the Company
Intellectual Property or engaging in any act of unfair competition. The
Company has the right to bring an action for the infringement of all of the
Company Intellectual Property.
(e) All necessary registration, maintenance, and renewal
fees in connection with Company Intellectual Property that is registered
and owned by the Company or any Company Subsidiary have been filed with
relevant patent, copyright, trademark or other authorities in the United
States and any other country for the purposes of maintaining such Company
Intellectual Property. In each case where the Company or any Company
Subsidiary has acquired any Intellectual Property from any Person, the
Company or any Company Subsidiary has obtained a valid and enforceable
assignment sufficient to irrevocably transfer all rights acquired in such
Intellectual Property to the Company or Company Subsidiary, as applicable.
(f) The Company and each Company Subsidiary have taken
all commercially reasonable steps that are required to protect the Company
and each Company Subsidiary's rights in confidential information and trade
secrets of the Company and each Company Subsidiary or provided by any other
Person to the Company or any Company Subsidiary. Without limiting the
foregoing, the Company and each Company Subsidiary have and enforce a
policy requiring each employee, director, consultant and contractor to
execute a confidentiality and non-disclosure agreement substantially in the
form previously provided to Acquiror, and each present and former employee,
director, consultant and contractor has executed such an agreement.
(g) Neither this Merger Agreement nor the transactions
contemplated by this Merger Agreement, including the assignment to
Acquiror, by operation of law or otherwise, of any Agreements to which the
Company is a party, will result in (i) the Surviving Corporation granting
to any third party any right to any Intellectual Property right owned by,
or licensed to, the Surviving Corporation, (ii) the Surviving Corporation
being bound by, or subject to, any non-compete or other restriction on the
operation or scope of the Surviving Corporation's business, or (iii) the
Surviving Corporation being obligated to pay any royalties or other amounts
to any third party in excess of those payable by the Surviving Corporation
prior to the Closing. Neither the Company nor any Company Subsidiary will
be, as a result of the execution and delivery of this Merger Agreement or
the performance of its obligations hereunder, in breach of any license,
sublicense or other Agreement relating to the Company Intellectual
Property.
(h) Schedule 3.17(h) of the Company Disclosure Schedule
sets forth a complete and correct list of all contracts, licenses, and
Agreements relating to the Company Intellectual Property which is not
readily available on the open market for such Intellectual Property at
market prices and is materially necessary for the operation of the Company
and the Company Subsidiaries in the Ordinary Course of Business to which
the Company or any Company Subsidiary is a party or to which the Company or
any Company Subsidiary is bound. Neither the Company nor any Company
Subsidiary is in breach and neither the Company nor any Company Subsidiary
has failed to perform under any of the foregoing contracts, licenses or
Agreements and, to the Company's knowledge, no other party to any such
contract, license, or Agreement is in breach thereof or has failed to
perform thereunder, and, to the Company's knowledge, there are no
threatened disputes or disagreements with respect to such contracts,
licenses, or Agreements. No person who has licensed Intellectual Property
to the Company or any Company Subsidiary has ownership rights or license
rights to improvements made by the Company or any Company Subsidiary in
such Intellectual Property.
(i) No Person other than the Company or the Company
Subsidiaries has any right or interest of any kind or nature in or with
respect to the Company Intellectual Property that is owned by the Company
or the Company Subsidiaries or any portion thereof or any rights to sell,
license, lease, transfer, use or otherwise exploit such Company
Intellectual Property or any portion thereof.
(j) Schedule 3.17(j) of the Company Disclosure Schedule
sets forth a complete and correct list of (i) all Persons other than the
Company or the Company Subsidiaries who have been provided with source code
or have claimed a right to be provided with any source code for any Company
Intellectual Property that is owned by the Company or the Company
Subsidiaries which is not readily obtainable on the open market for such
Intellectual Property at market prices and is materially necessary for the
operation of the Company and the Company Subsidiaries in the Ordinary
Course of Business (the "Company Owned Software"), and (ii) all source code
escrow agreements relating to any of the Company Owned Software. No Person
other than the Company and the Company Subsidiaries is in possession of, or
has or has had access to, or has made any demand for access to any source
code for Company Owned Software.
SECTION 3.18. Environmental Matters.
Except as would not be reasonably expected to have a
Company Material Adverse Effect:
(a) The Company and each Company Subsidiary have complied
and are in compliance with, and the Company Real Property and all
improvements thereon are in compliance with, all Environmental Laws.
(b) Neither the Company nor any Company Subsidiary has
any liability, known or unknown, contingent or absolute, under any
Environmental Law, nor is the Company or any Company Subsidiary responsible
for any such liability of any other person under any Environmental Law,
whether by contract, by operation of law or otherwise. There are no pending
or, to the knowledge of the Company, threatened Environmental Claims, and
neither the Company nor any Company Subsidiary has received any notice of
any Environmental Claim from any governmental authority or any other person
or entity or knows or is aware of any fact(s) which might reasonably form
the basis for any such Environmental Claim.
(c) The Company and the Company Subsidiaries have been
duly issued, and currently have and will maintain through the Closing Date,
all Environmental Permits necessary to operate the business or Assets of
the Company as currently operated. A complete and correct list of all such
Environmental Permits, all of which are valid and in full force and effect,
is set forth in Schedule 3.18(c) of the Company Disclosure Schedule. The
Company and the Company Subsidiaries have timely filed applications for all
Environmental Permits. All of the Environmental Permits set forth in
Schedule 3.18(c) of the Company Disclosure Schedule are transferable and
none require consent, notification, or other action to remain in full force
and effect following consummation of the transactions contemplated hereby.
(d) The Company Real Property contains no underground
improvements, including but not limited to treatment or storage tanks, or
underground piping associated with such tanks, used currently or in the
past for the management of Hazardous Materials, and no portion of the
Company Real Property is or has been used as a dump or landfill or consists
of or contains filled in land or wetlands. With respect to any real
property formerly owned, operated, or leased by the Company or the Company
Subsidiaries, during the period of such ownership, operation or tenancy, no
portion of such property was used as a dump or landfill, and the Company is
not aware of any such use at any time prior to its ownership, operation, or
tenancy of such real property. Neither PCBs nor asbestos-containing
materials are present on or in the Company Real Property or the
improvements thereon. There has been no Release of Hazardous Materials at,
on, under, or from the real property currently owned, used or operated by
the Company or any Company Subsidiary, nor was there such a Release at any
real property formerly owned, operated or leased by the Company during the
period of such ownership, operation, or tenancy, such that the Company is
or could be liable for Remediation with respect to such Hazardous
Materials.
(e) The Company has furnished to Acquiror copies of all
environmental assessments, reports, audits and other documents in its
possession or under its control that relate to the Company Real Property,
or the Company or any Company Subsidiary's compliance with Environmental
Laws, or any other real property that the Company or the Company
Subsidiaries formerly owned, operated, or leased. Any information the
Company or the Company Subsidiaries has furnished to Acquiror concerning
the environmental conditions of the Company Real Property, prior uses of
the Company Real Property, and the operations of the Company or the Company
Subsidiaries related to compliance with Environmental Laws is accurate and
complete.
(f) No Company Real Property, and no property to which
Hazardous Materials originating on or from such properties or the
businesses or Assets of the Company or any Company Subsidiary has been sent
for treatment or disposal, is listed or proposed to be listed on the
National Priorities List or CERCLIS or on any other governmental database
or list of properties that may or do require Remediation under
Environmental Laws.
(g) No Encumbrance in favor of any person relating to or
in connection with any Environmental Claim has been filed or has attached
to the Company Real Property.
(h) No authorization, notification, recording, filing,
consent, waiting period, Remediation, or approval with respect to the
Company or any Company Subsidiary is required under any Environmental Law
in order to consummate the transaction contemplated hereby.
(i) For purposes of this Section 3.18, "Company
Subsidiary" shall include Fresh Air Solutions, L.P., a Pennsylvania limited
partnership, to the extent that the Company or any other Company Subsidiary
has any liability arising out of, or related to, such entity.
SECTION 3.19. Finders' Fees; Opinions of Financial Advisor.
(a) Except for Credit Suisse First Boston Corporation,
there is no investment banker, broker, finder or other intermediary that
has been retained by, or is authorized to act on behalf of, the Company or
any Company Subsidiary who might be entitled to any fee or commission from
Acquiror or any of its affiliates upon consummation of the transactions
contemplated by this Merger Agreement.
(b) The Company has received the opinion of Credit Suisse
First Boston Corporation, dated as of the date hereof, to the effect that,
as of such date, the Common Stock Merger Consideration is fair, from a
financial point of view, to the holders of the Company Common Stock (other
than Apollo Investment Fund IV, L.P., Apollo Overseas Partners IV, L.P. and
AIF IV/RRRR LLC).
SECTION 3.20. Required Vote; Board Approval.
(a) The only votes of the holders of any class or series
of capital stock of the Company required by the Company's certificate of
incorporation and bylaws, any Agreement binding on the Company, law, rule
or regulation to approve this Merger Agreement and/or any of the other
transactions contemplated hereby are the affirmative vote of the holders of
more than fifty percent of the votes entitled to be cast by all holders of
the outstanding Company Common Stock and Company Preferred Stock and the
consent of the holders of a majority of the outstanding shares of Company
Preferred Stock (the "Company Stockholder Approval").
(b) Upon the unanimous recommendation of the Special
Committee, the Company's Board of Directors has unanimously (i) determined
that this Merger Agreement and the transactions contemplated hereby,
including the Merger, are advisable and in the best interests of the
Company and the Company's Common Stockholders (ii) approved this Merger
Agreement and the transactions contemplated hereby and (iii) resolved to
recommend to such Company's Common Stockholders that they vote in favor of
adopting and approving this Merger Agreement in accordance with the terms
hereof.
SECTION 3.21. State Takeover Statutes.
The Company has taken all actions required to be taken by
it (a) in order to approve the execution of the Company Voting Agreement
for purposes of Section 203(a) of Delaware Law and (b) so that the
restrictions on "business combination" contained in Section 203 of Delaware
Law do not apply to this Merger Agreement, the Merger, the Company Voting
Agreement or any of the transactions contemplated by any of the foregoing.
No other "control share acquisition," "fair price" or other anti-takeover
laws or regulations enacted under state or federal laws in the United
States apply to this Merger Agreement or any of the transactions
contemplated hereby.
SECTION 3.22. Certain Agreements.
None of the Company, any Company Subsidiary or any of
their respective affiliates are parties to or otherwise bound by any
Agreement or arrangement that limits or otherwise restricts, in any
material respect, the Company, any Company Subsidiary or any of their
respective affiliates from engaging or competing in any line of business or
in any locations.
SECTION 3.23. Foreign Currency Exposure.
No more than ten percent (10%) of the Company's
consolidated revenues set forth on the Company Balance Sheet are derived
from the operations of the Company and the Company Subsidiaries outside of
the United States.
SECTION 3.24. Insurance.
The Company maintains fire and casualty, general
liability, business interruption, product liability, professional liability
and sprinkler and water damage insurance policies with reputable insurance
carriers, which provide full and adequate coverage for all normal risks
incident to the business of the Company and the Company Subsidiaries and
their respective properties and assets and are in character and amount
similar to that carried by entities engaged in similar business and subject
to the same or similar perils or hazards. None of the insurance policies
maintained by the Company are "claims made" policies.
SECTION 3.25. Customers, Distributors and Suppliers.
Schedule 3.25 of the Company Disclosure Schedule sets
forth a complete and correct list of the names of each (a) customer,
distributor, and other agent and representative to whom the Company and/or
the Company Subsidiaries made sales in excess of $1,000,000 during the most
recently complete fiscal year, showing the approximate total sales in
dollars by the Company and/or the Company Subsidiaries to each such Person
during such period, (b) supplier from whom the Company and/or the Company
Subsidiaries purchased more than $1,000,000 of supplies during the most
recently completed fiscal year, showing the approximate total purchases in
dollars from each such Person during such period, and (c) customer,
distributor, and other agent and representative and supplier with whom the
Company and/or the Company Subsidiaries have a dispute as of the date
hereof with respect to payables or receivables in excess of $250,000 for
any such dispute, with a description of the dispute.
SECTION 3.26. Relations with Governments.
Neither the Company, any Company Subsidiary nor, to the
knowledge of the Company, any of the Company's or any Company Subsidiary's
officers, directors, employees or agents (or stockholders, distributors,
representatives or other persons acting on the express, implied or apparent
authority of the Company or any Company Subsidiary) have paid, given or
received or have offered or promised to pay, give or receive, any bribe or
other unlawful payment of money or other thing of value, any unlawful
discount, or any other unlawful inducement, to or from any person or
Governmental Entity in the United States or elsewhere in connection with or
in furtherance of the business of the Company or any Company Subsidiary
(including, without limitation, any offer, payment or promise to pay money
or other thing of value (a) to any foreign official, political party (or
official thereof) or candidate for political office for the purposes of
influencing any act, decision or omission in order to assist the Company or
any Company Subsidiary in obtaining business for or with, or directing
business to, any person, or (b) to any person, while knowing that all or a
portion of such money or other thing of value will be offered, given or
promised to any such official or party for such purposes). Neither the
business of the Company nor any Company Subsidiary is in any manner
dependent upon the making or receipt of such payments, discounts or other
inducements except for minimal payments, discounts or inducements. Neither
the Company nor any Company Subsidiary has otherwise taken any action that
would cause the Company or any Company Subsidiary to be in violation of the
Foreign Corrupt Practices Act of 1977, as amended, or any applicable Laws
of similar effect.
SECTION 3.27. Affiliates.
Except as set forth in Schedule 3.27 of the Company
Disclosure Schedule (the "Company Affiliates"), there are no affiliates of
the Company as of the date hereof as that term is used in SEC Rule 145.
SECTION 3.28. Current Cash Reserves; Indebtedness.
As of April 30, 2001, the aggregate amount, as would be
reflected in a consolidated balance sheet as of such date prepared in
accordance with GAAP consistently applied, of (i) cash and cash
equivalents, plus (ii) short-term investments of the Company with a
maturity of three years or less ((i) and (ii) "Current Cash Reserves") is
at least One Hundred Four Million Dollars ($104,000,000). The Company owns
all such Current Cash Reserves free and clear of all Encumbrances except as
set forth in Schedule 3.28 of the Company Disclosure Schedule. As of the
date of this Merger Agreement, neither the Company nor any Company
Subsidiary has any Indebtedness except as set forth in Schedule 3.28 of the
Company Disclosure Schedule.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF ACQUIROR
Except as disclosed in the Acquiror Disclosure Schedule
(the "Acquiror Disclosure Schedule") delivered to the Company separately
prior to, or contemporaneously with, the date hereof (which disclosure
schedule shall make a specific reference to the particular Section or
subsection of this Merger Agreement to which exception is being taken),
Acquiror represents and warrants to the Company that:
SECTION 4.01. Corporate Existence and Power.
Acquiror is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware, and
has all corporate powers required to carry on its business as now
conducted. Acquiror is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of its
activities makes such qualification necessary, except where the failure to
be so qualified, individually or in the aggregate, would not be reasonably
likely to have an Acquiror Material Adverse Effect. Schedule 4.01 of the
Acquiror Disclosure Schedule sets forth a complete and correct list of the
states in which Acquiror is qualified to do business as a foreign
corporation. Acquiror has heretofore made available to the Company true and
complete copies of Acquiror's certificate of incorporation and bylaws as
currently in effect.
SECTION 4.02. Corporate Authorization.
(a) The execution, delivery and performance by Acquiror
of this Merger Agreement and the consummation by Acquiror of the
transactions contemplated hereby are within Acquiror's corporate powers
and, except for the Acquiror Stockholder Approval, have been duly
authorized by all necessary corporate action. Assuming that this Merger
Agreement constitutes the valid and binding obligation of the Company, this
Merger Agreement constitutes a valid and binding agreement of Acquiror,
enforceable in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and similar laws, now or hereafter
in effect, relating to or affecting creditors' rights and remedies and to
general principles of equity.
(b) The execution, delivery and performance by Merger Sub
of this Merger Agreement and the consummation by Merger Sub of the
transactions contemplated hereby are within Merger Sub's corporate powers
and, except for the Merger Sub Stockholder Approval, have been duly
authorized by all necessary corporate action. Assuming that this Merger
Agreement constitutes the valid and binding obligation of the Company, this
Merger Agreement constitutes a valid and binding agreement of Merger Sub,
enforceable in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and similar laws, now or hereafter
in effect, relating to or affecting creditors' rights and remedies and to
general principles of equity.
SECTION 4.03. Governmental Authorization.
The execution, delivery and performance by Acquiror of
this Merger Agreement and the consummation by Acquiror of the transactions
contemplated hereby require no action by or in respect of, or filing with,
any Governmental Entity (including, without limitation, the FCC) other than
(a) the filing of (i) a certificate of merger and the Restated Charter in
accordance with Delaware Law and (ii) appropriate documents with the
relevant authorities of other states or jurisdictions in which Acquiror or
any Acquiror Subsidiary is qualified to do business; (b) compliance with
any applicable requirements of the HSR Act; (c) compliance with any
applicable requirements of the Securities Act and the Exchange Act; (d)
compliance with any applicable state securities or blue sky laws; and (e)
such other consents, approvals, actions, orders, authorizations,
registrations, declarations and filings that, if not obtained or made,
would not, individually or in the aggregate, (i) be reasonably likely to
have an Acquiror Material Adverse Effect, or (ii) prevent or materially
impair the ability of Acquiror to consummate the transactions contemplated
by this Merger Agreement.
SECTION 4.04. Non-Contravention.
The execution, delivery and performance by Acquiror of
this Merger Agreement and the consummation by Acquiror of the transactions
contemplated hereby do not and will not (a) contravene or conflict with
Acquiror's or any Acquiror Subsidiary's certificate of incorporation or
bylaws, (b) assuming compliance with the matters referred to in Section
4.03, contravene or conflict with or constitute a violation of any
provision of any law, regulation, judgment, injunction, order or decree
binding upon or applicable to Acquiror or any Acquiror Subsidiary, (c)
constitute a default under or give rise to a right of termination,
cancellation or acceleration of any right or obligation of Acquiror or any
Acquiror Subsidiary or to a loss of any benefit or status to which Acquiror
or any Acquiror Subsidiary is entitled under any provision of any Agreement
binding upon Acquiror or any Acquiror Subsidiary or any license, franchise,
permit or other similar authorization held by Acquiror or any Acquiror
Subsidiary, or (d) result in the creation or imposition of any Lien on any
asset of Acquiror or any Acquiror Subsidiary other than, in the case of
each of (b), (c) and (d), any such items that would not, individually or in
the aggregate (i) be reasonably likely to have an Acquiror Material Adverse
Effect or (ii) prevent or materially impair the ability of Acquiror to
consummate the transactions contemplated by this Merger Agreement. Copies
of consents executed by respective agents of banks and guarantors required
to be obtained in order for Acquiror to issue the Discrepancy Notes and to
execute this Merger Agreement, and consummate the transactions contemplated
hereby and thereby, under Acquiror's existing term and revolving credit
facilities have been obtained and copies of such consents have been
provided to the Company and such consents are in full force and effect.
SECTION 4.05. Capitalization.
(a) As of the date hereof, the authorized capital stock
of Acquiror consists of 150,000,000 shares of Acquiror Common Stock and
200,000 shares of Acquiror Preferred Stock. As of May 7, 2001, there were
outstanding (i) 49,663,602 shares of Acquiror Common Stock, (ii) no shares
of preferred stock, par value $.01, of Acquiror (the "Acquiror Preferred
Stock"), (iii) stock options to purchase an aggregate of 5,112,854 shares
of Acquiror Common Stock (of which options to purchase an aggregate of
2,495,449 shares of Acquiror Common Stock are exercisable as of May 7,
2001) and (iv) warrants to purchase an aggregate of 12,802,581 shares of
Acquiror Common Stock. All outstanding shares of capital stock of Acquiror
have been duly authorized and validly issued and are fully paid and
nonassessable.
(b) As of the date hereof, except (i) as set forth in
Section 4.05(a), and (ii) for changes since May 7, 2001, resulting only
from the exercise of stock options or warrants outstanding on such date and
referred to in Section 4.05(a)(iii) or Section 4.05(a)(iv), there are no
outstanding (x) shares of capital stock or other voting securities of
Acquiror, (y) securities of Acquiror convertible into or exchangeable for
shares of capital stock or voting securities of Acquiror, or (z) options or
other rights to acquire from Acquiror, and no obligation of Acquiror to
issue, any capital stock, voting securities or securities convertible into
or exchangeable for capital stock or voting securities of Acquiror (the
items in clauses (x), (y) and (z) being referred to collectively as the
"Acquiror Securities"). There are no outstanding obligations of Acquiror or
any Acquiror Subsidiary to repurchase, redeem or otherwise acquire any
Acquiror Securities. There are no outstanding Agreements or other
understandings or commitments of any kind of Acquiror or any Acquiror
Subsidiary to provide funds to, or make any investment (in the form of a
loan, capital contribution or otherwise) in, any other Person. Except as
contemplated by this Merger Agreement, there are no stockholder agreements,
voting trusts or other agreements or understandings to which Acquiror or
any Acquiror Subsidiary is a party relating to voting, registration or
disposition of any shares of capital stock of Acquiror or any Acquiror
Subsidiary or granting to any person or group of persons the right to
elect, or to designate or nominate for election, a director to the board of
directors of Acquiror. Holders of options, warrants or other rights to
acquire, or securities convertible into or exchangeable for, Acquiror
Securities are not entitled to adjustments to the number of Acquiror
Securities underlying such options, warrants or other rights or convertible
or exchangeable securities, or to adjustments to respective exercise or
conversion prices, by reason of the issuance of Acquiror Series A Preferred
Stock in the Merger.
(c) Neither Acquiror nor Merger Sub owns any Company
Securities.
SECTION 4.06. Subsidiaries.
(a) Each Acquiror Subsidiary is a corporation duly
incorporated or an entity duly organized, and is validly existing and in
good standing under the laws of its jurisdiction of incorporation or
organization, has all powers and authority and all material governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted and is duly qualified to do business as a foreign
entity and is in good standing in each jurisdiction where the character of
the property owned or leased by it or the nature of its activities makes
such qualification necessary, in each case with such exceptions as,
individually or in the aggregate, would not be reasonably likely to have,
an Acquiror Material Adverse Effect. Schedule 4.06 of the Acquiror
Disclosure Schedule sets forth a complete and correct list of the states in
which each Acquiror Subsidiary is qualified to do business.
(b) All of the outstanding shares of capital stock of, or
other ownership interest in, each Acquiror Subsidiary has been validly
issued and is fully paid and nonassessable. All of the outstanding capital
stock of, or other ownership interest in, each Acquiror Subsidiary, that is
owned, directly or indirectly, by Acquiror, is owned free and clear of any
Encumbrance and free of any other limitation or restriction (including any
limitation or restriction on the right to vote, sell or otherwise dispose
of such capital stock or other ownership interests). There are no
outstanding (i) securities of Acquiror or any Acquiror Subsidiary
convertible into or exchangeable or exercisable for shares of capital stock
or other voting securities or ownership interests in any Acquiror
Subsidiary, (ii) options, warrants or other rights to acquire from Acquiror
or any Acquiror Subsidiary, and no other obligation of Acquiror or any
Acquiror Subsidiary to issue, any capital stock, voting securities or other
ownership interests in, or any securities convertible into or exchangeable
or exercisable for any capital stock, voting securities or ownership
interests in, any Acquiror Subsidiary or (iii) obligations of Acquiror or
any Acquiror Subsidiary to repurchase, redeem or otherwise acquire any
outstanding securities of any Acquiror Subsidiary or any capital stock of,
or other ownership interests in, any Acquiror Subsidiary.
(c) There are no outstanding obligations of Acquiror or
any Acquiror Subsidiary requiring Acquiror or any Acquiror Subsidiary to
make any investment in any other Person.
SECTION 4.07. Acquiror SEC Documents.
(a) Acquiror has made available to the Company the
Acquiror SEC Documents. Acquiror has filed all reports, filings,
registration statements and other documents required to be filed by it with
the SEC since January 1, 1999. No Acquiror Subsidiary is subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act and no
Acquiror Subsidiary is an investment company registered or required to be
registered under the Investment Company Act of 1940.
(b) As of its filing date, each Acquiror SEC Document
complied as to form in all material respects with the applicable
requirements of the Securities Act and/or the Exchange Act, as the case may
be.
(c) No Acquiror SEC Document filed pursuant to the
Exchange Act contained, as of its filing date, any untrue statement of a
material fact or omitted to state any material fact necessary in order to
make the statements made therein, in the light of the circumstances under
which they were made, not misleading. No Acquiror SEC Document, as amended
or supplemented, if applicable, filed pursuant to the Securities Act
contained, as of the date such document or amendment became effective, any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading.
SECTION 4.08. Financial Statements; No Material Undisclosed
Liabilities.
(a) The audited consolidated financial statements and
unaudited consolidated interim financial statements of Acquiror included in
the Acquiror 10-K and the Acquiror 10-Q fairly present in all material
respects, in conformity with GAAP (except as may be indicated in the notes
thereto and except that financial statements included in the Acquiror 10-Q
do not contain all GAAP notes to such financial statements), the
consolidated financial position of Acquiror and its consolidated Acquiror
Subsidiaries as of the dates thereof and their consolidated results of
operations and changes in financial position for the periods then ended
(subject to normal year-end adjustments in the case of any unaudited
interim financial statements).
