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Exhibit 2.2
RECAPITALIZATION AGREEMENT AND
PLAN OF MERGER
By and Among
ATX Telecommunications Services, Inc.,
Xxxxxx Xxxxxxx, Xxxxx Xxxxxxxxx, Xxxxxxx Xxxx and The Xxxxxxxx Xxxx Trust
and
CoreComm Limited
Dated as of
March 9, 2000
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TABLE OF CONTENTS
PAGE
I. THE MERGER.................................................................................... 1
1.1 The Formation of ATX Merger Sub, CoreComm Merger Sub and the Merger................. 1
1.2 The Recapitalization................................................................ 3
1.3 Conversion of CoreComm Common Stock................................................. 9
1.4 Exchange of Certificates............................................................ 10
1.5 Directors and Officers of Surviving Corporation..................................... 12
1.6 Directors and Officers of ATX....................................................... 12
II. CLOSING....................................................................................... 12
2.1 Closing............................................................................. 12
III. REPRESENTATIONS AND WARRANTIES OF
ATX AND ATX MERGER SUB...................................................................... 13
3.1 Organization, Etc................................................................... 13
3.2 Authorization....................................................................... 14
3.3 Capitalization...................................................................... 15
3.4 No Violation........................................................................ 16
3.5 Financial Statements................................................................ 17
3.6 No Undisclosed or Contingent Liabilities............................................ 17
3.7 Absence of Certain Changes.......................................................... 18
3.8 Litigation, Orders.................................................................. 19
3.9 Title to Properties; Encumbrances................................................... 19
3.10 Compliance with Law; Licenses....................................................... 20
3.11 Taxes............................................................................... 21
3.12 Consents and Approvals.............................................................. 22
3.13 Contracts and Commitments........................................................... 23
3.14 Insurance........................................................................... 24
3.15 Certain Interests................................................................... 24
3.16 Intellectual Property............................................................... 24
3.17 Employee Benefit Plans.............................................................. 25
3.18 Labor Matters....................................................................... 26
3.19 Environmental Protection............................................................ 26
3.20 Brokers or Finders.................................................................. 26
3.21 Accounting and Tax Matters.......................................................... 27
3.22 Registration Statement; Proxy Statement/Prospectus.................................. 27
3.23 Non-Competition Agreements.......................................................... 27
3.24 Customers........................................................................... 27
3.25 Legal Opinion....................................................................... 27
3.26 Full Disclosure..................................................................... 27
3.27 NO OTHER REPRESENTATIONS OR WARRANTIES.............................................. 28
IV. REPRESENTATIONS AND WARRANTIES OF CORECOMM.................................................... 28
4.1 Organization, Etc................................................................... 28
4.2 Authorization....................................................................... 28
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TABLE OF CONTENTS
(Continued)
PAGE
4.3 Capitalization...................................................................... 29
4.4 No Violation........................................................................ 29
4.5 SEC Filings; Financial Statements................................................... 30
4.6 Absence of Certain Changes.......................................................... 30
4.7 Consents and Approvals.............................................................. 30
4.8 Brokers or Finders.................................................................. 31
4.9 Accounting and Tax Matters.......................................................... 31
4.10 Registration Statement; Proxy Statement/Prospectus.................................. 31
4.11 Fairness Opinion.................................................................... 31
4.12 Legal Opinion....................................................................... 31
4.13 NO OTHER REPRESENTATIONS OR WARRANTIES.............................................. 32
V. OBLIGATIONS OF ATX AND CORECOMM............................................................... 32
5.1 Other Transactions.................................................................. 32
5.2 Supplemental Disclosure............................................................. 32
5.3 Conduct of Business................................................................. 32
5.4 Confidentiality..................................................................... 34
5.5 Proxy Statement/Prospectus; Registration Statement.................................. 34
5.6 Stockholders' Meeting............................................................... 35
5.7 Cooperation; Regulatory Filings..................................................... 35
5.8 Public Announcements................................................................ 37
5.9 Effect of Due Diligence............................................................. 37
5.10 Letters from Accountants; New Financial Statements.................................. 38
5.11 Nasdaq Application.................................................................. 38
5.12 Stock Plans and Options............................................................. 38
5.13 Access and Investigations........................................................... 39
5.14 Communications Licenses and Authorizations.......................................... 39
5.15 FCC/State PUC Applications.......................................................... 39
5.16 Stockholders Agreement.............................................................. 40
5.17 Transition Services Agreement....................................................... 40
5.18 Reincorporation and Acquisition..................................................... 40
5.19 Termination of Agreements........................................................... 40
5.20 Escrow Agreements................................................................... 41
5.21 Phantom Unit Plan................................................................... 41
5.22 Name................................................................................ 41
5.23 Existing Stockholders' Agreement.................................................... 41
5.24 Negotiation of Term Sheets.......................................................... 41
5.25 Operating Subsidiaries.............................................................. 41
5.26 Subchapter S Election............................................................... 41
5.27 Assignment of Reimbursement Rights.................................................. 41
5.28 Certificate of Incorporation, Etc................................................... 41
5.29 CoreComm Transactions............................................................... 42
5.30 Protective Agreements............................................................... 42
5.31 Key Employee Employment Agreements.................................................. 42
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TABLE OF CONTENTS
(Continued)
PAGE
5.32 Xxxxxxx and Xxxxxxxxx Employment Agreements......................................... 42
5.34 Working Capital Loans............................................................... 42
VI. CONDITIONS TO OBLIGATIONS OF CORECOMM......................................................... 42
6.1 Representations and Warranties...................................................... 42
6.2 Performance......................................................................... 43
6.3 No Proceeding or Litigation......................................................... 43
6.4 No Injunction....................................................................... 43
6.5 Officer's Certificates.............................................................. 43
6.6 Consents and Approvals.............................................................. 43
6.7 HSR Act............................................................................. 43
6.8 No Material Adverse Change.......................................................... 43
6.9 Stockholder Approval................................................................ 44
6.10 FCC/State PUC Consents.............................................................. 44
6.11 Registration Statement.............................................................. 44
6.12 Transition Services Agreement....................................................... 44
6.13 Resignations........................................................................ 44
6.14 The GAAP Financial Statements of ATX................................................ 44
6.15 Stockholders' Agreement............................................................. 44
6.16 NASDAQ Listing...................................................................... 44
6.17 Formation of ATX Merger Sub......................................................... 44
6.18 Escrow Agreement.................................................................... 44
6.19 Opinions of Counsel................................................................. 44
6.20 Corporate Governance................................................................ 45
6.21 Necessary Consents.................................................................. 45
6.22 Existing Stockholders' Agreement.................................................... 45
6.23 Employment Matters.................................................................. 45
VII. CONDITIONS TO OBLIGATIONS OF ATX.............................................................. 45
7.1 Representations and Warranties...................................................... 45
7.2 Performance......................................................................... 46
7.3 No Proceeding or Litigation......................................................... 46
7.4 No Injunction....................................................................... 46
7.5 Officer's Certificate............................................................... 46
7.6 Consents and Approvals.............................................................. 46
7.7 HSR Act............................................................................. 46
7.8 Registration Rights Agreement....................................................... 46
7.9 FCC/State PUC Consents.............................................................. 46
7.10 No Material Adverse Change.......................................................... 47
7.11 Registration Statement.............................................................. 47
7.12 Tax Opinion......................................................................... 47
7.13 Letters of Credit................................................................... 47
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TABLE OF CONTENTS
(Continued)
PAGE
VIII. TERMINATION OF AGREEMENT..................................................................... 47
8.1 Termination of Agreement............................................................ 47
8.2 Procedure Upon Termination.......................................................... 48
IX. INDEMNIFICATION............................................................................... 48
9.1 Indemnification by ATX Stockholders................................................. 48
9.2 Procedures for Indemnification...................................................... 49
9.3 Cooperation in Defense.............................................................. 50
9.4 Limitations on Indemnification by ATX Stockholders.................................. 50
9.5 Mitigation of Losses................................................................ 51
9.6 Exclusivity......................................................................... 51
9.7 Indemnification Escrow.............................................................. 51
X. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.................................................... 52
10.1 ATX, ATX Merger Sub and ATX Stockholders............................................ 52
10.2 CoreComm............................................................................ 52
XI. MISCELLANEOUS................................................................................. 52
11.1 Expenses............................................................................ 52
11.2 Further Assurances.................................................................. 52
11.3 Parties in Interest................................................................. 52
11.4 Entire Agreement, Amendments and Waiver............................................. 52
11.5 Interpretation...................................................................... 53
11.6 Notices............................................................................. 53
11.7 Governing Law....................................................................... 54
11.8 Submission to Jurisdiction; Waivers................................................. 54
11.9 Third Parties....................................................................... 54
11.10 Severability........................................................................ 54
11.11 Counterparts........................................................................ 54
XII. DEFINED TERMS................................................................................. 55
12.1 Location of Certain Defined Terms................................................... 55
12.2 Other Defined Terms................................................................. 58
XIII. ATX STOCKHOLDER COVENANTS.................................................................... 59
13.1 No Transfers........................................................................ 59
13.2 Cooperation; No Solicitation........................................................ 59
Exhibit A - Convertible Preferred Stock Term Sheet
Exhibit B - Form of Short Term Senior Notes Term Sheet
Exhibit C - Form of Stockholders Agreement
Exhibit D - Form of Transition Services Agreement
Exhibit E - Lease Amendments
Exhibit F - Phantom Unit Plan Matters
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TABLE OF CONTENTS
(Continued)
PAGE
Exhibit G - Registration Rights Agreement
Exhibit H - Required Consents
Exhibit I - Employment Issues
Exhibit J - Collar Stock Price Example
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RECAPITALIZATION AGREEMENT AND PLAN OF MERGER
RECAPITALIZATION AGREEMENT AND PLAN OF MERGER, dated as of March 9,
2000, by and among ATX Telecommunications Services, Inc., a Delaware corporation
("ATX"), CoreComm Limited, a Bermuda corporation ("CoreComm"), Xxxxxx Xxxxxxx
("Xxxxxxx"), Xxxxx Xxxxxxxxx ("Xxxxxxxxx"), Xxxxxxx Xxxx ("Xxxx") and The
Xxxxxxxx Xxxx Trust (the "Xxxx Trust" and, collectively with Xxxxxxx, Buruchian
and Xxxx, the "ATX Stockholders").
RECITALS
WHEREAS, the Boards of Directors of ATX, and CoreComm, respectively,
deem it advisable and in the best interests of ATX, CoreComm and their
respective stockholders that ATX and CoreComm combine in order to advance the
long-term business interests of ATX and CoreComm;
WHEREAS, the combination of ATX and CoreComm shall be effected by the
terms of this Recapitalization Agreement and Plan of Merger (the "Agreement")
through the Merger (of CoreComm Merger Sub (as defined herein) and ATX Merger
Sub (as defined herein)) and the Recapitalization (each as defined herein) of
ATX; and
WHEREAS, for federal income tax purposes, it is intended that the Merger
and Recapitalization shall qualify as exchanges within the meaning of Section
351 of the Internal Revenue Code of 1986, as amended (the "Code") and as
reorganizations within the meaning of Section 368(a) of the Code.
WHEREAS, the Boards of Directors of ATX and CoreComm have approved this
Agreement and each of the documents required to be executed in connection with
this Agreement to which it is a party.
Accordingly, in consideration of the representations, warranties,
covenants and agreements contained herein, and intending to be legally bound
hereby, the parties hereto agree as follows:
I. THE MERGER
1.1 The Formation of ATX Merger Sub, CoreComm Merger Sub and the
Merger.
(a) As promptly as practicable following the execution of
this Agreement, ATX shall cause to be organized for the sole purpose of
effectuating the Merger contemplated herein a corporation organized under the
laws of the State of Delaware ("ATX Merger Sub"). As promptly as practicable
following the execution of this Agreement, CoreComm shall cause to be organized
for the sole purpose of effecting the Domestication Merger (as defined in
Section 1.1(d) below) and the Merger contemplated herein, a corporation
organized under the laws of the State of Delaware ("CoreComm Merger Sub"). The
respective certificates of incorporation and Bylaws of each of ATX Merger Sub
and CoreComm Merger Sub shall be in such forms as shall be mutually determined
by ATX and CoreComm as soon as practicable following the execution of this
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Agreement and the authorized capital stock of each of ATX Merger Sub and
CoreComm Merger Sub shall initially consist of 100 shares of common stock, par
value $0.01 per share. All of the outstanding shares of ATX Merger Sub shall be
issued to ATX at a price of $1.00 per share and all of the outstanding shares of
CoreComm Merger Sub shall be issued to CoreComm at a price of $1.00 per share.
(b) As promptly as practicable following the execution of
this Agreement, ATX (with respect to ATX Merger Sub) and CoreComm (with respect
to CoreComm Merger Sub) shall take all requisite action to designate the
directors and officers of ATX Merger Sub and CoreComm Merger Sub and take such
steps as may be necessary or appropriate to complete the organization of ATX
Merger Sub and CoreComm Merger Sub. ATX shall cause the directors of ATX Merger
Sub to ratify and approve this Agreement. CoreComm shall cause the directors of
CoreComm Merger Sub to ratify and approve this Agreement.
(c) As promptly as practicable following the organization of
ATX Merger Sub, ATX, as the sole stockholder of ATX Merger Sub, shall cause ATX
Merger Sub to adopt this Agreement and to perform its obligations under this
Agreement. As promptly as practicable following the organization of CoreComm
Merger Sub, CoreComm, as the sole stockholder of CoreComm Merger Sub shall cause
CoreComm Merger Sub to adopt this Agreement and to perform its obligations under
this Agreement. As promptly as practicable after the organization of ATX Merger
Sub and CoreComm Merger Sub, the parties shall cause this Agreement to be
amended to add ATX Merger Sub and CoreComm Merger Sub as parties hereto. Such
amendment shall provide for the making by ATX Merger Sub of those
representations and warranties equivalent to those set forth in Article 3 hereof
that apply to ATX Merger Sub, and covenants and obligations equivalent to those
set forth in Article 5 hereof that apply to ATX Merger Sub, and ATX Merger Sub
and CoreComm Merger Sub shall each become a constituent corporation in the
Merger.
(d) Immediately prior to the Merger, CoreComm shall
amalgamate and merge with and into CoreComm Merger Sub (the "Domestication
Merger"), subject to compliance with applicable provisions of the Delaware
General Corporation Law (the "DGCL") and the laws of Bermuda. As a result of the
Domestication Merger, each issued and outstanding share of CoreComm Common Stock
shall become and represent one share of common stock, par value $.01 per share
("CoreComm Merger Sub Common Stock"), of CoreComm Merger Sub, and the
independent existence of CoreComm shall cease. Prior to the consummation of the
Domestication Merger, CoreComm, as sole stockholder of CoreComm Merger Sub,
shall adopt this Agreement. Unless the context otherwise requires, all
references in this Agreement to CoreComm shall be deemed to mean CoreComm prior
to the consummation of the Domestication Merger and CoreComm Merger Sub
following the consummation of the Domestication Merger, and all references to
CoreComm Common Stock shall be deemed to mean the CoreComm Common Stock prior to
the consummation of the Domestication Merger and CoreComm Merger Sub Common
Stock after the consummation of the Domestication Merger.
(e) Subject to the provisions of this Agreement, a
certificate of merger (the "Certificate of Merger") in such form as is required
by the relevant provisions of the DGCL shall be duly prepared, executed and
acknowledged by the appropriate parties and thereafter delivered to the
Secretary of State of the State of Delaware for filing, as provided in the DGCL,
on the Closing
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Date (as defined in Section 2.1). The Merger shall become effective upon the
filing of the Certificate of Merger with the Secretary of State of the State of
Delaware (the "Effective Time").
(f) At the Effective Time, the separate existence of ATX
Merger Sub shall cease and ATX Merger Sub shall be merged (the "Merger") with
and into CoreComm Merger Sub (ATX Merger Sub and CoreComm Merger Sub are
sometimes referred to herein as the "Constituent Corporations" and CoreComm
Merger Sub is sometimes referred to herein as the "Surviving Corporation"). The
Certificate of Incorporation of CoreComm Merger Sub as in effect immediately
prior to the Effective Time shall be the Certificate of Incorporation of the
Surviving Corporation until thereafter amended as provided by the DGCL, the
Bylaws of CoreComm Merger Sub as in effect immediately prior to the Effective
Time shall be the Bylaws of the Surviving Corporation until thereafter amended
as provided by the DGCL, the Certificate of Incorporation and such Bylaws.
(g) At and after the Effective Time, the effect of the
Merger shall be as provided in the applicable provisions of the DGCL. Without
limiting the generality of the foregoing, and subject thereto, the Surviving
Corporation shall possess all the rights, privileges, powers and franchises of a
public as well as of a private nature, and be subject to all the restrictions,
disabilities and duties of each of the Constituent Corporations; and all and
singular rights, privileges, powers and franchises of each of the Constituent
Corporations, and all property, real, personal and mixed, and all debts due to
either of the Constituent Corporations on whatever account, as well as for stock
subscriptions and all other things in action or belonging to each of the
Constituent Corporations, shall be vested in the Surviving Corporation, and all
property, rights, privileges, powers and franchises, and all and every other
interest shall be thereafter the property of the Surviving Corporation as they
were of the Constituent Corporations, and the title to any real estate vested by
deed or otherwise, in either of the Constituent Corporations, shall not revert
or be in any way impaired; but all rights of creditors and all liens upon any
property of either of the Constituent Corporations shall be preserved
unimpaired, and all debts, liabilities and duties of the Constituent
Corporations shall thereafter attach to the Surviving Corporation, and may be
enforced against it to the same extent as if such debts and liabilities had been
incurred by it.
1.2 The Recapitalization.
(a) Simultaneously with the Merger, ATX shall recapitalize
(the "Recapitalization") by causing the ATX Stockholders to exchange, and the
ATX Stockholders agree to exchange, all of the issued and outstanding shares of
pre-Recapitalization ATX common stock, par value $.01 per share ("ATX Common
Stock") for the following aggregate consideration:
(i) That number of shares of ATX Common Stock equal
to $500 million divided by the Base Stock Price. The "Base Stock Price" shall be
equal to $40.328, subject to the Base Adjustments as defined below.
The number of shares of ATX Common Stock to be received by the
ATX Stockholders in connection with the Recapitalization will be subject to a
collar mechanism as follows: in the event that the volume weighted average
trading price of CoreComm Common Stock for the ten trading days ending with the
last trading day prior to the Closing Date (the "Closing Stock Price") is
greater than the Collar Stock Price (as defined below), then the number of
shares
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of ATX Common Stock to be issued to the ATX Stockholders pursuant to the
Recapitalization will be adjusted such that the aggregate value (based on the
Closing Stock Price) of the ATX Common Stock received by the ATX Stockholders is
equal to the aggregate value (based on the Closing Stock Price) of ATX Common
Stock they would have been entitled to receive if the Closing Stock Price were
equal to the Collar Stock Price.
The "Collar Stock Price" shall be the Base Stock Price
multiplied by the Collar Percentage. The Collar Percentage shall be equal to
115%, subject to the following adjustments: If (1) the Closing has not occurred
on or prior to July 15, 2000, (2) subsequent to the date of this Agreement,
CoreComm has engaged in a transaction (other than transactions contemplated by
this Agreement, which shall not be deemed to include the potential transaction
referred to in Section 5.18 or any transaction which would result in a Base
Adjustment) (a "CoreComm Transaction") that would (x) require the approval of
the stockholders of CoreComm or, (y) require CoreComm to include the information
relating to such transaction in the pro forma financial statements (the "Pro
Formas") that are required to be contained in the Registration Statement or (z)
require CoreComm to amend or restate the Pro Formas in any material manner, and
(3) all conditions to Closing have been satisfied (or waived by the party
entitled to waive such condition) or are capable of being satisfied on such date
with reasonable best efforts, other than the conditions set forth in Sections
6.10 and/or 6.11, and the failure of either such condition to be satisfied is
the direct result of a CoreComm Transaction, then, commencing on the later to
occur of (i) July 16, 2000 and (ii) the first business day after which the
circumstances set forth in clause (3) are present (such later date being the
"Trigger Day") the Collar Percentage shall be increased as follows: 2.5
percentage points on the Trigger Day, and an additional five percentage points
per each 31 day period (a "Monthly Period") (on a pro rata basis, based on the
actual number of elapsed days in such Monthly Period at the Closing Date)
beginning on the sixteenth calendar day following the Trigger Day. An example of
this calculation is set forth on Exhibit J.
The "Base Adjustments" shall be as follows: (i) if, after the
date of this Agreement and on or prior to the Closing Date the outstanding
shares of CoreComm Common Stock shall be changed into a different number of
shares by reason of any reclassification, recapitalization, stock split, reverse
stock split, combination or exchange of shares, or any dividend payable in
CoreComm Common Stock shall be declared thereon with a record date within such
period, or any similar event shall occur, the Base Stock Price shall be adjusted
accordingly to provide to the ATX Stockholders the same economic effect as
contemplated by this Agreement prior to such reclassification, recapitalization,
stock split, reverse stock split, combination, exchange, dividend or similar
event; and (ii) if, after the date of this Agreement and on or prior to the
Closing Date, CoreComm shall distribute to all holders of CoreComm Common Stock
shares of capital stock of CoreComm other than CoreComm Common Stock, evidences
of indebtedness or other assets (other than cash dividends out of current or
retained earnings), or shall distribute to substantially all holders of Common
Stock rights or warrants to subscribe for securities (other than those referred
to in subsection (i) above), then in each such case the Base Stock Price shall
be multiplied by a fraction of which the numerator shall be the Current Market
Price (as defined below) of the CoreComm Common Stock on the record date less
the then fair market value (as determined by the CoreComm Board of Directors,
whose determination shall be conclusive evidence of such fair market value
(absent manifest error) and described in a board resolution) of the portion of
the assets so distributed or of such subscription rights or warrants applicable
to one share of CoreComm Common Stock and
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of which the denominator shall be the Current Market Price of the CoreComm
Common Stock. The "Current Market Price" shall mean the volume weighted average
trading price of CoreComm Common Stock for the ten prior trading days. CoreComm
may only effect a distribution described under (ii) above, if such distribution
does not include operating assets that are required to maintain the current
operating businesses of CoreComm, Inc. (a subsidiary of CoreComm), other than
the LMDS licenses and related assets.
(ii) 250,000 shares of ATX Series 3% Senior
Convertible Exchangeable Preferred Stock, par value $.01 per share ("ATX
Convertible Preferred Stock"), with such rights and preferences as set forth in
the term sheet attached hereto as Exhibit A setting forth the terms and
conditions of the ATX Convertible Preferred Stock; and
(iii) $150 million in cash (the "Cash Consideration")
(subject to certain adjustments set forth herein) (collectively with the ATX
Common Stock and the ATX Convertible Preferred Stock, the "Exchange
Consideration"); provided, however, that in the event CoreComm has not completed
a debt or equity financing (including a public or private sale of equity
securities or an institutional debt financing) prior to the Closing Date, at
CoreComm's election, the aggregate amount of Cash Consideration to be paid by
CoreComm to the ATX Stockholders may be reduced by up to $70 million and such
portion of the Cash Consideration shall be paid through the issuance of short
term senior notes with such terms and conditions as set forth in the term sheet
attached hereto as Exhibit B.
(b) ATX shall prepare as of a date not more than five (5)
business days prior to the Closing Date, an unaudited consolidated balance sheet
(estimated as of the Closing Date) and unaudited statements of income and cash
flows of ATX for the period from the ATX Balance Sheet Date to the date of such
statements (the "Pre-Closing Financial Statements") from the GAAP Audited
Financials and the books and records of ATX in accordance with GAAP (applied on
a consistent basis using the same accounting methods, policies, practices,
principles and procedures with consistent classifications, judgments and
estimation methodologies used in preparation of the GAAP Audited Financials) and
shall set forth the Working Capital ("Estimated Closing Working Capital"), the
ATX Debt (the "Estimated Closing ATX Debt") and the estimated capital
expenditures made by ATX during such period (the "Estimated Closing Capital
Expenditures"). To the extent ATX intends to make distributions at Closing as
permitted by Section 1.2(j), such intended distributions shall be included in
the Pre-Closing Financial Statements on a pro-forma basis. ATX shall provide a
copy of the Pre-Closing Financial Statements to CoreComm within three (3) days
of its completion.
In the event that the Pre-Closing Financial Statements
reflect that the Estimated Closing Working Capital is less than zero (such
deficiency, the "Working Capital Shortfall"), then the Exchange Consideration
shall be reduced (subject to the calculation of the Final Closing Financial
Statements) by an amount equal to the excess of zero over the Estimated Closing
Working Capital. If the Pre-Closing Financial Statements reflect that the
Estimated Closing Working Capital is greater than zero (such excess, the
"Working Capital Excess") then the Exchange Consideration shall be increased
(subject to the calculation of the Final Closing Financial Statements) by an
amount equal to the amount of the Working Capital Excess. The Working Capital
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Shortfall or Working Capital Excess, as applicable, shall be the "Pre-Closing
Working Capital Adjustment."
In the event that the Pre-Closing Financial Statements
reflect that Estimated Closing ATX Debt is greater than zero, then the Exchange
Consideration shall be reduced (subject to the calculation of the Final Closing
Financial Statements) by an amount equal to the Estimated Closing ATX Debt.
In the event that the Pre-Closing Financial Statements
reflect that the Capital Expenditure Adjustment, as calculated using the
Estimated Closing Capital Expenditures from the Pre-Closing Financial
Statements, is greater than zero (such amount, the "Pre-Closing Capital
Expenditure Adjustment"), then the Exchange Consideration shall be reduced
(subject to a calculation of the final Closing Financial Statements) by an
amount equal to the Pre-Closing Capital Expenditure Adjustment.
(c) Within ninety (90) days after the Closing Date (the
"Closing Financial Statements Delivery Date"), ATX shall cause to be prepared
and delivered to the Stockholder Representative (as defined below) a proposed
unaudited balance sheet and proposed unaudited statements of income and cash
flows (the "Proposed Closing Financial Statements") prepared in accordance with
GAAP (applied on a consistent basis using the same accounting methods, policies,
practices, principles and procedures with consistent classifications, judgments
and estimation methodologies that were used in preparation of the GAAP Audited
Financials) setting forth the Working Capital of ATX and ATX Debt as of the
Closing Date and Capital Expenditures of ATX for the period from the ATX Balance
Sheet Date through the Closing Date. For purposes of this Section 1.2, the
Stockholder Representative shall mean BDO Xxxxxxx, LLP.
(d) The Stockholder Representative shall have a period of
thirty (30) days (the "Review Period") from the date on which ATX delivers the
Proposed Closing Financial Statements to the Stockholder Representative pursuant
to Section 1.2(c), to review the Proposed Closing Financial Statements. If,
prior to the expiration of the Review Period, the Stockholder Representative
does not deliver a Dispute Notice (as defined below) to ATX, the unaudited
balance sheet and unaudited statements of income and cash flows included in the
Proposed Closing Financial Statements shall be deemed to be final and binding
upon ATX and the ATX Stockholders for purposes of determining the Working
Capital of ATX and the ATX Debt as of the Closing Date and the Capital
Expenditures of ATX for the period from the ATX Balance Sheet Date through the
Closing Date for purposes of this Agreement. The unaudited balance sheet and
unaudited statements of income and cash flows included in the Proposed Closing
Financial Statements shall not become final and binding at the end of the Review
Period if, prior to the expiration of the Review Period, the Stockholder
Representative delivers a written notice to ATX (the "Dispute Notice") setting
forth in reasonable detail the disagreements that the Stockholder Representative
has with the unaudited balance sheet and/or either of the unaudited statements
of income and cash flows included in the Proposed Closing Financial Statements
and the effect which such disagreements would have on the calculation of any of
the Working Capital of ATX and ATX Debt as of the Closing Date or Capital
Expenditures of ATX for the period from the ATX Balance Sheet Date through the
Closing Date. If the Stockholder Representative delivers a Dispute Notice prior
to the end of the Review Period, the representatives of ATX and the Stockholder
Representative shall have a ten (10) day period (the
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"Settlement Period") from the date of the delivery of the Dispute Notice to
attempt to resolve any dispute set forth in the Dispute Notice and to agree upon
an unaudited balance sheet and unaudited statements of income and cash flows
which shall be binding on ATX and the ATX Stockholder for purposes of this
Agreement and to agree upon the Working Capital of ATX and ATX Debt as of the
Closing Date and the Capital Expenditures of ATX for the period from the ATX
Balance Sheet Date through the Closing Date. If the Stockholder Representative
and ATX have not arrived at an agreement during the Settlement Period then, at
any time following the termination of the Settlement Period, either the
Stockholder Representative or ATX may submit the issue in dispute to the
Philadelphia, Pennsylvania office of PricewaterhouseCoopers LLP (the
"Accountant") for resolution in accordance with this Section. In resolving any
disputed item, the Accountant (i) shall be bound by the provisions of this
Section 1.2, (ii) may not assign a value to any item greater than the greatest
value for such item claimed by either party or less than the smallest value for
such item claimed by either party, (iii) shall make its determination based
solely on information submitted by the parties and not by independent review and
(iv) shall be instructed to issue a report containing its resolution of the
disputed issue or issues (the "Accountant's Report") within thirty (30) days
following submission of the dispute. The Accountant's Report shall be delivered
by the Accountant to ATX and the Stockholder Representative, and shall be final
and binding on ATX and the ATX Stockholders for purposes of this Agreement. The
fees charged by the Accountant shall be paid by ATX.
(e) During the period of any dispute within the
contemplation of this Section 1.2, the ATX Stockholders, the Stockholder
Representative and their representatives (including counsel and accountants)
shall have reasonable access during normal business hours to all books, records,
employees, offices and other facilities and properties of the Surviving
Corporation to the extent required to complete their review of the Closing
Financial Statements and shall be permitted to review the working papers
(subject to the execution of customary waivers, releases and indemnifications),
if any, of ATX or its auditor relating to the Closing; provided that any such
access shall not unreasonably interfere with the day-to-day operations of ATX
and shall be limited to those items related to the assessment of the Closing
Financial Statements and matters related thereto. ATX and CoreComm or their
auditors shall cooperate with the ATX Stockholders and other representatives of
the ATX Stockholders in facilitating such review.
(f) In the event that the Final Closing Financial Statements
reflect that the Working Capital of ATX as of the Closing Date is less than the
Applicable Amount (such deficiency, the "Final Working Capital Shortfall"), then
an amount equal to the excess of the Applicable Amount over the Final Working
Capital Shortfall shall be paid to ATX from the Escrow (defined below) as
provided in Subsection 1.2(i) (the "Final Shortfall"); provided, however, that
the Final Shortfall shall be adjusted to reflect any adjustments to the Closing
Exchange Consideration previously made due to a Pre-Closing Working Capital
Adjustment. If the Final Closing Balance Sheet reflects that the Working Capital
of ATX as of the Closing Date is greater than the Applicable Amount (a "Final
Working Capital Excess") then an amount equal to the excess of the Final Working
Capital Excess over the amount of Working Capital generated subsequent to July
31, 2000 shall be delivered to the ATX Stockholders by ATX as provided in
Subsection 1.2(i); provided, however, that the Final Working Capital Excess (and
any related amounts to be paid) shall be adjusted to reflect any adjustments to
the Closing Exchange Consideration previously made due to a Pre-Closing Working
Capital Adjustment. As used herein, the "Applicable Amount" means
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$2,000,000, if the Closing occurs on or prior to July 31, 2000 and zero if the
Closing occurs after July 31, 2000.
(g) In the event that the Final Closing Financial Statements
reflect that the ATX Debt is greater than zero (such amount the "Final ATX
Debt"), then an amount equal to the Final ATX Debt shall be paid to ATX from the
Escrow as provided in Subsection 1.2(i); provided, however, that the Final ATX
Debt shall be adjusted to reflect any adjustments to the Closing Exchange
Consideration previously made due to any Estimated Closing ATX Debt.
(h) In the event that the Final Closing Financial Statements
reflect that the Capital Expenditure Adjustment, as calculated utilizing the
Capital Expenditures as set forth on the Final Closing Financial Statements, is
greater than zero (the "Final Capital Expenditure Adjustment"), then the amount
equal to the Final Capital Expenditure Adjustment shall be paid to ATX from the
Escrow as provided in Subsection 1.2(i); provided, however, that the Final
Capital Expenditure Adjustment shall be adjusted to reflect adjustments to the
Closing Exchange Consideration previously made due to a Pre-Closing Capital
Expenditure Adjustment.
(i) Upon the Recapitalization, an aggregate of 1.1111% of
all shares of ATX Common Stock, ATX Convertible Preferred Stock and Cash
Consideration (provided that if any portion of the Cash Consideration is to be
payable in Short Term Senior Notes, the Short Term Senior Notes shall be
delivered prior to the Cash Consideration) comprising the Exchange Consideration
shall be deposited in escrow (the "Escrow") pursuant to an escrow agreement
among ATX, CoreComm, each ATX Stockholder and an escrow agent selected by such
parties (the "Escrow Agreement"). In the event of any reduction in the Exchange
Consideration requiring a repayment to ATX under Subsections (f) through (h)
above, such repayment shall be made pro rata from the ATX Common Stock, ATX
Convertible Preferred Stock and cash in the Escrow, for purposes of which the
ATX Common Stock shall be valued at the closing price for ATX Common Stock on
the trading day immediately preceding the day on which the repayment of such
share to ATX is effected. Any amounts payable by ATX under Subsection (f) as
additional Exchange Consideration shall be in shares of ATX Common Stock based
on the same valuation as set forth in the preceding sentence subject to the
right of any ATX Stockholders to elect to receive such additional Exchange
Consideration in cash.
(j) From the ATX Balance Sheet Date through the Closing
Date, ATX shall be permitted to:
(i) make such cash distributions and payments to the
ATX Stockholders: (x) in order to satisfy any debt obligation of ATX to the ATX
Stockholder(s) (including affiliates thereof); (y) in order to return any
capital to the ATX Stockholders (including the amount of any positive capital
account balances respecting the ATX Partnerships) (as hereinafter defined); and
(z) of any undistributed profits computed in accordance with GAAP of ATX or the
ATX Partnership through the Closing Date; provided that if there is insufficient
cash on hand to make such distributions and payments, the amounts shall be
payable by ATX on the business day next following the Closing Date and the
payment of such amounts shall be deemed to have been made on the business day
prior to the Closing Date for purposes of the adjustments set forth in this
Section 1.2; or
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(ii) cancel or eliminate any indebtedness owed by any
ATX Stockholders to ATX.
(k) The following terms, whenever used herein, shall have
the following meanings for all purposes of this Agreement:
"ATX Balance Sheet Date" means December 31, 1999.
"ATX Capital Expenditure Obligation" means the
obligation of ATX and the ATX Partnerships to make Capital Expenditures from the
period commencing January 1, 2000 through the Closing Date in the amount and for
those categories of items set forth on Section 1.2 of the ATX Disclosure
Schedule.
"ATX Debt" means all liabilities of ATX, other than
current liabilities, as set forth on the Pre-Closing Financial Statements, the
Closing Financial Statements and the Final Closing Financial Statement, as
applicable.
"Capital Expenditures" means, with respect to a period,
all amounts that would, in accordance with GAAP, be set forth as "capital
expenditures" or "purchase of property and equipment"on the statement of cash
flows for ATX for such period.
"Capital Expenditure Adjustment" means the excess of the
amount of ATX Capital Expenditure Obligation over the actual Capital
Expenditures of ATX from the period between the ATX Balance Sheet Date and
Closing, but in no event shall the Capital Expenditure Adjustment be a negative
amount.
"GAAP" means generally accepted accounting principles as
in effect on the date or for the period with respect to which such principles
apply in all cases applied on a consistent basis.
"Working Capital" shall mean, as of any date, the
current assets of ATX less the current liabilities of ATX (exclusive of the
current portion of long term debt), all determined in accordance with GAAP.
1.3 Conversion of CoreComm Common Stock. As of the Effective Time,
by virtue of the Merger and without any action on the part of the holder of any
shares of ATX Merger Sub's common stock, par value $.01 per share ("ATX Merger
Sub Common Stock") or CoreComm's common stock, par value $.01 per share
("CoreComm Common Stock"):
(a) Each issued and outstanding share of ATX Merger Sub
Common Stock shall be converted into the right to receive one (1) share of
CoreComm Common Stock.
(b) All shares of CoreComm Common Stock that are owned by
CoreComm as treasury stock or by any Subsidiary of CoreComm shall be canceled
and retired and shall cease to exist and no consideration shall be delivered in
exchange therefor. As used in this Agreement, the word "Subsidiary" means, with
respect to any party, any corporation or other organization, whether
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incorporated or unincorporated, of which (i) such party or any other Subsidiary
of such party is a general partner (excluding partnerships, the general
partnership interests of which held by such party or any Subsidiary of such
party do not have a majority of the voting interest in such partnership) or (ii)
at least a majority of the securities or other interests having by their terms
ordinary voting power to elect a majority of the Board of Directors or others
performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such party or by
any one or more of its Subsidiaries, or by such party and one or more of its
Subsidiaries.
(c) Subject to Section 1.4, each issued and outstanding
share of CoreComm Common Stock (other than shares to be canceled in accordance
with Section 1.3(b) and shares to be issued under Section 1.3(a)) shall be
converted into the right to receive one (1) (the "Merger Ratio") fully paid and
nonassessable shares of ATX Common Stock. All such shares of CoreComm Common
Stock, when so converted, shall no longer be outstanding and shall automatically
be canceled and retired and shall cease to exist, and each holder of a
certificate representing any such shares shall cease to have any rights with
respect thereto, except the right to receive the shares of ATX Common Stock and
any cash in lieu of fractional shares of ATX Common Stock to be issued or paid
in consideration therefor upon the surrender of such certificate in accordance
with Section 1.4.
1.4 Exchange of Certificates. The procedures for exchanging
outstanding shares of CoreComm Common Stock for ATX Common Stock pursuant to the
Merger shall be as follows:
(a) As of the Effective Time, ATX shall deposit with an
exchange agent selected by CoreComm and reasonably acceptable to ATX (the
"Exchange Agent"), for the benefit of the holders of shares of CoreComm Common
Stock, certificates representing the shares of ATX Common Stock and cash (such
shares of ATX Common Stock together with any dividends or distributions with
respect thereto, together with such cash, being hereinafter referred to as the
"Exchange Fund") issuable pursuant to Section 1.3 in exchange for outstanding
shares of CoreComm Common Stock.
(b) Promptly after the Effective Time, the Exchange Agent
shall mail to each holder of record of a certificate or certificates which
immediately prior to the Effective Time represented outstanding shares of
CoreComm Common Stock (each a "Certificate" and, collectively, the
"Certificates") whose shares were converted pursuant to Section 1.4 into the
right to receive shares of ATX Common Stock (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent and shall be in such form and have such other provisions as ATX and
CoreComm may reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for certificates representing shares
of ATX Common Stock. Upon surrender of a Certificate for cancellation to the
Exchange Agent, together with such letter of transmittal, duly executed, the
holder of such Certificate shall be entitled to receive in exchange therefor a
certificate representing that number of whole shares of ATX Common Stock which
such holder has the right to receive pursuant to the provisions of this Article
1, and the Certificate so surrendered shall immediately be canceled. In the
event of a transfer of ownership of CoreComm Common Stock which is not
registered in the transfer records of CoreComm, a certificate representing the
proper number of shares of ATX Common Stock may be issued to a transferee if
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the Certificate representing such CoreComm Common Stock is presented to the
Exchange Agent, accompanied by all documents required to evidence and effect
such transfer and by evidence that any applicable stock transfer taxes have been
paid. Until surrendered as contemplated by this Section 1.4, each Certificate
shall be deemed at any time after the Effective Time to represent only the right
to receive upon such surrender the certificate representing shares of ATX Common
Stock and cash in lieu of any fractional share as contemplated by this Section
1.4. All shares of ATX Common Stock issued upon the surrender for or exchange of
Certificates in accordance with the terms of this Agreement, shall be deemed to
have been issued in full satisfaction of all rights pertaining to the CoreComm
Common Stock shares formerly represented by such Certificates. The instructions
for effecting the surrender of the Certificates shall set forth procedures that
must be taken by the holder of any Certificate that has been lost, destroyed or
stolen. It shall be a condition to the right of such holder to receive a
certificate representing shares of ATX Common Stock that the Exchange Agent
shall have received, along with the letter of transmittal, a duly executed lost
certificate affidavit, including an agreement to indemnify ATX, signed exactly
as the name or names of the registered holder or holders appeared on the books
of CoreComm immediately prior to the Effective Time, together with a customary
bond and such other documents as ATX or the Exchange Agent may reasonably
require in connection therewith.
(c) No dividends or other distributions declared or made
after the Effective Time with respect to ATX Common Stock with a record date
after the Effective Time shall be paid to the holder of any unsurrendered
Certificate with respect to the shares of ATX Common Stock represented thereby
and no cash payment in lieu of fractional shares shall be paid to any such
holder pursuant to subsection (e) below until the holder of such Certificate
shall surrender such Certificate. Subject to the effect of applicable laws,
following surrender of any such Certificate, there shall be paid to the holder
of the certificates representing whole shares of ATX Common Stock issued in
exchange therefor, without interest, (i) at the time of such surrender, the
amount of any cash payable in lieu of a fractional share of ATX Common Stock to
which such holder is entitled pursuant to subsection (e) below and the amount of
dividends or other distributions with a record date after the Effective Time
previously paid with respect to such whole shares of ATX Common Stock, and (ii)
at the appropriate payment date, the amount of dividends or other distributions
with a record date after the Effective Time but prior to surrender and a payment
date subsequent to surrender payable with respect to such whole shares of ATX
Common Stock.
(d) All shares of ATX Common Stock issued upon the surrender
for exchange of shares of CoreComm Common Stock in accordance with the terms
hereof (including any cash paid pursuant to subsection (c) or (e) of this
Section 1.4) shall be deemed to have been issued in full satisfaction of all
rights pertaining to such shares of CoreComm Common Stock, subject, however, to
the Surviving Corporation's obligation to pay any dividends or make any other
distributions with a record date prior to the Effective Time which may have been
declared or made by CoreComm on such shares of CoreComm Common Stock in
accordance with the terms of this Agreement on or prior to the date hereof and
which remain unpaid at the Effective Time, and there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of CoreComm Common Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any reason, they
shall be canceled and exchanged as provided in this Section 1.4.
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(e) No certificate or scrip representing fractional shares
of ATX 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 exercise any rights of a stockholder of ATX.
Notwithstanding any other provision of this Agreement, each holder of shares of
CoreComm Common Stock exchanged pursuant to the Merger who would otherwise have
been entitled to receive a fraction of a share of ATX Common Stock (after taking
into account all Certificates delivered by such holder) shall receive, in lieu
thereof, cash (without interest) in an amount equal to such fractional part of a
share of ATX Common Stock multiplied by the last reported sale price of ATX
Common Stock, as reported on The Nasdaq National Market, on the first trading
day after the Effective Time.
(f) Any portion of the Exchange Fund which remains
undistributed to the stockholders of CoreComm for one year after the Effective
Time shall be delivered to ATX, and any former stockholders of CoreComm who have
not previously complied with this Section 1.4 shall thereafter look only to ATX
for payment of their claim for ATX Common Stock, any cash in lieu of fractional
shares of ATX Common Stock, and any dividends or distributions with respect to
CoreComm Common Stock or ATX Common Stock.
(g) Neither CoreComm nor ATX shall be liable to any former
holder of shares of CoreComm Common Stock or current holder of ATX Common Stock,
as the case may be, for such shares (or dividends or distributions with respect
thereto) delivered to a public official as required by any applicable abandoned
property, escheat or similar law.
1.5 Directors and Officers of Surviving Corporation. The initial
directors of the Surviving Corporation shall be the directors of CoreComm
immediately prior to the Merger, each to hold office in accordance with the
Certificate of Incorporation and Bylaws of the Surviving Corporation, and the
initial officers of the Surviving Corporation shall be the officers of CoreComm
immediately prior to the Merger, in each case until their respective successors
are duly elected or appointed.
1.6 Directors and Officers of ATX. At Closing, the directors of ATX
shall be the directors of CoreComm immediately prior to the Merger, each to hold
office in accordance with the Certificate of Incorporation and Bylaws of ATX,
and the initial officers of ATX shall be the officers of CoreComm immediately
prior to the Merger, in each case until their respective successors are duly
elected or appointed.
II. CLOSING
2.1 Closing.
(a) The closing of the transaction contemplated by this
Agreement (the "Closing") shall take place at the offices of Klehr, Harrison,
Xxxxxx, Branzburg & Xxxxxx LLP, 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxxx,
Xxxxxxxxxxxx 00000, at 10:00 A.M., on the second business day immediately
following the day on which the last to be fulfilled or waived of the conditions
set forth in Articles 6 and 7 shall be fulfilled or waived in accordance
herewith or at such other time, date or
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place as the parties hereto may agree. The date on which the Closing actually
occurs is referred to herein as the "Closing Date."
(b) At the Closing, ATX and ATX Merger Sub shall deliver all
previously undelivered documents, instruments and writings required to be
delivered by ATX and ATX Merger Sub at or prior to the Closing pursuant to this
Agreement or otherwise required in connection therewith.
(c) At the Closing, CoreComm shall deliver all previously
undelivered documents, instruments and writings required to be delivered by
CoreComm at or prior to the Closing pursuant to this Agreement or otherwise
required in connection therewith.
III. REPRESENTATIONS AND WARRANTIES OF
ATX AND ATX MERGER SUB
The predecessors of ATX were two limited partnerships formed under the
laws of the Commonwealth of Pennsylvania, ATX Telecommunications Services Ltd.
and Global Telecom Services (the "ATX Partnerships") who, together with A. T.
Telecommunications, Inc. and Global Telecommunications, Inc., their respective
general partners, merged with and into ATX on February 9, 2000 (the "ATX
Merger"). With the exceptions of Sections 3.1, 3.2 and 3.3 hereof, which shall
refer solely to ATX, unless otherwise specifically provided for therein, the
representations and warranties of ATX in this Article 3 shall refer to the ATX
Partnerships and to ATX, as applicable. Except as set forth in the ATX
Disclosure Schedule delivered by ATX to CoreComm prior to the execution of this
Agreement (the "ATX Disclosure Schedule") (each section of which qualifies the
correspondingly numbered representation and warranty or covenant to the extent
specified therein), ATX (and ATX Merger Sub to the extent set forth herein)
represents and warrants to CoreComm as follows:
3.1 Organization, Etc.
(a) ATX is a corporation duly organized, validly existing
and in good standing as a corporation under the laws of the State of Delaware.
ATX has the power and authority to conduct its business as it is currently being
conducted and as heretofore been conducted by the ATX Partnerships and to own,
operate and lease the property and assets that it now owns and leases. ATX is
duly qualified or licensed and in good standing to do business (and has paid all
relevant franchise and similar taxes) in each jurisdiction in which the nature
of its business or the ownership or leasing of its properties makes such
qualification or license necessary, except where the failure to be so qualified
would not have, individually or in the aggregate, a Material Adverse Effect and
each such jurisdiction is listed on Section 3.1(a)(i) of the ATX Disclosure
Schedule. ATX is duly licensed or permitted as a "public utility" or similar
regulated entity by state Governmental Authority in all states where such
licensing or permitting is necessary and each such state and license or permit
is set forth in Section 3.1(a)(ii) of the ATX Disclosure Schedule. The copies of
the Certificate of Incorporation (the "ATX Certificate of Incorporation") and
Bylaws (the "ATX Bylaws") of ATX and the Partnership Agreements of the ATX
Partnerships (the "ATX Partnership Agreements"), as previously delivered to
CoreComm by ATX, are complete and correct copies of such instruments as
currently in full force and effect. The minute books, or comparable records, of
ATX and the ATX
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Partnerships heretofore have been made available to CoreComm for its inspection
and contains true and complete records of all meetings and consents in lieu of
meetings of the Board of Directors (and any committee thereof), and the
stockholders of ATX and the partners of the ATX Partnerships since the time of
the ATX's organization and the organization of the ATX Partnerships, as the case
may be, and accurately reflect all transactions referred to in such minutes and
consents in lieu of meetings. The stock books, or comparable records, of ATX and
the ATX Partnerships heretofore have been made available to the CoreComm for its
inspection and are true and complete. ATX does not directly or indirectly own
any equity or similar interest in, or any interest convertible into or
exchangeable or exercisable for any equity or similar interest, in any
corporation, partnership, joint venture or other business association or entity.
(b) At the Closing, ATX Merger Sub shall be a corporation
duly organized, validly existing and in good standing as a corporation under the
laws of the State of Delaware. ATX Merger Sub shall have the power and authority
to conduct its business as it is currently being conducted and to own, operate
and lease the property and assets that it then owns and leases. ATX Merger Sub
shall be duly qualified or licensed and in good standing to do business (and
shall have paid all relevant franchise and similar taxes) in each jurisdiction
in which the nature of its business or the ownership or leasing of its
properties makes such qualification or license necessary, except where the
failure to be so qualified would not have, individually or in the aggregate, a
Material Adverse Effect. The copies of the Certificate of Incorporation (the
"ATX Merger Sub Certificate of Incorporation") and Bylaws (the "ATX Merger Sub
Bylaws") of ATX Merger Sub, as shall be delivered to CoreComm by ATX Merger Sub,
will be complete and correct copies of such instruments as in full force and
effect at the Closing. The minute books, or comparable records, of ATX Merger
Sub shall have been made available to CoreComm for its inspection and shall
contain true and complete records of all meetings and consents in lieu of
meetings of the Board of Directors (and any committee thereof), and the
stockholders of ATX Merger Sub from the time of the ATX's Merger Sub's
organization to Closing, and will accurately reflect all transactions referred
to in such minutes and consents in lieu of meetings. The stock books, or
comparable records, of ATX Merger Sub shall have been made available to CoreComm
for its inspection and will be true and complete. At the Closing, ATX Merger Sub
will not directly or indirectly own any equity or similar interest in, or any
interest convertible into or exchangeable or exercisable for any equity or
similar interest, in any corporation, partnership, joint venture or other
business association or entity.
3.2 Authorization.
(a) ATX has all power and authority necessary to execute and
deliver this Agreement and to perform its obligations under this Agreement and
to consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement and the performance of ATX's obligations and
consummation of the transactions contemplated hereby have been duly authorized
by ATX and no corporate proceedings on the part of ATX are necessary to
authorize this Agreement or to consummate such transactions. The stockholders of
ATX have approved the entering into by ATX of the Agreement and the performance
of the transactions contemplated hereby and no additional stockholder
proceedings are necessary to authorize this Agreement or to consummate such
transactions. This Agreement has been duly executed and delivered by ATX and
constitutes a valid and binding obligation of ATX, enforceable against ATX in
accordance with its terms, except as such enforceability may be limited by
bankruptcy,
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insolvency, reorganization, moratorium and similar laws relating to or affecting
creditors rights generally, or by general equity principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
(b) At the Closing, ATX Merger Sub shall have all power and
authority necessary to execute and deliver this Agreement and to perform its
obligations under this Agreement and to consummate the transactions contemplated
by this Agreement. Such execution and delivery of this Agreement and the
performance of ATX Merger Sub's obligations and consummation of the transactions
contemplated hereby shall have been duly authorized by ATX Merger Sub and no
corporate proceedings on the part of ATX Merger Sub shall be necessary to
authorize this Agreement or to consummate such transactions. At the time of ATX
Merger Sub's execution and delivery of this Agreement and at the Closing, the
stockholders of ATX Merger Sub shall have approved the entering into by ATX
Merger Sub of the Agreement and the performance of the transactions contemplated
hereby and no additional stockholder proceedings shall be necessary to authorize
this Agreement or to consummate such transactions. At the time of ATX Merger
Sub's execution and delivery of this Agreement this Agreement shall have been
duly executed and delivered by ATX Merger Sub and shall constitute a valid and
binding obligation of ATX Merger Sub, enforceable against ATX Merger Sub in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and similar laws relating to
or affecting creditors rights generally, or by general equity principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
3.3 Capitalization.
(a) The authorized capital stock of ATX consists of 10,000
shares of ATX Common Stock. As of the date hereof, (i) 1,000 shares of ATX
Common Stock were issued and outstanding, all of which are validly issued, fully
paid and nonassessable and (ii) no shares of ATX Common Stock were held in the
treasury of ATX. All of the outstanding shares of ATX Common Stock are owned by
the persons listed on Section 3.3 of the ATX Disclosure Schedule, in the
respective amounts set forth on Section 3.3 of the ATX Disclosure Schedule, free
and clear of any Liens. There are no obligations, contingent or otherwise, of
ATX to repurchase, redeem or otherwise acquire any shares of ATX Common Stock.
(b) (i) Except for the ATX Common Stock, there are no equity
securities of any class of ATX, or any security exchangeable into or exercisable
for such equity securities, issued, reserved for issuance or outstanding; (ii)
except as set forth on Section 3.3 of the ATX Disclosure Schedule, there are no
options, warrants, equity securities, calls, rights, commitments or agreements
of any character to which ATX is a party or by which it is bound obligating ATX
or any successor to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of equity securities of ATX or any successor or
obligating ATX or any successor to grant, extend, accelerate the vesting of or
enter into any such option, warrant, equity security, call, right, commitment or
agreement; and (iii) except as may be contemplated by this Agreement there are
no voting trusts, proxies or other voting agreements or understandings with
respect to the shares of equity securities of ATX.
(c) At the Closing, the authorized capital stock of ATX
Merger Sub shall consist of 1,000 shares of ATX Merger Sub Common Stock. As of
the Closing Date, (i) 100 shares of ATX
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Merger Sub Common Stock shall be issued and outstanding, all of which shall be
validly issued, fully paid and nonassessable and (ii) no shares of ATX Merger
Sub Common Stock shall be held in the treasury of ATX Merger Sub. At the
Closing, all of the outstanding shares of ATX Merger Sub Common Stock shall be
owned by ATX free and clear of any Liens. At the Closing, there are no
obligations, contingent or otherwise, of ATX Merger Sub to repurchase, redeem or
otherwise acquire any shares of ATX Merger Sub Common Stock .
(d) (i) At the Closing, except for the ATX Merger Sub Common
Stock, there shall be no equity securities of any class of ATX Merger Sub, or
any security exchangeable into or exercisable for such equity securities,
issued, reserved for issuance or outstanding; (ii) there shall be no options,
warrants, equity securities, calls, rights, commitments or agreements of any
character to which ATX Merger Sub is a party or by which it is bound obligating
ATX Merger Sub or any successor to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of equity securities of ATX Merger
Sub or any successor or obligating ATX Merger Sub or any successor to grant,
extend, accelerate the vesting of or enter into any such option, warrant, equity
security, call, right, commitment or agreement; and (iii) except as may be
contemplated by this Agreement there shall be no voting trusts, proxies or other
voting agreements or understandings with respect to the shares of equity
securities of ATX Merger Sub.
3.4 No Violation. Neither the execution or delivery of this
Agreement or any agreement contemplated hereby by ATX, nor the performance by
ATX of the transactions contemplated hereby (including, without limitation, the
ATX Merger) violates, conflicts with results in a breach of or constitutes a
default (or an event or condition that, with notice or lapse of time or both,
would constitute a default) under, gives others any right of termination,
amendment, acceleration, cancellation or revocation of or results in the
termination, amendment, cancellation or revocation of, or accelerates the
performance required by, or causes the acceleration of the maturity of any
liability or obligation pursuant to, or results in the creation or imposition of
any security interest, lien, charge or other encumbrance ("Liens") upon any of
the property or assets of ATX under (a) the ATX Certificate of Incorporation,
the ATX Bylaws or the ATX Partnership Agreement or (b) except as individually or
in the aggregate would not have a Material Adverse Effect any judgment, order,
writ, injunction, decree, law, statute, ordinance, rule, regulation, ("Law") or
any note, bond, mortgage, indenture, deed of trust, license, lease, contract,
Permit, franchise, commitment, understanding, arrangement, agreement or
restriction of any kind or character ("Contract") to which ATX is a party or by
which ATX or its assets or properties is or may be bound or affected. The ATX
Disclosure Schedule sets forth a correct and complete list in all material
respects of Contracts to which ATX is a party or by which it or its assets or
properties is or may be bound or affected under which consents or waivers are or
may be required prior to consummation of the transactions contemplated by this
Agreement, including, without limitation, the ATX Merger. Other than as set
forth in Section 3.4 of the ATX Disclosure Schedule, no consent, approval, order
or authorization of, or registration or filing with, any Governmental Authority
is required to be obtained by or on behalf of ATX in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby (including, without limitation, the ATX Merger).
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3.5 Financial Statements.
(a) ATX has delivered to CoreComm audited balance sheets of
the ATX Partnerships at December 31, 1996, December 31, 1997 and December 31,
1998, together with audited statements of income and cash flows for each of the
years then ended, in each case, together with the reports thereon of BDO
Xxxxxxx, LLP, independent certified public accountants (the "ATX Financial
Statements"). All such financial statements (including the notes thereto) were
prepared on a cash basis, which is a basis of accounting other than generally
accepted accounting principles, and fairly present, in all material respects,
the financial condition and results of operations and cash flows of the ATX
Partnerships as of the respective dates or for the periods referred to therein.
In addition, ATX has delivered to CoreComm an unaudited balance sheet (the "ATX
Balance Sheet") as of December 31, 1999, prepared in accordance with GAAP
together with unaudited statements of income and cash flows for the twelve
months then ended, each in draft form and prepared in accordance with GAAP (the
"Unaudited 1999 Financials").
(b) (i) The net income of the ATX Partnerships, before
provision for income taxes, partner salaries and bonuses, interest expense,
depreciation expense, amortization and non-recurring expenses (including
expenses relating to the Phantom Unit Plan), as derived from the GAAP Audited
Financial Statements (as defined in Section 5.10) (prepared in accordance with
United States generally accepted accounting principles) for each of the fiscal
years 1997, 1998 and 1999 are not less than $16,300,000, $14,800,000 and
$10,000,000, respectively. No expense has been recorded by reason of awards
under the Phantom Unit Plan.
(ii) The net revenues of the ATX Partnerships as
derived from the GAAP Audited Financial Statements (as defined in Section 5.11)
(prepared in accordance with United States generally accepted accounting
principles) for each of the fiscal years 1997, 1998 and 1999 are not less than
$90,300,000, $110,800,000 and $131,600,000, respectively.
(c) The Unaudited 1999 Financials do, and the GAAP Audited
Financials to be delivered by ATX pursuant to Section 5.10(b) will, (x) reflect
a non cash compensation charge for the issuance of the units under the 1998
Phantom Unit Plan, and (y) fully reserve in current liabilities for the
following contingent ATX liabilities:
(i) liabilities in respect of claims by the
Pennsylvania Department of Revenue asserting that ATX failed to remit certain
gross receipts taxes for the years 1992, 1993, 1994 and 1996; and
(ii) liabilities, which shall not exceed $175,000, in
respect of the failure to file sales and use taxes, in any jurisdiction.
3.6 No Undisclosed or Contingent Liabilities. Except as set forth on
Section 3.6 of the ATX Disclosure Schedule, ATX has no liabilities or
obligations of any nature (whether absolute, accrued, contingent or otherwise
and whether due or to become due) (whether or not of a kind required by
generally accepted accounting principles to be set forth on a financial
statement or in notes thereto) ("Liabilities") that were not fully and
adequately reflected or reserved against on the ATX Balance Sheet or described
on any schedule or in the notes to the ATX Financial Statements
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except for liabilities and obligations (i) incurred in the ordinary course of
business consistent with past practice since the ATX Balance Sheet Date, or (ii)
arising from this Agreement and transaction expenses incurred in connection with
this Agreement and (iii) which individually or in the aggregate would not have a
Material Adverse Effect.
3.7 Absence of Certain Changes. Since the ATX Balance Sheet Date,
ATX has conducted its business in the ordinary course and consistent with past
practice, and has not, except in the ordinary course and consistent with past
practice or as set forth on Section 3.7 of the ATX Disclosure Schedule:
(a) suffered any change in its operations, financial
condition, assets, liabilities or earnings or working capital which,
individually or in the aggregate, have had a Material Adverse Effect;
(b) permitted or allowed any of its assets to be subjected
to any mortgage, pledge, lien, security interest, encumbrance, restriction or
charge of any kind, other than those which individually or in the aggregate
would not have a Material Adverse Effect;
(c) written down the value of any inventory or written off
as uncollectible any notes or accounts receivable, other than those which,
individually or in the aggregate, would not have a Material Adverse Effect;
(d) canceled any debt, or waived any claim or right with a
value greater than $20,000;
(e) disposed of or permitted to lapse any rights to the use
of any material patent, trademark, trade name, service xxxx or copyright, or
disposed of or disclosed to any Person other than an officer, director or
employee of ATX any trade secret, formula, process or know-how not theretofore a
matter of public knowledge;
(f) granted any material general increase in the
compensation of employees (including any such increase pursuant to any bonus,
pension, profit sharing or other plan or commitment) or any material increase in
the compensation payable or to become payable to any management employee, and no
such increase is customary on a periodic basis or required by agreement or
understanding (except for ordinary course increases consistent with past
practice and current industry practice);
(g) made any material capital expenditure or material
commitment for additions to its property, equipment or intangible capital
assets, other than those required to execute its current business plan;
(h) made any change in any method of accounting or
accounting practice (other than as is contemplated by this Agreement) or failed
to maintain its books, accounts and records in the ordinary course of business
and consistent with past practice;
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(i) failed to maintain in full force and effect all material
existing policies of insurance at least at such levels as were in effect prior
to such date or canceled any such insurance or taken or failed to take any
action that would enable the insurers under such policies to avoid liability for
claims arising out of occurrences prior to the Closing;
(j) entered into any material transaction or made or entered
into any material contract or commitment, or terminated or amended any material
contract or commitment;
(k) taken any action that, individually or in the aggregate,
could have a Material Adverse Effect on ATX or materially adversely affect its
current relationships with its employees, suppliers, distributors, advertisers,
subscribers or others having business relationships with it;
(l) except as contemplated by this Agreement, declared, paid
or set aside for payment any distribution in respect of the ATX Common Stock or
interests in the ATX Partnerships or redeemed, purchased or otherwise acquired,
directly or indirectly, any of the ATX Common Stock or interests in the ATX
Partnerships; or
(m) agreed to take any action with respect to any of the
matters described in this Section 3.7.
3.8 Litigation, Orders. Except as set forth on Section 3.8 of the
ATX Disclosure Schedule, there are no claims, actions, suits, proceedings,
complaints, demands, litigations or legal, administrative or arbitral
proceedings, investigations or inquiries pending before any court, arbitrator or
governmental or regulatory authority (collectively, "Legal Actions"), or, to the
knowledge of ATX, threatened against or affecting ATX or any of its properties
owned or leased, except as would not, individually or in the aggregate, have a
Material Adverse Effect or which relate to, or could have a material effect on,
the transactions contemplated by this Agreement. There are no Legal Actions
questioning the validity of this Agreement, the transactions contemplated hereby
or any action taken or to be taken by ATX pursuant to this Agreement or any
other agreement contemplated hereby, at law or in equity, before or by any
federal, state, local or foreign governmental authority; nor, to the knowledge
of ATX, is there any valid basis for any Legal Action. To the knowledge of ATX,
there is no fact, event or circumstances that could give rise to any Legal
Actions that, individually or in the aggregate, would have a Material Adverse
Effect. ATX is not subject to any judgment, order or decree entered in any
lawsuit or proceeding that has had or will have a Material Adverse Effect or
materially adversely affect ATX's ability to acquire any property for the use or
benefit of ATX or to conduct its business in any area or which relate to, or
could have any effect on, the transactions contemplated by this Agreement.
3.9 Title to Properties; Encumbrances. Except as set forth on
Section 3.9 of the ATX Disclosure Schedule, ATX has good and marketable title to
all of its properties and assets including all of the assets reflected on the
ATX Balance Sheet, free and clear of all Liens except liens for taxes not yet
due and payable and such liens or other imperfections of title, if any, that do
not materially detract from the value of or materially interfere with the
present use of the property affected thereby and all material leases, subleases,
licenses or other agreements pursuant to which ATX leases real or personal
property, are in good standing, valid and effective in accordance with their
respective
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terms, and there is not, under any such lease, any existing default (or event
which with notice or lapse of time, or both, would constitute a default).
3.10 Compliance with Law; Licenses.
(a) Except as set forth on Section 3.10(a) of the ATX
Disclosure Schedule, the business of ATX (including, without limitation, the ATX
Partnerships prior to the ATX Merger) has not been and is not being conducted in
violation of any laws (whether statutory or otherwise), rules, regulations,
orders, ordinances, judgments, decrees, writs and injunctions of all federal,
state, local or foreign governmental authorities including subdivisions thereof
(collectively, "Laws"), including all Laws relating to the safe conduct of ATX's
business, environmental protection and conservation, antitrust, taxes, consumer
protection, currency exchange, telecommunications, equal opportunity, health,
sanitation, fire, zoning, building, occupational safety, pension, securities and
trademark and copyright, except for such violations as would not, individually
or in the aggregate, have a Material Adverse Effect. Except as set forth on
Section 3.10(a) of the ATX Disclosure Schedule, ATX holds all licenses, permits,
variances, exemptions, authorizations, operating certificates, orders and
approvals of all Governmental Entities (collectively, "Licenses") that are
required for it to own, lease and operate its properties and conduct its
business as currently conducted, except where the failure to hold Licenses would
not, individually or in the aggregate, have a Material Adverse Effect. Except as
set forth on Section 3.10(a) of the ATX Disclosure Schedule, there has occurred
no default under or violation of any such License, except for such violations or
defaults that would not, individually or in the aggregate, have a Material
Adverse Effect.
(b) Since December 31, 1998, ATX has filed with the
applicable PUCs (as defined below) or the FCC, as the case may be, all forms,
statements, reports and documents (including exhibits, annexes and any
amendments thereto) required to be filed by them, and each such filing complied
in all material respects with all applicable laws, rules, and regulations, other
than such failures to file and non-compliance that would, individually or in the
aggregate, have a Material Adverse Effect on it or prevent or impair its ability
to consummate the transactions contemplated by this Agreement.
(c) ATX has all permits, licenses, franchises, consents,
registrations, certificates, variances, exemptions, orders and other
governmental or regulatory authorizations, consents and approvals, necessary to
conduct its business as presently conducted and for the ownership, lease or
operation of property that it now owns or leases, except for those the absence
of which would not, individually or in the aggregate, have a Material Adverse
Effect on it or prevent, delay or impair its ability to consummate the
transactions contemplated by this Agreement (collectively, "Permits"). All such
Permits are listed on Section 3.10(c) of the ATX Disclosure Schedule and are in
full force and effect; no material violations are or have been recorded in
respect of any Permit and no proceeding is pending or threatened to revoke or
limit any Permit. No action by ATX or CoreComm or any other person is required
in order that all Permits will remain in full force or effect following the
consummations of the transactions contemplated by this Agreement. All Permits
are valid and in full force and effect, and ATX has duly performed and is in
compliance in all material respects with all of its obligations under such
Permits.
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(d) Except as set forth on Section 3.10(d) of the ATX
Disclosure Schedule, ATX has validly and properly obtained the necessary Permits
from the appropriate governmental authority in each such jurisdiction,
including, without limitation, state public service and public utilities
commissions ("State PUCs") (the "State Permits") and municipal authorities (the
"Municipal Permits") and holds all Permits issued by the FCC (the "FCC Permits")
that are required for the conduct of its business as it has been and is
presently conducted, and for the holding of its assets. All of the FCC Permits,
the State Permits and the Municipal Permits (collectively the "Communications
Permits") are set forth in Section 3.10(d) of the ATX Disclosure Schedule.
(e) Each of the Communications Permits was duly issued and
is valid and in full force and effect and each of the Communications Permits has
not been modified, canceled, revoked, or conditioned in any adverse manner. Each
of the Communications Permits has not been sold, conveyed, pledged, assigned or
transferred to any other party, and no other party has any present or future
right to acquire use of them.
(f) Except as set forth on Section 3.10(d)(i) of the ATX
Disclosure Schedule, ATX has complied with and is in compliance with all
regulations and laws applicable to its operations under the Communications
Permits, except where any such failure would not individually or in the
aggregate have a Material Adverse Effect. ATX is in compliance with, and its
businesses have operated in compliance with, the Communications Act of 1934, as
amended, FCC regulations, or any applicable state laws or regulations, and has
filed all tariffs, registrations and reports and paid all required fees,
including any renewal applications, required by the Communications Act of 1934,
as amended, or any applicable state regulations and has complied with the terms
of each such tariff or regulation, except where any such failure would not
individually or in the aggregate have a Material Adverse Effect. There is no
action, suit, investigation or other proceeding pending or, to ATX's knowledge,
threatened against ATX which might materially adversely affect the
Communications Permits, or the assignment of the Communications Permits to
CoreComm. No event has occurred with respect to the Communications Permits
which, after notice or lapse of time, or both, would permit revocation or
termination thereof, or would result in any impairment of the rights of the
holder of the Communications Permits or the imposition of a forfeiture against
ATX or any subsequent holder of the Communications Permits with respect to the
operation of the facilities authorized thereby.
(g) ATX has delivered to CoreComm correct and complete
copies of (a) ATX's Communications Permits and the applications related thereto
together with any pending applications filed by ATX for new or modified
facilities related to the purchased business, and (b) all other Permits and any
tariffs filed by ATX relating to the purchased business, and any applications
for additional or modified Permits to the purchased business.
3.11 Taxes.
(a) ATX has timely filed or will file (including any
applicable extension periods) all material tax reports, returns and forms
required to be filed by it on or before the Closing Date in the manner provided
by applicable federal, state, local or foreign tax laws. Copies of all material
tax returns for ATX in respect of all years not barred by the statute of
limitations have been
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delivered by ATX to CoreComm and all such returns are listed on Section 3.11 of
the ATX Disclosure Schedule.
(b) With respect to each of ATX's tax returns that has been
examined or audited by the Internal Revenue Service or a state, local or foreign
taxing authority (collectively, an "Authority"), which returns are identified on
the ATX Disclosure Schedule, all deficiencies asserted as a result of such
examinations or audits have been fully paid, adequately provided for or are
being contested in good faith, except where the failure to be fully paid,
adequately provided for or contested would not have a Material Adverse Effect
individually or in the aggregate. There are no outstanding agreements or waivers
extending the statutory period of limitation applicable to any federal, state,
local or foreign tax return for any period.
(c) Except as set forth on Section 3.11 of the ATX
Disclosure Schedule, ATX has timely paid or will pay all federal, state, local
and foreign income, payroll, withholding, excise, sales, use, real and personal
property, use and occupancy, business and occupancy, business and occupation,
mercantile, real estate, capital stock and franchise or other tax (collectively,
"Taxes") due or claimed to be due on or before the Closing Date to the Internal
Revenue Service, to any Authority or to any Person from ATX by the Internal
Revenue Service or any Authority, other than any failures to make such payments
which have not had, individually or in the aggregate, a Material Adverse Effect.
Except as set forth on Section 3.11 of the ATX Disclosure Schedule, no tax liens
have been filed on any property or assets of ATX and no claims are being
asserted with respect to any Taxes which, individually or in the aggregate,
would have a Material Adverse Effect.
3.12 Consents and Approvals. Except for consents and approvals that
will be obtained prior to Closing (which such consents and approvals are listed
on Section 3.12 of the ATX Disclosure Schedule and which have heretofore been
provided to CoreComm for review) and consents and approvals the failure of which
to obtain would not, individually or in the aggregate, have a Material Adverse
Effect or prevent or impede or delay the consummation of the transactions
contemplated hereby, ATX is not required to obtain, transfer or cause to be
transferred any consent, approval or License of, or make any declaration, filing
or registration with, any third party or any governmental or regulatory
authority in connection with (a) the execution and delivery by ATX of this
Agreement or any agreement contemplated hereby, or (b) the consummation by ATX
of the transactions contemplated hereby or thereby except for those required
under (i) the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended,
and the rules and regulations promulgated thereunder (the "HSR Act") (ii) the
Communications Act of 1934, as amended, and any regulations promulgated
thereunder (the "Communications Act") (iii) the rules and regulations of local,
state or foreign public utility commissions or similar local, state or foreign
regulatory bodies (each, a "PUC") and local, state and foreign Government
Entities identified on Section 3.12 of the ATX Disclosure Schedule pursuant to
applicable local state or foreign laws regulating the telephone or other
telecommunications business ("Utilities Laws") and (iv) the antitrust or other
competition laws of any jurisdiction.
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3.13 Contracts and Commitments.
(a) Section 3.13(a) of the ATX Disclosure Schedule sets
forth complete and accurate lists of the following:
(i) all real property and the location thereof and
the description of any structures located thereon that are leased by ATX,
together with the annual rental and unexpired lease term and identity of the
owner of any real property leased;
(ii) all employment, consulting or agency agreements
requiring payments in excess of $100,000 per annum to which ATX is a party or is
otherwise bound;
(iii) each instrument or agreement defining the terms
on which any debt of, or guarantees by, ATX in excess of $250,000 has been or
may be issued;
(iv) all outstanding loans or advances (excluding
advances for ordinary and necessary business expenses) by ATX to any of its
officers, directors or stockholders or any member of the immediate families of
such officers, directors or stockholders; and
(v) all contracts, commitments or agreements to
which ATX is a party or is otherwise bound and which involve future payments,
performance of services or delivery of goods to or by ATX for annual payments
(for any one or a series of related contracts) of at least $100,000.
(b) ATX and, to ATX's knowledge, all other parties to the
contracts, commitments, instruments and agreements listed in Section 3.13(a) of
the ATX Disclosure Schedule have complied with the provisions thereof in all
material respects, no party is in default thereunder, and no event has occurred
which, but for the passage of time or the giving of notice or both, would
constitute a default thereunder, other than those which, individually or in the
aggregate, would not have a Material Adverse Effect. Except as set forth on
Section 3.13(b) of the ATX Disclosure Schedule, no contract, commitment,
instrument or agreement listed in Section 3.13(a) of the ATX Disclosure Schedule
requires the consent of any party thereto in order to consummate the
transactions contemplated hereby (including, without limitation, the ATX Merger)
except for such consents the failure of which to obtain would not, individually
or in the aggregate, have a Material Adverse Effect or to prevent or impede or
delay the consummation of the transactions contemplated hereby.
(c) (i) Except as may be disclosed on Section 3.13(c)(i)
of the ATX Disclosure Schedule, ATX is not a party to or bound by any contracts
or commitments that require payments in excess of $100,000 per annum by any
party thereto and are not cancelable by ATX on notice of not longer than 30
days;
(ii) subject to obtaining any requisite consents of
third parties, the enforceability of the contracts and commitments referred to
in Section 3.13(a) will not be affected in any manner by the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby or by the other agreements referred to herein, other than those which,
individually or in the aggregate, would not have a Material Adverse Effect;
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(iii) Except as set forth on Section 3.13(c)(iii) of
the ATX Disclosure Schedule, ATX is not a party to or bound by any contracts or
commitments with officers, employees, agents, consultants, advisors, salesmen,
sales representatives, distributors or dealers that require payments, or would
be reasonably expected to result in payments, in excess of $100,000 per annum
and are not cancelable by it on notice of not longer than 30 days and without
liability, penalty or premium or any agreement or arrangement providing for the
payment of any bonus or commission based on sales or earnings; and
(iv) Except as set forth on Section 3.13(c)(iv) of
the ATX Disclosure Schedule, ATX is not a party to or bound by any employment
agreement or any other agreement that contains any severance or termination pay,
liabilities or obligations.
(d) Section 1.2 of the ATX Disclosure Schedule is derived
from, and sets forth all capital expenditures which will be required by ATX in
order to carry out, the business plan of ATX referred to in Section 5.3 hereof
within the time periods contemplated by such business plan.
3.14 Insurance. ATX maintains policies of fire, medical, life,
liability, workers' compensation and other forms of insurance in such amounts,
with such deductibles and against such risks and losses as are, in ATX's
judgment, reasonable for the business and assets of ATX. All such insurance
policies are listed on Section 3.14 of the ATX Disclosure Schedule.
3.15 Certain Interests. Neither ATX nor any officer, director or
stockholder thereof, nor any of their respective Affiliates, spouses or
immediate family, has (a) any direct or indirect interest (other than the
ownership of less than one percent of the outstanding securities of a publicly
held company) in any corporation or business that is involved in or competes
with ATX, (b) any direct or indirect interest in any property or assets used by,
or relating to, ATX or its business, except through the ownership of shares of
ATX Common Stock or ATX Merger Sub Common Stock or (c) has a claim whatsoever
against, or owes any amount to, ATX, except for claims in the ordinary course of
business, such as accrued vacation pay, accrued benefits under Benefit Plans or
similar matters in any agreements in effect on the date hereof. Section 3.15 of
the ATX Disclosure Schedule sets forth a complete list of all agreements and
arrangements between ATX and each of its officers, directors, stockholders and
their respective spouses or immediate family and true and correct copies of all
such agreements and arrangements have been delivered to CoreComm.
3.16 Intellectual Property. Section 3.16 of the ATX Disclosure
Schedule sets forth a list of all patents, internet domain name registrations,
trademarks, servicemarks, trade names and copyrights (collectively, the
"Scheduled Intellectual Property") that ATX either owns or has a license to use.
ATX owns or is licensed to use all of its trade secrets, know-how, software and
other proprietary rights and all Scheduled Intellectual Property (collectively,
the "Intellectual Property"), free and clear of any Liens except for Liens which
would not have, individually or in the aggregate, a Material Adverse Effect.
None of ATX's Intellectual Property is subject to any pending or, to the
knowledge of ATX, threatened, challenge or reversion except for challenges or
reversions which would not have, individually or in the aggregate, a Material
Adverse Effect. To the knowledge of ATX, the conduct of the business of ATX as
now being conducted, and the use of ATX's Intellectual Property in the conduct
of such business, do not infringe or otherwise conflict with any trademarks,
patents, registrations, or other intellectual property or proprietary rights of
others, nor, has any claim
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been made that the conduct of such business as now being conducted infringes or
otherwise is covered by the intellectual property of a third party other than
claims which would not have, individually or in the aggregate, a Material
Adverse Effect. To the knowledge of ATX, none of its Intellectual Property is
currently being infringed by a third party.
3.17 Employee Benefit Plans.
(a) ATX has made available to CoreComm true and complete
copies of all employment, retention, severance, deferred compensation, change of
control or other agreements or contracts with any employee of ATX and Section
3.17 of the ATX Disclosure Schedule contains a list of all of the foregoing.
(b) ATX does not contribute to, maintain, have an actual or
contingent liability with respect to, or sponsor any plan subject to Title IV of
ERISA.
(c) ATX has made available to CoreComm with respect to each
Benefit Plan, a true and complete copy (or, to the extent no such copy exists,
an accurate description) thereof and, to the extent applicable: (i) any related
trust agreement or other funding instrument; (ii) the most recent determination
letter, if applicable; (iii) any summary plan description and other written
communications (or a description of any oral communications) by ATX to its
employees concerning the extent of the benefits provided under a Benefit Plan;
and (iv) for the three most recent years (A) the Form 5500 and attached
schedules; (B) audited financial statements, (C) actuarial valuation reports and
(D) attorney's response to an auditor's request for information.
(d) (i) With respect to each Benefit Plan, such plan has
been established and administered in accordance with its terms, and in
compliance with the applicable provisions of ERISA, the Code, and other
applicable laws, rules and regulations and no transaction prohibited by any
applicable statute or regulation, including Section 406 of ERISA or Section 4975
of the Code, has occurred with respect to any Benefit Plan that would
individually or in the aggregate be reasonably likely to result in material
liability to ATX; (ii) each Benefit Plan which is intended to be qualified
within the meaning of Section 401(a) of the Code is so qualified and has
received a favorable determination letter as to its qualification, and nothing
has occurred, whether by action or failure to act, that could reasonably be
expected to cause the loss of such qualification; (iii) no event has occurred
and no condition exists that would subject ATX or any of its subsidiaries either
directly or by reason of their affiliation with any member of their "Controlled
Group" (defined as any organization which is a member of a controlled group of
organizations within the meaning of Code sections 414(b), (c), (m) or (o)), to
any tax, fine, lien, penalty or other liability imposed by ERISA, the Code or
other applicable laws, rules and regulations; and (v) there are no actions,
suits or claims (other than routine claims for benefits) pending or threatened
against the Benefit Plans and, no facts exist which could give rise to any such
actions, suits, or claims that would be reasonably likely to result in material
liability to the Company with respect to the Benefit Plans.
(e) No Benefit Plan or other agreement or arrangement exists
that, as a result of the transactions contemplated by this Agreement, could
result in the payment to any present or former employee of ATX of any money or
other property or accelerate the time of, or increase the amount of payment to
which such person may otherwise be entitled or to provide any other rights
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or benefits to any present or former employee of ATX or any other person,
whether or not such payment would constitute a parachute payment within the
meaning of Section 280G of the Code. Except as set forth in the ATX Disclosure
Schedule, no employee or former employee of ATX will become entitled to any
bonus, retirement, severance, job security or similar benefit or enhancement of
such benefit (including acceleration of vesting or exercise of an incentive
award) as a result of the transactions contemplated hereby.
(f) ATX does not have any current or projected liability in
respect of post-employment or post-retirement health or medical or life
insurance benefits for retired, former or current employees of ATX nor maintains
any deferred compensation plan.
(g) No Benefit Plan or other agreement or arrangement exists
that, as a result of the transactions contemplated by this Agreement (including
the ATX Merger), could result in the payment by ATX to any present or former
employee of University City Housing ("UCH") of any money or other property or
accelerate the time of, or increase the amount of payment by ATX to which such
person may otherwise be entitled, or could result in the requirement that ATX
provide any other rights or benefits to any present or former employee of UCH or
any other person (as a result of such person's status as an employee of UCH),
including but not limited to, any severance payment, whether or not such payment
would constitute a parachute payment within the meaning of Section 280G of the
Code. No employee or former employee of UCH (as a result of such person's status
as an employee of UCH) is or will become entitled to any bonus, retirement,
severance, job security or similar benefit or enhancement of such benefit
(including acceleration of vesting or exercise of an incentive award) from ATX
as a result of the transactions contemplated hereby.
3.18 Labor Matters. None of the individuals employed by ATX or any of
its subsidiaries or affiliates is represented by a union. ATX has made no
collective bargaining agreements with respect to any current or former employees
of ATX or any of its subsidiaries or affiliates. No labor strike, picketing,
work stoppage, work slowdown, soliciting, petition for a representation election
or civil action, or other labor dispute has, within the last five years,
occurred or, to ATX's knowledge, has been threatened with respect to ATX.
3.19 Environmental Protection. ATX has obtained all Licenses under
federal, state and local laws, rules and regulations relating to pollution or
protection of the environment (collectively, the "Environmental Laws") required
for the operation of its business except for Licenses the lack of which would
not have a Material Adverse Effect individually or in the aggregate. ATX is in
compliance in all material respects with all terms and conditions of such
Licenses and all Environmental Laws and has not received any notice alleging
non-compliance. There is no civil, criminal or administrative action, suit,
demand, claim, investigation, proceeding, notice or demand letter pending or, to
the knowledge of ATX, threatened against ATX relating in any way to any
Environmental Laws. There are no past or present events or conditions relating
to ATX that may interfere with or prevent compliance in any material respect
with any Environmental Laws or that may give rise to any material common law or
other legal liability thereunder.
3.20 Brokers or Finders. No agent, broker, investment banker,
financial advisor or other firm or Person is or will be entitled to any broker's
or finder's fees or any similar commission or fee in connection with the
transaction contemplated by this Agreement, based upon arrangements made
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by or on behalf of ATX, except Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities
Corporation, whose fees and expenses will be paid by ATX.
3.21 Accounting and Tax Matters. Neither ATX nor any of its
Affiliates has taken or agreed to take any action which would prevent the Merger
and the Recapitalization from constituting transactions qualifying as exchanges
under Section 351 of the Code and a merger under Section 368(a) of the Code.
3.22 Registration Statement; Proxy Statement/Prospectus. The
information supplied or to be supplied by ATX or its Affiliates for inclusion in
or incorporation by reference in the registration statement on Form S-4 pursuant
to which shares of ATX Common Stock issuable in the Merger and the
Recapitalization will be registered with the SEC (the "Registration Statement")
shall not at the time the Registration Statement is declared effective by the
SEC under the Securities Act of 1933, as amended, contain any untrue statement
of a material fact or omit to state any material fact required to be stated in
the Registration Statement or necessary in order to make the statements in the
Registration Statement, in light of the circumstances under which they were
made, not misleading. The information supplied or to be supplied by ATX for
inclusion in the proxy statement/prospectus (the "Proxy Statement") to be sent
to the stockholders of CoreComm in connection with its meeting of stockholders
to consider this Agreement and the Merger (collectively, the "Stockholders'
Meeting") shall not, on the date the Proxy Statement is first mailed to
stockholders of CoreComm at the time of the Stockholders' Meeting and at the
Effective Time, contain any statement which, at such time and in light of the
circumstances under which it was made, is false or misleading with respect to
any material fact, or omit to state any material fact necessary in order to make
the statements made in the Proxy Statement not false or misleading, or omit to
state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the Stockholders'
Meeting which has become false or misleading. If at any time prior to the
Effective Time any event relating to ATX or any of its Affiliates, officers or
directors should be discovered by ATX which should be set forth in an amendment
to the Registration Statement or a supplement to the Proxy Statement, ATX shall
promptly inform CoreComm.
3.23 Non-Competition Agreements. Neither ATX nor any officer,
director, or key employee of ATX, is a party to any agreement, other than with
ATX or its predecessors, that purports to restrict or prohibit it, directly or
indirectly, from engaging in any business involving telecommunications or any
other material business currently engaged in by ATX, or to the knowledge of ATX,
by CoreComm or any corporations affiliated with CoreComm.
3.24 Customers. No single customer of ATX generates greater than 2%
of the total sales of ATX. As of March 7, 2000, there were approximately 20,000
customers of ATX.
3.25 Legal Opinion. As of the date of execution of this Agreement,
ATX has received reasonable assurances from Klehr, Harrison, Xxxxxx, Branzburg &
Xxxxxx LLP, counsel to ATX, regarding its ability to deliver the opinion
required by Section 7.12 of the Agreement.
3.26 Full Disclosure. No representation or warranty of ATX contained
in this Agreement or which will be contained in the Escrow Agreement, and no
document furnished by or on behalf
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of ATX to CoreComm pursuant to this Agreement contains an untrue statement of a
material fact or omits to state a material fact required to be stated herein or
necessary to make the statements made, in the context in which made, not
materially false or misleading. There is no fact, event, circumstance or
condition that ATX has not disclosed to CoreComm in writing that has or would
have, insofar as ATX can now foresee, a Material Adverse Effect on ATX or the
ability of ATX to perform this Agreement or the Escrow Agreement.
3.27 NO OTHER REPRESENTATIONS OR WARRANTIES. EXCEPT AS SPECIFICALLY
AND EXPRESSLY SET FORTH IN THIS ARTICLE 3, (I) ATX MAKES NO REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, RELATING TO ATX, OR THE ASSETS OR BUSINESS OF ATX,
INCLUDING, WITHOUT LIMITATION, ANY REPRESENTATION OR WARRANTY AS TO VALUE,
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR FOR ORDINARY PURPOSES, OR
ANY OTHER MATTER AND (II) ATX MAKES NO, AND HEREBY DISCLAIMS ANY, OTHER
REPRESENTATIONS OR WARRANTIES REGARDING THE ASSETS OR THE BUSINESS OF ATX.
IV. REPRESENTATIONS AND WARRANTIES OF CORECOMM
Except as set forth in the CoreComm Disclosure Schedule delivered by
CoreComm to ATX prior to the execution of this Agreement (the "CoreComm
Disclosure Schedule") (each section of which qualifies the correspondingly
numbered representation and warranty or covenant to the extent specified
therein) or in the CoreComm SEC Reports, CoreComm represents and warrants to ATX
as follows:
4.1 Organization, Etc. CoreComm is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation. CoreComm has the power and authority to conduct its business as
it is currently being conducted and to own, operate and lease the property and
assets that it now owns and leases. CoreComm is duly qualified or licensed and
in good standing to do business and has paid all relevant franchise and similar
taxes in each jurisdiction in which the nature of its business or the ownership
or leasing of its properties makes such qualification or license necessary,
except where the failure to be so qualified would not, individually or in the
aggregate, have a Material Adverse Effect. The copies of the Memorandum of
Association (the "CoreComm Memorandum of Association") and Bylaws (the "CoreComm
Bylaws") of CoreComm, as previously delivered to ATX by CoreComm, are complete
and correct copies of such instruments as currently in effect.
4.2 Authorization. CoreComm has all power and authority necessary to
execute and deliver this Agreement, to perform its obligations under this
Agreement and consummate the transactions contemplated by this Agreement. The
execution and delivery of this Agreement, the performance of CoreComm's
obligations hereunder and the consummation of the transactions contemplated
hereby has been duly authorized by CoreComm and no corporate proceedings on the
part of CoreComm are necessary to authorize this Agreement or to consummate such
transactions. This Agreement has been duly executed and delivered by CoreComm
and constitutes a valid and binding obligation of CoreComm, enforceable against
CoreComm in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium
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and similar laws relating to or affecting creditors rights generally, or by
general equity principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
4.3 Capitalization.
(a) The authorized capital stock of CoreComm consists of
75,000,000 shares of common stock par value $.01 per share, and 1,000,000 shares
of preferred stock, par value $.01 per share. As of March 6, 2000, (i)
39,213,036 shares of CoreComm Common Stock were issued and outstanding, all of
which are validly issued, fully paid and nonassessable and no shares of
preferred stock were issued and outstanding, and (ii) no shares of CoreComm
Common Stock are held in the treasury of CoreComm. Section 4.3 of the CoreComm
Disclosure Schedule shows, as of March 6, 2000, the number of shares of CoreComm
Common Stock reserved for future issuance pursuant to (i) stock options granted
and outstanding as of the date hereof, the plans under which such options were
granted and award agreements pursuant to which "non-plan" options were granted
(collectively, the "CoreComm Stock Plans"), (ii) the conversion of CoreComm's
issued and outstanding 6% convertible subordinated notes due 2006; and (iii) the
exercise of outstanding warrants. As of the date hereof, no other shares of
CoreComm Common Stock are issued and outstanding. All shares of CoreComm Common
Stock subject to issuance as specified above are duly authorized and, upon
issuance on the terms and conditions specified in the instruments pursuant to
which they are issuable, shall be validly issued, fully paid and nonassessable.
There are no obligations, contingent or otherwise, of CoreComm to repurchase,
redeem or otherwise acquire any shares of CoreComm Common Stock.
(b) Except as reserved for future grants of options under
the CoreComm Stock Plans and as set forth on Section 4.3 of the CoreComm
Disclosure Schedule, (i) there are no equity securities of any class of
CoreComm, or any security exchangeable into or exercisable for such equity
securities, issued, reserved for issuance or outstanding; (ii) there are no
options, warrants, equity securities, calls, rights, commitments or agreements
of any character to which CoreComm is a party or by which it is bound obligating
CoreComm to issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of equity securities of CoreComm or obligating to grant,
extend, accelerate the vesting of or enter into any such option, warrant, equity
security, call, right, commitment or agreement; and (iii) there are no voting
trusts, proxies or other voting agreements or understandings with respect to the
shares of equity securities of CoreComm.
4.4 No Violation. Except as set forth on Section 4.4 of the CoreComm
Disclosure Schedule, neither the execution or delivery of this Agreement or any
agreement contemplated hereby by CoreComm, nor the performance by CoreComm of
the transactions contemplated hereby or thereby violates, conflicts with,
results in a breach of or constitutes a default (or an event or condition that,
with notice or lapse of time or both, would constitute a default) under, gives
others any right of termination, acceleration, amendment, cancellation or
revocation of or results in the termination, amendment, cancellation or
revocation of, or accelerates the performance required by, or causes the
acceleration of the maturity of any liability or obligation pursuant to, or
results in the creation or imposition of any Lien upon any of the property or
assets of CoreComm under (a) the CoreComm Memorandum of Association or the
CoreComm Bylaws or (b) except as individually or in the aggregate would not have
a Material Adverse Effect on any Law or any Contract to which
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CoreComm is a party or by which CoreComm or its assets or properties is or may
be bound or affected.
4.5 SEC Filings; Financial Statements.
(a) CoreComm has timely filed all forms, reports and
documents filed or required to be filed by CoreComm with the SEC since January
1, 1999 (collectively, the "CoreComm SEC Reports") and has made the CoreComm SEC
Reports available to ATX. The CoreComm SEC Reports (i) at the time filed,
complied in all material respects with the applicable requirements of the
Securities Act of 1933, as amended (the "Securities Act") and the Securities
Exchange Act of 1934 (the "Exchange Act"), as the case may be, and (ii) did not
at the time they were filed (or if amended or superseded by a filing prior to
the date of this Agreement, then on the date of such filing) contain any untrue
statement of a material fact or omit to state a material fact required to be
stated in such CoreComm SEC Reports or necessary in order to make the statements
in such CoreComm SEC Reports, in the light of the circumstances under which they
were made, not misleading. CoreComm does not know of any fact, event or
circumstance that has occurred since the date of the last CoreComm SEC Report,
or that now exists, that (i) would have been required to be disclosed in a
CoreComm SEC Report if it had occurred prior to the date thereof, or (ii) that
has had or would have a Material Adverse Effect individually or in the
aggregate.
(b) Each of the consolidated financial statements
(including, in each case, any related notes) contained in the CoreComm SEC
Reports complied as to form in all material respects with the applicable
published rules and regulations of the SEC with respect thereto, was prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods involved (except as may be indicated in the notes
to such financial statements or, in the case of unaudited statements, in
conformity with the requirements of Form 10-Q under the Exchange Act) and fairly
presented in all material respects the consolidated financial position of
CoreComm as of the dates and the consolidated results of its operations and cash
flows for the periods indicated, except that the unaudited interim financial
statements were or are subject to normal and recurring year-end adjustments
which were not or are not expected to be material in amount. The CoreComm SEC
Reports contain a balance sheet as of September 30, 1999 which shall be referred
to as the "CoreComm Balance Sheet". September 30, 1999 shall be referred to as
the "CoreComm Balance Sheet Date."
4.6 Absence of Certain Changes. Except as disclosed in the CoreComm
SEC Reports or in the CoreComm Disclosure Schedule, since the CoreComm Balance
Sheet Date, there has not been any condition, event or occurrence that would
have a Material Adverse Effect to CoreComm, individually or in the aggregate.
4.7 Consents and Approvals. Except for consents and approvals that
will be obtained prior to Closing and except for those consents and approvals
with regard to ATX's Communication Permits that are listed in Sections 3.10(d)
and 3.12 of the ATX Disclosure Schedule (the "ATX Communications Consents")
(which consents and approvals other than the ATX Communications Consents are
listed in Section 4.7 of the CoreComm Disclosure Schedule and which have
heretofore been provided to ATX for review) and consents and approvals the
failure of which to obtain would not, individually or in the aggregate, have a
Material Adverse Effect or prevent or impede or delay
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the consummation of the transactions contemplated hereby, CoreComm is not
required to obtain, transfer or cause to be transferred any consent, approval or
License of, or make any declaration, filing or registration with, any third
party or any governmental or regulatory authority in connection with (a) the
execution and delivery by CoreComm of this Agreement or any agreement
contemplated hereby, or (b) the consummation by CoreComm of the transactions
contemplated hereby or thereby except for those required under (i) the HSR Act,
(ii) the Communications Act, (iii) the rules and regulations of any PUC and
local, state and foreign Government Entities identified in the CoreComm
Disclosure Schedule pursuant to applicable Utilities Laws and (iv) the antitrust
or other competition laws of any jurisdiction.
4.8 Brokers or Finders. No agent, broker, investment banker,
financial advisor or other firm or Person is or will be entitled to any broker's
or finder's fees or any similar commission or fee in connection with the
transaction contemplated by this Agreement, based upon arrangements made by or
on behalf of CoreComm, except Xxxxxxx, Xxxxx & Co., whose fees and expenses will
be paid by CoreComm.
4.9 Accounting and Tax Matters. Neither CoreComm nor any of its
Affiliates has taken or agreed to take any action which would prevent the
Mergers and the Recapitalization from constituting transactions qualifying as
exchanges under Section 351 of the Code and a merger under Section 368(a) of the
Code.
4.10 Registration Statement; Proxy Statement/Prospectus. The
information supplied or to be supplied by CoreComm or its Affiliates for
inclusion in or incorporation by reference in the Registration Statement shall
not at the time the Registration Statement is declared effective by the SEC
under the Securities Act, contain any untrue statement of a material fact or
omit to state any material fact required to be stated in the Registration
Statement or necessary in order to make the statements in the Registration
Statement, in light of the circumstances under which they were made, not
misleading. The information supplied or to be supplied by CoreComm for inclusion
in the Proxy Statement shall not, on the date the Proxy Statement is first
mailed to stockholders of CoreComm, at the time of the Stockholders' Meeting and
at the Effective Time, contain any statement which, at such time and in light of
the circumstances under which it was made, is false or misleading with respect
to any material fact, or omit to state any material fact necessary in order to
make the statements made in the Proxy Statement not false or misleading, or omit
to state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the Stockholders'
Meeting which has become false or misleading. If at any time prior to the
Effective Time any event relating to CoreComm or any of its Affiliates, officers
or directors should be discovered by CoreComm which should be set forth in an
amendment to the Registration Statement or a supplement to the Proxy Statement,
CoreComm shall promptly inform ATX.
4.11 Fairness Opinion. CoreComm has received an opinion from Xxxxxxx,
Sachs & Co., dated March 9, 2000, that the transactions contemplated herein are
fair, from a financial point of view, based on information available as of the
date of the opinion, and such opinion has not been withdrawn.
4.12 Legal Opinion. As of the date of execution of this Agreement,
CoreComm has received reasonable assurances from Xxxx, Weiss, Rifkind, Xxxxxxx
and Xxxxxxxx, counsel to
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CoreComm and from Xxxxxx, Xxxx and Xxxxxx LLP, regulatory counsel to ATX,
regarding each firm's ability to deliver the opinions required by Section 6.19
of the Agreement.
4.13 NO OTHER REPRESENTATIONS OR WARRANTIES. EXCEPT AS SPECIFICALLY
AND EXPRESSLY SET FORTH IN THIS ARTICLE 4, (I) CORECOMM MAKES NO REPRESENTATION
OR WARRANTY, EXPRESS OR IMPLIED, RELATING TO CORECOMM, OR THE ASSETS OR BUSINESS
OF CORECOMM, INCLUDING, WITHOUT LIMITATION, ANY REPRESENTATION OR WARRANTY AS TO
VALUE, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR FOR ORDINARY
PURPOSES, OR ANY OTHER MATTER AND (II) CORECOMM MAKES NO, AND HEREBY DISCLAIMS
ANY, OTHER REPRESENTATIONS OR WARRANTIES REGARDING THE ASSETS OF OR THE BUSINESS
OF CORECOMM.
V. OBLIGATIONS OF ATX AND CORECOMM
5.1 Other Transactions. From and after the date hereof and
continuing until the Closing or the earlier termination of this Agreement
pursuant to Article 8 hereof, ATX agrees that it will not and will not authorize
any officer, director, employee or agent of ATX or any Affiliate of ATX to, or
authorize any investment banker, attorney, accountant or other representative
retained by ATX to, directly or indirectly, without the written consent of
CoreComm, solicit or encourage, furnish any information with respect to ATX to
any Person in connection with, or engage in any discussions with any other
Person in connection with, any proposal for a merger or other business
combination involving ATX or for the acquisition of a substantial equity
interest in ATX or a substantial portion of ATX's assets, other than as
contemplated by this Agreement.
5.2 Supplemental Disclosure. Each of ATX and CoreComm shall have the
continuing obligation promptly to supplement or amend the ATX Disclosure
Schedule or the CoreComm Disclosure Schedule, as the case may be, with respect
to any matter arising or discovered after the date hereof that, if existing or
known at the date of this Agreement, would have been required to be set forth or
described in the ATX Disclosure Schedule or the CoreComm Disclosure Schedule, as
the case may be; provided, however, that for purposes of the rights and
obligations of the parties hereunder, any such supplemental or amended
disclosure shall not be deemed to have been disclosed as of the date of this
Agreement unless agreed to in writing by the parties. Notwithstanding the
delivery of new ATX Disclosure Schedules or new CoreComm Disclosure Schedules,
no representation or warranty set forth herein shall be deemed modified by the
information set forth in such new ATX Disclosure Schedules or new CoreComm
Disclosure Schedules unless the other party hereto accepts such new ATX
Disclosure Schedules or new CoreComm Disclosure Schedules in writing; provided
that completion of Closing by the other party hereto shall be deemed acceptance
of new ATX Disclosure Schedules or new CoreComm Disclosure Schedules delivered
pursuant to this Section 5.2.
5.3 Conduct of Business. From the date of this Agreement to the
Closing, other than as set forth on Section 5.3 of the ATX Disclosure Schedule,
ATX shall conduct its business (and ATX shall conduct the business of ATX Merger
Sub) only in the ordinary course and consistent with past practice and the
business plan of ATX, which business plan has previously been delivered by ATX
to CoreComm. Without limiting the generality of the foregoing, and except as
otherwise expressly
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provided in this Agreement or consented to in writing by CoreComm from the date
of this Agreement to the Closing, ATX shall:
(a) use its reasonable best efforts to preserve its business
organization and its current relationships with its employees, suppliers,
distributors, customers, subscribers and others having business relationships
with it and to keep available to it the services of its employees;
(b) not split, combine, reclassify, issue, deliver, sell,
pledge or otherwise encumber or subject to any Lien, any equity interests, or
any rights, options or warrants to acquire any shares of capital stock, or
declare, set aside or pay any distribution in respect of any equity interest, or
redeem, purchase or otherwise acquire any equity interest;
(c) through July 31, 2000 make capital expenditures set
forth in Section 1.2 of the ATX Disclosure Schedule, at the time called for by
such Section, and after July 31, 2000, such further capital expenditures as
required to execute its current business plan within the time periods
contemplated thereby but only to the extent (i) requested by CoreComm and (ii)
that CoreComm is willing to provide by loan the funds required therefor;
(d) not take any action which would have resulted in a
breach of Section 3.7 had such action taken place after the ATX Balance Sheet
Date, but prior to the date hereof;
(e) not take any action that would result in any of its
representations or warranties set forth in this Agreement becoming untrue or
cause any of the conditions to the Closing set forth in Article 6, to not be
satisfied, other than those actions that would not materially adversely affect
ATX's ability to consummate the transactions contemplated by this Agreement;
(f) not merge or consolidate with any other person or
(except in the ordinary course of business) acquire a material amount of assets
of any other person or acquire the securities of any other Person;
(g) not sell, lease, license, mortgage, encumber, subject to
Lien or otherwise surrender, relinquish, encumber, or dispose of any assets
other than the disposition of obsolete or damaged assets in the ordinary course
of its business;
(h) not change any method of accounting or accounting
practice used by them, except for any change required by this Agreement or by
United States generally accepted accounting principles;
(i) not establish or increase the benefits under, or promise
to establish, modify or increase the benefits under, any bonus, insurance,
severance, deferred compensation, pension, retirement, profit sharing, stock
option (including without limitation, the granting of stock options, stock
appreciation rights, performance awards, or restricted stock awards), stock
purchase or other employee benefit plan or employment, consulting or severance
agreement, or otherwise increase the compensation payable to any directors,
officers or employees of ATX, except in the ordinary course of business and
consistent with past practice, or establish, adopt or enter into any collective
bargaining agreement;
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(j) amend its articles of organization, by-laws or other
comparable organizational documents, except for any change required by this
Agreement;
(k) take any action to expand the states in which any of its
businesses currently operate, other than pursuant to public announcements made
prior to the date hereof or as may be required under agreements entered into
prior to the date hereof;
(l) incur any indebtedness for borrowed money or issue any
debt securities or assume, guarantee or endorse, or otherwise as an
accommodation become responsible for the obligations of any person for borrowed
money, except for indebtedness incurred on reasonable commercial terms for the
purpose of funding capital expenditures contemplated by Section 1.2 of the ATX
Disclosure Schedule;
(m) not take or agree to take any action that would prevent
the Merger and Recapitalization from qualifying as exchanges under Section 351
of the Code or as reorganizations under Section 368 of the Code;
(n) not pay any bonus or other extraordinary compensation to
any ATX Stockholder except to the extent otherwise expressly permitted by this
Agreement; and
(o) not agree or commit to do any of the foregoing.
Further, ATX hereby covenants that ATX Merger Sub shall conduct no
activity following its incorporation other than in connection with the
transactions contemplated by this Agreement.
5.4 Confidentiality. ATX and CoreComm shall hold, and shall cause
their respective Affiliates, employees, agents, consultants and advisors to
hold, in strict confidence, unless compelled to disclose by judicial or
administrative process or by other requirements of law (including, without
limitation, disclosure requirements under the Securities Act of 1933, as
amended, and the Securities Exchange Act of 1934, as amended, or the requirement
of any stock exchange or the NASDAQ National Market), all documents and
information concerning the other parties furnished to it by any other party or
its representatives in connection with the transaction contemplated by this
Agreement (except to the extent that such information shall be shown to have
been (a) previously known by the party to which it was furnished, (b) in the
public domain through no fault of such party or (c) later lawfully acquired from
other sources by the party to which it was furnished), and each party shall not
release or disclose such information to any other person, except its auditors,
attorneys, financial advisors, bankers and other consultants and advisors in
connection with the transaction contemplated by this Agreement. Each party shall
be deemed to have satisfied its obligation to hold confidential information
concerning or supplied by the other party if it exercises the same care as it
takes to preserve confidentiality for its own similar information.
5.5 Proxy Statement/Prospectus; Registration Statement.
(a) As promptly as practicable after the execution of this
Agreement, ATX and CoreComm shall jointly prepare and file with the SEC the
Proxy Statement and the Registration Statement in which the Proxy Statement will
be included. Such Registration Statement shall register
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the shares to be issued under the Merger and, to the extent legally permissible,
the shares of ATX Common Stock to be issued in the Recapitalization, and, if
legally permitted, shall also register the resale of the shares of ATX
Convertible Preferred Stock (including the shares of ATX Common Stock issuable
upon conversion thereof) to be issued pursuant to the Recapitalization. CoreComm
and ATX shall use their reasonable best efforts to cause the Registration
Statement to become effective as soon after such filing as practicable. The
Proxy Statement shall include the recommendations of the Board of Directors of
CoreComm in favor of this Agreement and the Merger.
(b) CoreComm and ATX shall use their reasonable best efforts
make all necessary filings with respect to the Merger under the Securities Act
and the Exchange Act and applicable state blue sky laws and the rules and
regulations thereunder.
5.6 Stockholders' Meeting. CoreComm will take, in accordance with
applicable law and the CoreComm Memorandum of Association and the CoreComm
Bylaws, all actions necessary to convene the meeting of holders of CoreComm
Common Stock (the "CoreComm Stockholders' Meeting") as promptly as practicable
after the Registration Statement is declared effective to consider and vote upon
the adoption of this Agreement and the Domestication Merger. Subject to
fiduciary and other legal obligations under applicable law and the terms of this
Agreement, CoreComm's Board of Directors shall recommend that the stockholders
of CoreComm adopt this Agreement and thereby approve the transactions
contemplated hereby and shall take all lawful action to solicit such adoption.
5.7 Cooperation; Regulatory Filings.
(a) Subject to the terms and conditions of this Agreement,
each party hereto will use its reasonable best efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate the transaction
contemplated by this Agreement as soon as practicable after the date hereof
(including furnishing all information required by the FCC, any State regulatory
agency or commission or any municipal authority). In furtherance and not in
limitation of the foregoing, each of CoreComm and ATX shall (i) make an
appropriate filing of a Notification and Report Form pursuant to the HSR Act
with respect to the transaction contemplated hereby as promptly as practicable
and to supply as promptly as practicable any additional information and
documentary material that may be requested pursuant to the HSR Act and to
otherwise use its reasonable best efforts to cause the expiration or termination
of the applicable waiting periods under the HSR Act as soon as practicable; and
(ii) make an appropriate filing with the Federal Communications Commission (the
"FCC") requesting the FCC's written consent to the transaction contemplated
hereby (the "FCC Consent Application").
(b) Each party hereto shall, in connection with the efforts
referenced in this Section 5.7 to obtain all requisite approvals and
authorizations for the transaction contemplated by this Agreement under the HSR
Act, the Communications Act or any other Regulatory Law (as defined below), (i)
cooperate in all respects with each other in connection with any filing or
submission and in connection with any investigation or other inquiry, including
any proceeding initiated by a private party; (ii) promptly inform the other
parties of any communication received by such party from, or given by such party
to, the Antitrust Division of the Department of Justice
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(the "DOJ"), the Federal Trade Commission (the "FTC"), the FCC or any other
Governmental Entity and of any material communication received or given in
connection with any proceeding by a private party, in each case regarding the
transaction contemplated hereby, and (iii) permit the other party to review any
communication given by it to, and consult with each other in advance of any
meeting or conference with, the DOJ or any such other Governmental Entity or, in
connection with any proceeding by a private party, with any other Person, and to
the extent permitted by the DOJ or such other applicable Governmental Entity or
other Person, give the other party the opportunity to attend and participate in
such meetings and conferences. For purposes of this Agreement, "Regulatory Law"
means the Xxxxxxx Act, as amended, the Xxxxxxx Act, as amended, the HSR Act, the
Communications Act, the Federal Trade Commission Act, as amended, and all other
federal, state and foreign, if any, statutes, rules, regulations, orders,
decrees, administrative and judicial doctrines and other laws that are designed
or intended to prohibit, restrict or regulate actions having the purpose or
effect of monopolization or restraint of trade or lessening of competition
through merger or acquisition.
(c) In furtherance and not in limitation of the covenants of
the parties contained in this Section 5.7, if any administrative or judicial
action or proceeding, including any proceeding by a private party, is instituted
(or threatened to be instituted) challenging the transaction contemplated by
this Agreement as violative of any Regulatory Law, each of the parties hereto
shall cooperate in all respects with each other and contest and resist any such
action or proceeding and use its respective reasonable best efforts to have
vacated, lifted, reversed or overturned any decree, judgment, injunction or
other order, whether temporary, preliminary or permanent, that is in effect and
that prohibits, prevents or restricts consummation of the transaction
contemplated by this Agreement.
(d) If any objections are asserted with respect to the
transaction contemplated hereby under any Regulatory Law or if any suit is
instituted by any Governmental Entity (including any foreign governmental
entity) or any private party challenging the transaction contemplated hereby as
violative of any Regulatory Law, each of the parties hereto shall use its
reasonable best efforts to resolve (through litigation, settlement or otherwise
as CoreComm and ATX shall reasonably determine) any such objections or challenge
as such Governmental Entity or private party may have to such transaction under
such Regulatory Law so as to permit consummation of the transaction contemplated
by this Agreement.
(e) Each party hereto shall consult with, and utilize
reasonable best efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable (including using its
best efforts to provide all appropriate and necessary assistance to the other
parties hereto) with respect to the obtaining of all permits, consents,
approvals and authorizations of all third parties and Governmental Entities
necessary or advisable in order to consummate the transaction contemplated by
this Agreement and each party will keep the other party apprized of the status
of matters relating to completion of the transaction contemplated hereby.
(f) Nothing in this Section 5.7 shall require CoreComm or
ATX to sell, hold separate or otherwise dispose of or conduct its business in a
specified manner, or permit the sale, holding separate or other disposition of,
any of its assets or the conduct of its business in a specified manner, or agree
to payments or modifications to contractual arrangements, whether as a condition
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to obtaining any approval from a Governmental Entity or any permits, consents,
approvals or authorization of any other Person or for any other reason, if in
CoreComm's or ATX's sole judgment, as the case may be, such sale, holding
separate or other disposition of, or the conduct of its business in a specified
manner or agreement or modification, would reasonably be expected to materially
diminish the value of the transaction contemplated hereby to CoreComm or ATX, as
the case may be.
(g) CoreComm shall have the right to have its designated
representatives, as provided to ATX from time to time (the "Designated CoreComm
Representatives"), present within normal business hours and without material
disruption to the business of ATX for consultation at ATX's principal offices
from the date hereof until the Closing Date. Such Designated CoreComm
Representatives shall have the right to review and become familiar with the
conduct of the business of ATX and shall be available to be consulted and shall
have authority on behalf of CoreComm in regard to consultation in regard to
Material Decisions (as defined below in this Section 5.7(g)). CoreComm shall
take all reasonable actions necessary to ensure that its Designated CoreComm
Representatives will be readily available during normal business hours. Without
written notice to and favorable consultation (which shall not be unreasonably
withheld, delayed or conditioned with respect to time or content) with the
Designated CoreComm Representatives, ATX shall not take any action involving any
Material Decision. "Material Decision" shall mean, for purposes of this
Agreement, any of the following to the extent the same may affect the assets,
the obligations or the business of ATX following the date hereof: (i) any
entering into, termination or material amendment of, or waiver of any ATX's
rights in respect of, any material contracts; (ii) any purchase order in excess
of $100,000 in any instance to be delivered, or the payment for which shall
become due, after the Closing Date; (iii) the acceptance of any material
customer contract that deviates from the terms and conditions of current pricing
policies; (iv) any action to respond to any material customer or regulatory
complaint outside of the ordinary course of business; (v) any general
communication with customers related to the business or to the Merger; or (vi) a
material change in pricing, promotional, marketing or any other decision that
would affect any of ATX's customary profit margins.
5.8 Public Announcements. CoreComm and ATX shall consult with each
other before issuing any press release or otherwise making any public statement
with respect to this Agreement or the transaction contemplated hereby and shall
not issue any press release or make any such public statement without the prior
consent of the other party, which consent shall not be unreasonably withheld or
delayed except as may be required by applicable law or any requirement of any
stock exchange on which the stock of any party is listed.
5.9 Effect of Due Diligence. In connection with CoreComm's
investigation of the business of ATX, CoreComm may have received from or on
behalf of ATX certain projections, including projected statements of operating
revenues and income from operations of ATX. CoreComm acknowledges that there are
uncertainties inherent in attempting to make such estimates, projections and
other forecasts and plans, that CoreComm is familiar with such uncertainties,
that CoreComm is taking full responsibility for making its own evaluation of the
adequacy and accuracy of all estimates, projections and other forecasts and
plans so furnished to it (including the reasonableness of the assumptions
underlying such estimates, projections and forecasts), and that CoreComm shall
have no claim against ATX, or any of its Affiliates with respect thereto.
Accordingly, ATX makes no representation or warranty with respect to such
estimates, projections
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and other forecasts and plans (including the reasonableness of the assumptions
underlying such estimates, projections and forecasts).
5.10 Letters from Accountants; New Financial Statements.
(a) CoreComm shall use its reasonable best efforts to cause
to be delivered to ATX "cold comfort" letters of Ernst & Young LLP its
independent public accountants, dated the date on which the Registration
Statement shall become effective and as of the Effective Time, respectively, and
addressed to ATX, in form and substance reasonably satisfactory to ATX and
comparable in scope and substance to letters customarily delivered by
independent public accountants in connection with registration statements
similar to the Registration Statement and transactions such as the transactions
contemplated by this Agreement.
(b) On or prior to March 15, 2000, ATX shall provide to
CoreComm revised versions of the ATX Financial Statements and the revised ATX
Balance Sheet, which will present the combined balance sheets of the ATX
Partnerships at December 31, 1997, December 31, 1998 and December 31, 1999 and
the related combined statements of income, shareholder's equity and changes in
financial position for the years then ended, including the footnotes thereto,
and shall be certified by BDO Xxxxxxx, LLP, and shall fairly present the
consolidated financial position of ATX and/or the ATX Partnerships at such dates
and the consolidated results of operations of the ATX Partnerships and their
subsidiaries for such respective periods, in each case in accordance with
generally accepted accounting principles consistently applied for the periods
covered thereby. (The foregoing consolidated financial statements of ATX and the
ATX Partnerships are herein called the "GAAP Audited Financials.") Prior to the
filing of the Registration Statement, ATX shall use its reasonable best efforts
to cause its accountants to supply to CoreComm the GAAP Audited Financials.
(c) ATX shall use its reasonable best efforts to cause to be
delivered to CoreComm "cold comfort" letters of BDO Xxxxxxx LLP, its independent
public accountants, dated the date on which the Registration Statement shall
become effective and as of the Effective Time, respectively, and addressed to
CoreComm in form and substance reasonably satisfactory to CoreComm and
comparable in scope and substance to letters customarily delivered by
independent public accountants in connection with registration statements
similar to the Registration Statement and transactions such as the transaction
contemplated by this Agreement.
(d) ATX shall provide CoreComm with any and all further
financial statements or information which is necessary or advisable to prepare
or include in the Registration Statement.
5.11 Nasdaq Application. ATX shall promptly prepare and submit an
application to The Nasdaq National Market to list the shares of ATX Common Stock
to be issued in the Merger and the Recapitalization and shall use its best
efforts to cause such shares of ATX Common Stock to be approved for listing by
The Nasdaq National Market, subject to official notice of issuance, prior to the
Closing Date.
5.12 Stock Plans and Options. CoreComm currently intends to implement
a stock option plan under which award grants may be made to post-Effective Time
employees of ATX and its
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subsidiaries, and that such post-Effective Time employees shall include persons
who prior to the Effective Time were employees of ATX or its subsidiaries as
well as of CoreComm or its subsidiaries; it being understood that (i) nothing
set forth herein shall be deemed to grant to any specific employee of
post-Effective Time ATX or its subsidiaries any right to receive an option grant
under any such plan, and (ii) the decision as to whether or not any such plan
shall be implemented, the terms of any such stock option plan, and the terms of
any grant made thereunder, shall be within the discretion of post-Effective Time
ATX, its board of directors, and any committee of such board which may
administer such plan.
5.13 Access and Investigations. Prior to the Closing Date, ATX agrees
that CoreComm shall be entitled to, through its employees and representatives,
including Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx, and Xxxxx & Xxxxx LLP
(collectively, their "Representatives"), to make such investigation of the
properties, businesses and operations of ATX, and such examination of the books,
records and financial condition of ATX, as it wishes. Any such investigation and
examination shall be conducted at a reasonable time, upon reasonable advance
notice and under reasonable circumstances and ATX shall cooperate fully therein;
provided, however, that no such investigation or examination shall interfere
with the day-to-day operations of ATX. No investigation by CoreComm shall
diminish or obviate any of the representations, warranties, covenants or
agreements of ATX contained in this Agreement. In order that CoreComm may have
full opportunity to make such physical, business, accounting and legal review,
examination or investigation as it may wish of the affairs of ATX, ATX shall
make available to the Representatives during such period all such information
and copies of documents concerning the affairs of ATX as the Representatives may
reasonably request, and shall permit the Representatives access to the
properties of ATX in all parts thereof.
5.14 Communications Licenses and Authorizations. ATX shall obtain and
maintain in full force and effect all Permits, and any renewals thereof, from
the FCC and any appropriate State PUC and any municipal authority, and make all
filings and reports and pay all fees reasonably necessary or required for the
continued operation of its business, as and when such Permits, filings or
reports are necessary or required, other than any Permits, filings or reports
which would not, individually or in the aggregate, have a Material Adverse
Effect.
5.15 FCC/State PUC Applications.
(a) As promptly as practicable after the execution and
delivery of this Agreement, ATX shall prepare and deliver to CoreComm ATX's
completed portion of all appropriate applications for FCC State PUC and
municipal authority approval, and such other documents as may be required, with
respect to the assignment of ATX's Permits to CoreComm (collectively, the
"FCC/State PUC Applications"). As promptly as practicable after the execution
and delivery of this Agreement, CoreComm shall prepare and deliver to ATX,
CoreComm's portion of all appropriate FCC/State PUC Applications. As soon as
practical after the execution and delivery of this Agreement, the parties shall
file, or cause to be filed, the FCC/State PUC Applications. If the Closing shall
not have occurred for any reason within any applicable initial consummation
period relating to the FCC's or the State PUCs grant of the FCC/State PUC
Applications, and neither ATX nor CoreComm shall have terminated this Agreement
pursuant to Section 8.1, CoreComm and ATX shall jointly request one or more
extensions of the consummation period of such grant. No party
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hereto shall knowingly take, or fail to take, any action if the intent or
reasonably anticipated consequence of such action or failure to act is, or would
be, to cause the FCC or State PUCs not to grant approval of the FCC/State PUC
Applications or materially delay either such approval or the consummation of the
assignment of Permits and the Customer Base of ATX.
(b) CoreComm and ATX shall each pay one-half of any FCC or
State PUC fees that may be payable in connection with the filing or granting of
approval of the FCC/State PUC Applications. Except as set forth in the
immediately preceding sentence, ATX and CoreComm each shall bear its own
expenses in connection with the preparation and prosecution of the FCC/State PUC
Applications. ATX and CoreComm each shall use its reasonable best efforts to
prosecute the FCC/State PUC Applications in good faith and with due diligence
before the FCC and the State PUCs, and in connection therewith shall take such
action or actions as may be necessary or reasonably required in connection with
the FCC/State PUC Applications, including furnishing to the FCC and the State
PUCs any documents, materials or other information requested by the FCC and the
State PUCs in order to obtain such approvals as expeditiously as practicable.
(c) Promptly upon execution of this Agreement, each of ATX
and CoreComm shall take all reasonable actions necessary to comply promptly with
all legal requirements which may be imposed on ATX or CoreComm, as the case may
be, with respect to this Agreement and the transactions contemplated hereby
(including furnishing all information required by the FCC or any state
regulatory agency or commission) and shall take all reasonable actions necessary
to cooperate promptly with and furnish information to CoreComm or ATX, as the
case may be, in connection with any such requirements imposed upon ATX or
CoreComm in connection with this Agreement and the transactions contemplated
hereby.
5.16 Stockholders Agreement. At or prior to the Closing, each of the
ATX Stockholders, CoreComm and ATX, shall execute and deliver to CoreComm the
Stockholders Agreement, substantially in the form attached as Exhibit C hereto.
5.17 Transition Services Agreement. At or prior to the Closing, each
of ATX and CoreComm shall execute and deliver the Transition Services Agreement,
substantially in the form attached as Exhibit D hereto.
5.18 Reincorporation and Acquisition. Notwithstanding anything to the
contrary contained herein, CoreComm shall be permitted to take any and all
action which may be deemed advisable or necessary (i) in order to provide for
the reincorporation of CoreComm from Bermuda to Delaware and (ii) to enter into
and consummate the potential transaction identified by CoreComm to ATX on March
6, 2000.
5.19 Termination of Agreements. At the Effective Time, all contracts
between ATX and the ATX Stockholders or any of their respective Affiliates or
family members (other than this Agreement, the Escrow Agreement, the
Indemnification Escrow Agreement and the Senior Management Employment Agreements
(as defined in Section 5.31)) shall be terminated and ATX shall have no further
liability or obligations thereunder, except that the leases identified on
Exhibit E shall continue in effect beyond the Effective Date but shall be
amended on the Effective Date as described on Exhibit E.
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5.20 Escrow Agreements. At or prior to the Closing, (i) each of ATX,
the ATX Stockholders, CoreComm and the escrow agent thereunder shall execute and
deliver the Escrow Agreement contemplated by Section 1.2, and (ii) each of ATX,
the ATX Stockholders and the Escrow Agent thereunder, shall execute and deliver
the Indemnification Escrow Agreement contemplated by Section 9.7, each of which
shall contain usual and customary terms and conditions for the transactions
contemplated hereby be in such form as shall be reasonably satisfactory to the
respective parties thereto and CoreComm.
5.21 Phantom Unit Plan. At the Effective Time, ATX Stockholders shall
take all actions reasonably required to satisfy ATX's obligations pursuant to
ATX's 1998 Phantom Unit Plan, all of which funds and/or securities utilized to
satisfy such obligations shall be derived from the Exchange Consideration, as
further delineated on Exhibit F hereto. ATX shall use its reasonable best
efforts to cause each Person receiving any consideration in satisfaction of
ATX's obligations pursuant to the 1998 Phantom Unit Plan to agree to enter into
agreements that include the terms outlined on Exhibit I.
5.22 Name. Following the Effective Time, the parties hereto shall
cooperate and take all actions required to cause ATX's name to be changed from
"ATX Telecommunications Services, Inc." to "CoreComm Limited".
5.23 Existing Stockholders' Agreement. On the Closing Date, the ATX
Stockholders and ATX shall terminate that certain Stockholders' Agreement dated
as of February 9, 2000 by and among Buruchian, Gravina, Xxxx and ATX (the
"Existing Stockholders' Agreement").
5.24 Negotiation of Term Sheets. Promptly following the date of
execution of this Agreement, ATX, CoreComm and the ATX Stockholders shall
negotiate the agreements or instruments contemplated by the term sheets
identified in Sections 1.2 and 5.19 of this Agreement, each of which shall be
consistent with such term sheets and otherwise be in form and substance
reasonably satisfactory to such parties..
5.25 Operating Subsidiaries. Notwithstanding anything to the contrary
contained herein, ATX shall at the request of CoreComm take any and all action
which may be reasonably requested to place its operating assets at or
immediately prior to the Closing into one or more wholly-owned operating
subsidiaries.
5.26 Subchapter S Election. Notwithstanding anything to the contrary
contained herein, ATX shall take, and shall be permitted to take, any and all
action which may be deemed advisable or necessary in order to file Subchapter S
elections for the purposes of state and federal income taxes.
5.27 Assignment of Reimbursement Rights. As of the Effective Time,
ATX shall assign any right to reimbursement from health and welfare providers to
the ATX Stockholders.
5.28 Certificate of Incorporation, Etc. Each of CoreComm, ATX and the
ATX Stockholders shall use their best efforts to ensure that the Certificate
Incorporation and then By-laws
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of ATX immediately prior to the Effective Time shall be in the forms requested
by CoreComm. ATX shall take such action as may be necessary to effect Section
1.6 of this Agreement.
5.29 CoreComm Transactions. If prior to the Closing Date CoreComm
shall enter into a definitive agreement for a CoreComm Transaction, CoreComm
shall promptly notify ATX of such transaction. Nothing set forth in this
Agreement shall be deemed to prohibit or otherwise limit CoreComm from pursuing
and entering into agreements for or consummating CoreComm Transactions.
5.30 Protective Agreements. ATX shall insure that as of the Closing
Date each then current employee of ATX shall have executed ATX's standard
non-solicitation/confidentiality agreement in substantially the form previously
delivered to CoreComm.
5.31 Key Employee Employment Agreements. ATX shall use its reasonable
best efforts to enter into employment agreements to be effective from the
Closing Date with 15 key and/or management employees of ATX identified by
CoreComm (the "Identified Employees"), which employment agreements (the "Key
Employee Employment Agreements") shall contain the terms set forth on Exhibit I,
and shall also be otherwise in form and substance reasonably satisfactory to
CoreComm.
5.32 Xxxxxxx and Buruchian Employment Agreements. ATX shall offer to
enter into, and shall cause each of Xxxxxxx and Xxxxxxxxx to enter into new
employment agreements with ATX to take effect on the Closing Date, which
agreements (the "Senior Management Employment Agreements") shall contain the
terms set forth on Exhibit I and shall otherwise be in form and substance
reasonably satisfactory to CoreComm.
5.33 Transaction Not Subject to Outside Conditions. The parties agree
that their respective obligations to consummate the transactions contemplated
hereby shall not be subject to, or intentionally delayed by any party hereto
pending satisfaction of, any condition not expressly provided for herein.
5.34 Working Capital Loans. If CoreComm requests ATX to make capital
expenditures following July 31, 2000, CoreComm shall loan to ATX the amount
required to fund such capital expenditures. Any such loan shall be at reasonable
commercial terms and collateral for a loan from CoreComm. If this Agreement
shall be terminated prior to the consummation of the Merger, all amounts
advanced by CoreComm to ATX shall be repaid, together with accrued unpaid
interest to the date of repayment and without set-off, not later than ten days
following such termination.
VI. CONDITIONS TO OBLIGATIONS OF CORECOMM
The obligations of CoreComm under this Agreement are subject to the
satisfaction or waiver (such waiver being the exclusive right of CoreComm), at
or before the Closing, of each of the following conditions:
6.1 Representations and Warranties. Each of the representations and
warranties of ATX contained herein, and the statements contained in any
schedule, instrument, list, certificate or writing
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delivered by ATX pursuant to this Agreement, that is qualified as to materiality
or Material Adverse Effect or which are contained in Section 3.5(b) shall be
true and correct as of the date when made and as of the Closing Date as if made
at and as of the Closing Date and each of such representations, warranties and
statements (other than those in Section 3.5(b)) that is not so qualified shall
be true and correct in all material respects as of the date when made and as of
the Closing Date as if made at and as of the Closing Date (except, in each case,
for those representations, warranties and statements that address matters only
as of a particular date, in which case they shall be true and correct, or true
and correct in all material respects, as applicable, as of such date).
6.2 Performance. ATX shall have performed and complied with all
agreements, obligations, covenants and conditions required by this Agreement to
be performed or complied with by ATX at or prior to the Closing that are
qualified as to materiality or Material Adverse Effect and shall have performed
and complied in all material respects with all other agreements, obligations,
covenants and conditions required by this Agreement to be performed or complied
with by ATX at or prior to the Closing that are not so qualified as to
materiality.
6.3 No Proceeding or Litigation. There shall not be instituted or
pending any suit, action, investigation, inquiry or other proceeding by or
before any court or governmental or other regulatory or administrative agency or
commission requesting or looking toward an order, judgment or decree that
restrains or prohibits the consummation of the transactions contemplated hereby.
6.4 No Injunction. No statute, rule, regulation, executive order,
decree or injunction shall have been enacted, entered, promulgated or enforced
by any court or governmental authority that prohibits the consummation of the
transactions contemplated hereby.
6.5 Officer's Certificates. The Chief Executive Officer of ATX shall
have delivered to CoreComm a certificate, dated the Closing Date, certifying the
fulfillment of the conditions specified in Sections 6.1, 6.2 and 6.3.
6.6 Consents and Approvals. All Licenses, Permits, consents,
approvals and authorizations of all third parties and Governmental Entities
shall have been obtained that are necessary in connection with the execution and
delivery by ATX of this Agreement, or the consummation by ATX of the
transactions contemplated hereby, and shall be in full force and effect, and
copies of all such Licenses, Permits, consents, approvals and authorizations
shall have been delivered to CoreComm, except to the extent that such lack of
approval or delivery would not have a Material Adverse Effect on ATX following
consummation of the transactions contemplated hereby.
6.7 HSR Act. The waiting period (and any extension thereof)
applicable to the consummation of the transactions contemplated hereby under the
HSR Act, if applicable, shall have expired or been terminated.
6.8 No Material Adverse Change. From the date of this Agreement
through the Closing Date, there shall not have occurred any change in the
financial condition, business or operations of ATX that would individually or in
the aggregate, have a Material Adverse Effect.
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6.9 Stockholder Approval. This Agreement and the Domestication
Merger shall have been approved in the manner required under applicable law by
the holders of the issued and outstanding shares of capital stock of CoreComm.
6.10 FCC/State PUC Consents. The FCC and State PUCs shall have
granted by Final Order the FCC/State PUC Consent Applications, without
conditions, qualifications or other restrictions that are likely to have a
Material Adverse Effect whether imposed by the FCC or any other Governmental
Entity.
6.11 Registration Statement. The Registration Statement shall have
become effective under the Securities Act and shall not be subject of any stop
order or proceedings seeking a stop order.
6.12 Transition Services Agreement. ATX and UHC shall have executed
and delivered the Transition Services Agreement, which shall remain in full
force and effect.
6.13 Resignations. All resignations of directors and officers of ATX
which have been previously requested in writing by CoreComm shall have been
delivered to CoreComm.
6.14 The GAAP Financial Statements of ATX. CoreComm shall have
received the GAAP Audited Financials with no qualifications that would prevent
the inclusion of such financial statements in any SEC filing of CoreComm or ATX.
6.15 Stockholders' Agreement. The ATX Stockholders and ATX shall have
executed and delivered to CoreComm the ATX Stockholders' Agreement, which shall
remain in full force and effect.
6.16 NASDAQ Listing. The ATX Common Stock to be issued in the Merger
and the Recapitalization pursuant to this Agreement shall have been authorized
for listing on the NASDAQ National Market, subject to official notice of
issuance.
6.17 Formation of ATX Merger Sub. ATX Merger Sub shall have been
incorporated and capitalized as described in Section 1.1.
6.18 Escrow Agreement. ATX, the ATX Stockholders and the Escrow Agent
shall have executed and delivered the Escrow Agreement, which shall remain in
full force and effect.
6.19 Opinions of Counsel.
(a) Since the date of this Agreement, there shall have been
no change in applicable law or interpretations thereof, or any change in facts
(including the discovery of any facts not known as of the date of this
Agreement) or circumstance, which shall have prevented Xxxx, Weiss, Rifkind,
Xxxxxxx & Xxxxxxxx, counsel to CoreComm, on the Closing Date, from delivering to
CoreComm a written opinion of such firm to the effect that for federal income
tax purposes the Merger and Recapitalization will constitute an exchange to
which Section 351 of the Code applies or a reorganization within the meaning of
Section 368(a) of the Code, or both.
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(b) CoreComm shall have received an opinion, dated the
Closing Date, from ATX's telecommunications regulatory counsel, substantially in
the form agreed to by the parties.
(c) CoreComm shall have received an opinion, dated the
Closing Date, from Klehr, Harrison, Xxxxxx, Branzburg and Xxxxxx LLP,
substantially in the form agreed to by the parties.
6.20 Corporate Governance. ATX shall have taken all actions necessary
so that not later than the Closing Date, the composition of the Board of
Directors and each committee of the Board of Directors and each officer of ATX
shall be the same as those for CoreComm immediately prior to the Effective Date.
6.21 Necessary Consents. ATX shall have obtained all material
consents and approvals, including, but not limited to, any waivers, consents or
approval, in connection with the agreements (including any amendments thereto)
set forth on Exhibit H hereto, and each shall be in full force and effect.
6.22 Existing Stockholders' Agreement. The Existing Stockholders'
Agreement shall have been terminated and ATX shall have no further or continuing
obligations thereunder.
6.23 Employment Matters. ATX shall have entered into Key Employee
Employment Agreements in form and substance reasonably acceptable to CoreComm
with at least 5 Identified Employees so long as CoreComm has complied with its
obligation to offer employment to the Identified Employees as set forth on
Exhibit I. In addition, at least 50% of the persons receiving consideration in
satisfaction of ATX's obligations under the 1998 Phantom Unit Plan, plus all
Identified Employees shall have entered into agreements relating to Phantom
Unitholders as set forth on Exhibit I.
VII. CONDITIONS TO OBLIGATIONS OF ATX
The obligations of ATX under this Agreement are subject to the
satisfaction or waiver (such waiver being the exclusive right of ATX), at or
before the Closing, of each of the conditions set forth in this Article VII. In
the event that CoreComm undertakes any action contemplated by the definition of
Base Adjustments in Section 1.2(i) prior to the Closing, no condition set forth
in this Article VII shall be deemed not to be satisfied if, but for such action
or the consequences thereof, such condition would otherwise be satisfied.
7.1 Representations and Warranties. Each of the representations and
warranties of CoreComm contained herein, and the statements contained in any
schedule, instrument, list, certificate or writing delivered by CoreComm
pursuant to this Agreement, that is qualified as to materiality or Material
Adverse Effect shall be true and correct as of the date when made and as of the
Closing Date if made at and as of the Closing Date and each of such
representations, warranties and statements that is not so qualified shall be
true and correct in all material respects as of the date when made and as of the
Closing Date as if made at and as of the Closing Date (except, in each case, for
those representations, warranties and statements that address matters only as of
a particular date,
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in which case they shall be true and correct, or true and correct in all
material respects, as applicable, as of such date).
7.2 Performance. CoreComm shall have performed and complied with all
agreements, obligations, covenants and conditions required by this Agreement to
be performed or complied with by CoreComm at or prior to the Closing that are
qualified as to materiality or Material Adverse Effect and shall have performed
and complied in all material respects with all other agreements, obligations,
covenants and conditions required by this Agreement to be performed or complied
with by CoreComm at or prior to the Closing that are not so qualified as to
materiality.
7.3 No Proceeding or Litigation. There shall not be threatened,
instituted or pending any suit, action, investigation, inquiry or other
proceeding by or before any court or governmental or other regulatory or
administrative agency or commission requesting or looking toward an order,
judgment or decree that restrains or prohibits the consummation of the
transactions contemplated hereby.
7.4 No Injunction. No statute, rule, regulation, executive order,
decree or injunction shall have been enacted, entered, promulgated or enforced
by any court or governmental authority which prohibits the consummation of the
transactions contemplated hereby.
7.5 Officer's Certificate. CoreComm shall have delivered to ATX a
certificate, dated the Closing Date, executed by the Chief Executive Officer of
CoreComm, certifying to the fulfillment of the conditions specified in Sections
7.1, 7.2 and 7.3.
7.6 Consents and Approvals. All Licenses, Permits, consents,
approvals and authorizations of all third parties and Governmental Entities
shall have been obtained that are necessary in connection with the execution and
delivery by CoreComm of this Agreement, or the consummation by CoreComm of the
transactions contemplated hereby and shall be in full force and effect and
copies of all such Licenses, Permits, consents, approvals and authorizations
shall have been delivered to ATX, except to the extent such lack of approval or
delivery would not have a Material Adverse Effect on ATX following consummation
of the transactions contemplated hereby.
7.7 HSR Act. The waiting period (and any extension thereof)
applicable to the consummation of the transactions contemplated hereby under the
HSR Act, if applicable, shall have expired or been terminated.
7.8 Registration Rights Agreement. ATX, CoreComm and each of the ATX
Stockholders shall have entered into a Registration Rights Agreement in the form
attached hereto as Exhibit G.
7.9 FCC/State PUC Consents. The FCC shall have granted by Final
Order and the State PUCs shall have granted the FCC/State PUC Consent
Applications, without conditions, qualifications or other restrictions that are
likely to have a Material Adverse Effect, whether imposed by the FCC or any
other Governmental Entity.
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7.10 No Material Adverse Change. From the date of this Agreement
through the Closing Date, there shall not have occurred any change in the
financial condition, business or operations of CoreComm that would have a
Material Adverse Effect.
7.11 Registration Statement. The Registration Statement shall have
become effective under the Securities Act and shall not be subject of any stop
order or proceedings seeking a stop order.
7.12 Tax Opinion. Since the date of this Agreement, there shall have
been no change in law or interpretations thereof, or changes in facts (including
the discovery of facts not known as of the date of this Agreement) or
circumstances, which shall have prevented Klehr, Harrison, Xxxxxx, Branzburg &
Xxxxxx LLP, counsel to ATX, on the Closing Date, from delivering to ATX a
written opinion of such firm to the effect that for federal income tax purposes
the Merger and Recapitalization will constitute an exchange to which Section 351
of the Code applies or a reorganization within the meaning of Section 368(a) of
the Code, or both.
7.13 Letters of Credit. Effective on the Closing Date, arrangements
shall have been made to replace or effectively relieve Xxxx or his Affiliates
(other than ATX or one of its subsidiaries) of liability under any letter of
credit issued on behalf of ATX which has been guaranteed or secured by Xxxx or
one of his Affiliates (other than ATX or one of its subsidiaries).
VIII. TERMINATION OF AGREEMENT
8.1 Termination of Agreement. This Agreement may be terminated at
any time prior to the Closing:
(a) by mutual agreement of ATX and CoreComm;
(b) by CoreComm, on or after the later of (x) October 31,
2000, or (y) 120 days following the date on which CoreComm last made an initial
announcement that it had entered into a definitive agreement for a CoreComm
Transaction, if any of the conditions provided in Article 6 of this Agreement
have not been satisfied and have not been waived in writing by CoreComm prior to
such date; provided that, in the case of a failure to satisfy the conditions set
forth in Section 6.3 as a result of a suit, action, investigation, inquiry or
other proceeding or Section 6.4 as a result of an order, decree or injunction,
CoreComm shall have used its reasonable best efforts to remove such suit,
action, investigation, inquiry or other proceeding in the case of Section 6.3 or
such order decree or injunction in the case of Section 6.4;
(c) by ATX on or after October 31, 2000, if any of the
conditions provided in Article 7 of this Agreement have not been satisfied and
have not been waived in writing by ATX prior to such date; provided that, in the
case of a failure to satisfy the conditions set forth in Section 7.3 as a result
of a suit, action, investigation, inquiry or other proceeding or Section 7.4 as
a result of an order, decree or injunction, ATX shall have used its reasonable
best efforts to remove such suit, action, investigation, inquiry or other
proceeding in the case of Section 7.3 or such order, decree or injunction in the
case of Section 7.4;
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(d) by CoreComm if ATX breaches in a material respect any of
its representations, warranties or covenants contained in this Agreement and
such breach would give rise to the condition under Section 6.1 or 6.2 not being
satisfied and which breach cannot be or is not cured by the Closing Date; or
(e) by ATX if CoreComm breaches in a material respect any of
it representations, warranties or covenants contained in this Agreement and such
breach would give rise to the condition under Section 7.1 or 7.2 not being
satisfied and which breach cannot be or is not cured by the Closing Date.
8.2 Procedure Upon Termination.
(a) In the event of termination pursuant to Section 8.1,
written notice thereof shall immediately be given by the terminating party to
the other party and the transaction contemplated by this Agreement shall be
terminated, without further action or obligation on the part of either party
except as set forth in this Section 8.2, , except that any such termination
shall be without prejudice to the rights of any party on account of
nonsatisfaction of the conditions set forth in Articles 6 or 7 resulting from
the intentional or willful breach or violation of the representations,
warranties, covenants or agreements of another party under this Agreement.
(b) ATX, on the one hand, and CoreComm on the other hand,
shall return all documents, work papers and other material of the other parties
relating to the transaction contemplated hereby, whether obtained before or
after the execution hereof, to the party furnishing such items;
(c) all confidential information received by ATX or CoreComm
with respect to the business of the other parties or their Affiliates shall be
treated in accordance with Section 5.4.
IX. INDEMNIFICATION
9.1 Indemnification by ATX Stockholders. Subject to the limitations
set forth in this Article 9, and as an inducement to prompt CoreComm to enter
into this Agreement (without which such inducement CoreComm would not have
entered into this Agreement), each of the ATX Stockholders hereby agree, jointly
and severally, to indemnify and hold harmless ATX from and after the Closing
against and with respect to any and all claims, demands, losses, costs,
expenses, obligations, liabilities, damages, recoveries, and deficiencies,
including interest, penalties, and reasonable fees and expenses of attorneys,
experts, personnel and consultants incurred by the Indemnified Party (as defined
herein) (including in any action or proceeding between the Indemnifying Party
(as defined herein) and the Indemnified Party or between the Indemnified Party
and any third party or otherwise) (together referred to as "ATX Losses")
resulting from (i) any breach of a representation, warranty, covenant, or
agreement made by ATX, ATX Merger Sub, or any of the ATX Stockholders, in this
Agreement, the ATX Disclosure Schedules or any other certificate or document
delivered by ATX, ATX Merger Sub or any of the ATX Stockholders to CoreComm
pursuant to this Agreement each of which representation, warranty, covenant or
agreement shall be considered without regard to any materiality or Material
Adverse Effect qualification therein for purposes of determining whether a
breach has occurred, and any and all
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demands, claims, actions, suits or proceedings, assessments, judgments, costs
and legal and other expenses incident to the foregoing, and (ii) the failure of
ATX to have either applied for or obtained any necessary regulatory
authorization or approval from any state public utilities commission or
comparable entity (regardless of whether or not such failure is disclosed in the
ATX Disclosure Schedule) in any state in which ATX had in excess of $25,000 of
revenues from intra-state operations in calendar year 1999.
9.2 Procedures for Indemnification.
(a) Promptly after receipt by a party (the "Indemnified
Party") of notice of the commencement of any action by a person not a party to
this Agreement involving the subject matter of the foregoing indemnity
provisions other than with respect to Taxes (a "Third Party Suit"), such
Indemnified Party shall, if a claim thereof is to be made against another party
hereto (the "Indemnifying Party") pursuant to the provisions of Section 9.1,
promptly notify such Indemnifying Party of the commencement thereof; but the
omission to so notify such Indemnifying Party will not relieve it from any
liability which it may have to the Indemnified Party to the extent the
Indemnifying Party was not prejudiced by such omission.
(b) The Indemnifying Party shall have ten (10) days from
receipt of such notice to notify the Indemnified Party whether or not it
disputes its liability to the Indemnified Party with respect to such Third Party
Suit and whether or not it desires, at its sole cost and expense, to defend such
Third Party Suit. If the Indemnifying Party shall so notify the Indemnified
Party that it desires to defend against such Third Party Suit, the Indemnifying
Party shall have the right to defend against such Third Party Suit (unless (i)
the Indemnifying Party is also a party to such Proceeding and the Indemnified
Party determines in good faith that joint representation would be inappropriate,
or (ii) the Indemnifying Party fails to provide reasonable assurance to the
Indemnified Party of its financial capacity to defend such Proceeding and
provide indemnification with respect to such Proceeding), with counsel
reasonably satisfactory to such Indemnified Party, by appropriate proceedings
which shall be promptly settled or prosecuted by the Indemnifying Party, so long
as it diligently conducts such defenses, to a final conclusion such that a (i)
it will be conclusively established for purposes of this Agreement that the
claims made in that Proceeding are within the scope of and subject to
indemnification; (ii) no compromise or settlement of such claims may be effected
by the Indemnifying Party without the Indemnified Party's consent unless (A)
there is no finding or admission of any violation of Laws or any violation of
the rights of any Person and no effect on any other claims that may be made
against the Indemnified Party, and (B) the sole relief provided is monetary
damages that are paid in full by the Indemnifying Party; and (iii) the
Indemnified Party will have no liability with respect to any compromise or
settlement of such claims effected without its consent and the Indemnified Party
shall receive a full release. The Indemnified Party may elect to participate in
any such contest at its own cost and expense; provided, however, that the
control of such contest shall rest primarily with the Indemnifying Party.
(c) Notwithstanding the foregoing (i) if the defendants in
any action include both the Indemnified Party and the Indemnifying Party and the
Indemnified Party shall have reasonably concluded that there may be legal
defenses available to it which are different from or additional to those
available to the Indemnifying Party, or if there is a conflict of interest which
would prevent counsel for the Indemnifying Party from also representing the
Indemnified Party, the Indemnified
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Party shall have the right to select separate counsel to participate in the
defense of such Third Party Suit on behalf of such Indemnified Party, at the
cost of the Indemnified Party; and (ii) in the event that such Third Party Suit
involves potentially criminal or fraudulent activity of an Indemnifying Party,
the Indemnified Party shall have the right, at its sole option, to defend such
Third Party Suit at the expense of the Indemnifying Party.
(d) If the Indemnifying Party shall fail to elect to defend
against such Third Party Suit, then the amount of any such Third Party Suit,
including all losses, judgments, expenses and costs incurred by the Indemnified
Party in connection with any defense thereof shall be deemed to be a liability
of the Indemnifying Party hereunder.
(e) After notice from the Indemnifying Party to such
Indemnified Party of its election to assume the defense thereof, the
Indemnifying Party shall not be liable to the Indemnified Party pursuant to the
provisions of Sections 9.1 for any legal or other expense subsequently incurred
by such Indemnified Party in connection with the defense thereof other than
reasonable costs of investigation, unless (i) the Indemnified Party shall have
employed counsel in accordance with Subsection (c) above, (ii) the Indemnifying
Party shall not have employed counsel reasonably satisfactory to the Indemnified
Party to represent the Indemnified Party within a reasonable time after the
notice of the commencement of the action, or (iii) the Indemnifying Party has
authorized the employment of counsel for the Indemnified Party at the expense of
the Indemnifying Party.
(f) In the event the Indemnified Party shall have any claim
against the Indemnifying Party hereunder which does not involve a claim or
demand by or against a third party, the Indemnified Party shall promptly notify
the Indemnifying Party of such claim, providing reasonable details of the facts
giving rise to the claim and a statement of the Indemnified Party's Loss in
connection with the claim, to the extent such Loss is then known to the
Indemnified Party and, otherwise, an estimate of the amount of the Loss that it
reasonably anticipates that it will incur or suffer; however, failure by the
Indemnifying Party to give notice shall not prejudice any rights contained
herein.
9.3 Cooperation in Defense. In case of any claim, arbitration or
legal proceeding, the defense of which is assumed by an Indemnifying Party in
accordance with this Article 9, the Indemnified Party, upon request of the
Indemnifying Party, shall provide reasonable cooperation (at the expense of the
Indemnifying Party in accordance with this Article 9) in the defense thereof.
9.4 Limitations on Indemnification by ATX Stockholders.
Notwithstanding Section 9.1 or any other provision of this Agreement or
applicable law, the ATX Stockholders' aggregate liability for ATX Losses
indemnified pursuant to Section 9.1 is subject to the following limitations:
(a) The ATX Stockholders shall have no liability for any ATX
Loss unless notice of a claim for such ATX Loss, specifying in reasonable detail
the basis for such claim, is made upon ATX Stockholders prior to the expiration
of the survival periods set forth in Section 10.1. The ATX Stockholders' maximum
aggregate liability for ATX Losses shall be $250,000,000; plus the aggregate
amount of any costs, charges and expenses (including without limitation legal
expenses) incurred by ATX and CoreComm in bringing or enforcing any claims
against the ATX Stockholders under this Agreement.
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(b) The ATX Stockholders shall be liable for ATX Losses
(other than ATX Losses due to or arising out of any inaccuracy in or any breach
of a representation, warranty, covenant or agreement of ATX, ATX Merger Sub or
the ATX Stockholders contained in Sections 3.1, 3.2, 3.3 and 3.20) (the "Basket
Exclusions"), only if and to the extent that the aggregate ATX Losses exceed
$10,000,000; provided, however, that the ATX Stockholders shall be liable only
for amounts in excess of $5,000,000 (including the Basket Exclusions); provided
further that the ATX Stockholders shall be liable for all ATX Losses related to
the Basket Exclusions.
9.5 Mitigation of Losses.
(a) ATX Losses shall be subject to appropriate mitigation
for (i) any actual recovery from third parties (less attorneys' fees, expenses
and other costs of recovery), (ii) the actual collection of insurance proceeds
(less attorneys' fees, expenses and other costs of recovery, net of any
adjustments to the corresponding insurance premiums).
(b) Where an Indemnified Party is entitled (whether by right
of indemnity, reimbursement or any other means) to recover from any Person (not
being any employee or officer of an Indemnified Party, but including its or
their insurers) any sum with respect to any matter giving rise to a claim, then
(subject first to being indemnified and secured to the reasonable satisfaction
of an Indemnified Party against all costs, expenses, tax or other liabilities
which may be thereby incurred) the Indemnified Party shall take all reasonable
steps to enforce such recovery (keeping the Indemnifying Party fully informed of
the progress of any action taken) and account to the Indemnifying Party for any
net amounts that are recovered (not exceeding the amount previously paid by the
Indemnifying Party and after first taking account of any liability or loss of
the Indemnified Party with respect to which the Indemnifying Party is not
liable).
9.6 Exclusivity. Following the Closing, the remedies (subject to the
limitations) set forth in this Article 9 shall be the sole remedy for claims for
liability for ATX Losses arising under this Agreement.
9.7 Indemnification Escrow. Upon the Recapitalization, 27% of the
shares of ATX Common Stock comprising the Exchange Consideration shall be
deposited in escrow (the "Indemnification Escrow") pursuant to an escrow
agreement among ATX, each ATX Stockholder and an escrow agent selected by such
parties with the consent of CoreComm (the "Indemnification Escrow Agreement").
Such shares (together with any distributions thereon or the proceeds from the
sales thereof) shall be held in the Indemnification Escrow subject to the terms
of the Indemnification Escrow Agreement to secure the indemnification
obligations of the ATX Stockholders under Section 9.1 hereof, and such assets
shall be held and disbursed in accordance with the terms of the Indemnification
Escrow Agreement. In the event of any claim by ATX against such assets, the
shares of ATX Common Stock shall be valued at the closing price on the business
day immediately preceding the date on which such shares are to be disbursed to
an Indemnified Party in accordance with the terms of the Indemnification Escrow
Agreement.
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X. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
10.1 ATX, ATX Merger Sub and ATX Stockholders. Notwithstanding the
right of CoreComm to investigate fully the affairs of ATX, ATX Merger Sub and
the ATX Stockholders and notwithstanding any knowledge of facts determined or
determinable by CoreComm pursuant to such investigation or right of
investigation, CoreComm shall have the right to rely fully upon the
representations, warranties, covenants and agreements of ATX, ATX Merger Sub and
the ATX Stockholders contained in this Agreement or in any document or
certificate delivered pursuant to this Agreement. All such representations,
warranties, covenants and agreements shall survive the execution and delivery of
this Agreement and the Closing hereunder. Except for those representations and
warranties set forth in Section 3.3 hereof (all of which representations and
warranties shall survive without limitation as to time), all representations and
warranties of ATX and ATX Merger Sub contained in this Agreement shall expire
(i) April 30, 2001, and (ii) with respect to any claim related to taxes or
environmental representations and warranties, on the date upon which the
liability to which any such claim may relate is barred by all applicable statues
of limitations.
10.2 CoreComm. None of the representations, warranties, covenants and
agreements of CoreComm contained in this Agreement or in any document or
certificate delivered pursuant to this Agreement shall survive the Closing
hereunder other than those covenants that by their terms are to be performed
after the Closing.
XI. MISCELLANEOUS
11.1 Expenses. Except as otherwise provided herein, each party hereto
shall pay all fees and expenses incurred by it in connection with this
Agreement.
11.2 Further Assurances. Following the Closing, at the request of any
party, the other party or parties shall deliver any further instruments of
transfer and take all commercially reasonable actions as may be necessary or
appropriate to effectuate any of the other transactions contemplated by this
Agreement.
11.3 Parties in Interest. This Agreement shall be binding upon, inure
to the benefit of, and be enforceable by the respective successors and permitted
assigns of the parties hereto. The rights and obligations of CoreComm and ATX
hereunder may not be assigned, in whole or in part, without the prior written
consent of the other, which shall not be unreasonably withheld and any attempt
to make any such assignment without such consent shall be null and void.
11.4 Entire Agreement, Amendments and Waiver.
(a) This Agreement, the exhibits, the schedules and other
writings referred to herein or delivered pursuant hereto that form a part hereof
contain the entire understanding, both written and oral, of the parties with
respect to its subject matter. This Agreement supersedes all prior agreements
and understandings between the parties with respect to its subject matter.
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(b) This Agreement may be amended only by a written
instrument duly executed by each of the parties hereto. Any condition to a
party's obligations hereunder may be waived in writing by such party to the
extent permitted by law.
11.5 Interpretation. When a reference is made in this Agreement to
Articles, Sections, Exhibits or Schedules, such reference shall be to an Article
or Section of or Exhibit or Schedule to this Agreement unless otherwise
indicated. The table of contents, glossary of defined terms and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation." The words "hereof,"
"herein" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement. The term "or" is not exclusive.
11.6 Notices. All notices, claims, certificates, requests, demands
and other communications hereunder shall be in writing and shall be deemed to
have been duly given if delivered personally, by facsimile transmission or
mailed (registered or certified mail, postage prepaid, return receipt requested
or recognized overnight carrier) as follows:
If to CoreComm to: CoreComm Limited
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
with a copy to: Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
If to ATX: ATX Telecommunications Services, Inc.
00 Xxxxxxxx Xxxx
Xxxx Xxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
with a copy to: Klehr, Harrison, Xxxxxx, Branzburg & Xxxxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
or to such other address as the Person to whom notice is to be given may have
previously furnished to the others in writing in the manner set forth above,
provided that notice of a change of address shall be deemed given only upon
receipt.
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11.7 Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Delaware
without regard to its or any other jurisdiction's conflicts of law rules.
11.8 Submission to Jurisdiction; Waivers. Each of CoreComm and ATX
irrevocably agrees that any legal action or proceeding with respect to this
Agreement or for recognition and enforcement of any judgment in respect hereof
brought by any other party hereto or its successors or assigns may be brought
and determined in the Chancery Court of the State of Delaware or any federal
District Court in the State of Delaware, and irrevocably submits with regard to
any such action or proceeding for itself and in respect to its property,
generally and unconditionally, to the exclusive jurisdiction of such courts, and
agrees that service of process in any such action or proceeding shall be
effective if mailed to such party at the address specified in Section 11.6. Each
of CoreComm and ATX hereby irrevocably waives, and agrees not to assert, by way
of motion, as a defense, counterclaim or otherwise, in any action or proceeding
with respect to this Agreement, (a) any claim that it is not personally subject
to the jurisdiction of such courts for any reason other than the failure to
lawfully serve process, (b) that it or its property is exempt or immune from
jurisdiction of any such court or from any legal process commenced in such
courts (whether through service of notice, attachment prior to judgment,
attachment in aid of execution of judgment, execution of judgment or otherwise),
and (c) to the fullest extent permitted by applicable law, that (i) the suit,
action or proceeding in any such court is brought in an inconvenient forum, (ii)
the venue of such suit, action or proceeding is improper, (iii) this Agreement,
or the subject matter hereof, may not be enforced in or by such court and (iv)
any right to a trial by jury.
11.9 Third Parties. Nothing herein expressed or implied is intended
or shall be construed to confer upon or give to any person, other than the
parties hereto and their successors or permitted assigns, any rights or remedies
under or by reason of this Agreement.
11.10 Severability. If it is determined that any term or provision of
this Agreement is invalid, illegal or incapable of being enforced by any law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transaction contemplated hereby is not affected in any manner
materially adverse to any party. To such end, the provisions of this Agreement
are agreed to be severable. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transaction contemplated hereby is consummated as originally
contemplated to the greatest extent possible.
11.11 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be deemed to be an original and considered one
and the same agreement and shall become effective when one or more counterparts
have been signed by each of the parties and delivered (including by facsimile
transmission) to the other parties hereto, it being understood that all parties
need not sign the same counterpart.
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XII. DEFINED TERMS
12.1 Location of Certain Defined Terms. The following terms used in
this Agreement are defined in the Section indicated:
Term Section
Accountant 1.2
Accountant's Report 1.2
Adjustment Event 1.3
Agreement forepart
Applicable Amount 1.2
ATX forepart
ATX Balance Sheet 3.5
ATX Balance Sheet Date 1.2
ATX Bylaws 3.1
ATX Capital Expenditure Obligation 1.2
ATX Certificate of Incorporation 3.1
ATX Common Stock 1.2
ATX Debt 1.2
ATX Disclosure Schedule Article III
ATX Financial Statements 3.5
ATX Losses 9.1
ATX Merger Article III
ATX Merger Sub 1.1
ATX Merger Sub Common Stock 1.3
ATX Partnership Agreements 3.1
ATX Partnerships Article III
ATX Stockholders forepart
Authority 3.11
Base Adjustments 1.2
Base Stock Price 1.2
Basket Exclusions 9.4
Buruchian forepart
Capital Expenditure Adjustment 1.2
Capital Expenditures 1.2
Cash Consideration 1.2
Certificate of Merger 1.1
Certificate 1.4
Closing 2.1
Closing Date 2.1
Closing Exchange Consideration 1.2
Closing Financial Statements Delivery Date 1.2
Closing Stock Price 1.2
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Collar Stock Price 1.2
Code forepart
Communications Act 3.12
Communications Permits 3.10
Constituent Corporations 1.1
Contract 3.4
Controlled Group 3.17
Convertible Preferred Stock 1.2
CoreComm forepart
CoreComm Balance Sheet 4.5
CoreComm Balance Sheet Date 4.5
CoreComm Bylaws 4.1
CoreComm Common Stock 1.3
CoreComm Disclosure Schedule Article IV
CoreComm Memorandum of Association 4.1
CoreComm Merger Sub 1.1
CoreComm Merger Sub Common Stock 1.1
CoreComm SEC Reports 4.5
CoreComm Stock Plans 4.3
CoreComm Stockholders' Meeting 5.6
CoreComm Transaction 1.2
Current Market Price 1.2
Dispute Notice 1.2
DGCL 1.1
Domestication Merger 1.1
DOJ 5.7
Effective Time 1.1
Environmental Laws 3.19
ERISA 3.19
Escrow 1.2
Escrow Agreement 1.2
Estimated Closing ATX Debt 1.2
Estimated Closing Capital Expenditures 1.2
Estimated Closing Working Capital 1.2
Exchange Agent 1.4
Exchange Act 4.5
Exchange Consideration 1.2
Exchange Fund 1.4
FCC 5.7
FCC Consent Application 5.7
FCC Permits 3.10
FCC/State PUC Applications 5.16
Final ATX Debt 1.2
Final Capital Expenditure Adjustment 1.2
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Final Shortfall 1.2
Final Working Capital Excess 1.2
Final Working Capital Shortfall 1.2
Financial Closing Financial Statements 1.2
FTC 5.7
GAAP 1.2
GAAP Audited Financials 5.11
GAAP Balance Sheet 5.11
GAAP Balance Sheet Date 5.11
GAAP Interim Financials 5.11
Xxxxxxx forepart
HSR Act 3.12
Identified Employees 5.30
Indemnification Escrow 9.7
Indemnification Escrow Agreement 9.7
Indemnified Party 9.3
Indemnifying Party 9.3
Intellectual Property 3.16
Xxxx forepart
Xxxx Trust forepart
Key Employee Employment Agreements 5.30
Law 3.4
Laws 3.10
Legal Actions 3.8
Liabilities 3.6
Licenses 3.10
Liens 3.4
Losses 9.1
Material Decision 5.7
Merger 1.1
Merger Ratio 1.3
Monthly Period 1.2
Municipal Permits 3.10
Permits 3.10
Phantom Unit Plan 5.14
Pre-Closing Capital Expenditure Adjustment 1.2
Pre-Closing Financial Statements 1.2
Pre-Closing Working Capital Adjustment 1.2
Pro Formas 1.2
Proposed Closing Financial Statements 1.2
Proxy Statement 3.22
PUC 3.12
Recapitalization 1.2
Registration Statement 3.22
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Regulatory Law 5.8
Representatives 5.14
Representation Termination Date 9.3
Review Period 1.2
Rights Holders 7.8
Scheduled Intellectual Property 3.16
Securities Act 4.5
Senior Management Employment Agreements 5.31
Settlement Period 1.2
Stockholders 9.1
Stockholders' Representative 1.2
State Permits 3.10
State PUCs 3.10
Stockholders' Meetings 3.22
Subsidiary 1.3
Surviving Corporation 1.1
Third Party Suit 9.2
Taxes 3.11
Trigger Day 1.2
Unaudited 1999 Financials 3.5
Utilities Laws 3.12
Working Capital 1.2
Working Capital Shortfall 1.2
12.2 Other Defined Terms. As used in this Agreement, the following
terms have the meanings indicated:
"Affiliate" of a specified Person means a Person that directly
or indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, the Person specified.
"Benefit Plans" means, with respect to any Person, each employee
benefit plan, program, arrangement and contract (including, without limitation,
any "employee benefit plan," as defined in Section 3(3) of ERISA and any bonus,
incentive, deferred compensation, stock bonus, stock purchase, restricted stock,
stock option, employment, retention, termination, stay agreement or bonus,
change in control and severance plan, program, arrangement and contract) and on
the date of this Agreement, which is maintained or contributed to by such Person
or under which, on the date of this Agreement, such Person may have an actual or
contingent liability (excluding any plans or programs required to be maintained
or contributed to under the local law of the jurisdiction in which such person
is employed).
"Final Order" means an order, action or decision of a
Governmental Entity that has not been reversed, stayed, or enjoined and as to
which the time to appeal, petition for certiorari or seek reargument or
rehearing or administrative reconsideration or review has expired and as to
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which no appeal, reargument, petition for certiorari or rehearing or petition
for reconsideration or application for review is pending or as to which any
right to appeal, reargue, petition for certiorari or rehearing for
reconsideration or review has been waived in writing by each party having such a
right or, if any appeal, reargument, petition for certiorari or rehearing or
reconsideration or review thereof has been sought, the order or judgment of the
court or agency has been affirmed by the highest court (or the administrative
entity or body) to which the order was appealed or from which the argument or
rehearing or reconsideration or review was sought, or certiorari has been
denied, and the time to take any further appeal or to seek certiorari or further
reargument or rehearing, or reconsideration or review, has expired.
"Governmental Entity" means any government, court,
administrative agency or commission or other governmental authority or
instrumentality, domestic, foreign or supranational, or any quasi-governmental
or private body exercising any regulatory, taxing, importing or other
governmental or quasi-governmental authority.
"Knowledge" means the actual knowledge or notice of Gravina,
Buruchian, Xxxx or the Xxxx Trust or any officer or director of ATX, after due
inquiry.
"Material Adverse Effect" means, with respect to any entity, a
material adverse effect on its business, assets, operations or financial
condition, taken as a whole, other than any such effect arising out of or
resulting from general economic or financial conditions or changes in or
affecting the communications industry.
"Person" means an individual, corporation, limited liability
corporation, limited liability partnership, partnership, association, trust,
unincorporated organization, other entity or group (as defined in the Securities
Exchange Act of 1934, as amended).
XIII. ATX STOCKHOLDER COVENANTS
13.1 No Transfers. Each ATX Stockholder agrees that prior to the
Closing such ATX Stockholder will not, and will not contract to, sell or
otherwise pledge, encumber, transfer or dispose of such ATX Stockholder's
pre-Recapitalization shares of ATX shares or any interest therein other than (i)
pursuant to the Recapitalization or (ii) with CoreComm's prior written consent.
13.2 Cooperation; No Solicitation. Each ATX Stockholder hereby agrees
to cooperate reasonably with CoreComm and ATX in connection with the
consummation of the transactions contemplated thereby. Each ATX Stockholder
agrees that it will not, and will not cause or permit any of its affiliates, or
any of their respective officers, employees, representatives and agents,
directly or indirectly, to solicit, initiate or encourage any inquiries or the
making of any proposal with respect to an acquisition of ATX or its businesses
or assets, or such ATX Stockholder's pre-Recapitalization shares or provide
information to or negotiate, explore, otherwise engage in discussions with or in
any other way cooperate with any Person (other than CoreComm or its subsidiaries
or their respective directors, officers, employees, agents and representatives)
with respect to any such transaction or enter into any agreement, arrangement or
understanding requiring or causing ATX to abandon, terminate or fail to
consummate the transactions contemplated by this Agreement.
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officers of CoreComm and ATX, Xxxxxx Xxxxxxx, Xxxxx
Xxxxxxxxx, Xxxxxxx Xxxx and The Xxxxxxxx Xxxx Trust on the date first written
above.
CORECOMM LIMITED
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President-General
Counsel
ATX TELECOMMUNICATIONS
SERVICES, INC.
By: /s/ Xxxxxxx Xxxx
----------------
Name: Xxxxxxx Xxxx
Title:
SOLELY WITH RESPECT
TO ARTICLES 9, 11, 12 and 13 HEREOF
Xxxxxx Xxxxxxx
/s/ Xxxxxx Xxxxxxx
------------------
Xxxxx Xxxxxxxxx
/s/ Xxxxx Xxxxxxxxx
-------------------
Xxxxxxx Xxxx
/s/ Xxxxxxx Xxxx
----------------
THE XXXXXXXX XXXX TRUST
By: /s/ Xxxx X. Xxxxxxxx
--------------------
Name: Xxxx X. Xxxxxxxx
Title: Trustee
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EXHIBIT C
FORM OF STOCKHOLDER AGREEMENT
AGREEMENT dated as of ________ ___, 2000 among ATX Telecommunications
Services, Inc., a Delaware corporation (the "Company") and each of the Persons
listed on Schedule A hereto (each, a "Stockholder").
WHEREAS, pursuant to a Recapitalization Agreement and Plan of Merger,
dated as of March ___, 2000 (the "Merger Agreement"), by and among CoreComm
Limited ("CoreComm"), the Company and the Stockholders (with respect only to
certain provisions thereof) ATX Merger Sub, a wholly-owned subsidiary of the
Company ("Merger Sub") is being merged with and into a wholly-owned subsidiary
of, and successor by merger to CoreComm (the "Merger"), and as a result thereof
(i) each share of the Company's common stock, par value $.01 per share (the
Pre-Recapitalization Common Stock") issued and outstanding immediately prior to
the effective time of the Merger (the "Effective Time") is being converted into
___ shares the Company's Common Stock, par value $.01 per share (the "Common
Stock"), ___ shares of the Company's 3% Convertible Preferred Stock, par value
$.01 per share (the "Preferred Stock"), as well as the right to receive cash or
notes and (ii) each share of CoreComm Common Stock issued and outstanding
immediately prior to the Effective Time, other than treasury shares, is being
converted into one share of the Common Stock; and
WHEREAS, it is a condition to the obligation of CoreComm to consummate
the Merger, that the Company and each of the holders immediately prior to the
Effective Time of the issued and outstanding shares of Pre-Recapitalization
Common Stock enter into this Agreement; and
WHEREAS, the Stockholders are the holders of all of the shares of
Pre-Recapitalization Common Stock issued and outstanding immediately prior to
the Effective Time; and
WHEREAS, each Stockholder has independently determined that the Merger
is in its best interest and each Stockholder wishes to facilitate the
consummation of the Merger by entering into this Agreement and agreeing to be
bound by the terms hereof;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, provisions and covenants herein contained, each Stockholder and the
Company hereby agree as follows:
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SECTION 1. COVENANTS OF STOCKHOLDERS WITH RESPECT TO VOTING SECURITIES
OF THE COMPANY.
During the term of this Agreement and subject to all of the provisions
hereof, each Stockholder and the Company agree as follows:
1.1 Acquisition of Voting Securities. Each Stockholder shall not
acquire, agree to acquire or offer or propose to acquire, directly or
indirectly, or in conjunction with or through any Person, record or beneficial
ownership of any Voting Securities (as hereinafter defined), except (i) through
the exercise of conversion rights, if any, of Voting Securities (including any
conversion of the Preferred Stock); (ii) by way of stock splits,
reclassifications or stock dividends or other distributions or offerings made on
a pro rata basis to holders of Voting Securities or any class of Voting
Securities; (iii) from another Stockholder by bequest (including, without
limitation, through the creation of a trust), gift, will, pledge, hypothecation
or otherwise in accordance with clause (i) of Section 1.6 hereof; (iv) pursuant
to a bequest or similar gift or transfer from a Person who is not a Stockholder,
including, without limitation, through the creation of a trust for the benefit
of a Stockholder; (v) pursuant to a will or the laws of descent and distribution
from a Person who is not a Stockholder; or (vi) pursuant to the grant or
exercise of stock options or the receipt of other compensation or benefits
involving Voting Securities granted to a Stockholder in such Stockholder's
capacity (if applicable) as an employee or consultant of the Company or any
subsidiary of the Company; provided, however, that if, in connection with the
transfer of Voting Securities to a Stockholder pursuant to clauses (iv) and (v)
of this Section 1.1, a trust, corporation or other entity is formed for the
purpose of holding Voting Securities for the benefit of a Stockholder (other
than solely as an income beneficiary of a trust), then, as a condition precedent
to the receipt by such Stockholder of any direct or indirect beneficial interest
in such Voting Securities, such trust, corporation or other entity shall agree
to be bound by the terms and conditions of a stockholder agreement having the
same or substantially the same terms and conditions as this Agreement.
If a Stockholder shall acquire, directly or indirectly, record or
beneficial ownership of, or the right to acquire, any Voting Securities in
contravention of this Agreement, then such Stockholder shall promptly notify the
Company, and the Company, in its sole discretion, may either (x) purchase (or
cause its designee(s) to purchase) any or all of such acquired Voting Securities
at a price equal to the price paid by such Stockholder or (y) require such
Stockholder to dispose of, within 30 days from the date on which the Company
requests such Stockholder to do so, only in accordance with the provisions of
Section 1.6 (ii) or (iv), the Voting Securities acquired in violation of this
Section 1.1, provided that any sale may be delayed by the
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Stockholders to avoid a violation of Section 16(b) of the Exchange Act or any
other provisions of the Exchange Act or Securities Act, including, without
limitation, any applicable volume limits under Rule 144 of the Securities Act,
or any successor rules or regulations permitting sales of unregistered or
otherwise restricted securities. Each Stockholder hereby acknowledges that any
acquisition of Voting Securities in contravention of this Agreement shall
constitute a breach of this Agreement and that the Company's right to purchase
or require the disposition of Voting Securities pursuant to this Section 1.1
shall not be exclusive and shall be in addition to any other rights and remedies
the Company may have in connection with a breach of this Agreement.
For the purposes of this Agreement, "Voting Securities" means all
securities of the Company, or any successor to the Company, entitling the holder
thereof to vote as a stockholder for any purpose or under any circumstance or
any securities convertible into or exchangeable for under any circumstance such
securities or any rights, warrants or options to acquire (through purchase,
exchange, conversion or otherwise) any such securities under any circumstance.
1.2 Voting of Voting Securities. Each Stockholder shall vote or direct
the vote of all Shares of Voting Securities that are (a) acquired pursuant to
the Merger, (b) acquired by a Stockholder pursuant to Section 1.1, (c) held in
trusts, corporations or other entities formed as contemplated by Section 1.6 or
(d) otherwise hereinafter acquired, with respect to which such Stockholder has
the legal capacity to vote or to direct the vote of such Voting Securities, on
each matter submitted to a vote of the stockholders of the Company, (x) in the
same proportion as the votes cast by all holders of Voting Securities other than
the Stockholders and any affiliates and associates of the Company, with respect
to such matter, or, (y) in the event of a proposed change of control transaction
for the Company, in the manner recommended to the stockholders by the Board of
Directors of the Company provided that the Board of Directors, prior to such
recommendation, shall have received an opinion from a nationally recognized
investment banking firm to the effect that the transaction or the consideration
to be received by the unaffiliated holders of the Common Stock is fair from a
financial point of view to such stockholders; provided, further, that in the
absence of such opinion such Voting Securities shall be voted as provided in
clause (x) of this Section 1.2.
Each Stockholder shall take such action as may be required so that all
Voting Securities with respect to which such Stockholder has the legal capacity
to vote or to direct the vote of such Voting Securities as provided for herein
shall be present in person or by proxy at all duly noticed and convened meetings
of holders of
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Voting Securities for the purpose of determining the presence of a quorum at
such meetings.
1.3 No Voting Trusts. No Stockholder shall, directly or indirectly,
deposit any Voting Securities in a voting trust or in any other manner, except
pursuant to this Agreement, subject any Voting Securities to any arrangement or
agreement with respect to the voting thereof.
1.4 No Election Contests. No Stockholder shall, directly or
indirectly, solicit proxies or become a "participant" in a "solicitation" in
opposition to the recommendation of the Company's Board of Directors with
respect to any matter, including, without limitation, any "election contest"
relating to the election of directors of the Company (as such terms are defined
in Regulation 14A under the Exchange Act) or initiate, propose or otherwise
solicit stockholders of the Company for the approval of one or more stockholder
proposals at any time, or induce or attempt to induce any other person to
initiate any stockholder proposal; provided, however, that each Stockholder
shall vote any Voting Securities directly or indirectly beneficially owned by
such Stockholder in any "election contest" in accordance with the provisions of
the first paragraph of Section 1.2 hereof.
1.5 No Syndications. No Stockholder shall, directly or indirectly,
join or encourage the formation of a partnership, limited partnership, syndicate
or other "group," or otherwise act in concert with any other Person (except as
contemplated by Section 1.2 hereof) for the purpose of affecting or influencing
control of the Company or acquiring, holding, disposing of or Voting Securities.
1.6 Disposition of Voting Securities. No Stockholder shall, directly
or indirectly, offer, sell, assign, pledge, encumber or otherwise dispose of or
transfer in any manner any shares of Common Stock prior to __________1/ except
that the Common Stock may be pledged in respect of a margin loan or to a bona
fide third party lending institution provided that the pledgee shall be bound by
the restrictions contained in this sentence. In addition, except as set forth
above no Stockholder shall, directly or indirectly, offer, sell, assign, pledge,
encumber or otherwise dispose of or transfer in any manner any Voting Securities
(or enter into agreements or understandings with respect to the foregoing), if
after such disposition, the Person holding such Voting Securities would own 5%
or more of the Total Voting Power (or Voting Securities which are convertible
into or exercisable for shares which, after giving effect to such exercise or
conversion, would represent 5% or more of the Total
------------------
1/ Nine month anniversary of Closing Date.
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Voting Power). Any offer, sale, assignment, pledge, encumbrance or other
disposition or transfer of Voting Securities not otherwise prohibited by this
Agreement shall only be effected, to the extent otherwise legally permissible,
in the following manners: (i) pursuant to a bona fide public offering of Voting
Securities (which may include a secondary distribution effected through the
facilities of any national securities exchange on which the Voting Securities
are listed); provided, however, that in case of any such proposed public
offering, each Stockholder selling pursuant to such offering (the "Selling
Stockholder") will use his/her/its best efforts (and will instruct the managing
underwriter of any such public offering or broker-dealer to or through which
such public offering is being made to use its best efforts) to achieve a
sufficiently broad public distribution of the securities being offered (in light
of the number of securities being offered), with the intention that no person or
related group of persons should purchase in such public offering Voting
Securities representing 5% or more of the Total Voting Power; (ii) pursuant to
an unsolicited open market sale or sales during any three-month period
involving, in the aggregate, Voting Securities representing not more than 1% of
the Total Voting Power, as defined in Section 5.4, (in accordance with the
requirements as to the manner of sale set forth in Rule 144(f) and (g) of the
Securities Act or any successor rules or regulations permitting sales of
unregistered or otherwise restricted securities, if such sale is subject to Rule
144 or such successor rules or regulations) on any national securities exchange
on which the Voting Securities are listed; (iii) pursuant to a tender offer made
by the Company or any subsidiary of the Company or made by a third person to the
stockholders of the Company as to which the Company's Board of Directors has
recommended to the stockholders of the Company; (iv) pursuant to a
privately-negotiated transaction with a Person who is not a Stockholder;
provided, that in no case shall any such sale, transfer or other disposition
under this clause (iv) be made to such Person if, immediately after such
transaction, such Person (based upon the written representation of such Person,
which as a condition precedent to such sale, transfer or other disposition shall
be delivered to such Stockholder and to the Company prior to the consummation of
such transaction), together with its affiliates and associates would be the
direct or indirect beneficial or record owner of Voting Securities (when added
to the Voting Securities (if any) already beneficially owned by such Person and
its affiliates and associates) representing in excess of 5% of the Total Voting
Power; (v) pursuant to a will or the laws of descent and distribution; provided,
that the estate of a Stockholder shall be bound by the terms and conditions of
this Agreement and if, immediately after any distribution out of such estate,
any distributee, together with such distributee's affiliates and associates
would (other than solely as an income beneficiary of a trust) be the direct or
indirect beneficial or record owner of, or have the right to acquire, Voting
Securities (when added to the Voting Securities (if any) already owned by such
distributee and his/her affiliates and associates representing in excess of 5%
of the Total Voting Power, then such distributee shall, as a condition
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precedent to receiving such shares of Voting Securities, agree to be bound by
the terms and conditions of a stockholder agreement having the same terms and
conditions as this Agreement; (vi) pursuant to a bequest or similar gift or
transfer to any Person who is not a Stockholder or; provided that if,
immediately after delivery of a bequest or similar gift or transfer, including,
but not limited to, through the creation of a trust, the recipient, together
with such recipient's affiliates and associates (including, as the case may be,
the Stockholder making such transfer), would (other than solely as an income
beneficiary of a trust) be the direct or indirect beneficial or record owner of,
or have the right to acquire, Voting Securities (when added to the Voting
Securities (if any) already owned by such recipient and its affiliates and
associates (including, as the case may be, the Stockholder making such
transfer)) representing in excess of 5% of the Total Voting Power, then such
recipient shall, as a condition precedent to receiving such shares of Voting
Securities, agree to be bound by the terms and conditions of a stockholder
agreement having the same terms and conditions as this Agreement; or (vii) as a
result of any pledge or hypothecation to a bona fide financial institution to
secure a bona fide loan, guaranty or other financial accommodation or as a
result of any foreclosure with respect thereto; provided, however, that in
connection with any transfer by a Stockholder of Voting Securities pursuant to
clauses (v) or (vi) of this Section 1.6 to a trust, corporation or other entity
and a Stockholder retains the authority, as trustee or otherwise, to vote,
acquire or dispose of, or to direct the voting, acquisition or disposition of,
Voting Securities to be held by such trust or other entity, then as a condition
precedent to the transfer of such shares of Voting Securities to such trust or
other entity, such Stockholder shall cause such trust or other entity to be
bound by the terms and conditions of a stockholder agreement having the same or
substantially the same terms and conditions as this Agreement.
Notwithstanding anything to the contrary contained herein, a
Stockholder shall not dispose of or otherwise transfer any Voting Securities in
violation of the provisions of Section 5 of the Securities Act.
1.7 No Solicitation. No Stockholder shall propose, solicit or
participate in any fashion, in any transaction relating to an acquisition of, a
business combination or similar transaction with, or a change of control of, the
Company or make or solicit or encourage any Person to make a tender offer for
Voting Securities.
1.8 Legend on Voting Securities. Each Stockholder agrees that each
certificate representing its Voting Securities shall bear the following legend,
which will remain thereon as long as such Voting Securities are subject to the
restrictions contained in this Agreement:
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The shares represented by this certificate are subject to the
provisions of a Stockholder Agreement dated as of ______ ___, 2000, among
the Company and certain Stockholders, and may not be sold or transferred
except in accordance therewith. Copies of said Agreement are on file at the
offices of the Secretary of the Company.
The Company may enter a stop transfer order with the transfer agent (or agents)
and the registrar (or registrars) of the Voting Securities against the transfer
of legended Voting Securities held by a Stockholder except in compliance with
the requirements of this Agreement. The Company agrees to remove promptly any
stop transfer order with respect to, and issue promptly either legended (if the
Voting Securities remain subject to the restrictions of this Agreement) or
unlegended certificates in substitution for, certificates for any such Voting
Securities that are no longer subject to or are to be transferred in compliance
with the restrictions contained in this Agreement. Without limiting the
generality of the foregoing, the Company shall promptly remove any stop transfer
order in effect with respect to such certificates, upon the delivery to the
Company of an opinion of counsel to a Stockholder, in form and substance
reasonably satisfactory to the Company, that legended certificates representing
Voting Securities are no longer subject to this Agreement or that such Voting
Securities are being transferred in compliance with the provisions of Sections
1.6, and shall promptly issue unlegended certificates in substitution for such
legended certificates, except if such legended certificates are being
transferred pursuant to Section 1.6 to a transferee who shall be bound by the
terms and conditions of a Stockholder Agreement, in which event the Company may
issue legended certificates.
SECTION 2. REPRESENTATIONS AND WARRANTIES.
2.1 Representations and Warranties of the Stockholders. Each
Stockholder represents and warrants to the Company as follows:
(i) At the Effective Time, such Stockholder will be the record
and beneficial owner of the Shares of Common Stock and Preferred Stock set forth
beside its name on Schedule A hereto (such Stockholder's "Shares") and will be
the lawful owner of such Shares, free and clear of all liens, charges,
encumbrances, voting agreements and commitments of every kind, other than this
Agreement. Such Stockholder has full legal power, authority and right to vote
all of such Stockholder's Shares in the manner required by this Agreement
without the consent or approval of, or any other action on the part of, any
other person or entity.
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(ii) The execution, delivery and performance by such
Stockholder of this Agreement has been approved by all necessary action on the
part of such Stockholder.
(iii) This Agreement has been duly executed and delivered by
such Stockholder and constitutes the valid and binding agreement of such
Stockholder, enforceable against the Stockholder in accordance with its terms.
(iv) The execution, delivery and performance of this Agreement
by such Stockholder does not violate or breach, and will not give rise to any
violation or breach of, any law, contract, instrument, arrangement or agreement
by which such Stockholder is, or any of such Stockholder's Shares are, bound.
(v) The execution, delivery and performance of this Agreement
by such Stockholder does not create or give rise to any right in any other
Person or entity (other than the Company) with respect to such Stockholder's
Shares or any other Voting Securities.
2.2 Representations and Warranties of the Company. The Company
represents and warrants to each Stockholder as follows:
(i) The execution, delivery and performance by the Company of
this Agreement has been approved by all necessary corporate action on the part
of the Company.
(ii) This Agreement has been duly executed and delivered by a
duly authorized officer of the Company and constitutes a valid and binding
agreement of the Company, enforceable against The Company in accordance with its
terms.
(iii) The execution and delivery of this Agreement by the
Company does not violate or breach, and will not give rise to any violation or
breach of, the charter or bylaws of the Company, or, except as will not
materially impair its ability to effectuate, carry out or comply with all of the
terms of this Agreement, any law, contract, instrument, arrangement or agreement
by which the Company is bound.
2.3 No Indirect Conduct. No Stockholder shall engage in any conduct or
take any action through any agent or any entity acting in concert with such
Stockholder that the Stockholder has hereby agreed not to engage in or take.
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SECTION 3. COVENANTS OF THE COMPANY.
3.1 Registration Rights. During the term and subject to all of the
provisions hereof (including, without limitation Section 1.6(vi)), the Company
agrees to provide registration rights to each Stockholder on the terms and
subject to the provisions set forth in Registration Rights Agreement attached as
Appendix I hereto.
3.2 Access to Management. The Company agrees that so long as a
Stockholder continues to hold 5% or more (or in the case of Xxxxx Xxxxxxxxx and
Xxxxxx Xxxxxxx, 2% or more) of any class of Voting Securities, the Company shall
provide such Stockholder with an opportunity on a regularly scheduled basis to
review with senior management of the Company, significant issues facing the
Company; provided, however, that such Stockholder shall agree (i) to maintain
the confidentiality of any non-public information disclosed to such Stockholder
in any such session, and (ii) if necessary, refrain from engaging in any
transaction involving (x) the Company's securities while in possession of any
material non-public information about the Company disclosed to such Stockholder
by the Company in the course of the Company's complying with the provisions of
this Section 3.2 or (y) or any other securities to which such material
non-public information relates.
SECTION 4. TERM OF AGREEMENT.
The term of this Agreement shall commence at the Effective Time and
shall terminate with respect to any given Stockholder (but only such
Stockholder) (x) in the case of Xxxxxxx Xxxx and The Xxxxxxxx Xxxx Trust, when
such Stockholders (together with any transferees who are members of such
Stockholder's immediate family or entities described in clause (v) of Section
1.6 hereof) ceased to own Voting Securities having, in the aggregate, 5% or more
of the Total Voting Power, and (y) in the case of each of Xxxxx Xxxxxxxxx and
Xxxxxx Xxxxxxx, when such Stockholder (together with any transferees who are
members of such Stockholder's immediate family or entities described in clause
(v) of Section 1.6 hereof) ceases to own less than 50% of the Voting Securities
issued to such party pursuant to the Recapitalization (after giving effect to
any stock splits or stock dividends), unless the transaction or transactions
which resulted in such Stockholder ceasing to hold such threshold number or
percentage of Voting Securities shall have violated the terms of this Agreement.
For purposes hereof, ownership of Voting Securities shall include record
ownership of such securities as well as beneficial ownership thereof within the
meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended.
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SECTION 5. MISCELLANEOUS.
5.1 Specific Performance. The Company and each Stockholder acknowledge
and agree that irreparable damage would occur in the event any of the provisions
of this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the Company or a
Stockholder, as the case may be, shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically, the terms and provisions hereof in any court of the United
States or any state thereof having jurisdiction, in addition to any other remedy
to which it may be entitled at law or equity.
5.2 The Term "Company." The term "Company" shall be deemed to include
any successor to the Company by way of merger, consolidation, sale of assets or
otherwise, except as the context otherwise requires, it being the intention
hereof that this Agreement shall continue to be binding on each Stockholder
notwithstanding such merger, consolidation, sale of assets or other succession,
unless the provisions of Section 4.2 of this Agreement shall otherwise provide.
5.3 The Terms "Affiliate," Associate," "Beneficial Owner" "Entity,"
and "Person." As used herein, the term "affiliate" shall have the meaning set
forth in Rule 12b-2 under the Exchange Act; the term "beneficial owner" (which
shall include "beneficially owned" or other similar phrasing as used herein)
shall have the meaning set forth in Section 13(d)(3) of the Securities Act; the
term "associate" shall mean (1) a corporation or organization (other than the
Company or a subsidiary of the Company) of which such Person (as defined herein)
is an officer or partner or is, directly or indirectly, the beneficial owner of
10 percent or more of any class of equity securities, (2) any trust or other
estate in which such Person has a substantial beneficial interest or as to which
such Person serves as trustee or in a similar capacity, and (3) any relative or
spouse of such Person, or any relative of such spouse, who has the same home as
such Person; and the term "Person" shall mean any individual, partnership,
corporation, joint venture, association, unincorporated organization, trust,
government or agency thereof, or any other entity.
5.4 The Term "Total Voting Power." The term "Total Voting Power," as
used in this Agreement, shall mean the aggregate voting power of all Voting
Securities outstanding at the time of any determination which at such time have
ordinary voting power to vote in the election of directors of the Company. In
determining Total Voting Power for purposes of this Agreement, the Stockholder
may conclusively rely on the most recent reports filed by the Company with the
SEC in which the number of Voting Securities outstanding is set forth or from
which Total
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Voting Power can reasonably be derived, it being understood that each
Stockholder shall not be considered to be in breach of this Agreement if he/she
has acted in good faith on the basis of a determination of Total Voting Power as
contemplated herein.
5.5 Notices. All notices, requests and other communications to any
person named hereunder shall be in writing (including wire, telex or similar
writing) and shall be given to such person at its address set forth below or
such address or telex number as such person may hereafter specify for the
purpose by notice to the other person:
If to the Company:
ATX Telecommunications Services, Inc.
[address]
Attention:
Copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
Facsimile: 212-757-3990
If to any Stockholder, to the most current address of such
Stockholder provided by such Stockholder to the Company in writing
Each such notice, request or other communication shall be effective (a) if given
by facsimile, when such facsimile is transmitted to the facsimile number
specified in this subsection and the appropriate answer back is received or (b)
if given by any other means, when actually received at the address specified in
this subsection, provided that a notice given other than during normal business
hours on a business day at the place of receipt shall not be effective until the
opening of business on the next business day.
5.6 Governing Law and Jurisdiction. THIS AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE APPLICABLE
TO AGREEMENTS MADE AND PERFORMED ENTIRELY WITHIN SUCH STATE. THE UNDERSIGNED
HEREBY SUBMITS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURTS
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LOCATED WITHIN THE STATE OF DELAWARE, COUNTY OF NEW CASTLE, AND WAIVES ANY RIGHT
TO A TRIAL BY JURY IN CONNECTION WITH ANY ACTION OR PROCEEDING RELATING HERETO.
5.7 Amendments. This Agreement may be amended, modified or
supplemented only by written agreement of each Stockholder and the Company.
5.8 Waiver. Any failure of any party to comply with any obligation,
covenant, agreement or condition herein may be waived by the party entitled to
the benefit of such obligation, covenant, agreement or condition only by a
written instrument signed by such party, but such waiver or failure to insist
upon strict compliance with such obligation, covenant, agreement or condition
shall not operate as a waiver of, or estoppel with respect to, any subsequent or
other non-compliance. Wherever this Agreement requires or permits consent by or
on behalf of any party hereto, such consent shall be given in writing in a
manner consistent with the requirements for a waiver of compliance as set forth
in this Section 5.8.
5.9 Successors and Assigns. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, including, without
limitation, (i) any person who acquires any interest, beneficial or otherwise,
in Voting Securities by will or pursuant to the laws of descent and distribution
and (ii) any successor trust.
5.10 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
5.11 Entire Agreement. This Agreement, including the appendices
referred to herein, embodies the entire agreement and understanding of the
parties hereto in respect of the subject matter contained herein. There are no
restrictions, promises, representations, warranties, covenants or undertakings,
other than those expressly set forth or referred to herein. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
5.12 Severability. If any provision of this Agreement shall be deemed
or declared to be unenforceable, invalid or void, the same shall not impair any
of the other provisions of this Agreement.
5.13 Other Rights and Privileges. Except as otherwise specifically set
forth in this Agreement, each Stockholder shall have and enjoy all rights and
privileges otherwise permitted stockholders of the Company under applicable law.
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IN WITNESS WHEREOF, each Stockholder and the Company have duly
executed this Agreement as of day and year first above written.
ATX TELECOMMUNICATIONS
SERVICES, INC.
By:
-----------------------------
Name:
Title:
STOCKHOLDERS:
------------------------------
Xxxxxxx Xxxx
------------------------------
Xxxxx Xxxxxxxxx
------------------------------
Xxxxxx Xxxxxxx
THE XXXXXXXX XXXX TRUST
By:
------------------------------
Name:
Title:
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EXHIBIT G
FORM OF REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of ___________, 2000 (the
"Agreement"), by and between ATX Telecommunications Services, Inc. , a Delaware
corporation (the "Company"), and each of Xxxxxxx Xxxx ("Xxxx"), Xxxxx Xxxxxxxxx
("Xxxxxxxxx"), Xxxxxx Xxxxxxx ("Xxxxxxx") and The Xxxxxxxx Xxxx Trust (the
"Trust"). Each of Karp, Buruchian, Xxxxxxx and the Trust is referred to as a
"Stockholder").
WHEREAS, pursuant to a Recapitalization Agreement and Plan of Merger,
dated as of March ___, 2000 (the "Recapitalization and Merger Agreement"), by
and among the Company, CoreComm Limited ("CoreComm"), and, with respect to
certain provisions thereof, each of Karp, Buruchian, Xxxxxxx and the Trust, the
Company is being recapitalized by exchanging each share of pre-recapitalization
share of the Company's common stock for _____ shares of the Company's
post-recapitalization common stock, par value $.01 per share (the "Common
Stock"), _____ shares of the Company 3% Convertible Preferred Stock, par value
$.01 per share (the "Preferred Stock"), and $ _____ in cash and notes.
WHEREAS, the Stockholders are the holders of all of the outstanding
pre-recapitalization shares of the Company's common stock and it is a condition
to the consummation of the recapitalization and the other transactions
contemplated by the Recapitalization and Merger Agreement that the Company grant
to the Stockholders the registration rights and other rights set forth herein;
and
In consideration of the mutual covenants and agreements set forth
herein and for good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
1. General; Securities Subject to this Agreement.
1.1 Grant of Rights. The Company hereby grants
registration rights to the Stockholders upon the terms and subject to the
conditions set forth in this Agreement. Capitalized terms used herein and not
defined shall have the meanings assigned to such terms in the Recapitalization
and Merger Agreement.
1.2 Registrable Securities. For the purposes of this
Agreement, "Registrable Securities" means, each of the following: (a) any shares
of Common Stock issued to the Stockholders pursuant to the Recapitalization and
Merger Agreement, (b) any shares of Preferred Stock issued to the Stockholders
pursuant to the Recapitalization and Merger Agreement, and (c) any shares of
Common Stock issued upon conversion of, or as payment of dividends on, or in
exchange for shares of the Preferred Stock issued pursuant to the
Recapitalization and Merger Agreement; provided, however, that shares shall
cease to be Registrable Securities for purposes of this Agreement when a
registration statement covering such Registrable Securities has been declared
effective under the Securities Act by the SEC and all such Registrable
Securities have been disposed of pursuant to such effective registration
statement.
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1.3 Stockholders of Registrable Securities. A Person is
deemed to be a holder of Registrable Securities whenever such Person (i) is a
party to this Agreement (or a permitted transferee thereof) and (ii) owns of
record Registrable Securities. If the Company receives conflicting instructions,
notices or elections from two or more Persons with respect to the same
Registrable Securities, the Company may act upon the basis of the instructions,
notice or election received from the registered owner of such Registrable
Securities.
2. Demand Registration Rights.
2.1 Demand Registration.
(a) At any time on or after [date]1/, the Stockholders
may make a written request (specifying the intended method of disposition) (such
Stockholders, the "Initiating Common Stockholders") for registration under the
Securities Act (a "Demand Common Registration") of all or part of the shares of
Common Stock which constitute such Initiating Stockholders' Registrable
Securities; provided, however, that, (i) the Company shall not be required to
effect more than two (2) Demand Common Registrations pursuant to this Agreement,
(ii) the market value of the shares of Common Stock proposed to be registered by
the Initiating Common Stockholders shall not be less than 1,500,000 shares
(subject to appropriate adjustments to reflect stock splits, stock dividends,
corporate recapitalizations or similar transactions) as of the date of the
request, and (iii) the Initiating Common Stockholders shall be the holders as of
the date of the request of at least 25% of the then outstanding shares of Common
Stock that constitute Registrable Securities hereunder; provided, however, that
one such Demand Common Registration may be requested by Initiating Common
Stockholders owning less than 25% of the then outstanding shares of Common Stock
that constitute Registrable Securities hereunder so long as such Initiating
Common Stockholders are the holders as of the date of the request of at least
10% of the then outstanding shares of Common Stock that constitute Registrable
Securities hereunder.
(b) At any time after the date hereof, the Stockholders
may make a written request (specifying the intended method of disposition) (such
Stockholders, the "Initiating Preferred Stockholders") for registration under
the Securities Act (a "Demand Preferred Registration") of all or part of the
shares of Preferred Stock which constitute such Initiating Stockholders'
Registrable Securities; provided, however, that, (i) the Company shall not be
required to effect more than one such Demand Preferred Registration pursuant to
this Agreement, (ii) the face value of the shares of Preferred Stock proposed to
be registered by the Initiating Stockholders shall not be less than $80,000,000
as of the date of the request, and (iii) the Initiating Preferred Stockholders
shall be the holders as of the date of the request of at least 25% of the then
outstanding shares of Preferred Stock that constitute Registrable Securities
hereunder.
------------------------------
1/ Nine months from the Closing Date.
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(c) If at the time of any request to register Registrable
Securities pursuant to this Section 2.1, the Company is engaged or plans to
engage in within ninety (90) days of the time of such request in a registered
public offering or any other activity which, in the good faith determination of
the Board of Directors of the Company, would be required to be disclosed under
applicable law as a result of such request or would be materially and adversely
affected by the requested registration (each, a "Company Event"), then the
Company may at its option direct that such request be delayed for a reasonable
period of time not in excess of three (3) months from the effective date of such
offering or the date of completion of such other activity, as the case may be,
such right to delay a request to be exercised by the Company not more than once
in any 365-day period; provided, however, that if the Company receives a written
request from Initiating Common Stockholders or the Initiating Preferred
Stockholders (the "Initiating Stockholders") to register the Registrable
Securities of such Stockholders prior to the occurrence of a Company Event, then
such registration shall not be delayed by any Registration Statement thereafter
effected by the Company. In addition, the Company shall not be required to
effect any registration within three (3) months after the effective date of any
other Registration Statement of the Company. Within ten days after receipt of a
request for a Demand Common Registration or a Demand Preferred Registration
(each, a "Demand Registration"), the Company shall give written notice (the
"Notice") of such request to all other Stockholders holding the class of stock
to which such Demand Registration relates and shall include in such registration
all Registrable Securities of that class that the Company has received written
requests for inclusion therein within 15 days after the Notice is given.
Thereafter, in the case of Demand Common Registration, the Company may elect to
include in such registration additional shares of Common Stock issued by the
Company. All requests made pursuant to this Section 2.1 shall specify the class
and aggregate number of Registrable Securities to be registered.
2.2 Effective Demand Registration. The Company shall use
reasonable commercial efforts to cause any Demand Registration to become
effective not later than ninety (90) days after it receives a request under
Section 2.1 hereof and to remain effective for the lesser of (i) the period
during which all Registrable Securities registered in the Demand Registration
are sold and (ii) one hundred and twenty (120) days; provided, however, that if
the Initiating Stockholders request the Company to withdraw such registration,
other than as the result of a breach by the Company, it shall constitute a
Demand Registration unless the Initiating Stockholders promptly pay all of the
costs and expenses incurred by the Company in connection with such registration.
2.3 Underwriting Procedures.
(a) The offering of Registrable Securities
pursuant to a Demand Registration shall be in the form of a firm commitment
underwritten offering and the managing underwriter and other underwriters
selected for such offering shall be selected by the Initiating Stockholders,
provided that the managing underwriter and other underwriters are reasonably
acceptable to the Company (having
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due regard to the experience and relationship with the Company of the managing
underwriter and the other underwriters) (the "Approved Underwriter"). In such
event, if the Approved Underwriter advises the Company in writing that in its
opinion the aggregate amount of such Registrable Securities requested to be
included in such offering is sufficiently large to have a material adverse
effect on the success of such offering, the Company shall include in such
registration only the aggregate amount of Registrable Securities that in the
opinion of the Approved Underwriter may be sold without any such material
adverse effect and shall reduce pro rata based on the number of Registrable
Securities included in the request for Demand Registration, the amount of
Registrable Securities to be included by each Stockholder in such registration.
(b) Distribution by Underwriters. The managing
underwriter or underwriters selected for any offering shall enter into an
agreement with the Company and the Stockholders whereby the underwriters shall
be prohibited from (i) distributing 5% or greater of the Registrable Securities
to any Person in connection with the initial placement of the Registrable
Securities for the offering and from (ii) distributing 5% or greater of the
Registrable Securities to any Person for 90 days after such initial placement.
3. Incidental or "Piggy-Back" Registration Rights.
3.1 Notice of Registration. If, at any time or from time
to time prior to the fourth anniversary of the date hereof, the Company shall
determine to register any of its Common Stock for sale in an Underwritten
Offering for its own account (other than a registration relating to (i) a
registration of an employee compensation plan or arrangement adopted in the
ordinary course of business on Form S-8 (or any successor form) or any dividend
reinvestment plan or (ii) a registration of securities on Form S-4 (or any
successor form) including, without limitation, in connection with a proposed
issuance in exchange for securities or assets of, or in connection with a merger
or consolidation with another corporation) (a "Company Registration"), or shall
register any of its Common Stock pursuant to a demand request for registration
by any holder of the Company's Common Stock other than the Stockholders (a
"Third Party Demand Registration"), the Company will promptly give to the
Stockholders written notice thereof, and include in such registration (subject
to Section 3.2) all the Common Stock Registrable Securities specified in a
written request made by any one or more of the Stockholders within ten days
after such Stockholder's receipt of such written notice from the Company
("Incidental Registration"). The right of the Stockholder to have Common Stock
Registrable Securities included in a registration pursuant to this Section 3.1
shall be conditioned upon such Stockholder entering into (together with the
Company and/or the other holders, if any, distributing their securities through
such underwriting) an underwriting agreement in customary form with the managing
underwriter or underwriters selected for such underwriting by the Company or by
the stockholders who have demanded such registration (the "Company
Underwriter").
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3.2 Cutback. If the lead managing underwriter of an
offering covered by Section 3.1 shall advise the Company in writing on or before
the date five days prior to the date then scheduled for such offering that, in
its opinion, the amount of Common Stock (including Common Stock Registrable
Securities) requested to be included in such registration exceeds the amount
which can be sold in such offering without adversely affecting the distribution
of the Common Stock being offered, then the Company will include in such
registration:
(i) in the case of a Company Registration, first, any shares
proposed to be offered by the Company; second, Registrable Securities
requested to be registered by the Stockholders and any other shares
requested by other stockholders of the Company, including the Stockholders,
to be included in such registration, allocated, if necessary, pro rata
among the Stockholders and such other holders requesting such registration
on the basis of the number of the shares Beneficially Owned at the time;
and
(ii) in the case of a Third Party Demand Registration, first,
any shares proposed to be offered by the stockholder or stockholders
exercising their right to cause the Company to proceed with such Third
Party Demand Registration (the "Initiating Third Party Holders"), second,
any shares proposed to be offered by the Company, and third, Registrable
Securities requested to be registered by the Stockholders and any other
shares requested by other stockholders of the Company, including the
Stockholders but excluding the Initiating Third Party Holders, to be
included in such registration, allocated, if necessary, pro rata among the
Stockholders and such other holders requesting such registration on the
basis of the number of the shares Beneficially Owned at the time;
provided, however, that in the event the Company will not, by virtue of the
foregoing cut-back mechanism, include in any such registration all of the Common
Stock Registrable Securities requested to be included in such registration, the
Stockholders may, upon written notice to the Company given within three days of
the time the Stockholders first are notified of such matter, reduce the amount
of Registrable Securities they desire to have included in such registration,
whereupon only the Registrable Securities, if any, they desire to have included
will be considered for such inclusion.
3.3 Right of Termination. The Company shall have the
right to terminate or withdraw any registration initiated by it under Section
3.2 prior to the effectiveness of such registration whether or not the
Stockholders have elected to include Registrable Securities in such
registration.
4. Provisions Applicable to Demand and Piggy-Back Registrations.
4.1 Expenses. The Company shall pay all Registration
Expenses (as defined in Section 6 hereof) incurred in connection with any
registration
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pursuant to Section 2 or 3 hereto, unless registration fails to become effective
as a result of the fault of one or more Stockholders, in which case the Company
will not be required to pay the Registration Expenses incurred with respect to
the offering of such Stockholder's or Stockholders' Registrable Securities. The
Registration Expenses incurred with respect to the offering of such
Stockholder's or Stockholders' Registrable Securities shall be the product of
(a) the aggregate amount of all Registration Expenses incurred in connection
with such registration and (b) the ratio that the number of such Registrable
Securities bears to the total number of Registrable Securities included in the
registration.
4.2 Holdback Agreements. Each Stockholder agrees not to
effect any public sale or distribution of any Registrable Securities being
registered or of any securities convertible into or exchangeable or exercisable
for such Registrable Securities, including a sale pursuant to Rule 144 under the
Act, during the ninety (90) day period beginning on the effective date of any
Demand Registration or Incidental Registration or other underwritten offering in
which such Stockholder is participating (except as part of such registration),
if and to the extent requested by any other Stockholders, in the case of a
non-underwritten public offering, or if and to the extent requested by the
Company Underwriter, in the case of an under-written public offering.
5. Registration Procedures.
In connection with any registration statement filed pursuant
to this Agreement, the Company will, as expeditiously as possible:
(a) in connection with a request pursuant to this
Agreement, prepare and file with the Commission, after receipt of a request to
file a registration statement with respect to Registrable Securities, a
registration statement on any form for which the Company then qualifies or which
counsel for the Company shall deem appropriate and which form shall be available
for the sale of such Registrable Securities in accordance with the intended
method of distribution thereof and, if the offering is an underwritten offering,
shall be reasonably satisfactory to the managing underwriter or underwriters,
and use its best efforts to cause such registration statement to become
effective; provided, however, that before filing a registration statement or
prospectus or any amendments or supplements thereto, the Company shall (i)
furnish to the counsel selected by the Stockholder or Stockholders making the
demand, if any, copies of all such documents proposed to be filed, and (ii)
notify such counsel and each seller or prospective seller of Registrable
Securities of any stop order issued or threatened by the Commission and take all
reasonable actions required to prevent the entry of such stop order or to remove
it if entered;
(b) in connection with a registration pursuant to this
Agreement, prepare and file with the Commission such amendments and supplements
to such registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective for a period
of not more than one hundred and twenty (120) days (or such shorter period that
will terminate
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when all Registrable Securities covered by such registration statement have been
disposed of);
(c) furnish to each seller of Registrable Securities such
number of copies of the registration statement, each amendment and supplement
thereto (in each case including all exhibits thereto), the prospectus included
in such registration statement (including each preliminary prospectus) and such
other documents as each seller may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such seller;
(d) use reasonable efforts to register or qualify such
Registrable Securities under such other securities or "blue sky" laws of such
jurisdictions as any seller or underwriter reasonably requests in writing and to
do any and all other acts and things that may be reasonably necessary or
advisable to register or qualify for sale in such jurisdictions the Registrable
Securities owned by such seller; provided, however, that the Company shall not
be required to (i) qualify generally to do business in any jurisdiction where it
is not then so qualified, (ii) subject itself to taxation in any such
jurisdiction, (iii) consent to general service of process in any such
jurisdiction or (iv) provide any undertaking required by such other securities
or "blue sky" laws or make any change in its charter or by-laws that the Board
of Directors of the Company determines in good faith to be contrary to the best
interest of the Company and its Stockholders;
(e) use reasonable efforts to cause the Registrable
Securities covered by such registration statement to be registered with or
approved by such other governmental agencies or authorities as may be necessary
by virtue of the business and operations of the Company to enable the seller or
sellers thereof or the underwriters, if any, to consummate the disposition of
such Registrable Securities;
(f) notify each seller of such Registrable Securities at
any time when a prospectus relating thereto is required to be delivered under
the Securities Act of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and prepare and file
with the Commission as soon thereafter as practicable, after consultation with
the Initiating Stockholders, a supplement or amendment to such prospectus so
that, as thereafter delivered to the purchasers of such Registrable Securities,
such prospectus will not contain an untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading;
(g) enter into customary agreements (including an
underwriting agreement in customary form, if the offering is an underwritten
offering) and take such other actions as are reasonably required in order to
expedite or facilitate the disposition of such Registrable Securities;
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(h) otherwise use reasonable efforts to comply with all
applicable rules and regulations of the Commission; and
(i) use reasonable efforts to cause all Registrable
Securities covered by the registration statement to be listed on each securities
exchange or market, if any, on which similar securities issued by the Company
are then listed, provided that the applicable listing requirements are
satisfied.
The Company may require each seller or prospective seller of
Registrable Securities as to which any registration is being effected to furnish
to the Company such information regarding the distribution of such securities
and other matters as may be required to be included in the registration
statement.
Each holder of Registrable Securities agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind described in
paragraph (f) of this Section 5, such holder shall forthwith discontinue
disposition of Registrable Securities pursuant to the registration statement
covering such Registrable Securities until such holder's receipt of the copies
of the supplemented or amended prospectus contemplated by paragraph (f) of this
Section 5 and, if so directed by the Company, such holder shall deliver to the
Company all copies, other than permanent file copies then in such holder's
possession or copies delivered to prospective purchasers, of the prospectus
covering such Registrable Securities current at the time of receipt of such
notice. If the Company shall give any such notice, the Company shall extend the
period during which such registration statement shall be maintained effective
pursuant to this Agreement (including the period referred to in paragraph (b) of
this Section 5) by the number of days during the period from and including the
date of the giving of such notice pursuant to paragraph (f) of this Section 5 to
and including the date when each seller of Registrable Securities covered by
such registration statement shall have received the copies of the supplemented
or amended prospectus contemplated by paragraph (f) of this Section 5.
6. Registration Expenses. The Company shall pay all expenses
incident to its performance of or compliance with this Agreement; provided,
however, that the Company shall not pay the costs and expenses of any
Stockholder relating to underwriters' commissions and discounts relating to
Registrable Securities to be sold by such Stockholder, brokerage fees, transfer
taxes or the fees or expenses of any counsel, accountants or other
representatives retained by the Stockholders, individually or in the aggregate.
All of the expenses described in this Section 6 that are to be paid by the
Company are herein called the "Registration Expenses."
7. Indemnification; Contribution.
7.1 Indemnification by the Company. The Company agrees
to indemnify, in the case of any registration statement filed pursuant to this
Agreement, each seller of any Registrable Securities covered by such
registration statement, each other person who participates as an underwriter in
the offering or sale of such securities, and each person, if any, who controls
such seller or any such
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underwriter within the meaning of the Securities Act (collectively, the
"Indemnified Parties") against any losses, claims, damages or liabilities to
which such Indemnified Party may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which such
securities were registered under the Securities Act, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, or any omission or alleged omission to state a material fact
required to be stated therein or necessary to make the statements therein in
light of the circumstances in which they were made not misleading, or any
violation by the Company of the Securities Act or any rule or regulation
thereunder applicable to the Company; provided, however, that the Company shall
not be liable to the extent that any loss, claim, or liability arises out of or
is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of such Indemnified Party expressly for use in the
Registration Statement; provided, further, that the Company shall not be liable
to any seller of Registrable Securities (or to any person who acts as an
underwriter in such sale or who controls such seller) to the extent that any
loss, claim, or liability arises out of an untrue statement, alleged untrue
statement, omission, or alleged omission made in any preliminary prospectus if
either (a)(i) such seller failed to send or deliver a copy of the prospectus
with or prior to written confirmation of the sale by such seller to the person
asserting the claim and (ii) the prospectus would have corrected such untrue
statement, alleged untrue statement, omission or alleged omission; or (b)(x)
such untrue statement, alleged untrue statement, omission or alleged omission is
corrected in an amendment or supplement to the prospectus and (y) having been
furnished by or on behalf of the Company with copies of the prospectus as so
amended or supplemented, such seller fails to deliver such prospectus as so
amended or supplemented, with or prior to the written confirmation of the sale
by such seller to the person asserting the claim.
7.2 Indemnification by Stockholders. In connection with
any registration statement in which a Stockholder is participating, each such
Stockholder shall furnish to the Company in writing such information and
affidavits with respect to such Stockholder as the Company reasonably requests
for use in connection with any such registration statement or prospectus and
agrees to indemnify, to the fullest extent permitted by law, the Company, its
officers, directors and agents and each person, if any, who controls the Company
(within the meaning of the Securities Act) against any and all losses, claims,
damages, and liabilities resulting from any untrue or alleged untrue statement
of a material fact or any omission or alleged omission of a material fact
required to be stated in any registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or necessary to make
the statements therein (in the case of a prospectus, in light of the
circumstances under which they were made) not misleading, to the extent that
such untrue or alleged untrue statement or omission is contained in or omitted
from, as the case may be, any information or affidavit with respect to such
Stockholder so
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furnished in writing by such Stockholder expressly for use in any such
prospectus or preliminary prospectus; provided, however, that the liability of
such Stockholder shall not exceed the net proceeds received by such Stockholder
from the sale of its Registrable Securities. Each Stockholder also shall
indemnify any underwriters of the Registrable Securities, their officers and
directors and each person who controls such underwriters (within the meaning of
the Securities Act) to the same extent as provided above with respect to the
indemnification of the Company; provided, however, that the indemnification of
such Stockholder shall be limited to the net proceeds received by such
Stockholder from the sale of its Registrable Securities.
7.3 Contribution. If the indemnification provided for in
this Section 7 is unavailable to any indemnified party hereunder in respect of
any losses, claims, damages, liabilities or expenses referred to herein, then
the indemnifying party, to the extent such indemnification is unavailable, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims,
damages, liabilities or expenses in such proportion as is appropriate to reflect
the relative fault of the indemnifying party and indemnified parties in
connection with the actions that resulted in such losses, claims, damages,
liabilities or expenses. The relative fault of such indemnifying party and
indemnified parties shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 7.3 were determined by pro rata allocation
or by any other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person.
8. Definitions. As used herein, the following terms shall have
the following respective meanings:
"Beneficial Ownership" shall have the meaning set forth in
Rule 13d-3 under the Exchange Act.
"Board of Directors" means the board of directors of the
Company.
"Commission" means the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
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"Common Stock" means the common stock of the Company or any
other equity securities of the Company into which such securities are converted,
reclassified, reconstituted or exchanged.
"Person" means any individual, firm, corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, government (or an agency or political subdivision thereof) or other
entity of any kind, and shall include any successor (by merger or otherwise) of
any such entity.
"Registration Expenses" shall have the meaning specified in
Section 6 herein.
"Securities Act" means the Securities Act of 1933, or any
successor federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Underwritten Offering" shall mean a sale of securities of the
Company to an underwriter or underwriters for re-offering to the public, which
shall include a road show and other customary selling efforts.
9. Miscellaneous.
9.1 Limitations on Subsequent Registration Rights. From
and after the date of this Agreement, the Company shall not, without the prior
written consent of the holders of a majority of the Registrable Securities then
outstanding, enter into any agreement with any holder or prospective holder of
any securities of the Company which would allow such holder or prospective
holder (a) to include such securities in any registration filed under Section
2.1(a) hereof, unless under the terms of such agreement, such holder or
prospective holder may include such securities in any such registration only to
the extent that the inclusion of such securities will not reduce the amount of
the Registrable Securities of the holders which is included, or (b) to make a
demand registration which could result in such registration statement being
declared effective within ninety (90) days of the effective date of any
registration effected pursuant to Section 2.1.
9.2 Assignment. The rights of the Stockholders to have
the Company register Registrable Securities pursuant to this Agreement shall be
automatically assignable by each Stockholder to any transferee (other than the
transferee of such shares in a registered transaction) of all or any portion of
the Registrable Securities if: (i) the Stockholder agrees in writing with the
transferee or assignee to assign such rights, and a copy of such agreement is
furnished to the Company after such assignment, (ii) the Company is furnished
with written notice of (a) the name and address of such transferee or assignee,
and (b) the securities with respect to which such registration rights are being
transferred or assigned, (iii) the transferee or assignee agrees in writing for
the benefit of the Company to be bound by all of the provisions contained
herein, and (iv) if required under the terms of the Stockholders Agreement, such
transferee enters into the requisite stockholders
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agreement with the Company as contemplated by the Stockholders Agreement, of
even date herewith, among the Company and each of Karp, Buruchian, Xxxxxxx and
the Trust (the "Stockholders Agreement").
9.3 Amendments and Waivers. Except as otherwise provided
herein, the provisions of this Agreement may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of the
Stockholders that own, in the aggregate, 50% or more of the Registrable
Securities then outstanding.
9.4 Notices. Any notice or other communication required
or permitted hereunder shall be in writing and shall be delivered personally,
telecopied (and confirmed) or sent by certified, registered or express mail,
postage prepaid. Any such notice shall be deemed given when so delivered
personally, telecopied (and confirmed) or, if mailed, five days (or, in the case
of express mail, one day) after the date of deposit in the United States mail,
as follows:
(i) if to the Company, to:
[ATX Telecommunications Services, Inc.]
000 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx
Telecopier No.: (000) 000-0000
with copies to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
1285 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
Telecopier No.: (000) 000-0000
(ii) if to any Stockholder, to the most current address of such
Stockholder provided by such Stockholder to the Company in
writing.
with copies to:
Klehr, Harrison, Xxxxxx, Xxxxxxxxx & Xxxxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telecopier No.: (000) 000-0000
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Any party may by notice given in accordance with this section to the
other parties designate another address or person for receipt of notices
hereunder.
9.5 Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the Stockholders and their permitted
successors and assigns as provided for in Section 9.1 hereof and the successors
and assigns of the Company; provided, however, that such successors and assigns
become parties to this Agreement by executing counterparts thereto and, in the
case of successors and assigns of the Stockholder, there has been compliance
with Section 9.1 hereof.
9.6 Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
9.7 Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
9.8 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO
THE RULES OF CONFLICT OF LAWS OF THE STATE OF NEW YORK OR ANY OTHER
JURISDICTION.
9.9 Severability. If any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired.
9.10 Entire Agreement. This Agreement is entered into and
delivered pursuant to the Recapitalization and Merger Agreement and as such
contains the entire agreements among the parties with respect to the subject
matter hereof and supersedes all prior agreements and understandings, written or
oral, with respect thereto.
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered as of the date first written above.
ATX TELECOMMUNICATIONS SERVICES, INC.
By:
-----------------------------
Name:
Title:
STOCKHOLDERS:
------------------------------
Xxxxxxx Xxxx
------------------------------
Xxxxx Xxxxxxxxx
------------------------------
Xxxxxx Xxxxxxx
THE XXXXXXXX XXXX TRUST
By:
-----------------------------
Name:
Title:
