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Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
XXXX.XXX, INC.
ML ACQUISITION CORP.
SWIFT TELECOMMUNICATIONS, INC.
AND
THE SOLE XXXXXXXXXXX OF
SWIFT TELECOMMUNICATIONS, INC.
DATED AS OF
JANUARY 31, 2001
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TABLE OF CONTENTS
ARTICLE I THE MERGER............................................................................................ 1
SECTION 1.1 THE MERGER.................................................................................. 1
SECTION 1.2 EFFECTIVE TIME.............................................................................. 1
SECTION 1.3 EFFECT OF THE MERGER........................................................................ 2
SECTION 1.4 DIRECTORS AND OFFICERS...................................................................... 2
SECTION 1.5 ADDITIONAL ACTIONS.......................................................................... 2
ARTICLE II CONSIDERATION; CONVERSION OF SHARES.................................................................. 3
SECTION 2.1 MERGER CONSIDERATION........................................................................ 3
SECTION 2.2 CONVERSION OF SHARES........................................................................ 5
SECTION 2.3 EXCHANGE OF CERTIFICATES.................................................................... 5
SECTION 2.4 NO FRACTIONAL SECURITIES.................................................................... 5
SECTION 2.5 STOCK TRANSFER BOOKS........................................................................ 6
SECTION 2.6 NO FURTHER OWNERSHIP RIGHTS IN COMPANY STOCK................................................ 6
ARTICLE III REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY.............................................. 6
SECTION 3.1 CORPORATE ORGANIZATION...................................................................... 6
SECTION 3.2 AUTHORIZATION............................................................................... 7
SECTION 3.3 CONSENTS AND APPROVALS; NO VIOLATIONS....................................................... 7
SECTION 3.4 CAPITALIZATION; SUBSIDIARIES................................................................ 7
SECTION 3.5 FINANCIAL STATEMENTS........................................................................ 8
SECTION 3.6 ABSENCE OF UNDISCLOSED LIABILITIES.......................................................... 9
SECTION 3.7 ABSENCE OF CERTAIN CHANGES OR EVENTS........................................................ 9
SECTION 3.8 LEGAL PROCEEDINGS, ETC...................................................................... 9
SECTION 3.9 TAXES....................................................................................... 10
SECTION 3.10 TITLE TO PROPERTIES AND RELATED MATTERS..................................................... 10
SECTION 3.11 INTELLECTUAL PROPERTY; PROPRIETARY RIGHTS; EMPLOYEE RESTRICTIONS............................ 12
SECTION 3.12 CONTRACTS................................................................................... 13
SECTION 3.13 EMPLOYEES; EMPLOYEE BENEFITS................................................................ 14
SECTION 3.14 COMPLIANCE WITH APPLICABLE LAW.............................................................. 15
SECTION 3.15 ABILITY TO CONDUCT THE BUSINESS............................................................. 15
SECTION 3.16 MAJOR CUSTOMERS............................................................................. 15
SECTION 3.17 ACCOUNTS RECEIVABLE......................................................................... 16
SECTION 3.18 INSURANCE................................................................................... 16
SECTION 3.19 BANK ACCOUNTS; POWERS OF ATTORNEY........................................................... 16
SECTION 3.20 MINUTE BOOKS, ETC........................................................................... 16
SECTION 3.21 RELATED PERSON INDEBTEDNESS AND CONTRACTS................................................... 16
SECTION 3.22 AT&T EASYLINK AGREEMENT; XTREME AGREEMENTS; AND COMTEXT AGREEMENT........................... 17
SECTION 3.23 BROKERS; PAYMENTS........................................................................... 17
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SECTION 3.24 COMPANY ACTION.............................................................................. 18
SECTION 3.25 DISCLOSURE.................................................................................. 18
ARTICLE IV REPRESENTATIONS AND WARRANTIES RELATING TO THE SHAREHOLDERS.......................................... 18
SECTION 4.1 AUTHORIZATION; ETC.......................................................................... 18
SECTION 4.2 PARENT COMMON STOCK......................................................................... 19
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE PARENT AND MERGER SUB........................................... 21
SECTION 5.1 CORPORATE ORGANIZATION...................................................................... 21
SECTION 5.2 AUTHORIZATION............................................................................... 21
SECTION 5.3 CONSENTS AND APPROVALS; NO VIOLATIONS....................................................... 22
SECTION 5.4 CAPITALIZATION.............................................................................. 22
SECTION 5.5 SEC REPORTS................................................................................. 23
SECTION 5.6 BROKERS; PAYMENTS........................................................................... 23
SECTION 5.7 DISCLOSURE.................................................................................. 23
SECTION 5.8 VALIDITY OF SHARES.......................................................................... 23
ARTICLE VI ADDITIONAL AGREEMENTS................................................................................ 24
SECTION 6.1 TRANSFER OF SHARES.......................................................................... 24
SECTION 6.2 REASONABLE EFFORTS; ETC..................................................................... 24
SECTION 6.3 FEES AND EXPENSES........................................................................... 24
SECTION 6.4 NASDAQ NATIONAL MARKET LISTING.............................................................. 24
SECTION 6.5 TAX COVENANTS............................................................................... 24
SECTION 6.6 INDEMNIFICATION............................................................................. 25
SECTION 6.7 EXCHANGE ACT REPORTS........................................................................ 26
SECTION 6.8 LEGENDS..................................................................................... 26
SECTION 6.9 EASYLINK AGREEMENTS; XTREME AGREEMENTS; AND COMTEXT AGREEMENTS.............................. 26
SECTION 6.10 REGISTRATION RIGHTS......................................................................... 26
SECTION 6.11 FUNDING OF CLOSING CASH PAYMENT UNDER THE EASYLINK AGREEMENTS; GUARANTEE.................... 26
SECTION 6.12 UNDERTAKING BY THE PARENT................................................................... 27
ARTICLE VII COVENANTS OF SHAREHOLDERS........................................................................... 27
SECTION 7.1 NONCOMPETITION.............................................................................. 27
ARTICLE VIII CONDITIONS TO THE OBLIGATIONS OF THE PARENT AND MERGER SUB......................................... 28
SECTION 8.1 PERFORMANCE................................................................................. 29
SECTION 8.2 ABSENCE OF LITIGATION....................................................................... 29
SECTION 8.3 ADDITIONAL AGREEMENTS....................................................................... 29
SECTION 8.4 DELIVERY OF CERTIFICATES FOR CANCELLATION................................................... 29
SECTION 8.5 CERTIFICATES OF MERGER...................................................................... 29
SECTION 8.6 NASDAQ WAIVER OR RECEIPT OF SHAREHOLDER APPROVAL............................................ 29
SECTION 8.7 SUPPORTING DOCUMENTS........................................................................ 30
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SECTION 8.8 EASYLINK CLOSING............................................................................ 30
ARTICLE IX CONDITIONS TO THE OBLIGATIONS OF THE COMPANY AND THE SHAREHOLDER..................................... 30
SECTION 9.1 PERFORMANCE................................................................................. 30
SECTION 9.2 ABSENCE OF LITIGATION....................................................................... 30
SECTION 9.3 ADDITIONAL AGREEMENTS....................................................................... 30
SECTION 9.4 CERTIFICATES OF MERGER...................................................................... 31
SECTION 9.5 CASH AND SHARES OF PARENT COMMON STOCK...................................................... 31
SECTION 9.6 NASDAQ WAIVER OR RECEIPT OF SHAREHOLDER APPROVAL............................................ 31
SECTION 9.7 SUPPORTING DOCUMENTS........................................................................ 31
SECTION 9.8 EASYLINK CLOSING............................................................................ 31
ARTICLE X TERMINATION........................................................................................... 32
SECTION 10.1 TERMINATION................................................................................. 32
SECTION 10.2 EFFECT OF TERMINATION....................................................................... 32
ARTICLE XI INDEMNIFICATION; SURVIVAL OF REPRESENTATIONS AND WARRANTIES.......................................... 32
SECTION 11.1 INDEMNITY OBLIGATIONS....................................................................... 32
SECTION 11.2 NOTIFICATION OF CLAIMS...................................................................... 34
SECTION 11.3 DURATION.................................................................................... 34
SECTION 11.4 NO CONTRIBUTION............................................................................. 35
ARTICLE XII MISCELLANEOUS PROVISIONS............................................................................ 35
SECTION 12.1 AMENDMENT; WAIVER........................................................................... 35
SECTION 12.2 WAIVER OF COMPLIANCE........................................................................ 35
SECTION 12.3 NOTICES..................................................................................... 35
SECTION 12.4 ASSIGNMENT.................................................................................. 36
SECTION 12.5 NO THIRD PARTY BENEFICIARIES................................................................ 36
SECTION 12.6 PUBLIC ANNOUNCEMENTS........................................................................ 36
SECTION 12.7 COUNTERPARTS................................................................................ 37
SECTION 12.8 HEADINGS.................................................................................... 37
SECTION 12.9 ENTIRE AGREEMENT............................................................................ 37
SECTION 12.10 GOVERNING LAW............................................................................... 37
EXHIBIT
Exhibit A Delaware Certificate of Merger
Exhibit B New York Certificate of Merger
Exhibit C Promissory Note
Exhibit D Disclosure Schedule
Exhibit E FIRPTA Certificate
Exhibit F Easylink Note
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of January 31, 2001 by and among
Xxxx.xxx, Inc., a corporation organized under the laws of the State of Delaware
(the "Parent"), ML Acquisition Corp., a corporation organized under the laws of
the State of Delaware and a wholly-owned subsidiary of the Parent ("Merger
Sub"), Swift Telecommunications, Inc., a corporation organized under the laws of
the State of New York (the "Company"), and the sole shareholder of the Company
(the "Shareholder") identified on the signature pages hereto.
WHEREAS, the respective Boards of Directors of the Parent, Merger Sub
and the Company have approved, and the respective stockholders of Merger Sub and
the Company have approved, the merger of the Company with and into Merger Sub
(the "Merger"), pursuant to which Merger Sub will be the surviving corporation
and the stockholders of the Company immediately prior to such merger will be
entitled to receive the consideration provided for in this Agreement, all upon
the terms and subject to the conditions set forth herein;
WHEREAS, it is intended that the Merger qualify as a tax-free
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements set forth herein, and intending to be
legally bound hereby, the parties hereby agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. (a) At the Effective Time (as defined in
Section 1.2), and subject to and upon the terms and conditions of this
Agreement, the New York State Business Corporation Law (the "BCL") and the
Delaware General Corporation Law (the "GCL"), the Company shall be merged with
and into Merger Sub, the separate corporate existence of the Company shall
cease, and Merger Sub shall continue as the surviving corporation. Merger Sub as
the surviving corporation after the Merger is hereinafter sometimes referred to
as the "Surviving Corporation."
(b) Closing. Unless this Agreement has been terminated and the
transactions herein contemplated have been abandoned pursuant to Article X and
subject to the satisfaction or waiver of the conditions set forth in Articles
VIII and IX, the consummation of the Merger (the "Closing") will take place as
promptly as practicable (and in any event within two (2) business days) after
satisfaction or waiver of the conditions set forth in Articles VIII and IX, at
the offices of Parent, 00 Xxxxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx, unless
another date, time or place is agreed to in writing by the Company and the
Parent. The date of such Closing is referred to herein as the "Closing Date."
Section 1.2 Effective Time. As promptly as practicable after the
satisfaction or waiver of the conditions set forth in Articles VIII and IX, the
parties hereto shall cause the
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Merger to be consummated by filing certificates of merger as contemplated by the
GCL in the form of Exhibit A hereto (the "Delaware Certificate of Merger") and
as contemplated by the BCL in the form of Exhibit B hereto (the "New York
Certificate of Merger", and together with the Delaware Certificate of Merger,
the "Certificates of Merger"), together with any required related certificates,
with the Secretaries of State of the States of Delaware and New York,
respectively, in such form as required by, and executed in accordance with the
relevant provisions of, the GCL and the BCL (the time that the Merger is
effective pursuant to the GCL and the BCL being referred to herein as the
"Effective Time").
Section 1.3 Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in this Agreement, the Certificates of Merger
and the applicable provisions of the GCL and the BCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time all the
property, rights, privileges, powers and franchises of the Company and Merger
Sub shall vest in the Surviving Corporation, and all debts, liabilities and
duties of the Company and Merger Sub shall become the debts, liabilities and
duties of the Surviving Corporation.
(a) Certificate of Incorporation. Unless otherwise determined
by the Parent prior to the Effective Time, at the Effective Time, the
Certificate of Incorporation of Merger Sub, as in effect immediately prior to
the Effective Time, shall be the Certificate of Incorporation of the Surviving
Corporation until thereafter amended in accordance with the GCL and such
Certificate of Incorporation.
(b) By-Laws. Unless otherwise determined by the Parent prior
to the Effective Time, the By-laws of Merger Sub, as in effect immediately prior
to the Effective Time, shall be the By-laws of the Surviving Corporation.
Section 1.4 Directors and Officers. The directors of Merger Sub
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-laws of the Surviving Corporation, and the officers of
Merger Sub immediately prior to the Effective Time shall be the officers of the
Surviving Corporation, in each case until their respective successors are duly
elected or appointed and qualified.
Section 1.5 Additional Actions. If, at any time after the Effective
Time, the Surviving Corporation considers or is advised that any deeds, bills of
sale, assignments, assurances or any other acts or things are necessary or
desirable to vest, perfect or confirm, of record or otherwise, in the Surviving
Corporation, its right, title or interest in or to any of the rights, properties
or assets of Merger Sub or the Company acquired or to be acquired by reason of,
or as a result of, the Merger, or otherwise to carry out the purposes of this
Agreement, the Surviving Corporation and its proper officers and directors shall
be authorized to execute and deliver, in the name and on behalf of Merger Sub or
the Company, all such deeds, bills of sale, assignments and assurances and to
do, in the name and on behalf of Merger Sub or the Company, all such other acts
and things necessary or desirable to vest, perfect or confirm any and all right,
title or interest in, to or under such rights, properties or assets in the
Surviving Corporation or otherwise to carry out the purposes of this Agreement.
