AMENDED AND RESTATED
BIG STUFF AGREEMENT
This AMENDED AND RESTATED BIG STUFF ACQUISITION AGREEMENT (the "RESTATED
AGREEMENT") is made and entered into as of this 26th day of October, 1999, by
and among Advanced Communications Group, Inc., a Delaware corporation ("PARENT")
and ACG Acquisition VII Corp., a Delaware corporation and a wholly-owned
subsidiary of Parent ("ACQUISITION SUBSIDIARY"), on the one hand and Big
Stuff, Inc., a Texas corporation ("BIG STUFF"), Xxxxxxx X'Xxxx, a resident of
the State of Texas ("X'XXXX"), and Xxxxxxx X. Xxxx, a resident of the State of
Texas ("XXXX") (X'Xxxx and Xxxx are together referred to herein as the "BIG
STUFF SHAREHOLDERS"), on the other.
RECITALS
A. Parent desires to acquire, and Big Stuff and the Big Stuff Shareholders
desire Parent to acquire, all of the outstanding common stock of Big Stuff, on
the terms and subject to the conditions set forth in this Restated Agreement.
B. In furtherance of such acquisition, the respective Boards of Directors
of Parent, Acquisition Subsidiary and Big Stuff have approved the merger (the
"MERGER") of Acquisition Subsidiary with and into Big Stuff in accordance with
the Corporation Laws, all on the terms and conditions set forth in this Restated
Agreement.
C. The Boards of Directors of each of Big Stuff, Acquisition Subsidiary and
Parent believe it is in the best interests of each company and their respective
stockholders and the Board of Directors of Parent has directed or will direct
that the Restated Agreement be submitted to the shareholders of Parent with the
recommendation that the Restated Agreement, including, but not limited to, the
issuance of shares of Parent Common Stock pursuant to this Restated Agreement,
be approved by the Parent's stockholders and the Boards of Directors of Big
Stuff and Acquisition Subsidiary have directed or will direct that the Merger be
submitted to their respective shareholders in accordance with the Corporation
Laws.
D. The Big Stuff Shareholders own all outstanding shares of Big Stuff Common
Stock, believe that the Merger and the transactions contemplated by this
Restated Agreement are in their best interests and desire to enter into this
Restated Agreement.
E. The parties intend that the Closing will occur prior to or concurrently
with, among other actions: (i) the closing of the acquisition by Parent or a
direct or indirect subsidiary of Parent of all of the outstanding capital stock
of YPtel Corporation, a corporation incorporated under the laws of Canada (the
"COMPANY") pursuant to that certain Amended and Restated YPtel Acquisition
Agreement, a form of which has been provided by Parent to Big Stuff (the
"RESTATED COMPANY AGREEMENT"), dated as of October 26, 1999, among the Parent,
the Company, the shareholders of the Company (the "COMPANY SHAREHOLDERS"),
Xxxxxxx X. Xxxxxxxxx, Xxxxxxx X. Xxxxxx, Xxxxxx Xxxxxx, Xxxxxxx X. XxXxxxxx, The
J.L.R. Family Trust, The Paisley Family Trust, Imperial Capital Limited, a
corporation organized under the laws of the Province of Ontario ("ICL"), Cold
Trust, Global Investment Trust, Freezer Trust, Storage Trust, Directory Trust
and Publisher Trust; (ii) the closing of the acquisition by Parent or a
subsidiary of Parent of all of the outstanding capital stock of Web YP, Inc.
("WEB") (Big Stuff and Web are sometimes collectively referred to as
"WORLDPAGES") whether by merger, exchange or otherwise; (iii) the redemption of
the promissory notes (collectively, the "GREAT WESTERN NOTES") in the aggregate
original principal amount of Fifteen Million Dollars ($15,000,000.00) (plus
accrued but unpaid interest at the time of redemption) owed by Parent to X'Xxxx
and certain other former shareholders of Great Western Directories, Inc.
(collectively, the "GREAT WESTERN SHAREHOLDERS") by the issuance of Parent
Common Stock to the Great Western Shareholders; and (iv) the satisfaction of the
other conditions to closing set forth in this Restated Agreement, the Restated
Company Agreement and the Restated Web YP Agreement.
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NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties agree
as follows:
ARTICLE I--TERMS OF THE MERGER
1.1 THE MERGER. Upon the terms and subject to the conditions of this
Restated Agreement, the Merger shall be consummated in accordance with the Texas
Business Corporation Act (the "TEXAS CORPORATION ACT") and the General
Corporation Law of the State of Delaware (together with the Texas Corporation
Act, the "CORPORATION LAWS"). At the Effective Time, upon the terms and subject
to the conditions of this Restated Agreement, Acquisition Subsidiary shall be
merged with and into Big Stuff in accordance with the Corporation Laws and the
separate existence of Acquisition Subsidiary shall thereupon cease, and Big
Stuff, as the surviving corporation in the Merger (the "SURVIVING CORPORATION"),
shall continue its corporate existence under the laws of the State of Texas as a
subsidiary of Parent and under the corporate name "Big Stuff YP, Inc." The
Certificate of Incorporation of Big Stuff shall be the certificate of
incorporation of the Surviving Corporation. The parties shall prepare and
execute a certificate of merger in a form to be agreed to by the parties hereto,
acting reasonably (the "CERTIFICATE OF MERGER"), in order to comply in all
respects with the requirements of the Corporation Laws and with the provisions
of this Restated Agreement.
1.2 EFFECTIVE TIME.
(a) EFFECTIVE TIME OF THIS RESTATED AGREEMENT. Despite its execution,
no term, provision, right or obligation under or pursuant to this Restated
Agreement shall be effective, unless and until the later of (i) the
execution of this Restated Agreement; and (ii) receipt by Parent's Board of
Directors from its financial advisors, PaineWebber Incorporated or such
other investment banking firm selected by Parent's Board of Directors, of a
written opinion addressed to it for inclusion in the Proxy
Statement/Prospectus to the effect that the consideration to be paid, in the
aggregate, by the Parent in the transactions contemplated by this Restated
Agreement, the Restated Company Agreement, the Restated Web Agreement,
including the lending by Xxxxxxx X'Xxxx and Xxxxxxx Xxxx to Big Stuff and/or
Web of up to an aggregate of Six Million Dollars ($6,000,000) and the
agreement relating to the redemption of the Great Western Notes, is fair to
Parent from a financial point of view. The parties to this Restated
Agreement are parties to that certain Big Stuff Acquisition Agreement dated
as of June 3, 1999 (the "JUNE 3 BIG STUFF AGREEMENT"). Unless and until the
later of the events described in clauses (i) and (ii) hereof occurs, the
June 3 Big Stuff YP Agreement shall remain in full force and effect, subject
to termination of such agreement in accordance with its terms. Immediately
upon the execution of this Restated Agreement, as described in clause (i)
above, and the receipt by Parent's Board from its financial advisors of a
written opinion, as described in clause (ii) above, this Restated Agreement
shall become effective and the June 3 Big Stuff YP Agreement shall terminate
and none of the parties thereto shall have any obligations thereunder.
(b) EFFECTIVE TIME OF THE MERGER. The Merger shall become effective as
of the time of the filing of the Certificate of Merger with the Secretary of
State of the State of Texas and the Secretary of State of the State of
Delaware in accordance with the applicable provisions of the Corporation
Laws or at such later time as may be specified in the Certificate of Merger.
The Certificate of Merger shall be filed, and the closing of the Merger (the
"CLOSING") shall occur three (3) business days after all of the conditions
set forth in this Restated Agreement have been satisfied or waived by the
party or parties entitled to the benefit of the same; PROVIDED, HOWEVER,
that if such conditions are not satisfied or waived by January 31, 2000, the
Closing shall be automatically postponed for seven (7) days and will
continue to be postponed for continuous seven (7) day periods until
February 28, 2000, unless another time is agreed to by Parent and Big Stuff.
If such conditions are not satisfied or waived by February 28, 2000, the
Closing shall be
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automatically postponed until March 1, 1999, unless another time is agreed
to in writing by Parent and Big Stuff. The Closing shall occur at the
offices of Xxxxxxxxx Xxxxxxx Xxxxx Xxxxxx LLP, 000 Xxxxx Xxxxxx,
Xxxxx 0000, Xx. Xxxxx, Xxxxxxxx 00000, unless another place is agreed to in
writing by Parent and Big Stuff. The time when the Merger shall become
effective is herein referred to as the "EFFECTIVE TIME" and the date on
which the Effective Time occurs is herein referred to as the "CLOSING DATE."
1.3 MERGER CONSIDERATION. Subject to the provisions of this Restated
Agreement and any applicable backup or other withholding requirements, each of
the issued and outstanding shares ("BIG STUFF SHARES") of common stock, no par
value per share, of Big Stuff ("BIG STUFF COMMON STOCK") as of the Effective
Time shall be converted into the right to receive, and there shall be paid and
issued as hereinafter provided, in exchange for the Big Stuff Shares, 415.584
shares (the "EXCHANGE RATIO") of Parent Common Stock, par value $.0001 per share
("PARENT COMMON STOCK"), plus cash in lieu of any fractional share as
hereinafter provided (the "MERGER CONSIDERATION").
No fractional shares of Parent Common Stock shall be issued pursuant to the
Merger nor will any fractional share interest involved entitle the holder
thereof to vote, to receive dividends or to exercise any other rights as a
shareholder of Parent. In lieu thereof, any Person who would otherwise be
entitled to a fractional share of Parent Common Stock pursuant to the provisions
hereof shall receive an amount in cash equal to the value of such fractional
share. The value of such fractional share for purposes hereof shall be the
product of such fraction multiplied by Five and 50/100 Dollars ($5.50).
Each share of Big Stuff Common Stock held in the treasury of Big Stuff or by
a wholly-owned subsidiary of Big Stuff shall be cancelled as of the Effective
Time and no Merger Consideration shall be payable with respect thereto. From and
after the Effective Time, there shall be no further transfers on the stock
transfer books of Big Stuff of any of the Big Stuff Shares outstanding prior to
the Effective Time.
Subject to the provisions of this Restated Agreement, at the Effective Time,
all the shares of Acquisition Subsidiary common stock outstanding immediately
prior to the Merger shall be converted, by virtue of the Merger and without any
action on the part of the holder thereof, into one share of the common stock of
the Surviving Corporation (the "SURVIVING CORPORATION COMMON STOCK"), which one
share of the Surviving Corporation Common Stock shall constitute all of the
issued and outstanding capital stock of the Surviving Corporation.
1.4 STOCKHOLDERS' RIGHTS UPON MERGER. Upon consummation of the Merger, the
Certificates shall cease to represent any rights with respect thereto, and,
subject to applicable Law (as hereinafter defined) and this Restated Agreement,
the Certificates shall only represent the right to receive the Merger
Consideration including the amount of cash, if any, payable in lieu of
fractional shares of Parent Common Stock into which the Big Stuff Shares have
been converted pursuant to this Restated Agreement.
1.5 SURRENDER AND EXCHANGE OF SHARES. At the Effective Time, each holder
of a Big Stuff Share shall surrender and deliver the Certificates and
transmittal letter (the "LETTER OF TRANSMITTAL") to Continental Stock Transfer
and Trust Company. Upon such surrender and delivery, the holder shall receive a
certificate representing the number of whole shares of Parent Common Stock into
which such holder's Big Stuff Shares have been converted pursuant to this
Restated Agreement plus the amount of cash payable in lieu of any fractional
share. Until so surrendered and exchanged, each outstanding Certificate after
the Effective Time shall be deemed for all purposes to evidence the right to
receive that number of whole shares of Parent Common Stock into which the Big
Stuff Shares have been converted pursuant to this Restated Agreement, plus the
amount of cash payable in lieu of any fractional share; PROVIDED, HOWEVER, that
no dividends or other distributions, if any, in respect of the shares of Parent
Common Stock, declared after the Effective Time and payable to holders of record
after the Effective Time, shall be paid to the holders of any unsurrendered
Certificates until such
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Certificates and Letters of Transmittal are surrendered and delivered as
provided herein. Subject to applicable Law, after the surrender and exchange of
the Certificates, the record holders thereof will be entitled to receive any
such dividends or other distributions without interest thereon, which
theretofore have become payable with respect to the number of shares of Parent
Common Stock for which such Certificates were exchangeable. Holders of any
unsurrendered Certificates shall not be entitled to vote Parent Common Stock
until such Certificates are exchanged pursuant to this Restated Agreement.
1.6 DIRECTORS. Immediately following the Closing Date, the Board of
Directors of the Parent shall be restructured to be composed of eight
(8) members as follows: (i) one director chosen by Parent and one director
chosen by ICL to serve three (3) year terms; (ii) one director chosen by Parent
and one director chosen by ICL and one director to be agreed to by Parent, ICL
and WorldPages to serve two (2) year terms; and (iii) one director chosen by
Parent and one director chosen by ICL and one director to be agreed to by
Parent, ICL and WorldPages to serve one (1) year terms. Parent currently intends
to nominate Xxxxxxx X'Xxxx and two (2) individuals to be named at or prior to
Closing. The directors to be nominated by ICL are currently anticipated to be
Xxxxxx Xxxxxxxx, Xxxxxx Xxxxxxxx and Xxxxxx Xxxxx. In addition, for a period of
one (1) year following the Closing Date, each of Parent and ICL may designate
one party to attend any and all Board of Directors meetings, as non-voting,
non-participating observers only (the "OBSERVERS"). Parent shall reimburse the
Observers for those expenses incurred in connection with attending Board of
Directors meetings, including travel expenses, in the same manner and to the
same extent that Parent reimburses its directors for such expenses. The parties
hereto expressly acknowledge and agree that this SECTION 1.6 is not intended to,
and does not, except with regard to the initial Board of Directors of Parent
referenced in this SECTION 1.6, impose any requirement that the Board of
Directors of Parent be comprised of the individuals listed in this SECTION 1.6
or that any Person has a right to designate a certain individual or a certain
number of individuals as nominees to the Board of Directors of Parent.
1.7 BYLAWS. At and after the Effective Time, the Bylaws of Acquisition
Subsidiary in effect at the Effective Time shall be the Bylaws of the Surviving
Corporation (subject to any subsequent amendment).
1.8 OTHER EFFECTS OF MERGER. The Merger shall have all further effects as
specified in the applicable provisions of the Corporation Laws.
1.9 TAX-FREE REORGANIZATION. The parties intend that the Merger qualify as
a tax-free reorganization pursuant to Section 368 of the Code. The parties
hereto hereby adopt this Restated Agreement as a "plan of reorganization" within
the meaning of Sections 1.368-2(g) and 1.368(a) of the Treasury regulations.
1.10 CONVERTIBLE NOTE. At any time between the date hereof and Closing,
X'Xxxx and Xxxx may continue to lend up to Six Million Dollars ($6,000,000) to
Big Stuff or Web pursuant to a "CONVERTIBLE NOTE", described below. The
Convertible Note includes amounts lent by X'Xxxx and Xxxx to Big Stuff or Web
since January 1, 1999. The Convertible Note will provide additional working
capital required by Big Stuff or Web (i) to consummate the contemplated
contractual arrangements with Excite and to fulfill its obligations thereunder,
(ii) to pay for extraordinary capital expenditures approved in advance by a
disinterested majority of the Board of Directors of the Parent, including
consummation of contractual arrangements with other entities similar to those
with Excite, or (iii) for working capital purposes, including for ordinary
capital expenditures. The conversion feature of the Convertible Note shall
provide that the principal amount of the Convertible Note, but not the accrued
but unpaid interest, shall be automatically converted into Parent common stock
at Closing at a conversion price of $5.50 per share. If the acquisition of
WorldPages contemplated by this Restated Agreement and the Restated Web
Agreement shall not be consummated, the conversion feature shall not be
operable, and Parent shall have no obligations under the Convertible Note. The
parties agree that notwithstanding anything herein or in the Restated Web
Agreement to the contrary, there shall be no "doubling" of the
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amount which may be lent by X'Xxxx and Xxxx to Big Stuff or Web and that an
aggregate maximum amount of $6,000,000 may be lent by X'Xxxx and Xxxx to Big
Stuff and Web, collectively.
1.11 ADDITIONAL ACTIONS. If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm or record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of Acquisition Subsidiary or Big Stuff or otherwise to
carry out this Restated Agreement, the officers and directors of the Surviving
Corporation shall be authorized to execute and deliver, in the name and on
behalf of Acquisition Subsidiary or Big Stuff, all such deeds, bills of sale,
assignments and assurances and to take and do, in the name and on behalf of
Acquisition Subsidiary or Big Stuff, all such other actions and things as may be
necessary or desirable to vest, perfect or confirm any and all right, title and
interest in, to and under such rights, properties or assets in the Surviving
Corporation or otherwise to carry out this Restated Agreement.
ARTICLE II--REPRESENTATIONS AND WARRANTIES OF
BIG STUFF AND THE BIG STUFF SHAREHOLDERS
Big Stuff, on behalf of itself and the Big Stuff Shareholders, jointly and
severally represent and warrant to and covenant with Parent as follows:
2.1 ORGANIZATION AND GOOD STANDING. Big Stuff is a corporation duly
organized and validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization and has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as now being conducted. Big Stuff is duly qualified or
licensed and in good standing to do business in each jurisdiction in which the
character of the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification or licensing necessary, except
where the failure to be so duly qualified or licensed and in good standing would
not have a Big Stuff Material Adverse Effect. SCHEDULE 2.1 sets forth a complete
and accurate list of the jurisdictions of incorporation or organization and
qualification or license of Big Stuff. Big Stuff has heretofore delivered to
Parent accurate and complete copies of the Certificates or Articles of
Incorporation and Bylaws, or equivalent governing instruments, as currently in
effect, of Big Stuff.
2.2 CAPITALIZATION. As of the date hereof, the authorized capital stock of
Big Stuff (the "BIG STUFF STOCK") consists of 10,000 shares of common stock. As
of the date hereof, (a) 3,500 shares of Big Stuff Stock were issued and
outstanding, and (b) no options or warrants to purchase any shares of Big Stuff
capital stock were issued or outstanding. No other capital stock of Big Stuff is
issued or outstanding. All issued and outstanding shares of the Big Stuff Stock
are duly authorized, validly issued, fully paid and non-assessable and were
issued free of preemptive rights and in compliance with applicable corporate and
securities Laws. Except as set forth on SCHEDULE 2.2, as of the date of this
Restated Agreement there are no outstanding rights, reservations of shares,
subscriptions, warrants, puts, calls, unsatisfied preemptive rights, options or
other agreements of any kind relating to any of the capital stock or any other
security of Big Stuff, and there is no authorized or outstanding security of any
kind convertible into or exchangeable for any such capital stock or other
security. There are no restrictions upon the transfer of or otherwise pertaining
to the securities (including, but not limited to, the ability to pay dividends
thereon) or retained earnings of Big Stuff or the ownership thereof other than
those, if any, described on SCHEDULE 2.2 or those imposed generally by the
Securities Act, the Securities Exchange Act, applicable state or foreign
securities Laws or applicable corporate Law.
2.3 SUBSIDIARIES. Big Stuff does not and will not, from the date of this
Restated Agreement until the Closing Date, hold, directly or indirectly, any
capital stock or other interest in any Person.
2.4 AUTHORIZATION; BINDING AGREEMENT. Big Stuff and the Big Stuff
Shareholders have all requisite power and authority to execute and deliver this
Restated Agreement and the Big Stuff Transaction
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Agreements and to consummate the transactions contemplated hereby and thereby.
The execution and delivery of this Restated Agreement and the other agreements
and documents referred to herein and to be executed in connection herewith to
which Big Stuff or any Big Stuff Shareholder is or will be a party or a
signatory (the "BIG STUFF TRANSACTION AGREEMENTS") and the consummation of the
transactions contemplated hereby and thereby including, but not limited to the
Merger, have been or will be duly and validly authorized by Big Stuff's Board of
Directors and no other corporate or other proceedings on the part of Big Stuff
or any Big Stuff Shareholder are necessary to authorize the execution and
delivery of this Restated Agreement and the Big Stuff Transaction Agreements or
to consummate the transactions contemplated hereby or thereby (other than the
adoption of this Restated Agreement by the Big Stuff Shareholders in accordance
with the Texas Corporation Act and the Articles of Incorporation and Bylaws of
Big Stuff). This Restated Agreement has been duly and validly executed and
delivered by Big Stuff and the Big Stuff Shareholders and constitutes, and upon
execution and delivery thereof as contemplated by this Restated Agreement, the
Big Stuff Transaction Agreements will constitute, the legal, valid and binding
obligations of Big Stuff and the Big Stuff Shareholders, enforceable against Big
Stuff and the Big Stuff Shareholders in accordance with its and their respective
terms, except to the extent that enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and by principles of
equity regarding the availability of remedies (collectively, the "ENFORCEABILITY
EXCEPTIONS").
