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MERGER AGREEMENT
dated as of June 1, 2000
by and among
URSUS TELECOM CORPORATION,
LAE ACQUISITION CORP.,
LATIN AMERICAN ENTERPRISES, INC.,
▇▇▇▇ ▇▇▇▇ ▇▇▇▇
and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
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EXHIBIT A FORM OF ARTICLES OF MERGER
ANNEX I CERTIFICATE OF INCORPORATION AND BY-LAWS OF ACQUIROR
ANNEX II FORM OF EMPLOYMENT AGREEMENTS
ANNEX III FORM OF ESCROW AGREEMENT
MERGER AGREEMENT
This Merger Agreement (the "Agreement") is entered into and dated as of
June 1, 2000 by and among Ursus Telecom Corporation, a Florida corporation
(the "Acquiror"), LAE Acquisition Corp., a Florida corporation ("Merger Sub"),
Latin American Enterprises, Inc., a Florida corporation (the "Company"), ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇., individually and as trustee of the ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇. Revocable
Trust (collectively, "▇▇▇▇"), a resident of Florida, and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
("▇▇▇▇") (▇▇▇▇ and ▇▇▇▇ are collectively referred to as the "Stockholders").
WHEREAS, ▇▇▇▇ owns 49% of the Company and ▇▇▇▇ owns 51% of the Company;
and
WHEREAS, Acquiror desires to acquire LAE by means of a merger (the
"Merger") of Merger Sub with and into the Company, which Merger is intended to
qualify as a tax-free reorganization under Section 368(a)(2)(E) of the Code;
and
WHEREAS, Acquiror and the Stockholders desire to enter into this
Agreement setting forth the terms pursuant to which such acquisition will
occur.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants, agreements and conditions contained herein, the
sufficiency of which is hereby acknowledged by the parties, the parties agree
as follows:
1. MERGER
On the Closing Date (as defined herein), and subject to the terms and
conditions set forth herein, Merger Sub shall be merged with and into the
Company, which shall be the surviving corporation. At Closing, the parties
shall cause the Company and Merger Sub to execute, and file with the Florida
Secretary of State, articles of merger in the form of Exhibit A hereto (the
"Articles of Merger") in order to give effect to the Merger.
2. MERGER CONSIDERATION
Pursuant to the Merger, shares in the Company shall, without further
action on the part of the holders thereof, be converted into the right to
collectively receive 45,000 shares of common stock of Acquiror ("Acquiror
Stock") and cash in the amount of $65,000 (the "Cash"). The Acquiror Stock
and the Cash are collectively referred to as (the "Merger Consideration").
3. ESCROW
A total of thirty thousand (30,000) shares of the Acquiror Stock
constituting the Merger Consideration (the "Escrow Stock") shall be deposited
at the Closing by Acquiror in an escrow account with Suntrust Bank, or such
other Person mutually agreeable to Acquiror and ▇▇▇▇ (the "Escrow Agent"),
such escrow to be pursuant to the terms of that certain escrow agreement to be
entered into by and among Acquiror, the Stockholders and the Escrow Agent,
such agreement in substantially the form attached hereto as Annex III (the
"Escrow Agreement").
4. CLOSING
At the Closing, (i) the Company and Merger Sub shall execute and file the
Articles of Merger and (ii) all other transactions contemplated by this
Agreement shall occur. The date on which the actions described above occur
shall be referred to as the "Closing Date."
5. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
The Company and each of the Stockholders jointly and severally represents
and warrants to Acquiror and Merger Sub that all of the following
representations and warranties in this Section 5 are true at the date of this
Agreement and, subject to Section 7.7 hereof, shall be true on the Closing
Date, and agree that such representations and warranties shall survive the
Closing Date for a period of one year (the last day of such period being the
"Expiration Date"), except that the representations and warranties set forth
in Sections 5.9 and 5.17 hereof shall survive until such time as the
applicable statute of limitations period has run, which shall be deemed to be
the Expiration Date for such purposes.
5.1 Due Organization. The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of its respective state
or country of incorporation as set forth on Schedule 5.1, and is duly
authorized and qualified to do business under all applicable laws,
regulations, ordinances and orders of public authorities to carry on its
business in the places and in the manner as now conducted, to own or hold
under lease the properties and assets it now owns or holds under lease, and to
perform all of its obligations under the Material Contracts; is duly qualified
in the jurisdictions listed in Schedule 5.1 and there are no other
jurisdictions in which the conduct of the Company's business or activities or
its ownership of assets requires any other qualification under applicable law,
the absence of which would have a materially adverse effect on the business,
condition (financial or other), properties, or results of operations of the
Company taken as a whole or on the ability of the Company to consummate the
transactions contemplated by the Company's Material Contracts (as used herein
with respect to the Company, a "Company Material Adverse Effect"). True,
complete and correct copies of the Articles of Incorporation and By-laws, each
as amended, of the Company (the "Charter Documents") are all attached to
Schedule 5.1. The minute books and stock records of the Company, as heretofore
made available to Acquiror, are correct and complete in all material respects.
5.2 Authorization.
(a) The Company has full corporate power and authority to execute
and deliver this Agreement and to consummate the Merger and the other
transactions contemplated on its part hereby. The execution and delivery by
the Company of this Agreement and the consummation of the transactions
contemplated on its part hereby have been duly authorized by the Board of
Directors and the Stockholders and no other corporate proceedings on the part
of the Company or the Stockholders are necessary to authorize the execution
and delivery of this Agreement by the Company or the consummation of the
transactions contemplated on their part hereby. This Agreement has been duly
executed and delivered by the Company, and constitutes a legal, valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms, except to the extent that its enforceability may be
limited by applicable bankruptcy, insolvency, reorganization or other laws
affecting the enforcement of creditors' rights generally or by general
equitable principles. Each other agreement to be executed in connection with
this Agreement by the Company on or prior to the Closing Date will be duly
executed and delivered by the Company, and will constitute a legal, valid and
binding obligation of the Company, enforceable against the Company in
accordance with its respective terms, subject to applicable bankruptcy,
insolvency, moratorium, reorganization or other laws affecting the enforcement
of creditors' rights generally or by general equitable principles.
(b) Each Stockholder has the full legal right, power and authority to
enter into this Agreement. Each Stockholder owns beneficially and of record
all of the shares of the Company's capital stock (the "Equity Consideration")
identified on Schedule 5.3 as being owned by such Stockholder, and, except as
set forth on Schedule 5.3, such Equity Consideration is owned free and clear
of any and all Liens, voting trusts and restrictions of every kind.
5.3 Capital Stock of the Companies. The entire authorized capital
stock of the Company is as set forth in Schedule 5.3. All of the issued and
outstanding shares of capital stock of the Company are owned by the
Stockholders, free and clear of any liens, claims, mortgages, encumbrances,
pledges, security interests, equities and charges of any kind ("Liens") (other
than Liens set forth on Schedule 5.3). Except as disclosed on Schedule 5.3,
there are no outstanding options, rights (preemptive or otherwise), warrants,
calls, convertible securities or commitments or any other arrangements
requiring or restricting the issuance, sale or transfer of any equity
securities of the Company or any securities convertible directly or indirectly
into equity securities of the Company, or evidencing the right to subscribe
for any equity securities of the Company, or giving any Person any rights with
respect to the capital stock of the Company. Except as contemplated by this
Agreement or disclosed on Schedule 5.3, there are no voting agreements, voting
trusts, or other agreements (including cumulative voting rights) with respect
to the voting of the capital stock of the Company. All of the issued and
outstanding shares of the capital stock of the Company (i) have been duly
authorized and validly issued, (ii) are fully paid and nonassessable, (iii)
are owned of record and beneficially by the Stockholders, (iv) were offered,
issued, sold and delivered by the Company in compliance with all applicable
state, federal and foreign laws concerning the issuance of securities, and (v)
were issued without violating the preemptive rights of any Person.
5.4 Subsidiaries. Schedule 5.4 contains a true and complete list of
all direct and indirect domestic and foreign subsidiaries and Affiliates of
the Company and sets forth the number and class of the authorized capital
stock of the Company's subsidiaries and the number of shares of each of the
Company's subsidiaries and Affiliates which are issued and outstanding, all of
which shares (except as set forth on Schedule 5.4) are owned by each Company
of record and beneficially, free and clear of any Liens (the Company and its
subsidiaries are collectively referred to as the "Companies"). Except as set
forth in Schedule 5.4, (i) the Companies do not own, of record or
beneficially, or control, directly or indirectly, any capital stock,
securities convertible into capital stock or any other equity interest in any
Person and (ii) the Companies are not, directly or indirectly, a participant
in any Person.
5.5 Financial Statements. The Companies have delivered to Acquiror
copies of the following financial statements (collectively, the "Financial
Statements"): (a) Unaudited combined balance sheet, statement of operations,
statement of stockholders' equity and statement of cash flows for the
Companies at and for the years ended December 31,1998 and December 31, 1999;
and (b) Unaudited combined balance sheet, statement of operations, statement
of stockholders' equity, and statement of cash flows for the Companies at and
for the three months ended March 31, 2000 (the "Balance Sheet Date"). The
Financial Statements are consistent with the books and records of the
Companies (which, in turn, are accurate and complete in all material respects)
and fairly present the Companies' financial condition, assets and liabilities
as of their respective dates and the results of operations and cash flows for
the periods related thereto, and have been prepared on an income tax (not
GAAP) basis. The Financial Statements do not reflect any liability for (i)
Deferred Revenue, arising from phone cards which have been sold but not used;
(ii) "dial around" compensation which may be claimed by payphone owners for
toll free calls made from their phones; (iii) amounts owed to United and
described in Schedule 5.6; or (iv) amounts which may be owed to MCI-Worldcom
in excess of $459,000 (the "Reserve") in connection with the action described
in Schedule 5.16; and Acquiror is accepting such liabilities except any
liability in excess of the Reserve which may be owed to MCI-Worldcom. The
Companies have not deferred recognition of any of their respective accounts
payable or accelerated recognition of any of their respective accounts
receivable. Attached hereto as Schedule 5.5 is the cash balance of the
Company as of June 1, 2000.
5.6 Liabilities and Obligations. Except as set forth on Schedule
5.6, since the Balance Sheet Date the Companies have not incurred any
liabilities or obligations in excess of $10,000 of any kind, character and
description, whether fixed, accrued, absolute, secured or unsecured,
contingent or otherwise, except liabilities and obligations incurred in the
ordinary course of business after the Balance Sheet Date.
5.7 Accounts and Notes Receivable. Schedule 5.7 sets forth a list,
which is accurate and complete in all material respects, of the accounts and
notes receivable of the Company as of the Balance Sheet Date. Except to the
extent reflected on Schedule 5.7, the accounts, notes and other receivables
shown on Schedule 5.7 and on the A/R Aging Reports are and shall be, and the
Company has no reason to believe that any such account receivable is not or
shall not be, collectible in the amounts shown net of reserves reflected in
the unaudited balance sheet as of the Balance Sheet Date referred to in
Section 5.5(b) (the "Unaudited Balance Sheet").
5.8 Intellectual Property.
(a) Certain Definitions. When used in this Section 5.8, the
following capitalized terms shall have the following meanings:
(i) the term "Development Environment" means any device,
programming, documentation, media and other objects, including compilers,
"workbenches," tools, and higher-level or "proprietary" languages, used by the
Companies for the development, maintenance and implementation of any Software,
to the extent such objects may be necessary for any subsequent maintenance or
enhancement of the same Software;
(ii) the term "Intellectual Property Rights" means
intellectual property rights arising from or in respect of the following,
whether protected, created or arising under the laws of the United States or
any other jurisdiction:
(1) registered and unregistered trademarks and service
marks and logos (including all Internet domain names), and applications
therefor (collectively, "Marks");
(2) patents, patent rights and all applications
therefor, including any and all continuation, divisional,
continuation-in-part, or reissue patent applications or patents issuing
thereon, and including all foreign counterparts thereof (collectively,
"Patents"); and
(3) know-how, inventions, discoveries, concepts,
ideas, methods, processes, designs, formulae, technical data, drawings,
specifications, data bases and other proprietary and confidential information,
including customer lists, in each case to the extent not included in the
foregoing subparagraphs (1) or (2) (collectively, "Trade Secrets");
(iii) the term "Intellectual Property Assets" means all
Intellectual Property Rights owned or licensed by the Companies or used or
exercised in or necessary to the conduct of each Company's business, and all
further uses of the terms Marks, Patents, copyrights, and Trade Secrets in
this Section_5.8 shall mean Marks, Patents, copyrights, and Trade Secrets that
are Intellectual Property Assets; and
(iv) the term "Software" means any and all (w)_computer
programs, including any and all software implementations of algorithms, models
and methodologies, whether in source code or object code, (x)_databases and
compilations, including any and all data and collections of data, whether
machine readable or otherwise, (y)_descriptions, flow-charts and other work
product used to design, plan, organize and develop any of the foregoing, and
(z)_all documentation, including user manuals and training manuals, relating
to any of the foregoing, in each case developed or licensed by the Companies,
or used in or necessary for the conduct of their respective businesses,
specifically excluding those items prepared for customers in the operation of
each Company's business for which the customer contractually has vested title.
