Exhibit 2.1.2
AGREEMENT AND PLAN
OF
MERGER
BY AND AMONG
ADVANCED TELECOMMUNICATIONS, INC.
ONE CALL ACQUISITION CORP.
AND
ONE CALL TELECOM, INC.
JUNE 22, 1998
TABLE OF CONTENTS
SectionPage
EXHIBITS AND SCHEDULES
ExhibitsPage
EXHIBIT B Plan of Merger1
EXHIBIT C Stock Options5
EXHIBIT D Escrow Agreement6
EXHIBIT E Opinion of Counsel of Purchaser7
EXHIBIT F Opinion of Counsel of Company8
EXHIBIT H Noncompete Agreement11
SchedulesPage
Schedule 1.73-5
Schedule 4.18
Schedule 5.1014
Schedule 5.1114
Schedule 5.1214
Schedule 5.1314
Schedule 5.1415
Schedule 5.1515
Schedule 5.1616
Schedule 5.1716
Schedule 5.1817
Schedule 5.1917
Schedule 5.212, 14, 21
Schedule 5.218
Schedule 5.2118
Schedule 5.2218
Schedule 5.2318
Schedule 5.2419
Schedule 5.2520
Schedule 5.2720
Schedule 5.2820
Schedule 5.2912
Schedule 5.312
Schedule 5.413
Schedule 5.613
Schedule 5.814
Schedule 5.922
Schedule 6.522
Schedule 6.622
Schedule 6.723
Schedule 6.823
AGREEMENT AND
PLAN OF MERGER
This Agreement is made as of June ___, 1998, by and among Advanced
Telecommunications, Inc., a Minnesota corporation ("Purchaser"), One Call
Acquisition Corp., Minnesota corporation ("Acquisition Sub") and One Call
Telecom, Inc., a Minnesota corporation (the "Company").
RECITALS
A. The issued and outstanding capital stock of the Company and the holders
thereof (individually a "Shareholder " and, collectively, the "Shareholders") as
of the date of this Agreement is reflected on Exhibit A attached hereto
("Company Capital Stock").
B. Acquisition Sub is a wholly-owned subsidiary of Purchaser.
C. Purchaser, Acquisition Sub, the Company and the Shareholders desire to
have the Company merge with and into Acquisition Sub pursuant to a transaction
in which the separate existence of the Company will cease and Acquisition Sub
shall continue as the surviving corporation. Each share of Company Capital Stock
will be exchanged for shares of Purchaser's Class A common stock and the parties
intend that the transaction qualify as a tax free reorganization under Section
368(a) of the Internal Revenue Code of 1986 (the "Code").
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements hereinafter set forth, Purchaser, Acquisition Sub, the Company
and the Shareholders hereby agree as follows:
. Upon the terms and subject to the conditions of this Agreement, at the
Effective Time in accordance with the Minnesota Business Corporation Act
("MBCA"), Acquisition Sub shall be merged with and into the Company in
accordance with this Agreement (the "Merger"). The Acquisition Sub shall be the
surviving corporation in the Merger as a wholly-owned subsidiary of Parent
(Acquisition Sub is hereinafter sometimes referred to as the "Surviving
Corporation"). The parties shall prepare, execute or file an appropriate
certificate of merger (the "Plan of Merger") substantially in the form of
Exhibit B attached hereto to comply with the requirements of the MBCA and the
separate existence of the Company shall thereupon cease.
. The Merger shall have the effects set forth in Section 302A.641 of the MBCA.
. The Merger shall become effective at the time of the filing of the Articles of
Merger with the Secretary of State of the State of Minnesota in accordance with
the applicable provisions of the MBCA, or at such later time as may be specified
in the Articles of Merger. The Articles of Merger shall be filed as soon as
practicable after all of the conditions set forth in this Agreement have been
satisfied or waived by the party or parties entitled to the benefit of the same.
The time when the Merger shall become effective is herein referred to as the
"Effective Time". . On the terms and subject to the conditions set forth in this
Agreement, the aggregate Merger consideration to be paid to the Shareholders
(the "Purchase Price") shall be 12,963 shares of Class A Common Stock of
Purchaser ("Purchaser Common Stock") less (a) the Company's "working capital"
deficit on June 30, 1998 and (b) further adjusted in accordance with Section 1.5
and Section 3.1(g). For every $1,000 deficit in working capital, the Purchase
Price shall be reduced by 3.7 shares of Purchaser Common Stock. For purposes of
this Section, working capital shall mean the Company's current assets less
current liabilities (inclusive of (i) retirement of Old Notes of $400,000 (as
defined in Section 1.12) and (ii) assumption of capital leases identified on
Schedule 5.7) (calculated in accordance with generally accepted accounting
principles ("GAAP")) plus accrued or paid expenses incurred pursuant to Section
11.1(a), plus those items listed on Schedule 1.4(a) An example illustrating the
calculation of the adjustment to the Purchase Price is set forth on Schedule
1.4(b).
.
(a) Pre-Closing Adjustments. A pre-closing review (the "Review")
shall be undertaken by a least two persons, one selected by the Purchaser
and one selected by the Company, to determine any necessary pre-closing
adjustments to the Purchase Price arising out of, in connection with or in
any way resulting from the Company's obligations stated on its June 30,
1998 balance sheet, prepared in accordance with GAAP, with US West, Sprint
and AT&T (the "Matter"). Company agrees to cooperate fully with the
Purchaser in the Review, including providing the member(s) of the
Purchaser's staff with access to such documents related to the Matter so
that the Purchaser's staff can identify and determine any adjustments to
the Purchase Price. The written results of the Review shall be provided to
the Purchaser and the Company no later than thirty (30) business days
prior to the Closing Date. Company and Purchaser shall, within twenty (20)
business days prior to the Closing Date, notify the other in writing
whether it agrees or disagrees with the results of the Review.
If both parties agree with the results of the Review, the Purchase
Price shall be adjusted by 3.7 shares of Purchaser Common Stock for every
$1,000 difference between the amount of the Matter as represented by the
Company as of June 30, 1998, and the amount of the Matter as determined in
the Review.
For example, if the results of the Review conclude that the
amount of the Matter is $5,000 greater than what was
represented by the Company as of June 30, 1998, the Purchase
Price shall be reduced by 18.5 shares (5 x 3.7 shares). On the
other hand, if the results of the Review conclude that the
amount of the Matter is $5,000 less than what was represented
by the Company as of the date of this Agreement, the Purchase
Price shall be increased by 18.5 shares (5 x 3.7 shares).
If the Purchaser and the Company disagree with the results of the
Review, then the independent certified public accounting firm of McGladrey
& Xxxxxx LLP ("McGladrey") shall determine the adjustment, if any, to the
Purchaser's balance sheet at June 30, 1998 required in accordance with the
provisions of this Agreement, and such determination shall be final and
binding on the Company and Purchaser.
For purposes of this paragraph, the "Differential" shall mean the
difference in dollar amount between the Purchaser's proposed adjustment
and the Company's June 30, 1998 stated amount. If the dollar amount of the
adjustment that is determined by McGladrey falls within 25% of the
Differential from the Purchaser's proposed adjustment, then the Purchaser
will be entitled to recover from the Company all reasonable costs in
connection with retaining the accounting firm. If the dollar amount of the
adjustment that is determined by McGladrey falls within 25% of the
Differential from the Company's June 30, 1998 stated amount, then the
Company will be entitled to recover from the Purchaser all reasonable
costs in connection with retaining McGladrey. Except as set forth above,
the costs of retaining McGladrey will be borne equally by the Company and
the Purchaser.
The Company and the Purchaser agree to initiate conversations with
US West, Sprint and AT&T and, on a good faith best efforts basis, attempt
to reduce the amount of Company's obligations to US West, Sprint and AT&T
with respect to the Matter as soon as practical, but no later than one
year from the date of this Agreement. To the extent that the Company
and/or the Purchaser obtain a reduction of the amount of the obligation of
US West, Sprint and AT&T from the amount set forth in the Company's June
30, 1998 balance sheet adjusted pursuant to this Section 1.5(a) plus any
amounts accrued from June 30, 1998 through Closing, whether such reduction
occurs before or after Closing, the Purchase Price shall be increased by
such reduction at the rate of 3.7 shares of Purchaser's Common Stock for
every $1,000 of reduction. The additional shares of Purchaser's Common
Stock shall be distributed to Shareholders as soon as practical after the
determination of such reduction.
(b) Post-Closing Adjustments.
(i) The Purchase Price shall be adjusted by the difference in
the working capital deficit between June 30, 1998 and the Closing.
The adjustment shall be 3.7 shares of Purchaser Common Stock for
every $1,000 in such working capital deficit and shall be deducted
from the Purchase Price at the Closing; provided however, the
Purchaser shall provide the Company with a credit of 370.4 shares of
Purchaser Common Stock as an offset against this adjustment.
Further, any adjustments made pursuant to Section 1.5(a) above will
be not used in the calculation of adjustments under this Section
1.5(b).
Within thirty (30) days following the month-end in which
the Closing occurs, the Company shall prepare and provide Purchaser
with the financial statements for such month-end and financial
statements as of the Closing Date, calculated through a pro rata
allocation based on the number of days in the month preceding and
including the Closing Date as related to the total number of days in
the month. If Purchaser disagrees with the financial statements in
the preceding sentence, Purchaser shall within ten (10) business
days notify the Company of such dispute.
If the Purchaser and the Company are unable to resolve
the dispute within ten (10) business days of the Purchaser's notice,
Purchaser shall place in escrow such number of shares of Purchaser
Common Stock equal to the amount of the dispute and promptly pay the
balance of the Purchase Price (less the Escrowed Consideration
defined in Section 1.11) to the Company.
(ii) In the event there are any claims by the Purchaser
relating to breaches of warranties by the Company contained in this
Agreement, the Purchaser shall notify the Company in writing within
six (6) months of the date of Closing of the amount of such claims.
If the Company does not dispute the amount or existence of such
claims, the Purchaser shall off-set the Escrowed Consideration by an
amount equal to 3.7 shares for every $1,000 worth of claims,
and the Purchaser shall recalculate Schedule 1.7 accordingly. At the
end of the escrow period specified in Section 1.11 below, the
Purchaser shall pay to each of the Shareholders the pro rata portion
of the Escrowed Consideration not subject to such off-set as
reflected on the recalculated Schedule 1.7.
