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AGREEMENT AND PLAN OF MERGER
by and among
PREMIERE TECHNOLOGIES, INC.,
NETS ACQUISITION CORP.
and
XPEDITE SYSTEMS, INC.
Dated as of November 13, 1997
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TABLE OF CONTENTS
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ARTICLE I. [INTENTIONALLY OMITTED]....................................... 1
ARTICLE II. THE MERGER................................................... 1
SECTION 2.01. THE MERGER............................................ 1
SECTION 2.02. CLOSING............................................... 1
SECTION 2.03. CERTIFICATE OF INCORPORATION.......................... 2
SECTION 2.04. BY-LAWS............................................... 2
SECTION 2.05. DIRECTORS............................................. 2
SECTION 2.06. OFFICERS.............................................. 2
SECTION 2.07. EFFECTIVE TIME........................................ 2
ARTICLE III. EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES................... 2
SECTION 3.01. EFFECT ON COMPANY COMMON STOCK........................ 2
SECTION 3.02. CONVERSION OF ACQUISITION SUB COMMON STOCK............ 3
SECTION 3.03. FRACTIONAL SHARES..................................... 4
SECTION 3.04. EXCHANGE PROCEDURES................................... 4
SECTION 3.05. STOCK TRANSFER BOOKS.................................. 5
SECTION 3.06. NO FURTHER OWNERSHIP RIGHTS IN COMPANY
COMMON STOCK.......................................... 5
SECTION 3.07. LOST, STOLEN OR DESTROYED CERTIFICATES................ 5
SECTION 3.08. COMPANY STOCK OPTIONS AND WARRANTS.................... 5
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE COMPANY................ 6
SECTION 4.01. ORGANIZATION AND STANDING............................. 6
SECTION 4.02. AUTHORITY AND STATUS.................................. 7
SECTION 4.03. CAPITALIZATION........................................ 7
SECTION 4.04. NO CONFLICT, REQUIRED FILINGS AND CONSENTS............ 8
SECTION 4.05. COMPLIANCE; PERMITS................................... 9
SECTION 4.06. SEC FILINGS; FINANCIAL STATEMENTS..................... 10
SECTION 4.07. ABSENCE OF CERTAIN CHANGES OR EVENTS.................. 10
SECTION 4.08. NO UNDISCLOSED LIABILITIES............................ 11
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SECTION 4.09. ABSENCE OF LITIGATION................................. 11
SECTION 4.10. EMPLOYEE BENEFIT PLANS, EMPLOYMENT AGREEMENTS......... 11
SECTION 4.11. LABOR MATTERS......................................... 12
SECTION 4.12. INFORMATION SUPPLIED.................................. 12
SECTION 4.13. TITLE TO PROPERTY..................................... 13
SECTION 4.14. TAXES................................................. 13
SECTION 4.15. ENVIRONMENTAL MATTERS................................. 14
SECTION 4.16. INSURANCE............................................. 15
SECTION 4.17. OPINION OF FINANCIAL ADVISOR.......................... 15
SECTION 4.18. BROKERS............................................... 15
SECTION 4.19. BOOKS AND RECORDS..................................... 15
SECTION 4.20. CERTAIN PAYMENTS...................................... 15
SECTION 4.21. INTELLECTUAL PROPERTY................................. 16
SECTION 4.22. CONTRACTS............................................. 16
SECTION 4.23. INFORMATION SYSTEMS................................... 16
SECTION 4.24. REGULATION OF BUSINESS................................ 17
SECTION 4.25. TAX MATTERS........................................... 17
SECTION 4.26. STATE TAKEOVER LAWS................................... 17
SECTION 4.27. STOCKHOLDER VOTING AGREEMENTS......................... 17
SECTION 4.28. BOARD RECOMMENDATION.................................. 17
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION SUB.. 17
SECTION 5.01. ORGANIZATION AND STANDING............................. 17
SECTION 5.02. AUTHORITY AND STATUS.................................. 18
SECTION 5.03. CAPITALIZATION........................................ 18
SECTION 5.04. NO CONFLICT, REQUIRED FILINGS AND CONSENTS............ 19
SECTION 5.05. COMPLIANCE; PERMITS................................... 20
SECTION 5.06. SEC FILINGS; FINANCIAL STATEMENTS..................... 20
SECTION 5.07. ABSENCE OF CERTAIN CHANGES OR EVENTS.................. 21
SECTION 5.08. NO UNDISCLOSED LIABILITIES............................ 21
SECTION 5.09. ABSENCE OF LITIGATION................................. 21
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SECTION 5.10. EMPLOYEE BENEFIT PLANS, EMPLOYMENT AGREEMENTS......... 22
SECTION 5.11. LABOR MATTERS......................................... 22
SECTION 5.12. INFORMATION SUPPLIED.................................. 23
SECTION 5.13. TITLE TO PROPERTY..................................... 23
SECTION 5.14. TAXES................................................. 23
SECTION 5.15. ENVIRONMENTAL MATTERS................................. 24
SECTION 5.16. INSURANCE............................................. 25
SECTION 5.17. OPINION OF FINANCIAL ADVISOR.......................... 25
SECTION 5.18. BROKERS............................................... 25
SECTION 5.19. BOOKS AND RECORDS..................................... 25
SECTION 5.20. CERTAIN PAYMENTS...................................... 25
SECTION 5.21. INTELLECTUAL PROPERTY................................. 25
SECTION 5.22. CONTRACTS............................................. 26
SECTION 5.23. INFORMATION SYSTEMS................................... 26
SECTION 5.24. REGULATION OF BUSINESS................................ 26
SECTION 5.25. NO BUSINESS........................................... 26
SECTION 5.26. TAX MATTERS........................................... 26
SECTION 5.27. BOARD RECOMMENDATION.................................. 26
ARTICLE VI. CONDUCT OF BUSINESS PENDING THE MERGER....................... 27
SECTION 6.01. CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER. 27
SECTION 6.02. CONDUCT OF BUSINESS BY PARENT PENDING THE MERGER...... 29
SECTION 6.03. NO SOLICITATION....................................... 30
ARTICLE VII. ADDITIONAL AGREEMENTS....................................... 31
SECTION 7.01. HSR ACT; ETC.......................................... 31
SECTION 7.02. PREPARATION OF THE PROSPECTUS/PROXY STATEMENT......... 31
SECTION 7.03. STOCKHOLDER APPROVAL.................................. 32
SECTION 7.04. ACCESS TO INFORMATION; CONFIDENTIALITY................ 33
SECTION 7.05. CONSENTS; APPROVALS................................... 34
SECTION 7.06. INDEMNIFICATION AND INSURANCE......................... 34
SECTION 7.07. EMPLOYMENT AND BENEFIT MATTERS........................ 35
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SECTION 7.08. NOTIFICATION OF CERTAIN MATTERS....................... 35
SECTION 7.09. FURTHER ACTION........................................ 36
SECTION 7.10. PUBLIC ANNOUNCEMENTS.................................. 36
SECTION 7.11. CONVEYANCE TAXES...................................... 36
SECTION 7.12. NASDAQ LISTING........................................ 36
SECTION 7.13. NO ACQUISITION SUB BUSINESS........................... 36
SECTION 7.14. NEGOTIATIONS WITH MINORITY AFFILIATE.................. 36
SECTION 7.15. ACCOUNTING AND TAX MATTERS............................ 37
SECTION 7.16. REGISTRATION RIGHTS................................... 37
ARTICLE VIII. CONDITIONS TO THE MERGER................................... 37
SECTION 8.01. CONDITIONS TO OBLIGATION OF EACH PARTY
TO EFFECT THE MERGER.................................. 37
SECTION 8.02. ADDITIONAL CONDITIONS TO OBLIGATIONS OF PARENT........ 38
SECTION 8.03. ADDITIONAL CONDITIONS TO OBLIGATION OF THE COMPANY.... 39
ARTICLE IX. TERMINATION.................................................. 40
SECTION 9.01. TERMINATION........................................... 40
SECTION 9.02. EFFECT OF TERMINATION................................. 42
SECTION 9.03. FEES AND EXPENSES..................................... 44
ARTICLE X. GENERAL PROVISIONS............................................ 44
SECTION 10.01. EFFECTIVENESS OF REPRESENTATIONS,
WARRANTIES AND AGREEMENTS, ETC....................... 44
SECTION 10.02. NOTICES.............................................. 45
SECTION 10.03. CERTAIN DEFINITIONS.................................. 46
SECTION 10.04. AMENDMENT............................................ 47
SECTION 10.05. WAIVER............................................... 47
SECTION 10.06. HEADINGS............................................. 47
SECTION 10.07. SEVERABILITY......................................... 47
SECTION 10.08. ENTIRE AGREEMENT..................................... 48
SECTION 10.09. ASSIGNMENT........................................... 48
SECTION 10.10. PARTIES IN INTEREST.................................. 48
SECTION 10.11. FAILURE OR INDULGENCE NOT WAIVER;
REMEDIES CUMULATIVE.................................. 48
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SECTION 10.12. GOVERNING LAW........................................ 48
SECTION 10.13. COUNTERPARTS......................................... 48
SECTION 10.14. CONSENT TO JURISDICTION.............................. 48
INDEX OF EXHIBITS
EXHIBIT A Form of Affiliate Letter
EXHIBIT B Form of Company Stockholder Agreement
EXHIBIT C Registration Rights
INDEX OF SCHEDULES*
SCHEDULE 4.01(b) Certificate of Incorporation and By-Laws of the Company
SCHEDULE 4.03(a) Capitalization
SCHEDULE 4.03(b) Conversion Rights
SCHEDULE 4.03(c) Minority Affiliates
SCHEDULE 4.04(a) Contracts
SCHEDULE 4.04(b) Defaults
SCHEDULE 4.04(c) Conflicts
SCHEDULE 4.05(a) Compliance with Laws and Agreements
SCHEDULE 4.05(b) Permits
SCHEDULE 4.06 Company SEC Reports
SCHEDULE 4.07(a)-(g) Absence of Certain Changes
SCHEDULE 4.08 Liabilities
SCHEDULE 4.09 Litigation
SCHEDULE 4.10 ERISA Matters
SCHEDULE 4.11 Labor Matters
SCHEDULE 4.13 Title to Property
SCHEDULE 4.14 Taxes
SCHEDULE 4.15 Environmental Matters
SCHEDULE 4.18 Brokers
SCHEDULE 4.21 Intellectual Property Rights
SCHEDULE 4.22(a) Change of Control Provisions
SCHEDULE 4.22(b) Affiliate Contracts
SCHEDULE 5.01(b) Articles of Incorporation and By-Laws of Parent and
Acquisition Sub
SCHEDULE 5.03(a) Capitalization
SCHEDULE 5.03(b) Conversion Rights
SCHEDULE 5.04(a) Contracts
SCHEDULE 5.04(b) Defaults
SCHEDULE 5.04(c) Conflicts
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SCHEDULE 5.05(a) Compliance with Laws and Agreements
SCHEDULE 5.05(b) Permits
SCHEDULE 5.06 Parent SEC Reports
SCHEDULE 5.07(a)-(f) Absence of Certain Changes
SCHEDULE 5.08 Liabilities
SCHEDULE 5.09 Litigation
SCHEDULE 5.10 ERISA Matters
SCHEDULE 5.11 Labor Matters
SCHEDULE 5.13 Title to Property
SCHEDULE 5.14 Taxes
SCHEDULE 5.15 Environmental Matters
SCHEDULE 5.18 Brokers
SCHEDULE 5.21 Intellectual Property Rights
SCHEDULE 5.22 Change of Control Provisions
SCHEDULE 6.01 Conduct of Business by the Company
SCHEDULE 6.02 Conduct of Business by Parent
SCHEDULE 7.08 Benefit Plans
* Pursuant to Item 601(b)(2) of Regulation S-K, the registrant has omitted all
schedules and similar attachments to the Merger Agreement. The registrant
agrees to furnish copies of all such schedules and similar attachments to the
Commission upon request.
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INDEX OF DEFINITIONS
DEFINITION SECTION
"1996 Company Balance Sheet"................ Section 4.08
"1996 Parent Balance Sheet"................. Section 5.08
"Acquisition Proposal"...................... Section 6.03(a)
"Acquisition Sub Common Stock".............. Section 3.02
"Acquisition Sub"........................... Introduction
"affiliate"................................. Section 10.03(a)
"Agreement"................................. Introduction
"Alternative Transaction"................... Section 9.01
"Antitrust Division"........................ Section 7.01
"Average Closing Price"..................... Section 3.01(a)
"beneficial owner".......................... Section 10.03(b)
"Benefit Plan".............................. Section 7.07
"Blue Sky Laws"............................. Section 4.04(d)
"business day".............................. Section 10.03(c)
"Certificate of Merger"..................... Section 2.07
"Certificate"............................... Section 3.04(b)
"Closing Date".............................. Section 2.02
"Closing"................................... Section 2.02
"Code"...................................... Section 3.04(f)
"Company Common Stock"...................... Section 3.01(a)
"Company Employee Plans".................... Section 4.10
"Company Permits"........................... Section 4.05(b)
"Company SEC Reports"....................... Section 4.06(a)
"Company Stock Option Plans"................ Section 3.08(a)
"Company Stockholder Agreements"............ Section 4.27
"Company Stockholders Meeting".............. Section 4.12
"Company"................................... Introduction
"Confidentiality Letter".................... Section 7.04
"control"................................... Section 10.03(d)
"Determination Date"........................ Section 3.01(a)
"Effective Time"............................ Section 2.07
"Environmental Laws"........................ Section 4.15
"ERISA"..................................... Section 4.10
"Exchange Act".............................. Section 4.04(a)
"Exchange Agent"............................ Section 3.04(a)
"Exchange Ratio"............................ Section 3.01(a)
"Excluded Shares"........................... Section 3.01(b)
"FTC"....................................... Section 7.01
"GCL"....................................... Section 2.01
"generally accepted accounting principles".. Section 10.03(e)
"HSR Act"................................... Section 4.04(d)
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"Indemnified Parties"....................... Section 7.06(b)
"Intellectual Property Rights".............. Section 4.21
"IRS"....................................... Section 4.10
"Large Stockholder"......................... Section 7.16
"Laws"...................................... Section 4.04(c)
"Liens"..................................... Section 4.03(a)
"Material Adverse Effect"................... Section 10.03(f)
"Maximum Average Closing Price"............. Section 3.01(a)
"Merger Consideration"...................... Section 3.04(b)
"Merger".................................... Introduction
"Minimum Average Closing Price"............. Section 3.01(a)
"Minority Affiliate"........................ Section 4.03(c)
"NASDAQ".................................... Section 3.01(a)
"Option".................................... Section 3.08(a)
"Parent Common Stock"....................... Section 3.01(a)
"Parent Employee Plans"..................... Section 5.10
"Parent Expenses"........................... Section 9.02(b)
"Parent Fee"................................ Section 9.02(b)
"Parent Permits"............................ Section 5.05(b)
"Parent SEC Reports"........................ Section 5.06(a)
"Parent Stockholders Meeting"............... Section 5.12
"Parent".................................... Introduction
"PBGC"...................................... Section 4.10
"person".................................... Section 10.03(g)
"Prior Agreement"........................... Section 4.04(b)
"Prospectus/Proxy Statement"................ Section 4.12
"S-4 Registration Statement"................ Section 4.12
"SEC"....................................... Section 4.06
"Securities Act"............................ Section 4.04(d)
"Shares".................................... Section 3.01(a)
"Significant Subsidiary".................... Section 4.01(a)
"Subsidiary"................................ Section 4.01(a)
"Surviving Corporation Common Stock"........ Section 3.02
"Surviving Corporation"..................... Section 2.01
"Tax Opinion"............................... Section 8.01(d)
"Tax Returns"............................... Section 4.14(a)
"Tax" or "Taxes"............................ Section 4.14(a)
"Third Party"............................... Section 9.01
"Threshold Price"........................... Section 9.01(h)
"UK Purchase Agreement"..................... Section 8.02(c)
"Xpedite Germany............................ Section 6.01
"Xpedite"................................... Introduction
"XSL"....................................... Section 8.02(c)
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER ("AGREEMENT"), dated as of November 13,
1997, is entered into by and among PREMIERE TECHNOLOGIES, INC., a Georgia
corporation ("PARENT"), NETS ACQUISITION CORP., a Delaware corporation
("ACQUISITION SUB"), and XPEDITE SYSTEMS, INC., a Delaware corporation (the
"COMPANY" or "XPEDITE").
WHEREAS, the respective Boards of Directors of Parent, Acquisition Sub
and the Company, and, in the case of Acquisition Sub, the sole stockholder of
Acquisition Sub, have approved the merger of Acquisition Sub with and into the
Company (the "MERGER") upon the terms and subject to the conditions set forth
herein; and
WHEREAS, Parent, Acquisition Sub and the Company desire to make
certain representations, warranties, covenants and agreements in connection with
the Merger and prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the mutual benefits to be derived
from this Agreement and of the representations, warranties, covenants and
agreements hereinafter contained, Parent, Acquisition Sub and the Company agree
as follows:
ARTICLE I.
[INTENTIONALLY OMITTED]
ARTICLE II.
THE MERGER
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SECTION 2.01. THE MERGER. In accordance with the provisions of this
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Agreement and the General Corporation Law of the State of Delaware, as amended
(the "GCL"), at the Effective Time (as defined in SECTION 2.07), Acquisition Sub
shall be merged with and into the Company, and the Company shall be the
surviving corporation in the Merger (hereinafter sometimes called the "SURVIVING
CORPORATION"). At the Effective Time, the separate existence of Acquisition Sub
shall cease.
SECTION 2.02. CLOSING. The closing of the Merger (the "CLOSING")
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will take place as soon as practicable after the satisfaction or waiver of the
conditions set forth in ARTICLE VIII (the "CLOSING DATE") at the offices of
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, XX 00000,
unless another date or place is agreed to in writing by the parties hereto
(taking into account the provisions of SECTION 9.01(i)).
SECTION 2.03. CERTIFICATE OF INCORPORATION. As of the Effective
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Time, the Certificate of Incorporation of the Company immediately prior to the
Effective Time shall be the Certificate of Incorporation of the Surviving
Corporation, until thereafter amended as provided by law or in such Certificate
of Incorporation.
SECTION 2.04. BY-LAWS. The By-Laws of Acquisition Sub as in effect
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at the Effective Time shall be the By-Laws of the Surviving Corporation, until
thereafter amended or repealed as provided by law.
SECTION 2.05. DIRECTORS. The directors of Acquisition Sub at the
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Effective Time shall, from and after the Effective Time, be the directors of the
Surviving Corporation and shall hold office from the Effective Time until their
respective successors are duly elected or appointed and qualified in the manner
provided in the Certificate of Incorporation and By-Laws of the Surviving
Corporation, or as otherwise provided by law.
SECTION 2.06. OFFICERS. The officers of the Company at the Effective
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Time shall, from and after the Effective Time, be the officers of the Surviving
Corporation and shall hold office from the Effective Time until their respective
successors are duly elected or appointed and qualified in the manner provided in
the Certificate of Incorporation and By-Laws of the Surviving Corporation, or as
otherwise provided by law.
SECTION 2.07. EFFECTIVE TIME. The Merger shall become effective at
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the time of filing of a certificate of merger reflecting the Merger (the
"Certificate of Merger") with the Secretary of State of the State of Delaware in
accordance with the provisions of Section 251 of the GCL. The Certificate of
Merger shall be filed with the Secretary of State of the State of Delaware on
the Closing Date. The time when the Merger becomes effective is herein referred
to as the "EFFECTIVE TIME."
ARTICLE III.
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
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SECTION 3.01. EFFECT ON COMPANY COMMON STOCK.
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(a) Except as otherwise provided herein, each share of common stock, par
value $.01 per share of the Company (each, a "SHARE" or collectively, the
"SHARES" or the "COMPANY COMMON STOCK") actually issued and outstanding
immediately prior to the Effective Time (except for the Excluded Shares) shall,
at the Effective Time, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into and exchangeable for that multiple
of a share (rounded to the nearest one-thousandth of a share) of the common
stock, par value $.01 per share, of Parent ("PARENT COMMON STOCK") obtained by
dividing $34.00 by the Average Closing Price (as defined below) (as the same may
be adjusted pursuant to this Agreement, the "EXCHANGE RATIO"). "AVERAGE CLOSING
PRICE" shall mean the
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average of the daily last sale prices for the shares of Parent Common Stock for
the twenty (20) consecutive trading days on which such shares are actually
traded as over-the-counter securities and quoted on the Nasdaq National Market
("NASDAQ") (as reported by The Wall Street Journal or, if not reported thereby,
any other authoritative source selected by Parent and the Company) ending at the
close of trading on the trading day immediately preceding the date of the
Company Stockholders Meeting (the "DETERMINATION DATE")); provided, that for
purposes of this SECTION 3.01, the Average Closing Price shall be deemed to
equal $27.20 (the "MINIMUM AVERAGE CLOSING PRICE") in the event the actual
Average Closing Price is less than the Minimum Average Closing Price and shall
be deemed to equal $39.20 (the "MAXIMUM AVERAGE CLOSING PRICE") in the event the
actual Average Closing Price is greater than the Maximum Average Closing Price.
(b) Each share of Company Common Stock held in the Company's treasury
immediately prior to the Effective Time (the "EXCLUDED SHARES") shall, at the
Effective Time, by virtue of the Merger, be canceled without payment of any
consideration therefor and without any conversion thereof.
(c) In the event Parent changes the number of shares of Parent Common Stock
issued and outstanding prior to the Effective Time as a result of a stock split,
stock dividend, or similar recapitalization with respect to such stock and the
record date therefor (in the case of a stock dividend) or the effective date
thereof (in the case of a stock split or similar recapitalization for which a
record date is not established) shall be after the Exchange Ratio has been
finally determined and prior to the Effective Time, the Exchange Ratio shall be
appropriately adjusted to reflect the effects of such stock split, stock
dividend or recapitalization. In the event Parent changes the number of shares
of Parent Common Stock issued and outstanding prior to the Effective Time as a
result of a stock split, stock dividend, or similar recapitalization with
respect to such stock and the record date therefor (in the case of a stock
dividend) or the effective date thereof (in the case of a stock split or similar
recapitalization for which a record date is not established) shall be prior to
the date on which the Exchange Ratio is finally determined, the Average Closing
Price, the Minimum Average Closing Price, the Maximum Average Closing Price and
the Threshold Price (as hereinafter defined) shall be appropriately adjusted to
reflect the effects of such stock split, stock dividend or recapitalization.
SECTION 3.02. CONVERSION OF ACQUISITION SUB COMMON STOCK. Each share of
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common stock, par value $.01 per share, of Acquisition Sub (the "ACQUISITION SUB
COMMON STOCK") issued and outstanding at the Effective Time shall, at the
Effective Time by virtue of the Merger and without any action on the part of the
holder thereof, be converted into and exchangeable for one fully paid and
nonassessable share of the common stock of the Surviving Corporation ("SURVIVING
CORPORATION COMMON STOCK"). From and after the Effective Time, each outstanding
certificate theretofore representing shares of Acquisition Sub Common Stock
shall be deemed for all purposes to evidence ownership of, and to represent the
number of shares of, Surviving Corporation Common Stock into which such shares
of Acquisition Sub Common Stock shall have been converted.
