EXHIBIT 2.5.7
AGREEMENT
THIS AGREEMENT (the "Agreement") is entered into as of the 8th day of
January, 1999 (the "Effective Date"), by and among Able Telcom Holding Corp., a
Florida corporation (the "Company"), MFS Communications Company, Inc., a
Delaware corporation ("MFS"), and WorldCom, Inc., a Georgia corporation
("WorldCom" and, collectively with MFS, "Holder").
RECITALS
A. The Company's common stock, par value $.001 (the "Common Stock") is listed
for trading on the Nasdaq National Market System and in connection therewith, is
subject to certain rules and regulations promulgated by the Nasdaq Stock Market,
Inc., including, among others, the Nasdaq Marketplace Rules.
B. Nasdaq Marketplace Rule 4460(i)(C) ("Rule 4460(i)(C)") provides, among other
things, that in connection with the acquisition of stock or assets of another
company, if the number of shares of common stock to be issued is or will be
equal to or in excess of 20% of the number of shares of common stock outstanding
before the issuance of such stock or securities, shareholder approval is
required.
C. On April 26, 1998, the Company, MFS, WorldCom, and certain other related
parties entered into an Agreement and Plan of Merger, as amended on July 2,
1998, and further amended, on September 9, 1998 (collectively the "Merger
Agreement"), whereby, among other things, the Company (i) acquired MFS Network
Technologies, Inc. ("MFSNT") and (ii) agreed to grant to MFS an option (the
"Option") to purchase 2,000,000 shares of the Common Stock, pursuant to which
the Option may be exercised by MFS in whole or in part at $7.00 per share.
D. As of April 24, 1998, there were 9,379,824 shares of Common Stock
outstanding, of which approximately 1,875,960 shares represented just less than
20% of the Common Stock outstanding prior to the issuance of any securities in
connection with the MFSNT acquisition (the "MFSNT Transaction").
E. As of the Effective Date, no Options were exercised by MFS.
F. On or about June 30, 1998, the Company completed an offering of certain of
its securities to investors (the "Series B Offering"), the proceeds of which
were used in connection with the MFSNT Transaction.
G. The parties to this Agreement wish to modify and replace the terms and
conditions of the Option with those set forth in this Agreement, in conformity
with Rule 4460(i)(C).
NOW THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements contained herein, and
intending to be legally bound hereby, the parties hereto agree as follows:
1. RECITALS. The above recitals are true, complete and are herein incorporated
by reference.
2. MODIFICATION TO THE GRANT OF THE OPTION. Unless and until such time as
shareholder approval is obtained by the Company (if ever) pursuant to Rule
4460(i)(C) to approve the issuance of 20% or more of the Common Stock in
connection with the MFSNT Transaction (taking into account the issuances
pursuant to the Series B Offering and the Options) (the "Approval Date"), the
Option shall be modified to a stock appreciation rights award (the "SAR") on the
following terms:
x. XXXXX OF SARS. Each SAR shall represent the right to participate in
an increase in the value of one (1) share of Common Stock and all of the SARs in
the aggregate shall represent the right to participate in an increase in the
value of an aggregate of two million (2,000,000) shares of Common Stock (the
"Aggregate Base Common Stock"). Holder shall be entitled to receive, for each
SAR exercised, an amount equal to the excess (the "Appreciation Amount"),
payable as set forth in Section 2.e.iii. hereof, of the "Fair Market Value", as
hereinafter defined, of the Common Stock as of the applicable exercise date (as
provided in Section 2.e.ii hereof) over $7.00 (the "Strike Price") during the
exercise period, as described in Section 2.b below. For purposes of this
Agreement, "Fair Market Value" shall mean the average on the last three (3)
trading days immediately preceding the applicable exercise date of (i) the last
closing bid price for the Common Stock on the Nasdaq National Market ("NASDAQ"),
as reported by Bloomberg Financial Markets or its successors ("Bloomberg") or,
(ii) if NASDAQ is not the principal trading market for the Common Stock, the
last closing bid price of the Common Stock on the principal securities exchange
or trading market where the Common Stock is listed or traded as reported by
Bloomberg, or (iii) if the foregoing do not apply, the last closing bid price of
the Common Stock in the over-the-counter market on the electronic bulletin board
for the Common Stock reported by Bloomberg, or (iv) if no closing bid price is
reported for the Common Stock by Bloomberg, the last closing trade price of the
Common Stock by Bloomberg, or (v) if no closing bid price is reported for the
Common Stock by Bloomberg, the average of the bid prices of any market makers
for the Common Stock as reported in the "pink sheets" by the National Quotation
Bureau, Inc.
b. EXERCISE PERIOD. The SARs shall be exercisable, in whole or in part,
at the times and in the manner specified by Section 2.e. below commencing on the
earlier of: (i) one (1) business day after the date upon which the potential
issuance of Common Stock under this Agreement is voted upon by the shareholders
of the Company and (ii) May 1, 1999 (the "Commencement Date"), and ending on
January 2, 2002 (the "Termination Date"). All rights with respect to any
unexercised SARs shall expire, and these SARs shall become null and void, at
5:00 on the Termination Date.
c. CERTAIN ADJUSTMENTS.
i. In the event of any change in the capital structure or
business of the Company by reason of any stock dividend or extraordinary
dividend, stock split or reverse stock split, recapitalization, or
reclassification of its capital stock, or any similar change affecting the
Company's capital structure and the Company determines an adjustment is
appropriate under this Section 2, then the number of shares constituting the
Aggregate Base Common Stock and the Strike Price shall be appropriately adjusted
consistent with such change.
ii. In the event of a merger or consolidation in which the
Company is not the surviving entity or in the event of any transaction that
results in the acquisition of all or substantially all of the Company's
outstanding Common Stock by a single person or entity or by a group of persons
and/or entities acting in concert, or in the event of the sale or transfer of
all or substantially all of the Company's assets (all of the foregoing being
referred to as "Acquisition Events"), then the Company may, in its sole
discretion, terminate all outstanding SARs, effective as of the date of the
Acquisition Event, by delivering notice of termination to Holder at least thirty
(30) days prior to the date of consummation of the Acquisition Event; provided,
that during the period from the date on which such notice of termination is
delivered to the consummation of the Acquisition Event, Holder shall have the
right to exercise in full, subject to the limitations in Section 2.a., all of
the SARs that are then outstanding as of the date immediately preceding the date
of the Acquisition Event but contingent on the occurrence of the Acquisition
Event, and further provided that, if the Acquisition Event does not take place
within a specified period after giving such notice for any reason whatsoever,
the notice and exercise shall be null and void.
d. PRIVILEGE OF STOCK OWNERSHIP. Holder shall not be deemed to be the
holder of, or to have any of the rights of a holder of Common Stock with respect
to, any SARs.
e. MANNER OF EXERCISING SARS.
i. The SARs may be exercised in whole or in part after the
Commencement Date, only by written notice signed by Holder and mailed or
delivered to the President or Secretary of the Company at its principal office,
which notice shall: (i) specify the number of SARs which are being exercised;
(ii) the federal identification number of Holder (or transferee); (iii) if an
SAR is being exercised by any party or parties other than Holder, be accompanied
by proof satisfactory to the Company and its counsel, that such party or parties
have the right to exercise the SAR, and (iv) such other documentation and
representations as may be reasonably requested by the Company in connection with
such exercise (an "SAR Exercise Notice"). Once exercised a particular SAR may
not be further exercised.
ii. An SAR shall be deemed to have been exercised with respect
to the SARs specified in said notice at the time of timely receipt by the
Company of an SAR Exercise Notice as specified in Section 2.e.i. above.
iii. The Appreciation Amount shall be paid in cash or other
immediately available funds within fifteen (15) days of receipt of an SAR
Exercise Notice; provided, however, that to the extent that the Company would be
required to pay in excess of $10 million in any twelve (12) month period as a
result of any exercise(s) of the SARs, then the amount of such excess shall
3
be represented by a promissory note with quarterly payments amortized ratably
over a period of six (6) months and bearing interest at ten percent (10%) per
annum.
3. EFFECT ON SAR UPON SHAREHOLDER APPROVAL. In the event that shareholder
approval is obtained to issue shares of common stock in connection with the
MFSNT Transaction in accordance with Rule 4460(i)(C) then, after the Approval
Date the provisions of Section 2 hereof (other than defined terms used herein
from such Section) shall be void and of no further force or effect and any
unexercised SARs shall revert back to Options on the following terms:
x. XXXXX OF THE OPTIONS. Subject to and upon the terms and conditions
set forth in this Agreement, Holder shall have the right to purchase an
aggregate of two million (2,000,000) shares of Common Stock (the "Option
Shares") (less any number of SARs that Holder exercised pursuant to Section 2
hereof, if any) at $7.00 per share (the "Exercise Price") during the exercise
period, as described in Section 3.b. below.
b. EXERCISE PERIOD. The Options shall be exercisable, in whole or in
part, at the times and in the manner specified by Section 3.e.i. below
commencing on the Approval Date and ending on Termination Date. All rights with
respect to any unexercised Option Shares shall expire, and the Option shall
become null and void at 5:00 on the Termination Date.
c. CERTAIN ADJUSTMENTS.
i. In the event of any change in the capital structure or business
of the Company by reason of any stock dividend or extraordinary dividend, stock
split or reverse stock split, recapitalization or reclassification of its
capital stock, any sale or transfer of all or substantially all of the Company's
assets or business, or any similar change affecting the Company's capital
structure and the Company determines an adjustment is appropriate under this
Agreement, then the aggregate number of shares which thereafter may be issued
and the Exercise Price of such shares pursuant to this Section 3 shall be
appropriately adjusted consistent with such change.
ii. In the event of a merger or consolidation or similar event in
which the Company is not the surviving entity or in the event of any transaction
that results in the acquisition of all or substantially all of the Company's
outstanding Common Stock by a single person or entity or by a group of persons
and/or entities acting in concert (an "Acquisition Event"), then the Holder
shall thereafter upon exercise of an Option be entitled to receive the number of
shares of capital stock or other securities or property of the successor
corporation resulting from such Acquisition Event to which the Common Stock of
the Company, deliverable upon the exercise of this Option, would have been
entitled upon such Acquisition Event if this Option had been exercised
immediately prior to such Acquisition Event. In any such case, appropriate
adjustment (as reasonably determined in good faith by the Board of Directors of
the Company) shall be made in the application of the provisions set forth in
this Option with respect to the rights and interests thereafter of the Holder
such that the provisions set forth in this Option (including those relating to
adjustments of the Exercise Price and the number of shares issuable upon the
exercise of this Option) shall thereafter be applicable, as near as reasonably
may be, in relation to any shares or other property thereafter deliverable upon
the exercise hereof as if this Option had been exercised immediately prior to
such
4
Acquisition Event and the Holder hereof had carried out the terms of the
exchange as provided for by such Acquisition Event.
d. PRIVILEGE OF STOCK OWNERSHIP. Holder shall not be deemed to be the
holder of, or to have any of the rights of a holder of Common Stock with respect
to, any Option Shares.
e. MANNER OF EXERCISING OPTIONS.
i. The Option may be exercised in whole or in part, only by written
notice signed by Holder and mailed or delivered to the President or Secretary of
the Company at its principal office, which notice shall: (i) specify the number
of Options which are being exercised; (ii) the federal identification number of
Holder (or transferee); (iii) if the Option is being exercised by any party or
parties other than Holder, be accompanied by proof satisfactory to the Company
and its counsel, that such party or parties have the right to exercise the
Option; and (iv) be accompanied by payment in full of the applicable Exercise
Price in cash or other immediately available funds. Prior to issuance of any
Option Shares, however, Holder shall execute and deliver such other
documentation and representations as may be reasonably requested by the Company
in connection with such exercise, including for purposes of applicable state and
federal securities laws.
ii. This Option shall be deemed to have been exercised with respect
to the Option Shares specified in said notice at the time of timely receipt by
the Company of: (i) the notice specified in Section 3.e.i. hereof; (ii) any
other documentation or representation reasonably required by the Company
pursuant to Section 3.e.i. hereof; and (iii) the payment required in Section
3.e.i. hereof.
iii. Unless a Registration Statement with respect to the Option
Shares is effective at the time of issuance, the certificates representing the
Option Shares issued or to be issued hereunder shall be stamped or otherwise
imprinted with legends substantially in the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE SECURITIES LAWS OF ANY STATE, AND HAVE BEEN ACQUIRED FOR
AN INVESTMENT AND NOT BE SOLD, TRANSFERRED, PLEDGED, OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR SUCH SHARES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR AN OPTION OF COUNSEL ACCEPTABLE TO COUNSEL FOR THE
COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH LAWS.
iv. Upon satisfaction of the provisions of Section 3.e.ii., the
Company shall have up to five (5) days to issue to Holder stock certificates
representing the Option Shares so exercised.
f. REGISTRATION RIGHTS. The Company will, on or before June 30, 1999,
file with the Securities and Exchange Commission ("SEC") a registration
statement to register on a "shelf" basis
5
the resale by Holder of any Option Shares purchased by it pursuant to the Option
until they could be sold by Holder on an unrestricted basis under Rule 144
without regard to volume limitations (the "Registration Term"). The Company will
use its best efforts to have such registration statement declared effective by
the SEC as promptly as possible and to maintain the effectiveness of such
registration statement throughout the Registration Term.
4. AMENDMENTS. The provisions of this Agreement may not be amended,
supplemented, waived or changed orally, except by a writing signed by the party
as to whom enforcement of any such amendment, supplement, waiver or modification
is sought and making specific reference to this Agreement.
5. TRANSFERS. The SARs or Options, as the case may be, may not be transferred
other than to an affiliate of Holder without the Company's prior written
consent.
6. FURTHER ASSURANCES. The parties hereby agree from time to time to execute and
deliver such further and other transfers, assignments and documents and do all
matters and things which may be convenient or necessary to more effectively and
completely carry out the intentions of this Agreement.
7. BINDING EFFECT. All of the terms and provisions of this Agreement, whether so
expressed or not, shall be binding upon, inure to the benefit of, and be
enforceable by the parties and their respective administrators, executors, legal
representatives, heirs, successors and permitted assigns.
8. GOVERNING LAW. This Agreement and all transactions contemplated by this
Agreement shall be governed by, and construed and enforced in accordance with,
the internal laws of the State of Florida without regard to principles of
conflicts of laws.
9. ENTIRE AGREEMENT. This Agreement represents the entire understanding and
agreement among the parties with respect to the subject matter hereof, and
supersedes all other agreements, negotiations, understandings and
representations (if any) made by and among such parties, including without
limitation, the terms of the Option as described in the Merger Agreement.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
6
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
THE COMPANY:
ABLE TELCOM HOLDING CORP.
By: /s/ XXXXX X. XXX, XX.
-----------------------------------
Name: XXXXX X. XXX, XX.
---------------------------------
Its: CEO and PRESIDENT
----------------------------------
MFS:
MFS COMMUNICATIONS COMPANY, INC.
By: /s/ XXXXX X. XXXXXX
-----------------------------------
Name: XXXXX X. XXXXXX
---------------------------------
Its: VP and CONTROLLER
----------------------------------
WORLDCOM:
WORLDCOM NETWORK SERVICES, INC.
By: /s/ XXXXX X. XXXXXX
-----------------------------------
Name: XXXXX X. XXXXXX
---------------------------------
Its: VP and CONTROLLER
----------------------------------
7