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ARTICLE II
CONSIDERATION; CONVERSION OF SHARES
Section 2.1 Merger Consideration. (a) Total Merger Consideration. The
consideration payable in the Merger to holders of shares of the Company's common
stock, no par value ("Company Common Stock"), shall consist, subject to
reduction as provided below, in the aggregate of (i) EIGHT HUNDRED THIRTY FIVE
THOUSAND TWO HUNDRED NINETY FOUR UNITED STATES DOLLARS (US$835,294) (the "Cash
Consideration"), (ii) a promissory note in the aggregate principal amount of
NINE MILLION ONE HUNDRED EIGHTY EIGHT THOUSAND TWO HUNDRED THIRTY FIVE UNITED
STATES DOLLARS (US$9,188,235) in the form Exhibit C hereto (, the "Note"), (iii)
EIGHTEEN MILLION NINE HUNDRED SIXTY ONE THOUSAND ONE HUNDRED SEVENTY SIX
(18,961,176) shares of the Class A Common Stock, $.01 par value per share
("Parent Common Stock"), of the Parent (such number of shares to be
appropriately adjusted in the event of any stock split, stock dividend, stock
combination or recapitalization or other event having similar effect), or
shares, property or other consideration into which such shares shall have been
converted in the event of any merger, consolidation, reorganization or other
event in which the Parent Common Stock is converted into the right to receive
other shares, property or consideration (the "Closing Share Payment") and (iv)
the Contingent Payment (as defined in Section 2.1(c) below). The Note and the
Closing Share Payment shall be subject to reduction as provided in paragraph (b)
of this Section 2.1. The Cash, the Note, the Closing Share Payment and the
Contingent Payment, as any of the foregoing may be reduced, shall be referred to
as the "Merger Consideration."
(b) Reduction in Merger Consideration.
If on or before September 30, 2001 Xtreme Global Communications (S) Pte
Ltd or Xtreme Global Communications SDN BHD (collectively, "Xtreme") do not
complete the acquisitions of all of the Singapore and Malaysian assets to be
acquired from Xpedite Systems, Inc. ("Xpedite") by Xtreme, including receipt of
all governmental licenses necessary to offer the services offered by Xtreme (the
"Xtreme Assets"), the cash portion of the Purchase Price payable at the Closing,
the Closing Share Payment and the Note shall be subject to reduction as follows:
(A) the cash portion of the Purchase Price shall be SIX
HUNDRED NINETY FOUR THOUSAND ONE HUNDRED SEVENTEEN
UNITED STATES DOLLARS ($694,117);
(B) the Note shall be SEVEN MILLION SIX HUNDRED THIRTY
FIVE THOUSAND TWO HUNDRED NINETY FOUR UNITED STATES
DOLLARS ($7,635,294); and
(C) the Closing Share Payment shall be FIFTEEN MILLION
SEVEN HUNDRED FIFTY SIX THOUSAND SEVEN HUNDRED FIVE
(15,756,470) shares of Parent Common Stock.
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Any reduction in the cash portion of the Purchase Price under this this
Section 2.1(b) may be satisfied by offset against an equal amount of payments on
the Note. The Shareholder shall return to the Parent for cancellation the number
of shares of Parent Common Stock received as part of the Closing Share Payment
in excess of the number specified in Section 2.1(b)(C) above if a reduction in
Section 2.1(b) shall occur (the "Excess Shares"). The share certificates
evidencing the Excess Shares shall contain a legend notifying of the
restrictions contained in this Agreement.
(c) Contingent Payment.
The Surviving Corporation shall pay in United States dollars the
Contingent Payment to the Shareholder upon each date on which the Surviving
Corporation receives Comtext SRL Net Proceeds (as defined below). The Contingent
Payment means an amount in cash equal to the amount of Comtext SRL Net Proceeds
so received in United States dollars; provided, however, that, if after giving
effect to the payment of the Contingent Payment the Merger would not qualify as
a tax-free reorganization under Section 368(a) of the Code, then the Contingent
Payment will be payable in cash and shares of Parent Common Stock (valued at
$1.00 per share, as adjusted for stock splits, stock dividends, stock
combinations, recapitalizations and other events having similar effect) in such
proportions as would result in the Merger qualifying as a tax-free
reorganization under Section 368(a) of the Code. "Comtext SRL Net Proceeds"
means the net proceeds from the sale of the business and assets of GN Comtext
S.r.L., an Italian corporation ("Swift Comtext srl"), after payment of (a) all
costs and expenses incurred in connection with such sale, (b) all Taxes (as
defined in Section 3.9(e)) payable as a result of such sale or the distribution
of such proceeds to the Surviving Corporation, (c) all liabilities and
obligations arising out of such sale or otherwise arising out of or relating to
Swift Comtext srl, including special employee bonuses payable in connection with
such sale, (d) all costs and losses, if any arising, out of the conversion of
such proceeds into United States dollars and (e) the deferred portion of the
purchase price (including any contingent payment obligations) now or hereafter
owed to GN Comtext Limited, whether paid in cash or by offset of payments,
including with respect to applicable Taxes, due from GN Comtext Ltd. under the
Telecoms Agreement (as defined in the GN Comtext Ltd. agreement). Payments of
Comtext SRL Net Proceeds consisting of deferred payment obligations or other
non-cash consideration shall be paid, subject to payment of such costs,
expenses, Taxes, liabilities and obligations and other costs and expenses, (i)
in the case of Comtext SRL Net Proceeds that are not required to be applied to
the repayment of the $35 million original principal amount note issued to AT&T
Corporation (the "AT&T Note"), promptly after receipt of such deferred payments
in cash or conversion of such non-cash consideration into cash and (ii) in the
case of Comtext SRL Net Proceeds that are required to be applied to the
repayment of the AT&T Note, at the times that the amounts so applied to such
repayment would have been paid on the AT&T Note in accordance with the
originally scheduled installments thereof against which such payments were
applied together with, in the case of clause (ii), interest on such amounts at
the rate of interest under the AT&T Note from the time of such application of
such amounts to the repayment of the AT&T Note until such amounts are paid to
the Shareholder (such interest to be paid when it would have been payable under
the AT&T Note). In addition, Swift Comtext srl cash and accounts receivable
shall be liquidated as promptly as practicable after the Closing and the net
proceeds after payment of all liabilities (including those specified above)
shall be paid to the Shareholder on a bi-weekly basis. Swift
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Comtext srl shall not conduct any business or activities other those in
furtherance of the sale of its assets and the winding up of its business and
activities incident thereto.
Section 2.2 Conversion of Shares. (a) Conversion of Shares. Each share
of Company Common Stock issued and outstanding as of the Effective Time shall,
by virtue of the Merger and without any action on the part of the holder
thereof, automatically be converted into the right to receive a proportionate
share of the Merger Consideration.
(b) Treasury Shares. Each share of Company Common Stock held in the
Company's treasury as of the Effective Time, if any, shall by virtue of the
Merger be canceled without payment of any consideration therefor.
(c) Merger Sub Shares. Each share of common stock, par value $0.01 per
share, of Merger Sub issued and outstanding at the Effective Time shall, by
virtue of the Merger and without any action on the part of the holder thereof,
remain outstanding and thereafter represent one share of common stock of the
Surviving Corporation, as such shares of common stock are constituted
immediately following the Effective Time.
Section 2.3 Exchange of Certificates. (a) At the Closing, certificates
(the "Certificates") representing all of the issued and outstanding shares of
Company Common Stock shall be surrendered for cancellation and termination in
the Merger. At the Effective Time, each Certificate shall be canceled in
exchange for a proportionate share of the Merger Consideration as provided
pursuant to Section 2.2 of this Agreement. Certificates representing shares of
Parent Common Stock shall be delivered to the the Shareholder on the Closing
Date. Until surrendered, each outstanding Certificate which prior to the
Effective Time represented shares of Company Common Stock shall be deemed for
all corporate purposes to evidence the right to receive the proportionate share
of the Merger Consideration into which the shares of Company Common Stock have
been converted. From and after the Effective Time, the holder of shares of
Company Common Stock shall cease to have any rights in respect of such shares
and his rights shall be solely in respect of the Merger Consideration into which
such shares of Company Common Stock have been converted.
(b) In the event any Certificate has been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed, Parent shall issue in exchange
for such lost, stolen or destroyed Certificate the portion of the Merger
Consideration payable or issuable in exchange therefor pursuant to the
provisions of Section 2.2 of this Agreement. The Board of Directors of Parent
may in its discretion and as a condition precedent to the issuance thereof
require the owner of such lost, stolen or destroyed Certificate to provide to
Parent an indemnity agreement against any claim that may be made against Parent
with respect to the Certificate alleged to have been lost, stolen or destroyed.
Section 2.4 No Fractional Securities. No fractional shares of Parent
Common Stock shall be issuable by the Parent upon the conversion of shares of
Company Common Stock in the Merger pursuant to Section 2.2 hereof. In lieu of
any such fractional shares, each holder of Company Common Stock who would
otherwise have been entitled to receive a fraction of a share of Parent Common
Stock shall be entitled to receive instead an amount in cash equal to
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such fraction multiplied by the closing price of a share of Parent Common Stock
on the NASDAQ Stock Market on the day on which the Effective Time occurs.
Section 2.5 Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed, and there shall be no further
registration of transfers of Company Common Stock thereafter on the records of
the Company.
Section 2.6 No Further Ownership Rights in Company Stock. The Merger
Consideration into which the shares of Company Common Stock have been converted
in accordance with the terms hereof shall be deemed to have been issued and paid
in full satisfaction of all rights pertaining to such shares, and there shall be
no further registration of transfers on the records of the Surviving Corporation
of shares of Company Common Stock that were outstanding immediately prior to the
Effective Time. If, after the Effective Time, certificates for shares of Company
Common Stock are presented to the Surviving Corporation for any reason, they
shall be canceled and exchanged as provided in this Article II.
ARTICLE III
REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY
Each of the Company and the Shareholder, jointly and severally,
represents and warrants to the Parent and Merger Sub as set forth below as of
the date of this Agreement and as of the Closing Date, subject to the exceptions
set forth in the disclosure schedules attached hereto as Exhibit D (the
"Disclosure Schedules"), the section numbers and letters of which correspond to
the section and subsection numbers and letters of this Agreement. Sections 3.6
through 3.17 shall not apply to the AT&T Easylink business.
Section 3.1 Corporate Organization. Each of the Company and it
Subsidiaries (as defined in Section 3.4(b)) is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation as set forth on Schedule 3.1. Each of the Company and its
Subsidiaries has all requisite corporate power and authority to own, operate and
lease the properties and assets it now owns, operates and leases and to carry on
its business as presently conducted. Each of the Company and its Subsidiaries is
duly qualified to transact business as a foreign corporation and is in good
standing in the jurisdictions set forth in Schedule 3.1, which are the only
jurisdictions where such qualification is required by reason of the nature of
the properties and assets currently owned, operated or leased by it or the
business currently conducted by it other than those jurisdictions where the
failure to be so qualified would not have a Company Material Adverse Effect (as
defined in Section 3.7). The Company has previously delivered to the Parent
complete and correct copies of the Certificate or Articles of Incorporation
(certified by the Secretary of State of the applicable jurisdiction) or the
Memorandum and Articles of Association, or comparable charter documents (such
Certificate, Articles, Memorandum or comparable documents, "Charter") and its
By-Laws (certified by the Secretary of the Company as of a recent date). Except
as set forth in Schedule 3.1, neither the Charter or Bylaws of the Company or
any of its Subsidiaries have been amended since the date of certification
thereof, nor has any action been taken for the purpose of effecting any
amendment of such instrument.
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Section 3.2 Authorization. Each of the Company and its Subsidiaries has
full corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated by this
Agreement have been duly approved by the Board of Directors and shareholders of
the Company, and no other corporate action on the part of the Company is
necessary to approve and authorize the execution and delivery of this Agreement
or (subject to the filing of the Certificates of Merger pursuant to the GCL and
the BCL) the consummation of the transactions contemplated by this Agreement.
This Agreement has been duly executed and delivered by the Company and
constitutes the valid and binding agreement of the Company, enforceable in
accordance with its terms, except to the extent that enforceability may be
limited by applicable bankruptcy, reorganization, insolvency, moratorium,
fraudulent conveyance or other laws affecting the enforcement of creditors'
rights generally and by general principles of equity, regardless of whether such
enforceability is considered in a proceeding in law or in equity, and
requirements of good faith, fair dealing and reasonableness.
Section 3.3 Consents and Approvals; No Violations. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
by this Agreement will not: (i) violate or conflict with any provision of the
Charter or By-Laws of the Company or any of its Subsidiaries, (ii) breach,
violate or constitute an event of default (or an event which with the lapse of
time or the giving of notice or both would constitute an event of default)
under, give rise to any right of termination, cancellation, modification or
acceleration under, or, except as set forth on Schedule 3.3, require any consent
or the giving of any notice under, any note, bond, indenture, mortgage, security
agreement, lease, license, franchise, permit, agreement or other instrument or
obligation to which the Company or any Subsidiary is a party, or by which the
Company or any Subsidiary or any of its properties or assets may be bound, (iii)
result in the creation of any lien, claim or encumbrance or other right of any
third party of any kind whatsoever upon the properties or assets of the Company
or any Subsidiary pursuant to the terms of any such instrument or obligation,
(iv) violate or conflict with any law, statute, ordinance, code, rule,
regulation, judgment, order, writ, injunction, decree or other instrument of any
federal, state, local or foreign court or governmental or regulatory body,
agency or authority applicable to the Company or any Subsidiary or by which any
of its properties or assets may be bound or (v) except as disclosed on Schedule
3.3, require, on the part of the Company or any Subsidiary, any filing or
registration with, or permit, license, exemption, consent, authorization or
approval of, or the giving of any notice to, any governmental or regulatory
body, agency or authority.
Section 3.4 Capitalization; Subsidiaries. (a) The authorized capital
stock of the Company consists of 200 shares of Company Common Stock, of which
200 shares are issued and outstanding. Schedule 3.4(a) sets forth a complete and
correct list of the record and beneficial ownership of the issued and
outstanding shares of Company Common Stock. All of the issued and outstanding
shares of Company Common Stock were duly authorized and validly issued and are
fully paid and nonassessable, and were not issued in violation of any preemptive
rights or federal or state securities laws. Except as disclosed in Schedule
3.4(a) hereto, the Company has never repurchased or redeemed any shares of its
capital stock, and there are no amounts owed or which may be owed to any person
by the Company as a result of any repurchase or redemption of shares of its
capital stock. Except as disclosed in Schedule 3.4(a) hereto, there are no
agreements, arrangements or understandings to which the Company is a
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party or by which it is bound to redeem or repurchase any shares of its capital
stock. There are no outstanding options, warrants or other rights to purchase,
or any securities convertible into or exchangeable for ("Convertible
Securities"), Convertible Securities or shares of the capital stock of the
Company, and there are no agreements, arrangements or understandings to which
the Company is a party or by which it is bound pursuant to which the Company is
or may be required to issue additional shares of its capital stock.
(b) Except as set forth in Schedule 3.4(b), the Company does
not own, directly or indirectly, any equity securities, or options, warrants or
other rights to acquire equity securities, or securities convertible into or
exchangeable for equity securities, of any other corporation, limited liability
company or similar entity (whether domestic or foreign), or any partnership or
other equity interest in any general or limited partnership or unincorporated
joint venture (each of such corporations, limited liability companies, similar
entities, partnerships or unincorporated entities in which the Company has any
direct or indirect interest, individually, a "Subsidiary" and collectively,
"Subsidiaries"). The authorized and outstanding capital stock or other equity
interests of each Subsidiary consists of the classes and numbers of shares of
capital stock or percentage of such equity interests set forth in Schedule
3.4(b). Schedule 3.4(b) sets forth a complete and correct list of the record and
beneficial ownership of the issued and outstanding shares of each class of
capital stock or equity interest of each Subsidiary. All of the issued and
outstanding shares of capital stock or other equity interests of each Subsidiary
were duly authorized and validly issued and are fully paid and nonassessable,
and were not issued in violation of any preemptive rights or federal, state or
foreign securities laws. Except as disclosed in Schedule 3.4(a) hereto, no
Subsidiary has ever repurchased or redeemed any shares of its capital stock or
equity interests, and there are no amounts owed or which may be owed to any
person by any Subsidiary as a result of any repurchase or redemption of shares
of its capital stock or other equity interests. Except as disclosed in Schedule
3.4(a) hereto, there are no agreements, arrangements or understandings to which
any Subsidiary is a party or by which it is bound to redeem or repurchase any
shares of its capital stock or other equity interests. There are no outstanding
options, warrants or other rights to purchase, or any securities convertible
into or exchangeable for ("Convertible Securities"), Convertible Securities or
shares of the capital stock or other equity interests of any Subsidiary, and
there are no agreements, arrangements or understandings to which any Subsidiary
is a party or by which it is bound pursuant to which the such Subsidiary is or
may be required to issue additional shares of its capital stock.
Section 3.5 Financial Statements. (a) Attached hereto as Schedule
3.5(a) are the unaudited consolidated balance sheet of the Company as of
November 30, 2000 and the unaudited consolidated pro forma statements of income
and cash flows of the Company for the eleven months ended November 30, 2000 (pro
forma for the acquisition by the Company of the GN Comtext Ltd business as
though such acquisition occurred as of January 1, 2000), which statements of
income and cash flows reflect pro forma information for the period from January
1, 2000 until July 31, 2000 and actual information for the period from August 1,
2000 until November 30, 2000 (hereinafter collectively referred to as the
"Financial Statements"). Except as set forth on Schedule 3.5(a), the Financial
Statements (i) have been prepared from the books and records of the Company,
(ii) have been prepared in accordance with GAAP during the periods covered
thereby and (iii) present fairly in all material respects the consolidated
financial condition and consolidated results of operations and cash flows of the
Company as at November 30, 2000, and for the eleven months ended November 30,
2000.
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Section 3.6 Absence of Undisclosed Liabilities. Except (i) as set forth
on Schedule 3.6, (ii) as set forth or reserved against in the balance sheet of
the Company as of November 30, 2000 included in the Financial Statements (the
"Balance Sheet") and (iii) for obligations and liabilities incurred since
November 30, 2000 in the ordinary course of business consistent in kind and
amount with past practice, neither the Company nor any of its Subsidiaries has
any material liabilities or obligations of any nature, whether accrued,
absolute, contingent or otherwise.
Section 3.7 Absence of Certain Changes or Events. Except as set forth
in Schedule 3.7, since November 30, 2000, each of the Company and its
Subsidiaries has carried on its business in all material respects in the
ordinary course and consistent with past practice. Except as set forth on
Schedule 3.7 hereto, since November 30, 2000, each of the Company and its
Subsidiaries has not: (i) incurred any material obligation or liability (whether
absolute, accrued, contingent or otherwise) except in the ordinary course of
business and consistent in kind and amount with past practice; (ii) experienced
any Company Material Adverse Effect (as defined below); (iii) made any change in
accounting principle or practice or in its method of applying any such principle
or practice; (iv) suffered any material damage, destruction or loss, whether or
not covered by insurance, affecting its properties, assets or business; (v)
mortgaged, pledged or subjected to any lien, charge or other encumbrance, or
granted to third parties any rights in, any of its material assets, tangible or
intangible; (vi) sold or transferred any of its assets having a value in excess
of $5,000 per individual asset or $50,000 in the aggregate for all assets sold
or transferred, except in the ordinary course of business and consistent in kind
and amount with past practice, or canceled or compromised any debts or waived
any claims or rights except in the ordinary course of business and consistent in
kind and amount with past practice; (vii) issued any additional shares of
capital stock or any rights, options or warrants to purchase, or securities
convertible into or exchangeable for, Convertible Securities or shares of its
capital stock; (viii) declared or paid any dividends on or made any
distributions (however characterized) in respect of shares of its capital stock;
(ix) repurchased or redeemed any shares of its capital stock; or (x) entered
into any agreement to do any of the foregoing. The term "Company Material
Adverse Effect" means, for purposes of this Agreement, any change, event or
effect that is, or that is reasonably likely to be, materially adverse to the
business, prospects, operations, assets, liabilities, contingent or otherwise,
financial condition or results of operations of the Company and its Subsidiaries
taken as a whole or the Surviving Corporation and its Subsidiaries.
Section 3.8 Legal Proceedings, etc. Except as set forth in Schedule
3.8, there are no suits, actions, claims, proceedings (including, without
limitation, arbitral or administrative proceedings) or investigations pending
or, to the best knowledge of the Company (which, for purposes of this Agreement,
together with similar phrases relating to the knowledge or awareness of the
Company, shall mean the best knowledge, after due inquiry, of the Shareholder,
Xxxx Xxxxxxxxxxx, Xxxx Xxxxxx and Xxxxxx Nah), threatened against the Company or
any Subsidiary or its properties, assets or business or, to the best knowledge
of the Company, pending or threatened against any the Shareholder, officers,
directors, employees, agents or consultants of the Company or any Subsidiary in
connection with the business of the Company or any Subsidiary, and, in each
case, which involve amounts in excess of $10,000 singly or in the aggregate.
There are no such suits, actions, claims, proceedings or investigations pending
against the Company or any Subsidiary, or, to the best knowledge of the Company,
threatened against the Company or any Subsidiary challenging the validity or
propriety of the transactions
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contemplated by this Agreement. There is no judgment, order, injunction, decree
or award (whether issued by a court, an arbitrator or an administrative agency)
to which the Company or any Subsidiary is a party, or involving the properties,
assets or business of the Company or any Subsidiary, which is unsatisfied or
which requires continuing compliance therewith by the Company or any Subsidiary.
Section 3.9 Taxes. The Company represents and warrants the following:
(a) All Tax returns, reports and other filings in respect of
Taxes (as that term is hereinafter defined) required to be filed in respect of
the Company or any Subsidiary have been or will be duly and timely filed, have
been or will be prepared in compliance in all material respects with all
applicable laws, rules and regulations, and (in the case of all filed returns,
reports and other filings) are true, correct and complete, and all Taxes of the
Company or such Subsidiary, whether or not shown as due on such returns, reports
or other filings, have been or will be fully paid when due. Each of the Company
and its Subsidiaries has established in accordance with GAAP adequate reserves
on the Balance Sheet for Taxes accrued but not yet due or has determined in
accordance with GAAP that such reserves are not necessary.
(b) Except as set forth in Schedule 3.9, there is no
agreement, plan or arrangement covering any employee or independent contractor
or former employee or independent contractor of the Company or any Subsidiary
that, considered individually or considered collectively with any other such
agreement, plan or arrangement, will, or could reasonably be expected to, give
rise directly or indirectly to the payment of any amount that would not be
deductible pursuant to Section 280G of the Code or that would be subject to an
excise tax under Section 4999 of the Code.
(c) Except as set forth in Schedule 3.9, each of the Company
and its Subsidiaries has withheld or deducted all Taxes or other amounts from
payments to employees or other persons required to be deducted or withheld, and
has timely paid over such Taxes or other amounts to the appropriate governmental
authorities to the extent due and payable.
(d) Neither the Company nor any of its Subsidiaries is a
"consenting corporation" within the meaning of Section 341(f)(1) of the Code, or
comparable provisions of any state statutes, and none of the assets of the
Company or any Subsidiary is subject to an election under Section 341(f) of the
Code or comparable provisions of any state statutes.
(e) For purposes of this Agreement, the terms "Tax" and
"Taxes" shall mean and include any and all United States federal, state, local,
foreign or other taxes (including, without limitation, any and all income,
franchise, sales, use, excise, withholding, employment, payroll, social security
or property taxes) and similar assessments, customs, duties, charges and fees
(including interest, penalties and additions to such taxes, assessments,
customs, duties, charges and fees, penalties for failure to file or late filing
of any return, report or other filing, and any interest in respect of such
penalties and additions).
Section 3.10 Title to Properties and Related Matters. (a) Except as set
forth on Schedule 3.10(a), each of the Company and its Subsidiaries has good and
valid title to all personal property, tangible or (excluding any Intellectual
Property Rights, as defined in Section
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3.11) intangible, which it purports to own, including the properties reflected
on the Balance Sheet or acquired after the date thereof (other than properties
and assets sold or otherwise disposed of in the ordinary course of business and
consistent in kind and amount with past practice since November 30, 2000), free
and clear of any claims, liens, pledges, security interests or encumbrances of
any kind whatsoever (other than (i) purchase money security interests and common
law vendor's liens, in each case for goods purchased on open account in the
ordinary course of business consistent in kind and amount with past practice and
having a fair market value of less than $10,000 in each individual case, (ii)
liens for Taxes not yet due and payable, and (iii) such imperfections of title
and encumbrances, if any, that are not material in character, amount or extent
and that do not materially detract from the value, or materially interfere with
the use of, the property subject thereto or affected thereby or that affect
property having a fair market value of less than $10,000 in each individual
case). Collectively, such property, the property leased by the Company as
disclosed on Schedule 3.10(c) and the Intellectual Property Rights disclosed on
Schedule 3.11 constitute all property, tangible or intangible, used or held for
use by the Company and its Subsidiaries and necessary to conduct the business of
the Company and its Subsidiaries as presently conducted.
(b) Neither the Company nor any Subsidiary owns any real
property or any interest in real property, except as set forth in Schedule
3.10(d).
(c) Schedule 3.10(c) sets forth a list, which is correct and
complete in all material respects, of all equipment, machinery, instruments,
vehicles, furniture, fixtures and other items of personal property currently
owned by the Company or any Subsidiary with a book value as of November 30,
2000, in each case of $5,000 or more. Except as set forth in Schedule 3.10(c),
all such personal property that is material to the business of the Company or
any Subsidiary is in suitable operating condition (ordinary and reasonable wear
and tear excepted) and is physically located in or about one of the places of
business of the Company or any Subsidiary. Except as disclosed in Schedule
3.10(c), none of such personal property is subject to any agreement or
commitment for its use by any person other than the Company or any Subsidiary.
The maintenance and operation of such personal property has been in conformance
in all material respects with all applicable laws and regulations.
(d) Schedule 3.10(d) sets forth a complete and correct list of
all real property and personal property leases to which the Company or any
Subsidiary is a party and which involve payments in each case of at least $1,000
per month. The Company has previously delivered to the Parent complete and
correct copies of each lease (and any amendments or supplements thereto) listed
in Schedule 3.10(d). Except as set forth in Schedule 3.10(d), (i) each such
lease is valid and binding, and in full force and effect; (ii) neither the
Company nor any Subsidiary nor (to the best knowledge of the Company) any other
party is in default under any such lease, and no event has occurred which
constitutes, or with the lapse of time or the giving of notice or both would
constitute, a default by the Company or any Subsidiary or (to the best knowledge
of the Company) a default by any other party under such lease; (iii) there are
no disputes or disagreements between the Company or any Subsidiary and any other
party with respect to any such lease; and (iv) there is no requirement under any
such lease that the Company or any Subsidiary either obtain the lessor's consent
to, or notify the lessor of, the consummation of the transactions contemplated
by this Agreement. Except as set forth on Schedule 3.10(d), there are
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no assets leased by the Company or any Subsidiary that are owned, directly or
indirectly, by any Related Person (as that term is hereinafter defined in
Section 3.22)
Section 3.11 Intellectual Property; Proprietary Rights; Employee
Restrictions. (a) Set forth on Schedule 3.11 is a list of all copyright
registrations and applications for copyright registrations, trademark
registrations and applications for trademark registrations, patents and patent
applications, trademarks, service marks, trade names and Internet domain names
that are used by the Company or any Subsidiary in the business of the Company as
presently conducted. The items listed on Schedule 3.11, together with all other
intellectual property rights owned by the Company or any Subsidiary and used in
connection with its business are referred to as "Intellectual Property Rights."