(b) There are no liabilities of Acquiror or any Acquiror
Subsidiary of any kind whatsoever, whether accrued, contingent, absolute,
determined, determinable or otherwise, in each case, that are required by
GAAP to be set forth on a consolidated balance sheet of Acquiror, other
than:
(i) liabilities or obligations disclosed or
provided for in the Acquiror Balance Sheet or disclosed in the notes
thereto;
(ii) liabilities or obligations under this
Merger Agreement or incurred in connection with the transactions
contemplated hereby;
(iii) liabilities or obligations incurred in the
Ordinary Course of Business; provided, that, any such liabilities or
obligations, whether or not incurred in the Ordinary Course of Business,
constituting Indebtedness shall be disclosed pursuant to Section 4.08(b)(i)
to the extent that such Indebtedness matures or requires scheduled payments
to be made on or before the date which is 365 days after the End Date; and
(iv) liabilities or obligations not required to
be disclosed (due solely to materiality, knowledge or other applicable
qualifiers or dollar limitations) in the Acquiror Disclosure Schedule
pursuant to the terms of the applicable provisions requiring such
disclosure; provided, that, such liabilities or obligations in the
aggregate do not result in an Acquiror Material Adverse Effect.
SECTION 4.09. Information to Be Supplied.
(a) The information to be supplied by Acquiror expressly
for inclusion or incorporation by reference in the Joint Proxy Statement
will (i) in the case of the Registration Statement, at the time it becomes
effective, not 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 and (ii) in the case of the
remainder of the Joint Proxy Statement, at the time of the mailing thereof,
and at the time of the Acquiror Stockholders Meeting, not 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. The Joint Proxy Statement will comply (with respect to
information relating to Acquiror) as to form in all material respects with
the provisions of the Securities Act and the Exchange Act.
(b) Notwithstanding the foregoing, Acquiror makes no
representation or warranty with respect to any statements made or
incorporated by reference in the Joint Proxy Statement based on information
supplied by the Company.
SECTION 4.10. Absence of Certain Changes.
Since December 31, 2000, except as otherwise expressly
contemplated by this Merger Agreement, Acquiror and the Acquiror
Subsidiaries have conducted their business only in the ordinary course
consistent with past practice and, since such date, there has not been (a)
any damage, destruction or other casualty loss (whether or not covered by
insurance) affecting the business or Assets of Acquiror or any Acquiror
Subsidiary that, individually or in the aggregate, has had or would be
reasonably likely to have an Acquiror Material Adverse Effect, (b) any
change in the business, operations, properties, condition (financial or
otherwise), Assets or liabilities (including, without limitation,
contingent liabilities) of Acquiror or any Acquiror Subsidiary having,
individually or in the aggregate, an Acquiror Material Adverse Effect, (c)
any action, event, occurrence, development or state of circumstances or
facts that, individually or in the aggregate, has had or would be
reasonably likely to have an Acquiror Material Adverse Effect, or (d) any
Agreement by Acquiror or any Acquiror Subsidiary to take any of the actions
described in this Section 4.10 except as expressly contemplated by this
Merger Agreement. Between December 31, 2000 and the date of this Merger
Agreement, neither Acquiror nor any Acquiror Subsidiary has taken, or
agreed to take, any action that would constitute a material breach of
Section 5.02 if taken after the date of this Merger Agreement.
SECTION 4.11. Litigation.
As of the date hereof, there is no action, suit,
investigation, arbitration or proceeding pending against, or to the
knowledge of Acquiror threatened against, Acquiror or any Acquiror
Subsidiary or any of their respective assets or properties before any
arbitrator or Governmental Entity which would reasonably be expected to
result in monetary damages in excess of $100,000 or any restriction, in any
material respect, on the business or operations of Acquiror or any Acquiror
Subsidiary. None of the foregoing matters would be reasonably likely to
have an Acquiror Material Adverse Effect. There are no outstanding
injunctions against Acquiror or any Acquiror Subsidiary, and there are no
outstanding judgments, decrees, awards or orders with respect to Acquiror
or any Acquiror Subsidiary which have not been satisfied and complied with
in full or which require Acquiror or an Acquiror Subsidiary to take, or
refrain from taking, action in the future.
SECTION 4.12. Contracts.
(a) As of the date hereof, the exhibit index to
Acquiror's most recently filed Annual Report on Form 10-K, as supplemented
by Schedule 4.12(a) of the Acquiror Disclosure Schedule, includes each
contract (including all amendments thereto) to which Acquiror or any
Acquiror Subsidiaries is a party or by which any of them is bound and (i)
which would be required, pursuant to the Exchange Act and the rules and
regulations thereunder, to be filed as an exhibit to an Annual Report of
Acquiror on Form 10-K, a Quarterly Report of Acquiror on Form 10-Q or a
Current Report of Acquiror on Form 8-K (without regard to whether such
report is now due to be filed) or (ii) involves payments by or to Acquiror
or any Acquiror Subsidiary in excess of $1 million in calendar year 2001 or
any subsequent calendar year (collectively, the "Acquiror Contracts").
Schedule 4.12(a) of the Acquiror Disclosure Schedule indicates which of the
Acquiror Contracts have terminated, and which of the Acquiror Contracts are
scheduled to terminate in accordance with their respective terms, in 2001.
(b) Each Acquiror Contract is in full force and effect,
constitutes a valid and binding obligation of and is legally enforceable in
accordance with its terms against Acquiror or any Acquiror Subsidiary, as
applicable, and, to the knowledge of Acquiror, (i) the Acquiror Contracts
are valid, binding and enforceable obligations of the other parties
thereto, except as such enforceability may be subject to the effects of any
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or similar Laws affecting creditors' rights generally or subject
to the effects of general equitable principles (whether considered in a
proceeding in equity or at law); (ii) Acquiror and/or each Acquiror
Subsidiary, as the case may be, has complied with all of the provisions of
such Acquiror Contracts and is not in default thereunder, and there has not
occurred any event which (whether with or without notice, lapse of time, or
the happening or occurrence of any other event) would constitute such a
default, and the execution of this Merger Agreement by Acquiror and its
performance hereunder will not cause, or result in, a breach or default
under any Acquiror Contract; (iii) there has not been (A) any failure by
Acquiror or any Acquiror Subsidiary or, to the knowledge of Acquiror or any
Acquiror Subsidiary, any other party to any such Acquiror Contract to
comply with all material provisions thereof, (B) any default by Acquiror or
any Acquiror Subsidiary or, to the knowledge of Acquiror or any Acquiror
Subsidiary, any other party thereunder or (C) to the knowledge of Acquiror
(1) any cancellation thereof in writing which has not been cured or (2) any
outstanding dispute thereunder which has not been cured.
(c) Neither Acquiror nor any Acquiror Subsidiary is a
guarantor or otherwise liable for any liability or obligation (including
Indebtedness) of any Person other than a wholly owned subsidiary of
Acquiror.
(d) No officer, director or significant stockholder of
Acquiror or any Acquiror Subsidiary, or affiliate of such officer, director
or significant stockholder, is currently a party to any transaction,
understanding or commitment with Acquiror or any Acquiror Subsidiary,
including, without limitation, any Agreement providing for the employment
of, furnishing of services by, rental of Assets from or to, requiring
payments on a change of control of Acquiror or otherwise requiring payments
to, any such officer, director, significant stockholder or affiliate,
except for the payment of benefits to officers or directors in the Ordinary
Course of Business.
(e) Neither Acquiror nor any Acquiror Subsidiary is a
party to any contract with the United States government or to any other
material Government Contract.
SECTION 4.13. Taxes.
Except as would not be reasonably expected to have an
Acquiror Material Adverse Effect:
(a) All Acquiror Tax Returns required to be filed with
any Taxing authority by, or with respect to, Acquiror and the Acquiror
Subsidiaries have been filed in substantial compliance with all applicable
laws.
(b) Acquiror and the Acquiror Subsidiaries have timely
paid all Taxes shown as due and payable on the Acquiror Tax Returns that
have been so filed and all other Taxes not subject to reporting
obligations, and, as of the time of filing, the Acquiror Tax Returns were
complete and correct (other than Taxes that are being contested in good
faith and for which adequate reserves are reflected on the Acquiror Balance
Sheet in accordance with GAAP).
(c) Acquiror and the Acquiror Subsidiaries have made
adequate provision in accordance with GAAP for all Taxes payable by them
for which no Acquiror Tax Return has yet been filed.
(d) Acquiror and the Acquiror Subsidiaries have complied
in all material respects with all applicable laws, rules and regulations
relating to the payment and withholding of Taxes.
(e) Acquiror has not received written notice of any
action, suit, proceeding, audit or claim now proposed or pending against or
with respect to Acquiror or any Acquiror Subsidiary in respect of any Tax
that would have an Acquiror Material Adverse Effect.
(f) Neither Acquiror nor any Acquiror Subsidiary has been
a member of an affiliated, consolidated, combined or unitary group other
than one of which Acquiror was the common parent.
(g) Neither Acquiror nor any of the Acquiror Subsidiaries
holds any asset subject to a consent under Section 341(f) of the Code.
(h) The federal income Tax Returns have been examined and
settled with the IRS (or the applicable statute of limitations for the
assessment of federal income Taxes for such periods have expired) for all
years through 1996. The parties acknowledge that certain net operating loss
carry overs generated prior to 1997 may be unavailable in either 1997 or in
subsequent years.
(i) There are no material Encumbrances for Taxes on any
of the assets of Acquiror or any Acquiror Subsidiary.
(j) Neither Acquiror nor any Acquiror Subsidiary is a
party to any tax allocation, tax sharing, tax indemnity or similar
agreement (whether or not in writing), arrangement or practice with respect
to Taxes (including any adverse pricing agreement, closing agreement or
other agreement relating to Taxes with any taxing authority), except among
themselves.
SECTION 4.14. Employee Benefits.
(a) Schedule 4.14(a) of the Acquiror Disclosure Schedule
sets forth a complete and correct list identifying each material "employee
benefit plan," as defined in Section 3(3) of the ERISA, each employment,
severance or similar contract, plan, arrangement or policy and each other
plan or arrangement (written or oral) providing for compensation, bonuses,
profit-sharing, stock option or other stock related rights or other forms
of incentive or deferred compensation, vacation benefits, insurance
coverage (including any self-insured arrangements), health or medical
benefits, disability benefits, workers' compensation, supplemental
unemployment benefits, severance benefits and post-employment or retirement
benefits (including compensation, pension, health, medical or life
insurance benefits) that is maintained, administered or contributed to by
Acquiror or any ERISA Affiliate and covers any employee, former employee,
officer, director or other service provider of Acquiror or any Acquiror
Subsidiary. Copies of such plans (and, if applicable, related trust
agreements) and all amendments thereto and written interpretations thereof
have been furnished to the Company together with the most recent annual
report (Form 5500 including all applicable schedules thereto) and summary
plan description prepared in connection with any such plan. Such plans are
referred to collectively herein as the "Acquiror Benefit Plans."
(b) No Acquiror Benefit Plan constitutes a Multiemployer
Plan or a Retirement Plan, including any terminated Acquiror Benefit Plans.
Neither Acquiror nor any of its ERISA Affiliates has incurred any liability
under Title IV of ERISA arising in connection with the termination of, or
complete or partial withdrawal from, any plan covered or previously covered
by Title IV of ERISA. Nothing has been done or omitted to be done and no
transaction or holding of any asset under or in connection with any
Acquiror Benefit Plan has occurred that will make Acquiror or any Acquiror
Subsidiary, or any officer or director of Acquiror or any Acquiror
Subsidiary, subject to any liability under Title I of ERISA or liable for
any tax pursuant to Section 4975 of the Code (assuming the taxable period
of any such transaction expired as of the date hereof) that would be
reasonably likely to have an Acquiror Material Adverse Effect.
(c) Each Acquiror Benefit Plan that is intended to be
qualified under Section 401(a) of the Code is so qualified and has been so
qualified during the period from its adoption to date, and each trust
forming a part thereof is exempt from tax pursuant to Section 501(a) of the
Code. Acquiror has furnished to the Company copies of the most recent
Internal Revenue Service determination letters, if any, with respect to
each such Acquiror Benefit Plan. Each Acquiror Benefit Plan has been
maintained in substantial compliance with its terms and with the
requirements prescribed by any and all statutes, orders, rules and
regulations, including but not limited to ERISA and the Code, which are
applicable to such Acquiror Benefit Plan except for any compliance failures
that are not reasonably likely to have an Acquiror Material Adverse Effect.
(d) There is no contract, agreement, plan or arrangement
that, as a result of the Merger, would obligate Acquiror to make any
payment of any amount that would not be deductible pursuant to the terms of
Section 162(m) or Section 280G of the Code.
(e) There has been no amendment to, written
interpretation or announcement (whether or not written) relating to, or
change in employee participation or coverage under, any Acquiror Benefit
Plan that would increase the expense of maintaining such Acquiror Benefit
Plan above the level of the expense incurred in respect thereof for the
fiscal year ended December 31, 2000 except for any increase that is not
reasonably likely to have an Acquiror Material Adverse Effect.
(f) Neither Acquiror nor any ERISA Affiliate has any
liability under any Acquiror Benefit Plan that is not a Retirement Plan
that provides for continuing benefits or coverage for any participant or
any beneficiary of a participant after such participant's termination of
employment, except as may be required by Section 4980B of the Code or
Section 601 (et seq.) of ERISA, or under any applicable state law, and at
the expense of the participant or the beneficiary of the participant. No
Acquiror Benefit Plan is a VEBA or an ESOP.
(g) Acquiror and the Acquiror Subsidiaries have not
received notice of any pending unfair labor practice charges, contract
grievances under any collective bargaining agreement, other administrative
charges, claims, grievances or lawsuits before any court, governmental
agency, regulatory body, or arbiter arising under any Law governing any
Acquiror Benefit Plan, and, to Acquiror's knowledge, there exist no facts
that could give rise to such a claim.
(h) There are no arrangements, agreements or plans
pursuant to which cash and non-cash payments will become payable to any
current or former employee, officer or director of Acquiror or any Acquiror
Subsidiary as a result of the Merger or a termination of service subsequent
to the consummation of the Merger. There is no Acquiror Benefit Plan
requiring payments, cancellation of Indebtedness or other obligation to be
made on a change of control or otherwise as a result of the consummation of
any of the transactions contemplated by this Merger Agreement or as a
result of a termination of service subsequent to the consummation of any of
the transactions contemplated by this Merger Agreement, with respect to any
current or former employee, officer or director of Acquiror or any Acquiror
Subsidiary.
SECTION 4.15. Compliance with Laws; Licenses, Permits and
Registrations.
(a) Neither Acquiror nor any Acquiror Subsidiary is in
violation of, or has violated, any applicable provisions of any laws,
statutes, ordinances, regulations, judgments, injunctions, orders or
consent decrees, except for any such violations that, individually or in
the aggregate, would not be reasonably likely to have an Acquiror Material
Adverse Effect.
(b) Each of Acquiror and the Acquiror Subsidiaries has
all permits, licenses, approvals, authorizations of and registrations with
and under all federal, state, local and foreign laws, and from all
Governmental Entities required by Acquiror and the Acquiror Subsidiaries to
carry on their respective businesses as currently conducted, except where
the failure to have any such permits, licenses, approvals, authorizations
or registrations, individually or in the aggregate, would not be reasonably
likely to have an Acquiror Material Adverse Effect.
(c) Schedule 4.15 of the Acquiror Disclosure Schedule
contains a true and complete list of all material licenses, permits, and
authorizations ("FCC Licenses") issued to Acquiror or the Acquiror
Subsidiaries by the FCC, including, with respect to Licenses held by
Motient Services Inc. only, the frequencies authorized for and the issuance
and expiration dates of each such FCC License. No such FCC License is
subject to any restriction or condition which would limit in any material
respect the full operation of the business of Acquiror and the Acquiror
Subsidiaries as now operated, and no proceeding, inquiry, investigation or
other administrative action is pending or, to Acquiror's knowledge,
threatened by or before the FCC that would reasonably be expected to result
in the revocation of any material FCC authorization or otherwise impair in
any material respect the full operation of the business of Acquiror and the
Acquiror Subsidiaries. The representations contained in this Section
4.15(c) and (d) are limited by the statements set forth in the section of
Acquiror's most recent SEC Form 10-K entitled "Business - Regulation" filed
with the Securities and Exchange Commission on April 2, 2001 ("Regulatory
Disclosure"). The statements contained in the Regulatory Disclosure fully
and accurately describe, with respect to the business of Acquiror and its
Subsidiaries, the material legal matters and proceedings arising under the
Communications Act of 1934, as amended, and the published rules,
regulations and policies promulgated thereunder by the FCC.
(d) The FCC Licenses are in good standing, are in full
force and effect in all material respects and are not materially impaired
by any act or omission of Acquiror, the Acquiror Subsidiaries, or any of
their officers, directors, or employees. All material reports, forms, and
statements required to be filed with the FCC with respect to the business
of Acquiror and the Acquiror Subsidiaries have been filed and are complete
and accurate in all material respects.
SECTION 4.16. Title to Properties.
(a) Acquiror and each Acquiror Subsidiary have good and
marketable title to, or valid leasehold interests in, all their properties
and assets except for such as are no longer used or useful in the conduct
of their businesses or as have been disposed of in the Ordinary Course of
Business and except for defects in title, easements, restrictive covenants
and similar Liens, encumbrances or impediments that, in the aggregate, do
not materially interfere with the ability of Acquiror and the Acquiror
Subsidiaries to conduct their business, taken as a whole, as currently
conducted. All such assets and properties, other than assets and properties
in which Acquiror or any Acquiror Subsidiary has leasehold interests, are
free and clear of all Liens.
(b) Acquiror and each Acquiror Subsidiary are in
compliance with the terms of all leases to which they are a party and under
which they are in occupancy, and all such leases are in full force and
effect and Acquiror and each Acquiror Subsidiary enjoy peaceful and
undisturbed possession under all such leases.
SECTION 4.17. Intellectual Property.
(a) "Acquiror Intellectual Property" means Intellectual
Property necessary or useful to carry on the business of Acquiror and the
Acquiror Subsidiaries, taken as a whole, as currently conducted. Schedule
4.17(a) of the Acquiror Disclosure Schedule sets forth a complete and
correct list of the Acquiror Intellectual Property which is not readily
obtainable on the open market for such Intellectual Property at market
prices and is materially necessary for the operation of Acquiror and the
Acquiror Subsidiaries in the Ordinary Course of Business.
(b) Acquiror and the Acquiror Subsidiaries have good and
valid title to or have a valid and enforceable license to use the Acquiror
Intellectual Property free and clear of all Encumbrances.
(c) The operation of the business of Acquiror and each
Acquiror Subsidiary as currently conducted does not, and will not, infringe
on any Intellectual Property rights of others, violate any right of any
Person (including any right to privacy or publicity), or constitute unfair
competition or trade practices under the laws of any jurisdiction in any
material respect. Neither Acquiror nor any Acquiror Subsidiary has received
any written notice of infringement, misappropriation, or violation of or
challenge to, and there are no claims pending or, to Acquiror's knowledge,
threatened with respect to the rights of others to the use of, any Acquiror
Intellectual Property that, in any such case, individually or in the
aggregate, would be reasonably likely to have an Acquiror Material Adverse
Effect. The Acquiror Intellectual Property is not subject to any
outstanding injunction, judgment, order, decree, ruling or charge.
(d) To the best of Acquiror's knowledge, no third party
is infringing upon any of the Acquiror Intellectual Property, and Acquiror
has not notified any third party that it believes such third party is
interfering with, infringing, or misappropriating any of the Acquiror
Intellectual Property or engaging in any act of unfair competition.
Acquiror has the right to bring an action for the infringement of all of
the Acquiror Intellectual Property.
(e) All necessary registration, maintenance, and renewal
fees in connection with Acquiror Intellectual Property that is registered
and owned by Acquiror or any Acquiror Subsidiary have been filed with
relevant patent, copyright, trademark or other authorities in the United
States and any other country for the purposes of maintaining such Acquiror
Intellectual Property. In each case where Acquiror or any Acquiror
Subsidiary has acquired any Intellectual Property from any person, Acquiror
or the Acquiror Subsidiary has obtained a valid and enforceable assignment
sufficient to irrevocably transfer all rights acquired in such Intellectual
Property to Acquiror or Acquiror Subsidiary, as applicable.
(f) Acquiror and each Acquiror Subsidiary have taken all
commercially reasonable steps that are required to protect Acquiror and
each Acquiror Subsidiary's rights in confidential information and trade
secrets of Acquiror and each Acquiror Subsidiary or provided by any other
Person to Acquiror or any Acquiror Subsidiary. Without limiting the
foregoing, Acquiror and each Acquiror Subsidiary have and enforce a policy
requiring each employee, director, consultant and contractor to execute a
confidentiality and non-disclosure agreement substantially in the form
previously provided to the Company, and each present and former employee,
director, consultant and contractor has executed such an agreement.
(g) Neither this Merger Agreement nor the transactions
contemplated by this Merger Agreement will result in (i) Acquiror granting
to any third party any right to any Intellectual Property right owned by,
or licensed to, Acquiror, (ii) Acquiror being bound by, or subject to, any
non-compete or other restriction on the operation or scope of Acquiror's
business, or (iii) Acquiror being obligated to pay any royalties or other
amounts to any third party in excess of those payable by Acquiror prior to
the Closing. Neither Acquiror nor any Acquiror Subsidiary will be, as a
result of the execution and delivery of this Merger Agreement or the
performance of its obligations hereunder, in breach of any license,
sublicense or other Agreement relating to the Acquiror Intellectual
Property.
(h) Schedule 4.17(h) of the Acquiror Disclosure Schedule
sets forth a list of all material contracts, licenses, and Agreements
relating to the Acquiror Intellectual Property which is not readily
obtainable on the open market for such Intellectual Property at market
prices and is materially necessary for the operation of Acquiror and the
Acquiror Subsidiaries in the Ordinary Course of Business to which Acquiror
or any Acquiror Subsidiary is a party or to which Acquiror or any Acquiror
Subsidiary is bound. Neither Acquiror nor any Acquiror Subsidiary is in
breach and neither Acquiror nor any Acquiror Subsidiary has failed to
perform under any of the foregoing contracts, licenses or Agreements and,
to Acquiror's knowledge, no other party to any such contract, license, or
Agreement is in breach thereof or has failed to perform thereunder and, to
Acquiror's knowledge, there are not threatened disputes or disagreements
with respect to such contracts, licenses, or Agreements. No person who has
licensed Intellectual Property to Acquiror or any Acquiror Subsidiary has
ownership rights or license rights to improvements made by Acquiror or any
Acquiror Subsidiary in such Intellectual Property.
(i) No person other than Acquiror or the Acquiror
Subsidiaries has any right or interest of an kind or nature in or with
respect to Acquiror Intellectual Property that is owned by Acquiror or the
Acquiror Subsidiaries or any portion thereof or any rights to sell,
license, lease, transfer, use or otherwise exploit such Acquiror
Intellectual Property or any portion thereof.
(j) Schedule 4.17(j) of the Acquiror Disclosure Schedule
sets forth a complete and correct list of (i) all Persons other than
Acquiror or the Acquiror Subsidiaries who have been provided with source
code or have claimed a right to be provided with any source code for any
Acquiror Intellectual Property that is owned by Acquiror or the Acquiror
Subsidiaries which is not readily available on the open market at market
prices and is materially necessary for the operation of Acquiror and the
Acquiror Subsidiaries in the Ordinary Course of Business (the "Acquiror
Owned Software"), and (ii) all source code escrow agreements relating to
any of the Acquiror Owned Software. No Person other than Acquiror and the
Acquiror Subsidiaries is in possession of, or has or has had access to, or
has made any demand for access to any source code for Acquiror Owned
Software.
SECTION 4.18. Environmental Matters.
Except as would not be reasonably expected to have an Acquiror
Material Adverse Effect:
(a) Acquiror and each Acquiror Subsidiary have complied
and are in compliance with, and the Acquiror Real Property and all
improvements thereon are in compliance with, all Environmental Laws.
(b) Neither Acquiror nor any Acquiror Subsidiary has any
liability, known or unknown, contingent or absolute, under any
Environmental Law, nor is Acquiror or any Acquiror Subsidiary responsible
for any such liability of any other person under any Environmental Law,
whether by contract, by operation of law or otherwise. There are no pending
or, to the knowledge of Acquiror, threatened Environmental Claims, and
neither Acquiror nor any Acquiror Subsidiary has received any notice of any
Environmental Claim from any governmental authority or any other person or
entity or knows or is aware of any fact(s) which might reasonably form the
basis for any such Environmental Claim.
(c) Acquiror and the Acquiror Subsidiaries have been duly
issued, and currently have and will maintain through the Closing Date, all
Environmental Permits necessary to operate the business or Assets of
Acquiror as currently operated. A complete and correct list of all such
Environmental Permits, all of which are valid and in full force and effect,
is set forth in Schedule 4.18(c) of the Acquiror Disclosure Schedule.
Acquiror and the Acquiror Subsidiaries have timely filed applications for
all Environmental Permits. All of the Environmental Permits set forth in
Schedule 4.18(c) of the Acquiror Disclosure Schedule are transferable and
none require consent, notification, or other action to remain in full force
and effect following consummation of the transactions contemplated hereby.
(d) The Acquiror Real Property contains no underground
improvements, including but not limited to treatment or storage tanks, or
underground piping associated with such tanks, used currently or in the
past for the management of Hazardous Materials, and no portion of the
Acquiror Real Property is or has been used as a dump or landfill or
consists of or contains filled in land or wetlands. With respect to any
real property formerly owned, operated, or leased by Acquiror or the
Acquiror Subsidiaries, during the period of such ownership, operation or
tenancy, no portion of such property was used as a dump or landfill, and
Acquiror is not aware of any such use at any time prior to its ownership,
operation, or tenancy of such real property. Neither PCBs nor
asbestos-containing materials are present on or in the Acquiror Real
Property or the improvements thereon. There has been no Release of
Hazardous Materials at, on, under, or from the real property currently
owned, used or operated by Acquiror or any Acquiror Subsidiary, nor was
there such a Release at any real property formerly owned, operated or
leased by Acquiror during the period of such ownership, operation, or
tenancy, such that Acquiror is or could be liable for Remediation with
respect to such Hazardous Materials.
