Exhibit 1
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AGREEMENT AND PLAN OF MERGER
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Agreement and Plan of Merger (the "Agreement") entered into as of February
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3, 1998, by and among Primus Telecommunications Group, Inc., a Delaware
corporation (the "Purchaser"), Taurus Acquisition Corporation, a Florida
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corporation and a wholly-owned Subsidiary of the Purchaser (the "Purchaser
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Subsidiary"), and TresCom International, Inc., a Florida corporation (the
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"Target"). The Purchaser, the Purchaser Subsidiary and the Target are referred
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to collectively herein as the "Parties."
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WITNESSETH:
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WHEREAS, this Agreement contemplates a transaction in which the Purchaser
will acquire all of the outstanding capital stock of the Target through a merger
of the Purchaser Subsidiary with and into the Target.
WHEREAS, each Board of Directors of the Purchaser, the Purchaser Subsidiary
and the Target has approved the acquisition of the Target by the Purchaser,
including the merger of the Purchaser Subsidiary with and into the Target (the
"Merger"), upon the terms and subject to the conditions set forth herein;
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WHEREAS, the Board of Directors of the Target has determined that the
Merger is fair to and in the best interests of the holders of the Target's
common stock, par value $0.0419 per share (the "Target Shares"), and has
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resolved to recommend the acceptance and approval of the Merger by the Target
Stockholders (as defined in (S)1 below);
WHEREAS, the Board of Directors of the Purchaser has determined that the
Merger is fair to and in the best interests of the holders of the Purchaser's
common stock, par value $0.01 per share (the "Purchaser Shares"), and has
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resolved to recommend the acceptance and approval of the Merger by the Purchaser
Stockholders (as defined in (S)1 below);
WHEREAS, to induce the Purchaser and the Purchaser Subsidiary to enter into
this Agreement, the Purchaser, the Purchaser Subsidiary and K. ▇▇▇▇ ▇▇▇▇▇, the
Chairman of the Board and Chief Executive Officer of the Purchaser, have entered
into a Stockholder Agreement (the "Stockholder Agreement") with Warburg, Pincus,
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Investors, L.P. (the "Stockholder") pursuant to which the Stockholder, among
other things, has agreed to vote its Target Shares in favor of the Merger and
has granted the Purchaser Subsidiary an option to purchase certain Target Shares
beneficially owned by the Stockholder, the Purchaser has agreed to grant certain
registration rights to the Stockholder, and the Purchaser's Chief Executive
Officer has granted certain other rights to the Stockholder, all upon the terms
and subject to the conditions set forth in the Stockholder Agreement;
WHEREAS, to induce the Purchaser and the Purchaser Subsidiary on the one
hand, and the Target on the other hand, to enter into this Agreement, certain
other stockholders of the Target and the Purchaser, respectively, have entered
into voting agreements, pursuant to which such stockholders, among other things,
have agreed to vote their shares in favor of the Merger, all upon the terms and
subject to the conditions set forth in said agreements;
WHEREAS, this Agreement contemplates a tax-free merger of the Purchaser
Subsidiary with and into the Target in a reorganization pursuant to Code
(S)368(a)(2)(E), and the Target Stockholders will receive capital stock in the
Purchaser in exchange for their capital stock in the Target;
NOW, THEREFORE, in consideration of the premises and the mutual promises
set forth herein, and in consideration of the representations, warranties and
covenants set forth herein, the Parties agree as follows:
1. Definitions.
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"Acquisition Proposal" means any proposal or offer (including, without
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limitation, any proposal or offer to Target Stockholders) with respect to a
merger, acquisition, consolidation, recapitalization, reorganization, tender
offer or exchange offer or similar transaction involving, or any purchase of all
or any significant portion of the assets of, or any equity interest representing
25% or more of the outstanding Target Shares in, the Target or any of its
material Subsidiaries.
"Additional Consideration" has the meaning set forth in (S)7(a)(vi)
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below.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
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promulgated under the Securities Exchange Act; provided, however, in the case of
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the Target or the Stockholder, (i) no portfolio company of the Stockholder or of
any related venture fund, (ii) no representative or employee of the Stockholder
or of any related venture fund serving as a member of the board of directors on
any such portfolio company, and (iii) no registered broker-dealer or any other
Affiliated entity of Stockholder that is a registered investment adviser, as
well as certain registered investment companies that may be deemed to be
Affiliates of the Stockholder, shall be considered an Affiliate of the Target or
the Stockholder for purposes of this Agreement.
"Agreement" has the meaning set forth in the preambles.
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"Articles of Merger" has the meaning set forth in (S)2(c) below.
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"Benefit Plan" and "Benefit Plans" has the meaning set forth in
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(S)3(m)(i).
"Blue Sky Filings" has the meaning set forth in (S)5(c)(i).
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"Closing" has the meaning set forth in (S)2(b) below.
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"Closing Date" has the meaning set forth in (S)2(b) below.
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"Code" has the meaning set forth in (S)3(m)(ii).
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"Common Stock" has the meaning set forth in the preambles.
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"Confidentiality Agreement" means the letter agreement dated March 21,
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1997 between the Purchaser and The ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Company, Inc., as
representative of the Target,
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providing that, among other things, each Party would maintain confidential
certain information of the other Party.
"Confidential Information" means Confidential Evaluation Material, as
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defined in the Confidentiality Agreement.
"Delaware General Corporation Law" means Title 8, Chapter 1 of the
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Delaware Code, as amended.
"Effective Time" has the meaning set forth in (S)2(d)(i) below.
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"Employees" has the meaning set forth in (S)3(m)(i.
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"ERISA" has the meaning set forth in (S)3(m)(i.
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"ERISA Affiliate" has the meaning set forth in (S)3(m)(iii).
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"Exchange Agent" has the meaning set forth in (S)2(e)(i).
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"Exchange Fund" has the meaning set forth in (S)2(e)(i).
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"Exchange Ratio" has the meaning set forth in (S)2(d)(v).
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"Florida Business Corporation Law" means the Florida Business
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Corporation Act, as amended.
"GAAP" means United States generally accepted accounting principles as
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in effect from time to time.
"▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
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Improvements Act of 1976, as amended.
"Indemnified Party" has the meaning set forth in (S)5(h)(ii) below.
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"Joint Proxy Statement/Prospectus" has the meaning set forth in
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(S)5(c)(i) below.
"Merger" has the meaning set forth in the preambles.
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"Nasdaq" has the meaning set forth in (S)5(c)(ii) below.
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"Order" has the meaning set forth in (S)6(a)(v) below.
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"Outstanding Debt" has the meaning set forth in (S)5(d)(iv) below.
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"Party" has the meaning set forth in the preambles.
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"Pension Plan" has the meaning set forth in (S)3(m)(ii).
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"Person" means an individual, a partnership, a corporation, a limited
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liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization or a governmental entity (or any
department, agency or political subdivision thereof).
"Per Share Merger Consideration" has the meaning set forth in
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(S)2(d)(v) below.
"Potential Buyer" has the meaning set forth in (S) 5(g) below.
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"Purchase Warrant" means that certain warrant to purchase Target
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Shares issued to the Stockholder and dated October 2, 1995.
"Purchaser" has the meaning set forth in the preambles.
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"Purchaser 10-K" has the meaning set forth in (S)4(f) below.
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"Purchaser 10-Q" has the meaning set forth in (S)4(f) below.
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"Purchaser Board" means the board of directors of the Purchaser.
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"Purchaser Companies" means the Purchaser, the Purchaser Subsidiary
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and any of their respective Affiliates.
"Purchaser Disclosure Letter" has the meaning set forth in (S)4(a)
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below.
"Purchaser Fairness Opinion" means an opinion of BT Alex. ▇▇▇▇▇
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Incorporated, addressed to the Purchaser Board, as to the fairness of the Merger
to the Purchaser from a financial point of view.
"Purchaser Reports" has the meaning set forth in (S)4(e) below.
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"Purchaser Shares" has the meaning set forth in the preambles.
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"Purchaser Special Meeting" has the meaning set forth in (S)5(c)(ii)
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below.
"Purchaser Stockholder" means any Person who or which holds any
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Purchaser Shares.
"Purchaser Subsidiary" has the meaning set forth in the preambles.
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"Purchaser-owned Share" means any Target Share that is beneficially
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owned by any Purchaser Company.
"Purchaser's Most Recent Audited Fiscal Year End" has the meaning set
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forth in (S)4(f) below.
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"Registration Statement" has the meaning set forth in (S)5(c)(i)
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below.
"Requisite Stockholder Approval" means, with respect to the Target,
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the affirmative vote of the holders of a majority of the outstanding Target
Shares in favor of this Agreement and the Merger in accordance with the Florida
Business Corporation Law, or, with respect to the Purchaser, the affirmative
vote of the holders of a majority of the outstanding Purchaser Shares in favor
of this Agreement and the Merger in accordance with the Delaware General
Corporation Law.
"SEC" means the Securities and Exchange Commission.
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"Securities Act" means the Securities Act of 1933, as amended, and the
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rules and regulations promulgated thereunder.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
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as amended, and the rules and regulations promulgated thereunder.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
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charge or other security interest, other than (a) mechanic's, materialman's and
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similar liens; (b) liens for taxes not yet due and payable or for taxes that the
taxpayer is contesting in good faith through appropriate proceedings; (c)
purchase money liens and liens securing rental payments under capital lease
arrangements; and (d) other liens arising in the ordinary course of business and
not incurred in connection with the borrowing of money.
"Stock Rights" means each option, warrant, purchase right,
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subscription right, conversion right, exchange right or other contract,
commitment or security providing for the issuance or sale of any capital stock,
or otherwise causing to become outstanding any capital stock.
"Stockholder" has the meaning set forth in the preambles.
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"Stockholder Agreement" has the meaning set forth in the preambles.
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"Subsidiary" means any corporation with respect to which a specified
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Person (or a Subsidiary thereof) owns a majority of the voting stock or
otherwise has the power to vote or direct the voting of sufficient securities to
elect a majority of the directors.
"Surviving Corporation" has the meaning set forth in (S)2(a) below.
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"Target" has the meaning set forth in the preambles.
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"Target 10-K" has the meaning set forth in (S)3(f) below.
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"Target 10-Q" has the meaning set forth in (S)3(f) below.
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"Target Board" means the board of directors of the Target.
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"Target Disclosure Letter" has the meaning set forth in (S)3(a) below.
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"Target Fairness Opinion" means an opinion of The ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
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Company, Inc., addressed to the Target Board, as to the fairness of the Merger
to the Target Stockholders from a financial point of view.
"Target Reports" has the meaning set forth in (S)3(e) below.
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"Target Shares" has the meaning set forth in the preambles.
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"Target Special Meeting" has the meaning set forth in (S)5(c)(ii)
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below.
"Target Stockholder" means any Person who or which holds any Target
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Shares.
"Target's Most Recent Audited Fiscal Year End" has the meaning set
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forth in (S)3(f) below.
"Tax Return" means any report, return, declaration or other
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information required to be supplied to a taxing authority in connection with
Taxes.
"Taxes" means all taxes or other like assessments including, without
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limitation, income, withholding, gross receipts, excise, real or personal
property, asset, sales, use, license, payroll, transaction, capital, net worth
and franchise taxes imposed by or payable to any federal, state, county, local
or foreign government, taxing authority, subdivision or agency thereof,
including interest, penalties, additions to tax or additional amounts thereto.
"Valuation Period" has the meaning set forth in (S)2(d)(v) below.
