Exhibit 2.7
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of February 11, 2000 (this
"AGREEMENT"), is made and entered into among WORLD ACCESS, INC., a Delaware
corporation ("WAXS"), STI Merger Co., a Delaware corporation and wholly-owned
subsidiary of WAXS ("MERGER SUB"), and STAR TELECOMMUNICATIONS, INC., a Delaware
corporation ("STAR").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of STAR and WAXS deem it advisable and
in the best interests of each corporation and its respective stockholders that
STAR and WAXS engage in a business combination in order to advance the long-term
strategic business interests of STAR and WAXS;
WHEREAS, the combination of STAR and WAXS shall be effected by the
terms of this Agreement through a merger as outlined below (the "MERGER");
WHEREAS, in furtherance thereof, the respective Boards of Directors of
STAR, Merger Sub and WAXS have approved the Merger, upon the terms and subject
to the conditions set forth in this Agreement, pursuant to which each share of
common stock, par value $0.001 per share, of STAR ("STAR COMMON STOCK") issued
and outstanding immediately prior to the Effective Time (as defined in Section
1.3) will be converted into the right to receive the consideration set forth in
Section 1.6;
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "CODE"), and the regulations
promulgated thereunder; and
WHEREAS, simultaneously with the execution and delivery of this
Agreement, WAXS and Xxxxxxxxxxx X. Xxxxxxxx and Xxxxx Xxxxxx (the "PRINCIPAL
STOCKHOLDERS") are entering into an agreement (the "VOTING AND STOCK TRANSFER
RESTRICTION AGREEMENT") pursuant to which each Principal Stockholder will agree
to, among other things, vote in favor of the Merger and certain restrictions on
the transfer of the consideration received in the Merger.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, and intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with the General Corporation Law of the
State of Delaware (the "DGCL"), STAR shall be merged with and into Merger Sub at
the Effective Time (as defined below). Following the Merger, the separate
corporate existence of STAR shall cease and Merger Sub shall continue as the
surviving corporation (the "SURVIVING CORPORATION").
1.2 CLOSING. Subject to the satisfaction or waiver of the conditions
set forth in Article VI, the closing of the Merger and the transactions
contemplated by this Agreement (the "CLOSING") will take place on the second
business day following the satisfaction or waiver of such conditions, unless
another time or date is agreed to in writing by the parties hereto (the date of
the Closing being referred to herein as the "CLOSING DATE"). The Closing shall
be held at the offices of Long Xxxxxxxx & Xxxxxx LLP, 000 Xxxxxxxxx Xxxxxx,
Xxxxx 0000, Xxxxxxx, Xxxxxxx 00000, unless another place is agreed to by the
parties hereto.
1.3 EFFECTIVE TIME. On the Closing Date the parties shall (i) file a
certificate of merger (the "CERTIFICATE OF MERGER") in such form as is required
by, and executed in accordance with, the relevant provisions of the DGCL and
(ii) make all other filings or recordings required under the DGCL in connection
with the Merger. The Merger shall become effective at such time as the
Certificate of Merger is duly filed with the Delaware Secretary of State or at
such subsequent time as WAXS and STAR shall agree and as shall be specified in
the Certificate of Merger (the date and time the Merger becomes effective being
the "EFFECTIVE TIME").
1.4 EFFECTS OF THE MERGER. At and after the Effective Time, the Merger
will have the effects set forth in the DGCL. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time all the property,
rights, privileges, powers, licenses, authorizations and franchises of Merger
Sub and STAR shall be vested in the Surviving Corporation, and all debts,
liabilities and duties of Merger Sub and STAR shall become the debts,
liabilities and duties of the Surviving Corporation.
1.5 CERTIFICATE OF INCORPORATION/BYLAWS. The certificate of
incorporation and bylaws of Merger Sub, as in effect immediately prior to the
Effective Time, shall be the certificate of incorporation and bylaws of the
Surviving Corporation, until thereafter changed or amended as provided therein
or by applicable law.
1.6 CONVERSION OF SECURITIES. At the Effective Time, by virtue of the
Merger and without any action on the part of WAXS, Merger Sub, STAR or the
holders of any of the following securities:
(a) [INTENTIONALLY OMITTED.]
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(b) Each share of STAR Common Stock issued and outstanding and
directly or indirectly owned or held by STAR or a Subsidiary thereof at the
Effective Time shall, by virtue of the Merger, cease to be outstanding and shall
be canceled and retired and no capital stock of WAXS or other consideration
shall be delivered in exchange therefor.
(c) Subject to Section 2.4, each share of STAR Common Stock
issued and outstanding immediately prior to the Effective Time (other than the
Dissenter's Shares (as defined in Section 8.12)) shall be converted into the
right to receive, at the election of WAXS by written notice to STAR prior to the
Closing, (i) the number of shares of WAXS Common Stock obtained by solving for
"X" in the following formula (the "Exchange Ratio"):
X = 7.81 + Z
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or (ii) such number of shares of WAXS Common Stock as shall equal sixty percent
(60%) of the Exchange Ratio and an amount in cash equal to forty percent (40%)
of the sum of $7.81 plus "Z" (as defined below); provided, however, that WAXS
and STAR expressly agree that, notwithstanding anything in this Agreement to the
contrary, in order to ensure that the Merger satisfies the continuity of
interest requirement under Treasury Regulation Section 1.368-1(e), that in no
event shall WAXS issue cash for more than forty-five percent (45%) of the
outstanding shares of STAR Common Stock, including for purposes of this
calculation cash paid for fractional shares pursuant to Section 2.4 and cash
paid for Dissenters' Shares.
For purposes of this Section 1.6, "Z" shall equal the PT-1 Excess Proceeds (as
defined in Section 8.12) DIVIDED BY 62,856,702. All shares of STAR Common Stock,
at the Effective Time, shall no longer be outstanding and shall automatically be
canceled and retired and each holder of a certificate representing any such
shares (a "CERTIFICATE") shall cease to have any rights with respect thereto,
except as set forth in this Section 1.6(c), Section 2.4 or at law. The shares of
WAXS Common Stock issued pursuant to this Section 1.6(c) together with any cash
in lieu of fractional shares paid pursuant to Section 2.4 shall be referred to
herein as the "MERGER CONSIDERATION."
1.7 STAR STOCK OPTIONS.
(a) At the Effective Time, by virtue of the Merger and without any
further action on the part of STAR, WAXS, Merger Sub or the holder of any
outstanding option, warrant or other right to acquire STAR capital stock (a
"STAR STOCK OPTION"), each STAR Stock Option will be automatically converted
into a WAXS Stock Option (as defined in Section 3.1(b)) to purchase shares of
WAXS Common Stock in an amount equal to the number of shares of STAR Common
Stock covered under such STAR Stock Option multiplied by the Exchange Ratio
(rounded to the nearest whole number of shares of WAXS Common Stock) at a
price per share of WAXS Common Stock
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equal to the per share option exercise price specified in the STAR Stock
Option divided by the Exchange Ratio (rounded to the nearest whole cent).
Each such WAXS Stock Option shall contain terms and provisions which are
substantially similar to those terms, conditions and provisions governing the
original STAR Stock Option, except that references to STAR in such STAR Stock
Option will be deemed to refer to WAXS and the date of grant of the STAR
Stock Option shall be deemed to be the date of grant of such WAXS Stock
Option. At the Effective Time, for purposes of interpretation of such new
WAXS Stock Option, (i) all references in any stock option plan of STAR shall
be deemed to refer to WAXS; (ii) any stock option plan of STAR which governs
the STAR Stock Option shall continue to govern the WAXS Stock Option
substituted therefor; and (iii) WAXS shall, as soon as practicable after the
Effective Time, issue to each holder of an outstanding STAR Stock Option a
document evidencing the foregoing issued and substituted WAXS Stock Option by
WAXS. It is the intention of the parties: (1) that, subject to applicable
law, STAR Stock Options assumed by WAXS qualify, following the Effective
Time, as incentive stock options, as defined in Section 422 of the Code, to
the extent that STAR Stock Options qualified as incentive stock options prior
to the Effective Time, (2) that each holder of a STAR Stock Option shall
receive a new WAXS Stock Option which preserves (but does not increase) the
excess of the fair market value of the shares subject to such STAR Stock
Option immediately before the Effective Time over the aggregate option price
of such shares immediately before the Effective Time, if any such excess then
exists, (3) that the terms, conditions, restrictions and provisions of the
WAXS Stock Option be substantially similar to the terms, conditions,
restrictions and provisions of the STAR Stock Option, and (4) any terms
conditions, restrictions or provisions of a STAR Stock Option applicable to a
number of shares rather than a percentage or fraction of shares should be
appropriately adjusted based upon the Exchange Ratio. Without the prior
written consent of WAXS (which may be withheld in its discretion), no new
options shall be issued by STAR on or after the date hereof, including,
without limitation, under any stock option plan currently maintained by STAR.
(b) With respect to each STAR Stock Option converted into a WAXS
Stock Option pursuant to Section 1.7(a), and with respect to the shares of
WAXS Common Stock underlying such option, WAXS shall file and keep current all
requisite registration statements, on Form S-8 or other appropriate form, for as
long as such options remain outstanding, which registration statement shall
include a prospectus meeting the requirements of General Instruction C to Form
S-8 with respect to affiliates of STAR, subject at all times to compliance with
all applicable federal and state securities laws.
(c) After the date of this Agreement, STAR agrees that it will
not grant any restricted stock, stock appreciation rights or limited stock
appreciation rights and also agrees that it will not permit cash payments to
holders of STAR Stock Options in lieu of the substitution therefor of WAXS Stock
Options, as described in this Section 1.7.
1.8 CERTAIN ADJUSTMENTS. If between the date hereof and the Effective
Time, the outstanding WAXS Common Stock or STAR Common Stock shall have been
changed into a different number of shares or different class by reason of any
reclassification, recapitalization, stock split, split-up, combination, exchange
of shares or similar capital stock event or a stock dividend or
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dividend payable in any other securities shall be declared with a record date
within such period, or any similar event shall have occurred, the Exchange
Ratio shall be appropriately adjusted to provide to the holders of STAR
Common Stock and the holders of STAR Stock Options the same economic effect
as contemplated by this Agreement prior to such event.
ARTICLE II
EXCHANGE OF CERTIFICATES
2.1 EXCHANGE FUND. At least five (5) days prior to the mailing of the
Joint Proxy Statement/Prospectus (as defined in Section 5.1), WAXS shall appoint
a commercial bank or trust company reasonably acceptable to STAR to act as
exchange agent hereunder (the "EXCHANGE AGENT") for the purpose of exchanging
Certificates for the Merger Consideration. Immediately prior to the Effective
Time, WAXS shall deposit with the Exchange Agent, in trust for the benefit of
holders of shares of STAR Common Stock, cash payable and certificates
representing the WAXS Common Stock issuable pursuant to Section 1.6 in exchange
for outstanding shares of STAR Common Stock. WAXS agrees to deposit with the
Exchange Agent from time to time as needed, cash sufficient to pay cash in lieu
of fractional shares pursuant to Section 2.4 and any dividends and other
distributions pursuant to Section 2.3. Any cash and certificates of WAXS Common
Stock deposited with the Exchange Agent shall hereinafter be referred to as the
"EXCHANGE FUND".
2.2 EXCHANGE PROCEDURES. As soon as reasonably practicable after the
Effective Time, WAXS shall cause the Exchange Agent to mail to each holder of a
Certificate (other than to holders of Dissenter's Shares) (i) a letter of
transmittal which shall advise such holder of the effectiveness of the Merger
and specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent, and which letter shall be in customary form and have such other
provisions as WAXS may reasonably specify and (ii) instructions for effecting
the surrender of such Certificates in exchange for the applicable Merger
Consideration. Upon surrender of a Certificate to the Exchange Agent together
with such letter of transmittal, duly executed and completed in accordance with
the instructions thereto, and such other documents as may reasonably be required
by the Exchange Agent, the holder of such Certificate shall be entitled to
receive in exchange therefor promptly (A) one or more shares of WAXS Common
Stock (which shall be in uncertificated book entry form unless a physical
certificate is requested) representing, in the aggregate, the whole number of
shares that such holder has the right to receive pursuant to Section 1.6 (after
taking into account all shares of STAR Common Stock then held by such holder),
and (B) a check in the amount equal to the cash that such holder has the right
to receive pursuant to the provisions of Section 1.6(c), if any, and this
Article II, including cash in lieu of any additional shares of WAXS Common Stock
pursuant to Section 2.4 and dividends and other distributions pursuant to
Section 2.3. No interest will be paid or will accrue on any cash payable
pursuant to 1.6(c), Section 2.3 or Section 2.4. In the event of transfer of
ownership of STAR Common Stock which is not registered in the transfer records
of STAR, one or more shares of WAXS Common Stock evidencing, in the aggregate,
the proper number of shares of WAXS Common Stock, a check in the proper amount
of cash in lieu of any additional shares of WAXS
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Common Stock pursuant to Section 2.4, a check in the proper amount of cash
pursuant to Section 1.6(c) and any dividends or other distributions to which
such holder is entitled pursuant to Section 2.3, may be issued with respect
to such STAR Common Stock to such a transferee if the Certificate
representing such shares of STAR Common Stock is presented to the Exchange
Agent, accompanied by all documents required to evidence and effect such
transfer and to evidence that any applicable stock transfer taxes have been
paid.
2.3 DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED CERTIFICATES. No
dividends or other distributions declared or made with respect to shares of WAXS
Common Stock with a record date after the Effective Time shall be paid to the
holder of any unexchanged Certificate with respect to the shares of WAXS Common
Stock that such holder would be entitled to receive upon surrender of such
Certificate and no cash payment in lieu of fractional shares of WAXS Common
Stock shall be paid to any such holder pursuant to Section 2.4 until such holder
shall surrender such Certificate in accordance with Section 2.2. Subject to the
effect of applicable laws, following surrender of any such Certificate, there
shall be paid to such holder of shares of WAXS Common Stock issuable in exchange
therefor, without interest, (a) promptly after the time of such surrender, the
amount of any cash payable in lieu of fractional shares of WAXS Common Stock to
which such holder is entitled pursuant to Section 2.4 and the amount of
dividends or other distributions with a record date after the Effective Time
theretofore paid with respect to such whole shares of WAXS Common Stock, and (b)
at the appropriate payment date, the amount of dividends or other distributions
with a record date after the Effective Time but prior to such surrender and a
payment date subsequent to such surrender payable with respect to such shares of
WAXS Common Stock.
2.4 NO FRACTIONAL SHARES OF WAXS COMMON STOCK.
(a) No certificates or scrip or shares of WAXS Common Stock
representing fractional shares of WAXS Common Stock or book-entry credit of the
same shall be issued upon the surrender for exchange of Certificates and such
fractional share interests will not entitle the owner thereof to vote or to have
any rights of a stockholder of or a holder of shares of WAXS Common Stock.
