EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
among
AT&T CORP.,
KIRI INC.,
FRANTIS, INC.
and
FIRSTCOM CORPORATION
Dated as of November 1, 1999
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TABLE OF CONTENTS
PAGE
ARTICLE I THE MERGER..........................................................................2
1.1. The Merger..........................................................................2
1.2. Closing.............................................................................2
1.3. Effective Time of the Merger........................................................2
1.4. Certificate of Incorporation and By-Laws............................................3
1.5. Directors; Officers.................................................................3
ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS; EXCHANGE
OF CERTIFICATES.....................................................................3
2.1. Effect on Capital Stock.............................................................3
2.2. Delivery of Certificates............................................................4
2.3. Company Stock Options...............................................................7
ARTICLE III REPRESENTATIONS AND WARRANTIES......................................................8
3.1. Representations and Warranties of the Company.......................................8
3.2. Representations and Warranties of Parent...........................................22
ARTICLE IV COVENANTS..........................................................................26
4.1. No Solicitation....................................................................26
4.2. Conduct of Business................................................................27
4.3. Filings; Other Action..............................................................32
4.4. Access to Information; Pre-Closing Review..........................................33
4.5. Publicity..........................................................................34
4.6. Further Action.....................................................................34
4.7. Insurance; Indemnity...............................................................35
4.8. Shareholder Approval; Preparation of Proxy Statement...............................35
4.9. Certain Tax Matters................................................................36
4.10. Senior Notes.......................................................................37
4.11. Ancillary Agreements...............................................................38
4.12. Netstream Purchase Price Adjustment................................................38
4.13. Conduct of Business of RV and Netstream............................................38
4.14. RV Public Shares...................................................................41
4.15. Credit Facility....................................................................41
ARTICLE V CONDITIONS.........................................................................41
5.1. Conditions to Each Party's Obligations.............................................41
5.2. Additional Conditions to Obligations of Parent, RV and
Merger Sub.........................................................................42
5.3. Additional Conditions to Obligations of the Company................................44
ARTICLE VI TERMINATION........................................................................45
6.1. Termination........................................................................45
6.2. Effect of Termination..............................................................47
ARTICLE VII GENERAL PROVISIONS.................................................................47
7.1. Nonsurvival of Representations and Warranties......................................47
7.2. Amendment..........................................................................47
7.3. Extension; Waiver..................................................................48
7.4. Notices............................................................................48
7.5. Assignment; Binding Effect.........................................................49
7.6. Entire Agreement...................................................................49
7.7. Fees and Expenses..................................................................49
7.8. Governing Law......................................................................50
7.9. Headings...........................................................................50
7.10. Interpretation.....................................................................50
7.11. Investigations.....................................................................51
7.12. Severability.......................................................................51
7.13. Enforcement of Agreement...........................................................51
7.14. Counterparts.......................................................................51
AGREEMENT AND PLAN OF MERGER, dated as of November 1, 1999
("AGREEMENT"), among AT&T Corp., a New York corporation ("PARENT"), Kiri Inc., a
Delaware corporation ("RV"), Frantis, Inc., a Delaware corporation and
wholly-owned subsidiary of RV ("MERGER SUB"), and FirstCom Corporation, a Texas
corporation (the "COMPANY"). Certain capitalized terms used herein are defined
in Schedule A attached hereto.
RECITALS
A. Each of Parent, RV, Merger Sub and the Company desire to enter
into the business combination transaction described herein, in which the Company
would merge with and into Merger Sub (the "MERGER").
B. The Boards of Directors of Parent and the respective Boards of
Directors or shareholders (as the case may be) of each of RV and Merger Sub have
duly adopted resolutions approving the transactions contemplated hereby.
C. The Board of Directors of the Company, acting on the
recommendation of a special committee of independent directors, has approved
this Agreement and the Merger, has determined by unanimous resolution that the
Merger is in the best interests of the Company and its shareholders and intends
to recommend to the shareholders of the Company that they vote to approve the
Merger.
D. Concurrently with the execution of this Agreement and as a
condition and inducement to Parent's willingness to enter into this Agreement,
certain shareholders of the Company have entered into a voting agreement, dated
as of the date hereof (the "VOTING AGREEMENT"), among Parent and the several
shareholders named therein, providing, among other things, that such
shareholders will vote in favor of the Merger.
E. JAMTIS, Inc., a Delaware corporation ("JAMTIS"), and an indirect
wholly-owned subsidiary of Parent, has entered into agreements (the "NETSTREAM
ACQUISITION AGREEMENTS") to acquire quotas (the "NETSTREAM SHARES") representing
100% of the outstanding equity interest in Netstream Telecom Ltda., a Brazilian
company ("NETSTREAM").
F. Parent intends to cause Jamtis to merge with a wholly-owned
subsidiary of RV, such that, following such merger, (I) Jamtis will be a direct
wholly-owned subsidiary of RV, and (II) Netstream will be an indirect
wholly-owned subsidiary of RV.
G. Pursuant to the Netstream Acquisition Agreements, Promon
Tecnologia S.A., a Brazilian corporation (sociedade anonima) (together with its
affiliates, "PROMON")
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has agreed to purchase, prior to the Closing a 10% interest in the capital of
RV, in the form of RV Class A Shares.
H. Each of Parent, RV, Merger Sub and the Company intend that the
Merger qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "CODE").
I. Each of Parent, RV, Merger Sub and the Company intend that,
immediately following the Effective Time, on a fully-diluted basis, (I) the
former shareholders of the Company will own, collectively, approximately 34% of
the shares of common stock of RV, in the form of RV Class A Common Stock or RV
Preferred Stock, as the case may be, (II) Promon will own, directly or
indirectly, approximately 6% of the shares of common stock of RV, in the form of
RV Class A Common Stock, and (III) Parent will own, directly or indirectly,
approximately 60% of the shares of common stock of RV, in the form of RV Class B
Common Stock (as defined herein).
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE I
THE MERGER
I.1. THE MERGER. On the terms and subject to the conditions set forth
in this Agreement, and in accordance with applicable state corporation laws, the
Company shall be merged with and into Merger Sub at the Effective Time (as
defined in Section 1.3 below). Upon the Effective Time, the separate existence
of the Company shall cease, and Merger Sub shall continue as the surviving
corporation (the "SURVIVING CORPORATION").
I.2. CLOSING. Unless this Agreement shall have been terminated
pursuant to Section 6.1, and subject to the satisfaction or waiver of the
conditions set forth in Article V, the closing of the Merger (the "CLOSING")
shall take place as promptly as practicable (and in any event within two
business days) following satisfaction or waiver of the conditions set forth in
Article V (the "CLOSING DATE"), at the offices of Debevoise & Xxxxxxxx, 000
Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, unless another date or place is agreed
to in writing by the parties hereto.
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I.3. EFFECTIVE TIME OF THE MERGER. As soon as practicable following
the satisfaction or waiver of the conditions set forth in Article V, the
Surviving Corporation shall file a certificate of merger (the "CERTIFICATE OF
MERGER") executed in accordance with the relevant provisions of the Delaware
General Corporation Law ("DGCL"). The Merger shall become effective at such time
as the Certificate of Merger is duly filed with the Secretary of State of the
State of Delaware, or at such other time thereafter as is provided in the
Certificate of Merger (the "EFFECTIVE TIME").
I.4. CERTIFICATE OF INCORPORATION AND BY-LAWS. The Articles of
Incorporation and By-Laws of Merger Sub as in effect immediately prior to the
Effective Time shall be the Articles of Incorporation and By-Laws of the
Surviving Corporation following the Merger, until amended in accordance with the
DGCL.
I.5. DIRECTORS; OFFICERS. (a) The directors of Merger Sub at the
Effective Time shall be the initial directors of the Surviving Corporation,
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
(b) The officers of Merger Sub at the Effective Time shall be the
officers of the Surviving Corporation, until the earlier of their resignation or
removal or until their respective successors are duly elected and qualified, as
the case may be.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
II.1. EFFECT ON CAPITAL STOCK. As of the Effective Time, by virtue of
the Merger and without any further act or deed on the part of Parent, RV, Merger
Sub, the Company or any holder of any of the following securities:
(a) COMMON STOCK OF THE COMPANY. Each issued and outstanding share of
common stock, par value $0.001 per share, of the Company (together with
any rights appurtenant thereto, "COMPANY COMMON STOCK") shall be converted
into the right to receive one fully paid and non-assessable share of Class
A common stock, par value $0.01 per share, of RV ("RV CLASS A COMMON
STOCK").
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(b) PREFERRED STOCK OF THE COMPANY. Each issued and outstanding share
of Series A convertible preferred stock, par value $0.001 per share, of
the Company ("PREFERRED STOCK") shall be converted into the right to
receive one fully paid and non-assessable share of Series A convertible
preferred stock, par value $0.001 per share, of RV ("RV PREFERRED STOCK").
II.2. DELIVERY OF CERTIFICATES. (a) EXCHANGE AGENT; EXCHANGE FUND. As
of the Effective Time, Parent and the Company shall cause to be deposited, with
a bank or trust company designated by Parent (and reasonably acceptable to the
Company) (the "EXCHANGE AGENT"), for exchange in accordance with this Article
II, through the Exchange Agent, for the benefit of the holders of shares of
Company Common Stock, certificates representing the shares of RV Class A Common
Stock issuable pursuant to Section 2.1 in exchange for issued and outstanding
shares of Company Common Stock. All of such deposited certificates representing
shares of RV Class A Common Stock, collectively, together with any dividends or
distributions with respect thereto, are referred to hereinafter as the "EXCHANGE
FUND."
(b) EXCHANGE PROCEDURES. As soon as reasonably practicable after the
Effective Time, Parent shall instruct the Exchange Agent to mail to each holder
of record of a certificate or certificates which immediately prior to the
Effective Time represented outstanding shares of Company Common Stock
(collectively, the "CERTIFICATES"), (I) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates to the
Exchange Agent and shall be in form and have such other provisions as Parent and
the Company may reasonably specify) and (II) instructions to effect the
surrender of the Certificates in exchange for certificates representing shares
of RV Class A Common Stock. Upon surrender of one or more Certificates for
cancellation to the Exchange Agent together with such letter of transmittal,
duly executed, and such other customary or other reasonable documents as may be
required pursuant to such instructions, the holder of such Certificates shall be
entitled to receive in exchange therefor a certificate representing that number
of whole shares of RV Class A Common Stock which such holder has the right to
receive in respect of the Certificates surrendered by such holder pursuant to
the provisions of this Article II, and the Certificates so surrendered shall
forthwith be cancelled. In the event of transfer of ownership of Company Common
Stock which is not registered in the transfer of records of the Company, a
certificate representing the proper number of shares of RV Class A Common Stock
may be issued to a transferee if the Certificate representing such Company
Common Stock is presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 2.2, each Certificate shall be deemed at any
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time after the Effective Time to present only the right to receive upon such
surrender a certificate representing shares of RV Class A Common Stock, and cash
in lieu of any fractional shares of RV Class A Common Stock as contemplated by
this Section 2.2.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends or
other distributions declared or made after the Effective Time with respect to RV
Class A Common Stock with a record date after the Effective Time shall be paid
to the holder of any unsurrendered Certificate with respect to the shares of RV
Class A Common Stock represented thereby, and no cash payment in lieu of
fractional shares shall be paid to any such holder pursuant to Section 2.2(e)
until the holder of such Certificate shall have duly surrendered such
Certificate in accordance with Section 2.2(b). Subject to the effect of
applicable laws, following surrender of any such Certificate, there shall be
paid to the holder of the certificates representing whole shares of RV Class A
Common Stock issued in exchange therefor, without interest, (I) at the time of
such surrender or as promptly thereafter as practicable, the amount of any cash
payable with respect to a fractional share of RV Class A Common Stock to which
such holder is entitled pursuant to Section 2.2(e) and the amount of dividends
or other distributions, if any, with a record date after the Effective Time
theretofore paid with respect to such whole shares of RV Class A Common Stock,
and (II) at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but prior to surrender
and a payment date subsequent to surrender payable with respect to such whole
shares of RV Class A Common Stock.
(d) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All shares
of RV Class A Common Stock issued upon conversion of shares of Company Common
Stock in accordance with the terms hereof (including any cash paid pursuant to
Section 2.2(c) or 2.2(e)) shall be deemed to have been issued in full
satisfaction of all rights pertaining to such shares of Company Common Stock,
and there shall be no further registration of transfers on the stock transfer
books of the Surviving Corporation of the shares of Company Common Stock which
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be cancelled and exchanged as provided in this Article II.
(e) TREATMENT OF FRACTIONAL SHARES. (i) No certificates or scrip
representing fractional shares of RV Class A Common Stock shall be issued upon
the surrender for exchange of Certificates, and such fractional interests will
not entitle the owner thereof to vote or to any rights of a stockholder of the
Surviving Corporation.
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(ii) As promptly as practicable following the Effective Time, the
Exchange Agent will determine the excess of (x) the aggregate number of shares
of RV Class A Common Stock delivered to the Exchange Agent over (y) the
aggregate number of whole shares of RV Class A Common Stock to be distributed in
connection with the Merger (such excess being referred to herein as the "EXCESS
SHARES"). Following the Effective Time, Parent and RV will cause the Exchange
Agent, on behalf of the former stockholders of the Company, to sell the Excess
Shares at then-prevailing prices on the securities exchange on which they are
listed in the manner provided in clause (iii) of this Section.
(iii) The sale of the Excess Shares by the Exchange Agent will be
executed through one or more member firms and will be executed in round lots to
the extent practicable. The Exchange Agent will use reasonable efforts to
complete the sale of the Excess Shares as promptly following the Effective Time,
as, in its sole judgment, is practicable consistent with obtaining the best
execution of such sales in light of prevailing market conditions. Until the net
proceeds of such sale or sales have been distributed to the former stockholders
of the Company, the Exchange Agent will hold such proceeds in trust for such
holders (the "EXCESS SHARES Trust"). All commissions, transfer taxes and other
out-of-pocket transaction costs incurred in connection with such sale of Excess
Shares shall be paid by RV. The Exchange Agent will determine the portion of the
Excess Shares Trust to which each holder of Company Common Stock, is entitled,
if any, by multiplying the amount of the aggregate proceeds comprising the
Excess Shares Trust by a fraction, the numerator of which is the amount of the
fractional share interest to which such holder of Company Common Stock is
entitled (after taking into account all such shares held at the Effective Time
by such holder) and the denominator of which is the aggregate amount of
fractional share interests to which all holders of Company Common Stock are
entitled pursuant to the Merger are entitled pursuant to the Merger PROVIDED,
that no holder of Company Common Stock will be entitled to receive cash in an
amount equal to or greater than the value of one full share of RV Class A Common
Stock.
(iv) As soon as practicable after the determination of the amount of
cash, if any, to be paid to holders of Company Common Stock with respect to
fractional share interests, the Exchange Agent will make available such amounts
to such holders.
(f) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund
that remains undistributed to the stockholders of the Company for six months
after the Effective Time shall be delivered to RV upon demand, and any
stockholders of the Company who have not theretofore complied with this Article
II shall thereafter look only to RV for payment of their claim for RV Class A
Common Stock, any cash in lieu of
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fractional shares of RV Class A Common Stock and any dividends or distributions
with respect to RV Class A Common Stock.
(g) NO LIABILITY. None of Parent, RV and the Surviving Corporation
shall be liable to any holder of shares of Company Common Stock or RV Class A
Common Stock, as the case may be, for such shares (or dividends or distributions
with respect thereto) or cash from the Exchange Fund delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
(h) WITHHOLDING RIGHTS. RV or the Exchange Agent shall be entitled to
deduct and withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of shares of Company Common Stock such amounts as the
Surviving Corporation or the Exchange Agent is required to deduct and withhold
with respect to the making of such payment under the Code, or any provision of
state, local or foreign tax law, or any court order. To the extent that amounts
are so withheld by RV or the Exchange Agent, 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 RV or the Exchange Agent.
