CONFORMED COPY
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AGREEMENT AND PLAN OF MERGER
DATED AS OF JUNE 14, 1998
AMONG
TELEGLOBE INC.
NORTH MERGER SUB CORPORATION
and
EXCEL COMMUNICATIONS, INC.
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TABLE OF CONTENTS
ARTICLE I
THE MERGER . . . . . . . . . . . . . . 3
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . 3
1.2 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.3 Effective Time . . . . . . . . . . . . . . . . . . . . . . 3
1.4 Effects of the Merger . . . . . . . . . . . . . . . . . . . 3
1.5 Certificate of Incorporation . . . . . . . . . . . . . . . 4
1.6 By-Laws of Surviving Corporation . . . . . . . . . . . . . 4
1.7 Officers and Directors of Surviving Corporation . . . . . . 4
1.8 Effect on Capital Stock . . . . . . . . . . . . . . . . . . 5
1.9 Teleglobe Articles Amendment; Teleglobe By-Law
Amendment . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE II
EXCHANGE OF CERTIFICATES . . . . . . . . . . 6
2.1 Exchange Fund . . . . . . . . . . . . . . . . . . . . . . . 6
2.2 Exchange Procedures . . . . . . . . . . . . . . . . . . . . 7
2.3 Distributions with Respect to Unexchanged Shares . . . . . 7
2.4 No Further Ownership Rights in Excel Common Stock . . . . 8
2.5 No Fractional Teleglobe Common Shares . . . . . . . . . . . 8
2.6 Termination of Exchange Fund . . . . . . . . . . . . . . . 8
2.7 No Liability . . . . . . . . . . . . . . . . . . . . . . . 9
2.8 Investment of the Exchange Fund . . . . . . . . . . . . . . 9
2.9 Lost Certificates . . . . . . . . . . . . . . . . . . . . . 9
2.10 Withholding Rights . . . . . . . . . . . . . . . . . . . . 9
2.11 Further Assurances . . . . . . . . . . . . . . . . . . . . 9
2.12 Stock Transfer Books . . . . . . . . . . . . . . . . . . . 10
ARTICLE III
REPRESENTATIONS AND WARRANTIES . . . . . . . . . 10
3.1 Representations and Warranties of Excel . . . . . . . . . . 10
(a) Organization, Standing and Power . . . . . . . . . 10
(b) Subsidiaries . . . . . . . . . . . . . . . . . . . 10
(c) Capital Structure . . . . . . . . . . . . . . . . . 11
(d) Authority; No Conflicts . . . . . . . . . . . . . . 12
(e) Reports and Financial Statements . . . . . . . . . 14
(f) Information Supplied . . . . . . . . . . . . . . . 14
(g) Absence of Certain Changes or Events . . . . . . . 15
(h) Board Approval . . . . . . . . . . . . . . . . . . 15
(i) Vote Required . . . . . . . . . . . . . . . . . . . 15
(j) Brokers or Finders . . . . . . . . . . . . . . . . 15
(k) Opinion of Excel Fairness Opinion Banker . . . . . 16
(l) No Undisclosed Liabilities . . . . . . . . . . . . 16
(m) Taxes . . . . . . . . . . . . . . . . . . . . . . 16
(n) Properties . . . . . . . . . . . . . . . . . . . 17
(o) Intellectual Property . . . . . . . . . . . . . . 17
(p) Agreements, Contracts and Commitments . . . . . . 18
(q) Litigation . . . . . . . . . . . . . . . . . . . 18
(r) Environmental Matters . . . . . . . . . . . . . . 18
(s) Employee Benefit Plans . . . . . . . . . . . . . 19
(t) Compliance With Laws . . . . . . . . . . . . . . 20
(u) Accounting and Tax Matters . . . . . . . . . . . 21
(v) Labor Matters . . . . . . . . . . . . . . . . . . 21
(w) Insurance . . . . . . . . . . . . . . . . . . . . 21
(x) No Existing Discussions . . . . . . . . . . . . . 22
(y) Anti-Takeover Laws; Stockholder Rights Plan . . . 22
(z) DGCL Section 203 . . . . . . . . . . . . . . . . 22
(aa) Year 2000 . . . . . . . . . . . . . . . . . . . . 22
(ab) Pooling Letters . . . . . . . . . . . . . . . . . 22
(ac) Certain Regulatory Matters . . . . . . . . . . . 23
3.2 Representations and Warranties of Teleglobe . . . . . . . . 23
(a) Organization, Standing and Power . . . . . . . . . 24
(b) Subsidiaries . . . . . . . . . . . . . . . . . . 24
(c) Capital Structure . . . . . . . . . . . . . . . . . 24
(d) Authority; No Conflicts . . . . . . . . . . . . . . 25
(e) Reports and Financial Statements . . . . . . . . . 27
(f) Information Supplied . . . . . . . . . . . . . . . 27
(g) Absence of Certain Changes or Events . . . . . . . 28
(h) Board Approval . . . . . . . . . . . . . . . . . . 28
(i) Vote Required . . . . . . . . . . . . . . . . . . . 28
(j) Brokers or Finders . . . . . . . . . . . . . . . . 29
(k) Opinion of Teleglobe Fairness Opinion Banker . . . 29
(l) No Undisclosed Liabilities . . . . . . . . . . . 29
(m) Taxes . . . . . . . . . . . . . . . . . . . . . . 29
(n) Properties . . . . . . . . . . . . . . . . . . . 30
(o) Intellectual Property . . . . . . . . . . . . . . 30
(p) Agreements, Contracts and Commitments . . . . . . 31
(q) Litigation . . . . . . . . . . . . . . . . . . . 31
(r) Environmental Matters . . . . . . . . . . . . . . 31
(s) US Employee Benefit Plans . . . . . . . . . . . . 32
(t) Canadian Employee Benefit Plans . . . . . . . . . 33
(u) Compliance With Laws . . . . . . . . . . . . . . 34
(v) Accounting and Tax Matters . . . . . . . . . . . 34
(w) Labor Matters . . . . . . . . . . . . . . . . . . 34
(x) Insurance . . . . . . . . . . . . . . . . . . . . 35
(y) No Existing Discussions . . . . . . . . . . . . . 35
(z) Anti-Takeover Laws; Shareholder Rights Plan . . . 35
(aa) Year 2000 . . . . . . . . . . . . . . . . . . . . 35
(ab) Pooling Letters . . . . . . . . . . . . . . . . . 36
(ac) Certain Regulatory Matters . . . . . . . . . . . 36
(ad) No Plan or Intention to Dispose of Surviving
Corporation . . . . . . . . . . . . . . . . . . 37
3.3 Representations and Warranties of Teleglobe and Merger
Sub . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(a) Organization and Corporate Power . . . . . . . . . 37
(b) Capital Structure . . . . . . . . . . . . . . . . . 37
(c) Corporate Authorization . . . . . . . . . . . . . . 37
(d) Non-Contravention . . . . . . . . . . . . . . . . . 38
(e) No Business Activities . . . . . . . . . . . . . . 38
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS . . . . . . 38
4.1 Covenants of Excel . . . . . . . . . . . . . . . . . . . . 38
(a) Ordinary Course . . . . . . . . . . . . . . . . . . 38
(b) Dividends; Changes in Share Capital . . . . . . . . 39
(c) Issuance of Securities . . . . . . . . . . . . . . 39
(d) Governing Documents . . . . . . . . . . . . . . . . 39
(e) No Acquisitions . . . . . . . . . . . . . . . . . . 39
(f) No Dispositions . . . . . . . . . . . . . . . . . . 39
(g) Investments; Indebtedness . . . . . . . . . . . . . 40
(h) Pooling-of-Interests; Tax-Free Qualification . . . 40
(i) Other Actions . . . . . . . . . . . . . . . . . . . 40
(j) Accounting Methods; Income Tax Elections . . . . . 40
(k) Excel Employee Plans . . . . . . . . . . . . . . . 40
4.2 Covenants of Teleglobe . . . . . . . . . . . . . . . . . . 41
(a) Ordinary Course . . . . . . . . . . . . . . . . . . 41
(b) Dividends; Changes in Share Capital . . . . . . . . 41
(c) Issuance of Securities . . . . . . . . . . . . . . 42
(d) Governing Documents . . . . . . . . . . . . . . . . 42
(e) No Acquisitions . . . . . . . . . . . . . . . . . . 42
(f) No Dispositions . . . . . . . . . . . . . . . . . . 42
(g) Investments; Indebtedness . . . . . . . . . . . . . 42
(h) Pooling-of-Interests; Tax-Free Qualification . . . 43
(i) Other Actions . . . . . . . . . . . . . . . . . . . 43
(j) Accounting Methods; Income Tax Elections . . . . . 43
(k) Teleglobe Employee Plans . . . . . . . . . . . . . 43
4.3 Advice of Changes; Governmental Filings . . . . . . . . . . 44
4.4 Transition Planning . . . . . . . . . . . . . . . . . . . . 44
4.5 Control of Other Party's Business . . . . . . . . . . . . . 44
4.6 Network Transition . . . . . . . . . . . . . . . . . . . . 44
ARTICLE V
ADDITIONAL AGREEMENTS . . . . . . . . . . . 45
5.1 Preparation of Proxy Statement; Stockholders Approval . . . 45
5.2 Teleglobe Board of Directors; Officers . . . . . . . . . . 46
5.3 Access to Information . . . . . . . . . . . . . . . . . . . 47
5.4 Best Efforts . . . . . . . . . . . . . . . . . . . . . . . 47
5.5 Acquisition Proposals . . . . . . . . . . . . . . . . . . . 49
5.6 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . 50
5.7 Directors' and Officers' Indemnification and Insurance . . 50
5.8 Public Announcements . . . . . . . . . . . . . . . . . . . 51
5.9 Accountants' Letters . . . . . . . . . . . . . . . . . . . 51
5.10 Listing of Teleglobe Common Shares . . . . . . . . . . . . 51
5.11 Rule 145 Affiliates of Teleglobe and Excel; Pooling
Letters . . . . . . . . . . . . . . . . . . . . . . . . 51
5.12 Stockholder Litigation . . . . . . . . . . . . . . . . . . 52
5.13 Restriction on Certain Dispositions . . . . . . . . . . . 52
5.14 Compliance with Section 228 of the DGCL . . . . . . . . 53
5.15 Registration Rights Agreement . . . . . . . . . . . . . 53
ARTICLE VI
CONDITIONS PRECEDENT . . . . . . . . . . . 53
6.1 Conditions to Each Party's Obligation to Effect the
Merger . . . . . . . . . . . . . . . . . . . . . . . . . 53
(a) Stockholder Approval . . . . . . . . . . . . . . . 53
(b) No Injunctions or Restraints, Illegality . . . . . 54
(c) HSR Act; Competition Act (Canada); Required
Consents . . . . . . . . . . . . . . . . . . . . . . 54
(d) NYSE, TSE and ME Listings . . . . . . . . . . . . . 54
(e) Effectiveness of the Form F-4 . . . . . . . . . . . 54
6.2 Additional Conditions to Obligations of Teleglobe and
Merger Sub . . . . . . . . . . . . . . . . . . . . . . . 54
(a) Representations and Warranties . . . . . . . . . . 54
(b) Performance of Obligations of Excel . . . . . . . . 55
(c) Tax Opinion . . . . . . . . . . . . . . . . . . . . 55
(d) No Material Adverse Change . . . . . . . . . . . . 55
(e) Excel Consent and Voting Agreement . . . . . . . . 55
(f) Third-Party Consents . . . . . . . . . . . . . . . 55
6.3 Additional Conditions to Obligations of Excel . . . . . . . 55
(a) Representations and Warranties . . . . . . . . . . 55
(b) Performance of Obligations of Teleglobe . . . . . . 56
(c) Tax Opinion . . . . . . . . . . . . . . . . . . . . 56
(d) No Material Adverse Change . . . . . . . . . . . . 56
(e) Teleglobe Consent and Voting Agreements . . . . . 56
(f) IRS Ruling . . . . . . . . . . . . . . . . . . . . 56
(g) Third-Party Consents . . . . . . . . . . . . . . . 57
ARTICLE VII
TERMINATION AND AMENDMENT . . . . . . . . . . 57
7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . 57
7.2 Effect of Termination . . . . . . . . . . . . . . . . . . . 58
7.3 Payment by Excel . . . . . . . . . . . . . . . . . . . . . 59
7.4 Payment by Teleglobe . . . . . . . . . . . . . . . . . . . 59
7.5 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . 60
7.6 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE VIII
GENERAL PROVISIONS . . . . . . . . . . . . 60
8.1 Survival of Representations, Warranties and Covenants . . . 60
8.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.3 Interpretation . . . . . . . . . . . . . . . . . . . . . . 62
8.4 Counterparts . . . . . . . . . . . . . . . . . . . . . . . 62
8.5 Entire Agreement; No Third Party Beneficiaries . . . . . . 62
8.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . . 63
8.7 Severability . . . . . . . . . . . . . . . . . . . . . . . 63
8.8 Assignment . . . . . . . . . . . . . . . . . . . . . . . . 63
8.9 Submission to Jurisdiction; Waivers . . . . . . . . . . . . 63
8.10 Enforcement . . . . . . . . . . . . . . . . . . . . . . . 64
8.11 Definitions . . . . . . . . . . . . . . . . . . . . . . . 64
8.12 Waiver of Jury Trial. . . . . . . . . . . . . . . . . . 65
Exhibits
Exhibit A Excel Consent and Voting Agreement
Exhibit B Teleglobe Consent and Voting Agreements
Exhibit C Excel Stock Option Agreement
Exhibit D Teleglobe Stock Option Agreement
Exhibit E Registration Rights Agreement
Exhibit F Teleglobe Articles Amendment; Teleglobe By-Law Amendment
Exhibit G Teleglobe Tax Certificate
Exhibit H Excel Tax Certificate
Exhibit I Excel Affiliates Letter
Exhibit J Teleglobe Affiliates Letter
AGREEMENT AND PLAN OF MERGER, dated as of June 14, 1998 (this
"Agreement"), among TELEGLOBE INC., a corporation governed by the Canada
Business Corporations Act (the "CBCA") ("Teleglobe"), NORTH MERGER SUB
CORPORATION, a Delaware corporation and a direct wholly owned subsidiary of
Teleglobe ("Merger Sub"), and EXCEL COMMUNICATIONS, INC., a Delaware
corporation ("Excel"). Certain capitalized terms used herein but not defined
when used have the meanings assigned to such terms in Section 8.11.
W I T N E S S E T H:
WHEREAS, the Boards of Directors of Teleglobe and Excel deem it
advisable and in the best interests of each corporation and of their
respective shareholders that Teleglobe and Excel combine their respective
businesses, stockholders, managements, employees and other constituencies in
a merger of equals in order to advance the long-term business interests of
Teleglobe and Excel;
WHEREAS, the combination of Teleglobe and Excel shall be effected
by the terms of this Agreement through a merger as described below;
WHEREAS, in furtherance thereof, the respective Boards of Directors
of Teleglobe, Merger Sub and Excel have approved the merger of Merger Sub
with and into Excel (the "Merger"), with Excel to be the surviving
corporation in such Merger (the "Surviving Corporation"), upon the terms and
subject to the conditions set forth in this Agreement, pursuant to which each
outstanding share of common stock, par value $.001 per share, of Excel
("Excel Common Stock") issued and outstanding immediately prior to the
Effective Time (as defined in Section 1.3), will be converted into the right
to receive common shares, without par value, of Teleglobe (all such shares to
be issued in the Merger, "Teleglobe Common Shares") based upon the Exchange
Ratio (as defined in Section 1.8(a));
WHEREAS, the Board of Directors of Teleglobe deems it advisable and
in the best interest of Teleglobe and Excel to amend and restate as of the
Effective Time either Teleglobe's Articles of Incorporation (the "Teleglobe
Articles Amendment") or Teleglobe's by-laws (the "Teleglobe By-Law
Amendment") to incorporate certain governance provisions in respect of
certain actions by and the composition of the Board of Directors of
Teleglobe;
WHEREAS, Teleglobe will receive at the Effective Time full equity
ownership of the outstanding stock of the Surviving Corporation through the
simultaneous conversion at the Effective Time of the issued and outstanding
common stock of Merger Sub into common stock of the Surviving Corporation and
cancellation of Excel Common Stock;
WHEREAS, the holders of shares of Excel Common Stock immediately
prior to the Effective Time have the right to receive Teleglobe Common Shares
in the Merger and, in consideration of Teleglobe's agreeing to deliver such
Teleglobe Common Shares to the Exchange Agent (as defined in Section 2.1), as
set forth in Section 2.1, and in exchange for their issuance, Teleglobe is
entitled to subscribe and will subscribe to a number of shares of common
stock, par value $.001 per share, of the Surviving Corporation ("Surviving
Corporation Common Stock") equivalent to the number of shares of Excel Common
Stock outstanding immediately prior to the Effective Time (the "Surviving
Corporation Shares"), as set forth in Section 1.8(f);
WHEREAS, Teleglobe, Merger Sub and Excel desire to make certain
representations, warranties, covenants and agreements in connection with the
transactions contemplated hereby and also to prescribe various conditions to
the transactions contemplated hereby;
WHEREAS, Teleglobe, Merger Sub and Excel intend that the Merger be
accounted for as a pooling-of-interests for financial statements purposes
under generally accepted accounting principles in the United States of
America ("US GAAP") and under generally accepted accounting principles in
Canada ("Canadian GAAP");
WHEREAS, Teleglobe, Merger Sub and Excel intend, by approving
resolutions authorizing this Agreement, to adopt this Agreement as a plan of
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), and the rules and regulations
promulgated thereunder;
WHEREAS, Teleglobe and Merger Sub have required, as a condition to
their willingness to enter into this Agreement, that certain stockholders of
Excel contemporaneously enter into the consent and voting agreement (the
"Excel Consent and Voting Agreement") attached hereto as Exhibit A and
execute and deliver the Excel Stockholders Consent (as defined herein)
immediately following the execution and delivery of this Agreement;
WHEREAS, Excel has required, as a condition to its willingness to
enter into this Agreement, that certain shareholders of Teleglobe
contemporaneously enter into consent and voting agreements in the forms
attached hereto as Exhibit B (the "Teleglobe Consent and Voting Agreements"
and, together with the Excel Consent and Voting Agreement, the "Voting
Agreements") and execute and deliver the Teleglobe Shareholders Consents (as
defined herein) immediately following the execution and delivery of this
Agreement;
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition and inducement to each of Teleglobe's and
Excel's willingness to enter into this Agreement, Teleglobe and Excel have
entered into (i) a stock option agreement dated as of the date of this
Agreement and attached hereto as Exhibit C (the "Excel Stock Option
Agreement"), pursuant to which Excel granted Teleglobe an option to purchase
shares of Excel Common Stock under certain circumstances, and (ii) a stock
option agreement dated as of the date of this Agreement and attached hereto
as Exhibit D (the "Teleglobe Stock Option Agreement" and, together with the
Excel Stock Option Agreement, the "Stock Option Agreements"), pursuant to
which Teleglobe granted Excel an option to purchase common shares of
Teleglobe capital stock under certain circumstances; and
WHEREAS, in connection with the Merger, Teleglobe desires to grant
to certain of Excel's affiliates (as defined for purposes of Rule 145
promulgated under the Securities Act of 1933, as amended (the "Securities
Act")) at the time of execution of the Excel Stockholders Consent (including
those persons identified on the signature pages thereof) certain registration
rights pursuant to a Registration Rights Agreement to be entered into and
delivered at the Closing in the form attached hereto as Exhibit E (the
"Registration Rights Agreement");
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein, and intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I
THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the Delaware General
Corporation Law (the "DGCL"), Merger Sub shall be merged with and into Excel
at the Effective Time. Following the Merger, the separate corporate
existence of Merger Sub shall cease and Excel shall continue as the Surviving
Corporation under the name "Excel Communications, Inc."
1.2 Closing. The closing of the Merger (the "Closing") will take
place at 10:00 a.m., New York time, on the fifth Business Day after the
satisfaction or waiver of the conditions (excluding conditions that, by their
terms, cannot be satisfied until the Closing Date, but subject to
satisfaction or waiver of such conditions) set forth in Article VI (the
"Closing Date"), unless another time or date is agreed to in writing by the
parties hereto. The Closing shall be held at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
& ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, unless another
place is agreed to in writing by the parties hereto.
1.3 Effective Time. As soon as practicable following the Closing,
the parties shall (i) file a certificate of merger (the "Delaware Certificate
of Merger") in such form as is required by and executed in accordance with
the relevant provisions of the DGCL and (ii) make all other filings or
recordings required under the DGCL. The Merger shall become effective at
such time as the Delaware Certificate of Merger is duly filed with the
Delaware Secretary of State or at such subsequent time as Teleglobe and Excel
shall agree and be specified in the Delaware Certificate of Merger (the date
and time the Merger becomes effective being the "Effective Time").
1.4 Effects of the Merger. At and after the Effective Time, the
Merger will have the effects set forth in the DGCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time all
the property, rights, privileges, powers and franchises of Excel and Merger
Sub shall be vested in the Surviving Corporation, and all debts, liabilities
and duties of Excel and Merger Sub shall become the debts, liabilities and
duties of the Surviving Corporation.
1.5 Certificate of Incorporation of Surviving Corporation. The
certificate of incorporation of Excel, as in effect immediately prior to the
Effective Time, shall be the certificate of incorporation of the Surviving
Corporation, until thereafter changed or amended as provided therein or by
applicable Law (as defined in Section 3.1(d)(ii)), except that Article Fourth
of the Certificate of Incorporation of the Surviving Corporation shall be
amended to read in its entirety as follows:
"The total number of shares of stock which the
Corporation shall have authority to issue is [insert
actual number of shares of Excel Common Stock outstanding
at the Effective Time plus 1,000] shares of common stock,
par value $0.001 per share ("Common Stock").
(a) Each share of Common Stock of the Corporation
shall have identical rights and privileges in every
respect. The holders of shares of Common Stock shall be
entitled to vote upon all matters submitted to a vote of
the stockholders of the Corporation and shall be entitled
to one vote for each share of Common Stock held.
(b) The holders of shares of Common Stock shall be
entitled to receive such dividends (payable in cash,
stock or otherwise) as may be declared thereon by the
Board of Directors at any time and from time to time out
of any funds of the Corporation legally available
therefor.
(c) In the event of any voluntary or involuntary
liquidation, dissolution or winding-up of the
Corporation, the holders of shares of Common Stock shall
be entitled to receive all of the assets of the
Corporation available for distribution to its
stockholders, ratably in proportion to the number of
share of Common Stock held by them. A liquidation,
dissolution or winding-up of the Corporation, as such
terms are used in this Paragraph (c), shall not be deemed
to be occasioned by or to include any consolidation or
merger of the Corporation with or into any other
corporation or corporations or other entity or a sale,
lease, exchange or conveyance of all or part of the
assets of the Corporation."
1.6 By-Laws of Surviving Corporation. The by-laws of Merger Sub,
as in effect immediately prior to the Effective Time, shall be the by-laws of
the Surviving Corporation until thereafter changed or amended as provided
therein or by applicable Law.
1.7 Officers and Directors of Surviving Corporation. The officers
of Excel as of the Effective Time shall be the officers of the Surviving
Corporation, until the earlier of their resignation or removal or otherwise
ceasing to be an officer or until their respective successors are duly
elected or appointed and qualified, as the case may be. The directors of
Merger Sub as of the Effective Time (which shall be comprised of an equal
number of representatives designated by Teleglobe and Excel) shall be the
directors of the Surviving Corporation until the earlier of their resignation
or removal or otherwise ceasing to be a director or until their respective
successors are duly elected or appointed and qualified.
1.8 Effect on Capital Stock. (a) At the Effective Time by virtue
of the Merger and without any action on the part of the holder thereof, each
share of Excel Common Stock issued and outstanding immediately prior to the
Effective Time shall be converted into the right to receive 0.885 (the
"Exchange Ratio") of a common share of Teleglobe capital stock (which
together with any cash in lieu of fractional Teleglobe Common Shares shall be
the "Merger Consideration"). It is understood and agreed by the parties that
on June 15, 1998, Teleglobe will pay a dividend (the "Teleglobe Stock
Dividend") of one common share of Teleglobe capital stock in respect of each
outstanding common share of Teleglobe capital stock and of one First Series
Preferred Share of Teleglobe capital stock in respect of each outstanding
First Series Preferred Share of Teleglobe capital stock to shareholders of
record on such date, and that the Exchange Ratio has been calculated after
giving effect to such dividend.
(b) As a result of the Merger and without any action on the part
of the holders thereof, at the Effective Time, all shares of Excel Common
Stock shall cease to be outstanding and shall be canceled and retired and
shall cease to exist, and each holder (other than Teleglobe, Merger Sub and
Excel) of a certificate which, immediately prior to the Effective Time,
represented any such shares of Excel Common Stock (a "Certificate") shall
thereafter cease to have any rights with respect to such shares of Excel
Common Stock, except the right to receive the applicable Merger Consideration
in accordance with Article II upon the surrender of such Certificate.