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"Weighted Average Sales Price of a Purchaser Share" has the meaning
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set forth in (S)2(d)(v) below.
2. The Transaction.
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(a) The Merger. On and subject to the terms and conditions of
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this Agreement, the Purchaser Subsidiary will merge with and into the Target at
the Effective Time. The Target shall be the corporation surviving the Merger
(the "Surviving Corporation").
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(b) The Closing. The closing of the transactions contemplated by
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this Agreement (the "Closing") shall take place at the offices of ▇▇▇▇▇▇ ▇▇▇▇ &
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▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, commencing at 9:00 a.m. local
time on the third business day following the satisfaction or waiver of all
conditions to the obligations of the Parties to consummate the transactions
contemplated hereby (other than conditions with respect to actions the
respective Parties will take at the Closing itself) or such other date as the
Parties may mutually determine (the "Closing Date").
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(c) Actions at the Closing. At the Closing, (i) the Target will
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deliver to the Purchaser and the Purchaser Subsidiary the various certificates,
instruments and documents referred to in (S)6(a) below; (ii) the Purchaser and
the Purchaser Subsidiary will deliver to the Target the various certificates,
instruments and documents referred to in (S)6(b) below; (iii) the Target and the
Purchaser Subsidiary will file with the Department of State of the State of
Florida Articles of Merger in the form attached hereto as Exhibit A (the
"Articles of Merger"); and (iv) the Purchaser will deliver the Exchange Fund to
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the Exchange Agent in the manner provided below in this (S)2.
(d) Effect of Merger.
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(i) General. The Merger shall become effective at the
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time (the "Effective Time") the Target and the Purchaser Subsidiary file the
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Articles of Merger with the Department of State of the State of Florida. The
Merger shall have the effect set forth in the Florida Business Corporation Law.
The Surviving Corporation may, at any time after the Effective Time, take any
action (including executing and delivering any document) in the name and on
behalf of either the Target or the Purchaser Subsidiary in order to carry out
and effectuate the transactions contemplated by this Agreement.
(ii) Articles of Incorporation. The Articles of
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Incorporation of the Surviving Corporation shall be the Articles of
Incorporation of the Purchaser Subsidiary, except that its name shall be
changed to TresCom International, Inc..
(iii) Bylaws. The Bylaws of the Surviving Corporation
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shall be amended and restated at and as of the Effective Time to read as did the
Bylaws of the Purchaser Subsidiary immediately prior to the Effective Time
(except that the name of the Surviving Corporation will be TresCom
International, Inc.).
(iv) Directors and Officers. The directors and officers
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of the Purchaser Subsidiary shall become the directors and officers of the
Surviving Corporation at and as of the Effective Time (retaining their
respective positions and terms of office).
(v) Conversion of Target Shares. At and as of the
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Effective Time, (A) each issued and outstanding Target Share (other than any
Purchaser-owned Shares) shall be converted into the right to receive the Per
Share Merger Consideration, and all such Target Shares shall no longer be
outstanding, shall be canceled and retired, shall cease to exist, and each
holder of a certificate representing any such Target Shares shall thereafter
cease to have any rights with respect to such Target Shares, except the right to
receive the Per Share Merger Consideration for such Target Shares upon the
surrender of such certificate in accordance with (S)2(e) below, and (B) each
Purchaser-owned Share and each Target Share held in the treasury of the Target
or by any Subsidiary of the Target shall be canceled without payment therefor;
provided, however, that the Per Share Merger Consideration shall be subject to
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proportionate adjustment in the event of any stock split, stock dividend or
reverse stock split. No Target Share shall be deemed to be outstanding or to
have any rights other than those set forth above in this (S)2(d)(v) after the
Effective Time. As used herein, the term "Per Share Merger Consideration" shall
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mean that number of Purchaser Shares determined
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by applying to each Target Share an exchange ratio (the "Exchange Ratio")
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determined as follows: In the event that the Weighted Average Sales Price of a
Purchaser Share as of the Closing Date is greater than or equal to $15.8905, the
Exchange Ratio shall be the quotient of $10.00 divided by the Weighted Average
Sales Price of a Purchaser Share as of the Closing Date; and (B) in the event
that the Weighted Average Sales Price of a Purchaser Share as of the Closing
Date is less than $15.8905, the Exchange Ratio shall be 0.6293, provided,
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however, that in the event that the Weighted Average Sales Price of a Purchaser
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Share as of the Closing Date is less than $14.0210, the Target shall have
certain termination rights as set forth in (S)7(a)(vi), subject to the rights of
the Purchaser to override such termination as set forth in such (S)7(a)(vi).
Notwithstanding anything in this (S)2(d)(v), no fractional Purchaser Shares
shall be issued to holders of Target Shares. In lieu thereof, each holder of
shares of Target Shares who would otherwise have been entitled to receive a
fraction of a Purchaser Share (after taking into account all certificates
delivered by such holder at any one time) shall receive an amount in cash equal
to such fraction of a Purchaser Share, multiplied by the Weighted Average Sales
Price of a Purchaser Share as of the Closing Date. "Weighted Average Sales Price
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of a Purchaser Share" means the volume-weighted average sales price per
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Purchaser Share as reported by Bloomberg Information Systems, Inc. during a
period consisting of the third Nasdaq trading day prior to the date as of which
the Weighted Average Sales Price of a Purchaser Share is being determined and
the nineteen (19) consecutive trading days prior to such day (the "Valuation
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Period").
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(vi) Conversion of Stock Rights. At the Effective Time,
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each Stock Right granted by the Target to purchase Target Shares which is
outstanding and unexercised immediately prior thereto (whether or not vested or
exercisable), other than the Purchase Warrant, shall be converted automatically
into an option to purchase Purchaser Shares in an amount and at an exercise
price determined as follows:
(x) The number of Purchaser Shares to be subject to the new option shall be
equal to the product of the number of Target Shares subject to the original
Stock Right multiplied by the Exchange Ratio, provided that any fractional
Purchaser Shares resulting from such multiplication shall be rounded up to
the next whole share; and
(y) The exercise price per Purchaser Share under the new option shall be
equal to the quotient of the exercise price per Target Share under the
original Stock Right divided by the Exchange Ratio, provided that the
exercise price resulting from such division shall be rounded up to the next
whole cent.
The adjustment provided herein with respect to any original Stock Rights which
are "incentive stock options" (as defined in Section 422 of the Code) shall be
and are intended to be effected in a manner which is consistent with Section
424(a) of the Code. The option plan of the Target under which the original
Stock Rights were issued shall be assumed by the Purchaser, and the duration and
other terms of the new option shall be the same as the original Stock Right,
except that all references to the Target shall be deemed to be references to the
Purchaser. At the Effective Time, the Purchaser shall deliver to holders of
original Stock Rights appropriate option agreements representing the right to
acquire Purchaser Shares on the terms and conditions set forth in this Section
2(d)(vi).
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The Purchaser shall take all corporate action necessary to reserve for
issuance a sufficient number of Purchaser Shares for delivery upon exercise of
the new options in accordance with this Section 2(d)(vi). The Purchaser shall
file a registration statement on Form S-8 (or any successor form) or another
appropriate form, effective promptly after the Effective Time, with respect to
Purchaser Shares subject to the new options and shall use all reasonable efforts
to maintain the effectiveness of such registration statement or registration
statements (and maintain the current status of the prospectus or prospectuses
contained therein) for so long as such options remain outstanding. With respect
to those individuals who subsequent to the Merger will be subject to the
reporting requirements under Section 16(a) of the Securities Exchange Act, the
Purchaser shall administer the option plans assumed pursuant to this Section
2(d)(vi) in a manner that complies with rule 16b-3 promulgated under the
Securities Exchange Act to the extent the Target option plan complied with such
rule prior to the Merger.
(vii) Conversion of Capital Stock of the Purchaser
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Subsidiary. At and as of the Effective Time, each share of common stock, $.01
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par value per share, of the Purchaser Subsidiary shall be converted into one
share of common stock, $.01 par value per share, of the Surviving Corporation.
(e) Procedure for Exchange.
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(i) Immediately after the Effective Time, (A) the
Purchaser will furnish to StockTrans, Inc., its transfer agent, or such bank or
trust company reasonably acceptable to Target, to act as exchange agent (the
"Exchange Agent") a corpus (the "Exchange Fund") consisting of Purchaser Shares
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and cash sufficient to permit the Exchange Agent to make full payment of the Per
Share Merger Consideration to the holders of all of the issued and outstanding
Target Shares (other than any Purchaser-owned Shares), and (B) the Purchaser
will cause the Exchange Agent to mail a letter of transmittal (with instructions
for its use) in the form to be mutually agreed upon by the Target and the
Purchaser to each holder of issued and outstanding Target Shares (other than any
Purchaser-owned Shares) for the holder to use in surrendering the certificates
which represented his or its Target Shares against payment of the Per Share
Merger Consideration. Upon surrender to the Exchange Agent of such certificates,
together with such letter of transmittal, duly executed and completed in
accordance with the instructions thereto, the Surviving Corporation shall
promptly cause to be issued a certificate representing that number of whole
Purchaser Shares and a check representing the amount of cash in lieu of any
fractional shares and unpaid dividends and distributions, if any, to which such
Persons are entitled, after giving effect to any required tax withholdings. No
interest will be paid or accrued on the cash in lieu of fractional shares and
unpaid dividends and distributions, if any, payable to recipients of Purchaser
Shares. If payment is to be made to a Person other than the registered holder
of the certificate surrendered, it shall be a condition of such payment that the
certificate so surrendered shall be properly endorsed or otherwise in proper
form for transfer and that the Person requesting such payment shall pay any
transfer or other taxes required by reason of the payment to a Person other than
the registered holder of the certificate surrendered or establish to the
satisfaction of the Surviving Corporation or the Exchange Agent that such tax
has been paid or is not applicable. In the event any certificate representing
Shares shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the Person claiming such certificate to be lost,
stolen or destroyed, the Exchange Agent will
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issue in exchange for such lost, stolen or destroyed certificate the Per Share
Merger Consideration deliverable in respect thereof; provided, however, the
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Person to whom the Per Share Merger Consideration is paid shall, as a condition
precedent to the payment thereof, give the Surviving Corporation a bond in such
sum as it may direct or otherwise indemnify the Surviving Corporation in a
manner satisfactory to it against any claim that may be made against the
Surviving Corporation with respect to the certificate alleged to have been lost,
stolen or destroyed. No dividends or other distributions declared after the
Effective Time with respect to Purchaser Shares and payable to the holders of
record thereof shall be paid to the holder of any unsurrendered certificate
until the holder thereof shall surrender such certificate in accordance with
this (S)2(e). After the surrender of a certificate in accordance with this
(S)2(e), the record holder thereof shall be entitled to receive any such
dividends or other distributions, without any interest thereon, which
theretofore had become payable with respect to the Purchaser Shares represented
by such certificate. No holder of an unsurrendered certificate shall be
entitled, until the surrender of such certificate, to vote the Purchaser Shares
into which his Target Shares shall have been converted.
(ii) The Target will cause its transfer agent to furnish
promptly to the Purchaser Subsidiary a list, as of a recent date, of the record
holders of Target Shares and their addresses, as well as mailing labels
containing the names and addresses of all record holders of Target Shares and
lists of security positions of Target Shares held in stock depositories. The
Target will furnish the Purchaser Subsidiary with such additional information
(including, but not limited to, updated lists of holders of Target Shares and
their addresses, mailing labels and lists of security positions) and such other
assistance as the Purchaser or the Purchaser Subsidiary or their agents may
reasonably request.
