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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of February 11, 2000 (this
"Agreement"), is made and entered into among WORLD ACCESS, INC., a Delaware
corporation ("WAXS"), STI Merger Co., a Delaware corporation and wholly-owned
subsidiary of WAXS ("Merger Sub"), and STAR TELECOMMUNICATIONS, INC., a
Delaware corporation ("STAR").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of STAR and WAXS deem it advisable
and in the best interests of each corporation and its respective stockholders
that STAR and WAXS engage in a business combination in order to advance the
long-term strategic business interests of STAR and WAXS;
WHEREAS, the combination of STAR and WAXS shall be effected by the
terms of this Agreement through a merger as outlined below (the "Merger");
WHEREAS, in furtherance thereof, the respective Boards of Directors of
STAR, Merger Sub and WAXS have approved the Merger, upon the terms and subject
to the conditions set forth in this Agreement, pursuant to which each share of
common stock, par value $0.001 per share, of STAR ("STAR Common Stock") issued
and outstanding immediately prior to the Effective Time (as defined in Section
1.3) will be converted into the right to receive the consideration set forth in
Section 1.6;
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code"), and the
regulations promulgated thereunder; and
WHEREAS, simultaneously with the execution and delivery of this
Agreement, WAXS and Xxxxxxxxxxx X. Xxxxxxxx and Xxxxx Xxxxxx (the "Principal
Stockholders") are entering into an agreement (the "Voting and Stock Transfer
Restriction Agreement") pursuant to which each Principal Stockholder will agree
to, among other things, vote in favor of the Merger and certain restrictions on
the transfer of the consideration received in the Merger.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, and intending to be legally bound hereby, the parties hereto agree
as follows:
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ARTICLE I
THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the General Corporation Law of
the State of Delaware (the "DGCL"), STAR shall be merged with and into Merger
Sub at the Effective Time (as defined below). Following the Merger, the
separate corporate existence of STAR shall cease and Merger Sub shall continue
as the surviving corporation (the "Surviving Corporation").
1.2 Closing. Subject to the satisfaction or waiver of the
conditions set forth in Article VI, the closing of the Merger and the
transactions contemplated by this Agreement (the "Closing") will take place on
the second business day following the satisfaction or waiver of such
conditions, unless another time or date is agreed to in writing by the parties
hereto (the date of the Closing being referred to herein as the "Closing
Date"). The Closing shall be held at the offices of Long Xxxxxxxx & Xxxxxx LLP,
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx 00000, unless another place
is agreed to by the parties hereto.
1.3 Effective Time. On the Closing Date the parties shall (i) file
a certificate of merger (the "Certificate of Merger") in such form as is
required by, and executed in accordance with, the relevant provisions of the
DGCL and (ii) make all other filings or recordings required under the DGCL in
connection with the Merger. The Merger shall become effective at such time as
the Certificate of Merger is duly filed with the Delaware Secretary of State or
at such subsequent time as WAXS and STAR shall agree and as shall be specified
in the Certificate of Merger (the date and time the Merger becomes effective
being the "Effective Time").
1.4 Effects of the Merger. At and after the Effective Time, the
Merger will have the effects set forth in the DGCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time all the
property, rights, privileges, powers, licenses, authorizations and franchises
of Merger Sub and STAR shall be vested in the Surviving Corporation, and all
debts, liabilities and duties of Merger Sub and STAR shall become the debts,
liabilities and duties of the Surviving Corporation.
1.5 Certificate of Incorporation/Bylaws. The certificate of
incorporation and bylaws of Merger Sub, as in effect immediately prior to the
Effective Time, shall be the certificate of incorporation and bylaws of the
Surviving Corporation, until thereafter changed or amended as provided therein
or by applicable law.
1.6 Conversion of Securities. At the Effective Time, by virtue of
the Merger and without any action on the part of WAXS, Merger Sub, STAR or the
holders of any of the following securities:
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(a) [INTENTIONALLY OMITTED.]
(b) Each share of STAR Common Stock issued and
outstanding and directly or indirectly owned or held by STAR or a Subsidiary
thereof at the Effective Time shall, by virtue of the Merger, cease to be
outstanding and shall be canceled and retired and no capital stock of WAXS or
other consideration shall be delivered in exchange therefor.
(c) Subject to Section 2.4, each share of STAR Common
Stock issued and outstanding immediately prior to the Effective Time (other
than the Dissenter's Shares (as defined in Section 8.12)) shall be converted
into the right to receive, at the election of WAXS by written notice to STAR
prior to the Closing, (i) the number of shares of WAXS Common Stock obtained by
solving for "X" in the following formula (the "Exchange Ratio"):
X = 7.81 + Z
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or (ii) such number of shares of WAXS Common Stock as shall equal sixty percent
(60%) of the Exchange Ratio and an amount in cash equal to forty percent (40%)
of the sum of $7.81 plus "Z" (as defined below); provided, however, that WAXS
and STAR expressly agree that, notwithstanding anything in this Agreement to
the contrary, in order to ensure that the Merger satisfies the continuity of
interest requirement under Treasury Regulation Section 1.368-1(e), that in no
event shall WAXS issue cash for more than forty-five percent (45%) of the
outstanding shares of STAR Common Stock, including for purposes of this
calculation cash paid for fractional shares pursuant to Section 2.4 and cash
paid for Dissenters' Shares.
For purposes of this Section 1.6, "Z" shall equal the PT-1 Excess Proceeds (as
defined in Section 8.12) divided by 62,856,702. All shares of STAR Common
Stock, at the Effective Time, shall no longer be outstanding and shall
automatically be canceled and retired and each holder of a certificate
representing any such shares (a "Certificate") shall cease to have any rights
with respect thereto, except as set forth in this Section 1.6(c), Section 2.4
or at law. The shares of WAXS Common Stock issued pursuant to this Section
1.6(c) together with any cash in lieu of fractional shares paid pursuant to
Section 2.4 shall be referred to herein as the "Merger Consideration."
1.7 STAR Stock Options.
(a) At the Effective Time, by virtue of the Merger and
without any further action on the part of STAR, WAXS, Merger Sub or the holder
of any outstanding option, warrant or other right to acquire STAR capital stock
(a "STAR Stock Option"), each STAR Stock Option will be automatically converted
into a WAXS Stock Option (as defined in Section 3.1(b)) to purchase shares of
WAXS Common Stock in an amount equal to the number of shares of STAR Common
Stock
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covered under such STAR Stock Option multiplied by the Exchange Ratio (rounded
to the nearest whole number of shares of WAXS Common Stock) at a price per share
of WAXS Common Stock equal to the per share option exercise price specified in
the STAR Stock Option divided by the Exchange Ratio (rounded to the nearest
whole cent). Each such WAXS Stock Option shall contain terms and provisions
which are substantially similar to those terms, conditions and provisions
governing the original STAR Stock Option, except that references to STAR in such
STAR Stock Option will be deemed to refer to WAXS and the date of grant of the
STAR Stock Option shall be deemed to be the date of grant of such WAXS Stock
Option. At the Effective Time, for purposes of interpretation of such new WAXS
Stock Option, (i) all references in any stock option plan of STAR shall be
deemed to refer to WAXS; (ii) any stock option plan of STAR which governs the
STAR Stock Option shall continue to govern the WAXS Stock Option substituted
therefor; and (iii) WAXS shall, as soon as practicable after the Effective Time,
issue to each holder of an outstanding STAR Stock Option a document evidencing
the foregoing issued and substituted WAXS Stock Option by WAXS. It is the
intention of the parties: (1) that, subject to applicable law, STAR Stock
Options assumed by WAXS qualify, following the Effective Time, as incentive
stock options, as defined in Section 422 of the Code, to the extent that STAR
Stock Options qualified as incentive stock options prior to the Effective Time,
(2) that each holder of a STAR Stock Option shall receive a new WAXS Stock
Option which preserves (but does not increase) the excess of the fair market
value of the shares subject to such STAR Stock Option immediately before the
Effective Time over the aggregate option price of such shares immediately before
the Effective Time, if any such excess then exists, (3) that the terms,
conditions, restrictions and provisions of the WAXS Stock Option be
substantially similar to the terms, conditions, restrictions and provisions of
the STAR Stock Option, and (4) any terms conditions, restrictions or provisions
of a STAR Stock Option applicable to a number of shares rather than a percentage
or fraction of shares should be appropriately adjusted based upon the Exchange
Ratio. Without the prior written consent of WAXS (which may be withheld in its
discretion), no new options shall be issued by STAR on or after the date hereof,
including, without limitation, under any stock option plan currently maintained
by STAR.
(b) With respect to each STAR Stock Option converted into
a WAXS Stock Option pursuant to Section 1.7(a), and with respect to the shares
of WAXS Common Stock underlying such option, WAXS shall file and keep current
all requisite registration statements, on Form S-8 or other appropriate form,
for as long as such options remain outstanding, which registration statement
shall include a prospectus meeting the requirements of General Instruction C to
Form S-8 with respect to affiliates of STAR, subject at all times to compliance
with all applicable federal and state securities laws.
(c) After the date of this Agreement, STAR agrees that it
will not grant any restricted stock, stock appreciation rights or limited stock
appreciation rights and also agrees that it will not permit cash payments to
holders of STAR Stock Options in lieu of the substitution therefor of WAXS
Stock Options, as described in this Section 1.7.
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1.8 Certain Adjustments. If between the date hereof and the
Effective Time, the outstanding WAXS Common Stock or STAR Common Stock shall
have been changed into a different number of shares or different class by
reason of any reclassification, recapitalization, stock split, split-up,
combination, exchange of shares or similar capital stock event or a stock
dividend or dividend payable in any other securities shall be declared with a
record date within such period, or any similar event shall have occurred, the
Exchange Ratio shall be appropriately adjusted to provide to the holders of
STAR Common Stock and the holders of STAR Stock Options the same economic
effect as contemplated by this Agreement prior to such event.
ARTICLE II
EXCHANGE OF CERTIFICATES
2.1 Exchange Fund. At least five (5) days prior to the mailing of
the Joint Proxy Statement/Prospectus (as defined in Section 5.1), WAXS shall
appoint a commercial bank or trust company reasonably acceptable to STAR to act
as exchange agent hereunder (the "Exchange Agent") for the purpose of
exchanging Certificates for the Merger Consideration. Immediately prior to the
Effective Time, WAXS shall deposit with the Exchange Agent, in trust for the
benefit of holders of shares of STAR Common Stock, cash payable and
certificates representing the WAXS Common Stock issuable pursuant to Section
1.6 in exchange for outstanding shares of STAR Common Stock. WAXS agrees to
deposit with the Exchange Agent from time to time as needed, cash sufficient to
pay cash in lieu of fractional shares pursuant to Section 2.4 and any dividends
and other distributions pursuant to Section 2.3. Any cash and certificates of
WAXS Common Stock deposited with the Exchange Agent shall hereinafter be
referred to as the "Exchange Fund".
2.2 Exchange Procedures. As soon as reasonably practicable after
the Effective Time, WAXS shall cause the Exchange Agent to mail to each holder
of a Certificate (other than to holders of Dissenter's Shares) (i) a letter of
transmittal which shall advise such holder of the effectiveness of the Merger
and specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent, and which letter shall be in customary form and have such other
provisions as WAXS may reasonably specify and (ii) instructions for effecting
the surrender of such Certificates in exchange for the applicable Merger
Consideration. Upon surrender of a Certificate to the Exchange Agent together
with such letter of transmittal, duly executed and completed in accordance with
the instructions thereto, and such other documents as may reasonably be
required by the Exchange Agent, the holder of such Certificate shall be
entitled to receive in exchange therefor promptly (A) one or more shares of
WAXS Common Stock (which shall be in uncertificated book entry form unless a
physical certificate is requested) representing, in the aggregate, the whole
number of shares that such holder has the right to receive pursuant to Section
1.6 (after taking into account all shares of STAR Common Stock then held by
such holder), and (B) a check in the amount equal to the cash that such holder
has the right to receive pursuant to the provisions of Section 1.6(c), if any,
and this Article II, including cash in lieu of any additional shares of WAXS
Common Stock pursuant to Section 2.4 and dividends and
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other distributions pursuant to Section 2.3. No interest will be paid or will
accrue on any cash payable pursuant to 1.6(c), Section 2.3 or Section 2.4. In
the event of transfer of ownership of STAR Common Stock which is not registered
in the transfer records of STAR, one or more shares of WAXS Common Stock
evidencing, in the aggregate, the proper number of shares of WAXS Common Stock,
a check in the proper amount of cash in lieu of any additional shares of WAXS
Common Stock pursuant to Section 2.4, a check in the proper amount of cash
pursuant to Section 1.6(c) and any dividends or other distributions to which
such holder is entitled pursuant to Section 2.3, may be issued with respect to
such STAR Common Stock to such a transferee if the Certificate representing
such shares of STAR Common Stock is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such transfer and
to evidence that any applicable stock transfer taxes have been paid.
2.3 Distributions with Respect to Unexchanged Certificates. No
dividends or other distributions declared or made with respect to shares of
WAXS Common Stock with a record date after the Effective Time shall be paid to
the holder of any unexchanged Certificate with respect to the shares of WAXS
Common Stock that such holder would be entitled to receive upon surrender of
such Certificate and no cash payment in lieu of fractional shares of WAXS
Common Stock shall be paid to any such holder pursuant to Section 2.4 until
such holder shall surrender such Certificate in accordance with Section 2.2.
Subject to the effect of applicable laws, following surrender of any such
Certificate, there shall be paid to such holder of shares of WAXS Common Stock
issuable in exchange therefor, without interest, (a) promptly after the time of
such surrender, the amount of any cash payable in lieu of fractional shares of
WAXS Common Stock to which such holder is entitled pursuant to Section 2.4 and
the amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole shares of WAXS
Common Stock, and (b) at the appropriate payment date, the amount of dividends
or other distributions with a record date after the Effective Time but prior to
such surrender and a payment date subsequent to such surrender payable with
respect to such shares of WAXS Common Stock.
2.4 No Fractional Shares of WAXS Common Stock.
(a) No certificates or scrip or shares of WAXS Common
Stock representing fractional shares of WAXS Common Stock or book-entry credit
of the same shall be issued upon the surrender for exchange of Certificates and
such fractional share interests will not entitle the owner thereof to vote or
to have any rights of a stockholder of or a holder of shares of WAXS Common
Stock.
(b) Notwithstanding any other provision of this
Agreement, each holder of shares of STAR Common Stock exchanged pursuant to the
Merger who would otherwise have been entitled to receive a fraction of a share
of WAXS Common Stock (after taking into account all Certificates delivered by
such holder) shall receive, in lieu thereof, cash (without interest) in an
amount equal to the product of (i) such fractional part of a share of WAXS
Common Stock multiplied by (ii) the average of the daily closing price for a
share of WAXS Common Stock on the Nasdaq for the ten (10) consecutive trading
days in which such shares are traded on the Nasdaq, ending at the close of
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trading on the date of the Effective Time or, if such date is not a business
day, the business day immediately preceding the date on which the Effective
Time occurs. As promptly as practicable after the determination of the amount
of cash, if any, to be paid to holders of fractional interests, the Exchange
Agent shall so notify WAXS, and WAXS shall promptly deposit such amount with
the Exchange Agent and shall cause the Exchange Agent to promptly forward
payments to such holders of fractional interests subject to and in accordance
with the terms hereof.
2.5 No Further Ownership Rights in STAR Common Stock. As
applicable, all shares of WAXS Common Stock issued and cash paid upon
conversion of shares of STAR Common Stock in accordance with the terms of
Article I and this Article II (including any cash paid pursuant to Section 2.4)
shall be deemed to have been issued or paid in full satisfaction of all rights
pertaining to the shares of STAR Common Stock.
2.6 Termination of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to the holders of Certificates for six (6) months
after the Effective Time shall be delivered to the Surviving Corporation or
otherwise on the instruction of the Surviving Corporation, and any holders of
the Certificates who have not theretofore complied with this Article II shall
thereafter look only to the Surviving Corporation and WAXS for the Merger
Consideration with respect to the shares of STAR Common Stock formerly
represented thereby to which such holders are entitled pursuant to Section 1.6
and Section 2.2, any cash in lieu of fractional shares of WAXS Common Stock to
which such holders are entitled pursuant to Section 2.4 and any dividends or
distributions with respect to shares of WAXS Common Stock to which such holders
are entitled pursuant to Section 2.3. Any such portion of the Exchange Fund
remaining unclaimed by holders of shares of STAR Common Stock five (5) years
after the Effective Time (or such earlier date immediately prior to such time
as such amounts would otherwise escheat to or become property of any
Governmental Entity (as defined in Section 3.1(c)(3)) shall, to the extent
permitted by law, become the property of the Surviving Corporation free and
clear of any claims or interest of any Person previously entitled thereto.
2.7 No Liability. None of WAXS, Merger Sub, STAR, the Surviving
Corporation or the Exchange Agent shall be liable to any Person in respect of
any Merger Consideration from the Exchange Fund delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
2.8 Investment of the Exchange Fund. The Exchange Agent shall
invest any cash included in the Exchange Fund as directed by the Surviving
Corporation on a daily basis. Any interest and other income resulting from such
investments shall promptly be paid to the Surviving Corporation.
2.9 Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such Person of a bond in such
reasonable amount as the Surviving Corporation may direct as indemnity against
any claim that
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may be made against it with respect to such Certificate, the Exchange Agent
will deliver in exchange for such lost stolen or destroyed Certificate the
applicable Merger Consideration with respect to the shares of STAR Common Stock
formerly represented thereby, any cash in lieu of fractional shares of WAXS
Common Stock, and unpaid dividends and distributions on shares of WAXS Common
Stock deliverable in respect thereof, pursuant to this Agreement.
2.10 Withholding Rights. Each of the Surviving Corporation and WAXS
shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of shares of STAR Common Stock
such amounts as it is required to deduct and withhold with respect to the
making of such payment under the Code and the rules and regulations promulgated
thereunder, or any provision of state, local or foreign tax law. To the extent
that amounts are so withheld by the Surviving Corporation or WAXS, as the case
may be, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares of STAR Common Stock
in respect of which such deduction and withholding was made by the Surviving
Corporation or WAXS, as the case may be.
2.11 Stock Transfer Books. The stock transfer books of STAR shall
be closed immediately upon the Effective Time and there shall be no further
registration of transfers of shares of STAR Common Stock thereafter on the
records of STAR. On or after the Effective Time, any Certificates presented to
the Exchange Agent or WAXS for any reason shall be converted as provided in
Articles I and II hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of WAXS and Merger Sub. Except
as set forth in the WAXS SEC Reports (as defined below) filed and publicly
available prior to the date hereof or the WAXS Disclosure Schedule delivered by
WAXS to STAR prior to the execution of this Agreement (the "WAXS Disclosure
Schedule") (each section of which qualifies the correspondingly numbered
representation and warranty or covenant to the extent specified therein), WAXS
and Merger Sub represent and warrant to STAR as follows:
(a) Organization; Standing and Power; Subsidiaries.
(1) Each of WAXS, its Subsidiaries (as defined
in Section 8.12) and Merger Sub is a corporation duly organized,
validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization, has the requisite 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
organized, existing and in good standing or to have such power and
authority would not have a Material Adverse Effect on WAXS, and is
duly qualified and in good standing to do business in each
jurisdiction in which the nature of its
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business or the ownership or leasing of its properties makes such
qualification necessary other than in such jurisdictions where the
failure to so qualify or to be in good standing would not have a
Material Adverse Effect on WAXS. The copies of the certificate of
incorporation and bylaws of WAXS and Merger Sub which were previously
furnished or made available to STAR are true, complete and correct
copies of such documents as in effect on the date of this Agreement.
(2) Exhibit 21.1 to WAXS's Annual Report on Form
10-K for the year ended December 31, 1998 includes all the
Subsidiaries of WAXS which as of the date of this Agreement are
Significant Subsidiaries (as defined in Rule 1-02 of Regulation S-X of
the SEC). All the outstanding shares of capital stock of, or other
equity interests in, each such Significant Subsidiary have been
validly issued and are fully paid and nonassessable and are owned
directly or indirectly by WAXS, free and clear of all pledges, claims,
liens, charges, encumbrances and security interests of any kind or
nature whatsoever (collectively "Liens") and free of any other
restriction (including any restriction on the right to vote, sell or
otherwise dispose of such capital stock or other ownership interests).
Neither WAXS nor any of its Subsidiaries directly or indirectly owns
any equity or similar interest in, or any interest convertible into or
exchangeable or exercisable for any equity or similar interest in, any
corporation, partnership, joint venture or other business association
or entity (other than the Subsidiaries of WAXS) that is or would
reasonably be expected to be material to WAXS and its Subsidiaries
taken as a whole.
(b) Capital Structure. As of February 7, 2000:
(1) The authorized capital stock of WAXS
consists of (A) 150,000,000 shares of WAXS Common Stock, of which
53,787,805 shares are outstanding and no shares are held in the
treasury of WAXS and (B) 10,000,000 shares of Preferred Stock, par
value $.01 per share, of which 50,000 shares designated as 4.25%
Cumulative Senior Perpetual Convertible Preferred Stock, Series A, par
value $.01 per share (the "Series A Preferred Stock"), and 350,259.875
shares designated as Convertible Preferred Stock, Series C (the
"Series C Preferred Stock"), are outstanding. WAXS has reserved or has
available 4,347,827 shares of WAXS Common Stock for issuance upon
conversion of the Series A Preferred Stock and 18,027,478 shares of
WAXS Common Stock for issuance upon conversion of the Series C
Preferred Stock. All issued and outstanding shares of the capital
stock of WAXS are duly authorized, validly issued, fully paid and
nonassessable, and no class of capital stock is entitled to preemptive
rights. In addition to the rights described in Section 3.1(b) of the
WAXS Disclosure Schedule, there are outstanding options, warrants or
other rights (a "WAXS Stock Option") to acquire 13,133,837 shares of
capital stock from WAXS.
(2) No bonds, debentures, notes or other
indebtedness of WAXS having the right to vote on any matters on which
holders of capital stock of WAXS may vote ("WAXS Voting Debt") are
issued or outstanding.
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(3) Except as otherwise set forth in this
Section 3.1(b) and as contemplated by Section 1.5 and Section 1.6,
there are no securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to
which WAXS or any of its Subsidiaries is a party or by which any of
them is bound obligating WAXS or any of its Subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other voting securities of WAXS or any of
its Subsidiaries or obligating WAXS or any of its Subsidiaries to
issue, grant, extend or enter into any such security, option, warrant,
call right, commitment, agreement, arrangement or undertaking. There
are no outstanding obligations of WAXS or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any shares of capital stock of
WAXS or any of its Subsidiaries.
(c) Authority; No Conflicts.
(1) WAXS and Merger Sub have all requisite
corporate power and authority to enter into this Agreement and to
consummate the Merger and the other transactions contemplated hereby,
subject, in the case of WAXS, to the approval by the stockholders of
WAXS by the Required WAXS Vote (as defined in Section 3.1(g)) of this
Agreement, the Merger and the other transactions contemplated hereby
and, in the case of Merger Sub, the affirmative vote of WAXS, as sole
stockholder thereof, of this Agreement, the Merger and the other
transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the Merger and the other
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of WAXS and Merger Sub,
subject, in the case of WAXS, to the approval by the stockholders of
WAXS of this Agreement, the Merger and the transactions contemplated
hereby by the Required WAXS Vote and subject, in the case of Merger
Sub, to the affirmative vote of WAXS, as sole stockholder thereof, of
this Agreement, the Merger and the other transactions contemplated
hereby. This Agreement has been duly executed and delivered by WAXS
and Merger Sub and constitutes a valid and binding agreement of each
of WAXS and Merger Sub, enforceable against it in accordance with its
terms, except to the extent that its enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
laws affecting the enforcement of creditors' rights generally or by
general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(2) Subject, in the case of WAXS, to the
approval by the stockholders of WAXS of this Agreement, the Merger and
the transactions contemplated hereby by the Required WAXS Vote and, in
the case of Merger Sub, the affirmative vote of WAXS, as sole
stockholder thereof, of this Agreement, the Merger and the other
transactions contemplated hereby, the execution and delivery of this
Agreement by WAXS and Merger Sub does not, and the consummation by
WAXS and Merger Sub of the Merger and the other actions contemplated
hereby will not, conflict with, or result in any violation of, or
constitute a default (with or without notice or lapse of time, or
both) under, or give rise to a right of
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termination, amendment, cancellation or acceleration of any obligation
or the loss of a material benefit under, or the creation of a Lien on
any assets (any such conflict, violation, default, right of
termination, amendment, cancellation or acceleration, loss or
creation, a "Violation") of: (A) any provision of the certificate of
incorporation or bylaws of WAXS, any Subsidiary of WAXS or Merger Sub,
or (B) except as would not have a Material Adverse Effect on WAXS and
subject to obtaining or making the consents, approvals, orders,
authorizations, registrations, declarations and filings referred to in
paragraph (3) below, any loan or credit agreement, note, mortgage,
bond, indenture, lease, or other agreement, obligation, instrument,
permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to WAXS, any
Subsidiary of WAXS or their respective properties or assets.
(3) No consent, approval, order or authorization
of, or registration, declaration or filing with, any supranational,
national, state, municipal, local or foreign government, any
instrumentality, subdivision, court, administrative agency or
commission or other authority thereof, or any quasi-governmental or
private body exercising any supranational, national, state, municipal,
local or foreign regulatory, taxing, importing or other governmental
or quasi-governmental authority (a "Governmental Entity"), is required
by or with respect to WAXS, any Subsidiary of WAXS or Merger Sub in
connection with the execution and delivery of this Agreement by WAXS
or Merger Sub or the consummation of the Merger and the other
transactions contemplated hereby, except for those required under or
in relation to (A) the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended (the "HSR Act"), (B) state securities or "blue sky"
laws (the "Blue Sky Laws"), (C) the Communications Act of 1996, as
amended (the "Communications Act"), and all applicable state public
utilities laws, (D) the Securities Act, (E) the Exchange Act, (F) the
DGCL with respect to the filing of the Certificate of Merger, (G)
rules and regulations of Nasdaq, (H) antitrust or other competition
laws of other jurisdictions, (I) such consents, approvals, orders,
authorizations, registrations, declarations and filings as are
required by applicable laws, regulations and rules governing the
telecommunications business including, without limitation, those of
the United States Federal Communication Commission (the "FCC"), (J)
any filings and approvals expressly contemplated by this Agreement,
and (K) such consents, approvals, orders, authorizations,
registrations, declarations and filings the failure of which to make
or obtain would not have a Material Adverse Effect on WAXS. Consents,
approvals, orders, authorizations, registrations, declarations and
filings required under or in relation to any of the foregoing clauses
(A) through (K) are hereinafter referred to as "Necessary Consents".
(d) Reports and Financial Statements.
(1) WAXS has filed all required registration
statements, prospectuses, reports, schedules, forms, statements and
other documents required to be filed by it under the federal
securities laws with the SEC since January 1, 1998 (collectively,
including all exhibits thereto, the "WAXS SEC Reports"). No Subsidiary
of WAXS, including, without
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limitation Merger Sub, is required to file any form, report,
registration statement, prospectus or other document with the SEC not
otherwise filed with a WAXS SEC Report. As of the respective times
such documents were filed or, as applicable, became effective, or as
subsequently amended, the WAXS SEC Reports complied as to form and
content, in all material respects, with the requirements of the
Securities Act and the Exchange Act, as the case may be, and the rules
and regulations promulgated thereunder and, taken as a whole, the WAXS
SEC Reports do not contain any untrue statement of a material fact or
omit to state any 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
financial statements (including the related notes) included in the
WAXS SEC Reports (or, if amended or superseded by a filing prior to
the date of this Agreement, then on the date of such filing) presents
fairly, in all material respects, the consolidated financial position
and consolidated results of operations and cash flows of WAXS and its
Subsidiaries as of the respective dates or for the respective periods
set forth therein all in conformity with GAAP consistently applied
during the periods involved except as otherwise noted therein, and
subject, in the case of the unaudited interim financial statements, to
normal and recurring year-end adjustments that have not been and are
not expected to be material in amount. All of such WAXS SEC Reports,
as of their respective dates (or as of the date of any amendment to
the respective WAXS SEC Report filed prior to the date of this
Agreement), complied or will comply as to form in all material
respects with the applicable requirements of the Securities Act and
the Exchange Act and the rules and regulations promulgated thereunder.
(2) Since December 31, 1998, WAXS and its
Subsidiaries have not incurred any liabilities that are of a nature
that would be required to be disclosed on a balance sheet of WAXS and
its Subsidiaries or the footnotes thereto prepared in conformity with
GAAP, other than (A) liabilities incurred in the ordinary course of
business or (B) liabilities that would not have a Material Adverse
Effect on WAXS.
(e) Information Supplied. None of the information
supplied or to be supplied by WAXS for inclusion or incorporation by reference
in the Joint Proxy Statement/Prospectus (as defined herein) will, on the date
it is first mailed to WAXS's and STAR's stockholders, as applicable, or at the
time of the WAXS Stockholders Meeting or the STAR Stockholders Meeting, as
applicable, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. The Joint Proxy Statement/Prospectus will, on the date it
is first mailed to WAXS's and STAR's stockholders and at the time of the WAXS
Stockholders Meeting and the STAR Stockholders Meeting, comply as to form in
all material respects with the requirements of the Exchange Act and the rules
and regulations promulgated thereunder.
(f) WAXS Board Approval. The Board of Directors of WAXS,
by resolutions duly adopted by unanimous vote at a meeting duly called and held
and not subsequently rescinded or modified in any way (the "WAXS Board
Approval"), has duly (i) determined that this Agreement, the Merger and the
other transactions contemplated hereby are fair to and in the best interests of
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WAXS and its stockholders, (ii) approved this Agreement, the Merger and the
other transactions contemplated hereby and (iii) declared the advisability of
this Agreement, the Merger and the other transactions contemplated hereby, and,
further, (iv) recommended that the stockholders of WAXS approve and adopt this
Agreement, the Merger and the other transactions contemplated hereby and
directed that this Agreement and the transactions contemplated hereby be
submitted for consideration by WAXS's stockholders at the WAXS Stockholders
Meeting.
(g) Required WAXS Stockholder Vote. The affirmative vote
of holders of shares of WAXS Common Stock, Series A Preferred Stock and Series
C Preferred Stock, voting together as a single class, representing a majority
of the outstanding shares of WAXS Common Stock, Series A Preferred Stock and
Series C Preferred Stock (the "Required WAXS Vote"), is the only vote of
the holders of any class or series of WAXS capital stock necessary to adopt
this Agreement and approve the Merger and the other transactions contemplated
hereby.
(h) Required Merger Sub Board Approval. The Board of
Directors of Merger Sub, by resolutions duly adopted by a unanimous written
consent and not subsequently rescinded or modified in any way, has duly (i)
determined that this Agreement, the Merger and the other transactions
contemplated hereby are fair to and in the best interests of Merger Sub and its
sole stockholder, WAXS, (ii) approved this Agreement, the Merger and the other
transactions contemplated hereby and (iii) declared the advisability of this
Agreement, the Merger and the other transactions contemplated hereby, and,
further, (iv) recommended that WAXS adopt this Agreement and approve the Merger
and the other transactions contemplated hereby and directed that this Agreement
and the transactions contemplated hereby be submitted for consideration by WAXS
at a meeting duly called.
(i) Required Merger Sub Stockholder Vote. The affirmative
vote of WAXS, as sole stockholder of Merger Sub, is the only vote of the
holders of any class or series of Merger Sub capital stock necessary to adopt
this Agreement and approve the Merger and the other transactions contemplated
hereby.
(j) Litigation: Compliance with Laws.
(1) There is no suit, investigation, action or
proceeding pending or, to the Knowledge of WAXS, threatened, against
or affecting WAXS or any Subsidiary of WAXS having, or which would
have a Material Adverse Effect on WAXS, nor is there any judgment,
decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against WAXS or any Subsidiary of WAXS having,
or which would have a Material Adverse Effect on WAXS.
(2) Except as would not have a Material Adverse
Effect on WAXS, WAXS and its Subsidiaries hold all permits, licenses,
variances, authorizations, exemptions, orders and approvals of all
Governmental Entities including, without limitation, the FCC and state
public utilities commissions, which are necessary for the operation of
the businesses
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of WAXS and its Subsidiaries (the "WAXS Permits"). Such WAXS permits
are valid and in full force and effect and WAXS and its Subsidiaries
are in compliance with the terms of the WAXS Permits, except where the
failure to be valid and in full force and effect or to so comply would
not have a Material Adverse Effect on WAXS. The businesses of WAXS and
its Subsidiaries are not being conducted in violation of, and WAXS has
not received any notices of violations with respect to, any law,
ordinance or regulation of any Governmental Entity, except for
possible violations which would not have a Material Adverse Effect on
WAXS. WAXS is not aware of any threatened suspension, cancellation or
invalidation of any such WAXS Permit. Except as set forth in the WAXS
SEC Reports or except as would not have a Material Adverse Effect on
WAXS, neither WAXS nor any of its Subsidiaries has received notice
from either the FCC or any state public utilities commissions of any
complaint filed therewith concerning WAXS or any of its Subsidiaries,
operations or services.
(k) Absence of Certain Changes or Events. Except for
liabilities incurred in connection with this Agreement or the transactions
contemplated hereby, and except as permitted by Section 4.1, since December 31,
1998 through and including the date hereof, (i) WAXS and its Subsidiaries have
conducted, in all material respects, their business only in the ordinary course
and (ii) there has not been any change, circumstance or event which has had, or
would reasonably be expected to have, a Material Adverse Effect on WAXS, other
than any change, circumstance or effect relating (A) to the economy or
financial markets in general, or (B) in general to the industries in which WAXS
and its Subsidiaries operate and not specifically relating to WAXS and its
Subsidiaries.
(l) Intellectual Property. Except as would not have a
Material Adverse Effect on WAXS: (i) WAXS and each of its Subsidiaries owns, or
is licensed to use (in each case, free and clear of any Liens, or claim of
rights therein by any third party) all Intellectual Property (as defined below)
used in or necessary for the conduct of its business as currently conducted,
(ii) the use of any Intellectual Property by WAXS and its Subsidiaries does not
infringe on or otherwise violate the rights of any Person and is in accordance
with any applicable license pursuant to which WAXS or any Subsidiary acquired
the right to use any Intellectual Property; (iii) to the Knowledge of WAXS, no
Person is challenging, infringing on or otherwise violating any right of WAXS
or any of its Subsidiaries with respect to any Intellectual Property owned by
and/or licensed to WAXS or its Subsidiaries; and (iv) neither WAXS nor any of
its Subsidiaries has received any written notice of any pending claim with
respect to any Intellectual Property used by WAXS and its Subsidiaries and to
WAXS's Knowledge no Intellectual Property owned and/or licensed by WAXS or its
Subsidiaries is being used or enforced in a manner that would result in the
abandonment, cancellation or unenforceability of such Intellectual Property.
For purposes of this Agreement, "Intellectual Property" shall mean trademarks,
service marks, brand names, certification marks, trade dress and other
indications of origin, the goodwill associated with the foregoing and
registrations in any jurisdiction of, and applications in any jurisdiction to
register, the foregoing, including any extension, modification or renewal of
any such registration or application; inventions, discoveries and ideas,
whether patentable or not, in any jurisdiction; patents, applications for
patents (including,
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without limitation, divisions, continuations, continuations in part and renewal
applications), and any renewals, extensions or reissues thereof, in any
jurisdiction; non-public information, trade secrets and confidential
information and rights in any jurisdiction to limit the use or disclosure
thereof by any person; writings and other works, whether copyrightable or not,
in any jurisdiction; registrations or applications for registration of
copyrights in any jurisdiction, and any renewals or extensions thereof; any
similar intellectual property or proprietary rights; and any claims or causes
of action arising out of or relating to any infringement or misappropriation of
any of the foregoing.
(m) Brokers or Finders. No agent, broker, investment
banker, financial advisor or other firm or Person is or will be entitled to any
broker's or finder's fee or any other similar commission or fee in connection
with any of the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of WAXS, except Xxxxxxxxx, Lufkin & Xxxxxxxx
Securities Corporation (the "WAXS Financial Advisor"), whose fees and expenses
will be paid by WAXS in accordance with WAXS's agreement with such firm, a copy
of which has been, or will be promptly when available, provided to STAR.
(n) Opinion of WAXS Financial Advisor. WAXS has received
the opinion of the WAXS Financial Advisor, dated the date of this Agreement, to
the effect that as of such date, the Merger Consideration is fair, from a
financial point of view, to WAXS and its stockholders, a copy of which has been
provided to STAR.
(o) Taxes.
(1) (i) All material Tax Returns of WAXS and
each of its Subsidiaries have been filed, or requests for extensions
have been timely filed and have not expired; (ii) all Tax Returns
filed by WAXS and its Subsidiaries are complete and accurate in all
material respects; (iii) all Taxes shown to be due on such Tax Returns
or on subsequent assessments with respect thereto have been paid or
adequate reserves have been established for the payment of such Taxes,
and no other material Taxes are payable by WAXS or any of its
Subsidiaries with respect to items or periods covered by such Tax
Returns (whether or not shown on or reportable on such Tax Returns) or
with respect to any period prior to the date of this Agreement; (iv)
there are no material liens on any of the assets of WAXS or any of its
Subsidiaries with respect to Taxes, other than liens for Taxes not yet
due and payable or for Taxes that WAXS and its Subsidiaries is
contesting in good faith through appropriate proceedings and for which
appropriate reserves have been established; and (v) there is no audit,
examination, deficiency or refund litigation or matter in controversy
with respect to any Taxes of WAXS and its Subsidiaries that might
reasonably be expected to result in a Tax determination which would
have a Material Adverse Effect on WAXS.
(2) There are no contracts, agreements, plans or
arrangements, including but not limited to the provisions of this
Agreement, covering any employee or former employee of WAXS or any of
its Subsidiaries that, individually or collectively, could give
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rise to the payment of any amount (or portion thereof) that would not
be deductible pursuant to Sections 280G, 404, or 162 of the Code.
(3) Neither WAXS nor any of its Subsidiaries is
a party to a Tax Sharing Agreement.
(p) Certain Contracts. Neither WAXS nor any of its
Subsidiaries is a party to or bound by (i) any "material contract" (as such
term is defined in Item 601(b)(10) of Regulation S-K of the SEC), (ii) any
noncompetition agreement or any other agreement or arrangement that limits or
otherwise restricts WAXS or any of its Subsidiaries or any successor thereto,
from engaging or competing in any line of business or in any geographic area,
which agreement or arrangement would have a Material Adverse Effect on WAXS or
the Surviving Corporation after giving effect to the Merger, or (iii) any
agreement or arrangement between WAXS or any of its Subsidiaries, on the one
hand, and any affiliates, directors or officers of WAXS or its Subsidiaries, on
the other hand, that is not on arm's-length terms. All contracts filed with the
WAXS SEC Reports and the contracts listed on Section 3.1(p) of the WAXS
Disclosure Schedule are valid, binding and are in full force and effect and
enforceable in accordance with their respective terms, except to the extent
that such enforceability may be subject to applicable bankruptcy, insolvency,
moratorium, reorganization, or other laws affecting the enforcement or
creditors' rights generally or by general equitable principles, and other than
such contracts which by their terms are no longer in force or effect. Neither
WAXS nor its Subsidiaries are in violation or breach of or default under any
such contract, nor to WAXS's and its Subsidiaries' Knowledge, is any other
party to any such contract in violation or breach or other default under any
such contract, except for any such violation, breach or default which would not
have a Material Adverse Effect on WAXS.
3.2 Representations and Warranties of STAR. Except as set forth in
the STAR SEC Reports (as defined below) filed and publicly available prior to
the date hereof or the STAR Disclosure Schedule delivered by STAR to WAXS prior
to the execution of this Agreement (the "STAR Disclosure Schedule") (each
section of which qualifies the correspondingly numbered representation and
warranty or covenant to the extent specified therein), STAR represents and
warrants to WAXS as follows:
(a) Organization; Standing and Power; Subsidiaries.
(1) Each of STAR and its Subsidiaries is a
corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation or organization,
has the requisite 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 organized, existing and in good standing or
to have such power and authority would not have a Material Adverse
Effect on STAR, and is duly qualified and in good standing to do
business in each jurisdiction in which the nature of its business or
the ownership or leasing of its properties makes such qualification
necessary, other than in such jurisdictions where the failure to so
qualify or to be in good standing would not have a Material Adverse
Effect
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on STAR. The copies of the certificate of incorporation and bylaws of
STAR which were previously furnished or made available to WAXS are
true, complete and correct copies of such documents as in effect on
the date of this Agreement.
(2) Exhibit 21.1 to STAR's Annual Report on Form
10-K for the year ended December 31, 1998 includes all the
Subsidiaries of STAR which as of the date of this Agreement are
Significant Subsidiaries (as defined in Rule 1-02 of Regulation S-X of
the SEC). All the outstanding shares of capital stock of, or other
equity interests in, each such Significant Subsidiary have been
validly issued and are fully paid and nonassessable and are owned
directly or indirectly by STAR, free and clear of all Liens and free
of any other restriction (including any restriction on the right to
vote, sell or otherwise dispose of such capital stock or other
ownership interests). Neither STAR nor any of its Subsidiaries
directly or indirectly owns any equity or similar interest in, or any
interest convertible into or exchangeable or exercisable for any
equity or similar interest in, any corporation, partnership, joint
venture or other business association or entity (other than the
Subsidiaries of STAR), that is or would reasonably be expected to be
material to STAR and its Subsidiaries taken as a whole.
(b) Capital Structure.
(1) The authorized capital stock of STAR
consists of (A) 50,000,000 shares of STAR Common Stock, of which
58,683,131 shares are outstanding and no shares are held in the
treasury of STAR and (B) 5,000,000 shares of preferred stock, par
value $0.001 per share, of which no shares are outstanding. All issued
and outstanding shares of the capital stock of STAR are duly
authorized, validly issued, fully paid and nonassessable, and no class
of capital stock is entitled to preemptive rights. There are
outstanding options, warrants or other rights to acquire 4,173,571
shares of capital stock from STAR. Section 3.2(b) of the STAR
Disclosure Schedule lists the exercise price and vesting schedule for
each STAR Stock Option.
(2) No bonds, debentures, notes or other
indebtedness of STAR having the right to vote on any matters on which
holders of capital stock of STAR may vote ("STAR Voting Debt") are
issued or outstanding.
(3) Except as otherwise set forth in this
Section 3.2(b), there are no securities, options, warrants, calls,
rights, commitments, agreements, arrangements or undertakings of any
kind to which STAR or any of its Subsidiaries is a party or by which
any of them is bound obligating STAR or any of its Subsidiaries to
issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock or other voting securities of STAR
or any of its Subsidiaries or obligating STAR or any of its
Subsidiaries to issue, grant, extend or enter into any such security,
option, warrant, call, right, commitment, agreement, arrangement or
undertaking. There are no outstanding obligations of STAR or any of
its
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Subsidiaries to repurchase, redeem or otherwise acquire any shares of
capital stock of STAR or any of its Subsidiaries.
(c) Authority; No Conflicts.
(1) STAR has all requisite corporate power and
authority to enter into this Agreement and to consummate the Merger
and the other transactions contemplated hereby, subject to the
approval by the stockholders of STAR by the Required STAR Vote (as
defined in Section 3.2(g)) of this Agreement, the Merger and the other
transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the Merger and the other
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of STAR, subject to the
approval by the stockholders of STAR of this Agreement and the Merger
and the other transactions contemplated hereby by the Required STAR
Vote. This Agreement has been duly executed and delivered by STAR and
constitutes a valid and binding agreement of STAR, enforceable against
it in accordance with its terms, except to the extent that its
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the enforcement of
creditors' rights generally or by general equitable principles
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(2) Subject to the approval by the stockholders
of STAR of this Agreement, the Merger and the other transactions
contemplated hereby by the Required STAR Vote, the execution and
delivery of this Agreement by STAR does not, and the consummation by
STAR of the Merger and the other actions contemplated hereby will not,
conflict with, or result in a Violation of: (A) any provision of the
certificate of incorporation or bylaws of STAR or a Shareholder or any
Subsidiary of STAR or (B) except as would not have a Material Adverse
Effect on STAR, subject to obtaining or making the consents,
approvals, orders, authorizations, registrations, declarations and
filings referred to in paragraph (3) below, any loan or credit
agreement, note, mortgage, bond, indenture, lease, or other agreement,
obligation, instrument, permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to STAR, any Subsidiary of STAR or their respective
properties or assets.
(3) No consent, approval, order or authorization
of, or registration, declaration or filing with, any Governmental
Entity is required by or with respect to STAR or any Subsidiary of
STAR in connection with the execution and delivery of this Agreement
by STAR, or the consummation of the Merger and the other transactions
contemplated hereby, except the Necessary Consents and such consents,
approvals, orders, authorizations, registrations, declarations and
filings the failure of which to make or obtain would not have a
Material Adverse Effect on STAR.
(d) Reports and Financial Statements.
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EXHIBIT 2.1
(1) STAR has filed all required registration
statements, prospectuses, reports, schedules, forms, statements and
other documents required to be filed by it under the federal securities
laws with the SEC since January 1, 1998 (collectively, including all
exhibits thereto, the "STAR SEC Reports"). No Subsidiary of STAR is
required to file any form, report, registration statement or prospectus
or other document with the SEC not otherwise filed with an STAR SEC
Report. As of the respective times such documents were filed or, as
applicable, became effective, or as subsequently amended, the STAR SEC
Reports complied as to form and content, in all material respects, with
the requirements of the Securities Act and the Exchange Act, as the
case may be, and the rules and regulations promulgated thereunder, and,
taken as a whole, the STAR SEC Reports do not contain any untrue
statement of a material fact or omit to state any 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 financial statements (including the related
notes) included in the STAR SEC Reports (or, if amended or superseded
by a filing prior to the date of this Agreement, then on the date of
such filing) presents fairly, in all material respects, the
consolidated financial position and consolidated results of operations
and cash flows of STAR and its Subsidiaries as of the respective dates
or for the respective periods set forth therein, all in conformity with
GAAP consistently applied during the periods involved except as
otherwise noted therein, and subject, in the case of the unaudited
interim financial statements, to normal and recurring year-end
adjustments that have not been and are not expected to be material in
amount. All of such STAR SEC Reports, as of their respective dates (or
as of the date of any amendment to the respective STAR SEC Report filed
prior to the date of this Agreement), complied or will comply as to
form in all material respects with the applicable requirements of the
Securities Act and the Exchange Act and the rules and regulations
promulgated thereunder.
(2) Since December 31, 1998, STAR and its
Subsidiaries have not incurred any liabilities that are of a nature
that would be required to be disclosed on a balance sheet of STAR and
its Subsidiaries or the footnotes thereto prepared in conformity with
GAAP, other than (A) liabilities incurred in the ordinary course of
business or (B) liabilities that would not have a Material Adverse
Effect on STAR.
(e) Information Supplied. None of the information
supplied or to be supplied by STAR for inclusion or incorporation by reference
in the Joint Proxy Statement/Prospectus will, on the date it is first mailed to
WAXS's or STAR's stockholders, as applicable, or at the time of the WAXS
Stockholders Meeting (as defined in Section 5.1) or the STAR Stockholders
Meeting, as applicable, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
(f) Board Approval. The Board of Directors of STAR, by
resolutions duly adopted by unanimous vote at a meeting duly called and held and
not subsequently rescinded or modified in any way (the "STAR Board Approval"),
has duly (i) determined that this Agreement,
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the Merger and the other transactions contemplated hereby are fair to and in the
best interests of STAR and its stockholders, (ii) approved this Agreement, the
Merger and the other transactions contemplated hereby and (iii) declared the
advisability of this Agreement, the Merger and the other transactions
contemplated hereby, and, further, (iv) recommended that the stockholders of
STAR approve and adopt this Agreement, the Merger and the other transactions
contemplated hereby and directed that this Agreement and the transactions
contemplated hereby be submitted for consideration by STAR's stockholders.
(g) Required Stockholder Vote. The affirmative vote of
the holders of a majority of the outstanding shares of STAR Common Stock (the
"Required STAR Vote") is the only vote of the holders of any class or series of
STAR capital stock necessary to adopt this Agreement and approve the Merger and
the other transactions contemplated hereby.
(h) Litigation: Compliance with Laws.
(1) There is no suit, investigation, action or
proceeding pending or, to the Knowledge of STAR, threatened, against or
affecting STAR or any Subsidiary of STAR having, or which would have a
Material Adverse Effect on STAR, nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator
outstanding against STAR or any Subsidiary of STAR having, or which
would have a Material Adverse Effect on STAR.
(2) Except as would not have a Material Adverse
Effect on STAR, STAR and its Subsidiaries hold all permits, licenses,
variances, authorizations, exemptions, orders and approvals of all
Governmental Entities including, without limitation, the FCC and state
public utilities commissions, necessary for the operation of the
businesses of STAR and its Subsidiaries (the "STAR Permits"). Such STAR
permits are valid and in full force and effect and STAR and its
Subsidiaries are in compliance with the terms of the STAR Permits,
except where the failure to be valid and in full force and effect or to
so comply would not have a Material Adverse Effect on STAR. The
businesses of STAR and its Subsidiaries are not being conducted in
violation of, and STAR has not received any notices of violations with
respect to, any law, ordinance or regulation of any Governmental
Entity, except for possible violations which would not have a Material
Adverse Effect on STAR. STAR is not aware of any threatened suspension,
cancellation or invalidation of any STAR Permit. Except as set forth in
the STAR SEC Reports or except as would not have a Material Adverse
Effect on STAR, STAR has not received notice from either the FCC or any
state public utilities commissions of any complaint filed therewith
concerning STAR or any of its Subsidiaries, operations or services.
(i) Absence of Certain Changes or Events. Except for
liabilities incurred in connection with this Agreement or the transactions
contemplated hereby, except as disclosed in the STAR SEC Reports filed prior to
the date of this Agreement, and except as permitted by Section 4.2, since
December 31, 1998 through and including the date hereof, (i) STAR and its
Subsidiaries have
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conducted, in all material respects, their business only in the ordinary course
and (ii) there has not been any change, circumstance or event which has had, or
would reasonably be expected to have, a Material Adverse Effect on STAR, other
than any change, circumstance or effect relating (A) to the economy or financial
markets in general, or (B) in general to the industries in which STAR and its
Subsidiaries operate and not specifically relating to STAR and its Subsidiaries.
(j) Employee Benefits Matters.
(1) Section 3.2(j)(l) of the STAR Disclosure
Schedule sets forth a list of all material agreements, arrangements,
commitments, and policies (i) which relate to employee benefits; (ii)
which pertain to present or former employees, retirees, directors or
independent contractors (or their beneficiaries, dependents or spouses)
of STAR; and (iii) which are currently or expected to be adopted,
maintained by, sponsored by, or contributed to by STAR or any other
employer (a "STAR Affiliate") which, under Section 414 of the Code,
would constitute a single employer with STAR (collectively referred to
as "STAR Employee Benefit Plans"), including, but not limited to, all:
(A) employee benefit plans as defined in Section 3(3) of ERISA; and (B)
all other deferred compensation, incentive, profit-sharing, thrift,
stock ownership, stock appreciation rights, bonus, stock option, stock
purchase, vacation, or other benefit plans or arrangements.
(2) STAR and all STAR Affiliates have complied
with their respective substantive obligations with respect to all STAR
Employee Benefit Plans (including, but not limited to, (i) filing or
distributing all reports or notices required by ERISA or the Code and
(ii) complying with all requirements of Part 6 of Title I of ERISA and
Code Section 4980B) and have maintained the STAR Employee Benefit Plans
in compliance with all applicable laws and regulations (including, but
not limited to, ERISA and the Code), except where the failure to comply
with such obligations would not result in a Material Adverse Effect on
STAR. Each STAR Employee Benefit Plan that is intended to qualify under
Code Section 401(a) has received a favorable determination letter (or
other ruling indicating its tax-qualified status) from the IRS, and the
IRS has not threatened or taken any action to revoke any favorable
determination letter issued with respect to any such STAR Employee
Benefit Plan. No statement, either oral or written, has been made by
STAR or any STAR Affiliate (or any agent of either) to any Person
regarding any STAR Employee Benefit Plans that is not in accordance
with the terms of that plan that would have a Material Adverse Effect
on STAR.
(3) STAR has made available to WAXS true,
correct and complete copies of all of the current documents relating to
the STAR Employee Benefit Plans, including, but not limited to: (i) all
plan texts (including any subsequent amendments), trust instruments and
other funding arrangements adopted or entered into in connection with
each of the STAR Employee Benefit Plans; (ii) the notices and election
forms used to notify employees and their dependents of their
continuation coverage rights under group health plans (under Code
Section 4980B(f) and ERISA Section 606), if applicable; and (iii) the
most recent Form 5500
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annual reports (including all schedules thereto), summary plan
descriptions and favorable determination letters, if applicable, for
Employee Benefit Plans. Since the date such documents were supplied to
WAXS, no plan amendments have been adopted and no such amendments or
changes shall be adopted or made prior to the Closing Date without
WAXS's approval, except as required by applicable law after the date
hereof.
(4) Neither STAR nor any STAR Affiliate has any
agreement, arrangement, commitment or understanding to create any
additional STAR Employee Benefit Plans or to continue, modify, change
or terminate any existing STAR Employee Benefit Plans that could have a
Material Adverse Effect on STAR.
(5) None of the STAR Employee Benefit Plans (i)
is currently under investigation, audit or review by the U.S.
Department of Labor, the IRS, the Pension Benefit Guaranty Corporation
or any other federal or state agency or (ii) is liable for any federal,
state, local or foreign taxes that would have a Material Adverse Effect
on STAR. Except for such liabilities that would not have a Material
Adverse Effect on STAR, there is no transaction in connection with
which STAR or any STAR Affiliate could be subject to either a civil
penalty assessed pursuant to ERISA Section 502, a tax imposed by Code
Section 4975 or liability for a breach of fiduciary responsibility
under ERISA.
(6) Other than routine claims for benefits
payable to participants or beneficiaries in accordance with the terms
of the STAR Employee Benefit Plans, or relating to qualified domestic
relations orders (as defined in Section 414(p) of the Code), there are
no claims, pending or threatened, by any participant or beneficiary
against any of the STAR Employee Benefit Plans or any fiduciary of any
of the STAR Employee Benefit Plans that could have a Material Adverse
Effect on STAR.
(7) Neither STAR nor any STAR Affiliate has at
any time maintained, sponsored or contributed to any "pension plan" as
defined in ERISA Section 3(2) which is subject to Title IV of ERISA or
contributed to any pension plan which is a "multiemployer plan" as
defined in ERISA Section 3(37)(A).
(8) Section 3.2(j)(8) of the STAR Disclosure
Schedule sets forth a list of all agreements, arrangements, commitments
and STAR Employee Benefit Plans, under which (i) any benefits will be
increased, (ii) the vesting or exercisability of benefits will be
accelerated, (iii) amounts will become immediately payable, and/or (iv)
the immediate funding for any benefits is required, upon the occurrence
of the transaction contemplated by this Agreement. Section 3.2(j)(8) of
the STAR Disclosure Schedule sets forth an estimate of the total value
and/or cost of any such change in control benefits and/or funding and
the time periods in which such payments must be made and/or funding
obligations must be met, including but not limited to the value and/or
costs of any gross up payments for tax purposes.
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(9) To the Knowledge of STAR, no key employee,
or group of employees of STAR has any plans to terminate employment
with STAR other than employees with plans to retire. STAR has complied
in all material respects with all laws relating to the employment of
labor, including provisions thereof relating to wages, hours and equal
opportunity, and it does not have any material labor relations problems
(including threatened or actual strikes or work stoppages or material
grievances).
(10) Neither STAR nor any of its Subsidiaries is
a party to any collective bargaining agreement.
(k) Intellectual Property. Except as would not have a
Material Adverse Effect on STAR: (i) STAR and each of its Subsidiaries owns, or
is licensed to use (in each case, free and clear of any Liens, or claims of
rights therein by any third party), all Intellectual Property used in or
necessary for the conduct of its business as currently conducted, (ii) the use
of any Intellectual Property by STAR and its Subsidiaries does not infringe on
or otherwise violate the rights of any Person and is in accordance with any
applicable license pursuant to which STAR or any Subsidiary acquired the right
to use any Intellectual Property; (iii) to the Knowledge of STAR, no Person is
challenging, infringing on or otherwise violating any right of STAR or any of
its Subsidiaries with respect to any Intellectual Property owned by and/or
licensed to STAR or its Subsidiaries; and (iv) neither STAR nor any of its
Subsidiaries has received any written notice of any pending claim with respect
to any Intellectual Property used by STAR and its Subsidiaries and to STAR's
Knowledge, no Intellectual Property owned and/or licensed by STAR or its
Subsidiaries is being used or enforced in a manner that would result in the
abandonment, cancellation or unenforceability of such Intellectual Property.
(l) Brokers or Finders. No agent, broker, investment
banker, financial advisor or other firm or Person is or will be entitled to any
broker's or finder's fee or any other similar commission or fee in connection
with any of the transactions contemplated by this Agreement, based upon
arrangements made by or on behalf of STAR except Deutsche Bank Xxxx Xxxxx (the
"STAR Financial Advisor"), whose fees and expenses will be paid by STAR in
accordance with STAR's agreement with such firm, a copy of which has been, or
will be promptly when available, provided to WAXS.
(m) Opinion of STAR Financial Advisor. STAR has received
the opinion of the STAR Financial Advisor, dated the date of this Agreement, to
the effect that as of such date, the Merger Consolidation is fair, from a
financial point of view, to STAR and its stockholders, a copy of which has been
provided to WAXS.
(n) Taxes.
(1) (i) All material Tax Returns of STAR and
each of its Subsidiaries have been filed, or requests for extensions
have been timely filed and have not expired; (ii) all Tax Returns filed
by STAR and its Subsidiaries are complete and accurate in all material
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respects; (iii) all Taxes shown to be due on such Tax Returns or on
subsequent assessments with respect thereto have been paid or the STAR
SEC Reports reflect that adequate reserves have been established for
the payment of such Taxes, and no other material Taxes are payable by
STAR and its Subsidiaries with respect to items or periods covered by
such Tax Returns (whether or not shown on or reportable on such Tax
Returns) or with respect to any period prior to the date of this
Agreement; (iv) STAR and each of its Subsidiaries have disclosed on its
federal income Tax Return all positions taken therein that could give
rise to a substantial understatement of income Tax within the meaning
of Section 6662 of the Code; (v) there are no material liens on any of
the assets of STAR or any of its Subsidiaries with respect to Taxes,
other than liens for Taxes not yet due and payable or for Taxes that
STAR or any of its Subsidiaries is contesting in good faith through
appropriate proceedings and for which the STAR SEC Reports reflect that
appropriate reserves have been established; (vi) no power of attorney
to deal with Tax matters or waiver or extension of any statute of
limitations with respect to Taxes has been granted by STAR or any of
its Subsidiaries; and (vii) there is no (X) audit, examination,
deficiency or refund litigation or matter in controversy with respect
to any Taxes of STAR and its Subsidiaries nor (Y) has the IRS nor any
other Tax authority asserted any claim for Taxes in writing, or to the
knowledge of STAR, is threatening to assert any claim for Taxes, that
might reasonably be expected to result in a Tax determination which
would have a Material Adverse Effect on STAR.
(2) [INTENTIONALLY OMITTED.]
(3) There are no contracts, agreements, plans or
arrangements, including but not limited to the provisions of this
Agreement, covering any employee or former employee of STAR or any of
its Subsidiaries that, individually or collectively, could give rise to
the payment of any amount (or portion thereof) that would not be
deductible pursuant to Sections 280G, 404, or 162 of the Code.
(4) Neither STAR nor any of its Subsidiaries is
a party to (A) a Tax Sharing Agreement, (B) transactions which have
produced deferred intercompany gains, losses or other intercompany
items or excess loss accounts (within the meaning of Treas. Reg. ss.
1.1502-13 or 1.1502-19, respectively, or any predecessor regulations or
any comparable items for state, local or non-United States Tax
purposes), or (C) any joint venture, partnership, limited liability
company or other arrangement or contract that should be treated as a
partnership for federal income Tax purposes or as to which, an election
has been made under Treas. Reg. ss. 301.7701-3 to have the entity
disregarded for federal income Tax purposes as an entity separate from
its owner.
(5) None of STAR and its Subsidiaries (A) has or
has had operations or assets outside the United States taxable as a
"branch" by the United States or as a "permanent establishment" by any
foreign country, (B) has received written notice of any claim made by a
Tax authority in a jurisdiction where STAR or any of its Subsidiaries
does not file Tax Returns that it is or may be subject to Taxes in such
jurisdiction, (C) does business in or
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derives income from any state, local territorial or non-United States
taxing jurisdiction other than those for which Tax Returns have been
filed and made available to WAXS pursuant to Section 3.2 (n)(6) hereof,
(D) is a "passive foreign investment company" within the meaning of the
Code, (E) has participated in or cooperated with an international
boycott or has been requested to do so in connection with any prior
transaction or the transactions contemplated by this Agreement, and (F)
has availed itself of any Tax amnesty, Tax holiday or similar relief in
any jurisdiction.
(6) STAR has made available to WAXS true copies
of (A) all material Tax Returns that STAR or its Subsidiaries have
filed since January 1, 1994 and (B) all material correspondence,
including without limitation, closing agreements, private letter
rulings, advance pricing agreements and gain recognition agreements and
other written submissions to or communications with any Tax
authorities.
(o) Certain Contracts. Neither STAR nor any of its
Subsidiaries is a party to or bound by (i) any "material contract" (as such term
is defined in Item 601(b)(10) of Regulation S-K of the SEC), (ii) any
noncompetition agreement or any other agreement or arrangement that limits or
otherwise restricts STAR or any of its Subsidiaries or any successor thereto or
that would, after the Effective Time, limit or restrict WAXS or the Surviving
Corporation or any of its affiliates or any successor thereto, from engaging or
competing in any line of business or in any geographic area, which agreement or
arrangement would have a Material Adverse Effect on WAXS or the Surviving
Corporation, (iii) any agreement or arrangement between STAR or any of its
Subsidiaries, on the one hand, and any affiliates, directors or officers of STAR
or its Subsidiaries, on the other hand, that is not on arm's-length terms or
(iv) any agreement or arrangement that may require the payment of money or
provision of services in excess of $500,000 annually or $1,000,000 over the term
of such agreement or arrangement. All contracts filed with the STAR SEC Reports
and the contracts listed on Section 3.2(o) of the STAR Disclosure Schedule are
valid binding and are in full force and effect and enforceable in accordance
with their respective terms, except to the extent that such enforceability may
be subject to applicable bankruptcy, insolvency, moratorium, reorganization, or
other laws affecting the enforcement of creditors' rights generally or by
general equitable principles, and other than such contracts which by their terms
are no longer in force or effect. Neither STAR nor its Subsidiaries are in
violation or breach of or default under any such contract, nor to STAR's
Knowledge, is any other party to any such contract in violation or breach or
other default under any such contract, except for any such violation, breach or
default which would not have a Material Adverse Effect on STAR.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 Covenants of STAR. During the period from the date of this
Agreement and continuing until the Effective Time, STAR agrees as to itself and
its Subsidiaries that (except as
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expressly required, contemplated or permitted by this Agreement or the STAR
Disclosure Schedule or as required by a Governmental Entity of competent
jurisdiction or any law or regulation or to the extent that WAXS shall otherwise
consent in writing, which consent shall not be unreasonably withheld, delayed or
conditioned):
(a) Ordinary Course. STAR and its Subsidiaries shall
carry on their respective businesses in the usual, regular and ordinary course
in all material respects, in substantially the same manner as heretofore
conducted, and shall use all reasonable efforts to preserve intact their present
lines of business, maintain their rights and franchises and preserve their
relationships with customers, suppliers and others having significant business
dealings with them.
(b) Dividends; Changes in Share Capital. STAR shall not,
and shall not permit any of its Subsidiaries to, and shall not propose to, (i)
declare or pay any dividends on or make other distributions in respect of any of
its capital stock, except for dividends by wholly owned Subsidiaries of STAR,
(ii) split, combine or reclassify any of its capital stock or issue or authorize
or propose the issuance of any other securities in respect of, in lieu of or in
substitution for, shares of its capital stock, except for any such action by a
wholly owned Subsidiary of STAR which remains a wholly owned Subsidiary after
consummation of such transaction, or (iii) repurchase, redeem or otherwise
acquire any shares of capital stock of STAR or any of its Subsidiaries or any
securities convertible into or exercisable for any shares of such capital stock
except for the purchase from time to time by STAR of STAR Common Stock in the
ordinary course of business consistent with past practice in connection with the
STAR Employee Benefit Plans.
(c) Issuance of Securities. STAR shall not, and shall not
permit any of its Subsidiaries to, issue, deliver or sell, or authorize or
propose the issuance, delivery or sale of, any shares of its capital stock of
any class, any STAR Voting Debt or any securities convertible into or
exercisable for, or any rights, warrants or options to acquire, any such shares
or STAR Voting Debt, or enter into any agreement with respect to any of the
foregoing, other than (i) the issuance of STAR Common Stock upon the exercise of
STAR Stock Options or in connection with other stock-based Benefits Plans
outstanding on the date hereof, in each case in accordance with their present
terms, or (ii) issuances by a wholly-owned Subsidiary of STAR of capital stock
to such Subsidiary's parent or another wholly-owned subsidiary of STAR.
(d) Governing Documents. Except to the extent required by
the rules and regulations of the Nasdaq, neither STAR nor any of its
Subsidiaries shall amend or propose to amend their respective certificates of
incorporation, by-laws or other governing documents.
(e) Acquisitions. STAR shall not, and shall not permit
any of its Subsidiaries to acquire or agree to acquire, by merging or
consolidating with, or by purchasing a substantial equity interest in or a
substantial portion of the assets of, or by any other manner, any business or
any corporation, partnership, association or other business organization or
division thereof or otherwise acquire or agree to acquire any assets (other than
the acquisition of assets used in the operations of the business of STAR and its
Subsidiaries in the ordinary course).
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(f) Sales. Except as set forth in Section 4.1(f) of the
STAR Disclosure Schedule, STAR shall not, and shall not permit any of its
Subsidiaries to, sell or agree to sell by merging or consolidating with, or by
selling or substantial equity interest in or a substantial portion of the assets
of, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof or otherwise sell
or agree to sell any assets (other than the sale of assets used in the
operations of the business of STAR and its Subsidiaries in the ordinary course;
provided, however, STAR may enter into a definitive agreement for (and
consummate) the PT-1 Sale on terms and conditions which would satisfy the
condition set forth in Section 6.2(h) hereof).
(g) Investments; Indebtedness. STAR shall not, and shall
not permit any of its Subsidiaries to, (i) make any loans, advances or capital
commitments to, or investments in, any other Person, other than (x) by STAR or a
Subsidiary of STAR to or in STAR or in any Subsidiary of STAR or (y) pursuant to
any contract or other legal obligation of STAR or any of its Subsidiaries
existing at the date hereof or (ii) create, incur, assume or suffer to exist any
indebtedness, issuances of debt or securities, guarantees, loans or advances not
in existence as of the date hereof except pursuant to credit facilities,
indentures and other arrangements in existence on the date hereof or in the
ordinary course of business consistent with past practice, in each case as such
credit facilities, indentures and other arrangements may be amended, extended,
modified, refunded, renewed or refinanced after the date hereof.
(h) Compensation. Other than as contemplated by Section
4.1(h) of the STAR Disclosure Schedule, STAR shall not increase the amount of
compensation of any director or executive officer except in the ordinary course
of business consistent with past practice or as required by an existing
agreement, make any increase in or commitment to increase any employee benefits,
issue any additional STAR Stock Options, adopt or make any commitment to adopt
any additional employee benefit plan or make any contribution, other than
regularly scheduled contributions, to any Employee Benefit Plan.
(i) Accounting Methods; Income Tax Matters. STAR shall
not change its methods of accounting in effect on December 31, 1998, except as
required by changes in GAAP as concurred in by STAR's independent auditors. STAR
shall not (i) change its fiscal year, (ii) make any material tax election, (iii)
adopt or change any Tax accounting method, (iv) enter into any closing
agreement, (v) settle or compromise a Tax liability with a Tax authority, (vi)
surrender any right to claim a refund of Taxes, or (vii) take (or permit any
Subsidiary of STAR to take) any other action which would have the effect of
materially increasing the Tax liability or materially decreasing any Tax Asset
of STAR or any of its Subsidiaries, other than in the ordinary course of
business consistent with past practice.
(j) Certain Agreements. STAR shall not, and shall not
permit any of its Subsidiaries to, enter into any agreement or arrangement that
limits or otherwise restricts STAR or any of its Subsidiaries or any of their
respective affiliates or any successor thereto, or that could,
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after the Effective Time, limit or restrict WAXS or the Surviving Corporation or
any of their respective affiliates or any successor thereto, from engaging or
competing in any line of business or, in any geographic area which agreement or
arrangement would reasonably be expected to have a Material Adverse Effect on
WAXS or the Surviving Corporation.
(k) Other Actions. Notwithstanding the fact that STAR may
take certain actions as permitted under Article IV hereof, STAR agrees not to
take any action which could reasonably be expected to cause the Merger to fail
to qualify as a reorganization within the meaning of Section 368(a) of the Code.
(l) Litigation. STAR shall not and shall not permit any
of its Subsidiaries to settle or, compromise any litigation, except where the
amount paid or payable, in each case, does not exceed $200,000.
4.2 Control of STAR's Business. Except as provided in Section 5.9,
nothing contained in this Agreement shall give WAXS, directly or indirectly, the
right to control or direct STAR's operations prior to the Effective Time. Prior
to the Effective Time, STAR shall exercise, consistent with the terms and
conditions of this Agreement, complete control and supervision over its
operations.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Preparation of Proxy Statement: Stockholders Meetings.
(a) As promptly as reasonably practicable following the
date hereof, WAXS and STAR shall prepare (in form and substance reasonably
satisfactory to each of WAXS and STAR) and file with the SEC proxy materials
which shall constitute the joint proxy statement and prospectus in connection
with the WAXS Stockholders Meeting and the STAR Stockholders Meeting (such proxy
statement and prospectus, and any amendments or supplements thereto, the "Joint
Proxy Statement/Prospectus") and WAXS shall prepare (in form and substance
reasonably satisfactory to each of WAXS and STAR) and file a registration
statement on Form S-4 with respect to the issuance of WAXS Common Stock in the
Merger (the "Registration Statement"). The Joint Proxy Statement/Prospectus will
be included in and will constitute a part of the Registration Statement as
WAXS's prospectus. The Registration Statement and the Joint Proxy
Statement/Prospectus shall comply as to form in all material respects with the
applicable provisions of the Securities Act and the Exchange Act and the rules
and regulations thereunder. Each of WAXS and STAR shall use reasonable efforts
to have the Registration Statement declared effective by the SEC as promptly as
reasonably practicable after filing with the SEC and to keep the Registration
Statement effective as long as is necessary to consummate the Merger and the
actions contemplated thereby. WAXS and STAR shall, as promptly as practicable
after receipt thereof, provide the other party copies of any written comments
and advise the other party of any oral comments, with respect to the Joint Proxy
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Statement/Prospectus received from the SEC. WAXS will provide STAR with a
reasonable opportunity to review and comment on any amendment or supplement to
the Registration Statement prior to filing such with the SEC, and will provide
STAR with a copy of all such filings made with the SEC. Notwithstanding any
other provision herein to the contrary, no amendment or supplement (including by
incorporation by reference) to the Joint Proxy Statement/Prospectus or the
Registration Statement shall be made without the approval of both parties, which
approval shall not be unreasonably withheld or delayed; provided, that with
respect to documents filed by a party which are incorporated by reference in the
Registration Statement or Joint Proxy Statement/Prospectus, this right of
approval shall apply only with respect to information relating to the other
party or its business, financial condition or results of operations. WAXS will
use reasonable efforts to cause the Joint Proxy Statements/Prospectus to be
mailed to WAXS's stockholders, and STAR will use reasonable efforts to cause the
Joint Proxy Statement/Prospectus to be mailed to STAR's stockholders, in each
case as promptly as practicable after the Registration Statement is declared
effective under the Securities Act. WAXS shall also take any action (other than
qualifying to do business in any jurisdiction in which it is not now so
qualified or to file a general consent to service of process) required to be
taken under any applicable state securities laws in connection with the issuance
of WAXS Common Stock and STAR shall furnish all information concerning STAR and
the holders of STAR Common Stock as may be reasonably requested in connection
with any such action. Each party will advise the other party, promptly after it
receives notice thereof, of the time when the Registration Statement has become
effective, the issuance of any stop order, the suspension of the qualification
of the WAXS Common Stock issuable in connection with the Merger for offering
or sale in any jurisdiction, or any request by the SEC for amendment of the
Joint Proxy Statement/Prospectus or the Registration Statement. If at any time
prior to the Effective Time any information relating to WAXS or STAR, or any of
their respective affiliates, officers or directors, should be discovered by WAXS
or STAR which should be set forth in an amendment or supplement to any of the
Registration Statement or the Joint Proxy Statement/Prospectus so that any of
such documents would not include any misstatement of a material fact or omit to
state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, the party which
discovers such information shall promptly notify the other party hereto and, to
the extent required by law, rules or regulations, an appropriate amendment or
supplement describing such information shall be promptly filed with the SEC and
disseminated to the stockholders of WAXS and STAR.
(b) Subject to Section 5.4, STAR shall, as promptly as
reasonably practicable following the execution of this Agreement, duly take all
lawful action to call, give notice of, convene and hold a meeting of its
stockholders (the "STAR Stockholders Meeting ") (which meeting the parties
intend to be held no later than thirty (30) days following the date on which the
Registration Statement has been declared effective by the SEC) for the purpose
of obtaining the Required STAR Vote with respect to the actions contemplated by
this Agreement and shall take all lawful action to solicit the adoption of this
Agreement by the Required STAR Vote. Subject to Section 5.4, the Board of
Directors of STAR shall recommend adoption of this Agreement by the stockholders
of STAR to the effect as set forth in Section 3.2(f), and shall not withdraw,
modify or materially qualify in any manner adverse to WAXS such recommendation
or take any action or make any statement
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in connection with the STAR Stockholders Meeting materially inconsistent with
such recommendation (collectively, an "Adverse Change in the STAR
Recommendation"); provided, however, that the foregoing shall not prohibit
accurate disclosure of factual information regarding the business, financial
condition or results of operations of WAXS or STAR or the fact that an
Acquisition Proposal has been made, the identity of the party making such
proposal or the material terms of such proposal (provided, that the Board of
Directors of STAR does not withdraw, modify or materially qualify in any manner
adverse to WAXS its recommendation) in the Registration Statement or the Joint
Proxy Statement/Prospectus, to the extent such information, facts, identity or
terms is required to be disclosed therein under applicable law.
(c) WAXS shall, as promptly as reasonably practicable
following the execution of this Agreement, duly take all lawful action to call,
give notice of, convene and hold a meeting of its stockholders (the "WAXS
Stockholders Meeting") (which meeting the parties intend to be held no later
than thirty (30) days following the date on which the Registration Statement has
been declared effective by the SEC) for the purpose of obtaining the Required
WAXS Vote with respect to the transactions contemplated by this Agreement and
shall take all lawful action to solicit the approval of the transactions
contemplated hereby by the Required WAXS Vote. The Board of Directors of WAXS
shall recommend approval of the transactions contemplated hereby by the
stockholders of WAXS to the effect as set forth in Section 3.1(f), and shall not
withdraw, modify or materially qualify in any manner adverse to STAR such
recommendation or take any action or make any statement in connection with the
WAXS Stockholders Meeting materially inconsistent with such recommendation;
provided, however, that the foregoing shall not prohibit accurate disclosure of
factual information regarding the business, financial condition or operations of
WAXS or STAR.
5.2 Access to Information. Upon reasonable notice, each of STAR
and WAXS shall (and shall cause its Subsidiaries to) afford to the officers,
employees, accountants, counsel, financial advisors and other representatives of
the other party hereto reasonable access during normal business hours, during
the period prior to the Effective Time, to all its properties, books, contracts,
commitments, records, officers and employees and, during such period, each of
STAR and WAXS shall (and shall cause its Subsidiaries to) furnish promptly to
the other party hereto (a) a copy of each report, schedule, registration
statement and other document filed, published, announced or received by it
during such period pursuant to the requirements of federal or state securities
laws, as applicable (other than documents which such party is not permitted to
disclose under applicable law), and (b) consistent with its legal obligations,
all other information concerning it and its business, properties and personnel
as such other party may reasonably request; provided, however, that either STAR
or WAXS may restrict the foregoing access to the extent that any law, treaty,
rule or regulation of any Governmental Entity applicable to such party requires
such party or its Subsidiaries to restrict access to any properties or
information. The parties will hold any such information which is non-public in
confidence to the extent required by, and in accordance with, the provisions of
the Confidentiality Agreement, dated December 17, 1999, between STAR and WAXS
(the "Confidentiality Agreement"). Any investigation by WAXS or STAR shall not
affect the representations and warranties made herein of STAR or WAXS, as the
case may be.
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5.3 Reasonable Efforts.
(a) Subject to the terms and conditions of this
Agreement, each party will use reasonable efforts to take, or cause to be taken,
all actions and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate the Merger and the
other transactions contemplated by this Agreement as soon as practicable after
the date hereof, including (i) preparing and filing as promptly as practicable
all documentation to effect all necessary applications, notices, petitions,
filings, and other documents and to obtain as promptly as practicable all
consents, waivers, licenses, orders, registrations, approvals, permits and
authorizations necessary or advisable to be obtained from any third party and/or
any Governmental Entity in order to consummate the Merger or any of the other
transactions contemplated by this Agreement and (ii) taking all reasonable steps
as may be necessary to obtain all such material consents, waivers, licenses,
registrations, permits, authorizations, tax rulings, orders and approvals. The
parties each shall keep the other apprised of the status of matters relating to
completion of the transactions contemplated hereby, including promptly
furnishing the other with copies of notices or other communications received by
it or any of its Subsidiaries or affiliates from any Governmental Entity or
third party with respect to the Merger or any of the other transactions
contemplated by this Agreement, in each case, to the extent permitted by law or
regulation or any applicable confidentiality agreements existing on the date
hereof.
(b) Promptly following execution of this Agreement, STAR
and WAXS shall promptly prepare and file any required notifications with the
United States Department of Justice and the Federal Trade Commission as required
by the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"HSR Act"). The parties shall cooperate with each other in connection with the
preparation of such notifications and related matters, including sharing
information concerning sales and ownership and such other information as may be
needed to complete such notification, and providing a copy of such notifications
to the other prior to filing; provided, that WAXS and STAR shall have the right
to redact any dollar revenue information from the copies of such notifications
provided to the other parties. The parties shall keep all information about the
other obtained in connection with the preparation of such notification
confidential pursuant to the terms of the Confidentiality Agreement. Each Person
shall pay the filing fee required under the regulations promulgated pursuant to
the HSR Act with respect to its own filing thereunder.
5.4 Acquisition Proposals. Without the prior written consent of
WAXS, pending the Effective Time or earlier termination of this Agreement
pursuant to Section 7.1, STAR agrees that neither it nor any of its Subsidiaries
shall, and that it shall use its reasonable efforts to cause its employees,
officers, directors, affiliates, agents and representatives (including any
investment banker, financial advisor, attorney or accountant retained by any of
them) not to, directly or indirectly, initiate, solicit, encourage or knowingly
facilitate (including by way of furnishing information or engaging in
discussions or negotiations) any inquiries or the making of any proposal or
offer with respect to a merger, reorganization, share exchange, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
action involving STAR, or any purchase or sale of a material portion of the
assets of (including stock of Subsidiaries) of STAR,
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taken as a whole, or any purchase or sale of, or tender or exchange offer for, a
material portion of the equity securities of STAR (any such proposal or offer
being hereinafter referred to as an "Acquisition Proposal"). STAR further agrees
that neither it nor any of its Subsidiaries shall, and that it shall use its
reasonable efforts to cause it and its Subsidiaries' officers, directors,
affiliates, employees, agents and representatives (including any investment
banker, financial advisor, attorney or accountant retained by it or any of its
Subsidiaries) not to, directly or indirectly, have any discussion with or
provide any confidential information or data to any Person relating to an
Acquisition Proposal, or engage in any negotiations concerning an Acquisition
Proposal, or knowingly facilitate any effort or attempt to make or implement an
Acquisition Proposal or accept an Acquisition Proposal. STAR agrees that it and
its Subsidiaries will, and will cause its officers, directors, affiliates,
employees, agents and representatives to, immediately cease and cause to be
terminated any activities, discussions or negotiations existing as of the date
of this Agreement with any parties conducted heretofore with respect to any
Acquisition Proposal. STAR agrees that it will promptly inform its directors,
officers, affiliates, key employees, agents and representatives of the
obligations undertaken in this Section 5.4. Notwithstanding anything contained
in this Section 5.4 or otherwise in this Agreement to the contrary, STAR or its
Board of Directors shall be permitted to (A) in response to an unsolicited bona
fide written Acquisition Proposal by any Person, recommend approval of such an
unsolicited bona fide written Acquisition Proposal to its stockholders or effect
an Adverse Change in the STAR Recommendation or (B) engage in any discussions or
negotiations with, or provide any information to, any person in response to an
unsolicited bona fide written Acquisition Proposal by any such Person, if and
only to the extent that, in any such case as is referred to in clause (A) or
(B), (i) the STAR Stockholders Meeting shall not have occurred, (ii) its Board
of Directors (x) in the case of clause (A) above, concludes in good faith
that such Acquisition Proposal constitutes a Superior Proposal (as defined in
Section 8.12) and terminates this Agreement pursuant to Section 7.1 (h) or (y)
in the case of clause (B) above concludes in good faith that such Acquisition
Proposal could reasonably be expected to result in a Superior Proposal, (iii)
prior to providing any information or data to any Person in connection with an
Acquisition Proposal by any such Person, its Board of Directors receives from
such Person an executed confidentiality agreement containing confidentiality
terms at least as stringent as those contained in the Confidentiality Agreement,
and (iv) prior to providing any information or data to any Person or entering
into discussions or negotiations with any such Person regarding such Acquisition
Proposal, its Board of Directors notifies WAXS promptly of such inquiries,
proposals or offers received by, any such information requested from, or any
such discussions or negotiations sought to be initiated or continued with, any
of its representatives indicating, in connection with such notice, the name of
such Person and the material terms and conditions of any inquiries, proposals or
offers. STAR agrees that it will promptly keep WAXS informed of the status and
terms of any such proposals or offers and the status and terms of any such
discussions or negotiations. STAR agrees that it will, and will cause its
officers, directors and representatives to, immediately cease and cause to be
terminated any activities, discussions or negotiations existing as of the date
of this Agreement with any parties conducted heretofore with respect to any
Acquisition Proposal. STAR agrees that it will promptly inform its directors,
officers, key employees, agents and representative of the obligations undertaken
in this Section 5.4. Nothing in this Section 5.4 shall (x) permit STAR
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or WAXS to terminate this Agreement (except as specifically provided in Article
VII hereof) or (y) affect any other obligation of STAR or WAXS under this
Agreement.
5.5 Fees and Expenses. All Expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such Expenses. As used in this Agreement, "Expenses" includes
all out-of-pocket expenses (including all fees and expenses of counsel,
accountants, investment bankers, experts and consultants to a party hereto and
its affiliates) incurred by a party or on its behalf in connection with or
related to the authorization, preparation, negotiation, execution and
performance of this Agreement and the transactions contemplated hereby.
5.6 Public Announcements. Neither WAXS nor STAR shall, without the
prior consent of the other party, issue a press release or any other public
statement with respect to this Agreement or the transactions contemplated hereby
except pursuant to a joint communications plan, unless otherwise required by
applicable law or by obligations pursuant to any listing agreement with, or
rules of, any securities exchange, in which case the parties shall use
reasonable efforts to consult with each other before issuing any press release
or otherwise making any public statement with respect to this Agreement or the
transactions contemplated hereby.
5.7 Listing. So long as WAXS Common Stock is quoted on the Nasdaq
or listed on any national securities exchange, WAXS, prior to the Effective
Time, will cause to be quoted or listed, upon official notice of issuance, and
keep quoted or listed on such system or exchange, all WAXS Common Stock issuable
pursuant to Article I hereof.
5.8 Termination of Tax Sharing Agreement. As of the Effective
Time, STAR shall cause all Tax Sharing Agreements to which STAR or any of its
Subsidiaries is a party to be terminated and of no further force and effect
after the Effective Time, thereby extinguishing any rights or obligations of any
party thereunder.
5.9 Management Services. Subject to obtaining any necessary
regulatory or third party consents and to the extent permitted under applicable
law, WAXS and STAR intend to enter into a management agreement pursuant to which
WAXS will provide, under the supervision and direction of the STAR board of
directors, certain management services to STAR. Neither party shall have any
obligation under this Section 5.9 and the provision of the foregoing services
shall be subject to the negotiation of a definitive agreement satisfactory to
each of WAXS and STAR in its sole discretion.
5.10 New Director of WAXS. WAXS shall take all appropriate action
such that, immediately following the Effective Time, and without further action
by WAXS, one (1) designee of STAR shall be elected to the Board of Directors of
WAXS. Such STAR designee shall be Xxxxxxxxxxx X. Xxxxxxxx, or such other person
designated by STAR and agreed to by WAXS prior to the Effective time.
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5.11 Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of STAR or Merger Sub, any deeds,
bills of sale, assignments or assurances and to take and do, in the name and on
behalf of STAR or Merger Sub, any other actions and things to vest, perfect or
confirm of record or otherwise in the Surviving Corporation any and all rights,
properties, or assets acquired or to be acquired by the Surviving Corporation as
a result of, or in connection with, the Merger.
5.12 Directors' and Officers' Indemnification and Insurance.
(a) From the Effective Time through the sixth (6th)
anniversary of the date on which the Effective Time occurs, WAXS shall indemnify
and hold harmless each present (as of the Effective Time) or former officer or
director of STAR and its Subsidiaries (the "Indemnified Parties"), against all
claims, losses, liabilities, damages, judgments, fines and reasonable fees,
costs and expenses, including attorneys' fees and disbursements (collectively,
"Costs"), incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of or pertaining to (i) the fact that the Indemnified Party is or was an
officer or director of STAR or any of its Subsidiaries or (ii) matters existing
or occurring at or prior to the Effective Time (including this Agreement and the
transactions and actions contemplated hereby), whether asserted or claimed prior
to, at or after the Effective Time, to the fullest extent permitted under
applicable law; provided that no Indemnified Party may settle any such claim
without the prior approval of WAXS (which approval shall not be unreasonably
withheld or delayed). Each Indemnified Party will be entitled to advancement of
expenses incurred in the defense of any claim, action, suit, proceeding or
investigation from WAXS within ten (10) business days of receipt by WAXS from
the Indemnified Party of a request therefor; provided that any person to whom
expenses are advanced provides an undertaking, to the extent required by the
DGCL, to repay such advances if it is ultimately determined that such person is
not entitled to indemnification.
(b) WAXS shall maintain, at no expense to the
beneficiaries, in effect for six years from the Effective Time the current
policies of the directors' and officers' liability insurance maintained by STAR
with respect to matters existing or occurring at or prior to the Effective Time
(including the transactions contemplated by this Agreement); provided that WAXS
may substitute therefor policies of at least the same coverage containing terms
and conditions which are not materially less advantageous to any beneficiary
thereof; and provided, further, that in no event shall WAXS be required to pay
annual premiums for such insurance in excess of 125% of the annual premiums
currently paid by STAR for such insurance.
(c) Notwithstanding anything herein to the contrary, if
any claim, action, suit, proceeding or investigation (whether arising before, at
or after the Effective Time) is made against any Indemnified Party, on or prior
to the sixth (6th) anniversary of the Effective Time, the provisions of this
Section 5.12 shall continue in effect until the final disposition of such claim,
action, suit, proceeding or investigation.
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(d) The covenants contained in this Section 5.12 are
intended to be for the benefit of, and shall be enforceable by, each of the
Indemnified Parties and their respective heirs and legal representatives and
shall not be deemed exclusive of any other rights to which an Indemnified Party
is entitled, whether pursuant to law, contract or otherwise.
(e) In the event that the Surviving Corporation or any of
its successors or assigns (i) consolidates with or merges into any other Person
and shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers or conveys all or substantially all of
its properties and assets to any Person, then, and in each such case, proper
provision shall be made so that the successors or assigns of the Surviving
Corporation or the purchaser of such properties and assets shall succeed to the
obligations set forth in this Section 5.12.
5.13 Confidentiality. The parties each agree that the
Confidentiality Agreement shall continue in full force and effect until the
Effective Time, and if this Agreement is terminated or if the Merger is not
consummated for any reason whatsoever, such Confidentiality Agreement shall
thereafter remain in full force and effect in accordance with its terms.
5.14 Compliance with Dissenters' Rights Statute. STAR shall comply
with all procedures and requirements applicable to it under Section 262 of the
DGCL.
5.15 Interim Financing. The parties have agreed that WAXS will make
available up to $25,000,000 in secured financing to STAR and up to $10,000,000
in secured financing to STAR's subsidiary, STAR Telecommunications GmbH,
(collectively, the "Interim Financing") pursuant to the terms of the Loan
Documents (as defined below). The Interim Financing will mature at the earlier
of one year from the date hereof and ninety (90) days after any termination of
this Agreement (other than a termination due to STAR's breach or default under
this Agreement which will result in the Interim Financing becoming immediately
due and payable). The Interim Financing will be made pursuant to, and subject to
the finalization of, appropriate loan and security documents (the "Loan
Documents") substantially in the form of, and as contemplated by, the draft Loan
Documents distributed to STAR on or prior to the date hereof.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligations of STAR and WAXS to effect the Merger are subject to
the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) HSR Act. The waiting period (and any extension
thereof) applicable to the Merger under the HSR Act shall have been terminated
or shall have expired.
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(b) Stockholder Approval. WAXS shall have obtained the
Required WAXS Vote in connection with the approval of this Agreement and the
Merger and STAR shall have obtained the Required STAR Vote in connection with
the approval of this Agreement and the Merger.
(c) Registration Statement. The Registration Statement shall
have been declared effective by the SEC under the Securities Act. No stop order
suspending the effectiveness of the Registration Statement shall have been
issued by the SEC and no proceedings for that purpose shall have been initiated
or, to the Knowledge of WAXS or STAR, threatened by the SEC.
6.2 Additional Conditions to Obligations of WAXS. The obligations
of WAXS to effect the Merger are subject to the satisfaction of, or waiver by
WAXS, on or prior to the Closing Date of the following conditions:
(a) Representations and Warranties. Each of the
representations and warranties of STAR set forth in this Agreement shall be
true and correct as of the date of this Agreement and as of the Closing Date as
though made on and as of the Closing Date (except to the extent in either case
that such representations and warranties speak as of another date, in which
case any such representations and warranties shall be true and correct as of
such date), except where any failures to be true and correct would not have a
Material Adverse Effect on WAXS or the Surviving Corporation, and WAXS shall
have received a certificate of the chief executive officer and the chief
financial officer of STAR to such effect.
(b) Performance of Obligations of STAR. STAR shall have
performed or complied in all material respects with all material agreements and
covenants required to be performed by it under this Agreement at or prior to
the Closing Date, and WAXS shall have received a certificate of the chief
executive officer and the chief financial officer of STAR to such effect.
(c) Consents and Approvals. Other than the filing provided
for under Section 1.3, all consents, approvals and actions of, filings with and
notices to any Governmental Entity required to consummate the Merger and the
other transactions contemplated hereby, or of any other third party required of
STAR or any of its Subsidiaries to consummate the Merger and the other
transactions contemplated hereby, the failure of which to be obtained or taken
would have a Material Adverse Effect on WAXS or the Surviving Corporation,
shall have been obtained; provided, however, that the provisions of this
Section 6.2(c) shall not be available to WAXS, if its failure to fulfill its
obligations pursuant to Section 5.3 shall have been the cause of, or shall have
resulted in, the failure to obtain such consent or approval.
(d) No Material Change. STAR and its Subsidiaries, taken as a
whole, shall not have suffered, since the date hereof, a Material Adverse
Effect, other than any change, circumstance or effect relating (i) to the
economy or financial markets in general, (ii) in general to the industries in
which STAR operates and not specifically relating to STAR or (iii) the trading
price of STAR Common Stock.
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(e) Opinion of Counsel to STAR. WAXS shall have received from
Xxxxxxx & XxXxxxxx an opinion, dated the Closing Date, in form and substance
reasonably satisfactory to WAXS.
(f) No Injunctions or Restraints; Illegality. No laws shall
have been adopted or promulgated, and no temporary restraining order,
preliminary or permanent injunction or other order issued by a court or other
Governmental Entity of competent jurisdiction shall be in effect (i) having the
effect of making the Merger illegal or otherwise prohibiting consummation of
the Merger or (ii) which otherwise would have a Material Adverse Effect on WAXS
or the Surviving Corporation; provided, however, that the provisions of this
Section 6.2(f) shall not be available to WAXS if its failure to fulfill its
obligations pursuant to Section 5.3 shall have been the cause of, or shall have
resulted in any such order or injunction.
(g) Dissenters' Rights. STAR shall have complied with all
procedures and requirements applicable to it under Section 262 of the DGCL, the
period for exercising dissenters' rights of appraisal pursuant to the DGCL in
connection with the Merger shall have expired, and holders of less than one
percent (1%) of the shares of STAR Common Stock issued and outstanding
immediately prior to the Closing shall have exercised such dissenters' rights
of appraisal, and WAXS shall have received a certificate from an officer of
STAR to all such effects.
(h) Sale of PT-1. STAR shall have consummated the sale of the
capital stock of PT-1 Communications, Inc. ("PT-1"), or the assets of PT-1 on a
substantially equivalent basis, for Net PT-1 Sale Proceeds (as defined in
Section 8.12 ) of at least $150,000,000 pursuant to an agreement in form and
substance reasonably satisfactory to WAXS (the "PT-1 Sale"); provided, however,
if (i) the PT-1 Sale has not been consummated prior to the Closing Date, (but
STAR has entered into a definitive agreement, in form and substance
satisfactory to WAXS, for the PT-1 Sale) and (ii) WAXS determines in its sole
discretion to waive compliance with this Section 6.2(h) and proceed with the
Merger, then WAXS and STAR agree that in such event, they shall amend this
Agreement to provide that (A) the formula used to determine the Exchange Ratio
shall be modified by deleting "Z" therefrom and (B) a holder of STAR Common
Stock and STAR Stock Options immediately prior to the Effective Time shall have
a right to receive such holder's pro rata share of an aggregate number of
additional "contingent" shares of WAXS Common Stock, if and when the PT-1 Sale
is consummated pursuant to such definitive agreement (or, in the case of a
holder of STAR Stock Option, when such option is exercised), equal to the PT-1
Excess Proceeds divided by twenty (20) (the "Contingent Shares") and that the
provisions of any such amendment to this Agreement concerning the issuance of
such Contingent Shares will satisfy the requirements of Section 3.03 of IRS
Revenue Procedure 77-37, as it has been amplified and superseded, which
established the circumstances under which the Internal Revenue Service
previously issued advanced rulings on contingent stock arrangements in mergers
intended to qualify as "reorganizations" under Section 368(a) of the Code.
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(i) STAR shall have provided evidence satisfactory to WAXS
that any and all obligations of STAR (or any of its affiliates) relating to or
arising in connection with the China-U.S. Cable Network were fully satisfied by
the reclamation of STAR's capacity in such network and neither STAR nor any of
its affiliates has any further obligation or liability with respect thereto,
including without limitation payment of the amounts claimed and owing by STAR
according to that letter dated January 11, 2000 from Kou Yinsen, Director, CBP
to Xxx Xxxxxxx.
6.3 Additional Conditions to Obligations of STAR. The obligations
of STAR to effect the Merger are subject to the satisfaction of, or waiver by
STAR, on or prior to the Closing Date of the following additional conditions:
(a) Representations and Warranties. Each of the
representations and warranties of WAXS set forth in this Agreement shall be
true and correct as of the date of this Agreement and as of the Closing Date as
though made on and as of the Closing Date (except to the extent in either case
that such representations and warranties speak as of another date, in which
case any such representations and warranties shall be true and correct as of
such date), except where any failures to be true and correct would not have a
Material Adverse Effect on WAXS, and STAR shall have received a certificate of
the chief executive officer and the chief financial officer of WAXS to such
effect.
(b) Performance of Obligations of WAXS. WAXS shall have
performed or complied in all material respects with all material agreements and
covenants required to be performed by it under this Agreement at or prior to
the Closing Date, and STAR shall have received a certificate of the chief
executive officer and the chief financial officer of WAXS to such effect.
(c) Consents and Approvals. Other than the filing provided
for under Section 1.3, all consents, approvals and actions of, filings with and
notices to any Governmental Entity required to consummate the Merger and the
other transactions contemplated hereby, or of any other third party required of
WAXS or any of its Subsidiaries to consummate the Merger and the transactions
contemplated hereby, the failure of which to be obtained or taken would have a
Material Adverse Effect on WAXS, shall have been obtained; provided, however,
that the provisions of this Section 6.3(c) shall not be available to STAR if
its failure to fulfill any of its obligations pursuant to Section 5.3 shall
have been the cause of, or shall have resulted in, the failure to obtain such
consent or approval.
(d) No Material Change. WAXS shall not have suffered, since
the date hereof, a Material Adverse Effect, other than any change, circumstance
or effect relating (i) to the economy or financial markets in general, (ii) in
general to the industries in which WAXS operates and not specifically relating
to WAXS or (iii) the trading price of WAXS Common Stock.
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(e) Opinion of Counsel to WAXS. STAR shall have received from
Long Xxxxxxxx & Xxxxxx LLP an opinion, dated the Closing Date, in form and
substance reasonably satisfactory to STAR.
(f) No Injunctions or Restraints; Illegality. No laws shall
have been adopted or promulgated, and no temporary restraining order,
preliminary or permanent injunction or other order issued by a court or other
Governmental Entity of competent jurisdiction shall be in effect (i) having the
effect of making the Merger illegal or otherwise prohibiting consummation of
the Merger or (ii) which otherwise would have a Material Adverse Effect on WAXS
after giving effect to the Merger; provided, however, that the provisions of
this Section 6.3(g) shall not be available to STAR if its failure to fulfill
its obligations pursuant to Section 5.3 shall have been the cause of, or shall
have resulted in any such order or injunction.
(g) Exchange Fund. An officer of the Exchange Agent shall
have certified in writing to STAR that the deposit required to be made by WAXS
into the Exchange Fund pursuant to Section 2.1 has been made in connection with
the establishment thereof.
ARTICLE VII
TERMINATION AND AMENDMENT
7.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, by action taken or authorized by the Board of
Directors of the terminating party or parties:
(a) By mutual written consent of WAXS and STAR;
(b) By either WAXS or STAR, if the other party shall have
failed to comply in any material respect with any of its material covenants or
agreements contained in this Agreement, which failure to so comply has not been
cured within ten (10) business days following receipt by such other party of
written notice of such failure to comply; provided, however, that if any such
breach is curable by the breaching party through the exercise of the breaching
party's reasonable efforts and for so long as the breaching party shall be so
using its reasonable efforts to cure such breach, the non-breaching party may
not terminate this Agreement pursuant to this paragraph; and provided, further,
that no party shall have the right to terminate this Agreement pursuant to this
Section 7.1(b) if such party is then failing to comply in any material respect
with any of its covenants or agreements contained in this Agreement;
(c) By either WAXS or STAR, if there has been a breach by the
other party of any representations or warranties, which breach has not been
cured within ten (10) business days following receipt by such other party of
written notice of such failure to comply; provided, however, that if any such
breach is curable by the breaching party through the exercise of the breaching
party's
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reasonable efforts and for so long as the breaching party shall be so
using reasonable efforts to cure such breach, the non-breaching party may not
terminate this Agreement pursuant to this paragraph; and provided further, that
this provision shall not apply to such breaches which would not have a Material
Adverse Effect on WAXS or the Surviving Corporation;
(d) By either STAR or WAXS, if the Effective Time shall not
have occurred on or before September 30, 2000 (the "Termination Date");
provided, however, that the right to terminate this Agreement under this
Section 7.1(d) shall not be available to any party whose action or failure to
fulfill any obligation under this Agreement has been the cause of, or resulted
in, the failure of the Effective Time to occur on or before the Termination
Date and any such action or failure constitutes a breach of this Agreement by
such party;
(e) By either STAR or WAXS if any Governmental Entity (i)
shall have issued an order, decree or ruling or taken any other action (which
the parties shall have used their reasonable efforts to resist, resolve or
lift, as applicable, in accordance with Section 5.3) permanently restraining,
enjoining or otherwise prohibiting the transactions contemplated by this
Agreement, and such order, decree, ruling, or other action shall have become
final and nonappealable or (ii) shall have failed to issue an order, decree or
ruling or to take any other action (which order, decree, ruling or other action
the parties shall have used their reasonable efforts to obtain, in accordance
with Section 5.3), which, in the case of each of (i) and (ii) is necessary to
fulfill the conditions set forth in Section 6.2(f) with respect to WAXS or
Section 6.3(g) with respect to STAR, and such denial of a request to issue such
order, decree, ruling or take such other action shall have become final and
nonappealable; provided, however, that the right to terminate this Agreement
under this Section 7.1(e) shall not be available to any party whose action or
failure to fulfill any obligation under this Agreement has been the cause of
such action or inaction and any such action or failure constitutes a breach of
this Agreement by such party;
(f) By WAXS or STAR if the adoption of this Agreement by the
stockholders of WAXS or the stockholders of STAR shall not have been obtained
by reason of the failure to obtain the Required WAXS Vote or the Required STAR
Vote, as applicable, in each case upon the taking of such vote at a duly held
meeting of stockholders of WAXS or STAR, or at any adjournment thereof;
(g) By WAXS if the Board of Directors of STAR, prior to the
Required STAR Vote, shall make an Adverse Change in the STAR Recommendation
(other than in connection with STAR's termination of this Agreement pursuant to
Section 7.1(b)) or approve or recommend a Superior Proposal pursuant to Section
5.4 or shall resolve to take any such actions;
(h) By STAR, at any time prior to the Required STAR Vote upon
three (3) business days' prior notice to WAXS, if its Board of Directors shall
have determined as of the date of such notice that an Acquisition Proposal is a
Superior Proposal; provided, however, that (i) STAR shall have complied with
Section 5.4, (ii) prior to such termination, STAR shall, if requested by
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WAXS in connection with a revised proposal by it, negotiate in good faith for
such three (3) business day period with WAXS and (iii) the Board of Directors
of STAR shall have concluded in good faith, as of the effective date of such
termination, after taking into account any revised proposal by WAXS during such
three (3) business day period, that an Acquisition Proposal is a Superior
Proposal; and provided, further, that it shall be a condition to termination by
STAR pursuant to this Section 7.1(h) that STAR shall have made the payment of
the fee to WAXS pursuant to Section 7.2(b);
(i) By WAXS, if (X) either STAR or any of its material
Subsidiaries (1) commences a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or consents to the
entry of an order for relief in an involuntary case under any such law, (2)
consents to the appointment of or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of STAR or any
of its Subsidiaries or for all or a material portion of the property or assets
of STAR or any of its Subsidiaries or (3) effects any general assignment for
the benefit of creditors or (Y) a Governmental Entity having jurisdiction
enters a decree or order for (a) relief in respect of STAR or any of its
material Subsidiaries in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, (b) appointment of
a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official of STAR or any of its Subsidiaries or for all or a material portion of
the property and assets of STAR or any of its Subsidiaries or (c) the winding
up or liquidation of the affairs of STAR or any of its material Subsidiaries
and, in each case, such decree or order shall remain unstayed and in effect for
a period of 30 consecutive days; or
(j) By WAXS if there has been an Event of Default under the
Credit Agreement, of even date herewith, between WAXS and STAR.
7.2 Effect of Termination.
(a) In the event of any termination of this Agreement by
either STAR or WAXS, as provided in Section 7.1, this Agreement shall forthwith
become void and there shall be no liability or obligation on the part of WAXS
or STAR or their respective officers or directors except with respect to
Section 3.1(m), Section 3.2(l), the second sentence of Section 5.2, Section
5.5, Section 5.6, this Section 7.2, and Article VIII, which provisions shall
survive such termination and except that, notwithstanding anything to the
contrary contained in this Agreement, neither WAXS nor STAR shall be relieved
or released from any liabilities or damages arising out of its breach of this
Agreement;
(b) If this Agreement is terminated by STAR pursuant to
Section 7.1(h), STAR shall, prior to such termination, pay to WAXS $14,000,000
in immediately available funds (the "Termination Fee");
(c) If this Agreement is terminated by WAXS pursuant to
Section 7.1(g), STAR shall, within three (3) days following such termination,
pay to WAXS the Termination Fee; and
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(d) If this Agreement is terminated by WAXS or STAR pursuant
to Section 7.1(f) because STAR's stockholders have failed to adopt this
Agreement by the Required Star Vote and STAR enters into a definitive agreement
with respect to a Business Combination within twelve (12) months following such
termination, then STAR shall pay to WAXS the Termination Fee prior to or at the
consummation thereof.
7.3 Amendment. This Agreement may be amended by STAR and WAXS, by
action taken or authorized by their respective Boards of Directors or
representatives or authorized officers, at any time before or after approval of
the matters presented in connection with the Merger by the stockholders of STAR
and WAXS (including, without limitation, an amendment as described in Section
6.2(h)), but, after any such approval, no amendment shall be made which by law
or in accordance with the rules of any relevant stock exchange or automatic
quotations system requires further approval by such stockholders without such
further approval. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of STAR and WAXS.
7.4 Extension, Waiver. At any time prior to the Effective Time,
the parties hereto, by action taken or authorized by their respective Boards of
Directors, representatives or authorized officers, may, to the extent legally
allowed, (i) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (iii) waive compliance with any of the agreements or
conditions 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 a written
instrument signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of those rights.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Non-Survival of Representations, Warranties and Agreements.
None of the representations, warranties, covenants and other agreements in this
Agreement or in any instrument delivered pursuant to this Agreement including
any rights arising out of any breach of such representations, warranties,
covenants and other agreements, shall survive the Effective Time, except for
those covenants and agreements contained herein and therein that by their terms
apply or are to be performed in whole or in part after the Effective Time and
this Article VIII.
8.2 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed duly given (a) on the date of delivery
if delivered personally, or by telecopy or facsimile, upon confirmation of
receipt, (b) on the first business day following the date of dispatch if
delivered by a recognized next day courier service, or (c) on the tenth
business day following the
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date of mailing if delivered by registered or certified mail return receipt
requested, postage prepaid All notices hereunder shall be delivered as set
forth below, or pursuant to such other instructions as may be designated in
writing by the party to receive such notice:
(a) If to WAXS or Merger Sub, to:
World Access, Inc.
Resurgens Plaza, Suite 2210
000 Xxxx Xxxxx Xxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxx X. Xxxxxxxx
with a copy to
Long Xxxxxxxx & Xxxxxx LLP
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: H. Xxxxxxxx Xxxxxx
(b) If to STAR to:
STAR Telecommunications, Inc.
000 Xxxx Xx Xx Xxxxxx
Xxxxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxxxxxx X. Xxxxxxxx
with a copy to
Xxxxxxx & XxXxxxxx
Twenty-Ninth Floor
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx
8.3 Interpretation. When a reference is made in this Agreement to
Sections, Exhibits, the WAXS Disclosure Schedule or the STAR Disclosure
Schedule, such reference shall be to a Section of or Exhibit or schedule to
this Agreement unless otherwise indicated. 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. Whenever the
words "include", "includes" or
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"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation". All Exhibits, the WAXS Disclosure Schedule and
the STAR Disclosure Schedule are incorporated herein and made a part hereof.
8.4 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 party, it being understood that both
parties need not sign the same counterpart.
8.5 Entire Agreement; No Third Party Beneficiaries.
(a) This Agreement and the Confidentiality Agreement
constitute the entire agreement and supersede all prior agreements and
understandings, both written and oral, including, without limitation, that
certain Letter of Intent, dated December 17, 1999, between WAXS and STAR, among
the parties with respect to the subject matter hereof.
(b) This Agreement shall be binding upon and inure solely to
the benefit of each party hereto, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other Person any right,
benefit or remedy of any nature whatsoever under or by reason of this
Agreement, except as provided for in Section 5.12.
8.6 Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the State of Delaware (without giving effect to
choice of law principles thereof).
8.7 Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any law or public policy,
all other terms and provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance of the actions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner in order that the
transactions contemplated hereby are consummated as originally contemplated to
the greatest extent possible.
8.8 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto, in whole or in part (whether by operation of law or otherwise), without
the prior written consent of the other parties, and any attempt to make any
such assignment without such consent shall be null and void. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit
of and be enforceable by the parties and their respective successors and
assigns.
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8.9 Submission to Jurisdiction; Waivers. Each of WAXS and STAR
irrevocably agrees that any legal action or proceeding with respect to this
Agreement or for recognition and enforcement of any judgment in respect hereof
brought by the other party hereto or its successors or assigns may be brought
and determined in the Chancery or other Courts of the State of Delaware, and
each of WAXS and STAR hereby irrevocably submits with regard to any such action
or proceeding for itself and in respect to its property, generally and
unconditionally, to the nonexclusive jurisdiction of the aforesaid courts. Each
of WAXS and STAR hereby irrevocably waives, and agrees not to assert, by way of
motion, as a defense, counterclaim or otherwise, in any action or proceeding
with respect to this Agreement, (i) any right to trial by jury with respect to
any action, suit or proceeding arising out of or relating to this Agreement,
the Merger or any other transaction contemplated hereby, (ii) any claim that it
is not personally subject to the jurisdiction of the above named courts for any
reason other than the failure to lawfully serve process, (iii) that it or its
property is exempt or immune from jurisdiction of any such court or from any
legal process commenced in such courts (whether through service of notice,
attachment prior to judgment, attachment in aid of execution of judgment,
execution of judgment or otherwise), and (iv) to the fullest extent permitted
by applicable law, that (a) the suit, action or proceeding in any such court is
brought in an inconvenient forum, (b) the venue of such suit, action or
proceeding is improper and (c) this Agreement, or the subject matter hereof,
may not be enforced in or by such courts.
8.10 Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms. It is accordingly agreed
that the parties shall be entitled to specific performance of the terms hereof,
this being in addition to any other remedy to which they are entitled at law or
in equity.
8.11 Headings. The headings contained in this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
8.12 Definitions. As used in this Agreement:
(a) "beneficial ownership" or "beneficially own" shall have
the meaning under Section 13(d) of the Exchange Act and the rules and
regulations thereunder.
(b) "Board of Directors" means the Board of Directors of any
specified Person and any committees thereof.
(c) "Business Combination" means (i) a merger,
reorganization, consolidation, share exchange, business combination,
recapitalization, liquidation, dissolution or similar transaction involving a
party as a result of which either (A) such party's stockholders prior to such
transaction (by virtue of their ownership of such party's shares) in the
aggregate cease to own at least 65% of the voting securities of the entity
surviving or resulting from such transaction (or the ultimate parent entity
thereof) or, regardless of the percentage of voting securities held by such
stockholders, if any Person shall beneficially own, directly or indirectly, at
least 20% of the voting securities of such
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ultimate parent entity, or (B) the individuals comprising the board of
directors of such party prior to such transaction do not constitute a majority
of the board of directors of such ultimate parent entity, (ii) a sale, lease,
exchange, transfer or other disposition of at least 50% of the assets of such
party and its Subsidiaries, taken as whole, in a single transaction or a series
of related transactions, or (iii) the acquisition, directly or indirectly, by a
Person of beneficial ownership of 20% or more of the common stock of such party
whether by merger, consolidation, share exchange, business combination, tender
or exchange offer or otherwise.
(d) "Dissenters' Shares" means shares of STAR Common Stock
for which dissenter's rights of appraisal have been exercised pursuant to the
DGCL.
(e) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
(f) "GAAP" means United States generally accepted accounting
principles.
(g) "Known" or "Knowledge" means, with respect to any party,
the knowledge of such party's executive officers after reasonable inquiry.
(h) "Material Adverse Effect" means, with respect to any
entity, any change, circumstance or effect or any breach of the provisions of
this Agreement that, individually or in the aggregate with all other changes,
circumstances and effects or breaches, is or would reasonably be expected to be
materially adverse to (i) the business, financial condition or results of
operations of such entity and its Subsidiaries taken as a whole, or (ii) the
ability of such entity (or the party owning such entity) to consummate the
transactions contemplated by this Agreement.
(i) "Nasdaq" means the National Market System of the NASDAQ
Stock Market.
(j) "Net PT-1 Proceeds" means the cash proceeds received by
STAR at the consummation of the PT-1 Sale, net of all Taxes, fees, expenses and
costs incurred in connection with the PT-1 Sale, including, without limitation:
(1) fees or expenses for investment banking or other
financial services;
(2) agency, brokerage, finder's or other similar fees or
commissions;
(3) legal, accounting, consulting or other professional
fees or expenses;
(4) the cost of any remedial or corrective actions or
measures;
(5) the costs associated with the transfer or termination
of any PT-1 employees; or
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(6) the costs of any right or obligation the vesting of
which is accelerated by the PT-1 Sale.
(k) "Person" means an individual, corporation, limited
liability company, partnership, association, trust, unincorporated
organization, other entity or group (as defined in the Exchange Act).
(l) "Pre-Closing Price" means the closing price of WAXS
Common Stock as reported on the Nasdaq for the trading day (in which such
shares are traded on the Nasdaq) ending at the close of trading on the second
(2nd) trading day preceding the Closing.
(m) "PT-1 Excess Proceeds" means the Net PT-1 Proceeds in
excess of $150,000,000.
(n) "SEC" means the Securities and Exchange Commission.
(o) "Securities Act" means the Securities Act of 1933, as
amended.
(p) "Subsidiary", when used with respect to any party means
any corporation or other organization, whether incorporated or unincorporated,
(i) of which such party or any other Subsidiary of such party is a general
partner (excluding partnerships, the general partnership interests of which
held by such party or any Subsidiary of such party do not have a majority of
the voting interests in such partnership) or (ii) at least a majority of the
securities or other interests of which having by their terms ordinary voting
power to elect a majority of the Board of Directors or others performing
similar functions with respect to such corporation or other organization is
directly or indirectly owned or controlled by such party or by any one or more
of its Subsidiaries, or by such party and one or more of its Subsidiaries.
(q) "Superior Proposal" means a written proposal made by a
Person unaffiliated with STAR which is for (I) (i) a merger, reorganization,
consolidation, share exchange, business combination, recapitalization,
liquidation, dissolution or similar transaction involving STAR as a result of
which either (A) STAR's stockholders prior to such action (by virtue of their
ownership of STAR's shares) in the aggregate cease to own at least 50% of the
voting securities of the entity surviving or resulting from such transaction
(or the ultimate parent entity thereof) or (B) the individuals comprising the
board of directors of STAR prior to such transaction do not constitute a
majority of the board of directors of such ultimate parent entity, (ii) a sale,
lease, exchange, transfer
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or other disposition of at least 50% of the assets of STAR and its
Subsidiaries, taken as a whole, in a single transaction or a series of related
transactions, or (iii) the acquisition, directly or indirectly, by a Person of
beneficial ownership of 50% or more of the common stock of STAR whether by
merger, consolidation, share exchange, business combination, tender or exchange
offer or otherwise, and which is (II) otherwise on terms which the Board of
Directors of STAR in good faith concludes (after consultation with its
financial advisors and outside legal counsel), taking into account among other
things, all legal, financial, regulatory and other aspects of the proposal and
the Person making the proposal, (i) would, if consummated, result in a
transaction that is more favorable to its stockholders (in their capacities as
stockholders), from a financial point of view, than the transactions
contemplated by this Agreement and (ii) is reasonably capable of being
completed.
(r) "Tax" (and, with correlative meaning, "Taxes" shall mean:
(i) all taxes, charges, fees, levies or other assessments, however denominated,
including any interest, penalties or other additions to tax that may become
payable in respect thereof, imposed by any federal, territorial, state, local
or foreign government or any agency or political subdivision of any such
government, which taxes shall include, without limiting the generality of the
foregoing, all income or profits taxes (including, but not limited to, federal
income taxes and state income taxes), payroll and employee withholding taxes,
unemployment insurance, social security taxes, sales and use taxes, ad valorem
taxes, excise taxes, employer tax, estimated, severance, telecommunications,
occupation, goods and services, capital, profits, value added taxes, franchise
taxes, gross receipts taxes, business license taxes, occupation taxes, real and
personal property taxes, stamp taxes, environmental taxes, transfer taxes,
workers' compensation, Pension Benefit Guaranty Corporation premiums and other
governmental charges, and other obligations of the same or of a similar nature
to any of the foregoing, which the Person is required to pay, withhold or
collect; and (ii) any liability for the payment of any amounts described in
clause (i) as a result of being a successor to or transferee of any individual
or entity or a member of an affiliated, consolidated or unitary group for any
period (including pursuant to Treas. Reg. ss. 1.1502-6 or comparable provisions
of state, local or foreign tax law); and (iii) any liability for the payment of
amounts described in clause (i) or clause (ii) as a result of any express or
implied obligation to indemnify any Person or as a result of any obligations
under agreements or arrangements with any Person.
(s) "Tax Asset" means any net operating loss, net capital
loss, investment tax credit, foreign tax credit, charitable deduction or any
other credit or tax attribute which could reduce Taxes (including, without
limitation, credits related to alternative minimum Taxes).
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(t) "Tax Return" shall mean all reports, estimates,
declarations of estimated tax, information statements and returns (including
any attached schedules) or similar statement relating to, or required to be
filed in connection with, any Taxes, including information returns or reports
with respect to backup withholding and other payments to third parties.
(u) "Tax Sharing Agreement" shall mean any and all existing
Tax sharing agreements, or arrangements written or unwritten, express or
implied, binding two or more Persons with respect to the payment of Taxes,
including any agreements or arrangements which afford any other Person the
right to receive any payment from one or more other Persons in respect to any
Taxes or the benefit of any Tax Asset of one or more other Persons or require
or permit the transfer or assignment of any income, revenue, receipts or gains.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, WAXS, Merger Sub and STAR have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first above written.
WAXS:
WORLD ACCESS, INC.
By: /s/ Xxxx X. Xxxxxxxx
-------------------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Chairman and Chief Executive Officer
STAR:
STAR TELECOMMUNICATIONS, INC.
By: /s/ Xxxxxxxxxxx X. Xxxxxxxx
-------------------------------------------------
Name: Xxxxxxxxxxx X. Xxxxxxxx
Title: President
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MERGER SUB:
STI MERGER CO.
By: /s/ Xxxx X. Xxxxxxxx
-------------------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Chairman and Chief Executive Officer
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