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ANNEX A
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
TERREMARK HOLDINGS, INC.
AND
AMTEC, INC.
Dated as of November 24, 1999
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TABLE OF CONTENTS
Page
ARTICLE I THE MERGER.....................................................1
1.1. The Merger........................................................1
1.2. Conversion of Stock...............................................2
1.3. Surrender of Certificates.........................................2
1.4. Fractional Shares.................................................3
1.5. Stock Options.....................................................3
1.6. Certificate of Incorporation of the Surviving
Corporation.......................................................3
1.7. By-Laws of the Surviving Corporation..............................4
1.8. Directors and Officers of the Surviving Corporation...............4
1.9. Closing...........................................................4
1.10.Appraisal Rights..................................................4
0.00.Xxxx of Additional Shares.........................................4
ARTICLE II REPRESENTATIONS AND WARRANTIES.................................5
2.1. Representations and Warranties of the Company.....................5
(a) Due Organization, Good Standing and Corporate
Power........................................................5
(b) Authorization and Validity of Agreement......................5
(c) Capitalization...............................................6
(d) Consents and Approvals; No Violations........................7
(e) Company Reports and Financial Statements.....................7
(f) Absence of Certain Changes...................................8
(g) Title to Properties; Encumbrances............................9
(h) Compliance with Laws.........................................9
(i) Litigation...................................................9
(j) Government Authorization....................................10
(k) Opinion of Financial Advisor................................10
(l) Takeover Statutes and Charter Provisions....................10
(m) Employee Benefit Plans......................................10
(n) Insurance...................................................11
(o) Casualties..................................................12
(p) Propriety of Past Payments..................................12
(q) Employment Relations and Agreements.........................12
(r) Client Relations............................................13
(s) Sufficiency of Assets.......................................13
(t) Contracts and Commitments...................................13
(u) Disclosure Documents........................................13
(v) Full Disclosure.............................................14
2.2. Representations and Warranties of Terremark......................14
(a) Due Organization; Good Standing and Corporate
Power.......................................................14
(b) Authorization and Validity of Agreement.....................14
(c) Capitalization..............................................15
(d) Consents and Approvals; No Violations.......................16
(e) Real Property...............................................16
(f) Leases......................................................17
(g) Contracts and Commitments...................................17
(h) Insurance...................................................17
(i) Casualties..................................................18
(j) Propriety of Past Payments..................................18
(k) Financial Statements; Absence of Certain
Changes.....................................................18
(l) Sufficiency of Assets.......................................19
(m) Information in Disclosure Documents and
Registration Statement......................................19
(n) Broker's or Finder's Fee....................................20
(o) Compliance with Laws........................................20
(p) Litigation..................................................20
(q) Government Authorization....................................20
(r) Employee Benefit Plans......................................21
(i) List of Plans..........................................21
(ii) Status of Plans........................................21
(iii)Contributions..........................................21
(iv) Tax Qualification......................................21
(v) Transactions...........................................21
(vi) Documents..............................................22
(s) Employment Relations and Agreements.........................22
(t) Client Relations............................................22
(u) Environmental Laws and Regulations..........................22
(v) Full Disclosure.............................................23
ARTICLE III ADDITIONAL AGREEMENTS.........................................23
3.1. Access to Information Concerning Properties and
Records..........................................................23
3.2. Confidentiality..................................................24
3.3. Registration Statement...........................................24
3.4. Conduct of the Business Pending the Effective Time...............24
3.5. Company Stockholder Meeting; Proxy Statement; Form
S-4..............................................................25
3.6. Stock Exchange Listing...........................................26
3.7. Reasonable Best Efforts..........................................26
3.8. Supplemental Disclosure..........................................26
3.9. Officers' and Directors' Insurance; Indemnification..............26
3.10.Letters of Company's Accountants.................................27
3.11.Takeover Statutes................................................27
3.12.U.S. Real Property Holding Company Covenant......................27
ARTICLE IV CONDITIONS PRECEDENT TO MERGER................................28
4.1. Conditions Precedent to Obligations of Terremark and
the Company......................................................28
(a) Approval of Company's Stockholders..........................28
(b) Registration Statement......................................28
(c) Litigation..................................................28
(d) Injunction..................................................28
(e) Statutes....................................................28
(f) AMEX Listing................................................29
4.2. Conditions Precedent to Obligations of Terremark.................29
(a) Accuracy of Representations and Warranties..................29
(b) Performance by Company......................................29
(c) Tax Opinion Letter..........................................29
(d) Letters of Company Accountants..............................29
(e) Employment Agreement........................................29
(f) Stock Purchase Agreement....................................30
4.3. Conditions Precedent to Obligation of the Company................30
(a) Accuracy of Representations and Warranties..................30
(b) Performance by Terremark....................................30
(c) Letters of Terremark Accountants............................30
(d) Lock Up Letters.............................................30
ARTICLE V TERMINATION AND ABANDONMENT...................................31
5.1. Termination......................................................31
5.2. Effect of Termination............................................31
ARTICLE VI MISCELLANEOUS.................................................32
6.1. Fees and Expenses................................................32
6.2. Negotiations.....................................................32
6.3. Survival of Representations and Warranties.......................34
6.4. Extension; Waiver................................................34
6.5. Public Announcements.............................................34
6.6. Notices..........................................................34
6.7. Entire Agreement; Severability...................................35
6.8. Binding Effect; Benefit; Assignment..............................36
6.9. Amendment and Modification.......................................36
6.10.Further Actions..................................................36
6.11.Interpretation; Headings.........................................36
6.12.Counterparts.....................................................37
6.13.Applicable Law...................................................37
6.14.Severability.....................................................37
6.15."Person" Defined.................................................37
DEFINITIONS
Page
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Acquisition Proposal (Section 6.2(a)).......................................34
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Affiliate (Section 4.3(d))..................................................32
Agents (Section 3.2)........................................................25
Agreement (Preamble).........................................................1
AMEX (Section 1.4)...........................................................3
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Certificate of Merger (Section 1.1(a)).......................................1
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Closing (Section 1.9)........................................................4
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Closing Date (Section 1.9)...................................................4
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Commission (Section 2.1(e))..................................................7
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Commission Filings (Section 2.1(e))..........................................8
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Common Stock (Section 1.2(a))................................................2
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Company (Preamble)...........................................................1
Company Benefit Plans (Section 2.1(m)(i))...................................11
Company Proxy Statement (Section 2.1(u))....................................14
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Company Stock Option (Section 1.5)...........................................3
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Company Stock Option Plans (Section 1.5).....................................3
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Company Stockholders Approval (Section 2.1(b))...............................6
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DGCL (Section 1.1(a))........................................................1
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EC Merger Regulation (Section 2.1(j)).......................................10
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Effective Time (Section 1.1(a))..............................................1
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Environmental Laws (Section 2.2(u)(i))......................................23
ERISA (Section 2.1(m)(i))...................................................11
ERISA (Section 2.2(r)(i))...................................................22
Exchange Act (Section 2.1(d))................................................7
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FBCA (Section 1.1(a))........................................................1
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Foregone Commission (Section 6.2(e))........................................35
Form S-4 (Section 2.1(u))...................................................14
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Hazardous Material Section 2.2(a)1))........................................23
HSR Act (Section 2.1(d)).....................................................7
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Knowledge (Section 2.1(i))..................................................10
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Material Adverse Effect (Section 2.1(a)).....................................5
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Maximum Amount (Section 3.9)................................................28
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Merger (Preamble)............................................................1
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Merger Consideration (Section 1.2(c))........................................2
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Notice of Superior Proposal (Section 6.2(b))................................34
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Partners (Section 1.11)......................................................4
Permits (Section 2.1(h))....................................................10
Person (Section 6.15).......................................................39
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Post Merger Common Stock (Section 1.2(a))....................................2
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Predecessor (Section 2.2(u)(ii))............................................24
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Preferred Stock (Section 2.1(c)).............................................6
--------------------------------
Proceeds (Section 1.11)......................................................4
Securities Act (Section 2.1(d))..............................................7
Stock Purchase Agreement (Section 4.2(f))...................................31
Subsidiary (Section 2.1(a))..................................................5
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Superior Proposal (Section 6.2(a))..........................................34
----------------------------------
Surviving Corporation (Section 1.1(b)).......................................2
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Terremark (Preamble).........................................................1
Terremark Benefit Plans (Section 2.2(r)(i)).................................22
Terremark Common Stock (Section 1.2(b))......................................2
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Terremark Financial Statements (Section 2.2(k)).............................19
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Terremark Preferred Stock (Section 2.2(c))..................................15
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Vista Green (Section 4.2(f))................................................31
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of November 24, 1999
("Agreement"), by and between Terremark Holdings, Inc., a Florida
corporation ("Terremark"), and AMTEC, INC., a Delaware corporation (the
"Company").
WHEREAS, Terremark desires to merge with and into the Company and the
Company desires that Terremark be merged with and into it, with the Company
being the surviving corporation;
WHEREAS, the respective Boards of Directors of Terremark and the
Company have approved the execution of this Agreement and the transactions
contemplated hereby including the merger of Terremark into the Company
pursuant to and subject to the terms and conditions of this Agreement and
the laws of the States of Delaware and Florida (the "Merger");
WHEREAS, the Directors of the Company have determined that the terms
of the Merger are in the best interests of, the holders of the issued and
outstanding capital stock of the Company, approved the Merger and recommend
the acceptance of the approval and adoption of this Agreement by the
stockholders of the Company; and
WHEREAS, the terms and conditions of the Merger and the mode of
carrying the same into effect are set forth below.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties, conditions and agreements herein
contained, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1. The Merger. (a) Subject to the terms and conditions of this
Agreement, at the time of the Closing (as defined in Section 1.9 hereof), a
certificate of merger (the "Certificate of Merger") shall be duly prepared,
executed and acknowledged by Terremark and the Company in accordance with
the General Corporation Law of the State of Delaware (the "DGCL") and the
Florida Business Corporation Act (the "FBCA") and shall be filed, together
with all other filings or recordings required by the DGCL and the FBCA to
be made in connection with the Merger, on the Closing Date (as defined in
Section 1.9 hereof). The Merger shall become effective at such time as the
Certificate of Merger is duly filed with the Secretary of State of the
State of Delaware in accordance with the provisions and requirements of the
DGCL. The date and time when the Merger shall become effective is
hereinafter referred to as the "Effective Time."
(b) At the Effective Time, Terremark shall be merged with and
into the Company whereupon the separate corporate existence of Terremark
shall cease, and the Company shall continue as the surviving corporation
under the laws of the State of Delaware (the "Surviving Corporation").
(c) From and after the Effective Time, the Merger shall have
the effects set forth in Section 607.1106 of the FBCA and Section 259 of
the DGCL.
1.2. Conversion of Stock. At the Effective Time:
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(a) Each share of the common stock of the Company, $0.001 par
value (the "Common Stock") then issued and outstanding shall, by virtue of
the Merger and without any action on the part of the holder thereof, be
converted into and represent one share of common stock, $0.001 par value,
of the Surviving Corporation (the "Post Merger Common Stock") and any
rights to receive Common Stock (including options, warrants and convertible
preferred stock) shall automatically be converted to a right to receive an
equal number of the Post Merger Common Stock, such that, immediately after
the Effective Time, all holders of the Common Stock, together with the
holders of any rights to receive Common Stock shall, in the aggregate and
on a fully diluted basis, hold 38.5% of the Post Merger Common Stock of the
Surviving Corporation;
(b) Each share of common stock, par value $0.01 per share, of
Terremark (the "Terremark Common Stock") then issued and outstanding shall,
by virtue of the Merger and without any action on the part of the holder
thereof, become the right to receive fully paid and nonassessable shares of
the Post Merger Common Stock, such that, immediately after the Effective
Time, all holders of the Terremark Common Stock shall, in the aggregate and
on a fully diluted basis, hold 61.5% of the Post Merger Common Stock; and
(c) Each share of the Post Merger Common Stock issued as
provided in Sections 1.2 (a) and (b) shall be of the same class and shall
have the same terms as the currently outstanding Common Stock. The shares
of the Post Merger Common Stock to be received as consideration pursuant to
the Merger with respect to the Common Stock (together with cash in lieu of
fractional shares as set forth below) is referred to herein as the "Merger
Consideration."
1.3. Surrender of Certificates.
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(a) At the Effective Time, each holder of a certificate or
certificates theretofore representing issued and outstanding shares of the
Terremark Common Stock may surrender such certificates to the Surviving
Corporation and receive in exchange therefor certificates representing the
appropriate number of shares of Post Merger Common Stock as provided in
Section 1.2. In the event that the share certificates for the shares in the
Surviving Corporation are to be registered to a holder other than the
registered owner of a surrendered certificate, it shall be a condition of
such issuance that the certificate so surrendered shall be properly
endorsed or otherwise in proper form for transfer and that all applicable
transfer and other similar taxes shall have been paid. Until so
surrendered, each such certificate shall, from and after the Effective
Time, represent for all purposes, only the right to receive the shares of
the Post Merger Common Stock.
(b) At the Effective Time, the share certificates theretofore
representing issued and outstanding shares of the Common Stock shall
automatically be deemed to represent the same number of shares of Post
Merger Common Stock.
(c) No dividends or other distributions with respect to shares
of the Post Merger Common Stock shall be paid to holders of any
certificates representing the shares of Terremark Common Stock not
surrendered as set forth in this Section 1.3. Subject to applicable laws,
following such surrender, there shall be paid, without interest, to the
record holder of the shares of the Post Merger Common Stock issued in
exchange therefor (i) at the time of such surrender, all dividends and
other distributions payable in respect of such Post Merger Common Stock
with a record date after the Effective Time and a payment on or prior to
the date of such surrender and not previously paid and (ii) at the
appropriate payment date, the dividends or other distributions payable with
respect to such Post Merger Common Stock with a record date after the
Effective Time but with a payment date subsequent to such surrender. For
the purposes of dividends or other distributions in respect of Post Merger
Common Stock, all shares of Post Merger Common Stock to be issued pursuant
to the Merger shall be entitled to dividends pursuant to the immediately
preceding sentence as if issued and outstanding as of the Effective Time.
