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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
December 3, 1997
SmarTalk TeleServices, Inc.
(Exact name of Registrant as specified in its charter)
California
(State or jurisdiction of incorporation)
0-21579 95-4502740
(Commission File Number) (IRS Employer Identification No.)
1640 South Sepulveda Boulevard, Suite 500, Los Angeles, CA 90025
(Address of principal executive offices) (Zip Code)
(310) 444-8800
(Registrant's Telephone Number)
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ITEM 5. OTHER EVENTS
SmarTalk TeleServices, Inc., a California corporation ("SmarTalk"), is
party to an Agreement and Plan of Reorganization and Merger by and among
SmarTalk, SMTK Acquisition Corp. II, a Delaware corporation and ConQuest
Telecommunication Services Corp., a Delaware corporation ("ConQuest"), dated as
of July 30, 1997 (the "Merger Agreement"). In order to provide for a more
orderly transition, SmarTalk and ConQuest executed an Interim Operating
Agreement effective as of December 3, 1997 (the "Operating Agreement"). Pursuant
to the Operating Agreement, operational control of ConQuest passed to SmarTalk
as of December 3, 1997. Among other provisions contained in the Operating
Agreement, SmarTalk and ConQuest agreed to waive certain conditions contained in
the Merger Agreement and agreed to a new composition of the ConQuest Board of
Directors.
On December 9, 1997, SmarTalk closed the previously announced
acquisition of selected assets of the prepaid phone card business of Frontier
Corporation, a New York corporation.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) EXHIBITS
99.1 Interim Operating Agreement by and between SmarTalk
TeleServices, Inc. and ConQuest Telecommunication
Services Corp., effective as of December 3, 1997.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SMARTALK TELESERVICES, INC.
(Registrant)
By /s/ ERICH L. SPANGENBERG
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Erich L. Spangenberg
Vice Chairman of the Board and
Chief Operating Officer
Date: December 23, 1997
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Number Subject Matter
- ------ --------------
<S> <C>
99.1 Interim Operating Agreement by and between SmarTalk TeleServices,
Inc. and ConQuest Telecommunication Services Corp., effective as
of December 3, 1997.
</TABLE>
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Exhibit 99.1
INTERIM OPERATING AGREEMENT
This Interim Operating Agreement (the "Agreement"), effective as of
December 3, 1997 (the "Interim Operations Date"), is made by and between
SmarTalk TeleServices, Inc. ("SmarTalk") and ConQuest Telecommunication
Services Corp. ("ConQuest").
WHEREAS, SmarTalk, SMTK Acquisition Corp. II ("SMTK Sub") and ConQuest
are parties to that certain Agreement and Plan of Reorganization and Merger,
dated as of July 30, 1997 ("Merger Agreement"), pursuant to which, among other
things, SMTK Sub will be merged (the "Merger") with and into ConQuest, with
ConQuest thereafter becoming a wholly-owned subsidiary of SmarTalk;
WHEREAS, SmarTalk and ConQuest each has scheduled a meeting of its
stockholders on December 31, 1997 for the purpose of approving the Merger,
immediately following which the Merger will become effective under Delaware law
(the "Effective Time"); and
WHEREAS, in order to provide for a more orderly transition, the parties
hereto wish to enter into this Agreement, pursuant to which, among other
things, operational control of ConQuest will immediately pass to SmarTalk
notwithstanding that the legal consummation of the Merger and the physical
exchange of the Merger consideration will not occur until the Effective Time;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements contained herein, the parties hereto
agree as follows:
Section 1. Waiver of Certain Conditions to the Merger. (a) SmarTalk
hereby irrevocably waives (i) all of the conditions to the Closing (as defined
in the Merger Agreement) set forth in Article 7 of the Merger Agreement, (ii)
any right to terminate the Merger Agreement pursuant to Sections 10.2 and 10.4
of the Merger Agreement, (iii) any claims, actions, defenses or rights, known
or unknown, existing or future, which it may have to rescind the foregoing
waiver or to otherwise terminate, fail to close under or rescind the Merger
Agreement and (iv) all of the deliveries contemplated by Section 9.1 of the
Merger Agreement.