(iii) The Purchaser may cause the Exchange Agent to invest
the cash included in the Exchange Fund in one or more investments selected by
the Purchaser; provided, however, that the terms and conditions of the
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investments shall be such as to permit the Exchange Agent to make prompt payment
of the Per Share Merger Consideration as necessary. The Purchaser may cause the
Exchange Agent to pay over to the Surviving Corporation any net earnings with
respect to the investments, and the Purchaser will replace promptly any portion
of the Exchange Fund which the Exchange Agent loses through investments.
(iv) The Purchaser may cause the Exchange Agent to pay
over to the Surviving Corporation any portion of the Exchange Fund (including
any earnings thereon) remaining 180 days after the Effective Time, and
thereafter all former stockholders of the Target shall be entitled to look to
the Surviving Corporation (subject to abandoned property, escheat and other
similar laws) as general creditors thereof with respect to the cash payable upon
surrender of their certificates.
(v) The Purchaser shall pay, or shall cause the Surviving
Corporation to pay, all charges and expenses of the Exchange Agent.
(f) Closing of Transfer Records. After the Effective Time, no
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transfer of Target Shares outstanding prior to the Effective Time shall be made
on the stock transfer books of the Surviving Corporation. If, after the
Effective Time, certificates representing such shares are
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presented for transfer to the Exchange Agent, they shall be canceled and
exchanged for certificates representing Purchaser Shares and cash in lieu of
fractional shares, if any, as provided in (S)2(e).
3. Representations and Warranties of the Target. The Target
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represents and warrants to the Purchaser and the Purchaser Subsidiary that the
statements contained in this (S)3 are true and correct as of the date of this
Agreement.
(a) Organization, Qualification and Corporate Power. Each of
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the Target and its Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation. Each of the Target and its Subsidiaries is duly authorized to
conduct business and is in good standing under the laws of each jurisdiction
where such qualification is required, except where the lack of such
qualification would not have a material adverse effect on the business,
financial condition or results of operations of the Target and its Subsidiaries
taken as a whole or on the ability of the Parties to consummate the transactions
contemplated by this Agreement. Each of the Target and its Subsidiaries has full
corporate power and corporate authority, and all material foreign, federal and
state governmental permits, licenses and consents, to carry on the businesses in
which it is engaged and to own and use the properties owned and used by it. The
Target does not own any equity interest in any corporation or other entity other
than the Subsidiaries listed in (S)3(a) of the Target Disclosure Letter
accompanying this Agreement (the "Target Disclosure Letter").
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(b) Capitalization. The entire authorized capital stock of the
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Target consists of 1,000,000 shares of preferred stock, $.01 par value per
share, none of which are issued and outstanding, and 50,000,000 Target Shares,
of which 12,130,571 Target Shares were issued and outstanding as of January 26,
1998 and no Target Shares were held in treasury. All of the issued and
outstanding Target Shares have been duly authorized and are validly issued,
fully paid and nonassessable, and none have been issued in violation of any
preemptive or similar right. Except as set forth in (S)3(b) of the Target
Disclosure Letter, neither the Target nor any of its Subsidiaries has any
outstanding or authorized Stock Rights. There are no outstanding or authorized
stock appreciation, phantom stock, profit participation or similar rights with
respect to the Target or any of its Subsidiaries. The Target owns, directly or
indirectly, 100% of the outstanding shares of capital stock of each of its
Subsidiaries and each such share of capital stock has been duly authorized and
is validly issued, fully paid and nonassessable, and none of such shares of
capital stock has been issued in violation of any preemptive or similar right.
(c) Authorization of Transaction. The Target has full power and
----------------------------
authority (including full corporate power and corporate authority) and has taken
all required action necessary to properly execute and deliver this Agreement and
to perform its obligations hereunder, and this Agreement constitutes the valid
and legally binding obligation of the Target, enforceable in accordance with its
terms and conditions, except as limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors' rights generally and (ii) general principles
of equity, regardless of whether asserted in a proceeding in equity or at law;
provided, however, that the Target cannot consummate the Merger unless and until
-----------------
it receives the Requisite ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
-▇▇-
(▇) ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇. Neither the execution and the delivery of
----------------
this Agreement, nor the consummation of the transactions contemplated hereby,
will (i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree or other restriction of any government, governmental
agency or court to which the Target or any of its Subsidiaries is subject or any
provision of the charter or bylaws of the Target or any of its Subsidiaries or
(ii) conflict with, result in a breach of, constitute a default under, result in
the acceleration of, create in any party the right to accelerate, terminate,
modify or cancel or require any notice under any agreement, contract, lease,
license, instrument or other arrangement to which the Target or any of its
Subsidiaries is a party or by which it is bound or to which any of its assets is
subject, except where the violation, conflict, breach, default, acceleration,
termination, modification, cancellation, or failure to give notice would not
have a material adverse effect on the business, financial condition or results
of operations of the Target and its Subsidiaries taken as a whole or on the
ability of the Parties to consummate the transactions contemplated by this
Agreement. Other than in connection with the provisions of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Act, the Florida Business Corporation Law, the Securities Exchange Act, the
Securities Act, state securities laws, and with regard to any required
governmental or regulatory approvals or consents relating to the
telecommunications industry, the laws, rules or regulations of the United
States, the several states or the District of Columbia, the Commonwealth of
Puerto Rico, the United States Virgin Islands and of any other jurisdiction in
which such approvals or consents may be required, and any other statutes, rules
or regulations set forth in (S) 3(d) of the Target Disclosure Letter, neither
the Target nor any of its Subsidiaries needs to give any notice to, make any
filing with or obtain any authorization, consent or approval of any government
or governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement, except where the failure to give notice, to file
or to obtain any authorization, consent or approval would not have a material
adverse effect on the business, financial condition or results of operations of
the Target and its Subsidiaries taken as a whole or on the ability of the
Parties to consummate the transactions contemplated by this Agreement.
(e) Filings with the SEC. Except as set forth in (S)3(e) of the
--------------------
Target Disclosure Letter, the Target has made all filings with the SEC that it
has been required to make under the Securities Act and the Securities Exchange
Act (collectively, the "Target Reports"). Each of the Target Reports has
--------------
complied with the Securities Act and the Securities Exchange Act in all material
respects. None of the Target Reports, as of their respective dates, contained
any untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
(f) Financial Statements. The Target has filed an Annual Report
--------------------
on Form 10-K (the "Target 10-K") for the fiscal year ended December 31, 1996
-----------
(the "Target's Most Recent Audited Fiscal Year End") and a Quarterly Report on
--------------------------------------------
Form 10-Q (the "Target 10-Q") for the fiscal quarter ended September 30, 1997.
-----------
The financial statements included in the Target 10-K and the Target 10-Q
(including the related notes and schedules) have been prepared from the books
and records of the Target and its Subsidiaries in accordance with GAAP applied
on a consistent basis throughout the periods covered thereby, and present fairly
in all material respects the financial condition of the Target and its
Subsidiaries as of the indicated dates and the results of operations and cash
flows of the Target and its Subsidiaries for the indicated periods, except that
unaudited interim results are subject to year-end adjustments.
-12-
(g) Events Subsequent to Target's Most Recent Fiscal Year.
-----------------------------------------------------
Since the Target's Most Recent Audited Fiscal Year End, except as disclosed in
the Target Reports and except as set forth in (S) 3(g) of the Target Disclosure
Letter, (i) the Target and its Subsidiaries have conducted their respective
businesses only in, and have not engaged in any transaction other than according
to, the ordinary and usual course of such businesses, and (ii) there has not
been (A) any change in the financial condition, business or results of
operations of the Target or any of its Subsidiaries, or any development or
combination of developments relating to the Target or any of its Subsidiaries of
which management of the Target has knowledge, and which could reasonably be
expected to have a material adverse effect upon the business, financial
condition or results of operations of the Target and its Subsidiaries taken as a
whole; (B) any declaration, setting aside or payment of any dividend or other
distribution with respect to the capital stock of the Target, or any redemption,
repurchase or other reacquisition of any of the capital stock of the Target; (C)
any change by the Target in accounting principles, practices or methods; (D) any
increase in the compensation of any officer or grant of any general salary or
benefits increase to their employees other than in the ordinary course of
business consistent with past practices; (E) any issuance or sale of any capital
stock or other securities (including any Stock Rights) by the Target or any of
its Subsidiaries of any kind, other than upon exercise of Stock Rights issued by
or binding upon the Target; (F) any modification, amendment or change to the
terms or conditions of any Stock Right; (G) any split, combination,
reclassification, redemption, repurchase or other reacquisition of any capital
stock or other securities of the Target or any of its Subsidiaries; or (H) the
taking by the Target of, or the entry into any agreement by the Target to take,
any action prohibited under clauses (i), and (iv) through (vi), of (S)5(d)
below.
(h) Compliance. Except as set forth in (S)3(h) of the Target
----------
Disclosure Letter, the Target and its Subsidiaries are in compliance with all
applicable foreign, federal, state and local laws, rules and regulations except
where the failure to be in compliance could reasonably be expected to have a
material adverse effect on the business, financial condition or results of
operations of the Target and its Subsidiaries taken as a whole.
(i) Brokers' and Other Fees. Except as set forth in (S)3(i) of
-----------------------
the Target Disclosure Letter, none of the Target and its Subsidiaries has any
liability or obligation to pay any fees or commissions to any broker, finder or
agent with respect to the transactions contemplated by this Agreement. Attached
to (S)3(i) of the Target Disclosure Letter are true and complete copies of the
Target's engagement or similar letters with (i) the brokers, finders and agents
referred to in such section of the Target Disclosure Letter, and (ii) ▇▇▇▇▇▇
▇▇▇▇ & ▇▇▇▇▇▇ LLP as to its legal services to be performed in connection with
transactions involving a possible change in control of the Company, including
this Agreement and the transactions contemplated hereby.
(j) Litigation and Liabilities. Except as disclosed in the
--------------------------
Target Reports, or the Target Disclosure Letter, there are (i) no actions, suits
or proceedings pending or, to the knowledge of the management of the Target,
threatened against the Target or any of the Subsidiaries, or any facts or
circumstances known to the management of the Target which may give rise to an
action, suit or proceeding against the Target or any of its Subsidiaries, which
(x) could reasonably be expected to have a material adverse effect upon the
business, financial condition or results of
-13-
operations of the Target and its Subsidiaries taken as a whole or (y) could
reasonably be expected to impair or delay the Target's ability to consummate the
transactions contemplated by this Agreement, or (ii) no obligations or
liabilities of the Target or any of its Subsidiaries, whether accrued,
contingent or otherwise, known to the management of the Target which could
reasonably be expected to have a material adverse effect upon the business,
financial condition or results of operations of the Target and its Subsidiaries
taken as a whole.
