EXHIBIT 99.01
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter called this "Agreement"), dated as
of August 17, 1998, among Emerging Communications, Inc., a Delaware
corporation (the "Company"), Innovative Communication Corporation, a U.S.
Virgin Islands corporation ("Purchaser"), and ICC Merger Sub Corporation, a
Delaware corporation and a wholly-owned subsidiary of Purchaser ("Merger
Sub"), the Company and Merger Sub sometimes being hereinafter collectively
referred to as the "Constituent Corporations."
RECITALS
WHEREAS, the Boards of Directors of Purchaser and the Company each have
determined that it is in the best interests of their respective shareholders
for Purchaser to acquire the shares of Common Stock, par value $0.01 per share
of the Company, not currently owned by Innovative Communications Company, a
Delaware limited liability company (the "Parent"), which owns all of the
outstanding capital stock of the Purchaser upon the terms and subject to the
conditions set forth herein; and
WHEREAS, the Company, Purchaser and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement.
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein the
parties hereto hereby agree as follows:
ARTICLE I
THE TENDER OFFER
1.1. Tender Offer. (a) Provided that this Agreement shall not have been
terminated in accordance with Article IX hereof and none of the events set
forth in Annex A hereto shall have occurred or be existing, within five
business days of the date hereof, the Purchaser will commence a tender offer
(the "Offer") for all of the outstanding Shares that the Parent does not own
at a price of $10.25 per Share in cash, net to the seller, subject to the
conditions set forth in Annex A hereto. Subject to the terms and conditions of
the Offer, the Purchaser will promptly pay for all Shares duly tendered that
it is obligated to purchase thereunder. The Company's Board of Directors and a
majority of the Company's Independent Directors (as defined below) shall
recommend acceptance of the Offer to its stockholders in a
Solicitation/Recommendation Statement on Schedule 14D-9 (as such statement may
be amended or supplemented from time to time, the "Schedule 14D-9") to be
filed with the Securities and Exchange Commission (the "SEC") upon
commencement of the Offer; provided, however, that if the Company's Board of
Directors determines that its fiduciary duties require it to amend or withdraw
its recommendation, such amendment or withdrawal shall not constitute a breach
of this Agreement. The Purchaser will not without the prior written consent of
the Company decrease the price per Share or change the form of consideration
payable in the Offer, decrease the number of Shares sought, change the
conditions to the Offer or waive the Minimum Tender Condition (as defined on
Annex A hereto). The Purchaser shall not terminate or withdraw the Offer or
extend the expiration date of the Offer unless at the expiration date of the
Offer the conditions to the Offer set forth on Annex A hereto shall not have
been satisfied or waived.
(b) Purchaser agrees, as to the Offer to Purchase and related Letter of
Transmittal (which together, as either of them may be amended or supplemented
from time to time, constitute the "Offer Documents"), and the Company agrees,
as to the Schedule 14D-9, that such documents shall, in all material respects,
comply with the requirements of the Securities and Exchange Act of 1934, as
amended (the "Exchange Act"), and the rules and regulations thereunder and
other applicable laws. The Company and its counsel, as to the Offer Documents,
and
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Purchaser and its counsel, as to the Schedule 14D-9, shall be given an
opportunity to review such documents prior to their being filed with the SEC.
(c) In connection with the Offer, the Company will cause its transfer agent
to furnish promptly to the Purchaser a list, as of a recent date, of the
record holders of Shares and their addresses, as well as mailing labels
containing the names and addresses of all record holders of Shares and lists
of security positions of Shares held in stock depositories. The Company will
furnish the Purchaser with such additional information (including, but not
limited to, updated lists of holders of Shares and their addresses, mailing
labels and lists of security positions) and such other assistance as Purchaser
or its agents may reasonably request in communicating the Offer to the record
and beneficial holders of Shares.
ARTICLE II
THE MERGER; CLOSING; EFFECTIVE TIME
2.2. The Merger. Subject to the terms and conditions of this Agreement and
the Delaware Certificate of Merger (as defined below), at the Effective Time
(as defined in Section 2.4) Merger Sub shall be merged with and into the
Company and the separate corporate existence of the Merger Sub shall thereupon
cease (the "Merger"). The Company shall be the surviving corporation in the
Merger (sometimes hereinafter referred to as the "Surviving Corporation") and
shall continue to be governed by the laws of the State of Delaware, and the
separate corporate existence of the Company with all its rights, privileges,
immunities, powers and franchises shall continue unaffected by the Merger,
except as set forth in Section 3.1. The Merger shall have the effects
specified in the Delaware General Corporation Law (the "DGCL").
2.3. Closing. The closing of the Merger (the "Closing") shall take place (i)
at the offices of Xxxxxx Xxxxxx & Xxxxxxx, 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000 at 10:00 A.M. on the first business day on which the last to be
fulfilled or waived of the conditions set forth in Article VIII (other than
those conditions that by their nature are to be satisfied at the Closing, but
subject to the fulfillment or waiver of those conditions) shall be fulfilled
or waived in accordance with this Agreement or (ii) at such other place and
time and/or on such other date as the Company and Purchaser may agree.
2.4. Effective Time. As soon as practicable following the Closing, and
provided that this Agreement has not been terminated or abandoned pursuant to
Article IX hereof, the Company and Purchaser will cause a Certificate of
Merger (the "Delaware Certificate of Merger") to be executed and filed with
the Secretary of State of Delaware as provided in Section 251 of the DGCL. The
Merger shall become effective on the date on which the Delaware Certificate of
Merger has been duly filed with the Secretary of State of Delaware, and such
time is hereinafter referred to as the "Effective Time." At the Effective
Time, all of the assets, properties, rights, privileges, powers and franchises
of the Company and Merger Sub shall vest in the Surviving Corporation, and all
debts, liabilities, obligations and duties of the Company and Merger Sub shall
become the debts, liabilities, obligations and duties of the Surviving
Corporation.
2.5. Merger Without Meeting of Stockholders. Notwithstanding Section 2.4
hereof, in the event that Purchaser, Merger Sub or any other subsidiary of
Purchaser shall acquire at least 90% of the outstanding Shares pursuant to the
Offer or otherwise, the parties hereto agree, at the request of Purchaser or
Merger Sub, to take all necessary and appropriate action to cause the Merger
to become effective as soon as practicable after the acceptance for payment
and purchase of Shares by the Purchaser pursuant to the Offer without a
meeting of stockholders of the Company in accordance with Section 253 of the
DGCL.
ARTICLE III
CERTIFICATE OF INCORPORATION AND BY-LAWS OF THE SURVIVING CORPORATION
3.1. The Certificate of Incorporation. The Restated Certificate of
Incorporation of the Company (the "Certificate") in effect at the Effective
Time shall be the Certificate of Incorporation of the Surviving Corporation,
until duly amended in accordance with the terms thereof and the DGCL.
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3.2. The By-Laws. The By-Laws of the Company in effect at the Effective Time
shall be the By-Laws of the Surviving Corporation, until duly amended in
accordance with the terms thereof and the DGCL.
ARTICLE IV
OFFICERS AND DIRECTORS OF THE SURVIVING CORPORATION
4.1. Officers and Directors. The directors and officers of the Company at
the Effective Time shall, from and after the Effective Time, be the directors
and officers, respectively, of the Surviving Corporation until their
successors have been duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the Surviving
Corporation's Certificate of Incorporation and By-Laws.
4.2. Actions by Directors. For purposes of Section 1.1(a), Article IX and
Sections 10.3 and 10.4, no action taken by the Board of Directors of the
Company prior to the Merger shall be effective unless such action is approved
by the affirmative vote of at least a majority of the directors of the Company
who are not officers of Purchaser or the Company or any affiliate of either of
them (the "Independent Directors").
ARTICLE V
CONVERSION OR CANCELLATION OF SHARES IN THE MERGER
5.1. Conversion or Cancellation of Shares. The manner of converting or
canceling shares of the Company and Merger Sub in the Merger shall be as
follows:
(a) At the Effective Time, each share of the Common Stock, par value
$0.01 per share (the "Shares"), of the Company issued and outstanding
immediately prior to the Effective Time (other than Shares owned by the
Parent, the Purchaser, Merger Sub or any other direct or indirect
subsidiary of the Parent (collectively, the "Purchaser Companies") or
Shares that are owned by the Company or any direct or indirect subsidiary
of the Company or Shares ("Dissenting Shares") which are held by
stockholders ("Dissenting Stockholders") properly exercising appraisal
rights pursuant to Section 262 of the DGCL (collectively, "Excluded
Shares")) shall, by virtue of the Merger and without any action on the part
of the holder thereof, be converted into the right to receive, without
interest, an amount in cash (the "Merger Consideration") equal to $10.25 or
such greater amount which may be paid pursuant to the Offer. At the
Effective Time, all Shares (other than Excluded Shares), by virtue of the
Merger and without any action on the part of the holders thereof, shall no
longer be outstanding and shall be canceled and retired and shall cease to
exist, and each holder of a certificate representing any such Shares (other
than Excluded Shares) shall thereafter cease to have any rights with
respect to such Shares, except the right to receive the Merger
Consideration for such Shares upon the surrender of such certificate in
accordance with Section 5.2 or the right, if any, to receive payment from
the Surviving Corporation of the "fair value" of such Shares as determined
in accordance with Section 262 of the DGCL.
(b) At the Effective Time, each Share issued and outstanding at the
Effective Time and owned by any of Purchaser Companies or held in the
Company's treasury or owned by the Company or any direct or indirect
subsidiary of the Company shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into one share of
common stock of the Surviving Corporation. From and after the Effective
Time, each outstanding certificate theretofore representing Shares of the
Company owned by any of the Purchaser Companies shall be deemed for all
purposes to evidence ownership of, and to represent the number of shares
of, the Surviving Corporation into which such Shares of the Company shall
have been converted.
(c) At the Effective Time, the shares of common stock, par value $0.01 per
share, of Merger Sub issued and outstanding immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the
part of Merger Sub or the holders of such shares, be converted into that
number of shares of common stock of the Surviving Corporation equal to the
number of issued and outstanding Shares at the
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Effective Time less the number of Excluded Shares. From and after the
Effective Time, each outstanding certificate theretofore representing
shares of Merger Sub shall be deemed for all purposes to evidence ownership
of, and to represent the number of shares of, the Surviving Corporation
into which such shares of Merger Sub shall have been converted.
5.2. Payment for Shares. At or prior to the Effective Time, purchaser shall
make available or cause to be made available to the paying agent appointed by
Purchaser with the Company's prior approval (the "Paying Agent") amounts
sufficient in the aggregate to provide all funds necessary for the Paying
Agent to make payments pursuant to Section 5.1(a) hereof to holders of Shares
issued and outstanding immediately prior to the Effective Time. Promptly after
the Effective Time, the Surviving Corporation shall cause to be mailed to each
person who was, at the Effective Time, a holder of record (other than holders
of Excluded Shares) of issued and outstanding Shares a form (mutually agreed
to by Purchaser and the Company) of letter of transmittal and instructions for
use in effecting the surrender of the certificates which, immediately prior to
the Effective Time, represented any of such Shares in exchange for payment
therefor. Upon surrender to the Paying Agent of such certificates, together
with such letter of transmittal, duly executed and completed in accordance
with the instructions thereto, the Surviving Corporation shall promptly cause
to be paid to the persons entitled thereto a check in the amount to which such
persons are entitled, after giving effect to any required tax withholdings. No
interest will be paid or will accrue on the amount payable upon the surrender
of any such certificate. If payment is to be made to a person other than the
registered holder of the certificate surrendered, it shall be a condition of
such payment that the certificate so surrendered shall be properly 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 certificate
surrendered or establish to the satisfaction of the Surviving Corporation or
the Paying Agent that such tax has been paid or is not applicable. One hundred
and eighty (180) days following the Effective Time, the Surviving Corporation
shall be entitled to cause the Paying Agent to deliver to it any funds
(including any interest received with respect thereto) made available to the
Paying Agent which have not been disbursed to holders of certificates formerly
representing Shares outstanding on the Effective Time, and thereafter such
holders shall be entitled to look to the Surviving Corporation only as general
creditors thereof with respect to the cash payable upon due surrender of their
certificates. Notwithstanding the foregoing, neither the Paying Agent nor any
party hereto shall be liable to any holder of certificates formerly
representing Shares for any amount paid to a public official pursuant to any
applicable abandoned property, escheat or similar law. The Surviving
Corporation shall pay all charges and expenses, including those of the Paying
Agent, in connection with the exchange of cash for Shares and Purchaser shall
reimburse the Surviving Corporation for such charges and expenses.
5.3 Dissenters' Rights. If any Dissenting Stockholder shall be entitled to
be paid the "fair value" of such Dissenting Stockholder's Shares, as provided
in Section 262 of the DGCL, the Company shall give Purchaser notice thereof
and Purchaser shall have the right to participate in all negotiations and
proceedings with respect to any such demands. Neither the Company nor the
Surviving Corporation shall, except with the prior written consent of
Purchaser, voluntarily make any payment with respect to, or settle or offer to
settle, any such demand for payment. If any person who otherwise would have
been a Dissenting Stockholder shall have failed to perfect or shall have
effectively withdrawn or lost the right to dissent, the Shares held by such
person shall thereupon be treated as though such Shares had been converted
into the Merger Consideration pursuant to Section 5.1.
5.4 Transfer of Shares After the Effective Time. No transfers of Shares
shall be made on the stock transfer books of the Surviving Corporation at or
after the Effective Time.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.1 Representations and Warranties of the Company. The Company hereby
represents and warrants to Purchaser and Merger Sub that:
(a) Corporate Authority. Subject only to approval of this Agreement by
the holders of a majority of the outstanding Shares, the Company has the
requisite corporate power and authority and has taken all corporate action
necessary in order to execute and deliver this Agreement and to consummate
the transactions contemplated hereby. This Agreement is a valid and binding
agreement of the Company enforceable against the Company in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles.
(b) Fairness Opinion. The Board of Directors of the Company has received
an opinion of Houlihan, Lokey, Xxxxxx and Xxxxx, dated the date hereof, to
the effect that the offer and the Merger are fair, from a financial point
of view, to the holders of Shares (other than Purchaser).
(c) Schedule 14D-9; Offer Documents. The Schedule 14D-9 distributed to
the Company's stockholders in connection with the Merger will not, at the
date of filing with the SEC, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading, except that no
representation is made by the Company with respect to information supplied
by the Parent, Purchaser or Merger Sub for inclusion in the Schedule 14D-9.
None of the information supplied by the Company for inclusion in the Offer
Documents or the Rule 13e-3 Transaction Statement on Schedule 13E-3
(together with any supplements or amendments thereto, the "Schedule 13E-
3"), at the respective times such Offer Documents or the Schedule 13B-3 or
any amendments or supplements thereto are filed with the SEC, will contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading. The Company agrees to correct promptly any information in the
Schedule 14D-9 or any information provided by it for use in the Offer
Documents or the Schedule 13E-3 if and to the extent that it shall have
become false or misleading in any material respect and the Company further
agrees to take all steps necessary to cause the Schedule 14D-9 as so
corrected to be filed with the SEC and disseminated to the holders of
Shares, in each case as and to the extent required by applicable federal
securities laws.
6.2. Representations and Warranties of Purchaser and Merger Sub. Purchaser
and Merger Sub represent and warrant to the Company that:
(a) Corporate Organization and Qualification. Each of Purchaser and
Merger Sub is a corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of incorporation and
is in good standing as a foreign corporation in each jurisdiction where the
properties owned, leased or operated, or the business conducted, by it
require such qualification except for such failure to so qualify or to be
in such good standing, which, when taken together with all other such
failures, could not reasonably be expected to have a material adverse
effect on the condition (financial or otherwise), properties, assets,
liabilities, business or results of operations of Purchaser and its
subsidiaries, taken as a whole. Purchaser owns record and beneficially all
of the issued and outstanding shares of common stock of Merger Sub.
(b) Corporate Authority. Each of Purchaser and Merger Sub has the
requisite corporate power and authority and has taken all corporate action
necessary in order to execute and deliver this Agreement and to consummate
the transactions contemplated hereby. This Agreement is a valid and binding
agreement of Purchaser and Merger Sub enforceable against Purchaser and
Merger Sub in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors, rights and to general
equity principles.
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(c) Governmental Filings; No Violations. (i) Other than filings by
Purchaser of the certificate of merger under the DGCL and filings required
under the Exchange Act (the "Purchaser Regulatory Filings"), no notices,
reports or other filings are required to be made by Purchaser and Merger
Sub with, nor are any consents, registrations, approvals, permits or
authorizations required to be obtained by Purchaser and Merger Sub from,
any governmental entity or third party in connection with the execution and
delivery of this Agreement by Purchaser and Merger Sub and the consummation
of the transactions contemplated hereby by Purchaser and Merger Sub, the
failure to make or obtain any or all of which could prevent or materially
delay the transactions contemplated by this Agreement.
(ii) The execution and delivery of this Agreement by Purchaser and Merger
Sub do not, and the consummation of the transactions contemplated hereby by
Purchaser and Merger Sub will not, constitute or result in a breach or
violation of, or a default under, the Certificate of Incorporation or By-
Laws (or similar organizational documents) or any contract or agreement of
Purchaser or Merger Sub.
(d) Funds. Purchaser has received a commitment from the Rural Telephone
Financial Corporation to provide the funds necessary to consummate the
Offer and the Merger.
(e) Offer Documents; Schedule 14D-9. The Offer Documents will not, at the
date of filing with the SEC, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. None of the
information supplied by Purchaser or Merger Sub for inclusion in the
Schedule 14D-9 or related materials or the Schedule 13E-3 at the respective
times such Schedules or any amendments or supplements thereto are filed
with the SEC, will contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading. Purchaser and Merger Sub agree to correct promptly any
information in the Offer Documents or any information provided by them for
use in the Schedule 14D-9 or related materials or the Schedule 13E-3 if and
to the extent that it shall have become false or misleading in any material
respect and Purchaser and Merger Sub further agree to take all steps
necessary to cause the Offer Documents as so corrected to be filed with the
SEC and to be disseminated to holders of Shares, in each case as and to the
extent required by applicable federal securities laws.
ARTICLE VII
COVENANTS
7.1. Interim Operations of the Company. The Company covenants and agrees
that, prior to the Effective Time (unless Purchaser shall otherwise agree in
writing and except as otherwise expressly contemplated by this Agreement), the
business of the Company and its subsidiaries shall be conducted only in the
ordinary and usual course consistent with past practice and, to the extent
consistent therewith, each of the Company and its subsidiaries shall use its
best efforts to preserve its business organization intact (including
maintaining all of its Permits) and maintain its existing relations with
customers, suppliers, employees and business associates and it will take no
action that would adversely affect the ability of the parties to promptly
consummate the transactions contemplated by this Agreement.
7.2. Meetings of the Company's Stockholders. If required following
termination of the Offer, the Company will take all action necessary to
convene a meeting of holders of Shares as promptly as practicable to consider
and vote upon the approval of this Agreement and the Merger. Subject to
fiduciary requirements of applicable law, the Board of Directors of the
Company shall recommend such approval and the Company shall take all lawful
action to solicit such approval provided, however, that nothing contained in
this Section 7.2 shall prohibit the Company or its Board of Directors, or the
representatives of either of them, from recommending to the stockholders of
the Company against, or withdrawing, modifying or changing its recommendation
to the stockholders with respect to, the Merger, if the Board of Directors
determines, after consultation with counsel, that failure to do so would
violate its fiduciary duty to the stockholders of the Company under applicable
law. At any such meeting of the Company all of the Shares then owned by
Purchaser Companies (including all Shares currently owned by the Purchaser
Companies) will be voted in favor of this Agreement.
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7.3. Filings; Other Action. Subject to the terms and conditions herein
provided, (a) the Purchaser shall promptly make the Purchaser Regulatory
Filings and thereafter make any other required submissions with respect to the
Offer and the Merger and (b) the Company and the Purchaser shall use their
respective best efforts to take promptly, or cause to be taken promptly, all
other action and do, or cause to be done, all other things necessary, proper
or appropriate under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement as soon as
practicable.
7.4. Publicity. The initial press release issued in connection with the
execution of this Agreement shall be a joint press release and thereafter the
Company and Purchaser shall consult with each other prior to issuing any press
releases or otherwise making public statements with respect to the
transactions contemplated hereby and prior to making any filings with any
governmental entity or with any national securities exchange with respect
thereto.
7.5. Indemnification; Directors' and Officers' Insurance. (a) From and after
the Effective Time, the Surviving Corporation and Purchaser each agrees that
it will indemnify and hold harmless each present and former director and/or
officer of the Company, determined as of the Effective Time (the "Indemnified
Parties"), that is made a party or threatened to be made a party to any
threatened, pending or completed action, suit, proceeding or claim, whether
civil, criminal, administrative or investigative, by reason of the fact that
he or she was a director or officer of the Company or any subsidiary of the
Company prior to the Effective Time and arising out of actions or omissions of
the Indemnified Party in any such capacity occurring at or prior to the
Effective Time (a "Claim") against any costs or expenses (including reasonable
attorneys' fees), judgments, fines, amounts paid in settlement pursuant to
Section 7.5(b), losses, claims, damages or liabilities (collectively, "Costs")
reasonably incurred in connection with any Claim, whether asserted or claimed
prior to, at or after the Effective Time, to the fullest extent that the
Company would have been permitted under Delaware law. The Surviving
Corporation and Purchaser shall also advance expenses (including attorneys'
fees), as incurred by the indemnified Party to the fullest extent permitted
under applicable law provided such indemnified Party provides an undertaking
to repay such advances if it is ultimately determined that such Indemnified
Party is not entitled to indemnification.
(b) Any Indemnified Party wishing to claim indemnification under paragraph
(a) of this Section 7.5, upon learning of any such Claim, shall promptly
notify the Surviving Corporation and Purchaser thereof, but the failure to so
notify shall not relieve the Surviving Corporation or Purchaser of any
liability it may have to such Indemnified Party if such failure does not
materially prejudice the indemnifying party. In the event of any such claim,
action, suit, proceeding or investigation (whether arising before or after the
Effective Time), (i) Purchaser or the Surviving Corporation shall have the
right to assume the defense thereof and Purchaser shall not be liable to such
Indemnified Parties for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Parties in connection with
the defense thereof, except that if Purchaser or the Surviving Corporation
elects not to assume such defense or counsel for the Indemnified Parties
advises that there are issues which raise conflicts of interest between
Purchaser or the Surviving Corporation and the Indemnified Parties, the
Indemnified Parties may retain counsel satisfactory to them, and Purchaser or
the Surviving Corporation shall pay all reasonable fees and expenses of such
counsel for the Indemnified Parties promptly as statements therefor are
received; provided, however, that the Surviving Corporation and Purchaser
shall be obligated pursuant to this paragraph (b) to pay for only one firm of
counsel for all Indemnified Parties in any jurisdiction unless the use of one
counsel for such Indemnified Parties would present such counsel with a
conflict of interest, (ii) the Indemnified Parties will cooperate in the
defense of any such matter and (iii) Purchaser shall not be liable for any
settlement effected without its prior written consent; and provided further
that the Surviving Corporation and Purchaser, respectively, shall not have any
obligation hereunder to any Indemnified Party when and if a court of competent
jurisdiction shall ultimately determine, and such determination shall have
become final and non-appealable, that the indemnification of such Indemnified
Party in the manner contemplated hereby is prohibited by applicable law. If
such indemnity is not available with respect to any Indemnified Party, then
the Surviving Corporation and the Indemnified Party shall contribute to the
amount payable in such proportion as is appropriate to reflect relative faults
and benefits.
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(c) If a claim for indemnification or advancement under this Section 7.5 is
not paid in full by the Surviving Corporation or Purchaser within thirty days
after a written claim therefor has been received by the Surviving Corporation
or Purchaser, the Indemnified Party may any time thereafter bring suit against
the Surviving Corporation or Purchaser to recover the unpaid amount of the
claim and, if successful in whole or in part, the Indemnified Party shall be
entitled to be paid also the expense of prosecuting such claims.
Neither the failure of the Surviving Corporation or Purchaser (including
their Boards of Directors, independent legal counsel or shareholders) to have
made a determination prior to the commencement of such suit that
indemnification of the Indemnified Party is proper in the circumstances
because he or she has met the applicable standard of conduct, nor an actual
determination by the Surviving Corporation or Purchaser (including their
Boards of Directors, independent legal counsel, or shareholders) that the
Indemnified Party has not met such applicable standard of conduct, shall be a
defense to the suit or create a presumption that the Indemnified Party has not
met the applicable standard of conduct.
(d) The Surviving Corporation shall maintain the Company's existing
officers' and directors' liability insurance or equivalent liability insurance
("D&O Insurance") for a period of six years after the Effective Time so long
as the annual premium therefor is not in excess of the last annual premium
paid prior to the date hereof (the "Current Premium"); provided, however, if
the existing D&O Insurance expires, is terminated or canceled during such six-
year period, the Surviving Corporation will use its best efforts to obtain as
much D&O Insurance as can be obtained for the remainder of such period for a
premium not in excess (on an annualized basis) of 200 percent of the Current
Premium.
(e) In lieu of the insurance arrangement referred to in clause (d) of
this Section 7.5, the Surviving Corporation may, on or before the
expiration of the Offer, enter into alternative insurance arrangements
provided that such arrangements are approved by the Independent Directors
and Purchaser.
7.6. Other Agreements.
(a) Takeover Statute. If any "fair price," "control share acquisition" or
similar anti-takeover statute or regulation shall become applicable to the
Merger, the Offer or the other transactions contemplated hereby, the
Company and the members of the Board of Directors of the Company shall
grant such approvals and take such actions as are necessary so that the
transactions contemplated hereby may be consummated as promptly as
practicable on the terms contemplated hereby and otherwise act to eliminate
or minimize the effects of such statute or regulation on the transactions
contemplated hereby.
(b) Best Efforts and Cooperation. The Company and Purchaser each shall
use (and shall cause its subsidiaries to use) its best efforts to cause the
conditions set forth in Article VIII to be satisfied and to consummate the
Merger and the other transactions contemplated by this Agreement.
(c) Purchaser Vote. Purchaser shall vote (or consent with respect to) or
cause to be voted (or a consent to be given with respect to) any Shares
(including all Shares currently owned) and any shares of common stock of
Merger Sub beneficially owned by it, the Parent or any of their respective
subsidiaries or with respect to which it, the Parent or any of their
respective subsidiaries has the power (by agreement, proxy or otherwise) to
cause to be voted (or to provide a consent), in favor of the adoption and
approval of this Agreement at any meeting of stockholders of the Company or
Merger Sub, respectively, at which this Agreement shall be submitted for
adoption and approval and at all adjournments or postponements thereof (or,
if applicable, by any action of stockholders of either the Company or
Merger Sub by consent in lieu of a meeting).
(d) Consents. Each Purchaser Company shall, and shall cause each of its
respective subsidiaries to, use its and their reasonable best efforts to
obtain prior to the Effective Time all consents, registrations, approvals,
permits, authorizations, notices, reports or other filings required to be
made or obtained by any Purchaser Company with or from any third Person
including any Governmental Entity in connection with the Offer and the
Merger and which are necessary for the consummation of the Offer and the
Merger and the other transactions contemplated thereby.
8
7.7. Certain Amendments to the Certificate of Incorporation and By-laws of
the Surviving Corporation. No amendment to the Certificate of Incorporation or
By-laws of the Surviving Corporation shall reduce in any way the elimination
of personal liability of the directors of the Company contained therein or
adversely affect any then existing right of any director or officer (or former
director or officer) to be indemnified with respect to acts, omissions or
events occurring prior to the Effective Time.
ARTICLE VIII
CONDITIONS
8.1. Conditions to Obligations of Parties. The respective obligations of the
parties to consummate the Merger are subject to the fulfillment of each of the
following conditions:
(a) Stockholder Approval. In the event of a Company stockholder meeting
pursuant to Section 7.2, this Agreement shall have been duly approved by
the holders of a majority of the Shares, in accordance with applicable law
and the Certificate and By-Laws of the Company;
(b) Purchase of Shares. The Purchaser (or one of Purchaser Companies)
shall have purchased Shares pursuant to the Offer; and
(c) Litigation. No court or other governmental entity of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered
any statute, rule, regulation, judgment, decree, injunction or other order
(whether temporary, preliminary or permanent) which is in effect and
prohibits consummation of the Merger.
ARTICLE IX
TERMINATION
9.1. Termination by Mutual Consent. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, before or
after the approval by holders of Shares, by the mutual consent of Purchaser
and the Company, by action of their respective Boards of Directors.
9.2. Termination by Either Purchaser or the Company. This Agreement may be
terminated and the Merger may be abandoned by action of the Board of Directors
of either Purchaser or the Company if: (i) the Purchaser, or any Purchaser
Company, shall have terminated the Offer without purchasing any Shares
pursuant thereto; provided that the right to terminate this Agreement under
this Section 9.2 (i) shall not be available to the Purchaser or any Purchaser
Company whose failure to fulfill any obligation under this Agreement has been
the cause or results in the failure to purchase such Shares; and provided,
further, that in the case of termination of this Agreement by Purchaser, such
termination of the Offer is not in violation of the terms of the Offer; or
(ii) without fault of the terminating party, the Merger shall not have been
consummated by December 31, 1999, whether or not such date is before or after
the approval by holders of Shares.
9.3. Termination by Purchaser. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, before or
after the approval by holders of Shares, by action of the Board of Directors
of Purchaser, if: (i) the Company shall have failed to comply in any material
respect with any of the covenants or agreements contained in this Agreement to
be complied with or performed by the Company at or prior to such date of
termination; or (ii) the Board of Directors of the Company or the Independent
Directors shall have withdrawn or modified in a manner adverse to Purchaser or
Merger Sub its approval or recommendation of the Offer, this Agreement or the
Merger or the Board of Directors of the Company or the Independent Directors,
upon request by Purchaser, shall fail to reaffirm such approval or
recommendation, or shall have resolved to do any of the foregoing.
9.4. Termination by the Company. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, before or
after the approval by holders of Shares by action of the Board
9
of Directors of the Company, if Purchaser or Merger Sub (i) shall have failed
to comply in any material respect with any of the covenants or agreements
contained in this Agreement to be complied with or performed by Purchaser or
Merger Sub at or prior to such date of termination or (ii) shall have failed
to commence the Offer within the time required in Section 1.1.
9.5. Effect of Termination and Abandonment. In the event of termination of
this Agreement and abandonment of the Merger pursuant to this Article IX, no
party hereto (or any of its directors or officers) shall have any liability or
further obligation to any other party to this Agreement, except as provided in
Section 10.2 below and except that nothing herein will relieve any party from
any liability or damages for any breach of this Agreement.
ARTICLE X
MISCELLANEOUS AND GENERAL
10.1 Payment of Expenses. Whether or not the Merger shall be consummated,
each party hereto shall pay its own expenses incident to preparing for,
entering into and carrying out this Agreement and the consummation of the
Merger.
10.2. Survival. The agreements of the Company, Purchaser and Merger Sub
contained in Sections 5.2 (but only to the extent that such Section expressly
relates to actions to be taken after the Effective Time), 5.3, 5.4, 7.5, 7.7,
and 10.1 shall survive the consummation of the Merger. The agreements of the
Company, Purchaser and Merger Sub contained in Section 9.5 and this Article X
shall survive the termination of this Agreement. All other representations,
warranties, agreements and covenants in this Agreement shall not survive the
consummation of the Merger or the termination of this Agreement.
10.3. Modification or Amendment. Subject to the applicable provisions of the
DGCL, at any time prior to the Effective Time, the parties hereto may modify
or amend this Agreement, by written agreement executed and delivered by duly
authorized officers of the respective parties.
10.4. Waiver of Conditions. The conditions to each of the parties'
obligations to consummate the Merger are for the sole benefit of such party
and may be waived by such party in whole or in part to the extent permitted by
applicable law.
10.5. Counterparts. For the convenience of the parties hereto, this
Agreement may be executed in any number of counterparts, each such counterpart
being deemed to be an original instrument, and all such counterparts shall
together constitute the same agreement.
10.6. GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL. (a) THIS AGREEMENT
SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE INTERPRETED,
CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE STATE OF
DELAWARE WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF. The parties
hereby irrevocably submit to the jurisdiction of the courts of the State of
Delaware and the Federal courts of the United States of America located in the
State of Delaware solely in respect of the interpretation and enforcement of
the provisions of this Agreement and of the documents referred to in this
Agreement, and in respect of the transactions contemplated hereby, and hereby
waive, and agree not to assert, as a defense in any action, suit or proceeding
for the interpretation or enforcement hereof or of any such document, that it
is not subject thereto or that such action, suit or proceeding may not be
brought or is not maintainable in said courts or that the venue thereof may
not be appropriate or that this Agreement or any such document may not be
enforced in or by such courts, and the parties hereto irrevocably agree that
all claims with respect to such action or proceeding shall be heard and
determined in such a Delaware State or Federal court. The parties hereby
consent to and grant any such court jurisdiction over such parties and over
the subject matter of such dispute and agree that mailing of process or other
papers in connection with any such action or proceeding in the manner provided
in Section 10.7, or in such other manner as may be permitted by law, shall be
valid and sufficient service thereof.
10
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES,
AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES
ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH SUCH
PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii)
EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH SUCH PARTY HAS
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.6.
10.7. Notices. Any notice, request, instruction or other document to be
given hereunder by any party to the others shall be in writing and delivered
personally or sent by registered or certified mail, postage prepaid:
if to Purchaser or Merger Sub
Innovative Communications Corporation
5 and 00X Xxxxxx Xxxxx
Xx. Xxxxx, X.X. Xxxxxx Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
with a copy to:
Xxxxx Xxxxxxx, Esq.
Xxxxxx Xxxxxx & Xxxxxxx
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
if to the Company
Emerging Communications, Inc.
Chase Financial Center
Orange Grove Christiansted
St. Croix, U.S. Virgin Islands 00821
Attention: Xxxxxx Xxxxxxx
with a copy to:
Xxxxxxx X. Xxxxxxxxx, Esq.
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, X.X. 00000
or to such other persons or addresses as may be designated in writing by the
party to receive such notice.
10.8. Entire Agreement. This Agreement (including any annexes exhibits or
Schedules hereto) constitutes the entire agreement, and supersedes all other
prior agreements, understandings, representations and warranties both written
and oral, among the parties, with respect to the subject matter hereof.
10.9. No Third Party Beneficiaries. Except as provided in Sections 7.5
(Indemnification; Directors' and Officers' Insurance) and 7.7 (Certain
Amendments to the Certificate of Incorporation and By-laws of the Surviving
Corporation), this Agreement is not intended to confer upon any Person other
than the parties hereto any rights or remedies hereunder.
11
10.10. Obligations of Purchaser and of the Company. Whenever this Agreement
requires Merger Sub or, after the Effective Time, the Surviving Corporation,
to take any action, such requirement shall be deemed to include an undertaking
on the part of Purchaser to cause Merger Sub or the Surviving Corporation,
respectively, to take such action, including providing the requisite funds to
purchase Shares or make any other payment obligation. Whenever this Agreement
requires a subsidiary of the Company to take any action, such requirement
shall be deemed to include an undertaking on the part of the Company to cause
such subsidiary to take such action and, after the Effective Time, on the part
of the Surviving Corporation to cause such subsidiary to take such action.
10.11. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may
be valid and enforceable, the intent and purpose of such invalid or
unenforceable provision and (b) the remainder of this Agreement and the
application of such provision to other persons or circumstances shall not be
affected by such invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of such provision, or
the application thereof, in any other jurisdiction.
10.12. Interpretation. The table of contents and headings herein are for
convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
Where a reference in this Agreement is made to a Section or Schedule, such
reference shall be to a Section of or Annex or Schedule to this Agreement
unless otherwise indicated. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation."
10.13. Assignment. This Agreement shall not be assignable by operation of
law or otherwise; provided, however, that Purchaser may designate, by written
notice to the Company, another wholly-owned direct or indirect subsidiary to
be a Constituent Corporation in lieu of Merger Sub, in the event of which, all
references herein to Merger Sub shall be deemed references to such other
subsidiary except that all representations and warranties made herein with
respect to Merger Sub as of the date of this Agreement shall be deemed
representations and warranties made with respect to such other subsidiary as
of the date of such designation.
10.14. Definition of "Subsidiary" and "Person". When a reference is made in
this Agreement to a subsidiary of a party, the word "subsidiary" means any
corporation or other organization whether incorporated or unincorporated of
which at least a majority of the securities or interests having by the terms
thereof ordinary voting power to elect at least a majority of the board of
directors or others performing similar functions with respect to such
corporation or other organization is directly or indirectly owned or
controlled by such party or by any one or more of its subsidiaries, or by such
party and one or more of its subsidiaries. When a reference is made in this
Agreement to a person, the word "person" means and includes any natural
person, corporation, partnership, firm, joint venture, association, joint-
stock company, trust, unincorporated organization, governmental or political
subdivision, regulatory body or other entity.