II.3. COMPANY STOCK OPTIONS. (a) Each option (each, a "COMPANY STOCK
OPTION" and collectively, the "COMPANY STOCK OPTIONS") to purchase shares of
Company Common Stock granted under the Company's long-term incentive plans and
directors stock option plans or pursuant to the authority of the Board of
Directors of the Company that is outstanding immediately prior to the Closing
Date shall be deemed to constitute an option to acquire one share of RV Class A
Common Stock (each, an "ASSUMED AWARD"), PROVIDED that any fractional share of
RV Class A Common Stock resulting from an aggregation of all of the shares of a
holder subject to Company Stock Options shall be rounded to the nearest whole
share, and PROVIDED, FURTHER, that, for any Company Stock Option to which
Section 421 of the Code applies by reason of its qualification under any of
Sections 422 through 424 of the Code, the option price, the number of shares
purchasable pursuant to such option and the terms and conditions of exercise of
such option shall be determined in order to comply with Section 424 of the Code.
Each such Assumed Award, to the extent permissible under Section 424(a) of the
Code, shall thereafter be exercisable until the end of the period during which
the Company Stock Option was exercisable and shall otherwise have terms no less
favorable to the holder thereof than the original Company Stock Option.
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(b) RV shall take such actions as are necessary for the assumption of
Company Stock Options pursuant to this Section 2.3, including the reservation,
issuance and listing of RV Class A Common Stock as is necessary to effectuate
the transactions contemplated by this Section 2.3. RV shall prepare and file
with the SEC a registration statement on an appropriate form, or a
post-effective amendment to a registration statement previously filed under the
Securities Act (as defined herein), with respect to the shares of RV Class A
Common Stock subject to the Assumed Awards and, where applicable, shall use its
reasonable best efforts to have such registration statement declared effective
by Closing Date and to maintain the effectiveness of such Assumed Awards (and to
maintain the current status of the prospectus contained therein) for so long as
such Assumed Awards remain outstanding. With respect to those individuals, if
any, who, subsequent to the Closing, will be subject to the reporting
requirements under Section 16(a) of the Exchange Act, where applicable, RV shall
use its reasonable efforts to administer Company Stock Options assumed pursuant
to this Section 2.3 in a manner that complies with Rule 16b-3 promulgated under
the Exchange Act (as defined herein).
ARTICLE III
REPRESENTATIONS AND WARRANTIES
III.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to Parent, RV and Merger Sub as of the date
hereof and as of the Closing Date as follows:
(a) EXISTENCE; GOOD STANDING; CORPORATE AUTHORITY. Each of the
Company and its Subsidiaries is (i) a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and (II) duly licensed or qualified to do business as a foreign
corporation and is in good standing under the laws of any other state of the
United States or (to the extent the concepts of "qualified to do business" and
"good standing" exist) any other jurisdiction in which the character of the
properties owned or leased by it or in which the transaction of its business
makes such licensure, qualification or good standing necessary, except where the
failure to be so in good standing or to be so licensed or qualified,
individually or in the aggregate, would not have a material adverse effect on
(X) the business, operations, results of operations, assets or financial
condition of the Company or any Subsidiary, or (Y) the ability of the Company to
perform its obligations under this Agreement or any Ancillary Agreement (any of
the foregoing events or circumstances being referred to herein as a "MATERIAL
ADVERSE EFFECT"). Each of the Company and its Subsidiaries has the requisite
corporate power and authority to own, operate and lease its properties and
assets and carry on its
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business as now conducted and proposed to be conducted as discussed in the
Company Reports (as defined below). The Company has delivered to Parent true and
correct copies of the Certificate of Incorporation and By-Laws of the Company
and of the comparable organizational documents of each Subsidiary of the
Company, each of which is in full force and effect.
(b) AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS. The Company has
the requisite corporate power and authority to execute and deliver this
Agreement and the Ancillary Agreements to which it is a party, to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by the Company of
this Agreement and such Ancillary Agreements, the performance of its obligations
hereunder and thereunder and the consummation by the Company of the transactions
contemplated hereby and thereby have been duly and validly authorized by the
Board of Directors of the Company, and no other action on the part of the
Company or any shareholder thereof is necessary to authorize the execution and
delivery by the Company of this Agreement or such Ancillary Agreements, to
perform the obligations hereunder or thereunder or to consummate the
transactions contemplated hereby or thereby (other than the approval of this
Agreement and the Merger by the holders of a majority of the shares of Company
Common Stock). The Board of Directors of the Company, acting on the
recommendation of a duly constituted special committee of independent directors,
has duly adopted resolutions determining that the Merger is advisable and the
terms of this Agreement and the Merger are fair to, and in the best interests
of, the Company and the Company's shareholders. This Agreement has been, and
upon execution as contemplated herein, each Ancillary Agreement to which the
Company is a party, will have been, duly and validly executed and delivered by
the Company, and (assuming due execution and delivery of this Agreement and each
of such Ancillary Agreements by each other party hereto and thereto) constitutes
the valid and binding obligation of the Company, enforceable against the Company
in accordance with its terms.
(c) COMPLIANCE WITH LAWS. Except as set forth on Schedule 3.1(c) of
the Disclosure Letter, neither the Company nor any of its Subsidiaries is in
violation of any foreign, federal, state or local law, statute, ordinance, rule,
regulation, order, judgment, ruling or decree ("LAWS") of any foreign, federal,
state or local judicial, legislative, executive, administrative or regulatory
body or authority or any court, arbitration, board or tribunal (each such
entity, a "GOVERNMENTAL ENTITY") applicable to the Company or any of its
Subsidiaries or any of their respective properties or assets, except for
violations which, individually or in the aggregate, would not have a Material
Adverse Effect.
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(d) CAPITALIZATION OF THE COMPANY. (i) As of the date hereof, the
authorized capital stock of the Company consists of 50,000,000 shares of Company
Common Stock and 10,000,000 shares of Preferred Stock and (A) 24,376,556 shares
of Company Common Stock are issued and outstanding, (B) 1,313,086 shares of
Preferred Stock are issued and outstanding, (C) options to purchase an aggregate
of 10,578,500 shares of Company Common Stock are outstanding (the "OPTIONS"),
10,578,500 shares of Company Common Stock are reserved for issuance upon the
exercise of outstanding Options and 300,000 shares are reserved for future
grants under all stock option or other incentive plans or arrangements of the
Company (the "COMPANY STOCK PLANS"), and there are no stock appreciation rights
or limited stock appreciation rights or other equity-related rights or awards
outstanding other than the Options, (D) warrants to purchase 5,758,771 shares of
Company Common Stock are outstanding (the "WARRANTS"), and 5,758,771 shares are
reserved for issuance upon the exercise of the Warrants, and (E) no shares of
Company Common Stock or Preferred Stock are held by the Company's Subsidiaries
or in treasury. Except for the Warrants, the Options and the shares of Preferred
Stock outstanding, the Company has no outstanding bonds, debentures, notes or
other obligations, instruments or securities entitling the holders thereof to
vote (or which are convertible into or exercisable for securities having the
right to vote) with the shareholders of the Company on any matter. Schedule
3.1(d) of the Disclosure Letter sets forth for each Option and Warrant
outstanding as of the date hereof, (I) its exercise price, (II) its expiration
date, (III) the first date upon which it becomes exercisable, and (IV) the
number of shares of Company Common Stock (or other securities) for which it is
exercisable.
(ii) Except as set forth on Schedule 3.1(d)(ii), of the Disclosure
Letter, since June 30, 1999 the Company has not (A) issued any shares of its
capital stock, (B) granted any options or warrants to purchase any shares of its
capital stock or (C) split, combined or reclassified any shares of its capital
stock. All issued and outstanding shares of Company Common Stock and Preferred
Stock are duly authorized, validly issued, fully paid, nonassessable and free of
preemptive rights.
(iii) Except for the Options, the Warrants, the outstanding shares of
Preferred Stock and the rights (the "COMPANY RIGHTS") distributed to holders of
Company Common Stock pursuant to the Rights Agreement, dated as of April 1, 1998
(in the form attached as Exhibit 2.1 to the SEC Form 8-A filed by the Company on
April 3, 1998), between the Company and American Stock Transfer & Trust Company
(the "RIGHTS AGREEMENT"), and except as set forth in this Section 3.1(d) or in
Schedule 3.1(d) of the Disclosure Letter, there are no other shares of capital
stock of the Company, no securities of the Company convertible into or
exchangeable for shares of capital stock or voting securities of the
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Company, and no existing options, warrants, calls, subscriptions, convertible
securities, or other rights, agreements or commitments which obligate the
Company or any of its Subsidiaries to issue, transfer or sell any shares of
capital stock of, or equity interests in, the Company or any of its
Subsidiaries. Except as set forth in the certificate of designation relating to
the outstanding shares of Preferred Stock, there are no outstanding obligations
of the Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any shares of capital stock of the Company and, other than outstanding
Options, there are no awards outstanding under any Company Stock Plans or any
other outstanding stock-related awards. There are no voting agreements, voting
trusts or other agreements or understandings to which the Company or any of its
Subsidiaries is a party (or, to the knowledge of the Company, to which any two
or more shareholders are parties, other than the Voting Agreement) with respect
to the voting of capital stock of the Company or any of its Subsidiaries.
(e) SUBSIDIARIES. Schedule 3.1(e) of the Disclosure Letter sets forth
for each Subsidiary of the Company: (I) its name and jurisdiction of
incorporation or organization; (II) its authorized capital stock or share or
equity capital; (III) the number of issued and outstanding shares of capital
stock or equity capital; and (IV) the legal and beneficial owner or owners of
such shares. Except as set forth on Schedule 3.1(e) of the Disclosure Letter,
each of the outstanding shares of capital stock or other equity interest of each
of the Company's Subsidiaries is duly authorized, validly issued, fully paid and
nonassessable, and is owned, directly or indirectly, by the Company free and
clear of all liens, pledges, security interests, claims or other encumbrances
(collectively, "ENCUMBRANCES"). Except for interests in the Company's
Subsidiaries or as set forth on Schedule 3.1(e) of the Disclosure Letter,
neither the Company nor any of its Subsidiaries owns directly or indirectly any
interest or investment (whether equity or debt) in any corporation, firm,
partnership, limited liability company, joint venture, business, association,
trust, business trust or other entity (each individually, along with any natural
person and any Government Entity, a "PERSON").
(f) NO VIOLATION; CONSENTS. (i) Except as set forth on Schedule
3.1(f) of the Disclosure Letter, neither the execution, delivery or performance
by the Company of this Agreement or any of the Ancillary Agreements nor the
consummation by the Company of the transactions contemplated hereby or thereby
will: (A) violate, conflict with or result in a breach of any provisions of the
Certificate of Incorporation or By-Laws (or comparable organizational documents)
of the Company or any of its Subsidiaries; (B) violate, conflict with, result in
a breach of any provision of, constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, result in
the termination or in a right of termination of, accelerate the performance
required by
12
or benefit obtainable under, result in the triggering of any payment or other
obligations pursuant to, result in the creation of any Encumbrance upon any of
the properties or assets of the Company or any of its Subsidiaries under, or
result in there being declared void, voidable, subject to withdrawal, or without
further binding effect, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust or any license, franchise, Permit,
lease, contract, plan, agreement or other instrument, commitment or obligation
to which the Company or any of its Subsidiaries is a party, by which the Company
or any of its Subsidiaries or any of their respective properties is bound, or
under which the Company or any of its Subsidiaries or any of their respective
properties is entitled to a benefit (each of the foregoing, to the extent the
same have any continuing force or effect, a "CONTRACT" and collectively,
"CONTRACTS"), except for any of the foregoing matters which, individually or in
the aggregate, would not have a Material Adverse Effect or prevent or materially
delay the consummation of the transactions contemplated hereby (a "MATERIAL
DELAYING EFFECT"); or (C) violate any Laws applicable to the Company, any of its
Subsidiaries or any of their respective assets or properties, except for
violations which, individually or in the aggregate, would not have a Material
Adverse Effect.
(ii) Except as set forth on Schedule 3.1(f) of the Disclosure Letter,
and other than the filings required under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 0000 (xxx "XXX XXX"), the Securities Exchange Act of 1934,
as amended (together with the rules and regulations promulgated thereunder, the
"EXCHANGE ACT"), the Securities Act of 1933, as amended (with respect to the
Registration Statement) or filings in connection with the maintenance of
qualification to do business in other jurisdictions (the filings disclosed in
the Disclosure Letter relating to this clause (ii), the other filings referred
to in this clause (ii) and the Other Antitrust Filings and Consents required or
permitted to be made or obtained, collectively, the "REGULATORY FILINGS"),
neither the execution, delivery or performance by the Company of this Agreement
or any of the Ancillary Agreements nor the consummation by the Company of the
transactions contemplated hereby or thereby will require any consent, approval
or authorization of, or declaration, filing or registration with, (A) any
Governmental Entity, including any such consent, approval, authorization,
declaration, filing or registration under any Laws of any foreign jurisdiction
relating to antitrust matters or competition ("FOREIGN ANTITRUST LAWS"), (B) any
other Law of any foreign jurisdiction, or (C) any other Person, except for those
consents, approvals, authorizations, declarations, filings or registrations the
failure of which to obtain or make, individually or in the aggregate, would not
have a Material Adverse Effect or a Material Delaying Effect.
13
(g) COMPANY REPORTS; ABSENCE OF UNDISCLOSED LIABILITIES. (i) Each
registration statement, report (including annual and quarterly reports), proxy
statement or information statement (as defined under the Exchange Act) and all
attachments and exhibits thereto prepared by the Company or relating to its
securities or properties since January 1, 1997, each in the form (including all
exhibits and amendments thereto) filed with the Securities and Exchange
Commission (the "SEC") (collectively, as amended or restated, the "COMPANY
REPORTS"), as of their respective dates (or the respective dates of the latest
amendments thereto or restatements thereof), (A) complied as to form in all
material respects with the applicable requirements of the Securities Act of
1933, as amended, and the rules and regulations thereunder (the "SECURITIES
ACT") and the Exchange Act and (B) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. Each of the consolidated balance
sheets included in or incorporated by reference in the Company Reports fairly
presented the financial position of the entity or entities to which it relates
as of its date, and each of the consolidated statements of results of operations
and consolidated statements of cash flows included in or incorporated by
reference in the Company Reports fairly presented the results of operations or
cash flows, as the case may be, of the entity or entities to which it relates
for the periods set forth therein, in each case in accordance with United States
generally accepted accounting principles consistently applied during the periods
involved.
(ii) Except as set forth on Schedule 3.1(g) of the Disclosure Letter,
neither the Company nor any of its Subsidiaries has any liabilities or
obligations, whether liquidated, accrued, contingent or otherwise, except (X)
liabilities and obligations in the respective amounts reflected or reserved
against in the consolidated balance sheet of the Company and its Subsidiaries as
of June 30, 1999 included in the Company Reports and (Y) liabilities and
obligations incurred in the ordinary course of business since that date which
individually or in the aggregate would not have a Material Adverse Effect.
(h) RIGHTS AGREEMENT; ABSENCE OF AFFILIATED SHAREHOLDER. (i) The
Company has duly amended the Rights Agreement to provide that none of the
approval, execution or delivery of this Agreement or the consummation of the
Merger will cause (X) the Company Rights to become exercisable under the Rights
Agreement, (y) Parent or Merger Sub (or any of their respective affiliates), to
be deemed an "Acquiring Person" (as defined in the Rights Agreement), or (Z)
result in the occurrence of a "Distribution Date" or "Triggering Event" (as
defined, respectively, in the Rights Agreement).
(ii) No shareholder of the Company is or, at any time during the
three-year period preceding the date hereof or the Effective Time, has been, an
"affiliated
14
shareholder" of the Company as such term is defined in Part Thirteen of the
Texas Business Corporation Act.
(i) LITIGATION. Except as disclosed in the Company Reports, there are
no claims, actions, suits, proceedings, arbitrations, investigations or audits
(collectively, "LITIGATION") by a third party (including a Governmental Entity)
pending or, to the knowledge of the Company, threatened against the Company or
any of its Subsidiaries, other than those which, individually or in the
aggregate, would not have a Material Adverse Effect. Except as disclosed in the
Company Reports, no Governmental Entity has advised the Company or any of its
Subsidiaries of an intention to conduct any audit, investigation or other review
with respect to the Company or any of its Subsidiaries that the Company
reasonably believes would be material.