(e) Acquiror has furnished to the Company copies of all
environmental assessments, reports, audits and other documents in its
possession or under its control that relate to the Acquiror Real Property,
or Acquiror or any Acquiror Subsidiary's compliance with Environmental
Laws, or any other real property that Acquiror or the Acquiror Subsidiaries
formerly owned, operated, or leased. Any information Acquiror or the
Acquiror Subsidiaries has furnished to the Company concerning the
environmental conditions of the Acquiror Real Property, prior uses of the
Acquiror Real Property, and the operations of Acquiror or the Acquiror
Subsidiaries related to compliance with Environmental Laws is accurate and
complete.
(f) No Acquiror Real Property, and no property to which
Hazardous Materials originating on or from such properties or the
businesses or Assets of Acquiror or any Acquiror Subsidiary has been sent
for treatment or disposal, is listed or proposed to be listed on the
National Priorities List or CERCLIS or on any other governmental database
or list of properties that may or do require Remediation under
Environmental Laws.
(g) No Encumbrance in favor of any person relating to or
in connection with any Environmental Claim has been filed or has attached
to the Acquiror Real Property.
(h) No authorization, notification, recording, filing,
consent, waiting period, Remediation, or approval with respect to Acquiror
or any Acquiror Subsidiary is required under any Environmental Law in order
to consummate the transaction contemplated hereby.
SECTION 4.19. Finders' Fees; Opinions of Financial Advisor.
(a) Except for X.X. Xxxxxx Securities Inc. there is no
investment banker, broker, finder or other intermediary that has been
retained by, or is authorized to act on behalf of, Acquiror or any Acquiror
Subsidiary who might be entitled to any fee or commission from Acquiror or
any of its affiliates upon consummation of the transactions contemplated by
this Merger Agreement.
(b) Acquiror has received the opinion of X.X. Xxxxxx
Securities Inc., dated as of the date hereof, to the effect that, as of
such date, the Merger Consideration is fair, from a financial point of
view, to the Acquiror.
SECTION 4.20. Required Vote; Board Approval.
(a) The only vote of the holders of any class or series
of capital stock of Acquiror required by law, rule or regulation is (i) the
affirmative vote of the holders of a majority of the outstanding shares of
Acquiror Common Stock to approve the Restated Charter and (ii) the
affirmative vote of the holders of a majority of the Acquiror Common Stock
present in person or represented by proxy at the Acquiror Stockholders
Meeting and entitled to vote to approve the Required Acquiror Stockholders
Consent (the "Acquiror Stockholder Approval").
(b) Acquiror's Board of Directors has unanimously (i)
determined that this Merger Agreement and the transactions contemplated
hereby are advisable and in the best interests of Acquiror and the Acquiror
Stockholders, (ii) approved and declared advisable this Merger Agreement
and the transactions contemplated hereby, (iii) approved and declared
advisable the Restated Charter and (iv) resolved to recommend to such
stockholders that they vote in favor of (A) adopting and approving the
Restated Charter, and (B) the Required Acquiror Stockholders Consent.
(c) The only vote of the holders of any class or series
of capital stock of Merger Sub required by law, rule or regulation is the
affirmative vote of the Merger Sub Stockholder to approve this Merger
Agreement and/or any of the other transactions contemplated hereby (the
"Merger Sub Stockholder Approval").
(d) Merger Sub's Board of Directors has unanimously (i)
determined that this Merger Agreement and the transactions contemplated
hereby are advisable and in the best interests of Merger Sub and the Merger
Sub Stockholder, (ii) approved and declared advisable this Merger Agreement
and the transactions contemplated hereby, and (iii) recommended to such
stockholder that it vote in favor of adopting and approving this Merger
Agreement in accordance with the terms hereof, and such stockholder has so
adopted and approved this Merger Agreement.
SECTION 4.21. Insurance.
Acquiror maintains fire and casualty, general liability,
business interruption, product liability, professional liability and
sprinkler and water damage insurance policies with reputable insurance
carriers, which provide full and adequate coverage for all normal risks
incident to the business of Acquiror and Acquiror Subsidiaries and their
respective properties and assets and are in character and amount similar to
that carried by entities engaged in similar business and subject to the
same or similar perils or hazards. None of the insurance policies
maintained by Acquiror are "claims made" policies.
SECTION 4.22. State Takeover Statutes.
Acquiror has taken all actions required to be taken by it
(a) in order to approve the execution of the Acquiror Voting Agreement for
purposes of Section 203(a) of Delaware Law and (b) so that the restrictions
on "business combination" contained in Section 203 of Delaware Law do not
apply to this Merger Agreement, the Merger, the Acquiror Voting Agreement
or any of the transactions contemplated by any of the foregoing. No other
"control share acquisition," "fair price" or other anti-takeover laws or
regulations enacted under state or federal laws in the United States apply
to this Merger Agreement or any of the transactions contemplated hereby.
SECTION 4.23. Certain Agreements.
None of Acquiror, any Acquiror Subsidiary or any of their
respective affiliates are parties to or otherwise bound by any Agreement or
arrangement that limits or otherwise restricts, in any material respect,
Acquiror, any Acquiror Subsidiary or any of their respective affiliates
from engaging or competing in any line of business or in any locations.
SECTION 4.24. Customers, Distributors and Suppliers.
Schedule 4.24 of the Acquiror Disclosure Schedule sets
forth a complete and correct list of the names of each (a) customer,
distributor, and other agent and representative to whom Acquiror and/or the
Acquiror Subsidiaries made sales in excess of $1,000,000 during the most
recently complete fiscal year, showing the approximate total sales in
dollars by Acquiror and/or the Acquiror Subsidiaries to each such Person
during such period, (b) supplier from whom Acquiror and/or the Acquiror
Subsidiaries purchased more than $1,000,000 of supplies during the most
recently completed fiscal year, showing the approximate total purchases in
dollars from each such Person during such period, and (c) customer,
distributor, and other agent and representative and supplier with whom
Acquiror and/or the Acquiror Subsidiaries have a dispute as of the date
hereof with respect to payables or receivables in excess of $250,000 for
any such dispute, with a description of the dispute.
SECTION 4.25. Indebtedness.
As of the date of this Merger Agreement, neither Acquiror
nor any Acquiror Subsidiary has any Indebtedness.
SECTION 4.26. XM Satellite Radio Holdings, Inc.; Mobile Satellite
Ventures LLC; Merger Sub.
(a) To the knowledge of Acquiror, XM Satellite Radio
Holdings, Inc. ("XM") has filed all reports, filings, registration
statements and other documents required to be filed by it with the SEC
since January 1, 2000 (collectively, the "XM SEC Documents").
(b) To the knowledge of Acquiror, as of its filing date,
each XM SEC Document complied as to form in all material respects with the
applicable requirements of the Securities Act and/or the Exchange Act, as
the case may be.
(c) To the knowledge of Acquiror, (i) no XM SEC Document
filed pursuant to the Exchange Act contained, as of its filing date, any
untrue statement of a material fact or omitted to state any material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading, and (ii) no XM
SEC Document, as amended or supplemented, if applicable, filed pursuant to
the Securities Act contained, as of the date such document or amendment
became effective, any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading.
(d) All agreements to which (i) Acquiror and (ii)(A) XM
and/or (B) other stockholders of XM (to the extent that the same related to
XM) or (i) Acquiror and (ii)(A) Mobile Satellite Ventures LLC and/or (B)
other members of Mobile Satellite Ventures LLC (to the extent that the same
related to Mobile Satellite Ventures LLC) are parties are set forth in
Schedule 4.26 of the Acquiror Disclosure Schedule, copies of which
agreements have been previously provided to the Company.
(e) Without regard to the Acquiror Disclosure Schedule,
as of the date hereof, Acquiror is the record and beneficial owner of
14,757,262 shares of capital stock of XM consisting of (i) 852,243 shares
of XM Class A Stock and (ii) 13,905,019 shares of XM Class B Stock and
Acquiror does not have, directly or indirectly, any other option, right or
interest to acquire any additional shares of XM Class A Common Stock
(except through conversion of currently held XM Class B Stock) or XM Class
B Stock or the right to acquire any such option, right or interest (all
such existing shares, options, rights and interests, collectively, as
adjusted pursuant to dispositions and acquisitions permitted pursuant to
this Merger Agreement, the "Acquiror XM Stock"), which, to the knowledge of
Acquiror, represents as of March 31, 2001 approximately (i) 33.7% of the
fully diluted voting percentage of the outstanding capital stock of XM and
(ii) 15% of the fully diluted ownership percentage of the outstanding
capital stock of XM. As of the date hereof, the shares of Acquiror XM Stock
are (A) free and clear of any and all Encumbrances, (B) not subject to any
limitations or restrictions, including, without limitation, in respect of
the right to vote, lease, lend, exchange, mortgage, pledge, convert,
register, transfer, sell or otherwise dispose of such stock or grant any
option, right or interest therein (and any other securities into which such
stock is convertible) and the proceeds thereof or the right to acquire any
such option, right or interest, and (C) not subject to any other option,
right or interest therein (and any other securities into which such stock
is convertible) and the proceeds thereof or the right to acquire any such
option, right or interest. Except for the contingent transfer of
registration rights to the Company pursuant to the Bridge Note Documents,
as of the date hereof, Acquiror shall not have transferred any of its
registration rights relating to Acquiror XM Stock granted to Acquiror
pursuant to the XM Registration Rights Agreement or taken any other action
that could interfere with Acquiror's compliance with its obligations
pursuant to Section 6.09.
(f) Without regard to the Acquiror Disclosure Schedule,
immediately prior to the Effective Time, Acquiror will be the sole record
and beneficial owner of at least 9 million shares of XM Class A Stock ("XM
Merger Shares"). Without regard to the Acquiror Disclosure Schedule, (i)
all XM Merger Shares, as of the Effective Time, will (A) be free and clear
of any and all Encumbrances whatsoever, (B) not be subject to any
limitations or restrictions, including, without limitation, in respect of
the right to vote, lease, lend, exchange, mortgage, pledge, convert,
register, transfer, sell or otherwise dispose of such stock or grant any
option, right or interest therein (and any other securities into which such
stock is convertible) and the proceeds thereof or the right to acquire any
such option, right or interest, except as expressly contemplated by the XM
Stock Documents, as amended in accordance with Section 6.09 hereof, and (C)
not be subject to any other option, right or interest therein (and any
other securities into which such stock is convertible) and the proceeds
thereof or the right to acquire any such option, right or interest, except
as expressly contemplated by the XM Stock Documents, as amended in
accordance with Section 6.09 hereof, and (ii) the Acquiror shall be able to
transfer one demand registration right and a pro-rata portion of all its
other registration rights relating to Acquiror XM Stock granted to Acquiror
pursuant to the XM Registration Rights Agreement, and (iii) Acquiror shall
not have taken any other action that could interfere with Acquiror's
compliance with its obligations pursuant to Section 6.09.
(g) Acquiror is the sole record and beneficial owner of
all of the outstanding capital stock or other securities of Merger Sub. All
such securities of Merger Sub, as of immediately prior to the Effective
Time and except as expressly contemplated by this Merger Agreement, will
(i) be free and clear of any and all Encumbrance whatsoever, (ii) not be
subject to any limitations or restrictions, including, without limitation,
in respect of the right to vote, lease, lend, exchange, mortgage, pledge,
convert, register, transfer, sell or otherwise dispose of such stock or
grant any option, right or interest therein (and any other securities into
which such stock is convertible) and the proceeds thereof or the right to
acquire any such option, right or interest and (iii) not be subject to any
other option, right or interest therein (and any other securities into
which such stock is convertible). Merger Sub has been organized by Acquiror
for the specific purpose of entering into this Merger Agreement and
consummating the transactions contemplated hereby. Merger Sub does not
have, nor has ever had, any operations and has no liabilities or properties
and is not a party to any agreement or instrument except for this Merger
Agreement.
ARTICLE V
COMPANY AND ACQUIROR COVENANTS
SECTION 5.01. Conduct of Business of the Company.
The Company hereby covenants and agrees that, from the
date of this Merger Agreement until the Effective Time, the Company, unless
otherwise expressly contemplated by this Merger Agreement or consented to
in writing by Acquiror, which consent shall not be unreasonably withheld,
will, and will cause the Company Subsidiaries to, carry on its and their
respective businesses only in the Ordinary Course of Business, use their
respective reasonable best efforts to preserve intact their business
organizations and Assets, maintain their rights and franchises, retain the
services of their officers and key employees and maintain their
relationships with customers, suppliers, licensors, licensees and others
having business dealings with them, and use their respective reasonable
best efforts to keep in full force and effect liability insurance and bonds
comparable in amount and scope of coverage to that currently maintained.
Without limiting the generality of the foregoing, except as otherwise
expressly contemplated by this Merger Agreement or as consented to in
writing by Acquiror, which consent shall not be unreasonably withheld, from
the date of this Merger Agreement until the Effective Time the Company
shall not, and shall not permit any Company Subsidiary to:
(a) (i) increase in any manner the compensation or fringe
benefits of, or pay any bonus to, any director, officer or employee, except
for increases or bonuses in the Ordinary Course of Business to employees
who are not directors or officers; (ii) grant any severance or termination
pay to, or enter into any severance Agreement with, any director, officer
or employee (other than pursuant to the normal severance practices or
existing Agreements of the Company or any Company Subsidiary in effect on
the date of this Merger Agreement), or enter into any employment Agreement,
change of control Agreements or other similar Agreement or understanding
with any director, officer or employee; (iii) establish, adopt, enter into
or amend any Plan or Other Arrangement, except as may be required to comply
with applicable Law; (iv) pay any material benefits not provided for under
any Plan or Other Arrangement; (v) grant any awards under any bonus,
incentive, performance or other compensation plan or arrangement or Plan or
Other Arrangement (including the grant of stock options, stock appreciation
rights, stock-based or stock-related awards, performance units or
restricted stock, or the removal of existing restrictions in any Plan or
Other Arrangement or Agreement or awards made thereunder) to any director,
officer or employee, except as required under the Agreements set forth in
Schedule 5.01(a)(v) of the Company Disclosure Schedule to employees who are
not officers or directors; or (vi) take any action to fund or in any other
way secure the payment of compensation or benefits under any Agreement,
except as required under the Agreements set forth in Schedule 5.01(a)(vi)
of the Company Disclosure Schedule; provided, that, with the prior consent
of Acquiror (which consent shall not be unreasonably withheld), the Company
may (x) agree to pay retention bonuses and (y) issue restricted shares of
Company Common Stock and/or Company Stock Options to purchase Company
Common Stock for purposes of retaining employees; provided, further, that
notwithstanding any other provision contained in this Section 5.01, the
Company may issue after the date hereof stock options to purchase Company
Common Stock in the Ordinary Course of Business not in excess of an
aggregate of 100,000 shares of Company Common Stock underlying such options
without the consent of Acquiror;
(b) declare, set aside or pay any dividend on, or make
any other distribution in respect of, outstanding shares of capital stock,
other than dividends or other distributions declared, set aside, paid or
made by any Company Subsidiary to the Company or any wholly owned Company
Subsidiary, and except that the Company may pay non-cash dividends required
by the terms of the Company Preferred Stock;
(c) (i) redeem, purchase or otherwise acquire any shares
of capital stock of the Company or any Company Subsidiary or any securities
or obligations convertible into or exchangeable for any shares of capital
stock of the Company or any Company Subsidiary, or any options, warrants or
conversion or other rights to acquire any shares of capital stock of the
Company or any Company Subsidiary or any such securities or obligations, or
any other securities thereof; (ii) effect any reorganization or
recapitalization; or (iii) 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;
(d) except (i) upon the exercise of the Company Stock
Options in accordance with their terms, (ii) for the issuance of options to
purchase Company Common Stock to the extent permitted under clause (a)
above, and (iii) for the payments of non-cash dividends required by the
terms of the Company Preferred Stock, issue, deliver, award, grant or sell,
or authorize the issuance, delivery, award, grant or sale (including the
grant of any limitations in voting rights or other Encumbrances) of, any
shares of any class of its capital stock (including shares held in
treasury), any securities convertible into or exercisable or exchangeable
for any such shares, or any rights, warrants or options to acquire any such
shares, or amend or otherwise modify the terms of any such rights, warrants
or options the effect of which shall be to make such terms more favorable
to the holders thereof;
(e) except as contemplated by Agreements set forth in
Schedule 5.01(e) of the Company Disclosure Schedule, acquire or agree to
acquire, by merging or consolidating with, by purchasing an equity interest
in or a portion of the Assets of, or by any other manner, any business or
any corporation, partnership, association or other business organization or
division thereof, or otherwise acquire or agree to acquire any Assets of
any other Person (other than in the Ordinary Course of Business) and other
than assets received in respect of the transfer or other disposition of
assets or debt, equity or other investments or interests in any Portfolio
Company as permitted by clause (f) below;
(f) sell, lease, exchange, mortgage, pledge, transfer or
otherwise subject to any Encumbrance or dispose of (collectively,
"Dispositions"), or agree to sell, lease, exchange, mortgage, pledge,
transfer or otherwise subject to any Encumbrance or dispose of, any of its
Assets (other than cash expenditures permitted by clause (i) or (j) below),
except for (i) Dispositions of immaterial assets for not in excess of
$500,000 in aggregate consideration, (ii) other than any Dispositions of
investments in Portfolio Companies permitted under clause (iii) below,
sales of items of a nature reflected on the Company Balance Sheet as cash
equivalents or short term investments for fair market value (as determined
in the Company's good faith judgment) in exchange for cash, cash
equivalents or other short-term investments, and (iii) Dispositions of
investments in, capital stock of, securities of or loans to, the Portfolio
Companies for not in excess of $500,000 in aggregate consideration;
(g) adopt any amendments to its articles or certificate
of incorporation, bylaws or other comparable charter or organizational
documents;
(h) make or rescind any material election relating to
Taxes, settle or compromise any material claim, action, suit, litigation,
proceeding, arbitration, investigation, audit or controversy relating to
Taxes, or elect to change any of its methods of reporting income or
deductions for federal income tax purposes from those employed in the
preparation of the federal income tax returns for the taxable year ended
December 31, 2000, except in either case as may be required by Law, the IRS
or GAAP;
(i) make or agree to make any new capital expenditure or
expenditures which are not included in the Company's 2001 capital budget, a
copy of which was furnished to Acquiror, and which expenditures are,
individually, in excess of $50,000 or, in the aggregate, in excess of
$500,000;
(j) (i) incur any Indebtedness for borrowed money or
guarantee any such Indebtedness of another Person (other than the Company
or any wholly owned Company Subsidiary), issue or sell any debt securities
or warrants or other rights to acquire any debt securities of the Company
or any Company Subsidiary (other than indebtedness, securities or warrants
or rights issued to the Company or a wholly owned Company Subsidiary),
guarantee any debt securities of another Person (other than the Company or
any wholly owned Company Subsidiary), enter into any "keep well" or other
Agreement to maintain any financial statement condition of another Person
(other than the Company or any wholly owned Company Subsidiary) or enter
into any Agreement having the economic effect of any of the foregoing,
except, in each case, (A) for short-term borrowings incurred in the
Ordinary Course of Business, and (B) for installments of funds provided by
the corporation specified in Schedule 5.01(k) of the Company Disclosure
Schedule to the Company pursuant to the Company's financing arrangements
with such corporation as in effect on the date hereof, or (ii) make any
loans, advances or capital contributions to, or investments in, any other
Person other than (A) intragroup loans, advances, capital contributions or
investments between or among the Company and (1) Rare Medium, Inc.,
Xxxxxxxxx Xxxxxx Communications, Inc. and Live Market, Inc. (provided,
that, the Company shall give timely notice and a description of the use of
proceeds (other than to satisfy lease obligations in the Ordinary Course of
Business) with respect to any loans, advances, capital contributions in or
investments in Live Market, Inc. which shall not exceed $1,000,000 in the
aggregate) and (2) its other wholly-owned Company Subsidiaries to the
extent necessary to satisfy outstanding rent obligations, (B) loans to
employees in the Ordinary Course of Business, (C) the extension of credit
to customers of the Company or any Company Subsidiary in the Ordinary
Course of Business and (D) except for the transactions contemplated by the
Bridge Note Documents; provided, that, the Company or any Company
Subsidiaries may make capital investments or expenditures in, or capital
contributions or loans to, the Portfolio Companies which in the aggregate
do not exceed $500,000 from the date hereof until the Effective Time (which
$500,000 shall not include any forgiveness of loans made by the Company or
the Company Subsidiaries to any Portfolio Companies, which loans are listed
in Schedule 5.01(j) of the Company Disclosure Schedule);
(k) pay, discharge, settle or satisfy any claims,
liabilities or obligations (whether absolute or contingent, matured or
unmatured, known or unknown), other than the payment, discharge or
satisfaction in the Ordinary Course of Business or in accordance with their
terms, of liabilities reflected or reserved against in, or contemplated by,
the most recent financial statement or incurred in the Ordinary Course of
Business, or waive any material benefits of, or agree to modify in any
material respect, any confidentiality, standstill or similar Agreements to
which the Company or any Company Subsidiary is a party;
(l) other than in the Ordinary Course of Business, pay,
discharge, settle or satisfy any dispute with a customer or agree to reduce
the amount owed by a customer or accept something in lieu of full payment
owed by a customer, in each case involving an amount in dispute of more
than $250,000 or more than $250,000 in payments, commitments or liabilities
being reduced; provided, that, for purposes of this paragraph (l) only,
Ordinary Course of Business shall not include any transactions, settlements
or other arrangements (A) between the Company or any Company Subsidiary and
their respective affiliates or any Portfolio Company with respect to
payments for services rendered and (B) in which the Company or any Company
Subsidiary accepts equity securities of the customer in lieu of any
payments, commitments or liabilities;
(m) delay or postpone the payments of any accounts
payable and other liabilities or amounts owed by the Company to third
parties other than in accordance with their terms, except for delays or
postponements in good faith due to bona fide disputes and except for delays
or postponements which would not reasonably be expected to have a Company
Material Adverse Effect or, following the Effective Time, an Acquiror
Material Adverse Effect;
(n) forgive any loans owed to the Company, except for the
forgiveness of the loans made by the Company or the Company Subsidiaries to
any Portfolio Companies, which loans are listed in Schedule 5.01(j) of the
Company Disclosure Schedule;
(o) enter into any Agreement which involves payments by
the Company or any Company Subsidiary in excess of $500,000 in any twelve
(12) month period;
(p) except in the Ordinary Course of Business, waive,
release or assign any rights or claims, or modify, amend or terminate any
Agreement to which the Company or any Company Subsidiary is a party;
(q) make any change in any method of accounting or
accounting practice or policy other than those required by GAAP or a
Governmental Entity;
(r) except as permitted by Section 5.05 hereof, take any
action to exempt or make any Person or action (other than the Company) not
subject to the provisions of Section 203 of Delaware Law or any other
potentially applicable anti-takeover or similar statute or regulation;
(s) permit the conversion of any Company Preferred Stock
into Company Common Stock or permit the exercise of any Company Warrant; or
(t) authorize, or commit or agree to do any of the
foregoing.
SECTION 5.02. Conduct of Business of Acquiror.
