BIG STUFF AGREEMENT
This ACQUISITION AGREEMENT (the "AGREEMENT") is made and entered
into as of this 3rd day of June, 1999, by and among Advanced
Communications Group, Inc., a Delaware corporation ("PARENT") and ACG
Acquisition VII Corp., a Delaware corporation and a wholly-owned
subsidiary of Parent ("ACQUISITION SUBSIDIARY"), on the one hand and Big
Stuff, Inc., a Texas corporation ("BIG STUFF"), Xxxxxxx X'Xxxx, a
resident of the State of Texas ("X'XXXX"), and Xxxxxxx X. Xxxx, a
resident of the State of Texas ("XXXX") (X'Xxxx and Xxxx are together
referred to herein as the "BIG STUFF SHAREHOLDERS"), on the other.
RECITALS
A. Parent desires to acquire, and Big Stuff and the Big Stuff
Shareholders desire Parent to acquire, all of the outstanding common
stock of Big Stuff, on the terms and subject to the conditions set forth
in this Agreement.
B. In furtherance of such acquisition, the respective Boards of
Directors of Parent, Acquisition Subsidiary and Big Stuff have approved
the merger (the "MERGER") of Acquisition Subsidiary with and into Big
Stuff in accordance with the laws of the States of Texas and Delaware,
all on the terms and conditions set forth in this Agreement.
C. The Boards of Directors of each of Big Stuff, Acquisition
Subsidiary and Parent believe it is in the best interests of each
company and their respective stockholders and the Board of Directors of
Parent has directed or will direct that the Agreement be submitted to
the shareholders of Parent with the recommendation that the Agreement,
including, but not limited to, the issuance of shares of Parent Common
Stock pursuant to this Agreement, be approved by the Parent's
stockholders and the Boards of Directors of Big Stuff and Acquisition
Subsidiary have directed or will direct that the Merger be submitted to
their respective shareholders in accordance with the Corporation Laws.
D. The Big Stuff Shareholders own all outstanding shares of Big
Stuff Common Stock, believe that the Merger and the transactions
contemplated by this Agreement are in their best interests and desire to
enter into this Agreement.
E. The parties intend that the Closing will occur prior to or
concurrently with (i) the closing of the acquisition by Parent or a
direct or indirect subsidiary of Parent of all of the outstanding
capital stock of YPtel Corporation, a corporation incorporated under the
laws of Canada (the "COMPANY") pursuant to that certain Acquisition
Agreement, a form of which has been provided by Parent to Big Stuff (the
"COMPANY ACQUISITION AGREEMENT"), dated as of June 3, 1999, among the
Parent, the Company, the shareholders of the Company (the "COMPANY
SHAREHOLDERS"), the J.L.R. Family Trust, the Paisley Family Trust,
Xxxxxx Xxxxxx, Xxxxxxx X. XxXxxxxx, Imperial Capital Limited, a
corporation organized under the laws of the Province of Ontario ("ICL"),
Cold Trust, Global Investment Trust, Freezer Trust, Storage Trust,
Directory Trust and Publisher Trust; (ii) the closing of the acquisition
by Parent or a subsidiary of Parent of all of the outstanding capital
stock of Web YP Inc. ("WEB") (Big Stuff and Web are sometimes
collectively referred to as "WORLDPAGES") whether by merger, exchange or
otherwise; (iii) the
pay-off of the promissory notes (collectively, the "GREAT WESTERN
NOTES") in the aggregate original principal amount of Fifteen Million
Dollars ($15,000,000) (plus accrued but unpaid interest at the time of
pay-off) from the Company to X'Xxxx and certain other former
shareholders of Great Western Directories, Inc. (collectively, the
"GREAT WESTERN SHAREHOLDERS") by the issuance of Parent Common Stock to
the Great Western Shareholders; and (iv) the satisfaction of the other
conditions to closing set forth in this Agreement, the Company
Acquisition Agreement and the WebYP Acquisition Agreement.
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
ARTICLE I - TERMS OF THE MERGER
1.1 The Merger. Upon the terms and subject to the
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conditions of this Agreement, the Merger shall be consummated in accordance
with the Texas General Corporation Law (the "TEXAS CORPORATION LAW") and
the Delaware General Corporation Law (together with the Texas Corporation
Law, the "CORPORATION LAWS"). At the Effective Time, upon the terms and
subject to the conditions of this Agreement, Acquisition Subsidiary shall
be merged with and into Big Stuff in accordance with the Corporation Laws
and the separate existence of Acquisition Subsidiary shall thereupon cease,
and Big Stuff, as the surviving corporation in the Merger (the "SURVIVING
CORPORATION"), shall continue its corporate existence under the laws of the
State of Texas as a subsidiary of Parent and under the corporate name "Big
Stuff, Inc." The Certificate of Incorporation of Big Stuff shall be the
certificate of incorporation of the Surviving Corporation. The parties
shall prepare and execute a certificate of merger in a form to be agreed to
by the parties hereto, acting reasonably (the "CERTIFICATE OF MERGER"), in
order to comply in all respects with the requirements of the Corporation
Laws and with the provisions of this Agreement.
1.2 Effective Time. The Merger shall become effective
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as of the time of the filing of the Certificate of Merger with the
Secretary of State of the State of Texas and the Secretary of State of
the State of Delaware in accordance with the applicable provisions of
the Corporation Laws or at such later time as may be specified in the
Certificate of Merger. The Certificate of Merger shall be filed, and
the closing of the Merger (the "CLOSING") shall occur, as soon as
practicable after all of the conditions set forth in this Agreement have
been satisfied or waived by the party or parties entitled to the benefit
of the same. The Closing shall occur at the offices of Xxxxxxxxx
Xxxxxxx Xxxxx Xxxxxx LLP, 000 Xxxxx Xxxxxx, Xxxxx 0000, Xx. Xxxxx,
Xxxxxxxx 00000, unless another place or time is agreed to in writing by
Parent and Big Stuff. The time when the Merger shall become effective
is herein referred to as the "EFFECTIVE TIME" and the date on which the
Effective Time occurs is herein referred to as the "CLOSING DATE."
1.3 Merger Consideration. Subject to the provisions of
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this Agreement and any applicable backup or other withholding requirements,
each of the issued and outstanding shares ("BIG STUFF SHARES") of common
stock, no par value per share, of Big Stuff ("BIG STUFF COMMON STOCK") as
of the Effective Time shall be converted into the right to receive, and
there shall be paid and issued as hereinafter provided, in exchange for the
Big Stuff Shares, 415.584 shares (the "EXCHANGE RATIO") of Parent Common
Stock, par value $.0001 per share ("PARENT COMMON STOCK"), plus cash in
lieu of any fractional share as hereinafter provided (the "MERGER
CONSIDERATION").
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No fractional shares of Parent Common Stock shall be issued
pursuant to the Merger nor will any fractional share interest involved
entitle the holder thereof to vote, to receive dividends or to exercise any
other rights as a shareholder of Parent. In lieu thereof, any Person who
would otherwise be entitled to a fractional share of Parent Common Stock
pursuant to the provisions hereof shall receive an amount in cash equal to
the value of such fractional share. The value of such fractional share for
purposes hereof shall be the product of such fraction multiplied by Five
and 50/100 Dollars ($5.50).
Each share of Big Stuff Common Stock held in the treasury of Big
Stuff or by a wholly-owned subsidiary of Big Stuff shall be cancelled as of
the Effective Time and no Merger Consideration shall be payable with
respect thereto. From and after the Effective Time, there shall be no
further transfers on the stock transfer books of Web of any of the Web
Shares outstanding prior to the Effective Time.
Subject to the provisions of this Agreement, at the Effective
Time, all the shares of Acquisition Subsidiary common stock outstanding
immediately prior to the Merger shall be converted, by virtue of the Merger
and without any action on the part of the holder thereof, into one share of
the common stock of the Surviving Corporation (the "SURVIVING CORPORATION
COMMON STOCK"), which one share of the Surviving Corporation Common Stock
shall constitute all of the issued and outstanding capital stock of the
Surviving Corporation.
1.4 Stockholders' Rights upon Merger. Upon consummation
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of the Merger, the Certificates shall cease to represent any rights with
respect thereto, and, subject to applicable Law (as hereinafter defined)
and this Agreement, the Certificates shall only represent the right to
receive the Merger Consideration including the amount of cash, if any,
payable in lieu of fractional shares of Parent Common Stock into which the
Big Stuff Shares have been converted pursuant to this Agreement.
1.5 Surrender and Exchange of Shares. At the Effective
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Time, each holder of a Big Stuff Share shall surrender and deliver the
Certificates and transmittal letter (the "LETTER OF TRANSMITTAL") to
Continental Stock Transfer and Trust Company. Upon such surrender and
delivery, the holder shall receive a certificate representing the number of
whole shares of Parent Common Stock into which such holder's Big Stuff
Shares have been converted pursuant to this Agreement plus the amount of
cash payable in lieu of any fractional share. Until so surrendered and
exchanged, each outstanding Certificate after the Effective Time shall be
deemed for all purposes to evidence the right to receive that number of
whole shares of Parent Common Stock into which the Big Stuff Shares have
been converted pursuant to this Agreement, plus the amount of cash payable
in lieu of any fractional share; provided, however, that no dividends
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or other distributions, if any, in respect of the shares of Parent Common
Stock, declared after the Effective Time and payable to holders of record
after the Effective Time, shall be paid to the holders of any unsurrendered
Certificates until such Certificates and Letters of Transmittal are
surrendered and delivered as provided herein. Subject to applicable Law,
after the surrender and exchange of the Certificates, the record holders
thereof will be entitled to receive any such dividends or other
distributions without interest thereon, which theretofore have become
payable with respect to the number of shares of Parent Common Stock for
which such Certificates were exchangeable. Holders of any unsurrendered
Certificates shall not be entitled to vote Parent Common Stock until such
Certificates are exchanged pursuant to this Agreement.
1.6 Directors. Immediately following the Closing Date,
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the Board of Directors of the
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Parent shall be restructured to be composed of eight (8) members as
follows: (i) one director chosen by Parent and one director chosen by ICL
to serve three (3) year terms; (ii) one director chosen by Parent and one
director chosen by ICL and one director to be agreed to by Parent, ICL and
WorldPages to serve two (2) year terms; and (iii) one director chosen by
Parent and one director chosen by ICL and one director to be agreed to by
Parent, ICL and WorldPages to serve one (1) year terms. The directors to
be nominated by the Parent are currently anticipated to be Xxxxxxx X'Xxxx,
Xxxxxx Xxxxxx and Xxxxxx Xxxxx. The directors to be nominated by ICL are
currently anticipated to be Xxxxxx Xxxxxxxx, Xxxxxx Xxxxxxxx and Xxxxxx
Xxxxx. The parties hereto expressly acknowledge and agree that this
Section 1.6 is not intended to, and does not, except with regard to the
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initial Board of Directors of Parent referenced in this Section 1.6,
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impose any requirement that the Board of Directors of Parent be comprised
of the individuals listed in this Section 1.6 or that any Person has a
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right to designate a certain individual or a certain number of individuals
as nominees to the Board of Directors of Parent.
1.7 Bylaws. At and after the Effective Time, the Bylaws
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of Acquisition Subsidiary in effect at the Effective Time shall be the
Bylaws of the Surviving Corporation (subject to any subsequent amendment).
1.8 Other Effects of Merger. The Merger shall have all
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further effects as specified in the applicable provisions of the
Corporation Laws.
1.9 Tax-Free Reorganization. The parties intend that the
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Merger qualify as a tax-free reorganization pursuant to Section 368 of the
Code. The parties hereto hereby adopt this Agreement as a "plan of
reorganization" within the meaning of Sections 1.368-2(g) and 1.368(a) of
the Treasury regulations.
1.10 Convertible Note. At any time between the date hereof
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and Closing, X'Xxxx and Xxxx may continue to lend up to Ten Million Dollars
($10,000,000) to Web or Big Stuff pursuant to a "CONVERTIBLE NOTE",
described below. The Convertible Note includes amounts lent by X'Xxxx and
Xxxx to Web or Big Stuff since January 1, 1999. The Convertible Note will
provide additional working capital required by Web or Big Stuff (i) to
consummate the contemplated contractual arrangements with Excite and to
fulfill its obligations thereunder, (ii) to pay for extraordinary capital
expenditures approved in advance by a disinterested majority of the Board
of Directors of the Parent, including consummation of contractual
arrangements with other entities similar to those with Excite, or (iii) for
working capital purposes, including for ordinary capital expenditures. The
conversion feature of the Convertible Note shall provide that the principal
amount of the Convertible Note, but not the accrued but unpaid interest,
shall be convertible into Parent common stock at any time on or after
Closing at a conversion price of $5.50 per share. If the acquisition of
WorldPages contemplated by this Agreement and the Web Acquisition Agreement
shall not be consummated, the conversion feature shall not be operable, and
Parent shall have no obligations under the Convertible Note. The parties
agree that notwithstanding anything herein or in the Web Acquisition
Agreement to the contrary, there shall be no "doubling" of the amount which
may be lent by X'Xxxx and Xxxx to Web or Big Stuff and that an aggregate
maximum amount of $10,000,000 may be lent by X'Xxxx and Xxxx to Web and Big
Stuff, collectively.
1.11 Due Diligence Review.
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(a) At the time of execution of this Agreement,
neither Parent nor Big Stuff
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has received from the other any Disclosure Schedules which are to become
part of this Agreement and neither Parent nor Big Stuff has conducted its
due diligence investigation of the other. Within twenty-one (21) days
after the date of this Agreement (the "SCHEDULE PERIOD"), each of Parent
and Big Stuff shall deliver to the other any Disclosure Schedules which it
is required or may desire to provide hereunder. Upon execution hereof,
each of Parent and Big Stuff shall be entitled forthwith to commence its
due diligence review of the books, records and operations of the other
(including the Parent Securities Filings), provided, however, that any
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review conducted by Parent or Big Stuff pursuant to the provisions of this
Section 1.11 shall be completed within thirty (30) days from the date of
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this Agreement or within nine (9) days of receipt of all Disclosure
Schedules from the other party, whichever shall be the longer period. If
as a result of such review, either Parent or Big Stuff finds in good faith
that it is not in its economic best interest to proceed with the Closing as
contemplated herein, it may, at or prior to the expiration of said due
diligence review period (as extended by failure of a party to provide its
Disclosure Schedules on a timely basis), terminate this Agreement without
penalty by giving the other party written notice of such termination in the
manner provided in Section 11.1. Nothing in this Section 1.11 shall be
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construed to limit the right of any party to continue its due diligence
review through the Closing Date.
(b) If either party decides to terminate the Agreement
pursuant to the provisions of Section 1.11(a) hereof, neither party shall
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have any further obligation to the other under this Agreement; provided,
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however, that the terminating party shall be liable to the other party
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for the fee set forth in Section 8.2(b) or 8.2(c), as applicable, if such
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terminating party subsequently enters into a Parent Triggering Transaction
or a Big Stuff Triggering Transaction, as the case may be, that would
require the payment of the fee required by Section 8.2.
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1.12 Additional Actions. If, at any time after the Effective
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Time, the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm or record or otherwise
in the Surviving Corporation its right, title or interest in, to or under
any of the rights, properties or assets of Acquisition Subsidiary or
Big Stuff or otherwise to carry out this Agreement, the officers and
directors of the Surviving Corporation shall be authorized to execute and
deliver, in the name and on behalf of Acquisition Subsidiary or Big Stuff,
all such deeds, bills of sale, assignments and assurances and to take and
do, in the name and on behalf of Acquisition Subsidiary or Big Stuff, all
such other actions and things as may be necessary or desirable to vest,
perfect or confirm any and all right, title and interest in, to and under
such rights, properties or assets in the Surviving Corporation or otherwise
to carry out this Agreement.
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF BIG STUFF AND THE
BIG STUFF SHAREHOLDERS
Big Stuff on behalf of itself and the Big Stuff Shareholders,
jointly and severally represent and warrant to and covenant with Parent as
follows:
2.1 Organization and Good Standing. Big Stuff is a corporation
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duly organized and validly existing and in good standing under the laws of
the jurisdiction of its incorporation or organization and has all requisite
corporate power and authority to own, lease and operate its properties and
to carry on its business as now being conducted. Big Stuff is duly
qualified or licensed and in good standing to do business in each
jurisdiction in which the character of the property owned, leased or
operated by it or the nature of the business conducted by it makes such
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qualification or licensing necessary, except where the failure to be so
duly qualified or licensed and in good standing would not have a Big Stuff
Material Adverse Effect. Schedule 2.1 to be provided during the Schedule
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Period sets forth a complete and accurate list of the jurisdictions of
incorporation or organization and qualification or license of Big Stuff.
Big Stuff has heretofore delivered, or will deliver during the Schedule
Period, to Parent accurate and complete copies of the Certificates or
Articles of Incorporation and Bylaws, or equivalent governing instruments,
as currently in effect, of Big Stuff.
2.2 Capitalization. As of the date hereof, the authorized
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capital stock of Big Stuff (the "BIG STUFF STOCK") consists of 10,000
shares of common stock. As of the date hereof, (a) 3,500 shares of Big
Stuff Stock were issued and outstanding, and (b) no options or warrants to
purchase any shares of Big Stuff capital stock were issued or outstanding.
No other capital stock of Big Stuff is issued or outstanding. All issued
and outstanding shares of the Big Stuff Stock are duly authorized, validly
issued, fully paid and non-assessable and were issued free of preemptive
rights and in compliance with applicable corporate and securities Laws.
Except as set forth on Schedule 2.2 to be provided during the Schedule
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Period, as of the date of this Agreement there are no outstanding rights,
reservations of shares, subscriptions, warrants, puts, calls, unsatisfied
preemptive rights, options or other agreements of any kind relating to any
of the capital stock or any other security of Big Stuff, and there is no
authorized or outstanding security of any kind convertible into or
exchangeable for any such capital stock or other security. There are no
restrictions upon the transfer of or otherwise pertaining to the securities
(including, but not limited to, the ability to pay dividends thereon) or
retained earnings of Big Stuff or the ownership thereof other than those,
if any, to be described on Schedule 2.2 and provided during the Schedule
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Period or those imposed generally by the Securities Act, the Securities
Exchange Act, applicable state or foreign securities Laws or applicable
corporate Law.
2.3 Subsidiaries. Big Stuff does not and will not, from the
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date of this Agreement until the Closing Date, hold, directly or
indirectly, any capital stock or other interest in any Person.
2.4 Authorization; Binding Agreement. Big Stuff and the Big
--------------------------------
Stuff Shareholders have all requisite power and authority to execute and
deliver this Agreement and the Big Stuff Transaction Agreements and to
consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and the other agreements and
documents referred to herein and to be executed in connection herewith
to which Big Stuff or any Big Stuff Shareholder is or will be a party or
a signatory (the "BIG STUFF TRANSACTION AGREEMENTS") and the
consummation of the transactions contemplated hereby and thereby
including, but not limited to the Merger, have been or will be duly and
validly authorized by Big Stuff's Board of Directors and no other
corporate or other proceedings on the part of Big Stuff or any Big Stuff
Shareholder are necessary to authorize the execution and delivery of
this Agreement and the Big Stuff Transaction Agreements or to consummate
the transactions contemplated hereby or thereby (other than the adoption
of this Agreement by the Big Stuff Shareholders in accordance with the
Texas Corporation Law and the Articles of Incorporation and Bylaws of
Big Stuff). This Agreement has been duly and validly executed and
delivered by Big Stuff and the Big Stuff Shareholders and constitutes,
and upon execution and delivery thereof as contemplated by this
Agreement, the Big Stuff Transaction Agreements will constitute, the
legal, valid and binding agreements of Big Stuff and the Big Stuff
Shareholders, enforceable against Big Stuff and the Big Stuff
Shareholders in accordance with its and their respective terms, except
to the extent that enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization or other similar laws affecting
the enforcement of creditors' rights generally and by principles of
equity regarding the availability of remedies
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(collectively, the "ENFORCEABILITY EXCEPTIONS").
2.5 Governmental Approvals. No consent, approval, waiver or
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authorization of, notice to or declaration or filing with ("CONSENT")
any Governmental Authority on the part of Big Stuff or any of the Big
Stuff Shareholders is required in connection with the execution or
delivery by Big Stuff or the Big Stuff Shareholders of this Agreement
and the Big Stuff Transaction Agreements or the consummation by Big
Stuff or the Big Stuff Shareholders of the transactions contemplated
hereby or thereby other than (i) the filing of the Certificate of Merger
with the Secretary of State of the States of Texas and Delaware; (ii)
filings with the SEC and state securities laws administrators, (iii)
Consents from or with Governmental Authorities set forth on Schedule
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2.5 to be provided during the Schedule Period, (iv) filings under the
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HSR Act, and (v) those Consents that, if they were not obtained or made,
do not or would not have a Big Stuff Material Adverse Effect.
2.6 No Violations. The execution and delivery of this
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Agreement and the Big Stuff Transaction Agreements, the consummation of
the transactions contemplated hereby and thereby and compliance by Big
Stuff and the Big Stuff Shareholders with any of the provisions hereof
or thereof will not (i) conflict with or result in any breach of any
provision of the Certificate and/or Articles of Incorporation or Bylaws
or other governing instruments of Big Stuff, (ii) except as set forth on
Schedule 2.6 to be provided during the Schedule Period, require any
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Consent under or result in a violation or breach of, or constitute (with
or without due notice or lapse of time or both) a default (or give rise
to any right of termination, cancellation or acceleration or augment the
performance required) under any of the terms, conditions or provisions
of any Big Stuff Material Contract or other obligation to which Big
Stuff or any Big Stuff Shareholder is a party or by which any of them or
any of their properties or assets may be bound, (iii) result in the
creation or imposition of any lien or encumbrance of any kind upon any
of the assets of Big Stuff or (iv) subject to obtaining the Consents
from Governmental Authorities referred to in Section 2.5 above,
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contravene any Law currently in effect to which Big Stuff or any Big
Stuff Shareholder or its or any of its respective assets or properties
are subject, except in the case of clauses (ii), (iii) and (iv) above,
for any deviations from the foregoing which do not or would not have a
Big Stuff Material Adverse Effect.
