Exhibit 2.1
PLAN OF REORGANIZATION AND AGREEMENT
BY AND AMONG FOCAL COMMUNICATIONS CORPORATION
AND ITS SUBSIDIARIES
This Plan of Reorganization and Agreement is made this 12th day of June,
1997, by and among Focal Communications Corporation ("Focal Holding"), Focal
Communications Corporation of Illinois (now known as Focal Communications
Corporation, "Focal Existing") and provides for Focal Holding to become the
holding company of all existing and proposed operating subsidiaries of Focal
Existing. The reorganization shall be accomplished through an exchange of
shares of Focal Existing for shares of Focal Holding. The reorganization shall
comprise and be consummated with Focal Holding becoming a limited operating
holding company with operating regional subsidiaries.
WHEREAS, Focal Existing owns 100% of the outstanding shares of the
following subsidiaries: Focal Communications Corporation of New York, Focal
Telecommunications Corporation, Focal Communications Corporation of New Jersey,
Focal Communications Corporation of Massachusetts and Focal Communications
Corporation of California (hereinafter referred to as the "Subsidiaries").
WHEREAS, it is the intent of Focal Existing that each subsidiary of Focal
Holding shall operate and provide telecommunications services in a specific
geographic region as authorized by Federal and State regulators.
WHEREAS, Focal Existing is an operating telecommunications company doing
business in the State of Illinois.
WHEREAS, it is the desire of Focal Existing to reorganize so that the
operating company in the State of Illinois and all other operating subsidiaries
become same-tier subsidiaries of a holding company. The Holding Company and its
subsidiaries are sometimes referred to as "Focal Enterprises".
WHEREAS, to accomplish such corporate reorganization, a new holding company
to be known as Focal Communications Corporation must be formed to accomplish
such parent-subsidiaries structure.
WHEREAS, the company believes that the desired corporate reorganization and
structure shall provide greater regulatory, corporate and financial flexibility
to Focal Enterprises and to each Focal subsidiary, including Focal Existing
which shall operate as a separate and distinct subsidiary providing
telecommunications services in the State of Illinois.
WHEREAS, such structure shall be accomplished through the implementation of
this Plan of Reorganization as provided below:
ARTICLE I
TRANSACTION
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1.1 Focal Existing shall amend its Certificate of Incorporation and
change its name, pursuant to an action by written consent of shareholders and
directors to "Focal Communications Corporation of Illinois". Upon Focal
Existing consummating its name change, Focal Existing shall cause the formation
of Focal Holding for the purpose of becoming the Holding Company all of Focal
Enterprises. Focal Holding shall be formed as "Focal Communications
Corporation". Terms of the Certificate of Incorporation and Bylaws of Focal
Holding, including terms of the shares of stock of Focal Holding, shall be
identical to Focal Existing.
1.2. Focal Existing shareholders shall upon the closing date as defined
herein voluntarily exchange their shares of Focal Existing for the exact number
and terms of shares of Focal Holding. In exchange for such transfer, Focal
Holding shall issue to each shareholder of Focal Existing the exact number and
terms of shares of Focal Existing received by Focal Holding, thereby resulting
in each previous shareholder of Focal Existing becoming a shareholder of Focal
Holding with identical share rights and privileges previously had in Focal
Existing. Focal Existing shall upon closing and consummation of the share
exchange become a wholly owned subsidiary of Focal Holding and all subsidiaries
of Focal Existing becoming second-tier subsidiaries of Focal Holding.
1.3. Focal Existing shall upon the closing of the share exchange distribute
to Focal Holding its shares then held in Focal Existing's subsidiaries,
specifically, all shares of Common Stock then outstanding of Focal
Communications Corporation of New York, Focal Communications Corporation of New
Jersey, Focal Communications Corporation of Massachusetts, Focal Communications
Corporation of California, and Focal Telecommunications Corporation.