2.5 GOVERNMENTAL APPROVALS. No consent, approval, waiver or authorization
of, notice to or declaration or filing with ("CONSENT") any Governmental
Authority on the part of Big Stuff or any of the Big Stuff Shareholders is
required in connection with the execution or delivery by Big Stuff or the Big
Stuff Shareholders of this Restated Agreement and the Big Stuff Transaction
Agreements or the consummation by Big Stuff or the Big Stuff Shareholders of the
transactions contemplated hereby or thereby other than (i) the filing of the
Certificate of Merger with the Secretary of State of the States of Texas and
Delaware; (ii) filings with the SEC and state securities laws administrators,
(iii) Consents from or with Governmental Authorities set forth on SCHEDULE 2.5,
(iv) filings under the HSR Act, and (v) those Consents that, if they were not
obtained or made, do not or would not have a Big Stuff Material Adverse Effect.
2.6 NO VIOLATIONS. The execution and delivery of this Restated Agreement
and the Big Stuff Transaction Agreements, the consummation of the transactions
contemplated hereby and thereby and compliance by Big Stuff and the Big Stuff
Shareholders with any of the provisions hereof or thereof will not (i) conflict
with or result in any breach of any provision of the Certificate and/or Articles
of Incorporation or Bylaws or other governing instruments of Big Stuff,
(ii) except as set forth on SCHEDULE 2.6, require any Consent under or result in
a violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, cancellation
or acceleration or augment the performance required) under any of the terms,
conditions or provisions of any Big Stuff Material Contract or other obligation
to which Big Stuff or any Big Stuff Shareholder is a party or by which any of
them or any of their properties or assets may be bound, (iii) result in the
creation or imposition of any lien or encumbrance of any kind upon any of the
assets of Big Stuff or (iv) subject to obtaining the Consents from Governmental
Authorities referred to in SECTION 2.5 above, contravene any Law currently in
effect to which Big Stuff or any Big Stuff Shareholder or its or any of its
respective assets or properties are subject, except in the case of clauses (ii),
(iii) and (iv) above, for any deviations from the foregoing which do not or
would not have a Big Stuff Material Adverse Effect.
2.7 LITIGATION. Except as set forth in SCHEDULE 2.7, there is no action,
cause of action, claim, demand, suit, proceeding, citation, summons, subpoena,
inquiry or investigation of any nature, civil, criminal, regulatory or
otherwise, in law or in equity, by or before any court, tribunal, arbitrator,
mediator or other Governmental Authority ("LITIGATION") pending or, to the
knowledge of the Big Stuff
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Shareholders or Big Stuff, threatened against Big Stuff or any officer,
director, employee or agent thereof, in his or her capacity as such, or as a
fiduciary with respect to any Benefit Plan of Big Stuff, or otherwise relating,
in a manner that could have a Big Stuff Material Adverse Effect, to Big Stuff or
the securities of Big Stuff, or any properties or rights of Big Stuff or that
could prevent or delay the consummation of the transactions contemplated by this
Restated Agreement.
2.8 BIG STUFF FINANCIAL STATEMENTS. The unaudited interim financial
statements of Big Stuff as of and for the fiscal year ended December 31, 1998,
and as of and for the six months ended June 30, 1999 (the "BIG STUFF FINANCIAL
STATEMENTS") have been provided to Parent. The Big Stuff Financial Statements
were prepared in accordance with generally accepted accounting principles
applicable to the business of Big Stuff consistently applied in accordance with
past accounting practices and fairly present (including, but not limited to, the
inclusion of all adjustments with respect to interim periods which are necessary
to present fairly the financial condition and assets and liabilities or the
results of operations of Big Stuff except as may be indicated therein or in the
notes thereto, subject to normal year-end adjustment in the ordinary course with
respect to certain items immaterial in amount or effect and the exclusion of
footnote disclosure in interim Big Stuff Financial Statements) the financial
condition and assets and liabilities or the results of operations of Big Stuff
as of the dates and for the periods indicated. Except as reflected in the Big
Stuff Financial Statements, as of their respective dates, Big Stuff did not have
any debts, obligations, guaranties of obligations of others or liabilities
(contingent or otherwise) that would be required in accordance with generally
accepted accounting principles to be disclosed in the Big Stuff Financial
Statements.
2.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
SCHEDULE 2.9, since June 30, 1999, through the date of this Restated Agreement,
there has not been: (i) any Event that could reasonably be expected to have a
Big Stuff Material Adverse Effect; (ii) any declaration, payment or setting
aside for payment of any dividend (except to the Big Stuff Shareholders, but
only if the entire amount of such dividend is paid to Web as a capital
contribution) or other distribution or any redemption, purchase or other
acquisition of any shares of capital stock or securities of Big Stuff;
(iii) any return of any capital or other distribution of assets to stockholders
of Big Stuff (except to Big Stuff or a subsidiary wholly owned by Big Stuff);
(iv) other than in the ordinary course of business any investment of a capital
nature by Big Stuff by the purchase of any property or assets except to the
extent such investment is in the ordinary course of business and is individually
or in the aggregate, not in excess of $75,000; (v) any acquisition (by merger,
consolidation, acquisition of stock or assets or otherwise) of any Person or
business; (vi) any sale, disposition, pledge, mortgage or other transfer of
assets or properties of Big Stuff other than in the ordinary course of business
consistent with past practice; (vii) any action or agreement or undertaking by
Big Stuff to take any action that, if taken or done on or after the date hereof,
would result in a breach of SECTION 6.6 below; (viii) any employment, severance
or consulting agreement entered into by Big Stuff with any stockholder, officer,
director, agent, employee or consultant of Big Stuff or any amendment or
modification to, or termination of, any current employment, severance or
consulting agreement to which Big Stuff is a party or by which it is bound;
(ix) any forgiveness, cancellation, compromise, settlement, waiver or release of
any debts, claims, rights or Litigation, in each case in excess, individually or
in the aggregate, of $25,000; (x) any agreement, authorization or commitment to
take, whether in writing or otherwise, any action which, if taken prior to the
date hereof, would have made any representation or warranty of Big Stuff in this
Restated Agreement untrue or incorrect in any material respect; (xi) any failure
by Big Stuff to conduct its business in the ordinary course consistent with past
practice, it being understood, however, that Big Stuff has accelerated and
intensified its business activities since March 31, 1999.
2.10 COMPLIANCE WITH LAWS. The business of Big Stuff has been operated in
compliance with all Laws applicable thereto, except for any instances of
non-compliance which do not and would not have a Big Stuff Material Adverse
Effect.
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2.11 PERMITS. (i) Big Stuff has all permits, certificates, licenses,
approvals, and other authorizations required in connection with the operation of
its business (collectively, "BIG STUFF PERMITS"), (ii) Big Stuff is not in
violation of any Big Stuff Permit, and (iii) no proceedings are pending or, to
the knowledge of Big Stuff, threatened, to revoke or limit any Big Stuff Permit,
except, in the case of clause (i) or (ii) above, those the absence or violation
of which do not and would not have a Big Stuff Material Adverse Effect.
2.12 FINDERS AND INVESTMENT BANKERS. Neither Big Stuff nor any of its
officers or directors has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders' fees in connection
with the transactions contemplated hereby.
2.13 CONTRACTS. Except as set forth in SCHEDULE 2.13, Big Stuff is not a
party or subject to any material note, bond, mortgage, indenture, contract,
lease, license, agreement, understanding, instrument, bid or proposal ("BIG
STUFF MATERIAL CONTRACT"). For purposes of this SECTION 2.13, a note, bond,
mortgage, indenture, contract, lease, license, agreement, understanding,
instrument, bid or proposal shall be considered a Big Stuff Material Contract
(a) if it is with an affiliate of Big Stuff, (b) if the financial obligation of
Big Stuff thereunder or, if applicable, to the assets or properties of Big Stuff
could exceed $25,000 after the Closing Date, or (c) if it provides for any
exclusivity or non-competition restrictions applicable to Big Stuff. Big Stuff
has made available to Parent true and accurate copies of the Big Stuff Material
Contracts. All such Big Stuff Material Contracts are valid and binding and are
in full force and effect and enforceable in accordance with their respective
terms, subject to the Enforceability Exceptions. Any and all transactions
between or involving Big Stuff and an affiliate thereof were entered into in the
ordinary course of business and are upon fair and reasonable terms not
materially less favorable than Big Stuff could obtain or become entitled to in
an arm's-length transaction with a Person that is not an affiliate. Except as
set forth in SCHEDULE 2.5 (i) no Consent of any Person is needed in order that
each such Big Stuff Material Contract shall continue in full force and effect in
accordance with its terms without penalty, acceleration or rights of early
termination by reason of the consummation of the transactions contemplated by
this Restated Agreement, and (ii) Big Stuff is not in material violation or
breach of or default under any such Big Stuff Material Contract, nor to Big
Stuff's knowledge is any other party to any such Big Stuff Material Contract in
material violation or breach of or default under any such Big Stuff Material
Contract.
2.14 EMPLOYEE BENEFIT PLANS. Except as set forth in SCHEDULE 2.14, there
are no Benefit Plans (as defined below) maintained or contributed to by Big
Stuff under which Big Stuff could incur any liability. A "BENEFIT PLAN" shall
mean (i) an employee benefit plan as defined in Section 3(3) of the ERISA, even
if, because of some other provision of ERISA, such plan is not subject to any or
all of ERISA's provisions, and (ii) whether or not described in the preceding
clause, (a) any pension, profit sharing, stock bonus, deferred or supplemental
compensation, retirement, thrift, stock purchase or stock option plan, or any
other compensation, welfare, insurance, medical, hospitalization, fringe benefit
or retirement plan, program, policy, course of conduct, understanding or
arrangement of any kind whatsoever, whether formal or informal, oral or written,
providing for benefits for or the welfare of any or all of the current or former
employees or agents of Big Stuff or their beneficiaries or dependents, (b) a
multi-employer plan as defined in Section 3(37) of ERISA (a "MULTI-EMPLOYER
PLAN") or in any other applicable Law, or (c) a multiple employer plan as
defined in Section 413 of the Code or in any other applicable Law.
With respect to each Benefit Plan (where applicable): Big Stuff has made
available to Parent complete and accurate copies of (i) all plan and trust texts
and agreements, insurance contracts and other funding arrangements; (ii) annual
reports on the Form 5500 series for the last three (3) years; (iii) financial
statements and/or annual and periodic accountings of plan assets for the last
three (3) years; (iv) the most recent determination letter received from the
IRS; (v) actuarial valuations for the last three (3) years; and (vi) the most
recent summary plan description as defined in ERISA.
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No Big Stuff Benefit Plan is a defined benefit pension plan subject to Title
IV of ERISA or Section 412 of the Code. Each of the Big Stuff Benefit Plans has
been maintained in compliance with its terms and all applicable Law, except
where the failure to do so would not result in a Big Stuff Material Adverse
Effect or a Surviving Corporation Material Adverse Effect. Big Stuff does not
contribute to, and does not have any outstanding liability with respect to, any
Multi-employer Plan.
Except as set forth in SCHEDULE 2.14, the consummation of the Merger will
not, either alone or in conjunction with another Event: (i) entitle any
individual to severance pay, or (ii) accelerate the time of payment or vesting
of benefits or increase the amount of compensation due to any individual.
2.15 TAXES AND RETURNS.
(a) Except as disclosed in SCHEDULE 2.15, Big Stuff has timely filed, or
caused to be timely filed, all federal, state, local and foreign income,
gross receipts, sales, use, property, production, payroll, franchise,
withholding, employment, social security, license, excise, transfer, gains,
and other tax returns or reports required to be filed by it, and has paid,
collected or withheld, or caused to be paid, collected or withheld, all
taxes and governmental charges, assessments and contributions of any nature
whatsoever including, but not limited to, any related penalties, interest
and liabilities (any of the foregoing being referred to herein as a "TAX"),
required to be paid, collected or withheld, other than such Taxes for which
adequate reserves in the Big Stuff Financial Statements have been
established or which are being contested in good faith and have been
disclosed in writing to Parent prior to the date of this Restated Agreement.
Except as set forth in SCHEDULE 2.15, there are no claims or assessments
pending against Big Stuff for any alleged deficiency in any Tax, and Big
Stuff does not know of any threatened Tax claims or assessments against Big
Stuff (other than those for which adequate reserves in the Big Stuff
Financial Statements have been established or which are being contested in
good faith and have been disclosed in writing to Parent prior to the date of
this Restated Agreement). Except as set forth in SCHEDULE 2.15, Big Stuff
has not made an election under Section 338 of the Code and has not taken any
action that would result in any Tax liability of Big Stuff as a result of a
deemed election within the meaning of Section 338 of the Code. Except as set
forth in SCHEDULE 2.15, Big Stuff does not have any waivers or extensions of
any applicable statute of limitations to assess any Taxes. Except as set
forth in SCHEDULE 2.15, there are no outstanding requests by Big Stuff for
any extension of time within which to file any return or within which to pay
any Taxes shown to be due on any return. Big Stuff (i) has elected to be
treated as, and from the date of such election until the date hereof has
met, and currently meets, the eligibility requirements for treatment as, an
"S" corporation under the Code; and (ii) as of the date hereof, has no
subsidiaries for Tax purposes.
(b) A listing of all Tax sharing agreements or similar arrangements with
respect to or involving Big Stuff is set forth in SCHEDULE 2.15.
(c) Except as set forth in SCHEDULE 2.15, Big Stuff has not made or
become obligated to make, or will, as a result of the transactions
contemplated by this Restated Agreement, make or become obligated to make,
any "excess parachute payment" as defined in Section 280G of the Code
(without regard to subsection (b)(4) thereof).
(d) Big Stuff has disclosed on its federal income tax returns all
positions taken therein that could give rise to a substantial understatement
of federal income tax liability within the meaning of Section 6662(d) of the
Code.
(e) There are no liens for Taxes on the assets of Big Stuff except for
statutory liens for current Taxes not yet due and payable.
(f) All elections with respect to Taxes affecting Big Stuff are set
forth in SCHEDULE 2.15 or, with respect to elections made on or before
December 31, 1996, are reflected in the Tax returns of Big Stuff filed and
provided to Parent prior to the date of this Restated Agreement. Big Stuff
has
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not: (i) made and will not make a deemed dividend election under Treas. Reg.
Section 1.1502-32(f)(2) or a consent dividend election under Section 565 of
the Code; (ii) consented at any time under Section 341(f)(l) of the Code to
have the provisions of Section 341(f)(2) of the Code apply to any
disposition of the assets of Big Stuff; (iii) agreed, and is not required,
to make any adjustment under Section 481(a) of the Code by reason of a
change in accounting method or otherwise; (iv) made an express election, and
is not required, to treat any asset of Big Stuff as owned by another Person
for federal income Tax purposes or as tax-exempt bond financed property or
tax-exempt use property within the meaning of Section 168 of the Code;
(v) made any of the foregoing elections and is not required to apply any of
the foregoing rules under any comparable state, foreign or local income Tax
provision.
(g) Except as set forth in SCHEDULE 2.15, Big Stuff is not a partner or
member in any joint venture, partnership, limited liability company or other
arrangement or contract that is or could be treated as a partnership for
federal income Tax purposes.
(h) Except as set forth in SCHEDULE 2.15, Big Stuff is not a party to or
otherwise subject to any arrangement having the effect of or giving rise to
the recognition of a deduction or loss before the Closing Date and a
corresponding recognition of taxable income or gain after the Closing Date,
or any other arrangement that would have the effect of or give rise to the
recognition of taxable income or gain by Big Stuff after the Closing Date
without the receipt of or entitlement to a corresponding amount of cash.
2.16 LIABILITIES. From June 30, 1999, through the date of this Restated
Agreement, except as expressly disclosed in SCHEDULE 2.16 or in the Big Stuff
Financial Statements, Big Stuff does not have any direct or indirect
indebtedness, liability, claim, loss, damage, deficiency, obligation or
responsibility, fixed or unfixed, xxxxxx or inchoate, liquidated or
unliquidated, secured or unsecured, accrued, absolute, contingent or otherwise,
whether or not of a kind required by generally accepted accounting principles to
be set forth in a financial statement, other than those incurred in the ordinary
course of business or in an amount not in excess of $25,000 individually or
$100,000 in the aggregate. Except as set forth on SCHEDULE 2.16 or in the Big
Stuff Financial Statements, as of the date of this Restated Agreement, Big Stuff
is not subject to any (i) obligations in respect of borrowed money,
(ii) obligations evidenced by bonds, debentures, notes or other similar
instruments, (iii) obligations which would be required by generally accepted
accounting principles to be classified as "capital leases," (iv) obligations to
pay the deferred purchase price of property or services, except trade accounts
payable arising in the ordinary course of business and payable not more than
twelve (12) months from the date of incurrence, and (v) guaranties of any
obligations of any other Person.
2.17 ENVIRONMENTAL MATTERS. As of the date of this Restated Agreement,
(i) except where the failure to so comply will not have a Big Stuff Material
Adverse Effect, Big Stuff is in compliance with all applicable Environmental
Laws (as hereinafter defined), (ii) there is no civil, criminal or
administrative judgment, action, suit, demand, claim, hearing, notice of
violation, investigation, proceeding, notice or demand letter pending or, to the
knowledge of Big Stuff, threatened against Big Stuff or any of its properties
pursuant to Environmental Laws, and (iii) except as set forth on SCHEDULE 2.17,
there are no past or present Events which reasonably may be expected to prevent
compliance with, or which have given rise to or which reasonably may be expected
to give rise to liability on the part of Big Stuff under Environmental Laws,
except for those which would not reasonably be expected to give rise to a Big
Stuff Material Adverse Effect. As used herein the term "ENVIRONMENTAL LAWS"
shall mean Laws relating to pollution, waste control, the generation, presence
or disposal of asbestos, hazardous or toxic wastes or substances, the protection
of the environment, environmental activity or public health and safety.
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2.18 INTELLECTUAL PROPERTY; FICTITIOUS NAMES. For purposes of this
Restated Agreement, "INTELLECTUAL PROPERTY" shall mean all patents, trademarks,
service marks, trade names, copyrights, franchises and similar rights of or used
by Big Stuff, all applications for any of the foregoing and all permits, grants
and licenses or other rights running to or from Big Stuff relating to any of the
foregoing. Except as set forth on SCHEDULE 2.18, (i) Big Stuff owns, or is
licensed to, or otherwise has, the full right to use all Intellectual Property
currently used or proposed to be used in its business, (ii) Big Stuff has not
received, as of the date of this Restated Agreement, notice of any charge or
claim of any Person relating to such Intellectual Property or any process or
confidential information of Big Stuff ("IP CLAIM NOTICE") and does not know of
any basis for any such charge or claim, and Big Stuff has sufficient rights in
the Intellectual Property to use it in the manner currently used or proposed to
be used in its business, and (iii) Big Stuff and its corporate predecessors, if
any, have not conducted business at any time during the period beginning five
(5) years prior to June 3, 1999 under any corporate, trade or fictitious names
other than their current corporate names. Big Stuff shall promptly notify Parent
of any IP Claim Notice received by Big Stuff after the date of this Restated
Agreement.
2.19 REAL ESTATE.
(a) Big Stuff owns no real property.
(b) SCHEDULE 2.19(b) sets forth a true, correct and complete schedule as
of the date of this Restated Agreement of all material leases, subleases,
easements, rights-of-way, licenses or other agreements under which Big Stuff
uses or occupies, or has the right to use or occupy, now or in the future,
any real property or improvements thereon (the "BIG STUFF REAL PROPERTY
LEASES"). Except for the matters listed on said SCHEDULE 2.19(b), Big Stuff
holds the leasehold estate under or other interest in each Big Stuff Real
Property Lease free and clear of all liens, encumbrances and other rights of
occupancy other than statutory landlords' or mechanics' liens which have not
been executed upon.