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SECTION 3.03. FRACTIONAL SHARES. Notwithstanding any other provision of
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this Agreement, each holder of shares of Company Common Stock exchanged pursuant
to the Merger who would otherwise have been entitled to receive a fraction of a
share of Parent Common Stock (after taking into account all certificates
delivered by such holder) shall receive, in lieu thereof, cash (without
interest) in an amount equal to such fractional part of a share of Parent Common
Stock multiplied by the market value of one share of Parent Common Stock at the
Effective Time. The market value of one share of Parent Common Stock at the
Effective Time shall be the last sale price of such common stock on NASDAQ (as
reported by The Wall Street Journal or, if not reported thereby, any other
authoritative source selected by Parent) on the last trading day preceding the
Effective Time. No such holder will be entitled to dividends, voting rights, or
any other rights as a stockholder in respect of any fractional shares.
SECTION 3.04. EXCHANGE PROCEDURES.
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(a) Prior to the Effective Time, the Company and Parent jointly shall
select a bank or trust company to act as exchange agent in the Merger (the
"EXCHANGE AGENT").
(b) As soon as reasonably practicable after the Effective Time, Parent
shall mail or cause the Exchange Agent to mail to each holder of record entitled
to the Merger Consideration, (i) a form of letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
certificates which immediately prior to the Effective Time represented
outstanding Shares (the "CERTIFICATES") shall pass, only upon proper delivery of
the Certificates to the Surviving Corporation, and shall be in such form and
have such other provisions as the Surviving Corporation reasonably may specify)
and (ii) instructions for use in effecting the surrender of the Certificates in
exchange for consideration provided in SECTION 3.01 (the "MERGER CONSIDERATION")
to which such holder is entitled. Upon the proper surrender of a Certificate to
the Exchange Agent, together with such letter of transmittal and any additional
documentation as Parent may reasonably require, the holder of such Certificate
shall be entitled to receive in exchange therefor the Merger Consideration,
together with all undelivered dividends or distributions in respect of the
shares of Parent Common Stock so issuable (without interest thereon), and the
Certificate so surrendered shall forthwith be canceled. If any Merger
Consideration is to be paid to a person other than the person in whose name the
surrendered Certificate is registered, it shall be a condition of payment of
such Merger Consideration that the Certificate so surrendered shall be promptly
endorsed or otherwise in proper form for transfer and that the person requesting
such payment shall pay any transfer or other taxes required by reason of the
payment to a person other than the registered holder of the surrendered
Certificate or established to the satisfaction of Parent that such tax has been
paid or is not applicable.
(c) Until surrendered in accordance with the provisions of this SECTION
3.04, from and after the Effective Time, each Certificate (other than
Certificates representing Excluded Shares) shall represent for all purposes only
the right to receive, upon such surrender, the Merger Consideration into which
the Shares represented by such Certificates shall have been converted pursuant
to SECTION 3.01, and shall cease to have any rights with respect to the shares
of Company Common Stock formerly represented thereby, except as otherwise
provided herein or by law.
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(d) Notwithstanding the foregoing, none of Parent, the Surviving
Corporation or the Exchange Agent shall be liable to any person in respect of
retained Company Common Stock (or dividends or distributions with respect
thereto) for any amount delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.
(f) Parent shall be entitled to deduct and withhold from the Merger
Consideration otherwise payable pursuant to this Agreement to any holder of
shares of Company Common Stock such amounts as Parent is required to deduct and
withhold with respect to the making of such payment under the Internal Revenue
Code of 1986, as amended (the "CODE"), or any provision of state, local or
foreign tax law. To the extent that amounts are so withheld by Parent, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of the shares of Company Common Stock in respect of
which such deduction and withholding was made by Parent.
SECTION 3.05. STOCK TRANSFER BOOKS. At the Effective Time, the stock
--------------------
transfer books of the Company shall be closed, and there shall be no further
registration of transfers of Company Common Stock thereafter on the records of
the Company.
SECTION 3.06. NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. The
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Merger Consideration delivered upon the surrender of a certificate representing
Shares in accordance with the terms hereof shall be deemed to have been issued
in full satisfaction of all rights pertaining to such Shares, and there shall be
no further registration of transfers on the records of the Surviving Corporation
of Shares which were outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation for any reason, they shall be canceled and exchanged as provided in
this ARTICLE III.
SECTION 3.07. LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
--------------------------------------
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
pay in exchange for such lost, stolen or destroyed Certificates, upon the making
of an affidavit of that fact by the holder thereof and delivery of bond in such
sum as it may reasonably direct as indemnity against any claim that may be made
against Parent, the Surviving Corporation or any stockholder of Parent, the
Surviving Corporation or the Exchange Agent with respect to the Certificates
alleged to have been lost, stolen or destroyed, the Merger Consideration
attributable to such Certificates as may be required pursuant to SECTION 3.04.
SECTION 3.08. COMPANY STOCK OPTIONS AND WARRANTS.
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(a) At the Effective Time, each option and warrant granted by the Company
to purchase shares of Company Common Stock, which is outstanding immediately
prior thereto (an "OPTION" or, collectively, the "OPTIONS"), granted by the
Company under the Company's 1992, 1993 or 1996 Incentive Stock Option Plans or
the Officers' Contingent Stock Option Plan (collectively, the "COMPANY STOCK
OPTION PLANS") or the Non-Employee Directors' Warrant Plan or otherwise, which
are outstanding at the Effective Time, whether or not
-5-
exercisable, shall be converted into and become rights with respect to Parent
Common Stock, and Parent shall assume each Option, in accordance with the terms
of the Company Stock Option Plan and stock option or warrant agreement by which
it is evidenced, except that from and after the Effective Time, (i) Parent and
its Compensation Committee shall be substituted for the Company and the
Committee of the Company's Board of Directors (including, if applicable, the
entire Board of Directors of the Company) administering such the Company Stock
Option Plan, (ii) each Option assumed by Parent may be exercised solely for
shares of Parent Common Stock (or cash, if so provided under the terms of such
Option), (iii) the number of shares of Parent Common Stock subject to such
Option shall be equal to the number of whole shares (rounded down to the nearest
whole share) of Company Common Stock subject to such Option immediately prior to
the Effective Time multiplied by the Exchange Ratio, and (iv) the per share
exercise price under each such Option shall be adjusted by dividing the per
share exercise price under each such Option by the Exchange Ratio and rounding
up to the nearest cent. Notwithstanding the provisions of clauses (iii) and (iv)
of the first sentence of this SECTION 3.08(a), each Option which is an
"incentive stock option" shall be adjusted as required by Section 424 of the
Code, and the regulations promulgated thereunder, so as not to constitute a
modification, extension or renewal of such Option, within the meaning of Section
424(h) of the Code.
(b) Prior to the Effective Time, the Company shall use its reasonable best
efforts to obtain all necessary consents or releases from holders of Options
under any of the Company Stock Option Plans or the Non-Employee Directors'
Warrant Plan or otherwise and take all such other lawful action as may be
necessary to give effect to the transactions contemplated by this Section
(except for such action that may require the approval of the Company's
stockholders).
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company hereby represents and warrants to Parent as follows:
SECTION 4.01. ORGANIZATION AND STANDING.
-------------------------
(a) Each of the Company and its Subsidiaries (as hereinafter defined) is a
corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation, and has the full corporate power
and authority to carry on its business in the places as it is now being
conducted and to own and lease the properties and assets which it now owns or
leases, except where the failure of same will not in any case result in a
Material Adverse Effect. The Company and each of its Subsidiaries is now duly
qualified to transact business and in good standing as a foreign corporation in
all jurisdictions in which the character of the property owned or leased by it
and the nature of the business conducted by it require such qualification,
except where failure to be qualified could not reasonably be expected to have a
Material Adverse Effect. For purposes of this Agreement, a "SUBSIDIARY" of any
person is any corporation, partnership, joint venture or other legal entity of
which a majority of all outstanding shares of capital stock or other equity
interests (the holders of which are ordinarily and generally entitled to vote
for the
-6-
election of the board of directors or other governing body thereof) is owned,
directly or indirectly, by such person (either alone or through or together with
any other Subsidiary).
(b) True, correct and complete copies of the Certificate of Incorporation,
certified by the Secretary of State of the State of Delaware, and By-Laws of the
Company are attached hereto as SCHEDULE 4.01(b).
SECTION 4.02. AUTHORITY AND STATUS.
--------------------
(a) The Company has requisite corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
(b) This Agreement has been approved by the Board of Directors of the
Company in accordance with the GCL and except for the approval of the
stockholders of the Company, no other corporate proceeding on the part of the
Company is necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. The affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock approving this
Agreement is the only vote of the holders of any class or series of the
Company's capital stock necessary to approve this Agreement and the transactions
contemplated by this Agreement.
(c) This Agreement has been duly and validly executed and delivered by the
Company and is a valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or similar laws in effect now or hereafter relating to creditors'
rights generally, and by equitable principles (whether considered in a
proceeding at law or in equity).
SECTION 4.03. CAPITALIZATION.
--------------
(a) The authorized capital stock of the Company consists of (i) fifteen
million (15,000,000) shares of common stock, par value $.01 per share, of which
8,997,105 Shares were issued and outstanding and 72,000 Shares were held in the
Company's treasury as of October 31, 1997; (ii) one million (1,000,000) shares
of preferred stock, par value $.01 per share, of which none are outstanding or
held in the Company's treasury as of October 31, 1997; and (iii) as of October
31, 1997, 777,851 and 136,832 Shares reserved for future issuance pursuant to
outstanding stock options and warrants under the Company Stock Option Plans and
the Non-Employee Directors' Warrant Plan together with certain other warrant
awards, respectively. All of the issued and outstanding capital stock of the
Company is validly issued, fully paid and non-assessable. All of the
outstanding capital stock of each of the Company's Subsidiaries is owned
directly or indirectly by the Company free and clear of all security interests,
liens, pledges, claims, charges, escrows, encumbrances, mortgages, indentures or
easements (collectively, "LIENS") of any nature, except as disclosed on SCHEDULE
4.03(a).
(b) Except as set forth in SECTION 4.03(a) or on SCHEDULE 4.03(b), there
are no other shares of capital stock of the Company or any of its Subsidiaries,
or securities convertible
-7-
into or exchangeable or exercisable for shares of capital stock of the Company
or any of its Subsidiaries, outstanding, and there are no outstanding options,
warrants, rights, contracts, commitments, understandings, arrangements or claims
of any character by which the Company or any of its Subsidiaries is or may
become bound to issue, transfer, sell, repurchase or otherwise acquire or retire
any shares of capital stock or other ownership interest of the Company or any of
its Subsidiaries, or any securities convertible into or exchangeable or
exercisable for any such shares or other ownership interest.
(c) SCHEDULE 4.03(c) sets forth a complete and accurate list of entities
(each, a "MINORITY AFFILIATE"), other than the Company's Subsidiaries, of which
the Company owns equity securities (as defined in Rule 3a-11 promulgated under
the Exchange Act (as hereinafter defined)), including, as to each Minority
Affiliate, its name, its jurisdiction of incorporation, formation or
organization and its capitalization (including the identity of each stockholder
or owner of equity securities or other securities and the number of shares or
other securities held thereby). None of the Company or any of its Subsidiaries
has entered into any commitment, contract or agreement to provide equity
financing to any other person or entity.
SECTION 4.04. NO CONFLICT, REQUIRED FILINGS AND CONSENTS.
------------------------------------------
(a) The exhibit index to the Company's most recently filed Annual Report on
Form 10-K, and Quarterly Reports on Form 10-Q and any Current Reports on
Form 8-K filed since such Annual Report on Form 10-K, as supplemented by
SCHEDULE 4.04(a), include each agreement, contract or other instrument
(including all amendments thereto) to which the Company or any of its
Subsidiaries is a party or by which any of them is bound and which would be
required pursuant to the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT") and the rules and regulations thereunder to be filed as an
exhibit to an Annual Report on Form 10-K, a Quarterly Report on Form 10-Q or a
Current Report on Form 8-K. The Company has made available to Parent on or prior
to the date hereof true, correct and complete copies in all material respects of
each such agreement, contract, instrument and amendment.
(b) Except as disclosed in SCHEDULE 4.04(b), (i) neither the Company nor
any of its Subsidiaries has breached, is in default under, or has received
written notice of any breach of or default under, any of the agreements,
contracts or other instruments referred to in SECTION 4.04(a), (ii) to the best
knowledge of the Company, no other party to any of the agreements, contracts or
other instrument referred to in SECTION 4.04(a) has breached or is in default of
any of its obligations thereunder, and (iii) each of the agreements, contracts
and other instruments referred to in SECTION 4.04(a) is in full force and
effect, except in any such case for breaches, defaults or failures to be in full
force and effect that do not constitute a Material Adverse Effect.
(c) Except as set forth in SCHEDULE 4.04(c), the execution and delivery of
this Agreement by the Company does not, and the performance of this Agreement by
the Company and the consummation of the transactions contemplated hereby will
not, (i) conflict with or violate the Certificate of Incorporation or By-Laws of
the Company or the organizational documents of any of its Subsidiaries, (ii)
conflict with or violate in any material respect any federal, foreign, state,
local or provincial law, rule, regulation, order, judgment or decree
(collectively, "LAWS")
-8-
applicable to the Company or any of its Subsidiaries or by which its or any of
their respective properties is bound or affected, or (iii) result in any
material breach of or constitute a material default (or an event that with
notice or lapse of time or both would become a material default) under, or
materially impair the Company's or any of its Subsidiaries' rights or materially
alter the rights or obligations of any third party under, or give to others any
material rights of termination, amendment, acceleration or cancellation of, or
result in the creation of a material Lien on any of the properties or assets of
the Company or any of its Subsidiaries pursuant to, any material note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which the Company or any of its Subsidiaries
is a party or by which the Company or any of its Subsidiaries or its or any of
their respective properties is bound or affected. The only obligations of the
Company under that certain Agreement and Plan of Merger, dated as of August 8,
1997, by and between Xpedite Acquisition Corp. and the Company (the "PRIOR
AGREEMENT"), are the obligations set forth in Sections 7.04, 9.02 and 9.03 of
the Prior Agreement.
(d) The execution and delivery of this Agreement by the Company does not,
and the performance of this Agreement by the Company will not, require any
material consent, approval, authorization or permit of, or filing with or
notification to, any domestic or foreign governmental or regulatory authority
except for applicable requirements, if any, of the Securities Act of 1933, as
amended (the "SECURITIES ACT"), the Exchange Act, state securities laws ("BLUE
SKY LAWS"), the pre-merger notification requirements of the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR ACT"), the premerger
notification requirements of the European Community and other requirements of
foreign jurisdictions and the filing and recordation of the Certificate of
Merger or other documents as required by the GCL.
SECTION 4.05. COMPLIANCE; PERMITS.
-------------------
(a) Except as disclosed in SCHEDULE 4.05(a), neither the Company nor any of
its Subsidiaries is in conflict with, or in default or violation in any material
respect of, (i) any Law applicable to the Company or any of its Subsidiaries or
by which its or any of their respective properties is bound or affected or (ii)
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise, tariff or other instrument or obligation to which the Company
or any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries or its or any of their respective properties is bound or affected,
except, in the case of clause (ii), for any such conflicts, defaults or
violations which do not constitute a Material Adverse Effect.
(b) Except as disclosed in SCHEDULE 4.05(b), the Company and its
Subsidiaries hold all permits, licenses, franchises, easements, variances,
exemptions, consents, certificates, authorizations, orders and approvals from
domestic and foreign governmental and regulatory authorities which are material
to the operation of the business of the Company and its Subsidiaries taken as a
whole as it is now being conducted (collectively, the "COMPANY PERMITS"), and
the Company and its Subsidiaries are in compliance in all material respects with
the terms of the Company Permits.
-9-
SECTION 4.06. SEC FILINGS; FINANCIAL STATEMENTS.
---------------------------------
(a) The Company has filed all forms, reports and documents required to be
filed with the United States Securities and Exchange Commission (the "SEC") and
has made available to Parent (i) its Annual Report on Form 10-K for the fiscal
year ended December 31, 1996, (ii) all other reports or registration statements
filed by the Company with the SEC since January 1, 1997, (iii) all proxy
statements relating to the Company's meetings of stockholders (whether annual or
special) since January 1, 1997, and (iv) all amendments and supplements to all
such reports and registration statements filed by the Company with the SEC
((i)(iv) collectively, the "COMPANY SEC REPORTS"). Except as disclosed in
SCHEDULE 4.06, the Company SEC Reports (a) were prepared in all material
respects in accordance with the requirements of the Securities Act or the
Exchange Act, as the case may be, and (b) did not at the time they were filed
(or if amended or superseded by a filing prior to the date of this Agreement,
then on the date of such filing) contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. None of the Company's Subsidiaries is
required to file any forms, reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in each case,
any related notes thereto) contained in the Company SEC Reports was prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods involved (except as may be indicated in the notes
thereto), and each fairly presents the consolidated financial position of the
Company and its Subsidiaries as at the respective dates thereof and the
consolidated results of its operations and cash flows and stockholder equity for
the periods indicated, except that the unaudited interim financial statements
were or are subject to normal and recurring year-end adjustments which were not
or are not expected to be material in amount.
SECTION 4.07. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth
------------------------------------
in SCHEDULE 4.07(a) through SCHEDULE 4.07(g) or Company SEC Reports filed prior
to the date of this Agreement, since December 31, 1996, the Company has
conducted its business in the ordinary course and there has not occurred: (a)
any Material Adverse Effect; (b) any amendments or changes in the Certificate of
Incorporation or By-Laws of the Company or similar organizational documents of
its Subsidiaries; (c) any damage to, destruction or loss of any asset of the
Company or any of its Subsidiaries (whether or not covered by insurance) that
constitutes a Material Adverse Effect or that would constitute a Material
Adverse Effect if not covered by insurance; (d) any material change by the
Company in its accounting methods, principles or practices except as required by
any change in generally accepted accounting principles; (e) any material
revaluation by the Company of any of its or any of its Subsidiaries' assets,
including, without limitation, writing off notes or accounts receivable other
than in the ordinary course of business; (f) any sale, pledge, disposition of or
encumbrance upon any assets of the Company or any of its Subsidiaries (except
(i) sales of assets in the ordinary course of business and in a manner
consistent with past practice, (ii) dispositions of obsolete or worthless assets
and (iii) sales of other assets not in excess of $100,000 in the aggregate); or
(g) any other action or event that would have required the consent of Parent
pursuant to SECTION 6.01 had such event occurred after the date of this
Agreement.
-10-
SECTION 4.08. NO UNDISCLOSED LIABILITIES. Except as is disclosed in
--------------------------
SCHEDULE 4.08, neither the Company nor any of its Subsidiaries has any material
liabilities (absolute, accrued, contingent or otherwise), except liabilities (a)
in the aggregate adequately provided for in the Company's audited balance sheet
(including any related notes thereto) for the fiscal year ended December 31,
1996 included in the Company's 1996 Annual Report on Form 10-K (the "1996
COMPANY BALANCE SHEET"), (b) incurred in the ordinary course of business and not
required under generally accepted accounting principles to be reflected on the
1996 Company Balance Sheet, (c) incurred since December 31, 1996 in the ordinary
course of business consistent with past practice or (d) incurred in connection
with this Agreement.
SECTION 4.09. ABSENCE OF LITIGATION. Except as set forth in SCHEDULE
---------------------
4.09, there are no claims, actions, suits, proceedings or investigations pending
or, to the knowledge of the Company, threatened against the Company or any of
its Subsidiaries, or any properties or rights of the Company or any of its
Subsidiaries, before any court, arbitrator or administrative, governmental or
regulatory authority or body, domestic or foreign, that if determined adversely
to the Company, would be reasonably likely to constitute a Material Adverse
Effect.
SECTION 4.10. EMPLOYEE BENEFIT PLANS, EMPLOYMENT AGREEMENTS. Except in
---------------------------------------------
each case as set forth in SCHEDULE 4.10, (i) there has been no "prohibited
transaction," as such term is defined in Section 406 of the Employee Retirement
Income Security Act of 1975, as amended ("ERISA") and Section 4975 of the Code,
with respect to any employee pension plans (as defined in Section 3(2) of ERISA,
any material employee welfare plans (as defined in Section 3(1) of ERISA), or
any material bonus, stock option, stock purchase, incentive, deferred
compensation, supplemental retirement, severance and other similar fringe or
employee benefit plans, programs or arrangements (collectively, the "COMPANY
EMPLOYEE PLANS") which could result in any liability of the Company or any of
its Subsidiaries; (ii) all Company Employee Plans are in compliance in all
material respects with the requirements prescribed by any and all Laws
(including ERISA and the Code), currently in effect with respect thereto
(including all applicable requirements for notification to participants or the
Department of Labor, Pension Benefit Guaranty Corporation (the "PBGC"), Internal
Revenue Service (the "IRS") or Secretary of the Treasury), and the Company and
each of its Subsidiaries have performed all material obligations required to be
performed by them under, are not in any material respect in default under or
violation of, and have no knowledge of any material default or violation by any
other party to, any of the Company Employee Plans; (iii) each Company Employee
Plan intended to qualify under Section 401(a) of the Code and each trust
intended to qualify under Section 501(a) of the Code is the subject of a
favorable determination letter from the IRS, and nothing has occurred which may
reasonably be expected to impair such determination; (iv) all contributions
required to be made to any Company Employee Plan pursuant to Section 412 of the
Code, or the terms of any Company Employee Plan or any collective bargaining
agreement, have been made on or before their due dates; (v) with respect to each
Company Employee Plan, no "reportable event" within the meaning of Section 4043
of ERISA (excluding any such event for which the 30-day notice requirement has
been waived under the regulations to Section 4043 of ERISA) nor any event
described in Section 4062, 4063 or 4041 of ERISA has occurred; (vi) no
withdrawal
-11-
(including a partial withdrawal) has occurred with respect to any multiemployer
plan within the meaning set forth in Section 3(37) of ERISA that has resulted
in, or could reasonably be expected to result in, any withdrawal liability for
the Company or any of its Subsidiaries; (vii) neither the Company nor any of its
Subsidiaries has incurred, or reasonably expects to incur, any liability under
Title IV of ERISA (other than liability for premium payments to the PBGC, and
contributions not in default to the respective plans, arising in the ordinary
course), (viii) none of the Company or any of its Subsidiaries is a party to any
employment, consulting or similar agreement; and (ix) none of the Company or any
of its Subsidiaries is or will be liable for any severance or other payments to
any of its employees as a result of this Agreement or the consummation of the
transactions contemplated hereby.
SECTION 4.11. LABOR MATTERS. Except as set forth in SCHEDULE 4.11: (i)
-------------
there are no claims or proceedings pending or, to the knowledge of the Company
or any of its Subsidiaries, threatened, between the Company or any of its
Subsidiaries and any of their respective employees, which claims or proceedings
constitute a Material Adverse Effect; (ii) neither the Company nor any of its
Subsidiaries is a party to any collective bargaining agreement or other labor
union contract applicable to persons employed by the Company or its
Subsidiaries, nor does the Company or any of its Subsidiaries know of any
activities or proceedings of any labor union to organize any such employees; and
(iii) neither the Company nor any of its Subsidiaries has any knowledge of any
strikes, slowdowns, work stoppages, lockouts, or threats thereof, by or with
respect to any employees of the Company or any of its Subsidiaries.
