Exhibit 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
DATED AS OF JUNE 12, 2000
AMONG
ILLUMINET HOLDINGS, INC.
ILLUMINET TELEMANAGEMENT, INC.
and
NATIONAL TELEMANAGEMENT CORPORATION
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TABLE OF CONTENTS
PAGE
ARTICLE I THE MERGER........................................................1
1.1 The Merger............................................................1
1.2 Closing...............................................................2
1.3 Effective Time........................................................2
1.4 Effects of the Merger.................................................2
1.5 Certificate of Incorporation..........................................2
1.6 By-Laws...............................................................2
1.7 Officers and Directors of Surviving Corporation.......................2
1.8 Effect on Capital Stock...............................................3
1.9. Dissenting Shares....................................................4
1.10. Tax and Accounting Consequences.....................................5
1.11. Taking of Necessary Action; Further Action..........................5
ARTICLE II EXCHANGE OF CERTIFICATES..........................................5
2.1. Surrender of Certificates............................................5
2.2. No Further Ownership Rights in NTC Capital Stock.....................7
2.3. Dissenting Shares After Payment......................................7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF NTC...........................7
3.1. Organization, Standing and Power.....................................7
3.2. Capital Structure....................................................8
3.3. Authority; No Conflicts; Consents....................................8
3.4. Subsidiaries.........................................................9
3.5. Vote Required........................................................9
3.6. Brokers or Finders..................................................10
3.7. [Reserved]..........................................................10
3.8. Financial Statements and Forecasts..................................10
3.9. No Undisclosed Liabilities..........................................11
3.10. Corporate and Assumed Names........................................11
3.11. Spin-offs by NTC...................................................11
3.12. Accounts Receivable................................................11
3.13. Contracts; Compliance..............................................11
3.14. Authorizations.....................................................12
3.15. Environmental Matters..............................................12
3.16. Personal Property; Inventory.......................................14
3.17. Real Property......................................................14
3.18. Insurance..........................................................15
3.19. Compensation; Employment Agreements; Organized Labor Matters.......15
3.20. Employee Plans.....................................................16
3.21. Compliance with ERISA..............................................17
3.22. Litigation; Compliance with Law....................................18
3.23. Taxes..............................................................18
3.24. Absence of Changes.................................................21
3.25. Deposit Accounts; Powers of Attorney...............................22
3.26. Relations with Governments.........................................22
3.27. Intellectual Property..............................................22
3.28. Related Party Agreements...........................................23
3.29. State Takeover Statutes............................................23
3.30. Correct Records....................................................24
3.31. Accounting Matters.................................................24
3.32. Customer/Supplier Relationships....................................24
3.33. Disclosure.........................................................24
3.34. Information Statement..............................................24
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER AND MERGER SUB.......24
4.1. Organization, Standing and Power....................................25
4.2. Authority; No Conflicts; Consents...................................25
4.3. SEC Documents; Parent Financial Statements..........................25
4.4. Brokers or Finders..................................................26
4.5. Merger Sub Organization and Corporate Power.........................26
4.6. Merger Sub Corporate Authorization..................................26
4.7. Merger Sub Non-Contravention........................................26
4.8. Information Statement...............................................27
4.9. Disclosure..........................................................27
4.10. Litigation.........................................................27
ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS.........................27
5.1. Covenants of NTC....................................................27
5.2. Covenants of Parent.................................................30
5.3. Control of Other Party's Business...................................30
ARTICLE VI ADDITIONAL AGREEMENTS...........................................30
6.1 NTC Stockholders Meeting.............................................30
6.2 Access to Information................................................31
6.3 Reasonable Efforts...................................................32
6.4 Acquisition Proposals................................................32
6.5 Fees and Expenses....................................................33
6.6 Public Announcements.................................................33
6.7. Notification of Certain Matters.....................................33
6.8. Affiliate Agreements................................................34
6.9. Additional Documents and Further Assurances.........................34
6.10. Pooling Accounting.................................................34
6.11. Indemnification....................................................34
6.12. Listing Application................................................35
6.13. Employee Benefits..................................................35
ARTICLE VII CONDITIONS PRECEDENT...........................................35
7.1 Conditions to Each Party's Obligation to Effect the Merger...........35
7.2 Additional Conditions to Obligations of Parent and Merger Sub........36
7.3 Additional Conditions to Obligations of NTC..........................38
ARTICLE VIII TERMINATION AND AMENDMENT.....................................39
8.1 Termination..........................................................39
8.2 Effect of Termination................................................41
8.3 Amendment............................................................41
8.4 Extension; Waiver....................................................41
ARTICLE IX SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION......42
9.1. Survival of Representations and Warranties..........................42
9.2. Escrow Arrangements.................................................42
9.3. Stockholder Representative..........................................49
ARTICLE X GENERAL PROVISIONS................................................50
10.1 Notices.............................................................50
10.2 Interpretation......................................................51
10.3 Counterparts........................................................51
10.4 Entire Agreement; No Third Party Beneficiaries......................52
10.5 Governing Law.......................................................52
10.6 Severability........................................................52
10.7 Assignment..........................................................52
10.8 Submission to Jurisdiction; Waivers.................................52
10.9 Enforcement.........................................................53
10.10. Facsimiles........................................................53
10.10 Definitions........................................................53
10.11. Cross Reference Table for Certain Defined Terms...................56
Exhibit Index...............................................................60
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KC-748005-6
MERGER AGREEMENT
AGREEMENT AND PLAN OF MERGER, dated as of June 12, 2000 (this
"Agreement"), among ILLUMINET HOLDINGS, INC., a Delaware corporation ("Parent"),
ILLUMINET TELEMANAGEMENT, INC., a Texas corporation and a direct wholly-owned
subsidiary of Parent ("Merger Sub"), and NATIONAL TELEMANAGEMENT CORPORATION, a
Texas corporation ("NTC").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and NTC
have each determined that the merger of Merger Sub with and into NTC (the
"Merger") is in the best interests of their respective stockholders, and such
Boards of Directors have approved such Merger, upon the terms and subject to the
conditions set forth in this Agreement, pursuant to which all of the issued and
outstanding share of common stock of NTC will be converted into the right to
receive shares of the common stock of Parent;
WHEREAS, Parent, Merger Sub and NTC desire to make certain
representations, warranties, covenants and agreements in connection with the
transactions contemplated hereby and also to prescribe various conditions to the
transactions contemplated hereby;
WHEREAS, each of the Stockholders set forth on Exhibit B, concurrently
with the execution of this Agreement, and as a condition and inducement to
Parent's and Merger Sub's willingness to enter into this Agreement, is entering
into a Voting Agreement in the form attached hereto as Exhibit I; and
WHEREAS, Parent, Merger Sub and NTC intend that the Merger shall (a)
constitute a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), and the regulations promulgated
thereunder; and (b) qualify for accounting treatment as a pooling of interests.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1. THE MERGER. Upon the terms and subject to the conditions set forth in
this Agreement, and in accordance with the applicable provisions of the Texas
Business Corporation Act (the "TBCA"), Merger Sub shall be merged with and into
NTC at the Effective Time. Following the Merger, the separate corporate
existence of Merger Sub shall cease and NTC shall continue as the surviving
corporation (the "Surviving Corporation").
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1.2. CLOSING. The closing of the Merger (the "Closing") will take place on
the fifth Business Day after the satisfaction or waiver (subject to applicable
law) of the conditions (excluding conditions that, by their terms, cannot be
satisfied until the Closing Date) set forth in Article VII (the "Closing Date"),
unless another time or date is agreed to in writing by the parties hereto. The
Closing shall be held at the offices of Blackwell Sanders Peper Martin LLP, 2300
Main Street, Kansas City, Missouri 64108, unless another place is agreed to in
writing by the parties hereto.
1.3. EFFECTIVE TIME. On the Closing Date, the parties shall (i) file
articles of merger (the "Articles of Merger") in such form as is required by and
executed in accordance with the relevant provisions of the TBCA and (ii) make
all other filings or recordings required under the TBCA. The Merger shall become
effective at such time as the Articles of Merger are duly filed with the Texas
Secretary of State or at such subsequent time as Parent and NTC shall agree and
be specified in the Articles of Merger (the date and time the Merger becomes
effective being the "Effective Time").
1.4. EFFECTS OF THE MERGER. At and after the Effective Time, the Merger
will have the effects set forth in the TBCA. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time all the property,
rights, privileges, powers and franchises of NTC and Merger Sub shall be vested
in the Surviving Corporation, and all debts, liabilities and duties of NTC and
Merger Sub shall become the debts, liabilities and duties of the Surviving
Corporation.
1.5. CERTIFICATE OF INCORPORATION. The articles of incorporation of Merger
Sub, as in effect immediately prior to the Effective Time, shall be the articles
of incorporation of the Surviving Corporation (except that the name of the
Surviving Corporation shall be changed to "National Telemanagement
Corporation"), until thereafter changed or amended as provided therein or by
applicable law.
1.6. BY-LAWS. The by-laws of Merger Sub as in effect at the Effective Time
shall be the by-laws of the Surviving Corporation until thereafter changed or
amended as provided therein or by applicable law.
1.7. OFFICERS AND DIRECTORS OF SURVIVING CORPORATION. The officers of
Merger Sub as of the Effective Time shall be the officers of the Surviving
Corporation, until the earlier of their resignation or removal or otherwise
ceasing to be an officer or until their respective successors are duly elected
and qualified, as the case may be. The position of Mr. George Lebus will be as
set forth in his employment agreement. The directors of Merger Sub as of the
Effective Time shall be the directors of the Surviving Corporation until the
earlier of their resignation or removal or otherwise ceasing to be a director or
until their respective successors are duly elected and qualified.
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1.8. EFFECT ON CAPITAL STOCK.
(a) Effect on Capital Stock. At the Effective Time, by virtue of the
Merger and without any action on the part of Merger Sub or NTC, each share
of NTC Capital Stock issued and outstanding immediately prior to the
Effective Time (other than any Dissenting Shares (as defined in Section
1.9)) will be canceled and extinguished and be converted automatically into
the right to receive, upon surrender of the certificate representing such
share of NTC Capital Stock in the manner provided in Section 2.1(c), the
Per Share Merger Consideration, as set forth on Exhibit A. Each share of
NTC Capital Stock held as treasury shares shall be canceled and retired and
no payment shall be made in respect thereof.
(b) Stock Options.
(i) Assumption of NTC Options. At the Effective Time, each
outstanding NTC Option under the NTC 1995 Stock Plan for Incentive and
Nonqualified Stock Options (the "Option Plan") or otherwise, vested or
unvested, will, in connection with the Merger, be exchanged for a new,
nonqualified, option under the Parent's 1997 Equity Incentive Plan
subject to the agreement of the option holder and the execution of a
new option agreement as provided in (b)(iii). Each NTC Option so
exchanged by Parent under this Agreement shall be subject to the terms
and conditions of the Parent's 1997 Equity Incentive Plan, except for
certain additional restrictions on resale set forth in the new option
agreement, shall have the same vesting schedule as previously provided
and (A) such assumed NTC Option will be exercisable for that number of
shares of Parent Common Stock equal to the product obtained by
multiplying the number of shares of NTC Capital Stock that were
issuable upon exercise in full of such assumed NTC Option immediately
prior to the Effective Time by the number value equal to the Per Share
Merger Consideration rounded down to the nearest whole number of
shares of Parent Common Stock and (B) the per share exercise price for
the shares of Parent Common Stock issuable upon exercise of such
assumed NTC Option shall be equal to the quotient obtained by dividing
the exercise price per share of NTC Capital Stock at which such NTC
Option was exercisable immediately prior to the Effective Time by the
number value equal to the Per Share Merger Consideration, rounded up
to the nearest whole cent. With respect to NTC Options vested as of
the Closing Date, as set forth on Exhibit A, when exercised, if prior
to the end of the General Escrow Period or such longer period as
determined under Section 9.2(c), the number of shares of Parent Common
Stock issued to the holder will be reduced by the appropriate number
of shares to be deposited with the Escrow Agent in the General Escrow
Fund, pursuant to Section 2.1(b).
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(ii) New Option Agreement. Effective as of the Effective Time,
Parent and each holder of an outstanding NTC Option will enter into a
document evidencing the exchange and issuance of a new option to such
holder.
(c) Capital Stock of Merger Sub. Each share of common stock, par value
$0.01 per share, of Merger Sub issued and outstanding immediately prior to
the Effective Time shall be converted into and exchanged for one validly
issued, fully paid and nonassessable share of common stock, par value $0.01
per share, of the Surviving Corporation. Each stock certificate of Merger
Sub evidencing ownership of any such shares shall continue to evidence
ownership of such shares of capital stock of the Surviving Corporation.
(d) Adjustment to Parent Common Stock. The number of shares of Parent
Common Stock issuable hereunder shall be adjusted to reflect fully the
effect of any stock split, reverse split, stock dividend (including any
dividend or distribution of securities convertible into Parent Common Stock
or NTC Capital Stock), reorganization, recapitalization or other like
change with respect to Parent Common Stock or NTC Capital Stock occurring
after the date hereof.
(e) Fractional Shares. No fractional shares of Parent Common Stock
shall be issued in the Merger. The aggregate Per Share Merger Consideration
to be issued to the holder of a certificate previously evidencing NTC
Capital Stock shall be rounded to the nearest whole share of Parent Common
Stock, as set forth on Exhibit A.
(f) Preferred Stock. The effect of the Merger on the Preferred Stock
shall be as set forth in the Preferred Stock Agreement.
1.9. DISSENTING SHARES.
(a) Notwithstanding any provision of this Agreement to the contrary,
any shares of NTC Capital Stock or Preferred Stock issued and outstanding
immediately prior to the Effective Time that are held by a stockholder who
has exercised and perfected appraisal rights ("Dissenting Shares"), shall
not be converted into or represent a right to receive Parent Common Stock
pursuant to Section 1.8, but the holder thereof shall only be entitled to
such rights as are granted by Section 5.11 of the TBCA.
(b) Notwithstanding the provisions of subsection (a), if any holder of
Dissenting Shares shall effectively withdraw or lose (through failure to
perfect or otherwise) his or her appraisal rights, then, as of the later of
the Effective Time and the occurrence of such event, such holder's shares
shall automatically be converted into and represent only the right to
receive the Per Share Merger Consideration to which such stockholder would
otherwise be entitled under Section 1.8(a) (less the number of shares
allocable to such stockholder that have been deposited into the General
Escrow Fund on such holder's behalf pursuant to Article IX), upon surrender
of the certificate representing such shares.
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(c) NTC shall give Parent (i) prompt notice of any written demand for
appraisal received by NTC pursuant to the applicable provisions of Section
5.11 of the TCBA and (ii) the opportunity to participate in all
negotiations and proceedings with respect to such demands. NTC shall not,
except with the prior written consent of Parent, voluntarily make any
payment with respect to any such demands or offer to settle or settle any
such demands.
1.10. TAX AND ACCOUNTING CONSEQUENCES. It is intended by the parties hereto
that the Merger shall (i) constitute a reorganization with the meaning of
Section 368 of the Code and (ii) qualify for accounting treatment as a pooling
of interests. Each party has consulted with, and is relying exclusively upon,
its own tax advisors and accountants with respect to the tax and accounting
consequences, respectively, of the Merger.
1.11. TAKING OF NECESSARY ACTION; FURTHER ACTION. If, at any time after the
Effective Time, any further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of NTC and Sub, the officers and directors of NTC, Parent and
Merger Sub are fully authorized in the name of their respective corporation or
otherwise to take, and will take, all such lawful and necessary action.
ARTICLE II
EXCHANGE OF CERTIFICATES
2.1. SURRENDER OF CERTIFICATES.
(a) Exchange Agent. The transfer agent of Parent shall serve as
exchange agent (the "Exchange Agent") in the Merger.
(b) Parent to Provide Common Stock. Promptly after the Effective Time,
Parent shall make available to the Exchange Agent for exchange in
accordance with this Article II the shares of Parent Common Stock issuable
pursuant to Section 1.8(a) in exchange for all the outstanding shares of
NTC Capital Stock, as set forth on Exhibit A; provided, -------- however,
that on behalf of the Stockholders, pursuant to Section 9.2 ------- hereof,
Parent shall deposit the General Escrow Amount into the General Escrow
Fund. The portion of the General Escrow Amount contributed on behalf of
each Stockholder shall be in proportion to the aggregate Per Share Merger
Consideration that such Stockholder would otherwise be entitled to receive
in the Merger by virtue of ownership of outstanding shares of NTC Capital
Stock, as set forth on Exhibit A.
(c) Exchange Procedures. On the Closing Date, the Stockholders will
surrender the certificates representing their NTC Capital Stock (the "NTC
Certificates") to the Exchange Agent for cancellation together with a
letter of transmittal in such form and having such provisions as Parent may
reasonably request. Upon surrender of a NTC Certificate for cancellation to
the Exchange Agent or to such other agent or agents as may be appointed by
Parent, together with such letter of transmittal, the Exchange Agent will
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promptly deliver to the holder of such NTC Certificate in exchange therefor
a certificate representing the number of whole shares of Parent Common
Stock (less the number of shares of Parent Common Stock to be deposited in
the General Escrow Fund on such holder's behalf pursuant to Section 2.1(b)
and Article IX) to which such Stockholder is entitled pursuant to Section
1.8, and the NTC Certificate so surrendered shall forthwith be canceled.
