Exhibit 2.1
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 0.00.Xxxxxxxxx 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 0.00.Xxxxxxxxx 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 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) 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 VI
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 conitemplated 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: /s/Xxxxxx X. Xxxxxxx, Xx.
Name: Xxxxxx X. Xxxxxxx, Xx.
Title: President and Chief
Executive Officer
RARE MEDIUM GROUP, INC.
By: /s/Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: Chairman, President and
Chief Executive Officer
MR ACQUISITION CORP.
By: /s/Xxxxxx X. Xxxxxxx, Xx.
Name: Xxxxxx X. Xxxxxxx, Xx.
Title: President
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....................................69
SECTION 8.03. Fees and Expenses........................................69
SECTION 8.04. Amendment................................................70
SECTION 8.05. Extension; Waiver........................................70
ARTICLE IX GENERAL PROVISIONS................................................71
SECTION 9.01 Effectiveness of Representations, Warranties
and Agreements............................................71
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...............................................73
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
Except for the Discrepancy Note Term which is filed as part of this Merger
Agreement as Exhibit B, the exhibits and schedules to the Merger Agreement are
not being filed with this report. The Merger Agreement filed with this report
briefly describes the contents of each exhibit and schedule to the Merger
Agreement. The registrant undertakes to furnish supplementally a copy of any
omitted exhibit and schedule to the Securities and Exchange Commission upon
request. Pursuant to Item 601(b)(2) of Regulation S-K, set forth below is a list
of the omitted exhibits and schedules:
EXHIBIT A Form of Restated Charter of Acquiror
EXHIBIT C Form of Acquiror Voting Agreement
EXHIBIT D Form of Affiliate Agreements
EXHIBIT E Form of Company Voting Agreement
EXHIBIT F Form of Registration Rights Agreement
Acquiror Disclosure Schedules contain a list of exceptions to the
representations and warranties contained in the Merger Agreement.
Company Disclosure Schedules contain a list of exceptions to the representations
and warranties contained in the Merger Agreement.
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.
EXHIBIT B TO MERGER AGREEMENT
SUMMARY OF TERMS AND CONDITIONS FOR
DISCREPANCY NOTES AND DISCREPANCY NOTE AGREEMENT
Issuer: Acquiror
Holders: Preferred Stockholders of the Company and
their affiliates.
Subsidiary Guarantors: Same, if any, in the existing Term Credit,
Revolving Credit and Bridge Facilities to
the extent not prohibited by the
Indenture.
Initial Principal Amount: As determined by Section 2.01(b) of the
Merger Agreement; provided, that if the
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Initial Principal Amount of the
Discrepancy Notes is less than
$10,000,000, the covenants relating to
asset sales, investments, incurrence
of debt and incurrence of liens shall
conform to the covenants set forth in
the HY Indenture, but all other terms,
provisions and requirements shall
remain the same.
Maturity Date: 3 years from the date of initial issuance.
Interest: 12% per annum, payable quarterly in
arrears by capitalizing accrued interest
into principal. Default rate is 14%.
Optional Prepayments: At any time in any amount, subject to
Restrictions on Cash Payments (set
forth below).
Mandatory Prepayments: In the event that the Issuer or any of its
subsidiaries shall be required to
mandatorily, or voluntarily elects to,
prepay, repay or redeem (or offer to
prepay, repay or redeem) any Unsecured
Indebtedness or Subordinated
Indebtedness, then the Issuer shall be
required to make a ratable prepayment
of the Notes determined with respect to
the amount of such other prepayment,
repayment or redemption; provided, this
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provision shall not apply with respect to
scheduled payments of interest.
Certain Indebtedness: As used in this Summary of Terms, the
following terms shall generally mean
the following:
"Indebtedness" shall be defined in a
manner substantially similar to the
corresponding definitions in the existing
Term Credit, Revolving Credit and Bridge
Facilities, provided, that any capital
stock, which is redeemable by the holder
thereof or upon the occurrence of any
event or condition, shall be included as
Indebtedness.
