Exhibit 2.1
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AGREEMENT AND PLAN OF MERGER
AMONG
CORECOMM LIMITED,
CORECOMM GROUP SUB I, INC.
AND
VOYAGER.NET, INC.
Dated as of March 12, 2000
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TABLE OF CONTENTS
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Page
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ARTICLE I THE MERGER ...............................................2
1.1 The Merger ...............................................2
1.2 Effective Time ...........................................2
1.3 Closing ..................................................3
1.4 Tax Consequences .........................................3
ARTICLE II DIRECTORS AND OFFICERSOF THE SURVIVING CORPORATION........3
2.1 Directors of the Surviving Corporation ...................3
2.2 Officers of the Surviving Corporation ....................4
ARTICLE III EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS .................................4
3.1 Effect on Capital Stock ..................................4
3.2 Company Stock Options and Related Matters ................7
ARTICLE IV PAYMENT OF SHARES ........................................8
4.1 Payment for Shares of Company Common Stock ...............8
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY............11
5.1 Existence; Good Standing; Authority; Compliance With Law.11
5.2 Authorization, Validity and Effect of Agreements.........13
5.3 Capitalization ..........................................14
5.4 Subsidiaries ............................................15
5.5 Other Interests .........................................15
5.6 No Violation; Consents ..................................15
5.7 SEC Documents ...........................................16
5.8 Litigation ..............................................17
5.9 Absence of Certain Changes ..............................17
5.10 Taxes ...................................................19
5.11 Real Property Leases; Properties ........................20
5.12 Intellectual Property ...................................22
5.13 Environmental Matters ...................................24
5.14 Employee Benefit Plans ..................................25
5.15 Labor Matters ...........................................27
5.16 No Brokers ..............................................28
5.17 Opinion of Financial Advisor ............................28
5.18 Non-Competition Agreements ..............................28
5.19 Material Contracts ......................................28
5.20 Certain Agreements ......................................29
5.21 Subscribers .............................................30
5.22 Information .............................................30
(i)
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5.23 Vote Required ...........................................30
5.24 Definition of the Company's Knowledge ...................30
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF PARENT.................31
6.1 Existence; Good Standing; Authority;
Compliance With Law .....................................31
6.2 Authorization, Validity and Effect of Agreements.........32
6.3 Capitalization ..........................................32
6.4 Subsidiaries ............................................33
6.5 Other Interests .........................................33
6.6 No Violation; Consents ..................................34
6.7 SEC Documents ...........................................34
6.8 Litigation ..............................................35
6.9 Absence of Certain Changes ..............................35
6.10 Intellectual Property ...................................36
6.11 No Brokers ..............................................36
6.12 Opinion of Financial Advisor ............................36
6.13 Taxes ...................................................36
6.14 Employee Benefit Plans ..................................37
6.15 Definition of Parent's Knowledge ........................37
ARTICLE VII COVENANTS ...............................................37
7.1 No Solicitations ........................................37
7.2 Conduct of Businesses ...................................39
7.3 Tax-Free Treatment ......................................42
ARTICLE VIII ADDITIONAL AGREEMENTS ...................................43
8.1 Meetings of Stockholders ................................43
8.2 HSR and Other Filings ...................................43
8.3 Proxy Statement; Registration Statement .................45
8.4 Listing Application .....................................46
8.5 Affiliates of the Company ...............................46
8.6 Expenses ................................................47
8.7 Officers' and Directors' Indemnification ................47
8.8 Access to Information; Confidentiality ..................49
8.9 Publicity ...............................................49
8.10 Employee Benefits .......................................50
8.11 Reincorporation and Acquisition .........................50
8.12 Other Actions ...........................................51
8.13 Notification of Certain Matters .........................51
8.14 Notification of Parent Transactions .....................52
ARTICLE IX CONDITIONS TO THE MERGER ................................52
9.1 Conditions to the Obligations of Each Party
to Effect the Merger ....................................52
(ii)
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9.2 Conditions to Obligations of the Company ................53
9.3 Conditions to Obligations of Parent .....................54
9.4 Parent Transactions .....................................55
ARTICLE X TERMINATION, AMENDMENT AND WAIVER .......................55
10.1 Termination .............................................55
10.2 Effect of Termination ...................................58
10.3 Amendment ...............................................58
ARTICLE XI GENERAL PROVISIONS ......................................59
11.1 Notices .................................................59
11.2 Certain Definitions .....................................60
11.3 Non-Survival of Representations, Warranties,
Covenants and Agreements ................................60
11.4 Miscellaneous ...........................................60
11.5 Assignment ..............................................61
11.6 Severability ............................................61
11.7 Choice of Law/Consent to Jurisdiction ...................61
11.8 Incorporation ...........................................62
11.9 The Headings ............................................62
11.10 No Agreement Until Executed .............................62
11.11 Obligations of Parent and of the Company ................62
Exhibits
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Exhibit A Affiliate Letter
Exhibit B Registration Rights Agreement
Exhibit C Stockholders Agreement
(iii)
Company Disclosure Schedule
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Section Title
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5.1(b) Organizational and Good Standing
5.1 Organizational Documents
5.1(f) Communications Permits
5.1(g) Violations of Communications Permits
5.3 Capitalization
5.4 Subsidiaries
5.5 Other Interests
5.6(a) No Violations
5.6(b) Consents
5.8 Litigation
5.9 Absence of Certain Changes
5.10 Taxes
5.11 Real Property Leases; Properties
5.12(a) Intellectual Property
5.12(b) Intellectual Property Licenses
5.12(c) Intellectual Property Enforcement Actions
5.13 Environmental Matters
5.14(a) Company Benefit Plans
5.14(b) Employee Matters
5.14(c) Employee Compensation
5.15 Labor Matters
5.18 Non-Competition Agreements
5.19(a) Material Contracts
5.19(b) Other Contracts
5.19(c) Circuit Schedule
5.20 Certain Agreements
7.2(a) Conduct by the Company
8.12 Pricing Policies
Parent Disclosure Schedule
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Section Title
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6.1 Organizational and Good Standing
6.3 Capitalization
6.4 Subsidiaries
6.5 Other Interests
6.6(a) No Violations
6.6(b) Consents
6.8 Litigation
(iv)
6.9 Absence of Certain Changes
6.10 Intellectual Property
6.13 Taxes
7.3(b) Conduct by Parent
(v)
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of March 12, 2000,
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by and among CoreComm Limited, a Bermuda corporation ("Parent"), CoreComm Group
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Sub I, Inc., a Delaware corporation and a wholly owned subsidiary of Parent
("MergerCo"), and Voyager.net, Inc., a Delaware corporation (the "Company").
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RECITALS
WHEREAS, the respective Boards of Directors of Parent, MergerCo and the
Company have approved the merger of MergerCo with and into the Company (the
"Merger") in accordance with the Delaware General Corporation Law (the "DGCL")
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and, upon the terms and subject to the conditions set forth in this Agreement,
holders of shares of common stock, par value $.0001 per share, of the Company
(the "Company Common Stock") issued and outstanding immediately prior to the
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Effective Time (as hereinafter defined) will be entitled, subject to the terms
and conditions hereof, to the right to receive shares of common stock, par value
$.01 per share, of Parent (the "Parent Common Stock") and cash, without any
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interest thereon, subject to certain adjustments;
WHEREAS, the Board of Directors of the Company (the "Company Board") has,
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in light of and subject to the terms and conditions set forth herein, (i)
determined that (A) the consideration to be paid for each share of Company
Common Stock in the Merger is fair to the stockholders of the Company, and (B)
the Merger is in the best interests of the Company and its stockholders, and
(ii) resolved to approve and adopt this Agreement and the transactions
contemplated or required by this Agreement, including the Merger (collectively,
the "Transactions"), and to recommend approval and adoption by the stockholders
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of the Company of this Agreement and the Transactions;
WHEREAS, as a condition to the willingness of Parent and MergerCo to enter
into this Agreement, Media/Communications Partners II Limited Partnership,
Media/Communications Investors Limited Partnership Glenn R. Friedly and
Christopher P. Torto and certain of their affiliates (collectively, the
"Principal Stockholders") have entered into a Voting Agreement, dated as of the
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date hereof, with Parent and MergerCo (the "Voting Agreement"), pursuant to
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which each Principal Stockholder has agreed, among other things, to vote such
Principal Stockholder's shares of Company Common Stock in favor of the approval
of the Transactions, upon the terms and subject to the conditions set forth in
the Voting Agreement;
WHEREAS, Parent, MergerCo and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Transactions, and also to prescribe various conditions to the Transactions;
WHEREAS, the parties intend, by executing this Agreement, to either or both
(i) adopt a plan of reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code") and to cause the Merger
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to qualify as a reorganization under the provisions of Section 368(a) of the
Code or (ii) agree to a transaction that qualifies as an exchange under the
provisions of Section 351 of the Code; and
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, Parent, MergerCo and the Company hereby agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Subject to the terms and conditions of this Agreement, at
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the Effective Time, the Company and MergerCo shall consummate the Merger
pursuant to which (a) MergerCo shall be merged with and into the Company and the
separate corporate existence of MergerCo shall thereupon cease, (b) the Company
shall be the successor or surviving corporation in the Merger (sometimes
hereinafter referred to as the "Surviving Corporation") and shall continue to be
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governed by the laws of the State of Delaware and the DGCL, and (c) the separate
corporate existence of the Company with all its rights, privileges, immunities,
powers and franchises shall continue unaffected by the Merger. Without limiting
the generality of the foregoing, and subject thereto, at the Effective Time, all
the properties, rights, privileges, powers and franchises of the Company and
MergerCo shall vest in the Surviving Corporation, and all debts, liabilities and
duties of the Company and MergerCo shall become the debts, liabilities and
duties of the Surviving Corporation. The Company shall take such steps as are
permitted under the DGCL to (i) amend the Certificate of Incorporation of the
Company (the "Company Certificate") so that the Certificate of Incorporation of
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MergerCo, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided by law and such Certificate of Incorporation, and (ii) amend
the Bylaws of the Company (the "Company Bylaws") so that the Bylaws of MergerCo,
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as in effect immediately prior to the Effective Time, shall be the Bylaws of the
Surviving Corporation until thereafter amended as provided by law, by the
Certificate of Incorporation of the Surviving Corporation and by such Bylaws.
Notwithstanding the foregoing, the name of the Surviving Corporation shall be
"CoreComm-Voyager, Inc." and the Certificate of Incorporation and Bylaws of the
Surviving Corporation shall so provide. The Merger shall have the effects
specified in the DGCL, including Section 259 of the DGCL.
1.2 Effective Time. As promptly as practicable after all of the
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conditions set forth in Article IX shall have been satisfied or, if permissible,
waived by the party entitled to the benefit of the same, MergerCo and the
Company shall duly execute and file a certificate of merger (the "Certificate of
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Merger") with the Secretary of State of the State of Delaware in accordance with
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the DGCL. The Merger shall become effective as of the time of the Certificate
of Merger has been duly filed or such other subsequent date or time as shall be
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agreed upon by the parties and set forth in the Certificate of Merger and in
accordance with the DGCL (the "Effective Time").
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1.3 Closing. The closing of the Merger (the "Closing") shall take place
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at such time and on a date to be specified by the parties, which shall be no
later than the second business day after satisfaction or waiver of all of the
conditions set forth in Article IX hereof (the "Closing Date"), at the offices
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of Paul, Weiss, Rifkind, Wharton & Garrison, 1285 Avenue of the Americas, New
York, NY 10019, unless another date or place is agreed to by the parties hereto.
1.4 Tax Consequences. It is intended by all of the parties hereto that
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the Merger will qualify both or either (i) as a reorganization within the
meaning of Section 368(a) of the Code or (ii) a transaction that, together with
the Reincorporation (as defined herein) qualifies as an exchange under the
provisions of Section 351 of the Code and which is treated for U.S. federal
income tax purposes as a transfer of Company Common Stock by the shareholders of
the Company to Parent in exchange for the Merger Consideration. All of the
parties to this Agreement agree to report the Merger, for all purposes, in a
manner which is consistent with the preceding sentence and no party shall take
any action, or fail to take any action which action or failure to take such
action would cause the Merger to fail to qualify (i) as a reorganization within
the meaning of Section 368(a) of the Code or (ii) a transaction that, together
with the Reincorporation (as defined herein) qualifies as an exchange under the
provisions of Section 351 of the Code and which is treated for U.S. federal
income tax purposes as a transfer of Company Common Stock by the shareholders of
the Company to Parent in exchange for the Merger Consideration. However, it is
further intended by all of the parties hereto that if the transactions with ATX
Communications Services, Inc. ("ATX") described in Section 8.11 occur, and this
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Agreement is assigned as provided in Section 11.5, then the incorporation of
ATX, the transactions with ATX described in Section 8.11, and the transactions
described in this Agreement will be treated for U.S. federal income tax purposes
as one integrated transaction qualifying as an exchange under the provisions of
Section 351 of the Code in which the shareholders of the Company transfer
Company Common Stock in exchange for ATX stock.
ARTICLE II
DIRECTORS AND OFFICERS
OF THE SURVIVING CORPORATION
2.1 Directors of the Surviving Corporation. The directors of MergerCo
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immediately prior to the Effective Time shall be the directors of the Surviving
Corporation immediately after the Effective Time until their successors shall
have been duly elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the Certificate of Incorporation and
Bylaws of the Surviving Corporation. The Company will use reasonable efforts to
cause any director who is a designee of the Company on the Board of Directors of
any Company Subsidiary to resign as of the Effective Time.
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2.2 Officers of the Surviving Corporation. The officers of the Company
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immediately prior to the Effective Time shall be the officers of the Surviving
Corporation immediately after the Effective Time until their successors shall
have been duly elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the Certificate of Incorporation and
Bylaws of the Surviving Corporation.
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS
3.1 Effect on Capital Stock. As of the Effective Time, by virtue of the
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Merger and without any action on the part of the holder of any shares of Company
Common Stock or any shares of capital stock of MergerCo:
(a) Each issued and outstanding share of Company Common Stock held by
the Company as a treasury share or held by any direct or indirect Company
Subsidiary and each issued and outstanding share of Company Common Stock owned
by Parent, MergerCo or any other direct or indirect Parent Subsidiary
immediately prior to the Effective Time, shall be canceled and retired and cease
to exist without any conversion thereof and no payment or distribution shall be
made with respect thereto.
(b) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time, other than those shares referred to in
Section 3.1(a), shall be canceled and shall be converted automatically into and
represent the right to receive: (i) an amount equal to $3.00, net to the holder
in cash, without any interest thereon (plus any cash in lieu of fractional
shares as described in Section 4.1(e), the "Cash Consideration") and (ii) that
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number of fully paid and nonassessable shares of Parent Common Stock equal to
$14.00 divided by the Base Stock Price (as defined below) (the "Exchange Ratio")
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(rounded to the nearest thousandth and subject to adjustment, as provided below,
and subject to cash in lieu of fractional shares of Parent Common Stock, if any,
pursuant to Section 4.1(e), the "Stock Consideration" and together with the Cash
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Consideration, the "Merger Consideration").
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(c) The Exchange Ratio shall be adjusted as follows:
(i) if the Average Parent Common Stock Price is greater than the
Collar Percentage multiplied by the Base Stock Price (such product being
the "Ceiling Stock Price"), then the Exchange Ratio shall be adjusted such
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that the aggregate value (based on the Average Parent Common Stock Price)
of the Stock Consideration will be equal to the value the Stock
Consideration would represent if the Average Parent Common Stock Price were
equal to the Ceiling Stock Price and there were no adjustments to the
Exchange Ratio as contemplated in this Section 3.1. The Collar Percentage
shall be equal to 119%, subject to the following adjustments: If (1) the
Closing has not occurred on or prior to July 15, 2000, (2) subsequent to
the date of this Agreement,
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Parent has engaged in a transaction (other than transactions contemplated
by this Agreement or any transaction which would result in a Base
Adjustment (as defined below)) (a "Parent Transaction") that would (x)
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require the approval of the stockholders of Parent or, (y) require Parent
to include the information relating to such transaction in the pro forma
financial statements (the "Pro Formas") that are required to be contained
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in the Registration Statement or (z) require Parent to amend or restate the
Pro Formas in any material manner, and (3) all conditions to Closing have
been satisfied (or waived by the party entitled to waive such condition) or
are capable of being satisfied on such date with reasonable best efforts,
other than the conditions set forth in Sections 9.1(a) and 9.1(d) and the
failure of either such condition to be satisfied is the result of a Parent
Transaction, then, commencing on the later to occur of (i) July 16, 2000
and (ii) the first business day after which the circumstances set forth in
clause (3) are present (such later date being the "Trigger Day") the Collar
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Percentage shall be increased as follows: 2.5 percentage points on the
Trigger Day, and an additional five percentage points per each 31 day
period (a "Monthly Period") (on a pro rata basis, based on the actual
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number of elapsed days in such Monthly Period at the Closing Date)
beginning on the sixteenth calendar day following the Trigger Day;
(ii) if the Average Parent Common Stock Price is equal to or
greater than 69% of the Base Stock Price and less than 86% of the Base
Stock Price (86% of the Base Stock Price being the "Floor Stock Price"),
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then the Exchange Ratio shall be adjusted such that the aggregate value
(based on the Average Parent Common Stock Price) of the Stock Consideration
will be equal to the value the Stock Consideration would represent if the
Average Parent Common Stock Price were equal to the Floor Stock Price and
there were no adjustments to the Exchange Ratio as contemplated in this
Section 3.1; and
(iii) subject to the provisions of Section 10.1(i), if the
Average Parent Common Stock Price is less than 69% of the Base Stock Price,
then the Exchange Ratio will equal that number that it would be set to in
clause (ii) above if the Average Parent Common Stock Price were equal to
69% of the Base Stock Price.
For purposes of this Agreement, the "Average Parent Common Stock Price"
---------------------------------
means the volume weighted average trading price of Parent Common Stock for ten
randomly selected trading days out of the twenty (20) consecutive trading days
ending with the last trading day prior to the Closing Date. The "Base Stock
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Price" shall be equal to $47.875, subject to the following "Base Adjustments":
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(i) if, after the date of this Agreement and on or prior to the Closing Date the
outstanding shares of Parent Common Stock shall be changed into a different
number of shares by reason of any reclassification, recapitalization, stock
split, reverse stock split, combination or exchange of shares, or any dividend
payable in Parent Common Stock shall be declared thereon with a record date
within such period, or any similar event shall occur, the Base Stock Price shall
be adjusted accordingly to provide to the shareholders of the Company the same
economic effect as contemplated by this Agreement absent such reclassification,
recapitalization, stock split, reverse stock split, combination, exchange,
dividend or similar event; and (ii) if, after the date of this Agreement and on
or prior to the
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Closing Date, Parent shall distribute to all holders of Parent Common Stock
shares of capital stock of Parent other than Parent Common Stock, evidences of
indebtedness or other assets (other than cash dividends out of current or
retained earnings), or shall distribute to substantially all holders of Common
Stock rights or warrants to subscribe for securities (other than those referred
to in subsection (i) above), then in each such case the Base Stock Price shall
be multiplied by a fraction of which the numerator shall be the Current Market
Price (as defined below) of the Parent Common Stock on the record date less the
then fair market value (as determined in good faith by the Board of Directors of
Parent (the "Parent Board"), whose determination shall be conclusive evidence of
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such fair market value (absent manifest error or bad faith) and described in a
board resolution) of the portion of the assets so distributed or of such
subscription rights or warrants applicable to one share of Parent Common Stock
and of which the denominator shall be the Current Market Price of the Parent
Common Stock. The "Current Market Price" shall mean the volume weighted average
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trading price of Parent Common Stock for the ten randomly selected trading days
out of the prior twenty (20) consecutive trading days. Parent may only effect a
distribution described under (ii) above, if such distribution does not include
operating assets that are required to maintain the current operating businesses
of CoreComm, Inc. (a subsidiary of Parent) and the distribution of such
operating assets would not have a material adverse effect on the current
operating businesses of CoreComm, Inc., other than the LMDS licenses and related
assets.
(d) If at any time prior to Closing, either the written opinion of
counsel required to be received by the Company pursuant to Section 9.2(e) or the
written opinion required to be received by Parent pursuant to Section 9.3(g) is
not reasonably expected to be delivered in a form acceptable to the Company and
Parent because less than 80% of the value of the Merger Consideration will be
Stock Consideration (determined as of the Closing Date) and all other conditions
to Closing set forth in Article IX have been satisfied (or waived by the party
entitled to make such condition), then the Merger Consideration shall be
adjusted by increasing the Stock Consideration and decreasing the Cash
Consideration so that the Stock Consideration shall constitute 80% of the value
of the Merger Consideration (determined as of the Closing Date) provided, that,
after such adjustment, the Merger qualifies as a reorganization under the
provisions of Section 368(a)(2)(E) of the Code.