(k) Taxes. Except as set forth in (S)3(k) of the Target
-----
Disclosure Letter, the Target has duly filed all federal, state, local and
foreign tax returns required to be filed by it, and has duly paid, caused to be
paid or made adequate provision for the payment of all Taxes required to be paid
in respect of the periods covered by such returns, except where the failure to
pay such Taxes would not have a material adverse effect upon the business,
financial condition or results of operations of the Target and its Subsidiaries
taken as a whole. Except as set forth in (S)3(k) of the Target Disclosure
Letter, no claims for Taxes have been asserted against the Target and no
material deficiency for any Taxes has been proposed, asserted or assessed which
has not been resolved or paid in full. To the knowledge of the Target's
management, no Tax Return or taxable period of the Target is under examination
by any taxing authority, and Target has not received written notice of any
pending audit by any taxing authority. There are no outstanding agreements or
waivers extending the statutory period of limitation applicable to any Tax
Return for any period of the Target. To the knowledge of the management of the
Target, the Target has no obligation or liability to pay Taxes of or
attributable to any other person or entity. No issue or claim has been asserted
for Taxes by any taxing authority for any prior period. Except as set forth in
(S)3(k) of the Target Disclosure Letter, there are no tax liens other than liens
for Taxes not yet due relating to the Target. The Target is not a party to any
agreement or contract which would result in payment of any "excess parachute
payment" within the meaning of Section 280G of the Code. The Target has not
filed any consent pursuant to Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection (f) asset
owned by the Target or any of the Subsidiaries. The Target has not been and is
not a United States real property holding company (as defined in Section
897(c)(2) of the Code) during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code).
(l) Fairness Opinion. The ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Company, LLC has
----------------
delivered to the Target Board, and not withdrawn, the Target Fairness Opinion,
and a true and complete copy thereof has been furnished to the Purchaser.
(m) Employee Benefits.
-----------------
(i) All pension, profit-sharing, deferred compensation,
savings, stock bonus and stock option plans, and all employee benefit plans,
whether or not covered by the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") which are sponsored by the Target or any ERISA Affiliate
-----
(as defined below) of the Target or to which the Target or any ERISA Affiliate
of the Target makes contributions, and which cover employees of the Target (the
"Employees") or former employees of the Target, all employment or severance
---------
contracts with officers of the Target, and any applicable "change of control" or
similar provisions in any plan, contract or arrangement that cover Employees
(collectively, "Benefit Plans" and individually a "Benefit Plan") are accurately
------------- ------------
and completely listed in (S)3(m) of the Target Disclosure Letter. No
-14-
Benefit Plan is a multi-employer plan, money purchase plan or defined benefit
plan and no Benefit Plan is covered by Title IV of ERISA. True and complete
copies of all Benefit Plans (other than medical and other similar welfare plans
made generally available to all Employees) have been made available to the
Purchaser.
(ii) All Benefit Plans to the extent subject to ERISA, are
in compliance in all material respects with ERISA and the rules and regulations
promulgated thereunder. Each Benefit Plan which is an "employee pension benefit
plan" within the meaning of Section 3(2) of ERISA ("Pension Plan") and which is
------------
intended to be qualified under Section 401(a) of the Internal Revenue Code of
1986, as amended (the "Code"), has received a favorable determination letter
----
from the Internal Revenue Service, which determination letter is currently in
effect, and there are no proceedings pending or, to the best knowledge of the
management of the Target, threatened, or any facts or circumstances known to the
management of the Target, which are reasonably likely to result in revocation of
any such favorable determination letter. There is no pending or, to the best
knowledge of the management of the Target, threatened litigation relating to the
Benefit Plans. Neither the Target nor any of the Subsidiaries has engaged in a
transaction with respect to any Benefit Plan that, assuming the taxable period
of such transaction expired as of the date hereof, is reasonably likely to
subject the Target or any of the Subsidiaries to a tax or penalty imposed by
either Section 4975 of the Code or Section 502(i) of ERISA.
(iii) No liability under Title IV of ERISA has been or is
reasonably likely to be incurred by the Target or any of the Subsidiaries with
respect to any ongoing, frozen or terminated Benefit Plan that is a "single-
employer plan", within the meaning of Section 4001(a)(15) of ERISA, currently or
formerly maintained by any of them, or the single-employer plan of any entity
which is considered a predecessor of the Target or one employer with the Target
under Section 4001 of ERISA (an "ERISA Affiliate"); provided, however, for
--------------- -------- -------
purposes hereof, the Stockholder, its Affiliates and its partners, and their
respective Affiliates, shall not be considered an ERISA Affiliate. All
contributions required to be made under the terms of any Benefit Plan have been
timely made or reserves therefor on the balance sheet of the Target have been
established, which reserves are adequate. Except as required by Part 6 of Title
I of ERISA, the Target does not have any unfunded obligations for retiree health
and life benefits under any Benefit Plan.
(n) Florida Business Corporation Law. For purposes of Section
--------------------------------
607.0902 of the Florida Business Corporation Law, the execution and delivery of
the Stockholder Agreement and the purchase of Target Shares thereunder, and the
purchase of Target Shares or other securities issued by the Target by Purchaser
Companies generally, has received the prior approval of the Board of Directors
of the Target and, accordingly, will not constitute a "control share
acquisition" as defined in Section 607.0902(2) of the Florida Business
Corporation Law.
4. Representations and Warranties of the Purchaser and the Purchaser
-----------------------------------------------------------------
Subsidiary. Each of the Purchaser and the Purchaser Subsidiary, jointly and
----------
severally, represents and warrants to the Target that the statements contained
in this (S)4 are true and correct as of the date of this Agreement.
(a) Organization, Qualification and Corporate Power. Each of
-----------------------------------------------
the Purchaser and its Subsidiaries is a corporation duly organized, validly
existing and in good standing
-15-
under the laws of the jurisdiction of its incorporation. Each of the Purchaser
and its Subsidiaries is duly authorized to conduct business and is in good
standing under the laws of each jurisdiction where such qualification is
required, except where the lack of such qualification would not have a material
adverse effect on the business, financial condition or results of operations of
the Purchaser and its Subsidiaries taken as a whole or on the ability of the
Parties to consummate the transactions contemplated by this Agreement. Each of
the Purchaser and its Subsidiaries has full corporate power and corporate
authority, and all material foreign, federal and state governmental permits,
licenses and consents, to carry on the businesses in which it is engaged and to
own and use the properties owned and used by it. The Purchaser does not own any
equity interest in any corporation or other entity other than the Subsidiaries
listed in (S)4(a) of the Purchaser's disclosure letter accompanying this
Agreement (the "Purchaser Disclosure Letter").
---------------------------
(b) Capitalization. The entire authorized capital stock of the
--------------
Purchaser consists of 2,000,000 shares of preferred stock, $.01 par value per
share, none of which are issued and outstanding, and 40,000,000 Purchaser
Shares, of which 19,676,057 Purchaser Shares were issued and outstanding as of
January 30, 1998 and no Purchaser Shares were held in treasury. All of the
issued and outstanding Purchaser Shares have been duly authorized and are
validly issued, fully paid and nonassessable, and none have been issued in
violation of any preemptive or similar right. Except as set forth in (S)4(b) of
the Purchaser Disclosure Letter, neither the Purchaser nor any of its
Subsidiaries has any outstanding or authorized Stock Rights. There are no
outstanding or authorized stock appreciation, phantom stock, profit
participation or similar rights with respect to the Purchaser or any of its
Subsidiaries. Except as set forth in (S)4(b) of the Purchaser Disclosure
Letter, the Purchaser, directly or indirectly, owns 100% of the outstanding
shares of capital stock of each of its Subsidiaries and each such share of
capital stock has been duly authorized and is validly issued, fully paid and
nonassessable, and none of such shares of capital stock has been issued in
violation of any preemptive or similar right.
(c) Authorization of Transaction. Each of the Purchaser and the
----------------------------
Purchaser Subsidiary has full power and authority (including full corporate
power and corporate authority), and has taken all required action necessary, to
properly execute and deliver this Agreement and to perform its obligations
hereunder, and this Agreement constitutes the valid and legally binding
obligation of each of the Purchaser and the Purchaser Subsidiary, enforceable in
accordance with its terms and conditions, except as limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors' rights generally and (ii)
general principles of equity, regardless of whether asserted in a proceeding in
equity or at law; provided, however, that the Purchaser cannot consummate the
-----------------
Merger unless and until it receives the Requisite Stockholder Approval.
(d) Noncontravention. Neither the execution and the delivery of
----------------
this Agreement, nor the consummation of the transactions contemplated hereby,
will (i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree or other restriction of any government, governmental
agency or court to which either the Purchaser or its Subsidiaries is subject or
any provision of the charter or bylaws of either the Purchaser or its
Subsidiaries or (ii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify or cancel or require any notice under any
agreement,
-16-
contract, lease, license, instrument or other arrangement to which either the
Purchaser or its Subsidiaries is a party or by which it is bound or to which any
of its assets is subject, except in the case of clause (ii) where the violation,
conflict, breach, default, acceleration, termination, modification, cancellation
or failure to give notice would not have a material adverse effect on the
business, financial condition or results of operations of the Purchaser and its
Subsidiaries taken as a whole or on the ability of the Parties to consummate the
transactions contemplated by this Agreement. Other than in connection with the
provisions of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, Nasdaq, the Securities Exchange Act,
the Securities Act, state securities laws, and with regard to any required
governmental or regulatory approvals or consents relating to the
telecommunications industry, the laws, rules or regulations of the United
States, the several states or the District of Columbia, the Commonwealth of
Puerto Rico, the United States Virgin Islands and of any other jurisdiction in
which such approvals or consents may be required, and any other statutes, rules
or regulations set forth in (S) 4(d) of the Purchaser Disclosure Letter, neither
the Purchaser nor its Subsidiaries needs to give any notice to, make any filing
with or obtain any authorization, consent or approval of any government or
governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement, except where the failure to give notice, to file
or to obtain any authorization, consent or approval would not have a material
adverse effect on the ability of the Parties to consummate the transactions
contemplated by this Agreement.
(e) Filings with the SEC. The Purchaser has made all filings
--------------------
with the SEC that it has been required to make under the Securities Act and the
Securities Exchange Act (collectively, the "Purchaser Reports"). Each of the
-----------------
Purchaser Reports has complied with the Securities Act and the Securities
Exchange Act in all material respects. None of the Purchaser Reports, as of
their respective dates, contained any untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
(f) Financial Statements. The Purchaser has filed an Annual
--------------------
Report on Form 10-K (the "Purchaser 10-K") for the fiscal year ended December
--------------
31, 1996 (the "Purchaser's Most Recent Audited Fiscal Year End") and a Quarterly
-----------------------------------------------
Report on Form 10-Q (the "Purchaser 10-Q") for the fiscal quarter ended
--------------
September 30, 1997. The financial statements included in the Purchaser 10-K and
the Purchaser 10-Q (including the related notes and schedules) have been
prepared from the books and records of the Purchaser and its Subsidiaries in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby, and present fairly in all material respects the financial
condition of the Purchaser and its Subsidiaries as of the indicated dates and
the results of operations and cash flows of the Purchaser and its Subsidiaries
for the indicated periods, except that unaudited interim results are subject to
year-end adjustments.
(g) Events Subsequent to Purchaser's Most Recent Audited Fiscal
-----------------------------------------------------------
Year. Since the Most Recent Fiscal Year End, there has not been any change in
----
the financial condition, business or results of operations of the Purchaser or
any of its Subsidiaries, or any development or combination of developments
relating to the Purchaser or any of its Subsidiaries of which management of the
Purchaser has knowledge, and which could reasonably be expected to have a
material adverse effect upon the business, financial condition or results of
operations of the Purchaser and its Subsidiaries taken as a whole.
-17-
(h) Brokers' Fees. Except as set forth in (S)4(h) of the
-------------
Purchaser Disclosure Letter, none of the Purchaser or its Subsidiaries has any
liability or obligation to pay any fees or commissions to any broker, finder or
agent with respect to the transactions contemplated by this Agreement.