(b) Notwithstanding any other provision of this Agreement, each
holder of shares of STAR Common Stock exchanged pursuant to the Merger who
would otherwise have been entitled to receive a fraction of a share of WAXS
Common Stock (after taking into account all Certificates delivered by such
holder) shall receive, in lieu thereof, cash (without interest) in an amount
equal to the product of (i) such fractional part of a share of WAXS Common Stock
multiplied by (ii) the average of the daily closing price for a share of WAXS
Common Stock on the Nasdaq for the ten (10) consecutive trading days in which
such shares are traded on the Nasdaq, ending at the close of trading on the date
of the Effective Time or, if such date is not a business day, the business day
immediately preceding the date on which the Effective Time occurs. As promptly
as practicable after the determination of the amount of cash, if any, to be paid
to holders of fractional interests, the Exchange Agent shall so notify WAXS, and
WAXS shall promptly deposit such amount with the Exchange Agent and shall cause
the Exchange Agent to promptly forward payments to such holders of fractional
interests subject to and in accordance with the terms hereof.
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2.5 NO FURTHER OWNERSHIP RIGHTS IN STAR COMMON STOCK. As applicable,
all shares of WAXS Common Stock issued and cash paid upon conversion of shares
of STAR Common Stock in accordance with the terms of Article I and this Article
II (including any cash paid pursuant to Section 2.4) shall be deemed to have
been issued or paid in full satisfaction of all rights pertaining to the shares
of STAR Common Stock.
2.6 TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund
which remains undistributed to the holders of Certificates for six (6) months
after the Effective Time shall be delivered to the Surviving Corporation or
otherwise on the instruction of the Surviving Corporation, and any holders of
the Certificates who have not theretofore complied with this Article II shall
thereafter look only to the Surviving Corporation and WAXS for the Merger
Consideration with respect to the shares of STAR Common Stock formerly
represented thereby to which such holders are entitled pursuant to Section 1.6
and Section 2.2, any cash in lieu of fractional shares of WAXS Common Stock to
which such holders are entitled pursuant to Section 2.4 and any dividends or
distributions with respect to shares of WAXS Common Stock to which such holders
are entitled pursuant to Section 2.3. Any such portion of the Exchange Fund
remaining unclaimed by holders of shares of STAR Common Stock five (5) years
after the Effective Time (or such earlier date immediately prior to such time as
such amounts would otherwise escheat to or become property of any Governmental
Entity (as defined in Section 3.1(c)(3)) shall, to the extent permitted by law,
become the property of the Surviving Corporation free and clear of any claims or
interest of any Person previously entitled thereto.
2.7 NO LIABILITY. None of WAXS, Merger Sub, STAR, the Surviving
Corporation or the Exchange Agent shall be liable to any Person in respect of
any Merger Consideration from the Exchange Fund delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
2.8 INVESTMENT OF THE EXCHANGE FUND. The Exchange Agent shall invest
any cash included in the Exchange Fund as directed by the Surviving Corporation
on a daily basis. Any interest and other income resulting from such investments
shall promptly be paid to the Surviving Corporation.
2.9 LOST CERTIFICATES. If any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such Person of a bond in such
reasonable amount as the Surviving Corporation may direct as indemnity against
any claim that may be made against it with respect to such Certificate, the
Exchange Agent will deliver in exchange for such lost stolen or destroyed
Certificate the applicable Merger Consideration with respect to the shares of
STAR Common Stock formerly represented thereby, any cash in lieu of fractional
shares of WAXS Common Stock, and unpaid dividends and distributions on shares of
WAXS Common Stock deliverable in respect thereof, pursuant to this Agreement.
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2.10 WITHHOLDING RIGHTS. Each of the Surviving Corporation and WAXS
shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of shares of STAR Common Stock
such amounts as it is required to deduct and withhold with respect to the making
of such payment under the Code and the rules and regulations promulgated
thereunder, or any provision of state, local or foreign tax law. To the extent
that amounts are so withheld by the Surviving Corporation or WAXS, as the case
may be, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares of STAR Common Stock
in respect of which such deduction and withholding was made by the Surviving
Corporation or WAXS, as the case may be.
2.11 STOCK TRANSFER BOOKS. The stock transfer books of STAR shall be
closed immediately upon the Effective Time and there shall be no further
registration of transfers of shares of STAR Common Stock thereafter on the
records of STAR. On or after the Effective Time, any Certificates presented to
the Exchange Agent or WAXS for any reason shall be converted as provided in
Articles I and II hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF WAXS AND MERGER SUB. Except as
set forth in the WAXS SEC Reports (as defined below) filed and publicly
available prior to the date hereof or the WAXS Disclosure Schedule delivered by
WAXS to STAR prior to the execution of this Agreement (the "WAXS DISCLOSURE
SCHEDULE") (each section of which qualifies the correspondingly numbered
representation and warranty or covenant to the extent specified therein), WAXS
and Merger Sub represent and warrant to STAR as follows:
(a) ORGANIZATION; STANDING AND POWER; SUBSIDIARIES.
(1) Each of WAXS, its Subsidiaries (as defined in Section
8.12) and Merger Sub is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization, has the requisite 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
organized, existing and in good standing or to have such power and
authority would not have a Material Adverse Effect on WAXS, and is
duly qualified and in good standing to do business in each
jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification necessary other
than in such jurisdictions where the failure to so qualify or to be
in good standing would not have a Material Adverse Effect on WAXS.
The copies of the certificate of incorporation and bylaws of WAXS
and Merger Sub which were previously furnished or made available to
STAR are true, complete and correct copies of such documents as in
effect on the date of this Agreement.
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(2) Exhibit 21.1 to WAXS's Annual Report on Form 10-K for
the year ended December 31, 1998 includes all the Subsidiaries of
WAXS which as of the date of this Agreement are Significant
Subsidiaries (as defined in Rule 1-02 of Regulation S-X of the SEC).
All the outstanding shares of capital stock of, or other equity
interests in, each such Significant Subsidiary have been validly
issued and are fully paid and nonassessable and are owned directly
or indirectly by WAXS, free and clear of all pledges, claims, liens,
charges, encumbrances and security interests of any kind or nature
whatsoever (collectively "LIENS") and free of any other restriction
(including any restriction on the right to vote, sell or otherwise
dispose of such capital stock or other ownership interests). Neither
WAXS nor any of its Subsidiaries directly or indirectly owns any
equity or similar interest in, or any interest convertible into or
exchangeable or exercisable for any equity or similar interest in,
any corporation, partnership, joint venture or other business
association or entity (other than the Subsidiaries of WAXS) that is
or would reasonably be expected to be material to WAXS and its
Subsidiaries taken as a whole.
(b) CAPITAL STRUCTURE. As of February 7, 2000:
(1) The authorized capital stock of WAXS consists of (A)
150,000,000 shares of WAXS Common Stock, of which 53,787,805 shares
are outstanding and no shares are held in the treasury of WAXS and
(B) 10,000,000 shares of Preferred Stock, par value $.01 per share,
of which 50,000 shares designated as 4.25% Cumulative Senior
Perpetual Convertible Preferred Stock, Series A, par value $.01 per
share (the "SERIES A PREFERRED STOCK"), and 350,259.875 shares
designated as Convertible Preferred Stock, Series C (the "SERIES C
PREFERRED STOCK"), are outstanding. WAXS has reserved or has
available 4,347,827 shares of WAXS Common Stock for issuance upon
conversion of the Series A Preferred Stock and 18,027,478 shares of
WAXS Common Stock for issuance upon conversion of the Series C
Preferred Stock. All issued and outstanding shares of the capital
stock of WAXS are duly authorized, validly issued, fully paid and
nonassessable, and no class of capital stock is entitled to
preemptive rights. In addition to the rights described in Section
3.1(b) of the WAXS Disclosure Schedule, there are outstanding
options, warrants or other rights (a "WAXS STOCK OPTION") to acquire
13,133,837 shares of capital stock from WAXS.
(2) No bonds, debentures, notes or other indebtedness of
WAXS having the right to vote on any matters on which holders of
capital stock of WAXS may vote ("WAXS VOTING DEBT") are issued or
outstanding.
(3) Except as otherwise set forth in this Section 3.1(b)
and as contemplated by Section 1.5 and Section 1.6, there are no
securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which WAXS
or any of its Subsidiaries is a party or by which any of them is
bound obligating WAXS or any of its Subsidiaries to issue, deliver
or sell, or cause to be issued, delivered or sold, additional shares
of capital stock or other voting securities of WAXS or any of its
Subsidiaries or obligating WAXS or any of its Subsidiaries to issue,
grant, extend or enter into any such security, option, warrant, call
right, commitment, agreement, arrangement or
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undertaking. There are no outstanding obligations of WAXS or any of
its Subsidiaries to repurchase, redeem or otherwise acquire any
shares of capital stock of WAXS or any of its Subsidiaries.
(c) AUTHORITY; NO CONFLICTS.
(1) WAXS and Merger Sub have all requisite corporate power
and authority to enter into this Agreement and to consummate the
Merger and the other transactions contemplated hereby, subject, in
the case of WAXS, to the approval by the stockholders of WAXS by the
Required WAXS Vote (as defined in Section 3.1(g)) of this Agreement,
the Merger and the other transactions contemplated hereby and, in
the case of Merger Sub, the affirmative vote of WAXS, as sole
stockholder thereof, of this Agreement, the Merger and the other
transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the Merger and the other
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of WAXS and Merger Sub,
subject, in the case of WAXS, to the approval by the stockholders of
WAXS of this Agreement, the Merger and the transactions contemplated
hereby by the Required WAXS Vote and subject, in the case of Merger
Sub, to the affirmative vote of WAXS, as sole stockholder thereof,
of this Agreement, the Merger and the other transactions
contemplated hereby. This Agreement has been duly executed and
delivered by WAXS and Merger Sub and constitutes a valid and binding
agreement of each of WAXS and Merger Sub, enforceable against it in
accordance with its terms, except to the extent that its
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the enforcement
of creditors' rights generally or by general equitable principles
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(2) Subject, in the case of WAXS, to the approval by the
stockholders of WAXS of this Agreement, the Merger and the
transactions contemplated hereby by the Required WAXS Vote and, in
the case of Merger Sub, the affirmative vote of WAXS, as sole
stockholder thereof, of this Agreement, the Merger and the other
transactions contemplated hereby, the execution and delivery of this
Agreement by WAXS and Merger Sub does not, and the consummation by
WAXS and Merger Sub of the Merger and the other actions contemplated
hereby will not, conflict with, or result in any violation of, or
constitute a default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, amendment,
cancellation or acceleration of any obligation or the loss of a
material benefit under, or the creation of a Lien on any assets (any
such conflict, violation, default, right of termination, amendment,
cancellation or acceleration, loss or creation, a "VIOLATION") of:
(A) any provision of the certificate of incorporation or bylaws of
WAXS, any Subsidiary of WAXS or Merger Sub, or (B) except as would
not have a Material Adverse Effect on WAXS and subject to obtaining
or making the consents, approvals, orders, authorizations,
registrations, declarations and filings referred to in paragraph (3)
below, any loan or credit agreement, note, mortgage, bond,
indenture, lease, or other agreement, obligation, instrument,
permit, concession, franchise, license, judgment, order, decree,
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statute, law, ordinance, rule or regulation applicable to WAXS, any
Subsidiary of WAXS or their respective properties or assets.
(3) No consent, approval, order or authorization of, or
registration, declaration or filing with, any supranational,
national, state, municipal, local or foreign government, any
instrumentality, subdivision, court, administrative agency or
commission or other authority thereof, or any quasi-governmental or
private body exercising any supranational, national, state,
municipal, local or foreign regulatory, taxing, importing or other
governmental or quasi-governmental authority (a "GOVERNMENTAL
ENTITY"), is required by or with respect to WAXS, any Subsidiary of
WAXS or Merger Sub in connection with the execution and delivery of
this Agreement by WAXS or Merger Sub or the consummation of the
Merger and the other transactions contemplated hereby, except for
those required under or in relation to (A) the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR ACT"), (B)
state securities or "blue sky" laws (the "BLUE SKY LAWS"), (C) the
Communications Act of 1996, as amended (the "COMMUNICATIONS ACT"),
and all applicable state public utilities laws, (D) the Securities
Act, (E) the Exchange Act, (F) the DGCL with respect to the filing
of the Certificate of Merger, (G) rules and regulations of Nasdaq,
(H) antitrust or other competition laws of other jurisdictions, (I)
such consents, approvals, orders, authorizations, registrations,
declarations and filings as are required by applicable laws,
regulations and rules governing the telecommunications business
including, without limitation, those of the United States Federal
Communication Commission (the "FCC"), (J) any filings and approvals
expressly contemplated by this Agreement, and (K) such consents,
approvals, orders, authorizations, registrations, declarations and
filings the failure of which to make or obtain would not have a
Material Adverse Effect on WAXS. Consents, approvals, orders,
authorizations, registrations, declarations and filings required
under or in relation to any of the foregoing clauses (A) through (K)
are hereinafter referred to as "NECESSARY CONSENTS".
(d) REPORTS AND FINANCIAL STATEMENTS.
(1) WAXS has filed all required registration statements,
prospectuses, reports, schedules, forms, statements and other
documents required to be filed by it under the federal securities
laws with the SEC since January 1, 1998 (collectively, including all
exhibits thereto, the "WAXS SEC REPORTS"). No Subsidiary of WAXS,
including, without limitation Merger Sub, is required to file any
form, report, registration statement, prospectus or other document
with the SEC not otherwise filed with a WAXS SEC Report. As of the
respective times such documents were filed or, as applicable, became
effective, or as subsequently amended, the WAXS SEC Reports complied
as to form and content, in all material respects, with the
requirements of the Securities Act and the Exchange Act, as the case
may be, and the rules and regulations promulgated thereunder and,
taken as a whole, the WAXS SEC Reports do not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading. Each of the financial statements (including the
related notes) included in the WAXS SEC Reports (or,
11
if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) presents fairly, in all
material respects, the consolidated financial position and
consolidated results of operations and cash flows of WAXS and its
Subsidiaries as of the respective dates or for the respective
periods set forth therein all in conformity with GAAP consistently
applied during the periods involved except as otherwise noted
therein, and subject, in the case of the unaudited interim financial
statements, to normal and recurring year-end adjustments that have
not been and are not expected to be material in amount. All of such
WAXS SEC Reports, as of their respective dates (or as of the date of
any amendment to the respective WAXS SEC Report filed prior to the
date of this Agreement), complied or will comply as to form in all
material respects with the applicable requirements of the Securities
Act and the Exchange Act and the rules and regulations promulgated
thereunder.
(2) Since December 31, 1998, WAXS and its Subsidiaries
have not incurred any liabilities that are of a nature that would be
required to be disclosed on a balance sheet of WAXS and its
Subsidiaries or the footnotes thereto prepared in conformity with
GAAP, other than (A) liabilities incurred in the ordinary course of
business or (B) liabilities that would not have a Material Adverse
Effect on WAXS.
(e) INFORMATION SUPPLIED. None of the information supplied or
to be supplied by WAXS for inclusion or incorporation by reference in the
Joint Proxy Statement/Prospectus (as defined herein) will, on the date it is
first mailed to WAXS's and STAR's stockholders, as applicable, or at the time
of the WAXS Stockholders Meeting or the STAR Stockholders Meeting, as
applicable, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. The Joint Proxy Statement/Prospectus will, on the date
it is first mailed to WAXS's and STAR's stockholders and at the time of the
WAXS Stockholders Meeting and the STAR Stockholders Meeting, comply as to
form in all material respects with the requirements of the Exchange Act and
the rules and regulations promulgated thereunder.