Acquiror hereby covenants and agrees that, from the date
of this Merger Agreement until the Effective Time, Acquiror, except for
obligations under Agreements in existence on the date of this Merger
Agreement with respect to Mobile Satellite Ventures LLC and except for the
Proposed Satellite Restructuring, unless otherwise expressly contemplated
by this Merger Agreement or consented to in writing by the Company, which
consent shall not be unreasonably withheld, will, and will cause the
Acquiror Subsidiaries to, carry on its and their respective businesses only
in the Ordinary Course of Business, use their respective reasonable best
efforts to preserve intact their business organizations and Assets,
maintain their rights and franchises, retain the services of their officers
and key employees and maintain their relationships with customers,
suppliers, licensors, licensees and others having business dealings with
them, and use their respective reasonable best efforts to keep in full
force and effect liability insurance and bonds comparable in amount and
scope of coverage to that currently maintained. Without limiting the
generality of the foregoing, but subject to the exception for matters
relating to Mobile Satellite Ventures LLC set forth in the immediately
preceding sentence and except for the Proposed Satellite Restructuring,
except as otherwise expressly contemplated by this Merger Agreement or as
consented to in writing by the Company, which consent shall not be
unreasonably withheld, from the date of this Merger Agreement until the
Effective Time Acquiror shall not, and shall not permit any Acquiror
Subsidiary to:
(a) (i) increase in any manner the compensation or fringe
benefits of, or pay any bonus to, any director, officer or employee,
except for increases or bonuses in the Ordinary Course of Business to
employees who are not directors or officers; (ii) grant any severance or
termination pay to, or enter into any severance Agreement with, any
director, officer or employee (other than pursuant to the normal
severance practices or existing Agreements of Acquiror or any Acquiror
Subsidiary in effect on the date of this Merger Agreement), or enter into
any employment Agreement, change of control Agreements or other similar
Agreements or understanding with any director, officer or employee; (iii)
establish, adopt, enter into or amend any Plan or Other Arrangement,
except as may be required to comply with applicable Law; (iv) pay any
material benefits not provided for under any Plan or Other Arrangement;
(v) grant any awards under any bonus, incentive, performance or other
compensation plan or arrangement or Plan or Other Arrangement (including
the grant of stock options, stock appreciation rights, stock-based or
stock-related awards, performance units or restricted stock, or the
removal of existing restrictions in any Plan or Other Arrangement or
Agreement or awards made thereunder) to any director, officer or
employee, except as required under the Agreements set forth in Schedule
5.02(a)(v) of the Acquiror Disclosure Schedule to employees who are not
officers or directors, or (vi) take any action to fund or in any other
way secure the payment of compensation or benefits under any Agreement,
except as required under the Agreements set forth in Schedule 5.02(a)(vi)
of the Acquiror Disclosure Schedule; provided, that, with the prior
consent of Company (which consent shall not be unreasonably withheld),
Acquiror may (x) agree to pay retention bonuses and (y) issue restricted
shares of Acquiror Common Stock and/or Acquiror Stock Options to purchase
Acquiror Common Stock for purposes of retaining employees; provided,
further, that notwithstanding any other provision contained in this
Section 5.02, Acquiror may issue after the date hereof stock options to
purchase Acquiror Common Stock in the Ordinary Course of Business not in
excess of an aggregate of 100,000 shares of Acquiror Common Stock
underlying such options without the consent of the Company;
(b) declare, set aside or pay any dividend on, or make
any other distribution in respect of, outstanding shares of capital stock
other than dividends or other distributions declared, set aside, paid or
made by any Acquiror Subsidiary to Acquiror or any wholly owned Acquiror
Subsidiary;
(c) (i) redeem, purchase or otherwise acquire any shares
of capital stock of Acquiror or any Acquiror Subsidiary or any securities
or obligations convertible into or exchangeable for any shares of capital
stock of Acquiror or any Acquiror Subsidiary, or any options, warrants or
conversion or other rights to acquire any shares of capital stock of
Acquiror or any Acquiror Subsidiary or any such securities or obligations,
or any other securities thereof; (ii) effect any reorganization or
recapitalization; or (iii) 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;
(d) except (i) upon the exercise of Acquiror Stock
Options or Acquiror Pre-Merger Warrants in accordance with their terms, and
(ii) the issuance of options to purchase Acquiror Common Stock to the
extent permitted under clause (a) above, issue, deliver, award, grant or
sell, or authorize the issuance, delivery, award, grant or sale (including
the grant of any limitations in voting rights or other Encumbrances) of,
any shares of any class of its capital stock (including shares held in
treasury), any securities convertible into or exercisable or exchangeable
for any such shares, or any rights, warrants or options to acquire any such
shares, or amend or otherwise modify the terms of any such rights, warrants
or options the effect of which shall be to make such terms more favorable
to the holders thereof;
(e) except as contemplated by Agreements set forth in
Schedule 5.02(e) of the Acquiror Disclosure Schedule, acquire or agree to
acquire, by merging or consolidating with, by purchasing an equity interest
in or a portion of the Assets of, or by any other manner, any business or
any corporation, partnership, association or other business organization or
division thereof, or otherwise acquire or agree to acquire any Assets of
any other Person (other than the purchase of assets from suppliers or
vendors in the Ordinary Course of Business);
(f) (i) sell, lease, exchange, mortgage, pledge, transfer
or otherwise subject to any Encumbrance or dispose of, or agree to sell,
lease, exchange, mortgage, pledge, transfer or otherwise subject to any
Encumbrance or dispose of, any of its Assets or any shares of its capital
stock or any Acquiror XM Stock or any security or other right that
represents the right to acquire or receive, directly or indirectly, any
capital stock of Acquiror or XM, or (ii) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of any capital stock of Acquiror or XM,
whether any such transaction described in (i) or (ii) above is to be
settled by delivery of capital stock or such other securities or other
rights, in cash or otherwise, and in the case of (i) and (ii), except for
(x) Dispositions of immaterial assets not in excess of $500,000 in the
aggregate and (y) sales of items of a nature reflected on the Acquiror
Balance Sheet as cash equivalents or short term investments for fair market
value (as determined in Acquiror's good faith judgment) in exchange for
cash, cash equivalents or other short term investments; provided, that,
notwithstanding any other provision contained in this Section 5.02, without
the consent of the Company, Acquiror shall be permitted to sell (i) up to
one (1) million shares of Acquiror XM Stock, or (ii) if the Second Closing
(as defined in the Bridge Note Agreement) shall not have occurred for any
reason, up to an additional two (2) million shares of Acquiror XM Stock;
provided that Acquiror shall not be permitted to sell any of the additional
two (2) million shares of Acquiror XM Stock contemplated in clause (ii)
above until after July 1, 2001 and if all of the conditions set forth in
Section 6.10 hereof and Section 3.02(f) of the Bridge Note Agreement are
able to be satisfied; provided, further, that Acquiror shall use its
reasonable best efforts to cause the conditions set forth in Section 6.10
and Section 3.02(f) of the Bridge Note Agreement to be satisfied; provided,
further, that prior to the sale of any of the additional two (2) million
shares of Acquiror XM Stock as contemplated by (ii) above, Acquiror shall
deliver to the Company a certificate of its chief financial officer stating
that the proceeds to be received by Acquiror upon the sale of such shares,
after giving effect to Acquiror's then existing liquidity, are reasonably
necessary for the business purposes of Acquiror promptly following receipt
of such proceeds and containing a schedule setting forth in reasonable
detail such intended uses;
(g) adopt any amendments to its articles or certificate
of incorporation, bylaws or other comparable charter or organizational
documents (other than the Restated Charter);
(h) make or rescind any material election relating to
Taxes, settle or compromise any material claim, action, suit, litigation,
proceeding, arbitration, investigation, audit or controversy relating to
Taxes, or elect to change any of its methods of reporting income or
deductions for federal income tax purposes from those employed in the
preparation of the federal income tax returns for the taxable year ended
December 31, 2000, except in either case as may be required by Law, the IRS
or GAAP;
(i) make or agree to make any new capital expenditure or
expenditures which are not included in Acquiror's 2001 capital budget, a
copy of which was furnished to the Company, and which expenditures are,
individually, in excess of $50,000 or, in the aggregate, in excess of
$500,000;
(j) (i) incur any Indebtedness for borrowed money (except
for the transactions contemplated by the Bridge Note Documents) or
guarantee any such Indebtedness of another Person (other than Acquiror or
any wholly owned Acquiror Subsidiary), issue or sell any debt securities or
warrants or other rights to acquire any debt securities of Acquiror or any
Acquiror Subsidiary (other than indebtedness, securities or warrants or
rights issued to Acquiror or a wholly owned Acquiror Subsidiary), guarantee
any debt securities of another Person (other than Acquiror or any wholly
owned Acquiror Subsidiary), enter into any "keep well" or other Agreement
to maintain any financial statement condition of another Person (other than
Acquiror or any wholly owned Acquiror Subsidiary) or enter into any
Agreement having the economic effect of any of the foregoing, except for
short-term borrowings incurred in the Ordinary Course of Business, or (ii)
make any loans, advances or capital contributions to, or investments in,
any other Person other than intragroup loans, advances, capital
contributions or investments between or among Acquiror and any of its
wholly owned Acquiror Subsidiaries and other than (x) the extension of
credit to customers of Acquiror or any Acquiror Subsidiary in the Ordinary
Course of Business, (y) intragroup loans, advances, capital contributions
or investments between or among Acquiror and any wholly owned Acquiror
Subsidiary and (z) loans to employees in the Ordinary Course of Business;
(k) pay, discharge, settle or satisfy any claims,
liabilities or obligations (whether absolute or contingent, matured or
unmatured, known or unknown), other than the payment, discharge or
satisfaction, in the Ordinary Course of Business or in accordance with
their terms, of liabilities reflected or reserved against in, or
contemplated by, the most recent financial statement or incurred in the
Ordinary Course of Business, or waive any material benefits of, or agree to
modify in any material respect, any confidentiality, standstill or similar
Agreements to which Acquiror or any Acquiror Subsidiary is a party, or take
any action that would adversely affect Acquiror's ability to repay or
redeem the Discrepancy Notes;
(l) other than in the Ordinary Course of Business, pay,
discharge, settle or satisfy any dispute with a customer or agree to reduce
the amount owed by a customer or accept something in lieu of full payment
owed by a customer, in each case involving an amount in dispute of more
than $250,000 or more than $250,000 in payments, commitments or liabilities
being reduced; provided, that, for purposes of this paragraph (l) only,
Ordinary Course of Business shall not include any transactions, settlements
or other arrangements (A) between Acquiror or any Acquiror Subsidiary and
their respective affiliates with respect to payments for services rendered
and (B) in which Acquiror or any Acquiror Subsidiary accepts equity
securities of the customer in lieu of any payments, commitments or
liabilities;
(m) forgive any loans owed to Acquiror or any Acquiror
Subsidiary;
(n) except in the Ordinary Course of Business, waive,
release or assign any rights or claims, or modify, amend or terminate any
Agreement to which Acquiror or any Acquiror Subsidiary is a party;
(o) amend, alter, repeal or otherwise modify, or waive
any right or obligation under, any consents, releases, waivers or other
instrument obtained from banks and/or guarantors under the Term Credit
Agreement or Revolving Credit Agreement which would materially adversely
affect Acquiror's ability to consummate the transaction contemplated by
this Merger Agreement, would reasonably be expected to have an Acquiror
Material Adverse Effect or would require a repayment of Indebtedness or
would adversely affect the economics of the transactions contemplated
herein for the Company, the Preferred Stockholders, the New Lenders or the
New Guarantors (including, without limitation, through adversely affecting
the rights, interest or remedies with respect any documents, instruments,
agreements or other arrangements to be entered into by the Preferred
Stockholders, the New Lenders or the New Guarantors with Acquiror, any
Acquiror Subsidiary or Xxxxxx after giving effect to the Merger);
(p) enter into any Agreement which involves payments by
Acquiror or any Acquiror Subsidiary in excess of $500,000 in any twelve
(12) month period;
(q) make any change in any method of accounting or
accounting practice or policy other than those required by GAAP or a
Governmental Entity;
(r) vote in favor of, or otherwise consent to, the
amendment, alteration, repeal or other modification of, or waive any right
or obligation under, any provision of (i) the Amended and Restated Asset
Sale Agreement dated January 8, 2001 between Motient Services Inc. and
Mobile Satellite Ventures LLC (the "MSV Asset Sale Agreement") if such
amendment, alteration, repeal or other modification would be reasonably
expected to reduce the combined value of the Acquiror's interests in Mobile
Satellite Ventures LLC and Motient Services Inc. or (ii) the Amended and
Restated Shareholders Agreement, dated as of August 8, 2000, by and among
XM, Acquiror and other parties named therein;
(s) except as permitted by Section 5.05 hereof, take any
action to exempt or make any Person or action (other than the Company) not
subject to the provisions of Section 203 of Delaware Law or any other
potentially applicable anti-takeover or similar statute or regulation; or
(t) authorize, or commit or agree to do any of the
foregoing.
SECTION 5.03. Other Actions.
The Company, Merger Sub and Acquiror shall not, and shall
not permit any of their respective affiliates to, knowingly take any action
that would, or that could reasonably be expected to, result in (a) any of
the representations and warranties of such party set forth in this Merger
Agreement becoming untrue, (b) the failure of any party hereto to comply
with the covenants set forth in this Merger Agreement or (c) any of the
conditions to the Merger set forth in Article VII not being satisfied.
SECTION 5.04. Access and Information.
(a) For so long as this Merger Agreement is in effect,
the Company shall, and shall cause each Company Subsidiary to, (i) afford
to Acquiror and its officers, employees, accountants, consultants, legal
counsel and other representatives reasonable access during normal business
hours, subject to reasonable advance notice, to all of their respective
properties, Agreements, books, records and personnel and (ii) furnish
promptly to Acquiror all other information concerning their respective
businesses, operations, prospects, conditions (financial or otherwise),
Assets, liabilities and personnel as Acquiror may reasonably request.
(b) For so long as this Merger Agreement is in effect,
Acquiror and Merger Sub shall, and shall cause each Acquiror Subsidiary to,
(i) afford to the Company and its officers, employees, accountants,
consultants, legal counsel and other representatives reasonable access
during normal business hours, subject to reasonable advance notice, to all
of their respective properties, Agreements, books, records and personnel
and (ii) furnish promptly to the Company all other information concerning
their respective businesses, operations, prospects, conditions (financial
or otherwise), Assets, liabilities and personnel as the Company may
reasonably request.
(c) For so long as this Merger Agreement is in effect and
from and after the date hereof, each party agrees to discuss in good faith
with the other party (i) the occurrence of any material developments
concerning their respective businesses and assets, including any material
adverse developments causing a breach of any of its own representations and
warranties contained herein and (ii) any proposed write-off of any
investment made by it or by any of its Subsidiaries. No disclosure by any
party pursuant to this Section 5.04(c) shall be deemed to amend or
supplement the Company Disclosure Schedule or the Acquiror Disclosure
Schedule.
(d) For so long as this Merger Agreement is in effect and
from and after the date hereof, the Company shall provide prompt written
notice of the occurrence of any of the following events (whether or not
such event would be required to be disclosed pursuant to this Merger
Agreement): (i) the receipt by the Company of written notice of any lawsuit
against the Company or a Company Subsidiary which if determined adversely
to the Company or a Company Subsidiary would reasonably be expected to
result in monetary damages in excess of $100,000 or any restriction, in any
material respect, on the business or operations of the Company or any
Company Subsidiary, (ii) written notice by the provider of any Indebtedness
of a demand for refund or otherwise request repayment of any amounts
advanced to the Company, and (iii) written notice of a material default
under any Company Contract.
(e) For so long as this Merger Agreement is in effect,
the Company shall, following the end of the first full month following the
date hereof and following the end of each month thereafter, provide a
written report (the "Company Monthly Report") containing the following
information in reasonable detail: (i) cash reserves as of the date of such
Company Monthly Report; (ii) the material terms of any contract entered
into by the Company or any Company Subsidiary not previously disclosed to
Acquiror which involves payments by or to the Company or any Company
Subsidiary in excess of $500,000 in any twelve (12) month period after the
effective date of such contract; (ii) cash received by the Company during
the month of such Company Monthly Report; (iii) any material developments
with respect to the matters set forth on Schedule 5.01(k) of the Company
Disclosure Schedule; (iv) the resignation of any executive officer or
senior manager level employee of the Company; (v) written notice by any
landlord of a late payment under any lease for real property; and (vi) any
forgiveness or reduction of debt or account receivable in excess of
$250,000 or the exchange or reduction of the same for equity or other
consideration.
(f) For so long as this Merger Agreement is in effect,
the Company shall furnish to Acquiror within 30 days after the end of each
fiscal month of the Company, an unaudited consolidated balance sheet of the
Company as of the end of such fiscal month and the related unaudited
consolidated statements of operations, stockholders' equity and cash flows
for the fiscal month then ended, prepared in accordance with GAAP, except
for the absence of notes thereto and subject to normal recurring year end
adjustments which will not be material in nature or amount, and certified
by the chief financial officer or equivalent officer of the Company.
(g) For so long as this Merger Agreement is in effect and
from and after the date hereof, Acquiror shall provide prompt written
notice of the occurrence of any of the following events (whether or not
such event would be required to be disclosed pursuant to this Merger
Agreement): (i) the receipt by Acquiror of written notice of any lawsuit
against Acquiror or an Acquiror Subsidiary which if determined adversely to
Acquiror or an Acquiror Subsidiary would reasonably be expected to result
in monetary damages in excess of $100,000 or any restriction, in any
material respect, on the business or operations of Acquiror or any Acquiror
Subsidiary, (ii) written notice by the provider of any Indebtedness of a
demand for refund or otherwise request repayment of any amounts advanced to
Acquiror, (iii) written notice of a material default under any Acquiror
Contract, and (iv) any amendment, alteration, repeal or other modification,
or waiver of any right or obligation under, any consents, releases, waivers
or other instrument obtained from banks and/or guarantors under the Term
Credit Agreement or Revolving Credit Agreement within 10 days of the
intended effective date of any such amendment, alteration, repeal or other
modification, or waiver.
(h) For so long as this Merger Agreement is in effect,
Acquiror shall, following the end of the first full month following the
date hereof and following the end of each month thereafter, provide a
written report (the "Acquiror Monthly Report") containing the following
information in reasonable detail: (i) cash reserves as of the date of such
Acquiror Monthly Report; (ii) the material terms of any contract entered
into by Acquiror or any Acquiror Subsidiary not previously disclosed to the
Company which involves payments by or to Acquiror or any Acquiror
Subsidiary in excess of $500,000 in any twelve (12) month period after the
effective date of such contract; (iii) cash received by Acquiror during the
month of such Acquiror Monthly Report; (iv) monthly subscriber information,
including number of subscribers and average revenues per user; (v) the
resignation of any executive officer or senior manager level employee of
Acquiror; (vi) written notice by any landlord of a late payment under any
lease for real property; and (vii) any forgiveness or reduction of debt or
account receivable in excess of $250,000 or the exchange or reduction of
the same for equity or other consideration.
(i) For so long as this Merger Agreement is in effect,
Acquiror shall furnish to the Company within 30 days after the end of each
fiscal month of Acquiror, an unaudited consolidated balance sheet of
Acquiror as of the end of such fiscal month and the related unaudited
consolidated statements of operations, stockholders' equity and cash flows
for the fiscal month then ended, prepared in accordance with GAAP, except
for the absence of notes thereto and subject to normal recurring year end
adjustments which will not be material in nature or amount, and certified
by the chief financial officer or equivalent officer of Acquiror.
SECTION 5.05. No Solicitation.
(a) Company No Solicitation. The Company shall, and shall
use its best efforts to cause its directors, officers, employees, agents,
investment bankers, financial advisors, attorneys, accountants and other
representatives ("Representatives") and the Company Subsidiaries and their
respective Representatives to, immediately cease any discussions or
negotiations with any Person that may be ongoing with respect to a
Competing Transaction (as defined in Section 5.05(d) of this Merger
Agreement) for the Company. The Company shall not, and shall direct and use
its best efforts to cause the Company Subsidiaries and the Representatives
of the Company and the Company Subsidiaries not to, directly or indirectly:
(i) initiate, solicit or encourage (including by way of furnishing
information or assistance), or take any other action to facilitate, any
inquiries or the making of any proposal that constitutes, or may reasonably
be expected to lead to, any Competing Transaction for the Company; or (ii)
enter into or participate in any discussions or negotiations with any
Person regarding a Competing Transaction for the Company, or furnish to any
Person any information regarding a Competing Transaction for the Company,
or take any other action to facilitate or cooperate with the making of any
inquiry or proposal regarding a Competing Transaction for the Company; or
(iii) grant any waiver or release under any standstill or similar Agreement
in effect on the date hereof with respect to any class of the equity
securities of the Company; or (iv) agree to approve or endorse any
Competing Transaction for the Company. Without limiting the foregoing, it
is understood that any violation of the restrictions set forth in the
preceding two sentences by any Representative of the Company or any Company
Subsidiary authorized to act on behalf of the Company or any Company
Subsidiary shall be deemed to be a breach of this Section 5.05(a) by the
Company.
(b) Acquiror No Solicitation. Acquiror and Merger Sub
shall, and shall use their best efforts to cause their Representatives and
the other Acquiror Subsidiaries and their respective Representatives to,
immediately cease any discussions or negotiations with any Person that may
be ongoing with respect to a Competing Transaction (as defined in Section
5.05(d) of this Merger Agreement) for Acquiror. Acquiror and Merger Sub
shall not, and shall direct and use their best efforts to cause the other
Acquiror Subsidiaries and the Representatives of Acquiror, Merger Sub and
the other Acquiror Subsidiaries not to, directly or indirectly: (i)
initiate, solicit or encourage (including by way of furnishing information
or assistance), or take any other action to facilitate, any inquiries or
the making of any proposal that constitutes, or may reasonably be expected
to lead to, any Competing Transaction for Acquiror; or (ii) enter into or
participate in any discussions or negotiations with any Person regarding a
Competing Transaction for Acquiror, or furnish to any Person any
information regarding a Competing Transaction for Acquiror, or take any
other action to facilitate or cooperate with the making of any inquiry or
proposal regarding a Competing Transaction for Acquiror; or (iii) grant any
waiver or release under any standstill or similar Agreement in effect on
the date hereof with respect to any class of the equity securities of
Acquiror; or (iv) agree to or endorse any Competing Transaction for
Acquiror. Without limiting the foregoing, it is understood that any
violation of the restrictions set forth in the preceding two sentences by
any director, officer, employee, investment banker, attorney, accountant,
agent or other advisor or representative of Acquiror or any Acquiror
Subsidiary authorized to act on behalf of Acquiror or any Acquiror
Subsidiary, or otherwise, shall be deemed to be a breach of this Section
5.05(b) by Acquiror.
(c) Each party hereto shall: (i) notify the other parties
(within one (1) business day) and in writing (as promptly as practicable)
if any inquiries or proposals, including a request for information,
regarding a Competing Transaction for such party are received by such
party, or, to the knowledge of such party, by any of such party's
respective Representatives; (ii) include in such notice the identity of the
person making any such inquiry or proposal, the material terms of such
inquiry or proposal and, if in writing, shall promptly deliver or cause to
be delivered to such other party a copy of such inquiry or proposal, along
with all other documentation and related correspondence; and (iii) keep
such other parties informed, on a current basis, of the nature of any such
inquiries and the status and terms of any such proposals, including any
amendments or proposed amendments thereto.
(d) For purposes of this Merger Agreement, "Competing
Transaction" shall mean any of the following involving a Person or a
subsidiary of that Person (other than the transactions contemplated by this
Merger Agreement and excluding any Portfolio Company): (i) any merger,
consolidation, share exchange, business combination, or other similar
transaction; (ii) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition of fifteen percent (15%) or more of the Assets of a
Person or any of its subsidiaries, or issuance of fifteen percent (15%) or
more of the outstanding voting securities of a Person or any of its
subsidiaries in a single transaction or series of transactions; (iii) any
tender offer or exchange offer for fifteen percent (15%) or more of the
outstanding shares of capital stock of a Person or any of its subsidiaries,
or the filing of a registration statement under the Securities Act in
connection therewith; (iv) any Person (other than Acquiror or the Company)
shall, after the date hereof, have acquired beneficial ownership or the
right to acquire beneficial ownership of, or any "group" (as such term is
defined under Section 13(d) of the Exchange Act) shall have been formed
after the date of this Merger Agreement which beneficially owns or has the
right to acquire beneficial ownership of, fifteen percent (15%) or more of
the then outstanding shares of capital stock of a Person; or (v) any
Agreement to, or public announcement by Acquiror, the Company or any other
Person of, a proposal, plan or intention to do any of the foregoing.
(e) Notwithstanding anything to the contrary set forth in
subsections (a), (b), (c) and (d) above or elsewhere in this Merger
Agreement, nothing contained in this Merger Agreement shall prohibit (i)
either Acquiror or the Company from complying with Rules 14d-9 and 14e-2
promulgated under the Exchange Act or publicly disclosing the existence of
any Competing Transaction as required by applicable Law, or (ii) the
Representatives of either Acquiror or the Company, as the case may be,
prior to the time of the Acquiror Stockholders Meeting or the Company
Stockholders Meeting, as the case may be, furnishing information to, or
entering into discussions or negotiations with, any Person in connection
with an unsolicited bona fide written proposal from such Person for a
Competing Transaction for Acquiror or the Company, as the case may be,
which involves a merger, consolidation, share exchange, business
combination or the acquisition of more than 75% of the outstanding common
stock of Acquiror or the Company, as the case may be, if before doing so:
(A) Acquiror or the Company, as the case may be, enters into with such
Person a confidentiality agreement in reasonably customary form on terms
not more favorable to such Person than the terms contained in the
Confidentiality Agreement; (B) the Board of Directors of Acquiror or the
Company, as the case may be, after consultation with independent financial
advisors, reasonably determines in good faith that the Competing
Transaction, if consummated, is reasonably likely to result in a
transaction more favorable to the Acquiror Stockholders or the Company
Stockholders, as the case may be, than the Merger (any such more favorable
Competing Transaction being referred to in this Merger Agreement as a
"Superior Proposal"); (C) the Board of Directors of Acquiror or the
Company, as the case may be, reasonably determines in its good faith
judgment, after consultation with independent financial advisors, that such
Person has the financial ability to consummate such proposal; (D) the Board
of Directors of Acquiror or the Company, as the case may be, after
consultation with and having received the advice of independent legal
counsel, determines in good faith that such action is necessary for such
Board of Directors to comply with its fiduciary duties to the Acquiror
Stockholders or the Company Stockholders, as the case may be, under
applicable Law; and (E) Acquiror or the Company, as the case may be, shall
have otherwise complied with the terms of this Section 5.05.
(f) Notwithstanding anything to the contrary set forth in
subsections (a), (b), (c), (d) and (e) above or elsewhere in this Merger
Agreement, in the event that a proposal for a Competing Transaction
constitutes a Superior Proposal, nothing contained in this Merger Agreement
shall prohibit the Board of Directors of Acquiror or the Company, as the
case may be, from withdrawing its recommendation required under Section
6.02(a) and Section 6.02(b) hereof and recommending such Superior Proposal
to its respective stockholders: (i) if, but only if, Acquiror or the
Company, as the case may be: (A) complies fully with this Section 5.05 and
(B) provides the other parties with at least four (4) business days prior
written notice of its intent to withdraw its respective recommendation and
(ii) if, in the event that during such four (4) business days Acquiror or
the Company, as the case may be, makes a counter proposal to such Superior
Proposal (any such counter proposal being referred to in this Merger
Agreement as the "Counter Proposal"), the Board of Directors of Acquiror or
the Company, a case may be, in good faith, taking into account the advice
of its outside financial advisors, determines that such Counter Proposal is
not at least as favorable to its stockholders as the Superior Proposal.
(g) In the event that, pursuant to Section 5.05(e) of
this Merger Agreement, either party elects to engage in discussions or
negotiations with, or furnish any information to, any Person regarding a
Superior Proposal, such party must at least two (2) business days prior to
engaging in such discussions or negotiations or furnishing such information
provide written notice to the other party.
(h) Nothing in this Section 5.05 shall (i) permit either
party to terminate this Merger Agreement (except as specifically provided
in Article VIII hereof) or (ii) affect any other obligation of such party
under this Merger Agreement.