2.20 CORPORATE RECORDS. The corporate record books of or relating to Big
Stuff made available to Parent by Big Stuff contain accurate and complete
records of (i) all corporate actions of the stockholders and directors (and
committees thereof) of Big Stuff, (ii) the Certificate and/or Articles of
Incorporation, Bylaws and/or other governing instruments, as amended, of Big
Stuff, and (iii) the issuance and transfer of stock of Big Stuff. Except as set
forth on SCHEDULE 2.20, Big Stuff does not have any of its material records or
information recorded, stored, maintained or held off the premises of Big Stuff.
2.21 TITLE TO AND CONDITION OF PERSONAL PROPERTY. Big Stuff has good and
marketable title to, or a valid leasehold interest in, all material items of any
personal property reflected in the Big Stuff Financial Statements dated
June 30, 1999, or currently used in the operation of its business, and such
property or leasehold interests are free and clear of all liens, claims,
charges, security interests, options, or other title defects or encumbrances,
except for property disposed of in the ordinary course since the date thereof
consistent with the provisions of SECTION 2.9 above, and such exceptions to
title and liens, claims, charges, security interests, options, title defects or
encumbrances which do not and would not have a Big Stuff Material Adverse
Effect. As of the date of this Restated Agreement, all such personal property is
in good operating condition and repair (ordinary wear and tear excepted), is
suitable for the use to which the same is customarily put by Big Stuff, is free
from material defects and is of a quality and quantity presently usable in the
ordinary course of the operation of the business of Big Stuff, except where such
failure would not have a Big Stuff Material Adverse Effect.
2.22 NO ADVERSE ACTIONS. Except as set forth on SCHEDULE 2.22, there is no
existing, pending or, to the knowledge of Big Stuff, threatened termination,
cancellation, limitation, modification or change in the business relationship of
Big Stuff, with any supplier, customer or other Person except as are immaterial
individually and in the aggregate and are in the ordinary course of business.
None of Big Stuff, or, to the knowledge of Big Stuff or any Big Stuff
Shareholder, any director, officer, agent,
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employee or other Person acting on behalf of Big Stuff or any Big Stuff
Shareholder has used any corporate funds for unlawful contributions, payments,
gifts, entertainment or other unlawful expenses relating to political activity,
or made any direct or indirect unlawful payments to governmental or regulatory
officials or others.
2.23 LABOR MATTERS. Except as may be set forth on SCHEDULE 2.13 or 2.23,
Big Stuff does not have any obligations, contingent or otherwise, under any
employment, severance or consulting agreement, collective bargaining agreement
or other contract with a labor union or other labor or employee group. To the
knowledge of Big Stuff or any Big Stuff Shareholder, as of the date of this
Restated Agreement, there are no efforts presently being made or threatened by
or on behalf of any labor union with respect to the unionizing of employees of
Big Stuff. As of the date of this Restated Agreement, there is no claim by an
employee, an employee group, a labor union or other labor group or a
Governmental Authority against Big Stuff pending or, to the knowledge of Big
Stuff or any Big Stuff Shareholder, threatened before the National Labor
Relations Board or any other court or tribunal respecting employment and
employment practices, terms and conditions of employment, termination of
employment or the compliance with any legislation concerning labor matters,
including, without limiting the generality of what precedes, labor relations,
occupational health and safety, minimum labor standards, industrial accidents
and occupational diseases; there is no labor strike, dispute, slowdown or
stoppage pending or, to the knowledge of Big Stuff or any Big Stuff Shareholder,
threatened against or involving Big Stuff; no representation question exists
respecting the employees of Big Stuff; no grievance or internal or informal
complaint exists, no arbitration proceeding arising out of or under any
collective bargaining agreement is pending and no claim therefor has been
asserted. As of the date of this Restated Agreement, there has not been any
material adverse change in relations with employees or agents of Big Stuff as a
result of any announcement of the transactions contemplated by this Restated
Agreement. Big Stuff shall promptly notify Parent upon knowledge by Big Stuff or
any Big Stuff Shareholder of the occurrence after the date hereof of any matter
referenced in this SECTION 2.23.
2.24 INSURANCE. Big Stuff has obtained and maintains in full force and
effect insurance with responsible and reputable insurance companies or
associations in such amounts, on such terms and covering such risks, including
fire and other risks insured against by extended coverage, public liability
insurance and insurance against claims for personal injury or death or property
damage occurring in connection with the activities of Big Stuff or any
properties owned, occupied or controlled by it, as is customary and prudent.
Since January 1, 1997, Big Stuff has not received notice of default under, or
intended cancellation or nonrenewal of, any policies of insurance, and Big Stuff
has not been refused any insurance coverage by an insurance carrier to which it
has applied for insurance.
2.25 DISCLOSURE. All information and documents provided prior to the date
of this Restated Agreement, and all information and documents subsequently
provided, to Parent or its representatives or lenders by or on behalf of Big
Stuff in connection with the transactions contemplated by this Restated
Agreement are or contain, or will be or will contain as to subsequently provided
information or documents, true, accurate and complete information in all
material respects with respect to the subject matter thereof and are, or will be
as to subsequently provided information or documents, reasonably responsive to
any specific request made by or on behalf of Parent or its representatives or
lenders.
2.26 TAX. Neither Big Stuff nor the Big Stuff Shareholders know of any
fact or have taken any action, in each case with respect to Big Stuff or the Big
Stuff Shareholders, that could be reasonably expected to prevent the transaction
contemplated hereby from qualifying as a tax-free reorganization pursuant to
Section 368 of the Code.
2.27 YEAR 2000 COMPLIANCE. Except as set forth in SCHEDULE 2.27 attached
hereto, Big Stuff has taken all commercially reasonable and prudent measures
designed to make all material aspects of Big Stuff's operations Year 2000
Compliant, to the extent within Big Stuff's control. As used in this section,
"YEAR 2000 COMPLIANT" shall mean that any and all computer hardware including
but not limited to
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mainframe computers, personal computers, servers and related equipment),
computer software, programming languages, code, electronic applications and
systems (including but not limited to LANs, WANs, inter/intranet systems and
client/server systems), programs, files, databases, chips, microprocessors and
any and all electronic or mechanical functionalities in any way used in
connection with, relied upon or relating to a specified subject matter (e.g., a
business, product or service) accurately and completely process (in the manner
intended, including but not limited to calculating, comparing and sequencing) on
a timely basis any and all data which are in any way dependent upon usage of
calendar dates, including but not limited to dates on or after January 1, 2000,
or time.
ARTICLE III--REPRESENTATIONS AND WARRANTIES
OF PARENT
Parent represents and warrants to and covenants with Big Stuff as follows:
3.1 ORGANIZATION AND GOOD STANDING. Parent is a corporation duly organized
and validly existing under the laws of the State of Delaware and has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as now being conducted. Each of the Active Parent
Subsidiaries is a corporation, duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization
and has all requisite corporate, power and authority to own, lease and operate
its properties and to carry on its business as now being conducted, except where
the failure to be so duly organized, validly existing and in good standing or to
have such power and authority would not have a Parent Material Adverse Effect.
Parent and each of the Active Parent Subsidiaries is duly qualified or licensed
and in good standing to do business in each jurisdiction in which the character
of the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary, except where
the failure to be so duly qualified or licensed and in good standing would not
have a Parent Material Adverse Effect. SCHEDULE 3.1 sets forth a complete and
accurate list of the jurisdictions of incorporation or organization and
qualifications or licenses of Parent and the Active Parent Subsidiaries. Parent
has heretofore made available to Big Stuff accurate and complete copies of the
Certificates or Articles of Incorporation and Bylaws, or equivalent governing
instruments, as currently in effect, of Parent and each of the Active Parent
Subsidiaries.
3.2 CAPITALIZATION. As of the date hereof, the authorized capital stock of
Parent consists of 180,000,000 shares of Parent Common Stock and 20,000,000
shares of preferred stock, par value $0.0001 per share. As of the opening of
business on the date of this Restated Agreement, (a) 20,083,953 shares of Parent
Common Stock were outstanding; (b) no shares of Parent preferred stock were
issued and outstanding; and (c) 163,307 shares of Parent Common Stock were held
as treasury shares. No other capital stock of Parent is issued or outstanding.
All issued and outstanding shares of the Parent Common Stock are duly
authorized, validly issued, fully paid and non-assessable and were issued free
of preemptive rights and in compliance with applicable corporate and securities
Laws. Except as set forth in the Parent Securities Filings or on SCHEDULE 3.2,
as of the date of this Restated Agreement there are no outstanding rights,
reservations of shares, subscriptions, warrants, puts, calls, unsatisfied
preemptive rights, options or other agreements of any kind relating to any of
the capital stock or any other security of Parent, and there is no authorized or
outstanding security of any kind convertible into or exchangeable for any such
capital stock or other security. There are no restrictions upon the transfer of
or otherwise pertaining to the securities (including, but not limited to, the
ability to pay dividends thereon) or retained earnings of Parent and the Active
Parent Subsidiaries or the ownership thereof other than those pursuant to the
Parent Guaranty, the Great Western Credit Agreement or those imposed generally
by the Securities Act, the Securities Exchange Act, applicable state or foreign
securities Laws or applicable corporate Law.
3.3 SUBSIDIARIES. Except as set forth on SCHEDULE 3.3, all of the capital
stock and other interests of the Active Parent Subsidiaries held by Parent are
owned by it or a Parent subsidiary, free and clear
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of any claim, lien, encumbrance, security interest or agreement with respect
thereto. All of the outstanding shares of capital stock in each of the Active
Parent Subsidiaries held directly or indirectly by Parent are duly authorized,
validly issued, fully paid and non-assessable and were issued free of preemptive
rights and in compliance with applicable corporate and securities Laws.
3.4 AUTHORIZATION; BINDING AGREEMENT. Parent and Acquisition Subsidiary
have all requisite corporate power and authority to execute and deliver this
Restated Agreement and the Parent Transaction Agreements and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Restated Agreement and the other agreements and documents referred to herein and
to be executed in connection herewith to which Parent or Acquisition Subsidiary
is or will be a party or a signatory (the "PARENT TRANSACTION AGREEMENTS") and
the consummation of the transactions contemplated hereby and thereby have been
duly and validly authorized by the respective Boards of Directors of Parent and
Acquisition Subsidiary, as appropriate, and except for the approval of the
holders of the Parent Common Stock, no other corporate proceedings on the part
of Parent or Acquisition Subsidiary are necessary to authorize the execution and
delivery of this Restated Agreement and the Parent Transaction Agreements or to
consummate the transactions contemplated hereby or thereby, except for the
concurrence of Bank of America National Trust and Savings Association under the
Great Western Credit Agreement. This Restated Agreement has been duly and
validly executed and delivered by each of Parent and Acquisition Subsidiary and
constitutes, and upon execution and delivery thereof as contemplated by this
Restated Agreement, the Parent Transaction Agreements will constitute, the
legal, valid and binding obligations of Parent and Acquisition Subsidiary,
enforceable against each of Parent and Acquisition Subsidiary in accordance with
its and their respective terms, subject to the Enforceability Exceptions.
3.5 GOVERNMENTAL APPROVALS. No Consent from or with any Governmental
Authority on the part of Parent or any of the Active Parent Subsidiaries, is
required in connection with the execution or delivery by Parent and Acquisition
Subsidiary of this Restated Agreement and the Parent Transaction Agreements or
the consummation by Parent and Acquisition Subsidiary of the transactions
contemplated hereby or thereby other than (i) filings with the SEC, state
securities laws administrators and the NYSE, (ii) Consents from or with
Governmental Authorities, (iii) filings under the HSR Act, and (iv) those
Consents that, if they were not obtained or made, do not or would not have a
Parent Material Adverse Effect.
3.6 NO VIOLATIONS. The execution and delivery of this Restated Agreement
and the Parent Transaction Agreements, the consummation of the transactions
contemplated hereby and thereby and compliance by Parent and Acquisition
Subsidiary with any of the provisions hereof or thereof will not (i) conflict
with or result in any breach of any provision of the Certificate and/or Articles
of Incorporation or Bylaws or other governing instruments of Parent or any of
the Active Parent Subsidiaries, except as set forth on SCHEDULE 3.6,
(ii) except for compliance with the requirements under the Parent Guaranty,
require any Consent under or result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, cancellation or acceleration or augment the
performance required) under any of the terms, conditions or provisions of any
Parent Material Contract or other obligation to which Parent or any Active
Parent Subsidiary, is a party or by which any of them or any of their properties
or assets may be bound, (iii) result in the creation or imposition of any lien
or encumbrance of any kind upon any of the assets of Parent or any Parent
Subsidiary, or (iv) subject to obtaining the Consents from Governmental
Authorities referred to in SECTION 3.5 above, contravene any Law currently in
effect to which Parent or any Active Parent Subsidiary or its or any of their
respective assets or properties are subject, except in the case of clauses (ii),
(iii) and (iv) above, for any deviations from the foregoing which do not or
would not have a Parent Material Adverse Effect.
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3.7 SECURITIES FILINGS AND LITIGATION.
(a) Parent has made available to Big Stuff true and complete copies of
(i) its Annual Reports on Form 10-K, as amended, for the years ended
December 31, 1997 and 1998, as filed with the SEC, (ii) its proxy statement
relating to the meeting of shareholders held on July 29, 1998, as filed with
the SEC, and (iii) all other reports, statements and registration statements
and amendments thereto (including, without limitation, Quarterly Reports on
Form 10-Q and Current Reports on Form 8-K, as amended) filed by Parent with
the SEC since February 18, 1998. The reports and statements set forth in
clauses (i) through (iii) above, and those subsequently provided or required
to be provided pursuant to this section, are referred to collectively as the
"PARENT SECURITIES FILINGS." As of their respective dates, or as of the date
of the last amendment thereof, if amended after filing, none of the Parent
Securities Filings (including all schedules thereto and disclosure documents
incorporated by reference therein), contained or, as to Parent Securities
Filings subsequent to the date hereof, will contain any untrue statement of
a material fact or omitted or, as to Parent Securities Filings subsequent to
the date hereof, 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 Parent
Securities Filings at the time of filing or as of the date of the last
amendment thereof, if amended after filing, complied or, as to Parent
Securities Filings subsequent to the date hereof, will comply in all
material respects with the Securities Exchange Act or the Securities Act, as
applicable.
(b) Except as set forth on SCHEDULE 3.7(b) attached hereto, there is no
Litigation pending or, to the knowledge of Parent, threatened against Parent
or any Active Parent Subsidiary, any officer, director, employee or agent
thereof, in his or her capacity as such, or as a fiduciary with respect to
any Benefit Plan of Parent, or otherwise relating, in a manner that could
have a Parent Material Adverse Effect, to Parent, any Active Parent
Subsidiary or the securities of any of them, or any properties or rights of
Parent or any of the Active Parent Subsidiaries, which is required to be
described in any Parent Securities Filing that is not so described. No event
has occurred as a consequence of which Parent would be required to file a
Current Report on Form 8-K pursuant to the requirements of the Securities
Exchange Act as to which such a report has not been timely filed with the
SEC. Any reports, statements and registration statements and amendments
thereof (including, without limitation, Reports on Form 10-K, Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K, as amended) filed by
Parent with the SEC after the date hereof shall be provided to Big Stuff
upon such filing.
3.8 PARENT FINANCIAL STATEMENTS. The audited consolidated and unaudited
interim financial statements of Parent and the Active Parent Subsidiaries
included in the Parent Securities Filings (the "PARENT FINANCIAL STATEMENTS")
have been made available to Big Stuff. Except as noted thereon, the Parent
Financial Statements were prepared in accordance with generally accepted
accounting principles applicable to the business of Parent and the Active Parent
Subsidiaries consistently applied in accordance with past accounting practices
and fairly present (including, but not limited to, the inclusion of all
adjustments with respect to interim periods which are necessary to present
fairly the financial condition and assets and liabilities or the results of
operations of Parent and the Active Parent Subsidiaries, subject to normal
year-end adjustments in the ordinary course with respect to certain items
immaterial in amount or effect and the exclusion of footnote disclosure in
interim Parent Financial Statements) the financial condition and assets and
liabilities or the results of operations of Parent and the Active Parent
Subsidiaries as of the dates and for the periods indicated. Except as set forth
in SCHEDULE 3.8 or as reflected in the Parent Financial Statements, as of their
respective dates, neither Parent nor any Active Parent Subsidiary had any debts,
obligations, guaranties of obligations of others or liabilities (contingent or
otherwise) that would be required in accordance with generally accepted
accounting principles to be disclosed in the Parent Financial Statements.
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3.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in the
Parent Securities Filings made available by Parent to Big Stuff prior to the
date of this Restated Agreement or in SCHEDULE 3.9 since June 30, 1999, through
the date of this Restated Agreement, there has not been: (i) any Event that
could reasonably be expected to have a Parent Material Adverse Effect; or
(ii) any agreement by Parent or Active Parent Subsidiary to take any action that
would result in a breach of SECTION 6.6 below.
3.10 COMPLIANCE WITH LAWS. The business of Parent and the Active Parent
Subsidiaries, has been operated in compliance with all Laws applicable thereto,
except for any instances of non-compliance which do not and would not have a
Parent Material Adverse Effect.
3.11 PERMITS. (i) Parent and the Active Parent Subsidiaries have all
permits, certificates, licenses, approvals, tariffs and other authorizations
required in connection with the operation of their business (collectively,
"PARENT PERMITS"), (ii) neither Parent nor any Active Parent Subsidiary is in
violation of any Parent Permit, and (iii) no proceedings are pending or, to the
knowledge of Parent, threatened, to revoke or limit any Parent Permit, except,
in the case of clause (i) or (ii) above, those the absence or violation of which
do not and would not have a Parent Material Adverse Effect.
3.12 FINDERS AND INVESTMENT BANKERS. Neither Parent nor any of its
officers or directors has employed any broker or finder or otherwise incurred
any liability for any brokerage fees, commissions or finders' fees in connection
with the transactions contemplated hereby except that PaineWebber Incorporated
has been engaged to deliver the fairness opinion required to be delivered
pursuant to SECTION 7.1(l) and NationsBanc Xxxxxxxxxx Securities, L.L.C. has
been engaged to assist in the sale(s) of the CLEC Operations and a copy of the
engagement letters and other related documents have been (or will be, with
respect to the fairness opinion to be issued by PaineWebber Incorporated)
furnished to Big Stuff. Big Stuff will not be liable for any brokerage fees,
commissions, investment banking fees or other amounts to PaineWebber
Incorporated or NationsBanc Xxxxxxxxxx Securities, L.L.C. in connection with
this Restated Agreement, the Company Agreement, the Restated Web Agreement or
any transactions contemplated herein or therein.
3.13 CONTRACTS. Except as set forth in SCHEDULE 3.13 attached hereto,
neither Parent nor any Active Parent Subsidiary is a party to any material note,
bond, mortgage, indenture, contract, lease, license, agreement, understanding,
instrument, bid or proposal ("PARENT MATERIAL CONTRACT") required to be
described in or filed as an exhibit to any Parent Securities Filing that is not
described in or filed as required by the Securities Act or the Securities
Exchange Act, as the case may be. Parent has made available to Big Stuff true
and accurate copies of the Parent Material Contracts. All such Parent Material
Contracts are valid and binding and are in full force and effect and enforceable
in accordance with their respective terms, subject to the Enforceability
Exceptions.
3.14 CORPORATE RECORDS. The respective corporate record books of or
relating to Parent and each of the Active Parent Subsidiaries made available to
Big Stuff by Parent contain accurate and complete records of (i) all corporate
actions of the respective shareholders and directors (and committees thereof) of
Parent and the Active Parent Subsidiaries, (ii) the Certificate and/or Articles
of Incorporation, Bylaws and/or other governing instruments, as amended, of
Parent and the Active Parent Subsidiaries, and (iii) the issuance and transfer
of stock of Parent and the Active Parent Subsidiaries.
3.15 TAX. Parent does not know of any fact and has not taken any action
that could be reasonably expected to prevent the transaction contemplated hereby
from qualifying as a tax-free reorganization pursuant to Section 368 of the
Code.
3.16 DISCLOSURE. All information and documents provided prior to the date
of this Restated Agreement and all information and documents subsequently
provided, to Big Stuff and the Big Stuff Shareholders, or its or their
respective representatives or lenders by or on behalf of Parent in connection
with the transactions contemplated by this Restated Agreement are or contain, or
will be or will contain as to subsequently provided information or documents,
true, accurate and complete
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information in all material respects with respect to the subject matter thereof
and are, or will be as to subsequently provided information or documents,
reasonably responsive to any specific request made by or on behalf of Big Stuff
and the Big Stuff Shareholders or its or their representatives or lenders.