(f) WAXS BOARD APPROVAL. The Board of Directors of WAXS, by
resolutions duly adopted by unanimous vote at a meeting duly called and held
and not subsequently rescinded or modified in any way (the "WAXS BOARD
APPROVAL"), has duly (i) determined that this Agreement, the Merger and the
other transactions contemplated hereby are fair to and in the best interests
of WAXS and its stockholders, (ii) approved this Agreement, the Merger and
the other transactions contemplated hereby and (iii) declared the
advisability of this Agreement, the Merger and the other transactions
contemplated hereby, and, further, (iv) recommended that the stockholders of
WAXS approve and adopt this Agreement, the Merger and the other transactions
contemplated hereby and directed that this Agreement and the transactions
contemplated hereby be submitted for consideration by WAXS's stockholders at
the WAXS Stockholders Meeting.
(g) REQUIRED WAXS STOCKHOLDER VOTE. The affirmative vote of
holders of shares of WAXS Common Stock, Series A Preferred Stock and Series C
Preferred Stock, voting together as a single class, representing a majority
of the outstanding shares of WAXS Common Stock, Series A Preferred Stock and
Series C Preferred Stock (the "REQUIRED WAXS VOTE"), is the only vote of
12
the holders of any class or series of WAXS capital stock necessary to adopt
this Agreement and approve the Merger and the other transactions contemplated
hereby.
(h) REQUIRED MERGER SUB BOARD APPROVAL. The Board of Directors
of Merger Sub, by resolutions duly adopted by a unanimous written consent and
not subsequently rescinded or modified in any way, has duly (i) determined
that this Agreement, the Merger and the other transactions contemplated
hereby are fair to and in the best interests of Merger Sub and its sole
stockholder, WAXS, (ii) approved this Agreement, the Merger and the other
transactions contemplated hereby and (iii) declared the advisability of this
Agreement, the Merger and the other transactions contemplated hereby, and,
further, (iv) recommended that WAXS adopt this Agreement and approve the
Merger and the other transactions contemplated hereby and directed that this
Agreement and the transactions contemplated hereby be submitted for
consideration by WAXS at a meeting duly called.
(i) REQUIRED MERGER SUB STOCKHOLDER VOTE. The affirmative vote
of WAXS, as sole stockholder of Merger Sub, is the only vote of the holders
of any class or series of Merger Sub capital stock necessary to adopt this
Agreement and approve the Merger and the other transactions contemplated
hereby.
(j) LITIGATION: COMPLIANCE WITH LAWS.
(1) There is no suit, investigation, action or proceeding
pending or, to the Knowledge of WAXS, threatened, against or
affecting WAXS or any Subsidiary of WAXS having, or which would have
a Material Adverse Effect on WAXS, nor is there any judgment,
decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against WAXS or any Subsidiary of WAXS
having, or which would have a Material Adverse Effect on WAXS.
(2) Except as would not have a Material Adverse Effect on
WAXS, WAXS and its Subsidiaries hold all permits, licenses,
variances, authorizations, exemptions, orders and approvals of all
Governmental Entities including, without limitation, the FCC and
state public utilities commissions, which are necessary for the
operation of the businesses of WAXS and its Subsidiaries (the "WAXS
PERMITS"). Such WAXS permits are valid and in full force and effect
and WAXS and its Subsidiaries are in compliance with the terms of
the WAXS Permits, except where the failure to be valid and in full
force and effect or to so comply would not have a Material Adverse
Effect on WAXS. The businesses of WAXS and its Subsidiaries are not
being conducted in violation of, and WAXS has not received any
notices of violations with respect to, any law, ordinance or
regulation of any Governmental Entity, except for possible
violations which would not have a Material Adverse Effect on WAXS.
WAXS is not aware of any threatened suspension, cancellation or
invalidation of any such WAXS Permit. Except as set forth in the
WAXS SEC Reports or except as would not have a Material Adverse
Effect on WAXS, neither WAXS nor any of its Subsidiaries has
received notice from either the FCC or any state public utilities
commissions of any
13
complaint filed therewith concerning WAXS or any of its
Subsidiaries, operations or services.
(k) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except for
liabilities incurred in connection with this Agreement or the transactions
contemplated hereby, and except as permitted by Section 4.1, since December
31, 1998 through and including the date hereof, (i) WAXS and its Subsidiaries
have conducted, in all material respects, their business only in the ordinary
course and (ii) there has not been any change, circumstance or event which
has had, or would reasonably be expected to have, a Material Adverse Effect
on WAXS, other than any change, circumstance or effect relating (A) to the
economy or financial markets in general, or (B) in general to the industries
in which WAXS and its Subsidiaries operate and not specifically relating to
WAXS and its Subsidiaries.
(l) INTELLECTUAL PROPERTY. Except as would not have a Material
Adverse Effect on WAXS: (i) WAXS and each of its Subsidiaries owns, or is
licensed to use (in each case, free and clear of any Liens, or claim of
rights therein by any third party) all Intellectual Property (as defined
below) used in or necessary for the conduct of its business as currently
conducted, (ii) the use of any Intellectual Property by WAXS and its
Subsidiaries does not infringe on or otherwise violate the rights of any
Person and is in accordance with any applicable license pursuant to which
WAXS or any Subsidiary acquired the right to use any Intellectual Property;
(iii) to the Knowledge of WAXS, no Person is challenging, infringing on or
otherwise violating any right of WAXS or any of its Subsidiaries with respect
to any Intellectual Property owned by and/or licensed to WAXS or its
Subsidiaries; and (iv) neither WAXS nor any of its Subsidiaries has received
any written notice of any pending claim with respect to any Intellectual
Property used by WAXS and its Subsidiaries and to WAXS's Knowledge no
Intellectual Property owned and/or licensed by WAXS or its Subsidiaries is
being used or enforced in a manner that would result in the abandonment,
cancellation or unenforceability of such Intellectual Property. For purposes
of this Agreement, "INTELLECTUAL PROPERTY" shall mean trademarks, service
marks, brand names, certification marks, trade dress and other indications of
origin, the goodwill associated with the foregoing and registrations in any
jurisdiction of, and applications in any jurisdiction to register, the
foregoing, including any extension, modification or renewal of any such
registration or application; inventions, discoveries and ideas, whether
patentable or not, in any jurisdiction; patents, applications for patents
(including, without limitation, divisions, continuations, continuations in
part and renewal applications), and any renewals, extensions or reissues
thereof, in any jurisdiction; non-public information, trade secrets and
confidential information and rights in any jurisdiction to limit the use or
disclosure thereof by any person; writings and other works, whether
copyrightable or not, in any jurisdiction; registrations or applications for
registration of copyrights in any jurisdiction, and any renewals or
extensions thereof; any similar intellectual property or proprietary rights;
and any claims or causes of action arising out of or relating to any
infringement or misappropriation of any of the foregoing.
(m) BROKERS OR FINDERS. No agent, broker, investment banker,
financial advisor or other firm or Person is or will be entitled to any
broker's or finder's fee or any other similar commission or fee in connection
with any of the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of WAXS, except Xxxxxxxxx, Lufkin &
Xxxxxxxx Securities
14
Corporation (the "WAXS FINANCIAL ADVISOR"), whose fees and expenses will be
paid by WAXS in accordance with WAXS's agreement with such firm, a copy of
which has been, or will be promptly when available, provided to STAR.
(n) OPINION OF WAXS FINANCIAL ADVISOR. WAXS has received the
opinion of the WAXS Financial Advisor, dated the date of this Agreement, to
the effect that as of such date, the Merger Consideration is fair, from a
financial point of view, to WAXS and its stockholders, a copy of which has
been provided to STAR.
(o) TAXES.
(1) (i) All material Tax Returns of WAXS and each of its
Subsidiaries have been filed, or requests for extensions have been
timely filed and have not expired; (ii) all Tax Returns filed by
WAXS and its Subsidiaries are complete and accurate in all material
respects; (iii) all Taxes shown to be due on such Tax Returns or on
subsequent assessments with respect thereto have been paid or
adequate reserves have been established for the payment of such
Taxes, and no other material Taxes are payable by WAXS or any of its
Subsidiaries with respect to items or periods covered by such Tax
Returns (whether or not shown on or reportable on such Tax Returns)
or with respect to any period prior to the date of this Agreement;
(iv) there are no material liens on any of the assets of WAXS or any
of its Subsidiaries with respect to Taxes, other than liens for
Taxes not yet due and payable or for Taxes that WAXS and its
Subsidiaries is contesting in good faith through appropriate
proceedings and for which appropriate reserves have been
established; and (v) there is no audit, examination, deficiency or
refund litigation or matter in controversy with respect to any Taxes
of WAXS and its Subsidiaries that might reasonably be expected to
result in a Tax determination which would have a Material Adverse
Effect on WAXS.
(2) There are no contracts, agreements, plans or
arrangements, including but not limited to the provisions of this
Agreement, covering any employee or former employee of WAXS or any
of its Subsidiaries that, individually or collectively, could give
rise to the payment of any amount (or portion thereof) that would
not be deductible pursuant to Sections 280G, 404, or 162 of the Code.
(3) Neither WAXS nor any of its Subsidiaries is a party to a
Tax Sharing Agreement.
(p) CERTAIN CONTRACTS. Neither WAXS nor any of its Subsidiaries
is a party to or bound by (i) any "material contract" (as such term is
defined in Item 601(b)(10) of Regulation S-K of the SEC), (ii) any
noncompetition agreement or any other agreement or arrangement that limits or
otherwise restricts WAXS or any of its Subsidiaries or any successor thereto,
from engaging or competing in any line of business or in any geographic area,
which agreement or arrangement would have a Material Adverse Effect on WAXS
or the Surviving Corporation after giving effect to the Merger, or (iii) any
agreement or arrangement between WAXS or any of its Subsidiaries, on the one
hand, and any affiliates, directors or officers of WAXS or its Subsidiaries,
on the other hand, that
15
is not on arm's-length terms. All contracts filed with the WAXS SEC Reports
and the contracts listed on Section 3.1(p) of the WAXS Disclosure Schedule
are valid, binding and are in full force and effect and enforceable in
accordance with their respective terms, except to the extent that such
enforceability may be subject to applicable bankruptcy, insolvency,
moratorium, reorganization, or other laws affecting the enforcement or
creditors' rights generally or by general equitable principles, and other
than such contracts which by their terms are no longer in force or effect.
Neither WAXS nor its Subsidiaries are in violation or breach of or default
under any such contract, nor to WAXS's and its Subsidiaries' Knowledge, is
any other party to any such contract in violation or breach or other default
under any such contract, except for any such violation, breach or default
which would not have a Material Adverse Effect on WAXS.
3.2 REPRESENTATIONS AND WARRANTIES OF STAR. Except as set forth in the
STAR SEC Reports (as defined below) filed and publicly available prior to the
date hereof or the STAR Disclosure Schedule delivered by STAR to WAXS prior to
the execution of this Agreement (the "STAR DISCLOSURE SCHEDULE") (each section
of which qualifies the correspondingly numbered representation and warranty or
covenant to the extent specified therein), STAR represents and warrants to WAXS
as follows:
(a) ORGANIZATION; STANDING AND POWER; SUBSIDIARIES.
(1) Each of STAR and its Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of
its jurisdiction of incorporation or organization, has the requisite
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 organized, existing and in good standing or to have
such power and authority would not have a Material Adverse Effect on
STAR, and is duly qualified and in good standing to do business in
each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification
necessary, other than in such jurisdictions where the failure to so
qualify or to be in good standing would not have a Material Adverse
Effect on STAR. The copies of the certificate of incorporation and
bylaws of STAR which were previously furnished or made available to
WAXS are true, complete and correct copies of such documents as in
effect on the date of this Agreement.
(2) Exhibit 21.1 to STAR's Annual Report on Form 10-K for
the year ended December 31, 1998 includes all the Subsidiaries of
STAR which as of the date of this Agreement are Significant
Subsidiaries (as defined in Rule 1-02 of Regulation S-X of the SEC).
All the outstanding shares of capital stock of, or other equity
interests in, each such Significant Subsidiary have been validly
issued and are fully paid and nonassessable and are owned directly
or indirectly by STAR, free and clear of all Liens and free of any
other restriction (including any restriction on the right to vote,
sell or otherwise dispose of such capital stock or other ownership
interests). Neither STAR nor any of its Subsidiaries directly or
indirectly owns any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for any equity or
similar interest in, any corporation, partnership, joint venture or
other business association or entity (other than the Subsidiaries of
STAR),
16
that is or would reasonably be expected to be material to STAR and
its Subsidiaries taken as a whole.
(b) CAPITAL STRUCTURE.
(1) The authorized capital stock of STAR consists of (A)
50,000,000 shares of STAR Common Stock, of which 58,683,131 shares
are outstanding and no shares are held in the treasury of STAR and
(B) 5,000,000 shares of preferred stock, par value $0.001 per share,
of which no shares are outstanding. All issued and outstanding
shares of the capital stock of STAR are duly authorized, validly
issued, fully paid and nonassessable, and no class of capital stock
is entitled to preemptive rights. There are outstanding options,
warrants or other rights to acquire 4,173,571 shares of capital
stock from STAR. Section 3.2(b) of the STAR Disclosure Schedule
lists the exercise price and vesting schedule for each STAR Stock
Option.
(2) No bonds, debentures, notes or other indebtedness of
STAR having the right to vote on any matters on which holders of
capital stock of STAR may vote ("STAR VOTING DEBT") are issued or
outstanding.
(3) Except as otherwise set forth in this Section 3.2(b),
there are no securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to
which STAR or any of its Subsidiaries is a party or by which any of
them is bound obligating STAR or any of its Subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock or other voting securities of
STAR or any of its Subsidiaries or obligating STAR or any of its
Subsidiaries to issue, grant, extend or enter into any such
security, option, warrant, call, right, commitment, agreement,
arrangement or undertaking. There are no outstanding obligations of
STAR or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any shares of capital stock of STAR or any of its
Subsidiaries.
(c) AUTHORITY; NO CONFLICTS.
(1) STAR has all requisite corporate power and authority to
enter into this Agreement and to consummate the Merger and the other
transactions contemplated hereby, subject to the approval by the
stockholders of STAR by the Required STAR Vote (as defined in
Section 3.2(g)) of this Agreement, the Merger and the other
transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the Merger and the other
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of STAR, subject to the
approval by the stockholders of STAR of this Agreement and the
Merger and the other transactions contemplated hereby by the
Required STAR Vote. This Agreement has been duly executed and
delivered by STAR and constitutes a valid and binding agreement of
STAR, enforceable against it in accordance with its terms, except to
the extent that its enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws
affecting the enforcement of creditors'
17
rights generally or by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity
or at law).
(2) Subject to the approval by the stockholders of STAR of
this Agreement, the Merger and the other transactions contemplated
hereby by the Required STAR Vote, the execution and delivery of this
Agreement by STAR does not, and the consummation by STAR of the
Merger and the other actions contemplated hereby will not, conflict
with, or result in a Violation of: (A) any provision of the
certificate of incorporation or bylaws of STAR or a Shareholder or
any Subsidiary of STAR or (B) except as would not have a Material
Adverse Effect on STAR, subject to obtaining or making the consents,
approvals, orders, authorizations, registrations, declarations and
filings referred to in paragraph (3) below, any loan or credit
agreement, note, mortgage, bond, indenture, lease, or other
agreement, obligation, instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to STAR, any Subsidiary of STAR or their
respective properties or assets.