SECTION 5.06. Exchange Rights.
Until the termination of this Merger Agreement pursuant
to Article VIII, the Company shall not, prior to date that is 5 months
after Initial Closing Date (as defined in the Bridge Note Agreement) for
the Notes (as defined in the Bridge Note Agreement) issued pursuant to the
Bridge Note Agreement exercise any rights which the Company may have under
the Bridge Note Agreement to exchange the Notes for XM Shares (as defined
therein) unless Acquiror materially breaches this Merger Agreement or
Acquiror elects to prepay all or any portion of any Notes in accordance
with Section 2.06 thereof, in which case such exchange right shall be
exercisable at any time following the giving of an optional prepayment
notice in accordance with Section 2.06 thereof and prior to the close of
business on the day immediately preceding the prepayment date.
Section 5.07. Employee Benefits.
(a) Following the Effective Time, Acquiror shall provide
to the those individuals who were employees of the Company or any of its
subsidiaries immediately prior to the Effective Time ("Employees") employee
plans and programs which provide benefits taken as a whole that are no less
favorable than either (i) those provided to those individuals immediately
prior to the Effective Time or (ii) those provided to comparable employees
of Acquiror, as Acquiror may elect and shall take such actions as are
necessary to allow the Company's employees to participate in Acquiror's
401(k); provided, however, that nothing in this Section 5.07(a) shall
require Acquiror to provide benefits on a change of control, options or
other incentives comparable to those provided by the Company. With respect
to such benefits, service accrued by Employees during employment with the
Company and the Company Subsidiaries prior to the Effective Time shall be
recognized for all purposes as service rendered to Acquiror and the
Acquiror Subsidiaries and successors, except to the extent necessary to
prevent duplication of benefits.
(b) Acquiror shall honor, in accordance with their terms,
and shall make required payments when due under, all Company Benefit Plans,
as in effect as of the date hereof and as are amended without violation of
this Merger Agreement; provided, however, that the foregoing shall not
preclude Acquiror from amending or terminating any Company Benefit Plan in
accordance with its terms.
(c) With respect to any welfare plans in which the
Employees are eligible to participate after the Effective Time, Acquiror
shall (i) waive all limitations as to preexisting conditions, exclusions
and waiting periods with respect to participation and coverage requirements
applicable to the Employees and (ii) provide each Employee with credit for
any co-payments and deductibles paid prior to the Effective Time in
satisfying any applicable deductible or out-of-pocket requirements.
(d) Acquiror hereby acknowledges that the consummation of
the transactions contemplated by this Merger Agreement shall cause a
"change of control" to occur under the agreements set forth on Schedule
5.07(d) of the Company Disclosure Schedule. Acquiror hereby agrees to honor
the terms of such agreements as such terms are set forth on Schedule
5.07(d) of the Company Disclosure Schedule, subject to amendments to such
agreements as may be mutually agreed upon by Acquiror and the individual
that is a party to each such agreement.
Section 5.08. Covenants Relating to XM.
Notwithstanding anything to the contrary set forth in
this Merger Agreement or the Bridge Note Documents, Acquiror hereby
covenants and agrees that, from the date of this Merger Agreement until the
Effective Time, except as expressly provided in this Merger Agreement or in
the Bridge Note Documents, unless consented to in writing by each of the
Preferred Stockholders in their sole discretion, Acquiror shall not, and
shall not permit any Acquiror Subsidiary to:
(a) (i) permit any Encumbrances (other than those in
effect on the date hereof and which are disclosed on Schedule 4.26 of the
Acquiror Disclosure Schedule) whatsoever in respect of any Acquiror XM
Stock, (ii) subject any Acquiror XM Stock to any limitations or
restrictions, including, without limitation, in respect of the right to
lease, lend, exchange, mortgage, pledge, convert, register, transfer, sell
or otherwise dispose of any Acquiror XM Stock or grant any option, right or
interest therein (and any other securities into which such Acquiror XM
Stock is convertible) and the proceeds thereof or the right to acquire any
such option, right or interest, (iii) sell, transfer or assign any Acquiror
XM Stock, or grant or create any other option, right or interest in any
Acquiror XM Stock (and any other securities into which such Acquiror XM
Stock is convertible) and the proceeds thereof or the right to acquire any
such option, right or interest, and (iv) enter into any swap, participation
or other arrangement that transfers to another, in whole or in part, any of
the economic consequences of ownership of any Acquiror XM Stock or grant
any option, right or interest therein (and any other securities into which
such Acquiror XM Stock is convertible) and the proceeds thereof or the
right to acquire any such option, right or interest, in each such case,
whether any such transaction described in clauses (i) through (iv) above is
to be settled by delivery of capital stock, such other securities, other
rights, in cash or otherwise;
(b) (i) exercise voting or other control rights, powers
and privileges with respect to any Acquiror XM Stock or any XM Stock
Documents, (ii) consent to or approve (or withhold any such consent or
approval) of (A) the amendment, alteration, supplement, repeal or any other
modification of any Acquiror XM Stock or any XM Stock Documents, (B) any
action to be taken with respect, or pursuant, to any Acquiror XM Stock or
any XM Stock Documents, or (iii) waive or otherwise not exercise any right,
remedy, power, privilege or obligation under, or with respect to, any
Acquiror XM Stock or any XM Stock Documents, in the case of each of (i),
(ii) and (iii), to the extent that it could reasonably be expected to
render the conditions to closing in Section 7.04(c) and (d) incapable of
satisfaction; and
(c) authorize, or commit or agree to do any of the
foregoing.
For the benefit of the Preferred Stockholders, for so
long as this Merger Agreement is in effect, the Company agrees that, in the
event it shall become the beneficial owner of, or acquire any voting or
other rights with respect to, any Acquiror XM Stock pursuant to the Bridge
Note Documents or any of the other documents and instruments delivered in
connection therewith, it shall comply with the provisions of this Section
5.08 as if it were Acquiror without giving effect to any exceptions
applicable to Acquiror with respect to the Bridge Note Documents.
SECTION 5.09. Merger Sub Compliance.
Acquiror shall cause Merger Sub to comply with all of its
obligations under or related to this Agreement.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Registration Statement; Joint Proxy Statement.
(a) As promptly as practicable after the execution of
this Merger Agreement, Acquiror and the Company shall prepare and file with
the SEC a registration statement on Form S-4 (such registration statement,
together with the amendments thereto being the "Registration Statement"),
containing a joint proxy statement/prospectus (such joint proxy
statement/prospectus, together with any amendments thereof or supplements
thereto, in each case in the form or forms mailed to the Acquiror
Stockholders and to the Company Stockholders, being the "Joint Proxy
Statement"), in connection with the registration under the Securities Act
of the shares of Acquiror Series A Preferred Stock issuable pursuant to
Section 2.01 or upon the exercise of Acquiror Warrants, the shares of
Acquiror Common Stock issuable upon the conversion thereof or upon the
exercise of Acquiror Warrants, the vote of the Company Stockholders with
respect to the Merger and the other transactions contemplated by this
Merger Agreement, and the vote of the Acquiror Stockholders with respect to
(i) the Restated Charter, and (ii) the Required Acquiror Stockholders
Consent. Acquiror and the Company shall cooperate with each other in the
preparation of the Joint Proxy Statement and shall provide all information
in connection therewith. Each party agrees promptly to provide the other
party with copies of all correspondence from and all responsive
correspondence to the SEC regarding the Registration Statement and Joint
Proxy Statement. Each party agrees promptly to notify the other party of
all stop orders or threatened stop orders of which it becomes aware with
respect to the Registration Statement. Each of Acquiror and the Company
will use all reasonable efforts to have or cause the Registration Statement
to become effective as promptly as practicable, and shall take any action
required to be taken under any applicable federal or state securities Laws
in connection with the issuance of shares of Acquiror Series A Preferred
Stock and the Discrepancy Notes in the Merger. Each of Acquiror and the
Company shall furnish all information concerning it and the holders of its
capital stock as the other may reasonably request in connection with such
actions. As promptly as practicable after the Registration Statement shall
have become effective, the Company and Acquiror shall mail the Joint Proxy
Statement to their respective stockholders and shall comply with the proxy
solicitation rules and regulations under the Exchange Act in connection
with the solicitation of such stockholders. Each of Acquiror and the
Company covenants and agrees that the Joint Proxy Statement shall include
the respective recommendations of the Board of Directors to the Acquiror
Stockholders and the Company Stockholders subject to Section 5.05 above.
(b) The information supplied by the Company for inclusion
in the Registration Statement shall not, at the time the Registration
Statement is declared 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. The
information supplied by the Company for inclusion in the Joint Proxy
Statement to be sent to the Company Stockholders in connection with the
meeting of the Company Stockholders to consider the Merger (the "Company
Stockholders Meeting") shall not, at the date the Joint Proxy Statement (or
any amendment thereof or supplement thereto) is first mailed to the Company
Stockholders and the Acquiror Stockholders, at the time of the Company
Stockholders Meeting and the Acquiror Stockholders Meeting (as defined in
Section 6.01(c)), or 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 the light
of the circumstances under which they are made, not misleading. If at any
time prior to the Effective Time any event or circumstance relating to the
Company or any of its affiliates, or its or their respective officers or
directors, should be discovered by the Company which should be set forth in
an amendment to the Registration Statement or a supplement to the Joint
Proxy Statement, the Company shall promptly inform Acquiror. All documents
that the Company is responsible for filing with the SEC in connection with
the transactions contemplated herein will comply as to form and substance
in all material respects with the applicable requirements of the Securities
Act and the rules and regulations thereunder and the Exchange Act and the
rules and regulations thereunder.
(c) The information supplied by Acquiror for inclusion in
the Registration Statement shall not, at the time the Registration
Statement is declared 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. The
information supplied by Acquiror for inclusion in the Joint Proxy Statement
to be sent to the Acquiror Stockholders in connection with the meeting of
the Acquiror Stockholders to consider (i) the Restated Charter and (ii) the
Required Acquiror Stockholders Consent (the "Acquiror Stockholders
Meeting") shall not, at the date the Joint Proxy Statement (or any
amendment thereof or supplement thereto) is first mailed to the Company
Stockholders and the Acquiror Stockholders, at the time of the Company
Stockholders Meeting and the Acquiror Stockholders Meeting, or 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 the light of the circumstances under
which they are made, not misleading. If at any time prior to the Effective
Time any event or circumstance relating to Acquiror or any of its
respective affiliates, or its or their respective officers or directors,
should be discovered by Acquiror which should be set forth in an amendment
to the Registration Statement or a supplement to the Joint Proxy Statement,
Acquiror shall promptly inform the Company. All documents that Acquiror is
responsible for filing with the SEC in connection with the transactions
contemplated herein will comply as to form and substance in all material
respects with the applicable requirements of the Securities Act and the
rules and regulations thereunder and the Exchange Act and the rules and
regulations thereunder.
(d) The Company, Merger Sub and Acquiror each hereby (i)
consents to the use of its name and, on behalf of its subsidiaries and
affiliates, the names of such subsidiaries and affiliates and to the
inclusion of financial statements and business information relating to such
party and its subsidiaries (in each case, to the extent required by
applicable securities Laws) in any registration statement or proxy
statement prepared by the Company or Acquiror pursuant to this Merger
Agreement; (ii) agrees to use its reasonable best efforts to obtain the
written consent of any Person retained by it which may be required to be
named (as an expert or otherwise) in such registration statement or proxy
statement; and (iii) agrees to cooperate, and to use its reasonable best
efforts to cause its subsidiaries and affiliates to cooperate, with any
legal counsel, investment banker, accountant or other agent or
representative retained by any of the parties specified in clause (i) in
connection with the preparation of any and all information required, as
determined after consultation with each party's counsel, to be disclosed by
applicable securities Laws in any such registration statement or proxy
statement.
SECTION 6.02. Meetings of Stockholders.
(a) The Company shall promptly after the date of this
Merger Agreement take all action necessary in accordance with Delaware Law
and its certificate of incorporation and bylaws to duly call, give notice
of, convene and hold the Company Stockholders Meeting, and the Company
shall consult with Acquiror in connection therewith. Except to the extent
that such actions would be inconsistent with their fiduciary duties as
determined in good faith (after consultation with and having received the
advice of outside legal counsel) and provided that the Company has complied
with Section 5.05(f), at such meeting, the Company's board of directors
shall recommend that the holders of Company Common Stock and Company
Preferred Stock vote in favor of adopting and approving this Merger
Agreement in accordance with the terms hereof, and the Company shall use
all reasonable efforts to solicit from the Company Stockholders proxies or
consents to approve this Merger Agreement and the transactions contemplated
hereby and shall take all other actions reasonably necessary or advisable
to secure the vote or consent of the holders of Company Common Stock and
Company Preferred Stock required by Delaware Law to approve this Merger
Agreement and the transactions contemplated hereby. Notwithstanding the
receipt of a Superior Proposal by the Company, the Company shall hold the
Company Stockholders Meeting.
(b) Acquiror shall promptly after the date of this Merger
Agreement take all action necessary in accordance with Delaware Law and its
certificate of incorporation and bylaws to duly call, give notice of,
convene and hold the Acquiror Stockholders Meeting, and Acquiror shall
consult with the Company in connection therewith. Except to the extent that
such actions would be inconsistent with their fiduciary duties as
determined in good faith (after consultation with and having received the
advice of outside legal counsel) and provided that Acquiror has complied
with Section 5.05(f), at such meeting, Acquiror's board of directors shall
recommend that the holders of Acquiror Common Stock vote in favor of
adopting and approving this Merger Agreement in accordance with the terms
hereof, and Acquiror shall use its reasonable best efforts to solicit from
its stockholders proxies or consents to approve (i) the Restated Charter
and (ii) the Required Acquiror Stockholders Consent and shall take all
other actions reasonably necessary or advisable to secure the vote or
consent of the Acquiror Stockholders required by Delaware Law to approve
(i) the Restated Charter and (ii) the Required Acquiror Stockholders
Consent. Notwithstanding the receipt of a Superior Proposal by Acquiror,
Acquiror shall hold the Acquiror Stockholders Meeting.
(c) Acquiror and the Company shall coordinate and
cooperate with respect to the timing of the Acquiror Stockholders Meeting
and the Company Stockholders Meeting and shall use their respective
reasonable best efforts to hold the Acquiror Stockholders Meeting and the
Company Stockholders Meeting on the same day as soon as practicable after
the date on which the Registration Statement becomes effective.
SECTION 6.03. Appropriate Action; Consents; Filings.
(a) Upon the terms and subject to the conditions set
forth in this Merger Agreement, the Company, Merger Sub and Acquiror shall
use their reasonable best efforts to take, or cause to be taken, all
appropriate action, and do, or cause to be done, and to assist and
cooperate with the other parties in doing all things necessary, proper or
advisable under applicable Law or otherwise to consummate and make
effective the transactions contemplated by this Merger Agreement as
promptly as practicable, including (i) executing and delivering any
additional instruments necessary, proper or advisable to consummate the
transactions contemplated by, and to carry out fully the purposes of, this
Merger Agreement, (ii) obtaining from any Governmental Entities any
Licenses required to be obtained or made by Acquiror, Merger Sub or the
Company or any of their subsidiaries in connection with the authorization,
execution and delivery of this Merger Agreement and the consummation of the
transactions contemplated herein, including, without limitation, the
Merger, and (iii) making all necessary filings, and thereafter making any
other required submissions, with respect to this Merger Agreement and the
Merger required under (A) the Securities Act, the Exchange Act and any
other applicable federal or state securities Laws, (B) the HSR Act and (C)
any other applicable Law; provided, that, Acquiror, Merger Sub and the
Company shall cooperate with each other in connection with the making of
all such filings, including providing copies of all such Documents to the
non-filing party and its advisors prior to filing and discussing all
reasonable additions, deletions or changes suggested in connection
therewith. The Company and Acquiror shall furnish to each other all
information required for any application or other filing to be made
pursuant to the rules and regulations of any applicable Law in connection
with the transactions contemplated by this Merger Agreement.
(b) (i) The Company, Merger Sub and Acquiror shall give
(or shall cause their respective subsidiaries to give) any notices to third
parties, and use, and cause their respective subsidiaries to use, their
reasonable best efforts to obtain any third party consents, approvals or
waivers (A) necessary, proper or advisable to consummate the transactions
contemplated in this Merger Agreement, (B) disclosed or required to be
disclosed in the Company Disclosure Schedule or the Acquiror Disclosure
Schedule, as the case may be, or (C) required to prevent a Company Material
Adverse Effect from occurring prior to or after the Effective Time or an
Acquiror Material Adverse Effect from occurring prior to or after the
Effective Time.
(ii) In the event that any party shall fail to
obtain any third party consent, approval or waiver described in subsection
(b)(i) above, such party shall use its reasonable best efforts, and shall
take any such actions reasonably requested by the other parties hereto, to
minimize any adverse effect upon the Company and Acquiror, their respective
subsidiaries, and their respective businesses resulting, or which could
reasonably be expected to result after the Effective Time, from the failure
to obtain such consent, approval or waiver, and shall promptly provide
notice of such failure to the other party.
(c) From the date of this Merger Agreement until the
Effective Time, the Company, Merger Sub and Acquiror shall promptly notify
each other in writing of any pending or, to the knowledge of the Company,
Merger Sub or Acquiror (or their respective Subsidiaries), threatened
action, proceeding or investigation by any Governmental Entity or any other
Person (i) challenging or seeking damages in connection with the Merger or
the conversion of Company Common Stock into Acquiror Series A Preferred
Stock pursuant to the Merger or (ii) seeking to restrain or prohibit the
consummation of the Merger or otherwise limit the right of Acquiror or its
subsidiaries to own or operate all or any portion of the businesses or
Assets of the Company or any Company Subsidiary. The Company, Merger Sub
and Acquiror shall cooperate with each other in defending any such action,
proceeding or investigation, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental
Entity vacated or reversed.
(d) Notwithstanding the prohibitions contained in Section
5.02, Acquiror shall be permitted to amend its certificate of incorporation
to effect a reverse stock split, reclassification or similar action if
Acquiror and the Company reasonably believe that such action is necessary
to maintain the listing of Acquiror Common Stock on the Nasdaq National
Market; provided, that, any such action taken shall not change the
aggregate value of the Merger Consideration to be received by the Company
Stockholders and the Company Preferred Stockholders as provided herein or
otherwise alter the overall economics of the transactions contemplated
herein. In such event, the Company and Acquiror agree to cooperate in good
faith with each other and to modify this Merger Agreement and to execute
and deliver such other documents or instruments as either party reasonably
requests to the extent reasonably necessary to effect the actions
contemplated by the preceding sentence.
(e) In the event that any of the provisions herein or in
the Restated Charter relating to the terms of the Acquiror Series A
Preferred Stock are required to be amended in order to satisfy initial
listing requirements for the Acquiror Series A Preferred Stock on the
Nasdaq National Market, the parties hereto agree to cooperate in good faith
with each other and to modify this Merger Agreement and the Restated
Charter and to execute and deliver such other documents or instruments as
either party reasonably requests to the extent reasonably necessary to
satisfy initial listing requirements for the Acquiror Series A Preferred
Stock on the Nasdaq National Market; provided, that, any such actions taken
shall not change the aggregate value of the Merger Consideration to be
received by the Company Stockholders and the Company Preferred Stockholders
as provided herein or otherwise alter the overall economics of the
transactions contemplated herein.
SECTION 6.04. Public Announcements.
Acquiror, Merger Sub and the Company shall consult with
each other before issuing or making, and shall give each other a reasonable
opportunity to review and comment upon, any press release or other public
statement with respect to the Merger and the other transactions
contemplated in this Merger Agreement, and shall not issue any such press
release or make any such public statement prior to such consultation and
reasonable opportunity for review and comment, except as may be required by
Law or any listing agreement with or rule of the NASD.
SECTION 6.05. Post-Signing SEC Documents.
Each of the Company, Merger Sub and Acquiror will file
with the SEC all reports, schedules, forms, statements and other Documents
required to be filed by it after the date of this Merger Agreement but
before the Effective Time (in the case of the Company, the "Company
Post-Signing SEC Documents" and, in the case of Acquiror, the "Acquiror
Post-Signing SEC Documents").
SECTION 6.06. Affiliates.
Prior to the Effective Time, the Company shall use its
reasonable best efforts to obtain Affiliate Agreements from each Person
listed in Schedule 3.27 of the Company Disclosure Schedule and any Person
who may be deemed to have become an affiliate of the Company (under SEC
Rule 145 of the Securities Act) after the date of this Merger Agreement and
at or prior to the Effective Time; provided, that, the Company shall use
its reasonable best efforts to obtain Affiliate Agreements from each such
Person as soon as practicable after the date of this Merger Agreement or
the date on which such Person attains such status, as the case may be.
SECTION 6.07. Directors' and Officers' Insurance; Indemnification.
(a) After the Effective Time, the Surviving Corporation
shall indemnify and hold harmless the individuals who on or prior to the
Effective Time were officers and directors of the Company or the Company
Subsidiaries (the "Indemnified Parties") with respect to all acts or
omissions by them in their capacities as such or taken at the request of
the Company or any Company Subsidiary at any time on or prior to the
Effective Time, to the fullest extent that a corporation can indemnify its
directors and officers in accordance with Delaware Law. The certificate of
incorporation of the Surviving Corporation shall contain provisions set
forth in the Certificate of Incorporation of Merger Sub as in effect on the
date hereof with respect to indemnification and exculpation. The provisions
shall not be amended, repealed or otherwise modified for a period of six
years from the Effective Time in any manner that would adversely affect the
rights thereunder of individuals who at the Effective Time were directors
or officers of the Company, unless such modification is required by law.
After the Effective Time, the Surviving Corporation shall also advance
indemnifiable expenses to any such person upon receipt of an undertaking by
such person to repay such expenses if it is determined that such person is
not entitled to indemnification.
(b) For a period of six years after the Effective Time,
the Surviving Corporation shall maintain in effect, if available,
directors' and officers' liability insurance covering those persons who are
currently covered by the Company's directors' and officers' liability
insurance policy (a copy of which has been made available to Acquiror) on
terms comparable to those now applicable to directors and officers of the
Company; provided, however, that in no event shall the Surviving
Corporation be required to expend in excess of 150% of the annual premium
currently paid by the Company for such coverage, and that if the premium
for such coverage exceeds such amount, the Surviving Corporation shall
purchase a policy with the greatest coverage available for such 150% of the
annual premium.
SECTION 6.08. Payment of Expenses.
The Company shall reimburse the Preferred Stockholders
for all reasonable fees and expenses of outside counsel, accountants and
other advisors incurred or payable (or reasonably expected to be incurred
or payable) by the Preferred Stockholders or any of their affiliates, in
connection with the Merger and the transactions contemplated hereby
including, without limitation, the compliance with and the filing of the
appropriate reports and documents pursuant to the HSR Act (collectively,
"Company Preferred Transaction Expenses"). The Preferred Stockholders shall
provide documentation reasonably satisfactory to the Company to document
the Company Preferred Transaction Expenses.
SECTION 6.09. XM.
Prior to the Effective Time, Acquiror shall (a) take all
action necessary to ensure that it will be able to deliver the XM Merger
Shares, which shall be Unencumbered XM Merger Shares, at the Effective Time
duly registered in the name of each of the Preferred Stockholders,
including, without limitation, the actions set forth on Part (a) of
Schedule 6.09 attached hereto; (b) use best efforts to cause the XM Stock
Documents, as in effect on the date hereof, to be amended to reflect
substantially the terms and conditions set forth on Part (b) of Schedule
6.09 attached hereto; (c) take all action necessary to ensure that it will
be able to transfer the XM Related Rights together with the XM Merger
Shares at the Effective Time, including, without limitation, the actions
set forth as Part (c) of Schedule 6.09; and (d) use best efforts to obtain
each of the consents, amendments, approvals, terminations, discharges,
releases and other instruments or authorizations necessary to comply with
clauses (a), (b) and (c) hereof.
SECTION 6.10. Consent to Second Closing Under Bridge Note Agreement.
The Company hereby agrees not to withhold its consent to
the consummation of the Second Closing (as such term is defined in the
Bridge Note Agreement) provided that Acquiror shall have delivered to the
Company the Notice of Purchase (as such term is defined in the Bridge Note
Agreement) on or after July 15, 2001 and, in addition to the satisfaction
of the conditions set forth in Section 3.02 of the Bridge Note Agreement
(except for the condition set forth in Section 3.02(l) thereof), the
following conditions shall have been satisfied:
(a) Acquiror not being in breach of any provision of the
Merger Agreement which, if not cured, would cause the conditions set forth
in Section 7.03 or Section 7.04 to not be satisfied;
(b) Acquiror shall, at the time of such Notice of
Purchase, be continuing to use its reasonable best efforts to take all
actions necessary to consummate the Merger and the transactions
contemplated thereby;
(c) (i) The Acquiror has obtained the consents set forth
on Schedule 4.04 of the Acquiror Disclosure Schedule and the Acquiror
Consent Notice has been received by the Company; and (ii) if the Acquiror
Stockholders Meeting has been held, the stockholders of Acquiror shall have
approved the Restated Charter and the Required Acquiror Stockholders
Consent at the Acquiror Stockholders Meeting;
(d) There not being any other condition to any party's
obligation to effect the Merger and the other transactions contemplated
herein which, in the reasonable judgment of Acquiror or the Company, is not
likely to be satisfied on or prior to the End Date;
(e) There not being in effect any injunction or order
prohibiting the consummation of the transactions contemplated by the Merger
Agreement;
(f) Acquiror shall have either (i) delivered a
certificate to the Company certifying that the Acquiror is not aware of any
inaccuracy of the representations and warranties or breach of any covenants
or agreements of the Company, in each case occurring after the date hereof
and prior to the delivery of the Notice of Purchase, contained in this
Merger Agreement except for any failure of a representation or warranty to
be true and correct (without regard to materiality qualifiers contained
therein), which would not constitute a Company Material Adverse Effect, or
(ii) if the Acquiror is aware of one or more inaccuracies of the
representations and warranties or breaches of any covenants or agreements
of the Company, in each case occurring after the date hereof and prior to
the delivery of the Notice of Purchase, contained in this Merger Agreement
except for any failure of a representation or warranty to be true and
correct (without regard to materiality qualifiers contained therein), which
would not constitute a Company Material Adverse Effect, Acquiror shall
deliver the certificate described in (i) above except that such certificate
shall (A) contain a reasonable description of any such inaccuracies and/or
breaches and (B) waive, to the extent that Acquiror is legally permitted to
waive, the condition to its obligation to effect the Merger and the
transactions contemplated herein pursuant to Section 7.02(a) or 7.02(b)
hereof, as the case may be, but only with respect to such inaccuracies
and/or breaches as they are described in the certificate and as they exist
(with all the facts and circumstances) as of the date of such certificate;
and
(g) Acquiror shall have delivered to the Company a
certificate of its chief financial officer confirming (i) the satisfaction
of the preceding conditions (a) through (e), and (ii) that the proceeds to
be received by Acquiror upon issuance of the Tranche B Note (as such term
is defined in the Bridge Note Agreement), after giving effect to Acquiror's
then existing liquidity, are reasonably necessary for the business purposes
of Acquiror promptly following receipt of such proceeds and will contain a
schedule setting forth in reasonable detail such intended uses.
