AGREEMENT AND PLAN OF MERGER by and among NORTH PITTSBURGH SYSTEMS, INC., CONSOLIDATED COMMUNICATIONS HOLDINGS, INC. and FORT PITT ACQUISITION SUB INC. Dated as of July 1, 2007
AGREEMENT
AND PLAN OF MERGER (this “Agreement”),
dated
as of July 1, 2007, by and among North Pittsburgh Systems, Inc., a Pennsylvania
corporation (the “Company”),
Consolidated Communications Holdings, Inc., a Delaware corporation
(“Parent”),
and
Fort Pitt Acquisition Sub Inc., a Pennsylvania corporation and a wholly owned
subsidiary of Parent (“Merger
Sub”).
RECITALS
WHEREAS,
the respective Boards of Directors of the Company, Parent and (upon its
formation) Merger Sub have determined that it is advisable and in the best
interests of their respective corporations and shareholders that Merger Sub
be
merged with and into the Company (the “Merger”),
and
that the Company continue as the surviving corporation of the Merger (the
“Surviving
Corporation”),
on
the terms and subject to the conditions set forth in this
Agreement;
WHEREAS,
the Board of Directors of the Company has approved and adopted this Agreement,
including all the terms and conditions set forth herein, and all the
Transactions (as defined in Section 1.1), including the Merger, and has
resolved, subject to the terms of this Agreement, to recommend to the
shareholders of the Company to vote to approve and adopt this
Agreement;
WHEREAS,
the Board of Directors of each of Parent and (upon its formation) Merger
Sub
(and Parent as the sole shareholder of Merger Sub) have approved and adopted
this Agreement, including all the terms and conditions set forth herein,
and all
the Transactions;
WHEREAS,
immediately prior to the execution of this Agreement, and as a condition
to
Parent and Merger Sub entering into this Agreement, the Company and Xxxxx
Fargo
Bank Minnesota, N.A., as Rights Agent, have executed an amendment (the
“Rights
Agreement Amendment”)
to
that certain Rights Agreement, dated as of September 25, 2003 (the “Rights
Agreement”),
so as
to render the Preferred Stock Purchase Rights issued thereunder (the
“Company
Rights”)
inapplicable to this Agreement and the Transactions;
WHEREAS,
Parent shall cause Merger Sub to be formed, and to execute a counterpart
of this
Agreement, promptly after the date hereof as provided in Section 9.15;
WHEREAS,
each of the Company, Parent and (upon its formation) Merger Sub desires to
make
certain representations, warranties, covenants and agreements in connection
with
the Transactions and also to prescribe various conditions to the consummation
thereof.
NOW,
THEREFORE, in consideration of the foregoing and the mutual representations,
warranties, covenants and agreements set forth herein, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE
I
DEFINITIONS
Section
1.1. Certain
Definitions.
As used
in this Agreement, the following terms have the following meanings:
“Acceptable
Confidentiality Agreement”
means
a
confidentiality agreement that contains confidentiality and standstill
provisions that are no less favorable in the aggregate to the Company than
those
contained in the Confidentiality Agreement (it being understood and agreed
that
such confidentiality agreement need not prohibit the making or amendment
of any
Alternative Proposal).
“Affiliate”
has
the
meaning assigned to that term in Rule 12b-2 of the Exchange Act
Rules.
“Alternative
Proposal”
means
any offer, proposal or indication of interest by any Person (or group of
Persons) that relates to (i) a transaction or series of transactions (including
any merger, consolidation, recapitalization, reorganization, liquidation
or
other direct or indirect business combination) involving the Company or the
issuance or acquisition of shares of Company Common Stock or other equity
securities of the Company representing twenty-five percent (25%) (in number
or
voting power) or more of the outstanding capital stock of the Company (other
than the Transactions), (ii) any tender offer (including a self-tender offer)
or
exchange offer that, if consummated, would result in any Person, together
with
all Affiliates thereof, becoming the beneficial owner of shares of Company
Common Stock or other equity securities of the Company representing twenty-five
percent (25%) (in number or voting power) or more of the outstanding capital
stock of the Company, or (iii) the acquisition, license or purchase by any
Person or group of Persons (other than the Company and the Company
Subsidiaries), or any other disposition by the Company or any Company
Subsidiaries, of twenty-five percent (25%) or more of the consolidated assets
of
the Company and the Company Subsidiaries, taken as a whole (other than the
Transactions).
“Bulldog
Group”
means
any one or more of the following Persons, or any of their respective Affiliates:
Bulldog Investors, Xxxxxxx Xxxxxxxxx, Xxxxxx Xxxxx, Santa Xxxxxx Partners
Opportunity Fund, L.P., Santa Xxxxxx Partners L.P., Santa Xxxxxx Partners
II
L.P., Xxxxxxxx X. Xxxxxxxxx, Monarch Activist Partners L.P., Xxxxx Xxxxxxxx,
Xxxxxx Malad, Xxxxx and Xxxxxxx Funds LLC, Full Value Partners L.P., Xxxxx
Xxxxxxxx, and any other Person purporting to be a member of, or to represent
the
interests of, the so-called North Pittsburgh Systems Shareholder
Committee.
“Business
Day”
means
a
day other than Saturday or Sunday or any other day on which banks in New
York,
New York are required to be or may be closed.
“Code”
means
the United States Internal Revenue Code of 1986, as amended.
“Communications
Act”
means
the Communications Act of 1934, as amended.
“Company
Articles”
means
the Company’s Articles of Incorporation, as amended.
2
“Company
By-laws”
means
the Company’s By-laws, as amended.
“Company
Material Adverse Effect”
means
any material adverse effect on (i) the business, financial condition or results
of operations of the Company and the Company Subsidiaries, taken as a whole,
or
(ii) the Company’s ability to perform its obligations under this Agreement;
provided,
however,
that
none of the following shall be deemed, either alone or in combination, to
constitute, and none of the following shall be taken into account in determining
whether there has been or will be, a Company Material Adverse Effect:
(1) any failure by the Company or any of the Company Subsidiaries to meet
any internal or published projections, forecasts, or revenue or earnings
predictions for any period ending prior to, on or after the date of this
Agreement (it being understood that this clause (1) does not and shall not
be
deemed to apply to the underlying cause or causes of any such failure);
(2) any adverse change, effect, event, occurrence, state of facts or
development to the extent attributable to the announcement or pendency of
the
Merger including (A) the absence of consents, waivers or approvals relating
to
the Merger from any Governmental Entity or other Person or (B) any litigation
brought by any shareholder(s) of the Company in connection with this Agreement
or any of the Transactions; (3) any adverse change, effect, event,
occurrence, state of facts or development attributable to conditions generally
affecting (A) the telecommunications industry as a whole that are not
specifically related to the Company and the Company Subsidiaries and do not
have
a materially disproportionate adverse effect on the Company and the Company
Subsidiaries, taken as a whole, or (B) the United States economy as a
whole, including changes in economic and financial markets and regulatory
or
political conditions, whether resulting from acts of terrorism, war, natural
disaster or otherwise, that do not have a materially disproportionate adverse
effect on the Company and the Company Subsidiaries, taken as a whole; (4)
any
change in the market price or trading volume of the Company’s securities;
(5) any adverse change, effect, event, occurrence, state of facts or
development arising from or relating to any change in GAAP or any change
in
applicable Laws or the interpretation or enforcement thereof that, in each
case,
do not have a materially disproportionate adverse effect on the Company and
the
Company Subsidiaries, taken as a whole; (6)
any
change, occurrence, development, event, series of events or circumstance
arising
out of, resulting from or attributable to any action taken or threatened
to be
taken by any member(s) of the Bulldog Group in connection with the Company’s
2007 annual meeting of shareholders, this Agreement or any of the
Transactions,
or any
related matter; (7) any costs or expenses incurred or accrued by the Company
and
the Company Subsidiaries in connection with this Agreement or any of the
Transactions; and (8) any actions taken, or failures to take action, or such
other changes, occurrences, developments, events, series of events or
circumstances, to which Parent has consented in writing, or the failure of
the
Company to take any action referred to in Section 6.1 due to Parent’s
withholding of consent.
“Company
Material Subsidiary”
means
any Company Subsidiary that is a “Significant Subsidiary” within the meaning of
Rule 405 promulgated under the Securities Act.
“Company
Subsidiary”
means
any Subsidiary of the Company.
“Company’s
Knowledge”
means
the actual knowledge of the directors and executive officers of the Company,
without investigation.
3
“Confidentiality
Agreement”
means
the confidentiality agreement, dated May 25, 2007, between the Company and
Parent.
“Contract”
means
any written contract, agreement, lease, instrument or other legally binding
contractual commitment.
“Environmental
Law”
means
all applicable Laws as in effect on the date of this Agreement relating to:
(i)
pollution or protection or restoration of the environment or natural resources,
(ii) the handling, use, presence, disposal, release, threatened release or
distribution in commerce of chemicals or substances or mixtures to protect
human
health or the environment, or (iii) the protection of worker health and
safety.
“ERISA”
means
the Employee Retirement Income Security Act of 1974, as amended.
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended.
“Exchange
Act Rules”
means
the rules promulgated by the SEC under the Exchange Act.
“FCC”
means
the United States Federal Communications Commission.
“FCC
Rules”
means
the rules and regulations promulgated by the FCC.
“GAAP”
means
United States generally accepted accounting principles.
“Governmental
Entity”
means
any federal, state or local court, administrative or regulatory agency or
commission or other governmental or quasi-governmental authority or
instrumentality.
“Hazardous
Substance”
means
(i) any substance that is listed, classified or otherwise regulated as hazardous
or toxic or a pollutant or contaminant under any Environmental Law; or
(ii) any petroleum, natural gas, natural gas liquids or coal product or
by-product, asbestos-containing material, polychlorinated biphenyls or
radioactive material.
“HSR
Act”
means
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended.
“Intellectual
Property”
means
all trade secrets, know-how, designs, patents and patent applications, all
unregistered and registered trademarks, service marks and tradenames and
applications for registration thereof, all unregistered and registered
copyrights and applications for registration thereof, all Internet domain
name
registrations and all computer software programs and databases.
“Law”
means
any federal,
state, regional, local or municipal law, statute,
code, ordinance, rule, regulation, judgment, order, writ, decree, injunction,
constitution or other similar legally enforceable requirement enacted, adopted,
promulgated or applied by a Governmental Entity.
“License”
means
any license or certificate of public convenience issued by any applicable
state
or federal agency, including the PPUC and the FCC.
4
“Lien”
means
any lien, mortgage, deed of trust, encumbrance, claim or security
interest.
“NASDAQ”
means,
with respect to Parent, the NASDAQ Global Market and, with respect to the
Company, the NASDAQ National Market System.
“Parent
Benefit Plan”
means
each “employee benefit plan” (within the meaning of Section 3(3) of ERISA),
each stock based, severance, retention, employment, change-in-control, deferred
compensation or supplemental retirement agreement, program, policy or
arrangement, and each material bonus, incentive, vacation or other material
employee benefit plan, agreement, program, policy or arrangement with respect
to
current or former employees, any of which is maintained or sponsored by Parent
or any of the Parent Subsidiaries or with respect to which Parent or any
of the
Parent Subsidiaries is obligated to make any contributions, other than any
plans
maintained or sponsored by a union.
“Parent
By-laws”
means
Parent’s By-laws, as amended.
“Parent
Certificate”
means
Parent’s Certificate of Incorporation, as amended.
“Parent
Material Adverse Effect”
means
any material adverse effect on (i) the business, financial condition or results
of operations of Parent and the Parent Subsidiaries, taken as a whole, or
(ii)
Parent’s or Merger Sub’s ability to perform their respective obligations under
this Agreement; provided,
however,
that
none of the following shall be deemed, either alone or in combination, to
constitute, and none of the following shall be taken into account in determining
whether there has been or will be, a Parent Material Adverse Effect:
(1) any failure by Parent or any of the Parent Subsidiaries to meet any
internal or published projections, forecasts, or revenue or earnings predictions
for any period ending prior to, on or after the date of this Agreement (it
being
understood that this clause (1) does not and shall not be deemed to apply
to the
underlying cause or causes of any such failure); (2) any adverse change,
effect, event, occurrence, state of facts or development to the extent
attributable to the announcement or pendency of the Merger including (A)
the
absence of consents, waivers or approvals relating to the Merger from any
Governmental Entity or other Person or (B) any litigation brought by any
stockholder(s) of Parent in connection with this Agreement or any of the
Transactions; (3) any adverse change, effect, event, occurrence, state of
facts or development attributable to conditions generally affecting (A) the
telecommunications industry as a whole that are not specifically related
to
Parent and the Parent Subsidiaries and do not have a materially disproportionate
adverse effect on Parent and the Parent Subsidiaries, taken as a whole, or
(B) the United States economy as a whole, including changes in economic and
financial markets and regulatory or political conditions, whether resulting
from
acts of terrorism, war, natural disaster or otherwise, that do not have a
materially disproportionate adverse effect on Parent and the Parent
Subsidiaries, taken as a whole; (4) any change in the market price or trading
volume of Parent’s securities; (5) any adverse change, effect, event,
occurrence, state of facts or development arising from or relating to any
change
in GAAP or any change in applicable Laws or the interpretation or enforcement
thereof that, in each case, do not have a materially disproportionate adverse
effect on Parent and the Parent Subsidiaries, taken as a whole; (6) any costs
or
expenses incurred or accrued by Parent and the Parent Subsidiaries in connection
with this Agreement or any of the Transactions; and (7) any actions taken,
or
failures to take action, or such other changes, occurrences, developments,
events, series of events or circumstances, to which the Company has consented
in
writing, or the failure of Parent to take any action referred to in Section
6.2
due to the Company’s withholding of consent.
5
“Parent
Material Subsidiary”
means
each of (i) Merger Sub and (ii) any other Parent Subsidiary that is a
“Significant Subsidiary” within the meaning of Rule 405 promulgated under the
Securities Act.
“Parent
Stock”
means
common stock, par value $.01 per share, of Parent.
“Parent
Subsidiary”
means
any Subsidiary of Parent.
“Parent’s
Knowledge”
means
the actual knowledge of the directors and executive officers of Parent, without
investigation.
“PBCL”
means
the Pennsylvania Business Corporation Law of 1988, as amended.
“PBGC”
means
the Pension Benefit Guaranty Corporation.
“Permitted
Liens”
means
(i) Liens for Taxes or other governmental charges not yet delinquent or the
amount or validity of which is being contested in good faith, (ii) mechanics’,
carriers’, workers’, repairers’, and similar Liens arising or incurred in the
ordinary course of business, (iii) pledges or deposits to secure obligations
under workers’ compensation Laws or similar legislation or to secure public or
statutory obligations, (iv) zoning, entitlement and other land use and
environmental regulations by Governmental Entities, (v) with respect to Owned
Real Property, any matters disclosed in title reports delivered or made
available to Parent prior to the date of this Agreement and all Liens of
record,
(vi) with respect to leasehold interests, Liens incurred, created, assumed
or
permitted to exist and arising by, through or under a landlord or owner of
the
leased property, with or without the consent of the lessee, (vii) Liens in
favor
of the Company or any Company Subsidiary securing intercompany borrowing
by any
Company Subsidiary, (viii) Liens set forth on Section 4.8
of the
Company Disclosure Schedule, (ix) Liens specifically disclosed in the Company
SEC Financial Statements, (x) purchase money Liens arising in the ordinary
course of business, and (xi) such other Liens as would not be reasonably
expected to have, in the aggregate, a Company Material Adverse
Effect.
“Person”
shall
be construed as broadly as possible and shall include an individual or natural
person, a partnership, a corporation, an association, a joint stock company,
a
limited liability company, a trust, a joint venture, an unincorporated
organization and a Governmental Entity.
“PPUC”
means
the Pennsylvania Public Utility Commission.
“PPUC
Rules”
means
the rules and regulations promulgated by the PPUC.
“SEC”
means
the United States Securities and Exchange Commission.
“Securities
Act”
means
the Securities Act of 1933, as amended.
“Securities
Act Rules”
means
the rules promulgated by the SEC under the Securities Act.
6
“Subsidiary”,
when
used with respect to any Person, means any corporation, limited liability
company, partnership or other organization, whether incorporated or
unincorporated, of which at least a majority of the securities or other
interests having by their terms voting power to elect a majority of the board
of
directors, or others performing similar functions with respect to such
corporation or other organization, is beneficially owned or controlled, directly
or indirectly, by such Person or by any one or more of its Subsidiaries (as
defined in the preceding clause) or by such Person and one or more of its
Subsidiaries.
“Superior
Proposal”
means
any bona fide written Alternative Proposal (provided,
that
for purposes of this definition, the applicable percentages in clauses (i),
(ii)
and (iii) of the definition of Alternative Proposal shall be fifty percent
(50%)
rather than twenty-five percent (25%)), which (on its most recently amended
or
modified terms, if amended or modified) the Board of Directors of the Company
determines in good faith, if consummated, would result in a transaction that
is
more favorable to the Company’s shareholders (other than Parent, Merger Sub and
their respective Affiliates), from a financial point of view, than the Merger,
taking
into account, among other things, (i) the terms of such Alternative Proposal
and
(ii) such legal, financial, regulatory, timing and other aspects of such
Alternative Proposal, including the Person making such Alternative Proposal,
which the Company’s Board of Directors deems relevant.
“Tax”
means
any net income, alternative or add-on minimum tax, gross income, gross receipts,
sales, use, ad valorem, transfer, franchise, profits, license, social security,
withholding, payroll, employment, excise, severance, stamp, occupation, premium,
property, environmental or windfall profit tax, any tax required by the Public
Utility Realty Tax Act, or any other tax, custom, duty, governmental fee
or
other like assessment or charge of any kind whatsoever, imposed by any
Governmental Entity, together with any interest, penalty or addition to tax
imposed with respect thereto.
“Transactions”
means,
collectively, all of the transactions contemplated by this Agreement, including
the Merger. For the avoidance of doubt, references herein to the Transactions
or
to any of the Transactions shall not be deemed to include or mean the
Financing.
Section
1.2. Certain
Other Definitions.
The
following terms are defined in the respective Sections of the Agreement
indicated:
|
Defined
Term
|
Section
|
|
|
Agreement
|
Preamble
|
|
|
Articles
of Merger
|
2.3
|
|
|
Cash
Consideration
|
3.1(c)(i)
|
|
|
Cash
Conversion Number
|
3.3(a)(i)
|
|
|
Cash
Electing Company Share
|
3.1(c)(i)
|
|
|
Cash
Election
|
3.1(c)(i)
|
|
|
Cash
Election Number
|
3.3(b)
|
|
|
Certificate
|
3.1(c)
|
|
|
Closing
|
2.2
|
|
|
Closing
Date
|
2.2
|
|
|
Company
|
Preamble
|
7
|
Company
Benefit Plan
|
4.12(a)
|
|
|
Company
Benefit Plans
|
4.12(a)
|
|
|
Company
Common Stock
|
3.1(b)
|
|
|
Company
Disclosure Schedule
|
Article
IV
|
|
|
Company
Preferred Stock
|
4.2(a)
|
|
|
Company
Reimbursement Amount
|
8.3(b)
|
|
|
Company
Representatives
|
6.3(a)
|
|
|
Company
Required Statutory Approvals
|
4.4(a)
|
|
|
Company
Rights
|
Recitals
|
|
|
Company
SEC Documents
|
4.5(a)
|
|
|
Company
SEC Financial Statements
|
4.5(c)
|
|
|
Company
Shareholder Approval
|
4.3(a)
|
|
|
Company
Shareholders’ Meeting
|
2.6(a)(i)
|
|
|
Company
Tax Returns
|
4.9
|
|
|
Company
Termination Fee
|
8.3(a)(y)
|
|
|
Company
Union Contracts
|
4.13(a)(iii)
|
|
|
Department
of State
|
2.3
|
|
|
Disclosing
Party
|
6.5(a)
|
|
|
Effective
Time
|
2.3
|
|
|
Electing
Company Share
|
3.1(c)(ii)
|
|
|
Election
Deadline
|
3.2(b)
|
|
|
Evercore
|
4.20
|
|
|
Exchange
Agent
|
3.2(a)
|
|
|
Excluded
Shares
|
3.1(b)
|
|
|
Financing
|
5.12
|
|
|
Financing
Commitments
|
5.12
|
|
|
Form
of Election
|
3.2(b)
|
|
|
Indemnified
Liabilities
|
6.8(a)
|
|
|
Indemnified
Parties
|
6.8(a)
|
|
|
Indemnified
Party
|
6.8(a)
|
|
|
Leased
Real Property
|
4.8(c)
|
|
|
Merger
|
Recitals
|
|
|
Merger
Consideration
|
3.1(c)
|
|
|
Merger
Sub
|
Preamble
|
|
|
Merger
Sub Common Stock
|
3.1(a)
|
|
|
Non-Electing
Company Holder
|
3.4(b)
|
|
|
Non-Electing
Company Share
|
3.1(c)(iii)
|
|
|
Owned
Real Property
|
4.8(b)
|
|
|
Parent
|
Preamble
|
|
|
Parent
Disclosure Schedule
|
Article
V
|
|
|
Parent
Preferred Stock
|
5.2(a)
|
|
|
Parent
Registration Statement
|
2.6(a)(i)
|
|
|
Parent
Required Statutory Approvals
|
5.4(a)
|
|
|
Parent
SEC Documents
|
5.5(a)
|
|
|
Parent
SEC Financial Statements
|
5.5(c)
|
|
|
Parent
Stock Consideration
|
3.1(c)(ii)
|
8
|
Parent
Stock Issuance
|
2.6(a)(i)
|
|
|
Parent
Tax Returns
|
5.8
|
|
|
Proceeding
|
6.8(a)
|
|
|
Proxy
Statement/Prospectus
|
2.6(a)(i)
|
|
|
PUHCA
|
5.9(b)
|
|
|
Rights
Agreement
|
Recitals
|
|
|
Rights
Agreement Amendment
|
Recitals
|
|
|
Shortfall
Number
|
3.3(c)
|
|
|
Stock
Electing Company Share
|
3.1(c)(ii)
|
|
|
Stock
Election
|
3.1(c)(ii)
|
|
|
Superior
Proposal Agreement
|
6.3(c)(y)
|
|
|
Surviving
Corporation
|
Recitals
|
ARTICLE
II
THE
MERGER
Section
2.1. The
Merger.