(c) Each share of Excel Common Stock issued and owned or held by
Teleglobe, Merger Sub or Excel at the Effective Time shall, by virtue of the
Merger, cease to be outstanding and shall be canceled and retired and no
Teleglobe Common Shares or other consideration shall be delivered in exchange
therefor.
(d) Each share of common stock, par value $.001 per share, of
Merger Sub ("Merger Sub Common Stock") issued and outstanding immediately
prior to the Effective Time shall be converted into and shall become one
validly issued fully paid and nonassessable share of Surviving Corporation
Common Stock as of the Effective Time, and the Surviving Corporation shall
become a wholly owned Subsidiary of Teleglobe.
(e) At the Effective Time, each outstanding option to purchase or
right to receive Excel Common Stock (an "Excel Stock Option") issued pursuant
to the (a) Excel Communications, Inc. Employee Ownership Plan, (b) Excelcom,
Inc. 1995 Stock Option Plan, (c) Excelcom, Inc. 1997 Director Stock Option
Plan, (d) Excelcom, Inc. Director Stock Option Plan with ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
(e) Telco Communications Group, Inc. Amended and Restated 1994 Stock Option
Plan, (f) Excel Communications, Inc. 1997 Stock Option Plan and (g) Excel
Communications, Inc. 1997 Director Stock Option Plan (collectively, the
"Excel Stock Plans"), whether vested or unvested, shall be deemed to
constitute an option to acquire, on the same terms and conditions as were
applicable under such Excel Stock Option (taking into account any
acceleration of vesting as a result of the Merger), that number of common
shares of Teleglobe capital stock which the holder of such Excel Stock Option
would have been entitled to receive pursuant to the Merger if such holder had
exercised such Excel Stock Option in full immediately prior to the Effective
Time (rounded up to the nearest whole number), at an exercise price per share
equal to (y) the exercise price per share for the shares of Excel Common
Stock purchasable pursuant to such Excel Stock Option divided by (z) the
Exchange Ratio (a "Converted Option"). Teleglobe shall take such actions as
are necessary for the assumption of the Excel Stock Options pursuant to this
Section 1.8(e), including the reservation, issuance and listing of common
shares of Teleglobe capital stock as are necessary to effectuate the
transactions contemplated by this Section 1.8(e). Teleglobe shall prepare
and file with the Securities and Exchange Commission (the "SEC") a
registration statement on Form S-8 or other appropriate form with respect to
common shares of Teleglobe capital stock subject to Excel Stock Options
issued under such Excel Stock Plans and shall use its best efforts to have
such registration statement declared effective immediately following the
Effective Time and to maintain the effectiveness of such registration
statement or registration statements covering such Excel Stock Options (and
maintain the current status of the prospectus or prospectuses contained
therein) for so long as such Excel Stock Options remain outstanding.
(f) In exchange for and in consideration of the issuance of the
Teleglobe Common Shares, Teleglobe will be entitled to subscribe and
undertakes and agrees to subscribe, at the Effective Time, for the Surviving
Corporation Common Stock. The Surviving Corporation Common Stock will at the
Effective Time have been duly authorized and, when issued to Teleglobe
pursuant to this Agreement, will be validly issued and outstanding as fully
paid and non-assessable.
(g) At the Effective Time, the Registration Rights Agreement dated
as of October 14, 1997, between Excel and the stockholders of Excel named on
the signature pages thereto shall, by virtue of the Merger, become applicable
to the common shares of Teleglobe capital stock on the same terms and
conditions applicable to the Excel Common Stock and Teleglobe shall assume
the obligations of Excel with respect thereto.
1.9 Teleglobe Articles Amendment; Teleglobe By-Law Amendment.
Subject to the receipt of the Required Articles Amendment Vote or the
Required By-Law Amendment Vote (each as defined in Section 3.2(i)), the
articles of incorporation or the by-laws of Teleglobe, as in effect
immediately prior to the Effective Time, shall be amended and restated as of
the Effective Time to include the provisions set forth in Exhibit F.
ARTICLE II
EXCHANGE OF CERTIFICATES
2.1 Exchange Fund. Prior to the Effective Time, Teleglobe shall
appoint a commercial bank or trust company reasonably acceptable to Excel
having net capital of not less than $100,000,000, to act as exchange agent
hereunder for the purpose of exchanging Certificates for the Merger
Consideration (the "Exchange Agent"). At or prior to the Effective Time,
Teleglobe shall deposit with the Exchange Agent, in trust for the benefit of
holders of shares of Excel Common Stock, certificates representing the
Teleglobe Common Shares issuable pursuant to Section 1.8(a) in exchange for
outstanding shares of Excel Common Stock. Teleglobe agrees to make available
to the Exchange Agent from time to time as needed, cash sufficient to pay
cash in lieu of fractional shares pursuant to Section 2.5 and any dividends
and other distributions pursuant to Section 2.3. Any cash and certificates
representing Teleglobe Common Shares deposited with the Exchange Agent shall
hereinafter be referred to as the "Exchange Fund." At the Effective Time,
the Surviving Corporation shall deposit with the Exchange Agent, in trust for
the benefit of Teleglobe, a certificate representing the Surviving
Corporation Shares issuable pursuant to Section 1.8(f).
2.2 Exchange Procedures. As soon as reasonably practicable after
the Effective Time, Teleglobe shall cause the Exchange Agent to mail to each
holder of a Certificate (i) a letter of transmittal which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon due delivery of the Certificates and other required
documents to the Exchange Agent, and which letter shall be in customary form
and have such other provisions as Teleglobe may reasonably specify and (ii)
instructions for effecting the surrender of such Certificates in exchange for
the applicable Merger Consideration. Upon surrender of a Certificate to the
Exchange Agent together with such letter of transmittal, duly executed and
completed in accordance with the instructions thereto, and such other
documents as may reasonably be required by the Exchange Agent, the holder of
such Certificate shall be entitled to receive in exchange therefor (A) a
certificate representing one or more Teleglobe Common Shares representing, in
the aggregate, the whole number of shares that such holder has the right to
receive pursuant to Section 1.8(a) (after taking into account all shares of
Excel Common Stock then held by such holder) and (B) a check in the amount
(after giving effect to any required tax withholdings) equal to the cash that
such holder has the right to receive pursuant to the provisions of this
Article II, including cash in lieu of any fractional Teleglobe Common Shares
pursuant to Section 2.5 and any unpaid dividends and other distributions to
which such holder is entitled pursuant to Section 2.3, and the Certificate so
surrendered shall forthwith be canceled. No interest will be paid or will
accrue on any cash payable pursuant to Section 2.3 or Section 2.5. In the
event of a transfer of ownership of Excel Common Stock which is not
registered in the transfer records of Excel, one or more certificates
evidencing, in the aggregate, the proper number of Teleglobe Common Shares
and a check in the proper amount of cash in lieu of any fractional Teleglobe
Common Shares pursuant to Section 2.5 and any dividends or other
distributions to which such holder is entitled pursuant to Section 2.3 may be
issued with respect to such Excel Common Stock to such a transferee if the
Certificate representing such shares of Excel Common Stock is presented to
the Exchange Agent, accompanied by all documents required to evidence and
effect such transfer and the ownership of such shares of Excel Common Stock
by such transferee and to evidence that any applicable stock transfer taxes
have been paid.
2.3 Distributions with Respect to Unexchanged Shares. No
dividends or other distributions declared or made with respect to common
shares of Teleglobe capital stock with a record date after the Effective Time
shall be paid to the holder of any unsurrendered Certificate with respect to
the Teleglobe Common Shares that such holder would be entitled to receive
upon surrender of such Certificate pursuant to the Merger and no cash payment
in lieu of fractional Teleglobe Common Shares shall be paid to any such
holder pursuant to Section 2.5 until such holder shall surrender such
Certificate in accordance with Section 2.2. Subject to the effect of
applicable Law, following surrender of any such Certificate, there shall be
paid to such holder, without interest, (a) promptly after the time of such
surrender, the amount of any cash payable in lieu of fractional Teleglobe
Common Shares to which such holder is entitled pursuant to Section 2.5 and
the amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole Teleglobe Common
Shares, and (b) at the appropriate payment date, the amount of dividends or
other distributions with a record date after the Effective Time but prior to
such surrender and a payment date subsequent to such surrender payable with
respect to such Teleglobe Common Shares. For purposes of dividends or other
distributions in respect of common shares of Teleglobe capital stock, all
Teleglobe Common Shares to be issued pursuant to the Merger shall be deemed
issued and outstanding as of the Effective Time.
2.4 No Further Ownership Rights in Excel Common Stock . All
Teleglobe Common Shares issued and cash paid upon conversion of shares of
Excel Common Stock in accordance with the terms of Article I and this Article
II (including any stock dividends or cash paid pursuant to Section 2.3 or
cash paid pursuant to Section 2.5) shall be issued or paid in full
satisfaction of all rights pertaining to the shares of Excel Common Stock.
2.5 No Fractional Teleglobe Common Shares. (a) No certificates or
scrip or Teleglobe Common Shares representing fractional Teleglobe Common
Shares shall be issued upon the surrender for exchange of Certificates and
such fractional share interests will not entitle the owner thereof to vote or
to have any rights of a shareholder of Teleglobe or a holder of Teleglobe
Common Shares.
(b) Notwithstanding any other provision of this Agreement, each
holder of shares of Excel Common Stock exchanged pursuant to the Merger who
would otherwise have been entitled to receive a fraction of a Teleglobe
Common Share (after taking into account all Certificates delivered by such
holder) shall be entitled to receive, in lieu thereof, cash (without
interest) in an amount equal to the product of (i) such fractional part of a
Teleglobe Common Share and (ii) the average closing price of the Teleglobe
Common Shares on the New York Stock Exchange, Inc. (the "NYSE"), as reported
on the NYSE Composite Tape for the ten trading days prior to and ending on
the trading day immediately preceding the Closing Date (the "Average Price").
As promptly as practicable after the determination of the amount of cash, if
any, to be paid to holders of fractional interests, the Exchange Agent shall
so notify Teleglobe, and Teleglobe shall deposit such amount with the
Exchange Agent and shall cause the Exchange Agent to forward payments to such
holders of fractional interests subject to and in accordance with the terms
hereof.
2.6 Termination of Exchange Fund. Any portion of the Exchange
Fund which remains undistributed to the holders of Certificates for twelve
months after the Effective Time shall be delivered to Teleglobe or otherwise
on the instruction of Teleglobe, and any holders of the Certificates who have
not theretofore complied with this Article II shall thereafter look only to
Teleglobe for the Merger Consideration with respect to the shares of Excel
Common Stock formerly represented thereby to which such holders are entitled
pursuant to Section 1.8 and Section 2.2, including any cash in lieu of
fractional Teleglobe Common Shares to which such holders are entitled
pursuant to Section 2.5, and any dividends or distributions with respect to
Teleglobe Common Shares to which such holders are entitled pursuant to
Section 2.3, in each case, without any interest thereon. Any such portion of
the Exchange Fund remaining unclaimed by holders of shares of Excel Common
Stock immediately prior to such time as such amounts would otherwise escheat
to or become property of any Governmental Entity (as defined in Section
3.1(d)(iii)) shall, to the extent permitted by Law, become the property of
Teleglobe free and clear of any claims or interest of any Person previously
entitled thereto.
2.7 No Liability. None of Teleglobe, Merger Sub, Excel, the
Surviving Corporation or the Exchange Agent shall be liable to any Person in
respect of any Merger Consideration or any cash in respect of dividends or
other distributions from the Exchange Fund delivered to a public official
pursuant to any applicable abandoned property, escheat or similar Law.
2.8 Investment of the Exchange Fund. The Exchange Agent shall
invest any cash included in the Exchange Fund as directed by Teleglobe on a
daily basis. Any interest and other income resulting from such investments
shall promptly be paid to Teleglobe.
2.9 Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
Person claiming such Certificate to be lost, stolen or destroyed, and if
required by Teleglobe, the posting by such Person of a bond in such
reasonable amount as Teleglobe may direct as indemnity against any claim that
may be made against it with respect to such Certificate, the Exchange Agent
will deliver in exchange for such lost, stolen or destroyed Certificate the
applicable Merger Consideration with respect to the shares of Excel Common
Stock formerly represented thereby (including any cash in lieu of fractional
Teleglobe Common Shares), and any unpaid dividends and distributions on
Teleglobe Common Shares deliverable in respect thereof, pursuant to this
Agreement.
2.10 Withholding Rights. Each of the Surviving Corporation and
Teleglobe shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of shares of Excel
Common Stock such amounts as it is required to deduct and withhold with
respect to the making of such payment under the Code and the rules and
regulations promulgated thereunder, or any other provision of applicable Law.
To the extent that amounts are so withheld by the Surviving Corporation or
Teleglobe, as the case may be, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the shares of
Excel Common Stock in respect of which such deduction and withholding was
made by the Surviving Corporation or Teleglobe, as the case may be.
2.11 Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of Excel or Merger Sub, any
deeds, bills of sale, assignments or assurances and to take and do, in the
name and on behalf of Excel or Merger Sub, any other actions and things to
vest, perfect or confirm of record or otherwise in Teleglobe or in the
Surviving Corporation any and all right, title and interest in, to and under
any of the rights, properties or assets acquired or to be acquired by
Teleglobe or the Surviving Corporation as a result of, or in connection with,
the Merger.
2.12 Stock Transfer Books. At the close of business, New York
City time, on the day the Effective Time occurs, the stock transfer books of
Excel shall be closed and there shall be no further registration of transfers
of shares of Excel Common Stock thereafter on the records of Excel. From and
after the Effective Time, the holders of Certificates shall cease to have any
rights with respect to such shares of Excel Common Stock formerly represented
thereby, except as otherwise provided herein or by applicable Law. Subject
to Sections 2.6 and 2.7, on or after the Effective Time, any Certificates
presented to the Exchange Agent or Teleglobe for any reason shall be
converted into the Merger Consideration with respect to the shares of Excel
Common Stock formerly represented thereby (including any cash in lieu of
fractional Teleglobe Common Shares to which the holders thereof are entitled
pursuant to Section 2.5) and shall represent the right to receive dividends
or other distributions to which the holders thereof are entitled pursuant to
Section 2.3.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Excel. Excel represents and
warrants to Teleglobe and Merger Sub that the statements contained in this
Section 3.1 are true and correct except as set forth herein and in the
disclosure schedule delivered by Excel to Teleglobe (the "Excel Disclosure
Schedule"). The Excel Disclosure Schedule is arranged in paragraphs
corresponding to the numbered and lettered paragraphs contained in this
Agreement and the section of the disclosure schedule corresponding to any
numbered and lettered paragraph shall qualify other paragraphs in this
Agreement only to the extent that it is reasonably apparent from a reading of
such disclosure that it also qualifies or applies to such other paragraphs.
Inclusion of information in the Excel Disclosure Schedule shall not be
construed as an admission that such information is material to the operations
or financial condition of Excel and its Subsidiaries.
(a) Organization, Standing and Power. Each of Excel and each of
its Subsidiaries is a corporation or other entity duly incorporated or
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization, has all requisite power and
authority to own, lease and operate its properties and to carry on its
business as now being conducted and is duly qualified and in good standing to
do business in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary
other than in such jurisdictions where the failure so to qualify or to be in
good standing would not, either individually or in the aggregate, have a
Material Adverse Effect on Excel. The copies of the certificate of
incorporation and by-laws of Excel which were previously furnished to
Teleglobe are true, complete and correct copies of such documents as in
effect on the date of this Agreement.
(b) Subsidiaries. Excel does not own, directly or indirectly, any
equity or other ownership interest in any corporation, partnership, joint
venture or other entity or enterprise, except for the Subsidiaries and other
entities set forth in the Excel Disclosure Documents (as defined in Section
3.1(e)), which are all the Subsidiaries of Excel that are "Significant
Subsidiaries" as such term is defined in Rule 1-02 of Regulation S-X under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Except
as set forth in the Excel Disclosure Documents filed prior to the date of
this Agreement, neither Excel nor any of its Subsidiaries is subject to any
obligation or requirement to provide a material amount of funds to or make
any material investment (in the form of a loan, capital contribution or
otherwise) in any such entity that is not directly or indirectly wholly owned
by Excel. Except as would not, either individually or in the aggregate, have
a Material Adverse Effect on Excel, each of the outstanding shares of capital
stock (or other ownership interests having by their terms ordinary voting
power to elect directors or others performing similar functions with respect
to such Subsidiary) owned by Excel of each of Excel's Subsidiaries is duly
authorized, validly issued, fully paid and nonassessable, and is owned
directly or indirectly by Excel free and clear of all liens, pledges,
security interests, claims or other encumbrances of any kind whatsoever
(including voting, transfer or similar rights such as rights of first offer
or rights of first refusal).
(c) Capital Structure. (i) As of the date hereof, the authorized
capital stock of Excel consisted of (A) 500,000,000 shares of Excel Common
Stock, of which, at the close of business on June 14, 1998, 132,259,389
shares were outstanding and 2,045,250 shares were reserved for issuance
pursuant to options or rights under the Excel Stock Plans (as defined in
Section 1.8(e)) and (B) 10,000,000 shares of preferred stock, par value $.001
per share, of which at the close of business on June 14, 1998, no shares were
outstanding. All issued and outstanding shares of the capital stock of Excel
are duly authorized, validly issued, fully paid and nonassessable, and no
class of capital stock is entitled to preemptive rights. There were
outstanding as of June 14, 1998 no options, warrants or other rights to
acquire capital stock from Excel other than options to acquire 9,459,032
shares of Common Stock. No Subsidiaries of Excel own any shares of Excel
Common Stock.
(ii) As of the date of this Agreement, no bonds, debentures, notes
or other indebtedness of Excel having the right to vote on any matters on
which shareholders may vote ("Excel Voting Debt") are issued or outstanding.
(iii) Except as otherwise set forth in this Section 3.1(c), there
are no securities, options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which Excel or any of its
Subsidiaries is a party or by which any of them is bound obligating Excel or
any of its Subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or other voting
securities of Excel or any of its Subsidiaries or obligating Excel or any of
its Subsidiaries to issue, grant, extend or enter into any such security,
option, warrant, call, right, commitment, agreement, arrangement or
undertaking. There are no outstanding obligations of Excel or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital
stock of Excel or any of its Subsidiaries. There are no agreements or
arrangements pursuant to which Excel is or could be required to register
shares of Excel Common Stock or other securities under the Securities Act, or
other agreements or arrangements with or among any securityholders of Excel
with respect to securities of Excel. There are no voting, sale, transfer or
other similar agreements to which Excel or any of its Subsidiaries is a party
with respect to the capital stock of Excel or its Subsidiaries or any other
securities of Excel or its Subsidiaries which are convertible or exchangeable
into or exercisable for shares of the capital stock of Excel or its
Subsidiaries.
(d) Authority; No Conflicts. (i) Excel has all requisite
corporate power and authority to enter into this Agreement and the other
Transaction Documents to which it is or may become a party and to consummate
the transactions contemplated hereby and thereby, subject in the case of the
consummation of the Merger to the adoption of this Agreement by the Required
Excel Vote (as defined in Section 3.1(i)). The execution and delivery by
Excel of this Agreement and the other Transaction Documents to which it is or
may become a party and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate
action on the part of Excel, subject in the case of the consummation of the
Merger to the approval and adoption of this Agreement by the Required Excel
Vote. This Agreement has been, and the other Transaction Documents to which
Excel is or may become a party have been or will be when executed by Excel,
duly executed and delivered by Excel, and each constitutes or will constitute
a valid and binding agreement of Excel, enforceable against it in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws
relating to or affecting creditors generally, by general equity principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) or by an implied covenant of good faith and fair dealing.
(ii) The execution and delivery by Excel of this Agreement and the
other Transaction Documents to which it is or may become a party do not and
will not, and the consummation by Excel of the Merger and the other
transactions contemplated hereby or thereby will not, conflict with, or
result in any violation of, or constitute a default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
amendment, cancellation or acceleration of any obligation or the loss of a
material benefit under, or the creation of a lien, pledge, security interest,
charge or other encumbrance on any assets (any such conflict, violation,
default, right of termination, amendment, cancellation or acceleration, loss
or creation, a "Violation") pursuant to (A) any provision of the certificate
of incorporation or by-laws of Excel or any Subsidiary of Excel or (B) except
as are not, individually or in the aggregate, reasonably likely to have a
Material Adverse Effect on Excel or prevent or materially delay the
performance of this Agreement by Excel and, subject to obtaining or making
the consents, approvals, orders, authorizations, registrations, declarations
and filings referred to in paragraph (iii) below, any loan or credit
agreement, note, mortgage, bond, indenture, lease, benefit plan or other
agreement, obligation, commitment, contract or instrument (any of the
foregoing a "Contract"), Permit or Federal or national, state or provincial,
municipal or local law, rule, regulation, statute, ordinance, decree, order,
permit, authorization, opinion, judgment or other legislation, whether of the
U.S., Canada or another foreign jurisdiction ("Laws"), applicable to Excel or
any Subsidiary of Excel or their respective properties or assets. For
purposes of this agreement, "Permit" shall mean any franchise, concession,
grant, authorization, license, permit, easement, variance, exception,
consent, certificate, approval, clearance or order of any Governmental Entity
required by Law, including any Environmental Law.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Federal, national, state,
provincial, municipal or local government, any instrumentality, subdivision,
court, administrative agency or commission or other authority thereof, or any
quasi-governmental or private body exercising any regulatory, taxing,
importing or any other governmental or quasi-governmental authority, whether
of the U.S., Canada or another foreign jurisdiction (a "Governmental
Entity"), is required by or with respect to Excel or any Subsidiary of Excel
in connection with the execution and delivery by Excel of this Agreement and
the other Transaction Documents to which it may be a party or the
consummation by Excel of the Merger and the other transactions contemplated
hereby or thereby, except for those required under or in relation to (A) the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
Act") and the Competition Act (Canada), (B) the Communications Act of 1934,
as amended (the "Communications Act"), and any rules, regulations, orders,
practices and policies promulgated by the U.S. Federal Communications
Commission (the "FCC") (such rules the "Federal Communications Laws"), (C)
state securities or "blue sky" laws (the "Blue Sky Laws"), (D) the Securities
Act, (E) the Exchange Act, (F) the Canadian Securities Laws, (G) the DGCL
with respect to the filing of the Delaware Certificate of Merger, (H) the
laws, rules, regulations, orders, practices and policies of any state
legislature or public utility or service commission ("PUCs"), foreign
(including multi-national) telecommunications regulatory agencies or similar
state or foreign regulatory bodies, (I) rules and regulations of the NYSE,
(J) antitrust or other competition Laws of other jurisdictions and (K) such
consents, approvals, orders, authorizations, registrations, declarations and
filings the failure of which to make or obtain are not, individually or in
the aggregate, reasonably likely to have a Material Adverse Effect on Excel
or prevent or materially delay the performance of this Agreement by Excel.
Consents, approvals, orders, authorizations, registrations, declarations and
filings required under or in relation to any of the foregoing clauses (A)
through (J) are hereinafter referred to as the "Required Consents." Neither
the execution and delivery by Excel of this Agreement and the other
Transaction Documents to which Excel is a party nor the consummation and
performance by Excel of the Merger and the other transactions contemplated
hereby or thereby will result in a violation of (a) the Federal
Communications Laws, (b) the laws, rules, regulations, orders, practices or
policies of any state legislature or PUC, foreign (including multi-national)
telecommunications regulatory agency or similar state or foreign regulatory
body or (c) any order, writ, judgment, injunction, decree or award of the
FCC, any entity listed in clause (b) above, or any court of competent
jurisdiction binding upon Excel, other than any violation which is not,
individually or in the aggregate, reasonably likely to have a Material
Adverse Effect on Excel.
(iv) Each of Excel and its Subsidiaries is in possession of all
Permits from appropriate Governmental Entities necessary for Excel or any of
its Subsidiaries to own, lease and operate its properties or to carry on
their respective businesses as they are now being conducted (the "Excel
Permits"), and all such Excel Permits are valid and in full force and effect,
except where the failure to have, or the suspension, cancellation or
restriction of, any of the Excel Permits does not and would not, individually
or in the aggregate, (a) have or be reasonably likely to have a Material
Adverse Effect on Excel or (b) prevent or materially delay the performance of
this Agreement by Excel. No suspension, cancellation or restriction of any
of the Excel Permits is pending or, to the actual knowledge of the executive
officers of Excel, threatened, except where the failure to have, or the
suspension or cancellation of, any of Excel Permits does not and would not,
individually or in the aggregate, (x) have or be reasonably likely to have a
Material Adverse Effect on Excel or (y) prevent or materially delay the
performance of this Agreement by Excel. Neither Excel nor any of its
Subsidiaries is in conflict with, or in default, breach or violation of, any
Excel Permits, except for such conflicts, defaults, breaches or violations
that do not and would not, individually or in the aggregate, (A) have or be
reasonably likely to have a Material Adverse Effect on Excel or (B) prevent
or materially delay the performance of this Agreement by Excel.
(e) Reports and Financial Statements. Excel has filed all
required reports, schedules, forms, statements and other documents required
to be filed by it with the SEC since January 1, 1996 (collectively,
including all exhibits thereto and any registration statement filed with the
SEC since such date, the "Excel Disclosure Documents"). No Subsidiary of
Excel is required to file any form, report or other document with the SEC.