2.7 Litigation. Except as set forth in Schedule 2.7 to be
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provided during the Schedule Period, there is no action, cause of
action, claim, demand, suit, proceeding, citation, summons, subpoena,
inquiry or investigation of any nature, civil, criminal, regulatory or
otherwise, in law or in equity, by or before any court, tribunal,
arbitrator, mediator or other Governmental Authority ("LITIGATION")
pending or, to the knowledge of the Big Stuff Shareholders or Big Stuff,
threatened against Big Stuff or any officer, director, employee or agent
thereof, in his or her capacity as such, or as a fiduciary with respect
to any Benefit Plan of Big Stuff, or otherwise relating, in a manner
that could have a Big Stuff Material Adverse Effect, to Big Stuff or the
securities of Big Stuff, or any properties or rights of Big Stuff or
that could prevent or delay the consummation of the transactions
contemplated by this Agreement.
2.8 Big Stuff Financial Statements. The unaudited interim
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financial statements of Big Stuff as of and for the fiscal year ended
December 31, 1998, and as of and for the three months ended March 31,
1999 (the "BIG STUFF FINANCIAL STATEMENTS") have been or will be, during
the Schedule Period, provided to Parent. Except as noted thereon, the
Big Stuff Financial Statements were or, as to those Big Stuff Financial
Statements provided or required to be provided subsequent to the date
hereof pursuant to this section, will be prepared in accordance with
generally accepted accounting principles applicable to the business of
Big Stuff consistently applied in accordance with
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past accounting practices and fairly present (including, but not limited
to, the inclusion of all adjustments with respect to interim periods
which are necessary to present fairly the financial condition and assets
and liabilities or the results of operations of Big Stuff except as may
be indicated therein or in the notes thereto, subject to normal year-end
adjustment in the ordinary course with respect to certain items
immaterial in amount or effect and the exclusion of footnote disclosure
in interim Big Stuff Financial Statements) the financial condition and
assets and liabilities or the results of operations of Big Stuff as of
the dates and for the periods indicated. Except as reflected in the Big
Stuff Financial Statements, as of their respective dates, Big Stuff did
not have any debts, obligations, guaranties of obligations of others or
liabilities (contingent or otherwise) that would be required in
accordance with generally accepted accounting principles to be disclosed
in the Big Stuff Financial Statements. Any financial statements
prepared with respect to Big Stuff subsequent to the date hereof
promptly shall be provided to Parent and shall constitute Big Stuff
Financial Statements for purposes hereof.
2.9 Absence of Certain Changes or Events. Except as set forth
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in Schedule 2.9 to be provided during the Schedule Period, since March
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31, 1999, through the date of this Agreement, there has not been: (i)
any Event that could reasonably be expected to have a Big Stuff Material
Adverse Effect; (ii) any declaration, payment or setting aside for
payment of any dividend (except to Big Stuff Shareholders, but only if
the entire amount of such dividend is paid to Web as a capital
contribution) or other distribution or any redemption, purchase or other
acquisition of any shares of capital stock or securities of Big Stuff;
(iii) any return of any capital or other distribution of assets to
stockholders of Big Stuff (except to Big Stuff or a subsidiary wholly
owned by Big Stuff); (iv) other than in the ordinary course of business
any investment of a capital nature by Big Stuff by the purchase of any
property or assets except to the extent such investment is in the
ordinary course of business and is individually or in the aggregate, not
in excess of $75,000; (v) any acquisition (by merger, consolidation,
acquisition of stock or assets or otherwise) of any Person or business;
(vi) any sale, disposition, pledge, mortgage or other transfer of assets
or properties of Big Stuff other than in the ordinary course of business
consistent with past practice; (vii) any action or agreement or
undertaking by Big Stuff to take any action that, if taken or done on or
after the date hereof, would result in a breach of Section 6.6 below;
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(viii) any employment, severance or consulting agreement entered into by
Big Stuff with any stockholder, officer, director, agent, employee or
consultant of Big Stuff or any amendment or modification to, or
termination of, any current employment, severance or consulting
agreement to which Big Stuff is a party or by which it is bound; (ix)
any forgiveness, cancellation, compromise, settlement, waiver or release
of any debts, claims, rights or Litigation, in each case in excess,
individually or in the aggregate, of $25,000; (x) any agreement,
authorization or commitment to take, whether in writing or otherwise,
any action which, if taken prior to the date hereof, would have made any
representation or warranty of Big Stuff in this Agreement untrue or
incorrect in any material respect; (xi) any failure by Big Stuff to
conduct its business in the ordinary course consistent with past
practice, it being understood, however, that Big Stuff has accelerated
and intensified its business activities since March 31, 1999.
2.10 Compliance with Laws. The business of Big Stuff has been
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operated in compliance with all Laws applicable thereto, except for any
instances of non-compliance which do not and would not have a Big Stuff
Material Adverse Effect.
2.11 Permits. (i) Big Stuff has all permits, certificates,
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licenses, approvals, and other authorizations required in connection
with the operation of its business (collectively, "BIG STUFF PERMITS"),
(ii) Big Stuff is not in violation of any Big Stuff Permit, and (iii) no
proceedings are pending or, to the knowledge of Big Stuff, threatened,
to revoke or limit any Big Stuff Permit,
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except, in the case of clause (i) or (ii) above, those the absence or
violation of which do not and would not have a Big Stuff Material
Adverse Effect.
2.12 Finders and Investment Bankers. Neither Big Stuff nor any
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of its officers or directors has employed any broker or finder or incurred
any liability for any brokerage fees, commissions or finders' fees in
connection with the transactions contemplated hereby.
2.13 Contracts. Except as set forth in Schedule 2.13 to be
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provided during the Schedule Period, Big Stuff is not a party or subject to
any material note, bond, mortgage, indenture, contract, lease, license,
agreement, understanding, instrument, bid or proposal ("BIG STUFF MATERIAL
CONTRACT"). For purposes of this Section 2.13, a note, bond, mortgage,
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indenture, contract, lease, license, agreement, understanding, instrument,
bid or proposal shall be considered a Big Stuff Material Contract (a) if it
is with an affiliate of Big Stuff, (b) if the financial obligation of Big
Stuff thereunder or, if applicable, to the assets or properties of Big
Stuff could exceed $25,000 after the Closing Date, or (c) if it provides
for any exclusivity or non-competition restrictions applicable to Big
Stuff. Big Stuff has made available, or will make available during the
Schedule Period, to Parent true and accurate copies of the Big Stuff
Material Contracts. All such Big Stuff Material Contracts are valid and
binding and are in full force and effect and enforceable in accordance with
their respective terms, subject to the Enforceability Exceptions. Any and
all transactions between or involving Big Stuff and an affiliate thereof
were entered into in the ordinary course of business and are upon fair and
reasonable terms not materially less favorable than Big Stuff could obtain
or become entitled to in an arm's-length transaction with a Person that is
not an affiliate. Except as set forth in Schedule 2.5 to be provided
------------
during the Schedule Period, (i) no Consent of any Person is needed in order
that each such Big Stuff Material Contract shall continue in full force and
effect in accordance with its terms without penalty, acceleration or rights
of early termination by reason of the consummation of the transactions
contemplated by this Agreement, and (ii) Big Stuff is not in material
violation or breach of or default under any such Big Stuff Material
Contract, nor to Big Stuff's knowledge is any other party to any such Big
Stuff Material Contract in material violation or breach of or default under
any such Big Stuff Material Contract.
2.14 Employee Benefit Plans. Except as set forth in Schedule 2.14
----------------------- -------------
to be provided during the Schedule Period, there are no Benefit Plans
(as defined below) maintained or contributed to by Big Stuff under which
Big Stuff could incur any liability. A "BENEFIT PLAN" shall mean (i) an
employee benefit plan as defined in Section 3(3) of the ERISA, even if,
because of some other provision of ERISA, such plan is not subject to any
or all of ERISA's provisions, and (ii) whether or not described in the
preceding clause, (a) any pension, profit sharing, stock bonus, deferred or
supplemental compensation, retirement, thrift, stock purchase or stock
option plan, or any other compensation, welfare, insurance, medical,
hospitalization, fringe benefit or retirement plan, program, policy, course
of conduct, understanding or arrangement of any kind whatsoever, whether
formal or informal, oral or written, providing for benefits for or the
welfare of any or all of the current or former employees or agents of the
employer or their beneficiaries or dependents, (b) a multi-employer plan as
defined in Section 3(37) of ERISA (a "MULTI-EMPLOYER PLAN") or in any other
applicable Law, or (c) a multiple employer plan as defined in Section 413
of the Code or in any other applicable Law.
With respect to each Benefit Plan (where applicable): Web has made,
or will make within the Schedule Period, available to Parent complete and
accurate copies of (i) all plan and trust texts and agreements, insurance
contracts and other funding arrangements; (ii) annual reports on the Form
5500 series for the last three (3) years; (iii) financial statements and/or
annual and periodic
9
accountings of plan assets for the last three (3) years; (iv) the most
recent determination letter received from the IRS; (v) actuarial valuations
for the last three (3) years; and (vi) the most recent summary plan
description as defined in ERISA.
No Big Stuff Benefit Plan is a defined benefit pension plan subject
to Title IV of ERISA or Section 412 of the Code. Each of the Big Stuff
Benefit Plans has been maintained in compliance with its terms and all
applicable Law, except where the failure to do so would not result in a Big
Stuff Material Adverse Effect or a Surviving Corporation Material Adverse
Effect. Big Stuff does not contribute to, and does not have any
outstanding liability with respect to, any Multi-employer Plan.
Except as set forth in Schedule 2.14 to be provided during the
-------------
Schedule Period, the consummation of the Merger will not, either alone or
in conjunction with another Event: (i) entitle any individual to severance
pay, or (ii) accelerate the time of payment or vesting of benefits or
increase the amount of compensation due to any individual.
2.15 Taxes and Returns.
-----------------
(a) Except as disclosed in Schedule 2.15 to be provided
-------------
during the Schedule Period, Big Stuff has timely filed, or caused to be
timely filed, all federal, state, local and foreign income, gross receipts,
sales, use, property, production, payroll, franchise, withholding,
employment, social security, license, excise, transfer, gains, and other
tax returns or reports required to be filed by it, and has paid, collected
or withheld, or caused to be paid, collected or withheld, all taxes and
governmental charges, assessments and contributions of any nature
whatsoever including, but not limited to, any related penalties, interest
and liabilities (any of the foregoing being referred to herein as a "TAX"),
required to be paid, collected or withheld, other than such Taxes for which
adequate reserves in the Big Stuff Financial Statements have been
established or which are being contested in good faith and have been
disclosed in writing to Parent prior to the date of this Agreement. Except
as set forth in Schedule 2.15 to be provided during the Schedule Period,
-------------
there are no claims or assessments pending against Big Stuff for any
alleged deficiency in any Tax, and Big Stuff does not know of any
threatened Tax claims or assessments against Big Stuff (other than those
for which adequate reserves in the Big Stuff Financial Statements have been
established or which are being contested in good faith and have been
disclosed in writing to Parent prior to the date of this Agreement).
Except as set forth in Schedule 2.15 to be provided during the Schedule
-------------
Period, Big Stuff has not made an election under Section 338 of the Code
and has not taken any action that would result in any Tax liability of Big
Stuff as a result of a deemed election within the meaning of Section 338 of
the Code. Except as set forth in Schedule 2.15 to be provided during the
-------------
Schedule Period, Big Stuff does not have any waivers or extensions of any
applicable statute of limitations to assess any Taxes. Except as set forth
in Schedule 2.15 to be provided during the Schedule Period, there are no
-------------
outstanding requests by Big Stuff for any extension of time within which to
file any return or within which to pay any Taxes shown to be due on any
return. Big Stuff (i) has elected to be treated as, and from the date of
such election until the date hereof has met, and currently meets, the
eligibility requirements for treatment as, an "S" corporation under the
Code; and (ii) as of the date hereof, has no subsidiaries for Tax purposes.
(b) A listing of all Tax sharing agreements or similar
arrangements with respect to or involving Big Stuff will be set forth in
Schedule 2.15 to be provided during the Schedule Period.
-------------
10
(c) Except as set forth in Schedule 2.15 to be provided
-------------
during the Schedule Period, Big Stuff has not made or become obligated to
make, or will, as a result of the transactions contemplated by this
Agreement, make or become obligated to make, any "excess parachute payment"
as defined in Section 280G of the Code (without regard to subsection (b)(4)
thereof).
(d) Big Stuff has disclosed on its federal income tax
returns all positions taken therein that could give rise to a substantial
understatement of federal income tax liability within the meaning of
Section 6662(d) of the Code.
(e) There are no liens for Taxes on the assets of Big Stuff
except for statutory liens for current Taxes not yet due and payable.
(f) All elections with respect to Taxes affecting Big Stuff
will be set forth in Schedule 2.15 to be provided during the Schedule
-------------
Period or, with respect to elections made on or before December 31, 1996,
are reflected in the Tax returns of Big Stuff filed and provided to Parent
prior to the date of this Agreement, or to be provided to Parent during the
Schedule Period. Big Stuff has not: (i) made and will not make a deemed
dividend election under Treas. Reg. Section 1.1502-32(f)(2) or a consent
dividend election under Section 565 of the Code; (ii) consented at any time
under Section 341(f)(l) of the Code to have the provisions of Section
341(f)(2) of the Code apply to any disposition of the assets of Big Stuff;
(iii) agreed, and is not required, to make any adjustment under Section
481(a) of the Code by reason of a change in accounting method or otherwise;
(iv) made an express election, and is not required, to treat any asset of
Big Stuff as owned by another Person for federal income Tax purposes or as
tax-exempt bond financed property or tax-exempt use property within the
meaning of Section 168 of the Code; (v) made any of the foregoing elections
and is not required to apply any of the foregoing rules under any
comparable state, foreign or local income Tax provision.
(g) Except as set forth in Schedule 2.15 to be provided
-------------
during the Schedule Period, Big Stuff is not a partner or member in any
joint venture, partnership, limited liability company or other arrangement
or contract that is or could be treated as a partnership for federal income
Tax purposes.
(h) Except as set forth in Schedule 2.15 to be provided
-------------
during the Schedule Period, big Stuff is not a party to or otherwise
subject to any arrangement having the effect of or giving rise to the
recognition of a deduction or loss before the Closing Date, and a
corresponding recognition of taxable income or gain after the Closing Date,
or any other arrangement that would have the effect of or give rise to the
recognition of taxable income or gain by Big Stuff after the Closing Date
without the receipt of or entitlement to a corresponding amount of cash.
2.16 Liabilities. From March 31, 1999, through the date of this
-----------
Agreement, except as expressly disclosed in Schedule 2.16 to be provided
-------------
during the Schedule Period or in the Big Stuff Financial Statements, Big
Stuff does not have any direct or indirect indebtedness, liability, claim,
loss, damage, deficiency, obligation or responsibility, fixed or unfixed,
xxxxxx or inchoate, liquidated or unliquidated, secured or unsecured,
accrued, absolute, contingent or otherwise, whether or not of a kind
required by generally accepted accounting principles to be set forth in a
financial statement, other than those incurred in the ordinary course of
business or in an amount not in excess of $25,000 individually or $100,000
in the aggregate. Except as set forth on Schedule 2.16 to be provided
-------------
during the Schedule Period or in the Big Stuff Financial Statements, as of
the date of this Agreement, Big Stuff does not have any (i) obligations in
respect of borrowed money,
11
(ii) obligations evidenced by bonds, debentures, notes or other similar
instruments, (iii) obligations which would be required by generally
accepted accounting principles to be classified as "capital leases," (iv)
obligations to pay the deferred purchase price of property or services,
except trade accounts payable arising in the ordinary course of business
and payable not more than twelve (12) months from the date of incurrence,
and (v) any guaranties of any obligations of any other Person.
2.17 Environmental Matters. As of the date of this Agreement,
---------------------
(i) except where the failure to so comply will not have a Big Stuff
Material Adverse Effect, Big Stuff is in compliance with all applicable
Environmental Laws (as hereinafter defined), (ii) there is no civil,
criminal or administrative judgment, action, suit, demand, claim, hearing,
notice of violation, investigation, proceeding, notice or demand letter
pending or, to the knowledge of Big Stuff, threatened against Big Stuff or
any of its properties pursuant to Environmental Laws, and (iii) except as
set forth on Schedule 2.17 to be provided during the Schedule Period,
-------------
there are no past or present Events which reasonably may be expected to
prevent compliance with, or which have given rise to or which reasonably
may be expected to give rise to liability on the part of Big Stuff under
Environmental Laws, except for those which would not reasonably be expected
to give rise to a Big Stuff Material Adverse Effect. As used herein the
term "ENVIRONMENTAL LAWS" shall mean Laws relating to pollution, waste
control, the generation, presence or disposal of asbestos, hazardous or
toxic wastes or substances, the protection of the environment,
environmental activity or public health and safety.
2.18 Intellectual Property; Fictitious Names. For purposes of
---------------------------------------
this Agreement, "INTELLECTUAL PROPERTY" shall mean all patents, trademarks,
service marks, trade names, copyrights, franchises and similar rights of or
used by Big Stuff, all applications for any of the foregoing and all
permits, grants and licenses or other rights running to or from Big Stuff
relating to any of the foregoing. Except as set forth on Schedule 2.18
-------------
to be provided during the Schedule Period, (i) Big Stuff owns, or is
licensed to, or otherwise has, the full and exclusive right to use all
Intellectual Property currently used or proposed to be used in its
business, (ii) the rights of Big Stuff in the Intellectual Property are,
subject to the rights of any licensor thereof, free and clear of any liens
or other encumbrances and restrictions and Big Stuff has not received, as
of the date of this Agreement, notice of any charge or claim of any Person
relating to such Intellectual Property or any process or confidential
information of Big Stuff ("IP CLAIM NOTICE") and does not know of any basis
for any such charge or claim, and (iii) Big Stuff and its corporate
predecessors, if any, have not conducted business at any time during the
period beginning five (5) years prior to the date hereof under any
corporate, trade or fictitious names other than their current corporate
names. Big Stuff shall promptly notify Parent of any IP Claim Notice
received by Big Stuff after the date of this Agreement.
2.19 Real Estate.
-----------
(a) Big Stuff owns no real property.
(b) Schedule 2.19(b) sets forth, or will set forth when
----------------
provided during the Schedule Period, a true, correct and complete schedule
as of the date of this Agreement of all material leases, subleases,
easements, rights-of-way, licenses or other agreements under which Big
Stuff uses or occupies, or has the right to use or occupy, now or in the
future, any real property or improvements thereon (the "BIG STUFF REAL
PROPERTY LEASES"). Except for the matters listed on said Schedule 2.19(b)
----------------
to be provided during the Schedule Period, Big Stuff holds the leasehold
estate under or other interest in each Big Stuff Real Property Lease free
and clear of all liens, encumbrances and other rights of occupancy other
than statutory landlords or mechanics' liens
12
which have not been executed upon.
2.20 Corporate Records. The corporate record books of or
-----------------
relating to Big Stuff made available, or to be made available during the
Schedule Period, to Parent by Big Stuff contain accurate and complete
records of (i) all corporate actions of the stockholders and directors (and
committees thereof) of Big Stuff, (ii) the Certificate and/or Articles of
Incorporation, Bylaws and/or other governing instruments, as amended, of
Big Stuff, and (iii) the issuance and transfer of stock of Big Stuff.
Except as set forth on Schedule 2.20 to be provided during the Schedule
-------------
Period, Big Stuff does not have any of its material records or information
recorded, stored, maintained or held off the premises of Big Stuff.
2.21 Title to and Condition of Personal Property. Big Stuff has
-------------------------------------------
good and marketable title to, or a valid leasehold interest in, all
material items of any personal property reflected in the Big Stuff
Financial Statements dated March 31, 1999, or currently used in the
operation of their business, and such property or leasehold interests are
free and clear of all liens, claims, charges, security interests, options,
or other title defects or encumbrances, except for property disposed of in
the ordinary course since the date thereof consistent with the provisions
of Section 2.9 above, and such exceptions to title and liens, claims,
-----------
charges, security interests, options, title defects or encumbrances which
do not and would not have a Big Stuff Material Adverse Effect. As of the
date of this Agreement, all such personal property is in good operating
condition and repair (ordinary wear and tear excepted), is suitable for the
use to which the same is customarily put by Big Stuff, is free from
material defects and is of a quality and quantity presently usable in the
ordinary course of the operation of the business of Big Stuff, except where
such failure would not have a Big Stuff Material Adverse Effect.
2.22 No Adverse Actions. Except as set forth on Schedule 2.22
------------------ -------------
to be provided during the Schedule Period, there is no existing, pending
or, to the knowledge of Big Stuff, threatened termination, cancellation,
limitation, modification or change in the business relationship of Big
Stuff, with any supplier, customer or other Person except as are immaterial
individually and in the aggregate and are in the ordinary course of
business. None of Big Stuff, or, to the knowledge of Big Stuff or any Big
Stuff Shareholder, any director, officer, agent, employee or other Person
acting on behalf of Big Stuff or any Big Stuff Shareholder has used any
corporate funds for unlawful contributions, payments, gifts, entertainment
or other unlawful expenses relating to political activity, or made any
direct or indirect unlawful payments to governmental or regulatory
officials or others.