SECTION 6.11. Acquiror Best Efforts to Obtain Consents.
Acquiror hereby agrees to use its best efforts to obtain
all of the consents and approvals set forth on Schedule 4.04 of the
Acquiror Disclosure Schedule which have not been obtained prior to the date
hereof (all such consents being collectively referred to herein as the
"Outstanding Consents"). Acquiror shall provide prompt written notice (the
"Acquiror Consent Notice") to the Company of the receipt by Acquiror of all
of the Outstanding Consents.
SECTION 6.12. Employee Plans.
To the extent practicable, immediately prior to Closing,
the Company will contribute to its 401(k) plans all employee deferrals and
any related matching or other employer contributions. One day prior to the
Effective Time, the Company will terminate its 401(k) plans. After the
Effective Time, Acquiror will apply to the Internal Revenue Service for a
determination letter to the effect that the termination of the Company's
401(k) plans will not affect the qualified status of the Company's 401(k)
plans and shall use its reasonable best efforts to obtain such a letter.
Upon receipt of a favorable determination letter from the IRS, Acquiror
will direct the trustees of the Company's 401(k) plans to distribute or
transfer assets pursuant to and in compliance with the terms of the
Company's 401(k) plans and the governing provisions of the Code.
SECTION 6.13. Exemption from Liability Under Section 16(b).
(a) Provided that the Company delivers to Acquiror the
Section 16 Information with respect to the Company prior to the Effective
Time, the Board of Directors of Acquiror, or a committee thereof consisting
of Non-Employee Directors (as such term is defined for purposes of Rule
16b-3(d) under the Exchange Act), shall adopt a resolution in advance of
the Effective Time providing that the receipt by the Company Insiders of
Acquiror Series A Preferred Stock in exchange for shares of Company Common
Stock, of options to purchase Acquiror Series A Preferred Stock and
Acquiror Common Stock upon assumption and conversion of Company Stock
Options and of warrants to purchase Acquiror Series A Non-Voting Preferred
Stock, Acquiror Series A Preferred Stock, Acquiror Non-Voting Common Stock
and Acquiror Common Stock upon assumption and conversion of Company
Warrants, in each case pursuant to the transactions contemplated hereby and
to the extent such securities are listed in the Section 16 Information, are
intended to be exempt from liability pursuant to Rule 16b-3 under the
Exchange Act.
(b) For purposes of this Section 6.13, "Section 16
Information" shall mean information accurate in all respects regarding the
Company Insiders and the number of shares of Company Common Stock or other
Company equity securities deemed to be beneficially owned by each such
Company Insider and expected to be exchanged for Acquiror Series A
Preferred Stock, Acquiror Series A Non-Voting Preferred Stock, Acquiror
Non-Voting Common Stock and Acquiror Common Stock in connection with the
Merger or options or warrants to purchase such stock.
(c) For purposes of this Section 6.13, "Company Insiders"
shall mean those officers and directors of the Company who are subject to
the reporting requirements of Section 16(a) of the Exchange Act who are
listed in the Section 16 Information.
ARTICLE VII
CONDITIONS
SECTION 7.01. Conditions to Obligations of Each Party Under This
Merger Agreement.
The respective obligations of each party to effect the
Merger and the other transactions contemplated herein shall be subject to
the satisfaction at or prior to the Effective Time of the following
conditions, any or all of which may be waived by agreement of Acquiror,
Merger Sub and the Company, in whole or in part, to the extent permitted by
applicable Law:
(a) Effectiveness of the Registration Statement. The
Registration Statement shall have been declared effective by the SEC under
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 Acquiror
or the Company, threatened by the SEC. Acquiror shall have received all
other federal or state securities permits and other authorizations
necessary to be received prior to the Effective Time to issue the
securities contemplated by this Merger Agreement in exchange for the
Company Common Stock and the Company Preferred Stock and to consummate the
Merger, the failure of which to obtain shall reasonably be expected to
result in an Acquiror Material Adverse Effect.
(b) Stockholder Approval. Each of the Acquiror
Stockholder Approval, the Merger Sub Stockholder Approval and the Company
Stockholder Approval shall have been obtained.
(c) No Order. No Governmental Entity or federal or state
court of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, executive order, decree,
judgment, injunction or other order (whether temporary, preliminary or
permanent), in any case which is in effect and which prevents or prohibits
consummation of the Merger or any other transactions contemplated by this
Merger Agreement; provided, however, that each of the parties shall use its
reasonable best efforts to cause any such decree, judgment, injunction or
other order to be vacated or lifted as promptly as practicable.
(d) HSR Act. Any applicable waiting periods with respect
to the Merger and the other transactions contemplated hereby, together with
any extensions thereof, under the HSR Act shall have expired or been
terminated.
(e) Nasdaq Listing. The shares of Acquiror Series A
Preferred Stock to be issued in the Merger shall have been approved for
listing on the Nasdaq National Market.
(f) Certain Consents. Acquiror shall have obtained all of
the consents and approvals set forth on Schedule 4.04 of the Acquiror
Disclosure Schedule.
SECTION 7.02. Additional Conditions to Obligations of Acquiror
and Merger Sub.
The obligations of Acquiror and Merger Sub to effect the
Merger and the other transactions contemplated herein are also subject to
the satisfaction at or prior to the Effective Time of the following
conditions, any or all of which may be waived by Acquiror and Merger Sub,
in whole or in part, to the extent permitted by applicable Law:
(a) Representations and Warranties. The representations
and warranties of the Company contained in this Merger Agreement shall be
true and correct when made and as of the Effective Time (except for
representations and warranties that speak as of a specific date or time,
which need only be true and correct in all material respects as of such
date or time) except where the failure to be true and correct (without
regard to materiality qualifiers contained therein) would not constitute a
Company Material Adverse Effect. Acquiror shall have received a certificate
of the chief executive officer and chief financial officer (or equivalent
officer) of the Company to that effect.
(b) Agreements and Covenants. The Company shall have
performed or complied in all material respects with all agreements and
covenants required by this Merger Agreement to be performed or complied
with by them on or prior to the Effective Time. Acquiror shall have
received a certificate of the chief executive officer and chief financial
officer of the Company to that effect.
(c) Net Worth Condition. (i) Acquiror shall have received
a certificate of the chief executive officer and chief financial officer
(or other equivalent officer) of the Company executed on behalf of the
Company to the effect that (A) to their knowledge (but without having
undertaken an independent appraisal), the sum of the Company's debts shall
not be greater than all of the Company's property, at a fair valuation, as
such term is utilized in Section 101(32), Chapter 1 of Title 11 of the
United State Code, as of immediately prior to the Effective Time but after
giving effect to a payment in the amount equal to $34,375,000 less the
amount of the portion of the proceeds from the sale of the Tranche B Note
(as defined in the Bridge Note Agreement) used to pay down the Commitments
(as defined in the Term Loan Agreement) under the Term Loan Agreement and
the Revolving Loan Agreement (such net payment amount, the "Repayment
Amount") and (B) immediately prior to the Effective Time, the Company's
assets exceed its liabilities (as determined in accordance with GAAP) by
more than the Repayment Amount.
(ii) For purposes of this Section 7.02(c), (A) the
Company's property or assets shall not include any funds of the Company
securing letters of credit, and the Company's debts or liabilities shall
not include any obligations with respect to funding the security for such
letters of credit or the liabilities for which the letters of credit were
established to the extent such liabilities are covered by such letters of
credit; (B) the Company Preferred Stock shall be treated as equity and not
as debt; (C) the Tranche A Note (as such term is defined in the Bridge Note
Agreement) shall be valued at face value, plus accrued interest; and (D)
the Tranche B Note (as such term is defined in the Bridge Note Agreement),
if issued, shall be valued at face value, plus accrued interest.
(d) New Lenders. The New Lenders shall have complied with
Section 2.06 in all material respects.
SECTION 7.03. Additional Conditions to Obligations of the Company.
The obligations of the Company to effect the Merger and
the other transactions contemplated herein are also subject to the
satisfaction at or prior to the Effective Time of the following conditions,
any or all of which may be waived by the Company, in whole or in part, to
the extent permitted by applicable Law:
(a) Representations and Warranties. The representations
and warranties of Acquiror contained in this Merger Agreement shall be true
and correct when made and as of the Effective Time (except for
representations and warranties that speak as of a specific date or time,
which need only be true and correct in all material respects as of such
date or time) except where the failure to be true and correct (without
regard to materiality qualifiers contained therein) would not constitute an
Acquiror Material Adverse Effect. The Company shall have received a
certificate of the chief executive officer and chief financial officer of
Acquiror to that effect.
(b) Agreements and Covenants. Acquiror and Merger Sub
shall have performed or complied in all material respects with all
agreements and covenants required by this Merger Agreement to be performed
or complied with by them on or prior to the Effective Time. The Company
shall have received a certificate of the chief executive officer and chief
financial officer of each of Acquiror and Merger Sub to that effect.
(c) Restated Charter. The Restated Charter shall have
been duly filed with and accepted by the Secretary of State of the State of
Delaware.
SECTION 7.04. Additional Conditions to the Consummation of the Merger.
The consummation of the Merger and the other transactions
contemplated herein are also subject to the satisfaction at or prior to the
Effective Time of the following conditions, any or all of which may be
waived solely with the written consent of the Preferred Stockholders, in
whole or in part, to the extent permitted by applicable Law:
(a) Documents. (i) Discrepancy Notes. If applicable, the
Acquiror and each other party thereto (other than the Preferred
Stockholders) shall have duly authorized, executed and delivered the
Discrepancy Notes, the Discrepancy Note Agreement and the other Discrepancy
Note Documents and shall have received all consents, approvals, amendments,
waivers, authorizations or other agreements from all other Persons
(including, without limitation, Governmental Entities) necessary or
desirable for Acquiror to incur the Indebtedness represented by, and to
issue, and enter into the transactions contemplated by the Discrepancy
Notes and the other Discrepancy Note Documents. The Discrepancy Notes shall
constitute "designated senior indebtedness" or the equivalent under any
subordinated indebtedness or other obligations of Acquiror; and
(ii) Tranche B and C Documents. Acquiror and
each other party thereto (other than the Preferred Stockholders) shall have
duly authorized, executed and delivered the Tranche B and C Documents and
shall have received all consents, approvals, amendments, waivers,
authorizations or other agreements from all other Persons (including,
without limitation, Governmental Entities) necessary or desirable for
Acquiror to enter into the transactions contemplated by the Tranche B and C
Documents.
(b) Representations and Warranties; Covenants. The
following representations and warranties shall be true and correct in all
material respects when made and as of the Effective Time: (i)
representations and warranties of Acquiror contained in Sections 4.26(e)
and 4.26(f) hereof; and (ii) if applicable, each of the representations and
warranties of Acquiror contained in the Discrepancy Notes, the other
Discrepancy Note Documents and the Tranche B and C Documents shall be true
and correct in all material respects.
(c) XM Merger Shares, Etc. (i) All XM Merger Shares
delivered, together with all XM Related Rights assigned and transferred, to
the Preferred Stockholders (or any of their respective designees) shall be
Unencumbered XM Merger Shares; (ii) at the Effective Time, the Preferred
Stockholders (or any of their respective designees) shall have good and
marketable, valid title in, to and under all XM Merger Shares and shall be
entitled to all of the rights, privileges, powers and benefits of the XM
Related Rights; and (iii) each of Acquiror, Merger Sub and the Company
shall have complied with the provisions of Sections 5.06, 5.08, 6.08, and
6.09 hereof and each of the actions, amendments, consents or other
documents contemplated by Schedule 6.09 of the Acquiror Disclosure Schedule
shall have become effective or have been obtained, in each case, in form
and substance reasonably satisfactory to the Preferred Stockholders.
(d) XM Termination Event. Since the date hereof, no XM
Termination Event shall have occurred and be continuing.
(e) Certificates; Opinions. (i) Each of the Preferred
Stockholders shall have received a certificate of the chief executive
officer and chief financial officer of Acquiror that the conditions
described in clauses (a), (b), (c) and (d) above shall have been satisfied;
and (ii) each of the Preferred Stockholders shall have received an opinion
of special counsel to Acquiror, in form and substance reasonably
satisfactory to them, relating to the Discrepancy Notes and the other
Discrepancy Note Documents regarding such matters as are customary for
senior secured financings of public companies.
(f) Registration Rights Agreement. The Registration
Rights Agreement executed as of the date hereof shall be in full force and
effect as of the Effective Time.
(g) HSR Act. Any applicable waiting periods with respect
to the delivery of the XM Merger Shares to the Preferred Stockholders,
together with any extensions thereof, under the HSR Act shall have expired
or been terminated.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination.
This Merger Agreement may be terminated at any time prior
to the Effective Time by written notice by the terminating party to the
other party (except if such termination is pursuant to Section 8.01(a)),
notwithstanding Acquiror Stockholder Approval, Merger Sub Stockholder
Approval or Company Stockholder Approval,
(a) by mutual written agreement of Acquiror, Merger Sub
and the Company.
(b) by either the Company or Acquiror, if
(i) the Merger shall not have been consummated
by November 15, 2001 (the "End Date"); provided, however, that the right to
terminate this Merger Agreement under this Section 8.01(b)(i) shall not be
available to any party whose breach of any provision of this Merger
Agreement has resulted in the failure of the Merger to occur on or before
the End Date;
(ii) there shall be any law or regulation that
makes consummation of the Merger illegal or otherwise prohibited or any
judgment, injunction, order or decree of any Governmental Entity having
competent jurisdiction enjoining Acquiror or the Company from consummating
the Merger is entered and such judgment, injunction, judgment or order
shall have become final and nonappealable and, prior to such termination,
the parties shall have used reasonable best efforts to resist, resolve or
lift, as applicable, such law, regulation, judgment, injunction, order or
decree;
(iii) an Acquiror Stockholders Meeting is held
and the holders of Acquiror Common Stock do not approve this Merger
Agreement; or
(iv) a Company Stockholders Meeting is held and
the holders of the Company Common Stock do not approve this Merger
Agreement;
(c) by Acquiror, (i) if the Company's Board of Directors
shall have (A) amended, modified, withdrawn, conditioned or qualified its
recommendation in a manner adverse to Acquiror, (B) failed to recommend
that the Company Stockholders vote to adopt this Merger Agreement or (C)
recommended any Superior Proposal for the Company to the Company
Stockholders; (ii) if there shall have occurred a willful and material
breach of Section 5.05 by the Company or any Company Subsidiary; (iii) if
following the announcement or receipt of a proposal for a Competing
Transaction for the Company, the Company shall have failed to proceed to
hold the Company Stockholders Meeting pursuant to the first sentence of
Section 6.02(a); or (iv) if a breach of any representation, warranty,
covenant or agreement on the part of the Company set forth in this Merger
Agreement shall have occurred that would cause any of the conditions set
forth in Section 7.02(a), Section 7.02(b) or Section 7.02(c) not to be
satisfied, and such condition shall be incapable of being satisfied by the
End Date;
(d) by the Company (i) if Acquiror's Board of Directors
shall have (A) amended, modified, withdrawn, conditioned or qualified its
recommendation in a manner adverse to the Company, (B) failed to recommend
that the Acquiror Stockholders vote to adopt this Merger Agreement or (C)
recommended any Superior Proposal for Acquiror to the Acquiror
Stockholders; (ii) if there shall have occurred a willful and material
breach of Section 5.05 by Acquiror; (iii) if following the announcement or
receipt of a proposal for a Competing Transaction for Acquiror, Acquiror
shall have failed to proceed to hold Acquiror Stockholders Meeting pursuant
to the first sentence of Section 6.02(b); or (iv) if a breach of any
representation, warranty, covenant or agreement on the part of Acquiror set
forth in this Merger Agreement shall have occurred that would cause any of
the conditions set forth in Section 7.03(a), Section 7.03(b), Section
7.03(c), Section 7.04(a), Section 7.04(b) or Section 7.04(c) not to be
satisfied, and such condition is incapable of being satisfied by the End
Date;
(e) by the Company, if after the satisfaction of all of
the conditions to consummation of the Merger set forth in Article VII
(other than Section 7.04(d)) have been satisfied or waived, (i) an XM
Termination Event shall have occurred and be continuing, and (ii) the
Preferred Stockholders shall have directed the Company to terminate this
Merger Agreement; and
(f) by the Company, at any time after June 5, 2001 and
prior to the Company's receipt of the Acquiror Consent Notice, if the
Company shall not have received the Acquiror Consent Notice on or prior to
June 5, 2001.
SECTION 8.02. Effect of Termination.
If this Merger Agreement is terminated pursuant to
Section 8.01, the provisions of Sections 6.08, 8.02, 8.03, 9.02, 9.05,
9.06, 9.07, 9.10 and 9.12 of this Merger Agreement shall remain in full
force and effect and survive any termination of this Merger Agreement.
Nothing herein shall release any party from liability for a willful breach
of this Merger Agreement.
SECTION 8.03. Fees and Expenses.
(a) Except as set forth in Section 6.08 and this Section
8.03, all fees and expenses incurred in connection herewith and the
transactions contemplated hereby shall be paid by the party incurring such
expenses, whether or not the Merger is consummated, except that expenses
incurred in connection with the filing, printing and mailing of the Joint
Proxy Statement and the Registration Statement shall be shared equally by
Acquiror and the Company.
(b) If this Merger Agreement is terminated pursuant to
Sections 8.01(b)(i) or (iv) or Section 8.01(c) (but in each such case only
if the Company or its stockholders have received in writing, or there shall
have been publicly disclosed, a proposal for a Competing Transaction for
the Company on or before the date of such termination and an agreement or
agreements to effect a transaction is entered into within six months of
such termination pursuant to a proposal for a Competing Transaction for the
Company (a "Company Subsequent Alternate Transaction"); provided, however,
that if this Merger Agreement is terminated pursuant to Sections 8.01(b)(i)
or 8.01(c)(iv), only if such Company Subsequent Alternate Transaction is
consummated), the Company shall pay to Acquiror a termination fee equal to
$6 million (the "Termination Fee"), plus reasonable out-of-pocket expenses
not to exceed $1.5 million.
(c) If this Merger Agreement is terminated pursuant to
Sections 8.01(b)(i) or (iii) or Section 8.01(d) (but in each such case only
if Acquiror or its stockholders have received in writing, or there shall
have been publicly disclosed, a proposal for a Competing Transaction for
Acquiror on or before the date of such termination and an agreement or
agreements to effect a transaction is entered into within six months of
such termination pursuant to a proposal for a Competing Transaction (an
"Acquiror Subsequent Alternate Transaction"); provided, however, that if
this Merger Agreement is terminated pursuant to Sections 8.01(b)(i) or
8.01(d)(iv), only if such Acquiror Subsequent Alternate Transaction is
consummated), Acquiror shall pay to the Company the Termination Fee, plus
reasonable out-of-pocket expenses not to exceed $1.5 million.
(d) Any payment of the Termination Fee pursuant to
Section 8.03(b) or (c) shall be made within one business day after the same
becomes payable. If one party fails to pay to the other promptly any fee or
expense due hereunder (including the Termination Fee), the defaulting party
shall pay the costs and expenses (including legal fees and expenses) in
connection with any action, including the filing of any lawsuit or other
legal action, taken to collect payment, together with interest on the
amount of any unpaid fee and/or expense at the publicly announced prime or
base rate of Citibank, N.A. from the date such fee was required to be paid
to the date it is paid.
(e) The remedies provided for in this Section 8.03 shall
not be exclusive of any rights at law or in equity that any party may have
in the event of a termination of this Merger Agreement.
SECTION 8.04. Amendment.
This Merger Agreement may be amended by the parties
hereto at any time prior to the Effective Time; provided, however, that,
after the Company Stockholder Approval or the Acquiror Stockholder
Approval, as the case may be, no amendment may be made which would require
such approval under applicable Law without stockholder approval; provided,
further, however, that unless consented to in writing by the Preferred
Stockholders (such consent to be given at the sole discretion of the
Preferred Stockholders), no amendment to this Merger Agreement (together
with the Exhibits, Schedules, the Company Disclosure Schedule and the
Acquiror Disclosure Schedule and the other Documents delivered pursuant
hereto) or any provision hereof or thereof shall be made if such amendment
would be reasonably likely to adversely affect the rights or remedies of
the Preferred Stockholders; provided, further, however, that unless
consented to in writing by Xxxxxx (such consent to be given at the sole
discretion of Xxxxxx), no amendment to this Merger Agreement (together with
the Exhibits, Schedules, the Company Disclosure Schedule and the Acquiror
Disclosure Schedule and the other Documents delivered pursuant hereto) or
any provision hereof or thereof shall be made if such amendment would be
reasonably likely to adversely affect the rights, remedies or overall
economics of the transactions contemplated herein of either Xxxxxx or
Acquiror. For the avoidance of doubt, no amendment of Section 7.02(c) of
this Merger Agreement shall be made without the prior written consent of
Xxxxxx, and neither the Preferred Stockholders nor Xxxxxx shall have any
consent rights with respect to actions taken pursuant to Section 6.03(d) or
6.03(e) of this Merger Agreement. This Merger Agreement may not be amended
except by an instrument in writing signed by each of the parties hereto.
Actions permitted to be taken by the Company may be taken at the discretion
of the Special Committee of the Company Board of Directors.
SECTION 8.05. Extension; Waiver.
At any time prior to the Effective Time, except as
otherwise expressly set forth herein, the parties hereto may (a) extend the
time for the performance of any of the obligations or other acts of the
other parties hereto, (b) waive any inaccuracies in the representations and
warranties contained herein or in any Document delivered pursuant hereto
and (c) subject to the proviso of Section 8.04, waive compliance with any
of the agreements or conditions contained herein; provided, however, that
unless consented to in writing by the Preferred Stockholders (such consent
to be given at the sole discretion of the Preferred Stockholders), no
extension or waiver of this Merger Agreement (together with the Exhibits,
Schedules, the Company Disclosure Schedule and the Acquiror Disclosure
Schedule and the other Documents delivered pursuant hereto) or any
provision hereof or thereof shall be made if such extension or waiver would
be reasonably likely to adversely affect the rights or remedies of the
Preferred Stockholders; provided, further, however, that unless consented
to in writing by Xxxxxx (such consent to be given at the sole discretion of
Xxxxxx), no extension or waiver of this Merger Agreement (together with the
Exhibits, Schedules, the Company Disclosure Schedule and the Acquiror
Disclosure Schedule and the other Documents delivered pursuant hereto) or
any provision hereof or thereof shall be made if such extension or waiver
would be reasonably likely to adversely affect the rights, remedies or
overall economics of the transactions contemplated herein of either Xxxxxx
or Acquiror . Any such extension or waiver shall be valid if set forth in
an instrument in writing signed by the party or parties to be bound
thereby. The failure of any party to assert any of its rights under this
Merger Agreement or otherwise shall not constitute a waiver of such rights.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01 Effectiveness of Representations, Warranties and
Agreements.
(a) Except as set forth in Section 9.01(b) of this Merger
Agreement, the representations, warranties, covenants and agreements of
each party hereto shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any other party
hereto, any affiliate of such party or any of their officers, directors,
representatives or agents whether prior to or after the execution of this
Merger Agreement.
(b) Notwithstanding any provision to the contrary herein,
the representations and warranties in this Merger Agreement will terminate
at the Effective Time; provided, however, that this Section 9.01(b) shall
in no way limit or terminate any covenant or agreement of the parties which
by its terms contemplates performance after the Effective Time or after the
termination of this Merger Agreement pursuant to Article VIII. For the
avoidance of doubt, the representations, warranties and covenants set forth
in the Discrepancy Notes are intended to be made as of the execution and
delivery of the Discrepancy Notes and are also intended to, and shall each,
survive the occurrence of the Effective Time and the termination of this
Merger Agreement (assuming the Merger has been consummated and the
Discrepancy Notes are issued).
SECTION 9.02. Notices.
All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly
given or made as of the date delivered, mailed or transmitted if delivered
personally, mailed by registered or certified mail (postage prepaid, return
receipt requested) or sent by overnight courier (providing proof of
delivery) to the parties at the following addresses or sent by electronic
transmission to the following telecopier numbers (or at such other address
or telecopy number for a party as shall be specified by like notice):
(a) If to Acquiror or to Merger Sub:
Motient Corporation
00000 Xxxxxxxxx Xxxx.
Xxxxxx, Xxxxxxxx 00000
Telecopier No.: 000-000-0000
Attention: General Counsel
With a copy (which shall not constitute notice) to:
Xxxxx & Xxxxxxx, L.L.P.