None of the Excel Disclosure Documents filed since January 1, 1998 (the
"Recent Excel Disclosure Documents"), as of their respective dates (and, if
amended or superseded by a filing prior to the date of this Agreement or the
Closing Date, then on the date of such filing), contained or will contain any
untrue statement of a material fact or omitted or will omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Each of the financial statements (including the related
notes) included in the Excel Disclosure Documents presents fairly, in all
material respects, the consolidated financial position and consolidated
results of operations and cash flows of Excel and its Subsidiaries as of the
respective dates or for the respective periods set forth therein, all in
conformity with US GAAP consistently applied during the periods involved
except as otherwise noted therein, and subject, in the case of the unaudited
interim financial statements, to normal and recurring year-end adjustments
that have not been and are not expected to be material in amount (and except
for the absence of footnotes in the case of such interim financial
statements). All of the Recent Excel Disclosure Documents, as of their
respective dates (and as of the date of any amendment to the respective
Recent Excel Disclosure Documents), complied as to form in all material
respects with the applicable requirements of the Securities Act and the
Exchange Act and the rules and regulations promulgated thereunder.
(f) Information Supplied. (i) None of the information supplied
or to be supplied by Excel for inclusion in, or incorporated by reference
from the Excel Disclosure Documents in, (A) the Form F-4 (as defined in
Section 5.1) will, at the time the Form F-4 is filed with the SEC, at any
time it is amended or supplemented or at the time it becomes effective under
the Securities Act, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading and (B) the Joint Information
Statement/Proxy Statement/Prospectus (as defined in Section 5.1) will, on the
date it is first mailed to the stockholders of Excel or the shareholders of
Teleglobe or at the time of the Excel Stockholders Meeting, if any, or the
Teleglobe Shareholders Meeting (each as defined in Section 5.1), contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The Form F-4 and the Joint Information Statement/Proxy
Statement/ Prospectus will comply as to form in all material respects with
the applicable requirements of the Exchange Act and the Securities Act and
the rules and regulations of the SEC thereunder.
(ii) Notwithstanding the foregoing provisions of this Section
3.1(f), no representation or warranty is made by Excel with respect to
statements made or incorporated by reference in the Form F-4 or the Joint
Information Statement/Proxy Statement/Prospectus based on information
supplied by Teleglobe for inclusion or incorporation by reference therein.
(iii) If at any time prior to the Effective Time any event
relating to Excel or any of its Affiliates, officers or directors should be
discovered by Excel which should be set forth in an amendment to the Form F-4
or a supplement to the Joint Information Statement/ Proxy
Statement/Prospectus, Excel shall promptly inform Teleglobe.
(g) Absence of Certain Changes or Events. Except as disclosed in
the Excel Disclosure Documents filed prior to the date of this Agreement,
since December 31, 1997, Excel and its Subsidiaries have in all material
respects conducted their business in the ordinary course consistent with past
practice, and there has not been any change in the business, condition
(financial or otherwise), assets, liabilities or results of operations of
Excel or any of its Subsidiaries or any event involving Excel or any of its
Subsidiaries which has had, or is reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on Excel.
(h) Board Approval. The Board of Directors of Excel, by
resolutions adopted at a meeting duly called and held and not subsequently
rescinded or modified (the "Excel Board Approval"), has (i) determined that
this Agreement and the other Transaction Documents to which Excel is a party
and the transactions contemplated hereby and thereby, including the Merger,
are in the best interests of Excel and its stockholders, (ii) approved this
Agreement and the other Transaction Documents to which Excel is a party and
the transactions contemplated hereby and thereby, including the Merger, and
(iii) recommended that the stockholders of Excel approve this Agreement and
the Merger.
(i) Vote Required. The affirmative approval, by vote or written
consent, of the holders of a majority of the outstanding shares of Excel
Common Stock to approve the Merger (the "Required Excel Vote") is the only
vote of the holders of any class or series of Excel capital stock necessary
to approve and adopt this Agreement and approve the Merger and no other vote
of the stockholders of Excel is required to approve the other transactions
contemplated hereby or by any other Transaction Documents to which it is or
may be a party.
(j) Brokers or Finders. No agent, broker, investment banker,
financial advisor or other firm or Person is or will be entitled to any
broker's or finder's fee or any other similar commission or fee in connection
with any of the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Excel, except ▇▇▇▇▇▇ Brothers Inc. (the
"Excel Fairness Opinion Banker") or ▇▇▇▇▇ ▇▇▇▇▇▇ Incorporated, whose fees and
expenses will be paid by Excel in accordance with Excel's agreements with
such firms based upon arrangements made by or on behalf of Excel and
previously disclosed to Teleglobe.
(k) Opinion of Excel Fairness Opinion Banker. Excel has received
the opinion of the Excel Fairness Opinion Banker, dated the date of this
Agreement, to the effect that, as of such date, the Exchange Ratio is fair,
from a financial point of view, to the holders of shares of Excel Common
Stock (the "Excel Fairness Opinion"), a copy of which opinion has been made
available to Teleglobe.
(l) No Undisclosed Liabilities. Except as disclosed in the Excel
Disclosure Documents filed prior to the date hereof, and except for normal or
recurring liabilities incurred since December 31, 1997 in the ordinary course
of business consistent with past practices, Excel and its Subsidiaries do not
have any liabilities, either accrued, contingent or otherwise (whether or not
required to be reflected in financial statements in accordance with US GAAP),
and whether due or to become due, which, individually or in the aggregate,
are reasonably likely to have a Material Adverse Effect on Excel.
(m) Taxes.
(i) Except for such matters that would not, individually or
in the aggregate, have a Material Adverse Effect on Excel: (A) Excel and
each of its Subsidiaries have (x) timely filed all Federal, national, state
and local tax returns and reports, whether U.S. or foreign, required to be
filed by them prior to the date of this Agreement (taking into account
extensions), (y) timely paid or accrued all Taxes due and payable thereon,
and (z) timely paid or accrued all Taxes for which a notice of assessment or
collection has been received (other than amounts being contested in good
faith by appropriate proceedings); (B) no tax return of Excel or any of its
Subsidiaries contains a disclosure statement under Section
6662(d)(2)(B)(ii)(l) of the Code or any similar provision of applicable Law;
(C) neither Excel nor any of its Subsidiaries currently is the beneficiary of
any extension of time within which to file any tax return, other than with
respect to the fiscal year ended December 31, 1997; (D) Excel has delivered
to Teleglobe correct and complete copies of all Federal tax returns,
examination reports and statements of deficiencies assessed against or agreed
to by Excel or any of its Subsidiaries for the past three taxable years of
Excel; (E) with respect to any period for which tax returns are not yet due
(including extensions), or for which Taxes are not yet due and owing, Excel
and each of its Subsidiaries has made due and sufficient current accruals for
such Taxes in the financial statements included in the Recent Excel
Disclosure Documents; (F) neither the Internal Revenue Service (the "IRS")
nor any other taxing authority has asserted in writing to Excel any claim for
Taxes, or to the actual knowledge of the executive officers of Excel, is
threatening to assert any claims for Taxes; (G) Excel and each of its
Subsidiaries have withheld or collected and paid over to the appropriate
governmental authorities (or are properly holding for such payment) all Taxes
required by Law to be withheld or collected; (H) neither Excel nor any of its
Subsidiaries has made an election under Section 341(f) of the Code; (I)
neither Excel nor any of its Subsidiaries has made any payments, is obligated
to make any payments, or is a party to any agreement that under certain
circumstances could obligate it to make any payments that will not be
deductible under Sections 162(m) or 280G of the Code or that will be subject
to excise tax under Section 4999 of the Code; (J) neither Excel nor any of
its Subsidiaries (x) has been a member of an affiliated group within the
meaning of Section 1504(a) of the Code (or any similar group defined under a
similar provision of applicable Law) other than an affiliated group the
common parent of which is Excel and (y) has any liability under Treasury
Regulations Section 1.1502-6 (or any similar provision of applicable Law), as
a transferee or successor, by contract or otherwise for Taxes of any
affiliated group of which Excel is not the common parent; (K) there are no
liens for Taxes upon the assets of Excel or any of its Subsidiaries (other
than liens for Taxes that are not yet due or that are being contested in good
faith by appropriate proceedings); (L) neither Excel nor any of its
Subsidiaries is the subject of any currently ongoing Tax audit, other than in
the ordinary course of business consistent with past practice; (M) there are
no pending requests for waivers of the time to assess any Tax, other than
those made in the ordinary course and for which payment has been made or
there are adequate reserves; and (N) neither Excel nor any of its
Subsidiaries has waived any statute of limitations in respect of Taxes or
agreed to any extension of time with respect to a Tax assessment or
deficiency.
(ii) For the purposes of this Agreement, a "Tax" or,
collectively, "Taxes," means any and all material Federal, state, local and
foreign taxes, assessments and other governmental charges, duties,
impositions and liabilities, including taxes based upon or measured by gross
receipts, income, profits, sales, use and occupation, and value added,
ad valorem, transfer, gains, franchise, withholding, payroll, recapture,
employment, excise, unemployment insurance, social security, business
license, occupation, business organization, stamp, environmental, customs
duty, capital stock, severance, disability, production and property taxes,
together with all interest, penalties and additions imposed with respect to
such amounts and any obligations under any agreements or arrangements with
any other person with respect to such amounts and including any liability for
taxes of a predecessor entity.
(n) Properties.
(i) Section 3.1(n)(i) of the Excel Disclosure Schedule
contains a true and complete list of all real property leased by Excel or its
Subsidiaries pursuant to leases providing for the occupancy of facilities in
excess of 20,000 square feet (collectively "Material Leases"). Each of Excel
and its Subsidiaries is not in default under any of such leases, except where
the existence of such defaults, individually or in the aggregate, are not
reasonably likely to have a Material Adverse Effect on Excel.
(ii) The Excel Disclosure Schedule contains a true and
complete list of all real property that Excel or any of its Subsidiaries
owns. With respect to each such item of real property, except for such
matters which are not reasonably likely, individually or in the aggregate, to
have a Material Adverse Effect on Excel: (x) Excel or one of its Subsidiaries
has good and marketable title to such property, free and clear of any
security interest, easement, covenant or other restriction, except for
recorded easements, covenants and other restrictions which do not materially
impair the current uses or occupancy of such property; and (y) the
improvements constructed on such property are in good condition, and all
mechanical and utility systems servicing such improvements are in good
condition, free in each case of material defects.
(o) Intellectual Property. To the actual knowledge of the
executive officers of Excel, Excel and its Subsidiaries own, or are licensed
or otherwise possess the rights to use, all intellectual property, including
patents, inventions, discoveries, technology, know-how, copyrights and
copyrightable works (including computer software, databases, code and related
systems, files and applications), trademarks, service marks, trade names,
trade dress, Internet domain names, trade secrets, confidential information,
specifications and designs that are necessary to conduct the business of
Excel and its Subsidiaries in all material respects as currently conducted
(the "Excel Intellectual Property"). All of the Excel Intellectual Property
necessary to conduct the business of Excel as currently conducted in all
material respects is subsisting and unexpired, has not been abandoned, does
not infringe or otherwise impair the intellectual property rights of any
third party, is not subject to any lien or other encumbrance, and does not
require the consent of any other Person to be used by the Surviving
Corporation upon the consummation of the transactions contemplated by this
Agreement (except for any such consent already obtained). No action, suit or
proceeding is pending, or to the actual knowledge of the executive officers
of Excel, threatened by any third party or Governmental Entity that seeks to
limit, cancel or question the validity of, or Excel's rights to, any Excel
Intellectual Property. Excel has taken reasonable steps to protect, maintain
and safeguard the Excel Intellectual Property, including any Excel
Intellectual Property for which improper or unauthorized disclosure would
impair its value or validity. To the actual knowledge of the executive
officers of Excel, no other Person is infringing or otherwise impairing any
of the Excel Intellectual Property.
(p) Agreements, Contracts and Commitments. Neither Excel nor any
of its Subsidiaries has breached, or received in writing any claim or notice
that it has breached, any of the terms or conditions of any material Contract
to which it is a party ("Excel Material Contracts"), other than any breaches
which, individually or in the aggregate, would have a Material Adverse Effect
on Excel. Each Excel Material Contract that has not expired by its terms is
in full force and effect.
(q) Litigation. Except as disclosed in the Excel Disclosure
Documents filed prior to the date hereof, as of the date hereof, there are no
actions, suits, investigations or proceedings (adjudicatory, rulemaking or
otherwise) pending or, to the actual knowledge of the executive officers of
Excel, threatened, nor any outstanding orders, decrees or judgments issued,
against Excel or any of its Subsidiaries (or any Employee Plan or Benefit
Arrangement), or any property of Excel or any such Subsidiary (including
Excel Intellectual Property), before any arbitrator of any kind or in or
before or by any Governmental Entity, except actions, suits, investigations,
proceedings, orders, decrees or judgments, which, individually and in the
aggregate, do not and are not reasonably likely to (a) have a Material
Adverse Effect on Excel or (b) prevent or materially delay the performance of
this Agreement by Excel.
(r) Environmental Matters.
(i) Except for such matters that, individually or in the
aggregate, are not reasonably likely to have a Material Adverse Effect on
Excel: (a) Excel and its Subsidiaries comply and within all applicable
statutes of limitations periods have complied with all applicable
Environmental Laws (as defined in Section 3.1(r)(iv)) and all applicable
Permits under applicable Environmental Laws; (b) Hazardous Substances (as
defined in Section 3.1(r)(v)) are not present at any of the properties
(including soils, groundwater, surface water, buildings or other structures)
owned or operated by Excel or any of its Subsidiaries in violation of or at
concentrations that would require remediation under any Environmental Law;
(c) neither Excel nor any of its Subsidiaries is subject to liability for any
Hazardous Substance disposal or contamination on any third party property;
(d) neither Excel nor any of its Subsidiaries has been associated with any
release or threat of release of any Hazardous Substance in violation or
otherwise in excess of levels of concentration permitted by any Environmental
Laws; (e) neither Excel nor any of its Subsidiaries has received any written
notice, demand, letter, claim or request for information alleging that Excel
or any of its Subsidiaries may be in violation of or liable under any
Environmental Law; (f) neither Excel nor any of its Subsidiaries is subject
to any orders, decrees, injunctions or other arrangements with any
Governmental Entity or is subject to any indemnity or other agreement with
any third party relating to liability under any Environmental Law or relating
to Hazardous Substances; (g) there are no circumstances or conditions
involving Excel or any of its Subsidiaries that would reasonably be expected
to result in any claims, liability, investigations, costs or restrictions on
the ownership, use or transfer of any property of Excel or any of its
Subsidiaries pursuant to any Environmental Law; and (h) to the actual
knowledge of the executive officers of Excel and its Subsidiaries, the
foregoing representations and warranties also apply to any liability that
Excel or any of its Subsidiaries retained or assumed either contractually or
by operation of law.
(ii) To the actual knowledge of the executive officers of
Excel, (A) no underground storage tanks are or have been located on any real
property owned, operated or leased by Excel or its Subsidiaries, except for
those that are maintained in material compliance with Environmental Laws and
(B) no real property owned, operated or leased by Excel or its Subsidiaries
has been used or is used as a landfill or waste disposal site.
(iii) Excel has made available to Teleglobe copies of all
environmentally related audits, assessments, studies, reports, analyses, and
results of investigations of any real property currently or formerly owned,
operated or leased by Excel or its Subsidiaries that are in the possession,
custody or control of Excel.
(iv) As used herein, the term "Environmental Law" means any
Law or agency requirement relating to: (x) the protection, investigation or
restoration of the environment, health and safety of workers or natural
resources, (y) the handling, use, presence, disposal, release or threatened
release of any Hazardous Substance or (z) noise, odor, wetlands, pollution,
contamination or any injury or threat of injury to persons or property in
connection with any Hazardous Substance.
(v) As used herein, the term "Hazardous Substance" means:
(x) any substance that is listed, classified or regulated pursuant to or that
could result in liability under any Environmental Law; (y) any petroleum
product or by-product, asbestos-containing material, lead-containing paint or
plumbing, polychlorinated biphenyls, radioactive materials or radon; or (z)
any other substance which is the subject of regulatory action by any
Governmental Entity pursuant to any Environmental Law.
(s) Employee Benefit Plans.
(i) Excel has listed in Section 3.1(s) of the Excel
Disclosure Schedule all employee benefit plans (as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"))
and all bonus, stock option, stock purchase, incentive, deferred
compensation, supplemental retirement, severance and other similar employee
benefit plans, and all unexpired severance agreements, written or otherwise,
for the benefit of, or relating to, any current or former employee of Excel
or any trade or business (whether or not incorporated) which is a member or
which is under common control with Excel within the meaning of Section 414 of
the Code, or any Subsidiary of Excel (together, the "Excel Employee Plans").
(ii) With respect to each Excel Employee Plan, Excel has made
available to Teleglobe, a true and correct copy of (w) the most recent annual
report (Form 5500) filed with the IRS, (x) such Excel Employee Plan, (y) each
trust agreement and group annuity contract, if any, relating to such Excel
Employee Plan and (z) the most recent actuarial report or valuation relating
to an Excel Employee Plan subject to Title IV of ERISA.
(iii) With respect to the Excel Employee Plans,
individually and in the aggregate, such plans are being administered in
accordance with their terms and applicable Laws and no event has occurred,
and to the actual knowledge of the executive officers of Excel, there exists
no condition or set of circumstances in connection with which Excel could be
subject to any liability which would have a Material Adverse Effect on Excel
under ERISA, the Code or any other applicable Law.
(iv) With respect to the Excel Employee Plans, individually
and in the aggregate, there are no funded benefit obligations for which
contributions have not been made or properly accrued under the terms of such
plans and applicable Laws and there are no unfunded benefit obligations which
have not been accounted for by reserves, or otherwise properly footnoted in
accordance with US GAAP, on the financial statements of Excel contained in
the Excel Disclosure Documents, except for any such funded or unfunded
benefit obligations which are not reasonably likely to have a Material
Adverse Effect on Excel.
(v) Except as disclosed in Excel Disclosure Documents filed
prior to the date of this Agreement, and except as provided for in this
Agreement, neither Excel nor any of its Subsidiaries is a party to any oral
or written (x) agreement with any officer or other key employee of Excel or
any of its Subsidiaries, the benefits of which are contingent, or the terms
of which are materially altered, upon the occurrence of a transaction
involving Excel of the nature contemplated by this Agreement, (y) agreement
with any officer of Excel providing any term of employment or compensation
guarantee extending for a period longer than one year from the date hereof
and for the payment of compensation in excess of $100,000 per annum or (z)
agreement or plan, including any stock option plan, stock appreciation right
plan, restricted stock plan or stock purchase plan, any of the benefits of
which will be increased, or the vesting of the benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by
this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement.
(t) Compliance With Laws. (i) Excel has complied with, is not in
violation of, and has not received any written notices of violation with
respect to, any Law applicable to Excel or any of its Subsidiaries or by
which any property, asset or operation of Excel or any of its Subsidiaries is
bound or affected with respect to the conduct of its business, or the
ownership or operation of its business, except for failures to comply or
violations which would not, individually or in the aggregate, have a Material
Adverse Effect on Excel.
(ii) Excel's marketing and direct sales programs, including
Excel's multi-level marketing program, have in all material respects been
conducted in accordance with all applicable Laws and there is not any action,
suit, proceeding, inquiry, arbitration or litigation pending or, to the
actual knowledge of the executive officers of Excel, threatened in connection
with such programs which, individually or in the aggregate, would have a
Material Adverse Effect on Excel.
(iii) No action, suit, proceeding, inquiry, arbitration or
litigation is pending against Excel or, to the actual knowledge of the
executive officers of Excel, threatened by any Governmental Entity or
individual regarding "slamming" (i.e., changing customers' long-distance
services without authorization) or "cramming" (i.e., charging customers for
services they have not requested), which, individually or in the aggregate,
would have a Material Adverse Effect on Excel.
(u) Accounting and Tax Matters. Neither Excel nor any of its
Subsidiaries has taken or agreed to take any action which (i) would
reasonably be expected to prevent Teleglobe from accounting for the business
combination to be effected by the Merger as a pooling of interests under US
GAAP or Canadian GAAP or (ii) would cause any representation contained in the
certificates relating to the tax-free reorganization treatment attached
hereto as Exhibits G and H to be untrue.
(v) Labor Matters. Neither Excel nor any of its Subsidiaries is a
party to or otherwise bound by any collective bargaining agreement, contract
or other agreement or understanding with a labor union or labor organization,
nor is any such contract or agreement presently being negotiated, nor is
there, nor has there been in the last five years, any application for
certification or recognition by any union or organization respecting any of
the employees of Excel or its Subsidiaries, nor is Excel or any of its
Subsidiaries a party to, or bound by, any consent decree with, or citation
by, any Governmental Entity relating to employees or employment practices
and, to the actual knowledge of the executive officers of Excel, there are no
campaigns being conducted to solicit cards from employees of Excel or its
Subsidiaries to authorize representation by any labor organization. As of
the date hereof, neither Excel nor any of its Subsidiaries is the subject of
any material proceeding asserting that Excel or any of its Subsidiaries has
committed an unfair labor practice or is seeking to compel it to bargain with
any labor union or labor organization nor, as of the date of this Agreement,
is there pending or, to the actual knowledge of the executive officers of
Excel, threatened, any material labor strike, dispute, walkout, work
stoppage, slow-down or lockout involving Excel or any of its Subsidiaries nor
has there been one in the past five years.
(w) Insurance. All material fire and casualty, general liability,
business interruption, product liability, and sprinkler and water damage
insurance policies and directors and officers liability insurance policies
maintained by Excel or any of its Subsidiaries are with reputable insurance
carriers, provide full and adequate coverage for all normal risks incident to
the business of Excel and its Subsidiaries and their respective properties
and assets, and are in character and amount at least equivalent to that
carried by persons engaged in similar businesses and subject to the same or
similar perils or hazards, except for any such failures to maintain insurance
policies that, individually or in the aggregate, are not reasonably likely to
have a Material Adverse Effect on Excel.
(x) No Existing Discussions. As of the date hereof, Excel is not
engaged, directly or indirectly, in any discussions or negotiations with any
other party with respect to an Acquisition Proposal (as defined in Section
5.5).
(y) Anti-Takeover Laws; Stockholder Rights Plan. Except for
Section 203 of the DGCL, no "fair price," "moratorium," "control share
acquisition" or other similar anti-takeover statute or regulation is
applicable, by reason of Excel's being a party to the Merger, this Agreement
or any of the other Transaction Documents to which it is a party or the
transactions contemplated hereby or thereby or by reason of the execution by
Excel's stockholders party thereto of the Excel Consent and Voting Agreement
and the transactions contemplated thereby and neither Excel nor any of its
Subsidiaries is a party to any "stockholder rights" plan or any similar anti-
takeover plan or device.
(z) DGCL Section 203. Prior to the time this Agreement was
executed, the Board of Directors of Excel has taken all action necessary, if
any, to exempt under or make not subject to Section 203 of the DGCL: (i) the
execution of this Agreement, the Excel Consent and Voting Agreement and the
Excel Stock Option Agreement, (ii) the Merger and (iii) the other
transactions contemplated hereby and by the other Transaction Documents.
(aa) Year 2000. Excel has developed and is in the process of
implementing a plan which it believes in good faith is sufficient to ensure
that in all material respects all hardware, software, firmware, systems,
files, applications, interfaces, databases and other computer-related
materials ("Software") that it owns, possesses and/or uses is or will be
designed to be used prior to, during and after the calendar year 2000 A.D.,
and will operate in all material respects during each such time period,
either on a stand-alone basis, or by interacting or interoperating with
third-party Software, without material error relating to the processing,
calculating, comparing, sequencing or other use of date data, including (i)
any material error relating to or resulting from date data which represents
or references more than one century ("Century-Based Data"); (ii) any abnormal
ending or provision of materially invalid or incorrect results as a result of
any Century-Based Data; or (iii) any material error relating to century
recognition or calculations accommodating Century-Based Data, values or
formulae, and the implementation of such plan is expected in good faith to be
completed in a timely manner. Excel has performed all necessary due
diligence and is in the process of performing tests and implementing
modifications to all Software that it owns, possesses and/or uses to design
an appropriate plan and to ensure the accuracy of this representation and
warranty.
(ab) Pooling Letters. Excel has received two letters from ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP, each addressed to Excel, regarding its concurrence with Excel's
management's conclusions as to the appropriateness of pooling of interests
accounting under US GAAP (under Accounting Principles Board Opinion No. 16)
and under Canadian GAAP (under Section 1580 of The Canadian Institute of
Chartered Accountants Handbook), respectively, for the Merger, as
contemplated to be effected as of the date of the letters.
(ac) Certain Regulatory Matters.
