EXECUTION COPY
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AGREEMENT OF MERGER
dated as of the 9th day of October, 1997
by and among
ADVANCED COMMUNICATIONS GROUP, INC.
(Parent)
and
ADVANCED COMMUNICATIONS GROUP ACQUISITION, INC.
(Newco)
and
ADVANCED COMMUNICATIONS CORP.
(Old ACG)
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TABLE OF CONTENTS
1. DEFINITIONS...............................................................3
2. THE MERGER................................................................5
2.1 Delivery and Filing of Articles of Merger...........................5
2.2 Effective Time of the Merger........................................6
2.3 Restated Certificate of Incorporation, By-laws and Board of
Directors of the Surviving Corporation..............................6
2.4 Certain Information With Respect to the Capital Stock of Old
ACG, Parent and Newco...............................................6
2.5 Effect of Merger....................................................7
3. CONVERSION OF STOCK.......................................................7
4. DELIVERY OF MERGER CONSIDERATION AND TREATMENT OF
OUTSTANDING OPTIONS, ETC.; REVERSE STOCK SPLIT AND SECTION 351
EXCHANGE PLAN.............................................................7
4.1 Effective Time......................................................7
4.2 Certificates........................................................8
4.3 Reverse Stock Split.................................................8
4.4 Section 351 Exchange Plan...........................................8
5. CLOSING...................................................................8
6. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF
OLD ACG...................................................................9
6.1 Due Organization....................................................9
6.2 Authorization.......................................................9
6.3 Capital Stock of Old ACG............................................9
6.4 Transactions in Capital Stock......................................10
6.5 Financial Statements...............................................10
6.6 Conformity with Law; Litigation....................................10
6.7 Tax Matters........................................................11
6.8 No Violations......................................................11
6.9 Absence of Changes................................................12
6.10 Disclosure.........................................................12
6.11 Draft Registration Statement.......................................12
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7. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF
PARENT AND NEWCO.........................................................12
7.1 Due Organization...................................................13
7.2 Authorization......................................................13
7.3 Capital stock......................................................13
7.4 Transactions in Capital Stock, Organization Accounting.............13
7.5 Subsidiaries.......................................................14
7.6 Financial Statements...............................................14
7.7 Liabilities and Obligations........................................14
7.8 Conformity with Law; Litigation....................................14
7.9 No Violations......................................................14
7.10 Parent Securities..................................................15
7.11 Business; Real Property; Material Agreement........................15
8. OTHER COVENANTS PRIOR TO CLOSING.........................................15
8.1 Access and Cooperation; Due Diligence..............................15
8.2 Conduct of Business Pending Closing................................16
8.3 Prohibited Activities..............................................17
8.4 Amendment of Schedules.............................................17
8.5 Compliance with the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976 (the "Xxxx-Xxxxx Act").................................17
8.6 Further Assurance..................................................18
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF OLD ACG...........................18
9.1 Representations and Warranties Performance of Obligations..........18
9.2 Satisfaction.......................................................18
9.3 No Litigation......................................................18
9.4 Consents and Approvals.............................................19
9.5 No Material Adverse Change.........................................19
9.6 Closing of IPO.....................................................19
10. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND NEWCO..................19
10.1 Representations and Warranties; Performance of Obligations.........19
10.2 No Litigation......................................................19
10.3 No Material Adverse Effect.........................................19
10.4 Satisfaction.......................................................19
10.5 Consents and Approvals.............................................20
10.6 FIRPTA Certificate.................................................20
10.7 Closing of IPO.....................................................20
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11. ADDITIONAL COVENANTS OF PARENT AFTER CLOSING.............................20
11.1 Rule 144 Filing....................................................20
12. TERMINATION OF AGREEMENT.................................................20
12.1 Termination........................................................20
12.2 Liabilities in Event of Termination................................21
13. INVESTMENT REPRESENTATIONS...............................................21
13.1 Compliance With Law................................................21
14. REGISTRATION RIGHTS......................................................22
14.1 PiggyBack Registration Rights......................................22
14.2 Demand Registration Rights.........................................22
14.3 Registration Procedures............................................23
14.4 Other Registration Matters.........................................25
14.5 Indemnification....................................................26
14.6 Contribution.......................................................29
14.7 Availability of Rule 144...........................................30
15. GENERAL..................................................................30
15.1 Cooperation........................................................30
15.2 Successors and Assigns.............................................30
15.3 Entire Agreement...................................................30
15.4 Counterparts.......................................................31
15.5 Brokers and Agents.................................................31
15.6 Expenses...........................................................31
15.7 Notices............................................................31
15.8 Exercise of Rights and Remedies....................................32
15.9 Time...............................................................32
15.10 Reformation and Severability.......................................32
15.11 Remedies Cumulative................................................32
15.12 Captions...........................................................32
15.13 Public Statements..................................................32
15.14 Amendments and Waivers.............................................33
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AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER (the "Agreement") is made as of the 9th day of
October, 1997, by and among ADVANCED COMMUNICATIONS GROUP, INC., a Delaware
corporation organized in September 1997 ("Parent"), ADVANCED COMMUNICATIONS
GROUP ACQUISITION, INC., a Delaware corporation ("Newco") and ADVANCED
COMMUNICATIONS CORP. (formerly named Advanced Communications Group, Inc.), a
Delaware corporation organized in June 1996 ("Old ACG").
RECITALS
WHEREAS, Old ACG has entered into agreements for, or negotiated the
terms of, the acquisition by merger, asset purchase or stock purchase of
ten companies (or interests therein) engaged in various aspects of the
telecommunications industry ("Founding Companies") for voting capital stock
and other consideration; and
WHEREAS, Old ACG intended to close the acquisition of the Founding
Companies substantially contemporaneously with the consummation of an
initial underwritten public offering of its common stock; and
WHEREAS, the executive officers of Old ACG have determined that it is
desirable for licensing and other regulatory purposes to restructure the
acquisitions of the Founding Companies; and
WHEREAS, as the initial step in the implementation of the restructured
proposal, Old ACG formed Parent as a new Delaware corporation in September
1997 to serve as the vehicle for the acquisition of the Founding Companies
and Old ACG substantially contemporaneously with the consummation of an
initial underwritten public offering ("IPO") of Common Stock, $.0001 par
value, of Parent ("Parent Stock") at the price to the public reflected in
the final prospectus of Parent relating to the IPO ("IPO Price"); and
WHEREAS, under the restructured proposal, contemporaneously with the
consummation of the IPO and as part of a single transaction, the
stockholders of the Founding Companies and Old ACG, will transfer, by stock
or asset purchase or reverse triangular merger, the stock or substantially
all the assets of certain companies and other assets in which they own an
interest to Parent in exchange for voting capital stock of Parent and other
consideration, including cash, voting stock, options, warrants, notes,
convertible notes and other property of Parent, under circumstances that
will constitute a tax-free transfer of property under Section 351 of the
Internal Revenue Code of 1986, as amended, and the rules and regulations
thereunder ("Code"), to the extent of their receipt of voting capital stock
of Parent; and
WHEREAS, substantially contemporaneously with the execution of this
Agreement and in order to document the integrated Section 351 exchange plan
contemplated herein, (a) Old ACG, the other Founding Companies, their
stockholders and others are amending and restating their respective
acquisition agreements; and (b) Parent and Old ACG are entering into this
Agreement pursuant to which Old ACG will become a wholly-owned subsidiary
of Parent substantially contemporaneously with the consummation of the IPO;
and
WHEREAS, it is contemplated that prior to the consummation of the IPO,
Old ACG will effect an approximately one for two reverse stock split, the
exact magnitude of which will be dependent upon the ultimate post IPO
valuation of Parent by the managing underwriters in the IPO and the
anticipated IPO Price; and
WHEREAS, the IPO and the acquisitions of the Founding Companies and
Old ACG are described in the Registration Statement on Form S-1 of Parent
(draft of October 2, 1997), a copy of which is attached to this Agreement
as Annex I ("Draft Registration Statement"); and
WHEREAS, Newco is a corporation recently organized under the laws of
the State of Delaware solely for the purpose of completing the transaction
set forth herein, and Newco is a wholly-owned subsidiary of Parent; and
WHEREAS, the respective Boards of Directors of Newco and of Old ACG
(which together are hereinafter collectively referred to as "Constituent
Corporations") deem it advisable and in the best interests of the
Constituent Corporations and their respective stockholders that Newco merge
with and into Old ACG ("Merger") pursuant to this Agreement and the
applicable provisions of the laws of the State of Delaware; and
WHEREAS, stockholders of Old ACG are the owners of 21,764,250 shares
of Common Stock, $.00001 par value, of Old ACG ("Old ACG Stock"); and
WHEREAS, in the Merger each issued and outstanding shares of Old ACG
Stock will be converted into one share of Parent Stock; and
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties, covenants, and agreements herein contained,
the parties hereto hereby agree as follows:
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1. DEFINITIONS
Unless the context otherwise requires, capitalized terms used in this
Agreement or in any schedule, or annex attached hereto and not otherwise
defined shall have the following meanings for all purposes of this
Agreement.
"Agreement" has the meaning set forth in the first paragraph of this
Agreement.
"Annex" means each Annex attached hereto that represents a document
relevant to the transactions contemplated in this Agreement.
"Balance Sheet Date" has the meaning set forth in Section 6.5.
"Certificate of Merger" means the Certificate of Merger with respect to the
Merger substantially in the form attached as Annex III, with such changes
therein as may be required by applicable state law.
"Charter Documents" means the Certificate of Incorporation, Articles of
Incorporation or other instrument pursuant to which any corporation,
partnership or other business entity that is a signatory to this Agreement
was formed or organized in accordance with applicable law.
"Closing" has the meaning set forth in Section 5.
"Closing Date" has the meaning set forth in Section 5.
"Code" has the meaning set forth in the fifth recital of this Agreement.
"Constituent Corporations" has the meaning set forth in the tenth recital
of this Agreement.
"Demand Registration" is defined in Section 14.2.
"DGCL" means the General Corporation Law of the State of Delaware.
"Draft Registration Statement" has the meaning set forth in the eighth
recital of this Agreement.
"Effective Time" means the time as of which the Merger becomes effective,
which shall, in any case, occur on the Closing Date.
"Founding Companies" has the meaning set forth in the first recital of this
Agreement.
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"Founding Stockholders" has the meaning set forth in Section 14.2.
"Xxxx-Xxxxx Act" has the meaning set forth in Section 8.5.
"IPO" has the meaning set forth in the fourth recital of this Agreement.
"IPO Price" has the meaning set forth in the fourth recital of this
Agreement.
"Material Adverse Effect" has the meaning set forth in Section 6.1.
"Material Documents" has the meaning set forth in Section 6.8.
"Merger" has the meaning set forth in the tenth recital of this Agreement.
"Newco" has the meaning set forth in the first paragraph of this Agreement.
"Newco Stock" means the common stock, par value $.01 per share, of Newco.
"Old ACG" has the meaning set forth in the first paragraph of this
Agreement.
"Old ACG Stock" has the meaning set forth in the eleventh recital of this
Agreement.
"Parent" has the meaning set forth in the first paragraph of this
Agreement.
"Parent Documents" has the meaning set forth in Section 7.9.
"Parent Stock" has the meaning set forth in the fourth recital of this
Agreement.
"Person" means an individual, a corporation, a partnership, an association,
a limited liability company, a joint stock company, a trust or other
unincorporated organization.
"Registrable Securities" means the shares of Parent Stock issuable in the
Merger.
"Restricted Securities" has the meaning set forth in Section 13.
"Returns" means any returns, reports or statements (including any
information returns) required to be filed for purposes of a particular Tax.
"Reverse Stock Split" has the meaning set forth in Section 4.3.
"Schedule" means each Schedule attached hereto, which shall reference the
relevant sections of this Agreement, on which parties hereto disclose
information as part of their respective representations, warranties,
covenants and agreements.
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"SEC" means the United States Securities and Exchange Commission.
"Section 351 Exchange Plan" means the Section 351 Exchange Plan in the form
of Annex II.
"Stockholders" means the holders of record of all the issued and
outstanding shares of Old ACG Stock.
"Subsidiaries" means, with respect to any Person, any corporation or other
organization, whether incorporated or unincorporated, of which (i) such
Person or any other Subsidiary of such Person is a general partner
(excluding partnerships, the general partnership interests of which held by
such Person or any Subsidiary of such Person 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 Person, by any one or
more of its Subsidiaries, or by such Person and one or more of its
Subsidiaries.
"Surviving Corporation" shall mean Old ACG as the surviving corporation in
the Merger.
"Tax" or "Taxes" means all Federal, state, local or foreign net or gross
income, gross receipts, net proceeds, sales, use, ad valorem, value added,
franchise, bank shares, withholding, payroll, employment, excise, property,
deed, stamp, alternative or add on minimum, environmental or other taxes or
assessments, whether disputed or not, together with any interest,
penalties, additions to tax or additional amounts with respect thereto.
"1933 Act" means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
2. THE MERGER
2.1 Delivery and Filing of Articles of Merger. The Constituent Corporations
will cause (i) the Certificate of Merger to be signed, verified and filed with
the Secretary of State of the State of Delaware and (ii) photocopies of a
stamped receipt copy of such filing to be delivered to Parent on the Closing
Date.
2.2 Effective Time of the Merger. At the Effective Time of the Merger,
Newco shall be merged with and into Old ACG, in accordance with the Certificate
of Merger, the separate existence of Newco shall cease, and Old ACG shall be
the surviving corporation in the Merger. Old ACG is sometimes hereinafter
referred to as the Surviving Corporation.
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2.3 Restated Certificate of Incorporation, By-laws and Board of Directors
of the Surviving Corporation. At the Effective Time:
(i) the Restated Certificate of Incorporation of Old ACG, as amended
as contemplated by the Certificate of Merger, shall be the Restated
Certificate of Incorporation of the Surviving Corporation until changed as
provided by law;
(ii) the By-laws of Old ACG then in effect shall become the By-laws of
the Surviving Corporation until they shall thereafter be further amended;
(iii) the members of the Board of Directors of Old ACG shall remain
the members of the Board of Directors of the Surviving Corporation after
the Effective Time until their successors shall have been elected and
qualified; and
(iv) the officers of Old ACG immediately prior to the Effective Time
shall continue as the officers of the Surviving Corporation in the same
capacity or capacities.
2.4 Certain Information With Respect to the Capital Stock of Old ACG,
Parent and Newco. The respective designations and numbers of outstanding shares
and voting rights of each class of outstanding capital stock of Old ACG, Parent
and Newco as of the date of this Agreement are as follows:
(i) the authorized, issued and outstanding capital stock of Old ACG
(including voting rights) is as set forth on Schedule 2.4(i);
(ii) the authorized, issued and outstanding capital stock of Parent
(including voting rights) is as set forth in Schedule 2.4(ii); and
(iii) the authorized capital stock of Newco consists of 1,000 shares
of common stock, par value $.01, of which 1,000 shares are issued and
outstanding and entitled to one vote per share on all matters submitted to
stockholders.
2.5 Effect of Merger. Old ACG shall be the Surviving Corporation of the
Merger and shall continue in existence under the laws of the State of Delaware.
The Merger will have the effects set forth in the DGCL. Without limiting the
generality of the foregoing, at the Effective Time, all the properties, rights,
privileges, powers and franchises of Old ACG and Newco will vest in the
Surviving Corporation, and all debts, liabilities and duties of Old ACG and
Newco shall become the debts, liabilities and duties of the Surviving
Corporation.
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3. CONVERSION OF STOCK
The manner of converting the shares of (i) Old ACG Stock and (ii) the Newco
Stock issued and outstanding immediately prior to the Effective Time into (x)
shares of Parent Stock and (y) shares of common stock of the Surviving
Corporation, respectively, shall be as follows:
As of the Effective Time:
(i) each share of Old ACG Stock issued and outstanding immediately
prior to the Effective Time, by virtue of the Merger and without any action
on the part of the holders thereof, automatically shall be deemed to
represent the right to receive one share of Parent Stock;
(ii) all shares of Parent Stock that are held by Surviving Corporation
after the Effective Time shall be transferred to Parent for cancellation;
and
(iii) each share of Newco Stock issued and outstanding immediately
prior to the Effective Time, shall continue to be one fully paid and
non-assessable share of common stock of the Surviving Corporation which
shall constitute all of the issued and outstanding shares of common stock
of the Surviving Corporation immediately after the Effective Time.
4. DELIVERY OF MERGER CONSIDERATION AND TREATMENT OF OUTSTANDING OPTIONS,
ETC.; REVERSE STOCK SPLIT AND SECTION 351 EXCHANGE PLAN
4.1 Effective Time. At the Effective Time, each Stockholder shall, upon
surrender of its certificate and the delivery of a certificate confirming the
investment representations and transfer restrictions set forth in Section 13
and its tax status as required by Section 10.6, receive one share of Parent
Stock for each share of Old ACG Stock owned of record immediately prior to the
Effective Time. All options and warrants relating to Old ACG Stock outstanding
immediately prior to the Effective Time shall, immediately after the Effective
Time in accordance with their terms, be assumed by Parent and become
exercisable for a like number of shares of Parent Stock.
4.2 Certificates. Stockholders shall present to Parent at the Closing all
certificates representing any and all shares of Old ACG Stock, duly endorsed in
blank by Stockholders, or accompanied by stock powers duly endorsed in blank,
and with all necessary transfer tax and other revenue stamps, acquired at
Stockholders' expense, affixed and canceled.
4.3 Reverse Stock Split. Prior to the consummation of the IPO and the
Merger, Old ACG will effect an approximately one-for-two reverse stock split
("Reverse Stock Split") the exact magnitude of which will be dependent upon the
ultimate post IPO valuation of Parent by the
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managing underwriters in the IPO and the anticipated IPO Price. Nothing in this
Agreement shall prevent Old ACG from effecting such Reverse Stock Split as may
be approved by its board of directors and Stockholders holding not less than
80% of the Old ACG Stock then outstanding.
4.4 Section 351 Exchange Plan. Upon the approval of this Agreement by the
holders of not less than 80% of the shares of Old ACG Stock then issued and
outstanding, each Stockholder shall be deemed to have approved and adopted the
Section 351 Exchange Plan to the same extent as if such Stockholder has
subscribed its signature thereon.
5. CLOSING
Prior to the taking of the actions described in clauses (i) and (ii) below
(the "Closing"), the parties to this Agreement shall take all actions necessary
to prepare to (i) effect the Merger (including the filing with the appropriate
state authorities of the Certificate of Merger which shall become effective at
the Effective Time) and (ii) effect the conversion of the shares and the
delivery of the Parent Stock referred to in Sections 3 and 4; provided, that
the actions contemplated by clauses (i) and (ii) above shall not include the
actual completion of the Merger or the conversion of the shares and the
delivery of the Parent Stock referred to in Sections 3 and 4, each of which
actions shall only be taken upon the Closing Date as herein provided. The
Closing shall take place on the date the closing of, and substantially
contemporaneously with, the sale of shares of Parent Stock in the IPO, or such
other date as the parties hereto may designate (the "Closing Date"), at such
place in New York City as the parties may mutually agree. On the Closing Date
(x) the Certificate of Merger shall be or shall have been filed with the
appropriate state authorities so that it shall be or, as of 10:00 a.m. New York
City Time on the Closing Date, become effective and the Merger shall thereby be
effected and (y) all transactions contemplated by this Agreement, including the
conversion of the shares and delivery of the Parent Stock which the
Stockholders shall be entitled to receive pursuant to the Merger shall occur
and be deemed to be completed.
6. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF OLD ACG
Old ACG represents, warrants, covenants and agrees (i) that all of the
following representations and warranties in this Section 6 are true at the date
of this Agreement and, subject to Section 8.4, shall be true at the Closing
Date, (ii) that all of the covenants and agreements in this Section 6 shall be
materially complied with or performed at and as of the Closing Date and (iii)
that none of the representations and warranties of Old ACG set forth in this
Agreement shall survive the Closing Date. For purposes of this Section 6, the
term "Old ACG" shall mean and refer to Old ACG and all of its Subsidiaries, if
any.
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6.1 Due Organization. Old ACG is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation,
and is duly authorized and qualified to do business and is in good standing
under the laws of each jurisdiction where such qualification is required except
where the failure to be so authorized or qualified would not have a material
adverse effect on the business, operations, affairs, prospects, properties,
assets or condition (financial or otherwise), of Old ACG taken as a whole (as
used herein with respect to Old ACG, or with respect to any other Person, a
"Material Adverse Effect"). Schedule 6.1 sets forth the jurisdiction in which
Old ACG is incorporated and contains a list of all such jurisdictions in which
Old ACG is authorized or qualified to do business. True, complete and correct
copies of the Charter Documents and Bylaws, each as amended, of Old ACG are all
attached hereto as Schedule 6.1. The stock records of Old ACG, as heretofore
made available to Parent, are correct and complete in all material respects. To
the knowledge of Old ACG, there are no minutes in the possession of Old ACG
which have not been made available to Parent, and all of such minutes are
correct and complete in all material respects.
6.2 Authorization. Old ACG has all requisite corporate power and authority
to conduct its business as presently conducted and to enter into this Agreement
and to perform its obligations hereunder. The execution and delivery by Old ACG
of this Agreement and its consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate action of the board of
directors of Old ACG. This Agreement has been duly executed and delivered by
Old ACG, and when this Agreement and the Merger have been approved by
Stockholders in accordance with the DGCL and Old ACG's Charter Documents, will
be a valid and binding obligation of Old ACG, enforceable against Old ACG in
accordance with its terms.
6.3 Capital Stock of Old ACG. The authorized capital stock of Old ACG is as
set forth in Schedule 2.4(i). All of the issued and outstanding shares of the
capital stock of Old ACG (i) have been duly authorized and validly issued and
(ii) are fully paid and nonassessable. Further, none of such shares was issued
in violation of the preemptive rights of any past or present stockholder.
6.4 Transactions in Capital Stock. Except as set forth on Schedule 6.4, (i)
no option, warrant, call, conversion right or commitment of any kind exists
which obligates Old ACG to issue or sell any of its authorized but unissued
capital stock; (ii) Old ACG has no obligation (contingent or otherwise) to
purchase, redeem or otherwise acquire any of its equity securities or any
interests therein or to pay any dividend or make any distribution in respect
thereof; and (iii) neither the voting stock structure of Old ACG nor the
relative ownership of shares among any of its respective stockholders has been
altered or changed in contemplation of the Merger. Schedule 6.4 also includes
complete and accurate copies of all stock option or stock purchase plans,
including a list of all outstanding options, warrants or other rights to
acquire shares of Company Stock.
6.5 Financial Statements. Attached hereto as Schedule 6.5 are copies of the
following financial statements of Old ACG, which reflect the results of its
operations from inception in June
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1996 (the "Old ACG Financial Statements"): Old ACG's audited Balance Sheet as
of December 31, 1996 and its unaudited Balance Sheet as of June 30, 1997
("Balance Sheet Date"), and audited Statements of Operations, Stockholder's
Equity and Cash Flows and related notes thereto for the period from June 10,
1996 through December 31, 1996 and unaudited Statements of Operations,
Stockholder's Equity and Cash Flows for the six months ended June 30, 1997. The
audited Old ACG Financial Statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the period indicated (except as noted thereon or on Schedule 6.5).
The unaudited Old ACG Financial Statements were prepared in accordance with the
books and records of Old ACG in accordance with accounting principles
consistently applied. Old ACG's Balance Sheets present fairly the financial
position of Old ACG as of the dates indicated thereon, and Old ACG's Statements
of Operations, Stockholder's Equity and Cash Flows included in the Old ACG
Financial Statements present fairly the results of operations for the periods
indicated thereon in accordance with generally accepted accounting principles.
Old ACG's Financial Statements at and for the period ended December 31, 1996
have been examined by KPMG Peat Marwick LLP, independent public accountants.
6.6 Conformity with Law; Litigation. Except to the extent set forth on
Schedule 6.6, Old ACG is not in violation of any law or regulation or any order
of any court or Federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality having jurisdiction over
Old ACG which would have a Material Adverse Effect; and except to the extent
set forth on Schedule 6.6, there are no material claims, actions, suits or
proceedings, commenced or, to the knowledge of Old ACG, threatened, against or
affecting Old ACG, at law or in equity, or before or by any Federal, state,
municipal or other governmental department, commission, board, bureau, agency
or instrumentality having jurisdiction over Old ACG and no notice of any claim,
action, suit or proceeding, whether pending or threatened, has been received by
Old ACG. Old ACG has conducted and is conducting its business in substantial
compliance with the requirements, standards, criteria and conditions set forth
in applicable Federal, state and local statutes, ordinances, permits, licenses,
orders, approvals, variances, rules and regulations, including all such
permits, licenses, orders and other governmental approvals set forth on
Schedules 6.6 and is not in violation of any of the foregoing which might have
a Material Adverse Effect.
6.7 Tax Matters.
(i) Old ACG has filed all Tax Returns that it was required to file.
All such Tax Returns filed by Old ACG were correct and complete in all
material respects. All Taxes owed by Old ACG (whether or not shown on any
Tax Return) have been paid. Old ACG is not currently the beneficiary of any
extension of time within which to file any Tax Return. Since Old ACG's
formation in June 1996 , no claim with respect to Old ACG has been made by
an authority in a jurisdiction where Old ACG does not file Tax Returns that
it is or may
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be subject to taxation by that jurisdiction. There is no lien
affecting any of Old ACG's assets that arose in connection with any failure
or alleged failure to pay any Tax.
(ii) Old ACG has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder or other party.
(iii) Old ACG does not expect any authority to assess any material
amount of additional Taxes against it for any period for which Tax Returns
have been filed. There is no material dispute or claim concerning any Tax
liability of Old ACG either claimed or raised by any authority in writing
or as to which Old ACG has knowledge based upon direct inquiry by any agent
of such authority.
6.8 No Violations. Old ACG is not in violation of its Charter Documents.
Neither Old ACG nor, to the knowledge of Old ACG, any other party thereto, is
in material default under any lease, instrument, agreement, license, or permit
to which it is a party or by which its properties are bound (the "Material
Documents"); and, except as set forth in Schedule 6.8, (i) the rights and
benefits of Old ACG under the Material Documents will not be materially
adversely affected by the transactions contemplated hereby and (ii) the
execution of this Agreement and the performance of the obligations hereunder
and the consummation of the transactions contemplated hereby will not result in
any material violation or breach or constitute a material default under, any of
the terms or provisions of the Material Documents or Old ACG's Charter
Documents. Except as set forth on Schedule 6.8 none of the Material Documents
requires notice to, or the consent or approval of, any governmental agency or
other third party with respect to any of the transactions contemplated hereby
in order to remain in full force and effect in all material respects, and
consummation of the transactions contemplated hereby will not give rise to any
right to termination, cancellation or acceleration or loss of any material
right or benefit.
6.9 Absence of Changes. Since the Balance Sheet Date, except as set forth
on Schedule 6.9, or as otherwise contemplated by Section 4.3, there has not
been:
(i) any material adverse change in the financial condition, assets,
liabilities (contingent or otherwise), income or business of Old ACG as a
whole;
(ii) any damage, destruction or loss (whether or not covered by
insurance) materially adversely affecting the properties or business of Old
ACG;
(iii) any change in the authorized capital of Old ACG or its
outstanding securities or any change in its ownership interests or any
grant of any options, warrants, calls, conversion rights or commitments; or
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(iv) any declaration or payment of any dividend or distribution in
respect of the capital stock or any direct or indirect redemption, purchase
or other acquisition of any of the capital stock of Old ACG.
6.10 Disclosure. This Agreement, including the Schedules and Annexes
hereto, together with all other documents and information made available to
Parent and its representatives in writing pursuant hereto, present fairly the
business and operations of Old ACG for the time periods with respect to which
such information was requested. Old ACG's rights under the documents delivered
pursuant hereto would not be materially adversely affected by, and no statement
made herein would be rendered untrue in any material respect by, any other
document to which Old ACG is a party, or to which its properties are subject,
or by any other fact or circumstance regarding Old ACG (which fact or
circumstance was, or should reasonably, after due inquiry, have been known to
Old ACG) that is not disclosed pursuant hereto or thereto.
6.11 Draft Registration Statement. The text of, and the financial
statements and other financial information contained in, the Draft Registration
Statement, insofar as they relate to Old ACG but not otherwise, are time,
accurate and complete in all material respects and do not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading.
7. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF PARENT AND NEWCO
Parent and Newco, jointly and severally, represent warrant, covenant and
agree (i) that, except as disclosed in the Draft Registration Statement, all of
the following representations and warranties in this Section 7 are true at the
date of this Agreement and, subject to Section 8.4, shall be true at the
Closing Date, (ii) that all of the covenants and agreements in this Section 7
shall be complied with or performed at and as of the Closing Date, and (iii)
that none of the representations and warranties of Parent and Newco set forth
in this Agreement shall survive the Closing Date.
7.1 Due Organization. Parent and Newco are each corporations duly
organized, validly existing and in good standing under the laws of the States
of Delaware and are duly authorized and qualified to do business under all
applicable laws, regulations, ordinances and orders of public authorities to
carry on their respective business in the places and in the manner as now
conducted, except where the failure to be so authorized or qualified would not
have a Material Adverse Effect. True, complete and correct copies of the
Charter Documents and By-laws, each as amended, of Parent and Newco (the
"Parent Charter Documents") are all attached hereto as Schedule 7.1.
7.2 Authorization. Parent and Newco each has all requisite corporate power
and authority to enter into this Agreement and to perform its obligations
hereunder. The execution and delivery of this Agreement by Parent and Newco and
their consummation of the transactions contemplated
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hereby have been duly authorized by all necessary corporate action of Parent
and Newco. This Agreement has been duly executed and delivered by Parent and
Newco and is a valid and binding obligation of Parent and Newco, enforceable
against each of them in accordance with its terms. By execution of this
Agreement, Parent has approved this Agreement and the Merger in its capacity as
the sole stockholder of Newco.
7.3 Capital stock. The authorized capital stock of Parent and Newco is as
set forth in Schedule 2.4(ii) and Section 2.4(iii), respectively. All of the
issued and outstanding shares of the capital stock of Parent and Newco (i) have
been duly authorized and validly issued, (ii) are fully paid and nonassessable,
and (iii) were offered, issued, sold and delivered by Parent and Newco in
compliance with all applicable state and Federal laws concerning the offer,
issuance, sale and delivery of securities. Further, none of such shares was
issued in violation of the preemptive rights of any past or present stockholder
of Parent or Newco.
7.4 Transactions in Capital Stock, Organization Accounting. Except as set
forth on Schedule 2.4(ii), (i) no option, warrant, call, conversion right or
commitment of any kind exists which obligates Parent or Newco to issue any of
its authorized but unissued capital stock and (ii) neither Parent nor Newco has
any obligation (contingent or otherwise) to purchase, redeem or otherwise
acquire any of its equity securities or any interests therein or to pay any
dividend or make any distribution in respect thereof. Schedule 2.4(ii) also
includes complete and accurate copies of all stock option or stock purchase
plans, including a list, accurate as of the date hereof, of all outstanding
options, warrants or other rights to acquire shares of capital stock of Parent.
7.5 Subsidiaries. Newco has no Subsidiaries. Parent has no Subsidiaries
except for Newco and each of the other companies identified on Schedule 7.5.
Except as set forth in the preceding sentence, neither Parent nor Newco
presently owns, of record or beneficially, or controls, directly or indirectly,
any capital stock, securities convertible into capital stock or any other
equity interest in Person nor is Parent or Newco, directly or indirectly, a
participant in any joint venture, partnership or other non-corporation entity.
7.6 Liabilities and Obligations. Except as set forth on Schedule 7.6 or in
the Draft Registration Statement, Parent and Newco have no material
liabilities, contingent or otherwise, except as set forth in or contemplated by
this Agreement and except for fees incurred in connection with the transactions
contemplated hereby and thereby.
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7.7 Conformity with Law; Litigation. Except to the extent set forth on
Schedule 7.7 or in the Draft Registration Statement, neither Parent nor Newco
is in violation of any law or regulation or any order of any court or Federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality having jurisdiction over either of them which would
have a Material Adverse Effect; and except to the extent set forth in Schedule
7.8, there are no material claims, actions, suits or proceedings, pending or,
to the knowledge of Parent or Newco, threatened, against or affecting Parent or
Newco, at law or in equity, or before or by any Federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality having jurisdiction over either of them and no notice of any
claim, action, suit or proceeding, whether pending or threatened, has been
received. Parent and Newco have conducted and are conducting their respective
businesses in substantial compliance with the requirements, standards, criteria
and conditions set forth in applicable Federal, state and local statutes,
ordinances, permits, licenses, orders, approvals, variances, rules and
regulations and are not in violation of any of the foregoing which might have a
Material Adverse Effect.
7.8 No Violations. Neither Parent nor Newco is in violation of any of
Parent's Charter Documents. None of Parent, Newco, or, to the knowledge of
Parent and Newco, any other party thereto, is in material default under any
lease, instrument, agreement, license, or permit to which Parent or Newco is a
party, or by which Parent or Newco, or any of their respective properties, are
bound (collectively, the "Parent Documents"); and (i) the rights and benefits
of Parent and Newco under the Parent Documents will not be materially adversely
affected by the transactions contemplated hereby and (ii) the execution of this
Agreement and the performance of the obligations hereunder and the consummation
of the transactions contemplated hereby will not result in any material
violation or breach or constitute a material default under, any of the terms or
provisions of the Parent Documents or the Parent's Charter Documents. Except as
set forth on Schedule 7.8, none of the Parent Documents requires notice to, or
the consent or approval of, any governmental agency or other third party with
respect to any of the transactions contemplated hereby in order to remain in
full force and effect, and consummation of the transactions contemplated hereby
will not give rise to any right to termination, cancellation or acceleration or
loss of any right or benefit.
7.9 Parent Securities. The shares of Parent Stock deliverable to the
Stockholders in the Merger pursuant to this Agreement or issuable upon the
exercise or conversion of the warrants and options referred to in the last
sentence of Section 4.1 will have been duly authorized prior to the Closing,
and upon consummation of the Merger in accordance with this Agreement or the
issuance of shares of Parent Stock upon the exercise of such warrants or
options in accordance with the terms thereof, will be validly issued, fully
paid and nonassessable.
7.10 Business; Real Property; Material Agreement Parent was formed in
September 1997. Neither Parent nor Newco has conducted any material business
since the date of its inception, except in connection with this Agreement and
similar agreements with other companies involved in the telephone business and
associated activities and consummating the transactions referred to in the
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Draft Registration Statement. Except as disclosed on Schedule 7.11, neither
Parent nor Newco owns or has at any time owned any real property or any
material personal property or is a party to any other material agreement.
8. OTHER COVENANTS PRIOR TO CLOSING
8.1 Access and Cooperation; Due Diligence.
(i) Between the date of this Agreement and the Closing Date, Old ACG
will afford to the officers and authorized representatives of Parent, the
Founding Companies, and Parent's prospective underwriters (collectively,
the "Parent Group") access to all of Old ACG's sites, properties, books and
records and will furnish Parent with such additional financial and
operating data and other information as to the business and properties of
Old ACG as Parent may from time to time reasonably request. Old ACG will
cooperate with Parent Group, its representatives, auditors and counsel in
the preparation of and any documents or other material that may be required
in connection with any documents or materials required by this Agreement.
Parent and Newco will, and will cause the other members of the Parent
Group, to treat all information obtained in connection with the negotiation
and performance of this Agreement as confidential.
(ii) Between the date of this Agreement and the Closing, Parent will
afford, or will cause to be afforded, to the officers and authorized
representatives of Old ACG access to all of Parent Group's sites,
properties, books and records and will furnish Old ACG with such additional
financial and operating data and other information as to the business and
properties of Parent Group as Old ACG may from time to time reasonably
request. Parent and Newco will cooperate with Old ACG's representatives,
auditors and counsel in the preparation of any documents or other material
which may be required in connection with any documents or materials
required by this Agreement. Old ACG will cause all information obtained in
connection with the negotiation and performance of this Agreement to be
treated as confidential.
8.2 Conduct of Business Pending Closing. Unless otherwise approved in
writing by Parent, between the date of this Agreement and the Closing Date, Old
ACG will:
(i) carry on its business in substantially the same manner as it has
heretofore and not introduce any material new method of management,
operation or accounting;
(ii) maintain its properties and facilities, including those held
under lease, in as good working order and condition as at present, ordinary
wear and tear excepted;
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(iii) perform in all material respects all of its obligations under
agreements relating to or affecting its respective assets, properties or
rights;
(iv) keep in full force and effect in all material respects the
present insurance policies or other comparable insurance coverage;
(v) use its reasonable best efforts to maintain and preserve its
business organization intact, retain its respective present key employees
and maintain its respective relationships with suppliers, customers and
others having business relations with it;
(vi) maintain material compliance with all material permits, laws,
rules and regulations, consent orders, and all other orders of applicable
courts, regulatory agencies and similar governmental authorities; and
(vii) maintain or reduce present salaries and commission levels for
all officers, directors, employees and agents except for ordinary and
customary bonus and salary increases for employees in accordance with past
practices.
8.3 Prohibited Activities. Between the date of this Agreement and the
Closing Date, Old ACG will not, except or otherwise expressly contemplated by
Section 4.3, without prior written consent of Parent:
(i) make any change in its Charter Documents or By-laws;
(ii) issue any securities, options, warrants, calls, conversion rights
or commitments relating to its securities of any kind other than in
connection with the exercise of options or warrants listed in Schedule 6.4;
or
(iii) declare or pay any dividend, or make any distribution in respect
of Old ACG Stock whether now or hereafter outstanding, or purchase, redeem
or otherwise acquire or retire for value any shares of Old ACG Stock.
8.4 Amendment of Schedules. Each party hereto agrees that, with respect to
the representations and warranties of such party contained in this Agreement,
such party shall have the continuing obligation until the Closing to supplement
or amend promptly the Schedules with respect to any matter hereafter arising or
discovered which, if existing or known at the date of this Agreement, would
have been required to be set forth or described in the Schedules.
Notwithstanding the foregoing sentence, no amendment or supplement to a
Schedule prepared by Old ACG or Parent that constitutes or reflects an event or
occurrence that would have a Material Adverse Effect may be made unless Parent
or Old ACG, as the case may be, consents to such amendment or supplement. For
all purposes of this Agreement, including without limitation for purposes of
determining whether
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the conditions set forth in Sections 9.1 and 10.1 have been fulfilled, the
Schedules shall be deemed to be the Schedules as amended or supplemented
pursuant to this Section 8.4. No party to this Agreement shall be liable to any
other party if this Agreement shall be terminated pursuant to the provisions of
Section 12.1(v). Neither the entry by Parent into any other agreement, such as
this Agreement, after the date hereof for the acquisition of one or more
companies involved in or assets associated with the telephone business and
related activities nor the performance by Parent of its obligations thereunder
shall be deemed to require the amendment to or a supplementation of any
Schedule hereto.
8.5 Compliance with the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976 (the "Xxxx-Xxxxx Act"). All parties to this Agreement hereby recognize
that compliance with the Xxxx-Xxxxx Act may be required in connection with the
transactions contemplated herein. If it is determined by the parties to this
Agreement that compliance with the Xxxx-Xxxxx Act is required, then: (i) each
of the parties hereto agrees to cooperate and use its best efforts to comply
with the Xxxx-Xxxxx Act, (ii) such compliance by and Old ACG shall be deemed a
condition precedent in addition to the conditions precedent set forth in
Section 10 of this Agreement, and such compliance by Parent and Newco shall be
deemed a condition precedent in addition to the conditions precedent set forth
in Section 9 of this Agreement, (iii) the parties agree to cooperate and use
their best efforts to cause all filings required under the Xxxx-Xxxxx Act to be
made, and (iv) Parent shall be responsible for all filing fees under the
Xxxx-Xxxxx Act.
8.6 Further Assurance. The parties hereto agree to execute and deliver, or
cause to be executed and delivered, such further instruments or documents or
take such other action as may be reasonably necessary or convenient to carry
out the transactions contemplated by this Agreement.
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF OLD ACG
The obligations of Old ACG with respect to actions to be taken on the
Closing Date are subject to the satisfaction or waiver on or prior to the
Closing Date of all of the following conditions. Upon Closing, all conditions
not satisfied shall be deemed to have been waived.
9.1 Representations and Warranties Performance of Obligations. All
representations and warranties of Parent and Newco contained in this Agreement
shall be true and correct in all material respects as of the Closing Date with
the same effect as though such representations and warranties had been made on
and as of such date; all of the terms, covenants and conditions of this
Agreement to be complied with or performed by Parent and Newco on or before the
Closing Date shall have been duly complied with or performed in all material
respects; and a certificate to the foregoing effect dated the Closing Date, and
signed by the President or any Vice President of Parent and of Newco shall have
been delivered to Old ACG.
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9.2 Satisfaction. All actions, proceedings, instruments and documents
required to carry out this Agreement or incidental hereto and all other related
legal matters shall be reasonably satisfactory to Old ACG and its counsel.
9.3 No Litigation. No action or proceeding before a court or any other
governmental agency or body shall have been instituted or threatened to
restrain or prohibit the Merger and no governmental agency or body shall have
taken any other action or made any request of Old ACG as a result of which the
management of Old ACG deems it inadvisable to proceed with the transactions
hereunder.
9.4 Consents and Approvals. All necessary consents of and filings with any
governmental authority or agency relating to the consummation of the
transactions contemplated herein shall have been obtained and made.
9.5 No Material Adverse Change. No event or circumstance shall have
occurred with respect to Parent or Newco that would constitute a Material
Adverse Effect.
9.6 Closing of IPO. The sale by Parent of shares of Parent Stock in the IPO
shall have closed prior to or substantially contemporaneously with the
consummation of the Merger.
10. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND NEWCO
The obligations of Parent and Newco with respect to actions to be taken on
the Closing Date are subject to the satisfaction or waiver on or prior to the
Closing Date of all of the following conditions. Upon Closing, all conditions
not satisfied shall be deemed to have been waived.
10.1 Representations and Warranties; Performance of Obligations. All the
representations and warranties of Old ACG contained in this Agreement shall be
true and correct in all material respects as of the Closing Date with the same
effect as though such representations and warranties had been made on and as of
such date; all of the terms, covenants and conditions of this Agreement to be
complied with or performed by Old ACG on or before the Closing Date shall have
been duly performed or complied with in all material respects; and Old ACG
shall have delivered to Parent a certificate dated the Closing Date and signed
by the President or any Vice President of Old ACG.
10.2 No Litigation. No action or proceeding before a court or any other
governmental agency or body shall have been instituted or threatened to
restrain or prohibit the Merger and no governmental agency or body shall have
taken any other action or made any request of Parent as a result of which the
management of Parent deems it inadvisable to proceed with the transactions
hereunder.
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10.3 No Material Adverse Effect. No event or circumstance shall have
occurred with respect to Old ACG which would constitute a Material Adverse
Effect, and Old ACG shall not have suffered any material loss or damages to any
of its properties or assets, whether or not covered by insurance, which change,
loss or damage materially affects or impairs the ability of Old ACG to conduct
its business.
10.4 Satisfaction. All actions, proceedings, instruments and documents
required to carry out the transactions contemplated by this Agreement or
incidental hereto and all other related legal matters shall have been
reasonably satisfactory to Parent and its counsel.
10.5 Consents and Approvals. All necessary consents of and filings with any
governmental authority or agency relating to the consummation of the
transactions contemplated herein shall have been obtained and made.
10.6 FIRPTA Certificate Each Stockholder shall have delivered to Parent a
certificate as to its status under Section 1.1445-2(b) of the Treasury
regulations.
10.7 Closing of IPO. The sale by Parent of shares of Parent Stock in the
IPO shall have closed prior to or substantially contemporaneously with the
consummation of the Merger.
11. ADDITIONAL COVENANTS OF PARENT AFTER CLOSING
11.1 Rule 144 Filing. Parent, from and after the IPO, shall use
commercially reasonable efforts to assure that Rule 144 under the Securities
Act will be available for sales of shares by Stockholders at the earliest time
such sales are legally permissible.
12. TERMINATION OF AGREEMENT
12.1 Termination. This Agreement may be terminated at any time prior to the
Closing Date solely:
(i) by mutual consent of the boards of directors of Parent and Old
ACG;
(ii) by Old ACG (acting through its board of directors), on the one
hand, or by Parent (acting through its board of directors), on the other
hand, if prior to October 16, 1997, a registration statement on Form S-1
relating to the IPO has not been filed by Parent with the SEC pursuant to
the 1933 Act;
(iii) by Company (acting through its board of directors), on the one
hand, or by Parent (acting through its board of directors), on the other
hand, if the transactions contemplated by this Agreement to take place at
the Closing shall not have been
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consummated by January 31, 1998 unless the failure of such
transactions to be consummated is due to the willful failure of the party
seeking to terminate this Agreement to perform any of its obligations under
this Agreement to the extent required to be performed by it prior to or on
the Closing Date;
(iv) by Stockholders or Company, on the one hand, or by Parent, on the
other hand, if a material breach or default shall be made by the other
party in the observance or in the due and timely performance of any of the
material covenants, agreements or conditions contained herein, and the
curing of such default shall not have been made on or before the Closing
Date; or
(v) by Company and Stockholders, on the one hand, or by Parent, on the
other hand, if either such party or parties declines to consent to an
amendment or supplement to a Schedule proposed by the other party or
parties pursuant to Section 8.4 because such proposed amendment constitutes
or reflects an event or occurrence that would have a Material Adverse
Effect.
12.2 Liabilities in Event of Termination. Except as provided in Section
8.4, the termination of this Agreement will in no way limit any obligation or
liability of any party based on or arising from a breach or default by such
party with respect to any of its representations, warranties, covenants or
agreements contained in this Agreement including, but not limited to, legal and
audit costs and out of pocket expenses.
13. INVESTMENT REPRESENTATIONS
The Parent Stock to be delivered to Stockholders pursuant to this Agreement
(collectively, "Restricted Securities") not been and will not be registered
under the 1933 Act and therefore may not be resold without compliance with the
requirements of the 1933 Act and applicable state securities laws. All of the
Restricted Securities will be deemed to have been acquired by Stockholders
solely for their own respective accounts, for investment purposes only, and
with no present intention of distributing of such securities in connection
with a distribution.
13.1 Compliance With Law. By accepting certificates representing Parent
Stock after the Effective Time, Stockholders will be deemed to have covenanted
and agreed that none of the Restricted Securities will be offered, sold,
assigned, exchanged, transferred, encumbered, distributed, appointed or
otherwise disposed of except after full compliance with all of the applicable
provisions of the 1933 Act and the rules and regulations of the SEC thereunder
and the provisions of applicable state securities laws and regulations. All the
Restricted Securities shall bear the following legend.
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THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS
(COLLECTIVELY, THE "ACTS") AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED
UNLESS AND UNTIL (A) THE SECURITIES SHALL HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS
(COLLECTIVELY, THE "ACTS") OR (B) THE HOLDER OF THESE SECURITIES PROVIDES
THE ISSUER WITH (X) AN UNQUALIFIED WRITTEN OPINION OF LEGAL COUNSEL, WHICH
COUNSEL AND OPINION (IN FORM AND SUBSTANCE) SHALL BE REASONABLY
SATISFACTORY TO THE ISSUER, TO THE EFFECT THAT THE PROPOSED DISPOSITION OF
THESE SECURITIES MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE ACTS OR (Y)
SUCH OTHER EVIDENCE AS MAY BE REASONABLY SATISFACTORY TO THE ISSUER THAT
THE PROPOSED DISPOSITION MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE
ACTS.
14. REGISTRATION RIGHTS
14.1 PiggyBack Registration Rights. Whenever Parent proposes to register
any Parent Stock for its own or the account of others under the 1933 Act for a
public offering other than (i) any registration of shares to be used as
consideration for acquisitions of additional businesses by Parent and (ii)
registrations relating to employee benefit plans, Parent shall give each
Stockholder then owning Registrable Securities that has not been registered
under the 1933 Act prompt written notice of its intent to do so. Upon the
written request of any such Stockholder given within 15 days after receipt of
such notice, Parent shall cause to be included in such registration all
Registrable Securities which any Stockholder requests; provided, however, if
Parent is advised in writing in good faith by any managing underwriter of an
underwritten offering of the securities being offered pursuant to any
registration statement under this Section 14.1 that the number of shares to be
sold by Persons other than Parent is greater than the number of such shares
which can be offered without adversely affecting the offering, Parent may
reduce pro rata the number of shares offered for the accounts of such Persons
(based upon the number of shares held by such Person) to a number deemed
satisfactory by such managing underwriter.
14.2 Demand Registration Rights. At any time after the first anniversary of
the Closing Date, Stockholders or their permitted transferees, including the
holders of Class A Interests and Class B Interests in Consolidation Partners
Founding Fund, L.L.C. that receive shares of Parent Stock upon the
distribution thereof following the consummation of the IPO,("Founding
Stockholders"), holding a majority of the Registrable Securities then
outstanding, which shares have not been previously registered or sold and which
shares are not entitled to be sold under Rule 144(k) (or any similar or
successor provision) promulgated under the 1933 Act, may request in writing
that Parent file a registration statement under the 1933 Act covering the
registration of such shares of Registrable Securities issued to and held by the
Founding Stockholders or their permitted transferees (a "Demand Registration").
Within
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ten days of the receipt of such request, Parent shall give written notice of
such request to all other Founding Stockholders and shall, as soon as
practicable but in no event later than 45 days after notice from the Founding
Stockholders requesting such registration, file and use its best efforts to
cause to become effective a registration statement covering all such shares.
Parent shall be obligated to effect only one Demand Registration for all
Founding Stockholders; provided, however, that Parent shall not be deemed to
have satisfied its obligation under this Section 14.2 unless and until a Demand
Registration covering all shares of Registrable Securities requested to be
registered has been filed and become effective under the 1933 Act and has
remained current and effective for not less than 90 days (or such shorter
period as is required to complete the distribution and sale of all shares
registered thereunder).
Notwithstanding the foregoing paragraph, following such a demand a majority
of the disinterested directors of Parent (i.e. directors who have not demanded
or elected to sell shares in any such public offering) may defer the filing of
the registration statement for a 30 day period.
If at the time of any request for a Demand Registration Parent has
formulated plans to file within 60 days after such request a registration
statement covering the sale of any of its securities in a public offering under
the 1933 Act, no registration of Registrable Securities shall be initiated
under this Section 14.2 until 90 days after the effective date of such
registration statement unless Parent is no longer proceeding diligently to
secure the effectiveness of such registration statement; provided that Parent
shall provide the Founding Stockholders the right to participate in such public
offering pursuant to, and subject to, Section 14.1.
14.3 Registration Procedures. All expenses incurred in connection with the
registrations under this Section 14 (including all registration, filing,
qualification, legal, printing and accounting fees, but excluding underwriting
commissions and discounts), shall be borne by Parent. In connection with
registrations under Sections 14.1 and 14.2 Parent will, as expeditiously as
practicable:
(i) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause
such registration statement to become and remain effective; provided that
Parent may discontinue any registration of its securities that is being
effected pursuant to Section 14.2 at any time prior to the effective date
of the registration statement relating thereto.
(ii) Prepare and file with the SEC such amendments (including
post-effective 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 as may be requested by
the Stockholders holding a majority of the Registrable Securities covered
thereby not exceeding 90 days and to comply with the provisions of the 1933
Act with respect to the disposition of all securities covered by such
registration
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statement during such period in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in such registration
statement; provided, that before filing a registration statement or
prospectus relating to the sale of Registrable Securities, or any
amendments or supplements thereto, Parent will furnish to counsel to each
holder of Registrable Securities covered by such registration statement or
prospectus, copies of all documents proposed to be filed, which documents
will be subject to the review of such counsel, and Parent will give
reasonable consideration in good faith to any comments of such counsel.
(iii) Furnish to each holder of Registrable Securities covered by the
registration statement and to each underwriter, if any, of such Registrable
Securities, such number of copies of a preliminary prospectus and
prospectus for delivery in conformity with the requirements of the 1933
Act, and such other documents, as such Person may reasonably request, in
order to facilitate the public sale or other disposition of the Registrable
Securities.
(iv) Use its best efforts to register or qualify the Registrable
Securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as each seller shall
reasonably request, and do any and all other acts and things which may be
reasonably necessary or advisable to enable such seller to consummate the
disposition of the Registrable Securities owned by such seller, in such
jurisdictions, except that Parent shall not for any such purpose be
required (x) to qualify to do business as a foreign corporation in any
jurisdiction where, but for the requirements of this Section 14.3(iv), it
is not then so qualified, or (y) to subject itself to taxation in any such
jurisdiction, or (z) to take any action which would subject it to general
or unlimited service of process in any such jurisdiction where it is not
then so subject.
(v) Use its best 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 to enable
the seller or sellers thereof to consummate the disposition of such
Registrable Securities.
(vi) Immediately notify each seller of Registrable Securities covered
by such registration statement, at any time when a prospectus relating
thereto is required to be delivered under the 1933 Act within the
appropriate period mentioned in Section 14.3(ii), if Parent becomes aware
that the prospectus included in such registration statement, as then in
effect, includes 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 not misleading in the light of the circumstances then
existing, and, at the request of any such seller, deliver a reasonable
number of copies of an amended or supplemental prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such
Registrable Securities, each prospectus shall not include an untrue
statement of a material fact or omit to state a material
-23-
fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing.
(vii) Otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC and make generally available to its
security holders, in each case as soon as practicable, but not later than
45 calendar days after the close of the period covered thereby (90 calendar
days in case the period covered corresponds to a fiscal year of the
Parent), an earnings statement of Parent which will satisfy the provisions
of Section 11 (a) of the 1933 Act.
(viii) Use its best efforts in cooperation with the underwriters to
list such Registrable Securities on each securities exchange as they may
reasonably designate.
(ix) In the event the offering is an underwritten offering, use its
best efforts to obtain a "cold comfort" letter from the independent public
accountants for Parent in customary form and covering such matters of the
type customarily covered by such letters.
(x) Execute and deliver all instruments and documents (including in an
underwritten offering an underwriting agreement in customary form) and take
such other actions and obtain such certificates and opinions as the
Stockholders holding a majority of the shares of Registrable Securities
covered by the Registration Statement may reasonably request in order to
effect an underwritten public offering of such Registrable Securities.
(xi) Make available for inspection by the seller of such Registrable
Securities covered by such registration statement, by any underwriter
participating in any disposition to be effected pursuant to such
registration statement and by any attorney, accountant or other agent
retained by any such seller or any such underwriter, all pertinent
financial and other records, pertinent corporate documents and properties
of Parent, and cause all of Parent's officers, directors and employees to
supply all information reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection with such
registration statement.
(xii) Obtain for delivery to the underwriter or agent an opinion or
opinions from counsel for Parent in customary form and in form and scope
reasonably satisfactory to such underwriter or agent and its counsel.
14.4 Other Registration Matters.
(i) Each Stockholder holding shares of Registrable Securities covered
by a Registration Statement referred to in this Section 14 will, upon
receipt of any notice from Parent of the happening of any event of the kind
described in Section 14.3(vi), forthwith
-24-
discontinue disposition of the 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 Section 14.3(vi).
(ii) If a registration pursuant to Section 14.1 or 14.2 involves an
underwritten offering, each Stockholder (including his permitted assigns)
agrees, if his shares of Registrable Securities are included in such
registration, not to effect any public sale or distribution, including any
sale pursuant to Rule 144 under the 1933 Act, of any Registrable
Securities, or of any security convertible into or exchangeable or
exercisable for any Registrable Securities (other than as part of such
underwritten offering), without the consent of the managing underwriter,
during a period commencing seven calendar days before and ending 180
calendar days (or such lesser number as the managing underwriter shall
designate) after the effective date of such registration. Similarly, each
of the Stockholders agrees not to effect any sale or distribution,
including any sale pursuant to the registration rights provided in Section
14.1, of any Registrable Securities, or of any security convertible into or
exchangeable or exercisable for any Registrable Securities, without the
consent of the managing underwriter of the IPO during a period commencing
on the effective date of the Draft Registration Statement and ending 365
calendar days (or such lesser number as such managing underwriter shall
designate) after such effective date.
14.5 Indemnification.
(i) In the event of any registration of any securities of Parent under
the 1933 Act pursuant to Section 14.1 or 14.2, Parent will, and it hereby
agrees to, indemnify and hold harmless, to the extent permitted by law,
each seller of any Registrable Securities covered by such registration
statement, each Affiliate of such seller and their respective directors,
officers, employees and agents or general and limited partners (and
directors, officers, employees and agents thereof) and, if such seller is a
portfolio or investment fund, its investment advisors or agents, each other
Person who participates as an underwriter in the offering or sale of such
securities and each other Person, if any, who controls such seller or any
such underwriter within the meaning of the 1933 Act, as follows:
(x) against any and all loss, liability, claim, damage or expense
whatsoever arising out of or based upon an untrue statement or alleged
untrue statement of a material fact contained in any registration
statement (or any amendment or supplement thereto), including all
documents incorporated therein by reference, or the omission or
alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading, or
arising out of an untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus or prospectus
(or any amendment or supplement thereto) or the omission or alleged
omission therefrom of a material fact
-25-
necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading;
(y) against any and all loss, liability, claim, damage and
expense whatsoever to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, if such settlement is
effected with the written consent of Parent; and
(z) against any and all expense reasonably incurred by them in
connection with investigating, preparing or defending against any
litigation, or investigation or proceeding by any governmental agency
or body, commenced or threatened, or any claim whatsoever based upon
any such untrue statement or omission, or any such alleged untrue
statement or mission to the extent that any such expense is not paid
under subsection (x) or (y) above;
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such seller or any such director,
officer, employee, agent, general or limited partner, investment advisor
or agent, underwriter or controlling Person and shall survive the transfer
of such securities by such seller.
(ii) Parent may require, as a condition to including any Registrable
Securities in any registration statement filed in accordance with Section
14.1 or 14.2, that Parent shall have received an undertaking reasonably
satisfactory to it from the prospective seller of such Registrable
Securities or any underwriter, to indemnify and hold harmless (in the same
manner and to the same extent as set forth in Section 14.5(i)) Parent with
respect to any statement or alleged statement in or omission or alleged
omission from such registration statement, any preliminary, final or
summary prospectus contained therein, or any amendment or supplement, if
such statement or alleged statement or omission or alleged omission was
made in reliance upon and in conformity with written information furnished
to Parent by or on behalf of such seller or underwriter specifically
stating that it is for use in the preparation of such registration
statement, preliminary, final or summary prospectus or amendment or
supplement. Such indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of Parent or any such director,
officer or controlling Person and shall survive the transfer of such
securities by such seller. In that event, the obligations of the Parent and
such sellers pursuant to this Section 14.5 are to be several and not joint;
provided, however, that, with respect to each claim pursuant to this
Section 14.5, Parent shall be liable for the full amount of such claim, and
each such seller's liability under this Section 14.5 shall be limited to an
amount equal to the net proceeds (after
-26-
deducting the underwriting discount and expenses) received by such
seller from the sale of Registrable Securities held by such seller pursuant
to this Agreement.
(iii) Promptly after receipt by an indemnified party hereunder of
written notice of the commencement of any action or proceeding involving a
claim referred to in this Section 14.5, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party, give
written notice to such indemnifying party of the commencement of such
action; provided, however, that the failure of any indemnified party to
give notice as provided herein shall not relieve the indemnifying party of
its obligations under this Section 14.5, except to the extent (not
including any such notice of an underwriter) that the indemnifying party is
materially prejudiced by such failure to give notice. In case any such
action is brought against an indemnified party, unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified
and indemnifying parties may exist in respect of such claim (in which case
the indemnifying party shall not be liable for the fees and expenses of
more than one firm of counsel selected by holders of a majority of the
shares of Registrable Securities included in the offering or more than one
firm of counsel for the underwriters in connection with any one action or
separate but similar or related actions), the indemnifying party will be
entitled to participate in and to assume the defense thereof, jointly with
any other indemnifying party similarly notified, to the extent that it may
wish with counsel reasonably satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not
be liable to such indemnified party for any legal or other expenses
subsequently incurred by such indemnifying party in connection with the
defense thereof, provided that the indemnifying party will not agree to any
settlement without the prior consent of the indemnified party (which
consent shall not be unreasonably withheld) unless such settlement requires
no more than a monetary payment for which the indemnifying party agrees to
indemnify the indemnified party and includes a full, unconditional and
complete release of the indemnified party; provided, however, that the
indemnified party shall be entitled to take control of the defense of any
claim as to which, in the reasonable judgment of the indemnifying party's
counsel, representation of both the indemnifying party and the indemnified
party would be inappropriate under the applicable standards of professional
conduct due to actual or potential differing interests between them. In the
event that the indemnifying party does not assume the defense of a claim
pursuant to this Section 14.5(iii), the indemnified party will have the
right to defend such claim by all appropriate proceedings, and will have
control of such defense and proceedings, and the indemnified party shall
have the right to agree to any settlement without the prior consent of the
indemnifying party. Each indemnified party shall, and shall cause its legal
counsel to, provide reasonable cooperation to the indemnifying party and
its legal counsel in connection with its assuming the defense of any claim,
including the furnishing of the indemnifying party with all papers served
in such proceeding. In the event that an indemnifying party assumes the
defense of an action under this Section 14.5(iii), then such indemnifying
party
-27-
shall, subject to the provisions of this Section 14.5, indemnify and
hold harmless the indemnified party from any and all losses, claims,
damages or liabilities by reason of such settlement or judgment.
(iv) Parent and each seller of Registrable Securities shall provide
for the foregoing indemnity (with appropriate modifications) in any
underwriting agreement with respect to any required registration or other
qualification of securities under any federal or state law or regulation of
any governmental authority.
14.6 Contribution. In order to provide for just and equitable contribution
in circumstances under which the indemnity contemplated by Section 14.5 is for
any reason not available or insufficient for any reason to hold harmless an
indemnified party in respect of any losses, claims, damages or liabilities
referred to therein, the parties required to indemnify by the terms thereof
shall contribute to the aggregate losses, liabilities, claims, damages and
expenses of the nature contemplated by such indemnity agreement incurred by
Parent, any seller of Registrable Securities and one or more of the
underwriters, except to the extent that contribution is not permitted under
Section 11 (f) of the 1933 Act. In determining the amounts which the respective
parties shall contribute, there shall be considered the relative benefits
received by each party from the offering of the Registrable Securities by
taking into account the portion of the proceeds of the offering realized by
each, and the relative fault of each party by taking into account the parties'
relative knowledge and access to information concerning the matter with respect
to which the claim was asserted, the opportunity to correct and prevent any
statement or omission and any other equitable considerations appropriate under
the circumstances. Parent and each Person selling securities agree with each
other that no seller of Registrable Securities shall be required to contribute
any amount in excess of the amount such seller would have been required to pay
to an indemnified party if the indemnity under Section 14.5(ii) were available.
Parent and each such seller agree with each other and the underwriters of the
Registrable Securities, if requested by such underwriters, that it would not be
equitable if the amount of such contribution were determined by pro rata or per
capita allocation (even if the underwriters were treated as one entity for such
purpose) or for the underwriters' portion of such contribution to exceed the
percentage that the underwriting discount bears to the initial public offering
price of the Registrable Securities. For purposes of this Section 14.6, each
Person, if any, who controls an underwriter within the meaning of Section 15 of
the 1933 Act shall have the same rights to contribution as such underwriter,
and each director and each officer of Parent who signed the registration
statement, and each Person, if any, who controls Parent or a seller of
Registrable Securities within the meaning of Section 15 of the 1933 Act shall
have the same rights to contribution as Parent or a seller of Registrable
Securities, as the case may be.
14.7 Availability of Rule 144. Parent shall not be obligated to register
shares of Registrable Securities held by any Stockholder at any time when the
resale provisions of Rule 144(k) (or any similar or successor provision)
promulgated under the 1933 Act are available to such Stockholder.
-28-
15. GENERAL
15.1 Cooperation. Old ACG, Parent and Newco shall deliver or cause to be
delivered to the other on the Closing Date and at such other times and places
as shall be reasonably agreed to, such additional instruments as any of the
others may reasonably request for the purpose of carrying out this Agreement.
Old ACG will cooperate and use its reasonable efforts to have the present
officers, directors and employees of Old ACG cooperate with Parent on and after
the Closing Date in furnishing information, evidence, testimony and other
assistance in connection with any Tax Return filing obligations, actions,
proceedings, arrangements or disputes of any nature with respect to matters
pertaining to all periods prior to the Closing Date.
15.2 Successors and Assigns. This Agreement and the rights of the parties
hereunder may not be assigned (except by operation of law), but if assigned by
operation of law, this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto, the successors of Parent, Newco and Old ACG.
15.3 Entire Agreement. This Agreement (including the Schedules and Annexes)
and the documents delivered pursuant hereto constitute the entire agreement and
understanding among Old ACG, Newco and Parent and supersede any prior agreement
and understanding relating to the subject matter of this Agreement. This
Agreement, upon execution and delivery, constitutes a valid and binding
agreement of the parties hereto enforceable in accordance with its terms and
may be modified or amended only by a written instrument executed by Old ACG,
Newco and Parent, acting through their respective officers or representatives,
duly authorized by their respective Boards of Directors. Any disclosure made on
any Schedule delivered pursuant hereto shall be deemed to have been disclosed
for purposes of any other Schedule required hereby; provided that Old ACG shall
make a good faith effort to cross reference disclosures, as necessary or
advisable, between related Schedules.
15.4 Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
15.5 Brokers and Agents. Each party represents and warrants that it
employed no broker or agent in connection with this transaction and agrees to
indemnify the other parties hereto against all loss, cost, damage or expense
arising out of claims for fees or commission of brokers employed or alleged to
have been employed by such indemnifying party.
15.6 Expenses. Whether or not the transactions herein contemplated shall be
consummated, Parent will pay the fees, expenses and disbursements of Parent,
Old ACG and their respective agents, representatives, accountants and counsel
incurred in connection with the subject matter of this Agreement and any
amendments thereto, including all costs and expenses incurred in
-29-
the performance and compliance with all conditions to be performed by Parent
and Company under this Agreement. Each Stockholder will be required to pay all
sales, use, transfer, real property transfer, gains, stock transfer and other
similar taxes ("Transfer Taxes") imposed in connection with the Merger, any
fees and expenses of Stockholders' legal counsel and all other costs and
expenses incurred by Stockholders in their performance and compliance with all
conditions to be performed by them under this Agreement. Each Stockholder shall
file all necessary documentation and Returns with respect to such Transfer
Taxes. In addition, each Stockholder will be required to pay any Taxes due upon
receipt of the consideration payable pursuant to Section 3.
15.7 Notices. All notices of communication required or permitted hereunder
shall be in writing, addressed to the party to be notified, and may be given by
(i) depositing the same in United States mail, postage prepaid and registered
or certified with return receipt requested, (ii) by telecopying the same if
receipt thereof is confirmed or (iii) by delivering the same in person to an
officer or agent of such party. If to Parent, Newco or Old ACG, addressed to
each of them at:
Advanced Communications Group, Inc.
0000 Xxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Xxx X. Xxxxxxxxx
Telecopy No.: 000-000-0000
with a copy to:
Bracewell & Xxxxxxxxx, L.L.P.
South Tower Pennzoil Place
000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attn: Xxxxx X. Xxxxxxx III
Telecopy No.: 000-000-0000
or to such other address or counsel as any party hereto shall specify pursuant
to this Section 20.7 from time to time.
15.8 Exercise of Rights and Remedies. Except as otherwise provided herein,
no delay of or omission in the exercise of any right, power or remedy accruing
to any party as a result of any breach or default by any other party under this
Agreement shall impair any such right, power or remedy, nor shall it be
construed as a waiver of or acquiescence in any such breach or default, or of
any similar breach or default occurring later; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring before or after that waiver.
-30-
15.9 Time. Time is of the essence with respect to this Agreement.
15.10 Reformation and Severability. In case any provision of this Agreement
shall be invalid, illegal or unenforceable, it shall, to the extent
practicable, be modified in such manner as to be valid, legal and enforceable
but so as to most nearly retain the intent of the parties, and if such
modification is not possible, such provision shall be severed from this
Agreement; and in either case the validity, legality and enforceability of the
remaining provisions of this Agreement shall not in any way be affected or
impaired thereby.
15.11 Remedies Cumulative. No right, remedy or election given by any term
of this Agreement shall be deemed exclusive but each shall be cumulative with
all other rights, remedies and elections available at law or in equity.
15.12 Captions. The headings of this Agreement are inserted for convenience
only, shall not constitute a part of this Agreement or be used to construe or
interpret any provision hereof.
15.13 Public Statements. The parties hereto shall consult with each other
and no party shall issue any public announcement or statement with respect to
the transactions contemplated hereby without the consent of the other parties,
unless the party desiring to make such announcement or statement, after seeking
such consent from the other parties, obtains advice from legal counsel that a
public announcement or statement is required by applicable law.
15.14 Amendments and Waivers. Any term of this Agreement may be amended and
the observance of any term of this Agreement may be waived only with the
written consent of Parent, Newco and Old ACG. Any amendment or waiver effected
in accordance with this Section 14.14 be binding upon each of the parties
hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
ADVANCED COMMUNICATIONS GROUP, INC.
By:
-------------------------------------
Name: Xxx X. Xxxxxxxxx
Title: Chairman and Chief Executive
Officer
-31-
ADVANCED COMMUNICATIONS GROUP
ACQUISITION, INC.
By:
-------------------------------------
Name: Xxx X. Xxxxxxxxx
Title: President
ADVANCED COMMUNICATIONS CORP.
By:
-------------------------------------
Name: Xxx X. Xxxxxxxxx
Title: Chairman and Chief Executive
Officer
-32-
ANNEX I
DRAFT REGISTRATION STATEMENT
(separately provided)
-34-
ANNEX II
ADVANCED COMMUNICATIONS GROUP, INC.
SECTION 351 EXCHANGE PLAN
The Board of Directors of Advanced Communications Group, Inc., a
Delaware corporation organized in September 1997 ("Company"), has adopted this
Section 351 Exchange Plan effective as of October 3, 1997 ("Exchange Plan") in
order to comply with the requirements of Section 351 of the Internal Revenue
Code of 1986, as amended, and the rules and regulations promulgated thereunder
("Code"), and for purposes of defining the rights of various persons who may
make future transfers of voting capital stock and other consideration,
including cash and other assets (the items transferred being collectively
referred to herein as the "Assets") to the Company, all as more particularly
set forth below:
WHEREAS, the Company intends to acquire outstanding shares of capital
stock of certain corporations and other assets and acquire the outstanding
capital stock of ACG, Inc., a Delaware corporation, in a reverse triangular
merger, all as part of an integrated transaction as more particularly
described in the Company's Registration Statement in Form S-1 (draft of
October 2, 1997) ("Draft Registration Statement") relating to its initial
underwritten public offering ("IPO"), the foregoing acquisitions being
hereinafter collectively referred to as the "Acquisitions"; and
WHEREAS, the various transactions comprising the Acquisitions will
occur substantially concurrently upon the consummation of the IPO;
NOW THEREFORE, in order to obtain the Assets, the Company may elect
to exchange, as a part of a single plan, shares of its voting capital stock
and other consideration, including cash, warrants, options and promissory
notes, for such Assets as shall be transferred to the Company by one or more
of the following individuals and entities: (i) the existing shareholders of
the predecessor to the Company in a reverse triangular merger; (ii) certain
holders of capital stock of other corporations or other assets that shall be
acquired by the Company pursuant to the Acquisitions; (iii) certain other
persons or entities who may assist the Company in the Acquisitions or in the
manufacture and or marketing of its products, (iv) purchasers of the Company's
capital stock in the IPO; and (v) certain other financial investors; and
FURTHERMORE, it is the expectation of the Company (without making any
representation with respect thereto) that the parties contributing such Assets
to the Company as part of the Acquisitions and the IPO will possess
immediately after the completion of the Acquisitions, at least 80% of the total
combined voting power of all classes of capital stock of the Company entitled
to
vote and at least 80% of the total number of shares of all other classes of
capital stock of the Company; and
FURTHERMORE, it is also the intention of the Company (without making
any representation with respect thereto) that the foregoing transfers of
Assets to the Company shall qualify as tax free within the provisions of
Section 351 of the Code; provided, however, that the Company does not assume
any liability or responsibility to any holder of capital stock of the Company
or any other person or entity in the event Section 351 of the Code does not
apply to such transfers of Assets; and
FURTHERMORE, it is the expectation of the Company that the parties to
the Acquisitions and the IPO will contribute Assets to the Company in the
approximate amounts contemplated by the Draft Registration Statement in
exchange for the voting capital stock, and other consideration, including
cash, options, warrants and promissory notes of the Company, in the
approximate amounts contemplated by the Draft Registration Statement.
The shares of voting capital stock and other consideration, including
cash, options, warrants and promissory notes of the Company, deliverable in
the Acquisitions may be subject to adjustment in accordance with the various
acquisition agreements between the Company and the contributing parties. This
Exchange Plan shall not obligate any party to any Acquisition to consummate
such Acquisition other than upon the terms of the definitive acquisition
agreement executed by such party with respect to such Acquisition.
By the execution of the acquisition agreement to which this Exchange
Plan is attached as Annex II, each of the contributing parties thereto
evidences such party's agreement with and adoption of this Exchange Plan.
-2-
ANNEX III
CERTIFICATE OF MERGER
OF
ADVANCED COMMUNICATIONS GROUP ACQUISITION, INC.
(A DELAWARE CORPORATION)
INTO
ACG, INC.
(A DELAWARE CORPORATION)
------------------------------------
Pursuant to Sections 103 and 251(c) of the General
Corporation Law of the State of Delaware
------------------------------------
Advanced Communications Group Acquisition, Inc., a Delaware
corporation ("Acquisition Corp."), desires to merge with and into ACG, Inc., a
Delaware corporation ("Old ACG"), pursuant to the provisions of Section 251(c)
of the General Corporation Law of the State of Delaware (the "Merger"). Old
ACG hereby certifies as follows:
FIRST: The names and states of incorporation of the constituent
corporations which plan to merge hereby (the "Constituent Corporations") are as
follows:
Name State of Incorporation
---- ----------------------
Acquisition, Inc. Delaware
ACG, Inc. Delaware
SECOND: An Agreement of Merger, dated as of October 1, 1997, by and
among Advanced Communications Group, Inc., a Delaware corporation ("ACG"),
Advanced Communications Group Acquisition, Inc. and Old ACG (the "Merger
Agreement"), has been approved, adopted, certified, executed and acknowledged
by each of the Constituent Corporations in accordance with the requirements of
Subsection 251(c) of the General Corporation Law of the State of Delaware.
-3-
THIRD: It is intended that the Merger Agreement and the other
contemporaneous agreements relating to the acquisition of the Founding
Companies (as defined in the Merger Agreement) (collectively, the "Other
Agreements") by ACG operate as an integrated plan pursuant to which the
stockholders of Old ACG and the stockholders named in the Other Agreements
(collectively, the "Stockholders") will transfer the stock of Old ACG and the
Other Founding Companies (as defined in the Merger Agreement) to ACG, and the
Stockholders, and the public will acquire stock of ACG in a tax-free transfer
of property pursuant to Section 351 of the Internal Revenue Code of 1986, as
amended.
FOURTH: The surviving corporation shall be Old ACG (the "Surviving
Corporation").
FIFTH: The Certificate of Incorporation of the Surviving Corporation
shall be substantively identical, mutatis mutandis, to the Certificate of
Incorporation of Acquisition Corp. that was in effect immediately prior to the
filing of this Certificate of Merger.
SIXTH: The executed Merger Agreement is on file at the principal place
of business of the Surviving Corporation. The address of the principal place of
business of the Surviving Corporation is 0000 Xxxx Xxxxxxx, Xxxxx 000, Xxxxxxx,
Xxxxx 00000.
SEVENTH: A copy of the executed Merger Agreement will be furnished by
the Surviving Corporation, on request and without cost, to any stockholder of
either of the Constituent Corporations.
EIGHT: This Certificate of Merger shall not become effective until ,
1997.
IN WITNESS WHEREOF, ACG, Inc. has caused this Certificate of Merger to
be signed by its ______________________ as of this ______ day of
_____________________, 1997.
ACG, Inc.
(a Delaware corporation)
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
-4-