SECTION 4.12. INFORMATION SUPPLIED. The information supplied or to be
--------------------
supplied by the Company for inclusion or incorporation by reference in (i) the
Registration Statement on Form S-4 to be filed by Parent with the SEC in
connection with the Merger, including the definitive joint proxy statement and
prospectus (the "PROSPECTUS/PROXY STATEMENT") constituting a part thereof (the
"S-4 REGISTRATION STATEMENT"), will not, at the time the S-4 Registration
Statement becomes effective under the Securities Act, and (ii) the
Prospectus/Proxy Statement and any amendments or supplements thereto, will not,
on the date the Prospectus/Proxy Statement (or any amendment thereof or
supplement thereto) is first mailed to stockholders in connection with the
meeting of the Company stockholders to consider the Merger (the "COMPANY
STOCKHOLDERS MEETING"), at the time of the Company Stockholders Meeting, or at
the Effective Time, contain any statement which, at such time and in light of
the circumstances under which it shall be made, is false or misleading with
respect to any material fact, or shall omit to state any material fact required
to be stated therein or necessary in order to make the statements made therein
not false or misleading, or omit to state any material fact necessary to correct
any statement in any earlier communication with respect to the solicitation of
proxies for the Company Stockholders Meeting which has become false or
misleading. If at any time prior to the Effective Time any event relating to
the Company or any of its Subsidiaries or any of their respective affiliates,
officers or directors should be discovered by the Company which should be set
forth in a supplement to the Prospectus/Proxy Statement, the Company shall
promptly inform Parent. Notwithstanding the foregoing, the Company makes no
representation or warranty with respect to any information supplied by Parent or
any of its representatives which is contained or incorporated by reference in
any of the foregoing documents.
-12-
SECTION 4.13. TITLE TO PROPERTY. Except as set forth in SCHEDULE 4.13,
-----------------
the Company and each of its Subsidiaries have good and defensible title to all
of their properties and assets, free and clear of all material liens, charges
and encumbrances, except liens for taxes not yet due and payable and such liens
or other imperfections of title, none of which is substantial in amount,
materially detracts from the value or impairs the use of the property subject
thereto, or impairs the operations of the Company or any of its Subsidiaries;
and, all leases pursuant to which the Company or any of its Subsidiaries lease
from others material amounts of real or personal property, are in good standing,
valid and effective in accordance with their respective terms, and there is not,
to the knowledge of the Company, under any of such leases, any existing material
default or event of default (or event which with notice or lapse of time, or
both, would constitute a material default).
SECTION 4.14. TAXES.
-----
(a) For purposes of this Agreement, "TAX" or "TAXES" shall mean taxes,
fees, levies, duties, tariffs, imposts, and governmental impositions or charges
of any kind in the nature of (or similar to) taxes, payable to any federal,
state, local or foreign taxing authority, including (without limitation) (i)
income, franchise, profits, gross receipts, ad valorem, net worth, value added,
sales, use, service, real or personal property, special assessments, capital
stock, license, payroll, withholding, employment, social security, workers'
compensation, unemployment compensation, utility, severance, production, excise,
stamp, occupation, premiums, windfall profits, transfer and gains taxes, and
(ii) interest, penalties, additional taxes and additions to tax imposed with
respect thereto; and "TAX RETURNS" shall mean returns, reports, and information
statements with respect to Taxes required to be filed with the IRS or any other
federal, foreign, state or provincial taxing authority, domestic or foreign,
including, without limitation, consolidated, combined and unitary tax returns.
(b) Other than as disclosed in SCHEDULE 4.14, (i) the Company and its
Subsidiaries have filed all United States federal income Tax Returns and all
other material Tax Returns required to be filed by them, (ii) the Company and
its Subsidiaries have paid and discharged all Taxes due in connection with or
with respect to the periods or transactions covered by such Tax Returns and have
paid all other Taxes as are due, except such as are being contested in good
faith by appropriate proceedings (to the extent that any such proceedings are
required) and with respect to which the Company is maintaining adequate
reserves, and (iii) there are no other material Taxes that would be due if
asserted by a taxing authority, except with respect to which the Company is
maintaining reserves to the extent currently required. Except as does not
involve or would not result in material liability to the Company or any of its
Subsidiaries: (i) there are no tax liens on any assets of the Company or any
Subsidiary thereof; and (ii) neither the Company nor any of its Subsidiaries has
been granted a waiver of any statute of limitations with respect to, or any
extension of a period for the assessment of, any Tax. The accruals and reserves
for Taxes (including deferred taxes) reflected in the 1996 Company Balance Sheet
are in all material respects adequate to cover all Taxes required to be accrued
through the date thereof (including interest and penalties, if any, thereon and
Taxes being contested) in accordance with generally accepted accounting
principles applied on a consistent basis, and the accrual and reserves for
-13-
Taxes (including deferred taxes) reflected in the books and records of the
Company as at the last day of the Company's most recently completed fiscal month
end are in all material respects adequate to cover all Taxes required to be
accrued through such date (including interest and penalties, if any, thereon and
Taxes being contested) in accordance with generally accepted accounting
principles applied on a consistent basis.
(c) Other than as disclosed in SCHEDULE 4.14, (i) all Tax Returns filed
with respect to Tax years of the Company and each of the Subsidiaries through
the Tax year ended December 31, 1992 have been examined and closed or are Tax
Returns with respect to which the applicable period for assessment under
applicable law, after giving effect to extensions or waivers, has expired; (ii)
to the knowledge of the Company, there is no claim, audit, action, suit,
proceeding, or investigation now pending against or with respect to the Company
or any Subsidiary in respect of any Tax; (iii) there are no written requests for
rulings or determinations in respect of any Tax pending between the Company or
any Subsidiary and any taxing authority; (iv) neither the Company nor any
Subsidiary will be required to include any adjustment in taxable income for any
Tax period following the Closing under Section 481(c) of the Code (or any
similar provision of the Tax laws of any jurisdiction) as a result of a change
in method of accounting for a Tax period prior to the Closing or pursuant to the
provisions of any agreement entered into with any taxing authority with regard
to the Tax liability of the Company or any Subsidiary for any Tax period prior
to the Closing; (v) all material Taxes that the Company or any Subsidiary is, or
was, required by law to withhold or collect have been duly withheld or collected
and, to the extent required, have been paid to the appropriate taxing authority;
(vi) the Company is not a U.S. real property holding corporation, as defined
under Section 897(c)(2) of the Code; and (vii) there is no contract, agreement,
plan or arrangement covering any person that, individually or collectively, as a
consequence of the transactions contemplated by this Agreement could give rise
to the payment of any amount that would not be deductible by the Company or any
Subsidiary by reason of Section 280G of the Code.
SECTION 4.15. ENVIRONMENTAL MATTERS. Except as set forth in SCHEDULE
---------------------
4.15, the Company and each of its Subsidiaries: (i) have obtained all material
approvals which are required to be obtained under all applicable federal, state,
foreign or local laws or any regulation, code, plan, order, decree, judgment,
notice or demand letter issued, entered, promulgated or approved thereunder
relating to pollution or protection of the environment, including laws relating
to emissions, discharges, releases or threatened releases of pollutants,
contaminants, or hazardous or toxic materials or wastes into ambient air,
surface water, ground water, or land or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling of pollutants, contaminants or hazardous or toxic materials or wastes
("ENVIRONMENTAL LAWS") by the Company or its Subsidiaries or their respective
agents; (ii) are in compliance in all material respects with all terms and
conditions of such required approvals, and also are in compliance in all
material respects with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in applicable Environmental Laws; (iii) as of the date hereof, are not
aware of nor have received notice of any past or present violations of
Environmental Laws or any event, condition, circumstance, activity, practice,
incident, action or plan which is reasonably likely to interfere with or prevent
continued compliance with Environmental Laws or which would give rise to any
-14-
material common law or statutory liability, or otherwise form the basis of any
claim, action, suit or proceeding, against the Company or any of its
Subsidiaries based on or resulting from the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling, or the
emission, discharge or release into the environment, of any pollutant,
contaminant or hazardous or toxic material or waste; and (iv) have taken all
actions necessary under applicable Environmental Laws to register any products
or materials required to be registered by the Company or its Subsidiaries (or
any of their respective agents) thereunder.
SECTION 4.16. INSURANCE. The Company maintains fire and casualty, general
---------
liability, business interruption, product liability, professional liability and
sprinkler and water damage insurance policies with reputable insurance carriers,
which provide full and adequate coverage for all normal risks incident to the
business of the Company and its Subsidiaries and their respective properties and
assets and are in character and amount similar to that carried by entities
engaged in similar business and subject to the same or similar perils or
hazards.
SECTION 4.17. OPINION OF FINANCIAL ADVISOR. The Company has been advised
----------------------------
by its financial advisor, Xxxxxxx Xxxxx & Co., that in its opinion, as of the
date hereof, the Merger Consideration set forth herein is fair to the holders of
shares of Company Common Stock from a financial point of view.
SECTION 4.18. BROKERS. Except as set forth in SCHEDULE 4.18, no broker,
-------
finder or investment banker or other party is entitled to any brokerage,
finder's or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Company or its Subsidiaries or affiliates. The fees and expenses of the
entities listed on SCHEDULE 4.18 will be paid by the Company. The Company has
heretofore furnished to Acquisition Sub a complete and correct copy of all
agreements between the Company and the entities listed on SCHEDULE 4.18 pursuant
to which such entities would be entitled to any payment relating to the
transactions contemplated hereunder.
SECTION 4.19. BOOKS AND RECORDS. The books of account, minute books,
-----------------
stock record books, and other records of the Company and its Subsidiaries, all
of which have been made available to Parent, are complete and correct in all
material respects and have been maintained in accordance with sound business
practices and the requirements of Section 13(b)(2) of the Exchange Act
(regardless of whether or not the Company and its Subsidiaries are subject to
that Section), including the maintenance of an adequate system of internal
controls. At the Closing, all of those books and records will be in the
possession of the Company and its Subsidiaries.
SECTION 4.20. CERTAIN PAYMENTS. Since June 17, 1992, none of the Company
----------------
or any of its Subsidiaries or any director, officer, agent, or employee of, or
any other person associated with or acting for or on behalf of, the Company or
any of its Subsidiaries, has directly or indirectly (a) made any contribution,
gift, bribe, rebate, payoff, influence payment, kick-back, or other payment to
any person, private or public, regardless of form, whether in money, property,
or services in violation of any Laws, or (b) established or maintained any fund
or asset that has not been recorded in the books and records of the Company or
any of its Subsidiaries.
-15-
SECTION 4.21. INTELLECTUAL PROPERTY. The Intellectual Property Rights (as
---------------------
hereinafter defined) of the Company and its Subsidiaries are listed in SCHEDULE
4.21. Except as set forth in SCHEDULE 4.21, each of the Company and each of its
Subsidiaries owns or possesses adequate licenses or other valid rights to use
all patents, patent rights, trademarks, trademark rights, trade names, trade
name rights, copyrights, service marks, trade secrets, applications for
trademarks and for service marks, know-how and other proprietary rights and
information (collectively, "INTELLECTUAL PROPERTY RIGHTS") used or held for use
in connection with its business as currently conducted or as contemplated to be
conducted, and, to the knowledge of the Company, there is no assertion or claim
challenging the ownership or validity of any of the foregoing. Except as set
forth in SCHEDULE 4.21, the conduct of the business of the Company and its
Subsidiaries as currently conducted does not conflict with any Intellectual
Property Rights of any third party. To the knowledge of the Company, there are
no infringements of any Intellectual Property Rights used or held for use in
connection with the business of the Company and its Subsidiaries.
SECTION 4.22. CONTRACTS.
---------
(a) Except as set forth on SCHEDULE 4.22(a), none of the Company or any of
its Subsidiaries is a party to or is bound by any employment agreement,
telecommunications agreement, vendor agreement, credit agreement, mortgage or
indenture, or any material joint venture agreement which (i) provides that the
terms thereof or any or all of the benefits or burdens thereunder will be
affected or altered (including, without limitation, by means of acceleration)
by, or are contingent upon, or (ii) will be subject to termination or
cancellation as a result of, the execution of this Agreement or the consummation
of the transactions contemplated hereby.
(b) Except as set forth on SCHEDULE 4.22(b), (i) none of the Company or any
of its Subsidiaries is a party to any agreement with any beneficial owner of 5%
or more of the capital stock of, or any executive officer or director of, the
Company or any of its Subsidiaries or any "associate" (as such term is defined
in Rule 12b-2 under the Exchange Act) of any such person, (ii) no officer or
director of the Company or any of its Subsidiaries or any associate of any such
person has any material interest in any material contract or property (real or
personal, tangible or intangible), used in or pertaining to the business of the
Company or any of its Subsidiaries and (iii) none of the Company or any of its
Subsidiaries is a party to any agreement with any of the Company's Minority
Affiliates or XSL.
SECTION 4.23. INFORMATION SYSTEMS. The Company's computer and software
-------------------
systems (including backup systems) are fully operational, and, to the best of
the Company's knowledge, there has been no material malfunction or other
material problem with such systems.
SECTION 4.24. REGULATION OF BUSINESS. To the best knowledge of the
----------------------
Company's management, there has not been any change or proposed change in any
Laws which has resulted in or is reasonably likely to result in the regulation
of the business of the Company or any of its Subsidiaries by the Federal
Communications Commission or any other foreign, federal,
-16-
state or local governmental agency or other governing body, the compliance with
which would have a material cost to the Company or an adverse impact on the
business of the Company.
SECTION 4.25. TAX MATTERS. Neither the Company nor any of its
-----------
Subsidiaries nor any affiliate thereof has taken or agreed to take any action or
has any knowledge of any fact or circumstance that is reasonably likely to
prevent the Merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Code.
SECTION 4.26. STATE TAKEOVER LAWS. Each of the Company and its
-------------------
Subsidiaries has taken all necessary action to exempt the transactions
contemplated by this Agreement from, or if necessary to challenge the validity
or applicability of, any applicable "moratorium," "fair price," "business
combination," "control share," or other anti-takeover Laws, including Section
203 of the GCL.
SECTION 4.27. STOCKHOLDER VOTING AGREEMENTS. Each of the directors of the
-----------------------------
Company and those holders of 5% or more of the outstanding shares of Company
Common Stock listed in EXHIBIT B has executed and delivered to Parent an
agreement in substantially the form of EXHIBIT B (the "COMPANY STOCKHOLDER
AGREEMENTS").
SECTION 4.28. BOARD RECOMMENDATION. The Board of Directors of the
--------------------
Company, at a meeting duly called and held, has by unanimous vote of the
directors present (who constituted all of the directors then in office, other
than Xxx X. Xxxxxxxx, Xx., who did not attend or vote at such meeting due to a
potential conflict of interest) (i) determined that this Agreement and the
transactions contemplated hereby, including the Merger, and the Stockholder
Agreements and the transactions contemplated thereby, taken together, are fair
to and in the best interests of the stockholders and (ii) resolved to recommend
that the holders of the shares of the Company Common Stock adopt this Agreement.
ARTICLE V.
REPRESENTATIONS AND
WARRANTIES OF PARENT AND ACQUISITION SUB.
----------------------------------------
Parent and Acquisition Sub hereby represent and warrant to the Company as
follows:
SECTION 5.01. ORGANIZATION AND STANDING.
-------------------------
(a) Each of Parent and its Subsidiaries, including, but not limited to,
Acquisition Sub, is a corporation duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its incorporation, and has the
full corporate power and authority to carry on its business in the places as it
is now being conducted and to own and lease the properties and assets which it
now owns or leases, except where the failure of same will not in any case result
in a Material Adverse Effect. Each of Parent and its Subsidiaries, including,
but not limited to, Acquisition Sub, is now duly qualified to transact business
and in good standing as a foreign
-17-
corporation in all jurisdictions in which the character of the property owned or
leased by it and the nature of the business conducted by it require such
qualification, except where failure to be qualified could not reasonably be
expected to have a Material Adverse Effect.
(b) True, correct and complete copies of the Articles of Incorporation, as
amended, certified by the Secretary of State of the State of Georgia, and the
Amended and Restated By-Laws of Parent and the Certificate of Incorporation,
certified by the Secretary of State of the State of Delaware, and By-Laws of
Acquisition Sub, in each case as of the date hereof, are attached hereto as
SCHEDULE 5.01(b).
SECTION 5.02. AUTHORITY AND STATUS.
--------------------
(a) Each of Parent and Acquisition Sub has requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby.
(b) This Agreement has been approved by the respective Boards of Directors
of Parent and Acquisition Sub and by the sole stockholder of Acquisition Sub in
accordance with the GCL and, except for the approval of the issuance of shares
of Parent Common Stock by the stockholders of Parent, no other corporate
proceeding on the part of either Parent or Acquisition Sub is necessary to
authorize this Agreement or to consummate the transactions contemplated hereby.
(c) This Agreement has been duly and validly executed and delivered by each
of Parent and Acquisition Sub and is a valid and binding agreement of each of
Parent and Acquisition Sub, enforceable against each of them in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or similar laws in
effect now or hereafter relating to creditors' rights generally, and by
equitable principles (whether considered in a proceeding at law or in equity).
SECTION 5.03. CAPITALIZATION.
--------------
(a) The authorized capital stock of Parent consists of (i) 150,000,000
shares of common stock, par value $.01 per share, of which 32,235,160 shares
(which includes 402,748 shares of exchangeable non-voting shares of Voice-Tel
Canada Limited, a Subsidiary of Parent) were issued and outstanding as of
November 2, 1997; (ii) 5,000,000 shares of preferred stock, par value $.01 per
share, of which one share, which has been designated "Series B Voting Preferred
Stock," par value $.01 per share, was outstanding as of November 2, 1997; and
(iii) 10,389,362 shares of Parent Common Stock reserved as of November 2, 1997,
for future issuance pursuant to outstanding stock options under Parent's stock
option plans or other arrangements. All of the issued and outstanding capital
stock of Parent is validly issued, fully paid and non-assessable, and all of the
shares of Parent Common Stock issuable pursuant to this Agreement is validly
issued and, when issued in accordance with the provisions of this Agreement,
will be fully paid and non-assessable. All of the outstanding capital stock of
each of Parent's Subsidiaries is owned directly or indirectly by Parent free and
clear of all Liens of any nature, except as disclosed on SCHEDULE 5.03(a).
-18-
(b) Except as set forth in SECTION 5.03(a) or on SCHEDULE 5.03(b), there
are no other shares of capital stock of Parent, or securities convertible into
or exchangeable or exercisable for shares of capital stock of Parent or any of
Parent's Subsidiaries, outstanding, and there are no outstanding options,
warrants, rights, contracts, commitments, understandings, arrangements or claims
of any character by which Parent or any of Parent's Subsidiaries is or may
become bound to issue, transfer, sell, repurchase or otherwise acquire or retire
any shares of capital stock or other ownership interest of Parent or any of
Parent's Subsidiaries, or any securities convertible into or exchangeable or
exercisable for any such shares or other ownership interest.
SECTION 5.04. NO CONFLICT, REQUIRED FILINGS AND CONSENTS.
------------------------------------------
(a) The exhibit index to Parent's most recently filed Annual Report on Form
10-K, and Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K
filed since such Annual Report on Form 10-K, as supplemented by SCHEDULE
5.04(a), include each agreement, contract or other instrument (including all
amendments thereto) to which Parent or any of its Subsidiaries is a party or by
which any of them is bound as of the date of this Agreement, and which would be
required pursuant to the Exchange Act and the rules and regulations thereunder
to be filed as an exhibit to an Annual Report on Form 10-K, a Quarterly Report
on Form 10-Q or a Current Report on Form 8-K. Parent has made available to the
Company on or prior to the date hereof true, correct and complete copies in all
material respects of each such agreement, contract, instrument and amendment.
(b) Except as disclosed in SCHEDULE 5.04(b), (i) neither Parent nor any of
its Subsidiaries has breached, is in default under, or has received written
notice of any breach of or default under, any of the agreements, contracts or
other instruments referred to in SECTION 5.04(a), (ii) to the best knowledge of
Parent, no other party to any of the agreements, contracts or other instrument
referred to in SECTION 5.04(a) has breached or is in default of any of its
obligations thereunder, and (iii) each of the agreements, contracts and other
instruments referred to in SECTION 5.04(a) is in full force and effect, except
in any such case for breaches, defaults or failures to be in full force and
effect that do not constitute a Material Adverse Effect.
(c) Except as set forth in SCHEDULE 5.04(c), the execution and delivery of
this Agreement by Parent and Acquisition Sub does not, and the performance of
this Agreement by Parent and Acquisition Sub and the consummation of the
transactions contemplated hereby will not, (i) conflict with or violate the
Articles of Incorporation or By-Laws of Parent or the organizational documents
of any of its Subsidiaries, (ii) conflict with or violate in any material
respect any Laws applicable to Parent or any of its Subsidiaries or by which its
or any of their respective properties is bound or affected, or (iii) result in
any material breach of or constitute a material default (or an event that with
notice or lapse of time or both would become a material default) under, or
materially impair Parent's or any of its Subsidiaries' rights or materially
alter the rights or obligations of any third party under, or give to others any
material rights of termination, amendment, acceleration or cancellation of, or
result in the creation of a material Lien on any of the properties or assets of
Parent or any of its Subsidiaries pursuant to, any material note, bond,
-19-
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Parent or any of its Subsidiaries is a
party or by which Parent or any of its Subsidiaries or its or any of their
respective properties is bound or affected.
(d) The execution and delivery of this Agreement by Parent and Acquisition
Sub does not, and the performance of this Agreement by Parent and Acquisition
Sub will not, require any material consent, approval, authorization or permit
of, or filing with or notification to, any domestic or foreign governmental or
regulatory authority except for applicable requirements, if any, of the
Securities Act, the Exchange Act, Blue Sky Laws, the pre-merger notification
requirements of the HSR Act, the premerger notification requirements of the
European Community and other requirements of foreign jurisdictions and the
filing and recordation of the Certificate of Merger or other documents as
required by the GCL.
SECTION 5.05. COMPLIANCE; PERMITS.
-------------------
(a) Except as disclosed in SCHEDULE 5.05(a), neither Parent nor any of its
Subsidiaries is in conflict with, or in default or violation in any material
respect of, (i) any Law applicable to Parent or any of its Subsidiaries or by
which its or any of their respective properties is bound or affected or (ii) any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise, tariff or other instrument or obligation to which Parent or any of
its Subsidiaries is a party or by which Parent or any of its Subsidiaries or its
or any of their respective properties is bound or affected, except, in the case
of clause (ii), for any such conflicts, defaults or violations which do not
constitute a Material Adverse Effect.
(b) Except as disclosed in SCHEDULE 5.05(b), Parent and its Subsidiaries
hold all permits, licenses, franchises, easements, variances, exemptions,
consents, certificates, authorizations, orders and approvals from domestic and
foreign governmental and regulatory authorities which are material to the
operation of the business of Parent and its Subsidiaries taken as a whole as it
is now being conducted (collectively, the "PARENT PERMITS"), and Parent and its
Subsidiaries are in compliance in all material respects with the terms of Parent
Permits.
SECTION 5.06. SEC FILINGS; FINANCIAL STATEMENTS.
---------------------------------
(a) Parent has filed all forms, reports and documents required to be filed
with the SEC and has made available to the Company (i) its Annual Report on Form
10-K for the fiscal year ended December 31, 1996, (ii) all other reports or
registration statements filed by Parent with the SEC since January 1, 1997,
(iii) all proxy statements relating to Parent's meetings of stockholders
(whether annual or special) since January 1, 1997, and (iv) all amendments and
supplements to all such reports and registration statements filed by Parent with
the SEC ((i)(iv) collectively, the "PARENT SEC REPORTS"). Except as disclosed
in SCHEDULE 5.06, the Parent SEC Reports (a) were prepared in all material
respects in accordance with the requirements of the Securities Act or the
Exchange Act, as the case may be, and (b) did not at the time they were filed
(or if amended or superseded by a filing prior to the date of this Agreement,
then on the date of such filing) contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the
-20-
circumstances under which they were made, not misleading. None of Parent's
Subsidiaries is required to file any forms, reports or other documents with the
SEC.