(3) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is
required by or with respect to STAR or any Subsidiary of STAR in
connection with the execution and delivery of this Agreement by
STAR, or the consummation of the Merger and the other transactions
contemplated hereby, except the Necessary Consents and such
consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to make or obtain
would not have a Material Adverse Effect on STAR.
(d) REPORTS AND FINANCIAL STATEMENTS.
(1) STAR has filed all required registration statements,
prospectuses, reports, schedules, forms, statements and other
documents required to be filed by it under the federal securities
laws with the SEC since January 1, 1998 (collectively, including all
exhibits thereto, the "STAR SEC REPORTS"). No Subsidiary of STAR is
required to file any form, report, registration statement or
prospectus or other document with the SEC not otherwise filed with
an STAR SEC Report. As of the respective times such documents were
filed or, as applicable, became effective, or as subsequently
amended, the STAR SEC Reports complied as to form and content, in
all material respects, with the requirements of the Securities Act
and the Exchange Act, as the case may be, and the rules and
regulations promulgated thereunder, and, taken as a whole, the STAR
SEC Reports do not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Each of
the financial statements (including the related notes) included in
the STAR SEC Reports (or, if amended or superseded by a filing prior
to the date of this Agreement, then on the date of such filing)
presents fairly, in all material respects, the consolidated
financial position and consolidated results of operations and cash
flows of STAR and its Subsidiaries as of the respective dates or for
the respective periods set forth therein, all in conformity with
GAAP consistently applied during the periods
18
involved except as otherwise noted therein, and subject, in the case
of the unaudited interim financial statements, to normal and
recurring year-end adjustments that have not been and are not
expected to be material in amount. All of such STAR SEC Reports, as
of their respective dates (or as of the date of any amendment to the
respective STAR SEC Report filed prior to the date of this
Agreement), complied or will comply as to form in all material
respects with the applicable requirements of the Securities Act and
the Exchange Act and the rules and regulations promulgated
thereunder.
(2) Since December 31, 1998, STAR and its Subsidiaries have
not incurred any liabilities that are of a nature that would be
required to be disclosed on a balance sheet of STAR and its
Subsidiaries or the footnotes thereto prepared in conformity with
GAAP, other than (A) liabilities incurred in the ordinary course of
business or (B) liabilities that would not have a Material Adverse
Effect on STAR.
(e) INFORMATION SUPPLIED. None of the information supplied or to
be supplied by STAR for inclusion or incorporation by reference in the Joint
Proxy Statement/Prospectus will, on the date it is first mailed to WAXS's or
STAR's stockholders, as applicable, or at the time of the WAXS Stockholders
Meeting (as defined in Section 5.1) or the STAR Stockholders Meeting, as
applicable, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
(f) BOARD APPROVAL. The Board of Directors of STAR, by
resolutions duly adopted by unanimous vote at a meeting duly called and held
and not subsequently rescinded or modified in any way (the "STAR BOARD
APPROVAL"), has duly (i) determined that this Agreement, the Merger and the
other transactions contemplated hereby are fair to and in the best interests
of STAR and its stockholders, (ii) approved this Agreement, the Merger and
the other transactions contemplated hereby and (iii) declared the
advisability of this Agreement, the Merger and the other transactions
contemplated hereby, and, further, (iv) recommended that the stockholders of
STAR approve and adopt this Agreement, the Merger and the other transactions
contemplated hereby and directed that this Agreement and the transactions
contemplated hereby be submitted for consideration by STAR's stockholders.
(g) REQUIRED STOCKHOLDER VOTE. The affirmative vote of the
holders of a majority of the outstanding shares of STAR Common Stock (the
"REQUIRED STAR VOTE") is the only vote of the holders of any class or series of
STAR capital stock necessary to adopt this Agreement and approve the Merger and
the other transactions contemplated hereby.
(h) LITIGATION: COMPLIANCE WITH LAWS.
(1) There is no suit, investigation, action or proceeding
pending or, to the Knowledge of STAR, threatened, against or
affecting STAR or any Subsidiary of STAR having, or which would have
a Material Adverse Effect on STAR, nor is there any judgment,
decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against
19
STAR or any Subsidiary of STAR having, or which would have a
Material Adverse Effect on STAR.
(2) Except as would not have a Material Adverse Effect on
STAR, STAR and its Subsidiaries hold all permits, licenses,
variances, authorizations, exemptions, orders and approvals of all
Governmental Entities including, without limitation, the FCC and
state public utilities commissions, necessary for the operation of
the businesses of STAR and its Subsidiaries (the "STAR PERMITS").
Such STAR permits are valid and in full force and effect and STAR
and its Subsidiaries are in compliance with the terms of the STAR
Permits, except where the failure to be valid and in full force and
effect or to so comply would not have a Material Adverse Effect on
STAR. The businesses of STAR and its Subsidiaries are not being
conducted in violation of, and STAR has not received any notices of
violations with respect to, any law, ordinance or regulation of any
Governmental Entity, except for possible violations which would not
have a Material Adverse Effect on STAR. STAR is not aware of any
threatened suspension, cancellation or invalidation of any STAR
Permit. Except as set forth in the STAR SEC Reports or except as
would not have a Material Adverse Effect on STAR, STAR has not
received notice from either the FCC or any state public utilities
commissions of any complaint filed therewith concerning STAR or any
of its Subsidiaries, operations or services.
(i) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except for liabilities
incurred in connection with this Agreement or the transactions contemplated
hereby, except as disclosed in the STAR SEC Reports filed prior to the date
of this Agreement, and except as permitted by Section 4.2, since December 31,
1998 through and including the date hereof, (i) STAR and its Subsidiaries
have conducted, in all material respects, their business only in the ordinary
course and (ii) there has not been any change, circumstance or event which
has had, or would reasonably be expected to have, a Material Adverse Effect
on STAR, other than any change, circumstance or effect relating (A) to the
economy or financial markets in general, or (B) in general to the industries
in which STAR and its Subsidiaries operate and not specifically relating to
STAR and its Subsidiaries.
(j) EMPLOYEE BENEFITS MATTERS.
(1) Section 3.2(j)(l) of the STAR Disclosure Schedule sets
forth a list of all material agreements, arrangements, commitments,
and policies (i) which relate to employee benefits; (ii) which
pertain to present or former employees, retirees, directors or
independent contractors (or their beneficiaries, dependents or
spouses) of STAR; and (iii) which are currently or expected to be
adopted, maintained by, sponsored by, or contributed to by STAR or
any other employer (a "STAR AFFILIATE") which, under Section 414 of
the Code, would constitute a single employer with STAR (collectively
referred to as "STAR EMPLOYEE BENEFIT PLANS"), including, but not
limited to, all: (A) employee benefit plans as defined in Section
3(3) of ERISA; and (B) all other deferred compensation, incentive,
profit-sharing, thrift, stock ownership, stock appreciation rights,
bonus, stock option, stock purchase, vacation, or other benefit
plans or arrangements.
20
(2) STAR and all STAR Affiliates have complied with their
respective substantive obligations with respect to all STAR Employee
Benefit Plans (including, but not limited to, (i) filing or
distributing all reports or notices required by ERISA or the Code
and (ii) complying with all requirements of Part 6 of Title I of
ERISA and Code Section 4980B) and have maintained the STAR Employee
Benefit Plans in compliance with all applicable laws and regulations
(including, but not limited to, ERISA and the Code), except where
the failure to comply with such obligations would not result in a
Material Adverse Effect on STAR. Each STAR Employee Benefit Plan
that is intended to qualify under Code Section 401(a) has received a
favorable determination letter (or other ruling indicating its
tax-qualified status) from the IRS, and the IRS has not threatened
or taken any action to revoke any favorable determination letter
issued with respect to any such STAR Employee Benefit Plan. No
statement, either oral or written, has been made by STAR or any STAR
Affiliate (or any agent of either) to any Person regarding any STAR
Employee Benefit Plans that is not in accordance with the terms of
that plan that would have a Material Adverse Effect on STAR.
(3) STAR has made available to WAXS true, correct and
complete copies of all of the current documents relating to the STAR
Employee Benefit Plans, including, but not limited to: (i) all plan
texts (including any subsequent amendments), trust instruments and
other funding arrangements adopted or entered into in connection
with each of the STAR Employee Benefit Plans; (ii) the notices and
election forms used to notify employees and their dependents of
their continuation coverage rights under group health plans (under
Code Section 4980B(f) and ERISA Section 606), if applicable; and
(iii) the most recent Form 5500 annual reports (including all
schedules thereto), summary plan descriptions and favorable
determination letters, if applicable, for Employee Benefit Plans.
Since the date such documents were supplied to WAXS, no plan
amendments have been adopted and no such amendments or changes shall
be adopted or made prior to the Closing Date without WAXS's
approval, except as required by applicable law after the date hereof.
(4) Neither STAR nor any STAR Affiliate has any agreement,
arrangement, commitment or understanding to create any additional
STAR Employee Benefit Plans or to continue, modify, change or
terminate any existing STAR Employee Benefit Plans that could have a
Material Adverse Effect on STAR.
(5) None of the STAR Employee Benefit Plans (i) is
currently under investigation, audit or review by the U.S.
Department of Labor, the IRS, the Pension Benefit Guaranty
Corporation or any other federal or state agency or (ii) is liable
for any federal, state, local or foreign taxes that would have a
Material Adverse Effect on STAR. Except for such liabilities that
would not have a Material Adverse Effect on STAR, there is no
transaction in connection with which STAR or any STAR Affiliate
could be subject to either a civil penalty assessed pursuant to
ERISA Section 502, a tax imposed by Code Section 4975 or liability
for a breach of fiduciary responsibility under ERISA.
21
(6) Other than routine claims for benefits payable to
participants or beneficiaries in accordance with the terms of the STAR
Employee Benefit Plans, or relating to qualified domestic relations
orders (as defined in Section 414(p) of the Code), there are no claims,
pending or threatened, by any participant or beneficiary against any of
the STAR Employee Benefit Plans or any fiduciary of any of the STAR
Employee Benefit Plans that could have a Material Adverse Effect on
STAR.
(7) Neither STAR nor any STAR Affiliate has at any time
maintained, sponsored or contributed to any "pension plan" as
defined in ERISA Section 3(2) which is subject to Title IV of ERISA
or contributed to any pension plan which is a "multiemployer plan"
as defined in ERISA Section 3(37)(A).
(8) Section 3.2(j)(8) of the STAR Disclosure Schedule sets
forth a list of all agreements, arrangements, commitments and STAR
Employee Benefit Plans, under which (i) any benefits will be
increased, (ii) the vesting or exercisability of benefits will be
accelerated, (iii) amounts will become immediately payable, and/or
(iv) the immediate funding for any benefits is required, upon the
occurrence of the transaction contemplated by this Agreement.
Section 3.2(j)(8) of the STAR Disclosure Schedule sets forth an
estimate of the total value and/or cost of any such change in
control benefits and/or funding and the time periods in which such
payments must be made and/or funding obligations must be met,
including but not limited to the value and/or costs of any gross up
payments for tax purposes.
(9) To the Knowledge of STAR, no key employee, or group of
employees of STAR has any plans to terminate employment with STAR
other than employees with plans to retire. STAR has complied in all
material respects with all laws relating to the employment of labor,
including provisions thereof relating to wages, hours and equal
opportunity, and it does not have any material labor relations
problems (including threatened or actual strikes or work stoppages
or material grievances).
(10) Neither STAR nor any of its Subsidiaries is a party to
any collective bargaining agreement.
(k) INTELLECTUAL PROPERTY. Except as would not have a Material
Adverse Effect on STAR: (i) STAR and each of its Subsidiaries owns, or is
licensed to use (in each case, free and clear of any Liens, or claims of
rights therein by any third party), all Intellectual Property used in or
necessary for the conduct of its business as currently conducted, (ii) the
use of any Intellectual Property by STAR and its Subsidiaries does not
infringe on or otherwise violate the rights of any Person and is in
accordance with any applicable license pursuant to which STAR or any
Subsidiary acquired the right to use any Intellectual Property; (iii) to the
Knowledge of STAR, no Person is challenging, infringing on or otherwise
violating any right of STAR or any of its Subsidiaries with respect to any
Intellectual Property owned by and/or licensed to STAR or its Subsidiaries;
and (iv) neither STAR nor any of its Subsidiaries has received any written
notice of any pending claim with respect to any Intellectual Property used by
STAR and its Subsidiaries and to STAR's Knowledge, no Intellectual Property
owned and/or licensed by STAR or its Subsidiaries is being used or enforced
22
in a manner that would result in the abandonment, cancellation or
unenforceability of such Intellectual Property.
(l) BROKERS OR FINDERS. No agent, broker, investment banker,
financial advisor or other firm or Person is or will be entitled to any
broker's or finder's fee or any other similar commission or fee in connection
with any of the transactions contemplated by this Agreement, based upon
arrangements made by or on behalf of STAR except Deutsche Bank Xxxx Xxxxx
(the "STAR FINANCIAL ADVISOR"), whose fees and expenses will be paid by STAR
in accordance with STAR's agreement with such firm, a copy of which has been,
or will be promptly when available, provided to WAXS.
(m) OPINION OF STAR FINANCIAL ADVISOR. STAR has received the
opinion of the STAR Financial Advisor, dated the date of this Agreement, to
the effect that as of such date, the Merger Consolidation is fair, from a
financial point of view, to STAR and its stockholders, a copy of which has
been provided to WAXS.
(n) TAXES.
(1) (i) All material Tax Returns of STAR and each of its
Subsidiaries have been filed, or requests for extensions have been
timely filed and have not expired; (ii) all Tax Returns filed by
STAR and its Subsidiaries are complete and accurate in all material
respects; (iii) all Taxes shown to be due on such Tax Returns or on
subsequent assessments with respect thereto have been paid or the
STAR SEC Reports reflect that adequate reserves have been
established for the payment of such Taxes, and no other material
Taxes are payable by STAR and its Subsidiaries with respect to items
or periods covered by such Tax Returns (whether or not shown on or
reportable on such Tax Returns) or with respect to any period prior
to the date of this Agreement; (iv) STAR and each of its
Subsidiaries have disclosed on its federal income Tax Return all
positions taken therein that could give rise to a substantial
understatement of income Tax within the meaning of Section 6662 of
the Code; (v) there are no material liens on any of the assets of
STAR or any of its Subsidiaries with respect to Taxes, other than
liens for Taxes not yet due and payable or for Taxes that STAR or
any of its Subsidiaries is contesting in good faith through
appropriate proceedings and for which the STAR SEC Reports reflect
that appropriate reserves have been established; (vi) no power of
attorney to deal with Tax matters or waiver or extension of any
statute of limitations with respect to Taxes has been granted by
STAR or any of its Subsidiaries; and (vii) there is no (X) audit,
examination, deficiency or refund litigation or matter in
controversy with respect to any Taxes of STAR and its Subsidiaries
nor (Y) has the IRS nor any other Tax authority asserted any claim
for Taxes in writing, or to the knowledge of STAR, is threatening to
assert any claim for Taxes, that might reasonably be expected to
result in a Tax determination which would have a Material Adverse
Effect on STAR.
(2) [INTENTIONALLY OMITTED.]