"Subordinated Indebtedness" means all
Indebtedness of Acquiror or any Acquiror
Subsidiary (after giving effect to the
Merger) which (i) together with all
Contingent Obligations related thereto, is
not secured by a lien on any property or
assets of Acquiror or any Acquiror
Subsidiary, (ii) does not prohibit any
lien granted in favor or for the benefit
of the Shareholder Guarantors or the
Holders or limit the ability of Acquiror
to grant any lien on its property or
assets, (iii) is not supported by a
Contingent Obligation of a Person which is
not Acquiror or any other Acquiror
Subsidiary unless any reimbursement
obligation of Acquiror or Acquiror
Subsidiary in respect thereof also
constitute Subordinated Indebtedness as
provided herein, (iv) does not mature or
require any scheduled payments of
principal or interest (other than interest
payable-in-kind) prior to the date which
is 366 days after the Maturity Date, (v)
do not contain terms and provisions more
restrictive to Acquiror and Acquiror
Subsidiaries than those set forth in the
Indenture, and (vi) is subordinated in all
respects pursuant to subordination
provisions satisfactory to the Holders
(which shall include, without limitation,
payment and remedy blockage rights).
"Unsecured Indebtedness" means all
Indebtedness of any Acquiror Subsidiary
(after giving effect to the Merger) which
(i) is not secured by a lien on any
property or assets of any Acquiror
Subsidiary, (ii) does not prohibit any
lien granted in favor or for the benefit
of the Shareholder Guarantors or the
Holders or limit the ability of Acquiror
to grant any lien on its property or
assets to the Shareholder Guarantors or
the Holders, (iii) if such Indebtedness of
any Acquiror Subsidiary is supported by a
Contingent Obligation of a Person which is
not Acquiror or Acquiror Subsidiary and
Acquiror has agreed to reimburse such
Person for any payments made by it in
respect of any Acquiror Subsidiary
Indebtedness, such reimbursement
obligations by Acquiror is not secured by
a lien on any of the property or assets of
Acquiror, (iv) does not mature or require
any scheduled payments of principal prior
to the date which is 366 days after the
Maturity Date, (v) the provisions relating
the amount, accrual and payment of
interest shall be reasonably acceptable to
the Holders, and (vi) do not contain terms
and provisions more restrictive to
Acquiror and Acquiror Subsidiaries than
those set forth in the Discrepancy Note
Documents; provided, that (a) in certain
circumstances to be negotiated between the
Holders and Xxxxxx, Unsecured Indebtedness
shall be limited to the Tranche A Loans
outstanding under the Revolving Credit
Facility as in effect on the Closing Date
(after giving effect to any payments or
commitment reductions required by the Bank
Waiver, but without giving any effect to
increase in commitment thereof or any
extension of the maturity date thereof
granted by the Tranche A lenders) which
are guaranteed by Xxxxxx, and (b) so long
as no Indebtedness of Acquiror or the
Indebtedness under the Revolving Credit
Facility shall have been accelerated, all
trade payables incurred in the ordinary
course of business.
Restriction on Cash Payments: So long as the Tranche A Loans under the
Revolving Credit Facility as in effect on
the Closing Date remain outstanding
(without giving any effect to increase in
commitment thereof or any extension of the
maturity date thereof granted by the
Tranche A lenders, but including all
amounts remaining outstanding after the
maturity date) and are guaranteed by
Xxxxxx, Issuer shall not make any cash
payments in respect of the principal
amount of the Discrepancy Notes nor any of
the other types of indebtedness described
in Mandatory Prepayments above.
Adjustment of Principal Value of Within ten (10) Business Days after
Notes: September 30, 2001, the Agent (as defined
below) shall calculate the amount (such
amount, the "Revised XM Value") equal
to the product of (x) the XM Share Price
(as defined in the Merger Agreement) as of
September 30, 2001 and (y) the number of
XM Merger Shares delivered at the Merger
Closing Date. If the Revised XM Value
exceeds the value of such XM Merger Shares
at the Merger Closing Date as determined
pursuant to the Merger Agreement at the
Effective Time (the "Initial XM Value"),
then the aggregate outstanding principal
amount of all of the Notes shall be
reduced, on a pro rata basis according to
the aggregate outstanding principal amount
of each Note, by an amount equal to (a)
the Revised XM Value minus (b) the Initial
XM Value; provided that in no case shall
the outstanding principal amount of any
Note be reduced to a number less than
zero. If the Revised XM Value does not
exceed the Initial XM Value, then there
shall be no adjustment to the outstanding
principal amount of any Note. If no
Discrepancy Notes were issued on the
Merger Closing Date, there shall be no
adjustment to the Preferred Stockholder
Merger Consideration. If the Discrepancy
Notes are adjusted so that the aggregate
principal amount thereof is reduced to
zero, the Discrepancy Notes shall be
cancelled and upon payment of all other
amounts payable or owing under the
Discrepancy Note Documents, all such
Discrepancy Note Documents shall be
terminated.