ARTICLE IV--ADDITIONAL COVENANTS OF BIG STUFF
AND THE BIG STUFF SHAREHOLDERS
Big Stuff and the Big Stuff Shareholders covenant and agree as follows:
4.1 NOTIFICATION OF CERTAIN MATTERS. Big Stuff and the Big Stuff
Shareholders shall give prompt notice to Parent if any of the following occur
from the date of this Restated Agreement through the Closing Date: (i) receipt
of any notice of, or other communication relating to, a default or Event which,
with notice or lapse of time or both, would become a default under any Big Stuff
Material Contract; (ii) receipt of any notice or other communication from any
third party alleging that the Consent of such third party is or may be required
in connection with the transactions contemplated by this Restated Agreement;
(iii) receipt of any material notice or other communication from any
Governmental Authority in connection with the transactions contemplated by this
Restated Agreement; (iv) receipt of any notice of or other communication
regarding or otherwise obtaining knowledge of an Event which would have a Big
Stuff Material Adverse Effect; (v) receipt of any notice of or other
communication regarding or otherwise obtaining knowledge of the commencement or
threat of any Litigation involving or affecting any Big Stuff Shareholder, Big
Stuff or any of its or their respective properties or assets, or, to its
knowledge, any employee, agent, director or officer of Big Stuff, in his or her
capacity as such or as a fiduciary under a Benefit Plan of Big Stuff, which, if
pending on the date hereof, would have been required to have been disclosed in
this Restated Agreement or which relates to the consummation of the transactions
contemplated by this Restated Agreement, including the Merger, or the Big Stuff
Transaction Agreements or any material development in connection with any
Litigation disclosed by Big Stuff or any Big Stuff Shareholder in or pursuant to
this Restated Agreement; and (vi) the receipt of any notice of or other
communication regarding or otherwise obtaining knowledge of any event that would
cause a breach by Big Stuff or any Big Stuff Shareholder of any provision of
this Restated Agreement or a Big Stuff Transaction Agreement, including such a
breach that would occur if such event had taken place on or prior to the date of
this Restated Agreement.
4.2 ACCESS AND INFORMATION. Between the date of this Restated Agreement
and the Closing Date, Big Stuff, upon reasonable notice, will give, and shall
direct its accountants and legal counsel to give, Parent, its lenders and their
respective authorized representatives (including, without limitation, financial
advisors, accountants and legal counsel) at all reasonable times access to all
offices and other facilities and to all contracts, agreements, commitments,
books and records (including, but not limited to, Tax returns) of or pertaining
to Big Stuff, will permit the foregoing to make such inspections as they may
require and will cause its officers promptly to furnish Parent with (a) such
financial and operating data and other information with respect to the business
and properties of Big Stuff as Parent may from time to time reasonably request
including, but not limited to, data and information required for inclusion in
Parent's pending registration statements and/or other Parent Securities Filings,
and (b) a copy of each material report, schedule and other document filed or
received by Big Stuff pursuant to the requirements of applicable securities
Laws. The foregoing access will be subject to restrictions contained in
SECTION 6.9 hereof.
4.3 BIG STUFF SHAREHOLDER APPROVAL. As soon as practicable, Big Stuff
will, if required, take all steps necessary to duly call, give notice of,
convene and hold a meeting of the Big Stuff Shareholders for the purpose of
adopting this Restated Agreement and for such other purposes as may be necessary
or desirable in connection with effectuating the transactions contemplated
hereby. The Board of Directors of Big Stuff (i) unless otherwise required under
the fiduciary duties of the directors of Big Stuff, as determined by such
directors in good faith upon advice of legal counsel, will recommend to
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the Big Stuff Shareholders that they adopt this Restated Agreement and approve
the transactions contemplated hereby, and (ii) will use its reasonable best
efforts to obtain any necessary adoption and approval by the Big Stuff
Shareholders of this Restated Agreement and the transactions contemplated hereby
including, without limitation, voting the Big Stuff Shares held for such
adoption and approval.
4.4 REASONABLE BEST EFFORTS. Subject to the terms and conditions herein
provided, Big Stuff and the Big Stuff Shareholders agree to use their reasonable
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 to consummate and make
effective as promptly as practicable, but in any event, prior to the Closing,
the Merger and the other transactions contemplated by this Restated Agreement
and the Big Stuff Transaction Agreements including, but not limited to
(i) obtaining the Consent of others to this Restated Agreement, the Big Stuff
Transaction Agreements and the transactions contemplated hereby and thereby,
(ii) the defending of any Litigation against Big Stuff, or involving any Big
Stuff Shareholder challenging this Restated Agreement, the Big Stuff Transaction
Agreements or the consummation of the transactions contemplated hereby or
thereby, excluding any Litigation caused by or relating to Parent or any Active
Parent Subsidiary, (iii) obtaining all Consents from Governmental Authorities
required for the consummation of the exchange and the transactions contemplated
hereby, and (iv) timely making all necessary filings under the HSR Act. Upon the
terms and subject to the conditions hereof, Big Stuff and the Big Stuff
Shareholders agree to use their reasonable best efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary to
satisfy the other conditions of the Closing set forth herein. Big Stuff and the
Big Stuff Shareholders will consult with counsel for Parent as to, and will
permit such counsel to participate in, at Parent's expense, any Litigation
referred to in clause (ii) above brought against or involving Big Stuff or any
Big Stuff Shareholder.
4.5 COMPLIANCE. In consummating the Merger and the transactions
contemplated hereby, Big Stuff and the Big Stuff Shareholders shall comply in
all material respects with the provisions of the Securities Exchange Act and the
Securities Act and shall comply, in all material respects, with all other
applicable Laws.
4.6 BENEFIT PLANS. Between the date of this Restated Agreement and through
the Closing Date, no discretionary award or grant under any Benefit Plan of Big
Stuff shall be made without the consent of Parent. Big Stuff shall not make any
amendment to any Benefit Plan, any awards thereunder or the terms of any
security convertible into or exchangeable for capital stock without the consent
of Parent.
4.7 TAX OPINION CERTIFICATION. Big Stuff and the Big Stuff Shareholders
shall use their best efforts to cause the Merger to qualify, and will not take
any action which to their knowledge could reasonably be expected to prevent the
Merger from qualifying, as a reorganization under Section 368 of the Code. Prior
to the Effective Time, Big Stuff and the Big Stuff Shareholders shall provide
tax counsel rendering an opinion under SECTION 7.1(m) with a certificate
concerning such factual matters as such counsel reasonably requests in
connection with its opinion.
4.8 AFFILIATE AGREEMENTS. Big Stuff shall use its reasonable business
efforts to ensure that each Person who is or may be an "affiliate" of Big Stuff
within the meaning of Rule 145 promulgated under the Securities Act shall enter
into an agreement in a form agreed to by the parties hereto, acting reasonably
(collectively, the "AFFILIATE AGREEMENTS").
4.9 TRANSFER RESTRICTIONS. (a) In addition to any other restrictions
imposed by Law on the ability of any Big Stuff Shareholder to transfer any
Parent Common Stock received by such Big Stuff Shareholder pursuant to this
Restated Agreement, the Big Stuff Shareholders who are "affiliates" of Big Stuff
within the meaning of Rule 145 promulgated under the Securities Act acknowledge
and agree that the following legend will appear on all certificates representing
the Parent Common Stock received by such "affiliates" of Big Stuff pursuant to
this Restated Agreement:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE HELD SUBJECT
TO ALL APPLICABLE PROVISIONS OF THE SECURITIES ACT OF 1933, AS
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AMENDED (THE "SECURITIES ACT"), AND THE RULES AND REGULATIONS PROMULGATED
BY THE SECURITIES AND EXCHANGE COMMISSION ("SEC") THEREUNDER. NO SALES,
TRANSFERS OR OTHER DISPOSITION OF THESE SHARES MAY BE MADE EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OR UPON THE PRIOR DELIVERY TO THE ISSUER OF AN OPINION FROM LEGAL COUNSEL
SATISFACTORY TO THE ISSUER AND IN FORM AND SUBSTANCE SATISFACTORY TO THE
ISSUER AND ITS LEGAL COUNSEL, STATING THAT SUCH SALE OR OTHER DISPOSITION
IS BEING MADE PURSUANT TO AND IN ACCORDANCE WITH THE REQUIREMENTS OF SEC
RULES 144 AND 145 OR IS OTHERWISE EXEMPT FROM REGISTRATION UNDER THE
SECURITIES ACT.
(b) Notwithstanding the foregoing, Parent shall instruct its transfer
agent to remove the legend set forth in SECTION 4.9(a) for those sales of
Parent Common Stock by "affiliates" (as defined in Securities Act Rules 144
and 145) of Parent and Big Stuff made pursuant to Securities Act Rules 144
and 145.
ARTICLE V
ADDITIONAL COVENANTS OF PARENT
Parent covenants and agrees as follows:
5.1 CONDUCT OF BUSINESS OF PARENT AND THE ACTIVE PARENT
SUBSIDIARIES. Parent covenants, represents and warrants that from the date of
this Restated Agreement through the Closing Date, unless Big Stuff shall
otherwise expressly consent in writing, Parent shall, and Parent shall cause
each Active Parent Subsidiary to, use its or their reasonable best efforts to
comply in all material respects with all Laws applicable to it or any of its
properties, assets or business and maintain in full force and effect all the
Parent Authorizations necessary for, or otherwise material to, such business.
5.2 NOTIFICATION OF CERTAIN MATTERS. Parent shall give prompt notice to
Big Stuff if any of the following occur from the date of this Restated Agreement
through the Closing Date: (i) any notice of, or other communication relating to,
a default or Event which, with notice or lapse of time or both, would become a
default under any Parent Material Contract which could have a Parent Material
Adverse Effect; (ii) receipt of any notice or other communication from any third
party alleging that the Consent of such third party is or may be required in
connection with the transactions contemplated by this Restated Agreement;
(iii) receipt of any material notice or other communication from any regulatory
authority (including, but not limited to, the NYSE or any other securities
exchange) in connection with the transactions contemplated by this Restated
Agreement; (iv) receipt of any notice of or other communication regarding or
otherwise obtaining knowledge of an Event which would have a Parent Material
Adverse Effect; (v) receipt of any notice of or other communication regarding or
otherwise obtaining knowledge of the commencement or threat of any Litigation
involving or affecting Parent or any Active Parent Subsidiary or any of their
respective properties or assets, or, to its knowledge, any employee, agent,
director or officer, in his or her capacity as such, of Parent or any Active
Parent Subsidiary which, if pending on the date hereof, would have been required
to have been disclosed in this Restated Agreement or which relates to the
consummation of the Merger or any material development in connection with any
Litigation disclosed by Parent in or pursuant to this Restated Agreement or the
Parent Securities Filings; (vi) receipt of any notice of or other communication
regarding or otherwise obtaining knowledge of any Event that could cause a
breach by Parent of any provision of this Restated Agreement or any Parent
Transaction Agreement, including such a breach that could occur if such Event
had taken place on or prior to the date of this Restated Agreement; and
(vii) amendment, modification or waiver of any provision of the Ionex Agreement
referenced on SCHEDULE 3.7 hereto.
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5.3 ACCESS AND INFORMATION. Between the date of this Restated Agreement
and the Closing Date, Parent: (i) will, upon reasonable notice, give, and direct
its legal counsel and accountants to give, Big Stuff and its authorized
representatives (including, without limitation, its financial advisors,
accountants and legal counsel) at all reasonable times access as reasonably
requested to the offices and other facilities and to all material contracts,
agreements, commitments, books and records (including, but not limited to, Tax
returns) of or pertaining to Parent and the Active Parent Subsidiaries;
(ii) will permit Big Stuff to make such reasonable inspections as it may
require; and (iii) will cause its officers promptly to furnish Big Stuff with
(a) such financial and operating data and other information with respect to the
business and properties of Parent and the Active Parent Subsidiaries as Big
Stuff may from time to time reasonably request, and (b) a copy of each material
report, schedule and other document filed or received by Parent or any Active
Parent Subsidiary pursuant to the requirements of applicable securities Laws,
the NYSE or other securities exchange, in each case as necessary in connection
with the transactions contemplated hereby. The foregoing access will be subject
to the restrictions contained in SECTION 6.9 hereof.
5.4 COMPLIANCE. In consummating the Merger and the transactions
contemplated hereby, Parent shall comply in all material respects with the
provisions of the Securities Exchange Act and the Securities Act and shall
comply, and/or cause the Active Parent Subsidiaries to comply or to be in
compliance, in all material respects, with all other applicable Laws.
5.5 SEC AND SHAREHOLDER FILINGS. Parent shall send to Big Stuff a copy of
all material public reports and materials as and when it sends the same to its
shareholders, the SEC, the NYSE or any other securities commission or exchange.
5.6 TAX TREATMENT. Parent and Acquisition Subsidiary shall use their best
efforts to cause the Merger to qualify, and will not take any action which to
its knowledge could reasonably be expected to prevent the Merger from
qualifying, as a reorganization under Section 368 of the Code. Prior to the
Effective Time, Parent shall provide tax counsel rendering an opinion under
SECTION 7.1(m) with a certificate concerning such factual matters as such
counsel identifies are relevant to its opinion.
5.7 EMPLOYMENT AND EMPLOYEE BENEFIT PLANS. At or before the Closing Date,
Parent shall, after consultation with Big Stuff, offer employment to the
employees of Big Stuff, effective as of the Closing Date, upon terms and
conditions reasonably acceptable to the Big Stuff employees and to Parent. After
the Closing Date, Parent shall arrange for each employee participating in any of
the Benefit Plans of Big Stuff at such time to participate in any counterpart
Benefit Plans of Parent in accordance with the eligibility criteria thereof,
provided that (i) such participants shall receive full credit for years of
service with Big Stuff prior to the Merger for all purposes for which such
service was recognized under the Benefit Plan of Big Stuff including, but not
limited to, recognition of service for eligibility, vesting, and, to the extent
not duplicative of benefits received under such Benefit Plan of Big Stuff, the
amount of benefits, and (ii) such participants shall participate in the Benefit
Plans of Parent on terms no less favorable than those offered by Parent to
similarly situated employees of Parent. Notwithstanding the foregoing, Parent
may continue one or more of the Benefit Plans of Big Stuff, in which case Parent
shall have satisfied its obligations hereunder with respect to the benefits so
provided.
5.9 EXPENSES. If the transactions contemplated by this Restated Agreement
are consummated, all fees and expenses incurred in connection with the
transactions contemplated by this Restated Agreement including, without
limitation, all legal, accounting, financial advisory, consulting fees,
(collectively, the "TRANSACTION EXPENSES") incurred by a party or its
stockholders in connection with the negotiation and effectuation of the terms
and conditions of this Restated Agreement and the transactions contemplated
hereby, shall be the obligation of Parent or any direct or indirect subsidiary
of Parent after Closing. If the Merger is not consummated, all Transaction
Expenses shall be and remain the obligation of the respective parties which
incurred them.
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5.10 PARENT SHAREHOLDER APPROVAL. As soon as practicable, Parent will, if
required, take all steps necessary to duly call, give notice of, convene and
hold a meeting of the Parent shareholders for the purpose of adopting this
Restated Agreement and for such other purposes as may be necessary or desirable
in connection with effectuating the transactions contemplated hereby. The Board
of Directors of Parent (i) unless otherwise required under the fiduciary duties
of the directors of Parent, as determined by such directors in good faith and
upon advice of legal counsel, will recommend to the Parent shareholders that
they adopt this Restated Agreement and approve the transactions contemplated
hereby, and (ii) will use its reasonable best efforts to obtain any necessary
adoption and approval by the Parent shareholders of this Restated Agreement and
the transactions contemplated hereby.
ARTICLE VI--ADDITIONAL COVENANTS OF THE PARENT,
BIG STUFF AND THE BIG STUFF SHAREHOLDERS
6.1 REGISTRATION OF SECURITIES.
(a) On or before the Closing Date, the Parent shall use its reasonable
best efforts to cause the following securities to be registered with the SEC
under the Securities Act and with the appropriate Governmental Authorities
under state blue sky Laws:
(i) Parent Common Stock to be received by Big Stuff Shareholders and
any other shareholders of Big Stuff upon conversion of Big Stuff Common
Stock, as described in SECTION 1.3 hereof; and
(ii) Parent Common Stock to be received by Big Stuff Shareholders
upon conversion of the Convertible Note described in SECTION 1.10 hereof.
(b) The Parent shall hold the meeting of the shareholders of Parent to
consider and to vote upon the approval of the Restated Agreement including
the issuance of Parent Common Stock to the Big Stuff Shareholders and to the
shareholders of the Company and of Web, and Parent and Big Stuff will
cooperate in the preparation of one or more registration statements (such
registration statements, together with any and all amendments and
supplements thereto, being hereinafter referred to as the "REGISTRATION
STATEMENTS"), which will include the preparation of one or more proxy
statements of the Parent satisfying all requirements of applicable state
securities Laws, the Securities Act and the Securities Exchange Act.
(c) Big Stuff will furnish Parent with such information concerning Big
Stuff as is necessary in order to cause the Registration Statements and any
proxy statements, insofar as they relate to Big Stuff, to comply with
applicable Law. None of the information relating to Big Stuff supplied by
Big Stuff for inclusion in the Registration Statements or any proxy
statements will be false or misleading with respect to any material fact or
will omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. Big Stuff agrees
promptly to advise Parent if, at any time prior to the meeting of the
shareholders of the Parent referenced herein, any information provided by it
in the Registration Statements or any proxy statement is or becomes
incorrect or incomplete in any material respect and to provide Parent with
the information needed to correct such inaccuracy or omission. Big Stuff
will furnish Parent with such supplemental information as may be necessary
in order to cause the Registration Statements or the proxy statements,
insofar as it relates to Big Stuff, to comply with applicable Law after the
mailing thereof to the stockholders of Parent, Big Stuff, Web, the Company
and others to whom it must be mailed.
(d) Big Stuff and Parent agree to cooperate in making any preliminary
filings of Registration Statements and the proxy statement with the SEC as
promptly as practicable, on a confidential basis pursuant to
Rule 14a-6(e)(2) under the Securities Exchange Act.
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(e) Parent will file the Registration Statements and the proxy statement
with the SEC and appropriate materials with applicable state securities
agencies and will use all reasonable best efforts to cause the Registration
Statements and the proxy statement to become effective under the Securities
Act and the Exchange Act and all such state filed materials to comply with
applicable state securities Laws. Big Stuff authorizes Parent to utilize in
the Registration Statements and in all such state filed materials, the
information concerning Big Stuff provided to Parent in connection with, or
contained in, the Registration Statements. Parent promptly will advise Big
Stuff when the Registration Statements have become effective and of any
supplements or amendments thereto, and Parent will furnish Big Stuff with
copies of all such documents. Parent shall file any and all amendments,
supplements and related filings to such Registration Statements (and state
filed materials) as may be required. Big Stuff shall not distribute any
written material that might constitute a "prospectus" relating to this
Restated Agreement or any of the transactions contemplated by this Restated
Agreement within the meaning of the Securities Act or any other applicable
securities Law without the prior written consent of Parent.
6.2 EMPLOYMENT AGREEMENTS. At or before the Closing Date, Parent will
enter into Employment and Non-Competition Agreements, in forms agreed to by
Parent and Big Stuff, acting reasonably, with certain individuals, the
identities of whom shall be agreed upon by Parent and Big Stuff, acting
reasonably.
6.3 CONSENTS. Each of Parent and Big Stuff shall promptly apply for or
otherwise seek, and use its best efforts to obtain, all consents and approvals
required to be obtained by it for the consummation of the Merger.
6.4 LEGAL REQUIREMENTS. Subject to the terms and conditions provided in
this Restated Agreement, each of the parties hereto shall use its reasonable
best efforts to take promptly, or cause to be taken, all reasonable actions, and
to do promptly, or cause to be done, all things necessary, proper or advisable
under applicable Laws to consummate and make effective the transactions
contemplated hereby and to obtain all necessary waivers, consents and approvals
and to effect all necessary registrations and filings and to remove any
injunctions or other impediments or delays, legal or otherwise, in order to
consummate and make effective the transactions contemplated by this Restated
Agreement for the purpose of securing for the parties hereto the benefits
contemplated by this Restated Agreement.
6.5 PUBLIC ANNOUNCEMENTS. All press releases and other disseminations of
information to employees, customers or suppliers relating to the Merger or the
transactions contemplated by this Restated Agreement or the Restated Company
Agreement by any party hereto shall require the prior approval of Parent and Big
Stuff, provided Parent shall have the right to make such public announcements
without the approval of the other parties hereto should such disclosure be
required by Law or the policies or requirements of United States securities
regulators, stock exchanges, or other relevant entities in the opinion of
Parent's legal counsel. Should such disclosure be required, Parent agrees to
provide the others with reasonable advance notice of and a copy of, and to
consult with the others regarding, the proposed disclosure.
6.6 CONDUCT OF BUSINESS PRIOR TO CLOSING DATE. Except as expressly
contemplated by this Restated Agreement, during the period from the date of this
Restated Agreement to the Closing Date, Big Stuff shall conduct its business in
the ordinary course and consistent with past practice, subject to the
limitations contained in this Restated Agreement, and Big Stuff shall use its
reasonable business efforts to preserve intact its business organization, to
keep available the services of its officers, agents and employees and to
maintain satisfactory relationships with all Persons with whom it does business.
Except as expressly contemplated by this Restated Agreement, and it being
acknowledged and agreed by each of the parties to this Restated Agreement that
Parent is in the process of a substantial reduction in workforce, and, subject
to the sale of the CLEC Operations, Parent shall, and it shall
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cause the Active Parent Subsidiaries to, use its or their reasonable best
efforts to preserve intact its business organization consistent with the budget
adopted by the Executive Committee of the Board of Directors of Parent, to keep
available the services of only those officers, agents and employees whom Parent
believes are required to maintain satisfactory relationships with all Persons
with whom it does business. Without limiting the generality of the foregoing,
and except as otherwise expressly provided in this Restated Agreement, after the
date of this Restated Agreement and prior to the Closing Date, (i) Big Stuff
will not, without the prior written consent of Parent (which consent shall not
be unreasonably withheld or delayed); and (ii) subject to the sale of the CLEC
Operations, neither Parent nor any Active Parent Subsidiary will, without the
prior written consent of Big Stuff (which consent shall not be unreasonably
withheld or delayed):
(a) except as provided for in this Restated Agreement, the Restated
Company Agreement or the Restated Web Agreement, amend or propose to amend
its Certificate or Articles of Incorporation or Bylaws (or comparable
governing instruments) in any material respect;
(b) except as set forth on SCHEDULE 6.6(b)(i), with regard to Big Stuff,
or Parent Common Stock to be issued pursuant to those options or warrants
listed on SCHEDULE 6.6(b)(ii) or in SECTION 6.10, with regard to Parent or
the Active Parent Subsidiaries, authorize for issuance, issue, grant, sell,
pledge, dispose of or propose to issue, grant, sell, pledge or dispose of
any shares of, or any options, warrants, commitments, subscriptions or
rights of any kind to acquire or sell any shares of, the capital stock or
other securities of Big Stuff, or of Parent or any Active Parent Subsidiary,
as the case may be, including, but not limited to, any securities
convertible into or exchangeable for shares of stock of any class of Big
Stuff, or of Parent or any Active Parent Subsidiary, as the case may be;
PROVIDED, HOWEVER, that Big Stuff may issue capital stock pursuant to the
exercise of options and warrants outstanding on the date of this Restated
Agreement;
(c) except as provided for in this Restated Agreement, the Restated
Company Agreement or the Restated Web Agreement, split, combine or
reclassify any shares of its capital stock or declare, pay or set aside any
dividend or other distribution (whether in cash, stock or property or any
combination thereof) in respect of its capital stock, other than dividends
or distributions to the Big Stuff Shareholders (but only if the entire
amount of such dividend is paid to Web as a capital contribution), or to
Parent or a Parent subsidiary, as the case may be, or redeem, purchase or
otherwise acquire or offer to acquire any shares of its capital stock or
other securities;
(d) except for debt (including, but not limited to, obligations in
respect of capital leases, but excluding obligations under the Convertible
Note) not in excess of $50,000 in the aggregate for all Persons combined,
(i) create, incur or assume any short-term debt (excluding trade payables
incurred in the ordinary course of business), long-term debt or obligations
in respect of capital leases, except for indebtedness contemplated by this
Restated Agreement; (ii) assume, guarantee, endorse or otherwise become
liable or responsible (whether directly, indirectly, contingently or
otherwise) for the obligations of any Person, except for obligations
permitted by this Restated Agreement of any Active Parent Subsidiary, in the
ordinary course of business consistent with past practice; (iii) except as
contemplated in this Restated Agreement, make any capital expenditures or
make any loans, advances or capital contributions to, or investments in, any
other Person (other than customary advances to employees made in the
ordinary course of business consistent with past practice), provided Big
Stuff will continue to make capital expenditures, maintain, upgrade and
expand its facilities, and otherwise operate in the ordinary course and
consistent with past practice; (iv) acquire the stock or assets of, or merge
or consolidate with, any other Person or business, except as contemplated in
this Restated Agreement and except the contemplated merger with Web or the
contemplated acquisition of all of the issued and outstanding capital stock,
either directly or indirectly, of the Company; or (v) voluntarily incur any
material liability or obligation (absolute, accrued, contingent or
otherwise), except in the ordinary course of business;
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(e) except for the contemplated sale of the Parent's CLEC Operations,
sell, transfer, mortgage, pledge or otherwise dispose of, or encumber, or
agree to sell, transfer, mortgage, pledge or otherwise dispose of or
encumber, any material assets or properties, real, personal or mixed, except
in the ordinary course of business, in the case of Parent and the Active
Parent Subsidiaries;
(f) increase in any manner the compensation of any of its officers,
agents or employees other than any increases required pursuant to their
employment agreements in accordance with their terms in effect on the date
of this Restated Agreement and increases in the ordinary course of business
consistent with past practice not in excess on an individual basis of the
lesser of 10% of the current compensation of such individual or $10,000 per
annum;
(g) enter into, establish, amend, make non-routine or material
interpretations or determinations with respect to, or terminate any
employment, consulting, retention, change in control, collective bargaining,
bonus or other incentive compensation, profit sharing, health or other
welfare, stock option, stock purchase, restricted stock, or other equity,
pension, retirement, vacation, severance, deferred compensation or other
compensation or benefit plan, policy, agreement, trust, fund or arrangement
with, for or in respect of, any shareholder, officer, director, other
employee, agent, consultant or affiliate, other than actions contemplated by
this Restated Agreement, the Restated Company Agreement and the Restated Web
Agreement;
(h) make any elections with respect to Taxes that are inconsistent with
the prior elections reflected in the Financial Statements as of and to the
period ended December 31, 1998;
(i) except with regard to the Xxxxxxx matter referenced on SCHEDULE 3.7
attached hereto, compromise, settle, grant any waiver or release relating to
or otherwise adjust any Litigation, except routine Litigation in the
ordinary course of business consistent with past practice, involving only a
payment not in excess of $50,000 individually or $100,000 when aggregated
with all such payments by Big Stuff or by Parent and the Active Parent
Subsidiaries combined, as the case may be;
(j) take any action or omit to take any action, which action or omission
would result in a breach of any of the covenants, representations and
warranties of Big Stuff, the Big Stuff Shareholders or Parent or the Active
Parent Subsidiaries set forth in this Restated Agreement or would have a Big
Stuff Material Adverse Effect, with regard to Big Stuff and the Big Stuff
Shareholders, or a Parent Material Adverse Effect, with regard to Parent and
the Active Parent Subsidiaries;
(k) except in the ordinary course of business enter into any lease or
other agreement, or amend any lease or other agreement, with respect to real
property;
(l)
(i) except as set forth in SECTION 6.6(l)(ii) or SECTION 11.1 OR 11.2
hereof, enter into or amend any agreement or transaction (A) pursuant to
which the aggregate financial obligation of Big Stuff, or of Parent or an
Active Parent Subsidiary, as the case may be, or the value of the
services to be provided could exceed $50,000, (B) having a term of more
than twelve (12) months and pursuant to which the aggregate financial
obligation of Big Stuff, or of Parent or an Active Parent Subsidiary, as
the case may be, or the value of the services to be provided could exceed
$100,000 per year, or (C) which is not terminable by Big Stuff or Parent
or the Active Parent Subsidiaries, as the case may be, upon no more than
thirty (30) days' notice without penalty in excess of $50,000
individually or $100,000 when aggregated with the penalties under all
such agreements or transactions;
(ii) The parties hereto expressly agree that, notwithstanding
anything in this Restated Agreement to the contrary, Parent may modify,
amend or waive its rights, including those respecting its indemnification
obligations, under (A) the Ionex Agreement referenced on SCHEDULE 3.13
attached hereto; (B) the Restated Company Agreement; and (C) the Restated
C-24
Web Agreement; PROVIDED, that such modifications, amendments and/or
waivers do not, or would not reasonably be expected to, materially
increase Parent's obligations or materially adversely affect Parent's
rights under each respective agreement, or otherwise materially affect
the consideration to be received under each respective agreement.
(m) except as set forth in SECTION 6.6(l)(ii) hereof, take any action
with respect to the indemnification of any Person;
(n) change any accounting practices or policies, except as required by
generally accepted accounting principles or Laws or as agreed to or
requested by Big Stuff's or Parent's auditors after consultation with
Parent's or Big Stuff's auditors, as the case may be; PROVIDED, HOWEVER,
that notice and a description of any change pursuant to this SECTION 6.6(n)
shall be provided promptly after such change is effected to Big Stuff or
Parent, as the case may be;
(o) except as set forth in SECTION 6.6(l)(ii) hereof, or except in the
ordinary course of business, enter into, amend, modify, terminate or waive
any rights under any contract which would result in a Big Stuff Material
Adverse Effect, with respect to Big Stuff, or a Parent Material Adverse
Effect, with respect to Parent;
(p) adopt a plan of liquidation, dissolution, merger, consolidation,
share exchange, restructuring, recapitalization, or other reorganization;
PROVIDED, HOWEVER, that Parent may adopt such a plan and may cause the
liquidation or dissolution of any Parent subsidiary if Parent is unable to
sell such Parent subsidiary (i) at a price which Parent determines to be
reasonable, and (ii) during a time period which Parent determines to be
reasonable; PROVIDED, FURTHER, HOWEVER, that if Parent adopts such a plan or
causes such liquidation or dissolution, Parent promptly shall provide to Big
Stuff notice of such adoption, liquidation or dissolution, as the case may
be; or
(q) resolve, agree, commit or arrange to do any of the foregoing.
Notwithstanding anything in this SECTION 6.6 to the contrary, it is
understood that Big Stuff has been accelerating and intensifying its business
activities since March 31, 1999 and will continue to do so. Accordingly,
(x) "ordinary course of business" and "consistent with past practice", as used
in this SECTION 6.6 with respect to Big Stuff, shall be interpreted to include
such acceleration and intensification; and (y) in considering requests for
consent from Big Stuff, Parent shall take into account such acceleration and
intensification.
Furthermore, Parent covenants, represents and warrants that from and after
the date hereof, unless Big Stuff shall otherwise expressly consent in writing,
Parent shall use its reasonable business efforts to:
(1) keep in full force and effect insurance comparable in amount and
scope of coverage to insurance now carried by it;
(2) pay all accounts payable and other obligations consistent with
prudent cash management principles, except if the same are contested in good
faith, and, in the case of the failure to pay any material accounts payable
or other obligations which are contested in good faith, only after
consultation with Big Stuff; and
(3) comply in all material respects with all Laws applicable to it or
any of its properties, assets or business, except for such Laws the failure
to comply with which would not have a Parent Material Adverse Effect and
maintain in full force and effect all Parent Permits necessary for, or
otherwise material to, such business, except for such Parent Permits the
failure of which to maintain in full force and effect would not have a
Parent Material Adverse Effect.
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Furthermore, Big Stuff covenants, represents and warrants that from and
after the date hereof, unless Parent shall otherwise expressly consent in
writing, Big Stuff shall use its or their reasonable business efforts to:
(1) keep in full force and effect insurance comparable in amount and
scope of coverage to insurance now carried by it;
(2) pay all accounts payable and other obligations, when they become due
and payable, in the ordinary course of business consistent with past
practice and with the provisions of this Restated Agreement, except if the
same are contested in good faith, and, in the case of the failure to pay any
material accounts payable or other obligations which are contested in good
faith, only after consultation with Parent; and
(3) comply in all material respects with all Laws applicable to it or
any of its properties, assets or business, and maintain in full force and
effect all Big Stuff Permits necessary for, or otherwise material to, such
business.
6.7 NO SOLICITATION OF ACQUISITION PROPOSAL. Unless Parent, Big Stuff and
the Big Stuff Shareholders shall otherwise agree in advance, in writing, neither
the Big Stuff Shareholders, Big Stuff, Parent nor any of their Associates shall,
directly or indirectly, make, encourage, facilitate, solicit, assist or initiate
any inquiry or proposal, or provide any information to or participate in any
negotiations with, any Person or group other than the parties to this Restated
Agreement and their Associates relating to any of the following transactions
("EXTRAORDINARY TRANSACTIONS"): (i) liquidation, dissolution, recapitalization,
share exchange, business combination, merger or consolidation of Big Stuff or
Parent or an Active Parent Subsidiary; (ii) sale of a significant amount of
assets of Big Stuff or Parent or an Active Parent Subsidiary; (iii) purchase or
sale of shares of capital stock of Big Stuff or Parent or an Active Parent
Subsidiary; or (iv) any similar actions or transactions involving Big Stuff or
Parent or an Active Parent Subsidiary (other than the Merger and the
transactions contemplated by this Restated Agreement, the Restated Company
Agreement and the Restated Web Agreement), or agree to or consummate any
Extraordinary Transaction. Each of Parent and Big Stuff shall immediately inform
the other party of any inquiry, proposal, or request for information or offer
(including the terms thereof and the Person making such inquiry, proposal,
request or offer) which it may receive in respect of an Extraordinary
Transaction and provide the other party with a copy of any such written
inquiries, proposals, requests for information and offers, and thereafter keep
the other party fully informed of the status and details thereof. The parties
hereto acknowledge and agree that the provisions of this SECTION 6.7 shall not
apply to: (a) the sale of the CLEC Operations by Parent or any Active Parent
Subsidiary; or (b) to the acquisition of Web or the Company; or (c) any
communications between or actions by Parent (or any Parent subsidiary), the
Company and ICL, acting jointly, on the one hand, and any Person not a party to
this Restated Agreement, on the other hand, which occurred prior to the date
that this Restated Agreement becomes effective pursuant to SECTION 1.2 hereof.
6.8 RESIGNATIONS. Big Stuff shall use its reasonable best efforts to cause
the officers and/or directors of Big Stuff as Parent may request to voluntarily
resign their positions as such effective as of the Closing Date. The instruments
effecting such resignations are herein referred to as the "RESIGNATIONS."
6.9 CONFIDENTIALITY. Unless (i) otherwise expressly provided in this
Restated Agreement, (ii) required by applicable Law or any listing agreement
with, or the rules and regulations of, any applicable securities exchange,
(iii) necessary to secure any required Consents as to which the other party has
been advised, or (iv) consented to in writing by Parent and Big Stuff, this
Restated Agreement and any information or documents furnished in connection with
this Restated Agreement, the June 3 Big Stuff YP Agreement or the
Confidentiality Agreement dated April 11, 1999 by and among Parent, the Company,
Big Stuff, Web and X'Xxxx shall be kept strictly confidential by Big Stuff,
Parent and their respective officers, directors, employees and agents. Prior to
any disclosure pursuant to
C-26
the preceding sentence, the party intending to make such disclosure shall
consult with the other party regarding the nature and extent of the disclosure.
Nothing contained herein shall preclude disclosures to the extent necessary to
comply with accounting, SEC and other disclosure obligations imposed by
applicable Law. To the extent required by such disclosure obligations, Parent,
after consultation with Big Stuff, may file with the SEC a Report on Form 8-K
pursuant to the Securities Exchange Act with respect to the Merger, which report
may include, among other things, financial statements and pro forma financial
information with respect to the other party. In connection with any filing with
the SEC of a registration statement or amendment thereto under the Securities
Act, Parent, after consultation with Big Stuff, may include a prospectus
containing any information required to be included therein with respect to the
Merger, including, but not limited to, financial statements and pro forma
financial information with respect to the other party, and thereafter distribute
said prospectus. Parent and Big Stuff shall cooperate with the other and provide
such information and documents as may be required in connection with any such
filings. In the event the Merger is not consummated, Parent and Big Stuff shall
return to the other all documents furnished by the other and will hold in
absolute confidence any information obtained from the other party except to the
extent (i) such party is required to disclose such information by Law or such
disclosure is required by discovery, subpoena or other similar legal process in
a proceeding involving a third Person; (ii) such party received such information
on a non-confidential basis from a source, other than the other party, which is
not known by such party to be bound by a confidentiality obligation with respect
thereto; or (iii) such information becomes generally available to the public or
is otherwise no longer confidential. Prior to any disclosure of information
pursuant to the exception in clause (i) of the preceding sentence, the party
intending to disclose the same shall so notify, in writing, the party which
provided the same in order that such party may seek a protective order or other
appropriate remedy should it choose to do so.
6.10 OPTIONS; STOCK ISSUANCES. The Board of Directors of Parent shall have
the right to grant or issue, as the case may be, (i) restricted stock or options
to acquire shares of Parent Common Stock pursuant to the Parent's 1997 Stock
Awards Plan, provided that no more than the number of shares authorized under
the 1997 Stock Awards Plan have been issued; (ii) restricted stock valued at or
warrants to purchase up to 90,000 shares of Parent Common Stock to be issued to
certain non-employee directors of Parent who were responsible for negotiating
the June 3 Big Stuff Agreement at an exercise price of $6.96 per share, the
Restated Company Agreement and the Restated Web Agreement; (iii) the shares of
Parent Common Stock issuable upon conversion at Closing of the Great Western
Notes at a conversion price of $5.50 per share; (iv) up to 1,090,909 shares of
Parent Common Stock issuable upon conversion of one or more notes which may be
issued to the Big Stuff Shareholders who may lend up to Six Million Dollars
($6,000,000.00) to Big Stuff or Web as provided in this Restated Agreement, at a
conversion price of $5.50 per share; (v) shares of Parent Common Stock to be
issued upon exercise of options or warrants to be granted at Closing to those
Persons designated by Company in the Restated Company Agreement; (vi) those
shares of Parent Common Stock issuable upon exercise of previously granted
options; and (vii) one (1) share of Parent Class B Voting Preferred Stock to be
issued to the trustee under the Exchange and Voting Trust Agreement.
C-27
ARTICLE VII--CONDITIONS TO CLOSING
7.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO CLOSING. The respective
obligations of each party to consummate this Restated Agreement and effect the
Merger shall be subject to the satisfaction or waiver at or prior to the Closing
Date of the following conditions:
(a) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No temporary restraining
order, preliminary or permanent injunction or other order issued by any
court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger shall be in effect, nor shall any
proceeding brought by an administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, seeking any
of the foregoing be pending; nor shall there be any action taken, or any
statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Merger, which makes the consummation of the Merger
illegal.
(b) OTHER AGREEMENTS. The Restated Company Agreement and the Restated
Web Agreement and all documents related to the Restated Company Agreement
and the Restated Web Agreement shall have been duly executed and delivered
by all parties thereto and shall be in full force and effect.
(c) EMPLOYMENT AND NON-COMPETITION AGREEMENTS. The Employment and
Non-Competition Agreements described in SECTION 6.2 hereof shall have been
duly executed and delivered by all parties thereto and shall be in full
force and effect.
(d) GOVERNMENT APPROVALS. Except for those Consents the failure of
which to be obtained, (i) in the reasonable judgment of Parent, would not
have a Parent Material Adverse Effect or a Big Stuff Material Adverse
Effect, and (ii) in the reasonable judgment of Big Stuff, would not have a
Big Stuff Material Adverse Effect or a Parent Material Adverse Effect, all
Consents of any domestic or foreign Governmental Authority required for the
consummation of the Merger shall have been obtained by Final Order.