(b) ConQuest hereby irrevocably waives (i) all of the conditions to the
Closing set forth in Article 8 of the Merger Agreement, other than the
conditions set forth in Sections 8.3(a), 8.6 and 8.9 of the Merger Agreement,
(ii) any right to terminate the Merger Agreement pursuant to Sections 10.2,
10.3(d) and 10.3(e) of the Merger Agreement, (iii) any claims, actions, defenses
or rights, known or unknown, existing or future, which it may have to rescind
the foregoing waiver or to otherwise terminate, fail to close under or rescind
the Merger Agreement (except for those rights to terminate the Merger Agreement
contained in Sections 10.3(a), (b) and (c) of the Merger Agreement) and (iv) all
of the deliveries contemplated by Section 9.2 of the Merger Agreement (except
that at the Closing, SmarTalk shall deliver to ConQuest a certificate, dated the
date of the Closing and signed by the President or a Vice President in his
corporate capacity, stating that each of the conditions set forth in Sections
8.3(a), 8.6 and 8.9 of the Merger Agreement has been satisfied).
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Section 2. Profits and Losses; Expenses. (a) Effective as of the
Interim Operations Date, all revenues, income, earnings or profits
(collectively, "Income") shall inure to the benefit of SmarTalk, which at its
option, may require ConQuest to pay over to SmarTalk or its designee, the
amount of such Income.
(b) Effective as of the Interim Operations Date, all costs, expenses,
losses and liabilities of ConQuest (collectively, "Expenses") shall be assumed
and guaranteed by SmarTalk.
Section 3. Closing Date. The parties hereby agree that, subject to the
provisions of Section 1(b) hereof, the Closing Date (as defined in the Merger
Agreement) shall be December 31, 1997 and further agree to use all reasonable
efforts to ensure that the Effective Time (as defined in the Merger Agreement)
shall be December 31, 1997, including promptly executing and filing with the
Secretary of State of the State of Delaware a certificate of merger.
Section 4. Board of Directors. Immediately upon execution of this
Agreement, ConQuest shall cause its board of directors to be comprised of six
directors: Robert H. Lorsch ("Lorsch"), Erich L. Spangenberg ("Spangenberg"),
David A. Hamburger (together with Lorsch and Spangenberg, the "SmarTalk
Directors"), James A. Sobwick ("Sobwick"), Peter Halliday ("Halliday") and D.
Mark Thomas ("Thomas"). In the event of a tie vote, the deadlock shall be
broken in a manner determined by a majority of the Continuing Directors (as
defined below) then in office. In the event that any or all of Sobwick,
Halliday or Thomas shall cease to be a member of the board of directors, the
SmarTalk Directors shall take all actions to elect the following persons (in
the order in which listed) to fill the vacancy or vacancies so created: (1)
Harold Erbs, (2) Patrick Hart and (3) Dennis Geraghty (the "Alternate
Designees"). In the event that Robert H. Lorsch, Erich L. Spangenberg and David
A. Hamburger cease to be directors of ConQuest, at the election of the
Continuing Directors, this Agreement shall cease to be of any further force or
effect, except for the provisions of Section 1 hereof, which shall survive
termination.
Section 5. Merger Agreement. The Merger Agreement may not be amended
without the unanimous agreement of the Continuing Directors then in office. As
used in this Agreement, "Continuing Directors" means, to the extent then in
office, Sobwick, Halliday, Thomas and any Alternate Designee, or another
director who is subsequently elected to the board of directors and designated
as a Continuing Director by a majority of the Continuing Directors then in
office, or, if there shall be no Continuing Director then in office, by the
holders of a majority of the outstanding common stock of ConQuest.
Section 6. Continuing Effect. Except as expressly provided for herein,
the provision of the Merger Agreement, including without limitation the
provisions of Article 6 thereof, shall remain in full force and effect.
IN WITNESS WHEREOF, SmarTalk and ConQuest have caused this Agreement to
be executed by their duly authorized officers, respectively, on December 15,
1997 but effective as of the Interim Operating date.
SMARTALK TELESERVICES, INC.
By /s/ Erich L. Spangenberg
-----------------------------------
Title Vice Chairman of the Board and
Chief Operating Officer
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CONQUEST TELECOMMUNICATION
By /s/ James E. Sobwick
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Title President and Chief
Executive Officer
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