(b) Marks. The Companies do not own any right, title or
interest in any registered Marks, except as shown on Schedule 5.8(a).
(c) Owned Patents. The Companies do not own any right, title or
interest in any Patents. Except as may be set forth on Schedule 5.8(a):
(i) there is no patent or patent application issued to or
filed by any other person, which patent or patent application is potentially
interfering with the Companies' respective businesses; and
(ii) none of the process or know-how or other technology
used or practiced, by each Company in its business infringes or is alleged to
infringe any patent or any other Intellectual Property Right or other
industrial property right of any other person.
(d) Owned Copyrights. Except as may be set forth on Schedule
5.8(b):
(i) the Company is the owner of all right, title and
interest in and to each of the copyrights used by the Company in its business
other than those as to which the rights being exercised by the Company have
been licensed from another person (collectively, the "Owned Copyrights"), free
and clear of any and all Liens, covenants, conditions and restrictions or
other adverse claims or interests of any kind or nature (subject to written
licenses granted in the ordinary course of business), and the Stockholders
have not received any notice or claim (whether written, oral or otherwise)
challenging the Stockholders' complete and exclusive ownership of all Owned
Copyrights or suggesting that any other person has any claim of legal or
beneficial ownership with respect thereto;
(ii) the Stockholders have not received any notice or claim
(whether written, oral or otherwise) challenging or questioning the validity
or enforceability of any of the Owned Copyrights or indicating an intention on
the part of any person to bring a claim that any Owned Copyright is invalid,
is unenforceable or has been misused and, to the Stockholders' knowledge, no
Owned Copyright otherwise has been challenged or threatened in any way;
(iii) the Company has taken all reasonable steps to protect
the Companies' rights in and to the Owned Copyrights, in each case in
accordance with standard industry practice.
(iv) the Companies have not granted to any person any
right, license or permission to exercise any rights under any of the Owned
Copyrights other than non-exclusive licenses of Software granted in the
ordinary course of business to distributors or customers;
(v) no other person has infringed or is infringing in any
material respect in regards to any of the Owned Copyrights; and
(vi) none of the subject matter of any Owned Copyrights nor
any other work of authorship fixed in a tangible medium that is copied,
modified, displayed or distributed in connection with the conduct by the
Company of its business, including without limitation, any Owned Software,
infringes, violates or conflicts with, or is alleged to infringe, violate or
conflict with, any copyright or any other Intellectual Property Right or other
industrial property right of any other person.
(e) Trade Secrets. The Company has taken reasonable precautions
to protect the secrecy, confidentiality and value of all of the Company's
material Trade Secrets ("Company Trade Secrets"). Except as may be set forth
in Schedule 5.8(c):
(i) the Company has the unrestricted right to use all of
the Company Trade Secrets and none of the Company Trade Secrets are subject to
any Liens, covenants, conditions and restrictions or other adverse claims or
interests of any kind or nature (subject to written licenses granted in the
ordinary course of business), and the Stockholders have not received any
notice or claim (whether written, oral or otherwise) challenging the
Companies' absolute and unrestricted right to use all of each Company Trade
Secrets or suggesting that any other person has any claim of any kind with
respect thereto;
(ii) none of the Company Trade Secrets has been, or is
alleged to have been, misappropriated from, any other person and none of the
Company Trade Secrets infringes, violates or conflicts with, or is alleged to
infringe, violate or conflict with, any patent, trade secret or any other
Intellectual Property Right or other industrial property rights of any third
party;
(iii) with respect to each Company Trade Secret in
accordance with standard industry practice, the documentation relating thereto
is current, accurate and sufficient in detail and content to identify and
explain it and to allow its full and proper use without reliance on the
special knowledge or memory of others; and
(iv) except under appropriate confidentiality obligations
that, to the knowledge of the Stockholders, have been fully observed and
performed, there has been no disclosure by any Company of material
confidential information or other Company Trade Secrets.
(f) Software. Schedule 5.8(d) sets forth a complete and
accurate list of all of the Software (excluding licensed software (other than
Development Environments or other software design tools) that is contained in
standard desktop applications and is available through commercial distributors
or in consumer retail stores). Schedule 5.8(d) specifically identifies all
Software that is owned exclusively by the Company (the "Owned Software") and
all Software that is used by the Company in the conduct of their business that
is not exclusively owned by the Company (the "Licensed Software") (excluding
licensed software that is contained in standard desktop applications and is
available through commercial distributors or in consumer retail stores).
Except as may be set forth in Schedule 5.8(d):
(i) the Companies are the owner of all right, title and
interest in and to all Owned Software, including without limitation all
copyrights, Trade Secrets and other Intellectual Property Rights relating
thereto, free and clear of any and all Liens, covenants, conditions and
restrictions or other adverse claims or interests of any kind or nature
(subject to written licenses granted in the ordinary course of business), and
the Stockholders have not received any notice or claim (whether written, oral
or otherwise) challenging the Companies' complete and exclusive ownership of
all Owned Software and all such Intellectual Property Rights relating thereto
or claiming that any other person has any claim of legal or beneficial
ownership with respect thereto;
(ii) the Companies have not assigned, licensed, transferred
or encumbered any of their rights in or to any Software, including without
limitation any copyrights, Trade Secrets or other Intellectual Property Rights
with respect to any Owned Software, to any person;
(iii) no source code of any Owned Software has been
licensed or otherwise made available to any person other than the Companies,
the Companies have treated such source code, and the data associated
therewith, as confidential and proprietary business information, and have
taken all reasonable steps to protect the same as trade secrets of the
Companies;
(iv) any person identified in Schedule 5.8(d) as having
received any such source code or data is bound by an appropriate
confidentiality and non-disclosure obligation with respect thereto and the
Stockholders are not aware of any material breach of any such agreement or any
threatened disputes or disagreements with respect thereto;
(v) the Companies have lawfully acquired the right to use
the Licensed Software, as it is used in the conduct of their respective
businesses as presently conducted, and have not exercised any rights in
respect of any Licensed Software, including without limitation, any
reproduction, distribution or derivative work rights, outside the scope of any
license expressly granted by the person from which the right to use such
Licensed Software was obtained; and
(vi) no royalties, fees, honoraria or other payments are
payable by the Companies to any person by reason of the ownership, use, sale,
licensing, distribution or other exploitation of any Software or any
Intellectual Property Asset.
(g) Performance of Existing Software Products. Except as may be
set forth in Schedule 5.8(e), all Software products that have been used by the
Companies in connection with their performance of data processing or other
services for any of their customers perform in all material respects, free of
significant bugs or programming errors.
(h) Software Documentation. Except as may be set forth in
Schedule 5.8(f), the Companies have taken all actions customary in the
software industry to document the Software and its operation, such that the
Software, including the source code and documentation, have been written in a
clear and professional manner so that they may be understood, modified and
maintained in an efficient manner by reasonably competent programmers.
(i) Agreements in Respect of Licensed Technology. Schedule
5.8(g) contains a complete and accurate specific list of all agreements and
arrangements pertaining to the Licensed Software (excluding licensed software
that is contained in standard desktop applications and available through
commercial distributors or in consumer retail stores) (collectively, "Licensed
Software Agreements") and a complete and accurate specific list of all
agreements and arrangements pertaining to any other technology used or
practiced by the Companies as to which a person other than the Companies owns
the applicable Intellectual Property Rights (collectively, "Other Licensed
Technology Agreements" and, together with Licensed Software Agreements, the
"Licensed Technology Agreements"). Schedule 5.8(g) sets forth a complete and
accurate list of all royalty obligations of the Companies under any Licensed
Technology Agreements. Except as may be set forth in Schedule_5.8(g):
(i) all Licensed Technology Agreements are in full force
and effect, and the Companies are not in material breach thereof, nor are the
Stockholders aware of any claim or information to the contrary;
(ii) all Licensed Technology Agreements will be maintained
by the Companies in full force and effect through the Closing;
(iii) there are no outstanding and, to the Stockholders'
knowledge, no threatened disputes or disagreements involving the Companies
with respect to any Licensed Technology Agreement;
(iv) the rights licensed under each Licensed Technology
Agreement shall be exercisable by the Companies on and after the Closing to
the same extent as prior to the Closing;
(v) the Licensed Technology Agreements together expressly
confer on the Companies valid and enforceable rights under or in respect of
all of the Intellectual Property Rights that are not owned exclusively by the
Companies and that are used or practiced in the Companies' businesses
(collectively, the "Licensed Intellectual Property"); and
(vi) neither the execution and delivery of this Agreement,
nor the consummation of the transactions contemplated hereby, will conflict
with or result in a breach of any of the terms, conditions or provisions of,
or constitute a default under, or result in the impairment of any rights
under, any Licensed Technology Agreement.
(j) Sufficiency of Owned and Licensed Intellectual Property.
Except as set forth in Schedule 5.8(h), the Marks, Owned Copyrights, Trade
Secrets and Licensed Intellectual Property, including without limitation the
foregoing to the extent they apply to any Software, constitute all of the
Intellectual Property Rights in the Companies' possession or control necessary
for the conduct of the Companies' businesses as presently conducted or
contemplated to be conducted and constitute all of the Intellectual Property
Rights necessary to operate such business after the Closing in substantially
the same manner as such business heretofore has been operated by the
Companies.
(k) Rights of Third Parties. Except as may be set forth in
Schedule 5.8(i), the Companies are not, nor have been during the three-year
period prior to the date hereof, a party to any action or proceeding, and
there is not pending or, to the Stockholders' knowledge, during the one-year
period prior to date hereof threatened, any action or proceeding that
involves or involved a claim of infringement, misappropriation or other
wrongful use or exploitation, either (i) by the Companies against any other
person or (ii) by any person against any Company, of any Intellectual Property
Asset or other Intellectual Property Right used or exploited by the Companies
in the conduct of its respective business, nor, to the knowledge of the
Stockholders, is there any reasonable basis therefor. Except as may be set
forth in Schedule 5.8(i), no Intellectual Property Asset is subject to any
outstanding order, judgment, decree, stipulation or agreement restricting the
use thereof by any Company (subject to written licenses granted in the
ordinary course of business). Except as may be set forth in Schedule 5.8(i),
the Companies have the exclusive right to bring actions against any person
that is infringing any Intellectual Property Assets other than Licensed
Intellectual Property.
(m) The components manufactured by the Companies and used in the
Companies' products are free of any disabling codes or instructions
(a "Disabling Code"), and any virus or other intentionally created,
undocumented contaminant (a "Contaminant"), that may, or may be used to,
access, modify, delete, damage or disable the Systems or that may result in
damage thereto. The components necessary for or implemented in the Owned
Software obtained from third party suppliers are, to the knowledge of the
Stockholders, free of any Disabling Codes or Contaminants that may, or may be
used to, access, modify, delete, damage or disable any of the Systems or that
might result in damage thereto. The Companies have taken reasonable steps and
implemented reasonable procedures to ensure that their internal computer
systems (consisting of hardware, software, databases or embedded control
systems, "Systems") are free from Disabling Codes and Contaminants. Except as
may be set forth in Schedule_5.8(j), the Companies have in place appropriate
disaster recovery plans, procedures and facilities and have taken all
reasonable steps to safeguard their Systems and restrict unauthorized access
thereto.
(n) neither the Shareholders nor the Companies have received
notice, whether in writing or otherwise, from Kamil or any other entity in
which such entity claims that the Shareholders or the Companies are infringing
any patent such entity may hold over the process of selling, buying,
marketing, transferring or using a pre-paid calling card.