2.23 Labor Matters. Except as may be set forth on Schedule
------------- ---------
2.13 or 2.23 to be provided during the Schedule Period, each of which is
---- ----
to be provided during the Schedule Period, Big Stuff does not have any
obligations, contingent or otherwise, under any employment, severance or
consulting agreement, collective bargaining agreement or other contract
with a labor union or other labor or employee group. To the knowledge of
Big Stuff, as of the date of this Agreement, there are no efforts presently
being made or threatened by or on behalf of any labor union with respect to
the unionizing of employees of Big Stuff. As of the date of this
Agreement, there is no claim by an employee, an employee group, a labor
union or other labor group or a Governmental Authority against Big Stuff
pending or, to the knowledge of the Big Stuff, threatened before the
National Labor Relations Board or any other court or tribunal respecting
employment and employment practices, terms and conditions of employment,
termination of employment or the compliance to any legislation concerning
labor matters, including, without limiting the generality of what precedes,
labor relations, occupational health and safety, minimum labor standards,
industrial accidents and occupational diseases; there is no labor strike,
dispute, slowdown or stoppage pending
13
or, to the knowledge of Big Stuff, threatened against or involving Big
Stuff; no representation question exists respecting the employees of Big
Stuff; no grievance or internal or informal complaint exists, no
arbitration proceeding arising out of or under any collective bargaining
agreement is pending and no claim therefor has been asserted. As of the
date of this Agreement, there has not been any material adverse change in
relations with employees or agents of Big Stuff as a result of any
announcement of the transactions contemplated by this Agreement. Big Stuff
shall promptly notify Parent upon knowledge by Big Stuff of the occurrence
after the date hereof of any matter referenced in this Section 2.23.
------------
2.24 Insurance. Big Stuff has obtained and maintains in full
---------
force and effect insurance with responsible and reputable insurance
companies or associations in such amounts, on such terms and covering such
risks, including fire and other risks insured against by extended coverage,
public liability insurance and insurance against claims for personal injury
or death or property damage occurring in connection with the activities of
Big Stuff or any properties owned, occupied or controlled by it, as is
customary and prudent. Since January 1, 1997, Big Stuff has not received
notice of default under, or intended cancellation or nonrenewal of, any
policies of insurance, and Big Stuff has not been refused any insurance for
coverage by an insurance carrier to which it has applied for insurance.
2.25 Disclosure. All information and documents provided prior to
----------
the date of this Agreement, and all information and documents subsequently
provided, to Parent or its representatives or lenders by or on behalf of
Big Stuff in connection with the transactions contemplated by this
Agreement are or contain, or will be or will contain as to subsequently
provided information or documents, true, accurate and complete information
in all material respects with respect to the subject matter thereof and
are, or will be as to subsequently provided information or documents,
reasonably responsive to any specific request made by or on behalf of
Parent or its representatives or lenders.
2.26 Tax. Neither Big Stuff nor the Big Stuff Shareholders know
---
of any fact or have taken any action, in each case with respect to Big
Stuff or the Big Stuff Shareholders, that could be reasonably expected
to prevent the transaction contemplated hereby from qualifying as a tax-
free reorganization pursuant to Section 368 of the Code.
2.27 Year 2000 Compliance. Except as set forth in Schedule 2.27
-------------------- -------------
to be provided during the Schedule Period, Big Stuff has taken all
commercially reasonable and prudent measures designed to make all
material aspects of Big Stuff's operations Year 2000 Compliant, to the
extent within Big Stuff's control. As used in this section, "YEAR 2000
COMPLIANT" shall mean that any and all computer hardware including but
not limited to mainframe computers, personal computers, servers and
related equipment), computer software, programming languages, code,
electronic applications and systems (including but not limited to LANs,
WANs, inter/intranet systems and client/server systems), programs,
files, databases, chips, microprocessors and any and all electronic or
mechanical functionalities in any way used in connection with, relied
upon or relating to a specified subject matter (e.g., a business,
product or service) accurately and completely process (in the manner
intended, including but not limited to calculating, comparing and
sequencing) on a timely basis any and all data which are in any way
dependent upon usage of calendar dates, including but not limited to
dates on or after January 1, 2000, or time.
14
ARTICLE III - REPRESENTATIONS AND WARRANTIES
OF PARENT
Parent represents and warrants to and covenants with Big Stuff as
follows:
3.1 Organization and Good Standing. Parent is a corporation
------------------------------
duly organized and validly existing under the laws of the State of Delaware
and has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now being conducted.
Each of the Active Parent Subsidiaries is a corporation, duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its incorporation or organization and has all requisite corporate, power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted, except where the failure to be so duly
organized, validly existing and in good standing or to have such power and
authority would not have a Parent Material Adverse Effect. Parent and each
of the Active Parent Subsidiaries is duly qualified or licensed and in good
standing to do business in each jurisdiction in which the character of the
property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary, except
where the failure to be so duly qualified or licensed and in good standing
would not have a Parent Material Adverse Effect. Schedule 3.1, to be
------------
provided during the Schedule Period, sets forth a complete and accurate
list of the jurisdictions of incorporation or organization and
qualification or license of Parent and the Active Parent Subsidiaries.
Parent has heretofore made available, or will make available during the
Schedule Period, to Big Stuff accurate and complete copies of the
Certificates or Articles of Incorporation and Bylaws, or equivalent
governing instruments, as currently in effect, of Parent and each of the
Active Parent Subsidiaries.
3.2 Capitalization. As of the date hereof, the authorized
--------------
capital stock of Parent consists of 180,000,000 shares of Parent Common
Stock and 20,000,000 shares of preferred stock, par value $0.0001 per share
as to which 142,857 shares have been designated as Series A Redeemable
Convertible Preferred Stock ("PARENT SERIES A STOCK"). As of the opening
of business on the date of this Agreement, (a) 19,917,262 shares of Parent
Common Stock were issued and outstanding, not including 234,141 shares of
Parent Common Stock which are treasury shares, and (b) 142,857 shares of
the Parent Series A Stock were issued and outstanding. No other capital
stock of Parent is issued or outstanding. All issued and outstanding
shares of the Parent Common Stock and Parent Series A Stock are duly
authorized, validly issued, fully paid and non-assessable and were issued
free of preemptive rights and in compliance with applicable corporate and
securities Laws. Except as set forth in the Parent Securities Filings or
on Schedule 3.2 to be provided during the Schedule Period, as of the date
------------
of this Agreement there are no outstanding rights, reservations of shares,
subscriptions, warrants, puts, calls, unsatisfied preemptive rights,
options or other agreements of any kind relating to any of the capital
stock or any other security of Parent, and there is no authorized or
outstanding security of any kind convertible into or exchangeable for any
such capital stock or other security. There are no restrictions upon the
transfer of or otherwise pertaining to the securities (including, but not
limited to, the ability to pay dividends thereon) or retained earnings of
Parent and the Active Parent Subsidiaries or the ownership thereof other
than those pursuant to the Parent Guaranty or the Great Western Credit
Agreement or those imposed generally by the Securities Act, the Securities
Exchange Act, applicable state or foreign securities Laws or applicable
corporate Law.
3.3. Subsidiaries. Except as set forth on Schedule 3.3 to be
------------ -------------
provided during the Schedule Period, all of the capital stock and other
interests of the Active Parent Subsidiaries held by Parent are owned by it
or a Parent subsidiary, free and clear of any claim, lien, encumbrance,
security
15
interest or agreement with respect thereto. All of the outstanding shares
of capital stock in each of the Active Parent Subsidiaries held directly or
indirectly by Parent are duly authorized, validly issued, fully paid and
non-assessable and were issued free of preemptive rights and in compliance
with applicable corporate and securities Laws.
3.4 Authorization; Binding Agreement. Parent and Acquisition
--------------------------------
Subsidiary have all requisite corporate power and authority to execute and
deliver this Agreement and the Parent Transaction Agreements and to
consummate the transactions contemplated hereby and thereby. The execution
and delivery of this Agreement and the other agreements and documents
referred to herein and to be executed in connection herewith to which
Parent or Acquisition Subsidiary is or will be a party or a signatory (the
"PARENT TRANSACTION AGREEMENTS") and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by
the respective Boards of Directors of Parent and Acquisition Subsidiary, as
appropriate, and except for the approval of the holders of the Parent
Common Stock, no other corporate proceedings on the part of Parent or
Acquisition Subsidiary are necessary to authorize the execution and
delivery of this Agreement and the Parent Transaction Agreements or to
consummate the transactions contemplated hereby or thereby. This Agreement
has been duly and validly executed and delivered by each of Parent and
Acquisition Subsidiary and constitutes, and upon execution and delivery
thereof as contemplated by this Agreement, the Parent Transaction
Agreements will constitute, the legal, valid and binding agreements of
Parent and Acquisition Subsidiary, enforceable against each of Parent and
Acquisition Subsidiary in accordance with its and their respective terms,
subject to the Enforceability Exceptions.
3.5 Governmental Approvals. No Consent from or with any
----------------------
Governmental Authority on the part of Parent or any of the Active Parent
Subsidiaries, is required in connection with the execution or delivery by
Parent and Acquisition Subsidiary of this Agreement and the Parent
Transaction Agreements or the consummation by Parent and Acquisition
Subsidiary of the transactions contemplated hereby or thereby other than
(i) filings with the SEC, state securities laws administrators and the
NYSE, (ii) Consents from or with Governmental Authorities, (iii) filings
under the HSR Act, and (iv) those Consents that, if they were not obtained
or made, do not or would not have a Parent Material Adverse Effect.
3.6 No Violations. The execution and delivery of this Agreement
-------------
and the Parent Transaction Agreements, the consummation of the transactions
contemplated hereby and thereby and compliance by Parent and Acquisition
Subsidiary with any of the provisions hereof or thereof will not (i)
conflict with or result in any breach of any provision of the Certificate
and/or Articles of Incorporation or Bylaws or other governing instruments
of Parent or any of the Active Parent Subsidiaries, except as set forth on
Schedule 3.6 to be provided during the Schedule Period, (ii) except for
------------
compliance with the requirements under the Parent Guaranty, require any
Consent under or result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration or augment the
performance required) under any of the terms, conditions or provisions of
any Parent Material Contract or other obligation to which Parent or any
Active Parent Subsidiary, is a party or by which any of them or any of
their properties or assets may be bound, (iii) result in the creation or
imposition of any lien or encumbrance of any kind upon any of the assets of
Parent or any Parent Subsidiary, or (iv) subject to obtaining the Consents
from Governmental Authorities referred to in Section 3.5 above,
-----------
contravene any Law currently in effect to which Parent or any Active Parent
Subsidiary or its or any of their respective assets or properties are
subject, except in the case of clauses (ii), (iii) and (iv) above, for any
deviations from the foregoing which do not or would not
16
have a Parent Material Adverse Effect.
3.7 Securities Filings and Litigation.
---------------------------------
(a) Parent has made available, or will make available during
the Schedule Period, to Big Stuff, true and complete copies of (i) its
Annual Reports on Form 10-K, as amended, for the years ended December 31,
1997 and 1998, as filed with the SEC, (ii) its proxy statement relating to
the meeting of shareholders held on July 29, 1998, as filed with the SEC,
and (iii) all other reports, statements and registration statements and
amendments thereto (including, without limitation, Quarterly Reports on
Form 10-Q and Current Reports on Form 8-K, as amended) filed by Parent with
the SEC since February 18, 1998. The reports and statements set forth in
clauses (i) through (iii) above, and those subsequently provided or
required to be provided pursuant to this section, are referred to
collectively as the "PARENT SECURITIES FILINGS." As of their respective
dates, or as of the date of the last amendment thereof, if amended after
filing, none of the Parent Securities Filings (including all schedules
thereto and disclosure documents incorporated by reference therein),
contained or, as to Parent Securities Filings subsequent to the date
hereof, will contain any untrue statement of a material fact or omitted or,
as to Parent Securities Filings subsequent to the date hereof, will omit to
state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading. Each of the Parent Securities Filings at the time of
filing or as of the date of the last amendment thereof, if amended after
filing, complied or, as to Parent Securities Filings subsequent to the date
hereof, will comply in all material respects with the Securities Exchange
Act or the Securities Act, as applicable.
(b) Except as set forth on Schedule 3.7(b) to be provided
---------------
during the Schedule Period, there is no Litigation pending or, to the
knowledge of Parent, threatened against Parent or any Active Parent
Subsidiary, any officer, director, employee or agent thereof, in his or her
capacity as such, or as a fiduciary with respect to any Benefit Plan of
Parent, or otherwise relating, in a manner that could have a Parent
Material Adverse Effect, to Parent, any Active Parent Subsidiary or the
securities of any of them, or any properties or rights of Parent or any of
the Active Parent Subsidiaries, which is required to be described in any
Parent Securities Filing that is not so described. No event has occurred
as a consequence of which Parent would be required to file a Current Report
on Form 8-K pursuant to the requirements of the Securities Exchange Act as
to which such a report has not been timely filed with the SEC. Any
reports, statements and registration statements and amendments thereof
(including, without limitation, Reports on Form 10-K, Quarterly Reports on
Form 10-Q and Current Reports on Form 8-K, as amended) filed by Parent with
the SEC after the date hereof shall be provided to Big Stuff upon such
filing.
3.8 Parent Financial Statements. The audited consolidated and
---------------------------
unaudited interim financial statements of Parent and the Active Parent
Subsidiaries included in the Parent Securities Filings (the "PARENT
FINANCIAL STATEMENTS") have been or will be, during the Schedule Period,
made available to Big Stuff. Except as noted thereon, the Parent Financial
Statements were prepared in accordance with generally accepted accounting
principles applicable to the business of Parent and the Active Parent
Subsidiaries consistently applied in accordance with past accounting
practices and fairly present (including, but not limited to, the inclusion
of all adjustments with respect to interim periods which are necessary to
present fairly the financial condition and assets and liabilities or the
results of operations of Parent and the Active Parent Subsidiaries,
subject to normal year-end adjustments in the ordinary course with respect
to certain items immaterial in amount or effect and the exclusion of
footnote disclosure in interim Parent Financial Statements) the financial
condition and assets and liabilities or the results of operations of
Parent and the Active
17
Parent Subsidiaries as of the dates and for the periods indicated.
Except as set forth in Schedule 3.8 to be provided during the Schedule
------------
Period or as reflected in the Parent Financial Statements, as of their
respective dates, neither Parent nor any Active Parent Subsidiary had
any debts, obligations, guaranties of obligations of others or
liabilities (contingent or otherwise) that would be required in
accordance with generally accepted accounting principles to be disclosed
in the Parent Financial Statements.
3.9 Absence of Certain Changes or Events. Except as set forth
------------------------------------
in the Parent Securities Filings made available by Parent to Big Stuff
prior to the date of this Agreement or in Schedule 3.9 to be provided
------------
during the Schedule Period, since March 31, 1999 through the date of this
Agreement, there has not been: (i) any Event that could reasonably be
expected to have a Parent Material Adverse Effect; or (ii) any agreement by
Parent or Active Parent Subsidiary to take any action that would result in
a breach of Section 6.6 below.
-----------
3.10 Compliance with Laws. The business of Parent and the Active
--------------------
Parent Subsidiaries, has been operated in compliance with all Laws
applicable thereto, except for any instances of non-compliance which do not
and would not have a Parent Material Adverse Effect.
3.11 Permits. (i) Parent and the Active Parent Subsidiaries have
-------
all permits, certificates, licenses, approvals, tariffs and other
authorizations required in connection with the operation of their business
(collectively, "PARENT PERMITS"), (ii) neither Parent nor any Active Parent
Subsidiary is in violation of any Parent Permit, and (iii) no proceedings
are pending or, to the knowledge of Parent, threatened, to revoke or limit
any Parent Permit, except, in the case of clause (i) or (ii) above, those
the absence or violation of which do not and would not have a Parent
Material Adverse Effect.
3.12 Finders and Investment Bankers. Neither Parent nor any of
------------------------------
its officers or directors has employed any broker or finder or otherwise
incurred any liability for any brokerage fees, commissions or finders' fees
in connection with the transactions contemplated hereby except that
PaineWebber Incorporated has been engaged to deliver the fairness opinion
required to be delivered pursuant to Section 7.1(l) and NationsBanc
--------------
Xxxxxxxxxx Securities, L.L.C. has been engaged to assist in the sale(s) of
the CLEC Operations and a copy of the engagement letters and other related
documents have been furnished to Big Stuff. Big Stuff will not be liable
for any brokerage fees, commissions, investment banking fees or other
amounts to PaineWebber Incorporated or NationsBanc Xxxxxxxxxx Securities,
L.L.C. in connection with this Agreement, the Company Acquisition
Agreement, the Web Acquisition Agreement or any transactions contemplated
herein or therein.
3.13 Contracts. Except as set forth in Schedule 3.13 to be
--------- -------------
provided during the Schedule Period, neither Parent nor any Active Parent
Subsidiary is a party to any material note, bond, mortgage, indenture,
contract, lease, license, agreement, understanding, instrument, bid or
proposal ("PARENT MATERIAL CONTRACT") required to be described in or filed
as an exhibit to any Parent Securities Filing that is not described in or
filed as required by the Securities Act or the Securities Exchange Act, as
the case may be. Parent has made, or will make during the Schedule Period,
available to Big Stuff true and accurate copies of the Parent Material
Contracts. All such Parent Material Contracts are valid and binding and
are in full force and effect and enforceable in accordance with their
respective terms, subject to the Enforceability Exceptions.
3.14 Corporate Records. The respective corporate record books of
-----------------
or relating to Parent and each of the Active Parent Subsidiaries made
available to Big Stuff by Parent contain accurate
18
and complete records of (i) all corporate actions of the respective
shareholders and directors (and committees thereof) of Parent and the
Active Parent Subsidiaries, (ii) the Certificate and/or Articles of
Incorporation, Bylaws and/or other governing instruments, as amended, of
Parent and the Active Parent Subsidiaries, and (iii) the issuance and
transfer of stock of Parent and the Active Parent Subsidiaries.
3.15 Tax. Parent does not know of any fact and has not taken
---
any action that could be reasonably expected to prevent the transaction
contemplated hereby from qualifying as a tax-free reorganization
pursuant to Section 368 of the Code.
3.16 Disclosure. All information and documents provided prior
----------
to the date of this Agreement and all information and documents
subsequently provided, to Big Stuff and the Big Stuff Shareholders, or
its or their respective representatives or lenders by or on behalf of
Parent in connection with the transactions contemplated by this
Agreement are or contain, or will be or will contain as to subsequently
provided information or documents, true, accurate and complete
information in all material respects with respect to the subject matter
thereof and are, or will be as to subsequently provided information or
documents, reasonably responsive to any specific request made by or on
behalf of Big Stuff and the Big Stuff Shareholders or its or their
representatives or lenders.
ARTICLE IV - ADDITIONAL COVENANTS OF BIG STUFF
AND THE BIG STUFF SHAREHOLDERS
Big Stuff and the Big Stuff Shareholders covenant and agree as
follows:
4.1 Notification of Certain Matters. Big Stuff and the Big Stuff
-------------------------------
Shareholders shall give prompt notice to Parent if any of the following
occur from the date of this Agreement through the Closing Date: (i)
receipt of any notice of, or other communication relating to, a default or
Event which, with notice or lapse of time or both, would become a default
under any Big Stuff Material Contract; (ii) receipt of any notice or other
communication from any third party alleging that the Consent of such third
party is or may be required in connection with the transactions
contemplated by this Agreement; (iii) receipt of any material notice or
other communication from any Governmental Authority in connection with the
transactions contemplated by this Agreement; (iv) the occurrence of an
Event which would have a Big Stuff Material Adverse Effect; (v) the
commencement or threat of any Litigation involving or affecting any Big
Stuff Shareholder, Big Stuff or any of its or their respective properties
or assets, or, to its knowledge, any employee, agent, director or officer
of Big Stuff, in his or her capacity as such or as a fiduciary under a
Benefit Plan of Big Stuff, which, if pending on the date hereof, would have
been required to have been disclosed in this Agreement or which relates to
the consummation of the transactions contemplated by this Agreement,
including the Merger, or the Big Stuff Transaction Agreements or any
material development in connection with any Litigation disclosed by Big
Stuff or any Big Stuff Shareholder in or pursuant to this Agreement; and
(vi) the occurrence of any event that would cause a breach by Big Stuff or
any Big Stuff Shareholder of any provision of this Agreement or a Big Stuff
Transaction Agreement, including such a breach that would occur if such
event had taken place on or prior to the date of this Agreement.
4.2 Access and Information. Between the date of this Agreement
----------------------
and the Closing Date, Big Stuff, upon reasonable notice, will give, and
shall direct its accountants and legal counsel to
19
give, Parent, its lenders and their respective authorized representatives
(including, without limitation, financial advisors, accountants and legal
counsel) at all reasonable times access to all offices and other facilities
and to all contracts, agreements, commitments, books and records
(including, but not limited to, Tax returns) of or pertaining to Big Stuff,
will permit the foregoing to make such inspections as they may require and
will cause its officers promptly to furnish Parent with (a) such financial
and operating data and other information with respect to the business and
properties of Big Stuff as Parent may from time to time reasonably request
including, but not limited to, data and information required for inclusion
in Parent's pending registration statements and/or other Parent Securities
Filings, and (b) a copy of each material report, schedule and other
document filed or received by Big Stuff pursuant to the requirements of
applicable securities Laws. The foregoing access will be subject to
restrictions contained in Section 6.9 hereof.