If Company disagrees regarding the existence or the amounts of the
claims identified by the Purchaser under this Section 1.5(b), the Company
shall, within ten (10) business days of the date of such notice from the
Purchaser, notify the Purchaser of such dispute. The Company and the
Purchaser shall use their good faith efforts to resolve such dispute
within thirty (30) days following the date of the Company's notice.
. At the Effective Time, by virtue of the Merger and as set forth in this
Section, subject to the other provisions of this Article 1, each share of Series
A Preferred Stock of the Company ("Series A") and Series B Preferred Stock of
the Company ("Series B") (collectively, Series A and Series B are hereinafter
referred to as the "Company Preferred Stock") issued and outstanding immediately
prior to the Effective Time shall be converted into the right to receive that
number of validly issued, fully paid and nonassessable shares of Purchaser
Common Stock (the "Merger Consideration"), pro rata based upon the liquidation
preference of each share of Company Preferred Stock as set forth in the
Company's Certificate of Designation for Series A and Series B filed with the
Minnesota Secretary of State on December 20, 1996 and December 10, 1997,
respectively (the "Liquidation Preference"). The shares of common stock of the
Company (the "Company Common Stock") will receive no shares of Purchaser Common
Stock since it is the Company's belief that the Liquidation Preference exceeds
the value of the Merger Consideration.
At the Effective Time, all shares of Company Capital Stock issued and
outstanding shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and each certificate previously evidencing
any such shares shall thereafter represent the right to receive the Merger
Consideration. The holders of certificates previously evidencing shares of
Company Capital Stock outstanding immediately prior to the Effective Time shall
cease to have any rights with respect to shares of Company Capital Stock.
Certificates previously evidencing shares of Company Preferred Stock shall be
exchanged for certificates evidencing whole shares of Purchaser Common Stock
issued in consideration therefor in accordance with the procedures of this
Section. Certificates previously evidencing shares of Company Common Stock shall
be transferred to the Purchaser for no consideration. No fractional shares of
Purchaser Common Stock shall be issued, and, in lieu thereof, a cash payment
shall be made.
At the Effective Time, each outstanding share of the Company Capital Stock
shall automatically be converted into a share of Common Stock of the Surviving
Corporation and such shares shall continue to be owned by Purchaser
. Following surrender at the Closing of a Shareholder's stock certificate
representing shares of Company Preferred Stock, there shall be paid to the
holder of such certificates promptly the Merger Consideration in the form of the
Purchaser Common Stock in the amounts reflected on Schedule 1.7 attached hereto,
less the escrowed shares pursuant to Section 1.11 and Section 5.31.
Such amounts may be adjusted in accordance with the dividend accruals of the
Company between the date of this Agreement and the Closing.
. All shares of Purchaser Common Stock issued and cash paid upon conversion of
the shares of Company Capital Stock in accordance with the terms hereof shall be
deemed to have been issued or paid in full satisfaction of all rights pertaining
to such shares of Company Capital Stock.
. No certificates or scrip evidencing fractional shares of Purchaser Common
Stock 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 any
rights of a stockholder of Purchaser. In lieu of any such fractional shares,
each holder of Company Capital Stock upon surrender of a certificate for
exchange, shall be paid an amount in cash (without interest), rounded to the
nearest cent.
. At the Effective Time, each issued and outstanding stock option, warrant,
right or other agreement to purchase or sell any capital stock of the Company
granted by the Company shall be cancelled by the holder and the Company. At the
Closing, the Purchaser shall grant options to purchase shares of Purchaser
Common Stock at an exercise price of $270 per share to certain employees as
indicated on Exhibit C. At the Effective Time, the holders of options granted by
the Company shall cease to have any rights with respect to shares of Company
Capital Stock and will only have rights with respect to Purchaser Common Stock
as set forth in this Section. The Company shall take such actions as are
necessary to ensure that from and after the date hereof the Company shall not
grant any rights to purchase any capital stock of the Company.
. Certificates representing 741 shares of Purchaser Common Stock (the "Escrowed
Consideration"), shall be held in reserve by Purchaser. The Purchaser shall hold
the Escrowed Consideration for six months following the Closing Date for
possible claims by Purchaser relating to breaches of warranties by the Company
and Shareholders contained in this Agreement. Any amounts held in reserve and
not subject to claim of Purchaser at the end of such escrow period will be paid
to the Shareholders in accordance with Schedule 1.7.
. At the Closing, Purchaser shall assume the outstanding debt due and owing by
the Company to Artesian Capital Limited Partnership II ("Artesian") pursuant to
those certain Promissory Notes dated (i) October 15, 1997 in the principal
amount of Fifty Thousand Dollars ($50,000), (ii) November 14, 1997 in the
principal amount of One Hundred Thousand Dollars ($100,000), (iii) November 26,
1997 in the principal amount of Fifty Thousand Dollars ($50,000) and (iv) April
21, 1998 in the principal amount of Two Hundred Thousand Dollars ($200,000)
(collectively, the "Old Notes"). The Old Notes shall be surrendered by Artesian
for cancellation at the Closing and Purchaser will execute a promissory note
payable to Artesian in the amount of Four Hundred Thousand Dollars ($400,000)
which will accrue interest at the rate of ten percent (10%) per annum and be
payable on the earlier to occur of (i) December 31, 1999 or (ii) the closing of
any financing of $15 million or more by the Purchaser (the "New Note"). The
Company's (i) Series A 8% Convertible Subordinated Promissory Notes due June 30,
2001 and (ii) Series B 15% Convertible Subordinated Promissory Notes due June
30, 2001, shall have a liquidation preference over the New Note.
. Subject to the provisions of Articles 7 and 8 hereof, the closing (the
"Closing") of the Merger will take place at Purchaser's offices two days after
receipt of approval from the Minnesota Public Utilities Commission or at such
other place, at such other time, or on such other date as the Company and the
Purchaser may agree. The date on which the Closing takes place is referred to as
the "Closing Date."
. At the Closing:
(a) The executed Plan of Merger (together with the Articles of
Merger) satisfying the requirements of Minnesota law shall be filed by
Acquisition Sub and the Company with the Secretary of State of Minnesota.
(b) Purchaser will hold in escrow 741 shares of Purchaser Common
Stock in accordance with Section 1.11 of this Agreement.
(c) Purchaser and Acquisition Sub shall deliver to the Company and
the Shareholders the following:
(i) the certificates and other documents and instruments
referred to in Article 8 hereof;
(ii) a true and complete copy of the Articles of Incorporation
of each of Purchaser and Acquisition Sub, including all amendments
thereto, as certified to by an appropriate governmental official;
(iii) a copy of the resolutions adopted by the Board of
Directors of each of Purchaser and Acquisition Sub authorizing the
execution and delivery of this Agreement and the consummation of the
Merger and other transactions contemplated hereby, as certified to
by the Secretary of Purchaser and Acquisition Sub, respectively;
(iv) stock options to purchase shares of the Purchaser Common
Stock to those individuals set forth on Exhibit C ;
(v) the New Note for delivery to Artesian; and
(vi) an opinion of counsel for Purchaser and Acquisition Sub
in substantially the form of Exhibit E attached hereto.
(d) The Company shall, and cause the Shareholders to deliver to
Purchaser the following:
(i) the certificates and other documents and instruments
referred to in Article 7 hereof;
(ii) a true and complete copy of the Articles of Incorporation
of the Company, including all amendments thereto, as certified to by
an appropriate governmental official, and a true and complete copy
of the By-Laws of the Company, as certified to by the Secretary of
the Company;
(iii) a true and complete copy of each material contract,
agreement, commitment or plan described on any Schedule hereto;
(iv) a copy of the resolutions adopted by the Board of
Directors of the Company authorizing the execution and delivery of
this Agreement and the Plan of Merger by the Company and the
consummation of the Merger and other transactions contemplated
hereby, as certified to by the Secretary of the Company;
(v) a copy of the resolutions adopted by the Shareholder of
the Company approving this Agreement and the Plan of Merger by the
Company and the consummation of the Merger and other transactions
contemplated hereby, as certified to by the Secretary of the
Company;
(vi) the resignations of the directors and officers of the
Company, effective as of the Closing Date;
(vii) an opinion of counsel for the Company and Shareholders
in substantially the form of Exhibit F attached hereto;
(viii) Noncompete Agreement from Artesian;
(ix) Exchange Agreement from the Shareholders in substantially
the form of Exhibit G attached hereto;
(x) Cancellation of all stock options, warrants and other
rights to acquire the Company Capital Stock; and
(xi) such other documents as Purchaser may request to convey
title to all of the Company's assets.
.
(a) The Company will deliver to Purchaser and Acquisition Sub, the
audited financial statements of the Company for the fiscal year ended
December 31, 1997 and the unaudited financial statements for the period
ended April 30, 1998 (collectively, the Financial Statements"). The
balance sheet of the Company as of December 31, 1997 is
hereinafter referred to as the Company's "Balance Sheet" and December 31,
1997 is hereinafter referred to as the "Balance Sheet Date."
(b) The Company shall deliver to Purchaser the Company's balance
sheet, income statement, statement of cash flows, accounts receivable and
accounts payable (aging), schedule of disputed charges, and the detail on
accrued expense accounts at June 30, 1998, by July 31, 1998.
(c) The Company shall prepare and deliver to Purchaser all of the
Schedules to this Agreement by the date of this Agreement, and shall from
time to time prior to Closing promptly amend, supplement and update the
Schedules as necessary.
(d) Purchaser has heretofore delivered to the Company the audited
financial statements of the Purchaser for the fiscal year ended June 30,
1997 and the unaudited financial statements for the period ended April 30,
1998 (the "Purchaser Financial Statements").
(e) Purchaser shall prepare and deliver to the Company the Schedules
necessary to be completed by the Company by the date of this Agreement,
and shall from time-to-time prior to Closing promptly amend, supplement
and update the Schedules as necessary.
(f) Company shall deliver to Purchaser a fully executed Release and
Termination Agreement with Sprint Communications Company L.P. ("Sprint")
in a form reasonably acceptable to the Purchaser which, among other
things, waives the Company's minimum commitment surcharges owed to Sprint.