1.4. Fractional Shares. No fractional shares of the Post Merger
Common Stock shall be issued in the Merger, but in lieu thereof, each
holder of the Terremark Common Stock shall be entitled to receive, in lieu
of the fractional shares, an amount of cash, without interest thereon
(rounded to the nearest whole cent), equal to the product of (i) such
fraction of a share of Post Merger Common Stock, multiplied by (ii) the
average of the closing prices of the shares of the Common Stock on the
American Stock Exchange (the "AMEX") as reported in The Wall Street Journal
(subject to correction for typographical or other manifest errors in such
reporting) over the ten trading-day period immediately preceding the
Closing Date.
1.5. Stock Options. (a) At the Effective Time, each outstanding
option to purchase Common Stock (a "Company Stock Option") granted under
the Company's plans identified in Schedule 1.5 as being the only
compensation or benefit plans or agreements pursuant to which Common Stock
may be issued (collectively, the "Company Stock Option Plans"), whether
vested or not vested, shall be deemed assumed by the Surviving Corporation
and shall thereafter be deemed to constitute an option to acquire, on the
same terms and conditions as were applicable under such Company Stock
Option prior to the Effective Date (in accordance with the past practice of
the Company with respect to interpretation and application of such terms
and conditions), the same number of shares of Post Merger Common Stock. In
addition, prior to the Effective Time, the Company will make any amendments
to the terms of such stock option or compensation plans or arrangements
that are necessary to give effect to the transactions contemplated by this
Agreement. The Company represents that no consents are necessary to give
effect to the transactions contemplated by this Section.
(b) Prior to the Effective Time, the Board of Directors of the
Company shall or shall cause the Plan Committee (as defined in the Company
Stock Option Agreements) to take all actions necessary to ensure that the
Merger will not result in (i) an acceleration of the vesting of any Company
Stock Options or (ii) a change in the number of shares for which
outstanding options are exercisable.
1.6. Certificate of Incorporation of the Surviving Corporation. The
Certificate of Incorporation of the Company, as in effect immediately prior
to the Effective Time, shall be the Certificate of Incorporation of the
Surviving Corporation; provided, however, that it shall have been amended
to reflect that the total number of shares of capital stock that the
Company is authorized to issue is 300,000,000 shares of common stock.
1.7. By-Laws of the Surviving Corporation. The By-Laws of the
Company, as in effect immediately prior to the Effective Time, shall be the
By-Laws of the Surviving Corporation; provided, however, that the Directors
of the Surviving Corporation shall take all such action as is necessary to
increase the maximum number of directors of the Surviving Corporation to a
number which is not less than 13.
1.8. Directors and Officers of the Surviving Corporation. The Company
agrees to take all necessary actions so that, on the second Business Day
after the Effective Time, the Company's board of directors shall include
not less than seven persons designated by Terremark.
1.9. Closing. The closing of the Merger (the "Closing") shall take
place at the offices of Xxxxxxxxx Xxxxxxx, P.A., 0000 Xxxxxxxx Xxxxxx,
Xxxxx, Xxxxxxx, as soon as practicable after the last of the conditions set
forth in Article IV hereof is fulfilled or waived (subject to applicable
law) but in no event later than the fifth business day thereafter, or at
such other time and place and on such other date as Terremark and the
Company shall mutually agree (the "Closing Date").
1.10. Appraisal Rights. In accordance with Section 262 of
the Delaware Law, no appraisal rights shall be available to holders
of shares of the Common Stock, in connection with the Merger.
1.11. Sale of Additional Shares. The parties to this Agreement hereby
acknowledge that Terremark at Bayshore, Inc., Terremark Centre, Inc. and
ACGDI, Inc. (each of which is a Florida corporation and which are
collectively referred to as the "Partners"), has sold to Terremark their
interests in Terremark Centre Limited, a Florida limited partnership, the
owner of certain real property referred to as the Terremark Centre located
at 0000 Xxxxx Xxxxxxxx Xxxxx, Xxxxxxx Xxxxx, Xxxxxxx, for a purchase price
equal to the difference between $56,000,000 and the (at the time of the
sale) outstanding principal balance of the first mortgage loan in favor of
Principal Mutual Insurance Company (the "Proceeds"). The Surviving
Corporation hereby agrees to, at the Effective Time, sell to the Partners,
or their assignees, for the Proceeds, such number of shares of Common Stock
as shall be equal, in the aggregate and on a fully diluted basis, to 35% of
the Post Merger Common Stock of the Surviving Corporation pursuant to that
certain Stock Purchase Agreement which shall be executed contemporaneously
herewith between the Company and Vistagreen Holdings (Bahamas), Ltd., a
Bahamian international business corporation. Upon the closing of this
Agreement and the Stock Purchase Agreement, the percentage ownership of the
holders of the Company Common Stock prior to the Effective Time shall be
25%, the percentage ownership of the Partners shall be 35%, and the
percentage ownership of the existing holders of the Terremark Common Stock
shall be 40%, each such percentage representing the respective ownership of
such persons of the Post Merger Common Stock.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
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2.1. Representations and Warranties of the Company. The
Company hereby represents and warrants to Terremark as follows:
(a) Due Organization, Good Standing and Corporate Power. Each
of the Company and its Subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its incorporation and each such corporation has all requisite corporate
power and authority to own, lease and operate its properties and to carry
on its business as now being conducted. Each of the Company and its
Subsidiaries is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification necessary, except in such jurisdictions where the failure to
be so qualified or licensed and in good standing would not have a Material
Adverse Effect on the Company. For the purposes of this Agreement,
"Material Adverse Effect" on any Person means a material adverse effect on
the business, properties, assets, liabilities, operations, results of
operations, condition (financial or otherwise) or prospects of the Person
and its Subsidiaries taken as a whole (i) except to the extent resulting
from (A) any change in general United States or global economic conditions
or general economic conditions in industries in which the Person competes,
or (B) the announcement of the transaction contemplated herein or any
action required to be taken pursuant to the terms hereof, and (ii) except
that the term Material Adverse Effect shall not include, with respect to
the Company (A) any decreases in the Company's stock price in and of itself
or (B) any deterioration in the Company's financial condition which is a
direct and proximate result of its agreements with Hebei United
Telecommunication Equipment Co. The Company has heretofore made available
to Terremark true and complete copies of the Certificate of Incorporation
and Bylaws (or equivalent documents), as amended to date, for itself and
each of its Subsidiaries and copies of the minutes of its Board of
Directors and committees of the Board of Directors (except as the same
relate to transactions contemplated hereby). The term "Subsidiary," as used
in this Agreement, refers to any Person in which the Company or Terremark,
as the case may be, owns any equity interest and shall include all joint
ventures.
(b) Authorization and Validity of Agreement. The Company has
full corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this
Agreement by the Company, and the consummation by it of the transactions
contemplated hereby, have been duly authorized and approved by its Board of
Directors and no other corporate action on the part of the Company is
necessary to authorize the execution, delivery and performance of this
Agreement by the Company and the consummation of the transactions
contemplated hereby (other than the approval of this Agreement and the
Merger by the holders of a majority of the shares of Common Stock (the
"Company Stockholders Approval"), which is the only vote of the holders of
any equity interest in the Company necessary in connection with the
consummation of the Merger). This Agreement has been duly executed and
delivered by the Company and is a valid and binding obligation of the
Company enforceable against the Company in accordance with its terms,
except to the extent that such enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles. The Company's Board of Directors, at a meeting duly
called and held, has, subject to the provisions of Section 6.2 hereof (i)
determined that this Agreement and the transactions contemplated hereby are
fair to and in the best interests of the Company's stockholders, (ii)
approved and adopted this Agreement and the transactions contemplated
hereby and authorized the execution of this Agreement, and (iii) resolved
to recommend approval and adoption of this Agreement and the Merger by its
stockholders.
(c) Capitalization. (i) The authorized capital stock of the
Company consists of 100,000,000 shares of Common Stock and 10,000,000
shares of preferred stock, $0.001 par value (the "Preferred Stock"). As of
the close of business on November 22, 1999, 36,271,689 shares of Common
Stock are issued and outstanding. Set forth on Schedule 2.2(c)(i) are (1)
the number of shares of Common Stock reserved for issuance pursuant to
outstanding Options granted under the Stock Incentive Plans, (2) the number
of such shares which have been issued under such Plans, (3) the number of
shares of Series G Preferred Stock issued and outstanding, and (4) the
number of warrants to purchase the indicated number of shares of Common
Stock. No shares of Common Stock are held in the Company's treasury. The
Series G Preferred Stock converts at the option of the holder into
1,688,022 shares of Common Stock, which number of shares of Common Stock
have been authorized and reserved for issuance by the Company. All issued
and outstanding shares of capital stock of the Company have been validly
issued and are fully paid and nonassessable, and are not subject to, nor
were they issued in violation of, any preemptive rights. Except as set
forth in this Section 2.1(c) or on Schedule 2.1(c) attached hereto, (x)
there are no shares of capital stock of the Company authorized, issued or
outstanding (except for shares subsequently issued pursuant to existing
options, warrants and other rights described in Section 2.1(c)) and (y)
there are not, as of the date hereof, and at the Effective Time there will
not be, any outstanding or authorized options, warrants, rights,
subscriptions, claims of any character, agreements, obligations,
convertible or exchangeable securities, or other commitments, contingent or
otherwise, relating to Common Stock or any other shares of capital stock of
the Company, pursuant to which the Company is or may become obligated to
issue shares of Common Stock, any other shares of its capital stock or any
securities convertible into, exchangeable for, or evidencing the right to
subscribe for, any shares of the capital stock of the Company.
(ii) Schedule 2.1(c)(ii) lists all of the Company's
Subsidiaries (as defined in Section 2.1(a) hereof). All of the outstanding
shares of capital stock of each of the Company's Subsidiaries have been
duly authorized and validly issued, are fully paid and nonassessable, are
not subject to, nor were they issued in violation of, any preemptive
rights, and are owned, of record and beneficially, by the Company, except
as otherwise set forth on Schedule 2.1(c)(ii), free and clear of all liens,
encumbrances, options or claims whatsoever. No shares of capital stock of
any of the Company's Subsidiaries are reserved for issuance and there are
no outstanding or authorized options, warrants, rights, subscriptions,
claims of any character, agreements, obligations, convertible or
exchangeable securities, or other commitments, contingent or otherwise,
relating to the capital stock of any Subsidiary of the Company, pursuant to
which such Subsidiary is or may become obligated to issue any shares of
capital stock of such Subsidiary or any securities convertible into,
exchangeable for, or evidencing the right to subscribe for, any shares of
such Subsidiary. Except for the Subsidiaries listed on Schedule 2.1(c)(ii),
the Company does not own, directly or indirectly, any capital stock or
other equity interest in any Person or have any direct or indirect equity
or ownership interest in any Person and, except as set forth in Schedule
2.1(c)(ii), neither the Company nor any of its Subsidiaries is subject to
any obligation or requirement to provide funds for or to make any
investment (in the form of a loan, capital contribution or otherwise) to or
in any Person. Schedule 2.1(c)(ii), sets forth the equity interests of each
such Subsidiary owned by the Company.
(d) Consents and Approvals; No Violations. Assuming (i)
compliance with any applicable requirements under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (ii)
compliance with any requirements of the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder (the
"Exchange Act") and any requirements of the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder (the
"Securities Act") relating to the Proxy Statement and registration of the
Post Merger Common Stock to be issued to holders of Terremark Common Stock
are met, (iii) the filing of the Certificate of Merger and other
appropriate merger documents, if any, as required by DGCL, and (iv)
approval of the Merger by a majority of the holders of Common Stock, is
received, the execution and delivery of this Agreement by the Company and
the consummation by the Company of the transactions contemplated hereby
will not: (1) violate any provision of the Certificate of Incorporation or
By-Laws of the Company or any of its Subsidiaries; (2) violate any statute,
ordinance, rule, regulation, order or decree of any court or of any
governmental or regulatory body, agency or authority applicable to the
Company or any of its Subsidiaries or by which any of their respective
properties or assets may be bound; (3) require any filing with, or permit,
consent or approval of, or the giving of any notice to, any governmental or
regulatory body, agency or authority; or (4) result in a violation or
breach of, conflict with, constitute (with or without due notice or lapse
of time or both) a default (or give rise to any right of termination,
cancellation, payment or acceleration) under, or result in the creation of
any lien, security interest, charge or encumbrance upon any of the
properties or assets of the Company or any of its Subsidiaries under, any
of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, franchise, permit, agreement, lease, franchise
agreement or other instrument or obligation to which the Company or any of
its Subsidiaries is a party, or by which it or any of their respective
properties or assets may be bound, excluding from the foregoing clauses
(2), (3) and (4) filings, notices, permits, consents and approvals the
absence of which, and violations, breaches, defaults, conflicts and liens
which, in the aggregate, would not have a Material Adverse Effect on the
Company.
(e) Company Reports and Financial Statements. Since March 31,
1997, the Company has filed all forms, reports and documents with the
Securities and Exchange Commission (the "Commission") required to be filed
by it pursuant to the federal securities laws and the Commission rules and
regulations thereunder, and, except to the extent revised or superseded by
a subsequent filing filed with the Commission prior to the date hereof, all
forms, reports and documents filed with the Commission have complied in all
material respects with all applicable requirements of the federal
securities laws and the Commission rules and regulations promulgated
thereunder. The Company has heretofore made available to Terremark true and
complete copies of all forms, reports, registration statements and other
filings filed by the Company with the Commission since March 31, 1997 (such
forms, reports, registration statements and other filings, together with
any amendments thereto, are sometimes collectively referred to as the
"Commission Filings"). As of their respective dates, except to the extent
revised or superseded by a subsequent filing filed with the Commission
prior to the date hereof, the Commission Filings did not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. Each of the
(i) consolidated balance sheets as of the end of the fiscal years ended
March 31, 1997, 1998 and 1999 and as of the end of the fiscal quarters
ended June 30, September 30, and December 31 of each such year, and (ii)
the consolidated statements of operations, consolidated statements of
stockholders' equity and consolidated statements of changes in financial
position for the fiscal years ended March 31, 1997, 1998 and 1999 and for
each of the fiscal quarters ended June 30, September 30 and December 31 of
each such year, as included in the Commission Filings, were all prepared in
accordance with generally accepted accounting principles (as in effect from
time to time) applied on a consistent basis (except as may be indicated
therein or in the notes or schedules thereto) and fairly present in all
material respects the consolidated financial position of the Company and
its consolidated Subsidiaries as of the dates thereof and the results of
their operations and changes in financial position for the periods then
ended (subject to normal year-end adjustments and the absence of notes in
the case of any unaudited interim financial statements, none of which
individually or in the aggregate had or could have a Material Adverse
Effect).
(f) Absence of Certain Changes. Except as previously disclosed
in the Commission Filings, the Company and its Subsidiaries have (i)
conducted their respective businesses in the ordinary course, consistent
with past practice, and (ii) since March 31, 1999, there has not been:
(i) any event, occurrence or development which,
individually or in the aggregate, would have a Material Adverse Effect on
the Company;
(ii) any declaration, setting aside or payment of any
dividend or other distribution with respect to any shares of capital stock
of the Company, or any repurchase, redemption or other acquisition by the
Company or any of its Subsidiaries of any outstanding shares of their
capital stock or any securities convertible into their capital stock;
(iii) any amendment of any material term of any
outstanding security of the Company or any of its Subsidiaries;
(iv) any material transaction or commitment made, or any
contract, agreement or settlement entered into, by (or judgment, order or
decree affecting) the Company or any of its Subsidiaries relating to its
assets or business (including the acquisition or disposition of any
material amount of assets) or any relinquishment by the Company or any of
its Subsidiaries of any contract or other right, in either case, material
to the Company and its Subsidiaries, taken as a whole, other than
transactions, commitments, contracts, agreements or settlements (including
without limitation settlements of litigation and tax proceedings) in the
ordinary course of business consistent with past practice and those
contemplated by this Agreement;
(v) any change in any method of accounting or accounting
practice by the Company or any of its Subsidiaries, except for any such
change which is not material or which is required by reason of a concurrent
change in GAAP;
(vi) any (1) grant of any severance or termination pay to
(or amendment to any such existing arrangement with) any director, officer
or employee of the Company or any of its Subsidiaries, (2) entering into of
any employment, deferred compensation, supplemental retirement or other
similar agreement (or any amendment to any such existing agreement) with
any director, officer or employee of the Company or any of its
Subsidiaries, (3) increase in, or accelerated vesting and/or payment of,
benefits under any existing severance or termination pay policies or
employment agreements or (4) increase in or enhancement of any rights or
features related to compensation, bonus or other benefits payable to
directors, officers or employees of the Company or any of its Subsidiaries,
in each case, other than in the ordinary course of business consistent with
past practice or as permitted by this Agreement; or
(vii) any material Tax election made or changed, any
material audit settled or any material amended Tax Return filed.
(g) Title to Properties; Encumbrances. The Company and each of
its Subsidiaries has good, valid and marketable title to (i) all its
material tangible properties and assets (real and personal), including,
without limitation, all the properties and assets reflected in the
consolidated balance sheet as of September 30, 1999 except as indicated in
the notes thereto and except for properties and assets reflected in the
consolidated balance sheet as of September 30, 1999 which have been sold or
otherwise disposed of in the ordinary course of business, and (ii) all the
tangible properties and assets purchased by the Company and any of its
Subsidiaries since September 30, 1999 except for such properties and assets
which have been sold or otherwise disposed of in the ordinary course of
business; in each case subject to no encumbrance, lien, charge or other
restriction of any kind or character, except for (1) liens reflected in the
consolidated balance sheet as of September 30, 1999, (2) liens consisting
of zoning or planning restrictions, easements, permits and other
restrictions or limitations on the use of real property or irregularities
in title thereto which do not materially detract from the value of, or
impair the use of, such property by the Company or any of its Subsidiaries
in the operation of its respective business, (3) liens for current taxes,
assessments or governmental charges or levies on property not yet due and
delinquent and (4) liens created in connection with the loan from Terremark
to the Company.
(h) Compliance with Laws; Permits. The Company and its
Subsidiaries are in material compliance with all applicable laws,
regulations, orders, judgments and decrees except where the failure to so
comply would not have a Material Adverse Effect on the Company. The Company
has not received any notice alleging non-compliance within the last two
years. Each member of the Company Group (a) has all permits, approvals and
other authorizations ("Permits") necessary for the conduct and operation of
its businesses as currently conducted and (b) uses its assets in compliance
with the terms of such Permits, except for any Permits not obtained or any
noncompliance which would not, individually or in the aggregate, have a
Material Adverse Effect.
(i) Litigation. Except as disclosed in the Commission Filings,
there is no and, in the past two years there has been no, action, suit,
proceeding at law or in equity, or any arbitration or any administrative or
other proceeding by or before (or to the Company's knowledge any
investigation by) any governmental or other instrumentality or agency,
pending, or, to the Company's knowledge, threatened, against or affecting
the Company or any of its Subsidiaries, or any of their properties or
rights which could have a Material Adverse Effect on the Company or prevent
or delay the consummation of the Merger. There are no such suits, actions,
claims, proceedings or investigations pending or, to the Company's
knowledge, threatened, seeking to prevent or challenging the transactions
contemplated by this Agreement. Except as disclosed in the Commission
Filings, neither the Company nor any of its Subsidiaries is subject to any
judgment, order or decree entered in any lawsuit or proceeding which could
have a Material Adverse Effect on the Company or on the ability of the
Company or any Subsidiary to conduct its business as presently conducted.
For the purposes of this Agreement, the term "knowledge" shall mean actual
knowledge.
(j) Government Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation by the
Company of the transactions contemplated hereby require no action by or in
respect of, or filing with, any governmental body, agency, official or
authority other than (i) the filing of a certificate of merger in
connection with the Merger in accordance with Delaware Law and Florida law,
(ii) compliance with any applicable requirements of the HSR Act, (iii)
compliance with any applicable requirements of Council Regulation No.
4064/89 of the European Community, as amended (the "EC Merger Regulation"),
(iv) compliance with any other applicable requirements of foreign
anti-trust or investment laws, (v) compliance with any applicable
environmental transfer statutes, (vi) compliance with any applicable
requirements of the Exchange Act, (vii) compliance with any applicable
requirements of the Securities Act, or (viii) other actions or filings
which if not taken or made would not, individually or in the aggregate,
have a Material Adverse Effect on the Company or prevent or materially
delay the Company's consummation of the Merger.
(k) Opinion of Financial Advisor. The Company has received the
opinion of Ramius Capital Group, L.L.C. to the effect that, as of the date
of its opinion, the transactions contemplated herein are necessary to the
Company. Except for Ramius Capital Group, L.L.C., the fees of which shall
not exceed $150,000 and such number of shares of Post Merger Common Stock
as shall have a value of $150,000 as determined based upon the closing
price of Common Stock of the Company on the trading day immediately
preceding the day of the Effective Time, no agent, broker, Person or firm
acting on behalf of the Company is, or will be entitled to any fee,
commission or broker's or finder's fees from any of the parties hereto, or
from any Person controlling, controlled by, or under common control with
any of the parties hereto, in connection with this Agreement or any of the
transactions contemplated hereby.
(l) Takeover Statutes and Charter Provisions. The Board of
Directors of the Company has taken the necessary actions to render Section
203 of the DGCL, any other potentially applicable anti-takeover or similar
statute or regulation and the provisions of the Company's charter, if any,
inapplicable to this Agreement, the Merger and the transactions
contemplated hereby.
(m) Employee Benefit Plans.
----------------------
(i) List of Plans. Set forth in Schedule 2.1(m) attached
hereto is an accurate and complete list of all employee benefit plans
("Company Benefit Plans") within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
whether or not any such Employee Benefit Plans are otherwise exempt from
the provisions of ERISA, established, maintained or contributed to by the
Company or any of its Subsidiaries (including, for this purpose and for the
purpose of all of the representations in this Section 2.1(m), all employers
(whether or not incorporated) which by reason of common control are treated
together with the Company as a single employer within the meaning of
Section 414 of the Code).
(ii) Status of Plans. Neither the Company nor any of its
Subsidiaries maintains or contributes to any Company Benefit Plan subject
to ERISA which is not in substantial compliance with ERISA. None of the
Company Benefit Plans are subject to the minimum funding requirements of
Section 412 of the Code, or subject to Title IV of ERISA, or multiemployer
plans (as defined in Section 4001(a)(3) of ERISA.
(iii) Contributions. All amounts which the Company or any
of its Subsidiaries is required, under applicable law or under any Company
Benefit Plan or any agreement relating to any Company Benefit Plan to which
Company or any of its Subsidiaries is a party, to have paid as
contributions thereto as of the last day of the most recent fiscal year of
such Company Benefit Plan ended prior to the date hereof, have either been
paid or properly accrued on the Financial Statements. The Company has made
any accruals on its Financial Statements that are required in accordance
with generally accepted accounting principles for contributions that have
not been made because they are not yet due under the terms of any Company
Benefit Plan or related agreements. Benefits under all Company Benefit
Plans are as represented and have not been increased subsequent to the date
as of which documents have been provided to the Company.
(iv) Tax Qualification. The Internal Revenue Service has
issued a favorable determination letter that each Company Benefit Plan
intended to be qualified under Section 401(a) of the Code is so qualified,
and, to the knowledge of the Company, nothing has occurred since the date
of the last such determination which resulted or is likely to result in the
revocation of such determination.
(v) Transactions. Neither the Company nor any of its
Subsidiaries has engaged in any transaction with respect to the Company
Benefit Plans which would subject it to a material tax, penalty or
liability for prohibited transactions under ERISA or the Code nor has any
of their respective directors, officers or employees to the extent they or
any of them are fiduciaries with respect to such Plans, materially breached
any of their responsibilities or obligations imposed upon fiduciaries under
Title I of ERISA or would result in any material claim being made under or
by or on behalf of any such Plans by any party with standing to make such
claim.
(n) Insurance. The Company has made available to Terremark a
schedule of insurance and policies currently maintained by the Company and
its Subsidiaries. Furthermore (a) neither the Company nor any of the
Company's Subsidiaries has received any notice of cancellation or
non-renewal of any such policy or arrangement nor is the termination of any
such policies or arrangements threatened, (b) there is no claim pending
under any of such policies or arrangements as to which coverage has been
questioned, denied or disputed by the underwriters of such policies or
arrangements, (c) neither the Company nor any of the Company's Subsidiaries
has received any notice from any of its insurance carriers that any
insurance premiums will be increased in the future or that any insurance
coverage presently provided for will not be available to the Company or any
of the Company's Subsidiaries in the future on substantially the same terms
as now in effect and (d) none of such policies or arrangements provides for
any retrospective premium adjustment, experienced-based liability or loss
sharing arrangement affecting the Company or any of the Company's
Subsidiaries.
(o) Casualties. Neither the Company nor any of the Company's
Subsidiaries has been affected in any way as a result of flood, fire,
explosion or other casualty (whether or not material and whether or not
covered by insurance). The Company is not aware of any circumstance which
is likely to cause it to suffer any material adverse change in its
business, operations or prospects.
(p) Propriety of Past Payments. (i) No unrecorded fund or asset
of the Company or any of the Company's Subsidiaries has been established
for any purpose, (ii) no accumulation or use of corporate funds of the
Company or any of the Company's Subsidiaries has been made without being
property accounted for in the books and records of the Company or any of
the Company's Subsidiaries, (iii) no payment has been made by or on behalf
of the Company or any of the Company's Subsidiaries with the understanding
that any part of such payment is to be used for any purpose other than that
described in the documents supporting such payment and (iv) none of the
Company, any of the Company's Subsidiaries, any director, officer, employee
or agent of the Company of any of the Company's Subsidiaries has, directly
or indirectly, made any illegal contribution, gift, bribe, rebate, payoff,
influence payment, kickback or other payment to any Person, private or
public, regardless of form, whether in money, property or services, (A) to
obtain favorable treatment for any stockholder, the Company, any of the
Company's Subsidiaries or any affiliate of the Company in securing
business, (B) to pay for favorable treatment for business secured for any
stockholder, the Company, any of the Company's Subsidiaries or any
affiliate of the Company, (C) to obtain special concessions, or for special
concessions already obtained, for or in respect of any stockholder, the
Company or any of the Company's Subsidiaries or any affiliate of the
Company or (iv) otherwise for the benefit of any stockholder, the Company
or any of the Company's Subsidiaries or any affiliate of the Company in
violation of any federal, state, local, municipal, foreign, international,
multinational or other administrative order, constitution, law, ordinance,
principle of common law, regulation, statute, or treaty (including existing
site plan approvals, zoning or subdivision regulations or urban
redevelopment plans relating to Real Property). Neither the Company nor any
of the Company's Subsidiaries nor any current directly, officer, agent,
employee or other Person acting on behalf of the Company or any of the
Company's Subsidiaries, has accepted or received any unlawful contribution,
payment, gift, kickback, expenditure or other item of value.
(q) Employment Relations and Agreements. (i) Each of the
Company and its Subsidiaries is in substantial compliance with all foreign,
federal, state or other applicable laws respecting employment and
employment practices, terms and conditions of employment and wages and
hours, and has not and is not engaged in any unfair labor practice; (ii) no
unfair labor practice complaint against the Company or any of its
Subsidiaries is pending before the National Labor Relations Board; (iii)
there is no labor strike, dispute, slowdown or stoppage actually pending or
threatened against or involving the Company or any of its Subsidiaries;
(iv) no representation question exists respecting the employees of the
Company or any of its Subsidiaries; (v) no grievance which might have a
Material Adverse Effect on the Company and its Subsidiaries or the conduct
of their respective businesses exists, no arbitration proceeding arising
out of or under any collective bargaining agreement is pending and no claim
therefor has been asserted; (vi) no collective bargaining agreement is
currently being negotiated by the Company or any of its Subsidiaries; and
(vii) neither the Company nor any of its Subsidiaries has experienced any
material labor difficulty during the last three years. There has not been,
and to the Company's knowledge, there will not be, any change in relations
with employees of the Company or any of its Subsidiaries as a result of the
transactions contemplated by this Agreement which could have a Material
Adverse Effect on the Company. Except as disclosed in Schedule 2.1(q)
attached hereto, there exist no employment, consulting, severance or
indemnification agreements between the Company and any director, officer or
employee of the Company or any agreement that would give any Person the
right to receive any payment from the Company as a result of the Merger.
(r) Client Relations. There has not been, and to the Company's
knowledge, there will not be, any change in relations with franchisees,
customers or clients of the Company or any of its Subsidiaries as a result
of the transactions contemplated by this Agreement which could have a
Material Adverse Effect on the Company.
(s) Sufficiency of Assets. The rights, properties and other
assets presently owned, leased or licensed by the Company or its
Subsidiaries include all such rights, properties and other assets necessary
to permit the Company and its Subsidiaries to conduct their respective
businesses in all material respects in the same manner as such businesses
have been conducted prior to the date hereof.
(t) Contracts and Commitments. Except as provided in
Schedule 2.1(t):
(i) No purchase contracts or commitments of the Company
or any of its Subsidiaries are in excess of the normal, ordinary and usual
requirements of business or at any excessive price.
(ii) Neither the Company nor any Subsidiary has any
outstanding contracts with Shareholders, directors, officers, employees,
agents, consultants, advisors, salesmen, sales representatives,
distributors or dealers that are in excess of the normal, ordinary and
usual requirements of business or at any excessive price.
(iii) Neither the Company nor any of its Subsidiaries is
restricted by agreement from carrying on its business anywhere in the
world.
(iv) Neither the Company nor any of its Subsidiaries has
outstanding any agreement to acquire any debt obligations of others.
(u) Disclosure Documents. Neither the proxy statement of the
Company (the "Company Proxy Statement") nor the Registration Statement on
Form S-4 (the "Form S-4"), each to be filed with the Commission in
connection with the Merger, nor any amendment or supplement thereto, will,
at the date the Company Proxy Statement or any such amendment or supplement
is first mailed to stockholders of the Company or at the time such
stockholders vote on the adoption and approval of this Agreement and the
transactions contemplated hereby, with respect to the Company Proxy
Statement, or the date the Form S-4 or any amendment thereto is filed with
the Commission, with respect to the Form S-4, contain any untrue statement
of a material fact or omit to state any material fact necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading. The Company Proxy Statement and the Form S-4
will, when filed, each comply as to form in all material respects with the
applicable requirements of the Securities Act and the Exchange Act.
Notwithstanding the foregoing, no representation or warranty is made by the
Company in this Section 2.1(u) with respect to statements made or
incorporated by reference therein based on information supplied by
Terremark for inclusion or incorporation by reference in the Company Proxy
Statement or the Form S-4, which shall be deemed to include information by
any third party with respect to any of the assets directly or indirectly
acquired by or furnished to Terremark after the date hereof.
(v) Full Disclosure. The Company has not failed to disclose to
Terremark any facts material to the business, results of operations,
assets, liabilities, financial condition or prospects of the Company or its
Subsidiaries. No representation or warranty by the Company contained in
this Agreement and no statement contained in any document (including
financial statements and the Schedules hereto), certificate, or other
writing furnished or to be furnished by the Company to Terremark or any of
its representatives pursuant to the provisions hereof or in connection with
the transactions contemplated hereby, contains or will contain any untrue
statement of material fact or omits or will omit to state any material fact
necessary, in light of the circumstances under which it was made, in order
to make the statements herein or therein not misleading.
2.2. Representations and Warranties of Terremark. Terremark
represents and warrants to the Company as follows:
(a) Due Organization; Good Standing and Corporate Power. Each
of Terremark and its Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and each such corporation has all requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted. Each of Terremark and its Subsidiaries is
duly qualified or licensed to do business and is in good standing in each
jurisdiction in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification necessary,
except in such jurisdictions where the failure to be so qualified or
licensed and in good standing would not have a Material Adverse Effect on
Terremark. Each member of the Terremark Group has made available to the
Company true and complete copies of its certificate of incorporation, as
amended to date, its by-laws, as amended to date and copies of the minutes
of its Board of Directors and of committees of the Board of Directors
(except as the same relate to the transactions contemplated hereby).
(b) Authorization and Validity of Agreement. Terremark has full
corporate power and authority to execute and deliver this Agreement, to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this
Agreement by Terremark, and the consummation by it of the transactions
contemplated hereby, have been duly authorized and approved by its Board of
Directors of Terremark. No other corporate action on the part of Terremark
is necessary to authorize the execution, delivery and performance of this
Agreement by Terremark and the consummation of the transactions
contemplated hereby (other than the approval of this Agreement by the
shareholders of Terremark, if required by the FBCA). This Agreement has
been duly executed and delivered by Terremark and is a valid and binding
obligation of Terremark, enforceable against Terremark in accordance with
its terms, except that such enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally, and general equitable principles.
Terremark's Board of Directors, at a meeting duly called and held, has
approved and adopted this Agreement and the transactions contemplated
hereby, and resolved to recommend approval an adoption of this Agreement
and the Merger by its shareholders.
(c) Capitalization. (i) The authorized capital stock of
Terremark consists of 5,000,000 shares of Terremark Common Stock and
4,176,693 shares of preferred stock, $1.00 par value, of which 4,176,693
shares of Series A Convertible Preferred Stock are outstanding (the
"Terremark Preferred Stock"). As of November 23, 1999, 1,121,250 shares of
Terremark Common Stock are issued and outstanding, and no shares of
Terremark Common Stock are reserved for issuance. All issued and
outstanding shares of Terremark Common Stock have been validly issued and
are fully paid and nonassessable, and are not subject to, nor were they
issued in violation of, any preemptive rights. Except as set forth in this
Section 2.2(c), (x) there are no shares of capital stock of Terremark
authorized, issued or outstanding (except for shares subsequently issued
pursuant to existing options or other rights described in this Section
2.2(c)) and (y) there are not as of the date hereof, and at the Effective
Time there will not be, any outstanding or authorized options, warrants,
rights, subscriptions, claims of any character, agreements, obligations,
convertible or exchangeable securities, or other commitments, contingent or
otherwise, relating to the Terremark Common Stock or any other shares of
capital stock of Terremark, pursuant to which Terremark is or may become
obligated to issue shares of Terremark Common Stock, any other shares of
its capital stock or any securities convertible into, exchangeable for, or
evidencing the right to subscribe for, any shares of the capital stock of
Terremark.
(ii) Schedule 2.2(c)(ii) lists all of Terremark's
Subsidiaries, the shareholders of each Subsidiary and the shares they own.
All of the outstanding shares of capital stock of each of Terremark's
Subsidiaries have been duly authorized and validly issued, are fully paid
and nonassessable, are not subject to, nor were they issued in violation
of, any preemptive rights, and are owned, of record and beneficially, by
Terremark, free and clear of all liens, encumbrances, options or claims
whatsoever. No shares of capital stock of any of Terremark's Subsidiaries
are reserved for issuance and there are no outstanding or authorized
options, warrants, rights, subscriptions, claims of any character,
agreements, obligations, convertible or exchangeable securities, or other
commitments, contingent or otherwise, relating to the capital stock of any
Subsidiary of Terremark, pursuant to which such Subsidiary is or may become
obligated to issue any shares of capital stock of such Subsidiary or any
securities convertible into, exchangeable for, or evidencing the right to
subscribe for, any shares of such Subsidiary. Except for the Subsidiaries
listed on Schedule 2.2(c)(ii), Terremark does not own, directly or
indirectly, any capital stock or other equity interest in any Person or
have any direct or indirect equity or ownership interest in any Person and
neither Terremark nor any of its Subsidiaries is subject to any obligation
or requirement to provide funds for or to make any investment (in the form
of a loan, capital contribution or otherwise) to or in any Person. With
respect to each of its Subsidiaries, a member of the Terremark Group owns
100% of the stock of each such Person.
(d) Consents and Approvals; No Violations. Assuming (i)
compliance with any applicable requirements under the HSR Act, (ii) the
filing of the Certificate of Merger and other appropriate merger documents,
if any, as required by the laws of the FBCA is made and (iii) approval of
this Agreement by the shareholders of Terremark if required by the laws of
Florida, the execution and delivery of this Agreement by Terremark and the
consummation by Terremark of the transactions contemplated hereby will not:
(1) violate any provision of the Articles of Incorporation or By-Laws of
Terremark; (2) violate any statute, ordinance, rule, regulation, order or
decree of any court or of any governmental or regulatory body, agency or
authority applicable to Terremark or by which its properties or assets may
be bound; (3) require any filing with, or permit, consent or approval of,
or the giving of any notice to any governmental or regulatory body, agency
or authority; or (4) result in a violation or breach of, conflict with,
constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, cancellation or acceleration)
under, or result in the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of Terremark or any of its
Subsidiaries under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, franchise, permit, agreement, lease or
other instrument or obligation to which Terremark or any of its
Subsidiaries is a party, or by which they or their respective properties or
assets may be bound, excluding from the foregoing clauses (2), (3) and (4)
violations, filings, notices, permits, consents and approvals the absence
of which, and violations, breaches, defaults, conflicts and liens which, in
the aggregate, would not have a Material Adverse Effect on Terremark.
(e) Real Property. (i) All Real Property ("Real Property") that
is owned by Terremark or any Terremark Subsidiary is reflected as an asset
on the Balance Sheet of the Terremark Financial Statements. There are no
proceedings, claims, disputes or conditions affecting any Real Property
that will curtail or interfere with the use of such property. Neither the
whole nor any portion of the Real Property nor any other assets of
Terremark or any Terremark Subsidiary is subject to any governmental decree
or order to be sold or is being condemned, expropriated or otherwise taken
by any public authority with or without payment of compensation therefor,
nor to the knowledge of Terremark has any such condemnation, expropriation
or taking been proposed.
(ii) Neither Terremark nor any Terremark Subsidiary has
received any notice of, or other writing referring to, any requirements or
recommendations by any insurance company that has issued a policy covering
any part of the Real Property or by any board of fire underwriters or other
body exercising similar functions, requiring or recommending any repairs or
work to be done on any part of the Real Property, which repair or work has
not been completed.
(iii) Each of Terremark and each Terremark Subsidiary has
obtained all appropriate certificates of occupancy, licenses, easements and
rights of way, including proofs of dedication, required to use and operate
the Real Property in the manner in which the Real Property is currently
being used and operated, except where the failure to obtain the same would
not have a Material Adverse Effect. Each of Terremark and each Terremark
Subsidiary has all approvals, permits and licenses, and no such approvals,
permits or licenses will be required, as a result of the Merger, to be
issued after the date hereof in order to permit the Company, following the
Closing, to continue to own or operate the Real Property in the same manner
as heretofore, other than any such approvals, permits or licenses that are
ministerial in nature and are normally issued in due course upon
application therefore without the further action by the applicant or when
the failure to obtain the same would not have a Material Adverse Effect.
(f) Leases. Schedule 2.2(f) contains an accurate and complete
description of the terms of each Lease ("Lease" shall mean each lease
pursuant to which Terremark or any Terremark Subsidiary leases any real or
personal property (excluding leases relating solely to personal property
calling for rental or similar periodic payments not exceeding $100,000 per
annum)). To Terremark's knowledge, each Lease is valid, binding and
enforceable in accordance with its terms and is in full force and effect.
The leasehold estate created by each Lease is free and clear of all
encumbrances. Except for defaults which individually or in the aggregate
have not had and will not have a Material Adverse Effect, there are no
existing defaults by Terremark or any Terremark Subsidiary under any of the
Leases. No event has occurred that (whether with or without notice, lapse
of time or the happening or occurrence of any other event) would constitute
a default under any Lease. Neither Terremark nor any of the Terremark
Subsidiaries has received notice, or has any other reason to believe, that
any lessor under any Lease will not consent (where such consent is
necessary) to the consummation of the Merger without requiring any
modification of the rights or obligations of the lessee thereunder.
(g) Contracts and Commitments. Except as provided in
the Terremark Financial Statements:
(i) No purchase contracts or commitments of Terremark or
any Terremark Subsidiary are in excess of the normal, ordinary and usual
requirements of business or at any excessive price.
(ii) Neither Terremark nor any Terremark Subsidiary has
any outstanding contracts with Shareholders, directors, officers,
employees, agents, consultants, advisors, salesmen, sales representatives,
distributors or dealers that are in excess of the normal, ordinary and
usual requirements of business or at any excessive price.
(iii) Neither Terremark nor any Terremark Subsidiary is
restricted by agreement from carrying on its business anywhere in the
world.
(iv) Neither Terremark nor any Terremark Subsidiary has
outstanding any agreement to acquire any debt obligations of others.
(h) Insurance. Terremark has made available to the Company a
schedule of insurance and policies currently maintained by Terremark and
its Subsidiaries. Furthermore (a) neither Terremark nor any Terremark
Subsidiary has received any notice of cancellation or non-renewal of any
such policy or arrangement nor is the termination of any such policies or
arrangements threatened, (b) there is no claim pending under any of such
policies or arrangements as to which coverage has been questioned, denied
or disputed by the underwriters of such policies or arrangements, (c)
neither Terremark nor any Terremark Subsidiary has received any notice from
any of its insurance carriers that any insurance premiums will be increased
in the future or that any insurance coverage presently provided for will
not be available to Terremark or any Terremark Subsidiary in the future or
that any insurance coverage presently provided for will not be available to
Terremark or any Terremark Subsidiary in the future on substantially the
same terms as now in effect and (d) none of such policies or arrangements
provides for any retrospective premium adjustment, experienced-based
liability or loss sharing arrangement affecting Terremark or any Terremark
Subsidiary.
(i) Casualties. Neither Terremark nor any Terremark Subsidiary
has been affected in any way as a result of flood, fire, explosion or other
casualty (whether or not material and whether or not covered by insurance).
Terremark is not aware of any circumstance which is likely to cause it to
suffer any material adverse change in its business, operations or
prospects.
(j) Propriety of Past Payments. (a) No unrecorded fund or asset
of Terremark or any Terremark Subsidiary has been established for any
purpose, (b) no accumulation or use of corporate funds of Terremark or any
Terremark Subsidiary has been made without being properly accounted for in
the books and records of Terremark or such Subsidiary, (c) no payment has
been made by or on behalf of Terremark or any Terremark Subsidiary with the
understanding that any part of such payment is to be used for any purpose
other than that described in the documents supporting such payment and (d)
none of Terremark, any Terremark Subsidiary, any director, officer,
employee or agent of Terremark or any Terremark Subsidiary or any other
Person associated with or acting for or on behalf of Terremark or any
Terremark Subsidiary has, directly or indirectly, made any illegal
contribution, gift, bribe, rebate, payoff, influence payment, kickback or
other payment to any Person, private or public, regardless of form, whether
in money, property or services, (i) to obtain favorable treatment for any
shareholder, Terremark, any Terremark Subsidiary or any affiliate of
Terremark in securing business, (ii) to pay for favorable treatment for
business secured for any shareholder, Terremark, any Terremark Subsidiary
or any affiliate of Terremark, (iii) to obtain special concessions, or for
special concessions already obtained, for or in respect of any shareholder,
Terremark, any Terremark Subsidiary or any affiliate of Terremark or (iv)
otherwise for the benefit of any shareholder, Terremark, any Terremark
Subsidiary or any affiliate of Terremark in violation of any federal,
state, local, municipal, foreign, international, multinational or other
administrative order, constitution, law, ordinance, principle of common
law, regulation, statute, or treaty (including existing site plan
approvals, zoning or subdivision regulations or urban redevelopment plans
relating to Real Property). Neither Terremark nor any Terremark Subsidiary
nor any current director, officer, agent, employee or other Person acting
on behalf of Terremark or any Terremark Subsidiary, has accepted or
received any unlawful contribution, payment, gift, kickback, expenditure or
other item of value.
(k) Financial Statements; Absence of Certain Changes. The
consolidated balance sheets provided by Terremark to the Company as of
March 31, 1999 and 1998 and the consolidated income statements and
statements of cash flow for the periods then ended and the unaudited
balance sheet as of September 30, 1999 and the unaudited consolidated
income statement for the period then ended (the "Terremark Financial
Statements") fairly present the consolidated financial position of
Terremark and its subsidiaries as of such dates and fairly present the
results of operations and changes in cash flow for the periods then ended,
in conformity with generally accepted accounting principles applied on a
consistent basis throughout the periods involved (except as may be
indicated in notes thereto and as for any unaudited financial statements,
except for normal year-end adjustments and the absence of notes). Terremark
and its Subsidiaries have since March 31, 1999 conducted in all material
respects their respective businesses in the ordinary course, reasonably
consistent with past practice, and there has not been:
(i) any event, occurrence or development which,
individually or in the aggregate, would have a Material Adverse Effect on
Terremark;
(ii) any declaration, setting aside or payment of any
dividend or other distribution with respect to any shares of capital stock
of Terremark, or any repurchase, redemption or other acquisition by
Terremark or any of its Subsidiaries of any outstanding shares of their
capital stock or any securities convertible into their capital stock;
(iii) any amendment of any material term of any
outstanding security of Terremark or any of its Subsidiaries;
(iv) any transaction or commitment made, or any contract,
agreement or settlement entered into, by (or judgment, order or decree
affecting) Terremark or any of its Subsidiaries relating to its assets or
business (including the acquisition or disposition of any material amount
of assets) or any relinquishment by Terremark or any of its Subsidiaries of
any contract or other right, in either case, material to Terremark and its
Subsidiaries, taken as a whole, other than transactions, commitments,
contracts, agreements or settlements (including without limitation
settlements of litigation and tax proceedings) in the ordinary course of
business consistent with past practice and those contemplated by this
Agreement;
(v) any change in any method of accounting or accounting
practice (other than any change for tax purposes) by Terremark or any of
its Subsidiaries, except for any such change which is not material or which
is required by reason of a concurrent change in GAAP;
(vi) any material Tax election made or changed, any
material audit settled or any material amended Tax Returns filed.
(l) Sufficiency of Assets. The rights, properties and other
assets presently owned, leased or licensed by Terremark or the Terremark
Subsidiaries include all such rights, properties and other assets necessary
to permit Terremark and Terremark Subsidiaries to conduct their respective
businesses in all material respects in the same manner as such businesses
have been conducted prior to the date hereof.
(m) Information in Disclosure Documents and Registration
Statement. None of the information supplied or to be supplied by Terremark
for inclusion in (i) the Form S-4, at the time it becomes effective or, in
the case of the Proxy Statement or any amendments thereof or supplements
thereto, at the time of the initial mailing of the Proxy Statement and any
amendments or supplements thereto, and at the time of the meeting of
shareholders of Terremark and the stockholders of the Company to be held in
connection with the Merger, 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 are made, not misleading. The Form S-4, as
of its effective date, will comply (with respect to the information
relating to Terremark) as to form in all material respects with the
requirements of the Securities Act, and the rules and regulations
promulgated thereunder, and as of the date of its initial mailing and as of
the date of the Company's stockholders' meeting, the Proxy Statement will
comply (with respect to information relating to Terremark) as to form in
all material respects with the applicable requirements of the Exchange Act,
and the rules and regulations promulgated thereunder. Notwithstanding the
foregoing, Terremark makes no representations as to any statement in the
foregoing documents based on information supplied by the Company for
inclusion therein.
(n) Broker's or Finder's Fee. No agent, broker, Person or firm
acting on behalf of Terremark is, or will be, entitled to any fee,
commission or broker's or finder's fees from any of the parties hereto, or
from any Person controlling, controlled by, or under common control with
any of the parties hereto, in connection with this Agreement or any of the
transactions contemplated hereby.
(o) Compliance with Laws. Terremark and its Subsidiaries are in
material compliance with all applicable laws, regulations, orders,
judgments and decrees except where the failure to so comply would not have
a Material Adverse Effect on Terremark. Terremark has not received any
notice alleging non-compliance within the last two years. Each member of
the Terremark Group (a) has all Permits necessary for the conduct and
operation of its businesses as currently conducted and (b) uses its assets
in compliance with the terms of such Permits, except for any Permits not
obtained or any noncompliance which would not, individually or in the
aggregate, have a Material Adverse Effect.
(p) Litigation. Except as disclosed in the Terremark Financial
Statements or as set forth in Schedule 2.2(p) attached hereto, there is no
action, suit, proceeding at law or in equity, or any arbitration or any
administrative or other proceeding by or before (or to Terremark's
knowledge, any investigation by) any governmental or other instrumentality
or agency, pending, or, to Terremark's knowledge, threatened, against or
affecting Terremark or any of its Subsidiaries, or any of their properties
or rights which could have a Material Adverse Effect on Terremark or
prevent or delay the consummation of the Merger. There are no such suits,
actions, claims, proceedings or investigations pending or, to Terremark's
knowledge, threatened, seeking to prevent or challenging the transactions
contemplated by this Agreement. Except as disclosed in the Terremark
Financial Statements, neither Terremark nor any of its Subsidiaries is
subject to any judgment, order or decree entered in any lawsuit or
proceeding which could have a Material Adverse Effect on Terremark or on
the ability of Terremark or any Subsidiary to conduct its business as
presently conducted.
(q) Government Authorization. The execution, delivery and
performance by Terremark of this Agreement and the consummation by
Terremark of the transactions contemplated hereby require no action by or
in respect of, or filing with, any governmental body, agency, official or
authority other than (i) the filing of a certificate of merger in
connection with the Merger in accordance with Delaware Law and Florida law,
(ii) compliance with any applicable requirements of the HSR Act, (iii)
compliance with any applicable requirements of the EC Merger Regulation,
(iv) compliance with any other applicable requirements of foreign
anti-trust or investment laws, (v) compliance with any applicable
environmental transfer statutes, (vi) compliance with any applicable
requirements of the Exchange Act, (vii) compliance with any applicable
requirements of the Securities Act, (viii) other actions or filings which
if not taken or made would not, individually or in the aggregate, have a
Material Adverse Effect on Terremark or prevent or materially delay
Terremark's consummation of the Merger.
(r) Employee Benefit Plans
(i) List of Plans. Set forth in Schedule 2.2(r) attached
hereto is an accurate and complete list of all employee benefit plans
("Terremark Benefit Plans") within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
whether or not any such Employee Benefit Plans are otherwise exempt from
the provisions of ERISA, established, maintained or contributed to by
Terremark or any of its Subsidiaries (including, for this purpose and for
the purpose of all of the representations in this Section 2.2(r), all
employers (whether or not incorporated) which by reason of common control
are treated together with Terremark as a single employer within the meaning
of Section 414 of the Code).
(ii) Status of Plans. Neither Terremark nor any of its
Subsidiaries maintains or contributes to any Terremark Benefit Plan subject
to ERISA which is not in substantial compliance with ERISA. None of the
Terremark Benefit Plans are subject to the minimum funding requirements of
Section 412 of the Code, or subject to Title IV of ERISA, or multiemployer
plans (as defined in Section 4001(a)(3) of ERISA.
(iii) Contributions. All amounts which Terremark or any
of its Subsidiaries is required, under applicable law or under any
Terremark Benefit Plan or any agreement relating to any Terremark Benefit
Plan to which Terremark or any of its Subsidiaries is a party, to have paid
as contributions thereto as of the last day of the most recent fiscal year
of such Terremark Benefit Plan ended prior to the date hereof, have either
been paid or properly accrued on the Financial Statements. Terremark has
made any accruals on its Financial Statements that are required in
accordance with generally accepted accounting principles for contributions
that have not been made because they are not yet due under the terms of any
Terremark Benefit Plan or related agreements. Benefits under all Terremark
Benefit Plans are as represented and have not been increased subsequent to
the date as of which documents have been provided to Terremark.
(iv) Tax Qualification. The Internal Revenue Service has
issued a favorable determination letter that each Terremark Benefit Plan
intended to be qualified under Section 401(a) of the Code is so qualified,
and, to the knowledge of Terremark, nothing has occurred since the date of
the last such determination which resulted or is likely to result in the
revocation of such determination.
(v) Transactions. Neither Terremark nor any of its
Subsidiaries has engaged in any transaction with respect to the Terremark
Benefit Plans which would subject it to a material tax, penalty or
liability for prohibited transactions under ERISA or the Code nor has any
of their respective directors, officers or employees to the extent they or
any of them are fiduciaries with respect to such Plans, materially breached
any of their responsibilities or obligations imposed upon fiduciaries under
Title I of ERISA or would result in any material claim being made under or
by or on behalf of any such Plans by any party with standing to make such
claim.
(vi) Documents. Terremark has delivered or caused to be
delivered to Terremark and its counsel true and complete copies of (1) all
Terremark Benefit Plans as in effect, together with all amendments thereto
which will become effective at a later date, as well as the latest Internal
Revenue Service determination letter obtained with respect to any such
Terremark Benefit Plan qualified under Section 401 or 501 of the Code and
(2) Form 5500 for the most recent completed fiscal year for each Terremark
Benefit Plan required to file such form.
(s) Employment Relations and Agreements. (i) Each of Terremark
and its Subsidiaries is in substantial compliance with all foreign,
federal, state or other applicable laws respecting employment and
employment practices, terms and conditions of employment and wages and
hours, and has not and is not engaged in any unfair labor practice; (ii) no
unfair labor practice complaint against Terremark or any of its
Subsidiaries is pending before the National Labor Relations Board; (iii)
there is no labor strike, dispute, slowdown or stoppage actually pending or
threatened against or involving Terremark or any of its Subsidiaries; (iv)
no representation question exists respecting the employees of Terremark or
any of its Subsidiaries; (v) no grievance which might have a Material
Adverse Effect on Terremark and its Subsidiaries or the conduct of their
respective businesses exists, no arbitration proceeding arising out of or
under any collective bargaining agreement is pending and no claim therefor
has been asserted; (vi) no collective bargaining agreement is currently
being negotiated by Terremark or any of its Subsidiaries; and (vii) neither
Terremark nor any of its Subsidiaries has experienced any material labor
difficulty during the last three years. There has not been, and to
Terremark's knowledge, there will not be, any change in relations with
employees of Terremark or any of its Subsidiaries as a result of the
transactions contemplated by this Agreement which could have a Material
Adverse Effect on Terremark. There exist no employment, consulting,
severance or indemnification agreements between Terremark and any director,
officer or employee of Terremark or any agreement that would give any
Person the right to receive any payment from the Company as a result of the
Merger.
(t) Client Relations. There has not been, and to Terremark's
knowledge, there will not be, any change in relations with franchisees,
customers or clients of Terremark or any of its Subsidiaries as a result of
the transactions contemplated by this Agreement which could have a Material
Adverse Effect on Terremark.
(u) Environmental Laws and Regulations.
----------------------------------
(i) The term "Environmental Laws" means any federal,
state, local or foreign law, statute, treaty, ordinance, rule, regulation,
permit, consent, approval, license, judgment, order, decree or injunction,
each as currently in effect and applicable, relating to: (i) Releases (as
defined in 42 U.S.C. sec. 9601(22)) or threatened Releases of Hazardous
Material (as hereinafter defined) into the environment; (ii) the
generation, treatment, storage, disposal, use, handling, manufacturing,
transportation or shipment of Hazardous Material; (iii) the health or
safety of employees in the workplace; (iv) protecting or restoring natural
resources; or (v) the environment. The term "Hazardous Material" means: (1)
hazardous substances (as defined in 42 U.S.C. sec. 9601(14)), including
"hazardous waste" as defined in 42 U.S.C. sec. 6903; (2) petroleum,
including crude oil and any fractions thereof; (3) natural gas, synthetic
gas and any mixtures thereof; (4) asbestos and/or asbestos containing
materials; (5) PCBs or materials containing PCBs; (6) any material
regulated as a medical waste; (7) radioactive materials; and (8) "Hazardous
Substance" or "Hazardous Material" as those terms are defined in any
indemnification provision in any contract, lease, or agreement to which
Terremark or any of its subsidiaries is a party.
(ii) The representations in this Section 2.2(u) shall be
deemed to apply to the Terremark Centre to the extent that it is an asset
which Terremark owns as of the Closing. With respect to any property
Terremark or any of its Subsidiaries currently or previously owned, to
Terremark's knowledge (i) there have been no Releases of Hazardous Material
in, on, under or affecting such properties or any surrounding site, and
each property is in compliance in all material respects with applicable
law, (ii) neither Terremark nor any of its Subsidiaries has disposed of any
Hazardous Material in a manner that has led, or could reasonably be
expected to lead, to a Release, except in each case for those Releases
which, individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect on Terremark. There have been no Releases
of Hazardous Material in, on, under or affecting their current or
previously owned or leased properties or any surrounding site, except in
each case for those Releases which, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect on Terremark.
Neither Terremark nor any of its Subsidiaries has received any written
notice of, or entered into any order, settlement or decree relating to: (i)
any violation of any Environmental Laws by Terremark or any of its
Subsidiaries or the institution or pendency of any suit, action, claim,
proceeding or investigation by any Governmental Entity or any third party
against Terremark or any of its Subsidiaries; or (ii) the response to or
remediation of Hazardous Material at or arising from any of Terremark's
properties or any subsidiary's properties. To Terremark's knowledge, there
have been no violations of any Environmental Laws by Terremark or any
Subsidiary or any Predecessor (herein defined) which, individually or in
the aggregate, would reasonably be expected to have a Material Adverse
Effect on Terremark. "Predecessor" means any Person which at any time
directly or indirectly owned any of the properties leased or owned at any
time by any member of the Terremark Group.
(v) Full Disclosure. Terremark has not failed to disclose to
the Company any facts material to the business, results of operations,
assets, liabilities, financial condition or prospects of Terremark or
Terremark Subsidiaries. No representation or warranty by Terremark
contained in this Agreement and no statement contained in any document
(including financial statements and the Schedules hereto), certificate, or
other writing furnished or to be furnished by Terremark to the Company or
any of its representatives pursuant to the provisions hereof or in
connection with the transactions contemplated hereby, contains or will
contain any untrue statement of material fact or omits or will omit to
state any material fact necessary, in light of the circumstances under
which it was made, in order to make the statements herein or therein not
misleading.
ARTICLE III
ADDITIONAL AGREEMENTS
3.1. Access to Information Concerning Properties and Records. During
the period commencing on the date hereof and ending at the Effective Time,
each of the Company and Terremark shall, and shall cause each of their
respective Subsidiaries to, upon reasonable notice, afford the other party,
and its respective counsel, accountants and other authorized
representatives, full access during normal business hours to the
properties, books and records of itself and its Subsidiaries in order that
they may have the opportunity to make such investigations as they shall
desire. No such investigation shall, however, affect the representations
and warranties made by each party to this Agreement. Each party hereto
agrees to cause its officers and employees to furnish such additional
financial and operating data and other information and respond to such
inquiries as the other party may from time to time request.
3.2. Confidentiality. Prior to the Effective Time and after any
termination of this Agreement each party hereto will hold, and will use its
best efforts to cause its officers, directors, employees, accountants,
counsel, consultants, advisors and agents to hold, in confidence, unless
compelled to disclose by judicial or administrative process or by other
requirements of law, including but not limited to, the Securities law, all
confidential documents and information concerning the other parties hereto
and the Subsidiaries furnished to such party in connection with the
transactions contemplated by this Agreement, except to the extent that such
information can be shown to have been (i) previously known on a
nonconfidential basis by such party, (ii) in the public domain through no
fault of such party, or (iii) later lawfully acquired by such party from
sources other than the parties hereto; provided, however, that such party
may disclose such information to its officers, directors, employees,
accountants, counsel, consultants, advisors, agents and representatives
(collectively, "Agents") in connection with the transactions contemplated
by this Agreement so long as such Persons are informed by such party of the
confidential nature of such information and are directed by such party to
treat such information confidentially and any breach by any such Agent
shall be deemed to conclusively be a breach by the applicable party hereto
for whom such Agent is an Agent. If this Agreement is terminated for any
reason, each party hereto will, and will use its best efforts to cause its
Agents to, destroy or deliver to the party from whom such material was
obtained, upon request, all documents and other materials, and all copies
thereof, obtained by such party or on its behalf from any such other
parties in connection with this Agreement that are subject to such
confidence.
3.3. Registration Statement. As promptly as practicable, Terremark
and the Company shall in consultation with each other prepare and file with
the SEC the Proxy Statement in preliminary form. Each of them shall use its
reasonable best efforts to have the Proxy Statement cleared by the SEC and
the S-4 declared effective as soon as practicable. If at any time prior to
the Effective Time any event or circumstances relating to the Company, any
subsidiary of the Company or Terremark, any of their respective
subsidiaries, or their respective officers or directors, should be
discovered by such party which should be set forth in an amendment or a
supplement to the Form S-4 or Proxy Statement, such party shall promptly
inform the other thereof and take appropriate action in respect thereof.
3.4. Conduct of the Business Pending the Effective Time. The Company
and Terremark each agrees that, except as permitted, required or
specifically contemplated by, or otherwise described in, this Agreement or
otherwise consented to or approved in writing by the other, such consent
not to be unreasonably withheld or delayed, during the period commencing on
the date hereof and ending at the Effective Time:
(a) Each of them and their respective Subsidiaries will conduct
their operations only according to their ordinary and usual course of
business and will use their best efforts to preserve intact their
respective business organization, keep available the services of their
officers and employees and maintain satisfactory relationships with
licensors, suppliers, distributors, clients and others having business
relationships with them;
(b) Neither of them nor any of their respective Subsidiaries
shall, except as otherwise contemplated in this Agreement, (i) make any
change in or amendment to their charter or by-laws (or comparable governing
documents); (ii) issue or sell any shares of their capital stock (other
than in connection with the exercise of Options outstanding on the date
hereof) or any of its other securities, or issue any securities convertible
into, or options, warrants or rights to purchase or subscribe to, or enter
into any arrangement or contract with respect to the issuance or sale of,
any shares of its capital stock or any of its other securities, or make any
other changes in their capital structure; provided, however, that Terremark
shall cause all outstanding shares of its Series A Convertible Preferred
Stock to be converted to Terremark Common Stock prior to the Closing, (iii)
declare, pay or make any dividend or other distribution or payment with
respect to, or split, redeem or reclassify, any shares of their capital
stock; (iv) enter into any contract or commitment except contracts in the
ordinary course of business, including without limitation, any acquisition
of a material amount of assets or securities, any disposition of a material
amount of assets or securities or release or relinquish any material
contract rights (it being understood that the acquisition, development,
leasing, sale, mortgaging or other disposition of real property or rights
with respect thereto is in the ordinary course of business of Terremark);
(v) amend any employee or non-employee benefit plan or program, employment
agreement, license agreement or retirement agreement, or pay any bonus or
contingent compensation; provided, however, that Terremark may take such
actions so long as and to the extent that the same are consistent with
prior practices; (vi) agree to the settlement of any litigation involving a
payment of more than $100,000 in the aggregate; (vii) change or permit to
change any method of accounting or accounting practices used by it, except
for any such change which is not material or which is required by reason of
a concurrent change in GAAP, (viii) agree, in writing or otherwise, to take
any of the foregoing actions or (ix) make or change any material tax
election; and
(c) Neither of them shall, nor permit any of their Subsidiaries
to, take any action, engage in any transaction or enter into any agreement
which would cause any of the representations or warranties set forth in
this Agreement to be untrue as of the Closing Date.
3.5. Company Stockholder Meeting; Proxy Statement; Form S-4.
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(a) The Company, acting through its Board of Directors, shall,
subject to and in accordance with applicable law and its Certificate of
Incorporation, as amended, and its By-Laws, promptly and duly call, give
notice of, convene and hold as soon as practicable following the date upon
which the Form S-4 becomes effective, a meeting of the holders of Company
capital stock for the purpose of voting to approve and adopt this Agreement
and the transactions contemplated hereby, and (i) except as required to
comply with the fiduciary duties of the Board of Directors as advised by
outside counsel, recommend approval and adoption of this Agreement and the
transactions contemplated hereby, by the stockholders of the Company and
include in the Proxy Statement such recommendation and (ii) except as
required to comply with the fiduciary duties of the Board of Directors as
advised by outside counsel, take all reasonable action to solicit and
obtain such approval. Terremark, acting through its Board of Directors,
shall, subject to and in accordance with applicable law and its Certificate
of Incorporation, as amended, and its By-Laws, promptly and duly call, give
notice of, convene and hold as soon a practicable following the date on
which the Form S-4 becomes effective a meeting of the holders of Terremark
Common Stock for the purpose of voting to approve and adopt this Agreement
and the transactions contemplated hereby and (i) except as required to
comply with the fiduciary duties of the Board of Directors as advised by
outside counsel, recommend approval and adoption of this Agreement and the
transactions contemplated hereby, by the shareholders of Terremark and
include in the Proxy Statement such recommendation and (ii) except as
required to comply with the fiduciary duties of the Board of Directors as
advised by outside counsel, take all reasonable action to solicit and
obtain such approval.
(b) The Company, as promptly as practicable, shall cause the
definitive Proxy Statement to be mailed to their respective stockholders.
3.6. Stock Exchange Listing. The Company shall use its
reasonable best efforts to cause the Post Merger Common Stock to be
issued in connection with the Merger to be approved for listing on
AMEX, subject to official notice of issuance.
3.7. Reasonable Best Efforts. Each of the Company and Terremark
shall, and each shall cause its respective Subsidiaries to, cooperate and
use their respective reasonable best efforts to take, or cause to be taken,
all appropriate action, and to make, or cause to be made, all filings
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this
Agreement, including, without limitation, their respective reasonable best
efforts to obtain, prior to the Closing Date, all licenses, permits,
consents, approvals, authorizations, qualifications and orders of
governmental authorities and parties to contracts with the Company and its
Subsidiaries as are necessary for consummation of the transactions
contemplated by this Agreement and to fulfill the conditions to the Merger;
provided, however, that no loan agreement or contract for borrowed money
shall be repaid except as currently required by its terms, in whole or in
part, and no contract shall be amended to increase the amount payable
thereunder or otherwise to be more burdensome to the Company or any of its
Subsidiaries in order to obtain any such consent, approval or authorization
without first obtaining the written approval of Terremark.
3.8. Supplemental Disclosure. Each of the Company and Terremark shall
give the other party prompt notice of (i) the occurrence, or
non-occurrence, of any event the occurrence, or non-occurrence, of which
would be likely to cause (x) any representation or warranty contained in
this Agreement to be untrue or inaccurate or (y) any covenant, condition or
agreement contained in this Agreement not to be complied with or satisfied
and (ii) any failure of the Company or Terremark, as the case may be, to
comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder; provided, however, that the delivery of
any notice pursuant to this Section shall not have any effect for the
purpose of determining the satisfaction of the conditions set forth in
Article IV of this Agreement or otherwise limit or affect the remedies
available hereunder to any party.
3.9. Officers' and Directors' Insurance; Indemnification. The
Surviving Corporation will, (i) for a period of three years commencing at
the Effective Time, maintain all rights to indemnification now existing in
favor of the directors and officers of the Company as provided in the
Company's Certificate of Incorporation or By-Laws, with respect to acts and
omissions occurring prior to the Effective Time; provided, however, that
the Surviving Corporation will not be liable for any settlement effected
without its consent; and (ii) for a period of three years commencing at the
Effective Time, use its reasonable best efforts to maintain a policy or
policies of directors' and officers' liability insurance covering directors
and officers of the Company and having such terms no less favorable than
the policies presently maintained by the Company on the date of this
Agreement (true and correct copies of which have been delivered to
Terremark) with respect to acts and omissions occurring prior to the
Effective Time; provided further that such insurance coverage shall
continue to be available and provided that the annual premium therefor
shall not exceed $110,000 (the "Maximum Amount") to maintain or procure
such insurance coverage; and provided further that if the Surviving
Corporation shall be unable to maintain or obtain such insurance coverage
as called for by this Section 3.9(ii), the Surviving Corporation will
maintain or obtain, for the remainder of such three year period, as much
comparable insurance as shall be available for the Maximum Amount.
3.10. Letters of Company's Accountants.
--------------------------------
(a) The Company shall use reasonable best efforts to cause to
be delivered to the Company and to Terremark two letters from Deloitte &
Touche LLP, one dated no earlier than three business days prior to the date
on which the Form S-4 shall become effective and one dated no earlier than
three business days prior to the Closing Date, each addressed to the Boards
of Directors of the Company and Terremark, in form reasonably satisfactory
to the Company and Terremark and customary in scope for comfort letters
delivered by independent public accountants in connection with registration
statements similar to the Form S-4.
(b) Terremark shall use reasonable best efforts to cause to be
delivered to the Company and to Terremark two letters from
PricewaterhouseCoopers, one dated no earlier than three business days prior
to the date on which the Form S-4 shall become effective and one dated no
earlier than three business days prior to the Closing Date, each addressed
to the Boards of Directors of the Company and Terremark, in form reasonably
satisfactory to the Company and Terremark and customary in scope for
comfort letters delivered by independent public accountants in connection
with registration statements similar to the Form S-4.
3.11. Takeover Statutes. If any anti-takeover or similar statute or
regulation is or may become applicable to the transactions contemplated
hereby, each of the parties and its Board of Directors shall grant such
approvals and take all such actions as are legally permissible so that the
transactions contemplated hereby may be consummated as promptly as
practicable on the terms contemplated hereby and otherwise act to eliminate
or minimize the effects of any such statute or regulation on the
transactions contemplated hereby.
3.12. U.S. Real Property Holding Company Covenant. For such period of
time as the Vistagreen Group (as defined in the Purchase Agreement) holds,
in the aggregate, Holders Stock acquired pursuant to the Purchase Agreement
(as hereinafter defined) representing at least 1% of the outstanding shares
of Common Stock of the Company, the Company shall not be or become a United
States Real Property Holding Corporation as defined in Section 897(c)(2) of
the Code nor shall the Holders Stock acquired pursuant to the Purchase
Agreement be or become a United States Real Property Interest as defined in
Section 897(c)(1)(A)(ii) of the Code. In addition, as of each determination
date (as defined in Treasury Regulation Section 1.897-2(c)), including
particularly a date of disposition, the Company shall provide to each
member of the Vistagreen Group a statement complying with Treasury
Regulation Section 1.897-2(g)(1)(ii) and shall also comply, on a timely
basis, with the notice requirements of Treasury Regulation Section
1.897-2(h) including without limitation, timely notice to the Internal
Revenue Service as provided in that Treasury Regulation, with a copy to
each member of the Vistagreen Group, together with other Supporting
Documents (as defined in that certain Stock Purchase Agreement by and
between Vistagreen Holdings (Bahamas), Ltd. and the Company as of the date
hereof (the "Purchase Agreement")), but dated as of the determination Date.
Any notice conforming with or under Treasury Regulation Section 1.897-2(h)
need address the status of the Company as a United States Real Property
Holding Corporation and the status of the Company shares as a United States
Real Property Interest only from a date that is no earlier than the day
that is thirty days prior to the Effective Date. These covenants shall in
all respects survive the Closing of this Agreement. The "Vistagreen Group,"
as used herein, shall have the same meaning as in the Purchase Agreement.
ARTICLE IV
CONDITIONS PRECEDENT TO MERGER
4.1. Conditions Precedent to Obligations of Terremark and the
Company. The respective obligations of Terremark, on the one hand, and the
Company, on the other hand, to effect the Merger are subject to the
satisfaction or waiver (subject to applicable law), at or prior to the
Effective Time, of each of the following conditions:
(a) Approval of Company's Stockholders. This Agreement and
the Merger shall have been approved and adopted by the requisite vote or
consent of the stockholders of the Company in accordance with applicable
law, the provisions of the Company's Certificate of Incorporation and
By-Laws, and the requirements of the AMEX;
(b) Registration Statement. The Form S-4 shall have become
effective in accordance with the provisions of the Securities Act. No stop
order suspending the effectiveness of the Form S-4 shall have been issued
by the SEC and no proceedings for that purpose shall have been initiated by
the SEC.
(c) Litigation. There shall not have been instituted or be
pending any suit, action or proceeding by any governmental entity as a
result of this Agreement or any of the transactions contemplated hereby
with questions the validity or legality of the transactions contemplated by
this Agreement.
(d) Injunction. No injunction or other order shall have been
issued by any court or by any governmental or regulatory agency, body or
authority which is then in effect and has the effect of making the Merger
illegal or otherwise prohibiting the consummation of the Merger;
(e) Statutes. No statute, rule, regulation, executive order,
decree or order of any kind shall have been enacted, entered, promulgated
or enforced by any court or governmental authority which prohibits the
consummation of the Merger; and
(f) AMEX Listing. The shares of Post Merger Common Stock to be
issued pursuant to the Merger shall have been approved for listing on the
AMEX, upon final notice of issuance.
4.2. Conditions Precedent to Obligations of Terremark. The
obligations of Terremark to effect the Merger are also subject to
the satisfaction or waiver by Terremark, at or prior to the
Effective Time, of each of the following conditions:
(a) Accuracy of Representations and Warranties. All
representations and warranties of the Company contained herein shall be
true and correct in all material respects as of the date hereof and at and
as of the Closing, with the same force and effect as though made on and as
of the Closing Date (except as to any such representation and warranty
which relates to a specific date, which shall be true and correct as of
such specific date), except with respect to any such items which do not
have, individually or in the aggregate, a Material Adverse Effect on the
Company; and Terremark shall have received a certificate signed on behalf
of the Company by the chief executive officer or the chief financial
officer of the Company to such effect;
(b) Performance by Company. The Company shall have performed in
all material respects all obligations and agreements, and complied in all
material respects with all covenants and conditions, contained in this
Agreement to be performed or complied with by it prior to the Closing Date;
and Terremark shall have received a certificate signed on behalf of the
Company by the chief executive officer or the chief financial officer of
the Company to such effect;
(c) Tax Opinion Letter. Terremark shall have received the
opinion of counsel reasonably satisfactory to Terremark in form and
substance reasonably satisfactory to Terremark, on the basis of customary
representations and assumptions set forth in such opinion, dated the
Effective Time, to the effect that (i) the Merger will be treated for
federal income tax purposes as a reorganization qualifying under the
provisions of Section 368(a) of the Code, (ii) each of the Company and
Terremark will be a party to the reorganization within the meaning of
Section 368(b) of the Code, (iii) a Terremark shareholder will not
recognize gain or loss on the receipt of Post Merger Common Stock in
exchange for Terremark Common Stock pursuant to the Merger, except with
respect to any cash received in lieu of a fractional share, (iv) the
adjusted tax basis of the Post Merger Common Stock that a Terremark
shareholder receives pursuant to the Merger will be equal to the adjusted
tax basis of the Terremark Common Stock exchanged therefor, reduced by the
amount of any basis allocable to any fractional share, and (v) the holding
period of Post Merger Common Stock that a Terremark shareholder receives
pursuant to the Merger will include the holding period of the Terremark
common Stock exchanged therefor (provided that Terremark Common Stock is
held as a capital asset at the Effective Time). In rendering its opinion,
counsel shall be entitled to rely upon customary representations of
officers of the Company and Terremark reasonably requested by counsel;
(d) Letters of Company Accountants. Terremark shall
have received the Accountants Letters set forth in Section 3.10;
(e) Employment Agreement. Xxxxxx Xxxxxx, Jr. Shall have entered
into an employment contract in form and substance acceptable to Terremark
which shall provide for, among other things, an annual salary of $250,000
and a surrender by him of all options to purchase shares of Common Stock
other than 1,000,000 options exercisable at $3.00 per share and the
2,000,000 options exercisable at $0.35 per share, none of which shall be
exercised until at least one year after the Effective Time; and
(f) Stock Purchase Agreement. The Stock Purchase Agreement by
and between the Company and Vistagreen Holdings (Bahamas), Ltd., a Bahamian
international business corporation ("Vistagreen") executed concurrently
herewith (the "Stock Purchase Agreement") shall be in full force and
effect, with all conditions precedent thereto (other than the consummation
of this Agreement) having been satisfied, all representations and
warranties of Vistagreen true and correct and with the parties hereto
having no reasonable basis to believe that the transactions contemplated in
the Stock Purchase Agreement would not be closed immediately after the
Effective Time.
4.3. Conditions Precedent to Obligation of the Company. The
obligation of the Company to effect the Merger is also subject to the
satisfaction or waiver by the Company, at or prior to the Effective Time,
of each of the following conditions:
(a) Accuracy of Representations and Warranties. All
representations and warranties of Terremark contained herein shall be true
and correct in all material respects as of the date hereof and at and as of
the Closing, with the same force and effect as though made on and as of the
Closing Date (except as to any such representation and warranty which
relates to a specific date, which shall be true and correct as of such
specific date), except with respect to any such items which do not have,
individually or in the aggregate, a Material Adverse Effect on Terremark;
and the Company shall have received a certificate signed on behalf of
Terremark by the chief executive officer or the chief financial officer of
Terremark to such effect;
(b) Performance by Terremark. Terremark shall have performed in
all material respects all obligations and agreements, and complied in all
material respects with all covenants and conditions, contained in this
Agreement to be performed or complied with by it prior to the Closing Date;
and the Company shall have received a certificate signed on behalf of
Terremark by the chief executive officer or the chief financial officer of
Terremark to such effect.
(c) Letters of Terremark Accountants. The Company shall have
received the Accountants Letters set forth in Section 3.10.
(d) Lock Up Letters. Each holder of Terremark Common Stock
immediately prior to the Effective Time ("Terremark Holder") shall have
executed a letter in form and substance reasonably satisfactory to the
Company providing that such holder shall not, except as provided below,
sell, offer to sell, pledge or otherwise dispose of any interest in the
Post Merger Common Stock for a period of not less than one (1) year after
the Effective Time; provided, however, that nothing contained herein shall
preclude (i) open market sales pursuant to Rule 144 or (ii) sales by any
Terremark Holder to Terremark, any Affiliate of Terremark or another
Terremark Holder, or to any member of the Vistagreen Group or Affiliate of
the Vistagreen Group. The term "Affiliate" as used herein shall mean any
person that directly or indirectly, through one or more intermediaries,
controls, or is controlled by, or is under common control with, such
person.
ARTICLE V
TERMINATION AND ABANDONMENT
5.1. Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned, at any time prior to the
Effective Time, whether before or after approval of the Merger by the
Company's stockholders:
(a) by mutual consent of the Board of Directors of the Company
and Terremark;
(b) by the Board of Directors of Terremark or the Company if
the Effective Time shall not have occurred by July 1, 2000 through no fault
of the terminating party;
(c) by either of the parties, if any permanent injunction,
order, decree or ruling by any governmental entity or competent
jurisdiction preventing the consummation of the Merger shall become final
and nonappealable;
(d) by the Board of Directors of Terremark or the Company if
there has been a material breach of any representation, warranty,
obligation, covenant, agreement or condition set forth in this Agreement on
the part of the other party; provided, however, that each of the Company
and Terremark shall have the right to cure any such breach within three
days of written notice of any such breach given by the other party;
(e) by the Board of Directors of Terremark or the Company if
the approval of this Agreement and the Merger by the required number of
holders of the Common Stock shall not have been obtained by reason of the
failure to obtain the required vote at a duly held meeting (including any
adjournment or postponement thereof) of the Company's stockholders or any
adjournment thereof; provided, however, that if the failure to obtain such
required vote is the result of the failure of the Company to obtain a
quorum at its meeting of stockholders, the Company will immediately call an
additional meeting if so requested by Terremark; or
(f) by the Board of Directors of Terremark or the Company if
the Board of Directors of the Company shall have withdrawn or modified its
approval or recommendation of the Merger in any manner adverse to
Terremark;
provided, however, that the right to terminate the Agreement shall not be
available to a party that has breached in any material respect its
obligations under the Agreement in any manner that shall have proximately
contributed to the failure of the Merger to be consummated.
5.2. Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 5.1 hereof by Terremark or the Company,
written notice thereof shall promptly be given to the other party
specifying the provision hereof pursuant to which such termination is made,
and this Agreement shall become void and have no effect, and there shall be
no liability hereunder on the part of Terremark or the Company, except that
Sections 3.2, 6.1 and 6.2 hereof shall survive any termination of this
Agreement. Nothing in this Section 5.2 shall relieve any party to this
Agreement of liability for breach of this Agreement.
ARTICLE VI
MISCELLANEOUS
6.1. Fees and Expenses. (a) Except as set forth in Section 6.2
below, all costs and expenses incurred in connection with this Agreement
and the consummation of the transactions contemplated hereby shall be paid
by the party incurring such costs and expenses.
6.2. Negotiations
(a) The Company and its Agents shall immediately cease any
discussions or negotiations with any parties that may be ongoing with
respect to an Acquisition Proposal (as hereinafter defined). From and after
the date hereof until the Closing, the Company shall not, nor shall it
permit any of its Agents or any investment banker, financial advisor,
attorney, accountant or other representative retained by it to, directly or
indirectly, (i) solicit, initiate or knowingly encourage (including by way
of furnishing non-public information or assistance), or knowingly take any
other action to facilitate, any inquiries or the making of any proposal
which constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal, or (ii) participate in any discussions or
negotiations regarding any Acquisition Proposal; provided, however, that
if, at any time the Board of Directors of the Company determines in good
faith, after consultation with independent legal counsel (who may be the
Company's regularly engaged independent counsel), that it may be necessary
to do so in order to comply with its fiduciary duties to the Company's
stockholders under applicable law, the Company may, in response to an
unsolicited Superior Proposal, and subject to compliance with Section
6.2(c), (x) furnish information with respect to the Company to the person
making such unsolicited Superior Proposal pursuant to a confidentiality
agreement in a form approved by the Company, and (y) participate in
discussions or negotiations regarding such Superior Proposal. For purposes
of this Agreement, "Acquisition Proposal" means any inquiry, proposal or
offer from any person relating to any direct or indirect acquisition or
purchase of 20% or more of the assets of the Company or 20% or more of any
class of equity securities of the Company, any tender offer or exchange
offer that if consummated would result in any person beneficially owning
20% or more of any class of equity securities of the Company, any merger,
consolidation, business combination, sale of all or substantially all the
assets, recapitalization, liquidation, dissolution or similar transaction
involving the Company (other than the transactions between the parties
hereto contemplated by this Agreement or ordinary course trading of the
Common Stock on the AMEX), or any other transaction the consummation of
which could reasonably be expected to impede, interfere with, prevent or
materially delay the Merger or which could reasonably be expected to
materially dilute the benefits to the Terremark shareholders of the
transactions contemplated hereby. For purposes of this Agreement, a
"Superior Proposal" means any bona fide Acquisition Proposal made by a
third party on terms which the Board of Directors of the Company determines
in its good faith judgment (after consultation with an experienced
investment banker) to be more favorable to the Company stockholders than
the terms of the Merger set forth in this Agreement.
(b) Except as set forth in this Section 6.2, neither the Board
of Directors of the Company nor any committee thereof shall (i) withdraw or
modify, or propose to withdraw or modify, in a manner adverse to Terremark,
the approval or recommendation of this Agreement or the Merger by such
Board of Directors or such committee, (ii) approve or recommend, or propose
to approve or recommend, any Acquisition Proposal, or (iii) cause the
Company to enter into any agreement with respect to any Acquisition
Proposal. Notwithstanding the foregoing, in the event that the Board of
Directors of the Company determines in good faith, after consultation with
independent legal counsel (who may be the Company's regularly engaged
independent counsel), that it may be necessary to do so in order to comply
with its fiduciary duties to the Company's stockholders under applicable
law, the Board of Directors of the Company may (subject to the other
provisions of this Article VI) withdraw or modify its approval or
recommendation of this Agreement and the Merger, approve or recommend a
Superior Proposal, cause the Company to enter into an agreement with
respect to a Superior Proposal or terminate this Agreement, but in each
case only at a time that is after the fifth business day following
Terremark's receipt of written notice (a "Notice of Superior Proposal")
advising Terremark that the Board of Directors of the Company has received
a Superior Proposal, specifying the material terms and conditions of such
Superior Proposal and identifying the person making such Superior Proposal.
Upon receiving the Notice of Superior Proposal, Terremark shall have the
opportunity to amend this Agreement. If after such amendment, the Board of
Directors of the Company still determines in good faith that the
Acquisition Proposal constitutes a Superior Proposal, the Board may then
(1) withdraw or modify, or propose to withdraw or modify, in a manner
adverse to Terremark, the approval or recommendation of this Agreement or
the Merger by such Board of Directors or such committee, (2) approve or
recommend, or propose to approve or recommend, any Acquisition Proposal, or
(3) cause the Company to enter into any agreement with respect to any
Acquisition Proposal; provided, however, that in doing so, the Company
shall concurrently pay, or cause to be paid, to Terremark the fees set
forth below in this Section 6.2.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 6.2, the Company shall promptly
advise Terremark orally and in writing of any request for information or of
any Acquisition Proposal, the material terms and the financial
consideration in respect of such request or Acquisition Proposal and the
identity of the person making such request or Acquisition Proposal.
(d) Nothing contained in this Section 6.2 shall prohibit the
Company from taking and disclosing to its stockholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act or from
making any disclosure to the Company's stockholders if, in the good faith
judgment of the Board of Directors of the Company, after consultation with
independent legal counsel (who may be the Company's regularly engaged
independent counsel), failure so to disclose would be inconsistent with its
fiduciary duties to the Company's stockholders under applicable law.
(e) The Company acknowledges that Terremark, in proceeding with
the transactions contemplated herein, has foregone the opportunity to
consummate a transaction in which it would have earned a commission in the
amount of $3.0 million (the "Foregone Commission").
(f) In the event the Company terminates this Agreement pursuant
to Section 5.1(f), or Terremark terminates pursuant to Sections 5.1(d) or
5.1(f), the Company shall pay Terremark (A) all fees and expenses incurred
by Terremark in connection with the transactions contemplated hereby, up to
a limit of $200,000 and (B) an amount equal to the Foregone Commission, all
within three (3) days of any such termination. In the event the Company
executes a definitive agreement pursuant to a Superior Proposal within
twelve (12) months after the termination of this Agreement pursuant to the
first sentence of this Section 6.2(f), the Company shall, in addition to
the applicable amounts set forth in the preceding sentence, also pay to
Terremark an amount equal to 25% of the difference between (x) the
valuation of the Company used to formulate the Superior Proposal and (y)
the valuation of the Company used to formulate the transaction pursuant to
this Agreement. The foregoing amount shall be due and owing to Terremark
regardless of whether the transactions contemplated by the Superior
Proposal are ultimately consummated by the Company.
(g) The provisions of this Section 6.2 will survive the
termination of this Agreement prior to the Closing.
6.3. Survival of Representations and Warranties. The respective
representations and warranties of the Company and Terremark contained
herein or in any certificates or other documents delivered prior to or at
the Closing shall not be deemed waived or otherwise affected by any
investigation made by any party. Each and every such representation and
warranty shall expire with, and be terminated and extinguished by, the
Closing and thereafter neither of the Company nor Terremark shall be under
any liability whatsoever with respect to any such representation or
warranty. This Section 6.3 shall have no effect upon any other obligation
of the parties hereto, whether to be performed before or after the
Effective Time.
6.4. Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken by or on behalf of the respective Boards of
Directors of the Company or Terremark, may (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 by any other applicable party or in any document,
certificate or writing delivered pursuant hereto by any other applicable
party or (iii) waive compliance with any of the agreements or conditions
contained herein. Any agreement on the part of any party to any such
extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
6.5. Public Announcements. Terremark and the Company will consult
with each other before issuing any press release or making any public
statement with respect to this Agreement and the transactions contemplated
hereby and shall not issue any press release or make any public statement
without the prior consent of the other party, which consent shall not be
unreasonably withheld. Notwithstanding the foregoing, any such press
release or public statement as may be required by applicable law or any
listing agreement with any national securities exchange may be issued (a)
prior to such consultation, if the party making the release or statement
has, in light of the applicable timing, used its reasonable efforts to
consult with the other party and (b) without the consent of the other
party.
6.6. Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall
be in writing and shall be deemed to have been duly given if delivered in
person or mailed, certified or registered mail with postage prepaid, or
sent by telecopier, as follows:
(a) if to the Company, to it at:
AMTEC, INC.
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Facsimile Number: (000) 000-0000
Attention: Xxxxx-Xxxxx Xxxx
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, Esq.
(b) if to Terremark, to it at:
Terremark Holdings Inc.
c/o Terremark Group, Inc.
0000 X. Xxxxxxxx Xxxxx, XX-0X
Xxxxxxx Xxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx, Esq.
with a copy to:
Xxxxxxxxx Traurig, P.A.
0000 Xxxxxxxx Xxxxxx
Xxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxxxxx, Esq.
or to such other Person or address as any party shall specify by notice in
writing to each of the other parties. All such notices, requests, demands,
waivers and communications shall be deemed to have been received on the
date of delivery unless if mailed, in which case on the third business day
after the mailing thereof except for a notice of a change of address, which
shall be effective only upon receipt thereof.
6.7. Entire Agreement; Severability. This Agreement and the annex,
schedules and other documents referred to herein or delivered pursuant
hereto, and the Promissory Note and Security Agreement executed by the
Company in favor of Terremark collectively contain the entire understanding
of the parties hereto with respect to the subject matter contained herein
and supersede all prior agreements and understandings, oral and written,
with respect thereto, including the letter of intent dated November 9, 1999
previously entered into by the parties. In the event that any provision
hereof would, under applicable law, be invalid or unenforceable in any
respect (a) if such provision is enforceable in part, such provision shall
be enforced to the maximum extent permissible under applicable law, and (b)
the invalidity or unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect, provided, however,
that if enforcement of the Agreement without giving effect to an invalid or
unenforceable provision would deny either party the benefit of the
transaction contemplated hereby, then the Agreement as a whole will
terminate.
6.8. Binding Effect; Benefit; Assignment. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by
any of the parties hereto without the prior written consent of the other
parties. Nothing in this Agreement, expressed or implied, is intended to
confer on any Person other than the parties hereto or their respective
successors and permitted assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
6.9. Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified and supplemented in writing by the
parties hereto in any and all respects before the Effective Time
(notwithstanding any stockholder approval), by action taken by the
respective Boards of Directors of Terremark and the Company or by the
respective officers authorized by such Boards of Directors, provided,
however, that after any such stockholder approval, no amendment shall be
made which by law requires further approval by such stockholders without
such further approval.
6.10. Further Actions. Each of the parties hereto agrees that,
subject to its legal obligations, it will use its best efforts to fulfill
all conditions precedent specified herein, to the extent that such
conditions are within its control, and to do all things reasonably
necessary to consummate the transactions contemplated hereby.
6.11. Interpretation; Headings. Any matter required to be disclosed
in any Schedule which was not disclosed therein shall be deemed to have
been disclosed in the correct Schedule to the extent such matter was
reasonably specifically cross-referenced to another Schedule containing
such disclosure. The parties agree that certain agreements and other
matters may be listed in a Schedule for informational purposes only,
notwithstanding that, because they do not rise to the applicable
materiality thresholds or otherwise, they are not required to be listed
therein by the terms of this Agreement. In no event shall the listing of
any such Contract or the inclusion of any other matter in any Schedule be
deemed or interpreted to broaden or otherwise amplify the representations
and warranties or covenants contained in this Agreement. Furthermore, the
disclosure of any particular item or items of information in any Schedule
shall not be taken as an admission that such disclosure is required to be
made under the terms of any such representations and warranties (including
any admission that any such items establish the required level of
materiality). The descriptive headings of the several Articles and Sections
of this Agreement are inserted for convenience only, do not constitute a
part of this Agreement and shall not affect in any way the meaning or
interpretation of this Agreement.
6.12. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, and all of
which together shall be deemed to be one and the same instrument.
6.13. Applicable Law. This Agreement and the legal relations
between the parties hereto shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard
to the conflict of laws rules thereof.
6.14. Severability. If any term, provision, covenant or restriction
contained in this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable or against its
regulatory policy, the remainder of the terms, provisions, covenants and
restrictions contained in this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
6.15. "Person" Defined. "Person" shall mean and include an
individual, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization, a group and a government or other department
or agency thereof.
IN WITNESS WHEREOF, each of Terremark and the Company have caused
this Agreement to be executed by their respective officers thereunto duly
authorized, all as of the date first above written.
TERREMARK HOLDINGS, INC.
/s/ Xxxxxx X. Xxxxxx
Chairman & Chief Executive Officer
AMTEC, INC.
/s/ Xxxxxx X. Xxxxxx, Xx.
Chairman & Chief Executive Officer
AMENDMENT TO AGREEMENT AND PLAN OF MERGER
THIS ADMENDMENT TO AGREEMENT AND PLAN OF MERGER is dated as of February 11,
2000 ("Amendment"), and is made by and between Terremark Holdings, Inc. a
Florida Corporation ("Terremark'), and AmTec, Inc., a Delaware corporation
("AmTec").
WHEREAS, the parties entered into that certain Agreement and Plan of
merger dated as of November 24, 1999 (the "Merger Agreement"); and
WHEREAS, the parties desire to hereby amend the Merger Agreement, as
set forth herein, effective as of the date forth set forth above.
NOW THEREFORE, for good and valuable consideration, the parties
hereto agree as follows (all capitalization terms not herein defined shall
have the meaning set forth in the Merger Agreement):
1. Terremark and AmTec have determined to prepare and submit to
the stockholders of AmTec a proxy statement and to delay the
filing of a registration statement (which shall be made on a
Form S-3 or similar form) with the SEC relating to the share
to be issued in the Merger Agreement and to be sold pursuant
to the Stock Purchase Agreement until the Effective Time.
All references to the Form S-4, and all obligations,
representations, warranties and references thereto are deemed
to be eliminated from the Merger Agreement.
2. Section 1.6 is revised and restated in its entirety to read
as follows:
1.6 Certificate of Incorporation of the Surviving Corporation.
The Certificate of Incorporation of the Company, as in effect
immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation; provided, however, that
the name of the Surviving Corporation shall be Terremark Worldwide,
Inc. and that the total number of shares of capital stock that the
Company is authorized to issue is 300,000,000 shares of common stock.
3. The following section is added as a new Section 2.2(w):
Investment Intent. Terremark represents and warrants that, to its
knowledge, the holders of Terremark Common Stock (i) are taking the
Post Merger Common Stock issued to them for investment purposes and
not with a view to distribution thereof, and that they (ii) agree not
to make any sale, transfer or other disposition of the Post Merger
Common Stock in violation of any applicable securities law.
4. Section 4.2 (c) is revised and restated in its entirety to
read as follows:
Tax Opinion Letter. Terremark shall have received the option of
counsel reasonably satisfactory to Terremark in form and substance
reasonably satisfactory to Terremark, on the basis of customary
representations and assumptions set forth in or attached to such
opinion, dated the Effective Time, to the effect that (i) the Merger
will be treated for federal income tax purposes as a reorganization
qualifying under the provisions of Section 368(a) of the code, (ii)
each of the Company and Terremark will be a party to the
reorganization within the meaning of Section 368(a) of the Code
368(b) of the Code, (iii) a Terremark shareholder that is a United
States person within the meaning of Section 7701(a)(30) of the Code
(a "U.S. Terremark Shareholder") will not recognize gain or loss on
the receipt of Post Merger Common Stock in exchange for Terremark
Common Stock pursuant to the Merger, except with respect to any cash
received in lieu of a fractional share, (iv) the adjusted tax basis
of the Post Merger Common Stock that a U.S. Terremark Shareholder
receives pursuant to the Merger will be equal to the adjusted tax
basis of the Terremark Common Stock exchanged therefor, reduced by
the amount of any basis allocable to any fractional share, and (v)
the holding period of Post Merger Common Stock that a U.S. Terremark
shareholder receives pursuant to the Merger will include the holding
period of the Terremark common Stock exchanged therefor (provided
that Terremark Common Stock is held as a capital asset at the
Effective Time.) In rendering its opinion, counsel shall be entitled
to rely upon customary representations of officers of the Company and
Terremark reasonably requested by counsel;
5. Section 4.3(d) is revised and restated in its entirety to
read as follows:
Lock Up Letters. Each holder of Terremark Common Stock immediately
prior to the Effective Time ("Terremark Holder") shall have executed
a letter in form and substance reasonably satisfactory to the Company
providing that such holder shall not, except as provided below, sell
offer to sell or otherwise dispose of any interest in the Post Merger
Common Stock for a period of not less that one year after the
Effective Time; provided, however, that nothing contained herein
shall preclude (i) open market sales in an amount which would be
permitted under that volume limitations of Rule 145, as if such rule
were applicable, or (ii) sales by any Terremark Holder to Terremark,
any Affiliate of Terremark or another Terremark Holder, or to any
member of the Vistagreen Group of Affiliate of the Vistagreen Group.
The term "Affiliate" as used herein shall mean any person that
directly or indirectly, through one or more intermediaries, controls,
or is controlled by, or is under common control with, such person.
6. The following section is added as a new Section 4.3(e):
Stock Purchase Agreement. The Stock Purchase Agreement shall be in
full force and effect, with all conditions precedent thereto (other
than the consummation of this Agreement) having been satisfied, all
representations and warranties of this Agreement) having been
satisfied, all representations and warranties of Vistagreen true and
correct and with the parties hereto having no reasonable basis to
believe that the transactions contemplated in the Stock Purchase
Agreement would not be closed immediately after the Effective Time.
7. The following section is added as a new Section 3.13:
Stock Option Grants. The parties agree to take all actions necessary
or appropriate to cause the Company or the Surviving Corporation, as
appropriate, to approve the grant of a total of up to 750,000 stock
options to purchase Post Merger Common Stock under the Company's
Amended and Restated 1996 Stock Option Plan (the "Plan") to such
individuals as shall be designated by Terremark. Such grants shall be
made as of the Closing Date, and shall be made in accordance with the
following terms: (a) the options shall be granted with an exercise
price equal to the Fair Market Value of Common Stock as defined in
the Plan (i.e. the closing sales price of the shares on the date of
grant on the American Stock Exchange), (b) the options shall vest
over a three year period (i.e. at the rate of 1/3 on each anniversary
of the date of grant), except as otherwise set forth herein, (c) in
the event of a Change in Control of the Surviving Corporation (as
defined in the Plan) the options shall expire in a ten (10) year
period.
8. Each of the parties hereto agrees that it will use its commercially
reasonable best efforts to do all things reasonably necessary to
consummate the transactions contemplated hereby.
9. This Amendment may be executed in several counterparts, each of which
shall be deemed to be an original, and all of which together shall be
deemed to be one and the same instrument.
10. This Amendment and the legal relations between the parties hereto
shall be goverened by and constructed in accordance with the laws of
the State of Delaware, without regard to the conflict of the laws
rules thereof.
11. Except as specifically amended by the Amendment, all terms and
conditions of the Merger Agreement shall remain unchanged and in full
force and effect.
12. The parties hereby acknowledge and consent to the amendment
as of the date hereof to that certain Stock Purchase
Agreement by and between Vistagreen Holdings (Bahamas), Ltd.,
a Bahamian international business company and AmTec, Inc., a
Delaware Corporation dated as of November 24, 1999.
IN WITNESS WHEREOF, each of Terremark and AmTec have caused this
Amendment to Agreement and Plan of Merger to be executed by their
respective offices thereunto duly authorized, all as of the date first
above written.
TERREMARK HOLDINGS, INC.
/s/ Xxxxx X. Xxxxxxxx
Executive Vice-President
AMTEC, INC.
/s/ Xxxxxx X. Xxxxxx, Xx.
Chairman & Chief Executive Officer