(i) Except for billing disputes with customers arising in the
ordinary course of business that in the aggregate involve immaterial amounts,
there are no proceedings or investigations pending or, to the actual
knowledge of the executive officers of Excel, threatened, before any
Governmental Entity directed specifically at Excel or, in the case of matters
of general applicability to the telecommunications industry, in which Excel
is identified for possible disparate treatment or whose outcome may have a
disparate impact on Excel, in which any of the following matters are being
considered which are reasonably likely to have a Material Adverse Effect on
Excel, nor has Excel or any of its Subsidiaries received written notice or
inquiry from any Governmental Entity, indicating that any of such matters
should be considered or may become the object of consideration or
investigation specifically regarding Excel which are reasonably likely to
have a Material Adverse Effect on Excel or, in the case of matters of general
applicability to the telecommunications industry, in which Excel is
identified for possible disparate treatment or whose outcome may have a
disparate impact on Excel; (u) increases in access charges, universal service
contributions or the like; (v) traffic routing restrictions or restrictions
on use of facilities; (w) reduction or restriction of rates charged to
customers; (x) reduction of earnings; (y) refunds or other forfeitures of
amounts previously charged to customers; or (z) failure to meet any expense,
infrastructure, service quality or other commitments previously made to or
imposed by any Governmental Entity.
(ii) Neither Excel nor any of its Subsidiaries has any outstanding
commitments made in the context of a matter or proceeding related
specifically to Excel or, in the case of matters of general applicability to
the telecommunications industry, in which Excel is identified for possible
disparate treatment or whose outcome may have a disparate impact on Excel
(and no such obligations have been imposed upon Excel and remain
outstanding), regarding; (u) increases in access charges, universal service
contributions or the like; (v) traffic routing restrictions or restrictions
on use of facilities; (w) reduction or restriction of rates charged to
customers; (x) reduction of earnings; (y) refunds or other forfeitures of
amounts previously charged to customers; or (z) expenses, infrastructure
expenditures, service quality or other regulatory requirements, to or by any
Governmental Entity, in each case which are reasonably likely to have a
Material Adverse Effect on Excel.
(iii) Other than in the context of a reorganization involving pro
forma transfer of authorizations, Excel has not transferred, sold any
interest in or otherwise taken action to reduce its control over any Federal
or state regulatory licenses, certificates, approvals or other authorizations
under which it operates, and the transfer of such authorizations, subject to
regulatory approval, would not violate the terms of any agreement to which
Excel is a party or by which Excel is bound, or impinge the rights of any
third party.
3.2 Representations and Warranties of Teleglobe. Teleglobe
represents and warrants to Excel that the statements contained in this
Section 3.2 are true and correct except as set forth herein and in the
disclosure schedule delivered by Teleglobe to Excel (the "Teleglobe
Disclosure Schedule"). The Teleglobe Disclosure Schedule is arranged in
paragraphs corresponding to the numbered and lettered paragraphs contained in
this Agreement and the section of the disclosure schedule corresponding to
any numbered and lettered paragraph shall qualify other paragraphs in this
Agreement only to the extent that it is reasonably apparent from a reading of
such disclosure that it also qualifies or applies to such other paragraphs.
Inclusion of information in the Teleglobe Disclosure Schedule shall not be
construed as an admission that such information is material to the operations
or financial condition of Teleglobe and its Subsidiaries.
(a) Organization, Standing and Power. Each of Teleglobe and each
of its Subsidiaries is a corporation or other entity duly incorporated or
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization, has all requisite power and
authority to own, lease and operate its properties and to carry on its
business as now being conducted and is duly qualified and in good standing to
do business in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary
other than in such jurisdictions where the failure so to qualify or to be in
good standing would not, either individually or in the aggregate, have a
Material Adverse Effect on Teleglobe. The copies of the certificate of
incorporation and by-laws, or comparable documents, of Teleglobe which were
previously furnished to Excel are true, complete and correct copies of such
documents as in effect on the date of this Agreement.
(b) Subsidiaries. Teleglobe does not own, directly or indirectly,
any equity or other ownership interest in any corporation, partnership, joint
venture or other entity or enterprise, except for the Subsidiaries and other
entities set forth in the Teleglobe Disclosure Documents (as defined in
Section 3.2(e)), which are all the Subsidiaries of Teleglobe that are
required to be disclosed pursuant to item 1 of Part II of Schedule IX of the
Regulation Respecting Securities enacted under the Securities Act (Quebec).
Except as set forth in the Teleglobe Disclosure Documents filed prior to the
date of this Agreement, neither Teleglobe nor any of its Subsidiaries is
subject to any obligation or requirement to provide a material amount of
funds to or make any material investment (in the form of a loan, capital
contribution or otherwise) in any such entity that is not directly or
indirectly wholly owned by Teleglobe. Except as would not, either
individually or in the aggregate, have a Material Adverse Effect on
Teleglobe, each of the outstanding shares of capital stock (or other
ownership interests having by their terms ordinary voting power to elect
directors or others performing similar functions with respect to such
Subsidiary) owned by Teleglobe of each of Teleglobe's Subsidiaries is duly
authorized, validly issued, fully paid and nonassessable, and is owned
directly or indirectly by Teleglobe free and clear of all liens, pledges,
security interests, claims or other encumbrances of any kind whatsoever
(including voting, transfer or similar rights such as rights of first offer
or rights of first refusal).
(c) Capital Structure. (i) As of the date hereof, the authorized
capital stock of Teleglobe consisted of (A) an unlimited number of common
shares of Teleglobe capital stock, of which, at the close of business on June
14, 1998 (after giving effect to the Teleglobe Stock Dividend), 129,306,908
shares were outstanding and 7,106,364 shares were reserved for issuance
pursuant to options or rights under Teleglobe's Executive Stock Option Plan
(the "Teleglobe Option Plan") and (B) an unlimited number of Class A non-
voting shares and preferred shares, all without par value, of which, at the
close of business on June 14, 1998 (after giving effect to the Teleglobe
Stock Dividend), 5,000,000 Third Series Preferred Shares were outstanding.
All issued and outstanding shares of the capital stock of Teleglobe are duly
authorized, validly issued, fully paid and nonassessable and no class of
capital stock is entitled to preemptive rights. There were outstanding as of
June 14, 1998 no options, warrants or other rights to acquire capital stock
from Teleglobe other than options or rights to acquire 3,577,706 common
shares of Teleglobe capital stock.
(ii) As of the date of this Agreement, no bonds, debentures, notes
or other indebtedness of Teleglobe having the right to vote on any matters on
which shareholders may vote ("Teleglobe Voting Debt") are issued or
outstanding.
(iii) Except as otherwise set forth in this Section 3.2(c), there
are no securities, options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which Teleglobe or any of its
Subsidiaries is a party or by which any of them is bound obligating Teleglobe
or any of its Subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or other voting
securities of Teleglobe or any of its Subsidiaries or obligating Teleglobe or
any of its Subsidiaries to issue, grant, extend or enter into any such
security, option, warrant, call, right, commitment, agreement, arrangement or
undertaking. There are no outstanding obligations of Teleglobe or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital
stock of Teleglobe or any of its Subsidiaries. There are no agreements or
arrangements pursuant to which Teleglobe is or could be required to register
or qualify common shares of Teleglobe capital stock or other securities under
the Securities Act or any Canadian Securities Laws, or other agreements or
arrangements with or among any securityholders of Teleglobe with respect to
securities of Teleglobe. There are no voting, sale, transfer or other
similar agreements to which Teleglobe or any of its Subsidiaries is a party
with respect to the capital stock of Teleglobe or Teleglobe's Subsidiaries or
any other securities of Teleglobe or Teleglobe's Subsidiaries which are
convertible or exchangeable into or exercisable for shares of the capital
stock of Teleglobe or Teleglobe's Subsidiaries.
(d) Authority; No Conflicts. (i) Teleglobe has all requisite
corporate power and authority to enter into this Agreement and the other
Transaction Documents to which it is or may become a party and, subject to
the approval by the Required Articles Amendment Vote or the Required By-Law
Amendment Vote of the Teleglobe Articles Amendment or the Teleglobe By-Law
Amendment, respectively, to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement and the other
Transaction Documents to which it is or may become a party and the
consummation of the transactions contemplated hereby and thereby have been
duly authorized by all necessary corporate action on the part of Teleglobe,
subject in the case of the Teleglobe Articles Amendment or the Teleglobe By-
Law Amendment, as the case may be, to the approval by the Required Articles
Amendment Vote or the Required By-Law Amendment Vote, as the case may be.
This Agreement has been, and the other Transaction Documents to which
Teleglobe is or may become a party have been or will be when executed by
Teleglobe, duly executed and delivered by Teleglobe, and each constitutes or
will constitute a valid and binding agreement of Teleglobe, enforceable
against it in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws relating to or affecting creditors generally, by
general equity principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law) or by an implied covenant of
good faith and fair dealing.
(ii) The execution and delivery by Teleglobe of this Agreement and
the other Transaction Documents to which it is or may become a party do not
and will not, and the consummation by Teleglobe and Merger Sub of the Merger
and the other transactions contemplated hereby or thereby will not, conflict
with, or result in a Violation pursuant to: (A) any provision of the
certificate of incorporation or by-laws or similar constitutive documents of
Teleglobe or any Subsidiary of Teleglobe, or (B) except as are not,
individually or in the aggregate, reasonably likely to have a Material
Adverse Effect on Teleglobe or prevent or materially delay the performance of
this Agreement by Teleglobe and, subject to obtaining or making the consents,
approvals, orders, authorizations, registrations, declarations and filings
referred to in paragraph (iii) below, any Contract, Law or Permit applicable
to Teleglobe or any Subsidiary of Teleglobe or their respective properties or
assets.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required
by or with respect to Teleglobe or any Subsidiary of Teleglobe in connection
with the execution and delivery by Teleglobe of this Agreement and the other
Transaction Documents to which Teleglobe may be a party or the consummation
by Teleglobe of the Merger and the other transactions contemplated hereby or
thereby, except for the Required Consents, if applicable, and those required
under or in relation to the Telecommunications Act (Canada), the
Radiocommunication Act (Canada) or the Telegraphs Act (Canada), the Montreal
Exchange (the "ME") and The Toronto Stock Exchange (the "TSE" and, together
with the ME and the NYSE, the "Exchanges") and such consents, approvals,
orders, authorizations, registrations, declarations and filings the failure
of which to make or obtain are not individually or in the aggregate,
reasonably likely to have a Material Adverse Effect on Teleglobe or prevent
or materially delay the performance of this Agreement by Teleglobe. Neither
the execution and delivery by Teleglobe of this Agreement, and the other
Transaction Documents to which Teleglobe is a party nor the consummation and
performance by Teleglobe of the Merger and the other transactions
contemplated hereby or thereby will result in a violation of (a) the Federal
Communications Laws, (b) the laws, rules, regulations, orders, practices or
policies of any state legislature or PUC, foreign (including multi-national)
telecommunications regulatory agency or similar state or foreign regulatory
body, or (c) any order, writ, judgment, injunction, decree or award of the
FCC, any entity listed in clause (b) above, or any court of competent
jurisdiction binding upon Teleglobe, other than any violation which is not,
individually or in the aggregate, reasonably likely to have a Material
Adverse Effect on Teleglobe.
(iv) Each of Teleglobe and its Subsidiaries is in possession of
all Permits from appropriate Governmental Entities necessary for Teleglobe or
any of its Subsidiaries to own, lease and operate its properties or to carry
on their respective businesses as they are now being conducted (the
"Teleglobe Permits"), and all such Teleglobe Permits are valid and in full
force and effect, except where the failure to have, or the suspension,
cancellation or restriction of, any of the Teleglobe Permits does not and
would not, individually or in the aggregate, (a) have or be reasonably likely
to have a Material Adverse Effect on Teleglobe or (b) prevent or materially
delay the performance of this Agreement by Teleglobe. No suspension,
cancellation or restriction of any of the Teleglobe Permits is pending or, to
the actual knowledge of the executive officers of Teleglobe, threatened,
except where the failure to have, or the suspension or cancellation of, any
of Teleglobe Permits does not and would not, individually or in the
aggregate, (x) have or be reasonably likely to have a Material Adverse Effect
on Teleglobe or (y) prevent or materially delay the performance of this
Agreement by Teleglobe. Neither Teleglobe nor any of its Subsidiaries is in
conflict with, or in default, breach or violation of any Teleglobe Permits,
except for such conflicts, defaults, breaches or violations that do not and
would not, individually or in the aggregate, (A) have or be reasonably likely
to have a Material Adverse Effect on Teleglobe or (B) prevent or materially
delay the performance of this Agreement by Teleglobe.
(e) Reports and Financial Statements. Teleglobe has filed all
required reports, schedules, forms, statements and other documents required
to be filed by it with the Canadian securities regulatory authorities (the
"CSA") and, to the extent applicable, the SEC since January 1, 1996
(collectively, including all exhibits thereto and any registration statement
filed since such date, the "Teleglobe Disclosure Documents"). No Subsidiary
of Teleglobe is required to file any form, report or other document with the
CSA or the SEC. None of the Teleglobe Disclosure Documents filed since
January 1, 1998 (the "Recent Teleglobe Disclosure Documents"), as of their
respective dates (and, if amended or superseded by a filing prior to the date
of this Agreement or the Closing Date, then on the date of such filing),
contained or will contain any untrue statement of a material fact or omitted
or will omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. Each of the financial statements
(including the related notes) included in the Teleglobe Disclosure Documents
presents fairly, in all material respects, the consolidated financial
position and consolidated results of operations and cash flows of Teleglobe
and its Subsidiaries as of the respective dates or for the respective periods
set forth therein, all in conformity with Canadian GAAP consistently applied
during the periods involved except as otherwise noted therein, and subject,
in the case of the unaudited interim financial statements, to normal and
recurring year-end adjustments that have not been and are not expected to be
material in amount (and except for the absence of footnotes in the case of
such interim financial statements). All of the Recent Teleglobe Disclosure
Documents, as of their respective dates (and as of the date of any amendment
to the respective Recent Teleglobe Disclosure Documents), complied as to form
in all material respects with the applicable requirements of the Canadian
Securities Laws and, to the extent applicable, to the Securities Act and the
Exchange Act and the rules and regulations promulgated thereunder.
(f) Information Supplied. (i) None of the information supplied
or to be supplied by Teleglobe for inclusion in, or incorporated by reference
in, (A) the Form F-4 will, at the time the Form F-4 is filed with the SEC, at
any time it is amended or supplemented or at the time it becomes effective
under the Securities Act, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, and (B) the Joint Information
Statement/Proxy Statement/Prospectus will, on the date it is first mailed to
the stockholders of Excel or the shareholders of Teleglobe or at the time of
the Excel Stockholders Meeting, if any, or the Teleglobe Shareholders
Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The Form F-4 and the Joint Information Statement/Proxy
Statement/Prospectus will comply as to form in all material respects with the
applicable requirements of the Exchange Act and the Securities Act and the
rules and regulations of the SEC thereunder and with the applicable
requirements of the Canadian Securities Laws.
(ii) Notwithstanding the foregoing provisions of this Section
3.2(f), no representation or warranty is made by Teleglobe with respect to
statements made or incorporated by reference in the Form F-4 or the Joint
Information Statement/Proxy Statement/Prospectus based on information
supplied by Excel for inclusion or incorporation by reference therein.
(iii) If at any time prior to the Effective Time any event
relating to Teleglobe or any of its Affiliates, officers or directors should
be discovered by Teleglobe which should be set forth in an amendment to the
Form F-4 or a supplement to the Joint Information Statement/ Proxy
Statement/Prospectus, Teleglobe shall promptly inform Excel.
(g) Absence of Certain Changes or Events. Except as disclosed in
the Teleglobe Disclosure Documents filed prior to the date of this Agreement,
since December 31, 1997, Teleglobe and its Subsidiaries have in all material
respects conducted their business in the ordinary course consistent with past
practice, and there has not been any change in the business, condition
(financial or otherwise), assets, liabilities or results of operations of
Teleglobe or any of its Subsidiaries or any event involving Teleglobe or any
of its Subsidiaries which has had, or is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Teleglobe.
(h) Board Approval. The Board of Directors of Teleglobe, by
resolutions adopted at a meeting duly called and held and not subsequently
rescinded or modified (the "Teleglobe Board Approval"), has (i) determined
that this Agreement, and the other Transaction Documents to which Teleglobe
is a party and the transactions contemplated hereby and thereby, including
the Share Issuance, the Teleglobe Articles Amendment and the Teleglobe By-Law
Amendment, are in the best interests of Teleglobe and its shareholders, (ii)
approved this Agreement and the other Transaction Documents to which
Teleglobe is a party and the transactions contemplated hereby and thereby,
including the Share Issuance, the Teleglobe Articles Amendment and the
Teleglobe By-Law Amendment, and (iii) recommended that the shareholders of
Teleglobe approve the Share Issuance, the Teleglobe Articles Amendment and
the Teleglobe By-Law Amendment.
(i) Vote Required. No vote of the holders of any class of
Teleglobe capital stock is required to approve the Share Issuance under
applicable Canadian law or the rules of the Exchanges. The affirmative vote
of holders of common shares of Teleglobe capital stock representing (i) two
thirds of the total votes cast at a meeting of the holders of outstanding
common shares of Teleglobe capital stock (such vote, the "Required Articles
Amendment Vote") and (ii) a majority of the total votes cast at a meeting of
the holders of outstanding common shares of Teleglobe capital stock (such
vote, the "Required By-Law Amendment Vote") is the only vote of the holders
of any class or series of Teleglobe capital stock necessary to approve the
Teleglobe Articles Amendment and the Teleglobe By-Law Amendment,
respectively, and no other vote of the holders of any class of capital stock
of Teleglobe is required to approve the other transactions contemplated
hereby or by any other Transaction Documents to which it is or may be a
party.
(j) Brokers or Finders. No agent, broker, investment banker,
financial advisor or other firm or Person is or will be entitled to any
broker's or finder's fee or any other similar commission or fee in connection
with any of the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Teleglobe, except Bear, ▇▇▇▇▇▇▇ & Co.
Inc. (the "Teleglobe Fairness Opinion Banker") and ▇▇▇ ▇▇▇▇▇▇ & Co Inc, each
of whose fees and expenses will be paid by Teleglobe in accordance with
Teleglobe's agreements with such firms based upon arrangements made by or on
behalf of Teleglobe and previously disclosed to Excel.
(k) Opinion of Teleglobe Fairness Opinion Banker. Teleglobe has
received the opinion of the Teleglobe Fairness Opinion Banker dated the date
of this Agreement, to the effect that, as of such date, the Exchange Ratio is
fair, from a financial point of view, to the holders of common shares of
Teleglobe capital stock (the "Teleglobe Fairness Opinion"), a copy of which
opinion has been made available to Excel.
(l) No Undisclosed Liabilities. Except as disclosed in the
Teleglobe Disclosure Documents filed prior to the date hereof, and except for
normal or recurring liabilities incurred since December 31, 1997 in the
ordinary course of business consistent with past practices, Teleglobe and its
Subsidiaries do not have any liabilities, either accrued, contingent or
otherwise (whether or not required to be reflected in financial statements in
accordance with Canadian GAAP), and whether due or to become due, which,
individually or in the aggregate, are reasonably likely to have a Material
Adverse Effect on Teleglobe.
(m) Taxes.
(i) Except for such matters that would not, individually or
in the aggregate, have a Material Adverse Effect on Teleglobe: (A) Teleglobe
and each of its Subsidiaries have (x) timely filed all Federal, national,
state, provincial and local tax returns and reports, whether of the U.S.,
Canada or another foreign jurisdiction, required to be filed by them prior to
the date of this Agreement (taking into account extensions), (y) timely paid
or accrued all Taxes due and payable thereon, and (z) timely paid or accrued
all Taxes for which a notice of assessment or collection has been received
(other than amounts being contested in good faith by appropriate
proceedings); (B) no tax return of Teleglobe or any of its Subsidiaries
contains a disclosure statement under Section 6662(d)(2)(B)(ii)(l) of the
Code or any similar provision of applicable Law; (C) neither Teleglobe nor
any of its Subsidiaries currently is the beneficiary of any extension of time
within which to file any tax return, other than with respect to the fiscal
year ended December 31, 1997; (D) Teleglobe has delivered to Excel correct
and complete copies of all Federal tax returns, examination reports and
statements of deficiencies assessed against or agreed to by Teleglobe or any
of its Subsidiaries for the past three taxable years of Teleglobe; (E) with
respect to any period for which tax returns are not yet due (including
extensions), or for which Taxes are not yet due and owing, Teleglobe and each
of its Subsidiaries has made due and sufficient current accruals for such
Taxes in the financial statements included in the Recent Teleglobe Disclosure
Documents; (F) neither the IRS nor any other taxing authority has asserted in
writing to Teleglobe any claim for Taxes, or to the actual knowledge of the
executive officers of Teleglobe, is threatening to assert any claims for
Taxes; (G) Teleglobe and each of its Subsidiaries have withheld or collected
and paid over to the appropriate governmental authorities (or are properly
holding for such payment) all Taxes required by Law to be withheld or
collected; (H) neither Teleglobe nor any of its Subsidiaries has made an
election under Section 341(f) of the Code; (I) neither Teleglobe nor any of
its Subsidiaries has made any payments, is obligated to make any payments, or
is a party to any agreement that under certain circumstances could obligate
it to make any payments that will not be deductible under Sections 162(m) or
280G of the Code or that will be subject to excise tax under Section 4999 of
the Code; (J) neither Teleglobe nor any of its Subsidiaries (x) has been a
member of an affiliated group within the meaning of Section 1504(a) of the
Code (or any similar group defined under a similar provision of applicable
Law) other than an affiliated group the common parent of which is Teleglobe
and (y) has any liability under Treasury Regulations Section 1.1502-6 (or any
similar provision of applicable Law), as a transferee or successor, by
contract or otherwise for Taxes of any affiliated group of which Teleglobe is
not the common parent; (K) there are no liens for Taxes upon the assets of
Teleglobe or any of its Subsidiaries (other than liens for Taxes that are not
yet due or that are being contested in good faith by appropriate
proceedings); (L) neither Teleglobe nor any of its Subsidiaries is the
subject of any currently ongoing Tax audit, other than in the ordinary course
of business consistent with past practice; (M) there are no pending requests
for waivers of the time to assess any Tax, other than those made in the
ordinary course and for which payment has been made or there are adequate
reserves; and (N) neither Teleglobe nor any of its Subsidiaries has waived
any statute of limitations in respect of Taxes or agreed to any extension of
time with respect to a Tax assessment or deficiency.
(n) Properties.
(i) Section 3.2(n)(i) of the Teleglobe Disclosure Schedule
contains a true and complete list of all real property leased by Teleglobe or
its Subsidiaries pursuant to Material Leases. Each of Teleglobe and its
Subsidiaries is not in default under any of such leases, except where the
existence of such defaults, individually or in the aggregate, are not
reasonably likely to have a Material Adverse Effect on Teleglobe.
(ii) The Teleglobe Disclosure Schedule contains a true and
complete list of all real property that Teleglobe or any of its Subsidiaries
owns. With respect to each such item of real property, except for such
matters which are not reasonably likely, individually or in the aggregate, to
have a Material Adverse Effect on Teleglobe: (x) Teleglobe or the identified
Subsidiary has good and marketable title to such property, free and clear of
any security interest, easement, covenant or other restriction, except for
recorded easements, covenants and other restrictions which do not materially
impair the current uses or occupancy of such property; and (y) the
improvements constructed on such property are in good condition, and all
mechanical and utility systems servicing such improvements are in good
condition, free in each case of material defects.
(o) Intellectual Property. To the actual knowledge of the
executive officers of Teleglobe, Teleglobe and its Subsidiaries own, or are
licensed or otherwise possess the rights to use, all intellectual property,
including patents, inventions, discoveries, technology, know-how, copyrights
and copyrightable works (including computer software, databases, code and
related systems, files and applications), trademarks, service marks, trade
names, trade dress, Internet domain names, trade secrets, confidential
information, specifications and designs that are necessary to conduct the
business of Teleglobe and its Subsidiaries in all material respects as
currently conducted (the "Teleglobe Intellectual Property"). All of the
Teleglobe Intellectual Property necessary to conduct the business of
Teleglobe as currently conducted in all material respects is subsisting and
unexpired, has not been abandoned, does not infringe or otherwise impair the
intellectual property rights of any third party, is not subject to any lien
or other encumbrance, and does not require the consent of any other Person to
be used by Teleglobe upon the consummation of the transactions contemplated
by this Agreement (except for any such consent already obtained). No action,
suit or proceeding is pending, or to the actual knowledge of the executive
officers of Teleglobe, threatened by any third party or any Governmental
Entity that seeks to limit, cancel or question the validity of, or
Teleglobe's rights to, any Teleglobe Intellectual Property. Teleglobe has
taken reasonable steps to protect, maintain and safeguard the Teleglobe
Intellectual Property, including any Teleglobe Intellectual Property for
which improper or unauthorized disclosure would impair its value or validity.
To the actual knowledge of the executive officers of Teleglobe, no other
Person is infringing or otherwise impairing any of the Teleglobe Intellectual
Property.