(b) Each of the consolidated financial statements (including, in each case,
any related notes thereto) contained in the Parent SEC Reports was prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods involved (except as may be indicated in the notes
thereto), and each fairly presents the consolidated financial position of Parent
and its Subsidiaries as at the respective dates thereof and the consolidated
results of its operations and cash flows and stockholder equity for the periods
indicated, except that the unaudited interim financial statements were or are
subject to normal and recurring year-end adjustments which were not or are not
expected to be material in amount.
SECTION 5.07. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth
------------------------------------
in SCHEDULE 5.07(a) through SCHEDULE 5.07(f) or Parent SEC Reports filed prior
to the date of this Agreement, since December 31, 1996, Parent has conducted its
business in the ordinary course and there has not occurred: (a) any Material
Adverse Effect; (b) any amendments or changes in the Articles of Incorporation
or By-Laws of Parent; (c) any damage to, destruction or loss of any asset of
Parent or any of its Subsidiaries (whether or not covered by insurance) that
constitutes a Material Adverse Effect or that would constitute a Material
Adverse Effect if not covered by insurance; (d) any material change by Parent in
its accounting methods, principles or practices except as required by any change
in generally accepted accounting principles; (e) any revaluation by Parent or
any of its Subsidiaries of any of its or any of its Subsidiaries' assets,
including, without limitation, writing off notes or accounts receivable other
than in the ordinary course of business; or (f) any other action or event that
would have required the consent of the Company pursuant to SECTION 6.02 had such
event occurred after the date of this Agreement.
SECTION 5.08. NO UNDISCLOSED LIABILITIES. Except as is disclosed in
--------------------------
SCHEDULE 5.08, the Parent SEC Reports, or on any other SCHEDULE referred to in
this Article 5, neither Parent nor any of its Subsidiaries has any material
liabilities (absolute, accrued, contingent or otherwise), except liabilities (a)
in the aggregate adequately provided for in Parent's audited balance sheet
(including any related notes thereto) for the fiscal year ended December 31,
1996 included in Parent's 1996 Annual Report on Form 10-K as amended by Parent's
Current Report on Form 8-K, dated September 26, 1997 (the "1996 PARENT BALANCE
SHEET"), (b) incurred in the ordinary course of business and not required under
generally accepted accounting principles to be reflected on the 1996 Parent
Balance Sheet, (c) incurred since December 31, 1996 in the ordinary course of
business consistent with past practice or (d) incurred in connection with this
Agreement.
SECTION 5.09. ABSENCE OF LITIGATION. Except as set forth in SCHEDULE
---------------------
5.09, there are no claims, actions, suits, proceedings or investigations pending
or, to the knowledge of Parent, threatened against Parent or any of its
Subsidiaries, or any properties or rights of Parent or any of its Subsidiaries,
before any court, arbitrator or administrative, governmental or regulatory
authority or body, domestic or foreign, that if determined adversely to Parent,
would be reasonably likely to constitute a Material Adverse Effect.
-21-
SECTION 5.10. EMPLOYEE BENEFIT PLANS, EMPLOYMENT AGREEMENTS. Except in
---------------------------------------------
each case as set forth in SCHEDULE 5.10, (i) there has been no "prohibited
transaction," as such term is defined in Section 406 of ERISA and Section 4975
of the Code, with respect to any employee pension plans (as defined in Section
3(2) of ERISA, any material employee welfare plans (as defined in Section 3(1)
of ERISA), or any material bonus, stock option, stock purchase, incentive,
deferred compensation, supplemental retirement, severance and other similar
fringe or employee benefit plans, programs or arrangements (collectively, the
"PARENT EMPLOYEE PLANS") which could result in any liability of Parent or any of
its Subsidiaries; (ii) all Parent Employee Plans are in compliance in all
material respects with the requirements prescribed by any and all Laws
(including ERISA and the Code), currently in effect with respect thereto
(including all applicable requirements for notification to participants or the
Department of Labor, PBGC, IRS or Secretary of the Treasury), and Parent and
each of its Subsidiaries have performed all material obligations required to be
performed by them under, are not in any material respect in default under or
violation of, and have no knowledge of any material default or violation by any
other party to, any of Parent Employee Plans; (iii) each Parent Employee Plan
intended to qualify under Section 401(a) of the Code and each trust intended to
qualify under Section 501(a) of the Code is the subject of a favorable
determination letter from the IRS, and nothing has occurred which may reasonably
be expected to impair such determination; (iv) all contributions required to be
made to any Parent Employee Plan pursuant to Section 412 of the Code, or the
terms of any Parent Employee Plan or any collective bargaining agreement, have
been made on or before their due dates; (v) with respect to each Parent Employee
Plan, no "reportable event" within the meaning of Section 4043 of ERISA
(excluding any such event for which the 30-day notice requirement has been
waived under the regulations to Section 4043 of ERISA) nor any event described
in Section 4062, 4063 or 4041 of ERISA has occurred; (vi) no withdrawal
(including a partial withdrawal) has occurred with respect to any multiemployer
plan within the meaning set forth in Section 3(37) of ERISA that has resulted
in, or could reasonably be expected to result in, any withdrawal liability for
Parent or any of its Subsidiaries; and (vii) neither Parent nor any of its
Subsidiaries has incurred, or reasonably expects to incur, any liability under
Title IV of ERISA (other than liability for premium payments to the PBGC, and
contributions not in default to the respective plans, arising in the ordinary
course).
SECTION 5.11. LABOR MATTERS. Except as set forth in SCHEDULE 5.11: (i)
-------------
there are no claims or proceedings pending or, to the knowledge of Parent or any
of its Subsidiaries, threatened, between Parent or any of its Subsidiaries and
any of their respective employees, which claims or proceedings constitute a
Material Adverse Effect; (ii) neither Parent nor any of its Subsidiaries is a
party to any collective bargaining agreement or other labor union contract
applicable to persons employed by Parent or its Subsidiaries, nor does Parent or
any of its Subsidiaries know of any activities or proceedings of any labor union
to organize any such employees; and (iii) neither Parent nor any of its
Subsidiaries has any knowledge of any strikes, slowdowns, work stoppages,
lockouts, or threats thereof, by or with respect to any employees of Parent or
any of its Subsidiaries.
SECTION 5.12. INFORMATION SUPPLIED. The information supplied or to be
--------------------
supplied by Parent for inclusion or incorporation by reference in (i) the S-4
Registration
-22-
Statement will not, at the time the S-4 Registration Statement becomes effective
under the Securities Act, and (ii) the Prospectus/Proxy Statement and any
amendments or supplements thereto, will not, on the date the Prospectus/Proxy
Statement (or any amendment thereof or supplement thereto) is first mailed to
stockholders in connection with the meeting of Parent stockholders to consider
the issuance of shares of Parent Common Stock pursuant to this Agreement (the
"PARENT STOCKHOLDERS MEETING"), at the time of Parent Stockholders Meeting, or
at the Effective Time, contain any statement which, at such time and in light of
the circumstances under which it shall be made, is false or misleading with
respect to any material fact, or shall omit to state any material fact required
to be stated therein or necessary in order to make the statements made therein
not false or misleading, or omit to state any material fact necessary to correct
any statement in any earlier communication with respect to the solicitation of
proxies for the Parent Stockholders Meeting which has become false or
misleading. If at any time prior to the Effective Time any event relating to
Parent or any of its Subsidiaries or any of their respective affiliates,
officers or directors should be discovered by Parent which should be set forth
in a supplement to the Prospectus/Proxy Statement, Parent shall promptly inform
the Company. Notwithstanding the foregoing, Parent makes no representation or
warranty with respect to any information supplied by the Company or any of its
representatives which is contained or incorporated by reference in any of the
foregoing documents.
SECTION 5.13. TITLE TO PROPERTY. Except as set forth in SCHEDULE 5.13,
-----------------
Parent and each of its Subsidiaries have good and defensible title to all of
their properties and assets, free and clear of all material liens, charges and
encumbrances, except liens for taxes not yet due and payable and such liens or
other imperfections of title, none of which is substantial in amount, materially
detracts from the value or impairs the use of the property subject thereto, or
impairs the operations of Parent or any of its Subsidiaries; and, all leases
pursuant to which Parent or any of its Subsidiaries lease from others material
amounts of real or personal property, are in good standing, valid and effective
in accordance with their respective terms, and there is not, to the knowledge of
Parent, under any of such leases, any existing material default or event of
default (or event which with notice or lapse of time, or both, would constitute
a material default).
SECTION 5.14. TAXES.
-----
(a) Other than as disclosed in SCHEDULE 5.14, (i) Parent and its
Subsidiaries have filed all United States federal income Tax Returns and all
other material Tax Returns required to be filed by them, (ii) Parent and its
Subsidiaries have paid and discharged all Taxes due in connection with or with
respect to the periods or transactions covered by such Tax Returns and have paid
all other Taxes as are due, except such as are being contested in good faith by
appropriate proceedings (to the extent that any such proceedings are required)
and with respect to which Parent is maintaining adequate reserves, and (iii)
there are no other material Taxes that would be due if asserted by a taxing
authority, except with respect to which Parent is maintaining reserves to the
extent currently required. Except as does not involve or would not result in
material liability to Parent or any of its Subsidiaries: (i) there are no tax
liens on any assets of Parent or any Subsidiary thereof; and (ii) neither Parent
nor any of its Subsidiaries has been granted a waiver of any statute of
limitations with respect to, or any extension of a period for the assessment of,
any Tax. The accruals and reserves for Taxes (including deferred taxes)
reflected
-23-
in the 1996 Parent Balance Sheet are in all material respects adequate to cover
all Taxes required to be accrued through the date thereof (including interest
and penalties, if any, thereon and Taxes being contested) in accordance with
generally accepted accounting principles applied on a consistent basis, and the
accrual and reserves for Taxes (including deferred taxes) reflected in the books
and records of Parent as at the last day of Parent's most recently completed
fiscal month end are in all material respects adequate to cover all Taxes
required to be accrued through such date (including interest and penalties, if
any, thereon and Taxes being contested) in accordance with generally accepted
accounting principles applied on a consistent basis.
(b) Other than as disclosed in SCHEDULE 5.14, (i) all Tax Returns filed
with respect to Tax years of Parent and each of the Subsidiaries through the Tax
year ended December 31, 1992 have been examined and closed or are Tax Returns
with respect to which the applicable period for assessment under applicable law,
after giving effect to extensions or waivers, has expired; (ii) to the knowledge
of Parent, there is no claim, audit, action, suit, proceeding, or investigation
now pending against or with respect to Parent or any Subsidiary in respect of
any Tax; (iii) there are no written requests for rulings or determinations in
respect of any Tax pending between Parent or any Subsidiary and any taxing
authority; (iv) neither Parent nor any Subsidiary will be required to include
any adjustment in taxable income for any Tax period following the Closing under
Section 481(c) of the Code (or any similar provision of the Tax laws of any
jurisdiction) as a result of a change in method of accounting for a Tax period
prior to the Closing or pursuant to the provisions of any agreement entered into
with any taxing authority with regard to the Tax liability of Parent or any
Subsidiary for any Tax period prior to the Closing; and (v) all material Taxes
that Parent or any Subsidiary is, or was, required by law to withhold or collect
have been duly withheld or collected and, to the extent required, have been paid
to the appropriate taxing authority.
SECTION 5.15. ENVIRONMENTAL MATTERS. Except as set forth in SCHEDULE
---------------------
5.15, Parent and each of its Subsidiaries: (i) have obtained all material
approvals which are required to be obtained under all Environmental Laws by
Parent or its Subsidiaries or their respective agents; (ii) are in compliance in
all material respects with all terms and conditions of such required approvals,
and also are in compliance in all material respects with all other limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in applicable Environmental Laws; (iii) as of
the date hereof, are not aware of nor have received notice of any past or
present violations of Environmental Laws or any event, condition, circumstance,
activity, practice, incident, action or plan which is reasonably likely to
interfere with or prevent continued compliance with Environmental Laws or which
would give rise to any material common law or statutory liability, or otherwise
form the basis of any claim, action, suit or proceeding, against Parent or any
of its Subsidiaries based on or resulting from the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling, or the
emission, discharge or release into the environment, of any pollutant,
contaminant or hazardous or toxic material or waste; and (iv) have taken all
actions necessary under applicable Environmental Laws to register any products
or materials required to be registered by Parent or its Subsidiaries (or any of
their respective agents) thereunder.
-24-
SECTION 5.16. INSURANCE. Parent maintains fire and casualty, general
---------
liability, business interruption, and professional liability insurance policies
with reputable insurance carriers, which provide full and adequate coverage for
all normal risks incident to the business of Parent and its Subsidiaries and
their respective properties and assets and are in character and amount similar
to that carried by entities engaged in similar business and subject to the same
or similar perils or hazards.
SECTION 5.17. OPINION OF FINANCIAL ADVISOR. Parent has been advised by
----------------------------
its financial advisor, Prudential Securities Incorporated, that in its opinion,
as of the date hereof, the Merger Consideration set forth herein is fair to
Parent from a financial point of view.
SECTION 5.18. BROKERS. Except as set forth in SCHEDULE 5.18, no broker,
-------
finder or investment banker or other party is entitled to any brokerage,
finder's or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Parent or its Subsidiaries or affiliates. The fees and expenses of the entities
listed on SCHEDULE 5.18 will be paid by Parent.
SECTION 5.19. BOOKS AND RECORDS. The books of account, minute books,
-----------------
stock record books, and other records of Parent are complete and correct in all
material respects and have been maintained in accordance with sound business
practices and the requirements of Section 13(b)(2) of the Exchange Act
(regardless of whether or not Parent is subject to that Section), including the
maintenance of an adequate system of internal controls.
SECTION 5.20. CERTAIN PAYMENTS. Since June 17, 1992, none of Parent or
----------------
any of its Subsidiaries or any director, officer, agent, or employee of, or any
other person associated with or acting for or on behalf of, Parent or any of its
Subsidiaries, has directly or indirectly (a) made any contribution, gift, bribe,
rebate, payoff, influence payment, kick-back, or other payment to any person,
private or public, regardless of form, whether in money, property, or services
in violation of any Laws, or (b) established or maintained any fund or asset
that has not been recorded in the books and records of Parent or any of its
Subsidiaries.
SECTION 5.21. INTELLECTUAL PROPERTY. Except as set forth in SCHEDULE
---------------------
5.21, each of Parent and each of its Subsidiaries owns or possesses adequate
licenses or other valid rights to use all Intellectual Property Rights used or
held for use in connection with its business as currently conducted or as
contemplated to be conducted, and, to the knowledge of Parent, there is no
assertion or claim challenging the ownership or validity of any of the
foregoing. Except as set forth in SCHEDULE 5.21 and SCHEDULE 5.09, the conduct
of the business of Parent and its Subsidiaries as currently conducted does not
conflict with any Intellectual Property Rights of any third party. To the
knowledge of Parent, there are no infringements of any Intellectual Property
Rights used or held for use in connection with the business of Parent and its
Subsidiaries.
SECTION 5.22. CONTRACTS. Except as set forth on SCHEDULE 5.22, none of
---------
Parent or any of its Subsidiaries is a party to or is bound by any employment
agreement, telecommunications agreement, vendor agreement, credit agreement,
mortgage or indenture, or
-25-
any material joint venture agreement which (i) provides that the terms thereof
or any or all of the benefits or burdens thereunder will be affected or altered
(including, without limitation, by means of acceleration) by, or are contingent
upon, or (ii) will be subject to termination or cancellation as a result of, the
execution of this Agreement or the consummation of the transactions contemplated
hereby.
SECTION 5.23. INFORMATION SYSTEMS. Parent's computer and software systems
-------------------
(including backup systems) are fully operational, and, to the best of Parent's
knowledge, there has been no material malfunction or other material problem with
such systems.
SECTION 5.24. REGULATION OF BUSINESS. To the best knowledge of Parent's
----------------------
management, and except as set forth in the Parent SEC Reports, there has not
been any change or proposed change in any Laws which has resulted in or is
reasonably likely to result in the regulation of the business of Parent or any
of its Subsidiaries by the Federal Communications Commission or any other
foreign, federal, state or local governmental agency or other governing body,
the compliance with which would have a material cost to Parent or an adverse
impact on the business of Parent.
SECTION 5.25. NO BUSINESS. Acquisition Sub was formed solely for the
-----------
purpose of effecting the Merger, and has undertaken no business other than in
connection with the transactions contemplated by this Agreement.
SECTION 5.26. TAX MATTERS. Neither Parent nor any of its Subsidiaries nor
-----------
any affiliate thereof has taken or agreed to take any action or has any
knowledge of any fact or circumstance that is reasonably likely to prevent the
Merger from qualifying as a reorganization within the meaning of Section 368(a)
of the Code.
SECTION 5.27. BOARD RECOMMENDATION. The Board of Directors of Parent, at
--------------------
a meeting duly called and held, has by unanimous vote of the directors present
(who constituted all of the directors then in office) (i) determined that this
Agreement and the transactions contemplated hereby, including the Merger and the
other transactions contemplated hereby, taken together, are fair to and in the
best interests of the stockholders and (ii) resolved to recommend that the
stockholders of Parent approve the issuance of shares of Parent Common Stock
pursuant to this Agreement.
ARTICLE VI.
CONDUCT OF BUSINESS PENDING THE MERGER
--------------------------------------
SECTION 6.01. CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER. The
-----------------------------------------------------
Company covenants and agrees that, during the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Effective Time, unless Parent shall otherwise agree in writing and except
as required by the UK Purchase Agreement, (i) the Company shall conduct its
business and shall cause the businesses of its
-26-
Subsidiaries to be conducted only in, and the Company and its Subsidiaries shall
not take an action except in, the ordinary course of business and in a manner
consistent with past practice, and (ii) the Company shall use all reasonable
effort to preserve substantially intact the business organization of the Company
and its Subsidiaries, to keep available the services of the present officers,
employees and consultants of the Company and its Subsidiaries and to preserve
the present relationships of the Company and its Subsidiaries with customers,
suppliers and other persons with which the Company or any of its Subsidiaries
has significant business relations. By way of amplification and not limitation,
except as contemplated by this Agreement or as required by the UK Purchase
Agreement or as described on SCHEDULE 6.01, neither the Company nor any of its
Subsidiaries shall, during the period from the date of this Agreement and
continuing until the earlier of the termination of this Agreement or the
Effective Time, directly or indirectly do, or propose to do, any of the
following without the prior written consent of Parent:
(a) amend or otherwise change the Certificate of Incorporation or By-Laws
of the Company or similar organizational documents of any of its Subsidiaries;
(b) issue, sell, dispose of, or, except in connection with any financings
in connection with the transactions contemplated by the UK Purchase Agreement
and the acquisition of a majority interest in Xpedite Germany, pledge or
encumber, or authorize the issuance, sale, pledge, disposition or encumbrance of
any shares of capital stock of any class, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of capital stock,
or any other ownership interest (including, without limitation, any phantom
interest) in the Company or any of its Subsidiaries (except for the issuance of
shares of Company Common Stock issuable pursuant to stock options which were
granted under the Company Stock Option Plans and are outstanding on the date
hereof, in accordance with the terms of the Company Stock Option Plans);
(c) sell, pledge, dispose of or encumber any assets of the Company or any
of its Subsidiaries (except for (i) sales of assets in the ordinary course of
business and in a manner consistent with past practice, (ii) dispositions of
obsolete or worthless assets, (iii) sales of other assets not in excess of
$100,000 in the aggregate, and (iv) in connection with any financings related to
the consummation of the transactions contemplated by the UK Purchase Agreement
or the acquisition of a majority interest in Xpedite Systems, GmbH ("Xpedite
Germany"));
(d) (i) declare, set aside, make or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
any of its capital stock, except that a wholly owned Subsidiary of the Company
may declare and pay a dividend to its parent, (ii) split, combine or reclassify
any of its capital stock or issue or authorize or propose the issuance of any
other securities or property in respect of, in lieu of or in substitution for
shares of its capital stock, or (iii) amend the terms or change the period of
exercisability of, purchase, repurchase, redeem or otherwise acquire, any of its
securities or any securities of its Subsidiaries, including, without limitation,
shares of Company Common Stock or any option, warrant or right, directly or
indirectly, to acquire shares of Company Common Stock, or provide that upon the
exercise or conversion of any such option, warrant or right the holder thereof
shall receive cash, or propose to do any of the foregoing;
-27-
(e) except in connection with the consummation of the transactions
contemplated by the UK Purchase Agreement and the acquisition of a majority
interest in Xpedite Germany and any financings related thereto (i) acquire (by
merger, consolidation, or acquisition of stock or assets) any corporation,
partnership or other business organization or division or any equity interest
therein; (ii) incur any indebtedness for borrowed money or issue any debt
securities, except for short-term, working capital and commercial paper
borrowings not in excess of $1,000,000 in the aggregate for the Company and its
Subsidiaries, taken as a whole at any one time outstanding incurred in the
ordinary course of business consistent with past practice and except for the
intercompany indebtedness between the Company and any of its wholly owned
Subsidiaries or between such wholly owned Subsidiaries, or assume, guarantee or
endorse or otherwise as an accommodation become responsible for, the obligations
of any person or, except in the ordinary course of business consistent with past
practice, make any loans or advances; (iii) enter into or amend any material
contract or agreement; (iv) authorize any capital expenditures or purchase of
fixed assets, in the aggregate, in excess of $1,000,000 per month for the
Company and its Subsidiaries taken as a whole; (v) make any loan to, or
investment in, any Minority Affiliate or XSL, other than business transactions
with Minority Affiliates or XSL in the ordinary course of business; or (vi)
enter into or amend any contract, agreement, commitment or arrangement to effect
any of the matters prohibited by this SECTION 6.01;
(f) (i) increase the compensation payable or to become payable to its
officers or employees, except for increases in salary or wages of employees of
the Company or its Subsidiaries who are not officers of the Company in the
ordinary course of business in accordance with past practice and except for
increases in salary or wages as provided for in employment agreements; (ii)
grant any severance or termination pay to, or enter into or amend any employment
or severance agreement with any director, officer or other employee of the
Company or any of its Subsidiaries; or (iii) establish, adopt, enter into or
amend any collective bargaining, bonus, profit sharing, thrift, compensation,
stock option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust, fund, policy
or arrangement for the benefit of any current or former directors, officers or
employees, except, in each case, as may be required by law;
(g) except as may be required as a result of a change in law or in
generally accepted accounting principles, take any action to change accounting
policies or procedures (including, without limitation, procedures with respect
to revenue recognition, payments of accounts payable and collection of accounts
receivable);
(h) make any material tax election inconsistent with past practice or
settle or compromise or amend any material federal, state, local or foreign tax
liability or agree to an extension of a statute of limitations;
(i) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction in the ordinary course of business and
consistent with past practice of liabilities reflected or reserved against in
the financial statements contained in the Company SEC Reports filed prior to
-28-
the date of this Agreement or incurred in the ordinary course of business and
consistent with past practice;
(j) offer employment to any person as an officer of the Company, or promote
any existing employee to such office;
(k) settle or agree to a final settlement of any litigation against the
Company or any of its Subsidiaries for an amount in excess of $450,000;
(l) amend or grant waivers or approvals in its discretion under the UK
Purchase Agreement (other than converting the purchase price and other dollar
denominated provisions contained therein to Pounds Sterling provisions at an
agreed upon conversion rate); or
(m) take, or agree in writing or otherwise to take, any of the actions
described in SECTIONS 6.01(a) through (l) above, or any action which would make
any of the representations or warranties of the Company contained in this
Agreement untrue or incorrect or prevent the Company from performing or cause
the Company not to perform its covenants hereunder.
SECTION 6.02. CONDUCT OF BUSINESS BY PARENT PENDING THE MERGER. Parent
------------------------------------------------
covenants and agrees that, during the period from the date of this Agreement and
continuing until the earlier of the termination of this Agreement or the
Effective Time, unless the Company shall otherwise agree in writing, continue to
conduct its business, and cause its Subsidiaries to continue to conduct their
respective businesses, in a manner designed in its reasonable judgment, to
enhance the long-term value of the Parent Common Stock and the business
prospects of Parent and its Subsidiaries and to the extent consistent therewith
use all reasonable best efforts to preserve intact the core businesses and
goodwill of Parent and its Subsidiaries with their respective present officers,
employees, consultants, customers, suppliers and other persons with which Parent
or any of its Subsidiaries has significant business relations; provided, that
the foregoing shall not prevent Parent or any of its Subsidiaries from acquiring
any assets or other businesses or from discontinuing or disposing of any of
their respective assets or businesses if such action is, in the judgment of
Parent, desirable in the conduct of the business of Parent and such
Subsidiaries. By way of amplification and not limitation, except as contemplated
by this Agreement or as described on SCHEDULE 6.02, Parent shall not, during the
period from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Effective Time, directly or indirectly do,
or propose to do, any of the following without the prior written consent of the
Company:
(a) amend or otherwise change the Certificate of Incorporation or By-Laws
of Parent in any manner adverse to the holders of Company Common Stock as
compared to the current holders of Parent Common Stock;
(b) except as may be required as a result of a change in law or in
generally accepted accounting principles, take any action to change accounting
policies or procedures (including,
-29-
without limitation, procedures with respect to revenue recognition, payments of
accounts payable and collection of accounts receivable); or
(c) take, or agree in writing or otherwise to take, any of the actions
described in SECTIONS 6.02(a) or (b) above, or any action which would make any
of the representations or warranties of Parent contained in this Agreement
untrue or incorrect or prevent Parent or Acquisition Sub from performing or
cause Parent or Acquisition Sub not to perform their respective covenants
hereunder.
SECTION 6.03. NO SOLICITATION.
---------------
(a) The Company shall not, directly or indirectly, through any officer,
director, employee, representative or agent of the Company or any of its
Subsidiaries, (i) solicit, initiate or encourage or take any other action to
facilitate the institution of any inquiries or proposals regarding any merger,
reorganization, consolidation, business combination, recapitalization,
liquidation, dissolution, sale of all or any significant portion of assets, sale
of shares of capital stock (including without limitation by way of a tender or
exchange offer) or similar transactions involving the Company or any
Subsidiaries of the Company other than the Merger (any of the foregoing
inquiries or proposals being referred to herein as an "ACQUISITION PROPOSAL"),
(ii) engage in negotiations or discussions concerning, or provide any nonpublic
information or assistance to any person in connection with any Acquisition
Proposal, or (iii) agree to, approve or recommend any Acquisition Proposal.
Nothing contained in this SECTION 6.03(a) shall prevent the Board of Directors
of the Company from considering, negotiating, discussing, approving and
recommending to the stockholders of the Company a bona fide Acquisition Proposal
not solicited in violation of this Agreement, PROVIDED that the Board of
Directors of the Company determines in good faith (after consultation with and
based upon the advice of outside counsel) that it is required to do so in order
to discharge properly its fiduciary duties to the Company's stockholders; and
PROVIDED, FURTHER, that the Company shall keep Parent informed, on a reasonably
current basis, as to the status and details of any such consideration,
negotiations or discussions. Nothing contained in this SECTION 6.03 shall
prohibit the Board of Directors of the Company from complying with Rule 14e-2
promulgated under the Exchange Act with regard to a tender or exchange offer.
(b) The Company shall immediately notify Parent after receipt of any
Acquisition Proposal or any modification of or amendment to any Acquisition
Proposal, or any request for nonpublic information relating to the Company or
any of its Subsidiaries in connection with an Acquisition Proposal or for access
to the properties, books or records of the Company or any Subsidiary by any
person or entity that informs the Board of Directors of the Company or such
Subsidiary that it is considering making, or has made, an Acquisition Proposal.
Such notice to Parent shall be made orally and in writing, shall indicate
whether the Company is providing or intends to provide the person making the
Acquisition Proposal with access to information concerning the Company as
provided in SECTION 6.03(c) and, if reasonably practicable, shall be made prior
to furnishing any such information to, or entering into negotiations or
discussions with, such person.
-30-
(c) If the Board of Directors of the Company receives a request for
material nonpublic information by a person who makes, or indicates that it is
considering making, a bona fide Acquisition Proposal, and the Board of Directors
determines in good faith and upon the advice of outside counsel that it is
required to cause the Company to act as provided in this SECTION 6.03(c) in
order to discharge properly the directors' fiduciary duties to the Company's
stockholders, then, PROVIDED that such person has executed a confidentiality
agreement substantially similar to the one then in effect among the Company and
Parent the Company may provide such person with access to information regarding
the Company.
(d) The Company shall immediately cease and cause to be terminated any
existing discussions or negotiations with any persons (other than Parent)
conducted heretofore with respect to any of the foregoing. The Company agrees
not to release any third party from the confidentiality provisions of any
confidentiality agreement to which the Company is a party.
(e) The Company shall ensure that the officers, directors and employees of
the Company and its Subsidiaries and any investment banker or other advisor or
representative retained by the Company are aware of the restrictions described
in this SECTION 6.03.
ARTICLE VII.
ADDITIONAL AGREEMENTS
---------------------
SECTION 7.01. HSR ACT; ETC. As promptly as practicable after the date of
------------
the execution of this Agreement, the Company and Parent shall file notifications
under and in accordance with the HSR Act and the legal requirements of the
European Community and any other foreign jurisdictions requiring notification in
connection with the Merger and the transactions contemplated hereby. The
Company and Parent shall respond as promptly as practicable to any inquires
received from the Federal Trade Commission (the "FTC") and the Antitrust
Division of the Department of Justice (the "ANTITRUST DIVISION") for additional
information or documentation and shall respond as promptly as practicable to all
inquires and requests received from any State Attorney General or other
governmental authority (foreign or domestic) in connection with antitrust
matters.
SECTION 7.02. PREPARATION OF THE PROSPECTUS/PROXY STATEMENT.
---------------------------------------------
(a) As promptly as practicable after the execution of this Agreement,
Parent shall prepare and file with the SEC the Prospectus/Proxy Statement and
the S-4 Registration Statement and the Company shall cooperate in the
preparation and filing of the Prospectus/Proxy Statement and S-4 Registration
Statement and shall furnish all information concerning it and the holders of its
capital stock as Parent may reasonably request in connection with such actions.
Parent and the Company shall use their reasonable best efforts to respond to all
SEC comments, to have the S-4 Registration Statement declared effective under
the Securities Act as promptly as practicable after such filing and to cause the
Prospectus/Proxy Statement to be mailed to Parent's and the Company's respective
stockholders at the earliest practicable date. Parent shall use its reasonable
-31-
best efforts to take any action required to be taken under the applicable Blue
Sky Laws in connection with the issuance of the shares of Parent Common Stock
upon consummation of the Merger
(b) The Company has disclosed in SCHEDULE 7.02(b) all persons whom it
reasonably believes is or will be an "affiliate" of the Company for purposes of
Rule 145 under the Securities Act. The Company shall use its reasonable best
efforts to cause each such person to deliver to Parent not later than 30 days
after the date of this Agreement, a written agreement, substantially in the form
of EXHIBIT A, providing that such person will not sell, pledge, transfer, or
otherwise dispose of the shares of the Company Common Stock held by such person
except as contemplated by such agreement or by this Agreement and will not sell,
pledge, transfer, or otherwise dispose of the shares of Parent Common Stock to
be received by such person upon consummation of the Merger except in compliance
with applicable provisions of the Securities Act and the rules and regulations
thereunder and, if the Merger is accounted for by the pooling-of-interests
method of accounting, until such time as financial results covering at least 30
days of combined operations of Parent and the Company have been published within
the meaning of Section 201.01 of the SEC's Codification of Financial Reporting
Policies. If the Merger is accounted for using the pooling-of-interests method
of accounting, shares of Parent Common Stock issued to such affiliates of the
Company in exchange for shares of the Company Common Stock shall not be
transferable until such time as financial results covering at least 30 days of
combined operations of Parent and the Company have been published within the
meaning of Section 201.01 of the SEC's Codification of Financial Reporting
Policies, regardless of whether each such affiliate has provided the written
agreement referred to in this SECTION 7.02(b) (and Parent shall be entitled to
place restrictive legends upon certificates for shares of Parent Common Stock
issued to affiliates of the Company pursuant to this Agreement to enforce the
provisions of this SECTION 7.02(b)).
SECTION 7.03. STOCKHOLDER APPROVAL.
--------------------
(a) As soon as practicable after the S-4 Registration Statement is
effective, the Company shall call and hold the Company Stockholders Meeting in
accordance with applicable laws for the purpose of voting upon the adoption of
this Agreement. In connection with the Company Stockholders Meeting, the Board
of Directors of the Company shall recommend to its stockholders the approval of
the matters submitted for approval at such meeting (subject to the Board of
Directors of the Company, after having consulted with and considered the advice
of outside counsel, reasonably determining in good faith that the making of such
recommendation, or the failure to withdraw or modify its recommendation, would
constitute a breach of fiduciary duties of the members of such Board of
Directors to the Company's stockholders under applicable law), and the Board of
Directors and officers of the Company shall use their reasonable best efforts to
obtain such stockholders' approval (subject to the Board of Directors of the
Company, after having consulted with and considered the advice of outside
counsel, reasonably determining in good faith that the taking of such actions
would constitute a breach of fiduciary duties of the members of such Board of
Directors to the Company's stockholders under applicable law). At the Company
Stockholders Meeting, Parent shall cause all of the shares of Company Common
Stock for which it holds proxies to vote to be voted in favor of adoption of
this Agreement.
-32-
(b) As soon as practicable after the S-4 Registration Statement is
effective, Parent shall call and hold the Parent Stockholders Meeting in
accordance with applicable laws for the purpose of voting upon the approval of
the issuance of shares of Parent Common Stock pursuant to this Agreement. In
connection with the Parent Stockholders Meeting, the Board of Directors of
Parent shall recommend to its stockholders the approval of the matters submitted
for approval (subject to the Board of Directors of Parent, after having
consulted with and considered the advice of outside counsel, reasonably
determining in good faith that the making of such recommendation, or the failure
to withdraw or modify its recommendation, would constitute a breach of fiduciary
duties of the members of such Board of Directors to Parent's stockholders under
applicable law), and the Board of Directors and officers of Parent shall use
their reasonable best efforts to obtain such stockholders' approval (subject to
the Board of Directors of Parent, after having consulted with and considered the
advice of outside counsel, reasonably determining in good faith that the taking
of such actions would constitute a breach of fiduciary duties of the members of
such Board of Directors to Parent's stockholder under applicable law).
SECTION 7.04. ACCESS TO INFORMATION; CONFIDENTIALITY. Upon reasonable
--------------------------------------
notice and subject to restrictions contained in confidentiality agreements to
which such party is subject (from which such party shall use reasonable best
efforts to be released), the Company and Parent shall each (and shall cause each
of their Subsidiaries, and in the case of the Company, use commercially
reasonable efforts to cause its Minority Affiliates and XSL, to) afford to the
officers, employees, accountants, counsel and other representatives of the
other, reasonable access, during the period prior to the Effective Time, to all
its properties, books, contracts, commitments and records and, during such
period, the Company and Parent each shall (and shall cause each of their
Subsidiaries, and in the case of the Company, use commercially reasonable
efforts to cause its Minority Affiliates and XSL, to) furnish promptly to the
other all information concerning its business, properties and personnel as such
other party may reasonably request, and each shall make available to the other
the appropriate individuals (including attorneys, accountants and other
professionals) for discussion of the other's business (including, in the case of
the Company, the business of the Minority Affiliates and XSL), properties and
personnel as either Parent or the Company may reasonably request. From and after
the date of this Agreement through the Effective Time, the Company shall provide
to Parent monthly consolidated statements of operations and cash flows and
monthly consolidated balance sheets for the Company and its Subsidiaries and, if
the Company receives such statements from its Minority Affiliates or XSL, from
such Minority Affiliates or XSL, within 30 days following the end of each
calendar month during such period. Each party shall keep such information
confidential in accordance with the terms of the confidentiality letter, dated
October 26, 1997 (the "CONFIDENTIALITY LETTER") between Parent and the Company.
The Company shall use its reasonable best efforts to exercise its rights under
confidentiality agreements entered into with persons which were considering an
Alternative Transaction (as defined in SECTION 9.01 with respect to the Company
to preserve the confidentiality of the information relating to the Company and
its Subsidiaries and Minority Affiliates and XSL provided to such persons and
their affiliates and representatives.
-33-
SECTION 7.05. CONSENTS; APPROVALS. The Company and Acquisition Sub shall
-------------------
each use their reasonable best efforts to obtain all consents, waivers,
approvals, authorizations or orders (including, without limitation, all United
States and foreign governmental and regulatory rulings and approvals), and the
Company and Parent shall make all filings (including, without limitation, all
filings with United States and foreign governmental or regulatory agencies)
required in connection with the authorization, execution and delivery of this
Agreement by the Company and Parent and the consummation by them of the
transactions contemplated hereby, in each case as promptly as practicable. The
Company and Parent shall furnish promptly all information required to be
included in the Prospectus/Proxy Statement or for any application or other
filing to be made pursuant to the rules and regulations of any United States or
foreign governmental body in connection with the transactions contemplated by
this Agreement.
SECTION 7.06. INDEMNIFICATION AND INSURANCE.
-----------------------------
(a) The By-Laws of the Surviving Corporation shall contain the provisions
with respect to indemnification set forth in the By-Laws of the Company on the
date hereof, which provisions shall not be amended, repealed or otherwise
modified for a period of six years from the Effective Time in any manner that
would adversely affect the rights thereunder of individuals who on or prior to
the Effective Time were directors, officers, employees or agents of the Company,
unless such modification is required by law.
(b) The Company shall, to the fullest extent permitted under applicable law
or under the Company's Certificate of Incorporation or By-Laws and regardless of
whether the Merger becomes effective, indemnify and hold harmless, and, after
the Effective Time, the Surviving Corporation shall, to the fullest extent
permitted under applicable law or under the Surviving Corporation's Certificate
of Incorporation or By-Laws as in effect at the Effective Time, indemnify and
hold harmless, each present and former director, officer or employee of the
Company or any of its Subsidiaries (collectively, the "INDEMNIFIED PARTIES")
against any cost or expense (including attorney's fees), judgments, fines,
losses, claims, damages, liabilities and amounts paid in settlement in
connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, (x) arising out of or
pertaining to the transactions contemplated by this Agreement or (y) otherwise
with respect to any acts or omissions occurring at or prior to the Effective
Time, to the same extent as provided in the Company's Certificate of
Incorporation or By-Laws or any applicable contract or agreement as in effect on
the date hereof, in each case for a period of six years after the date hereof.
In the event of any such claim, action, suit, proceeding or investigation
(whether arising before or after the Effective Time), (i) any counsel retained
by the Indemnified Parties for any period after the Effective Time shall be
reasonably satisfactory to the Surviving Corporation, (ii) after the Effective
Time, the Surviving Corporation shall pay the reasonable fees and expenses of
such counsel, promptly after statements therefor are received, and (iii) the
Surviving Corporation will cooperate in the defense of any such matter; PROVIDED
that the Surviving Corporation shall not be liable for any settlement effected
without its written consent (which consent shall not be unreasonably withheld);
and PROVIDED, FURTHER, that in the event that any claim or claims for
indemnification are asserted or made within such six-year period, all rights to
indemnification in respect of any such claim or claims shall continue until the
disposition of any and all such
-34-
claims. The Indemnified Parties as a group may retain only one law firm to
represent them with respect to any single action unless there is, under
applicable standards of professional conduct, a conflict on any significant
issue between the positions of any two or more Indemnified Parties.
(c) Parent and the Surviving Corporation shall honor and fulfill in all
respects the obligations of the Company pursuant to indemnification agreements
with the Company's directors and officers existing at or before the Effective
Time.
(d) For a period of six years after the Effective Time, Parent shall cause
the Surviving Corporation to maintain in effect, if available, directors' and
officers' liability insurance covering those persons who are currently covered
by the Company's directors' and officers' liability insurance policy (a copy of
which has been made available to Parent) on terms comparable to those now
applicable to directors and officers of the Company; PROVIDED that in no event
shall Parent or the Surviving Corporation be required to expend in excess of
150% of the annual premium currently paid by the Company for such coverage; and
PROVIDED, FURTHER, that if the premium for such coverage exceeds such amount,
Parent or the Surviving Corporation shall purchase a policy with the greatest
coverage available for such 150% of the annual premium.
(e) This Section shall survive the consummation of the Merger at the
Effective Time, is intended to benefit the Company, the Surviving Corporation
and the Indemnified Parties, shall be binding on all successors and assigns of
Parent and the Surviving Corporation and shall be enforceable by the Indemnified
Parties.
SECTION 7.07. EMPLOYMENT AND BENEFIT MATTERS. The Surviving Corporation
------------------------------
shall for a period of one (1) year following the Effective Time maintain the
contractual benefit programs identified in SCHEDULE 7.07 (each, a "BENEFIT
PLAN"); PROVIDED that nothing herein shall affect the Surviving Corporation's
rights to modify or terminate any such Benefit Plan at or after the end of such
one (1) year period.
SECTION 7.08. NOTIFICATION OF CERTAIN MATTERS. The Company shall give
-------------------------------
prompt notice to Parent, and Parent shall give prompt notice to the Company, of
(i) the occurrence and nonoccurrence of any event the occurrence or
nonoccurrence of which would be likely to cause any representation or warranty
contained in this Agreement to become materially untrue or inaccurate, or (ii)
any failure of the Company or Parent, as the case may be, materially to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder; PROVIDED that the delivery of any notice pursuant to
this Section shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice; and PROVIDED, FURTHER, that
failure to give such notice shall not be treated as a breach of covenant for the
purposes of SECTIONS 8.02(a) and 8.03(a) unless the failure to give such notice
results in material prejudice to the other party.
SECTION 7.09. FURTHER ACTION. Upon the terms and subject to the
--------------
conditions hereof each of the parties hereto shall use their reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all other things necessary, proper or advisable to consummate and make
effective as promptly as practicable the transactions contemplated by this
-35-
Agreement, to obtain in a timely manner all necessary waivers, consents and
approvals and to effect all necessary registrations and filings, and otherwise
to satisfy or cause to be satisfied all conditions precedent to its obligations
under this Agreement.
SECTION 7.10. PUBLIC ANNOUNCEMENTS. Parent and the Company shall consult
--------------------
with each other before issuing any press release with respect to the Merger or
this Agreement and shall not issue any such press release or make any such
public statement without the prior consent of the other party, but following
consultation with the other party and the use of reasonable best efforts to
agree on a mutually satisfactory text, which shall not be unreasonably withheld;
PROVIDED that a party may, without the prior consent of the other party, issue
such press release or make such public statement as may upon the advice of
outside counsel be required by law or the rules and regulations of NASDAQ, as
the case may be.
SECTION 7.11. CONVEYANCE TAXES. Parent and the Company shall cooperate in
----------------
the preparation, execution and filing of all returns, questionnaires,
applications, or other documents regarding any real property transfer or gains,
sales, use, transfer, value added, stock transfer and stamp taxes, any transfer,
recording, registration and other fees, and any similar taxes which become
payable in connection with the transactions contemplated hereby that are
required or permitted to be filed at or before the Effective Time.
SECTION 7.12. NASDAQ LISTING. Parent shall use its reasonable best
--------------
efforts to list, prior to the Effective Time, on the NASDAQ the shares of Parent
Common Stock to be issued to the holders of the Company Common Stock pursuant to
the Merger, and Parent shall, on a timely basis, give all notices and make all
filings with the NASD required in connection with the transactions contemplated
herein.
SECTION 7.13. NO ACQUISITION SUB BUSINESS. Prior to the Effective Time,
---------------------------
Acquisition Sub shall not undertake any business other than as necessary to
consummate the transactions contemplated by this Agreement.
SECTION 7.14. NEGOTIATIONS WITH MINORITY AFFILIATE. Parent and/or the
------------------------------------
Company shall be entitled to commence and conduct (including without limitation
the formulation of the terms and conditions of) negotiations with Xpedite
Germany with respect to the acquisition by the Company of all or substantially
all the outstanding capital stock or assets of Xpedite Germany (which
acquisition shall not be conditioned upon the consummation of the Merger).
SECTION 7.15. ACCOUNTING AND TAX MATTERS. Each of the parties undertakes
--------------------------
and agrees to use its reasonable best efforts to cause the Merger, and to take
no action which would cause the Merger not, to qualify for treatment as a
pooling of interests for accounting purposes or as a "reorganization" within the
meaning of Section 368(a) of the Code for federal income tax purposes.
SECTION 7.16. REGISTRATION RIGHTS. Each person (including its
-------------------
"affiliates" and "associates," as defined under the Securities Act) who is
precluded by Rule 145 under the Securities Act from selling or disposing of all
of the shares of Parent Common Stock received by such person in the Merger
-36-
within one calendar quarter in the absence of an effective registration
statement therefor, or another exemption from registration, under the Securities
Act (each, together with such affiliates and associates, a "LARGE STOCKHOLDER")
shall be entitled to registration rights for such shares as set forth in
EXHIBIT C.
ARTICLE VIII.
CONDITIONS TO THE MERGER
------------------------
SECTION 8.01. CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE MERGER
-----------------------------------------------------------
The respective obligations of each party to effect the Merger shall be subject
to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) STOCKHOLDER APPROVAL OF THE MERGER. This Agreement and the Merger
----------------------------------
shall have been approved and adopted by the requisite vote of the stockholders
of the Company and the issuance of shares of Parent Common Stock in the Merger
shall have been approved by the requisite vote of the stockholders of Parent;
(b) HSR ACT, ETC. The waiting period applicable to the consummation of the
------------
Merger under the HSR Act and under any legal requirement of the European
Community shall have expired or been terminated, and any material requirements
of other foreign jurisdictions applicable to the consummation of the Merger
shall have been satisfied;
(c) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No statute, rule,
----------------------------------------
regulation, executive order, decree, ruling, temporary restraining order,
preliminary or permanent injunction or other order shall have been enacted,
entered, promulgated, enforced or issued by any court or governmental authority
of competent jurisdiction or shall otherwise be in effect which prohibits,
restrains, enjoins or restricts the consummation of the Merger;
(d) TAX OPINION. Each party shall have received a written opinion of
-----------
counsel from Xxxxxx & Bird LLP, in form reasonably satisfactory to such parties
(the "TAX OPINION"), to the effect that (i) the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Code, (ii) the
exchange in the Merger of the Company Common Stock for Parent Common Stock will
not give rise to gain or loss to the stockholders of the Company with respect to
such exchange (except to the extent of any cash received), and (iii) none of the
Company, Acquisition Sub or Parent will recognize gain or loss as a consequence
of the Merger (except for amounts resulting from any required change in
accounting methods and any income and deferred gain recognized pursuant to
Treasury regulations issued under Section 1502 of the Internal Revenue Code).
In rendering such Tax Opinion, such counsel shall be entitled to rely upon
representations of officers of the Company and Parent reasonably satisfactory in
form and substance to such counsel;
(e) S-4 REGISTRATION STATEMENT. The S-4 Registration Statement shall be
--------------------------
effective under the Securities Act, no stop orders suspending the effectiveness
-37-
of the Registration Statement shall have been issued, no action, suit,
proceeding or investigation by the SEC to suspend the effectiveness thereof
shall have been initiated and be continuing, and all necessary approvals under
the Securities Act or Exchange Act or Blue Sky Laws relating to the issuance or
trading of the shares of Parent Common Stock issuable pursuant to the Merger
shall have been received; and
(f) NASDAQ LISTING. The shares of Parent Common Stock issuable pursuant to
--------------
the Merger shall have been approved for listing on NASDAQ.
SECTION 8.02. ADDITIONAL CONDITIONS TO OBLIGATIONS OF PARENT. The
----------------------------------------------
obligations of Parent to effect the Merger are also subject to the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
------------------------------
the Company contained in this Agreement shall be true and correct in all
material respects at and as of the Effective Time with the same force and effect
as if made at and as of such time, except for (i) changes contemplated by this
Agreement and (ii) those representations and warranties which address matters
only as of a particular date (which shall have been true and correct as of such
date) and Parent shall have received a certificate to such effect signed by the
Chief Executive Officer and the Chief Financial Officer of the Company;
(b) AGREEMENTS AND COVENANTS. The Company shall have performed or complied
------------------------
in all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it at or prior to the Effective
Time, and Parent shall have received a certificate to such effect signed by the
Chief Executive Officer and the Chief Financial Officer of the Company;
(c) ACQUISITION OF XPEDITE SYSTEMS LIMITED. All conditions precedent to
--------------------------------------
the closing of the transactions contemplated by the Share Purchase Agreement
dated as of August 8, 1997 (the "UK PURCHASE AGREEMENT") by and among Xpedite
Systems Holdings (UK) Limited, Xpedite Systems, Inc. and the stockholders of
Xpedite Systems Limited, a company organized under the laws of England ("XSL")
shall have been satisfied, and such transactions shall have been consummated in
accordance with the terms and conditions of the UK Purchase Agreement;
(d) NO MATERIAL ADVERSE EFFECT. There shall have been no Material Adverse
--------------------------
Effect with respect to the Company since the date of this Agreement, and Parent
shall have received a certificate to such effect signed by the Chief Executive
Officer and the Chief Financial Officer of the Company.
(e) POOLING LETTERS. Parent shall have received a letter, dated as of the
---------------
Effective Time, addressed to Parent, in form and substance reasonably acceptable
to Parent, from Xxxxxx Xxxxxxxx LLP to the effect that the Merger will qualify
for pooling-of-interests accounting treatment. Parent also shall have received
a letter, dated as of the Effective Time, addressed to Parent, in form and
substance reasonably acceptable to Parent, from Ernst & Young LLP to the effect
-38-
that such firm is not aware of any matters relating to the Company and its
Subsidiaries which would preclude the Merger from qualifying for pooling-of-
interests accounting treatment.
(f) AFFILIATE AGREEMENTS. Parent shall have received from each affiliate
--------------------
of the Company the affiliates letter referred to in SECTION 7.02(b), to the
extent necessary to assure in the reasonable judgment of Parent that the
transactions contemplated hereby will qualify for pooling-of-interests
accounting treatment.
SECTION 8.03. ADDITIONAL CONDITIONS TO OBLIGATION OF THE COMPANY. The
--------------------------------------------------
obligation of the Company to effect the Merger is also subject to the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
------------------------------
Parent and Acquisition Sub contained in this Agreement shall be true and correct
in all material respects on and as of the Effective Time, except for (i) changes
contemplated by this Agreement and (ii) those representations and warranties
which address matters only as of a particular date (which shall have been true
and correct as of such date), and the Company shall have received a certificate
to such effect signed by the Chief Executive Officer or Chief Financial Officer
of Parent; and
(b) AGREEMENTS AND COVENANTS. Parent and Acquisition Sub shall have
------------------------
performed or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by them on or prior
to the Effective Time, and the Company shall have received a certificate to such
effect signed by the Chief Executive Officer or Chief Financial Officer of
Parent.
(c) NO MATERIAL ADVERSE EFFECT. There shall have been no Material Adverse
--------------------------
Effect with respect to Parent since the date of this Agreement, and Parent shall
have received a certificate to such effect signed by the Chief Executive Officer
or the Chief Financial Officer of Parent.
ARTICLE IX.
TERMINATION
-----------
SECTION 9.01. TERMINATION. This Agreement may be terminated at any time
-----------
prior to the Effective Time, notwithstanding approval thereof by the
stockholders of the Company or the stockholders of Parent:
(a) by mutual written consent duly authorized by the Boards of Directors of
Parent and the Company; or
(b) by either Parent or the Company if the Merger shall not have been
consummated by April 30, 1998 (PROVIDED that such date shall be extended by an
additional 30 days in the event the Prospectus/Proxy Statement shall have been
-39-
mailed to stockholders of both the Company and Parent by such date; and
PROVIDED, FURTHER, that the right to terminate this Agreement under this SECTION
9.01(b) shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of or resulted in the failure
of the Merger to occur on or before such date); or
(c) by either Parent or the Company if a court of competent jurisdiction or
governmental, regulatory or administrative agency or commission shall have
issued a nonappealable final order, decree or ruling or taken any other action
having the effect of permanently restraining, enjoining or otherwise prohibiting
the Merger (PROVIDED that the right to terminate this Agreement under this
SECTION 9.01(c) shall not be available to any party who has not complied with
its obligations under SECTION 7.09 and such noncompliance materially contributed
to the issuance of any such order, decree or ruling or the taking of such
action); PROVIDED, FURTHER, that for the purposes of this SECTION 9.01(c), a
temporary injunction restraining, enjoining or otherwise prohibiting the Merger
shall be deemed to be a nonappealable final order hereunder if such injunction
remains continuously in effect for 60 days after the date of issuance thereof;
and PROVIDED, FURTHER, that during such period all obligations of the Company or
Parent to expend funds or incur monetary obligations in connection with the
transactions contemplated hereby shall be suspended; or
(d) by Parent or the Company, if: (i) the Board of Directors of the Company
shall have recommended to the stockholders of the Company an Alternative
Transaction (as defined below) or (ii) a tender offer or exchange offer for 15%
or more of the outstanding shares of Company Common Stock is commenced (other
than by Parent or an affiliate of Parent) and the Board of Directors of the
Company recommends that the stockholders of the Company tender their shares in
such tender or exchange offer; PROVIDED that the Company shall not be entitled
to exercise any termination rights under clause (i) or (ii) of this SECTION
9.01(d) unless (x) any action of the Board of Directors of the Company referred
to in either such clause is required to be taken by the Board of Directors in
order to properly discharge its fiduciary duties to its stockholders and (y) the
Company has complied with its obligations in SECTION 6.03; or
As used herein, "ALTERNATIVE TRANSACTION" means (i) a transaction or series
of transactions pursuant to which any person (or group of persons) other than
Parent or its Subsidiaries (a "THIRD PARTY") acquires or would acquire more than
15% of the outstanding shares, whether from the Company or pursuant to a tender
offer or exchange offer or otherwise, (ii) any acquisition or proposed
acquisition of the Company or any of its Subsidiaries by a merger, consolidation
or other business combination (including any so-called "merger of equals" and
whether or not the Company or any of its Subsidiaries is the entity surviving
any such merger or business combination), (iii) any reorganization,
recapitalization, liquidation or dissolution of the Company or any of its
Subsidiaries (other than the liquidation or dissolution of a wholly-owned
Subsidiary of the Company or any of its Subsidiaries) or (iv) any other
transaction pursuant to which any Third Party acquires or would acquire control
of assets (including for this purpose the outstanding equity securities of
Subsidiaries of the Company and any entity surviving any merger or business
combination with any Subsidiary) of the Company or any of its Subsidiaries
-40-
having a fair market value equal to more than 15% of the fair market value of
all the assets of the Company and its Subsidiaries, taken as a whole,
immediately prior to such transaction.
(e) by the Company, if: (i) the Board of Directors of Parent shall have
recommended to the stockholders of Parent (x) any acquisition or proposed
acquisition of Parent by a merger, consolidation or other business combination
(including any so-called "merger of equals" and whether or not the Company is
the entity surviving any such merger or business combination) in which the
consideration to be received by Parent stockholders in such business combination
shall be other than cash, (y) any liquidation or dissolution of Parent, or (z)
any transaction or series of transactions in which Third Parties would acquire
substantially all of the consolidated assets of Parent or (ii) a tender offer or
exchange offer for 50% or more of the outstanding shares of Parent Common Stock
is commenced and the Board of Directors of Parent recommends that the
stockholders of Parent tender their shares in such tender or exchange offer; or
(f) by Parent, if the Board of Directors of the Company shall withdraw,
modify or change its approval or recommendation of this Agreement or the Merger
in a manner adverse to Parent; or
(g) by the Company, if the Board of Directors of Parent shall withdraw,
modify or change its approval or recommendation of this Agreement or the Merger
in a manner adverse to the Company; or
(h) by either the Company or Parent, if there has been a material breach of
any representation, warranty, covenant or agreement on the part of the other set
forth in this Agreement, which breach has not been cured within 30 days
following receipt by the breaching party of written notice of such breach, in
any case such that the conditions set forth in SECTIONS 8.02 or 8.03, as the
case may be, would be incapable of being satisfied by April 30, 1998 (PROVIDED
that the right to terminate this Agreement under this SECTION 9.01(h) shall not
be available to any party who is itself in material breach of any of its
representations, warranties, covenants or agreements set forth in this
Agreement, such that the conditions set forth in SECTIONS 8.02 OR 8.03, as the
case may be, would be incapable of being satisfied by April 30, 1998); or
(i) by the Company, if its Board of Directors so determines by a vote of a
majority of the members of its entire Board, at any time during the three-
business-day period commencing on the Determination Date, if the Average Closing
Price shall be less than $24.00 (the "THRESHOLD PRICE"); subject, however, to
the following three sentences. If the Company elects to exercise its
termination right pursuant to this SECTION 9.01(i), it shall give prompt written
notice thereof to Parent (provided that such notice of election to terminate may
be withdrawn at any time within the three-business-day period referenced in the
following sentence). During the three-business-day period commencing with its
receipt of such notice, Parent shall have the option, in its sole discretion, to
elect to increase the Exchange Ratio to equal the quotient obtained by dividing
(x) the product of the Threshold Price and the Exchange Ratio (as then in
effect) by (y) the Average Closing Price. If Parent makes an election
contemplated by the preceding sentence within such three-business-day period, it
shall give prompt written notice to the Company of such election and the revised
-41-
Exchange Ratio, whereupon no termination shall have occurred pursuant to this
SECTION 9.01(i) and this Agreement shall remain in effect in accordance with its
terms (except as the Exchange Ratio shall have been so modified), and any
references in this Agreement to "Exchange Ratio" shall thereafter be deemed to
refer to the Exchange Ratio as adjusted pursuant to this SECTION 9.01(i).
SECTION 9.02. EFFECT OF TERMINATION.
---------------------
(a) Except as provided in SECTION 10.01, in the event of the termination of
this Agreement pursuant to SECTION 9.01, this Agreement shall forthwith become
void and there shall be no liability on the part of any party hereto or any of
its affiliates, directors, officers or stockholders, subject to the provisions
of SECTION 9.02(b) and SECTION 9.02(c), and nothing herein shall relieve any
party from liability for any breach hereof occurring prior to termination. The
Confidentiality Letter shall survive termination of this Agreement as set forth
therein.
(b) Notwithstanding anything to the contrary contained in this Agreement,
in the event that this Agreement is terminated by either party for any reason,
except as provided in clauses (i) and (ii) below, the Company shall pay to
Parent an amount equal to $9,500,000 (the "PARENT FEE") plus all documented fees
and expenses incurred by Parent and its Subsidiaries in connection with or
related to the authorization, preparation, regulation, execution and performance
of this Agreement and the transactions contemplated hereby (including, without
limitation, all fees and expenses of counsel, accountants, investment bankers,
experts, consultants, banks and other financial institutions) (the "PARENT
EXPENSES") up to a maximum of $1,000,000 in the aggregate. Notwithstanding the
foregoing:
(i) the Company shall not be obligated to pay the Parent Fee or any
Parent Expenses if this Agreement is terminated
(1) pursuant to SECTION 9.01(a),
(2) by the Company pursuant to SECTION 9.01(e), 9.01(g), 9.01(h)
or SECTION 9.01(i),
(3) by the Company pursuant to SECTION 9.01(b) solely as a result
of the failure to satisfy any of the conditions set forth in SECTION
8.01(b), 8.01(c) (other than if any such injunction results from
claims made by stockholders of the Company or any Third Party
proposing an Alternative Transaction), 8.01(d), 8.01(e), 8.01(f),
8.03(a), 8.03(b) or 8.03(c),
(4) by either party pursuant to SECTION 9.01(b) solely as a result
of the failure to satisfy the condition set forth in SECTION 8.01(a),
but only if the stockholders of the Company have adopted this
Agreement and the stockholders of Parent have not approved the
issuance of shares of Parent Common Stock in the Merger or any other
aspect of the Merger which is submitted for their approval at the
Parent Stockholders Meeting,
-42-
(5) by Parent pursuant to SECTION 9.01(b) solely as a result of
the failure to satisfy any of the conditions set forth in SECTION
8.01(b), 8.01(d), 8.01(e), 8.01(f), 8.02(e) or 8.02(f),
(6) by either party pursuant to SECTION 9.01(c) if any such
injunction results from claims made by stockholders of the Company or
any Third Party proposing an Alternative Transaction, or
(7) by the Company pursuant to SECTION 9.01(g); and
(ii) the Company shall not be obligated to pay the Parent Fee but
shall only be obligated to reimburse Parent for the amount of Parent
Expenses incurred by it up to a maximum of $1,000,000 if this Agreement is
terminated
(1) by Parent pursuant to SECTION 9.01(b) solely as a result of
the failure to satisfy the condition set forth in SECTION 8.02(c)
(other than as a result of the Company's breach of a representation or
warranty in the UK Purchase Agreement or the Company's failure to
fulfill any of its material obligations in the UK Purchase Agreement)
or the condition set forth in SECTION 8.02(d), or
(2) by the Company pursuant to SECTION 9.01(g) if there shall have
occurred a Material Adverse Effect with respect to the Company after
the date of this Agreement and prior to the date on which Parent's
Board of Directors withdrew, modified or changed its approval or
recommendation of this Agreement or the Merger in a manner adverse to
the Company.
(c) Notwithstanding anything to the contrary contained in this Agreement,
in the event this Agreement is terminated
(i) by the Company pursuant to SECTION 9.01(e) or 9.01(h),
(ii) by the Company pursuant to SECTION 9.01(b) solely as a result of
the failure to satisfy any of the conditions set forth in SECTION 8.01(c)
(if any such injunction results from claims made by stockholders of Parent
or any Third Party proposing an Alternative Transaction with Parent),
8.03(a), 8.03(b) or 8.03(c),
(iii) by either party pursuant to SECTION 9.01(b) solely as a result
of the failure to satisfy the condition set forth in SECTION 8.01(a), but
only if the stockholders of the Company have adopted this Agreement and the
stockholders of Parent have not approved the issuance of shares of Parent
Common Stock in the Merger or any other aspect of the Merger which is
submitted for their approval at the Parent Stockholders Meeting,
-43-
(iv) by either party pursuant to SECTION 9.01(c) if any such
injunction results from claims made by stockholders of Parent or any Third
Party proposing an Alternative Transaction with Parent, or
(v) by the Company pursuant to SECTION 9.01(g) (unless there shall
have occurred a Material Adverse Effect with respect to the Company after
the date of this Agreement and prior to the date on which Parent's Board of
Directors withdrew, modified or changed its approval or recommendation of
this Agreement or the Merger in a manner adverse to the Company),
Parent shall pay to the Company an amount equal to $9,500,000 plus all
documented fees and expenses incurred by Parent and its Subsidiaries in
connection with or related to the authorization, preparation, regulation,
execution and performance of this Agreement and the Prior Agreement and the
transactions contemplated hereby and thereby (including, without limitation, all
fees and expenses of counsel, accountants, investment bankers, experts,
consultants, banks and other financial institutions) up to a maximum of
$1,000,000 in the aggregate.
(d) Any payment required to be made pursuant to SECTION 9.02(b) or SECTION
9.02(c), as the case may be, shall be made to the party entitled to receive such
payment (the "Recipient") or its designee not later than two business days after
delivery by the Recipient or its designee to the party obligated to make such
payment of notice of demand for payment and shall be made by wire transfer of
immediately available funds to an account designated by the Recipient or its
designee in the notice of demand for payment delivered pursuant to this SECTION
9.02(d).
(e) The parties acknowledge that the loss to either party resulting from
breach of this Agreement by the other party or other failure of the Merger to be
consummated is not susceptible of ready measurement and, therefore, that the
payments provided in this SECTION 9.02 are intended by the parties to constitute
liquidated damages for any breach by a party of the terms of this Agreement, and
not a penalty.
SECTION 9.03. FEES AND EXPENSES. All fees and expenses incurred in
-----------------
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such expenses, whether or not the Merger is
consummated, subject to the provisions of SECTION 9.02(b) and SECTION 9.02(c).
ARTICLE X.
GENERAL PROVISIONS
------------------
SECTION 10.01. EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES AND
------------------------------------------------
AGREEMENTS, ETC. Except as otherwise provided in this SECTION 10.01, the
---------------
representations, warranties and agreements of each party hereto shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any other party hereto, any person controlling any such party or
any of their officers or directors, whether prior to or
-44-
after the execution of this Agreement. The representations, warranties and
agreements in this Agreement shall terminate at the Effective Time or upon the
termination of this Agreement pursuant to SECTION 9.01, as the case may be,
except that the agreements set forth in ARTICLE III and SECTION 7.06 shall
survive the Effective Time indefinitely and those set forth in SECTIONS 7.04,
9.02 and 9.03 shall survive such termination indefinitely. Nothing in this
SECTION 10.01 shall relieve any party for any breach of any representation,
warranty or agreement in this Agreement occurring prior to termination.
SECTION 10.02. NOTICES. All notices and other communications given or
-------
made pursuant hereto shall be in writing and shall be deemed to have been duly
given or made if and when delivered personally or by overnight courier to the
parties at the following addresses or sent by electronic transmission, with
confirmation of receipt, to the telecopy numbers specified below (or at such
other address or telecopy number for a party as shall be specified by like
notice):
(a) If to Parent:
Premiere Technologies, Inc.
The Xxxxx Xxxxxxxx, Xxxxx 000
0000 Xxxxxxxxx Xxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx
Executive Vice President
Strategic Development
With copies to:
Xxxxxx & Bird, LLP
One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xxxxx X. Xxxxx, Xx.
-45-
(b) If to the Company:
Xpedite Systems, Inc.
0 Xxxxxxxxxx Xxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: President
With a copy to:
Xxxx X. Xxxxxx, Esq.
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
SECTION 10.03. CERTAIN DEFINITIONS. For purposes of this agreement, the
-------------------
term:
(a) "affiliate" of a person means a person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, the first mentioned person;
(b) "beneficial owner" with respect to any shares of Company Common Stock
or Parent Common Stock means a person who shall be deemed to be the beneficial
owner of such shares (i) which such person or any of its affiliates or
associates (as such term is defined in Rule 12b-2 of the Exchange Act)
beneficially owns, directly or indirectly, (ii) which such person or any of its
affiliates or associates has, directly or indirectly, (a) the right to acquire
(whether such right is exercisable immediately or subject only to the passage of
time), pursuant to any agreement, arrangement or understanding or upon the
exercise of conversion rights, exchange rights, warrants or options, or
otherwise, or (b) the right to vote pursuant to any agreement, arrangement or
understanding, or (iii) which are beneficially owned, directly or indirectly, by
any other persons with whom such person or any of its affiliates or associates
has any agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares;
(c) "business day" means any day other than a day on which banks in the
State of New York are required or authorized to be closed;
(d) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly, or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management or
policies of a person, whether through the ownership of stock, as trustee or
executor, by contract or credit arrangement or otherwise;
-46-
(e) "generally accepted accounting principles" shall mean United States
generally accepted accounting principles;
(f) "Material Adverse Effect" shall mean an event, change or occurrence
which, individually or together with any other event, change or occurrence, has
a material adverse impact on (i) the business, assets, properties, condition
(financial or other), results of operations or prospects of the Company and its
Subsidiaries or Parent and its Subsidiaries, as the case may be, in each case
taken as a whole, or (ii) the ability of the Company or Parent to perform their
respective obligations under this Agreement or to consummate the Merger or the
other transactions contemplated by this Agreement, provided that "Material
Adverse Effect" shall not be deemed to include the impact of (i) actions and
omissions of a party (or any of its Subsidiaries) taken with the prior informed
written consent of the other party in contemplation of the transactions
contemplated hereby or (ii) the Merger and the transactions contemplated hereby
on the operating performance of the Company, including expenses incurred by the
Company in consummating the transactions contemplated by this Agreement or the
Prior Agreement; and
(g) "person" means an individual, corporation, partnership, association,
trust, unincorporated organization, other entity or group (as defined in Section
13(d)(3) of the Exchange Act).
SECTION 10.04. AMENDMENT. This Agreement may be amended by the parties
---------
hereto by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time; PROVIDED that after approval of the
Merger by the stockholders of the Company or the stockholders of Parent, no
amendment may be made which by law required further approval by such
stockholders without such further approval. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.
SECTION 10.05. WAIVER. At any time prior to the Effective Time, any party
------
hereto may with respect to any other party hereto (a) extend the time for the
performance of any of the obligations or other acts, (b) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto, or (c) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid only
if set forth in an instrument in writing signed by the party or parties to be
bound thereby.
SECTION 10.06. HEADINGS. The headings contained in this Agreement are for
--------
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 10.07. SEVERABILITY. If any term or other provision of this
------------
Agreement is invalid, illegal or incapable of being enforced by any
rule of law, or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner adverse to any party. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
-47-
parties hereby shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the fullest extent possible.
SECTION 10.08. ENTIRE AGREEMENT. This Agreement constitutes the entire
----------------
agreement and supersedes all prior agreements and undertakings (other than the
Confidentiality Letter), both written and oral, among the parties, or any of
them, with respect to the subject matter hereof.
SECTION 10.09. ASSIGNMENT. This Agreement shall not be assigned by
----------
operation of law or otherwise, except that Acquisition Sub may assign all or any
of its rights hereunder to any direct wholly owned Subsidiary of Parent,
PROVIDED that no such assignment shall relieve the assigning party of its
obligations hereunder.
SECTION 10.10. PARTIES IN INTEREST. This Agreement shall be binding upon
-------------------
and inure solely to the benefit of each party hereto and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement, including, without limitation, by way of subrogation, other
than SECTION 7.06 (which is intended to be for the benefit of the Indemnified
Parties and may be enforced by such Indemnified Parties).
SECTION 10.11. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No
-----------------------------------------------------
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude any other or
further exercise thereof or of any other right. All rights and remedies
existing under this Agreement are cumulative to, and not exclusive of, any
rights or remedies otherwise available.
SECTION 10.12. GOVERNING LAW. This agreement shall be governed by, and
-------------
construed in accordance with, the internal laws of the State of Delaware
applicable to contracts executed and fully performed within the State of
Delaware without giving effect to principles of conflicts of laws.
SECTION 10.13. COUNTERPARTS. This Agreement may be executed in one or
------------
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
SECTION 10.14. CONSENT TO JURISDICTION. Each of the parties hereto:
-----------------------
(a) consents to submit itself to the personal jurisdiction of (i) the
United States District Court for the Southern District of New York in the event
any dispute arises out of this Agreement or any of the transactions contemplated
-48-
by this Agreement to the extent such court would have subject matter
jurisdiction with respect to such dispute and (ii) the Chancery or other Courts
of the State of Delaware otherwise;
(b) agrees that it will not attempt to deny or defeat such personal
jurisdiction or venue by motion or other request for leave from any such court;
(c) agrees that it will not bring any action relating to this Agreement or
any of the transactions contemplated by this Agreement in any Court other than
such courts;
(d) agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to a party to its address
set forth in SECTION 10.02 or at such other address of which a party shall have
been notified pursuant thereto; and
(e) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law.
-49-
IN WITNESS WHEREOF, each of Parent, Acquisition Sub and the Company has
executed this Agreement, or has caused this Agreement to be executed on its
behalf by a representative duly authorized, all as of the day and year first
above written.
PREMIERE TECHNOLOGIES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President
NETS ACQUISITION CORP.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President
XPEDITE SYSTEMS, INC.
By: /s/ Xxxxxx Xxxxxxx
-----------------------------------
Name: Xxxxxx Xxxxxxx
Title: Director
-50-
EXHIBIT A
FORM OF
AFFILIATE LETTER
Premiere Technologies, Inc.
0000 Xxxxxxxxx Xxxx XX
Lenox Building, Suite 400
Atlanta, Georgia 30326
Attention: Xxxxxxx X. Xxxxx
Executive Vice President Finance and Legal
Gentlemen:
The undersigned is a stockholder of Xpedite Systems, Inc. (the "COMPANY"),
a Delaware corporation, and will become a stockholder of Premiere Technologies,
Inc. ("PARENT"), a Georgia corporation, pursuant to the transactions described
in the Agreement and Plan of Merger, dated as of November 13, 1997 (the
"AGREEMENT"), by and among Parent, Nets Acquisition Corp. ("ACQUISITION SUB")
and the Company. Under the terms of the Agreement, Acquisition Sub will be
merged into and with the Company (the "MERGER"), and the shares of the $.01 par
value common stock of the Company ("COMPANY COMMON STOCK") will be converted
into and exchanged for shares of the $.01 par value common stock of Parent
("PARENT COMMON STOCK"). This Affiliate Letter represents an agreement between
the undersigned and Parent regarding certain rights and obligations of the
undersigned in connection with the shares of Parent to be received by the
undersigned as a result of the Merger.
In consideration of the Merger and the mutual covenants contained herein,
the undersigned and Parent hereby agree as follows:
1. Affiliate Status. The undersigned understands and agrees that as to
----------------
the Company the undersigned may be deemed to be an "affiliate" under Rule 145(c)
as defined in Rule 405 of the Rules and Regulations of the Securities and
Exchange Commission ("SEC") under the Securities Act of 1933, as amended
("SECURITIES ACT"), and the undersigned anticipates that the undersigned may be
deemed to be such an "affiliate" both at the time of the Agreement is submitted
to the stockholders of the Company for their consideration and adoption and at
the effective time of the Merger.
2. Initial Restrictions on Dispositions. During the 30 days immediately
------------------------------------
preceding the Effective Time of the Merger, the undersigned agrees that the
undersigned will not sell, transfer, or otherwise dispose of the undersigned's
interests in, or reduce the undersigned's risk relative to, any of the shares of
the Company Common Stock beneficially owned by the undersigned. The undersigned
agrees that the undersigned will not sell, transfer, or otherwise dispose of the
undersigned's interests in, or reduce the undersigned's risk relative to, any of
the shares of Parent Common Stock into which the undersigned's shares of the
Company Common Stock are converted upon consummation of the Merger until such
time as Parent notifies the undersigned that the requirements of SEC Accounting
Series Release Nos. 130 and 135 ("ASR 130 AND 135") have been met. The
undersigned understands that ASR 130 and 135 relate to publication of financial
results of post-Merger combined operations of Parent and the Company. Parent
agrees that it will publish such results as soon as practicable after completion
of the first full calendar month after consummation of the Merger containing the
required period of post-Merger combined operations and that it will notify the
undersigned promptly following such publication. Notwithstanding anything in
this Agreement to the contrary, the undersigned shall be permitted to transfer
the shares of Company Common Stock owned by it in connection with distributions
of securities by the undersigned to its equity holders on a pro rata basis in
accordance with the respective interests of such equity holders in the
undersigned; provided such transfer does not adversely affect the ability of
Parent to treat the Merger as a pooling of interests for accounting purposes or
for the Merger to qualify as a tax-free reorganization; and provided further
that the undersigned shall have given Parent prior written notice of such
proposed transfer and shall have supplied to Parent and its representatives such
information regarding the proposed transfer as Parent or such representatives
shall request to permit Parent and such representatives to confirm that such
transfer will not adversely affect the ability of Parent to treat the Merger as
a pooling of interests for accounting purposes or for the Merger to qualify as a
tax-free reorganization.
3. Covenants and Warranties of Undersigned. The undersigned represents,
---------------------------------------
warrants and agrees that:
(a) The Parent Common Stock received by the undersigned as a result of the
Merger will be taken for the undersigned's own account and not for others,
directly or indirectly, in whole or in part.
(b) The undersigned agrees not to make any sale, transfer of other
disposition of the Parent Common Stock received by the undersigned in
connection with the Merger in violation of the Securities Act or the rules
and regulations promulgated thereunder. Parent has informed the undersigned
that any distribution by the undersigned of Parent Common Stock has not been
registered under the Securities Act and that shares of Parent Common Stock
received pursuant to the Merger can only be sold by the undersigned (1)
following registration under the Securities Act, or (2) in conformity with
the volume and other requirements of Rule 145(d) promulgated by the SEC as
the same now exist or may hereafter be amended, or (3) in the opinion of
counsel reasonably acceptable to the Company, or pursuant to a "no action"
letter obtained by the undersigned from the staff of the Commission, such
sale, transfer or other disposition is otherwise exempt from registration
under the Securities Act. The undersigned understands that, except as
-------------------------------------------
provided in the Agreement, Parent is under no obligation to file a
------------------------------------------------------------------
registration statement with the SEC covering the disposition of the
-------------------------------------------------------------------
undersigned's shares of Parent Common Stock or to take any other action
-----------------------------------------------------------------------
necessary to make compliance with an exemption from such registration
---------------------------------------------------------------------
available.
---------
(c) The undersigned is aware that Parent intends to treat the Merger as a
tax-free reorganization under Section 368 of the Internal Revenue Code (the
-2-
"CODE") for federal income tax purposes. The undersigned agrees to treat the
transaction in the same manner as Parent for federal income tax purposes.
The undersigned acknowledges that Section 1.368-1(b) of the Income Tax
Regulations requires "continuity of interest" in order for the Merger to be
treated as tax-free under Section 368 of the Code. This requirement is
satisfied if, taking into account those Company stockholders who receive cash
in exchange for their stock, who receive cash in lieu of fractional shares,
or who dissent from the Merger, there is no plan or intention on the part of
the Company stockholders to sell or otherwise dispose of the Parent Common
Stock to be received in the Merger that will reduce such stockholders'
ownership to a number of shares having, in the aggregate, a value at the time
of the merger of less than 50% of the total fair market value of the Company
Common Stock outstanding immediately prior to the Merger. The undersigned
has no prearrangement, plan or intention to sell or otherwise dispose of an
amount of the undersigned's Parent Common Stock to be received in the Merger
which would cause the foregoing requirement not to be satisfied.
4. Restrictions on Transfer. The undersigned understands and agrees that
------------------------
stop transfer instructions with respect to the shares of Parent Common Stock
received by the undersigned pursuant to the Merger will be given to Parent's
Transfer Agent and that there will be placed on the certificates for such
shares, or shares issued in substitution thereof, a legend stating in substance:
"The shares represented by this certificate were issued pursuant to a
business combination which is accounted for as a "pooling of interests" and
may not be sold, nor may the owner thereof reduce the owner's risks relative
thereto in any way, until such time as Premiere Technologies, Inc. ("Parent")
has published the financial results covering at least 30 days of combined
operations after the effective date of the merger through which the business
combination was effected. In addition, the shares represented by this
certificate may not be sold, transferred or otherwise disposed of except or
unless (1) covered by an effective registration statement under the
Securities Act of 1933, as amended, (2) in accordance with (i) Rule 145(d)
(in the case of shares issued to an individual who is not an affiliate of
---
Parent) or (ii) Rule 144 (in the case of shares issued to an individual who
is an affiliate of Parent) of the Rules and Regulations of such Act, or (3)
in accordance with a legal opinion satisfactory to counsel for Parent that
such sale or transfer is otherwise exempt from the registration requirements
of such Act."
Such legend will also be placed on any certificate representing Parent
securities issued subsequent to the original issuance of the Parent Common Stock
pursuant to the Merger as a result of any transfer of such shares or any stock
dividend, stock split, or other recapitalization as long as the Parent Common
Stock issued to the undersigned pursuant to the Merger has not been transferred
in such manner to justify the removal of the legend therefrom. Upon the request
of the undersigned, Parent shall cause the certificates representing the shares
of Parent Common Stock issued to the undersigned in connection with the Merger
to be reissued free of any legend relating to restrictions on transfer by virtue
of ASR 130 and 135 as soon as practicable after the requirements of ASR 130 and
135 have been met. In addition, if the provisions of Rules 144 and 145 are
amended to eliminate restrictions applicable to the Parent Common Stock received
-3-
by the undersigned pursuant to the Merger, or at the expiration of the
restrictive period set forth in Rule 145(d), Parent, upon the request of the
undersigned, will cause the certificates representing the shares of Parent
Common Stock issued to the undersigned in connection with the Merger to be
reissued free of any legend relating to the restrictions set forth in Rules 144
and 145(d) upon receipt by Parent of an opinion of its counsel to the effect
that such legend may be removed.
5. Understanding of Restrictions on Dispositions. The undersigned has
---------------------------------------------
carefully read the Agreement and this Affiliate Agreement and discussed their
requirements and impact upon the undersigned's ability to sell, transfer, or
otherwise dispose of the shares of Parent Common Stock received by the
undersigned, to the extent the undersigned believes necessary, with the
undersigned's counsel or counsel for the Company.
6. Filing of Reports by Parent. Parent agrees, for a period of three
---------------------------
years after the effective date of the Merger, to file on a timely basis all
reports required to be filed by it pursuant to Section 13 of the Securities
Exchange Act of 1934, as amended, so that the public information provisions of
Rule 145(d) promulgated by the SEC as the same are presently in effect will be
available to the undersigned in the event the undersigned desires to transfer
any shares of Parent Common Stock issued to the undersigned pursuant to the
Merger.
7. Transfer Under Rule 145(d). If the undersigned desires to sell or
--------------------------
otherwise transfer the shares of Parent Common Stock received by the undersigned
in connection with the Merger at any time during the restrictive period set
forth in Rule 145(d), the undersigned will provide the necessary representation
letter to the transfer agent for Parent Common Stock together with such
additional information as the transfer agent may reasonably request. If
Parent's counsel concludes that such proposed sale or transfer complies with the
requirements of Rule 145(d), Parent shall cause such counsel to promptly provide
such opinions as may be necessary to Parent's Transfer Agent so that the
undersigned may complete the proposed sale or transfer, and Parent shall
promptly take such other actions as may reasonably be required in order to
effectuate such sale or transfer.
8. Acknowledgments. The undersigned recognizes and agrees that the
---------------
foregoing provisions also apply to all shares of the capital stock of the
Company and Parent that are deemed to be beneficially owned by the undersigned
pursuant to applicable federal securities laws, which the undersigned agrees may
include, without limitation, shares owned or held in the name of (i) the
undersigned's spouse, (ii) any relative of the undersigned or of the
undersigned's spouse who has the same home as the undersigned, (iii) any trust
or estate in which the undersigned, the undersigned's spouse, and any such
relative collectively own at least a 10% beneficial interest or of which any of
the foregoing serves as trustee, executor, or in any similar capacity, and (iv)
any corporation or other organization in which the undersigned, the
undersigned's spouse and any such relative collectively own at least 10% of any
class of equity securities or of the equity interest. The undersigned further
recognizes that, in the event that the undersigned is a director or officer of
Parent or becomes a director or officer of Parent upon consummation of the
Merger, among other things, any sale of Parent Common Stock by the undersigned
within a period of less than six months following the effective time of the
Merger may subject the undersigned to liability pursuant to Section 16(b) of the
Securities Exchange Act of 1934, as amended.
-4-
9. Miscellaneous. This Affiliate Agreement is the complete agreement
-------------
between Parent and the undersigned concerning the subject matter hereof. Any
notice required to be sent to any party hereunder shall be sent by registered or
certified mail, return receipt requested, using the addresses set forth herein
or such other address as shall be furnished in writing by the parties. This
Affiliate Agreement shall be governed by the laws of the State of Delaware.
This Affiliate Agreement is executed as of the ____ day of November, 1997.
Very truly yours,
___________________________
Signature
___________________________
Print Name
___________________________
___________________________
___________________________
Address
[add below the signatures of all registered owners
of shares deemed beneficially owned by the
affiliate]
___________________________
Name:
___________________________
Name:
___________________________
Name:
AGREED TO AND ACCEPTED as of
_______________, 19__
PREMIERE TECHNOLOGIES, INC.
By: ________________________
-5-
EXHIBIT B
FORM OF
STOCKHOLDER AGREEMENT
STOCKHOLDER AGREEMENT dated as of November 13, 1997, among the person whose
name appears on Schedule 1 (the "STOCKHOLDER"), Xpedite Systems, Inc., a
Delaware corporation (the "COMPANY"), and Premiere Technologies, Inc., a Georgia
corporation ("PARENT").
WHEREAS, Parent proposes to enter into a Merger Agreement dated as of the
date hereof (as amended from time to time, the "MERGER AGREEMENT"; capitalized
terms used but not defined herein shall have the meanings set forth in the
Merger Agreement, whether or not such Merger Agreement shall be in effect from
time to time) with the Company which provides, among other things, that Nets
Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of
Parent, will merge with and into the Company pursuant to the merger contemplated
by the Merger Agreement (the "MERGER");
WHEREAS, as of the date hereof, the Stockholder beneficially owns the
number of shares of common stock, par value $.01 per share, of the Company
("COMPANY COMMON STOCK") set forth on Schedule 1; and
WHEREAS, as a condition to the willingness of Parent to enter into the
Merger Agreement, Parent has requested that the Stockholder agree, and in order
to induce Parent to enter into the Merger Agreement, the Stockholder has agreed,
to enter into this Agreement with respect to all the shares of Company Common
Stock now beneficially owned and of which the Stockholder may hereafter acquire
beneficial ownership (the "SHARES") and any other securities, if any, which the
Stockholder is entitled to vote at any meeting of stockholders of the Company
(the "OTHER SECURITIES").
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein, and intending to be legally bound hereby, the
parties hereto agree as follows:
ARTICLE I
VOTING AGREEMENT
SECTION 1.01 VOTING AGREEMENT. The Stockholder hereby agrees that,
subject to Schedule 1, at any meeting of the stockholders of the Company,
however called, or in connection with any written consent of the holders of
shares of Company Common Stock, the Stockholder shall vote (or cause to be
voted) the Shares and the Other Securities in favor of the Merger, the execution
and delivery by the Company of the Merger Agreement and the approval of the
terms thereof and each of the other actions contemplated by the Merger Agreement
and this Agreement and any actions required in furtherance thereof and hereof.
The Stockholder agrees that the Stockholder shall not enter into any agreement
or understanding with any person or entity the effect of which would be to
violate the provisions and agreements contained in this Section 1.01. The
Stockholder acknowledges receipt and review of a copy of the Merger Agreement.
SECTION 1.02 IRREVOCABLE PROXY. The Stockholder hereby irrevocably
appoints Parent and each of its officers, as the Stockholder's attorney and
proxy pursuant to the provisions of Section 212(c) of the General Corporation
Law of the State of Delaware, with full power of substitution, to vote and
otherwise act (by written consent or otherwise) with respect to the Shares and
the Other Securities, which the Stockholder is entitled to vote at any meeting
of stockholders of the Company (whether annual or special and whether or not an
adjourned or postponed meeting) or consent in lieu of any such meeting or
otherwise, on the matters and in the manner specified in Section 1.01. THIS
PROXY AND POWER OF ATTORNEY IS IRREVOCABLE AND COUPLED WITH AN INTEREST. The
Stockholder hereby revokes all other proxies and powers of attorney with respect
to the Shares and the Other Securities that the Stockholder may have heretofore
appointed or granted, and no subsequent proxy or power of attorney shall be
given or written consent executed (and if given or executed, shall not be
effective) by the Stockholder with respect thereto. All authority herein
conferred or agreed to be conferred shall survive the death or incapacity of the
Stockholder and any obligation of the Stockholder under this Agreement shall be
binding upon the heirs, personal representatives, successors and assigns of the
Stockholder. The Shareholder hereby affirms that the irrevocable proxy set
forth in this SECTION 1.02 is given in connection with the execution of the
Merger Agreement, and that such irrevocable proxy is given to secure the
performance of the duties of the Shareholder under this Agreement. The
Shareholder hereby ratifies and confirms all that such irrevocable proxy may
lawfully do or cause to be done by virtue hereof.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
SECTION 2.01 REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. The
Stockholder represents and warrants to Parent as follows:
(a) This Agreement has been duly executed and delivered by the
Stockholder and is a legal, valid and binding obligation of the Stockholder,
enforceable against the Stockholder in accordance with its terms. There is no
beneficiary or holder of a voting trust certificate or other interest of any
trust of which Stockholder is trustee whose consent is required for the
execution and delivery of this Agreement or the consummation by the Stockholder
of the transactions contemplated hereby.
(b) The execution and delivery of this Agreement by the Stockholder do
not, and the performance of this Agreement by the Stockholder will not, (i)
conflict with or violate any federal, state, local or foreign law, statute,
ordinance, rule, regulation, permit, injunction, writ, judgment, decree or order
(collectively, "LAWS") of any domestic or foreign administrative, governmental
-2-
or regulatory agency or other governing body (each, a "GOVERNMENTAL ENTITY")
applicable to the Stockholder or by which any of the Stockholder's assets are
bound, or (ii) conflict with, result in any breach of or constitute a default
(or an event that with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or require payment under, or result in the creation of any
Encumbrance (as hereinafter defined) on any of the assets of the Stockholder
pursuant to, any contract or other instrument to which the Stockholder is a
party or by which the Stockholder or any of the Stockholder's assets are bound,
except for any thereof that could not reasonably be expected to materially
impair the ability of the Stockholder to perform the Stockholder's obligations
hereunder or to consummate the transactions contemplated hereby and except for
any Encumbrances created hereby.
(c) The execution and delivery of this Agreement by the Stockholder do
not, and the performance of this Agreement by the Stockholder will not, require
the Stockholder to obtain any consent, approval, authorization or permit of, or
to make any filing with or notification to, any Governmental Entity based on any
Laws of any Governmental Entity, except (i) the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Securities and Exchange
Commission (the "COMMISSION") thereunder (the "EXCHANGE ACT"), and the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (the "SECURITIES ACT"); and (ii) where the failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, could not reasonably be expected to materially impair
the ability of the Stockholder to perform its obligations hereunder or to
consummate the transactions contemplated hereby.
(d) There is no suit, action, investigation or proceeding pending or,
to the knowledge of the Stockholder, threatened against the Stockholder at law
or in equity before or by any Governmental Entity that could reasonably be
expected to materially impair the ability of the Stockholder to perform the
Stockholder's obligations hereunder or to consummate the transactions
contemplated hereby, and there is no judgment, decree, injunction, rule, order
or writ of any Governmental Entity to which the Stockholder or the Stockholder's
assets are subject that could reasonably be expected to materially impair the
ability of the Stockholder to perform the Stockholder's obligations hereunder or
to consummate the transactions contemplated hereby.
(e) The Stockholder owns beneficially and of record the number of
shares of Company Common Stock (the "EXISTING SHARES") set forth on Schedule 1.
The Existing Shares constitute all the shares of Company Common Stock owned of
record or beneficially by the Stockholder. The Stockholder has sole voting
power, sole power of disposition and all other stockholder rights with respect
to all the Existing Shares, with no restrictions, other than pursuant to
applicable securities laws, on the Stockholder's rights of disposition
pertaining thereto. The Stockholder has good and valid title to all the
Existing Shares, free and clear of all Encumbrances (other than any Encumbrance
created by this Agreement).
(f) The Stockholder understands and acknowledges that Parent is
entering into, and causing Acquisition Sub to enter into, the Merger Agreement
in reliance upon the Stockholder's execution and delivery of this Agreement.
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The Stockholder acknowledges that the irrevocable proxy set forth in SECTION
1.02 is granted in consideration for the execution and delivery of the Merger
Agreement by Parent and Acquisition Sub.
SECTION 2.02 REPRESENTATIONS AND WARRANTIES OF PARENT. Parent represents
and warrants to the Stockholder that Parent is a corporation duly organized,
validly existing and in good standing under the laws of the State of Georgia.
Parent has the requisite corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder. The execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by Parent's Board of Directors and (except as
otherwise set forth in the Merger Agreement) no other corporate proceedings on
the part of Parent are necessary to authorize this Agreement and the
consummation of the transactions contemplated hereby. This Agreement has been
duly executed and delivered by Parent and is a legal, valid and binding
obligation of Parent, enforceable against Parent in accordance with its terms.
ARTICLE III
COVENANTS OF THE STOCKHOLDER
SECTION 3.01 CONFIDENTIALITY OF AGREEMENT. Each party hereto agrees that,
without the prior written consent of the other party, it will not disclose this
Agreement, or the contents hereof, to any person or entity, except (a) such
party's directors, employees, agents, advisors and affiliates, in each case on a
confidential and need-to-know basis, (b) filings of, or filings of amendment(s)
to, Schedule 13D, or (c) as is required, in the opinion of its counsel, by
applicable law or pursuant to applicable requirements of any listing agreement
with or the rules of any securities exchange or the NASDAQ National Market,
provided that if any party hereto proposes to make any disclosure based upon the
opinion of its counsel such party will, if practicable, advise and consult with
the other party at least one business day prior to such disclosure concerning
the information such party proposes to disclose.
SECTION 3.02 FURTHER ASSURANCES. The Stockholder agrees to use the
Stockholder's reasonable best efforts to take, or cause to be taken, all
appropriate action, and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement. If any further action
is necessary or desirable to carry out the purposes of this Agreement, the
Stockholder shall use the Stockholder's reasonable best efforts to take all such
action as promptly as practicable.
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ARTICLE IV
TERMINATION
SECTION 4.01 TERMINATION. This Agreement shall terminate upon the earlier
of (a) the termination of the Merger Agreement for any reason whatsoever and (b)
the Effective Time of the Merger and, except as set forth below, the parties
hereto shall have no further rights or obligations with respect thereto, except
as a result of any prior breach thereof.