(i) Litigation and Liabilities. Except as disclosed in the
--------------------------
Purchaser Reports or the Purchaser Disclosure Letter, there are no actions,
suits or proceedings pending or, to the knowledge of the management of the
Purchaser, threatened against the Purchaser or any of the Subsidiaries, or any
facts or circumstances known to the management of the Purchaser which may give
rise to an action, suit or proceeding against the Purchaser or any of its
Subsidiaries, which (x) could reasonably be expected to have a material adverse
effect upon the business, financial condition or results of operations of the
Purchaser and its Subsidiaries taken as a whole or (y) could reasonably be
expected to impair or delay the Purchaser's ability to consummate the
transactions contemplated by this Agreement.
(j) Fairness Opinion. BT Alex. ▇▇▇▇▇ Incorporated has delivered
----------------
to the Purchaser Board, and not withdrawn, the Purchaser Fairness Opinion, and a
true and complete copy thereof has been furnished to the Target.
(k) Taxes. The Purchaser has duly filed all federal, state,
-----
local and foreign tax returns required to be filed by it, and has duly paid,
caused to be paid or made adequate provision for the payment of all Taxes
required to be paid in respect of the periods covered by such returns, except
where the failure to pay such Taxes would not have a material adverse effect
upon the business, financial condition or results of operations of the Purchaser
and its Subsidiaries taken as a whole. Except as set forth in (S)4(k) of the
Purchaser Disclosure Letter, no claims for Taxes have been asserted against the
Purchaser and no material deficiency for any Taxes has been proposed, asserted
or assessed which has not been resolved or paid in full. To the knowledge of the
Purchaser's management, no Tax Return or taxable period of the Purchaser is
under examination by any taxing authority, and Purchaser has not received
written notice of any pending audit by any taxing authority. There are no
outstanding agreements or waivers extending the statutory period of limitation
applicable to any Tax Return for any period of the Target. To the knowledge of
the management of the Purchaser, the Purchaser has no obligation or liability to
pay Taxes of or attributable to any other person or entity. No issue or claim
has been asserted for Taxes by any taxing authority for any prior period. Except
as set forth in (S)4(k) of the Purchaser Disclosure Letter, there are no tax
liens other than liens for Taxes not yet due relating to the Purchaser. The
Purchaser is not a party to any agreement or contract which would result in
payment of any "excess parachute payment" within the meaning of Section 280G of
the Code. The Purchaser has not filed any consent pursuant to Section 341(f) of
the Code or agreed to have Section 341(f)(2) of the Code apply to any
disposition of a subsection (f) asset owned by the Purchaser or any of the
Subsidiaries. The Purchaser has not been and is not a United States real
property holding company (as defined in Section 897(c)(2) of the Code) during
the applicable period specified in Section 897(c)(1)(A)(ii) of the Code).
(l) Compliance. The Purchaser and its Subsidiaries are in
----------
compliance with all applicable foreign, federal, state and local laws, rules and
regulations except where the
-18-
failure to be in compliance could reasonably be expected to have a material
adverse effect on the business, financial condition or results of operations of
the Purchaser and its Subsidiaries taken as a whole.
(m) Ownership of the Purchaser Subsidiary; No Prior Activities.
----------------------------------------------------------
The Purchaser Subsidiary is a direct, wholly-owned Subsidiary of the Purchaser
and was formed solely for the purpose of engaging in the transactions
contemplated by this Agreement. Except for obligations or liabilities incurred
in connection with its incorporation or organization and the transactions
contemplated by this Agreement and except for this Agreement and any other
agreements or arrangements contemplated by this Agreement, the Purchaser
Subsidiary has not and will not have incurred, directly or indirectly, through
any Subsidiary or Affiliate, any obligations or liabilities or engaged in any
business activities of any type or kind whatsoever or entered into any
agreements or arrangements with any Person which could adversely effect the
ability of the Purchaser to consummate the transactions contemplated hereby.
5. Covenants. The Parties agree as follows with respect to the
---------
period from and after the execution of this Agreement through and including the
Closing Date (except for (S)5(h) and (S)5(i), which will apply from and after
the Effective Time in accordance with their respective terms).
(a) General. Each of the Parties will use all reasonable efforts
-------
to take all actions and to do all things necessary in order to consummate and
make effective the transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the closing conditions set forth in (S)6
below).
(b) Notices and Consents. The Target and the Purchaser will give
--------------------
any notices (and will cause each of their respective Subsidiaries to give any
notices) to third parties, and will use all reasonable efforts to obtain (and
will cause each of their respective Subsidiaries to use all reasonable efforts
to obtain) any third-party consents, that may be required in connection with the
matters referred to in (S)3(d) and (S)4(d) above.
(c) Regulatory Matters and Approvals. Each of the Parties,
--------------------------------
promptly after the date hereof, will (and the Target, promptly after the date
hereof, will cause each of its Subsidiaries to) give any notices to, make any
filings with and use all reasonable efforts to obtain any authorizations,
consents and approvals of governments and governmental agencies in connection
with the matters referred to in (S)3(d) and (S)4(d) above. Purchaser shall be
responsible for preparing and filing the appropriate applications and
documentation which are necessary or appropriate to request the authorizations,
consents and approvals from governmental authorities with jurisdiction over the
telecommunications industry to the Merger and the transactions contemplated
hereby and, the Target at its sole cost and expense will cooperate with the
Purchaser in that regard, providing such assistance as the Purchaser shall
reasonably request. The Purchaser will provide the Target with drafts of all
applications and other documents to be filed with any such regulatory authority
prior to such filing and shall give the Target a reasonable opportunity to
review and comment thereon. Without limiting the generality of the foregoing:
-19-
(i) Federal Securities Laws. As promptly as practicable following
-----------------------
the date hereof, the Purchaser and the Purchaser Subsidiary shall, in
cooperation with the Target, prepare and file with the SEC preliminary proxy
materials which shall constitute the Joint Proxy Statement/Prospectus (such
proxy statement/prospectus, and any amendments or supplements thereto, the
"Joint Proxy Statement/Prospectus") and a registration statement on Form S-4
--------------------------------
with respect to the issuance of Purchaser Shares in the Merger (the
"Registration Statement"), and file with state securities administrators such
----------------------
registration statements or other documents as may be required under applicable
blue sky laws to qualify or register such Purchaser Shares in such states as are
designated by the Target (the "Blue Sky Filings"). The Joint Proxy
----------------
Statement/Prospectus will be included in the Registration Statement as the
Purchaser's prospectus. The Registration Statement and the Joint Proxy
Statement/ Prospectus shall comply as to form in all material respects with the
applicable provisions of the Securities Act and the Exchange Act and the rules
and regulations thereunder. Each of the Purchaser and the Purchaser Subsidiary
shall use all reasonable efforts to have the Registration Statement declared
effective by the SEC as promptly as practicable after filing with the SEC and to
keep the Registration Statement effective as long as is necessary to consummate
the Merger. The Purchaser and the Purchaser Subsidiary agree that none of the
information supplied or to be supplied by the Purchaser or the Purchaser
Subsidiary for inclusion or incorporation by reference in the Joint Proxy
Statement/Prospectus and each amendment or supplement thereto, at the time of
mailing thereof and at the time of the Target Special Meeting or the Purchaser
Special Meeting, will contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The Target agrees that none of the information supplied or to be
supplied by the Target for inclusion or incorporation by reference in the Joint
Proxy Statement/Prospectus and each amendment or supplement thereto, at the time
of mailing thereof and at the time of the Target Special Meeting or the
Purchaser Special Meeting, will contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. For purposes of the foregoing, it is understood and agreed
that information concerning or related to the Purchaser and the Purchaser
Special Meeting will be deemed to have been supplied by the Purchaser and
information concerning or related to the Target and the Target Special Meeting
shall be deemed to have been supplied by the Target. The Purchaser will provide
the Target with a reasonable opportunity to review and comment on any amendment
or supplement to the Joint Proxy Statement/Prospectus prior to filing such with
the SEC, will provide the Target with a copy of all such filings made with the
SEC and will notify the Target as promptly as practicable after the receipt of
any comments from the SEC or its staff or from any state securities
administrators and of any request by the SEC or its staff or by any state
securities administrators for amendments or supplements to the Registration
Statement or any Blue Sky Filings or for additional information, and upon
request of the Target, will supply the Target and its legal counsel with copies
of all correspondence between the Purchaser or any of its representatives, on
the one hand, and the SEC, its staff or any state securities administrators, on
the other hand, with respect to the Registration Statement. No amendment or
supplement to the information supplied by the Target for inclusion in the Joint
Proxy Statement/Prospectus shall be made without the approval of the Target,
which approval shall not be unreasonably withheld or delayed. If, at any time
prior to the Effective Time, any event relating to the Target or the Purchaser
or any of their respective Affiliates, officers or directors is discovered by
the Target or the Purchaser, as the case may be, that is required by the
-20-
Securities Act, the Exchange Act, or the rules or regulations thereunder, to be
set forth in an amendment to the Registration Statement or a supplement to the
Joint Proxy Statement/Prospectus, the Target or the Purchaser, as the case may
be, will as promptly as practicable inform the other, and such amendment or
supplement will be promptly filed with the SEC and disseminated to the
stockholders of the Target and the Purchaser, to the extent required by
applicable securities laws. All documents which the Target of the Purchaser
files or is responsible for filing with the SEC and any other regulatory agency
in connection with the Merger (including, without limitation, the Registration
Statement and the Joint Proxy Statement/Prospectus) will comply as to form and
content in all material respects with the provisions of applicable law.
Notwithstanding the foregoing, the Target, on the one hand, and the Purchaser
and the Purchaser Subsidiary, on the other hand, make no representations or
warranties with respect to any information that has been supplied in writing by
the other, or the other's auditors, attorneys, financial advisors, specifically
for use in the Registration Statement or the Joint Proxy Statement/Prospectus,
or in any other documents to be filed with the SEC or any other regulatory
agency expressly for use in connection with the transactions contemplated
hereby.
(ii) Florida Business Corporation Law and Delaware General
-----------------------------------------------------
Corporation Law. The Target will take all action, to the extent necessary in
---------------
accordance with applicable law, its articles of incorporation and bylaws to
convene a special meeting of its stockholders (the "Target Special Meeting"), as
----------------------
soon as reasonably practicable in order that the stockholders may consider and
vote upon the adoption of this Agreement and the approval of the Merger in
accordance with the Florida Business Corporation Law. The Purchaser will take
all action, to the extent necessary in accordance with applicable law, its
certificate of incorporation and bylaws to convene a special meeting of its
stockholders (the "Purchaser Special Meeting"), as soon as reasonably
-------------------------
practicable in order that the stockholders may consider and vote upon the
adoption of this Agreement and the approval of the Merger in order to satisfy
the requirements of the Nasdaq Stock Market ("Nasdaq"). The Target and the
------
Purchaser shall mail the Joint Proxy Statement/Prospectus to their respective
stockholders simultaneously and as soon as reasonably practicable. The Joint
Proxy Statement/Prospectus shall contain the affirmative unanimous
recommendations of the respective boards of directors of the Target and
Purchaser in favor of the adoption of this Agreement and the approval of the
Merger; provided, however, that no director of either the Target or the
-------- -------
Purchaser shall be required to take any action if it is advised in writing by
▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇ LLP, in the case of the Target Board, or by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
LLP, in the case of the Purchaser Board, that such action would violate its
fiduciary duty to stockholders .