(g) Company shall deliver to Purchaser the US West Report relating
to the traffic study on the Centron common blocks for the five central
offices of the Company, the results of which shall reflect a rating no
worse than an average P.02 grade of service in the busy hour of the week
for each central office. To the extent that this grade is not met for any
central office, the Purchaser shall pay the installation costs reasonably
required to meet a P.02 grade and these installation costs (together with
monthly costs for the remaining contract terms for the Company's high call
volume customers for each central office which fails to meet a P.02 grade)
will be deducted from the Purchase Price on the basis of 3.7 shares of
Purchaser Common Stock for every $1,000 expended to make the upgrades.
. The Company and Purchaser agree to use all commercially reasonable efforts to
(a) promptly file, or cause to be promptly filed, with any United States agency
or any state or local governmental body or agency, all such notices,
applications or other documents as may be necessary to consummate the
transactions contemplated hereby; and (b) thereafter diligently pursue all
consents or approvals from any such governmental agencies or bodies as may be
necessary to consummate the transactions contemplated hereby.
. From the date hereof until the Closing Date, except as set forth on Schedule
4.1 or as otherwise required by this Agreement, the Company shall, unless
Purchaser shall otherwise agree in writing:
(a) carry on the business of the Company in the ordinary course;
(b) continue to insure the Company and its properties substantially
in accordance with its past practices;
(c) use reasonable efforts to preserve the Company's business
organization intact, keep available the Company's present management and
employees, and preserve the Company's present relationships with its
suppliers and customers and others with which it has business
relationships;
(d) not solicit, initiate or intentionally encourage the submission
of offers or proposals from any Person (other than Purchaser and
Acquisition Sub) for the acquisition of the stock or any significant
portion of the assets or business of the Company;
(e) not issue, sell or otherwise dispose of any of its shares of
capital stock or grant any options, warrants or other rights to acquire
any of its shares of capital stock;
(f) not declare or pay any cash or non-cash dividends on its capital
stock or any other cash or non-cash distributions in respect of its
capital stock;
(g) pay payroll when due in the ordinary course or in accordance
with past practices;
(h) not extend or shorten the time for payment of the Company's
accounts receivable other than in accordance with past practices or in the
ordinary course;
(i) not (i) issue any debt securities or (ii) incur any indebtedness
for money borrowed whether long or short term other than trade payables
incurred in the ordinary course;
(j) not incur or agree to incur any obligations or liabilities
except current liabilities accrued in the ordinary course of business,
none of which materially adversely affect the Company's business or
assets;
(k) not sell, lease or otherwise dispose or agree to sell, lease or
otherwise dispose of any of its assets except sales of inventory to end
user customers at standard industry prices and terms, in the ordinary
course of business;
(l) not make any change in the rate of compensation, commission,
bonus or other remuneration payable or paid or agreed to be paid to any of
its employees;
(m) not make any write down or write up of the value of any of its
inventory; and
(n) not make any change in the Company's coupon program or policy
with customers other than in the ordinary course.
. The Company shall deliver to Purchaser such financial information that is
available to the Company which Purchaser shall reasonably request, reflecting
the results of operations of the Company after April 30, 1998. The Purchaser
shall deliver to the Company such financial information that is available to the
Purchaser which the Company shall reasonably request reflecting the results of
operations of the Purchaser after April 30, 1998.
. The Company shall deliver to Purchaser the audit of the Company's books and
records for the year ended December 31, 1997 as conducted by Xxxxxx Xxxxxxxx
LLP, the Company's independent accountants, within thirty (30) days after the
date of this Agreement.
. From the date of this Agreement until the Effective Time, the Company will
give Purchaser and its respective officers, employees, counsel, advisors and
representatives reasonable access, during normal business hours, to the offices
and other facilities and to the books and records of the Company and will
furnish Purchaser to the extent available with such financial and operating data
and such other information with respect to the business and operations of the
Company as Purchaser may from time to time reasonably request.
. Subject to the terms and conditions herein provided and to applicable legal
requirements, each of the parties hereto agrees to use its reasonable best
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, and to assist and cooperate with the other parties hereto in doing, as
promptly as practicable, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement.
. Purchaser and the Company shall promptly notify each other of (a) the
occurrence or non-occurrence of any fact or event which would be reasonably
likely (i) to cause any representation or warranty contained in this Agreement
to be untrue or inaccurate in any material respect at any time from the date
hereof to the Effective Time or (ii) to cause any material covenant, condition
or agreement under this Agreement not to be complied with or satisfied in all
material respects and (b) any failure of the Company or Purchaser, as the case
may be, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder in any material respect; provided,
however, that no such notification shall affect the representations or
warranties of any party or the conditions to the obligations of any party
hereunder.
. The Company shall not directly or indirectly, encourage, solicit, participate
in or initiate discussions or negotiations with, or provide any information to,
any corporation, partnership, person or other entity or group (other than
Purchaser, any of its affiliates or representatives) concerning any proposal or
offer to acquire all or a substantial part of the business or properties
of the Company or any capital stock of the Company, whether by merger, tender
offer, exchange offer, sale of assets or similar transaction involving the
Company.
. The Company shall not disclose to any other potential buyer that the Purchaser
is acquiring the Company or the price or terms thereof without the prior written
consent of the Purchaser.
. The Company shall promptly submit this Agreement and the transactions
contemplated hereby for the approval of the Shareholders as soon as practicable
and shall use its best efforts to obtain shareholder approval of this Agreement
and the transactions contemplated hereby.
. Purchaser and Acquisition Sub will use their best efforts to assist in the
termination of certain personal guarantees of Artesian and Xxxxx X. Xxxxxxx
("Xxxxxxx") dated December 13, 1996, January 16, 1997 and October 14, 1997 and
in effect on the date of this Agreement. To the extent such personal guarantees
are not terminated, Purchaser and Acquisition Sub will indemnify Artesian and
Xxxxxxx to the extent of such guarantees.
. The Purchaser will pay accrued bonuses due and owing to those persons
identified on Schedule 4.11 in the amounts indicated thereon on the earlier to
occur of (i) December 15, 1998, or (ii) the closing of any financing of $15
million or more by the Company.
. The Company shall secure agreements from a majority of the holders of Common
Stock, Series A Preferred Stock and Series B Preferred Stock to vote the Company
Capital Stock in favor of the Merger by causing Artesian, and any of (i) RWJ
Company, (ii) X.X. Xxxxx Partners, or (iii) Minnesota Management Partners I
Investment to execute and deliver to the Purchaser Agreements to Facilitate
Merger in the Form of Exhibit H attached hereto.
. Purchaser and the Company shall hold in confidence all information as required
and in accordance with the Non-disclosure Agreement dated May 7, 1998 between
Purchaser and the Company.
. The Purchaser and the Company will use their good faith efforts to effect the
tax treatment set forth in Recital 1C above.
. The Company shall have made the adjustments identified on Schedule 4.15 to its
financial statements.
The Company and the Shareholders jointly and severally warrant and
represent to and covenant with Purchaser as follows:
. The Company is a corporation, duly incorporated, validly existing and in good
standing under the laws of Minnesota. The Company has the corporate power and
holds all rights, privileges, franchises, immunities, licenses, permits,
authorizations and approvals (governmental or otherwise) necessary to own and
operate its properties and to conduct its business as presently
conducted, the failure of which to hold would have a material adverse effect on
the financial condition or operations of the Company.
. The Company is duly qualified to do business and in good standing as a foreign
corporation in each jurisdiction in which the nature or location of the
Company's business or properties requires such qualification, except such
jurisdictions in which the failure so to qualify is not likely to have a
material adverse effect on the financial condition or operations of the Company.
Schedule 5.2 sets forth all jurisdictions in which the Company is qualified to
do business as a foreign corporation.
. Except as set forth on Schedule 5.3, the Company does not own, and on the
Closing Date will not own, any securities or any other direct or indirect
interest in any person or entity.
.
(a) The total number of shares of capital stock and the par value
thereof which the Company is authorized to issue, the number of such
shares which are issued and outstanding, and the number of treasury shares
are set forth on Schedule 5.4. All of the issued and outstanding shares of
the Company's Common Stock are now, and will on the Closing Date, be owned
by the Shareholders and will be transferred to the Purchaser free and
clear of all mortgages, pledges, liens, security interests, restrictions,
adverse claims or charges or third party rights of any kind.
(b) Except as set forth on Schedule 5.4, there are no outstanding
options, conversion rights, warrants or other rights in existence to
acquire from the Company any of its shares of capital stock.
(c) The issued and outstanding shares of capital stock of the
Company as of the date hereof and as of the Closing Date have been and
will be duly and validly issued and are fully paid and nonassessable and
have not been issued in violation of, and are not subject to, any
preemptive rights, and, except as set forth on Schedule 5.4, there are no
voting trust agreements or other contracts, agreements or arrangements to
which either the Company or, to the Company's best knowledge, the
Shareholders is a party restricting voting or dividend rights or
transferability with respect to the outstanding shares of capital stock of
the Company.
. The Company has all right, power and authority required for it to enter into,
and, subject to the requisite approval of the Shareholders, to perform its
obligations under this Agreement and the Plan of Merger. Subject to Shareholder
approval, the Company has taken all corporate actions on its part necessary or
appropriate to execute, deliver and perform this Agreement and the Plan of
Merger and to consummate the Merger. This Agreement has been duly authorized,
executed and delivered by the Company and is binding upon and enforceable
against the Company in accordance with its terms and conditions; and, when
executed and delivered by the Company, the Plan of Merger will be duly
authorized, executed and delivered by the Company and will be binding upon, and
enforceable against, the Company in accordance with its terms and conditions.