23
(3) There are no contracts, agreements, plans or
arrangements, including but not limited to the provisions of this
Agreement, covering any employee or former employee of STAR or any
of its Subsidiaries that, individually or collectively, could give
rise to the payment of any amount (or portion thereof) that would
not be deductible pursuant to Sections 280G, 404, or 162 of the Code.
(4) Neither STAR nor any of its Subsidiaries is a party to
(A) a Tax Sharing Agreement, (B) transactions which have produced
deferred intercompany gains, losses or other intercompany items or
excess loss accounts (within the meaning of Treas. Reg. Section
1.1502-13 or 1.1502-19, respectively, or any predecessor regulations
or any comparable items for state, local or non-United States Tax
purposes), or (C) any joint venture, partnership, limited liability
company or other arrangement or contract that should be treated as a
partnership for federal income Tax purposes or as to which, an
election has been made under Treas. Reg. Section 301.7701-3 to have
the entity disregarded for federal income Tax purposes as an entity
separate from its owner.
(5) None of STAR and its Subsidiaries (A) has or has had
operations or assets outside the United States taxable as a "branch"
by the United States or as a "permanent establishment" by any
foreign country, (B) has received written notice of any claim made
by a Tax authority in a jurisdiction where STAR or any of its
Subsidiaries does not file Tax Returns that it is or may be subject
to Taxes in such jurisdiction, (C) does business in or derives
income from any state, local territorial or non-United States taxing
jurisdiction other than those for which Tax Returns have been filed
and made available to WAXS pursuant to Section 3.2 (n)(6) hereof,
(D) is a "passive foreign investment company" within the meaning of
the Code, (E) has participated in or cooperated with an
international boycott or has been requested to do so in connection
with any prior transaction or the transactions contemplated by this
Agreement, and (F) has availed itself of any Tax amnesty, Tax
holiday or similar relief in any jurisdiction.
(6) STAR has made available to WAXS true copies of (A) all
material Tax Returns that STAR or its Subsidiaries have filed since
January 1, 1994 and (B) all material correspondence, including
without limitation, closing agreements, private letter rulings,
advance pricing agreements and gain recognition agreements and other
written submissions to or communications with any Tax authorities.
(o) CERTAIN CONTRACTS. Neither STAR nor any of its Subsidiaries
is a party to or bound by (i) any "material contract" (as such term is
defined in Item 601(b)(10) of Regulation S-K of the SEC), (ii) any
noncompetition agreement or any other agreement or arrangement that limits or
otherwise restricts STAR or any of its Subsidiaries or any successor thereto
or that would, after the Effective Time, limit or restrict WAXS or the
Surviving Corporation or any of its affiliates or any successor thereto, from
engaging or competing in any line of business or in any geographic area,
which agreement or arrangement would have a Material Adverse Effect on WAXS
or the Surviving Corporation, (iii) any agreement or arrangement between STAR
or any of its Subsidiaries, on the one hand, and any affiliates, directors or
officers of STAR or its Subsidiaries, on the other hand, that is
24
not on arm's-length terms or (iv) any agreement or arrangement that may
require the payment of money or provision of services in excess of $500,000
annually or $1,000,000 over the term of such agreement or arrangement. All
contracts filed with the STAR SEC Reports and the contracts listed on Section
3.2(o) of the STAR Disclosure Schedule are valid binding and are in full
force and effect and enforceable in accordance with their respective terms,
except to the extent that such enforceability may be subject to applicable
bankruptcy, insolvency, moratorium, reorganization, or other laws affecting
the enforcement of creditors' rights generally or by general equitable
principles, and other than such contracts which by their terms are no longer
in force or effect. Neither STAR nor its Subsidiaries are in violation or
breach of or default under any such contract, nor to STAR's Knowledge, is any
other party to any such contract in violation or breach or other default
under any such contract, except for any such violation, breach or default
which would not have a Material Adverse Effect on STAR.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 COVENANTS OF STAR. During the period from the date of this
Agreement and continuing until the Effective Time, STAR agrees as to itself
and its Subsidiaries that (except as expressly required, contemplated or
permitted by this Agreement or the STAR Disclosure Schedule or as required by
a Governmental Entity of competent jurisdiction or any law or regulation or
to the extent that WAXS shall otherwise consent in writing, which consent
shall not be unreasonably withheld, delayed or conditioned):
(a) ORDINARY COURSE. STAR and its Subsidiaries shall carry on
their respective businesses in the usual, regular and ordinary course in all
material respects, in substantially the same manner as heretofore conducted,
and shall use all reasonable efforts to preserve intact their present lines
of business, maintain their rights and franchises and preserve their
relationships with customers, suppliers and others having significant
business dealings with them.
(b) DIVIDENDS; CHANGES IN SHARE CAPITAL. STAR shall not, and
shall not permit any of its Subsidiaries to, and shall not propose to, (i)
declare or pay any dividends on or make other distributions in respect of any
of its capital stock, except for dividends by wholly owned Subsidiaries of
STAR, (ii) split, combine or reclassify any of its capital stock or issue or
authorize or propose the issuance of any other securities in respect of, in
lieu of or in substitution for, shares of its capital stock, except for any
such action by a wholly owned Subsidiary of STAR which remains a wholly owned
Subsidiary after consummation of such transaction, or (iii) repurchase,
redeem or otherwise acquire any shares of capital stock of STAR or any of its
Subsidiaries or any securities convertible into or exercisable for any shares
of such capital stock except for the purchase from time to time by STAR of
STAR Common Stock in the ordinary course of business consistent with past
practice in connection with the STAR Employee Benefit Plans.
25
(c) ISSUANCE OF SECURITIES. STAR shall not, and shall not
permit any of its Subsidiaries to, issue, deliver or sell, or authorize or
propose the issuance, delivery or sale of, any shares of its capital stock of
any class, any STAR Voting Debt or any securities convertible into or
exercisable for, or any rights, warrants or options to acquire, any such shares
or STAR Voting Debt, or enter into any agreement with respect to any of the
foregoing, other than (i) the issuance of STAR Common Stock upon the exercise of
STAR Stock Options or in connection with other stock-based Benefits Plans
outstanding on the date hereof, in each case in accordance with their present
terms, or (ii) issuances by a wholly-owned Subsidiary of STAR of capital stock
to such Subsidiary's parent or another wholly-owned subsidiary of STAR.
(d) GOVERNING DOCUMENTS. Except to the extent required by the
rules and regulations of the Nasdaq, neither STAR nor any of its Subsidiaries
shall amend or propose to amend their respective certificates of
incorporation, by-laws or other governing documents.
(e) ACQUISITIONS. STAR shall not, and shall not permit any of
its Subsidiaries to acquire or agree to acquire, by merging or consolidating
with, or by purchasing a substantial equity interest in or a substantial
portion of the assets of, or by any other manner, any business or any
corporation, partnership, association or other business organization or
division thereof or otherwise acquire or agree to acquire any assets (other
than the acquisition of assets used in the operations of the business of STAR
and its Subsidiaries in the ordinary course).
(f) SALES. Except as set forth in Section 4.1(f) of the STAR
Disclosure Schedule, STAR shall not, and shall not permit any of its
Subsidiaries to, sell or agree to sell by merging or consolidating with, or
by selling or substantial equity interest in or a substantial portion of the
assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof
or otherwise sell or agree to sell any assets (other than the sale of assets
used in the operations of the business of STAR and its Subsidiaries in the
ordinary course; provided, however, STAR may enter into a definitive
agreement for (and consummate) the PT-1 Sale on terms and conditions which
would satisfy the condition set forth in Section 6.2(h) hereof).
(g) INVESTMENTS; INDEBTEDNESS. STAR shall not, and shall not
permit any of its Subsidiaries to, (i) make any loans, advances or capital
commitments to, or investments in, any other Person, other than (x) by STAR
or a Subsidiary of STAR to or in STAR or in any Subsidiary of STAR or (y)
pursuant to any contract or other legal obligation of STAR or any of its
Subsidiaries existing at the date hereof or (ii) create, incur, assume or
suffer to exist any indebtedness, issuances of debt or securities,
guarantees, loans or advances not in existence as of the date hereof except
pursuant to credit facilities, indentures and other arrangements in existence
on the date hereof or in the ordinary course of business consistent with past
practice, in each case as such credit facilities, indentures and other
arrangements may be amended, extended, modified, refunded, renewed or
refinanced after the date hereof.
(h) COMPENSATION. Other than as contemplated by Section 4.1(h)
of the STAR Disclosure Schedule, STAR shall not increase the amount of
compensation of any director or
26
executive officer except in the ordinary course of business consistent with
past practice or as required by an existing agreement, make any increase in
or commitment to increase any employee benefits, issue any additional STAR
Stock Options, adopt or make any commitment to adopt any additional employee
benefit plan or make any contribution, other than regularly scheduled
contributions, to any Employee Benefit Plan.
(i) ACCOUNTING METHODS; INCOME TAX MATTERS. STAR shall not
change its methods of accounting in effect on December 31, 1998, except as
required by changes in GAAP as concurred in by STAR's independent auditors.
STAR shall not (i) change its fiscal year, (ii) make any material tax
election, (iii) adopt or change any Tax accounting method, (iv) enter into
any closing agreement, (v) settle or compromise a Tax liability with a Tax
authority, (vi) surrender any right to claim a refund of Taxes, or (vii) take
(or permit any Subsidiary of STAR to take) any other action which would have
the effect of materially increasing the Tax liability or materially
decreasing any Tax Asset of STAR or any of its Subsidiaries, other than in
the ordinary course of business consistent with past practice.
(j) CERTAIN AGREEMENTS. STAR shall not, and shall not permit
any of its Subsidiaries to, enter into any agreement or arrangement that
limits or otherwise restricts STAR or any of its Subsidiaries or any of their
respective affiliates or any successor thereto, or that could, after the
Effective Time, limit or restrict WAXS or the Surviving Corporation or any of
their respective affiliates or any successor thereto, from engaging or
competing in any line of business or, in any geographic area which agreement
or arrangement would reasonably be expected to have a Material Adverse Effect
on WAXS or the Surviving Corporation.
(k) OTHER ACTIONS. Notwithstanding the fact that STAR may take
certain actions as permitted under Article IV hereof, STAR agrees not to take
any action which could reasonably be expected to cause the Merger to fail to
qualify as a reorganization within the meaning of Section 368(a) of the Code.
(l) LITIGATION. STAR shall not and shall not permit any of
its Subsidiaries to settle or, compromise any litigation, except where the
amount paid or payable, in each case, does not exceed $200,000.
4.2 CONTROL OF STAR'S BUSINESS. Except as provided in Section 5.9,
nothing contained in this Agreement shall give WAXS, directly or indirectly, the
right to control or direct STAR's operations prior to the Effective Time. Prior
to the Effective Time, STAR shall exercise, consistent with the terms and
conditions of this Agreement, complete control and supervision over its
operations.
27
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 PREPARATION OF PROXY STATEMENT: STOCKHOLDERS MEETINGS.
(a) As promptly as reasonably practicable following the date
hereof, WAXS and STAR shall prepare (in form and substance reasonably
satisfactory to each of WAXS and STAR) and file with the SEC proxy materials
which shall constitute the joint proxy statement and prospectus in connection
with the WAXS Stockholders Meeting and the STAR Stockholders Meeting (such
proxy statement and prospectus, and any amendments or supplements thereto,
the "JOINT PROXY STATEMENT/PROSPECTUS") and WAXS shall prepare (in form and
substance reasonably satisfactory to each of WAXS and STAR) and file a
registration statement on Form S-4 with respect to the issuance of WAXS
Common Stock in the Merger (the "REGISTRATION STATEMENT"). The Joint Proxy
Statement/Prospectus will be included in and will constitute a part of the
Registration Statement as WAXS's prospectus. The Registration Statement and
the Joint Proxy Statement/Prospectus shall comply as to form in all material
respects with the applicable provisions of the Securities Act and the
Exchange Act and the rules and regulations thereunder. Each of WAXS and STAR
shall use reasonable efforts to have the Registration Statement declared
effective by the SEC as promptly as reasonably practicable after filing with
the SEC and to keep the Registration Statement effective as long as is
necessary to consummate the Merger and the actions contemplated thereby. WAXS
and STAR shall, as promptly as practicable after receipt thereof, provide the
other party copies of any written comments and advise the other party of any
oral comments, with respect to the Joint Proxy Statement/Prospectus received
from the SEC. WAXS will provide STAR with a reasonable opportunity to review
and comment on any amendment or supplement to the Registration Statement
prior to filing such with the SEC, and will provide STAR with a copy of all
such filings made with the SEC. Notwithstanding any other provision herein to
the contrary, no amendment or supplement (including by incorporation by
reference) to the Joint Proxy Statement/Prospectus or the Registration
Statement shall be made without the approval of both parties, which approval
shall not be unreasonably withheld or delayed; PROVIDED, that with respect to
documents filed by a party which are incorporated by reference in the
Registration Statement or Joint Proxy Statement/Prospectus, this right of
approval shall apply only with respect to information relating to the other
party or its business, financial condition or results of operations. WAXS
will use reasonable efforts to cause the Joint Proxy Statements/Prospectus to
be mailed to WAXS's stockholders, and STAR will use reasonable efforts to
cause the Joint Proxy Statement/Prospectus to be mailed to STAR's
stockholders, in each case as promptly as practicable after the Registration
Statement is declared effective under the Securities Act. WAXS shall also
take any action (other than qualifying to do business in any jurisdiction in
which it is not now so qualified or to file a general consent to service of
process) required to be taken under any applicable state securities laws in
connection with the issuance of WAXS Common Stock and STAR shall furnish all
information concerning STAR and the holders of STAR Common Stock as may be
reasonably requested in connection with any such action. Each party will
advise the other party, promptly after it receives notice thereof, of the
time when the Registration Statement has become effective, the issuance of
any stop order, the suspension of the qualification of the WAXS Common Stock
issuable in connection with the Merger for offering
28
or sale in any jurisdiction, or any request by the SEC for amendment of the
Joint Proxy Statement/Prospectus or the Registration Statement. If at any
time prior to the Effective Time any information relating to WAXS or STAR, or
any of their respective affiliates, officers or directors, should be
discovered by WAXS or STAR which should be set forth in an amendment or
supplement to any of the Registration Statement or the Joint Proxy
Statement/Prospectus so that any of such documents would not include any
misstatement of a material fact or omit to state any material fact necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading, the party which discovers such information
shall promptly notify the other party hereto and, to the extent required by
law, rules or regulations, an appropriate amendment or supplement describing
such information shall be promptly filed with the SEC and disseminated to the
stockholders of WAXS and STAR.