0000 Xxxxxxxxxx Xxxxx, Xxxxx 0000
XxXxxx, Xxxxxxxx 00000
Telecopier No.: 000-000-0000
Attention: Xxxxxxx X.X. Xxxxxx, Esq.
(b) If to the Company:
Rare Medium Group, Inc.
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: 000-000-0000
Attention: General Counsel
With a copy (which shall not constitute notice)to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: 000-000-0000
Attention: Xxxxx Xxxxxxxx, Esq. and
Xxxxxxx Xxxxxxxxx, Esq.
With a copy to (which shall not constitute
notice) to:
X'Xxxxxxxx Graev & Karabell, LLP
00 Xxxxxxxxxxx Xxxxx -- 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: 000-000-0000
Attention: Xxxxxxxx
X. XxXxxxxx, Esq.
SECTION 9.03. Headings.
The headings contained in this Merger Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Merger Agreement.
SECTION 9.04. Severability.
If any term or other provision of this Merger Agreement
is invalid, illegal or incapable of being enforced by any rule of Law or
public policy, all other conditions and provisions of this Merger 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
Merger Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner to the end that transactions
contemplated hereby are fulfilled to the extent possible.
SECTION 9.05. Entire Agreement.
This Merger Agreement (together with the Exhibits,
Schedules, the Company Disclosure Schedule and the Acquiror Disclosure
Schedule and the other Documents delivered pursuant hereto) and the
Confidentiality Agreement constitute the entire agreement of the parties,
and supersede all prior agreements and undertakings, both written and oral,
among the parties, or any of them, with respect to the subject matter
hereof and, except as expressly provided herein, are not intended to confer
upon any other Person any rights or remedies hereunder.
SECTION 9.06. Assignment.
This Merger Agreement shall not be assigned by operation
of Law or otherwise.
SECTION 9.07. Parties in Interest.
This Merger Agreement shall be binding upon and inure
solely to the benefit of each party hereto, and nothing in this Merger
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 Merger Agreement, other than (i) Section 6.07 (which is
intended to be for the benefit of the Indemnified Parties and may be
enforced by such Indemnified Parties), (ii) Section 5.07(d) (which is
intended to be for the benefit of the individuals covered by the agreements
listed on Schedule 5.07(d) of the Company Disclosure Schedule), (iii) the
other provisions contained herein which are intended to benefit the
Preferred Stockholders and (iv) the other provisions contained herein which
are intended to benefit Xxxxxx. The parties hereto expressly acknowledge
and agree that each of the Preferred Stockholders (and its successors and
assigns) is a third-party beneficiary of Sections 2.01(b), 2.05, 4.26,
5.08, 6.08, 6.09, 7.04, 8.01(e), 8.02, the second proviso in the first
sentence of Section 8.04, the proviso in the first sentence of Section
8.05, the second sentence of Section 9.01(b), and this sentence, and as
such, may enforce such provisions against the Company and Acquiror and
shall have all rights and remedies of a third-party beneficiary with
respect to such provisions. Further, the parties hereto expressly
acknowledge and agree that Xxxxxx (and its successors and assigns) is a
third-party beneficiary of Section 8.04 and 8.05 and, as such, may enforce
such provisions against Acquiror and the Company and shall have all rights
and remedies of a third-party beneficiary with respect to such provisions.
SECTION 9.08. Mutual Drafting.
Each party hereto has participated in the drafting of
this Merger Agreement, which each party acknowledges is the result of
extensive negotiations between the parties.
SECTION 9.09. Specific Performance.
In addition to any other remedies which any party may
have at law or in equity, the Company hereby acknowledges that the Company
Preferred Stock, the Company Common Stock, the Company and the Company
Subsidiaries are unique, and that the harm to Acquiror resulting from
breaches by the Company of its obligations cannot be adequately compensated
by damages and Acquiror hereby acknowledges that the Discrepancy Notes, the
Acquiror Series A Preferred Stock and Acquiror are unique, and that the
harm to the Company resulting from breaches by Acquiror of its obligations
cannot be adequately compensated by damages. Accordingly, each party agrees
that the other party shall have the right to have all obligations,
undertakings, agreements, covenants and other provisions of this Merger
Agreement specifically performed by such party and that the other party
shall have the right to obtain an order or decree of such specific
performance in any of the courts of the United States of America or of any
state or other political subdivision thereof.
SECTION 9.10. Governing Law.
This Merger Agreement shall be governed by, and construed
in accordance with, the Laws of the State of Delaware without regard to any
principles of conflicts of law.
SECTION 9.11. Counterparts.
This Merger Agreement may be executed and delivered in
two or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed and delivered shall be deemed to
be an original but all of which taken together shall constitute one and the
same agreement.
SECTION 9.12. Confidentiality.
All information delivered to or obtained by or on behalf
of any party to this Merger Agreement shall be held pursuant to the
Confidentiality Agreement.
SECTION 9.13. Jurisdiction.
Except as otherwise expressly provided in this Merger
Agreement, the parties hereto agree that any suit, action or proceeding
seeking to enforce any provision of, or based on any matter arising out of
or in connection with, this Merger Agreement or the transactions
contemplated hereby shall be brought in the United States District Court
for the District of Delaware or any Delaware State court sitting in
Wilmington, Delaware having subject matter jurisdiction, and each of the
parties hereby consents to the exclusive jurisdiction of such courts (and
of the appropriate appellate courts therefrom) in any such suit, action or
proceeding and irrevocably waives, to the fullest extent permitted by law,
any objection which it may now or hereafter have to the laying of the venue
of any such suit, action or proceeding in any such court or that any such
suit, action or proceeding which is brought in any such court has been
brought in an inconvenient forum. Process in any such suit, action or
proceeding may be served on any party anywhere in the world, whether within
or without the jurisdiction of any such court.
SECTION 9.14. Waiver of Jury Trial.
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY
AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATED TO THIS MERGER AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
ARTICLE X
definitIONS
For purposes of this Merger Agreement, the following
terms, and the singular and plural thereof, shall have the meanings set
forth below:
"Acquiror" is defined in the Preamble to this Merger
Agreement.
"Acquiror Balance Sheet" means Acquiror's consolidated
balance sheet included in the Acquiror 10-K relating to its fiscal year
ended December 31, 2000.
"Acquiror Benefit Plans" is defined in Section 4.14(a).
"Acquiror Common Stock" means the common stock, par value
$.01 per share, of Acquiror.
"Acquiror Consent Notice" is defined in Section 6.11.
"Acquiror Contracts" is defined in Section 4.12(a).
"Acquiror Disclosure Schedule" is defined in Article IV.
"Acquiror Intellectual Property" is defined in Section
4.17(a).
"Acquiror Material Adverse Effect" means any event,
change or effect that, individually or when taken together with all other
such events and not measured solely on a quarterly basis, changes or
effects, is or is reasonably likely to be materially adverse to the
business, operations, condition (financial or otherwise), Assets or
liabilities of Acquiror and the Acquiror Subsidiaries, taken as a whole;
provided, however, that none of the following shall be taken into account
in determining whether there has been or will be an Acquiror Material
Adverse Effect:
(a) any change in the market price or trading volume of
Acquiror Common Stock;
(b) any failure by Acquiror to meet internal projections
or forecasts or published revenue or earnings predictions; or
(c) any adverse change or effect (including any
litigation, loss of employees, cancellation of or delay in customer orders,
reduction in revenues or income or disruption of business relationships)
arising from or attributable or relating to (i) the announcement or
pendency of the Merger, (ii) conditions affecting the industry or industry
sector in which Acquiror or any Acquiror Subsidiary participates, the U.S.
economy as a whole or any foreign economy in any location where Acquiror or
any Acquiror Subsidiary has material operations or sales, (iii) legal,
accounting, investment banking or other fees or expenses incurred in
connection with the transactions contemplated by this Merger Agreement,
(iv) the payment of any amounts due to, or the provision of any other
benefits to, any officers or employees under employment contracts,
non-competition agreements, employee benefit plans, severance arrangements
or other arrangements in existence as of the date of this Merger Agreement,
(v) compliance with the terms of, or the taking of any action required by,
this Merger Agreement, (vi) the taking of any action approved or consented
to by the Company, (vii) any change in accounting requirements or
principles or any change in applicable Laws or the interpretation thereof,
(viii) any action required to be taken under applicable Laws or Agreements,
or (ix) any actions taken by Acquiror or any Acquiror Subsidiary with the
consent of the Company pursuant to and in accordance with Section 5.02 or
any other provision of this Merger Agreement applicable to Acquiror or an
Acquiror Subsidiary.
"Acquiror Monthly Report" is defined in Section 5.04(h).
"Acquiror Non-Voting Common Stock" is defined in Section 1.05.
"Acquiror Option" is defined in Section 2.04.
"Acquiror Owned Software" is defined in Section 4.17(j).
"Acquiror Post-Signing SEC Documents" is defined in
Section 6.05.
"Acquiror Preferred Stock" is defined in Section 4.05(a).
"Acquiror Pre-Merger Warrants" shall mean each
outstanding unexercised and unexpired warrant to purchase Acquiror Common
Stock.
"Acquiror Real Property" means the real property
currently or formerly owned, operated, or used by Acquiror or any Acquiror
Subsidiary.
"Acquiror SEC Documents" means (i) Acquiror's Annual
Report on Form 10-K for its fiscal year ended December 31, 2000 (the
"Acquiror 10-K"), (ii) Acquiror's Quarterly Report on Form 10-Q for the
quarter ended March 31, 2001 (the "Acquiror 10-Q"), (iii) Acquiror's proxy
or information statements relating to meetings of, or actions taken without
a meeting by, the Acquiror Stockholders held since December 31, 1996, and
(iv) all other reports, filings, registration statements and other
documents filed by Acquiror with the SEC since December 31, 1996.
"Acquiror Securities" is defined in Section 4.05(b).
"Acquiror Series A Preferred Stock" is defined in
Section 1.05.
"Acquiror Series A Non-Voting Preferred Stock" is defined
in Section 1.05.
"Acquiror Stock Options" shall mean each outstanding
unexercised and unexpired option to purchase Acquiror Common Stock under
the Acquiror Stock Plans.
"Acquiror Stock Plans" shall mean Acquiror's Stock Award
Plan and Director Stock Option Plan.
"Acquiror Stockholder Approval" is defined in Section 4.20(a).
"Acquiror Stockholders" is defined in the Preamble to
this Merger Agreement.
"Acquiror Stockholders Meeting" is defined in Section 6.01(c).
"Acquiror Subsequent Alternate Transaction" is defined in
Section 8.03(c).
"Acquiror Subsidiary" means a corporation, partnership,
joint venture or other entity of which Acquiror owns, directly or
indirectly, at least 50% of the outstanding securities or other interests
the holders of which are generally entitled to vote for the election of the
board of directors or other governing body or otherwise exercise Control of
such entity.
"Acquiror Tax Returns" means all Tax Returns required to
be filed by Acquiror or any Acquiror Subsidiaries.
"Acquiror Voting Agreement" means the voting agreement
among Acquiror and certain stockholders of Acquiror, substantially in the
form of Exhibit C.
"Acquiror Warrant" is defined in Section 2.05.
"Acquiror XM Stock" is defined in Section 4.26(e).
"affiliate" means, with respect to any Person, a Person
that directly or indirectly, through one or more intermediaries, Controls,
is Controlled by, or is under common Control with, such Person.
"Affiliate Agreements" means the Affiliate Agreements in
substantially the form of Exhibit D.
"Agreement" means any concurrence of understanding and
intention between two or more Persons with respect to their relative rights
and/or obligations or with respect to a thing done or to be done (whether
or not conditional, executory, express, implied, in writing or meeting the
requirements of contract), including, without limitation, contracts,
leases, promissory notes, covenants, easements, rights of way, covenants,
commitments, arrangements and understandings.
"Assets" means assets of every kind and everything that
is or may be available for the payment of liabilities (whether inchoate,
tangible or intangible), including, without limitation, real and personal
property. For the avoidance of doubt, "Assets" includes any capital stock,
share certificates, or other equity interests.
"Bank Waiver" means Amendment No. 3 of Revolving Credit
Agreement, Waiver of Revolving Credit Agreement and Term Credit Agreement
and Termination and Release of Shareholder Guarantors among the Acquiror
and each of the other parties to the Term Credit Agreement and the
Revolving Credit Agreement and certain other Loan Documents as such term is
defined in both the Term Credit Agreement and the Revolving Credit
Agreement.
"Bloomberg" means Bloomberg Financial Markets (or a
comparable reporting service of national reputation selected by the Company
if Bloomberg Financial Markets is not then reporting closing bid prices of
such security).
"Board of Directors" means, with respect to any Person,
the board of directors or other body performing similar functions if such
Person is not a corporation, of such Person, or any duly authorized
committee thereof.
"Bridge Note Agreement" means the Note Purchase Agreement
between Acquiror and the Company dated as of April 2, 2001.
"Bridge Note Documents" means the Bridge Note Agreement,
the Pledge Agreement (as defined in the Bridge Note Agreement) and, if any,
the Second Pledge Agreement (as defined in the Bridge Note Agreement).
"business day" means a day other than a Saturday, a
Sunday or any other day on which commercial banks in the State of New York
or in the Commonwealth of Virginia are authorized or obligated to be
closed.
"Capital Lease Obligations" means all monetary
obligations of a Person under any leasing or similar arrangement which, in
accordance with GAAP, is classified as a capital lease.
"Certificate of Merger" is defined in Section 1.02.
"Certificates" is defined in Section 2.02(b).
"Claims" means all demands, claims, actions or causes of
action, assessments, losses, damages (including, without limitation,
diminution in value), liabilities, sanctions, costs and expenses,
including, without limitation, interest, penalties and attorneys' fees and
disbursements.
"Closing" is defined in Section 2.08.
"Closing Date" is defined in Section 2.08.
"Code" means the United States Internal Revenue Code of
1986, as amended.
"Collateral Purchase Agreement" means, if any
Discrepancy Notes are required to be issued at the Effective Time, an
agreement to be executed at the Effective Time among Acquiror, one or more
of the holders of the Discrepancy Notes or any
designee or affiliate appointed by them, Xxxxxx and each other party to the
Intercreditor Agreement, which shall set forth certain additional rights,
if any, with respect to the collateral subject to the Intercreditor
Agreement and shall be in form and substance reasonably satisfactory to
Xxxxxx and the holders of the Discrepancy Notes.
"Common Stock Merger Consideration" is defined in Section
2.01(a).
"Company" is defined in the Preamble to this Merger
Agreement.
"Company Affiliates" is defined in Section 3.27.
"Company Balance Sheet" means the Company's consolidated
balance sheet included in the Company 10-K.
"Company Benefit Plans" is defined in Section 3.14(a).
"Company Common Stock" is defined in Section 2.01(a).
"Company Contracts" is defined in Section 3.12(a).
"Company Designees" is defined in Section 1.06.
"Company Disclosure Schedule" is defined in Article III.
"Company Intellectual Property" is defined in Section 3.17(a).
"Company Insiders" is defined in Section 6.13.
"Company Material Adverse Effect" means any event, change
or effect that, individually or when taken together with all other such
events and not measured solely on a quarterly basis, changes or effects, is
or is reasonably likely to be materially adverse to the business,
operations, condition (financial or otherwise), Assets or liabilities of
the Company and the Company Subsidiaries, taken as a whole; provided,
however, that none of the following shall be taken into account in
determining whether there has been or will be a Company Material Adverse
Effect:
(a) any change in the market price or trading volume of
Company Common Stock;
(b) any failure by the Company to meet internal
projections or forecasts or published revenue or earnings predictions; or
(c) any adverse change or effect (including any
litigation, loss of employees, cancellation of or delay in customer orders,
reduction in revenues or income or disruption of business relationships)
arising from or attributable or relating to (i) the announcement or
pendency of the Merger, (ii) conditions affecting the industry or industry
sector in which the Company or any Company Subsidiary participates, the
U.S. economy as a whole or any foreign economy in any location where the
Company or any Company Subsidiary has material operations or sales, (iii)
legal, accounting, investment banking or other fees or expenses incurred in
connection with the transactions contemplated by this Merger Agreement,
(iv) the payment of any amounts due to, or the provision of any other
benefits to, any officers or employees under employment contracts,
non-competition agreements, employee benefit plans, severance arrangements
or other arrangements in existence as of the date of this Merger Agreement,
(v) compliance with the terms of, or the taking of any action required by,
this Merger Agreement, (vi) the taking of any action approved or consented
to by Acquiror, (vii) any change in accounting requirements or principles
or any change in applicable Laws or the interpretation thereof, (viii) any
action required to be taken under applicable Laws or Agreements, (ix) any
action taken by the Company or any Company Subsidiary with the consent of
Acquiror pursuant to and in accordance with Section 5.01 or any other
provision of this Merger Agreement applicable to the Company or a Company
Subsidiary, or (x) write-offs or loan forgiveness in connection with
Portfolio Companies.
"Company Monthly Report" is defined in Section 5.04(e).
"Company Owned Software" is defined in Section 3.17(j).
"Company Post-Signing SEC Documents" is defined in
Section 6.05.
"Company Preferred Stock" is defined in Section 2.01(b).
"Company Preferred Transaction Expenses" is defined in
Section 6.08.
"Company Real Property" means the real property currently
or formerly owned, operated, or used by the Company, any Company Subsidiary
or Fresh Air Solutions, L.P.
"Company SEC Documents" means (i) the Company's Annual
Report on Form 10-K for its fiscal year ended December 31, 2000 (the
"Company 10-K"), (ii) the Company's draft Form 10-Q for the quarter ended
March 31, 2001 (the "Company 10-Q"), (iii) the Company's proxy or
information statements relating to meetings of, or actions taken without a
meeting by, the Company Stockholders held since December 31, 1996, and (iv)
all other reports, filings, registration statements and other documents
filed by the Company with the SEC since December 31, 1996.
"Company Securities" is defined in Section 3.05(b).
"Company Stock Options" is defined in Section 2.04.
"Company Stock Plans" is defined in Section 2.04.
"Company Stockholder Approval" is defined in Section 3.20(a).
"Company Stockholders Meeting" is defined in Section 6.01(b).
"Company Stockholders" is defined in the Preamble to this
Merger Agreement.
"Company Subsequent Alternate Transaction" is defined in
Section 8.03(b).
"Company Subsidiary" means a corporation, partnership,
joint venture or other entity of which the Company owns, directly or
indirectly, at least 50% of the outstanding securities or other interests
the holders of which are generally entitled to vote for the election of the
board of directors or other governing body or otherwise exercise Control of
such entity other than a Portfolio Company.
"Company Tax Returns" means all Tax Returns required to
be filed by the Company or any Company Subsidiaries.
"Company Voting Agreement" means the voting agreement
among the Company and certain stockholders of the Company, substantially in
the form of Exhibit E.
"Company Warrants" is defined in Section 2.05.
"Competing Transaction" is defined in Section 5.05(d).
"Confidentiality Agreement" shall mean that certain
confidentiality agreement between Acquiror and the Company dated December
22, 2000.
"Contingent Obligation" means, as applied to any Person,
any direct or indirect liability of that Person with respect to any
Indebtedness, lease, dividend, letter of credit or other obligation (the
"primary obligations") of another Person (the "primary obligor"),
including, without limitation, any obligation of that Person, whether or
not contingent, (a) to purchase, repurchase or otherwise acquire such
primary obligations or any property constituting direct or indirect
security therefor, or (b) to advance or provide funds (i) for the payment
or discharge of any such primary obligation, or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain
the net worth or solvency or any balance sheet item, level of income or
financial condition of the primary obligor, or (c) to purchase property,
securities or services primarily for the purpose of assuring the owner of
any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation, or (d) otherwise to assure or hold
harmless the holder of any such primary obligation against loss in respect
thereof, or (e) to purchase or otherwise acquire, or otherwise to assure a
creditor against loss in respect of any Indebtedness. For purposes of this
definition, the amount of any Contingent Obligation shall be deemed to be
an amount equal to the maximum reasonably anticipated liability in respect
thereof.
"Control" (including the terms "Controlled by" and "under
common Control with") means, as used with respect to any Person,
possession, directly or indirectly or as a trustee or executor, of power to
direct or cause the direction of management or policies of such Person
(whether through ownership of voting securities, as trustee or executor, by
Agreement or otherwise).
"Counter Proposal" is defined in Section 5.05(f).
"Current Cash Reserves" is defined in Section 3.28.
"Delaware Law" is defined in the Preamble to this Merger
Agreement.
"Discrepancy Note" is defined in Section 2.01(b).
"Discrepancy Note Agreement" is defined in Section
2.01(b).
"Discrepancy Note Documents" means any or all of (i) the
Discrepancy Notes, (ii) the Discrepancy Note Agreement, (iii) the
Collateral Purchase Agreement, (iv) the Intercreditor Agreement, and (v)
any other documents, instruments or agreements in connection with any of
the foregoing, in form and substance reasonably satisfactory to the parties
thereto.
"Dispositions" is defined in Section 5.01(f).
"Documents" means any paper or other material (including,
without limitation, computer storage media) on which is recorded (by
letters, numbers or other marks) information that may be evidentially used,
including, without limitation, legal opinions, mortgages, indentures,
notes, instruments, leases, Agreements, insurance policies, reports,
studies, financial statements (including, without limitation, the notes
thereto), other written financial information, schedules, certificates,
charts, maps, plans, photographs, letters, memoranda and all similar
materials.
"Employees" is defined in Section 5.07(a).
"Effective Time" is defined in Section 1.02.
"Encumbrance" means, as used with respect to any Person,
any mortgage, lien, pledge, encumbrance, security interest, deed of trust,
option, encroachment, reservation, order, decree, judgment, condition,
restriction, charge, Agreement, claim or equity of any kind, other than:
(i) Taxes not yet due or the validity of which is being contested in good
faith by appropriate proceedings, and as to which such Person shall, if
appropriate under GAAP, have set aside in such Person's financial
statements and on its books and records adequate reserves; and (ii)
deposits under workers' compensation, unemployment insurance, social
security and other similar Laws, or to secure the performance of bids,
tenders or contracts (other than for the repayment of borrowed money) or to
secure indemnity, performance or other similar bonds for the performance of
bids, tenders or contracts (other than for the repayment of borrowed money)
or to secure statutory obligations or surety or appeal bonds, or to secure
indemnity, performance or other similar bonds in the Ordinary Course of
Business; provided, that the exceptions set forth in the foregoing clauses
(i) and (ii) shall not apply with respect to any Acquiror XM Stock and
solely with respect to any Acquiror XM Stock, any such event or condition
shall be expressly included as "Encumbrances."
"End Date" is defined in Section 8.01(b)(i).
"Environmental Claims" means, with respect to any Person,
all Claims pursuant to Environmental Laws, including but not limited to,
those based on, arising out of or otherwise relating to: (i) the
Remediation, presence or Release of, or exposure to, Hazardous Materials or
other environmental conditions initiated, existing or occurring prior to
the Closing Date at, on, under, above, from, or about any real properties
currently or formerly owned, leased or operated by such Person or any of
its predecessors or affiliates; (ii) the off-site Release, treatment,
transportation, storage or disposal prior to the Closing Date of Hazardous
Materials originating from such Person's Assets or business; or (iii) any
violations of Environmental Laws by such Person prior to the Closing Date,
including reasonable expenditures necessary to cause such Person to be in
compliance with or resolve violations of Environmental Laws.
"Environmental Laws" means any Laws (including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act), now or hereafter in effect relating to the Remediation,
generation, production, installation, use, storage, treatment,
transportation, Release, threatened Release, or disposal of Hazardous
Materials, or noise control, or the protection of human health, safety,
natural resources, animal health or welfare, or the environment.
"Environmental Permits" means any permits, licenses,
certificates and approvals required under any Environmental Law.
"ERISA" means the Employee Retirement Income Security Act
of 1974, as amended, and all Laws promulgated pursuant thereto or in
connection therewith.
"ERISA Affiliate" is defined in Section 3.14(a).
"ESOP" is defined in Section 3.14(f).
"Excess Shares" is defined in Section 2.02(e).
"Exchange Act" means the Securities Exchange Act of 1934,
as amended, and all Laws promulgated pursuant thereto or in connection
therewith.
"Exchange Agent" is defined in Section 2.02(a).
"Exchange Fund" is defined in Section 2.02(a).
"FCC" means the Federal Communications Commission.
"FCC Licenses" is defined in Section 4.15(c).
"GAAP" is defined in Section 3.08(a).
"Government Contract" means any Agreement with or for
(and any subcontract at any tier under an Agreement with or for) any
federal, state or local governmental agency, department, commission, board,
bureau, authority or instrumentality.
"Governmental Entities" (including the term
"Governmental") means any governmental, quasi-governmental or regulatory
authority, whether domestic or foreign.
"group" is defined in Section 5.05(d).
-----
"Guaranteed Amount" is defined in Section 2.01(b)(i)(B).
"Hazardous Materials" means any wastes, substances,
radiation, or materials (whether solids, liquids or gases): (i) which are
hazardous, toxic, infectious, explosive, radioactive, carcinogenic, or
mutagenic; (ii) which are or become defined as "pollutants,"
"contaminants," "hazardous materials," "hazardous wastes," "hazardous
substances," "toxic substances," "radioactive materials," "solid wastes,"
or other similar designations in, or otherwise subject to regulation under,
any Environmental Laws; (iii) which contain without limitation
polychlorinated biphenyls (PCBs), asbestos or asbestos-containing
materials, lead-based paints, urea-formaldehyde foam insulation, or
petroleum or petroleum products (including, without limitation, crude oil
or any fraction thereof); or (iv) which pose a hazard to human health,
safety, natural resources, employees, or the environment.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, and all Laws promulgated pursuant
thereto or in connection therewith.
"Xxxxxx" means Xxxxxx Electronics Corporation.