. Except as set forth on Schedule 5.6, neither the execution or delivery by the
Company of this Agreement or the Plan of Merger, nor the performance by the
Company of its obligations hereunder or thereunder, does or will, after the
giving of notice, or the lapse of time, or otherwise:
(a) conflict with, result in a breach of, or constitute a default
under, (i) the Articles of Incorporation or By-Laws of the Company or (ii)
any federal, state or local law, statute, code, ordinance, rule or
regulation applicable to it, (iii) any federal, state or local court or
administrative order or process to which the Company is a party or is
bound, or (iv) any material contract, agreement, arrangement, commitment,
or plan to which the Company is a party, or under which the Company may be
obligated, or by which the Company or any of its material rights,
properties or assets may be subject or bound;
(b) result in the creation of any mortgage, pledge, lien, claim,
charge, encumbrance or assessment upon any of the material rights,
properties or assets of the Company; or
(c) terminate, amend or modify, or give any party the right to
terminate, amend, modify, abandon or refuse to perform or comply with, any
material contract, agreement, arrangement, commitment or plan to which the
Company is a party, or under which the Company may be obligated, or by
which the Company or any of the rights, properties or assets of the
Company may be subject or bound.
. Except as set forth on Schedule 5.7, on the Balance Sheet Date, the Company
had, and on the date hereof has, and on the Closing Date will have, good and
marketable title to all the properties and assets reflected on the Balance
Sheet, subject to no mortgages, pledges, security interests, liens, encumbrances
or other charges of any kind, except (a) as to personal property sold or
otherwise disposed of after the Balance Sheet Date in the ordinary course of
business; (b) mechanics', carriers', workmens', repairmens' or other like liens
arising or incurred in the ordinary course of business; (c) liens for taxes,
assessments and other governmental charges which are not yet due and payable;
(d) other imperfections of title or encumbrances which do not materially impair
the use and operations of the Company's assets or properties to which they
relate in the operation of the Company's business as presently conducted, and
(e) the security interest of Artesian (which will be terminated on or before the
Closing Date).
. Schedule 5.8 contains a true and complete list and brief description of all
real property owned or leased by the Company, either as lessor or lessee.
. Except as set forth on Schedule 5.9 there are no actions, suits or proceedings
pending, threatened in writing against the Company, at law or in equity, before
any federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, which if
determined adversely to the Company would have a material adverse effect on the
financial condition or operations of the Company. Except as set
forth on Schedule 5.9 and Schedule 5.27, the Company is not operating under, or
subject to, any governmental order, writ, injunction or decree.
. The Company is not conducting its business or affairs in violation of any
applicable federal, state or local law, statute, ordinance, rule, permit or
regulation except (a) as set forth on Schedule 5.10 or (b) for violations which
individually or in the aggregate would not have a material adverse effect on the
financial condition or operations of the Company.
. Except as set forth on Schedule 5.11, there is no labor dispute, grievance,
strike or request for union representation affecting any of the Company's
employees generally pending, or threatened against the Company. The Company is
not a party to any collective bargaining agreement and no such contract is
currently being negotiated with the Company. No representation question exists
or has been raised respecting the employees of the Company, nor are there any
campaigns being conducted to solicit cards from the employees of the Company to
authorize representation by any labor organization.
. The Financial Statements attached hereto as Schedule 5.12 were prepared from
the Company's books and records in accordance with generally accepted accounting
principles, subject, in the case of the interim financial statements, to normal
recurring year-end adjustments (the effect of which will not , individually or
in the aggregate, be materially adverse) and the absence of notes (that, if
presented, would not differ materially from those included in the audited
financial statements of the Company for the fiscal year ended December 31, 1997
consistently applied, and present fairly in all material respects the financial
position, results of operations and changes in cash flows of the Company at the
dates and for the periods indicated therein. The accounts receivable reflected
in the Financial Statements were generated in the ordinary course and are
collectible, subject to the reserves in the Financial Statements for doubtful
accounts.
. Except as set forth on Schedule 5.13,
(a) on the Balance Sheet Date, to the best of its knowledge, the
Company did not have any material liability of a nature required to be
reflected on a balance sheet prepared in accordance with generally
accepted accounting principles, which was not disclosed, reflected or
reserved against in the Company's Balance Sheet; and
(b) except for liabilities which have been incurred in the ordinary
course of business, since the Company's Balance Sheet Date, to the best of
its knowledge, the Company has not incurred any material liability of any
nature which would be required to be reflected on a balance sheet prepared
in accordance with generally accepted accounting principles.
. Since the Balance Sheet Date, the Company has conducted its business in the
ordinary course, and, except as contemplated by this Agreement or as set forth
on Schedule 5.14, there has not been any:
(a) material adverse change in the financial condition or business
of the Company other than changes relating to general economic conditions
or developments affecting the Company's industry generally;
(b) sale, assignment, transfer, mortgage, pledge or lease of any
material amount of assets of the Company, except in the ordinary course of
business;
(c) declaration, payment or distribution in respect of, or purchase
or redemption of, any shares of the Company's capital stock;
(d) capital expenditures by the Company in excess of $5,000 for any
single item or $20,000 in the aggregate;
(e) damage, destruction or loss (whether or not covered by
insurance) materially adversely affecting the properties or business of
the Company;
(f) loan by the Company to any Person or guaranty by the Company of
any loan, other than routine advances to employees in the ordinary course
of business;
(g) amendment of the Articles of Incorporation or By-Laws of the
Company; or
(h) agreement by the Company to do any of the foregoing.
.
(a) All contracts and agreements which are material to the financial
condition or operations of the Company (collectively, "Contracts") are
described on Schedule 5.15, except for the following contracts and
agreements which are not required to be set forth on Schedule 5.15: (i)
normal purchase and sale commitments heretofore or hereafter entered into
in the ordinary course of business; (ii) any Contract that involves an
aggregate commitment by the Company of less than $10,000 per year; and
(iii) any Contract which is terminable by the Company by notice of not
more than 30 days for a cost of less than $10,000.
(b) Except as set forth on Schedule 5.15, each Contract listed on
Schedule 5.15 is in full force and effect. Except as set forth on Schedule
5.15, the Company has performed in all material respects all obligations
required to be performed by it to date under the Contracts and it is not
(with or without the lapse of time or the giving of notice, or both) in
breach or default thereunder.
.
(a) Schedule 5.16 sets forth all patents, trademarks, trade names,
service marks and copyrights (whether or not such trademarks, trade names,
service marks and
copyrights are registered), and all pending applications therefor, owned
by the Company, or in which the Company has any interest, which are
material to the business of the Company.
(b) Except as set forth on Schedule 5.16, there is not any claimed
or actual infringement or misappropriation by the Company of any valid
patent, trademark, trade name, service xxxx or copyright which relates to
the business of the Company and which is owned by any third party, and
which will have a material adverse effect on the financial condition or
operations of the Company.
(c) There is no pending or threatened claim asserted in writing by
the Company against others for infringement or misappropriation of any
patent, trademark, trade name, service xxxx or copyright owned by the
Company.
(d) All applications to register patents, trademarks, trade names,
service marks or copyrights which have been filed by or on behalf of the
Company, and any resulting registrations are owned by the Company, free
and clear of any security interest, lien, encumbrance or any interest of
any nature of any third party.
. The Company has timely filed without extensions or will file all foreign,
federal, state and local tax returns and estimates for all years and periods
(and portions thereof) through the Closing Date for which any such returns,
reports or estimates were due or will be due and any and all amounts shown on
such returns and reports to be due and payable through the Closing Date have
been or will be paid in full, and since the Balance Sheet Date, the Company has
not incurred any liability with respect to any taxes based on income, gross
revenues, gross receipts, purchases, sales, business, capital stock or surplus,
properties or assets of the Company except in the ordinary course of business.
The federal income tax returns of the Company have never been examined by the
Internal Revenue Service. Except as set forth on Schedule 5.17, there are no
pending audits, investigations or examinations, by any federal, state, local or
foreign taxing authority of any payment, return or report made or filed by the
Company nor has there been any claim made against the Company alleging a failure
to pay or report any kind of tax which may be assessed by any such taxing
authority against the Company. Schedule 5.17 sets forth the states in which the
Company has made sales during the past three years.
.
(a) For the purposes of this Section 5.18, the term "Employee Plan"
includes all pension, retirement, disability, medical, dental or other
health insurance plans, life insurance or other death benefit plans,
profit sharing, deferred compensation, stock option, bonus or other
incentive plans, vacation benefit plans, severance plans, or other
employee benefit plans or arrangements, including, without limitation, any
pension plan as defined in Section 3(2) of The Employee Retirement Income
Security Act of 1974 ("ERISA") and any welfare plan as defined in Section
3(1) of ERISA, whether or not funded, to which the Company is a party.
(b) There are no Employee Plans other than those set forth on
Schedule 5.18.
(c) Prior to the date hereof, the Company has delivered to Purchaser
a copy of each Employee Plan set forth on Schedule 5.18 .
(d) The Company does not maintain any "pension plans" as defined in
Section 3 (2) of ERISA other than those set forth on Schedule 5.18.
(e) Each Employee Plan, if any, and to the Company's best knowledge,
the administrators and fiduciaries of each Employee Plan and the Company
have complied, in all material respects, with all applicable requirements
of ERISA and of any other applicable law (including regulations and
rulings thereunder) governing each Employee Plan.
(f) The Company has no obligation. to contribute to a
"Multi-Employer Plan," as defined in Section 3(37) of ERISA.
(g) To the Company's best knowledge, no "reportable event" (as
defined in ERISA) has occurred with respect to any Employee Plan.
. The Company has in full force and effect all policies of insurance set forth
on Schedule 5.19; the Company will have in full force and effect on the Closing
Date such policies of insurance or policies of insurance of substantially the
same character and coverage as those set forth on Schedule 5.19; and the Company
will notify Purchaser in writing of any changes in such insurance coverage
occurring prior to the Closing which would have a material adverse effect on the
financial condition or operations of the Company.
. Each of the Shareholders receiving shares of Purchaser's Common Stock in the
Merger shall agree not to dispose of any shares in a manner that would cause the
Merger to violate the continuity of Shareholder interest requirements set forth
in Treasury Regulation ss. 1.368-1. Each of the Shareholders receiving shares of
Purchaser's Common Stock in the Merger shall represent that such shares are
being purchased for his own account and for investment and without the intention
of reselling or redistributing the same; each such Shareholder shall further
acknowledge that the shares to be received in the Merger have not been
registered under the Securities Act of 1933 or relevant state securities laws
and are, therefore, restricted.