(b) Subject to Section 5.4, STAR shall, as promptly as
reasonably practicable following the execution of this Agreement, duly take
all lawful action to call, give notice of, convene and hold a meeting of its
stockholders (the "STAR STOCKHOLDERS MEETING ") (which meeting the parties
intend to be held no later than thirty (30) days following the date on which
the Registration Statement has been declared effective by the SEC) for the
purpose of obtaining the Required STAR Vote with respect to the actions
contemplated by this Agreement and shall take all lawful action to solicit
the adoption of this Agreement by the Required STAR Vote. Subject to Section
5.4, the Board of Directors of STAR shall recommend adoption of this
Agreement by the stockholders of STAR to the effect as set forth in Section
3.2(f), and shall not withdraw, modify or materially qualify in any manner
adverse to WAXS such recommendation or take any action or make any statement
in connection with the STAR Stockholders Meeting materially inconsistent with
such recommendation (collectively, an "ADVERSE CHANGE IN THE STAR
RECOMMENDATION"); provided, however, that the foregoing shall not prohibit
accurate disclosure of factual information regarding the business, financial
condition or results of operations of WAXS or STAR or the fact that an
Acquisition Proposal has been made, the identity of the party making such
proposal or the material terms of such proposal (provided, that the Board of
Directors of STAR does not withdraw, modify or materially qualify in any
manner adverse to WAXS its recommendation) in the Registration Statement or
the Joint Proxy Statement/Prospectus, to the extent such information, facts,
identity or terms is required to be disclosed therein under applicable law.
(c) WAXS shall, as promptly as reasonably practicable
following the execution of this Agreement, duly take all lawful action to call,
give notice of, convene and hold a meeting of its stockholders (the "WAXS
STOCKHOLDERS MEETING") (which meeting the parties intend to be held no later
than thirty (30) days following the date on which the Registration Statement has
been declared effective by the SEC) for the purpose of obtaining the Required
WAXS Vote with respect to the transactions contemplated by this Agreement and
shall take all lawful action to solicit the approval of the transactions
contemplated hereby by the Required WAXS Vote. The Board of Directors of WAXS
shall recommend approval of the transactions contemplated hereby by the
stockholders of WAXS to the effect as set forth in Section 3.1(f), and shall not
withdraw, modify or materially qualify in any manner adverse to STAR such
recommendation or take any action or make any statement in connection with the
WAXS Stockholders Meeting materially inconsistent with
29
such recommendation; provided, however, that the foregoing shall not prohibit
accurate disclosure of factual information regarding the business, financial
condition or operations of WAXS or STAR.
5.2 ACCESS TO INFORMATION. Upon reasonable notice, each of STAR and
WAXS shall (and shall cause its Subsidiaries to) afford to the officers,
employees, accountants, counsel, financial advisors and other representatives of
the other party hereto reasonable access during normal business hours, during
the period prior to the Effective Time, to all its properties, books, contracts,
commitments, records, officers and employees and, during such period, each of
STAR and WAXS shall (and shall cause its Subsidiaries to) furnish promptly to
the other party hereto (a) a copy of each report, schedule, registration
statement and other document filed, published, announced or received by it
during such period pursuant to the requirements of federal or state securities
laws, as applicable (other than documents which such party is not permitted to
disclose under applicable law), and (b) consistent with its legal obligations,
all other information concerning it and its business, properties and personnel
as such other party may reasonably request; provided, however, that either STAR
or WAXS may restrict the foregoing access to the extent that any law, treaty,
rule or regulation of any Governmental Entity applicable to such party requires
such party or its Subsidiaries to restrict access to any properties or
information. The parties will hold any such information which is non-public in
confidence to the extent required by, and in accordance with, the provisions of
the Confidentiality Agreement, dated December 17, 1999, between STAR and WAXS
(the "CONFIDENTIALITY AGREEMENT"). Any investigation by WAXS or STAR shall not
affect the representations and warranties made herein of STAR or WAXS, as the
case may be.
5.3 REASONABLE EFFORTS.
(a) Subject to the terms and conditions of this Agreement, each
party will use reasonable efforts to take, or cause to be taken, all actions
and to do, or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate the Merger and the other
transactions contemplated by this Agreement as soon as practicable after the
date hereof, including (i) preparing and filing as promptly as practicable
all documentation to effect all necessary applications, notices, petitions,
filings, and other documents and to obtain as promptly as practicable all
consents, waivers, licenses, orders, registrations, approvals, permits and
authorizations necessary or advisable to be obtained from any third party
and/or any Governmental Entity in order to consummate the Merger or any of
the other transactions contemplated by this Agreement and (ii) taking all
reasonable steps as may be necessary to obtain all such material consents,
waivers, licenses, registrations, permits, authorizations, tax rulings,
orders and approvals. The parties each shall keep the other apprised of the
status of matters relating to completion of the transactions contemplated
hereby, including promptly furnishing the other with copies of notices or
other communications received by it or any of its Subsidiaries or affiliates
from any Governmental Entity or third party with respect to the Merger or any
of the other transactions contemplated by this Agreement, in each case, to
the extent permitted by law or regulation or any applicable confidentiality
agreements existing on the date hereof.
(b) Promptly following execution of this Agreement, STAR and
WAXS shall promptly prepare and file any required notifications with the
United States Department of Justice and
30
the Federal Trade Commission as required by the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR ACT"). The parties shall
cooperate with each other in connection with the preparation of such
notifications and related matters, including sharing information concerning
sales and ownership and such other information as may be needed to complete
such notification, and providing a copy of such notifications to the other
prior to filing; provided, that WAXS and STAR shall have the right to redact
any dollar revenue information from the copies of such notifications provided
to the other parties. The parties shall keep all information about the other
obtained in connection with the preparation of such notification confidential
pursuant to the terms of the Confidentiality Agreement. Each Person shall pay
the filing fee required under the regulations promulgated pursuant to the HSR
Act with respect to its own filing thereunder.
5.4 ACQUISITION PROPOSALS. Without the prior written consent of
WAXS, pending the Effective Time or earlier termination of this Agreement
pursuant to Section 7.1, STAR agrees that neither it nor any of its
Subsidiaries shall, and that it shall use its reasonable efforts to cause its
employees, officers, directors, affiliates, agents and representatives
(including any investment banker, financial advisor, attorney or accountant
retained by any of them) not to, directly or indirectly, initiate, solicit,
encourage or knowingly facilitate (including by way of furnishing information
or engaging in discussions or negotiations) any inquiries or the making of
any proposal or offer with respect to a merger, reorganization, share
exchange, consolidation, business combination, recapitalization, liquidation,
dissolution or similar action involving STAR, or any purchase or sale of a
material portion of the assets of (including stock of Subsidiaries) of STAR,
taken as a whole, or any purchase or sale of, or tender or exchange offer
for, a material portion of the equity securities of STAR (any such proposal
or offer being hereinafter referred to as an "ACQUISITION PROPOSAL"). STAR
further agrees that neither it nor any of its Subsidiaries shall, and that it
shall use its reasonable efforts to cause it and its Subsidiaries' officers,
directors, affiliates, employees, agents and representatives (including any
investment banker, financial advisor, attorney or accountant retained by it
or any of its Subsidiaries) not to, directly or indirectly, have any
discussion with or provide any confidential information or data to any Person
relating to an Acquisition Proposal, or engage in any negotiations concerning
an Acquisition Proposal, or knowingly facilitate any effort or attempt to
make or implement an Acquisition Proposal or accept an Acquisition Proposal.
STAR agrees that it and its Subsidiaries will, and will cause its officers,
directors, affiliates, employees, agents and representatives to, immediately
cease and cause to be terminated any activities, discussions or negotiations
existing as of the date of this Agreement with any parties conducted
heretofore with respect to any Acquisition Proposal. STAR agrees that it will
promptly inform its directors, officers, affiliates, key employees, agents
and representatives of the obligations undertaken in this Section 5.4.
Notwithstanding anything contained in this Section 5.4 or otherwise in this
Agreement to the contrary, STAR or its Board of Directors shall be permitted
to (A) in response to an unsolicited bona fide written Acquisition Proposal
by any Person, recommend approval of such an unsolicited bona fide written
Acquisition Proposal to its stockholders or effect an Adverse Change in the
STAR Recommendation or (B) engage in any discussions or negotiations with, or
provide any information to, any person in response to an unsolicited bona
fide written Acquisition Proposal by any such Person, if and only to the
extent that, in any such case as is referred to in clause (A) or (B), (i) the
STAR Stockholders Meeting shall not have occurred, (ii) its Board of
Directors (x) in the case of clause (A) above, concludes in good faith
31
that such Acquisition Proposal constitutes a Superior Proposal (as defined in
Section 8.12) and terminates this Agreement pursuant to Section 7.1 (h) or
(y) in the case of clause (B) above concludes in good faith that such
Acquisition Proposal could reasonably be expected to result in a Superior
Proposal, (iii) prior to providing any information or data to any Person in
connection with an Acquisition Proposal by any such Person, its Board of
Directors receives from such Person an executed confidentiality agreement
containing confidentiality terms at least as stringent as those contained in
the Confidentiality Agreement, and (iv) prior to providing any information or
data to any Person or entering into discussions or negotiations with any such
Person regarding such Acquisition Proposal, its Board of Directors notifies
WAXS promptly of such inquiries, proposals or offers received by, any such
information requested from, or any such discussions or negotiations sought to
be initiated or continued with, any of its representatives indicating, in
connection with such notice, the name of such Person and the material terms
and conditions of any inquiries, proposals or offers. STAR agrees that it
will promptly keep WAXS informed of the status and terms of any such
proposals or offers and the status and terms of any such discussions or
negotiations. STAR agrees that it will, and will cause its officers,
directors and representatives to, immediately cease and cause to be
terminated any activities, discussions or negotiations existing as of the
date of this Agreement with any parties conducted heretofore with respect to
any Acquisition Proposal. STAR agrees that it will promptly inform its
directors, officers, key employees, agents and representative of the
obligations undertaken in this Section 5.4. Nothing in this Section 5.4 shall
(x) permit STAR or WAXS to terminate this Agreement (except as specifically
provided in Article VII hereof) or (y) affect any other obligation of STAR or
WAXS under this Agreement.
5.5 FEES AND EXPENSES. All Expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such Expenses. As used in this Agreement, "EXPENSES" includes all
out-of-pocket expenses (including all fees and expenses of counsel, accountants,
investment bankers, experts and consultants to a party hereto and its
affiliates) incurred by a party or on its behalf in connection with or related
to the authorization, preparation, negotiation, execution and performance of
this Agreement and the transactions contemplated hereby.
5.6 PUBLIC ANNOUNCEMENTS. Neither WAXS nor STAR shall, without the
prior consent of the other party, issue a press release or any other public
statement with respect to this Agreement or the transactions contemplated hereby
except pursuant to a joint communications plan, unless otherwise required by
applicable law or by obligations pursuant to any listing agreement with, or
rules of, any securities exchange, in which case the parties shall use
reasonable efforts to consult with each other before issuing any press release
or otherwise making any public statement with respect to this Agreement or the
transactions contemplated hereby.
5.7 LISTING. So long as WAXS Common Stock is quoted on the Nasdaq or
listed on any national securities exchange, WAXS, prior to the Effective Time,
will cause to be quoted or listed, upon official notice of issuance, and keep
quoted or listed on such system or exchange, all WAXS Common Stock issuable
pursuant to Article I hereof.
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5.8 TERMINATION OF TAX SHARING AGREEMENT. As of the Effective Time,
STAR shall cause all Tax Sharing Agreements to which STAR or any of its
Subsidiaries is a party to be terminated and of no further force and effect
after the Effective Time, thereby extinguishing any rights or obligations of any
party thereunder.
5.9 MANAGEMENT SERVICES. Subject to obtaining any necessary regulatory
or third party consents and to the extent permitted under applicable law, WAXS
and STAR intend to enter into a management agreement pursuant to which WAXS will
provide, under the supervision and direction of the STAR board of directors,
certain management services to STAR. Neither party shall have any obligation
under this Section 5.9 and the provision of the foregoing services shall be
subject to the negotiation of a definitive agreement satisfactory to each of
WAXS and STAR in its sole discretion.
5.10 NEW DIRECTOR OF WAXS. WAXS shall take all appropriate action such
that, immediately following the Effective Time, and without further action by
WAXS, one (1) designee of STAR shall be elected to the Board of Directors of
WAXS. Such STAR designee shall be Xxxxxxxxxxx X. Xxxxxxxx, or such other person
designated by STAR and agreed to by WAXS prior to the Effective time.
5.11 FURTHER ASSURANCES. At and after the Effective Time, the officers
and directors of the Surviving Corporation will be authorized to execute and
deliver, in the name and on behalf of STAR or Merger Sub, any deeds, bills of
sale, assignments or assurances and to take and do, in the name and on behalf of
STAR or Merger Sub, any other actions and things to vest, perfect or confirm of
record or otherwise in the Surviving Corporation any and all rights, properties,
or assets acquired or to be acquired by the Surviving Corporation as a result
of, or in connection with, the Merger.
5.12 DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE.
(a) From the Effective Time through the sixth (6th)
anniversary of the date on which the Effective Time occurs, WAXS shall
indemnify and hold harmless each present (as of the Effective Time) or former
officer or director of STAR and its Subsidiaries (the "INDEMNIFIED PARTIES"),
against all claims, losses, liabilities, damages, judgments, fines and
reasonable fees, costs and expenses, including attorneys' fees and
disbursements (collectively, "COSTS"), incurred in connection with any claim,
action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of or pertaining to (i) the fact
that the Indemnified Party is or was an officer or director of STAR or any of
its Subsidiaries or (ii) matters existing or occurring at or prior to the
Effective Time (including this Agreement and the transactions and actions
contemplated hereby), whether asserted or claimed prior to, at or after the
Effective Time, to the fullest extent permitted under applicable law;
PROVIDED that no Indemnified Party may settle any such claim without the
prior approval of WAXS (which approval shall not be unreasonably withheld or
delayed). Each Indemnified Party will be entitled to advancement of expenses
incurred in the defense of any claim, action, suit, proceeding or
investigation from WAXS within ten (10) business days of receipt by WAXS from
the Indemnified Party of a request therefor; PROVIDED that any person
33
to whom expenses are advanced provides an undertaking, to the extent required
by the DGCL, to repay such advances if it is ultimately determined that such
person is not entitled to indemnification.
(b) WAXS shall maintain, at no expense to the beneficiaries,
in effect for six years from the Effective Time the current policies of the
directors' and officers' liability insurance maintained by STAR with respect to
matters existing or occurring at or prior to the Effective Time (including the
transactions contemplated by this Agreement); PROVIDED that WAXS may substitute
therefor policies of at least the same coverage containing terms and conditions
which are not materially less advantageous to any beneficiary thereof; and
PROVIDED, FURTHER, that in no event shall WAXS be required to pay annual
premiums for such insurance in excess of 125% of the annual premiums currently
paid by STAR for such insurance.
(c) Notwithstanding anything herein to the contrary, if any
claim, action, suit, proceeding or investigation (whether arising before, at or
after the Effective Time) is made against any Indemnified Party, on or prior to
the sixth (6th) anniversary of the Effective Time, the provisions of this
Section 5.12 shall continue in effect until the final disposition of such claim,
action, suit, proceeding or investigation.
(d) The covenants contained in this Section 5.12 are intended
to be for the benefit of, and shall be enforceable by, each of the Indemnified
Parties and their respective heirs and legal representatives and shall not be
deemed exclusive of any other rights to which an Indemnified Party is entitled,
whether pursuant to law, contract or otherwise.
(e) In the event that the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other Person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers or conveys all or substantially all of
its properties and assets to any Person, then, and in each such case, proper
provision shall be made so that the successors or assigns of the Surviving
Corporation or the purchaser of such properties and assets shall succeed to the
obligations set forth in this Section 5.12.