Until so surrendered, each outstanding NTC Certificate that, prior to the
Effective Time, represented shares of NTC Capital Stock will be deemed from
and after the Effective Time, for all corporate purposes, other than the
payment of dividends as provided in Section 2.1(d), to evidence only the
right to receive the number of full shares of Parent Common Stock into
which such shares of NTC Capital Stock shall have been converted pursuant
to Article I. As soon as practicable after the Effective Time, and subject
to and in accordance with the provisions of Article IX hereof, Parent shall
cause to be distributed to the Escrow Agent a certificate or certificates
representing the General Escrow Amount, which shall be registered in the
books of Parent in the name of the Escrow Agent. Such shares shall be
beneficially owned by the holder on whose behalf such shares were deposited
in the General Escrow Fund and shall be available to compensate Parent as
provided in Article IX.
(d) Distributions with Respect to Unexchanged Shares. No dividends or
other distributions declared or made after the Effective Time with respect
to Parent Common Stock will be paid to any holder of any unsurrendered NTC
Certificate with respect to the shares of Parent Common Stock represented
thereby until the holder of record of such NTC Certificate shall surrender
such NTC Certificate. Subject to applicable law, following surrender of any
such NTC Certificate, there shall be paid to the record holder of the
certificates representing whole shares of Parent Common Stock issued in
exchange therefor, without interest, and at the time of such surrender, the
amount of dividends or other distributions, without interest, with a record
date after the Effective Time theretofore paid with respect to such whole
shares of Parent Common Stock.
(e) Transfers of Ownership. If any certificate for shares of Parent
Common Stock is to be issued in a name other than that in which NTC
Certificate surrendered in exchange therefor is registered, it will be a
condition to the issuance thereof that NTC Certificate so surrendered will
be properly endorsed and otherwise in proper form for transfer and that the
person requesting such exchange will have paid to Parent or any agent
designated by it any transfer or other taxes required by reason of the
issuance of a certificate for shares of Parent Common Stock in any name
other than that of the registered holder of the NTC Certificate
surrendered, or established to the satisfaction of the Parent or any agent
designated by it that such tax has been paid or is not payable.
(f) Lost, Stolen or Destroyed NTC Certificate. In the event any NTC
Certificates shall have been lost, stolen or destroyed, the Exchange Agent
shall issue in exchange for such lost, stolen or destroyed NTC Certificate,
upon the making of an affidavit of that fact by the holder thereof, the
number of shares of Parent Common Stock, if any, as may be required
pursuant to Section 1.8; provided, however, that Parent
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may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed NTC
Certificates to deliver a bond in such sum as it may reasonably direct
against any claim that may be made against Parent or Exchange Agent with
respect to the certificates alleged to have been lost, stolen or destroyed.
(g) No Liability. Notwithstanding anything to the contrary in this
Section 2.1, none of the Exchange Agent, the Surviving Corporation or any
party hereto shall be liable to the holder of shares of Parent Common Stock
or NTC Capital Stock for any amount properly paid to a public official
pursuant to any applicable abandoned property, escheat or similar law.
2.2. NO FURTHER OWNERSHIP RIGHTS IN NTC CAPITAL STOCK. All shares of Parent
Common Stock issued upon the surrender for exchange of shares of NTC Capital
Stock in accordance with the terms hereof shall be deemed to be full
satisfaction of all rights pertaining to such shares of NTC Capital Stock, and
there shall be no further registration of transfers in the records of the
Surviving Corporation of shares of NTC Capital Stock that were outstanding
immediately prior to the Effective Time. If, after the Effective Time, NTC
Certificates are presented to the Surviving Corporation for any reason, they
shall be canceled and exchanged as provided in this Article II.
2.3. DISSENTING SHARES AFTER PAYMENT . Dissenting Shares, if any, after
payments in respect thereto have been made to dissenting Stockholders of NTC
pursuant to Section 5.11 of the TCBA, shall be canceled.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF NTC
Except as set forth in the NTC Disclosure Schedules delivered by NTC to
Parent prior to the execution of this Agreement (the "NTC Disclosure Schedules")
(each schedule qualifies the correspondingly numbered representation and
warranty or covenant to the extent specified therein), and dated as of the date
hereof, on the date hereof and as of the Effective Time as though made at the
Effective Time, NTC represents and warrants to Parent as follows:
3.1. ORGANIZATION, STANDING AND POWER. Each of NTC and its Subsidiaries is
a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation or organization, has all requisite
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted and is duly qualified and in good standing to do
business in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary other
than in such jurisdictions where the failure so to qualify would not, either
individually or in the aggregate, have a Material Adverse Effect on NTC. The
copies of the articles of incorporation and by-laws of NTC and each Subsidiary
which were previously furnished to Parent are true, complete and correct copies
of such documents as in effect on the date of this Agreement. Set forth on
Schedule 3.1 is each location (specifying state, county and city) where NTC or
any Subsidiary (a) has a place of business or (b) owns or leases real property.
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3.2. CAPITAL STRUCTURE.
(a) The authorized capital stock of NTC consists of (i) 100,000,000
shares of Class A Voting common stock, par value $.001 per share of which
7,865,383 shares are issued and outstanding (the "NTC Common Stock"), (ii)
10,000,000 shares of Class B Non-voting common stock, par value $.001 per
share of which no shares are outstanding, and (iii) 10,000,000 shares of
preferred stock of which 450,000 shares of Series A Redeemable Preferred
Stock (the "Preferred Stock") are issued and outstanding. All issued and
outstanding shares of the capital stock of NTC are duly authorized, validly
issued, fully paid and nonassessable, and were issued in compliance with
all applicable securities laws and no class of capital stock is entitled to
preemptive rights. Schedule 3.2 sets forth all holders of NTC Options and
NTC Warrants, the number of NTC Options and NTC Warrants held by each such
holder and the vesting schedule and the exercise price of each NTC Option
and NTC Warrant.
(b) As of the date of this Agreement, no bonds, debentures, notes or
other indebtedness of NTC having the right to vote on any matters on which
stockholders may vote ("NTC Voting Debt") are issued or outstanding.
(c) Except as set forth on Schedule 3.2, there are no securities,
options, warrants, puts, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which NTC or any of its
Subsidiaries is a party or by which any of them is bound obligating NTC or
any of its Subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or other voting
securities of NTC or any of its Subsidiaries or obligating NTC or any of
its Subsidiaries to issue, grant, extend or enter into any such security,
option, warrant, call, right, commitment, agreement, arrangement or
undertaking. There are no outstanding obligations of NTC or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any shares of
capital stock of NTC or any of its Subsidiaries.
3.3. AUTHORITY; NO CONFLICTS; CONSENTS.
(a) NTC has all requisite corporate power and authority to enter into
this Agreement and to consummate the transactions contemplated hereby,
subject in the case of the consummation of the Merger to the adoption of
this Agreement by the Required NTC Vote (as defined in Section 3.5). The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of NTC, subject in the case of the
consummation of the Merger to the adoption of this Agreement by the
Required NTC Vote. This Agreement has been duly executed and delivered by
NTC and constitutes a valid and binding agreement of NTC, enforceable
against it in accordance with its terms, except as such enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium and
similar laws relating to or affecting creditors generally, by general
equity principles (regardless of whether such enforceability is considered
in a proceeding in equity or at law).
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(b) Except as set forth on Schedule 3.3, the execution and delivery of
this Agreement and the Ancillary Agreements do not or will not, as the case
may be, and the consummation of the Merger and the other transactions
contemplated hereby will not, conflict with, or result in any violation of,
or constitute a default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, amendment, cancellation or
acceleration of any obligation or the loss of a material benefit under, or
the creation of a lien, pledge, security interest, charge or other
encumbrance on any assets (any such conflict, violation, default, right of
termination, amendment, cancellation or acceleration, loss or creation, a
"Violation") pursuant to: (i) any provision of the articles of
incorporation or by-laws of NTC or any Subsidiary of NTC, or (ii) except as
would not have a Material Adverse Effect on NTC and, subject to obtaining
or making the consents, approvals, orders, authorizations, registrations,
declarations and filings referred to in paragraph (c) below, any loan or
credit agreement, note, mortgage, bond, indenture, lease, benefit plan or
other agreement, obligation, instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to NTC or any Subsidiary of NTC or their respective
properties or assets.
(c) Except as set forth on Schedule 3.3, no consent, approval, order
or authorization of, or registration, declaration or filing with, any
Governmental Entity or any other person, is required by or with respect to
NTC or any Subsidiary of NTC in connection with the execution and delivery
of this Agreement by NTC or the consummation of the Merger and the other
transactions contemplated hereby, or the conduct by the Surviving
Corporation of NTC's business after the Effective Time without interruption
or delay except for those required under or in relation to (i) the HSR Act,
(ii) state securities or "blue sky" laws (the "Blue Sky Laws"), (iii) the
Securities Act of 1933, as amended (the "Securities Act"), (iv) the TBCA
with respect to the filing of the Articles of Merger, (vi) such consents,
approvals, orders, authorizations, registrations, declarations and filings,
the failure of which to obtain would not have a Material Adverse Effect on
NTC. Consents, approvals, orders, authorizations, registrations,
declarations and filings required under or in relation to any of the
foregoing clauses (i) through (vi) are hereinafter referred to as "Required
Consents."
3.4. SUBSIDIARIES. Schedule 3.4 lists each Subsidiary, its state of
incorporation and all of the authorized, issued and outstanding capital
stock of each Subsidiary. Except as set forth on Schedule 3.4, all such
shares of capital stock are owned by NTC, free and clear of all Liens.
Except as set forth on Schedule 3.4, NTC does not, directly or indirectly,
own any stock of, or any other interest in, any other corporation, limited
liability company, joint venture, partnership, trust or other business
entity. There are no outstanding options, warrants, puts, calls, contracts,
agreements, conversion rights or preemptive or other rights to subscribe
for, purchase or otherwise acquire any securities of any Subsidiary.
3.5. VOTE REQUIRED. The affirmative vote of two-thirds of the votes
represented by the outstanding shares of NTC Common Stock and Preferred
Stock voting together as one class and the Preferred Stock voting as a
separate class to approve the Merger (the "Required NTC
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Vote"), are the only votes of the holders of any class or series of NTC
capital stock necessary to adopt this Agreement and approve the
transactions contemplated hereby. Any written consent to approve the Merger
must be unanimous among all holders of NTC Common Stock and Preferred
Stock.
3.6. BROKERS OR FINDERS. No agent, broker, investment banker,
financial advisor or other firm or Person is or will be entitled to any
broker's or finder's fee or any other similar commission or fee in
connection with any of the transactions contemplated by this Agreement,
except Robinson Humphrey (the "NTC Financial Advisor"), whose fee and
expenses will be paid by NTC in accordance with NTC's agreement with such
firm, based upon arrangements made by or on behalf of NTC and previously
disclosed to Parent.
3.7. [RESERVED]
3.8. FINANCIAL STATEMENTS AND FORECASTS.
(a) The books of account and related records of NTC fairly
reflect in reasonable detail its assets, liabilities and transactions
in accordance with GAAP applied on a consistent basis. NTC has
delivered to Parent the following financial statements (the "Financial
Statements"):
Statements of income, retained earnings and cash flows of NTC for
the fiscal years ended December 31, 1995 through December 31, 1999,
inclusive, and balance sheets of NTC as at each of such dates, and
an unaudited statement of income of NTC for the three months ended
March 31, 2000 and a balance sheet of NTC as at such date;
The Financial Statements: (i) are correct and complete and in
accordance with the books and records of NTC, (ii) fairly present the
financial condition, assets and liabilities of NTC as at their
respective dates and the results of operations and cash flows for the
periods covered thereby and (iii) have been prepared in accordance
with GAAP consistently applied, except for the absence of explanatory
notes with respect to the March 31, 2000 Financial Statements. The
Financial Statements referred to above (except for the March 31, 2000
Financial Statements) have been certified by NTC's Accountants. All
references in this Agreement to the "Balance Sheet" shall mean the
balance sheet of NTC as at December 31, 1999 included in the Financial
Statements and all references to the "Balance Sheet Date" shall mean
December 31, 1999.
(b) The forecasted financial data and projections set forth as
Schedule 3.8 were prepared by NTC in good faith on the basis of
reasonable assumptions and in accordance with NTC's historical
practices, including revenue and expense recognition, amortization and
reserve policies. The parties acknowledge that financial forecasts are
inherently subject to risks and uncertainties and NTC is making no
representation as to the actual realization of these forecasts.
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3.9. NO UNDISCLOSED LIABILITIES. Neither NTC nor any Subsidiary of NTC has
any liability or obligation of any nature, whether due or to become due,
absolute, contingent or otherwise, including liabilities for or in respect of
federal, state and local taxes and any interest or penalties relating thereto,
except (a) to the extent reflected as a liability on the Balance Sheet, (b)
liabilities incurred in the ordinary course of business consistent with
historical practice since the Balance Sheet Date and fully reflected as
liabilities on NTC's books of account, none of which would have a Material
Adverse Effect, (c) unaccrued liabilities under Contracts entered into in the
ordinary course where the amount of the liability is ascertainable from the face
of the Contract and (d) liabilities disclosed and quantified on Schedule 3.9.
3.10. CORPORATE AND ASSUMED NAMES. Set forth on Schedule 3.10 is a listing
of all prior corporate names of NTC, and all names of all predecessor companies
of NTC, including the names of any entities acquired by NTC (by stock purchase,
merger or otherwise) or owned by NTC or from which NTC previously acquired
material assets. Except as disclosed on Schedule 3.10, NTC has not been a
subsidiary or division of another corporation.
3.11. SPIN-OFFS BY NTC. Except as set forth on Schedule 3.11, there has not
been any sale, spin-off or split-up of assets of NTC other than in the ordinary
course of business, since December 31, 1997.
3.12. ACCOUNTS RECEIVABLE. All of the accounts and notes receivable of NTC
and its Subsidiaries represent amounts receivable for merchandise actually
delivered or services actually provided (or, in the case of non-trade accounts
or notes represent amounts receivable in respect of other bona-fide business
transactions), have arisen in the ordinary course of business, and have been
billed and are generally due within 30 days after such billing. The reserve for
doubtful accounts reflected on the Balance Sheet is adequate in light of NTC's
historical collection experience. Schedule 3.12 sets forth (a) the total amount
of accounts receivable of NTC outstanding as of the last day of the month
immediately preceding the present month and (b) the aging of such receivables
based on the following schedule: 0-30 days, 31-60 days, 61-90 days, and over 90
days, from the due date thereof.
3.13. CONTRACTS; COMPLIANCE. Schedule 3.13 sets forth every lease, contract
or commitment of any kind, oral or written, formal or informal (including
without limitation mortgages, security agreements, guaranties, agreements
relating to the borrowing of money, employment agreements, collective bargaining
agreements, powers of attorney, distribution arrangements, non-competition
agreements, patent and software license agreements, contracts or orders for
future purchase or delivery of goods or rendition or services, bonus, deferred
compensation, pension or retirement plans, accrued vacation pay and group
insurance and welfare arrangements) of NTC or any Subsidiary, except for (a)
agent contracts and (b) contracts with annual payments of less than $25,000 or
which are terminable by NTC with no penalty on 30 days notice or less.
Notwithstanding the foregoing, Schedule 3.13 sets forth all Smartpay contracts
and all contracts related to American Roaming with annual payments in excess of
$25,000 annually. Attached to Schedule 3.13 is the form of agent agreement
utilized by NTC. Substantially all agreements with an agent are in substantially
the same form as attached to
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Schedule 3.13. The agreements listed on Schedule 3.13 are referred to herein as
the "Material Contracts." Except as set forth on Schedule 3.13, neither NTC nor
any Subsidiary is a party to any employment agreement, nor has it executed any
letter relating to employment, which provides for any increase in compensation
(including severance pay or benefits) based on a change in control, sale of
business or a merger involving NTC. True, correct and complete copies of the
Material Contracts have been delivered to Parent. There have been no events of
material default by NTC or any subsidiary, or to NTC's knowledge, any third
party, and, to the knowledge of NTC, no state of facts exist which with notice
or the passage of time, or both, would constitute an event of material default
by NTC, any Subsidiary or any other party to a Material Contract. All Material
Contracts to which NTC or any Subsidiary is a party or by which it is bound are
in full force and effect; and each constitutes the legal, valid, binding and
enforceable obligation of NTC and any Subsidiary and, to NTC's knowledge, the
other parties thereto. Except for the consents set forth on Schedule 3.3, the
transactions contemplated by this Agreement will not (and will not give any
person a right to terminate or modify any rights of, or accelerate or increase
any obligations of NTC or any Subsidiary under any Material Contract.
3.14. AUTHORIZATIONS. NTC holds all licenses, franchises, permits, resale
tax certificates and other governmental authorizations and approvals
(collectively, the "Authorizations") necessary to operate its business in the
manner in which it is presently conducted, except for those Authorizations the
failure of which to obtain would not have a Material Adverse Effect on NTC.
Schedule 3.14 lists all such Authorizations. The Authorizations listed on
Schedule 3.14 are valid, and neither NTC nor any Subsidiary has received any
notice that any governmental authority intends to cancel, terminate or not renew
any such Authorization, nor does NTC or any Subsidiary know of any basis that
would permit any governmental authority to cancel, terminate or not renew any
such Authorization. Except as set forth in Schedule 3.14, NTC has conducted and
is conducting its business in compliance with the requirements, standards,
criteria and conditions set forth in the Authorizations in all material respects
and is not in material violation of any of the foregoing.