(e) Each share of common stock, par value $.01 per share, of MergerCo
(the "MergerCo Common Stock") issued and outstanding immediately prior to the
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Effective Time shall be converted into one validly issued, fully paid and non-
assessable share of common stock, par value $.01 per share, of the Surviving
Corporation (the "Surviving Corporation Common Stock"), certificates for which
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shall be issued to the stockholders of MergerCo on a pro rata basis in
accordance with their respective shares of MergerCo upon surrender to the
Surviving Corporation of such stockholders' certificates formerly representing
such shares of MergerCo Common Stock.
(f) All shares of Company Common Stock, when converted as provided in
Section 3.1(b), shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each Certificate previously
evidencing such shares shall thereafter represent only the right to receive the
Merger Consideration and cash in lieu of fractional shares of Parent Common
Stock in accordance with Sections 3.1(b) and 4.1(e) and any
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distribution or dividend under Section 4.1(c). The holders of Certificates
previously evidencing shares of Company Common Stock outstanding immediately
prior to the Effective Time shall cease to have any rights with respect to the
Company Common Stock except as otherwise provided herein or by law and, upon the
surrender of Certificates in accordance with the provisions of Article III
hereof, shall only represent the right to receive for their shares of Company
Common Stock the Merger Consideration and cash in lieu of fractional shares of
Parent Common Stock in accordance with Sections 3.1(b) and 4.1(e) and any
distribution or dividend under Section 4.1(c) in each case without interest.
3.2 Company Stock Options and Related Matters.
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(a) Each option (collectively, the "Company Options") granted under
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the Company's Amended and Restated 1998 Stock Option and Incentive Plan (the
"Company Stock Option Plan"), which is outstanding (whether or not then
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exercisable) as of immediately prior to the Effective Time and which has not
been exercised or canceled prior thereto, shall, at the Effective Time, be
assumed by Parent, subject to the provisions of this Section 3.2 (the "Assumed
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Options"). The Assumed Options shall not terminate in connection with the
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Merger and shall continue to have, and be subject to, the same terms and
conditions as set forth in the Company Stock Option Plan and agreements (as in
effect immediately prior to the Effective Time) pursuant to which the Company
Options were granted, provided that (i) all references to the Company shall be
deemed to be references to Parent and all references to shares of Company Common
Stock shall be deemed to be references to shares of Parent Common Stock, (ii)
each Company Option shall be exercisable for that number of whole shares of
Parent Common Stock equal to the product of the number of shares of Company
Common Stock covered by such Company Option immediately prior to the Effective
Time multiplied by the Option Exchange Ratio (as defined below) and rounded to
the nearest whole number of shares of Parent Common Stock and (iii) the exercise
price per share of Company Common Stock under such Company Option shall be equal
to the exercise price per share of Company Common Stock under the Company Option
divided by the Option Exchange Ratio and rounded to the nearest cent. Parent
shall (A) reserve for issuance the number of shares of Parent Common Stock that
will become issuable upon the exercise of such Assumed Options pursuant to this
Section 3.2, (B) promptly after the Effective Time issue to each holder of a
Company Option a document evidencing the assumption by Parent of the Company's
obligations with respect thereto under this Section 3.2, and (C) promptly after
the Effective Time, cause to be filed a registration statement on an appropriate
form under the Securities Act of 1933, as amended (the "Securities Act"),
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relating to the Company Stock Option Plans then in effect and covering the
shares of Parent Common Stock issuable upon exercise of the Assumed Options. As
used in this Section 3.2, "Option Exchange Ratio" means the sum of (i) the
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Exchange Ratio (as it may be adjusted) and (ii) the quotient obtained by
dividing the per share Cash Consideration by the Average Parent Common Stock
Price.
(b) The adjustments provided in this Section 3.2 with respect to any
Company Options that are "incentive stock options" as defined in Section 422 of
the Code, shall be and are intended to be effected in a manner which is
consistent with Section 424(a) of the Code.
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(c) The parties to this Agreement shall take all reasonable action
required to exempt under SEC Rule 16(b)-3 the treatment of options contemplated
hereby, including, if necessary or appropriate, obtaining approvals, by each
party's Board of Directors, of the type described in a pertinent SEC no-action
letter dated January 12, 1999.
ARTICLE IV
PAYMENT OF SHARES
4.1 Payment for Shares of Company Common Stock.
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(a) From and after the Effective Time, such bank or trust company
designated by Parent, and reasonably acceptable to the Company, shall act as
exchange agent (the "Exchange Agent"). At or prior to the Effective Time,
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MergerCo shall deposit, or MergerCo shall otherwise take all steps necessary to
cause to be deposited, with the Exchange Agent the aggregate Merger
Consideration and the cash in lieu of fractional shares of Parent Common Stock
(such aggregate Merger Consideration and cash in lieu of shares of Parent Common
Stock together with any dividends or distributions with respect thereto to which
the holders of Certificates may be entitled pursuant to Section 4.1(c) being
hereinafter referred to as the "Exchange Fund") to which holders of shares of
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Company Common Stock shall be entitled pursuant to Section 3.1.
(b) Promptly after the Effective Time, Parent shall cause the Exchange
Agent to mail to each holder of record of a Certificate or Certificates other
than the Company, Parent, MergerCo or any Parent Subsidiary (i) a letter of
transmittal which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as Parent may reasonably specify and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for the Merger
Consideration and cash in lieu of fractional shares of Parent Common Stock.
Upon surrender of a Certificate for cancellation to the Exchange Agent together
with such letter of transmittal, duly executed and completed in accordance with
the instructions thereto, the holder of such Certificate shall be entitled to
receive in exchange therefor (x) a certificate representing the number of whole
shares of Parent Common Stock representing the Stock Consideration to which such
holder shall be entitled, (y) a check representing the amount of the Cash
Consideration to which such holder shall be entitled and (z) a check
representing the amount of cash in lieu of fractional shares of Parent Common
Stock, if any, plus the amount of any dividends (other than stock dividends), or
distributions, if any, pursuant to paragraph (c) below, in the case of (y) and
(z), after giving effect to any required withholding tax, and the Certificate so
surrendered shall forthwith be canceled. No interest will be paid or accrued on
the Cash Consideration or on cash payable in lieu of fractional shares or on the
dividend or distribution, if any, payable to holders of Certificates pursuant to
this Section 4.1. In the event of a transfer of ownership of Company Common
Stock which is not registered in the transfer records of the Company, a
Certificate representing the proper number of shares of Parent Common Stock,
together with checks for the Cash Consideration to which such holder shall be
entitled and for any cash to be paid in
8
lieu of fractional shares of Parent Common Stock plus, to the extent applicable,
the amount of any dividend or distribution, if any, payable pursuant to
paragraph (c) below, may be issued and paid to such a transferee if the
Certificate representing shares of such Company Common Stock is presented to the
Exchange Agent, accompanied by all documents required to evidence and effect
such transfer and to evidence that any applicable stock transfer taxes have been
paid. If any certificate for shares of Parent Common Stock is to be issued in a
name other than that in which the surrendered Certificate is registered, it
shall be a condition of such exchange that the person requesting such exchange
shall pay any transfer or other taxes required by reason of the issuance of
certificates for shares of Parent Common Stock in a name other than that of the
registered holder of the surrendered Certificate, or shall establish to the
satisfaction of Parent or the Exchange Agent that such tax has been paid or is
not applicable.
(c) Notwithstanding any other provisions of this Agreement, no
dividends or other distributions on Parent Common Stock shall be paid with
respect to any shares of Company Common Stock represented by a Certificate until
such Certificate is surrendered for exchange as provided herein; provided,
however, that subject to the effect of applicable laws, following surrender of
any such Certificate, there shall be paid to the holder of the certificates
representing whole shares of Parent Common Stock issued in exchange therefor,
without interest, (i) at the time of such surrender, the amount of dividends or
other distributions with a record date after the Effective Time theretofore
payable with respect to such whole shares of Parent Common Stock and not paid,
less the amount of any withholding taxes which may be required thereon, and (ii)
at the appropriate payment date, the amount of dividends or other distributions
with a record date after the Effective Time but prior to surrender and a payment
date subsequent to surrender payable with respect to such whole shares of Parent
Common Stock, less the amount of any withholding taxes which may be required
thereon.
(d) At and after the Effective Time, there shall be no transfers on
the stock transfer books of the Company of the shares of Company Common Stock
which were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation, they
shall be canceled and exchanged for the Merger Consideration and cash in lieu of
fractional shares, if any, in accordance with this Section 4.1 (plus dividends
and distributions to the extent set forth in Section 4.1(c), if any).
(e) No certificates or scrip representing fractional shares of Parent
Common Stock shall be issued upon the surrender for exchange of Certificates,
and such fractional share interest will not entitle its owner to vote, to
receive dividends or to any other rights of a stockholder of Parent. In lieu of
the issuance of any fractional shares of Parent Common Stock pursuant to Section
3.1(b), the Exchange Agent shall pay to each holder of shares of Company Common
Stock exchanged pursuant to the Merger who are entitled to receive a fraction of
a share of Parent Common Stock (after taking into account all Certificates
delivered by such holder) in accordance with the provisions of this Article IV,
an amount in cash equal to the product obtained by multiplying (A) the
fractional shares of Parent Common Stock to which such holder is entitled (after
taking into account all shares of Company Common Stock held at the Effective
Time) by (B) the closing price for a share of Parent Common Stock on NASDAQ on
the first business day immediately following the Effective Time.
9
(f) Any portion of the Exchange Fund (including the proceeds of any
investments thereof and any shares of Parent Common Stock) that remains
unclaimed by the former stockholders of the Company one year after the Effective
Time shall be delivered to the Surviving Corporation. Any former stockholders
of the Company who have not theretofore complied with this Article IV shall
thereafter look only to the Surviving Corporation for payment of their Merger
Consideration and cash in lieu of fractional shares (plus dividends and
distributions to the extent set forth in Section 4.1(c), if any), as determined
pursuant to this Agreement, without any interest thereon. None of Parent,
MergerCo, the Company, the Exchange Agent or any other person shall be liable to
any former holder of shares of Company Common Stock for any amount properly
delivered to a public official pursuant to applicable abandoned property,
escheat or similar laws. If any Certificates shall not have been surrendered
prior to five years after the Effective Time (or immediately prior to such
earlier date on which any Merger Consideration in respect of such Certificate
would otherwise escheat to or become the property of any Governmental Entity (as
defined herein)), any amounts payable in respect of such Certificate shall, to
the extent permitted by applicable law, become the property of the Surviving
Corporation, free and clear of all claims or interests of any person previously
entitled to those amounts. In the event any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such person of a bond in such
reasonable amount as the Surviving Corporation may direct as indemnity against
any claim that may be made against it with respect to such Certificate, the
Exchange Agent or the Surviving Corporation will issue and pay in exchange for
such lost, stolen or destroyed Certificate the Merger Consideration and cash in
lieu of fractional shares (plus, to the extent applicable, dividends and
distributions payable pursuant to Section 4.1(c)) in each case without interest.
(g) Each of the Surviving Corporation and Parent shall be entitled to
deduct and withhold from any amounts otherwise payable pursuant to this
Agreement to any holder of a Certificate such amounts as it is required to
deduct and withhold with respect to the making of such payment under the Code,
or any provisions of Law. To the extent that amounts are so withheld by the
Surviving Corporation or Parent, as the case may be, such withheld amounts shall
be treated for purposes of this Agreement as having been paid to the holder of a
Certificate in respect to which such deduction and withholding was made by the
Surviving Corporation or Parent, as the case may be.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure letter delivered at or prior to the
execution hereof to Parent, which shall refer to the relevant Sections of this
Agreement (the "Company Disclosure Schedule"), the Company represents and
---------------------------
warrants to Parent and MergerCo as follows:
10
5.1 Existence; Good Standing; Authority; Compliance With Law.
--------------------------------------------------------
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. Except as set forth
in Section 5.1 of the Company Disclosure Schedule, the Company is duly licensed
or qualified to do business as a foreign corporation and is in good standing
under the laws of any other state of the United States in which the character of
the properties owned, leased or operated by it therein or in which the
transaction of its business makes such qualification or licensing necessary,
except where the failure to be so licensed or qualified would not, individually
or in the aggregate, reasonably be expected to have a material adverse effect on
the business, assets, properties, results of operations or financial condition
of the Company and the Company Subsidiaries (as defined herein) taken as a
whole (a "Company Material Adverse Effect"). The Company has all requisite
-------------------------------
corporate power and authority to own, operate, lease and encumber its properties
and carry on its business as now conducted.
(b) Each of the Company Subsidiaries is a corporation, partnership or
limited liability company (or similar entity or association in the case of those
Company Subsidiaries organized and existing other than under the laws of a state
of the United States) duly incorporated or organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation or
organization, has the corporate or other power and authority to own its
properties and to carry on its business as it is now being conducted, and is
duly qualified or licensed to do business and is in good standing in each
jurisdiction in which the character of the properties owned, leased or operated
by it therein or in which the transaction of its business makes such
qualification or licensing necessary, except as set forth in Section 5.1(b) of
the Company Disclosure Schedule and except for jurisdictions in which such
failures to be so qualified or to be in good standing would not, individually or
in the aggregate, reasonably be expected to have a Company Material Adverse
Effect.
(c) Neither the Company nor any of the Company Subsidiaries is in
violation of any order of any court, Governmental Entity or arbitration board or
tribunal, or any domestic law, statute, order, judgment, decree, ordinance, rule
or regulation ("Law"), applicable to the Company or any Company Subsidiary or by
---
which any of their respective properties or assets is bound or affected, which
violations would, individually or in the aggregate, reasonably be expected to
have a Company Material Adverse Effect.
(d) The Company and the Company Subsidiaries have obtained all
franchises, grants, authorizations, licenses, permits, easements, variances,
exceptions, consents, waivers, rights, certificates, approvals and orders of,
and registrations required to be made with, any United States (federal, state or
local) government, or governmental, regulatory or administrative authority,
agency or commission, court or arbitrator of competent jurisdiction or stock
exchange (each of the foregoing, a "Governmental Entity") that are material to
-------------------
its business as it is now being or is intended to be conducted (the "Company
-------
Permits"), except where failure to obtain any such Company Permit would not,
- -------
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect. The Company or one or more of the Company Subsidiaries
is in possession of all of the Company Permits, no material
11
violations are or have been recorded in respect of any of the Company Permits
and no suspension or cancellation of any of the Company Permits is pending or,
to the knowledge of the Company, threatened that has resulted or would be,
individually or in the aggregate, reasonably expected to result in a Company
Material Adverse Effect. Except for such defaults or violations that would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect, all of the Company Permits are in full force and effect
and neither the Company nor any of its Subsidiaries is, or has received notice
alleging that it is, in conflict with, or in default or violation of, or, with
the giving of notice or lapse of time or both, would be in conflict with, or in
default or violation of, (i) any Law applicable to the Company or any of its
Subsidiaries or by which any property or asset of the Company or any of its
Subsidiaries is bound or affected by or (ii) any of the Company Permits.
(e) The copies of the Company certificate of incorporation and by-
laws, each as amended through the date of this Agreement that are incorporated
by reference in, as exhibits to the Company's registration statement on Form S-8
dated August 12, 1999 and all comparable corporate organizational documents of
the Company Subsidiaries made available to Parent by the Company are complete
and correct copies of those documents. All such corporate organizational
documents of the Company and the Company Subsidiaries are listed on Section
5.1(e) of the Company Disclosure Schedule. Such certificate of incorporation
and by-laws and all comparable organizational documents of the Company
Subsidiaries are in full force and effect. The Company is not in violation of
any of the provisions of such certificate of incorporation or by-laws.
(f) All Company Permits issued by a state public utilities commission
or a similar state regulatory body ("PUC") or the Federal Communications
---
Commission ("FCC"), or a municipal authority used in conjunction with Company's
---
provision of telecommunications services (collectively, the "Communications
--------------
Permits") are listed in Section 5.1(f) of the Company Disclosure Schedule. Each
- -------
of the Communications Permits was duly issued and is valid and in full force and
effect and has not been modified, canceled, revoked, or conditioned in any
adverse manner except for such modifications, cancellations, revocations or
conditions that would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect. None of the Communications
Permits has been sold, conveyed, pledged, assigned or transferred to any other
party, and no other party has any present or future right to acquire use of them
that would in either case, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect.
(g) Except as disclosed in Section 5.1(g) the Company Disclosure
Schedule, the Company has complied with and is in compliance with all
regulations and laws applicable to its operations under the Communications
Permits, except where any such failure would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.
The Company is in compliance with, and its businesses have operated in
compliance with, the Communications Act of 1934, as amended, FCC regulations, or
any applicable state laws or regulations, and has filed all tariffs,
registrations and reports and paid all required fees, including any renewal
applications, required by the Communications Act of 1934, as amended, or any
applicable state regulations and has complied with the terms of each such
12
tariff or regulation, except where any such failure would not, individually or
in the aggregate, reasonably be expected to have a Company Material Adverse
Effect. There is no action, suit, investigation or other proceeding pending or,
to the Company's knowledge, threatened against the Company which might adversely
affect the Communications Permits, or the assignment of the Communications
Permits to Parent or MergerCo that would, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect. No event has
occurred with respect to the Communications Permits which permits or, after
notice or lapse of time, or both, would permit revocation or termination
thereof, or would result in any impairment of the rights of the holder of the
Communications Permits or the imposition of a forfeiture against the Company or
any subsequent holder of the Communications Permits with respect to the
operation of the facilities authorized thereby that would, individually or in
the aggregate, reasonably be expected to have a Company Material Adverse Effect.
(h) The Company has delivered to Parent correct and complete copies of
(a) the Company's Communications Permits and the applications related thereto
together with any pending applications filed by the Company for new or modified
facilities related to the purchased business, and (b) all other Permits and any
tariffs filed by the Company relating to the purchased business, and any
applications for additional or modified Permits to the purchased business,
except for those Communications Permits or other Permits that would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
5.2 Authorization, Validity and Effect of Agreements. The Company has the
------------------------------------------------
requisite power and authority to enter into the transactions and to execute and
deliver this Agreement. The Company Board has unanimously approved this
Agreement, the Merger and the other Transactions and has resolved to recommend
that the holders of Company Common Stock adopt and approve this Agreement at the
stockholders' meeting of the Company to be held in accordance with the
provisions of Section 8.1. In connection with the foregoing, the Company Board
has taken such actions and votes as are necessary on its part to render the
provisions of Section 203 of the DGCL and all other applicable takeover statutes
inapplicable to this Agreement, the Merger, the other Transactions and the
Voting Agreement. Subject only to the approval of this Agreement by the holders
of a majority of the outstanding shares of Company Common Stock (the "Requisite
---------
Company Vote"), the execution by the Company of this Agreement and the
- ------------
consummation of the Transactions have been duly authorized by all requisite
corporate action on the part of the Company and no other corporate proceedings
on the part of the Company are necessary to authorize this Agreement or to
consummate the Transactions. As of the date hereof, all of the directors and
executive officers of the Company have indicated that they presently intend to
vote all shares of the Company Common Stock which they own to approve this
Agreement and the Transactions at the stockholders' meeting of the Company to be
held in accordance with the provisions of Section 8.1. This Agreement, assuming
due and valid authorization, execution and delivery thereof by Parent,
constitutes a valid and legally binding obligation of the Company, enforceable
against the Company in accordance with its terms, subject to applicable
bankruptcy, insolvency, moratorium or other similar laws relating to creditors'
rights and general principles of equity.
13
5.3 Capitalization.
--------------
(a) The authorized capital stock of the Company consists of 50,000,000
shares of Company Common Stock and 5,000,000 shares of preferred stock, par
value $.01 per share, of the Company (the "Company Preferred Stock"). As of the
-----------------------
date of this Agreement, (i) 31,650,108 shares of Company Common Stock were
issued and outstanding, (ii 9,775,688 shares of Company Common Stock have been
authorized and reserved for issuance and are available for grant pursuant to the
Company Stock Option Plan, subject to adjustment on the terms set forth in the
Company Stock Option Plan, (ii 3,493,467 options were outstanding under the
Company Stock Option Plan, (iv no shares of Company Preferred Stock were issued
and outstanding, and (v) no shares of Company Common Stock and no shares of
Company Preferred Stock were held in the treasury of the Company. All such
issued and outstanding shares of capital stock of the Company are duly
authorized, validly issued, fully paid, nonassessable and free of preemptive
rights. As of the date of this Agreement, no shares of capital stock or voting
securities of the Company were issued, outstanding or reserved for issuance by
the Company or outstanding other than as described above and, since such date,
no shares of capital stock or other voting securities or options in respect
thereof have been issued except upon the exercise of the Company Options
outstanding on such date. The Company has no outstanding bonds, debentures,
notes or other obligations the holders of which have the right to vote (or which
are convertible into or exercisable for securities having the right to vote)
with the stockholders of the Company on any matter. Except for the Company
Options (all of which have been issued under the Company Stock Option Plan),
there are no existing options, warrants, calls, subscriptions, convertible
securities, redemption rights, or other rights, agreements or commitments to
which the Company is a party or by which the Company is bound relating to the
issued or unissued capital stock of, other equity interests in, or securities
exchangeable for or convertible into capital stock or other equity interests in,
the Company or any Company Subsidiary or any Company Subsidiary which obligate
the Company to issue, transfer or sell any shares of capital stock of the
Company.