-----------
4.3 Big Stuff Shareholder Approval. As soon as practicable, Big
------------------------------
Stuff will, if required, take all steps necessary to duly call, give notice
of, convene and hold a meeting of the Big Stuff Shareholders for the
purpose of adopting this Agreement and for such other purposes as may be
necessary or desirable in connection with effectuating the transactions
contemplated hereby. The Board of Directors of Big Stuff (i) unless
otherwise required under the fiduciary duties of the directors of Big
Stuff, as determined by such directors in good faith upon advice of legal
counsel, will recommend to the Big Stuff Shareholders that they adopt this
Agreement and approve the transactions contemplated hereby, and (ii) will
use its reasonable best efforts to obtain any necessary adoption and
approval by the Big Stuff Shareholders of this Agreement and the
transactions contemplated hereby including, without limitation, voting the
Big Stuff Shares held for such adoption and approval.
4.4 Reasonable Best Efforts. Subject to the terms and
-----------------------
conditions herein provided, Big Stuff and the Big Stuff Shareholders agree
to use their reasonable best efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective as promptly as practicable, but
in any event, prior to the Closing, the Merger and the other transactions
contemplated by this Agreement and the Big Stuff Transaction Agreements
including, but not limited to (i) obtaining the Consent of others to this
Agreement, the Big Stuff Transaction Agreements and the transactions
contemplated hereby and thereby, (ii) the defending of any Litigation
against Big Stuff, or involving any Big Stuff Shareholder challenging this
Agreement, the Big Stuff Transaction Agreements or the consummation of the
transactions contemplated hereby or thereby, excluding any Litigation
caused by or relating to Parent or any Active Parent Subsidiary, (iii)
obtaining all Consents from Governmental Authorities required for the
consummation of the exchange and the transactions contemplated hereby, and
(iv) timely making all necessary filings under the HSR Act. Upon the terms
and subject to the conditions hereof, Big Stuff and the Big Stuff
Shareholders agree to use their reasonable best efforts to take, or cause
to be taken, all actions and to do, or cause to be done, all things
necessary to satisfy the other conditions of the Closing set forth herein.
Big Stuff and the Big Stuff Shareholders will consult with counsel for
Parent as to, and will permit such counsel to participate in, at Parent's
expense, any Litigation referred to in clause (ii) above brought against or
involving Big Stuff or any Big Stuff Shareholder.
4.5 Compliance. In consummating the Merger and the transactions
----------
contemplated hereby, Big Stuff and the Big Stuff Shareholders shall comply
in all material respects with the provisions of the Securities Exchange Act
and the Securities Act and shall comply, in all material respects, with all
other applicable Laws.
20
4.6 Benefit Plans. Between the date of this Agreement and
-------------
through the Closing Date, no discretionary award or grant under any Benefit
Plan of Big Stuff shall be made without the consent of Parent. Big Stuff
shall not make any amendment to any Benefit Plan, any awards thereunder or
the terms of any security convertible into or exchangeable for capital
stock without the consent of Parent.
4.7 Tax Opinion Certification. Big Stuff and the Big Stuff
-------------------------
Shareholders shall use their best efforts to cause the Merger to qualify,
and will not take any action which to their knowledge could reasonably be
expected to prevent the Merger from qualifying, as a reorganization under
Section 368 of the Code. Prior to the Effective Time, Big Stuff and the
Big Stuff Shareholders shall provide tax counsel rendering an opinion under
Section 7.1(m) with a certificate concerning such factual matters as such
--------------
counsel reasonably requests in connection with its opinion.
4.8 Affiliate Agreements. Big Stuff shall use its reasonable
--------------------
business efforts to ensure that each Person who is or may be an "affiliate"
of Big Stuff within the meaning of Rule 145 promulgated under the
Securities Act shall enter into an agreement in a form agreed to by the
parties hereto, acting reasonably (collectively, the "AFFILIATE
AGREEMENTS").
4.9 Transfer Restrictions. (a) In addition to any other
---------------------
restrictions imposed by Law on the ability of any Big Stuff Shareholder
to transfer any Contingent Rights II or Parent Common Stock received by
such Big Stuff Shareholder pursuant to this Agreement, each Big Stuff
Shareholder agrees that such Big Stuff Shareholder will not sell,
transfer or otherwise dispose of any of the Parent Common Stock received
by such Web Shareholder pursuant to this Agreement for a period of six
(6) months after the Closing Date; provided, however, that this
-------- -------
restriction shall not apply to the Parent Common Stock received by the
Big Stuff Shareholders pursuant to the conversion of the Convertible
Note (the "Conversion Stock"). For purposes of this Section 4.9, a
-----------
pledge of any shares subject to this Section 4.9 by a Big Stuff
-----------
Shareholder to a financial institution as collateral security for loans
arranged by such Shareholder shall not constitute a sale, transfer, or
other disposition of such shares so long as the financial institution
agrees to be bound to the restrictions imposed by this Section 4.9.
-----------
Notwithstanding anything in this Section 4.9 to the contrary, the
-----------
restrictions on transfer imposed by this Section 4.9 shall terminate,
-----------
except with regard to the Contingent Rights II, on the first to occur of
any of the following events: (i) a take-over bid (as such term is used
in the Securities Exchange Act) is completed for Parent; (ii) Parent
sells all, or substantially all, of its assets either directly by the
sale of shares of its subsidiaries or indirectly by the sale of assets
of its direct and indirect subsidiaries, or a combination thereof (other
than the CLEC Operations); and (iii) Parent ceases to have at least
fifty-one percent (51%) of the aggregate votes attaching to all of the
issued and outstanding security of all classes in the capital stock of
its subsidiaries (except for the capital stock of such subsidiaries
comprising the CLEC Operations) including the Company, WorldPages, or
Great Western Directories, Inc., directly or indirectly.
The Big Stuff Shareholders acknowledge and agree that the
following legend will appear on all certificates representing Parent
Common Stock received by the Big Stuff Shareholders pursuant to this
Agreement (except the Conversion Stock):
EXCEPT AS PROVIDED IN SECTION 4.9 OF THE BIG STUFF
AGREEMENT MADE AND ENTERED INTO AS OF JUNE 3, 1999 BY AND
AMONG THE CORPORATION, ACG ACQUISITION VII CORP., BIG STUFF
AND THE SHAREHOLDERS OF BIG STUFF (THE "BIG
21
STUFF AGREEMENT"), THESE SECURITIES MAY NOT BE SOLD,
ASSIGNED, TRANSFERRED, DISTRIBUTED, APPOINTED OR OTHERWISE
DISPOSED OF AND MAY ONLY BE ENCUMBERED OR PLEDGED IN
ACCORDANCE WITH SECTION 4.9 OF THE BIG STUFF AGREEMENT.
The Big Stuff Shareholders who are "affiliates" of Big Stuff
within the meaning of Rule 145 promulgated under the Securities Act
acknowledge and agree that the following additional legend will appear
on all certificates representing the Parent Common Stock received by
such "affiliates" of Big Stuff pursuant to this Agreement:
IN ADDITION, THE SHARES OF STOCK REPRESENTED BY THIS
CERTIFICATE ARE HELD SUBJECT TO ALL APPLICABLE PROVISIONS OF
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND THE RULES AND REGULATIONS PROMULGATED BY THE
SECURITIES AND EXCHANGE COMMISSION ("SEC") THEREUNDER. NO
SALES, TRANSFERS OR OTHER DISPOSITION OF THESE SHARES MAY BE
MADE EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR UPON THE PRIOR DELIVERY TO
ADVANCED COMMUNICATIONS GROUP, INC. ("ACG") OF AN OPINION
FROM LEGAL COUNSEL SATISFACTORY TO ACG AND IN FORM AND
SUBSTANCE SATISFACTORY TO ACG AND ITS LEGAL COUNSEL, STATING
THAT SUCH SALE OR OTHER DISPOSITION IS BEING MADE PURSUANT
TO AND IN ACCORDANCE WITH THE REQUIREMENTS OF SEC RULES 144
AND 145 OR IS OTHERWISE EXEMPT FROM REGISTRATION UNDER THE
SECURITIES ACT.
(b) Notwithstanding the foregoing, (i) certificates representing
shares of Parent Common Stock issued to Persons who are not "affiliates"
(as defined in Rules 144 and 145 under the Securities Act) of Parent shall
contain the first legend set forth in Section 4.9(a), but shall not
--------------
contain the second legend set forth in Section 4.9(a); and (ii) Parent
--------------
shall instruct its transfer agent to remove the second legend set forth in
Section 4.9(a) for those sales of Parent Common Stock by "affiliates" (as
--------------
defined in Securities Act Rules 144 and 145) of Parent and Big Stuff made
pursuant to Securities Act Rules 144 and 145.
ARTICLE V
ADDITIONAL COVENANTS OF PARENT
Parent covenants and agrees as follows:
5.1 Conduct of Business of Parent and the Active Parent
----------------------------------------------------
Subsidiaries. Parent covenants, represents and warrants that from the
------------
date of this Agreement through the Closing Date, unless Big Stuff shall
otherwise expressly consent in writing, Parent shall, and Parent shall
cause each Active Parent Subsidiary to, use its or their reasonable best
efforts to comply in all material respects with all Laws applicable to it
or any of its properties, assets or business and maintain in full force and
effect all the Parent Authorizations necessary for, or otherwise material
to, such business.
22
5.2 Notification of Certain Matters. Parent shall give prompt
-------------------------------
notice to Big Stuff if any of the following occur from the date of this
Agreement through the Closing Date: (i) any notice of, or other
communication relating to, a default or Event which, with notice or lapse
of time or both, would become a default under any Parent Material Contract
which could have a Parent Material Adverse Effect; (ii) receipt of any
notice or other communication from any third party alleging that the
Consent of such third party is or may be required in connection with the
transactions contemplated by this Agreement; (iii) receipt of any material
notice or other communication from any regulatory authority (including, but
not limited to, the NYSE or any other securities exchange) in connection
with the transactions contemplated by this Agreement; (iv) the occurrence
of an Event which could have a Parent Material Adverse Effect; (v) the
commencement or threat of any Litigation involving or affecting Parent or
any Active Parent Subsidiary or any of their respective properties or
assets, or, to its knowledge, any employee, agent, director or officer, in
his or her capacity as such, of Parent or any Active Parent Subsidiary
which, if pending on the date hereof, would have been required to have been
disclosed in this Agreement or which relates to the consummation of the
Merger or any material development in connection with any Litigation
disclosed by Parent in or pursuant to this Agreement or the Parent
Securities Filings; and (vi) any Event that could cause a breach by Parent
of any provision of this Agreement or any Parent Transaction Agreement,
including such a breach that could occur if such Event had taken place on
or prior to the date of this Agreement.
5.3 Access and Information. Between the date of this Agreement
----------------------
and the Closing Date, Parent will, upon reasonable notice, give, and direct
its legal counsel and accountants to give, Big Stuff and its authorized
representatives (including, without limitation, its financial advisors,
accountants and legal counsel) at all reasonable times access as reasonably
requested to the offices and other facilities and to all material
contracts, agreements, commitments, books and records (including, but not
limited to, Tax returns) of or pertaining to Parent and the Active Parent
Subsidiaries, will permit Big Stuff to make such reasonable inspections as
it may require and will cause its officers promptly to furnish Big Stuff
with (a) such financial and operating data and other information with
respect to the business and properties of Parent and the Active Parent
Subsidiaries as Big Stuff may from time to time reasonably request, and (b)
a copy of each material report, schedule and other document filed or
received by Parent or any Active Parent Subsidiary pursuant to the
requirements of applicable securities Laws, the NYSE or other securities
exchange, in each case as necessary in connection with the transactions
contemplated hereby. The foregoing access will be subject to the
restrictions contained in Section 6.9 hereof.
-----------
5.4 Compliance. In consummating the Merger and the transactions
----------
contemplated hereby, Parent shall comply in all material respects with the
provisions of the Securities Exchange Act and the Securities Act and shall
comply, and/or cause the Active Parent Subsidiaries to comply or to be in
compliance, in all material respects, with all other applicable Laws.
5.5 SEC and Shareholder Filings. Parent shall send to Big Stuff
---------------------------
a copy of all material public reports and materials as and when it sends
the same to its shareholders, the SEC, the NYSE or any other securities
commission or exchange.
5.6 Tax Treatment. Parent and Acquisition Subsidiary shall use
-------------
their best efforts to cause the Merger to qualify, and will not take any
action which to its knowledge could reasonably be expected to prevent the
Merger from qualifying, as a reorganization under Section 368 of the Code.
Prior to the Effective Time, Parent shall provide tax counsel rendering an
opinion under
23
Section 7.1(m) with a certificate concerning such factual matters as such
--------------
counsel identifies are relevant to its opinion.
5.7 Employment and Employee Benefit Plans. At or before the
--------------------------------------
Closing Date, Parent shall, after consultation with Big Stuff, offer
employment to the employees of Big Stuff, effective as of the Closing Date,
upon terms and conditions reasonably acceptable to the Big Stuff employees
and to Parent. After the Closing Date, Parent shall arrange for each
employee participating in any of the Benefit Plans of Big Stuff at such
time to participate in any counterpart Benefit Plans of Parent in
accordance with the eligibility criteria thereof, provided that (i) such
participants shall receive full credit for years of service with Big Stuff
prior to the Merger for all purposes for which such service was recognized
under the Benefit Plan of Big Stuff including, but not limited to,
recognition of service for eligibility, vesting, and, to the extent not
duplicative of benefits received under such Benefit Plan of Web, the amount
of benefits, and (ii) such participants shall participate in the Benefit
Plans of Parent on terms no less favorable than those offered by Parent to
similarly situated employees of Parent. Notwithstanding the foregoing,
Parent may continue one or more of the Benefit Plans of Big Stuff, in which
case Parent shall have satisfied its obligations hereunder with respect to
the benefits so provided.
5.8 Tax Opinion Certification. Parent shall use its best
-------------------------
efforts to cause the Merger to qualify, and will not take any action which
to their knowledge could reasonably be expected to prevent the Merger from
qualifying, as a reorganization under Section 368 of the Code. Prior to
the Effective Time, Parent shall provide tax counsel rendering an opinion
under Section 7.1(m) hereof with a certificate concerning such factual
--------------
matters as such counsel reasonably requests in connection with its opinion.
5.9 Expenses. If the transactions contemplated by this
--------
Agreement are consummated, all fees and expenses incurred in connection
with the transactions contemplated by this Agreement including, without
limitation, all legal, accounting, financial advisory, consulting fees,
(collectively, the "TRANSACTION EXPENSES") incurred by a party or its
stockholders in connection with the negotiation and effectuation of the
terms and conditions of this Agreement and the transactions contemplated
hereby, shall be the obligation of Parent or any direct or indirect
subsidiary of Parent after Closing. If the Merger is not consummated,
all Transaction Expenses shall be the obligation of the respective
parties which incurred them.
5.10 Parent Shareholder Approval. As soon as practicable,
---------------------------
Parent will, if required, take all steps necessary to duly call, give
notice of, convene and hold a meeting of the Parent shareholders for the
purpose of adopting this Agreement and for such other purposes as may be
necessary or desirable in connection with effectuating the transactions
contemplated hereby. The Board of Directors of Parent (i) unless
otherwise required under the fiduciary duties of the directors of
Parent, as determined by such directors in good faith and upon advice of
legal counsel, will recommend to the Parent shareholders that they adopt
this Agreement and approve the transactions contemplated hereby, and
(ii) will use its reasonable best efforts to obtain any necessary
adoption and approval by the Parent shareholders of this Agreement and
the transactions contemplated hereby.
5.11 Sale of CLEC Operations.
-----------------------
(a) Parent shall attempt to sell by the Anniversary Date all of
the shares of or otherwise dispose of the CLEC Operations. Any such
sale shall be for cash, assignment of
24
indebtedness, or other acceptable consideration as determined by (i) the
Board of Directors of Parent if before Closing, or (ii) a committee of
the Board of Directors of Parent if after Closing. If acceptable non-
cash consideration is received, the Board of Directors or a committee of
the Board of Directors, as the case may be, in conjunction with the
independent certified public accountants of Parent, shall determine the
fair market value of the consideration received for the sale of the
shares of or other disposal of the CLEC Operations.
(b) If the CLEC Sales Price received by Parent from the sales(s)
by Parent of CLEC Operations (i) prior to the Anniversary Date, or (ii)
within sixty (60) days after the Anniversary Date, if, prior to the
Anniversary Date, Parent has entered into a definitive agreement for the
sale of a portion or all of the CLEC Operations (the applicable date is
hereinafter referred to as the "FINAL SALE DATE"), is greater than Sixty
Million Dollars ($60,000,000) (the amount by which the CLEC Sales Price
exceeds $60,000,000 is referred to hereinafter as the "CLEC SALES PRICE
INCREASE"), then each Eligible Parent Shareholder shall have the right
to receive, in the manner provided in the certificate representing the
Contingent Rights I, that number of shares of Parent Common Stock
determined by multiplying the total number of Parent CLEC Shares by the
Eligible Parent Shareholder's Proportionate Share.
(c) If the CLEC Sales Price received by Parent from the sale(s)
by Parent of CLEC Operations on or prior to the Final Sale Date is less
than Forty Million Dollars ($40,000,000) (the amount by which the CLEC
Sales Price is less than $40,000,000 is referred to hereinafter as the
"CLEC SALES PRICE DECREASE"), then each Eligible Acquisition
Shareholder, excluding, for purposes of this Section 5.11(c), X'Xxxx,
---------------
shall have the right to receive, in the manner provided in the
certificate representing the Contingent Rights II, that number of shares
of Parent Common Stock determined by multiplying the total number of
Acquisition CLEC Shares by such Eligible Acquisition Shareholder's
Proportionate Share.
(d) For greater certainty, any CLEC Operations that have not
been sold prior to the Final Sale Date shall be deemed to have no value
for purposes of determining the CLEC Sales Price Increase or the CLEC
Sales Price Decrease.
(e) It is acknowledged and agreed that the number of shares of
Parent Common Stock which may be issued (i) to the Eligible Parent
Shareholders pursuant to Section 5.11(b) hereof, or (ii) to the
---------------
Eligible Acquisition Shareholders pursuant to Section 5.11(c) hereof
---------------
is to be calculated in conjunction with the number of shares of Parent
Common Stock which may be issued to Eligible Parent Shareholders (as
that term is defined in the Company Acquisition Agreement and the Web
Acquisition Agreement), or which may be issued to Eligible Acquisition
Shareholders (as that term is defined in the Company Acquisition
Agreement and the Web Acquisition Agreement), respectively. It is the
intent of the parties to this Agreement, the Company Acquisition
Agreement and the Web Acquisition Agreement that, if the closing of all
such agreements shall occur: (i) the number of shares of Parent Common
Stock issuable to the Eligible Parent Shareholders pursuant to Section
-------
5.11(b) hereof and the corresponding sections of the Company Acquisition
-------
Agreement and the Web Acquisition Agreement (such sections, the "CLEC
INCREASE SECTIONS") shall equal the number of shares of Parent Common
Stock calculated by reference to the CLEC Increase Section of one
such agreement only, not the number of shares of Parent Common Stock
calculated by reference to the CLEC Increase Sections of all three such
agreements; and (ii) the aggregate number of shares (such aggregate
number, the "SELLER SHARE NUMBER") of Parent Common Stock issuable to
the Eligible Acquisition Shareholders pursuant to Section 5.11(c)
---------------
hereof, to the Eligible Acquisition
25
Shareholders (as that term is defined in the Company Acquisition
Agreement) pursuant to Section 5.10(c) of the Company Acquisition
Agreement, and to the Eligible Acquisition Shareholders (as that term is
defined in the Web Acquisition Agreement) pursuant to Section 5.11(c) of
the Web Acquisition Agreement (such sections, the "CLEC DECREASE
SECTIONS") shall be calculated as follows: 62.406014% of the Seller
Share Number of shares of Parent Common Stock are issuable pursuant to
the Company Acquisition Agreement; 25.56391% of the Seller Share Number
of shares of Parent Common Stock are issuable pursuant to the Web
Acquisition Agreement; and 12.030075% of the Seller Share Number of
shares of Parent Common Stock are issuable pursuant to this Agreement.
ARTICLE VI - ADDITIONAL COVENANTS OF THE PARENT, BIG STUFF
AND THE BIG STUFF SHAREHOLDERS
6.1 Registration Rights and Stock Restriction Agreement.
---------------------------------------------------
(a) On or before the Closing Date, the Parent shall use its
reasonable best efforts to cause the following securities to be registered
with the SEC under the Securities Act:
(i) Parent Common Stock to be received by Big Stuff
Shareholders upon conversion of Big Stuff Common Stock, as described
in Section 1.3 hereof;
-----------
(ii) Parent Common Stock issuable upon exchange of the
Contingent Rights II; and
(iii) Parent Common Stock to be received by the shareholders
of Web upon conversion of the Convertible Note described in Section
-------
1.10 hereof.
----
(b) The Parent shall hold the meeting of the shareholders of
Parent to consider and to vote upon the approval of the Agreement including
the issuance of Parent Common Stock to the Big Stuff Shareholders and to
the shareholders of the Company and of Web, and Parent and Big Stuff will
cooperate in the preparation of one or more registration statements (such
registration statements, together with any and all amendments and
supplements thereto, being hereinafter referred to as the "REGISTRATION
STATEMENTS"), which will include the preparation of one or more proxy
statements of the Parent satisfying all requirements of applicable state
securities Laws, the Securities Act and the Securities Exchange Act.