5.13 CONFIDENTIALITY. The parties each agree that the Confidentiality
Agreement shall continue in full force and effect until the Effective Time, and
if this Agreement is terminated or if the Merger is not consummated for any
reason whatsoever, such Confidentiality Agreement shall thereafter remain in
full force and effect in accordance with its terms.
5.14 COMPLIANCE WITH DISSENTERS' RIGHTS STATUTE. STAR shall comply with
all procedures and requirements applicable to it under Section 262 of the DGCL.
5.15 INTERIM FINANCING. The parties have agreed that WAXS will make
available up to $25,000,000 in secured financing to STAR and up to $10,000,000
in secured financing to STAR's subsidiary, STAR Telecommunications GmbH,
(collectively, the "Interim Financing") pursuant to the terms of the Loan
Documents (as defined below). The Interim Financing will mature at the earlier
of one year from the date hereof and ninety (90) days after any termination of
this Agreement
34
(other than a termination due to STAR's breach or default under this
Agreement which will result in the Interim Financing becoming immediately due
and payable). The Interim Financing will be made pursuant to, and subject to
the finalization of, appropriate loan and security documents (the "Loan
Documents") substantially in the form of, and as contemplated by, the draft
Loan Documents distributed to STAR on or prior to the date hereof.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligations of STAR and WAXS to effect the Merger are subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) HSR ACT. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or
shall have expired.
(b) STOCKHOLDER APPROVAL. WAXS shall have obtained the Required
WAXS Vote in connection with the approval of this Agreement and the Merger
and STAR shall have obtained the Required STAR Vote in connection with the
approval of this Agreement and the Merger.
(c) REGISTRATION STATEMENT. The Registration Statement shall
have been declared effective by the SEC under the Securities Act. No stop
order suspending the effectiveness of the Registration Statement shall have
been issued by the SEC and no proceedings for that purpose shall have been
initiated or, to the Knowledge of WAXS or STAR, threatened by the SEC.
6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF WAXS. The obligations of
WAXS to effect the Merger are subject to the satisfaction of, or waiver by WAXS,
on or prior to the Closing Date of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations
and warranties of STAR set forth in this Agreement shall be true and correct
as of the date of this Agreement and as of the Closing Date as though made on
and as of the Closing Date (except to the extent in either case that such
representations and warranties speak as of another date, in which case any
such representations and warranties shall be true and correct as of such
date), except where any failures to be true and correct would not have a
Material Adverse Effect on WAXS or the Surviving Corporation, and WAXS shall
have received a certificate of the chief executive officer and the chief
financial officer of STAR to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF STAR. STAR shall have
performed or compl ied in all material respects with all material agreements
and covenants required to be performed by it under this Agreement at or prior
to the Closing Date, and WAXS shall have received a certificate of the chief
executive officer and the chief financial officer of STAR to such effect.
35
(c) CONSENTS AND APPROVALS. Other than the filing provided for
under Section 1.3, all consents, approvals and actions of, filings with and
notices to any Governmental Entity required to consummate the Merger and the
other transactions contemplated hereby, or of any other third party required
of STAR or any of its Subsidiaries to consummate the Merger and the other
transactions contemplated hereby, the failure of which to be obtained or
taken would have a Material Adverse Effect on WAXS or the Surviving
Corporation, shall have been obtained; provided, however, that the provisions
of this Section 6.2(c) shall not be available to WAXS, if its failure to
fulfill its obligations pursuant to Section 5.3 shall have been the cause of,
or shall have resulted in, the failure to obtain such consent or approval.
(d) NO MATERIAL CHANGE. STAR and its Subsidiaries, taken as a
whole, shall not have suffered, since the date hereof, a Material Adverse
Effect, other than any change, circumstance or effect relating (i) to the
economy or financial markets in general, (ii) in general to the industries in
which STAR operates and not specifically relating to STAR or (iii) the trading
price of STAR Common Stock.
(e) OPINION OF COUNSEL TO STAR. WAXS shall have received from
Xxxxxxx & XxXxxxxx an opinion, dated the Closing Date, in form and substance
reasonably satisfactory to WAXS.
(f) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No laws shall have
been adopted or promulgated, and no temporary restraining order, preliminary
or permanent injunction or other order issued by a court or other
Governmental Entity of competent jurisdiction shall be in effect (i) having
the effect of making the Merger illegal or otherwise prohibiting consummation
of the Merger or (ii) which otherwise would have a Material Adverse Effect on
WAXS or the Surviving Corporation; provided, however, that the provisions of
this Section 6.2(f) shall not be available to WAXS if its failure to fulfill
its obligations pursuant to Section 5.3 shall have been the cause of, or
shall have resulted in any such order or injunction.
(g) DISSENTERS' RIGHTS. STAR shall have complied with all
procedures and requirements applicable to it under Section 262 of the DGCL,
the period for exercising dissenters' rights of appraisal pursuant to the
DGCL in connection with the Merger shall have expired, and holders of less
than one percent (1%) of the shares of STAR Common Stock issued and
outstanding immediately prior to the Closing shall have exercised such
dissenters' rights of appraisal, and WAXS shall have received a certificate
from an officer of STAR to all such effects.
(h) SALE OF PT-1. STAR shall have consummated the sale of the
capital stock of PT-1 Communications, Inc. ("PT-1"), or the assets of PT-1 on a
substantially equivalent basis, for Net PT-1 Sale Proceeds (as defined in
Section 8.12 ) of at least $150,000,000 pursuant to an agreement in form and
substance reasonably satisfactory to WAXS (the "PT-1 Sale"); PROVIDED, HOWEVER,
if (i) the PT-1 Sale has not been consummated prior to the Closing Date, (but
STAR has entered into a definitive agreement, in form and substance satisfactory
to WAXS, for the PT-1 Sale)
36
and (ii) WAXS determines in its sole discretion to waive compliance with this
Section 6.2(h) and proceed with the Merger, then WAXS and STAR agree that in
such event, they shall amend this Agreement to provide that (A) the formula
used to determine the Exchange Ratio shall be modified by deleting "Z"
therefrom and (B) a holder of STAR Common Stock and STAR Stock Options
immediately prior to the Effective Time shall have a right to receive such
holder's pro rata share of an aggregate number of additional "contingent"
shares of WAXS Common Stock, if and when the PT-1 Sale is consummated
pursuant to such definitive agreement (or, in the case of a holder of STAR
Stock Option, when such option is exercised), equal to the PT-1 Excess
Proceeds DIVIDED BY twenty (20) (the "Contingent Shares") and that the
provisions of any such amendment to this Agreement concerning the issuance of
such Contingent Shares will satisfy the requirements of Section 3.03 of IRS
Revenue Procedure 77-37, as it has been amplified and superseded, which
established the circumstances under which the Internal Revenue Service
previously issued advanced rulings on contingent stock arrangements in
mergers intended to qualify as "reorganizations" under Section 368(a) of the
Code.
(i) STAR shall have provided evidence satisfactory to WAXS that
any and all obligations of STAR (or any of its affiliates) relating to or
arising in connection with the China-U.S. Cable Network were fully satisfied
by the reclamation of STAR's capacity in such network and neither STAR nor
any of its affiliates has any further obligation or liability with respect
thereto, including without limitation payment of the amounts claimed and
owing by STAR according to that letter dated January 11, 2000 from Kou
Yinsen, Director, CBP to Xxx Xxxxxxx.
6.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF STAR. The obligations of
STAR to effect the Merger are subject to the satisfaction of, or waiver by STAR,
on or prior to the Closing Date of the following additional conditions:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations
and warranties of WAXS set forth in this Agreement shall be true and correct
as of the date of this Agreement and as of the Closing Date as though made on
and as of the Closing Date (except to the extent in either case that such
representations and warranties speak as of another date, in which case any
such representations and warranties shall be true and correct as of such
date), except where any failures to be true and correct would not have a
Material Adverse Effect on WAXS, and STAR shall have received a certificate
of the chief executive officer and the chief financial officer of WAXS to
such effect.
(b) PERFORMANCE OF OBLIGATIONS OF WAXS. WAXS shall have
performed or complied in all material respects with all material agreements
and covenants required to be performed by it under this Agreement at or prior
to the Closing Date, and STAR shall have received a certificate of the chief
executive officer and the chief financial officer of WAXS to such effect.
(c) CONSENTS AND APPROVALS. Other than the filing provided for
under Section 1.3, all consents, approvals and actions of, filings with and
notices to any Governmental Entity required to consummate the Merger and the
other transactions contemplated hereby, or of any other third
37
party required of WAXS or any of its Subsidiaries to consummate the Merger
and the transactions contemplated hereby, the failure of which to be obtained
or taken would have a Material Adverse Effect on WAXS, shall have been
obtained; provided, however, that the provisions of this Section 6.3(c) shall
not be available to STAR if its failure to fulfill any of its obligations
pursuant to Section 5.3 shall have been the cause of, or shall have resulted
in, the failure to obtain such consent or approval.
(d) NO MATERIAL CHANGE. WAXS shall not have suffered, since the
date hereof, a Material Adverse Effect, other than any change, circumstance
or effect relating (i) to the economy or financial markets in general, (ii)
in general to the industries in which WAXS operates and not specifically
relating to WAXS or (iii) the trading price of WAXS Common Stock.
(e) OPINION OF COUNSEL TO WAXS. STAR shall have received from
Long Xxxxxxxx & Xxxxxx LLP an opinion, dated the Closing Date, in form and
substance reasonably satisfactory to STAR.
(f) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No laws shall
have been adopted or promulgated, and no temporary restraining order,
preliminary or permanent injunction or other order issued by a court or other
Governmental Entity of competent jurisdiction shall be in effect (i) having the
effect of making the Merger illegal or otherwise prohibiting consummation of the
Merger or (ii) which otherwise would have a Material Adverse Effect on WAXS
after giving effect to the Merger; provided, however, that the provisions of
this Section 6.3(g) shall not be available to STAR if its failure to fulfill its
obligations pursuant to Section 5.3 shall have been the cause of, or shall have
resulted in any such order or injunction.
(g) EXCHANGE FUND. An officer of the Exchange Agent shall have
certified in writing to STAR that the deposit required to be made by WAXS into
the Exchange Fund pursuant to Section 2.1 has been made in connection with the
establishment thereof.
ARTICLE VII
TERMINATION AND AMENDMENT
7.1 TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time, by action taken or authorized by the Board of Directors of
the terminating party or parties:
(a) By mutual written consent of WAXS and STAR;
(b) By either WAXS or STAR, if the other party shall have
failed to comply in any material respect with any of its material covenants
or agreements contained in this Agreement, which failure to so comply has not
been cured within ten (10) business days following receipt by such other
party of written notice of such failure to comply; provided, however, that if
any such
38
breach is curable by the breaching party through the exercise of the
breaching party's reasonable efforts and for so long as the breaching party
shall be so using its reasonable efforts to cure such breach, the
non-breaching party may not terminate this Agreement pursuant to this
paragraph; and PROVIDED, FURTHER, that no party shall have the right to
terminate this Agreement pursuant to this Section 7.1(b) if such party is
then failing to comply in any material respect with any of its covenants or
agreements contained in this Agreement;
(c) By either WAXS or STAR, if there has been a breach by the
other party of any representations or warranties, which breach has not been
cured within ten (10) business days following receipt by such other party of
written notice of such failure to comply; provided, however, that if any such
breach is curable by the breaching party through the exercise of the
breaching party's reasonable efforts and for so long as the breaching party
shall be so using reasonable efforts to cure such breach, the non-breaching
party may not terminate this Agreement pursuant to this paragraph; and
provided further, that this provision shall not apply to such breaches which
would not have a Material Adverse Effect on WAXS or the Surviving Corporation;
(d) By either STAR or WAXS, if the Effective Time shall not
have occurred on or before September 30, 2000 (the "TERMINATION DATE");
provided, however, that the right to terminate this Agreement under this
Section 7.1(d) shall not be available to any party whose action or failure to
fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Effective Time to occur on or before the
Termination Date and any such action or failure constitutes a breach of this
Agreement by such party;
(e) By either STAR or WAXS if any Governmental Entity (i) shall
have issued an order, decree or ruling or taken any other action (which the
parties shall have used their reasonable efforts to resist, resolve or lift,
as applicable, in accordance with Section 5.3) permanently restraining,
enjoining or otherwise prohibiting the transactions contemplated by this
Agreement, and such order, decree, ruling, or other action shall have become
final and nonappealable or (ii) shall have failed to issue an order, decree
or ruling or to take any other action (which order, decree, ruling or other
action the parties shall have used their reasonable efforts to obtain, in
accordance with Section 5.3), which, in the case of each of (i) and (ii) is
necessary to fulfill the conditions set forth in Section 6.2(f) with respect
to WAXS or Section 6.3(g) with respect to STAR, and such denial of a request
to issue such order, decree, ruling or take such other action shall have
become final and nonappealable; provided, however, that the right to
terminate this Agreement under this Section 7.1(e) shall not be available to
any party whose action or failure to fulfill any obligation under this
Agreement has been the cause of such action or inaction and any such action
or failure constitutes a breach of this Agreement by such party;
(f) By WAXS or STAR if the adoption of this Agreement by the
stockholders of WAXS or the stockholders of STAR shall not have been obtained
by reason of the failure to obtain the Required WAXS Vote or the Required
STAR Vote, as applicable, in each case upon the taking of such vote at a duly
held meeting of stockholders of WAXS or STAR, or at any adjournment thereof;
39
(g) By WAXS if the Board of Directors of STAR, prior to the
Required STAR Vote, shall make an Adverse Change in the STAR Recommendation
(other than in connection with STAR's termination of this Agreement pursuant
to Section 7.1(b)) or approve or recommend a Superior Proposal pursuant to
Section 5.4 or shall resolve to take any such actions;
(h) By STAR, at any time prior to the Required STAR Vote upon
three (3) business days' prior notice to WAXS, if its Board of Directors
shall have determined as of the date of such notice that an Acquisition
Proposal is a Superior Proposal; provided, however, that (i) STAR shall have
complied with Section 5.4, (ii) prior to such termination, STAR shall, if
requested by WAXS in connection with a revised proposal by it, negotiate in
good faith for such three (3) business day period with WAXS and (iii) the
Board of Directors of STAR shall have concluded in good faith, as of the
effective date of such termination, after taking into account any revised
proposal by WAXS during such three (3) business day period, that an
Acquisition Proposal is a Superior Proposal; and provided, further, that it
shall be a condition to termination by STAR pursuant to this Section 7.1(h)
that STAR shall have made the payment of the fee to WAXS pursuant to Section
7.2(b);
(i) By WAXS, if (X) either STAR or any of its material
Subsidiaries (1) commences a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or consents to the
entry of an order for relief in an involuntary case under any such law, (2)
consents to the appointment of or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of STAR or any of
its Subsidiaries or for all or a material portion of the property or assets of
STAR or any of its Subsidiaries or (3) effects any general assignment for the
benefit of creditors or (Y) a Governmental Entity having jurisdiction enters a
decree or order for (a) relief in respect of STAR or any of its material
Subsidiaries in an involuntary case under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect, (b) appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official of
STAR or any of its Subsidiaries or for all or a material portion of the property
and assets of STAR or any of its Subsidiaries or (c) the winding up or
liquidation of the affairs of STAR or any of its material Subsidiaries and, in
each case, such decree or order shall remain unstayed and in effect for a period
of 30 consecutive days; or
(j) By WAXS if there has been an Event of Default under the
Credit Agreement, of even date herewith, between WAXS and STAR.