3.15. ENVIRONMENTAL MATTERS.
(a) NTC's business conduct at the real property identified on Schedule
3.17 is not and has not been in violation of any applicable federal, state
and local environmental and employee protection laws, rules, regulations,
judgments, orders and consent agreements ("Environmental Laws").
(b) NTC has delivered to Parent or will deliver to Parent at Closing
all Authorizations necessary for NTC to treat, transport, store, dispose of
and otherwise handle any hazardous or toxic material, substance, waste, or
any other pollutant, contaminant, chemical or substance regulated by any
Environmental Laws, including but not limited to petroleum products,
asbestos or polychlorinated biphenyls ("Hazardous Materials") in connection
with its business as presently conducted, a list of which Authorizations
are set forth on Schedule 3.14. All of the Authorizations set forth on
Schedule 3.14 are in full force and effect and NTC is in compliance with
the
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requirements of such Authorizations. NTC has reported to the appropriate
authorities, to the extent required by all Environmental Laws, all past and
present sites owned, leased and operated by NTC where Hazardous Materials
have been treated, stored, disposed of or otherwise handled.
(c) There are no aboveground or underground storage tanks located on
any property currently owned, leased or operated by NTC for which NTC has
liability under any Environmental Law, nor, to the knowledge of NTC, have
any aboveground or underground storage tanks ever been located on any
property owned, leased or operated by NTC or any of its predecessors in
interest.
(d) There has been no disposal, release or threatened release, spill,
leak, discharge or other escape ("Release") of Hazardous Materials by NTC
or its agents at, from, in or on any property owned, leased or operated by
NTC at any time which were, or which were required to be, reported under
any Environmental Law, and NTC does not have any knowledge of any
contingent liabilities in connection with any disposal or release of any
Hazardous Material into the environment.
(e) No Hazardous Materials have been used, stored, manufactured,
treated, processed on, or transported to or from the real property
identified on Schedule 3.17 by NTC or its agents or any real property
previously owned, leased or occupied by NTC except as necessary to the
conduct of the business of NTC and in compliance under laws, ordinances,
and regulations applicable to the use, storage, manufacture, treatment,
processing or transportation thereof.
(f) Except as set forth on Schedule 3.15, NTC has not received nor
does NTC expect to receive any notice of potential responsibility or letter
of inquiry from any private party or government agency for any off-site
facility under the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C.ss.ss.9601 et seq., or state or local counterpart
thereof ("CERCLA"). Except as set forth on Schedule 3.15, NTC has not
received nor does NTC reasonably expect to receive any notice, letter,
citation, order, warning, complaint, inquiry, claim or demand alleging or
asserting that: NTC has violated, or is about to violate, any Environmental
Laws; there has been a release or there is a threat of a release of any
Hazardous Materials by NTC or its agents at, from or onto any of the real
property identified on Schedule 3.17; NTC may be or is liable, in whole or
in part, for the costs of cleaning up, remediating, removing or responding
to a release or threat of a release of Hazardous Materials by NTC or its
agents at, from or onto any of the real property identified on Schedule
3.17 or, as a result of NTC's ownership and/or operation of the real
property identified on Schedule 3.17, at, from or onto any other property
wherever located; NTC's leasehold interest in the real property identified
on Schedule 3.17 is subject to a lien in favor of any governmental entity
for any liability, costs or damages, under Environmental Laws, arising from
costs incurred by such governmental entity. In the event of any such notice
prior to Closing, NTC shall immediately provide a copy thereof to Parent.
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(g) NTC's leaseholder interest in real property identified on Schedule
3.17 is not listed, or, to the best of the knowledge of NTC, proposed for
listing, on the National Priorities List under CERCLA or on CERCLIS or any
analogous state list of sites requiring investigation or cleanup.
(h) NTC has not transported or arranged for the transportation of any
Hazardous Materials to any location that is listed or, to the best
knowledge of NTC proposed for listing, on the National Priorities List or
on the CERCLIS or any analogous state list.
3.16. PERSONAL PROPERTY; INVENTORY. Except as set forth on Schedule 3.16:
(a) NTC has good and marketable title (except for property leased by
NTC pursuant to a lease or agreement set forth on Schedule 3.13 or property
subject to a license set forth on Schedule 3.13) to all personal property,
other than personal property which is immaterial individually or in the
aggregate, whether tangible or intangible (including its rights in its
leases and agreements with respect to any leased property), used by NTC in
its business, free and clear of all liens, security interests, charges and
other encumbrances of any kind, other than Permitted Encumbrances;
(b) to NTC's knowledge, all of the tangible personal property owned by
NTC or leased by NTC pursuant to any lease listed on Schedule 3.13, other
than personal property which is immaterial individually or in the
aggregate, is in good working order and condition, ordinary wear and tear
excepted; and
(c) all leases included on Schedule 3.13 are in full force and effect
and constitute legal, valid and binding agreements of NTC (and their
successors) in accordance with their respective terms, except to the extent
that enforceability is affected by bankruptcy, insolvency, moratorium or
other creditor's rights proceedings, and NTC is not in material default
under the terms of any such lease.
3.17. REAL PROPERTY. NTC does not now own and has never owned any real
property. Schedule 3.17 lists all real property currently leased by NTC in the
conduct of its business and all leases or other agreements and all amendments
thereto in respect of such real property (the "Leases"), and the annual rentals
and other amounts paid under each such Lease or other agreement during the last
year. NTC's rights in such Leases and other agreements to which it is a party
are free and clear of all liens, security interests, charges and other
encumbrances of any kind, other than the Permitted Encumbrances, and all
undisputed amounts due and payable under such Leases have been paid. All amounts
in dispute are set forth on Schedule 3.17. True and complete copies of the
Leases have been delivered to the Parent. All Leases and other agreements
included on the NTC Disclosure Schedule are in full force and effect and
constitute legal, valid and binding agreements of NTC in accordance with their
respective terms, except to the extent that enforceability is affected by
bankruptcy, insolvency, moratorium or other creditor's rights proceedings. There
is no material default under any Lease, nor, to NTC's
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knowledge does any state of facts exist which, with notice or the passage of
time, or both would constitute a material default under any Lease.
3.18. INSURANCE. During the past three policy years, NTC has not handled or
received knowledge of any insurance losses or workers' compensation claims
relating to NTC or the Assigned Employees (defined below). NTC maintains, and
since January 1, 1995 has maintained, insurance (a) written by insurance
companies reasonably believed by NTC to be financially sound and reputable, (b)
that is sufficient for compliance by NTC with all of its contracts, agreements,
instruments and other commitments and with all applicable laws, and (c) that
insures against risks of the kind customarily insured against and in amounts
customarily carried by companies similarly situated and provides adequate
insurance coverage for the business and assets of NTC. Schedule 3.18 lists and
summarizes the property and casualty and liability insurance policies and
programs maintained for the benefit of NTC. To the extent that NTC or any
Affiliate of NTC has a policy of maintaining self-insurance coverage of any kind
under which NTC benefits, such policy is described on Schedule 3.18. Except as
set forth on Schedule 3.18, since January 1, 1995, (x) no insurance maintained
by NTC or with respect to the business conducted by NTC has been canceled by the
insurer nor has NTC applied for and been refused coverage by any insurer, (y)
NTC has not received any notice of any pending or threatened termination of any
policies of insurance, nor has any insurer suggested any alteration of any
tangible asset, the purchase of additional assets or modification of any methods
of doing business, and (z) all insurance maintained by or for the benefit of NTC
can be terminated by NTC without the need for any additional payments of any
kind from NTC or any other person or entity on account of the policies. NTC is
not in default with respect to any provision contained in any such insurance
policy, and to the knowledge of NTC, NTC has not failed to give any notice or
present any claim thereunder in a due and timely fashion.
3.19. COMPENSATION; EMPLOYMENT AGREEMENTS; ORGANIZED LABOR MATTERS.
(a) Schedule 3.19 sets forth the names and titles of all employees of
NTC or any Affiliate of NTC who are primarily assigned to the business and
operations of NTC (the "Assigned Employees") and the names of all officers
and directors of NTC and all Subsidiaries of NTC, listing all employment,
severance or other agreements with the Assigned Employees and the base rate
of compensation of each such person as of the date hereof. Since the
Balance Sheet Date, there have been no increases in the compensation
payable or any bonuses to any such employee, except ordinary compensation
increases implemented on a basis consistent with past practices, including
with respect to promotions made in accordance with past practice, and the
severance plans identified on Schedule 3.20.
(b) During the past three years (i) neither NTC nor any Affiliate of
NTC has been, or is currently, bound by or subject to (and none of the
assets or properties of NTC is bound by or subject to) any arrangement or
agreement with any labor union with respect to the Assigned Employees, (ii)
none of the Assigned Employees has been or is currently represented by any
labor union or covered by any collective bargaining
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agreement, (iii) to the knowledge of NTC, no campaign to establish such
representation has been commenced or is currently in progress, and (iv)
there has not been nor is there currently any pending or, to the knowledge
of NTC, threatened labor dispute involving any group of the Assigned
Employees nor has NTC experienced any labor interruptions.
3.20. EMPLOYEE PLANS.
(a) Schedule 3.20 lists all employee benefit plans in which the
Assigned Employees participate (the "Plans"), including all employment
agreements and other agreements or arrangements containing "golden
parachute" (as defined under section 280G of the Code) or other similar
provisions, and deferred compensation agreements. True and complete copies
of the Plans have been delivered to the Parent. Except for the Plans, the
Assigned Employees do not participate in any plan, program, fund or
arrangement that constitutes an "employee pension benefit plan," nor does
NTC have any obligation to contribute to or accrue or pay any benefits
under any deferred compensation or retirement funding arrangement on behalf
of any Assigned Employees (such as, for example, and without limitation,
any individual retirement account or annuity, any "excess benefit plan"
(within the meaning of section 3(36) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) or any non-qualified deferred
compensation arrangement). For the purposes of this Agreement, the term
"employee pension benefit plan" shall have the same meaning as is given
that term in section 3(2) of ERISA. NTC is not required to contribute to
any retirement plan pursuant to the provisions of any collective bargaining
agreement establishing the terms and conditions or employment of any of the
Assigned Employees.
(b) NTC does not contribute to or have any actual or potential
liability with respect to any multiemployer plan as defined in section
3(37) of ERISA. NTC has not incurred any liability on account of a "partial
withdrawal" or a "complete withdrawal" (within the meaning of sections 4205
and 4203, respectively, of ERISA) from any multiemployer plan, no such
liability has been asserted, nor to the knowledge of NTC are there any
events or circumstances which could result in any such partial or complete
withdrawal.
(c) Each Plan and the administration thereof is and has been in
material compliance with its terms and all applicable provisions of ERISA,
the Code and the regulations issued thereunder, as well as with all other
applicable federal, state and local statutes, ordinances and regulations.
(d) All accrued contribution obligations of NTC with respect to any
Plan listed on Schedule 3.20 have either been fulfilled in their entirety
or are fully reflected on the Balance Sheet.
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3.21. COMPLIANCE WITH ERISA.
(a) All of the Plans that are intended to qualify under section 401(a)
of the Code (the "Qualified Plans") have been determined by the Internal
Revenue Service to be so qualified, and nothing has occurred (or failed to
occur) since the date of such determination letters that would adversely
affect such determination in a manner that would be material to NTC. All
reports and other documents required to be filed with any governmental
agency or distributed to plan participants or beneficiaries (including, but
not limited to, summary plan descriptions, actuarial reports, audits, Form
5500 annual reports or other Tax Returns) have been timely filed or
distributed, except for failures that would not in the aggregate materially
adversely affect NTC. Neither NTC nor any Plan listed in the NTC Disclosure
Schedule has engaged in any transaction prohibited under the provisions of
section 4975 of the Code or section 406 of ERISA with respect to any Plan
that is not exempt under the Code or ERISA. No Plan has incurred an
accumulated funding deficiency, as defined in section 412(a) of the Code
and section 302(1) of ERISA; and NTC has not incurred nor has any liability
for excise tax or penalty due to the Internal Revenue Service ("IRS") nor
any liability to the Pension Benefit Guaranty Corporation --- ("PBGC")
other than for fixed rate premiums incurred in the ordinary ------ course
of business. In addition:
(i) there have been no terminations, partial terminations or
discontinuance of contributions to any such Qualified Plan without
notice to and approval by the Internal Revenue Service;
(ii) no Plan subject to the provisions of Title IV of ERISA has
been terminated;
(iii) there have been no "reportable events" (as that phrase is
defined in section 4043 of ERISA) with respect to any Plan;
(iv) NTC has not incurred and has no liability under section 4062
of ERISA with respect to any Plan; and
(v) no circumstances exist pursuant to which NTC could have any
material direct or indirect liability whatsoever (including, but not
limited to, any liability to any multiemployer plan or the PBGC under
Title IV of ERISA or to the Internal Revenue Service for any excise
tax or penalty, or being subject to any statutory lien to secure
payment of any such liability) with respect to any plan now or
heretofore maintained or contributed to by any entity other than NTC
that is, or at any time was, a member of a "controlled group" (as
defined in section 412(n)(6)(B) of the Code) that includes NTC.
(b) Except to the extent required under Part 6 of ERISA and section
4980B of the Code or applicable state law, NTC does not provide health or
welfare benefits for any
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retired or former employee, nor is it obligated to provide health or
welfare benefits to any active employee following such employee's
retirement or other termination of service.
(c) Each Plan that is a "group health plan" as defined in section
607(l) of ERISA has been operated with respect to Assigned Employees in
material compliance with the notice, continuation and other requirements of
section 4980B of the Code, the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended, the Health Insurance Portability and
Accountability Act of 1996, as amended, and Parts 6 and 7 of Subtitle B of
Title I of ERISA and the respective regulations thereunder.
(d) There are no pending or threatened claims (other than claims for
benefits in the ordinary course), lawsuits, audits, investigations or
arbitrations which have been asserted or instituted against any Plan, any
fiduciaries with respect to their duties to the Plans or the assets of any
trust that would be material to NTC.
(e) Except as disclosed in Schedule 3.21, no representation made in
this Section 3.21 has modified the written terms of any Plan in any
material respect, and the Merger and the other transactions contemplated
hereunder will not result in the payment, vesting or acceleration of any
benefit, including severance pay, which would have a material adverse
effect on NTC or the Parent.
3.22. LITIGATION; COMPLIANCE WITH LAW. Except as set forth on Schedule
3.22, there are no claims, actions, suits or proceedings (or, to the knowledge
of NTC, investigations) pending or, to the knowledge of NTC, threatened against
or affecting, NTC, the Merger or the other transactions contemplated in this
Agreement, at law or in equity, or before or by any arbitrator, court or any
governmental department, commission, board, bureau, agency or instrumentality
(including any claims or proceedings under any Environmental Laws or any claims,
grievances or unfair labor practice charges or complaints under the Fair Labor
Standards Act, the National Labor Relations Act or any other federal, state or
local laws or regulations regulating the relationships between employers and
employees), and no notice of any such claim, action, suit, proceeding or
investigation, whether pending or threatened, has been received. Except to the
extent set forth on Schedule 3.22, NTC is not presently engaged in any legal
action to recover moneys due it or damages sustained by it. Except to the extent
set forth on Schedule 3.22, NTC has since its inception conducted its business
in material compliance with the requirements, standards, criteria and conditions
set forth in all laws, statutes, ordinances, regulations, rules, judgments,
orders, writs, injunctions and decrees binding upon or applicable to NTC and its
property and is not in material violation of any of the foregoing.
3.23. TAXES.
(a) Except as set forth on Schedule 3.23:
(i) NTC has timely filed all required federal, state, local and
foreign returns ("Tax Returns") and estimates for all years and
periods (and portions thereof) and for all jurisdictions (whether
federal, state, local or foreign) in which
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any such Tax Returns or estimates were due. All Tax Returns were true,
correct and complete when filed. NTC has not filed a request for
extension of its Returns that is currently in effect. All federal,
state and foreign Tax Returns filed by NTC for the past three years
have been provided to the Parent. All Taxes, owed by NTC or remitted
by NTC on behalf of a third party, whether or not shown on a Tax
Return, have been paid. Notwithstanding the foregoing, with respect to
the payment of Taxes owed or remitted by NTC on behalf of a third
party in any taxing jurisdiction other than a state or the U.S.
federal government, NTC represents only that to its knowledge, after
reasonable investigation by qualified advisors of all reasonably
available information, all Taxes owed by NTC or remitted by NTC on
behalf of a third party have been paid.
(ii) NTC has never been a member of any consolidated, combined or
unitary group for federal, state, local or foreign Tax purposes.
(iii) NTC is not a party to any joint venture, partnership or
other arrangement that could be treated as a partnership for federal
income Tax purposes.
(iv) NTC has (a) withheld all required amounts from its
employees, agents, contractors and nonresidents and remitted such
amounts to the proper agencies; (b) paid all employer contributions
and premiums; and (c) filed all federal, state, local and foreign
Returns and reports with respect to employee income Tax withholding,
social security unemployment Taxes and premiums, all in compliance
with the withholding Tax provisions of Code as in effect for the
applicable year and other applicable federal, state, local or foreign
laws.
(v) NTC has not executed or filed with any taxing authority
(whether federal, state, local or foreign) any agreement or other
document extending or having the effect of extending the period for
assessment, reassessment or collection of any Taxes past the Effective
Date, and no power of attorney granted by NTC with respect to any
Taxes will be in force following the Closing.
(vi) No federal, state, local or foreign Tax audits or other
administrative proceedings, discussions or court proceedings are
presently pending with regard to any Taxes or Tax Returns of NTC.
(vii) NTC has not entered into any agreement with any taxing
authority relating to Taxes which affects any taxable year ending
after the Effective Date.
(viii) NTC has not agreed to and it is not required to make any
adjustment by reason of a change in accounting methods that affects
any taxable year ending after the Effective Date. Neither the IRS nor
any other agency has proposed any such adjustment or change in
accounting methods that affects any taxable year ending after the
Effective Date. NTC has no application pending
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with any taxing authority requesting permission for any changes in
accounting methods that relate to its business or operations and that
affects any taxable year ending after the Effective Date.
(ix) NTC is not a party to any Tax sharing agreement or similar
arrangement for the sharing of Tax liabilities or benefits effective
for any year (whether current year, a future year or a past year) that
will have any effect after the Closing.
(x) NTC is not an investment company within the meaning of Code
section 351(e).
(xi) There is no contract, agreement, plan or arrangement
covering any employee or former employee of NTC that, individually or
collectively, could give rise to the payment by NTC after the
Effective Date of any amount that would not be deductible by reason of
Code section 280G.
(xii) No asset of NTC is Tax-exempt use property under Code
section 168(h).
(xiii) No portion of the cost of any asset of NTC has been
financed directly or indirectly from the proceeds of any Tax-exempt
state or local government obligation described in Code section 103(a).
(xiv) None of the assets of NTC is property that NTC is required
to treat as being owned by any other person pursuant to the safe
harbor lease provision of former Code section 168(f)(8).
(xv) Except as set forth on Schedule 3.23, NTC does not have and
has not had a permanent establishment in any foreign country and does
not and has not engaged in a trade or business in any foreign country.
(xvi) In the past five years, NTC has not been a party to a
transaction that has been reported as a reorganization within the
meaning of Code section 368 or distributed a corporation (or been
distributed by a corporation) in a transaction that has been reported
to qualify under Code section 355.
(b) For purposes of this Section 3.23, the term "NTC" shall be deemed
to include any predecessor to NTC and any person or entity from which NTC
incurs a liability for Taxes as a transferee, joint and severally, or by
contract.
(c) There is no contract, agreement, plan or arrangement to which NTC
or any Subsidiary of NTC is a party, including, without limitation, the
provisions of this Agreement, covering any employee or former employee of
NTC or any Subsidiary,
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which, individually or collectively, could give rise to the payment of any
amount that would not be deductible pursuant to Sections 280G or 162(m) of
the Code.
3.24. ABSENCE OF CHANGES. Since the Balance Sheet Date, except as set forth
on Schedule 3.24, or as contemplated by this Agreement, there has not been with
respect to NTC:
(a) any event having a Material Adverse Effect on the business,
operations, properties, assets, rights, prospects, liabilities,
Authorizations or condition (financial or otherwise) of NTC or NTC's
relations with its customers, agents, employees or creditors;
(b) any damage, destruction or loss (whether or not covered by
insurance) materially and adversely affecting the properties or business of
NTC;
(c) any change in the authorized capital of NTC or its outstanding
securities or any change in its ownership interests or any grant of any
subscriptions, options, warrants, calls, conversion rights or commitments;
(d) any declaration or payment of any dividend or distribution in
respect of NTC's capital stock or any direct or indirect purchase, or
redemption or other acquisition or retirement of any of the capital stock
of NTC;
(e) any increase in the compensation, bonus, sales commissions or fees
payable or to become payable by NTC to any of its directors, officers,
employees, consultants or agents or to NTC, except for ordinary and
customary bonuses and salary increases for employees (which are other than
officers, directors, consultants or agents) in accordance with past
practice and reflected in the books and records of NTC and except as
required pursuant to any employment agreement in existence on the date
hereof;
(f) any work interruptions, labor grievances or claims filed;
(g) any sale or transfer, or any agreement to sell or transfer, any
material assets, property or rights of NTC to any person or entity,
including NTC or Affiliates of NTC or NTC (other than the sales of
inventory in the ordinary course of business);
(h) any new or renegotiated indebtedness or any cancellation, or
agreement to cancel, any indebtedness or other obligation owing to NTC,
including any indebtedness or obligation of NTC or Affiliates of NTC or
NTC, other than the negotiation and adjustment of bills made by NTC in the
course of good faith disputes with customers in the ordinary course of
business and in a manner consistent with past practice;
(i) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets, property
or rights of NTC or requiring consent of any party to the transfer and
assignment of any such assets, property or rights;
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(j) any purchase or acquisition of, or agreement, plan or arrangement
to purchase or acquire, any property, rights or assets outside of the
ordinary course of NTC's business;
(k) any waiver of any material rights or claims of NTC, other than the
negotiation and adjustment of bills made by NTC in the course of good faith
disputes with customers in the ordinary course of business and in a manner
consistent with past practice;
(l) any amendment or termination (other than by expiration at the end
of its term) of any material contract, agreement, lease, license, permit or
other right to which NTC is a party, other than amendments of customer
agreements in the ordinary course of business;
(m) any transaction or conduct by NTC outside the ordinary course of
its business;
(n) any cancellation or termination of a material contract with a
customer or client prior to the scheduled termination date;
(o) any changes in accounting methods or practices (including, without
limitation, any change in depreciation or amortization methods or rates);
or
(p) any other distribution of property or assets by NTC other than in
the ordinary course of business.
3.25. DEPOSIT ACCOUNTS; POWERS OF ATTORNEY. Set forth on Schedule 3.25 with
respect to NTC is (a) the name of each financial institution in which NTC has
accounts or safe deposit boxes, (b) the names in which the accounts or boxes are
held, (c) the type of account and account number, and (d) the name of each
person or entity authorized to draw thereon or have access thereto. Schedule
3.25 also sets forth the name of each person or entity holding a general or
special power of attorney from or otherwise binding upon NTC and a description
of the terms of such power.
3.26. RELATIONS WITH GOVERNMENTS. Neither NTC nor any Subsidiary has made,
offered or agreed to offer anything of value to any governmental official,
political party or candidate for government office in violation of any law,
statute, ordinance, rule or regulation, nor has NTC or any Subsidiary otherwise
taken any action which would cause NTC to be in violation of the Foreign Corrupt
Practices Act of 1977, as amended, or any law of similar effect.
3.27. INTELLECTUAL PROPERTY. Attached hereto as Schedule 3.27 is a correct
list of all Proprietary Rights used in or necessary to the business of NTC or
any Subsidiary as now being conducted (other than for off-the-shelf software
programs that have not been customized for use by NTC or any Subsidiary). Except
as set forth in Schedule 3.27, NTC or any Subsidiary owns or has the right to
use all Proprietary Rights necessary to the conduct of its business as presently
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conducted and as necessary to develop NTC's iRoam products and services as such
products and services are currently anticipated to be developed. With respect to
such Proprietary Rights indicated in Schedule 3.27 and except as indicated in
such schedule, (a) NTC or any Subsidiary owns all right, title, and interest in
and to or a valid and enforceable license or waiver to use all of such
Proprietary Rights, (b) there are no outstanding notices or claims (written or
oral) received by NTC or any Subsidiary asserting the infringement by, or
invalidity, abuse, misuse, or unenforceability of, any of such Proprietary
Rights by the NTC or any Subsidiary, and, to NTC's or any Subsidiary's
knowledge, there are no grounds for the same, and (c) all such Proprietary
Rights will be owned or available for use by NTC or any Subsidiary on identical
terms and conditions immediately subsequent to the Effective Time. Except as set
forth on Schedule 3.27, the conduct of NTC's or any Subsidiary's business has
not and does not, to the knowledge of NTC after a reasonable investigation by
qualified advisors, infringe any rights of others. Except as set forth on
Schedule 3.27, all of the patents, trademarks (including service marks and
logos) and copyrights owned by NTC or any Subsidiary have been duly registered
in, filed in or issued by the United States Patent and Trademark Office or
Register of Copyrights or the corresponding offices of other countries as
identified on Schedule 3.27. and have been properly maintained and renewed,
consistent with commercially reasonable business practices, in accordance with
all applicable provisions of law and administrative regulations in the United
States and each such country, except in those instances set forth in Schedule
3.27 where registration applications are pending in either such Office or
Register. The term "Proprietary Rights" means any patents, patent applications,
patent disclosures and inventions as well as any reissues, continuations,
continuations-in-part, divisions, extensions or reexaminations thereof; any
material trademarks, service marks, trade dress, logos, trade names, service
names, brand names and corporate names, together with all goodwill associated
therewith, whether or not registered; copyrights and copyrightable works; mask
works; trade secrets and confidential information; computer software, including
source code and object code; all other proprietary rights; and all copies and
tangible embodiments of the foregoing (in whatever form or medium); all
registrations, applications for registration and renewals for each of the
foregoing; and all know-how, in each of the foregoing cases wherever such rights
exist throughout the world, including the right to recover for past
infringement. NTC and any Subsidiary have taken reasonable security measures to
maintain the confidentiality of and to protect the Proprietary Rights. Each
engineer, programmer, consultant and officer of NTC or any Subsidiary has
executed a proprietary information and inventions agreement substantially in the
form provided to Parent. After the Effective Time, all patents, patent
applications or other Proprietary Rights used or useful in the business of NTC
or any Subsidiary and held by any Affiliate shall be unimpaired as a result of
the Merger.
3.28. RELATED PARTY AGREEMENTS. Except as set forth on Schedule 3.28, NTC
is not a party to or otherwise bound by any agreement with NTC or any Affiliate
of NTC.
3.29. STATE TAKEOVER STATUTES. The provisions of Section 13.03 of the TBCA
will not prohibit the consummation of the Merger or the transactions
contemplated hereby, and will not apply to, restrict, affect or impair Parent's
operation of NTC after the Effective Time.
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3.30. CORRECT RECORDS. The financial records, ledgers, account books,
minute books, stock certificate books, stock registers and other corporate
records of NTC and each Subsidiary are current, correct and complete in all
material respects.
3.31. ACCOUNTING MATTERS. Neither NTC, nor, to the knowledge of NTC, any of
its Affiliates, has taken or agreed to take any action that would prevent the
accounting for the transactions contemplated by this Agreement as a pooling of
interests.
3.32. CUSTOMER/SUPPLIER RELATIONSHIPS. NTC reasonably believes its
relationship with its customers and suppliers is good. NTC has received no
notice of any intent or threat to terminate or modify any material customer or
supplier relationship and has no reason to believe that any such event is
imminent or pending. Since December 31, 1999, there have been no terminations,
cancellations or adverse change in any customer or supplier relationship which
individually or in the aggregate would have a Material Adverse Effect on NTC.
3.33. DISCLOSURE. No representation or warranty of NTC in this Agreement or
in any certificate or agreement furnished or to be furnished by NTC or on behalf
of NTC contains, or will contain, an untrue statement of a material fact with
respect to NTC or omits to state a material fact necessary to make the
statements therein with respect to NTC, in light of the circumstances under
which they were made, not misleading. True, correct and complete copies of each
document or agreement listed or described on the NTC Disclosure Schedules have
been delivered or will be delivered to the Parent as of the Closing and there
are no amendments or modifications thereto, except as expressly noted in the NTC
Disclosure Schedules on which such agreement or document is referenced.
3.34. INFORMATION STATEMENT. None of the information provided by NTC for
inclusion in the Information Statement, at the date it was given to the NTC
Stockholders, will contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND MERGER SUB
Except as set forth in the Parent Disclosure Schedule delivered by Parent
to NTC prior to the execution of this Agreement (the "Parent Disclosure
Schedule") (each schedule qualifies the correspondingly numbered representation
and warranty or covenant to the extent specified therein) and dated as of the
date hereof, on the date hereof and as of the Effective Time as though made at
the Effective Time, Parent represents and warrants to NTC as follows:
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4.1. ORGANIZATION, STANDING AND POWER. Parent is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization, has all requisite power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted and is duly qualified and in good standing to do business
in each jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification necessary other than in such
jurisdictions where the failure so to qualify or to be in good standing would
not, either individually or in the aggregate, have a Material Adverse Effect on
Parent.
4.2. AUTHORITY; NO CONFLICTS; CONSENTS.
(a) Parent has all requisite corporate power and authority to enter
into this Agreement. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Parent. This
Agreement has been duly executed and delivered by Parent and constitutes a
valid and binding agreement of Parent, enforceable against it in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and similar laws relating to or
affecting creditors generally, by general equity principles (regardless of
whether such enforceability is considered in a proceeding in equity or at
law).
(b) Except as set forth on Schedule 4.2, the execution and delivery of
this Agreement does not or will not, as the case may be, and the
consummation of the Merger will not, conflict with, or result in a
Violation pursuant to: (A) any provision of the certificate of
incorporation or by-laws of Parent, (B) except as would not have a Material
Adverse Effect on Parent and, subject to obtaining or making the consents,
approvals, orders, authorizations, registrations, declarations and filings
referred to in paragraph (ii) below, any loan or credit agreement, note,
mortgage, bond, indenture, lease, benefit plan or other agreement,
obligation, instrument, permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to
Parent or any Subsidiary of Parent or their respective properties or
assets.
(c) Except as set forth on Schedule 4.2, no consent, approval, order
or authorization of, or registration, declaration or filing with, any
Governmental Entity or any other person is required by or with respect to
Parent in connection with the execution and delivery of this Agreement by
Parent or the consummation of the Merger, except for (i) any filing
required under (A) the HSR Act, (B) the TBCA, (C) any state Blue Sky Laws,
(D) the Securities Act, or (E) the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and (ii) such consents, approvals, orders,
authorizations, registrations, declarations and filings the failure of
which to make or obtain would not have a Material Adverse Effect on Parent.
4.3. SEC DOCUMENTS; PARENT FINANCIAL STATEMENTS. Parent has furnished NTC
with a true and complete copy of all of its filings with the SEC (the "SEC
Documents"). As of their respective filing dates, the SEC Documents complied in
all material respects with the
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requirements of the Securities Act and the Exchange Act, as applicable, and none
of the SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances in which they
were made, not misleading, except to the extent corrected by documents
subsequently filed with the SEC. The SEC Documents contain an audited
consolidated balance sheet of Parent as of December 31, 1999 (the "Parent
Balance Sheet") and the related audited consolidated statements of income and
cash flow for the year then ended (the "Parent Financials"). The Parent
Financials have been prepared in accordance with GAAP applied on a basis
consistent throughout the periods indicated and consistent with each other. The
Parent Financials present fairly the consolidated financial condition and
operating results and cash flows of Parent and its subsidiaries as of the dates
and during the periods indicated therein. Since the date of the Parent Balance
Sheet and until the date of this Agreement, there has not occurred any material
adverse change in the business, assets or condition (financial or otherwise) of
Parent and its subsidiaries, taken as a whole.
4.4. BROKERS OR FINDERS. No agent, broker, investment banker, financial
advisor or other firm or Person is or will be entitled to any broker's or
finder's fee or any other similar commission or fee in connection with any of
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Parent, except Bancboston Robertson Stephens, whose fees and
expenses will be paid by Parent in accordance with Parent's agreement with such
firm based upon arrangements made by or on behalf of Parent and previously
disclosed to NTC.
4.5. MERGER SUB ORGANIZATION AND CORPORATE POWER. Merger Sub is a
corporation duly incorporated, validly existing and in good standing under the
laws of Texas. Merger Sub is a direct wholly-owned subsidiary of Parent.
4.6. MERGER SUB CORPORATE AUTHORIZATION. Merger Sub has all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance by
Merger Sub of this Agreement and the consummation by Merger Sub of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Merger Sub. This Agreement has been duly
executed and delivered by Merger Sub and constitutes a valid and binding
agreement of Merger Sub, enforceable against it in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting
creditors generally, by general equity principles (regardless or whether such
enforceability is considered in a proceeding in equity or at law) or by an
implied covenant of good faith and fair dealing.
4.7. MERGER SUB NON-CONTRAVENTION. The execution, delivery and performance
by Merger Sub of this Agreement and the consummation by Merger Sub of the
transactions contemplated hereby do not and will not contravene or conflict with
the certificate of incorporation or by-laws of Merger Sub.
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4.8. INFORMATION STATEMENT. None of the information provided by Parent for
inclusion in the Information Statement, at the date it was given to of the NTC
Stockholders, will contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading.
4.9. DISCLOSURE. No representations or warranty by the Parent or Merger Sub
in this Agreement, and no exhibit, document, statement, certificate or schedule
furnished or to be furnished to NTC pursuant hereto, or in connection with the
transactions contemplated hereby, contains or will contain any untrue statement
of a material fact, or omits or will omit to state a material fact necessary to
make the statements or facts contained herein or therein not misleading or
necessary to provide the Company with adequate or complete information as to the
Parent and its subsidiaries and their affairs.
4.10. LITIGATION. There is no claim, legal action, suit, arbitration,
governmental investigation or other legal or administrative proceeding,
including any bankruptcy proceedings, nor any order, decree or judgment or
progress, pending, in effect, or to the knowledge of Parent, threatened against
or relating to Parent which would affect the consummation of the transactions
contemplated by this Agreement, or have a Material Adverse Effect on Parent.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1. COVENANTS OF NTC. During the period from the date of this Agreement
and continuing until the Effective Time, NTC agrees as to itself and its
Subsidiaries that (except as expressly contemplated or permitted by this
Agreement or to the extent that Parent shall otherwise consent in writing):
(a) Ordinary Course.
(i) NTC and its Subsidiaries shall carry on their respective
businesses in the usual, regular and ordinary course in all material
respects, in substantially the same manner as heretofore conducted,
and shall use all reasonable efforts to preserve intact their present
lines of business, maintain their rights and franchises and preserve
their relationships with customers, suppliers and others having
business dealings with them to the end that their ongoing businesses
shall not be impaired in any material respect at the Effective Time.
(ii) NTC shall not, and shall not permit any of its Subsidiaries
to, (A) enter into any new material line of business or (B) incur or
commit to any capital expenditures other than those set forth on
Schedule 5.1.
(iii) Except in the ordinary course of business consistent with
past practice and in accordance with the NTC budget for the year 2000
provided to
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Parent, NTC shall not change the pricing on any of its products or services
without the written consent of Parent.
(b) Product Development. NTC shall continue to use commercially
reasonable efforts to develop, in accordance with existing plans or
contract, any new products or services or modifications to existing
products or services, including but not limited to the iRoam wireless
product.
(c) Dividends; Changes in Share Capital. NTC shall not, and shall not
permit any of its Subsidiaries to, and shall not propose to, (i) declare or
pay any dividends on or make other distributions in respect of any of its
capital stock, (ii) split, combine or reclassify any of its capital stock
or issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for, shares of its capital stock,
or (iii) repurchase, redeem or otherwise acquire any shares of its capital
stock or any securities convertible into or exercisable for any shares of
its capital stock.
(d) Issuance of Securities. NTC shall not, and shall not permit any of
its Subsidiaries to, issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock of any
class, any NTC Voting Debt or any securities convertible into or
exercisable for, or any rights, warrants or options to acquire, any such
shares or NTC Voting Debt, or enter into any agreement with respect to any
of the foregoing, other than (i) the issuance of NTC Capital Stock upon the
exercise of stock options or in connection with other stock-based benefits
plans outstanding on the date hereof in accordance with their present
terms, or options issued to new employees after the date hereof which shall
be subject to normal vesting schedules and shall be for no more than 5,000
shares of NTC Common Stock to any individual and 20,000 shares of NTC
Common Stock in the aggregate, (ii) issuances by a wholly owned Subsidiary
of NTC of capital stock to such Subsidiary's parent, (iii) issuances in
accordance with the NTC Warrants.
(e) Governing Documents. Except as contemplated by this Agreement, NTC
and its Subsidiaries shall not amend or propose to amend their respective
certificates of incorporation, by-laws or other governing documents.
(f) No Acquisitions. NTC shall not, and shall not permit any of its
Subsidiaries to, acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial equity interest in or a substantial
portion of the assets of, or by any other manner, any business or any
corporation, partnership, association or other business organization or
division thereof or otherwise acquire or agree to acquire any assets (other
than the acquisition of assets used in the operations of the business of
NTC and its Subsidiaries in the ordinary course).
(g) No Dispositions. NTC shall not, and shall not permit any
Subsidiary of NTC to, sell, lease, encumber or otherwise dispose of, or
agree to sell, lease, encumber or
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otherwise dispose of, any of its assets (including capital stock of
Subsidiaries of NTC) which are material, individually or in the aggregate,
to NTC.
(h) Indebtedness. NTC shall not, and shall not permit any of its
Subsidiaries to, (i) make any loans, advances or capital contributions to,
or investments in, any other Person, other than by NTC or a Subsidiary of
NTC to or in NTC or any Subsidiary of NTC or (ii) pay, discharge or satisfy
any claims, liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than trade indebtedness,
payments, discharges or satisfactions incurred or committed to in the
ordinary course of business consistent with past practice and borrowings or
paydowns consistent with past practice under NTC's existing credit
facilities.
(i) Tax-Free Qualification. NTC shall not, and shall not permit any of
its Subsidiaries to, take any action that would prevent or impede the
Merger from qualifying as a reorganization under Section 368 of the Code.
(j) Severance Pay. Except as contemplated by this Agreement, NTC shall
not grant any severance or termination pay (i) to any director or officer
or (ii) to any other employee except (A) payments made pursuant to written
agreements outstanding on the date hereof and disclosed in the NTC
Disclosure Schedules and (B) the payment of no more than two weeks
severance to employees, in lieu of notice of termination, who leave prior
to the Closing Date;
(k) Employees; Benefit Plans. NTC shall not (i) adopt any employee
benefit plan, (ii) enter into any employment contract, pay or agree to pay
any special bonus or special remuneration to any director or employee, or
increase the salaries or wage rates of its employees, except for bonuses to
existing employees in connection with anniversary and promotions consistent
with past practice and in accordance with the NTC budget for the year 2000
as provided to Parent; or (iii) hire or employ any executive personnel
after the date hereof;
(l) Other Actions. NTC shall not, and shall not permit any of its
Subsidiaries to, take any action that would, or that could reasonably be
expected to, result in, any of the conditions to the Merger set forth in
Article VI not being satisfied.
(m) Accounting Methods; Income Tax Elections. Except as required by a
Governmental Entity, NTC shall not change its methods of accounting in
effect at December 31, 1999, except as required by changes in GAAP as
concurred in by NTC's independent auditors. NTC shall not (i) change its
fiscal year or (ii) make any material Tax election, other than in the
ordinary course of business consistent with past practice, without
consultation with Parent.
(n) Pooling. NTC shall not take any action that would interfere with
Parent's ability to account for the Merger as a pooling of interests.
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5.2. COVENANTS OF PARENT. During the period from the date of this
Agreement and continuing until the Effective Time, Parent agrees as to
itself and its Subsidiaries that (except as expressly contemplated or
permitted by this Agreement or as otherwise indicated on the Parent
Disclosure Schedule or as required by a Governmental Entity of competent
jurisdiction or to the extent that NTC shall otherwise consent in writing):
(a) Ordinary Course. Parent and its Subsidiaries shall carry on
their respective businesses in the usual, regular and ordinary course
in all material respects, in substantially the same manner as
heretofore conducted, and shall use all reasonable efforts to preserve
intact their present lines of business, maintain their rights and
franchises and preserve their relationships with customers, suppliers
and others having business dealings with them to the end that their
ongoing businesses shall not be impaired in any material respect at
the Effective Time;
(b) Governing Documents. Except to the extent required to comply
with their respective obligations hereunder or required by law, Parent
and its material Subsidiaries shall not amend, in the case of
Subsidiaries, in any material respect, or propose to amend their
respective certificates of incorporation, by-laws or other governing
documents.
(c) Tax-Free Qualification. Parent shall not, and shall not
permit any of its Subsidiaries to, take any action that would prevent
or impede the Merger from qualifying as a reorganization under Section
368 of the Code.
(d) Reserve Shares. Parent shall reserve sufficient shares of
Parent Common Stock under its 1997 Equity Incentive Plan to account
for shares which will be issuable under the NTC Options to be
exchanged pursuant to Section 1.8(b).
(e) Other Actions. Parent shall not, and shall not permit any of
its Subsidiaries to, take any action that would, or that could
reasonably be expected to, result in any of the conditions to the
Merger set forth in Article VII not being satisfied.
5.3. CONTROL OF OTHER PARTY'S BUSINESS. Nothing contained in this Agreement
shall give NTC, directly or indirectly, the right to control or direct Parent's
operations prior to the Effective Time. Nothing contained in this Agreement
shall give Parent, directly or indirectly, the right to control or direct NTC's
operations prior to the Effective Time. Prior to the Effective Time, each of NTC
and Parent shall exercise, consistent with the terms and conditions of this
Agreement, complete control and supervision over its respective operations.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1. NTC STOCKHOLDERS MEETING. NTC shall take all action in accordance with
the federal securities laws, the TBCA and NTC's articles of incorporation and
bylaws necessary to either (a) obtain a unanimous written consent of the NTC
Stockholders ("Written Consent") or (b) convene a special meeting of the
Stockholders of NTC entitled to vote (the "NTC
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Stockholders Meeting"), in each case to be held or completed on the earliest
practicable date determined by Parent, subject to the consent of NTC (which
shall not be unreasonably withheld) in each case to consider and vote upon
approval of the Merger, this Agreement and the transactions contemplated hereby.
NTC's Board of Directors, at a meeting duly called and held at which a quorum
was present throughout, has by unanimous vote of the directors resolved to
recommend that the Stockholders of NTC approve this Agreement and the
transactions contemplated hereby (the "Recommendation"). Upon any written
request by Parent, NTC's Board of Directors shall promptly meet to consider
whether to reaffirm its Recommendation that the Stockholders of NTC approve this
Agreement and the transactions contemplated hereby. In the event that the
Recommendation shall at any time be withdrawn, revoked or modified, or NTC's
Board of Directors shall not reaffirm its Recommendation as contemplated hereby
and the stockholders of NTC shall not have approved this Agreement, the
transactions contemplated hereby and the Merger at the NTC Stockholders Meeting,
NTC shall immediately pay to Parent the Parent Fee (as such term is defined in
Section 8.2(b)). NTC shall cooperate with Parent in the preparation of all
materials required to be sent to the Stockholders in connection with the Written
Consent or the NTC Stockholders Meeting, either as required by applicable state
law or under the Securities Act (the "Information Statement") NTC shall use all
reasonable efforts to mail at the earliest practicable date to the Stockholders
the Information Statement, which shall include the Recommendation.
6.2. ACCESS TO INFORMATION.
(a) Upon reasonable notice, NTC shall (and shall cause its
Subsidiaries to) afford to the officers, employees, accountants, counsel,
financial advisors and other representatives of Parent reasonable access
during normal business hours, during the period prior to the Effective
Time, to all its properties, books, contracts, commitments and records and,
during such period, NTC shall (and shall cause its Subsidiaries to) furnish
promptly to Parent (i) a copy of each report, schedule, registration
statement and other document filed, published, announced or received by it
during such period pursuant to the requirements of Federal or state
securities laws, as applicable (other than reports or documents which such
party is not permitted to disclose under applicable law), and (ii)
consistent with its legal obligations, all other information concerning its
business, properties and personnel as such other party may reasonably
request; provided, however, that NTC may restrict the foregoing access to
the extent that (A) a Governmental Entity requires NTC or any of its
Subsidiaries to restrict access to any properties or information reasonably
related to any such contract on the basis of applicable laws and
regulations with respect to national security matters or (B) any law,
treaty, rule or regulation of any Governmental Entity applicable to NTC
requires NTC or its Subsidiaries to restrict access to any properties or
information. The parties will hold any such information which is non-public
in confidence to the extent required by, and in accordance with, the
provisions of the letter dated February 23, 1999 between NTC and Parent
(the "Confidentiality Agreement"). Any investigation by Parent of NTC shall
not affect the representations and warranties of NTC or Parent, as the case
may be.
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(b) Upon reasonable notice, Parent shall provide to NTC such
information as NTC shall reasonably request, subject to any legal
restrictions on Parent with respect to disclosure of such information. NTC
acknowledges that receipt of any non-public material information concerning
the Parent will prevent any person with access to that information from
selling shares of Parent Common Stock until such information is no longer
material or has been made publicly available by the Company.
6.3. REASONABLE EFFORTS.
(a) Subject to the terms and conditions of this Agreement, each party
will use its reasonable efforts to take, or cause to be taken, all actions
and to do, or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations including obtaining all necessary
covenants, approvals necessary to consummate the Merger and the other
transactions contemplated by this Agreement as soon as practicable after
the date hereof. In furtherance and not in limitation of the foregoing,
each party hereto agrees to make, to the extent it has not already done so,
an appropriate filing pursuant to the HSR Act with respect to the
transactions contemplated hereby as promptly as practicable and in any
event within five business days of the date hereof and to supply as
promptly as practicable any additional information and documentary material
that may be requested pursuant to the HSR Act and to take all other actions
necessary to cause the expiration or termination of the applicable waiting
periods under the HSR Act as soon as practicable.
(b) Each of Parent, Merger Sub and NTC shall use its best efforts to
cause the Merger to qualify and will not (both before and after
consummation of the Merger) take any actions which to its knowledge could
reasonably be expected to prevent the Merger from qualifying, as a
reorganization under the provisions of Section 368 of the Code.
6.4. ACQUISITION PROPOSALS. NTC agrees that neither it nor any of its
Subsidiaries nor any of the officers and directors of it or its Subsidiaries
shall, and that it shall direct and use its best efforts to cause its and its
Subsidiaries' employees, agents and representatives (including any investment
banker, attorney or accountant retained by it or any of its Subsidiaries) not
to, directly or indirectly, initiate, solicit, encourage or otherwise facilitate
(including by way of furnishing information) any inquiries or the making of any
proposal or offer with respect to a merger, reorganization, share exchange,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving, or any purchase or sale of all or any
significant portion of the assets or of the equity securities of, it or any of
its Subsidiaries that, in any such case, could reasonably be expected to
interfere with the completion of the Merger or the other transactions
contemplated by this Agreement (any such proposal or offer being hereinafter
referred to as an "Acquisition Proposal"). NTC further agrees that neither it
nor any of its Subsidiaries nor any of the officers and directors of it or its
Subsidiaries shall, and that it shall direct and use its best efforts to cause
its and its Subsidiaries' employees, agents and representatives (including any
investment banker, attorney or accountant retained by it or any of its
Subsidiaries) not to, directly or indirectly, have any discussion with or
provide any
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confidential information or data to any Person relating to an Acquisition
Proposal, or engage in any negotiations concerning an Acquisition Proposal, or
otherwise facilitate any effort or attempt to make or implement an Acquisition
Proposal or accept an Acquisition Proposal. NTC agrees that it will immediately
cease and cause to be terminated any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any
Acquisition Proposal. Notwithstanding the foregoing, NTC and its officers,
directors, advisors and their respective representatives will not be prohibited
from taking any of the actions indicated above in this section to the extent
such action is taken by, or upon the authority of, the NTC Board of Directors in
the exercise of good faith judgment as to its fiduciary duties to the NTC
Stockholders, which judgment is based upon the advice of independent, outside
legal counsel that a failure of the NTC Board of Directors to take such action
would be likely to constitute a breach of its fiduciary duties to the NTC
Stockholders. In addition to the foregoing, if NTC receives, prior to the
Effective Time or the termination of this Agreement, any offer, proposal, or
request relating to any of the above, NTC shall immediately notify Parent
thereof, including information as to the identity of the offer or the party
making any such offer or proposal and the specific terms of such offer or
proposal, as the case may be, and such other information related thereto as
Parent may reasonably request. The parties hereto agree that irreparable damage
would occur in the event that the provisions of this Section 6.4 were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed by the parties that Parent shall be entitled to seek an
injunction or injunctions to prevent breaches of the provisions of this Section
6.4 and to enforce specifically the terms and provisions hereof in any court of
the United States or any state having jurisdiction, this being in addition to
any other remedy to which Parent may be entitled at law or in equity.
6.5. FEES AND EXPENSES. Whether or not the Merger is consummated, all
Expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such Expenses. As used
in this Agreement, "Expenses" includes all out-of-pocket expenses (including,
without limitation, all fees and expenses of counsel, accountants, investment
bankers, experts and consultants to a party hereto 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 and the
transactions contemplated hereby. The Expenses that will be assumed by the
Surviving Corporation after the Closing shall be no greater than as set forth on
Schedule 6.5.
6.6. PUBLIC ANNOUNCEMENTS. Unless otherwise required by law, prior to the
Effective Time, no disclosure (whether or not in response to an inquiry) of the
subject matter of this Agreement shall be made by any party hereto unless
approved by Parent prior to release, provided that such approval shall not be
unreasonably withheld, subject, in the case of Parent, to Parent's obligation to
comply with applicable securities laws and the rules and regulations of the
Nasdaq National Market.
6.7. NOTIFICATION OF CERTAIN MATTERS. NTC shall give prompt notice to
Parent of (i) the occurrence or non-occurrence of any event, the occurrence or
non-occurrence of which is reasonably foreseeable to cause any representation or
warranty of NTC contained in this
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Agreement to be untrue or inaccurate at or prior to the Effective Time in all
material respects and (ii) and failure of NTC to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder in all material respects; provided, however, that the delivery of any
notice pursuant to this Section 6.7 shall not limit or otherwise affect any
remedies available to the party receiving such notice. No disclosure by NTC
pursuant to this Section 6.7, however, shall be deemed to amend or supplement
the NTC Disclosure Schedules or prevent or cure any misrepresentations, breach
of warranty or breach of covenant. Notwithstanding the foregoing, NTC may, not
later than five days prior to Closing, deliver to Parent updated NTC Disclosure
Schedules which may only reflect matters that arise after the date hereof (and
that NTC could not reasonably have known or anticipated as of the date hereof)
and, provided that such updated NTC Disclosure Schedules are acceptable to
Parent in its sole discretion, such updated NTC Disclosure Schedules shall
supersede and replace the NTC Disclosure Schedules delivered by NTC at the
signing of this Agreement.
6.8. AFFILIATE AGREEMENTS. Schedule 6.8 sets forth those persons who, in
NTC's reasonable judgment, are or may be "affiliates" of NTC within the meaning
of Rule 144 (each such person, an "Affiliate") promulgated under the Securities
Act ("Rule 144"). NTC shall provide Parent with such information and documents
as Parent reasonably requests for purposes of reviewing such list. NTC shall
deliver or cause to be delivered to Parent, concurrently with the execution of
this Agreement (and in any case prior to the Closing Date) from each of the
Affiliates of NTC, an executed Affiliate Agreement in the form attached hereto
as Exhibit H, each of which will be in full force and effect as of the Effective
Time. Parent shall be entitled to place appropriate legends on the certificates
evidencing any Parent Common Stock to be received by such Affiliates pursuant to
the terms of this Agreement, and to issue appropriate stop transfer instructions
to the transfer agent for Parent Common Stock, consistent with the terms of such
Affiliate Agreements.
6.9. ADDITIONAL DOCUMENTS AND FURTHER ASSURANCES. Each party hereto, at the
request of another party hereto, shall execute and deliver such other
instruments and do and perform such other acts and things as may be reasonably
necessary or desirable for effecting completely the consummation of this
Agreement and the transactions contemplated hereby.
6.10. POOLING ACCOUNTING. Parent and NTC shall each use their best efforts
to cause the business combination to be effected by the Merger to be accounted
for as a pooling of interests. Each of the Parent and NTC shall use its best
efforts to cause its Affiliates (as defined in Section 6.8) not to take any
action that would adversely affect the ability of Parent to account for the
business combination to be effected by the Merger as a pooling of interests.
6.11. INDEMNIFICATION. After the Effective Time, Parent agrees to indemnify
and hold harmless all current and former directors and officers of NTC to the
same extent of the indemnification rights of such persons existing on the date
hereof as set forth in the current NTC Articles of Incorporation and Bylaws,
from and after the Effective Time, except for liability (i) for any breach of
fiduciary duty of loyalty to NTC, Parent or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of
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law, (iii) for any transaction in which the director or officer derived an
improper personal benefit or (iv) for which indemnification by Parent or the
Surviving Corporation is prohibited by law.
6.12. LISTING APPLICATION. Parent will file a listing application with the
Nasdaq to approve for listing, subject to official notice of issuance, the
shares of Parent Common Stock to be issued in the Merger. Parent shall use its
reasonable efforts to cause the shares of Parent Common Stock to be issued in
the Merger to be approved for listing on the Nasdaq National Market System, as
soon as practicable after the Effective Time.
6.13. EMPLOYEE BENEFITS. As of the Effective Date, Parent or its
subsidiaries shall become the employer of all of the employees of NTC as of the
Effective Date (the "Transferred Employees") and, to the extent one or more of
the NTC employee benefit plans is terminated, shall make available to the
Transferred Employees the corresponding employee benefit plan(s) maintained by
Parent for its employees (the "Parent Plans") in accordance with their terms. To
the extent permitted by the terms of the Parent Plans, Parent will (i) waive all
deductibles, waiting periods and limitations with respect to pre-existing
conditions and other conditions applicable to employees of NTC and its
subsidiaries under the Parent Plans and (ii) grant full past service credit
(including credit for eligibility, benefit accrual and for vesting) to the
Transferred Employees for service with NTC and its affiliates and predecessors
under any and all of the Parent Plans, including but not limited to bonus,
severance, and similar employment policies. Neither this Agreement nor the
consummation of the transactions contemplated by this Agreement will entitle any
employee, including but not limited to, Transferred Employees, to any other
severance benefits nor will it accelerate compensation due any such Transferred
Employee as of the Effective Date. Subject to the foregoing, Parent shall have
the right in the good faith exercise of operations and managerial discretion to
make changes or cause changes to be made after the Effective Date in
compensation, benefits and other terms of employment and to terminate any such
employee.
ARTICLE VII
CONDITIONS PRECEDENT
7.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
obligations of NTC, Parent and Merger Sub to effect the Merger are subject to
the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Stockholder Approval. NTC shall have obtained the Required NTC
Votes in connection with the adoption of this Agreement by the Stockholders
of NTC.
(b) No Injunctions or Restraints, Illegality. No laws shall have been
adopted or promulgated, and no temporary restraining order, preliminary or
permanent injunction or other order issued by a court or other Governmental
Entity of competent jurisdiction shall be in effect, having the effect of
making the Merger illegal or otherwise prohibiting consummation of the
Merger; provided, however, that the provisions of this Section 7.1(b) shall
not be available to any party whose failure to fulfill its obligations
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pursuant to Section 6.3 shall have been the cause of, or shall have
resulted in, such order or injunction.
(c) HSR Act. The waiting period (and any extension thereof) applicable
to the Merger under the HSR Act shall have been terminated or shall have
expired.
(d) Merger. The Merger shall have been declared effective by the
Secretary of State of all necessary jurisdictions.
7.2. ADDITIONAL CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER SUB. The
obligations of Parent and Merger Sub to effect the Merger are subject to the
satisfaction of, or waiver by Parent, on or prior to the Closing Date of the
following conditions:
(a) Representations and Warranties. Each of the representations and
warranties of NTC set forth in this Agreement that is qualified as to
materiality shall have been true and correct on the date of this Agreement,
and each of the representations and warranties of NTC that is not so
qualified shall have been true and correct in all material respects on the
date of this Agreement, and Parent shall have received a certificate of the
chief executive officer and the chief financial officer of NTC to such
effect.
(b) Performance of Obligations of NTC. NTC shall have performed or
complied with all agreements and covenants required to be performed by it
under this Agreement at or prior to the Closing Date that are qualified as
to materiality and shall have performed or complied in all material
respects with all other agreements and covenants required to be performed
by it under this Agreement at or prior to the Closing Date that are not so
qualified as to materiality.
(c) Third Party Consents. Any and all consents, waivers, assignments
and approvals listed on Schedule 3.3 and Schedule 4.2 shall have been
obtained.
(d) Litigation. There shall be no bona fide action, suit, claim or
proceeding of any nature pending, or overtly threatened, against Parent,
Merger Sub or NTC, their respective properties or any of their officers,
directors, arising out of, or in any way connected with, the Merger or the
other transactions contemplated by this Agreement.
(e) Legal Opinion. Parent shall have received a legal opinion from
Hallett & Perrin, P.C., legal counsel to NTC, substantially in the form of
Exhibit D hereto.
(f) Employment Agreements. Designated employees of NTC, as set forth
on Exhibit E, shall have executed and delivered to Parent an Employment
Agreement in the form attached hereto as Exhibit F. Mr. George Lebus shall
have executed an Employment Agreement substantially in the form of Exhibit
M hereto.
(g) No Material Adverse Changes. There shall not have occurred any
Material Adverse Effect with respect to NTC.
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(h) Affiliate Agreements. Each of the persons listed on Schedule 6.8
shall have executed an Affiliate Agreement in substantially the form
attached as Exhibit H.
(i) Voting Agreement. Parent shall have received from each Principal
Stockholder an executed Voting Agreement in substantially the form attached
as Exhibit I.
(j) Pooling. Parent shall be satisfied that the transactions
contemplated hereby do not violate pooling-of-interest accounting under
Accounting Principles Board Opinion No. 16, including receiving such
letters or opinions as Parent deems necessary from Ernst & Young, LLP, and
the NTC Accountants.
(k) Registration Rights Agreement. Parent shall have received from
each Stockholder of NTC a Registration Rights Agreement in substantially
the form of Exhibit J.
(l) Investor Questionnaire. Parent shall have received from each
Stockholder, Preferred Stockholder and each holder of NTC Options and NTC
Warrants, a questionnaire and representation letter in substantially the
form of Exhibits L-1 and L-2 hereto, containing such representations and
warranties as Parent shall deem necessary.
(m) Due Diligence. Parent shall have completed its due diligence
review of NTC, with the results of such review satisfactory to Parent in
its sole discretion;
(n) NTC Warrants. The holders of the NTC Warrant shall have fully
exercised all NTC Warrants in accordance with their terms prior to the
Effective Time or have reached such other agreement, satisfactory to Parent
in its sole discretion, with respect to the disposition of the NTC
Warrants.
(o) Preferred Stock. The holders of the Preferred Stock shall have
entered into an agreement (the "Preferred Stock Agreement"), satisfactory
to Parent in its sole discretion, with respect to the cancellation or
redemption of the Preferred Stock in connection with the Merger and the
receipt of Parent Common Stock therefore, and the requirements and events
set forth in the Preferred Stock Agreement shall have taken place prior to
or as of the Effective Time.
(p) Rule 506 Offering. Counsel for Parent shall have reasonably
determined that the issuance of Parent Common Stock in the Merger shall
comply with all applicable provisions of Rule 506 under the Securities Act.
(q) NTC Option Holders. The holders of all outstanding NTC Options
shall have executed the agreements referenced in Section 1.8(b)(ii).
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(r) Certificate of NTC. Parent shall have been provided with a
certificate executed on behalf of NTC by it's Chief Executive Officer and
its Chief Financial Officer to the effect that, as of the Effective Time:
(i) all representations and warranties made by NTC in this
Agreement are true and correct in all material respects on and as of
the Effective Time as though such representations and warranties were
made on and as of such time; and
(ii) all covenants and obligations of this Agreement to be
performed by NTC on or before such date have been so performed in all
material respects; and
(iii) the condition set forth in Section 7.2(g) has been
satisfied.
(s) Other Documents. Parent shall have received such other documents
as Parent and its counsel deem reasonably necessary in order to complete
the transactions contemplated by this Agreement, including without
limitation officer's and secretary's certificates and good standing
certificates.
7.3. ADDITIONAL CONDITIONS TO OBLIGATIONS OF NTC. The obligations of NTC to
effect the Merger are subject to the satisfaction of, or waiver by NTC, on or
prior to the Closing Date of the following additional conditions:
(a) Representations and Warranties. Each of the representations and
warranties of Parent and Merger Sub set forth in this Agreement that is
qualified as to materiality shall have been true and correct on the date of
this Agreement, and each of the representations and warranties of each of
Parent and Merger Sub that is not so qualified shall have been true and
correct in all material respects on the date of this Agreement, and NTC
shall have received a certificate of the chief executive officer and the
chief financial officer of Parent to such effect.
(b) Performance of Obligations of Parent. Parent shall have performed
or complied with all agreements and covenants required to be performed by
it under this Agreement at or prior to the Closing Date that are qualified
as to materiality and shall have performed or complied in all material
respects with all agreements and covenants required to be performed by it
under this Agreement at or prior to the Closing Date that are not so
qualified as to materiality, and NTC shall have received a certificate of
the chief executive officer and the chief financial officer of Parent to
such effect.
(c) No Material Adverse Changes. There shall not have occurred a
Material Adverse Effect with respect to Parent.
(d) Legal Opinion. NTC shall have received a legal opinion from
Blackwell Sanders Peper Martin LLP, legal counsel to Parent, substantially
in the form of Exhibit K hereto.
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(e) Tax Opinion. NTC shall have received a written opinion from
Hallett & Perrin, P.C., its tax counsel, substantially in the form of
Exhibit C, to the effect that the Merger will constitute a reorganization
within the meaning of Section 368(a) of the Code and such opinion shall not
have been withdrawn.
(f) Registration Rights Agreement. Parent shall have executed a
Registration Rights Agreement in substantially the form of Exhibit J.
(g) Pooling. NTC shall be satisfied that the transactions contemplated
hereby do not violate pooling-of-interest accounting under Accounting
Principles Board Opinion No. 16, including receiving such letters or
opinions as NTC deems necessary from the NTC Accountants.
(h) Employment Agreement. Parent and Mr. George Lebus shall have
executed an Employment Agreement substantially in the form of Exhibit M
hereto.
(i) Certificate of Parent. NTC shall have been provided with a
certificate executed on behalf of Parent by a President or Vice President
to the effect that, as of the Effective Time:
(i) all representations and warranties made by Parent and Merger
Sub in this Agreement are true and correct in all material respects on
and as of the Effective Time as though such representations and
warranties were made on and as of such time;
(ii) all covenants and obligations of this Agreement to be
performed by Parent on or before such date have been so performed in
all material respects; and
(iii) the condition set forth in Section 7.3(c) has been
satisfied.
(j) Other Documents. NTC shall have received such other documents as
NTC and its counsel deem reasonably necessary in order to complete the
transactions contemplated by this Agreement, including without limitation
officer's and secretary's certificates and good standing certificates.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1. TERMINATION. This Agreement may be terminated at any time prior to the
Effective Time, by action taken or authorized by the Board of Directors of the
terminating party or parties, and except as provided below, whether before or
after approval of the matters presented in connection with the Merger by the
stockholders of NTC:
(a) By mutual written consent of Parent and NTC;
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(b) By either NTC or Parent if the Effective Time shall not have
occurred on or before July 31, 2000 (the "Termination Date"); provided,
however, that the right to terminate this Agreement under this Section
8.1(b) shall not be available to any party whose failure to fulfill any
obligation under this Agreement has to any extent been the cause of, or
resulted in, the failure of the Effective Time to occur on or before the
Termination Date;
(c) By Parent if there shall be any action taken, or any statute,
rule, regulation or order enacted, promulgated or issued or deemed
applicable to the Merger by any Governmental Entity, which would: (i)
prohibit Parent's or Sub's ownership or operation of any portion of the
business of NTC or (ii) compel Parent or NTC to dispose of or hold separate
all or a portion of the business or assets of NTC or Parent as a result of
the Merger;
(d) By Parent if it is not in material breach of its obligations under
this Agreement and there has been a material breach of any representation,
warranty, covenant or agreement contained in this Agreement on the part of
NTC and such breach has not been cured within ten (10) calendar days after
written notice to NTC; provided, however, that, no cure period shall be
available for a breach which by its nature cannot be cured;
(e) By NTC if it is not in material breach of its obligations under
this Agreement and there has been a material breach of any representation,
warranty, covenant or agreement contained in this Agreement on the part of
Parent and such breach has not been cured within ten (10) calendar days
after written notice to Parent; provided, however, that no cure period
shall be required for a breach which by its nature cannot be cured;
(f) By either NTC or Parent if the approval by the stockholders of NTC
required for the consummation of the Merger shall not have been obtained by
reason of the failure to obtain the Required NTC Vote before July 31, 2000;
(g) By Parent if the Board of Directors of NTC, prior to the NTC
Stockholders Meeting shall withdraw or modify in any adverse manner its
Recommendation pursuant to Section 6.1; or
(h) By NTC at any time prior to the NTC Stockholders Meeting, upon two
Business Days' prior notice to Parent, if the Board of Directors of NTC
shall have determined in good faith based on the advice of outside counsel
that failure to do so would constitute a breach of its fiduciary duties
under applicable law.
Notwithstanding anything else contained in this Agreement, the right to
terminate this Agreement under this Section 8.1 shall not be available to any
party (a) that is in material breach of its obligations hereunder or (b) whose
failure to fulfill its obligations or to comply with its
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covenants under this Agreement has been the cause of, or resulted in, the
failure to satisfy any condition to the obligations of either party hereunder.
8.2. EFFECT OF TERMINATION.
(a) In the event of termination of this Agreement by either NTC or
Parent as provided in Section 8.1, this Agreement shall forthwith become
void and there shall be no liability or obligation on the part of Parent or
NTC or their respective officers or directors except with respect to
Section 3.6, Section 4.4, the second sentence of Section 6.2, Section 6.5
and this Section 8.2.
(b) Parent and NTC agree that if (i) NTC shall terminate this
Agreement pursuant to Section 8.1(h), (ii) NTC or Parent shall terminate
this Agreement pursuant to Section 8.1(f), (iii) Parent shall terminate
this Agreement pursuant to Section 8.1(d) and the impact of the event which
caused the breach specified therein is reasonably likely to have a Material
Adverse Effect on NTC or (iv) Parent shall terminate this Agreement
pursuant to Section 8.1(g), then NTC shall pay to Parent an amount equal to
$1,000,000 million (the "Parent Fee").
(c) The Parent Fee required to be paid pursuant to Section 8.2(b)
shall be made prior to, and shall be a pre-condition to the effectiveness
of termination of this Agreement pursuant to such Section. All payments
under this Section 8.2 shall be made by wire transfer of immediately
available funds to an account designated by the party entitled to receive
payment.
8.3. AMENDMENT. This Agreement may be amended by the parties hereto, by
action taken or authorized by their respective Boards of Directors, at any time
before or after approval of the matters presented in connection with the Merger
by the stockholders of NTC, but, after any such approval, no amendment shall be
made which by law requires further approval by such stockholders without such
further approval. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
8.4. EXTENSION; WAIVER. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party. The failure of
any party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of those rights.
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ARTICLE IX
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
9.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the representations
and warranties in this Agreement shall survive the Merger and continue until the
earlier of the date which is the date of the auditor's report for the first
audit of Parent's financial statements after the Closing Date or the date which
is one year following the Closing Date (the "Expiration Date").
9.2. ESCROW ARRANGEMENTS.
(a) General Escrow Fund. As security for the indemnity provided for in
this Section 9.2 and by virtue of this Agreement, the Stockholders, holders
of Preferred Stock (the "Preferred Stockholders") and holders of NTC
Options vested as of the Closing Date, as set forth on Exhibit A, will be
deemed to have received and deposited with the Escrow Agent (as defined
below) the General Escrow Amount (plus any additional shares as may be
issued upon any stock split, stock dividend or recapitalization effected by
Parent after the Effective Time with respect to the General Escrow Amount)
without any act of any Stockholder, Preferred Stockholder and holders of
NTC Options vested as of the Closing Date, as set forth on Exhibit A. As
soon as practicable after the Effective Time, the General Escrow Amount,
without any act of any Stockholder, or holder of Preferred Stock, will be
deposited with an institution mutually acceptable to Parent and NTC in
their reasonable discretion as Escrow Agent which shall execute a joinder
hereto (the "Escrow Agent"), such deposit to constitute an escrow fund
------------- (the "General Escrow Fund") to be governed by the terms set
forth --------------------- herein. The Escrow Agent may execute this
Agreement following the date hereof, and prior to the Effective Time, and
such later execution, if so executed after the date hereof, shall not
affect the binding nature of this Agreement as of the date hereof between
the other signatories hereto. The portion of the General Escrow Amount
contributed on behalf of each Stockholder, Preferred Stockholder and
holders of NTC Options vested as of the Closing Date, as set forth on
Exhibit A, shall be in proportion to the aggregate Parent Common Stock
which such person would otherwise be entitled under Section 1.8 or the
Preferred Stock Agreement. The General Escrow Amount shall be used to
indemnify and hold Parent and its officers, directors and affiliates
(including the Surviving Corporation) (the "Indemnified Parties") harmless
against all ------------------- Damages incurred by any Indemnified Parties
directly or indirectly as a result of (i) any inaccuracy or breach of a
representation or warranty of NTC contained in this Agreement or any
Ancillary Agreement or NTC's failure to perform or comply prior to the
Effective Time with any covenant contained in this Agreement, (ii) any
legal, accounting, financial advisor, investment banker or other
third-party professional fees, costs, commissions or expenses incurred by
NTC in connection with the Merger, this Agreement, or the transactions
contemplated hereby, which in the aggregate exceed that set forth on
Schedule 6.5, or (iii) up to a maximum of $1,000,000 (the
"Proprietary Rights Amount"), all amounts paid, payable or incurred in
connection with or related to any infringement or alleged infringement of
the rights of any third party
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related to the ownership, license or use of any Proprietary Rights by NTC
or its affiliates, relating to any settlement agreement, license, royalty
or any other agreement or arrangement, including, without limitation,
amounts paid or payable, without regard as to whether such amounts relate
to infringements alleged to have occurred prior to the Closing or are paid
or payable to secure access to such Proprietary Rights after the Closing.
No Stockholder or Preferred Stockholder shall have any right to
contribution from NTC for any claim made by Parent after the Effective
Time. For purposes of determining the existence of any misrepresentation,
breach of warranty, or nonfulfillment of any covenant or agreement, or
calculating the amount of any Damages incurred in connection with any such
misrepresentation, breach of warranty, or nonfulfillment of any covenant or
agreement, any and all references to material or Material Adverse Effect
(or other correlative terms) shall be disregarded. As used herein,
"Damages" shall mean any and all damages, losses, settlement payments,
expenses (including attorneys' fees, interest and penalties), obligations,
liabilities, claims, actions or causes of action and encumbrances suffered,
sustained, incurred or required to be paid by any Indemnified Party, net of
any resulting income tax benefits or insurance recoveries to Parent;
provided, however, that Parent shall not be entitled to make a claim under
Section 9.2(a)(i) unless and until it has incurred Damages of a cumulative
aggregate of $250,000 (the "Basket") and shall thereafter be entitled to
make a claim only for amounts incurred in excess of such Basket. In no
event shall Damages suffered under Section 9.2(a)(ii) or (iii) be subject
to the Basket.
(b) [Reserved].
(c) Escrow Period; Distribution upon Termination of Escrow Period.
Subject to the following requirements, the General Escrow Fund shall be in
existence immediately following the Effective Time and shall terminate on
the Expiration Date (such period being the "General Escrow Period");
provided, however, that the General Escrow Period shall not terminate (i)
until one (1) year after the Closing Date (the "Proprietary Rights Period")
with respect to the matters described under 9.2(a)(iii), (ii) with respect
to any amount up to the Proprietary Rights Amount which, in the reasonable
judgment of Parent, subject to the objection of the Stockholder
Representative (as defined in Section 9.3 below), is necessary to satisfy
any unsatisfied claims with respect to matters described under 9.2(a)(iii),
specified in any Officer's Certificate delivered to the Escrow Agent prior
to termination of such Proprietary Rights Period with respect to facts and
circumstances existing prior to the termination of such Proprietary Rights
Period, or is specified in a
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certificate of an officer of Parent stating that a third party has asserted
a claim for which Parent reasonably anticipates it will be entitled to
indemnification under 9.2(a)(iii), or (iii) for all other matters under
9.2(a), with respect to any amount which, in the reasonable judgment of
Parent, subject to the objection of the Stockholder Representative (as
defined in Section 9.3 below), is necessary to satisfy any unsatisfied
claims specified in any Officer's Certificate delivered to the Escrow Agent
prior to termination of such General Escrow Period with respect to facts
and circumstances existing prior to the termination of such General Escrow
Period, or is specified in a certificate of an officer of Parent stating
that a third party has asserted a claim for which Parent reasonably
anticipates it will be entitled to indemnification hereunder. As soon as
all claims specified under (i), (ii) or (iii) above have been resolved, the
Escrow Agent shall deliver to the Stockholders and Preferred Stockholders
the portion of the General Escrow Fund not required to satisfy any Damages
which have been specified as stated under (i), (ii) or (iii). Deliveries of
General Escrow Amounts to the Stockholders or Preferred Stockholders
pursuant to this Section 9.2(c) shall be made in proportion to their
respective original contributions to the General Escrow Fund.
(d) Protection of General Escrow Fund.
(i) The Escrow Agent shall hold and safeguard the General Escrow
Fund during the General Escrow Period or any longer time period under
9.2(c), shall treat such fund as a trust fund in accordance with the
terms of this Agreement and not as the property of Parent and shall
hold and dispose of the General Escrow Fund only in accordance with
the terms hereof.
(ii) Any shares of Parent Common Stock or other equity securities
issued or distributed by Parent (including shares issued upon a stock
split) ("New Shares") in respect of Parent Common Stock in the General
Escrow Fund which have not been released from the General Escrow Fund
shall be added to the General Escrow Fund and become a part thereof.
New Shares issued in respect of shares of Parent Common Stock which
have been released from the General Escrow Fund shall not be added to
the General Escrow Fund but shall be distributed to the record holders
thereof. Cash dividends on Parent Common Stock shall not be added to
the General Escrow Fund but shall be distributed to the record holders
thereof.
(iii) Each stockholder shall have voting rights and the right to
distributions of dividends with respect to the shares of Parent Common
Stock contributed to the General Escrow Fund by such Stockholder or
Preferred Stockholder (and on any voting securities added to the
General Escrow Fund in respect of such shares of Parent Common Stock).
As the record holder of such shares, the Escrow Agent shall vote such
shares in accordance with the instructions of the Stockholders or
Preferred Stockholder having the beneficial interest therein and shall
promptly deliver copies of all proxy solicitation materials to such
Stockholders or Preferred Stockholder.
(e) Claims Upon General Escrow Fund.
(i) Subject to subsection (f) below, thirty (30) days after
receipt by the Escrow Agent at any time on or before the last day of
the General Escrow Period, or any longer time period under 9.2(c), of
a certificate signed by any officer of Parent "Officer's
Certificate" (A) stating that Parent has paid or properly accrued
Damages and (B) specifying in reasonable detail the individual items
of Damages
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included in the amount so stated, the date each such item was paid or
properly accrued, and the nature of the misrepresentation, breach of
warranty or covenant or other matter specified in Section 9.2(a) to
which such item is related, the Escrow Agent shall, subject to the
provisions of Section 9.2(f) hereof, deliver to Parent out of the
General Escrow Fund, as promptly as practicable, shares of Parent
Common Stock held in the General Escrow Fund with a value equal to
such Damages.
(ii) For the purposes of determining the number of shares of
Parent Common Stock to be delivered to any party out of the General
Escrow Fund pursuant hereto, the shares of Parent Common Stock shall
be valued at the closing price of the Parent Common Stock on the
Nasdaq National Market on the Closing Date, which the parties shall
certify to the Escrow Agent in writing.
(f) Objections to Claims. At the time of delivery of any Officer's
Certificate to the Escrow Agent, a duplicate copy of such certificate shall
be delivered to the Stockholder Representative, and for a period of thirty
(30) days after such delivery, the Escrow Agent shall make no delivery to
Parent of any amounts in the General Escrow Fund pursuant to Section 9.2(e)
hereof unless the Escrow Agent shall have received written authorization
from the Stockholder Representative to make such delivery. After the
expiration of such thirty (30) day period, the Escrow Agent shall make
delivery of shares of Parent Common Stock from the General Escrow Fund in
accordance with Section 9.2(e) hereof; provided, however, that no such
payment or delivery may be made if the -------- ------- Stockholder
Representative shall object in a written statement to the claim made in the
Officer's Certificate, and such statement shall have been delivered to the
Escrow Agent prior to the expiration of such thirty (30) day period.
(g) Resolution of Conflicts.
(i) In case the Stockholder Representative shall object in
writing to any claim or claims made in any Officer's Certificate, the
Stockholder Representative and Parent shall attempt in good faith to
agree upon the rights of the respective parties with respect to each
of such claims. If the Stockholder Representative and Parent should so
agree, a memorandum setting forth such agreement shall be prepared and
signed by both parties and shall be furnished to the Escrow Agent. The
Escrow Agent shall be entitled to rely on any such memorandum and
distribute shares of Parent Common Stock from the General Escrow Fund
in accordance with the terms thereof.
(ii) In the event the parties cannot resolve an objection to a
claim as set forth in (i) above, the objection shall be resolved as
follows:
(A) Any dispute relating to or arising out of the
performance or interpretation of this Article IX shall be
resolved by final and binding arbitration at the request of
either party. Such arbitration shall be
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conducted in English by three (3) arbitrators in Seattle,
Washington, U.S.A., in accordance with the then-current
Commercial Arbitration Rules and Supplementary Procedures for
International Commercial Arbitration of the American Arbitration
Association, as modified herein "AAA").
(B) The arbitrators shall be selected by mutual agreement of
the parties or, failing such agreement, in accordance with the
aforesaid AAA rules. At least one (1) of the arbitration panel
shall be reasonably familiar with the technical field(s)
encompassed by this Agreement. The parties shall bear the costs
of the arbitrators equally.
(C) Subject to the reasonable discretion of the arbitrators
and upon good cause shown, the parties shall have the right of
limited prehearing discovery, including (i) exchange of witness
lists, (ii) exchange of documentary evidence and reasonably
related documents, (iii) written interrogatories, and (iv)
depositions under oath of any witnesses who are to be called to
testify at the arbitration hearing.
(D) As soon as the discovery is concluded, the arbitrators
shall hold a hearing in accordance with the aforesaid AAA rules.
Thereafter the arbitrators shall promptly render a written award,
together with a written opinion setting forth in reasonable
detail the grounds for such award. The award shall also provide
that the prevailing party shall recover its reasonable attorney's
fees and other costs incurred in the proceedings, in addition to
any other relief which may be granted.
(E) Judgment may be entered in any court of competent
jurisdiction to enforce the arbitral award.
(F) The duty of the parties to arbitrate any dispute
hereunder shall survive expiration or termination of this
Agreement for any reason.
(h) Third-Party Claims. In the event Parent becomes aware of a
third-party claim which Parent believes may result in a demand against the
General Escrow Fund, Parent shall notify the Stockholder Representative of
such claim, and the Stockholders and Preferred Stockholders shall be
entitled, at their expense, to participate in any defense of such claim.
Parent shall have the right in its sole discretion to settle any such
claim. In the event that the Stockholder Representative has consented to
any such settlement, the Stockholders and Preferred Stockholders shall have
no power or authority to object under any provision of this Article IX to
the amount of any claim by Parent against the General Escrow Fund with
respect to such settlement.
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(i) Escrow Agent's Duties.
(i) The Escrow Agent shall be obligated only for the performance
of such duties as are specifically set forth herein, and as set forth
in any additional written escrow instructions which the Escrow Agent
may receive after the date of this Agreement which are signed by an
officer of Parent and the Stockholder Representative, and may rely and
shall be protected in relying or refraining from acting on any
instrument reasonably believed to be genuine and to have been signed
or presented by the proper party or parties. The Escrow Agent shall
not be liable for any act done or omitted hereunder as Escrow Agent
while acting in good faith and in the exercise of reasonable judgment,
and any act done or omitted pursuant to the advice of counsel shall be
conclusive evidence of such good faith.
(ii) The Escrow Agent is hereby expressly authorized to disregard
any and all warnings given by any of the parties hereto or by any
other person, excepting only orders or process of courts of law and is
hereby expressly authorized to comply with and obey orders, judgments
or decrees of any court. In case the Escrow Agent obeys or complies
with any such order, judgment or decree of any court, the Escrow Agent
shall not be liable to any of the parties hereto or to any other
person by reason of such compliance notwithstanding any such order,
judgment or decree being subsequently reversed, modified, annulled,
set aside, vacated or found to have been entered without jurisdiction.
(iii) The Escrow Agent shall not be liable in any respect on
account of the identity, authority or rights of the parties executing
or delivering or purporting to execute or deliver this Agreement or
any documents or papers deposited or called for hereunder.
(iv) The Escrow Agent shall not be liable for the expiration of
any rights under any statute of limitations with respect to this
Agreement or any documents deposited with the Escrow Agent.
(v) In performing any duties under the Agreement, the Escrow
Agent shall not be liable to any party for damages, losses, or
expenses, except for the negligence or willful misconduct on the part
of the Escrow Agent. The Escrow Agent shall not incur any such
liability for (A) any act or failure to act made or omitted in good
faith, (B) any action taken or omitted in reliance upon any
instrument, including any written statement of affidavit provided for
in this Agreement that the Escrow Agent shall in good faith believe to
be genuine, nor will the Escrow Agent be liable or responsible for
forgeries, fraud, impersonations, or determining the scope of any
representative authority. In addition, the Escrow Agent may consult
with the legal counsel in connection with Escrow Agent's duties under
this Agreement and shall be fully protected in any act taken,
suffered, or permitted by him/her in good faith in accordance with the
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advice of counsel. The Escrow Agent is not responsible for determining
and verifying the authority of any person acting or purporting to act
on behalf of any party to this Agreement.
(vi) If any controversy arises between the parties to this
Agreement, or with any other party, concerning the subject matter of
this Agreement, its terms or conditions, the Escrow Agent will not be
required to determine the controversy or to take any action regarding
it. The Escrow Agent may hold all documents and shares of Parent
Common Stock and may wait for settlement of any such controversy by
final appropriate legal proceedings or other means as, in the Escrow
Agent's discretion, the Escrow Agent may be required, despite what may
be set forth elsewhere in this Agreement. In such event, the Escrow
Agent will not be liable for damage. Furthermore, the Escrow Agent may
at its option, file an action of interpleader requiring the parties to
answer and litigate any claims and rights among themselves. The Escrow
Agent is authorized to deposit with the clerk of the court all
documents and shares of Parent Common Stock held in escrow, except all
costs, expenses, charges and reasonable attorney fees incurred by the
Escrow Agent due to the interpleader action and which the parties
jointly and severally agree to pay. Upon initiating such action, the
Escrow Agent shall be fully released and discharged of and from all
obligations and liability imposed by the terms of this Agreement.
(vii) The parties and their respective successors and assigns
agree jointly and severally to indemnify and hold Escrow Agent
harmless against any and all losses, claims, damages, liabilities, and
expenses, including reasonable costs of investigation, counsel fees,
including allocated costs of in-house counsel and disbursements that
may be imposed on Escrow Agent or incurred by Escrow Agent in
connection with the performance of his/her duties under this
Agreement, including but not limited to any litigation arising from
this Agreement or involving its subject matter other than arising out
of its negligence or willful misconduct.
(viii) The Escrow Agent may resign at any time upon giving at
least thirty (30) days written notice to the parties; provided,
however, that no such resignation shall become effective until the
appointment of a successor escrow agent which shall be accomplished as
follows: the parties shall use their best efforts to mutually agree on
a successor escrow agent within thirty (30) days after receiving such
notice. If the parties fail to agree upon a successor escrow agent
within such time, the Escrow Agent shall have the right to appoint a
successor escrow agent. The successor escrow agent shall execute and
deliver an instrument accepting such appointment and it shall, without
further acts, be vested with all the estates, properties, rights,
powers, and duties of the predecessor escrow agent as if originally
names as escrow agent. Upon appointment of a
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successor escrow agent, the Escrow Agent shall be discharged from any
further duties and liability under this Agreement.
(j) Fees. All fees of the Escrow Agent for performance of its duties
hereunder shall be paid by Parent as Parent and the Escrow Agent shall
agree. It is understood that the fees and usual charges agreed upon for
services of the Escrow Agent shall be considered compensation for ordinary
services as contemplated by this Agreement. In the event that the
conditions of this Agreement are not promptly fulfilled, or if the Escrow
Agent renders any service not provided for in this Agreement, of if the
parties request a substantial modification of its terms, or if any
controversy arises, or if the Escrow Agent is made a party to, or
intervenes in, any litigation pertaining to the General Escrow Fund or its
subject matter, the Escrow Agent shall be reasonably compensated for such
extraordinary services and reimbursed for all costs, attorney's fees,
including allocated costs of in-house counsel, and expenses occasioned by
such default, delay, controversy or litigation.
(k) Consequential Damages. In no event shall the Escrow Agent be
liable for special, indirect or consequential loss or damage of any kind
whatsoever (including but not limited to lost profits), even if the Escrow
Agent has been advised of the likelihood of such loss or damage and
regardless of the form of action.
(l) Successor Escrow Agents. Any corporation into which the Escrow
Agent in its individual capacity may be merged or converted or with which
it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Escrow Agent in its individual
capacity shall be a party, or any corporation to which substantially all
the corporate trust business of the Escrow Agent in its individual capacity
may be transferred, shall be the Escrow Agent under this Escrow Agreement
without further act.
9.3. STOCKHOLDER REPRESENTATIVE.
(a) In the event that the Merger is approved, effective upon such
vote, and without further act of any Stockholder or Preferred Stockholder,
George Lebus shall be appointed as agent and attorney-in-fact (the
"Stockholder Representative") for each Stockholder or Preferred
----------------------------- Stockholder, for and on behalf of the
Stockholders or Preferred Stockholder, to give and receive notices and
communications, to authorize delivery of Parent of shares of Parent Common
Stock from the General Escrow Fund in satisfaction of claims by Parent, to
object to such deliveries, to agree to, negotiate, enter into settlements
and compromises of, and demand arbitration and comply with orders of courts
and awards of arbitrators with respect to such claims, and to take all
actions necessary or appropriate in the judgment of the Stockholder
Representative for the accomplishment of the foregoing. Such agency may be
changed by the Stockholders and Preferred Stockholder from time to time
upon not less than thirty (30) days prior written notice to Parent;
provided, however, that the Stockholder Representative may not be removed
unless holders of a majority in interest in the General Escrow Fund agree
to
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such removal and to the identity of the substituted agent. Any vacancy in
the position of Stockholder Representative may be filled by approval of the
holders of a majority in interest in the General Escrow Fund. No bond shall
be required of the Stockholder Representative, and the Stockholder
Representative shall not receive compensation for his or her services.
Notices or communications to or from the Stockholder Representative shall
constitute notice to or from each of the Stockholders and Preferred
Stockholders.
(b) The Stockholder Representative shall not be liable for any act
done or omitted hereunder as Stockholder Representative, except due to such
person's gross negligence or bad faith. The Stockholders and Preferred
Stockholder on whose behalf the General Escrow Amount was contributed to
the General Escrow Fund shall severally indemnify the Stockholder
Representative and hold the Stockholder Representative harmless against any
loss, liability or expense incurred without gross negligence or bad faith
on the part of the Stockholder Representative and arising out of or in
connection with the acceptance or administration of the Stockholder
Representative's duties hereunder, including the reasonable fees and
expenses of any legal counsel retained by the Stockholder Representative.
(c) A decision act, consent or instruction of the Stockholder
Representative shall constitute a decision of all Stockholders and
Preferred Stockholders for whom a portion of the General Escrow Amount
otherwise issuable to them is deposited in the General Escrow Fund and
shall be final, binding and conclusive upon each of such Stockholders and
Preferred Stockholders, and the Escrow Agent and Parent may rely upon any
such decision, act, consent or instruction of the Stockholder
Representative as being the decision, act, consent or instruction of each
and every such Stockholder or Preferred Stockholder. The Escrow Agent and
Parent are hereby relieved from any liability to any person for any acts
done by them in accordance with such decision, act, consent or instruction
of the Stockholder Representative.
ARTICLE X
GENERAL PROVISIONS
10.1. NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed duly given (a) on the date of delivery if
delivered personally, or by telecopy or telefacsimile, upon confirmation of
receipt, (b) on the first Business Day following the date of dispatch if
delivered by a recognized next-day courier service, or (c) on the tenth
Business Day following the date of mailing if delivered by registered or
certified mail, return receipt requested, postage prepaid. All notices
hereunder shall be delivered as set forth below, or pursuant to such other
instructions as may be designated in writing by the party to receive such
notice:
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(a) if to Parent or Merger Sub, to:
Illuminet Holdings, Inc.
4501 Intelco Loop SE
Lacey, Washington 98503
Attention: Roger H. Moore
Facsimile No.: (360) 923-3440
with a copy to:
Blackwell Sanders Peper Martin LLP
2300 Main Street, Suite 1000
Kansas City, Missouri 64108
Attention: James M. Ash, Esq.
Facsimile No.: (816) 983-8000
(b) if to NTC to:
National Telemanagement Corporation
8828 Stemmons Freeway, Suite 212
Dallas, Texas 75247-3712
Attention: George F. Lebus
Facsimile No.: (214) 640-4142
with a copy to:
Hallett & Perrin, P.C.
717 N. Harwood, Suite 1400
Dallas, Texas
Attention: Bruce Hallett, Esq.
Facsimile No.: (214) 953-3154
10.2. INTERPRETATION. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of
contents, glossary of defined terms and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation".
10.3. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that both
parties need not sign the same counterpart.
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10.4. ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES.
(a) This Agreement constitutes the entire agreement and supersedes all
prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof, other than the
Confidentiality Agreement, which shall survive the execution and delivery
of this Agreement.
(b) This Agreement shall be binding upon and inure solely to the
benefit of each party hereto, and nothing in this Agreement, except for the
indemnification provided under Section 6.11, express or implied, is
intended to or shall confer upon any other Person any right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.
10.5. GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware.
10.6. SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any law or public policy, all
other terms and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner in order that the
transactions contemplated hereby are consummated as originally contemplated to
the greatest extent possible.
10.7. ASSIGNMENT. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any of the parties hereto, in
whole or in part (whether by operation of law or otherwise), without the prior
written consent of the other party, and any attempt to make any such assignment
without such consent shall be null and void, except that Merger Sub may assign,
in its sole discretion, any or all of its rights, interests and obligations
under this Agreement to any direct wholly owned Subsidiary of Parent without the
consent of NTC, but no such assignment shall relieve Merger Sub of any of its
obligations under this Agreement. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.
10.8. SUBMISSION TO JURISDICTION; WAIVERS. Each of Parent and NTC
irrevocably agrees that any legal action or proceeding with respect to this
Agreement or for recognition and enforcement of any judgment in respect hereof
brought by the other party hereto or its successors or assigns may be brought
and determined in the Chancery or other Courts of the State of Delaware, and
each of Parent and NTC hereby irrevocably submits with regard to any such action
or proceeding for itself and in respect to its property, generally and
unconditionally, to the nonexclusive jurisdiction of the aforesaid courts. Each
of Parent and NTC hereby irrevocably waives, and agrees not to assert, by way of
motion, as a defense, counterclaim or otherwise, in any action or proceeding
with respect to this Agreement, (a) the defense of sovereign immunity,
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(b) any claim that it is not personally subject to the jurisdiction of the
above-named courts for any reason other than the failure to serve process in
accordance with this Section 7.9, (c) that it or its property is exempt or
immune from jurisdiction of any such court or from any legal process commenced
in such courts (whether through service of notice, attachment prior to judgment,
attachment in aid of execution of judgment, execution of judgment or otherwise),
and (d) to the fullest extent permitted by applicable law, that (i) the suit,
action or proceeding in any such court is brought in an inconvenient forum, (ii)
the venue of such suit, action or proceeding is improper and (iii) this
Agreement, or the subject matter hereof, may not be enforced in or by such
courts.
10.9. ENFORCEMENT. The parties 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. It is accordingly agreed that the parties
shall be entitled to specific performance of the terms hereof, this being in
addition to any other remedy to which they are entitled at law or in equity.
10.10. FACSIMILES. This Agreement and any Ancillary Agreement, and any
amendments hereto or thereto, to the extent signed and delivered by means of a
facsimile machine, shall be treated in all manner and respects as an original
agreement or instrument and shall be considered to have the same binding effect
as if it were the original signed version thereof delivered in person. At the
request of any party hereto or any party to any such Ancillary Agreement, each
other party hereto or thereto shall reexecute original forms thereof and deliver
them to all other parties. No party hereto or to any such Ancillary Agreement
shall claim that this Agreement or such Ancillary Agreement is invalid, not
binding or unenforceable based upon the use of a facsimile machine to deliver a
signature, or the fact that any signature or agreement or instrument was
transmitted or communicated through the use of a facsimile machine, and each
such party forever waives any such claim or defense.
10.11. DEFINITIONS. As used in this Agreement:
"Aggregate Merger Consideration" means 1,825,000 shares of Parent
Common Stock.
"Ancillary Agreements" means any agreement required by or executed
in connection with this Agreement to which NTC, any NTC stockholder, or
Parent is a party.
"Board of Directors" means the Board of Directors of any specified
Person and any committees thereof.
"Business Day" means any day on which banks are not required or
authorized to close in the City of New York.
"Dissenting Shares" shall have the meaning given the term in Section
1.9.
"GAAP" means generally accepted United States accounting principles.
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"General Escrow Amount" means 5% of the Aggregate Merger
Consideration and 5% of any shares of Parent Common Stock given to the
Preferred Stockholders under the Preferred Stock Agreement.
"Governmental Entity" means any entity exercising executive,
legislative, judicial, regulatory or administrative function of or
pertaining to government of any nation, state or other political
subdivision thereof.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Lien" means (i) in respect of any asset (other than a security),
any lien, charge, pledge, restriction on transfer, claim, security
interest, conditional sale agreement, mortgage, security agreement, option
or other encumbrance and (ii) in respect of any security, any of the
foregoing (to the extent not imposed by any applicable securities laws)
and, in addition, any adverse claim or restriction on voting.
"Material Adverse Effect" means, with respect to any entity, any
adverse change, circumstance or effect that, individually or in the
aggregate with all other adverse changes, circumstances and effects, is or
is reasonably likely to be materially adverse to the business, financial
condition or results of operations of such entity and its Subsidiaries
taken as a whole, other than any change, circumstance or effect relating
to (i) the United States economy or securities markets in general or (ii)
the industry in which Parent and NTC operate and not specifically relating
to Parent or NTC.
"NTC Accountants" means PriceWaterhouseCoopers.
"NTC Capital Stock" shall mean shares of common stock of NTC and
shares of any other capital stock of NTC (other than the Preferred Stock),
exclusive of shares of NTC Capital Stock issuable upon exercise of NTC
Options and NTC Warrants, as set forth on Exhibit A.
"NTC Options" shall mean all issued and outstanding options, and
other rights to acquire or receive NTC Capital Stock (whether or not
vested), other than NTC Warrants as set forth and described on Exhibit A
and Schedule 3.2 hereto.
"NTC Warrants" shall mean all issued and outstanding warrants to
acquire NTC Capital Stock, as set forth and described on Exhibit A and
Schedule 3.2 hereto.
"Parent Common Stock" shall mean shares of common stock, par value
$0.01 per share, of the Parent.
"Per Share Merger Consideration" means a number of shares of Parent
Common Stock equal to a fraction, the numerator of which is the Aggregate
Merger Consideration, and the denominator of which is the total number of
shares of NTC Capital Stock on a
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fully-diluted basis, after giving effect to the exercise, conversion or
exchange of all NTC Options vested as of the Closing Date, NTC Warrants or
other instruments convertible into or exchangeable for NTC Capital Stock,
excluding the Preferred Stock, as set forth on Exhibit A.
"Permitted Encumbrance" shall mean (a) any minor imperfections of
title, none of which, individually or in the aggregate, materially
detracts from the value of or impairs the use of the affected properties
or impairs the operations of NTC or any of its Subsidiaries or (b) Liens
for current taxes not yet due and payable.
"Person" means an individual, corporation, limited liability NTC,
partnership, association, trust, unincorporated organization, other entity
or group (as defined in the Exchange Act).
"Principal Stockholders" means the persons set forth on Exhibit B.
"Related Party" means, with respect to NTC or any Subsidiary, any
director, officer, beneficial owner, or holder of more than 5% of NTC
Capital Stock on a fully diluted basis, any family member of the
foregoing, or any corporation, partnership or other entity in which the
foregoing have an interest.
"SEC" means the Securities and Exchange Commission or any successor
thereto.
"Stockholder" shall mean each holder of any NTC Capital Stock
immediately prior to the Effective Time.
"Subsidiary" when used with respect to any party means any
corporation or other organization, whether incorporated or unincorporated,
(i) of which such party or any other Subsidiary of such party is a general
partner (excluding partnerships, the general partnership interests of
which held by such party or any Subsidiary of such party do not have a
majority of the voting interests in such partnership) or (ii) at least a
majority of the securities or other interests of which having by their
terms ordinary voting power to elect a majority of the Board of Directors
or others performing similar functions with respect to such corporation or
other organization is directly or indirectly owned or controlled by such
party or by any one or more of its Subsidiaries, or by such party and one
or more of its Subsidiaries.
"Tax or Taxes" shall mean for the purposes of this Agreement, the
term "Tax" or, collectively, "Taxes" shall mean (i) any and all federal,
state, local and foreign taxes, assessments and other governmental
charges, duties, impositions and liabilities, including taxes based upon
or measured by gross receipts, income, profits, sales, use and occupation,
and value added, ad valorem, transfer, franchise, withholding, payroll,
recapture, employment, excise and property taxes, together with all
interest, penalties and additions imposed with respect to such amounts,
(ii) any liability for the payment of any amounts of the type described in
clause (ii) of Section 3.23 as a result of being a member
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of an affiliated, consolidated, combined or unitary group for any period
and (iii) any liability, other than liability for a lessor's taxes pursuant
to leases set forth on Schedule 3.17, for the payment of any amounts of the
type described in clauses (i) or (ii) as a result of any express or implied
obligation to indemnify any other person or as a result of any obligations
under any agreements or arrangements with any other person with respect to
such amounts and including any liability for taxes of a predecessor entity.
"The other party" means, with respect to NTC, Parent and means, with
respect to Parent, NTC.
10.12. CROSS REFERENCE TABLE FOR CERTAIN DEFINED TERMS. The following terms
are defined in this Agreement in the section set forth opposite such term below:
TERM SECTION
---- -------
Acquisition Proposal........................................ 6.4
Affiliate................................................... 6.8
Affiliate Agreement......................................... 6.8
Agreement................................................... Preamble
Articles of Merger.......................................... 1.3
Assigned Employees.......................................... 3.19
Authorizations.............................................. 3.14
Balance Sheet............................................... 3.8
Balance Sheet Date.......................................... 3.8
Basket...................................................... 9.2(a)
Blue Sky Laws............................................... 3.3(c)
CERCLA...................................................... 3.15
Closing..................................................... 1.2
Closing Date................................................ 1.2
Code........................................................ Recitals
Confidentiality Agreement................................... 6.2
Dissenting Shares........................................... 1.9
Effective Time.............................................. 1.3
Environmental Laws.......................................... 3.15
ERISA....................................................... 3.20
Escrow Agent................................................ 9.2
Exchange Act................................................ 4.2(c)
Expenses.................................................... 6.5
Expiration Date............................................. 9.1
Fairness Opinion............................................ 3.7
Financial Statements........................................ 3.8
General Escrow Fund......................................... 9.2
General Escrow Period....................................... 9.2
Hazardous Materials......................................... 3.15
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Indemnified Parties......................................... 9.2
Information Statement....................................... 6.1
Intellectual Property....................................... 3.27
IRS......................................................... 3.21(a)
Leases...................................................... 3.17
Loss(es).................................................... 9.2
Material Contracts.......................................... 3.13
Merger...................................................... Recitals
Merger Sub.................................................. Preamble
New Shares.................................................. 9.2(d)
NTC......................................................... Preamble
NTC Certificate............................................. 2.1(c)
NTC Common Stock............................................ 3.2(a)
NTC Disclosure Schedule..................................... Article III
NTC Financial Advisor....................................... 3.6
NTC Stockholders Meeting.................................... 6.1
Officer's Certificate....................................... 9.2(d)
Option Plan................................................. 1.8(b)
Parent...................................................... Preamble
Parent Balance Sheet........................................ 4.3
Parent Disclosure Schedule.................................. Article IV
Parent Fee.................................................. 8.2
Parent Financials........................................... 4.3
PBGC........................................................ 3.21(a)
Plans....................................................... 3.20
Preferred Stock............................................. 3.3(a)
Preferred Stock Agreement................................... 7.2(o)
Preferred Stockholder....................................... 9.2(a)
Proprietary Rights.......................................... 3.27
Proprietary Rights Amount................................... 9.2(a)
Proprietary Rights Period................................... 9.2(a)
Qualified Plans............................................. 3.21
Recommendation.............................................. 6.1
Release..................................................... 3.15
Required Consents........................................... 3.3(c)
Required NTC Vote........................................... 3.5
Rule 144.................................................... 6.8
SEC Documents............................................... 4.3
Securities Act.............................................. 3.3(c)
Stockholder Representative.................................. 9.3
Surviving Corporation....................................... 1.1
Tax Returns................................................. 3.23(a)(i)
Termination Date............................................ 8.1(b)
TBCA........................................................ 1.1
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Violation................................................... 3.3(b)
Voting Agreements........................................... 7.2(j)
Written Consent............................................. 6.1
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IN WITNESS WHEREOF, Parent, NTC and Merger Sub have caused this Agreement
to be signed by their respective officers thereunto duly authorized, all as of
June 12, 2000.
ILLUMINET HOLDINGS, INC.
By:
Name: Roger Moore
Title: President and Chief Executive
Officer
ILLUMINET TELEMANAGEMENT, INC.
By: /s/ Roger Moore
Name: Roger Moore
Title: President and Chief Executive
Officer
NATIONAL TELEMANAGEMENT CORPORATION
By: /s/ George Lebus
Name: George Lebus
Title: President
STOCKHOLDER REPRESENTATIVE
(As to the provisions of Article IX only)
/s/ George Lebus
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EXHIBIT INDEX
Exhibit A NTC Capital Stock, Options and Warrants; Merger Consideration
Exhibit B Principal Stockholders
Exhibit C Tax Opinion
Exhibit D NTC Counsel Opinion
Exhibit E Designated Employees
Exhibit F Employment Agreement
Exhibit G Reserved
Exhibit H Affiliate Agreement
Exhibit I Voting Agreement
Exhibit J Registration Rights Agreement
Exhibit K Parent Counsel Opinion
Exhibit L-1 Investor Questionnaire
Exhibit L-2 Representation Letter
Exhibit M George Lebus Employment Agreement