1.4. Focal Existing shall upon the closing date as defined herein assign to
Focal Holding its rights, title and interest in the closing documents entered
into by Focal Existing on November 27, 1996 or such documents subsequently
entered into which provide for capitalization of Focal Existing. Specifically,
Focal Existing shall assign its rights, title and interest to the following
identified agreements:
a. Stock Purchase Agreement by and among Focal Communications Corporation
and Madison Dearborn Capital Partners, L.P., Frontenac VI, L.P., Battery
Ventures III, L.P., Xxxxx X. Xxxx, Xxxx X. Xxxxxxxx, Xxxxxx X. Xxxxxx and Xxxxxx
X. Xxxxxx, Xx.;
b. Executive Investor Stock Pledge Agreement entered into by and between
Xxxxx X. Xxxx, and Focal Communications Corporation; Executive Investors Stock
Agreement entered into by and between Xxxx X. Xxxxxxxx and Focal Communications
Corporation; Executive Investors Stock Agreement entered into by and between
Xxxxxx X. Xxxxxx, Xx. and Focal
Communications Corporation, and Executive Investors Stock Agreement entered into
by and between Xxxxxx X. Xxxxxx and Focal Communications Corporation;
c. Stockholder's Agreement entered into by and among Focal Communications
Corporation and Madison Dearborn Capital Partners, L.P., Frontenac VI, L.P.,
Battery Ventures III, L.P., Xxxxx X. Xxxx, Xxxx X. Xxxxxxxx, Xxxxxx X. Xxxxxx
and Xxxxxx X. Xxxxxx, Xx.;
d. Executive Stock Agreement and Employment Agreement entered into by
Focal Communications Corporation and each of Xxxxx X. Xxxx, Xxxx X. Xxxxxxxx,
Xxxxxx X. Xxxxxx and Xxxxxx X. Xxxxxx, Xx.;
e. Registration Agreement entered into by and among Focal Communications
Corporation and Madison Dearborn Capital Partners, L.P., Frontenac VI, L.P.,
Battery Ventures III, L.P., Xxxxx X. Xxxx, Xxxx X. Xxxxxxxx, Xxxxxx X. Xxxxxx
and Xxxxxx X. Xxxxxx, Xx.;
f. Vesting Agreement entered into by and among Focal Communications
Corporation and Madison Dearborn Capital Partners, L.P., Xxxxx X. Xxxx, Xxxx X.
Xxxxxxxx, Xxxxxx X. Xxxxxx and Xxxxxx X. Xxxxxx, Xx.;
g. Vesting Agreement entered into by and among Focal Communications
Corporation and Frontenac VI, L.P., Xxxxx X. Xxxx, Xxxx X. Xxxxxxxx, Xxxxxx X.
Xxxxxx and Xxxxxx X. Xxxxxx, Xx.;
h. Vesting Agreement entered into by and among Focal Communications
Corporation and Battery Ventures III, L.P., Xxxxx X. Xxxx, Xxxx X. Xxxxxxxx,
Xxxxxx X. Xxxxxx and Xxxxxx X. Xxxxxx, Xx.;
i. Purchase and Joinder Agreement entered into by and between Focal
Communications Corporation and Northwestern University;
j. Purchase and Joinder Agreement entered into by and between Focal
Communications Corporation and Xxxxxxx Xxxxx.
k. Purchase and Joinder Agreement entered into by and between Focal
Communications Corporation and Xxxxx Xxx.
l. Purchase and Joinder Agreement entered into by and between Focal
Communications Corporation and the King Children Trust Partnership.
m. Purchase, Joinder and Consent Agreement entered into by and between
Focal Communications Corporation and Xxxx X. Xxxxxxxx.
n. Purchase, Joinder and Consent Agreement entered into by and between
Focal Communications Corporation and the King Children Trust Partnership.
ARTICLE II
CLOSING
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2.1 The closing hereunder shall take place at the office at Focal
Existing at a time and date designated by the President of Focal Existing as
soon as is practicable after all conditions to closing have been satisfied or
waived in writing; however, such closing shall take place within thirty (30)
days of satisfaction of all conditions precedent to closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARTY
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The following representations and warranties are made to Focal Existing,
Focal Holding and each of the shareholders of Focal Existing who shall become
shareholders of Focal Holding:
3.1. Organization and Qualification. Each of the Participants in the Plan
of Reorganization is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and each has the requisite
corporate power and authority to carry on its business as it is now being
conducted. Each of the Participants in the Plan of Reorganization is duly
qualified as a foreign corporation to do business and is in good standing in
each jurisdiction where the character of the property owned or leased by it, or
the nature of its activities, is such that qualification as a foreign
corporation in that jurisdiction is required by law.
3.2. Each of the Participants in the Plan of Reorganization has the
requisite corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized and approved by the Board of Directors of Focal Existing and
upon approval of the Amendment of the Certificate of Incorporation for the
purpose of changing the name of Focal Existing to Focal Communications
Corporation of Illinois, no other corporate proceedings on the part of Focal
Existing are necessary to approve and adopt this Agreement or to approve the
consummation of the transactions contemplated hereby, including delivery of
consideration. This Agreement has been duly and validly executed on behalf of
each of the participating corporations.
3.3. The execution, delivery and performance of this Agreement, and the
performance by each participating corporation of its obligations hereunder will
not have a material adverse affect on the business, conditions, operations or
prospects of the participating corporations, conflict with or result in a
material breach of or default under any material indenture or loan or credit
agreement or any other material agreement or instrument to which each of the
participating corporations or any of its subsidiaries is a party, require the
authorization, consent, approval or license of any third party other than is as
contemplated under this Agreement or constitute grounds for loss or suspension
of any permits, licenses or other authorizations material to the business
condition, operations or prospects of each of the participating corporations.