(iii) ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act. As soon as possible after the
---------------------
date hereof, each of the Parties will file (and the Target will cause each of
its Subsidiaries to file) any Notification and Report Forms and related material
that it may be required to file with the Federal Trade Commission and the
Antitrust Division of the United States Department of Justice under the ▇▇▇▇-
▇▇▇▇▇-▇▇▇▇▇▇ Act, will use all reasonable efforts to obtain (and the Target will
cause each of its Subsidiaries to use all reasonable efforts to obtain) an early
termination of the applicable waiting period, and will make (and the Target will
cause each of its Subsidiaries to make) any further filings pursuant thereto
that may be necessary.
-21-
(iv) Periodic Reports. Unless an exemption shall be
----------------
expressly applicable to the Target, or unless the Purchaser agrees otherwise in
writing, the Target will file with the SEC and Nasdaq all reports required to be
filed by it pursuant to the rules and regulations of the SEC. Such reports and
other information shall comply in all material respects with all of the
requirements of the SEC rules and regulations and, when filed, will not include
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. The Purchaser and
the Purchaser Subsidiary, and their counsel, shall be given an opportunity to
review such filings prior to their being filed with the SEC and Nasdaq, and
shall be provided with final copies thereof concurrently with their filing with
the SEC.
(d) Operation of Business. The Target will not (and will not
---------------------
cause or permit any of its Subsidiaries to), without the written consent of the
Purchaser, take any action or enter into any transaction other than in the
ordinary course of business. Without limiting the generality of the foregoing,
except as expressly provided in this Agreement or (S)5(d) of the Target
Disclosure Letter, without the written consent of the Purchaser:
(i) none of the Target and its Subsidiaries will authorize
or effect any change in its charter or bylaws;
(ii) none of the Target and its Subsidiaries will grant any
Stock Rights or issue, sell or otherwise dispose of any of its capital stock
(except upon the conversion or exercise of Stock Rights outstanding as of the
date of this Agreement and except for options to purchase up to 330,000 Target
Shares to employees to be designated by the Target with the approval of the
Purchaser, it being understood that all such options shall be granted at the
fair market value of the Target Shares as of the date of grant, shall vest one-
third on each of the first, second and third anniversary of the grant date, but
shall not vest as a result of the completion of the Merger);
(iii) none of the Target and its Subsidiaries will declare,
set aside or pay any dividend or distribution with respect to its capital stock
(whether in cash or in kind), or redeem, repurchase or otherwise acquire any of
its capital stock;
(iv) none of the Target and its Subsidiaries (1) will have
incurred any indebtedness for borrowed money, whether to fund working capital
requirements, operating losses or capital expenditure requirements (including
equipment purchases), or for any capitalized lease obligation, or (2) will have
entered into any legally binding commitment or obligation to (w) incur any
capital expenditure (including equipment purchases), (x) pay any fees, costs or
expenses relating to the transactions contemplated hereby, (y) make any
acquisition earn-out payments or (z) pay any compensation (including, without
limitation, "stay-bonus" or similar arrangements or fees) to employees,
stockholders or consultants (or any Affiliates thereof) of the Target as a
result of the consummation of the Merger, the aggregate amount of clauses (1)
and (2), after giving effect to the Closing of the transactions contemplated
hereby, does not exceed $38 million; it being understood that prior to the
Closing, the Target agrees to advise the Purchaser, and to consult with the
Purchaser, in connection with entering into any commitment or obligation
relating to any capital expenditure
-22-
(including equipment purchases) which individually, or when taken together with
related capital expenditures (including equipment purchases), exceeds $50,000;
(v) none of the Target and its Subsidiaries will impose
any Security Interest upon any of its assets other than in the ordinary course
of business provided, that no such Security Interest could reasonably be
--------
expected to have a material adverse effect on the business, financial condition
or results of operations of the Target and its Subsidiaries taken as a whole;
(vi) none of the Target and its Subsidiaries will make any
capital investment in, make any loan to or acquire the securities or assets of
any other Person other than to or from wholly-owned Subsidiaries in the ordinary
course of business;
(vii) none of the Target and its Subsidiaries will make any
change in employment terms for any of its directors, officers and employees
other than customary increases to employees who are neither executive officers
or directors of the Target or any Subsidiary awarded in the ordinary course of
business consistent with past practices (except as provided for in section
5(d)(vii) of the Target Disclosure Schedule); and
(viii) none of the Target and its Subsidiaries will commit
to any of the foregoing.
In the event the Target shall request the Purchaser to consent in
writing to an action otherwise prohibited by this (S)5(d), the Purchaser shall
use all reasonable efforts to respond in a prompt and timely fashion, but may
otherwise respond affirmatively or negatively in its sole discretion.
(e) Access. Each Party will (and will cause each of its
------
Subsidiaries to) permit representatives of the other Party to have access at all
reasonable times and in a manner so as not to materially interfere with the
normal business operations of the Target and its Subsidiaries, or the Purchaser
and its Subsidiaries, as applicable, to all premises, properties, personnel,
books, records (including tax records), contracts and documents of or pertaining
to such Party. Each Party and all of their respective representatives will treat
and hold as such any Confidential Information it receives from the other Party
or any of its representatives in accordance with the Confidentiality Agreement.
(f) Notice of Developments. Each Party will give prompt written
----------------------
notice to the others of any material adverse development causing a breach of any
of its own representations and warranties in (S)3 and (S)4 above. No disclosure
by any Party pursuant to this (S)5(f), however, shall be deemed to amend or
supplement the Target Disclosure Letter or Purchaser Disclosure Letter or to
prevent or cure any misrepresentation, breach of warranty or breach of covenant.
(g) Exclusivity. Neither the Target nor any of its officers and
-----------
directors shall, and the Target will cause its employees, agents and
representatives (including, without limitation, any investment banker, attorney
or accountant retained by the Target) not to, directly or indirectly, encourage,
initiate or solicit any inquiries or the making of any Acquisition Proposal or,
-23-
except to the extent required for the discharge by the Target Board of its
fiduciary duties to the Target Stockholders as advised in writing by ▇▇▇▇▇▇ ▇▇▇▇
& ▇▇▇▇▇▇ LLP, engage in any negotiations concerning, or provide any confidential
information or data to, or have any discussions with, any Person relating to an
Acquisition Proposal, or otherwise assist or facilitate any effort or attempt by
any Person or entity (other than the Purchaser and the Purchaser Subsidiary, or
their officers, directors, representatives, agents, Affiliates or associates) to
make or implement an Acquisition Proposal. The Target will notify the Purchaser
promptly if any such inquiries or proposals are received by, any such
information is requested from, or any such negotiations or discussions are
sought to be instituted or continued with, the Target, and will provide to the
Purchaser a copy of such Acquisition Proposal. The Target and its officers and
directors will, and the Target will cause its employees, agents and
representatives (including, without limitation, any investment banker, attorney
or accountant retained by the Target) to, immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any parties
conducted heretofore with respect to any of the foregoing. The Target will
promptly request that each Person to whom any confidential documents or
information concerning the Target was disclosed by the Target since January 1,
1997 for the purpose of discussing a possible change in control transaction
involving the Target (a "Potential Buyer"), either return all of such
---------------
confidential documents and information, and all copies thereof, to the Target or
deliver a written certification of such destruction to the Target. The Target
shall use all reasonable efforts to cause each such Potential Buyer to comply
with such request.
(h) Insurance and Indemnification.
-----------------------------
(i) The Purchaser will provide each individual who served as
a director or officer of the Target at any time prior to the Effective Time with
liability insurance for a period of six years after the Effective Time no less
favorable in coverage and amount than any applicable insurance of the Target in
effect immediately prior to the Effective Time; provided, however, if the
-------- -------
existing liability insurance expires, or is terminated or canceled by the
insurance carrier during such six-year period, the Surviving Corporation will
use its best efforts to obtain as much liability insurance as can be obtained
for the remainder of such period for a premium not in excess (on an annualized
basis) of 150% of the last annual premium paid prior to the date hereof. In
fulfillment of its obligations under this clause (i), the Purchaser may arrange
insurance providing coverage that in the aggregate is no less favorable to the
Target's officers and directors than that which is currently in effect for the
Purchaser's officers and directors.
(ii) The Purchaser (A) will not take or knowingly permit to
be taken any action to alter or impair any exculpatory or indemnification
provisions now existing in the articles of incorporation, bylaws or
indemnification and employment agreements of the Target or any of its
Subsidiaries for the benefit of any individual who served as a director or
officer of the Target or any of its Subsidiaries (an "Indemnified Party") at any
-----------------
time prior to the Effective Time, and (B) shall cause the Surviving Corporation
to honor and fulfill such provisions until the date which is six years from the
Effective Date; provided, however, in the event any claim or claims are asserted
-------- -------
within such period, all rights to indemnification in respect of such claim or
claims shall continue until the final disposition thereof.
-24-
(iii) To the extent clause (i) above shall not serve to
indemnify and hold harmless an Indemnified Party, the Purchaser, subject to the
terms and conditions of this clause (iii), will indemnify, for a period of six
years from the Effective Date, to the fullest extent permitted under applicable
law each Indemnified Party from and against any and all actions, suits,
proceedings, hearings, investigations, charges, complaints, claims, demands,
injunctions, judgments, orders, decrees, rulings, damages, dues, penalties,
fines, costs, amounts paid in settlement, liabilities, obligations, taxes,
liens, losses, expenses and fees, including all court costs and reasonable
attorneys' fees and expenses, resulting from, arising out of, relating to or
caused by this Agreement or any of the transactions contemplated herein;
provided, however, in the event any claim or claims are asserted or threatened
-------- -------
within such six-year period, all rights to indemnification in respect of any
such claim or claims shall continue until final disposition of any and all such
claims. Any Indemnified Party wishing to claim indemnification under this clause
(iii), and notwithstanding the provisions set forth in the Target's articles of
incorporation, by-laws or other agreements respecting indemnification of
directors or officers, upon learning of any such claim, action, suit, proceeding
or investigation, shall promptly notify the Purchaser thereof, but the failure
to so notify shall not relieve the Purchaser of any liability it may have to
such Indemnified Party if such failure does not materially prejudice the
Purchaser. In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), (A) the
Purchaser or the Surviving Corporation shall have the right to assume the
defense thereof and the Purchaser shall not be liable to such Indemnified
Parties for any legal expenses of other counsel or any other expenses
subsequently incurred by such Indemnified Parties in connection with the defense
thereof, except that if the Purchaser or the Surviving Corporation fails to
assume such defense or counsel for the Purchaser advises that there are issues
which raise conflicts of interest between the Purchaser or the Surviving
Corporation, on the one hand, and the Indemnified Parties, on the other hand,
the Indemnified Parties may retain counsel satisfactory to them, and the Target,
the Purchaser or the Purchaser Subsidiary shall pay all reasonable fees and
expenses of such counsel for the Indemnified Parties promptly as statements
therefor are received; provided, however, that the Purchaser shall be obligated
-------- -------
to pay for only one firm of counsel for all Indemnified Parties in any
jurisdiction unless the use of one counsel for such Indemnified Parties would
present such counsel with a conflict of interest, in which case the Purchaser
need only pay for separate counsel to the extent necessary to resolve such
conflict; (B) the Indemnified Parties will reasonably cooperate in the defense
of any such matter; and (C) the Purchaser shall not be liable for any settlement
effectuated without its prior written consent, which consent shall not be
unreasonably withheld or delayed. Purchaser shall not settle any action or
claim identified in this (S)5(h)(iii) in any manner that would impose any
liability or penalty on an Indemnified Party not paid by the Purchaser or the
Surviving Corporation without such Indemnified Party's prior written consent,
which consent shall not be unreasonably withheld or delayed.
(iv) Notwithstanding anything contained in clause (iii)
above, the Purchaser shall not have any obligation hereunder to any Indemnified
Party (A) if the indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable law, (B) the conduct of the
Indemnified Party relating to the matter for which indemnification is sought
involved bad faith or willful misconduct, or (C) with respect to actions taken
by any such Indemnified Party in its individual capacity, including, without
limitations, with respect to any matters relating, directly or indirectly, to
the purchase, sale or trading of securities
-25-
issued by the Target other than a tender or sale pursuant to a stock tender
agreement or (D) if such Indemnified Party shall have breached its obligation to
cooperate with the Purchaser in the defense of any claim in respect of which
indemnification is sought.
(i) Financial Statements. As soon as they are made available to
--------------------
and reviewed by senior management of the Target, the Target shall make available
to the Purchaser copies of all internally generated monthly, quarterly
(including, quarterly statements for the three-month period ended December 31,
1997) and annual financial statements, consisting of consolidated balance
sheets, and statements of income and of cash flows. The delivery of any such
quarterly and annual financial statements shall constitute a representation and
warranty by the Target that such financial statements were prepared from the
books and records of the Target, in accordance with GAAP consistently applied
during the periods involved and fairly present the financial condition, results
of operations and cash flows, as the case may be, of the Target as at and for
the periods set forth therein (subject in the case of quarterly financial
statements to the absence of complete footnotes other than as may be required by
GAAP and subject to normal year-end audit adjustments).
(j) Continuity of Business Enterprise. The Purchaser, Purchaser
---------------------------------
Subsidiary or any other member of the qualified group (as defined in Treasury
Regulation (S)1.368-1(d) shall, for the foreseeable future, continue at least
one significant historic business line of the Target and use at least a
significant portion of the Target's historic business assets in a business, in
each case within the meaning of Treasury Regulation (S)1.368-1(d).
6. Conditions to Obligation to Close.
---------------------------------
(a) Conditions to Obligation of the Purchaser and the Purchaser
-----------------------------------------------------------
Subsidiary. The obligation of each of the Purchaser and the Purchaser
----------
Subsidiary to consummate the transactions to be performed by it in connection
with the Closing is subject to satisfaction or waiver by Purchaser or Purchaser
Subsidiary of the following conditions at or prior to the Closing Date:
(i) this Agreement and the Merger shall have received the
Requisite Stockholder Approval;
(ii) the Target and its Subsidiaries shall have procured all
third-party consents specified in (S)5(b) above which are applicable to the
Target and its Subsidiaries;
(iii) the representations and warranties set forth in (S)3
above shall be true and correct in all material respects at and as of the
Closing Date, except for (A) changes contemplated by this Agreement, (B) those
representations and warranties which address matters only as of a particular
date (which shall have been true and correct as of such date);
(iv) the Target shall have performed and complied with all
of its covenants hereunder in all material respects through the Closing;
-26-
(v) neither any statute, rule, regulation, order,
stipulation or injunction (each an "Order") shall be enacted, promulgated,
-----
entered, enforced or deemed applicable to the Merger nor any other action shall
have been taken by any governmental authority, administrative agency or court of
competent jurisdiction (A) which prohibits the consummation of the transactions
contemplated by the Merger; (B) which prohibits the Purchaser's or the Purchaser
Subsidiary's ownership or operation of all or any material portion of their or
the Target's business or assets, or which compels the Purchaser or the Purchaser
Subsidiary to dispose of or hold separate all or any material portion of the
Purchaser's or the Purchaser Subsidiary's or the Target's business or assets as
a result of the transactions contemplated by the Merger; (C) which makes the
purchase of, or payment for, some or all of the Target Shares illegal; or (D)
which imposes material limitations on the ability of the Purchaser or the
Purchaser Subsidiary to acquire or hold or to exercise effectively all rights of
ownership of Target Shares, including, without limitation, the right to vote any
Target Shares purchased by the Purchaser on all matters properly presented to
the Target Stockholders; or (E) which imposes any limitations on the ability of
the Purchaser or the Purchaser Subsidiary, or any of their respective
Subsidiaries, effectively to control in any material respect the business or
operations of the Target or any of its Subsidiaries;
(vi) the Target shall have delivered to the Purchaser and
the Purchaser Subsidiary a certificate to the effect that each of the conditions
specified above in (S)6(a)(i)-(S)6(a)(iv) is satisfied in all respects;
provided, however, with respect to (S)6(a)(i), the Target shall only be required
-------- -------
to certify that this Agreement and the Merger received the Requisite Stockholder
Approval of the Target Stockholders;
(vii) all applicable waiting periods (and any extensions
thereof) under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act shall have expired or otherwise been
terminated, and the Parties shall have received all other material
authorizations, consents and approvals of governments and governmental agencies
referred to in (S)3(d) and (S)4(d) above;
(viii) the Purchase Warrant shall have been exercised in
full, provided, that such exercise may be conditioned upon the effectiveness of
--------
the Merger;
(ix) the Purchaser Shares to be issued in the Merger shall
have been approved upon official notice of issuance for quotation on Nasdaq,
subject to official notice of issuance; and
(x) the Registration Statement shall have been declared
effective by the SEC under the Securities Act. No stop order suspending the
effectiveness of the Registration Statement shall have been issued by the SEC
and no proceedings for that purpose shall have been initiated or threatened by
the SEC.
Subject to the provisions of applicable law, the Purchaser
Subsidiary may waive, in whole or in part, any condition specified in this
(S)6(a) if they execute a writing so stating at or prior to the Closing.
-27-
(b) Conditions to Obligation of the Target. The obligation of
--------------------------------------
the Target to consummate the transactions to be performed by it in connection
with the Closing is subject to satisfaction or waiver by the Target of the
following conditions at or prior to the Closing Date:
(i) this Agreement and the Merger shall have received the
Requisite Stockholder Approval;
(ii) the Purchaser and its Subsidiaries shall have
procured all material third-party consents specified in (S)5(b) above which are
applicable to the Purchaser and its Subsidiaries;
(iii) the representations and warranties set forth in (S)4
above shall be true and correct in all material respects at and as of the
Closing Date, except for (A) changes contemplated by this Agreement, (B) those
representations and warranties which address matters only as of a particular
date (which shall have been true and correct as of such date);
(iv) each of the Purchaser and the Purchaser Subsidiary
shall have performed and complied with all of its covenants hereunder in all
material respects through the Closing;
(v) neither any Order shall be enacted, promulgated,
entered, enforced or deemed applicable to the Merger nor any other action shall
have been taken by any governmental authority, administrative agency or court of
competent jurisdiction (A) which prohibits the consummation of the transactions
contemplated by the Merger; (B) which prohibits the Purchaser's or the Purchaser
Subsidiary's ownership or operation of all or any material portion of their or
the Target's business or assets, or which compels the Purchaser or the Purchaser
Subsidiary to dispose of or hold separate all or any material portion of the
Purchaser's or the Purchaser Subsidiary's or the Target's business or assets as
a result of the transactions contemplated by the Merger; or (C) which makes the
purchase of, or payment for, some or all of the Target Shares illegal;
(vi) each of the Purchaser and the Purchaser Subsidiary
shall have delivered to the Target a certificate to the effect that each of the
conditions specified above in (S)6(b)(i)-(iv) is satisfied in all respects;
provided, however, with respect to (S)6(b)(i), each of the Purchaser and the
-------- -------
Purchaser Subsidiary shall only be required to certify that this Agreement and
the Merger received the Requisite Stockholder Approval of the Purchaser
Stockholders;
(vii) the Merger shall be a tax-free merger of the
Purchaser Subsidiary with and into the Target in a reorganization pursuant to
Code Section 368(a)(2)(E);
(viii) all applicable waiting periods (and any extensions
thereof) under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act shall have expired or otherwise been
terminated and the Parties shall have received all other material
authorizations, consents and approvals of governments and governmental agencies
referred to in (S)3(d) and (S)4(d) above;
-28-
(ix) the Registration Statement shall have been declared
effective by the SEC under the Securities Act; and
(x) the Purchaser Shares to be issued in the Merger shall
have been approved for quotation on Nasdaq, subject to official notice of
issuance.
Subject to the provisions of applicable law, the Target may waive, in
whole or in part, any condition specified in this (S)6(b) if it executes a
writing so stating at or prior to the Closing.
7. Termination.
-----------
(a) Termination of Agreement. The Parties may terminate this
------------------------
Agreement with the prior authorization of their respective board of directors as
provided below:
(i) The Parties may terminate this Agreement, and the
Merger may be abandoned, by mutual written consent at any time prior to the
Effective Time;
(ii) This Agreement may be terminated and the Merger may be
abandoned by action of the Board of Directors of either the Purchaser or the
Target if (i) the Merger shall not have been consummated by October 31, 1998
(unless the failure to consummate the Merger by such date is due to the action
or failure to act of the Party seeking to terminate), or (iii) if any Order
shall have become final and non-appealable;
(iii) This Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, before or after the approval
by the Target Stockholders or the Purchaser Stockholders, by action of the
Target Board, in the event that the Purchaser or the Purchaser Subsidiary shall
have breached any of their representations, warranties or covenants under this
Agreement which breach shall have caused a reasonable likelihood that the
Purchaser and the Purchaser Subsidiary will not be able to consummate the
Merger;
(iv) This Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, before or after the approval
by the Target Stockholders or the Purchaser Stockholders, by action of the
Purchaser Board, in the event that the Target shall have breached any of its
representations, warranties or covenants under this Agreement which breach shall
have caused a reasonable likelihood that the Target will not be able to
consummate the Merger;
(v) (A) This Agreement may be terminated by the Target
and the Merger may be abandoned at any time, before or after the approval by the
Target Stockholders or the Purchaser Stockholders, if, without violating its
obligations under (S)5(g) hereof, the Target enters into an agreement with
respect to an unsolicited Acquisition Proposal after having received (A) the
written opinion from The ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Company, Inc. to the effect that such
Acquisition Proposal is more favorable to the Target Stockholders from a
financial point of view than the Merger, and (B) the written opinion of ▇▇▇▇▇▇
▇▇▇▇ & ▇▇▇▇▇▇ LLP that approval, acceptance
-29-
and recommendation of such Acquisition Proposal is required by fiduciary
obligations to the Target Stockholders under applicable law;
(B) This Agreement may be terminated by the Purchaser, and
the Merger may be abandoned, if the Target Board (i) enters into or publicly
announces its intention to enter into an agreement or agreement in principle
with respect to an Acquisition Proposal, (ii) withdraws or materially modifies
its recommendation to the Target Stockholders of this Agreement or the Merger or
(iii) after the receipt of an Acquisition Proposal, fails to confirm publicly,
upon the request of the Purchaser, its recommendation to the Target Stockholders
that the Target Stockholders approve this Agreement and the Merger;
(vi) This Agreement may be terminated by the Target , and the
Merger may be abandoned in the event that the Weighted Average Sales Price of a
Purchaser Share as of the Closing Date is less than $14.0210; provided, however,
-------- -------
the Purchaser may override such termination and reinstate this Agreement within
three (3) Business Days after it has received written notice of termination by
the Target pursuant to this clause (vi), by delivery of written notice to the
Target that it agrees to pay to each holder of a Target Share additional
consideration such that, when added to the Per Share Merger Consideration, each
holder of Target Shares shall receive an aggregate value of $8.8235 for each
Target Share exchanged in the Merger (the "Additional Consideration"). The
------------------------
Additional Consideration may be paid in cash or in Purchaser Shares, or a
combination thereof, at the election of the Purchaser, with each such Purchaser
Share to be delivered to be valued based upon the Weighted Average Sales Price
of a Purchaser Share as of the Closing Date. Notwithstanding the foregoing, the
amount of cash which may be delivered pursuant to this clause (vi), if any,
shall not be in an amount which would result in the Merger not being qualified
as a reorganization pursuant to Code (S)368(a)(2)(E);
(vii) Any Party may terminate this Agreement, and the Merger may
be abandoned, by giving written notice to the other Parties at any time after
the Target Special Meeting in the event that this Agreement and the Merger fail
to receive the Requisite Stockholder Approval by the Target Stockholders; or
(viii) Any Party may terminate this Agreement, and the Merger
may be abandoned, by giving written notice to the other Parties at any time
after the Purchaser Special Meeting in the event that this Agreement and the
Merger fail to receive the Requisite Stockholder Approval by the Purchaser
Stockholders.
(b) Effect of Termination.
---------------------
(i) Except as provided in clauses (ii) or (iii) of this
(S)7(b), if any Party terminates this Agreement pursuant to (S)7(a) above, all
rights and obligations of the Parties hereunder shall terminate without any
liability of any Party to any other Party (except for any liability of any Party
then in breach); provided, however, that the provisions of the Confidentiality
-----------------
Agreement, this (S)7(b) and (S)8(l) below, shall survive any such termination.
-30-
(ii) If this Agreement is terminated (x) by the Purchaser
pursuant to (S)7(a)(iv), but only with respect to a breach by Target of (S)5(g),
(y) by Target pursuant to (S)7(a)(v)(A) or (z) by Purchaser pursuant to
(S)7(a)(v)(B), then, within five (5) days after such termination, the Target
shall pay the Purchaser the sum of $5,000,000 in immediately available funds,
which the Parties agree is a reasonable sum to reimburse the Purchaser for costs
and expenses incurred in connection with this Agreement.
(iii) If this Agreement is terminated by the Target as a
result of the Purchaser not obtaining the Requisite Stockholder Approval by the
Purchaser Stockholders, then the Purchaser shall pay the Target, within five (5)
days after the completion of the meeting at which the Purchaser Stockholders
considered the approval of this Agreement and the Merger, the sum of $5,000,000
in immediately available funds, which the Parties agree is a reasonable sum to
reimburse the Target for costs and expenses incurred in connection with this
Agreement.
8. Miscellaneous.
-------------
(a) Survival. None of the representations, warranties and
--------
covenants of the Parties (other than the provisions in (S)2 above concerning
payment of the Per Share Merger Consideration and the provisions in (S)5(h)
above concerning insurance and indemnification and (S)5(i) concerning continuity
of business enterprise) will survive the Effective Time.
(b) Press Releases and Public Announcements. No Party shall
---------------------------------------
issue any press release or make any public announcement relating to the subject
matter of this Agreement without the prior written approval of the other
Parties; provided, however, that any Party may make any public disclosure it
believes in good faith is required by applicable law or any listing or trading
agreement concerning its publicly-traded securities (in which case the
disclosing Party will use all reasonable efforts to advise the other Parties
prior to making the disclosure).
(c) No Third-Party Beneficiaries. This Agreement shall not
----------------------------
confer any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns; provided, however, that (i) the
provisions in (S)2 above (A) concerning payment of the Per Share Merger
Consideration are intended for the benefit of the Target Stockholders and (B)
concerning the conversion of the stock options are intended for the benefit of
the holders of such stock options, and (ii) the provisions in (S)5(h) above
concerning insurance and indemnification are intended for the benefit of the
individuals specified therein and their respective legal representatives.
(d) Entire Agreement. This Agreement (including the
----------------
Confidentiality Agreement and the other documents referred to herein)
constitutes the entire agreement among the Parties and supersedes any prior
understandings, agreements or representations by or among the Parties, written
or oral, to the extent they related in any way to the subject matter hereof.
(e) Binding Effect; Assignment. This Agreement shall be binding
--------------------------
upon and inure to the benefit of the Parties and their respective successors and
permitted assigns. No Party may assign or delegate either this Agreement or any
of its rights, interests or obligations hereunder,
-31-
by operation of law or otherwise, without the prior written approval of the
other Parties. Any purported assignment or delegation without such approval
shall be void and of no effect.
(f) Counterparts. This Agreement may be executed (including by
------------
facsimile) in one or more counterparts, each of which shall be deemed an
original but all of which together will constitute one and the same instrument.
(g) Headings. The section headings contained in this Agreement
--------
are inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(h) Notices. All notices, requests, demands, claims and other
-------
communications hereunder shall be in writing. Any notice, request, demand,
claim or other communication hereunder shall be deemed duly given if (and then
two business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid and addressed to the intended recipient as
set forth below:
If to the Target: TresCom International, Inc.
----------------
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a Copy to: ▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇ LLP
--------------
Two Stamford Plaza
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esquire
If to the Purchaser: PRIMUSTELECOMMUNICATIONS
-------------------
GROUP INC.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
K. ▇▇▇▇ ▇▇▇▇▇, Chairman and
Chief Executive Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a Copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
--------------
3000 Two ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esquire
-32-
If to the Purchaser Subsidiary: TAURUS ACQUISITION CORPORATION
------------------------------
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
K. ▇▇▇▇ ▇▇▇▇▇, Chairman and
Chief Executive Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a Copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
--------------
3000 Two ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Esquire
Any Party may send any notice, request, demand, claim or other communication
hereunder to the intended recipient at the address set forth above using
personal delivery, expedited courier, messenger service, telecopy or ordinary
mail, but no such notice, request, demand, claim or other communication shall be
deemed to have been duly given unless and until it actually is received by the
intended recipient. Any Party may change the address to which notices,
requests, demands, claims and other communications hereunder are to be delivered
by giving the other Parties notice in the manner set forth in this (S)8(h),
provided that no such change of address shall be effective until it actually is
received by the intended recipient.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF FLORIDA WITHOUT
GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE
STATE OF FLORIDA OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF
THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF FLORIDA.
(j) Amendments and Waivers. The Parties may mutually amend any
----------------------
provision of this Agreement at any time prior to the Effective Time with the
prior authorization of their respective boards of directors; provided, however,
-----------------
that any amendment effected subsequent to Requisite Stockholder Approval will be
subject to the restrictions contained in the Florida Business Corporation Law
and the Delaware General Corporation Law, to the extent applicable. No
amendment of any provision of this Agreement shall be valid unless the same
shall be in writing and signed by all of the Parties. No waiver by any party of
any default, misrepresentation or breach of warranty or covenant hereunder,
whether intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation or breach of warranty or covenant hereunder or affect
in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(k) Severability. Any term or provision of this Agreement that is
------------
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
-33-
(l) Expenses. Except as expressly set forth elsewhere in this
--------
Agreement, each of the Parties will bear its own costs and expenses (including
legal fees and expenses) incurred in connection with this Agreement and the
transactions contemplated hereby.
(m) Construction. The Parties have participated jointly in the
------------
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof
shall arise favoring or disfavoring any Party by virtue of the authorship of any
of the provisions of this Agreement. Any reference to any federal, state, local
or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context otherwise requires. The
word "including" shall mean including without limitation. The phrase "business
day" shall mean any day other than a day on which banks in the State of New York
are required or authorized to be closed. Any disclosure made with reference to
one or more sections of the Target Disclosure Schedule shall be deemed disclosed
with respect to each other section therein as to which such disclosure is
relevant provided that such relevance is reasonably apparent. Disclosure of any
matter in the Target Disclosure Schedule or the Purchaser Disclosure Schedule
shall not be deemed an admission that such matter is material.
(n) Incorporation of Exhibits and Schedules. The Exhibits and
---------------------------------------
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
(o) Definition of Knowledge. As used herein, the words
-----------------------
"knowledge", "best knowledge" or "known" shall, (i) with respect to the Target
or Target management, mean the actual knowledge of the corporate executive
officers of the Target, in each case after such individuals have made due and
diligent inquiry as to the matters which are the subject of the statements which
are "known" by the Target or made to the "knowledge" or "best knowledge" of the
Target, (ii) with respect to the Purchaser or the Purchaser management, mean the
actual knowledge of the corporate executive officers of the Purchaser, in each
case after such individuals have made due and diligent inquiry as to the matters
which are the subject of the statements which are "known" by the Purchaser or
made to the "knowledge" or "best knowledge" of the Purchaser, and (iii) with
respect to the Purchaser Subsidiary or the Purchaser Subsidiary management, mean
the actual knowledge of the corporate executive officers of the Purchaser or the
Purchaser Subsidiary, in each case after such individuals have made due and
diligent inquiry as to the matters which are the subject of the statements which
are "known" by the Purchaser Subsidiary or made to the "knowledge" or "best
knowledge" of the Purchaser Subsidiary.
(p) WAIVER OF JURY TRIAL. EACH OF THE PURCHASER, THE PURCHASER
--------------------
SUBSIDIARY AND THE TARGET, AND EACH INDEMNIFIED PARTY, HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY.
-34-
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
PRIMUS COMMUNICATIONS GROUP, INC.
By: /s/ K. ▇▇▇▇ ▇▇▇▇▇
--------------------
Name: K. ▇▇▇▇ ▇▇▇▇▇
Title: President and Chief Executive Officer
TAURUS ACQUISITION CORPORATION
By: /s/ K. ▇▇▇▇ ▇▇▇▇▇
--------------------
Name: K. ▇▇▇▇ ▇▇▇▇▇
Title: President
TRESCOM INTERNATIONAL, INC.
By:________________________________
Name: ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
Title: President Chief Executive Officer
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
PRIMUS COMMUNICATIONS GROUP, INC.
By:___________________________
Name: K. ▇▇▇▇ ▇▇▇▇▇
Title: President and Chief Executive Officer
MERGER SUB
By:___________________________
Name: K. ▇▇▇▇ ▇▇▇▇▇
Title: President
TRESCOM INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
Title: President and Chief Executive Officer
EXHIBIT A
---------
ARTICLES OF MERGER
OF
MERGER SUB,
A FLORIDA CORPORATION
INTO
TARGET,
A FLORIDA CORPORATION
_______________________
Pursuant to Section 607.1105 of the Florida Business Corporation Act,
the undersigned corporations adopt the following Articles of Merger:
FIRST: Merger Sub, a Florida corporation ("Merger Sub"), shall be
merged with and into Target, a Florida corporation ("Target"), whereby Target
shall be the surviving corporation (the "Merger").
SECOND: The Merger shall become effective as of the day on which
these Articles of Merger are filed with the Department of State of the State of
Florida.
THIRD: The Agreement and Plan of Merger, dated as of February ____,
1998, pursuant to which Merger Sub shall be merged with and into Target, was
adopted by the shareholder of Merger Sub on the ____ day of _____________ 1998,
and was adopted by the shareholders of Target on the ____ day of _____________,
1998.
IN WITNESS WHEREOF, these Articles of Merger have been executed on
behalf of Merger Sub and Target by their authorized officers as of ____________,
1998.
TARGET
By:_____________________________
Name:
Title:
MERGER SUB
By:_____________________________
Name:
Title: