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EXHIBIT 10.6
OPTION TO MERGE AGREEMENT
ACNET USA, INC.
This Option to Merge Agreement is entered into as of June 9, 1999 by and
among MCC ACQUISITION CORP. ("Purchaser"), a wholly owned subsidiary of XXXXXXX
COMMUNICATIONS CORPORATION ("Xxxxxxx"), and the shareholders of ACNET USA, INC.
("AcNet USA") (the "Shareholders"), all of whom are listed on the signature page
of this Agreement, and ACNET USA, INC.
RECITALS
A. Purchaser desires to have an option to merge AcNet USA with a
wholly-owned subsidiary of Purchaser ("Merger Co.").
B. AcNet USA desires to grant to Purchaser an option to merge AcNet USA
with Merger Co.
C. The Shareholders desire to enter into this Agreement to facilitate the
Merger, as described below.
AGREEMENT
In consideration of the recitals and agreements set forth below, the
parties agree:
1 Irrevocable Option to Purchase AcNet USA Shares.
(a) AcNet USA hereby grants to Purchaser the continuing option to
merge AcNet USA with a wholly-owned subsidiary of Purchaser, with AcNet USA as
the surviving entity (the "Merger"), pursuant to the applicable laws of Texas
and Iowa, for the aggregate consideration described on Exhibit A. Purchaser may
exercise such option upon ten days' prior written notice to AcNet USA.
(b) The closing (the "Closing") of the Merger shall take place at a
time and place agreed to by AcNet USA and Purchaser. In the absence of such an
agreement, the Closing shall be at 10 a.m. at Xxxxxxx'x executive office on the
first business day ten days after the exercise of the option set forth in
section 1(a) above. At the Closing: (i) the Shareholders shall receive cash and
certificates for their respective shares of the Xxxxxxx common stock
constituting the purchase
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price described on Exhibit A; (ii) the Shareholders shall deliver to Purchaser
certificates for all of the outstanding shares of capital stock of AcNet USA
(the "AcNet USA Shares"), duly endorsed for transfer; and (iii) AcNet USA,
Purchaser and Merger Co. shall execute and deliver a merger agreement among
them, and articles of merger, reasonably satisfactory in form and substance to
Purchaser.
(c) This option may be exercised by notice to AcNet USA given at any
time prior to December 31, 1999 (the "Option Period") at which time the option
shall expire if not exercised.
(d) The Shareholders and AcNet USA agree that, during the Option
Period, they shall cause AcNet USA to be managed so as to ensure that AcNet USA
shall not, unless it receives the prior written consent of Purchaser: (i) merge
or consolidate AcNet USA with any individual, partnership, corporation, limited
liability company, association, joint stock company, trust, joint venture,
unincorporated organization or a governmental entity or any department, agency
or political division thereof; (ii) sell, lease or otherwise dispose of any of
AcNet USA's assets; (iii) liquidate, dissolve or effect a recapitalization or
reorganization of AcNet USA in any form of transaction; (iv) create, incur,
assume, guarantee, be or remain liable for, contingently or otherwise, or suffer
to exist any indebtedness, other than indebtedness to Xxxxxxx and the
indebtedness of AcNet USA presently existing; or (v) conduct discussions or
negotiations with respect to a transaction of the type described in clauses (i)
through (iv) with any party. Each Shareholder represents and warrants that such
Shareholder's holdings of AcNet USA Shares are accurately described on Exhibit
A.
(e) The parties intend that the Merger shall qualify as a non-taxable
reorganization pursuant to Section 368(a)(1)(A) of the Internal Revenue Code of
1986, as amended, except to the extent of the cash paid in the transaction, and
the parties agree to use their reasonable best efforts to obtain an opinion of
tax counsel reasonably acceptable to them that the Merger so qualifies.
(f) On the Closing date, AcNet USA and Intercarrier Transport
Corporation ("ITC") will enter into a management agreement under which AcNet USA
will manage the business and activities of ITC, with reimbursement to AcNet USA
for the reasonable costs and expenses (including an overhead allocation of 3%)
incurred by AcNet USA in providing such management services. The management
agreement will terminate on the earlier of (i) the purchase by Purchaser or
Xxxxxxx of the ITC Stock or (ii) December 31, 1999.
(g) On the Closing date, AcNet USA and AcNet S.A. de C.V. ("ACN")
will enter into a management agreement under which AcNet USA will manage the
business and activities of ACN, with reimbursement to AcNet USA for
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the reasonable costs and expenses (including an overhead allocation of 3%)
incurred by AcNet USA in providing such management services. The ACN management
agreement will terminate upon termination of AcNet USA's management agreement
with ITC.
(h) On the Closing date, ITC and ACN will enter into a
telecommunications services agreement having terms and conditions which are
acceptable to MCC and X.X. Xxxxxx.
(i) As of the date of this Agreement, 1,650,000 shares represents
approximately 7.78% of the issued and outstanding common stock of Xxxxxxx on a
fully-diluted basis, but without giving effect to the transactions contemplated
by the Option to Merge Agreement among Purchaser, Xxxxxxx and ITC dated the date
hereof. The parties acknowledge that such percentage may change, based on
transactions Xxxxxxx may conduct, prior to the date of Closing. The parties also
agree that the number of Xxxxxxx shares issuable hereunder will be adjusted
proportionately if Xxxxxxx issues a stock split or stock dividend or if there is
a reverse split or similar recapitalization of the Xxxxxxx common stock.
2. Injunctive Relief. The parties hereto agree that any party may apply
for and obtain from any U.S. state or federal court appropriate injunctive
relief prohibiting the violation of the terms of this Agreement. Such remedy
shall be cumulative and not exclusive.
3. Waiver. Any party to this Agreement may, at any time prior to the
Closing, waive any of the terms or conditions of this Agreement or agree to an
amendment or modification to this Agreement by an agreement in writing.
4. Notices. All notices and other communications among the parties shall
be in writing and shall be deemed to have been duly given when (i) delivered in
person, (ii) two days after delivery to a reputable overnight courier service,
or (iii) five days after posting in the United States mail having been sent
registered or certified mail return receipt requested:
(a) If to Purchaser, to:
MCC Acquisition Corp.
Attn: Xxxxxx X. Xxxxxxx
0000 00xx Xxxxxx, X.X.
Xxxxx Xxxxxx, XX 00000
Telephone No.: 000-000-0000
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(b) If to AcNet USA and/or any Shareholder, to:
AcNet USA, Inc.
Attn: X.X. Xxxxxx
000 Xxxxx 00xx Xxxxxx
Xxxxx 000
XxXxxxx, Xxxxx 00000-0000
Telephone No.: 000-000-0000
or to such other address or addresses as the parties may from time to time
designate in writing.
5. Reliance. Each of the parties to this Agreement shall be deemed to
have relied upon the accuracy of the written representations and warranties made
to it in or pursuant to this Agreement, notwithstanding any investigations
conducted by or on its behalf or notice, knowledge or belief to the contrary.
6. Construction; Governing Law. This Agreement shall be construed and
enforced in accordance with the laws of the State of Iowa, U.S.A., without
regard to conflicts of law principles. The parties have participated jointly in
the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any
provisions of this Agreement.
7. Captions; Counterparts. The captions in this Agreement are for
convenience only and shall not be considered a part of or affect the
construction or interpretation of any provision of this Agreement. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
8. Other Agreements. The parties acknowledge that in connection with the
Merger certain other agreements will be entered into. The parties agree to
negotiate the terms and conditions of such definitive agreements in good faith.
The parties further agree as follows:
(a) Certain of the Shareholders have relationships with other
companies that are active in various technology markets. Accordingly, the
following companies shall not be deemed competitors with AcNet USA in connection
with any noncompetition clauses incorporated in the definitive agreements:
Ashton Systems Corporation; The Ashton Group, Inc.; Texas Facilities Service
Corporation; L&L Consultores S.A. de C.V.; CSX S.A. de C.V.;
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and ICT Consulting, Inc. The Shareholders represent and warrant that such
entities do not derive revenues from the target markets of AcNet USA, AcNet,
S.A. de C.V. or Xxxxxxx, except as Xxxxxxx may consent in writing.
(b) At or prior to the Closing, X.X. Xxxxxx and Xxxxx Xxxx will enter
into employment agreements with AcNet USA. X.X. Xxxxxx will be the Chief
Executive Officer of AcNet USA and a director/director general of AcNet USA,
AcNet S.A. de C.V., AcNet Internet S.A. de C.V. and AcNet Panama S.A.
(collectively, the "AcNet Companies"). Xx. Xxxxxx'x first year salary shall be
$50,000, his second year salary shall be $100,000 and his third year salary
shall be $150,000. Xx. Xxxxxx'x employment agreement will provide for medical
coverage in the United States and Mexico, as well as the use of a 2000 Jeep
Cherokee Limited and driver while traveling in Mexico. Xxxxx Xxxx shall be
Senior Vice President of Network Services and a director of the AcNet Companies.
His salary shall be $124,000 and he shall receive U.S. and Mexican medical
coverage. Xx. Xxxx will receive a signing bonus of $74,000. Xx. Xxxxxx and Xx.
Xxxx will be eligible for bonuses and options as approved by Xxxxxxx'x Board of
Directors. Their base salaries shall be subject to annual review by the
Compensation Committee of Xxxxxxx'x Board of Directors, but will not be
decreased without the employee's consent. Each of the employment agreements
shall provide that if the employee is terminated by the company without Cause,
or by the employee with Good Reason, prior to the end of the three-year term,
the employee shall receive as severance payment in full of the base salary due
for the remaining term, plus one year of additional base salary (at year 3
levels), all paid within 15 days after the termination; provided, in no event
shall aggregate severance consideration exceed three years' base salary. "Cause"
will include conviction of a felony, material misappropriation of funds, and
willful failure to comply with a lawful and material directive of the Board of
Directors of Xxxxxxx which is not inconsistent with the employment agreement.
"Good Reason" means a material change in the employee's duties, title or
authority, requiring relocation to an area not approved by the employee, and a
material breach of the agreements with the employee. Each employment agreement
will prohibit competition by the employee for a six-month post-termination
period.
(c) Xx. Xxxxxx and Xx. Xxxx shall have the right to name or fill two
seats on the Board of Directors of any of the AcNet Companies. Each such board
shall consist of five to seven directors of which two shall be selected by
Xxxxxxx; the remaining one to three directors shall be elected unanimously by
the other directors.
(d) The Shareholders represent and warrant that all of the
outstanding ownership rights and interests in AcNet Panama S.A., a Panama
corporation, are and at Closing will be held by ITC.
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(e) Xxxxxxx shall provide up to 100,000 shares, in the aggregate, of
Xxxxxxx common stock to be utilized by the AcNet Companies in connection with
the recruitment and retention of qualified executives. Any grants of such shares
(or options therefor) shall be approved by the Board of Directors of AcNet USA.
(f) In the event that Murdock sells greater than 50% of its aggregate
interest in the AcNet Companies, or if Xx. Xxxxxx'x employment agreement is
terminated prior to the end of the three-year term, Xx. Xxxxxx shall be granted
observer rights on the Xxxxxxx Board of Directors.
(g) In addition to standard officer/director indemnification, AcNet
USA will indemnify and hold Messrs. Ashton and Xxxx harmless from any loss,
cost, damage or expense either of them may suffer as a result of acting as a
legal representative of any of the AcNet companies in Mexico or Panama, except
to the extent such liability resulted from such person's bad faith or
intentional violations of law.
9. Irrevocable Proxies; Enforceability. Each Shareholder hereby grants to
Xxxxxxx an irrevocable proxy to vote such Shareholder's AcNet USA Shares in
connection with any shareholder vote required in connection with the Merger.
Each Shareholder acknowledges that such proxy is coupled with an interest by
virtue, among other things, of Xxxxxxx'x loans to AcNet, S.A. de C.V. Each
Shareholder hereby irrevocably waives any statutory dissenter's or appraisal
rights in connection with the Merger. AcNet USA and each Shareholder represent
and warrant to Purchaser and Xxxxxxx that the AcNet USA board of directors has
duly approved the Merger and that this Agreement is a valid and binding
obligation of each of them, enforceable according to its terms, except as such
enforceability may be limited by bankruptcy or creditors' rights laws. AcNet and
each Shareholder agree that, without limiting their other remedies, Purchaser
and Xxxxxxx may specifically enforce this Agreement in any court of appropriate
jurisdiction.
10. Amendments. This Agreement may be amended or modified in whole or in
part, only by a duly authorized agreement in writing executed in the same manner
as this Agreement and which makes reference to this Agreement.
11. Publicity. All press releases or other public communications of any
nature whatsoever relating to the transactions contemplated by this Agreement,
and the method of the release for publication thereof, shall be subject to the
prior mutual approval of Purchaser and AcNet USA, which approval shall not be
unreasonably withheld by any party; provided, however, that nothing herein shall
prevent any party from publishing such press releases or other public
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communications as such party may consider necessary in order to satisfy such
party's legal or contractual obligations.
12. Miscellaneous Items.
(a) All loans payable by AcNet USA, AcNet and the related companies
to X.X. Xxxxxx and other stockholders and employees will be paid in full on or
prior to the Closing date. The aggregate amount of such loans is less than
$250,000.
(b) Xxxxxxx will indemnify X.X. Xxxxxx against any loss or liability
resulting from personal guarantees made by X.X. Xxxxxx with respect to any of
the companies and disclosed in writing to Xxxxxxx prior to the Closing, and will
use its best efforts to have X.X. Xxxxxx released from all such guarantees
within 30 days after the Closing. None of such guarantees have been granted
after June 1, 1999.
(c) AcNet USA will use reasonable good faith efforts to obtain
audited financial statements prior to the Closing. If the Closing does not
occur, then the cost of such audit will be paid by Xxxxxxx and will be deducted
from the loans payable by AcNet to Xxxxxxx. In addition, Xxxxxxx will pay up to
$10,000 of the aggregate legal fees incurred by X.X. Xxxxxx, AcNet USA and
related companies in connection with the transaction.
(d) The Shareholders will be entitled to piggyback registration
rights with respect to the Xxxxxxx common stock they receive under this
Agreement.
IN WITNESS WHEREOF the parties have hereunto caused this Agreement to
be duly executed as of the date first above written.
MCC ACQUISITION CORP.
By:/s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx,
Chief Executive Officer
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SHAREHOLDERS
/s/ Xxx Xxxxxxx Ashton
-----------------------------------
Xxx Xxxxxxx Ashton
/s/ Xxxxx Xxxx Xxxx Xxxxxxxx
-----------------------------------
Xxxxx Xxxx Xxxx Xxxxxxxx
/s/ Xxxx X. Xxxxxx
------------------------------------
Xxxx X. Xxxxxx
/s/ Xxxxxx Xxxxxxx
------------------------------------
Xxxxxx Xxxxxxx
/s/ Xxxx Xxxxx Xxxxx
-----------------------------------
Xxxx Xxxxx Xxxxx
/s/ Xxxxx Xxxxx Xxxxxxx
-----------------------------------
Xxxxx Xxxxx Xxxxxxx
/s/ Xxxxxx Xxxxxxx Xxxxx, Jr.
-----------------------------------
Xxxxxx Xxxxxxx Xxxxx, Jr.
/s/ Xxxxxxx Xxxx Xxxx Xxxxxxxx
-----------------------------------
Xxxxxxx Xxxx Xxxx Xxxxxxxx
/s/ Xxxx Xxxxxxxx Xxxxx
-----------------------------------
Xxxx Xxxxxxxx Xxxxx
/s/ Xxxx Xxxxxxxxxx Xxxxxxxxx
-----------------------------------
Xxxx Xxxxxxxxxx Xxxxxxxxx
/s/ Xxxx Xxxxxx Xxxxx, Xx.
-----------------------------------
Xxxx Xxxxxx Xxxxx, Xx.
/s/ Xxxx X. Xxxxxx
-----------------------------------
Xxxx X. Xxxxxx
/s/ Xxxxxx Xxxxxx Xxxxxxxx
-----------------------------------
Xxxxxx Xxxxxx Xxxxxxxx
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/s/ Xxxxxxx X. Xxxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxxx
XXXXXXX COMMUNICATIONS CORPORATION
By:/s/ Xxxxxx X. Xxxxxxx
-----------------------------------
Xxxxxx X. Xxxxxxx,
Chief Executive Officer
ACNET USA, INC.
BY/s/ Xxx Xxxxxxx Ashton
-----------------------------------
Xxx Xxxxxxx Ashton,
Chief Executive Officer
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EXHIBIT A
ACNET USA, INC.
---------------
PURCHASE CONSIDERATION
-------------------------------------------
AcNet USA Shares of Xxxxxxx
Shareholders Shares Held Common Stock Cash
------------------------------------ -------------------- ------------------------- -----------------
Xxx Xxxxxxx Ashton 800 1,320,000 $160,000
Xxxxx Xxxx Xxxx Xxxxxxxx 130 214,500 26,000
Xxxx X. Xxxxxx 15 24,750 3,000
Xxxxxxx Xxxx Xxxx Xxxxxxxx 5 8,250 1,000
Xxxxxx Xxxxxx Xxxxxxxx 8 13,200 1,600
Xxxxxxx X. Xxxxxxx 15 24,750 3,000
Xxxx Xxxxxxxx Xxxxx 1 1,650 200
Xxxx Xxxxxxxxxx Xxxxxxxxx 3 4,950 600
Xxxx Xxxxxx Xxxxx, Xx. 1 1,650 200
Xxxx X. Xxxxxx 5 8,250 1,000
Xxxxxx Xxxxxxx Xxxxx, Jr. 1 1,650 200
Xxxxx Xxxxx Xxxxxxx 6 9,900 1,200
Xxxx Xxxxx Xxxxx 5 8,250 1,000
Xxxxxx Xxxxxxx 5 8,250 1,000
==================================== ==================== ========================= =================
Totals 1,000 1,650,000 $200,000