5.9 Environmental Matters. For purposes of this Section 5.9,
references to the "Company" or "Companies" shall also include each of their
predecessors. Except as set forth on Schedule 5.9:
(i) each Company is and at all times has been in compliance
in all material respects with all Environmental Requirements;
(ii) each Company possesses all permits, licenses and
certificates required by all Environmental Requirements (and a list thereof,
which is accurate and complete in all material respects, is set forth as
Schedule 5.9);
(iii) no environmental clearances, approvals or consents
are required under applicable law from any Governmental Authority or entity in
order to continue operations after the Closing Date;
(iv) there are no pending or, to the knowledge of the
Stockholders, threatened claims, actions or proceedings (or notices of
potential claims, actions or proceedings) from any Governmental Authority or
any other Person regarding any matter relating to health, safety or protection
of the environment against any Company;
(v) no real property currently, or, to the Stockholders'
knowledge, formerly, owned or operated by any Company is or was listed on the
National Priorities List, the Comprehensive Environmental Response and
Compensation Liability Index System or any similar state or local list of
potential or confirmed hazardous waste sites;
(vi) to the Stockholders' knowledge, no conditions exist on
adjacent properties that threaten the environmental condition or safety of any
property owned, operated or used by any Company; and
(vii) no Company has released or disposed of any Hazardous
Materials at any property owned or used by each Company and, to the
Stockholders' knowledge, no other Person has released or disposed of Hazardous
Materials at any such property.
5.10 Personal Property. Schedule 5.10 sets forth a list, that is
accurate and complete in all material respects, of (x) all personal property
with a fair market value in excess of $10,000 that, in accordance with GAAP,
would be included in "depreciable plant, property and equipment" (or similarly
named line item) in a balance sheet of each Company and (y) all other personal
property owned by each Company with a value individually in excess of $10,000
and (except as set forth in Schedule 5.10) all such personal property is owned
free and clear of all Liens. Except as set forth on Schedule 5.10, all
personal property with a value individually in excess of $10,000 used by the
Company in its business is either owned by the Company or leased by the
Company pursuant to a Material Contract and such personal property constitutes
all of the personal property with a value in excess of $10,000 which is
necessary for the conduct of the business of the Company as currently
conducted and presently proposed to be conducted.
5.11 Significant Customers; Material Contracts and Commitments.
Schedule 5.11(a) sets forth a list, that is accurate and complete in all
material respects, of all customers or Persons representing 5% or more of the
Company's total annual revenues as of the Balance Sheet Date (the "Significant
Customers"). Except to the extent set forth on Schedule 5.11(a), none of the
Company's Significant Customers has canceled or substantially reduced or, to
the knowledge of the Stockholders, is currently attempting or threatening to
cancel a contract or substantially reduce utilization of the services provided
by any Company. Except as listed or described on Schedule 5.11(b), no Company
is a party to or bound by, nor does there exist any written or oral contracts
relating to or in any way affecting the operation or ownership of each
Company's business that are of a type described below (the "Material
Contracts"):
(a) any collective bargaining agreement or arrangement with any
labor union or any such agreement currently in negotiation or proposed;
(b) any contract for capital expenditures or the acquisition or
construction of fixed assets for or in respect to real property in excess of
$10,000;
(c) any contract with a term in excess of one year for the
purchase, maintenance, acquisition, sale or furnishing of materials, supplies,
merchandise, machinery, equipment, parts or other property or services which
requires aggregate future payments of greater than $10,000;
(d) any contract relating to the borrowing of money, or the
guaranty of another person's borrowing of money, including, without
limitation, all notes, mortgages, pledges, security agreements, bonds,
indentures and other obligations, agreements and other instruments for or
relating to any lending or borrowing, including assumed indebtedness;
(e) any contract granting any Person a Lien on any of the assets
of the Company, in whole or in part;
(f) any contract granting to any Person a first-refusal,
first-offer or similar preferential right to purchase or acquire any of the
assets or capital stock of the Company's business;
(g) any contract under which the Company is (i) a lessee or
sublessee of any machinery, equipment, vehicle or other tangible personal
property or real property, (ii) a lessor or sublessor of any real property or
tangible personal property owned or leased by the Company, or (iii) a lessor
or sublessor, or lessee or sublessee, of any Intellectual Property listed on
Schedule 5.8(a);
(h) any contract providing for the indemnification of any
officer, director, employee or other person;
(i) any joint venture or partnership contract;
(j) any employment or consulting agreements;
(k) any option, license, franchise or similar agreement; and
(l) any other contract with a term in excess of one year,
whether or not made in the ordinary course of business, which involves or may
involve payments in excess of $10,000, and any other agreement which is
material to the Company.
The Company has provided Acquiror with a true and complete copy of each
written Material Contract, including all amendments or other modifications
thereto. Except as set forth on Schedule 5.11(b), each Material Contract is a
valid and binding obligation of the Company, enforceable in accordance with
its terms, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general principles of equity
(whether applied in a proceeding at law or in equity) and is in full force and
effect. Except as set forth on Schedule_5.11(b), (i) the Company has
performed all obligations required to be performed by it under each Material
Contract and neither the Company nor, to the knowledge of the Stockholders,
any other party to any Material Contract, is (with or without the lapse of
time or the giving of notice or both) in breach or default in any material
respect thereunder and (ii) the Stockholders have not been notified that any
party to any Material Contract intends to cancel, terminate, not renew or
exercise an option under any Material Contract, whether in connection with the
transactions contemplated hereby or otherwise.
5.12 Real Property. Schedule 5.12 sets forth a list, that is
accurate and complete in all material respects, copies of which have been
delivered to the Acquiror, of all real property owned, leased, or used by the
Company in the conduct of its business. The Company has good and insurable
title to the real property owned by it, subject to no Lien except for:
(a) Liens listed on Schedules 5.12 as securing specified
liabilities under a specified Material Contract with respect to which no
material default exists;
(b) Liens for current Taxes not yet due and payable and
assessments not in default;
(c) easements for utilities serving the property only; and
(d) easements, covenants and restrictions and other exceptions
to title shown of record in the office of the county clerks, or other
appropriate official in which the properties and leasehold estates are located
which do not adversely affect the current use of the property.
5.13 Insurance. Schedule 5.13 sets forth a list, that is accurate
and complete in all material respects, (a) as of the Balance Sheet Date, of
all fire, products liability, general liability, vehicle, worker's
compensation, directors' and officers' liability, title and other insurance
policies carried by the Company, and (b) all insurance loss runs on workers
compensation claims received by the Company for the past three policy years.
True, complete and correct copies of all insurance policies concerning the
Company, its properties, businesses, officers and directors, or other
employees currently in effect have been delivered to Acquiror and such
insurance policies evidence all of the insurance that the Company carries.
All of such insurance policies are currently in full force and effect and will
continue in full force and effect following the Closing in accordance with
their respective terms. No insurance carried by the Company has been canceled
by the insurer and no Company has ever been denied coverage. The Company has
paid all premiums due, and has otherwise performed all of its obligations,
under each such insurance policy.
5.14 Compensation; Organized Labor Matters. Schedule 5.14 sets forth
a list, that is accurate and complete in all material respects, of all
officers, directors and key employees of the Company and listing their
respective rates of compensation (and the portions thereof attributable to
salary, bonus and other compensation, respectively). Since the Balance Sheet
Date, there have been no increases in the compensation payable or any special
bonuses to any officer, director, key employee or other employee, except
ordinary salary increases implemented on a basis consistent with past
practices. Except as set forth on Schedule 5.14, (a)_no employees of the
Company are represented by any labor union and, to the knowledge of the
Stockholders, no campaign to establish such representation is in progress, and
(b) there is no pending or, to the best of the Stockholders' knowledge,
threatened labor dispute involving the Company and any group of its employees
nor has the Company experienced any labor interruption over the past three (3)
years. Further, except as set forth in Schedule 5.14, no Stockholder has
received written notice of any claim, or has knowledge of any facts which are
likely to give rise to any claim, that they have not complied in any material
respect with any laws relating to the employment of labor, including, without
limitation, any provisions thereof relating to wages, hours, collective
bargaining, the payment of social security and similar taxes, equal employment
opportunity, employment discrimination or employment safety.
5.15 Employee Plans.
(a) Schedule 5.15 contains a list, that is accurate and
complete in all material respects, of all Benefit Plans, including all
agreements or arrangements containing "golden parachute" or other similar
provisions. True, complete and correct copies of all Benefit Plans and
agreements and any trusts related thereto, and classifications of employees
covered thereby have been delivered to Acquiror.
(b) Except for the Benefit Plans, if any, described on Schedule
5.15 and the government sponsored Benefit Plans required by the laws of any
jurisdiction where a Company is located, no Company sponsors, maintains or
contributes to any plan program, fund or arrangement that constitutes an
"employee pension benefit plan," and no Company has any obligation to
contribute to or accrue or pay any benefits under any deferred compensation or
retirement funding arrangement on behalf of any employee or employees (such
as, for example, and without limitation, any individual retirement account or
annuity, any "excess benefit plan" (within the meaning of Section 3(36) of
ERISA or any non-qualified deferred compensation arrangement). For the
purposes of this Agreement, the term "employee pension benefit plan" shall
have the same meaning as is given that term in Section 3(2) of ERISA.
(c) No Company is now, or as a result of its past activities can
it reasonably be expected to become, liable to the Pension Benefit Guaranty
Corporation (other than for premium payments) or to any multi-employer
employee pension benefit plan under the provisions of Title IV of ERISA.
(d) All Benefit Plans listed on Schedule 5.15 and the
administration thereof are in compliance with their terms and all applicable
provisions of ERISA and the regulations issued thereunder, as well as with all
other applicable federal, state and local statutes, ordinances and
regulations, except for such noncompliance as would not be reasonably likely
to have a Company Material Adverse Effect. There have been no "reportable
events" (as that phrase is defined in Section 4043 of ERISA) with respect to a
Benefit Plan listed in Schedule 5.15.
(e) No circumstances exist pursuant to which the Company could
reasonably be expected to have any direct or indirect liability whatsoever
with respect to any Plan now or heretofore maintained or contributed to by any
Person other than any Company that is, or at any time was, a member of a
"controlled group" (as defined in Section 412(n)(6)(B) of the Code) that
includes the Companies.
(f) All Benefit Plans listed on Schedule 5.15 that are intended
to qualify under Section 401(a) of the Code (the "Qualified Plans") are, and
have been so qualified and have been determined by the Internal Revenue
Service to be so qualified, and copies of such determination letters have been
delivered to Acquiror. Neither the Stockholders, any Qualified Plan nor the
Company has engaged in any transaction prohibited under the provisions of
Section 4975 of the Code or Section 406 of ERISA.
5.16 Conformity with Law; Litigation. Except as set forth on
Schedule 5.16, the Company has complied with, and is in compliance with, and
has not received any notice of any alleged noncompliance with, all laws,
rules, statutes, ordinances, regulations, writs, injunctions, decrees,
arbitration awards, and orders (collectively, "Laws") applicable to it, to its
properties, or to the operation of its business, except for such noncompliance
or alleged noncompliance as would not be reasonably likely to have a Company
Material Adverse Effect. Except to the extent set forth on Schedule 5.16
(which shall disclose the parties to, nature of, and relief sought for each
matter disclosed): (a)_there is no legal action, suit, action, proceeding,
investigation, audit, claim or order pending or, to the Stockholders'
knowledge, threatened against either any Company or, to the knowledge of the
Stockholders, pending or threatened against any of the officers, directors or
employees of the Company, with respect to its respective business or proposed
business activities which would be reasonably likely to have a Company
Material Adverse Effect, or to which the Company is otherwise a party, before
any court, or before any Governmental Authority, and (b)_no Company is subject
to any judgment, order or decree of any court or Governmental Authority.
5.17 Taxes. Except as set forth on Schedule 5.17:
(a) All Returns required to have been filed by or with respect
to the Company and any affiliated, combined, consolidated, unitary or similar
group of which the Company is or was a member (a "Relevant Group") with any
Taxing Authority have been duly filed, and each such Return correctly and
completely reflects the Tax liability and all other information required to be
reported thereon. All Taxes (whether or not shown on any Return) owed by the
Company and any member of a Relevant Group (individually, the "Acquired Party"
and collectively, the "Acquired Parties") have been paid on or prior to the
due date for payment of such Taxes;
(b) To the knowledge of the Stockholders, the provisions for
Taxes due by the Company (as opposed to any reserve for deferred Taxes
established to reflect timing differences between book and Tax income) in the
Financial Statements are sufficient for all unpaid Taxes, being current taxes
not yet due and payable, of such Acquired Party;
(c) No Acquired Party is a party to any agreement extending the
time within which to file any Return. No claim has ever been made by any
Taxing Authority in a jurisdiction in which an Acquired Party does not file
Returns that it is or may be subject to taxation by that jurisdiction that is
unresolved or if adversely determined would be reasonably likely to have a
Company Material Adverse Effect;
(d) Each Acquired Party has withheld and paid all Taxes required
to have been withheld and paid in connection with amounts paid or owing to any
employee, creditor, independent contractor or other third party;
(e) There is no dispute or claim concerning any Tax liability of
any Acquired Party either (i) claimed or raised by any Taxing Authority or
(ii) otherwise known to any Acquired Party. Schedule 5.17 contains a list,
that is accurate and complete in all Material Respects, of all federal, state,
local and foreign income Tax Returns filed by or with respect to any Acquired
Party for all taxable periods ended on or after December 31, 1997 (and all
such Returns, reports and statements have been delivered to Acquiror)
indicates those Tax Returns, if any, that have been audited, and indicates (1)
those Returns that currently are the subject of audit, and (2) all Tax
examination reports and statements of deficiencies assessed against or agreed
to by, such Acquired Party since December 31, 1997;
(f) No Acquired Party has waived any statute of limitations, the
waiver of which remains in effect on the date hereof, in respect of Taxes or
agreed to any extension of time with respect to any Tax assessment or
deficiency;
(g) No Acquired Party has made any payments, is obligated to
make any payments, or is a party to any agreement that under certain
circumstances could require it to make any payments, that are not deductible
under Section 280G of the Code;
(h) No Acquired Party is a party to any Tax allocation or
sharing agreement;
(i) None of the assets of any Acquired Party constitutes
tax-exempt bond financed property or tax-exempt use property, within the
meaning of Section 168 of the Code. No Acquired Party is a party to any "safe
harbor lease" that is subject to the provisions of Section 168(f)(8) of the
Internal Revenue Code as in effect prior to the Tax Reform Act of 1986, or to
any "long-term contract" within the meaning of Section 460 of the Code;
(j) No Acquired Party is a "consenting corporation" within the
meaning of Section_341(f)(1) of the Code, or comparable provisions of any
state statutes, and none of the assets of any Acquired Party is subject to an
election under Section 341(f) of the Code or comparable provisions of any
state statutes;
(k) There are no accounting method changes or proposed or
threatened accounting method changes, of any Acquired Party that could give
rise to an adjustment under Section_481 of the Code for periods after the
Closing Date;
(l) No Acquired Party has received any written ruling of a
Taxing Authority related to Taxes or entered into any written and legally
binding agreement with a Taxing Authority relating to Taxes;
(m) Each Acquired Party has disclosed (in accordance with
Section 6662(d)(2)(B)(ii) of the Code) on its federal income Tax Returns all
positions taken therein that could give rise to a substantial understatement
of federal income Tax within the meaning of Section 6662(d) of the Code;
(n) No Acquired Party has any liability for Taxes of any Person
other than such Acquired Party (i) under Section 1.1502-6 of the Treasury
regulations (or any similar provision of state, local or foreign law), (ii) as
a transferee or successor, (iii) by contract or (iv) otherwise;
(o) Prior to Acquiror's acquisition of the Companies' Equity
Interests pursuant to this Agreement, there currently are no limitations on
the utilization of the net operating losses, built-in losses, capital losses,
Tax credits or other similar items of any Acquired Party (collectively, the
"Tax Losses") under (i) Section 382 of the Code, (ii) Section 383 of the Code,
(iii) Section 384 of the Code, (iv)_Section 269 of the Code, (v) Section
1.1502-15 and Section 1.1502-15A of the Treasury regulations, (vi) Section
1.1502-21 and Section_1.1502-21A of the Treasury regulations or (vii) Sections
1.1502-91 through 1.1502-99 of the Treasury regulations, in each case as in
effect both prior to and following the Tax Reform Act of 1986; and
(p) No Company is under the jurisdiction of a court in a Title
11 or similar case within the meaning of Section 351(e)(2) of the Code.
5.18 No Violations or Consents. Except as set forth on Schedule
5.18, the execution of this Agreement and the performance by the Company and
the Stockholders of their obligations hereunder and the consummation by the
Company and the Stockholders of the transactions contemplated hereby will not
(i) result in any violation or breach of, or constitute a default under, any
of the terms or provisions of the Charter Documents or (ii) require the
consent, approval, waiver of any filing with or notice to, any other Person
(other than (a) in connection with or in compliance with the provisions of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the
Securities Act of 1933, as amended (the "Securities Act"), the Communications
Act of 1934, as amended (the "Telecommunications Act") or the "blue sky" or
"public utility" laws of various states, and (b) any consents required under
the Material Contracts or other filings and approvals expressly contemplated
by this Agreement), (iii) violate, conflict with or result in a breach of or
the acceleration of any obligation under, or constitute a default (or an event
which with notice or the lapse of time or both would become a default) under,
or give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a Lien on any property or asset
of any Stockholder pursuant to any provision of any contract to which any
Stockholder is bound, lien, order, judgment or decree to which such party is
subject or by which any Stockholder or any of his property or assets is bound,
or (iv) violate or conflict with any law, rule, regulation, permit, ordinance
or regulation applicable to any Stockholder or by which any property or asset
of any Stockholder is bound or affected. No Company is in violation of any
Charter Document.
5.19 Business Conduct. Except as set forth on Schedule 5.19, since
the Balance Sheet Date, the Company has conducted its business only in the
ordinary course consistent with past custom and practices and has incurred no
liabilities other than in the ordinary course of business consistent with past
custom and practices. Except as forth on Schedule 5.19, since the Balance
Sheet Date, there has not been any:
(a) Material adverse change in the Company's operations,
condition (financial or otherwise), operating results, assets, liabilities,
employee, customer or supplier relations or business prospects;
(b) Loan or advance by the Company to any Persons in excess of
$5,000 in the aggregate other than sales to customers on credit in the
ordinary course of business consistent with past custom and practices;
(c) Declaration, setting aside, or payment of any dividend or
other distribution in respect to the Company's capital stock, any direct or
indirect redemption, purchase, or other acquisition of such capital stock, or
the payment of principal or interest on any note, bond, debt instrument or
debt to any Affiliate;
(d) Incurrence of any debts, liabilities or obligations except
current liabilities incurred in connection with or for services rendered or
goods supplied in the ordinary course of business consistent with past custom
and practices, liabilities on account of taxes and governmental charges but
not penalties, interest or fines in respect thereof, and obligations or
liabilities incurred by virtue of the execution of this Agreement;
(e) Issuance by the Company of any notes, bonds, or other debt
securities or any equity securities or securities convertible into or
exchangeable for any equity securities;
(f) Cancellation, waiver or release by the Company of any debts,
rights or claims;
(g) Change in accounting principles, methods or practices
(including, without limitation, any change in depreciation or amortization
policies or rates) utilized by each Company;
(h) Capital expenditures or commitments therefor by the Company
in excess of $10,000 in the aggregate;
(i) Adoption, amendment or termination of, or increase in the
benefits provided under, any Benefit Plan; or
(j) An occurrence or event not included in clauses (a) through
(i) that has or might be expected to have a Company Material Adverse Effect.
5.20 Prohibited Activities. Except as set forth on Schedule 7.3, no
Company has, between the Balance Sheet Date and the date hereof, taken any of
the actions set forth in Section 7.3.
5.21 Predecessor Status; etc. Set forth on Schedule 5.21 is a
listing of all names of all predecessor companies of each Company, including
the names of any entities acquired by each Company (by stock purchase, merger
or otherwise) or owned by each Company or from whom each Company previously
acquired material assets. Except as disclosed on Schedule 5.21, no Company
has been a subsidiary or division of another Person or a part of any
acquisition which was later rescinded.
5.22 Affiliate Relationships. Except as set forth on Schedule 5.22,
neither the Stockholders nor any Affiliate of the Stockholders, and no
director, officer or employee of or consultant to the Company owns, directly
or indirectly, in whole or in part, any property, assets or right, tangible or
intangible, which is associated with any property, asset or right owned by any
Company or which the Company is operating or using or the use of which is
necessary for its business or otherwise engages in business or any transaction
with the Company. Schedule 5.22 describes any relationships which any
Stockholder or any director, officer, employee, agent or consultant of each
Company has with any other Person which is a competitor, potential competitor
(based upon the nature of such potential competitor's business as of the
Closing Date), supplier or customer of each Company.
5.23 Brokers. Except as set forth in Schedule 5.23, no Company has
paid or become obligated to pay any fee or commission to any broker, finder,
investment banker or other intermediary in connection with this Agreement.
5.24 Government Authorizations and Intangibles. Except as set forth
in Schedule 5.24, the Company holds all federal, state and foreign licenses,
franchises, permits and governmental authorizations, including without
limitation all licenses and authorizations required by the United States
Federal Communications Commission (the "FCC"), by state public utilities
commissions and foreign regulatory authorities ("Company Permits") necessary
to conduct the Company's business as presently conducted and the absence of
any of which could have a Company Material Adverse Effect. To the
Stockholders' knowledge, the Company's licenses, franchises, permits and other
governmental authorizations are valid and in effect. No Company or
Stockholder has received any notice that any Governmental Authority intends to
cancel, terminate or not renew any license, franchise, permit or other
governmental authorization of the Company. To the Stockholders' knowledge,
the Company is in compliance with the requirements, standards, criteria and
conditions set forth in all of its licenses, franchises, permits and other
governmental authorizations and has made all required filings and paid all
required fees, except where such non-compliance or violation would not have a
Company Material Adverse Effect. Except as set forth on Schedule 5.24, the
Stockholders have not received notice from the FCC, any state public utilities
commissions or any foreign regulatory authority of any complaint filed
therewith concerning any Company, its operations or services.
5.25 Misrepresentation. To the knowledge of the Stockholders, none
of the representations and warranties set forth in this Agreement, or in any
of the certificates, schedules, exhibits, lists, documents or other
instruments delivered or to be delivered to Acquiror by the Companies or the
Stockholders pursuant hereto, taken as a whole, contains any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements contained herein or therein not misleading.
5.26 Preemptive Rights. No Stockholder has, or hereby waives, any
preemptive or other right to acquire shares of Equity Consideration or
Acquiror Stock.
5.27 No Retained Rights. No Stockholder will retain any right after
the Closing in any Equity Consideration except for the rights received in
accordance with this Agreement.
5.28 Laws Obeyed. The Stockholder and the Company have obeyed the
laws of such jurisdictions to which they are or have been subject, including
without limitation, the Federal Corrupt Practices Act, except where such
failure to obey the law would not have a Company Material Adverse Effect.
5.29 MCI Note. The Company has paid all amounts due to MCI-Worldcom
under that certain promissory note for $764,519.11, dated May 2, 1996.
6. REPRESENTATIONS AND WARRANTIES OF ACQUIROR
Acquiror and Merger Sub jointly and severally represents and warrants to
the Company and the Stockholders that all of the following representations and
warranties in this Section 6 are true at the date of this Agreement and,
subject to Section 7.7 hereof, shall be true at the time of the Closing Date,
and that such representations and warranties shall survive the Closing Date
for a period of one year (the "Acquiror Expiration Date").
6.1 Due Organization. Acquiror and Merger Sub are corporations duly
incorporated, validly existing and in good standing under the laws of the
State of Florida, and are duly authorized and qualified to do business under
all applicable laws, regulations, ordinances and orders of public authorities
to carry on its business in the places and in the manner as now conducted, to
own or hold under lease the properties and assets they now own or hold under
lease, and to perform all of their obligations under any material agreement to
which they are a party or by which their properties are bound; are duly
qualified in the jurisdictions listed in Schedule 6.1 and there are no other
jurisdictions in which the conduct of Acquiror's or Merger Sub's business or
activities or their ownership of assets requires any other qualification under
applicable law, the absence of which would have an Acquiror Material Adverse
Effect. True, complete and correct copies of the Certificate or Articles of
Incorporation and By-laws, each as amended, of Acquiror (the "Acquiror Charter
Documents") and Merger Sub are all attached hereto as Annex_I.
6.2 Authorization. Acquiror and Merger Sub have full corporate power
and authority to execute and deliver this Agreement and to consummate the
Equity Purchase and the other transactions contemplated on their part hereby.
The execution, delivery and performance by Acquiror and Merger Sub of this
Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Acquiror
and Merger Sub. This Agreement has been duly executed and delivered by
Acquiror and Merger Sub, and is a legal, valid and binding obligation of
Acquiror and Merger Sub, enforceable against Acquiror and Merger Sub in
accordance with its terms, except to the extent that its enforceability may be
limited by applicable bankruptcy, insolvency, reorganization or other laws
affecting the enforcement of creditors' rights generally or by general
equitable principles. Each other agreement to be executed in connection with
this Agreement by Acquiror and Merger Sub on or prior to the Closing Date will
be duly executed and delivered by Acquiror and Merger Sub and will constitute
a legal, valid and binding obligation of Acquiror and Merger Sub, enforceable
against them in accordance with its terms, subject to applicable bankruptcy,
insolvency, moratorium, reorganization or other laws affecting the enforcement
of creditors' rights generally or by general equitable principles.
6.3 Capital Stock. The authorized capital stock of the Acquiror
consists in its entirety of (a) 20,000,000 shares of Acquiror Stock, $0.01 par
value, of which, as of March 31, 2000, 7,506,815 were issued and outstanding
and (b) 1,000,000 shares of Preferred Stock, $0.01 par value per share, of
which, as of March 31, 2000, 1,000 were issued and outstanding. All
outstanding shares of Acquiror Stock have been duly authorized and validly
issued, are fully paid and non-assessable, are free of preemptive rights and
were issued in compliance with all applicable securities laws and regulations.
To the knowledge of Acquiror and except as otherwise contemplated by this
Agreement, there are no voting trusts or other agreements, arrangements or
understandings with respect to the voting of Acquiror Stock. The authorized
capital stock of Merger Sub consists in its entirety of 10,000 shares of
common stock, $.01 par value, all of which are issued and outstanding. All of
the outstanding shares of Merger Sub common stock are owned beneficially and
of record by the Acquiror.
6.4 Acquiror Stock. The Acquiror Stock to be issued in connection
with the Equity Purchase has been duly authorized and, when issued as
contemplated hereby at the Closing, will be validly issued, fully paid and
non-assessable, and not subject to any preemptive rights or other rights or
interests of third parties.
6.5 No Violations or Consents. The execution, delivery and
performance of this Agreement by the Acquiror and Merger Sub and the
consummation of the transactions contemplated hereby, will not (i) violate or
conflict with any provision of any charter or bylaws of the Acquiror or Merger
Sub, (ii) require the consent, waiver, approval, license or authorization of
or any filing by the Acquiror or Merger Sub with any public authority, other
than (a) in connection with or in compliance with the provisions of the
Exchange Act, the Securities Act, the Telecommunications Act and the rules and
regulations arising thereunder, the rules and regulations of The Nasdaq Stock
Market, Florida Law or the "takeover", "blue sky" or "public utilities" laws
of various states and (b) any other filings and approvals expressly
contemplated by this Agreement, (iii) violate, conflict with or result in a
breach of or the acceleration of any obligation under, or constitute a default
(or an event which with notice or the lapse of time or both would become a
default) under, or give to others any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a Lien on any
property or asset of the Acquiror pursuant to any provision of any indenture,
mortgage, lien, lease, agreement, instrument, order, judgment or decree to
which the Acquiror or Merger Sub is subject or by which the Acquiror or Merger
Sub or any of their property or assets are bound, or (iv) violate or conflict
with any Law applicable to the Acquiror or Merger Sub or by which any of their
property or assets are bound or affected except, in each of the instances set
forth in items (i) through (iv) above, where failure to give such notice, make
such filings, or obtain such authorizations, consents or approvals, or where
such violations, conflicts, breaches or defaults, in the aggregate, would not
have an Acquiror Material Adverse Effect.
6.6 Financial Statements and Reports. The Acquiror heretofore has
delivered to the Company true and complete copies of (a) its Registration
Statement on Form S-1 dated May 12, 1998, Registration No. 333-48559, (b) its
Registration Statement on Form S-3, dated March 13, 2000, Registration No.
333-32434, (c) its Annual Report on Form 10-K for the fiscal year ended March
31, 1999 and (d) its Quarterly Reports on Form 10-Q for the quarter ended
September 30, 1999 and December 31, 1999 (collectively, "Acquiror SEC
Filings"). The Acquiror SEC Filings made in compliance with the Exchange Act
were filed in a timely manner pursuant to the rules and regulations thereof.
As of the respective times such documents were filed or, as applicable, became
effective, the Acquiror SEC Filings complied as to form and content, in all
material respects, with the requirements of the Securities Act and the
Exchange Act, as the case may be, and the rules and regulations promulgated
thereunder, and did not 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 light of the circumstances under which they
were made, not misleading. The consolidated financial statements of the
Acquiror included in the Acquiror SEC Filings were prepared in accordance with
GAAP, applied on a consistent basis and (except as may be indicated therein or
in the notes thereto) present fairly the consolidated financial position,
results of operations and cash flows of the Acquiror and its consolidated
subsidiaries as of the dates and for the periods indicated subject, in the
case of unaudited interim consolidated financial statements, to normal
recurring year-end adjustments.
6.7 Brokers. Acquiror and Merger Sub have not paid or become
obligated to pay any fee or commission to any broker, finder, investment
banker or other intermediary in connection with this Agreement.
6.8 No Adverse Change. Except as set forth on Schedule 6.8, since
March 31, 2000, there has not been any occurrence or event that has or might
be expected to have an Acquiror Material Adverse Effect.
7. COVENANTS PRIOR TO CLOSING
7.1 Access and Cooperation: Due Diligence.
(a) Between the date of this Agreement and the Closing Date,
each Company will afford to the officers and authorized representatives of
Acquiror access during business hours to all of the Companies' and its
subsidiaries' sites, properties, books and records and will furnish Acquiror
with such additional financial and operating data and other information as to
the business and properties of each Company and its respective subsidiaries as
Acquiror may from time to time reasonably request. Each Company will
cooperate with Acquiror and its representatives, including Acquiror's auditors
and counsel, in the preparation of any documents or other material which may
be required in connection with the transactions contemplated by this
Agreement.
(b) Between the date of this Agreement and the Closing Date,
Acquiror will afford to the officers and authorized representatives of each
Company access during business hours to all of Acquiror's sites, properties,
books and records and will furnish each Company with such additional financial
and operating data and other information as to the business and properties of
Acquiror as each Company may from time to time reasonably request. Acquiror
will cooperate with each Company, its representatives, auditors and counsel in
the preparation of any documents or other material which may be required in
connection with the transactions contemplated by this Agreement.
(c) Acquiror and the Stockholders will treat all information
obtained in connection with the negotiation and performance of this Agreement
or the due diligence investigations conducted as confidential in accordance
with the provisions of Section 15 hereof. The parties and their respective
representatives will take such reasonable steps as are necessary to ensure
they (i) do not disrupt the Companies' or Acquiror's business as the case may
be and (ii) maintain the confidentiality of the transactions contemplated by
this Agreement in accordance with Section 15 until the Closing Date.
7.2 Conduct of Business Pending Closing. Between the date of this
Agreement and the Closing Date, each Company will, and will cause each of its
subsidiaries to, except as set forth on Schedule 7.2:
(a) carry on its business in the ordinary course substantially
as conducted heretofore and not introduce any new method of management,
operation or accounting;
(b) maintain its properties and facilities, including those held
under Leases, in as good working order and condition as at present, ordinary
wear and tear excepted;
(c) perform in all material respects its obligations under
agreements relating to or affecting its assets, properties or rights;
(d) keep in full force and effect present insurance policies or
other comparable insurance coverage;
(e) maintain and preserve its business organization intact and
use its best efforts to retain its present key employees and relationships
with suppliers, customers and others having business relations with each
Company or such subsidiary;
(f) maintain compliance with all permits, laws, rules and
regulations, consent orders, and all other orders of applicable courts,
regulatory agencies and similar Governmental Authorities;
(g) maintain present debt and lease instruments in accordance
with their respective terms and not enter into new or amended debt or lease
instruments, provided that debt and/or lease instruments may be replaced if
such replacement instruments are on terms at least as favorable to the Company
or such subsidiary as the instruments being replaced; and
(h) except in the ordinary course of business or as required by
law or contractual obligations or other understandings or arrangements
existing on the date hereof or with Acquiror's prior approval, each Company or
such subsidiary will not (i) increase in any manner the base compensation of,
or enter into any new bonus or incentive agreement or arrangement with, any of
the employees engaged in the Company's or such subsidiary's business, (ii) pay
or agree to pay any additional pension, retirement allowance or other employee
benefit to any such employee, whether past or present, (iii) enter into any
new employment, severance, consulting, or other compensation agreement with
any existing employee engaged in the Company's or such subsidiary's business,
(iv) amend or enter into a new Plan (except as required by Law) or amend or
enter into a new collective bargaining agreement (except as required by this
Agreement), or (v) engage in any transaction with any Affiliates.
7.3 Prohibited Activities. Except as disclosed on Schedule 7.3
between the date hereof and the Closing Date, each Company will not, and will
cause each of its subsidiaries not to, without the prior written consent of
Acquiror:
(a) make any change in its Articles of Incorporation or By-laws;
(b) grant or issue any securities, options, warrants, calls,
conversion rights or commitments of any kind relating to its securities of any
kind other than in connection with the exercise of options or warrants listed
on Schedule 5.3;
(c) declare or pay any dividend, or make any distribution in
respect of its capital stock whether now or hereafter outstanding, or
purchase, redeem or otherwise acquire or retire for value any shares of its
stock or engage in any transaction that will significantly affect the cash
reflected on the Unaudited Balance Sheet;
(d) enter into any contract or commitment or incur or agree to
incur any liability or make any capital expenditure, except if it is in the
ordinary course of business (consistent with past practice and each Company's
capital budget as in effect on the date hereof, a copy of which has been
delivered to Acquiror) or involves an amount not in excess of $10,000;
(e) create, assume or permit to exist any Lien upon any assets
or properties whether now owned or hereafter acquired, except (1) with respect
to purchase money Liens incurred in connection with the acquisition of
equipment with an aggregate cost not in excess of $10,000 necessary or
desirable for the conduct of the business of each Company or such subsidiary,
(2)(A)Liens for Taxes either not yet due or being contested in good faith and
by appropriate proceedings (and for which adequate reserves have been
established and are being maintained) or (B)_materialmen's, mechanics',
workers', repairmen's, employees' or other like Liens arising in the ordinary
course of business (the liens set forth in clause (2) of this Section 7.3(e)
being referred to herein as "Statutory Liens");
(f) sell, assign, lease or otherwise transfer or dispose of any
property, assets or equipment (except for immaterial transfers or dispositions
in the ordinary course of business);
(g) negotiate for the acquisition of any business or the
start-up of any new business;
(h) merge or consolidate or agree to merge or consolidate with
or into any other corporation;
(i) waive any material right or claim of each Company or such
subsidiary;
(j) commit a material breach of, materially amend or terminate
any Material Contract;
(k) enter into any other transaction outside the ordinary course
of its business or prohibited hereunder; or
(l) cancel, fail to renew, or cause to be cancelled, or fail to
renew, any Company Permit.
7.4 No Shop. In consideration of the substantial expenditure of
time, effort and expense undertaken by Acquiror in connection with its due
diligence review and the preparation and execution of this Agreement, the
Stockholders agree that neither they nor their representatives, agents or
employees will, after the execution of this Agreement until the earlier of (i)
the termination of this Agreement in accordance with Section 13.1 or (ii) the
Closing, directly or indirectly, solicit, encourage, negotiate or discuss with
any third party (including by way of furnishing any information concerning any
Company) any acquisition proposal relating to or affecting each Company or any
part of it, or any direct or indirect interests in each Company, whether by
purchase of assets or stock, purchase of interests, merger or other
transaction ("Acquisition Transaction"), and that the Stockholders will
promptly advise Acquiror of the terms of any communications any of the
Stockholders may receive or become aware of relating to any bid for all or any
part of any Company.
7.5 Termination of Related Party Agreements. The Stockholders and
each Company shall terminate (i) any stockholders' agreements, voting
agreements, voting trusts, options, warrants and employment agreements between
any Company and any employee and (ii) any existing agreement between any
Company and any Stockholder, on or prior to the Closing Date, as set forth on
Schedule 7.5. Copies of each such agreement have been provided to counsel for
Acquiror.
7.6 Notification of Certain Matters. The Stockholders shall give
prompt notice to Acquiror of (i) the occurrence or non-occurrence of any event
of which the Stockholders have knowledge, the occurrence or non-occurrence of
which, would cause any representation or warranty of the Stockholders
contained herein to be untrue or inaccurate in any material respect at or
prior to the Closing and (ii) any material failure of any Stockholder to
comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by such person hereunder. Acquiror shall give prompt notice
to the Stockholders of (i) the occurrence or nonoccurrence of any event of
which Acquiror has knowledge, the occurrence or non-occurrence of which, would
cause any representation or warranty of Acquiror contained herein to be untrue
or inaccurate in any material respect at or prior to the Closing and (ii) any
material failure of Acquiror to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by it hereunder. The delivery
of any notice pursuant to this Section 7.6 shall not be deemed to (i) modify
the representations or warranties hereunder of the party delivering such
notice, which modification may only be made pursuant to Section 7.7, (ii)
modify the conditions set forth in Sections 8 and 9 or (iii) limit or
otherwise affect the remedies available hereunder to the party receiving such
notice with respect to any breach or other matters specified herein; provided,
however, that if a party shall disclose any breach of its representations or
warranties to the other party in writing prior to Closing (a "Disclosed
Breach"), then the other party's sole remedy for such Disclosed Breach shall
be to either: (1) terminate this Agreement, whereupon the parties shall be
released from all obligations and liability hereunder; or (2) waive the
Disclosed Breach and proceed to consummate the Closing as originally
contemplated hereby.
7.7 Amendment of Schedules.
(a) Each party hereto agrees that, with respect to the
representations and warranties of such party contained in this Agreement, such
party shall have the continuing obligation until the Closing Date to
supplement or amend promptly the Schedules hereto with respect to any matter
hereafter arising or discovered which, if existing or known at the date of
this Agreement, would have been required to be set forth or described in the
Schedules.
(b) Notwithstanding the foregoing clause (a), no amendment or
supplement to a Schedule prepared by the Stockholders under Article 5 that
constitutes or reflects a material event or occurrence, individually or
cumulatively with any other events or occurrences, may be made unless Acquiror
consents in writing to such amendment or supplement; and provided further,
that no amendment or supplement to a Schedule prepared by Acquiror under
Article 6 that constitutes or reflects a material event or occurrence,
individually or cumulatively with any other events or occurrences, may be made
unless the Stockholders consent in writing to such amendment or supplement.
In the event that the Stockholders seek to amend or supplement a Schedule
pursuant to this Section 7.7 and Acquiror does not consent to such amendment
or supplement, as provided above, this Agreement shall be deemed terminated by
mutual consent as set forth in Section 13.1(a) hereof, whereupon the parties
shall be released from all obligations and liability hereunder. In the event
that Acquiror seeks to amend or supplement a Schedule pursuant to this Section
7.7 and the Stockholders do not consent to such amendment or supplement, as
provided above, this Agreement shall be deemed terminated by mutual consent as
set forth in Section 13.1(a) hereof, whereupon the parties shall be released
from all obligations and liability hereunder.
(c) For all purposes of this Agreement, including without
limitation for purposes of determining whether the conditions set forth in
Articles 8, 9 and 10 have been fulfilled, the Schedules hereto shall be deemed
to be the Schedules as amended or supplemented pursuant to this Section 7.7.
No party to this Agreement shall be liable to any other party if this
Agreement shall be terminated pursuant to the provisions of this Section 7.7,
except that, notwithstanding anything to the contrary contained in this
Agreement, if the Stockholders on the one hand, or Acquiror on the other hand,
amend or supplement a Schedule which results in a termination of this
Agreement and such amendment or supplement arises out of or reflects facts or
circumstances which such party knew about at the time of execution of this
Agreement and had reason to believe would result in a termination of this
Agreement, or if such amendment or supplement otherwise is proposed in bad
faith, the injured party may seek such legal and equitable remedies it deems
appropriate.
7.8 Further Assurances. The parties hereto agree to execute and
deliver, or cause to be executed and delivered, such further instruments or
documents or take such other action as may be reasonably necessary or
convenient to carry out the transactions contemplated hereby.
7.9 A/R Aging Reports. Within ten (10) days prior to Closing, the
Stockholders shall provide Acquiror (i) an accurate list of all outstanding
receivables obtained subsequent to the Balance Sheet Date and as of a date
which is within ten (10) calendar days of the Closing Date and (ii) an aging
of all such accounts and notes receivable showing amounts due in 30 day aging
categories (the "A/R Aging Reports").
7.10 ▇▇▇▇ Employment. At Closing, ▇▇▇▇ and Acquiror shall enter into
an employment agreement in the form attached as Schedule 7.10 hereto.
7.11 [Intentionally deleted].
8. CONDITIONS PRECEDENT
8.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment at or prior to the Closing Date of the following conditions:
(a) The shares of Acquiror Stock issuable in the Merger or
thereafter shall have been authorized for listing on the Nasdaq National
Market, upon official notice of issuance.
(b) There shall not have been instituted or pending any action
or proceeding by or before any Governmental Authority or other regulatory or
administrative agency or commission, domestic or foreign, by any government or
governmental authority, nor shall there by any determination by any
government, Governmental Authority, regulatory or administrative agency or
commission which, in either case, would require either party to take any
action or do anything in connection with the foregoing which would result in a
Material Adverse Effect to their respective businesses or materially impair
Acquiror's ownership or operation of all or a material portion of the business
or assets of any Company or compel Acquiror to dispose of all or a material
portion of the business or assets of Acquiror.
(c) The receipt by the parties of any required consents to the
transfer of control of the Companies Permits, except where, in the sole
discretion of the Acquiror, failure to transfer or obtain a consent would not
have a Company Material Adverse Effect.
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE STOCKHOLDERS
The obligations of the Stockholders with respect to actions to be taken
on the Closing Date are subject to the satisfaction (or waiver by the
Stockholders) on or prior to the Closing Date of all of the conditions set
forth in this Article 9; provided, that (except as otherwuse provided in
Section 7.6) no such waiver shall constitute a waiver of, or otherwise affect
the Stockholders' rights under, Section 12.2.
9.1 Representations and Warranties. All representations and
warranties of Acquiror and Merger Sub contained in this Agreement (a) that are
qualified as to materiality shall be true and (b)_that are not qualified as to
materiality shall be true and correct in all material respects, in each case
as of the Closing Date with the same effect as though such representations and
warranties had been made on and as of such date; and a certificate
representing the foregoing dated the Closing Date and signed by the President
or any Vice President of Acquiror and Merger Sub shall have been delivered to
the Stockholders.
9.2 Performance of Obligations. All of the terms, covenants and
conditions of this Agreement to be complied with and performed by Acquiror and
Merger Sub on or before the Closing Date shall have been duly complied with
and performed in all material respects on or before the Closing Date and
certificates to the foregoing effect dated the Closing Date and signed by the
President or any Vice President of Acquiror and Merger Sub shall have been
delivered to the Stockholders.
9.3 No Litigation. No action or proceeding before any Governmental
Authority or body shall have been instituted or threatened to restrain or
prohibit the Equity Purchase or the transactions contemplated by this
Agreement.
9.4 Consents and Approvals. All necessary consents of and filings
required to be obtained or made by Acquiror and Merger Sub with any
Governmental Authority or agency relating to the consummation of the
transactions contemplated by this Agreement shall have been obtained and made.
9.5 Good Standing Certificates. Acquiror and Merger Sub shall have
delivered to the Stockholders a certificate, dated as of a date no earlier
than 10 days prior to the Closing Date, duly issued by the Florida Secretary
of State and in each state in which Acquiror and Merger Sub are authorized to
do business, showing that Acquiror and Merger Sub are in good standing and
authorized to do business.
9.6 Secretary's Certificate. The Stockholders shall have received a
certificate or certificates, dated the Closing Date and signed by the
secretary of Acquiror and Merger Sub, certifying the truth and correctness of
attached copies of the Acquiror's and Merger Sub's Certificate of
Incorporation (including amendments thereto), By-laws (including amendments
thereto), and resolutions of the board of directors and, if required, the
stockholders of Acquiror and Merger Sub approving Acquiror's and Merger Sub's
entering into this Agreement and the consummation of the transactions
contemplated hereby.
9.7 No Material Adverse Change. As of the Closing Date, no event or
circumstance shall have occurred with respect to Acquiror which would
constitute an Acquiror Material Adverse Effect.
9.8 Opinion of Counsel. The Stockholders shall have received from
▇▇▇▇▇▇▇ Berlin Shereff ▇▇▇▇▇▇▇▇, LLP, counsel to Acquiror and Merger Sub, an
opinion dated the Closing Date and in a form reasonably satisfactory to the
Stockholders.
10. CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIROR
The obligations of Acquiror with respect to actions to be taken on the
Closing Date, are subject to the satisfaction (or waiver by Acquiror) on or
prior to the Closing Date of all of the conditions set forth in this Section
10; provided, that (except as otherwise provided under Section 7.6) no such
waiver shall constitute a waiver of, or otherwise affect Acquiror's or any of
its respective Affiliates' rights under Section 12.1.
10.1 Representations and Warranties. All the representations and
warranties of the Stockholders contained in this Agreement (a) that are
qualified as to materiality shall be true and correct and (b) that are not
qualified as to materiality shall be true and correct in all material
respects, in each case as of the Closing Date with the same effect as though
such representations and warranties had been made on and as of such date; and
the Stockholders shall have delivered to Acquiror certificates representing
the foregoing dated the Closing Date signed by the Stockholders and which
shall have been delivered to Acquiror.
10.2 Performance of Obligations. All of the terms, covenants and
conditions of this Agreement to be complied with or performed by the
Stockholders and each Company on or before the Closing Date shall have been
duly complied with and performed in all material respects on or before the
Closing Date and the Stockholders shall have delivered to Acquiror a
certificate dated the Closing Date and signed by them to such effect.
10.3 No Litigation. No action or proceeding before any Governmental
Authority or body shall have been instituted or threatened to restrain or
prohibit the Equity Purchase or the transactions contemplated by this
Agreement and no Governmental Authority or body shall have taken any other
action or made any request of Acquiror as a result of which the management of
Acquiror deems it inadvisable to proceed with the transactions hereunder.
10.4 Secretary's Certificate. Acquiror shall have received a
certificate, dated the Closing Date and signed by the secretary of the
Company, certifying the truth and correctness of attached copies of the
Company's and each of its subsidiaries' Articles of Incorporation (including
amendments thereto), By-laws (including amendments thereto), and resolutions
of the board of directors and the stockholders approving the Company's
entering into this Agreement and the consummation of the transactions
contemplated hereby.
10.5 No Material Adverse Change. As of the Closing Date, no event or
circumstance shall have occurred with respect to any Company which would
constitute a Company Material Adverse Effect, and no Company shall have
suffered any material loss or damages to any of its properties or assets
whether or not covered by insurance, which change, loss or damage materially
affects or impairs the ability of each Company to conduct its business.
10.6 Stockholders' Release. The Stockholders shall have delivered to
Acquiror an instrument dated the Closing Date releasing each Company from any
and all (i) claims of the Stockholders against each Company and (ii)
obligations of each Company to the Stockholders, except for obligations
arising under this Agreement or the transactions contemplated hereby.
10.7 Termination of Related Party Agreements. All agreements
specified in Section 7.5 hereof shall have been terminated effective prior to
or as of the Closing Date.
10.8 Opinion of Counsel. The Acquiror shall have received from
▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, domestic counsel to the Companies, an opinion dated the
Closing Date and in the form of Schedule 10.8.
10.9 Consents and Approvals. All necessary consents of and filings
required to be obtained or made by each Company with any Governmental
Authority or agency relating to the consummation of the transactions
contemplated herein shall have been obtained and made and all consents and
approvals of third parties listed on Schedule 5.17 shall have been obtained.
10.10 Good Standing Certificates. Each Company shall have delivered
to Acquiror a certificate, dated as of a date no earlier than ten days prior
to the Closing Date, duly issued by the Secretary of State (or equivalent
thereof) of each Company's respective state or country of incorporation and,
unless waived by Acquiror, in each state, or country, in which each Company is
authorized to do business, showing each Company is in good standing and
authorized to do business in such state or country.
10.11 Employment Agreements. The persons named in Schedule 10.11
shall have entered into employment arrangements with the Acquiror under the
terms set forth in such Schedule.
10.12 Letters of Resignation. Acquiror shall have received letters
of resignation addressed to each Company from those members of each Company's
board of directors and officers as listed on Schedule 5.14, which resignations
shall be effective as of the Closing.
10.13 [Intentionally deleted]
11. COVENANTS AFTER CLOSING
11.1 Preparation and Filing of Tax Returns.
(a) The Company shall, if possible, file or cause to be filed
all separate Returns of any Acquired Party for all taxable periods that end on
or before the Closing Date. Each Stockholder shall pay or cause to be paid
all Tax liabilities (in excess of all amounts already paid with respect
thereto or properly accrued or reserved with respect thereto on the Company
Financial Statements) shown by such Returns to be due.
(b) Acquiror shall file or cause to be filed all separate
Returns of, or that include, any Acquired Party for all taxable periods ending
after the Closing Date.
(c) Each party hereto shall, and shall cause its subsidiaries
and Affiliates to, provide to each of the other parties hereto such
cooperation and information as any of them reasonably may request in filing
any Return, amended Return or claim for refund, determining a liability for
Taxes or a right to refund of Taxes or in conducting any audit or other
proceeding in respect of Taxes. Such cooperation and information shall
include providing copies of all relevant portions of relevant Returns,
together with relevant accompanying schedules and relevant work papers,
relevant documents relating to rulings or other determinations by Taxing
Authorities and relevant records concerning the ownership and Tax basis of
property, which such party may possess. Each party shall make its employees
reasonably available on a mutually convenient basis at its cost to provide
explanation of any documents or information so provided. Subject to the
preceding sentence, each party required to file Returns pursuant to this
Agreement shall bear all costs of filing such Returns.
12. INDEMNIFICATION
The Stockholders and Acquiror each make the following covenants that are
applicable to them, respectively:
12.1 General Indemnification by the Stockholders. The Stockholders
covenant and agree that they, jointly and severally, will indemnify, defend,
protect and hold harmless Acquiror, each Company and their respective
Affiliates (other than the Stockholders) at all times, from and after the
Closing Date until the Expiration Date, from and against all claims, damages,
actions, suits, proceedings, demands, assessments, adjustments, costs and
expenses (including specifically, but without limitation, reasonable
attorneys' fees, court costs, witness fees and reasonable expenses of
investigation) (collectively, "Losses") incurred by Acquiror, each Company, or
any of their respective Affiliates (other than the Stockholders) as a result
of or arising from (i) any breach of the representations and warranties of the
Stockholders set forth herein or on the schedules or certificates delivered in
connection herewith, (ii) any breach of any agreement or certificate on the
part of the Stockholders contained in this Agreement, or (iii) any Tax imposed
upon any Company or relating to any third party or Acquired Party for any
period ending on or prior to the Closing Date relating to matters known by or
under the control of the Stockholder, including, in each case, any such Tax
arising out of or in connection with the transactions effected pursuant to
this Agreement or any such Tax for which an Acquired Party may be liable under
Section 1.1502-6 of the Treasury Regulations (or any similar provisions of
state, local or foreign law), as a transferee or successor, by contract or
otherwise, (but excluding Taxes accrued or reserved properly on the Company
Financial Statements and Taxes accruing in the ordinary course of business
after the date of the Company Financial Statements).
12.2 Indemnification by Acquiror. Acquiror covenants and agrees that
it will indemnify, defend, protect and hold harmless the Stockholders at all
times from and after the Closing Date until the Acquiror Expiration Date, from
and against all Losses incurred by the Stockholders as a result of or arising
from (i) any breach by Acquiror of its representations and warranties set
forth herein or on the schedules or certificates delivered in connection
herewith, (ii) any breach of any agreement on the part of Acquiror contained
in this Agreement, or (iii) any liability under any federal or state law or
regulation, at common law or otherwise, arising out of or based upon any
untrue statement or alleged untrue statement of a material fact relating to
Acquiror, or arising out of or based upon any omission or alleged omission by
Acquiror to state a material fact relating to Acquiror required to be stated
or necessary to make the statements not misleading.
12.3 Third Person Claims. Promptly after any party hereto
(hereinafter the "Indemnified Party") has received notice of or has knowledge
of any claim by a Person not a party to this Agreement (a "Third Person"), of
the commencement of any action or proceeding by such Third Person, the
Indemnified Party shall, as a condition precedent to a claim with respect
thereto being made against any party obligated to provide indemnification
pursuant to Section 12.1 or 12.2 hereof (hereinafter the "Indemnifying
Party"), give the Indemnifying Party written notice of such claim or the
commencement of such action or proceeding. Such notice shall state the nature
and the basis of such claim and a reasonable estimate of the amount thereof.
The Indemnifying Party shall have the right to defend and settle, at its own
expense and by its own counsel, any such matter so long as the Indemnifying
Party pursues the same in good faith and diligently, provided that the
Indemnifying Party shall not settle any proceeding without the written consent
of the Indemnified Party, such consent not to be unreasonably withheld or
delayed. If the Indemnifying Party undertakes to defend or settle, it shall
promptly notify the Indemnified Party of its intention to do so, and the
Indemnified Party shall cooperate, at the Indemnifying Party's expense, with
the Indemnifying Party and its counsel in the defense thereof and in any
settlement thereof. If the Indemnifying Party desires to accept a final and
complete settlement of any such Third Person's claim and the Indemnified Party
refuses to consent to such settlement, then the Indemnifying Party's liability
pursuant to this Section with respect to such Third Person's claim shall be
limited to the amount so offered in settlement to said Third Person plus all
indemnifiable costs and expenses incurred to date, the Indemnifying Party
shall be relieved of its duty to defend and shall tender the Third Person's
claim back to the Indemnified Party, who shall thereafter, at its own expense,
be responsible for the defense and negotiation of such Third Person's claim.
If the Indemnifying Party does not undertake to defend such matter to which
the Indemnified Party is entitled to indemnification hereunder, or fails
diligently to pursue such defense, the Indemnified Party may undertake such
defense through counsel of its choice, at the cost and expense of the
Indemnifying Party, and the Indemnified Party may settle such matter on terms
as it determines in its sole discretion, and the Indemnifying Party shall
reimburse the Indemnified Party for the amount paid in such settlement and any
other liabilities or expenses incurred by the Indemnified Party in connection
therewith.
12.4 Exclusive Remedy. The indemnification provided for in this
Article 12 shall be the exclusive remedy in any action seeking damages or any
other form of relief brought by any party to this Agreement against another
party, provided that nothing herein shall be construed to limit the right of a
party, in a proper case, to seek injunctive relief for a breach of Articles 14
or 15 of this Agreement or to seek relief for a breach of any employment
agreement with, or any promissory note, stock option or warrant issued by
Acquiror.
12.5 Limitations on Indemnification. Notwithstanding anything to the
contrary contained in this Agreement:
(a) The Persons entitled to be indemnified pursuant to Section
12.1 or 12.2, as applicable, shall not be entitled to recover Losses with
respect to any claim for indemnification hereunder until such time as, and
solely to the extent that, the aggregate amount of Losses in respect of all
claims for indemnification under Section 12.1 or 12.2, as applicable, exceeds
$15,000 (the "Threshold"), and thereafter, such Persons shall only be entitled
to recover Losses in excess of the Threshold. No Person shall be entitled to
indemnification under this Article 12 if and to the extent that such Person's
claim for indemnification is directly or indirectly related to a breach by
such Person of any representation, warranty, covenant or other agreement set
forth in this Agreement.
(b) Acquiror shall have the right, upon written notice, to
offset indemnification amounts due to it pursuant to this Agreement against
payments due to the Stockholders under this Agreement.
(c) After Closing, (i) the indemnification obligations of the
Stockholders under Section 12.1 shall be limited, in the aggregate, to an
amount equal to fifty percent (50%) of the Merger Consideration, and (ii) the
indemnification obligations of Acquiror under Section 12.2 shall be limited,
in the aggregate, to an amount equal to fifty percent (50%) of the Merger
Consideration. Notwithstanding the foregoing, the limitations contained in
this subsection (c) shall be (1) an amount equal to the entire Merger
Consideration for all Stockholders in the aggregate, with respect to any
liability arising from the Stockholders' breach of the representations
contained in Section 5.2 or 5.3; and (2) an amount equal to the entire Merger
Consideration for the Acquiror with respect to any liability arising from the
Acquiror's breach of the covenants or representations contained in Sections
6.2 or 6.4.
(d) Stockholders may, at their option, pay for Losses, with cash
or with Acquiror Stock. Any Acquiror Stock used to pay Losses shall be valued
at the time of payment and as set forth in the Escrow Agreement.
(e) In no event shall either party be liable for special,
punitive, indirect or consequential damages.
13. TERMINATION OF AGREEMENT
13.1 Termination. This Agreement may be terminated at any time prior
to the Closing Date solely:
(a) by mutual consent of the boards of directors of Acquiror and
each Company;
(b) by the Stockholders or the Companies (acting through its
board of directors), on the one hand, or by Acquiror (acting through its board
of directors), on the other hand, if the transactions contemplated by this
Agreement to take place at the Closing shall not have been consummated by June
30, 2000 unless the failure of such transactions to be consummated is due to
the willful failure of the party seeking to terminate this Agreement to
perform any of its obligations under this Agreement to the extent required to
be performed by it prior to or on the Closing Date;
(c) by the Stockholders or the Companies, on the one hand, or by
Acquiror, on the other hand, if a material breach or default shall be made by
the other party in the observance or in the due and timely performance of any
of the covenants, agreements or conditions contained herein, and the curing of
such default shall not have been made on or before three (3) days prior to the
Closing Date or, if later, within seven (7) days of notice thereof; or
(d) pursuant to Section 7.7 hereof.
13.2 Liabilities in Event of Termination. Except as otherwise
provided in Sections 7.6 or 7.7 hereof, the termination of this Agreement will
in no way limit any obligation or liability of any party based on or arising
from a breach or default by such party with respect to any of its
representations, warranties, covenants or agreements contained in this
Agreement including, but not limited to, legal costs and out of pocket
expenses.
14. NONCOMPETITION
14.1 Prohibited Activities. Subject to subsection (f) below, the
Stockholders agree severally and not jointly that each such Stockholder will
not, for a period of three (3) years following the Closing Date, for any
reason whatsoever, directly or indirectly, for themselves or on behalf of or
in conjunction with any other Person, of whatever nature:
(a) engage, as an officer, director, stockholder, owner,
partner, joint venturer, or in a managerial capacity, or as an employee,
independent contractor, consultant or advisor, or as a sales representative,
in any business selling any products or services in direct competition with
Acquiror or any of the subsidiaries thereof [text regarding a territory of
noncompetition was deleted here];
(b) call upon any person who is, at that time an employee of
Acquiror (including the subsidiaries thereof) in a sales representative or
managerial capacity for the purpose or with the intent of enticing such
employee away from or out of the employ of Acquiror (including the
subsidiaries thereof), provided that each Stockholder shall be permitted to
call upon and hire any member of his or her immediate family;
(c) call upon any Person which is, at that time, or which has
been, within three (3) years prior to the Closing Date, a customer of Acquiror
(including the subsidiaries thereof), or any Company for the purpose of
soliciting or selling products or services in direct competition with Acquiror
(including its subsidiaries);
(d) call upon any prospective acquisition candidate, on any
Stockholder's own behalf or on behalf of any competitor in similar or
incidental businesses or activities, which candidate, to the actual knowledge
of such Stockholder after due inquiry, was called upon by Acquiror (including
the subsidiaries thereof) or for which, to the actual knowledge of such
Stockholder after due inquiry, Acquiror (or any subsidiary thereof) made an
acquisition analysis, for the purpose of acquiring such entity; or
(e) disclose customers, whether in existence or proposed, of any
Company to any Person for any reason or purpose whatsoever except to the
extent that each Company has in the past disclosed such information to the
public for valid business reasons or disclosure is specifically required by
law.
(f) ▇▇▇▇ has developed and patented a telephone switching device
(the "Device") described in Schedule 14.1 hereto. Notwithstanding the terms
of this Section 14.1, ▇▇▇▇'▇ continued development, sale, lease, marketing and
exploitation of the Device after the date hereof shall not be considered a
breach of subsections (a) or (c) above.
14.2 Damages. Because of the difficulty of measuring economic losses
to Acquiror as a result of a breach of the foregoing covenant, and because of
the immediate and irreparable damage that could be caused to Acquiror for
which it would have no other adequate remedy, each Stockholder agrees that, in
the event of breach by such Stockholder, the foregoing covenant may be
enforced by Acquiror by injunctions and restraining orders.
14.3 Reasonable Restraint. It is agreed by the parties hereto that
the foregoing covenants in this Section 14 impose a reasonable restraint on
the Stockholders in light of the activities and business of Acquiror
(including the subsidiaries thereof) on the date of the execution of this
Agreement and the current plans of Acquiror.
14.4 Severability, Reformation. The covenants in this Article 14 are
severable and separate, and the unenforceability of any specific covenant
shall not affect the provisions of any other covenant. Moreover, in the event
any court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it is the intention
of the parties that such restrictions be enforced to the fullest extent which
the court deems reasonable, and this Agreement shall thereby be reformed.
14.5 Independent Covenant. All of the covenants in this Article 14
shall be construed as an agreement independent of any other provision in this
Agreement, and the existence of any claim or cause of action of any
Stockholder against Acquiror (including the subsidiaries thereof), whether
predicated on this Agreement or otherwise, shall not constitute a defense to
the enforcement by Acquiror of such covenants.
14.6 Materiality. The Stockholders hereby agree that the covenants
in this Article 14 are a material and substantial part of this transaction and
the consideration for this transaction.
15. NONDISCLOSURE OF CONFIDENTIAL INFORMATION
15.1 Stockholders. The Stockholders recognize and acknowledge that
they had in the past, currently have, and in the future may have, access to
certain confidential information of the Company and/or Acquiror, such as
operational policies, and pricing and cost policies that are valuable, special
and unique assets of each Company's and/or Acquiror's respective businesses
(collectively, the "Confidential Information"). The Stockholders, severally
and not jointly, agree that they will not disclose such Confidential
Information to any person, firm, corporation, association or other entity for
any purpose or reason whatsoever, except (a) to authorized representatives of
Acquiror who need to know such Confidential Information in connection with the
transactions contemplated hereby, who have been informed of the confidential
nature of such Confidential Information and who have agreed to keep such
Confidential Information confidential as provided hereby, (b) following the
Closing, such Confidential Information may be disclosed by Stockholders who
are employees of Acquiror if and to the extent required in the course of
performing their duties for Acquiror and (c) to counsel and other advisers,
provided that such advisers (other than counsel) agree to the confidentiality
provisions of this Section 15.1, unless (i) such Confidential Information
becomes known to the public generally through no fault of any such
Stockholders or (ii) disclosure is required by law or the order of any
Governmental Authority under color of law, provided, that prior to disclosing
any Confidential Information pursuant to this clause (ii), the Stockholders
shall, if possible, give prior written notice thereof to Acquiror and provide
Acquiror with the opportunity to contest such disclosure. In the event of a
breach or threatened breach by any of the Stockholders of the provisions of
this Section 15, Acquiror shall be entitled to an injunction restraining such
Stockholders from disclosing, in whole or in part, such Confidential
Information. Nothing herein shall be construed as prohibiting Acquiror from
pursuing any other available remedy for such breach or threatened breach,
including the recovery of damages. In the event the transactions contemplated
by this Agreement are not consummated, the Stockholders shall have none of the
above-mentioned restrictions on their ability to disseminate Confidential
Information with respect to Acquiror.
15.2 Acquiror. Acquiror recognizes and acknowledges that it has in
the past, currently has, and in the future may have, access to certain
Confidential Information of each Company, such as operational policies, and
pricing and cost policies that are valuable, special and unique assets of each
Company's business. Acquiror agrees that, prior to the Closing, or if the
transactions contemplated by this Agreement are not consummated, it will not
disclose such Confidential Information to any person, firm, corporation,
association or other entity for any purpose or reason whatsoever, except (a)
to the Stockholders and to authorized representatives of each Company, and (b)
to counsel and other advisers, provided that such advisors (other than
counsel) agree to the confidentiality provisions of this Section 15.2, unless
(i) such Confidential Information becomes known to the public generally
through no fault of Acquiror or (ii) disclosure is required by law or the
order of any Governmental Authority under color of law, provided, that prior
to disclosing any Confidential Information pursuant to this clause (iii),
Acquiror shall, if possible, give prior written notice thereof to each Company
and the Stockholders and provide each Company and the Stockholders with the
opportunity to contest such disclosure. In the event of a breach or
threatened breach by Acquiror of the provisions of this Section, each Company
and the Stockholders shall be entitled to an injunction restraining Acquiror
from disclosing, in whole or in part, such confidential information. Nothing
herein shall be construed as prohibiting each Company and the Stockholders
from pursuing any other available remedy for such breach or threatened breach,
including the recovery of damages.
15.3 Damages. Because of the difficulty of measuring economic losses
as a result of the breach of the foregoing covenants in Sections 15.1 and
15.2, and because of the immediate and irreparable damage that would be caused
for which they would have no other adequate remedy, the parties hereto agree
that, in the event of a breach by any of them of the foregoing covenants, the
covenant may be enforced against the other parties by injunctions and
restraining orders.
15.4 Survival. The obligations of the parties under this Article 15
shall survive for a period of three (3) years from the Closing Date.
16. FEDERAL SECURITIES ACT REPRESENTATIONS
The Stockholders acknowledge that the shares of Acquiror Stock to be
delivered to the Stockholders pursuant to this Agreement have not been and
will not be registered under the Securities Act or under any state securities
or "blue sky" laws, and therefore may not be sold, transferred or otherwise
conveyed without compliance with the Securities Act and such laws or pursuant
to an exemption therefrom. The Acquiror Stock to be acquired by the
Stockholders pursuant to this Agreement is being acquired solely for their own
respective accounts, for investment purposes only, and with no present
intention of distributing, selling or otherwise disposing of it in connection
with a distribution.
16.1 Compliance with Law. The Stockholders covenant, warrant and
represent that none of the shares of Acquiror Stock issued to the Stockholders
will be offered, sold, assigned, pledged, hypothecated, transferred or
otherwise disposed of except after full compliance with all of the applicable
provisions of the Securities Act and the rules and regulations of the SEC.
All the Acquiror Stock shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE SHARES HAVE
BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, ASSIGNED, EXCHANGED,
TRANSFERRED, ENCUMBERED, PLEDGED, DISTRIBUTED, APPOINTED OR OTHERWISE DISPOSED
OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER
THE SECURITIES ACT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS AND, IF REQUIRED BY
URSUS TELECOM CORPORATION, AN OPINION OF COUNSEL TO URSUS TELECOM CORPORATION
STATING THAT REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT.
16.2 Economic Risk: Sophistication. The Stockholders represent and
warrant that they are able to bear the economic risk of an investment in the
Acquiror Stock acquired pursuant to this Agreement, can afford to sustain a
total loss of such investment and have such knowledge and experience in
financial and business matters that they are capable of evaluating the merits
and risks of the proposed investment in the Acquiror Stock. The Stockholders
represent and warrant that they have had an adequate opportunity to ask
questions and receive answers from the officers of Acquiror concerning any and
all matters relating to the transactions described herein including, without
limitation, the background and experience of the current and proposed officers
and directors of Acquiror, business, operations, financial conditions and
plans for Acquiror, and any plans for additional acquisitions and the like.
Each Stockholder represents that after taking into consideration the
information and advice provided herein each Stockholder has the requisite
knowledge and experience in financial and business matters to be capable of
evaluating the merits and risks of this investment.
17. GENERAL
17.1 Cooperation. Each Company, the Stockholders, Acquiror and
Merger Sub shall each deliver or cause to be delivered to the other on the
Closing Date, and at such other times and places as shall be reasonably agreed
to, such additional instruments as the other may reasonably request for the
purpose of carrying out this Agreement. The Stockholders will cooperate and
use their reasonable efforts to have the present officers, directors and
employees of each Company cooperate with Acquiror on and after the Closing
Date in furnishing information, evidence, testimony and other assistance in
connection with any Tax Return filing obligations, actions, proceedings,
arrangements or disputes of any nature with respect to matters pertaining to
all periods prior to the Closing Date.
17.2 Successors and Assigns. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefits of the
parties hereto and their respective successors and permitted assigns. Neither
this Agreement nor any of the rights, interests or obligations shall be
assigned by any of the parties hereto without the prior written consent of the
other. This Agreement is not intended to confer upon any other person any
rights or remedies hereunder.
17.3 Entire Agreement. This Agreement (including the schedules,
exhibits and annexes attached hereto), and the documents and other agreements
executed and delivered pursuant hereto constitute the entire agreement and
understanding among the Stockholders, each Company and Acquiror and supersede
any prior agreement and understanding relating to the subject matter of this
Agreement. This Agreement, upon execution, constitutes a valid and binding
agreement of the parties hereto enforceable in accordance with its terms and
may be modified or amended only by a written instrument executed by the
Stockholders and each of the Companies and Acquiror, acting through their
respective officers or trustees, duly authorized by their respective boards of
directors. Any disclosure made on any Schedule delivered pursuant hereto
shall be deemed to have been disclosed for purposes of any other Schedule
required hereby, provided that each Company and the Stockholders shall make a
good faith effort to cross reference disclosure, as necessary or advisable,
between related Schedules.
17.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
17.5 Expenses.
(a) Whether or not the transactions herein contemplated shall be
consummated, each of the parties hereto will pay its own fees, expenses and
disbursements and those of its agents, representatives, accountants and
counsel incurred in connection with the subject matter of this Agreement and
any amendments thereto, including all costs and expenses incurred in the
performance and compliance with all conditions to be performed by it under
this Agreement.
(b) Each Stockholder shall pay all sales, use, transfer, real
property transfer, recording, gains, stock transfer, stamp, and other similar
taxes and fees ("Transfer Taxes") imposed on each pursuant to federal and
state law in connections with the transactions contemplated hereby, except
that Acquiror shall pay all Transfer Taxes due on the issuance of the Acquiror
Stock. Each Stockholder shall file all necessary documentation and Returns
with respect to such Transfer Taxes. In addition, each Stockholder
acknowledges that he, and not any Company or Acquiror, will pay all Taxes due
upon receipt of the consideration payable pursuant to Section 2 hereof, and
will assume all Tax risks and liabilities of such Stockholder in connection
with the transactions contemplated hereby.
17.6 Notices. All notices or communications required or permitted
hereunder shall be in writing and may be given by depositing the same in
United States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested, via reputable overnight
courier, so addressed and charges prepaid, or by delivering the same in person
to an officer or agent of such party.
(a) If to Acquiror, addressed to them at:
Ursus Telecom Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
with copies to:
▇▇▇▇▇▇▇ Berlin Shereff ▇▇▇▇▇▇▇▇, LLP
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esquire
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esquire
(b) If to the Stockholders, addressed to them at
c/o ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
Latin American Enterprises, Inc.
▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with copies to:
▇▇▇▇▇▇ & ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇ ▇▇▇▇▇, Esquire
or to such other address or counsel as any party hereto shall specify pursuant
to this Section 17.6 from time to time.
17.7 Governing Law. The validity and interpretation of this
Agreement shall be governed by and construed in accordance with the laws of
the State of Florida, without reference to the conflicts of laws principles
thereof.
17.8 Exercise of Rights and Remedies. Except as otherwise provided
herein, no delay of or omission in the exercise of any right, power or remedy
accruing to any party as a result of any breach or default by any other party
under this Agreement shall impair any such right, power or remedy, nor shall
it be construed as a waiver of or acquiescence in any such breach or default,
or of any similar breach or default occurring later; nor shall any waiver of
any single breach or default be deemed a waiver of any other breach or default
occurring before or after that waiver.
17.9 Time. Time is of the essence with respect to this Agreement.
17.10 Reformation and Severability. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall, to the extent
possible, be modified in such manner as to be valid, legal and enforceable but
so as to most nearly retain the intent of the parties, and if such
modification is not possible, such provision shall be severed from this
Agreement, and in either case the validity, legality and enforceability of the
remaining provisions of this Agreement shall not in any way be affected or
impaired thereby.
17.11 Captions. The headings of this Agreement are inserted for
convenience only, shall not constitute a part of this Agreement or be used to
construe or interpret any provision hereof.
17.12 Amendments and Waivers. Except as otherwise provided herein,
any term of this Agreement may be amended and the observance of any term of
this Agreement may be waived only with the written consent of Acquiror, each
Company and each of the Stockholders and any such amendment or waiver shall be
binding upon each of the parties hereto, any other Person receiving Acquiror
Stock in connection with the Equity Purchase and each future holder of such
Acquiror Stock.
17.13 Publicity. The parties hereto shall not, and shall cause
their Affiliates not to, issue or cause the publication of any press release
or other announcement with respect to the Equity Purchase or this Agreement
without delivering a draft of any such press release to such parties.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
IN WITNESS WHEREOF, the parties hereto have executed this Merger
Agreement as of the day and year first above written.
URSUS TELECOM CORPORATION
By: (SEAL)
-----------------------------
Name:
Title: Chairman of the Board
LAE ACQUISITION CORP.
By:
-------------------------------
Name:
Title: Chief Executive Officer
LATIN AMERICAN ENTERPRISES, INC.
By:
---------------------------------
Name:
Title: Chief Executive Officer
STOCKHOLDERS:
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▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇., Individually and as
Trustee of the ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇. Revocable Trust
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