(e) RELATED TRANSACTIONS. (i) The acquisition by Parent, or a direct
or indirect subsidiary of Parent, of Big Stuff and Web in a tax-free
reorganization shall have been consummated prior to or simultaneously with
the acquisition of the Company and any registration statement(s) required
for the registration of Parent Common Stock issued to the Big Stuff
Shareholders, the Company shareholders and the shareholders of Web as
consideration in connection with the acquisition of Big Stuff, the Company
and Web by Parent shall have been declared effective, (ii) no stop order
suspending the effectiveness of such registration statement(s) shall have
been issued and no proceeding for that purpose shall have been initiated or
threatened by the SEC or any other Governmental Authority, and (iii) the
Great Western Notes shall have been satisfied by the issuance of Parent
Common Stock to the Great Western Shareholders.
(f) FINANCING. Parent and Big Stuff shall have received from their
lenders an extension of all of their and their subsidiaries' debt owing by
them on terms and conditions satisfactory to Parent and Big Stuff or all
such debts shall be refinanced on terms satisfactory to Parent and Big Stuff
or any consents and approvals required from such lenders is received.
(g) SHAREHOLDER APPROVAL. All necessary approvals of the Big Stuff
Shareholders and the shareholders of Parent in connection with the Merger
shall have been obtained.
(h) REQUIRED CONSENTS. Any required Consents of any Person to the
Merger or the transactions contemplated by this Restated Agreement shall
have been obtained on terms and conditions reasonably acceptable to Parent
and Big Stuff and be in full force and effect, except for those the failure
of which to obtain, in the reasonable judgment of Parent and Big Stuff,
would not have a Parent Material Adverse Effect or a Big Stuff Material
Adverse Effect.
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(i) HSR ACT. Any waiting period applicable to the Merger under the HSR
Act shall have expired or earlier termination thereof shall have been
granted and no action shall have been instituted by either the United States
Department of Justice or the Federal Trade Commission to prevent the
consummation of the transactions contemplated by this Restated Agreement or
to modify or amend such transactions in any material manner, or if any such
action shall have been instituted, it shall have been withdrawn or a final
judgment shall have been entered against such Department or Commission, as
the case may be.
(j) REGISTRATION STATEMENT(S). The Registration Statement(s) shall
have been declared effective and no stop order suspending the effectiveness
of the Registration Statement(s) shall have been issued and no proceeding
for that purpose shall have been initiated or threatened by the SEC or any
Governmental Authority, whether state or federal.
(k) BLUE SKY. Parent shall have received all state securities Law
authorizations necessary to consummate the transactions contemplated hereby.
(l) FAIRNESS OPINION. The written opinion received by Parent's Board
of Directors from its financial advisors, PaineWebber Incorporated, pursuant
to SECTION 1.2 hereof shall not have been withdrawn.
(m) TAX OPINION. Parent shall have received an opinion from Xxxxxxxxx
Xxxxxxx Xxxxx Xxxxxx LLP based on customary representations contained in
certificates of Parent, to the effect that, if the Merger is consummated in
accordance with the provisions of this Restated Agreement, the Merger will
qualify as a tax-free reorganization within the meaning of the Code.
(n) NYSE LISTING APPROVAL. Parent shall have received from the NYSE
approval for listing with the NYSE of the Parent Common Stock to be issued
pursuant to this Restated Agreement, the Restated Company Agreement and the
Restated Web Agreement.
(o) SALE OF CLEC OPERATIONS. The sale of the CLEC Operations,
contemplated under the Ionex Agreement referenced on SCHEDULE 3.13 hereof,
shall have closed.
7.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF BIG STUFF SHAREHOLDERS AND BIG
STUFF. The obligations of the Big Stuff Shareholders and Big Stuff to
consummate and effect this Restated Agreement and the transactions contemplated
hereby shall be subject to the satisfaction at or prior to the Closing Date of
each of the following conditions, any of which may be waived, in writing,
exclusively by Big Stuff:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS.
(i) The representations and warranties of Parent in this Restated
Agreement that are modified by materiality or Parent Material Adverse
Effect ("PARENT MODIFIED REPRESENTATION") shall be true and correct in
all respects and those that are not so modified ("PARENT NONMODIFIED
REPRESENTATION") shall be true and correct in all material respects on
the date hereof and, except for changes not prohibited by this Restated
Agreement, as of the Closing Date as if made at the Closing Date.
Furthermore, none of the representations or warranties of Parent
contained in this Restated Agreement, disregarding any qualifications
therein or in this SECTION 7.2(a) regarding materiality or Parent
Material Adverse Effect, shall be untrue or incorrect to the extent that
such untrue or incorrect representations or warranties, when taken
together as a whole, have had or would have a Parent Material Adverse
Effect; and
(ii) Parent shall have performed and complied with all of the
covenants and agreements in all material respects and satisfied in all
material respects all of the conditions required by this Restated
Agreement to be performed or complied with or satisfied by Parent at or
prior to the Closing Date. Notwithstanding anything in this Restated
Agreement to the contrary, the parties hereto acknowledge and agree that
the consummation of the transactions contemplated by this Restated
Agreement and the subsequent disposition of the CLEC Operations
C-29
constitutes a significant change from the plans and strategies described
in the 1998 10-K such that the representations and warranties of Parent
that reference the 1998 10-K will not be true and correct as of the
Closing Date as they relate to the plans and strategies of the business
of Parent at the Closing Date.
(b) CERTIFICATE OF PARENT AND OTHER DELIVERIES. Big Stuff shall have
been provided, with (i) a certificate executed on behalf of Parent by an
Officer to the effect that, as of the Closing Date, all representations and
warranties made by Parent under this Restated Agreement are true and
complete except as qualified by SECTION 7.2(a)(i) hereof; and all covenants,
obligations and conditions of this Restated Agreement to be performed by
Parent on or before such date have been so performed; (ii) a certificate of
good standing from the Secretary of State of the State of Delaware that
Parent is a validly existing corporation; (iii) duly adopted resolutions of
the Board of Directors of Parent approving the execution, delivery and
performance of this Restated Agreement and the Parent Transaction Agreements
to which it is a party and the instruments contemplated hereby and thereby,
certified by its Secretary or Assistant Secretary; and (iv) such other
documents and instruments as Big Stuff may reasonably request.
(c) SHAREHOLDER APPROVAL. Big Stuff shall have received from Parent's
transfer agent a certificate indicating that a sufficient number of Parent's
shareholders voted to approve the Merger such that the Merger was deemed
approved by the Parent shareholders.
(d) LEGAL OPINION. Big Stuff shall have received a legal opinion of
Xxxxxxxxx Xxxxxxx Xxxxx Xxxxxx LLP, legal counsel to Parent, in a form to be
agreed upon by the parties hereto, acting reasonably.
(e) NO MATERIAL ADVERSE CHANGE. There shall not have occurred after
the date hereof any Event that has or reasonably could be expected to have a
Parent Material Adverse Effect.
(f) LITIGATION. Except as set forth on SCHEDULE 3.7 attached hereto,
there shall be no action, suit, claim or proceeding of any nature pending,
or overtly threatened, against Parent, its properties or any of its officers
or directors, arising out of, or in any way connected with, the Merger or
the other transactions contemplated by the terms of this Restated Agreement
which individually or in the aggregate may cause a Parent Material Adverse
Effect.
7.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF PARENT. The obligations of
Parent to consummate and effect this Restated Agreement and the transactions
contemplated hereby shall be subject to the satisfaction at or prior to the
Closing Date of each of the following conditions, any of which may be waived, in
writing, exclusively by Parent:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS.
(i) The representations and warranties of Big Stuff and the Big Stuff
Shareholders contained in this Restated Agreement that are modified by
materiality or Big Stuff Material Adverse Effect ("BIG STUFF MODIFIED
REPRESENTATION") shall be true and correct in all respects, and those
that are not so modified ("BIG STUFF NONMODIFIED REPRESENTATION") shall
be true and correct in all material respects, on the date hereof and,
except for changes not prohibited by this Restated Agreement, as of the
Closing Date as if made at the Closing Date. Furthermore, none of the
representations or warranties of Big Stuff or the Big Stuff Shareholders
contained in this Restated Agreement, disregarding any qualifications
therein or in this SECTION 7.3(a) regarding materiality or Big Stuff
Material Adverse Effect, shall be untrue or incorrect to the extent that
such untrue or incorrect representations or warranties, when taken
together as a whole, have had or would have a Big Stuff Material Adverse
Effect; and
C-30
(ii) Big Stuff and the Big Stuff Shareholders shall have performed
and complied with all the covenants and agreements in all material
respects and satisfied in all material respects all the conditions
required by this Restated Agreement to be performed or complied with or
satisfied by Big Stuff and the Big Stuff Shareholders at or prior to the
Closing Date.
(b) CERTIFICATE OF BIG STUFF AND OTHER DELIVERIES. Parent shall have
been provided with (i) a certificate executed on behalf of Big Stuff by its
Chief Executive Officer to the effect that, as of the Effective Time all
representations and warranties made by Big Stuff in this Restated Agreement
are true and correct, except as qualified by SECTION 7.3(a)(i) hereof, and
all covenants, obligations and conditions of this Restated Agreement to be
performed by Big Stuff and the Big Stuff Shareholders on or before such date
have been so performed; (ii) a certificate of good standing from the proper
authority in the jurisdictions in which Big Stuff is incorporated or
qualified to do business stating that each is a validly existing corporation
in good standing; (iii) duly adopted resolutions of the Big Stuff Board of
Directors and Big Stuff Shareholders approving the execution, delivery and
performance of this Restated Agreement and the Big Stuff Transaction
Agreements to which Big Stuff is a party and the instruments contemplated
hereby and thereby, certified by the Secretary or Assistant Secretary of Big
Stuff; (iv) a true and complete copy of the Articles or Certificate of
Incorporation or comparable governing instruments, as amended, of Big Stuff
certified by the Secretary of State of the state of incorporation or
comparable authority in other jurisdictions, and a true and complete copy of
the Bylaws or comparable governing instruments, as amended, of Big Stuff
certified by the Secretary thereof; (v) the duly executed Resignations on
terms and conditions reasonably acceptable to Parent; and (vi) such other
documents and instruments as Parent reasonably may request.
(c) LEGAL OPINION. Parent shall have received a legal opinion from
Xxxxxxxxx & Falconer LLP, legal counsel to Big Stuff, in a form to be agreed
upon by the parties hereto, acting reasonably.
(d) LITIGATION. There shall be no action, suit, claim or proceeding of
any nature pending, or overtly threatened, against Big Stuff, its respective
properties or any of its officers or directors, arising out of, or in any
way connected with, the Merger or the other transactions contemplated by the
terms of this Restated Agreement which individually or in the aggregate may
cause a Big Stuff Material Adverse Effect.
(e) NO MATERIAL ADVERSE CHANGE. There shall have not occurred after
the date hereof any Event that has or reasonably could be expected to have a
Big Stuff Material Adverse Effect.
(f) AFFILIATE AGREEMENTS. At least thirty (30) days prior to the
Effective Time, Parent shall have received the duly executed Affiliate
Agreements.
ARTICLE VIII--TERMINATION AND ABANDONMENT
8.1 TERMINATION. This Restated Agreement may be terminated and the Merger
contemplated hereby may be abandoned at any time prior to the Closing Date only
as follows, whether before or after approval by the Big Stuff Shareholders:
(a) by mutual written consent of Big Stuff and Parent, duly authorized
by the Board of Directors of each;
(b) by Big Stuff or Parent if the Closing shall not have occurred on or
before January 31, 2000, as such date may be extended pursuant to
SECTION 1.2(b) hereof (or such other date as may be agreed to by Big Stuff
and Parent); PROVIDED, THAT, no party may terminate this Restated Agreement
under this SECTION 8.1(b) if such party's breach of this Restated Agreement
has caused or resulted in the failure of the Closing to occur on or before
such date;
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(c) by Big Stuff if (i) there are any breaches of any Parent Modified
Representation or any material breaches of any Parent Nonmodified
Representation, or (ii) Parent has breached or failed to perform,
notwithstanding satisfaction or due waiver of all conditions thereto, any of
its material covenants or agreements contained herein as to which notice
specifying such breach or failure has been given to Parent promptly after
the discovery thereof and Parent has failed to cure or otherwise resolve the
same to the reasonable satisfaction of Big Stuff within thirty (30) days
after receipt of such notice;
(d) by Parent if (i) there are any breaches of any Big Stuff Modified
Representations or any material breaches of any Big Stuff Nonmodified
Representations, or (ii) Big Stuff has breached or failed to perform,
notwithstanding satisfaction or due waiver of all conditions thereto, any of
its material covenants or agreements contained herein as to which notice
specifying such breach or failure has been given to Big Stuff promptly after
the discovery thereof and Big Stuff has failed to cure or otherwise resolve
the same to the reasonable satisfaction of Parent within thirty (30) days
after receipt of such notice;
(e) by Big Stuff or Parent if a court of competent jurisdiction or other
Governmental Authority shall have issued an order, decree or ruling or taken
any other action permanently restraining, enjoining or otherwise prohibiting
the Merger, the Restated Company Agreement or any of the transactions
contemplated by this Restated Agreement or such other agreements and such
order, decree, ruling or other action shall have become final and
nonappealable;
(f) (i) by Big Stuff if the stockholders of Parent fail to approve and
adopt the Merger or the issuance of the Parent Common Stock pursuant to this
Restated Agreement or the other transactions contemplated or otherwise
referenced herein or therein, as applicable, at the meeting duly convened
therefor;
(f)(ii) by Parent if the stockholders of Parent fail to approve and
adopt the Merger pursuant to this Restated Agreement or the other
transactions contemplated or otherwise referenced herein or therein, as
applicable;
(g) by Parent, if Big Stuff or its Board of Directors breaches any
provision of SECTION 6.7; or
(h) by Big Stuff, if Parent or its Board of Directors breaches any
provision of SECTION 6.7;
The party desiring to terminate this Restated Agreement pursuant to this
SECTION 8.1 shall give written notice of such termination to the other party in
accordance with SECTION 11.1 below.
8.2 PROCEDURE UPON TERMINATION. In the event of termination pursuant to
this ARTICLE VIII, the Merger shall be abandoned without further action by Big
Stuff or Parent, provided that the obligations of the applicable parties to this
Restated Agreement contained in ARTICLE IX and SECTION 6.9 hereof shall remain
in full force and effect. If this Restated Agreement is terminated as provided
herein, each party shall use its reasonable best efforts to redeliver all
documents, work papers and other material (including any copies thereof) of any
other party relating to the transactions contemplated hereby, whether obtained
before or after the execution hereof, to the party furnishing the same. Nothing
contained in this Restated Agreement shall relieve any party from any liability
for any inaccuracy, misrepresentation or breach of this Restated Agreement prior
to termination.
ARTICLE IX--SURVIVAL OF REPRESENTATIONS
AND WARRANTIES; INDEMNIFICATION
9.1 INDEMNIFICATION BY THE BIG STUFF SHAREHOLDERS.
(a) If the Closing has occurred, subject to the terms and conditions of
this ARTICLE IX, the Big Stuff Shareholders shall indemnify Parent, and its
officers, directors, agents and representatives (THE "INDEMNITEES"), from
and in respect of, and hold the Indemnitees harmless against, any and
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all damages, fines, penalties, losses, liabilities, excise and other taxes,
judgments, and deficiencies (including without limitation amounts paid in
settlement and interest and reasonable out-of-pocket legal and accounting
fees), but which amount shall be offset or reduced by the amount of any
insurance proceeds received by Parent in respect of any of the foregoing,
incurred or suffered by any of the Indemnitees ("DAMAGES") resulting from,
relating to or in connection with any misrepresentation or breach of
warranty of the Big Stuff Shareholders contained in this Restated Agreement.
(b) The Big Stuff Shareholders acknowledge that their indemnification
obligations hereunder are solely in their capacity as former shareholders of
Big Stuff, and, accordingly, the indemnification obligations in this
ARTICLE IX shall not entitle any Big Stuff Shareholder who was or is a
current or former officer, director or employee of Big Stuff to any
indemnification from Big Stuff pursuant to the organizational or governing
documents of Big Stuff or pursuant to this Restated Agreement.
9.2 METHOD OF ASSERTING CLAIMS.
(a) Prior to the date (THE "REPORT DATE") that is thirty (30) days after
the completion of Parent's audit report by Parent's independent auditors for
the fiscal year ended December 31, 1999, each Indemnitee shall give written
notice (THE "CLAIM NOTICE") to the Representative, as agent for the Big
Stuff Shareholders, of any and all claims or events known to it which gives
rise to a claim for indemnification hereunder by the Indemnitee against the
Big Stuff Shareholders (AN "INDEMNIFIABLE CLAIM"). The Claim Notice shall
specify the nature and estimated amount of such claimed Damages (THE
"CLAIMED AMOUNT"). In the case of any claim for indemnification hereunder
arising out of a claim, action, suit or proceeding brought by any Person who
is not a party to this Restated Agreement (A "THIRD-PARTY CLAIM"), prior to
the Report Date, the Indemnitee also shall give the Representative, as agent
for the Big Stuff Shareholders, copies of any written claims, process or
legal pleadings with respect to such Third-Party Claim.
(b) Within forty-five (45) days after delivery of a Claim Notice, the
Representative shall notify the Parent in writing of his objections, if any,
to the claim. If the Representative has no objections to the claim, the
Representative shall remit to the Parent the Claimed Amount within thirty
(30) days. If the Representative has objections to the claim, the
Representative and the Indemnitee shall proceed in good faith to negotiate a
resolution of the dispute regarding the claim, and, if not resolved through
negotiations, such dispute shall be resolved by litigation in an appropriate
court of competent jurisdiction.
9.3 THIRD PARTY CLAIMS.
(a) Except as otherwise provided in paragraph (c) below, the
Representative, as agent for the Big Stuff Shareholders, may elect to
compromise or defend, at the Big Stuff Shareholders' own expense and by the
Big Stuff Shareholders' own counsel reasonably satisfactory to the
Indemnitee, any Third-Party Claim; provided that (i) the Representative
provides the Indemnitee with reasonable evidence that the Big Stuff
Shareholders will have the financial resources to defend against such claim
and fulfill their indemnification obligations hereunder; and (ii) the giving
of a Defense Notice (as defined below) by the Representative shall
constitute an acknowledgment by the Big Stuff Shareholders of their
obligation to indemnify the Indemnitee with respect to such Third-Party
Claim in accordance with the terms of this ARTICLE IX. If the
Representative, as agent for the Big Stuff Shareholders, elects to
compromise or defend a Third-Party Claim, the Representative shall, within
thirty (30) days of its receipt of the notice provided pursuant to
SECTION 9.2(a) hereof (or sooner, if the nature of such Third-Party Claim so
requires), notify the related Indemnitee of its intent to do so (A "DEFENSE
NOTICE"), and such Indemnitee shall reasonably cooperate in the compromise
of, or defense against, such Third-Party Claim. The Big Stuff Shareholders
shall be responsible for the payment of such Indemnitee's actual
out-of-pocket
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expenses (other than legal and accounting fees) incurred in connection with
such cooperation, and such expenses shall constitute Damages incurred or
suffered by Parent within the meaning of SECTION 9.1(a) hereof. After notice
from the Representative, as agent for the Big Stuff Shareholders, to an
Indemnitee of its election to assume the defense of a Third-Party Claim, the
Big Stuff Shareholders shall not be liable to such Indemnitee under this
ARTICLE IX for any legal expenses subsequently incurred by such Indemnitee
in connection with the defense thereof. If the Representative, as agent for
the Big Stuff Shareholders, elects not to compromise or defend against a
Third-Party Claim, or fails to notify an Indemnitee of its election as
provided in this SECTION 9.3, such Indemnitee may pay, compromise or defend
such Third-Party Claim on behalf of and for the account and risk of the Big
Stuff Shareholders (and any amount paid or expenses incurred in connection
therewith shall constitute Damages incurred or suffered by Parent within the
meaning of SECTION 9.1(a) hereof). The Representative may not consent to
entry of any judgment or enter into any settlement without the written
consent of each related Indemnitee (which consent shall not be unreasonably
withheld), unless such judgment or settlement provides solely for money
damages or other money payments for which such Indemnitee is entitled to
indemnification hereunder and includes as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnitee of a release from all
liability in respect of such Third-Party Claim.
(b) In respect of any claim, action, suit or proceeding brought by a
taxing authority in respect of Taxes for which the Big Stuff Shareholders
may be required to indemnify the Parent (A "TAX CLAIM"), the Representative,
as agent for the Big Stuff Shareholders, shall have the sole right to
control any Tax Claim, provided, however, that the Representative shall
provide the Indemnitee with copies of all correspondence with any taxing
authority in connection with any such Tax Claim and shall keep the
Indemnitee reasonably informed of all progress with such taxing authority,
and provided further that the Representative shall consult with the
Indemnitee in good faith in contesting any proposed adjustment and shall
consider any reasonable advice from the Indemnitee concerning such Tax Claim
so long as the Representative, as agent for the Big Stuff Shareholders,
shall (subject to the immediately following sentence) ultimately be entitled
to control any such Tax Claim concerning any indemnity obligation of the Big
Stuff Shareholders. The Representative shall not be entitled to compromise
or settle any Tax liability of the Company for any pre-Closing Period that
would have the effect of materially decreasing the Company's deductions for
credits or materially increasing the Company's taxable income for any
taxable year or period subsequent to the pre-Closing Period without the
prior written consent of Parent, which consent shall not be unreasonably
withheld. Parent will cooperate fully with Representative in defending any
Tax Claim.
(c) If there is a reasonable likelihood that a Third-Party Claim may
have a material adverse effect on an Indemnitee, other than as a result of
money damages or other money payments for which such Indemnitee is entitled
to indemnification hereunder, such Indemnitee will have the right, after
consultation with the Representative, and at the cost and expense of the Big
Stuff Shareholders (which costs and expenses, other than legal and
accounting fees, shall constitute Damages within the meaning of
SECTION 9.1(a) hereof to the extent provided therein), to defend such
Third-Party Claim. If the Third-Party Claim involves a third party with whom
Parent has a significant on-going or prospective relationship, the
Indemnitee will have the right, after consultation with the Representative,
and at the cost and expense of the Big Stuff Shareholders (which costs and
expenses, other than legal and accounting fees, shall constitute Damages
within the meaning of SECTION 9.1(a) hereof to the extent provided therein),
to defend such Third-Party Claim; provided that the Big Stuff Shareholders
shall not be obligated to pay Damages to the extent it is determined (by
agreement between the Representative and Indemnitees or by arbitration or
court judgment) that the Third-Party Claim was settled on terms that were
not fair and reasonable to the Indemnitors.
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9.4 SURVIVAL. The representations and warranties of Big Stuff set forth in
this Restated Agreement shall survive the Closing and shall continue until the
Report Date. The representations and warranties shall not be affected by any
examination made for or on behalf of Parent or the knowledge of any of Parent's
officers, directors, stockholders, employees or agents, except that the
representations and warranties are qualified by the matters disclosed in the
Disclosure Schedules to the representations and warranties of Big Stuff and the
Big Stuff Shareholders contained in ARTICLE II hereof and Parent agrees that
Parent has knowledge of such matters. Notwithstanding anything to the contrary
herein, if a claim for indemnification is made before the expiration of the
periods of survival set forth above in this SECTION 9.4, then (notwithstanding
the expiration of such time period) the representation or warranty applicable to
such claim shall survive until, but only for purposes of, the resolution of such
claim.
9.5 LIMITATIONS.
(a) The Big Stuff Shareholders shall not be liable under this
ARTICLE IX unless and until the aggregate amount of Damages incurred or
suffered by Indemnitees exceeds $100,000, (at which point the Big Stuff
Shareholders shall become liable for the entire amount of such Damages in
excess of $75,000). For purposes of the preceding sentence, no independent
claims of less than $1,000 may be made; PROVIDED, HOWEVER, that all claims
arising out of a common set of facts shall be aggregated for purposes of
determining whether the $1,000 threshold has been met.
(b) The Big Stuff Shareholders' liability under this ARTICLE IX shall
not exceed $400,000.
The Big Stuff Shareholders may, at their option, satisfy their
indemnification obligations under this Restated Agreement by (i) the payment of
that amount of cash sufficient to satisfy such indemnification claim, but in any
event not exceeding the amount set forth in SECTION 9.5(b) hereof, and subject
to the provisions of SECTION 9.5(a) hereof; or (ii) the delivery of stock
certificates representing that number of shares of Parent Common Stock
sufficient to satisfy such indemnification claim, the value of which shall be
determined in accordance with SECTION 9.5(d) hereof; PROVIDED, HOWEVER, that any
stock certificates delivered in satisfaction of an indemnification claim must be
delivered to Parent within three (3) business days following (as applicable)
(A) the date calculated in accordance with SECTION 9.2 or SECTION 9.3 hereof, if
the claim is not in dispute; (B) resolution of such indemnification claim,
whether prior to or following commencement of litigation; or (C) the entry of a
final and non-appealable judgment by a court of competent jurisdiction.
(d) The parties hereto agree that, for purposes of valuing shares of
Parent Common Stock delivered pursuant to SECTION 9.5(c) to satisfy any
indemnification claims pursuant to SECTION 9.2 or SECTION 9.3, Parent Common
Stock shall be valued at a price per share equal to the greater of: (A) the
weighted average of the closing prices, as reported on the NYSE, of the
Parent Common Stock on the twenty (20) trading days prior to the date on
which the stock certificates for the Parent Common Stock are to be delivered
pursuant to clause (ii) of SECTION 9.5(c), or (B) $5.50.
(e) No claim for indemnification pursuant to SECTION 9.1 shall be made
unless asserted by a written notice given to the Representative on or before
the Report Date.
9.6 THE REPRESENTATIVE.
(a) Big Stuff and the Big Stuff Shareholders hereby authorize, direct
and appoint Xxxx to act as sole and exclusive agent, attorney-in-fact and
representative of the Big Stuff Shareholders (THE "REPRESENTATIVE"), and
authorizes and directs the Representative to (i) take any and all actions
(including without limitation executing and delivering any documents,
incurring any costs and expenses for the account of the Big Stuff
Shareholders (which will constitute Damages incurred or suffered by Parent
within the meaning of SECTION 9.1(a) hereof) and making any and all
determinations) which may be required or permitted by this Restated
Agreement to be taken by the Big Stuff Shareholders or the Representative,
(ii) exercise such other rights, power and authority as are authorized,
delegated and granted to the Representative hereunder in connection
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with the transactions contemplated hereby and (iii) exercise such rights,
power and authority as are incidental to the foregoing. Any such actions
taken, exercises of rights, power or authority, and any decision or
determination made by the Representative consistent therewith, shall be
absolutely and irrevocably binding on each indemnifying party as if such
indemnifying party personally had taken such action, exercised such rights,
power or authority or made such decision or determination in such
indemnifying party's individual capacity. Notwithstanding any other
provision of this Restated Agreement, if the Closing occurs, then with
respect to the matters covered by ARTICLE IX, (i) each of the Big Stuff
Shareholders irrevocably relinquishes such Big Stuff Shareholder's right to
act independently and other than through the Representative, except with
respect to the removal of the Representative or appointment of a successor
Representative as provided in SECTION 9.6(b) below, and (ii) no Big Stuff
Shareholders shall have any right under this Restated Agreement or otherwise
to institute any suit, action or proceeding against Big Stuff or Parent with
respect to any such matter, any such right being irrevocably and exclusively
delegated to the Representative. The Representative hereby acknowledges and
accepts the foregoing authorization and appointment and agrees to serve as
the Representative in accordance with this Restated Agreement.
(b) The Representative shall serve as Representative until his
resignation, removal from office, incapacity or death; provided, however,
that the Representative shall not have the right to resign without
(i) prior written notice to the Big Stuff Shareholders, and (ii) picking a
successor reasonably satisfactory to Parent to serve until a successor
thereto is elected by the Big Stuff Shareholders. The Representative may be
removed at any time, and a successor representative, reasonably satisfactory
to Parent, may be appointed, pursuant to written action by Big Stuff
Shareholders. Any successor to the Representative shall, for purposes of
this Restated Agreement, be deemed to be, from the time of the appointment
thereof in accordance with the terms hereof, the Representative, and from
and after such time, the term "REPRESENTATIVE" as used herein and therein
shall be deemed to refer to such successor. No appointment of a successor
shall be effective unless such successor agrees in writing to be bound by
the terms of this Restated Agreement.
(c) The Representative shall be permitted to retain counsel, consultants
and other advisors and shall promptly notify Parent after retaining any such
Person.
(d) The provisions of this SECTION 9.6 shall in no way impose any
obligations on Parent (other than those set forth in paragraph (c) above).
In particular, notwithstanding any notice received by Parent to the contrary
(except any notice of the appointment of a successor Representative approved
by Parent in accordance with paragraph (b) of this SECTION 9.6), Parent
shall be entitled to assume that all actions, decisions and determinations
of the Representative are fully authorized by the Big Stuff Shareholders.
(e) The Representative shall not be liable to the Big Stuff Shareholders
for the performance of any act or the failure to act so long as he acted or
failed to act in good faith in what he reasonably believed to be the scope
of his authority and for a purpose which he reasonably believed to be in the
best interests of the Big Stuff Shareholders.
9.7 INDEMNIFICATION BY THE PARENT.
(a) INDEMNITY. If the Closing has occurred, subject to the terms and
conditions of this SECTION 9.7, Parent shall indemnify the Big Stuff
Shareholders from and in respect of all, and hold the Big Stuff Shareholders
harmless against, any and all damages, fines, penalties, losses,
liabilities, judgments and deficiencies (including without limitation
amounts paid in settlement and interest) ("BIG STUFF SHAREHOLDER DAMAGES")
resulting from, relating to or in connection with any misrepresentation or
breach of warranty of the Parent contained in this Restated Agreement.
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(b) SURVIVAL. The representations and warranties of Parent set forth
in this Restated Agreement shall survive the Closing and shall continue
until the Report Date. The representations and warranties shall not be
affected by any examination made for or on behalf of Big Stuff or Big Stuff
Shareholders or the knowledge of any of Big Stuff's officers, directors,
stockholders, employees or agents, except that the representations and
warranties are qualified by the matters disclosed in the Disclosure
Schedules to the representations and warranties of the Parent contained in
ARTICLE III hereof, and Big Stuff agrees that Big Stuff has knowledge of
such matters. Notwithstanding anything to the contrary herein, if a claim
for indemnification is made before the expiration of the periods of survival
set forth above in this SECTION 9.7, then (notwithstanding the expiration of
such time period) the representation or warranty applicable to such claim
shall survive until, but only for purposes of, the resolution of such claim.
(c) LIMITATIONS. Parent shall not be liable under this SECTION 9.7
unless and until the aggregate amount of Big Stuff Shareholder Damages
incurred or suffered by the Big Stuff Shareholders exceeds $100,000 (at
which point Parent shall become liable for the entire amount of Big Stuff
Shareholder Damages in excess of $75,000). Furthermore, the liability of
Parent under this SECTION 9.7 shall be $400,000. No claim for
indemnification pursuant to SECTION 9.7 shall be made unless asserted by a
written notice given to Parent on or before the Report Date.
ARTICLE X--MUTUAL RELEASE
10.1 MUTUAL RELEASE OF ALL CLAIMS.
(a) Parent, for itself and for all of its stockholders, directors,
officers, agents, employees, representatives, divisions, subsidiaries,
affiliates, insurers, successors and assigns, hereby releases, remises,
acquits and forever discharges Big Stuff and the Big Stuff Shareholders, and
each of them and each of their respective stockholders, directors, officers,
agents, employees, representatives, divisions, parents, subsidiaries,
affiliates, insurers, successors and assigns, of and from any and all manner
of claims, actions, causes of action, suits, debts, dues, accounts,
contracts, agreements, continuing obligations, judgments, claims and demands
whatsoever, whether in law or in equity, which now exist or may hereafter
arise from any matter, fact, circumstance, happening or thing whatsoever
occurring or failing to occur in connection with the negotiation, execution
and performance of their respective obligations under the June 3 Big Stuff
Agreement.
(b) Big Stuff and the Big Stuff Shareholders, each for itself and for
all of their respective stockholders, directors, officers, agents,
employees, representatives, divisions, subsidiaries, affiliates, insurers,
successors and assigns, hereby releases, remises, acquits and forever
discharges Parent and its stockholders, directors, officers, agents,
employees, representatives, divisions, parents, subsidiaries, affiliates,
insurers, successors and assigns, of and from any and all manner of claims,
actions, causes of action, suits, debts, dues, accounts, contracts,
agreements, continuing obligations, judgments, claims and demands
whatsoever, whether in law or in equity, which now exist or may hereafter
arise from any matter, fact, circumstance, happening or thing whatsoever
occurring or failing to occur in connection with the negotiation, execution
and performance of its obligations under the June 3 Big Stuff Agreement.
(c) Parent and each of Big Stuff and the Big Stuff Shareholders hereby
represent, warrant and acknowledge that the mutual covenants and agreements
in this ARTICLE X are made in good faith.
10.2 COVENANT NOT TO XXX.
(a) Parent hereby agrees that it will not institute any action against
Big Stuff and the Big Stuff Shareholders arising out of the June 3 Big Stuff
Agreement, including, but not limited to, any claim for contractual
indemnity or implied indemnity.
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(b) Each of Big Stuff and the Big Stuff Shareholders hereby agrees that
it will not institute any action against Parent arising out of the June 3
Big Stuff Agreement, including, but not limited to, any claim for
contractual indemnity or implied indemnity.
10.3 NO ADMISSION OF LIABILITY. None of Parent, Big Stuff or the Big Stuff
Shareholders admits liability to any other party hereto and, in fact, each of
Parent, Big Stuff and the Big Stuff Shareholders denies any liability relating
to the June 3 Big Stuff YP Agreement.
ARTICLE XI--AMENDMENT AND WAIVER
11.1 AMENDMENT OF THIS RESTATED AGREEMENT. Prior to Parent stockholder
approval and except as is otherwise required by Applicable Law, this Restated
Agreement may be amended by the parties hereto at any time by execution of an
instrument in writing signed on behalf of each of the parties hereto. Following
receipt of approval by the Parent shareholders, the parties hereto acknowledge
and agree that this Restated Agreement may be amended by the parties hereto by
execution of an instrument in writing signed on behalf of each of the parties
hereto; PROVIDED, HOWEVER, that any such amendment shall not have a material
adverse effect upon Parent.
11.2 EXTENSION; WAIVER. At any time prior to the Effective Time, Parent
and Acquisition Subsidiary, on the one hand, and Big Stuff and the Big Stuff
Shareholders, on the other, may, to the extent legally allowed, (i) extend the
time for the performance of any of the obligations of the other party hereto,
(ii) waive any inaccuracies in the representations and warranties made by such
other party contained herein or in any document delivered pursuant hereto, and
(iii) waive compliance with any of the agreements or conditions for the benefit
of such party 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 an instrument
in writing signed on behalf of such party; PROVIDED, HOWEVER, that an extension
pursuant to SECTION 1.2(b) hereof need not be set forth in writing in order to
be effective, unless such extension is to a date after March 1, 2000.
ARTICLE XII--GENERAL PROVISIONS
12.1 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or mailed by registered or certified mail (return receipt
requested) or sent via facsimile (with acknowledgment of complete transmission)
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
(a) if to Parent, to:
Advanced Communications Group, Inc.
000 Xxxxx Xxxxx Xxxx Xxxx, Xxxxx 000
Xx. Xxxxx, Xxxxxxxx 00000
Attn: Xx. Xxxxxxx X'Xxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxxxx Xxxxxxx Xxxxx Xxxxxx LLP
000 Xxxxx Xxxxxx, Xxxxx 0000
Xx. Xxxxx, Xxxxxxxx 00000-0000
Attn: Xx. Xxxxx X. Adoor
Facsimile: (000) 000-0000
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(b) if to Big Stuff and Big Stuff Shareholders, to:
Big Stuff, Inc.
0000 Xxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxx 00000
Attn: Xx. Xxxxxxx X. Xxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxxxx & Xxxxxxxx
000 Xxxxxx Xxxxxx
00(xx) Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000-0000
Attn: Xx. Xxxx X. Xxxxx
Facsimile: (000) 000-0000
12.2 INTERPRETATION. The words "INCLUDE," "INCLUDES" and "INCLUDING" when
used herein shall be deemed in each case to be followed by the words "without
limitation". The table of contents and headings contained in this Restated
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Restated Agreement. All Disclosure Schedules
to this Restated Agreement constitute a part of this Restated Agreement as if
set forth in full herein and are incorporated herein.
12.3 COUNTERPARTS. This Restated Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
12.4 ENTIRE AGREEMENT; ASSIGNMENT. Subject to its becoming effective in
accordance with SECTION 1.2 hereof, this Restated Agreement (including, but not
limited to, the Recitals hereto), the Disclosure Schedules hereto, and the
documents and instruments and other agreements among the parties hereto
referenced herein: (i) constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof including, but not limited to, (A) the June 3 Big Stuff
Agreement; and (B) the Letter of Intent dated April 11, 1999 by and among the
Parent, the Company, Big Stuff, Web and X'Xxxx and the Confidentiality Agreement
dated April 11, 1999 by and among Parent, the Company, Big Stuff, Web and
X'Xxxx; (ii) are not intended to confer upon any Person not a party hereto any
rights or remedies hereunder except that the Representative shall have the
express rights articulated in ARTICLE IX; and (iii) shall not be assigned by
operation of law or otherwise, except that Parent may assign its rights and
delegate its obligations hereunder to its affiliates, provided that Parent shall
remain liable hereunder.
12.5 SEVERABILITY. In the event that any provision of this Restated
Agreement or the application thereof, becomes or is declared by a court of
competent jurisdiction to be illegal, void or unenforceable, the remainder of
this Restated Agreement will continue in full force and effect and the
application of such provision to other Persons or circumstances will be
interpreted so as reasonably to effect the intent of the parties hereto so long
as consideration of the Restated Agreement is not materially affected for any
party hereof. The parties further agree to replace such void or unenforceable
provision of this Restated Agreement with a valid and enforceable provision that
will achieve, to the extent possible, the economic, business and other purposes
of such void or unenforceable provision.
12.6 OTHER REMEDIES. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy
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conferred hereby, or by law or equity upon such party, and the exercise by a
party of any one remedy will not preclude the exercise of any other remedy.
12.7 GOVERNING LAW. This Restated Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof. Each of the parties hereto irrevocably consents to the exclusive
jurisdiction and venue of any court within the State of California, City and
County of San Francisco, in connection with any matter based upon or arising out
of this Restated Agreement or the matters contemplated herein, agrees that
process may be served upon them in any manner authorized by the laws of the
State of California, City and County of San Francisco for such Persons and
waives and covenants not to assert or plead any objection which they might
otherwise have to such jurisdiction, venue and such process.
12.8 RULES OF CONSTRUCTION. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Restated
Agreement and, therefore, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
ARTICLE XIII--DEFINITIONS
13.1 DEFINITIONS.
"Acquisition Subsidiary" shall have the meaning ascribed to it in the
preamble hereto.
"Active Parent Subsidiaries" shall mean Xxxxx; FirsTel; Value; Great Western
Directories, Inc.; Telecom Resources, Inc.; the Switchboard of Oklahoma
City, Inc.; Long Distance Management of Kansas, Inc.; Long Distance Management
II, Inc.; and National Telecom, a proprietorship.
"Affiliate Agreements" shall have the meaning set forth in SECTION 4.8
hereof.
"Anniversary Date" shall mean the first anniversary of the Closing Date.
"Associates" shall mean affiliates of any Person (including, without
limitation, directors, officers, employees, agents, representatives and
shareholders or any affiliates or associates thereof).
"Benefit Plan" shall have the meaning ascribed to such term in SECTION 2.14
hereof.
"Big Stuff" shall have the meaning ascribed to such term in the preamble
hereto.
"Big Stuff Common Stock" shall have the meaning ascribed to such term in
SECTION 1.3 hereof.
"Big Stuff Financial Statements" shall have the meaning ascribed to such
term in SECTION 2.8 hereof.
"Big Stuff Material Adverse Effect" shall mean a material adverse effect on
(i) the business, assets, condition (financial or otherwise), properties,
liabilities or the results of operations of Big Stuff taken as a whole,
(ii) the ability of Big Stuff to perform its obligations set forth in this
Restated Agreement and the Big Stuff Transaction Agreements, or (iii) the
ability of Big Stuff or the Big Stuff Shareholders to timely consummate the
transactions contemplated by this Restated Agreement and the Big Stuff
Transaction Agreements.
"Big Stuff Material Contract" shall have the meaning ascribed to such term
in SECTION 2.13 hereof.
"Big Stuff Modified Representations" shall have the meaning ascribed to such
term in SECTION 7.3(a)(i) hereof.
"Big Stuff Nonmodified Representations" shall have the meaning ascribed to
such term in SECTION 7.3(a)(i) hereof.
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"Big Stuff Permits" shall have the meaning ascribed to such term in
SECTION 2.11 hereof.
"Big Stuff Real Property Leases" shall have the meaning ascribed to such
term in SECTION 2.19(b) hereof.
"Big Stuff Shares" shall have the meaning ascribed to such term in
SECTION 1.3 hereof.
"Big Stuff Shareholders" shall have the meaning ascribed to such term in the
preamble hereto.
"Big Stuff Shareholder Damages" shall have the meaning ascribed to such term
in SECTION 9.7(a) hereof.
"Big Stuff Stock" shall have the meaning set forth in SECTION 2.2 hereof.
"Big Stuff Transaction Agreements" shall have the meaning ascribed to such
term in SECTION 2.4 hereof.
"Certificate of Merger" shall have the meaning ascribed to such term in
SECTION 1.1 hereof.
"Certificates" shall mean the certificates which, prior to the Merger,
represented the Big Stuff Shares, and shall include a certificate issued upon
due execution and delivery of an affidavit of loss and a bond, if required by
Parent, in the event that a Big Stuff Shareholder is unable to produce and
deliver, at the Closing, the original certificate which prior to the Merger,
represented any Big Stuff Shares.
"Claim Notice" shall have the meaning ascribed to such term in
Section 9.2(a) hereof.
"Claimed Amount" shall have the meaning ascribed to such term in
SECTION 9.2(a) hereof.
"Class A Special Shares" shall have the meaning set forth in the Restated
Company Agreement.
"CLEC Operations" shall mean Xxxxx, FirsTel, Valu, and such other non-yellow
pages operating subsidiaries or operations of Parent as shall be determined by
the Board of Directors of Parent.
"Closing" shall mean the closing of the Merger.
"Closing Date" shall mean the date on which the Closing actually occurs.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and the
Treasury regulations thereunder.
"Company" shall have the meaning set forth in Recital E hereto.
"Company Shareholders" shall have the meaning set forth in Recital E hereto.
"Consent" shall have the meaning ascribed to such term in SECTION 2.5
hereof.
"Conversion Stock" shall have the meaning ascribed to such term in
SECTION 4.9 hereof.
"Convertible Note" shall have the meaning ascribed to such term in
SECTION 1.10 hereof.
"Corporation Laws" shall have the meaning ascribed to such term in
SECTION 1.1 hereof.
"Damages" shall have the meaning ascribed to such term in SECTION 9.1(a)
hereof.
"Defense Notice" shall have the meaning ascribed to such term in
SECTION 9.3(a) hereof.
"Disclosure Schedules" shall mean, collectively, that information required
to be delivered by Big Stuff to Parent, and by Parent to Big Stuff, pursuant to
this Restated Agreement.
"Effective Time" shall have the meaning ascribed to such term in
SECTION 1.2 hereof.
"Enforceability Exceptions" shall have the meaning ascribed to such term in
SECTION 2.4 hereof.
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"Environmental Laws" shall have the meaning ascribed to such term in
SECTION 2.17 hereof.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, together with all regulations thereunder.
"Event" shall mean any event, occurrence, fact, condition, change,
development or effect.
"Exchange Ratio" shall have the meaning ascribed to such term in
SECTION 1.3 hereof.
"Extraordinary Transactions" shall have the meaning ascribed to such term in
SECTION 6.7 hereof.
"Xxxxx" shall mean Xxxxx Long Distance Service, Inc.
"Final Order", with respect to any Consent of a Governmental Authority,
shall mean an action by the appropriate Governmental Authority as to which:
(i) no request for stay by such Governmental Authority of the action is pending,
no such stay is in effect, and, if any deadline for filing any such request is
designated by statute or regulation, it has passed; (ii) no petition for
rehearing or reconsideration of the action is pending before such Governmental
Authority, and no appeal or comparable administrative remedy is pending before
such Governmental Authority, and the time for filing any such petition, appeal
or administrative remedy has passed; (iii) such Governmental Authority does not
have the action under reconsideration on its own motion and the time for such
reconsideration has passed; and (iv) no appeal to a court, or request for stay
by a court, of the Governmental Authority action is pending or in effect, and if
any deadline for filing any such appeal or request is designated by statute or
rule, it has passed.
"FirsTel" shall mean FirsTel, Inc.
"Governmental Authority" shall mean a nation or government, any state or
other political subdivision thereof, any Person, authority or body exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government including, without limitation, any governmental or
regulatory authority, agency, department, board, commission or instrumentality,
any court, tribunal or arbitrator and any self-regulatory organization.
"Great Western Credit Agreement" shall mean the Loan Agreement dated as of
May 14, 1999, by and among Great Western Directories, Inc., the lenders
signatories thereto, and Bank of America National Trust and Savings Association
as Administrative Agent.
"Great Western Notes" shall have the meaning ascribed to such term in
Recital E hereto.
"Great Western Shareholders" shall have the meaning ascribed to such term in
Recital E hereto.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"ICL" shall have the meaning ascribed to such term in Recital E hereto.
"Indemnifiable Claim" shall have the meaning ascribed to such term in
SECTION 9.2(a) hereof.
"Indemnitees" shall have the meaning ascribed to such term in
SECTION 9.1(a) hereof.
"Intellectual Property" shall have the meaning ascribed to such term in
SECTION 2.18 hereof.
"IP Claim Notice" shall have the meaning ascribed to such term in
SECTION 2.18 hereof.
"IRS" shall mean the United States Internal Revenue Service, or any
successor thereto.
"June 3 Big Stuff Agreement" shall have the meaning ascribed to such term in
SECTION 1.2(a) hereof.
"Law" shall mean applicable provision of any constitution, treaty, statute,
law, code, rule, regulation, ordinance, policy or order of any Governmental
Authority or other matters having the force
C-42
of law including, but not limited to, any orders, decisions, injunctions,
judgments, awards and decrees of or agreements with any court or other
Governmental Authority.
"Letter of Transmittal" shall have the meaning ascribed to such term in
SECTION 1.5 hereof.
"Litigation" shall have the meaning ascribed to such term in SECTION 2.7
hereof.
"Merger" shall have the meaning ascribed to such term in Recital B hereto.
"Merger Consideration" shall have the meaning ascribed to such term in
SECTION 1.3 hereof.
"Multi-employer Plan" shall have the meaning ascribed to such term in
SECTION 2.14 hereof.
"NYSE" shall mean the New York Stock Exchange, Inc.
"X'Xxxx" shall have the meaning ascribed to such term in the preamble
hereto.
"Parent" shall have the meaning ascribed to such term in the Preamble
hereto.
"Parent Common Stock" shall have the meaning ascribed to such term in
SECTION 1.3 hereof.
"Parent Financial Statements" shall have the meaning ascribed to such term
in SECTION 3.8 hereof.
"Parent Guaranty" shall mean that certain Guaranty of Parent given pursuant
to the Great Western Credit Agreement.
"Parent Material Adverse Effect" shall mean a material adverse effect on
(i) the business, assets, condition (financial or otherwise), properties,
liabilities or the results of operations of Parent and the Active Parent
Subsidiaries taken as a whole, (ii) the ability of Parent to perform its
obligations set forth in this Restated Agreement and the Parent Transaction
Agreements, or (iii) the ability of Parent to timely consummate the transactions
contemplated by this Restated Agreement and the Parent Transaction Agreements.
"Parent Material Contract" shall have the meaning ascribed to such term in
SECTION 3.13 hereof.
"Parent Modified Representations" shall have the meaning ascribed to such
term in SECTION 7.2(a)(i) hereof.
"Parent Nonmodified Representation" shall have the meaning ascribed to such
term in SECTION 7.2(a)(i) hereof.
"Parent Permits" shall have the meaning ascribed to such term in
SECTION 3.11 hereof.
"Parent Securities Filings" shall have the meaning ascribed to such term in
SECTION 3.7 hereof.
"Parent Series A Stock "shall have the meaning ascribed to such term in
SECTION 3.2 hereof.
"Parent Transaction Agreements" shall have the meaning ascribed to such term
in SECTION 3.4 hereof.
"Person" shall mean and include an individual, corporation, partnership,
association, trust or other entity or organization, including a Governmental
Authority.
"Registration Statements" shall have the meaning ascribed to such term in
SECTION 6.1(b) hereof.
"Xxxx" shall have the meaning ascribed to such term in the preamble hereto.
"Report Date" shall have the meaning ascribed to such term in
SECTION 9.2(a) hereof.
"Representative" shall have the meaning ascribed to such term in
SECTION 9.6 hereof.
"Resignations" shall have the meaning ascribed to such term in SECTION 6.8
hereof.
"Restated Agreement" shall have the meaning ascribed to it in the preamble
hereto.
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"Restated Company Agreement" shall have the meaning set forth in Recital E
hereto.
"Restated Web Agreement" shall mean that certain Amended and Restated
Acquisition Agreement dated as of October 26, 1999, among the Parent, ACG
Acquisition VII Corp., Web and the Web shareholders.
"SEC" shall mean the U.S. Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended, and all
rules and regulations promulgated thereunder.
"Securities Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and all rules and regulations promulgated thereunder.
"Surviving Corporation" shall have the meaning ascribed to such term in
SECTION 1.1 hereof.
"Surviving Corporation Common Stock" shall have the meaning ascribed to such
term in SECTION 1.3 hereof.
"Surviving Corporation Material Adverse Effect" shall mean a material
adverse effect on (i) the business, assets, condition (financial or otherwise),
properties, liabilities or the results of operations of the Surviving
Corporation, or (ii) the ability to timely consummate the transactions
contemplated by this Restated Agreement.
"Tax" shall have the meaning ascribed to such term in SECTION 2.15(a)
hereof.
"Tax Claim" shall have the meaning ascribed to such term in SECTION 9.3(b)
hereof.
"Third-Party Claim" shall have the meaning ascribed to such term in
SECTION 9.2(a) hereof.
"Transaction Expenses" shall have the meaning ascribed to such term in
SECTION 5.9 hereof.
"Valu" shall mean, collectively, Valu-line of Louisiana, Inc. and Valu-line
of Longview, Inc.
"Web" shall have the meaning ascribed to such term in Recital E hereto.
"WorldPages" shall have the meaning ascribed to such term in Recital E
hereto.
"Year 2000 Compliant" shall have the meaning ascribed to such term in
SECTION 2.27 hereof.
[SIGNATURES ON FOLLOWING PAGE]
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[Signature pages to the Amended and Restated Big Stuff Acquisition Agreement]
IN WITNESS WHEREOF, Parent, the Acquisition Subsidiary, Big Stuff and the
Big Stuff Shareholders have caused this Restated Agreement to be signed by their
duly authorized respective officers, all as of the date first written above.
ADVANCED COMMUNICATIONS GROUP, INC.
By: /s/ XXXXXXX XXXXX
-----------------------------------------
Name: Xxxxxxx Xxxxx
Title: Chief Financial Officer and
Secretary
ACG ACQUISITION VI CORP.
By: /s/ XXXXXXX XXXXX
-----------------------------------------
Name: Xxxxxxx Xxxxx Title: Secretary
BIG STUFF, INC.
By: /s/ XXXXXXX X. XXXX
-----------------------------------------
Title: CEO
/s/ XXXXXXX X'XXXX
-----------------------------------------
XXXXXXX X'XXXX
/s/ XXXXXXX X. XXXX
-----------------------------------------
XXXXXXX X. XXXX
C-45
ARTICLE I--TERMS OF THE MERGER..................................... C-2
1.1 THE MERGER.................................................. C-2
1.2 EFFECTIVE TIME.............................................. C-2
1.3 MERGER CONSIDERATION........................................ C-3
1.4 STOCKHOLDERS' RIGHT UPON MERGER............................. C-3
1.5 SURRENDER AND EXCHANGE OF SHARES............................ C-3
1.6 BYLAWS...................................................... C-4
1.7 OTHER EFFECTS OF MERGER..................................... C-4
1.8 TAX-FREE REORGANIZATION..................................... C-4
1.9 CONVERTIBLE NOTE............................................ C-4
1.11 ADDITIONAL ACTIONS.......................................... C-5
ARTICLE II--REPRESENTATIONS AND WARRANTIES OF BIG STUFF AND THE BIG
STUFF SHAREHOLDERS............................................... C-5
2.1 ORGANIZATION AND GOOD STANDING.............................. C-5
2.2 CAPITALIZATION.............................................. C-5
2.3 SUBSIDIARIES................................................ C-5
2.4 AUTHORIZATION; BINDING AGREEMENT............................ C-5
2.5 GOVERNMENTAL APPROVALS...................................... C-6
2.6 NO VIOLATIONS............................................... C-6
2.7 LITIGATION.................................................. C-6
2.8 BIG STUFF FINANCIAL STATEMENTS.............................. C-7
2.9 ABSENCE OF CERTAIN CHANGES OR EVENTS........................ C-7
2.10 COMPLIANCE WITH LAWS........................................ C-7
2.11 PERMITS..................................................... C-8
2.12 FINDERS AND INVESTMENT BANKERS.............................. C-8
2.13 CONTRACTS................................................... C-8
2.14 EMPLOYEE BENEFIT PLANS...................................... C-8
2.15 TAXES AND RETURNS........................................... C-9
2.16 LIABILITIES................................................. C-10
2.17 ENVIRONMENTAL MATTERS....................................... C-10
2.18 INTELLECTUAL PROPERTY; FICTITIOUS NAMES..................... C-11
2.19 REAL ESTATE................................................. C-11
2.20 CORPORATE RECORDS........................................... C-11
2.21 TITLE TO AND CONDITION OF PERSONAL PROPERTY................. C-11
2.22 NO ADVERSE ACTIONS.......................................... C-11
2.23 LABOR MATTERS............................................... C-12
2.24 INSURANCE................................................... C-12
2.25 DISCLOSURE.................................................. C-12
2.26 TAX......................................................... C-12
2.27 YEAR 2000 COMPLIANCE........................................ C-12
ARTICLE III--REPRESENTATIONS AND WARRANTIES OF PARENT.............. C-13
3.1 ORGANIZATION AND GOOD STANDING.............................. C-13
3.2 CAPITALIZATION.............................................. C-13
3.3. SUBSIDIARIES................................................ C-13
3.4 AUTHORIZATION; BINDING AGREEMENT............................ C-14
3.5 GOVERNMENTAL APPROVALS...................................... C-14
3.6 NO VIOLATIONS............................................... C-14
3.7 SECURITIES FILINGS AND LITIGATION........................... C-15
3.8 PARENT FINANCIAL STATEMENTS................................. C-15
3.9 ABSENCE OF CERTAIN CHANGES OR EVENTS........................ C-16
3.10 COMPLIANCE WITH LAWS........................................ C-16
3.11 PERMITS..................................................... C-16
3.12 FINDERS AND INVESTMENT BANKERS.............................. C-16
3.13 CONTRACTS................................................... C-16
3.14 CORPORATE RECORDS........................................... C-16
3.15 TAX......................................................... C-16
3.16 DISCLOSURE.................................................. C-16
ARTICLE IV--ADDITIONAL COVENANTS OF BIG STUFF AND THE BIG STUFF
SHAREHOLDERS..................................................... C-17
4.1 NOTIFICATION OF CERTAIN MATTERS............................. C-17
4.2 ACCESS AND INFORMATION...................................... C-17
4.3 BIG STUFF SHAREHOLDER APPROVAL.............................. C-17
4.4 REASONABLE BEST EFFORTS..................................... C-18
4.5 COMPLIANCE.................................................. C-18
4.6 BENEFIT PLANS............................................... C-18
4.7 TAX OPINION CERTIFICATION................................... C-18
4.8 AFFILIATE AGREEMENTS........................................ C-18
4.9 TRANSFER RESTRICTIONS....................................... C-18
ARTICLE V--ADDITIONAL COVENANTS OF PARENT.......................... C-19
5.1 CONDUCT OF BUSINESS OF PARENT AND THE ACTIVE PARENT
SUBSIDIARIES.............................................. C-19
5.2 NOTIFICATION OF CERTAIN MATTERS............................. C-19
5.3 ACCESS AND INFORMATION...................................... C-20
5.4 COMPLIANCE.................................................. C-20
5.5 SEC AND SHAREHOLDER FILINGS................................. C-20
5.6 TAX TREATMENT............................................... C-20
5.7 EMPLOYMENT AND EMPLOYEE BENEFIT PLANS....................... C-20
5.8 EXPENSES....................................................
5.9 PARENT SHAREHOLDER APPROVAL.................................
ARTICLE VI--ADDITIONAL COVENANTS OF THE PARENT, BIG STUFF AND THE BIG
STUFF SHAREHOLDERS............................................... C-21
6.1 REGISTRATION OF SECURITIES.................................. C-21
6.3 CONSENTS.................................................... C-22
6.3 LEGAL REQUIREMENTS..........................................
6.4 PUBLIC ANNOUNCEMENTS........................................
6.5 CONDUCT OF BUSINESS PRIOR TO CLOSING DATE...................
6.7 NO SOLICITATION OF ACQUISITION PROPOSAL..................... C-26
6.8 RESIGNATIONS................................................ C-26
6.9 CONFIDENTIALITY............................................. C-26
ARTICLE VII--CONDITIONS TO CLOSING................................. C-28
7.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO CLOSING.......... C-28
7.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF SHAREHOLDERS AND
COMPANY................................................... C-29
7.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF PARENT.......... C-30
ARTICLE VIII--TERMINATION AND ABANDONMENT.......................... C-31
8.1 TERMINATION................................................. C-31
8.2 PROCEDURE UPON TERMINATION.................................. C-32
ARTICLE IX--SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION.................................................. C-32
9.1 INDEMNIFICATION BY THE BIG STUFF SHAREHOLDERS............... C-32
9.2 METHOD OF ASSERTING CLAIMS.................................. C-33
9.3 THIRD PARTY CLAIMS.......................................... C-33
9.4 SURVIVAL.................................................... C-35
9.5 LIMITATIONS................................................. C-35
9.6 THE REPRESENTATIVE.......................................... C-35
9.7 INDEMNIFICATION BY THE PARENT............................... C-36
ARTICLE X--MUTUAL RELAEASE......................................... C-37
10.1 MUTUAL RELEASE OF ALL CLAIMS................................ C-37
10.2 COVENANT NOT TO XXX......................................... C-37
10.3 NO ADMISSION OF LIABILITY................................... C-38
ARTICLE XI--AMENDMENT AND WAIVER................................... C-38
11.1 AMENDMENT OF THIS RESTATED AGREEMENT........................ C-38
11.2 EXTENSION; WAIVER........................................... C-38
ARTICLE XII--GENERAL PROVISIONS.................................... C-38
12.1 NOTICES..................................................... C-38
12.2 INTERPRETATION.............................................. C-39
12.3 COUNTERPARTS................................................ C-39
12.4 ENTIRE AGREEMENT; ASSIGNMENT................................ C-39
12.5 SEVERABILITY................................................ C-39
12.6 OTHER REMEDIES.............................................. C-39
12.7 GOVERNING LAW............................................... C-40
12.8 RULES OF CONSTRUCTION....................................... C-40
ARTICLE XIII--DEFINITIONS.......................................... C-40
13.1 DEFINITIONS................................................. C-40
SCHEDULES
Schedule 2.1 Jurisdictions of Incorporation and Qualification
Schedule 2.2 Capitalization
Schedule 2.5 Governmental Approvals
Schedule 2.6 No Violations
Schedule 2.7 Litigation
Schedule 2.9 Absence of Certain Changes or Events
Schedule 2.13 Contracts
Schedule 2.14 Employee Benefit Plans
Schedule 2.15 Taxes
Schedule 2.16 Liabilities
Schedule 2.17 Environmental Matters
Schedule 2.18 Intellectual Property
Schedule 2.19(b) Real Estate--Leased
Schedule 2.20 Corporate Records
Schedule 2.22 No Adverse Actions
Schedule 2.23 Labor Matters
Schedule 2.27 Year 2000 Compliance
Schedule 3.1 Parent Jurisdictions of Incorporation and Qualification
Schedule 3.2 Parent Securities Filings
Schedule 3.3 Parent Subsidiaries
Schedule 3.7(b) Parent Litigation
Schedule 3.8 Parent Liabilities
Schedule 3.9 Absence of Certain Changes or Events
Schedule 3.13 Parent Contracts
Schedule 6.6(b)(i) Big Stuff Securities Issuances, Etc.
Schedule 6.6(b)(ii) Parent Securities Issuances, Etc.