(b) Section 5.3 of the Company Disclosure Schedule sets forth a full
list of the Company Options, including the name of the person to whom such
Company Options have been granted, the number of shares subject to each Company
Option, the per share exercise price for each Company Option and the vesting
schedule for each Company Option. Except as set forth in Section 5.3 of the
Company Disclosure Schedule, there are no agreements or understandings to which
the Company or any Company Subsidiary is a party with respect to the voting of
any shares of capital stock of the Company or which restrict the transfer of any
such shares, nor does the Company have knowledge of any third party agreements
or understandings with respect to the voting of any such shares or which
restrict the transfer of any such shares. Except as set forth in Section 5.3 of
the Company Disclosure Schedule, there are no outstanding contractual
obligations of the Company or any Company Subsidiary to repurchase, redeem or
otherwise acquire any shares of capital stock, partnership interests or any
other securities of the Company or any Company Subsidiary. Except as set forth
in Section 5.3 of the Company Disclosure Schedule, neither the Company nor any
Company Subsidiary is under any obligation, contingent or otherwise, by reason
of any agreement to register the offer and sale or resale of any of their
securities under the Securities Act.
14
5.4 Subsidiaries. The Company owns directly or indirectly each of the
------------
outstanding shares of capital stock or other equity interest of each of the
Company Subsidiaries. Each of the outstanding shares of capital stock of each
of the Company Subsidiaries having corporate form is duly authorized, validly
issued, fully paid and nonassessable. Except as set forth in Section 5.4 of the
Company Disclosure Schedule, each of the outstanding shares of capital stock or
other equity interest of each of the Company Subsidiaries is owned, directly or
indirectly, by the Company free and clear of all liens, pledges, security
interests, claims, options, rights of first refusal, agreements, limitations on
the Company or such other Company's voting rights, charges or other encumbrances
(collectively, "Liens"). Section 5.4 of the Company Disclosure Schedule sets
-----
forth: (i) name and jurisdiction of incorporation or organization of each
subsidiary of the Company (the "Company Subsidiaries"); (ii) the authorized
--------------------
capital stock, share capital or other equity interest, to the extent applicable
of each Company Subsidiary; and (iii) the name of each stockholder or equity
interest holder and the number of issued and outstanding shares of capital
stock, share capital or other equity interest held by it with respect to each
Subsidiary.
5.5 Other Interests. Except as set forth in Section 5.5 of the Company
---------------
Disclosure Schedule, neither the Company nor any Company Subsidiary owns
directly or indirectly any interest or investment (whether equity or debt) in
any corporation, partnership, limited liability company, joint venture,
business, trust or other entity (other than investments in short-term investment
securities), other than in any Company Subsidiary.
5.6 No Violation; Consents.
----------------------
(a) Except as set forth in Section 5.6(a) of the Company Disclosure
Schedule, neither the execution and delivery by the Company of this Agreement
nor consummation by the Company of the Transactions in accordance with the terms
hereof, will conflict with or result in a breach of any provisions of the
Company Certificate or the Company Bylaws or any comparable organizational
documents of any Company Subsidiary. Except as set forth in Section 5.6(a) of
the Company Disclosure Schedule, the execution and delivery by the Company of
this Agreement and consummation by the Company of the Transactions in accordance
with the terms hereof will not violate, or conflict with, or result in (x) a
violation of any Law applicable to the Company or any Company Subsidiary or by
which any property or asset of the Company or any Company Subsidiary is bound or
affected or (y) any provision of, or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default) under, or
result in the termination or in a right of termination or cancellation of, or
accelerate the performance required by, or result in the creation of any Lien,
upon any of the properties or assets of the Company or the Company Subsidiaries
under, or result in being declared void, voidable or without further binding
effect, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, franchise, permit, lease, contract, agreement
or other instrument, commitment or obligation (collectively, "Contracts") to
---------
which the Company or any of the Company Subsidiaries is a party, or by which the
Company or any of the Company Subsidiaries or any of their properties is bound,
except in each such case as would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect. Other than
the filings provided for
15
in Article I of this Agreement, the Hart-Scott-Rodino Antitrust Improvements Act
of 1976 (the "HSR Act"), the Securities Exchange Act of 1934, as amended (the
-------
"Exchange Act"), the Securities Act or applicable state securities and "Blue
------------
Sky" laws, the Communications Act of 1934, as amended, and any regulations
promulgated thereunder (the "Communications Act"), the rules and regulations of
------------------
local, state, or foreign PUCs (the "PUC Regulations"), and the applicable local,
---------------
state, or foreign laws regulating the telecommunications industry (the "Utility
-------
Laws") (collectively, the "Regulatory Filings") the execution and delivery of
- ---- ------------------
this Agreement by the Company does not, and the performance of this Agreement by
the Company and consummation of the Transactions does not, require any consent,
approval or authorization of, or declaration, filing or registration with, any
Governmental Entity, except where the failure to obtain any such consent,
approval or authorization of, or declaration, filing or registration with, any
governmental or regulatory authority would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.
(b) Section 5.6(b) of the Company Disclosure Letter sets forth a
correct and complete list of all material Contracts to which the Company or any
Company Subsidiaries are a party or by which they or their assets or properties
is bound or affected under which consents or waivers are required prior to
consummation of the transactions contemplated by this Agreement and the
Transactions.
5.7 SEC Documents.
-------------
(a) The Company has filed all required forms, reports, exhibits,
schedules, statements and other documents with the Securities and Exchange
Commission (the "SEC") since July 21, 1999 (collectively, and including the
---
Company's registration statement on Form S-1 dated July 20, 1999, the "Company
-------
SEC Reports"), all of which were prepared in accordance with the applicable
- -----------
requirements of the Exchange Act, the Securities Act and the rules and
regulations promulgated thereunder (the "Securities Laws"). All required
---------------
Company SEC Reports have been filed with the SEC and constitute all forms,
reports, exhibits, schedules, statements and other documents required to be
filed by the Company under the Securities Laws since July 21, 1999. As of their
respective dates, the Company SEC Reports, including any financial statements or
schedules included or incorporated therein by reference, (i) complied as to form
in all material respects with the applicable requirements of the Securities Laws
and (ii) 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 made therein, in the light of the circumstances under which they were
made, not misleading. Each of the consolidated balance sheets of the Company
included in or incorporated by reference into the Company SEC Reports (including
the related notes and schedules) fairly presents the consolidated results of
operations and cash flow of the Company and the Company Subsidiaries as of its
date and each of the consolidated statements of income, retained earnings and
cash flows of the Company included in or incorporated by reference into the
Company SEC Reports (including any related notes and schedules) fairly presents
the results of operations, retained earnings or cash flows, as the case may be,
of the Company and the Company Subsidiaries for the periods set forth therein
(subject, in the case of unaudited statements, to normal year-end audit
adjustments which would not be material in amount or effect), in each case in
accordance
16
with generally accepted accounting principles consistently applied during the
periods involved, except as may be noted therein and except, in the case of the
unaudited statements, as permitted by Form 10-Q pursuant to Section 13 or 15(d)
of the Exchange Act. All of such balance sheets and statements complied as to
form in all material respects with applicable accounting requirements and with
the published rules and regulations of the SEC with respect thereto. No Company
Subsidiary is subject to the periodic reporting requirements of the Exchange Act
or is otherwise required to file any documents with the SEC or any national
securities exchange or quotation service or comparable Governmental Entity.
(b) Except as and to the extent set forth on the consolidated balance
sheet of the Company and the consolidated Company Subsidiaries as of September
30, 1999 including the related notes, neither the Company nor any Company
Subsidiary has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) that would be required to be reflected on a
balance sheet or in the related notes prepared in accordance with generally
accepted accounting principles, except for liabilities or obligations incurred
in the ordinary course of business since September 30, 1999 that have not
resulted and would not, individually or in the aggregate, reasonably be expected
to have a Company Material Adverse Effect.
5.8 Litigation. Except as set forth in Section 5.8 of the Company
----------
Disclosure Schedule, there is no litigation, suit, claim, action or proceeding
pending or, to the knowledge of the Company, threatened against the Company or
any of the Company Subsidiaries, as to which there is a reasonable likelihood of
an adverse determination and which, if adversely determined, would, individually
or in the aggregate, reasonably be expected to have a Company Material Adverse
Effect. Neither the Company nor any Company Subsidiary is subject to any
outstanding order, writ, injunction or decree which has resulted or would,
individually or in the aggregate, reasonably be expected to result in a Company
Material Adverse Effect.
5.9 Absence of Certain Changes. Except as disclosed in the Company SEC
--------------------------
Reports filed with the SEC between September 30, 1999 and the date of this
Agreement or in Section 5.9 of the Company Disclosure Schedule, since September
30, 1999 the Company and the Company Subsidiaries have conducted their
businesses only in the ordinary course of business and there has not been:
(a) any declaration, setting aside or payment of any dividend or other
distribution with respect to Company Common Stock or any redemption, purchase or
other acquisition of the Company's securities;
(b) any material commitment, contractual obligation (including,
without limitation, any management or franchise agreement, any lease (capital or
otherwise) or any binding letter of intent), borrowing, liability, guaranty,
capital expenditure or transaction (each, a "Commitment") entered into by the
----------
Company or any of the Company Subsidiaries outside the ordinary course of
business except for Commitments for expenses of attorneys, accountants and
investment bankers incurred in connection with the Transactions;
17
(c) any material change in the Company's accounting principles,
practices or methods;
(d) any damage, destruction or other casualty loss with respect to any
asset or property owned, leased or otherwise used by it or any Company
Subsidiaries, whether or not covered by insurance, which damage, destruction or
loss, individually or in the aggregate, has resulted or would, individually or
in the aggregate, reasonably be expected to have a Company Material Adverse
Effect;
(e) any increase in the compensation or benefits or establishment of
any bonus, insurance, severance, deferred compensation, pension, retirement,
profit sharing, stock option (including, the granting of stock options, stock
appreciation rights, performance awards or restricted stock awards), stock
purchase or other employee benefit plan, or any other increase in the
compensation payable or to become payable to any executive officers of the
Company or any Company Subsidiary except in the ordinary course of business
consistent with past practice or except as required by applicable Law or
pursuant to agreements in effect as of September 30, 1999;
(f) (A) any material incurrence or assumption by the Company or any
Company Subsidiary of any indebtedness for borrowed money or (B) any guarantee,
endorsement or other incurrence or assumption of material liability (whether
directly, contingently or otherwise) by the Company or any Company Subsidiary
for the obligations of any other person (other than any wholly-owned Company
Subsidiary), other than in the ordinary course of business consistent with past
practice;
(g) any creation or assumption by the Company or any Company
Subsidiary of any Lien on any material asset of the Company or any Company
Subsidiary, other than in the ordinary course of business consistent with past
practice;
(h) any making of any loan, advance or capital contribution to or
investment in any person by the Company or any Company Subsidiary, other than in
the ordinary course of business consistent with past practice or in an amount
which are not in the aggregate in excess of $100,000;
(i) (A) any Contract or agreement entered into by the Company or any
Company Subsidiary on or prior to the date hereof relating to any material
acquisition or disposition of any assets or business or (B) any modification,
amendment, assignment or termination of or relinquishment by the Company or any
Company Subsidiary of any rights under any other Contract (including any
insurance policy naming it as a beneficiary or a loss payable payee) that has
resulted or would, individually or in the aggregate, reasonably be expected to
result in a Company Material Adverse Effect other than transactions,
commitments, contracts or agreements in the ordinary course of business
consistent with past practice or those contemplated by this Agreement; or
18
(j) the circuits identified in Section 5.19(c) of the Company
Disclosure Schedule have not been materially altered or otherwise changed in any
manner that would, individually or in the aggregate, reasonably be expected to
have a Company Material Adverse Effect.
5.10 Taxes.
-----
(a) Except as set forth in Section 5.10 of the Company Disclosure
Schedule, each of the Company and the Company Subsidiaries (i) has filed, or
will have filed, all Tax Returns (as defined below) required to be filed by it
on or before the Closing Date (taking into account any applicable extensions)
and all such Tax Returns are true, correct and complete in all material
respects, and (ii) has paid, or will have paid, all Taxes (as defined below)
required to be paid by it on or before the Closing Date (whether or not shown on
any Tax Return), except, in each case, where the failure to file such Tax
Returns or pay such Taxes would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect. Except as set
forth in Section 5.10 of the Company Disclosure Schedule, the most recent
audited financial statements contained in the Company's Quarterly Report on Form
10-Q for the quarter year ended September 30, 1999 reflect an adequate reserve
for all material Taxes payable by the Company and the Company Subsidiaries for
all taxable periods and portions thereof through the date of such financial
statements in accordance with United States generally accepted in accounting
principles ("GAAP"). To the knowledge of the Company, and except as set forth
----
in Section 5.10 of the Company Disclosure Schedule, no deficiencies for any
Taxes have been proposed, asserted or assessed against the Company or any of the
Company Subsidiaries, there are no Tax liens on any assets of the Company or of
any of the Company Subsidiaries (other than Liens for current Taxes not yet
due), and no requests for waivers of the time to assess any such Taxes are
pending. Section 5.10 of the Company Disclosure Schedule lists all (A) Tax
sharing allocation or indemnification agreements and (B) agreements for
exemptions with Governmental Entities to which the Company or any of the Company
Subsidiaries is a party.
(b) Except as set forth on Schedule 5.10 of the Company Disclosure
Schedule, neither the Company nor any of the Company Subsidiaries has been a
member of any "affiliated group" (as defined in section 1504(a) of the Code)
other than the affiliated group of which the Company is the "parent" and, except
with respect to any group of which only the Company and/or its Subsidiaries are
members, is not subject to Treas. Reg. (S) 1.1502-6 (or any similar provision
under foreign, state or local law) for any period. Except as set forth on
Schedule 5.10 of the Company Disclosure Schedule, neither the Company nor any of
the Company Subsidiaries has been required to include in income any adjustment
pursuant to Section 481 of the Code (or any similar provision of state, local or
foreign tax law) by reason of a voluntary change in accounting method initiated
by the Company or any of the Company Subsidiaries, and to the knowledge of the
Company the Internal Revenue Service has not initiated or proposed any such
adjustment or change in accounting method. Except as set forth on Schedule 5.10
of the Company Disclosure Schedule, no closing agreement that could affect the
Taxes of the Company or any of the Company Subsidiaries for periods ending after
the Effective Time pursuant to Section 7121 of
19
the Code (or any predecessor provision) or any similar provision of any state,
local or foreign law has been entered into by or with respect to the Company or
any of the Company Subsidiaries. Except as set forth on Schedule 5.10 of the
Company Disclosure Schedule, there is no contract, agreement, plan or
arrangement covering any person that, individually or collectively, could give
rise to the payment of any amount that would not be deductible by the Company or
any of the Company Subsidiaries by reason of Section 162(m) or Section 280G of
the Code and neither the Company nor any of the Company Subsidiaries has made or
expects to make any such payments. Neither the Company nor any of the Company
Subsidiaries is, or has been, a United States real property holding corporation
(as defined in Section 897(c)(2) of the Code) during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code.
(c) For purposes of this Agreement, "Taxes" means all federal, state,
-----
local and foreign income, property, sales, franchise, employment, excise, use,
franchise, capital stock, withholding, payroll, gross receipts, value added,
transfer and gains and other taxes, tariffs or governmental charges of any
nature whatsoever, together with any interest, penalties or additions to Tax
with respect thereto.
(d) For purposes of this Agreement, "Tax Returns" means all reports,
-----------
returns, declarations, statements or other information required to be supplied
to a domestic or foreign taxing authority in connection with Taxes.
5.11 Real Property Leases; Properties.
--------------------------------
(a) Section 5.11 of the Company Disclosure Schedule is a true and
correct Schedule of all real property leased, subleased, licensed or occupied or
used by the Company or any Company Subsidiary under any agreements, other than
point-of-presence related agreements ("POP Agreements"), (collectively, the
--------------
"Leases") to or by the Company or any of the Company Subsidiaries (collectively,
- -------
the "Real Property") and lists the dates of and parties to each such Lease, the
-------------
dates and parties to each amendment, modification, supplement to such Lease, the
term of such Lease, any extension and expansion options, and the rent payable
thereunder. Neither the Company nor any Company Subsidiary owns any real
property. The Company has delivered to Parent complete and accurate copies of
the Leases (as amended to date).
(b) With respect to each of the Leases, except as would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect:
(i) each Lease is legal, valid, binding, enforceable obligation
of the Company;
(ii) each Lease will continue to be legal, valid, binding,
enforceable obligation of the Company immediately following the Closing in
accordance with the terms thereof as in effect immediately prior to the
Closing;
20
(iii) neither the Company nor, to the knowledge of the Company,
any other party, is in material breach or violation of, or default under,
any such Lease, and, to the knowledge of the Company, no event has
occurred, is pending or, is threatened, which, after the giving of notice,
with lapse of time, would constitute a material breach or default by the
Company or, to the knowledge of the Company, any other party under such
Lease nor has any termination event or on condition occurred under the
Leases;
(iv) the Company has not assigned, transferred, conveyed,
mortgaged, deeded in trust or encumbered any interest in the leasehold or
subleasehold;
(v) to the knowledge of the Company, there are no Liens,
easement, covenant or other restriction applicable to the Real Property,
except for recorded easements, covenants and other restrictions which do
not materially impair the current uses or the occupancy by the Company of
the property subject thereto;
(vi) neither the Company nor any Company Subsidiary thereof has
any ownership, financial or other interest in the landlord under any Lease;
(vii) there are no Leases granting to any person or entity other
than the Company or any of the Company Subsidiaries any right to the
possession, use, occupancy or enjoyment of the Real Property, or any
portion thereof;
(viii) there is no underlying mortgage, deed of trust, lease,
grant of term or other estate in or interest affecting any Real Property
which is superior to the interest of the Company and the Company
Subsidiaries, as tenants under the applicable Lease; and
(ix) except for as disclosed in Section 5.11(c) of the Company
Disclosure Schedule or easements, rights-of-way and other non-monetary
encumbrances of a minor nature that do not individually or in the aggregate
(i) interfere in any material respect with, or materially increase the cost
of, the use, occupancy or operation of the applicable parcel of Real
Property as currently used, occupied and operated or (ii) materially reduce
the fair market value of the applicable parcel of Real Property below the
fair market value such parcel would have had but for such encumbrances, the
Real Property is free and clear of all liens, pledges, mortgages, deeds of
trust, security interests, claims, leases, licenses, charges, options,
rights of first refusal, easements, servitudes, transfer restrictions,
encumbrances, restrictive covenants, encroachment or other survey defect or
any other restriction or limitation whatsoever and the Company or one of
the Company Subsidiaries holds the leasehold estate and interest in each
Lease free and clear of all liens, pledges, mortgages, deeds of trust,
security interests, claims, leases, licenses, charges, options, rights of
first refusals, easements, servitudes, transfer restrictions, encumbrances
or any other restriction or limitation whatsoever.
21
(c) All of the land, buildings, structures and other improvements used
by the Company and the Company Subsidiaries in the conduct of their businesses
are included in the Real Property, except for such land, buildings, structures
and other improvements that would not, in the aggregate, reasonably be expected
to have a Company Material Adverse Effect.
(d) Each of the POP Agreements of the Company and the Company
Subsidiaries constitute legal, valid, binding, enforceable obligation of the
Company and will continue to be legal, valid, binding, enforceable obligation
of the Company immediately following the Closing in accordance with the terms
thereof as in effect immediately prior to the Closing, except for those the
absence of which would not in the aggregate reasonably be expected to have a
Company Material Adverse Effect. Neither the Company nor any Company
Subsidiary, nor to the Company's knowledge, any other person, is in violation of
or in default under (nor does there exist any condition which with the passage
of time or the giving of notice would cause such a violation of or default
under) any POP Agreement to which the Company or a Company Subsidiary is a party
or by which it or any of its properties or assets is bound or affected, except
for violations or defaults that have not resulted and would not, in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.
(e) Except as set forth in Section 5.11(f) of the Company Disclosure
Schedule, the Company and the Company Subsidiaries own good and marketable
title, free and clear of all Liens, to all of the property and assets shown on
the Company's balance sheet at September 30, 1999 as reflected in the Company
SEC Reports (the "Company Balance Sheet") or acquired after September 30, 1999,
---------------------
except for (A) assets which have been disposed of to nonaffiliated third parties
since September 30, 1999 in the ordinary course of business, (B) Liens reflected
in the Company Balance Sheet, (C) Liens or imperfections of title which are not,
individually or in the aggregate, material in character, amount or extent and
which do not materially detract from the value or materially interfere with the
present or presently contemplated use of the assets subject thereto or affected
thereby, and (D) Liens for current Taxes not yet due and payable. All of the
machinery, equipment and other tangible personal property and assets owned or
used by the Company and the Company Subsidiaries are, to the Company's
knowledge, in good condition and repair, except for ordinary wear and tear not
caused by neglect, and are useable in the ordinary course of business.
5.12 Intellectual Property.
---------------------
(a) Section 5.12(a) of the Company Disclosure Letter sets forth all
United States and foreign patents and patent applications, trademark and service
mark registrations and applications, Internet domain name registrations and
applications, and copyright registrations and applications owned or licensed by
the Company and material to the business of the Company and the Company
Subsidiaries, taken as a whole, as conducted as of the date hereof, specifying
as to each item, as applicable: (i) the owner of the item; and (ii) the
issuance, registration or application numbers and dates.
(b) Section 5.12(b) of the Company Disclosure Letter sets forth all
material licenses, sublicenses, and other agreements or permissions ("IP
--
Licenses") under which the
- --------
22
Company is a licensor or licensee or otherwise is authorized to use or practice
any Intellectual Property. For purposes of this Agreement, "Intellectual
------------
Property" means all of the following as they exist in all jurisdictions
- --------
throughout the world, in each case, to the extent owned by, licensed to, or
otherwise used by the Company or any Company Subsidiaries or, as applicable,
Parent or any Parent Subsidiary: (A) patents, patent applications, and other
patent rights (including any divisions, continuations, continuations- in-part,
substitutions, or reissues thereof, whether or not patents are issued on any
such applications and whether or not any such applications are modified,
withdrawn, or resubmitted); (B) trademarks, service marks, trade dress, trade
names, brand names, Internet domain names, designs, logos, or corporate names,
whether registered or unregistered, and all registrations and applications for
registration thereof; (C) copyrights, including all renewals and extensions,
copyright registrations and applications for registration, and non-registered
copyrights; (D) trade secrets, concepts, ideas, designs, research, processes,
procedures, techniques, methods, know-how, data, mask works, discoveries,
inventions, modifications, extensions, improvements, and other proprietary
rights (whether or not patentable or subject to copyright, mask work, or trade
secret protection); and (E) computer software programs, including all source
code, object code, and documentation related thereto.
(c) Except as set forth in Section 5.12(c) of the Company Disclosure
Schedule, the Company or the Company Subsidiaries are the owner of free and
clear of any Liens, or a licensee under a valid sufficient license for, all
Intellectual Property that is material to the business of the Company and the
Company Subsidiaries conducted as of the date hereof, taken as a whole. Except
as disclosed in the Company SEC Reports or Section 5.12(c) of the Company
Disclosure Schedule, there are no claims pending or, to the Company's knowledge,
threatened, that the Company or any Company Subsidiary is in violation of any
such intellectual property right of any third party or that challenges the
validity, enforceability, ownership, or right to use, sell, or license any
Intellectual Property which would, individually or in the aggregate, reasonably
be expected to have a Company Material Adverse Effect, and, to the Company's
knowledge, no third party is in violation of any intellectual property rights of
the Company or any Company Subsidiary which would, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.
(d) The Company and/or one or more of its Subsidiaries owns, or is
licensed or otherwise possesses valid rights to use, all material computer
software programs or applications, including the Company's web-based customer
care and billing system, and other tangible or intangible proprietary
information or materials (the "Software") that are used in the business of the
--------
Company and the Company Subsidiaries as conducted as of the date hereof, except
for software that is "off the shelf" or "shrink-wrapped" and except for any such
failures to own, be licensed or possess that would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect. In
addition to the foregoing, as to the Company's web-based customer care and
billing system, the Company owns all source code, object code, and documents
related thereto, except as would not reasonably be expected to have a Company
Material Adverse Effect. The Software performs in conformance with its
documentation and is fully and freely transferable to Parent without any third
party consents, except for failures to perform or to be fully and freely
transferable that, individually or in the aggregate, have not resulted and would
not, individually or in the
23
aggregate, reasonably be expected to result in a Material Adverse Effect on the
Company.
5.13 Environmental Matters. The Company and the Company Subsidiaries are
---------------------
and have been in compliance with all Environmental Laws (as defined below),
except for any noncompliance that would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect. As used in
this Agreement, "Environmental Laws" shall mean all federal, state and local
------------------
laws, rules, regulations, ordinances and orders that regulate the release of
hazardous substances or other pollutants or contaminants into the environment,
or impose requirements relating to environmental protection, pollution or health
and safety. As used in this Agreement, "Hazardous Materials" means any
-------------------
"hazardous waste" as defined in either the United States Resource Conservation
and Recovery Act or regulations adopted pursuant to said act, any "hazardous
substances" or "hazardous materials" as defined in the United States
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA")
------
and, to the extent not included in the foregoing, any oil or fractions thereof,
pollutants or contaminants. Except as set forth in Section 5.13 of the Company
Disclosure Schedule, there is no administrative or judicial enforcement
proceeding or other claim, demand, order, decree or judgment pending, or to the
knowledge of the Company, threatened against the Company or any Company
Subsidiary under any Environmental Law. Except as set forth in Section 5.13 of
the Company Disclosure Schedule, neither the Company nor any Subsidiary or, to
the knowledge of the Company, any legal predecessor of the Company or any
Subsidiary, has received any written notice that it is potentially responsible
under any Environmental Law for response costs or natural resource damages, as
those terms are defined under the Environmental Laws, at any location and
neither the Company nor any Subsidiary has transported or disposed of, or
arranged for any third party to transport or dispose of, any Hazardous Materials
at any location included on the National Priorities List, as defined under
CERCLA or any location proposed for inclusion on that list or at any location on
any analogous state list. Except as set forth in Section 5.13 of the Company
Disclosure Schedule, (i) the Company has no knowledge of any release on the real
property owned or leased by the Company or any Company Subsidiary or predecessor
entity of Hazardous Materials in a manner that could result in an order to which
the Company or any Company Subsidiary is subject to perform a response action or
in material liability to the Company or any Company Subsidiary under the
Environmental Laws, and (ii) to the Company's knowledge, there is no hazardous
waste treatment, storage or disposal facility, underground storage tank,
landfill, surface impoundment, underground injection well, friable asbestos or
PCB's, as those terms are defined under the Environmental Laws, located at any
of the real property owned or leased by the Company or any Company Subsidiary or
predecessor entity or facilities utilized by the Company or the Company
Subsidiaries in a condition likely to result in material liability to the
Company or any Company Subsidiary under Environmental Laws.
5.14 Employee Benefit Plans.
----------------------
(a) Section 5.14(a) of the Company Disclosure Schedule sets forth a
list of every Benefit Plan (as hereinafter defined) that is maintained by the
Company or an Affiliate (as hereinafter defined) on the date hereof (each a
"Company Benefit Plan").
- ---------------------
24
(b) Each Company Benefit Plan which has been intended to qualify under
Section 401(a) of the Code, has received a favorable determination or approval
letter from the Internal Revenue Service ("IRS") regarding its qualification
---
under such section, its related trust has been determined to be exempt from
taxation under Section 501(a) of the Code, and nothing has occurred since the
date of such letter that has or is likely to adversely affect such qualification
or exemption. Each Company Benefit Plan that requires registration with a
government body has been so registered.
(c) With respect to any Company Benefit Plan, there has been no event
in that could subject, directly or indirectly, the Company or any Affiliate or
any Company Benefit Plan to any material liability under ERISA, the Code or any
other law, regulation or governmental order applicable to any Company Benefit
Plan, including, without limitation, Section 406, 409, 502(i), 502(l) or 4069 of
ERISA, or Section 4971, 4975 or 4976 of the Code, or under any agreement,
instrument, statute, rule of law or regulation pursuant to or under which the
Company or any Affiliate has agreed to indemnify any person against liability
incurred under, or for a violation or failure to satisfy the requirement of, any
such statute, regulation or order. Except as set forth on Section 5.14(b) of
the Company Disclosure Schedule, there are no actions, liens, suits or claims
pending or, to the knowledge of the Company or any Affiliate, threatened (other
than routine claims for benefits) with respect to any Company Benefit Plan as to
which the Company or any Affiliate has or could reasonably be expected to have
any direct or indirect actual or contingent material liability.
No litigation or governmental administrative proceeding (or investigation) or
other proceeding (other than those relating to routine claims for benefits) is
pending or, to the Company's knowledge, threatened with respect to any such
Company Benefit Plan.
(d) Neither the Company nor any Affiliate maintains or has any
obligation to contribute to, or has within the preceding six years maintained or
contributed to, or has had during such period the obligation to maintain or
contribute to, or may have any liability with respect to, any Company Benefit
Plan subject to Title IV of ERISA, Section 412 of the Code, any Multiemployer
Plan or any "multiple employer plan" within the meaning of the Code or ERISA or
the regulations promulgated thereunder.
(e) Except as provided in Section 5.14(c) of the Disclosure Schedule,
neither the Company nor any Affiliate is a party to any plan or agreement that
will, as a result of the consummation of the transactions contemplated by this
Agreement or otherwise, (i) result in the acceleration of the time for payment
or vesting of, or increase the amount of compensation due to any employee,
former employee, consultant or independent contractor, (ii) reasonablely be
expected to result in any "excess parachute payment" under Section 280G of the
Code or any payment which is non-deductible under Section 162(m) of the Code.
The consummation of the transactions contemplated by this Agreement will not
entitle any employee or former employee to severance pay or similar payment
which payments, individually or in the aggregate, would be material to the
Company and the Company Subsidiaries.
25
(f) Neither the Company nor any Affiliate has an announced plan or
legally binding commitment to create any additional Company Benefit Plans or to
amend or modify any existing Company Benefit Plan, other than amendments to
comply with law.
(g) Neither the Company nor any Affiliate has any material liability,
whether absolute or contingent, direct or indirect, including any obligations
under any Company Benefit Plan, with respect to any misclassification of a
person as an independent contractor rather than as an employee or with respect
to any employees "leased" from any employer.
(h) Neither the Company nor any Affiliate has any obligation to
provide or any direct or indirect liability, whether contingent or otherwise,
with respect to the provision of health or death benefits to or in respect of
former employees, except as may be required pursuant to COBRA or state health
coverage continuation law and the costs of which are fully paid by such former
employees.
(i) Each Company Benefit Plan which is a "group health plan" (as
defined in Section 601 of ERISA) is in material compliance with the provisions
of COBRA, HIPAA and any other applicable federal, state or local law.
(j) With respect to each Company Benefit Plan, complete and correct
copies of the following documents (if applicable to such Company Benefit Plan)
have previously been delivered to Parent: (i) all documents embodying or
governing such Company Benefit Plan, and any funding medium for such Company
Benefit Plan (including, without limitation, trust agreements) as they may have
been amended to the date hereof; (ii) the most recent IRS determination or
approval letter with respect to such Company Benefit Plan under Code Section
401(a), and any applications for determination or approval subsequently filed
with the IRS; (iii) the current summary plan description for such Company
Benefit Plan (or other descriptions of such Company Benefit Plan provided to
employees) and all modifications thereto; and for the three most recent years,
(w) the Forms 5500, with all applicable schedules and accountants' opinions
attached thereto; (x) audited financial statements; (y) actuarial valuation
reports, if any; and (z) attorney's response to an auditor's request for
information.
(k) For purposes of Sections 5.14 and 6.14 of this Agreement:
(i) "Benefit Plan" means any plan, program, arrangement,
------------
agreement or commitment which is an employment, consulting or deferred
compensation agreement, or an executive compensation, incentive bonus or
other bonus, employee pension, profit-sharing, savings, retirement, stock
option, stock purchase, severance pay, life, health, disability or accident
insurance plan, or vacation, or other employee benefit plan, program,
arrangement, agreement or commitment, including, without limitation, any
"employee benefit plan" as defined in Section 3(3) of ERISA;
26
(ii) An entity "maintains" a Benefit Plan if such entity
---------
sponsors, contributes to, or provides benefits under or through such
Benefit Plan, or has any obligation (by agreement or under applicable law)
to contribute to, or has any direct or indirect liability, whether
contingent or otherwise, with respect to any such Benefit Plan, or if such
Benefit Plan provides benefits to or otherwise covers employees of such
entity (or their spouses, dependents, or beneficiaries);
(iii) An entity is an "Affiliate" of another entity if it would
---------
have ever been considered a single employer with such other entity under
ERISA Section 4001(b) or part of the same "controlled group" as such other
entity for purposes of ERISA Section 302(d)(8)(C) and Sections 414(b), (c),
(m) or (o) of the Code; and
(iv) "Multiemployer Plan" means an employee pension or welfare
------------------
benefit plan to which more than one unaffiliated employer contributes and
which is maintained pursuant to one or more collective bargaining
agreements;
(v) "COBRA" means Section 4980B of the Code and Section 601 et
----- --
seq. of ERISA, and regulations thereunder; and
---
(vi) "HIPAA" means the Health Insurance Portability and
-----
Accountability Act of 1996.
5.15 Labor Matters.
-------------
(i) Except as disclosed in Section 5.15 of the Company Disclosure
Schedule, neither the Company nor any Company Subsidiary is a party to, or
bound by, any collective bargaining agreement, contract or other agreement
or understanding with a labor union or labor union organization. There is
no unfair labor practice or labor arbitration proceeding pending or, to the
knowledge of the Company, threatened against the Company or any of the
Company Subsidiaries relating to their business. To the Company's
knowledge, there are no organizational efforts with respect to the
formation of a collective bargaining unit presently being made or
threatened involving employees of the Company or any of the Company
Subsidiaries.
(ii) Neither the Company nor any Company Subsidiary has violated
any provision of federal or state law or any governmental rule or
regulation, or any order, decree, judgment arbitration award of any court,
arbitrator or any government agency regarding the terms and conditions of
employment of employees, former employees or prospective employees or other
labor related matters, including, without limitation, laws, rules,
regulations, orders, rulings, decrees, judgments and awards relating to
discrimination, fair labor standards and occupational health and safety,
wrongful discharge or violation of the personal rights of employees, former
employees or prospective employees, except for such violations that would
not, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect.
27
5.16 No Brokers. Neither the Company nor any of the Company Subsidiaries
----------
has entered into any contract, arrangement or understanding with any person or
firm which may result in the obligation of such entity or Parent to pay any
finder's fees, brokerage or agent's commissions or other like payments in
connection with the negotiations leading to this Agreement or consummation of
the Transactions, except that the Company has retained Morgan Stanley Dean
Witter ("Morgan Stanley") as its financial advisor in connection with the
--------------
Transactions. The Company has delivered to Parent a true and complete copy of
any contract, agreement or understanding entered into with Morgan Stanley in
connection with the Merger or the Transactions. Other than the foregoing
arrangements and Parent's arrangements with Goldman Sachs & Co. and Albert
Schneider, the Company is not aware of any claim for payment of any finder's
fees, brokerage or agent's commissions or other like payments in connection with
the negotiations leading to this Agreement or consummation of the Transactions.
5.17 Opinion of Financial Advisor. The Company has received the opinion of
----------------------------
Morgan Stanley to the effect that, as of the date hereof, the Merger
Consideration is fair to the holders of Company Common Stock from a financial
point of view. The Company has delivered or will promptly after receipt of such
written opinion, deliver a signed copy of that opinion to Parent.
5.18 Non-Competition Agreements. Except as set forth in Section 5.18 of
--------------------------
the Company Disclosure Letter, neither the Company nor any Company Subsidiary is
a party to any agreement which purports to restrict or prohibit in any material
respect the Company and the Company Subsidiaries collectively from, directly or
indirectly, engaging in any business involving Internet service access or
telecommunications currently engaged in by the Company, any Company Subsidiary
or any other persons affiliated with the Company. None of the Company's
officers, directors or key employees is a party to any agreement which, by
virtue of such person's relationship with the Company, restricts in any material
respect the Company or any Company Subsidiary or affiliate of either of them
from, directly or indirectly, engaging in any of the businesses described above.
5.19 Material Contracts.
------------------
(a) Schedule 5.19(a) of the Company Disclosure Letter lists or
describes, and the Company has been furnished copies of all material contracts
or arrangements to which the Company or any Company Subsidiary is a party or to
which its assets, property or business is bound or subject (other than contracts
between the Company and any Company Subsidiary), which involve aggregate
payments by or to the Company or any Company Subsidiary (including, without
limitation, payments pursuant to a guaranty of any obligations of any Company
Subsidiary or third party) of $100,000 or more, whether or not made in the
ordinary course of business (the "Company Contracts").
-----------------
(b) Except for the Company Contracts or as set forth in Section
5.19(b) of the Company Disclosure Schedule, there is no Contract that is
material to the business, results of operations, assets, properties or financial
condition of the Company and the Company
28
Subsidiaries taken as a whole. Each of the Company Contracts constitutes a valid
and legally binding obligation of the Company or such Company Subsidiary and, to
the knowledge of the Company, of the other parties thereto, enforceable in
accordance with its terms, and is in full force and effect, except to the extent
the failure to be so valid, binding or enforceable, has not and would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect. Neither the Company nor any Company Subsidiary, nor to
the Company's knowledge, any other person, is in violation of or in default
under (nor does there exist any condition which with the passage of time or the
giving of notice would cause such a violation of or default under) any Contract
to which the Company or a Company Subsidiary is a party or by which it or any of
its properties or assets is bound or affected, except for violations or defaults
that have not resulted and would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect. The Company
has satisfied all volume commitment requirements under the applicable Company
Contracts to allow for the most favorable pricing structure to be provided to
the Company under such Company Contracts. Set forth in Schedule 5.19(b), the
Company Disclosure Letter is a description of any material changes to the amount
and terms of the indebtedness of the Company and the consolidated Company
Subsidiaries as described in the notes to the financial statements set forth as
incorporated by reference in the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1999. The aggregate amount of indebtedness of the
Company and the Company Subsidiaries which is outstanding under the Amended and
Restated Credit Agreement, dated as of July 26, 1999, among Voyager Information,
Inc., Fleet National Bank, as agent and certain lenders, is no more than
$23,750,000.
(c) Section 5.19(c) of the Company Disclosure Schedule sets forth a
true and complete list as of February 1, 2000 of all circuit and related
agreements and any amendments, supplements or other modifications thereto except
for those circuit and related agreements that would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.
5.20 Certain Agreements. Except as set forth in Section 5.20 of the
------------------
Company Disclosure Letter, neither the Company nor any of the Company
Subsidiaries is a party to any oral or written (i) agreement with any executive
officer or other key employee of the Company or Company Subsidiary the benefits
of which are contingent, or the terms of which are materially altered, upon the
occurrence of a transaction involving the Company of the nature contemplated by
this Agreement, or agreement with respect to any executive officer of the
Company providing any term of employment or compensation guarantee (x) extending
for a period longer than one year after the Effective Time or (y) for the
payment of in excess of $100,000 or (ii) plan or arrangements, including any
stock option plan, stock appreciation right plan, restricted stock plan or stock
purchase plan, any of the benefits of which will be increased, or the vesting of
the benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any of the benefits
of which will be calculated on the basis of any of the transactions contemplated
by this Agreement.
5.21 Subscribers. The Company has at least 325,000 subscribers as
-----------
calculated in accordance with the Company's customary practices. As used
herein, the term "Subscriber"
----------
29
means a customer of the Company or a Company Subsidiary who (i) is currently
connected to and receiving Internet access service from the system and (ii) is
being charged and is paying for such service. Notwithstanding the foregoing, it
shall not be deemed to be a reduction in the number of Subscribers if a
Subscriber continues to remain as a customer of the Company, even though such
Subscriber has been aggregated with one or more other Subscribers into one
account.
5.22 Information. None of the information to be supplied by the Company
-----------
for inclusion or incorporation by reference in the Proxy Statement or the Form
S-4 will, in the case of the Form S-4, at the time it becomes effective and at
the Effective Time, contain any untrue statement of a material fact or omit to
state any material fact required to be stated in that Form S-4 or necessary to
make the statements in that Form S-4 not misleading, or, in the case of the
Proxy Statement or any amendments of or supplements to the Proxy Statement, at
the time of the mailing of the Proxy Statement and any amendments of or
supplements to the Proxy Statement and at the time of the Company Stockholders
Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated in that Proxy Statement or necessary in
order to make the statements in that Proxy Statement, in light of the
circumstances under which they are made, not misleading. The Proxy Statement
(except for those portions of the Proxy Statement that relate only to Parent or
Parent Subsidiaries or affiliates of Parent) will comply as to form in all
material respects with the provisions of the Exchange Act.
5.23 Vote Required. The Requisite Company Vote is the only vote of the
-------------
holders of any class or series of the Company's capital stock necessary (under
the Company Certificate and Company By-laws, the DGCL, other applicable Law or
otherwise) to approve this Agreement, the Merger or the other Transactions.
5.24 Definition of the Company's Knowledge. As used in this Agreement,
-------------------------------------
the phrase "to the knowledge of the Company" or any similar phrase means the
-------------------------------
actual (and not the constructive or imputed) knowledge after due inquiry of
Christopher P. Torto, Osvaldo deFaria, Glenn R. Friedly and James Militello.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PARENT
Except as set forth in the disclosure letter delivered at or prior to
the execution hereof to the Company, which shall refer to the relevant Sections
of this Agreement (the "Parent Disclosure Schedule"), each of Parent and
--------------------------
30
MergerCo represents and warrants to the Company as follows:
6.1 Existence; Good Standing; Authority; Compliance With Law.
--------------------------------------------------------
(a) Each of Parent and MergerCo is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation. Except as set forth in Section 6.1 of Parent Disclosure
Schedule, each of Parent and MergerCo is duly licensed or qualified to do
business as a foreign corporation and is in good standing under the laws of any
other state of the United States in which the character of the properties owned,
leased or operated by it therein or in which the transaction of its business
makes such qualification or licensing necessary, except where the failure to be
so licensed or qualified would not, individually or in the aggregate, reasonably
be expected to have a material adverse effect on the business, assets,
properties, results of operations or financial condition of Parent and the
Parent Subsidiaries (as defined herein) taken as a whole (a "Parent Material
---------------
Adverse Effect"). Each of Parent and MergerCo has all requisite corporate power
- --------------
and authority to own, operate, lease and encumber its properties and carry on
its business as now conducted.
(b) Each of the Parent Subsidiaries is a corporation, partnership or
limited liability company (or similar entity or association in the case of those
Parent Subsidiaries organized and existing other than under the laws of a state
of the United States) duly incorporated or organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation or
organization, has the corporate or other power and authority to own its
properties and to carry on its business as it is now being conducted, and is
duly qualified or licensed to do business and is in good standing in each
jurisdiction in which character of the properties owned, leased or operated by
it therein or in which the transaction of its business makes such qualification
or licensing necessary, except for jurisdictions in which such failures to be so
qualified or to be in good standing would not, individually or in the aggregate,
reasonably be expected to have a Parent Material Adverse Effect.
(c) Except as set forth in Section 6.1(c) of the Parent Disclosure
Schedule, neither Parent, MergerCo nor any of the Parent Subsidiaries is in
violation of any order of any court, Governmental Entity or arbitration board or
tribunal, or any Law, applicable to Parent, MergerCo or any Parent Subsidiary or
by which any of their respective properties or assets is bound or affected by
which violation would, individually or in the aggregate, reasonably be expected
to have a Parent Material Adverse Effect. Parent, MergerCo and the Parent
Subsidiaries have obtained all franchises, grants, authorizations, licenses,
permits, easements, variances, exceptions, consents, waivers, rights,
certificates, approvals and orders of, and registrations required to be made
with any Governmental Entity that are material to its business as it is now
being or is intended to be conducted (the "Parent Permits"), where the failure
--------------
to obtain any such Parent Permits would not, individually or in the aggregate,
reasonably be expected to have a Parent Material Adverse Effect.
(d) The copies of the Parent's Memorandum of Association ("Parent
------
Certificate") and by-laws ("Parent ByLaws"), each as amended through the date of
- ----------- -------------
this Agreement that are incorporated by reference in, as exhibits to the
Parent's Quarterly Report on Form 10-Q for the quarter ended September 30, 1999
and all comparable corporate organizational documents of the Parent Subsidiary
made available to the Company by Parent
31
are complete and correct copies of those documents. Such Memorandum of
Association and by-laws and all comparable organizational documents of the
Parent Subsidiaries are in full force and effect. The Parent is not in violation
of any of the provisions of such Memorandum of Association or by-laws.
6.2 Authorization, Validity and Effect of Agreements. Each of Parent
------------------------------------------------
and MergerCo has the requisite power and authority to enter into the
Transactions and to execute and deliver this Agreement. The Parent Board has
unanimously approved this Agreement, the Merger and the other Transactions and
has resolved to recommend that the holders of Parent Common Stock adopt and
approve this Agreement at the stockholders' meeting of Parent to be held in
accordance with the provisions of Section 8.1. The Board of Directors of
MergerCo (the "MergerCo Board") and the stockholders of MergerCo have approved
--------------
this Agreement and the Transactions. Subject only to the approval of this
Agreement by the holders of a majority of the outstanding shares of Parent
Common Stock (the "Requisite Parent Vote"), the execution by Parent of this
---------------------
Agreement and the consummation of the Transactions have been duly authorized by
all requisite corporate action on the part of Parent and MergerCo and no other
corporate proceedings on the part of Parent or MergerCo are necessary to
authorize this Agreement or to consummate the Transactions. As of the date
hereof, all of the directors and executive officers of Parent have indicated
that they presently intend to vote all shares of Parent Common Stock which they
own to approve this Agreement and the Transactions at the stockholders' meeting
of Parent to be held in accordance with the provisions of Section 8.1. This
Agreement, assuming due and valid authorization, execution and delivery thereof
by the Company, constitutes a valid and legally binding obligation of Parent and
MergerCo, enforceable against Parent and MergerCo in accordance with its terms,
subject to applicable bankruptcy, insolvency, moratorium or other similar laws
relating to creditors' rights and general principles of equity.
6.3 Capitalization. The authorized capital stock of Parent consists
--------------
of 75,000,000 shares of Parent Common Stock and 1,000,000 shares of preferred
stock, par value $.01 per share, of Parent ("Parent Preferred Stock"). As of
----------------------
March 6, 2000, (i) 39,213,036 shares of Parent Common Stock were issued and
outstanding, (ii) 19,125,000 shares of Parent Common Stock have been authorized
and reserved for issuance and are available for grant pursuant to Parent's stock
option plans (the "Parent Stock Option Plans"), subject to adjustment on the
-------------------------
terms set forth in Parent Stock Option Plans, (iii) 10,511,875 options (the
"Parent Options") were outstanding under Parent Stock Option Plans, (iv) no
- ---------------
shares of Parent Preferred Stock were issued and outstanding, and (v) no shares
of Parent Common Stock and no shares of Parent Preferred Stock were held in the
treasury of Parent. As of the date of this Agreement, no shares of capital
stock or voting securities of Parent were issued, outstanding or reserved for
issuance by Parent or outstanding other than as described above and, since such
date, no shares of capital stock or other voting securities or options in
respect thereof have been issued except upon the exercise of the Parent Options
outstanding on such date. The authorized capital stock of MergerCo consists of
1,500 shares of MergerCo Common Stock, of which 1,500 shares were outstanding as
of the date of this Agreement. All such issued and outstanding shares of
capital stock of Parent are duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights. Parent has
32
no outstanding bonds, debentures, notes or other obligations the holders of
which have the right to vote (or which are convertible into or exercisable for
securities having the right to vote) with the stockholders of Parent on any
matter. Except as set forth in the Parent SEC Reports and in Section 6.3 of the
Parent Disclosure Schedule, there are no existing options, warrants, calls,
subscriptions, convertible securities, redemption rights or other rights,
agreements or commitments to which Parent is a party or by which Parent is bound
relating to the issued or unissued capital stock of, other equity interests in,
or securities exchangeable for or convertible into capital stock or other equity
interests in, Parent or any Parent Subsidiary or any Parent Subsidiary which
obligate Parent to issue, transfer or sell any shares of capital stock of
Parent, other than the Parent Options. Except as set forth in Section 6.3 of
Parent Disclosure Schedule or in the Parent SEC Reports, there are no agreements
or understandings to which Parent or any Parent Subsidiary is a party with
respect to the voting of any shares of capital stock of Parent or which restrict
the transfer of any such shares, nor does Parent have knowledge of any third
party agreements or understandings with respect to the voting of any such shares
or which restrict the transfer of any such shares. Except as set forth in
Section 6.3 of Parent Disclosure Schedule or in the Parent SEC Reports, there
are no outstanding contractual obligations of Parent or any Parent Subsidiary to
repurchase, redeem or otherwise acquire any shares of capital stock, partnership
interests or any other securities of Parent or any Parent Subsidiary. Except as
set forth in Section 6.3 of Parent Disclosure Schedule or in the Parent SEC
Reports, neither Parent nor any Parent Subsidiary is under any obligation,
contingent or otherwise, by reason of any agreement to register the offer and
sale or resale of any of their securities under the Securities Act.
6.4 Subsidiaries. Parent owns directly or indirectly each of the
------------
outstanding shares of capital stock or other equity interest of MergerCo and
each of the Parent Subsidiaries. Each of the outstanding shares of capital
stock of MergerCo and each of the Parent Subsidiaries having corporate form is
duly authorized, validly issued, fully paid and nonassessable. Each of the
outstanding shares of capital stock or other equity interest of MergerCo and
each of the Parent Subsidiaries is owned, directly or indirectly, by Parent free
and clear of all Liens. Section 6.4 of Parent Disclosure Schedule sets forth:
(i) the name and jurisdiction of incorporation or organization of each
Subsidiary of Parent ("Parent Subsidiaries") and (ii) the name of each
-------------------
stockholder or equity interest holder and the number of issued and outstanding
shares of capital stock, share capital or other equity interest held by it with
respect to each Parent Subsidiary.
6.5 Other Interests. Except as set forth in Section 6.5 of Parent
---------------
Disclosure Schedule, neither Parent nor any Parent Subsidiary owns directly or
indirectly any interest or investment (whether equity or debt) in any
corporation, partnership, limited liability company, joint venture, business,
trust or other entity (other than investments in short-term investment
securities), other than in any Parent Subsidiary.
6.6 No Violation; Consents.
----------------------
(a) Except as set forth in Section 6.6(a) of Parent Disclosure
Schedule, neither the execution and delivery by Parent of this Agreement nor
consummation by Parent of
33
the Transactions in accordance with the terms hereof, will conflict with or
result in a breach of any provisions of Parent Certificate or Parent ByLaws or
any comparable organizational documents of any Parent Subsidiary. Except as set
forth in Section 6.6(a) of Parent Disclosure Schedule, the execution and
delivery by Parent of this Agreement and consummation by Parent of the
Transactions in accordance with the terms hereof will not violate, or conflict
with, or result in (x) a violation of any Law applicable to Parent or any Parent
Subsidiary or by which any property or asset of Parent or any Parent Subsidiary
is bound or affected or (y) any provision of, or constitute a default (or an
event which, with notice or lapse of time or both, would constitute a default)
under, or result in the termination or in a right of termination or cancellation
of, or accelerate the performance required by, or result in the creation of any
Lien upon any of the properties or assets of Parent or the Parent Subsidiaries
under, or result in being declared void, voidable or without further binding
effect, any of the terms, conditions or provisions of any Contract to which
Parent or any of Parent Subsidiaries is a party, or by which Parent or any of
the Parent Subsidiaries or any of their properties is bound, except as would
not, individually or in the aggregate, reasonably be expected to have a Parent
Material Adverse Effect. Other than the Regulatory Filings, the execution and
delivery of this Agreement by Parent does not, and the performance of this
Agreement by Parent and consummation of the Transactions does not, require any
consent, approval or authorization of, or declaration, filing or registration
with, any Governmental Entity, except where the failure to obtain any such
consent, approval or authorization of, or declaration, filing or registration
with, any governmental or regulatory authority would not, individually or in the
aggregate, reasonably be expected to have a Parent Material Adverse Effect.
(b) Section 6.6(b) of the Parent Disclosure Letter sets forth a
correct and complete list of all material Contracts to which Parent or any
Parent Subsidiaries are a party or by which they or their assets or properties
is or may be bound or affected under which consents or waivers are required
prior to consummation of the transactions contemplated by this Agreement and the
Transactions.
6.7 SEC Documents. Parent has filed all required forms, reports,
-------------
exhibits, schedules, statements and other documents with the SEC since September
2, 1998 (collectively, the "Parent SEC Reports"), all of which were prepared in
------------------
accordance with the applicable requirements of the Securities Laws. All
required Parent SEC Reports have been filed with the SEC and constitute all
forms, reports, exhibits, schedules, statements and other documents required to
be filed by Parent under the Securities Laws since September 2, 1998. As of
their respective dates, Parent SEC Reports, including any financial statement or
schedules included or incorporated therein by reference (i) complied as to form
in all material respects with the applicable requirements of the Securities Laws
and (ii) 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 made therein, in the light of the circumstances under which they were
made, not misleading. Each of the consolidated balance sheets of Parent
included in or incorporated by reference into Parent
34
SEC Reports (including the related notes and schedules) fairly presents the
consolidated results of operations and cash flow position of Parent and Parent
Subsidiaries as of its date and each of the consolidated statements of income,
retained earnings and cash flows of Parent included in or incorporated by
reference into Parent SEC Reports (including any related notes and schedules)
fairly presents the results of operations, retained earnings or cash flows, as
the case may be, of Parent and Parent Subsidiaries for the periods set forth
therein (subject, in the case of unaudited statements, to normal year-end audit
adjustments which would not be material in amount or effect), in each case in
accordance with generally accepted accounting principles consistently applied
during the periods involved, except as may be noted therein and except, in the
case of the unaudited statements, as permitted by Form 10-Q pursuant to Section
13 or 15(d) of the Exchange Act. All of such balance sheets and statements
complied as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto. No Parent Subsidiary is subject to the periodic reporting
requirements of the Exchange Act or is otherwise required to file any documents
with the SEC or any national securities exchange or quotation service or
comparable Governmental Entity.
6.8 Litigation. Except as set forth in Section 6.8 of Parent
----------
Disclosure Schedule and in the Parent SEC Reports, there is no litigation, suit,
claim, action or proceeding pending or, to the knowledge of Parent, threatened
against Parent or any of Parent Subsidiaries, as to which there is a reasonable
likelihood of an adverse determination and which, if adversely determined,
would, individually or in the aggregate, reasonably be expected to have a Parent
Material Adverse Effect. Neither Parent nor any Parent Subsidiary is subject to
any outstanding order, writ, injunction or decree which, individually or in the
aggregate, has resulted or would, individually or in the aggregate, reasonably
be expected to have a Parent Material Adverse Effect.
6.9 Absence of Certain Changes. Except as disclosed in Parent SEC
--------------------------
Reports filed with the SEC between September 30, 1999 and the date of this
Agreement or in Section 6.9 of the Parent Disclosure Schedule, since September
30, 1999 Parent and Parent Subsidiaries have conducted their businesses only in
the ordinary course of business and there has not been:
(a) any declaration, setting aside or payment of any dividend or other
distribution with respect to Parent Common Stock or any redemption, purchase or
other acquisition of Parent's securities;
(b) any Commitment entered into by Parent or any of Parent
Subsidiaries outside the ordinary course of business except for Commitments for
expenses of attorneys, accountants and investment bankers incurred in connection
with the Transactions;
(c) any material change in Parent's accounting principles,
practices or methods; or
(d) any damage, destruction or other casualty loss with respect to any
asset or property owned, leased or otherwise used by it or any Parent
Subsidiaries, whether or not covered by insurance, which damage, destruction or
loss, individually or in the aggregate, has resulted or would, individually or
in the aggregate, reasonably be expected to have a Parent Material Adverse
Effect.
35
6.10 Intellectual Property. Parent or the Parent Subsidiaries are the
---------------------
owner free and clear of any Liens of, or a licensee under a valid unrestricted
license for, all Intellectual Property which are material to the business of
Parent and the Parent Subsidiaries as currently conducted, taken as a whole.
Except as disclosed in Parent SEC Reports or Section 6.10 of Parent Disclosure
Schedule, there are no claims pending or, to Parent's knowledge, threatened,
that Parent or any Parent Subsidiary is in violation of any such intellectual
property right of any third party or that challenges the validity,
enforceability, ownership, or right to use, sell, or license any Intellectual
Property which would, individually or in the aggregate, reasonably be expected
to have a Parent Material Adverse Effect, and, to Parent's knowledge, no third
party is in violation of any intellectual property rights of Parent or any
Parent Subsidiary which would, individually or in the aggregate, reasonably be
expected to have a Parent Material Adverse Effect.
6.11 No Brokers. Neither Parent nor any of Parent Subsidiaries has
----------
entered into any contract, arrangement or understanding with any person or firm
which may result in the obligation of such entity or the Company to pay any
finder's fees, brokerage or agent's commissions or other like payments in
connection with the negotiations leading to this Agreement or consummation of
the Transactions, except that Parent has retained Goldman, Sachs & Co. and
Albert Schneider as its financial advisor in connection with the Transactions.
Other than the foregoing arrangements and the Company's arrangements with Morgan
Stanley, Parent is not aware of any claim for payment of any finder's fees,
brokerage or agent's commissions or other like payments in connection with the
negotiations leading to this Agreement or consummation of the Transactions.
6.12 Opinion of Financial Advisor. Parent has received the opinion of
----------------------------
Goldman, Sachs & Co. to the effect that, as of the date hereof, the Merger
Consideration is fair to the holders of Parent Common Stock from a financial
point of view.
6.13 Taxes. Except as set forth in Section 6.13 of the Parent
-----
Disclosure Schedule, each of the Parent and the Parent Subsidiaries (i) has
filed, or will have filed, all Tax Returns required to be filed by it on or
before the Closing Date (taking into account any applicable extensions) and all
such Tax Returns are true, correct and complete in all material respects, and
(ii) has paid, or will have paid, all Taxes required to be paid by it on or
before the Closing Date (whether or not shown on any Tax Return), except, in
each case, where the failure to file such Tax Returns or pay such Taxes would
not, individually or in the aggregate, reasonably be expected to have a Parent
Material Adverse Effect. Except as set forth in Section 6.13 of the Parent
Disclosure Schedule, the most recent unaudited financial statements contained in
the Parent's Quarterly Report on Form 10-Q for the quarter ended September 30,
1999 reflect an adequate reserve for all material Taxes payable by the Parent
and the Parent Subsidiaries for all taxable periods and portions thereof through
the date of such financial statements in accordance with United States GAAP. To
the knowledge of the Parent, and except as set forth in Section 6.13 of the
Parent Disclosure Schedule, no deficiencies for any Taxes have been proposed,
asserted or assessed against the Parent or any of the Parent Subsidiaries, there
are no Tax liens on any assets of the Parent or of any of the Parent
Subsidiaries (other than liens for current Taxes not yet due), and no requests
for waivers of the
36
time to assess any such Taxes are pending. The transactions described in Section
8.11, including the Reincorporation (as defined herein), will not result in any
material Tax liability to Parent or to ATX.
6.14 Employee Benefit Plans. Each Parent Benefit Plan which is
----------------------
intended to be qualified under Section 401(a) of the Code has received a
favorable determination or approval letter from the IRS regarding its
qualification under such section, and neither the Parent nor any Affiliate knows
of any event that has occurred which would preclude qualified status. With
respect each Parent Benefit Plan, there has been no material failure to comply
with any applicable provision of ERISA, the Code or any other law which would
subject the Parent or any Affiliate to liability for any damages, penalty, or
taxes that would, individually or in the aggregate, reasonably be expected to
have a Parent Material Adverse Effect.
6.15 Definition of Parent's Knowledge. As used in this Agreement, the
--------------------------------
phrase "to the knowledge of Parent" or any similar phrase means the actual (and
--------------------------
not the constructive or imputed) knowledge after due inquiry of the executive
officers of Parent.
ARTICLE VII
COVENANTS
7.1 No Solicitations.
----------------
(a) The Company represents and warrants that it has terminated, and
has caused its subsidiaries and affiliates, and their respective officers,
directors, employees, investment bankers, attorneys, accountants and other
advisors or representatives to terminate, any activities, discussions or
negotiations relating to, or that may be reasonably be expected to lead to, any
Acquisition Proposal (as hereinafter defined) and will promptly request the
return of all confidential information regarding the Company provided to any
third party prior to the date of this Agreement pursuant to the terms of any
confidentiality agreements. From the date hereof until the termination hereof
and except as permitted by the following provisions of this Section 7.1, the
Company shall not, and shall not authorize or permit any of its officers,
directors or employees or any investment banker, financial advisor, attorney,
accountant or other advisor or Representative retained by it to, directly or
indirectly, (i) solicit, initiate or encourage (including by way of furnishing
non-public information), or take any other action to facilitate, any inquiries
or the making of any proposal that constitutes an Acquisition Proposal or any
inquiries or making of any proposal that constitutes, or may reasonably be
expected to lead to, an Acquisition Proposal, or (ii) participate in any
activities, discussions or negotiations regarding an Acquisition Proposal;
provided, however, that subject to compliance by the Company with the provisions
- -------- -------
of Section 7.1(b), the Company Board may furnish information to, or enter into
discussions or negotiations with, any person that makes an unsolicited written
Acquisition Proposal if, and only to the extent that (A) the Company Board,
after consultation with its outside legal counsel, determines in good faith that
such action is necessary for the Company Board to comply with its fiduciary
duties to the Company's stockholders under
37
applicable law, (B) such Acquisition Proposal is not subject to any financing
contingencies or is, in the good faith judgment of the Company Board after
consultation with a nationally recognized financial advisor, reasonably capable
of being financed, and is at least as likely to be consummated as is the Merger,
(C) the Company Board determines in good faith that such Acquisition Proposal,
based upon such matters as it deems relevant (including consultation with a
nationally recognized financial advisor) would, if consummated, result in a
transaction more favorable to the Company's stockholders from a financial point
of view than the Merger (any such more favorable Acquisition Proposal being
referred to herein as a "Superior Proposal"), (D) the Company receives from such
-----------------
person an executed confidentiality agreement in reasonably customary form and
(E) at least three (3) business days prior to taking such action, the Company
shall provide written notice to Parent to the effect that it is taking such
action.
(b) Prior to providing any information to or entering into discussions
with any person in connection with an Acquisition Proposal by a person as set
forth in Section 7.1(a), the Company shall notify Parent orally and in writing
of any Acquisition Proposal (including, without limitation, the material terms
and conditions thereof and the identity of the person making it) or any
inquiries indicating that any person is considering making or wishes to make an
Acquisition Proposal, as promptly as practicable (but in no case later than 24
hours) after its receipt thereof, and shall provide Parent with a copy of any
written Acquisition Proposal or amendments or supplements thereto, and shall
thereafter inform Parent on a prompt basis of (x) any material changes to the
terms and conditions of such Acquisition Proposal, and shall promptly give
Parent a copy of any information delivered to such person that amends or
supplements the Acquisition Proposal and that has not previously been provided
to Parent, and (y) any request by any person for nonpublic information relating
to its or any Company Subsidiaries' properties, books or records.
(c) The Company Board will not withdraw or modify, or propose to
withdraw or modify, in any manner adverse to Parent, its approval or
recommendation of this Agreement or the Merger except in connection with a
Superior Proposal and then only upon or after the termination of this Agreement
pursuant to Section 10.1(c) and payment to Parent of the amounts referred to in
Section 10.2(b).
(d) Nothing contained in this Section 7.1 shall prohibit the Company
from at any time taking and disclosing to its stockholders a position
contemplated by Rule 14d-9 or Rule 14e-2 promulgated under the Exchange Act or
making any disclosure required by Rule 14a-9 promulgated under the Exchange Act
if, the Company Board determines, in its good faith reasonable judgment after
consultation with outside legal counsel, that failure to so disclose would be
inconsistent with its obligations under applicable law.
(e) As used in this Agreement, the term "Acquisition Proposal" shall
--------------------
mean any proposed or actual (i) merger, consolidation or similar transaction
involving the Company, (ii) sale, lease, exchange, mortgage, pledge, transfer or
other disposition, directly or indirectly, by merger, consolidation, share
exchange or otherwise, of any assets of the Company or the Company Subsidiaries
representing 15% or more of the consolidated assets of
38
the Company and the Company Subsidiaries, (iii) issue, sale or other disposition
by the Company of (including by way of merger, consolidation, share exchange or
any similar transaction) securities (or options, rights or warrants to purchase,
or securities convertible into, such securities) representing 15% or more of the
votes associated with the outstanding securities of the Company, (iv) tender
offer or exchange offer in which any person shall acquire beneficial ownership
(as such term is defined in Rule 13d-3 under the Exchange Act), or the right to
acquire beneficial ownership, or any "group" (as such term is defined under the
Exchange Act) shall have been formed which beneficially owns or has the right to
acquire beneficial ownership of, 15% or more of the outstanding shares of
Company Common Stock, (v) recapitalization, restructuring, liquidation,
dissolution, or other similar type of transaction with respect to the Company,
(vi) transaction which is similar in form, substance or purpose to any of the
foregoing transactions or (vii) any public announcement of a proposal or plan to
do any of the foregoing (including, without limitation, the filing of a
registration statement under the Securities Act) or any agreement to engage in
any of the foregoing; provided, however, that the term "Acquisition Proposal"
-------- -------
shall not include the Merger and the other Transactions.
7.2 Conduct of Businesses.
---------------------
(a) Conduct by the Company. Prior to the Effective Time, except as
----------------------
specifically permitted by this Agreement, unless Parent or MergerCo has
consented in writing thereto, the Company shall cause each Company Subsidiary to
conduct its operations according to their usual, regular and ordinary course of
business consistent with past practice or in accordance with the Business Plan
of the Company which has been provided to Parent ("Business Plan") and, to the
-------------
extent consistent therewith, with no less diligence and effort then would be
applied in the absence of this Agreement, will use its reasonable best efforts
to, and to cause each Company Subsidiary to, preserve intact the business
organization of the Company and each of the Company Subsidiaries, to keep
available the services of the present officers and key employees of the Company
and the Company Subsidiaries, and to preserve the good will of customers,
suppliers and all other persons having business relationships with the Company
and the Company Subsidiaries. Without limiting the generality of the foregoing,
and except as set forth on Section 7.2(a) of the Company Disclosure Schedule,
neither the Company nor any Company Subsidiary shall (except as expressly
permitted by this Agreement or to the extent Parent or MergerCo shall otherwise
consent in writing):
(i) directly or indirectly, split, combine, subdivide,
reclassify or redeem, retire, purchase or otherwise acquire, or propose
to redeem, retire or purchase or otherwise acquire, any shares of its
capital stock, or any of its other securities; or declare, set aside or
pay any dividend or other distribution (whether in cash, stock or
property or any combination thereof) in respect of Company Common Stock,
except for dividends paid by any Company Subsidiary to the Company or
any Company Subsidiary that is, directly or indirectly, wholly owned by
the Company;
(ii) authorize for issuance, issue, pledge, reissue, sell,
deliver or agree or commit to issue, pledge, reissue, sell or deliver
(whether through
39
the issuance or granting of options, warrants, commitments,
subscriptions, rights to purchase or otherwise) any stock of any class
or any other securities (including indebtedness having the right to
vote) or equity equivalents (including, without limitation, securities
convertible into capital stock, options, warrants and stock appreciation
rights), other than the issuance of shares of Company Common Stock upon
the exercise of Company Options in accordance with their present terms;
(iii) acquire, sell, lease, encumber, license, pledge, grant,
transfer or dispose of any assets outside the ordinary course of
business which are material to the Company or any of the Company
Subsidiaries (whether by merger, consolidation, purchase, sale, asset
acquisition, stock acquisition or otherwise) or enter into any material
commitment or transaction outside the ordinary course of business,
except as set forth in Section 7.2(a) of the Company Disclosure
Schedule;
(iv) except as contemplated by the Business Plan, incur,
assume or prepay any amount of indebtedness for borrowed money,
guarantee any indebtedness, issue or sell debt securities or warrants or
rights to acquire any debt securities, guarantee (or become liable or
responsible for, whether directly, contingently or otherwise) any debt
of others, make any loans, advances or capital contributions, or
investments in, mortgage, pledge or otherwise encumber any material
assets, create or suffer any material Lien thereupon other than in the
ordinary course of business consistent with prior practice;
(v) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than any payment, discharge or satisfaction (A) in the
ordinary course of business consistent with past practice, or (B) in
connection with the transactions contemplated by this Agreement;
(vi) change any of the accounting principles or practices
used by it (except as required by GAAP, in which case written notice
shall be provided to Parent prior to any such change);
(vii) except as required by law, (A) enter into, adopt, amend
or terminate any Company Benefit Plan, (B) enter into, adopt, amend or
terminate any agreement, arrangement, plan or policy between the Company
or any of the Company Subsidiaries and one or more of their directors or
officers, (C) except for normal increases in the ordinary course of
business consistent with past practice, increase in any manner the
compensation or fringe benefits of any director, officer or employee or
pay any benefit not required by any Company Benefit Plan or arrangement
as in effect as of the date hereof, (D) pay any benefit not required by
any existing plan or arrangement (including the granting of stock
options, stock appreciation rights, shares of restricted stock or
performance units) or grant any severance or termination pay to (except
pursuant to existing agreements, plans or policies), or enter into any
employment or severance agreement with, any director,
40
officer or other employee of the Company or any Company Subsidiaries or
(E) establish, adopt, enter into, amend or take any action to accelerate
rights under any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement,
savings, welfare, deferred compensation, employment, termination,
severance or other employee benefit plan, agreement, trust, fund, policy
or arrangement for the benefit or welfare of any directors, officers or
current or former employees, except in each case to the extent required
by applicable Law; provided, however, that nothing in this Agreement
will be deemed to prohibit the payment of benefits as they become
payable;
(viii) adopt any amendments to the Company Certificate or the
Company Bylaws or comparable organizational documents of any Company
Subsidiary, except as expressly provided by the terms of this Agreement;
(ix) make or file and elections in respect of Taxes with
respect to the Company or any of its Subsidiaries;
(x) terminate, cancel or request any material change in,
or agree to any material change in any Contract which is material to the
Company and the Company Subsidiaries taken as a whole, or enter into any
Contract which would be material to the Company and the Company
Subsidiaries taken as a whole, in either case other than in the ordinary
course of business consistent with past practice;
(xi) make or authorize any capital expenditure, which
would be material to the Company and the Company Subsidiaries taken as a
whole, other than in the ordinary course of business consistent with
past practice or in accordance with the Business Plan;
(xii) enter into any agreement or arrangement that
materially limits or otherwise restricts the Company or any Company
Subsidiary or any successor thereto, or that would, after the Effective
Time, limit or restrict the Surviving Corporation and its affiliates
(including Parent) or any successor thereto, from engaging or competing
in any line of business or in any geographic area, other than in the
ordinary course of business consistent with past practice;
(xiii) adopt a plan of complete or partial liquidation or
resolutions providing for or authorizing such a liquidation or a
dissolution, merger, consolidation, restructuring, recapitalization or
reorganization (other than plans of complete or partial liquidation or
dissolution of inactive Company Subsidiaries);
(xiv) settle, waive, release, assign or compromise any
material rights, claims or litigation (whether or not commenced prior to
the date of this Agreement);
41
(xv) take any action that would result in any of its
representations or warranties set forth in this Agreement becoming
untrue or cause any conditions to closing set forth in Article IX, to
not be satisfied, other than those actions that would not materially
adversely affect the Company's ability to consummate the transactions
contemplated by this Agreement; or
(xvi) authorize or enter into any formal or informal written
or other agreement or otherwise make any commitment to do any of the
foregoing actions.
(b) Conduct by Parent. Except as expressly provided in this Agreement
-----------------
or as disclosed on Section 7.2(b) of Parent Disclosure Schedule, neither Parent
nor any Parent Subsidiary shall (except as expressly permitted by this Agreement
or to the extent the Company shall otherwise consent in writing):
(i) declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of Parent Common Stock, except for dividends paid by
any Parent Subsidiary to Parent or any Parent Subsidiary that is,
directly or indirectly, wholly owned by Parent; or
(ii) authorize or enter into any formal or informal written
or other agreement or otherwise make any commitment to do any of the
foregoing actions; provided that nothing in this Section 7.2(b) shall
prohibit Parent from undertaking any actions contemplated by the
definition of Base Adjustments in Section 3.1(c)(ii) prior to Closing.
7.3 Tax-Free Treatment. Parent, MergerCo and the Company intend that
------------------
the Merger will qualify as either (i) a reorganization within the meaning of
Section 368(a) of the Code or (ii) a transaction that, together with the
Reincorporation (as defined herein) qualifies as an exchange under the
provisions of Section 351 of the Code and which is treated for U.S. federal
income tax purposes as a transfer of Company Common Stock by the shareholders of
the Company to Parent in exchange for the Merger Consideration. None of Parent,
MergerCo or the Company shall take, or fail to take, or cause to be taken or
fail to cause to be taken, any action, whether before or after the Closing,
which action or failure to take any action would cause the Merger to fail to
constitute a "reorganization" within the meaning of Section 368(a) of the Code
or a transaction that, together with the Reincorporation (as defined herein)
qualifies as an exchange under the provisions of Section 351 of the Code and
which is treated for U.S. federal income tax purposes as a transfer of Company
Common Stock by the shareholders of the Company to Parent in exchange for the
Merger Consideration. However, it is further intended by all of the parties
hereto that if the transactions with ATX described in Section 8.11 occur, and
this Agreement is assigned as provided in Section 11.5, then the incorporation
of ATX, the transactions with ATX described in Section 8.11, and the
transactions described in this Agreement will be treated for U.S. federal income
tax purposes as one integrated transaction qualifying as an exchange under the
provisions of Section 351 of
42
the Code in which the shareholders of the Company transfer Company Common Stock
in exchange for ATX stock. No party to this Agreement shall take a position on
any Tax return that is inconsistent with the intentions expressed in this
Section 7.3.
ARTICLE VIII
ADDITIONAL AGREEMENTS
8.1 Meetings of Stockholders. Following execution of this Agreement,
------------------------
(i) Parent will take all action necessary in accordance with applicable law,
Parent Certificate and Parent ByLaws to convene a meeting of its stockholders as
promptly as practicable to consider and vote upon the approval of the issuance
of Parent Common Stock to be issued pursuant to the Merger and (ii) the Company
will take all action necessary in accordance with applicable Law, the Company
Certificate and the Company Bylaws to convene a meeting of its stockholders as
promptly as practicable to consider and vote upon the approval of this Agreement
and the Transactions (the "Company Stockholders Meeting"). The proxy statements
----------------------------
of Parent and the Company related to their respective stockholders' meeting
shall, subject to Section 7.1 hereof, contain the recommendation of Parent Board
and the Company Board, respectively, that its stockholders approve this
Agreement and the Transactions. Subject to and in accordance with applicable
Law, each of Parent and the Company shall use its reasonable best efforts to
obtain the such approval, including, without limitation, by timely mailing the
Proxy Statement (as hereinafter defined) contained in the Form S-4 to its
stockholders. Parent and the Company shall coordinate and cooperate with each
other with respect to the timing of their respective stockholders' meetings and
shall use their reasonable best efforts to hold such meetings on the same day.
8.2 HSR and Other Filings.
---------------------
(a) Subject to the terms and conditions herein provided and to
applicable legal requirements, each of the parties hereto agrees to use its
reasonable best efforts to (i) take, or cause to be taken, all actions and to
do, or cause to be done, all things necessary, proper or advisable to consummate
and make effective as promptly as practicable the transactions contemplated by
this Agreement and (ii) to cooperate with each other in connection with the
foregoing, including the taking of such actions as are necessary to obtain any
necessary consents, licenses, approvals, orders, exemptions and authorizations
by or from any public or private third party or Governmental Entity, including,
without limitation, those consents, licenses, approvals, exemptions or
authorizations required with respect to the agreements set forth in Sections
5.6(a) and 5.6(b) of the Company Disclosure Schedule and any others that are
required to be obtained under any Law or any Contract to which the Company or
any Company Subsidiary is a party or by which any of their respective properties
or assets are bound, (iii) to defend all lawsuits or other legal proceedings
challenging this Agreement or the consummation of the Transactions, (iv) to
cause to be lifted or rescinded any injunction or restraining order or other
order adversely affecting the ability of the parties to consummate the
Transactions, and (iv) to effect all necessary registrations and submissions of
information
43
requested by governmental authorities. For purposes of the foregoing sentence,
the obligations of Parent and the Company to use their "reasonable best efforts"
to obtain waivers, consents and approvals to loan agreements, leases and other
contracts shall not include any obligation to agree to an adverse modification
of the terms of such documents or to prepay or incur additional obligations to
such other parties. If, at any time after the Effective Time, any further action
is necessary or desirable to carry out the purpose of this Agreement, the proper
officers and directors of Parent and the Company shall take all such necessary
action. The Company shall use its reasonable best efforts to properly record all
assignments of its Intellectual Property and make all other necessary filings
with the United States Patent and Trademark Office and the United States
Copyright Office.
(b) Without limiting the generality of the foregoing, as promptly as
practicable, Parent and the Company each shall properly prepare and file any
other filings required under applicable Law relating to the Merger and the other
Transactions (including filings, if any, required under the HSR Act, the
Securities Act, the Exchange Act and any other applicable federal or Blue Sky
Laws, the DGCL, Bermuda Law, other applicable Law and the rules and regulations
of NASDAQ, and the Communications Act, the PUC Regulations, and the Utility Laws
(collectively, "Other Filings"). Each of Parent and the Company shall promptly
-------------
notify the other of the receipt of any comments on, or any request for
amendments or supplements to, any Other Filings by any Governmental Entity or
official, and each of Parent and the Company shall supply the other with copies
of all correspondence between it and each of its Subsidiaries and
representatives, on the one hand, and any other appropriate governmental
official, on the other hand, with respect to any Other Filings. None of the
parties will file any such document if any of the other parties shall have
reasonably objected to the filing of such document. No party to this Agreement
shall consent to any voluntary extension of any statutory deadline or waiting
period or to any voluntary delay of the consummation of the Merger and the other
Transactions at the behest of any Governmental Entity without the consent and
agreement of the other party to this Agreement, which consent shall not be
unreasonably withheld or delayed. Parent and the Company hereby covenant and
agree to use their respective reasonable best efforts to secure termination of
any waiting periods under the HSR Act and obtain the approval of the Federal
Trade Commission (the "FTC") or any other Governmental Entity for the
---
transactions contemplated hereby. The Company and Parent shall keep the other
apprised of the status of matters relating to the completion of the transactions
contemplated hereby and work cooperatively in connection with obtaining any
consents from Governmental Entity, including, without limitation: (i) promptly
notifying the other of, and if in writing, furnishing the other with copies of
(or, in the case of material oral communications, advise the other orally of)
any communications from or with any Governmental Entity with respect to the
Merger or any of the other transactions contemplated by this Agreement, (ii)
permitting the other party to review and discuss in advance, and considering in
good faith the views of one another in connection with, any proposed written (or
any material proposed oral) communication with any Governmental Entity, (iii)
not participating in any meeting with any Governmental Entity unless it consults
with the other party in advance and to the extent permitted by such Governmental
Entity gives the other party the opportunity to attend and participate thereat,
(iv) furnishing the other party with copies of all correspondence, filings and
communications (and memoranda setting forth
44
the substance thereof) between it and any Governmental Entity with respect to
this Agreement and the Merger, and (v) furnishing the other party with such
necessary information and reasonable assistance as such other party may
reasonably request in connection with its preparation of necessary filings or
submissions of information to any Governmental Entity. The Company and Parent
may, as each deems advisable and necessary, reasonably designate any
competitively sensitive material provided to the other under this Section as
"outside counsel only." Such materials and the information contained therein
shall be given only to the outside legal counsel of the recipient and will not
be disclosed by such outside counsel to employees, officers, or directors of the
recipient unless express permission is obtained in advance from the source of
the materials (the Company or Parent, as the case may be) or its legal counsel.
8.3 Proxy Statement; Registration Statement. As promptly as
---------------------------------------
practicable after the execution of this Agreement, Parent and the Company shall
prepare and file with the SEC under the Securities Act a registration statement
on Form S-4 (such registration statement, together with any amendments or
supplements thereto, the "Form S-4"), in connection with the registration under
--------
the Securities Act of the shares of Parent Common Stock to be distributed to the
stockholders of the Company in the Merger (the "Registered Securities"). The
---------------------
Form S-4 also shall include a joint proxy statement/prospectus and forms of
proxies (such joint proxy statement/prospectus together with any amendments or
supplements thereto, the "Proxy Statement") relating to the stockholder meetings
---------------
of Parent and the Company and the vote of the stockholders of Parent and the
Company with respect to this Agreement and the Transactions. Parent will cause
the Proxy Statement and the Form S-4 to comply as to form in all material
respects with the applicable provisions of the Securities Act, the Exchange Act
and the rules and regulations thereunder, the rules and regulations of NASDAQ,
and the DGCL and Bermuda Law, and the Company will cause the Proxy Statement to
comply as to form in all material respects with the applicable provisions of the
Exchange Act and the rules and regulations thereunder, the rules and regulations
of NASDAQ and the DGCL. Each of Parent and the Company shall furnish all
information about itself and its business and operations and all necessary
financial information to the other as the other may reasonably request in
connection with the preparation of the Proxy Statement and the Form S-4. Parent
shall use its reasonable best efforts, and the Company will cooperate with them,
to have the Form S-4 declared effective by the SEC as promptly as practicable
(including clearing the Proxy Statement with the SEC). Each of Parent and the
Company agrees promptly to correct any information provided by it for use in the
Proxy Statement and the Form S-4 if and to the extent that such information
shall have become false or misleading in any material respect, and each of the
parties hereto further agrees to take all steps necessary to amend or supplement
the Proxy Statement and, in the case of Parent, the Form S-4, and to cause the
Proxy Statement and, in the case of Parent, the Form S-4, as so amended or
supplemented to be filed with the SEC and to be disseminated to their respective
stockholders, in each case as and to the extent required by applicable federal
and state securities laws. No amendment or supplement to the Proxy Statement
will be made without the approval of each of Parent and the Company, which
approval shall not be unreasonably withheld or delayed. Each of Parent and the
Company agrees that the information provided by it for inclusion in the Proxy
Statement or the Form S-4 and each amendment or supplement thereto, at the time
of mailing thereof and at the time of
45
the respective meetings of stockholders of Parent and the Company, will not
include an 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. Each of
the Company and Parent will advise the other, and deliver copies (if any) to the
other, promptly after either receives notice thereof, of any request by the SEC
for amendment of the Proxy Statement or the Form S-4 or comments thereon and
responses thereto or requests by the SEC for additional information, or notice
of the time when the Form S-4 has become effective or any supplement or
amendment has been filed, the issuance of any stop order or the suspension of
the qualification of the Registered Securities issuable in connection with the
Merger for offering or sale in any jurisdiction. Each of Parent and the Company
shall use its reasonable best efforts to timely mail the Proxy Statement to its
stockholders as promptly as practicable following the effective date of the
Proxy Statement.