(c) Big Stuff will furnish Parent with such information
concerning Big Stuff as is necessary in order to cause the Registration
Statements and any proxy statements, insofar as they relate to Big Stuff,
to comply with applicable Law. None of the information relating to Big
Stuff supplied by Big Stuff for inclusion in the Registration Statements or
any proxy statements will be false or misleading with respect to any
material fact or will omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. Big Stuff
agrees promptly to advise Parent if, at any time prior to the meeting of
the shareholders of the Parent referenced herein, any information provided
by it in the Registration Statements or any proxy statement is or becomes
incorrect or incomplete in any material respect and to provide Parent with
the information needed to correct such inaccuracy or omission. Big Stuff
will furnish Parent with such supplemental information as may be necessary
in order to cause the Registration Statements or the proxy statements,
insofar as it relates to Big Stuff, to comply with applicable Law after the
mailing thereof
26
to the Big Stuff Shareholders.
(d) Big Stuff and Parent agree to cooperate in making any
preliminary filings of Registration Statements and the Parent proxy
statement with the SEC as promptly as practicable, on a confidential basis
pursuant to Rule 14a-6(e)(2) under the Securities Exchange Act.
(e) Parent will file the Registration Statements and the
Parent proxy statements with the SEC and appropriate materials with
applicable state securities agencies and will use all reasonable best
efforts to cause the Registration Statements and the Parent proxy
statements to become effective under the Securities Act and all such
state filed materials to comply with applicable state securities Laws.
Big Stuff authorizes Parent to utilize in the Registration Statements
and in all such state filed materials, the information concerning Big
Stuff provided to Parent in connection with, or contained in, the
Registration Statements. Parent promptly will advise Big Stuff when the
Registration Statements have become effective and of any supplements or
amendments thereto, and Parent will furnish Big Stuff with copies of all
such documents. Parent shall file any and all amendments, supplements
and related filings to such Registration Statements (and state filed
materials) as may be required. Big Stuff shall not distribute any
written material that might constitute a "prospectus" relating to this
Agreement or any of the transactions contemplated by this Agreement
within the meaning of the Securities Act or any other applicable
securities Law without the prior written consent of Parent.
6.2 Employment Agreements. At or before the Closing Date,
---------------------
Parent will enter into Employment and Non-Competition Agreements, in
forms agreed to by Parent and Big Stuff, acting reasonably, with certain
individuals, the identities of whom shall be agreed upon by Parent and
Big Stuff, acting reasonably.
6.3 Consents. Each of Parent and Big Stuff shall promptly
--------
apply for or otherwise seek, and use its best efforts to obtain, all
consents and approvals required to be obtained by it for the
consummation of the Merger.
6.4 Legal Requirements. Subject to the terms and conditions
------------------
provided in this Agreement, each of the parties hereto shall use its
reasonable best efforts to take promptly, or cause to be taken, all
reasonable actions, and to do promptly, or cause to be done, all things
necessary, proper or advisable under applicable Laws to consummate and
make effective the transactions contemplated hereby to obtain all
necessary waivers, consents and approvals and to effect all necessary
registrations and filings and to remove any injunctions or other
impediments or delays, legal or otherwise, in order to consummate and
make effective the transactions contemplated by this Agreement for the
purpose of securing to the parties hereto the benefits contemplated by
this Agreement.
6.5 Public Announcements. All press releases and other
--------------------
disseminations of information to employees, customers or suppliers
relating to the Merger or the transactions contemplated by this
Agreement or the Company Acquisition Agreement by any party hereto shall
require the prior approval of Parent and Big Stuff, provided Parent
shall have the right to make such public announcements without the
approval of the other parties hereto should such disclosure be required
by Law or the policies or requirements of United States securities
regulators, stock exchanges, or other relevant entities in the opinion
of Parent's legal counsel. Should such disclosure be required, Parent
agrees to provide the others with reasonable advance notice of and a
copy of, and to consult with the others regarding, the proposed
disclosure.
27
6.6 Conduct of Business Prior to Closing Date. Except as
-----------------------------------------
expressly contemplated by this Agreement, during the period from the date
of this Agreement to the Closing Date, Big Stuff shall conduct its business
in the ordinary course and consistent with past practice, subject to the
limitations contained in this Agreement, and Big Stuff shall use its
reasonable business efforts to preserve intact its business organization,
to keep available the services of its officers, agents and employees and to
maintain satisfactory relationships with all Persons with whom it does
business. Except as expressly contemplated by this Agreement, and it being
acknowledged and agreed by each of the parties to this Agreement that
Parent is in the process of a substantial reduction in workforce, and,
subject to Section 5.11, Parent shall, and it shall cause the Active
------------
Parent Subsidiaries to, use its or their reasonable business efforts to
preserve intact its business organization, consistent with the budget
adopted by the Executive Committee of the Board of Directors of Parent, to
keep available the services of only those officers, agents and employees
whom Parent believes are required to maintain satisfactory relationships
with all Persons with whom it does business. Without limiting the
generality of the foregoing, and except as otherwise expressly provided in
this Agreement, after the date of this Agreement and prior to the Closing
Date, (i) Big Stuff will not, without the prior written consent of Parent
(which consent shall not be unreasonably withheld or delayed); and (ii)
subject to Section 5.11, neither Parent nor any Active Parent Subsidiary
------------
will, without the prior written consent of Big Stuff (which consent shall
not be unreasonably withheld or delayed):
(a) except as provided for in this Agreement, the Company
Acquisition Agreement or the Web Acquisition Agreement, amend or propose to
amend its Certificate or Articles of Incorporation or Bylaws (or comparable
governing instruments) in any material respect;
(b) except as set forth on Schedule 6.6(b)(i) to be
------------------
provided during the Schedule Period, with regard to Web, or Parent Common
Stock to be issued pursuant to those options or warrants listed on
Schedule 6.6(b)(ii) to be provided during the Schedule Period or in
-------------------
Section 6.10, with regard to Parent or the Active Parent Subsidiaries,
------------
authorize for issuance, issue, grant, sell, pledge, dispose of or propose
to issue, grant, sell, pledge or dispose of any shares of, or any options,
warrants, commitments, subscriptions or rights of any kind to acquire or
sell any shares of, the capital stock or other securities of Big Stuff, or
of Parent or any Active Parent Subsidiary, as the case may be, including,
but not limited to, any securities convertible into or exchangeable for
shares of stock of any class of Big Stuff, or of Parent or any Active
Parent Subsidiary, as the case may be; provided, however, that Big
-------- -------
Stuff may issue capital stock pursuant to the exercise of options and
warrants outstanding on the date of this Agreement;
(c) except as provided for in this Agreement, the Company
Acquisition Agreement or the Web Acquisition Agreement, split, combine or
reclassify any shares of its capital stock or declare, pay or set aside any
dividend or other distribution (whether in cash, stock or property or any
combination thereof) in respect of its capital stock, other than dividends
or distributions to Big Stuff Shareholders (but only if the entire amount
of such dividend is paid to Web as a capital contribution), or to Parent or
a Parent subsidiary, as the case may be, or redeem, purchase or otherwise
acquire or offer to acquire any shares of its capital stock or other
securities;
(d) (i) except for debt (including, but not limited to,
obligations in respect of capital leases, but excluding obligations under
the Convertible Note) not in excess of $50,000 in the aggregate for all
Persons combined, create, incur or assume any short-term debt (excluding
trade payables incurred in the ordinary course of business), long-term debt
or obligations in respect of
28
capital leases; (ii) assume, guarantee, endorse or otherwise become liable
or responsible (whether directly, indirectly, contingently or otherwise)
for the obligations of any Person, except for obligations permitted by this
Agreement of any Active Parent Subsidiary, in the ordinary course of
business consistent with past practice; (iii) make any capital expenditures
or make any loans, advances or capital contributions to, or investments in,
any other Person (other than customary advances to employees made in the
ordinary course of business consistent with past practice), provided Big
Stuff will continue to make capital expenditures, maintain, upgrade and
expand its facilities, and otherwise operate in the ordinary course and
consistent with past practice; (iv) acquire the stock or assets of, or
merge or consolidate with, any other Person or business except the
contemplated merger with Web; or (v) voluntarily incur any material
liability or obligation (absolute, accrued, contingent or otherwise);
(e) subject to Section 5.11 hereof, sell, transfer,
------------
mortgage, pledge or otherwise dispose of, or encumber, or agree to sell,
transfer, mortgage, pledge or otherwise dispose of or encumber, any
material assets or properties, real, personal or mixed, except in the
ordinary course of business, in the case of Parent and the Active Parent
Subsidiaries;
(f) increase in any manner the compensation of any of its
officers, agents or employees other than any increases required pursuant to
their employment agreements in accordance with their terms in effect on the
date of this Agreement and increases in the ordinary course of business
consistent with past practice not in excess on an individual basis of the
lesser of 10% of the current compensation of such individual or $10,000 per
annum;
(g) enter into, establish, amend, make non-routine or
material interpretations or determinations with respect to, or terminate
any employment, consulting, retention, change in control, collective
bargaining, bonus or other incentive compensation, profit sharing, health
or other welfare, stock option, stock purchase, restricted stock, or other
equity, pension, retirement, vacation, severance, deferred compensation or
other compensation or benefit plan, policy, agreement, trust, fund or
arrangement with, for or in respect of, any shareholder, officer, director,
other employee, agent, consultant or affiliate, other than actions
contemplated by this Agreement, the Company Acquisition Agreement and the
Web Acquisition Agreement;
(h) make any elections with respect to Taxes that are
inconsistent with the prior elections reflected in the Financial Statements
as of and to the period ended December 31, 1998;
(i) except with regard to Xxxxxxx, compromise, settle, grant
any waiver or release relating to or otherwise adjust any Litigation,
except routine Litigation in the ordinary course of business consistent
with past practice, involving only a payment not in excess of $50,000
individually or $100,000 when aggregated with all such payments by Big
Stuff or by Parent and the Active Parent Subsidiaries combined, as the case
may be;
(j) take any action or omit to take any action, which action
or omission would result in a breach of any of the covenants,
representations and warranties of Big Stuff, the Big Stuff Shareholders or
Parent or the Active Parent Subsidiaries set forth in this Agreement or
would have a Big Stuff Material Adverse Effect, with regard to Big Stuff
and the Big Stuff Shareholders, or a Parent Material Adverse Effect, with
regard to Parent and the Active Parent Subsidiaries;
(k) except in the ordinary course of business enter into any
lease or other agreement, or amend any lease or other agreement, with
respect to real property;
29
(l) enter into or amend any agreement or transaction (i)
pursuant to which the aggregate financial obligation of Big Stuff, or of
Parent or an Active Parent Subsidiary, as the case may be, or the value of
the services to be provided could exceed $50,000, (ii) having a term of
more than twelve (12) months and pursuant to which the aggregate financial
obligation of Big Stuff, or of Parent or an Active Parent Subsidiary, as
the case may be, or the value of the services to be provided could exceed
$100,000 per year, or (iii) which is not terminable by Big Stuff or Parent
or the Active Parent Subsidiaries, as the case may be, upon no more than
thirty (30) days' notice without penalty in excess of $50,000 individually
or $100,000 when aggregated with the penalties under all such agreements or
transactions;
(m) take any action with respect to the indemnification of
any Person;
(n) change any accounting practices or policies, except as
required by generally accepted accounting principles or Laws or as agreed
to or requested by Big Stuff's or Parent's auditors after consultation with
Parent's or Big Stuff's auditors, as the case may be; provided,
--------
however, that notice and a description of any change pursuant to this
-------
Section 6.6(n) shall be provided promptly after such change is effected
--------------
to Big Stuff or Parent, as the case may be;
(o) except in the ordinary course of business, enter into,
amend, modify, terminate or waive any rights under any contract which would
result in a Big Stuff Material Adverse Effect, with respect to Big Stuff,
or a Parent Material Adverse Effect, with respect to Parent;
(p) adopt a plan of liquidation, dissolution, merger,
consolidation, share exchange, restructuring, recapitalization, or other
reorganization; provided, however, that Parent may adopt such a plan
-------- -------
and may cause the liquidation or dissolution of any Parent subsidiary if
Parent is unable to sell such Parent subsidiary (i) at a price which Parent
determines to be reasonable, and (ii) during a time period which Parent
determines to be reasonable; provided, further, however, that if
-------- ------- -------
Parent adopts such a plan or causes such liquidation or dissolution, Parent
promptly shall provide to Big Stuff notice of such adoption, liquidation or
dissolution, as the case may be; or
(q) resolve, agree, commit or arrange to do any of the
foregoing.
Notwithstanding anything in this Section 6.6 to the contrary, it
-----------
is understood that Big Stuff has been accelerating and intensifying its
business activities since March 31, 1999 and will continue to do so.
Accordingly, (x) "ordinary course of business" and "consistent with past
practice", as used in this Section 6.6 with respect to Big Stuff,
-----------
shall be interpreted to include such acceleration and intensification;
and (y) in considering requests for consent from Big Stuff, Parent shall
take into account such acceleration and intensification.
Furthermore, Parent covenants, represents and warrants that from
and after the date hereof, unless Big Stuff shall otherwise expressly
consent in writing, Parent shall use its reasonable business efforts to:
(1) keep in full force and effect insurance comparable in amount
and scope of coverage to insurance now carried by it;
(2) pay all accounts payable and other obligations, to the
extent permitted by Parent's
30
cash flow and consistent with prudent cash management strategies, and
consistent with the provisions of this Agreement, except if the same are
contested in good faith, and, in the case of the failure to pay any
material accounts payable or other obligations which are contested in
good faith, only after consultation with Big Stuff; and
(3) comply in all material respects with all Laws applicable to
it or any of its properties, assets or business and maintain in full
force and effect all Parent Permits necessary for, or otherwise material
to, such business; provided, however, that Big Stuff acknowledges
-------- -------
and agrees that Parent is attempting to sell its CLEC Operations, and to
the extent such CLEC Operations are sold and, as a result, certain Laws
or Parent Permits to which Parent is subject as of the date hereof
become unnecessary, irrelevant or immaterial, Parent shall not be
required to comply with such Laws or maintain such Parent Permits.
Furthermore, Big Stuff covenants, represents and warrants that from
and after the date hereof, unless Parent shall otherwise expressly consent
in writing, Big Stuff shall use its or their reasonable business efforts
to:
(1) keep in full force and effect insurance comparable in
amount and scope of coverage to insurance now carried by it;
(2) pay all accounts payable and other obligations, when
they become due and payable, in the ordinary course of business
consistent with past practice and with the provisions of this
Agreement, except if the same are contested in good faith, and, in
the case of the failure to pay any material accounts payable or
other obligations which are contested in good faith, only after
consultation with Parent; and
(3) comply in all material respects with all Laws applicable
to it or any of its properties, assets or business and maintain in
full force and effect all Big Stuff Permits necessary for, or
otherwise material to, such business.
6.7 No Solicitation of Acquisition Proposal. Neither the Big
---------------------------------------
Stuff Shareholders, Big Stuff, Parent nor any of their Associates shall,
directly or indirectly, make, encourage, facilitate, solicit, assist or
initiate any inquiry or proposal, or provide any information to or
participate in any negotiations with, any Person or group other than the
parties to this Agreement and their Associates relating to any of the
following transactions ("EXTRAORDINARY TRANSACTIONS"): (i) liquidation,
dissolution, recapitalization, share exchange, business combination, merger
or consolidation of Big Stuff or Parent or an Active Parent Subsidiary,
(ii) sale of a significant amount of assets of Big Stuff or Parent or an
Active Parent Subsidiary, (iii) purchase or sale of shares of capital stock
of Big Stuff or Parent or an Active Parent Subsidiary, or (iv) any similar
actions or transactions involving Big Stuff or Parent or an Active Parent
Subsidiary (other than the Merger and the transactions contemplated by this
Agreement, the Company Acquisition Agreement and the Web Acquisition
Agreement), or agree to or consummate any Extraordinary Transaction. Each
of Parent and Big Stuff shall immediately inform the other party of any
inquiry, proposal, or request for information or offer (including the terms
thereof and the Person making such inquiry, proposal, request or offer)
which it may receive in respect of an Extraordinary Transaction and provide
Parent and Big Stuff with a copy of any such written inquiries, proposals,
requests for information and offers, and thereafter keep Parent and Big
Stuff fully informed of the status and details thereof. The provisions of
this Section 6.7 shall not apply to the sale of the CLEC Operations by
-----------
Parent or any Active Parent Subsidiary as contemplated by Section 5.11
------------
hereof or to the WorldPages Acquisition.
31
6.8 Resignations. Big Stuff shall use its reasonable business
------------
efforts to cause the officers and/or directors of Big Stuff as Parent may
request to voluntarily resign their positions as such effective as of the
Closing Date. The instruments effecting such resignations are herein
referred to as the "RESIGNATIONS."
6.9 Confidentiality. Unless (i) otherwise expressly provided
---------------
in this Agreement, (ii) required by applicable Law or any listing agreement
with, or the rules and regulations of, any applicable securities exchange,
(iii) necessary to secure any required Consents as to which the other party
has been advised, or (iv) consented to in writing by Parent and Big Stuff,
this Agreement and any information or documents furnished in connection
herewith shall be kept strictly confidential by Big Stuff, Parent and their
respective officers, directors, employees and agents. Prior to any
disclosure pursuant to the preceding sentence, the party intending to make
such disclosure shall consult with the other party regarding the nature and
extent of the disclosure. Nothing contained herein shall preclude
disclosures to the extent necessary to comply with accounting, SEC and
other disclosure obligations imposed by applicable Law. To the extent
required by such disclosure obligations, Parent, after consultation with
Big Stuff, may file with the SEC a Report on Form 8-K pursuant to the
Securities Exchange Act with respect to the Merger, which report may
include, among other things, financial statements and pro forma financial
information with respect to the other party. In connection with any filing
with the SEC of a registration statement or amendment thereto under the
Securities Act, Parent, after consultation with Big Stuff, may include a
prospectus containing any information required to be included therein with
respect to the Merger, including, but not limited to, financial statements
and pro forma financial information with respect to the other party, and
thereafter distribute said prospectus. Parent and Big Stuff shall
cooperate with the other and provide such information and documents as may
be required in connection with any such filings. In the event the Merger
is not consummated, Parent and Big Stuff shall return to the other all
documents furnished by the other and will hold in absolute confidence any
information obtained from the other party except to the extent (i) such
party is required to disclose such information by Law or such disclosure is
required by discovery, subpoena or other similar legal process in a
proceeding involving a third Person, (ii) such party received such
information on a non-confidential basis from a source, other than the other
party, which is not known by such party to be bound by a confidentiality
obligation with respect thereto, or (iii) such information becomes
generally available to the public or is otherwise no longer confidential.
Prior to any disclosure of information pursuant to the exception in clause
(i) of the preceding sentence, the party intending to disclose the same
shall so notify, in writing, the party which provided the same in order
that such party may seek a protective order or other appropriate remedy
should it choose to do so.
6.10 Options; Stock Issuances. The Board of Directors of Parent
------------------------
shall have the right to grant or issue , as the case may be, (i) restricted
stock or options to acquire shares of Parent Common Stock pursuant to the
Parent's 1997 Stock Awards Plan, provided that no more than the number of
shares authorized under the 1997 Stock Awards Plan have been issued; (ii)
warrants to purchase up to 90,000 shares of Parent Common Stock to be
issued to certain non-employee directors of Parent who are responsible for
negotiating this Agreement at an exercise price of $6.96 per share, the
Company Acquisition Agreement and the Web Acquisition Agreement; (iii) the
shares of Parent Common Stock issuable upon conversion at Closing of the
Great Western Notes at a conversion price of $5.50 per share; (iv) up to
1,818,182 shares of Parent Common Stock issuable upon conversion of one or
more notes which may be issued to the Web shareholders who may lend up to
Ten Million Dollars ($10,000,000.00) to Big Stuff or Web as provided in
this Agreement, at a conversion price of $5.50 per share; (v) shares of
Parent Common Stock to be issued upon exercise
32
of options or warrants to be granted at Closing to those Persons designated
by Company; (vi) those shares of Parent Common Stock issuable upon exercise
of previously granted options; (vii) derivative securities to purchase
shares of Parent Common Stock issuable to certain Big Stuff Shareholders in
connection with the sale of the CLEC Operations, as provided in Section
-------
5.11 hereof; (viii) derivative securities to purchase shares of Parent
----
Common Stock issuable to certain Company Shareholders in connection with
the sale of the CLEC Operations; and (ix) derivative securities to purchase
shares of Parent Common Stock issuable to certain Web shareholders in
connection with the sale of the CLEC Operations.
ARTICLE VII - CONDITIONS TO CLOSING
7.1 Conditions to Obligations of Each Party to Closing. The
--------------------------------------------------
respective obligations of each party to consummate this Agreement and
effect the Merger shall be subject to the satisfaction or waiver at or
prior to the Closing Date of the following conditions:
(a) No Injunctions or Restraints; Illegality. No
----------------------------------------
temporary restraining order, preliminary or permanent injunction or
other order issued by any court of competent jurisdiction or other legal
restraint or prohibition preventing the consummation of the Merger shall
be in effect, nor shall any proceeding brought by an administrative
agency or commission or other governmental authority or instrumentality,
domestic or foreign, seeking any of the foregoing be pending; nor shall
there be any action taken, or any statute, rule, regulation or order
enacted, entered, enforced or deemed applicable to the Merger, which
makes the consummation of the Merger illegal.
(b) Other Agreements. The Company Acquisition Agreement
----------------
and the Web Acquisition Agreement and all documents related to the
Company Acquisition Agreement and the Web Acquisition Agreement shall
have been duly executed and delivered by all parties thereto and shall
be in full force and effect.
(c) Employment and Non-Competition Agreements. The
-----------------------------------------
Employment and Non-Competition Agreements described in Section 6.2
-----------
hereof shall have been duly executed and delivered by all parties
thereto and shall be in full force and effect.
(d) Government Approvals. Except for those Consents the
--------------------
failure of which to be obtained, (i) in the reasonable judgment of
Parent, would not have a Parent Material Adverse Effect or a Big Stuff
Material Adverse Effect, and (ii) in the reasonable judgment of Big
Stuff, would not have a Big Stuff Material Adverse Effect or a Parent
Material Adverse Effect, all Consents of any domestic or foreign
Governmental Authority required for the consummation of the Merger shall
have been obtained by Final Order.
(e) Related Transactions. (i) The acquisition by
--------------------
Parent, or a direct or indirect subsidiary of Parent, of Big Stuff and
Web in a tax-free reorganization shall have been consummated prior to or
simultaneously with the acquisition of the Company and any registration
statement(s) required for the registration of Parent Common Stock issued
to the Big Stuff Shareholders, the Company shareholders and the
shareholders of Web as consideration in connection with the acquisition
of Big Stuff, the Company and Web by Parent shall have been declared
effective, (ii) and no stop order suspending the effectiveness of such
registration statement(s) shall have been issued and no proceeding for
that purpose shall have been initiated
33
or threatened by the SEC or any other Governmental Authority, and (iii)
the Great Western Notes shall have been satisfied by the issuance of
Parent Common Stock to the Great Western Shareholders.
(f) Financing. Parent and Big Stuff shall have received
---------
from their lenders an extension of all of their and their subsidiaries'
debt owing by them on terms and conditions satisfactory to Parent and
Big Stuff or all such debts shall be refinanced on terms satisfactory to
Parent and Big Stuff or any consents and approvals required from such
lenders is received.
(g) Shareholder Approval. All necessary approvals of
--------------------
the Big Stuff Shareholders and the shareholders of Parent in connection
with the Merger shall have been obtained.
(h) Required Consents. Any required Consents of any
-----------------
Person to the Merger or the transactions contemplated by this Agreement
shall have been obtained on terms and conditions reasonably acceptable to
Parent and Big Stuff and be in full force and effect, except for those the
failure of which to obtain, in the reasonable judgment of Parent and Big
Stuff, would not have a Parent Material Adverse Effect or a Big Stuff
Material Adverse Effect.
(i) HSR Act. Any waiting period applicable to the Merger
-------
under the HSR Act shall have expired or earlier termination thereof shall
have been granted and no action shall have been instituted by either the
United States Department of Justice or the Federal Trade Commission to
prevent the consummation of the transactions contemplated by this Agreement
or to modify or amend such transactions in any material manner, or if any
such action shall have been instituted, it shall have been withdrawn or a
final judgment shall have been entered against such Department or
Commission, as the case may be.
(j) Registration Statement. The Registration Statement(s)
----------------------
shall have been declared effective and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by the
SEC.
(k) Blue Sky. Parent shall have received all state
--------
securities Law authorizations necessary to consummate the transactions
contemplated hereby.
(l) Fairness Opinion. Parent's Board of Directors shall
----------------
have received from its financial advisors, PaineWebber Incorporated, a
written opinion addressed to it for inclusion in the Prospectus/Proxy
Statement to the effect that the consideration to be paid, in the
aggregate, by the Parent in the transactions contemplated by this
Agreement, the Company Acquisition Agreement, the Web Acquisition
Agreement and the agreement relating to the redemption of the Great
Western Notes is fair to Parent from a financial point of view. The
opinion is being given as of this date.
(m) Tax Opinion. Parent shall have received an opinion
-----------
from Xxxxxxxxx Xxxxxxx Xxxxx Xxxxxx LLP based on customary representations
contained in certificates of Parent, to the effect that, if the Merger is
consummated in accordance with the provisions of this Agreement, the Merger
will qualify as a tax-free reorganization within the meaning of the Code.
(n) Contingent Rights I. Parent shall have declared and
-------------------
paid the Contingent
34
Rights I dividend.
(o) NYSE Listing Approval. Parent shall have received
---------------------
from the NYSE approval for listing with the NYSE of the Parent Common
Stock to be issued pursuant to this Agreement, the Company Acquisition
Agreement and the Web Acquisition Agreement.
(p) Escrow Agreement. The Escrow Agreement described in
----------------
Section 9.1(b) shall have been duly executed and delivered by all
parties thereto and shall be in full force and effect.
7.2 Additional Conditions to Obligations of Big Stuff
-------------------------------------------------
Shareholders and Big Stuff. The obligations of the Big Stuff
--------------------------
Shareholders and Big Stuff to consummate and effect this Agreement and
the transactions contemplated hereby shall be subject to the
satisfaction at or prior to the Closing Date of each of the following
conditions, any of which may be waived, in writing, exclusively by Big
Stuff:
(a) Representations, Warranties and Covenants.
-----------------------------------------
(i) The representations and warranties of Parent in
this Agreement that are modified by materiality or Parent Material
Adverse Effect ("PARENT MODIFIED REPRESENTATION") shall be true
and correct in all respects and those that are not so modified
("PARENT NONMODIFIED REPRESENTATION") shall be true and correct in
all material respects on the date hereof and, except for changes
not prohibited by this Agreement, as of the Closing Date as if
made at the Closing Date. Furthermore, none of the
representations or warranties of Parent contained in this
agreement, disregarding any qualifications therein or in this
Section 7.2(a) regarding materiality or Parent Material Adverse
--------------
Effect, shall be untrue or incorrect to the extent that such
untrue or incorrect representations or warranties, when taken
together as a whole, have had or would have a Parent Material
Adverse Effect; and
(ii) Parent shall have performed and complied with
all of the covenants and agreements in all material respects and
satisfied in all material respects all of the conditions required
by this Agreement to be performed or complied with or satisfied by
Parent at or prior to the Closing Date. Notwithstanding anything
in this Agreement to the contrary, the parties hereto acknowledge
and agree that the consummation of the transactions contemplated
by this Agreement and the subsequent disposition of the CLEC
Operations constitutes a significant change from the plans and
strategies described in the 1998 10-K such that the
representations and warranties of Parent that reference the 1998
10-K will not be true and correct as of the Closing Date as they
relate to the plans and strategies of the business of Parent at
the Closing Date.
(b) Certificate of Parent and Other Deliveries. Big
------------------------------------------
Stuff shall have been provided, with (i) a certificate executed on
behalf of Parent by an Officer to the effect that, as of the Closing
Date, all representations and warranties made by Parent under this
Agreement are true and complete except as qualified by Section
-------
7.2(a)(i) hereof; and all covenants, obligations and conditions of this
---------
Agreement to be performed by Parent on or before such date have been so
performed; (ii) a certificate of good standing from the Secretary of
State of the State of Delaware that Parent is a validly existing
corporation; (iii) duly adopted resolutions of the Board of Directors of
Parent approving the execution, delivery and performance of this
Agreement and the
35
Parent Transaction Agreements to which it is a party and the instruments
contemplated hereby and thereby, certified by its Secretary or Assistant
Secretary; and (iv) such other documents and instruments as Big Stuff
may reasonably request.
(c) Shareholder Approval. Big Stuff shall have received
--------------------
from Parent's transfer agent a certificate indicating that a sufficient
number of Parent's shareholders voted to approve the Merger such that
the Merger was deemed approved by the Parent shareholders.
(d) Legal Opinion. Big Stuff shall have received a legal
-------------
opinion of Xxxxxxxxx Xxxxxxx Xxxxx Xxxxxx LLP, legal counsel to Parent,
in a form to be agreed upon by the parties hereto, acting reasonably.
(e) No Material Adverse Change. There shall not have
--------------------------
occurred after the date hereof any Event that has or reasonably could be
expected to have a Parent Material Adverse Effect.
(f) Litigation. There shall be no action, suit, claim or
----------
proceeding of any nature pending, or overtly threatened, against Parent,
its properties or any of its officers or directors, arising out of, or in
any way connected with, the Merger or the other transactions contemplated
by the terms of this Agreement which individually or in the aggregate may
cause a Parent Material Adverse Effect.
7.3 Additional Conditions to the Obligations of Parent. The
--------------------------------------------------
obligations of Parent to consummate and effect this Agreement and the
transactions contemplated hereby shall be subject to the satisfaction at
or prior to the Closing Date of each of the following conditions, any of
which may be waived, in writing, exclusively by Parent:
(a) Representations, Warranties and Covenants.
-----------------------------------------
(i) The representations and warranties of Big Stuff
and the Big Stuff Shareholders contained in this Agreement that are
modified by materiality or Big Stuff Material Adverse Effect ("BIG
STUFF MODIFIED REPRESENTATION") shall be true and correct in all
respects, and those that are not so modified ("BIG STUFF NONMODIFIED
REPRESENTATION") shall be true and correct in all material respects,
on the date hereof and, except for changes not prohibited by this
Agreement, as of the Closing Date as if made at the Closing Date.
Furthermore, none of the representations or warranties of Big Stuff
or the Big Stuff Shareholders contained in this Agreement,
disregarding any qualifications therein or in this Section 7.3(a)
--------------
regarding materiality or Big Stuff Material Adverse Effect, shall be
untrue or incorrect to the extent that such untrue or incorrect
representations or warranties, when taken together as a whole, have
had or would have a Big Stuff Material Adverse Effect; and
(ii) Big Stuff and the Big Stuff Shareholders shall
have performed and complied with all the covenants and agreements in
all material respects and satisfied in all material respects all the
conditions required by this Agreement to be performed or complied
with or satisfied by Big Stuff and the Big Stuff Shareholders at or
prior to the Closing Date.
(b) Certificate of Big Stuff and Other Deliveries.
---------------------------------------------
Parent shall have been provided with (i) a certificate executed on
behalf of Big Stuff by its Chief Executive Officer to the effect that,
as of the Effective Time all representations and warranties made by Big
Stuff in
36
this Agreement are true and correct, except as qualified by Section
-------
7.3(a)(i) hereof, and all covenants, obligations and conditions of this
---------
Agreement to be performed by Big Stuff and the Big Stuff Shareholders on
or before such date have been so performed; (ii) a certificate of good
standing from the proper authority in the jurisdictions in which Big
Stuff is incorporated or qualified to do business stating that each is a
validly existing corporation in good standing; (iii) duly adopted
resolutions of the Big Stuff Board of Directors and Big Stuff
Shareholders approving the execution, delivery and performance of this
Agreement and the Big Stuff Transaction Agreements to which Big Stuff is
a party and the instruments contemplated hereby and thereby, certified
by the Secretary or Assistant Secretary of Big Stuff; (iv) a true and
complete copy of the Articles or Certificate of Incorporation or
comparable governing instruments, as amended, of Big Stuff certified by
the Secretary of State of the state of incorporation or comparable
authority in other jurisdictions, and a true and complete copy of the
Bylaws or comparable governing instruments, as amended, of Big Stuff
certified by the Secretary thereof; (v) the duly executed Resignations
on terms and conditions reasonably acceptable to Parent; and (vi) such
other documents and instruments as Parent reasonably may request.
(c) Legal Opinion. Parent shall have received a legal
-------------
opinion from Xxxxxxxxx & Falconer LLP, legal counsel to Big Stuff, in a
form to be agreed upon by the parties hereto, acting reasonably.
(d) Litigation. There shall be no action, suit, claim
----------
or proceeding of any nature pending, or overtly threatened, against Big
Stuff, its respective properties or any of its officers or directors,
arising out of, or in any way connected with, the Merger or the other
transactions contemplated by the terms of this Agreement which
individually or in the aggregate may cause a Big Stuff Material Adverse
Effect.
(e) No Material Adverse Change. There shall have not
--------------------------
occurred after the date hereof any Event that has or reasonably could be
expected to have a Big Stuff Material Adverse Effect.
(f) Affiliate Agreements. At least thirty (30) days
--------------------
prior to the Effective Time, Parent shall have received the duly
executed Affiliate Agreements.
ARTICLE VIII - TERMINATION AND ABANDONMENT
8.1 Termination. This Agreement may be terminated and the
-----------
Merger contemplated hereby may be abandoned at any time prior to the
Closing Date only as follows, whether before or after approval by the Big
Stuff Shareholders:
(a) by mutual written consent of Big Stuff and Parent, duly
authorized by the Board of Directors of each;
(b) by Big Stuff or Parent if the Closing shall not have
occurred on or before October 31, 1999 (or such other date as may be agreed
to by Big Stuff and Parent); provided, that, no party may terminate
-------- ----
this Agreement under this Section 8.1(b) if such party's breach of this
--------------
Agreement has caused or resulted in the failure of the Closing to occur on
or before such date;
37
(c) by Big Stuff if (i) there are any breaches of any Parent
Modified Representation or any material breaches of any Parent Nonmodified
Representation, or (ii) Parent has breached or failed to perform,
notwithstanding satisfaction or due waiver of all conditions thereto, any
of its material covenants or agreements contained herein as to which notice
specifying such breach or failure has been given to Parent promptly after
the discovery thereof and Parent has failed to cure or otherwise resolve
the same to the reasonable satisfaction of Big Stuff within thirty (30)
days after receipt of such notice;
(d) by Parent if (i) there are any breaches of any Big Stuff
Modified Representations or any material breaches of any Big Stuff
Nonmodified Representations, or (ii) Big Stuff has breached or failed to
perform, notwithstanding satisfaction or due waiver of all conditions
thereto, any of its material covenants or agreements contained herein as to
which notice specifying such breach or failure has been given to Big Stuff
promptly after the discovery thereof and Big Stuff has failed to cure or
otherwise resolve the same to the reasonable satisfaction of Parent within
thirty (30) days after receipt of such notice;
(e) by Big Stuff or Parent if a court of competent
jurisdiction or other Governmental Authority shall have issued an order,
decree or ruling or taken any other action permanently restraining,
enjoining or otherwise prohibiting the Merger, the Company Acquisition
Agreement or any of the transactions contemplated by this Agreement or such
other agreements and such order, decree, ruling or other action shall have
become final and nonappealable;
(f)(i) by Big Stuff if the stockholders of Parent fail to
approve and adopt the Merger or the issuance of the Parent Common Stock
pursuant to this Agreement or the other transactions contemplated or
otherwise referenced herein or therein, as applicable, at the meeting duly
convened therefor;
(f)(ii) by Parent if the stockholders of Parent fail to
approve and adopt the Merger pursuant to this Agreement or the other
transactions contemplated or otherwise referenced herein or therein, as
applicable;
(g) by Parent, if Big Stuff or its Board of Directors
breaches any provision of Section 6.7;
-----------
(h) by Big Stuff, if Parent or its Board of Directors
breaches any provision of Section 6.7; or
-----------
(i) by Parent or Big Stuff upon the occurrence of the events
described in Section 1.11.
------------
The party desiring to terminate this Agreement pursuant to the
preceding clauses (b), (c), (d), (e), (f)(i), (f)(ii), (g), (h) or (i)
shall give written notice of such termination to the other party in
accordance with Section 11.1 below.
------------
8.2 Termination Fees and Rights. In recognition of the
---------------------------
considerable time and expense that the parties have expended and will
expend in entering into this Agreement, and pursuing the Merger and the
other transactions contemplated hereby, the following fees shall be payable
in the event of termination of this Agreement:
38
(a) To the extent that this Agreement is terminated solely
pursuant to Section 8.1(a), (b) or (e), and neither a Big Stuff
--------------------------
Triggering Transaction nor Parent Triggering Transaction has occurred prior
to the date of termination, no termination fees are payable to any party
and this Agreement shall become void and of no effect with no liability on
the part of any party hereto (or any of its directors, officers, employees,
agents, or representatives); provided, that no such termination shall
relieve any party hereto from any liability under Section 6.9 or for any
-----------
breach of this Agreement.
(b) If this Agreement is terminated by Big Stuff pursuant to
Section 8.1(c), (f)(i) or (h) or by Parent pursuant to Section 8.1(i),
----------------------------- --------------
Parent shall promptly pay a termination fee to the Company in an amount
equal to $1,560,150 and to WorldPages, collectively, in an amount equal to
$939,850, inclusive of expenses, by wire transfer of immediately available
funds if Parent consummates a Parent Triggering Transaction within six (6)
months following the date of such termination, provided that if
--------
WorldPages is a party to the Parent Triggering Transaction, then all of the
$2,500,000 payable as a termination fee hereunder shall be paid to the
Company and no fee shall be paid to WorldPages.
(c) If this Agreement is terminated by Parent pursuant to
Section 8.1(d) or (g) or by Big Stuff pursuant to Section 8.1(i), Big
--------------------- --------------
Stuff and Web, jointly and not severally, shall promptly pay a termination
fee to Parent in an amount equal to $1,810,631 and to the Company in an
amount equal to $689,369, inclusive of expenses, by wire transfer of
immediately available funds if Big Stuff consummates a Big Stuff Triggering
Transaction within six (6) months following the date of such termination,
provided that if Parent is a party to the Big Stuff Triggering
--------
Transaction, then all of the $2,500,000 payable as a termination fee
hereunder shall be paid to the Company.
(d) If this Agreement is terminated by Big Stuff or by
Parent pursuant to Section 8.1(f)(i) or (f)(ii), respectively, no
----------------------------
termination fee shall be payable by Big Stuff even if Big Stuff consummates
a Big Stuff Triggering Transaction.
(e) If a termination fee is payable by a party pursuant to
this Agreement and a termination fee is payable by the same party pursuant
to the Company Acquisition Agreement and the Web Acquisition Agreement,
then the parties agree that notwithstanding anything herein or therein to
the contrary, there shall be no "doubling" of such termination fee and that
a maximum of $2,500,000 shall be paid by any party required to pay a
termination fee, whether payable hereunder or pursuant to the Company
Acquisition Agreement or the Web Acquisition Agreement.
8.3 Procedure Upon Termination. In the event of termination
--------------------------
pursuant to this Article VIII, the Merger shall be abandoned without
------------
further action by Big Stuff or Parent, provided that the agreements
contained in Sections 8.2, 8.3, 9.1, 9.7 and 6.9 hereof shall remain in
-----------------------------------
full force and effect. If this Agreement is terminated as provided herein,
each party shall use its reasonable best efforts to redeliver all
documents, work papers and other material (including any copies thereof) of
any other party relating to the transactions contemplated hereby, whether
obtained before or after the execution hereof, to the party furnishing the
same. Nothing contained in this Agreement shall relieve any party from any
liability for any inaccuracy, misrepresentation or breach of this Agreement
prior to termination.
39
ARTICLE IX - SURVIVAL OF REPRESENTATIONS
AND WARRANTIES; INDEMNIFICATION
9.1 Indemnification by the Big Stuff Shareholders.
---------------------------------------------
(a) If the Closing has occurred, subject to the terms and
conditions of this Article IX, the Big Stuff Shareholders shall
----------
indemnify Parent, and its officers, directors, agents and
representatives (THE "INDEMNITEES"), from and in respect of, and hold
the Indemnitees harmless against, any and all damages, fines, penalties,
losses, liabilities, excise and other taxes, judgments, and deficiencies
(including without limitation amounts paid in settlement and interest
and reasonable out-of-pocket legal and accounting fees), but which
amount shall be offset or reduced by the amount of any insurance
proceeds received by Parent in respect of any of the foregoing, incurred
or suffered by any of the Indemnitees ("DAMAGES") resulting from,
relating to or in connection with any misrepresentation or breach of
warranty of the Big Stuff Shareholders contained in this Agreement.
(b) At Closing, (i) the Big Stuff Shareholders and the
Parent shall execute an escrow agreement (THE "ESCROW AGREEMENT") with
an escrow agent (THE "ESCROW AGENT") both of which as shall be
reasonably acceptable to the Parent and the Representative and (ii) the
Big Stuff Shareholders shall deposit Parent Common Stock with an
aggregate value equal to Four Hundred Thousand Dollars ($400,000) with
the Escrow Agent to be used as payment for any of the indemnification
obligations of the Big Stuff Shareholders pursuant hereto. For purposes
of calculating the value of the Parent Common Stock deposited with the
Escrow Agent, one share of Parent Common Stock shall be deemed to have a
value of $5.50.
(c) The Big Stuff Shareholders acknowledge that their
indemnification obligations hereunder are solely in their capacity as
former shareholders of Big Stuff, and, accordingly, the indemnification
obligations in this Article IX shall not entitle any Big Stuff
----------
Shareholder who was or is a current or former officer, director or
employee of Big Stuff to any indemnification from Web pursuant to the
organizational or governing documents of Big Stuff.
9.2 Method of Asserting Claims.
--------------------------
(a) Prior to the date (the "Report Date") that is thirty
(30) days after the completion of Parent's audit report by Parent's
independent auditors for the fiscal year ended December 31, 1999, each
Indemnitee shall give written notice (THE "CLAIM NOTICE") to the
Representative, as agent for the Big Stuff Shareholders, of any and all
claims or events known to it which gives rise to a claim for
indemnification hereunder by the Indemnitee against the Big Stuff
Shareholders (AN "INDEMNIFIABLE CLAIM"). The Claim Notice shall specify
the nature and estimated amount of such claimed Damages (THE "CLAIMED
AMOUNT"). In the case of any claim for indemnification hereunder
arising out of a claim, action, suit or proceeding brought by any Person
who is not a party to this Agreement (A "THIRD-PARTY CLAIM"), prior to
the Report Date, the Indemnitee also shall give the Representative, as
agent for the Big Stuff Shareholders, copies of any written claims,
process or legal pleadings with respect to such Third-Party Claim.
(b) Within forty-five (45) days after delivery of a Claim
Notice, the Representative shall notify the Parent and the Escrow Agent
in writing of his objections, if any, to the Claim. Payments from the
Escrow Account shall be made, and disputes shall be resolved, as set
forth in the Escrow Agreement.
40
9.3 Third Party Claims.
------------------
(a) Except as otherwise provided in paragraph (c) below,
the Representative, as agent for the Big Stuff Shareholders, may elect
to compromise or defend, at the Big Stuff Shareholders' own expense and
by the Big Stuff Shareholders' own counsel reasonably satisfactory to
the Indemnitee, any Third-Party Claim; provided that (i) the
Representative provides the Indemnitee with reasonable evidence that the
Big Stuff Shareholders will have the financial resources to defend
against such claim and fulfill their indemnification obligations
hereunder; and (ii) the giving of a Defense Notice (as defined below) by
the Representative shall constitute an acknowledgment by the Big Stuff
Shareholders of their obligation to indemnify the Indemnitee with
respect to such Third-Party Claim in accordance with the terms of this
Article IX. If the Representative, as agent for the Big Stuff
----------
Shareholders, elects to compromise or defend a Third-Party Claim, the
Representative shall, within thirty (30) days of its receipt of the
notice provided pursuant to Section 9.2(a) hereof (or sooner, if the
--------------
nature of such Third-Party Claim so requires), notify the related
Indemnitee of its intent to do so (A "DEFENSE NOTICE"), and such
Indemnitee shall reasonably cooperate in the compromise of, or defense
against, such Third-Party Claim. The Big Stuff Shareholders shall be
responsible for the payment of such Indemnitee's actual out-of-pocket
expenses (other than legal and accounting fees) incurred in connection
with such cooperation, and such expenses shall constitute Damages
incurred or suffered by Parent within the meaning of Section 9.1(a)
--------------
hereof. After notice from the Representative, as agent for the Big
Stuff Shareholders, to an Indemnitee of its election to assume the
defense of a Third-Party Claim, the Big Stuff Shareholders shall not be
liable to such Indemnitee under this Article IX for any legal expenses
----------
subsequently incurred by such Indemnitee in connection with the defense
thereof. If the Representative, as agent for the Big Stuff
Shareholders, elects not to compromise or defend against a Third-Party
Claim, or fails to notify an Indemnitee of its election as provided in
this Section 9.3, such Indemnitee may pay, compromise or defend such
-----------
Third-Party Claim on behalf of and for the account and risk of the Big
Stuff Shareholders (and any amount paid or expenses incurred in
connection therewith shall constitute Damages incurred or suffered by
Parent within the meaning of Section 9.1(a) hereof). The
--------------
Representative may not consent to entry of any judgment or enter into
any settlement without the written consent of each related Indemnitee
(which consent shall not be unreasonably withheld), unless such judgment
or settlement provides solely for money damages or other money payments
for which such Indemnitee is entitled to indemnification hereunder and
includes as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnitee of a release from all liability in respect
of such Third-Party Claim.
(b) In respect of any claim, action, suit or proceeding
brought by a taxing authority in respect of Taxes for which the Big
Stuff Shareholders may be required to indemnify the Parent (A "TAX
CLAIM"), the Representative, as agent for the Big Stuff Shareholders,
shall have the sole right to control any Tax Claim, provided, however,
that the Representative shall provide the Indemnitee with copies of all
correspondence with any taxing authority in connection with any such Tax
Claim and shall keep the Indemnitee reasonably informed of all progress
with such taxing authority, and provided further that the Representative
shall consult with the Indemnitee in good faith in contesting any
proposed adjustment and shall consider any reasonable advice from the
Indemnitee concerning such Tax Claim so long as the Representative, as
agent for the Big Stuff Shareholders, shall (subject to the immediately
following sentence) ultimately be entitled to control any such Tax Claim
concerning any indemnity obligation of the Big Stuff Shareholders. The
Representative shall not be entitled to compromise or settle any Tax
41
liability of the Company for any pre-Closing Period that would have the
effect of materially decreasing the Company's deductions for credits or
materially increasing the Company's taxable income for any taxable year
or period subsequent to the pre-Closing Period without the prior written
consent of Parent, which consent shall not be unreasonably withheld.
Parent will cooperate fully with Representative in defending any Tax
Claim.
(c) If there is a reasonable likelihood that a Third-Party
Claim may have a material adverse effect on an Indemnitee, other than as
a result of money damages or other money payments for which such
Indemnitee is entitled to indemnification hereunder, such Indemnitee
will have the right, after consultation with the Representative, and at
the cost and expense of the Big Stuff Shareholders (which costs and
expenses, other than legal and accounting fees, shall constitute Damages
within the meaning of Section 9.1(a) hereof to the extent provided
--------------
therein), to defend such Third-Party Claim. If the Third-Party Claim
involves a third party with whom Parent has a significant on-going or
prospective relationship, the Indemnitee will have the right, after
consultation with the Representative, and at the cost and expense of the
Big Stuff Shareholders (which costs and expenses, other than legal and
accounting fees, shall constitute Damages within the meaning of Section
-------
9.1(a) hereof to the extent provided therein), to defend such Third-
------
Party Claim; provided that the Big Stuff Shareholders shall not be
obligated to pay Damages to the extent it is determined (by agreement
between the Representative and Indemnitees or by arbitration or court
judgment) that the Third-Party Claim was settled on terms that were not
fair and reasonable to the Indemnitors.
9.4 Survival. The representations and warranties of Big Stuff
--------
set forth in this Agreement shall survive the Closing and shall continue
until the Report Date. The representation and warranties shall not be
affected by any examination made for or on behalf of Parent or the
knowledge of any of Parent's officers, directors, stockholders,
employees or agents, except that the representations and warranties are
qualified by the matters disclosed in the Disclosure Schedules to the
representations and warranties of Big Stuff and the Big Stuff
Shareholders contained in Article II hereof and Parent agrees that
----------
Parent has knowledge of such matters. Notwithstanding anything to the
contrary herein, if a claim for indemnification is made before the
expiration of the periods of survival set forth above in this Section
-------
9.4, then (notwithstanding the expiration of such time period) the
---
representation or warranty applicable to such claim shall survive until,
but only for purposes of, the resolution of such claim.
9.5 Limitations.
-----------
(a) The Big Stuff Shareholders shall not be liable under
this Article IX unless and until the aggregate amount of Damages
----------
incurred or suffered by Indemnitees exceeds $100,000, (at which point
the Big Stuff Shareholders shall become liable for the entire amount of
such Damages in excess of $75,000). For purposes of the preceding
sentence, no independent claims of less than $1,000 may be made;
provided however, that all claims arising out of a common set of facts
shall be aggregated for purposes of determining whether the $1,000
threshold has been met.
(b) The Big Stuff Shareholders' liability under this
Article IX shall not exceed $400,000. At their option, the Big Stuff
----------
Shareholders may elect to pay an Indemnifiable Claim in cash rather than
by transfer or sale of the escrowed Parent Common Stock.
(c) No claim for indemnification pursuant to Section 9.1
-----------
shall be made unless
42
asserted by a written notice given to the Representative on or before
the Report Date.
9.6 The Representative.
------------------
(a) Big Stuff and the Big Stuff Shareholders hereby
authorize, direct and appoint Xxxx to act as sole and exclusive agent,
attorney-in-fact and representative of the Big Stuff Shareholders (THE
"REPRESENTATIVE"), and authorizes and directs the Representative to (i)
take any and all actions (including without limitation executing and
delivering any documents, incurring any costs and expenses for the
account of the Big Stuff Shareholders (which will constitute Damages
incurred or suffered by Parent within the meaning of Section 9.1(a)
--------------
hereof) and making any and all determinations) which may be required or
permitted by this Agreement to be taken by the Big Stuff Shareholders or
the Representative, (ii) exercise such other rights, power and authority
as are authorized, delegated and granted to the Representative hereunder
in connection with the transactions contemplated hereby and (iii)
exercise such rights, power and authority as are incidental to the
foregoing. Any such actions taken, exercises of rights, power or
authority, and any decision or determination made by the Representative
consistent therewith, shall be absolutely and irrevocably binding on
each indemnifying party as if such indemnifying party personally had
taken such action, exercised such rights, power or authority or made
such decision or determination in such indemnifying party's individual
capacity. Notwithstanding any other provision of this Agreement, if the
Closing occurs, then with respect to the matters covered by Article IX,
----------
(i) each of the Big Stuff Shareholders irrevocably relinquishes
such Big Stuff Shareholder's right to act independently and other than
through the Representative, except with respect to the removal of the
Representative or appointment of a successor Representative as provided
in Section 9.6(b) below, and (ii) no Big Stuff Shareholders shall have
--------------
any right under this Agreement or otherwise to institute any suit,
action or proceeding against Big Stuff or Parent with respect to any
such matter, any such right being irrevocably and exclusively delegated
to the Representative. The Representative hereby acknowledges and
accepts the foregoing authorization and appointment and agrees to serve
as the Representative in accordance with this Agreement.
(b) The Representative shall serve as Representative until
his resignation, removal from office, incapacity or death; provided,
however, that the Representative shall not have the right to resign
without (i) prior written notice to the Big Stuff Shareholders, and
(ii) picking a successor reasonably satisfactory to Parent to serve
until a successor thereto is elected by the Big Stuff Shareholders.
The Representative may be removed at any time, and a successor
representative, reasonably satisfactory to Parent, may be appointed,
pursuant to written action by Big Stuff Shareholders. Any successor to
the Representative shall, for purposes of this Agreement, be deemed to
be, from the time of the appointment thereof in accordance with the
terms hereof, the Representative, and from and after such time, the term
"REPRESENTATIVE" as used herein and therein shall be deemed to refer to
such successor. No appointment of a successor shall be effective unless
such successor agrees in writing to be bound by the terms of this
Agreement.
(c) The Representative shall be permitted to retain
counsel, consultants and other advisors and shall promptly notify Parent
after retaining any such Person.
(d) The provisions of this Section 9.6 shall in no way
-----------
impose any obligations on Parent (other than those set forth in
paragraph (c) above). In particular, notwithstanding any notice
received by Parent to the contrary (except any notice of the appointment
of a successor
43
Representative approved by Parent in accordance with paragraph (b) of
this Section 9.6), Parent shall be entitled to assume that all
-----------
actions, decisions and determinations of the Representative are fully
authorized by the Big Stuff Shareholders.
(e) The Representative shall not be liable to the Big
Stuff Shareholders for the performance of any act or the failure to act
so long as he acted or failed to act in good faith in what he reasonably
believed to be the scope of his authority and for a purpose which he
reasonably believed to be in the best interests of the Big Stuff
Shareholders.
9.7 Indemnification by the Parent.
-----------------------------
(a) Indemnity. If the Closing has occurred, subject to
---------
the terms and conditions of this Section 9.7, Parent shall indemnify
-----------
the Big Stuff Shareholders from and in respect of all, and hold the Big
Stuff Shareholders harmless against, any and all damages, fines,
penalties, losses, liabilities, judgments and deficiencies (including
without limitation amounts paid in settlement and interest) ("BIG STUFF
SHAREHOLDER DAMAGES") resulting from, relating to or in connection with
any misrepresentation or breach of warranty of the Parent contained in
this Agreement.
(b) Survival. The representations and warranties of
--------
Parent set forth in this Agreement shall survive the Closing and shall
continue until the Report Date. The representations and warranties
shall not be affected by any examination made for or on behalf of Big
Stuff or Big Stuff Shareholders or the knowledge of any of Big Stuff's
officers, directors, stockholders, employees or agents, except that the
representations and warranties are qualified by the matters disclosed in
the Disclosure Schedules to the representations and warranties of the
Parent contained in Article III hereof, and Big Stuff agrees that Big
-----------
Stuff has knowledge of such matters. Notwithstanding anything to the
contrary herein, if a claim for indemnification is made before the
expiration of the periods of survival set forth above in this Section
-------
9.7, then (notwithstanding the expiration of such time period) the
---
representation or warranty applicable to such claim shall survive until,
but only for purposes of, the resolution of such claim.
(c) Limitations. Parent shall not be liable under this
-----------
Section 9.7 unless and until the aggregate amount of Big Stuff
-----------
Shareholder Damages incurred or suffered by the Big Stuff Shareholders
exceeds $100,000 (at which point Parent shall become liable for the
entire amount of Big Stuff Shareholder Damages in excess of $75,000).
Furthermore, the liability of Parent under this Section 9.7 shall be
-----------
limited to $400,000. No claim for indemnification pursuant to Section
-------
9.7 shall be made unless asserted by a written notice given to Parent
---
on or before the Report Date.
ARTICLE X - AMENDMENT AND WAIVER
10.1 Amendment. Except as is otherwise required by applicable
---------
Law, this Agreement may be amended by the parties hereto at any time
only by execution of an instrument in writing signed on behalf of each
of the parties hereto.
10.2 Extension; Waiver. At any time prior to the Effective
-----------------
Time, Parent and Acquisition Subsidiary, on the one hand, and Big Stuff
and the Big Stuff Shareholders, on the other, may, to the extent legally
allowed, (i) extend the time for the performance of any of the
obligations of the other party hereto, (ii) waive any inaccuracies in
the representations and
44
warranties made by such other party contained herein or in any document
delivered pursuant hereto, and (iii) waive compliance with any of the
agreements or conditions for the benefit of such party contained herein.
Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party.
ARTICLE XI - GENERAL PROVISIONS
11.1 Notices. All notices and other communications hereunder
-------
shall be in writing and shall be deemed given if delivered personally or
by commercial delivery service, or mailed by registered or certified
mail (return receipt requested) or sent via facsimile (with
acknowledgment of complete receipt) to the parties at the following
addresses (or at such other address for a party as shall be specified by
like notice):
(a) if to Parent, to:
Advanced Communications Group, Inc.
000 Xxxxx Xxxxx Xxxx Xxxx, Xxxxx 000
Xx. Xxxxx, Xxxxxxxx 00000
Attn: Xx. Xxxxxxx X'Xxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxxxx Xxxxxxx Xxxxx Xxxxxx LLP
000 Xxxxx Xxxxxx, Xxxxx 0000
Xx. Xxxxx, Xxxxxxxx 00000-0000
Attn: Xx. Xxxxx Xxxxx
Facsimile: (000) 000-0000
(b) if to Big Stuff and Big Stuff Shareholders, to:
Big Stuff, Inc.
0000 Xxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxx 00000
Attn: Xx. Xxxxxxx X. Xxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxxxx & Xxxxxxxx
000 Xxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000-0000
Attn: Xx. Xxxx X. Xxxxx
Facsimile: (000) 000-0000
11.2 Interpretation. The words "INCLUDE," "INCLUDES" and
--------------
"INCLUDING" when used
45
herein shall be deemed in each case to be followed by the words "without
limitation". The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement. All Disclosure
Schedules to this Agreement constitute, or will constitute when
delivered during the Schedule Period, a part of this Agreement as if set
forth in full herein and are, or will be when delivered during the
Schedule Period, incorporated herein.
11.3 Counterparts. This Agreement may be executed in one or
------------
more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have
been signed by each of the parties and delivered to the other parties,
it being understood that all parties need not sign the same counterpart.
11.4 Entire Agreement; Assignment. This Agreement (including,
----------------------------
but not limited to, the Recitals hereto), the Disclosure Schedules
hereto, and the documents and instruments and other agreements among the
parties hereto referenced herein: (i) constitute the entire agreement
among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, both written and
oral, among the parties with respect to the subject matter hereof
including, but not limited to, the Letter of Intent dated April 11, 1999
by and among the Parent, the Company, Web, Big Stuff and X'Xxxx and the
Confidentiality Agreement dated April 11, 1999 by and among Parent, the
Company, Web, Big Stuff and X'Xxxx; (ii) are not intended to confer upon
any other Person any rights or remedies hereunder except that the
Representative shall have the express rights articulated in Article
-------
IX; and (iii) shall not be assigned by operation of law or otherwise,
--
except that Parent may assign its rights and delegate its obligations
hereunder to its affiliates, provided that Parent shall remain liable
hereunder.
11.5 Severability. In the event that any provision of this
------------
Agreement or the application thereof, becomes or is declared by a court
of competent jurisdiction to be illegal, void or unenforceable, the
remainder of this Agreement will continue in full force and effect and
the application of such provision to other Persons or circumstances will
be interpreted so as reasonably to effect the intent of the parties
hereto so long as consideration of the Agreement is not materially
affected for any party hereof. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such void or unenforceable
provision.
11.6 Other Remedies. Except as otherwise provided herein, any
--------------
and all remedies herein expressly conferred upon a party will be deemed
cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any
one remedy will not preclude the exercise of any other remedy.
11.7 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of Delaware,
regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof. Each of the parties hereto
irrevocably consents to the exclusive jurisdiction and venue of any
court within the State of California, City and County of San Francisco,
in connection with any matter based upon or arising out of this
Agreement or the matters contemplated herein, agrees that process may be
served upon them in any manner authorized by the laws of the State of
California, City and County of San Francisco for such Persons and waives
and covenants not to assert or plead any objection which they might
otherwise have to such jurisdiction, venue and such process.
46
11.8 Rules of Construction. The parties hereto agree that they
---------------------
have been represented by counsel during the negotiation and execution of
this Agreement and, therefore, waive the application of any law,
regulation, holding or rule of construction providing that ambiguities
in an agreement or other document will be construed against the party
drafting such agreement or document.
ARTICLE XII - DEFINITIONS
12.1 Definitions.
-----------
"Acquisition CLEC Shares" means the quotient of the CLEC Sales
Price Decrease divided by $5.50.
"Acquisition Subsidiary" shall have the meaning ascribed to it in
the preamble hereto.
"Active Parent Subsidiaries" shall mean Xxxxx; Firstel; Value;
Great Western Directories, Inc.; Telecom Resources, Inc.; the
Switchboard of Oklahoma City, Inc.; Long Distance Management of Kansas,
Inc.; Long Distance Management II, Inc.; and National Telecom, a
proprietorship.
"Affiliate Agreements" shall have the meaning set forth in
Section 4.8 hereof.
-----------
"Aggregate Acquisition Shares" means the sum of the aggregate
number of Class B Special Shares and Contingent Rights II outstanding as
of the Closing Date, immediately after giving effect to the Closing.
"Agreement" shall have the meaning ascribed to it in the preamble
hereto.
"Anniversary Date" shall mean the first anniversary of the Closing
Date.
"Associates" shall mean affiliates of any Person (including,
without limitation, directors, officers, employees, agents, representatives
and shareholders or any affiliates or associates thereof).
"Benefit Plan" shall have the meaning ascribed to such term in
Section 2.14 hereof.
------------
"Big Stuff" shall have the meaning ascribed to such term in the
preamble hereto.
"Big Stuff Common Stock" shall have the meaning ascribed to such
term in Section 1.3 hereof.
-----------
"Big Stuff Financial Statements" shall have the meaning ascribed
to such term in Section 2.8 hereof.
-----------
"Big Stuff Material Adverse Effect" shall mean a material adverse
effect on (i) the business, assets, condition (financial or otherwise),
properties, liabilities or the results of operations of Big Stuff taken as
a whole, (ii) the ability of Big Stuff to perform its obligations set forth
in this Agreement and the Big Stuff Transaction Agreements, or (iii) the
ability of Big Stuff or the Big Stuff Shareholders to timely consummate the
transactions contemplated by this Agreement and the
47
Big Stuff Transaction Agreements.
"Big Stuff Material Contract" shall have the meaning ascribed to
such term in Section 2.13 hereof.
------------
"Big Stuff Modified Representations" shall have the meaning
ascribed to such term in Section 7.3(a)(i).
-----------------
"Big Stuff Nonmodified Representations" shall have the meaning
ascribed to such term in Section 7.3(a)(i).
-----------------
"Big Stuff Permits" shall have the meaning ascribed to such term
in Section 2.11 hereof.
------------
"Big Stuff Real Property Leases" shall have the meaning ascribed
to such term in Section 2.19(b) hereof.
---------------
"Big Stuff Shareholder Damages" shall have the meaning ascribed to
such term in Section 9.7(a) hereof.
--------------
"Big Stuff Shareholders" shall have the meaning ascribed to such
term in the preamble hereto.
"Big Stuff Shares" shall have the meaning ascribed to such term in
Section 1.3 hereof.
-----------
"Big Stuff Stock" shall have the meaning set forth in Section
-------
2.2 hereof.
---
"Big Stuff Transaction Agreements" shall have the meaning ascribed
to such term in Section 2.4 hereof.
-----------
"Big Stuff Triggering Transaction" means any transaction by way of
a purchase or sale of shares or assets, a merger, a reverse take-over or
other business combination involving Big Stuff or any subsidiary of Big
Stuff formed, organized or acquired directly or indirectly by Big Stuff on
or after the date hereof of Web's core business or in the sale of all or
substantially all of Web's assets.
"Certificate of Merger" shall have the meaning ascribed to such
term in Section 1.1 hereof.
-----------
"Certificates" shall mean the certificates which, prior to the
Merger, represented the Big Stuff Shares, and shall include a
certificate issued upon due execution and delivery of an affidavit of
loss and a bond, if required by Parent, in the event that a Big Stuff
Shareholder is unable to produce and deliver, at the Closing, the
original certificate which prior to the Merger, represented any Big
Stuff Shares.
"Claim Notice" shall have the meaning ascribed to such term in
Section 9.2(a) hereof.
--------------
"Claimed Amount" shall have the meaning ascribed to such term in
Section 9.2(a) hereof.
--------------
"Class A Special Shares" shall have the meaning ascribed to such
term in the Company Acquisition Agreement.
48
"Class B Special Shares" shall have the meaning ascribed to such
term in the Company Acquisition Agreement.
"CLEC Operations" shall mean Xxxxx, Firstel, Valu, and such other
non-yellow pages operating subsidiaries or operations of Parent as shall
be determined by the Board of Directors of Parent.
"CLEC Sales Price Decrease" shall have the meaning ascribed to
such term in Section 5.11(c) hereof.
---------------
"CLEC Sales Price Increase" shall have the meaning ascribed to
such term in Section 5.11(b) hereof.
---------------
"CLEC Sales Price" shall mean the aggregate consideration received
by Parent from the sale(s) of the CLEC Operations, reduced by warranty
claims and paying or reserving against the taxes payable by Parent or a
subsidiary of Parent directly attributable to the sale(s) of the CLEC
Operations. For greater certainty and explanation, but not limitation,
the consideration received by Parent shall not be reduced by any fee
paid to NationsBanc Xxxxxxxxxx Securities, L.L.C. in connection with the
sale(s) of the CLEC Operations or to PaineWebber Incorporated.
"Closing" shall mean the closing of the Merger.
"Closing Date" shall mean the date on which the Closing actually
occurs.
"Code" shall mean the Internal Revenue Code of 1986, as amended,
and the Treasury regulations thereunder.
"Company" shall have the meaning set forth in Recital E hereto.
"Company Acquisition Agreement" shall have the meaning set forth
in Recital E hereto.
"Company Shareholders" shall have the meaning set forth in Recital
E hereto.
"Consent" shall have the meaning ascribed to such term in Section
-------
2.5 hereof.
---
"Contingent Rights I" shall mean, collectively, the rights to
receive Parent Common Stock pursuant to Section 5.11(b) hereof, which
---------------
rights shall be represented by certificates, the form of which shall be
designated at a later date (and shall be acceptable to the parties
hereto, acting reasonably), and which shall be non-transferable, except
by operation of law.
"Contingent Rights II" shall mean, collectively, the rights to
receive Parent Common Stock pursuant to Section 5.11(c) hereof, which
---------------
rights shall be represented by certificates, the form of which shall be
designated at a later date (and shall be acceptable to the parties
hereto, acting reasonably), and which shall be non-transferable, except
by operation of law.
"Conversion Stock" shall have the meaning ascribed to such term in
Section 4.9 hereof.
-----------
"Convertible Note" shall have the meaning ascribed to such term in
Section 1.10 hereof.
------------
49
"Corporation Laws" shall have the meaning ascribed to such term in
Section 1.1 hereof.
-----------
"Damages" shall have the meaning ascribed to such term in Section
-------
9.1(a) hereof.
------
"Defense Notice" shall have the meaning ascribed to such term in
Section 9.3(a) hereof.
--------------
"Disclosure Schedules" shall mean, collectively, that information
required to be delivered by Big Stuff to Parent, and by Parent to Big
Stuff, pursuant to this Agreement.
"Effective Time" shall have the meaning ascribed to such term in
Section 1.2 hereof.
-----------
"Eligible Acquisition Shareholder's Proportionate Share" means,
for any Eligible Acquisition Shareholder, the quotient of (a) the sum of
the number of Class B Special Shares and Contingent Rights II owned by
such Eligible Acquisition Shareholder on the Closing Date, immediately
after giving effect to the Closing, divided by (b) the number of
Aggregate Acquisition Shares.
"Eligible Acquisition Shareholders" shall mean the holders of
Class B Special Shares and the holders of Contingent Rights II on the
Closing Date, immediately after giving effect to the Closing.
"Eligible Parent Shareholder's Proportionate Share" shall mean,
for any Eligible Parent Shareholder, the quotient of (i) the number of
Contingent Rights I owned by such Eligible Parent Shareholder on the
Closing Date, immediately after giving effect to the Closing, divided by
(ii) the aggregate number of outstanding Contingent Rights I.
"Eligible Parent Shareholders" shall mean the holders of
Contingent Rights I on the Closing Date, immediately after giving effect
to the Closing.
"Enforceability Exceptions" shall have the meaning ascribed to
such term in Section 2.4 hereof.
-----------
"Environmental Laws" shall have the meaning ascribed to such term
in Section 2.17 hereof.
------------
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, together with all regulations thereunder.
"Escrow Agent" shall have the meaning ascribed to such term in
Section 9.1(b) hereof.
--------------
"Escrow Agreement" shall have the meaning ascribed to such term in
Section 9.1(b) hereof.
--------------
"Event" shall mean any event, occurrence, fact, condition, change,
development or effect.
"Exchange Ratio" shall have the meaning ascribed to such term in
Section 1.3 hereof.
-----------
"Extraordinary Transactions" shall have the meaning ascribed to
such term in Section 6.7
-----------
50
hereof.
"Xxxxx" shall mean Xxxxx Long Distance Service, Inc.
"Final Order", with respect to any Consent of a Governmental
Authority, shall mean an action by the appropriate Governmental Authority
as to which: (i) no request for stay by such Governmental Authority of the
action is pending, no such stay is in effect, and, if any deadline for
filing any such request is designated by statute or regulation, it has
passed; (ii) no petition for rehearing or reconsideration of the action is
pending before such Governmental Authority, and no appeal or comparable
administrative remedy is pending before such Governmental Authority, and
the time for filing any such petition, appeal or administrative remedy has
passed; (iii) such Governmental Authority does not have the action under
reconsideration on its own motion and the time for such reconsideration has
passed; and (iv) no appeal to a court, or request for stay by a court, of
the Governmental Authority action is pending or in effect, and if any
deadline for filing any such appeal or request is designated by statute or
rule, it has passed.
"Final Sale Date" shall have the meaning set forth in Section 5.11(b).
---------------
"Firstel" shall mean Firstel, Inc.
"Governmental Authority" shall mean a nation or government, any
state or other political subdivision thereof, any Person, authority or body
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government including, without limitation, any
governmental or regulatory authority, agency, department, board, commission
or instrumentality, any court, tribunal or arbitrator and any self-
regulatory organization.
"Great Western Credit Agreement" shall mean the Loan Agreement
dated as of May 14, 1999, by and among Great Western Directories, Inc., the
lenders signatories thereto, and Bank of America National Trust and Savings
Association as Administrative Agent.
"Great Western Notes" shall have the meaning ascribed to such term
in Recital E hereto.
"Great Western Shareholders" shall have the meaning ascribed to
such term in Recital E hereto.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, and the rules and regulations promulgated
thereunder.
"ICL" shall have the meaning ascribed to such term in Recital E
hereto.
"Indemnifiable Claim" shall have the meaning ascribed to such term
in Section 9.2(a) hereof.
--------------
"Indemnitees" shall have the meaning ascribed to such term in
Section 9.1(a) hereof.
--------------
"Intellectual Property" shall have the meaning ascribed to such
term in Section 2.18 hereof.
------------
"IP Claim Notice" shall have the meaning ascribed to such term in
Section 2.18 hereof.
------------
51
"IRS" shall mean the United States Internal Revenue Service, or
any successor thereto.
"Law" shall mean applicable provision of any constitution, treaty,
statute, law, code, rule, regulation, ordinance, policy or order of any
Governmental Authority or other matters having the force of law including,
but not limited to, any orders, decisions, injunctions, judgments, awards
and decrees of or agreements with any court or other Governmental
Authority.
"Letter of Transmittal" shall have the meaning ascribed to such
term in Section 1.5 hereof.
-----------
"Litigation" shall have the meaning ascribed to such term in
Section 2.7 hereof.
-----------
"Merger" shall have the meaning ascribed to such term in Recital B
hereto.
"Merger Consideration" shall have the meaning ascribed to such
term in Section 1.3 hereof.
-----------
"Multi-employer Plan" shall have the meaning ascribed to such term
in Section 2.14 hereof.
------------
"NYSE" shall mean the New York Stock Exchange, Inc.
"X'Xxxx" shall have the meaning ascribed to such term in the
preamble hereto.
"Parent" shall have the meaning ascribed to such term in the
Preamble hereto.
"Parent CLEC Shares" shall mean the quotient of the CLEC Sales
Price Increase divided by $5.50.
"Parent Common Stock" shall have the meaning ascribed to such term
in Section 1.3 hereof.
-----------
"Parent Financial Statements" shall have the meaning ascribed to
such term in Section 3.8 hereof.
-----------
"Parent Guaranty" shall mean that certain Guaranty of Parent given
pursuant to the Great Western Credit Agreement.
"Parent Material Adverse Effect" shall mean a material adverse
effect on (i) the business, assets, condition (financial or otherwise),
properties, liabilities or the results of operations of Parent and the
Active Parent Subsidiaries taken as a whole, (ii) the ability of Parent to
perform its obligations set forth in this Agreement and the Parent
Transaction Agreements, or (iii) the ability of Parent to timely consummate
the transactions contemplated by this Agreement and the Parent Transaction
Agreements.
"Parent Material Contract" shall have the meaning ascribed to such
term in Section 3.13 hereof.
------------
52
"Parent Modified Representations" shall have the meaning ascribed
to such term in Section 7.2(a)(i) hereof.
-----------------
"Parent Nonmodified Representation" shall have the meaning
ascribed to such term in Section 7.2(a)(i) hereof.
-----------------
"Parent Permits" shall have the meaning ascribed to such term in
Section 3.11 hereof.
------------
"Parent Securities Filings" shall have the meaning ascribed to
such term in Section 3.7 hereof.
-----------
"Parent Series A Stock " shall have the meaning ascribed to such
term in Section 3.2 hereof.
-----------
"Parent Transaction Agreements" shall have the meaning ascribed to
such term in Section 3.4 hereof.
-----------
"Parent Triggering Transaction" shall mean any transaction by way
of a purchase or sale of shares or assets, a merger, a reverse take-over or
other business combination involving the Parent or any Parent Subsidiary or
any subsidiary of the Parent formed, organized or acquired directly or
indirectly by the Parent on or after the date hereof with (i) the Company,
or (ii) which results in the sale of the yellow pages publishing business
of the Parent or Great Western Directories, Inc., or (iii) with another
Person or entity which derives the majority of their revenues from a
business other than the yellow pages publishing business.
"Person" shall mean and include an individual, corporation,
partnership, association, trust or other entity or organization,
including a Governmental Authority.
"Registration Statements" shall have the meaning ascribed to such
term in Section 6.1(b) hereof.
--------------
"Xxxx" shall have the meaning ascribed to such term in the
preamble hereto.
"Report Date" shall have the meaning ascribed to such term in
Section 9.2(a) hereof.
--------------
"Representative" shall have the meaning ascribed to such term in
Section 9.6 hereof.
-----------
"Resignations" shall have the meaning ascribed to such term in
Section 6.8 hereof.
-----------
"Schedule Period" shall have the meaning ascribed to such term in
Section 1.11(a) hereof.
---------------
"SEC" shall mean the U.S. Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and all rules and regulations promulgated thereunder.
"Securities Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended, and all rules and regulations promulgated
thereunder.
53
"Surviving Corporation" shall have the meaning ascribed to such
term in Section 1.1 hereof.
-----------
"Surviving Corporation Common Stock" shall have the meaning
ascribed to such term in Section 1.3 hereof.
-----------
"Surviving Corporation Material Adverse Effect" shall mean a
material adverse effect on (i) the business, assets, condition (financial
or otherwise), properties, liabilities or the results of operations of the
Surviving Corporation, or (ii) the ability to timely consummate the
transactions contemplated by this Agreement.
"Tax" shall have the meaning ascribed to such term in Section
-------
2.15(a) hereof.
-------
"Tax Claim" shall have the meaning ascribed to such term in
Section 9.3(b) hereof.
--------------
"Texas Corporation Law" shall have the meaning ascribed to such
term in Section 1.1 hereof.
-----------
"Third-Party Claim" shall have the meaning ascribed to such term
in Section 9.2(a) hereof.
--------------
"Transaction Expenses" shall have the meaning ascribed to such
term in Section 5.9 hereof.
-----------
"Valu" shall mean, collectively, Valu-line of Louisiana, Inc. and
Valu-line of Longview, Inc.
"Web" shall have the meaning ascribed to such term in the Recital
E hereto.
"Web Acquisition Agreement" shall mean that certain Acquisition
Agreement dated as of June 3, 1999, among the Parent, ACG Acquisition VI
Corp., Web and the Web shareholders.
"WorldPages" shall have the meaning ascribed to such term in
Recital E hereto.
"WorldPages Acquisition" shall mean the acquisition by Parent or a
direct or indirect subsidiary of Parent of all of the outstanding
capital stock of Big Stuff and Web on terms reasonably acceptable to the
Company, whether by merger, exchange or otherwise.
"Year 2000 Compliant" shall have the meaning ascribed to such term
in Section 2.27 hereof.
------------
[Signatures on following page]
54
[Signature pages to the Big Stuff Agreement]
IN WITNESS WHEREOF, Parent, the Acquisition Subsidiary, Big Stuff
and the Big Stuff Shareholders have caused this Agreement to be signed
by their duly authorized respective officers, all as of the date first
written above.
ADVANCED COMMUNICATIONS GROUP, INC.
By:
----------------------------------------------
Xxxxx X. Xxxxx
Title: President and Chief Operations Officer
ACG ACQUISITION VII CORP.
By:
----------------------------------------------
Xxxxx X. Xxxxx
Title: President
BIG STUFF, INC.
By:
----------------------------------------------
Title:
----------------------------------------------
XXXXXXX X'XXXX
----------------------------------------------
XXXX XXXX
[Big Stuff Acquisition Agreement]
The terms and provisions of Sections 5.11 and 8.2 of this
Agreement are hereby acknowledged and agreed to by Web, Xxxxxxx X. Xxxx
(as a Web shareholder), Xxxxxxx X'Xxxx (as a Big shareholder), the
Company, the shareholders of the Company, The J.L.R. Family Trust, The
Paisley Family Trust, Xxxxxx Xxxxxx, Xxxxxxx X. XxXxxxxx, Cold Trust,
Global Investment Trust, Freezer Trust, Storage Trust, Directory Trust,
Publisher and Imperial Capital Limited.
WEB YP, INC.
By:
-------------------------------------------
----------------------------------------------
XXXXXXX X. XXXX
----------------------------------------------
XXXXXXX X'XXXX
----------------------------------------------
YPTEL CORPORATION
By:
-------------------------------------------
Title:
SHAREHOLDERS OF YPTEL CORPORATION
By: Imperial Capital Limited as
attorney-in-fact
By:
-------------------------------------------
Title:
THE J.L.R. FAMILY TRUST, by its trustees
By:
-------------------------------------------
Xxxxxxx X. Xxxxxxxxx, as trustee and with
no personal liability
-------------------------------------------
Xxxxxxx Xxxxxxx, as trustee and with no
personal liability
THE PAISLEY FAMILY TRUST
By:
-------------------------------------------
Xxxxxxx X. Xxxxxx, as trustee and with no
personal liability
-------------------------------------------
Xxxxxxx Xxxxxxx, as trustee and with no
personal liability
-------------------------------------------
Xxxxxx Xxxxxx
-------------------------------------------
Xxxxxxx X. XxXxxxxx
COLD TRUST
By:
----------------------------------------
, as trustee and with
no personal liability
-------------------------------------------
, as trustee and with
no personal liability
GLOBAL INVESTMENT TRUST
By:
-------------------------------------------
, as trustee and with
no personal liability
----------------------------------------------
, as trustee and with
no personal liability
FREEZER TRUST
By:
-------------------------------------------
, as trustee and with
no personal liability
----------------------------------------------
, as trustee and with
no personal liability
STORAGE TRUST
By:
-------------------------------------------
, as trustee and with
no personal liability
----------------------------------------------
, as trustee and with
no personal liability
DIRECTORY TRUST
By:
-------------------------------------------
, as trustee and with
no personal liability
----------------------------------------------
, as trustee and with
no personal liability
PUBLISHER TRUST
By:
-------------------------------------------
, as trustee and with
no personal liability
-------------------------------------------
, as trustee and with
no personal liability
IMPERIAL CAPITAL LIMITED, a corporation
incorporated under the law of the Providence of
Ontario
By:
-------------------------------------------
Title:
----------------------------------------
ARTICLE I - TERMS OF THE MERGER 2
1.1 The Merger 2
1.2 Effective Time 2
1.3 Merger Consideration 2
1.4 Stockholders' Right upon Merger 3
1.5 Surrender and Exchange of Shares 3
1.6 Directors 4
1.7 Bylaws 4
1.8 Other Effects of Merger 4
1.9 Tax-Free Reorganization 4
1.10 Convertible Note 4
1.11 Due Diligence Review 4
1.12 Additional Actions 5
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF
BIG STUFF AND THE BIG STUFF
SHAREHOLDERS 5
2.1 Organization and Good Standing 5
2.2 Capitalization 6
2.3 Subsidiaries 6
2.4 Authorization; Binding Agreement 6
2.5 Governmental Approvals 7
2.6 No Violations 7
2.7 Litigation 7
2.8 Big Stuff Financial Statements 7
2.9 Absence of Certain Changes or Events 8
2.10 Compliance with Laws 8
2.11 Permits 8
2.12 Finders and Investment Bankers 9
2.13 Contracts 9
2.14 Employee Benefit Plans 9
2.15 Taxes and Returns 10
2.16 Liabilities 11
2.17 Environmental Matters 12
2.18 Intellectual Property; Fictitious Names 12
2.19 Real Estate 12
2.20 Corporate Records 13
2.21 Title to and Condition of Personal
Property 13
2.22 No Adverse Actions 13
2.23 Labor Matters 13
2.24 Insurance 14
2.25 Disclosure 14
2.26 Tax 14
2.27 Year 2000 Compliance 14
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF
PARENT 15
3.1 Organization and Good Standing 15
3.2 Capitalization 15
3.3. Subsidiaries 15
3.4 Authorization; Binding Agreement 16
3.5 Governmental Approvals 16
3.6 No Violations 16
3.7 Securities Filings and Litigation 17
3.8 Parent Financial Statements 17
3.9 Absence of Certain Changes or Events 18
3.10 Compliance with Laws 18
3.11 Permits 18
3.12 Finders and Investment Bankers 18
3.13 Contracts 18
3.14 Corporate Records 18
3.15 Tax 19
3.16 Disclosure 19
ARTICLE IV - ADDITIONAL COVENANTS OF BIG STUFF
AND THE BIG STUFF SHAREHOLDERS 19
4.1 Notification of Certain Matters 19
4.2 Access and Information 19
4.3 Big Stuff Shareholder Approval 20
4.4 Reasonable Best Efforts 20
4.5 Compliance 20
4.6 Benefit Plans 21
4.7 Tax Opinion Certification 21
4.8 Affiliate Agreements 21
4.9 Transfer Restrictions 21
ARTICLE V - ADDITIONAL COVENANTS OF PARENT 22
5.1 Conduct of Business of Active Parent
and the Parent Subsidiaries 22
5.2 Notification of Certain Matters 23
5.3 Access and Information 23
5.4 Compliance 23
5.5 SEC and Shareholder Filings 23
5.6 Tax Treatment 23
5.7 Employment and Employee Benefit Plans 24
5.8 Tax Opinion Certification 24
5.9 Expenses 24
5.10 Parent Shareholder Approval 24
5.11 Sale of CLEC Operations 24
ARTICLE VI - ADDITIONAL COVENANTS OF THE PARENT,
BIG STUFF AND THE BIG STUFF
SHAREHOLDERS 26
6.1 Registration Rights and Stock
Restriction Agreement 26
6.2 Employment Agreements 27
6.3 Consents 27
6.4 Legal Requirements 27
6.5 Public Announcements 27
6.6 Conduct of Business Prior to Closing
Date 28
6.7 No Solicitation of Acquisition Proposal 31
6.8 Resignations 32
6.9 Confidentiality 32
6.10 Options; Stock Issuances 32
ARTICLE VII - CONDITIONS TO CLOSING 33
7.1 Conditions to Obligations of Each Party
to Closing 33
7.2 Additional Conditions to Obligations of
Big Stuff Shareholders and Big Stuff 35
7.3 Additional Conditions to the
Obligations of Parent 36
ARTICLE VIII- TERMINATION AND ABANDONMENT 37
8.1 Termination 37
8.2 Termination Fees and Rights 38
8.3 Procedure Upon Termination 39
ARTICLE IX - SURVIVAL OF REPRESENTATIONS AND
WARRANTIES; INDEMNIFICATION 40
9.1 Indemnification by the Big Stuff
Shareholders 40
9.2 Method of Asserting Claims 40
9.3 Third Party Claims 41
9.4 Survival 42
9.5 Limitations 42
9.6 The Representative 43
9.7 Indemnification by the Parent 44
ARTICLE X - AMENDMENT AND WAIVER 44
10.1 Amendment 44
10.2 Extension; Waiver 44
ARTICLE XI - GENERAL PROVISIONS 45
11.1 Notices 45
11.2 Interpretation 45
11.3 Counterparts 46
11.4 Entire Agreement; Assignment 46
11.5 Severability 46
11.6 Other Remedies 46
11.7 Governing Law 46
11.8 Rules of Construction 47
ARTICLE XII - DEFINITIONS 47
12.1 Definitions 47
SCHEDULES
Schedule 2.1 Jurisdictions of Incorporation and Qualification
Schedule 2.2 Capitalization
Schedule 2.5 Governmental Approvals
Schedule 2.6 No Violations
Schedule 2.7 Litigation
Schedule 2.9 Absence of Certain Changes or Events
Schedule 2.13 Contracts
Schedule 2.14 Employee Benefit Plans
Schedule 2.15 Taxes
Schedule 2.16 Liabilities
Schedule 2.17 Environmental Matters
Schedule 2.18 Intellectual Property
Schedule 2.19(b) Real Estate - Leased
Schedule 2.20 Corporate Records
Schedule 2.22 No Adverse Actions
Schedule 2.23 Labor Matters
Schedule 2.27 Year 2000 Compliance
Schedule 3.1 Parent Jurisdictions of Incorporation and Qualification
Schedule 3.2 Parent Securities Filings
Schedule 3.3 Parent Subsidiaries
Schedule 3.7(b) Parent Litigation
Schedule 3.8 Parent Liabilities
Schedule 3.9 Absence of Certain Changes or Events
Schedule 3.13 Parent Contracts
Schedule 6.6(b)(i) Web Securities Issuances, Etc.
Schedule 6.6(b)(ii) Parent Securities Issuances, Etc.