Except as set forth on Schedule 3.11 or as the failure to have been validly
assigned would not have a Company Material Adverse Effect, all Intellectual
Property Rights purported to be owned by the Company or any Subsidiary which
were developed, worked on or otherwise held by any shareholder, employee,
officer, consultant or otherwise are owned free and clear by the Company or such
Subsidiary by operation of law or have been validly assigned to the Company or
such Subsidiary. Except for the items listed on Schedule 3.11, true and correct
copies of all such licenses, assignments and releases of Intellectual Property
Rights have been provided to Parent prior to the date hereof, all of which are,
to the knowledge of the Shareholder, valid and binding and in full force and
effect. Except as set forth on Schedule 3.11, the Company or a Subsidiary has a
valid license to use or exclusive ownership of all Intellectual Property Rights
material to the business of the Company or any Subsidiary as presently
conducted. Except as set forth on Schedule 3.11, the present business activities
or products of the Company and its Subsidiaries do not infringe any Intellectual
Property Rights of others. Except as set forth in Schedule 3.11, neither the
Company nor any Subsidiary has received any written notice or other claim from
any person asserting that any of the present activities of the Company or any
Subsidiary infringe or may infringe any Intellectual Property Rights of such
person.
(b) Except as set forth in Schedule 3.11, the Company is not
aware of any present infringement by others of the copyrights or other
Intellectual Property Rights of the Company or any Subsidiary in any of the
products, technology or services of the Company or any Subsidiary, or any
violation in any material respect of the confidentiality of any of the
proprietary information of the Company or any Subsidiary. To the Company's best
knowledge, neither the Company nor any Subsidiary is making unlawful use of any
confidential information or trade secrets of any past or present employees of
the Company or any Subsidiary.
(c) To the best knowledge of the Shareholder, neither the
Shareholder nor any employee of the Company or any Subsidiary is bound by any
consulting or employment agreement relating to confidential information or trade
secrets of another entity that are being violated by such persons. The
activities of the employees of the Company or any Subsidiary on behalf of the
Company or any Subsidiary do not violate any agreements or arrangements known to
the Company or the Shareholder which any such employees or consultants have with
former employers or any other entity to whom such employees or consultants may
have rendered consulting services.
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Section 3.12 Contracts. (a) Except as set forth in any other Schedule
hereto that requires any of such to be disclosed thereon, neither the Company
nor any Subsidiary is a party to, or subject to:
(i) any contract, arrangement or understanding, or
series of related contracts, arrangements or understandings, that
involves annual expenditures or receipts by the Company or any
Subsidiary of more than $10,000;
(ii) any note, indenture, credit facility, mortgage,
security agreement or other contract, arrangement or understanding
relating to or evidencing indebtedness for money borrowed or a security
interest or mortgage in the assets of the Company or any Subsidiary;
(iii) any guaranty issued by the Company or any
Subsidiary;
(iv) any contract, arrangement or understanding relating
to the acquisition, issuance, transfer or sale of any securities or a
material amount of assets;
(v) any contract, arrangement or understanding relating
to the acquisition, transfer, distribution, use, development, sharing
or license of any technology or Intellectual Property Rights;
(vi) any contract, arrangement or understanding granting
to any person the right to use any property or property right of the
Company or any Subsidiary other than licenses granted in the ordinary
course of business consistent with past practice with a term of less
than one year;
(vii) any contract, arrangement or understanding
restricting the rights of the Company or any Subsidiary to (A) engage
in any business activity or compete with any business, or (B) develop
or distribute any technology;
(viii) any contract, arrangement or understanding relating
to the employment of, or the performance of services by, any employee,
consultant or independent contractor and pursuant to which the Company
or any Subsidiary is required to pay more than $10,000 per year;
(ix) any contract, arrangement or understanding with a
Related Person (as that term is hereinafter defined); or
(x) any outstanding offer, commitment or obligation to
enter into any contract or arrangement of the nature described in
subsections (i) through (ix) of this subsection 3.12(a).
(b) The Company has previously made available for inspection
and copying to the Parent copies that are complete and correct in all material
respects (or, in the case of oral contracts, a materially complete and correct
description) of each contract (and any amendments or supplements thereto) listed
on Schedule 3.12(a). Except as set forth in Schedule 3.12(b), (i) each contract
listed in Schedule 3.12(a) is in full force and effect; (ii) neither the Company
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nor any Subsidiary nor any other party is in default under any material
contract, and no event has occurred that constitutes, or with the lapse of time
or the giving of notice or both would constitute, a default by the Company or
any Subsidiary or (to the best knowledge of the Company) a default by any other
party under such contract; (iii) there are no material disputes or disagreements
between the Company or any Subsidiary and any other party with respect to any
material contract; and (iv) except as mutually agreed by the parties and set
forth on Schedule 3.12(b), Part 2, or where the failure to obtain consent or
give notice would not have a Company Material Adverse Effect and would not have
a material adverse effect on the transactions contemplated hereby, each other
party to each contract has consented or been given notice (or prior to the
Closing shall have consented or been given notice), where such consent or the
giving of such notice is necessary, sufficient that such contract shall remain
in full force and effect following the consummation of the transactions
contemplated by this Agreement without modification in the rights or obligations
of the Company or any Subsidiary thereunder.
(c) Except as set forth and described in Schedule 3.12(c),
neither the Company nor any Subsidiary has issued any warranty or any agreement
or commitment to indemnify any person.
Section 3.13 Employees; Employee Benefits. (a) Schedule 3.13(a) sets
forth the names of each current employee of the Company or any Subsidiary (the
"Employees") and such Employee's job title, the location of employment of such
Employee, such Employee's current salary, the amount of any bonuses or other
compensation paid since November 30, 2000 to such Employee, the date of
employment of such Employee and the accrued vacation time of such Employee.
Except as set forth on Schedule 3.13(a), there are no outstanding loans from the
Company or any Subsidiary to any officer, director, employee, agent or
consultant of the Company or any Subsidiary, or to any other Related Person.
Schedule 3.13(a) hereto sets forth a complete and correct description of all
severance policies of the Company and its Subsidiaries. Complete and correct
copies of all written agreements with Employees and all employment policies, and
all amendments and supplements thereto, have previously been delivered or made
available to the Parent, and a list of all such agreements and policies is set
forth on Schedule 3.13(a). To the best knowledge of the Shareholder and except
as set forth on Schedule 3.13(a), none of the Employees has indicated a desire
to terminate his or her employment, or any intention to terminate his or her
employment upon a sale of, or business combination relating to, the Company or
in connection with the transactions contemplated by this Agreement. Except as
set forth on Schedule 3.13(a), since November 30, 2000, neither the Company nor
any Subsidiary has (i) increased the salary or other compensation payable or to
become payable to or for the benefit of any Employee, (ii) increased the term or
tenure of employment for any Employee, (iii) increased the amounts payable to
any Employee upon the termination of any such person's employment or (iv)
adopted, increased, augmented or improved benefits granted to or for the benefit
of Employees under any Benefit Plan.
(b) Except as disclosed on Schedule 3.13(b), each of the
Company and its Subsidiaries has complied in all material respects with Title
VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in
Employment Act, as amended, the Fair Labor Standards Act, as amended, the
Immigration Reform and Control Act of 1986, and all applicable laws, rules and
regulations governing payment of minimum wages and overtime rates, the
withholding and payment of taxes from compensation, discriminatory practices
with respect to employment
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and discharge, or otherwise relating to the conduct of employers with respect to
Employees or potential employees, and there have been no claims made or to the
best knowledge of the Company, threatened thereunder against the Company or any
Subsidiary arising out of, relating to or alleging any violation of any of the
foregoing.
(c) Schedule 3.13(c) sets forth a list of each defined benefit
and defined contribution plan, stock ownership plan, employment or consulting
agreement, executive compensation plan, bonus plan, incentive compensation plan
or arrangement, deferred compensation agreement or arrangement, agreement with
respect to temporary employees or "leased employees" (within the meaning of
Section 414(n) of the Code), vacation pay, sickness, disability or death benefit
plan (whether provided through insurance, on a funded or unfunded basis or
otherwise), employee stock option, stock appreciation rights or stock purchase
plan, severance pay plan, cafeteria plan, arrangement or practice, employee
relations policy, practice or arrangement, and each other employee benefit plan,
program or arrangement, including, without limitation, each "employee benefit
plan" within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), which has been maintained by the
Company or any Subsidiary for the benefit of or relating to any of the Employees
or to any former Employees or their dependents, survivors or beneficiaries,
whether or not legally binding, whether written or oral or whether express or
implied, all of which are hereinafter referred to as the "Benefit Plans."
Section 3.14 Compliance with Applicable Law. Neither the Company nor
any Subsidiary is in violation in any material respect of any applicable safety,
health, environmental or other law, statute, ordinance, code, rule, regulation,
judgment, order, injunction, writ or decree of any federal, state, local or
foreign court or governmental or regulatory body, agency or authority having,
asserting or claiming jurisdiction over it or over any part of its business,
operations, properties or assets, except for any violation that would not have a
Company Material Adverse Effect. Neither the Company nor any Subsidiary has
received any written notice alleging any such violation, nor to the best
knowledge of the Company, is there any inquiry, investigation or proceedings
relating thereto.
Section 3.15 Ability to Conduct the Business. Each of the Company and
its Subsidiaries has in force, and is in compliance with all governmental
permits, licenses, exemptions, consents, authorizations and approvals used in or
required for the conduct of its business as presently conducted, all of which,
except as set forth in Schedule 3.15 or as the failure to so remain in force
would not have a Company Material Adverse Effect, shall continue in full force
and effect, without requirement of any filing or the giving of any notice and
without modification thereof, following the consummation of the transactions
contemplated hereby. Neither the Company nor any Subsidiary has received any
written notice of, and to the best knowledge of the Company, there are no
inquiries, proceedings or investigations relating to or which could result in,
the revocation or modification of any such permit, license, exemption, consent,
authorization or approval.
Section 3.16 Major Customers. Schedule 3.16 sets forth a complete and
correct list of the 200 largest customers of the Company and its Subsidiaries,
in terms of revenue recognized in respect of such customers during each of the
month and the eleven months ended November 30, 2000, showing the amount of
revenue recognized for each such customer during such period.
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Except as set forth and described in Schedule 3.16, neither the Company nor any
Subsidiary has received any written notice from any of the customers listed in
Schedule 3.16 hereto terminating or reducing in any material respect, or setting
forth an intention to terminate or reduce in the future, or otherwise reflecting
a material adverse change in, the business relationship between such customer
and the Company or such Subsidiary.
Section 3.17 Accounts Receivable. All accounts receivable of the
Company and its Subsidiaries reflected on the Balance Sheet (i) arose from bona
fide transactions in the ordinary course of business and consistent with past
practice, (ii) except as set forth on Schedule 3.17, are owned by the Company or
a Subsidiary free and clear of any security interest, lien, encumbrance, claims
and (iii) are accurately and fairly reflected on the Balance Sheet in accordance
with generally accepted accounting principles consistently applied. The reserves
for bad debts reflected on the Balance Sheet (including any determination to
establish no reserves) were calculated or such determination was made in
accordance with generally accepted accounting principles consistent with past
practice and are adequate.
Section 3.18 Insurance. Schedule 3.18 hereto is a true and complete
list of all insurance policies carried by the Company and each Subsidiary with
respect to its business, together with, in respect of each such policy, the name
of the insurer, the number of the policy, the annual policy premium payable
therefor, the limits of coverage, the deductible amount (if any), the expiration
date thereof and each pending claim thereunder. Complete and correct copies of
each certificate of insurance have previously been delivered or made available
by the Company to the Parent. All such policies are in full force and effect.
All premiums due thereon have been paid.
Section 3.19 Bank Accounts; Powers of Attorney. Schedule 3.19 sets
forth a complete and correct list showing:
(i) all bank accounts of the Company and each
Subsidiary, together with, with respect to each such account, the
account number, the names of all signatories thereof, the authorized
powers of each such signatory and the approximate balance thereof on
the date of this Agreement; and
(ii) the names of all persons holding powers of attorney
from the Company or any Subsidiary and a summary statement or a copy of
the terms thereof.
Section 3.20 Minute Books, etc. The minute books, stock certificate
book and stock ledger of the Company and each of its Subsidiaries are complete
and correct in all material respects. The minute books of the Company and each
Subsidiary contain materially accurate and complete records of all meetings or
written consents to action of the Board of Directors and shareholders of the
Company and such Subsidiary and accurately reflect in all material respects all
corporate actions of the Company and such Subsidiary which are required by law
to be passed upon by the Board of Directors or shareholders.