12
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officers of the parties hereto on the date first
hereinabove written.
Emerging Communications, Inc.
/s/ Xxxxxx X. Xxxxxxx
By:__________________________________
Name: Xxxxxx X. Xxxxxxx
Title:Chief Operating Officer
Innovative Communication Corporation
/s/ Xxxxxxx X. Xxxxxxx
By:__________________________________
Name:Xxxxxxx X. Xxxxxxx
Title:President
ICC Merger Sub Corporation
/s/ Xxxxxxx X. Xxxxxxx
By:__________________________________
Name:Xxxxxxx X. Xxxxxxx
Title:President
13
ANNEX A
Certain Conditions of the Offer. Notwithstanding any other provision of the
Offer, the Purchaser shall not be obligated to accept for payment any Shares
or, subject to any applicable rules and regulations of the SEC, including Rule
14e-l(c) (relating to Purchaser's obligation to pay for or return tendered
Shares promptly after termination or withdrawal of the Offer) or pay for, and
may delay the acceptance for payment of or payment for, any tendered Shares
unless (I) there have been validly tendered and not withdrawn prior to the
expiration date of the Offer a majority of the outstanding Shares not
beneficially owned directly or indirectly by the Parent or its affiliates as
of the date the Shares are accepted for payment pursuant to the Offer (the
"Minimum Tender Condition"), or (II) the Purchaser shall have received funds
sufficient to purchase all Shares tendered in the Offer and to pay the Merger
Consideration or (III) if on or after August 24, 1998, and at or before the
time of payment for any of such Shares (whether or not any Shares have
theretofore been accepted for payment or paid for pursuant to the Offer), any
of the following events shall occur:
(a) there shall be any statute, rule, regulation, judgment, injunction or
other order, enacted, promulgated, entered, enforced or deemed applicable
to the Offer or the Merger or any other action shall have been taken by any
government, legislative body, court or governmental, regulatory or
administrative agency, authority, tribunal or commission, domestic,
supranational or foreign (each, a "Governmental Entity"), (i) challenging
the legality of the acquisition by the Purchaser of the Shares; (ii)
restraining, delaying or prohibiting the making or consummation of the
Offer or the Merger or obtaining from the Parent, Company, Purchaser or the
Merger Sub any damages in connection therewith; (iii) imposing limitations
on the ability of Parent, Purchaser or Merger Sub (or any affiliate of
Parent, Purchaser or the Merger Sub) to acquire or hold or to exercise full
rights of ownership of the Shares, including, without limitation, the right
to vote the Shares purchased by them on all matters properly presented to
the stockholders of the Company or (iv) having a substantial likelihood of
any of the foregoing.
(b) there shall have occurred (i) any general suspension of, or
limitation on times or prices for, trading in securities on any national
securities exchange or in the over-the-counter market in the United States
or (ii) a declaration of a banking moratorium or any suspension of payments
in respect of banks in the United States (whether or not mandatory);
(c) the Company shall have breached or failed to perform in any material
respect any of its covenants, obligations or agreements under the Agreement
or any representation or warranty of the Company set forth in the Agreement
shall have been inaccurate or incomplete in any material respect when made
or thereafter shall become inaccurate or incomplete in any material
respect;
(d) any change, including, without limitation, any change arising out of
or related to any natural disaster (including hurricanes and earthquakes),
shall have occurred or been threatened or become known (or any condition,
event or development shall have occurred or been threatened or become known
involving a prospective change) in the business, properties, assets,
liabilities, condition (financial or otherwise), or results of operations
of the Company or any of its subsidiaries that could reasonably be expected
to be materially adverse to the Company and its subsidiaries taken as a
whole (a "Material Adverse Effect");
(e) all consents, registrations, approvals, permits, authorizations,
notices, reports or other filings required to be made or obtained by the
Parent, Company, Purchaser, the Merger Sub or any stockholder of Purchaser
with or from any Governmental Entity in connection with the Offer and the
Merger shall not have been made or obtained except where the failure to
make or to obtain, as the case may be, such consents, registrations,
approvals, permits, authorizations, notices, reports or other filings could
not reasonably be expected to have a Material Adverse Effect;
(f) the Special Committee of the Board of Directors shall have adversely
amended or modified or shall have withdrawn its recommendation of the Offer
or the Merger, or shall have failed to publicly reconfirm such
recommendation upon request by Parent, Purchaser or Merger Sub, or shall
have resolved to do any of the foregoing; or
(g) the Agreement shall have been terminated in accordance with its terms
or the Merger Sub shall have reached an agreement or understanding with the
Special Committee providing for termination of the Offer which, in the
reasonable judgment of the Purchaser with respect to each and every matter
referred to above, and regardless of the circumstances (including any
action or inaction by the Parent, Merger Sub, Purchaser or any affiliate of
Parent) giving rise to any such condition, makes it inadvisable to proceed
with the Offer or with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of the Purchaser and may
be asserted by the Purchaser regardless of the circumstances (including any
action or inaction by the Purchaser, Merger Sub or any affiliate of Parent)
giving rise to any such conditions or, subject to the terms of the Merger
Agreement, may be waived by the Purchaser in whole or in part at any time and
from time to time in its sole discretion. The failure by the Purchaser at any
time to exercise any of the foregoing rights shall not be deemed a waiver of
any such right and each such right shall be deemed an ongoing right which may
be asserted at any time and from time to time. Any determination by the
Purchaser concerning the events described above will be final and binding on
all holders of the Shares.
2