(j) ABSENCE OF CERTAIN CHANGES. Except as set forth in the Company
Reports or on Schedule 3.1(j) or 3.1(d) of the Disclosure Letter, since June 30,
1999, the Company and its Subsidiaries have conducted their business only in the
ordinary course of such business consistent with past practices, and there has
not occurred (I) any Material Adverse Effect; (II) any declaration, setting
aside or payment of any dividend or other distribution with respect to the
capital stock of the Company or any of its Subsidiaries (other than Subsidiaries
that, at all times since June 30, 1999, have been wholly-owned, directly or
indirectly, by the Company) or any repurchase, redemption or any other
acquisition by the Company or any of its Subsidiaries of any outstanding shares
of capital stock or other securities of, or other ownership interests in, the
Company or any of its Subsidiaries; (III) any change in accounting principles,
practices or methods used by the Company or any of its Subsidiaries; (IV) any
entering into or amendment of any employment agreement, which is, or would be
required to be, set forth on Schedule 3.1(m), with, or any increase in the rate
or terms (including, without limitation, any acceleration of the right to
receive payment) of compensation payable, or to become payable, by the Company
or any of its Subsidiaries to, their respective directors, officers or
employees; (V) any entering into or amendment of any increase in the rate or
terms (including, without limitation, any acceleration of the right to receive
payment) of any bonus, insurance, pension or other employee benefit plan or
arrangement covering any such directors, officers or employees; (VI) any
revaluation by the Company or any of its Subsidiaries of any of their respective
assets except for write-downs and write-offs not exceeding $500,000 or
equivalent in the aggregate or for which specific reserves were made in the
preparation of the consolidated balance sheet of the Company and its
Subsidiaries, as at June 30, 1999, included in the Company Reports; (VII) any
transaction or commitment made by the Company or any of its Subsidiaries to buy
or sell any assets that are or would be material to the Company's business; or
(VIII) any other transaction or
15
event that, had it occurred after the date of this Agreement, would constitute a
breach of the covenant set forth in Section 4.2(b).
(k) TAXES. Except as set forth on Schedule 3.1(k) of the Disclosure
Letter:
(i)(A) All Tax Returns relating to the Company and each of its
Subsidiaries or the business or assets thereof that were required to be filed on
or before the Closing Date have been duly and timely filed and are correct and
complete in all material respects, (B) all Taxes shown as owing on such Tax
Returns have been paid, and (C) neither the Company nor any of its Subsidiaries
is currently the beneficiary of any extension of time within which to file any
Tax Return which has not been filed.
(ii)(A) All material Taxes that are or may become payable by the
Company or any of its Subsidiaries or chargeable as an Encumbrance upon the
assets thereof as of the Closing Date for which the filing of a Tax Return is
not required have been duly and timely paid, (B) the Company and each of its
Subsidiaries has duly and timely withheld all material Taxes required to be
withheld in connection with the business or assets of such person, and such
withheld Taxes have been either duly and timely paid to the proper governmental
authorities or properly set aside in accounts for such purpose, and (C) the
Company Reports reflect an adequate reserve for all material Taxes payable or
asserted to be payable by the Company or any of its Subsidiaries for all taxable
periods or portions thereof through the date of the most recent financial
statements set forth therein.
(iii) There has been no claim or issue (other than a claim or issue
that has been finally settled) concerning any liability for Taxes of the Company
or any of its Subsidiaries asserted, raised or, to the knowledge of the Company,
threatened by any taxing authority.
(iv) Schedule 3.1(k) of the Disclosure Letter lists all Income Tax
Returns that have been filed with respect to the Company and any of its
Subsidiaries for taxable periods ended on or after January 1, 1992 and that have
not yet been audited or are currently the subject of audit.
(v) Neither the Company nor any of its Subsidiaries has (A) waived
any statute of limitations, (B) agreed to any extension of the period for
assessment or collection or (C) executed or filed any power of attorney with
respect to Taxes, which waiver, agreement or power of attorney is currently in
force.
16
(vi)(A) There are no outstanding adjustments under Section 481 of the
Code (or similar or analogous provision of state, local or foreign law) for
Income Tax purposes applicable to the Company or any of its Subsidiaries
required as a result of changes in methods of accounting effected on or before
the Closing Date, and (B) no material elections for Income Tax purposes have
been made by the Company or any of its Subsidiaries that are currently in force
or by which the Company or any of its Subsidiaries is bound.
(vii) Neither the Company nor any of its Subsidiaries (A) is a party
to or bound by or has any obligation under any Tax allocation, sharing,
indemnity or similar agreement or arrangement, or (B) is or has been a member of
any group of companies filing a consolidated, combined or unitary Income Tax
Return.
(l) EMPLOYEE BENEFIT PLANS. (i) Schedule 3.1(l) of the Disclosure
Letter lists all bonus, deferred compensation, pension, retirement,
profit-sharing, thrift, savings, employee stock ownership, stock bonus, stock
purchase, restricted stock, stock option plans, or any other employee benefit
plan, program, agreement, or arrangement, whether written or unwritten and
regardless of whether they are funded or unfunded or U.S. or non-U.S., with, for
the benefit of, or covering employees or former employees of the Company and its
Subsidiaries whether maintained by the Company or its Subsidiaries or with
respect to which the Company or its Subsidiaries have any liability, including
any "employee benefit plans" within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") ("COMPANY BENEFIT
PLANS"). The Company has provided Parent with a true and correct copy of each of
the Company Benefit Plans (or a true and correct description of any unwritten
Company Benefit Plan) and all contracts relating thereto, or to the funding
thereof, and the two most recent annual reports and actuarial valuations (if
applicable) relating to each Company Benefit Plan.
(ii) The Company is not aware that any officer, executive or key
employee or any group of employees of the Company or any of its Subsidiaries has
any plans to terminate his, her or its employment.
(iii) Each Company Benefit Plan and Employment Agreement conforms in
all material respects to, and its administration is in conformity in all
material respects with, all applicable laws. No material liability has been or
is expected to be incurred by the Company or any of its Subsidiaries with
respect to any Company Benefit Plan and Employment Agreement except for benefits
payable or contributions due under the terms of such plans or agreements, and
full payment has been made of all amounts that the
17
Company or any of its Subsidiaries is required to have paid as contributions to
each Company Benefit Plan and Employment Agreement. All Company Benefit Plans
intended and Employment Agreements to satisfy applicable tax qualification
requirements or other requirements necessary to secure favorable tax or other
legal treatment comply in all material respects with such requirements, and
adequate accruals for all obligations under the Company Benefit Plans and
Employment Agreements are reflected in the financial statements of the Company.
Neither the Company nor any of its Subsidiaries nor any of their ERISA
Affiliates has ever maintained, contributed to or incurred or expects to incur
any liability under Title IV of ERISA. Except as set forth on Schedule 3.1(l) of
the Disclosure Letter, (A) the execution of, and performance of the transactions
contemplated in, this Agreement will not (either alone or upon the occurrence of
any additional or subsequent events) constitute an event under any benefit plan,
policy, arrangement or agreement or any trust or loan that will or may result in
any payment (whether of severance pay or otherwise), acceleration, forgiveness
of indebtedness, vesting, distribution, increase in benefits or obligation to
fund benefits with respect to any employee and (B) no payment or benefit which
will or may be made by the Company, any of its Subsidiaries or Parent with
respect to any employee, officer or director will constitute an "excess
parachute payment" within the meaning of Section 280G(b)(1) of the Code.
(iv) Except as described in the Company Reports or listed on Schedule
3.1(l) of the Disclosure Letter, neither the Company nor any of its Subsidiaries
maintains or contributes to any plan or arrangement which provides or has any
liability to provide life insurance or medical or other employee welfare
benefits to any employee or former employee upon his or her retirement or
termination of employment, and neither the Company nor any of its Subsidiaries
has ever represented, promised or contracted (whether in written form or, to the
knowledge of the Company, in unwritten form) to any employee or former employee
that such benefits would be provided. None of the Company Benefit Plans is a
Multiemployer Plan or a Single Employer Plan within the meaning of ERISA.
(m) LABOR AND EMPLOYMENT MATTERS. (i) Schedule 3.1(m) of the
Disclosure Letter lists , as of October 15, 1999, each officer and employee of
the Company and any of its Subsidiaries. Not more than 30 additional employees
were hired by the Company and its Subsidiaries between October 15, 1999 and the
date hereof. Except as set forth on Schedule 3.1(m) of the Disclosure Letter,
(I) neither the Company nor any of its Subsidiaries is a party to, or bound by,
any collective bargaining agreement or other Contracts or understanding with a
labor union or labor organization; and (II) there is no (X) unfair labor
practice, labor dispute (other than routine individual grievances) or labor
18
arbitration proceeding pending or, to the knowledge of the Company, threatened
against the Company or any of its Subsidiaries, (Y) activity or proceeding by a
labor union or representative thereof to organize any employees of the Company
or any of its Subsidiaries, or (Z) lockouts, strikes, slowdowns, work stoppages
or threats thereof by or with respect to such employees. The Company and each of
its Subsidiaries is in substantial compliance with all Laws regarding
employment, employment practices, terms and conditions of employment and wages
and hours.
(ii) There are no pending or, to the knowledge of the Company,
threatened claims for indemnification by the Company or any of its subsidiaries
in favor of directors, officers, employees and agents of the Company or any of
its Subsidiaries.
(iii) Except for (a) any benefits to be provided to employees under
any Company Benefit Plan, (b) any benefits to be provided to employees under any
Employment Agreement and (iii) compensation payable in the ordinary course for
services rendered within the payroll period immediately preceding the date
hereof, the Company and its Subsidiaries have no liabilities with respect to any
employees, other than as reflected in the Company Reports or on Schedule 3.1(m)
of the Disclosure Letter.
(n) BROKERS AND FINDERS. Except for CIBC World Markets Corp. pursuant
to an engagement letter, a true and complete copy of which has previously been
delivered to Parent, no broker, dealer or financial advisor is entitled to
receive from the Company or any of its Subsidiaries any broker's, finder's or
investment banking fee in connection with this Agreement or the transactions
contemplated hereby.
(o) LICENSES AND PERMITS. Schedule 3.1(o) of the Disclosure Letter
sets forth a complete and correct list of all licenses, concessions, permits,
certificates of need, approvals and authorizations (collectively, "PERMITS")
from all Governmental Entities held by the Company and its Subsidiaries. Such
Permits are sufficient to enable the Company and its Subsidiaries to lawfully
conduct their respective businesses as presently conducted in all material
respects. No Permit listed, or required to be listed, on Schedule 3.1(o) of the
Disclosure Letter is subject to revocation, forfeiture or renegotiation by
virtue of any existing circumstances affecting the Company and its Subsidiaries
or by virtue of the execution and delivery of this Agreement by the Company and
the consummation of the transactions contemplated hereby. There is no Litigation
pending or, to the knowledge of the Company, threatened to modify or revoke any
Permit, and no Permit is subject to any outstanding order, decree, judgment,
stipulation, or investigation that would be likely to affect such Permit or the
rights of the Company or
19
any of its Subsidiaries thereunder, except for instances of any of the foregoing
matters which, individually or in the aggregate, would not have a Material
Adverse Effect.
(p) ENVIRONMENTAL MATTERS. Except as set forth on Schedule 3.1(p) of
the Disclosure Letter, and except where the failure of any of the following to
be true and correct would not have a Material Adverse Effect:
(i) The Company and its Subsidiaries are in compliance with all
Environmental Laws and the requirements of any permits issued under such
Environmental Laws with respect to any properties or assets of the Company
or any of its Subsidiaries ("COMPANY PROPERTY");
(ii) There are no past, pending or, to the knowledge of the Company,
threatened material Environmental Claims against the Company, any of its
Subsidiaries or any Company Property; and
(iii) There are no facts, circumstances, conditions or occurrences
regarding any Company Property or any property adjoining or in the
vicinity of any Company Property, that could reasonably be anticipated (i)
to form the basis of a material claim under any Environmental Law against
the Company, any of its Subsidiaries or any Company Property or (II) to
cause such Company Property or assets to be subject to any restrictions on
its ownership, occupancy, use or transferability under any Environmental
Law.
(q) MATERIAL CONTRACTS. Except as set forth on Schedule 3.1(q) of the
Disclosure Letter, none of the Company and any of its Subsidiaries is bound by
(A) any agreement, contract or commitment providing for annual payments of more
than $250,000, (B) any agreement, indenture or other instrument which contains
restrictions with respect to payment of dividends or any other distribution in
respect of its capital stock providing for annual payments of more than
$250,000, (C) any agreement, indenture or instrument relating to indebtedness
providing for annual payments of more than $250,000, (D) any agreement or
contract with any Affiliate providing for annual payments of more than $250,000,
(E) any interconnection agreement providing for annual payments of more than
$250,000, (F) any employment, consulting, severance, "change of control" or
other similar agreements, understandings or arrangements, whether written or
unwritten, which cover any employee or former employee of the Company or any of
its Subsidiaries (the "EMPLOYMENT AGREEMENTS"). The Company has provided Parent
with a true and correct copy of each of the Employment Agreements (or a true and
complete description of each unwritten Employment Agreement) (in each case,
which may entitle any Person
20
to receive payments from the Company or any of its Subsidiaries in excess of
$100,000 per year) or any other similar type of contract, (G) any material
license, contract or agreement transferring, providing for or restricting the
use of, or settling any claim with respect to, any Intellectual Property, or (H)
any agreement, contract or commitment limiting the ability of the Company or any
of its Subsidiaries to engage in any line of business or to compete with any
Person or to otherwise acquire property or conduct business in any area. Except
as otherwise set forth on Schedule 3.1(q) of the Disclosure Letter, each
contract or agreement set forth on Schedule 3.1(q) of the Disclosure Letter (or
required to be set forth in Section 3.1(q) of the Disclosure Letter) is in full
force and effect and there exists no material default or material event of
default or to the knowledge of each of the Company and each of its Subsidiaries,
event, occurrence, condition or act (including the consummation of the Merger)
which, with the giving of notice, the lapse of time or the happening of any
other material event or condition, would become a default or event of default
thereunder.
(r) ASSETS. Except as set forth in the Company Reports, the Company
and its Subsidiaries own, or otherwise have sufficient and legally enforceable
rights to use, all of the properties and assets (real, personal or mixed,
tangible or intangible), used or held for use in connection with, necessary for
the conduct of, or otherwise material to, the business and operations of the
Company and its Subsidiaries (the "ASSETS"). The Company and its Subsidiaries
have good, valid and marketable title to, or in the case of leased property has
good and valid leasehold interests in, all Assets that are material to their
respective businesses and operations, including but not limited to all such
Assets reflected in the Company Reports or acquired since the date most recent
thereof (except any that have been disposed of in the ordinary course of
business after the date hereof and in accordance with this Agreement), in each
case free and clear of any Encumbrance, except Permitted Encumbrances. The
Company and its Subsidiaries have maintained all tangible Assets that are
material to their respective businesses and operations in good repair, working
order and operating condition subject only to ordinary wear and tear, and all
such tangible Assets are fully adequate and suitable for the purposes for which
they are presently being used. Schedule 3.1(r) of the Disclosure Letter sets
forth a list as of August 31, 1999 of all tangible Assets that are material to
the business and operations of the Company and its Subsidiaries and identifies
the location of such Assets.
(s) INTELLECTUAL PROPERTY; TECHNOLOGY. (i) Except as otherwise
indicated on Schedule 3.1(s) of the Disclosure Letter the Company and its
Subsidiaries own the entire right, title and interest in and to the Marks, the
Copyrights and the Patents free and clear of any Encumbrances except for
Permitted Encumbrances. Each item that is indicated as registered on Schedule
3.1(s) of the Disclosure Letter has been duly registered, filed with
21
or issued by the appropriate authorities in the countries indicated on Schedule
3.1(s) of the Disclosure Letter and to the knowledge of the Company, all such
registrations, filings and issuances remain in full force and effect. Except as
otherwise indicated on Schedule 3.1(s) of the Disclosure Letter, none of the
Marks, the Copyrights or the Patents are the subject of any pending, or to the
Company's knowledge, threatened opposition, interference, cancellation
proceeding or other legal or governmental proceeding before a registration or
issuing authority in any jurisdiction. Except as otherwise disclosed in Schedule
3.1(s) of the Disclosure Letter, the conduct of the business of the Company and
its Subsidiaries as presently conducted does not infringe, violate, or
constitute misappropriation of any Intellectual Property of any other Person,
nor, since January 1, 1997, has the Company or any of its Subsidiaries received
notice to the contrary from any Person. The Company and its Subsidiaries own or
have the right to use through assignment, lease, license or other agreement all
Intellectual Property necessary for the conduct of the business as presently
conducted. Except as set forth in Schedule 3.1(s) of the Disclosure Letter,
there are no pending, or to the Company's knowledge, threatened material claims
by any Person for infringement of any Intellectual Property or unfair
competition by the Company or any of its Subsidiaries. Except as set forth in
Schedule 3.1(s) of the Disclosure Letter, to the Company's knowledge no Person
is infringing upon the Intellectual Property owned by, assigned to or subject to
assignment of, the Company or any of its Subsidiaries, and the Company and its
Subsidiaries are aware of no facts that would support such a claim. The
consummation of the transaction contemplated hereby will not result in the loss
or impairment of the Company's or any of its Subsidiaries' right to own or use
any of the Intellectual Property necessary to the conduct of the business as
presently conducted (including, but not limited to the Marks, the Copyrights and
the Patents) nor will it require the consent of any governmental authority or
third party.
(ii) The costs to the Company and its Subsidiaries of reprogramming
required to permit the proper functioning in and following the year 2000, of the
(I) computer systems and (II) equipment containing embedded microchips, in each
case, owned or operated by the Company or any of its Subsidiaries and the
testing of all such systems and equipment (including, without limitation,
reprogramming errors) could, individually or in the aggregate, not reasonably be
expected to have a Material Adverse Effect. Except for the cost of such of the
reprogramming referred to in this Section 3.1(s) as may be necessary, the
computer and management information systems of the Company and its Subsidiaries
are sufficient to permit the Company and its Subsidiaries to conduct its
business without material interruption arising out of any failure to be Year
2000 Compliant and without such conduct resulting in a Material Adverse Effect.
22
(t) INSURANCE. All insurance policies maintained by or on behalf of
any the Company or any Subsidiary are in full force and effect, and all premiums
due thereon have been paid. The Company and each Subsidiary has complied in all
material respects with the terms and provisions of such policies. The Company
has delivered to Parent complete and correct copies of its directors and
officers liability insurance policies, which policies are in full force and
effect.
(u) AFFILIATE TRANSACTIONS. Except as otherwise described in the
Company's Proxy statement for its 1999 annual meeting of shareholders (the "1999
PROXY") or on Schedule 3.1(u) of the Disclosure Letter, each agreement,
contract, arrangement, understanding, transfer of assets or liabilities or other
commitment or transaction between the Company or any Subsidiary of the Company,
on one hand, and any Person who is (or, at the time such agreement, contract,
arrangement, understanding, transfer, commitment or transaction was entered into
or made, was) a shareholder, director or employee of the Company or any
Subsidiary of the Company (or other Person controlled, directly or indirectly,
by any of the foregoing), on the other hand (collectively, "AFFILIATE
TRANSACTIONS"), is on terms and conditions at least as favorable to the Company
(or such Subsidiary, as the case may be) as would be obtainable by it in a
comparable arm's-length transaction with a Person unrelated to any shareholder,
director or employee of the Company or any of its Subsidiaries. All Affiliate
Transactions having effect or outstanding as of the date hereof that are
material to the Company or any of its Subsidiaries are described in the 1999
Proxy or on Schedule 3.1(u) of the Disclosure Letter.
(v) OPINION. The board of directors of the Company has received an
opinion of CIBC World Markets Corp. (the "OPINION"), to the effect that, as of
the date of such opinion, the equity ownership of the Company's shareholders in
RV is fair from a financial point of view to the holders of the Company Common
Stock. The Company has been authorized by CIBC World Markets Corp. to permit the
inclusion of the Opinion in its entirety and references thereto, subject to
prior review of, and consent to, such inclusion and references by CIBC World
Markets Corp. and its counsel (such consents not to be unreasonably withheld or
delayed), in the Proxy Statement.
(w) STATE STATUTES. The Board of Directors of the Company has
approved the terms of this Agreement and the Merger, and such approval is
sufficient to render inapplicable the provisions of Part Thirteen of the Texas
Business Corporation Act (the "TBCA") to the extent, if any, that such Section
is applicable to the Merger, this Agreement and the transactions contemplated
hereunder. To the knowledge of the Company (based on consultation with outside
legal counsel), except for the DGCL and the TBCA,
23
no other state takeover statute or similar statute or regulation applies or
purports to apply to the Merger, this Agreement or the transactions contemplated
hereunder.
(x) NO EXTORTION PAYMENTS. None of the Company or any of its
Subsidiaries has made, or has agreed to make, any payment in connection with any
Person's scheme or plan to demand money or property in exchange for (i) the
safety of any Person or (II) the ability of any Person to conduct otherwise
legal business.
(y) NO IMPROPER PAYMENTS. None of the Company or any of its
Subsidiaries nor any Person acting on behalf of any of them has paid or
delivered, or promised to pay or deliver, directly or indirectly through any
other Person, any monies or anything of value to (I) any person or firm employed
by or acting for or on behalf of any customer or supplier, whether private or
governmental, or (II) any government official or employee or any political
party, for the purpose of illegally or improperly inducing or rewarding any
action by such customer, supplier, official, employee or political party
favorable to the Company or any of its Subsidiaries.
(z) NO VENEZUELAN INVESTMENTS. As of the date hereof, the Company
does not operate any business or have any investment in any person operating any
business in Venezuela.
III.2. REPRESENTATIONS AND WARRANTIES OF PARENT. Parent hereby
represents and warrants to the Company as of the date hereof and as of the
Closing Date as follows:
(a) EXISTENCE; GOOD STANDING; CORPORATE AUTHORITY. Each of Parent, RV
and Merger Sub, and each member of the Jamtis Group, is (I) a corporation or
limited liability company, as the case may be, duly organized, validly existing
and in good standing (to the extent that "good standing" is a cognizable legal
concept under applicable law) under the laws of its jurisdiction of
incorporation and (II) is duly licensed or qualified to do business and is in
good standing under the laws of any other state of the United States or any
other jurisdiction in which the character of the properties owned or leased by
it or in which the transaction of its business makes such licensure,
qualification or good standing necessary, except where the failure to be so in
good standing or to be so licensed or qualified, individually or in the
aggregate, would not have a material adverse effect on the business, operations,
results of operations, assets or financial condition of RV or Merger Sub, or on
the ability of Parent, RV or Merger Sub to consummate the transactions
contemplated herein (an "ACQUIROR MATERIAL ADVERSE EFFECT"). Each of RV and
Merger Sub, and each member of the Jamtis Group, has the requisite corporate
power and authority to own, operate and lease its properties and assets and
carry on its business.
24
True and correct copies of the Certificate of Incorporation and Bylaws of each
of RV and Merger Sub as of the date hereof are attached as Exhibit A. The
organizational documents of RV, Merger Sub and, as of the Closing Date, each
member of the Jamtis Group, are or will be in full force and effect.
(b) AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS. Each of Parent,
RV and Merger Sub has the requisite corporate power and authority to execute and
deliver this Agreement and the Ancillary Agreements to which it is a party, to
perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The execution and delivery by each
of Parent, RV and Merger Sub of this Agreement and the Ancillary Agreements to
which it is a party, the performance of its obligations hereunder and thereunder
and the consummation by it of the transactions contemplated hereby and thereby
have been duly and validly authorized by the Board of Directors of Parent or by
the shareholder or shareholders of RV and Merger Sub, as the case may be, and no
other corporate proceedings on the part of Parent, RV or Merger Sub are
necessary to authorize this Agreement or the Ancillary Agreements (to which any
of them is a party), to perform the obligations hereunder or thereunder or to
consummate the transactions contemplated hereby or thereby. This Agreement and,
upon execution as contemplated herein, each Ancillary Agreement to which Parent,
RV or Merger Sub is a party, has been duly and validly executed and delivered by
Parent, RV and/or Merger Sub, as the case may be, and (assuming due execution
and delivery of this Agreement and each of the Ancillary Agreements by each
other party hereto and thereto), constitutes the valid and binding obligation of
Parent, RV or Merger Sub, as the case may be, enforceable against Parent, RV or
Merger Sub, as the case may be, in accordance with its terms.
(c) COMPLIANCE WITH LAWS. None of Parent, RV, Merger Sub or any
member of the Jamtis Group is in violation of any Laws applicable to Parent, RV,
Merger Sub or such member, or any of its properties or assets, except for
violations which, individually or in the aggregate, would not have an Acquiror
Material Adverse Effect.
(d) CAPITALIZATION. (i) As of the date hereof, the authorized capital
stock of RV consists of 1,000 shares of common stock, par value $.01 per share,
and 1,000 shares of common stock are issued and outstanding. As of the Closing
Date, the aggregate number of shares of capital stock of RV shall be not more
than the sum of (I) 80,848,204, plus (II) the product of (X) such number of
shares of Preferred Stock issued or accrued as paid-in-kind dividends from
November 1, 1999 to the Closing Date, and (Y) 2.077. All issued and outstanding
shares of capital stock of RV and of Merger Sub are duly authorized, validly
issued, fully paid, non-assessable and free of pre-emptive rights. As
25
of the Closing, except for approximately 10% of the aggregate number of shares
of capital stock of RV that will be owned by Promon, in the form of shares of RV
Class A Common Stock, all issued and outstanding shares of capital stock of RV
will be owned, directly or indirectly, by Parent, in the form of shares of RV
Class B Common Stock, all issued and outstanding shares of capital stock of
Merger Sub are owned directly by RV and all issued and outstanding shares or
quota, as the case may be, of each member of the Jamtis Group are owned
indirectly by RV, in each case free and clear of Encumbrances (other than any
Encumbrances created by Promon as to the shares of RV Class A Common Stock owned
by it). None of RV, Merger Sub or any member of the Jamtis Group has any
outstanding bonds, debentures, notes or other similar obligations, instruments
or securities entitling the holders thereof to vote (or which are convertible
into or exercisable for securities having the right to vote) with the
shareholders of RV, Merger Sub or such member on any matter. As of the date
hereof and as of the Closing Date, the amount and ownership of the issued equity
capital of each member of the Jamtis Group are as set forth on Schedule 3.2(d)
of the RV Disclosure Letter.
(ii) Except as described in this Agreement or in the Netstream
Acquisition Agreements, or as set forth in the RV Disclosure Letter, there are
no other shares of capital stock (or quota, as the case may be) of RV, Merger
Sub or any member of the Jamtis Group, no securities of RV, Merger Sub or any
member of the Jamtis Group convertible or exchangeable for shares of capital
stock, voting securities (or quota, as the case may be) of RV, Merger Sub or any
member of the Jamtis Group, and no existing options, warrants, calls,
subscriptions, convertible securities, or other rights, agreements or
commitments which obligate RV, Merger Sub or any member of the Jamtis Group to
issue, transfer or sell any shares of capital stock of RV, Merger Sub or any
member of the Jamtis Group.
(e) NO VIOLATION; CONSENTS. (i) Neither the execution, delivery or
performance by Parent, RV and Merger Sub of this Agreement or any of the
Ancillary Agreements nor the consummation by Parent, RV and Merger Sub of the
transactions contemplated hereby or thereby will: (X) violate, conflict with or
result in a breach of any provisions of the Certificate of Incorporation or
Bylaws of any of Parent, RV, Merger Sub or any member of the Jamtis Group; (Y)
violate, conflict with, result in a breach of any provision of, constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, result in the termination or in a right of
termination of, accelerate the performance required by or benefit obtainable
under, result in the triggering of any payment or other obligations pursuant to,
result in the creation of any Encumbrance upon any of the properties or assets
of RV, Merger Sub or any member of the Jamtis Group under, or result in there
being declared void, voidable, subject to
26
withdrawal, or without further binding effect, any of the terms, conditions or
provisions of any contract to which any of RV or Merger Sub is a party, by which
any of RV, Merger Sub or any member of the Jamtis Group or any of their
respective properties are bound, or under which any of RV, Merger Sub or any
member of the Jamtis Group or any of their respective properties are entitled to
a benefit, except for any of the foregoing matters which, individually or in the
aggregate, would not have an Acquiror Material Adverse Effect or a Material
Delaying Effect; or (Z) violate any Laws applicable to any of RV, Merger Sub or
any member of the Jamtis Group or any of its assets or properties, except for
violations which, individually or in the aggregate, would not have an Acquiror
Material Adverse Effect.
(ii) Other than the filings required under the HSR Act, the Exchange
Act, notifications to the SUPERINTENDENCIA DE VALORES Y SEGUROS of Chile and the
SUPERINTENDENCIA DE INDUSTRIA Y COMERCIO of Colombia and filings in connection
with the maintenance of qualification to do business in other jurisdictions
required or permitted to be made or obtained by Parent, RV or Merger Sub,
neither the execution, delivery or performance by Parent, RV and Merger Sub of
this Agreement or any of the Ancillary Agreements nor the consummation by
Parent, RV and Merger Sub of the transactions contemplated hereby or thereby
will require any consent, approval or authorization of, or declaration, filing
or registration with, (A) any Governmental Entity, including any such consent,
approval, authorization, declaration, filing or registration under any Foreign
Antitrust Laws, (B) any other Law of any foreign jurisdiction, or (C) any other
Person, except for those consents, approvals, authorizations, declarations,
filings or registrations the failure of which to obtain or make, individually or
in the aggregate, would have an Acquiror Material Adverse Effect or a Material
Delaying Effect.
(iii) Neither RV nor any of its Subsidiaries has any liabilities or
obligations, contingent or otherwise, except liabilities and obligations arising
hereunder or under the Netstream Acquisition Agreements and/or, as of the
Closing, liabilities and obligations (A) arising under the Brand License, the RV
Agreement, the Executive Agreement and under any bond tender offer arrangements
being undertaken by RV, if any, and (B) incurred in the ordinary course of
business following the Final Closing under the Netstream Acquisition Agreements
which individually or in the aggregate would not have an Acquiror Material
Adverse Effect.
(f) NETSTREAM ACQUISITION AGREEMENTS. Parent has delivered to the
Company complete and correct copies of the Netstream Acquisition Agreements
(including all exhibits, schedules and other attachments thereto), as executed
and delivered by the parties thereto (or in the form to be executed and
delivered at the closing thereunder).
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Each of the Netstream Acquisition Agreements is (or, following execution and
delivery, as the case may be, will be) in full force and effect in accordance
with its terms.
(g) LITIGATION. There is no Litigation claim by a third party
(including a Governmental Entity) pending or, to the knowledge of Parent,
threatened against Parent, RV, Merger Sub or any member of the Jamtis Group,
other than those which, individually or in the aggregate, would not have an
Acquiror Material Adverse Effect. No Governmental Entity has indicated an
intention to conduct any audit, investigation or other review with respect to RV
or Merger Sub.
(h) PROXY STATEMENT. None of the information supplied by Parent for
inclusion in the Proxy Statement, at the respective times filed with the SEC and
distributed to shareholders of the Company, will contain any untrue statement of
a material fact or omit to state any material fact relating to Parent, RV,
Merger Sub or any member of the Jamtis Group required to be stated therein or
necessary in order to make the statements therein relating to Parent, RV, Merger
Sub or any member of the Jamtis Group in light of the circumstances under which
they were made, not misleading.
(i) BROKERS AND FINDERS. No actions by Parent, RV or Merger Sub or by
any Person acting on behalf of either of them has given rise to any valid claim
against the Company, RV, Merger Sub or any member of the Jamtis Group for any
broker's, finder's or investment banking fee in connection with this Agreement
or the transactions contemplated hereby.
ARTICLE IV
COVENANTS
IV.1. NO SOLICITATION. (a) The Company and its Subsidiaries shall,
and shall direct and use reasonable best efforts to cause their respective
officers, directors, employees, representatives and agents to, immediately cease
any discussions or negotiations with any parties other than Parent (or RV or
Merger Sub) that may be ongoing with respect to an Acquisition Proposal. The
Company and its Subsidiaries shall not, and shall not authorize or permit any of
their respective officers, directors or employees or any investment banker,
financial advisor, attorney, accountant or other representative to, directly or
indirectly, (I) solicit, initiate or encourage (including by way of furnishing
non-public information), or take any other action to facilitate, any inquiries
or the making of any proposal that constitutes, or may reasonably be expected to
lead to,
28
an Acquisition Proposal, (II) participate in any discussions or negotiations
regarding an Acquisition Proposal; PROVIDED, HOWEVER, that if, at any time prior
to the approval of the Merger by the holders of a majority of the shares of
Company Common Stock, the Board of Directors of the Company determines in good
faith, having received the advice of outside counsel concerning its fiduciary
duties to the Company's shareholders under applicable law, the Company, in
response to an Acquisition Proposal that (A) was unsolicited or that did not
otherwise result from a breach of this Section 4.1(a) (subject to compliance
with Sections 4.1(c) and 4.1(d)), and (B) constitutes a Superior Proposal, may
(I) furnish non-public information with respect to the Company and its
Subsidiaries to the person who made such Acquisition Proposal pursuant to a
customary confidentiality agreement and (II) participate in negotiations
regarding such Acquisition Proposal. Without limiting the foregoing, it is
understood that any violation of the restrictions set forth in the preceding
sentence by any director or officer of the Company or any of its Subsidiaries or
any authorized investment banker, financial advisor, attorney, accountant or
other representative of the Company or any of its Subsidiaries, acting on behalf
of the Company or any of its Subsidiaries, shall be deemed to be a breach of
this Section 4.1(a) by the Company.
(b) Neither the Board of Directors of the Company nor any committee
thereof shall (I) withdraw or modify, or propose to withdraw or modify, in a
manner adverse to Parent, the approval or recommendation by such Board of
Directors or such committee of the Merger unless there is a Superior Proposal
outstanding, (II) approve or recommend, or propose to approve or recommend, an
Acquisition Proposal unless such Acquisition Proposal is a Superior Proposal or
(III) cause the Company to enter into any letter of intent, agreement in
principle, acquisition agreement or other agreement (an "ACQUISITION AGREEMENT")
with respect to an Acquisition Proposal unless such Acquisition Proposal is a
Superior Proposal, and unless, in each case, such Board of Directors shall have
(A) determined in good faith, based on the advice of outside counsel, that
failure to do so would constitute a breach of its fiduciary duties to the
Company's shareholders under applicable law and (B) delivered a notice of
termination to Parent pursuant to Section 6.1(c).
(c) The Company shall promptly (but in any event within one day)
advise Parent orally and in writing of any Acquisition Proposal or any inquiry
delivered to or received by the chief executive officer, any other senior
officer or any director of the Company regarding the making of an Acquisition
Proposal including any request for information, the material terms and
conditions of such request, Acquisition Proposal or inquiry and the identity of
the person making such request, Acquisition Proposal or inquiry. The Company
will, to the extent reasonably practicable, keep Parent fully
29
informed of the status and details (including amendments or proposed amendments)
of any such request, Acquisition Proposal or inquiry. In addition to the
foregoing, the Company will deliver to Parent a written notice (the "ACQUISITION
AGREEMENT NOTICE") not less than five days prior to entering into any
Acquisition Agreement.
(d) Nothing contained in this Section 4.1 shall prohibit the Company
from at any time taking and disclosing to its shareholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act or from making
any disclosure to the Company's shareholders if, in the good faith judgment of
its Board of Directors, based upon the advice of outside counsel, failure so to
disclose would constitute a breach of its fiduciary duties to the Company's
shareholders under applicable law; PROVIDED, HOWEVER, that neither the Company
nor its Board of Directors nor any committee thereof shall, except as permitted
by Section 4.1(b), withdraw or modify, or propose to withdraw or modify, its
position with respect to this Agreement or approve or recommend, or propose to
approve or recommend, an Acquisition Proposal; and PROVIDED, FURTHER, that the
taking of a position by the Company pursuant to Rule 14e-2(a)(2) or (3) of the
Exchange Act in respect of an Acquisition Proposal shall not be deemed a
withdrawal, a modification or a proposal to do either, of its position with
respect to this Agreement for purposes hereof.
IV.2. CONDUCT OF BUSINESS. (a) From the date hereof to and including
the Closing Date, except as set forth on Schedule 4.2(a) of the Disclosure
Letter or as otherwise required pursuant to this Agreement, unless Parent has
consented in writing thereto, the Company shall, and shall cause each of its
Subsidiaries to:
(i) conduct its operations according to its usual, regular
and ordinary course of business in accordance with its current business
plan;
(ii) use its reasonable best efforts to preserve intact its
business organization and goodwill, to maintain in effect all existing
qualifications, licenses, Permits, approvals and other authorizations
referred to in Sections 3.1(a) and 3.1(o), to keep available the services
of its officers and employees and to maintain satisfactory relationships
with customers, suppliers, distributors, brokers, sales agents and all
other persons having business relationships with it;
(iii) promptly notify Parent upon becoming aware of any
material breach of any representation, warranty or covenant contained in
this Agreement or the occurrence of any event that would cause any
representation or warranty of the Company contained in this Agreement no
longer to be true and correct or any covenant of the Company contained in
this Agreement not to be complied with;
30
(iv) timely file with the SEC, and promptly deliver to
Parent, true and correct copies of all reports, statements or schedules or
other filings required to be filed by the Company under the Securities Act
or Exchange Act with the SEC subsequent to the date of this Agreement; and
(v) deliver, as promptly as reasonably practicable but in any
event within 30 business days after the end of each accounting month,
monthly consolidated financial statements for the Company and its
Subsidiaries for and as of the end of each such month.
(b) From the date hereof to and including the Closing Date, except as
set forth on Schedule 4.2(b) of the Disclosure Letter, unless Parent has
consented in writing thereto, the Company shall not, and shall not permit any of
its Subsidiaries to:
(i) amend its Certificate of Incorporation or By-Laws or
comparable governing instruments;
(ii) except as otherwise provided in this Section 4.2(b),
issue, sell, pledge or otherwise dispose of any shares of its capital
stock or other ownership interest in the Company or any of the
Subsidiaries, or any securities convertible into or exchangeable for any
such shares or ownership interest, or any rights, warrants or options to
acquire or with respect to any such shares of capital stock, ownership
interest, or convertible or exchangeable securities, except (A) issuances
of shares of Company Common Stock in respect of any exercise of Options or
Warrants outstanding on the date hereof and disclosed in the Disclosure
Letter, (B) issuances of shares of Company Common Stock in respect of any
conversion of the Company's Series A preferred stock outstanding at the
time immediately prior to such issuance, and (C) issuance of newly created
shares of preferred stock of the Company that are redeemable at the option
of the Company (and the Surviving Corporation or RV, as the case may be)
on or, at the Company's election, at any time after the Closing Date,
PROVIDED that the sum of (1) the aggregate redemption price of such
newly-created shares of preferred stock as of the Closing Date, and (2)
the aggregate principal amount of any indebtedness incurred under
subclause (B) of clause (xi) of this Section 4.2, does not exceed
US$20,000,000; or accelerate any right to convert or exchange or acquire
any securities of the Company or any of its Subsidiaries for any such
shares or ownership interest;
31
(iii) effect any stock split, reverse stock split, stock
dividend, subdivision, reclassification or similar transaction, or
otherwise change its capital structure as it exists on the date hereof;
(iv) grant, confer, award or amend any option, warrant,
convertible security or other right to acquire any shares of its capital
stock or take any action to cause to be exercisable any otherwise
unexercisable option under any Company Stock Plan, PROVIDED that this
Section 4.2(b) shall not prohibit or restrict the Company from granting
unvested options to acquire up to 300,000 shares of Company Common Stock
prior to the Closing Date ("INTERIM COMPANY OPTIONS"), PROVIDED FURTHER,
that no Interim Company Options (I) shall be granted except in the
ordinary course of business to employees of the Company and its
Subsidiaries as of the date hereof and employees of the Company and its
Subsidiaries hired by the Company or such Subsidiaries after the date
hereof, or (II) shall become vested according to their terms as a result
of the consummation of the Merger and other transactions contemplated
hereby;
(v) declare, set aside or pay any dividend or make any other
distribution or payment with respect to any shares of Common Stock or
other capital stock or ownership interests (other than such payments by a
majority-owned Subsidiary to the Company or another majority-owned
Subsidiary);
(vi) directly or indirectly redeem, purchase or otherwise
acquire any shares of its capital stock or the capital stock of any of its
Subsidiaries;
(vii) sell, lease, assign, transfer or otherwise dispose of
(by merger or otherwise) any of its property, business or assets
(including, without limitation, receivables, leasehold interests or
Intellectual Property and including any sale and leaseback transaction)
except for fair value in the ordinary course of business provided that the
proceeds of such sales do not exceed $50,000 in any single transaction or
$100,000 in the aggregate prior to the Closing Date;
(viii) settle or compromise any pending or threatened
Litigation other than settlements of Litigations which involve solely the
payment of money (without admission of liability) not to exceed $250,000
in any one case or $500,000 in the aggregate;
(ix) make any advance, loan, extension of credit or capital
contribution to, or purchase or acquire (by merger or otherwise) any
stock, bonds,
32
notes, debentures or other securities of, or any assets constituting a
business unit of, or make any other investment in (other than capital
contributions to Subsidiaries of the Company made in accordance with the
Company's current business plan), any person, firm or entity, except (A)
extensions of trade credit and endorsements of negotiable instruments and
other negotiable documents in the ordinary course of business, (B)
investments in cash and cash equivalents, (c) payroll and travel advances
in the ordinary course of business and (D) investments in majority-owned
Subsidiaries;
(x) make any capital expenditures in the aggregate for the
Company and its Subsidiaries in excess of the amounts specified in the
Company's current budget for capital expenditures, a true and complete
copy of which has been delivered to Parent, or otherwise acquire assets
having a value, in the aggregate, in excess of $150,000 not in the
ordinary course of business;
(xi) incur, assume or create any indebtedness for borrowed
money or for the deferred purchase price for property or services or
pursuant to any capital lease or other financing, except (A) indebtedness
incurred in the ordinary course of business consistent with past practice
for working capital purposes pursuant to the Company's existing credit
facilities as disclosed in the Disclosure Letter or equipment financing
facilities referred to in the Company's current budget for capital
expenditures and (b) for the incurrence or creation of such indebtedness
that is prepayable by its terms without penalty or premium in excess of
___% of the proceeds received from the incurrence or creation of such
indebtedness at any time on or after the Closing Date, PROVIDED that the
sum of (1) the aggregate principal amount of such indebtedness incurred or
created pursuant to this subclause, and (2) the aggregate redemption price
of all shares of preferred stock issued under clause (ii) of this Section
4.2(b), does not exceed US$20,000,000;
(xii) take any action to assume, guarantee or otherwise
become liable or responsible (whether directly, contingently or otherwise)
for the obligations of any other Person except majority-owned Subsidiaries
of the Company and except for obligations in the ordinary course of
business consistent with the past practice of the Company not exceeding
$50,000 individually and $150,000 in the aggregate;
(xiii) make any material Tax election (unless required by law
or unless consistent with prior practice) or settle or compromise any
material Income Tax liability except, in each case, with the express
consent of Parent;
33
(xiv) waive or amend any term or condition of any
confidentiality or "standstill" agreement to which the Company is a party
and which relates to a business combination with or involving the Company
or the purchase of shares or assets of the Company;
(xv) grant or amend any stock-related or performance awards
except as otherwise permitted herein;
(xvi) enter into or amend any legally binding employment,
severance, retention, change in control, consulting or salary continuation
agreement with any officer, director, employee or former employee of the
Company or any of its Subsidiaries (which would involve, together with all
other such agreements, aggregate payments by the Company or any of its
Subsidiaries the payment by Company or any of its Subsidiaries of more
than $250,000 in the aggregate or grant any increases in compensation or
benefits to employees other than increases to officers and employees in
the ordinary course of business consistent with the past practice of the
Company;
(xvii) adopt, amend or terminate any employee benefit plan,
policy, understanding or arrangement;
(xviii) enter into any agreements that would constitute
Material Contracts; or amend any of the foregoing agreements as exist on
the date hereof other than in the ordinary course of business;
(xix) amend, change or waive (or exempt any Person from the
effect of) the Rights Agreement, except for Parent, RV and Merger Sub in
connection with the transactions contemplated by this Agreement;
(xx) make any material changes in the type or amount of
insurance coverage;
(xxi) except as may be required by law or generally
acceptable accounting principles and with prior written notice to Parent,
change any accounting principles or practices used by the Company or its
Subsidiaries;
(xxii) effect any material change in the Company's
advertising, services promotion or brand support policies or programs or
commit to any significant new product promotion or advertising campaign
except, in each case, for matters in the ordinary course of business of
the Company;
34
(xxiii) effect any material change in the Company's billing
practices or sales terms, or cause a material acceleration or delay in the
collection of accounts or notes receivable or the payment of accounts or
notes payable;
(xxiv) waive, relinquish, release or terminate any right or
claim, including any such right or claim under any Material Contract or
permit any rights of material value to use any Intellectual Property to
lapse or be forfeited, in each case, except in the ordinary course of
business consistent with the past practice of the Company;
(xxv) apply for, consent to, or acquiesce in, the appointment
of a trustee, receiver, sequestrator or other custodian for any
substantial part of the property of the Company or any Subsidiary, or make
a general assignment for the benefit of creditors, or permit or suffer to
exist the commencement of any bankruptcy, reorganization, debt arrangement
or other case or proceeding under any bankruptcy or insolvency law, or any
dissolution, winding up or liquidation proceeding, in respect of the
Company or any Subsidiary;
(xxvi) acquire, invest in or enter into any arrangement or
contract with any person having operations in Venezuela of a nature
conducted by any of the parties hereto; or
(xxvii) agree in writing or otherwise to take any of the
foregoing actions.
(c) If the Company shall have given notice to Parent of an action as
to which it seeks consent pursuant to section 4.2(b), such notice to describe
the relevant matters in reasonable detail, and Parent shall not have objected
within 15 days, the Company may take the action described in such notice.
IV.3. FILINGS; OTHER ACTION. Subject to the terms and conditions
herein provided, the Company and Parent shall: (I) promptly make their
respective filings and thereafter make any other required submissions under the
HSR Act with respect to the Merger; (II) cooperate and consult with one another
in (A) determining which Regulatory Filings are required or, in the case of
Other Antitrust Filings, permitted to be made prior to the Effective Time with,
and which consents, approvals, Permits, authorizations or waivers (collectively,
"CONSENTS") are required or, in the case of Other Antitrust Consents, permitted
to be obtained prior to the Closing Date from Governmental Entities or other
Persons in connection with the execution and delivery of this Agreement and the
35
consummation of the transactions contemplated hereby, including, without
limitation, (I) all such Regulatory Filings and Consents as relate to Foreign
Antitrust Laws (the "OTHER ANTITRUST FILINGS" and the "OTHER ANTITRUST
CONSENTS," respectively; collectively, the "OTHER ANTITRUST FILINGS AND
CONSENTS") and (II) all Consents required to transfer to the Company any Permits
or registrations held on behalf of the Company or any of its Subsidiaries by or
in the name of distributors, brokers or sales agents; (B) preparing all
Regulatory Filings and all other filings, submissions and presentations required
or prudent to obtain all Consents, including by providing to the other party
drafts of such material reasonably in advance of the anticipated filing or
submission dates; and (C) timely making all such Regulatory Filings and timely
seeking all such Consents (it being understood that the parties will make or
seek to obtain all Other Antitrust Filings and Consents, whether mandatory or
voluntary); and (III) use their reasonable best efforts to take, or cause to be
taken, all other action and do, or cause to be done, all other things necessary,
proper or appropriate to consummate and make effective the transactions
contemplated by this Agreement. Each of Parent and the Company shall use its
reasonable best efforts to contest any proceeding seeking a preliminary
injunction or other legal impediment to, and to resolve any objections as may be
asserted by any Governmental Entity with respect to the Merger under the HSR Act
or Foreign Antitrust Laws; PROVIDED that the foregoing shall not require Parent
to take any action that could directly or indirectly (A) impose limitations on
the ability of Parent (or any of its affiliates or Subsidiaries) effectively to
acquire, operate or hold, or require Parent or the Company or any of their
respective affiliates or Subsidiaries to dispose of or hold separate, any
portion of their respective assets or business that (I) is either material to
the business of Parent and its Subsidiaries or material to the business of the
Company and its Subsidiaries, or (II) is reasonably likely to have a Material
Adverse Effect, (B) restrict any future business activity by Parent, the Company
or any of their affiliates or Subsidiaries that (I) is either material to the
business of Parent and its Subsidiaries or material to the business of the
Company and its Subsidiaries, or (II) is reasonably likely to have a Material
Adverse Effect, including, without limitation, requiring the prior consent of
any Governmental Entity to future transactions by Parent, the Company or any of
their affiliates or Subsidiaries, or (C) otherwise adversely affect Parent, the
Company or any of their respective affiliates or Subsidiaries in a manner that
(I) is either material to the business of Parent and its Subsidiaries or
material to the business of the Company and its Subsidiaries, or (II) is
reasonably likely to have a Material Adverse Effect. If, at any time after the
Closing Date, any further action is necessary or desirable to carry out the
purpose of this Agreement, the proper officers and directors of Parent and the
Company shall take all such necessary action.
36
IV.4. ACCESS TO INFORMATION; PRE-CLOSING REVIEW. From the date of
this Agreement to the Closing Date, the Company shall, and shall cause its
Subsidiaries to, (I) give Parent and its authorized representatives full access
during normal business hours to all books, records, personnel, research and
other consultants, offices and other facilities and properties of the Company
and its Subsidiaries and its accountants (and shall use its reasonable best
efforts to give Parent and such representatives access to such accountants' work
papers, as Parent may reasonably request), (II) permit Parent to make such
copies and inspections thereof as Parent may reasonably request and (III)
furnish Parent with such financial and operating data and other information with
respect to the business and properties of the Company and its Subsidiaries as
Parent may from time to time reasonably request; provided that no investigation
or information furnished pursuant to this Section 4.4 shall affect any
representations or warranties made by the Company herein or the conditions to
the obligations of Parent to consummate the transactions contemplated hereby.
The Company acknowledges that it has been afforded an adequate opportunity to
investigate the properties, assets, liabilities, personnel and records of
Netstream. Prior to the closing under the Netstream Acquisition Agreements,
Parent will use its reasonable best efforts to assist the Company in obtaining
any further information as to Netstream that the Company may reasonably request.
From and after the date of the Final Closing under the Netstream Acquisition
Agreements, Parent shall, and shall cause its Subsidiaries to, (I) give the
Company and its authorized representatives full access during normal business
hours to all books, records, personnel, research and other consultants, offices
and other facilities and properties of Netstream and Netstream's accountants
(and shall use its reasonable best efforts to give the Company and such
representatives access to such accountants' work papers), (II) permit the
Company to make such copies and inspections thereof as the Company may
reasonably request and (III) furnish the Company with such financial and
operating data and other information with respect to the business and properties
of Netstream as the Company may from time to time reasonably request.
IV.5. PUBLICITY. Except as otherwise required by law, each of the
Company and Parent shall obtain the prior written consent of the other party
(which consent will not be unreasonably withheld or delayed) before issuing any
press release or otherwise making (or proposing publicly to make) any public
statement with respect to the transactions contemplated hereby or by any of the
Ancillary Agreements and in making any filings with any national securities
exchange with respect thereto.
IV.6. FURTHER ACTION. (a) Each party hereto shall, subject to the
fulfillment at or before the Closing Date of each of the conditions of
performance set forth herein or the
37
waiver thereof, perform such further acts and execute such documents as may be
reasonably required to effect the Merger.
(b) The Company shall not, and cause its Subsidiaries not to, and
Parent shall not, and shall cause RV and Merger Sub not to, take any action that
could reasonably be expected to result in (I) any of its representations and
warranties set forth in this Agreement that are qualified by materiality
becoming untrue, (ii) any of such representations and warranties that are not so
qualified becoming untrue in any material respect or (III) any of the conditions
set forth in Article V not being satisfied (subject to the Company's right to
take actions specifically permitted by Section 4.1). The Company shall use, and
the Company shall cause its Subsidiaries to use, and each of Parent, RV and
Merger Sub shall use, their reasonable efforts to take, or cause to be taken,
all action, and to do, or cause to be done, all things necessary, proper or
advisable under applicable Laws to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation,
using their reasonable efforts to satisfy the conditions contained in Article V.
(c) The Company and Parent shall confer on a regular and frequent
basis as reasonably requested by either of them. Each of Parent and the Company
shall promptly notify the other in writing of the occurrence of any event that
will or may result in the failure to satisfy any of the conditions to the other
party's obligations specified in Article V. The Company will promptly provide to
Parent (and its counsel) copies of all filings made by the Company with any
Governmental Entity in connection with this Agreement and the transactions
contemplated hereby and shall promptly advise Parent orally and, if requested by
Parent, in writing of any Material Adverse Effect.
IV.7. INSURANCE; INDEMNITY. For a period of six years after the
Closing Date, Parent shall cause RV or the Surviving Corporation to maintain
officers' and directors' liability insurance covering the parties who are
currently covered, in their capacities as officers and directors, by the
Company's existing officers' and directors' liability insurance policies (the
"CURRENT POLICIES") on terms substantially no less advantageous to such parties
than such Current Policies and providing for aggregate coverage of 300% of the
amount covered by the Current Policies.
IV.8. SHAREHOLDER APPROVAL; PREPARATION OF PROXY STATEMENT. (a)
Subject to the provisions of this Agreement, the Company will (I) duly call,
give notice of, convene and hold a special meeting of its shareholders (the
"SHAREHOLDER MEETING") for the purpose of obtaining a vote upon the Merger and
(II) through its Board of Directors,
38
declare the advisability of the Merger and recommend to its shareholders that
the Company Shareholder Approval be given.
(b) Subject to the provisions of this Agreement, the Company and RV
will prepare and file a preliminary proxy statement (such proxy statement, and
any amendments or supplements thereto, the "PROXY Statement") and a registration
statement in appropriate form (the "REGISTRATION STATEMENT") with the SEC and
will use their respective reasonable best efforts to respond to any comments of
the SEC or its staff, to cause the Proxy Statement to be cleared by the SEC and
to have the Registration Statement declared effective under the Securities Act
as soon as practicable after responding to all such comments to the satisfaction
of the staff. Each of the Company and RV will notify the other party promptly of
its receipt of any comments from the SEC or its staff and of any request by the
SEC or its staff for amendments or supplements to the Proxy Statement and/or the
Registration Statement or for additional information and will supply the other
party with copies of all correspondence between it or any of its
representatives, on the one hand, and the SEC or its staff, on the other hand,
with respect to the Proxy Statement, the Registration Statement or the Merger.
The Company agrees to notify RV a reasonable time prior to any filing or
distribution of the Proxy Statement or the Registration Statement of such filing
or distribution. Each of the Company and RV shall give the other party and its
counsel (who shall provide any comments thereon as soon as practicable) the
opportunity to review and approve the Proxy Statement and the Registration
Statement prior to filing with the SEC and shall give the other party and its
counsel (who shall provide any comments thereon as soon as practicable) the
opportunity to review all amendments and supplements to the Proxy Statement and
the Registration Statement and all responses to requests for additional
information and replies to comments prior to their being filed with, or sent to,
the SEC. Each of the Company and RV agrees to use its reasonable best efforts,
after consultation with the other party, to respond promptly to all such
comments of and requests by the SEC. As promptly as practicable after the Proxy
Statement has been cleared by the SEC, the Company shall mail the Proxy
Statement to the shareholders of the Company. If at any time prior to the
Shareholders Meeting there shall occur any event that should be set forth in an
amendment or supplement to the Proxy Statement, the Company will promptly
prepare and mail to its shareholders such an amendment or supplement. The
Company will not mail or distribute any proxy statement or (except with respect
to shares of Company Common Stock reserved for issuance upon the exercise of
Options or Warrants outstanding on the date hereof not exceeding 100,000 of such
shares) registration statement, or any amendment or supplement thereto, to which
RV reasonably objects; PROVIDED that RV shall identify its objections and fully
cooperate with the Company to create a mutually satisfactory Proxy Statement and
Registration Statement.
39
(c) Notwithstanding anything to the contrary in this Agreement,
without the prior written consent of RV, the Company shall neither (I) call a
Shareholder Meeting for the purpose of voting on the Merger, nor (II) file a
proxy statement or offering document with the SEC or otherwise publish a proxy
statement or offering document, unless and until the Company shall be in
compliance with all reporting requirements applicable to the Company under the
Securities Act and the Exchange Act except such requirements, the failure of
with which to comply, would not, individually or in the aggregate, have a
Material Adverse Effect.
IV.9. CERTAIN TAX MATTERS. (a) Each of Parent, RV, Merger Sub and the
Company intend the Merger to qualify as a reorganization under Sections
368(a)(1)(A) and 368(a)(2)(D) of the Code and shall use their best efforts to
cause the Merger to so qualify. Each of Parent, RV, Merger Sub and the Company
shall take the position for all purposes that the Merger qualifies as a
reorganization under those Sections of the Code. None of Parent, RV, Merger Sub
or the Company shall take any action that would reasonably be expected to cause
the Merger to fail to qualify as a reorganization within the meaning of Section
368(a) of the Code.
(b) Each of Parent, RV, Merger Sub and the Company shall cooperate
and use their best efforts in obtaining the opinions of Debevoise & Xxxxxxxx,
counsel to Parent, RV and Merger Sub, and Xxxxx & XxXxxxxx, counsel to the
Company, described in Sections 5.2(f) and 5.3(g), respectively. In connection
therewith, both the Company, on the one hand, and Parent, RV and Merger Sub, on
the other hand, shall deliver to Debevoise & Xxxxxxxx and Xxxxx & XxXxxxxx
representation letters substantially in the form attached hereto as Annex A (the
"REPRESENTATION LETTERS").
IV.10. SENIOR NOTES. As promptly as practicable following the date
hereof, the Company shall solicit waivers from holders of a requisite majority
or majorities of the Company's outstanding 14% Senior Notes due 2007 (the
"NOTES") of the applicability to the transactions contemplated hereby of certain
covenants set forth in the indenture governing the Notes, as identified by
Parent to the Company (such waivers, the "REQUISITE WAIVERS"). If requested by
RV, the Company shall prepare and distribute to the holders of the Notes, as
promptly as reasonably practicable following the date on which the Registration
Statement shall have been declared effective, an offer to purchase and consent
solicitation statement, on terms and conditions and in a form satisfactory to RV
(together with all related transmittal and consent forms and other documents
delivered to such holders, the "TENDER OFFER STATEMENT"), seeking the tender,
and the delivery of an accompanying consent by holders
40
of a requisite majority or majorities of outstanding principal amount of the
Notes ("REQUISITE MAJORITY") to the amendments to the indenture constituting the
Notes as are considered necessary or appropriate by RV. RV shall be entitled to
participate in the preparation of the Tender Offer Statement and in any
discussions with holders of Notes relating to the terms of any offer to purchase
Notes or solicitation of consents or waivers. The Company shall not distribute
to any Person the Tender Offer Statement or any written material relating to any
offer to purchase Notes or to the solicitation of any consents or waivers from
holders of the Notes, or make any announcement with respect to the Tender Offer
Statement or any such offer or solicitation, or engage, directly or through
intermediaries, in any discussions with any holder of Notes after the date
hereof, without the prior express approval of RV. Any registration statement, if
any, required in connection with any such offer or solicitation shall be in form
and substance satisfactory to RV, and RV shall be entitled to participate in the
preparation and filing thereof, and the Company shall cooperate in such
preparation and filing as the registrant thereunder. If RV shall have requested
the distribution of a Tender Offer Statement, at the Closing (provided that the
Requisite Majority has been obtained) the Company shall execute and deliver to
the trustee under the indenture relating to the Notes a supplemental indenture
in the form specified in, and otherwise in accordance with, such Tender Offer
Statement. On or prior to the settlement date of any tender offer, Parent shall,
and shall cause RV to, provide financing as necessary to enable the Company to
pay for tendered Notes, in a manner not inconsistent with the terms of the
Tender Offer Statement. The Company shall be responsible for all out-of-pocket
expenses incurred by it in connection with the making of any offers to purchase
Notes or solicitation as contemplated in this Section, PROVIDED that RV shall
pay and reimburse the Company for all out-of-pocket fees and expenses of outside
advisers actually incurred by the Company prior to the Closing if this Agreement
is terminated in accordance with Section 6.1(b)(i).
IV.11. ANCILLARY AGREEMENTS. At or prior to the Closing, and subject
to the fulfillment or waiver of all other conditions to Closing, each of Parent,
RV and the Company shall execute and deliver the Ancillary Agreements to which
it is a party.
IV.12. NETSTREAM PURCHASE PRICE ADJUSTMENT. If the amount Jamtis pays
to purchase the Netstream Shares is reduced pursuant to the Netstream
Acquisition Agreements, Parent shall, or shall cause its affiliates to, make a
cash capital contribution to RV in the amount of such reduction prior to the
Closing.
IV.13. CONDUCT OF BUSINESS OF RV AND NETSTREAM. (a) From the date
hereof to and including the date of the "Final Closing" (as such term is defined
in the Netstream Acquisition Agreements), Parent, as soon as reasonably
practicable, shall consult in good
41
faith with the Company concerning (I) any approval or waiver by Parent or Jamtis
with respect to actions by or concerning Netstream that are restricted under
Section 7.1(a) of the Netstream Master Agreement and (II) designating Xxxxx
Xxxxxx (or an affiliate of Xxxxx Xxxxxx) as a preferred supplier to Netstream.
Such consultation shall include meetings between the parties as reasonably
necessary.
(b) From the date hereof to and including the Closing Date, except as
set forth in Schedule 4.13(b) of the RV Disclosure Letter or as otherwise
required pursuant to this Agreement, unless the Company has consented in writing
thereto, RV shall, and shall cause each of its Subsidiaries to:
(i) use its reasonable best efforts to preserve intact its
business organization and goodwill, to maintain in effect all existing
qualifications, licenses, permits, approvals and other authorizations, to
keep available the services of its officers and employees and to maintain
satisfactory relationships with customers, suppliers, distributors,
brokers, sales agents and all other persons having business relationships
with it; and
(ii) promptly notify the Company upon becoming aware of any
material breach of any representation, warranty or covenant contained in
this Agreement or the occurrence of any event that would cause any
representation or warranty of Parent relating to RV or any of its
Subsidiaries no longer to be true and correct;
(c) From the date hereof to and including the Closing Date, except as
contemplated hereby or as set forth in Schedule 4.13(c) of the RV Disclosure
Letter, unless the Company has consented in writing thereto, RV shall not, and
shall not permit any of its Subsidiaries to (and Parent shall not, and/or shall
not cause RV and its Subsidiaries to):
(i) amend its Certificate of Incorporation or By-Laws or
comparable governing instruments;
(ii) issue, sell, pledge or otherwise dispose of any shares
of its capital stock or other ownership interest in RV or any of the
Subsidiaries, or any securities convertible into or exchangeable for any
such shares or ownership interest, or any rights, warrants or options to
acquire or with respect to any such shares of capital stock, ownership
interest, or convertible or exchangeable securities, except (a) issuances
related to the merger of Jamtis with a wholly-owned subsidiary of RV, (b)
issuances related to the contributions to the capital of RV contemplated
hereby,
42
and (C) following the closing under the Netstream Acquisition Agreements
and prior to the Closing, issuance or granting of unvested options to
acquire up to 625,000 shares of RV Class A Common Stock ("INTERIM RV
OPTIONS") to officers and employees of Netstream, PROVIDED that no Interim
RV Options shall become vested according to their terms as a result of the
consummation of the Merger and the other transactions contemplated hereby
and by the Netstream Acquisition Agreements;
(iii) effect any stock split, reverse stock split, stock
dividend, subdivision, reclassification or similar transaction, or
otherwise change its capital structure as it exists on the date hereof,
except as required in order to achieve an appropriate number of shares to
effect the share exchange contemplated in the Merger;
(iv) declare, set aside or pay any dividend or make any other
distribution or payment with respect to any shares of capital stock or
ownership interests (other than such payments by a wholly-owned Subsidiary
of RV to RV or to another such wholly-owned Subsidiary);
(v) directly or indirectly redeem, purchase or otherwise
acquire any shares of its capital stock or the capital stock of any of its
Subsidiaries;
(vi) sell, lease, assign, transfer or otherwise dispose of
(by merger or otherwise) any of its property, business or assets
(including, without limitation, receivables, leasehold interests or
Intellectual Property and including any sale and leaseback transaction)
except for fair value in the ordinary course of business provided that the
proceeds of such sales do not exceed $50,000 in any single transaction or
$100,000 in the aggregate prior to the Closing Date;
(vii) settle or compromise any pending or threatened
Litigation other than settlements of Litigations which involve solely the
payment of money (without admission of liability) not to exceed $50,000 in
any one case or $100,000 in the aggregate;
(viii) make any advance, loan, extension of credit or capital
contribution to, or purchase or acquire (by merger or otherwise) any
stock, bonds, notes, debentures or other securities of, or any assets
constituting a business unit of, or make any other investment in, any
person, firm or entity, except (A) extensions of trade credit and
endorsements of negotiable instruments and other negotiable documents in
the ordinary course of business, (B) investments in cash and cash
43
equivalents, (C) payroll and travel advances in the ordinary course of
business and (D) investments in majority-owned Subsidiaries;
(ix) incur, assume or create any indebtedness for borrowed
money or for the deferred purchase price for property or services or
pursuant to any capital lease or other financing, except indebtedness
incurred in the ordinary course of business for working capital or capital
expenditures;
(x) waive, relinquish, release or terminate any right or
claim, including any such right or claim under any Material Contract or
permit any rights of material value to use any Intellectual Property to
lapse or be forfeited, in each case, except in the ordinary course of
business;
(xi) apply for, consent to, or acquiesce in, the appointment
of a trustee, receiver, sequestrator or other custodian for any
substantial part of the property of RV or any Subsidiary, or make a
general assignment for the benefit of creditors, or permit or suffer to
exist the commencement of any bankruptcy, reorganization, debt arrangement
or other case or proceeding under any bankruptcy or insolvency law, or any
dissolution, winding up or liquidation proceeding, in respect of RV or any
Subsidiary;
(xii) amend the Netstream Acquisition Agreements in any
material respect;
(xiii) agree in writing or otherwise to take any of the
foregoing actions.
(d) If Parent or RV shall have given notice to the Company of an
action as to which it seeks consent pursuant to Section 4.13(c), such notice to
describe the relevant matters in reasonable detail, and the Company shall not
have objected within 15 days, RV and its Subsidiaries (and Parent, if
applicable) may take the action described in such notice.
IV.14. RV PUBLIC SHARES. Parent shall not take, or cause its
affiliates to take, any action in the twelve-month period following the
Effective Time to increase above 80% Parent's direct and indirect percentage
interest in the capital stock of RV, without the approval of all of the
Disinterested Directors of RV.
IV.15. CREDIT FACILITY. RV and Parent shall enter into a Credit
Facility containing terms and conditions in accordance with those in the term
sheet attached hereto as Exhibit F.
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ARTICLE V
CONDITIONS
V.1. CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective
obligation of each party to consummate the transactions contemplated hereby
shall be subject to the satisfaction or, where permissible, waiver, on or prior
to the Closing Date, of the following conditions:
(a) The waiting period applicable to the Merger under the HSR Act
shall have expired or been terminated.
(b) None of the parties shall be subject to any order, judgment,
injunction, decree or ruling, or other action of a court or other Governmental
Entity of competent jurisdiction restraining, enjoining or otherwise prohibiting
the Merger or any other transactions contemplated by this Agreement; PROVIDED
that each of the parties shall have used its reasonable best efforts to appeal
as promptly as practicable any such order, judgment, injunction, decree, ruling
or other action.
(c) The Company Shareholder Approval shall have been obtained in
accordance with the Texas Business Corporation Act and the Company's Certificate
of Incorporation and By-laws.
(d) The Registration Statement shall have become effective under the
Securities Act and shall not be the subject of any stop order or proceedings
seeking a stop order.
(e) All Regulatory Filings and Consents (including, without
limitation, the Other Antitrust Filings and Consents) which are necessary for
the consummation of the Merger shall have been made or obtained, or any waiting
period (whether requisite or voluntary) under any Foreign Antitrust Laws shall
have expired, in each case, to the extent that the failure to make or obtain
such Regulatory Filings or Consents or of the waiting period to have expired, in
the aggregate, is reasonably likely, individually or in the aggregate, to have a
Material Delaying Effect (all such Consents, Regulatory Filings and the lapse of
all such waiting periods being referred to as the "REQUISITE REGULATORY
APPROVALS"), and all such Requisite Regulatory Approvals shall be in full force
and effect.
45
There shall not be any statute, law, rule or regulation that makes consummation
of the transactions contemplated hereby illegal or prohibited.
(f) The Company shall have received the Requisite Waivers, and, if
Parent shall have requested the Company to prepare and distribute a Tender Offer
Statement, the holders of a Requisite Majority shall have tendered the Notes
held by them, and the Company shall have received written notice of the approval
of a Requisite Majority for the amendments and/or waivers described in the final
version of such Tender Offer Statement distributed to holders of Notes, and,
with respect to any Notes which remain outstanding, the Trustee with respect to
the Notes shall have executed and delivered to the Company a supplemental
indenture acceptable in form and substance to Parent.
(g) RV shall have acquired, directly or indirectly, the Netstream
Shares free and clear of any Encumbrances other than any Encumbrances created
pursuant to this Agreement.
V.2. ADDITIONAL CONDITIONS TO OBLIGATIONS OF PARENT, RV AND MERGER
SUB. The obligations of Parent, RV and Merger Sub to consummate the transactions
contemplated hereby shall be subject to the satisfaction or, where permissible,
waiver, on or prior to the Closing Date, of the following conditions:
(a) (I) The representations and warranties made by the Company in
this Agreement shall be true and correct in all respects as of the date hereof,
and shall be true and correct in all respects as of the Closing Date as if made
as of the Closing Date (other than representations and warranties made as of a
specified date), except where the failure to be so true and correct (without
giving effect to any materiality qualifications or thresholds contained in such
representations and warranties), individually and in the aggregate, would not
have a Material Adverse Effect, (II) the Company shall not have breached or
failed to comply in any material respect with any of its obligations under this
Agreement or any of the Ancillary Agreements to which it is a party, PROVIDED
that the Company shall have a 15 day period in which to cure breaches that are
reasonably likely to be curable, and (III) the Company shall have delivered to
Parent a certificate dated the Closing Date and signed by the Company's
President or a Vice President to the effect set forth above in this Section
5.2(a)(i).
(b) Each Ancillary Agreement shall have been executed and delivered
by each party thereto other than Parent, RV or Merger Sub and shall be in full
force and effect, in accordance with its terms.
46
(c) There shall not have been issued, delivered, sold or granted any
shares of Common Stock pursuant to the Rights Agreement.
(d) The Executive Agreement shall be in full force and effect in
accordance with its terms.
(e) All directors of the Company whose resignations shall have been
requested by Parent not less than five days prior to the Closing Date shall have
submitted their resignations or been removed from office effective as of the
Closing Date.
(f) Parent, RV and Merger Sub shall have received an opinion of
Debevoise & Xxxxxxxx, counsel to Parent, RV and Merger Sub, or other counsel of
national reputation, dated on or about the date of the mailing to the Company
shareholders of the Proxy Statement, which opinion shall be reconfirmed as of
the Effective Time, to the effect that, on the basis of the facts,
representations and assumptions set forth in such opinion, the Merger will be
treated for U.S. federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code, and that RV, Merger Sub and the Company
will each be a party to that reorganization within the meaning of Section 368(b)
of the Code. In rendering such opinion, such counsel may require and rely upon
the Representation Letters.
(g) FirstCom Colombia SA shall have duly completed a FUSION IMPROPIA
as provided in Schedule 5.2(g) (or such other corporate transaction as is
approved by Parent) and shall have received all requisite governmental approvals
with respect to the transfer or assumption of all material licenses and
concessions held by FirstCom Colombia SA as of the date such FUSION IMPROPIA is
effective, and Parent shall have received from Xxxxx & XxXxxxxx an opinion with
regard to the status of FirstCom Colombia in substantially the form previously
delivered to the Company.
(h) Parent shall have received such evidence as reasonably requested
that the Company has good and valid title to the shares owned by it of all of
its Subsidiaries.
(i) The Federal Communications Commission shall have given any
approval required in connection with the change of control of the Company.
V.3. ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE COMPANY. The
obligations of the Company to consummate the transactions contemplated hereby
are subject to the satisfaction or, where permissible, waiver, on or prior to
the Closing Date, of the following conditions:
47
(a) (i0 The representations and warranties made by Parent in this
Agreement shall be true and correct in all respects as of the date hereof, and
shall be true and correct in all respects as of the Closing Date as if made as
of the Closing Date (other than representations and warranties made as of a
specified date), except where the failure to be so true and correct (without
giving effect to any materiality qualifications or thresholds contained in such
representations and warranties), individually and in the aggregate, would not
have a Material Adverse Effect, (II) none of Parent, RV or Merger Sub shall have
breached or failed to comply in any material respect with any of its obligations
under this Agreement to which it is a party, or any of the Ancillary Agreements
to which it is a party, PROVIDED that Parent, RV and Merger Sub shall have a 15
day period in which to cure breaches that are reasonably likely to be curable,
and (III) Parent shall have delivered to the Company a certificate dated the
Closing Date and signed by an authorized officer of Parent to the effect set
forth above in this Section 5.3(a).
(b) Each Ancillary Agreement shall have been executed and delivered
by each party thereto other than the Company and shall be in full force and
effect, in accordance with its terms.
(c) Parent shall have delivered a certificate to the Company
certifying as to the amount of any reduction, if any, in the purchase price paid
by Jamtis under the Netstream Acquisition Agreements, and the shareholders of RV
shall have contributed to the capital of RV an aggregate of not less than
$70,000,000 plus any additional amount required by Section 4.12, as equity in
cash.
(d) The RV Class A Common Stock shall have been accepted for listing
by a national securities exchange.
(e) Parent shall have caused to be duly elected as members of the
board of directors of RV (I) the Chief Executive Officer of the Company, (II) if
requested by Promon, one "Disinterested Director" (as defined in the Articles of
Incorporation of RV) nominated by Promon, and (III) two or, if Promon shall not
have nominated any Disinterested Director, three Disinterested Directors
proposed by Parent and agreed by the Company, and each of such Disinterested
Directors shall have agreed to serve in such capacity.
(f) The shareholders of RV shall have duly adopted the Amended and
Restated Certificate of Incorporation and Amended and Restated By-Laws of RV in
the form attached as Exhibit C, and the board of directors of RV shall have duly
adopted (I) a
48
Board Policy in the form of Exhibit B and (II) if any shares of Series A
preferred stock of the Company are outstanding, a Certificate of Designation
substantially in the form of Exhibit G.
(g) The Company shall have received an opinion of Xxxxx & XxXxxxxx,
counsel to the Company, or other counsel of national reputation, dated on or
about the date of the mailing to the Company shareholders of the Proxy
Statement, which opinion shall be reconfirmed as of the Effective Time, to the
effect that, on the basis of the facts, representations and assumptions set
forth in such opinion, the Merger will be treated for U.S. federal income tax
purposes as a reorganization within the meaning of Section 368(a) of the Code,
and that RV, Merger Sub and the Company will each be a party to that
reorganization within the meaning of Section 368(b) of the Code. In rendering
such opinion, such counsel may require and rely upon the Representation Letters.
ARTICLE VI
TERMINATION
VI.1. TERMINATION. This Agreement may be terminated at any time prior
to the Closing Date, notwithstanding approval thereof by the shareholders of the
Company:
(a) by mutual written consent of the Company and Parent;
(b) by Parent or the Company by written notice if:
(i) the Closing Date shall not have occurred on or before
April 30, 2000 (PROVIDED that the right to terminate this Agreement
pursuant to this clause (i) 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 Closing Date to occur on or before
such date); or
(ii) there shall be any statute, law, rule or regulation that
makes consummation of the transactions contemplated hereby illegal or
prohibited or if any court or other Governmental Entity of competent
jurisdiction shall have issued an order, judgment, decree or ruling, or
taken any other action restraining, enjoining or otherwise prohibiting the
Merger and such order, judgment, injunction, decree, ruling or other
action shall have become final and non-appealable, PROVIDED that the party
49
terminating this Agreement has complied with the provisions of the
penultimate sentence of Section 4.3;
(c) by the Company by written notice if:
(i) the Company shall have entered into or agreed to enter
into an Acquisition Agreement, PROVIDED that the Company shall have
delivered an Acquisition Agreement Notice in accordance with Section
4.1(c) and paid the Termination Amount and Parent Expenses as provided in
Section 7.7(b);
(ii) the Final Closing under the Netstream Acquisition
Agreements shall have failed to occur, or shall be incapable of occurring,
prior to April 30, 2000 in either case as a result of a breach of any
covenant of Parent or any of its affiliates thereunder; or
(iii) a "Material Adverse Effect", as defined in the
Netstream Master Agreement, shall have occurred with respect to Netstream.
(d) by Parent by written notice if:
(i) Any Person, other than Parent, RV, Merger Sub and any
other Person that would be included with the Parent in a "group" within
the meaning of Section 13(d) of the Securities Exchange Act of 1934, as
amended, shall have acquired beneficial ownership of 20% or more of the
outstanding shares of Company Common Stock;
(ii) Since the date hereof, there shall have occurred any
event, change, effect or development that, individually or in the
aggregate, would have a Material Adverse Effect, PROVIDED that such a
notice from Parent with respect to this subparagraph (ii) must be given
not later than 15 days after any notice from the Company to Parent that
such an event, change, effect or development has occurred, such notice to
describe the same in reasonable detail;
(iii) The Company shall have entered into an Acquisition
Agreement or the Board of Directors of the Company shall have (A)
withdrawn, modified or failed to maintain its recommendation to the
shareholders of the Company to approve the Merger in any manner adverse to
the ability of Merger Sub and Parent to complete the Merger hereunder, (B)
recommended an Acquisition Proposal or received from a financial advisor
to the Company of nationally recognized standing a fairness opinion with
respect to an Acquisition Proposal that indicates such
50
Acquisition Proposal is a Superior Proposal, or (C) authorized the
execution of an agreement in principle or a definitive agreement
relating to an Acquisition Proposal with a Person other than Parent;
or
(iv) The Shareholder Approval shall not have been obtained at
the Shareholder Meeting (including any postponement or adjournment
thereof).
VI.2. EFFECT OF TERMINATION. If this Agreement is terminated pursuant
to Section 6.1 hereof, this Agreement, except for the provisions of Section 6
and Article VII, shall terminate, without any liability on the part of any party
or its directors, officers or shareholders. Nothing herein shall relieve any
party to this Agreement from any liability for breach of this Agreement or
prejudice the ability of the non-breaching party to seek damages from any other
party for any breach of this Agreement, including without limitation, attorneys'
fees and the right to pursue any remedy at law or in equity. Notwithstanding
anything to the contrary in the foregoing, no party hereto shall be entitled to
bring any action, suit or claim under this Agreement for damages against any
other party hereto unless the amount of such damages exceeds $500,000 (provided
that, if the damages of the claiming party are found to have, or are agreed as
having, exceeded such amount on a cumulative basis, the full amount of such
damages will be recoverable).
ARTICLE VII
GENERAL PROVISIONS
VII.1. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement or in any document delivered
pursuant to this Agreement shall survive the Effective Time.
VII.2. AMENDMENT. To the extent permitted by applicable law, this
Agreement may be amended by action taken by or on behalf of the respective
Boards of Directors of the Company and Parent at any time before or after
approval of the Merger by the shareholders of the Company but, after any such
shareholder approval, no amendment shall be made which adversely affects the
rights of the Company's shareholders hereunder without the approval of such
shareholders owning a majority of the outstanding shares of Company Common
Stock. This Agreement may not be amended except by an instrument in writing
signed on behalf of the parties.
51
VII.3. EXTENSION; WAIVER. At any time prior to the Closing Date,
either party, may (I) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (II) waive any
inaccuracies in the representations and warranties contained herein by any other
applicable party or in any document, certificate or writing delivered pursuant
hereto by any other applicable party or (III) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of any
party to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
VII.4. NOTICES. Any notice required to be given hereunder shall be
sufficient if in writing, and sent by facsimile transmission (with a
confirmatory copy sent by overnight courier), by courier service (with proof of
service), hand delivery or certified or registered mail (return receipt
requested and first-class postage prepaid), addressed as follows:
If to Parent, RV or Merger Sub: If to the Company:
AT&T Corp. FirstCom Corporation
000 Xxxxx Xxxxx Xxxxxx 000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000 Xxxxx Xxxxxx, XX 00000
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxx Attention: General Counsel
General Attorney
With a copy (which copy shall not With a copy (which copy shall
constitute notice) to: not constitute notice) to:
Debevoise & Xxxxxxxx Xxxxx & XxXxxxxx
000 Xxxxx Xxxxxx 0000 Xxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 Xxxxx, XX 00000
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxx, Xx. Attention: Xxxxxx Xxxxx
52
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
VII.5. ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties; PROVIDED, HOWEVER, that Parent may assign
its rights hereunder to an affiliate but nothing shall relieve the assignor from
its obligations hereunder. Subject to the preceding sentence, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and assigns. Notwithstanding anything contained in
this Agreement to the contrary, nothing in this Agreement, expressed or implied,
is intended to confer on any person other than the parties hereto or their
respective heirs, successors, executors, administrators and assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
VII.6. ENTIRE AGREEMENT. This Agreement, the Disclosure Letter, the
Ancillary Agreements and any other documents delivered by the parties in
connection herewith or therewith constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings among the parties with respect thereto.
VII.7. FEES AND EXPENSES. (a) Except as expressly provided otherwise
herein, whether or not the transactions contemplated hereby are consummated, all
costs and expenses incurred in connection with the transactions contemplated
hereby shall be paid by the party incurring such expenses PROVIDED that any such
costs and expenses incurred by RV or Merger Sub shall be paid, or shall be
reimbursed to RV or Merger Sub, as the case may be, by Parent.
(b) If this Agreement is terminated pursuant to Section 6.1(c)(i) or
any of clauses (i) and (iii) of Section 6.1(d), the Company shall pay to Parent
as promptly as practicable in same-day funds an aggregate amount equal to the
sum of (I) $10,000,000 (the "TERMINATION AMOUNT") and (II) the out-of-pocket
expenses of Parent and its affiliates incurred in connection with or arising out
of this Agreement, the Ancillary Agreements and the transactions contemplated
hereby and thereby (including, without limitation, amounts paid or payable to
investment bankers (if any), information agents, lending banks, fees and
expenses of counsel, accountants and consultants and printing and mailing
expenses, regardless of when such expenses are incurred) (the "PARENT
53
EXPENSES"), PROVIDED that the maximum amount of Parent Expenses payable shall be
$1,000,000.
(c) If this Agreement is terminated pursuant to Section 6.1(c)(ii),
Parent shall pay to the Company the out-of-pocket expenses of the Company and
its affiliates incurred in connection with or arising out of this Agreement, the
Ancillary Agreements and the transactions contemplated hereby and thereby
(including, without limitation, any amounts paid or payable to investment
bankers, information agents, lending banks, fees and expenses of counsel,
accountants and consultants and printing and mailing expenses, regardless of
when such expenses are incurred) (the "COMPANY EXPENSES,") PROVIDED that the
maximum amount of Company Expenses payable shall be $1,000,000.
(d) If the Company fails to pay promptly any amounts owing pursuant
to Section 7.7(b) when due, the Company shall in addition thereto pay to Parent,
or if Parent fails to pay promptly any amounts owing pursuant to Section 7.7(c)
when due, Parent shall in addition thereto pay to the Company, in each case, all
costs and expenses (including, pursuant to Section 7.7(b), fees and
disbursements of counsel) incurred in collecting such amounts, together with
interest on such amounts (or any unpaid portion thereof) from the date such
payment was required to be made until the date such payment is received by
Parent or the Company, as the case may be, at the prime rate of The Chase
Manhattan Bank as in effect from time to time during such period.
VII.8. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard to
its rules of conflict of laws. Each of the Company and Parent hereby irrevocably
and unconditionally consents to submit to the exclusive jurisdiction of the
courts of the State of New York and of the United States of America located in
the State of New York (the "NEW YORK COURTS") for any litigation arising out of
or relating to this Agreement and the transactions contemplated hereby (and
agrees not to commence any litigation relating thereto except in such courts),
waives any objection to the laying of venue of any such litigation in the New
York Courts and agrees not to plead or claim in any New York Court that such
litigation brought therein has been brought in an inconvenient forum.
VII.9. HEADINGS. Headings of the Articles and Sections of this
Agreement are for the convenience of the parties only, and shall be given no
substantive or interpretive effect whatsoever.
VII.10. INTERPRETATION. In this Agreement, unless the context
otherwise requires, words describing the singular number shall include the
plural and vice versa,
54
and words denoting any gender shall include all genders and words denoting
natural persons shall include corporations and partnerships and vice versa.
Whenever the words "include," "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation." As used in this Agreement, the words "SUBSIDIARY," "AFFILIATE" and
"ASSOCIATE" shall have the meanings ascribed thereto in Rule 12b-2 under the
Exchange Act. For purposes of this Agreement, one party shall be considered
"wholly owned" by another party if all of the shares of its outstanding capital
stock, other than directors' qualifying shares, are beneficially owned by such
other party.
VII.11. INVESTIGATIONS. No action taken pursuant to this Agreement,
including, without limitation, any investigation by or on behalf of any party,
shall be deemed to constitute a waiver by the party taking such action of
compliance with any representations, warranties, covenants or agreements
contained in this Agreement.
VII.12. SEVERABILITY. Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
VII.13. ENFORCEMENT OF AGREEMENT. (a) The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any New York Court, this
being in addition to any other remedy to which they are entitled at law or in
equity.
(b) The prevailing party in any judicial action shall be entitled to
receive from the other party reimbursement for the prevailing party's reasonable
attorneys' fees and disbursements, and court costs.
VII.14. COUNTERPARTS. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument. Each counterpart may consist of a number of copies
hereof each signed by less than all, but together signed by all, of the parties
hereto.
55
IN WITNESS WHEREOF, the parties have executed this Agreement and
caused the same to be duly delivered on their behalf on the day and year first
written above.
AT&T CORP.
By: /s/ XXXX X. XXXXX
---------------------------------------
Name: Xxxx X. Xxxxx
Title: Vice President
KIRI INC.
By: /s/ XXXXXXX XXXXXXXX
---------------------------------------
Name: Xxxxxxx XxXxxxxx
Title: President
FRANTIS, INC.
By: /s/ XXXXXXX XXXXXXXX
---------------------------------------
Name: Xxxxxxx XxXxxxxx
Title: President
FIRSTCOM CORPORATION
By: /s/ XXXXXXXX X. NORTHLAND
---------------------------------------
Name: Xxxxxxxx X. Northland
Title: Chairman, President and
Chief Executive Officer
SCHEDULE A
DEFINITIONS
1. DEFINED TERMS. The following capitalized terms, when used in this
Agreement, shall have the following respective meanings:
"ACQUISITION PROPOSAL" means any proposal or offer from any person
relating to any direct or indirect acquisition or purchase of 10% or more of the
assets of the Company or any of its Subsidiaries or any shares of any class of
outstanding equity securities of the Company or any of its Subsidiaries, any
tender offer or exchange offer that if consummated would result in any person
beneficially owning 10% or more of any class of equity securities of the Company
or any of its Subsidiaries or any merger, consolidation, business combination,
sale of substantially all the assets, joint venture, management or operating
agreement, recapitalization, liquidation, dissolution or similar transaction
involving the Company or any of its Subsidiaries, other than the transactions
contemplated by this Agreement.
"ANCILLARY AGREEMENTS" means the Voting Agreement, the RV Agreement
(in the form of Exhibit E), the Brand License, the Employment Agreements and the
Credit Facility Agreement between Parent and RV (based on the terms set forth in
Exhibit F).
"BRAND LICENSE" means the Service Xxxx License Agreement between
Parent and RV, in the form of Exhibit D).
"COPYRIGHTS" shall mean all material copyrights, whether registered
or unregistered, owned by, assigned to or subject to assignment to the Company
or any of its Subsidiaries anywhere in the world.
"DISCLOSURE LETTER" means the letter dated as of the date hereof
delivered by the Company to Parent and identified as such and initialed by the
parties to this Agreement.
"ENVIRONMENTAL LAWS" means laws relating to the protection of human
health or the environment
"ERISA AFFILIATE" means any person (as defined in Section 3(9) of
ERISA) that is or has been a member of any group of persons described in Section
414(b), (c), (m) or (o) of the Code, including Company or any one of its
Subsidiaries.
ii
"EXECUTIVE AGREEMENT" means the Employment Agreement dated as of
November 1, 1999, between RV FirstCom and Xxxxxxxx X. Northland, including the
exhibits thereto.
"INCOME TAX" means any Tax computed in whole or in part based on or
by reference to net income and any alternative, minimum, accumulated earnings or
personal holding company Tax (including all interest and penalties thereon and
additions thereto).
"INCOME TAX RETURN" means any return, report, declaration, form,
claim for refund or information return or statement relating to Income Taxes,
including any schedule or attachment thereto, and including any amendment
thereof.
"INTELLECTUAL PROPERTY" means the United States and foreign
trademarks, service marks, trade names, trade dress, domain names, copyrights,
and similar rights, including registrations and applications to register or
renew the registration of any of the foregoing, the United States and foreign
letters patent and patent applications, inventions, processes, designs,
formulae, trade secrets, know-how, ideas, research and development, technical
data, copyrightable works, engineering notebooks, confidential information,
Software, firmware, Internet Web sites, mask works and other semiconductor chip
rights and applications, registrations and renewals thereof, and all similar
intellectual property rights (including moral rights), all rights to xxx for and
remedies against past, present and future infringements of any or all of the
foregoing and rights of priority and protection of interests therein under the
Laws of any jurisdiction, tangible embodiments of any of the foregoing (in any
medium including electronic media), and licenses of any of the foregoing.
"JAMTIS GROUP" means, collectively, Jamtis, Inc., Jamtis LLC,
Atlantis Holdings do Brasil Ltda. and Atlantis do Brasil Ltda..
"MARKS" shall mean all registrations for trademarks, service marks
and domain names and all pending applications for such registrations owned by,
assigned to or subject to assignment to the Company or any of its Subsidiaries
anywhere in the world and all material unregistered trademarks, trade names,
service makers, brand names, and business names.
"NETSTREAM MASTER AGREEMENT" means the Master Agreement, dated as of
August 20, 1999, between Jamtis and the individuals listed on Schedule 4.8(b)
attached thereto.
iii
"PATENTS" shall mean all patents and patent applications owned by,
assigned to or subject to assignment to the Company or any of its Subsidiaries
anywhere in the world.
"PERMITTED ENCUMBRANCES" means (A) Encumbrances reserved against or
reflected in the Company Reports, to the extent reserved or reflected or
described in the notes to any balance sheet set forth therein, (b) Encumbrances
for Taxes not yet due and payable or which are being contested in good faith and
by appropriate proceedings if adequate reserves with respect thereto are
maintained on the Company's books in accordance with GAAP, (C) those
Encumbrances set forth in Section 3.1(r) of the Disclosure Schedule and (D)
those Encumbrances that, individually and in the aggregate with all other
Permitted Encumbrances, do not and will not materially interfere with the use of
the properties or assets of the Company and its Subsidiaries taken as a whole as
currently used, or otherwise have or result in a Material Adverse Effect.
"RV DISCLOSURE LETTER" means the letter dated as of the date hereof
delivered by RV to the Company and identified as such and initialed by the
parties to this Agreement.
"SUPERIOR PROPOSAL" means any bona fide proposal made by a third
party to acquire, directly or indirectly, for consideration consisting of cash
and/or securities, 50% or more of the voting power of the common stock of, or
all or substantially all the assets of, the Company and its Subsidiaries and
otherwise on terms which the Board of Directors determines in good faith (after
receiving the advice of a financial advisor of nationally recognized standing
(which advice shall be disclosed in reasonable detail to Parent)) to be more
favorable to the Company's shareholders than the Merger and for which financing,
to the extent necessary with respect to such proposal, is then committed or
which, in the good faith judgment of the Board of Directors, is reasonably
capable of being obtained by such third party.
"TAX" means any federal, state, local or foreign income, alternative,
minimum, accumulated earnings, personal holding company, franchise, capital
stock, profits, windfall profits, gross receipts, sales, use, value added,
transfer, registration, stamp, premium, excise, customs duties, severance,
environmental (including taxes under section 59A of the Code), real property,
personal property, ad valorem, occupancy, license, occupation, employment,
payroll, social security, disability, unemployment, workers' compensation,
withholding, estimated or other similar tax, duty, fee, assessment or other
governmental charge or deficiencies thereof (including all interest and
penalties thereon and additions thereto).
iv
"TAX RETURN" means any return, report, declaration, form, claim for
refund or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"YEAR 2000 COMPLIANT" means that software, hardware and equipment (X)
correctly perform date data century recognition, and calculations that
accommodate same century and multi-century formulas and date values; (y) operate
or are expected to operate on a basis comparable to their current operation
during and after calendar year 2000 A.D., including but not limited to leap
years; and (Z) shall not end abnormally or provide invalid or incorrect results
as a result of date data which represents or references different centuries or
more than one century.
2. OTHER DEFINED TERMS. The following capitalized terms, when used in
this Agreement without definition, shall have the meanings set forth in the
Sections of this Agreement indicated below:
DEFINED TERM SECTION REFERENCE
"1999 Proxy" Section 3.1(u)
"Acquiror Material Adverse Effect" Section 3.2(a)
"Acquisition Agreement" Section 4.1(b)
"Acquisition Agreement Notice" Section 4.1(c)
"affiliate" Section 7.10
"Affiliate Transactions" Section 3.1(u)
"Agreement" First Paragraph
"Assets" Section 3.1(r)
"associate" Section 7.10
"Assumed Award" Section 2.3(a)
"Certificate of Merger" Section 1.3
"Certificates" Section 2.2(b)
"Closing" Section 1.2
"Closing Date" Section 1.2
"Code" Recitals
"Company" First Paragraph
"Company Benefit Plans" Section 3.1(l)
v
DEFINED TERM SECTION REFERENCE
"Company Common Stock" Section 2.1(a)
"Company Expenses" Section 7.7(c)
"Company Property" Section 3.1(p)
"Company Reports" Section 3.1(g)
"Company Rights" Section 3.1(d)
"Company Shareholder Approval" Section 3.1(h)
"Company Stock Option" Section 2.3(a)
"Company Stock Plans" Section 3.1(d)
"Consents" Section 4.3
"Consent Solicitation Statement" Section 4.10
"Contract" or "Contracts" Section 3.1(f)
"Current Policies" Section 4.7
"Effective Time" Section 1.3
"Employment Agreements" Section 3.1(l)
"Encumbrances" Section 3.1(e)
"ERISA" Section 3.1(l)
"excess parachute payment" Section 3.1(l)
"Excess Shares Trust" Section 2.2(e)
"Exchange Act" Section 3.1(f)
"Exchange Agent" Section 2.2(a)
"Exchange Fund" Section 2.2(a)
"Fairness Opinion" Section 3.1(v)
"Foreign Antitrust Laws" Section 3.1(f)
"Governmental Entity" Section 3.1(c)
"HSR Act" Section 3.1(f)
"Interim RV Options" Section 4.13(c)
"Jamtis" Recitals
"Laws" Section 3.1(c)
"Litigation" Section 3.1(i)
"Material Adverse Effect" Section 3.1(a)
vi
DEFINED TERM SECTION REFERENCE
"Material Contracts" Section 3.1(q)
"Material Delaying Effect" Section 3.1(f)
"Merger" Recitals
"Merger Sub" First Paragraph
"Netstream Acquisition Agreements" Recitals
"Netstream Shares" Recitals
"New York Courts" Section 7.8
"Notes" Section 4.10
"Option" or "Options" Section 3.1(d)
"Other Antitrust Consents" Section 4.3
"Other Antitrust Filings" Section 4.3
"Other Antitrust Filings and Consents" Section 5.3
"Parent" First Paragraph
"Parent Expenses" Section 7.7(b)
"Permits" Section 3.1(o)
"Person" Section 3.1(e)
"Preferred Stock" Section 2.1(b)
"Proxy Statement" Section 4.8(b)
"Registration Statement" Section 4.8(b)
"Regulatory Filings" Section 3.1(f)
"Representation Letters" Section 4.9(b)
"Requisite Majority" Section 4.10
"Requisite Regulatory Approvals" Section 5.1(e)
"Rights Agreement" Section 3.1(d)
"RV" First paragraph
"RV Class A Common Stock" Section 2.1(a)
"RV Class B Common Stock" Section 2.1(b)
"RV Preferred Stock" Section 2.1(b)
"SEC" Section 3.1(g)
"Securities Act" Section 3.1(g)
vii
DEFINED TERM SECTION REFERENCE
"Shareholder Meeting" Section 4.8(a)
"Subsidiary" Section 7.10
"Surviving Corporation" Section 1.1
"TBCA" Section 3.1(w)
"Termination Amount" Section 7.7(b)
"Voting Agreement" Recitals
"Warrants" Section 3.1(d)