Security and Pledge: Substantially the same as set
forth in the Reimbursement Security and
Pledge Agreement. Intercreditor terms
between the Shareholder Guarantors and the
Holders shall be subject to the
Intercreditor Agreement and the Collateral
Purchase Agreement.
Conditions: Such conditions, certificates, financing
statements, opinions and other
documentation as may be reasonably
requested by the Holders relating to the
Note Documents and creation and perfection
of security interests.
Representations and Warranties of Representations and warranties shall
the Issuer and its Subsidiaries: include the following (subject to
qualifications reasonably acceptable to
the Issuer and the Holders):
- Corporate Existence and Power
- Corporate Authorization;
No Contravention
- Government Approvals
- Binding Effect
- Litigation
- No Default
- ERISA Compliance
- Title to Property
- Taxes
- Environmental Matters
- Regulated Entities
- Subsidiaries
- Insurance
- Collateral; Property
- Pledge and Security
- Disclosure
- Satisfaction of Conditions
- Solvency of Acquiror and Consolidated
Acquiror Subsidiaries, including the
Company and its Subsidiaries, after giving
effect to the transactions contemplated by
the Merger Agreement, such representation
and warranty to apply to the consolidated
group of Acquiror, taken as a whole, and
assuming that (but not relying upon) the
conditions set forth in Section 7.02(c) of
the Merger Agreement are true.
The representations and warranties, to the
extent applying to Acquiror Subsidiaries,
shall be made with the express exclusion
of the Company and its Subsidiaries,
except that the solvency representation
and warranty shall be made with the
express inclusion of the Company and its
Subsidiaries.
Covenants of the Issuer and its Covenants shall include the following
Subsidiaries: (subject to qualifications reasonably
acceptable to the Issuer and the Holders):
- Conduct of Business; Preservation of
Corporate Existence
- Maintenance of Property
- Compliance with Laws
- Security and Pledge
- Government Approvals
- Limitation on Liens
- Disposition of Assets, Consolidations
and Mergers, but the following shall in
any event be permitted:
- Dispositions required or
permitted by the Shareholder
Guarantors
- Ordinary course of business
dispositions
- Dispositions by Acquiror
Subsidiaries of assets so long
as the proceeds thereof are
reinvested within 180 days in
Permitted Reinvestments (to be
defined) and otherwise
permitted (but in no event more
permissive than the Indenture)
- Dispositions by Acquiror of
assets (other than XM) so long
as such disposition is for fair
value, the consideration
thereof is at least 75% cash,
the proceeds thereof are
reinvested within 180 days in
Permitted Reinvestments (to be
defined) and such proceeds are
deposited in a cash collateral
account pending such
reinvestment
- Dispositions of a limited
amount of assets the proceeds
of which may be used to fund
ordinary course operating
costs and expenses (but in no
event more permissive than the
Indenture)
- Intercompany transactions among
Acquiror Subsidiaries
- Acquiror Subsidiaries may
dividend, transfer or otherwise
dispose of assets to Acquiror
without consideration
- The foregoing to be permitted so
long as it would not result in
any default under any other
contractual obligation
- Investments, but the following shall in
any event be permitted:
- Permitted Reinvestments
- Investments in Acquiror
Subsidiaries made with proceeds
of Dispositions of a limited
amount of assets to fund
ordinary course operating costs
and expenses (but in no event
more permissive than the
Indenture)
- Investments made with Qualified
Proceeds (the proceeds of
Qualified Subordinated Debt and
Acquiror equity proceeds)
- Intercompany transactions among
Acquiror Subsidiaries
- The foregoing to be permitted
so long as it would not result
in any default under any other
contractual obligation
- Transactions with Affiliates
- Restricted Payments
- Limitation on Indebtedness, but the
following shall in any event be
permitted:
- Scheduled Indebtedness
outstanding at the Closing Date
(to the extent contained in the
Acquiror or Company (see below
for qualifications) Disclosure
Schedules to the Merger
Agreement or otherwise
permitted to be incurred
pursuant to the Merger
Agreement
- Unlimited Qualified
Subordinated Indebtedness (to
be defined (but in any event
will not permit payments or
become due earlier than 366
days after the Maturity Date))
of Acquiror and Acquiror
Subsidiaries
- Unlimited Unsecured
Indebtedness (to be defined
(but in any event will not
permit payments or become due
earlier than 366 days after the
Maturity Date)) of Acquiror
Subsidiaries only
- Vendor financings (including,
without limitation, the
Motorola financing) currently
permitted by the Bridge
Facility
- Qualified Unsecured Contingent
Obligations (to be defined) of
Acquiror in respect of
permitted vendor financings of
Acquiror Subsidiaries
- The foregoing to be permitted
so long as it would not result
in any default under any other
contractual obligation
- Financial Information; Certificates;
Other Information
- Notices
- Maintenance of Insurance
- Inspection of Property and Books and
Records
- Environmental Laws
- No Subsidiaries
- FCC Approvals and Licenses
- No Amendments, Etc.
- Further Assurances
The covenants, to the extent applying to
Acquiror Subsidiaries, shall expressly
include the Company and its Subsidiaries;
provided, that any condition with respect
to the Company and its Subsidiaries, which
would otherwise violate the provisions of
any covenant, shall be deemed to be
permitted under such covenants to the
extent that such condition existed prior
to the consummation of the Merger;
provided, further, that to the extent the
Bridge Facility contains special
limitations applicable solely to the "High
Yield Subsidiaries", such special
limitations shall be included in the
Discrepancy Note Agreement only to the
extent that such limitations are also
contained in the Term Credit and Revolving
Credit Facilities.
Events of Default: Events of Default shall include the
following (subject to qualifications
reasonably acceptable to the Issuer and
the Holders):
- Payment default under any Note Document
- Specified covenant defaults without cure
period
- Specified covenant defaults with
20 day cure period
- Incorrect representation, warranty,
certification or statement
- Cross-payment default to any
Indebtedness or Contingent Obligation
having an aggregate principal and face
amount of more than $5,000,000
- Cross-default to the Revolving Credit
Agreement and the related Shareholder
Guaranty documents
- Cross-acceleration default to any
Indebtedness or Contingent Obligation
having an aggregate principal and face
amount of more than $5,000,000
- Voluntary bankruptcy event;
- Involuntary bankruptcy event;
- ERISA Event;
- Monetary judgments, decrees, etc.
involving more than an amount equal to
the greater of (i) $5,000,000 and (ii)
10% of the Issuer's net worth;
- Non-monetary judgments which could
reasonably be expected to have a
Material Adverse Effect;
- Invalidity and third party violation of
the Note Documents; failure of security
interests, etc.;
- FCC and Governmental Authority
revocation, etc., of licenses, permits,
etc.
- Change in Control
Tax Indemnification: Comparable to provisions currently set
forth in the existing Term Credit,
Revolving Credit and Bridge Facilities
Expenses; Indemnification: Comparable to provisions currently set
forth in the existing Term Credit,
Revolving Credit and Bridge Facilities
Governing Law: New York.
Senior Indebtedness:: The Notes shall constitute
"Senior Indebtedness" and, to the maximum
extent permitted, "Designated Senior
Indebtedness" under the Indenture and the
Revolving Credit Facility Guaranties.
References: It is understood that all references to
the existing Revolving Credit Facility
herein shall include all amendments
effected by Bank Waiver No. 3, and any
other amendments and modifications thereto
permitted in accordance with the terms of
the Merger Agreement.
The Agent: Comparable to provisions currently set
forth in the existing Term Credit and
Revolving Credit Facilities, except that
the Agent shall be an entity designated by
the Holders
Documentation: Documentation and all additional terms,
conditions and provisions shall be
reasonably acceptable to the Issuer and
the Holders acting in good faith