8.4 Listing Application. Parent and the Company shall cooperate and
-------------------
promptly prepare and submit to the NASDAQ all reports, applications and other
documents that may be necessary or desirable to enable all of the shares of
Parent Common Stock that will be outstanding or will be reserved for issuance at
the Effective Time to be listed for trading on the NASDAQ. Each of Parent and
the Company shall furnish all information about itself and its business and
operation and all necessary financial information to the other as the other may
reasonably request in connection with such NASDAQ listing process. Each of
Parent and the Company agrees promptly to correct any information provided by it
for use in the NASDAQ listing process if and to the extent that such information
shall have become false or misleading in any material respect. Each of Parent
and the Company will advise and deliver copies (if any) to the other party,
promptly after it receives notice thereof, of any request by the NASDAQ for
amendment of any submitted materials or comments thereon and responses thereto
or requests by the NASDAQ for additional information. The parties shall use
their reasonable best efforts to cause the Surviving Corporation to cause the
Company Common Stock to be de-listed from NASDAQ and de-registered under the
Exchange Act as soon as practicable following the Effective Time.
8.5 Affiliates of the Company.
-------------------------
(a) At least 30 days prior to the Closing Date, the Company shall
deliver to Parent a list of names and addresses of those persons who were, in
the Company's reasonable judgment, at the record date for its stockholders'
meeting to approve the Merger, "affiliates" (each such person, an "Affiliate")
---------
of the Company within the meaning of Rule 145. The Company shall provide Parent
such information and documents as Parent shall reasonably request for purposes
of reviewing such list. The Company shall advise the persons identified on the
list of the resale restrictions imposed by applicable securities laws and shall
use its reasonable best efforts to deliver or cause to be delivered to Parent,
prior to the Closing Date, from each of the Affiliates of the Company identified
in the foregoing list, an Affiliate Letter in the form attached hereto as
Exhibit A. Parent shall be entitled to place legends as specified in such
- ---------
Affiliate Letters on the certificates evidencing any shares of Parent Common
Stock to be received by such Affiliates pursuant to the terms of this Agreement,
and to issue appropriate
46
stop transfer instructions to the transfer agent for such shares of Parent
Common Stock, consistent with the terms of such Affiliate Letters.
(b) Parent shall file the reports required to be filed by it under the
Exchange Act and the rules and regulations adopted by the SEC thereunder, and it
will take such further action as any Affiliate of the Company may reasonably
request, all to the extent required from time to time to enable such Affiliate
to sell shares of Parent Common Stock received by such Affiliate in the Merger
without registration under the Securities Act pursuant to (i) Rule 145(d)(1) or
(ii) any successor rule or regulation hereafter adopted by the SEC.
8.6 Expenses. Except as otherwise provided in Section 10.2(b),
--------
whether or not the Merger is consummated, all Expenses incurred in connection
with this Agreement and the Transactions shall be paid by the party incurring
such Expenses. For purposes of this Agreement, "Expenses" consist of all out-
--------
of-pocket expenses (including, all fees and expenses of counsel, accountants,
investment bankers, experts and consultants to a party to this Agreement and its
affiliates) incurred by a party or on its behalf in connection with or related
to the authorization, preparation, negotiation, execution and performance of
this Agreement, the preparation, printing, filing and mailing of the Proxy
Statement, the solicitation of stockholder approvals and all other matters
related to the closing of the transactions contemplated by this Agreement.
8.7 Officers' and Directors' Indemnification.
----------------------------------------
(a) In the event of any threatened or actual claim, action, proceeding
or investigation, whether civil, criminal or administrative, including, without
limitation, any such claim, action, suit, demand, proceeding or investigation in
which any person who is now, or has been at any time prior to the date hereof,
or who becomes prior to the Effective Time, a director, officer, employee,
fiduciary or agent of the Company or any of the Company Subsidiaries (the
"Indemnified Parties") is, or is threatened to be, made a party based in whole
- --------------------
or in part on, or arising in whole or in part out of, or pertaining to (i) the
fact that he is or was a director, officer, employee, fiduciary or agent of the
Company or any of the Company Subsidiaries, or is or was serving at the request
of the Company or any of the Company Subsidiaries as a director, officer,
employee, fiduciary or agent of the Company or any Company Subsidiary or (ii)
the negotiation, execution or performance of this Agreement or any of the
Transactions, whether in any case asserted or arising before or after the
Effective Time, the parties hereto agree to cooperate and use their reasonable
best efforts to defend against and respond thereto. It is understood and agreed
that the Company shall indemnify and hold harmless, and after the Effective Time
the Surviving Corporation and Parent shall indemnify and hold harmless, as and
to the full extent permitted by applicable law, each Indemnified Party against
any losses, claims, damages, liabilities, costs, expenses (including attorneys'
fees and expenses), judgments, fines and amounts paid in settlement in
connection with any such threatened or actual claim, action, suit, demand,
proceeding or investigation. In the event any such Indemnified Party is or
becomes involved in any capacity in any action, proceeding or investigation for
which indemnification is to be provided under this Agreement (whether asserted
or arising before or after the Effective Time), (A) the Company, and Parent and
the
47
Surviving Corporation after the Effective Time, shall promptly pay expenses in
advance of the final disposition of any claim, action, suit, demand, proceeding
or investigation to the full extent permitted by law, provided that the
Indemnified Party may not retain more than one counsel (in addition to any
necessary local counsel) to represent all the Indemnified Parties and the
Company, Parent and the Surviving Corporation shall pay all reasonable fees and
expenses for such counsel for the Indemnified Parties promptly after statements
therefor are received and (B) the Company, Parent and the Surviving Corporation
will use their respective reasonable best efforts to assist in the defense of
any such matter; provided that in no event shall the Company, Parent or the
Surviving Corporation be liable for any settlement effected without its prior
written consent (which consent shall not be unreasonably withheld); and provided
further that neither Parent nor the Surviving Corporation shall have no
obligation hereunder to any Indemnified Party when and if a court of competent
jurisdiction shall ultimately determine, and such determination shall become
final and non-appealable, that indemnification of such Indemnified Party in the
manner contemplated hereby is prohibited by applicable law. Any Indemnified
Party wishing to claim indemnification under this Section 8.7, upon learning of
any such claim, action, suit, demand, proceeding or investigation, shall notify
the Company and, after the Effective Time, Parent and the Surviving Corporation,
thereof; provided that the failure to so notify shall not affect the obligations
of the Company, Parent and the Surviving Corporation except to the extent such
failure to notify materially prejudices such party.
(b) Parent agrees that all rights to indemnification existing in favor
of, and all limitations on the personal liability of, the directors, officers,
employees and agents of the Company and the Company Subsidiaries provided for in
the Company Certificate or Bylaws as in effect as of the date hereof with
respect to matters occurring prior to the Effective Time, and including the
Merger, shall continue in full force and effect for a period of not less then
six years from the Effective Time; provided, however, that all rights to
indemnification in respect of any claims (each a "Claim") asserted or made
-----
within such period shall continue until the final disposition of such Claim.
Prior to the Effective Time, the Company may purchase an extended reporting
period endorsement under the Company's existing directors' and officers'
liability insurance coverage for the Company's directors and officers in a form
and with terms acceptable to the Company, which shall provide such directors and
officers with coverage for six years following the Effective Time of not less
than the existing coverage under, and have other terms not materially less
favorable to, the insured persons than the directors' and officers' liability
insurance coverage presently maintained by the Company, so long as the cost is
less than $ 750,000, provided that, the Company agrees to cooperate in good
-------- ----
faith with the Parent in order to obtain the lowest premium for the above
referenced coverage. In the event that $ 750,000 is insufficient for the above
referenced coverage, the Company may spend up to that amount to purchase such
lesser coverage as is possible.
(c) This Section 8.7 is intended for the irrevocable benefit of, and
to grant third party rights to, the Indemnified Parties and shall be binding on
all successors and assigns of Parent, the Company and the Surviving Corporation.
Each of the Indemnified Parties shall be entitled to enforce the covenants
contained in this Section 8.7.
48
(d) In the event that Parent, the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other person or
entity and shall not be the continuing or surviving corporation or entity of
such consolidation or merger or (ii) transfers or conveys all or substantially
all of its properties and assets to any person or entity, then, and in each such
case, proper provision shall be made so that the successors and assigns of
Parent or the Surviving Corporation assume the obligations set forth in this
Section 8.7.
8.8 Access to Information; Confidentiality. From the date hereof
--------------------------------------
until the Effective Time, each of Parent and the Company shall, and shall cause
each of their respective Subsidiaries and each of their and their respective
Subsidiaries' officers, employees and agents to, afford to the other and to the
officers, accountants, consultants, legal counsel, financial advisors,
investment bankers, employees, agents and other representatives (collectively
"Representatives") of the other complete access at all reasonable times, upon
- ----------------
prior notice, to such Representatives, properties, books, records and contracts,
and shall furnish to the other such financial, operating and other data and
information concerning the business, properties, contracts, assets, liabilities,
personnel and other aspects of the other party and its Subsidiaries as the other
or its Representatives may reasonably request. Prior to the Effective Time, the
Company and the Parent shall hold in confidence all such information on the
terms and subject to the conditions contained in that certain confidentiality
agreement between Parent and the Company dated January 27, 2000 (the
"Confidentiality Agreement"). The Company hereby waives the provisions of the
- --------------------------
Confidentiality Agreement as and to the extent necessary to permit the making
and consummation of the transactions contemplated by this Agreement. At the
Effective Time, such Confidentiality Agreement shall terminate.
8.9 Publicity. Parent and the Company shall consult with each other
---------
before issuing any press release or otherwise making any public statements with
respect to this Agreement or any transaction contemplated hereby and shall not
issue any such press release or make any such public statement without the prior
consent of the other party, which consent shall not be unreasonably withheld;
provided, however, that a party may, without the prior consent of the other
party, issue such press release or make such public statement as may be required
by law or the applicable rules of any stock exchange if it has used its best
efforts to consult with the other party and to obtain such party's consent but
has been unable to do so in a timely manner. With regard to the Merger, the
parties shall make a joint public announcement of the Transactions no later than
(i) the close of trading on NASDAQ on the day this Agreement is signed, if such
signing occurs during a business day or (ii) the opening of trading on NASDAQ on
the business day following the date on which this Agreement is signed, if such
signing does not occur during a business day.
8.10 Employee Benefits.
-----------------
(a) Parent agrees that the Company will honor, and from and after the
Effective Time, Parent will cause the Surviving Corporation to honor, all
obligations under the existing terms of the employment and severance agreements
to which the Company or any Company Subsidiary is presently a party, except as
may otherwise be agreed to by the parties thereto.
49
(b) Parent agrees that individuals who are employed by the Company or
any Company Subsidiary immediately prior to the Closing Date shall remain
employees of the Company or such Company Subsidiary as of the Closing Date (each
such employee, an "Affected Employee"); provided, however, that nothing
----------------- -------- ------
contained herein shall confer upon any Affected Employee the right to continued
employment by the Company or any Company Subsidiary for any period of time after
the Closing Date which is not otherwise required by law or contract.
(c) To the extent that any Affected Employees becomes a participant in
any employee benefit plan maintained by Parent or any Parent Subsidiary, Parent
shall, or shall cause such Parent Subsidiary to, give such Affected Employees
full credit solely for the purposes of eligibility and vesting under such
employee benefits plans for such Affected Employee's service with Parent, the
Company or any affiliate thereof to the same extent recognized immediately prior
to the Closing Date; provided, that the entry dates into such employee benefit
--------
plans for such Affected Employees will be in the normal course of such plan's
administration, which may be the beginning of the plan year.
(d) After the Effective Time, until the date Parent determines in its
sole discretion to modify, amend, terminate or replace the Company Benefit
Plans, Parent shall cause the Surviving Corporation to maintain the Company
Benefit Plans (but not bonus or equity-based plans) on substantially similar
terms to those currently in effect. After the Effective Time, if Parent decides
to move the Affected Employees to a Parent employee benefit plan, the Affected
Employees will be permitted to participate in Parent employee benefit plan on
terms substantially similar to those provided to employees of Parent.
8.11 Reincorporation and Acquisition.
-------------------------------
(a) Parent shall take any and all action which may be deemed advisable
or necessary to reincorporate by merger (the "Reincorporation") from a Bermuda
---------------
corporation to a Delaware corporation so that at the time of the consummation of
the transactions contemplated by this Agreement, Parent is a Delaware
corporation.
(b) Parent shall be permitted to take any and all action which may be
deemed advisable or necessary to consummate the transactions contemplated by the
Recapitalization and Plan of Merger, dated as of March 9, 2000, among ATX,
certain stockholders of ATX and Parent (the "ATX Transaction"); provided that,
---------------
none of the actions taken in accordance with Sections 8.11(a) and (b) or
consequences thereof shall be deemed a breach of a representation or warranty or
be deemed to cause a failure of a condition set forth in Article IX not to be
satisfied if, but for such action or consequence thereof, such condition would
otherwise be satisfied.
8.12 Other Actions. (a) During the period from the date of this
-------------
Agreement to the Effective Time, the Company and Parent shall not, and shall not
permit any of their respective subsidiaries to, take any action that would, or
that could reasonably be expected to,
50
result in any of the conditions to the Merger set forth in Article IX of this
Agreement not being satisfied other than as provided in this Agreement.
(b) Parent shall have the right to have its designated
representatives, as provided to the Company from time to time (the "Designated
----------
Parent Representatives"), upon reasonable notice, present within normal business
- ----------------------
hours and without material disruption to the business of the Company for
consultation at the Company's principal offices from the date hereof until the
Closing Date. Such Designated Parent Representatives shall have the right to
review and become familiar with the conduct of the business of the Company and
shall be available to be consulted and shall have authority on behalf of Parent
in regard to consultation in regard to Material Decisions (as defined below in
this Section 8.12(b)). Parent shall take all reasonable actions necessary to
ensure that its Designated Parent Representatives will be readily available
during normal business hours. Without written notice to and favorable
consultation (which shall not be unreasonably withheld, delayed or conditioned
with respect to time or content) with the Designated Parent Representatives,
unless the Parent or the Designated Parent Representatives shall have failed to
respond within five business days to such written notice, the Company shall not
take any action involving any Material Decision. "Material Decision" shall
-----------------
mean, for purposes of this Agreement, any of the following to the extent the
same may affect the assets, the obligations or the business of the Company
following the date hereof: (i) any purchase order, capital expenditure or other
purchase of assets in excess of $100,000 in any instance to be delivered, or the
payment for which shall become due, after the Closing Date; (ii) the acceptance
of any material customer contract or the establishing of any pricing policy that
deviates in any material respect from the terms and conditions of current
pricing policies as set forth in Section 8.12(b) of the Company Disclosure
Schedule; (iii) any general communication with customers related to the business
or to the Merger; or (iv) a material change in material promotional or marketing
decisions or policies.
8.13 Notification of Certain Matters. The Parent and the Company
-------------------------------
shall promptly notify each other of (a) the occurrence or non-occurrence of any
fact or event which would reasonably be expected (i) to cause any representation
or warranty contained in this Agreement to be untrue or inaccurate in any
material respect at any time from the date of this Agreement to the Effective
Time, (ii) to cause any material covenant, condition or agreement hereunder not
to be complied with or satisfied in all material respects or (iii) to result in
the case of Parent, a Parent Material Adverse Effect, or in the case of the
Company, a Company Material Adverse Effect, (b) any failure of the Company or
Parent, as the case may be, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder in any material
respect; provided, however, that no such notification shall affect the
representations or warranties of any party or the conditions to the obligations
of any party hereunder, (c) any notice or other material communications from any
Governmental Entity in connection with the transactions contemplated by this
Agreement and (d) the commencement of any suit, action or proceeding that seeks
to prevent, seeks damages in respect of, or otherwise relates to the
consummation of the transactions contemplated by this Agreement.
51
8.14 Notification of Parent Transactions. If prior to the Closing
-----------------------------------
Date Parent shall enter into a definitive agreement for a Parent Transaction,
Parent shall promptly notify the Company of such transaction. Nothing set forth
in this Agreement shall be deemed to prohibit or otherwise limit Parent from
pursuing and entering into agreements for or consummating Parent Transactions.
ARTICLE IX
CONDITIONS TO THE MERGER
9.1 Conditions to the Obligations of Each Party to Effect the Merger.
----------------------------------------------------------------
The respective obligations of each party to effect the Merger shall be subject
to the fulfillment or waiver, where permissible, at or prior to the Closing
Date, of each of the following conditions:
(a) Stockholder Approvals. This Agreement and the Transactions shall
---------------------
have been duly approved by the Requisite Company Vote of the stockholders of the
Company and the issuance of shares of Parent Common Stock in the Merger shall
have been duly approved by the Requisite Parent Vote.
(b) Hart-Scott-Rodino Act. Any waiting period (and any extension
---------------------
thereof) applicable to the consummation of the Merger under the HSR Act shall
have expired or been terminated.
(c) No Injunctions, Orders or Restraints; Illegality. No statute,
------------------------------------------------
rule, regulation, executive order, decree, ruling or injunction, whether
permanent, preliminary or temporary (an "Injunction"), shall have been enacted,
----------
entered, promulgated or enforced by any Governmental Entity or court which
restrains, enjoins or otherwise prohibits the consummation of the Merger
substantially on the terms contemplated hereby and no Governmental Entity shall
have instituted any proceeding seeking any such law, order, injunction or decree
or any other Person has filed a motion and such motion has not been dismissed,
including for an Injunction, which restrains, enjoins or otherwise prohibits
consummation of the Merger substantially on the terms contemplated hereby;
provided that the party seeking to rely upon this condition has fully complied
with and performed its obligations pursuant to Section 8.2 hereof.
(d) Form S-4. The Form S-4 shall have been declared effective by the
--------
SEC under the Securities Act, and no stop order suspending the effectiveness of
the Form S-4 shall have been issued by the SEC, and no proceeding for that
purpose shall have been initiated or, to the knowledge of Parent or the Company,
threatened by the SEC.
(e) Listing. Parent shall have obtained the approval for the listing
-------
of the shares of Parent Common Stock issuable in the Merger and upon exercise of
the Assumed Options on NASDAQ, subject to official notice of issuance.
52
(f) Registration Rights Agreement. Parent and the Voting Agreement
-----------------------------
Stockholders shall have entered into a registration rights agreement in
substantially the form set forth in Exhibit B to this Agreement (the
"Registration Rights Agreement").
- ------------------------------
(g) Government Consents. All consents, approvals and action of any
-------------------
Governmental Entity required to permit the consummation of the Merger and the
other transactions contemplated by this Agreement shall have been obtained or
made, free of any condition that would reasonably be expected to have a Company
Material Adverse Effect or a Parent Material Adverse Effect, as the case may be.
9.2 Conditions to Obligations of the Company. The obligations of the
----------------------------------------
Company to effect the Merger are further subject to the following conditions:
(a) Representations and Warranties. (i) Those representations and
------------------------------
warranties of Parent set forth in this Agreement which are qualified by a Parent
Material Adverse Effect or words of similar effect shall be true and correct as
of the date of this Agreement and as of the Closing Date as though made on and
as of the Closing Date (except to the extent such representations and warranties
expressly relate to a specific date or as of the date hereof, in which case such
representations and warranties shall be true and correct as of such date), and
(ii) those representations and warranties of Parent set forth in this Agreement
which are not so qualified shall be true and correct in all material respects as
of the date of this Agreement and as of the Closing Date as though made on and
as of the Closing Date (other than representations and warranties that expressly
relate to a specific date or as of the date hereof, in which case such
representations and warranties shall be true and correct in all material
respects as of such date).
(b) Performance of Obligations of Parent. Parent shall have performed
------------------------------------
in all material respects all obligations required to be performed by it under
this Agreement, including, without limitation, the covenants contained in
Articles VII and VIII hereof.
(c) Officers' Certificate. The Company shall have received a
---------------------
certificate of the Chief Executive Officer or President and the Chief Financial
Officer of Parent, dated the Closing Date, to the effect that the statements set
forth in paragraphs (a) and (b) of this Section 9.2 are true and correct.
(d) Consents, Approvals, Etc. All material consents, authorizations,
-------------------------
orders and approvals of (or filings or registrations with) any governmental
commission, board, other Governmental Entity or third parties required to be
made or obtained by Parent and Parent Subsidiaries and affiliated entities in
connection with the execution, delivery and performance of this Agreement shall
have been obtained or made.
(e) Legal Opinion. The Company shall have received a written opinion
-------------
from its counsel, Goodwin, Procter & Hoar LLP, in form and substance reasonably
satisfactory to it, to the effect that the Merger will constitute either (i) a
tax free reorganization within the meaning of Section 368(a) of the Code or (ii)
a transaction that, together with the
53
Reincorporation (as defined herein) qualifies as an exchange under the
provisions of Section 351 of the Code and which is treated for U.S. federal
income tax purposes as a transfer of Company Common Stock by the shareholders of
the Company to Parent in exchange for the Merger Consideration and such opinion
shall not have been withdrawn.
9.3 Conditions to Obligations of Parent. The obligation of Parent to
-----------------------------------
effect the Merger is further subject to the following conditions:
(a) Representations and Warranties. (i) Those representations and
------------------------------
warranties of the Company set forth in this Agreement which are qualified by a
Company Material Adverse Effect or words of similar effect shall be true and
correct as of the date of this Agreement and as of the Closing Date as though
made on and as of the Closing Date (except to the extent such representations
and warranties expressly relate to a specific date or as of the date hereof, in
which case such representations and warranties shall be true and correct as of
such date), and (ii) those representations and warranties of the Company set
forth in this Agreement which are not so qualified shall be true and correct in
all material respects as of the date of this Agreement and as of the Closing
Date as though made on and as of the Closing Date (other than such
representations and warranties that expressly relate to a specific date, in
which case such representations and warranties shall be true and correct in all
material respects as of such date).
(b) Performance of Obligations of the Company. The Company shall have
-----------------------------------------
performed in all material respects all obligations required to be performed by
it under this Agreement, including, without limitation, the covenants contained
in Articles VII and VIII hereof.
(c) Absence of Company Changes. From September 30, 1999 through the
--------------------------
Closing Date, there shall not have occurred any change concerning the Company or
any of the Company Subsidiaries that has had, or is reasonably expected to have,
a material adverse effect on the business, properties, assets, results of
operations or financial condition of the Company and the Company Subsidiaries
taken as a whole (other than any (i) regulatory changes generally affecting the
industries in which the Company operates, including changes due to actual or
proposed changes in law or regulations, or (ii) changes that are related to a
general drop in stock prices in the United States resulting from political or
economic turmoil.)
(d) Officers' Certificate. Parent shall have received a certificate
---------------------
of the Chief Executive Officer or President and the Controller of the Company to
the effect that the statements set forth in paragraphs (a) and (b) of this
Section 9.3 are true and correct.
(e) Consents, Approvals, Etc. All material consents, authorizations,
-------------------------
orders and approvals of (or filings or registrations with) any governmental
commission, board, other Governmental Entity or third parties required to be
made or obtained by the Company and the Company Subsidiaries and affiliated
entities in connection with the execution, delivery and performance of this
Agreement shall have been obtained or made.
54
(f) Stockholders Agreement. The Principal Stockholders who are
----------------------
required by the Voting Agreement to enter into the Stockholders Agreement,
substantially in the form of Exhibit C attached hereto, and Parent shall have
entered into such agreement, which shall remain in full force and effect.
(g) Legal Opinion. Parent shall have received a written opinion from
-------------
its counsel, Paul, Weiss, Rifkind, Wharton & Garrison, in form and substance
reasonably satisfactory to it, to the effect that the Merger will constitute (i)
a tax free reorganization within the meaning of Section 368(a) of the Code or
(ii) a transaction that, together with the Reincorporation (as defined herein)
qualifies as an exchange under the provisions of Section 351 of the Code and
which is treated for U.S. federal income tax purposes as a transfer of Company
Common Stock by the shareholders of the Company to Parent in exchange for the
Merger Consideration and such opinion shall not have been withdrawn.
(h) Affiliate Letters. The Parent shall have received an executed
-----------------
copy of an Affiliate Letter from each Affiliate of the Company.
(i) Other Agreements. Those letter agreements dated as of the date
----------------
hereof between Parent and certain individuals and executed in connection
herewith shall have been performed at or prior to Closing.
9.4 Parent Transactions. In the event that Parent undertakes any
-------------------
action contemplated by the definition of Base Adjustments in Section 3.1(c)(ii)
prior to the Closing, no condition set forth in this Article IX shall be deemed
not to be satisfied if, but for such action or the consequences thereof, such
condition would otherwise be satisfied.
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
10.1 Termination. This Agreement may be terminated and abandoned at
-----------
any time prior to the Effective Time, whether before or after the approval of
matters presented in connection with the Merger by the stockholders of Parent
and the Company:
(a) by the mutual written consent of Parent and the Company.
(b) by either of Parent or the Company:
(i) if any required approval of the stockholders of Parent
or the Company that is a condition to the obligations of Parent or the
Company under Section 9.1 of this Agreement shall not have been obtained
at the Company Stockholders Meeting or the special meeting of the
Parent's stockholders to be held to consider approval of the issuance of
Parent Common Stock to be issued in the Merger; or
55
(ii) if any Governmental Entity shall have issued a final
and nonappealable Injunction (which Injunction the parties have used
their best efforts to lift), which permanently enjoins the Merger.
(c) by the Company, if the Company Board shall elect to terminate this
Agreement in order to recommend or approve a Superior Proposal, provided that
(i) the Company has complied with all the terms of Section 7.1 and notified
Parent in writing that it intends to terminate this Agreement in order to
recommend or approve a Superior Proposal, attaching the most current version of
such proposal to such notice, (ii) at any time after the third business day
following written notification by the Company to Parent of the Company's
intention to enter into a binding agreement with respect to such proposal, after
taking into account any modifications to the transactions contemplated by this
Agreement that Parent has then proposed in writing and not withdrawn, the
Company Board has determined that such proposal is and continues to be a
Superior Proposal and (iii) concurrently with the effectiveness of such
termination, pays to Parent the termination fee under Section 10.2(b), it being
understood on the date of the effectiveness of such termination, whether or not
prior to such effectiveness, the Company may enter into an agreement with
respect to such Superior Proposal which agreement, if entered into prior to such
effectiveness must be conditioned upon the payment of the termination fee on the
same date as provided herein. The termination under this Section 10.1(c) shall
not be effective until the Company has made payment to Parent of the amounts
required to be paid pursuant to Section 10.2(b).
(d) by Parent, if (i) the Company Board shall have resolved to or
shall have (A) withdrawn, modified or changed in a manner adverse to Parent its
approval or recommendation of this Agreement, (B) failed to include such
recommendation in the Proxy Statement, (C) approved or recommended any
Acquisition Proposal, (D) entered into a definitive agreement with respect to a
Superior Proposal or (E) made a public announcement of its intention to take any
of the foregoing actions or (ii) a tender offer or exchange offer for more than
15% of the outstanding shares of the Company Common Stock is commenced and the
Company Board fails to recommend against acceptance of such tender offer or
exchange offer by its stockholders (including by taking no position with respect
to the acceptance of such tender offer or exchange offer by its stockholders).
(e) by Parent, if it is not in material breach of its obligations
under this Agreement, on or after the later of (x) October 31, 2000, or (y) 120
days following the date on which Parent last made an initial announcement that
it had entered into a definitive agreement for a Parent Transaction, if any of
the conditions provided in Sections 9.1 and 9.3 of this Agreement have not been
satisfied and have not been waived in writing by Parent prior to such date;
provided that, if the Merger has not occurred by reason of the nonsatisfaction
of the condition set forth in Section 9.1(b) hereof or the pendency of a non
final Injunction, Parent shall have used its best efforts to cause such
condition to be satisfied or have any such Injunction stayed or reversed.
(f) by the Company, if it is not in material breach of its obligations
under this Agreement, on or after October 31, 2000, if any of the conditions
provided in
56
Sections 9.1 and 9.2 of this Agreement have not been satisfied and have not been
waived by the Company; provided, however, if the Merger has not occurred by
reason of the nonsatisfaction of the condition set forth in Section 9.1(b)
hereof or the pendency of a non-final Injunction, the Company shall have used
its best efforts to cause such condition to be satisfied or have any such
Injunction stayed or reversed.
(g) by Parent, upon a breach of any material representation, warranty,
covenant or agreement on the part of the Company set forth in this Agreement, or
if any representation or warranty of the Company shall have become untrue, in
either case such that the conditions set forth in either of Section 9.3(a) or
9.3(b) would not be satisfied (a "Terminating Company Breach"); provided,
--------------------------
however, that, if such Terminating Company Breach is curable by the Company
through the exercise of its reasonable best efforts and for so long as the
Company continues to exercise such reasonable best efforts, Parent may not
terminate this Agreement under this Section 10.1(g).
(h) by the Company, upon breach of any material representation,
warranty, covenant or agreement on the part of Parent set forth in this
Agreement, or if any representation or warranty of Parent shall have become
untrue, in either case such that the conditions set forth in either of Section
9.2(a) or 9.2(b) would not be satisfied (a "Terminating Parent Breach");
-------------------------
provided, however, that, if such Terminating Parent Breach is curable by Parent
through its reasonable best efforts and for so long as Parent continues to
exercise such reasonable best efforts, the Company may not terminate this
Agreement under this Section 10.1(h); or
(i) by the Company if (i) as of a date not more than three business
days before the expected Closing Date, the Average Parent Common Stock Price
would be less than 69% of the Base Stock Price, (ii) irrevocable notice shall
have been provided to Parent in accordance with the notice provisions hereunder
indicating the Company's intention to terminate the Agreement, and (iii) within
one business day of receipt of such notice, Parent shall not have agreed (by
unilateral notice to the Company) to increase the number of shares of Parent
Common Stock to be issued to the shareholders of the Company pursuant to the
Merger such that as of the Closing Date, the aggregate value (based on the
Average Parent Common Stock Price) of the Parent Common Stock to be received by
the shareholders of the Company will be equal to the aggregate value (based on
the Average Parent Common Stock Price) of Parent Common Stock they would have
been entitled to receive if the Average Parent Common Stock Price were equal to
the Floor Stock Price. In the event the Company serves the notice provided for
in (ii) above, and the Parent does not agree to increase the number of shares in
accordance with (iii) above, then the termination shall become effective
immediately on the following business day.
10.2 Effect of Termination.
---------------------
(a) In the event of the termination of this Agreement pursuant to
Section 10.1 hereof, this Agreement shall forthwith become null and void and
have no effect, without any liability on the part of any party hereto or its
Representatives, affiliates, trustees,
57
directors, officers or stockholders and all rights and obligations of any party
hereto shall cease except for the agreements contained in Sections 8.6, 8.8 and
11.4 and this Section 10.2 which shall survive the termination; provided,
however, that nothing contained in this Section 10.2 shall relieve any party
from liability for any fraud or willful breach of its representations or
warranties or breach of its covenants or agreements set forth in this Agreement.
(b) In the event the Company shall have terminated this Agreement
pursuant to Section 10.1(c), or Parent shall have terminated this Agreement
pursuant to Section 10.1(d)(i), then the Company shall simultaneously with such
termination pay Parent a termination fee equal to $19.0 million (the
"Termination Amount"). In the event that Parent shall have terminated this
- -------------------
Agreement pursuant to Section 10.1(d)(ii) and either (x) the Company shall have
entered into a definitive agreement with respect to the tender or exchange offer
giving rise to such termination or (y) the person making the tender or exchange
offer giving rise to such termination shall have accepted shares for payment
pursuant to such tender or exchange offer, the Company shall pay, upon the
earlier of entering into a definitive agreement and the acceptance of shares for
payment, to the Parent a termination fee equal to the Termination Amount.
(c) Any payment required by this Section 10.2 shall be payable by
the Company to Parent by wire transfer of immediately available funds to an
account designated by Parent.
(d) The Company acknowledges that the agreements contained in
this Section 10.2 are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, Parent and MergerCo would not
enter into this Agreement; accordingly, if the Company fails to pay promptly the
amounts due pursuant to Section 10.2(b), and, in order to obtain such payment,
Parent commences a suit which results in a judgment against the Company for all
or a portion of such amounts, the Company shall pay to Parent's Expenses in
connection with such suit, together with interest on the amounts payable to
Parent at the prime rate of The Chase Manhattan Bank in effect on the date such
payment was required to be made.
10.3 Amendment. This Agreement may be amended by the parties hereto
---------
by an instrument in writing signed on behalf of each of the parties hereto at
any time before or after any approval hereof by the stockholders of Parent and
the Company, but in any event following authorization by Parent Board and the
Company Board; provided, however, that after any such stockholder approval, no
amendment shall be made which by law requires further approval by the
stockholders without obtaining such approval.
58
ARTICLE XI
GENERAL PROVISIONS
11.1 Notices. All notices and other communications given or made
-------
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered or sent if delivered personally or sent by
cable, telegram, telecopier, facsimile or telex or sent by prepaid overnight
carrier to the parties at the following addresses (or at such other addresses as
shall be specified by the parties by like notice):
(a) if to Parent:
CoreComm Limited
110 East 59th Street
New York, NY 10022
Attention: Jared L. Gurfein, Esq.
Facsimile No.: (212) 906-8489
with a copy to:
Kenneth M. Schneider, Esq.
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019-6064
Facsimile No.: (212) 757-3990
(b) if to the Company:
Voyager.net, Inc.
4660 S. Hagadorn Road
Suite 320
East Lansing, MI 48823
Attention: Christopher P. Torto
Facsimile No.: (517) 324-8947
with a copy to:
David F. Dietz, P.C.
Joseph L. Johnson III
Neil McLaughlin, P.C.
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109
Facsimile No.: (617) 523-1231
59
11.2 Certain Definitions. For purposes of this Agreement:
-------------------
(a) The term "affiliate," as applied to any person, means any
---------
other person directly or indirectly controlling, controlled by, or under common
control with, that person. For the purposes of this definition, "control"
-------
(including, with correlative meanings, the terms "controlling," "controlled by"
----------- -------------
and "under common control with"), as applied to any person, means the
-------------------------
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that person, whether through the
ownership of voting securities, by contract or otherwise.
(b) The term "business day" means any day, other than Saturday,
------------
Sunday or a federal holiday, and shall consist of the time period from 12:01
a.m. through 12:00 midnight Eastern time. In computing any time period under
this Agreement, the date of the event which begins the running of such time
period shall be included except that if such event occurs on other than a
business day such period shall begin to run on and shall include the first
business day thereafter.
(c) The term "including" means, unless the context clearly
---------
requires otherwise, including but not limited to the things or matters named or
listed after that term.
(d) The term "person" shall include individuals, corporations,
------
limited and general partnerships, trusts, limited liability companies,
associations, joint ventures, Governmental Entities and other entities and
groups (which term shall include a "group" as such term is defined in Section
-----
13(d)(3) of the Exchange Act).
(e) The term "Subsidiary" means any corporation more than 50% of
----------
whose outstanding voting securities, or any partnership, joint venture or other
entity more than 50% of whose total equity interest, is directly or indirectly
owned by Parent or the Company, as the case may be.
11.3 Non-Survival of Representations, Warranties, Covenants and
----------------------------------------------------------
Agreements. Except for Articles I, II and IV, the last sentence of Section
- ----------
8.2(a), and Sections 7.3, 8.4, 8.5, 8.6, 8.7 and 8.10 and this Article XI, none
of the representations, warranties, covenants and agreements contained in this
Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Effective Time, and thereafter there shall be no liability on the
part of none of Parent, MergerCo or the Company or any of their respective
officers, directors or stockholders in respect thereof. Except as expressly set
forth in this Agreement, there are no representations or warranties of any party
hereto, express or implied.
11.4 Miscellaneous. This Agreement (i) constitutes, together with the
-------------
Confidentiality Agreement, Parent Disclosure Schedule and the Company Disclosure
Schedule, the entire agreement and supersedes all of the prior agreements and
understandings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof, (ii) shall be binding upon and inure to
the benefits of the parties hereto and their respective successors and assigns
and is not intended to confer upon any other person (except as set forth
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below) any rights or remedies hereunder and (iii) may be executed in two or more
counterparts which together shall constitute a single agreement. Except as
provided in Section 8.7, this Agreement is not intended to confer upon any
person other than the parties to this Agreement any rights or remedies under
this Agreement. The parties hereto agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in the Delaware Courts (as hereinafter defined),
this being in addition to any other remedy to which they are entitled at law or
in equity.
11.5 Assignment. Except as expressly permitted by the terms hereof,
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neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by either party hereto without the prior written consent of
the other party, except that Parent shall assign all of its rights, interests
and obligations under this Agreement to ATX, upon consummation of the ATX
Transaction if such consummation occurs prior to the Closing provided that,
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notwithstanding such assignment, Parent shall remain liable under this
Agreement. If such assignment occurs, then (i) ATX will acquire the Company by
merging a wholly owned first-tier domestic subsidiary of ATX into the Company,
(ii) the acquisition of Parent by ATX will be consummated after the
Reincorporation of Parent, and (iii) the acquisition of Parent by ATX will be
structured so that it will be treated for U.S. federal income tax purposes as a
transfer of stock of Parent by Parent stockholders in exchange for stock issued
by ATX.
11.6 Severability. If any provision of this Agreement, or the
------------
application thereof to any person or circumstance is held invalid or
unenforceable, the remainder of this Agreement, and the application of such
provision to other persons or circumstances, shall not be affected thereby, and
to such end, the provisions of this Agreement are agreed to be severable.
11.7 Choice of Law/Consent to Jurisdiction. All disputes, claims or
-------------------------------------
controversies arising out of this Agreement, or the negotiation, validity or
performance of this Agreement, or the Transactions shall be governed by and
construed in accordance with the laws of the State of Delaware without regard to
its rules of conflict of laws. Each of Parent, MergerCo and the Company hereby
irrevocably and unconditionally consents to submit to the sole and exclusive
jurisdiction of the courts of the State of Delaware and of the United States of
America located in the State of Delaware (the "Delaware Courts") for any
---------------
litigation arising out of or relating to this Agreement, or the negotiation,
validity or performance of this Agreement, or the Transactions (and agrees not
to commence any litigation relating thereto except in such courts), waives any
objection to the laying of venue of any such litigation in the Delaware Courts
and agrees not to plead or claim in any Delaware Court that such litigation
brought therein has been brought in any inconvenient forum. Each of the parties
hereto agrees, (a) to the extent such party is not otherwise subject to service
of process in the State of Delaware, to appoint and maintain an agent in the
State of Delaware as such party's agent for acceptance of legal process, and (b)
that service of process may also be made on such party by
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prepaid certified mail with a proof of mailing receipt validated by the United
States Postal Service constituting evidence of valid service. Service made
pursuant to (a) or (b) above shall have the same legal force and effect as if
served upon such party personally within the State of Delaware. For purposes of
implementing the parties' agreement to appoint and maintain an agent for service
of process in State of Delaware, each such party does hereby appoint The
Corporation Trust Company, 1209 Orange Street, Wilmington, New Castle County,
Delaware 19801, as such agent.
11.8 Incorporation. The Parent Disclosure Schedule and the Company
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Disclosure Schedule and all Exhibits and Schedules attached hereto and thereto
and referred to herein and therein respectively are hereby incorporated herein
and made a part hereof for all purposes as if fully set forth herein.
11.9 The Headings. The headings contained in this Agreement are for
------------
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
11.10 No Agreement Until Executed. Irrespective of negotiations among
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the parties or the exchanging of drafts of this Agreement, this Agreement shall
not constitute or be deemed to evidence a contract, agreement, arrangement or
understanding among the parties hereto unless and until (i) the Company Board
has approved the terms of this Agreement, including, without limitation, for
purposes of Section 203 of the DGCL and any applicable provision of the Company
Certificate, (ii) Parent Board has approved the terms of this Agreement,
including, without limitation, for purposes of the DGCL and Bermuda law and any
applicable provisions of Parent Certificate and (ii) this Agreement is executed
by the parties hereto.
11.11 Obligations of Parent and of the Company. Whenever this Agreement
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requires a Parent Subsidiary to take any action, that requirement shall be
deemed to include an undertaking on the part of Parent to cause that Parent
Subsidiary to take that action. Whenever this Agreement requires a Company
Subsidiary to take any action, that requirement shall be deemed to include an
undertaking on the part of the Company to cause that Company Subsidiary to take
that action and, after the Effective Time, on the part of the Surviving
Corporation to cause that Company Subsidiary to take that action.
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IN WITNESS WHEREOF, Parent, MergerCo and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
CORECOMM LIMITED
By: /s/ Richard J. Lubasch
-----------------------------------
Name: Richard J. Lubasch
Title: Senior Vice President, General
Counel and Secretary
VOYAGER.NET, INC.
By: /s/ Christopher P. Torto
-----------------------------------
Name: Christopher P. Torto
Title: Chief Executive Officer
CORECOMM GROUP SUB I, INC.
By: /s/ Richard J. Lubasch
-----------------------------------
Name: Richard J. Lubasch
Title: Senior Vice President, General
Counsel and Secretary
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