"Indebtedness" of any Person means without duplication,
(a) all indebtedness for borrowed money; (b) all obligations issued,
undertaken or assumed as the deferred purchase price of capital assets; (c)
all reimbursement obligations with respect to surety bonds, letters of
credit, bankers' acceptances and similar instruments (in each case, whether
or not matured), excluding performance bonds, letters of credit and similar
undertakings in the ordinary course of business of such Person, to the
extent that such undertakings do not secure an obligation for borrowed
money or the deferred purchase price of a capital asset; (d) all
obligations evidenced by notes, bonds, debentures or similar instruments,
including obligations so evidenced incurred in connection with the
acquisition of property, assets or businesses, excluding performance bonds,
letters of credit and similar undertakings in the Ordinary Course of
Business of such Person, to the extent that such undertakings do not secure
an obligation for borrowed money or the deferred purchase price of a
capital asset; (e) all indebtedness created or arising under any
conditional sale or other title retention agreement, or incurred as
financing, in either case with respect to property acquired by the Person
(even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of
such property); (f) all Capital Lease Obligations; (g) all net obligations
with respect to Rate Contracts; (h) sale-leaseback financings; (i) all
Contingent Obligations; (j) all Indebtedness referred to in paragraphs (a)
through (i) above secured by any Lien upon or in property (including
accounts and contract rights) owned by such Person, even though such Person
has not assumed or become liable for the payment of such Indebtedness; and
(k) to the extent not otherwise included in paragraphs (a) through (i)
above, the guarantee by such Person of any indebtedness referred to in
paragraphs (a) through (i) above of any other Person. For purposes of this
definition, any Indebtedness (w) of the Company to any wholly owned Company
Subsidiary, (x) of any wholly owned Company Subsidiary to the Company or
any other wholly owned Company Subsidiary, (y) of Acquiror to any Acquiror
Subsidiary and (z) of any Acquiror Subsidiary to Acquiror or any other
Acquiror Subsidiary, shall be excluded from the definition of Indebtedness.
"Indemnified Parties" is defined in Section 6.07(a).
"Intellectual Property" is defined in Section 3.17(a).
"Intercreditor Agreement" means, if any Discrepancy Notes
are required to be issued at the Effective Time, an Intercreditor Agreement
or similar agreement among Acquiror, Motient Holdings Inc., Xxxxxx (as
agent for certain shareholder guarantors), the holders of the Discrepancy
Notes (or any agent, trustee or representative acting for their benefit)
and any other creditors of Acquiror having a Lien on substantially all of
the assets of Acquiror, which agreement shall set forth the relative rights
and priorities of the secured creditors of Acquiror with respect to any
assets of Acquiror securing obligations to such creditors and shall be in
form and substance reasonably satisfactory to Xxxxxx and the holders of the
Discrepancy Notes.
"IRS" means the United States Internal Revenue Service
and its successors.
"Joint Proxy Statement" is defined in Section 6.01(a).
"knowledge" (including the terms "knowing" and
"knowingly") will be deemed to be present with respect to the Company and
the Company Subsidiaries, on the one hand, or Acquiror and the Acquiror
Subsidiaries, on the other hand, when the matter in question was brought to
the attention of or, if due diligence had been exercised, would have been
brought to the attention of, any officer or any other employee with the
title of Vice President or above of the Company or any Company Subsidiary,
on the one hand, or Acquiror or any Acquiror Subsidiary, on the other hand.
"Laws" means all foreign, federal, state and local
statutes, laws, ordinances, regulations, rules, resolutions, orders,
tariffs, determinations, writs, injunctions, awards (including, without
limitation, awards of any arbitrator), judgments and decrees applicable to
the specified Person and to the businesses and Assets thereof (including,
without limitation, Laws relating to securities registration and
regulation; the sale, leasing, ownership or management of real property;
employment practices, terms and conditions, and wages and hours; building
standards, land use and zoning; safety, health and fire prevention; and
environmental protection, including Environmental Laws).
"License" means any franchise, grant, authorization,
license, tariff, permit, easement, variance, exemption, consent,
certificate, approval or order of any Governmental Entity.
"Lien" means any mortgage, deed of trust, pledge,
hypothecation, assignment, charge or deposit arrangement, encumbrance, lien
(statutory or other) or preference, priority or other security interest or
preferential arrangement of any kind or nature whatsoever (including,
without limitation, those created by, arising under or evidenced by any
conditional sale or other title retention agreement, the interest of a
lessor under a Capital Lease Obligation, any financing lease having
substantially the same economic effect as any of the foregoing, or the
filing of any financing statement naming the owner of the asset to which
such lien relates as debtor, under the UCC or any comparable law) and any
contingent or other agreement to provide any of the foregoing.
"Merger" is defined in the Preamble to this Merger
Agreement.
"Merger Agreement" is defined in the Preamble to this
Merger Agreement.
"Merger Consideration" is defined in Section 2.01(b).
"Merger Sub" is defined in the Preamble to this Merger
Agreement.
"Merger Sub Stockholder" is defined in the Preamble to
this Merger Agreement.
"Merger Sub Stockholder Approval" is defined in Section
4.20(c).
"MSV Asset Sale Agreement" is defined in Section 5.02(r).
"Multiemployer Plan" is defined in Section 3.14(b).
"NASD" means the National Association of Securities
Dealers, Inc.
"New Guarantor" is defined in Section 2.06(b).
"New Lender" is defined in Section 2.06(a).
"Ordinary Course of Business" means ordinary course of
business consistent with past practices and, in the reasonable judgment of
a diligent businessman, prudent business operations.
"Original Consideration Value" is defined in Section
2.01(b).
"Other Arrangement" means a benefit program or practice
providing for bonuses, incentive compensation, vacation pay, severance pay,
insurance, restricted stock, stock options, employee discounts, company
cars, tuition reimbursement or any other perquisite or benefit (including,
without limitation, any fringe benefit under Section 132 of the Code) to
employees, officers or independent contractors that is not a Plan.
"Outstanding Consents" is defined in Section 6.11.
"Pension Plan" means an "employee pension benefit plan"
as such term is defined in Section 2(2) of ERISA.
"Person" means an individual, corporation, partnership,
joint venture, trust, unincorporated organization or other entity, or a
Governmental Entity.
"Plan" means any plan, program or arrangement, whether or
not written, that is or was an "employee benefit plan" as such term is
defined in Section 3(3) of ERISA and (i) which was or is established or
maintained by the Company or any Company Subsidiary; (ii) to which the
Company or any Company Subsidiary contributed or was obligated to
contribute or to fund or provide benefits; or (iii) which provides or
promises benefits to any person who performs or who has performed services
for the Company or any Company Subsidiary and because of those services is
or has been (A) a participant therein or (B) entitled to benefits
thereunder.
"Portfolio Company" means those entities identified on
the Portfolio Company Schedule of the Company Disclosure Schedules.
"Preferred Stock Merger Consideration" is defined in
Section 2.01(b).
"Preferred Stockholders" means, for purposes of this
Merger Agreement, each Person that is a holder of Company Preferred Stock
entitled to receive one or more Discrepancy Notes pursuant to the terms of
this Merger Agreement, whether such Person is a holder thereof as of the
date of this Merger Agreement (each such Person as of the date hereof being
identified on Schedule 3.27 of the Company Disclosure Schedule) or at any
time thereafter up to the Effective Time.
"Principal Amount" is defined in Section 2.01(b).
"Proposed Satellite Restructuring" means a possible
transaction or series of transactions pursuant to which the satellite
assets of Motient Services Inc. would be transferred to Mobile Satellite
Ventures LLC, in a transaction whereby (i) Acquiror would borrow up to $45
million under its existing term or revolving credit facilities and Acquiror
would loan up to $45 million to Mobile Satellite Ventures LLC, (ii) Mobile
Satellite Ventures would purchase or otherwise acquire the Subject Assets
(as defined in the MSV Asset Sale Agreement) from Motient Services Inc. for
a purchase price of $45 million and the issuance of a promissory note in
the principal amount of $15 million to Motient Services Inc. as
contemplated by the MSV Asset Sale Agreement, and (iii) Motient Services
Inc. would use the $45 million in proceeds from Mobile Satellite Ventures
LLC to repay $45 million under its existing revolving credit facility.
"Qualified Plan" means a Pension Plan that satisfies, or
is intended by the Company to satisfy, the requirements for tax
qualification described in Section 401 of the Code.
"Rate Contracts" means interest rate and currency swap
agreements, cap, floor and collar agreements, interest rate insurance,
currency spot and forward contracts and other agreements or arrangements
designed to provide protection against fluctuations in interest or currency
exchange rates; provided, that, such agreements or arrangements are
documented under master netting agreements.
"Real Property" means, as to any Person, the real
property currently or formerly owned, operated or used by such Person.
"Registration Rights Agreement" shall mean the
registration rights agreement between Acquiror and the Preferred
Stockholders substantially in the form of Exhibit F.
"Registration Statement" is defined in Section 6.01(a).
"Regulatory Disclosure" is defined in Section 4.15(c).
"Release" means any emission, spill, seepage, leak,
escape, leaching, discharge, injection, pumping, pouring, emptying,
dumping, disposal, migration, or release of Hazardous Materials from any
source (including without limitation, the Real Property and property
adjacent to the Real Property) into or upon the environment, including the
air, soil, improvements, surface water, groundwater, the sewer, septic
system, storm drain, publicly owned treatment works, or waste treatment,
storage, or disposal systems.
"Remediation" means any investigation, clean-up, removal
action, remedial action, restoration, repair, response action, corrective
action, monitoring, sampling and analysis, installation, reclamation,
closure, or post-closure in connection with the suspected, threatened or
actual presence or Release of Hazardous Materials.
"Repayment Amount" is defined in Section 7.02(c).
"Representatives" is defined in Section 5.05(a).
"Required Acquiror Stockholders Consent" shall mean any
authorization or approval of the issuance of the Acquiror Series A
Preferred Stock, the Acquiror Options and the Acquiror Warrants to be
issued pursuant to the terms of this Merger Agreement and the issuance of
any Acquiror Series A Preferred Stock, Acquiror Common Stock, Acquiror
Series A Non-Voting Preferred Stock and/or Acquiror Non-Voting Common Stock
upon the conversion and/or exercise thereof, that is required to be
obtained from the Acquiror Stockholders pursuant to the Nasdaq Marketplace
Rules.
"Restated Charter" is defined in Section 1.05.
"Retirement Plan" is defined in Section 3.14(b).
"Revolver Commitments" is defined in Section 2.06(a)(ii).
"Revolver Guaranty Documents" is defined in Section 2.06(b).
"Revolving Credit Agreement" means the Revolving Credit
Agreement dated as of March 31, 1998 among Acquiror, any Acquiror
Subsidiary that is a party thereto, the agents and the other lender parties
thereto, in effect on the date hereof, without giving effect to any
amendment, supplement, restatement or other modification thereto or waiver
thereunder (except as expressly permitted or contemplated hereunder)
effected without the prior written consent of the Company (which consent
shall not be unreasonably withheld).
"Revolving Loan Reduction Amount" means an amount equal to amount
by which the Commitments (as defined in the Revolving Credit Facility) are
required to be reduced pursuant to Section 3(b) of the Bank Waiver.
"SEC" means the United States Securities and Exchange
Commission and its successors.
"Section 16 Information" is defined in Section 6.13.
"Securities Act" means the Securities Act of 1933, as
amended, and all Laws promulgated pursuant thereto or in connection
therewith.
"Special Committee" shall mean a committee of the board
of directors of the Company designated to consider the transactions
contemplated by this Merger Agreement and to make certain recommendations
to such board of directors regarding the transactions contemplated herein.
"Superior Proposal" is defined in Section 5.05(e).
"Surviving Corporation" is defined in Section 1.01.
"Tax Returns" means all federal, state, local, foreign
and other applicable returns, declarations, reports and information
statements with respect to Taxes required to be filed with the IRS or any
other Governmental Entity or Tax authority or agency, including, without
limitation, consolidated, combined and unitary tax returns (collectively,
"returns") and all amended returns and claims for refund of Taxes.
"Taxes" (including the terms "Tax" and "Taxing") means
all federal, state, local and foreign taxes (including, without limitation,
income, profit, franchise, sales, use, real property, personal property, ad
valorem, excise, employment, social security and wage withholding taxes)
and installments of estimated taxes, assessments, deficiencies, levies,
imports, duties, license fees, registration fees, withholdings, or other
similar charges of every kind, character or description imposed by any
Governmental Entity, and any interest, penalties or additions to tax
imposed thereon or in connection therewith.
"Term Credit Agreement" means the Term Credit Agreement
dated as of March 31, 1998 among Acquiror, the agents and the other lender
parties thereto, in effect on the date hereof, without giving effect to any
amendment, supplement, restatement or other modification thereto or waiver
thereunder (except as expressly permitted or contemplated hereunder)
effected without the prior written consent of the Company (which consent
shall not be unreasonably withheld).
"Term Guaranty Documents" is defined in Section 2.06(b).
"Term Loan Reduction Amount" means an amount equal to
amount by which the Obligations (as defined in the Term Credit Facility)
are required to paid pursuant to Section 17 of the Bank Waiver.
"Term Loans" is defined in Section 2.06(a)(i).
"Termination Fee" is defined in Section 8.03(b).
"Tranche B and C Documents" is defined in Section
2.06(c).
"Unencumbered XM Merger Shares" means XM Merger Shares
complying with each of the representations and warranties as set forth in
Section 4.26(f)(i).
"VEBA" is defined in Section 3.14(f).
"Volume Weighted Average Price" means, for any security
as of any date, the volume weighted average prices of such security (as
reported in Bloomberg) or, if no sale price is reported for such security
by Bloomberg, the average of the per share bid prices of any market makers
for such security as reported in the "pink sheets" by the National
Quotation Bureau, Inc. If the Volume Weighted Average Price cannot be
calculated for such security on such date on any of the foregoing bases,
the Volume Weighted Average Price of such security on such date shall be
the fair market value as reasonably determined by an investment banking
firm selected by the Acquiror and reasonably acceptable to the Company and
the Preferred Stockholders, with the costs of such appraisal to be borne by
the Acquiror.
"Voting Agreements" is defined in the Preamble to this
Merger Agreement.
"XM" is defined in Section 4.26(a).
"XM Class A Stock" means Class A Common Stock of XM, par
value $.01 per share.
"XM Class B Stock" means Class B Common Stock of XM, par
value $.01 per share.
"XM Merger Shares" is defined in Section 4.26(f).
"XM Registration Rights Agreement" means the Amended and
Restated Registration Rights Agreement dated as of August 8, 2000, by and
among XM and certain of its stockholders party thereto.
"XM Related Rights" means all rights, benefits, powers
and privileges of Acquiror with respect to Acquiror XM Stock under the XM
Stock Documents, as amended in accordance with Section 6.09 of the Merger
Agreement.
"XM SEC Documents" is defined in Section 4.26(a).
"XM Share Price" means, as of any date, the average of
the Volume Weighted Average Price, as reported by Bloomberg, of the shares
of XM Class A Stock for the ten (10) consecutive trading days ending on the
trading day immediately preceding such determination date; provided, that,
in the event that there is a material adverse event regarding XM or its
operations that is publicly reported during such measurement period (either
through a press release or through a filing with the SEC) the "XM Share
Price" will instead be measured by the ten (10) consecutive trading days
commencing on the trading day immediately following the date on which the
release or report is made.
"XM Stock Documents" means, any or all of the following
as the context may require: (i) the certificate of incorporation and bylaws
of XM, (ii) the Amended and Restated Shareholders Agreement, dated as of
August 8, 2000, by and among XM and certain of its stockholders party
thereto, (iii) the XM Restated Registration Rights Agreement, and (iv) any
other documents and instruments to which Acquiror or any Acquiror
Subsidiary is party (or has any direct or indirect rights under) pursuant
to which Acquiror or any Acquiror Subsidiary has any rights, interests or
obligations with respect to any Acquiror XM Stock.
"XM Termination Event" means, on any determination date,
an XM Share Price of less than $4.00 per share.
IN WITNESS WHEREOF, Acquiror, Merger Sub and the Company
have duly executed and delivered or have caused this Merger Agreement to be
executed and delivered as of the date first written above.
MOTIENT CORPORATION
By:_______________________________
Name:_____________________________
Title:____________________________
RARE MEDIUM GROUP, INC.
By:_______________________________
Name:_____________________________
Title:____________________________
MR ACQUISITION CORP.
By:_______________________________
Name:_____________________________
Title:____________________________
TABLE OF CONTENTS
Page
ARTICLE I THE MERGER 1
SECTION 1.01. The Merger...............................................1
SECTION 1.02. Effective Time...........................................2
SECTION 1.03. Effect of the Merger.....................................2
SECTION 1.04. Certificate of Incorporation; Bylaws.....................2
SECTION 1.05. Acquiror Restated Charter................................2
SECTION 1.06. Directors and Officers...................................2
ARTICLE II CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
and other INSTRUMENTS.............................................3
SECTION 2.01. Conversion of Securities.................................3
SECTION 2.02. Exchange of Certificates or Instruments..................5
SECTION 2.03. Stock Transfer Books.....................................8
SECTION 2.04. Company Stock Options....................................8
SECTION 2.05. Company Warrants.........................................9
SECTION 2.06. Purchase of Tranche B and Tranche C Interests...........10
SECTION 2.07. Stock Options...........................................11
SECTION 2.08. Closing.................................................11
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THe company...................11
SECTION 3.01. Corporate Existence and Power...........................12
SECTION 3.02. Corporate Authorization.................................12
SECTION 3.03. Governmental Authorization..............................12
SECTION 3.04. Non-Contravention.......................................12
SECTION 3.05. Capitalization..........................................13
SECTION 3.06. Subsidiaries............................................14
SECTION 3.07. Company SEC Documents...................................15
SECTION 3.08. Financial Statements; No Material Undisclosed
Liabilities.............................................15
SECTION 3.09. Information to Be Supplied..............................16
SECTION 3.10. Absence of Certain Changes..............................16
SECTION 3.11. Litigation..............................................16
SECTION 3.12. Contracts...............................................17
SECTION 3.13. Taxes...................................................18
SECTION 3.14. Employee Benefits.......................................19
SECTION 3.15. Compliance with Laws; Licenses, Permits and
Registrations...........................................20
SECTION 3.16. Title to Properties.....................................21
SECTION 3.17. Intellectual Property...................................21
SECTION 3.18. Environmental Matters...................................23
SECTION 3.19. Finders' Fees; Opinions of Financial Advisor............24
SECTION 3.20. Required Vote; Board Approval...........................24
SECTION 3.21. State Takeover Statutes.................................25
SECTION 3.22. Certain Agreements......................................25
SECTION 3.23. Foreign Currency Exposure...............................25
SECTION 3.24. Insurance...............................................25
SECTION 3.25. Customers, Distributors and Suppliers...................25
SECTION 3.26. Relations with Governments..............................26
SECTION 3.27. Affiliates..............................................26
SECTION 3.28. Current Cash Reserves; Indebtedness.....................26
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF ACQUIROR.......................27
SECTION 4.01. Corporate Existence and Power...........................27
SECTION 4.02. Corporate Authorization.................................27
SECTION 4.03. Governmental Authorization..............................27
SECTION 4.04. Non-Contravention.......................................28
SECTION 4.05. Capitalization..........................................28
SECTION 4.06. Subsidiaries............................................29
SECTION 4.07. Acquiror SEC Documents..................................30
SECTION 4.08. Financial Statements; No Material Undisclosed
Liabilities.............................................30
SECTION 4.09. Information to Be Supplied..............................31
SECTION 4.10. Absence of Certain Changes..............................31
SECTION 4.11. Litigation..............................................31
SECTION 4.12. Contracts...............................................32
SECTION 4.13. Taxes...................................................33
SECTION 4.14. Employee Benefits.......................................33
SECTION 4.15. Compliance with Laws; Licenses, Permits and
Registrations...........................................35
SECTION 4.16. Title to Properties.....................................36
SECTION 4.17. Intellectual Property...................................36
SECTION 4.18. Environmental Matters...................................38
SECTION 4.19. Finders' Fees; Opinions of Financial Advisor............39
SECTION 4.20. Required Vote; Board Approval...........................39
SECTION 4.21. Insurance...............................................40
SECTION 4.22. State Takeover Statutes.................................40
SECTION 4.23. Certain Agreements......................................40
SECTION 4.24. Customers, Distributors and Suppliers...................40
SECTION 4.25. Indebtedness............................................41
SECTION 4.26. XM Satellite Radio Holdings, Inc.; Mobile
Satellite Ventures LLC; Merger Sub......................41
ARTICLE V COMPANY AND ACQUIROR COVENANTS....................................42
SECTION 5.01. Conduct of Business of the Company......................42
SECTION 5.02. Conduct of Business of Acquiror.........................46
SECTION 5.03. Other Actions...........................................50
SECTION 5.04. Access and Information..................................50
SECTION 5.05. No Solicitation.........................................52
SECTION 5.06. Exchange Rights.........................................54
Section 5.07. Employee Benefits.......................................54
Section 5.08. Covenants Relating to XM................................55
SECTION 5.09. Merger Sub Compliance...................................56
ARTICLE VI ADDITIONAL AGREEMENTS............................................56
SECTION 6.01. Registration Statement; Joint Proxy Statement...........56
SECTION 6.02. Meetings of Stockholders................................58
SECTION 6.03. Appropriate Action; Consents; Filings...................59
SECTION 6.04. Public Announcements....................................60
SECTION 6.05. Post-Signing SEC Documents..............................60
SECTION 6.06. Affiliates. 60
SECTION 6.07. Directors' and Officers' Insurance; Indemnification.....61
SECTION 6.08. Payment of Expenses.....................................61
SECTION 6.09. XM......................................................61
SECTION 6.10. Consent to Second Closing Under Bridge Note Agreement...62
SECTION 6.11. Acquiror Best Efforts to Obtain Consents................63
SECTION 6.12. Employee Plans..........................................63
SECTION 6.13. Exemption from Liability Under Section 16(b)............63
ARTICLE VII CONDITIONS......................................................64
SECTION 7.01. Conditions to Obligations of Each Party Under
This Merger Agreement...................................64
SECTION 7.02. Additional Conditions to Obligations of
Acquiror and Merger Sub.................................65
SECTION 7.03. Additional Conditions to Obligations of the
Company.................................................65
SECTION 7.04. Additional Conditions to the Consummation of
the Merger..............................................66
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER..............................67
SECTION 8.01. Termination.67
SECTION 8.02. Effect of Termination...................................68
SECTION 8.03. Fees and Expenses.......................................69
SECTION 8.04. Amendment. 69
SECTION 8.05. Extension; Waiver.......................................70
ARTICLE IX GENERAL PROVISIONS...............................................70
SECTION 9.01. Effectiveness of Representations, Warranties
and Agreements..........................................70
SECTION 9.02. Notices.................................................71
SECTION 9.03. Headings................................................72
SECTION 9.04. Severability............................................72
SECTION 9.05. Entire Agreement........................................72
SECTION 9.06. Assignment..............................................72
SECTION 9.07. Parties in Interest.....................................73
SECTION 9.08. Mutual Drafting.........................................73
SECTION 9.09. Specific Performance....................................73
SECTION 9.10. Governing Law...........................................73
SECTION 9.11. Counterparts............................................74
SECTION 9.12. Confidentiality.........................................74
SECTION 9.13. Jurisdiction............................................74
SECTION 9.14. Waiver of Jury Trial....................................74
ARTICLE X DEFINITIONS.......................................................74
EXHIBITS
--------
EXHIBIT A Restated Charter
EXHIBIT B Discrepancy Note Term Sheet
EXHIBIT C Acquiror Voting Agreement
EXHIBIT D Affiliate Agreements
EXHIBIT E Company Voting Agreement
EXHIBIT F Registration Rights Agreement
SCHEDULES
---------
Acquiror Disclosure Schedule
Company Disclosure Schedule
SCHEDULE 6.09
Part (a): XM Merger Shares. Prior to the Effective Time, among
other things, Acquiror shall have:
1) converted such number of shares of XM Class B Stock into shares of XM
Class A Stock in accordance with the XM Stock Documents such that
Acquiror will be able to freely transfer nine million shares of XM
Class A Stock, which shall be Unencumbered XM Merger Shares, to the
Preferred Stockholders (or their designees) at the Effective Time;
2) delivered irrevocable instructions to XM to cause share certificates
representing the XM Merger Shares to be duly reissued to, and
registered as record owner in the name of, the Preferred Stockholders
(or their designees) as requested by the Preferred Stockholders in
writing; and
3) taken all such other action so that the conditions set forth in
Sections 7.04(c) shall have been satisfied prior to the Effective
Time.
Part (b): XM Stock Documents. Prior to the Effective Time, among other
things,
1) the Amended and Restated Shareholders Agreement, dated as of August 8,
2000, by and among XM and certain of its stockholders party thereto
relating to certain capital stock of XM shall be amended to accomplish
the following objectives:
a) cause one person designated by a majority of the holders of XM
Merger Shares to serve on the board of directors of XM;
b) permit the transfer of XM Merger Shares to the Preferred
Stockholders (or their designees) and their successive transferees
iteratively without any limitations, restrictions or conditions;
and
c) confirm that the provisions of Section 2.2 are applicable only to
Acquiror, but not its transferees, and expressly provide that such
provisions do not apply to the Preferred Stockholders (or their
designees) or their respective successors or transferees.
Part (c): Prior to the Effective time, among other things,
Acquiror shall take such actions under the Amended and Restated
Registration Rights Agreement, dated as of August 8, 2000, by and among XM
and certain of its stockholders party thereto relating to certain capital
stock of XM to cause Acquiror to transfer one of its demand registration
rights and a pro-rata potion of all of its other registration rights to the
Preferred Stockholders (or their designees) or their respective successors
or transferees together with the XM Merger Shares.