(p) Agreements, Contracts and Commitments. Neither Teleglobe nor
any of its Subsidiaries has breached, or received in writing any claim or
notice that it has breached, any of the terms or conditions of any material
Contract to which it is a party ("Teleglobe Material Contracts"), other than
any breaches which, individually or in the aggregate, would have a Material
Adverse Effect on Teleglobe. Each Teleglobe Material Contract that has not
expired by its terms is in full force and effect.
(q) Litigation. Except as disclosed in the Teleglobe Disclosure
Documents filed prior to the date hereof, there are no actions, suits,
investigations or proceedings (adjudicatory, rulemaking or otherwise) pending
or, to the actual knowledge of the executive officers of Teleglobe,
threatened, nor any orders, decrees or judgments issued, against Teleglobe or
any of its Subsidiaries (or any Teleglobe Employee Plan), or any property of
Teleglobe or any such Subsidiary (including Teleglobe Intellectual Property),
before any arbitrator of any kind or in or before or by any Governmental
Entity, except actions, suits, investigations, proceedings orders, decrees or
judgments which, individually or in the aggregate, do not and are not
reasonably likely to (a) have a Material Adverse Effect on Teleglobe or (b)
prevent or materially delay the performance of this Agreement by Teleglobe.
(r) Environmental Matters.
(i) Except for such matters that, individually or in the
aggregate, are not reasonably likely to have a Material Adverse Effect on
Teleglobe: (a) Teleglobe and its Subsidiaries comply and within all
applicable statutes of limitations periods have complied with all applicable
Environmental Laws and all applicable Permits under applicable Environmental
Laws; (b) Hazardous Substances are not present at any of the properties
(including soils, groundwater, surface water, buildings or other structures)
owned or operated by Teleglobe or any of its Subsidiaries in violation of or
at concentrations that would require remediation under any Environmental Law;
(c) neither Teleglobe nor its Subsidiaries is subject to liability for any
Hazardous Substance disposal or contamination on any third party property;
(d) neither Teleglobe nor any of its Subsidiaries has been associated with
any release or threat of release of any Hazardous Substance in violation or
otherwise in excess of levels of concentration permitted by any Environmental
Laws; (e) neither Teleglobe nor any of its Subsidiaries has received any
written notice, demand, letter, claim or request for information alleging
that Teleglobe or any of its Subsidiaries may be in violation of or liable
under any Environmental Law; (f) neither Teleglobe nor any of its
Subsidiaries is subject to any orders, decrees, injunctions or other
arrangements with any Governmental Entity or is subject to any indemnity or
other agreement with any third party relating to liability under any
Environmental Law or relating to Hazardous Substances; (g) there are no
circumstances or conditions involving Teleglobe or any of its Subsidiaries
that would reasonably be expected to result in any claims, liability,
investigations, costs or restrictions on the ownership, use or transfer of
any property of Teleglobe or any of its Subsidiaries pursuant to any
Environmental Law and (h) to the actual knowledge of the executive officers
of Teleglobe and its Subsidiaries, the foregoing representations and
warranties also apply to any liability that Teleglobe or any of its
Subsidiaries retained or assumed either contractually or by operation of law.
(ii) To the actual knowledge of the executive officers of
Teleglobe, (A) no underground storage tanks are or have been located on any
real property owned, operated or leased by Teleglobe or its Subsidiaries,
except for those that are maintained in material compliance with
Environmental Laws and (B) no real property owned, operated or leased by
Teleglobe or its Subsidiaries has been used or is used as a landfill or waste
disposal site.
(iii) Teleglobe has made available to Excel copies of all
environmentally related audits, assessments, studies, reports, analyses and
results of investigations of any real property currently or formerly owned,
operated or leased by Teleglobe or its Subsidiaries that are in the
possession, custody or control of Teleglobe.
(s) US Employee Benefit Plans.
(i) Teleglobe has listed in Section 3.2(s) of the Teleglobe
Disclosure Schedule all employee benefit plans (as defined in Section 3(3) of
ERISA) and all bonus, stock option, stock purchase, incentive, deferred
compensation, supplemental retirement, severance and other similar US
employee benefit plans, and all unexpired severance agreements, written or
otherwise, for the benefit of, or relating to, any current or former US
employee of Teleglobe or any trade or business (whether or not incorporated)
which is a member or which is under common control with Teleglobe within the
meaning of Section 414 of the Code, or any Subsidiary of Teleglobe (together,
the "US Teleglobe Employee Plans").
(ii) With respect to each US Teleglobe Employee Plan,
Teleglobe has made available to Excel, a true and correct copy of (w) the
most recent annual report (Form 5500) filed with the IRS, (x) such US
Teleglobe Employee Plan, (y) each trust agreement and group annuity contract,
if any, relating to such US Teleglobe Employee Plan and (z) the most recent
actuarial report or valuation relating to a US Teleglobe Employee Plan
subject to Title IV of ERISA.
(iii) With respect to the US Teleglobe Employee Plans,
individually and in the aggregate, such plans are being administered in
accordance with their terms and applicable Laws and no event has occurred,
and to the actual knowledge of the executive officers of Teleglobe, there
exists no condition or set of circumstances in connection with which
Teleglobe could be subject to any liability which would have a Material
Adverse Effect on Teleglobe under ERISA, the Code or any other applicable
Law.
(iv) With respect to the US Teleglobe Employee Plans,
individually and in the aggregate, there are no funded benefit obligations
for which contributions have not been made or properly accrued and there are
no unfunded benefit obligations which have not been accounted for by
reserves, or otherwise properly footnoted in accordance with Canadian GAAP,
on the financial statements of Teleglobe contained in the Teleglobe
Disclosure Documents, except for any such funded or unfunded benefit
obligations which are not reasonably likely to have a Material Adverse Effect
on Teleglobe.
(v) Except as disclosed in Teleglobe Disclosure Documents
filed prior to the date of this Agreement, and except as provided for in this
Agreement, neither Teleglobe nor any of its Subsidiaries is a party to any
oral or written (x) agreement with any US officer or other US key employee of
Teleglobe or any of its Subsidiaries, the benefits of which are contingent,
or the terms of which are materially altered, upon the occurrence of a
transaction involving Teleglobe of the nature contemplated by this Agreement,
(y) agreement with any US officer of Teleglobe providing any term of
employment or compensation guarantee extending for a period longer than one
year from the date hereof and for the payment of compensation in excess of
$100,000 per annum or (z) US agreement or plan, including any stock option
plan, stock appreciation right plan, restricted stock plan or stock purchase
plan, any of the benefits of which will be increased, or the vesting of the
benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement.
(t) Canadian Employee Benefit Plans. Teleglobe has listed in
Section 3.2(t) of the Teleglobe Disclosure Schedule a list of all pension,
retirement, bonus, profit sharing, compensation, incentive, stock purchase,
stock option, savings, insurance, medical, hospitalization, disability,
death, and other similar plans, programs, arrangements or practices (written
or otherwise) covering any or all of its Canadian employees or its
Subsidiaries (the "Canadian Teleglobe Employee Plans" and, together with the
US Teleglobe Employee Plans, the "Teleglobe Employee Plans").
(i) With respect to each Canadian Teleglobe Employee Plan,
Teleglobe has made available to Excel a true and correct copy of (x) such
Canadian Teleglobe Employee Plan and (y) the most recent actuarial report or
valuation relating to a Canadian Teleglobe Employee Plan, if any;
(ii) With respect to the Canadian Teleglobe Employee Plans,
individually and in the aggregate, such plans are being administered in
accordance with their terms and applicable Canadian Laws and no event has
occurred, and to the actual knowledge of the executive officers of Teleglobe,
there exists no condition or set of circumstances in connection with which
Teleglobe could be subject to any liability which would have a Material
Adverse Effect on Teleglobe under any applicable Canadian Law;
(iii) With respect to the Canadian Teleglobe Employee
Plans, individually and in the aggregate, there are no funded benefit
obligations for which contributions have not been made or properly accrued
under the terms of such plans and applicable Canadian Laws and there are no
unfunded benefit obligations which have not been accounted for by reserves,
or otherwise properly footnoted in accordance with Canadian GAAP, on the
financial statements of Teleglobe contained in the Teleglobe Disclosure
Documents, which obligations would have a Material Adverse Effect on
Teleglobe;
(iv) Except as disclosed in Teleglobe Disclosure Documents
filed prior to the date of this Agreement, and except as provided for in this
Agreement, neither Teleglobe nor any of its Subsidiaries is a party to any
oral or written (x) agreement with any Canadian officer or other Canadian key
employee of Teleglobe or any of its Subsidiaries, the benefits of which are
contingent, or the terms of which are materially altered, upon the occurrence
of a transaction involving Teleglobe of the nature contemplated by this
Agreement, (y) agreement with any Canadian officer of Teleglobe providing any
term of employment or compensation guarantee extending for a period longer
than one year from the date thereof and for the payment of compensation in
excess of $100,000 per annum, or (z) Canadian agreement or plan, including
any stock option plan, stock appreciation right plan, restricted stock plan
or stock purchase plan, any of the benefits of which will be increased, or
the vesting of the benefits of which will be accelerated, by the occurrence
of any of the transactions contemplated by this Agreement or the value of any
of the benefits of which will be calculated on the basis of any of the
transactions contemplated by this Agreement.
(u) Compliance With Laws. Teleglobe has complied with, is not in
violation of, and has not received any written notices of violation with
respect to, any Law applicable to Teleglobe or any of its Subsidiaries or by
which any property, asset or operation of Teleglobe or any of its
Subsidiaries is bound or affected with respect to the conduct of its
business, or the ownership or operation of its business, except for failures
to comply or violations which would not, individually or in the aggregate,
have a Material Adverse Effect on Teleglobe.
(v) Accounting and Tax Matters. Neither Teleglobe nor any of its
Subsidiaries has taken or agreed to take any action which (i) would
reasonably be expected to prevent Teleglobe from accounting for the business
combination to be effected by the Merger as a pooling of interests under US
GAAP or Canadian GAAP or (ii) would cause any representation contained in the
certificates relating to the tax-free reorganization treatment attached
hereto as Exhibits G and H to be untrue.
(w) Labor Matters. Except as disclosed in the Teleglobe
Disclosure Documents filed prior to the date hereof, neither Teleglobe nor
any of its Subsidiaries is a party to or otherwise bound by any collective
bargaining agreement, contract or other agreement or understanding with a
labor union or labor organization, nor is any such contract or agreement
presently being negotiated, nor is there, nor has there been in the last five
years, any application for certification or recognition by any union or
organization respecting any of the employees of Teleglobe or its
Subsidiaries, nor is Teleglobe or any of its Subsidiaries a party to, or
bound by, any consent decree with, or citation by, any Governmental Entity
relating to employees or employment practices and, to the actual knowledge of
the executive officers of Teleglobe, there are no campaigns being conducted
to solicit cards from employees of Teleglobe or its Subsidiaries to authorize
representation by any labor organization. As of the date hereof, neither
Teleglobe nor any of its Subsidiaries is the subject of any material
proceeding asserting that Teleglobe or any of its Subsidiaries has committed
an unfair labor practice or is seeking to compel it to bargain with any labor
union or labor organization nor, as of the date of this Agreement, is there
pending or, to the actual knowledge of the executive officers of Teleglobe,
threatened, any material labor strike, dispute, walkout, work stoppage, slow-
down or lockout involving Teleglobe or any of its Subsidiaries nor has there
been one in the past five years.
(x) Insurance. All material fire and casualty, general liability,
business interruption, product liability, and sprinkler and water damage
insurance policies and directors and officers liability insurance policies
maintained by Teleglobe or any of its Subsidiaries are with reputable
insurance carriers, provide full and adequate coverage for all normal risks
incident to the business of Teleglobe and its Subsidiaries and their
respective properties and assets, and are in character and amount at least
equivalent to that carried by Canadian persons engaged in similar businesses
and subject to the same or similar perils or hazards, except for any such
failures to maintain insurance policies that, individually or in the
aggregate, are not reasonably likely to have a Material Adverse Effect on
Teleglobe.
(y) No Existing Discussions. As of the date hereof, Teleglobe is
not engaged, directly or indirectly, in any discussions or negotiations with
any other party with respect to an Acquisition Proposal.
(z) Anti-Takeover Laws; Shareholder Rights Plan. No "fair price,"
"moratorium," "control share acquisition" or other similar anti-takeover
statute or regulation is applicable, by reason of Teleglobe's being a party
to the Merger, this Agreement or any of the other Transaction Documents to
which it is a party or the transactions contemplated hereby or thereby or by
reason of the execution by Teleglobe's shareholders party thereto of the
Teleglobe Consent and Voting Agreement and the transactions contemplated
thereby and neither Teleglobe nor its Subsidiaries is a party to any
"shareholders rights" plan or similar anti-takeover plan.
(aa) Year 2000. Teleglobe has developed and is in the process of
implementing a plan which it believes in good faith is sufficient to ensure
that in all material respects all Software that it owns, possesses and/or
uses is or will be designed to be used prior to, during and after the
calendar year 2000 A.D., and will operate in all material respects during
each such time period, either on a stand-alone basis, or by interacting or
interoperating with third-party Software, without material error relating to
the processing, calculating, comparing, sequencing or other use of date data,
including (i) any material error relating to or resulting from Century-Based
Data, (ii) any abnormal ending or provision of materially invalid or
incorrect results as a result of any Century-Based Data or (iii) any material
error relating to century recognition or calculations accommodating Century-
Based Data, values or formulae, and that the implementation of such plan is
expected in good faith to be completed in a timely manner. Teleglobe has
performed all necessary due diligence and is in the process of performing
tests and implementing modifications to all Software that it owns, possesses
and/or uses to design an appropriate plan and to ensure the accuracy of this
representation and warranty.
(ab) Pooling Letters. Teleglobe has received a letter from KPMG
Peat Marwick LLP addressed to Teleglobe regarding its concurrence with
Teleglobe's management's conclusions as to the appropriateness of the pooling
of interests accounting under US GAAP (under Accounting Principles Board
Opinion No. 16) and a letter from KPMG as to the appropriateness of pooling
of interests accounting under Canadian GAAP (under Section 1580 of The
Canadian Institute of Chartered Accountants Handbook), respectively, for the
Merger, as contemplated to be effected as of the date of the letters.
(ac) Certain Regulatory Matters.
(i) Except for billing disputes with customers arising in the
ordinary course of business that in the aggregate involve immaterial amounts,
there are no proceedings or investigations pending or, to the actual
knowledge of the executive officers of Teleglobe, threatened, before any
Governmental Entity directed specifically at Teleglobe or, in the case of
matters of general applicability to the telecommunications industry, in which
Teleglobe is identified for possible disparate treatment, or whose outcome
may have a disparate impact on Teleglobe, in which any of the following
matters are being considered which are reasonably likely to have a Material
Adverse Effect on Teleglobe, nor has Teleglobe or any of its Subsidiaries
received written notice or inquiry from any Governmental Entity, indicating
that any of such matters should be considered or may become the object of
consideration or investigation specifically regarding Teleglobe which are
reasonably likely to have a Material Adverse Effect on Teleglobe or, in the
case of matters of general applicability to the telecommunications industry,
in which Teleglobe is identified for possible disparate treatment, or whose
outcome may have a disparate impact on Teleglobe: (u) increases in access
charges, universal service contributions or the like; (v) traffic routing
restrictions or restrictions on use of facilities; (w) reduction or
restriction of rates charged to customers; (x) reduction of earnings; (y)
refunds or other forfeitures of amounts previously charged to customers; or
(z) failure to meet any expense, infrastructure, service quality or other
commitments previously made to or imposed by Governmental Entity.
(ii) Neither Teleglobe nor any of its Subsidiaries has any
outstanding commitments made in the context of a matter or proceeding related
specifically to Teleglobe or, in the case of matters of general applicability
to the telecommunications industry, in which Teleglobe is identified for
possible disparate treatment or whose outcome may have a disparate impact on
Teleglobe (and no such obligations have been imposed upon Teleglobe and
remain outstanding) regarding (u) increases in access charges, universal
service contributions or the like; (v) traffic routing restrictions or
restrictions on use of facilities; (w) reduction or restriction of rates
charged to customers; (x) reduction of earnings; (y) refunds or other
forfeitures of amounts previously charged to customers; or (z) expenses,
infrastructure expenditures, service quality or other regulatory
requirements, to or by any Governmental Entity, in each case which are
reasonably likely to have a Material Adverse Effect on Teleglobe.
(iii) Teleglobe has not transferred, sold any interest in or
otherwise taken any action to reduce its control over any Federal or national
or state or provincial regulatory licenses, certificates, approvals or other
authorizations under which it operates, U.S., Canadian or foreign, and the
transfer of such authorizations, subject to regulatory approval, would not
violate the terms of any agreement to which Teleglobe is a party or by which
Teleglobe is bound, or impinge the rights of any third party.
(ad) No Plan or Intention to Dispose of Surviving Corporation.
Teleglobe has no plan or intention to dispose in any manner of any of the
Surviving Corporation Common Stock or to dispose in any manner, or permit or
cause the Surviving Corporation to dispose in any manner, of any of the
assets of the Surviving Corporation, other than dispositions of assets of the
Surviving Corporation in the ordinary course of business which do not
constitute dispositions of all or a substantial portion (within the meaning
of Treasury Regulation Section 1.367(a)-3T(g)(3)) of the assets of the
Surviving Corporation.
3.3 Representations and Warranties of Teleglobe and Merger Sub.
Each of Teleglobe and Merger Sub, jointly and severally, represents and
warrants to Excel as follows:
(a) Organization and Corporate Power. Merger Sub was incorporated
on June 11, 1998, and is a corporation duly incorporated, validly existing
and in good standing under the laws of Delaware. Merger Sub is a direct
wholly owned Subsidiary of Teleglobe.
(b) Capital Structure. (i) The authorized capital stock of
Merger Sub consists of 1,000 shares of Merger Sub Common Stock, of which
1,000 shares are outstanding as of the date hereof. All issued and
outstanding shares of the capital stock of Merger Sub are duly authorized,
validly issued, fully paid and nonassessable. There are not as of the date
hereof and there will not be as of the Effective Time any outstanding or
authorized options, warrants, calls, rights, commitments or any other
agreements of any character to or by which Merger Sub is a party or may be
bound requiring it to issue, transfer, sell, purchase, redeem or acquire any
shares of capital stock or any securities or rights convertible into,
exchangeable for, or evidencing the right to subscribe for or acquire, any
shares of capital stock of Merger Sub.
(c) Corporate Authorization. Merger Sub has all requisite
corporate power and authority to enter into this Agreement and any other
Transaction Document to which it may become a party and to consummate the
transactions contemplated hereby and thereby. The execution, delivery and
performance by Merger Sub of this Agreement and any other Transaction
Document to which it may become a party and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of Merger Sub. This Agreement has
been, and any other Transaction Document to which it may become a party will
be, duly executed and delivered by Merger Sub and each constitutes or will
constitute a valid and binding agreement of Merger Sub, enforceable against
it in accordance with its terms, except as such enforceability may be limited
by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium
and other similar laws relating to or affecting creditors generally, by
general equity principles (regardless or whether such enforceability is
considered in a proceeding in equity or at law) or by an implied covenant of
good faith and fair dealing.
(d) Non-Contravention. The execution, delivery and performance by
Merger Sub of this Agreement and any other Transaction Document to which it
may be a party and the consummation by Merger Sub of the transactions
contemplated hereby and thereby do not and will not contravene or conflict
with the certificate of incorporation or by-laws of Merger Sub or any
Contract, Law or Permit applicable to Merger Sub or its properties or assets.
(e) No Business Activities. Merger Sub was formed for the purpose
of consummating the transactions contemplated hereby and has not conducted
any activities other than in connection with the organization of Merger Sub,
the negotiation and execution of this Agreement and the consummation of the
transactions contemplated hereby. Merger Sub has no Subsidiaries and no
material assets or liabilities and is not a party to any agreement (except
this Agreement).
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 Covenants of Excel. During the period from the date of this
Agreement and continuing until the Effective Time, Excel agrees as to itself
and its Subsidiaries that (except as expressly contemplated or permitted by
this Agreement or as set forth in the Excel Disclosure Schedule or to the
extent that Teleglobe shall otherwise consent in writing, which consent shall
not unreasonably be withheld):
(a) Ordinary Course. (i) Excel and its Subsidiaries shall carry
on their respective businesses in the usual, regular and ordinary course in
all material respects, in substantially the same manner as heretofore
conducted, and shall use all reasonable efforts to preserve intact their
present lines of business, maintain their rights and franchises and preserve
their relationships with customers, suppliers, regulators, distributors,
creditors, lessors, employees and others having business dealings with them
to the end that their ongoing businesses shall not be impaired in any
material respect at the Effective Time; provided, however, that no action by
Excel or its Subsidiaries with respect to matters specifically addressed by
any other provision of this Section 4.1 shall be deemed a breach of this
Section 4.1(a)(i) unless such action would constitute a breach of one or more
of such other provisions.
(ii) Excel shall not, and shall not permit any of its Subsidiaries
to, (A) alter the fundamental nature of its business or enter into material
new lines of business outside the communications industry, except as
disclosed in the Excel Disclosure Documents or as set forth in Excel's
current business plan, a copy of which has been previously provided to
Teleglobe, or (B) incur or commit to any capital expenditures other than
capital expenditures incurred or committed to in the ordinary course of
business consistent with past practice.
(b) Dividends; Changes in Share Capital. Excel shall not, and
shall not permit any of its Subsidiaries to, and shall not propose to, (i)
declare, set aside or pay any dividends on or make other distributions in
respect of any of its capital stock, except dividends by wholly owned
Subsidiaries of Excel, (ii) split, combine, subdivide or reclassify any of
its capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for, shares of its
capital stock, except for any such transaction by a wholly owned Subsidiary
of Excel, or (iii) repurchase, redeem or otherwise acquire any shares of its
capital stock or any securities convertible into or exercisable for any
shares of its capital stock.
(c) Issuance of Securities. Excel shall not, and shall not permit
any of its Subsidiaries to, issue, deliver, sell, transfer, pledge or
otherwise encumber or authorize or propose the issuance, delivery, sale,
transfer, pledge or encumbrance of, any shares of its capital stock of any
class, any Excel Voting Debt or any securities convertible into or
exercisable for, or any rights, warrants or options to acquire, any such
shares or Excel Voting Debt, or enter into any agreement with respect to any
of the foregoing, other than (i) the issuance of Excel Common Stock upon the
exercise of stock options or in connection with other stock-based benefits
plans outstanding on the date hereof in accordance with their current terms
and (ii) issuances by a wholly owned Subsidiary of Excel of capital stock to
such Subsidiary's parent or another wholly owned Subsidiary of Excel.
(d) Governing Documents. Except as expressly set forth herein or
as required by applicable Law, Excel and its Subsidiaries shall not amend, in
the case of Subsidiaries, in any material respect, or propose to amend their
respective certificates of incorporation, by-laws or other governing
documents.
(e) No Acquisitions. Other than acquisitions for cash in existing
or related lines of business of Excel the fair market value of the total
consideration (including the value of indebtedness or other liability
acquired or assumed) for which does not exceed $100 million in the aggregate,
Excel shall not, and shall not permit any of its Subsidiaries to, acquire or
agree to acquire by merging or consolidating with, or by purchasing a
substantial equity interest in or a substantial portion of the assets of, or
by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof or otherwise
acquire or agree to acquire any assets (other than the acquisition of assets
used in the operations of the business of Excel and its Subsidiaries in the
ordinary course); provided, however, that the foregoing shall not prohibit
(x) internal reorganizations or consolidations involving existing
Subsidiaries of Excel or (y) the creation of new Subsidiaries of Excel
organized to conduct or continue activities otherwise permitted by this
Agreement.
(f) No Dispositions. Other than (i) internal reorganizations or
consolidations involving existing Subsidiaries of Excel, (ii) dispositions
referred to in the Excel Disclosure Documents filed prior to the date of this
Agreement or (iii) other dispositions of assets having a fair market value at
the time of disposition not in excess of $100,000,000, Excel shall not, and
shall not permit any Subsidiary of Excel to, sell, lease, encumber or
otherwise dispose of, or agree to sell, lease, encumber or otherwise dispose
of, any of its assets (including capital stock of Subsidiaries of Excel)
which are material, individually or in the aggregate, to Excel and its
Subsidiaries, taken as a whole.
(g) Investments; Indebtedness. Excel shall not, and shall not
permit any of its Subsidiaries to, (i) other than in connection with actions
permitted by Section 4.1(e), make any loans, advances or capital
contributions to, or investments in, any other Person, other than by Excel or
a Subsidiary of Excel to or in Excel or any wholly owned Subsidiary of Excel
or (ii) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), or
settle any litigation, other than indebtedness, issuances of debt securities,
guarantees, loans, advances, capital contributions, investments, payments,
discharges or satisfactions incurred or committed to in the ordinary course
of business consistent with past practice.
(h) Pooling-of-Interests; Tax-Free Qualification. Excel shall
not, and shall not permit any of its Subsidiaries to, take any action which
(i) would reasonably be expected to prevent or impede the Merger from
qualifying for pooling-of-interests accounting treatment under US GAAP or
Canadian GAAP or (ii) would cause any representation contained in the
certificates relating to the tax-free reorganization treatment attached
hereto as Exhibits G and H to be untrue.
