Exhibit 1
AGREEMENT AND PLAN OF MERGER
among
BELL ATLANTIC CORPORATION
(D/B/A VERIZON COMMUNICATIONS)
VERIZON VENTURES I INC.
VERIZON VENTURES II INC.
and
NORTHPOINT COMMUNICATIONS GROUP, INC.
Dated as of August 7, 2000
TABLE OF CONTENTS
Page
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ARTICLE I
THE TRANSACTIONS; CLOSING
Section 1.1 The Asset Contribution..................................2
Section 1.2 The Merger..............................................9
Section 1.3 Closing................................................10
Section 1.4 Effective Time of the Merger...........................11
Section 1.5 Effects of the Merger..................................11
Section 1.6 Subsequent Actions.....................................11
Section 1.7 Certificate of Incorporation; By-laws; Directors
and Officers of the Surviving Corporation.............12
ARTICLE II
EFFECT ON THE STOCK OF NORTHPOINT AND MERGER SUBSIDIARY
Section 2.1 Conversion of Securities...............................12
Section 2.2 Conversion of Shares...................................12
Section 2.3 Exchange Procedures....................................14
Section 2.4 Transfer Books.........................................17
Section 2.5 Transfer Taxes; Withholding............................17
Section 2.6 Dissenting Shares......................................18
Section 2.7 Options to Purchase NorthPoint Common Stock............18
Section 2.8 Restricted Stock.......................................19
Section 2.9 Certain Adjustments....................................20
ARTICLE III
CERTAIN ADDITIONAL MATTERS
Section 3.1 Certificate of Incorporation and By-laws of Parent.....20
Section 3.2 Corporate Headquarters.................................20
Section 3.3 Corporate Identity.....................................20
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF NORTHPOINT
Section 4.1 Organization and Qualification; Subsidiaries...........21
Section 4.2 Certificate of Incorporation and By-laws...............21
Section 4.3 Capitalization.........................................21
Section 4.4 Authority Relative to this Agreement...................22
Section 4.5 No Conflict; Required Filings and Consents.............23
Section 4.6 SEC Filings; Financial Statements......................24
Section 4.7 Absence of Certain Changes or Events...................25
Section 4.8 Litigation.............................................25
Section 4.9 Permits; No Violation of Law...........................25
Section 4.10 Proxy Statement........................................26
Section 4.11 Employee Matters; ERISA................................27
Section 4.12 Labor Matters..........................................28
Section 4.13 Environmental Matters..................................29
Section 4.14 Tax Matters............................................29
Section 4.15 Intellectual Property..................................31
Section 4.16 Insurance..............................................32
Section 4.17 Certain Contracts......................................32
Section 4.18 Board Action; Vote Required; Applicability of
Section 203..........................................33
Section 4.19 Opinions of Financial Advisors.........................34
Section 4.20 Brokers................................................34
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF VERIZON
Section 5.1 Organization and Qualification; Subsidiaries...........34
Section 5.2 Authority Relative to this Agreement...................35
Section 5.3 No Conflict; Required Filings and Consents.............35
Section 5.4 Litigation.............................................36
Section 5.5 Permits; No Violation of Law...........................36
Section 5.6 Proxy Statement........................................37
Section 5.7 Labor Matters..........................................38
Section 5.8 Environmental Matters..................................38
Section 5.9 Assets.................................................39
Section 5.10 Certain Contracts......................................40
Section 5.11 Intellectual Property..................................40
Section 5.12 Brokers................................................41
Section 5.13 Tax Matters............................................41
Section 5.14 Insurance..............................................42
Section 5.15 No Business Activities.................................42
ARTICLE VI
COVENANTS AND AGREEMENTS
Section 6.1 Conduct of Business of NorthPoint Pending the
Effective Time.......................................42
Section 6.2 Conduct of the Verizon DSL Business Pending the
Effective Time.......................................46
Section 6.3 No Solicitation........................................47
Section 6.4 Regulatory Compliance Costs............................48
Section 6.5 Real Estate Matters....................................49
Section 6.6 Facilities Related Payments............................51
Section 6.7 Systems Assets.........................................53
Section 6.8 Future Contracts.......................................54
Section 6.9 Master Services Agreement..............................54
Section 6.10 Vendor Contracts.......................................54
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Proxy Statement and Registration Statement.............54
Section 7.2 NorthPoint Stockholder Meeting.........................55
Section 7.3 Additional Agreements..................................57
Section 7.4 Access to Information..................................58
Section 7.5 Public Announcements...................................59
Section 7.6 Indemnification; Maintenance of NorthPoint's
Indemnification, Directors' and Officers' Insurance..60
Section 7.7 Stock Market Listing...................................60
Section 7.8 Post-Merger Parent Board of Directors..................61
Section 7.9 No Shelf Registration..................................61
Section 7.10 Affiliates.............................................61
Section 7.11 Blue Sky...............................................62
Section 7.12 Tax-Free Reorganization................................62
Section 7.13 Employment and Employee Benefits Matters...............62
Section 7.14 Indemnification by Verizon.............................63
Section 7.15 Preemptive Right.......................................65
Section 7.16 Further Assurances.....................................65
ARTICLE VIII
CONDITIONS TO THE ASSET CONTRIBUTION AND THE MERGER
Section 8.1 Conditions to Each Party's Obligation to Effect
the Merger...........................................65
Section 8.2 Additional Conditions to Obligations of NorthPoint.....67
Section 8.3 Additional Conditions to Obligations of Verizon........68
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination............................................70
Section 9.2 Effect of Termination..................................71
Section 9.3 Amendment..............................................73
Section 9.4 Waiver.................................................73
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Non-Survival of Representations, Warranties and
Agreements...........................................73
Section 10.2 Notices................................................74
Section 10.3 Expenses...............................................75
Section 10.4 Certain Definitions....................................75
Section 10.5 Headings...............................................79
Section 10.6 Severability...........................................79
Section 10.7 Entire Agreement; No Third-Party Beneficiaries.........80
Section 10.8 Assignment.............................................80
Section 10.9 Governing Law..........................................80
Section 10.10 Counterparts...........................................80
Section 10.11 Interpretation.........................................80
EXHIBITS
Exhibit A - Form of Voting and Lock-Up Agreement
Exhibit B - Certificate of Incorporation of Parent
Exhibit C - By-laws of Parent
Exhibit D - NorthPoint Rule 145 Affiliate Agreement
Exhibit E - NorthPoint Officer's Certificate
Exhibit F - Parent Officer's Certificate
Exhibit G - Verizon Officer's Certificate
Exhibit H - Form of Master Services Agreement
Exhibit I - Form of Employee Matters Agreement
INDEX OF DEFINED TERMS
1933 Act...........................................................75
2000 Target Amount..................................................9
Affiliate..........................................................75
Agreement...........................................................1
Alternative Transaction............................................76
Asset Contribution..................................................1
Assumed Verizon Contracts...........................................3
Capitalized Co-Location Fees.......................................51
Cash Amount.........................................................2
Cash Consideration Amount..........................................13
Closing............................................................10
Closing Date.......................................................10
Closing Market Value...............................................19
Code................................................................1
commercially reasonable efforts....................................76
Compliance Expenses................................................48
Computer Software..................................................31
Consents...........................................................66
control............................................................76
Debt Financing......................................................1
DGCL................................................................2
Dispute............................................................51
Dispute Representative.............................................52
Dissenting Shares..................................................18
DSL.................................................................1
Effective Time.....................................................11
Employee Matters Agreement..........................................5
Environmental Law..................................................76
Equity Right.......................................................77
ERISA..............................................................27
Excess Parent Shares...............................................16
Exchange Act.......................................................75
Exchange Agent.....................................................14
Exchange Fund......................................................14
Excluded Verizon Assets.............................................3
Facilities Assets..................................................51
Facilities Assets Amounts..........................................53
Facilities Related Payments........................................51
FCC................................................................25
GAAP................................................................1
Governmental Approvals.............................................25
Governmental Entity................................................24
Hazardous Substance................................................77
HSR Act............................................................77
Intellectual Property Agreement....................................10
IT.................................................................51
knowledge..........................................................77
Lease Rejection Notice.............................................50
Legal Requirements.................................................26
Liens..............................................................22
Material Adverse Effect............................................77
Material Investment................................................78
Merger..............................................................1
Merger Consideration...............................................13
Merger Subsidiary...................................................1
Merger Subsidiary Common Stock.....................................13
Mirror Equity Right.................................................6
Mirror Share Number.................................................6
Mirror Shares.......................................................6
Nasdaq..............................................................9
Non-represented DSL Employees......................................46
Nondisclosure Agreement............................................47
NorthPoint..........................................................1
NorthPoint Acquisition Agreement...................................56
NorthPoint Common Stock............................................13
NorthPoint Contracts...............................................32
NorthPoint Disclosure Schedule.....................................20
NorthPoint Equity Right............................................78
NorthPoint ERISA Affiliate.........................................27
NorthPoint Filed SEC Reports.......................................24
NorthPoint Indemnified Parties.....................................63
NorthPoint Intellectual Property...................................31
NorthPoint Plan....................................................28
NorthPoint Preferred Stock.........................................13
NorthPoint SEC Reports.............................................24
NorthPoint Shortfall Amount.........................................9
NorthPoint Stockholder Approval....................................22
NorthPoint Stockholders' Meeting...................................55
NorthPoint Subsequent Determination................................56
NorthPoint Superior Proposal.......................................78
NorthPoint's Line of Business......................................78
Old Certificate....................................................14
Option Ratio.......................................................19
OSS................................................................53
Parent..............................................................1
Parent Common Stock................................................13
Parent Shares Trust................................................16
Parties............................................................78
Party Representatives..............................................59
Permits............................................................26
Person.............................................................79
Pre-Surrender Dividends............................................15
Preferred Financing.................................................1
Proxy Statement....................................................27
Registration Statement.............................................26
Regulatory Compliance Plan.........................................48
Relocated Employees................................................50
Repurchased Shares..................................................6
Requisite Regulatory Approvals.....................................66
Rule 145 Affiliates................................................79
SEC................................................................24
Shared Facilities..................................................50
Sharing Parties....................................................49
Subsidiary.........................................................79
Surviving Corporation...............................................9
Surviving Corporation Common Stock.................................13
Tax Return.........................................................31
Taxes..............................................................31
Termination Date...................................................70
Third Party........................................................76
Third Party Claim..................................................63
Transferred Employee...............................................79
Verizon.............................................................1
Verizon Asset Inventory.............................................8
Verizon Central Offices.............................................2
Verizon Disclosure Schedule........................................34
Verizon DSL Assets..................................................2
Verizon DSL Business...............................................79
Verizon DSL Employees..............................................79
Verizon Intellectual Property......................................40
Verizon Network Equipment Asset Value...............................8
Verizon Network Equipment Assets....................................2
Verizon Ownership Percentage........................................6
Verizon Shares......................................................6
Verizon Termination Fee............................................72
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of August 7, 2000
(this "Agreement"), by and among Bell Atlantic Corporation (d/b/a Verizon
Communications), a Delaware corporation ("Verizon"), Verizon Ventures I
Inc., a Delaware corporation ("Parent"), Verizon Ventures II Inc., a
Delaware corporation and wholly owned subsidiary of Parent ("Merger
Subsidiary"), and NorthPoint Communications Group, Inc., a Delaware
corporation ("NorthPoint").
WHEREAS, the Boards of Directors of Verizon and NorthPoint have
determined that it is in the best interests of their respective
stockholders to combine their respective digital subscriber line ("DSL")
operations in a business combination transaction in which (i) Verizon will
contribute, or will cause to be contributed, to Parent (A) the Cash Amount
(as defined below), of which $350 million will be used to fund the Merger
Consideration (as defined below), and (B) certain of the assets used by
Verizon in connection with its wholesale DSL operations, in exchange for
shares of common stock of Parent (the "Asset Contribution") and (ii) Merger
Subsidiary will be merged with and into NorthPoint, with NorthPoint
surviving as a wholly owned subsidiary of Parent as provided in this
Agreement (the "Merger");
WHEREAS, concurrently with entering into this Agreement,
Verizon is entering into (i) a commitment letter relating to a $200 million
senior secured debt facility (the "Debt Financing") and (ii) a securities
purchase agreement relating to the purchase by Verizon of $150 million of
9% Convertible Preferred Stock of NorthPoint (the "Preferred Financing");
WHEREAS, for U.S. federal income tax purposes, it is intended
that (i) the Asset Contribution and the Merger each will qualify as a
transaction described in Section 351 of the Internal Revenue Code of 1986,
as amended (the "Code"), and (ii) the Merger will qualify as a transaction
described in Section 368(a) of the Code;
WHEREAS, for financial accounting purposes, it is intended that
the transactions contemplated by this Agreement will be accounted for as a
purchase transaction in accordance with United States generally accepted
accounting principles ("GAAP"); and
WHEREAS, concurrently with the execution of this Agreement,
Parent and certain stockholders of NorthPoint (including certain NorthPoint
officers and directors) are entering into a Voting and Lock-Up Agreement in
the form attached as Exhibit A hereto.
NOW, THEREFORE, in consideration of the foregoing and the
agreements contained in this Agreement, and intending to be legally bound
hereby, the parties agree as follows:
ARTICLE I
THE TRANSACTIONS; CLOSING
Section 1.1 The Asset Contribution.
(a) Effective as of the Closing (as defined in Section 1.3
hereof), upon the terms and subject to the conditions set forth in this
Agreement and in accordance with the Delaware General Corporation Law (the
"DGCL") Verizon shall, or shall cause one or more of its Subsidiaries to,
(A) contribute to Parent cash in an amount equal to $800 million less (i)
the aggregate principal amount of the Debt Financing and the Preferred
Financing outstanding as of the Closing Date (as defined below) and (ii)
any accrued and unpaid interest and dividends thereon through such date,
and subject to adjustment pursuant to Sections 1.1(g) and 1.1(h) hereof
(the "Cash Amount"), and (B) sell, convey, assign, transfer and deliver to
Parent all of the right, title and interest of Verizon and its Subsidiaries
in and to all of the business, assets, properties, rights and interests (of
whatever kind and nature, real or personal, tangible or intangible), other
than the Excluded Verizon Assets (as defined below), that are owned, held
or used by Verizon and/or any of its Subsidiaries on the Closing Date (as
defined below) and relate exclusively to or are used exclusively by Verizon
or its Subsidiaries in connection with, the Verizon DSL Business
(collectively, the "Verizon DSL Assets"). Subject to Section 1.1(b) hereof,
it is agreed and understood that the Verizon DSL Assets shall include the
following:
(i) Verizon Network Equipment Assets. The network
equipment assets used exclusively by the Verizon DSL Business and
identified by category in Section 1.1(a)(i) of the Verizon Disclosure
Schedule (the "Verizon Network Equipment Assets"), which assets are
generally located at the central offices listed in Section 1.1(a)(i) of the
Verizon Disclosure Schedule (the "Verizon Central Offices");
(ii) Permits. To the extent assignable, all material
consents, permits, licenses, orders, registrations, franchises,
certificates, approvals or other similar rights from any federal, state or
local regulatory agencies related exclusively to the Verizon DSL Business;
(iii) Contracts. Except as the parties may otherwise
agree, the contracts, leases, indentures, agreements, commitments and all
other legally binding agreements (including without limitation real estate,
capital and operating leases) either described by category or identified in
Section 1.1(a)(iii) of the Verizon Disclosure Schedule (the "Assumed
Verizon Contracts");
(iv) Books and Records. Subject to any applicable legal
restrictions, all books, records and files related exclusively to the
Verizon DSL Business, including customer and supplier lists, sales and
other records, promotional material, operating manuals and guidelines,
equipment maintenance and warranty information, software manuals and
documentation, files, documents, papers, data stored in electronic, optical
or magnetic form, agreements, books of account, contracts, specifications
and all correspondence with any customers, suppliers, employees or
governmental entities or agencies related exclusively to the Verizon DSL
Business and personnel records related to the Verizon DSL Employees;
(v) Certain Indebtedness. All of Verizon's rights with
respect to any amounts outstanding under the Debt Financing at the
Effective Time, including any accrued and unpaid interest thereon; and
(vi) Intellectual Property. (A) The intellectual property
used by Verizon and its Subsidiaries exclusively in connection with the
Verizon DSL Business and identified in Section 1.1(a)(vi) of the Verizon
Disclosure Schedule and (B) any additional intellectual property developed
after the date hereof and prior to the Effective Time which is used by
Verizon and its Subsidiaries exclusively in connection with the Verizon DSL
Business, all of which shall be listed in a closing schedule to be
delivered by Verizon to NorthPoint at the Effective Time.
(b) Notwithstanding anything herein to the contrary, from and
after the Closing, Verizon and each of its Subsidiaries shall retain all
their respective right, title and interest in and to, and there shall be
excluded from the sale, conveyance, assignment or transfer to Parent
hereunder, and the Verizon DSL Assets shall not include, the following
(collectively, the "Excluded Verizon Assets"):
(i) any property or assets of Verizon or its Subsidiaries
which are (A) used in the general administration of Verizon's or its
Subsidiaries' businesses or (B) not used exclusively for the benefit of the
Verizon DSL Business or its activities;
(ii) all rights of Verizon or its Subsidiaries under this
Agreement or any other agreements, instruments and certificates delivered
in connection with this Agreement;
(iii) copies of all records prepared by Verizon and/or
any of its Subsidiaries and counsel and advisors thereto in connection with
the sale of the Verizon DSL Assets contemplated hereby;
(iv) all rights, claims, demands and judgments to the
extent relating to, arising out of or used in connection with the Excluded
Verizon Assets;
(v) all rights to claims for refunds of income taxes
relating to the Verizon DSL Business for any taxable period ending on or
before the Closing Date or the portion ending on the Closing Date of any
taxable period that includes (but does not end on) such date;
(vi) all accounts receivable, notes receivable and all
notes, bonds and other evidences of indebtedness of and rights to receive
payments from any Person, in each case arising out of the conduct of the
Verizon DSL Business prior to the Effective Time, and, except as provided
in the Employee Matters Agreement, all cash and cash equivalents of the
Verizon DSL Business as of the Effective Time; and
(vii) any and all rights and licenses in third party
intellectual property which are not used in connection with the Verizon DSL
Business or, if used in connection with the Verizon DSL Business, which
cannot be conveyed or assigned to Parent by reason of: (A) the requested
consent of such third party not having been obtained; (B) any requirement
of payment of compensation or other consideration to any third party; or
(C) any adverse effect on Verizon and its Subsidiaries.
(c) Notwithstanding anything herein to the contrary, Verizon
shall not assign, and Parent shall not assume or undertake, any liabilities
or obligations of Verizon, whether relating to the Verizon DSL Business or
otherwise, except as expressly set forth in this Agreement. Parent shall
assume the following obligations and liabilities:
(i) Contracts and Leases. All obligations and liabilities
of Verizon and its Subsidiaries under the Assumed Verizon Contracts arising
or to be performed after the Effective Time, including those under any real
estate, operating or capital lease or arrangement identified as an Assumed
Verizon Contract;
(ii) Operational Liabilities. All obligations and
liabilities related to, arising from, or with respect to, the operation of
the Verizon DSL Business from and after the Effective Time or any and all
products or services sold (whether or not under warranty) by the Verizon
DSL Business after the Effective Time, including obligations and
liabilities for and with respect to (whether entered into before or after
the Effective Time) outstanding commitments (in the form of accepted
purchase orders or otherwise) to sell services, or outstanding quotations,
proposals or bids with respect to the sale of services, any refunds,
adjustments, allowances, repairs, exchanges, returns and warranty,
merchantability, products liability and other claims;
(iii) Employee Liabilities. Subject to the provisions of
the Employee Matters Agreement among Parent, NorthPoint and Verizon (the
"Employee Matters Agreement"), all liabilities and obligations relating to
the Verizon DSL Employees who will be employed by Parent, to the extent
arising from and after the Effective Time; and
(iv) Tax Liabilities. All liabilities and obligations
relating to federal, state, local, foreign or other governmental taxes,
assessments, duties, fees, levies or similar charges of any kind, including
all interest, penalties and additions thereto, to the extent related to the
operation of the Verizon DSL Business from and after the Effective Time.
(d) It is the intention of the Parties that the Asset
Contribution shall not include any working capital items. The amount of (A)
any current liabilities associated with the Verizon DSL Assets that cannot
be excluded from the Verizon DSL Assets (such as an accrued and unpaid
payment obligation under any Assumed Verizon Contract) and (B) any current
assets associated with the Verizon DSL Assets that cannot be excluded from
the Verizon DSL Assets (such as pre-paid expenses) shall be netted against
each other and settled in cash between the Parties on the Closing Date or
as promptly as practicable thereafter (it being understood and agreed that
if clause (A) exceeds clause (B), Verizon shall pay Parent the difference
between clause (A) and clause (B); and that if clause (B) exceeds clause
(A), Parent shall pay to Verizon the difference between (A) and (B)).
(e) In consideration of the contribution of the Cash Amount,
the contribution to Parent of the Verizon DSL Assets and the conversion of
convertible preferred stock (and any securities of NorthPoint issued upon
conversion thereof) held by Verizon pursuant to Section 2.2(a)(ii) hereof,
Parent shall issue to Verizon at the Effective Time that number of fully
paid and nonassessable shares of Parent Common Stock (the "Verizon Shares")
such that Verizon's ownership interest in the issued and outstanding shares
of Parent Common Stock immediately after giving effect to the Merger set
forth in Section 1.2 hereof (the "Verizon Ownership Percentage") shall be
equal to 55%, subject to upward adjustment as provided in Section
1.1(g)(iii) hereof. The Verizon Shares shall be validly issued, fully paid
and nonassessable immediately upon issuance.
(f) (i) In further consideration of the contribution of the
Cash Amount, the contribution to Parent of the Verizon DSL Assets and the
conversion of convertible preferred stock held by Verizon pursuant to
Section 2.2(a)(ii) hereof, from and after the Effective Time, immediately
upon the exercise of any NorthPoint Equity Right outstanding immediately
prior to the Effective Time (each a "Mirror Equity Right"), Parent shall
issue to Verizon that number of shares of Parent Common Stock (the "Mirror
Shares") equal to (A) the Mirror Share Number (as defined below) multiplied
by (B) the difference (if positive) obtained by subtracting (x) the number
of shares of Parent Common Stock, if any, repurchased in the open market
(the "Repurchased Shares") on the date of issuance of shares pursuant to
the Mirror Equity Right with the proceeds received by NorthPoint upon
exercise of such Mirror Equity Right from (y) the number of shares of
Parent Common Stock issued on such date in respect of such Mirror Equity
Right; provided, however, that if at any time Parent shall fail to issue to
Verizon the appropriate number of Mirror Shares on the date of issuance of
shares pursuant to any Mirror Equity Right, then the number of Repurchased
Shares shall thereafter be deemed to be zero for all future issuances of
shares of Parent Common Stock upon the exercise of any Mirror Equity Right.
The Mirror Shares and the Verizon Shares are being issued to Verizon in
consideration of the aforementioned transactions and shall be validly
issued, fully paid and nonassessable immediately upon issuance.
(ii) For purposes of this Agreement, the "Mirror Share
Number" shall be equal to (A) the percentage of the issued and outstanding
shares of Parent Common Stock owned by Verizon immediately following the
Effective Time after giving effect to any adjustments to reflect the
NorthPoint Shortfall Amount (as defined in Section 1.1(g) hereof), if any,
divided by (B) the percentage of the issued and outstanding shares of
Parent Common Stock owned by all stockholders of Parent other than Verizon
immediately following the Effective Time after giving effect to any
adjustments to reflect the NorthPoint Shortfall Amount, if any.
(iii) For a period of two years after the date hereof,
upon the exercise of any Mirror Equity Right, Parent shall provide Verizon
with a report setting forth in reasonable detail the number of shares of
Parent Common Stock issued upon each exercise of a Mirror Equity Right, the
proceeds received by Parent upon such exercise, the number of Repurchased
Shares (if any) in respect of that Mirror Equity Right, the price paid for
the Repurchased Shares and the number of Mirror Shares issued to Verizon.
The Mirror Shares shall be issued to Verizon automatically, without any
further action on the part of Verizon and without payment of any further
consideration.
(iv) The number or type of Mirror Shares shall be
adjusted if and whenever Parent shall (A) subdivide or combine its
securities, (B) declare a stock dividend or (C) effect a reorganization,
reclassification, recapitalization, consolidation or merger, in the same
manner and in accordance with the same terms as the number or type of
shares issuable upon exercise of the Mirror Equity Right shall be adjusted
pursuant to the terms of the Mirror Equity Right. Parent will not enter
into a transaction or agreement for the acquisition of a majority of the
capital stock or voting power of Parent by another person or entity by
means of any transaction or series of related transactions (including,
without limitation, any reorganization, merger, consolidation or purchase
of stock) unless the person or entity resulting from such reorganization,
merger or consolidation or the person or entity purchasing such capital
stock or voting power shall expressly assume the due and punctual
performance and observance of Parent's obligation to issue the Mirror
Shares pursuant to this Section 1.1(f) and agrees not to treat Verizon less
favorably than any holders of an Equity Right, by supplemental agreement
satisfactory in form and substance to Verizon and executed and delivered to
Verizon.
(v) Parent shall issue the Mirror Shares only as whole
shares of Parent Common Stock in certificated form to Verizon. To the
extent that Verizon is entitled to receive a fractional share upon exercise
of a Mirror Equity Right, Parent shall add such fractional share to any
future issuances of Mirror Shares.
(vi) Parent shall not, by amendment of its organizational
documents or through any reorganization, transfer of assets, consolidation,
merger, issue or sale of securities or otherwise, avoid or take any action
which would have the effect of avoiding the observance or performance of
any of the terms to be observed or performed by Parent with respect to
Verizon's right to receive the Mirror Shares, but will at all times in good
faith assist in carrying out all of the provisions of such right and in
taking of all such action as may be necessary or appropriate in order to
protect Verizon's right to receive the Mirror Shares against dilution or
other impairment.
(vii) Each of the Parties hereto agrees that in the event
of any breach or default or threatened breach or threatened default by
Parent of any covenant, agreement, obligation or other provision relating
to Verizon's right to receive the Mirror Shares, monetary damages are not
adequate remedies to compensate Verizon, and Verizon shall be entitled (in
addition to any other remedy that may be available to it) to (A) a decree
or order of specific performance of such right, and (B) an injunction
restraining such breach or threatened breach, without, in either case, the
posting of any bond and, to the extent permissible by applicable law, each
Party waives any objection to the imposition of such relief.
(g) (i) On or prior to December 31, 2000, an inventory of the
used and useful Verizon Network Equipment Assets shall be conducted by an
independent appraiser selected by Verizon and such inventory shall be
brought down by such appraiser to a date that is not more than five
business days prior to the earlier of the Closing and December 31, 2000
(the "Verizon Asset Inventory"). Verizon shall bear the cost of conducting
the Verizon Asset Inventory. The gross book value (including any
capitalized labor and other costs associated with the installation,
provisioning, modification and upgrading of equipment) of the Verizon
Network Equipment Assets reflected in the Verizon Asset Inventory as of the
date thereof is herein referred to as the "Verizon Network Equipment Asset
Value." The term "Verizon Network Equipment Asset Value" does not include
Capitalized Co-Location Fees (as defined in Section 6.6 hereof).
(ii) If the Closing occurs on or after December 31, 2000,
to the extent that the Verizon Network Equipment Asset Value is less than
$513.5 million, the Cash Amount shall be increased by the amount of such
difference. If the Closing occurs before December 31, 2000, to the extent
that the Verizon Network Equipment Asset Value is less than (x) $513.5
million minus (y) $277 million divided by 365 and multiplied by the number
of days remaining in the year 2000 after the Closing, the Cash Amount shall
be increased by the amount of such difference.
(iii) The number of shares of Parent Common Stock to be
issued to Verizon pursuant to Section 1.1(e) hereof shall be increased in
an amount equal to the NorthPoint Shortfall Amount (as defined below)
divided by the average of the closing prices of NorthPoint Common Stock on
the Nasdaq National Market ("Nasdaq") (as reported in The Wall Street
Journal) on the 30 trading days immediately prior to the Closing Date and
all references in this Agreement to the Verizon Ownership Percentage as of
the Effective Time shall be adjusted to be references to a percentage equal
to such increased number of shares divided by the issued and outstanding
shares of Parent Common Stock immediately after giving effect to the
Merger. If the Closing occurs on or after December 31, 2000, if and to the
extent that the audited consolidated balance sheet of NorthPoint as of
December 31, 2000 reflects gross property, plant and equipment of less than
$513.5 million, the "NorthPoint Shortfall Amount" shall be equal to the
difference obtained by subtracting NorthPoint's gross property, plant and
equipment from $513.5 million. If the Closing occurs prior to December 31,
2000, if and to the extent that the audited consolidated balance sheet of
NorthPoint as of the Closing Date reflects gross property, plant and
equipment of less than (x) $513.5 million minus (y) $270 million divided by
365 and multiplied by the number of days remaining in the year 2000 after
the Closing (the "2000 Target Amount"), the "NorthPoint Shortfall Amount"
shall be equal to the difference between the gross property, plant and
equipment of NorthPoint as of the Closing Date and the 2000 Target Amount.
(iv) In the event that it is impossible to determine the
NorthPoint Shortfall Amount at the Closing Date because of the
unavailability of an audited balance sheet as contemplated by this Section
1.1.(g), the adjustments referred to herein shall be made as soon as
practicable after the Closing Date and shall be retroactive in all respects
to the Effective Time.
(h) The Cash Amount shall be further adjusted with respect to
Regulatory Compliance Costs in accordance with Section 6.4 hereof.
Section 1.2 The Merger. At the Effective Time, upon the terms
and subject to the conditions set forth in this Agreement and in accordance
with the DGCL, Merger Subsidiary shall merge with and into NorthPoint.
NorthPoint shall be the surviving corporation in the Merger (the "Surviving
Corporation") and shall thereupon become a direct, wholly owned subsidiary
of Parent.
Section 1.3 Closing.
(a) The closing (the "Closing") of the Asset Contribution and
the Merger shall take place no later than the second business day after
satisfaction or waiver of the conditions set forth in Article VIII unless
another time or date is agreed to by the parties hereto (the date of the
Closing being referred to as the "Closing Date"). The Closing shall be held
at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, Four Times
Square, New York, New York, unless another place is agreed to by the
Parties.
(b) At the Closing:
(i) Verizon shall deliver or cause to be delivered to
Parent (unless previously delivered), such appropriately executed bills of
sale for the Verizon DSL Assets, instruments of assignment and assumption
with respect to the Assumed Verizon Contracts and such other documents of
title, assignments, instruments of sale, conveyance or transfer or other
documents and certificates as may be reasonably requested by any Party
prior to the Closing with respect to the Verizon DSL Business or the
Assumed Verizon Contracts; and
(ii) Parent shall deliver to Verizon stock certificates
representing the Verizon Shares and such appropriately executed bills of
sale for the Verizon DSL Assets, instruments of assignment and assumption
with respect to the Assumed Verizon Contracts and such other documents of
title, assignments, instruments of sale, conveyance or transfer or other
documents and certificates as may be reasonably requested by NorthPoint
prior to the Closing with respect to the Verizon DSL Business or the
Assumed Verizon Contracts.
(iii) In consideration of the agreements contained in
this Agreement and for other good and valuable consideration, Verizon shall
deliver an executed intellectual property agreement (the "Intellectual
Property Agreement") which grants to Parent, for so long as Parent is a
majority-owned subsidiary of Verizon, a non- exclusive license to use all
intellectual property owned by Verizon and its Subsidiaries which is used
in connection with (but not exclusively in connection with) the Verizon DSL
Business as of the Closing Date, including the intellectual property
described in Section 1.3(b)(iii) of the Verizon Disclosure Schedule;
provided that such license shall be limited to the use or uses to which
Verizon employs such intellectual property at the Effective Time in
connection with the Verizon DSL Business.
Section 1.4 Effective Time of the Merger. Subject to the
provisions of this Agreement, as soon as practicable on the Closing Date,
the parties shall file with the Secretary of State of the State of Delaware
a certificate of merger duly completed and executed in accordance with the
relevant provisions of the DGCL and shall make all other filings required
under the DGCL to effect the Merger. The Merger shall become effective at
the actual time of the filing of such certificate of merger, or at such
other later time as is specified in the certificate of merger and agreed to
by the parties hereto (the time at which the Merger has become fully
effective being hereinafter referred to as the "Effective Time").
Section 1.5 Effects of the Merger. The Merger shall have the
effects set forth in Section 259 of the DGCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time all
the property, rights, privileges, powers and franchises of NorthPoint and
Merger Subsidiary shall continue with, or vest in, as the case may be,
NorthPoint as the Surviving Corporation, and all debts, liabilities and
duties of NorthPoint and Merger Subsidiary shall continue to be, or become,
as the case may be, the debts, liabilities and duties of NorthPoint as the
Surviving Corporation.
Section 1.6 Subsequent Actions. If at any time after the
Effective Time, the Surviving Corporation or Parent shall consider or be
advised that any deeds, bills of sale, assignments, assurances or any other
actions or things are necessary or desirable to continue in, vest, perfect
or confirm of record or otherwise in the Surviving Corporation or Parent,
as the case may be, its right, title or interest in, to or under any of the
rights, properties, privileges, franchises or assets to be acquired by the
Surviving Corporation or Parent as a result of, or in connection with, the
Asset Contribution or the Merger or to otherwise to carry out this
Agreement, the officers of Verizon and the officers and directors of each
of Parent and the Surviving Corporation shall be directed and authorized to
execute and deliver all such deeds, bills of sale, assignments and
assurances and to take and do, in the name and on behalf of each of such
corporations or otherwise, all such other actions and things as may be
necessary or desirable to vest, perfect or confirm any and all right, title
and interest in, to and under such rights, properties, privileges,
franchises or assets or otherwise to carry out this Agreement.
Section 1.7 Certificate of Incorporation; By-laws; Directors
and Officers of the Surviving Corporation. Unless otherwise agreed to by
NorthPoint and Verizon before the Effective Time, at the Effective Time:
(a) The Certificate of Incorporation and the By-laws of Merger
Subsidiary, as in effect immediately prior to the Effective Time, shall be
the Certificate of Incorporation and By-laws, respectively, of the
Surviving Corporation.
(b) The directors of Merger Subsidiary immediately prior to the
Effective Time shall be the directors of the Surviving Corporation until
the next annual meeting of stockholders of the Surviving Corporation (or
their earlier resignation or removal) and until their respective successors
are duly elected and qualified, as the case may be.
(c) The officers of NorthPoint immediately prior to the
Effective Time shall continue to serve in their respective offices of the
Surviving Corporation from and after the Effective Time, in each case until
their respective successors are duly elected or appointed and qualified or
until their resignation or removal.
ARTICLE II
EFFECT ON THE STOCK OF NORTHPOINT AND MERGER SUBSIDIARY
Section 2.1 Conversion of Securities. The manner and basis of
converting the shares of common stock of NorthPoint and of Merger
Subsidiary at the Effective Time, by virtue of the Merger and without any
action on the part of any of the Parties or the holder of any of such
securities, shall be as hereinafter set forth in this Article II.
Section 2.2 Conversion of Shares.
(a) Cancellation of Treasury Shares and Convertible Preferred
Shares Held by Verizon. (i) At the Effective Time, each share of NorthPoint
Common Stock held in the treasury of NorthPoint or beneficially owned by
NorthPoint immediately prior to the Effective Time shall be cancelled and
retired and no shares of stock or other securities of Parent or the
Surviving Corporation shall be issuable, and no payment or other
consideration shall be made, with respect thereto.
(ii) At the Effective Time, each share of 9% Convertible
PIK Preferred Stock of NorthPoint (the "NorthPoint Preferred Stock") held
by Verizon immediately prior to the Effective Time shall cease to exist and
shall be converted into shares of Parent Common Stock in accordance with
Section 1.1(e) hereof.
(b) Conversion of Common Stock of Merger Subsidiary into Common
Stock of the Surviving Corporation. As of the Effective Time, each share of
common stock, par value $0.01, of Merger Subsidiary (the "Merger Subsidiary
Common Stock") issued and outstanding immediately prior to the Effective
Time, and all rights in respect thereof, shall, without any action of any
holder thereof, forthwith cease to exist and be converted into one validly
issued, fully paid and nonassessable share of common stock, par value $0.01
per share, of the Surviving Corporation (the "Surviving Corporation Common
Stock"). Immediately after the Effective Time and upon surrender by Parent
of the certificate representing the shares of Merger Subsidiary Common
Stock, NorthPoint as the Surviving Corporation shall deliver to Parent an
appropriate certificate or certificates representing the Surviving
Corporation Common Stock created by conversion of the Merger Subsidiary
Common Stock owned by Parent.
(c) Conversion of NorthPoint Common Stock. Subject to Sections
2.3(g) and 2.6 hereof, each share of common stock, par value $0.001, of
NorthPoint ("NorthPoint Common Stock") issued and outstanding immediately
before the Effective Time (excluding those cancelled or converted pursuant
to Section 2.2(a) hereof) and all rights in respect thereof, shall at the
Effective Time, without any action on the part of any holder thereof,
forthwith cease to exist and be converted into and become one validly
issued, fully paid and nonassessable share of common stock, par value
$0.001 per share, of Parent ("Parent Common Stock") and the right to
receive an amount in cash (the "Cash Consideration Amount") equal to (i)
$350 million divided by (ii) the number of issued and outstanding shares of
NorthPoint Common Stock immediately prior to the Effective Time plus the
number of shares of NorthPoint Common Stock subject to warrants and
convertible securities outstanding (excluding stock options issued pursuant
to any NorthPoint Plan and excluding NorthPoint's Preferred Stock)
immediately prior to the Effective Time (collectively, the "Merger
Consideration").
(d) Cancellation of NorthPoint Common Stock. As of the
Effective Time, all shares of NorthPoint Common Stock converted pursuant to
Section 2.2(c) hereof shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each
holder of a certificate (each, an "Old Certificate") representing any such
shares of NorthPoint Common Stock shall cease to have any rights with
respect thereto, except the right to receive the Merger Consideration, in
accordance with Section 2.2(c) hereof, certain dividends or other
distributions in accordance with Section 2.3(f) hereof and any cash in lieu
of fractional shares of Parent Common Stock to be issued or paid in
consideration therefor upon surrender of such certificate in accordance
with Section 2.3(g) hereof, without interest.
Section 2.3 Exchange Procedures.
(a) Subject to the terms and conditions hereof, at or prior to
the Effective Time, Parent shall appoint a bank or trust company to act as
exchange agent (the "Exchange Agent") to effect the payment of the Merger
Consideration in accordance with the provisions of this Article II.
(b) As soon as practicable following the Effective Time, Parent
shall deposit, or cause to be deposited, with the Exchange Agent a
sufficient amount of cash and certificates representing Parent Common Stock
for exchange for Old Certificates in accordance with the provisions of
Section 2.2(c) hereof, including any Excess Parent Shares to be used to pay
cash in lieu of fractional shares of Parent Common Stock (such cash and
certificates, together with any dividends or distributions with respect
thereto, being herein referred to as the "Exchange Fund").
(c) Promptly following the Effective Time, Parent shall cause
the Exchange Agent to mail (and to make available for collection by hand)
to each holder of an Old Certificate (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title
to each Old Certificate shall pass, only upon proper delivery of such Old
Certificate to the Exchange Agent and which shall be in the form and have
such other provisions as Parent may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Old Certificates in
exchange for the Merger Consideration (or cash in lieu of fractional shares
of Parent Common Stock).
(d) Upon surrender of an Old Certificate for cancellation to
the Exchange Agent, together with a letter of transmittal duly completed
and validly executed in accordance with the instructions thereto, and such
other documents as may be required pursuant to such instructions, the
holder of such Old Certificate shall be entitled to receive in exchange
therefor the Merger Consideration for each share of NorthPoint Common Stock
formerly represented by such Old Certificate, to be mailed (or made
available for collection by hand if so elected by the surrendering holder)
within three business days of receipt thereof, and the Old Certificate so
surrendered shall be forthwith cancelled.
(e) The Exchange Agent shall accept such Old Certificates upon
compliance with such reasonable terms and conditions as the Exchange Agent
may impose to effect an orderly exchange thereof in accordance with normal
exchange practices. No interest shall be paid or accrued for the benefit of
holders of the Old Certificates on the Merger Consideration (or the cash
pursuant to subsections (f) and (g) below) payable upon the surrender of
the Certificates.
(f) No dividends or other distributions with respect to Parent
Common Stock with a record date on or after the Effective Time shall be
paid to the holder of any unsurrendered Old Certificate with respect to the
shares of Parent Common Stock represented thereby ("Pre-Surrender
Dividends") by reason of the conversion of shares of NorthPoint Common
Stock pursuant to Section 2.2(c) hereof and no cash payment in lieu of
fractional shares of Parent Common Stock shall be paid to any such holder
pursuant to Section 2.3(g) hereof until such Old Certificate is surrendered
in accordance with this Article II. Subject to the effect of applicable
laws, following surrender of any such Old Certificate, there shall be paid,
without interest, to the Person in whose name the shares of Parent Common
Stock representing such securities are registered (i) at the time of such
surrender or as promptly after the sale of the Excess Parent Shares as
practicable, the amount of any cash payable in lieu of fractional shares of
Parent Common Stock to which such holder is entitled pursuant to Section
2.3(g) hereof and the proportionate amount of Pre-Surrender Dividends, and
(ii) at the appropriate payment date or as promptly as practicable
thereafter, the proportionate amount of dividends or other distributions
with a record date after the Effective Time but prior to such surrender and
a payment date subsequent to such surrender payable with respect to such
shares of Parent Common Stock.
(g) Notwithstanding any other provision of this Agreement, no
fraction of a share of Parent Common Stock will be issued and no dividend
or other distribution, stock split or interest with respect to shares of
Parent Common Stock shall relate to any fractional share of Parent Common
Stock, and such fractional interest shall not entitle the owner thereof to
vote or to any rights as a holder of the shares of Parent Common Stock. In
lieu of any such fractional security, each holder of Parent Common Stock
otherwise entitled to a fraction of a share of Parent Common Stock will be
entitled to receive in accordance with the provisions of this Section 2.3
from the Exchange Agent a cash payment representing such holder's
proportionate interest in the net proceeds from the sale by the Exchange
Agent on behalf of all such holders of the aggregate of the fractions of
shares of Parent Common Stock which would otherwise be issued (the "Excess
Parent Shares"). The sale of the Excess Parent Shares by the Exchange Agent
shall be executed on Nasdaq and shall be executed in round lots to the
extent practicable. Until the net proceeds of such sale or sales have been
distributed to the holders of shares of NorthPoint Common Stock, the
Exchange Agent will, subject to Section 2.3(h) hereof, hold such proceeds
in trust for the holders of shares of NorthPoint Common Stock (the "Parent
Shares Trust"). NorthPoint shall pay all commissions, transfer taxes (other
than those transfer taxes for which NorthPoint's stockholders are solely
liable) and other out-of-pocket transaction costs, including the expenses
and compensation, of the Exchange Agent incurred in connection with such
sale of the Excess Parent Shares. As soon as practicable after the
determination of the amount of cash, if any, to be paid to holders of
shares of NorthPoint Common Stock in lieu of any fractional Parent Common
Stock interests, the Exchange Agent shall make available such amounts to
such holders of shares of NorthPoint Common Stock without interest.
(h) Any portion of the Merger Consideration in the Exchange
Fund which remains undistributed to the holders of the Old Certificates for
six months after the Effective Time shall be delivered to Parent, upon
demand, and any holders of shares of NorthPoint Common Stock prior to the
Merger who have not theretofore complied with this Article II shall
thereafter look for payment of their claim, as general creditors thereof,
only to Parent for their claim for (i) cash, (ii) shares of Parent Common
Stock, (iii) any cash, to be paid, in lieu of any fractional shares of
Parent Common Stock and (iv) any dividends or other distributions with
respect to shares of Parent Common Stock to which such holders may be
entitled.
(i) None of Parent, Verizon, NorthPoint, Merger Subsidiary or
the Exchange Agent shall be liable to any Person in respect of any shares
of Parent Common Stock or cash held in the Exchange Fund (and any cash,
dividends and other distributions payable in respect thereof) delivered to
a public official pursuant to any applicable abandoned property, escheat or
similar law. If any Old Certificates shall not have been surrendered prior
to one year after the Effective Time (or immediately prior to such earlier
date on which (i) any cash, (ii) any shares of Parent Common Stock, (iii)
any cash in lieu of fractional shares of Parent Common Stock or (iv) any
dividends or distributions with respect to shares of Parent Common Stock in
respect of such Certificate would otherwise escheat to or become the
property of any Governmental Entity (as defined herein)), any such shares
of Parent Common Stock, cash, dividends or distributions in respect of such
Certificate shall, to the extent permitted by applicable law, become the
property of Parent, free and clear of all claims or interest of any Person
previously entitled thereto.
(j) The Exchange Agent shall invest any cash included in the
Exchange Fund, as directed by Parent on a daily basis. Any interest and
other income resulting from such investments shall be paid to Parent.
Nothing contained in this Section 2.3(j) shall relieve Parent or the
Exchange Agent from making the payments required by this Article II to be
made to the holders of shares of Common Stock.
Section 2.4 Transfer Books. The stock transfer books of
NorthPoint shall be closed at the Effective Time and no transfer of any
shares of NorthPoint Common Stock will thereafter be recorded on any of
such stock transfer books. In the event of a transfer of ownership of
NorthPoint Common Stock that is not registered in the stock transfer
records of NorthPoint at the Effective Time, the Merger Consideration into
which such shares of NorthPoint Common Stock shall have been converted
shall be issued to the transferee together with a cash payment in lieu of
fractional shares, if any, in accordance with Section 2.3(g) hereof, and a
cash payment in the amount of Pre-Surrender Dividends, if any, in
accordance with Section 2.3(f) hereof, if the Old Certificate therefor is
surrendered as provided in Section 2.3 hereof, accompanied by all documents
required to evidence and effect such transfer and by evidence of payment of
any applicable stock transfer tax. The whole shares of Parent Common Stock
to be delivered to such holder shall be delivered in book-entry form,
unless such holder shall timely elect in writing to receive the
certificates representing such shares.
Section 2.5 Transfer Taxes; Withholding. If any certificate for
a share of Parent Common Stock is to be issued to, or cash is to be
remitted to, a Person (other than the Person in whose name the Old
Certificate surrendered in exchange therefor is registered), it shall be a
condition of such exchange that the Old Certificate so surrendered shall be
properly endorsed and otherwise in proper form for transfer and that the
Person requesting such exchange shall pay to the Exchange Agent any
transfer or other Taxes (as defined herein) required by reason of the
payment of the Merger Consideration to a Person other than the registered
holder of the Old Certificate so surrendered, or shall establish to the
satisfaction of the Exchange Agent that such Tax either has been paid or is
not applicable. Parent or the Exchange Agent shall be entitled to deduct
and withhold from the shares of Parent Common Stock (or cash in lieu of
fractional shares of Parent Common Stock) otherwise payable pursuant to
this Agreement to any holder of shares of NorthPoint Common Stock such
amounts as Parent or the Exchange Agent are required to deduct and withhold
under the Code, or any provision of state, local or foreign Tax law, with
respect to the making of such payment. To the extent that amounts are so
withheld by Parent or the Exchange Agent, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the
holder of shares of NorthPoint Common Stock in respect of whom such
deduction and withholding was made by Parent or the Exchange Agent.
Section 2.6 Dissenting Shares. Notwithstanding Section 2.2
hereof, shares of NorthPoint Common Stock issued and outstanding
immediately prior to the Effective Time and held by a holder who has
properly exercised and perfected his or her demand for appraisal rights
under Section 262 of the DGCL (the "Dissenting Shares") shall not be
converted into the right to receive the Merger Consideration, but the
holders of Dissenting Shares shall be entitled to receive from NorthPoint
such consideration as shall be determined pursuant to Section 262 of the
DGCL; provided, however, that if any such holder shall have failed to
perfect or shall effectively withdraw or lose his or her right to appraisal
and payment under the DGCL, such holder's shares of NorthPoint Common Stock
shall thereupon be deemed to have been converted as of the Effective Time
into the right to receive the Merger Consideration, without any interest
thereon, and such shares shall not be deemed to be Dissenting Shares.
Section 2.7 Options to Purchase NorthPoint Common Stock. At the
Effective Time, each option granted pursuant to a NorthPoint Plan by
NorthPoint to purchase shares of NorthPoint Common Stock (including,
without limitation, any option to purchase shares of NorthPoint Common
Stock outstanding under any employee stock purchase plan maintained by
NorthPoint which is intended to constitute an "employee stock purchase
plan" (as defined in Section 423 of the Code)) which is outstanding and
unexercised immediately prior to the Effective Time shall be converted into
an option to purchase shares of Parent Common Stock in such amount and at
such exercise price as provided below and otherwise having the same terms
and conditions as are in effect immediately prior to the Effective Time
(except to the extent that such terms, conditions and restrictions may be
altered in accordance with their terms as a result of the transactions
contemplated hereby). At the Effective Time, the NorthPoint Plans, and each
outstanding option to purchase shares of NorthPoint Common Stock under the
NorthPoint Plans, whether vested or unvested, will be assumed by Parent.
Notwithstanding anything to the contrary, no cash shall be paid pursuant to
Section 2.2(c) hereof with respect to the options so assumed and converted
pursuant to the following sentence. Each such option so assumed by Parent
under this Agreement shall continue to have, and be subject to, the same
terms and conditions set forth in the NorthPoint Plans and the applicable
stock option agreement as in effect immediately prior to the Effective
Time, except that:
(i) the number of whole shares of Parent Common Stock for which the
option will be exercisable immediately after the Effective Time shall be
equal to the number of shares of NorthPoint Common Stock subject to such
option immediately prior to the Effective Time multiplied by a fraction the
numerator of which is the Cash Consideration Amount plus the Closing Market
Value and the denominator of which is the Closing Market Value (such
fraction, the "Option Ratio"), with the resulting number of shares of
Parent Common Stock subject to the assumed option to be rounded down to the
next whole number of shares of Parent Common Stock, and
(ii) the per share exercise price for the shares of Parent Common
Stock issuable upon exercise of such assumed option will be equal to the
quotient determined by dividing the original exercise price by the Option
Ratio, with such adjusted per share exercise price to be rounded up to the
next whole cent.
(iii) "Closing Market Value" means the average of the last sale
prices for a share of Parent Common Stock as quoted on the Nasdaq National
Market (as reported in The Wall Street Journal) for the first five full
trading days immediately following the Effective Time.
The adjustments provided herein with respect to any options
which are "incentive stock options" (as defined in Section 422 of the Code)
shall be effected in a manner consistent with Section 424(a) of the Code or
which are options granted under an employee stock purchase plan (as defined
in Section 423 of the Code).
Section 2.8 Restricted Stock. At the Effective Time, any shares
of NorthPoint Common Stock awarded pursuant to any plan, arrangement or
transaction, and outstanding immediately prior to the Effective Time shall
be converted into cash and shares of Parent Common Stock in accordance with
Section 2.2(c) hereof, subject to the same terms, conditions and
restrictions as in effect immediately prior to the Effective Time, except
to the extent that such terms, conditions and restrictions may be altered
in accordance with their terms as a result of the transactions contemplated
hereby.
Section 2.9 Certain Adjustments. If between the date hereof and
the Effective Time, the outstanding shares of NorthPoint Common Stock or of
Parent Common Stock shall be changed into a different number of shares by
reason of any reclassification, recapitalization, split-up, combination or
exchange of shares, or any dividend payable in stock or other securities
shall be declared thereon with a record date within such period, the Merger
Consideration shall be adjusted accordingly to provide to the holders of
NorthPoint Common Stock and NorthPoint Preferred Stock the same economic
effect as contemplated by this Agreement prior to such reclassification,
recapitalization, split-up, combination, exchange or dividend.
ARTICLE III
CERTAIN ADDITIONAL MATTERS
Section 3.1 Certificate of Incorporation and By-laws of Parent.
Prior to the Effective Time and subject to and upon the terms and
conditions of this Agreement, Verizon shall cause the Certificate of
Incorporation and By-laws of Parent to be amended and restated to be in the
form of Exhibit B and Exhibit C, respectively.
Section 3.2 Corporate Headquarters. Immediately following the
Effective Time, the headquarters of Parent shall be located at the current
corporate headquarters of NorthPoint.
Section 3.3 Corporate Identity. At the Effective Time, the
corporate name of Parent shall be NorthPoint Communications Group, Inc.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF NORTHPOINT
Except as set forth in the disclosure schedule delivered by
NorthPoint to Verizon on the date hereof (the "NorthPoint Disclosure
Schedule") (each section of which qualifies the correspondingly numbered
representation and warranty or covenant as specified therein), NorthPoint
hereby represents and warrants to Verizon as follows:
Section 4.1 Organization and Qualification; Subsidiaries. Each
of NorthPoint and its Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization. Each of NorthPoint and its Subsidiaries has
the requisite corporate power and authority and any necessary governmental
authority, franchise, license, certificate or permit to own, operate or
lease the properties that it purports to own, operate or lease and to carry
on its business as it is now being conducted, and is duly qualified as a
foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned, operated or
leased or the nature of its activities makes such qualification necessary,
except for such failure which, when taken together with all other such
failures, would not have a Material Adverse Effect on NorthPoint.
Section 4.2 Certificate of Incorporation and By-laws.
NorthPoint has heretofore furnished, or otherwise made available, to
Verizon a complete and correct copy of the Certificate of Incorporation and
the By-laws of NorthPoint, each as amended to the date hereof. Such
Certificate of Incorporation and By-laws are in full force and effect.
Neither NorthPoint nor any of its Subsidiaries is in violation of any of
the provisions of its respective Certificate of Incorporation or its
By-laws.
Section 4.3 Capitalization.
(a) The authorized capital stock of NorthPoint consists of (i)
281,250,000 shares of common stock, par value $0.001 per share, of which,
as of August 4, 2000, (A) 132,742,066 shares are outstanding, (B) 200,000
shares are held in the treasury of NorthPoint, (C) not more than 21,093,985
shares are issuable upon the exercise of options outstanding under the
NorthPoint option plans, (D) 13,388,155 shares are reserved for issuance in
connection with the NorthPoint Plans (as defined in Section 4.11(b)
hereof), and (ii) 24,276,843 shares of preferred stock, par value $0.001
per share, 1,500,000 of which are designated as 9% Convertible Preferred
Stock and none of which is currently outstanding or reserved for issuance.
Except as permitted by Section 6.1 hereof and except in connection with the
Preferred Financing, since June 20, 2000, no shares of NorthPoint Common
Stock or NorthPoint preferred stock have been issued, except upon the
exercise of options described in the immediately preceding sentence or as
contemplated by this Agreement. Section 4.3(a) of the NorthPoint Disclosure
Schedule sets forth a complete and accurate list, as of the date hereof, of
all NorthPoint Equity Rights, including the holders thereof, the number of
shares of NorthPoint capital stock subject to each such NorthPoint Equity
Right, the exercise or vesting schedule, the exercise price per share and
the term of each such NorthPoint Equity Right. On the day immediately
preceding the Closing Date, NorthPoint shall deliver to Parent an updated
Section 4.3(a) of the NorthPoint Disclosure Schedule, current as of the
Closing Date. Except as set forth in Section 4.3(a) of the NorthPoint
Disclosure Schedule, there are no NorthPoint Equity Rights outstanding as
of the date hereof.
(b) Except as set forth in Section 4.3(b) of the NorthPoint
Disclosure Schedule, or, after the date hereof, as permitted by Section 6.1
hereof, there are no outstanding obligations of NorthPoint or any of
NorthPoint's Subsidiaries to repurchase, redeem or otherwise acquire any
shares of capital stock of NorthPoint.
(c) All of the issued and outstanding shares of NorthPoint
Common Stock are validly issued, fully paid and nonassessable.
(d) All of the outstanding capital stock of each of
NorthPoint's Subsidiaries is owned directly or indirectly by NorthPoint and
is duly authorized, validly issued, fully paid and nonassessable. Except as
set forth in Section 4.3(d) of the NorthPoint Disclosure Schedule, all of
the outstanding capital stock of each of NorthPoint's Subsidiaries is owned
by NorthPoint free and clear of any liens, security interests, pledges,
agreements, claims, charges or encumbrances ("Liens"). Except as hereafter
issued or entered into in accordance with Section 6.1 hereof, there are no
Equity Rights to purchase or otherwise acquire from NorthPoint or any of
NorthPoint's Subsidiaries at any time, or upon the happening of any stated
event, any shares of the capital stock of any NorthPoint Subsidiary,
whether or not presently issued or outstanding, or any of NorthPoint's
direct or indirect interests in any Material Investment, and there are no
outstanding obligations of NorthPoint or any of NorthPoint's Subsidiaries
to repurchase, redeem or otherwise acquire any shares of capital stock of
any of NorthPoint's Subsidiaries or securities related to any investments.
Section 4.4 Authority Relative to this Agreement. NorthPoint
has the necessary corporate power and authority to enter into this
Agreement and, subject to obtaining the requisite approval of this
Agreement by NorthPoint's stockholders required by the DGCL (the
"NorthPoint Stockholder Approval"), to perform its obligations hereunder.
The execution and delivery of this Agreement by NorthPoint, and the
consummation by NorthPoint of the transactions contemplated hereby, have
been duly authorized by all necessary corporate action on the part of
NorthPoint, subject to obtaining the NorthPoint Stockholder Approval. This
Agreement has been duly executed and delivered by NorthPoint and, assuming
the due authorization, execution and delivery thereof by each of Verizon,
Parent and Merger Subsidiary, constitutes a legal, valid and binding
obligation of NorthPoint, enforceable against it in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting the rights and remedies
of creditors generally and to general principles of equity (regardless of
whether considered in a proceeding in equity or at law).
Section 4.5 No Conflict; Required Filings and Consents.
(a) Except as described in subsection (b) below or except as
set forth in Section 4.5 of the NorthPoint Disclosure Schedule, the
execution and delivery of this Agreement by NorthPoint do not, and the
performance of this Agreement by NorthPoint will not, (i) violate or
conflict with the Certificate of Incorporation or By-laws of NorthPoint,
(ii) conflict with or violate any law, regulation, court order, judgment or
decree applicable to NorthPoint or any of its Subsidiaries or by which any
of their respective property or assets (including investments) is bound or
affected, (iii) violate or conflict with the Certificate of Incorporation
or By-laws of any of NorthPoint's Subsidiaries, or (iv) result in any
breach of or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights
of termination or cancellation of, or result in the creation of a lien or
encumbrance on any of the properties or assets (including investments) of
NorthPoint or any of its Subsidiaries pursuant to, result in the loss of
any material benefit under, or result in any modification or alteration of,
or require the consent of any other party to, any contract, instrument,
permit, license or franchise to which NorthPoint or any of its Subsidiaries
is a party or by which NorthPoint, any of such Subsidiaries or any of their
respective property or assets (including investments) is bound or affected,
except in the case of this clause (iv) for conflicts, violations, breaches,
defaults, results or consents which, individually or in the aggregate,
would not have a Material Adverse Effect on NorthPoint.
(b) Except as set forth in Section 4.5 of the NorthPoint
Disclosure Schedule and except for applicable requirements, if any, of
state or foreign public utility commissions or laws or similar local or
state or foreign regulatory bodies or laws, state or foreign antitrust or
foreign investment laws and commissions, the Federal Communications
Commission, stock exchanges or other self-regulatory body upon which
securities of NorthPoint are listed, the Exchange Act, the premerger
notification requirements of the HSR Act, filing and recordation of
appropriate merger or other documents as required by the DGCL and any
filings required pursuant to any state securities or "blue sky" laws or the
rules of any applicable stock exchanges or other self-regulatory body, (i)
neither NorthPoint nor any of its Subsidiaries is required to submit any
notice, report or other filing with any federal, state, local or foreign
government, any court, administrative, regulatory or other governmental
agency, commission or authority or any non-governmental U.S. or foreign
self- regulatory agency, commission or authority or any arbitral tribunal
(each, a "Governmental Entity") in connection with the execution, delivery
or performance of this Agreement and (ii) no waiver, consent, approval or
authorization of any Governmental Entity is required to be obtained by
NorthPoint or any of its Subsidiaries in connection with its execution,
delivery or performance of this Agreement.
Section 4.6 SEC Filings; Financial Statements.
(a) NorthPoint has filed all forms, reports and documents
required to be filed with the Securities and Exchange Commission ("SEC")
since May 16, 1997, and has heretofore delivered or made available to
Verizon, in the form filed with the SEC, together with any amendments
thereto, its (i) Annual Reports on Form 10-K for the fiscal year ended
December 31, 1999, (ii) all proxy statements relating to NorthPoint's
meetings of stockholders (whether annual or special) held since May 16,
1997, (iii) Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 2000, and (iv) all other reports or registration statements filed
by NorthPoint with the SEC since May 16, 1997 (collectively, the
"NorthPoint SEC Reports", with such NorthPoint SEC Reports filed with the
SEC prior to the date hereof being referred to as "NorthPoint Filed SEC
Reports"). The NorthPoint SEC Reports (i) were prepared substantially in
accordance with the requirements of the 1933 Act or the Exchange Act, as
the case may be, and the rules and regulations promulgated under each of
such respective acts, and (ii) did not at the time they were filed contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(b) The financial statements, including all related notes and
schedules, contained in the NorthPoint SEC Reports (or incorporated by
reference therein) fairly present the consolidated financial position of
NorthPoint and its Subsidiaries as at the respective dates thereof and the
consolidated results of operations and cash flows of NorthPoint and its
Subsidiaries for the periods indicated in accordance with GAAP applied on a
consistent basis throughout the periods involved (except for changes in
accounting principles disclosed in the notes thereto) and subject in the
case of interim financial statements to normal year-end adjustments. The
books and records of NorthPoint and its Subsidiaries have been kept in
accordance with sound business practices, including the maintenance of an
adequate system of internal controls for recording revenue and expenses in
accordance with GAAP applied on a consistent basis throughout the periods
involved.
Section 4.7 Absence of Certain Changes or Events. Except as
disclosed in the NorthPoint Filed SEC Reports and in Section 4.7 of the
NorthPoint Disclosure Schedule, since December 31, 1999, and except as
permitted by this Agreement or consented to by Verizon hereunder,
NorthPoint and its Subsidiaries have not incurred any liability required to
be disclosed on a balance sheet of NorthPoint and its Subsidiaries or the
footnotes thereto prepared in conformity with GAAP, except in the ordinary
course of their businesses consistent with their past practices, and there
has not been any Material Adverse Effect on NorthPoint, and NorthPoint and
its Subsidiaries have conducted their respective businesses in the ordinary
course consistent with their past practices, except as set forth in the
Master Services Agreement attached as Exhibit H hereto.
Section 4.8 Litigation. There are no claims, actions, suits,
proceedings or investigations pending or, to NorthPoint's knowledge,
threatened against NorthPoint or any of its Subsidiaries, or any properties
or rights of NorthPoint or any of its Subsidiaries, by or before any
Governmental Entity, except for those that do not, individually or in the
aggregate, have a Material Adverse Effect on NorthPoint or prevent or
materially delay the ability of NorthPoint to consummate the transactions
contemplated hereby.
Section 4.9 Permits; No Violation of Law.
(a) NorthPoint and its Subsidiaries have all Federal
Communications Commission ("FCC") licenses and authorizations and all state
governmental authorizations and certificates, and have filed all required
federal and state notifications (all of the above being collectively
referred to as "Governmental Approvals") necessary for the operation of
their currently conducted telecommunications businesses in the United
States, except for those Government Approvals the absence of which,
individually or in the aggregate, would not have a Material Adverse Effect
on NorthPoint. All material Governmental Approvals granted to NorthPoint
and its Subsidiaries are listed in Section 4.9 of the NorthPoint Disclosure
Schedule and remain in full force and effect, and have not been revoked,
suspended, cancelled or modified in any adverse way, and are not subject to
any conditions or requirements that are not generally imposed by the FCC or
the issuing state communications regulatory agency upon the holders of such
Government Approvals.
(b) The businesses of NorthPoint and its Subsidiaries are not
being conducted in violation of any statute, law, ordinance, regulation,
judgment, order or decree of any Governmental Entity (including any stock
exchange or other self-regulatory body) ("Legal Requirements"), or in
violation of any Government Approvals or other permits, franchises,
licenses, authorizations, certificates, variances, exemptions, orders,
registrations or consents that are granted by any Governmental Entity
(including any stock exchange or other self-regulatory body) ("Permits"),
except for possible violations none of which, individually or in the
aggregate, may reasonably be expected to have a Material Adverse Effect on
NorthPoint. No investigation or review by any Governmental Entity
(including any stock exchange or other self-regulatory body) with respect
to NorthPoint or its Subsidiaries in relation to any alleged violation of
law or regulation is pending or, to NorthPoint's knowledge, threatened, nor
has any Governmental Entity (including any stock exchange or other
self-regulatory body) indicated an intention to conduct the same, except
for such investigations which, if they resulted in adverse findings, would
not have, individually or in the aggregate, a Material Adverse Effect on
NorthPoint. Except as set forth in Section 4.9 of the NorthPoint Disclosure
Schedule, neither NorthPoint nor any of its Subsidiaries is subject to any
cease and desist or other order, judgment, injunction or decree issued by,
or is a party to any written or oral Agreement, consent or memorandum of
understanding with, or is a party to any commitment letter or similar
undertaking to, or is subject to any order or directive by, or has adopted
any board resolutions at the request of, any Governmental Entity that
materially restricts the conduct of its business or which may reasonably be
expected to have a Material Adverse Effect on NorthPoint, nor has
NorthPoint or any of its Subsidiaries been advised that any Governmental
Entity is considering issuing or requesting any of the foregoing.
Section 4.10 Proxy Statement. None of the information supplied
or to be supplied by or on behalf of NorthPoint for inclusion or
incorporation by reference in the registration statement to be filed with
the SEC by Parent in connection with the issuance of shares of Parent
Common Stock in the Merger (the "Registration Statement") will, at the time
the Registration Statement becomes effective under the 1933 Act, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading. None of the information supplied or to be supplied by or on
behalf of NorthPoint for inclusion or incorporation by reference in the
proxy statement, in definitive form as it may be supplemented or amended,
relating to the NorthPoint Stockholders' Meeting or in the related proxy
and notice of meeting, or soliciting material used in connection therewith
(referred to herein collectively as the "Proxy Statement") will, at the
dates mailed to stockholders and at the time of the NorthPoint
Stockholders' Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The Registration Statement and
the Proxy Statement (except for information relating solely to Verizon)
will comply as to form in all material respects with the provisions of the
1933 Act and the Exchange Act and the rules and regulations promulgated
thereunder.
Section 4.11 Employee Matters; ERISA.
(a) Except where the failure to be true would not, individually
or in the aggregate, have a Material Adverse Effect on NorthPoint, (i) each
NorthPoint Plan has been operated and administered in accordance with
applicable law, including but not limited to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and the Code, (ii) each
NorthPoint Plan intended to be "qualified" within the meaning of Section
401(a) of the Code is so qualified, (iii) except as required by COBRA, no
NorthPoint Plan provides death or medical benefits (whether or not
insured), with respect to current or former employees of NorthPoint or of
any trade or business, whether or not incorporated, which together with
NorthPoint would be deemed a "single employer" within the meaning of
Section 4001 of ERISA (a "NorthPoint ERISA Affiliate"), beyond their
retirement or other termination of service, (iv) no liability under Title
IV of ERISA has been incurred by NorthPoint or any NorthPoint ERISA
Affiliate that has not been satisfied in full, and no condition exists that
presents a material risk to NorthPoint or any NorthPoint ERISA Affiliate of
incurring any such liability (other than PBGC premiums), (v) all
contributions or other amounts due from NorthPoint or any NorthPoint ERISA
Affiliate with respect to each NorthPoint Plan have been paid in full, (vi)
neither NorthPoint nor any NorthPoint ERISA Affiliate has engaged in a
transaction in connection with which NorthPoint or any of its Subsidiaries
could reasonably be expected to be subject to either a civil penalty
assessed pursuant to Section 409 or 502(i) of ERISA or a tax imposed
pursuant to Section 4975 or 4976 of the Code, (vii) to the best knowledge
of NorthPoint, there are no pending, threatened or anticipated claims
(other than routine claims for benefits) by, on behalf of or against any
NorthPoint Plan or any trusts related thereto, and (viii) neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (A) result in any payment (including,
without limitation, severance, unemployment compensation, golden parachute
or otherwise) becoming due to any director or any employee of NorthPoint or
any of its Subsidiaries under any NorthPoint Plan or otherwise, (B)
materially increase any benefits otherwise payable under any NorthPoint
Plan or (C) result in any acceleration of the time of payment or vesting of
any such benefits.
(b) For purposes of this Agreement, "NorthPoint Plan" shall
mean each deferred compensation, bonus or other incentive compensation,
stock purchase, stock option or other equity compensation plan, program,
agreement or arrangement; each severance or termination pay, medical,
surgical, hospitalization, life insurance or other "welfare" plan, fund or
program (within the meaning of section 3(1) of ERISA); each profit-sharing,
stock bonus or other "pension" plan, fund or program (within the meaning of
section 3(2) of ERISA); each employment, termination or severance
agreement; and each other employee benefit plan, fund, program, agreement
or arrangement, in each case, that is sponsored, maintained or contributed
to or required to be contributed to by NorthPoint or by any NorthPoint
ERISA Affiliate or to which NorthPoint or any NorthPoint ERISA Affiliate is
party, whether written or oral, for the benefit of any employee or former
employee of NorthPoint or any NorthPoint ERISA Affiliate.
Section 4.12 Labor Matters.
(a) Neither NorthPoint nor any of its Subsidiaries is a party
to any collective bargaining or other labor union contract applicable to
Persons employed by NorthPoint or any of its Subsidiaries and no collective
bargaining agreement is being negotiated by NorthPoint or any of its
Subsidiaries. There has not been, since NorthPoint's or any of its
Subsidiaries' inception, any labor strike, dispute, walkout, work stoppage,
slow-down or lockout against NorthPoint or any of its Subsidiaries, nor is
there one pending or, to the knowledge of NorthPoint, threatened, which may
interfere with the respective business activities of NorthPoint or any of
its Subsidiaries.
(b) To the knowledge of NorthPoint, there is no charge,
complaint or investigation against NorthPoint or any of its Subsidiaries
(i) before the National Labor Relations Board or any comparable
Governmental Entity pending or threatened in writing or (ii) asserting that
it or any of its Subsidiaries has committed an unfair labor practice nor is
NorthPoint or any of its Subsidiaries the subject of any proceeding seeking
to compel it to bargain with any labor union or labor organization. To the
knowledge of NorthPoint, none of NorthPoint, any of its Subsidiaries or any
of their respective representatives or employees has committed any unfair
labor practice in connection with the operation of the respective business
of NorthPoint or any of its Subsidiaries.
Section 4.13 Environmental Matters. Except as could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on NorthPoint, (i) each of NorthPoint and its Subsidiaries
has complied with all applicable Environmental Laws (as defined below);
(ii) the properties currently owned or operated by NorthPoint or any of its
Subsidiaries (including soils, groundwater, surface water, buildings or
other structures) are not contaminated with any Hazardous Substances (as
defined below); (iii) the properties formerly owned or operated by
NorthPoint or any of its Subsidiaries were not contaminated with Hazardous
Substances during the period of ownership or operation by it or any of its
Subsidiaries; (iv) neither NorthPoint nor any of its Subsidiaries is
subject to liability for any Hazardous Substance disposal or contamination
on any third party property; (v) neither NorthPoint nor any Subsidiary has
been associated with any release or threat of release of any Hazardous
Substance that is reasonably expected to result in liability; (vi) neither
NorthPoint nor any Subsidiary has received any notice, demand, letter,
claim or request for information alleging that it or any of its
Subsidiaries may be in violation of or liable under any Environmental Law
(including any claims relating to electromagnetic fields or microwave
transmissions); (vii) neither NorthPoint nor any of its Subsidiaries is
subject to any orders, decrees, injunctions or other arrangements with any
Governmental Entity or is subject to any indemnity or other agreement with
any third party relating to liability under any Environmental Law or
relating to Hazardous Substances; and (viii) there are no circumstances or
conditions involving NorthPoint or any of its Subsidiaries that could
reasonably be expected to result in any claims, liability, investigations,
costs or restrictions on the ownership, use, or transfer of any of its
properties pursuant to any Environmental Law.
Section 4.14 Tax Matters. Except as set forth in Section 4.14 of
the NorthPoint Disclosure Schedule:
(a) All material federal, state, local and foreign Tax Returns
(as defined herein) required to have been filed by NorthPoint or its
Subsidiaries have been filed with the appropriate governmental authorities
by the due date thereof including extensions;
(b) The Tax Returns referred to in paragraph (a) of this
Section 4.14 were true, correct and complete in all material respects;
(c) All material Taxes shown as due on those Tax Returns
referred to in paragraph (a) of this Section 4.14 as well as material
withholding Taxes imposed on or in respect of any amounts paid to or by
NorthPoint or any of its Subsidiaries, whether or not such withholding
Taxes are referred to or shown on any Tax Returns referred to in Section
4.14 (a) hereof, have been fully paid or adequately reflected as a
liability on NorthPoint's or its Subsidiaries' financial statements
included in the NorthPoint SEC Reports;
(d) With respect to any period for which Tax Returns have not
yet been filed, or for which Taxes are not yet due or owing, NorthPoint and
its Subsidiaries have made due and sufficient accruals in accordance with
GAAP for such Taxes in their respective books and records and financial
statements;
(e) Neither NorthPoint nor any of its Affiliates has taken,
agreed to take or omitted to take any action that would prevent or impede
the Asset Contribution and the Merger from qualifying as either (i) a
tax-free reorganization under Section 368(a) of the Code or (ii) a
transaction described in Section 351 of the Code (it being agreed that it
shall not be a violation of this Section 4.14(e) if the payment of the Cash
Consideration Amount causes the Merger not to qualify as a tax-free
reorganization under Section 368(a) of the Code);
(f) No deficiencies for any Taxes have been proposed, asserted
or assessed against NorthPoint or any of its Subsidiaries that are not
adequately reserved for under GAAP, except for deficiencies that
individually or in the aggregate would not have a Material Adverse Effect
on NorthPoint;
(g) NorthPoint is not aware of any material liens for Taxes
upon any assets of NorthPoint or any of its Subsidiaries apart from liens
for Taxes not yet due and payable; and
(h) As used in this Agreement, "Taxes" shall include all (x)
federal, state, local or foreign income, property, sales, excise, use,
occupation, service, transfer, payroll, franchise, withholding and other
taxes or similar governmental charges, fees, levies or other assessments
including any interest, penalties or additions with respect thereto, (y)
liability for the payment of any amounts of the type described in clause
(x) as a result of being a member of an affiliated, consolidated, combined
or unitary group, and (z) liability for the payment of any amounts as a
result of being party to any tax sharing agreement or as a result of any
express or implied obligation to indemnify any other Person with respect
to the payment of any amounts of the type described in clause (x) or (y).
As used in this Agreement, "Tax Return" shall include any declaration,
return, report, schedule, certificate, statement or other similar document
(including relating or supporting information) required to be filed with a
taxing authority or, where none is required to be filed with a taxing
authority, the statement or other document issued by a taxing authority in
connection with any Tax, including any information return, claim for
refund, amended return or declaration of estimated Tax.
Section 4.15 Intellectual Property.
(a) As used in this Agreement, "NorthPoint Intellectual
Property" means all of the following which are necessary to conduct the
business of NorthPoint and its Subsidiaries as presently conducted or as
currently proposed to be conducted: (i) trademarks, trade dress, service
marks, copyrights, logos, trade names, corporate names and all
registrations and applications to register the same; (ii) patents and
pending patent applications; (iii) all computer software programs,
databases and compilations (collectively, "Computer Software"); (iv) all
technology, know-how and trade secrets; and (v) all material licenses and
agreements to which NorthPoint or any of its Subsidiaries is a party which
relate to any of the foregoing.
(b) Except as set forth in Section 4.15(b) of the NorthPoint
Disclosure Schedule, NorthPoint or its Subsidiaries owns or has the right
to use, sell or license all NorthPoint Intellectual Property, free and
clear of all liens or encumbrances, and all registrations of NorthPoint
Intellectual Property are valid and enforceable and have been duly recorded
and maintained, except, in each case, as would not, individually or in the
aggregate, have a Material Adverse Effect on NorthPoint.
(c) Except as set forth in Section 4.15(c) of the NorthPoint
Disclosure Schedule, to the knowledge of NorthPoint, the conduct of
NorthPoint's and its Subsidiaries' business or the use of the NorthPoint
Intellectual Property does not infringe, violate, misappropriate or misuse
any intellectual property rights or any other proprietary right of any
Person or give rise to any obligations to any Person as a result of
co-authorship, and neither NorthPoint nor any of its Subsidiaries has
received any notice of, not satisfactorily resolved, any claims or charges
of infringement or misappropriation or threats that the conduct of
NorthPoint's or its Subsidiaries' business or NorthPoint's or its
Subsidiaries' use of any of the NorthPoint Intellectual Property materially
infringes, violates, misappropriates or misuses, or is otherwise in
conflict with, any intellectual property or proprietary rights of any
Person or that any of the NorthPoint Intellectual Property is invalid or
unenforceable.
(d) NorthPoint and its Subsidiaries have used reasonable
efforts to maintain the confidentiality of their trade secrets and other
confidential NorthPoint Intellectual Property.
Section 4.16 Insurance. Except as set forth in Section 4.16 of
the NorthPoint Disclosure Schedule, each of NorthPoint and each of its
Subsidiaries is, and has been continuously since December 31, 1999 (or such
later date as such Subsidiary was organized or acquired by NorthPoint),
insured with financially responsible insurers in such amounts and against
such risks and losses as are customary for companies conducting the
business as conducted by NorthPoint and its Subsidiaries during such time
period. Except as set forth in Section 4.16 of the NorthPoint Disclosure
Schedule, since December 31, 1999, neither NorthPoint nor any of its
Subsidiaries has received notice of cancellation or termination with
respect to any material insurance policy of NorthPoint or its Subsidiaries.
The insurance policies of NorthPoint and its Subsidiaries are valid and
enforceable policies.
Section 4.17 Certain Contracts.
(a) Section 4.17(a) of the NorthPoint Disclosure Schedule and
NorthPoint's Annual Report on Form 10-K for the year ended December 31,
1999 and the Quarterly Report on Form 10-Q for the quarter ended March 31,
2000 together set forth a true and complete list of (i) all strategic and
joint venture agreements, material DSL service contracts and agreements
with DSL equipment vendors to which NorthPoint or any of its Subsidiaries
is a party or may be bound and (ii) all contracts described in Item
601(b)(10) of Regulation S-K to which NorthPoint or its Subsidiaries is a
party or may be bound (collectively, the "NorthPoint Contracts"). All
NorthPoint Contracts are valid and in full force and effect on the date
hereof except to the extent they have previously expired in accordance with
their terms or if the failure to be in full force and effect, individually
and in the aggregate, would not have a Material Adverse Effect on
NorthPoint. Neither NorthPoint nor any of its Subsidiaries has violated any
provision of, or committed or failed to perform any act which with or
without notice, lapse of time or both would constitute a default under the
provisions of, any NorthPoint Contract, except in each case for those
NorthPoint Contracts which, individually and in the aggregate, would not
result in a Material Adverse Effect on NorthPoint.
(b) Set forth in Section 4.17 (b) of the NorthPoint Disclosure
Schedule is a list of each contract, agreement or arrangement to which
NorthPoint or any of its Subsidiaries is a party or may be bound which
limits or restrains Verizon, NorthPoint, any Verizon or NorthPoint
Subsidiary or any successor thereto from engaging or competing in any
business which arrangement has, or could reasonably be expected to have in
the foreseeable future, a Material Adverse Effect on NorthPoint, or to
NorthPoint's knowledge, on Verizon.
Section 4.18 Board Action; Vote Required; Applicability of
Section 203.
(a) The Board of Directors of NorthPoint has unanimously
determined that the transactions contemplated by this Agreement are in the
best interests of NorthPoint and its stockholders and has resolved to
recommend to such stockholders that they vote in favor of this Agreement
and the Merger.
(b) The approval of this Agreement and the Merger by a majority
of the outstanding shares entitled to vote thereon by all holders of
NorthPoint Common Stock and, if then entitled to vote, the 9% Convertible
Preferred Stock of NorthPoint, voting together as a single class, is the
only vote of the holders of any class or series of the capital stock of
NorthPoint required to approve this Agreement, the Merger and the other
transactions contemplated hereby.
(c) The provisions of Section 203 of the DGCL will not apply to
this Agreement or any of the transactions contemplated hereby.
Section 4.19 Opinions of Financial Advisors. NorthPoint has
received the opinion of Goldman, Sachs & Co., dated as of August 7, 2000,
to the effect that, as of such date, the Merger Consideration to be
received by the holders of NorthPoint Common Stock pursuant to this
Agreement is fair from a financial point of view to such holders.
Section 4.20 Brokers. Except for Goldman Sachs & Co., a true and
complete copy of whose engagement letter has been provided to Verizon prior
to the execution hereof, and Frank Yeary, the terms of whose engagement
have been disclosed to Verizon prior to the execution hereof, no broker,
finder or investment banker is entitled to any brokerage, finder's,
investment banking or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by
or on behalf of NorthPoint or any of its Subsidiaries.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF VERIZON
Except as set forth in the disclosure schedule delivered by
Verizon to NorthPoint on the date hereof (the "Verizon Disclosure
Schedule") (each section of which qualifies the correspondingly numbered
representation and warranty or covenant as specified therein), Verizon
hereby represents and warrants to NorthPoint as follows:
Section 5.1 Organization and Qualification; Subsidiaries. Each
of Verizon, Parent and Merger Subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization. Verizon has the requisite corporate power
and authority and any necessary governmental authority, franchise, license
or permit to own, operate or lease the properties that it purports to own,
operate or lease and to carry on the Verizon DSL Business as it is now
being conducted, and is duly qualified as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character
of its DSL properties owned, operated or leased or the nature of its DSL
activities makes such qualification necessary, except for such failures
which, when taken together with all other such failures, would not have a
Material Adverse Effect on the Verizon DSL Business.
Section 5.2 Authority Relative to this Agreement. Each of
Verizon, Parent and Merger Subsidiary has the necessary corporate power and
authority to enter into this Agreement to perform its obligations
hereunder. The execution and delivery of this Agreement by Verizon, Parent
and Merger Subsidiary and the consummation by Verizon, Parent and Merger
Subsidiary of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Verizon, Parent
and Merger Subsidiary. This Agreement has been duly executed and delivered
by Verizon, Parent and Merger Subsidiary and, assuming the due
authorization, execution and delivery thereof by the other Parties,
constitutes a legal, valid and binding obligation of Verizon, Parent and
Merger Subsidiary, enforceable against each of them in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting the rights and remedies
of creditors generally and to general principles of equity (regardless of
whether considered in a proceeding in equity or at law).
Section 5.3 No Conflict; Required Filings and Consents.
(a) Except as described in subsection (b) below, the execution
and delivery of this Agreement by Verizon, Parent and Merger Subsidiary do
not, and the performance of this Agreement by Verizon, Parent and Merger
Subsidiary will not, (i) violate or conflict with the Certificate of
Incorporation or By-laws of Verizon, Parent or Merger Subsidiary, (ii)
conflict with or violate any law, regulation, court order, judgment or
decree applicable to Verizon, Parent or Merger Subsidiary or by which any
of their respective property or assets (including investments) is bound or
affected, or (iii) result in any breach of or constitute a default (or an
event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination or cancellation of, or
result in the creation of a lien or encumbrance on any of the properties or
assets (including investments) of Verizon or Parent pursuant to, result in
the loss of any material benefit under, or result in any modification or
alteration of, or require the consent of any other party to, any contract,
instrument, permit, license or franchise to which Verizon or Parent is a
party or by which Verizon or Parent or any of their respective property or
assets (including investments) is bound or affected, except in the case of
this clause (iii) for conflicts, violations, breaches, defaults, results or
consents which, individually or in the aggregate, would not have a Material
Adverse Effect on the Verizon DSL Business.
(b) Except for applicable requirements, if any, of state or
foreign public utility commissions or laws or similar local or state
foreign regulatory bodies or laws, state or foreign antitrust or foreign
investment laws and commissions, the Federal Communications Commission, the
Exchange Act, the premerger notification requirements of the HSR Act,
filing and recordation of appropriate merger or other documents as required
by the DGCL and any filings required pursuant to any state securities or
"blue sky" laws or the rules of any applicable stock exchanges or other
self-regulatory body, (i) none of Verizon, Parent or Merger Subsidiary is
required to submit any notice, report or other filing with any Governmental
Entity in connection with the execution, delivery or performance of this
Agreement and (ii) no waiver, consent, approval or authorization of any
Governmental Entity is required to be obtained by Verizon or Parent in
connection with its execution, delivery or performance of this Agreement.
Section 5.4 Litigation. Except as set forth in Section 5.4 of
the Verizon Disclosure Schedule, there are no claims, actions, suits,
proceedings or investigations pending or, to Verizon's knowledge,
threatened against Verizon or Parent in respect of the Verizon DSL
Business, or to which any properties or rights of Verizon included in the
Verizon DSL Assets are subject, by or before any Governmental Entity,
except for those that are not, individually or in the aggregate, reasonably
likely to have a Material Adverse Effect on the Verizon DSL Business or
prevent, materially delay or intentionally delay the ability of Verizon to
consummate the transactions contemplated hereby.
Section 5.5 Permits; No Violation of Law.
(a) Verizon or one or more of its Subsidiaries have all
Governmental Approvals necessary for the operation of the Verizon DSL
Business, except for those Government Approvals the absence of which,
individually or in the aggregate, would not have a Material Adverse Effect
on the Verizon DSL Business. All material Government Approvals granted to
Verizon and its Subsidiaries with respect to the Verizon DSL Business are
listed in Section 5.5 of the Verizon Disclosure Schedule and remain in full
force and effect, and have not been revoked, suspended, cancelled or
modified in any adverse way, and are not subject to any conditions or
requirements that are not generally imposed by the FCC or the issuing state
communications regulatory agency upon the holders of such Government
Approvals.
(b) The Verizon DSL Business is not being operated in violation
of any Legal Requirements or in violation of any Permits, except for
possible violations none of which, individually or in the aggregate, may
reasonably be expected to have a Material Adverse Effect on the Verizon DSL
Business. No investigation or review by any Governmental Entity (including
any stock exchange or other self-regulatory body) with respect to Verizon
in relation to any alleged violation of law or regulation is pending or, to
Verizon's knowledge, threatened, nor has any Governmental Entity (including
any stock exchange or other self-regulatory body) indicated an intention to
conduct the same, except for such investigations which, if they resulted in
adverse findings, would not have, individually or in the aggregate, a
Material Adverse Effect on the Verizon DSL Business. Except as set forth in
Section 5.5 of the Verizon Disclosure Schedule, neither Verizon nor any of
its Subsidiaries is subject to any cease and desist or other order,
judgment, injunction or decree issued by, or is a party to any written or
oral Agreement, consent or memorandum of understanding with, or is a party
to any commitment letter or similar undertaking to, or is subject to any
order or directive by, or has adopted any board resolutions at the request
of, any Governmental Entity that materially restricts the ownership or
operation of the Verizon DSL Business or which may reasonably be expected
to have a Material Adverse Effect on the Verizon DSL Business, nor has
Verizon or any of its Subsidiaries been advised that any Governmental
Entity is considering issuing or requesting any of the foregoing.
Section 5.6 Proxy Statement. None of the information supplied
or to be supplied by or on behalf of Verizon for inclusion or incorporation
by reference in the Registration Statement will, at the time the
Registration Statement becomes effective under the 1933 Act, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading. None of the information supplied or to be supplied by or on
behalf of Verizon for inclusion or incorporation by reference in the Proxy
Statement will, at the dates mailed to stockholders and at the times of the
NorthPoint stockholders' meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading. The
Registration Statement and the Proxy Statement (except for information
relating solely to NorthPoint) will comply as to form in all material
respects with the provisions of the 1933 Act and the Exchange Act and the
rules and regulations promulgated thereunder.
Section 5.7 Labor Matters.
(a) Except as set forth in Section 5.7 of the Verizon
Disclosure Schedule, neither Verizon nor any of its Subsidiaries is a party
to any collective bargaining or other labor union contract applicable to
Verizon DSL Employees and no collective bargaining agreement is being
negotiated by Verizon or any of its Subsidiaries which would affect Verizon
DSL Employees. Since January 1, 1997, there has not been any labor strike,
dispute, walkout, work stoppage, slow-down or lockout against Verizon or
any of its Subsidiaries by any Verizon DSL Employees, nor is there one
pending or, to the knowledge of Verizon, threatened, which interfere with
the Verizon DSL Business, except where such strike, dispute, walkout, work
stoppage, slow-down or lockout individually or in the aggregate is not
reasonably likely to have a Material Adverse Effect on the Verizon DSL
Business.
(b) To the knowledge of Verizon, there is no charge, complaint
or investigation related to the Verizon DSL Business against Verizon or any
of its Subsidiaries (i) before the National Labor Relations Board or any
comparable Governmental Entity pending or threatened in writing or (ii)
asserting that it or any of its Subsidiaries has committed an unfair labor
practice nor is Verizon or any of its Subsidiaries the subject of any
proceeding seeking to compel it to bargain with any labor union or labor
organization, except in each case as is not, individually or in the
aggregate, reasonably likely to have a Material Adverse Effect on the
Verizon DSL Business. To the knowledge of Verizon, none of Verizon, any of
its Subsidiaries or any Verizon DSL Employees has committed any unfair
labor practice in connection with the Verizon DSL Business.
Section 5.8 Environmental Matters. Except as could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Verizon DSL Business, (i) each of Verizon and its
Subsidiaries has owned and operated the Verizon DSL Business in compliance
with all applicable Environmental Laws; (ii) the properties included in the
Verizon DSL Assets which are currently owned or operated by it or any of
its Subsidiaries (including soils, groundwater, surface water, buildings or
other structures) are not contaminated with any Hazardous Substances; (iii)
the properties formerly owned or operated by Verizon or any of its
Subsidiaries in connection with the Verizon DSL Business were not
contaminated with Hazardous Substances during the period of ownership or
operation by Verizon or any of its Subsidiaries; (iv) the Verizon DSL
Business is not subject to liability for any Hazardous Substance disposal
or contamination on any third party property; (v) the Verizon DSL Business
has not been associated with any release or threat of release of any
Hazardous Substance; (vi) neither Verizon nor any of its Subsidiaries has
received any notice, demand, letter, claim or request for information
alleging that it or any of its Subsidiaries may be in violation of or
liable under any Environmental Law (including any claims relating to
electromagnetic fields or microwave transmissions) with respect to the
Verizon DSL Business; (vii) neither Verizon nor any of its Subsidiaries is
subject to any orders, decrees, injunctions or other arrangements with any
Governmental Entity or is subject to any indemnity or other agreement with
any third party relating to liability under any Environmental Law or
relating to Hazardous Substances with respect to the Verizon DSL Business;
and (viii) there are no circumstances or conditions involving Verizon or
any of its Subsidiaries that could reasonably be expected to result in any
claims, liability, investigations, costs or restrictions on the ownership,
use, or transfer of any of the Verizon DSL Assets pursuant to any
Environmental Law.
Section 5.9 Assets. Verizon or one or more of its Subsidiaries
has, and at or prior to the Closing will deliver to Parent, good and valid
title to, or valid leasehold interests in, all of the Verizon DSL Assets,
free and clear of all Liens (except for Liens to be assumed by Parent
pursuant to this Agreement, including Liens associated with leased
equipment and Liens securing maintenance and similar contracts). The
Verizon Network Equipment Assets and Facilities Assets are in good working
order, normal wear and tear excepted, and are fit for their intended
purposes, except as would not have a Material Adverse Effect on the Verizon
DSL Business. Verizon believes in good faith that (i) the Verizon Network
Equipment Assets, (ii) the DSL subscriber contracts to which Verizon or one
of its Subsidiaries is a party, (iii) the Transferred Employees, (iv) the
assets used exclusively by the Transferred Employees, (v) the Assumed
Verizon Contracts, (vi) the OSS Support Agreement, (vii) the commercial
contracts and arrangements at tarriffed rates relating exclusively to the
Verizon DSL Business, (viii) the future contracts with respect to assets
which are not used exclusively in the Verizon DSL Business that may be
entered into pursuant to Section 6.8 hereof, (ix) the Facilities Assets,
(x) Capitalized Co- Location Fees and (xi) the Verizon DSL Assets (to the
extent not listed above), taken together in the aggregate, will be
sufficient to provide services in a manner substantially similar to those
provided by the Verizon DSL Business prior to the Effective Time.
Section 5.10 Certain Contracts.
(a) All Assumed Verizon Contracts are valid and in full force
and effect on the date hereof except to the extent they have previously
expired in accordance with their terms or if the failure to be in full
force and effect, individually and in the aggregate would not have a
Material Adverse Effect on the Verizon DSL Business. Neither Verizon nor
any of its Subsidiaries has violated any provision of, or committed or
failed to perform any act which with or without notice, lapse of time or
both would constitute a default under the provisions of, any Assumed
Verizon Contract, except in each case for those Assumed Verizon Contracts
which, individually and in the aggregate, would not result in a Material
Adverse Effect on the Verizon DSL Business.
(b) Set forth in Section 5.10 of the Verizon Disclosure
Schedule is a list of each contract, agreement or arrangement to which
Verizon or any of its Subsidiaries is a party or may be bound which is an
arrangement limiting or restraining Verizon, NorthPoint, any Verizon or
NorthPoint Subsidiary or any successor thereto from engaging or competing
in any business which arrangement has, or could reasonably be expected to
have in the foreseeable future, a Material Adverse Effect on the Verizon
DSL Business.
Section 5.11 Intellectual Property.
(a) As used in this Agreement, "Verizon Intellectual Property"
means all of the intellectual property included in the Verizon DSL Assets
and identified in Section 1.1(a)(vi) of the Verizon Disclosure Schedule.
The Verizon Intellectual Property constitutes all of the intellectual
property used by Verizon or its Subsidiaries on the date hereof exclusively
in connection with Verizon DSL Business.
(b) Except as set forth in Section 5.11(b) of the Verizon
Disclosure Schedule, Verizon or its Subsidiaries owns or has the right to
use, sell or license all Verizon Intellectual Property, free and clear of
all liens or encumbrances.
(c) Except as set forth in Section 5.11(c) of the Verizon
Disclosure Schedule, to the knowledge of Verizon, the ownership and
operation of the Verizon DSL Business does not materially infringe, violate
or misuse any intellectual property rights or any other proprietary right
of any Person or give rise to any obligations to any Person as a result of
co-authorship, and neither Verizon nor any of its Subsidiaries has received
any notice, not satisfactorily resolved, of any claims or threats that the
Verizon DSL Business or the use of any Verizon Intellectual Property in the
Verizon DSL Business materially infringes, violates, misappropriates or
misuses, or is otherwise in conflict with any intellectual property or
proprietary rights of any Person.
(d) Verizon and its Subsidiaries have used reasonable efforts
to maintain the confidentiality of the trade secrets and other confidential
Verizon Intellectual Property which is included in the Verizon Intellectual
Property.
Section 5.12 Brokers. Except for Morgan Stanley & Co.
Incorporated, the fees of which will be paid by Verizon, no broker, finder
or investment banker is entitled to any brokerage, finder's, investment
banking or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf
of Verizon or any of its Subsidiaries.
Section 5.13Tax Matters. Except as set forth in Section 5.13 of
the Verizon Disclosure Schedule:
(a) Verizon has paid in full or discharged, or caused to be
paid in full or discharged, all Taxes (i) related to the Verizon DSL Assets
or arising out of the conduct of the Verizon DSL Business that are required
to be paid (whether or not such Taxes are shown as due on any Tax Return)
and (ii) the non-payment of which has resulted in or which could result in
a lien on the Verizon DSL Assets in the hands of Parent.
(b) Neither Verizon nor any of its Affiliates has taken, agreed
to take or omitted to take any action that would prevent or impede the
Asset Contribution and the Merger from qualifying as either a (i) tax-free
reorganization under Section 368(a) of the Code or (ii) transaction
described in Section 351 of the Code (it being agreed that it shall not be
a violation of this Section 5.13(b) if the payment of the Cash
Consideration Amount causes the Merger not to qualify as a tax-free
reorganization under Section 368(a) of the Code).
Section 5.14 Insurance. Except as set forth in Section 5.14 of
the Verizon Disclosure Schedule, the Verizon DSL Business is, and has been
continuously since December 31, 1999, insured with financially responsible
insurers in such amounts and against such risks and losses as are customary
for companies conducting the business as conducted by Verizon and its
Subsidiaries during such time period. Except as set forth in Section 5.14
of the Verizon Disclosure Schedule, since December 31, 1999, neither
Verizon nor any of its Subsidiaries has received notice of cancellation or
termination with respect to any material insurance policy covering the
Verizon DSL Business. The insurance policies of Verizon and its
Subsidiaries with respect to the Verizon DSL Business are valid and
enforceable policies.
Section 5.15 No Business Activities. Merger Subsidiary and
Parent have not conducted any activities and have no obligations and
liabilities, in each case other than in connection with their organization,
the negotiation and execution of this Agreement and the consummation of the
transactions contemplated hereby. Merger Subsidiary has no Subsidiaries and
Parent has no Subsidiaries other than Merger Subsidiary.
ARTICLE VI
COVENANTS AND AGREEMENTS
Section 6.1 Conduct of Business of NorthPoint Pending the
Effective Time. NorthPoint covenants and agrees that between the date
hereof and the Effective Time, unless Verizon shall otherwise consent in
writing, and except as described in Section 6.1 of the NorthPoint
Disclosure Schedule or as otherwise expressly contemplated hereby, the
business of NorthPoint and its Subsidiaries shall be conducted only in, and
such entities shall not take any action except in, the ordinary course of
business and in a manner consistent with past practice; and each of
NorthPoint and its Subsidiaries will use its commercially reasonable
efforts to preserve substantially intact their business organizations, to
keep available the services of those of their present officers, employees
and consultants who are integral to the operation of their businesses as
presently conducted and to preserve their present relationships with
significant customers and suppliers and with other Persons with whom they
have significant business relations. By way of amplification and not
limitation, except as set forth in Section 6.1 of the NorthPoint Disclosure
Schedule or as otherwise expressly contemplated by this Agreement or in the
Employee Matters Agreement, NorthPoint and its Subsidiaries will not,
between the date hereof and the Effective Time, directly or indirectly, do
any of the following without the prior written consent of Verizon:
(a) (i) issue, sell, pledge, dispose of, encumber, authorize,
or propose the issuance, sale, pledge, disposition, encumbrance or
authorization of any shares of capital stock of any class, or any options,
warrants, convertible securities or other rights of any kind to acquire any
shares of capital stock of, or any other ownership interest in, NorthPoint
or any of its Subsidiaries (excluding such as may arise upon the exercise
of existing rights), except for (A) the issuance of shares of NorthPoint
Common Stock in order to satisfy obligations under the NorthPoint Plans in
effect on the date hereof and NorthPoint Equity Rights issued thereunder,
which issuances shall be consistent with its existing policy and past
practice; (B) grants of stock options with respect to NorthPoint Common
Stock to employees in the ordinary course of business and in amounts and in
a manner consistent with past practice; and (C) the issuance of securities
by a Subsidiary of NorthPoint to any Person which is directly or indirectly
wholly owned by NorthPoint; (ii) amend or propose to amend the Certificate
of Incorporation or By-laws of NorthPoint or any of its Subsidiaries or
adopt, amend or propose to amend any stockholder rights plan or related
rights agreement; (iii) split, combine or reclassify any outstanding shares
of NorthPoint Common Stock, or declare, set aside or pay any dividend or
distribution payable in cash, stock, property or otherwise with respect to
shares of NorthPoint Common Stock; (iv) redeem, purchase or otherwise
acquire or offer to redeem, purchase or otherwise acquire any shares of its
capital stock (provided that in the case of any repurchase of shares of
NorthPoint Common Stock upon the termination of employment of one of the
five founders of NorthPoint at the contractual price but in no event more
than $0.08 per share, Verizon shall be deemed to have consented to such
repurchase five business days after receiving written notice from
NorthPoint of its intent to effect such repurchase, unless Verizon shall
have objected to such repurchase within such five business day period); or
(v) authorize or propose or enter into any contract, agreement, commitment
or arrangement with respect to any of the matters prohibited by this
Section 6.1(a);
(b) (i) acquire (by merger, consolidation, or acquisition of
stock or assets) any corporation, partnership or other business
organization or division thereof or make any investment in another entity
(other than an entity which is a wholly owned Subsidiary of NorthPoint as
of the date hereof and other than incorporation of a wholly owned
Subsidiary of NorthPoint), except for acquisitions or investments in
NorthPoint's Line of Business which do not exceed $5,000,000 individually
or $10,000,000 in the aggregate for all such acquisitions or investments;
(ii) sell, pledge, dispose of, or encumber or authorize or propose the
sale, pledge, disposition or encumbrance of any assets of NorthPoint or any
of its Subsidiaries, except in the ordinary course of business consistent
with past practice; (iii) otherwise enter into any line of business which
is outside of NorthPoint's Line of Business; or (iv) authorize, enter into
or amend any contract, agreement, commitment or arrangement with respect to
any of the matters prohibited by this Section 6.1(b);
(c) incur any indebtedness other than borrowings under the Debt
Financing, the Preferred Financing and the Company's existing senior
secured credit facility (as in effect on the date hereof); provided,
however, that the Company may incur indebtedness (excluding indebtedness
convertible into equity of NorthPoint) after January 1, 2001, if such
indebtedness is incurred on an arm's length basis with nationally
recognized financial institutions or with Verizon and the incurrence of
such indebtedness does not exceed, individually or in the aggregate with
all other incurrences of indebtedness (including any indebtedness incurred
under the Debt Financing), $200,000,000 per calendar quarter;
(d) except as provided in a side letter to be entered into by
Verizon and NorthPoint within thirty days after the date hereof, take any
action with respect to the grant of any severance or termination pay, stay
bonus, or other incentive arrangements (otherwise than pursuant to any
NorthPoint Plan or any policies, arrangements and agreements of NorthPoint
which were in effect on, or offered or approved to be offered by the board
of directors or senior management of NorthPoint prior to the date hereof,
or pursuant to any renewal or extension subsequent to the date hereof of
the duration of the term of any such benefit plans, policies, arrangements
or agreements), or with respect to any increase in benefits payable under
its severance or termination pay policies, or stay bonus or other incentive
arrangements in effect on the date hereof;
(e) except in the ordinary course of business consistent with
past practice, take any action with respect to increases in employee
compensation, take any action to adjust the exercise price or number of
shares underlying options awarded under any NorthPoint Plan or make any
payments under any NorthPoint Plan to any director or employee of, or
independent contractor or consultant to, NorthPoint or any of its
Subsidiaries, adopt or otherwise materially amend any NorthPoint Plan or
enter into or amend any employment or consulting agreement, or grant or
establish any new awards under any such existing NorthPoint Plan or
agreement;
(f) change in any material respect its accounting policies,
methods or procedures except as required by GAAP or change any material Tax
election or enter into any material settlement for Taxes;
(g) take any action which it believes when taken could
reasonably be expected to adversely affect or delay in any material respect
the ability of any of the parties hereto to obtain any approval of any
Governmental Entity required to consummate the transactions contemplated
hereby;
(h) other than pursuant to this Agreement, take any action to
cause the shares of NorthPoint Common Stock to cease to be quoted on
Nasdaq;
(i) (i) other than as consistent with past practice, issue
stock appreciation rights, performance shares, restricted stock, or similar
equity based rights; (ii) materially modify (with materiality to be
determined with respect to the benefit plan in question) any actuarial cost
method, assumption or practice used in determining benefit obligations,
annual expense and funding for any Benefit Plan, except to the extent
required by GAAP; (iii) materially modify (with materiality to be
determined with respect to the Benefit Plan trust in question) the
investment philosophy of the Benefit Plan trusts or maintain an asset
allocation which is not consistent with such philosophy, subject to any
ERISA fiduciary obligation; (iv) subject to any ERISA fiduciary obligation,
enter into any outsourcing agreement, or any other material contract
relating to the Benefit Plans or management of the Benefit Plan trusts; (v)
offer any new or extend any existing retirement incentive, "window" or
similar benefit program; (vi) grant any ad hoc pension increase; (vii)
establish any new or fund any existing "rabbi" or similar trust (except in
accordance with the current terms of such trust), or enter into any other
arrangement for the purpose of securing non-qualified benefits or deferred
compensation; (viii) adopt any corporate owned life insurance program; or
(ix) adopt or implement any "split dollar" life insurance program; or
(j) take any action which it believes when taken would cause
its representations and warranties contained herein to become inaccurate in
any material respect.
Nothing in this Section 6.1 shall restrict the ability of
NorthPoint's wholly owned Subsidiaries to do any of the following: (a) pay
dividends (in cash or otherwise), or make any other distributions, to
NorthPoint or any of its wholly owned Subsidiaries in respect of its
capital stock or in respect of any other interest participating in, or
measured by, its profits or pay any indebtedness owed to NorthPoint or any
of its Subsidiaries; (b) make loans or advances to NorthPoint or any of its
wholly owned Subsidiaries; or (c) transfer any of its property or assets to
NorthPoint or any of its wholly owned Subsidiaries.
Section 6.2 Conduct of the Verizon DSL Business Pending the
Effective Time. Verizon covenants and agrees that between the date hereof
and the Effective Time, unless NorthPoint shall otherwise consent in
writing, except as described in Schedule 6.2 and except in connection with
the transactions contemplated hereby, Verizon and its Subsidiaries shall
own and operate the Verizon DSL Business only in a manner consistent with
past practices, and such entities shall not take any action except in the
ordinary course of business and in a manner consistent with the capital
expenditure program previously delivered by Verizon to NorthPoint; and each
of Verizon and its Subsidiaries will use its commercially reasonable
efforts to keep available the services of those of their present officers,
employees and consultants who are integral to the operation of the Verizon
DSL Business as presently conducted and to preserve their present
relationships with significant customers and suppliers of the Verizon DSL
Business and with other Persons with whom they have significant business
relations with respect to the Verizon DSL Business. By way of amplification
and not limitation, except as set forth in Schedule 6.2 or as otherwise
expressly contemplated by this Agreement, Verizon and its Subsidiaries will
not, between the date hereof and the Effective Time, directly or
indirectly, do any of the following without the prior written consent of
NorthPoint:
(a) except in the ordinary course of business consistent with
past practice, take any action with respect to increases in compensation of
the Transferred Employees, excluding employees who are covered by a
collective bargaining agreement to which Verizon or one of its Subsidiaries
is a party (the "Non-represented DSL Employees"), take any action to adjust
the exercise price or number of shares underlying options awarded to any
Non-represented DSL Employee or make any other payments to any
Non-represented DSL Employee;
(b) take any action which it believes when taken could
reasonably be expected to adversely affect or delay in any material respect
the ability of any of the parties hereto to obtain any approval of any
Governmental Entity required to consummate the transactions contemplated
hereby; or
(c) take any action which it believes when taken would cause
its representations and warranties contained herein to become inaccurate in
any material respect.
Section 6.3 No Solicitation. From and after the date hereof,
NorthPoint shall not, nor shall it permit any of its Subsidiaries to, nor
shall it authorize or permit any of its, or any of its Subsidiaries',
officers, directors or employees or any investment banker, financial
advisor, attorney, accountants or other representatives retained by it or
any of its Subsidiaries to, directly or indirectly through another Person,
(i) solicit, initiate or encourage (including by way of furnishing
information), or knowingly take any other action designed to facilitate,
any Alternative Transaction or (ii) participate in any discussion with or
provide any confidential information or data to any Person relating to an
Alternative Transaction, or engage in any negotiations concerning an
Alternative Transaction, or knowingly facilitate any effort or attempt to
make or implement an Alternative Transaction or accept an Alternative
Transaction; provided, however, that if, at any time prior to approval of
the Merger by the holders of NorthPoint Common Stock, (A) NorthPoint has
received an unsolicited bona fide written proposal relating to an
Alternative Transaction which did not result from a breach of this Section
6.3, (B) the Board of Directors of NorthPoint concludes in good faith
(after consultation with a financial advisor of nationally recognized
reputation and receiving the advice of its outside counsel) (I) that such
proposal constitutes a NorthPoint Superior Proposal and (II) that the
failure to provide such information or participate in such negotiations or
discussions would result in a breach by the Board of Directors of
NorthPoint of its fiduciary duties to NorthPoint stockholders under
applicable law, NorthPoint may, subject to giving Verizon at least five
business days' written notice of its intention to do so, (x) furnish
information with respect to NorthPoint and its Subsidiaries to any Person
pursuant to a customary confidentiality agreement containing terms no less
restrictive than the terms of the Nondisclosure Agreement dated April 7,
2000 entered into among NorthPoint, Bell Atlantic Corporation and GTE
Corporation, as amended (the "Nondisclosure Agreement"), provided that a
copy of all such information is delivered simultaneously to Verizon if it
has not previously been so furnished to Verizon, and (y) participate in
negotiations regarding such proposal. NorthPoint shall as soon as
practicable (and in any event within 24 hours) notify Verizon orally and in
writing of any request for information or of any proposal in connection
with an Alternative Transaction, the terms and conditions of such request
or proposal (including a copy thereof, if in writing, and all other
documentation and any related correspondence) and the identity of the
Person making such request or proposal. NorthPoint will keep Verizon fully
informed of the status and details (including amendments or proposed
amendments) of such request or proposal, and any discussions relating
thereto, on a current basis. NorthPoint shall, and shall cause its
officers, directors and representatives to, immediately cease and terminate
any existing solicitation, initiation, encouragement, activity, discussion
or negotiation with any Persons conducted heretofore by NorthPoint or its
representatives with respect to the foregoing. NorthPoint agrees that it
will use its commercially reasonable efforts to promptly inform its
directors, officers, employees and representatives of the obligations
undertaken in this Section 6.3. NorthPoint (i) agrees not to release any
Third Party from, or waive any provision of, or fail to enforce, any
standstill agreement or similar agreements to which it is a party related
to, or which could affect, an Alternative Transaction and agrees that
Verizon shall be entitled to enforce NorthPoint's rights and remedies under
and in connection with such agreements and (ii) acknowledges that the
provisions of clause (i) are an important and integral part of this
Agreement. Nothing contained in this Section 6.3(a) or Section 7.2 hereof
shall prohibit NorthPoint from taking and disclosing to its stockholders a
position as required by Rule 14e-9 or Rule 14e-2(a) promulgated under the
Exchange Act. Notwithstanding anything herein to the contrary, NorthPoint
shall submit this Agreement to the stockholders of NorthPoint at the
NorthPoint Stockholders' Meeting for the purposes of adopting this
Agreement and approving the Merger whether or not the Board of Directors of
NorthPoint makes a determination that a proposal constitutes a NorthPoint
Superior Proposal.
Section 6.4 Regulatory Compliance Costs.
(a) Within 60 days after the date hereof, NorthPoint and
Verizon shall agree on a plan (the "Regulatory Compliance Plan") to bring
NorthPoint's then-existing network into compliance with any and all state
and federal regulations applicable to Verizon that would become applicable
to the operations of NorthPoint from and after the Effective Time as a
result of the consummation of the Asset Contribution and the Merger. Both
Parties shall use all commercially reasonable efforts to minimize the cost
of implementing the Regulatory Compliance Plan. The Regulatory Compliance
Plan shall include the cost of (i) incremental network facilities, (ii)
incremental equipment in existing facilities, (iii) non-recurring and
monthly recurring charges of new transportation circuits for NorthPoint's
customers, (iv) non-recurring and monthly recurring charges for new
transportation circuits for NorthPoint's backbone network, (v) operating
support systems changes, and (vi) personnel time and materials required to
effect such changes (the "Compliance Expenses"). At the beginning of each
calendar month, NorthPoint shall submit to Verizon a detailed report of all
Compliance Expenses, describing the nature, date, amount and location of
each Compliance Expense paid during the immediately preceding calendar
month and, within five business days of receipt of such report, Verizon
shall reimburse NorthPoint for Compliance Expenses incurred during such
preceding month which are in accordance with the Regulatory Compliance
Plan.
(b) At the Closing, the Cash Amount shall be reduced by an
amount equal to 45% of the Compliance Expenses theretofore reimbursed by
Verizon.
(c) In the event that this Agreement is terminated pursuant to
Section 9.1(d)(i)(A) hereof, in addition to any other remedies contained
herein, NorthPoint shall be entitled to retain any reimbursement payments
made by Verizon in respect of Compliance Expenses.
(d) In the event that this Agreement is terminated pursuant to
Section 9.1(d)(ii)(A) hereof, in addition to any other remedies contained
herein, NorthPoint shall make a cash payment to Verizon within five
business days of such termination in an amount equal to 100% of the
reimbursement payments previously made by Verizon in respect of Compliance
Expenses.
(e) In the event this Agreement is terminated for any reason
other than pursuant to Section 9.1(d)(i)(A) or 9.1(d)(ii)(A) hereof,
NorthPoint shall make a cash payment to Verizon within five business days
of such termination in an amount equal to 50% of the reimbursement payments
previously made by Verizon in respect of Compliance Expenses.
Section 6.5 Real Estate Matters.
(a) All leases, contracts and arrangements with respect to
occupancy by the Verizon Network Equipment Assets of space in the Verizon
Central Offices shall be transferred to Parent at the Effective Time and
included in the Assumed Verizon Contracts, substantially at the rates
offered by Verizon to DLECs generally in the market in which such Verizon
Central Office is located. In the event that any rack located in an Verizon
Central Office is used in connection with the Verizon DSL Business and is
shared with any other Affiliate of Verizon as of the Effective Time (any
such Affiliate of Verizon, together with Parent, are referred to as the
"Sharing Parties"), from and after the Effective Time, the Sharing Party
which is the primary user of such rack shall retain the payment obligations
to the owner of such Verizon Central Office with respect thereto and the
Sharing Party which is not the primary user of such rack shall reimburse
such primary user in a manner to be agreed upon.
(b) (i) All leases, contracts and arrangements with respect to
the occupancy of premises not located in an Verizon Central Office which
are used exclusively in connection with the Verizon DSL Business as of the
Effective Time shall be transferred to Parent at the Effective Time and
included in the Assumed Verizon Contracts, except to the extent subject to
a regulatory prohibition or the imposition of incremental obligations on
Verizon or its Affiliates, including a non-discrimination obligation. Any
changes from and after the Effective Time with respect to such leases,
contracts and arrangements relating to such facilities shall be made at the
sole discretion of, and the expense of, Parent.
(ii) All leases, contracts and arrangements with respect
to the occupancy of premises not located in an Verizon Central Office which
at the Effective Time are shared by the Verizon DSL Business with another
Affiliate or business of Verizon (the "Shared Facilities") shall be
transferred to Parent at the Effective Time (provided that Parent shall
assume only a pro rated portion of the obligations under such leases,
contracts and arrangements based on the relative uses of such premises) and
included in the Assumed Verizon Contracts, except to the extent subject to
a regulatory prohibition or the imposition of incremental obligations on
Verizon or its Affiliates, including a non- discrimination obligation;
provided, however, that as soon as practicable following the Closing Date,
but in no event later than the six-month anniversary of the Closing Date,
Parent shall have the right, exercisable one time, to notify Verizon (the
"Lease Rejection Notice") that it desires to reassign to Verizon any of the
leases, contracts and arrangements related to Shared Facilities that in the
sole discretion of Parent it does not choose to continue to use. The Lease
Rejection Notice shall specify all Shared Leases to be reassigned. Such
reassignment of each such Shared Lease shall be effected promptly upon
vacation of the particular subject premises by Parent, and Parent shall be
responsible for the payment of all amounts accrued with respect to such
Shared Lease up to the date of such reassignment.
(iii) Transferred Employees that at the Effective Time
are in facilities covered by Shared Leases included in the Lease Rejection
Notice are referred to herein as "Relocated Employees."
Section 6.6 Facilities Related Payments.
(a) Commencing as soon as practicable after the date hereof,
NorthPoint will use its commercially reasonable efforts to review the
facilities locations of the Verizon DSL Business with a view toward
determining what infrastructure Parent shall require and shall submit to
Verizon, not later than the six-month anniversary of the Closing Date, a
detailed listing by facility of the Facilities Related Payments (as defined
below). Upon the written request of any Party, the Parties will resolve any
dispute, controversy or claim arising out of or relating to the
determination of the Facilities Related Payments (a "Dispute") in
accordance with the procedures set forth in Section 6.6(d) hereof. Within
five business days of the final determination of the amount of the
Facilities Related Payments, Verizon will reimburse NorthPoint in cash in
an amount, if any, equal to the lesser of (x) the Facilities Related
Payments and (y) $20 million. The term "Facilities Related Payments" shall
mean the sum of the Facilities Assets Amounts plus any Capitalized
Co-Location Fees paid by NorthPoint as a direct result of the transactions
contemplated by this Agreement, reduced by any payments made by Verizon or
an Affiliate of Verizon with respect to Capitalized Co-Location Fees
directly resulting from the transactions contemplated by this Agreement.
(b) "Facilities Assets" means tenant improvements, shared
information technology ("IT") infrastructure (e.g., local area network/wide
area network, printer, copier, fax), individual IT infrastructure (e.g.,
personal computer, software licenses, telephone, PBX, pager), office
furniture (e.g., cubicle, desk, chair, filing cabinet and common area
furnishings), office supply inventory, and field technician assets (e.g.,
tools, test equipment, field vehicles).
(c) "Capitalized Co-Location Fees" means capitalized central
office co-location fees and co-location application fees, capitalized
engineering charges related to central office co-location, and capitalized
upfront ILEC technician training expenses for any of the Verizon Central
Offices, but shall not include capitalized labor and other costs associated
with the installation, provisioning, modification and upgrading of
equipment.
(d) (i) The Parties agree to seek resolution of any Dispute in
accordance with the procedures set forth in this Section 6.6(d) upon the
written request of any Party. The Parties shall first attempt in good faith
to reach resolution of such Dispute through discussions at the
non-executive level. If such Dispute is not resolved within 15 days after
the date of receipt by any Party of a written request for discussions at
the non- executive level, the matter may be referred to a senior-level
employee at the level of vice president or above of each Party (each a
"Dispute Representative") in accordance with the following procedures.
Either Party may submit a written notice ("Second Written Notice")
following the end of the 15 day period referred to above. The notice shall
set out the nature of the Dispute and shall identify the Dispute
Representative in the notifying Party's organization, who shall have the
authority to agree to final resolution of the Dispute. Within five business
days of receipt of such notice, the receiving Party shall respond in
writing with designation of its Dispute Representative, who shall have the
authority to agree to final resolution of the Dispute. The Dispute
Representatives shall meet within five business days after the receiving
party's notice was received and shall negotiate to resolve the Dispute. The
discussions shall be left to the discretion of the Dispute Representatives,
who may agree to utilize other alternative dispute resolution procedures
such as mediation to assist in the negotiations. Discussions and
correspondence among the Dispute Representatives for purposes of these
negotiations shall be treated as confidential information developed for
purposes of settlement, shall be exempt from discovery and production, and
shall not be admissible in any arbitration or lawsuit without the
concurrence of all Parties. Documents identified in or provided with such
communications, which are not prepared for purposes of the negotiations,
are not so exempted and may, if otherwise admissible, be admitted in
evidence in an arbitration or lawsuit. The Parties agree to pursue
resolution under this section for a minimum of 45 days following the Second
Written Notice requesting initiation of these dispute resolution procedures
before pursing arbitration as set forth in Section 6.6(d)(ii) below.
(ii) If the Parties cannot resolve the claim or dispute
covered by the procedure set forth in Section 6.6(d)(i) above in accordance
with the negotiation procedure set forth therein, any Party shall have the
right to cause the other Parties to enter into binding arbitration in
accordance with the rules of the American Arbitration Association then in
effect. A Party must initiate such arbitration no later than 30 days
following conclusion of the dispute resolution process set forth in Section
6.6(d)(i) above. The arbitration shall be conducted on an expedited basis
in the County of New York, in the State of New York. Three arbitrators,
each having at least five years of experience in the telecommunications
field, shall be appointed, one by each Party, and then one selected jointly
by those two arbitrators, for such arbitration. Any award rendered therein
shall specify the findings of fact of the arbitrators and the reasons for
such award, with reference to and reliance on relevant law. The award, if
any, shall be final and binding upon the Parties, and shall be the sole and
exclusive remedy between the Parties regarding the claim or dispute
submitted for arbitration pursuant to this Section 6.6(d)(ii). Judgment
upon any award may be entered in any court having jurisdiction. The Parties
shall each be responsible for their own costs in the arbitration and shall
share equally in the cost of the arbitrator and any related costs such as
meeting space and the like.
(e) Verizon will provide Facilities Assets for Transferred
Employees either through the transfer of pre-existing used and useful
Facilities Assets or through the payment of Facilities Assets Amounts as
hereinafter set forth. Under no circumstances will Facilities Assets
Amounts be payable with respect to any employees other than Relocated
Employees or any facilities not included in the Lease Rejection Notice.
(f) "Facilities Assets Amounts" shall mean, with respect to
Relocated Employees only, a one-time fee of $26,600 per management
employee, $19,200 per non- management employee, and $19,500 per field
technician employee, offset in each case by the net book value of any
Facilities Assets associated with such Relocated Employee.
Section 6.7 Systems Assets. After the Closing Date, operations
support systems ("OSS") will be obtained by Parent from Verizon or its
Affiliates on a service bureau basis. These systems and services will be of
the type described on Schedule 6.7. The systems and services will be
provided through a contract, which shall include appropriate service level
standards, at a cost not to exceed $4 million per month for base
functionality at the Closing Date, increasing by $333,333 per month
commencing on the thirteenth month following the Closing Date, and such
contract shall be for a term of not in excess of 18 months. Any additional
enhancements and features beyond those provided for in the contract shall
be separately negotiated and will be provided on an arm's-length basis.
Such contract will be terminable by Parent on 90 days prior written notice.
Section 6.8 Future Contracts. The parties hereto acknowledge
that after the Closing from time to time Parent may desire to contract with
Verizon or its Affiliates for certain ongoing services. The parties agree
to use commercially reasonable efforts to negotiate arm's-length contracts
or arrangements relating to the provision of any such services as may be
requested by Parent from time to time.
Section 6.9 Master Services Agreement. Concurrently with the
execution of this Agreement, the parties hereto are entering into a Master
Services Agreement in the form attached as Exhibit H hereto.
Section 6.10Vendor Contracts. Verizon shall use its
commercially reasonable efforts (including requesting consents from vendors
where required) to enable Parent, from and after the Effective Time, to
make purchases under vendor contracts applicable to Affiliates of Verizon
to the extent permitted by such vendor contracts, provided that the making
by Parent of such purchases would not (i) require the payment of
compensation or other consideration by Verizon and its Affiliates other
than Parent to any third party or (ii) have any adverse effect upon Verizon
and its Affiliates.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Proxy Statement and Registration Statement.
(a) As promptly as practicable after the execution and delivery
of this Agreement, the Parties shall, in compliance with applicable law,
(x) prepare and file with the SEC and any applicable blue sky authorities
the Registration Statement, and shall use all commercially reasonable
efforts to cause the Registration Statement to be declared effective by the
SEC and such authorities; and (y) prepare and file with the SEC and shall
use all commercially reasonable efforts to have cleared by the SEC, and
promptly thereafter NorthPoint shall mail to the holders of record of
shares of NorthPoint Common Stock, the Proxy Statement, provided, however,
that NorthPoint shall not mail or otherwise furnish the Proxy Statement to
its stockholders unless and until:
(i) it has received notice from the SEC that the
Registration Statement has been declared effective under the 1933 Act;
(ii) Parent shall have received a letter of
PricewaterhouseCoopers LLP, dated a date within two business days prior to
the date of the first mailing of the Proxy Statement, and addressed to
Parent, in form and substance reasonably satisfactory to Parent and
customary in scope and substance for "cold comfort" letters delivered by
independent public accountants in connection with registration statements
on Form S-4 with respect to the financial statements of NorthPoint included
in the Proxy Statement and the Registration Statement;
(b) The parties will cooperate in the preparation of the Proxy
Statement (including the preparation of the financial statements contained
therein) and the Registration Statement and in having the Registration
Statement declared effective as soon as practicable; and
(c) Each Party will promptly inform the other Parties of the
receipt by it of any comments from the SEC or its staff and of any request
by the SEC for amendments or supplements to the Proxy Statement or the
Registration Statement or for additional information and will supply the
other Parties hereto with copies of all correspondence between it and its
representatives, on the one hand, and the SEC or the members of its staff
or any other governmental official, on the other hand, with respect to the
Proxy Statement or the Registration Statement.
Section 7.2 NorthPoint Stockholder Meeting.
(a) As promptly as practicable after the Registration Statement
is declared effective under the Securities Act, NorthPoint (i) shall duly
take all lawful action to call, give notice of, convene and hold a meeting
of its stockholders on a date determined in accordance with the mutual
agreement of NorthPoint and Verizon (the "NorthPoint Stockholders'
Meeting") for the purpose of obtaining the NorthPoint Stockholder Approval,
(ii) shall take all lawful action to solicit the adoption of this Agreement
and (iii) shall, subject to the provisions of Section 7.2(b) hereof,
through its Board of Directors, recommend to its stockholders the approval
of the Merger. If on the date of the NorthPoint Stockholders' Meeting,
NorthPoint has not received duly executed proxies which, when added to the
number of votes represented in Person at the meeting by Persons who intend
to vote to adopt this Agreement, will constitute a sufficient number of
votes to adopt this Agreement, then NorthPoint shall take all action
necessary or appropriate to adjourn such meeting until the date ten days
after the originally scheduled date of such meeting.
(b) Except as expressly permitted by this Section 7.2(b),
neither the Board of Directors of NorthPoint nor any committee thereof
shall (i) withdraw, qualify or modify, or propose to withdraw, qualify or
modify, in a manner adverse to Verizon, the approval or recommendation of
such Board of Directors or such committee of the Merger or take any action
or make any statement in connection with the NorthPoint Stockholders'
Meeting inconsistent with such approval or recommendation, (ii) approve or
recommend, or propose publicly to approve or recommend, any Alternative
Transaction or (iii) cause NorthPoint to enter into any letter of intent,
agreement in principle, acquisition agreement or other similar agreement
(each, a "NorthPoint Acquisition Agreement") related to any Alternative
Transaction, provided that if prior to the adoption of the Merger by the
holders of NorthPoint Common Stock the Board of Directors of NorthPoint
determines in good faith, after it has received a NorthPoint Superior
Proposal and after receipt of advice from outside counsel, that the failure
to do so would result in a breach by the Board of Directors of NorthPoint
of its fiduciary duties to NorthPoint stockholders under applicable law,
the Board of Directors of NorthPoint may (subject to this and the following
sentences) inform NorthPoint stockholders that it no longer believes that
such adoption is advisable and no longer recommends approval (a "NorthPoint
Subsequent Determination"), but only at a time that is after the fifth
business day following delivery by NorthPoint to Verizon of written notice
advising Verizon that the Board of Directors of NorthPoint has received a
NorthPoint Superior Proposal specifying the terms and conditions of such
NorthPoint Superior Proposal (and including a copy thereof with all
accompanying documentation, if in writing), identifying the Person making
such NorthPoint Superior Proposal and stating that it intends to make a
NorthPoint Subsequent Determination. After providing such notice,
NorthPoint shall provide a reasonable opportunity to Verizon, and shall
cooperate in good faith with Verizon, to make such adjustments in the terms
and conditions of this Agreement as would enable NorthPoint to proceed with
its recommendation to its stockholders without a NorthPoint Subsequent
Determination; provided, however, that any such adjustment shall be at the
discretion of the parties at the time. Notwithstanding any NorthPoint
Subsequent Determination, this Agreement shall be submitted by NorthPoint
to the stockholders of NorthPoint at the NorthPoint Stockholders' Meeting
for the purpose of adopting this Agreement and approving the Merger and
nothing herein will be deemed to relieve NorthPoint of such obligation.
(c) For purposes of this Agreement, a NorthPoint Subsequent
Determination shall be deemed to include, without limitation, any action or
activity described in clauses (i), (ii) or (iii) of paragraph (b) of this
Section 7.2.
Section 7.3 Additional Agreements.
(a) Each of the Parties will comply in all material respects
with all applicable laws and with all applicable rules and regulations of
any Governmental Entity in connection with its execution, delivery and
performance of this Agreement and the transactions contemplated hereby.
Each of the Parties agrees to use all commercially reasonable efforts to
obtain in a timely manner all necessary waivers, consents and approvals and
to effect all necessary registrations and filings, and to use all
commercially reasonable efforts to take, or cause to be taken, all other
actions and to do, or cause to be done, all other things necessary, proper
or advisable to consummate and make effective as promptly as practicable
the transactions contemplated by this Agreement and to effect all necessary
filings under the 1933 Act, the Exchange Act and the HSR Act. Without
limiting the generality of the foregoing, each of Verizon and NorthPoint
shall promptly prepare and file a Premerger Notification in accordance with
the HSR Act, shall promptly comply with any requests for additional
information, and shall use its commercially reasonable efforts to obtain
termination of the waiting period thereunder as promptly as practicable.
(b) Each of Verizon and NorthPoint shall, in connection with
the efforts referenced in Section 7.3(a) hereof, (i) cooperate in all
respects with each other in connection with any filing or submission and in
connection with any investigation or other inquiry, including any
proceeding initiated by a private party; (ii) promptly inform the other
party of any material communication received by such party from, or given
by such party to any Governmental Entity and of any material communication
received or given in connection with any proceeding by a private party, in
each case regarding any of the transactions contemplated hereby and (iii)
consult with each other in advance of any meeting or conference with any
such Governmental Entity or, in connection with any proceeding by a private
party, with any other Person, and to the extent permitted by the applicable
Governmental Entity or other Person, give the other Party the opportunity
to attend and participate in such meetings and conferences.
(c) In furtherance and not in limitation of the covenants of
the parties contained in Sections 7.3(a) and (b) hereof, if any
administrative or judicial action or proceeding, including any proceeding
by a private party, is instituted (or threatened to be instituted)
challenging any transaction contemplated by this Agreement as violative of
any applicable law, or if any statute, rule, regulation, executive order,
decree, injunction or administrative order is enacted, entered or
promulgated or enforced by a Governmental Entity which would make the
Merger, the Asset Contribution or the other transactions contemplated
hereby illegal or otherwise prohibit or materially impair or delay
consummation of the transactions contemplated hereby, each of Verizon and
NorthPoint shall cooperate in all respects with each other and use all
commercially reasonable efforts to contest and resist any such action or
proceeding, to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order, whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents or restricts
consummation of the transactions contemplated by this Agreement and to have
such statute, rule, regulation, executive order, decree, injunction or
administrative order repealed, rescinded or made inapplicable.
(d) Nothing in this Agreement shall require Parent, NorthPoint,
Verizon or their respective Subsidiaries to sell, hold separate or
otherwise dispose of or conduct their business in a manner, or agree to
sell, hold separate or otherwise dispose of or conduct their business in a
specified manner or permit the sale, holding separate or other disposition,
of any assets of Parent, NorthPoint, Verizon or their respective
Subsidiaries or the conduct of their business in a specified manner,
whether as a condition to obtaining any approval from a Government Entity
or any other Person or for any other reason, if such sale, holding separate
or other disposition or the conduct of their business in a specified
manner, in the aggregate, would have a Material Adverse Effect on Parent,
NorthPoint, Verizon or the Verizon DSL Business, after giving effect to the
Merger.
(e) Notwithstanding the foregoing or any other provision of
this Agreement, nothing in this Section 7.3 shall limit a Party's right to
terminate this Agreement pursuant to Section 9.1 hereof so long as such
Party has up to then complied in all respects with its obligations under
this Section 7.3.
Section 7.4 Access to Information.
(a) Upon reasonable notice by Verizon, NorthPoint shall, and
shall cause its Subsidiaries, and its and their officers, directors,
employees, auditors, counsel and agents to, afford the officers, employees,
auditors, counsel and agents of Verizon with reasonable access during
normal business hours to NorthPoint's and its Subsidiaries' officers,
employees, auditors, counsel agents, properties, offices and other
facilities and to their respective books and records, and shall furnish
Verizon with financial, operating and other data and information as Verizon
may reasonably request, including in connection with confirmatory due
diligence.
(b) Verizon agrees that all information received from
NorthPoint pursuant to Section 7.4(a) hereof shall be deemed received
pursuant to the Nondisclosure Agreement and Verizon shall comply, and shall
cause its Subsidiaries and each of its and their respective officers,
directors, employees, financial advisors and agents ("Party
Representatives") to comply, with the provisions of the Nondisclosure
Agreement with respect to such information and the provisions of the
Nondisclosure Agreement are hereby incorporated herein by reference with
the same effect as if fully set forth herein, provided that such
information may be used for any purpose contemplated hereby.
(c) Upon reasonable notice by NorthPoint, Verizon shall afford,
and shall cause its Subsidiaries and its and their officers, directors,
employees, auditors, counsel and agents to afford, the officers, employees,
auditors, counsel and agents of NorthPoint with reasonable access during
normal business hours to Verizon's and its Subsidiaries' officers,
employees, auditors, counsel agents, properties, offices and other
facilities and to their respective books and records, but in each case only
to the extent related to the Verizon DSL Business, and shall furnish
NorthPoint with financial, operating and other data and information
regarding the Verizon DSL Business as NorthPoint may reasonably request,
including in connection with confirmatory due diligence.
(d) NorthPoint agrees that all information received from
Verizon pursuant to Section 7.4(c) hereof shall be deemed received pursuant
to the Nondisclosure Agreement and NorthPoint shall comply, and shall cause
its Subsidiaries and each of its and their Party Representatives to comply,
with the provisions of the Nondisclosure Agreement with respect to such
information and the provisions of the Nondisclosure Agreement are hereby
incorporated herein by reference with the same effect as if fully set forth
herein, provided that such information may be used for any purpose
contemplated hereby.
Section 7.5 Public Announcements. None of the Parties shall
issue any press release or public statement with respect to this Agreement
or the transactions contemplated hereby, including the Merger and the other
agreements referred to herein, without the other Parties' prior consent,
except as may be required by applicable law or court process. In addition,
the Parties will consult with each other, and will provide each other with
a reasonable opportunity to review and comment upon, any such press release
or other public statements prior to their issuance. The Parties agree that
the initial press release or releases to be issued with respect to the
transactions contemplated by this Agreement shall be mutually agreed upon
prior to the issuance thereof.
Section 7.6 Indemnification; Maintenance of NorthPoint's
Indemnification, Directors' and Officers' Insurance. For a period of six
years after the Effective Time, Parent shall cause NorthPoint to, and
Parent shall, maintain in effect the current policies of directors' and
officers' liability insurance and fiduciary liability insurance
maintained by NorthPoint (provided that Parent may substitute therefor
policies of at least the same coverage and amounts containing terms and
conditions which are, in the aggregate, no less advantageous to the insured
in any material respect) with respect to all possible claims arising from
facts or events which occurred on or before the Effective Time. Parent
shall cause NorthPoint to maintain in effect (a) the current provisions
regarding indemnification of officers and directors contained in the
charter and by-laws of NorthPoint and each of its Subsidiaries until the
statutes of limitations for all possible claims have run; provided that
Parent need not cause NorthPoint to maintain in effect indemnification
provisions contained in the charter and by-laws of its Subsidiaries if and
to the extent that Parent assumes such indemnity obligations; and (b) any
directors, officers or employees indemnification agreements of NorthPoint
and its respective Subsidiaries. Parent shall cause NorthPoint to, and
Parent shall, indemnify the directors and officers of NorthPoint and
Parent, respectively, to the fullest extent to which NorthPoint and Parent
are permitted to indemnify such officers and directors under applicable
law. As of the Effective Time, Parent shall unconditionally and irrevocably
guarantee for the benefit of such directors, officers and employees the
obligations of NorthPoint under the foregoing indemnification arrangements.
Section 7.7 Stock Market Listing. Each of the Parties shall use
its commercially reasonable best efforts to obtain, prior to the Effective
Time, the approval for listing on Nasdaq, effective upon official notice of
issuance, of the shares of Parent Common Stock into which the NorthPoint
Common Stock will be converted pursuant to Article II hereof and which will
be issuable upon exercise of options pursuant to Section 2.7 hereof.
Section 7.8 Post-Merger Parent Board of Directors.
(a) At the Effective Time, the Board of Directors of Parent
shall consist of nine directors, of which six directors shall be
individuals selected by Verizon (three of whom shall be independent
directors within the meaning of the rules of Nasdaq) and three directors
shall be individuals selected by NorthPoint.
(b) For a period of 18 months following the Closing, Verizon
shall vote all of its shares of capital stock of Parent at each regular or
special meeting of the stockholders of Parent called for the purpose of
filling a position on the Board of Directors of Parent, or in any written
consent executed in lieu of such meeting of stockholders, and shall use its
reasonable efforts to cause each and every NorthPoint Nominee (as defined
in the By-laws of Parent attached hereto as Exhibit C) to be elected to the
Board of Parent in accordance with By-laws of Parent, as amended from time
to time.
Section 7.9 No Shelf Registration. Parent shall not be required
to amend or maintain the effectiveness of the Registration Statement for
the purpose of permitting resale of the shares of Parent Common Stock
received pursuant hereto by the Persons who may be deemed to be Rule 145
Affiliates of NorthPoint or Verizon. The shares of Parent Common Stock
issuable upon exercise of options issuable pursuant to Section 2.7 hereof
shall be registered under the 1933 Act and such registration shall be
effective at the time of issuance.
Section 7.10 Affiliates. NorthPoint (i) has disclosed to Verizon
in Section 7.10 of the NorthPoint Disclosure Schedule all Persons who are,
or may be, as of the date hereof its Rule 145 Affiliates under the
Securities Act, and (ii) shall use all commercially reasonable efforts to
cause each Person who is identified as an "affiliate" of it in Section 7.10
of the NorthPoint Disclosure Schedule to deliver to Verizon as promptly as
practicable but in no event later than 48 hours prior to the Closing Date,
a signed agreement substantially in the form attached hereto as Exhibit D.
NorthPoint shall notify Verizon from time to time of any other Persons who
then are, or may be, such an "affiliate" and use all commercially
reasonable efforts to cause each additional Person who is identified as an
"affiliate" to execute a signed agreement as set forth in this Section
7.10.
Section 7.11 Blue Sky. Verizon, NorthPoint and Parent will use
their best efforts to obtain prior to the Effective Time all necessary blue
sky permits and approvals required to permit the distribution of the shares
of Parent Common Stock to be issued in accordance with the provisions of
this Agreement.
Section 7.12 Tax-Free Reorganization.
(a) Each of the Parties will use its best efforts to cause (i)
the Asset Contribution and the Merger to qualify as a transaction described
in Section 351 of the Code and (ii) the Merger to qualify as a transaction
described in Section 351 of the Code and a tax-free reorganization under
Section 368(a) of the Code, and none of the Parties will take any action
that would cause (A) the Merger to fail to qualify as either (x) a
transaction qualifying under Section 351 of the Code or (y) a tax-free
reorganization under Section 368(a) of the Code or (B) the Asset
Contribution to qualify as a transaction qualifying under Section 351 of
the Code (it being agreed that it shall not be a violation of this Section
7.12(a) if the payment of the Cash Consideration Amount causes the Merger
not to qualify as a tax-free reorganization under Section 368(a) of the
Code).
(b) NorthPoint will deliver an Officer's Certificate
substantially in the form of Exhibit E, Parent will deliver an Officer's
Certificate substantially in the form of Exhibit F and Verizon will deliver
an Officer's Certificate substantially in the form of Exhibit G, in each
case executed as of the date of the Proxy Statement and as of the Closing
Date, and as may be reasonably requested by counsel to any Party.
NorthPoint will use its commercially reasonable efforts to procure from
each NorthPoint stockholder that will hold five percent or more of the
Parent Common Stock outstanding immediately following the Merger and Asset
Contribution, a certificate, executed as of the date of the Proxy Statement
and the Closing Date, substantially to the effect that such stockholder has
no plan or intention to sell or otherwise dispose of such Parent Common
Stock received in the Merger.
Section 7.13 Employment and Employee Benefits Matters.
Concurrently with the execution of this Agreement, NorthPoint and Verizon
are entering into an Employee Matters Agreement substantially in the form
attached as Exhibit I hereto.
Section 7.14 Indemnification by Verizon.
(a) Verizon shall indemnify, save and hold harmless NorthPoint
and its Subsidiaries, and their respective directors, officers,
stockholders and employees (the "NorthPoint Indemnified Parties"), from and
against any and all losses, liabilities, damages, lawsuits, claims, demands
and expenses (including without limitation reasonable attorneys' fees and
all reasonable amounts paid in investigation, defense or settlement)
incurred by the NorthPoint Indemnified Parties in connection with, arising
out of, or resulting from any claims against Verizon that have been or will
be asserted in respect of the Verizon DSL Assets in actions captioned Covad
Communications Co. et al. v. Bell Atlantic Corporation, District Court for
the District of Columbia, Christopher Specht v. Bell Atlantic Corporation,
Supreme Court of New York, and Walter Scott et al. v. Bell Atlantic
Corporation and Bell Atlantic Internet Solutions, Inc., Supreme Court of
New York, but only to the extent arising out of claims against the Verizon
DSL Assets in respect of actions taken by Verizon prior to the Effective
Time.
(b) If a NorthPoint Indemnified Party shall receive notice or
otherwise learn of the assertion by a Person who is not a party to this
Agreement of any claim or of the commencement by any such Person of any
Action (a "Third Party Claim") with respect to which Verizon may be
obligated to provide indemnification, such NorthPoint Indemnified Party
shall give Verizon written notice thereof promptly after becoming aware of
such Third Party Claim. Such notice shall describe the Third Party Claim in
reasonable detail, and shall indicate the amount (estimated if necessary)
of the loss that has been or may be sustained by or is claimed against such
NorthPoint Indemnified Party. Such notice shall be a condition precedent to
any liability by Verizon for any Third Party Claim under the provisions for
indemnification contained in this Agreement.
(c) Verizon may, in its sole discretion, elect to compromise,
settle or defend, at Verizon's own expense and by Verizon's own counsel,
any Third Party Claim without the prior consent of any NorthPoint
Indemnified Party.
(d) If Verizon chooses to defend any claim, the applicable
NorthPoint Indemnified Party shall make available to Verizon any personnel
or any books, records or other documents within its control that are
necessary or appropriate for such defense.
(e) Notwithstanding anything else in this Section 7.14, if an
offer of compromise or settlement is received by Verizon with respect to a
Third Party Claim and Verizon notifies the applicable NorthPoint
Indemnified Party in writing of Verizon's willingness to compromise or
settle such Third Party Claim as to Verizon and such NorthPoint Indemnified
Party declines to accept such compromise or settlement as applied to such
Indemnified Third Party following Verizon's entering into such compromise
or settlement, such NorthPoint Indemnified Party may continue to contest
such Third Party Claim as to itself, free of any participation by Verizon,
at such NorthPoint Indemnified Party's sole expense. In such event, the
obligation of Verizon to such NorthPoint Indemnified Party with respect to
such Third Party Claim shall be equal to the lesser of (i) the amount of
the offer of compromise or settlement which such NorthPoint Indemnified
Party declined to accept plus the costs and expenses of such NorthPoint
Indemnified Party prior to the date Verizon notifies such NorthPoint
Indemnified Party of the offer to compromise or settle and (ii) the actual
out-of-pocket amount such NorthPoint Indemnified Party is obligated to pay
as a result of such NorthPoint Indemnified Party's continuing to contest
such Third Party Claim. Verizon shall be entitled to recover (by setoff or
otherwise) from an NorthPoint Indemnified Party any additional expenses
incurred by Verizon as a result of such NorthPoint Indemnified Party's
decision to continue to contest such Third Party Claim.
(f) If the amount of any indemnifiable loss shall, at any time
subsequent to payment pursuant to this Agreement, be reduced by recovery,
settlement or otherwise, the amount of such reduction, less any expenses
incurred in connection therewith, shall promptly be repaid by the
applicable NorthPoint Indemnified Party to Verizon.
(g) In the event of payment by Verizon to any NorthPoint
Indemnified Party in connection with any Third Party Claim, Verizon shall
be subrogated to and shall stand in the place of such NorthPoint
Indemnified Party as to any events or circumstances in respect of which
such NorthPoint Indemnified Party may have any right or claim relating to
such Third Party Claim. Such NorthPoint Indemnified Party shall cooperate
with Verizon in a reasonable manner, and, at the cost and expense of
Verizon, in prosecuting any subrogated right or claim.
Section 7.15 Preemptive Right. If, from and after the Effective
Time and until the second anniversary of the date hereof, Parent determines
to issue any shares of any class of capital stock or any securities
convertible into capital stock (other than (i) issuances of pro rata stock
dividends to holders of Parent Common Stock and (ii) stock issued upon the
exercise of a Mirror Equity Right), Verizon shall be entitled to purchase,
at a price and on such terms as are no less favorable to Verizon than
offered by Parent to the proposed transferee, additional shares of such
capital stock or securities convertible into capital stock in such amounts
as is necessary to maintain Verizon's percentage ownership of the
outstanding Parent Common Stock equal to the Verizon Ownership Percentage
as of the Effective Time; provided, that in the event that Verizon
exercises its preemptive right in connection with the issuance of shares
issued by NorthPoint upon the exercise of options granted after the
Effective Time, the applicable purchase price for such shares shall be the
last sale price on Nasdaq (as reported in The Wall Street Journal) on the
business day immediately preceding the date of such issuance. In connection
with Verizon's preemptive right, Parent shall provide written notice to
Verizon no later than ten days prior to any issuance giving rise to such
preemptive right.
Section 7.16 Further Assurances. In case at any time after the
Effective Time any further action is necessary or desirable to carry out
the purposes of this Agreement, the proper officers and directors of each
of the parties to this Agreement shall take all such necessary action.
ARTICLE VIII
CONDITIONS TO THE ASSET CONTRIBUTION AND THE MERGER
Section 8.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each Party to effect the Asset
Contribution and the Merger shall be subject to the fulfillment at or prior
to the Effective Time of the following conditions:
(a) Stockholder Approval. The NorthPoint Stockholder Approval
shall have been obtained;
(b) Legality. No federal, state or foreign statute, rule,
regulation, executive order, decree, injunction or administrative order
shall have been enacted, entered, promulgated or enforced by any
Governmental Entity which is in effect and has the effect of making the
Asset Contribution or the Merger illegal or otherwise prohibiting the
consummation of the Merger;
(c) HSR Act. Any waiting period applicable to the consummation
of the Asset Contribution and the Merger under the HSR Act shall have
expired or been terminated;
(d) Regulatory Matters. All authorizations, consents, orders,
permits or approvals of, or declarations or filings with, and all
expirations of waiting periods imposed by, any Governmental Entity (all of
the foregoing, "Consents") which are necessary for the consummation of the
transactions contemplated hereby, other than Consents which, if not
obtained, would not have a Material Adverse Effect on any of Parent (after
the Effective Time), the Verizon DSL Business or NorthPoint, shall have
been filed, have occurred or have been obtained (all such Consents being
referred to as the "Requisite Regulatory Approvals") and all such Requisite
Regulatory Approvals shall be in full force and effect, provided, however,
that a Requisite Regulatory Approval shall not be deemed to have been
obtained if in connection with the grant thereof there shall have been an
imposition by any Governmental Entity of any condition, requirement,
restriction or change of regulation, or any other action directly or
indirectly related to such grant taken by such Governmental Entity, which
would (or if implemented would) constitute a Material Adverse Effect on any
of Parent, the Verizon DSL Business, Verizon or NorthPoint;
(e) Registration Statement Effective. The Registration
Statement shall have become effective prior to the mailing by NorthPoint of
the Proxy Statement to its stockholders, no stop order suspending the
effectiveness of the Registration Statement shall then be in effect, and no
proceedings for that purpose shall then be threatened by the SEC or shall
have been initiated by the SEC and not concluded or withdrawn;
(f) Blue Sky. All state securities or blue sky permits or
approvals required to carry out the transactions contemplated hereby shall
have been received;
(g) Stock Exchange Listing. The shares of Parent Common Stock
(i) into which the NorthPoint Common Stock will be converted pursuant to
Article II hereof, (ii) to be issued to Verizon pursuant to Article II
hereof and (iii) issuable upon the exercise of options issuable pursuant to
Section 2.7 hereof, shall have been duly approved for listing on Nasdaq,
subject to official notice of issuance; and
Section 8.2 Additional Conditions to Obligations of NorthPoint.
The obligations of NorthPoint to effect the Merger are also subject to the
fulfillment of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Verizon contained in this Agreement shall be true and correct
on the date hereof and (except to the extent such representations and
warranties speak as of a date earlier than the date hereof) shall also be
true and correct on and as of the Closing Date, except for changes
permitted under Section 6.2 hereof, as applicable, or otherwise
contemplated by this Agreement, with the same force and effect as if made
on and as of the Closing Date, provided, however, that for purposes of this
Section 8.2(a) only, such representations and warranties shall be deemed to
be true and correct unless the failure or failures of such representations
and warranties to be so true and correct (without regard to materiality
qualifiers contained therein), individually or in the aggregate, results or
will result in a Material Adverse Effect on the Verizon DSL Business;
(b) Agreements and Covenants. Verizon shall have performed or
complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or
before the Effective Time;
(c) Certificates. NorthPoint shall have received a certificate
of an executive officer of Verizon to the effect set forth in paragraphs
(a) and (b) above;
(d) Tax Opinion. NorthPoint shall have received an opinion of
Latham & Watkins, special counsel to NorthPoint, dated as of the Closing
Date, in form and substance reasonably satisfactory to NorthPoint,
substantially to the effect that, on the basis of the facts,
representations and assumptions set forth in such opinion, the Merger
constitutes a non-recognition transaction under Section 368 and/or Section
351 of the Code and therefore: (i) no gain or loss will be recognized for
federal income tax purposes by Parent, Merger Subsidiary or NorthPoint as a
result of the formation of Merger Subsidiary and the Merger; and (ii) no
gain or loss will be recognized for federal income tax purposes by the
stockholders of NorthPoint (other than Verizon or any Affiliate of Verizon,
the tax consequences to which will be addressed in a separate opinion of
tax counsel to Verizon) upon their exchange of NorthPoint Common Stock and
NorthPoint Preferred Stock solely for Parent Common Stock pursuant to the
Merger, except with respect to cash received in the Merger. In rendering
such opinion, Latham & Watkins may require and rely upon representations
and covenants including representations and covenants substantially in the
form of those contained in the NorthPoint, Parent and Verizon officer's
certificates attached hereto as Exhibit E, Exhibit F and Exhibit G,
respectively, and representations and covenants of holders of five percent
of the Parent Common Stock outstanding immediately following the Merger and
the Asset Contribution substantially to the effect that each such
stockholder has no plan or intention to sell or otherwise dispose of such
Parent Common Stock received in the Merger;
(e) Asset Contribution. Verizon shall have contributed the
Verizon DSL Assets to Parent as provided herein; and
(f) Consents Under Verizon Agreements. Verizon shall have
obtained the consent or approval of any Person whose consent or approval
shall be required under any agreement or instrument in order to permit the
consummation of the transactions contemplated hereby, except for the
Consents referred to in Section 8.1(d) hereof and except for those consents
or approvals the failure to obtain would not, individually or in the
aggregate, have a Material Adverse Effect on the Verizon DSL Business.
Section 8.3 Additional Conditions to Obligations of Verizon.
The obligations of Verizon to effect the Merger and the Asset Contribution
are also subject to the fulfillment of the following conditions:
(a) Representations and Warranties. The representations and
warranties of NorthPoint contained in this Agreement shall be true and
correct on the date hereof and (except to the extent such representations
and warranties speak as of a date earlier than the date hereof) shall also
be true and correct on and as of the Closing Date, except for changes
permitted under Section 6.1 hereof, as applicable, or otherwise
contemplated by this Agreement, with the same force and effect as if made
on and as of the Closing Date, provided, however, that for purposes of this
Section 8.3(a) only, such representations and warranties shall be deemed to
be true and correct unless the failure or failures of such representations
and warranties to be so true and correct (without regard to materiality
qualifiers contained therein), individually or in the aggregate, results or
will result in a Material Adverse Effect on NorthPoint;
(b) Agreements and Covenants. NorthPoint shall have performed or
complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or
before the Effective Time;
(c) Certificates. Verizon shall have received a certificate of
an executive officer of NorthPoint to the effect set forth in paragraphs
(a) and (b) above;
(d) Tax Opinion. Verizon shall have received an opinion of
Skadden, Arps, Slate, Meagher & Flom LLP, special counsel to Verizon, dated
as of the Effective Time, in form and substance reasonably satisfactory to
Verizon, substantially to the effect that, on the basis of the facts,
representations and assumptions set forth in such opinion, the Asset
Contribution together with the Merger constitutes a transfer of property
under Section 351(a) of the Code and therefore no gain or loss will be
recognized for federal income tax purposes by Verizon or Parent as a result
of the Asset Contribution or the Merger. In rendering such opinion,
Skadden, Arps, Slate, Meagher & Flom LLP may require and rely upon
representations and covenants including representations and covenants
substantially in the form of those contained in the NorthPoint, Parent and
Verizon officer's certificates attached hereto as Exhibit E, Exhibit F and
Exhibit G, respectively, and representations and covenants of holders of
five percent or more of the Parent Common Stock outstanding immediately
following the Merger and the Asset Contribution, substantially to the
effect that each such stockholder has no plan or intention to sell or
otherwise dispose of such Parent Common Stock received in the Merger.
(e) Affiliate Agreements. Verizon shall have received the
agreements required by Section 7.10 hereof to be delivered by the
NorthPoint Rule 145 Affiliates, duly executed by each NorthPoint Rule 145
Affiliate.
(f) Dissenting Shares. The number of shares of NorthPoint
Common Stock in respect of which the holders have taken all steps required
to be taken prior to the Effective Time, to the extent such steps are
necessary, to permit such shares to be deemed Dissenting Shares shall not
exceed 10% of the number of outstanding shares of NorthPoint Common Stock
as of the record date of the NorthPoint Stockholders' Meeting.
(g) Material Adverse Effect. There shall not have occurred any
Material Adverse Effect on NorthPoint.
(h) Consents Under NorthPoint Agreements. NorthPoint shall have
obtained the consent or approval of any Person whose consent or approval
shall be required under any agreement or instrument in order to permit the
consummation of the transactions contemplated hereby, except for the
Consents referred to in Section 8.1(d) hereof and except for those consents
or approvals which the failure to obtain would not, individually or in the
aggregate, have a Material Adverse Effect on NorthPoint.
(i) Employment Agreements. NorthPoint shall have entered into
employment agreements with such senior management employees of NorthPoint
as Verizon shall reasonably determine, which agreements shall be in form
and substance reasonably satisfactory to Verizon.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination. This Agreement may be terminated at
any time before the Effective Time, in each case as authorized by the
respective Board of Directors of Verizon or NorthPoint:
(a) By mutual written consent of each of Verizon and NorthPoint;
(b) By either of Verizon or NorthPoint if the Merger shall not
have been consummated on or before the one year anniversary of the date
hereof, provided that the Parties may mutually agree to extend such date to
a date no later than the date that is eighteen months from the date hereof
(such termination date, as it may be extended upon mutual agreement of the
Parties, is referred to as the "Termination Date"). The right to terminate
this Agreement under this Section 9.1(b) shall not be available to any
Party whose failure to fulfill any obligation under this Agreement has been
the cause of, or resulted in, the failure of any condition to be satisfied;
(c) By either of Verizon or NorthPoint if after the date hereof
a court of competent jurisdiction or Governmental Entity shall have issued
an order, decree or ruling or taken any other action (which order, decree
or ruling the Parties shall use their commercially reasonable efforts to
lift), in each case permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement, and such
order, decree, ruling or other action shall have become final and
nonappealable;
(d) (i) by NorthPoint, (A) if Verizon shall have breached or
failed to perform in any material respect any of its representations,
warranties, covenants or other agreements contained in this Agreement,
which breach or failure to perform (1) is incapable of being cured by
Verizon prior to the Termination Date and (2) renders any condition under
Section 8.1 or 8.2 hereof incapable of being satisfied prior to the
Termination Date, or (B) if a condition under Section 8.1 or 8.2 hereof to
NorthPoint's obligations hereunder cannot be satisfied prior to the
Termination Date;
(ii) by Verizon, (A) if NorthPoint shall have breached or
failed to perform in any material respect any of its representations,
warranties, covenants or other agreements contained in this Agreement,
which breach or failure to perform (1) is incapable of being cured by
NorthPoint prior to the Termination Date and (2) renders any condition
under Section 8.1 or 8.3 hereof incapable of being satisfied prior to the
Termination Date, or (B) if a condition under Section 8.1 or 8.3 hereof to
Verizon's obligations hereunder cannot be satisfied prior to the
Termination Date;
(e) By Verizon if the Board of Directors of NorthPoint (i)
shall fail to include in the Proxy Statement its recommendation without
modification or qualification that stockholders approve this Agreement and
the Merger, (ii) shall withdraw or modify in any adverse manner its
approval or recommendation of this Agreement or the Merger, (iii) shall
fail to reaffirm such approval or recommendation upon Verizon's request,
(iv) shall approve or recommend any Alternative Transaction or (v) shall
resolve to take any of the actions specified in this Section 9.1(e); or
(f) By either of Verizon or NorthPoint if the required approval
of the stockholders of NorthPoint shall fail to have been obtained at a
duly held stockholders meeting of such company, including any adjournments
thereof.
Section 9.2 Effect of Termination.
(a) In the event of termination of this Agreement as provided
in Section 9.1 hereof, and subject to the provisions of Section 10.1
hereof, this Agreement shall forthwith become void and there shall be no
liability on the part of any of the Parties, except (i) as set forth in
this Section 9.2 and in Section 10.3 hereof, (ii) for breaches of the
confidentiality obligations set forth in Section 7.4 hereof and (iii)
nothing herein shall relieve any Party from liability for any willful
breach hereof.
(b) If this Agreement (i) is terminated by Verizon pursuant to
Section 9.1(e) hereof, (ii) could have been (but was not) terminated by
Verizon pursuant to Section 9.1(e) hereof and is subsequently terminated by
Verizon or NorthPoint pursuant to Section 9.1(f) hereof because of the
failure to obtain the NorthPoint Stockholder Approval, (iii)(A) could not
have been terminated by Verizon pursuant to Section 9.1(e) hereof but is
subsequently terminated by Verizon or NorthPoint pursuant to Section 9.1(f)
hereof because of the failure to obtain the NorthPoint Stockholder
Approval, (B) prior to the NorthPoint Stockholders' Meeting there shall
have been an offer or proposal for, an announcement of any intention with
respect to (including the filing of a statement of beneficial ownership on
Schedule 13D discussing the possibility of or reserving the right to engage
in), or any agreement with respect to, a transaction that would constitute
an Alternative Transaction, involving NorthPoint or any of NorthPoint's
Subsidiaries, and (C) within 12 months after the termination of this
Agreement, NorthPoint enters into a definitive agreement with any Third
Party with respect to an Alternative Transaction, or (iv) is terminated by
Verizon as a result of NorthPoint's material breach of Section 7.1 or
Section 7.2(b) hereof which, in the case of Section 7.1 only, is not cured
within 10 days after notice thereof to NorthPoint, NorthPoint shall pay to
Verizon a termination fee of $100 million (the "Verizon Termination Fee").
(c) The Verizon Termination Fee payable under Section 9.2(b)
hereof shall be payable in cash, payable no later than one business day
following the delivery of notice of termination to NorthPoint, or, if such
fee shall be payable pursuant to clause (iii) of Section 9.2(b) hereof,
such fee shall be payable no later than one business day following the day
NorthPoint enters into the definitive agreement referenced in such clause
(iii).
(d) Verizon and NorthPoint agree that the agreements contained
in Section 9.2(b) hereof are an integral part of the transactions
contemplated by this Agreement and constitute liquidated damages and not a
penalty. In the event of any dispute as to whether any fee due under such
Section 9.2(b) is due and payable, the prevailing Party shall be entitled
to receive from the other Party the costs and expenses (including legal
fees and expenses) in connection with any action, including the filing of
any lawsuit or other legal action, relating to such dispute. Interest shall
be paid on the amount of any unpaid fee at the publicly announced prime
rate of Citibank, N.A. from the date such fee was required to be paid.
Section 9.3 Amendment. This Agreement may be amended by the
Parties pursuant to a writing adopted by action taken by all of the Parties
at any time before the Effective Time; provided, however, that, after
approval of this Agreement by the stockholders of NorthPoint, no amendment
may be made which would (a) alter or change the amount or kinds of
consideration to be received by the holders of NorthPoint Common Stock upon
consummation of the Merger, or (b) alter or change any of the terms and
conditions of this Agreement if such alteration or change would adversely
affect the holders of any class or series of securities of NorthPoint (it
being understood and agreed that any agreement by the Parties to extend the
Termination Date shall not be deemed to adversely affect the holders of any
class or series of securities of NorthPoint). This Agreement may not be
amended except by an instrument in writing signed by each of the Parties.
Section 9.4 Waiver. At any time before the Effective Time, any
Party may (a) extend the time for the performance of any of the obligations
or other acts of the other Parties, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document
delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a
Party to any such extension or waiver shall be valid only as against such
Party and only if set forth in an instrument in writing signed by such
Party.
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this
Agreement shall terminate at the Effective Time or upon the termination of
this Agreement pursuant to Section 9.1 hereof, as the case may be, except
that (a) the agreements set forth in Article I, Article III and Sections
2.2, 2.3, 2.4, 2.5, 2.6, 2.7, 2.8, 2.9, 3.2, 3.3, 6.4, 6.5, 6.6, 6.7, 6.8,
7.6, 7.8, 7.12, 7.14, 7.15 and 7.16 hereof and the representations in the
NorthPoint and Verizon officers' certificates delivered in accordance with
Section 7.12 hereof shall survive the Effective Time indefinitely, (b) the
agreements and representations set forth in Sections 7.4(b), 9.2 and 10.3
hereof shall survive termination indefinitely and (c) nothing contained
herein shall limit any covenant or Agreement of the Parties which by its
terms contemplates performance after the Effective Time.
Section 10.2 Notices. All notices and other communications given
or made pursuant hereto shall be in writing and shall be deemed to have
been duly given or made as of the date of receipt and shall be delivered
personally or mailed by registered or certified mail (postage prepaid,
return receipt requested), sent by overnight courier or sent by telecopy,
to the Parties at the following addresses or telecopy numbers (or at such
other address or telecopy number for a Party as shall be specified by like
notice):
(a) if to Verizon, Parent or Merger Subsidiary:
Bell Atlantic Corporation
(d/b/a Verizon Communications)
1717 Arch Street, 29th Floor
Philadelphia, PA 19103
Attention: Stephen E. Smith
Telecopy No.: (215) 557-7249
with copies to:
Bell Atlantic Corporation
(d/b/a Verizon Communications)
1095 Avenue of the Americas
New York, New York 10036
Attention: Marianne Drost
Telecopy No.: (212) 764-2739
and
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
Attention: Peter Allan Atkins, Esq.
Martha E. McGarry, Esq.
Telecopy No.: (212) 735-2000
(b) if to NorthPoint:
NorthPoint Communications Group, Inc.
303 Second Street, South Tower
San Francisco, CA 94107
Attention: Michael P. Glinsky
Telecopy No.: (415) 403-4004
with a copy to:
Latham & Watkins
1001 Pennsylvania Avenue, N.W.
Suite 1300
Washington, DC 20004
Attention: James F. Rogers, Esq.
Telecopy: (202) 637-2201
Section 10.3 Expenses. Except as otherwise provided in this
Agreement, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the
Party incurring such costs and expenses, except that those expenses
incurred in connection with the printing of the Proxy Statement and the
prospectus included in the Registration Statement, as well as the filing
fees related thereto and any filing fee required in connection with the
filing of Premerger Notifications under the HSR Act, shall be shared
equally by Verizon and NorthPoint. NorthPoint will pay any real property
transfer or similar Taxes imposed on it in connection with this Agreement
and the transactions contemplated hereby.
Section 10.4 Certain Definitions. For purposes of this Agreement,
the following terms shall have the following meanings:
(a) "1933 Act" means the Securities Act of 1933, as the same
may be amended from time to time, and "Exchange Act" means the Securities
Exchange Act of 1934, as the same may be amended from time to time.
(b) "Affiliate" of a Person means a Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, the first mentioned Person.
(c) "Alternative Transaction" means, whether in the form of an
inquiry, a proposal or intended proposal, a signed agreement or completed
action, as the case may be, any of (i) a transaction or series of
transactions pursuant to which any Person (or group of Persons) other than
Verizon and its respective Subsidiaries (a "Third Party") acquires or would
acquire, directly or indirectly, beneficial ownership (as defined in Rule
13d-3 under the Exchange Act) of more than 20% of the outstanding shares of
NorthPoint, whether from Verizon or pursuant to a tender offer or exchange
offer or otherwise, (ii) any acquisition or proposed acquisition of, or
business combination with, NorthPoint or any of its Subsidiaries by a
merger or other business combination (including any so-called
"merger-of-equals" and whether or not NorthPoint or any of its Subsidiaries
is the entity surviving any such merger or business combination) or (iii)
any other transaction pursuant to which any Third Party acquires or would
acquire, directly or indirectly, control of 20% or more in value of the
assets (including for this purpose the outstanding equity securities of
Subsidiaries of NorthPoint and any entity surviving any merger or business
combination including any of them) of NorthPoint or any of its
Subsidiaries.
(d) "commercially reasonable efforts" shall mean those efforts
necessary or advisable to advance the interests of the Parties in achieving
the purposes and specific requirements and satisfying the conditions of
this Agreement, provided that such efforts will not require or include
either expense or conduct not ordinarily incurred or engaged in by Parties
seeking to implement agreements of this type unless part of a separate
mutual understanding of the Parties not contained in this Agreement whether
reached before or after the Agreement is executed.
(e) "control" (including the terms "controlled by" and "under
common control with") means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of stock, as trustee or executor, by
contract or credit arrangement or otherwise.
(f) "Environmental Law" means any law relating to: (A) the
protection, investigation or restoration of the environment, health,
safety, or natural resources, (B) the handling, use, presence, disposal,
release or threatened release of any Hazardous Substance or (C) noise,
odor, wetlands, pollution, contamination or any injury or threat of injury
to Persons or property in connection with any Hazardous Substance.
(g) "Equity Right" means any subscription, option, warrant,
call, commitment, agreement, conversion right or other right of any
character (contingent or otherwise) to purchase or otherwise acquire any
shares of the capital stock of a Person.
(h) "Hazardous Substance" means any substance that is: listed,
classified or regulated pursuant to any Environmental Law, including any
petroleum product or by-product, asbestos-containing material,
lead-containing paint or plumbing, polychlorinated biphenyls, radioactive
materials or radon.
(i) "HSR Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as the same may be amended from time to time.
(j) "knowledge" of any Party shall mean the actual knowledge of
the executive officers of such Party.
(k) "Material Adverse Effect" means
(i) in the case of NorthPoint or Parent, any fact, event,
change or effect having, or which will have, a material adverse effect on
the business, operations, properties (including intangible properties),
financial condition, assets or liabilities of NorthPoint or Parent, as the
case may be, and its Subsidiaries taken as a whole, but shall not include
facts, events, changes or effects that are generally applicable to (A) the
data industry, (B) the United States economy or (C) the United States
securities markets generally or the Nasdaq Technology Index in particular,
nor shall it include any fact, event, change or effect caused predominantly
by Verizon's involvement in the transactions contemplated by this
Agreement; and
(ii) in the case of the Verizon DSL Business or Verizon,
any fact, event, change or effect having, or which will have, a material
adverse effect on the business, operations, properties (including
intangible properties), financial condition, assets or liabilities of the
Verizon DSL Business or Verizon, as the case may be, but shall not include
facts, events, changes or effects that are generally applicable to (A) the
data industry, (B) the United States economy or (C) the United States
securities markets generally or the Nasdaq Technology Index in particular,
nor shall it include any fact, event, change or effect caused predominantly
by NorthPoint's involvement in the transactions contemplated by this
Agreement.
(l) "Material Investment" means, as to NorthPoint, any Person
which NorthPoint directly or indirectly holds the stock of, or other equity
interest in, provided the lesser of the fair market value or book value of
such interest exceeds $2 million, excluding, however, any Person which is a
Subsidiary of NorthPoint.
(m) "NorthPoint Equity Right" means any Equity Right to
purchase or otherwise acquire any shares of capital stock of NorthPoint
from NorthPoint or any of its Subsidiaries, at any time or upon the
happening of any stated event, including any right to purchase shares of
NorthPoint Common Stock under any employee stock purchase plan of
NorthPoint.
(n) "NorthPoint's Line of Business" means data transport
services (including but not limited to xDSL, asynchronous transfer mode,
frame relay, internet protocol), and associated value-added services
(including but not limited to virtual private networks, content delivery,
applications service delivery, webcasting, web hosting, video conferencing,
voice over DSL, local area network and customer network setup and
support, network security applications) on a wholesale basis, as well as
OSS and consumer premises equipment sales, leasing and training.
(o) "NorthPoint Superior Proposal" means any written proposal
(on its most recently amended or modified terms, if amended or modified)
made by a Third Party to enter into an Alternative Transaction (provided
that (A) for the purposes of this definition, the applicable percentage in
clause (i) of the definition of Alternative Transaction shall be fifty
percent (50%) and (B) such Alternative Transaction provides for the
acquisition of all outstanding preferred equity of NorthPoint held by
Verizon and the repayment of all outstanding indebtedness owed by
NorthPoint to Verizon) which the Board of Directors of NorthPoint in good
faith concludes (after consultation with a financial advisor of nationally
recognized reputation and receiving the advice of its outside counsel),
taking into account, among other things, all legal, financial, regulatory
and other aspects of the proposal and the Third Party making the proposal
(i) would, if consummated, result in a transaction that is more favorable
to NorthPoint stockholders (in their capacities as stockholders), from a
financial point of view, than the transactions contemplated by this
Agreement and (ii) is reasonably capable of being completed.
(p) "Parties" means Verizon, Parent, Merger Subsidiary and
NorthPoint.
(q) "Person" means an individual, corporation, partnership,
association, trust, estate, limited liability company, labor union,
unincorporated organization, entity or group (as defined in the Exchange
Act).
(r) "Rule 145 Affiliates" means an affiliate within the meaning
of Rule 145 promulgated under the 1933 Act.
(s) "Subsidiary" means with respect to any Person, any
corporation or other legal entity of which such Person (either alone or
through or together with any other Subsidiary or Subsidiaries) owns,
directly or indirectly, more than 50% of the stock or other equity
interests the holders of which are generally entitled to vote for the
election of the board of directors or other governing body of such
corporation or other legal entity.
(t) "Transferred Employee" means the Verizon DSL Employees who
shall be employed by Parent or any of its Subsidiaries at the Effective
Time pursuant to the Employee Matters Agreement.
(u) "Verizon DSL Business" shall mean the DSL wholesale
business operations of Verizon and its Subsidiaries as conducted on the
date hereof.
(v) "Verizon DSL Employees" shall mean the employees of Verizon
who, in their capacity as employees, have responsibilities related
exclusively to the Verizon DSL Business.
Section 10.5 Headings. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning
or interpretation of this Agreement.
Section 10.6 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any
rule of law or public policy, all other conditions 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 adverse to any Party. Upon such determination that
any term or other provision is invalid, illegal or incapable of being
enforced, the Parties 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 to the end that the transactions
contemplated hereby are fulfilled to the maximum extent possible.
Section 10.7 Entire Agreement; No Third-Party Beneficiaries.
This Agreement, together with the Exhibits hereto, and the Nondisclosure
Agreement constitute the entire agreement and, except as expressly set
forth herein, supersedes any and all other prior agreements and
undertakings, both written and oral, among the Parties, or any of them,
with respect to the subject matter hereof and, except for Section 7.6 and
Section 7.8 hereof, is not intended to confer upon any Person other than
Verizon, NorthPoint, Parent and Merger Subsidiary and, after the Effective
Time, their respective stockholders, any rights or remedies hereunder.
Section 10.8 Assignment. This Agreement shall not be assigned by
operation of law or otherwise without the prior written consent of the
other Parties hereto, provided that Verizon may designate one or more of
its Affiliates to hold the shares of Parent Common Stock issuable to
Verizon hereunder.
Section 10.9 Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware
applicable to contracts executed in and to be performed entirely within
that State, without regard to the conflicts of laws provisions thereof.
Section 10.1 Counterparts. This Agreement may be executed in two
or more counterparts, and by the different Parties in separate
counterparts, each of which when executed shall be deemed to be an
original, but all of which shall constitute one and the same Agreement.
Section 10.1 Interpretation.
(a) Whenever the words "include", "includes" or "including" are
used in this Agreement they shall be deemed to be followed by the words
"without limitation."
(b) Words denoting any gender shall include all genders. Where
a word or phrase is defined herein, each of its other grammatical forms
shall have a corresponding meaning.
(c) A reference to any Party or to any party and to any other
agreement or document shall include such party's successors and permitted
assigns.
(d) A reference to any legislation or to any provision of any
legislation shall include any modification or re-enactment thereof, any
legislative provision substituted therefor and all regulations and
statutory instruments issued thereunder or pursuant thereto.
(e) All references to "$" and dollars shall be deemed to refer
to United States currency unless otherwise specifically provided.
IN WITNESS WHEREOF, Verizon, NorthPoint, Parent and Merger
Subsidiary have caused this Agreement to be executed as of the date first
written above by their respective officers thereunto duly authorized.
NORTHPOINT COMMUNICATIONS
GROUP, INC
By:
-----------------------------
Name:
Title:
BELL ATLANTIC CORPORORATION
(D/B/A VERIZON COMMUNICATIONS)
By:
------------------------------------
Name:
Title:
VERIZON VENTURES I INC.
By:
-----------------------------
Name:
Title:
VERIZON VENTURES II INC.
By:
-----------------------------
Name:
Title:
EXHIBIT B
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION OF
VERIZON VENTURES I INC.
The undersigned, ________________, certifies that she is
President of Verizon Ventures I Inc., a corporation organized and existing
under the laws of the State of Delaware (hereinafter called the
"Corporation"), and does hereby certify as follows:
1. The current name of the Corporation is Verizon Ventures I Inc.
2. The name under which the Corporation was originally incorporated
was Verizon Ventures I Inc. and the original Certificate of Incorporation
of the Corporation was filed with the Secretary of State of the State of
Delaware on July 14, 2000.
3. This Amended and Restated Certificate of Incorporation was duly
adopted by and in accordance with the provisions of Sections 228, 242 and
245 of the General Corporation Law of the State of Delaware as set forth in
Title 8 of the Delaware Code (the "GCL").
4. This Amended and Restated Certificate of Incorporation not only
restates and integrates, but also amends the provisions of the
Corporation's Certificate of Incorporation.
5. The text of the Certificate of Incorporation of the Corporation is
hereby amended and restated to read in its entirety as follows:
FIRST: The name of the Corporation is NorthPoint Communications
Group, Inc. (the "Corporation").
SECOND: The address of the registered office of the Corporation is
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington,
County of New Castle, State of Delaware 19801. The name of its registered
agent at that address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act
or activity for which a corporation may be organized under the General
Corporation Law of the State of Delaware (the "GCL").
FOURTH: (a) Authorized Capital Stock. The total number of shares of
stock which the Corporation shall have authority to issue is 510,000,000
shares of capital stock, consisting of (i) 500,000,000 shares of common
stock, par value $0.01 per share (the "Common Stock"), and (ii) 10,000,000
shares of preferred stock, par value $0.01 per share (the "Preferred
Stock").
(b) Common Stock. The powers, preferences and rights, and the
qualifications, limitations and restrictions, of each class of the Common Stock
are as follows:
(1) No Cumulative Voting. The holders of shares of Common
Stock shall not have cumulative voting rights.
(2) Dividends; Stock Splits. Subject to the rights of the
holders of Preferred Stock, and subject to any other provisions of this
Amended and Restated Certificate of Incorporation, as it may be amended
from time to time, holders of shares of Common Stock shall be entitled to
receive such dividends and other distributions in cash, stock or property
of the Corporation when, as and if declared thereon by the Board of
Directors from time to time out of assets or funds of the Corporation
legally available therefor.
(3) Liquidation, Dissolution, etc. In the event of any
liquidation, dissolution or winding up (either voluntary or involuntary) of
the Corporation, the holders of shares of Common Stock shall be entitled to
receive the assets and funds of the Corporation available for distribution
after payments to creditors and to the holders of any Preferred Stock of
the Corporation that may at the time be outstanding, in proportion to the
number of shares held by them, respectively.
(4) Merger, etc. In the event of a merger or
consolidation of the Corporation with or into another entity (whether or
not the Corporation is the surviving entity), the holders of each share of
Common Stock shall be entitled to receive the same per share consideration
on a per share basis.
(5) Power to Sell and Purchase Shares. Subject to the
requirements of applicable law, the Corporation shall have the power to
issue and sell all or any part of any shares of any class of stock herein
or hereafter authorized to such persons, and for such consideration, as the
Board of Directors shall from time to time, in its discretion, determine,
whether or not greater consideration could be received upon the issue or
sale of the same number of shares of another class, and as otherwise
permitted by law. Subject to the requirements of applicable law, the
Corporation shall have the power to purchase any shares of any class of
stock herein or hereafter authorized from such persons, and for such
consideration, as the Board of Directors shall from time to time, in its
discretion, determine, whether or not less consideration could be paid upon
the purchase of the same number of shares of another class, and as
otherwise permitted by law.
(c) Preferred Stock. The Board of Directors is hereby expressly
authorized to provide for the issuance of all or any shares of the
Preferred Stock in one or more classes or series, and to fix for each such
class or series such voting powers, full or limited, or no voting powers,
and such designations, preferences and relative, participating, optional or
other special rights and such qualifications, limitations or restrictions
thereof, as shall be stated and expressed in the resolution or resolutions
adopted by the Board of Directors providing for the issuance of such class
or series, including, without limitation, the authority to provide that any
such class or series may be (i) subject to redemption at such time or times
and at such price or prices; (ii) entitled to receive dividends (which may
be cumulative or non-cumulative) at such rates, on such conditions, and at
such times, and payable in preference to, or in such relation to, the
dividends payable on any other class or classes or any other series; (iii)
entitled to such rights upon the dissolution of, or upon any distribution
of the assets of, the Corporation; or (iv) convertible into, or
exchangeable for, shares of any other class or classes of stock, or of any
other series of the same or any other class or classes of stock, of the
Corporation at such price or prices or at such rates of exchange and with
such adjustments; all as may be stated in such resolution or resolutions.
FIFTH: The following provisions are inserted for the management of
the business and the conduct of the affairs of the Corporation, and for
further definition, limitation and regulation of the powers of the
Corporation and of its directors and stockholders:
(a) The business and affairs of the Corporation shall be
managed by or under the direction of the Board of Directors.
(b) The number of directors of the Corporation shall be as from
time to time fixed by the Board of Directors, and such number shall never
be less than three nor more than thirteen. Election of directors need not
be by written ballot unless the By-Laws so provide.
(c) A director shall hold office until the annual meeting for
the year in which his or her term expires and until his or her successor
shall be elected and shall qualify, subject, however, to prior death,
resignation, retirement, disqualification or removal from office.
(d) Subject to the terms of any one or more classes or series
of Preferred Stock, any vacancy on the Board of Directors that results from
an increase in the number of directors may be filled solely by a majority
of the Board of Directors then in office, provided that a quorum is
present, and any other vacancy occurring on the Board of Directors may be
filled by a majority of the Board of Directors then in office, even if less
than a quorum, or by a sole remaining director. Subject to the rights, if
any, of the holders of shares of Preferred Stock then outstanding, any or
all of the directors of the Corporation may be removed from office at any
time, but only by the affirmative vote of the holders of at least a
majority of the voting power of the Corporation's then outstanding capital
stock entitled to vote generally in the election of directors.
Notwithstanding the foregoing, whenever the holders of any one or more
classes or series of Preferred Stock issued by the Corporation shall have
the right, voting separately by class or series, to elect directors at an
annual or special meeting of stockholders, the election, term of office,
filling of vacancies and other features of such directorships shall be
governed by the terms of this Amended and Restated Certificate of
Incorporation applicable thereto.
(e) In addition to the powers and authority hereinbefore or by
statute expressly conferred upon them, the directors are hereby empowered
to exercise all such powers and do all such acts and things as may be
exercised or done by the Corporation, subject, nevertheless, to the
provisions of the GCL, this Amended and Restated Certificate of
Incorporation, and any By-Laws adopted by the stockholders; provided,
however, that no By-Laws hereafter adopted by the stockholders shall
invalidate any prior act of the directors which would have been valid if
such By-Laws had not been adopted.
SIXTH: No director shall be personally liable to the Corporation or
any of its stockholders for monetary damages for breach of fiduciary duty
as a director, except to the extent such exemption from liability or
limitation thereof is not permitted under the GCL as the same exists or may
hereafter be amended. If the GCL is amended hereafter to authorize the
further elimination or limitation of the liability of directors, then the
liability of a director of the Corporation shall be eliminated or limited
to the fullest extent authorized by the GCL, as so amended. Any repeal or
modification of this Article SIXTH by the stockholders of the Corporation
shall not adversely affect any right or protection of a director of the
Corporation existing at the time of such repeal or modification with
respect to acts or omissions occurring prior to such repeal or
modification.
SEVENTH: The Corporation shall indemnify its directors and officers
to the fullest extent authorized or permitted by law, as now or hereafter
in effect, and such right to indemnification shall continue as to a person
who has ceased to be a director or officer of the Corporation and shall
inure to the benefit of his or her heirs, executors and personal and legal
representatives; provided, however, that, except for proceedings to enforce
rights to indemnification, the Corporation shall not be obligated to
indemnify any director or officer (or his or her heirs, executors or
personal or legal representatives) in connection with a proceeding (or part
thereof) initiated by such person unless such proceeding (or part thereof)
was authorized or consented to by the Board of Directors. The right to
indemnification conferred by this Article SEVENTH shall include the right
to be paid by the Corporation the expenses incurred in defending or
otherwise participating in any proceeding in advance of its final
disposition.
The Corporation may, to the extent authorized from time to time
by the Board of Directors, provide rights to indemnification and to the
advancement of expenses to employees and agents of the Corporation similar
to those conferred in this Article SEVENTH to directors and officers of the
Corporation.
The rights to indemnification and to the advance of expenses
conferred in this Article SEVENTH shall not be exclusive of any other right
which any person may have or hereafter acquire under this Amended and
Restated Certificate of Incorporation, the By-Laws of the Corporation, any
statute, agreement, vote of stockholders or disinterested directors or
otherwise.
Any repeal or modification of this Article SEVENTH by the
stockholders of the Corporation shall not adversely affect any rights to
indemnification and to the advancement of expenses of a director or officer
of the Corporation existing at the time of such repeal or modification with
respect to any acts or omissions occurring prior to such repeal or
modification.
EIGHTH: Unless otherwise required by law, special meetings of
stockholders, for any purpose or purposes may be called only at the
direction of a majority of the Board of Directors. The ability of the
stockholders to call a special meeting is hereby specifically denied.
NINTH: Any action required or permitted to be taken by
the stockholders of the Corporation must be effected at a duly called
annual or special meeting of stockholders of the Corporation, and the
ability of the stockholders to consent in writing to the taking of any
action prior to [date]* is hereby specifically denied. Notwithstanding the
foregoing, at any time after [date], action may be taken without a meeting
by written consent pursuant to Section 228 of the GCL.
TENTH: Meetings of stockholders may be held within or without the
State of Delaware, as the By-Laws may provide. The books of the Corporation
may be kept (subject to any provision contained in the GCL) outside the
State of Delaware at such place or places as may be designated from time to
time by the Board of Directors or in the By-Laws of the Corporation.
ELEVENTH: In furtherance and not in limitation of the powers
conferred upon it by the laws of the State of Delaware and subject to the
applicable provisions set forth in the Corporation's By-Laws, the Board of
Directors shall have the power to adopt, amend, alter or repeal the
Corporation's By-Laws. The Corporation's By-Laws also may be adopted,
amended, altered or repealed by the affirmative vote of the holders of at
least a majority of the voting power of the shares entitled to vote at an
election of directors.
TWELFTH: The Corporation reserves the right to amend, alter, change
or repeal any provision contained in this Amended and Restated Certificate
of Incorporation in the manner now or hereafter prescribed in this Amended
and Restated Certificate of Incorporation, the Corporation's By-Laws or the
GCL, and all rights herein conferred upon stockholders are granted subject
to such reservation.
* * * * * * *
-------------
* Date which is eighteen months following the Closing Date under the
Agreement and Plan of Merger, dated as of August 7, 2000, by and
among the Corporation, NorthPoint Communications Group, Inc. and
Verizon Ventures II Inc.
IN WITNESS WHEREOF, the Corporation has caused this Amended and
Restated Certificate of Incorporation to be executed as of this __ day of
_______, 200_ in its name and on its behalf by its President, pursuant to
Section 103 of the General Corporation Law of the State of Delaware.
VERIZON VENTURES I INC.
By:______________________________________
Name:
Title: President
EXHIBIT C
AMENDED AND RESTATED
BY-LAWS
OF
NORTHPOINT COMMUNICATIONS GROUP, INC.
(FORMERLY KNOWN AS VERIZON VENTURES I INC.)
Effective ________ __, 200__
PAGE
ARTICLE I
OFFICES
Section 1. Principal Executive Office . . . . . . . . . . . . . . . . 1
Section 2. Other Offices . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Annual Meetings . . . . . . . . . . . . . . . . . . . . . . 2
Section 3. Special Meetings . . . . . . . . . . . . . . . . . . . . . 2
Section 4. Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 5. Adjourned Meetings and Notice Thereof . . . . . . . . . . . 2
Section 6. Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 7. Voting . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 8. Nature of Business at Meetings of Stockholders . . . . . . 4
Section 9. List of Stockholders Entitled to Vote . . . . . . . . . . . 5
Section 10. Stock Ledger . . . . . . . . . . . . . . . . . . . . . . . 5
Section 11. Record Date . . . . . . . . . . . . . . . . . . . . . . . 6
Section 12. Inspectors of Election . . . . . . . . . . . . . . . . . . 6
Section 13. Chairman and Secretary at Meetings . . . . . . . . . . . . 7
ARTICLE III
DIRECTORS
Section 1. Powers . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2. Certain Definitions . . . . . . . . . . . . . . . . . . . . 7
Section 3. Number of Directors . . . . . . . . . . . . . . . . . . . . 9
Section 4. Election of Directors . . . . . . . . . . . . . . . . . . . 9
Section 5. Nomination of Directors . . . . . . . . . . . . . . . . . . 11
Section 6. Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 7. Organization . . . . . . . . . . . . . . . . . . . . . . . 12
Section 8. Resignations and Removals of Directors . . . . . . . . . . 12
Section 9. Meetings . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 10. Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 11. Actions of Board . . . . . . . . . . . . . . . . . . . . . 13
Section 12. Approvals . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 13. Meetings by Means of Conference Telephone . . . . . . . . 14
Section 14. Committees . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 15. Compensation . . . . . . . . . . . . . . . . . . . . . . . 15
Section 16. Interested Directors . . . . . . . . . . . . . . . . . . . 15
ARTICLE IV
OFFICERS
Section 1. Titles and Relation to Board of Directors . . . . . . . . . 16
Section 2. Election, Term of Office and Vacancies . . . . . . . . . . 16
Section 3. Resignation . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4. Compensation . . . . . . . . . . . . . . . . . . . . . . . 17
Section 5. Chairman of the Board . . . . . . . . . . . . . . . . . . . 17
Section 6. Chief Executive Officer . . . . . . . . . . . . . . . . . . 17
Section 7. President and Vice Presidents . . . . . . . . . . . . . . . 17
Section 8. Secretary . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 9. Treasurer . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 10. ther Officers and Agents . . . . . . . . . . . . . . . . 19
ARTICLE V
STOCK
Section 1. Form of Certificates . . . . . . . . . . . . . . . . . . . 19
Section 2. Signatures . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3. Lost, Destroyed, Stolen or Mutilated Certificates . . . . . 19
Section 4. Transfers . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 5. Transfer and Registry Agents. . . . . . . . . . . . . . . . 20
Section 6. Beneficial Owners . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE VI
NOTICES
Section 1. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 2. Waivers of Notice . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 2. Disbursements . . . . . . . . . . . . . . . . . . . . . . . 21
Section 3. Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 4. Corporate Seal . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE VIII
INDEMNIFICATION
Section 1. Power to Indemnify in Actions, Suits or Proceedings
Other than Those by or in the Right of the Corporation . . 22
Section 2. Power to Indemnify in Actions, Suits or Proceedings
by or in the Right of the Corporation . . . . . . . . . . . 22
Section 3. Authorization of Indemnification . . . . . . . . . . . . . 23
Section 4. Good Faith Defined . . . . . . . . . . . . . . . . . . . . 23
Section 5. Indemnification by a Court . . . . . . . . . . . . . . . . 24
Section 6. Expenses Payable in Advance . . . . . . . . . . . . . . . . 24
Section 7. Nonexclusivity of Indemnification and Advancement of
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . .25
Section 8. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 9. Certain Definitions . . . . . . . . . . . . . . . . . . . . 25
Section 10. Survival of Indemnification and Advancement of Expenses . 26
Section 11. Limitation on Indemnification . . . . . . . . . . . . . . 26
Section 12. Indemnification of Employees and Agents . . . . . . . . . 26
ARTICLE IX
AMENDMENTS
Section 1. Amendments . . . . . . . . . . . . . . . . . . . . . . . . 26
BY-LAWS
OF
NORTHPOINT COMMUNICATIONS GROUP, INC.
(FORMERLY KNOWN AS VERIZON VENTURES I INC.)
AMENDED AND RESTATED AS OF __________, 200__
(hereinafter called the "Corporation")
ARTICLE I
OFFICES
Section 1. Principal Executive Office. The principal executive
office of the Corporation is hereby fixed and located at 303 Second Street,
San Francisco, California. The Board of Directors is hereby granted full
power and authority to change the place of said principal executive office
from time to time.
Section 2. Other Offices. The registered office of the
Corporation in the State of Delaware is hereby fixed and located at 1209
Orange Street, in the City of Wilmington, County of New Castle, State of
Delaware 19801, c/o The Corporation Trust Company. The Board of Directors
is hereby granted full power and authority to change the place of said
registered office within the State of Delaware from time to time. The
Corporation may also have offices in such other places in the United States
or elsewhere as the Board of Directors may from time to time designate or
as the business of the Corporation may from time to time require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. Meetings of the stockholders for
the election of directors or for any other purpose shall be held at such
time and place, either within or without the State of Delaware, as shall be
designated from time to time by the Board of Directors and stated in the
notice of the meeting or in a duly executed waiver of notice thereof.
Section 2. Annual Meetings. The annual meetings of stockholders
shall be held on such date and at such time as shall be designated from
time to time by the Board of Directors and stated in the notice of the
meeting, at which meetings the stockholders shall elect directors, and
transact such other business as may properly be brought before the meeting.
Written notice of the annual meeting stating the place, date and hour of
the meeting shall be given to each stockholder entitled to vote at such
meeting not less than 10 nor more than 60 days before the date of the
meeting.
Section 3. Special Meetings. Unless otherwise prescribed by law
or by the certificate of incorporation of the Corporation, as amended and
restated from time to time (the "Certificate of Incorporation"), special
meetings of stockholders, for any purpose or purposes, may be called only
at the direction of a majority of the Board of Directors in accordance with
the provisions of the Certificate of Incorporation. Such request shall
state the purpose or purposes of the proposed meeting. At a special
meeting of the stockholders, only such business shall be conducted as shall
be specified in the notice of meeting (or any supplement thereto) given by
or at the direction of the Board of Directors. Written notice of a special
meeting stating the place, date and hour of the meeting and the purpose or
purposes for which the meeting is called shall be given not less than 10
nor more than 60 days before the date of the meeting to each stockholder
entitled to vote at such meeting.
Section 4. Quorum. Except as otherwise required by law or by
the Certificate of Incorporation, the holders of a majority of the capital
stock issued and outstanding and entitled to vote thereat, present in
person or represented by proxy, shall constitute a quorum at all meetings
of the stockholders for the transaction of business. A quorum, once
established, shall not be broken by the withdrawal of enough votes to leave
less than a quorum.
Section 5. Adjourned Meetings and Notice Thereof. Any
stockholders' meeting, annual or special, whether or not a quorum is
present, may be adjourned from time to time by the chairman of such meeting
or by the vote of a majority of the shares present in person or represented
by proxy at such meeting, but in the absence of a quorum no other business
may be transacted at such meeting.
Notice of an adjourned meeting need not be given if (a) the
meeting is adjourned for thirty days or less, (b) the time and place of the
adjourned meeting are announced at the meeting at which the adjournment is
taken, and (c) no new record date is fixed for the adjourned meeting. If
the adjournment is for more than thirty days, or if after the adjournment a
new record date is fixed for the adjourned meeting, a notice of the
adjourned meeting shall be given to each stockholder entitled to vote at
the meeting not less than 10 nor more than 60 days before the date of the
meeting.
Section 6. Proxies. Any stockholder entitled to vote may do so
in person or by his or her proxy appointed by an instrument in writing or
by electronic proxy subscribed by such stockholder or by his or her
attorney thereunto authorized, delivered to the Secretary of the meeting;
provided, however, that no proxy shall be voted or acted upon after three
years from its date, unless said proxy provides for a longer period.
Without limiting the manner in which a stockholder may authorize another
person or persons to act for him or her as proxy, either of the following
shall constitute a valid means by which a stockholder may grant such
authority:
(1) A stockholder may execute a writing authorizing another person or
persons to act for him or her as proxy. Execution may be accomplished
by the stockholder or his or her authorized officer, director,
employee or agent signing such writing or causing his or her signature
to be affixed to such writing by any reasonable means, including, but
not limited to, by facsimile signature.
(2) A stockholder may authorize another person or persons to act for
him or her as proxy by transmitting or authorizing the transmission of
a telegram or other means of electronic transmission to the person who
will be the holder of the proxy or to a proxy solicitation firm, proxy
support service organization or like agent duly authorized by the
person who will be the holder of the proxy to receive such
transmission, provided that any such telegram or other means of
electronic transmission must either set forth or be submitted with
information from which it can be determined that the telegram or other
electronic transmission was authorized by the stockholder.
Any copy, facsimile telecommunication or other reliable reproduction of the
writing or transmission authorizing another person or persons to act as
proxy for a stockholder may be substituted or used in lieu of the original
writing or transmission for any and all purposes for which the original
writing or transmission could be used; provided that such copy, facsimile
telecommunication or other reproduction shall be a complete reproduction of
the entire original writing or transmission.
Section 7. Voting. At all meetings of the stockholders at which
a quorum is present, except as otherwise required by law, the Certificate
of Incorporation or these By-Laws, any question brought before any meeting
of stockholders shall be decided by the affirmative vote of the holders of
a majority of the total number of votes of the capital stock present in
person or represented by proxy and entitled to vote on such question,
voting as a single class. The Board of Directors, in its discretion, or
the officer of the Corporation presiding at a meeting of stockholders, in
his or her discretion, may require that any votes cast at such meeting
shall be cast by written ballot.
Section 8. Nature of Business at Meetings of Stockholders. No
business may be transacted at an annual meeting of stockholders, other than
business that is either (a) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board of Directors
(or any duly authorized committee thereof), (b) otherwise properly brought
before the annual meeting by or at the direction of the Board of Directors
(or any duly authorized committee thereof) or (c) otherwise properly
brought before the annual meeting by any stockholder of the Corporation (i)
who is a stockholder of record on the date of the giving of the notice
provided for in this Section 8 and on the record date for the determination
of stockholders entitled to vote at such annual meeting and (ii) who
complies with the notice procedures set forth in this Section 8.
In addition to any other applicable requirements, for business to
be properly brought before an annual meeting by a stockholder, such
stockholder must have given timely notice thereof in proper written form to
the Secretary of the Corporation.
To be timely, a stockholder's notice to the Secretary must be
delivered to or mailed and received at the principal executive offices of
the Corporation not less than 90 days prior to the anniversary date of the
immediately preceding annual meeting of stockholders; provided, however,
that in the event that the annual meeting is called for a date that is not
within 30 days before or after such anniversary date, notice by the
stockholder in order to be timely must be so received not later than the
close of business on the 10th day following the day on which such notice of
the date of the annual meeting was mailed or such public disclosure of the
date of the annual meeting was made, whichever first occurs.
To be in proper written form, a stockholder's notice to the
Secretary must set forth as to each matter such stockholder proposes to
bring before the annual meeting (i) a brief description of the business
desired to be brought before the annual meeting and the reasons for
conducting such business at the annual meeting, (ii) the name and record
address of such stockholder, (iii) the class or series and number of shares
of capital stock of the Corporation which are owned beneficially or of
record by such stockholder, (iv) a description of all arrangements or
understandings between such stockholder and any other person or persons
(including their names) in connection with the proposal of such business by
such stockholder and any material interest of such stockholder in such
business and (v) a representation that such stockholder intends to appear
in person or by proxy at the annual meeting to bring such business before
the meeting.
No business shall be conducted at the annual meeting of
stockholders except business brought before the annual meeting in
accordance with the procedures set forth in this Section 8, provided,
however, that, once business has been properly brought before the annual
meeting in accordance with such procedures, nothing in this Section 8 shall
be deemed to preclude discussion by any stockholder of any such business.
If the chairman of an annual meeting determines that business was not
properly brought before the annual meeting in accordance with the foregoing
procedures, the chairman shall declare to the meeting that the business was
not properly brought before the meeting and such business shall not be
transacted.
Section 9. List of Stockholders Entitled to Vote. The officer
of the Corporation who has charge of the stock ledger of the Corporation
shall prepare and make, at least 10 days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least 10 days prior to the meeting,
either at a place within the city where the meeting is to be held, which
place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall
also be produced and kept at the time and place of the meeting during the
whole time thereof, and may be inspected by any stockholder of the
Corporation who is present.
Section 10. Stock Ledger. The stock ledger of the Corporation
shall be the only evidence as to who are the stockholders entitled to
examine the stock ledger, the list required by Section 9 of this Article II
or the books of the Corporation, or to vote in person or by proxy at any
meeting of stockholders.
Section 11. Record Date. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any meeting
of stockholders or any adjournment thereof, or entitled to receive payment
of any dividend or other distribution or allotment of any rights, or
entitled to exercise any rights in respect of any change, conversion or
exchange of stock, or for the purpose of any other lawful action, the Board
of Directors may fix a record date, which record date shall not precede the
date upon which the resolution fixing the record date is adopted by the
Board of Directors and which record date: (1) in the case of determination
of stockholders entitled to vote at any meeting of stockholders or
adjournment thereof, shall not be more than 60 nor less than 10 days before
the date of such meeting; and (2) in the case of any other action, shall
not be more than 60 days prior to such other action. If no record date is
fixed: (1) the record date for determining stockholders entitled to notice
of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the
day on which the meeting is held; and (2) the record date for determining
stockholders for any other purpose shall be at the close of business on the
day on which the Board of Directors adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date
for the adjourned meeting.
Section 12. Inspectors of Election. In advance of any meeting
of stockholders, the Board by resolution or the Chairman or President shall
appoint one or more inspectors of election to act at the meeting and make a
written report thereof. One or more other persons may be designated as
alternate inspectors to replace any inspector who fails to act. If no
inspector or alternate is present, ready and willing to act at a meeting of
stockholders, the Chairman of the meeting shall appoint one or more
inspectors to act at the meeting. Unless otherwise required by law,
inspectors may be officers, employees or agents of the Corporation. Each
inspector, before entering upon the discharge of his or her duties, shall
take and sign an oath faithfully to execute the duties of inspector with
strict impartiality and according to the best of his or her ability. The
inspector shall have the duties prescribed by law and shall take charge of
the polls and, when the vote is completed, shall make a certificate of the
result of the vote taken and of such other facts as may be required by law.
Section 13. Chairman and Secretary at Meetings. At any meeting
of stockholders, the Chairman of the Board of Directors, or in his or her
absence, a person designated by the Board of Directors, shall preside at
and act as chairman of the meeting. The Secretary, or in his or her
absence a person designated by the chairman of the meeting, shall act as
secretary of the meeting.
ARTICLE III
DIRECTORS
Section 1. Powers. Subject to any limitations contained in the
Certificate of Incorporation, these By-laws or the Delaware General
Corporation Law (the "DGCL") as to actions to be authorized or approved by
the stockholders, and subject to the duties of directors as prescribed by
these By-laws, all corporate powers shall be exercised by or under the
ultimate direction of, and the business and affairs of the Corporation
shall be managed by, or under the ultimate direction of, the Board of
Directors.
Section 2. Certain Definitions. For purposes of these By-laws:
Any person shall be deemed to "beneficially own", to have
"beneficial ownership" of, or to be "beneficially owning" any securities
(which securities shall also be deemed "beneficially owned" by such person)
that such person is deemed to "beneficially own" within the meaning of Rule
13d-3 under the Securities Exchange Act of 1934, as amended.
"Independent Director" means a director of the Corporation who
falls within the definition of "independent director" under the rules of
the Nasdaq Stock Market or any other securities exchange on which the
Corporation's common stock is then listed.
"Merger Closing Date" means that date upon which the Agreement
and Plan of Merger, dated as of August 7, 2000, between Verizon,
NorthPoint, Verizon Ventures I Inc. and the Corporation (the "Merger
Agreement"), is consummated in accordance with its terms.
"NorthPoint" means NorthPoint Communications Group, Inc., a
Delaware corporation formed on May 17, 1997.
"NorthPoint Directors" means NorthPoint Nominees who are elected
or appointed to serve as members of the Board of Directors.
"NorthPoint Nominating Committee" means the nominating committee
consisting of those persons designated as the initial NorthPoint Directors
by NorthPoint in accordance with the Merger Agreement as of the Merger
Closing Date and such other persons who are nominated by such nominating
committee to serve as their replacements, which will have the authority to
designate each subsequent NorthPoint Director.
"NorthPoint Nominees" means such persons as are so designated by
NorthPoint or by the NorthPoint Nominating Committee, as such designations
may change from time to time, to serve as members of the Board of
Directors.
"Person" means any individual, group, corporation, partnership,
joint venture, trust, business, association, organization, governmental
entity or other entity.
"Verizon" means Bell Atlantic Corporation (d/b/a Verizon
Communications), a Delaware corporation.
"Verizon Directors" means Verizon Nominees who are elected or
appointed to serve as members of the Board of Directors.
"Verizon Nominating Committee" means the nominating committee
consisting of those persons designated as the initial Verizon Directors by
Verizon in accordance with the Merger Agreement as of the Merger Closing
Date and such other persons who are nominated by such nominating committee
to serve as their replacements, which will have the authority to designate
each subsequent Verizon Director, including the Independent Directors.
"Verizon Nominees" means such persons as are so designated by the
Verizon Nominating Committee, as such designations may change from time to
time, to serve as members of the Board of Directors.
Section 3. Number of Directors. For a period of eighteen months
immediately following the Merger Closing Date, the Corporation shall have
nine directors. Thereafter, the authorized number of directors of this
Corporation shall be not less than three nor more than thirteen, with the
exact number of directors within such range fixed from time to time by
resolution of the Board of Directors.
Section 4. Election of Directors. Directors shall be elected
by the stockholders of the Corporation, and each director so elected shall
hold office until such director's successor is duly elected and qualified,
or until such director's earlier death, resignation or removal. Directors
need not be stockholders.
Section 5. Nomination of Directors. (a) Except as set forth in
Section 5(b), only persons who are nominated in accordance with the
following procedures shall be eligible for election as directors of the
Corporation, except as may be otherwise provided in the Certificate of
Incorporation with respect to the right of holders of preferred stock of
the Corporation to nominate and elect a specified number of directors in
certain circumstances. Nominations of persons for election to the Board of
Directors may be made at any annual meeting of stockholders, or at any
special meeting of stockholders called for the purpose of electing
directors, (i) by or at the direction of the Board of Directors (or any
duly authorized committee thereof) or (ii) by any stockholder of the
Corporation (A) who is a stockholder of record on the date of the giving of
the notice provided for in this Section 2 and on the record date for the
determination of stockholders entitled to vote at such meeting and (B) who
complies with the notice procedures set forth in this Section 2.
In addition to any other applicable requirements, for a
nomination to be made by a stockholder, such stockholder must have given
timely notice thereof in proper written form to the Secretary of the
Corporation.
To be timely, a stockholder's notice to the Secretary must be
delivered to or mailed and received at the principal executive offices of
the Corporation (a) in the case of an annual meeting, not less than 90 days
prior to the anniversary date of the immediately preceding annual meeting
of stockholders; provided, however, that in the event that the annual
meeting is called for a date that is not within 30 days before or after
such anniversary date, notice by the stockholder in order to be timely must
be so received not later than the close of business on the 10th day
following the day on which such notice of the date of the annual meeting
was mailed or such public disclosure of the date of the annual meeting was
made, whichever first occurs; and (b) in the case of a special meeting of
stockholders called for the purpose of electing directors, not later than
the close of business on the 10th day following the day on which notice of
the date of the special meeting was mailed or public disclosure of the date
of the special meeting was made, whichever first occurs.
To be in proper written form, a stockholder's notice to the
Secretary must set forth (a) as to each person whom the stockholder
proposes to nominate for election as a director (i) the name, age, business
address and residence address of the person, (ii) the principal occupation
or employment of the person, (iii) the class or series and number of shares
of capital stock of the Corporation which are owned beneficially or of
record by the person and (iv) any other information relating to the person
that would be required to be disclosed in a proxy statement or other
filings required to be made in connection with solicitations of proxies for
election of directors pursuant to Section 14 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and the rules and regulations
promulgated thereunder; and (b) as to the stockholder giving the notice (i)
the name and record address of such stockholder, (ii) the class or series
and number of shares of capital stock of the Corporation which are owned
beneficially or of record by such stockholder, (iii) a description of all
arrangements or understandings between such stockholder and each proposed
nominee and any other person or persons (including their names) pursuant to
which the nomination(s) are to be made by such stockholder, (iv) a
representation that such stockholder intends to appear in person or by
proxy at the meeting to nominate the persons named in its notice and (v)
any other information relating to such stockholder that would be required
to be disclosed in a proxy statement or other filings required to be made
in connection with solicitations of proxies for election of directors
pursuant to Section 14 of the Exchange Act and the rules and regulations
promulgated thereunder. Such notice must be accompanied by a written
consent of each proposed nominee being named as a nominee and to serve as a
director if elected.
Except as set forth in Section 5(b) of Article III, no person
shall be eligible for election as a director of the Corporation unless
nominated in accordance with the procedures set forth in this Section 2.
If the Chairman of the meeting determines that a nomination was not made in
accordance with the foregoing procedures, the Chairman shall declare to the
meeting that the nomination was defective and such defective nomination
shall be disregarded.
(b) For a period of 18 months immediately following the
Merger Closing Date, the Corporation shall exercise all authority under
applicable law to cause any slate of directors presented to stockholders
for election to the Board of Directors to consist of such nominees that, if
elected, would result in the entire Board of Directors consisting of six
Verizon Directors (three of whom are Independent Directors) and three
NorthPoint Directors. Any Verizon Nominees, including Independent
Directors, that are included in a slate of directors shall be designated by
the Verizon Nominating Committee, and any NorthPoint Nominees that are
included in a slate of directors shall be designated by the NorthPoint
Nominating Committee. The Corporation's nominating committee shall
nominate each person so designated.
Section 6. Vacancies. (a) In the event that during the 18-
month period immediately following the Merger Closing Date, any Verizon
Director or NorthPoint Director shall for any reason cease to serve as a
member of the Board of Directors during his or her term of office, the
Board of Directors shall appoint to fill the vacancy created thereby such
person as may be designated by the Verizon Nominating Committee or the
NorthPoint Nominating Committee, as the case may be. Notwithstanding the
foregoing, if during the 18-month period immediately following the Merger
Closing Date, any Verizon Director who is an Independent Director shall for
any reason cease to serve as a member of the Board during his or her term
of office, the person designated to fill the vacancy shall be an
Independent Director. After the expiration of the 18-month period
immediately following the Merger Closing Date, any vacancy on the Board of
Directors shall be filled by a majority of the Board of Directors.
(b) The filling of any vacancy on the Board of Directors
that results from an increase in the number of directors shall be governed
by the Certificate of Incorporation. Whenever the holders of any one or
more class or classes or series of preferred stock of the Corporation shall
have the right, voting separately as a class, to elect directors at an
annual or special meeting of stockholders, the election, term of office,
filling of vacancies and other features of such directorships shall also be
governed by the Certificate of Incorporation.
Section 7. Organization. At each meeting of the Board of
Directors, the Chairman of the Board of Directors, or, in his or her
absence, a director chosen by a majority of the directors present, shall
act as Chairman. The Secretary of the Corporation shall act as Secretary
at each meeting of the Board of Directors. In case the Secretary shall be
absent from any meeting of the Board of Directors, an Assistant Secretary
shall perform the duties of Secretary at such meeting; and in the absence
from any such meeting of the Secretary and all the Assistant Secretaries,
the Chairman of the meeting may appoint any person to act as Secretary of
the meeting.
Section 8. Resignations and Removals of Directors. Any director
of the Corporation may resign at any time, by giving written notice to the
Chairman of the Board of Directors, the President or the Secretary of the
Corporation. Such resignation shall take effect at the time therein
specified or, if no time is specified, immediately; and, unless otherwise
specified in such notice, the acceptance of such resignation shall not be
necessary to make it effective. Except as otherwise required by law and
subject to the rights, if any, of the holders of shares of preferred stock
then outstanding, any director or the entire Board of Directors may be
removed from office at any time by the affirmative vote of the holders of
at least a majority in voting power of the issued and outstanding capital
stock of the Corporation entitled to vote in the election of directors.
Notwithstanding the foregoing, any director elected within 18 months of the
Merger Closing Date shall not be removed during his or her term except upon
the recommendation of a majority of the Verizon Directors in the case of a
Verizon Director, or upon the recommendation of a majority of the
NorthPoint Directors in the case of a NorthPoint Director.
Section 9. Meetings. The Board of Directors of the Corporation
may hold meetings, both regular and special, either within or without the
State of Delaware. Regular meetings of the Board of Directors may be held
at such time and at such place as may from time to time be determined by
the Board of Directors and, unless required by resolution of the Board of
Directors, without notice. Special meetings of the Board of Directors may
be called by the Chairman of the Board of Directors, the Vice Chairman, if
there be one, or a majority of the directors then in office. Notice
thereof stating the place, date and hour of the meeting shall be given to
each director at least 24 hours prior to such meeting by telephone,
facsimile or electronic transmission.
Section 10. Quorum. Except as may be otherwise required by law,
the Certificate of Incorporation or these By-Laws, at all meetings of the
Board of Directors, a majority of the entire Board of Directors shall
constitute a quorum for the transaction of business and the act of a
majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors. If a quorum shall not be
present at any meeting of the Board of Directors, the directors present
thereat may adjourn the meeting from time to time, without notice other
than announcement at the meeting of the time and place of the adjourned
meeting, until a quorum shall be present.
Section 11. Actions of Board. Unless otherwise provided by the
Certificate of Incorporation or these By-Laws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if all the members of the
Board of Directors or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of
proceedings of the Board of Directors or committee.
Section 12. Approvals. (a) For a period of eighteen months
immediately following the Merger Closing Date, the authorization, approval
or ratification of the following actions will require the approval of seven
members of the Board of Directors:
(i) any amendment to the Certificate of Incorporation
of the Corporation or to any of the provisions contained in Sections
3, 4, 5(b) and 6 of Article III and this Section 12 of these By-laws;
(ii) any change in the Corporation's legal form;
(iii) the adoption of any plan of liquidation or
dissolution, or commencement of a voluntary case under the federal
bankruptcy laws or any other applicable state or federal bankruptcy,
insolvency or similar law, or consent to the entry of an order for
relief in any involuntary case under any such law or to the
appointment of a receiver, liquidator, assignee, custodian, trustee or
sequestrator (or similar official) of the Corporation or of any
substantial part of its property, or make an assignment for the
benefit of its creditors, or admit in writing its inability to pay its
debts generally as they become due; and
(iv) the sale, conveyance, exchange, transfer or
purchase of any of the Corporation's tangible or intangible assets,
the sales price of which represents, in one or a series of related
transactions, in excess of 20% of the fair value of the Corporation's
total consolidated assets.
(b) In addition, for a period of 18 months following the
Merger Closing Date, the approval of a majority of the Board of Directors
which includes at least three NorthPoint Directors and two Verizon
Directors (one of whom is an Independent Director and one of whom is a
Verizon Director who is not an Independent Director) shall be required in
order for the Corporation to enter into any line or lines of business other
than NorthPoint's Line of Business (as defined in the Merger Agreement).
Section 13. Meetings by Means of Conference Telephone. Unless
otherwise provided by the Certificate of Incorporation or these By-Laws,
members of the Board of Directors of the Corporation, or any committee
designated by the Board of Directors, may participate in a meeting of the
Board of Directors or such committee by means of a conference telephone or
similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a
meeting pursuant to this Section 10 shall constitute presence in person at
such meeting.
Section 14. Committees. The Board of Directors may, by
resolution passed by a majority of the entire Board of Directors, designate
one or more committees, each committee to consist of one or more of the
directors of the Corporation. Without limiting the generality of the
foregoing, the Board of Directors shall designate, a Human Resources and
Compensation Committee (which shall be chaired by an Verizon Director so
long as there are Verizon Directors serving on the Board of Directors) and
an Audit Committee (which shall be chaired by an Independent Director who
is an Verizon Director so long as there are Verizon Directors serving on
the Board of Directors) and, for the 18 month period immediately following
the Merger Closing Date, a NorthPoint Nominating Committee and an Verizon
Nominating Committee. The Board of Directors may designate one or more
directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of any such committee. In the
absence or disqualification of a member of a committee, and in the absence
of a designation by the Board of Directors of an alternate member to
replace the absent or disqualified member, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he
or they constitute a quorum, may unanimously appoint another member of the
Board of Directors to act at the meeting in the place of any absent or
disqualified member. Any committee, to the extent permitted by law and
provided in the resolution establishing such committee, shall have and may
exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the Corporation. Each committee
shall keep regular minutes and report to the Board of Directors when
required.
Section 15. Compensation. The directors may be paid their
expenses, if any, of attendance at each meeting of the Board of Directors
and may be paid a fixed sum for attendance at each meeting of the Board of
Directors or a stated salary, or such other emoluments as the Board of
Directors shall from time to time determine. No such payment shall
preclude any director from serving the Corporation in any other capacity
and receiving compensation therefor. Members of special or standing
committees may be allowed like compensation for attending committee
meetings.
Section 16. Interested Directors. No contract or transaction
between the Corporation and one or more of its directors or officers, or
between the Corporation and any other corporation, partnership,
association, or other organization in which one or more of its directors or
officers are directors or officers, or have a financial interest, shall be
void or voidable solely for this reason, or solely because the director or
officer is present at or participates in the meeting of the Board of
Directors or committee thereof which authorizes the contract or
transaction, or solely because such person's or their votes are counted for
such purpose if (i) the material facts as to such person's or their
relationship or interest and as to the contract or transaction are
disclosed or are known to the Board of Directors or the committee, and the
Board of Directors or committee in good faith authorizes the contract or
transaction by the affirmative votes of a majority of the disinterested
directors, even though the disinterested directors be less than a quorum;
or (ii) the material facts as to such person's or their relationship or
interest and as to the contract or transaction are disclosed or are known
to the stockholders entitled to vote thereon, and the contract or
transaction is specifically approved in good faith by vote of the
stockholders; or (iii) the contract or transaction is fair as to the
Corporation as of the time it is authorized, approved or ratified, by the
Board of Directors, a committee thereof or the stockholders. Common or
interested directors may be counted in determining the presence of a quorum
at a meeting of the Board of Directors or of a committee which authorizes
the contract or transaction.
ARTICLE IV
OFFICERS
Section 1. Titles and Relation to Board of Directors. The
officers of the Corporation shall include a Chief Executive Officer, a
President, a Secretary and a Treasurer. The Board of Directors may also
choose a Chairman of the Board, one or more Vice Chairmen of the Board, a
Chief Operating Officer, a Chief Financial Officer, a General Counsel, and
one or more Vice Presidents (who may be designated Executive or Senior Vice
Presidents), Assistant Secretaries, Assistant Treasurers or other officers.
All officers shall perform their duties and exercise their powers subject
to the direction of the Chief Executive Officer and the overriding
direction of the Board of Directors. If there shall occur a vacancy in any
office, in the absence of the appointment of a replacement by the Board of
Directors, the Chief Executive Officer shall have the right and power to
appoint a Secretary, a Treasurer, a Chief Operating Officer, a Chief
Financial Officer, a General Counsel, one or more additional Vice
Presidents (who may be designated Executive or Senior Vice Presidents), one
or more Assistant Secretaries and one or more Assistant Treasurers, all of
whom shall serve at the pleasure of the Board of Directors, and shall
perform their duties and exercise their powers subject to the direction of
the Chief Executive Officer and the overriding direction of the Board of
Directors. Any number of offices may be held simultaneously by the same
person.
Section 2. Election, Term of Office and Vacancies. At its
regular annual meeting, the Board of Directors shall choose the officers of
the Corporation. No officer need be a member of the Board of Directors
except the Chairman of the Board, the Chief Executive Officer and the
President. The officers shall hold office until their successors are
chosen, except that the Board of Directors may remove any officer at any
time. Subject to Section 34 of these Bylaws, if an office becomes vacant
for any reason, the vacancy shall be filled by the Board of Directors.
Section 3. Resignation. Any officer may resign at any time upon
written notice to the Corporation without prejudice to the rights, if any,
of the Corporation under any contract to which the officer is a party.
Such resignation shall be effective when given unless the notice specifies
a later time. The resignation shall be effective regardless of whether it
is accepted by the Corporation.
Section 4. Compensation. The Board of Directors shall fix the
compensation of the Chairman of the Board, any Vice Chairman, the Chief
Executive Officer and the President and may fix the salaries of other
employees of the Corporation including the other officers. If the Board of
Directors does not fix the salaries of the other officers, the Chief
Executive Officer shall fix such salaries.
Section 5. Chairman of the Board. The Chairman of the Board
shall be selected by the Verizon Directors so long as there are Verizon
Directors serving on the Board of Directors or by a majority of the entire
Board of Directors if there are no Verizon Directors serving on the Board
of Directors. The Chairman of the Board shall, if present, preside at all
meetings of the Board of Directors, and exercise and perform such other
powers and duties as may be from time to time assigned to him by the Board
of Directors or prescribed by these Bylaws.
Section 6. Chief Executive Officer. Unless otherwise determined
by the Board of Directors, the Chief Executive Officer shall be deemed
general manager of the Corporation. The Chief Executive Officer shall be
entitled to attend all meetings of the Board of Directors and any
committees thereof and shall effectuate orders and resolutions of the Board
of Directors and exercise such other powers and perform such other duties
as the Board of Directors shall from time to time prescribe.
Section 7. President and Vice Presidents. In the absence or
disability of the Chief Executive Officer, the President, and in the
absence or disability of the President, the Vice President, if any, or if
more than one, the Vice Presidents in order of their rank as fixed by the
Board of Directors or, if not so ranked, the Vice President designated by
the Board of Directors, shall perform all the duties of the Chief Executive
Officer, and when so acting shall have all the powers of, and be subject to
all the restrictions upon, the Chief Executive Officer. The President and
Vice Presidents shall have such other powers and perform such other duties
as from time to time may be prescribed for them by the Board of Directors
or these Bylaws.
Section 8. Secretary. The Secretary (or in his absence an
Assistant Secretary or, if there be no Assistant Secretaries, another
person designated by the Board of Directors) shall have the following
powers and duties:
(a) The Secretary shall attend all meetings of the Board of
Directors and its committees and shall record all votes and the minutes of
such meetings in a book to be kept for that purpose at the principal
executive office of the Corporation or at such other place as the Board of
Directors may determine. The Secretary shall keep at the Corporation's
principal executive office the original or a copy of these Bylaws, as
amended from time to time.
(b) Unless a transfer agent is appointed by the Board of
Directors to keep a share register, the Secretary shall keep at the
principal executive office of the Corporation a share register showing the
names of the stockholders and their addresses, the number and class of
shares held by each, the number and date of certificates issued, and the
number and date of cancellation of each certificate surrendered for
cancellation.
(c) The Secretary shall give such notices as may be
required by law or these Bylaws.
(d) The Secretary shall exercise such other powers and
perform such other duties as the Board of Directors or the Chief Executive
Officer shall from time to time prescribe.
Section 9. Treasurer. Unless otherwise determined by the Board
of Directors, the Treasurer of the Corporation shall be its chief financial
officer, and shall have custody of the corporate funds and securities and
shall keep adequate and correct accounts of the Corporation's properties
and business transactions. The Treasurer shall disburse such funds of the
Corporation as may be ordered by the Board of Directors or by one or more
persons authorized by the Board of Directors, taking proper vouchers for
such disbursements, and when requested shall render to the Chief Executive
Officer, the Board of Directors and, if applicable, the Chief Financial
Officer, an account of all transactions and the financial condition of the
Corporation and shall exercise such other powers and perform such other
duties as the Board of Directors, the Chief Executive Officer or, if
applicable, the Chief Financial Officer shall prescribe.
Section 10. Other Officers and Agents. Such other officers and
agents as the Board of Directors may choose shall perform such duties and
have such powers as from time to time may be assigned to them by the Board
of Directors. The Board of Directors may delegate to any other officer of
the Corporation the power to choose such other officers and to prescribe
their respective duties and powers.
ARTICLE V
STOCK
Section 1. Form of Certificates. Every holder of stock in the
Corporation shall be entitled to have a certificate signed, in the name of
the Corporation, (i) by the Chairman of the Board of Directors, the
President or a Vice President and (ii) by the Treasurer or an Assistant
Treasurer, or the Secretary or an Assistant Secretary of the Corporation,
certifying the number of shares owned by such holder of stock in the
Corporation.
Section 2. Signatures. Any or all of the signatures on a
certificate may be a facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon
a certificate shall have ceased to be such officer, transfer agent or
registrar before such certificate is issued, it may be issued by the
Corporation with the same effect as if such person were such officer,
transfer agent or registrar at the date of issue.
Section 3. Lost, Destroyed, Stolen or Mutilated Certificates.
The Board of Directors may direct a new certificate to be issued in place
of any certificate theretofore issued by the Corporation alleged to have
been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming the certificate of stock to be lost, stolen or
destroyed. When authorizing such issue of a new certificate, the Board of
Directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificate, or such person's legal representative, to advertise the same
in such manner as the Board of Directors shall require and/or to give the
Corporation a bond in such sum as it may direct as indemnity against any
claim that may be made against the Corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
Section 4. Transfers. Stock of the Corporation shall be
transferable in the manner prescribed by law and in these By-Laws.
Transfers of stock shall be made on the books of the Corporation only by
the person named in the certificate or by such person's attorney lawfully
constituted in writing and upon the surrender of the certificate therefor,
properly endorsed for transfer and payment of all necessary transfer taxes;
provided, however, that such surrender and endorsement or payment of taxes
shall not be required in any case in which the officers of the Corporation
shall determine to waive such requirement. Every certificate exchanged,
returned or surrendered to the Corporation shall be marked "Cancelled,"
with the date of cancellation, by the Secretary or Assistant Secretary of
the Corporation or the transfer agent thereof. No transfer of stock shall
be valid as against the Corporation for any purpose until it shall have
been entered in the stock records of the Corporation by an entry showing
from and to whom transferred.
Section 5. Transfer and Registry Agents. The Corporation may
from time to time maintain one or more transfer offices or agencies and
registry offices or agencies at such place or places as may be determined
from time to time by the Board of Directors.
Section 6. Beneficial Owners. The Corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner, and to
hold liable for calls and assessments a person registered on its books as
the owner of shares, and shall not be bound to recognize any equitable or
other claim to or interest in such share or shares on the part of any other
person, whether or not it shall have express or other notice thereof,
except as otherwise provided by law.
ARTICLE VI
NOTICES
Section 1. Notices. Whenever written notice is required by law,
the Certificate of Incorporation or these By-Laws, to be given to any
director, member of a committee or stockholder, such notice may be given by
mail, addressed to such director, member of a committee or stockholder, at
such person's address as it appears on the records of the Corporation, with
postage thereon prepaid, and such notice shall be deemed to be given at the
time five business days after the same shall be deposited in the United
States mail. Written notice may also be given personally or by facsimile
and such notice shall be deemed to be given at the time of delivery, if
given personally, or when confirmation of receipt is received, if given by
facsimile.
Section 2. Waivers of Notice. (a) Whenever any notice is
required by law, the Certificate of Incorporation or these By-Laws, to be
given to any director, member of a committee or stockholder, a waiver
thereof in writing, signed, by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent to notice. Attendance of a person at a meeting, present by
person or represented by proxy, shall constitute a waiver of notice of such
meeting, except where the person attends the meeting for the express
purpose of objecting at the beginning of the meeting to the transaction of
any business because the meeting is not lawfully called or convened.
(b) Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the stockholders, directors or
members of a committee of directors need be specified in any written waiver
of notice unless so required by law, the Certificate of Incorporation or
these By-Laws.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends. Subject to the requirements of the GCL
and the provisions of the Certificate of Incorporation, dividends upon the
capital stock of the Corporation may be declared by the Board of Directors
at any regular or special meeting of the Board of Directors, and may be
paid in cash, in property, or in shares of the Corporation's capital stock.
Before payment of any dividend, there may be set aside out of any funds of
the Corporation available for dividends such sum or sums as the Board of
Directors from time to time, in its absolute discretion, deems proper as a
reserve or reserves to meet contingencies, or for purchasing any of the
shares of capital stock, warrants, rights, options, bonds, debentures,
notes, scrip or other securities or evidences of indebtedness of the
Corporation, or for equalizing dividends, or for repairing or maintaining
any property of the Corporation, or for any other proper purpose, and the
Board of Directors may modify or abolish any such reserve.
Section 2. Disbursements. All checks or demands for money and
notes of the Corporation shall be signed by such officer or officers or
such other person or persons as the Board of Directors may from time to
time designate.
Section 3. Fiscal Year. The fiscal year of the Corporation
shall be fixed by resolution of the Board of Directors.
Section 4. Corporate Seal. The corporate seal shall have
inscribed thereon the name of the Corporation, the year of its organization
and the word "Delaware". The seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.
ARTICLE VIII
INDEMNIFICATION
Section 1. Power to Indemnify in Actions, Suits or Proceedings
Other than Those by or in the Right of the Corporation. Subject to Section
3 of this Article VIII, the Corporation shall indemnify any person who was
or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of
the Corporation) by reason of the fact that such person is or was a
director or officer of the Corporation, or is or was a director or officer
of the Corporation serving at the request of the Corporation as a director
or officer, employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person in connection
with such action, suit or proceeding if such person acted in good faith and
in a manner such person reasonably believed to be in or not opposed to the
best interests of the Corporation, and, with respect to any criminal action
or proceeding, such person had no reasonable cause to believe his or her
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere
or its equivalent, shall not, of itself, create a presumption that such
person did not act in good faith and in a manner which such person
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his or her conduct was unlawful.
Section 2. Power to Indemnify in Actions, Suits or Proceedings
by or in the Right of the Corporation. Subject to Section 3 of this
Article VIII, the Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that such person is or was a
director or officer of the Corporation, or is or was a director or officer
of the Corporation serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise, against expenses
(including attorneys' fees) actually and reasonably incurred by such person
in connection with the defense or settlement of such action or suit if such
person acted in good faith and in a manner such person reasonably believed
to be in or not opposed to the best interests of the Corporation; except
that no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable to the
Corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
Section 3. Authorization of Indemnification. Any
indemnification under this Article VIII (unless ordered by a court) shall
be made by the Corporation only as authorized in the specific case upon a
determination that indemnification of the director or officer is proper in
the circumstances because such person has met the applicable standard of
conduct set forth in Section 1 or Section 2 of this Article VIII, as the
case may be. Such determination shall be made (i) by a majority vote of
the directors who are not parties to such action, suit or proceeding, even
though less than a quorum, or (ii) if there are no such directors, or if
such directors so direct, by independent legal counsel in a written
opinion, or (iii) by the stockholders. To the extent, however, that a
director or officer of the Corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding described above, or
in defense of any claim, issue or matter therein, such person shall be
indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection therewith, without the
necessity of authorization in the specific case.
Section 4. Good Faith Defined. For purposes of any
determination under Section 3 of this Article VIII, a person shall be
deemed to have acted in good faith and in a manner such person reasonably
believed to be in or not opposed to the best interests of the Corporation,
or, with respect to any criminal action or proceeding, to have had no
reasonable cause to believe his or her conduct was unlawful, if such
person's action is based on the records or books of account of the
Corporation or another enterprise, or on information supplied to such
person by the officers of the Corporation or another enterprise in the
course of their duties, or on the advice of legal counsel for the
Corporation or another enterprise or on information or records given or
reports made to the Corporation or another enterprise by an independent
certified public accountant or by an appraiser or other expert selected
with reasonable care by the Corporation or another enterprise. The term
"another enterprise" as used in this Section 4 shall mean any other
corporation or any partnership, joint venture, trust, employee benefit plan
or other enterprise of which such person is or was serving at the request
of the Corporation as a director, officer, employee or agent. The
provisions of this Section 4 shall not be deemed to be exclusive or to
limit in any way the circumstances in which a person may be deemed to have
met the applicable standard of conduct set forth in Section 1 or 2 of this
Article VIII, as the case may be.
Section 5. Indemnification by a Court. Notwithstanding any
contrary determination in the specific case under Section 3 of this Article
VIII, and notwithstanding the absence of any determination thereunder, any
director or officer may apply to the Court of Chancery of the State of
Delaware or any other court of competent jurisdiction in the State of
Delaware for indemnification to the extent otherwise permissible under
Sections 1 and 2 of this Article VIII. The basis of such indemnification
by a court shall be a determination by such court that indemnification of
the director or officer is proper in the circumstances because such person
has met the applicable standards of conduct set forth in Section 1 or 2 of
this Article VIII, as the case may be. Neither a contrary determination in
the specific case under Section 3 of this Article VIII nor the absence of
any determination thereunder shall be a defense to such application or
create a presumption that the director or officer seeking indemnification
has not met any applicable standard of conduct. Notice of any application
for indemnification pursuant to this Section 5 shall be given to the
Corporation promptly upon the filing of such application. If successful,
in whole or in part, the director or officer seeking indemnification shall
also be entitled to be paid the expense of prosecuting such application.
Section 6. Expenses Payable in Advance. Expenses incurred by a
director or officer in defending or investigating a threatened or pending
action, suit or proceeding shall be paid by the Corporation in advance of
the final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that such person is not
entitled to be indemnified by the Corporation as authorized in this Article
VIII.
Section 7. Nonexclusivity of Indemnification and Advancement of
Expenses. The indemnification and advancement of expenses provided by or
granted pursuant to this Article VIII shall not be deemed exclusive of any
other rights to which those seeking indemnification or advancement of
expenses may be entitled under the Certificate of Incorporation or any By-
Law, agreement, contract, vote of stockholders or disinterested directors
or pursuant to the direction (howsoever embodied) of any court of competent
jurisdiction or otherwise, both as to action in such person's official
capacity and as to action in another capacity while holding such office, it
being the policy of the Corporation that indemnification of the persons
specified in Sections 1 and 2 of this Article VIII shall be made to the
fullest extent permitted by law. The provisions of this Article VIII shall
not be deemed to preclude the indemnification of any person who is not
specified in Section 1 or 2 of this Article VIII but whom the Corporation
has the power or obligation to indemnify under the provisions of the GCL,
or otherwise.
Section 8. Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director or officer of
the Corporation, or is or was a director or officer of the Corporation
serving at the request of the Corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise against any liability asserted
against such person and incurred by such person in any such capacity, or
arising out of such person's status as such, whether or not the Corporation
would have the power or the obligation to indemnify such person against
such liability under the provisions of this Article VIII.
Section 9. Certain Definitions. For purposes of this Article
VIII, references to the "Corporation" shall include, in addition to the
resulting corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger which,
if its separate existence had continued, would have had power and authority
to indemnify its directors or officers, so that any person who is or was a
director or officer of such constituent corporation, or is or was a
director or officer of such constituent corporation serving at the request
of such constituent corporation as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust, employee benefit
plan or other enterprise, shall stand in the same position under the
provisions of this Article VIII with respect to the resulting or surviving
corporation as such person would have with respect to such constituent
corporation if its separate existence had continued. For purposes of this
Article VIII, references to "fines" shall include any excise taxes assessed
on a person with respect to an employee benefit plan; and references to
"serving at the request of the Corporation" shall include any service as a
director, officer, employee or agent of the Corporation which imposes
duties on, or involves services by, such director or officer with respect
to an employee benefit plan, its participants or beneficiaries; and a
person who acted in good faith and in a manner such person reasonably
believed to be in the interest of the participants and beneficiaries of an
employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the Corporation" as referred to in this
Article VIII.
Section 10. Survival of Indemnification and Advancement of
Expenses. The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article VIII shall, unless otherwise provided
when authorized or ratified, continue as to a person who has ceased to be a
director or officer and shall inure to the benefit of the heirs, executors
and administrators of such a person.
Section 11. Limitation on Indemnification. Notwithstanding
anything contained in this Article VIII to the contrary, except for
proceedings to enforce rights to indemnification (which shall be governed
by Section 5 hereof), the Corporation shall not be obligated to indemnify
any director or officer (or his or her heirs, executors or personal or
legal representatives) or advance expenses in connection with a proceeding
(or part thereof) initiated by such person unless such proceeding (or part
thereof) was authorized or consented to by the Board of Directors of the
Corporation.
Section 12. Indemnification of Employees and Agents. The
Corporation may, to the extent authorized from time to time by the Board of
Directors, provide rights to indemnification and to the advancement of
expenses to employees and agents of the Corporation similar to those
conferred in this Article VIII to directors and officers of the
Corporation.
ARTICLE IX
AMENDMENTS
Section 1. Amendments. Subject to the provisions set forth in
Section 12 of Article III, these By-Laws may be altered, amended or
repealed, in whole or in part, or new By-Laws may be adopted by the Board
of Directors or by the stockholders as provided in the Certificate of
Incorporation.