ARTICLE V
DEFINITIONS
SECTION 5.01 DEFINITIONS. For purposes of this Agreement:
(a) "BENEFICIALLY OWN" or "BENEFICIAL OWNERSHIP" with respect to any
securities shall mean having "beneficial ownership" of such securities (as
determined pursuant to Rule 13d-3 under the Exchange Act), including pursuant to
any agreement, arrangement or understanding, whether or not in writing;
(b) "PERSON" shall mean an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity.
(c) "ENCUMBRANCE" means any pledge, security interest, lien, claim,
encumbrance, mortgage, charge, hypothecation, option, right of first refusal or
offer, community property right, other marital right, preemptive right, voting
agreement, voting trust, proxy, power of attorney, escrow, option, forfeiture,
penalty, action at law or in equity, security agreement, stockholder agreement
or other agreement, arrangement, contract, commitment, understanding or
obligation, or any other restriction, qualification or limitation on the use,
transfer, right to vote, right to dissent and seek appraisal, receipt of income
or other exercise of any attribute of ownership.
ARTICLE VI
MISCELLANEOUS
SECTION 6.01 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of this Agreement is not affected in any manner materially adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
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parties as closely as possible in a mutually acceptable manner in order that the
terms of this Agreement remain as originally contemplated to the fullest extent
possible.
SECTION 6.02 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof.
SECTION 6.03 COUNTERPARTS. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
and delivered shall be deemed to be an original but all of which taken together
shall constitute one and the same instrument.
SECTION 6.04 ASSIGNMENT. This Agreement shall not be assigned by
operation of law or otherwise without the prior written consent of the other
parties, provided that Parent may assign its rights hereunder to any of its
affiliates, but no such assignment shall relieve Parent of its obligations
hereunder.
SECTION 6.05 AMENDMENTS. This Agreement may not be amended, supplemented,
waived or otherwise modified or terminated, except upon the execution and
delivery of a written agreement executed by the parties hereto.
SECTION 6.06 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, facsimile
transmission, mail (registered or certified mail, postage prepaid, return
receipt requested), or courier service providing proof of delivery. All
communications hereunder shall be delivered to the respective parties at the
following addresses:
If to Stockholder, to the address set forth on Schedule 1
If to the Company or Parent, to their respective addresses set forth in the
Merger Agreement, with copies delivered as provided therein
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
SECTION 6.07 NO THIRD PARTY BENEFICIARIES. This Agreement is not intended
to be for the benefit of, and shall not be enforceable by, any person or entity
not a party hereto.
SECTION 6.08 SPECIFIC PERFORMANCE. Each of the parties hereto
acknowledges that a breach by it of any agreement contained in this Agreement
will cause the other parties to sustain damage for which they would not have an
adequate remedy at law for money damages, and therefore each of the parties
hereto agrees that in the event of any such breach the aggrieved parties shall
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be entitled to the remedy of specific performance of such agreement and
injunctive and other equitable relief in addition to any other remedy to which
they may be entitled, at law or in equity.
SECTION 6.09 REMEDIES CUMULATIVE. All rights, powers and remedies
provided under this Agreement or otherwise available in respect hereof at law or
in equity shall be cumulative and not alternative, and the exercise of any
thereof by any party shall not preclude the simultaneous or later exercise of
any other such right, power or remedy by such party.
SECTION 6.10 NO WAIVER. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon strict compliance by any
other party hereto with its obligations hereunder, and any custom or practice of
the parties at variance with the terms hereof, shall not constitute a waiver by
such party of its right to exercise any such or other right, power or remedy or
to demand such compliance.
SECTION 6.11 GOVERNING LAW.
(a) This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Delaware, without giving effect to the principles of
conflicts of law thereof.
(b) Each party hereby irrevocably submits to the exclusive jurisdiction of
the Court of Chancery in the State of Delaware in any action, suit or proceeding
arising in connection with this Agreement, and agrees that any such action, suit
or proceeding shall be brought only in such court (and waives any objection
based on FORUM NON CONVENIENS or any other objection to venue therein);
PROVIDED, HOWEVER, that such consent to jurisdiction is solely for the purpose
referred to in this subsection (b) and shall not be deemed to be a general
submission to the jurisdiction of such court or in the State of Delaware other
than for such purposes.
SECTION 6.12 WAIVER OF JURY TRIAL. EACH OF PARENT, THE COMPANY AND THE
STOCKHOLDER HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT, THE
COMPANY OR THE STOCKHOLDER IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND
ENFORCEMENT THEREOF.
SECTION 6.13 DESCRIPTIVE HEADINGS. The descriptive headings used herein
are inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
Name:
-----------------------------------------
XPEDITE SYSTEMS, INC.
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
-----------------------------------------
PREMIERE TECHNOLOGIES, INC.
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
-----------------------------------------
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EXHIBIT C
REGISTRATION RIGHTS
-------------------
I. DEFINITIONS
-----------
1.1. Definitions. Terms defined in the Agreement and Plan of Merger, dated
-----------
as of November 13, 1997 (the "Agreement"), by and among Premiere Technologies,
Inc. ("Parent"), Xpedite Systems, Inc. (the "Company") and Nets Acquisition
Corp. ("Acquisition Sub"), are used herein as therein defined. In addition, the
following terms, as used herein, have the following meanings:
"Demand Registration" means a Demand Registration as defined in Section
2.1.
"Piggyback Registration" means a Piggyback Registration as defined in
Section 2.2.
"Priority Holders" means the following persons who have previously been
granted registration rights by Parent: (i) Sirrom Capital Corporation, (ii)
NationsBanc Capital Corporation, (iii) CMG@Ventures, L.P., (iv) WorldCom, Inc.,
(v) those former stockholders and other equity owners of Voice-Tel Enterprises,
Inc. ("VTE"), VTN, Inc. and the franchisees of VTE, and (vi) the former
stockholders of VoiceCom Holdings, Inc. pursuant to the acquisition agreement
between Parent and certain stockholders of VoiceCom.
"Registrable Securities" means (A) the shares of Parent Common Stock issued
to the Large Stockholder under the Agreement, and (B) any securities of Parent
issued as a dividend or other distribution with respect to, or in exchange for
or in replacement of, the shares of Parent Common Stock referred to in clause
(A); provided, that Registrable Securities shall not include (i) securities with
respect to which a registration statement with respect to the sale of such
securities has become effective under the Securities Act and all such securities
have been disposed of in accordance with such registration statement, (ii) such
securities as are actually sold pursuant to Rule 144 (or any successor provision
thereto) under the Securities Act ("Rule 144"), or (iii) such securities as are
acquired by Parent or any of its Subsidiaries.
"Underwriter" means a securities dealer who purchases any Registrable
Securities as principal and not as part of such dealer's market-making
activities.
II. REGISTRATION RIGHTS
-------------------
2.1. Demand Registration.
-------------------
(a) Beginning on the date that is 30 days after financial results
covering at least 30 days of combined operations of Parent and the Company have
been published within the meaning of Section 201.01 of the SEC's Codification of
Financial Reporting Policies and ending three months thereafter, a Large
Shareholder may make a written request for registration under the Securities Act
of all or part of its Registrable Securities (a "Demand Registration"); provided
that Parent shall not be obligated (i) to effect more than one Demand
Registration, (ii) to effect a Demand Registration for less than one million
shares of Parent Common Stock or (iii) to effect a Demand Registration within
three months of Large Shareholder selling any Registrable Securities pursuant to
a Piggyback Registration under Section 2.2. Such request will specify the
number of shares of Registrable Securities proposed to be sold. A registration
will not count as a Demand Registration (x) if, due to the provisions of Section
2.3, the number of Registrable Securities included in such registration is less
than 85% of the Registrable Securities sought to be included in such
registration and (y) until it has become effective.
(b) Unless Parent shall otherwise consent in writing in response to a
request made by the Large Stockholder, the offering of such Registrable
Securities pursuant to such Demand Registration shall be in the form of an
underwritten offering. Parent shall select the book-running and other managing
Underwriters (which shall be nationally recognized firms) in connection with
such offering and any additional investment bankers and managers to be used in
connection with the offering.
(c) Subject to the provisions of Section 2.3, other shareholders of
Parent shall be entitled to include shares in the Demand Registration pursuant
to any registration rights or other similar rights granted to them by Parent.
2.2. Piggyback Registration. If Parent proposes to file a registration
----------------------
statement under the Securities Act with respect to an offering of Parent Common
Stock (i) for Parent's own account (other than (a) a registration statement on
Form S-4 or S-8 or relating solely to securities issued pursuant to any benefit
plan (or any substitute form that may be adopted by the Commission), (b) a
registration statement covering any method of distribution which is not an
underwritten public offering, or (c) a registration relating to convertible
securities of Parent including any underlying equity securities or relating to
any securities sold pursuant to a Rule 144A transaction) or (ii) for the account
of any of the holders of Parent Common Stock (other than a registration where
the intended method of disposition is not pursuant to an underwritten public
offering), then Parent shall give written notice of such proposed filing to the
Large Shareholder as soon as practicable (but in no event less than ten days
before the anticipated filing date), and such notice shall offer, subject to the
terms and conditions hereof, such Large Shareholder the opportunity to register
such Registrable Securities as such Large Shareholder may request on the same
terms and conditions as Parent's or such holders' Parent Common Stock (a
"Piggyback Registration"). Parent shall have the right to terminate or withdraw
any registration undertaken by it under this Section 2.2 prior to the
effectiveness of such registration whether or not any Large Shareholder has
elected to include securities in such registration.
2.3. Reduction of Offering. Notwithstanding anything contained herein, if
---------------------
the managing Underwriter or Underwriters of an offering described in Section 2.1
or 2.2 shall advise Parent that (i) the size of the offering that Large
Shareholder, Parent and any other persons intend to make or (ii) the kind of
securities that Large Shareholder, Parent and such other persons intend to
include in such offering are such that the success of the offering would be
materially and adversely affected, then (A) if the size of the offering is the
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basis of such Underwriter's advice, the amount of Registrable Securities to be
offered for the account of such Large Shareholder shall be reduced to the extent
necessary to reduce the total amount of securities to be included in such
offering to the amount recommended by such managing Underwriter or Underwriters;
provided that (x) in the case of a Demand Registration, the amount of
Registrable Securities to be offered for the account of such Large Shareholder
shall be reduced only after the amount of securities to be offered for the
account of Parent and such other persons has been reduced to zero except and to
the extent prohibited by the terms of any registration rights or other agreement
in effect with any of the Priority Holders, and (y) in the case of a Piggyback
Registration, if securities are being offered for the account of persons other
than Parent, then after all securities of the persons requesting such
registration have been included (the "Demand Shareholders"), the proportion by
which the amount of such Registrable Securities intended to be offered for the
account of such Large Shareholder is reduced shall not exceed the proportion by
which the amount of such securities intended to be offered for the account of
persons other than the Demand Shareholders is reduced except and to the extent
prohibited by the terms of any registration rights or other agreement in effect
with any of the Priority Holders; and (B) if the combination of securities to be
offered is the basis of such Underwriter's advice, (x) the Registrable
Securities to be included in such offering shall be reduced as described in
clause (A) above (subject to the proviso in clause (A)), or (y) in the case of a
Piggyback Registration, if the actions described in sub-clause (x) of this
clause (B) would, in the judgment of the managing Underwriter, be insufficient
to eliminate the adverse effect that inclusion of the Registrable Securities
requested to be included would have on such offering, such Registrable
Securities will be excluded from such offering. If the managing underwriter has
not limited the number of Registrable Securities or other securities to be
underwritten, Parent and officers and directors of Parent may include its or
their securities for its or their own account in such registration if the
managing underwriter so agrees and if the number of Registrable Securities and
other securities which would otherwise have been included in such registration
and underwriting will not thereby be limited.
III. REGISTRATION PROCEDURES
-----------------------
3.1. Filings; Information. Whenever a Large Shareholder requests that any
--------------------
Registrable Securities be registered pursuant to Section 2.1 hereof, Parent will
use its commercially reasonable efforts to effect the registration of such
Registrable Securities as soon as reasonably practicable, and in connection with
any such request:
(a) Parent will as soon as reasonably practicable prepare and file with the
SEC a registration statement on any form for which Parent then qualifies and
which counsel for Parent shall deem appropriate and available for the sale of
the Registrable Securities to be registered thereunder in accordance with the
intended method of distribution thereof, and use reasonable efforts to cause
such filed registration statement to become and remain effective for a period
of not less than 45 days; provided that if Parent shall furnish to such Large
Shareholder a certificate signed by its Chairman, Chief Executive Officer,
Chief Financial Officer or any Executive Vice President stating that in his
or her good faith judgment it would be detrimental or otherwise
disadvantageous to Parent or its shareholders for such a registration
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statement to be filed, or, in the case of an effective registration
statement, for sales to be effected thereunder, Parent shall have a period of
not more than 120 days within which to file such registration statement
measured from the date of receipt of the request in accordance with Section
2.1 or, in the case of an effective registration statement, Parent shall be
entitled to require such Large Shareholder to refrain from selling
Registrable Securities under such registration statement for a period of up
to 120 days. If Parent furnishes a notice under this paragraph at a time
when a registration statement filed pursuant to this Agreement is effective,
Parent shall extend the period during which such registration statement shall
be maintained effective as provided in this Section 3.1(a) hereof by the
number of days during the period from and including the date of the giving of
notice under this paragraph to the date when sales under the registration
statement may recommence.
(b) Parent will, if requested, prior to filing such registration statement
or any amendment or supplement thereto, furnish to the Large Shareholder
requesting registration and each managing Underwriter, if any, copies
thereof, and thereafter furnish to such Large Shareholder and each such
Underwriter, if any, such number of copies of such registration statement,
each amendment and supplement thereto (in each case including all exhibits
thereto and documents incorporated by reference therein) and the prospectus
included in such registration statement (including each preliminary
prospectus) as such Large Shareholder or such Underwriter may reasonably
request in order to facilitate the sale of the Registrable Securities.
(c) After the filing of the registration statement, Parent will promptly
notify such Large Shareholder of any stop order issued or, to the knowledge
of Parent, threatened to be issued by the SEC and take all necessary actions
required to prevent the entry of such stop order or to remove it if entered.
(d) Parent will use its reasonable efforts to qualify the Registrable
Securities for offer and sale under such other securities or blue sky laws of
such jurisdictions in the United States as such Large Shareholder reasonably
(in light of such Large Shareholder's intended plan of distribution)
requests; provided that Parent will not be required to (i) qualify generally
to do business in any jurisdiction where it would not otherwise be required
to qualify but for this paragraph (d), (ii) subject itself to taxation in any
such jurisdiction or (iii) consent to service of process in any such
jurisdiction.
(e) Parent shall, as promptly as reasonably practicable, notify each Large
Shareholder that has sold, or is selling, Registrable Securities hereunder,
at any time when a prospectus relating to the sale of the Registrable
Securities is required by law to be delivered in connection with sales by an
Underwriter or dealer, of the occurrence of an event requiring the
preparation of a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they
were made, not misleading, and as promptly as practicable make available to
each such Large Shareholder and to the Underwriters any such supplement or
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amendment. Each Large Shareholder, by requesting a registration or selling
Registrable Securities hereunder, shall be deemed to agree with Parent that,
upon receipt of any notice from Parent of the happening of any event of the
kind described in the preceding sentence, such Large Shareholder will
forthwith discontinue the offer and sale of Registrable Securities pursuant
to the registration statement covering such Registrable Securities until
receipt of the copies of such supplemented or amended prospectus and, if so
directed by Parent, such Large Shareholder will deliver to Parent all copies,
other than permanent file copies then in Large Shareholder's possession, of
the most recent prospectus covering such Registrable Securities at the time
of receipt of such notice. In the event Parent shall give such notice,
Parent shall extend the period during which any registration statement shall
be maintained effective as provided in Section 3.1(a) hereof by the number of
days during the period from and including the date of the giving of such
notice to the date when Parent shall make available such supplemented or
amended prospectus.
(f) In the event of the issuance of a stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification
of any Registrable Securities included in such registration statement for
sale in any jurisdiction in the United States, Parent will promptly notify
the holders of Registrable Securities and will use its commercially
reasonable efforts to obtain the withdrawal of such order.
(g) Parent will enter into customary agreements (including an underwriting
agreement in customary form and satisfactory in form and substance to Parent
in its reasonable judgment) and take such other actions as are reasonably
required in order to expedite or facilitate the sale of such Registrable
Securities.
(h) Parent will furnish to each Large Shareholder that sells Registrable
Securities hereunder and to each managing Underwriter, if any, a signed
counterpart, addressed to such Large Shareholder and each Underwriter, of (i)
an opinion or opinions of counsel to Parent and (ii) a comfort letter or
comfort letters from Parent's independent auditors pursuant to SAS 72, each
in customary form and covering such matters of the type customarily covered
by opinions or comfort letters delivered to such parties.
(i) Parent will make generally available to its securityholders, as soon as
reasonably practicable, an earnings statement covering a period of 12 months,
beginning within three months after the effective date of the registration
statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act and the rules and regulations of the SEC
thereunder.
(j) Parent will use reasonable efforts to cause all such Registrable
Securities to be listed on each securities exchange on which similar
securities issued by Parent are then listed.
3.2. Registration Expenses. In connection with any Demand Registration or
---------------------
Piggyback Registration by or for a Large Shareholder, Parent shall pay the
following expenses incurred in connection with such registration (the
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"Registration Expenses"): (i) all filing fees with the SEC, (ii) fees and
expenses of compliance with securities or blue sky laws (including reasonable
fees and disbursements of counsel in connection with blue sky qualifications of
the Registrable Securities), (iii) printing expenses, (iv) the fees and expenses
incurred in connection with any listing of the Registrable Securities, (v) fees
and expenses of counsel and independent certified public accountants for Parent
(including the expenses of any comfort letters pursuant to Section 3.1(g)
hereof) and (vi) the reasonable fees and expenses of any additional experts
retained by Parent in connection with such registration. Such Large Shareholder
shall pay any underwriting fees, discounts or commissions attributable to the
sale of Registrable Securities, and any out-of-pocket expenses of Large
Shareholder, including such Large Shareholder's counsel's fees and expenses.
Parent shall pay internal Parent expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties).
3.3. Participation in Underwritten Registrations. No person may
-------------------------------------------
participate in any underwritten registered offering contemplated hereunder
unless such person (a) agrees to sell its securities on the basis provided in
any underwriting arrangements and (b) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting arrangements and other documents
reasonably required under the terms of such underwriting arrangements and these
Registration Rights. Parent may require each Large Shareholder that requests a
registration or is selling Registrable Securities hereunder promptly to furnish
in writing to Parent such information regarding such Large Shareholder, the plan
of distribution of the Registrable Securities and other information as Parent
may from time to time reasonably request or as may be legally required in
connection with such registration.
IV. INDEMNIFICATION AND CONTRIBUTION
--------------------------------
4.1. Indemnification by Parent. Parent agrees to indemnify and hold
-------------------------
harmless each Large Shareholder, its officers and directors, and each person, if
any, who controls Large Shareholder within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act from and against any and
all losses, claims, damages and liabilities caused by any untrue statement or
alleged untrue statement of a material fact contained in any registration
statement or prospectus relating to the Registrable Securities (as amended or
supplemented if Parent shall have furnished any amendments or supplements
thereto) or any preliminary prospectus, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any such untrue statement
or omission or alleged untrue statement or omission based upon information
furnished in writing to Parent by or on behalf of any Large Shareholder or
Underwriter for any Large Shareholder expressly for use therein; provided that
the foregoing indemnity agreement with respect to any preliminary prospectus
shall not inure to the benefit of any Large Shareholder if a copy of the current
prospectus was not provided to the purchaser of Registrable Securities and such
current prospectus would have cured the defect giving rise to such loss, claim,
damage or liability or for any sales occurring after Parent has informed such
Large Shareholder under Section 3.1(e) hereof and prior to the delivery by
Parent of any supplement or amendment to such prospectus. Parent also agrees to
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indemnify any Underwriters of the Registrable Securities, their officers and
directors and each person who controls such underwriters on substantially the
same basis as that of the indemnification of such Large Shareholder provided in
this Section 4.1.
4.2. Indemnification by Large Shareholders. Each Large Shareholder, by
-------------------------------------
requesting any registration or making any sale of Registrable Securities
hereunder, shall be deemed to agree (on a several and not joint basis) to
indemnify and hold harmless Parent, its officers and directors, and each person,
if any, who controls Parent within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from Parent to Large Shareholder, but only with reference to
information furnished in writing by or on behalf of Large Shareholder expressly
for use in any registration statement or prospectus relating to such Registrable
Securities, or any amendment or supplement thereto, or any preliminary
prospectus. Each such Large Shareholder also shall be deemed to agree to
indemnify and hold harmless Underwriters of the Registrable Securities, their
officers and directors and each person who controls such Underwriters on
substantially the same basis as that of the indemnification of Parent provided
in this Section 4.2.
4.3. Conduct of Indemnification Proceedings. In case any proceeding
--------------------------------------
(including any governmental investigation) shall be instituted involving any
person in respect of which indemnity may be sought pursuant to Section 4.1 or
4.2 hereof, such Person (the "Indemnified Party") shall promptly notify the
Person against whom such indemnity may be sought (the "Indemnifying Party") in
writing and the Indemnifying Party, upon the request of the Indemnified Party,
shall retain counsel reasonably satisfactory to such Indemnified Party to
represent such Indemnified Party and any others the Indemnifying Party may
designate in such proceeding and shall pay the fees and disbursements of such
counsel related to such proceeding. In any such proceeding, any Indemnified
Party shall have the right to retain its own counsel, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party unless (i) the
Indemnifying Party and the Indemnified Party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the Indemnified Party and the
Indemnifying Party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them.
It is understood that the Indemnifying Party shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the
fees and expenses of more than one separate firm of attorneys (in addition to
any local counsel) at any time for all such Indemnified Parties, and that all
such fees and expenses shall be reimbursed as they are incurred. In the case of
any such separate firm for the Indemnified Parties, such firm shall be
designated in writing by the Indemnified Parties. The Indemnifying Party shall
not be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent, or if there be a final judgment for
the plaintiff, the Indemnifying Party shall indemnify and hold harmless such
Indemnified Parties from and against any loss or liability (to the extent stated
above) by reason of such settlement or judgment.
4.4. Contribution. If the indemnification provided for in this Article IV
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is unavailable to the Indemnified Parties in respect of any losses, claims,
damages or liabilities referred to herein, then each such Indemnifying Party, in
lieu of indemnifying such Indemnified Party, shall contribute to the amount paid
or payable by such Indemnified Party as a result of such losses, claims, damages
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or liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by Parent, any Large Shareholder and the Underwriters from the
offering of the securities, or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) but also the
relative fault of Parent, such Large Shareholder and the Underwriters in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by Parent, such Large
Shareholder and the Underwriters shall be deemed to be in the same proportion as
the total proceeds from the offering (net of underwriting discounts and
commissions but before deducting expenses) received by each of Parent and such
Large Shareholder and the total underwriting discounts and commissions received
by the Underwriters, in each case as set forth in the table on the cover page of
the prospectus, bear to the aggregate public offering price of the securities.
The relative fault of Parent, a Large Shareholder and the Underwriters shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by or on behalf of such party
and the parties, relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
Parent and each Large Shareholder shall be deemed to agree that it would
not be just and equitable if contribution pursuant to this Section 4.4 were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an Indemnified Party as a
result of the losses, claims, damages or liabilities referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such Indemnified Party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 4.4, no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission, and
Large Shareholder shall not be required to contribute any amount in excess of
the amount by which the net proceeds of the offering (before deducting expenses)
received by Large Shareholder exceeds the amount of any damages which Large
Shareholder has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
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