. Except as set forth in Schedule 5.21, all of the tangible personal property of
the Company is (i) in good operating condition and repair, ordinary wear and
tear excepted and (ii) maintained in accordance with sound maintenance
practices. The Company's assets are sufficient for the operation of its business
in the ordinary course and are suitable for the purpose for which they are being
used. The amount of the Company's inventory and supplies currently on hand (i)
is sufficient for the operation of the Company's business in the ordinary course
based on current levels of operation adjusted for any increased level of
operations anticipated by the Company; (ii) has been purchased in the ordinary
course of business; (iii) is consistent in quality and quantity with past
practices of the Company; and (iv) is not obsolete and is of a quality and
quantity usable and salable in the ordinary course of business within twelve
(12) months subsequent to the Closing. All property leased by the Company is in
the condition required of such property by the terms of the lease applicable
thereto during the term of the lease and upon the expiration thereof. Except as
set forth in Schedule 5.21, none of the Shareholders has any direct or indirect
interest in any right, property or asset used or required by the Company in the
conduct of its business.
. Except as disclosed in Schedule 5.22, since June 3, 1996, no stockholder,
director, officer or employee of the Company, nor any ancestor, sibling,
descendent or spouse (an "Affiliate") of any such person, or any trust,
partnership or corporation in which any of such persons or their Affiliates have
a material interest, has had: (i) except for passive investments, any interest
in any entity which has purchased, sold or furnished to the Company any goods or
services; (ii) a beneficial interest in any lease, contract, commitment or
understanding to which the Company is a party or by which it is bound or
affected; (iii) except for salary and bonuses in the ordinary course of business
consistent with past practices, any interest or claim against the Company or any
assets of the Company; or (iv) any interest in any assets used in the business
of the Company.
. Except as disclosed in Schedule 5.23, no claim for product liability has ever
been asserted against the Company and, to the Company's best knowledge, no event
has occurred which might give rise to the assertion of any such claim. To the
Company's best knowledge, there is no deficiency or inadequacy in the
manufacture, design or formulation of any of the Company's products which may
hereafter give rise to any such failure or result in any such claim.
. To the Company's best knowledge, all products sold and services provided by
the Company (and the delivery thereof) have been in conformity with all
applicable contractual commitments and all express or implied warranties by the
Company and its suppliers. To the Company's best knowledge, no liability for any
warranty claims exist for the repair or replacement thereof or other damages in
connection with such services, sales or deliveries, except for any such claims
incurred in the ordinary course of business consistent in amount and character
with past experience of the Company. Copies of the standard terms and conditions
of sale, delivery or lease of the Company (including, without limitation, all
warranty provisions) are attached hereto as Schedule 5.24.
. Attached Schedule 5.25 lists:
(a) all employee handbooks and/or manuals relating to the employees
of the Company, true and correct copies of which have been delivered to
Purchaser; and
(b) all employees of the Company, together with their job
descriptions, rates of salary or wages, vacation benefits, and each bonus,
deferred compensation, stock option, incentive compensation, severance or
termination pay agreement or employment benefit applicable to each such
employee, whether formal or informal and whether legally binding or not.
.
(a) Neither the Company, or to the knowledge of the Company any
other user or owner of the Company's owned or leased real property (the
"Real Estate") has violated or been threatened with or received a notice,
directive, violation report or charge asserting any violation of the
Federal Solid Waste Disposal Act, the Federal Clean Air Act, the Federal
Clean Water Act, the Federal Resource Conservation Recovery Act of 1976
("RCRA"), the Federal Comprehensive Environmental Responsibility, Cleanup
and Liability Act of 1980 ("CERCLA"), the Toxic Substance Control Act of
1976, or any other Laws regulating or otherwise affecting or relating to
the environment ("Environmental Laws"), as the same may have been amended.
No action has been taken against the Company or, to the knowledge of the
Company, the Real Estate or any other user or owner of the Real Estate by
any federal, state or local department or agency concerning any
Environmental Laws. The Company is, and to the knowledge of the Company at
all times in the past has been, in compliance with all Environmental Laws.
To the knowledge of the Company, no asbestos, urea formaldehyde or
polychlorinated biphenyls or any other hazardous substances are present
in, on or under any of the Real Estate. No assets of the Company are
required to be upgraded, modified or replaced to be in compliance with
Environmental Laws.
(b) Neither the Company, nor to the knowledge of the Company, any
user or owner of the Real Estate has generated, stored, used, disposed of,
spilled, discharged or released any substance in any manner on the Real
Estate and the improvements thereon or on property adjacent to the Real
Estate or performed an environmental cleanup on the Real Estate or
adjacent property which may form the basis for any present or future claim
against the Company based upon Environmental Laws, or any demand or action
seeking cleanup of any site, location or body of water, surface or
subsurface, under any Environmental Laws, or otherwise, or which may
subject the Company and/or Purchaser to claims for damages.
(c) To the knowledge of the Company, no septic systems or xxxxx
exist on, in or under any of the Real Estate. To the knowledge of the
Company, the Real Estate has never been used as a landfill, dump site or
any other use which involves the disposal of solid waste on the Real
Estate in a manner which may subject the Company to any claim for cleanup
or damages under Environmental Laws. To the knowledge of the Company, no
hazardous or toxic substances or waste, as defined under Environmental
Laws, are located at, on or under any of the Real Estate, or have been
used, generated, treated, stored, disposed of, handled or removed from any
of the Real Estate.
(d) To the knowledge of the Company, no above ground or underground
storage tanks have ever been located at, on or under any of the Real
Estate. To the knowledge of the Company, at no time prior to or during the
Company's use of the Real Estate have hazardous or toxic substances or
wastes, as defined under Environmental Laws, been spilled, discharged,
leaked, discarded, released or otherwise deposited on any of the Real
Estate. To the knowledge of Company, none of the Real Estate is
contaminated by hazardous or toxic substances or wastes, as defined under
Environmental Laws, originating from off-site sources.
(e) No environmental claims have been asserted or are threatened or
are anticipated to be asserted against the Company with respect to the
Real Estate, any of its assets and/or the operation of its business.
(f) For purposes of this Section 5.26, "knowledge of the Company"
shall mean actual knowledge without a duty to inquire.
. The Company is in compliance with and has all permits, registrations and
authorizations required by all applicable Laws in the operation of the Company's
business except where noncompliance would not have a material adverse effect on
the financial condition or operations of the Company. Attached hereto as
Schedule 5.27 is a true and complete list of all licenses, permits,
registrations and authorities issued or granted to the Company by local, state
or federal government authorities or agencies. The Company is not in breach or
violation of any applicable Law relating thereto and all such licenses,
registrations, permits and authorizations are current and effective except where
a breach or violation or the absence of such licenses, registrations, permits or
authorizations would not have a material adverse effect on the financial
condition or operations of the Company.
. Schedule 5.28 attached hereto sets forth, based upon the May 10, 1998 list of
the Company's monthly invoices, a list of the fifteen (15) largest customers of
the Company determined by dollar amount of goods and services purchased from the
Company. Except as set forth on Schedule 5.28, the Company and the Shareholders
have received no notice or indication, and have no reason to believe, that any
customer, supplier or third party to material contracts of the Company intends
to cease doing business or reduce in any material respect the business
transacted with the Company or to terminate or modify any agreements with the
Company (whether as a result of consummation of the transactions contemplated
hereby or otherwise).
. Attached hereto as Schedule 5.29 is a true and complete list of the bank and
savings accounts, certificates of deposit and safe deposit boxes of the Company
and those persons authorized to sign thereon.
5.30 Customer Coupon Program. Schedule 5.30 sets forth the Company's
customer coupon program. The Company's customer coupon program has not been
altered since the Company's inception.
5.31 Brokerage. There are no claims for brokerage commissions, finders
fees or similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement or agreement made by or on behalf of the
Company. The Company acknowledges that the Purchaser shall separately escrow 463
shares of Purchaser Common Stock in connection with a potential breach of this
representation (in addition to the Escrowed Consideration). The foregoing escrow
shall terminate six months after the Closing.
. No warranty or representation by the Company contained in this Agreement or in
any writing to be furnished pursuant hereto contains or will contain any untrue
statement of fact or omits or will omit to state any material fact required to
make the warranties or representations herein or therein contained not
misleading. The Company has disclosed to Purchaser all material adverse facts
known to the Company relating to the Company, its assets or business.
Purchaser and Acquisition Sub warrant and represent to and covenant with
the Company and the Shareholders as follows:
. Purchaser and Acquisition Sub are corporations duly incorporated, validly
existing and in good standing under the laws of Minnesota. Each of Purchaser and
Acquisition Sub has the corporate power and holds all rights, privileges,
franchises, immunities, licenses, permits, authorizations and approvals
(governmental or otherwise) necessary to own and operate its properties and to
conduct its business as presently conducted, the failure of which to hold would
have a material adverse effect on the financial condition or operations of
either Purchaser or Acquisition Sub.
. The Purchaser is duly qualified to do business and in good standing as a
foreign corporation in each jurisdiction in which the nature or location of the
Purchaser's business or properties requires such qualification, except such
jurisdictions in which the failure so to qualify is not likely to have a
material adverse effect on the financial condition or operations of the
Purchaser. Schedule 6.2 sets forth all jurisdictions in which the Purchaser is
qualified to do business as a foreign corporation.
. Each of Purchaser and Acquisition Sub has all right, power and authority
required for it to enter into and perform its obligations under this Agreement
and, in the case of Acquisition Sub, the Plan of Merger. Each of Purchaser and
Acquisition Sub has taken all corporate actions on its part necessary or
appropriate to execute, deliver and perform this Agreement and, in the case of
Acquisition Sub, to consummate the Merger, and this Agreement has been duly
authorized, executed and delivered by each of Purchaser and Acquisition Sub and
is binding upon, and enforceable against each in accordance with its terms and
conditions; and, when executed and delivered by Acquisition Sub, the Plan of
Merger will be duly authorized, executed and delivered by Acquisition Sub and
will be binding upon, and enforceable against, Acquisition Sub in accordance
with its terms and conditions.
. Neither the execution and delivery of this Agreement by Purchaser or
Acquisition Sub, nor the execution or delivery of the Plan of Merger by
Acquisition Sub, nor the performance of their respective obligations hereunder
or under the Plan of Merger, does or will, after the giving of notice, or the
lapse of time, or otherwise:
(a) conflict with or constitute a default under the Articles of
Incorporation or By-Laws of Purchaser or Acquisition Sub: (a) conflict
with, result in a breach of, or constitute a default under, the Articles
of Incorporation or By-Laws of the Company, or (i) any federal, state or
local law, statute, code, ordinance, rule or regulation applicable to it,
(ii) any federal, state or local court or administrative order or process
to which the Company is a party or is bound, or (iii) any material
contract, agreement, note, debt
instrument, security agreement, mortgage, arrangement, commitment or plan
to which Purchaser or Acquisition Sub is a party, or under which Purchaser
or Acquisition Sub may be obligated, or by which Purchaser or Acquisition
Sub or any of its material rights, properties or assets may be subject or
bound; or
(b) result in the creation of any mortgage, pledge, lien, claim,
charge, encumbrance or assessment upon any of the material rights,
properties or assets of the Purchaser.
. There are no actions, suits or proceedings pending, or to the knowledge of
Purchaser, threatened in writing against Purchaser or Acquisition Sub, at law or
in equity, before any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, which if determined adversely to Purchaser, would have a material
adverse effect on the financial condition or operations of the Purchaser. Except
as set forth on Schedule 6.5, the Purchaser is not operating under or subject
to, any governmental order, writ, injunction or decree.
. The total number of shares of capital stock and the par value thereof which
the Purchaser is authorized to issue, the number of such shares which are issued
and outstanding, and the number of treasury shares are set forth on Schedule
6.6. Except for stock options, warrants or other rights to acquire 20,889 shares
of Purchaser Common Stock, there are no other outstanding options, conversion
rights, warrants or other rights to acquire from the Purchaser any shares of
Purchaser Common Stock. The shares of Purchaser Common Stock to be issued to the
Shareholders of the Company in the Merger will be at the Effective Time duly
authorized, validly issued, fully paid, nonassessable and free of preemptive
rights. Except as set forth on Schedule 6.6, there are no voting trust
agreements or other contracts, agreements or arrangements to which either the
Purchaser or, to the best of its knowledge, its shareholders is a party
restricting voting or dividend rights or transferability with respect to the
outstanding shares of capital stock of the Purchaser.
. The Purchaser Financial Statements attached hereto as Schedule 6.7 were
prepared from the Purchaser's books and records in accordance with generally
accepted accounting principles, subject, in the case of the interim financial
statements, to normal recurring year-end adjustments (the effect of which will
not, individually or in the aggregate, be materially adverse) and the absence of
notes (that, if presented, would not differ materially from those included in
the audited financial statements of the Purchaser for the fiscal year ended June
30, 1997 consistently applied, and present fairly in all material respects the
financial position, results of operations and changes in cash flows of the
Purchaser at the dates and for the periods indicated therein.
. Except as set forth on Schedule 6.8,
(a) on April 30, 1998, to the best of its knowledge, Purchaser did
not have any material liability of a nature required to be reflected on a
balance sheet prepared in accordance with generally accepted accounting
principles, which was not disclosed, reflected or reserved against in the
Purchaser's balance sheet; and
(b) except for liabilities which have been incurred in the ordinary
course of business, since April 30, 1998, to the best of its knowledge,
the Purchaser has not incurred any material liability of any nature which
would be required to be reflected on a balance sheet prepared in
accordance with generally accepted accounting principles.
. No warranty or representation by the Purchaser contained in this Agreement or
in any writing to be furnished pursuant hereto contains or will contain any
untrue statement of fact or omits or will omit to state any material fact
required to make the warranties or representations herein or therein contained
not misleading. The Purchaser has disclosed to Company all material adverse
facts known to the Purchaser relating to the Purchaser, its assets or business.
The obligations of Purchaser and Acquisition Sub under this Agreement are
subject to the following conditions precedent:
. Neither Purchaser nor the Company shall have terminated this Agreement
pursuant to Section 9.1 hereof.
. The warranties and representations made by the Company herein and by the
Shareholders in the Exchange Agreements to Purchaser and Acquisition Sub shall
be true and correct in all material respects on and as of the Closing Date with
the same effect as if such warranties and representations had been made on and
as of the Closing Date, and the Company and the Shareholders shall have
performed and complied in all material respects with all agreements, covenants
and conditions on their respective parts required to be performed or complied
with on or prior to the Closing Date; and at the Closing, Purchaser and
Acquisition Sub shall have received a certificate executed by the Company and
the Shareholders to the foregoing effect.
. No court or other governmental agency shall have issued an order which shall
be in effect on the Closing Date restraining or prohibiting the consummation of
the transactions contemplated hereby.
. All proceedings to be taken in connection with the consummation of the
transactions contemplated by this Agreement and all documents incident thereto
shall be reasonably satisfactory in all material respects and in form and
substance to Purchaser and its counsel, and Purchaser shall have received copies
of such documents as Purchaser and its counsel may reasonably request in
connection with said transactions.
. The approval or consent of all United States agencies and all state and local
governmental bodies and agencies as may be necessary to consummate the
transactions contemplated hereunder shall have been received.
. All amendments or supplements to the Schedules hereto made by the Company
which are individually or in the aggregate material to the business, operations
or financial condition of the Company shall be acceptable to Purchaser and
Acquisition Sub.
. The directors and officers of the Company shall have resigned their positions
as such as of the Closing Date.
. In accordance with the Company's Articles of Incorporation and Bylaws and
Minnesota corporate law, the Company shall have duly approved the transactions
contemplated by this Agreement. The Company shall not have received notice of
dissenter's rights from more than (i) 3% of the holders of Common Stock, (ii) 5%
of the holders of Series A Preferred Stock and (iii) 2% of the holders of Series
B Preferred Stock.
. All Shareholders of the Company shall have executed Exchange Agreements for
the benefit of Purchaser representing, among other things, good title to the
Company Capital Stock owned by such Shareholder and acknowledging the securities
law restrictions applicable to the Purchaser Common Stock that they will
receive.
. Artesian shall have executed and delivered a Noncompete Agreement in the form
of Exhibit H attached hereto.
Except for the condition set forth in Section 7.5 hereof, Purchaser and
Acquisition Sub shall have the right to waive any of the foregoing conditions
precedent.
The obligations of the Company and the Shareholders under this Agreement
are subject to the foregoing conditions precedent:
. Neither Purchaser nor the Company shall have terminated this Agreement
pursuant to Section 9.1 hereof.
. All warranties and representations made by Purchaser and Acquisition Sub
herein to the Company shall be true and correct in all material respects on and
as of the Closing Date with the same effect as if such warranties and
representations had been made on and as of the Closing Date, and Purchaser and
Acquisition Sub shall have performed and complied in all material respects
(except for the payment obligations which shall be absolute) with all
agreements, covenants and conditions on their part required to be performed or
complied with on or prior to the Closing Date; and at the Closing, the Company
shall have received a certificate executed by the President or any Vice
President of each of Purchaser and Acquisition Sub to the foregoing effect.
. No court or other governmental Person shall have issued an order which shall
be in effect on the Closing Date restraining or prohibiting the consummation of
the transactions contemplated hereby.
. All proceedings to be taken in connection with the consummation of the
transactions contemplated by this Agreement (including the approval of this
Agreement by the Board of Directors of Purchaser and Acquisition Sub) and all
documents incident thereto shall be
reasonably satisfactory in all material respects and in form and substance to
the Company, the Shareholders and their respective counsel, and the Company, the
Shareholders and such counsel shall have received copies of such documents as
they and counsel may reasonably request in connection with the transactions.
. The approval or consent of all United States agencies and all state and local
governmental bodies and agencies as may be necessary to consummate the
transactions contemplated hereunder shall have been received.
. The Shareholders of Acquisition Sub shall have duly approved the transactions
contemplated by this Agreement.
Except for the condition set forth in Sections 8.5 hereof, the Company and
the Shareholders shall have the right to waive any of the foregoing conditions
precedent.
. This Agreement may be terminated at any time prior to the Closing as follows,
and in no other manner:
(a) By mutual agreement of Purchaser and the Company (and the
Shareholders);
(b) By Purchaser or the Company (and the Shareholders), if at or
before the Closing any condition set forth herein for the benefit of
Purchaser or the Company (and the Shareholders), respectively, shall not
have been timely met and cannot be met on or before the Closing Date and
has not been waived, provided that the terminating party has not defaulted
in any material respect in the performance of any of its obligations under
this Agreement;
(c) By Purchaser on the earlier of (i) the date of the Public
Utilities Commission makes a determination not to approve the transactions
contemplated by this Agreement, (ii) September 30, 1998, or (iii) such
later date as Purchaser may agree upon, provided that any such failure to
close is not due to any default in any material respect in the performance
of any obligation under this Agreement by the terminating party;
(d) By Purchaser, if any warranty or representation made herein for
the benefit of Purchaser or in any certificate, schedule, or documents
furnished to Purchaser pursuant to this Agreement is untrue in any
material respect or the Company or the Shareholders shall have defaulted
in any material respect in the performance of any material obligation
under this Agreement;
(e) By Company, if any warranty or representation made herein for
the benefit of Company or in any certificate, schedule, or documents
furnished to Company pursuant to this Agreement is untrue in any material
respect or the Purchaser or the Shareholders
shall have defaulted in any material respect in the performance of any
material obligation under this Agreement;
.
(a) In the event of any termination of this Agreement pursuant to
Section 9.1, this Agreement shall forthwith become void and have no
further effect, and there shall be no liability on the part of any party
hereto.
(b) Notwithstanding any other provision of this Agreement, no
termination of this Agreement shall release any party from liability for
any breach of its obligations hereunder or any misrepresentation or other
violation of the terms and conditions of this Agreement.
. The Company agrees to indemnify Purchaser and to hold it harmless from and
against any and all damages, losses, deficiencies, actions, demands, judgments,
costs and expenses (including, without limitation, attorneys' and accountants'
fees) (collectively, "Losses") of or against Purchaser or Acquisition Sub
resulting from:
(a) any misrepresentation or breach of any warranty or
representation of the Company or the Shareholders, or any of them, in this
Agreement or in any document, instrument or agreement executed and/or
delivered pursuant to or in connection with this Agreement by
Shareholders;
(b) any breach or nonfulfillment of any agreement or covenant of the
Company or the Shareholders, or any of them, contained in this Agreement
or in any certificate, document or instrument executed and/or delivered
pursuant to or in connection with this Agreement by Shareholders;
(c) any assessments, claims or liabilities (including interest and
penalties) for federal, state or local income, sales, use, franchise or
other taxes relating to, imposed upon or assessed against the sales,
income, property or business of the Company for all periods prior to the
date of the Closing except as disclosed in the financial statements as of
the Closing Date; and
(d) third party claims (including fines and penalties sought to be
imposed or enforcement proceedings commenced by governmental agencies)
based upon, alleging or arising out of any act, omission or occurrence on
or before the Closing Date, including, without limitation, any claim for
nonperformance or breach of contract, and/or claims for personal injury or
for property damage, except as disclosed in the financial statements as of
the Closing Date or the Schedules attached hereto and delivered on the
date of this Agreement; provided however, Purchaser may not seek
indemnification under this Section 10.1(d) for any amounts that Purchaser
has actually received under any insurance
policy; provided further, Purchaser may in its sole discretion determine
whether or not it will seek insurance payments or coverage.
. Purchaser agrees to indemnify the Company and the Shareholders and to hold
them harmless from and against any and all Losses of or against the Company and
the Shareholders resulting from (a) any misrepresentation or breach of any
warranty or representation of Purchaser in this Agreement or in any document,
instrument or agreement executed and/or delivered by Purchaser pursuant to or in
connection with this Agreement; and (b) any breach or non-fulfillment of any
agreement or covenant contained in this Agreement or in any certificate,
document or instrument executed or delivered by Purchaser pursuant to or in
connection with this Agreement.
.
(a) If a party shall claim that it is entitled to be indemnified
pursuant to the terms of this Article, it (the "Claiming Party") shall so
notify the party or parties against which the claim is made (the
"Indemnifying Party") in writing of such claim within sixty (60) days
after the Claiming Party receives notice of any action, proceeding, demand
or assessment or otherwise has received notice of any claim of a third
party that may reasonably be expected to result in a claim for
indemnification by the Claiming Party against the Indemnifying Party;
provided, however, that failure to give such notification shall not affect
the indemnification provided hereunder except to the extent the
Indemnifying Party is actually prejudiced as a result of such failure.
Such notice shall specify the breach of representation, warranty or
agreement claimed by the Claiming Party and the Losses incurred by or
imposed upon the Claiming Party on account thereof. If such Losses are
liquidated in amount, the notice shall so state and such amount shall be
deemed the amount of the claim of the Claiming Party. If the amount is not
liquidated, the notice shall so state and in such event a claim shall be
deemed asserted against the Indemnifying Party on behalf of the Claiming
Party, but no payment shall be made on account thereof until the amount of
such claim is liquidated and the claim is finally determined.
(b) The following provisions shall apply to any claim of the
Claiming Party which is based upon (i) a suit, action or proceeding filed
or instituted by any third party, or (ii) any form of proceeding or
assessment instituted by any governmental entity:
(i) The Indemnifying Party shall, upon receipt of such written
notice and at its expense, actively and in good faith defend such
claim in its own name or, if necessary, in the name of the Claiming
Party; provided, however, that if the proceeding involves a matter
solely of concern to the Claiming Party in addition to the claim for
which indemnification under this Agreement is being sought, such
matter shall be within the sole responsibility of the Claiming Party
and its counsel. The Claiming Party will cooperate with and make
available to the Indemnifying Party such assistance and materials as
may be reasonably requested of it, and the Claiming Party shall have
the right, at its expense, to participate in the defense. The
Indemnifying Party shall have the right to settle and
compromise such claim only with the consent of the Claiming Party
(which consent shall not be unreasonably withheld).
(ii) If the Indemnifying Party notifies the Claiming Party
that it disputes any claim made by the Claiming Party and/or it
fails to defend such claim actively and in good faith, then the
Claiming Party shall have the right to conduct a defense against
such claim and shall have the right to settle and compromise such
claim upon three (3) days notice to, but without the consent of, the
Indemnifying Party. Once the amount of such claim is liquidated and
the claim is finally determined, the Claiming Party shall be
entitled to pursue each and every remedy available to it at law or
in equity to enforce the indemnification provisions of this
Agreement and, in the event it is determined, or the Indemnifying
Party agrees, that it is obligated to indemnify the Claiming Party
for such claim, the Indemnifying Party agrees to pay all costs,
expenses and fees, including, without limitation, all reasonable
attorneys' fees which may be incurred by the Claiming Party in
enforcing or attempting to enforce indemnification under this
Agreement, whether the same shall be enforced by suit or otherwise.
The prevailing party shall be entitled to recover all reasonable
costs in connection therewith.
.
(a) If the Closing of the Merger occurs, (i) Purchaser and
Acquisition Sub shall pay $50,000 of the costs and expenses incurred by
the Company in connection with the negotiation, preparation and execution
of this Agreement and the consummation of the Merger and the other
transactions contemplated hereby and (ii) any amounts in excess of $50,000
shall be paid by the Shareholders. To the extent the Company incurs any
costs or expenses with Xxxxxx Xxxxxxxx LLP after May 20, 1998 pertaining
to the Company's audit for the year ended December 31, 1997, such costs
and expenses shall be considered incurred by the Company as part of the
foregoing sentence. All costs and expenses incurred by the Purchaser and
the Acquisition Sub in connection with this Agreement shall be paid by the
Purchaser or the Acquisition Sub.
(b) If the Closing of the Merger does not occur, all costs and
expenses incurred in connection with the negotiation, preparation and
execution of this Agreement and the consummation of the Merger and the
other transactions contemplated hereby shall be paid by the party
incurring such costs or expenses.
. Except for attorneys and accountants for the respective parties, none of the
Company, the Shareholders, Purchaser or Acquisition Sub has retained any broker,
finder, investment banker or financial advisor in connection with this Agreement
or the Merger or any other transaction contemplated hereby.
. The warranties and representations of the Company contained in this Agreement
shall survive for a period of six (6) months following Effective Time of the
Merger.
. This Agreement (including all Schedules and the Exhibits hereto and any other
agreements executed and delivered herewith) contain the entire understanding of
the parties hereto with respect to the subject matter contained herein and
therein. This Agreement supersedes any and all prior agreements and
understandings between the parties with respect to such subject matter. No
waiver and no modification or amendment of any provision of this Agreement shall
be effective unless specifically made in writing and duly signed by the party to
be bound thereby.
. Prior to the Closing Date, all notices to third parties and all other
publicity relating to the transaction contemplated by this Agreement shall be
jointly planned, coordinated and agreed to by Purchaser and the Company. Prior
to the Closing Date, none of the parties hereto shall act unilaterally in this
regard without the prior written approval of the others, such approval not to be
unreasonably withheld.
. This Agreement may be executed in counterparts, each of which shall be deemed
an original but all of which, together, shall constitute one and the same
instrument.
. If any provision hereof shall be held invalid or unenforceable by any court of
competent jurisdiction or as a result of future legislative action, such holding
or action shall be strictly construed and shall not affect the validity or
effect of any other provision hereof.
. This Agreement shall be binding upon and inure to the benefit of the
successors and permitted assigns of the parties hereto. None of Purchaser,
Acquisition Sub nor the Company or any of the Shareholders may assign or
transfer any of its or his rights or obligations under this Agreement, except
with the prior written consent of the other parties.
. This Agreement is for the sole benefit of the parties hereto and nothing
herein expressed or implied shall give or be construed to give any Person other
than the parties hereto any legal or equitable rights hereunder, except as
otherwise set forth in Section 10.1 hereof.
.
(a) THE VALIDITY, INTERPRETATION AND EFFECT OF THIS AGREEMENT SHALL
BE GOVERNED EXCLUSIVELY BY THE LAWS OF THE STATE OF MINNESOTA, EXCLUDING
THE "CONFLICT OF LAWS" RULES OF THAT STATE.
(b) EACH OF THE PARTIES HERETO IRREVOCABLY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF (i) THE FOURTH JUDICIAL DISTRICT COURT OF THE STATE OF
MINNESOTA, AND (ii) THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
MINNESOTA, FOR THE PURPOSES OF ANY SUIT, ACTION OR OTHER PROCEEDING
ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY (AND
AGREES NOT TO COMMENCE ANY ACTION, SUIT OR PROCEEDING RELATING HERETO
EXCEPT IN SUCH COURTS). EACH OF THE PARTIES HERETO FURTHER AGREES THAT
SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY U.S. REGISTERED
MAIL TO SUCH PARTY'S RESPECTIVE ADDRESS SET FORTH HEREIN SHALL BE
EFFECTIVE SERVICE OF PROCESS FOR ANY ACTION, SUIT OR PROCEEDING IN
MINNESOTA WITH RESPECT TO ANY MATTERS TO WHICH IT HAS SUBMITTED TO
JURISDICTION AS SET FORTH ABOVE IN THE IMMEDIATELY PRECEDING SENTENCE.
EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
OBJECTION TO THE LAYING OF VENUE OF ANY ACTION, SUIT OR PROCEEDING ARISING
OUT OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY IN (x) THE
FOURTH JUDICIAL CIRCUIT COURT OF THE STATE OF MINNESOTA OR (y) THE UNITED
STATES DISTRICT COURT FOR THE DISTRICT OF MINNESOTA, AND HEREBY FURTHER
IRREVOCABLY AND UNCONDITIONALLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN
ANY SUCH COURT THAT ANY SUCH ACTION, SUIT OR PROCEEDING BROUGHT IN ANY
SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
. All notices or other communications required or permitted by this Agreement
shall be in writing and shall be deemed to have been duly received (a) if given
by facsimile, when transmitted and the appropriate telephonic confirmation
received if transmitted on a Business Day and during normal business hours of
the recipient, and otherwise on the next Business Day following transmission,
(b) if given by certified or registered mail, return receipt requested, postage
prepaid, three Business Days after being deposited in the U.S. mails and (c) if
given by courier or other means, when received or personally delivered, and
addressed as follows:
To the Company or Shareholders: One Call Telecom, Inc.