Section 3.21 Related Person Indebtedness and Contracts. Schedule 3.21
sets forth a complete and correct list of (and complete and correct copies have
been provided to Parent of) all contracts, commitments, arrangements and
understandings not described elsewhere in this
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Agreement between the Company or any Subsidiary and any of the following
(collectively, "Related Persons"): (i) any director or shareholder of the
Company or any Subsidiary; (ii) the spouses and children of any such director or
shareholder (collectively, "near relatives"); (iii) any trust for the benefit of
any such director or shareholder or any of their respective near relatives; or
(iv) any corporation, partnership, joint venture or other entity or enterprise
owned or controlled by any such director or shareholder or by any of their
respective near relatives. Except as set forth on Schedule 3.21, all amounts
contributed by any shareholder to the Company or any Subsidiary have been
treated as contributions to Company or Subsidiary equity and have not been
treated as, nor do they constitute, indebtedness of the Company or such
Subsidiary to such shareholder.
Section 3.22 AT&T Easylink Agreement; Xtreme Agreements; and Comtext
Agreement.
(a) All of the representations and warranties of the Company and, to
the knowledge of the Company, AT&T Corp., a New York corporation ("AT&T") under
the Asset Purchase Agreement dated December 14, 2000 between AT&T and the
Company and related agreements (the "Easylink Agreements") were true and correct
when made on such date and on the Closing Date (as defined in such agreement),
and the Company and, to the knowledge of the Shareholder and the Company, AT&T
has performed in all material respects all obligations required on the part of
such party. There are no outstanding claims for indemnification under the
Easylink Agreements, and the Company has not received any written notice with
respect to any such claim.
(b) All of the representations and warranties of Xtreme under the
respective agreements providing for the purchase by Xtreme of the RT Business
and the Malaysian RT Business (as defined in such agreements) and related
agreements (the "Xtreme Agreements"), and, to the knowledge of the Company, all
of the representations and warranties of the other parties under the Xtreme
Agreements were true and correct when made on such date, and the Company has
and, to the knowledge of the Shareholder and the Company, the other parties to
the Xtreme Agreements have performed in all material respects all obligations
required on the part of such party. There are no outstanding claims for
indemnification under the Xtreme Agreements, and the Company has not received
any written notice with respect to any such claim.
(c) All of the representations and warranties of the Company and, to
the knowledge of the Company, GN Comtext Limited under the Sale and Purchase
Agreement dated August 3, 2000 and providing for the purchase by the Company or
one of its designees of certain business and assets of GN Comtext Limited and
related agreements (the "Comtext Agreements") were true and correct when made on
such date, and the Company and, to the knowledge of the Shareholder and the
Company, GN Comtext has performed in all material respects all obligations
required on the part of such party. There are no outstanding claims for
indemnification under the Comtext Agreements, and the Company has not received
any written notice with respect to any such claim.
Section 3.23 Brokers; Payments. No broker, investment banker, financial
advisor or other person is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon
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arrangements made by or on behalf of the Company or the Shareholder. The Company
has suspended or terminated, and has the legal right to terminate or suspend,
all agreements, negotiations and discussions of business combination
transactions, issuance of capital stock of the Company or involving the
acquisition of AT&T Easylink with parties other than Parent. No valid claim
exists against the Company or, based on any action by the Company, against the
Surviving Corporation or the Parent for payment of any "topping," "break-up" or
"bust-up" fee or any similar compensation or payment arrangement as a result of
the transactions contemplated hereby.
Section 3.24 Company Action.
The Board of Directors of the Company, by unanimous written consent or
at a meeting duly called and held, has (i) determined that the Merger is fair
and in the best interests of the Company and its shareholders, (ii) approved the
Merger and this Agreement in accordance with the provisions of the BCL and (iii)
directed that this Agreement and the Merger be submitted to the Company
shareholders for the adoption of this Agreement and adoption and resolved to
recommend that the Company's shareholders vote in favor of the adoption of this
Agreement and the approval of the Merger. The Shareholder has approved the
Merger and this Agreement in accordance with the provisions of the BCL.
Section 3.25 Disclosure. No representation or warranty by the Company
or the Shareholder contained in this Agreement and no statement contained in any
of the Disclosure Schedules delivered or to be delivered pursuant to this
Agreement by the Company or the Shareholder contains or will contain any untrue
statement of a material fact or omits or will omit to state any material fact
necessary to make the statements contained therein, in light of the
circumstances under which they are made, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
RELATING TO THE SHAREHOLDERS
Section 4.1 Authorization; etc. The Shareholder represents and warrants
as of the date hereof and as of the Closing Date to the Parent and Merger Sub as
follows:
(i) The Shareholder is the sole and exclusive record and
beneficial owner of the shares of the Company's capital stock set forth
opposite his or her name in Schedule 4.1 hereto, free and clear of any
claims, liens, pledges, options, rights of first refusal or other
encumbrances or restrictions of any nature whatsoever (other than
restrictions on transfer imposed under applicable securities laws),
and, except as set forth on Schedule 4.1 hereto, there are no
agreements, arrangements or understandings to which the Shareholder is
a party (other than this Agreement) involving the purchase, sale or
other acquisition or disposition of the shares owned by the
Shareholder;
(ii) the Shareholder shall (A) concurrently with the
Shareholder's execution and delivery of this Agreement, execute and
deliver to Parent a written consent in which the Shareholder voted all
shares of capital stock entitled to vote owned by the Shareholder in
favor of the Merger and the adoption of this Agreement by the Company,
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(B) at the Effective Time, deliver or cause to be delivered to the
Parent certificates representing all shares of Company Common Stock
owned by the Shareholder, each such certificate to be duly endorsed for
transfer and free and clear of any claims, liens, pledges, options,
rights of first refusal or other encumbrances or restrictions of any
nature whatsoever (other than restrictions imposed under applicable
securities laws);
(iii) the Shareholder has all necessary legal capacity,
right, power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby, and this Agreement
constitutes a valid and binding obligation of the Shareholder
enforceable in accordance with its terms, except to the extent that
enforceability may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other laws affecting the enforcement of
creditors, rights generally and by general principles of equity,
regardless of whether such enforceability is considered in a proceeding
in law or in equity; and
(iv) the execution and delivery of this Agreement by the
Shareholder and the consummation of the transactions contemplated
hereby will not (A) except as disclosed on Schedule 4.1, breach,
violate or constitute an event of default (or an event which with the
lapse of time or the giving of notice or both would constitute an event
of default) under, give rise to any right of termination, cancellation,
modification or acceleration under or require any consent or the giving
of any notice under, any note, bond, indenture, mortgage, security
agreement, lease, license, franchise, permit, agreement or other
instrument or obligation to which the Shareholder is a party, or by
which the Shareholder or the shares of Company Common Stock held by the
Shareholder may be bound, or result in the creation of any material
lien, claim or encumbrance or other right of any third party of any
kind whatsoever upon the properties or assets of the Shareholder
pursuant to the terms of any such instrument or obligation, or (B)
violate or conflict with any law, statute, ordinance, code, rule,
regulation, judgment, order, writ, injunction, decree or other
instrument of any court or governmental or regulatory body, agency or
authority applicable to the Shareholder or by which such the shares of,
Company Common Stock held by the Shareholder may be bound.
Section 4.2 Parent Common Stock. The Shareholder acknowledges,
represents and warrants to the Parent and Merger Sub as follows:
(i) Such Shareholder understands that the shares of
Parent Common Stock to be issued to the Shareholder in the Merger will
not have been registered under the Securities Act of 1933, as amended
(the "Securities Act"), or any state securities law by reason of
specific exemptions under the provisions thereof which depend in part
upon the other representations and warranties made by the Shareholder
in this Agreement. Such Shareholder understands that the Parent is
relying, in part, upon the Shareholder's representation and warranties
contained in this Section 4.2 for the purpose of determining whether
this transaction meets the requirements for such exemptions.
(ii) Such Shareholder has such knowledge, skill and
experience in business, financial and investment matters so that the
Shareholder is capable of evaluating the merits and risks of an
investment in the Parent Common Stock pursuant to the
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transactions contemplated by this Agreement or to the extent that the
Shareholder has deemed it appropriate to do so, the Shareholder has
relied upon appropriate professional advice regarding the tax, legal
and financial merits and consequences of an investment in Parent Common
Stock pursuant to the transactions contemplated by this Agreement.
(iii) Such Shareholder has made, either alone or together
with the Shareholder's advisors, such independent investigation of the
Parent, its management and related matters as the Shareholder deems to
be, or such advisors have advised to be, necessary or advisable in
connection with an investment in the Parent Common Stock through the
transactions contemplated by this Agreement; and the Shareholder and
advisors have received all information and data that the Shareholder
and such advisors believe to be necessary in order to reach an informed
decision as to the advisability of an investment in the Parent Common
Stock pursuant to the transactions contemplated by this Agreement.
(iv) Such Shareholder has reviewed the Shareholder's
financial condition and commitments, alone and together with the
Shareholder's advisors, and, based on such review, the Shareholder is
satisfied that (A) the Shareholder has adequate means of providing for
the Shareholder's financial needs and possible contingencies and has
assets or sources of income which, taken together, are more than
sufficient so that he or she could bear the risk of loss of his or her
entire investment in the Parent Common Stock, (B) the Shareholder has
no present or contemplated future need to dispose of all or any portion
of the Parent Common Stock to satisfy any existing or contemplated
undertaking, need or indebtedness, and (C) the Shareholder is capable
of bearing the economic risk of an investment in the Parent Common
Stock for the indefinite future. Such Shareholder shall furnish any
additional information about the Shareholder reasonably requested by
the Parent to assure the compliance of this transaction with applicable
federal and state securities laws.
(v) Such Shareholder understands that the shares of the
Parent Common Stock to be received by the Shareholder in the
transactions contemplated hereby will be "restricted securities" under
applicable federal securities laws and that the Securities Act and the
rules of the Securities and Exchange Commission (the "SEC") promulgated
thereunder provide in substance that the Shareholder may dispose of
such shares only pursuant to an effective registration statement under
the Securities Act or an exemption from registration if available. Such
Shareholder further understands that, except as provided herein, the
Parent has no obligation or intention to register the sale of any of
the shares of the Parent Common stock to be received by the Shareholder
in the transactions contemplated hereby, or take any other action so as
to permit sales pursuant to, the Securities Act. Such Shareholder
further understands that applicable state securities laws may impose
additional constraints upon the sale of securities. As a consequence,
the Shareholder understands that the Shareholder may have to bear the
economic risk of an investment in the Parent Common Stock to be
received by the Shareholder pursuant to the transactions contemplated
hereby for an indefinite period of time.
(vi) Such Shareholder is acquiring shares of the Parent
Common Stock pursuant to the transactions contemplated hereby for
investment only and not with a view
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to or intention of or in connection with any resale or distribution of
such shares or any interest therein.
(vii) The certificate(s) evidencing the shares of the
Parent Common Stock to be issued pursuant to the transactions
contemplated hereby shall bear the following legends (in addition to
the legend referred to in Section 2.1(c)):
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or
any state securities laws and may not be sold or transferred
in the absence of such registration or an exemption therefrom
under the Securities Act of 1933, as amended, and applicable
state securities laws."
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE PARENT AND MERGER SUB
The Parent and Merger Sub jointly and severally represent and warrant
to the Company as of the date hereof and as of the Closing Date that:
Section 5.1 Corporate Organization. The Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Merger Sub is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. Each of the Parent and
Merger Sub has all requisite corporate power and authority to own, operate and
lease the properties and assets it now owns, operates and leases and to carry on
its business as presently conducted. The Parent and Merger Sub are each duly
qualified to transact business as a foreign corporation and are each in good
standing in the jurisdictions set forth opposite their respective names in
Schedule 5.1, which are the only jurisdictions where such qualification is
required by reason of the nature of the properties and assets currently owned,
operated or leased by the Parent or Merger Sub or the business currently
conducted by them, except for such jurisdictions where the failure to be so
qualified would not have a Xxxx.xxx Material Adverse Effect (as defined below).
The term "Xxxx.xxx Material Adverse Effect" means for purposes of this
Agreement, any change, event or effect that is, or would be, materially adverse
to the business, prospects, operation, assets, liabilities, financial condition
or results of operations of the Parent and its subsidiaries, taken as a whole.
Section 5.2 Authorization. Each of the Parent and Merger Sub has full
corporate power and authority to execute and deliver this Agreement and the Note
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the Note and the consummation of the transactions
contemplated hereby and thereby have been duly approved by the Boards of
Directors of the Parent and, in the case of this Agreement, Merger Sub and by
the Parent as the sole stockholder of Merger Sub, and no other corporate
proceedings on the part of the Parent or, in the case of this Agreement, Merger
Sub are necessary to approve and authorize the execution and delivery of this
Agreement or (subject to the filing of the Certificates of Merger pursuant to
the GCL and the BCL) the consummation of the transactions contemplated hereby
and thereby. Each of this Agreement and the Note has been duly executed
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and delivered by the Parent and, in the case of this Agreement, Merger Sub and
constitutes the valid and binding agreement of the Parent and Merger Sub,
enforceable in accordance with its terms, except to the extent that
enforceability may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other laws affecting the enforcement of creditors'
rights generally and by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or in law).
Section 5.3 Consents and Approvals; No Violations. Subject to (a) the
filing of the Certificates of Merger with the Secretary of State of the State of
Delaware and the Department of State of the State of New York and (b) compliance
with applicable federal and state securities laws, the execution and delivery of
this Agreement and the Note and the consummation of the transactions
contemplated hereby and thereby will not: (i) violate or conflict with any
provisions of the Certificate of Incorporation or By-laws of the Parent or
Merger Sub; (ii) breach, violate or constitute an event of default (or an event
which with the lapse of time or the giving of notice or both would constitute an
event of default) under, give rise to any right of termination, cancellation,
modification or acceleration under, or require any consent or the giving of any
notice under, any note, bond, indenture, mortgage, security agreement, lease,
license, franchise, permit, agreement or other instrument or obligation to which
the Parent or Merger Sub are parties, or by which any of them or any of their
respective properties or assets may be bound, or result in the creation of any
lien, claim or encumbrance of any kind whatsoever upon the properties or assets
of the Parent or Merger Sub pursuant to the terms of any such instrument or
obligation, other than any breach, violation, default, termination,
cancellation, modification or acceleration which would not have a Xxxx.xxx
Material Adverse Effect; (iii) violate or conflict with any law, statute,
ordinance, code, rule, regulation, judgment, order, writ, injunction or decree
or other instrument of any federal, state, local or foreign court or
governmental or regulatory body, agency or authority applicable to the Parent or
Merger Sub or by which any of their respective properties or assets may be
bound, except for such violations or conflicts which would not have a Xxxx.xxx
Material Adverse Effect; or (iv) require, on the part of the Parent or Merger
Sub, any filing or registration with, or permit, license, exemption, consent,
authorization or approval of, or the giving of any notice to, any governmental
or regulatory body, agency or authority other than any filing, registration,
permit, license, exemption, consent, authorization, approval or notice which if
not obtained or made would not have a Xxxx.xxx Material Adverse Effect.
Section 5.4 Capitalization. (a) As of the date hereof, the authorized
capital stock of the Parent consists of 150,000,000 shares of Parent Common
Stock, of which approximately 51,789,201 shares were issued and outstanding as
of December 31, 2000; 10,000,000 shares of Class B Common Stock, par value $.01
per share, of which 10,000,000 shares are issued and outstanding as of the date
hereof; and 60,000,000 shares of Preferred Stock, none of which is issued and
outstanding as of the date hereof. The outstanding shares of capital stock have
been duly authorized and validly issued, and are fully paid and non-assessable.
Except as disclosed in Schedule 5.4, and except with respect to employee,
director and consultant stock options and contingent share issuance obligations
in connection with acquisitions of assets (in each case as disclosed in or
contemplated by the SEC Filings (as defined below)), as of September 30, 2000
there are (i) no other options, warrants, preemptive rights or other rights to
purchase any of the Parent's authorized and unissued capital stock and (ii) no
obligations (contingent or otherwise)
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of the Parent to purchase, redeem or otherwise acquire any shares of its capital
stock or any interest therein or to pay any dividend or make any other
distribution in respect thereof.
(b) As of the date hereof, the authorized capital stock of
Merger Sub consists of 100 shares of Common Stock, par value $.01 per share, of
which 100 shares are issued and outstanding and owned by Parent. There are (i)
no other options, warrants, preemptive rights or other rights to purchase any of
Merger Sub's authorized and unissued capital stock and (ii) no obligations
(contingent or otherwise) of Merger Sub to purchase, redeem or otherwise acquire
any shares of its capital stock or any interest therein or to pay any dividend
or make any other distribution in respect thereof.
Section 5.5 SEC Reports.
Complete and correct copies of all reports and other filings filed by
the Parent with the SEC pursuant to the Securities Act, and the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations thereunder (the "Acts") since and including the filing date of the
Registration Statement with respect to the Parent's initial public offering
(such reports and other filings collectively referred to herein as the "SEC
Filings") are available on the SEC's Xxxxx Web site. Attached hereto as Schedule
5.5 is a copy of the SEC's Xxxxx Web site page listing all such reports and
filings filed by Parent. As of their respective dates, the SEC Filings did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
Section 5.6 Brokers; Payments. No broker, investment banker, financial
advisor or other person is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Parent or Merger Sub
Section 5.7 Disclosure. No representation or warranty by the Parent or
Merger Sub contained in this Agreement and no statement contained in any of the
Disclosure Schedules delivered or to be delivered pursuant to this Agreement by
Parent or Merger Sub contains or will contain, when considered together as a
whole, any untrue statement of a material fact or omits or will omit to state
any material fact necessary to make the statements contained therein not
misleading, in light of the circumstances under which they were made.
Section 5.8 Validity of Shares. Assuming the accuracy of the
representations contained in Section 4.2, the shares of Parent Common Stock to
be issued in connection with the Merger will, when issued in accordance with
this Agreement, be duly authorized, validly issued, fully paid and
nonassessable, will not be subject to any preemptive or other statutory right of
stockholders, will be issued in compliance with applicable U.S. federal and
state securities laws and will be free of any liens or encumbrances.
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ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1 Transfer of Shares. The Shareholder agrees that he (i)
shall not dispose of or in any way encumber his shares of Company Stock prior to
the consummation of the transactions contemplated hereby, (ii) shall use his
best efforts to cause, and take no action inconsistent with, the approval and
consummation of said transactions and (iii) at the Closing shall surrender the
stock certificates representing all shares of Company Stock owned by him, duly
endorsed for transfer.
Section 6.2 Reasonable Efforts; etc. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use its
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement and the Note, including obtaining any consents,
authorizations, exemptions and approvals from, and making all filings with, any
governmental or regulatory authority, agency or body which are necessary in
connection with the transactions contemplated by this Agreement.
Section 6.3 Fees and Expenses. The Parent and the Company shall bear
and pay all of their own fees, costs and expenses relating to the transactions
contemplated by this Agreement and the Note, including, without limitation, the
fees and expenses of their respective counsel, accountants, brokers and
financial advisors (including the fees, costs and expenses of the Shareholder
and the Company up to $75,000), except that the Shareholder shall be responsible
for all such fees, costs and expenses to the extent exceeding $75,000 incurred
by the Company and its Subsidiaries in connection with this Agreement and the
Note and the transactions contemplated hereby and such fees, costs and expenses
to the extent exceeding $75,000 shall be deemed expenses of the Shareholder and
paid by the Shareholder.
Section 6.4 Nasdaq National Market Listing. Parent shall cause the
shares of Parent Common Stock issuable in the Merger to be authorized for
listing on The Nasdaq National Market or, or if Parent's Common Stock is not
then listed on such market, then on such other securities exchange or market on
which such shares may then be traded or admitted for trading.
Section 6.5 Tax Covenants. (a) The parties hereto intend that, for
United States federal income tax purposes, the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Code, and that this
Agreement shall constitute a "plan of reorganization." Accordingly, both before
and after the Closing, each of the parties agrees that all of its books and
records shall be maintained, and all United States federal, state and local
income tax returns and schedules thereto shall be filed in a manner, consistent
with the Merger's qualification as a reorganization. Each party shall provide to
each other party such cooperation, information, reports, returns or schedules as
may be reasonably required to assist such other party in accounting for and
reporting the Merger as such. Each of Parent, Merger Sub, the Company and the
Shareholder agrees that it and its affiliates shall not take, cause or permit
any action (or fail to take, cause or permit any action) if such action (or the
failure of such action to occur) would cause the Merger not to be treated as a
reorganization within the meaning of Code Section
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368(a)(1); provided, however, that, notwithstanding the foregoing, each party
shall be expressly permitted to take, cause or permit any action (or fail to
take, cause or permit any action) if such action (or the failure of such action
to occur) is contemplated by this Agreement or any document related to the
transactions contemplated by this agreement or otherwise contemplated by the
parties and their respective affiliates.
(b) Parent shall have the exclusive right to represent the
interests of the Company in any and all Tax audits or administrative or court
proceedings relating to Tax returns, reports or other filings for all periods
whether ending before or after the day on which the Effective Time occurs.
(c) The Shareholder agrees to promptly notify Parent in
writing upon receipt by the Shareholder or any affiliate of the Shareholder of
notice of any pending or threatened Tax audits or assessments relating to the
income, properties or operations of the Company.
(d) After the Closing Date, the Parent, the Surviving
Corporation and the Shareholder agree to provide each other with such
cooperation and information relating to the Company as any other party may
reasonably request in (i) filing any Tax return, report or other filing, amended
Tax return, report or other filing or claim for refund, (ii) determining any Tax
liability or right to refund of Taxes, (iii) conducting or defending any audit
or other proceeding in respect of Taxes, or (iv) effectuating the terms of this
Agreement. Notwithstanding the foregoing, no party shall be unreasonably
required to prepare any document, or determine any information, not then in its
possession in response to a request under this Section 6.5(d).
(e) The Shareholder shall deliver to Parent on or before the
Closing Date an affidavit in the form of Exhibit E to the effect that the
Shareholder is not a "foreign person" within the meaning of Code Section 1445.
If, on or before the Closing Date, Parent has not received each such affidavit,
Parent may withhold from the Merger Consideration such sums as are required to
be withheld therefrom under Code Section 1445.
Section 6.6 Indemnification. (a) The Surviving Corporation shall assume
at the Effective Time, and shall be liable for a period of six years commencing
at the Effective Time for, the Company's obligations to indemnify (excluding any
and all claims arising (i) in connection with the transactions contemplated by
this Agreement and (ii) pursuant to Article XI hereof), defend and hold harmless
each person who is or has been at any time prior to the Effective Time, or who
becomes prior to the Effective Time, an officer, director or employee of the
Company (the "Company Indemnified Parties") in respect of acts or omissions
occurring on or prior to the Effective Time to the extent provided in the
Surviving Corporation's Certificate of Incorporation and Bylaws in effect on the
date hereof.
(b) If the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges into any other person or entity and is
not the continuing or surviving person of such consolidation or merger or (ii)
transfers all or substantially all of its properties and assets to any persons
or entity, then and in each such case, proper provision shall be made so that
the survivor or transferee shall assume the indemnification obligations provided
for in Section 6.6(a).
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Section 6.7 Exchange Act Reports. Parent shall timely file all reports
required to be filed under the Exchange Act, during the period commencing on the
date hereof and ending on the second anniversary of the Closing Date.
Section 6.8 Legends. The Parent shall re-issue a certificate without
the legends described in Section 4.2 to the holder of such certificate, if the
shares represented by such certificate are being transferred pursuant to an
effective registration statement under the Securities Act or if the shares
represented by such certificate may be publicly sold pursuant to Rule 144(k)
under the Securities Act. The Parent shall take all actions reasonably necessary
to facilitate sales by the Shareholder of the Parent Common Stock issued to the
Shareholder in the Merger pursuant to Rule 144.
Section 6.9 Easylink Agreements; Xtreme Agreements; and Comtext
Agreements.
The Company shall not amend or agree to any termination of, or exercise
any rights to terminate, or waive any of its rights under the Easylink
Agreements, the Xtreme Agreements or the Comtext Agreements without the prior
written consent of Parent. Before the Closing, the Company shall furnish Parent
with a copy of all notices under the Easylink Agreements, the Xtreme Agreements
and the Comtext Agreements delivered by or received by the Company or any of the
Subsidiaries and other written information received by the Company or any of the
Subsidiaries relating to the transactions contemplated by such agreements.
Section 6.10 Registration Rights.
The Shareholder shall be entitled to resale registration rights with
respect to the shares of Parent Common Stock included in the Closing Share
Payment pari passu with other senior executives of Parent and on the same terms
and conditions granted to such executives.
Section 6.11 Funding of Closing Cash Payment under the Easylink
Agreements; Guarantee.
Subject to satisfaction of all conditions precedent to the obligations
of the Company under the Easylink Agreements and the occurrence of the closing
thereunder (the "Easylink Closing") on or before February 15, 2001, and provided
the Company and the Shareholder are not in breach of any of their
representations, warranties or agreements under this Agreement, Parent agrees to
fund upon the Easylink Closing $14 million of the $15 million cash payment
required to be made by the Company to AT&T pursuant to the Easylink Agreements
(the "Easylink Cash Closing Payment") and upon the Easylink Closing to execute
and deliver to AT&T Corp. a guarantee of up to $15 million of the principal
amount of the note issuable to AT&T by the Company at the Easylink Closing in
substantially the form required under the Easylink Agreements (the "Parent
Guarantee"). The Shareholder shall fund the remaining $1.0 million of the
Easylink Cash Closing Payment and the $500,000 required deposit under the
Telecommunication Services Agreement entered into pursuant to the Easylink
Agreements (collectively, the "Shareholder Advance"), and the Parent shall
reimburse the Shareholder for the Shareholder Advance upon the Closing. Such
funding by Parent shall be pursuant to a loan from Parent to the Company which
shall be evidenced by a promissory note in the form of Exhibit F hereto (the
"Easylink Note"). The Easylink Note shall be due and payable upon the earlier of
(i)
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the termination of this Agreement as a result of a breach by the Shareholder or
the Company of any of their respective representations, warranties or agreements
hereunder and (ii) one year after the date of issuance. The Easylink Note shall
bear interest at a rate per annum equal to 10% per annum, which interest shall
be payable upon the maturity date of the Easylink Note. Until the Easylink Note
has been paid in full and the Parent Guarantee has been discharged, the
Shareholder shall, and the Shareholder shall cause the Company and its
subsidiaries to, comply with all of its and their respective covenants and other
obligations under the Easylink Note, the Easylink Security Agreements, the
Easylink Pledge Agreements and the other related agreements (as such terms are
defined in the Easylink Agreements and such agreements and related agreements
are collectively referred to herein as the "ATT Loan Documents"), and the
Shareholder shall not, and shall not permit the Company or any of its
subsidiaries to, amend, modify or seek a waiver of any of the terms, covenants
or other obligations under the ATT Loan Documents without the prior written
consent of the Parent. Except as contemplated by Section 2.1(c), until the
Easylink Note has been paid in full and the Parent Guarantee has been
discharged, the Company shall not, and shall cause its subsidiaries not to, make
any payment or distribution to the Shareholder or otherwise to any other
shareholder of the Company now existing or hereafter arising (whether in the
nature of a loan, repayment of a loan or advance, dividend, distribution, stock
repurchase, management or consulting fees or otherwise). If the Parent makes any
payment or payments in respect of the Parent Guarantee, in addition to any
rights of Parent under applicable law, the Parent shall be subrogated to all
rights of AT&T Corp. in respect of the obligations on which such payment or
payments were made (including all rights under the ATT Loan Documents with
respect to such obligations), and the Company shall be obligated to immediately
reimburse Parent for such payments with interest thereon at the default rate as
provided in the Easylink Note until paid in full.
Section 6.12 Undertaking by the Parent.
Pursuant to Section 12.4 of the Sale and Purchase Agreement between GN
Comtext Limited ("GN") and Swift Telecommunications, Inc. dated August 3, 2000
(the "GN Purchase Agreement"), Xxxx.xxx hereby covenants directly for the
benefit of GN to discharge such obligations as the Company owes to GN (to the
extent that such obligations have application in relation to GN Italy and/or its
affairs) under or by virtue of the GN Purchase Agreement or any other agreements
contemplated by the GN Purchase Agreement and as if references in the GN
Purchase Agreement to "Swift" in clause dealing with such obligations were
references to such party. Pursuant to Section 28.2 of the Telecommunications
Services Agreement between the Company and GN Comtext Limited dated August 3,
2001 (the "GN Telecom Agreement"), the Parent agrees for the benefit of GN to be
bound by the provisions of the GN Telecom Agreement jointly and severally with
the Company as if the Parent had all of the obligations of the Company under the
GN Telecom Agreement.
ARTICLE VII
COVENANTS OF SHAREHOLDERS
Section 7.1 Non-competition. The Shareholder hereby agrees that for a
period of three (3) years after the date hereof, he or she will not, directly or
indirectly, compete with the business of the Surviving Corporation or any
Subsidiary or (other than in his capacity as an
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employee of the Surviving Corporation) the Parent or any of its subsidiaries.
The Shareholder acknowledges that money damages may not be sufficient remedy for
any breach of this provision and agrees that Parent and the Surviving
Corporation will be entitled to seek specific performance and injunctive or
other equitable relief for any such breach.
For purposes of this Article VII, the term "not compete" shall mean
that:
(a) The Shareholder shall not, on Shareholder's behalf or on
behalf of any other party other than Parent or the Surviving Corporation or any
Subsidiary, solicit or seek the business of any customer or account of the
Surviving Corporation or any Subsidiary or Parent or any of its subsidiaries
wherein said solicitation involves a product or service substantially similar to
or competitive with any product or service offered or under development by the
Surviving Corporation or any Subsidiary or Parent or any of its subsidiaries as
of the date hereof or during the term of this covenant; provided that, until the
consummation of the acquisition of Alpha-Tel, the Shareholder may own shares of
capital stock, and hold a directorship and one or more offices, of Telecom
International Inc. which conducts some telex business activities provided such
activities are not expanded materially beyond those conducted as of the date
hereof.
(b) The Shareholder shall not directly or indirectly own,
operate, consult to or be employed by any firm in a business substantially
similar to or competitive with the present business of the Surviving Corporation
or any Subsidiary or the Parent or any of its subsidiaries or such business
activity in which the Surviving Corporation or any Subsidiary or the Parent or
any of its subsidiaries may engage during the term of this covenant; provided
that the Shareholder shall not be prohibited from owning less than 5% of a
publicly traded mutual fund or similar publicly traded investment for investment
purposes; and provided further that, until the consummation of the acquisition
of Alpha-Tel, the Shareholder may own shares of capital stock, and hold a
directorship and one or more offices, of Telecom International Inc. which
conducts some telex business activities provided such activities are not
expanded materially beyond those conducted as of the date hereof.
(c) The Shareholder shall not directly or indirectly solicit
the customers, vendors, subcontractors, or prospects of the Surviving
Corporation or any Subsidiary or the Parent or any of its subsidiaries with
services or products of the nature of those being sold by such entities.
The Shareholder further agrees that, for a period of three (3) years
from after the date hereof, he or she will not in any capacity (other than as an
employee of and on behalf of the Surviving Corporation or any Subsidiary or the
Parent or any of its subsidiaries), either separately, jointly or in association
with others, directly or indirectly, solicit or contact any of the employees or
consultants that were such with respect to the Surviving Corporation or any
Subsidiary or the Parent or any of its subsidiaries. The Shareholder's
obligations under this Section 7.1 shall survive the termination or cessation of
his employment with the Surviving Corporation and shall not be limited by
Article XI hereof.
ARTICLE VIII
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CONDITIONS TO THE OBLIGATIONS
OF THE PARENT AND MERGER SUB
The obligation of the Parent and Merger Sub to consummate the
transactions contemplated hereby shall be subject to the satisfaction, on or
prior to the Closing Date, of each of the following conditions (any of which may
be waived in writing by the Parent and Merger Sub in their sole discretion):
Section 8.1 Performance. The Company and the Shareholder shall have
performed and complied in all material respects with all of the obligations
under this Agreement that are required to be performed or complied with by them
on or prior to the Closing Date, and at the Closing the Company shall have
delivered to the Parent and Merger Sub a certificate (duly executed on behalf of
the Company by the President or the Chief Financial Officer of the Company) to
that effect with respect to all such obligations required to have been performed
or complied with by the Company on or before the Closing Date, and the
Shareholder shall have executed and delivered to the Parent and Merger Sub a
certificate to that effect with respect to all such obligations required to have
been performed or complied with by the Shareholder on or before the Closing
Date.
Section 8.2 Absence of Litigation. No statute, rule or regulation shall
have been enacted or promulgated, and no order, decree, writ or injunction shall
have been issued and remain in effect, by any court or governmental or
regulatory body, agency or authority which restrains, enjoins or otherwise
prohibits the consummation of the transactions contemplated hereby.
Section 8.3 Additional Agreements. Parent shall have received duly
executed and delivered the following agreements:
(i) Employment Agreement, in the form mutually agreed
by the Parent and Xxxxxx Xxx Xxxx as of the date hereof, executed by
Xx. Xxx Xxxx; and
(ii) a FIRPTA Certificate, duly executed by the Company.
Section 8.4 Delivery of Certificates for Cancellation. The share
certificates representing 100% of the issued and outstanding shares of Company
Common Stock as of the Closing Date, duly endorsed in blank, shall have been
surrendered for cancellation.
Section 8.5 Certificates of Merger. The Company shall have executed and
delivered to the Parent counterparts of the Certificates of Merger to be filed
with the Secretary of State of the State of Delaware and the Department of State
of the State of New York in connection with the Merger and the Certificates of
Merger shall have been duly filed and become effective.
Section 8.6 NASDAQ Waiver or Receipt of Shareholder Approval. Parent
shall have either (i) received a waiver from the NASDAQ Stock Market from its
shareholder approval rules to the extent applicable in connection with the
issuance of the Closing Share Payment and complied with any conditions contained
in such waiver in order to consummate the transactions contemplated hereby at
the Closing or (ii) shall have obtained shareholder approval to the extent
required under the rules of the NASDAQ Stock Market of the issuance of the
Closing Share
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Payment in accordance with the terms of this Agreement pursuant to a duly called
meeting of shareholders of Parent.
Section 8.7 Supporting Documents. The Company shall have delivered to
the Parent a certificate of the Secretary of the Company, dated the Closing
Date, certifying on behalf of the Company (i) that attached thereto is a true
and complete copy of the By-Laws of the Company as in effect on the date of such
certification; (ii) that attached thereto is a true and complete copy of all
resolutions adopted by the Board of Directors and the Shareholder of the Company
authorizing the execution, delivery and performance of this Agreement and the
consummation of the Merger; and (iii) to the incumbency and specimen signature
of each officer of the Company executing on behalf of the Company each of this
Agreement and the other agreements, certificates and documents related hereto.
Section 8.8 Easylink Closing.
The Easylink Closing shall have occurred in accordance with the terms
of the Easylink Agreements.
ARTICLE IX
CONDITIONS TO THE OBLIGATIONS OF THE COMPANY
AND THE SHAREHOLDER
The obligation of the Company and the Shareholder to consummate the
transactions contemplated by this Agreement shall be subject to the
satisfaction, on or prior to the Closing Date of each of the following
conditions (any of which may be waived in writing by the Company and the
Shareholder in their sole discretion):
Section 9.1 Performance. Each of the Parent and Merger Sub shall have
performed and complied in all material respects with all of the obligations
under this Agreement which are required to be performed or complied with by them
on or prior to the Closing Date, and at the Closing each of the Parent and
Merger Sub shall have delivered to the Company and the Shareholder a
certificate, signed on its behalf by its President or its Chief Financial
Officer, to that effect with respect to all such obligations required to have
been performed or complied with by such entity on or before the Closing Date.
Section 9.2 Absence of Litigation. No statute, rule or regulation shall
have been enacted or promulgated, and no order, decree, writ or injunction shall
have been issued and shall remain in effect, by any court or governmental or
regulatory body, agency or authority which restrains, enjoins or otherwise
prohibits the consummation of the transactions contemplated hereby.
Section 9.3 Additional Agreements. The Employment Agreement of the
Shareholder referred to in Section 8.5(i) hereof shall have been duly executed
and delivered by Parent or the Surviving Corporation.
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Section 9.4 Certificates of Merger. The Parent and Merger Sub shall
have executed and delivered to the Company counterparts of the Certificates of
Merger to be filed with the Secretary of State of the State of Delaware and the
Department of State of the State of New York in connection with the Merger and
the Certificates of Merger shall have been duly filed and become effective.
Section 9.5 Cash and Shares of Parent Common Stock. At the Closing, the
Parent shall deliver to the Shareholder the cash portion of the Merger
Consideration, the Note and the portion of the Closing Share Payment issuable to
the Shareholder pursuant to Section 2.2(a) hereof, in each case payable on the
Closing Date, as provided in Section 2.3 hereof, and the Parent shall reimburse
the Shareholder for the Shareholder Advance.
Section 9.6 NASDAQ Waiver or Receipt of Shareholder Approval. Parent
shall have either (i) received a waiver from the NASDAQ Stock Market from its
shareholder approval rules to the extent applicable in connection with the
issuance of the Closing Share Payment and complied with any conditions contained
in such waiver in order to consummate the transactions contemplated hereby at
the Closing or (ii) shall have obtained shareholder approval to the extent
required under the rules of the NASDAQ Stock Market of the issuance of the
Closing Share Payment in accordance with the terms of this Agreement pursuant to
a duly called special meeting of shareholders of Parent.
Section 9.7 Supporting Documents. (a) The Parent shall have delivered
to the Company a certificate of the Secretary of the Parent, dated the Closing
Date, certifying on behalf of the Parent (i) that attached thereto is a true and
complete copy of the By-Laws of such Parent as in effect on the date of such
certification; (ii) that attached thereto is a true and complete copy of all
resolutions adopted by the Board of Directors of such Parent authorizing the
execution, delivery and performance of this Agreement and the consummation of
the Merger; and (iii) to the incumbency and specimen signature of each officer
of the Parent executing on behalf of such Parent this Agreement and the other
agreements related hereto.
(b) Merger Sub shall have delivered to the Company a
certificate of the Secretary of Merger Sub, dated the Closing Date, certifying
on behalf of Merger Sub (i) that attached thereto is a true and complete copy of
the By-Laws of such Merger Sub as in effect on the date of such certification;
(ii) that attached thereto is a true and complete copy of all resolutions
adopted by the Board of Directors and stockholders of such Merger Sub
authorizing the execution, delivery and performance of this Agreement and the
consummation of the Merger; and (iii) to the incumbency and specimen signature
of each officer of Merger Sub executing on behalf of such Merger Sub this
Agreement and the other agreements related hereto.
Section 9.8 Easylink Closing.
The Easylink Closing shall have occurred in accordance with the terms
of the Easylink Agreements.
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ARTICLE X
TERMINATION
Section 10.1 Termination. This Agreement may be terminated at any
time prior to the Effective Time:
(a) by the mutual written consent of the Company and the
Parent;
(b) by either the Company or the Parent
(i) if any court or governmental or regulatory agency,
authority or body shall have enacted, promulgated or issued any
statute, rule, regulation, ruling, writ or injunction, or taken any
other action, restraining, enjoining or otherwise prohibiting the
transactions contemplated hereby and all appeals and means of appeal
therefrom have been exhausted; or
(ii) if the Effective Time shall not have occurred on or
before June 30, 2001; provided, however, that the right to terminate
this Agreement pursuant to this Section 11.1(b)(ii) shall not be
available to any party whose (or whose affiliate(s)') breach of any
representation or warranty or failure to perform or comply with any
obligation under this Agreement has been the cause of, or resulted in,
the failure of the Effective Time to occur on or before such date; or
(c) by the Company, if any of the conditions specified in
Article IX have not been met or waived prior to such time as such condition can
no longer be satisfied; or
(d) by the Parent, if any of the conditions specified in
Article VIII have not been met or waived prior to such time as such condition
can no longer be satisfied.
Section 10.2 Effect of Termination. In the event of termination of this
Agreement, this Agreement shall forthwith become void and there shall be no
liability on the part of any of the parties hereto or (in the case of the
Company, the Parent and Merger Sub) their respective officers or directors,
except for Sections 6.3 and 12.6, which shall remain in full force and effect,
and except that nothing herein shall relieve any party from liability for a
breach of this Agreement prior to the termination hereof.
ARTICLE XI
INDEMNIFICATION; SURVIVAL OF REPRESENTATIONS AND WARRANTIES
Section 11.1 Indemnity Obligations. (a) Subject to Section 11.3 hereof,
the Shareholder hereby agrees to indemnify and hold the Parent, the Surviving
Corporation and their respective affiliates and successors (collectively,
"Parent Indemnitees") harmless from, and to reimburse the Parent Indemnitees
for, any Losses (as that term is hereinafter defined) arising out of, based upon
or resulting from (i) any inaccuracy in or breach of any representation or
warranty of the Shareholder set forth in Article III or Article IV of this
Agreement ; (ii) any breach or
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nonfulfillment of, or any failure to perform, any of the covenants, agreements
or undertakings of the Company or the Shareholder (which covenants, agreements
or undertakings were to be performed or complied with on or prior to the
consummation of the Merger) which are contained in this Agreement or the
Easylink Note; (iii) any claims to the extent arising out of the conduct of the
business of the Company prior to the Closing that are not reserved as a
liability on the November 30, 2000 Balance Sheet or incurred in the ordinary
course of business consistent in kind and amount with past practice or disclosed
on the Disclosure Schedule, (iv) any Losses arising out of or relating to GN
Comtext S.r.L., including but not limited to the sale of its assets and business
and the distribution of the proceeds of such sale (v) the deferred portion of
the purchase price (including any contingent payment obligations) owed to GN
Comtext Ltd or (vi) the agreements and arrangements disclosed in item 2 of
Schedule 3.7. For purposes of this Agreement, the term "Losses" shall mean any
and all losses, damages, deficiencies, liabilities, obligations, actions,
claims, suits, proceedings, demands, assessments, judgments, recoveries, fees,
costs and expenses (including, without limitation, all out-of-pocket expenses,
reasonable investigation expenses and reasonable fees and disbursements of
accountants and counsel) of any nature whatsoever, net of insurance proceeds
actually realized by the party incurring such Loss. Notwithstanding the
foregoing and subject to the last sentence of this Section 11.1(a), (i) the
Shareholder shall not be liable for or be obligated to indemnify any party for
one or more breaches of representations, warranties or agreements of the
Shareholder hereunder (other than under Sections 3.3, 3.4, 3.23, 4.1, 4.2 and
7.1) or for indemnification under Section 11.1(a) (other than to the extent
arising out of Sections 3.3, 3.4, 3.23, 4.1, 4.2 or 7.1 or Section 11.1(a) (ii),
(iii), (iv), (v) or (vi)) unless and to the extent that the aggregate amount of
all Losses arising out of such a breach or breaches exceeds $250,000, and (ii)
the Shareholder shall not be liable for any Losses arising out of breaches of
representations, warranties or agreements hereunder (other than under Sections
3.3, 3.4, 3.23, 4.1, 4.2 and 7.1) or for indemnification under Section 11.1(a)
(other than to the extent arising out of Sections 3.3, 3.4, 3.23, 4.1, 4.2 or
7.1 or Section 11.1(a) (ii), (iii), (iv), (v) or (vi)) in excess of an amount
equal to 50% of the aggregate Merger Consideration actually paid to the
Shareholder. The foregoing limitations on liability of the Shareholder shall not
apply in the event of breaches of representations, warranties or agreements
arising out of fraud or willful misrepresentation on the part of the
Shareholder.
(b) Subject to Section 11.3 hereof, Parent hereby agrees to
indemnify and hold the Shareholder harmless from, and to reimburse the
Shareholder for, any Losses arising out of, based upon or resulting from (i) any
inaccuracy in or breach of any representation or warranty of the Parent or
Merger Sub set forth in Article V of this Agreement or any Schedule or
certificate delivered by the Parent pursuant hereto; or (ii) any breach or
nonfulfillment of, or any failure to perform, any of the covenants, agreements
or undertakings of the Parent or Merger Sub which are contained in this
Agreement. Notwithstanding the foregoing, (i) neither the Parent nor the
Surviving Corporation shall be liable for or be obligated to indemnify any party
for one or more breaches of representations, warranties or agreements of the
Parent or Merger Sub hereunder (other than under Sections 5.3, 5.4 and 5.6)
unless the aggregate amount of all Losses arising out of such a breach or
breaches exceeds $250,000 and (ii) the Parent and the Surviving Corp.
collectively shall not be liable for any Losses arising out of breaches of
representations or warranties under Article V (other than under Sections 5.3,
5.4 and 5.6) in excess of an amount equal to 50% of the total Merger
Consideration paid by Parent. The foregoing limitations on liability of Parent
and the Surviving Corporation shall not apply in the event of breaches of
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representations, warranties or agreements arising out of fraud or willful
misrepresentation on the part of Parent and the Surviving Corporation.
Section 11.2 Notification of Claims. (a) Subject to the provisions of
Section 11.3 below, in the event of the occurrence of an event pursuant to which
either party (the "Indemnified Party") shall seek indemnity pursuant to Section
11.1, the Indemnified Party shall provide the indemnifying party (the
"Indemnifying Party") against whom indemnification is sought with prompt written
notice (a "Claim Notice") of such event and shall otherwise promptly make
available to the Indemnifying Party, all relevant information that is material
to the claim and which is in the possession of the Indemnified Party. The
Indemnified Party's failure to give a timely Claims Notice or to promptly
furnish the Indemnifying Party with any relevant data and documents in
connection with any Third-Party Claim (as that term is hereinafter defined)
shall not constitute a defense (in part or in whole) to any claim for
indemnification by such party, except and only to the extent that such failure
shall result in any prejudice to the Indemnifying Party.
(b) After the giving of any Claim Notice pursuant hereto, the
amount of indemnification to which the Indemnified Party shall be entitled under
this Article XI shall be determined by (A) written agreement between the
Indemnified Party and the Indemnifying Party or (B) a final judgment or decree
of any court of competent jurisdiction. The judgment or decree of a court shall
be deemed final when the time for appeal, if any, has expired and no appeal has
been taken or when all appeals taken have been finally determined.
(c) The Indemnifying Party shall have the right to elect to
join in, and in such event to conduct and control, through counsel of its
choosing reasonably acceptable to the Indemnified Party, the defense,
settlement, adjustment or compromise of any claim of any third party (a "Third
Party Claim") as to which indemnification will be sought by the Indemnified
Party from the Indemnifying Party. The expense of any such defense, settlement,
adjustment or compromise, including such counsel, shall be borne by the
Shareholder with respect to indemnification sought pursuant to Section 11.1(a),
and by the Parent with respect to indemnification sought pursuant to Section
11.1(b). Unless the Indemnifying Party elects to assume such defense,
settlement, adjustment or compromise, the Indemnified Party shall have the right
to settle any such Third Party Claim; provided, however, that the Indemnified
Party may not effect the settlement, adjustment or compromise of any such Third
Party Claim without the written consent of the Indemnifying Party, which consent
shall not be unreasonably withheld. In connection with any Third Party Claim,
the Indemnified Party, or the Indemnifying Party if it has assumed the defense
of such claim pursuant to the foregoing, shall diligently pursue the defense of
such Third Party Claim.
Section 11.3 Duration. All representations and warranties set forth in
this Agreement and any Schedules or certificates delivered pursuant hereto or
thereto, and all covenants, agreements and undertakings of the parties contained
in or made pursuant to this Agreement, the Note and any Schedules or
certificates delivered pursuant hereto or thereto, and the rights of the parties
to seek indemnification with respect thereto, shall survive the Closing but all
representations and warranties contained in this Agreement or any certificate or
Schedule delivered pursuant hereto or thereto shall expire on March 31, 2002, at
which time the indemnification provided in Article XI arising out of a breach of
the representations or
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warranties shall terminate except with respect to any claim for indemnification
made prior to the date of expiration of the survival period for such claim which
shall survive until the resolution of such claim. Notwithstanding the foregoing,
obligations arising from the breaches of the representations and warranties set
forth in Sections 3.23, 3.4, 3.9, 3.23, 4.1(i), 5.3, 5.4 and 5.6 (the "Covered
Representations") and arising from fraud shall each survive the Closing Date
until expiration of the applicable statute of limitations.
Section 11.4 No Contribution. The Shareholder hereby waives,
acknowledges and agrees that the Shareholder shall not have and shall not
exercise or assert (or attempt to exercise or assert), any right of contribution
or right of indemnity against the Company or the Surviving Corporation in
connection with any indemnification payments which the Shareholder is required
to make under this Article XI.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.1 Amendment; Waiver. This Agreement may be amended by
written agreement among the Parent, Merger Sub, the Company and the Shareholder,
and any provision hereof may be waived in writing by the Parent or Merger Sub,
on the one hand, or by the Company and the Shareholder, on the other hand.
Section 12.2 Waiver of Compliance. Except as otherwise provided in this
Agreement, any failure of any of the parties to comply with any obligation,
covenant or agreement contained herein may be waived only by a written notice
from the party or parties entitled to the benefits thereof. No failure by any
party hereto to exercise, and no delay in exercising, any right hereunder, shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right hereunder preclude any other or future exercise of that right by that
party.
Section 12.3 Notices. All notices and other communications hereunder
shall be deemed given if given in writing and delivered personally, by
registered or certified mail, return receipt requested, postage prepaid, or by
overnight courier to the party to receive the same at its respective address set
forth below (or at such other address as may from time to time be designated by
such party to the others in accordance with this Section 12.3):
(a) if to the Company or the Shareholder, to:
Xxxxxx Xxx Xxxx
President
Swift Telecommunications, Inc.
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Telecopier: 000-000-0000
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with copies to:
Xxxxx X. Xxxxxxx, Esq.
Xxxxxxx, Xxxxx & Xxxxxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: 000-000-0000
(b) if to the Parent or Merger Sub, to:
Xxxx.xxx, Inc.
00 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxx
Telecopier: 000-000-0000
With a copy at the same address to:
Xxxxx X. Xxxxxxxx, Esq.
Telecopier: 000-000-0000
All such notices and communications hereunder shall be deemed given
when received, as evidenced by the signed acknowledgment of receipt of the
person to whom such notice or communication shall have been personally
delivered, the acknowledgment of receipt returned to the sender by the
applicable postal authorities or the confirmation of delivery rendered by the
applicable overnight courier service.
Section 12.4 Assignment. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors (or, in the case of the Shareholder, his heirs,
administrators, executors and personal representatives) and permitted assigns.
Neither this Agreement nor any rights, duties or obligations hereunder shall be
assigned by any party hereto without the prior written consent of the other
parties hereto, except that vested rights to receive payment or to initiate
legal action with respect to causes of action that have accrued hereunder shall
be assignable by devise, descent or operation of law and except that Parent may
assign its rights under this Agreement in connection with a merger or
consolidation of Parent with, or a transfer of all or substantially all of
Parent's assets to, another person.
Section 12.5 No Third Party Beneficiaries. Neither this Agreement or
any provision hereof nor any Schedule, certificate or other instrument delivered
pursuant hereto, nor any agreement to be entered into pursuant hereto or any
provision hereof, is intended to create any right, claim or remedy in favor of
any person or entity, other than the parties hereto and their respective
successors (or, in the case of the Shareholder, his respective heirs,
administrators, executors and personal representatives) and permitted assigns
and any other parties indemnified under Article XI.
Section 12.6 Public Announcements. Promptly after the execution and
delivery hereof, the Parent and the Company shall issue a press release in such
form as they shall
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mutually agree. Other than as provided in the immediately preceding sentence,
none of the parties hereto shall, except as mutually agreed by the Parent and
the Shareholder, or except as may be required by law or applicable regulatory
authority (including, without limitation, the rules applicable to Nasdaq
National Market), issue any reports, releases, announcements or other statements
to the public relating to the transactions contemplated hereby.
Section 12.7 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 12.8 Headings. The article and section headings contained in
this Agreement are solely for convenience of reference, are not part of the
agreement of the parties and shall not be used in construing this Agreement or
in any way affect the meaning or interpretation of this Agreement.
Section 12.9 Entire Agreement. This Agreement, the Note and the
Schedules, certificates and other instruments and documents delivered pursuant
to this Agreement, together with the other agreements referred to herein and to
be entered into pursuant hereto, embody the entire agreement of the parties
hereto in respect of, and there are no other agreements or understandings,
written or oral, among the parties relating to, the subject matter hereof, other
than the Confidentiality Agreement entered into between Parent and the Company
(the "Confidentiality Agreement"). The Transaction Agreements and the Note
supersedes all prior agreements and understandings, written or oral, between the
parties with respect to such subject matter, other than the Confidentiality
Agreement.
Section 12.10 Governing Law. The parties hereby agree that this
Agreement, and the respective rights, duties and obligations of the parties
hereunder, shall be governed by and construed in accordance with the General
Corporation Law of the State of Delaware as to matters within the scope thereof
and, as to all other matters, shall be governed by and construed in accordance
with the laws of the State of New York, without giving effect to principles of
conflicts of law thereunder. Each of the parties hereby (i) irrevocably consents
and agrees that any legal or equitable action or proceeding arising under or in
connection with this Agreement shall be brought exclusively in the federal or
state courts sitting in New York, New York and any court to which an appeal may
be taken in any such litigation, and (ii) by execution and delivery of this
Agreement, irrevocably submits to and accepts, with respect to any such action
or proceeding, for itself and in respect of its properties and assets, generally
and unconditionally, the jurisdiction of the aforesaid courts, and irrevocably
waives any and all rights such party may now or hereafter have to object to such
jurisdiction.
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IN WITNESS WHEREOF, Parent, Merger Sub, the Company and the Shareholder
have caused this Agreement to be duly executed and delivered as an instrument
under seal as of the date first above written.
XXXX.XXX, INC.
By: s/Xxxxx Xxxxxxxx
----------------------------
Xxxxx Xxxxxxxx:
Senior Vice President:
ML ACQUISITION CORP.
By: s/Xxxxx Xxxxxxxx
----------------------------
Xxxxx Xxxxxxxx:
Senior Vice President:
SWIFT TELECOMMUNICATIONS INC.
By: s/Xxxxxx Xxx Xxxx
----------------------------
Name: Xxxxxx Xxx Xxxx
Title: President
THE SHAREHOLDER:
S/Xxxxxx Xxx Xxxx
-----------------------------------
Xxxxxx Xxx Xxxx
F-1