Subject
to the terms and conditions of this Agreement, at the Effective Time, (a)
Merger
Sub shall be merged with and into the Company in accordance with the provisions
of Subchapter C of Chapter 19 of the PBCL and the separate corporate existence
of Merger Sub shall cease and (b) the Company shall be the Surviving Corporation
and shall continue its corporate existence under the PBCL. The Merger shall
have
the effects set forth in Section 1929 of the PBCL.
Section 2.2.
Closing.
The
closing of the Merger (the “Closing”)
shall
take place at the offices of Xxxxxx Xxxxxxx & Xxxx LLP, Xxx Xxxxxxx Xxxx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m., local time, on a date designated
by the Company which is reasonably satisfactory to Parent, which shall be
as
soon as practicable, but not later than five (5) Business Days, after
satisfaction or waiver of all of the conditions set forth in Article VII
(other
than those conditions that by their nature must be satisfied on the Closing
Date), or at such other place, time and date as the parties hereto shall
agree.
The date on which the Closing occurs is hereinafter referred to as the
“Closing
Date”.
Section 2.3.
Effective
Time.
As soon
as practicable during the Closing, Merger Sub and the Company shall cause
articles of merger providing for the Merger (the “Articles
of Merger”)
to be
executed and filed in the Department of State of the Commonwealth of
Pennsylvania (the “Department
of State”)
as
provided in Sections 1926 and 1927 of the PBCL, and shall take such other
and
further actions as may be required by applicable Law to make the Merger
effective. The Merger shall become effective at the time that the Articles
of
Merger are duly filed in the Department of State or such later time as is
agreed
upon by the parties hereto and specified in the Articles of Merger. The time
when the Merger becomes effective is hereinafter referred to as the
“Effective
Time”.
Section 2.4.
Articles
of Incorporation and By-laws of the Surviving Corporation.
At
the
Effective Time, the Articles of Incorporation and the By-laws of the Company,
as
in effect immediately prior to the Effective Time, shall be the Articles
of
Incorporation and By-laws of the Surviving Corporation until thereafter amended
in compliance with the PBCL.
9
Section 2.5.
Directors
and Officers of the Surviving Corporation.
The
directors of Merger Sub and the officers of the Company immediately prior
to the
Effective Time shall, from and after the Effective Time, be the directors
and
officers, respectively, of the Surviving Corporation until their respective
successors have been duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the PBCL and the
Articles of Incorporation and By-laws of the Surviving Corporation.
Section 2.6.
Proxy
Statement/Prospectus; Parent Registration Statement; Company Shareholders’
Meeting.
(a) Parent
and the Company shall together, or pursuant to an allocation of responsibility
to be agreed upon between them:
(i) prepare
and file with the SEC as soon as is reasonably practicable (x) proxy materials
(the “Proxy
Statement/Prospectus”)
under
the Exchange Act with respect to a meeting of the shareholders of the Company
(the “Company
Shareholders’ Meeting”) for
the
purpose of considering and taking action upon this Agreement, and
(y) a
Registration Statement on Form S-4 or other appropriate Form under the
Securities Act (the “Parent
Registration Statement”)
with
respect to the issuance of shares of Parent Stock pursuant to the Merger
(the
“Parent
Stock Issuance”)
in which
the Proxy Statement/Prospectus shall be included as a prospectus;
(ii) use
commercially reasonable efforts to have, as promptly as practicable, (x)
the
Proxy Statement/Prospectus cleared by the SEC under the Exchange Act and
(y) the
Parent Registration Statement declared effective by the SEC under the Securities
Act;
(iii) take
all
such action as shall be required under applicable state blue sky or securities
Laws in connection with the Transactions; and
(iv) cooperate
with each other in determining whether any filings are required to be made
or
consents are required to be obtained in any foreign jurisdiction prior to
the
Effective Time in connection with the Transactions, and in making any such
filings promptly and in seeking to obtain timely any such consents.
(b) Subject
to the terms and conditions of this Agreement (including the rights of the
Company under Sections 6.3(c) and 8.1(c)), the Company, acting through its
Board
of Directors, shall:
(i) include
in the Proxy Statement/Prospectus the recommendation of the Company’s Board of
Directors that the Company’s shareholders vote in favor of the approval and
adoption of this Agreement at the Company Shareholders’ Meeting; provided,
however,
that
such recommendation may be withdrawn, modified or amended, in each case,
(x) in
accordance with Section 6.3(c) or (y) if, other than in connection with an
Alternative Proposal, the Company’s Board of Directors shall have determined in
good faith (after consultation with the Company’s outside counsel) that the
failure to take such action is inconsistent with its fiduciary duties under
applicable Law (it being understood and agreed that notwithstanding any
withdrawal, modification or amendment made pursuant to this clause (y), the
Company shall still be required to hold the Company Shareholders’ Meeting
pursuant to Section 2.6(b)(ii));
10
(ii) as
soon
as reasonably practicable after the date on which the Proxy Statement/Prospectus
has been cleared by the SEC and the Parent Registration Statement has been
declared effective by the SEC, (x) mail the Proxy Statement/Prospectus to
the
Company’s shareholders and (y) duly call, give notice of, and convene and hold
the Company Shareholders’ Meeting; and
(iii) subject
to the proviso in Section 2.6(b)(i), use commercially reasonable efforts
to
solicit from the Company’s shareholders proxies in favor of the approval and
adoption of this Agreement.
(c) In
connection with the preparation of the Proxy Statement/Prospectus and the
Parent
Registration Statement, Parent shall furnish to the Company all information
concerning Parent, Merger Sub and the other Parent Subsidiaries as the Company
may reasonably request, and the Company shall furnish to Parent all information
concerning the Company and the Company Subsidiaries as Parent may reasonably
request. Each of the Company and Parent agrees that the information with
respect
to it or any of its Subsidiaries included or incorporated by reference in
the
Proxy Statement/Prospectus, the Parent Registration Statement, any amendment
or
supplement thereto or any other document filed in connection with this Agreement
or any of the Transactions with any Governmental Entity (in any such case
to the
extent such information was furnished by the Company or Parent, as the case
may
be, for inclusion or incorporation by reference therein) (i) at the respective
times that the applicable document is filed with the SEC or such other
Governmental Entity and first mailed or otherwise disseminated to the Company’s
shareholders, (ii) in addition, in the case of the Proxy Statement/Prospectus,
at the time of the Company Shareholders’ Meeting, and (iii) in addition, in the
case of the Parent Registration Statement, at the time the Parent Registration
Statement becomes effective and at the Effective Time, will 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.
(d) The
Company and the Company’s counsel, and Parent and Parent’s counsel, shall each
be given a reasonable opportunity to review and comment upon the Proxy
Statement/Prospectus and Parent Registration Statement prior to the filing
thereof with the SEC, and shall provide any comments thereon to the other
party
as soon as practicable (but in no event later than three (3) Business Days
after
being asked to comment thereon). The Company shall provide Parent and Parent’s
counsel, and Parent shall provide the Company and the Company’s counsel,
promptly after receipt thereof, with copies of any written comments or other
material communications that it or its counsel receives from time to time
from
the SEC or its staff with respect to the Proxy Statement/Prospectus or Parent
Registration Statement, with copies of any written responses to, and telephonic
notification of any material verbal responses received from, the SEC or its
staff by it or its counsel with respect to the Proxy Statement/Prospectus
or
Parent Registration Statement, and with notice of any stop order or the
suspension of qualification of the Parent Stock issuable pursuant to the
Merger
for offering or sale in any jurisdiction. If at any time Parent or the Company
shall become aware of the occurrence of any event or other circumstance relating
to it or any of its Subsidiaries as to which an amendment or supplement to
the
Proxy Statement/Prospectus or Parent Registration Statement shall be required,
it shall notify the other party thereof, and Parent and the Company shall
together, or pursuant to an allocation of responsibility to be agreed upon
between them, promptly prepare and file such amendment or supplement with
the
SEC and, if applicable, disseminate such amendment or supplement to the
Company’s shareholders. Neither the Company nor Parent shall disseminate or file
any such amendment or supplement without reasonable advance consultation
with
the other party and its counsel.
11
(e) Parent
and Merger Sub shall, at the Company Shareholders’ Meeting, vote, or cause to be
voted, all shares of Company Common Stock owned by any of Parent, Merger
Sub and
any other Affiliate of Parent in favor of the approval and adoption of this
Agreement.
ARTICLE
III
TREATMENT
OF SECURITIES
Section 3.1.
Conversion
of Capital Stock.
At the
Effective Time, by virtue of the Merger and without any action on the part
of
the Company, Parent, Merger Sub or any holder of any share of capital stock
of
the Company, Parent or Merger Sub:
(a) Common
Stock of Merger Sub.
Each
share of common stock, without par value, of Merger Sub (“Merger
Sub Common Stock”)
issued
and outstanding immediately prior to the Effective Time shall be converted
into
one newly issued, fully paid and nonassessable share of common stock of the
Surviving Corporation.
(b) Cancellation
of Certain Company Common Stock.
Each
share of common stock, par value $0.15625 per share, of the Company
(“Company
Common Stock”)
that
immediately prior to the Effective Time is owned by Parent, Merger Sub or
any
other Parent Subsidiary, and each share of Company Common Stock held in the
treasury of the Company or owned by any Company Subsidiary, shall automatically
be canceled and retired and shall cease to exist without any conversion thereof,
and no consideration shall be delivered in exchange therefor. Shares of Company
Common Stock that are canceled and retired pursuant to this Section 3.1(b)
are
hereinafter referred to as the “Excluded
Shares”.
(c) Conversion
of Company Common Stock.
Each
share of Company Common Stock issued and outstanding immediately prior to
the
Effective Time (other than Excluded Shares) shall automatically be converted
into the right to receive the following consideration:
(i) Each
share of Company Common Stock with respect to which an election to receive
cash
(a “Cash
Election”)
has
been effectively made and not revoked or lost pursuant to Section 3.2 (each,
a
“Cash
Electing Company Share”)
shall
(subject to Section 3.3) be converted into the right to receive $25.00 in
cash
without interest (such per share amount is hereinafter referred to as the
“Cash
Consideration”).
(ii) Each
share of Company Common Stock with respect to which an election to receive
stock
consideration (a “Stock
Election”)
has
been properly made and not revoked or lost pursuant to Section 3.2 (each,
a
“Stock
Electing Company Share”
and,
together with each Cash Electing Company Share, an “Electing
Company Share”)
shall
(subject to Section 3.3) be converted into the right to receive 1.1061947
validly issued, fully paid and nonassessable shares of Parent Stock, subject
to
adjustment in accordance with Section 3.1(e) (such per share amount, together
with any cash in lieu of fractional shares of Parent Stock to be paid pursuant
to Section 3.1(d), is hereinafter referred to as the “Parent
Stock Consideration”).
12
(iii) Each
share of Company Common Stock that is not (x) an Excluded Share or (y) a
share
of Company Common Stock with respect to which a Cash Election or a Stock
Election has been properly made and not revoked or lost pursuant to Section
3.2
(each, a “Non-Electing
Company Share”)
shall
be converted into the right to receive the Cash Consideration or the Parent
Stock Consideration, as determined pursuant to Section 3.3.
Effective
as of the Effective Time, each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time (other than Excluded
Shares)
shall no longer be outstanding and shall automatically be canceled and retired
and shall cease to exist, and each holder of a certificate that immediately
prior to the Effective Time represented any such share of Company Common
Stock
(a “Certificate”)
shall
cease to have any rights with respect thereto, except the right to receive
the
Merger Consideration therefor upon surrender of such Certificate in accordance
with Section 3.4. For purposes of this Agreement, the term “Merger
Consideration”
with
respect to a given share of Company Common Stock shall mean either the Cash
Consideration (with respect to a share of Company Common Stock representing
the
right to receive the Cash Consideration) or the Parent Stock Consideration
(with
respect to a share of Company Common Stock representing the right to receive
the
Parent Stock Consideration).
(d) No
Fractional Shares.
No
fractional shares of Parent Stock shall be issued in respect of shares of
Company Common Stock that are to be converted in the Merger into the right
to
receive shares of Parent Stock. Each holder of a Certificate (other than
holders
of Certificates representing Excluded Shares) shall be entitled to receive
in
lieu of any fractional share of Parent Stock to which such holder would
otherwise have been entitled pursuant to Sections 3.1(c) and 3.3 an amount
in
cash (without interest), rounded to the nearest whole cent, equal to the
product
obtained by multiplying (i) the fractional share of Parent Stock to which
such
holder would otherwise be entitled (after taking into account all shares
of
Company Common Stock held by such holder immediately prior to the Effective
Time, such holder’s unrevoked Cash Elections and Stock Elections and the
provisions of Section 3.3) by (ii) the average of the closing price on NASDAQ
for a share of Parent Stock for the five (5) consecutive trading days
immediately preceding the Effective Time.
(e) Adjustments.
If, on
or after the date of this Agreement and prior to the Effective Time, Parent
pays
a dividend in, splits, combines into a smaller number of shares, or issues
by
reclassification any shares of Parent Stock, then the Parent Stock Consideration
and any dependent items shall be appropriately adjusted to provide to the
holders of Company Common Stock the same economic effect as contemplated
by this
Agreement prior to such action, and as so adjusted shall, from and after
the
date of such event, be the Parent Stock Consideration or other dependent
item,
as applicable, subject to further adjustment in accordance with this
sentence.
13
Section
3.2. Election
Procedures.
(a) Promptly
after the execution of this Agreement, Parent shall designate and appoint
a bank
or trust company reasonably acceptable to the Company to act as exchange
agent
hereunder (the “Exchange
Agent”)
for
the purpose of exchanging Certificates.
(b) Parent
shall prepare and file as an exhibit to the Parent Registration Statement
a form
of election, and other appropriate and customary transmittal materials, in
such
form and containing such provisions as Parent and the Company shall mutually
agree (collectively, the “Form
of Election”).
The
Form of Election shall permit each Person who, at or prior to the Election
Deadline (as defined below), is a record holder (or, in the case of nominee
record holders, the beneficial owner, through proper instructions and
documentation) of any share of Company Common Stock (other than Excluded
Shares)
to specify (i) the number of such holder’s shares of Company Common Stock with
respect to which such holder makes a Cash Election and/or (ii) the number
of
such holder’s shares of Company Common Stock with respect to which such holder
makes a Stock Election. The Form of Election shall specify that delivery
shall
be effected, and risk of loss and title to the Certificates shall pass, only
upon proper delivery of the completed Form of Election and any Certificates
to
the Exchange Agent. The Company shall mail the Form of Election with the
Proxy
Statement/Prospectus to all Persons who are record holders of shares of Company
Common Stock as of the record date for the Company Shareholders’ Meeting and
shall use commercially reasonable efforts to make the Form of Election available
to all Persons who become holders of shares of Company Common Stock during
the
period between the record date for the Company Shareholders’ Meeting and the
Election Deadline. As used in this Agreement, “Election
Deadline”
means
5:00 p.m., New York City time, on the date that is two (2) Business Days
immediately preceding the Closing Date (or on such other date as the parties
hereto mutually agree).
(c) Any
such
election shall have been properly made only if the Exchange Agent shall have
received at its designated office, by the Election Deadline, a Form of Election
properly completed and signed and accompanied by Certificates representing
the
shares of Company Common Stock to which such Form of Election relates (or
by an
appropriate guarantee of delivery of such Certificates as set forth in such
Form
of Election from a firm that is an “eligible guarantor institution” (as defined
in Rule 17Ad-15 under the Exchange Act); provided,
that
such Certificates are in fact delivered to the Exchange Agent by the time
set
forth in such guarantee of delivery). Any share of Company Common Stock (other
than Excluded Shares) with respect to which a proper Cash Election or Stock
Election has not been made as aforesaid shall be deemed to be a Non-Electing
Company Share. After a Cash Election or a Stock Election is properly made
with
respect to any share of Company Common Stock, no further registration of
transfers of such share shall be made on the stock transfer books of the
Company, unless and until such Cash Election or Stock Election is properly
revoked.
(d) Parent
and the Company shall publicly announce the anticipated date of the Election
Deadline at least five (5) Business Days prior to the anticipated Closing
Date.
If the Closing Date is delayed to a subsequent date, the Election Deadline
shall
be similarly delayed to a subsequent date, and Parent and the Company shall
promptly announce any such delay and, when determined, the rescheduled Election
Deadline.
14
(e) Any
Cash
Election or Stock Election may be revoked with respect to all or any portion
of
the shares of Company Common Stock subject thereto (but only in whole share
amounts) by the holder who submitted the applicable Form of Election by such
holder submitting to the Exchange Agent a written notice of such revocation
received by the Exchange Agent at or prior to the Election Deadline. In
addition, all Cash Elections and Stock Elections shall automatically be revoked
if this Agreement is terminated in accordance with Article VIII. If a Cash
Election or Stock Election is revoked with respect to any shares of Company
Common Stock, the Certificates representing such shares shall be promptly
returned to the holder that submitted the same to the Exchange Agent, except
to
the extent (if any) a subsequent Cash Election and/or Stock Election is properly
made with respect to any or all of the shares of Company Common Stock
represented by such Certificate.
(f) The
good
faith determination of the Exchange Agent (or the joint determination of
Parent
and the Company, in the event that the Exchange Agent declines to make any
such
determination) shall be conclusive and binding as to whether or not Cash
Elections and Stock Elections shall have been properly made or revoked pursuant
to this Section 3.2 and as to when Cash Elections, Stock Elections and
revocations were received by the Exchange Agent. The Exchange Agent shall
have
reasonable discretion to disregard immaterial defects in the Forms of Election.
The Exchange Agent (or Parent and the Company jointly, in the event that
the
Exchange Agent declines to make the following computations) shall also make
all
computations as to the proration contemplated by Section 3.3, and absent
manifest error such computations shall be conclusive and binding on Parent,
the
Company and all holders of Company Common Stock. The Exchange Agent may,
with
the written agreement of Parent after Parent’s reasonable consultation with the
Company, make any rules that are consistent with this Section 3.2 for the
implementation of the Cash Elections and Stock Elections provided for in
this
Agreement and shall be necessary or desirable to effect the Cash Elections
and
Stock Elections.
Section
3.3. Proration.
Notwithstanding anything in this Agreement to the contrary:
(a) Cash
Conversion Number .
With
respect to all shares of Company Common Stock (other than the Excluded Shares)
issued and outstanding immediately prior to the Effective Time:
(i) eighty
percent (80%) of
such
shares (such number of shares, the “Cash
Conversion Number”)
shall
be converted into the right to receive an amount per share equal to the Cash
Consideration; and
(ii) the
remainder of such shares shall be converted into the right to receive the
Parent
Stock Consideration per share.
(b) If
Cash Election Number Equals or Exceeds the Cash Conversion
Number.
If the
aggregate number of Cash Electing Company Shares (such number of shares,
the
“Cash
Election Number”)
equals
or exceeds the Cash Conversion Number, then:
(i) all
Stock
Electing Company Shares and all Non-Electing Company Shares shall be converted
into the right to receive the Parent Stock Consideration per share;
and
15
(ii) the
number of Cash Electing Company Shares of each shareholder of the Company
that
shall be converted into the right to receive an amount per share equal to
the
Cash Consideration shall be equal to the product obtained by multiplying
(x) the
number of Cash Electing Company Shares of such shareholder by (y) a fraction,
the numerator of which is the Cash Conversion Number and the denominator
of
which is the Cash Election Number, and the remaining number of such holder’s
Cash Electing Company Shares shall be converted into the right to receive
the
Parent Stock Consideration per share.
(c) If
Cash Election Number Is Less Than the Cash Conversion Number.
If the
Cash Election Number is less than the Cash Conversion Number (such difference
between the Cash Election Number and the Cash Conversion Number, the
“Shortfall
Number”),
then:
(i) all
Cash
Electing Company Shares shall be converted into the right to receive an amount
per share equal to the Cash Consideration; and
(ii) the
Stock
Electing Company Shares and the Non-Electing Company Shares shall be treated
in
the following manner:
(x) if
the
Shortfall Number is less than or equal to the aggregate number of Non-Electing
Company Shares,
then
(A) all Stock Electing Company Shares shall be converted into the right to
receive the Parent Stock Consideration per share and (B) the number of
Non-Electing Company Shares of each shareholder of the Company that shall
be
converted into the right to receive an amount per share equal to the Cash
Consideration shall be equal to the product obtained by multiplying (1) the
number of Non-Electing Company Shares of such shareholder by (2) a fraction,
the
numerator of which is the Shortfall Number and the denominator of which is
the
aggregate number of Non-Electing Company Shares, and the remaining number
of
such holder’s Non-Electing Company Shares shall be converted into the right to
receive the Parent Stock Consideration per share; or
(y) if
the
Shortfall Number exceeds the aggregate number of Non-Electing Company
Shares,
then
(A) all Non-Electing Company Shares shall be converted into the right to
receive
an amount per share equal to the Cash Consideration and (B) the number of
Stock
Electing Company Shares of each shareholder of the Company that shall be
converted into the right to receive an amount per share equal to the Cash
Consideration shall be equal to the product obtained by multiplying (1) the
number of Stock Electing Company Shares of such shareholder by (2) a fraction,
the numerator of which is the amount by which the Shortfall Number exceeds
the
aggregate number of Non-Electing Company Shares and the denominator of which
is
the aggregate number of Stock Electing Company Shares, and the remaining
number
of such holder’s Stock Electing Company Shares shall be converted into the right
to receive the Parent Stock Consideration per share.
16
Section 3.4.
Delivery
of the Merger Consideration.
(a) Deposits
with Exchange Agent.
Prior
to the Effective Time (and, with respect to Parent Stock, from time to time
after the Effective Time as applicable), Parent shall deposit with the Exchange
Agent, pursuant to an agreement providing for the matters set forth in this
Section 3.4 and such other matters as may be appropriate and the terms of
which shall be mutually acceptable to Parent and the Company, an amount in
cash
and certificates representing shares of Parent Stock sufficient to effect
the
conversion of each share of Company Common Stock (other than Excluded Shares)
into the Merger Consideration pursuant to this Agreement.
(b) Exchange
Procedures.
(i) Promptly
after the Effective Time, but in any event not more than five (5) Business
Days
after the Effective Time, Parent shall cause the Exchange Agent to mail to
each
holder of record as of immediately prior to the Effective Time of Non-Electing
Company Shares (each such holder, a “Non-Electing
Company Holder”
),
subject
to Section 3.3, (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to each Certificate representing
any Non-Electing Company Shares held by such Non-Electing Company Holder
shall
pass, only upon delivery of the completed letter of transmittal and such
Certificate to the Exchange Agent and shall be in such form and have such
other
provisions as Parent and the Company shall mutually agree) and (ii) instructions
for use in effecting the surrender of each such Certificate in exchange for
the
total amount of Merger Consideration that such Non-Electing Company Holder
is
entitled to receive in exchange for such holder’s Non-Electing Company Shares in
the Merger pursuant to this Agreement. From and after the Effective Time,
until
surrendered as contemplated by this Section 3.4, each Certificate
representing Non-Electing Company Shares held by a Non-Electing Company Holder
shall be deemed to represent only the right to receive the total amount of
Merger Consideration to which such Non-Electing Company Holder is entitled
in
exchange for such Non-Electing Company Shares as contemplated by this Article
III.
(ii) Upon
surrender by a Non-Electing Company Holder to the Exchange Agent of all
Certificates representing such holder’s Non-Electing Company Shares, together
with a letter of transmittal duly completed and validly executed in accordance
with the instructions thereto, and such other documents as may be required
pursuant to such instructions, each Non-Electing Company Holder shall be
entitled to receive in exchange therefor (and
the
Exchange Agent shall mail to such Non-Electing Holder within ten (10) Business
Days following such surrender):
(A) a
certificate (or certificates in the aggregate) representing the number of
whole
shares of Parent Stock, if any, into which such holder’s shares of Company
Common Stock represented by such holder’s properly surrendered Certificates were
converted in accordance with this Article III, and such Certificates so
surrendered shall be forthwith cancelled, and (B) a check in an amount of
U.S.
dollars (after giving effect to any required withholdings pursuant to Section
3.4(g)) equal to (I) the amount of cash (consisting of the Cash Consideration
and cash in lieu of a fractional share of Parent Stock to be paid pursuant
to
Section 3.1(d)), if any, into which such holder’s shares of Company Common Stock
represented by such holder’s properly surrendered Certificates were converted in
accordance with this Article III, plus (II) any cash dividends and other
distributions that such holder has the right to receive pursuant to Section
3.4(c).
17
(iii) As
of the
Effective Time, each former shareholder of the Company who properly made
and did
not revoke a Cash Election and/or a Stock Election shall be entitled to receive
in exchange for such shareholder’s Electing Company Shares (and the Exchange
Agent shall mail to such former shareholder within ten (10) Business Days
following the Effective Time, unless such former shareholder is also a
Non-Electing Company Holder, in which case the Exchange Agent shall include
in
its mailing to such former shareholder pursuant to Section 3.4(b)(ii)): (A)
a
certificate (or certificates in the aggregate) representing the number of
whole
shares of Parent Stock, if any, into which such holder’s shares of Company
Common Stock represented by such holder’s properly surrendered Certificates were
converted in accordance with this Article III, and such Certificates so
surrendered shall be forthwith cancelled, and (B) a check in an amount of
U.S.
dollars (after giving effect to any required withholdings pursuant to Section
3.4(g)) equal to (I) the amount of cash (consisting of the Cash Consideration
and cash in lieu of a fractional share of Parent Stock to be paid pursuant
to
Section 3.1(d)), if any, into which such holder’s shares of Company Common Stock
represented by such holder’s properly surrendered Certificates were converted in
accordance with this Article III, plus (II) any cash dividends and other
distributions that such holder has the right to receive pursuant to Section
3.4(c).
(c) Dividends
and Distributions.
No
dividends or other distributions with respect to shares of Parent Stock shall
be
paid to the holder of any unsurrendered Certificate until such Certificate
is
surrendered as provided in this Article III. Subject to the effect of applicable
Laws, following such surrender, there shall be paid, without interest, to
the
record holder of the shares of Parent Stock issued in exchange for shares
of
Company Common Stock represented immediately prior to the Effective Time
by such
Certificate (i) when any payment or distribution of a certificate representing
any share(s) of Parent Stock is made to such holder pursuant to Section
3.4(b)(ii) or (iii), all dividends and other distributions payable in respect
of
such Parent Stock with a record date after the Effective Time and a payment
date
on or prior to the date of such surrender and not previously paid and (ii)
on
the appropriate payment date, the dividends or other distributions payable
with
respect to such Parent Stock with a record date after the Effective Time
but
prior to surrender and with a payment date subsequent to such surrender.
For
purposes of dividends and other distributions in respect of Parent Stock,
all
shares of Parent Stock to be issued pursuant to the Merger shall be entitled
to
dividends pursuant to the immediately preceding sentence as if issued and
outstanding as of the Effective Time.
(d) Transfer
Books; No Further Ownership Rights in Shares.
After
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
Common
Stock on the records of the Company. After the Effective Time, the holders of
Certificates shall cease to have any rights with respect to such shares,
except
the right to receive the Merger Consideration and such dividends and other
distributions on or in respect of Parent Stock as provided herein or as
otherwise provided by applicable Law. If, after the Effective Time, Certificates
are presented to the Surviving Corporation for any reason, they shall be
canceled and exchanged as provided in this Article III.
(e) Termination
of Fund; No Liability.
At any
time following twelve (12) months after the Effective Time, Parent shall
be
entitled to require the Exchange Agent to deliver to Parent
(i) certificates representing shares of Parent Stock and (ii) cash held by
the Exchange Agent for payment of Cash Consideration and cash payments in
lieu
of fractional shares of Parent Stock, in each case, not delivered to holders
of
Certificates. Thereafter, holders of Certificates shall be entitled to look
only
to Parent, which shall thereafter act as the Exchange Agent (subject to
abandoned property, escheat or other similar Laws), as general creditors
of
Parent with respect to the delivery of the Merger Consideration (including
payment of cash in lieu of fractional shares of Parent Stock). None
of
Parent, the Surviving Corporation and the Exchange Agent shall be liable
to any
Person for any Merger Consideration delivered to a public official pursuant
to
any abandoned property, escheat or similar Law.
18
(f) Lost,
Stolen or Destroyed Certificates.
In the
event that any Certificate shall have been lost, stolen or destroyed, upon
the
making of an affidavit attesting to that fact by the Person claiming such
Certificate to be lost, stolen or destroyed and, if requested by Parent or
the
Surviving Corporation, the delivery by such Person of a bond (in such amount
as
Parent or the Surviving Corporation may reasonably direct) as indemnity against
any claim that may be made against the Exchange Agent, Parent or the Surviving
Corporation on account of the alleged loss, theft or destruction of such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen
or
destroyed Certificate a certificate representing shares of Parent Stock and/or
deliver a check for Cash Consideration, and pay the cash in lieu of any
fractional share of Parent Stock to which such holder is entitled, which
constitute the total amount of Merger Consideration deliverable in respect
of
such Certificate as determined in accordance with this Article III.
(g) Withholding
Taxes.
The
right of any Person to receive payment or consideration payable upon surrender
of a Certificate pursuant to the Merger will be subject to any applicable
requirements with respect to the withholding of any Tax. To the extent amounts
are so withheld by Parent, the Surviving Corporation or the Exchange Agent,
(i)
such withheld amounts shall be treated for all purposes of this Agreement
as
having been paid to the holder of shares of Company Common Stock in respect
of
which the deduction and withholding was made and (ii) Parent shall, or shall
cause the Surviving Corporation or the Exchange Agent, as the case may be,
to,
promptly pay over such withheld amounts to the appropriate Governmental
Entity.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
Except
(i) as reasonably apparent from disclosure in the Company SEC Documents filed
on
or prior to the date hereof (excluding,
with
respect to the first sentence of Section 4.6 only, any disclosures in the
first
two sentences of the first paragraph under the caption “We
are subject to a complex and uncertain regulatory environment”
in
Section 1A. Risk Factors of the Company’s Annual Report on Form 10-K for year
ended December 31, 2006) or
(ii) as
set forth in a separate disclosure schedule (the “Company
Disclosure Schedule”)
which
has been delivered by the Company to Parent at or prior to the execution
of this
Agreement (each section of which qualifies the correspondingly numbered
representation and warranty, or covenant, to the extent specified therein
and
such other representations, warranties and covenants to the extent a matter
in
such section is disclosed in such a way as to make its relevance to the
information called for by such other representation and warranty, or covenant,
reasonably apparent on its face), the Company hereby represents and warrants
to
Merger Sub and Parent as follows:
19
Section 4.1.
Corporate
Organization.
(a) Each
of
the Company and the Company Material Subsidiaries is a corporation, duly
incorporated, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the requisite corporate power and
authority to own or lease all of its properties and assets and to carry on
its
business as it is now being conducted. Each of the Company and the Company
Material Subsidiaries is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it
makes
such licensing or qualification necessary, except where the failure to be
so
licensed or qualified would
not
be reasonably expected to have,
when
aggregated with all other such failures, a Company Material Adverse
Effect.
(b) The
copies of the Company Articles and Company By-laws most recently filed with
the
Company SEC Documents are true, complete and correct copies of such documents
as
in effect as of the date of this Agreement.
Section 4.2.
Capitalization.
(a) The
authorized capital stock of the Company consists of 50,000,000 shares of
capital
stock, of which (i) 40,000,000 shares have been designated as shares of Company
Common Stock and (ii) 151,000 shares have been designated as shares of Class
A
Junior Participating Preferred Stock, par value $1.00 per share, of the Company
(“Company
Preferred Stock”)
for
issuance upon exercise of the Company Rights pursuant to the Rights Agreement.
At the close of business on June 29, 2007, (i) 15,005,000
shares
of Company Common Stock were issued and outstanding, (ii) 35,000 shares of
Company Common Stock were held in the Company’s treasury, (iii) no shares of
Company Common Stock were reserved for issuance, (iv) no shares of Company
Preferred Stock were issued and outstanding (but 151,000 shares of Company
Preferred Stock were reserved for issuance upon exercise of the Company Rights
pursuant to the Rights Agreement), and (v) no other class or series of shares
of
capital stock of the Company had been designated, issued or reserved for
issuance. All of the issued and outstanding shares of Company Common Stock
have
been duly authorized and validly issued and are fully paid, nonassessable
and
free of any preemptive rights. Except as provided in this Agreement and except
for the Company Rights, there are no outstanding subscriptions, options,
warrants, calls, commitments, rights, arrangements, undertakings or agreements
of any character calling for the purchase, issuance, redemption or repurchase
of
any securities of the Company to which the Company or any Company Subsidiary
is
a party, including any securities representing the right to purchase or
otherwise receive any shares of Company Common Stock.
(b) Section 4.2(b)
of the
Company Disclosure Schedule sets forth, as of the date of this Agreement,
each
Company Material Subsidiary. The Company directly or indirectly owns,
beneficially and of record, all of the issued and outstanding shares of the
capital stock of each Company Material Subsidiary, free and clear of any
Liens,
except
for
(i)
Liens
imposed under federal or state securities Laws, (ii) Liens specifically
disclosed in the Company SEC Financial Statements and (iii) Liens that would
not
be reasonably expected to have, individually or in the aggregate, a Company
Material Adverse Effect. All such shares of capital stock are duly authorized
and validly issued and are fully paid, nonassessable and free of any preemptive
rights. Neither the Company nor any of the Company Material Subsidiaries
has any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the purchase or issuance of any security of
any of
the Company Material Subsidiaries, including any securities representing
the
right to purchase or otherwise receive any shares of capital stock of any
of the
Company Material Subsidiaries. There are no restrictions on the Company with
respect to voting the stock of any Company Material Subsidiary.
20
(c) Section 4.2(c)
of the
Company Disclosure Schedule sets forth, as of the date of this Agreement,
each
corporation, limited liability company, partnership or other entity in which
the
Company has a direct or indirect ownership interest and which is not a Company
Material Subsidiary, and the Company’s percentage ownership thereof. The Company
owns all interests set forth in Section 4.2(c)
of the
Company Disclosure Schedule free and clear of any Liens, except
for
(i)
Liens imposed under the applicable partnership or similar governing agreement
or
under federal or state securities Laws, (ii) Liens specifically disclosed
in the
Company SEC Financial Statements, and (iii) Liens that would not be reasonably
expected to have, individually or in the aggregate, a Company Material Adverse
Effect.
Section 4.3.
Authority.
(a) The
Company has all necessary corporate power and authority to execute and deliver
this Agreement and to consummate the Transactions to be consummated by it,
subject to the Company obtaining, prior to the Effective Time, the
affirmative vote for the approval and adoption of this Agreement of a majority
of the votes cast on the matter by the holders of Company Common Stock at
the
Company Shareholders’ Meeting when a quorum is present (the
“Company
Shareholder Approval”).
The
execution, delivery and performance by the Company of this Agreement, and
the
consummation by the Company of the Transactions to be consummated by it,
have
been duly authorized and approved by the Board of Directors of the Company
and,
except for obtaining the Company Shareholder Approval, no other corporate
action
on the part of the Company or its shareholders is necessary to authorize
the
execution and delivery by the Company of this Agreement and the consummation
by
the Company of the Transactions to be consummated by it. This Agreement has
been
duly executed and delivered by the Company and, assuming due and valid
authorization, execution and delivery of this Agreement by Parent and Merger
Sub, constitutes a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as such enforceability
(i) may be limited by bankruptcy, insolvency, moratorium or other similar
Laws
affecting or relating to the enforcement of creditors’ rights generally and (ii)
is subject to general principles of equity.
(b) At
a
meeting duly called and held, the Board of Directors of the Company, subject
to
the proviso to Section 2.6(b)(i) and to Section 6.3(c), (i) adopted and approved
this Agreement, the Merger and each of the other Transactions and the submission
of this Agreement to the Company’s shareholders for approval and (ii) resolved
to recommend that the Company’s shareholders vote in favor of the approval and
adoption of this Agreement at the Company Shareholders’ Meeting. None of the
aforesaid actions by the Board of Directors of the Company has been amended,
rescinded or modified as of the date of this Agreement.
21
Section 4.4.
Consents
and Approvals; No Violations.
(a) Except
for (i) the consents and approvals set forth in Section 4.4(a)
of the
Company Disclosure Schedule, (ii) the filing with the SEC of the Proxy
Statement/Prospectus and an amendment to the Company’s Registration Statement on
Form 8-A with respect to the Rights Agreement Amendment, (iii) the filing
with
the Department of State of the Articles of Merger and the related docketing
statements, (iv) such other filings, permits, authorizations, consents and
approvals as may be required under, and other applicable requirements of,
the
Exchange Act, the Exchange Act Rules, the HSR Act, and the applicable
requirements of NASDAQ, (v) filings with, and the approval required by, the
FCC
under the Communications Act or the FCC Rules, and (vi) filings with, and
the
approval required by, the PPUC under the Pennsylvania Public Utility Code
or the
PPUC Rules (all of the foregoing, collectively, the “Company
Required Statutory Approvals”),
no
consent or approval of, or filing, declaration or registration with, any
Governmental Entity, which has not been received or made, is required to
be
obtained by or made by the Company for the consummation by the Company of
the
Transactions to be consummated by it, other than such consents, approvals,
filings, declarations or registrations that if not obtained or made, would
not
be reasonably expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
(b) None
of
the execution and delivery by the Company of this Agreement and the consummation
by the Company of the Transactions to be consummated by it, and compliance
by
the Company with any of the terms and provisions of this Agreement, will
(i)
violate any provision of the Company Articles or Company By-laws or the Articles
of Incorporation or By-laws (or any similar organizational documents with
a
different name) of any Company Material Subsidiary or (ii) assuming that
the
Company Shareholder Approval and the Company Required Statutory Approvals
are
obtained or made, as the case may be, prior to the Effective Time, (x) violate
any Law applicable to the Company or any Company Subsidiary or any of their
respective properties or assets, or the award of any arbitrator or panel
of
arbitrators applicable to the Company or any Company Subsidiary or any of
their
respective properties or assets, or (y) violate, result in the loss of any
material benefit under, constitute a default (or an event which, with notice
or
lapse of time, or both, would constitute a default) under, result in the
termination of or a right of termination or cancellation under, accelerate
the
performance required by, or result in the creation of any Lien upon any of
the
respective properties or assets of the Company or any Company Subsidiary
under
any note, bond, mortgage, indenture, deed of trust, license, permit, lease,
contract, agreement or other instrument to which the Company or any Company
Subsidiary is a party or by which the Company or any Company Subsidiary or
any
of their respective properties or assets may be bound or affected, in any
such
case involving payments to or from the Company or any Company Subsidiary
of more
than $50,000 per year, except, in the case of clause (ii) above, for such
violations, losses of benefits, defaults, events, terminations, rights of
termination or cancellation, accelerations or Lien creations as would not
be
reasonably expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
Section 4.5.
SEC
Documents; Financial Statements; Undisclosed Liabilities.
(a) The
Company has filed all reports, schedules, forms and registration statements
with
the SEC required to be filed by it pursuant to the Securities Act and the
Securities Act Rules, or the Exchange Act and the Exchange Act Rules, in
each
such case since January 1, 2005 (collectively, and in each case including
all
annexes and schedules thereto and documents incorporated by reference therein,
the “Company
SEC Documents”).
As of
their respective dates (or if subsequently amended or superseded by a filing
prior to the date of this Agreement, on the date of such filing), the Company
SEC Documents complied as to form in all material respects with the requirements
of the Securities Act or the Exchange Act, as the case may be, and the rules
and
regulations of the SEC promulgated thereunder applicable to such Company
SEC
Documents, and none of the Company SEC Documents as of such dates contained
any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein,
in
light of the circumstances under which they were made, not misleading. To
the
Company’s Knowledge, as of the date hereof, none of the Company SEC Documents is
the subject of ongoing SEC review.
22
(b) The
Company is in compliance with, and has complied, in all material respects
with
(i) the applicable provisions of the Xxxxxxxx-Xxxxx Act of 2002 and the related
rules and regulations promulgated thereunder, and (ii) the applicable listing
and corporate governance rules and regulations of NASDAQ. The Company has
established and maintains disclosure controls and procedures and internal
control over financial reporting (as such terms are defined in paragraphs
(e) and (f), respectively, of Rule 13a-15 under the Exchange Act) as
required by Rule 13a-15 under the Exchange Act. The Company’s disclosure
controls and procedures are reasonably designed to ensure that all material
information required to be disclosed by the Company in the reports that it
files
or furnishes under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the rules and forms of the
SEC,
and that all such material information is accumulated and communicated to
the
management of the Company as appropriate to allow timely decisions regarding
required disclosure and to make the certifications required pursuant to
Sections 302 and 906 of the Xxxxxxxx-Xxxxx Act. The management of the
Company has completed its assessment of the effectiveness of the Company’s
internal control over financial reporting in compliance with the requirements
of
Section 404 of the Xxxxxxxx-Xxxxx Act for the year ended December 31,
2006, and such assessment concluded that such controls were effective to
provide
reasonable assurance regarding the reliability of the Company’s financial
reporting and the preparation of the Company’s financial statements for external
purposes in accordance with GAAP. The Company has disclosed, based on its
assessment of the effectiveness of the Company’s internal control over financial
reporting in compliance with the requirements of Section 404 of the
Xxxxxxxx-Xxxxx Act for the year ended December 31, 2006, to the Company’s
independent registered accounting firm and the audit committee of the Board
of
Directors of the Company (A) any significant deficiencies and material
weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the Company’s ability
to record, process, summarize and report financial information and (B) any
fraud, whether or not material, of which there is Company’s Knowledge that
involves management or other employees who have a significant role in the
Company’s internal control over financial reporting for the year ended December
31, 2006. The Company has made available to Parent a summary of any such
disclosures made by management to such accounting firm or audit committee
for
the year ended December 31, 2006.
(c) The
consolidated financial statements of the Company included in the Company
SEC
Documents (the “Company
SEC Financial Statements”)
(i)
have been prepared in accordance with GAAP (except as may be otherwise indicated
therein or in the notes thereto and except, in the case of unaudited
consolidated quarterly statements, as permitted by Form 10-Q of the Exchange
Act), applied on a consistent basis during the periods involved, (ii) complied
in all material respects with published rules and regulations of the SEC
with
respect thereto, and (iii) fairly present in all material respects the
consolidated financial position of the Company and its consolidated Company
Subsidiaries as of the respective dates thereof and the consolidated statements
of income, cash flows and (in the case of audited annual statements)
shareholders’ equity for the respective periods then ended (subject, in the case
of unaudited quarterly statements, to normal year-end audit adjustments and
the
absence of footnotes).
23
(d) As
of
March 31, 2007, neither the Company nor any of the Company Subsidiaries had
any
liabilities or obligations that would have been required by GAAP to be reflected
in the consolidated balance sheet of the Company and the Company Subsidiaries
as
of such date, except (i) for such liabilities and obligations reflected,
reserved against or otherwise disclosed in the consolidated balance sheet
of the
Company and the Company Subsidiaries as of such date (including the notes
thereto) that is included in the Company SEC Financial Statements and (ii)
for
such liabilities and obligations as would not be reasonably expected to have,
individually or in the aggregate, a Company Material Adverse Effect (it is
understood and agreed that the representations and warranties contained in
this
Section 4.5(d): (x) do not apply to matters described in any of Section 4.4,
the
other portions of this Section 4.5, and Sections 4.7, 4.9, 4.10, 4.11, 4.12,
4.14, 4.15 and 4.16 (which are addressed exclusively in those Sections) and
(y)
shall not be deemed breached if such breach relates to a matter which is
covered
by a representation or warranty of the Company contained in this Article
IV
(other than this Section 4.5(d)) that contains a “Company’s Knowledge”
qualification).
(e) Since
December 31, 2006 to the date of this Agreement,
(i) neither the Company nor any Company Subsidiary nor, to the Company’s
Knowledge, any director, officer, auditor, accountant or representative of
the
Company or any of the Company Subsidiaries has received any written complaint,
allegation, assertion or claim that the Company or any of the Company
Subsidiaries has engaged in improper or illegal accounting or auditing practices
or maintains improper or inadequate internal accounting controls relating
to the
Company and the Company Subsidiaries, taken as a whole, (ii) no attorney
representing the Company or any Company Subsidiary has made a report to the
Company’s chief legal officer, chief executive officer or Board of Directors (or
any committee thereof) pursuant to the
SEC’s
Standards of Professional Conduct for Attorneys (17 CFR Part 205), and (iii)
the
Company has disclosed to its outside auditors any fraud, whether or not
material, of which there is Company’s Knowledge that involves management or
other employees who have a significant role in the Company’s
internal control over financial reporting.
Section 4.6.
Absence
of Certain Changes or Events.
Except
as expressly contemplated by this Agreement, since March 31, 2007, no events
have occurred which have had or would be reasonably expected to have,
individually or in the aggregate, a Company Material Adverse Effect. From
March
31, 2007 to the date of this Agreement, (i) the Company and the Company
Subsidiaries have carried on and operated their respective businesses in
all
material respects in the ordinary course of business and (ii) there has been
no:
(a) declaration,
setting aside or payment of any dividend or other distribution in respect
of the
capital stock of the Company, other than the declaration and payment by
the
Company of regular quarterly cash dividends on the shares of Company Common
Stock;
24
(b) redemption
or other acquisition by the Company of any of its capital stock;
(c) stock
split, reverse stock split, combination or reclassification of the shares
of
Company Common Stock;
(d) increase
in the rate or terms of compensation payable by the Company or any of the
Company Subsidiaries to any of their respective directors, officers or employees
whose annual base compensation exceeds $100,000, or grant or increase in
the
rate or terms of any bonus, pension, severance or other employee benefit
plan,
policy, agreement or arrangement with, for or in respect of any of their
respective directors, officers or employees whose annual base compensation
exceeds $100,000, except in any such case for grants or increases
(i) required pursuant to the terms of plans or agreements in effect on the
date of this Agreement, (ii) occurring in the ordinary course of business,
or (iii) required by Law;
(e) adoption
or amendment (except as may be required by Law) of any Company Benefit Plan
or
any bonus, profit sharing, compensation, stock option, pension, retirement,
deferred compensation, employment or other employee benefit plan, agreement,
trust, fund or other arrangement for the benefit or welfare of any employee,
director or former director or employee;
(f) material
change by the Company in accounting methods, principles or practices except
as
required by GAAP;
(g) amendment
of any material Company Tax Return or the making of any material Tax election;
or
(h) any
agreement or commitment, whether in writing or otherwise, to take any action
described in clauses (a) through (g) above.
Section 4.7.
Litigation;
Other Proceedings.
Except
(i) as would not be reasonably expected to have, individually or in the
aggregate, a Company Material Adverse Effect and (ii) for any litigation
(or
threatened litigation) concerning this Agreement or any of the Transactions
or
relating to the Company’s 2007 annual meeting of shareholders, there is no
action, arbitration, suit, formal complaint (other than complaints by customers
(other than carriers) in the ordinary course of business) or proceeding pending
or, to the Company’s Knowledge, threatened against the Company or any of the
Company Subsidiaries or any of their respective properties or assets or any
of
their respective officers or directors (in their capacity as officers or
directors of the Company or any Company Subsidiary) before any Governmental
Entity.
Section 4.8.
Personal
Property; Real Property.
(a) None
of
the tangible personal property of the Company or any Company Subsidiary is
subject to any Liens, other than Permitted Liens. The Company and the Company
Subsidiaries have good title to, or a valid leasehold interest in, or with
respect to licensed assets only, a valid license to use, the tangible personal
assets and properties used or held for use by the Company and the Company
Subsidiaries in connection with the conduct of their respective businesses
as
conducted as of the date of this Agreement, except where failure to have
good
title or a valid leasehold or license would not be reasonably expected to
have,
individually or in the aggregate, a Company Material Adverse
Effect.
25
(b) Section
4.8(b)
of the
Company Disclosure Schedule sets forth a complete and correct list as of
the
date of this Agreement of all real property owned by the Company or any Company
Subsidiary (other than property rights with respect to land upon which telephone
poles or wires are located) (collectively, the “Owned
Real Property”)
and,
for each parcel of Owned Real Property, identifies the street address (or
other
identifying information) of such Owned Real Property.
(c) Section
4.8(c)
of the
Company Disclosure Schedule sets forth a complete and correct list as of
the
date of this Agreement of all real property leased, subleased, licensed or
otherwise occupied (whether as tenant, subtenant or pursuant to other occupancy
arrangements) by the Company or any Company Subsidiary (other than property
rights with respect to land upon which telephone poles or wires are located)
(collectively, including the improvements thereon, the “Leased
Real Property”)
and,
for each parcel of Leased Real Property, identifies the street address (or
other
identifying information) of such Leased Real Property.
(d) The
Company or a Company Subsidiary has good fee simple title to all Owned Real
Property, and, to the Company’s Knowledge, enjoys
peaceful and undisturbed possession of all Leased Real Property,
free and
clear of all Liens, except Permitted Liens.
(e) Except
for Permitted Liens, as of the date of this Agreement, none of the Owned
Real
Properties is subject to any lease, sublease, license or other agreement
granting to any Person (other than the Company or any Company Subsidiary)
any
right to the use or occupancy of such Owned Real Property or any part thereof.
Except as would not reasonably be expected to have, in the aggregate, a Company
Material Adverse Effect, to the Company’s Knowledge there does not exist any
condemnation or eminent domain proceeding that affects any Owned Real Property
or Leased Real Property.
Section 4.9.
Taxes.
Except
as would not be reasonably expected to have, individually or in the aggregate,
a
Company Material Adverse Effect, (i) all Tax returns, reports and similar
statements, including information returns and reports, claims for refund,
and
amended or substituted returns and reports (including any schedules attached
thereto) required to be filed by or on behalf of the Company or any of the
Company Subsidiaries (collectively, the “Company
Tax Returns”)
have
been timely filed (taking into account any extensions), (ii) as of the times
of
filing, the Company Tax Returns were correct, (iii) the Company and the Company
Subsidiaries have timely paid, withheld or made provision for all Taxes shown
as
due and payable on the Company Tax Returns that have been filed or that are
otherwise due and owing, other than Taxes that are being contested in good
faith, which have not been finally determined, and have been adequately reserved
against in accordance with GAAP on the Company’s most recent consolidated
financial statements, and (iv) to the Company’s Knowledge, as of the date of
this Agreement, there are no pending or threatened claims against or with
respect to the Company or any of the Company Subsidiaries in respect of any
Tax.
26
Section 4.10.
Licenses.
Except
as would not reasonably be expected to have, individually or in the aggregate,
a
Company Material Adverse Effect, (i) all Licenses required for the operation
of
the businesses of the Company and the Company Subsidiaries as currently
conducted are in full force and effect, (ii) all fees due and payable by
the
Company or any of the Company Subsidiaries to any Governmental Entities pursuant
to the rules governing such Licenses have been paid, (iii) the Company and
the
Company Subsidiaries are in compliance with the terms of each such License
of
which it is a licensee, and (iv) there is no proceeding being conducted by
any
Governmental Entity of which the Company or any Company Subsidiary has received
notice or, to the Company’s Knowledge, any proceeding or investigation
threatened by any Governmental Entity, seeking the termination, suspension,
modification, cancellation, revocation or nonrenewal of any of such Licenses
or
the imposition on the Company or any of the Company Subsidiaries of any penalty
or fine with respect to any of such Licenses.
Section 4.11.
Compliance
with Laws.
(a) Except
with respect to matters described in any of Sections 4.4, 4.5, 4.7, 4.9,
4.10,
4.12, 4.14, 4.15 and 4.16, which are excluded from the provisions of this
Section 4.11, and except as would not be reasonably expected to have,
individually or in the aggregate, a Company Material Adverse Effect, neither
the
Company nor any of the Company Subsidiaries is in violation of any Law
applicable to the Company or any of the Company Subsidiaries or any award
of any
arbitrator or panel of arbitrators applicable to the Company or any of the
Company Subsidiaries.
(b) Neither
the Company nor any of the Company Subsidiaries is in violation of any
requirement of applicable Law related to privacy, data protection or the
collection and use of personal information gathered or used by the Company
and
the Company Subsidiaries applicable to the Company or any of the Company
Subsidiaries or by which the Company or any of the Company Subsidiaries or
any
of their respective businesses or properties is bound, except for violations
that would not reasonably be expected to have, individually or in the aggregate,
a Company Material Adverse Effect.
Section 4.12.
Employee
Benefits.
(a) Set
forth
in Section 4.12(a)
of the
Company Disclosure Schedule is a complete and correct list as of the date
of
this Agreement of each “employee benefit plan” (within the meaning of
Section 3(3) of ERISA), each stock based, severance, retention, employment,
change-in-control, deferred compensation or supplemental retirement agreement,
program, policy or arrangement, and each material bonus, incentive, vacation
or
other material employee benefit plan, agreement, program, policy or arrangement
with respect to current or former employees, any of which is maintained or
sponsored by the Company or any of the Company Subsidiaries or with respect
to
which the Company or any of the Company Subsidiaries is obligated to make
any
contributions. All such plans, agreements, programs, policies and arrangements,
other than any plans maintained or sponsored by the Communications Workers
of
America, are hereinafter referred to collectively as the “Company
Benefit Plans”
and
individually as a “Company
Benefit Plan.”
27
(b) With
respect to each Company Benefit Plan, the Company has made available to Parent
(i) a complete and current copy of such plan or a summary of such plan if
no
written plan document exists; (ii) the most recent determination letter, if
applicable; (iii) the current summary plan description, if any; (iv) the
most
recent actuarial valuation report, if applicable; (v) the most recent annual
reports on Form 5500, and (vi) service agreements, insurance policies and
the
most recent trust agreement, if applicable.
(c) Each
Company Benefit Plan has been operated and administered, in all material
respects, in accordance with its terms and the requirements of all applicable
Laws, including ERISA and the Code. Each Company Benefit Plan which is intended
to be qualified within the meaning of Section 401(a) of the Code has
received a favorable determination letter as to its qualification or is a
prototype plan that is the subject of a favorable opinion letter from the
Internal Revenue Service, and, to the Company’s Knowledge, nothing has occurred
since the date of such determination or opinion letter that would adversely
affect such qualification.
(d) [Intentionally
omitted]
(e) Neither
the Company nor any of the Company Subsidiaries makes or is obligated to
make
contributions, or has within the last six (6) years made contributions, to
a
“multiemployer plan” within the meaning of Section 4001(a) (3) of
ERISA.
(f) With
respect to any “single-employer plan,” within the meaning of
Section 4001(a)(15) of ERISA, maintained or contributed to by the Company
or any of the Company Subsidiaries: (i) no liability to the PBGC has been
incurred (other than for premiums not yet due); (ii) no proceedings to terminate
any such plan have been instituted by the PBGC and no event or condition
has
occurred which would constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any such plan;
and (iii) no “accumulated funding deficiency,” within the meaning of
Section 302 of ERISA or Section 412 of the Code, whether or not
waived, exists.
(g) There
are
no actions, suits, claims (other than routine claims for benefits in the
ordinary course) or governmental audits pending or, to the Company’s Knowledge,
threatened with respect to any Company Benefit Plan, other than any such
actions, suits, claims or audits that would not be reasonably expected to
have,
individually or in the aggregate, a Company Material Adverse
Effect.
(h) No
Company Benefit Plan provides medical or dental benefits with respect to
current
or former employees of the Company or any Company Subsidiary beyond their
termination of employment (other than to the extent required by applicable
Law).
(i) Neither
the execution and delivery of this Agreement nor the consummation of the
Transactions (either alone or in conjunction with any other event) will:
(i)
increase any benefits otherwise payable under any Company Benefit Plan; (ii)
result in any acceleration of the time of payment or vesting of any such
benefits; (iii) limit or prohibit the ability to amend or terminate any Company
Benefit Plan; (iv) require the funding of any trust or other funding vehicle;
or
(v) renew or extend the term of any agreement in respect of compensation
for an
employee of the Company or any of the Company Subsidiaries that would create
any
liability to the Company or any of the Company Subsidiaries after consummation
of the transactions contemplated hereby.
28
(j) No
Affiliates of the Company, other than the Company Subsidiaries, would be
considered an “ERISA Affiliate” (i.e., an Affiliate or Person that, together
with the Company, would be treated as a single employer under Section 414(b),
(c), (d), or (o) of the Code).
(k) No
breach
of fiduciary duty under ERISA or prohibited transaction (within the meaning
of Section 406 of ERISA or Section 4975 of the Code) has occurred that would
be
reasonably expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
(l) All
contributions to such Company Benefit Plans, all payments under such
Company Benefit Plans (other than those to be made from a trust qualified
under
Code Section 401(a)) and all payments with respect to such Company Benefit
Plans
have been paid when due, and to the extent unpaid, are reflected on the
Company’s consolidated financial statements if and to the extent required in
accordance with GAAP.
Section 4.13.
Contracts.
(a) Section 4.13(a)
of the
Company Disclosure Schedule lists, as of the date of this Agreement, each
Contract that is of a type described below:
(i) any
Contract to which the Company or any of the Company Subsidiaries is a party
relating to indebtedness for borrowed money in excess of $500,000;
(ii) any
guarantee of any obligation for borrowed money in excess of $500,000 with
respect to which the Company or any of the Company Subsidiaries is a
guarantor;
(iii) any
collective bargaining agreement to which the Company or any of the Company
Subsidiaries is a party (collective, the “Company
Union Contracts”);
(iv) any
Contract to which the Company or any of the Company Subsidiaries is a party
granting a right of first refusal, right of first offer or similar preferential
right to purchase or acquire any of the Company’s or any of the Company
Subsidiaries’ capital stock or assets;
(v) any
Contract to which the Company or any of the Company Subsidiaries is a party
limiting, restricting or prohibiting the Company or any of the Company
Subsidiaries from conducting business anywhere in the United States or elsewhere
in the world, or any Contract to which the Company or any of the Company
Subsidiaries is a party limiting the freedom of the Company or any of the
Company Subsidiaries to engage in any line of business or to compete with
any
other Person;
29
(vi) any
joint
venture or partnership agreement to which the Company or any of the Company
Subsidiaries is a party; and
(vii) any
other
Contract (including all amendments thereto) that would be required to be
filed
by the Company with the SEC as a “material contract” pursuant to Item 601(b)(10)
of Regulation S-K under the Securities Act as of the date of this
Agreement, other than this Agreement and the Rights Agreement
Amendment.
The
Company has, prior to the date of this Agreement, delivered or made available
to
Parent and Merger Sub true and correct copies of all Contracts referred to
clauses (i) through (vii) above (except, with respect to any such Contract,
to
the extent that the Company or the applicable Subsidiary is precluded or
restricted from doing so by the terms of such Contract or by any confidentiality
agreement to which the Company or such Company Subsidiary is a party or by
which
it is bound).
(b) With
respect to each Contract to which the Company or any Company Subsidiary is
a
party, (i) neither the Company nor any of the Company Subsidiaries has breached
or is in default under, nor has any of them received written notice of breach
or
default under, such Contract, (ii) to the Company’s Knowledge, no other party to
such Contract has breached or is in default of any of its obligations
thereunder, and (iii) such Contract is a valid, binding and legally enforceable
obligation of the Company or one of the Company Subsidiaries and to the
Company’s Knowledge, of the other party or parties thereto, and is in full force
and effect, except in any such case for breaches, defaults or failures to
be
valid, binding and legally enforceable or to be in full force and effect
that
would not reasonably be expected to have, in the aggregate, a Company Material
Adverse Effect.
Section
4.14. Environmental
Laws and Regulations.
Except
for those matters that, individually or in the aggregate, would not reasonably
be expected to have a Company Material Adverse Effect, (i) the Company and
the Company Subsidiaries are in compliance with all applicable Environmental
Laws; (ii) to the Company’s Knowledge, no property currently owned or
operated by the Company or any of the Company Subsidiaries is contaminated
with
any Hazardous Substance which would reasonably be expected to result in
liability under any Environmental Law; (iii) neither the Company nor any of
the Company Subsidiaries would reasonably be expected to incur liability
under
any Environmental Law for any Hazardous Substance release to, disposal on
or
contamination of any property by the Company or any of the Company Subsidiaries
(or, to the Company’s Knowledge, by any other Person); (iv) there are no legal,
administrative, arbitral or other proceedings, claims, actions or causes
of
action currently pending before any Governmental Entity or arbitrator or
panel
of arbitrators or, to the Company’s Knowledge, threatened against the Company or
any of the Company Subsidiaries, seeking to impose on the Company or any
of the
Company Subsidiaries liability or obligations arising under Environmental
Laws;
and (v) neither the Company nor any of the Company Subsidiaries is subject
to
any agreement, order, judgment or decree by or with any Governmental Entity
imposing any liability or obligation under Environmental Laws.
30
Section
4.15. Labor
Relations.
(a) As
of the
date of this Agreement, no employees of the Company or any of the Company
Subsidiaries are covered by a collective bargaining agreement other than
the
Company Union Contracts.
(b) As
of the
date of this Agreement, there is no labor or employment-related charge,
complaint or claim of any sort against the Company or any Company Subsidiary
pending or, to the Company’s Knowledge, threatened before any Governmental
Entity, except for such charges, complaints or claims that would not be
reasonably expected to have, individually or in the aggregate, a Company
Material Adverse Effect. As of the date of this Agreement, there is no strike,
lockout, work slowdown or stoppage or, to the Company’s Knowledge, labor
organizing activity actually pending or, to the Company’s Knowledge, threatened
against the Company or any of the Company Subsidiaries, with such exceptions
as
would not be reasonably expected to have, individually or in the aggregate,
a
Company Material Adverse Effect.
Section
4.16. Intellectual
Property.
(a) Section
4.16(a)
of the
Company Disclosure Schedule sets forth a complete and correct list (or, in
the
case of copyrights, a description) as of the date of this Agreement of all
trademark and service xxxx registrations and pending applications, copyright
registrations and pending applications, and Internet domain name registrations
owned by the Company or any of the Company Subsidiaries. The Company and
the
Company Subsidiaries as applicable (i) are the sole and exclusive owners
of
record of all such registrations and applications and (ii) have paid all
taxes
and fees required to renew and maintain in force and effect through the date
of
this Agreement all such registrations and applications, except where the
failure
to pay such fees and taxes would not be reasonably expected to have, in the
aggregate, a Company Material Adverse Effect. Neither the Company nor any
of the
Company Subsidiaries owns or has any interest in any patents or patent
applications. No Person has been granted a license or right to use any
Intellectual Property owned by the Company or any of the Company Subsidiaries,
except in connection with products or services offered by the Company in
the
ordinary course of business.
(b) The
Company and the Company Subsidiaries own or possess adequate licenses or
other
rights to use all Intellectual Property necessary to conduct their respective
businesses as currently conducted, except where the failure to own or possess
such rights would not be reasonably expected to have, in the aggregate, a
Company Material Adverse Effect. Except as would not be reasonably expected
to
have, in the aggregate, a Company Material Adverse Effect, (i) neither the
Company nor any of the Company Subsidiaries is infringing, misappropriating
or
violating any Intellectual Property of any other Person, (ii) neither the
Company nor any of the Company Subsidiaries is in breach of, or in default
under, any license of Intellectual Property by any other Person to the Company
or any of the Company Subsidiaries, (iii) to the Company’s Knowledge, no Person
is infringing, misappropriating or otherwise violating any Intellectual Property
owned by the Company or any of the Company Subsidiaries, and (iv) the Company
and the Company Subsidiaries have taken commercially reasonable steps to
establish policies and procedures requiring employees and contractors with
access to Intellectual Property owned by the Company or any of the Company
Subsidiaries to maintain the confidentiality of non-public
information.
31
Section
4.17. Insurance.
The
Company and each of the Company Subsidiaries maintains insurance coverage
against such risks and in such amounts as the Company believes to be customary
for companies of its size, in its geographic region and in the businesses
in
which the Company and the Company Subsidiaries operate.
Section
4.18. Transactions
with Affiliates.
As of
the date of this Agreement, there are no transactions, agreements, arrangements
or understandings between the Company or any of the Company Subsidiaries,
on the
one hand, and any Affiliate of the Company (other than the Company
Subsidiaries), on the other hand, of the type that would be required to be
disclosed under Item 404 of Regulation S-K under the Securities
Act.
Section
4.19. Rights
Agreement; Restrictions on Business Combinations.
The
Board of Directors of the Company has (i) approved the execution of the Rights
Agreement Amendment such that the Company Rights issued pursuant to the terms
of
the Rights Agreement are inapplicable to this Agreement and the Transactions
and
(ii) taken all necessary action such that the restrictions imposed on business
combinations by Section 2538 and Subchapters E, F, G, H, I and J of Chapter
25
of the PBCL (to the extent such Subchapters apply to this Agreement and the
Transactions), and Article X of the Company Articles, are inapplicable to
this
Agreement and the Transactions. The Rights Agreement, as so amended, has
not
been further amended or modified (except, following the date of this Agreement,
in accordance with Section 6.3(c)(y)). A copy of the Rights Agreement Amendment
has been previously provided to Parent.
Section 4.20.
Opinion
of Financial Advisor.
The
Board of Directors of the Company has received the opinion of Evercore Group
L.L.C. (“Evercore”),
the
Company’s financial advisor, to the effect that, as of the date of this
Agreement, the Merger Consideration is fair from a financial point of view
to
the holders of shares of Company Common Stock (other than Parent, Merger
Sub and
their respective Affiliates).
Section 4.21.
Broker’s
Fees.
Except
for Evercore and the fees and expenses payable to it, neither the Company
nor
any of the Company Subsidiaries, nor any of their respective officers or
directors on behalf of the Company or the Company Subsidiaries, has employed
any
investment banker, financial advisor, broker, finder or other financial services
intermediary, or incurred any liability for any related advisory fees, broker’s
fees, commissions, finder’s fees or other compensation, in connection with any
of the Transactions.
Section
4.22. No
Other Representations or Warranties.
EXCEPT
FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY CONTAINED IN THIS ARTICLE
IV,
NEITHER THE COMPANY NOR ANY OTHER PERSON MAKES ANY EXPRESS OR IMPLIED
REPRESENTATION OR WARRANTY ON BEHALF OF THE COMPANY. THE COMPANY HEREBY
DISCLAIMS ANY SUCH OTHER REPRESENTATION OR WARRANTY, WHETHER BY THE COMPANY,
ANY
COMPANY SUBSIDIARY, OR ANY OF THEIR RESPECTIVE REPRESENTATIVES OR ANY OTHER
PERSON, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO PARENT, MERGER SUB
OR ANY
OTHER PERSON OF ANY DOCUMENTATION OR OTHER WRITTEN OR ORAL INFORMATION
BY THE
COMPANY, ANY COMPANY SUBSIDIARY OR ANY OF THEIR RESPECTIVE REPRESENTATIVES
OR
ANY OTHER PERSON, AND NEITHER THE COMPANY NOR ANY OTHER PERSON WILL HAVE
OR BE
SUBJECT TO ANY LIABILITY OR INDEMNIFICATION OBLIGATION TO PARENT, MERGER
SUB OR
ANY OTHER PERSON RESULTING FROM SUCH DELIVERY OR DISCLOSURE, OR PARENT’S OR
MERGER SUB’S USE, OF ANY SUCH DOCUMENTATION OR OTHER INFORMATION (INCLUDING ANY
INFORMATION, DOCUMENTS, PROJECTIONS, FORECASTS OR OTHER MATERIAL MADE AVAILABLE
TO PARENT OR MERGER SUB IN CERTAIN "DATA ROOMS" OR MANAGEMENT PRESENTATIONS
IN
EXPECTATION OF THE TRANSACTIONS).
32
ARTICLE
V
REPRESENTATIONS
AND WARRANTIES
OF
PARENT
AND MERGER SUB
Except
(i) as reasonably apparent from disclosure in the Parent SEC Documents filed
on
or prior to the date hereof or (ii) as set forth in a separate disclosure
schedule (the “Parent
Disclosure Schedule”)
which
has been delivered by the Parent and Merger Sub to the Company at or prior
to
the execution of this Agreement (each section of which qualifies the
correspondingly numbered representation and warranty, or covenant, to the
extent
specified therein and such other representations, warranties and covenants
to
the extent a matter in such section is disclosed in such a way as to make
its
relevance to the information called for by such other representation and
warranty, or covenant, reasonably apparent on its face), Merger Sub and the
Parent hereby jointly and severally represent and warrant to the Company
as
follows:
Section 5.1.
Corporate
Organization.
(a) Each
of
Parent, Merger Sub and the Parent Material Subsidiaries is a corporation,
partnership or limited liability company duly incorporated or organized,
validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization and has the requisite power, corporate or
otherwise, and authority to own or lease all of its properties and assets
and to
carry on its business as it is now being conducted. Each of Parent, Merger
Sub
and the Parent Material Subsidiaries is duly licensed or qualified to do
business in each jurisdiction in which the nature of the business conducted
by
it or the character or location of the properties and assets owned or leased
by
it makes such licensing or qualification necessary except where the failure
to
be so licensed or qualified would not be reasonably expected to have, when
aggregated with all other such failures, a Parent Material Adverse
Effect.
(b) The
copies of the Parent Certificate and Parent By-laws most recently filed with
the
Parent SEC Documents are true, complete and correct copies of such documents,
and the copies of the Articles of Incorporation and By-laws of Merger Sub
delivered to the Company prior to the date of this Agreement are true, complete
and correct copies of such documents, in each case as in effect as of the
date
of this Agreement.
Section 5.2.
Capitalization.
(a) The
authorized capital stock of Parent consists of 110,000,000 shares of capital
stock, of which 100,000,000 shares have been designated as shares of Parent
Stock and 10,000,000 shares have been designated as shares of preferred stock,
par value $0.01 per share, of Parent (“Parent
Preferred Stock”).
At
the close of business on June 29, 2007, (i) 26,130,618 shares of Parent Stock
were issued and outstanding, (ii) no shares of Parent Stock were held in
Parent’s treasury, (iii) 508,916 shares
of
Parent Stock were reserved for issuance pursuant to the Parent Benefit Plans
(and no shares of Parent Stock were reserved for any other purpose), (iv)
no
shares of Parent Preferred Stock were issued and outstanding (or reserved
for
any purpose), and (v) no other class or series of shares of capital stock
of
Parent had been designated, issued or reserved for issuance. All of the issued
and outstanding shares of Parent Stock have been duly authorized and validly
issued and are fully paid, nonassessable and free of any preemptive rights.
Except as provided in this Agreement and except as set forth in clause (iii)
of
the second sentence of this Section 5.2(a), there are no outstanding
subscriptions, options, warrants, calls, rights, arrangements, undertakings,
commitments or agreements of any character calling for the purchase, issuance,
redemption or repurchase of any securities of Parent to which Parent or any
Parent Subsidiary is a party, including any securities representing the right
to
purchase or otherwise receive any shares of Parent Stock. The shares of Parent
Stock to be issued pursuant to the Merger, when issued in accordance with
the
terms and subject to the conditions of this Agreement, will be duly authorized,
validly issued, fully paid and nonassessable and free of any preemptive rights,
and will not be subject to any restrictions on the resale thereof under federal
or state securities Laws.
33
(b) The
authorized capital stock of Merger Sub consists of 100 shares of Merger Sub
Common Stock, all of which shares are issued and outstanding and are owned,
of
record and beneficially, solely by Parent.
(c) Parent
owns, directly or indirectly, all of the issued and outstanding shares of
the
capital stock or partnership or member interests of each Parent Material
Subsidiary, free and clear of any Liens, except for (i) Liens imposed under
federal or state securities Laws, (ii) Liens specifically disclosed in the
Parent SEC Financial Statements and (iii) Liens that would not be reasonably
expected to have, individually or in the aggregate, a Parent Material Adverse
Effect. All such shares of capital stock are duly authorized and validly
issued
and are fully paid, nonassessable and free of any preemptive rights. Neither
Parent nor any of the Parent Material Subsidiaries has any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any security of any of
the
Parent Material Subsidiaries, including any securities representing the right
to
purchase or otherwise receive any shares of capital stock of any of the Parent
Material Subsidiaries. There are no restrictions on Parent with respect to
voting the stock of any Parent Material Subsidiary.
(d) With
respect to each corporation, limited liability company, partnership or other
entity in which Parent or any of the Parent Subsidiaries has a direct or
indirect ownership interest in which it invested and/or to which is loaned
more
than $20,000,000 and which is not a Parent Material Subsidiary, Parent owns
such
ownership interest free and clear of any Liens, except for (i) Liens imposed
under the applicable partnership or similar governing agreement or under
federal
or state securities Laws, (ii) Liens specifically disclosed in the Parent
SEC
Financial Statements and (iii) Liens that would not be reasonably expected
to
have, individually or in the aggregate, a Parent Material Adverse
Effect.
Section 5.3.
Authority.
Each of
Parent and Merger Sub has all necessary corporate power and authority to
execute
and deliver this Agreement and to consummate the Transactions to be consummated
by it. The execution, delivery and performance by Parent and Merger Sub of
this
Agreement, and the consummation by Parent and Merger Sub of the Transactions
to
be consummated by them, have been duly authorized and approved by the respective
Boards of Directors of Parent and Merger Sub, and by Parent as the sole
shareholder of Merger Sub, and no other corporate action on the part of Parent
or its stockholders, or Merger Sub or its shareholders, is necessary to
authorize the execution and delivery by Parent and Merger Sub of this Agreement
and the consummation by Parent and Merger Sub of the Transactions to be
consummated by them, including the Parent Stock Issuance. This Agreement
has
been duly executed and delivered by Parent and Merger Sub, and, assuming
due and
valid authorization, execution and delivery of this Agreement by the Company,
constitutes the valid and binding obligation of each of Parent and Merger
Sub,
enforceable against each of them in accordance with its terms, except that
such
enforceability (i) may be limited by bankruptcy, insolvency, moratorium or
other
similar Laws affecting or relating to the enforcement of creditors’ rights
generally and (ii) is subject to general principles of equity.
34
Section 5.4.
Consents
and Approvals; No Violations.
(a) Except
for (i) the consents and approvals set forth in Section
5.4(a)
of the
Parent Disclosure Schedule, (ii) the filing with the SEC of the Parent
Registration Statement, (iii) the filing with the Department of State of
the Articles of Merger and related docketing statements, (iv) such filings
and
approvals as may be required to be made or obtained under the state blue
sky or
securities Laws of various states in connection with the issuance of shares
of
Parent Stock pursuant to this Agreement, (v) such filings as may be required
to
cause the shares of Parent Stock to be issued pursuant to this Agreement
to be
approved for listing on NASDAQ, (vi) such other filings, permits,
authorizations, consents and approvals as may be required under, and other
applicable requirements of, the Exchange Act, the Exchange Act Rules or the
HSR
Act, (vii) filings with, and the approval required by, the FCC under the
Communications Act or the FCC Rules and (viii) filings with, and the approval
required by, the PPUC under the Pennsylvania Public Utility Code or the PPUC
Rules (all of the foregoing, collectively, the “Parent
Required Statutory Approvals”),
no
consent or approval of, or filing, declaration or registration with, any
Governmental Entity, which has not been received or made, is required to
be
obtained by or made by Parent or Merger Sub for the consummation by Parent
and
Merger Sub of the Transactions to be consummated by them, other than such
consents, approvals, filings, declarations or registrations that, if not
obtained or made, would not be reasonably expected to have, individually
or in
the aggregate, a Parent Material Adverse Effect.
(b) None
of
the execution and delivery by Parent and Merger Sub of this Agreement and
the
consummation by Parent and Merger Sub of the Transactions to be consummated
by
them, and compliance by Parent and Merger Sub with any of the terms and
provisions of this Agreement, will (i) violate any provision of the Parent
Certificate or Parent By-laws, the Articles of Incorporation or By-laws of
Merger Sub, or the Certificate of Incorporation or By-laws (or any similar
organizational documents with a different name) of any other Parent Material
Subsidiary or (ii) assuming that the Parent Required Statutory Approvals
are
obtained or made, as the case may be, prior to the Effective Time, (x) violate
any Law applicable to Parent, Merger Sub or any other Parent Subsidiary or
any
of their respective properties or assets, or the award of any arbitrator
or
panel of arbitrators applicable to Parent, Merger Sub or any other Parent
Subsidiary or any of their respective properties or assets or (y) violate,
result in the loss of any material benefit under, constitute a default (or
an
event which, with notice or lapse of time, or both, would constitute a default)
under, result in the termination of or a right of termination or cancellation
under, accelerate the performance required by, or result in the creation
of any
Lien upon any of the respective properties or assets of Parent, Merger Sub
or
any other Parent Subsidiary under any note, bond, mortgage, indenture, deed
of
trust, license, permit, lease, contract, agreement or other instrument to
which
Parent, Merger Sub or any other Parent Subsidiary is a party, or by which
any of
them or any of their respective properties or assets may be bound or affected,
except, in the case of clause (ii) above, for such violations, losses of
benefits, defaults, events, terminations, rights of termination or cancellation,
accelerations or Lien creations as would not be reasonably expected to have,
individually or in the aggregate, a Parent Material Adverse Effect.
35
(c) Parent
is
qualified under applicable Laws to be a transferee of the Licenses issued
by the
FCC and PPUC. To Parent’s Knowledge, there is (i) no reason why the FCC or the
PPUC will not grant their consent to the transfer of control to Parent of
the
Licenses issued by the FCC and the PPUC, respectively, and (ii) no fact that
would reasonably be expected to lead to a condition of the consent of the
FCC or
the PPUC that would not allow Parent to consummate the Transactions. Parent
does
not have ten percent (10%) or greater foreign owners, including both equity
and
voting shares, and Parent is not controlled by foreigners such that the consent
of the FCC will include Team Telecom review.
Section 5.5.
SEC
Documents; Financial Statements; Undisclosed Liabilities.
(a) Parent
has filed all reports, schedules, forms and registration statements with
the SEC
required to be filed by it pursuant to the Securities Act and the Securities
Act
Rules, or the Exchange Act and the Exchange Act Rules, in each such case
since
January 1, 2005 (collectively, and in each case including all annexes and
schedules thereto and documents incorporated by reference therein, the
“Parent
SEC Documents”).
As of
their respective dates (or if subsequently amended or superseded by a filing
prior to the date of this Agreement, on the date of such filing), the Parent
SEC
Documents complied as to form in all material respects with the requirements
of
the Securities Act or the Exchange Act, as the case may be, and the rules
and
regulations of the SEC promulgated thereunder applicable to such Parent SEC
Documents, and none of the Parent SEC Documents as of such dates contained
any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein,
in
light of the circumstances under which they were made, not misleading. To
Parent’s Knowledge, as of the date hereof, none of the Parent SEC Documents is
the subject of ongoing SEC review.
(b) Parent
is
in compliance with, and has complied, in all material respects with (i) the
applicable provisions of the Xxxxxxxx-Xxxxx Act of 2002 and the related rules
and regulations promulgated thereunder, and (ii) the applicable listing and
corporate governance rules and regulations of NASDAQ. Parent has established
and
maintains disclosure controls and procedures and internal control over financial
reporting (as such terms are defined in paragraphs (e) and (f),
respectively, of Rule 13a-15 under the Exchange Act) as required by
Rule 13a-15 under the Exchange Act. Parent’s disclosure controls and
procedures are reasonably designed to ensure that all material information
required to be disclosed by Parent in the reports that it files or furnishes
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the rules and forms of the SEC, and that all
such
material information is accumulated and communicated to the management of
Parent
as appropriate to allow timely decisions regarding required disclosure and
to
make the certifications required pursuant to Sections 302 and 906 of the
Xxxxxxxx-Xxxxx Act. The management of Parent has completed its assessment
of the
effectiveness of Parent’s internal control over financial reporting in
compliance with the requirements of Section 404 of the Xxxxxxxx-Xxxxx Act
for the year ended December 31, 2006, and such assessment concluded that
such controls were effective to provide reasonable assurance regarding the
reliability of Parent’s financial reporting and the preparation of Parent’s
financial statements for external purposes in accordance with GAAP. Parent
has
disclosed, based on its assessment of the effectiveness of Parent’s internal
control over financial reporting in compliance with the requirements of
Section 404 of the Xxxxxxxx-Xxxxx Act for the year ended December 31,
2006, to Parent’s independent registered accounting firm and the audit committee
of the Board of Directors of Parent (A) any significant deficiencies and
material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect Parent’s
ability to record, process, summarize and report financial information and
(B) any fraud, whether or not material, of which there is Parent’s
Knowledge that involves management or other employees who have a significant
role in Parent’s internal control over financial reporting for the year ended
December 31, 2006. Parent any has made available to the Company a summary
of any
such disclosures made by management to such accounting firm or audit committee
for the year ended December 31, 2006.
36
(c) The
consolidated financial statements of Parent included in the Parent SEC Documents
(the “Parent
SEC Financial Statements”)
(i)
have been prepared in accordance with GAAP (except as may be otherwise indicated
therein or in the notes thereto and except, in the case of unaudited
consolidated quarterly statements, as permitted by Form 10-Q of the Exchange
Act), applied on a consistent basis during the periods involved, (ii) complied
in all material respects with published rules and regulations of the SEC
with
respect thereto, and (iii) fairly present in all material respects the
consolidated financial position of Parent and its consolidated Parent
Subsidiaries as of the respective dates thereof and the consolidated statements
of income, cash flows and changes in stockholders’ equity for the respective
periods then ended (subject, in the case of unaudited quarterly statements,
to
normal year-end audit adjustments and the absence of footnotes).
(d) As
of
March 31, 2007, neither Parent nor any of the Parent Subsidiaries had any
liabilities or obligations that would have been required by GAAP to be reflected
in the consolidated balance sheet of Parent and the Parent Subsidiaries as
of
such date, except (i) for such liabilities and obligations reflected, reserved
against or otherwise disclosed in the consolidated balance sheet of Parent
and
the Parent Subsidiaries as of such date (including the notes thereto) that
is
included in the Parent SEC Financial Statements and (ii) for such liabilities
and obligations as would not be reasonably expected to have, individually
or in
the aggregate, a Parent Material Adverse Effect (it is understood and agreed
that the representations and warranties contained in this Section 5.5(d):
(x) do
not apply to matters described in any of Section 5.4, the other provisions
of
this Section 5.5, and Sections 5.7, 5.8, 5.9, 5.10, 5.11 and 5.17 (which
are
addressed exclusively in those Sections) and (y) shall not be deemed breached
if
such breach relates to a matter which is covered by a representation or warranty
of Parent and Merger Sub contained in this Article V (other than this Section
5.5(d)) that contains a “Parent’s Knowledge” qualification).
(e) Since
December 31, 2006 to the date of this Agreement,
(i) neither Parent nor any Parent Subsidiary nor, to Parent’s Knowledge,
any director, officer, auditor, accountant or representative of Parent or
any of
the Parent Subsidiaries has received any written complaint, allegation,
assertion or claim that Parent or any of the Parent Subsidiaries has engaged
in
improper or illegal accounting or auditing practices or maintains improper
or
inadequate internal accounting controls relating to Parent and the Parent
Subsidiaries, taken as a whole, (ii) no attorney representing Parent or any
Parent Subsidiary has made a report to Parent’s chief legal officer, chief
executive officer or Board of Directors (or any committee thereof) pursuant
to
the
SEC’s
Standards of Professional Conduct for Attorneys (17 CFR Part 205), and (iii)
Parent has disclosed to its outside auditors any fraud, whether or not material,
of which there is Parent’s Knowledge that involves management or other employees
who have a significant role in Parent’s internal control over financial
reporting.
37
Section 5.6.
Absence
of Certain Changes or Events.
Except
as expressly contemplated in this Agreement, since March 31, 2007, no events
have occurred which have had or would be reasonably expected to have,
individually or in the aggregate, a Parent Material Adverse Effect. From
March
31, 2007, to the date of this Agreement, (i) Parent and the Parent Subsidiaries
have carried on and operated their respective businesses in all material
respects in the ordinary course of business and (ii) there has been
no:
(a) declaration,
setting aside or payment of any dividend or other distribution in respect
of the
capital stock of the Parent, other than the declaration and payment by Parent
of
regular quarterly cash dividends on the shares of Parent Stock;
(b) redemption
or other acquisition by Parent of any of its capital stock;
(c) stock
split, reverse stock split, combination or reclassification of the shares
of
Parent Stock;
(d) material
change by Parent in accounting methods, principles or practices except as
required by GAAP; or
(e) any
agreement or commitment, whether in writing or otherwise, to take any action
described in clauses (a) through (d) above.
Section 5.7.
Litigation;
Other Proceedings.
Except
(i) as would not be reasonably expected to have, individually or in the
aggregate, a Parent Material Adverse Effect and (ii) for any litigation (or
threatened litigation) concerning this Agreement or any of the Transactions,
there is no action, arbitration, suit, formal complaint (other than complaints
by customers (other than carriers) in the ordinary course of business) or
proceeding pending or, to Parent’s Knowledge, threatened against Parent or any
of the Parent Subsidiaries or any of their respective properties or assets
or
any of their respective officers or directors (in their capacity as officers
or
directors of Parent or any Parent Subsidiary) before any Governmental
Entity.
Section 5.8.
Taxes.
Except
as would not be reasonably expected to have, individually or in the aggregate,
a
Parent Material Adverse Effect, (i) all Tax returns, reports and similar
statements, including information returns and reports, claims for refund,
and
amended or substituted returns and reports (including any schedules attached
thereto) required to be filed by or on behalf of Parent or any of the Parent
Subsidiaries (collectively, the “Parent
Tax Returns”)
have
been timely filed (taking into account any extensions), (ii) as of the times
of
filing, the Parent Tax Returns were correct, (iii) Parent and the Parent
Subsidiaries have timely paid, withheld or made provision for all Taxes shown
as
due and payable on the Parent Tax Returns that have been filed or that are
otherwise due and owing, other than Taxes that are being contested in good
faith, which have not been finally determined, and have been adequately reserved
against in accordance with GAAP on Parent’s most recent consolidated financial
statements, and (iv) to Parent’s Knowledge, as of the date of this Agreement,
there are no pending or threatened claims against or with respect to Parent
or
any of the Parent Subsidiaries in respect of any Tax.
38
Section 5.9.
Licenses.
(a) Except
as
would not reasonably be expected to have, individually or in the aggregate,
a
Parent Material Adverse Effect, (i) all Licenses required for the operation
of
the businesses of Parent and the Parent Subsidiaries as currently conducted
are
in full force and effect, (ii) all fees due and payable by Parent or any
of the
Parent Subsidiaries to any Governmental Entities pursuant to the rules governing
such Licenses have been paid, (iii) Parent and the Parent Subsidiaries are
in
compliance with the terms of each such License of which it is a licensee,
and
(iv) there is no proceeding being conducted by any Governmental Entity of
which
Parent has received notice or, to Parent’s Knowledge, any proceeding or
investigation threatened by any Governmental Entity, seeking the termination,
suspension, modification, cancellation, revocation or nonrenewal of any of
such
Licenses or the imposition on Parent or any of the Parent Subsidiaries of
any
penalty or fine with respect to any of such Licenses.
(b) Parent
is
not a “holding company” within the meaning of Section 16451(8)(A) of the Public
Utility Holding Company Act of 2005 (“PUHCA”).
Neither Parent nor any Parent Subsidiary is a “public utility” (as defined in
PUHCA), a “public-utility company” (as defined in PUHCA) or a “natural gas
company” (as defined in PUHCA).
Section 5.10.
Compliance
with Laws.
(a) Except
with respect to the matters described in Sections 5.4, 5.5, 5.7, 5.8, 5.9,
5.11
and 5.17, which are excluded from the provisions of this Section 5.10, and
except as would not be reasonably expected to have, individually or in the
aggregate, a Parent Material Adverse Effect, neither Parent nor any of the
Parent Subsidiaries is in violation of any Law applicable to Parent or any
of
the Parent Subsidiaries or any award of any arbitrator or panel of arbitrators
applicable to Parent or any of the Parent Subsidiaries.
(b) Neither
Parent nor any of the Parent Subsidiaries is in violation of any requirement
of
applicable Law related to privacy, data protection or the collection and
use of
personal information gathered or used by Parent and the Parent Subsidiaries
applicable to Parent or any of the Parent Subsidiaries or by which Parent
or any
of the Parent Subsidiaries or any of their respective businesses or properties
is bound, except for conflicts, violations and defaults that would not
reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect.
Section 5.11.
Environmental
Laws and Regulations.
Except
for those matters that, individually or in the aggregate, would not reasonably
be expected to have a Parent Material Adverse Effect, (i) Parent and the
Parent Subsidiaries are in compliance with all applicable Environmental Laws;
(ii) to Parent’s Knowledge, no property currently owned or operated by
Parent or any of the Parent Subsidiaries is contaminated with any Hazardous
Substance which would reasonably be expected to result in liability under
any
Environmental Law; (iii) neither Parent nor any of the Parent Subsidiaries
would reasonably be expected to incur liability under any Environmental Law
for
any Hazardous Substance release to, disposal on or contamination of any property
by Parent or any of the Parent Subsidiaries (or, to Parent’s Knowledge, by any
other Person); (iv) there are no legal, administrative, arbitral or other
proceedings, claims, actions or causes of action currently pending before
any
Governmental Entity or arbitrator or panel of arbitrators or, to Parent’s
Knowledge, threatened against Parent or any of the Parent Subsidiaries, seeking
to impose on Parent or any of the Parent Subsidiaries liability or obligations
arising under Environmental Laws; and (v) neither Parent nor any of the Parent
Subsidiaries is subject to any agreement, order, judgment or decree by or
with
any Governmental Entity imposing any liability or obligation under Environmental
Laws.
39
Section
5.12. Sufficient
Funds.
Prior
to
the date of this Agreement, Parent has delivered to the Company complete,
correct and executed copies of all financing agreements and/or commitment
letters (the “Financing
Commitments”)
with
respect to the financing of the Transactions (the “Financing”),
including all exhibits, schedules or amendments thereto. The Financing
Commitments are in full force and effect, and there are no conditions precedent
or other contingences related to the funding of the full amount of the
Financing, other than as set forth in or expressly contemplated by the Financing
Commitments. The aggregate proceeds contemplated by the Financing Commitments
will be sufficient for Parent and Merger Sub to pay the aggregate amount
of cash
consideration for the shares of Company Common Stock determined pursuant
to
Article III
(including the aggregate Cash Consideration and cash in lieu of fractional
shares of Parent Stock to be paid pursuant to Section 3.1(d)),
to
perform Parent’s and Merger Sub’s other obligations under this Agreement and to
pay all fees and expenses related to the Transactions payable by either of
them.
Parent and Merger Sub have no reason to believe that any of the conditions
precedent to the Financing will not be satisfied in connection with the
consummation of the Transactions or that the Financing will not be available
to
Merger Sub on the Closing Date.
Section 5.13.
Merger
Sub’s Operation.
Merger
Sub was formed solely for the purpose of engaging in the Transactions and
has
not engaged in any business activities or conducted any operations, in each
case
since the date of its incorporation, other than in connection with the
Transactions. Merger Sub has no liabilities or obligations other than its
liabilities and obligations under this Agreement.
Section 5.14.
Ownership
of Company Common Stock.
Neither
Parent nor Merger Sub is an “interested shareholder” (as defined in
Section 2553 of the PBCL) of the Company. None of Parent, Merger Sub, the
other Parent Subsidiaries
and
their respective “Affiliates” and “Associates” (as defined on March 27, 1985 in
Rule 12b-2 under the Exchange Act) owns
beneficially or of record any shares of Company Common Stock.
Section
5.15. Other
Agreements.
None of
Parent, Merger Sub or any other Parent Subsidiary has entered into any Contract
with any officer or director of the Company or any of the Company Subsidiaries
in connection with any of the Transactions.
40
Section 5.16.
Broker’s
Fees.
Except
for Wachovia Securities and the fees and expenses payable to it, neither
Parent
nor any of the Parent Subsidiaries or Parent’s Affiliates, nor any of their
respective officers or directors on behalf of Parent or any of the Parent
Subsidiaries or Parent’s Affiliates, has employed any investment banker,
financial advisor, broker, finder or other financial services intermediary,
or
incurred any liability for any related advisory fees, broker’s fees,
commissions, finder’s fees or other compensation, in connection with any of the
Transactions.
Section
5.17. Employee
Benefits .
(a) Neither
Parent nor any of the Parent Subsidiaries makes or is obligated to
make contributions, or
has
within the last six (6) years made contributions, to
a
“multiemployer plan” within the meaning of Section 4001(a)(3) of
ERISA.
(b) With
respect to any “single-employer plan,” within the meaning of
Section 4001(a)(15) of ERISA, maintained or contributed to by Parent or any
of the Parent Subsidiaries: (i) no liability to the PBGC has been incurred
(other than for premiums not yet due); (ii) no proceedings to terminate any
such
plan have been instituted by the PBGC and no event or condition has occurred
which would constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any such plan;
and (iii) no “accumulated funding deficiency,” within the meaning of
Section 302 of ERISA or Section 412 of the Code, whether or not
waived, exists.
Section
5.18. Contracts.
With
respect to each Contract to which Parent or any Parent Subsidiary is a Party,
(i) neither Parent nor any of the Parent Subsidiaries has breached or is
in
default under, nor has any of them received written notice of breach or default
under, such Contract, (ii) to Parent’s Knowledge, no other party to such
Contract has breached or is in default of any of its obligations thereunder,
and
(iii) such Contract is a valid, binding and enforceable obligation of Parent
or
one of the Parent Subsidiaries and, to Parent’s Knowledge, of the other party or
parties thereto, and is in full force and effect, except in any such case
for
breaches, defaults or failures to be valid, binding and legally enforceable
or
to be in full force and effect that would not reasonably be expected to have,
in
the aggregate, a Parent Material Adverse Effect.
Section
5.19. No
Other Representations or Warranties.
EXCEPT
FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY CONTAINED IN THIS ARTICLE
V,
NEITHER PARENT NOR ANY OTHER PERSON MAKES ANY EXPRESS OR IMPLIED REPRESENTATION
OR WARRANTY ON BEHALF OF PARENT. PARENT HEREBY DISCLAIMS ANY SUCH OTHER
REPRESENTATION OR WARRANTY, WHETHER BY PARENT, ANY PARENT SUBSIDIARY, OR
ANY OF
THEIR RESPECTIVE REPRESENTATIVES OR ANY OTHER PERSON, NOTWITHSTANDING THE
DELIVERY OR DISCLOSURE TO THE COMPANY OR ANY OTHER PERSON OF ANY DOCUMENTATION
OR OTHER WRITTEN OR ORAL INFORMATION BY PARENT, ANY PARENT SUBSIDIARY OR
ANY OF
THEIR RESPECTIVE REPRESENTATIVES OR ANY OTHER PERSON, AND NEITHER PARENT
NOR ANY
OTHER PERSON WILL HAVE OR BE SUBJECT TO ANY LIABILITY OR INDEMNIFICATION
OBLIGATION TO THE COMPANY OR ANY OTHER PERSON RESULTING FROM SUCH DELIVERY
OR
DISCLOSURE, OR THE COMPANY’S USE, OF ANY SUCH DOCUMENTATION OR OTHER INFORMATION
(INCLUDING ANY INFORMATION, DOCUMENTS, PROJECTIONS, FORECASTS OR OTHER
MATERIAL
MADE AVAILABLE TO THE COMPANY IN CERTAIN "DATA ROOMS" OR MANAGEMENT
PRESENTATIONS IN EXPECTATION OF THE TRANSACTIONS).
41
ARTICLE
VI
COVENANTS
Section 6.1.
Conduct
of Businesses of Company Prior to the Effective Time.
Except
as (x) set forth in Section 6.1
of the
Company Disclosure Schedule, (y) expressly contemplated or permitted by this
Agreement or (z) required by Law, during the period from the date of this
Agreement to the earlier of the Effective Time or the termination of this
Agreement in accordance with Section 8.1, unless Parent otherwise agrees
in
writing (such agreement not to be unreasonably withheld, delayed or
conditioned), the Company shall, and shall cause each of the Company
Subsidiaries to, (i) conduct its business in all material respects in the
ordinary course of business and (ii) use commercially reasonable efforts
to
maintain and preserve substantially intact its business organization and
the
goodwill of those having business or other third-party relationships with
it,
including Governmental Entities, and retain the services of its present officers
and key employees. Without limiting the generality of the foregoing, and
except
as (x) set forth in Section 6.1
of the
Company Disclosure Schedule, (y) expressly contemplated or permitted by this
Agreement, or (z) required by Law, during the period from the date of this
Agreement to the earlier of the Effective Time or the termination of this
Agreement in accordance with Section 8.1, the Company shall not, and shall
not
permit any of the Company Subsidiaries to, without the prior written consent
of
Parent (which consent, with respect to clause (a) below, may be given or
withheld by Parent in its sole discretion and, in any other case, shall not
be
unreasonably withheld, delayed or conditioned), except as set forth in clause
(g) below:
(a) (i)
issue, sell, grant, dispose of, pledge or otherwise encumber, or authorize
or
propose the issuance, sale, grant, disposition or pledge or other encumbrance
of, (x) any shares of its capital stock or any securities or rights
convertible into, exchangeable for, or evidencing the right to subscribe
for,
any shares of its capital stock or any rights, warrants, options, calls,
commitments or any other agreements of any character to purchase or acquire
any
shares of its capital stock or any securities or rights convertible into,
exchangeable for, or evidencing the right to subscribe for, any shares of
its
capital stock, other than in connection with the Rights Agreement, or (y)
any
other securities in respect of, in lieu of, or in substitution for, any shares
of its capital stock outstanding on the date of this Agreement, (ii) redeem,
purchase or otherwise acquire, or propose to redeem, purchase or otherwise
acquire, any of its outstanding shares of capital stock or (iii) split, combine,
subdivide or reclassify any shares of its capital stock or declare, set aside
for payment or pay any dividend, or make any other distribution in respect
of
any shares of capital stock, or otherwise make any payments to shareholders
in
their capacity as such, other than (x) payment by the Company of the regular
quarterly cash dividend of $0.20 per share in respect of the Company Common
Stock scheduled to be paid in July 2007, (y) declaration and payment by the
Company of the regular quarterly cash dividend of $0.20 per share in respect
of
the Company Common Stock scheduled to be paid in October 2007 and
(z) dividends declared or paid by any Company Subsidiary to any other
Company Subsidiary or to the Company;
(b) other
than in the ordinary course of business, incur any indebtedness for borrowed
money or guarantee any such indebtedness or make any loans, advances or capital
contributions to, or investments in, any other Person other than to any of
the
Company and the Company Subsidiaries;
42
(c) (i)
sell,
(ii) transfer, (iii) mortgage, encumber or otherwise knowingly incur a Lien
(other than Permitted Liens) with respect to or (iv) otherwise dispose of,
any
of its properties or assets with a net book value in excess of $500,000
individually and $1,000,000 in the aggregate, to any Person other than the
Company or a wholly-owned Company Subsidiary, or cancel, release or assign
any
indebtedness in excess of $500,000 owed to the Company or any Company
Subsidiary, except in any such case (x) in the ordinary course of business,
(y)
pursuant to contracts and agreements in force at the date of this Agreement
or
renewals of any such contract or agreement or (z) pursuant to plans disclosed
in
writing prior to the execution of this Agreement to Parent or Merger Sub
or in
the Company Disclosure Schedule;
(d) make
any
acquisition or investment (other than in the ordinary course of business),
whether by purchase of stock or securities, merger or consolidation,
contributions to capital, property transfers, or purchases of any property
or
assets, of or in any Person (i) other than a wholly-owned Company Subsidiary,
(ii) to the extent contemplated by the Company’s capital expenditure budget for
2007 (as most recently updated if applicable), a copy of which has been provided
to Parent prior to the date of this Agreement, or for 2008 or (iii) acquisitions
or investments that are not in excess of $500,000 in the aggregate;
(e) increase
the rate or terms of compensation payable by the Company or any of the Company
Subsidiaries to any of their respective directors, officers or employees,
or
grant or increase the rate or terms of any bonus, pension, severance or other
employee benefit plan, policy, agreement or arrangement with, for or in respect
of any of their respective directors, officers or employees, except in any
such
case for grants or increases (i) required pursuant to the terms of plans
or
agreements in effect on the date of this Agreement (and, additionally, in
the
case of any of the Company Union Contracts, pursuant to any renegotiation
thereof), (ii) occurring in the ordinary course of business or (iii) required
by
Law;
(f) amend
the
Company Articles or Company By-laws or the Articles of Incorporation or By-laws
(or comparable governing documents) of any Company Material
Subsidiary;
(g) engage
in
any of the activities described in Section
6.1(g)
of the
Company Disclosure Schedule without first consulting with Parent (it being
understood and agreed that Parent shall not have any approval rights with
respect to such activities);
(h) except
in
the ordinary course of business consistent with past practice, terminate,
renew,
extend, amend or modify in any material respect any Contract described in
Section
4.13(a)
of the
Company Disclosure Schedule;
(i) effect
or
permit, with respect to the Company and any Company Subsidiary, a “plant
closing” or “mass layoff”, as such terms are defined under the Worker Adjustment
and Retraining Act of 1988, as amended;
(j) change
the Company’s or any of the Company Subsidiaries’ method of accounting or
accounting principles or practices, except for any such change required by
reason of a change in GAAP or by Regulation S-X under the Exchange Act, as
approved by its independent public accountants;
43
(k) make
any
material Tax election; or
(l) authorize,
recommend, propose or announce an intention to do any of the foregoing, or
enter
into any contract, agreement commitment or arrangement to take any of the
actions prohibited by this Section 6.1.
Without
in any way limiting the rights or obligations of any party hereto under this
Agreement, the parties hereto acknowledge and agree that (i) nothing in this
Agreement shall give Parent, directly or indirectly, the right to control
or
direct the operations of the Company or any of the Company Subsidiaries prior
to
the Effective Time and (ii) prior to the Effective Time, the Company shall
exercise, consistent with the terms and conditions of this Agreement, complete
control and supervision over its and the Company Subsidiaries’ operations.
Section 6.2.
Conduct
of Businesses of Parent Prior to the Effective Time.
Except
as (x) set forth in Section 6.2
of the
Parent Disclosure Schedule, (y) expressly contemplated or permitted by this
Agreement or (z) required by Law, during the period from the date of this
Agreement to the earlier of the Effective Time or the termination of this
Agreement in accordance with Section 8.1, Parent shall not, and shall not
permit
any of the Parent Subsidiaries to, without the prior written consent of the
Company (which consent may be given or withheld by the Company in its sole
discretion):
(a) engage
in
any material repurchase of, or any recapitalization or other change,
restructuring or reorganization with respect to, Parent Stock, including
payment
of any dividend on or other distribution in respect to shares of Parent Stock,
other than (i) the declaration and payment by Parent of regular quarterly
cash
dividends of $0.38738 per share in respect of the Parent Stock and
(ii) dividends declared or paid by any Parent Subsidiary to any other
Parent Subsidiary or to Parent;
(b) (i)
alter
through merger, liquidation, reorganization, restructuring or in any other
manner the corporate structure or organization of Parent or (ii) engage in
any
action or enter into any transaction or series of transactions, or permit
any
action to be taken or transaction or series of transactions to be entered
into,
that, in
the
case of either clause (i) or clause (ii), could
reasonably be expected to delay the consummation of, or otherwise adversely
affect, the Merger or any of the other Transactions, including (x) withdrawing
or modifying, in a manner adverse to the Company, the approval by the Board
of
Directors of Parent of this Agreement, the Merger or the Parent Stock Issuance
or (y) engaging in any action or entering into any transaction or series
of
transactions, or permitting any action to be taken or transaction or series
of
transactions to be entered into, that could reasonably be expected to delay
or
otherwise adversely affect the funding of the full amount of the Financing
or
the ability of Parent and Merger Sub to
pay
the aggregate amount of cash consideration for the shares of Company Common
Stock determined pursuant to Article III (including the aggregate Cash
Consideration and cash in lieu of fractional shares of Parent Stock to be
paid
pursuant to Section 3.1(d));
44
(c) without
limiting the generality of Section 6.2(b), acquire (whether through merger,
consolidation, stock or asset purchase or otherwise), or agree to so acquire,
any material amounts of assets of or any equity in any Person or any business
or
division thereof, unless such acquisition or agreement would not (i) impose
any
delay in the obtaining of, or materially increase the risk of not obtaining,
any
authorizations, consents, orders, declarations or approvals of any Governmental
Entity necessary to consummate the Merger or any of the other Transactions
or
the expiration or termination of any waiting period under the HSR Act or
other
Law, (ii) increase the risk of any Governmental Entity entering an order
prohibiting the consummation of the Merger or any of the other Transactions
or
(iii) increase the risk of not being able to remove any such order on appeal
or
otherwise;
(d) adopt
any
amendments to the Parent Certificate or Parent By-laws (or the comparable
governing documents of any of the Parent Subsidiaries) which would alter
any of
the terms of Parent Stock; or
(e) authorize,
recommend, propose or announce an intention to do any of the foregoing, or
enter
into any contract, agreement, commitment or arrangement to take any of the
actions prohibited by this Section 6.2.
Section 6.3.
No
Solicitation.
(a) During
the period beginning on the date of this Agreement and continuing until the
earlier of the Effective Time or the termination of this Agreement in accordance
with Section 8.1, the Company agrees that the Company and the Company
Subsidiaries shall not, and neither the Company nor any of the Company
Subsidiaries shall authorize any of their respective officers, directors,
employees, agents, advisors and other representatives (including any investment
banker, financial advisor, attorney or accountant retained by the Company
or any
of the Company Subsidiaries or any of the foregoing) (collectively, the
“Company
Representatives”)
to,
initiate or solicit (including by way of furnishing non-public information)
or
knowingly facilitate the making of any proposal or offer that constitutes,
or is
reasonably expected to lead to, an Alternative Proposal from any Person or
group
of Persons or engage in any substantive discussions or negotiations concerning,
or provide any non-public information with respect to, an Alternative Proposal.
(b) Notwithstanding
anything in this Agreement to the contrary, the Company (directly or through
its
Company Representatives) may:
(i) until
receipt of the Company Shareholder Approval, engage in substantive discussions
or negotiations with a Person or group of Persons that makes a bona fide
Alternative Proposal (under circumstances in which the Company has complied
in
all material respects with its non-solicitation obligations under Section
6.3(a)) and may furnish to such Person(s) and its/their representatives
information concerning, and may afford such Person(s) and its/their
representatives access to, the Company and the Company Subsidiaries and their
businesses, properties, assets, books and records, if (x) in the good faith
judgment of the Company’s Board of Directors (after consultation with the
Company’s financial advisor and outside counsel), such Alternative Proposal
constitutes, or is reasonably likely to lead to, a Superior Proposal, and
(y)
prior to furnishing such information or access to, or entering into substantive
discussions (except as to the existence of this Section 6.3) or negotiations
with, such Person(s), (A) the Company receives from such Person(s) an executed
Acceptable Confidentiality Agreement and (B) the Company notifies Parent
to the
effect that it intends to furnish information or access to, or intends to
enter
into substantive discussions or negotiations with, such Person(s);
45
(ii) comply
with Rules 14e-2 and 14d-9 promulgated under the Exchange Act with regard
to a
tender or exchange offer;
(iii) make
“stop-look-and-listen” communications with respect to an Alternative Proposal of
the nature contemplated by Rule 14d-9 of the Exchange Act Rules;
and
(iv) make
such
other disclosures to the Company’s shareholders, and take such other actions, as
are required by Law.
In
addition to the obligations of the Company and the Company Subsidiaries set
forth in clause (i) of this Section 6.3(b), the Company shall promptly notify
Parent in writing of any Alternative Proposal made after the date of this
Agreement, which notice shall specify the material terms and conditions of
any
such Alternative Proposal and the identity of the Person(s) making such
Alternative Proposal. The Company agrees that it and the Company Subsidiaries
will not enter into any confidentiality agreement with any Person subsequent
to
the date hereof which prohibits the Company from providing such information
to
Parent. The Company shall promptly make available to Parent and Merger Sub
any
material non-public information concerning the Company or the Company
Subsidiaries that is made available to such Person(s) which was not previously
made available to Parent and Merger Sub.
(c) The
Board
of Directors of the Company may not (i) withdraw or modify, in a manner
adverse to Parent, the approval or recommendation by the Board of Directors
of
the Company of the Merger or this Agreement (except as set forth in clause
(y)
of the proviso to Section 2.6(b)(i) or as set forth below in this Section
6.3(c)), (ii) approve or recommend an Alternative Proposal or (iii) cause
the Company or any of the Company Subsidiaries to enter into any letter of
intent, agreement in principle, acquisition agreement or other similar agreement
related to any Alternative Proposal (other than an Acceptable Confidentiality
Agreement). Notwithstanding the foregoing, at any time prior to receipt of
the
Company Shareholder Approval, if the Board of Directors of the Company (after
consultation with the Company’s financial advisor and outside counsel)
determines in good faith that any Alternative Proposal referred to in Section
6.3(b) constitutes a Superior Proposal, the Board of Directors of the Company
may:
(w) withdraw
or modify its approval or recommendation of the Merger and this Agreement;
(x) approve
or recommend such Superior Proposal;
(y) cause
the
Company or any of the Company Subsidiaries to enter into a binding written
agreement with respect to such Alternative Proposal (a “Superior
Proposal Agreement”)
(and
amend the Rights Agreement in connection therewith); and
46
(z) terminate
this Agreement in accordance with Section 8.1(c); provided,
however,
that
(A) prior to terminating this Agreement, the Company shall give Parent at
least
four (4) Business Days’ notice thereof (except as provided in the final sentence
of this clause (z)), attaching the Superior Proposal Agreement (or, if
applicable, the most current draft thereof), which notice need only be given
once with respect to any Superior Proposal, unless such Superior Proposal is
modified in any material respect, and (B) if, within such four (4) Business
Day
period (except as provided in the final sentence of this clause (z)), Parent
makes an offer that the Board of Directors of the Company determines in good
faith is more favorable to the shareholders of the Company (other than Parent,
Merger Sub and their respective Affiliates), from a financial point of view,
than such Superior Proposal (taking into account, among other things, (I)
the
terms of such offer and (II) such legal, financial, regulatory, timing and
other
aspects of such offer which the Company’s Board of Directors deems relevant),
and agrees in writing to all adjustments in the terms and conditions of this
Agreement as are necessary to reflect such offer, the Company’s notice of
termination with respect to such Superior Proposal shall be deemed to be
rescinded and of no further force and effect and, if the Company or any Company
Subsidiary has entered into a Superior Proposal Agreement, it shall promptly
terminate such agreement (it being agreed that the Company will cause any
Superior Proposal Agreement entered into prior to the expiration of such
four
(4) Business Day period to include a provision permitting such termination).
Notwithstanding the foregoing, in the event that the Company gives Parent
at
least four (4) Business Days’ notice of a Superior Proposal as provided above in
this clause (z), then any subsequent notice of termination given by the Company
under this clause (z) shall require only at least two (2) Business Days’ notice
before taking effect and, accordingly, all references above in this clause
(z)
to four (4) Business Days shall instead be deemed to be two (2) Business
Days.
Section 6.4.
Publicity.
The
initial press release with respect to the execution of this Agreement shall
be a
joint press release reasonably acceptable to Parent and the Company. Thereafter,
so long as this Agreement is in effect, none of the Company, Parent and any
of
their respective Affiliates shall issue or cause the publication of any press
release or other announcement with respect to the Merger, this Agreement
or any
of the other Transactions without the prior written approval of the Company
and
Parent, except as may be required by Law or by any listing agreement with
a
securities exchange as determined in the good faith judgment of the party
wanting to make such release or announcement.
Section 6.5.
Access
to Information.
(a) Upon
reasonable notice and subject to applicable Laws relating to the exchange
of
information, each of Parent and the Company (each a “Disclosing
Party”)
shall,
and shall cause its Subsidiaries to, afford to the other Disclosing Party’s
officers, employees, accountants, counsel and other representatives, during
normal business hours during the period prior to the Effective Time, reasonable
access to all its properties, books, contracts, commitments and records,
and to
its officers, employees, accountants, counsel and other representatives and,
during such period, each Disclosing Party shall, and shall cause its
Subsidiaries to, make available to the other Disclosing Party and the other
Disclosing Party’s appropriate representatives (i) a copy of each report,
schedule, registration statement and other document filed or received by
it
during such period pursuant to the requirements of federal securities Laws
(other than reports or documents which the Disclosing Party is not permitted
to
so disclose under applicable Law) and (ii) all other information concerning
its business, properties and personnel as such other Disclosing Party may
reasonably request. Neither Disclosing Party nor any of its Subsidiaries
shall
be required to provide access to or to disclose information if such access
or
disclosure would violate or prejudice the rights of its customers, suppliers
or
employees, jeopardize the work product privilege or the attorney-client
privilege of the institution in possession or control of such information,
or
contravene any Law, fiduciary duty or binding agreement entered into prior
to
the date of this Agreement, provided
that the
applicable Disclosing Party gives notice to the other Disclosing Party of
the
same. The parties hereto will use commercially reasonable efforts to the
extent
practicable to make appropriate substitute disclosure arrangements under
circumstances in which the restrictions of the preceding sentence
apply.
47
(b) None
of
the Company, Parent or Merger Sub makes any representation as to the accuracy
of
any information provided pursuant to Section 6.5(a), and no party hereto
may rely on the accuracy of any such information, other than as expressly
set
forth in the Company’s representations and warranties in Article IV or Parent’s
and Merger Sub’s representations and warranties in Article V, as the case may
be.
(c) The
information provided pursuant to Section 6.5(a) will be used solely for the
purpose of effecting the Transactions and will be governed by the terms of
the
Confidentiality Agreement.
Section 6.6.
Further
Assurances; Regulatory Matters; Shareholder Litigation.
(a) Subject
to the terms and conditions of this Agreement, each of Parent, Merger Sub
and
the Company shall, and Parent shall cause Merger Sub to, cooperate with each
other and use (and shall cause its Subsidiaries to use) commercially reasonable
efforts (i) to take, or cause to be taken, all actions necessary, proper
or
advisable to comply promptly with all legal requirements which may be imposed
on
such party with respect to the Merger or the other Transactions and, subject
to
the conditions set forth in Article VII, to consummate the Transactions as
promptly as practicable and (ii) promptly to prepare and file all necessary
documentation, to effect all necessary applications, notices, petitions,
filings
and other documents, and to use commercially reasonable efforts, to obtain
as
soon as practicable after the date of this Agreement all necessary permits,
consents, approvals and authorizations of all Governmental Entities necessary
or
advisable in connection with consummating the Transactions, including the
Company Required Statutory Approvals and Parent Required Statutory Approvals.
Without limiting the generality of the foregoing provisions of this
Section 6.6(a), each party hereto and/or its Subsidiaries shall, within
fifteen (15) Business Days (and, with respect to the PPUC, ten (10) Business
Days) after the execution of this Agreement, file to the extent necessary
any
initial documentation required to obtain all requisite approvals or termination
of applicable waiting periods for the Merger and the other Transactions under
the HSR Act, the Pennsylvania Public Utility Code, the PPUC Rules, the
Communications Act, and the FCC Rules. In connection with the foregoing,
Parent
and the Company agree that the Company shall have primary responsibility
for the
preparation and filing of all applications, filings or other materials with
the
FCC and the PPUC and any other Federal or state regulatory agency or commission,
in each case with respect to the Merger and the Transactions (with discrete
responsibilities with respect to the preparation of such filings to be agreed
upon by the Company and Parent); provided,
however,
that
Parent and its counsel, and the Company and its counsel, shall each be given
a
reasonably opportunity to review and comment upon drafts of all such
applications, filings and other materials, including testimony and responses
to
discovery requests, or portions thereof prepared by the other party, and
shall
provide any comments thereon to the other party as soon as practicable (but
in
no event later than three (3) Business Days after being asked to comment
thereon).
48
(b) In
furtherance and not in limitation of the covenants of the parties hereto
contained in Section 6.6(a), each of the parties hereto shall use
commercially reasonable efforts to resolve such objections, if any, as may
be
asserted with respect to any of the Transactions by or under the FCC, the
FCC
Rules, the PPUC, the Pennsylvania Public Utility Code, the PPUC Rules, the
HSR
Act, the Federal Trade Commission or the Department of Justice, including
using
commercially reasonable efforts to obtain clearance, or if such clearance
cannot
be obtained, to reach an agreement, settlement, consent providing for
divestiture, a “hold separate” agreement, contractual undertakings with third
Persons or any other relief, with the Governmental Entity investigating the
Merger or the other Transactions; provided,
however,
that
the foregoing shall not require any party hereto to agree to any asset
divestiture or restriction on its or any of its Subsidiaries’ business
operations
or any
other condition imposed to a Company Required Statutory Approval or a Parent
Required Statutory Approval that
would
be reasonably expected to have a material adverse effect on the business,
results of operations, financial condition or assets and liabilities, taken
as a
whole, of either party and its Subsidiaries, taken as a whole. In connection
with the foregoing, if any administrative or judicial action or proceeding,
including any proceeding by a private Person, is instituted (or threatened
to be
instituted) challenging any of the Transactions as violative of the HSR Act
or
any other antitrust Law or other Law in any jurisdiction, the parties hereto
shall cooperate in all respects with each other and use their respective
commercially reasonable efforts to contest and resist any such action or
proceeding and to have vacated, lifted, reversed or overturned any judgment
or
other order, whether temporary, preliminary or permanent, that is in effect
and
that prohibits, prevents or restricts consummation of any of the Transactions,
including defending through litigation on the merits any claim asserted in
any
such action or proceeding by any Person.
Section 6.7.
Company
Benefit Plans.
(a) Parent
shall, and shall cause the Surviving Corporation and its Subsidiaries to,
honor
in accordance with their terms all the Company Benefit Plans and Company
Union
Contracts.
(b) Notwithstanding
anything herein to the contrary, for at least one (1) year following the
Closing, Parent shall, and shall cause the Surviving Corporation and its
Subsidiaries to, provide employees of the Surviving Corporation and it
Subsidiaries with compensation and employee benefits which, in the aggregate,
are no less favorable to such employees than the compensation and employee
benefits in
effect
for such employees of the Company or any of the Company Subsidiaries immediately
prior to the Effective Time; provided,
however,
that
this Section 6.7(b) shall not apply to any negotiated labor agreements, which
the Surviving Corporation shall honor according to their terms; and provided,
further,
that no
further benefits shall be required to be accrued under the North Pittsburgh
Telephone Company Retirement Income Restoration Plan on or after April 1,
2008.
49
(c) Parent
shall, and shall cause the Surviving Corporation and its Subsidiaries to,
(i)
credit all service with the Company and any of the Company Subsidiaries
(including service recognized by the Company or any of the Company Subsidiaries
for service with other entities) for purposes of determining vesting and
eligibility, and for purposes of determining the level of benefits with respect
to vacation, paid time off and severance, under any employee benefit plan,
policy or program maintained by Parent or the Surviving Corporation or any
of
their respective Subsidiaries that cover employees or former employees of
the
Company after the Closing, (ii) waive any pre-existing condition or
limitation or exclusion with respect to employees of the Company or any of
the
Company Subsidiaries under any group health plan or other welfare benefit
plan
to the extent they were waived or would be waived under the Company Benefit
Plans, and (iii) recognize the dollar amount of all expenses incurred by
employees of the Company or any of the Company Subsidiaries and their dependents
in the plan year in which the Closing occurs for purposes of deductibles,
co-payments and maximum out-of pocket limits under any group health
plan.
(d) Without
limiting the foregoing, Parent shall, or shall cause the Surviving Corporation
and its Subsidiaries to, pay severance benefits to persons who were salaried
employees of the Company or any of the Company Subsidiaries prior to the
Effective Time and whose employment with the Company, the Surviving Corporation
or any of their respective Subsidiaries is terminated within two (2) years
following the Closing, in accordance with the terms of the North Pittsburgh
Systems, Inc. Severance Plan as in effect immediately prior to the Effective
Time.
Section 6.8.
Indemnification
and Insurance.
(a) From
and
after the Effective Time, Parent and the Surviving Corporation shall, jointly
and severally (and Parent shall cause the Surviving Corporation to), indemnify,
defend and hold harmless, to the fullest extent authorized or permitted under
the PBCL or other applicable Law, each Person who is now, or has been at
any
time prior to the date of this Agreement or who becomes such prior to the
Effective Time, an officer, director or employee of the Company or any of
the
Company Subsidiaries (individually, an “Indemnified
Party,”
and
collectively, the “Indemnified
Parties”)
(in
such Person’s capacity as such and not as shareholders of the Company) against
any and all losses, claims, damages, costs, expenses (including attorneys’ fees
and disbursements), fines, liabilities and judgments and amounts that are
paid
in settlement with the approval of the indemnifying party (which approval
shall
not be unreasonably withheld, delayed or conditioned) (collectively,
“Indemnified
Liabilities”)
incurred
in connection with any pending, threatened or completed claim, action, suit,
proceeding or investigation, whether civil, criminal or investigative (each,
a
“Proceeding”)
based
in whole or in part on, or arising in whole or in part out of, or pertaining
in
whole or in part to (i) the fact that such Person is or was an officer,
director, employee, fiduciary or agent of the Company or any of the Company
Subsidiaries or (ii) matters occurring or existing at or prior to the Effective
Time (including acts or omissions occurring in connection with this Agreement
or
any of the Transactions), whether asserted or claimed prior to, at or after,
the
Effective Time. In the event any claim for Indemnified Liabilities is asserted
or made by an Indemnified Party, any determination required to be made with
respect to whether such Indemnified Party’s conduct complies with the standards
set forth under the PBCL or other applicable Law shall be made by independent
legal counsel selected by such Indemnified Party and reasonably acceptable
to
the Surviving Corporation. Parent shall, or shall cause the Surviving
Corporation to, promptly advance all reasonable out-of-pocket expenses of
each
Indemnified Party in connection with any Proceeding as such expenses (including
attorneys’ fees and disbursements) are incurred upon receipt from such
Indemnified Party of a request therefor (accompanied by invoices or other
relevant documentation), provided
(if and
to the extent required by the PBCL or other applicable Law) that such
Indemnified Party undertakes to repay such amount if it is ultimately determined
that such Indemnified Party is not entitled to be indemnified under the PBCL
or
other applicable Law with respect to such Proceeding. In the event that any
Proceeding is brought against any Indemnified Party (and in connection with
which indemnification could be sought by such Indemnified Party hereunder),
Parent and the Surviving Corporation shall each use commercially reasonable
efforts to assist in the vigorous defense of such matter; provided,
however,
that
neither Parent nor the Surviving Corporation shall settle, compromise or
consent
to the entry of any judgment in any such Proceeding without
the prior written consent of such Indemnified Party if
and to
the extent the terms of the proposed settlement, compromise or judgment involve
any non-monetary relief from such Indemnified Party.
50
(b) All
rights to indemnification and advancement of expenses existing in favor of,
and
all exculpations and limitations of the personal liability of, the directors,
officers, employees, fiduciaries and agents of any of the Company and the
Company Subsidiaries in the Company Articles or Company By-laws (or comparable
organizational documents of the Company Subsidiaries) as in effect as of
the
Effective Time with respect to matters occurring at or prior to the Effective
Time, including the Merger and the other Transactions, shall continue in
full
force and effect for a period of not less than six (6) years from the Effective
Time; provided,
however,
that
all rights to indemnification in respect of any claims asserted or made within
such period shall continue until the final disposition of such claim. The
Surviving Corporation shall not, and Parent shall cause the Surviving
Corporation not to, distribute or dispose of assets in a manner that would
render the Surviving Corporation or any successor unable to satisfy any of
its
obligations pursuant to this Section 6.8.
(c) For
a
period of six (6) years after the Effective Time, the Surviving Corporation
shall, and shall cause its Subsidiaries to, and Parent shall cause the Surviving
Corporation and its Subsidiaries to, maintain in effect the current directors’
and officers’ liability insurance policies maintained by any of the Company and
the Company Subsidiaries for the benefit of those Persons who are covered
by
such policies at the date of this Agreement or the Effective Time with respect
to claims arising in whole or in part from matters occurring or allegedly
occurring at or prior to the Effective Time (provided that the Surviving
Corporation and its Subsidiaries may substitute therefor policies of at least
the same coverage containing terms and conditions that are at least as
beneficial to the beneficiaries of the current policies and with reputable
carriers having a rating comparable to the Company’s current carrier);
provided,
however,
that
each of Parent and the Surviving Corporation and its Subsidiaries shall,
and
Parent shall cause the Surviving Corporation and its Subsidiaries to, first
use
commercially reasonable efforts to obtain a “tail” policy on substantially the
same terms and conditions for claims arising out of acts or conduct occurring
on
or prior to the Effective Time and effective for claims asserted during the
full
six (6)-year period referred to above (and, with respect to claims made during
such period, until final resolution thereof), and only if Parent and the
Surviving Corporation and its Subsidiaries are unable, after exerting their
commercially reasonable efforts, to obtain such a “tail” policy, then Parent or
the Surviving Corporation and its Subsidiaries will be required to obtain
such
coverage from such carriers in annual policies; provided,
further,
that (i)
if the existing policies expire or are terminated or canceled during such
six
(6)-year period, each of Parent and the Surviving Corporation and its
Subsidiaries shall, and Parent shall cause the Surviving Corporation and
its
Subsidiaries to, use commercially reasonable efforts to obtain substantially
similar policies with reputable carriers having a rating comparable to the
Company’s current carrier, (ii) Parent or the Surviving Corporation and its
Subsidiaries, as the case may be, shall not be required to spend as an annual
premium therefor an amount in excess of $650,000 and (iii) if, during such
six
(6)-year period, such insurance coverage cannot be obtained at all or can
be
obtained only for an amount in excess of $650,000, Parent or the Surviving
Corporation and its Subsidiaries, as the case may be, shall use commercially
reasonable efforts to cause to be obtained as much directors’ and officers’
liability insurance coverage as can be obtained for $650,000, on terms and
conditions substantially similar to the Company’s and the Company Subsidiaries’
existing directors’ and officers’ liability insurance.
51
(d) Notwithstanding
the foregoing, prior to the Effective Time the Company shall be permitted
to
purchase prepaid “tail” policies in favor of the individuals referred to in
Section 6.8(c) with respect to the matters described therein (provided that
the
annual premium therefor shall not exceed $650,000). If and to the extent
such
policies have been obtained prior to the Effective Time, Parent shall, and
shall
cause the Surviving Corporation to, maintain such policies in effect and
continue to honor the obligations of the Company thereunder.
(e) Parent
shall, and shall cause the Surviving Corporation to, honor and perform in
accordance with their terms all indemnification agreements in effect as of
the
date of this Agreement between the Company, on the one hand, and any director
or
officer of the Company, on the other hand.
(f) The
provisions of this Section 6.8: (i) are intended to be for the benefit of,
and
shall be enforceable by, each Indemnified Party, his or her heirs and his
or her
personal representatives, (ii) shall be binding on Parent and the Surviving
Corporation and their respective successors and assigns and (iii) are in
addition to, and not in substitution for, any other rights to indemnification
or
contribution that any such Person may have, whether pursuant to Law, Contract,
any Company Benefit Plan, the
Company Articles or Company By-Laws (or
comparable organizational documents of the Company Subsidiaries or the Surviving
Corporation),
or
otherwise.
(g) In
the
event that Parent or the Surviving Corporation or any of their respective
successors or assigns (i) consolidates with or merges into any other Person
and
shall not be the continuing or surviving corporation or entity in such
consolidation or merger, or (ii) transfers all or substantially all of its
properties and assets to any Person, then, and in each such case, proper
provision shall be made so that the successors and assigns of Parent or the
Surviving Corporation, as the case may be (and such Person’s ultimate parent
entity, if applicable), assume the obligations of Parent or the Surviving
Corporation, as the case may be, set forth in this Section 6.8.
Section 6.9.
NASDAQ
Approval.
Parent
shall use commercially reasonable efforts to cause the shares of Parent Stock
to
be issued pursuant to the Merger to be approved for listing on NASDAQ upon
official notice of issuance.
52
Section 6.10.
SEC
Filings.
During
the period from the date of this Agreement to the earlier of the Effective
Time
or the termination of this Agreement in accordance with Section 8.1, each
of the
Company and Parent shall file in a timely manner all reports, schedules,
forms
and registration statements with the SEC required to be filed by it pursuant
to
the Securities Act or the Exchange Act and the rules and regulations of the
SEC
promulgated thereunder, which filings (including all financial statements
included therein) at the time of such filing shall not contain any untrue
statement of a material fact or omit to state a material fact required to
be
stated therein or necessary in order to make the statements therein, in light
of
the circumstances under which they were made, not misleading.
Section 6.11.
Certain
Obligations of Merger Sub.
Prior
to the earlier of the Effective Time or the termination of this Agreement
in
accordance with Section 8.1:
(a) Merger
Sub shall not, and Parent shall cause Merger Sub not to, undertake any business
or activities other than in connection with this Agreement and engaging in
the
Merger and the other Transactions.
(b) Parent
shall take all action necessary to cause Merger Sub to perform its obligations
under this Agreement and to consummate the Merger and the other Transactions
on
the terms and conditions set forth in this Agreement.
ARTICLE
VII
CONDITIONS
Section 7.1.
Conditions
to Each Party’s Obligations to Effect the Merger.
The
obligation of each party to effect the Merger shall be subject to the
satisfaction at or prior to the Closing of each of the following conditions
(which may be waived in whole or in part by such party):
(a) Company
Shareholder Approval.
The
Company Shareholder Approval shall have been obtained.
(b) HSR
Act; Certain Regulatory Approvals.
(i) Any
applicable waiting period under the HSR Act relating to the Transactions
shall
have expired or been terminated, (ii) any approval required by the FCC under
the
Communications Act or the FCC Rules relating to the Transactions shall have
been
obtained and (iii) any approval required by the PPUC under the Pennsylvania
Public Utility Code or the PPUC Rules relating to the Transactions shall
have
been obtained.
(c) Statutes.
No
statute, rule or regulation shall have been enacted or promulgated by any
federal or state Governmental Entity of competent jurisdiction which prohibits
the consummation of the Merger.
(d) Injunctions.
There
shall be no judgment, order, writ, decree or injunction of any court of
competent jurisdiction in effect precluding, restraining, enjoining or
prohibiting consummation of the Merger.
(e) Parent
Registration Statement.
The
Parent Registration Statement shall have been declared effective by the SEC
under the Securities Act and no stop order suspending the effectiveness of
the
Parent Registration Statement shall be in effect and no proceeding for such
purpose shall be pending before or, to the Company’s Knowledge or Parent’s
Knowledge, threatened by the SEC.
53
(f) NASDAQ
Approval.
The
shares of Parent Stock to be issued pursuant to this Agreement shall have
been
approved for listing on NASDAQ.
Section 7.2.
Additional
Conditions to Obligation of Parent and Merger Sub to Effect the
Merger.
The
obligation of each of Parent and Merger Sub to effect the Merger shall be
further subject to the satisfaction, at or prior to the Closing, of each
of the
following conditions (which may be waived in whole or in part by Parent and
Merger Sub).
(a) Performance
of Obligations of the Company.
The
Company shall have performed in all material respects its agreements and
covenants contained in this Agreement to be performed by the Company at or
prior
to the Closing pursuant to the terms of this Agreement.
(b) Representations
and Warranties.
(i) The
representations and warranties of the Company set forth in (i) Sections 4.2(a),
4.3, 4.19, 4.20 and 4.21 and the first sentence of Section 4.6 shall be true
and
correct in all respects on the Closing Date as written, as if made on and
as of
the Closing Date (except for representations and warranties that expressly
speak
only as of a specific date or time other than the Closing Date, which need
only
be true and correct in all respects as of such other date or time), except
for
any immaterial inaccuracies, and (ii) all other representations and warranties
of the Company set forth in Article IV shall be true and correct in all material
respects on the Closing Date as if made on and as of the Closing Date (except
for representations and warranties that expressly speak only as of a specific
date or time other than the Closing Date, which need only be true and correct
in
all material respects as of such other date or time), except that
representations and warranties that contain qualifications with respect to
materiality or Company Material Adverse Effect shall be true and correct
in all
respects (giving effect to such qualification).
(c) Closing
Certificate.
Parent
shall have received a certificate signed by an authorized executive officer
of
the Company, dated the Closing Date, to the effect that the conditions set
forth
in Section 7.2(a) and Section 7.2(b) have been satisfied.
(d) Company
Required Statutory Approvals.
The
Company shall have obtained the Company Required Statutory Approvals (other
than
those referred to in Section 7.1(b)) required to be obtained by the Company
for
the consummation of the Transactions to be consummated by it, except for
those
the failure of which to obtain would not be reasonably expected to have a
Company Material Adverse Effect.
Section 7.3.
Additional
Conditions to Obligation of the Company to Effect the Merger.
The
obligation of the Company to effect the Merger shall be further subject to
the
satisfaction, at or prior to the Closing, of each of the following conditions
(which may be waived in whole or in part by the Company).
(a) Performance
of Obligations of Parent.
Parent
and Merger Sub each shall have performed in all material respects its agreements
and covenants contained in this Agreement to be performed by Parent and Merger
Sub, respectively, at or prior to the Closing pursuant to the terms of this
Agreement.
54
(b) Representations
and Warranties.
The
representations and warranties of Parent and Merger Sub set forth in (i)
Sections 5.2(a), 5.2(b), 5.3, 5.4(c), 5.12, 5.13, 5.14 and 5.15 and the first
sentence of Section 5.6 shall be true and correct in all respects on the
Closing
Date as written, as if made on and as of the Closing Date (except for
representations and warranties that expressly speak only as of a specific
date
or time other than the Closing Date, which need only be true and correct
in all
respects as of such other date or time), except for any immaterial inaccuracies,
and (ii) all other representations and warranties of Parent and Merger Sub
set
forth in Article V shall be true and correct in all material respects on
the
Closing Date as if made on and as of the Closing Date (except for
representations and warranties that expressly speak only as of a specific
date
or time other than the Closing Date, which need only be true and correct
in all
material respects as of such other date or time), except that representations
and warranties that contain qualifications with respect to materiality or
Parent
Material Adverse Effect shall be true and correct in all respects (giving
effect
to such qualification).
(c) Closing
Certificate.
The
Company shall have received a certificate signed by an authorized executive
officer of Parent, dated the Closing Date, to the effect that the conditions
set
forth in Section 7.3(a) and Section 7.3(b) have been
satisfied.
(d) Parent
Required Statutory Approvals.
Each of
Parent and Merger Sub shall have obtained the Parent Required Statutory
Approvals (other than those referred to in Section 7.1(b)) required to be
obtained by it for the consummation by Parent and Merger Sub of the Transactions
to be consummated by them, except for those the failure of which to obtain
would
not be reasonably expected to have a Parent Material Adverse
Effect.
(e) Accountants’
Comfort Letter.
The
Company shall
have
received from Parent’s independent registered public accounting firm a letter,
dated the Closing Date, in form and substance reasonably satisfactory to
the
Company, containing statements and information of the type ordinarily included
in accountants’ “comfort letters” with
respect to Parent’s financial information contained or incorporated by reference
in the Parent Registration Statement.
ARTICLE
VIII
TERMINATION
Section 8.1.
Termination.
Anything herein or elsewhere to the contrary notwithstanding, this Agreement
may
be terminated and the Merger may be abandoned at any time prior to the Effective
Time, by action taken or authorized by the Board of Directors of the terminating
party or parties, whether before or after the approval and adoption of this
Agreement by the shareholders of the Company:
(a) By
the
mutual written consent of Parent and the Company;
(b) By
either
the Company or Parent:
(i) if
any
Governmental Entity shall have issued an order, decree or ruling or taken
any
other action in each case permanently restraining, enjoining or otherwise
prohibiting any of the Transactions and such order, decree, ruling or other
action shall have become final and non-appealable; provided,
however,
that
the party seeking to terminate this Agreement pursuant to this clause (b)(i)
shall have used commercially reasonable efforts to challenge such order,
decree,
ruling or other action;
55
(ii) if
the
Effective Time shall not have occurred on or before April 1, 2008; provided, however, that
if
as of such date the conditions to the Closing set forth in Sections 7.1(b),
7.2(d) or 7.3(d) shall not have been fulfilled but shall be capable of being
fulfilled, and all other conditions to the Closing shall have been fulfilled
(other than those conditions that by their nature must be satisfied on the
Closing Date), then such date shall be extended ninety (90) days without
any
action by any of the parties hereto;
(iii) if
any
state or federal law, rule or regulation is adopted or issued which has the
effect of prohibiting the Merger; or
(iv) if
upon a
vote thereon taken at the Company Shareholders’ Meeting (including any
adjournment or postponement thereof) the Company Shareholder Approval shall
not
have been obtained.
(c) By
the
Company, if:
(i) (x)
Parent or Merger Sub has breached or failed to perform any of its covenants
or
other agreements contained in this Agreement such that the closing condition
set
forth in Section 7.3(a) would not be satisfied or (y) there exists a breach
of
any representation or warranty of the Parent or Merger Sub contained in this
Agreement such that the closing condition set forth in Section 7.3(b) would
not
be satisfied and, in the case of both clauses (x) and (y), such breach or
failure to perform (A) is not cured within thirty (30) days after the receipt
by
Parent of written notice thereof specifically referencing this Section 8.1(c)(i)
or (B) is incapable of being cured by the date set forth in Section 8.1(b)(ii);
(ii) the
Board
of Directors of Parent withdraws or modifies, in a manner adverse to the
Company, its approval of this Agreement, the Merger or the Parent Stock
Issuance; or
(iii) the
Board
of Directors of the Company approves a Superior Proposal; provided
that the
provisions of Sections 6.3 have been complied with by the Company (it being
agreed that for purposes of this Section 8.1(c) only, the Company shall be
deemed to be in compliance with Section 6.3 if a breach by the Company is
immaterial and unintentional).
(d) By
Parent: if:
(i) (x)
the
Company has breached or failed to perform any of its covenants or other
agreements contained in this Agreement such that the closing condition set
forth
in Section 7.2(a) would not be satisfied or (y) there exists a breach of
any
representation or warranty of the Company contained in this Agreement such
that
the closing condition set forth in Section 7.2(b) would not be satisfied
and, in
the case of both clauses (x) and (y), such breach or failure to perform (A)
is
not cured within thirty (30) days after the receipt by the Company of written
notice thereof specifically referencing this Section 8.1(d)(i) or (B) is
incapable of being cured by the date set forth in Section 8.1(b)(ii); or
56
(ii) the
Board
of Directors of the Company (x) withdraws or modifies, in a manner adverse
to Parent, its approval of this Agreement or the Merger or its recommendation
to
the Company’s shareholders referred to in Section 2.6(b)(i) (it being
understood and agreed that any “stop-look-and-listen” communications to the
Company’s shareholders of the nature contemplated by Rule 14d-9 of the Exchange
Act Rules shall not be deemed to constitute a withdrawal or modification
of such
recommendation), (y) recommends an Alternative Proposal or Superior Proposal
to
the shareholders of the Company or (z) enters into any letter of intent,
agreement in principle, merger agreement, acquisition agreement or similar
agreement (other than an Acceptable Confidentiality Agreement in accordance
with
Section 6.3) with respect to any Alternative Proposal or Superior
Proposal.
Section 8.2.
Effect
of Termination.
In the
event of the termination of this Agreement as provided in Section 8.1,
written notice thereof shall forthwith be given to the other party or parties
specifying the provision of this Agreement pursuant to which such termination
is
made, and this Agreement (other than this Section 8.2, Section 8.3 (if
applicable), and Article IX (as applicable), which shall survive any termination
of this Agreement) shall forthwith become null and void, and there shall
be no
liability or obligation on the part of Parent, Merger Sub or the Company
under
this Agreement; provided,
however,
that
none of the parties hereto shall be relieved or released from liability for
any
willful material breach of any of its covenants contained in this
Agreement.
Section 8.3.
Company
Termination Fee; Reimbursement of Expenses.
(a) If
(A)
the Company terminates this Agreement pursuant to Section 8.1(c)(iii), (B)
Parent terminates this Agreement pursuant to Section 8.1(d)(ii)(x) (unless
clause (y) of the proviso to Section 2.6(b)(i) applies), 8.1(d)(ii)(y) or
8.1(d)(ii)(z), or (C) clause (y) of the proviso to Section 2.6(b)(i) applies
and, thereafter, the Company Shareholder Approval is not obtained at the
Company
Shareholders’ Meeting held pursuant to Section 2.6(b)(ii) and this Agreement is
terminated in accordance with Section 8.1, then the Company shall pay to
Parent
the amount of $11,250,000 in cash (the “Company
Termination Fee”).
(b) If
the
Company or Parent terminates this Agreement and the Company is obligated
to pay
to Parent the Company Termination Fee, the Company shall also reimburse Parent
for its actual and reasonable documented out-of-pocket expenses incurred
in
connection with this Agreement and the other Transactions on or prior to
the
termination of this Agreement, up to a maximum amount of $1,500,000 (the
“Company
Reimbursement Amount”).
(c) With
respect to Section 8.3(a), the Company shall pay the Company Termination
Fee to
Parent, by wire transfer of same day funds, at or prior to the time of
termination, in the case of such termination by the Company, or as promptly
as
reasonably practicable (and in any event within two (2) Business Days), in
the
case of such termination by Parent. With respect to Section 8.3(b), the Company
shall pay the Company Reimbursement Amount to Parent, by wire transfer of
same
day funds, as promptly as reasonably practicable (and in any event within
two
(2) Business Days) after receipt of an invoice therefor from Parent. Except
to
the extent required by applicable Law, the Company shall not withhold any
withholding taxes from any payment made pursuant to this Section 8.3.
Notwithstanding
anything in this Agreement to the contrary, Parent and Merger Sub agree that
payment of the Company Termination Fee and the Company Reimbursement Amount,
if
such payments are payable and actually paid, shall be the sole and exclusive
remedy of Parent and Merger Sub upon the termination of this Agreement in
the
circumstances described in Sections 8.1(c) and 8.1(d). Under no circumstances
shall the Company Termination Fee or the Company Reimbursement Amount be
payable
more than once pursuant to this Section 8.3.
57
(d) Notwithstanding
anything to the contrary set forth in this Agreement, if the Company fails
promptly to pay Parent any amounts due under this Section 8.3, the Company shall
pay the costs and expenses (including reasonable 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 or obligation at the publicly announced prime rate of Wachovia
Bank,
National Association in effect from time to time from the date such fee or
obligation was required to be paid.
ARTICLE
IX
MISCELLANEOUS
Section 9.1.
Amendment
and Modification.
Subject
to applicable Law, this Agreement may be amended, modified or supplemented
in
any and all respects, whether before or after any vote of the shareholders
of
the Company contemplated hereby, by written agreement of the parties hereto
by
action taken or authorized by their respective Boards of Directors at any
time
prior to the Effective Time; provided,
however,
that
after the approval of this Agreement by the shareholders of the Company,
no
amendment, modification or supplement shall be made that changes the
consideration payable in the Merger or adversely affects the rights of the
Company’s shareholders under this Agreement without the prior approval of such
shareholders; and, provided,
further,
that
after the Effective Time no covenant or agreement of the parties hereto that
contemplates performance after the Effective Time may be amended, modified,
waived or supplemented.
Section 9.2.
Extension;
Waiver.
At any
time prior to the Effective Time, the parties may (i) extend the time for
the
performance of any of the obligations or other acts of any party, (ii) waive
any
inaccuracies in the representations and warranties contained in this Agreement
or in any document delivered pursuant to this Agreement and (iii) waive
compliance with any of the agreements or conditions contained in this Agreement.
Any agreement on the part of a party to any such extension or waiver shall
be
valid only if set forth in an instrument in writing signed on behalf of such
party. The failure of any party to this Agreement to assert any of its rights
under this Agreement or otherwise shall not constitute a waiver of such rights
nor shall any single or partial exercise of any such rights preclude any
other
or further exercise thereof.
Section 9.3.
Nonsurvival
of Representations and Warranties.
None of
the representations and warranties contained in this Agreement or in any
schedule, instrument or other document delivered pursuant to this Agreement
shall survive the Effective Time. This Section 9.3 shall not limit any
covenant or agreement of the parties hereto that contemplates performance
after
the Effective Time.
58
Section 9.4.
Notices.
Any
and
all notices or other communications or deliveries required or permitted to
be
provided hereunder shall be in writing and shall be deemed given and effective
on the earliest of (i) the date of transmission, if such notice or
communication is delivered via facsimile, at the facsimile telephone number
specified in this Section 9.4, prior to 5:00 p.m., New York City time, on
a
Business Day, (ii) the Business Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile telephone
number specified in this Agreement (x) at or after 5:00 p.m., New York City
time, on a Business Day or (y) on a day that this not a Business Day,
(iii) when received, if sent by nationally recognized overnight courier
service, or (iv) upon actual receipt by the party to whom such notice is
required or permitted to be given. The address for such notices and
communications (unless changed by the applicable party by like notice) shall
be
as follows:
(a) if
to the
Company, to:
North
Pittsburgh Systems, Inc.
0000
Xxxxxxxx Xxxx
Xxxxxxxx,
XX 00000
Attention:
President and Chief Executive Officer
Telephone
No.: (000) 000-0000
Facsimile
No: (000)-000-0000
with
a
copy to:
Thomas,
Thomas, Xxxxxxxxx & Xxxxxx
000
Xxxxxx Xxxxxx
Xxxxxxxxxx,
XX 00000
Attention:
Xxxxxxx X. Xxxxxx, Xx., Esq.
Telephone
No.: (000) 000-0000
Facsimile
No.: (000) 000-0000
and
a
copy to:
Xxxxxx
Xxxxxxx & Xxxx LLP
Xxx
Xxxxxxx Xxxx Xxxxx
Xxx
Xxxx,
XX 00000-0000
Attention:
Xxxxxxx X. Xxxxxxxxx, Esq.
Telephone
No.: (000) 000-0000
Facsimile
No.: (000) 000-0000
(b) if
to
Parent or Merger Sub, to:
000
Xxxxx
00xx
Xxxxxx
Xxxxxxx,
Xxxxxxxx 00000
Attention:
Xxxxxx X. Xxxxxx
Telephone
No.: (000) 000-0000
Facsimile
No: (000) 000-0000
59
with
a
copy to:
Xxxxxx
Xxxxxx LLP
0000
Xxxxx Xxxxx
Xxxxxxx,
XX 00000-0000
Attention:
Xxxxx X. Xxxxx, Esq.
Telephone
No.: (000) 000-0000
Facsimile
No: (000) 000-0000
Section 9.5.
Counterparts.
This
Agreement may be executed in two (2) or more identical counterparts, all
of
which shall be considered one and the same agreement. In the event that any
signature to this Agreement or any amendment hereto is delivered by facsimile
transmission or by e-mail delivery of a “.pdf” format data file, such signature
shall create a valid and binding obligation of the party executing (or on
whose
behalf such signature is executed) with the same force and effect as if such
facsimile or “.pdf” signature page were an original thereof. No party hereto
shall raise the use of a facsimile machine or e-mail delivery of a “.pdf” format
data file to deliver a signature to this Agreement or any amendment hereto
or
the fact that such signature was transmitted or communicated through the
use of
a facsimile machine or e-mail delivery of a “.pdf” format data file as a defense
to the formation or enforceability of a contract and each party hereto forever
waives any such defense.
Section 9.6.
Entire
Agreement; Third Party Beneficiaries.
This
Agreement (including the documents and the instruments referred to herein)
and
the Confidentiality Agreement: (i) constitute the entire agreement and supersede
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter of this Agreement, and (ii) are
not
intended to confer upon any Person other than the parties hereto any rights
or
remedies whatsoever, except (x) with respect to Article III and
Sections
6.7
and
6.8 (which shall inure to, and may be enforced by, the Persons benefiting
therefrom as intended third party beneficiaries thereof) and
(y)
for the right of the Company, acting on behalf of its shareholders, to pursue
any remedies against Parent or Merger Sub on behalf of the Company’s
shareholders by reason of the proviso set forth in Section 8.2. In any
successful action, suit or proceeding to enforce any provision of this Agreement
referred to in clause (x) of the preceding sentence, and without limiting
any
other remedies, each third party beneficiary commencing or participating
in such
action, suit or proceeding shall be entitled to recover from Parent all costs
and reasonable attorneys’ fees incurred by it in connection
therewith.
Section 9.7.
Severability.
If any
term, provision, covenant or restriction of this Agreement is held by a court
of
competent jurisdiction or other authority to be invalid, void, unenforceable
or
against its regulatory policy, the remainder of the terms, provisions, covenants
and restrictions of this Agreement shall nevertheless remain in full force
and
effect and shall in no way be affected, impaired or invalidated thereby.
Upon
such determination that any term, provision, covenant or restriction is invalid,
illegal, void, unenforceable or against regulatory policy, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties hereto as closely as possible in an acceptable
manner in order that the Transactions are consummated as originally contemplated
to the greatest extent possible.
60
Section 9.8.
Governing
Law.
This
Agreement shall be governed by and construed in accordance with the Laws
of the
Commonwealth of Pennsylvania without giving effect to the principles of
conflicts of law thereof or of any other jurisdiction.
Section 9.9.
Binding
Effect; Assignment.
This
Agreement shall be binding upon, inure to the benefit of and be enforceable
by
each of the parties hereto upon such party’s execution and delivery hereof, and
its successors and (subject to the following sentence) permitted assigns.
Neither this Agreement nor any of the rights, interests or obligations hereunder
may be assigned by any of the parties hereto, in whole or in part (whether
by
operation of law or otherwise), without the prior written consent of the
other
parties hereto and the written undertaking of the assignee to be bound by
the
terms of this Agreement, and any attempt to make any such assignment without
such consent shall be null and void ab initio.
Section 9.10.
Schedules.
The
fact that any information is disclosed in the Company Disclosure Schedule
or the
Parent Disclosure Schedule, as the case may be, shall not be construed to
mean
that such information is required to be disclosed by this Agreement. Without
limiting the foregoing, the information set forth in the Company Disclosure
Schedule, and the dollar thresholds set forth in this Agreement, shall not
be
used as a basis for interpreting the terms “material” or “Company Material
Adverse Effect” or other similar terms in this Agreement.
Section 9.11.
Specific
Performance.
The
parties hereto agree that irreparable damage would occur in the event that
any
of the provisions of this Agreement were not performed in accordance with
their
specific terms or were otherwise breached. It is accordingly agreed that
each of
the parties hereto shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement in addition to any other remedy to which such party is
entitled at law or in equity. Each of the parties hereto agrees that it shall
not oppose the granting of such relief and hereby irrevocably waives any
requirement for the security or posting of any bond in connection with such
relief.
Section 9.12.
Submission
to Jurisdiction; Waivers.
(a) Each
of
the Company, Parent and Merger Sub irrevocably agrees that any legal action,
suit or proceeding arising out of or relating to this Agreement or any of
the
Transactions or for recognition and enforcement of any judgment in respect
hereof or thereof brought by any party hereto or its successors or permitted
assigns shall be brought and determined in the Court of Common Pleas of
Allegheny County in the Commonwealth of Pennsylvania or in the United States
District Court in the Western District of Pennsylvania, and each of the Company,
Parent and Merger Sub hereby irrevocably submits with regard to any such
action,
suit or proceeding for itself and in respect to its property, generally and
unconditionally, to the jurisdiction of the aforesaid courts. Each of the
Company, Parent and Merger Sub hereby irrevocably waives, and agrees not
to
assert, by way of motion, as a defense or counterclaim or otherwise, in any
such
action, suit or proceeding, (i) any claim that it is not personally subject
to
the jurisdiction of the above-named courts for any reason other than the
failure
lawfully to serve process, (ii) that it or its property is exempt or immune
from
jurisdiction of either such court or from any legal process commenced in
such
courts (whether through service of notice, attachment prior to judgment,
attachment in aid of execution of judgment, execution of judgment or otherwise),
(iii) to the fullest extent permitted by applicable Law, that (x) such action,
suit or proceeding in either such court is brought in an inconvenient forum,
(y)
the venue of such action, suit or proceeding is improper and (iv) this
Agreement, the Transactions or the subject matter hereof or thereof, may
not be
enforced in or by such courts.
61
(b) EACH
PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER
THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND,
THEREFORE, EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
RIGHT IT
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION, SUIT OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS.
EACH
PARTY HERETO CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE OF ANY
OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT
SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF ANY SUCH LEGAL ACTION,
SUIT
OR PROCEEDING, (II) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS
WAIVER,
(III) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (IV) SUCH PARTY HAS
BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS
AND CERTIFICATIONS IN THIS SECTION 9.12(B).
Section
9.13. Expenses.
Except
as expressly set forth in this Agreement, all fees and expenses incurred
by the
parties hereto shall be borne solely and entirely by the party that has incurred
such fees and expenses.
Section 9.14.
Construction
of Agreement.
(a) The
terms
and provisions of this Agreement represent the results of negotiations among
the
parties hereto, each of which has been represented by counsel of its own
choosing, and none of which has acted under duress or compulsion, whether
legal,
economic or otherwise. Accordingly, the terms and provisions of this Agreement
shall be interpreted and construed in accordance with their usual and customary
meanings, and each of the parties hereto hereby waives the application in
connection with the interpretation and construction of this Agreement of
any Law
to the effect that ambiguous or conflicting terms or provisions contained
in
this Agreement shall be interpreted or construed against the party whose
attorney prepared the executed draft or any earlier draft of this
Agreement.
(b) All
references in this Agreement to Sections, Articles, Exhibits and Schedules
without further specification are to Sections and Articles of, and Exhibits
and
Schedules to, this Agreement.
(c) The
Table
of Contents and the captions in this Agreement are for convenience only and
shall not in any way affect the meaning, interpretation or construction of
any
provisions of this Agreement.
(d) Unless
the context otherwise requires, “or” is not exclusive.
(e) Unless
the context otherwise requires, “including” means “including but not limited
to.”
62
(f) The
definitions contained in this Agreement are applicable to the singular as
well
as the plural forms of such terms and to the masculine as well as the feminine
and neuter genders of such term.
Section 9.15.
Merger
Sub.
On the
date hereof, the Company and Parent are executing and delivering this Agreement.
Promptly after the date hereof, Parent shall cause Merger Sub to be incorporated
under the Laws of the Commonwealth of Pennsylvania and, promptly thereafter,
Parent shall deliver to the Company a counterpart of this Agreement duly
executed by Merger Sub pursuant to Section 9.5. Notwithstanding anything
in this
Agreement to the contrary, from and after the execution of this Agreement
by
Merger Sub, Merger Sub shall be bound by this Agreement as a party hereto
and,
effective upon its execution hereof, Merger Sub shall be deemed to make all
of
its representations and warranties set forth in Article V.
[Signatures
on the following page.]
63
IN
WITNESS WHEREOF, the Company, Parent and Merger Sub have caused this Agreement
to be signed by their respective officers thereunto duly authorized, in the
case
of the Company and Parent as of the date first written above and, in the
case of
Merger Sub, as of the date set forth under its name below.
| NORTH PITTSBURGH SYSTEMS, INC. | ||
| |
|
|
| By | /s/ Xxxxx X. Xxxxx | |
|
Name: Xxxxx X. Xxxxx |
||
| Title: President and Chief Executive Officer | ||
| CONSOLIDATED COMMUNICATIONS HOLDINGS, INC. | ||
| |
|
|
| By | /s/ Xxxxxx X. Xxxxxx | |
|
Name: Xxxxxx X. Xxxxxx |
||
| Title: President and Chief Executive Officer | ||
| FORT PITT ACQUISITION SUB INC. | ||
| |
|
|
| By | ||
|
Name: Xxxxxx X. Xxxxxx |
||
| Title: President | ||
| Date: July __, 2007 | ||