000 Xxxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxx
Phone: 000-000-0000
Fax: 000-000-0000
With a copy to: Artesian Capital Limited Partnership II
1700 Xxxxxx Tower
000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx
Phone: 000-000-0000
Fax: 000-000-0000
With a copy to: Xxxxxx Xxxxxxxxx
Xxxxxx Xxxxxxx Xxxxxx & Brand LLP
3300 Norwest Center
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
To Purchaser or Acquisition Sub: Advanced Telecommunications, Inc.
000 Xxxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
With a copy to: Xxxxx X. Xxxxxxxx, Esq.
Robins, Kaplan, Xxxxxx & Xxxxxx L.L.P.
0000 XxXxxxx Xxxxx
000 XxXxxxx Xxx.
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Phone: (000) 000-0000
Fax: (000) 000-0000
or to such other addresses as may be specified by any party hereto to the other
parties pursuant to notice given by such party in accordance with the provisions
of this Section 11.11.
. A disclosure contained in any item of any Schedule or in any section of this
Agreement shall constitute a disclosure for all relevant items of the Schedules
and all relevant sections of this Agreement.
. The failure of any party at any time or times to require the performance of
any provision hereof shall in no manner affect the right at a later time to
enforce the same. The waiver by any party of any condition, or the breach of any
provision, term, covenant, representation or warranty contained in this
Agreement, whether by conduct or otherwise, in any one or more instances shall
be deemed to be or construed as a further or continuing waiver of any such
condition or of the breach of any other provision, term, covenant,
representation or warranty of this Agreement.
. The respective representations and warranties of Purchaser and the Company
contained herein or in any certificates or other documents delivered prior to or
at the Closing shall not be deemed waived or otherwise affected by any
investigation made by any party hereto. Each and every representation and
warranty contained herein shall be deemed to be conditions to the Merger and
shall survive for a period of six months following the Merger. This Section
11.14 shall have no effect upon any other obligation of the parties hereto,
whether to be performed before or after the Closing.
11.15 Company Employees. After the Closing, the Purchaser shall use
reasonable efforts to offer employment to all of the Company's employees.
The parties hereto have duly executed this Agreement on the day and year
first above written.
ADVANCED TELECOMMUNICATIONS, INC. ONE CALL ACQUISITION CORP.
By: By:
Xxxxx X. Xxxxxxxx Xxxxx X. Xxxxxxxx
Chief Executive Officer Chief Executive Officer
ONE CALL TELECOM, INC.
By:
Xxxxxx Xxxxx
President and Chief Executive Officer
EXHIBIT B
PLAN OF MERGER
This Plan of Merger (this "Plan of Merger"), dated as of July ___, 1998,
is by and between One Call Telecom, Inc., a Minnesota corporation (the
"Company"), and One Call Acquisition Corp., a Minnesota corporation
("Acquisition Sub").
RECITALS:
A. The Company has authorized capital stock of _____ shares of common
stock, with __ par value (the "Common Stock"), of which shares are outstanding
as of the date hereof.
B. Acquisition Sub is a wholly-owned subsidiary of Advanced
Telecommunications, Inc., a Minnesota corporation ("Purchaser").
C. The Company, Acquisition Sub and Purchaser have entered into an
Agreement dated as of June __, 1998 (the "Merger Agreement") containing certain
warranties, representations, covenants, and agreements in connection with the
transactions contemplated therein and herein.
D. The Company, Acquisition Sub and Purchaser desire to have the Company
merge with and into Acquisition Sub pursuant to the terms and conditions set
forth in this Plan of Merger.
NOW, THEREFORE, in consideration of the mutual agreements and covenants
contained herein, the parties hereto agree that the Company and Acquisition Sub
shall be merged and that the terms and conditions of such merger and the mode of
carrying the same into effect shall be as follows:
1. Merger.
1.1 Merger. Pursuant to the applicable laws of Minnesota, the
Company shall merge with and into Acquisition Sub, and Acquisition Sub
shall be the surviving corporation after the merger and shall continue to
exist as a corporation created and governed by the laws of Minnesota.
1.2 Surviving Corporation. At the Effective Time of the Merger (as
hereinafter defined):
A. The separate existence of the Company shall cease
(Acquisition Sub and the Company are sometimes collectively referred
to herein as the "Constituent Corporations" and Acquisition Sub
after the Merger is sometimes referred to herein as the "Surviving
Corporation").
B. The By-Laws of Acquisition Sub in effect immediately prior
to the Effective Time of the Merger shall be the By-laws of the
Surviving Corporation until altered, amended or repealed in
accordance with the Articles of Incorporation of the Surviving
corporation and applicable law.
C. The initial directors and officers of the surviving
corporation shall be as follows:
DIRECTORS OFFICE
Xxxxx X. Xxxxxxxx Chief Executive Officer and
Chairman of the Board
Xxxxxxx Xxxxxxx Secretary and Treasurer
Xxxxxxx Xxxxxxxxxx
D. The Merger shall, from and after the Effective Time of the
Merger, have all of the effects provided by applicable law.
1.3 Effectiveness of Merger.
A. If all of the conditions precedent to the obligations of
each of the Company and the Purchaser as set forth in the Merger
Agreement shall have been satisfied or, to the extent permitted,
waived, articles of merger executed by duly authorized officers of
each of the Company and Acquisition Sub, complying in all respects
with the Minnesota Business Corporation Act shall be filed with the
Secretary of State of Minnesota.
B. The "Effective Time of the Merger" shall be the time when
the Plan of Merger and all other necessary documents (including, but
not limited to, articles of merger) and certificates with respect
thereto are accepted for filing by the Secretary of State of
Minnesota.
1.4 Shares of Constituent Corporations. The manner and basis of
exchanging the capital stock of the Company for cash and the Stock of
Purchaser upon the Effective Time of the merger shall be as follows:
Each share of Series A Preferred Stock of the Company ("Series A") and Series B
Preferred Stock of the Company ("Series B") (collectively, Series A and Series B
are hereinafter referred to as the "Company Preferred Stock") issued and
outstanding immediately prior to the Effective Time shall be converted into the
right to receive that number of validly issued, fully paid and nonassessable
shares of Purchaser Common Stock reflected in the Agreement (the "Merger
Consideration"), pro rata based upon the liquidation preference of each share of
Company Preferred Stock as set forth in the Company's Certificate of Designation
for Series A and Series B filed with the Minnesota Secretary of State on
December 20, 1996 and December 10, 1997, respectively (the "Liquidation
Preference"). The shares of common stock of the Company (the "Company Common
Stock") will receive no shares of Purchaser Common Stock since it is the
Company's belief that the Liquidation Preference exceeds the value of the Merger
Consideration. At the Effective Time, all shares of Company Capital Stock issued
and outstanding shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each certificate previously
evidencing any such shares shall thereafter represent the right to receive the
Merger Consideration. The holders of certificates previously evidencing shares
of Company Capital Stock outstanding immediately prior to the Effective Time
shall cease to have any rights with respect to shares of Company Capital Stock.
Certificates previously evidencing shares of Company Preferred Stock shall be
exchanged for certificates evidencing whole shares of Purchaser Common Stock
issued in consideration therefor in accordance with the procedures of this
Section. Certificates previously evidencing shares of Company Common Stock shall
be transferred to the Purchaser for no consideration. No fractional shares of
Purchaser Common Stock shall be issued, and, in lieu thereof, a cash payment
shall be made.
2. Termination.
2.1 Termination. This Plan of Merger may be terminated at any time
prior to the Effective Time of the Merger by the Company or Acquisition
Sub, by written notice to the other party hereto if either such party has
terminated the Merger Agreement in accordance with its terms.
2.2 Effects of Termination.
A. Subject to Sections 2.2.B, in the event of any termination
of this Plan of Merger pursuant to Section 2.1, this Plan of Merger
shall forthwith become void and have no further effect, and there
shall be no liability on the part of any party hereto.
B. Notwithstanding any other provision of this Plan of Merger
(including Section 2.2.A), no termination of this Plan of Merger
shall release any party from liability for any knowing and
intentional breach of its obligations hereunder.
3. Further Assurances. In case at any time after the Effective Time of the
Merger any further action is reasonably necessary or desirable to carry out the
purposes of this Plan of Merger or to vest Purchaser with full title to all
properties, assets, rights, approvals, immunities and franchises of either of
the Constituent Corporations, the Company and Acquisition Sub and their
respective officers and directors shall take all such reasonably necessary
action.
4. Amendment. At any time prior to the Effective Time of the Merger, this
Plan of Merger may be amended by the parties hereto by an agreement in writing
authorized by their respective Boards of Directors.
IN WITNESS WHEREOF, the parties have duly executed this Plan of Merger as
of the date first above written.
ONE CALL ACQUISITION CORP.
By:
Xxxxx X. Xxxxxxxx
Chief Executive Officer
ONE CALL TELECOM, INC.
By:
Xxxxxx Xxxxx
President
EXHIBIT C
STOCK OPTIONS
EXHIBIT D
ESCROW AGREEMENT
EXHIBIT E
OPINION OF COUNSEL OF PURCHASER
EXHIBIT F
OPINION OF COUNSEL OF COMPANY
SCHEDULE 6.2
Foreign Qualification
Purchaser is a Minnesota corporation and registered and in good standing
in the States of Washington, Oregon and Colorado. Through its wholly-owned
subsidiary corporations,
American Telephone Technology, Inc. and ATI Acquisition, Inc. d/b/a Electrotel,
maintains fixed offices in the States of Colorado, Washington and Oregon.
SCHEDULE 6.5
Litigation
NONE
SCHEDULE 6.6
Capital Stock
1. Purchaser's authorized capital consists of the following:
Issued and
a. Preferred: Authorized Outstanding
----------- -----------
500,000 93,916
b. Common:
- Class A 250,000 11,205*
- Class B 250,000 6,783
*Purchaser has issued and there remain outstanding subordinated
promissory notes convertible into 69,954 shares of Class A common
stock.
2. Transfer of shares is restricted by the Stockholders Agreement dated July
1, 1996, as amended, among Purchaser and all of Purchaser's shareholders.
SCHEDULE 6.8
Undisclosed Balance Sheet Liabilities
Line of credit of up to $5,000,000 under that certain Loan Agreement dated
as of June 17, 1998 among Purchaser, its wholly-owned subsidiaries, and Imperial
Bank.