3.4 Each of the subsidiaries is wholly owned by Focal Existing, has no
other outstanding warrants, options or rights to issue additional shares and
upon conveyance of all subsidiary shares owned by Focal Existing to Focal
Holding shall become a wholly owned subsidiary of Focal Holding, has conducted
no business, has no value other than its original stated capital which is the
minimum required under Delaware law and is of negligible value.
3.5. The Plan of Reorganization as contemplated herein is intended to be
and shall qualify as a tax free reorganization; there shall be no recognition of
gain or loss to the shareholders and to participating corporations as a result
of consummation of this Plan of Reorganization.
3.6. Each of the participating corporations is in substantial compliance
with all, and have received no notice of any violation of any, rules or
regulations applicable to its operations.
ARTICLE IV
CONDITIONS PRECEDENT TO CLOSING
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The obligations of the parties hereto to affect the transaction shall be
subject to the fulfillment at or prior to the closing of all of the following
conditions, unless the relying party on which such action required to be taken
shall waive such fulfillment:
4.1. Each and all shareholders of Focal Existing shall approve of the
transaction through a Unanimous Action by Written Consent, which shall include
consent to the exchange of Focal Existing shares for Focal Holding shares,
consent to assignment by Focal Existing of its rights, title and interest in the
closing documents to Focal Holding, and approve the Amendment of the Certificate
of Incorporation of Focal Existing to change its name to Focal Communications
Corporation of Illinois.
4.2. The Certificate of Incorporation of Focal Existing shall have been
amended to change its name to Focal Communications Corporation of Illinois and
the Certificate of Incorporation of Focal Holding shall designate as its name
Focal Communications Corporation.
4.3. The representations and warranties made herein are true as of the date
of closing.
ARTICLE V
SECURITIES AND SECURITY HOLDERS
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5.1. The shareholders of Focal Existing shall have approved of the
transaction contemplated herein, including the exchange of shares and the
consent to assignment of Focal Existing rights, title and interest in the
closing documents to Focal Holding.
5.2. The shares issued by Focal Holding to shareholders of Focal Existing
shall be exempt from registration with the Securities and Exchange Commission
pursuant to Section 4.2 of the Securities Act of 1933, and are exempt from
applicable State Securities registration.
5.3. The Securities shall be issued with legends identical to such
legends currently placed upon Certificates of Focal Existing, and shall include
the following additional legend:
THE SECURITIES AS REPRESENTED HEREBY HAVE BEEN ISSUED IN A TRANSACTION EXEMPT
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS THE
TRANSFEROR FIRST SATISFIES THE ISSUER THAT THE PROPOSED TRANSFER, IN THE MANNER
PROPOSED, DOES NOT VIOLATE THE REGISTRATION REQUIREMENTS OF SAID ACT.
5.4 Upon closing, Focal Existing shall correspond with each of its
shareholders and request such shareholder to exchange its or their shares of
Focal Existing for Focal Holding by Executing a share transmittal form which
shall provide that each shareholder forwards shares of Focal Existing to Focal
Existing, and upon receipt thereof, shall be automatically entitled to the same
number of shares with identical terms in Focal Holding.
ARTICLE VI
TERMINATION, AMENDMENT AND WAIVER
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6.1. This Agreement and transaction may be terminated at any time prior to
the closing, whether before or after any approval by shareholders, by resolution
of the Board of Directors of Focal Existing.
6.2. This Agreement may be amended in writing executed by and on behalf of
the each of the parties hereto.
ARTICLE VII
GENERAL PROVISIONS
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7.1. All representations and warranties contained herein and made in
writing by any party in connection herewith shall survive the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby, regardless of any investigation made by any party.
7.2. Governing Law. The corporate law of the State of Delaware shall
govern all issues and questions concerning the relative rights and obligations
of the participating corporations and their stockholders. All other issues and
questions concerning the instruction, validity, enforcement, interpretation of
this Agreement and the exhibits and schedules hereto shall be governed by, and
construed in accordance with the laws of the State of Illinois, without giving
effect to any choice of law or conflict of law rules or provisions that would
cause the application of the laws of any jurisdiction other than the State of
Illinois.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be signed on
the date first written above by their respective officers, thereunto duly
authorized.
FOCAL COMMUNICATIONS CORPORATION (FOCAL EXISTING)
By: /s/ Xxxxxx X. Xxxxxx, Xx.
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Xxxxxx X. Xxxxxx, Xx., President
By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx, Secretary/Treasurer
FOCAL COMMUNICATIONS CORPORATION (IN FORMATION, FOCAL HOLDING)
By: /s/ Xxxxxx X. Xxxxxx, Xx.
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Xxxxxx X. Xxxxxx, Xx., President
By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx, Secretary/Treasurer