7.2 EFFECT OF TERMINATION.
(a) In the event of any termination of this Agreement by either
STAR or WAXS, as provided in Section 7.1, this Agreement shall forthwith
become void and there shall be no liability or obligation on the part of WAXS
or STAR or their respective officers or directors except with respect to
Section 3.1(m), Section 3.2(l), the second sentence of Section 5.2, Section
5.5, Section 5.6, this Section 7.2, and Article VIII, which provisions shall
survive such termination and except that, notwithstanding anything to the
contrary contained in this Agreement, neither WAXS nor STAR
40
shall be relieved or released from any liabilities or damages arising out of
its breach of this Agreement;
(b) If this Agreement is terminated by STAR pursuant to Section
7.1(h), STAR shall, prior to such termination, pay to WAXS $14,000,000 in
immediately available funds (the "TERMINATION FEE");
(c) If this Agreement is terminated by WAXS pursuant to Section
7.1(g), STAR shall, within three (3) days following such termination, pay to
WAXS the Termination Fee; and
(d) If this Agreement is terminated by WAXS or STAR pursuant to
Section 7.1(f) because STAR's stockholders have failed to adopt this
Agreement by the Required Star Vote and STAR enters into a definitive
agreement with respect to a Business Combination within twelve (12) months
following such termination, then STAR shall pay to WAXS the Termination Fee
prior to or at the consummation thereof.
7.3 AMENDMENT. This Agreement may be amended by STAR and WAXS, by
action taken or authorized by their respective Boards of Directors or
representatives or authorized officers, at any time before or after approval of
the matters presented in connection with the Merger by the stockholders of STAR
and WAXS (including, without limitation, an amendment as described in Section
6.2(h)), but, after any such approval, no amendment shall be made which by law
or in accordance with the rules of any relevant stock exchange or automatic
quotations system requires further approval by such stockholders without such
further approval. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of STAR and WAXS.
7.4 EXTENSION, WAIVER. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Boards of
Directors, representatives or authorized officers, may, to the extent legally
allowed, (i) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (iii) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of those rights.
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ARTICLE VIII
GENERAL PROVISIONS
8.1 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. None
of the representations, warranties, covenants and other agreements in this
Agreement or in any instrument delivered pursuant to this Agreement including
any rights arising out of any breach of such representations, warranties,
covenants and other agreements, shall survive the Effective Time, except for
those covenants and agreements contained herein and therein that by their terms
apply or are to be performed in whole or in part after the Effective Time and
this Article VIII.
8.2 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed duly given (a) on the date of delivery if
delivered personally, or by telecopy or facsimile, upon confirmation of receipt,
(b) on the first business day following the date of dispatch if delivered by a
recognized next day courier service, or (c) on the tenth business day following
the date of mailing if delivered by registered or certified mail return receipt
requested, postage prepaid All notices hereunder shall be delivered as set forth
below, or pursuant to such other instructions as may be designated in writing by
the party to receive such notice:
(a) If to WAXS or Merger Sub, to:
World Access, Inc.
Resurgens Plaza, Suite 2210
000 Xxxx Xxxxx Xxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxx X. Xxxxxxxx
with a copy to
Long Xxxxxxxx & Xxxxxx LLP
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: H. Xxxxxxxx Xxxxxx
42
(b) If to STAR to:
STAR Telecommunications, Inc.
000 Xxxx Xx Xx Xxxxxx
Xxxxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxxxxxx X. Xxxxxxxx
with a copy to
Xxxxxxx & XxXxxxxx
Twenty-Ninth Floor
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx
8.3 INTERPRETATION. When a reference is made in this Agreement to
Sections, Exhibits, the WAXS Disclosure Schedule or the STAR Disclosure
Schedule, such reference shall be to a Section of or Exhibit or schedule to
this Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include", "includes" or "including" are used in this Agreement,
they shall be deemed to be followed by the words "without limitation". All
Exhibits, the WAXS Disclosure Schedule and the STAR Disclosure Schedule are
incorporated herein and made a part hereof.
8.4 COUNTERPARTS. This 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 party, it being understood that both
parties need not sign the same counterpart.
8.5 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES.
(a) This Agreement and the Confidentiality Agreement constitute
the entire agreement and supersede all prior agreements and understandings,
both written and oral, including, without limitation, that certain Letter of
Intent, dated December 17, 1999, between WAXS and STAR, among the parties
with respect to the subject matter hereof.
(b) This Agreement shall be binding upon and inure solely to
the benefit of each party hereto, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other Person any right, benefit
or remedy of any nature whatsoever under or by reason of this Agreement, except
as provided for in Section 5.12.
43
8.6 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware (without giving effect to
choice of law principles thereof).
8.7 SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any law or public policy, all
other terms and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the actions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner in order that the
transactions contemplated hereby are consummated as originally contemplated to
the greatest extent possible.
8.8 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto, in whole or in part (whether by operation of law or otherwise), without
the prior written consent of the other parties, and any attempt to make any such
assignment without such consent shall be null and void. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
8.9 SUBMISSION TO JURISDICTION; WAIVERS. Each of WAXS and STAR
irrevocably agrees that any legal action or proceeding with respect to this
Agreement or for recognition and enforcement of any judgment in respect hereof
brought by the other party hereto or its successors or assigns may be brought
and determined in the Chancery or other Courts of the State of Delaware, and
each of WAXS and STAR hereby irrevocably submits with regard to any such action
or proceeding for itself and in respect to its property, generally and
unconditionally, to the nonexclusive jurisdiction of the aforesaid courts. Each
of WAXS and STAR hereby irrevocably waives, and agrees not to assert, by way of
motion, as a defense, counterclaim or otherwise, in any action or proceeding
with respect to this Agreement, (i) any right to trial by jury with respect to
any action, suit or proceeding arising out of or relating to this Agreement, the
Merger or any other transaction contemplated hereby, (ii) any claim that it is
not personally subject to the jurisdiction of the above named courts for any
reason other than the failure to lawfully serve process, (iii) that it or its
property is exempt or immune from jurisdiction of any such court or from any
legal process commenced in such courts (whether through service of notice,
attachment prior to judgment, attachment in aid of execution of judgment,
execution of judgment or otherwise), and (iv) to the fullest extent permitted by
applicable law, that (a) the suit, action or proceeding in any such court is
brought in an inconvenient forum, (b) the venue of such suit, action or
proceeding is improper and (c) this Agreement, or the subject matter hereof, may
not be enforced in or by such courts.
8.10 ENFORCEMENT. The parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms. It is accordingly agreed that the parties
shall be entitled to specific performance of the terms hereof, this being in
addition to any other remedy to which they are entitled at law or in equity.
44
8.11 HEADINGS. The headings contained in this Agreement are inserted
for convenience only and do not constitute a part of this Agreement.
8.12 DEFINITIONS. As used in this Agreement:
(a) "BENEFICIAL OWNERSHIP" or "BENEFICIALLY OWN" shall have the
meaning under Section 13(d) of the Exchange Act and the rules and regulations
thereunder.
(b) "BOARD OF DIRECTORS" means the Board of Directors of any
specified Person and any committees thereof.
(c) "BUSINESS COMBINATION" means (i) a merger, reorganization,
consolidation, share exchange, business combination, recapitalization,
liquidation, dissolution or similar transaction involving a party as a result
of which either (A) such party's stockholders prior to such transaction (by
virtue of their ownership of such party's shares) in the aggregate cease to
own at least 65% of the voting securities of the entity surviving or
resulting from such transaction (or the ultimate parent entity thereof) or,
regardless of the percentage of voting securities held by such stockholders,
if any Person shall beneficially own, directly or indirectly, at least 20% of
the voting securities of such ultimate parent entity, or (B) the individuals
comprising the board of directors of such party prior to such transaction do
not constitute a majority of the board of directors of such ultimate parent
entity, (ii) a sale, lease, exchange, transfer or other disposition of at
least 50% of the assets of such party and its Subsidiaries, taken as whole,
in a single transaction or a series of related transactions, or (iii) the
acquisition, directly or indirectly, by a Person of beneficial ownership of
20% or more of the common stock of such party whether by merger,
consolidation, share exchange, business combination, tender or exchange offer
or otherwise.
(d) "DISSENTERS' SHARES" means shares of STAR Common Stock for
which dissenter's rights of appraisal have been exercised pursuant to the DGCL.
(e) "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.
(f) "GAAP" means United States generally accepted accounting
principles.
(g) "KNOWN" OR "KNOWLEDGE" means, with respect to any party,
the knowledge of such party's executive officers after reasonable inquiry.
(h) "MATERIAL ADVERSE EFFECT" means, with respect to any
entity, any change, circumstance or effect or any breach of the provisions of
this Agreement that, individually or in the aggregate with all other changes,
circumstances and effects or breaches, is or would reasonably be expected to be
materially adverse to (i) the business, financial condition or results of
operations of such entity and its Subsidiaries taken as a whole, or (ii) the
ability of such entity (or the party owning such entity) to consummate the
transactions contemplated by this Agreement.
45
(i) "NASDAQ" means the National Market System of the NASDAQ
Stock Market.
(j) "NET PT-1 PROCEEDS" means the cash proceeds received by
STAR at the consummation of the PT-1 Sale, net of all Taxes, fees, expenses and
costs incurred in connection with the PT-1 Sale, including, without limitation:
(1) fees or expenses for investment banking or other
financial services;
(2) agency, brokerage, finder's or other similar fees or
commissions;
(3) legal, accounting, consulting or other professional
fees or expenses;
(4) the cost of any remedial or corrective actions or
measures;
(5) the costs associated with the transfer or termination
of any PT-1 employees; or
(6) the costs of any right or obligation the vesting of
which is accelerated by the PT-1 Sale.
(k) "PERSON" means an individual, corporation, limited liability
company, partnership, association, trust, unincorporated organization, other
entity or group (as defined in the Exchange Act).
(l) "PRE-CLOSING PRICE" means the closing price of WAXS Common
Stock as reported on the Nasdaq for the trading day (in which such shares are
traded on the Nasdaq) ending at the close of trading on the second (2nd)
trading day preceding the Closing.
(m) "PT-1 EXCESS PROCEEDS" means the Net PT-1 Proceeds in
excess of $150,000,000.
(n) "SEC" means the Securities and Exchange Commission.
(o) "SECURITIES ACT" means the Securities Act of 1933, as
amended.
(p) "SUBSIDIARY", when used with respect to any party means any
corporation or other organization, whether incorporated or unincorporated,
(i) of which such party or any other Subsidiary of such party is a general
partner (excluding partnerships, the general partnership interests of which
held by such party or any Subsidiary of such party do not have a majority of
the voting interests in such partnership) or (ii) at least a majority of the
securities or other interests of which having by their terms ordinary voting
power to elect a majority of the Board of Directors or others performing
similar functions with respect to such corporation or other organization is
directly or
46
indirectly owned or controlled by such party or by any one or more of its
Subsidiaries, or by such party and one or more of its Subsidiaries.
(q) "SUPERIOR PROPOSAL" means a written proposal made by a
Person unaffiliated with STAR which is for (I) (i) a merger, reorganization,
consolidation, share exchange, business combination, recapitalization,
liquidation, dissolution or similar transaction involving STAR as a result of
which either (A) STAR's stockholders prior to such action (by virtue of their
ownership of STAR's shares) in the aggregate cease to own at least 50% of the
voting securities of the entity surviving or resulting from such transaction
(or the ultimate parent entity thereof) or (B) the individuals comprising the
board of directors of STAR prior to such transaction do not constitute a
majority of the board of directors of such ultimate parent entity, (ii) a
sale, lease, exchange, transfer or other disposition of at least 50% of the
assets of STAR and its Subsidiaries, taken as a whole, in a single
transaction or a series of related transactions, or (iii) the acquisition,
directly or indirectly, by a Person of beneficial ownership of 50% or more of
the common stock of STAR whether by merger, consolidation, share exchange,
business combination, tender or exchange offer or otherwise, and which is
(II) otherwise on terms which the Board of Directors of STAR in good faith
concludes (after consultation with its financial advisors and outside legal
counsel), taking into account among other things, all legal, financial,
regulatory and other aspects of the proposal and the Person making the
proposal, (i) would, if consummated, result in a transaction that is more
favorable to its stockholders (in their capacities as stockholders), from a
financial point of view, than the transactions contemplated by this Agreement
and (ii) is reasonably capable of being completed.
(r) "TAX" (and, with correlative meaning, "TAXES" shall mean:
(i) all taxes, charges, fees, levies or other assessments, however
denominated, including any interest, penalties or other additions to tax that
may become payable in respect thereof, imposed by any federal, territorial,
state, local or foreign government or any agency or political subdivision of
any such government, which taxes shall include, without limiting the
generality of the foregoing, all income or profits taxes (including, but not
limited to, federal income taxes and state income taxes), payroll and
employee withholding taxes, unemployment insurance, social security taxes,
sales and use taxes, ad valorem taxes, excise taxes, employer tax, estimated,
severance, telecommunications, occupation, goods and services, capital,
profits, value added taxes, franchise taxes, gross receipts taxes, business
license taxes, occupation taxes, real and personal property taxes, stamp
taxes, environmental taxes, transfer taxes, workers' compensation, Pension
Benefit Guaranty Corporation premiums and other governmental charges, and
other obligations of the same or of a similar nature to any of the foregoing,
which the Person is required to pay, withhold or collect; and (ii) any
liability for the payment of any amounts described in clause (i) as a result
of being a successor to or transferee of any individual or entity or a member
of an affiliated, consolidated or unitary group for any period
47
(including pursuant to Treas. Reg. Section 1.1502-6 or comparable provisions
of state, local or foreign tax law); and (iii) any liability for the payment
of amounts described in clause (i) or clause (ii) as a result of any express
or implied obligation to indemnify any Person or as a result of any
obligations under agreements or arrangements with any Person.
(s) "TAX ASSET" means any net operating loss, net capital loss,
investment tax credit, foreign tax credit, charitable deduction or any other
credit or tax attribute which could reduce Taxes (including, without
limitation, credits related to alternative minimum Taxes).
(t) "TAX RETURN" shall mean all reports, estimates,
declarations of estimated tax, information statements and returns (including
any attached schedules) or similar statement relating to, or required to be
filed in connection with, any Taxes, including information returns or reports
with respect to backup withholding and other payments to third parties.
(u) "TAX SHARING AGREEMENT" shall mean any and all existing Tax
sharing agreements, or arrangements written or unwritten, express or implied,
binding two or more Persons with respect to the payment of Taxes, including
any agreements or arrangements which afford any other Person the right to
receive any payment from one or more other Persons in respect to any Taxes or
the benefit of any Tax Asset of one or more other Persons or require or
permit the transfer or assignment of any income, revenue, receipts or gains.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
48
IN WITNESS WHEREOF, WAXS, Merger Sub and STAR have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first above written.
WAXS:
WORLD ACCESS, INC.
By:
-----------------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Chairman and Chief Executive Officer
STAR:
STAR TELECOMMUNICATIONS, INC.
By:
-----------------------------------------------
Name:
Title:
MERGER SUB:
STI MERGER CO.
By:
-----------------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Chairman and Chief Executive Officer
49