(i) Other Actions. Excel shall not, and shall not permit any of
its Subsidiaries to, take any action that would reasonably be expected to
result in any of the conditions to the Merger set forth in Article VI not
being satisfied.
(j) Accounting Methods; Income Tax Elections. Except as disclosed
in the Excel Disclosure Documents filed prior to the date of this Agreement,
or as required by a Governmental Entity, Excel shall not change its methods
of accounting in effect at March 31, 1998, except as required by changes in
US GAAP as concurred in by Excel's independent auditors. Excel shall not (i)
change its fiscal year or (ii) make any material Tax election, except as
required by Law.
(k) Excel Employee Plans. Excel agrees as to itself and its
Subsidiaries that it will not (i) enter into, adopt, amend (except as may be
required by Law), renew or terminate any Excel Employee Plan, or any other
employee benefit plan or any agreement, arrangement, plan or policy between
Excel or any of its Subsidiaries and one or more of its directors or
officers, (ii) increase or accelerate the compensation or fringe benefits of
any of its directors, officers or employees, except for normal increases in
salary or wages of employees of Excel who are not directors or executive
officers of Excel in the ordinary course of business consistent with past
practice that, in the aggregate, do not result in a material increase in
benefits or compensation expense to Excel, (iii) grant any stock options,
stock appreciation rights, restricted stock, restricted stock units or
performance units or shares other than as required by existing agreements
with individual employees, or enter into any contract, agreement, commitment
or arrangement to do any of the foregoing or (iv) enter into or renew any
contract, agreement, commitment or arrangement providing for the payment to
any director, officer or employee of such party of compensation or benefits
contingent, or the terms of which are materially altered, upon the occurrence
of any of the transactions contemplated by this Agreement.
(l) Contracts. Excel agrees, as to itself and its Subsidiaries,
not to take or omit to take any act which would cause a breach of any
Contract if the result would reasonably be expected to have a Material
Adverse Effect on Excel.
4.2 Covenants of Teleglobe. During the period from the date of
this Agreement and continuing until the Effective Time, Teleglobe agrees as
to itself and its Subsidiaries that (except as expressly contemplated or
permitted by this Agreement or as set forth in the Teleglobe Disclosure
Schedule or to the extent that Excel shall otherwise consent in writing,
which consent shall not unreasonably be withheld):
(a) Ordinary Course. (i) Teleglobe and its Subsidiaries shall
carry on their respective businesses in the usual, regular and ordinary
course in all material respects, in substantially the same manner as
heretofore conducted, and shall use all reasonable efforts to preserve intact
their present lines of business, maintain their rights and franchises and
preserve their relationships with customers, suppliers, regulators,
distributors, creditors, lessors, employees and others having business
dealings with them to the end that their ongoing businesses shall not be
impaired in any material respect at the Effective Time; provided, however,
that no action by Teleglobe or its Subsidiaries with respect to matters
specifically addressed by any other provision of this Section 4.2 shall be
deemed a breach of this Section 4.2(a)(i) unless such action would constitute
a breach of one or more of such other provisions.
(ii) Teleglobe shall not, and shall not permit any of its
Subsidiaries to, (A) alter the fundamental nature of its business or enter
into material new lines of business outside the communications industry,
except as disclosed in the Teleglobe Disclosure Documents or as set forth in
Teleglobe's current business plan, a copy of which has been previously
provided to Excel, or (B) incur or commit to any capital expenditures other
than capital expenditures incurred or committed to in the ordinary course of
business consistent with past practice.
(b) Dividends; Changes in Share Capital. Except for the Teleglobe
Stock Dividend, Teleglobe shall not, and shall not permit any of its
Subsidiaries to, and shall not propose to, (i) declare, set aside or pay any
dividends on or make other distributions in respect of any of its capital
stock, except (A) Teleglobe may continue the declaration and payment of
regular quarterly cash dividends in amounts and at times consistent with past
practice (including increases in such amounts consistent with past practice),
(B) Teleglobe may declare and/or pay a dividend for the period from the last
dividend record date prior to the Closing Date through, but not including,
the Closing Date to Teleglobe shareholders of record as of a date prior to
the Closing Date in an amount not in excess of the product of (a) the
quotient of (I) the number of days from and including the last dividend
payment date through but not including the Closing Date over (II) the number
of days in the quarter in which such dividend is being paid and (b) the
amount per common share of Teleglobe capital stock of the dividend paid by
Teleglobe in the immediately preceding quarter and (C) dividends by wholly
owned Subsidiaries of Teleglobe, (ii) split, combine, subdivide or reclassify
any of its capital stock or issue or authorize or propose the issuance of any
other securities in respect of, in lieu of or in substitution for, shares of
its capital stock, except for any such transaction by a wholly owned
Subsidiary of Teleglobe or (iii) repurchase, redeem or otherwise acquire any
shares of its capital stock or any securities convertible into or exercisable
for any shares of its capital stock.
(c) Issuance of Securities. Teleglobe shall not, and shall not
permit any of its Subsidiaries to, issue, deliver, sell, transfer, pledge or
otherwise encumber or authorize or propose the issuance, delivery, sale,
transfer, pledge or encumbrance of any shares of its capital stock of any
class, any Teleglobe Voting Debt or any securities convertible into or
exercisable for, or any rights, warrants or options to acquire, any such
shares or Teleglobe Voting Debt, or enter into any agreement with respect to
any of the foregoing, other than (i) the issuance of common shares of
Teleglobe capital stock upon the exercise of stock options or in connection
with other stock-based benefits plans outstanding on the date hereof in
accordance with their current terms, (ii) the conversion of shares of
Convertible Preferred Stock of Teleglobe outstanding on the date hereof and
(iii) issuances by a wholly owned Subsidiary of Teleglobe of capital stock to
such Subsidiary's parent or another wholly owned Subsidiary of Teleglobe.
(d) Governing Documents. Except as expressly set forth herein or
as required by applicable Law, Teleglobe and its Subsidiaries shall not
amend, in the case of Subsidiaries, in any material respect, or propose to
amend their respective certificates of incorporation, by-laws or other
governing documents.
(e) No Acquisitions. Other than acquisitions for cash in existing
or related lines of business of Teleglobe the fair market value of the total
consideration (including the value of indebtedness or other liability
acquired or assumed) for which does not exceed $100 million in the aggregate,
Teleglobe, shall not, and shall not permit any of its Subsidiaries to,
acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial equity interest in or a substantial portion of the
assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof
or otherwise acquire or agree to acquire any assets (other than the
acquisition of assets used in the operations of the business of Teleglobe and
its Subsidiaries in the ordinary course); provided, however, that the
foregoing shall not prohibit (x) internal reorganizations or consolidations
involving existing Subsidiaries of Teleglobe or (y) the creation of new
Subsidiaries of Teleglobe organized to conduct or continue activities
otherwise permitted by this Agreement.
(f) No Dispositions. Other than (i) internal reorganizations or
consolidations involving existing Subsidiaries of Teleglobe, (ii)
dispositions referred to in the Teleglobe Disclosure Documents filed prior to
the date of this Agreement or (iii) other dispositions of assets having a
fair market value at the time of disposition not in excess of $100,000,000,
Teleglobe shall not, and shall not permit any Subsidiary of Teleglobe to,
sell, lease, encumber or otherwise dispose of, or agree to sell, lease,
encumber or otherwise dispose of, any of its assets (including capital stock
of Subsidiaries of Teleglobe) which are material, individually or in the
aggregate, to Teleglobe and its Subsidiaries, taken as a whole.
(g) Investments; Indebtedness. Teleglobe shall not, and shall not
permit any of its Subsidiaries to, (i) other than in connection with actions
permitted by Section 4.2(e), make any loans, advances or capital
contributions to, or investments in, any other Person, other than by
Teleglobe or a Subsidiary of Teleglobe to or in Teleglobe or any wholly owned
Subsidiary of Teleglobe or (ii) pay, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), or settle any litigation, other than indebtedness,
issuances of debt securities, guarantees, loans, advances, capital
contributions, investments, payments, discharges or satisfactions incurred or
committed to in the ordinary course of business consistent with past
practice.
(h) Pooling-of-Interests; Tax-Free Qualification. Teleglobe shall
not, and shall not permit any of its Subsidiaries to, take any action which
(i) would reasonably be expected to prevent or impede the Merger from
qualifying for pooling-of-interests accounting treatment under US GAAP or
Canadian GAAP (ii) would cause any representation contained in the
certificates relating to the tax-free reorganization treatment attached
hereto as Exhibits G and H to be untrue.
(i) Other Actions. Teleglobe shall not, and shall not permit any
of its Subsidiaries to, take any action that would reasonably be expected to
result in any of the conditions to the Merger set forth in Article VI not
being satisfied.
(j) Accounting Methods; Income Tax Elections. Except as disclosed
in the Teleglobe Disclosure Documents filed prior to the date of this
Agreement, or as required by a Governmental Entity, Teleglobe shall not
change its methods of accounting in effect at March 31, 1998, except as
required by changes in Canadian GAAP as concurred in by Teleglobe's
independent auditors. Teleglobe shall not (i) change its fiscal year or (ii)
make any material Tax election, except as required by Law.
(k) Teleglobe Employee Plans. Teleglobe agrees as to itself and
its Subsidiaries that it will not (i) enter into, adopt, amend (except as may
be required by Law), renew or terminate any Teleglobe Employee Plan, or any
other employee benefit plan or any agreement, arrangement, plan or policy
between Teleglobe or any of its Subsidiaries and one or more of its directors
or officers, (ii) increase or accelerate the compensation or fringe benefits
of any of its directors, officers or employees, except for normal increases
in salary or wages of employees of Teleglobe who are not directors or
executive officers of Teleglobe in the ordinary course of business consistent
with past practice that, in the aggregate, do not result in a material
increase in benefits or compensation expense to Teleglobe, (iii) grant any
stock options, stock appreciation rights, restricted stock, restricted stock
units or performance units or shares other than as required by existing
agreements with individual employees, or enter into any contract, agreement,
commitment or arrangement to do any of the foregoing or (iv) enter into or
renew any contract, agreement, commitment or arrangement providing for the
payment to any director, officer or employee of such party of compensation or
benefits contingent, or the terms of which are materially altered, upon the
occurrence of any of the transactions contemplated by this Agreement.
(l) Contracts. Teleglobe agrees, as to itself and its
Subsidiaries, not to take or omit to take any act which could cause a breach
of any Contract if the result would reasonably be expected to have a Material
Adverse Effect on Teleglobe.
4.3 Advice of Changes; Governmental Filings. Each party shall (a)
confer on a regular and frequent basis with the other and (b) report (to the
extent permitted by applicable Law or any applicable confidentiality
agreement) on operational matters. Excel and Teleglobe shall file all
reports required to be filed by each of them with the SEC and the CSA (and
all other Governmental Entities) between the date of this Agreement and the
Effective Time and shall (to the extent permitted by applicable Law or any
applicable confidentiality agreement) deliver to the other party copies of
all such reports, announcements and publications promptly after the same are
filed. Subject to applicable Laws relating to the exchange of information,
each of Excel and Teleglobe shall have the right to review in advance, and
will consult with the other with respect to, all the information relating to
the other party and each of their respective Subsidiaries which appears in
any filings, announcements or publications made with, or written materials
submitted to, any third party or any Governmental Entity in connection with
the transactions contemplated by this Agreement. In exercising the foregoing
right, each of the parties hereto agrees to act reasonably and as promptly as
practicable. Each party agrees that, to the extent practicable and as timely
as practicable, it will consult with, and provide all appropriate and
necessary assistance to, the other party with respect to the obtaining of all
permits, consents, approvals and authorizations of all third parties and
Governmental Entities necessary or advisable to consummate the transactions
contemplated by this Agreement and each party will keep the other party
apprised of the status of matters relating to completion of the transactions
contemplated hereby.
4.4 Transition Planning. Teleglobe and Excel shall each appoint
four officers, including in each case its chief financial officer, to serve
from time to time as their respective representatives on a committee that
will be responsible for coordinating transition planning and implementation
relating to the Merger. Either party may remove and replace its appointees
at any time. During the period between the date of this Agreement and the
Effective Time, such committee shall (i) examine various alternatives
regarding the manner in which to best organize and manage the businesses of
Teleglobe and Excel after the Effective Time and (ii) coordinate policies and
strategies with respect to regulatory authorities and bodies, in all cases
subject to applicable law and regulation.
4.5 Control of Other Party's Business. Nothing contained in this
Agreement shall give Excel, directly or indirectly, the right to control or
direct Teleglobe's operations prior to the Effective Time. Nothing contained
in this Agreement shall give Teleglobe, directly or indirectly, the right to
control or direct Excel's operations prior to the Effective Time. Prior to
the Effective Time, each of Excel and Teleglobe shall exercise, consistent
with the terms and conditions of this Agreement, complete control and
supervision over its respective operations.
4.6 Network Transition. Promptly following the date hereof,
Teleglobe and Excel shall, to the extent not violative in any material
respect of any Law or of any Contracts to which any party hereto or any of
its Subsidiaries or controlled Affiliates is a party, commence to negotiate
in good faith an agreement to transition Excel's international traffic onto
Teleglobe's network, offer Teleglobe's products through Excel's marketing and
sales force and review Teleglobe's and Excel's U.S. domestic network to
obtain the maximum network optimization and other synergies as necessary for
Teleglobe's and Excel's future business plans.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Preparation of Proxy Statement; Stockholders Approval. (a)
As promptly as practicable following the date hereof, Teleglobe and Excel
shall prepare and file with the SEC preliminary proxy materials or an
information statement, as applicable, which shall constitute a joint
information statement, proxy statement and prospectus (such information
statement/ proxy statement/prospectus, and any amendments or supplements
thereto, the "Joint Information Statement/Proxy Statement/Prospectus"), and
Teleglobe shall, in cooperation with Excel, prepare and file with the SEC a
registration statement on Form F-4 with respect to the issuance of Teleglobe
Common Shares in the Merger (the "Form F-4"). The Joint Information
Statement/Proxy Statement/Prospectus will be included in the Form F-4 as
Teleglobe's prospectus. The Form F-4 and the Joint Information
Statement/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, and the Joint
Information Statement/ Proxy Statement/Prospectus shall comply as to form in
all material respects with the requirements of the Canadian Securities Laws.
Each of Teleglobe and Excel shall use all reasonable efforts to have the Form
F-4 declared effective by the SEC as promptly as practicable after filing
with the SEC and to keep the Form F-4 effective as long as is necessary to
consummate the Merger. The parties shall promptly provide copies, consult
with each other and prepare written responses with respect to any written
comments received from the SEC with respect to the Joint Information
Statement/Proxy Statement/Prospectus and the Form F-4 and advise one another
of any oral comments with respect to the Joint Information Statement/Proxy
Statement/Prospectus and the Form F-4 received from the SEC. The parties
will cooperate in preparing and filing with the SEC any amendment or
supplement to the Joint Information Statement/Proxy Statement/Prospectus or
the Form F-4. No amendment or supplement to the Joint Information
Statement/Proxy Statement/Prospectus shall be filed without the approval of
both parties, which approvals shall not be unreasonably withheld or delayed.
A copy of the Joint Information Statement/Proxy Statement/Prospectus shall
also be filed by Teleglobe with the CSA in accordance with the applicable
requirements of the Canadian Securities Laws.
(b) Each Stockholder who is a party to the Excel Consent and Voting
Agreement has agreed to execute, or cause to be executed, immediately
following execution and delivery of this Agreement, a written consent with
respect to all shares of Excel Common Stock owned by it or which it has the
right to vote or consent in favor of approval and adoption of the Merger and
this Agreement (the "Excel Stockholders Consent"). Notwithstanding the
foregoing, if Teleglobe so requests, Excel shall, as promptly as practicable
following such request, take all action necessary in accordance with
applicable Law and its Certificate of Incorporation and By-Laws to duly call,
give notice of and convene a meeting of its stockholders (the "Excel
Stockholders Meeting") to consider and vote upon the approval and adoption of
this Agreement and the Merger, and to submit this Agreement to the
stockholders of Excel for their approval, and Excel and its Board of
Directors shall take all lawful reasonable action to solicit, and use all
reasonable efforts to obtain, such approval. The Board of Directors of Excel
shall recommend approval of the Merger Agreement to the stockholders of
Excel.
(c) Each Shareholder who is a party to a Teleglobe Consent and
Voting Agreement has agreed (i) to execute, or cause to be executed,
immediately following execution and delivery of this Agreement, a written
consent with respect to all Teleglobe Common Shares owned by it or which it
has the right to vote or consent in favor of approval of the Share Issuance
(each a "Teleglobe Shareholders Consent") and (ii) to vote or consent (or
cause to be voted or consented), in person or by proxy, all Teleglobe Common
Shares owned by it or which it has the right to vote or consent in favor of
approval of the Teleglobe Articles Amendment and the Teleglobe By-Law
Amendment. Teleglobe shall, as promptly as practicable following the
execution of this Agreement, and in any event within 60 days hereof in the
case of the Teleglobe Articles Amendment, duly call, give notice of and
convene a meeting of its shareholders (the "Teleglobe Shareholders Meeting")
for the purpose of obtaining the Required Articles Amendment Vote, shall
recommend to its shareholders approval and adoption thereof and shall take
all lawful action to solicit the approval of the Teleglobe Articles Amendment
by the Required Articles Amendment Vote.
(d) The Board of Directors of Teleglobe shall recommend approval
of the Share Issuance and the Teleglobe Articles Amendment to the
shareholders of Teleglobe. Nothing in this Agreement shall permit either
Teleglobe or Excel to terminate this Agreement (except as specifically
provided in Article VII hereof) or recommend any other Acquisition Proposal
or change or withdraw its recommendation in favor of the Share Issuance, the
Teleglobe Articles Amendment or the Teleglobe By-Law Amendment or the
approval and adoption of the Merger and this Agreement, as the case may be.
(e) Teleglobe agrees that in the event the Required Articles
Amendment Vote is not obtained, it will duly call, give notice of and convene
a meeting of its shareholders for the purpose of obtaining the Required By-
Law Amendment Vote, shall recommend approval and adoption thereof and shall
take all lawful action to solicit the approval of its shareholders for the
Teleglobe By-Law Amendment.
5.2 Teleglobe Board of Directors; Officers. At or prior to the
Effective Time, the Board of Directors of Teleglobe will take all necessary
action (a) so that the Board of Directors of Teleglobe shall be constituted
as set forth in Exhibit F hereto, the members thereof to serve until the next
annual meeting of shareholders of Teleglobe and (b) to appoint ▇▇▇▇▇ ▇.
▇▇▇▇▇▇ as Vice-Chairman, President and Chief Operating Officer of Teleglobe,
which office he will hold in addition to his position as Chairman, Chief
Executive Officer and President of Excel. The composition and size of the
Board of Directors of Teleglobe as set forth in Exhibit F may be modified
prior to the approval by Teleglobe's shareholders of the Teleglobe By-Law
Amendment or the Teleglobe Articles Amendment without further amendment of
this Agreement only by written approval of the Chief Executive Officers of
each of Teleglobe and Excel. From and after the Effective Time until
December 31 of the fifth calendar year following the calendar year in which
the Merger occurs, the slate of individuals nominated to serve on the Board
of Directors of Teleglobe shall be selected in accordance with the provisions
of the Teleglobe Articles Amendment or the Teleglobe By-Law Amendment, as the
case may be.
5.3 Access to Information. Upon reasonable notice, each party
shall (and shall cause its Subsidiaries to) afford to the officers,
employees, accountants, counsel, financial advisors and other representatives
of the other party reasonable access during normal business hours, during the
period prior to the Effective Time, to all its properties, books, contracts,
commitments and records and, during such period, such party shall (and shall
cause its Subsidiaries to) furnish promptly to the other party (a) a copy of
each report, schedule, registration statement and other document filed,
published, announced or received by it during such period pursuant to the
requirements of applicable Law (other than documents which such party is not
permitted to disclose under applicable Law), and (b) consistent with its
legal obligations, all other information concerning its business, properties
and personnel as such other party may reasonably request; provided, however,
that either party may restrict the foregoing access to the extent that (i) a
Governmental Entity requires such party or any of its Subsidiaries to
restrict access to any properties or information reasonably related to any
such contract on the basis of applicable Laws with respect to national
security matters or (ii) any applicable Law requires such party or its
Subsidiaries to restrict access to any properties or information. The
parties will hold any such information which is non-public in confidence to
the extent required by, and in accordance with, the provisions of the
agreement dated April 21, 1998 between Excel and Teleglobe (the
"Confidentiality Agreement"). Any investigation by Teleglobe or Excel shall
not affect the representations and warranties of Excel or Teleglobe or Merger
Sub, as the case may be.
5.4 Best Efforts. (a) Subject to the terms and conditions of
this Agreement, each party will cooperate with each other and use (and shall
cause its Subsidiaries to use) its best efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable under applicable Laws to cause the conditions to closing
set forth in Article VI to be satisfied and to consummate the Merger and the
other transactions contemplated by this Agreement as soon as practicable
after the date hereof. In furtherance and not in limitation of the
foregoing, each party hereto agrees to make an appropriate filing of a
Notification and Report Form pursuant to the HSR Act and the Competition Act
(Canada) with respect to the transactions contemplated hereby as promptly as
practicable and in any event within twenty Business Days after the date
hereof and to supply as promptly as practicable any additional information
and documentary material that may be requested pursuant to the HSR Act and
the Competition Act (Canada) and to take all other actions necessary to cause
the expiration or termination of the applicable waiting periods under the HSR
Act and the Competition Act (Canada) as soon as practicable. Each party
shall, to the extent practicable, promptly notify the other party of any
communication to such party from any Governmental Entity in connection with
any required filing with, or approval or review by, such Governmental Entity
in connection with the Merger and shall, to the extent practicable, permit
the other party to review in advance any proposed communication to any
Governmental Entity in such connection to the extent permitted by applicable
Law.
(b) Each of Teleglobe and Excel shall, in connection with the
efforts referenced in this Section 5.4 to obtain all requisite approvals and
authorizations for the transactions contemplated by this Agreement under any
Regulatory Law (as defined below), use its best efforts to, to the extent
permitted by applicable Law, (i) cooperate in all respects with each other in
connection with any filing or submission and in connection with any
investigation or other inquiry, including any proceeding initiated by a
private party, (ii) promptly inform the other party of any communication
received by such party from, or given by such party to any Governmental
Entity and of any material communication received or given in connection with
any proceeding by a private party, in each case regarding any of the
transactions contemplated hereby, and (iii) permit the other party to review
any communication given by it to, and consult with each other in advance of
any meeting or conference with any Governmental Entity or, in connection with
any proceeding by a private party, with any other Person, and to the extent
permitted by such Governmental Entity or other Person, give the other party
the opportunity to attend and participate in such meetings and conferences.
For purposes of this Agreement, "Regulatory Law" means the ▇▇▇▇▇▇▇ Act, as
amended, the ▇▇▇▇▇▇▇ Act, as amended, the HSR Act, the U.S. Federal Trade
Commission Act, as amended, the Federal Communications Laws, the
Telecommunications Act (Canada), the Teleglobe Act (Canada), the Competition
Act (Canada) and all other Laws that are designed or intended to prohibit,
restrict or regulate actions having the purpose or effect of monopolization
or restraint of trade or lessening of competition through merger or
acquisition or otherwise regulate the telecommunications industry.
(c) In furtherance and not in limitation of the covenants of the
parties contained in Sections 5.4(a) and 5.4(b), if any administrative or
judicial action or proceeding, including any proceeding by a private party,
is instituted (or threatened to be instituted) challenging any transaction
contemplated by this Agreement as violative of any Regulatory Law, each of
Teleglobe and Excel shall cooperate in all respects with each other and use
its respective best efforts to contest and resist any such pending or
threatened action or proceeding and to have vacated, lifted, reversed or
overturned any decree, judgment, injunction or other order, whether
temporary, preliminary or permanent, that is in effect and that prohibits,
prevents or restricts consummation of the transactions contemplated by this
Agreement. Notwithstanding the foregoing or any other provision of this
Agreement, nothing in this Section 5.4 shall limit a party's right to
terminate this Agreement pursuant to Section 7.1(b) or 7.1(c) so long as such
party has up to then complied in all material respects with its obligations
under this Section 5.4.
(d) If any objections are asserted with respect to the
transactions contemplated hereby under any Regulatory Law or if any suit is
instituted by any Governmental Entity or any private party challenging any of
the transactions contemplated hereby as violative of any Regulatory Law, each
of Teleglobe and Excel shall use its best efforts to resolve any such
objections or challenge as such Governmental Entity or private party may have
to such transactions under such Regulatory Law so as to permit consummation
of the transactions contemplated by this Agreement, subject to Section
5.4(f).
(e) Each of Teleglobe, Merger Sub and Excel shall use its best
efforts to cause the Merger to qualify and will not (both before and after
consummation of the Merger) take any actions which could reasonably be
expected to prevent the Merger from qualifying for pooling-of-interests
treatment under US GAAP and Canadian GAAP and as a reorganization under the
provisions of Section 368(a) of the Code.
(f) Notwithstanding any other provision of this Agreement, in
connection with any filing or submission required or action to be taken by
either Excel or Teleglobe or any of their respective Subsidiaries to effect
the Merger and to consummate the other transactions contemplated hereby,
neither Excel nor Teleglobe nor any of their respective Subsidiaries shall be
required to commit to any divestiture or hold separate or similar
transactions or otherwise take (or refrain from taking) or commit to take (or
refrain from committing to take) any action that limits its freedom of action
with respect to, or its ability to retain, any of its Subsidiaries or any
material portion of the business, services, product lines or assets of Excel
and its Subsidiaries or any material portion of the business, services,
product lines or assets of Teleglobe or any of its Subsidiaries, or any other
action, if any of the foregoing, individually or in the aggregate would have
a Material Adverse Effect on any of Excel or Teleglobe (either with or
without including Teleglobe's ownership of Excel after the Merger).
5.5 Acquisition Proposals.
(a) Teleglobe and Excel each shall not, directly or indirectly,
through any officer, director, employee, stockholder, financial advisor,
agent or other representative of such party (including any investment banker,
attorney or accountant retained by such party or by any of such party's
Subsidiaries or stockholders) (i) solicit, initiate, encourage or knowingly
facilitate (including by way of furnishing information) any inquiries or
proposals that constitute, or could reasonably be expected to lead to, (x) a
breach of this Agreement, either Voting Agreement or either Stock Option
Agreement or otherwise interfere in any material respect with the completion
of the Merger or (y) a proposal or offer for an Alternative Transaction (as
defined below) involving such party or any of its Subsidiaries (any of the
foregoing inquiries or proposals being referred to in this Agreement as an
"Acquisition Proposal"), (ii) engage in negotiations or discussions
concerning, or provide any non-public information to any Person relating to,
or otherwise facilitate any effort or attempt to make or implement, any
Acquisition Proposal, or (iii) agree to or recommend to its stockholders or
shareholders, as applicable, any Acquisition Proposal; provided, however,
that nothing contained in this Agreement shall prevent Teleglobe or Excel
from complying with Rule 14e-2 under the Exchange Act or similar provisions
of the Canadian Securities Laws with respect to an Acquisition Proposal.
Each of Teleglobe and Excel agrees that it will immediately cease and cause
to be terminated any existing activities, discussions or negotiations with
any parties conducted heretofore with respect to any Acquisition Proposal.
Each of Excel and Teleglobe agrees not to release any third party from, or
waive any provision of, any standstill agreement to which it is a party or
any confidentiality agreement between it and another Person who has made or
who may reasonably be considered likely to make an Acquisition Proposal.
Each of Teleglobe and Excel agrees that it will take the necessary steps to
inform promptly the individuals or entities referred to in the first sentence
of this Section 5.5 of the obligations undertaken in this Section 5.5.
(b) Teleglobe and Excel shall each notify the other party
immediately after receipt by Teleglobe or Excel (or their advisors) of any
Acquisition Proposal or any request for nonpublic information in connection
with an Acquisition Proposal or for access to the properties, books or
records of such party by any person or entity that informs such party that it
is considering making, or has made, an Acquisition Proposal. Such notice
shall be made orally and in writing and shall indicate in reasonable detail
the identity of the offeror and the terms and conditions of such proposal,
inquiry or contact.
(c) As used in this Agreement, "Alternative Transaction"
means either (i) a transaction pursuant to which any person (or group of
persons) other than Teleglobe or Excel or their respective Affiliates (a
"Third Party"), would acquire more than 10% of the outstanding shares of
Excel Common Stock or common shares of Teleglobe capital stock, as the case
may be, whether pursuant to a tender offer or exchange offer or otherwise,
(ii) a merger or other business combination involving Teleglobe or Excel
pursuant to which any Third Party acquires more than 10% of the outstanding
shares of Excel Common Stock or common shares of Teleglobe capital stock, as
the case may be, or shares exercisable or convertible into or exchangeable
for more than 10% of the outstanding shares of Excel Common Stock or common
shares of Teleglobe capital stock, or of the entity surviving such merger or
business combination, (iii) any other transaction pursuant to which any Third
Party acquires control of assets or businesses (including for this purpose
the outstanding equity securities of Subsidiaries of Teleglobe or Excel, and
the entity surviving any merger or business combination including any of
them) of Teleglobe or Excel having a fair market value (as determined by the
Board of Directors of Teleglobe or Excel, as the case may be, in good faith)
equal to more than 10% of the fair market value of all the assets or
businesses of Teleglobe or Excel, as the case may be, and its Subsidiaries,
taken as a whole, immediately prior to such transaction, (iv) any
recapitalization, restructuring or other transaction which could reasonably
be expected to prevent or materially impair or delay the consummation of the
Merger or (v) any public announcement of a proposal, plan or intention to do
any of the foregoing or any agreement to engage in any of the foregoing.
5.6 Fees and Expenses. Whether or not the Merger is consummated,
all Expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such Expenses,
except that (a) if the Merger is consummated, the Surviving Corporation shall
pay, or cause to be paid, any and all property or transfer taxes imposed on
Excel or its Subsidiaries, (b) Expenses incurred in connection with the
filing, printing and mailing of the Joint Information Statement/Proxy
Statement/ Prospectus shall be shared equally by Teleglobe and Excel and (c)
the filing fees incurred pursuant to the requirements of the HSR Act and the
Competition Act (Canada), which shall be shared equally by Teleglobe and
Excel. As used in this Agreement, "Expenses" includes all out-of-pocket
expenses (including all fees and expenses of counsel, accountants, investment
bankers, experts and consultants to a party hereto and its Affiliates)
incurred by a party or on its behalf in connection with or related to the
authorization, preparation, negotiation, execution and performance of this
Agreement, the Voting Agreements, the Stock Option Agreements and the
transactions contemplated hereby and thereby, including the preparation,
printing, filing and mailing of the Joint Information Statement/Proxy
Statement/Prospectus, the solicitation of shareholder and stockholder
approvals and all other matters related to the transactions contemplated
hereby, including registration fees in connection with the Form F-4, costs
incurred in connection with any shareholder litigation or costs incurred in
the course of any contest involved in obtaining any Regulatory Approvals.
5.7 Directors' and Officers' Indemnification and Insurance.
Teleglobe shall cause the Surviving Corporation to maintain in effect in its
certificate of incorporation and by-laws (i) for a period of six years after
the Effective Time, the current provisions regarding limitation of liability
of directors and indemnification of officers, directors and employees
contained in the certificate of incorporation and by-laws of Excel, and
Teleglobe shall guarantee such obligation of the Surviving Corporation and
(ii) for a period of six years, the current policies of directors' and
officers' liability insurance and fiduciary liability insurance maintained by
Excel (provided that the Surviving Corporation may substitute therefor
policies of at least the same coverage and amounts containing terms and
conditions which are, in the aggregate, no less advantageous to the insured)
with respect to claims arising from facts or events that occurred at or
before the Effective Time; provided, however, that in no event shall the
Surviving Corporation be required to expend in any one year an amount in
excess of 200% of the annual premiums currently paid by Excel for such
insurance; and, provided, further, that if the annual premiums of such
insurance coverage exceed such amount, the Surviving Corporation shall be
obligated to obtain a policy with the greatest coverage available for a cost
not exceeding such amount.
5.8 Public Announcements. Teleglobe and Excel shall use all
reasonable efforts to develop a joint communications plan and each party
shall use all reasonable efforts (i) to ensure that all press releases and
other public statements with respect to the transactions contemplated hereby
shall be consistent with such joint communications plan, and (ii) unless
otherwise required by applicable Law or by obligations pursuant to any
listing agreement with or rules of any securities exchange, to consult with
each other before issuing any press release or otherwise making any public
statement with respect to this Agreement or the transactions contemplated
hereby.
5.9 Accountants' Letters. Upon reasonable notice from the other,
Teleglobe and Excel shall use their respective best efforts to cause ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, respectively, to deliver to
Teleglobe or Excel, as the case may be, a letter, dated within two Business
Days of the date of effectiveness of the Form F-4 covering such matters as
are requested by Teleglobe or Excel, as the case may be, and as are
customarily addressed in accountant's "comfort" letters. In connection with
Teleglobe's efforts to obtain such letter, if requested by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Excel shall provide a representation letter to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ complying with the statement on Auditing Standards No. 72
("SAS 72") or the comparable Canadian auditing standards, if then required.
In connection with Excel's efforts to obtain such letter, if requested by
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, Teleglobe shall provide a representation letter to
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP complying with SAS 72, if then required.
5.10 Listing of Teleglobe Common Shares. Teleglobe shall use its
best efforts to cause the Teleglobe Common Shares to be issued in the Merger
and the Teleglobe Common Shares to be reserved for issuance upon exercise of
the Converted Options to be approved for listing, subject to official notice
of issuance, on the NYSE, and subject to customary requirements, on the TSE
and the ME.
5.11 Rule 145 Affiliates of Teleglobe and Excel; Pooling Letters.
Concurrently with the execution of this Agreement, each of the directors of
Excel and of Teleglobe has executed an agreement in the form attached hereto
as Exhibit I or J or as applicable. No later than 30 days following the date
of this Agreement, Excel shall deliver to Teleglobe a letter identifying all
other Persons who, to Excel's knowledge, at the time of execution of the
Excel Stockholders Consent, at any Excel Stockholders Meeting or at the
Effective Time, may be deemed to be "affiliates" of Excel for purposes of
Rule 145 under the Securities Act or who may otherwise be deemed to be
Affiliates of Excel (the "Rule 145 Affiliates"). Excel shall use its best
efforts to cause each Person who is identified as a Rule 145 Affiliate in
such list to deliver to Teleglobe at or prior to the Effective Time a written
agreement to the effect that such Rule 145 Affiliate will not (a) sell,
pledge, transfer or otherwise dispose of any Teleglobe Common Shares issued
to such Rule 145 Affiliate pursuant to the Merger, except pursuant to an
effective registration statement or in compliance with Rule 145 under the
Securities Act or an exemption from the registration requirements of the
Securities Act, or (b) sell, pledge, transfer or otherwise dispose of, or
hedge or otherwise reduce its risk with respect to, any common shares of
Teleglobe capital stock or any shares of Excel Common Stock from the 30th day
prior to the Effective Time to such time as results covering at least 30 days
of combined operations of Teleglobe and Excel have been published by
Teleglobe in the form of a quarterly earnings report, an effective
registration statement filed with the SEC, a report to the SEC on Form 6-K or
any other public filing or announcement which includes the combined results
of operations of Teleglobe and Excel except for transfers or other
dispositions that, in the reasonable opinion of Teleglobe's independent
public accountants, will not prevent Teleglobe from accounting for the Merger
as a pooling of interests, taking into account the actions of other
Affiliates of Excel, Teleglobe or their respective Stockholders. Teleglobe
shall use its best efforts to cause each Person who would be deemed to be an
Affiliate with respect to Teleglobe other than its directors, no later than
30 days following the date of this Agreement, to deliver to Excel a letter in
the form attached hereto as Exhibit J.
5.12 Stockholder Litigation. Teleglobe, Merger Sub and Excel
shall cooperate and consult with one another, to the fullest extent possible,
in connection with any stockholder litigation against any of them or any of
their respective directors or officers with respect to the transactions
contemplated by this Agreement. In furtherance of and without in any way
limiting the foregoing, each of Teleglobe and Excel shall use its respective
best efforts to defeat such litigation so as to permit the consummation of
the transactions contemplated by this Agreement in the manner contemplated by
this Agreement. In the event that an Acquisition Proposal shall be pending
with respect to Teleglobe or Excel, neither party shall make any material
strategic decision with respect to any pending stockholder litigation or any
other third party litigation which challenges the enforceability of this
Agreement or otherwise seeks to impede, impair, delay or otherwise interfere
with the transaction contemplated hereby without the prior written consent of
the other party, which consent shall not unreasonably be withheld or delayed.
5.13 Restriction on Certain Dispositions. In order to assist in
ensuring that all holders of shares of Excel Common Stock receive tax-free
treatment under the Code, Teleglobe agrees that during the two year period
beginning on the Closing Date (the "Restricted Period"), it will not dispose
in any manner of any shares of the Surviving Corporation Common Stock or
dispose in any manner, or cause or permit the Surviving Corporation to
dispose in any manner, of any of the assets of the Surviving Corporation,
other than dispositions of assets of the Surviving Corporation in the
ordinary course of business which do not constitute dispositions of "all or a
substantial portion" of the assets of the Surviving Corporation for purposes
of Treasury Regulation Section 1.367(a)-3T(g)(3)(iii) and "Permitted
Dispositions". "Permitted Dispositions" shall be defined as: (a) transfers
or successive transfers of Excel Common Stock or Excel assets to one or more
corporations controlled (within the meaning of Section 368(c) of the Code) in
each case by the transferor, provided such transfer or transfers qualify
under Treasury Regulation Section 1.367(a)-3T(g)(7), (b) a disposition made
with respect to a liquidation of the Surviving Corporation subject to the
provisions of Treasury Regulation Section 1.367(a)-3T(g)(3)(iv) and (c) any
other transaction for which Excel or Teleglobe receives a private letter
ruling from the IRS, holding that such transactions will not result in the
recognition of gain according to the gain recognition agreements into which
certain of the holders of Excel Common Stock will enter under Treasury
Regulation Section 1.367(a)-3T(g)(3); provided, however, that any such
transfer, disposition or transaction may be consummated only if the
transferee shall agree in writing beforehand (i) to be bound by Teleglobe's
agreements and covenants in this Section 5.13 during any then remaining
portion of the Restricted Period, (ii) not to effect any subsequent transfer,
disposition or transaction or any sale, disposition, lease, transfer,
mortgage, merger, consolidation, amalgamation, combination, liquidation or
dissolution referred to in paragraph 2 of the Teleglobe By-Law Amendment
without the affirmative vote of at least 66-2/3% of the entire Board of
Directors (disregarding vacancies) of Teleglobe and (iii) to cause any
subsequent transferee to agree to be bound by all of the foregoing; and,
provided, further, that no transfer, disposition or transaction entered into
by Teleglobe in accordance with this Section 5.13, or by any transferee of
Teleglobe or any subsequent transferee, shall relieve Teleglobe from any
liability to any third party beneficiary of this Section 5.13 that arises out
of or is otherwise based upon any violation of the provisions of this Section
5.13.
5.14 Compliance with Section 228 of the DGCL. Excel has delivered,
concurrently with the delivery to it of the Excel Stockholders Consent, a
certificate of its Secretary as to the sufficiency of the Excel Stockholders
Consent to adopt and approve the Merger Agreement and the Merger. Pursuant
to the Joint Information Statement/Proxy Statement/Prospectus, Excel shall
notify its Stockholders who have not consented in writing to the adoption and
approval of the Merger Agreement and the Merger and who, if such action had
been taken at a meeting, would have been entitled to notice of the meeting if
the record date for such meeting had been the date of the Excel Stockholder
Consent.
5.15 Registration Rights Agreement. On or prior to the Closing
Date Teleglobe will execute and deliver the Registration Rights Agreement.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation to Effect the Merger.
The obligations of Teleglobe, Merger Sub and Excel to effect the Merger are
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
(a) Stockholder Approval. In connection with the approval and
adoption of this Agreement, Excel shall have obtained the Required Excel Vote
in accordance with applicable Law and the certificate of incorporation and
by-laws of Excel.
(b) No Injunctions or Restraints, Illegality. No Laws shall have
been adopted or promulgated, and no temporary restraining order, preliminary
or permanent injunction or other order issued by a court or other
Governmental Entity of competent jurisdiction shall be in effect, having the
effect of making the Merger illegal or otherwise prohibiting consummation of
the Merger; provided, however, that the provisions of this Section 6.1(b)
shall not be available to any party whose failure to fulfill its obligations
pursuant to Section 5.4 shall have been the cause of, or shall have resulted
in, such order or injunction.
(c) HSR Act; Competition Act (Canada); Required Consents. The
waiting period (and any extension thereof) applicable to the Merger under the
HSR Act shall have been terminated or shall have expired; the waiting period
prescribed under the Competition Act (Canada) shall have expired, and the
Director of Investigation and Research under said Act shall have advised
Teleglobe in writing that the Director has determined not to make an
application for an order under Section 92 of the Competition Act (Canada) in
respect of the Merger and no order shall have been issued by the Competition
Tribunal in connection with same; and all other Required Consents shall have
been granted and be in full force and effect; provided, however, that a
Required Consent shall not be deemed to have been obtained if in connection
with the grant thereof or in another proceeding there shall have been an
imposition by any Governmental Entity of any condition, requirement,
restriction or change of regulation, or any other action directly or
indirectly related to such grant taken by such Governmental Entity, which
could reasonably be expected to have a Material Adverse Effect on either of
Excel or Teleglobe (either with or without including Teleglobe's ownership of
Excel and its Subsidiaries after the Merger).
(d) NYSE, TSE and ME Listings. The Teleglobe Common Shares to be
issued in the Merger and such other shares to be reserved for issuance in
connection with this Agreement shall have been approved for listing on the
NYSE (subject to official notice of issuance) and the TSE and the ME (subject
to customary requirements).
(e) Effectiveness of the Form F-4. The Form F-4 shall have been
declared effective by the SEC under the Securities Act. No stop order
suspending the effectiveness of the Form F-4 shall have been issued by the
SEC and no proceedings for that purpose shall have been initiated or
threatened by the SEC that have not been withdrawn.
6.2 Additional Conditions to Obligations of Teleglobe and Merger
Sub. The obligations of Teleglobe and Merger Sub to effect the Merger are
subject to the satisfaction of, or waiver by Teleglobe on or prior to the
Closing Date of the following additional conditions:
(a) Representations and Warranties. Each of the representations
and warranties of Excel set forth in this Agreement that is qualified as to
materiality or Material Adverse Effect shall have been true and correct on
the date of this Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing Date as though made
on and as of the Closing Date, and each of the representations and warranties
of Excel that is not so qualified shall have been true and correct in all
material respects on the date of this Agreement and (except to the extent
such representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date, and Teleglobe
shall have received a certificate of the chief executive officer and the
chief financial officer of Excel to such effect.
(b) Performance of Obligations of Excel. Excel shall have
performed or complied with all agreements and covenants required to be
performed by it under this Agreement at or prior to the Closing Date that are
qualified as to materiality and shall have performed or complied in all
material respects with all other agreements and covenants required to be
performed by it under this Agreement at or prior to the Closing Date that are
not so qualified as to materiality, and Teleglobe shall have received a
certificate of the chief executive officer and the chief financial officer of
Excel to such effect.
(c) Tax Opinion. Teleglobe shall have received an opinion, dated
the Closing Date, based on the representations of Excel and Teleglobe
attached hereto as Exhibits G and H and appropriate representations of
certain shareholders of Excel and Teleglobe, of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇,
counsel to Teleglobe, to the effect that (i) the Merger will be treated for
U.S. Federal income tax purposes as a reorganization within the meaning of
Section 368(a) of the Code, (ii) Teleglobe, Merger Sub and Excel will each be
a party to the reorganization within the meaning of Section 368(b) of the
Code and (iii) no gain or loss will be recognized by Teleglobe, Merger Sub or
Excel as a result of the Merger.
(d) No Material Adverse Change. Since the date of this Agreement,
there shall not have occurred any event or circumstance that shall have
caused, or shall be reasonably likely to cause, a material adverse change in
the business, condition (financial or otherwise), assets, liabilities or
results of operations of Excel and its Subsidiaries, taken as a whole
(without taking into account the Merger), other than any change relating to
(i) the economy, foreign exchange rates or securities markets in general or
(ii) the telecommunications industry, if, in any of (i) or (ii) the effect on
Excel and its Subsidiaries, taken as a whole, is not either (A)
particularized or unique to Excel and its Subsidiaries, taken as a whole, or
(B) disproportionate relative to the effect on Teleglobe and its
Subsidiaries, taken as a whole (without taking into account the Merger), or
relative to the effect on the competitors of Excel and its Subsidiaries,
taken as a whole.
(e) Excel Consent and Voting Agreement. There shall not have been
a material breach of the Excel Consent and Voting Agreement by any of the
stockholders of Excel party thereto.
(f) Third-Party Consents. Excel or its Subsidiaries shall have
obtained in writing any third-party consents identified with an asterisk on
Section 3.1(d)(ii) of the Excel Disclosure Schedule and the same shall be in
full force and effect at the Closing.
6.3 Additional Conditions to Obligations of Excel. The
obligations of Excel to effect the Merger are subject to the satisfaction or
waiver by Excel, on or prior to the Closing Date, of the following additional
conditions:
(a) Representations and Warranties. Each of the representations
and warranties of Teleglobe and Merger Sub set forth in this Agreement that
is qualified as to materiality or Material Adverse Effect shall have been
true and correct on the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the Closing
Date as though made on and as of the Closing Date, and each of the
representations and warranties of each of Teleglobe and Merger Sub that is
not so qualified shall have been true and correct in all material respects on
the date of this Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing Date as though made
on and as of the Closing Date, and Excel shall have received a certificate of
the chief executive officer and the chief financial officer of Teleglobe to
such effect.
(b) Performance of Obligations of Teleglobe. Teleglobe shall have
performed or complied with all agreements and covenants required to be
performed by it under this Agreement at or prior to the Closing Date that are
qualified as to materiality and shall have performed or complied in all
material respects with all agreements and covenants required to be performed
by it under this Agreement at or prior to the Closing Date that are not so
qualified as to materiality, and Excel shall have received a certificate of
the chief executive officer and the chief financial officer of Teleglobe to
such effect.
(c) Tax Opinion. Excel shall have received an opinion, dated the
Closing Date, based on the representations of Excel and Teleglobe attached
hereto as Exhibits G and H and appropriate representations of certain
shareholders of Excel and Teleglobe, and based on the IRS ruling referred to
in paragraph (f) below, of Weil, Gotshal & ▇▇▇▇▇▇ LLP, counsel to Excel, to
the effect that (i) the Merger will be treated for U.S. Federal income tax
purposes as a reorganization within the meaning of Section 368(a) of the
Code, (ii) Teleglobe, Merger Sub and Excel will each be a party to the
reorganization within the meaning of Section 368(b) of the Code and (iii) no
gain or loss will be recognized by the shareholders of Excel as a result of
the Merger (except with respect to any cash received in lieu of fractional
shares).
(d) No Material Adverse Change. Since the date of this Agreement,
there shall not have occurred any event or circumstance that shall have
caused, or shall be reasonably likely to cause, a material adverse change in
the business, condition (financial or otherwise), assets, liabilities or
results of operations of Teleglobe and its Subsidiaries, taken as a whole
(without taking into account the Merger), other than any change relating to
(i) the economy, foreign exchange rates or securities markets in general or
(ii) the telecommunications industry, if, in any of (i) or (ii) the effect on
Teleglobe and its Subsidiaries, taken as a whole without giving effect to the
Merger, is not either (A) particularized or unique to Teleglobe and its
Subsidiaries taken as a whole, or (B) disproportionate relative to the effect
on Excel and its Subsidiaries, taken as a whole, or relative to the effect on
the competitors of Teleglobe and its Subsidiaries, taken as a whole (without
taking into account the Merger).
(e) Teleglobe Consent and Voting Agreements. There shall not have
been a material breach of the Teleglobe Consent and Voting Agreements by any
of the shareholders of Teleglobe party thereto.
(f) IRS Ruling. A ruling shall have been received from the IRS
under Treasury Regulation Section 1.367(a)-3(c)(9) to the effect that Excel
is substantially in compliance with the requirements of Treasury Regulation
sections 1.367(a)-3(c)(1)(ii)-(iv) within the meaning of Treasury Regulation
section 1.367-3(c)(9)(i); and the transfer of Excel Common Stock pursuant to
the Merger will be deemed to comply with the substantiality test requirement
of the active trade or business test described in Treasury Regulation Section
1.367-3(c)(1)(iv).
(g) Third-Party Consents. Teleglobe or its Subsidiaries shall
have obtained in writing any third-party consents identified with an asterisk
on Section 3.2(d)(ii) of the Teleglobe Disclosure Schedule and the same shall
be in full force and effect at the Closing.
(h) Registration Rights Agreement. The Registration Rights
Agreement shall have been executed and delivered by Teleglobe.
(i) Shareholder Approval. Either (i) the Teleglobe Articles
Amendment shall have been approved by the Required Articles Amendment Vote or
(ii) the Teleglobe By-Law Amendment shall have been approved by the Required
By-Law Amendment Vote, in either case in accordance with applicable Law and
the certificate of incorporation and by-laws of Teleglobe.
ARTICLE VII
TERMINATION AND AMENDMENT
7.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, by action taken or authorized by the Board of
Directors of the terminating party or parties, in the following
circumstances:
(a) By mutual written consent of Teleglobe and Excel;
(b) By either Teleglobe or Excel if the Effective Time shall not
have occurred on or before June 14, 1999 (the "Termination Date"); provided,
however, that the right to terminate this Agreement under this Section 7.1(b)
shall not be available to any party whose failure to fulfill any obligation
under this Agreement (including Section 5.4) has to any extent been the cause
of, or resulted in, the failure of the Effective Time to occur on or before
the Termination Date; and provided, further, that if on the Termination Date
the conditions to the Closing set forth in Section 6.1(c) shall not have been
fulfilled but shall be capable of being fulfilled, but all other conditions
to the Closing shall be fulfilled or shall be capable of being fulfilled,
then the Termination Date shall be extended to December 31, 1999;
(c) By either Teleglobe or Excel if any Governmental Entity (i)
shall have issued an order, decree or ruling or taken any other action (which
the parties shall have used their best efforts to resist, resolve or lift, as
applicable, in accordance with Section 5.4) permanently restraining,
enjoining or otherwise prohibiting the transactions contemplated by this
Agreement, and such order, decree, ruling or other action shall have become
final and nonappealable or (ii) shall have failed to issue an order, decree
or ruling or to take any other action (which order, decree, ruling or other
action the parties shall have used their best efforts to obtain, in
accordance with Section 5.4), in the case of each of (i) and (ii), which is
necessary to fulfill the condition set forth in Section 6.1(c) and such
action or inaction shall have become final and nonappealable; provided,
however, that the right to terminate this Agreement under this Section 7.1(c)
shall not be available to any party whose failure to comply with Section 5.4
has to any extent been the cause of such action or inaction;
(d) By Excel if neither (i) the Required Articles Amendment Vote
shall have been obtained nor (ii) the Required By-Law Amendment Vote shall
have been obtained by reason of the failure to obtain either such vote upon
the taking of such vote at a duly held meeting of shareholders of Teleglobe
on or prior to the 150th day following the date of this Agreement;
(e) By Teleglobe or Excel if (i) the other party shall have
materially breached or failed to comply with any of its obligations under
this Agreement or (ii) any representation or warranty made by the other that
is qualified as to materiality or Material Adverse Effect shall have been
incorrect when made or any representation or warranty not so qualified shall
have been incorrect in any material respect when made or in either case shall
have since ceased to be true and correct or true and correct in all material
respects, as the case may be, and such breach, failure or misrepresentation
has not been cured within 30 days after notice thereof and the continuance of
such breach, failure or misrepresentation would have a Material Adverse
Effect on Excel or Teleglobe (whether before or after giving effect to the
Merger);
(f) By Excel if any person or group shall have become the
beneficial owner (determined in accordance with Rule 13d-3 under the Exchange
Act) of securities representing more than 25% of the outstanding voting stock
of Teleglobe, other than any such person or group who satisfies such criteria
as of the date of this Agreement (a "Competing Share Transaction");
(g) By Teleglobe if any person or group shall have become the
beneficial owner (determined as set forth above) of securities representing
more than 25% of the outstanding voting stock of Excel, other than any such
person or group that satisfies such criteria as of the date of this
Agreement.
Notwithstanding anything else contained in this Agreement, the
right to terminate this Agreement under this Section 7.1 shall not be
available to any party (a) that is in material breach of its obligations
hereunder or (b) whose failure to fulfill its obligations or to comply with
its covenants under this Agreement has been the cause of, or resulted in, the
failure to satisfy any conditions to the obligations of either party
hereunder.
7.2 Effect of Termination. In the event of termination of this
Agreement by either Teleglobe or Excel as provided in Section 7.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Teleglobe or Excel or their respective officers or
directors except (i) with respect to Section 3.1(j), Section 3.2(j), the
second sentence of Section 5.3, Section 5.7, this Section 7.2, Section 7.3,
Section 7.4 and Article VIII and (ii) nothing herein will release any party
from any liability arising from any breach of this Agreement.
7.3 Payment by Excel. (a) Teleglobe and Excel agree that if
Teleglobe shall terminate this Agreement pursuant to Section 7.1(g), then
Excel shall pay to Teleglobe an amount equal to $120 million (the
"Termination Fee") plus Teleglobe's Expenses. Notwithstanding anything in
this Agreement (including Section 8.10) to the contrary, in the case of a
termination pursuant to Section 7.1(g), the payment of any amount pursuant to
this Section 7.3(a) shall constitute liquidated damages in full and complete
satisfaction of, and shall be Teleglobe's sole and exclusive remedy, together
with its rights under the Excel Stock Option Agreement, against Excel for any
loss, liability, damage or claim arising out of or in connection with any
such termination of this Agreement or the facts and circumstances resulting
in such termination or otherwise related thereto or otherwise arising out of
or in connection with this Agreement.
Excel acknowledges that the agreements contained in this Section
7.3(a) are critical provisions of the transactions contemplated hereby and
that without these agreements Teleglobe and Merger Sub would not enter into
this Agreement. Accordingly, if Excel fails to pay promptly the Termination
Fee and the Expenses due pursuant to this Section 7.3(a) and, in order to
obtain such payment, Teleglobe or Merger Sub commences litigation which
results in a judgment against Excel for the Termination Fee and the Expenses,
Excel shall pay to Teleglobe its costs and expenses (including attorneys'
fees) in connection with such litigation, together with interest on the
amount of the Termination Fee and the Expenses at the prime rate of The Chase
Manhattan Bank, N.A., in effect on the date and from the date such amounts
were originally required to have been paid.
(b) The Termination Fee required to be paid pursuant to Section
7.3(a) shall be paid by Excel no later than two Business Days after Teleglobe
shall have notified Excel of such termination. The Expenses required to be
paid pursuant to Section 7.3(a) shall be paid to Teleglobe not later than two
Business Days after Teleglobe shall have provided Excel with an invoice for
the Expenses. All payments under Section 7.3(a) shall be made by wire
transfer of immediately available funds to an account designated by the party
entitled to receive payment.
7.4 Payment by Teleglobe. (a) Teleglobe and Excel agree that if
(i) Excel shall terminate this Agreement pursuant to Section 7.1(f) or (ii)
Excel shall terminate this Agreement pursuant to Section 7.1(d) and at the
time of the meeting of the shareholders of Teleglobe at which the Teleglobe
By-Law Amendment is considered an Acquisition Proposal (for purposes of this
Section 7.4(a) only with respect to the definition of Acquisition Proposal,
replacing in the definition of Alternative Transaction the number 10% with
the number 25% in each of the four instances such number appears therein)
shall be pending with respect to Teleglobe, then Teleglobe shall pay to Excel
the Termination Fee plus Excel's Expenses. Notwithstanding anything in this
Agreement (including Section 8.10) to the contrary, in the case of a
termination pursuant to Section 7.1(f), the payment of any amount pursuant to
this Section 7.4(a) shall constitute liquidated damages in full and complete
satisfaction of, and shall be Excel's sole and exclusive remedy, together
with its rights under the Teleglobe Stock Option Agreement, against Teleglobe
for any loss, liability, damage or claim arising out of or in connection with
any such termination of this Agreement or the facts and circumstances
resulting in such termination or otherwise related thereto or otherwise
arising out of or in connection with this Agreement.
Teleglobe acknowledges that the agreements contained in this
Section 7.4(a) are critical provisions of the transactions contemplated
hereby and that without these agreements Excel would not enter into this
Agreement. Accordingly, if Teleglobe fails to pay promptly the Termination
Fee and the Expenses due pursuant to this Section 7.4(a) and, in order to
obtain such payment, Excel commences litigation which results in a judgment
against Teleglobe for the Termination Fee and the Expenses, Teleglobe shall
pay to Excel its costs and expenses (including attorneys' fees) in connection
with such litigation, together with interest on the amount of the Termination
Fee and the Expenses at the prime rate of The Chase Manhattan Bank, N.A. in
effect on the date and from the date such amounts were originally required to
have been paid.
(b) The Termination Fee required to be paid pursuant to Section
7.4(a) shall be paid by Teleglobe no later than two Business Days after Excel
shall have notified Teleglobe of such termination. The Expenses required to
be paid pursuant to Section 7.4(a) shall be paid to Excel not later than two
Business Days after Excel shall have provided Teleglobe with an invoice for
the Expenses. All payments under Section 7.4(a) shall be made by wire
transfer of immediately available funds to an account designated by Excel.
7.5 Amendment. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of
Directors, at any time before or after approval of the matters presented in
connection with the Merger by the stockholders of Excel or the shareholders
of Teleglobe, as the case may be, but, after any such approval, no amendment
shall be made which by Law or in accordance with the rules of any relevant
stock exchange requires further approval by such stockholders or shareholders
without such further approval. This Agreement may not be amended except by
an instrument in writing signed on behalf of each of the parties hereto.
7.6 Extension; Waiver. At any time prior to the Effective Time,
the parties hereto, by action taken or authorized by their respective Boards
of Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and (iii) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall
be valid only if set forth in a written instrument signed on behalf of such
party. The failure of any party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not constitute a waiver of
those rights nor shall any single or partial exercise thereof include any
other or further exercise thereof or the exercise of any other right, power
or privilege.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Survival of Representations, Warranties and Covenants. The
respective representations and warranties of the parties to this Agreement
contained herein or in any certificates or other documents delivered prior to
or at the Closing shall terminate at the Effective Time. The respective
covenants and agreements of the parties contained herein or in any
certificates or other documents delivered prior to or at the Closing shall
survive the execution and delivery of this Agreement and shall terminate only
in accordance with their terms.
8.2 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed duly given (a) on the date of delivery if
delivered personally, or by telecopy or facsimile, upon confirmation of
receipt, (b) on the first Business Day following the date of dispatch if
delivered by a recognized next-day courier service, or (c) on the third
Business Day following the date of mailing if delivered by registered or
certified mail, return receipt requested, postage prepaid. All notices
hereunder shall be delivered as set forth below, or pursuant to such other
instructions as may be designated in writing by the party to receive such
notice:
(a) if to Teleglobe or Merger Sub, to
Teleglobe Inc.
▇▇▇▇, ▇▇▇ ▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: Vice President, Legal Affairs
and Corporate Secretary
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III, Esq.
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
(b) if to Excel, to
Excel Communications, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Executive Vice President, Secretary
and General Counsel
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
8.3 Interpretation. When a reference is made in this Agreement to
Articles, Sections or Exhibits, such reference shall be to an Article of,
Section of or Exhibit to this Agreement unless otherwise indicated. The
table of contents, glossary of defined terms and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to
be followed by the words "without limitation". Whenever the word "material"
is used with respect to any Person and its Subsidiaries, it shall mean,
unless otherwise specified, such Person and its Subsidiaries taken as a
whole. All references herein to "$" or "dollars" shall be to U.S. dollars.
8.4 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original and all of
which shall be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by each of the
parties and delivered to the other party, it being understood that both
parties need not sign the same counterpart.
8.5 Entire Agreement; No Third Party Beneficiaries. (a) This
Agreement, the Voting Agreements and the Stock Option Agreements and the
Confidentiality Agreement constitute the entire agreement among the parties
and supersede all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof and thereof.
(b) This Agreement shall be binding upon and inure solely to the
benefit of each party hereto, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other Person any right,
benefit or remedy of any nature whatsoever under or by reason of this
Agreement, other than Sections 3.2(ad), 5.7 and 5.13 (which are intended to
be for the benefit of the Persons covered thereby (including, where
appropriate, the stockholders of Excel and Teleglobe as of the date of this
Agreement) and may be enforced by such Persons at any time).
8.6 Governing Law. This Agreement shall be governed and construed
in accordance with the Laws of the State of Delaware without regard to the
principles of conflicts of laws thereof.
8.7 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any Law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced,
the parties hereto shall negotiate in good faith to modify this Agreement so
as to effect the original intent of the parties as closely as possible in an
acceptable manner in order that the transactions contemplated hereby are
consummated as originally contemplated to the greatest extent possible.
8.8 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto, in whole or in part (whether by operation of law or otherwise),
without the prior written consent of the other party and the written
undertaking of the assignee to be bound by the terms of this Agreement, and
any attempt to make any such assignment without such consent shall be null
and void, except that Merger Sub may assign, in its sole discretion, any or
all of its rights, interests and obligations under this Agreement to any
direct wholly owned Subsidiary of Teleglobe without the consent of Excel;
provided, however, that no such assignment shall relieve Teleglobe of its
obligations under this Agreement. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and permitted assigns.
8.9 Submission to Jurisdiction; Waivers. Each of Teleglobe and
Excel irrevocably agrees that any legal action or proceeding with respect to
this Agreement or for recognition and enforcement of any judgment in respect
hereof brought by the other party hereto or its successors or assigns may be
brought and determined in the Chancery or other Courts of the State of
Delaware, and each of Teleglobe and Excel hereby irrevocably submits with
regard to any such action or proceeding for itself and in respect to its
property, generally and unconditionally, to the nonexclusive jurisdiction of
the aforesaid courts. Each of Teleglobe and Excel hereby irrevocably waives,
and agrees not to assert, by way of motion, as a defense, counterclaim or
otherwise, in any action or proceeding with respect to this Agreement, (a)
any claim that it is not personally subject to the jurisdiction of the
above-named courts for any reason other than the failure to serve process in
accordance with this Section 8.9, (b) that it or its property is exempt or
immune from jurisdiction of any such court or from any legal process
commenced in such courts (whether through service of notice, attachment prior
to judgment, attachment in aid of execution of judgment, execution of
judgment or otherwise), and (c) to the fullest extent permitted by applicable
Law, that (i) the suit, action or proceeding in any such court is brought in
an inconvenient forum, (ii) the venue of such suit, action or proceeding is
improper or (iii) this Agreement, or the subject matter hereof, may not be
enforced in or by such courts.
8.10 Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms. It is accordingly agreed
that the parties shall be entitled to specific performance of the terms
hereof, this being in addition to any other remedy to which they are entitled
at law or in equity, provided that the party seeking such relief is not in
material default of its representations, warranties or covenants hereunder.
8.11 Definitions. As used in this Agreement:
(a) "Affiliates", when used with respect to any Person, means any
other Person directly or indirectly controlling, controlled by or under
common control with such Person. As used in the definition of Affiliate, the
term control means possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.
(b) "Board of Directors" means the Board of Directors of any
specified Person and any committees thereof.
(c) "Business Day" means any day (other than a Saturday or a
Sunday) on which banks are not required or authorized to close in either the
City of New York or the City of Montreal.
(d) "Canadian Securities Laws" means the CBCA, the Securities Act
(Quebec) and the equivalent legislation in the other provinces of Canada, all
as now enacted or as the same may from time to time be amended, re-enacted or
replaced, and the applicable rules, regulations, rulings, orders and forms
made or promulgated under such statutes and the published policies of the
regulatory authorities administering such statutes, as well as the rules,
regulations, by-laws and policies of the ME and the TSE.
(e) "Material Adverse Effect" means, with respect to any entity, a
material adverse effect on the business, condition (financial or otherwise),
results of operations, assets or liabilities of such entity and its
Subsidiaries taken as a whole.
(f) "the other party" means, with respect to Excel, Teleglobe and
Merger Sub and means, with respect to Teleglobe and Merger Sub, Excel.
(g) "Person" means an individual, corporation, limited liability
company, partnership, association, trust, unincorporated organization, other
entity or group (as defined in the Exchange Act).
(h) "Subsidiary" when used with respect to any party means any
corporation or other organization, whether incorporated or unincorporated,
(i) of which such party or any other Subsidiary of such party is a general
partner (excluding partnerships, the general partnership interests of which
held by such party or any Subsidiary of such party do not have a majority of
the voting interests in such partnership) or (ii) at least a majority of the
securities or other interests of which having by their terms ordinary voting
power to elect a majority of the Board of Directors or others performing
similar functions with respect to such corporation or other organization is
directly or indirectly owned or controlled by such party or by any one or
more of its Subsidiaries, or by such party and one or more of its
Subsidiaries.
(i) "Transaction Documents" means, collectively, this Agreement,
the Voting Agreements, the Stock Option Agreements, the Registration Rights
Agreement and the documents, certificates or instruments to be delivered
pursuant to the transactions contemplated thereby.
8.12 Waiver of Jury Trial. Each party hereto waives, to the
fullest extent permitted by applicable law, any right it may have to a trial
by jury in respect of any litigation directly or indirectly arising out of,
under or in connection with this Agreement.
IN WITNESS WHEREOF, Teleglobe, Merger Sub and Excel have caused
this Agreement to be signed by their respective officers thereunto duly
authorized, all as of June 14, 1998.
TELEGLOBE INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chairman and Chief Executive Officer
NORTH MERGER SUB CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
EXCEL COMMUNICATIONS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman, President and Chief Executive Officer
GLOSSARY OF DEFINED TERMS
Definition Location of Definition
---------- ----------------------
Acquisition Proposal . . . . . . . . . . . . . . . . . . . Section 5.5(a)(i)
Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8.11
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Alternative Transaction . . . . . . . . . . . . . . . . . . . . Section 5.5(c)
Average Price . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.5(b)
Blue Sky Laws . . . . . . . . . . . . . . . . . . . . . . Section 3.1(d)(iii)
Board of Directors . . . . . . . . . . . . . . . . . . . . . Section 8.11(c)
Business Day . . . . . . . . . . . . . . . . . . . . . . . . Section 8.11(d)
CBCA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Canadian GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Canadian Securities Laws . . . . . . . . . . . . . . . . . . Section 8.11(e)
Canadian Teleglobe Employee Plans . . . . . . . . . . . . . . . Section 3.2(t)
Century-Based Data . . . . . . . . . . . . . . . . . . . . . Section 3.1(aa)
Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.8(b)
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.2
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.2
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.5
Communications Act . . . . . . . . . . . . . . . . . . . Section 3.1(d)(iii)
Competing Share Transaction . . . . . . . . . . . . . . . . . . Section 7.1(f)
Confidentiality Agreement . . . . . . . . . . . . . . . . . . . . Section 5.3
Contract . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.1(d)(ii)
Converted Option . . . . . . . . . . . . . . . . . . . . . . . Section 1.8(e)
CSA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.2(e)
Delaware Certificate of Merger . . . . . . . . . . . . . . . . . Section 1.3
DGCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.1
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.3
Environmental Law . . . . . . . . . . . . . . . . . . . . . Section 3.1(r)(iv)
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.1(s)(i)
Excel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Excel Board Approval . . . . . . . . . . . . . . . . . . . . . Section 3.1(h)
Excel Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Excel Consent and Voting Agreement . . . . . . . . . . . . . . . . . Recitals
Excel Disclosure Documents . . . . . . . . . . . . . . . . . . Section 3.1(e)
Excel Disclosure Schedule . . . . . . . . . . . . . . . . . . . . Section 3.1
Excel Employee Plans . . . . . . . . . . . . . . . . . . . Section 3.1(s)(i)
Excel Fairness Opinion . . . . . . . . . . . . . . . . . . . . Section 3.1(k)
Excel Fairness Opinion Banker . . . . . . . . . . . . . . . . . Section 3.1(j)
Excel Intellectual Property . . . . . . . . . . . . . . . . . . Section 3.1(o)
Excel Material Contracts . . . . . . . . . . . . . . . . . . . Section 3.1(p)
Excel Permits . . . . . . . . . . . . . . . . . . . . . . . Section 3.1(d)(iv)
Excel Stockholders Consent . . . . . . . . . . . . . . . . . . Section 5.1(b)
Excel Stockholders Meeting . . . . . . . . . . . . . . . . . . Section 5.1(b)
Excel Stock Option . . . . . . . . . . . . . . . . . . . . . . Section 1.8(e)
Excel Stock Option Agreement . . . . . . . . . . . . . . . . . . . . Recitals
Excel Stock Plans . . . . . . . . . . . . . . . . . . . . . . . Section 1.8(e)
Excel Voting Debt . . . . . . . . . . . . . . . . . . . . . Section 3.1(c)(ii)
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.1(b)
Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.1
Exchange Fund . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.1
Exchange Ratio . . . . . . . . . . . . . . . . . . . . . . . . Section 1.8(a)
Exchanges . . . . . . . . . . . . . . . . . . . . . . . Section 3.2(d)(iii)
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5.6
FCC . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.1(d)(iii)
Federal Communications Laws . . . . . . . . . . . . . . . Section 3.1(d)(iii)
Form F-4 . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5.1(a)
Governmental Entity . . . . . . . . . . . . . . . . . . Section 3.1(d)(iii)
HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.1(d)(iii)
Hazardous Substance . . . . . . . . . . . . . . . . . . . . Section 3.1(r)(v)
IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.1(m)(i)
Joint Information Statement/Proxy Statement/Prospectus . . . . Section 5.1(a)
Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.5
Material Adverse Effect . . . . . . . . . . . . . . . . . . . Section 8.11(f)
Material Leases . . . . . . . . . . . . . . . . . . . . . . Section 3.1(n)(i)
ME . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.2(d)(iii)
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Merger Consideration . . . . . . . . . . . . . . . . . . . . . Section 1.8(a)
Merger Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Merger Sub Common Stock . . . . . . . . . . . . . . . . . . . . Section 1.8(d)
NYSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.5(b)
Permit . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.1(d)(ii)
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8.11(h)
PUCs . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.1(d)(iii)
Recent Excel Disclosure Documents . . . . . . . . . . . . . . . Section 3.1(e)
Recent Teleglobe Disclosure Documents . . . . . . . . . . . . . Section 3.2(e)
Registration Rights Agreement . . . . . . . . . . . . . . . . . . . Recitals
Regulatory Law . . . . . . . . . . . . . . . . . . . . . . . . Section 5.4(b)
Required Articles Amendment Vote . . . . . . . . . . . . . . . Section 3.2(i)
Required By-Law Amendment Vote . . . . . . . . . . . . . . Section 3.2(d)(i)
Required Consents . . . . . . . . . . . . . . . . . . . . Section 3.1(d)(iii)
Required Excel Vote . . . . . . . . . . . . . . . . . . . . . Section 3.l(i)
Required Share Issuance Vote . . . . . . . . . . . . . . . . . Section 3.2(i)
Required Teleglobe Vote . . . . . . . . . . . . . . . . . . . . Section 3.2(i)
Restricted Period . . . . . . . . . . . . . . . . . . . . . . . . Section 5.13
Rule 145 Affiliates . . . . . . . . . . . . . . . . . . . . . . . Section 5.11
SAS 72 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5.9
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.8(e)
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Share Issuance . . . . . . . . . . . . . . . . . . . . . . Section 3.2(d)(i)
Software . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.1(aa)
Stock Option Agreements . . . . . . . . . . . . . . . . . . . . . . . Recitals
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . Section 8.11(i)
Superior Proposal . . . . . . . . . . . . . . . . . . . . . . . Section 5.5(a)
Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Surviving Corporation Shares . . . . . . . . . . . . . . . . . . . . Recitals
Surviving Corporation Stock . . . . . . . . . . . . . . . . . . . . Recitals
Tax or Taxes . . . . . . . . . . . . . . . . . . . . . . . Section 3.1(m)(ii)
Teleglobe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Teleglobe Articles Amendment . . . . . . . . . . . . . . . . . . . . Recitals
Teleglobe Board Approval . . . . . . . . . . . . . . . . . . . Section 3.2(h)
Teleglobe By-Law Amendment . . . . . . . . . . . . . . . . . . . . . Recitals
Teleglobe Common Shares . . . . . . . . . . . . . . . . . . . . . . . Recitals
Teleglobe Consent and Voting Agreements . . . . . . . . . . . . . . . Recitals
Teleglobe Disclosure Documents . . . . . . . . . . . . . . . . Section 3.2(e)
Teleglobe Disclosure Schedule . . . . . . . . . . . . . . . . . . Section 3.2
Teleglobe Employee Plans . . . . . . . . . . . . . . . . . . Section 3.2(t)
Teleglobe Fairness Opinion . . . . . . . . . . . . . . . . . . Section 3.2(k)
Teleglobe Fairness Opinion Banker . . . . . . . . . . . . . . . Section 3.2(j)
Teleglobe Intellectual Property . . . . . . . . . . . . . . . . Section 3.2(o)
Teleglobe Material Contracts . . . . . . . . . . . . . . . . . Section 3.2(p)
Teleglobe Option Plan . . . . . . . . . . . . . . . . . . . Section 3.2(c)(i)
Teleglobe Permits . . . . . . . . . . . . . . . . . . . . . Section 3.2(d)(iv)
Teleglobe Shareholders Consent . . . . . . . . . . . . . . . . Section 5.1(c)
Teleglobe Shareholders Meeting . . . . . . . . . . . . . . . . Section 5.1(c)
Teleglobe Stock Dividend . . . . . . . . . . . . . . . . . . . Section 1.8(a)
Teleglobe Stock Option Agreement . . . . . . . . . . . . . . . . . . Recitals
Teleglobe Voting Debt . . . . . . . . . . . . . . . . . . . Section 3.2(c)(ii)
Termination Date . . . . . . . . . . . . . . . . . . . . . . . Section 7.1(b)
Termination Fee . . . . . . . . . . . . . . . . . . . . . . . . Section 7.3(a)
the other party . . . . . . . . . . . . . . . . . . . . . . . Section 8.11(g)
Third Party . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5.5(c)
Transaction Documents . . . . . . . . . . . . . . . . . . . Section 8.11(j)
TSE . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.2(d)(iii)
US GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
US Teleglobe Employee Plans . . . . . . . . . . . . . . . . Section 3.2(s)(i)
Violation . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.1(d)(ii)
Voting Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals