<PAGE>
FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) November 19, 1999
Advanced Communications Group, Inc.
-----------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 001-13875 76-0549396
---------------------------- ------------------------ --------------------
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
390 S. Woodsmill Road, Suite 150, St. Louis, Missouri 63017
- ------------------------------------------------------ --------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 205-8668
---------------
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(Former name or former address, if changed since last report.)
<PAGE>
ITEM 2. DISPOSITION OF ASSETS
On November 19, 1999 Advanced Communications Group, Inc. ("Advanced
Communications") closed the sale of its telecommunications operations.
Advanced Communications sold, in a stock sale, its four wholly owned
subsidiaries which provided telecommunication services to Ionex
Telecommunications, Inc., formerly known as Compass Telecommunications, Inc.
Those four wholly owned subsidiaries were Feist Long Distance, Inc.,
FirsTel, Inc., Telecom Resources, Inc., and Valu-Line of Longview, Inc. In
addition, prior to the sale of the wholly owned subsidiaries, Advanced
Communications transferred its telecommunications operations related assets
and liabilities to those subsidiaries. Also on November 19, 1999, but prior
to the closing, Advanced Communications executed a First Amendment to the
Stock Purchase Agreement entered into between it, its telecommunication
subsidiaries, and Ionex. The First Amendment, among other things, addressed
issues which arose since the signing of the Stock Purchase Agreement and
permitted the waiving of certain closing conditions. Advanced Communications
received cash consideration in the amount of $49.8 million less preliminary
working capital, closing plant, property and equipment and other adjustments,
in the amount of $7.2 million, or approximately $42.6 million.
During the period of time between approximately September 1, 1999
and the closing Advanced Communications received consulting services from
Ionex.
ITEM 5. OTHER EVENTS.
ACTIVITIES IN CONNECTION WITH IMPLEMENTATION OF CHANGE IN BUSINESS
FOCUS, STRATEGY, AND DIRECTION
Furthering Advanced Communications' previously announced plans
to change its business focus, strategy and direction to concentrate on
creating an integrated network of print and Internet directories to
take advantage of the convergence of these advertising mediums,
Advanced Communications entered into amended and restated definitive
agreements for the acquisition of the outstanding capital stock of
YPtel Corporation, Web YP, Inc. (d/b/a WorldPages.com), and a website
production company, Big Stuff, Inc. In connection with these
acquisitions, Advanced Communications would issue 19,545,455 shares of
its common stock plus approximately 3.93 million additional shares in
connection with the redemption of indebtedness owed by Advanced
Communications and the conversion of indebtedness of Web YP and
Big Stuff into Advanced Communications common stock. Upon closing of
these acquisitions, which is contingent upon regulatory and shareholder
approvals, Advanced Communications will be re-named "WorldPages.com,
Inc." and it anticipates that its stock will continue to be traded on
the New York Stock Exchange under a new symbol.
Advanced Communications is currently concentrating on the
activities required to obtain stockholder approval as well as the
activities and documentation required to complete the acquisitions of
YPtel, Web YP and Big Stuff. Upon obtaining stockholder approval
Advanced Communications anticipates that the acquisitions will be
closed in the first quarter of 2000.
PRESS RELEASES
2
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Advanced Communications has issued eight news releases since July
26, 1999 concerning the following subjects: (a) completion of the Company's
switch installation in Wichita, Kansas, dated August 2, 1999; (b) announcement
of the Company's second quarter results, dated August 5, 1999; (c) receipt of
approval from the Federal Trade Commission and the U.S. Department of Justice
for the Company's sale of its telecommunications operations, dated August 25,
1999; (d) the Company's revised definitive agreements for the proposed
acquisitions of the outstanding stock of YPtel Company and changes to the
Company's Board of Directors, dated October 27, 1999; (e) receipt of approval
from the Federal Trade Commission and the U.S. Department of Justice in
connection with the proposed issuance of shares to the Company's chairman and
four others for conversion of debt, dated November 3, 1999; (f) announcement
of the Company's third quarter results, dated November 12, 1999; (g) receipt
of the final state regulatory approval needed to close the proposed sale of
the telecommunication operations, dated November 19, 1999; and (h)
announcement of the closing of the sale of the telecommunication operations,
dated November 22, 1999.
These news releases are filed as Exhibits 99(a) -(h) hereto and are
incorporated into this Item 5 by reference as fully and as completely as if set
forth in their entirety in this Item 5.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits
2 Plan of Acquisition, Reorganization, Arrangement, Liquidation
or Succession
(a) First Amendment dated November 19, 1999 to the Stock
Purchase Agreement by and among Advanced
Communications Group, Inc., Ionex Telecommunications,
Inc. formerly known as Compass Telecommunications,
Inc., Feist Long Distance Service, Inc., FirsTel,
Inc., Telecom Resources, Inc. and Valu-Line of
Longview, Inc., dated July 14, 1999.
(b) Amended and Restated YPtel Agreement made and entered
into as of October 26, 1999 by and among Advanced
Communications Group, Inc., YPtel Corporation, the
shareholders of YPtel listed on Exhibit "A" attached
thereto, Edward Truant, Douglas G. McIntyre, Jeffrey
L. Rosenthal, Stephen D. Lister, the J.L.R. Family
Trust, the Paisley Family Trust, Cold Trust, Global
Investment Trust, Freezer Trust, Storage Trust,
Directory Trust, Publisher Trust, and Imperial
Capital Limited.
(c) Amended and Restated Web YP Agreement made and
entered into as of October 26, 1999 by and among
3
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Advanced Communications Group, Inc., ACG Acquisition
VI Corp., Web YP, Inc., Richard O'Neal, and Richard
L. Reid.
(c) Amended and restated Big Stuff agreement made and
entered into as October 26, 1999 by and among
Advanced Communications Group, Inc., ACG Acquisition
VII Corp., Big Stuff, Inc., Richard O'Neal, and
Richard L. Reid.
99 Additional Exhibits
(a) Press Release issued by Advanced Communications
Group, Inc. dated August 2, 1999 announcing
completion of the Company's switch installation in
Wichita, Kansas.
(b) Press Release issued by Advanced Communications
Group, Inc. dated August 5, 1999 announcing the
Company's second quarter results.
(c) Press Release issued by Advanced Communications
Group, Inc. dated August 25, 1999 announcing approval
of the Federal Trade Commission and the U.S.
Department of Justice for the Company's sale of its
telecommunications operations.
(d) Press Release issued by Advanced Communications
Group, Inc. dated October 27, 1999 concerning the
Company's revised definitive agreement for the
proposed acquisition of the outstanding stock of
YPtel Corporation and changes to the Company's Board
of Directors.
(e) Press Release issued by Advanced Communications
Group, Inc. dated November 3, 1999 announcing receipt
of approval from the Federal Trade Commission and the
U.S. Department of Justice in connection with the
proposed issuance of shares to the Company's chairman
and four others for conversion of debt.
(f) Press Release issued by Advanced Communications
Group, Inc. dated November 12, 1999 announcing of the
Company's third quarter results.
(g) Press Release issued by Advanced Communications
Group, Inc. dated November 19, 1999 announcing
receipt of the final state regulatory approval needed
to close the proposed sale of the telecommunication
operations.
4
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(h) Press Release issued by Advanced Communications
Group, Inc. dated November 22, 1999 announcing the
closing of the sale of the telecommunication
operations.
5
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SIGNATURES
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 hereunto duly authorized.
ADVANCED COMMUNICATIONS GROUP, INC.
By: /s/ Michael A. Pruss
---------------------------
Michael A. Pruss
Chief Financial Officer
Date: December 6, 1999
6
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EXHIBIT INDEX
These Exhibits are numbered in accordance with the Exhibit Table of
Item 601 of Regulation S-K:
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
1 Omitted - Inapplicable.
2 (a) First Amendment to the Stock Purchase Agreement by and
among Advanced Communications Group, Inc., Ionex
Telecommunications, Inc. (formerly known as Compass
Telecommunications, Inc.), Feist Long Distance Service,
Inc., FirsTel, Inc., Telecom Resources, Inc. and
Valu-Line of Longview, Inc., dated July 14, 1999.
(b) Amended and Restated YPtel Agreement made and
entered into as of October 26, 1999 by and among
Advanced Communications Group, Inc., YPtel
Corporation, the shareholders of YPtel listed on
Exhibit "A" attached thereto, Edward Truant, Douglas
G. McIntyre, Jeffrey L. Rosenthal, Stephen D.
Lister, the J.L.R. Family Trust, the Paisley Family
Trust, Cold Trust, Global Investment Trust, Freezer
Trust, Storage Trust, Directory Trust, Publisher
Trust, and Imperial Capital Limited.
(c) Amended and Restated Web YP Agreement made and
entered into as of October 26, 1999 by and among
Advanced Communications Group, Inc., ACG Acquisition
VI Corp., Web YP, Inc., Richard O'Neal, and Richard
L. Reid.
(d) Amended and Restated Big Stuff Agreement made and
entered into as October 26, 1999 by and among
Advanced Communications Group, Inc., ACG Acquisition
VII Corp., Big Stuff, Inc., Richard O'Neal, and
Richard L. Reid.
4 Omitted - Inapplicable.
16 Omitted - Inapplicable.
17 Omitted - Inapplicable.
20 Omitted - Inapplicable.
23 Omitted - Inapplicable.
24 Omitted - Inapplicable.
27 Omitted - Inapplicable.
99 (a) Press Release issued by Advanced Communications Group,
Inc. dated August 2, 1999 announcing completion of the
Company's switch installation in Wichita Kansas.
(b) Press Release issued by Advanced Communications Group, Inc.
dated August 5, 1999 announcing the Company's second
quarter results.
(c) Press Release issued by Advanced Communications
Group, Inc. dated August 25, 1999 announcing
approval of the Federal Trade Commission and the
U.S. Department of Justice for the Company's sale of
its telecommunications operations.
7
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(d) Press Release issued by Advanced Communications
Group, Inc. dated October 27, 1999 concerning the
Company's revised definitive agreement for the
proposed acquisition of the outstanding stock of
YPtel Company and changes to the Company's Board of
Directors.
(e) Press Release issued by Advanced Communications
Group, Inc. dated November 3, 1999 announcing
receipt of approval from the Federal Trade
Commission and the U.S. Department of Justice in
connection with the proposed issuance of shares to
the Company's chairman and four others for
conversion of debt.
(f) Press Release issued by Advanced Communications
Group, Inc. dated November 12, 1999 announcing of
the Company's third quarter results.
(g) Press Release issued by Advanced Communications
Group, Inc. dated November 19, 1999 announcing
receipt of the final state regulatory approval
needed to close the proposed sale of the
telecommunication operations.
(h) Press Release issued by Advanced Communications
Group, Inc. dated November 22, 1999 announcing the
closing of the sale of the telecommunication
operations.
</TABLE>
8
<PAGE>
FIRST AMENDMENT
TO THE STOCK PURCHASE AGREEMENT
AMONG
IONEX TELECOMMUNICATIONS, INC.
ADVANCED COMMUNICATIONS GROUP, INC.,
FEIST LONG DISTANCE SERVICE, INC.,
FIRSTEL, INC.,
TELECOM RESOURCES, INC.
AND
VALU-LINE OF LONGVIEW, INC.
Dated as of November 19, 1999
<PAGE>
FIRST AMENDMENT
TO THE STOCK PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO THE STOCK PURCHASE AGREEMENT (the "Amendment")
made as of November 19, 1999 among IONEX TELECOMMUNICATIONS, INC., a Delaware
corporation (formerly named Compass Telecommunications, Inc.) ("Buyer"), and
FEIST LONG DISTANCE SERVICE, INC., a Kansas corporation, FIRSTEL, INC., a South
Dakota corporation, TELECOM RESOURCES, INC., a Texas corporation, VALU-LINE OF
LONGVIEW, INC., a Texas corporation, and ADVANCED COMMUNICATIONS GROUP, INC., a
Delaware corporation (the "Seller"), amends the Stock Purchase Agreement dated
as of July 14, 1999 among the parties referenced above (the "Stock Purchase
Agreement"; and as amended hereby, the "Agreement").
P R E A M B L E:
WHEREAS, the parties wish to amend the Stock Purchase Agreement to
enable the parties to close the transactions contemplated therein and to address
related and additional issues arising since the execution of the Stock Purchase
Agreement; and
WHEREAS, all capitalized terms not otherwise defined herein have the
meanings ascribed to them in the Stock Purchase Agreement.
NOW, THEREFORE, in consideration of the premises, the mutual
representations, warranties, covenants and agreements herein contained, and
other consideration, the receipt and sufficiency of which is acknowledged, the
parties hereby agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF SELLER
The Stock Purchase Agreement is hereby amended by inserting a new
Section 3.31, as follows:
3.31 DELAWARE OPINION LETTER. The recitation of facts set forth in the
opinion of Morris, Nichols, Arsht & Tunnell, as described in Section 8.2(m)
hereof, and upon which their opinion is based does not contain any untrue
statement of material fact or omit to state a material fact necessary to make
the statements contained therein not misleading.
2. INDEMNIFICATION
(a) The Stock Purchase Agreement is hereby further amended by
replacing Section 10.2 in its entirety with the following:
10.2 LIMITS ON INDEMNIFICATION. The parties hereto agree that any
indemnification payments to be made pursuant to this Agreement by Seller on the
one hand or Buyer on the other hand (except pursuant to Section 10.3(a), with
respect to the representations and warranties contained in Sections 3.12, 3.20,
3.22 and 3.23 (but only with respect to the Helmsman Publications, Inc. v.
Telecom Resources, Inc. litigation and
<PAGE>
the Gerald Morris and Lori Morris litigation set forth on Schedule 3.23), or
Sections 10.3(b), 10.3(c), 10.3(d), 10.3(f), 10.3(k), 10.3(l), 10.3(m) and
10.3(n) or 10.4(b)) shall be subject to the requirement that no claim may be
made until the aggregate amount of indemnifiable Losses incurred by Seller on
the one hand or Buyer on the other hand exceeds $75,000.00, at which time
such claim for indemnification may be made for the aggregate amount of all
indemnifiable Losses exceeding $75,000.00. Seller's indemnification
obligation under Section 10.3(c) shall be limited in total to One Hundred
Fifty Thousand and No/100s dollars ($150,000.00).
(b) The Stock Purchase Agreement is hereby further amended by
replacing the period at the end of Section 10.3(k) thereof with a
semi-colon and the word "or" and by inserting the following at the end
of Section 10.3:
(l) resulting from the dispute between Valu-Line and MCI/WorldCom
concerning amounts purportedly owed one another prior to and
as of the Closing Date and which arise out of the contract,
dated as of August of 1996, entered into by and between
Valu-Line and MCI Communications Corporation, as amended; or
(m) the failure of Seller to obtain any required Consent prior to
closing from any Governmental Authority to the assignment to a
Telecommunication Subsidiary of the Interconnect Agreements
listed on Schedule 8.2(k), including, but not limited to
consent by the Missouri Public Service Commission to the
Assignment to Feist of the Interconnect Agreement between
Seller and Southwestern Bell Telephone (Missouri), and consent
by the North Dakota Public Service Commission to the
assignment to FirsTel of the Interconnect Agreement between
Seller and US West Communications, Inc. (North Dakota); or
(n) failure of Seller to obtain consent to the assignment
to a Telecommunication Subsidiary of, or from a
change of control resulting from the transactions
contemplated by this agreement under, the following
contracts: Carrier Digital Services Agreement, WorldCom
Network Services, Inc.; Classic/Transcend Switched
Services Program Enrollment Terms, WorldCom Network
Services, Inc; Classic/Transcend Switched Services
Telecommunications Services Agreement, WorldCom Network
Services, Inc.; Carrier Agreement Terms and Conditions,
MCI Telecommunications Corporation, as amended (FirsTel,
Inc.); and Carrier Agreement, MCI Telecommunications
Corporation (Valu-Line of Longview, Inc.)
3. CLOSING
The Stock Purchase Agreement is hereby further amended by replacing the
word "and" at the end of Section 8.2(k) with a semi-colon, replacing the period
at the end of Section 8.2(l) with a semi-colon and inserting new Section 8.2(m)
and 8.2(n) as follows:
2
First Amendement to the Stock Purchase Agreement
<PAGE>
"(m) An opinion in form reasonably satisfactory to Buyer,
dated the Closing Date, of Morris, Nichols, Arsht & Tunnell, as to
Seller's ability to sell the Telecommunications Subsidiaries without
obtaining its shareholders' approval; and
(n) Buyer shall have in place an insurance policy, reasonably
satisfactory to Buyer and Seller, which shall (a) provide coverage to
Buyer for any Loss to Buyer arising out of a breach of the
representation and warranty contained in Section 10.3(a) hereof, (b)
have a benefit of $10 million dollars, (c) have a premium of $310,000
and (d) have a deductible of $400,000."
4. COVENANTS
(a) The Stock Purchase Agreement is hereby further amended by
inserting the following language at the end of Section 5.23:
"For purposes of clarification of the prior sentence, Seller
and Buyer agree that Seller shall accept Buyer's bid as long
as it is equally or more advantageous to Seller in terms of
price, service quality or range of services in comparison to
other bids. Seller shall submit to Buyer the
telecommunications requirements upon which Buyer's bid is to
be based as soon as practicable after the Closing Date."
(b) The Stock Purchase Agreement is further amended by adding
the following sections to Article V:
"5.27 MCFARLAND GUARANTEES. Buyer shall use its commercially reasonable
efforts to have Rick McFarland removed as a personal guarantor of any of TRI's
obligations and agree to indemnify Rick McFarland for Losses incurred by him as
a result of such personal guarantees of TRI's obligations accruing or arising
after the Closing. Notwithstanding the forgoing, Buyer shall not be obligated to
indemnify Seller for any Losses related to Seller's Guarantees accruing or
arising prior to the Closing."
"5.28 SELLER GUARANTEES. Buyer shall use its commercially reasonable
efforts to have removed Seller as a guarantor or otherwise relieve Seller of its
obligations listed on SCHEDULE 5.28 ("Seller's Guarantees") and agree to
indemnify Seller for any Losses incurred by it as a result of Seller's
Guarantees accruing or arising after the Closing. Notwithstanding the forgoing,
Buyer shall not be obligated to indemnify Seller for any Losses related to
Seller's Guarantees accruing or arising prior to the Closing."
"5.29 INTERCONNECT AGREEMENTS. If any required consent from any
Governmental Authority to the assignment of the Interconnect Agreements listed
on Schedule 8.2(k) has not been obtained by Closing, Seller shall use its best
efforts to obtain within sixty (60) days after the Closing Date any such
required consent from any Governmental Authority to the assignment to a
Telecommunication Subsidiary of the Interconnect Agreements listed on Schedule
8.2(k) not obtained as of the Closing Date, including but not limited to,
consent by the Missouri Public Service commission to the assignment to Feist of
the Interconnect Agreement between Seller and Southwestern Bell Telephone
(Missouri),
3
First Amendement to the Stock Purchase Agreement
<PAGE>
and consent by the North Dakota Public Service Commission to the assignment
to FirsTel of the Interconnect Agreement between Seller and US West
Communications, Inc. (North Dakota). Seller agrees to assign (at not
additional cost to Buyer) any such Interconnect Agreement to Buyer as soon as
practicable following the grant of any such consent."
"5.30 ADDITIONAL FILINGS. As soon as practicable after the Closing
Date, Buyer shall update the following registrations to reflect the consummation
of the transactions contemplated hereby: FirsTel and TRI registrations as toll
resellers in Colorado, FirsTel and TRI registrations as providers of
telecommunications services in Montana; Valu-Line, Feist and TRI registrations
as non-dominant telecommunications carriers in Texas."
"5.31 OKLAHOMA CITY WHITE PAGES ADVERTISING. Seller agrees that it
shall pay to Buyer an amount equal to Buyer's reasonable cost of obtaining eight
white pages of forward text information for the period extending from the
Closing Date until February 18, 2003. At Buyer's option, such advertising shall
contain information provided by Buyer, appear before the "telephone companies"
portion of the forward white pages text, appear in Southwestern Bell or
comparative alternative directories and appear in all or any portion of Oklahoma
City and its greater metropolitan area. Payment for such advertising in an
amount equal to $100,000 shall be made by Seller to Buyer at Closing. Within
ninety (90) days of the Closing Date, Buyer shall obtain a quote of the cost of
such advertising for the entire period described in this Section 5.31. If the
cost of this advertising as set forth in such quote exceeds $100,000, Seller
shall pay such excess to Buyer promptly upon receiving Buyer's written demand,
together with reasonable substantiating back-up, for such quote. If the cost of
this advertising is less than $100,000, Buyer shall pay such difference to
Seller promptly after obtaining such quote.
5. SCHEDULES
(a) Schedule 3.23 of the Stock Purchase Agreement is amended by
adding the following:
TELECOM RESOURCES, INC. ("TRI")
HELMSMAN PUBLICATIONS, INC. V. TELECOM RESOURCES, INC.
In Dallas County Court at Law No. 2; Cause No. 98-5003-B: Plaintiff
sued TRI for breach of contract and is seeking approximately $11,000.00 plus
attorneys' fees. TRI counterclaimed, asserting claims for breach of contract and
under the Texas Deceptive Practices Act, and is seeking treble damages and
attorneys' fees. No trial date has been set. By letter dated September 10, 1999,
counsel for plaintiff served upon TRI Plaintiff's Request for Production of
Documents to Defendant. A response was served on or about October 11, 1999.
"GERALD MORRIS AND LORI MORRIS
Gerald Morris and Lori Morris operate a bail bondsmen's business. The
Morris' transferred their local telecommunications services from a third-party
provider to Valu-Line. Unbeknownst to both the Morrises and Valu-Line the
third-party provider terminated the collect call service available to the
Morrises. Consequently, certain of the Morris' customers were
4
First Amendement to the Stock Purchase Agreement
<PAGE>
unable to obtain the Morris' services. The Morrises have filed a lawsuit
seeking compensation for damages resulting from the interruption of call
collect services and attorneys' fees, totaling approximately $55,000.
Settlement negotiations are underway between counsel for the parties."
(c) Schedule 5.14 of the Stock Purchase Agreement should be
amended by adding the following under the subheading "FirsTel, Inc.":
"Phoenix Warehouse; UCC - 1 successor in interest to an RCC
Finance Group Ltd., UCC-1."
(d) A new SCHEDULE 5.28 shall be added to the Stock Purchase
Agreement as follows:
SCHEDULE 5.28
SELLER GUARANTEES
1. Stock Purchase Agreement (Kinnet IRM) Seller and Liberty
Cellular, Inc.
2. Master Equipment Leases, Phoenix Leasing Incorporated,
Lease Nos: 991053 and 981055, formerly with R.C.C.
Finance Group Ltd. ("R.C.C.")
3. Master Equipment Lease, Marlin Leasing Corp. Lease No.
991066, formerly with R.C.C.
4. Master Equipment Lease, NewCourt Financial U.S.A., Inc., Lease
Nos. 981054 and 981068, formerly with R.C.C.
5. 2/15/96 Lease Agreement with IM Joint Venture (INFOMART).
6. Guaranty of Lease Agreement, ForHim, L.L.C., dated May 25, 1998.
7. Software License Agreement, Saville Systems, Inc., dated
September 16, 1998.
6. MISCELLANEOUS
(a) At Closing Buyer shall deduct Thirty Thousand Dollars
($30,000) from the Consideration payable at Closing to reflect the
failure of Seller to assign its competitive local exchange carrier
Telecommunication Authorization in Missouri (as set forth in Schedule
3.15 of the Agreement) to a Telecommunication Subsidiary and the fact
that TRI no longer holds IXC authorization in Arkansas (as set forth on
Schedule 3.15 of the Agreement).
5
First Amendement to the Stock Purchase Agreement
<PAGE>
(b) At Closing, Buyer shall deduct an amount equal to $150,000
from the Consideration payable at Closing to cover Seller's portion of
the insurance required to be obtained by Section 8.2(n) of the
Agreement.
(c) At Closing, Buyer shall deduct an amount equal to $15,000
from the Consideration payable at Closing to reflect Seller's failure
to convey certain resale agreements to a Telecommunication Subsidiary
prior to Closing.
(d) At Closing, Buyer shall deduct an amount equal to $100,000
from the Consideration payable at Closing to cover the amount payable
by Seller to Buyer, pursuant to Section 5.31 of the Agreement.
(e) As herein amended, the Stock Purchase Agreement shall
remain in full force and effect and is hereby ratified and confirmed in
all respects. After the date hereof, all references in the Stock
Purchase Agreement shall refer to the Stock Purchase Agreement as
herein amended.
(f) This Agreement may be executed in any number of
counterparts and by the different parties on separate counterparts, and
each such counterpart shall be deemed to be an original but all such
counterparts shall together constitute one and the same Agreement.
(g) This Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of Delaware
without giving effect to the principals of conflicts of law thereof.
THE REMAINDER OF THE PAGE IS LEFT BLANK INTENTIONALLY
[the next page is numbered 9]
6
First Amendement to the Stock Purchase Agreement
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.
IONEX TELECOMMUNICATIONS, INC. ADVANCED COMMUNICATIONS
GROUP, INC.
By:_____________________________ By: __________________________
Name:___________________________ Name: Richard A. O'Neal
Title:__________________________ Title: Chairman and Acting Chief
Executive Officer
FEIST LONG DISTANCE SERVICE, INC.
By:_______________________________
Name: Richard A. O'Neal
Title: Chairman of the Board
FIRSTEL, INC.
By:_______________________________
Name: Richard A. O'Neal
Title: Chairman of the Board
TELECOM RESOURCES, INC.
By:_______________________________
Name: Richard A. O'Neal
Title: Chairman of the Board and
President
VALU-LINE OF LONGVIEW, INC.
By:_______________________________
Name: Richard A. O'Neal
Title: Chairman of the Board
7
First Amendement to the Stock Purchase Agreement
<PAGE>
AMENDED AND RESTATED
YPTEL AGREEMENT
This YPTEL AMENDED AND RESTATED AGREEMENT (THE "RESTATED AGREEMENT") is made
and entered into as of October 26, 1999 by and among Advanced Communications
Group, Inc., a Delaware corporation ("PARENT"), YPtel Corporation, a corporation
incorporated under the laws of Canada (THE "COMPANY"), the shareholders of the
Company listed on the attached EXHIBIT A, Edward Truant, Douglas G. McIntyre,
Jeffrey L. Rosenthal, Stephen D. Lister, The J.L.R. Family Trust and The Paisley
Family Trust (COLLECTIVELY, THE "ICL PRINCIPALS"), Cold Trust, Global Investment
Trust, Freezer Trust, Storage Trust, Directory Trust and Publisher Trust
("BARBADIAN TRUSTS") (the shareholders listed on EXHIBIT A, the ICL Principals
and the Barbadian Trusts are collectively referred to herein as the
"SHAREHOLDERS") and Imperial Capital Limited, a corporation incorporated under
the laws of the Province of Ontario ("ICL"). The ICL Principals are executing
this Restated Agreement solely for the purpose of making the representations and
warranties of the ICL Principals set forth in ARTICLE II and for agreeing to the
indemnification obligations of the ICL Principals set forth in ARTICLE IX, and
for agreeing to the obligations of the ICL Principals set forth in SECTION 4.1,
SECTION 6.6 and the other provisions of this Restated Agreement. ICL is the
attorney-in-fact pursuant to certain powers of attorney (THE "POWERS OF
ATTORNEY"), pursuant to which all Shareholders other than Edward Truant,
Douglas G. McIntyre, The J.L.R. Family Trust, The Paisley Family Trust and the
Barbadian Trusts have granted to ICL the right to vote and to dispose of all of
the Company Common Stock. ICL is executing this Restated Agreement as
attorney-in-fact for the Shareholders other than Edward Truant, Douglas G.
McIntyre, The J.L.R. Family Trust, The Paisley Family Trust and the Barbadian
Trusts to bind such Shareholders to their obligations set forth in this Restated
Agreement.
RECITALS
A. The Company is the beneficial owner, directly and indirectly, and holder
of record of all of the issued and outstanding shares of the capital stock of
YPtel, Inc. ("YPTI") and Pacific Coast Publishing, Ltd. ("PCP") (COLLECTIVELY,
THE "SUBSIDIARIES") and desires to have itself and, indirectly, all of its
assets, including the capital stock of each of the Subsidiaries, acquired
directly or indirectly by Parent on the terms and subject to the conditions set
forth in this Restated Agreement.
B. Parent desires to cause Newco II, an indirect subsidiary of Parent, to
be formed prior to the Closing, to acquire all of the issued and outstanding
capital stock of the Company, and Parent desires to acquire all of the
outstanding common stock of YPTI, all on the terms and subject to the conditions
set forth in this Restated Agreement.
C. The Boards of Directors of each of the Company and Parent believe it is
in the best interests of each company and their respective stockholders and the
Board of Directors of Parent has directed or will direct that the Restated
Agreement be submitted to the shareholders of Parent with the recommendation
that the Restated Agreement, including but not limited to the issuance of shares
of Parent Common Stock pursuant to the Exchange and Voting Trust Agreement, be
approved by the Parent's stockholders.
D. The Shareholders own all of the issued and outstanding Company capital
stock and some of the Shareholders propose to transfer their shares to
corporations or limited partnerships established by them so that such entities
(together with the Shareholders not so transferring their shares) will at the
time of Closing own all of the outstanding Company Common Stock other than the
shares of Company Common Stock issued to the Subordinated Lenders upon exercise
of the warrants issued pursuant to the Subordinated Loan Agreement.
E. The parties intend that the Closing will occur concurrently with or
after, among other actions, (i) the closing of the acquisition by Parent or a
direct or indirect subsidiary of Parent of all of the outstanding capital stock
of Web YP, Inc. ("WEB") and Big Stuff, Inc. ("BIG STUFF") on terms reasonably
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acceptable to the Company (WEB AND BIG STUFF ARE SOMETIMES COLLECTIVELY REFERRED
TO AS "WORLDPAGES") whether by merger, exchange or otherwise (THE "WORLDPAGES
ACQUISITION"); (ii) the redemption of the promissory notes (COLLECTIVELY, THE
"GREAT WESTERN NOTES") in the aggregate original principal amount of Fifteen
Million Dollars (U.S. $15,000,000) (plus accrued but unpaid interest at the time
of redemption) owed by Parent to Richard O'Neal and certain other former
shareholders of Great Western Directories, Inc. (COLLECTIVELY, THE "GREAT
WESTERN SHAREHOLDERS") by the issuance of Parent Common Stock to the Great
Western Shareholders; (iii) the execution and delivery of the Exchange and
Voting Trust Agreement and the Support Agreement; (iv) the Company
Recapitalization; (v) the YPTI Recapitalization and purchase by Parent from the
Company of all of the outstanding common stock of YPTI; and (vi) the
satisfaction of the other conditions to Closing set forth in this Restated
Agreement.
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties agree
as follows:
ARTICLE I--THE TRANSACTIONS
1.1 TRANSACTIONS PRIOR TO CLOSING. Immediately prior to Closing and
subject to and upon the terms and conditions of the Restated Agreement:
(a) RECAPITALIZATION OF THE PARENT. The Parent shall be recapitalized
(THE "PARENT RECAPITALIZATION") so that immediately after the Parent
Recapitalization, the authorized capital stock of the Parent shall consist
of (A) 180,000,000 shares of the Parent Common Stock and (B) 20,000,000
shares of preferred stock of Parent from which the Board of Directors of
Parent (or a committee thereof) shall further authorize a class of voting
preferred stock to be issued to the Trustee pursuant to the Exchange and
Voting Trust Agreement and having the rights, preferences and designations
to be agreed upon prior to Closing (THE "PARENT CLASS B VOTING PREFERRED
STOCK").
(b) FORMATION OF NEWC I AND NEWCO II. Parent shall (i) form an
unlimited liability company under the laws of Nova Scotia which will be
owned by Parent ("NEWCO I"), the authorized capital stock of which shall
consist of common stock ("NEWCO I COMMON STOCK"), and (ii) form an unlimited
liability company under the laws of Nova Scotia ("NEWCO II"), the authorized
capital stock of which shall consist of (a) common stock ("NEWCO II COMMON
STOCK"); and (b) non-voting special shares having the rights, preferences
and designations set forth in EXHIBIT B hereto (THE "CLASS A SPECIAL
SHARES"), the holders of which shall have the right to exchange such shares
on a one-for-one basis for shares of Parent Common Stock pursuant to the
Exchange and Voting Trust Agreement. The first issuance of Newco I Common
Stock to Parent and Newco II Common Stock to Newco I, each for nominal
consideration, shall be effected such that at all times all of the issued
and outstanding Newco I Common Stock shall be owned by Parent and all of the
issued and outstanding Newco II Common Stock shall be owned by Newco I.
(c) RECAPITALIZATION OF THE COMPANY. The Shareholders and the Company
shall cause the Company to be recapitalized (THE "COMPANY RECAPITALIZATION")
so that immediately after the Company Recapitalization, (i) the authorized
capital stock of the Company shall consist only of common stock (THE
"COMPANY COMMON STOCK"); and (ii) the exchange into Company Common stock of
all outstanding shares of Class A preferred stock, Class B preferred stock,
Class C preferred stock and Class D preferred stock of the Company has
occurred.
(d) CONTINUANCE AND AMALGAMATION. The Company shall take such steps as
may be necessary to discontinue its existence as a corporation governed by
the Canada Business Corporations Act and to continue as a corporation
governed by the laws of Nova Scotia and immediately after such continuance,
shall amalgamate with an unlimited liability corporation caused to be
incorporated by the Company Shareholders under the laws of Nova Scotia.
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(e) THE YPTI RECAPITALIZATION. (a) The Company shall cause YPTI to be
recapitalized (THE "YPTI RECAPITALIZATION") by amending YPTI's articles of
incorporation to create a class of non-voting cumulative preferred stock
(THE "YPTI PREFERRED STOCK") (with an aggregate redemption amount equal to
the fair market value of YPTI less the adjusted cost base of Company in YPTI
and having the rights, preferences and designations to be agreed upon prior
to Closing (THE "YPTI CERTIFICATE OF PREFERRED STOCK DESIGNATION") to be
filed with the Secretary of State of the State of Washington and
(b) thereafter, YPTI shall declare and pay to the Company a dividend of the
YPTI Preferred Stock.
(f) TRANSFER OF COMPANY SHARES.
(i) Some of the Shareholders will transfer their Company Common Stock
to corporations or limited partnerships (on a tax-deferred basis) so that
effective upon delivery to Parent of a duly executed assignment and
assumption agreement reasonably acceptable to Parent (A) such transferee
Shareholder shall become subject to the rights and obligations of the
transferor Shareholder under this Restated Agreement to the same extent
as if they had signed this Restated Agreement individually or through ICL
as the attorney-in-fact and (B) such transferor Shareholder shall be
released from any and all obligations hereunder and (C) thereafter
(together with such Shareholders not so transferring) shall be considered
the Shareholders hereunder in substitution for the transferors.
(ii) To the extent that any Person receives shares of Company Common
Stock from an ICL Principal, directly or indirectly, in connection with a
transfer contemplated in SECTION 1.1(f)(i) hereof, such transferee
Shareholder shall be deemed to be an ICL Principal for purposes of this
Restated Agreement. Effective upon delivery to Parent of a duly executed
assignment and assumption agreement reasonably acceptable to Parent
(A) such transferee Shareholder shall become subject to the rights and
obligations of the transferor ICL Principal under this Restated Agreement
to the same extent as if they had signed this Restated Agreement
individually and (B) such transferor ICL Principal shall be released from
any and all obligations hereunder and (C) thereafter (together with such
ICL Principals not so transferring) shall be considered the ICL
Principals hereunder in substitution for the transferor ICL Principal.
1.2 TRANSACTIONS AT CLOSING. At the Closing, and subject to and upon the
terms and conditions of this Restated Agreement:
(a) TRANSFER OF PARENT STOCK. In consideration for the issuance of
Newco I Common Stock to Parent and Newco II Common Stock to Newco I (each as
contemplated by SECTION 1.1(b) hereof), Parent shall transfer and deliver to
Newco I and Newco I shall transfer and deliver to Newco II, respectively,
that number of shares of Parent Common Stock necessary to accomplish the
exchange with certain Shareholders described in SECTION 1.2(b).
(b) EXCHANGE OF COMPANY COMMON STOCK. (i) The Shareholders shall
transfer and deliver to Newco II the Company Common Stock free and clear of
any and all liens, claims and encumbrances, together with stock powers duly
executed in blank by the Shareholders that are executing this Restated
Agreement and by ICL on behalf of the Shareholders (other than those that
are executing this Restated Agreement) with signatures of ICL and the
Shareholders who are executing this Restated Agreement guaranteed;
(ii) Newco II shall transfer and deliver, at the election of each
Shareholder, either (A) shares of Class A Special Shares or (B) shares of
Parent Common Stock for the shares of Company Common Stock exchanged under
(i) above, or a combination thereof. The procedure for the exchange of
shares of Company Common Stock by each Shareholder and the number of
Class A Special Shares and Parent Common Stock to be received by each
Shareholder at the Closing will be substantially in accordance with the
procedures agreed to in writing by the parties hereto. The total number of
(i) shares of Parent Common Stock
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issuable upon the exchange of Class A Special Shares, plus (ii) the number
of shares of Parent Common Stock to be issued at Closing to the Shareholders
under this SECTION 1.2(b), shall equal 15,000,000 shares and no more.
(c) SALE OF PARENT CLASS B VOTING PREFERRED STOCK. In exchange for
nominal cash consideration, Parent shall issue to the trustee (THE
"TRUSTEE") under the Exchange and Voting Trust Agreement, one or more shares
of Parent Class B Voting Preferred Stock.
(d) SALE OF YPTI COMMON STOCK. Parent shall purchase from the Company,
free and clear of any and all liens, claims and encumbrances, all shares of
YPTI Common Stock owned by the Company, which shall constitute all of the
outstanding shares of YPTI Common Stock, for an aggregate purchase price
equal to the adjusted cost base of the shares of YPTI, which the parties
hereto agree shall be equal to the fair market value thereof (approximately
$21,000,000 Canadian) (THE "YPTI CONSIDERATION"), payable in cash or in
exchange for a promissory note, with terms, mutually acceptable to the
parties, to be agreed upon prior to closing.
1.3 EFFECTIVE DATE; FAIRNESS OPINION. Despite its execution, no term,
provision, right or obligation under or pursuant to this Restated Agreement
shall be effective, unless and until the later of (a) the execution of this
Restated Agreement; and (b) the receipt by Parent's Board of Directors from its
financial advisors, PaineWebber Incorporated, or such other investment banking
firm selected by Parent's Board of Directors, of a written opinion addressed to
it for inclusion in the Proxy Statement/ Prospectus to the effect that the
consideration to be paid, in the aggregate, by the Parent in the transactions
contemplated by this Restated Agreement, the Restated Web YP Agreement, the
Restated Big Stuff Agreement, including the lending by Richard O'Neal and
Richard Reid to Web YP and/or Big Stuff of up to an aggregate of Six Million
Dollars ($6,000,000) and the agreement relating to the redemption of the Great
Western Notes, is fair to Parent from a financial point of view. Unless and
until the fairness opinion referenced in this SECTION 1.3 is received by Parent,
the June 3 YPtel Agreement shall remain in full force and effect, subject to
termination of such agreement in accordance with its terms. Parent shall notify
ICL immediately upon receipt of the fairness opinion referenced in this
SECTION 1.3. Immediately upon receipt of the fairness opinion referenced in this
SECTION 1.3 by Parent, this Restated Agreement shall become effective and the
June 3 YPtel Agreement shall terminate.
1.4 CLOSING. Unless this Restated Agreement is earlier terminated pursuant
to ARTICLE VIII, the closing of the transactions contemplated by this Restated
Agreement (THE "CLOSING") will take place three (3) business days after the
conditions set forth in ARTICLE VII are satisfied or waived, at the offices of
Blackwell Sanders Peper Martin LLP, 720 Olive Street, Suite 2400, St. Louis,
Missouri 63101 and is anticipated to be on or before January 31, 2000; PROVIDED,
HOWEVER, that if such conditions are not satisfied or waived by January 31,
2000, the Closing shall be automatically postponed for seven (7) days and will
continue to be postponed for continuous seven (7) day periods until
February 28, 2000, unless another place or time is agreed to in writing by
Parent and the Company. If such conditions are not satisfied or waived by
February 28, 2000, the Closing shall be automatically postponed until March 1,
1999, unless another time is agreed to in writing by Parent and the Company. The
date upon which the Closing actually occurs is herein referred to as the
"CLOSING DATE." At the Closing: (a) the Company shall deliver to Parent the
various certificates, instruments and documents required to be delivered by the
Company pursuant to this Restated Agreement; (b) Parent shall deliver to the
Company the various certificates, instruments and documents required to be
delivered by Parent pursuant to this Restated Agreement; (c) the Company shall
provide to Parent evidence reasonably satisfactory to Parent that the Company
Recapitalization has been completed; (d) the Company shall provide to Parent
evidence reasonably satisfactory to Parent that the YPTI Recapitalization has
been completed and as a part thereof, YPTI has distributed the YPTI Preferred
Stock as a dividend to Company in accordance with SECTION 1.1(e); (e) the
Shareholders shall transfer their shares of Company Common Stock to Newco II in
accordance with SECTION 1.2(b)(i); (f) Newco II shall issue and deliver to the
Shareholders the
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Class A Special Shares and/or Parent Common Stock in accordance with
SECTION 1.2(b)(ii); (g) Parent shall sell to the Trustee the Parent Class B
Voting Preferred Stock in accordance with SECTION 1.2(c); (h) the Trustee shall
pay to Parent the consideration for the Parent Class B Voting Preferred Stock;
(i) the Company shall sell to the Parent the YPTI Common Stock in accordance
with SECTION 1.2(d); (j) Parent shall pay to the Company the YPTI Consideration;
and (k) an election statement, in a form agreed to, shall be signed by the
appropriate parties in accordance with the provisions set forth in section 338
of the Code.
1.5 PARENT NAME CHANGE AND DIRECTORS.
(a) PARENT NAME CHANGE. Parent shall recommend, and submit to its
shareholders entitled to vote thereon, a resolution for their approval to
amend the Certificate of Incorporation of Parent. Such resolution shall
require Parent to change its name to "WorldPages.com, Inc." or a variation
thereof and take all reasonable measures to have such name change become
effective on the Closing Date.
(b) DIRECTORS. Immediately following the Closing Date, the Board of
Directors of the Parent shall be restructured to be composed of eight
(8) members as follows: (i) one director chosen by Parent and one director
chosen by ICL to serve three year terms, (ii) one director chosen by Parent
and one director chosen by ICL and one director to be agreed to by Parent,
ICL and WorldPages to serve two year terms, and (iii) one director chosen by
Parent and one director chosen by ICL and one director to be agreed to by
Parent, ICL and WorldPages to serve one year terms. The Parent currently
intends to nominate Richard O'Neal and two (2) individuals to be named at or
prior to Closing. The directors to be nominated by ICL are currently
anticipated to be Wilmot Matthews, George Anderson and Robert Flynn. In
addition, for a period of one (1) year following the Closing Date, each of
Parent and ICL may designate one party to attend any and all Board of
Directors meetings, as non-voting, non-participating observers only (THE
"OBSERVERS"). Parent shall reimburse the Observers for those expenses
incurred in connection with attending Board of Directors meetings, including
travel expenses, in the same manner and to the same extent that Parent
reimburses its directors for such expenses. The parties hereto expressly
acknowledge and agree that this SECTION 1.5(b) is not intended to, and does
not, except with regard to the initial Board of Directors of Parent
referenced in this SECTION 1.5(b), impose any requirement that the Board of
Directors of Parent be comprised of the individuals listed in this
SECTION 1.5(b) or that any Person has a right to designate a certain
individual or a certain number of individuals as nominees to the Board of
Directors of Parent.
1.6 TAX DEFERRED EXCHANGE. From the date hereof through and including the
Closing Date, neither the Company, nor the Subsidiaries, nor any of the
Shareholders nor any of their respective affiliates, nor Parent, or any of
Parent's subsidiaries or any of their respective affiliates, shall
(i) knowingly take any action, or knowingly fail to take any action, that would
jeopardize qualification of the transactions contemplated by SECTION 1.2(b) of
this Restated Agreement (with respect to the issuance of Class A Special Shares
to residents of Canada holding such shares as capital property) as a tax
deferred transfer pursuant to Subsection 85(1) of Income Tax Act [Canada] SC
1985 [5(th) Supp.] c.1, as amended ("INCOME TAX ACT [CANADA]"), provided a joint
election is filed on a timely basis in prescribed form; or (ii) enter into any
contract, agreement, commitment or arrangement with any such effect. ICL, on
behalf of each Shareholder, and Newco II agree to jointly elect that the
proceeds of the disposition of the Company Common Stock pursuant to this
Restated Agreement shall be the Canadian dollar adjusted cost base of the
transferred shares of Company Common Stock, unless otherwise agreed to by the
transferring Shareholders. Class A Special Shares and/or Parent Common Stock, at
such Shareholder's option, will be issued only to transferring Shareholders who
are resident in Canada for purposes of the Income Tax Act [Canada].
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1.7 TAKING OF NECESSARY ACTION; FURTHER ACTION. If, at any time after the
Closing Date, any further action is necessary or desirable to carry out the
purposes of this Restated Agreement; including but not limited to vesting
Newco II with full right and title to and possession of the Company Common
Stock; vesting the Shareholders with full right and title to and possession of
the Class A Special Shares and/or Parent Common Stock, vesting the Trustee with
full right and title to and possession of the Parent Class B Voting Preferred
Stock; vesting Parent with full right and title to and possession of the YPTI
Common Stock; and vesting the Company with full right and title to the YPTI
Preferred Stock, subject to the requirements of SECTION 6.8, the parties hereto
will take all such lawful and necessary and/or desirable action so long as such
action is not inconsistent with this Restated Agreement.
1.8 AGGREGATE ISSUABLE PARENT COMMON STOCK. Exclusive of any options
listed on SCHEDULE 6.5(b)(i) attached hereto, the Shareholders, collectively,
shall not have the right to receive more than, nor shall the Parent be obligated
to transfer more than, 15,000,000 shares of Parent Common Stock, in the
aggregate, to the Shareholders, whether at Closing or pursuant to the subsequent
exchange for Parent Common Stock of Class A Special Shares issued to the
Shareholders at the Closing.
ARTICLE II--REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE ICL PRINCIPALS
The Company and the ICL Principals severally and not jointly and severally,
and jointly and severally as between the ICL Principals, represent and warrant
to Parent as follows:
2.1 ORGANIZATION AND GOOD STANDING. Company and each of the Subsidiaries
is a corporation duly organized and validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization and has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as now being conducted. Company and each of the
Subsidiaries is duly qualified or licensed and in good standing to do business
in each jurisdiction in which the character of the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification or licensing necessary, except where the failure to be so duly
qualified or licensed and in good standing would not have a Company Material
Adverse Effect. SCHEDULE 2.1 sets forth a complete and accurate list of the
jurisdictions of incorporation or organization and qualification or license of
Company and the Subsidiaries. Company has heretofore delivered to Parent
accurate and complete copies of the Certificates or Articles of Incorporation
and Bylaws, or equivalent governing instruments, as currently in effect, of
Company and each of the Subsidiaries.
2.2 CAPITALIZATION. As of the date hereof, the authorized capital stock of
Company (THE "COMPANY STOCK") consists of an unlimited number of Common Shares,
an unlimited number of Class A Shares, an unlimited number of Class B Shares,
1,841,000 Class C Shares, and an unlimited number of Class D Shares. As of the
date hereof, 13,500,000 shares of Common Stock, no Class A Shares, 100 Class B
Shares, 100 Class D Shares, and no Class C Shares of Company Stock are issued
and outstanding. No other capital stock of Company is issued or outstanding. All
issued and outstanding shares of the Company Stock are duly authorized, validly
issued, fully paid and non-assessable and are issued free of preemptive rights
and in compliance with applicable corporate and securities Laws. Except as set
forth on SCHEDULE 2.2 attached hereto, as of the date of this Restated Agreement
there are no outstanding rights, reservations of shares, subscriptions,
warrants, puts, calls, unsatisfied preemptive rights, options or other
agreements of any kind relating to any of the capital stock or any other
security of Company, and there is no authorized or outstanding security of any
kind convertible into or exchangeable for any such capital stock or other
security. There are no restrictions upon the transfer of or otherwise pertaining
to the securities (including, but not limited to, the ability to pay dividends
thereon) or retained earnings of Company and the Subsidiaries or the ownership
thereof other than those, if any, described on SCHEDULE 2.2 attached hereto or
those imposed generally
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by the Securities Act, the Securities Exchange Act, applicable state or foreign
securities Laws or applicable corporate Law.
2.3 SUBSIDIARIES. SCHEDULE 2.3(a) attached hereto sets forth the name and
percentages of any outstanding capital stock or other interest held, directly or
indirectly, by Company. Except as set forth on SCHEDULE 2.3(b) attached hereto,
all of the capital stock and other interests so held by Company are owned by it
or a Subsidiary as indicated on said SCHEDULE 2.3(a), free and clear of any
claim, lien, encumbrance, security interest or agreement with respect thereto.
All of the outstanding shares of capital stock in each of the Subsidiaries are
duly authorized, validly issued, fully paid and non-assessable and were issued
free of preemptive rights and in compliance with applicable corporate and
securities Laws. Except as set forth on SCHEDULE 2.3(c) attached hereto, there
are no irrevocable proxies, voting agreements or similar obligations with
respect to such capital stock of the Subsidiaries and no equity securities or
other interests of any of the Subsidiaries are or may become required to be
issued or purchased by reason of any options, warrants, rights to subscribe to,
puts, calls, reservation of shares or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable for,
shares of any capital stock of any Subsidiary, and there are no contracts,
commitments, understandings or arrangements by which any Subsidiary is bound to
issue additional shares of its capital stock, or options, warrants or rights to
purchase or acquire any additional shares of its capital stock or securities
convertible into or exchangeable for such shares.
2.4 AUTHORIZATION; BINDING AGREEMENT. Company, the ICL Principals, the
Barbadian Trusts and ICL, as attorney-in-fact for the Shareholders not signing
this Restated Agreement, have all requisite power and authority to execute and
deliver this Restated Agreement and the Company Transaction Agreements and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Restated Agreement and the other agreements and documents
referred to herein and to be executed in connection herewith to which Company,
the ICL Principals, the Barbadian Trusts, ICL or any Shareholder is or will be a
party or a signatory (THE "COMPANY TRANSACTION AGREEMENTS") and the consummation
of the transactions contemplated hereby and thereby have been duly and validly
authorized by Company's Board of Directors, ICL's Board of Directors, and the
trustees of The J.L.R. Family Trust, The Paisley Family Trust and the Barbadian
Trusts and no other corporate or other proceedings on the part of Company, any
Subsidiary, the ICL Principals, ICL or any Shareholder are necessary to
authorize the execution and delivery of this Restated Agreement and the Company
Transaction Agreements or to consummate the transactions contemplated hereby or
thereby, except for the concurrence of the Subordinated Lenders. This Restated
Agreement has been duly and validly executed and delivered by Company, the ICL
Principals, the Barbadian Trusts and ICL, as attorney-in-fact for the
Shareholders not signing this Restated Agreement, and constitutes, and upon
execution and delivery thereof as contemplated by this Restated Agreement, the
Company Transaction Agreements will constitute, the legal, valid and binding
obligations of Company, the ICL Principals and the Shareholders, enforceable
against Company, the ICL Principals and the Shareholders in accordance with its
and their respective terms, except to the extent that enforceability thereof may
be limited by applicable bankruptcy, insolvency, reorganization or other similar
laws affecting the enforcement of creditors' rights generally and by principles
of equity regarding the availability of remedies (COLLECTIVELY, THE
"ENFORCEABILITY EXCEPTIONS"). The Powers of Attorney are in full force and
effect and ICL has full authority under the Powers of Attorney to execute this
Restated Agreement and the Company Transaction Agreements as attorney-in-fact
for the Shareholders not signing this Restated Agreement, to bind such
Shareholders to the obligations of the Shareholders set forth in this Restated
Agreement and the Company Transaction Agreements, and to transfer the Company
Common Shares of such Shareholders to Newco II as contemplated by this Restated
Agreement.
2.5 GOVERNMENTAL APPROVALS. No consent, approval, waiver or authorization
of, notice to or declaration or filing with ("CONSENT") any nation or
government, any state, province, or other political subdivision thereof, any
Person, authority or body exercising executive, legislative, judicial,
regulatory or
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administrative functions of or pertaining to government including, without
limitation, any governmental or regulatory authority, agency, department, board,
commission or instrumentality, any court, tribunal or arbitrator and any
self-regulatory organization ("GOVERNMENTAL AUTHORITY") on the part of the
Shareholders, ICL, the ICL Principals, the Company or any of the Subsidiaries is
required in connection with the execution or delivery by the ICL Principals,
ICL, as attorney-in-fact for the Shareholders, or the Company of this Restated
Agreement and the Company Transaction Agreements or the consummation by Company
or the Shareholders of the transactions contemplated hereby or thereby other
than (i) filings with the SEC and state and provincial securities laws
administrators and other filings and/or court orders required under the Canada
Business Corporations Act, (ii) those Consents from or with Governmental
Authorities set forth on SCHEDULE 2.5 attached hereto, (iii) filings under the
HSR Act, (iv) filings with the Committee on Foreign Investment in the United
States for a determination as to whether the transaction contemplated by this
Restated Agreement is permitted under the Exon-Florio Amendment (Section 721) to
the Defense Production Act of 1950 (THE "EXON-FLORIO FILING"), (v) filings under
Investment Canada Act and the Competition Act, (vi) any filings required by the
U.S. Department of Commerce's reporting requirements for foreign investment in
the United States, and (vii) those Consents that, if they were not obtained or
made, do not or would not have a Company Material Adverse Effect.
2.6 NO VIOLATIONS. The execution and delivery of this Restated Agreement
and the Company Transaction Agreements, the consummation of the transactions
contemplated hereby and thereby and compliance by Company, ICL, the ICL
Principals and Shareholders with any of the provisions hereof or thereof will
not (i) conflict with or result in any breach of any provision of the
Certificate and/or Articles of Incorporation or Bylaws or other governing
instruments of Company or any of the Subsidiaries or of any provision of the
trust agreements of the Shareholders that are trusts, (ii) except as set forth
on SCHEDULE 2.6 attached hereto, require any Consent under or result in a
violation or breach of, or 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 or augment the performance required) under any of the terms,
conditions or provisions of any Company Material Contract or other obligation to
which Shareholders, ICL, Company or any Subsidiary is a party or by which any of
them or any of their properties or assets may be bound, (iii) result in the
creation or imposition of any lien or encumbrance of any kind upon any of the
assets of Company or any Subsidiary, or (iv) subject to obtaining the Consents
from Governmental Authorities referred to in SECTION 2.5 above contravene any
applicable provision of any constitution, treaty, statute, law, code, rule,
regulation, ordinance, policy or order of any Governmental Authority, including
without limitation those Governmental Authorities in the United States and
Canada, or other matters having the force of law including, but not limited to,
any orders, decisions, injunctions, judgments, awards and decrees of or
agreements with any court or other Governmental Authority ("LAW") currently in
effect to which any Shareholder, ICL, the Company or any Subsidiary or its or
any of their respective assets or properties are subject, except in the case of
clauses (ii), (iii) and (iv), above, for any deviations from the foregoing which
do not or would not have a Company Material Adverse Effect.
2.7 LITIGATION. Except as set forth in SCHEDULE 2.7 attached hereto,
(i) the Company represents and warrants to Parent that there is no action, cause
of action, claim, demand, suit, proceeding, citation, summons, subpoena, inquiry
or investigation of any nature, civil, criminal, regulatory or otherwise, in law
or in equity, by or before any court, tribunal, arbitrator, mediator or other
Governmental Authority ("LITIGATION") pending or, to the knowledge of Company,
threatened against the Company, any Subsidiary, or any officer, director,
employee or agent thereof, in his or her capacity as such, or as a fiduciary
with respect to any Benefit Plan of Company, or otherwise relating, in a manner
that could have a Company Material Adverse Effect, to Company, any Subsidiary,
or the securities of any of them, or any properties or rights of Company or any
of the Subsidiaries or that could prevent or delay the consummation of the
transactions contemplated by this Restated Agreement; and (ii) the ICL
Principals represent and warrant to Parent that to the knowledge of the
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ICL Principals there is no Litigation pending or threatened against Company, any
Subsidiary, or any officer, director, employee or agent thereof, in his or her
capacity as such, or as a fiduciary with respect to any Benefit Plan of Company,
or otherwise relating, in a manner that could have a Company Material Adverse
Effect, to the Company, any Subsidiary, or the securities of any of them, or any
properties or rights of Company or any of the Subsidiaries or that could prevent
or delay the consummation of the transactions contemplated by this Restated
Agreement.
2.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
SCHEDULE 2.8 attached hereto, since November 1, 1998, through the date of this
Restated Agreement, to the knowledge of the ICL Principals, there has not been
any event, occurrence, fact, condition, change, development or effect ("EVENT")
that could reasonably be expected to have a Company Material Adverse Effect.
2.9 FINDERS AND INVESTMENT BANKERS. Neither Company nor any Subsidiary nor
any of its respective officers or directors has employed any broker or finder or
incurred any liability for any brokerage fees, commissions or finders' fees in
connection with the transactions contemplated hereby other than a fee of U.S.
$265,000 payable to ICL by Parent or any direct or indirect subsidiary of Parent
immediately following Closing. There are no other fees due from the Company or
any Subsidiary to ICL and upon Closing neither the Company nor any Subsidiary
will have any further obligations to ICL pursuant to any management agreement or
other similar agreement.
2.10 CONTRACTS. Except as set forth in the PCP Acquisition Agreement or
SCHEDULE 2.10 attached hereto, the Company represents and warrants to Parent,
and the ICL Principals represent and warrant to the Parent that to their
knowledge, neither Company nor any Subsidiary is a party or is subject to any
Company Material Contract. Company has made available to Parent true and
accurate copies of the Company Material Contracts.
2.11 LIABILITIES. From November 1, 1998, through the date of this Restated
Agreement, except as expressly disclosed in SCHEDULE 2.11 or elsewhere is this
Restated Agreement or the Schedules attached hereto, to the knowledge of ICL
Principals, Company does not have any direct or indirect indebtedness,
liability, claim, loss, damage, deficiency, obligation or responsibility, fixed
or unfixed, choate or inchoate, liquidated or unliquidated, secured or
unsecured, accrued, absolute, contingent or otherwise, whether or not of a kind
required by Canadian generally accepted accounting principles to be set forth in
a financial statement other than those incurred in the ordinary course of
business or in an amount not in excess of U.S. $50,000 individually or U.S.
$100,000 in the aggregate. Except as set forth on SCHEDULE 2.11 attached hereto
or elsewhere in this Restated Agreement or the Schedules, as of the date of this
Restated Agreement, Company is not subject to (i) obligations in respect of
borrowed money, (ii) obligations evidenced by bonds, debentures, notes or other
similar instruments, (iii) to the knowledge of ICL Principals, obligations which
would be required by generally accepted accounting principles to be classified
as "capital leases," (iv) to the knowledge of ICL Principals, obligations to pay
the deferred purchase price of property or services, except trade accounts
payable arising in the ordinary course of business and payable not more than
twelve (12) months from the date of incurrence, and (v) to the knowledge of the
ICL Principals any guaranties of any obligations of any other Person.
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2.12 REAL ESTATE.
(a) Neither the Company nor any of the Subsidiaries owns any real
property.
(b) SCHEDULE 2.12(b) attached hereto sets forth a true, correct and
complete schedule as of the date of this Restated Agreement of all leases,
subleases, easements, rights-of-way, licenses or other agreements entered
into after the PCP Closing Date under which Company or any of the
Subsidiaries uses or occupies, or has the right to use or occupy, now or in
the future, any real property or improvements thereon (THE "COMPANY REAL
PROPERTY LEASES"). Except for the matters listed on said SCHEDULE 2.12(b),
Company or a Subsidiary, as indicated thereon, to the knowledge of the ICL
Principals, holds the leasehold estate under or other interest in each
Company Real Property Lease and each lease for real property that existed on
the PCP Closing Date free and clear of all liens, encumbrances and other
rights of occupancy other than statutory landlords, or mechanics' liens
which have not been executed upon. All of the real property and improvements
occupied by the Company or any Subsidiary under the Company Real Property
Leases and each lease for real property that existed on the PCP Closing Date
are used by the Company as office and graphic design space only.
2.13 CORPORATE RECORDS. The corporate record books of or relating to
Company made available to Parent by Company contain accurate and complete
records of (i) all corporate actions of the stockholders and directors (and
committees thereof) of Company, (ii) the Certificate and/or Articles of
Incorporation, Bylaws and/or other governing instruments, as amended, of
Company, and (iii) the issuance and transfer of stock of Company. Except as set
forth on SCHEDULE 2.13 attached hereto, Company does not have any of its
material records or information recorded, stored, maintained or held off the
premises of Company or at other than its solicitors' offices.
2.14 LABOR MATTERS. The Company has only two employees.
2.15 TAX. Neither the Company nor the ICL Principals know of any fact or
have knowingly taken any action that could be reasonably expected to prevent the
transfer of shares contemplated by SECTION 1.2(b) of this Restated Agreement
(with respect to the issuance of Class A Special Shares to residents of Canada
holding such shares as capital property) from qualifying as a tax deferred
transfer pursuant to Subsection 85(1) of Income Tax Act [Canada]; provided a
joint election is filed on a timely basis in prescribed form.
2.16 PCP ACQUISITION AGREEMENT. Neither Company nor any of the ICL
Principals had any knowledge on the date of the closing (THE "PCP CLOSING DATE")
under the Asset Purchase Agreement by and among the Company, Pacific Coast
Publishing, Inc., a Washington corporation, Leonard Langley ("LANGLEY") and Gary
Calkins ("CALKINS") and Pacific Coast Publishing, Ltd. (formerly PCP
Acquisition Inc.), a Washington corporation (THE "PCP ACQUISITION AGREEMENT") or
has had at any time after the PCP Closing Date or currently has any knowledge
(i) that any of the representations and warranties made by Pacific Coast
Publishing, Inc., Langley and Calkins (COLLECTIVELY, THE "PCP SELLERS") to the
Company and PCP were untrue, inaccurate or incomplete; (ii) that the PCP
Sellers, or any of them, would be unable to fully satisfy any of their
indemnification or other obligations set forth in the PCP Acquisition Agreement;
or (iii) of any Event that would result in a violation or breach of, or
constitute (with or without due notice of lapse of time or both) a default by
Company or any Subsidiary of any of their respective obligations under the PCP
Acquisition Agreement or any of the other agreements entered into in connection
with the acquisition of PCP (THE "PCP TRANSACTION DOCUMENTS") or any other Event
that would allow the PCP Sellers, or any of them, to offset against or otherwise
reduce their respective indemnification obligations under the PCP Acquisition
Agreement. Company and the ICL Principals agree that they will give prompt
written notice to Parent if between the date of this Restated Agreement and the
Closing Date they obtain knowledge of any fact that would make the
representations and warranties set forth in this SECTION 2.16 untrue if they
were made at that time. Neither the Company nor any of the Subsidiaries have
assigned, transferred or otherwise
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conveyed any of their respective rights or entitlements under the PCP
Acquisition Agreement or the PCP Transaction Documents.
2.17 KNOWLEDGE. When a representation or warranty of the ICL Principals
contained in ARTICLE II hereof is qualified (i) by the "knowledge" of such ICL
Principals, or (ii) by a statement that the ICL Principals "have no knowledge"
of factual matters comprising the representation or warranty, or (iii) by a
statement that the ICL Principals are "unaware" of factual matters comprising
the representation or warranty, or (iv) by words of similar import, such
"knowledge qualifiers" mean that each of the ICL Principals has affirmatively
and actively made due inquiry of John Woodall and Jay Cramer or any of their
respective replacements and that none of the ICL Principals has learned of any
information, fact or event that would make the representation or warranty of the
ICL Principal untrue, inaccurate, incorrect or incomplete. Knowledge possessed
by or otherwise obtained by any one ICL Principal after due inquiry as provided
herein with respect to a representation or warranty qualified by "knowledge"
shall be deemed to be known by, or learned of by all of the ICL Principals.
ARTICLE III--REPRESENTATIONS AND WARRANTIES
OF PARENT
Parent represents and warrants to the Company and the Shareholders as
follows:
3.1 ORGANIZATION AND GOOD STANDING. Parent is a corporation duly organized
and validly existing under the laws of the State of Delaware and 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 Active Parent
Subsidiaries is a corporation, duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization
and has all requisite corporate, power and authority to own, lease and operate
its properties and to carry on its business as now being conducted, except where
the failure to be so duly organized, validly existing and in good standing or to
have such power and authority would not have a Parent Material Adverse Effect.
Parent and each of the Active Parent Subsidiaries is duly qualified or licensed
and in good standing to do business in each jurisdiction in which the character
of the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary, except where
the failure to be so duly qualified or licensed and in good standing would not
have a Parent Material Adverse Effect. Parent has heretofore made available to
Company accurate and complete copies of the Certificates or Articles of
Incorporation and Bylaws, or equivalent governing instruments, as currently in
effect, of Parent and each of the Active Parent Subsidiaries.
3.2 CAPITALIZATION. As of the date hereof, the authorized capital stock of
Parent consists of 180,000,000 shares of common stock of Parent, par value
$0.0001 per share ("PARENT COMMON STOCK") and 20,000,000 shares of preferred
stock, par value $0.0001. As of the opening of business on the date of this
Restated Agreement, (a) 20,083,953 shares of Parent Common Stock were
outstanding, (b) no shares of the Parent preferred stock were issued and
outstanding and (c) 163,307 shares of Parent Common Stock were held as treasury
shares. No other capital stock of Parent is issued or outstanding. All issued
and outstanding shares of the Parent Common Stock are duly authorized, validly
issued, fully paid and non-assessable and were issued free of preemptive rights
and in compliance with applicable corporate and securities Laws. Except as set
forth on SCHEDULE 3.2 attached hereto, as of the date of this Restated Agreement
there are no outstanding rights, reservations of shares, subscriptions,
warrants, puts, calls, unsatisfied preemptive rights, options or other
agreements of any kind relating to any of the capital stock or any other
security of Parent, and there is no authorized or outstanding security of any
kind convertible into or exchangeable for any such capital stock or other
security. There are no restrictions upon the transfer of or otherwise pertaining
to the securities (including, but not limited to, the ability to pay dividends
thereon) or retained earnings of Parent and the Active Parent Subsidiaries or
the ownership thereof other than those pursuant to the Parent Guaranty or the
Great Western
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Credit Agreement or those imposed generally by the Securities Act, the
Securities Exchange Act, applicable state or foreign securities Laws or
applicable corporate Law.
3.3. SUBSIDIARIES. Except as set forth on SCHEDULE 3.3, all of the capital
stock and other interests of the Active Parent Subsidiaries held by Parent are
owned by it or a Parent subsidiary, free and clear of any claim, lien,
encumbrance, security interest or agreement with respect thereto. All of the
outstanding shares of capital stock in each of the Active Parent Subsidiaries
held directly or indirectly by Parent are duly authorized, validly issued, fully
paid and non-assessable and were issued free of preemptive rights and in
compliance with applicable corporate and securities Laws. Except as set forth on
SCHEDULE 3.3 attached hereto, there are no irrevocable proxies, voting
agreements or similar obligations with respect to such capital stock of the
Active Parent Subsidiaries and no equity securities or other interests of any of
the Active Parent Subsidiaries are or may become required to be issued or
purchased by reason of any obligations, options, warrants, rights to subscribe
to puts, calls, reservation of shares or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable for,
shares of any capital stock of any Active Parent Subsidiary, and there are no
contracts, commitments, understandings or arrangements by which any Active
Parent Subsidiary is bound to issue additional shares of its capital stock, or
options, warrants or rights to purchase or acquire any additional shares of its
capital stock or securities convertible into or exchangeable for such shares.
3.4 AUTHORIZATION; BINDING AGREEMENT. Parent has all requisite corporate
power and authority to execute and deliver this Restated Agreement and the
Parent Transaction Agreements and to consummate the transactions contemplated
hereby. The execution and delivery of this Restated Agreement and the other
agreements and documents referred to herein and to be executed in connection
herewith to which Parent is or will be a party or a signatory (THE "PARENT
TRANSACTION AGREEMENTS") and the consummation of the transactions contemplated
hereby and thereby have been duly and validly authorized by the Board of
Directors of Parent and except for the approval of the holders of the Parent
Common Stock, no other corporate proceedings on the part of Parent are necessary
to consummate the transactions contemplated hereby or thereby except for the
concurrence of Bank of America National Trust and Savings Association under the
Great Western Credit Agreement. This Restated Agreement has been duly and
validly executed and delivered by Parent and constitutes, and upon execution and
delivery thereof as contemplated by this Restated Agreement, the Parent
Transaction Agreements will constitute, the legal, valid and binding obligations
of Parent, enforceable against Parent in accordance with its and their
respective terms, subject to the Enforceability Exceptions.
3.5 GOVERNMENTAL APPROVALS. No Consent from or with any Governmental
Authority on the part of Parent or any of the Active Parent Subsidiaries, is
required in connection with the execution or delivery by Parent of this Restated
Agreement and the Parent Transaction Agreements or the consummation by Parent of
the transactions contemplated hereby or thereby other than (i) filings with the
SEC, state securities laws administrators and the NYSE, (ii) those Consents from
or with Governmental Authorities set forth on SCHEDULE 3.5 hereto, (iii) the
Exon-Florio Filings, filings under the HSR Act, filings with the Ontario
Securities Commission and those required under the Canada Business Corporations
Act, the Investment Canada Act and the Competition Act, (iv) any filings
required by the U.S. Department of Commerce's reporting requirements for foreign
investment in the United States; and (v) those Consents that, if they were not
obtained or made, do not or would not have a Parent Material Adverse Effect.
3.6 NO VIOLATIONS. The execution and delivery of this Restated Agreement
and the Parent Transaction Agreements, the consummation of the transactions
contemplated hereby and thereby and compliance by Parent with any of the
provisions hereof or thereof will not (i) conflict with or result in any breach
of any provision of the Certificate and/or Articles of Incorporation or Bylaws
or other governing instruments of Parent or any of the Active Parent
Subsidiaries, except as set forth on
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SCHEDULE 3.6, (ii) require any Consent under or result in a violation or breach
of, or 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
or augment the performance required) under any of the terms, conditions or
provisions of any Parent Material Contract or other obligation to which Parent
or any Parent subsidiary, is a party or by which any of them or any of their
properties or assets may be bound, except for compliance with the requirements
under that certain Guaranty of Parent (THE "PARENT GUARANTY") given pursuant to
the Loan Agreement dated as of May 14, 1999 by and among Great Western
Directories, Inc., the Lenders signatories thereto, and Bank of America National
Trust and Savings Association as Administrative Agent (THE "GREAT WESTERN CREDIT
AGREEMENT"), (iii) result in the creation or imposition of any lien or
encumbrance of any kind upon any of the assets of Parent or any Parent
Subsidiary, or (iv) subject to obtaining the Consents from Governmental
Authorities referred to in SECTION 3.5 above, contravene any Law currently in
effect to which Parent or any Parent subsidiary or its or any of their
respective assets or properties are subject, except in the case of clauses (ii),
(iii) and (iv) above, for any deviations from the foregoing which do not or
would not have a Parent Material Adverse Effect.
3.7 SECURITIES FILINGS AND LITIGATION. Parent has made available to
Company true and complete copies of (i) its Annual Reports on Form 10-K, as
amended, for the years ended December 31, 1997 and 1998, as filed with the SEC,
(ii) its proxy statement relating to the meeting of shareholders held on
July 29, 1998, as filed with the SEC, and (iii) all other reports, statements
and registration statements and amendments thereto (including, without
limitation, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as
amended) filed by Parent with the SEC since February 18, 1998. The reports and
statements set forth in clauses (i) through (iii), above, and those subsequently
provided or required to be provided pursuant to this section, are referred to
collectively as the "PARENT SECURITIES FILINGS." As of their respective dates,
or as of the date of the last amendment thereof, if amended after filing, none
of the Parent Securities Filings (including all schedules thereto and disclosure
documents incorporated by reference therein), contained or, as to Parent
Securities Filings subsequent to the date hereof, will contain any untrue
statement of a material fact or omitted or, as to Parent Securities Filings
subsequent to the date hereof, will 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 Parent
Securities Filings at the time of filing or as of the date of the last amendment
thereof, if amended after filing, complied or, as to Parent Securities Filings
subsequent to the date hereof, will comply in all material respects with the
Securities Exchange Act or the Securities Act, as applicable. Except as set
forth in SCHEDULE 3.7, there is no Litigation pending or, to the knowledge of
Parent, threatened against Parent or any Parent subsidiary, any officer,
director, employee or agent thereof, in his or her capacity as such, or as a
fiduciary with respect to any Benefit Plan of Parent, or otherwise relating, in
a manner that could have a Parent Material Adverse Effect, to Parent, any Parent
subsidiary or the securities of any of them, or any properties or rights of
Parent or any of the Parent subsidiaries that could prevent or delay the
consummation of the transactions contemplated by this Restated Agreement. No
event has occurred as a consequence of which Parent would be required to file a
Current Report on Form 8-K pursuant to the requirements of the Securities
Exchange Act as to which such a report has not been timely filed with the SEC.
Any reports, statements and registration statements and amendments thereof
(including, without limitation, Reports on Form 10-K, Quarterly Reports on
Form 10-Q and Current Reports on Form 8-K, as amended) filed by Parent with the
SEC after the date hereof shall be provided to Company upon such filing.
3.8 PARENT FINANCIAL STATEMENTS. The audited consolidated and unaudited
interim financial statements of Parent and the Parent subsidiaries included in
the Parent Securities Filings (THE "PARENT FINANCIAL STATEMENTS")have been made
available to Company. Except as noted thereon, the Parent Financial Statements
were prepared in accordance with generally accepted accounting principles
applicable to the business of Parent and the Parent subsidiaries consistently
applied in accordance with past accounting practices and fairly present
(including, but not limited to, the inclusion of all
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adjustments with respect to interim periods which are necessary to present
fairly the financial condition and assets and liabilities or the results of
operations of Parent and the Parent subsidiaries, subject to normal year-end
adjustments in the ordinary course with respect to certain items immaterial in
amount or effect and the exclusion of footnote disclosure in interim Parent
Financial Statements) the financial condition and assets and liabilities or the
results of operations of Parent and the Parent subsidiaries as of the dates and
for the periods indicated. Except as set forth in SCHEDULE 3.8 or as reflected
in the Parent Financial Statements, as of their respective dates, neither Parent
nor any Parent subsidiary had any debts, obligations, guaranties of obligations
of others or liabilities (contingent or otherwise) that would be required in
accordance with generally accepted accounting principles to be disclosed in the
Parent Financial Statements.
3.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in the
Parent Securities Filings made available by Parent to Company prior to the date
of this Restated Agreement or in SCHEDULE 3.9 attached hereto, since June 30,
1999, through the date of this Restated Agreement, there has not been: (i) any
Event that could reasonably be expected to have a Parent Material Adverse
Effect; or (ii) any agreement by Parent to take any action that would result in
a breach of SECTION 6.5 below.
3.10 COMPLIANCE WITH LAWS. The business of Parent and the Parent
subsidiaries, has been operated in compliance with all Laws applicable thereto,
except for any instances of non-compliance which do not and would not have a
Parent Material Adverse Effect.
3.11 PERMITS. (i) Parent and the Parent subsidiaries have all permits,
certificates, licenses, approvals, tariffs and other authorizations required in
connection with the operation of their business (COLLECTIVELY, "PARENT
PERMITS"), (ii) neither Parent nor any Parent Subsidiary is in violation of any
Parent Permit, and (iii) no proceedings are pending or, to the knowledge of
Parent, threatened, to revoke or limit any Parent Permit, except, in the case of
clause (i) or (ii) above, those the absence or violation of which do not and
would not have a Parent Material Adverse Effect.
3.12 FINDERS AND INVESTMENT BANKERS. Neither Parent nor any of its
officers or directors has employed any broker or finder or otherwise incurred
any liability for any brokerage fees, commissions or finders' fees in connection
with the transactions contemplated hereby, except that PaineWebber Incorporated
has been engaged to deliver the fairness opinion required to be delivered
pursuant to SECTION 1.3 and NationsBanc Montgomery Securities, L.L.C. has been
engaged to assist in the sale(s) of the CLEC Operations and a copy of the
engagement letters and other related documents have been furnished to the
Company.
3.13 CONTRACTS. Except as set forth in SCHEDULE 3.13, neither Parent nor
any Parent subsidiary is a party to any material note, bond, mortgage,
indenture, contract, lease, license, agreement, understanding, instrument, bid
or proposal ("PARENT MATERIAL CONTRACT"). Parent has made available to Company
true and accurate copies of the Parent Material Contracts. All such Parent
Material Contracts are valid and binding and are in full force and effect and
enforceable in accordance with their respective terms, subject to the
Enforceability Exceptions.
3.14 CORPORATE RECORDS. The respective corporate record books of or
relating to Parent and each of the Active Parent Subsidiaries made available to
Company by Parent contain accurate and complete records of (i) all corporate
actions of the respective shareholders and directors (and committees thereof) of
Parent and the Active Parent Subsidiaries, (ii) the Certificate and/or Articles
of Incorporation, Bylaws and/or other governing instruments, as amended, of
Parent and the Active Parent Subsidiaries, and (iii) the issuance and transfer
of stock of Parent and the Active Parent Subsidiaries.
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ARTICLE IV--ADDITIONAL COVENANTS OF THE COMPANY AND THE ICL PRINCIPALS
The Company and the ICL Principals severally and not jointly, and severally
and not jointly and severally as between the ICL Principals, covenant and agree
as follows:
4.1 NOTIFICATION OF CERTAIN MATTERS. The Company and the ICL Principals
shall give prompt notice to Parent if any of the following occur from the date
of this Restated Agreement through the Closing Date: (i) receipt of any notice
of, or other communication relating to, a default or Event which, with notice or
lapse of time or both, would become a default under any Company Material
Contract; (ii) receipt of any notice or other communication from any third party
alleging that the Consent of such third party is or may be required in
connection with the transactions contemplated by this Restated Agreement;
(iii) receipt of any material notice or other communication from any
Governmental Authority in connection with the transactions contemplated by this
Restated Agreement; (iv) receipt of any notice of or other communication
regarding or otherwise obtaining knowledge of an Event which would have a
Company Material Adverse Effect; (v) receipt of any notice of or other
communication regarding or otherwise obtaining knowledge of the commencement or
threat of any Litigation involving or affecting any Shareholder that might
adversely impact the transactions contemplated by this Restated Agreement, the
Company or any Subsidiary, or any of their respective properties or assets, or,
to its knowledge, any employee, agent, director or officer of the Company or any
Subsidiary, in his or her capacity as such or as a fiduciary under a Benefit
Plan of the Company, which, if pending on the date hereof, would have been
required to have been disclosed pursuant to SECTION 2.7, and (vi) receipt of any
notice of or other communication regarding or otherwise obtaining knowledge of
any Event that would cause a breach by the Company, a Subsidiary, or any
Shareholder of any provision of this Restated Agreement or a Company Transaction
Agreement, including such a breach that would occur if such event had taken
place on or prior to the date of this Restated Agreement.
4.2 ACCESS AND INFORMATION. Between the date of this Restated Agreement
and the Closing Date, the Company and the Subsidiaries, upon reasonable notice,
will give, and shall direct its accountants and legal counsel to give, Parent,
its lenders and their respective authorized representatives (including, without
limitation, financial advisors, accountants and legal counsel) at all reasonable
times access to all offices and other facilities and to all contracts,
agreements, commitments, books and records (including, but not limited to, Tax
returns) of or pertaining to the Company and the Subsidiaries, will permit the
foregoing to make such inspections as they may require and will cause its
officers promptly to furnish Parent with (a) such financial and operating data
and other information with respect to the business and properties of the Company
and Subsidiaries as Parent may from time to time reasonably request including,
but not limited to, data and information required for inclusion in Parent's
pending registration statements and/or other Parent Securities Filings, and
(b) a copy of each material report, schedule and other document filed or
received by the Company or any Subsidiary pursuant to the requirements of
applicable securities Laws. The Company further agrees to permit an independent
accounting firm selected by Parent to either prepare or review the separate
company and consolidated corporate income tax returns and supporting schedules
for U.S., Canadian and state income tax purposes of the Company and the
Subsidiaries for fiscal year beginning November 1, 1998 and ending on the
earlier of October 31, 1999 or the date the Company is acquired, provided that
all of the costs and expenses of such services are paid by the Parent. The
foregoing access will be subject to government security restrictions and
restrictions contained in confidentiality agreements to which the Company is
subject and of which Parent has been advised prior to the date of this Restated
Agreement; provided that the Company shall use its reasonable best efforts to
obtain waivers of such restrictions.
4.3 REASONABLE BEST EFFORTS. Subject to the terms and conditions herein
provided, the Company and ICL on behalf of the Shareholders agree to use their
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, all things necessary, proper or advisable to
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consummate and make effective as promptly as practicable, but in any event,
prior to the Closing, the transactions contemplated by this Restated Agreement
and the Company Transaction Agreements including, but not limited to
(i) obtaining the Consent of others to this Restated Agreement, the Company
Transaction Agreements and the transactions contemplated hereby and thereby,
(ii) the defending of any Litigation against the Company, ICL, any Subsidiary,
or any Shareholder challenging this Restated Agreement, the Transaction
Agreements or the consummation of the transactions contemplated hereby or
thereby, (iii) obtaining all Consents from Governmental Authorities required for
the consummation of the transactions contemplated hereby, (iv) timely making all
necessary filings under the HSR Act, and (v) timely making the Exon-Florio
Filings and any filings required under the laws of Nova Scotia, and the
Investment Canada Act and by the U.S. Department of Commerce's reporting
requirements for foreign investments in the United States. Upon the terms and
subject to the conditions hereof, the Company and ICL on behalf of the
Shareholders agree to use their reasonable best efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary to
satisfy the other conditions of the Closing set forth herein. The Company and
ICL on behalf of the Shareholders will consult with counsel for Parent as to,
and will permit such counsel to participate in, at Parent's expense, any
Litigation referred to in clause (ii) above brought against or involving the
Company, any Subsidiary or any Shareholder.
4.4 COMPLIANCE. In consummating the transactions contemplated hereby, the
Company and ICL on behalf of the Shareholders shall comply in all material
respects with the provisions of the Securities Exchange Act and the Securities
Act and shall comply, and/or cause the Subsidiaries to comply or to be in
compliance, in all material respects, with all other applicable Laws.
4.5 BENEFIT PLANS. Between the date of this Restated Agreement and through
the Closing Date, no discretionary award or grant under any Benefit Plan of the
Company or a Subsidiary shall be made without the consent of Parent; nor shall
the Company or a Subsidiary take any action or permit any action to be taken to
accelerate the vesting of any warrants or options previously granted pursuant to
any such Benefit Plan. Neither the Company nor any Subsidiary shall make any
amendment to any Benefit Plan, any awards thereunder or the terms of any
security convertible into or exchangeable for capital stock without the consent
of Parent. Parent acknowledges the granting of the options listed on
SCHEDULE 6.5(b)(i).
4.6 TAX OPINION CERTIFICATION. Prior to the Closing Date, the Company and
the Shareholders shall provide tax counsel rendering an opinion under
SECTION 7.1(l) with a certificate concerning such factual matters as such
counsel identifies are relevant to its opinion.
4.7 SHAREHOLDERS AGREEMENT AND VOTING TRUST AGREEMENTS. The Company and
ICL on behalf of the Shareholders shall cause all voting trust agreements
between the Shareholders, ICL and the Company and any powers of attorney or
other agreements relating to the voting or disposition of the capital stock of
the Company (COLLECTIVELY, "THE VOTING TRUST AGREEMENTS") and the Unanimous
Shareholders Agreement to be cancelled as of the Closing Date.
4.8 TRANSFER RESTRICTIONS. In addition to any other restrictions imposed
by Law on the Shareholders' ability to transfer any Class A Special Shares or
Parent Common Stock received by the Shareholders pursuant to this Restated
Agreement and the Exchange and Voting Trust Agreement, each Shareholder agrees
that, with respect to Class A Special Shares, the restrictions on transfer set
forth in the Exchange and Voting Trust Agreement shall apply.
4.9 SUBORDINATED LOAN AGREEMENT. The Company shall cause PCP to satisfy
all of its obligations under the Subordinated Loan Agreement dated as of
November 1, 1998 (THE "SUBORDINATED LOAN AGREEMENT") by and among PCP (f/k/a PCP
Acquisition, Inc.), the lenders which are parties thereto (THE "SUBORDINATED
LENDERS") and Canterbury Mezzanine Capital, L.P., as agent, including, without
limitation, the repayment in full of the Loans (as defined in the Subordinated
Loan Agreement) and all interest accrued thereon.
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The Company shall use its reasonable best efforts to cause the Subordinated
Lenders to exercise the warrants evidenced by the Warrant Certificates (as
defined in the Subordinated Loan Agreement) and to convert the Company Class B
stock issued to the Subordinated Lenders thereunder into Company Common Stock.
4.10 CONDUCT OF BUSINESS OF COMPANY AND THE SUBSIDIARIES. The Company
covenants, represents and warrants that from the date of this Restated Agreement
through the Closing Date, unless the Parent shall otherwise expressly consent in
writing, the Company shall, and the Company shall cause each Subsidiary to, use
its or their reasonable best efforts to comply in all material respects with all
Laws applicable to it or any of its properties, assets or business and maintain
in full force and effect all authorizations and permits necessary for, or
otherwise material to, such business.
ARTICLE V--ADDITIONAL COVENANTS OF PARENT
Parent covenants and agrees as follows:
5.1 CONDUCT OF BUSINESS OF PARENT AND THE ACTIVE PARENT
SUBSIDIARIES. Parent covenants, represents and warrants that from the date of
this Restated Agreement through the Closing Date, unless the Company shall
otherwise expressly consent in writing, Parent shall, and Parent shall cause
each Active Parent Subsidiary to, use its or their reasonable best efforts to
comply in all material respects with all Laws applicable to it or any of its
properties, assets or business and maintain in full force and effect all the
Parent Authorizations necessary for, or otherwise material to, such business.
5.2 NOTIFICATION OF CERTAIN MATTERS. Parent shall give prompt notice to
the Company if any of the following occur from the date of this Restated
Agreement through the Closing Date: (i) any notice of, or other communication
relating to, a default or Event which, with notice or lapse of time or both,
would become a default under any Parent Material Contract which could have a
Parent Material Adverse Effect; (ii) receipt of any notice or other
communication from any third party alleging that the Consent of such third party
is or may be required in connection with the transactions contemplated by this
Restated Agreement; (iii) receipt of any material notice or other communication
from any regulatory authority (including, but not limited to, the NYSE or any
other securities exchange) in connection with the transactions contemplated by
this Restated Agreement; (iv) receipt of any notice of or other communication
regarding or otherwise obtaining knowledge of an Event which would have a Parent
Material Adverse Effect; (v) receipt of any notice of or other communication
regarding or otherwise obtaining knowledge of the commencement or threat of
which Parent has knowledge of any Litigation involving or affecting Parent or
any Parent subsidiary or any of their respective properties or assets, or, to
its knowledge, any employee, agent, director or officer, in his or her capacity
as such, of Parent or any Parent subsidiary which, if pending on the date
hereof, would have been required to have been disclosed pursuant to
SECTION 3.7; (vi) receipt of any notice of or other communication regarding or
otherwise obtaining knowledge of any Event that could cause a breach by Parent
of any provision of this Restated Agreement or a Parent Transaction Agreement,
including such a breach that could occur if such Event had taken place on or
prior to the date of this Restated Agreement; and (vii) amendment, modification
or waiver of any provision of the Ionex Agreement referenced on SCHEDULE 3.7
hereto.
5.3 ACCESS AND INFORMATION. Between the date of this Restated Agreement
and the Closing Date, Parent (i) will, upon reasonable notice, give the Company
and its authorized representatives (including, without limitation, its financial
advisors, accountants and legal counsel) at all reasonable times access as
reasonably requested to the offices and other facilities and to all material
contracts, agreements, commitments, books and records (including, but not
limited to, Tax returns) of or pertaining to Parent and the Active Parent
Subsidiaries; (ii) will permit the Company to make such reasonable inspections
as it may require; and (iii) will cause its officers promptly to furnish the
Company with (a) such financial and operating data and other information with
respect to the business and properties of
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Parent and the Active Parent Subsidiaries as the Company may from time to time
reasonably request, and (b) a copy of each material report, schedule and other
document filed or received by Parent or any Active Parent Subsidiary pursuant to
the requirements of applicable securities Laws, the NYSE or other securities
exchange, in each case as necessary in connection with the transactions
contemplated hereby. The foregoing access will be subject to restrictions
contained in SECTION 6.7 hereof.
5.4 COMPLIANCE. In consummating the transactions contemplated hereby,
Parent shall comply in all material respects with the provisions of the
Securities Exchange Act and the Securities Act and shall comply, and/or cause
the Active Parent Subsidiaries to comply or to be in compliance, in all material
respects, with all other applicable Laws.
5.5 SEC AND SHAREHOLDER FILINGS. Parent shall send to the Company a copy
of all material public reports and materials as and when it sends the same to
its shareholders, the SEC, the NYSE or any other securities commission or
exchange.
5.6 TAX TREATMENT. Prior to the Closing Date, Parent shall provide tax
counsel rendering an opinion under Subsection 7.1(l) with a certificate
concerning such factual matters as such counsel identifies are relevant to its
opinion.
5.7 REASONABLE BEST EFFORTS. Subject to the terms and conditions herein
provided, Parent agrees to use its reasonable best efforts to take, or cause to
be taken, all actions, and to do, or cause to be done, all things necessary,
proper or advisable to consummate and make effective as promptly as practicable,
but in any event, prior to the Closing, the transactions contemplated by this
Restated Agreement and the Parent Transaction Agreements including, but not
limited to (i) obtaining the Consent of others to this Restated Agreement, the
Parent Transaction Agreements and the transactions contemplated hereby and
thereby, (ii) the defending of any Litigation against the Parent or any Parent
subsidiary, or any Shareholder challenging this Restated Agreement, the Parent
Transaction Agreements or the consummation of the transactions contemplated
hereby or thereby, (iii) obtaining all Consents from Governmental Authorities
required for the consummation of the transactions contemplated hereby,
(iv) timely making all necessary filings under the HSR Act, and (v) timely
making the Exon-Florio Filings and any filings required under the laws of Nova
Scotia, the Investment Canada Act and by the U.S. Department of Commerce's
reporting requirements for foreign investments in the United States. Upon the
terms and subject to the conditions hereof, Parent agrees to use its reasonable
best efforts to take, or cause to be taken, all actions and to do, or cause to
be done, all things necessary to satisfy the other conditions of the Closing set
forth herein. Parent will consult with counsel for Company as to, and will
permit such counsel to participate in, at the Company's expense, any Litigation
referred to in clause (ii) above brought against or involving Parent or any
Parent subsidiary.
5.8 EMPLOYEE BENEFIT PLANS. After the Closing Date, Parent shall arrange
for each employee participating in the Benefit Plan of the Company and the
Subsidiaries at such time to participate in any counterpart Benefit Plans of
Parent in accordance with the eligibility criteria thereof, provided that
(i) such participants shall receive full credit for years of service with the
Company or any of the Subsidiaries prior to the transactions contemplated by
this Restated Agreement for all purposes for which such service was recognized
under the Benefit Plan of the Company and the Subsidiaries including, but not
limited to, recognition of service for eligibility, vesting, and, to the extent
not duplicative of benefits received under such Benefit Plan of the Company and
the Subsidiaries, the amount of benefits, and (ii) such participants shall
participate in the Benefit Plans of Parent on terms no less favorable than those
offered by Parent to similarly situated employees of Parent. Notwithstanding the
foregoing, Parent may continue one or more of the Benefit Plans of the Company
and the Subsidiaries, in which case Parent shall have satisfied its obligations
hereunder with respect to the benefits so provided.
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5.9 EXPENSES. The fees and expenses incurred in connection with the
transactions contemplated by this Restated Agreement shall be paid by the party
or parties set forth below at the time and subject to the satisfaction of the
conditions set forth below:
(a) If this Restated Agreement becomes effective pursuant to
SECTION 1.3 hereof, Parent shall pay, at such time as this Restated
Agreement becomes effective pursuant to SECTION 1.3, to ICL $75,000, which
amount shall represent reimbursement of ICL for services provided to Parent
by Edward Truant. The parties hereto agree that Parent shall have no payment
obligation with regard to the study of and report on Big Stuff prepared by
Ernst & Young LLP.
(b) If the transactions contemplated by this Restated Agreement are
consummated, at Closing Parent shall: (i) pay ICL a fee of $265,000;
(ii) upon receipt by Parent of an invoice or other similar documentation,
reimburse ICL for all other fees and expenses incurred by a party to this
Restated Agreement or a stockholder of any such party in connection with the
negotiation and effectuation of the terms and conditions of this Restated
Agreement and the June 3 YPtel Agreement and the transactions contemplated
hereby, including but not limited to all legal, accounting, financial
advisory and consulting fees, except for those previously paid pursuant to
SECTION 5.9(a) hereof; and (iii) upon receipt by Parent of an invoice or
other similar documentation, reimburse ICL for expenses incurred by ICL
relating to the renegotiation of the Company's and the Subsidiaries'
outstanding debt. The fees and expenses described in this SECTION 5.9(b) are
referred to collectively hereinafter as the "TRANSACTION FEES AND EXPENSES".
If the transactions contemplated by this Restated Agreement are not
consummated, all Transaction Fees and Expenses shall be and remain the
obligation of the respective parties that incurred them.
5.10 INDEMNIFICATION AND INSURANCE.
(a) Subject to SECTION 9.1(b), Parent shall cause the Company, to the
full extent required under the Company's Articles of Incorporation or Bylaws
in effect on the date of this Restated Agreement, to indemnify and hold
harmless each present and former director, officer, employee or agent of the
Company and the Subsidiaries (COLLECTIVELY, THE "INDEMNIFIED PARTIES") with
respect to matters occurring through the Closing Date, for a period of three
(3) years after the Closing Date.
(b) For a period of three (3) years after the Closing Date and to the
extent available, Parent shall cause the Company to maintain in effect
directors' and officers' liability insurance covering those Persons who are
currently covered by the Company's directors and officers' liability
insurance policy on terms (including the amounts of coverage and the amounts
of deductibles, if any) that are no less favorable to them in any material
respect than the terms now applicable to them under the Company's current
insurance policies.
ARTICLE VI--ADDITIONAL COVENANTS OF THE PARENT,
THE COMPANY AND THE SHAREHOLDERS
6.1 REGISTRATION OF SECURITIES.
(a) On or before the Closing Date, the Parent shall use its reasonable
best efforts to cause the following securities to be registered with the SEC
under the Securities Act and with the appropriate Governmental Authorities
under state blue sky Laws:
(i) the 15,000,000 shares of Parent Common Stock to be transferred to
the Shareholders, whether at Closing or pursuant to the subsequent
exchange of the Class A Special Shares; and
(ii) the 75,000 warrants to purchase 75,000 shares of Parent Common
Stock to be granted to the current directors and/or officers of the
Company as listed on SCHEDULE 6.5(b)(i) hereof; and
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(iii) the 75,000 shares of Parent Common Stock issuable upon the exercise
of the 75,000 warrants referenced in SECTION 6.1(a)(ii) above.
(b) On or before the Closing Date, the Parent shall use its reasonable
best efforts to cause the following securities to be registered with the
appropriate Governmental Authorities or exempted from the registration and
prospectus requirements under the Canadian and provincial securities Laws
and the rules and regulations thereunder:
(i) Class A Special Shares;
(ii) Parent Common Stock transferable to the Shareholders by Newco II
pursuant to SECTION 1.2(b)(ii) hereof upon exchange by such
Shareholder of Company Common Stock; and
(iii) Parent Common Stock transferable to the Shareholders by Newco II
pursuant to SECTION 1.2(b)(ii) hereof upon exchange by such
Shareholder of the Class A Special Shares.
(c) As soon as reasonably practicable after the Closing Date, the Parent
shall use its reasonable best efforts to cause the following securities to
be registered with the SEC under the Securities Act and with the appropriate
Governmental Authorities under state blue sky Laws and where applicable, the
Canadian federal and provincial securities Laws and the rules and
regulations thereunder:
(i) the 186,281 warrants to purchase 186,281 shares of Parent Common
Stock to be granted to the current directors of the Company as
listed on SCHEDULE 6.5(b)(i) attached hereto;
(ii) the 186,281 shares of Parent Common Stock issuable upon the
exercise of the 186,281 warrants referenced in SECTION 6.1(c)(i)
above;
(iii) the 90,000 warrants to purchase 90,000 shares of Parent Common
Stock granted to the certain current or former non-employee
directors of the Parent pursuant to SECTION 6.9(ii) hereof; and
(iv) the 90,000 shares of Parent Common Stock issuable upon the exercise
of the 90,000 warrants referenced in SECTION 6.1(c)(iii) above.
(d) The registration statements referenced in SECTIONS 6.1(a)-(c) hereof
are hereinafter referred to collectively as the "REGISTRATION STATEMENTS."
(e) The Registration Statements shall state, if permitted on the
applicable registration statement form, that such Registration Statement
also registers such indeterminate number of additional shares of Parent
Common Stock as may become issuable to prevent dilution resulting from stock
splits, stock dividends or similar transactions with regard to Parent Common
Stock or Class A Special Shares.
(f) The Parent shall promptly prepare and file such amendments
(including post-effective amendments) and supplements to the Registration
Statements and the prospectus(es) used in connection with the Registration
Statements, as may be necessary to keep the Registration Statements
effective at all times during the periods the Class A Special Shares are
exchangeable and the warrants and options referenced in SECTIONS
6.1(a)(iii), 6.1(b)(iii), 6.1(c)(ii) and 6.1(c)(iv) are exercisable. The
Parent shall use its reasonable best efforts to cause such amendment and/or
new registration statements to become effective as soon as practicable
following the filing thereof.
(g)
(i) On or before the Closing Date, Parent shall cause all Parent
Common Stock issuable upon the exercise of the warrants referenced in
SECTION 6.1(a)(ii) to be listed on each securities exchange on which the
Parent Common Stock is then listed for trading.
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(ii) As soon as reasonably practicable after the Closing Date, Parent
shall use its reasonable best efforts to cause all Parent Common Stock
issuable upon the exercise of the warrants referenced in Sections and
6.1(c)(iii) to be listed on each securities exchange on which the Parent
Common Stock is then listed for trading.
6.2 LEGAL REQUIREMENTS. Subject to the terms and conditions provided in
this Restated Agreement, each of the parties hereto shall use its reasonable
best efforts to take promptly, or cause to be taken, all reasonable actions, and
to do promptly, or cause to be done, all things necessary, proper or advisable
under applicable Laws to consummate and make effective the transactions
contemplated hereby, to obtain all necessary waivers, consents and approvals,
and to effect all necessary registrations and filings and to remove any
injunctions or other impediments or delays, legal or otherwise, in order to
consummate and make effective the transactions contemplated by this Restated
Agreement for the purpose of securing for the parties hereto the benefits
contemplated by this Restated Agreement.
6.3 EXCHANGE AND VOTING TRUST AGREEMENT. At the Closing, Parent, Newco I,
Newco II, a trustee mutually satisfactory to Parent and Company, and those
Shareholders who will become the holders of all the Class A Special Shares on
the Closing Date (by ICL, as attorney-in-fact for certain Shareholders plus The
J.L.R. Family Trust and The Paisley Family Trust) shall enter into an Exchange
and Voting Trust Agreement substantially in the form of EXHIBIT C attached
hereto and which sets forth the agreement of the parties thereto with respect to
the procedures for voting the Parent Class B Voting Preferred Stock and the
exchange of the Class A Special Shares for Parent Common Stock (THE "EXCHANGE
AND VOTING TRUST AGREEMENT").
6.4 PUBLIC ANNOUNCEMENTS. All press releases and other disseminations of
information to employees, customers or suppliers relating to the transactions
contemplated by this Restated Agreement by any party hereto shall require the
prior approval of Parent and the Company, provided Parent shall have the right
to make such public announcements without the approval of the other parties
hereto should such disclosure be required by Law or the policies or requirements
of Canadian or United States securities regulators, stock exchanges, or other
relevant entities in the opinion of Parent's legal counsel. Should such
disclosure be required, Parent agrees to provide the others with reasonable
advance notice of and a copy of the proposed disclosure.
6.5 CONDUCT OF BUSINESS PRIOR TO CLOSING DATE. Except as expressly
contemplated by this Restated Agreement, during the period from the date of this
Restated Agreement to the Closing Date, the Company shall conduct, and it shall
cause the Subsidiaries to conduct, its or their businesses in the ordinary
course and consistent with past practice, subject to the limitations contained
in this Restated Agreement, and the Company shall, and it shall cause the
Subsidiaries to, use its or their reasonable best efforts to preserve intact its
business organization, to keep available the services of its officers, agents
and employees and to maintain satisfactory relationships with all Persons with
whom it does business. Except as expressly contemplated by this Restated
Agreement, and it being acknowledged and agreed by each of the parties to this
Restated Agreement that Parent is in the process of a substantial reduction in
workforce, and, subject to the sale of the CLEC Operations, Parent shall, and it
shall cause the Active Parent Subsidiaries to, use its or their reasonable best
efforts to preserve intact its business organization, consistent with the budget
adopted by the Executive Committee of the Board of Directors of Parent, to keep
available the services of only those officers, agents and employees whom Parent
believes are required to maintain satisfactory relationships with all Persons
with whom it does business. Without limiting the generality of the foregoing,
and except as otherwise expressly provided in this Restated Agreement, after the
date of this Restated Agreement and prior to the Closing Date, (i) neither the
Company nor any Subsidiary will, without the prior written consent of Parent;
and
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(ii) subject to the sale of the CLEC Operations, neither Parent nor any Active
Parent Subsidiary will, without the prior written consent of the Company:
(a) except as provided for in this Restated Agreement, amend or propose
to amend its Certificate or Articles of Incorporation or Bylaws (or
comparable governing instruments) in any material respect;
(b) except as set forth on SCHEDULE 6.5(b)(i), with regard to the
Company or the Subsidiaries, or on SCHEDULE 6.5(b)(ii), with regard to
Parent or the Parent subsidiaries, authorize for issuance, issue, grant,
sell, pledge, dispose of or propose to issue, grant, sell, pledge or dispose
of any shares of, or any options, warrants, commitments, subscriptions or
rights of any kind to acquire or sell any shares of, the capital stock or
other securities of the Company or any Subsidiary, or of Parent or any
Parent subsidiary, including, but not limited to, any securities convertible
into or exchangeable for shares of stock of any class of the Company or any
Subsidiary, or of Parent or any Parent subsidiary, as the case may be;
(c) except as provided for in this Restated Agreement, split, combine or
reclassify any shares of its capital stock or declare, pay or set aside any
dividend or other distribution (whether in cash, stock or property or any
combination thereof) in respect of its capital stock, other than dividends
or distributions to the Company or a Subsidiary, or to Parent or a Parent
subsidiary, as the case may be, or redeem, purchase or otherwise acquire or
offer to acquire any shares of its capital stock or other securities;
(d) except for debt (including, but not limited to, obligations in
respect of capital leases) disclosed on the financial statements of the
Company delivered to Parent prior to the date of this Restated Agreement and
changes thereto occurring in the ordinary course of business, (i) create,
incur or assume any short-term debt, long-term debt or obligations in
respect of capital leases, and indebtedness contemplated by this Restated
Agreement; (ii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, indirectly, contingently or otherwise) for
the obligations of any Person, except for obligations permitted by this
Restated Agreement of any subsidiary or Parent subsidiary, as the case may
be, in the ordinary course of business consistent with past practice;
(iii) except as contemplated in this Restated Agreement, make any capital
expenditures or make any loans, advances or capital contributions to, or
investments in, any other Person (other than customary advances to employees
made in the ordinary course of business consistent with past practice),
PROVIDED the Company will continue to make capital expenditures in
accordance with its budget, maintain, upgrade or expand its facilities and
those of the Subsidiaries, as the case may be, and otherwise operate in the
ordinary course and consistent with past practice; (iv) acquire the stock or
assets of, or merge or consolidate with, any other Person except as
contemplated in this Restated Agreement and the contemplated WorldPages
Acquisition; or (v) voluntarily incur any material liability or obligation
(absolute, accrued, contingent or otherwise), except in the ordinary course
of business;
(e) except in the ordinary course of business or as set forth in
SCHEDULE 6.5(e) or as otherwise permitted by this Restated Agreement, sell,
transfer, mortgage, pledge or otherwise dispose of, or encumber, or agree to
sell, transfer, mortgage, pledge or otherwise dispose of or encumber, any
material assets or properties, real, personal or mixed, except the sale of
the CLEC Operations, in the case of Parent and the Active Parent
Subsidiaries;
(f) increase in any manner the compensation of any of its officers,
agents or employees other than any increases required pursuant to their
employment agreements in accordance with their terms in effect on the date
of this Restated Agreement and increases in the ordinary course of business
consistent with past practice not in excess on an individual basis of the
lesser of 10% of the current compensation of such individual or U.S. $10,000
per annum;
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(g) enter into, establish, amend, make non-routine or material
interpretations or determinations with respect to, or terminate any
employment, consulting, retention, change in control, collective bargaining,
bonus or other incentive compensation, profit sharing, health or other
welfare, stock option, stock purchase, restricted stock, or other equity,
pension, retirement, vacation, severance, deferred compensation or other
compensation or benefit plan, policy, agreement, trust, fund or arrangement
with, for or in respect of, any shareholder, officer, director, other
employee, agent, consultant or affiliate, other than actions contemplated by
this Restated Agreement or in the ordinary course of business or those
agreements in connection with the WorldPages Acquisition.
(h) except with regard to the Saville matter referenced on SCHEDULE 3.7
attached hereto, compromise, settle, grant any waiver or release relating to
or otherwise adjust any Litigation, except routine Litigation in the
ordinary course of business consistent with past practice, involving only a
payment not in excess of U.S. $50,000 individually or U.S. $100,000 when
aggregated with all such payments by the Company and the Subsidiaries
combined or Parent and the Active Parent Subsidiaries combined, as the case
may be;
(i) (i) with respect to the Company or the Shareholders, take any action
or omit to take any action, which action or omission would result in a
breach of any of the covenants, representations and warranties of the
Company or Shareholders set forth in this Restated Agreement or which would
have a Company Material Adverse Effect and (ii) with respect to Parent, take
any action or omit to take any action, which action or omission would result
in a breach of any of the covenants, representations and warranties of the
Parent set forth in this Restated Agreement or which would have a Parent
Adverse Effect;
(j) except in the ordinary course of business, enter into any lease or
other agreement, or amend any lease or other agreement, with respect to real
property;
(k) (i) except as set forth in SECTION 6.5(k)(ii) or SECTION 11.2
hereof, and except in the ordinary course of business, enter into or amend
any agreement or transaction (A) pursuant to which the aggregate financial
obligation of the Company or a Subsidiary, or of Parent or a Parent
Subsidiary as the case may be, or the value of the services to be provided
could exceed U.S. $50,000, (B) having a term of more than 12 months and
pursuant to which the aggregate financial obligation of the Company or a
Subsidiary, or of Parent or a Parent Subsidiary as the case may be, or the
value of the services to be provided could exceed U.S. $100,000 per year, or
(C) which is not terminable upon no more than 30 days' notice without
penalty in excess of U.S. $50,000 individually or U.S. $100,000 when
aggregated with the penalties under all such agreements or transactions;
(ii) The parties hereto expressly agree that notwithstanding
anything in this Restated Agreement to the contrary, Parent may modify,
amend or waive its rights, including those respecting its indemnification
obligations, under (A) the Ionex Agreement referenced on SCHEDULE 3.13
attached hereto; (B) the Restated Web YP Agreement; and (C) the Restated Big
Stuff Agreement; PROVIDED that such modifications, amendments and/or waivers
do not, or would not reasonably be expected to, materially increase Parent's
obligations or materially adversely affect Parent's rights under each
respective agreement, or otherwise materially affect the consideration to be
received under each respective agreement.
(l) subject to SECTION 6.5(k)(ii) hereof, take any action with respect
to the indemnification of any Person;
(m) change any accounting practices or policies, except as required by
generally accepted accounting principles or Laws as agreed to or requested
by the Company's or Parent's auditors after consultation with Parent's or
the Company's auditors, as the case may be;
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(n) subject to SECTION 6.5(k)(ii) hereof, or except in the ordinary
course of business, enter into, amend, modify, terminate or waive any rights
under any Company Material Contract or Parent Material Contract;
(o) adopt a plan of liquidation, dissolution, exchange, consolidation,
share exchange, restructuring, recapitalization, or other reorganization;
PROVIDED, HOWEVER, that Parent may adopt such a plan and may cause the
liquidation or dissolution of any Parent subsidiary if Parent is unable to
sell such Parent subsidiary (i) at a price which Parent determines to be
reasonable; and (ii) during a time period which Parent determines to be
reasonable; or
(p) resolve, agree, commit or arrange to do any of the foregoing.
Furthermore, the Company covenants, represents and warrants that from and
after the date hereof, unless Parent shall otherwise expressly consent in
writing, the Company shall, and the Company shall cause each Subsidiary to, use
its or their reasonable best efforts to:
(A) keep in full force and effect insurance comparable in amount and
scope of coverage to insurance now carried by it;
(B) pay all accounts payable and other obligations in the ordinary
course of business consistent with past practice and with the provisions of
this Restated Agreement, except if the same are contested in good faith,
and, in the case of the failure to pay any material accounts payable or
other obligations which are contested in good faith, only after consultation
with Parent; and
(C) comply in all material respects with all Laws applicable to it or
any of its properties, assets or business and maintain in full force and
effect all Company Permits necessary for, or otherwise material to, such
business.
Furthermore, Parent covenants, represents and warrants that from and after
the date hereof, unless Company shall otherwise expressly consent in writing,
Parent shall, and Parent shall cause each Active Parent Subsidiary to, use its
or their reasonable best efforts to:
(1) keep in full force and effect insurance comparable in amount and
scope of coverage to insurance now carried by it;
(2) pay all accounts payable and other obligations consistent with
prudent cash management principles, except if the same are contested in good
faith, and, in the case of the failure to pay any material accounts payable
or other obligations which are contested in good faith, only after
consultation with Company; and
(3) comply in all material respects with all Laws applicable to it or
any of its properties, assets or business, except for such Laws the failure
to comply with which would not have a Parent Material Adverse Effect, and
maintain in full force and effect all Parent Permits necessary for, or
otherwise material to, such business, except for such Parent Permits the
failure of which to maintain would not have a Parent Material Adverse
Effect.
6.6 NO SOLICITATION OF ACQUISITION PROPOSAL. Unless Parent, the Company,
ICL and the ICL Principals shall agree in advance, in writing, neither Parent,
the Company, ICL, the ICL Principals nor any of their respective affiliates
(including, without limitation, directors, officers, employees, agents,
representatives and shareholders or any affiliates or associates thereof)
("ASSOCIATES") shall, directly or indirectly, make, encourage, facilitate,
solicit, assist or initiate any inquiry or proposal, or provide any information
to or participate in any negotiations with, any Person (other than the parties
to this Restated Agreement and their Associates) relating to any of the
following transactions ("EXTRAORDINARY TRANSACTIONS"): (i) liquidation,
dissolution, recapitalization, share exchange, business combination, exchange or
consolidation of the Company or a Subsidiary or Parent or a Parent subsidiary,
(ii) sale of
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a significant amount of assets of the Company or a Subsidiary or Parent or a
Parent subsidiary, (iii) purchase or sale of shares of capital stock of the
Company or a Subsidiary or Parent or a Parent subsidiary, or (iv) any similar
actions or transactions involving the Company or a Subsidiary or Parent or a
Parent subsidiary (other than the transactions contemplated by this Restated
Agreement), or agree to or consummate any Extraordinary Transaction. The parties
hereto shall immediately inform Parent and the Company of any inquiry, proposal,
or request for information or offer (including the terms thereof and the Person
making such inquiry, proposal, request or offer) which it may receive in respect
of an Extraordinary Transaction and provide Parent and Company with a copy of
any such written inquiries, proposals, requests for information and offers, and
thereafter keep Parent and Company fully informed of the status and details
thereof. The parties hereto acknowledge and agree that the provisions of this
SECTION 6.6 shall not apply to: (a) the sale of the CLEC Operations by Parent or
any Parent subsidiary; (b) the WorldPages Acquisition; or (c) any communications
between or actions by Parent (or any Parent subsidiary), the Company and ICL,
acting jointly, on the one hand, and any Person not a party to this Restated
Agreement, on the other hand, which occurred prior to the date that this
Restated Agreement becomes effective pursuant to SECTION 1.3 hereof.
6.7 CONFIDENTIALITY. Unless (i) otherwise expressly provided in this
Restated Agreement, (ii) required by Applicable Law or any listing agreement
with, or the rules and regulations of, any applicable securities exchange,
(iii) necessary to secure any required Consents as to which the other party has
been advised, or (iv) consented to in writing by Parent and the Company, this
Restated Agreement and any information or documents furnished in connection
herewith shall be kept strictly confidential by the Company, Parent and their
respective officers, directors, employees and agents. Prior to any disclosure
pursuant to the preceding sentence, the party intending to make such disclosure
shall consult with the other party regarding the nature and extent of the
disclosure. Nothing contained herein shall preclude disclosures to the extent
necessary to comply with accounting, SEC and other disclosure obligations
imposed by applicable Law. To the extent required by such disclosure
obligations, Parent, after consultation with the Company, may file with the SEC
a Report on Form 8-K pursuant to the Securities Exchange Act with respect to the
Transactions contemplated by this Restated Agreement, which report may include,
among other things, financial statements and pro forma financial information
with respect to the other party. In connection with any filing with the SEC of a
registration statement or amendment thereto under the Securities Act, Parent,
after consultation with the Company, may include a prospectus containing any
information required to be included therein with respect to the Transactions
contemplated by this Restated Agreement, including, but not limited to,
financial statements and pro forma financial information with respect to the
other party, and thereafter distribute said prospectus. Parent and the Company
shall cooperate with the other and provide such information and documents as may
be required in connection with any such filings. In the event the Transactions
contemplated by this Restated Agreement are not consummated, Parent and the
Company shall return to the other all documents furnished by the other and will
hold in absolute confidence any information obtained from the other party except
to the extent (i) such party is required to disclose such information by Law or
such disclosure is necessary or desirable in connection with the pursuit or
defense of a claim, (ii) such information was known by such party prior to such
disclosure or was thereafter developed or obtained by such party independent of
such disclosure, (iii) such party received such information on a
non-confidential basis from a source, other than the other party, which is not
known by such party to be bound by a confidentiality obligation with respect
thereto or (iv) such information becomes generally available to the public or is
otherwise no longer confidential. Prior to any disclosure of information
pursuant to the exception in clause (i) of the preceding sentence, the party
intending to disclose the same shall so notify the party which provided the same
in order that such party may seek a protective order or other appropriate remedy
should it choose to do so.
6.8 CAPITAL STOCK AND DERIVATIVE SECURITIES. In addition to the capital
stock of Parent to be issued pursuant to ARTICLE I of this Restated Agreement,
the Board of Directors of Parent shall have the right to grant or issue (i) the
options to acquire shares of Parent Common Stock pursuant to the Parent's
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1997 Stock Awards Plan which are listed on the attached SCHEDULE 6.5(b)(ii);
(ii) restricted stock valued at, or warrants to purchase up to 90,000 shares of
Parent Common Stock at an exercise price of U.S. $6.96 per share to be issued to
certain non-employee directors of Parent who were responsible for negotiating
the June 3 YPtel Agreement and the WorldPages Acquisition; (iii) the shares of
Parent Common Stock issuable upon conversion at Closing of the Great Western
Notes at a conversion price of U.S. $5.50 per share; (iv) up to 1,090,909 shares
of Parent Common Stock issuable at U.S. $5.50 per share upon redemption of one
or more notes which may be issued to the current shareholders of Web and Big
Stuff who may lend up to Six Million Dollars (U.S. $6,000,000.00) to Web or Big
Stuff as provided in the agreements by which Parent may acquire Web and Big
Stuff; (v) the shares of Parent Common Stock to be issued upon exercise of
options or warrants to be granted at Closing to those persons and at such
exercise prices as listed in SCHEDULE 6.5(b)(i); and (vi) one (1) share of
Parent Class B Voting Preferred Stock to be issued to the trustee under the
Exchange and Voting Trust Agreement pursuant to SECTION 1.2(c) hereof.
ARTICLE VII--CONDITIONS TO CLOSING
7.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO CLOSING. The respective
obligations of each party to this Restated Agreement to consummate and effect
this Restated Agreement and the transactions contemplated hereby shall be
subject to the satisfaction or waiver at or prior to the Closing Date of the
following conditions:
(a) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No temporary restraining
order, preliminary or permanent injunction or other order issued by any
court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the transactions contemplated by this
Restated Agreement shall be in effect, nor shall any proceeding brought by
an administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign, seeking any of the foregoing be
pending; nor shall there be any action taken, or any statute, rule,
regulation or order enacted, entered, enforced or deemed applicable to the
transactions contemplated by this Restated Agreement, which makes the
consummation of the transactions contemplated by this Restated Agreement
illegal.
(b) EXCHANGE AND VOTING TRUST AGREEMENT. The Exchange and Voting Trust
Agreement shall have been duly executed and delivered by all parties thereto
and shall be in full force and effect.
(c) GOVERNMENT APPROVALS. All consents, other than consents the
failure of which to be obtained, in the judgment of Parent, would not have a
Company Material Adverse Effect, of any domestic or foreign Governmental
Authority required for the consummation of the transactions contemplated by
this Restated Agreement shall have been obtained by Final Order.
(d) RELATED TRANSACTIONS. The acquisition by Parent, or a direct or
indirect Subsidiary of Parent, of Web and Big Stuff in a tax free
reorganization shall have been consummated and any registration statement(s)
required for the registration of Parent Common Stock issued to Web and Big
Stuff as consideration in connection with the acquisition by Parent shall
have been declared effective and no stop order suspending the effectiveness
of such registration statement(s) shall have been issued and no proceeding
for that purpose shall have been initiated or threatened by the SEC; and the
Great Western Notes shall have been satisfied by the issuance of Parent
Common Stock to the Great Western Shareholders.
(e) FINANCING. Parent and the Active Parent Subsidiaries and the
Company and the Subsidiaries shall have received from their lenders (both in
Canada and in the United States) an extension of all of their and their
subsidiaries' debt owing by them on terms and conditions satisfactory to
Parent and the Company or all such debts shall be refinanced on terms
satisfactory to Parent and the Company or any consents and approvals
required from such lenders is received.
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(f) SHAREHOLDER APPROVAL. All necessary approvals of the Shareholders
and the shareholders of Parent in connection with the transactions
contemplated by this Restated Agreement shall have been obtained.
(g) REQUIRED CONSENTS. Any required Consents of any Person to the
transactions contemplated by this Restated Agreement shall have been
obtained on terms and conditions reasonably acceptable to Parent and the
Company and be in full force and effect, except for those the failure of
which to obtain, in the reasonable judgment of Parent and Company, would not
have a Company Material Adverse Effect or Parent Material Adverse Effect.
(h) HSR ACT, EXON-FLORIO FILINGS AND INVESTMENT CANADA ACT. A
determination that the transactions contemplated by this Restated Agreement
are permitted shall have been received from the Committee on Foreign
Investment in connection with the Exon-Florio Filings and any waiting period
applicable to the transactions contemplated by this Restated Agreement under
the HSR Act and the Investment Canada Act shall have expired or earlier
termination thereof shall have been granted and no action shall have been
instituted by either the United States Department of Justice or the United
States Federal Trade Commission or appropriate Canadian Governmental
Authorities to prevent the consummation of the transactions contemplated by
this Restated Agreement or to modify or amend such transactions in any
material manner, or if any such action shall have been instituted, it shall
have been withdrawn or a final judgment shall have been entered against such
Department or Commission or Canadian Governmental Authority, as the case may
be.
(i) REGISTRATION STATEMENT. The Registration Statement(s) shall have
been declared effective and no stop order suspending the effectiveness of
the Registration Statement(s) shall have been issued and no proceeding for
that purpose shall have been initiated or threatened by the SEC or any
Governmental Authority, whether state, federal, Canadian federal or
provincial.
(j) BLUE SKY. Parent shall have received all state securities Law and
Canadian federal or provincial authorizations or exemptions necessary to
consummate the transactions contemplated hereby.
(k) FAIRNESS OPINION. The written opinion received by Parent's Board
of Directors from its financial advisors, PaineWebber Incorporated, pursuant
to SECTION 1.3 shall not have been withdrawn.
(l) TAX OPINION. Parent and the Company shall have received an opinion
from Cassels Brock & Blackwell based on customary representations contained
in certificates of Parent, and the Company, to the effect that, if the
transactions contemplated by SECTION 1.2(b) of this Restated Agreement are
consummated in accordance with the provisions of this Restated Agreement,
the Shareholders who do not immediately exchange the Company Common Stock
owned by them for Parent Common Stock pursuant to this Restated Agreement
and who are residents of Canada and hold shares as capital property will be
able to treat the transactions contemplated by this Restated Agreement as a
tax deferred transfer pursuant to Subsection 85(1) utilizing the provisions
of Subsection 85(1) of the Income Tax Act [Canada] provided that such
Shareholders and Newco II timely make all joint elections.
(m) NYSE LISTING APPROVAL. Parent shall have received from the NYSE
approval for listing with the NYSE of the Parent Common Stock to be issued
pursuant to this Restated Agreement, the Restated Web YP Agreement and the
Restated Big Stuff Agreement.
(n) TRANSACTION FEES AND EXPENSES. ICL shall have received payment of
the Transaction Fees and Expenses pursuant to SECTION 5.9(b).
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(o) SUPPORT AGREEMENT. The Support Agreement, substantially in the
form of EXHIBIT D attached hereto, shall have been duly executed and
delivered by all parties thereto and shall be in full force and effect.
(p) SALE OF CLEC OPERATIONS. The sale of the CLEC Operations,
contemplated under the Ionex Agreement referenced on SCHEDULE 3.13 hereof,
shall have closed.
7.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF SHAREHOLDERS AND COMPANY. The
obligations of the Company, ICL, the ICL Principals and the Shareholders to
consummate and effect this Restated Agreement and the transactions contemplated
hereby shall be subject to the satisfaction at or prior to the Closing Date of
each of the following conditions, any of which may be waived, in writing, by the
Company, ICL, the ICL Principals and a majority of the Shareholders:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS.
(i) The representations and warranties of Parent in this Restated
Agreement that are modified by materiality or Parent Material Adverse
Effect ("PARENT MODIFIED REPRESENTATION") shall be true and correct in
all respects and those that are not so modified ("PARENT NONMODIFIED
REPRESENTATION") shall be true and correct in all material respects on
the date hereof and, except for changes not prohibited by this Restated
Agreement, as of the Closing Date as if made at the Closing Date.
Furthermore, none of the representations or warranties of Parent
contained in this Restated Agreement, disregarding any qualifications
therein or in this SECTION 7.2(a) regarding Materiality or Parent
Material Adverse Effect, shall be untrue or incorrect to the extent that
such untrue or incorrect representations or warranties, when taken
together as a whole, have had or would have a Parent Material Adverse
Effect; and
(ii) Parent shall have performed and complied with all of the
covenants and agreements in all material respects and satisfied in all
material respects all of the conditions required by this Restated
Agreement to be performed or complied with or satisfied by Parent at or
prior to the Closing Date. Notwithstanding anything in this Restated
Agreement to the contrary, the parties hereto acknowledge and agree that
the consummation of the transactions contemplated by this Restated
Agreement and subsequent disposition of the CLEC Operations constitutes a
significant change from the plans and strategies described in the 1998
Form 10-K such that the representations and warranties of Parent that
reference the 1998 Form 10-K will not be true and correct as of the
Closing Date as they relate to the plans and strategies of the business
of Parent at Closing.
(b) CERTIFICATE OF PARENT AND OTHER DELIVERIES. The Company, ICL, the
ICL Principals and the Shareholders shall have been provided, with (i) a
certificate executed on behalf of Parent by an Officer to the effect that,
as of the Closing Date, all representations and warranties made by Parent
under this Restated Agreement are true and complete except as set forth in
SECTION 7.2(a); and all covenants, obligations and conditions of this
Restated Agreement to be performed by Parent on or before such date have
been so performed; (ii) a certificate of good standing from the Secretary of
State of the State of Delaware that Parent is a validly existing
corporation; (iii) duly adopted resolutions of the Board of Directors of
Parent approving the execution, delivery and performance of this Restated
Agreement and the Company Transaction Agreements to which it is a party and
the instruments contemplated hereby and thereby, certified by its Secretary
or Assistant Secretary; and (iv) such other documents and instruments as the
Company may reasonably request.
(c) LEGAL OPINION. The Company and the Shareholders shall have
received a legal opinion as to U.S. law issues from Blackwell Sanders Peper
Martin LLP, legal counsel to Parent (and if requested by the Company from
Canadian legal counsel for Parent as to Canadian law issues), in a form
reasonably acceptable to the Company and its legal counsel that addresses
matters typically
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covered in legal opinions in transactions similar to the transactions
contemplated by this Restated Agreement, including without limitation, the
authority of Parent to enter into this Restated Agreement and the Parent
Transaction Agreements and consummate the transactions contemplated hereby
and thereby and that the securities referenced in SECTION 6.1(a) or
SECTION 6.1(b) hereof shall have been registered with the SEC under the
Securities Act and shall have been listed for trading on the NYSE on or
before the Closing Date.
(d) KPMG OPINION. Parent shall have received the opinion from KPMG LLP
referenced in SECTION 7.3(d) hereof, and such opinion shall not have been
withdrawn.
(e) ICL PAYMENT. Parent shall have paid U.S. $75,000 to ICL, in
satisfaction of its obligation under SECTION 5.9(a) hereof.
(f) OUTSTANDING PARENT STOCK. Not more than the number of shares of
Parent as reflected in the 1998 10-K shall be outstanding on a fully diluted
basis, except as permitted by SECTION 6.9.
(g) NO MATERIAL ADVERSE CHANGE. There shall not have occurred after
the date hereof any Event that has or reasonably could be expected to have a
Parent Material Adverse Effect.
(h) LITIGATION. Except as set forth on SCHEDULE 3.7 hereof, there
shall be no action, suit, claim or proceeding of any nature pending, or
overtly threatened, against Parent or the Company, their respective
properties or any of their officers or directors, arising out of, or in any
way connected with, the Transactions contemplated by this Restated Agreement
or the other transactions contemplated by the terms of this Restated
Agreement which individually or in the aggregate may cause a Material
Adverse Effect.
(i) STOCK OPTIONS. The stock options listed on SCHEDULE 6.5(b)(i)
attached hereto shall have been granted by the Parent.
(j) ASSIGNMENT AND ASSUMPTION AGREEMENTS. To the extent that any
Shareholder has transferred shares pursuant to SECTION 1.1(f) hereof, the
assignment and assumption agreements referenced in SECTION 1.1(f) shall have
been duly executed and delivered by Parent.
7.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF PARENT. The obligations of
Parent to consummate and effect this Restated Agreement and the transactions
contemplated hereby shall be subject to the satisfaction at or prior to the
Closing Date of each of the following conditions, any of which may be waived, in
writing, exclusively by Parent:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS.
(i) The Company Modified Representations shall be true and correct in
all respects, and the Company Nonmodified Representations shall be true
and correct in all material respects, on the date hereof and, except for
changes not prohibited by this Restated Agreement, as of the Closing Date
as if made at the Closing Date. Furthermore, none of the representations
or warranties of the Company or Shareholders contained in this Restated
Agreement, disregarding any qualifications therein or in this
SECTION 7.3(a) regarding materiality or Company Material Adverse Effect,
shall be untrue or incorrect to the extent that such untrue or incorrect
representations or warranties, when taken together as a whole, have had
or would have a Company Material Adverse Effect; and
(ii) The Company and Shareholders shall have performed and complied
with all the covenants and agreements in all material respects and
satisfied in all material respects all the conditions required by this
Restated Agreement to be performed or complied with or satisfied by the
Company and Shareholders at or prior to the Closing Date.
(b) CERTIFICATE OF THE COMPANY AND OTHER DELIVERIES. Parent shall have
been provided with (i) a certificate executed on behalf of the Company by
its Chief Executive Officer to the effect
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that, as of the Closing Date all representations and warranties made by the
Company in this Restated Agreement are true and correct; and all covenants,
obligations and conditions of this Restated Agreement to be performed by the
Company and ICL on behalf of the Shareholders on or before such date have
been so performed; (ii) a certificate of good standing from the proper
authority in the jurisdictions in which the Company and the Subsidiaries are
incorporated or qualified to do business stating that each is a validly
existing corporation in good standing; (iii) duly adopted resolutions of the
Board of Directors of the Company approving the execution, delivery and
performance of this Restated Agreement and the Parent Transaction Agreements
to which the Company is a party and the instruments contemplated hereby and
thereby, certified by the Secretary or Assistant Secretary of the Company;
(iv) a true and complete copy of the Articles or Certificate of
Incorporation or comparable governing instruments, as amended, of the
Company and each of the Subsidiaries certified by the Secretary of State of
the state of incorporation or comparable authority in other jurisdictions,
and a true and complete copy of the Bylaws or comparable governing
instruments, as amended, of Parent and each of the Subsidiaries certified by
the Secretary thereof; (v) the duly executed Resignations on terms and
conditions reasonably acceptable to Parent; and (vi) such other documents
and instruments as Parent reasonably may request.
(c) LEGAL OPINION. Parent shall have received (i) a legal opinion as
to Canadian law issues from Cassels Brock & Blackwell, legal counsel to the
Company, (and if requested by Parent from U.S. legal counsel for the Company
as to U.S. law issues) in a form reasonably acceptable to Parent and its
legal counsel that addresses matters typically covered in legal opinions in
transactions similar to the transactions contemplated by this Restated
Agreement, including without limitation, the authority of all of the
Shareholders, the Company and ICL to enter into this Restated Agreement and
consummate the transactions contemplated hereby and, if required by Parent,
that the shares of Company Common Stock to be transferred to Newco II are
subject to the Powers of Attorney; and (ii) an opinion from Barbadian legal
counsel that the trustees of the Barbadian Trusts have the authority to
execute this Restated Agreement on behalf of the Barbadian Trusts and that
the Barbadian Trusts have the authority to enter into this Restated
Agreement and the Company Transaction Agreements and consummate the
transactions contemplated hereby and thereby and to hold the Parent Common
Stock that will be issued to the Barbadian Trusts pursuant to this Restated
Agreement.
(d) KPMG OPINION. Parent shall have received an opinion from KPMG LLP,
its independent certified public accountants, that upon completion of the
reorganization described in SECTIONS 1.1(a), 1.2(c) and 1.2(d) hereof,
Parent can properly file a consolidated income Tax return on behalf of a
consolidated group which would include Parent, YPTI and the Subsidiaries and
that the YPTI transactions can be accomplished as a tax free reorganization
under the Code, and such opinion shall not have been withdrawn.
(e) LITIGATION. There shall be no action, suit, claim or proceeding of
any nature pending, or overtly threatened, against Parent or the Company,
their respective properties or any of their officers or directors, arising
out of, or in any way connected with, the transactions contemplated by this
Restated Agreement or the other transactions contemplated by the terms of
this Restated Agreement which individually or in the aggregate may cause a
Parent Material Adverse Effect or a Company Material Adverse Effect.
(f) NO MATERIAL ADVERSE CHANGE. There shall have not occurred after
the date hereof any Event that has or reasonably could be expected to have a
Company Material Adverse Effect.
(g) YPTI TRANSACTIONS. Parent shall have received evidence from the
Company reasonably satisfactory to Parent that the YPTI Reclassification has
been completed and Parent shall have completed the purchase of the YPTI
Common Stock in accordance with SECTION 1.2(d).
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(h) SUBORDINATED LOAN AGREEMENT AND UNANIMOUS SHAREHOLDERS
AGREEMENT. PCP shall have satisfied all of its obligations under the
Subordinated Loan Agreement including, without limitation, the repayment in
full of the Loans (as defined in the Subordinated Loan Agreement) and all
interest accrued thereon. The Subordinated Lenders shall have exercised the
warrants evidenced by the Warrant Certificates (as defined in the
Subordinated Loan Agreement) and the Company Class B stock issued to the
Subordinated Lenders thereunder shall have been converted into Company
Common Stock. The Subordinated Loan Agreement shall be terminated, no party
thereto shall have any remaining or continuing rights or obligations
thereunder, and all Liens (as defined in the Subordinated Loan Agreement)
granted thereunder shall have been released. The Unanimous Shareholders
Agreement shall be terminated and no party thereto shall have any continuing
rights or obligations thereunder.
(i) ICL AGREEMENTS. All management and other agreements between ICL
and the Company shall have been terminated and no party thereto shall have
any continuing rights or obligations thereunder.
(j) ASSIGNMENT AND ASSUMPTION AGREEMENTS. To the extent that any
Shareholder has transferred shares pursuant to SECTION 1.1(f) hereof, the
assignment and assumption agreements referenced in SECTION 1.1(f) shall have
been duly executed and delivered to Parent.
ARTICLE VIII--TERMINATION AND ABANDONMENT
8.1 TERMINATION. This Restated Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing Date only as follows:
(a) by mutual written consent of Company and Parent, duly authorized by
the Board of Directors of each;
(b) by the Company or Parent if the Closing shall not have occurred on
or before January 31, 2000, as such date may be extended pursuant to
SECTION 1.4 (or such other date as may be agreed to by Company and Parent);
PROVIDED, THAT, no party may terminate this Restated Agreement under this
SECTION 8.1(b) if such party's breach of this Restated Agreement has caused
or resulted in the failure of the Closing to occur on or before such date;
(c) by the Company if (i) there are any breaches of any Parent Modified
Representation or any material breaches of any Parent Nonmodified
Representation, or (ii) Parent has breached or failed to perform,
notwithstanding satisfaction or due waiver of all conditions thereto, any of
its material covenants or agreements contained herein as to which notice
specifying such breach or failure has been given to Parent promptly after
the discovery thereof and Parent has failed to cure or otherwise resolve the
same to the reasonable satisfaction of the Company within thirty (30) days
after receipt of such notice;
(d) by Parent if (i) there are any breaches of any Company Modified
Representations or any material breaches of any Company Nonmodified
Representations, or (ii) Company has breached or failed to perform,
notwithstanding satisfaction or due waiver of all conditions thereto, any of
its material covenants or agreements contained herein as to which notice
specifying such breach or failure has been given to Company promptly after
the discovery thereof and Company has failed to cure or otherwise resolve
the same to the reasonable satisfaction of the Parent within thirty (30)
days after receipt of such notice;
(e) by Company or Parent if a court of competent jurisdiction or other
Governmental Authority shall have issued an order, decree or ruling or taken
any other action permanently restraining, enjoining or otherwise prohibiting
this Restated Agreement or any of the transactions contemplated by this
Restated Agreement and such order, decree, ruling or other action shall have
become final and nonappealable;
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(f)(i) by the Company if the stockholders of Parent fail to approve the
issuance of the Parent Common Stock pursuant to this Restated Agreement or
the other transactions contemplated or otherwise referenced herein, as
applicable, at the meeting duly convened therefor;
(f)(ii) by Parent if the stockholders of Parent fail to approve the
issuance of the Parent Common Stock pursuant to this Restated Agreement or
the other transactions contemplated or otherwise referenced herein, as
applicable, at the meeting duly convened therefor;
(g) by Parent, if Company or its Board of Directors breaches any
provision of SECTION 6.6; or
(h) by the Company, if Parent or its Board of Directors breaches any
provision of SECTION 6.6.
The party desiring to terminate this Restated Agreement pursuant to this
SECTION 8.1 shall give written notice of such termination to the other party in
accordance with SECTION 11.1, below.
8.2 PROCEDURE UPON TERMINATION. In the event of termination pursuant to
this ARTICLE VIII, the transactions contemplated by this Restated Agreement
shall be abandoned without further action by the Company or Parent, provided
that the obligations of the applicable parties to this Restated Agreement
contained in ARTICLE IX hereof shall remain in full force and effect. If this
Restated Agreement is terminated as provided herein, each party shall use its
reasonable best efforts to redeliver all documents, work papers and other
material (including any copies thereof) of any other party relating to the
transactions contemplated hereby, whether obtained before or after the execution
hereof, to the party furnishing the same.
ARTICLE IX--SURVIVAL OF REPRESENTATIONS
AND WARRANTIES; INDEMNIFICATION
9.1 INDEMNIFICATION BY THE ICL PRINCIPALS.
(a) If the Closing has occurred, subject to the terms and conditions of
this ARTICLE IX, the ICL Principals shall indemnify Parent, and its
officers, directors, agents and representatives (THE "INDEMNITEES"), from
and in respect of, and hold the Indemnitees harmless against, any and all
damages, fines, penalties, losses, liabilities, judgments, and deficiencies
(including without limitation amounts paid in settlement and interest and
reasonable legal and accounting fees), but which amount shall be offset or
reduced by the amount of any insurance proceeds received by Parent in
respect of any of the foregoing, incurred or suffered by any of the
Indemnitees ("DAMAGES") resulting from, relating to or in connection with
any misrepresentation or breach of warranty of the ICL Principals or for any
other matters referred to elsewhere in this Restated Agreement.
(b) The ICL Principals acknowledge that their indemnification
obligations hereunder are solely in their capacity as former shareholders of
the Company, and, accordingly, the indemnification obligations in this
ARTICLE IX shall not entitle any ICL Principal who was or is a current or
former officer, director or employee of the Company to any indemnification
from the Company or the Parent pursuant to the organizational or governing
documents of the Company or the Parent or pursuant to this Restated
Agreement.
9.2 METHOD OF ASSERTING CLAIMS.
(a) Prior to the expiration of six (6) months from the Closing Date,
each Indemnitee shall give written notice (THE "CLAIM NOTICE") to the ICL
Principals, of any and all claims or events known to it which gives rise or
may give rise to a claim for indemnification hereunder by the Indemnitee
against the ICL Principals (AN "INDEMNIFIABLE CLAIM"). The Claim Notice
shall specify the nature and estimated amount of such Damages (THE "CLAIMED
AMOUNT"). In the case of any claim for indemnification hereunder arising out
of a claim, action, suit or proceeding brought by any Person who is not a
party to this Restated Agreement (A "THIRD-PARTY CLAIM"), prior to
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expiration of six (6) months from the Closing Date, the Indemnitee also
shall give the ICL Principals, copies of any written claims, process or
legal pleadings with respect to such Third-Party Claim.
(b) Within forty-five (45) days after delivery of a Claim Notice, the
ICL Principals shall notify the Parent in writing of their objections, if
any, to the claim. If the ICL Principals have no objections to the claim,
the ICL Principals shall remit to the Parent the Claimed Amount within
thirty (30) days. If the ICL Principals have objections to the claim, the
ICL Principals and the Indemnitee shall proceed in good faith to negotiate a
resolution of the dispute regarding the claim, and, if not resolved through
negotiations, such dispute shall be resolved by litigation in an appropriate
court of competent jurisdiction.
9.3 THIRD PARTY CLAIMS.
(a) Except as otherwise provided in paragraph (c) below, the ICL
Principals may elect to compromise or defend, at the ICL Principals' own
expense and by the ICL Principals' own counsel reasonably satisfactory to
the Indemnitee, any Third-Party Claim; provided that (i) the ICL Principals
provide the Indemnitee with reasonable evidence that the ICL Principals will
have the financial resources to defend against such claim and fulfill their
indemnification obligations hereunder; and (ii) the giving of a Defense
Notice (as defined below) by the ICL Principals shall constitute an
acknowledgment by the ICL Principals of their obligation to indemnify the
Indemnitee with respect to such Third-Party Claim in accordance with the
terms of this ARTICLE IX. If the ICL Principals elect to compromise or
defend a Third-Party Claim, the ICL Principals shall, within thirty
(30) days of their receipt of the notice provided pursuant to
SECTION 9.2(a) hereof (or sooner, if the nature of such Third-Party Claim so
requires), notify the related Indemnitee of their intent to do so (A
"DEFENSE NOTICE"), and such Indemnitee shall reasonably cooperate in the
compromise of, or defense against, such Third-Party Claim. The ICL
Principals shall be responsible for the payment of such Indemnitee's actual
reasonable out-of-pocket expenses (including reasonable legal and accounting
fees) incurred in connection with such cooperation, and such expenses shall
constitute Damages incurred or suffered by Parent within the meaning of
SECTION 9.1(a) hereof. After notice from the ICL Principals, to an
Indemnitee of their election to assume the defense of a Third-Party Claim,
the ICL Principals shall not be liable to such Indemnitee under this
ARTICLE IX for any legal expenses subsequently incurred by such Indemnitee
in connection with the defense thereof. If the ICL Principals elect not to
compromise or defend against a Third-Party Claim, or fail to notify an
Indemnitee of their election as provided in this SECTION 9.3, such
Indemnitee may pay, compromise or defend such Third-Party Claim on behalf of
and for the account and risk of the ICL Principals (and any amount paid or
expenses incurred in connection therewith shall constitute Damages (within
the meaning of SECTION 9.1(a) hereof) incurred or suffered by Parent. The
ICL Principals may not consent to entry of any judgment or enter into any
settlement without the written consent of each related Indemnitee (which
consent shall not be unreasonably withheld), unless such judgment or
settlement provides solely for money damages or other money payments for
which such Indemnitee is entitled to indemnification hereunder and includes
as an unconditional term thereof the giving by the claimant or plaintiff to
such Indemnitee of a release from all liability in respect of such
Third-Party Claim.
(b) If there is a reasonable likelihood that a Third-Party Claim may
have a material adverse effect on an Indemnitee, other than as a result of
money damages or other money payments for which such Indemnitee is entitled
to indemnification hereunder, such Indemnitee will have the right, after
consultation with the ICL Principals, and at the cost and expense of the ICL
Principals (which costs and expenses, other than legal and accounting fees,
shall constitute Damages (within the meaning of SECTION 9.1(a) hereof) to
the extent provided therein to defend such Third-Party Claim.
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9.4 SURVIVAL. The representations and warranties of the Company set forth
in this Restated Agreement shall survive the Closing and shall continue for six
(6) months following the Closing Date. The representations and warranties shall
not be affected by any examination made for or on behalf of Parent or the
knowledge of any of Parent's officers, directors, stockholders, employees or
agents, except that the representations and warranties are qualified by the
matters disclosed in the Schedules to the representations and warranties of the
Company and the ICL Principals and Parent agrees that Parent has knowledge of
such matters. Notwithstanding anything to the contrary herein, if a claim for
indemnification is made before the expiration of the periods of survival set
forth above in this SECTION 9.4, then (notwithstanding the expiration of such
time period) the representation or warranty applicable to such claim shall
survive until, but only for purposes of, the resolution of such claim.
9.5 LIMITATIONS.
(a) The ICL Principals shall not be liable under this ARTICLE IX unless
and until the aggregate amount of Damages incurred or suffered by
Indemnitees exceeds U.S. $100,000. For purposes of the preceding sentence,
no independent claims of less than U.S. $10,000 may be made; PROVIDED,
HOWEVER, that all claims arising out of a common set of facts shall be
aggregated for purposes of determining whether the U.S. $10,000 threshold
has been met.
(b) The ICL Principals' aggregate liability under this ARTICLE IX shall
not exceed U.S. $4,125,000. The ICL Principals' liability under this
ARTICLE IX shall be joint and several; PROVIDED, HOWEVER, that the liability
of each of The J.L.R. Family Trust and The Paisley Family Trust under this
ARTICLE IX shall be limited to (i) Parent Common Stock received on the
Closing Date and held by such trust, or Parent Common Stock obtained upon
exchange of Class A Special Shares received on the Closing Date, and held by
such trust, or (ii) if the Parent Common Stock referred to in clause (i)
above has been sold or otherwise transferred, the after-tax proceeds from
the disposition of such Parent Common Stock.
(c) The ICL Principals may, at their option, satisfy their
indemnification obligations under this Restated Agreement by (i) the payment
of that amount of cash (in U.S. dollars) sufficient to satisfy such
indemnification claim, but in any event not exceeding the amount set forth
in SECTION 9.5(b) hereof, and subject to the provisions of SECTION 9.5(a)
hereof; or (ii) the delivery of stock certificates representing that number
of shares of Parent Common Stock or Class A Special Shares sufficient to
satisfy such indemnification claim, the value of which shall be determined
in accordance with SECTION 9.5(d) hereof; PROVIDED, HOWEVER, that any stock
certificates delivered in satisfaction of an indemnification claim must be
delivered to Parent within three (3) business days following (as applicable)
(A) the date calculated in accordance with SECTION 9.2 or SECTION 9.3
hereof, if the claim is not in dispute; (B) resolution of such
indemnification claim, whether prior to or following commencement of
litigation; or (C) the entry of a final and non-appealable judgment by a
court of competent jurisdiction.
(d)(i) The parties hereto agree that, for purposes of valuing shares
of Parent Common Stock delivered pursuant to SECTION 9.5(c) to satisfy
any indemnification claims pursuant to SECTION 9.2 or SECTION 9.3, Parent
Common Stock shall be valued at a price per share equal to the greater
of: (A) the weighted average of the closing prices, as reported on the
NYSE, of the Parent Common Stock on the twenty (20) trading days prior to
the date on which the stock certificates for the Parent Common Stock are
to be delivered pursuant to clause (ii) of SECTION 9.5(c), or (B) $5.50.
(ii) The parties hereto agree that, for purposes of valuing shares of
Class A Special Shares delivered to satisfy any indemnification claims
pursuant to SECTION 9.5(c), Class A Special Shares shall be valued at a
price per share equal to the greater of: (A) the weighted average of the
closing prices, as reported on the NYSE, of the Parent Common Stock into
which the Class A Special Shares are exchangeable on the twenty
(20) days prior to the date
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on which the stock certificates for the Class A Special Shares are to be
delivered pursuant to clause (ii) of SECTION 9.5(c), or (B) $5.50.
(e) No claim for indemnification pursuant to SECTION 9.1 shall be made
unless asserted by a written notice given to the ICL Principals on or before
six (6) months from the Closing Date. For greater certainty, no Claim Notice
may be given after six (6) months from the Closing Date.
9.6 INDEMNIFICATION BY THE PARENT.
(a) INDEMNITY. If the Closing has occurred, subject to the terms and
conditions of this SECTION 9.6, Parent shall indemnify the Company, the ICL
Principals, ICL and the Shareholders from and in respect of all, and hold
the Company, the ICL Principals, ICL and the Shareholders harmless against,
any and all damages, fines, penalties, losses, liabilities, judgments and
deficiencies (including without limitation amounts paid in settlement and
interest and reasonable legal and accounting fees) ("ICL PRINCIPAL
DAMAGES")resulting from, relating to or in connection with any
misrepresentation or breach of warranty of the Parent contained in this
Restated Agreement or for any other matters referred to elsewhere in this
Restated Agreement.
(b) SURVIVAL. The representations and warranties of Parent set forth
in this Restated Agreement shall survive the Closing and shall continue
until six (6) months after Closing Date. The representations and warranties
shall not be affected by any examination made for or on behalf of the
Company or ICL Principals or the knowledge of any of the Company's officers,
directors, stockholders, employees or agents, except that the
representations and warranties are qualified by the matters disclosed in the
Schedules to the representations and warranties of the Parent, and the
Company agrees that the Company has knowledge of such matters.
Notwithstanding anything to the contrary herein, if a claim for
indemnification is made before the expiration of the periods of survival set
forth above in this SECTION 9.6, then (notwithstanding the expiration of
such time period) the representation or warranty applicable to such claim
shall survive until, but only for purposes of, the resolution of such claim.
(c) LIMITATIONS. Parent shall not be liable under this SECTION 9.6
unless and until the aggregate amount of ICL Principal Damages incurred or
suffered by the ICL Principals exceeds U.S. $100,000. Furthermore, the
liability of Parent under this SECTION 9.6 shall not exceed U.S. $4,125,000.
No claim for indemnification pursuant to SECTION 9.6 shall be made unless
asserted by a written notice given to Parent on or before six (6) months
from the Closing Date. For greater certainty, no notice of a claim for
indemnification may be given after six (6) months from the Closing Date.
ARTICLE X--MUTUAL RELEASE
10.1 MUTUAL RELEASE OF ALL CLAIMS.
(a) Parent, for itself and for all of its stockholders, directors,
officers, agents, employees, representatives, divisions, subsidiaries,
affiliates, insurers, successors and assigns, hereby releases, remises,
acquits and forever discharges the Company, ICL and the ICL Principals, and
each of them and each of their respective stockholders, directors, officers,
agents, employees, representatives, divisions, parents, subsidiaries,
affiliates, insurers, successors and assigns, of and from any and all manner
of claims, actions, causes of action, suits, debts, dues, accounts,
contracts, agreements, continuing obligations, judgments, claims and demands
whatsoever, whether in law or in equity, which may exist or may hereafter
arise from any matter, fact, circumstance, happening or thing whatsoever
occurring or failing to occur in connection with the negotiation, execution
and performance of their respective obligations under the June 3 YPtel
Agreement.
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(b) The Company, ICL and the ICL Principals, each for itself and for all
of their respective stockholders, directors, officers, agents, employees,
representatives, divisions, subsidiaries, affiliates, insurers, successors
and assigns, hereby releases, remises, acquits and forever discharges Parent
and its stockholders, directors, officers, agents, employees,
representatives, divisions, parents, subsidiaries, affiliates, insurers,
successors and assigns, of and from any and all manner of claims, actions,
causes of action, suits, debts, dues, accounts, contracts, agreements,
continuing obligations, judgments, claims and demands whatsoever, whether in
law or in equity, which may exist or may hereafter arise from any matter,
fact, circumstance, happening or thing whatsoever occurring or failing to
occur in connection with the negotiation, execution and performance of its
obligations under the June 3 YPtel Agreement.
(c) Parent and each of the Company, ICL and the ICL Principals hereby
represent, warrant and acknowledge that the mutual covenants and agreements
in this ARTICLE X are made in good faith.
10.2 COVENANT NOT TO SUE.
(a) Parent hereby agrees that it will not institute any action against
the Company, ICL or the ICL Principals, including, but not limited to, any
claim for contractual indemnity or implied indemnity, arising out of the
June 3 YPtel Agreement.
(b) Each of the Company, the Shareholders, ICL and the ICL Principals
hereby agrees that it will not institute any action against Parent,
including, but not limited to, any claim for contractual indemnity or
implied indemnity, arising out of the June 3 YPtel Agreement.
10.3 NO ADMISSION OF LIABILITY. None of Parent, the Company, ICL or the
ICL Principals admits liability to any other party hereto and, in fact, each of
Parent, the Company, ICL and the ICL Principals denies any liability relating to
the June 3 YPtel Agreement.
ARTICLE XI--AMENDMENT AND WAIVER
11.1 AMENDMENT OF THIS RESTATED AGREEMENT. Prior to Parent stockholder
approval and except as is otherwise required by Applicable Law, this Restated
Agreement may be amended by the parties hereto at any time by execution of an
instrument in writing signed on behalf of each of the parties hereto. Following
receipt of approval by the Parent shareholders, the parties hereto acknowledge
and agree that this Restated Agreement may be amended by the parties hereto by
execution of an instrument in writing signed on behalf of each of the parties
hereto; PROVIDED, HOWEVER, that any such amendment may not affect a substantive
issue under this Restated Agreement, including, but not limited to, the economic
consideration to be paid or received hereunder.
11.2 DEVIATION FROM FORM OF EXCHANGE AND VOTING TRUST AGREEMENT, THE
SUPPORT AGREEMENT AND APPENDI A. Parent, the Company, the ICL Principals and
ICL agree that (i) the form of Exchange and Voting Trust Agreement attached
hereto as EXHIBIT C, the form of Support Agreement attached hereto as EXHIBIT D
and the form of Class A Special Shares Certificate of Designation attached
hereto as EXHIBIT B represent the agreement of the parties with regard to the
material terms and the economics of the Canadian tax deferral transaction; and
(ii) the Exchange and Voting Trust Agreement, the Support Agreement and the
Class A Special Shares Certificate of Designation which are executed by the
parties may differ from the forms attached hereto as EXHIBIT C, EXHIBIT D and
EXHIBIT B, respectively, only to the extent that such deviations (a) involve
solely procedural or mechanical elements of the Exchange and Voting Trust
Agreement, the Support Agreement and the Class A Special Shares Certificate of
Designation or the transactions contemplated thereunder; or (b) do not represent
deviations from the forms set forth in EXHIBIT C, EXHIBIT D and EXHIBIT B which
affect or may affect a substantive issue under the Exchange and Voting Trust
Agreement or which affect or may affect the economic consideration to paid or
received under the Exchange and Voting Trust Agreement,
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the Support Agreement or the Class A Special Shares Certificate of Designation.
The parties hereto acknowledge and agree that the terms of this SECTION 11.2 are
intended to, and shall, continue to apply following receipt of approval by the
Parent shareholders of the terms of this Restated Agreement and the transactions
contemplated herein.
11.3 EXTENSION; WAIVER. At any time prior to the Closing Date, Parent, on
the one hand, and the Company, ICL on behalf of the Shareholders and ICL
Principals, on the other, may, but shall not be obligated to (i) extend the time
for the performance of any of the obligations of the other party hereto,
(ii) waive any inaccuracies in the representations and warranties made by such
other party contained herein or in any document delivered pursuant hereto, and
(iii) waive compliance with any of the agreements or conditions for the benefit
of such party contained herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party; PROVIDED, HOWEVER, that an extension
pursuant to SECTION 1.4 hereof need not be set forth in writing in order to be
effective, unless such extension is to a date after March 1, 2000.
ARTICLE XII--GENERAL PROVISIONS
12.1 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or mailed by registered or certified mail (return receipt
requested) or sent via facsimile (with acknowledgment of complete transmission)
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
(a) if to Parent, to:
Advanced Communications Group, Inc.
390 South Woods Mill Road, Suite 150
St. Louis, Missouri
USA 63017
Attn: Mr. Richard O'Neal
Facsimile: (314) 205-8141
with a copy to:
Blackwell Sanders Peper Martin LLP
720 Olive Street, Suite 2400
St. Louis, Missouri
USA 63101-4834
Attn: Mr. Craig A. Adoor
Facsimile: (314) 345-6060
(b) if to the Company and Shareholders, to:
Imperial Capital Ltd.
1 First Canadian Place, Suite 5102
Toronto, Ontario
Canada M5X 1E3
Attn: Managing Partner
Facsimile: (416) 362-8660
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with a copy to:
Cassels Brock & Blackwell
Scotia Plaza--Suite 2100
40 King Street West
Toronto, Ontario
Canada M5H 3C2
Attn: Mr. Maxwell Gotlieb
Facsimile: (416) 360-8877
12.2 INTERPRETATION. The words "include", "includes" and "including" when
used herein shall be deemed in each case to be followed by the words "without
limitation." The table of contents and headings contained in this Restated
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Restated Agreement. All Exhibits and Schedules
to this Restated Agreement are hereby incorporated in and made a part of this
Restated Agreement as if set forth in full herein. References herein to
"dollars", "Dollars", "U.S. $" and "$" shall be deemed, in each case, to mean
U.S. dollars, unless expressly stated otherwise herein.
12.3 COUNTERPARTS. This Restated Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart. One or more of the parties hereto
may sign this Restated Agreement and deliver this Restated Agreement by
facsimile transmission. The parties hereto agree that a facsimile of a signature
shall be deemed an original signature.
12.4 ENTIRE AGREEMENT; ASSIGNMENT. Subject to its becoming effective in
accordance with SECTION 1.3 hereof, this Restated Agreement including, but not
limited to, the Recitals hereto, the Schedules and Exhibits hereto, and the
documents and instruments and other agreements among the parties hereto
referenced herein: (i) constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof including, but not limited to, (A) the June 3 YPtel
Agreement; and (B) the Letter of Intent dated April 11, 1999 by and among
Parent, the Company, Web, Big Stuff and O'Neal and the Confidentiality Agreement
dated April 11, 1999 by and among Parent, the Company, Web, Big Stuff and
O'Neal; (ii) are not intended to confer upon any Person not a party hereto any
rights or remedies hereunder; and (iii) shall not be assigned by operation of
law or otherwise except as otherwise specifically provided, except that Parent
may assign its rights and delegate its obligations hereunder to its affiliates,
provided Parent shall remain liable hereunder.
12.5 SEVERABILITY. In the event that any provision of this Restated
Agreement or the application thereof, becomes or is declared by a court of
competent jurisdiction to be illegal, void or unenforceable, the remainder of
this Restated Agreement will continue in full force and effect and the
application of such provision to other Persons or circumstances will be
interpreted so as reasonably to effect the intent of the parties hereto so long
as consideration of the Agreement is not materially affected for any party
hereof. The parties further agree to replace such void or unenforceable
provision of this Restated Agreement with a valid and enforceable provision that
will achieve, to the extent possible, the economic, business and other purposes
of such void or unenforceable provision.
12.6 OTHER REMEDIES. Subject to the limitations contained in this Restated
Agreement, any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy.
12.7 GOVERNING LAW. This Restated Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, regardless of
the laws that might otherwise govern
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under applicable principles of conflicts of laws thereof. Each of the parties
hereto irrevocably consents to the exclusive jurisdiction and venue of any court
within the State of Delaware, in connection with any matter based upon or
arising out of this Restated Agreement or the matters contemplated herein,
agrees that process may be served upon them in any manner authorized by the laws
of the State of Delaware for such Persons and waives and covenants not to assert
or plead any objection which they might otherwise have to such jurisdiction,
venue and such process.
12.8 RULES OF CONSTRUCTION. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Restated
Agreement and, therefore, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
12.9 LIMITATION OF LIABILITY OF TRUSTEE. The parties hereto agree that
none of the trustees of any trust referred to in this Restated Agreement has any
personal liability or obligations in respect of the obligations of the trusts
and that the sole recourse against the trust and the trustees pursuant to this
Restated Agreement shall be solely against the ICL Principals. For greater
certainty, the term "trust" includes the trustees and where any reference is
made herein to an act to be performed by or on behalf of the trust, such
reference shall be construed and applied for all purposes as if it referred to
an act to be performed by or on behalf of the trustees, each in his
representative capacity as trustee of the trust, and where any reference is made
hereto to an act to be performed by or for or on behalf of any of the trustees,
such reference shall be construed and applied for all purposes as if it referred
to an act to be performed by or for or on behalf of each of the trustees in his
capacity as a trustee.
12.10 TIME OF THE ESSENCE. Time shall be of the essence of this Restated
Agreement and every part hereof.
ARTICLE XIII--DEFINITIONS
13.1 DEFINITIONS.
"Active Parent Subsidiaries" means Feist; FirsTel; Value; Great Western
Directories, Inc.; Telecom Resources, Inc.; the Switchboard of Oklahoma
City, Inc.; Long Distance Management of Kansas, Inc.; Long Distance Management
II, Inc.; and National Telecom, a proprietorship.
"Affiliate Agreements" shall have the meaning set forth in SECTION 4.11.
"Anniversary Date" shall mean the first anniversary of the Closing Date.
"Associates" shall have the meaning set forth in SECTION 6.6.
"Barbadian Trusts" means collectively, Cold Trust, Global Investment Trust,
Freezer Trust, Storage Trust, Directory Trust and Publisher Trust.
"Benefit Plan" shall mean (i) an employee benefit plan as defined in
Section 3(3) of ERISA, even if, because of some other provision of ERISA, such
plan is not subject to any other provision of ERISA, such plan is not subject to
any or all of ERISA's provisions, and (ii) whether or not described in the
preceding clause, (a) any pension, profit sharing, stock bonus, deferred or
supplemental compensation, retirement, thrift, stock purchase or stock purchase
or stock option plan, or any other compensation, welfare, insurance, medical,
hospitalization, fringe benefit or retirement plan, program, policy, course of
conduct, understanding or arrangement of any kind whatsoever, whether formal or
informal, oral or written, providing for benefits for or the welfare of any or
all of the current or former employees or agents of the employer or their
beneficiaries or dependents, (b) Multi-employer Plan, or (c) a multiple employer
plan as defined in Section 413 of the Code or in any other applicable Law.
"Big Stuff" shall have the meaning set forth in RECITAL E hereto.
"Claim Notice" shall have the meaning set forth in SECTION 9.2(a).
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"Claimed Amount" shall have the meaning set forth in SECTION 9.2(a).
"Class A Special Shares" shall have the meaning set forth in
SECTION 1.1(b).
"CLEC Operations" shall mean Feist, FirsTel, Valu, and such other non-yellow
pages operating subsidiaries or operations of Parent as shall be determined by
the Board of Directors of Parent.
"Closing" shall mean the closing of the transactions contemplated by this
Restated Agreement.
"Closing Date" shall mean the date upon which the Closing actually occurs.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and the
Treasury regulations thereunder.
"Company" shall have the meaning set forth in the preamble hereto.
"Company Common Stock" shall have the meaning set forth in SECTION 1.1(c).
"Company Material Adverse Effect" shall mean a material adverse effect on
(i) the business, assets, condition (financial or otherwise), properties,
liabilities or the results of operations of Company and the Subsidiaries taken
as a whole, (ii) the ability of Company to perform its obligations set forth in
this Restated Agreement and the Company Transaction Agreements (as herein
defined), or (iii) the ability to timely consummate the transactions
contemplated by this Restated Agreement and the Company Transaction Agreements.
"Company Material Contract" shall mean a material note, bond, mortgage,
indenture, contract, lease, license, agreement, understanding, instrument, bid
or proposal to which Company or any Subsidiary is a party and which is with an
affiliate of Company or of a Subsidiary, if the financial obligation of Company
or a Subsidiary thereunder or applicable to the assets or properties of Company
or a Subsidiary could exceed U.S. $50,000 after the Closing Date or if it
provides for recurring monthly revenues to Company or a Subsidiary in excess of
U.S. $100,000 or includes any exclusivity or non-competition restrictions
applicable to Company or a Subsidiary.
"Company Modified Representations" shall mean the representations and
warranties of the Company and the ICL Principals contained in this Restated
Agreement that are modified by materiality or Company Material Adverse Effect.
"Company Nonmodified Representations" shall mean the representations and
warranties of the Company and Shareholders contained in this Restated Agreement
that are not modified by materiality or Company Material Adverse Effect.
"Company Permits" shall mean all permits, certificates, licenses, approvals,
and other authorization required in connection with the operation of the
business of the Company and the Subsidiaries.
"Company Real Property Leases" shall have the meaning set forth in
SECTION 2.12(b).
"Company Tax Goal" shall have the meaning set forth in SECTION 6.8.
"Company Transaction Agreements" shall have the meaning set forth in
SECTION 2.4.
"Consent" shall have the meaning set forth in SECTION 2.5.
"Damages" shall have the meaning set forth in SECTION 9.1(a).
"Defense Notice" shall have the meaning set forth in SECTION 9.3(a).
"Enforceability Exceptions" shall have the meaning set forth in
SECTION 2.4.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, together with all regulations thereunder.
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"Event" shall have the meaning set forth in SECTION 2.8.
"Exchange and Voting Trust Agreement" shall have the meaning set forth in
SECTION 6.3.
"Exon-Florio Filing" shall have the meaning set forth in SECTION 2.5.
"Extraordinary Transactions" shall have the meaning set forth in
SECTION 6.6.
"Feist" shall mean Feist Long Distance Service, Inc.
"Final Order," with respect to any Consent of a Governmental Authority,
shall mean an action by the appropriate Governmental Authority as to which:
(i) no request for stay by such Governmental Authority of the action is pending,
no such stay is in effect, and, if any deadline for filing any such request is
designated by statute or regulation, it has passed; (ii) no petition for
rehearing or reconsideration of the action is pending before such Governmental
Authority, and no appeal or comparable administrative remedy is pending before
such Governmental Authority, and the time for filing any such petition, appeal
or administrative remedy has passed; (iii) such Governmental Authority does not
have the action under reconsideration on its own motion and the time for such
reconsideration has passed; and (iv) no appeal to a court, or request for stay
by a court, of the Governmental Authority action is pending or in effect, and if
any deadline for filing any such appeal or request is designated by statute or
rule, it has passed.
"FirsTel" shall mean FirsTel, Inc.
"Governmental Authority" shall have the meaning set forth in SECTION 2.5.
"Great Western Credit Agreement" shall have the meaning set forth in
SECTION 3.6.
"Great Western Shareholders" shall have the meaning set forth in RECITAL E.
"Great Western Notes" shall have the meaning set forth in RECITAL E.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"ICL" shall have the meaning set forth in the preamble hereto.
"ICL Principal Damages" shall have the meaning set forth in SECTION 9.7(a).
"Income Tax Act [Canada]" shall have the meaning set forth in SECTION 1.6.
"Indemnifiable Claim" shall have the meaning set forth in SECTION 9.2(a).
"Indemnitees" shall have the meaning set forth in SECTION 9.1(a).
"June 3 YPtel Agreement" shall mean the Agreement dated as of June 3, 1999
by and among Parent, the Company, the Shareholders and ICL.
"Law" shall have the meaning set forth in SECTION 2.6.
"Litigation" shall have the meaning set forth in SECTION 2.7.
"Multi-employer Plan" shall mean a multi-employer plan as defined in
Section 3(37) of ERISA or in any other applicable Law.
"Newco I Common Stock" shall have the meaning set forth in SECTION 1.1(b).
"Newco II Common Stock" shall have the meaning set forth in SECTION 1.1(b).
"NYSE" shall mean the New York Stock Exchange, Inc.
"Observers" shall have the meaning set forth in SECTION 1.5(b).
A-41
<PAGE>
"Parent Class B Voting Preferred Stock" shall have the meaning set forth in
SECTION 1.1(a).
"Parent Common Stock" shall have the meaning set forth in SECTION 3.2.
"Parent Financial Statements" shall have the meaning set forth in
SECTION 3.8.
"Parent Guaranty" shall have the meaning set forth in SECTION 3.6.
"Parent Material Adverse Effect" shall mean a material adverse effect on
(i) the business, assets, condition (financial or otherwise), properties,
liabilities or the results of operations of Parent and the Active Parent
Subsidiaries taken as a whole, (ii) the ability of Parent to perform its
obligations set forth in this Restated Agreement and the Parent Transaction
Agreements, or (iii) the ability of Parent to timely consummate the transactions
contemplated by this Restated Agreement and the Parent Transaction Agreements.
"Parent Material Contract" shall have the meaning set forth in
SECTION 3.13.
"Parent Modified Representation" shall have the meaning set forth in
SECTION 7.2(a)(i).
"Parent Nonmodified Representation" shall have the meaning set forth in
SECTION 7.2(a)(i).
"Parent Permits" shall have the meaning set forth in SECTION 3.11.
"Parent Recapitalization" shall have the meaning set forth in
SECTION 1.1(a).
"Parent Securities Filings" shall have the meaning set forth in
SECTION 3.7.
"Parent Tax Goals" shall have the meaning set forth in SECTION 6.8(b).
"Parent Transaction Agreements" shall have the meaning set forth in
SECTION 3.4.
"PCP" shall have the meaning set forth in RECITAL A.
"PCP Acquisition Agreement" shall have the meaning set forth in
SECTION 2.16.
"PCP Closing Date" shall have the meaning set forth in SECTION 2.16.
"Person" shall mean and include an individual, corporation, partnership,
association, trust or other entity or organization, including a Governmental
Authority.
"Registration Statements" shall have the meaning set forth in
SECTION 6.1(d).
"Restated Agreement" shall have the meaning set forth in the preamble
hereto.
"Restated Big Stuff Agreement" shall mean that certain Amended and Restated
Acquisition Agreement dated as of October 26, 1999 by and among Parent, ACG
Acquisition VII Corp., Big Stuff, Richard O'Neal and Dick Reid.
"Restated Web YP Agreement" shall mean that certain Amended and Restated
Acquisition Agreement dated as of October 26, 1999 by and among Parent, ACG
Acquisition VI Corp., Web, Richard O'Neal and Dick Reid.
"SEC" shall mean the U.S. Securities and Exchange Commission.
"Securities Exchange Act" shall mean the United States Securities Exchange
Act of 1934, as amended, and all rules and regulations promulgated thereunder.
"Securities Act" shall mean the United States Securities Act of 1933, as
amended, and all rules and regulations promulgated thereunder.
"Shareholders" shall have the meaning set forth in the preamble hereto.
"Subordinated Lenders" shall have the meaning set forth in SECTION 4.9.
A-42
<PAGE>
"Subordinated Loan Agreement" shall have the meaning set forth in
SECTION 4.9.
"Subsidiaries" shall have the meaning set forth in RECITAL A.
"Support Agreement" means the Support Agreement to be entered into at the
Closing between Parent, Newco II and the Shareholders who are expected to become
the holders of Class A Special Shares.
"Tax Goals" shall have the meaning set forth in SECTION 6.8(b).
"Third-Party Claim" shall have the meaning set forth in SECTION 9.2(a).
"Transaction Fees and Expenses" shall have the meaning set forth in
SECTION 5.9(b).
"Unanimous Shareholders Agreement" shall mean the Unanimous Shareholders
Agreement dated as of the 1(st) day of November, 1998 among Imperial Capital
Limited, a corporation incorporated under the laws of Ontario, the J.L.R. Family
Trust, an inter vivos trust duly formed and organized the laws of Ontario, the
Paisley Family Trust, an inter vivos trust duly formed and organized under the
laws of Ontario, Cold Trust, Global Investment Trust, Freezer Trust, Storage
Trust, Directory Trust and Publisher Trust, inter vivos trusts duly formed and
organized under the laws of Barbados, Canterbury Mezzanine Capital, L.P. and
Canterbury Detroit Partners, L.P., limited partnerships formed under the laws of
Delaware, and YPtel Corporation, a corporation incorporated under the laws of
Canada, as amended to date.
"Valu" shall mean, collectively, Valu-line of Louisiana, Inc. and Valu-line
of Longview, Inc.
"Web" shall have the meaning set forth in RECITAL E hereof.
"WorldPages" shall have the meaning set forth in RECITAL E hereof.
"YPTI Certificate of Preferred Stock Designation" shall have the meaning set
forth in SECTION 1.1(e).
"YPTI Consideration" shall have the meaning set forth in SECTION 1.2(d).
"YPTI Preferred Stock" shall have the meaning set forth in SECTION 1.1(e).
"YPTI Recapitalization" shall have the meaning set forth in SECTION 1.1(e).
[SIGNATURES ON FOLLOWING PAGES]
A-43
<PAGE>
[Signature pages to the Amended and Restated YPtel Agreement]
IN WITNESS WHEREOF, Parent, the Company, the Shareholders, the ICL
Principals and ICL have caused this Amended and Restated Agreement to be signed
by their duly authorized respective officers, if appropriate, all as of the date
first written above.
<TABLE>
<S> <C> <C>
ADVANCED COMMUNICATIONS GROUP, INC.
By: /s/ MICHAEL PRUSS
-----------------------------------------
Name: Michael Pruss
Title: Chief Financial Officer and
Secretary
YPTEL CORPORATION
By: /s/ DOUGLAS MCINTYRE
-----------------------------------------
Title: President & CEO
SHAREHOLDERS OF YPTEL CORPORATION
By: Imperial Capital Limited as
attorney-in-fact
By: /s/ S. LISTER
-----------------------------------------
Title:
THE J.L.R. FAMILY TRUST, by its trustees
By: /s/ JEFF ROSENTHAL
-----------------------------------------
Jeffrey L. Rosenthal, as trustee and with
no personal liability
/s/ MAXWELL GOTLIEB
-----------------------------------------
Maxwell Gotlieb, as trustee and with no
personal liability
</TABLE>
A-44
<PAGE>
<TABLE>
<S> <C> <C>
THE PAISLEY FAMILY TRUST
By: /s/ S. LISTER
-----------------------------------------
Stephen D. Lister, as trustee and with no
personal liability
/s/ MAXWELL GOTLIEB
-----------------------------------------
Maxwell Gotlieb, as trustee and with no
personal liability
/s/ EDWARD TRUANT
-----------------------------------------
Edward Truant
/s/ DOUGLAS MCINTYRE
-----------------------------------------
Douglas G. McIntyre
COLD TRUST
By: /s/
-----------------------------------------
Concorde Bank Limited, as trustee and with
no personal liability
-----------------------------------------
, as trustee and with no personal
liability
GLOBAL INVESTMENT TRUST
By: /s/
-----------------------------------------
Concorde Bank Limited, as trustee and with
no personal liability
-----------------------------------------
, as trustee and with no personal
liability and with liability limited to
its trust assets
</TABLE>
A-45
<PAGE>
<TABLE>
<S> <C> <C>
FREEZER TRUST
By: /s/ PETER N. BOOS
-----------------------------------------
Peter N. Boos, as trustee and with no
personal liability and with liability
limited to its trust assets
/s/ ROSALIND E. JACKSON
-----------------------------------------
Rosalind E. Jackson, as trustee and with
no personal liability and with liability
limited to its trust assets
STORAGE TRUST
By: /s/ PETER N. BOOS
-----------------------------------------
Peter N. Boos, as trustee and with no
personal liability
/s/ ROSALIND E. JACKSON
-----------------------------------------
Rosalind E. Jackson, as trustee and with
no personal liability
DIRECTORY TRUST
By: /s/
-----------------------------------------
Concorde Bank Limited, as trustee and with
no personal liability
-----------------------------------------
, as trustee and with no personal
liability and with liability limited to
its trust assets
</TABLE>
A-46
<PAGE>
<TABLE>
<S> <C> <C>
PUBLISHER TRUST
By: /s/ PETER N. BOOS
-----------------------------------------
Peter N. Boos, as trustee and with no
personal liability
/s/ ROSALIND E. JACKSON
-----------------------------------------
Rosalind E. Jackson, as trustee and with
no personal liability
IMPERIAL CAPITAL LIMITED, a corporation
incorporated under the laws of the Province of
Ontario
By: /s/ JEFF ROSENTHAL
-----------------------------------------
Name: Jeff Rosenthal
Title: Director
/s/ JEFF ROSENTHAL
-----------------------------------------
Jeffrey L. Rosenthal
/s/ S. LISTER
-----------------------------------------
Stephen D. Lister
</TABLE>
A-47
<PAGE>
<TABLE>
<C> <S> <C>
ARTICLE I--THE TRANSACTIONS........................................ A-2
1.1 Transactions Prior to Closing: Corporate.................... A-2
1.2 Transactions Simultaneous with Closing...................... A-3
1.3 Effective Date; Fairness Opinion............................ A-4
1.4 Closing..................................................... A-4
1.5 Parent Name Change and Directors............................ A-5
1.6 Tax Deferred Exchange....................................... A-5
1.7 Taking of Necessary Action; Further Action.................. A-6
1.8 Aggregate Issuable Parent Common Stock...................... A-6
ARTICLE II--REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE ICL PRINCIPALS.......................................... A-6
2.1 Organization and Good Standing.............................. A-6
2.2 Capitalization.............................................. A-6
2.3 Subsidiaries................................................ A-7
2.4 Authorization; Binding Agreement............................ A-7
2.5 Governmental Approvals...................................... A-7
2.6 No Violations............................................... A-8
2.7 Litigation.................................................. A-8
2.8 Absence of Certain Changes or Events........................ A-9
2.9 Finders and Investment Bankers.............................. A-9
2.10 Contracts................................................... A-9
2.11 Liabilities................................................. A-9
2.12 Real Estate................................................. A-10
2.13 Corporate Records........................................... A-10
2.14 Labor Matters............................................... A-10
2.15 Tax......................................................... A-10
2.16 PCP Acquisition Agreement................................... A-10
2.17 Knowledge................................................... A-11
ARTICLE III--REPRESENTATIONS AND WARRANTIES OF PARENT.............. A-11
3.1 Organization and Good Standing.............................. A-11
3.2 Capitalization.............................................. A-11
3.3. Subsidiaries................................................ A-12
3.4 Authorization; Binding Agreement............................ A-12
3.5 Governmental Approvals...................................... A-12
3.6 No Violations............................................... A-12
3.7 Securities Filings and Litigation........................... A-13
3.8 Parent Financial Statements................................. A-13
3.9 Absence of Certain Changes or Events........................ A-14
3.10 Compliance with Laws........................................ A-14
3.11 Permits..................................................... A-14
3.12 Finders and Investment Bankers.............................. A-14
3.13 Contracts................................................... A-14
3.14 Corporate Records........................................... A-14
ARTICLE IV--ADDITIONAL COVENANTS OF THE COMPANY
AND THE ICL PRINCIPALS........................................... A-15
4.1 Notification of Certain Matters............................. A-15
4.2 Access and Information...................................... A-15
4.3 Reasonable Best Efforts..................................... A-15
4.4 Compliance.................................................. A-16
4.5 Benefit Plans............................................... A-16
4.6 Tax Opinion Certification................................... A-16
4.7 Shareholders Agreement and Voting Trust Agreements.......... A-16
4.8 Transfer Restrictions....................................... A-16
4.9 Subordinated Loan Agreement................................. A-16
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C>
4.10 Conduct of Business of Parent and the Parent Subsidiaries... A-17
ARTICLE V--ADDITIONAL COVENANTS OF PARENT.......................... A-17
5.1 Conduct of Business of Parent and the Parent Subsidiaries... A-17
5.2 Notification of Certain Matters............................. A-17
5.3 Access and Information...................................... A-17
5.4 Compliance.................................................. A-18
5.5 SEC and Shareholder Filings................................. A-18
5.6 Tax Treatment............................................... A-18
5.7 Reasonable Best Efforts..................................... A-18
5.8 Employee Benefit Plans...................................... A-18
5.9 Expenses.................................................... A-19
5.10 Indemnification and Insurance............................... A-19
ARTICLE VI--ADDITIONAL COVENANTS OF THE PARENT, THE COMPANY
AND THE SHAREHOLDERS............................................. A-19
6.1 Registration of Securities.................................. A-19
6.2 Legal Requirements.......................................... A-21
6.3 Exchange and Voting Trust Agreement......................... A-21
6.4 Public Announcements........................................ A-21
6.5 Conduct of Business Prior to Closing Date................... A-21
6.6 No Solicitation of Acquisition Proposal..................... A-24
6.7 Confidentiality............................................. A-25
6.8 Capital Stock and Derivative Securities..................... A-25
ARTICLE VII--CONDITIONS TO CLOSING................................. A-26
7.1 Conditions to Obligations of Each Party to Closing.......... A-26
7.2 Additional Conditions to Obligations of Shareholders and
Company................................................... A-28
7.3 Additional Conditions to the Obligations of Parent.......... A-29
ARTICLE VIII--TERMINATION AND ABANDONMENT.......................... A-31
8.1 Termination................................................. A-31
8.2 Procedure Upon Termination.................................. A-32
ARTICLE IX--SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION.................................................... A-32
9.1 Indemnification by the ICL Principals....................... A-32
9.2 Method of Asserting Claims.................................. A-32
9.3 Third Party Claims.......................................... A-33
9.4 Survival.................................................... A-34
9.5 Limitations................................................. A-34
9.6 Indemnification by the Parent............................... A-35
ARTICLE X--MUTUAL RELEASE.......................................... A-35
10.1 Mutual Release of All Claims................................ A-35
10.2 Covenant Not to Sue......................................... A-36
10.3 No Admission of Liability................................... A-36
ARTICLE XI--AMENDMENT AND WAIVER................................... A-36
11.1 Amendment of this Restated Agreement........................ A-36
11.2 Deviation from Form of Exchange and Voting Trust Agreement,
Support Agreement and Appendix A.......................... A-36
11.3 Extension; Waiver........................................... A-37
ARTICLE XII--GENERAL PROVISIONS.................................... A-37
12.1 Notices..................................................... A-37
12.2 Interpretation.............................................. A-38
12.3 Counterparts................................................ A-38
12.4 Entire Agreement; Assignment................................ A-38
12.5 Severability................................................ A-38
12.6 Other Remedies.............................................. A-38
12.7 Governing Law............................................... A-38
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C>
12.8 Rules of Construction....................................... A-39
12.9 Limitation on Liability of Trustee.......................... A-39
12.10 Time of the Essence......................................... A-39
ARTICLE XIII--DEFINITIONS.......................................... A-39
13.1 Definitions................................................. A-39
</TABLE>
EXHIBIT LIST
<TABLE>
<S> <C>
Exhibit A List of Shareholders
Exhibit B Form of Class A Special Shares Certificate of Designation
Exhibit C Form of Exchange and Voting Trust Agreement
Exhibit D Form of Support Agreement
</TABLE>
SCHEDULE LIST
<TABLE>
<S> <C>
Schedule 2.1 List of the jurisdictions of incorporation or organization
and qualification or license of Company and the
Subsidiaries
Schedule 2.2 Transfer restrictions
Schedule 2.3(a) Outstanding capital stock or other interest held by Company
Schedule 2.3(b) Restrictions on outstanding capital stock
Schedule 2.3(c) List of irrevocable proxies, voting agreements or similar
obligations with respect to capital stock
Schedule 2.5 Governmental Authorities
Schedule 2.6 Required consents
Schedule 2.7 Litigation
Schedule 2.8 List of changes or events
Schedule 2.10 Contracts
Schedule 2.11 Liabilities
Schedule 2.12(b) Company Real Property Leases
Schedule 2.13 Corporate Records
Schedule 3.2 Capitalization
Schedule 3.3 Subsidiaries
Schedule 3.5 Governmental Approvals
Schedule 3.7 Parent Litigation
Schedule 3.8 Parent Financial Statements
Schedule 3.9 Changes or Events
Schedule 3.13 Contracts
Schedule 6.5(b)(i) Company Options
Schedule 6.5(b)(ii) Parent Options
Schedule 6.7(e) Sale or Encumbrances
</TABLE>
<PAGE>
AMENDED AND RESTATED
WEB YP AGREEMENT
This AMENDED AND RESTATED WEB YP ACQUISITION AGREEMENT (the "RESTATED
AGREEMENT") is made and entered into as of this 26th day of October, 1999, by
and among Advanced Communications Group, Inc., a Delaware corporation ("PARENT")
and ACG Acquisition VI Corp., a Delaware corporation and a wholly-owned
subsidiary of Parent ("ACQUISITION SUBSIDIARY"), on the one hand and Web
YP, Inc., a Texas corporation ("WEB"), Richard O'Neal, a resident of the State
of Texas ("O'NEAL"), and Richard L. Reid, a resident of the State of Texas
("REID") (O'Neal and Reid are together referred to herein as the "WEB
SHAREHOLDERS"), on the other.
RECITALS
A. Parent desires to acquire, and Web and the Web Shareholders desire Parent
to acquire, all of the outstanding common stock of Web, on the terms and subject
to the conditions set forth in this Restated Agreement.
B. In furtherance of such acquisition, the respective Boards of Directors
of Parent, Acquisition Subsidiary and Web have approved the merger (the
"MERGER") of Acquisition Subsidiary with and into Web in accordance with the
Corporation Laws, all on the terms and conditions set forth in this Restated
Agreement.
C. The Boards of Directors of each of Web, Acquisition Subsidiary and
Parent believe it is in the best interests of each company and their respective
stockholders and the Board of Directors of Parent has directed or will direct
that the Restated Agreement be submitted to the shareholders of Parent with the
recommendation that the Restated Agreement, including, but not limited to, the
issuance of shares of Parent Common Stock pursuant to this Restated Agreement,
be approved by the Parent's stockholders and the Boards of Directors of Web and
Acquisition Subsidiary have directed or will direct that the Merger be submitted
to their respective shareholders in accordance with the Corporation Laws.
D. The Web Shareholders own all outstanding shares of Web Common Stock,
believe that the Merger and the transactions contemplated by this Restated
Agreement are in their best interests and desire to enter into this Restated
Agreement.
E. The parties intend that the Closing will occur prior to or concurrently
with, among other actions: (i) the closing of the acquisition by Parent or a
direct or indirect subsidiary of Parent of all of the outstanding capital stock
of YPtel Corporation, a corporation incorporated under the laws of Canada (the
"COMPANY") pursuant to that certain Amended and Restated YPtel Acquisition
Agreement, a form of which has been provided by Parent to Web (the "RESTATED
COMPANY AGREEMENT"), dated as of October 26, 1999, among the Parent, the
Company, the shareholders of the Company (the "COMPANY SHAREHOLDERS"),
Jeffrey L. Rosenthal, Stephen D. Lister, Edward Truant, Douglas G. McIntyre, The
J.L.R. Family Trust, The Paisley Family Trust, Imperial Capital Limited, a
corporation organized under the laws of the Province of Ontario ("ICL"), Cold
Trust, Global Investment Trust, Freezer Trust, Storage Trust, Directory Trust
and Publisher Trust; (ii) the closing of the acquisition by Parent or a
subsidiary of Parent of all of the outstanding capital stock of Big Stuff, Inc.
("BIG STUFF") (Web and Big Stuff are sometimes collectively referred to as
"WORLDPAGES") whether by merger, exchange or otherwise; (iii) the redemption of
the promissory notes (collectively, the "GREAT WESTERN NOTES") in the aggregate
original principal amount of Fifteen Million Dollars ($15,000,000.00) (plus
accrued but unpaid interest at the time of redemption) owed by Parent to O'Neal
and certain other former shareholders of Great Western Directories, Inc.
(collectively, the "GREAT WESTERN SHAREHOLDERS") by the issuance of Parent
Common Stock to the Great Western Shareholders; and (iv) the satisfaction of the
other conditions to closing set forth in this Restated Agreement, the Restated
Company Agreement and the Restated Big Stuff Agreement.
B-1
<PAGE>
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties agree
as follows:
ARTICLE I--TERMS OF THE MERGER
1.1 THE MERGER. Upon the terms and subject to the conditions of this
Restated Agreement, the Merger shall be consummated in accordance with the Texas
Business Corporation Act (the "TEXAS CORPORATION ACT") and the General
Corporation Law of the State of Delaware (together with the Texas Corporation
Act, the "CORPORATION LAWS"). At the Effective Time, upon the terms and subject
to the conditions of this Restated Agreement, Acquisition Subsidiary shall be
merged with and into Web in accordance with the Corporation Laws and the
separate existence of Acquisition Subsidiary shall thereupon cease, and Web, as
the surviving corporation in the Merger (the "SURVIVING CORPORATION"), shall
continue its corporate existence under the laws of the State of Texas as a
subsidiary of Parent and under the corporate name "Web YP, Inc." The Certificate
of Incorporation of Web shall be the certificate of incorporation of the
Surviving Corporation. The parties shall prepare and execute a certificate of
merger in a form to be agreed to by the parties hereto, acting reasonably (the
"CERTIFICATE OF MERGER"), in order to comply in all respects with the
requirements of the Corporation Laws and with the provisions of this Restated
Agreement.
1.2 EFFECTIVE TIME.
(a) EFFECTIVE TIME OF THIS RESTATED AGREEMENT. Despite its execution,
no term, provision, right or obligation under or pursuant to this Restated
Agreement shall be effective, unless and until the later of (i) the
execution of this Restated Agreement; and (ii) receipt by Parent's Board of
Directors from its financial advisors, PaineWebber Incorporated or such
other investment banking firm selected by Parent's Board of Directors, of a
written opinion addressed to it for inclusion in the Proxy
Statement/Prospectus to the effect that the consideration to be paid, in the
aggregate, by the Parent in the transactions contemplated by this Restated
Agreement, the Restated Company Agreement, the Restated Big Stuff Agreement,
including the lending by Richard O'Neal and Richard Reid to Web YP and/or
Big Stuff of up to an aggregate of Six Million Dollars ($6,000,000) and the
agreement relating to the redemption of the Great Western Notes, is fair to
Parent from a financial point of view. The parties to this Restated
Agreement are parties to that certain Web YP Acquisition Agreement dated as
of June 3, 1999 (the "JUNE 3 WEB YP AGREEMENT"). Unless and until the later
of the events described in clauses (i) and (ii) hereof occurs, the June 3
Web YP Agreement shall remain in full force and effect, subject to
termination of such agreement in accordance with its terms. Immediately upon
the execution of this Restated Agreement, as described in clause (i) above,
and the receipt by Parent's Board from its financial advisors of a written
opinion, as described in clause (ii) above, this Restated Agreement shall
become effective and the June 3 Web YP Agreement shall terminate and none of
the parties thereto shall have any obligations thereunder.
(b) EFFECTIVE TIME OF THE MERGER. The Merger shall become effective as
of the time of the filing of the Certificate of Merger with the Secretary of
State of the State of Texas and the Secretary of State of the State of
Delaware in accordance with the applicable provisions of the Corporation
Laws or at such later time as may be specified in the Certificate of Merger.
The Certificate of Merger shall be filed, and the closing of the Merger (the
"CLOSING") shall occur three (3) business days after all of the conditions
set forth in this Restated Agreement have been satisfied or waived by the
party or parties entitled to the benefit of the same; PROVIDED, HOWEVER,
that if such conditions are not satisfied or waived by January 31, 2000, the
Closing shall be automatically postponed for seven (7) days and will
continue to be postponed for continuous seven (7) day periods until
February 28, 2000, unless another time is agreed to by Parent and Web. If
such conditions are not satisfied or waived by February 28, 2000, the
Closing shall be automatically
B-2
<PAGE>
postponed until March 1, 1999, unless another time is agreed to in writing
by Parent and Web. The Closing shall occur at the offices of Blackwell
Sanders Peper Martin LLP, 720 Olive Street, Suite 2400, St. Louis, Missouri
63101, unless another place is agreed to in writing by Parent and Web. The
time when the Merger shall become effective is herein referred to as the
"EFFECTIVE TIME" and the date on which the Effective Time occurs is herein
referred to as the "CLOSING DATE."
1.3 MERGER CONSIDERATION. Subject to the provisions of this Restated
Agreement and any applicable backup or other withholding requirements, each of
the issued and outstanding shares ("WEB SHARES") of common stock, no par value
per share, of Web ("WEB COMMON STOCK") as of the Effective Time shall be
converted into the right to receive, and there shall be paid and issued as
hereinafter provided, in exchange for the Web Shares, 309.0909 shares (the
"EXCHANGE RATIO") of Parent Common Stock, par value $.0001 per share ("PARENT
COMMON STOCK"), plus cash in lieu of any fractional share as hereinafter
provided (the "MERGER CONSIDERATION"). The Exchange Ratio is calculated based on
the assumption that all outstanding options and warrants to purchase Web Common
Stock will be exercised effective on or before the Closing Date. If any of such
options or warrants are not so exercised, the Exchange Ratio shall be increased
to reflect the actual number of shares of Web Common Stock issued and
outstanding as of the Closing Date; PROVIDED, HOWEVER, that Parent shall have no
obligation with respect to any such unexercised options and warrants.
No fractional shares of Parent Common Stock shall be issued pursuant to the
Merger nor will any fractional share interest involved entitle the holder
thereof to vote, to receive dividends or to exercise any other rights as a
shareholder of Parent. In lieu thereof, any Person who would otherwise be
entitled to a fractional share of Parent Common Stock pursuant to the provisions
hereof shall receive an amount in cash equal to the value of such fractional
share. The value of such fractional share for purposes hereof shall be the
product of such fraction multiplied by Five and 50/100 Dollars ($5.50).
Each share of Web Common Stock held in the treasury of Web or by a
wholly-owned subsidiary of Web shall be cancelled as of the Effective Time and
no Merger Consideration shall be payable with respect thereto. From and after
the Effective Time, there shall be no further transfers on the stock transfer
books of Web of any of the Web Shares outstanding prior to the Effective Time.
Subject to the provisions of this Restated Agreement, at the Effective Time,
all the shares of Acquisition Subsidiary common stock outstanding immediately
prior to the Merger shall be converted, by virtue of the Merger and without any
action on the part of the holder thereof, into one share of the common stock of
the Surviving Corporation (the "SURVIVING CORPORATION COMMON STOCK"), which one
share of the Surviving Corporation Common Stock shall constitute all of the
issued and outstanding capital stock of the Surviving Corporation.
1.4 STOCKHOLDERS' RIGHTS UPON MERGER. Upon consummation of the Merger, the
Certificates shall cease to represent any rights with respect thereto, and,
subject to applicable Law (as hereinafter defined) and this Restated Agreement,
the Certificates shall only represent the right to receive the Merger
Consideration including the amount of cash, if any, payable in lieu of
fractional shares of Parent Common Stock into which the Web Shares have been
converted pursuant to this Restated Agreement.
1.5 SURRENDER AND EXCHANGE OF SHARES. At the Effective Time, each holder
of a Web Share shall surrender and deliver the Certificates and transmittal
letter (the "LETTER OF TRANSMITTAL") to Continental Stock Transfer and Trust
Company. Upon such surrender and delivery, the holder shall receive a
certificate representing the number of whole shares of Parent Common Stock into
which such holder's Web Shares have been converted pursuant to this Restated
Agreement plus the amount of cash payable in lieu of any fractional share. Until
so surrendered and exchanged, each outstanding Certificate after the Effective
Time shall be deemed for all purposes to evidence the right to receive that
number of whole shares of Parent Common Stock into which the Web Shares have
been converted pursuant to this Restated Agreement, plus the amount of cash
payable in lieu of any fractional share;
B-3
<PAGE>
PROVIDED, HOWEVER, that no dividends or other distributions, if any, in respect
of the shares of Parent Common Stock, declared after the Effective Time and
payable to holders of record after the Effective Time, shall be paid to the
holders of any unsurrendered Certificates until such Certificates and Letters of
Transmittal are surrendered and delivered as provided herein. Subject to
applicable Law, after the surrender and exchange of the Certificates, the record
holders thereof will be entitled to receive any such dividends or other
distributions without interest thereon, which theretofore have become payable
with respect to the number of shares of Parent Common Stock for which such
Certificates were exchangeable. Holders of any unsurrendered Certificates shall
not be entitled to vote Parent Common Stock until such Certificates are
exchanged pursuant to this Restated Agreement.
1.6 DIRECTORS. Immediately following the Closing Date, the Board of
Directors of the Parent shall be restructured to be composed of eight (8)
members as follows: (i) one director chosen by Parent and one director chosen by
ICL to serve three (3) year terms; (ii) one director chosen by Parent and one
director chosen by ICL and one director to be agreed to by Parent, ICL and
WorldPages to serve two (2) year terms; and (iii) one director chosen by Parent
and one director chosen by ICL and one director to be agreed to by Parent, ICL
and WorldPages to serve one (1) year terms. Parent currently intends to nominate
Richard O'Neal and two (2) individuals to be named at or prior to Closing. The
directors to be nominated by ICL are currently anticipated to be Wilmot
Matthews, George Anderson and Robert Flynn. In addition, for a period of one (1)
year following the Closing Date, each of Parent and ICL may designate one party
to attend any and all Board of Directors meetings, as non-voting,
non-participating observers only (the "OBSERVERS"). Parent shall reimburse the
Observers for those expenses incurred in connection with attending Board of
Directors meetings, including travel expenses, in the same manner and to the
same extent that Parent reimburses its directors for such expenses. The parties
hereto expressly acknowledge and agree that this SECTION 1.6 is not intended to,
and does not, except with regard to the initial Board of Directors of Parent
referenced in this SECTION 1.6, impose any requirement that the Board of
Directors of Parent be comprised of the individuals listed in this SECTION 1.6
or that any Person has a right to designate a certain individual or a certain
number of individuals as nominees to the Board of Directors of Parent.
1.7 BYLAWS. At and after the Effective Time, the Bylaws of Acquisition
Subsidiary in effect at the Effective Time shall be the Bylaws of the Surviving
Corporation (subject to any subsequent amendment).
1.8 OTHER EFFECTS OF MERGER. The Merger shall have all further effects as
specified in the applicable provisions of the Corporation Laws.
1.9 TAX-FREE REORGANIZATION. The parties intend that the Merger qualify as
a tax-free reorganization pursuant to Section 368 of the Code. The parties
hereto hereby adopt this Restated Agreement as a "plan of reorganization" within
the meaning of Sections 1.368-2(g) and 1.368(a) of the Treasury regulations.
1.10 CONVERTIBLE NOTE. At any time between the date hereof and Closing,
O'Neal and Reid may continue to lend up to Six Million Dollars ($6,000,000) to
Web or Big Stuff pursuant to a "CONVERTIBLE NOTE", described below. The
Convertible Note includes amounts lent by O'Neal and Reid to Web or Big Stuff
since January 1, 1999. The Convertible Note will provide additional working
capital required by Web or Big Stuff (i) to consummate the contemplated
contractual arrangements with Excite and to fulfill its obligations thereunder,
(ii) to pay for extraordinary capital expenditures approved in advance by a
disinterested majority of the Board of Directors of the Parent, including
consummation of contractual arrangements with other entities similar to those
with Excite, or (iii) for working capital purposes, including for ordinary
capital expenditures. The conversion feature of the Convertible Note shall
provide that the principal amount of the Convertible Note, but not the accrued
but unpaid interest, shall be automatically converted into Parent common stock
at Closing at a conversion price of $5.50 per share. If the acquisition of
WorldPages contemplated by this Restated Agreement and the
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Restated Big Stuff Agreement shall not be consummated, the conversion feature
shall not be operable, and Parent shall have no obligations under the
Convertible Note. The parties agree that notwithstanding anything herein or in
the Restated Big Stuff Agreement to the contrary, there shall be no "doubling"
of the amount which may be lent by O'Neal and Reid to Web or Big Stuff and that
an aggregate maximum amount of $6,000,000 may be lent by O'Neal and Reid to Web
and Big Stuff, collectively.
1.11 ADDITIONAL ACTIONS. If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm or record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of Acquisition Subsidiary or Web or otherwise to carry out
this Restated Agreement, the officers and directors of the Surviving Corporation
shall be authorized to execute and deliver, in the name and on behalf of
Acquisition Subsidiary or Web, all such deeds, bills of sale, assignments and
assurances and to take and do, in the name and on behalf of Acquisition
Subsidiary or Web, all such other actions and things as may be necessary or
desirable to vest, perfect or confirm any and all right, title and interest in,
to and under such rights, properties or assets in the Surviving Corporation or
otherwise to carry out this Restated Agreement.
ARTICLE II--REPRESENTATIONS AND WARRANTIES OF
WEB AND THE WEB SHAREHOLDERS
Web, on behalf of itself and the Web Shareholders, jointly and severally
represent and warrant to and covenant with Parent as follows:
2.1 ORGANIZATION AND GOOD STANDING. Web is a corporation duly organized
and validly existing and in good standing under the laws of the jurisdiction of
its incorporation or organization and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted. Web is duly qualified or licensed and in good standing
to do business in each jurisdiction in which the character of the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary, except where the failure to be
so duly qualified or licensed and in good standing would not have a Web Material
Adverse Effect. SCHEDULE 2.1 sets forth a complete and accurate list of the
jurisdictions of incorporation or organization and qualification or license of
Web. Web has heretofore delivered to Parent accurate and complete copies of the
Certificates or Articles of Incorporation and Bylaws, or equivalent governing
instruments, as currently in effect, of Web.
2.2 CAPITALIZATION. As of the date hereof, the authorized capital stock of
Web (the "WEB STOCK") consists of 10,000 shares of common stock. As of the date
hereof, (a) 6,086 shares of Web Stock were issued and outstanding, and
(b) 3,914 shares of Web Stock were issuable upon exercise of outstanding
warrants and options (after giving effect to the acceleration of vesting to be
triggered by the transactions contemplated by this Restated Agreement). No other
capital stock of Web is issued or outstanding. All issued and outstanding shares
of the Web Stock are duly authorized, validly issued, fully paid and
non-assessable and were issued free of preemptive rights and in compliance with
applicable corporate and securities Laws. Except as set forth on SCHEDULE 2.2,
as of the date of this Restated Agreement there are no outstanding rights,
reservations of shares, subscriptions, warrants, puts, calls, unsatisfied
preemptive rights, options or other agreements of any kind relating to any of
the capital stock or any other security of Web, and there is no authorized or
outstanding security of any kind convertible into or exchangeable for any such
capital stock or other security. There are no restrictions upon the transfer of
or otherwise pertaining to the securities (including, but not limited to, the
ability to pay dividends thereon) or retained earnings of Web or the ownership
thereof other than those, if any, described on SCHEDULE 2.2 or those imposed
generally by the Securities Act, the Securities Exchange Act, applicable state
or foreign securities Laws or applicable corporate Law.
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2.3 SUBSIDIARIES. Web does not and will not, from the date of this
Restated Agreement until the Closing Date, hold, directly or indirectly, any
capital stock or other interest in any Person.
2.4 AUTHORIZATION; BINDING AGREEMENT. Web and the Web Shareholders have
all requisite power and authority to execute and deliver this Restated Agreement
and the Web Transaction Agreements and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Restated
Agreement and the other agreements and documents referred to herein and to be
executed in connection herewith to which Web or any Web Shareholder is or will
be a party or a signatory (the "WEB TRANSACTION AGREEMENTS") and the
consummation of the transactions contemplated hereby and thereby including, but
not limited to the Merger, have been or will be duly and validly authorized by
Web's Board of Directors and no other corporate or other proceedings on the part
of Web or any Web Shareholder are necessary to authorize the execution and
delivery of this Restated Agreement and the Web Transaction Agreements or to
consummate the transactions contemplated hereby or thereby (other than the
adoption of this Restated Agreement by the Web Shareholders in accordance with
the Texas Corporation Act and the Articles of Incorporation and Bylaws of Web).
This Restated Agreement has been duly and validly executed and delivered by Web
and the Web Shareholders and constitutes, and upon execution and delivery
thereof as contemplated by this Restated Agreement, the Web Transaction
Agreements will constitute, the legal, valid and binding obligations of Web and
the Web Shareholders, enforceable against Web and the Web Shareholders in
accordance with its and their respective terms, except to the extent that
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of creditors'
rights generally and by principles of equity regarding the availability of
remedies (collectively, the "ENFORCEABILITY EXCEPTIONS").
2.5 GOVERNMENTAL APPROVALS. No consent, approval, waiver or authorization
of, notice to or declaration or filing with ("CONSENT") any Governmental
Authority on the part of Web or any of the Web Shareholders is required in
connection with the execution or delivery by Web or the Web Shareholders of this
Restated Agreement and the Web Transaction Agreements or the consummation by Web
or the Web Shareholders of the transactions contemplated hereby or thereby other
than (i) the filing of the Certificate of Merger with the Secretary of State of
the States of Texas and Delaware; (ii) filings with the SEC and state securities
laws administrators, (iii) Consents from or with Governmental Authorities set
forth on SCHEDULE 2.5, (iv) filings under the HSR Act, and (v) those Consents
that, if they were not obtained or made, do not or would not have a Web Material
Adverse Effect.
2.6 NO VIOLATIONS. The execution and delivery of this Restated Agreement
and the Web Transaction Agreements, the consummation of the transactions
contemplated hereby and thereby and compliance by Web and the Web Shareholders
with any of the provisions hereof or thereof will not (i) conflict with or
result in any breach of any provision of the Certificate and/or Articles of
Incorporation or Bylaws or other governing instruments of Web, (ii) except as
set forth on SCHEDULE 2.6, require any Consent under or result in a violation or
breach of, or 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
or augment the performance required) under any of the terms, conditions or
provisions of any Web Material Contract or other obligation to which Web or any
Web Shareholder is a party or by which any of them or any of their properties or
assets may be bound, (iii) result in the creation or imposition of any lien or
encumbrance of any kind upon any of the assets of Web or (iv) subject to
obtaining the Consents from Governmental Authorities referred to in SECTION 2.5
above, contravene any Law currently in effect to which Web or any Web
Shareholder or its or any of its respective assets or properties are subject,
except in the case of clauses (ii), (iii) and (iv) above, for any deviations
from the foregoing which do not or would not have a Web Material Adverse Effect.
2.7 LITIGATION. Except as set forth in SCHEDULE 2.7, there is no action,
cause of action, claim, demand, suit, proceeding, citation, summons, subpoena,
inquiry or investigation of any nature, civil,
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criminal, regulatory or otherwise, in law or in equity, by or before any court,
tribunal, arbitrator, mediator or other Governmental Authority ("LITIGATION")
pending or, to the knowledge of the Web Shareholders or Web, threatened against
Web or any officer, director, employee or agent thereof, in his or her capacity
as such, or as a fiduciary with respect to any Benefit Plan of Web, or otherwise
relating, in a manner that could have a Web Material Adverse Effect, to Web or
the securities of Web, or any properties or rights of Web or that could prevent
or delay the consummation of the transactions contemplated by this Restated
Agreement.
2.8 WEB FINANCIAL STATEMENTS. The audited financial statements of Web as
of and for the fiscal year ended December 31, 1998, and the unaudited financial
statements of Web as of and for the six months ended June 30, 1999 (the "WEB
FINANCIAL STATEMENTS") have been provided to Parent. The Web Financial
Statements were prepared in accordance with generally accepted accounting
principles applicable to the business of Web consistently applied in accordance
with past accounting practices and fairly present (including, but not limited
to, the inclusion of all adjustments with respect to interim periods which are
necessary to present fairly the financial condition and assets and liabilities
or the results of operations of Web except as may be indicated therein or in the
notes thereto, subject to normal year-end adjustment in the ordinary course with
respect to certain items immaterial in amount or effect and the exclusion of
footnote disclosure in interim Web Financial Statements) the financial condition
and assets and liabilities or the results of operations of Web as of the dates
and for the periods indicated. Except as reflected in the Web Financial
Statements, as of their respective dates, Web did not have any debts,
obligations, guaranties of obligations of others or liabilities (contingent or
otherwise) that would be required in accordance with generally accepted
accounting principles to be disclosed in the Web Financial Statements.
2.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
SCHEDULE 2.9, since June 30, 1999, through the date of this Restated Agreement,
there has not been: (i) any Event that could reasonably be expected to have a
Web Material Adverse Effect; (ii) any declaration, payment or setting aside for
payment of any dividend (except to the Web Shareholders, but only if the entire
amount of such dividend is paid to Big Stuff as a capital contribution) or other
distribution or any redemption, purchase or other acquisition of any shares of
capital stock or securities of Web; (iii) any return of any capital or other
distribution of assets to stockholders of Web (except to Web or a subsidiary
wholly owned by Web); (iv) other than in the ordinary course of business any
investment of a capital nature by Web by the purchase of any property or assets
except to the extent such investment is in the ordinary course of business and
is individually or in the aggregate, not in excess of $75,000; (v) any
acquisition (by merger, consolidation, acquisition of stock or assets or
otherwise) of any Person or business; (vi) any sale, disposition, pledge,
mortgage or other transfer of assets or properties of Web other than in the
ordinary course of business consistent with past practice; (vii) any action or
agreement or undertaking by Web to take any action that, if taken or done on or
after the date hereof, would result in a breach of SECTION 6.6 below;
(viii) any employment, severance or consulting agreement entered into by Web
with any stockholder, officer, director, agent, employee or consultant of Web or
any amendment or modification to, or termination of, any current employment,
severance or consulting agreement to which Web is a party or by which it is
bound; (ix) any forgiveness, cancellation, compromise, settlement, waiver or
release of any debts, claims, rights or Litigation, in each case in excess,
individually or in the aggregate, of $25,000; (x) any agreement, authorization
or commitment to take, whether in writing or otherwise, any action which, if
taken prior to the date hereof, would have made any representation or warranty
of Web in this Restated Agreement untrue or incorrect in any material respect;
(xi) any failure by Web to conduct its business in the ordinary course
consistent with past practice, it being understood, however, that Web has
accelerated and intensified its business activities since March 31, 1999,
including a payment in the amount of $3,500,000 to be made to Excite.
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2.10 COMPLIANCE WITH LAWS. The business of Web has been operated in
compliance with all Laws applicable thereto, except for any instances of
non-compliance which do not and would not have a Web Material Adverse Effect.
2.11 PERMITS. (i) Web has all permits, certificates, licenses, approvals,
and other authorizations required in connection with the operation of its
business (collectively, "WEB PERMITS"), (ii) Web is not in violation of any Web
Permit, and (iii) no proceedings are pending or, to the knowledge of Web,
threatened, to revoke or limit any Web Permit, except, in the case of
clause (i) or (ii) above, those the absence or violation of which do not and
would not have a Web Material Adverse Effect.
2.12 FINDERS AND INVESTMENT BANKERS. Neither Web nor any of its officers
or directors has employed any broker or finder or incurred any liability for any
brokerage fees, commissions or finders' fees in connection with the transactions
contemplated hereby.
2.13 CONTRACTS. Except as set forth in SCHEDULE 2.13, Web is not a party
or subject to any material note, bond, mortgage, indenture, contract, lease,
license, agreement, understanding, instrument, bid or proposal ("WEB MATERIAL
CONTRACT"). For purposes of this SECTION 2.13, a note, bond, mortgage,
indenture, contract, lease, license, agreement, understanding, instrument, bid
or proposal shall be considered a Web Material Contract (a) if it is with an
affiliate of Web, (b) if the financial obligation of Web thereunder or, if
applicable, to the assets or properties of Web could exceed $25,000 after the
Closing Date, or (c) if it provides for any exclusivity or non-competition
restrictions applicable to Web. Web has made available to Parent true and
accurate copies of the Web Material Contracts. All such Web Material Contracts
are valid and binding and are in full force and effect and enforceable in
accordance with their respective terms, subject to the Enforceability
Exceptions. Any and all transactions between or involving Web and an affiliate
thereof were entered into in the ordinary course of business and are upon fair
and reasonable terms not materially less favorable than Web could obtain or
become entitled to in an arm's-length transaction with a Person that is not an
affiliate. Except as set forth in SCHEDULE 2.5 (i) no Consent of any Person is
needed in order that each such Web Material Contract shall continue in full
force and effect in accordance with its terms without penalty, acceleration or
rights of early termination by reason of the consummation of the transactions
contemplated by this Restated Agreement, and (ii) Web is not in material
violation or breach of or default under any such Web Material Contract, nor to
Web's knowledge is any other party to any such Web Material Contract in material
violation or breach of or default under any such Web Material Contract.
2.14 EMPLOYEE BENEFIT PLANS. Except as set forth in SCHEDULE 2.14, there
are no Benefit Plans (as defined below) maintained or contributed to by Web
under which Web could incur any liability. A "BENEFIT PLAN" shall mean (i) an
employee benefit plan as defined in Section 3(3) of the ERISA, even if, because
of some other provision of ERISA, such plan is not subject to any or all of
ERISA's provisions, and (ii) whether or not described in the preceding clause,
(a) any pension, profit sharing, stock bonus, deferred or supplemental
compensation, retirement, thrift, stock purchase or stock option plan, or any
other compensation, welfare, insurance, medical, hospitalization, fringe benefit
or retirement plan, program, policy, course of conduct, understanding or
arrangement of any kind whatsoever, whether formal or informal, oral or written,
providing for benefits for or the welfare of any or all of the current or former
employees or agents of Web or their beneficiaries or dependents, (b) a
multi-employer plan as defined in Section 3(37) of ERISA (a "MULTI-EMPLOYER
PLAN") or in any other applicable Law, or (c) a multiple employer plan as
defined in Section 413 of the Code or in any other applicable Law.
With respect to each Benefit Plan (where applicable): Web has made available
to Parent complete and accurate copies of (i) all plan and trust texts and
agreements, insurance contracts and other funding arrangements; (ii) annual
reports on the Form 5500 series for the last three (3) years; (iii) financial
statements and/or annual and periodic accountings of plan assets for the last
three
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(3) years; (iv) the most recent determination letter received from the IRS;
(v) actuarial valuations for the last three (3) years; and (vi) the most recent
summary plan description as defined in ERISA.
No Web Benefit Plan is a defined benefit pension plan subject to Title IV of
ERISA or Section 412 of the Code. Each of the Web Benefit Plans has been
maintained in compliance with its terms and all applicable Law, except where the
failure to do so would not result in a Web Material Adverse Effect or a
Surviving Corporation Material Adverse Effect. Web does not contribute to, and
does not have any outstanding liability with respect to, any Multi-employer
Plan.
Except as set forth in SCHEDULE 2.14, the consummation of the Merger will
not, either alone or in conjunction with another Event: (i) entitle any
individual to severance pay, or (ii) accelerate the time of payment or vesting
of benefits or increase the amount of compensation due to any individual.
2.15 TAXES AND RETURNS.
(a) Except as disclosed in SCHEDULE 2.15, Web has timely filed, or
caused to be timely filed, all federal, state, local and foreign income,
gross receipts, sales, use, property, production, payroll, franchise,
withholding, employment, social security, license, excise, transfer, gains,
and other tax returns or reports required to be filed by it, and has paid,
collected or withheld, or caused to be paid, collected or withheld, all
taxes and governmental charges, assessments and contributions of any nature
whatsoever including, but not limited to, any related penalties, interest
and liabilities (any of the foregoing being referred to herein as a "TAX"),
required to be paid, collected or withheld, other than such Taxes for which
adequate reserves in the Web Financial Statements have been established or
which are being contested in good faith and have been disclosed in writing
to Parent prior to the date of this Restated Agreement. Except as set forth
in SCHEDULE 2.15, there are no claims or assessments pending against Web for
any alleged deficiency in any Tax, and Web does not know of any threatened
Tax claims or assessments against Web (other than those for which adequate
reserves in the Web Financial Statements have been established or which are
being contested in good faith and have been disclosed in writing to Parent
prior to the date of this Restated Agreement). Except as set forth in
SCHEDULE 2.15, Web has not made an election under Section 338 of the Code
and has not taken any action that would result in any Tax liability of Web
as a result of a deemed election within the meaning of Section 338 of the
Code. Except as set forth in SCHEDULE 2.15, Web does not have any waivers or
extensions of any applicable statute of limitations to assess any Taxes.
Except as set forth in SCHEDULE 2.15, there are no outstanding requests by
Web for any extension of time within which to file any return or within
which to pay any Taxes shown to be due on any return. Web (i) has elected to
be treated as, and from the date of such election until the date hereof has
met, and currently meets, the eligibility requirements for treatment as, an
"S" corporation under the Code; and (ii) as of the date hereof, has no
subsidiaries for Tax purposes.
(b) A listing of all Tax sharing agreements or similar arrangements with
respect to or involving Web is set forth in SCHEDULE 2.15.
(c) Except as set forth in SCHEDULE 2.15, Web has not made or become
obligated to make, or will, as a result of the transactions contemplated by
this Restated Agreement, make or become obligated to make, any "excess
parachute payment" as defined in Section 280G of the Code (without regard to
subsection (b)(4) thereof).
(d) Web has disclosed on its federal income tax returns all positions
taken therein that could give rise to a substantial understatement of
federal income tax liability within the meaning of Section 6662(d) of the
Code.
(e) There are no liens for Taxes on the assets of Web except for
statutory liens for current Taxes not yet due and payable.
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(f) All elections with respect to Taxes affecting Web are set forth in
SCHEDULE 2.15 or, with respect to elections made on or before December 31,
1996, are reflected in the Tax returns of Web filed and provided to Parent
prior to the date of this Restated Agreement. Web has not: (i) made and will
not make a deemed dividend election under Treas. Reg. Section
1.1502-32(f)(2) or a consent dividend election under Section 565 of the
Code; (ii) consented at any time under Section 341(f)(l) of the Code to have
the provisions of Section 341(f)(2) of the Code apply to any disposition of
the assets of Web; (iii) agreed, and is not required, to make any adjustment
under Section 481(a) of the Code by reason of a change in accounting method
or otherwise; (iv) made an express election, and is not required, to treat
any asset of Web as owned by another Person for federal income Tax purposes
or as tax-exempt bond financed property or tax-exempt use property within
the meaning of Section 168 of the Code; (v) made any of the foregoing
elections and is not required to apply any of the foregoing rules under any
comparable state, foreign or local income Tax provision.
(g) Except as set forth in SCHEDULE 2.15, Web is not a partner or member
in any joint venture, partnership, limited liability company or other
arrangement or contract that is or could be treated as a partnership for
federal income Tax purposes.
(h) Except as set forth in SCHEDULE 2.15, Web is not a party to or
otherwise subject to any arrangement having the effect of or giving rise to
the recognition of a deduction or loss before the Closing Date and a
corresponding recognition of taxable income or gain after the Closing Date,
or any other arrangement that would have the effect of or give rise to the
recognition of taxable income or gain by Web after the Closing Date without
the receipt of or entitlement to a corresponding amount of cash.
2.16 LIABILITIES. From June 30, 1999, through the date of this Restated
Agreement, except as expressly disclosed in SCHEDULE 2.16 or in the Web
Financial Statements, Web does not have any direct or indirect indebtedness,
liability, claim, loss, damage, deficiency, obligation or responsibility, fixed
or unfixed, choate or inchoate, liquidated or unliquidated, secured or
unsecured, accrued, absolute, contingent or otherwise, whether or not of a kind
required by generally accepted accounting principles to be set forth in a
financial statement, other than those incurred in the ordinary course of
business or in an amount not in excess of $25,000 individually or $100,000 in
the aggregate. Except as set forth on SCHEDULE 2.16 or in the Web Financial
Statements, as of the date of this Restated Agreement, Web is not subject to any
(i) obligations in respect of borrowed money, (ii) obligations evidenced by
bonds, debentures, notes or other similar instruments, (iii) obligations which
would be required by generally accepted accounting principles to be classified
as "capital leases," (iv) obligations to pay the deferred purchase price of
property or services, except trade accounts payable arising in the ordinary
course of business and payable not more than twelve (12) months from the date of
incurrence, and (v) guaranties of any obligations of any other Person.
2.17 ENVIRONMENTAL MATTERS. As of the date of this Restated Agreement,
(i) except where the failure to so comply will not have a Web Material Adverse
Effect, Web is in compliance with all applicable Environmental Laws (as
hereinafter defined), (ii) there is no civil, criminal or administrative
judgment, action, suit, demand, claim, hearing, notice of violation,
investigation, proceeding, notice or demand letter pending or, to the knowledge
of Web, threatened against Web or any of its properties pursuant to
Environmental Laws, and (iii) except as set forth on SCHEDULE 2.17, there are no
past or present Events which reasonably may be expected to prevent compliance
with, or which have given rise to or which reasonably may be expected to give
rise to liability on the part of Web under Environmental Laws, except for those
which would not reasonably be expected to give rise to a Web Material Adverse
Effect. As used herein the term "ENVIRONMENTAL LAWS" shall mean Laws relating to
pollution, waste control, the generation, presence or disposal of asbestos,
hazardous or toxic wastes or substances, the protection of the environment,
environmental activity or public health and safety.
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2.18 INTELLECTUAL PROPERTY; FICTITIOUS NAMES. For purposes of this
Restated Agreement, "INTELLECTUAL PROPERTY" shall mean all patents, trademarks,
service marks, trade names, copyrights, franchises and similar rights of or used
by Web, all applications for any of the foregoing and all permits, grants and
licenses or other rights running to or from Web relating to any of the
foregoing. Except as set forth on SCHEDULE 2.18, (i) Web owns, or is licensed
to, or otherwise has, the full right to use all Intellectual Property currently
used or proposed to be used in its business, (ii) Web has not received, as of
the date of this Restated Agreement, notice of any charge or claim of any Person
relating to such Intellectual Property or any process or confidential
information of Web ("IP CLAIM NOTICE") and does not know of any basis for any
such charge or claim, and Web has sufficient rights in the Intellectual Property
to use it in the manner currently used or proposed to be used in its business,
and (iii) Web and its corporate predecessors, if any, have not conducted
business at any time during the period beginning five (5) years prior to
June 3, 1999 under any corporate, trade or fictitious names other than their
current corporate names. Web shall promptly notify Parent of any IP Claim Notice
received by Web after the date of this Restated Agreement.
2.19 REAL ESTATE.
(a) Web owns no real property.
(b) SCHEDULE 2.19(b) sets forth a true, correct and complete schedule as
of the date of this Restated Agreement of all material leases, subleases,
easements, rights-of-way, licenses or other agreements under which Web uses
or occupies, or has the right to use or occupy, now or in the future, any
real property or improvements thereon (the "WEB REAL PROPERTY LEASES").
Except for the matters listed on said SCHEDULE 2.19(b), Web holds the
leasehold estate under or other interest in each Web Real Property Lease
free and clear of all liens, encumbrances and other rights of occupancy
other than statutory landlords' or mechanics' liens which have not been
executed upon.
2.20 CORPORATE RECORDS. The corporate record books of or relating to Web
made available to Parent by Web contain accurate and complete records of
(i) all corporate actions of the stockholders and directors (and committees
thereof) of Web, (ii) the Certificate and/or Articles of Incorporation, Bylaws
and/or other governing instruments, as amended, of Web, and (iii) the issuance
and transfer of stock of Web. Except as set forth on SCHEDULE 2.20, Web does not
have any of its material records or information recorded, stored, maintained or
held off the premises of Web.
2.21 TITLE TO AND CONDITION OF PERSONAL PROPERTY. Web has good and
marketable title to, or a valid leasehold interest in, all material items of any
personal property reflected in the Web Financial Statements dated June 30, 1999,
or currently used in the operation of its business, and such property or
leasehold interests are free and clear of all liens, claims, charges, security
interests, options, or other title defects or encumbrances, except for property
disposed of in the ordinary course since the date thereof consistent with the
provisions of SECTION 2.9 above, and such exceptions to title and liens, claims,
charges, security interests, options, title defects or encumbrances which do not
and would not have a Web Material Adverse Effect. As of the date of this
Restated Agreement, all such personal property is in good operating condition
and repair (ordinary wear and tear excepted), is suitable for the use to which
the same is customarily put by Web, is free from material defects and is of a
quality and quantity presently usable in the ordinary course of the operation of
the business of Web, except where such failure would not have a Web Material
Adverse Effect.
2.22 NO ADVERSE ACTIONS. Except as set forth on SCHEDULE 2.22, there is no
existing, pending or, to the knowledge of Web, threatened termination,
cancellation, limitation, modification or change in the business relationship of
Web, with any supplier, customer or other Person except as are immaterial
individually and in the aggregate and are in the ordinary course of business.
None of Web, or, to the knowledge of Web or any Web Shareholder, any director,
officer, agent, employee or other Person acting on behalf of Web or any Web
Shareholder has used any corporate funds for unlawful
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contributions, payments, gifts, entertainment or other unlawful expenses
relating to political activity, or made any direct or indirect unlawful payments
to governmental or regulatory officials or others.
2.23 LABOR MATTERS. Except as may be set forth on SCHEDULE 2.13 or 2.23,
Web does not have any obligations, contingent or otherwise, under any
employment, severance or consulting agreement, collective bargaining agreement
or other contract with a labor union or other labor or employee group. To the
knowledge of Web or any Web Shareholder, as of the date of this Restated
Agreement, there are no efforts presently being made or threatened by or on
behalf of any labor union with respect to the unionizing of employees of Web. As
of the date of this Restated Agreement, there is no claim by an employee, an
employee group, a labor union or other labor group or a Governmental Authority
against Web pending or, to the knowledge of Web or any Web Shareholder,
threatened before the National Labor Relations Board or any other court or
tribunal respecting employment and employment practices, terms and conditions of
employment, termination of employment or the compliance with any legislation
concerning labor matters, including, without limiting the generality of what
precedes, labor relations, occupational health and safety, minimum labor
standards, industrial accidents and occupational diseases; there is no labor
strike, dispute, slowdown or stoppage pending or, to the knowledge of Web or any
Web Shareholder, threatened against or involving Web; no representation question
exists respecting the employees of Web; no grievance or internal or informal
complaint exists, no arbitration proceeding arising out of or under any
collective bargaining agreement is pending and no claim therefor has been
asserted. As of the date of this Restated Agreement, there has not been any
material adverse change in relations with employees or agents of Web as a result
of any announcement of the transactions contemplated by this Restated Agreement.
Web shall promptly notify Parent upon knowledge by Web or any Web Shareholder of
the occurrence after the date hereof of any matter referenced in this
SECTION 2.23.
2.24 INSURANCE. Web has obtained and maintains in full force and effect
insurance with responsible and reputable insurance companies or associations in
such amounts, on such terms and covering such risks, including fire and other
risks insured against by extended coverage, public liability insurance and
insurance against claims for personal injury or death or property damage
occurring in connection with the activities of Web or any properties owned,
occupied or controlled by it, as is customary and prudent. Since January 1,
1997, Web has not received notice of default under, or intended cancellation or
nonrenewal of, any policies of insurance, and Web has not been refused any
insurance coverage by an insurance carrier to which it has applied for
insurance.
2.25 DISCLOSURE. All information and documents provided prior to the date
of this Restated Agreement, and all information and documents subsequently
provided, to Parent or its representatives or lenders by or on behalf of Web in
connection with the transactions contemplated by this Restated Agreement are or
contain, or will be or will contain as to subsequently provided information or
documents, true, accurate and complete information in all material respects with
respect to the subject matter thereof and are, or will be as to subsequently
provided information or documents, reasonably responsive to any specific request
made by or on behalf of Parent or its representatives or lenders.
2.26 TAX. Neither Web nor the Web Shareholders know of any fact or have
taken any action, in each case with respect to Web or the Web Shareholders, that
could be reasonably expected to prevent the transaction contemplated hereby from
qualifying as a tax-free reorganization pursuant to Section 368 of the Code.
2.27 YEAR 2000 COMPLIANCE. Except as set forth in SCHEDULE 2.27 attached
hereto, Web has taken all commercially reasonable and prudent measures designed
to make all material aspects of Web's operations Year 2000 Compliant, to the
extent within Web's control. As used in this section, "YEAR 2000 COMPLIANT"
shall mean that any and all computer hardware including but not limited to
mainframe computers, personal computers, servers and related equipment),
computer software, programming languages, code, electronic applications and
systems (including but not limited to LANs, WANs, inter/
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intranet systems and client/server systems), programs, files, databases, chips,
microprocessors and any and all electronic or mechanical functionalities in any
way used in connection with, relied upon or relating to a specified subject
matter (e.g., a business, product or service) accurately and completely process
(in the manner intended, including but not limited to calculating, comparing and
sequencing) on a timely basis any and all data which are in any way dependent
upon usage of calendar dates, including but not limited to dates on or after
January 1, 2000, or time.
ARTICLE III--REPRESENTATIONS AND WARRANTIES
OF PARENT
Parent represents and warrants to and covenants with Web as follows:
3.1 ORGANIZATION AND GOOD STANDING. Parent is a corporation duly organized
and validly existing under the laws of the State of Delaware and 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 Active Parent
Subsidiaries is a corporation, duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization
and has all requisite corporate, power and authority to own, lease and operate
its properties and to carry on its business as now being conducted, except where
the failure to be so duly organized, validly existing and in good standing or to
have such power and authority would not have a Parent Material Adverse Effect.
Parent and each of the Active Parent Subsidiaries is duly qualified or licensed
and in good standing to do business in each jurisdiction in which the character
of the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary, except where
the failure to be so duly qualified or licensed and in good standing would not
have a Parent Material Adverse Effect. SCHEDULE 3.1 sets forth a complete and
accurate list of the jurisdictions of incorporation or organization and
qualifications or licenses of Parent and the Active Parent Subsidiaries. Parent
has heretofore made available to Web accurate and complete copies of the
Certificates or Articles of Incorporation and Bylaws, or equivalent governing
instruments, as currently in effect, of Parent and each of the Active Parent
Subsidiaries.
3.2 CAPITALIZATION. As of the date hereof, the authorized capital stock of
Parent consists of 180,000,000 shares of Parent Common Stock and 20,000,000
shares of preferred stock, par value $0.0001 per share. As of the opening of
business on the date of this Restated Agreement, (a) 20,083,953 shares of Parent
Common Stock were outstanding; (b) no shares of Parent preferred stock were
issued and outstanding; and (c) 163,307 shares of Parent Common Stock were held
as treasury shares. No other capital stock of Parent is issued or outstanding.
All issued and outstanding shares of the Parent Common Stock are duly
authorized, validly issued, fully paid and non-assessable and were issued free
of preemptive rights and in compliance with applicable corporate and securities
Laws. Except as set forth in the Parent Securities Filings or on SCHEDULE 3.2,
as of the date of this Restated Agreement there are no outstanding rights,
reservations of shares, subscriptions, warrants, puts, calls, unsatisfied
preemptive rights, options or other agreements of any kind relating to any of
the capital stock or any other security of Parent, and there is no authorized or
outstanding security of any kind convertible into or exchangeable for any such
capital stock or other security. There are no restrictions upon the transfer of
or otherwise pertaining to the securities (including, but not limited to, the
ability to pay dividends thereon) or retained earnings of Parent and the Active
Parent Subsidiaries or the ownership thereof other than those pursuant to the
Parent Guaranty, the Great Western Credit Agreement or those imposed generally
by the Securities Act, the Securities Exchange Act, applicable state or foreign
securities Laws or applicable corporate Law.
3.3 SUBSIDIARIES. Except as set forth on SCHEDULE 3.3, all of the capital
stock and other interests of the Active Parent Subsidiaries held by Parent are
owned by it or a Parent subsidiary, free and clear of any claim, lien,
encumbrance, security interest or agreement with respect thereto. All of the
outstanding shares of capital stock in each of the Active Parent Subsidiaries
held directly or indirectly
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by Parent are duly authorized, validly issued, fully paid and non-assessable and
were issued free of preemptive rights and in compliance with applicable
corporate and securities Laws.
3.4 AUTHORIZATION; BINDING AGREEMENT. Parent and Acquisition Subsidiary
have all requisite corporate power and authority to execute and deliver this
Restated Agreement and the Parent Transaction Agreements and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Restated Agreement and the other agreements and documents referred to herein and
to be executed in connection herewith to which Parent or Acquisition Subsidiary
is or will be a party or a signatory (the "PARENT TRANSACTION AGREEMENTS") and
the consummation of the transactions contemplated hereby and thereby have been
duly and validly authorized by the respective Boards of Directors of Parent and
Acquisition Subsidiary, as appropriate, and except for the approval of the
holders of the Parent Common Stock, no other corporate proceedings on the part
of Parent or Acquisition Subsidiary are necessary to authorize the execution and
delivery of this Restated Agreement and the Parent Transaction Agreements or to
consummate the transactions contemplated hereby or thereby, except for the
concurrence of Bank of America National Trust and Savings Association under the
Great Western Credit Agreement. This Restated Agreement has been duly and
validly executed and delivered by each of Parent and Acquisition Subsidiary and
constitutes, and upon execution and delivery thereof as contemplated by this
Restated Agreement, the Parent Transaction Agreements will constitute, the
legal, valid and binding obligations of Parent and Acquisition Subsidiary,
enforceable against each of Parent and Acquisition Subsidiary in accordance with
its and their respective terms, subject to the Enforceability Exceptions.
3.5 GOVERNMENTAL APPROVALS. No Consent from or with any Governmental
Authority on the part of Parent or any of the Active Parent Subsidiaries, is
required in connection with the execution or delivery by Parent and Acquisition
Subsidiary of this Restated Agreement and the Parent Transaction Agreements or
the consummation by Parent and Acquisition Subsidiary of the transactions
contemplated hereby or thereby other than (i) filings with the SEC, state
securities laws administrators and the NYSE, (ii) Consents from or with
Governmental Authorities, (iii) filings under the HSR Act, and (iv) those
Consents that, if they were not obtained or made, do not or would not have a
Parent Material Adverse Effect.
3.6 NO VIOLATIONS. The execution and delivery of this Restated Agreement
and the Parent Transaction Agreements, the consummation of the transactions
contemplated hereby and thereby and compliance by Parent and Acquisition
Subsidiary with any of the provisions hereof or thereof will not (i) conflict
with or result in any breach of any provision of the Certificate and/or Articles
of Incorporation or Bylaws or other governing instruments of Parent or any of
the Active Parent Subsidiaries, except as set forth on SCHEDULE 3.6,
(ii) except for compliance with the requirements under the Parent Guaranty,
require any Consent under or result in a violation or breach of, or 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 or augment the
performance required) under any of the terms, conditions or provisions of any
Parent Material Contract or other obligation to which Parent or any Active
Parent Subsidiary, is a party or by which any of them or any of their properties
or assets may be bound, (iii) result in the creation or imposition of any lien
or encumbrance of any kind upon any of the assets of Parent or any Parent
Subsidiary, or (iv) subject to obtaining the Consents from Governmental
Authorities referred to in SECTION 3.5 above, contravene any Law currently in
effect to which Parent or any Active Parent Subsidiary or its or any of their
respective assets or properties are subject, except in the case of clauses (ii),
(iii) and (iv) above, for any deviations from the foregoing which do not or
would not have a Parent Material Adverse Effect.
3.7 SECURITIES FILINGS AND LITIGATION.
(a) Parent has made available to Web true and complete copies of
(i) its Annual Reports on Form 10-K, as amended, for the years ended
December 31, 1997 and 1998, as filed with the SEC,
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(ii) its proxy statement relating to the meeting of shareholders held on
July 29, 1998, as filed with the SEC, and (iii) all other reports,
statements and registration statements and amendments thereto (including,
without limitation, Quarterly Reports on Form 10-Q and Current Reports on
Form 8-K, as amended) filed by Parent with the SEC since February 18, 1998.
The reports and statements set forth in clauses (i) through (iii) above, and
those subsequently provided or required to be provided pursuant to this
section, are referred to collectively as the "PARENT SECURITIES FILINGS." As
of their respective dates, or as of the date of the last amendment thereof,
if amended after filing, none of the Parent Securities Filings (including
all schedules thereto and disclosure documents incorporated by reference
therein), contained or, as to Parent Securities Filings subsequent to the
date hereof, will contain any untrue statement of a material fact or omitted
or, as to Parent Securities Filings subsequent to the date hereof, will 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 Parent Securities Filings at the time of
filing or as of the date of the last amendment thereof, if amended after
filing, complied or, as to Parent Securities Filings subsequent to the date
hereof, will comply in all material respects with the Securities Exchange
Act or the Securities Act, as applicable.
(b) Except as set forth on SCHEDULE 3.7(b) attached hereto, there is no
Litigation pending or, to the knowledge of Parent, threatened against Parent
or any Active Parent Subsidiary, any officer, director, employee or agent
thereof, in his or her capacity as such, or as a fiduciary with respect to
any Benefit Plan of Parent, or otherwise relating, in a manner that could
have a Parent Material Adverse Effect, to Parent, any Active Parent
Subsidiary or the securities of any of them, or any properties or rights of
Parent or any of the Active Parent Subsidiaries, which is required to be
described in any Parent Securities Filing that is not so described. No event
has occurred as a consequence of which Parent would be required to file a
Current Report on Form 8-K pursuant to the requirements of the Securities
Exchange Act as to which such a report has not been timely filed with the
SEC. Any reports, statements and registration statements and amendments
thereof (including, without limitation, Reports on Form 10-K, Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K, as amended) filed by
Parent with the SEC after the date hereof shall be provided to Web upon such
filing.
3.8 PARENT FINANCIAL STATEMENTS. The audited consolidated and unaudited
interim financial statements of Parent and the Active Parent Subsidiaries
included in the Parent Securities Filings (the "PARENT FINANCIAL STATEMENTS")
have been made available to Web. Except as noted thereon, the Parent Financial
Statements were prepared in accordance with generally accepted accounting
principles applicable to the business of Parent and the Active Parent
Subsidiaries consistently applied in accordance with past accounting practices
and fairly present (including, but not limited to, the inclusion of all
adjustments with respect to interim periods which are necessary to present
fairly the financial condition and assets and liabilities or the results of
operations of Parent and the Active Parent Subsidiaries, subject to normal
year-end adjustments in the ordinary course with respect to certain items
immaterial in amount or effect and the exclusion of footnote disclosure in
interim Parent Financial Statements) the financial condition and assets and
liabilities or the results of operations of Parent and the Active Parent
Subsidiaries as of the dates and for the periods indicated. Except as set forth
in SCHEDULE 3.8 or as reflected in the Parent Financial Statements, as of their
respective dates, neither Parent nor any Active Parent Subsidiary had any debts,
obligations, guaranties of obligations of others or liabilities (contingent or
otherwise) that would be required in accordance with generally accepted
accounting principles to be disclosed in the Parent Financial Statements.
3.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in the
Parent Securities Filings made available by Parent to Web prior to the date of
this Restated Agreement or in SCHEDULE 3.9 since June 30, 1999, through the date
of this Restated Agreement, there has not been: (i) any Event that could
reasonably be expected to have a Parent Material Adverse Effect; or (ii) any
agreement by
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Parent or Active Parent Subsidiary to take any action that would result in a
breach of SECTION 6.6 below.
3.10 COMPLIANCE WITH LAWS. The business of Parent and the Active Parent
Subsidiaries, has been operated in compliance with all Laws applicable thereto,
except for any instances of non-compliance which do not and would not have a
Parent Material Adverse Effect.
3.11 PERMITS. (i) Parent and the Active Parent Subsidiaries have all
permits, certificates, licenses, approvals, tariffs and other authorizations
required in connection with the operation of their business (collectively,
"PARENT PERMITS"), (ii) neither Parent nor any Active Parent Subsidiary is in
violation of any Parent Permit, and (iii) no proceedings are pending or, to the
knowledge of Parent, threatened, to revoke or limit any Parent Permit, except,
in the case of clause (i) or (ii) above, those the absence or violation of which
do not and would not have a Parent Material Adverse Effect.
3.12 FINDERS AND INVESTMENT BANKERS. Neither Parent nor any of its
officers or directors has employed any broker or finder or otherwise incurred
any liability for any brokerage fees, commissions or finders' fees in connection
with the transactions contemplated hereby except that PaineWebber Incorporated
has been engaged to deliver the fairness opinion required to be delivered
pursuant to SECTION 7.1(l) and NationsBanc Montgomery Securities, L.L.C. has
been engaged to assist in the sale(s) of the CLEC Operations and a copy of the
engagement letters and other related documents have been (or will be, with
respect to the fairness opinion to be issued by PaineWebber Incorporated)
furnished to Web. Web will not be liable for any brokerage fees, commissions,
investment banking fees or other amounts to PaineWebber Incorporated or
NationsBanc Montgomery Securities, L.L.C. in connection with this Restated
Agreement, the Company Agreement, the Restated Big Stuff Agreement or any
transactions contemplated herein or therein.
3.13 CONTRACTS. Except as set forth in SCHEDULE 3.13 attached hereto,
neither Parent nor any Active Parent Subsidiary is a party to any material note,
bond, mortgage, indenture, contract, lease, license, agreement, understanding,
instrument, bid or proposal ("PARENT MATERIAL CONTRACT") required to be
described in or filed as an exhibit to any Parent Securities Filing that is not
described in or filed as required by the Securities Act or the Securities
Exchange Act, as the case may be. Parent has made available to Web true and
accurate copies of the Parent Material Contracts. All such Parent Material
Contracts are valid and binding and are in full force and effect and enforceable
in accordance with their respective terms, subject to the Enforceability
Exceptions.
3.14 CORPORATE RECORDS. The respective corporate record books of or
relating to Parent and each of the Active Parent Subsidiaries made available to
Web by Parent contain accurate and complete records of (i) all corporate actions
of the respective shareholders and directors (and committees thereof) of Parent
and the Active Parent Subsidiaries, (ii) the Certificate and/or Articles of
Incorporation, Bylaws and/or other governing instruments, as amended, of Parent
and the Active Parent Subsidiaries, and (iii) the issuance and transfer of stock
of Parent and the Active Parent Subsidiaries.
3.15 TAX. Parent does not know of any fact and has not taken any action
that could be reasonably expected to prevent the transaction contemplated hereby
from qualifying as a tax-free reorganization pursuant to Section 368 of the
Code.
3.16 DISCLOSURE. All information and documents provided prior to the date
of this Restated Agreement and all information and documents subsequently
provided, to Web and the Web Shareholders, or its or their respective
representatives or lenders by or on behalf of Parent in connection with the
transactions contemplated by this Restated Agreement are or contain, or will be
or will contain as to subsequently provided information or documents, true,
accurate and complete information in all material respects with respect to the
subject matter thereof and are, or will be as to subsequently provided
information or documents, reasonably responsive to any specific request made by
or on behalf of Web and the Web Shareholders or its or their representatives or
lenders.
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ARTICLE IV--ADDITIONAL COVENANTS OF WEB
AND THE WEB SHAREHOLDERS
Web and the Web Shareholders covenant and agree as follows:
4.1 NOTIFICATION OF CERTAIN MATTERS. Web and the Web Shareholders shall
give prompt notice to Parent if any of the following occur from the date of this
Restated Agreement through the Closing Date: (i) receipt of any notice of, or
other communication relating to, a default or Event which, with notice or lapse
of time or both, would become a default under any Web Material Contract;
(ii) receipt of any notice or other communication from any third party alleging
that the Consent of such third party is or may be required in connection with
the transactions contemplated by this Restated Agreement; (iii) receipt of any
material notice or other communication from any Governmental Authority in
connection with the transactions contemplated by this Restated Agreement;
(iv) receipt of any notice of or other communication regarding or otherwise
obtaining knowledge of an Event which would have a Web Material Adverse Effect;
(v) receipt of any notice of or other communication regarding or otherwise
obtaining knowledge of the commencement or threat of any Litigation involving or
affecting any Web Shareholder, Web or any of its or their respective properties
or assets, or, to its knowledge, any employee, agent, director or officer of
Web, in his or her capacity as such or as a fiduciary under a Benefit Plan of
Web, which, if pending on the date hereof, would have been required to have been
disclosed in this Restated Agreement or which relates to the consummation of the
transactions contemplated by this Restated Agreement, including the Merger, or
the Web Transaction Agreements or any material development in connection with
any Litigation disclosed by Web or any Web Shareholder in or pursuant to this
Restated Agreement; and (vi) the receipt of any notice of or other communication
regarding or otherwise obtaining knowledge of any event that would cause a
breach by Web or any Web Shareholder of any provision of this Restated Agreement
or a Web Transaction Agreement, including such a breach that would occur if such
event had taken place on or prior to the date of this Restated Agreement.
4.2 ACCESS AND INFORMATION. Between the date of this Restated Agreement
and the Closing Date, Web, upon reasonable notice, will give, and shall direct
its accountants and legal counsel to give, Parent, its lenders and their
respective authorized representatives (including, without limitation, financial
advisors, accountants and legal counsel) at all reasonable times access to all
offices and other facilities and to all contracts, agreements, commitments,
books and records (including, but not limited to, Tax returns) of or pertaining
to Web, will permit the foregoing to make such inspections as they may require
and will cause its officers promptly to furnish Parent with (a) such financial
and operating data and other information with respect to the business and
properties of Web as Parent may from time to time reasonably request including,
but not limited to, data and information required for inclusion in Parent's
pending registration statements and/or other Parent Securities Filings, and
(b) a copy of each material report, schedule and other document filed or
received by Web pursuant to the requirements of applicable securities Laws. The
foregoing access will be subject to restrictions contained in SECTION 6.9
hereof.
4.3 WEB SHAREHOLDER APPROVAL. As soon as practicable, Web will, if
required, take all steps necessary to duly call, give notice of, convene and
hold a meeting of the Web Shareholders for the purpose of adopting this Restated
Agreement and for such other purposes as may be necessary or desirable in
connection with effectuating the transactions contemplated hereby. The Board of
Directors of Web (i) unless otherwise required under the fiduciary duties of the
directors of Web, as determined by such directors in good faith upon advice of
legal counsel, will recommend to the Web Shareholders that they adopt this
Restated Agreement and approve the transactions contemplated hereby, and
(ii) will use its reasonable best efforts to obtain any necessary adoption and
approval by the Web Shareholders of this Restated Agreement and the transactions
contemplated hereby including, without limitation, voting the Web Shares held
for such adoption and approval.
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4.4 REASONABLE BEST EFFORTS. Subject to the terms and conditions herein
provided, Web and the Web Shareholders agree to use their reasonable best
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, all things necessary, proper or advisable to consummate and make effective
as promptly as practicable, but in any event, prior to the Closing, the Merger
and the other transactions contemplated by this Restated Agreement and the Web
Transaction Agreements including, but not limited to (i) obtaining the Consent
of others to this Restated Agreement, the Web Transaction Agreements and the
transactions contemplated hereby and thereby, (ii) the defending of any
Litigation against Web, or involving any Web Shareholder challenging this
Restated Agreement, the Web Transaction Agreements or the consummation of the
transactions contemplated hereby or thereby, excluding any Litigation caused by
or relating to Parent or any Active Parent Subsidiary, (iii) obtaining all
Consents from Governmental Authorities required for the consummation of the
exchange and the transactions contemplated hereby, and (iv) timely making all
necessary filings under the HSR Act. Upon the terms and subject to the
conditions hereof, Web and the Web Shareholders agree to use their reasonable
best efforts to take, or cause to be taken, all actions and to do, or cause to
be done, all things necessary to satisfy the other conditions of the Closing set
forth herein. Web and the Web Shareholders will consult with counsel for Parent
as to, and will permit such counsel to participate in, at Parent's expense, any
Litigation referred to in clause (ii) above brought against or involving Web or
any Web Shareholder.
4.5 COMPLIANCE. In consummating the Merger and the transactions
contemplated hereby, Web and the Web Shareholders shall comply in all material
respects with the provisions of the Securities Exchange Act and the Securities
Act and shall comply, in all material respects, with all other applicable Laws.
4.6 BENEFIT PLANS. Between the date of this Restated Agreement and through
the Closing Date, no discretionary award or grant under any Benefit Plan of Web
shall be made without the consent of Parent. Web shall not make any amendment to
any Benefit Plan, any awards thereunder or the terms of any security convertible
into or exchangeable for capital stock without the consent of Parent.
4.7 TAX OPINION CERTIFICATION. Web and the Web Shareholders shall use
their best efforts to cause the Merger to qualify, and will not take any action
which to their knowledge could reasonably be expected to prevent the Merger from
qualifying, as a reorganization under Section 368 of the Code. Prior to the
Effective Time, Web and the Web Shareholders shall provide tax counsel rendering
an opinion under SECTION 7.1(m) with a certificate concerning such factual
matters as such counsel reasonably requests in connection with its opinion.
4.8 AFFILIATE AGREEMENTS. Web shall use its reasonable business efforts to
ensure that each Person who is or may be an "affiliate" of Web within the
meaning of Rule 145 promulgated under the Securities Act shall enter into an
agreement in a form agreed to by the parties hereto, acting reasonably
(collectively, the "AFFILIATE AGREEMENTS").
4.9 TRANSFER RESTRICTIONS. (a) In addition to any other restrictions
imposed by Law on the ability of any Web Shareholder to transfer any Parent
Common Stock received by such Web Shareholder pursuant to this Restated
Agreement, the Web Shareholders who are "affiliates" of Web within the meaning
of Rule 145 promulgated under the Securities Act acknowledge and agree that the
following legend will appear on all certificates representing the Parent Common
Stock received by such "affiliates" of Web pursuant to this Restated Agreement:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE HELD SUBJECT TO
ALL APPLICABLE PROVISIONS OF THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND THE RULES AND REGULATIONS PROMULGATED BY THE
SECURITIES AND EXCHANGE COMMISSION ("SEC") THEREUNDER. NO SALES, TRANSFERS
OR OTHER DISPOSITION OF THESE SHARES MAY BE MADE EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
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ACT OR UPON THE PRIOR DELIVERY TO THE ISSUER OF AN OPINION FROM LEGAL
COUNSEL SATISFACTORY TO THE ISSUER AND IN FORM AND SUBSTANCE SATISFACTORY TO
THE ISSUER AND ITS LEGAL COUNSEL, STATING THAT SUCH SALE OR OTHER
DISPOSITION IS BEING MADE PURSUANT TO AND IN ACCORDANCE WITH THE
REQUIREMENTS OF SEC RULES 144 AND 145 OR IS OTHERWISE EXEMPT FROM
REGISTRATION UNDER THE SECURITIES ACT.
(b) Notwithstanding the foregoing, Parent shall instruct its transfer
agent to remove the legend set forth in SECTION 4.9(a) for those sales of
Parent Common Stock by "affiliates" (as defined in Securities Act Rules 144
and 145) of Parent and Web made pursuant to Securities Act Rules 144 and
145.
ARTICLE V
ADDITIONAL COVENANTS OF PARENT
Parent covenants and agrees as follows:
5.1 CONDUCT OF BUSINESS OF PARENT AND THE ACTIVE PARENT
SUBSIDIARIES. Parent covenants, represents and warrants that from the date of
this Restated Agreement through the Closing Date, unless Web shall otherwise
expressly consent in writing, Parent shall, and Parent shall cause each Active
Parent Subsidiary to, use its or their reasonable best efforts to comply in all
material respects with all Laws applicable to it or any of its properties,
assets or business and maintain in full force and effect all the Parent
Authorizations necessary for, or otherwise material to, such business.
5.2 NOTIFICATION OF CERTAIN MATTERS. Parent shall give prompt notice to
Web if any of the following occur from the date of this Restated Agreement
through the Closing Date: (i) any notice of, or other communication relating to,
a default or Event which, with notice or lapse of time or both, would become a
default under any Parent Material Contract which could have a Parent Material
Adverse Effect; (ii) receipt of any notice or other communication from any third
party alleging that the Consent of such third party is or may be required in
connection with the transactions contemplated by this Restated Agreement;
(iii) receipt of any material notice or other communication from any regulatory
authority (including, but not limited to, the NYSE or any other securities
exchange) in connection with the transactions contemplated by this Restated
Agreement; (iv) receipt of any notice of or other communication regarding or
otherwise obtaining knowledge of an Event which would have a Parent Material
Adverse Effect; (v) receipt of any notice of or other communication regarding or
otherwise obtaining knowledge of the commencement or threat of any Litigation
involving or affecting Parent or any Active Parent Subsidiary or any of their
respective properties or assets, or, to its knowledge, any employee, agent,
director or officer, in his or her capacity as such, of Parent or any Active
Parent Subsidiary which, if pending on the date hereof, would have been required
to have been disclosed in this Restated Agreement or which relates to the
consummation of the Merger or any material development in connection with any
Litigation disclosed by Parent in or pursuant to this Restated Agreement or the
Parent Securities Filings; (vi) receipt of any notice of or other communication
regarding or otherwise obtaining knowledge of any Event that could cause a
breach by Parent of any provision of this Restated Agreement or any Parent
Transaction Agreement, including such a breach that could occur if such Event
had taken place on or prior to the date of this Restated Agreement; and
(vii) amendment, modification or waiver of any provision of the Ionex Agreement
referenced on SCHEDULE 3.7 hereto.
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5.3 ACCESS AND INFORMATION. Between the date of this Restated Agreement
and the Closing Date, Parent: (i) will, upon reasonable notice, give, and direct
its legal counsel and accountants to give, Web and its authorized
representatives (including, without limitation, its financial advisors,
accountants and legal counsel) at all reasonable times access as reasonably
requested to the offices and other facilities and to all material contracts,
agreements, commitments, books and records (including, but not limited to, Tax
returns) of or pertaining to Parent and the Active Parent Subsidiaries;
(ii) will permit Web to make such reasonable inspections as it may require; and
(iii) will cause its officers promptly to furnish Web with (a) such financial
and operating data and other information with respect to the business and
properties of Parent and the Active Parent Subsidiaries as Web may from time to
time reasonably request, and (b) a copy of each material report, schedule and
other document filed or received by Parent or any Active Parent Subsidiary
pursuant to the requirements of applicable securities Laws, the NYSE or other
securities exchange, in each case as necessary in connection with the
transactions contemplated hereby. The foregoing access will be subject to the
restrictions contained in SECTION 6.9 hereof.
5.4 COMPLIANCE. In consummating the Merger and the transactions
contemplated hereby, Parent shall comply in all material respects with the
provisions of the Securities Exchange Act and the Securities Act and shall
comply, and/or cause the Active Parent Subsidiaries to comply or to be in
compliance, in all material respects, with all other applicable Laws.
5.5 SEC AND SHAREHOLDER FILINGS. Parent shall send to Web a copy of all
material public reports and materials as and when it sends the same to its
shareholders, the SEC, the NYSE or any other securities commission or exchange.
5.6 TAX TREATMENT. Parent and Acquisition Subsidiary shall use their best
efforts to cause the Merger to qualify, and will not take any action which to
its knowledge could reasonably be expected to prevent the Merger from
qualifying, as a reorganization under Section 368 of the Code. Prior to the
Effective Time, Parent shall provide tax counsel rendering an opinion under
SECTION 7.1(m) with a certificate concerning such factual matters as such
counsel identifies are relevant to its opinion.
5.7 EMPLOYMENT AND EMPLOYEE BENEFIT PLANS. At or before the Closing Date,
Parent shall, after consultation with Web, offer employment to the employees of
Web, effective as of the Closing Date, upon terms and conditions reasonably
acceptable to the Web employees and to Parent. After the Closing Date, Parent
shall arrange for each employee participating in any of the Benefit Plans of Web
at such time to participate in any counterpart Benefit Plans of Parent in
accordance with the eligibility criteria thereof, provided that (i) such
participants shall receive full credit for years of service with Web prior to
the Merger for all purposes for which such service was recognized under the
Benefit Plan of Web including, but not limited to, recognition of service for
eligibility, vesting, and, to the extent not duplicative of benefits received
under such Benefit Plan of Web, the amount of benefits, and (ii) such
participants shall participate in the Benefit Plans of Parent on terms no less
favorable than those offered by Parent to similarly situated employees of
Parent. Notwithstanding the foregoing, Parent may continue one or more of the
Benefit Plans of Web, in which case Parent shall have satisfied its obligations
hereunder with respect to the benefits so provided.
5.9 EXPENSES. If the transactions contemplated by this Restated Agreement
are consummated, all fees and expenses incurred in connection with the
transactions contemplated by this Restated Agreement including, without
limitation, all legal, accounting, financial advisory, consulting fees,
(collectively, the "TRANSACTION EXPENSES") incurred by a party or its
stockholders in connection with the negotiation and effectuation of the terms
and conditions of this Restated Agreement and the transactions contemplated
hereby, shall be the obligation of Parent or any direct or indirect subsidiary
of Parent after Closing. If the Merger is not consummated, all Transaction
Expenses shall be and remain the obligation of the respective parties which
incurred them.
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5.10 PARENT SHAREHOLDER APPROVAL. As soon as practicable, Parent will, if
required, take all steps necessary to duly call, give notice of, convene and
hold a meeting of the Parent shareholders for the purpose of adopting this
Restated Agreement and for such other purposes as may be necessary or desirable
in connection with effectuating the transactions contemplated hereby. The Board
of Directors of Parent (i) unless otherwise required under the fiduciary duties
of the directors of Parent, as determined by such directors in good faith and
upon advice of legal counsel, will recommend to the Parent shareholders that
they adopt this Restated Agreement and approve the transactions contemplated
hereby, and (ii) will use its reasonable best efforts to obtain any necessary
adoption and approval by the Parent shareholders of this Restated Agreement and
the transactions contemplated hereby.
ARTICLE VI--ADDITIONAL COVENANTS OF THE PARENT,
WEB AND THE WEB SHAREHOLDERS
6.1 REGISTRATION OF SECURITIES.
(a) On or before the Closing Date, the Parent shall use its reasonable
best efforts to cause the following securities to be registered with the SEC
under the Securities Act and with the appropriate Governmental Authorities
under state blue sky Laws:
(i) Parent Common Stock to be received by Web Shareholders and any
other shareholders of Web upon conversion of Web Common Stock, as
described in SECTION 1.3 hereof; and
(ii) Parent Common Stock to be received by Web Shareholders upon
conversion of the Convertible Note described in SECTION 1.10 hereof.
(b) The Parent shall hold the meeting of the shareholders of Parent to
consider and to vote upon the approval of the Restated Agreement including
the issuance of Parent Common Stock to the Web Shareholders and to the
shareholders of the Company and of Big Stuff, and Parent and Web will
cooperate in the preparation of one or more registration statements (such
registration statements, together with any and all amendments and
supplements thereto, being hereinafter referred to as the "REGISTRATION
STATEMENTS"), which will include the preparation of one or more proxy
statements of the Parent satisfying all requirements of applicable state
securities Laws, the Securities Act and the Securities Exchange Act.
(c) Web will furnish Parent with such information concerning Web as is
necessary in order to cause the Registration Statements and any proxy
statements, insofar as they relate to Web, to comply with applicable Law.
None of the information relating to Web supplied by Web for inclusion in the
Registration Statements or any proxy statements will be false or misleading
with respect to any material fact or will 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. Web agrees promptly to advise Parent if, at any time prior to
the meeting of the shareholders of the Parent referenced herein, any
information provided by it in the Registration Statements or any proxy
statement is or becomes incorrect or incomplete in any material respect and
to provide Parent with the information needed to correct such inaccuracy or
omission. Web will furnish Parent with such supplemental information as may
be necessary in order to cause the Registration Statements or the proxy
statements, insofar as it relates to Web, to comply with applicable Law
after the mailing thereof to the stockholders of Parent, Web, Big Stuff, the
Company and others to whom it must be mailed.
(d) Web and Parent agree to cooperate in making any preliminary filings
of Registration Statements and the proxy statement with the SEC as promptly
as practicable, on a confidential basis pursuant to Rule 14a-6(e)(2) under
the Securities Exchange Act.
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(e) Parent will file the Registration Statements and the proxy statement
with the SEC and appropriate materials with applicable state securities
agencies and will use all reasonable best efforts to cause the Registration
Statements and the proxy statement to become effective under the Securities
Act and the Exchange Act and all such state filed materials to comply with
applicable state securities Laws. Web authorizes Parent to utilize in the
Registration Statements and in all such state filed materials, the
information concerning Web provided to Parent in connection with, or
contained in, the Registration Statements. Parent promptly will advise Web
when the Registration Statements have become effective and of any
supplements or amendments thereto, and Parent will furnish Web with copies
of all such documents. Parent shall file any and all amendments, supplements
and related filings to such Registration Statements (and state filed
materials) as may be required. Web shall not distribute any written material
that might constitute a "prospectus" relating to this Restated Agreement or
any of the transactions contemplated by this Restated Agreement within the
meaning of the Securities Act or any other applicable securities Law without
the prior written consent of Parent.
6.2 EMPLOYMENT AGREEMENTS. At or before the Closing Date, Parent will
enter into Employment and Non-Competition Agreements, in forms agreed to by
Parent and Web, acting reasonably, with certain individuals, the identities of
whom shall be agreed upon by Parent and Web, acting reasonably.
6.3 CONSENTS. Each of Parent and Web shall promptly apply for or otherwise
seek, and use its best efforts to obtain, all consents and approvals required to
be obtained by it for the consummation of the Merger.
6.4 LEGAL REQUIREMENTS. Subject to the terms and conditions provided in
this Restated Agreement, each of the parties hereto shall use its reasonable
best efforts to take promptly, or cause to be taken, all reasonable actions, and
to do promptly, or cause to be done, all things necessary, proper or advisable
under applicable Laws to consummate and make effective the transactions
contemplated hereby and to obtain all necessary waivers, consents and approvals
and to effect all necessary registrations and filings and to remove any
injunctions or other impediments or delays, legal or otherwise, in order to
consummate and make effective the transactions contemplated by this Restated
Agreement for the purpose of securing for the parties hereto the benefits
contemplated by this Restated Agreement.
6.5 PUBLIC ANNOUNCEMENTS. All press releases and other disseminations of
information to employees, customers or suppliers relating to the Merger or the
transactions contemplated by this Restated Agreement or the Restated Company
Agreement by any party hereto shall require the prior approval of Parent and
Web, provided Parent shall have the right to make such public announcements
without the approval of the other parties hereto should such disclosure be
required by Law or the policies or requirements of United States securities
regulators, stock exchanges, or other relevant entities in the opinion of
Parent's legal counsel. Should such disclosure be required, Parent agrees to
provide the others with reasonable advance notice of and a copy of, and to
consult with the others regarding, the proposed disclosure.
6.6 CONDUCT OF BUSINESS PRIOR TO CLOSING DATE. Except as expressly
contemplated by this Restated Agreement, during the period from the date of this
Restated Agreement to the Closing Date, Web shall conduct its business in the
ordinary course and consistent with past practice, subject to the limitations
contained in this Restated Agreement, and Web shall use its reasonable business
efforts to preserve intact its business organization, to keep available the
services of its officers, agents and employees and to maintain satisfactory
relationships with all Persons with whom it does business. Except as expressly
contemplated by this Restated Agreement, and it being acknowledged and agreed by
each of the parties to this Restated Agreement that Parent is in the process of
a substantial reduction in workforce, and, subject to the sale of the CLEC
Operations, Parent shall, and it shall cause the Active Parent Subsidiaries to,
use its or their reasonable best efforts to preserve intact its
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business organization consistent with the budget adopted by the Executive
Committee of the Board of Directors of Parent, to keep available the services of
only those officers, agents and employees whom Parent believes are required to
maintain satisfactory relationships with all Persons with whom it does business.
Without limiting the generality of the foregoing, and except as otherwise
expressly provided in this Restated Agreement, after the date of this Restated
Agreement and prior to the Closing Date, (i) Web will not, without the prior
written consent of Parent (which consent shall not be unreasonably withheld or
delayed); and (ii) subject to the sale of the CLEC Operations, neither Parent
nor any Active Parent Subsidiary will, without the prior written consent of Web
(which consent shall not be unreasonably withheld or delayed):
(a) except as provided for in this Restated Agreement, the Restated
Company Agreement or the Restated Big Stuff Agreement, amend or propose to
amend its Certificate or Articles of Incorporation or Bylaws (or comparable
governing instruments) in any material respect;
(b) except as set forth on SCHEDULE 6.6(b)(i), with regard to Web, or
Parent Common Stock to be issued pursuant to those options or warrants
listed on SCHEDULE 6.6(b)(ii) or in SECTION 6.10, with regard to Parent or
the Active Parent Subsidiaries, authorize for issuance, issue, grant, sell,
pledge, dispose of or propose to issue, grant, sell, pledge or dispose of
any shares of, or any options, warrants, commitments, subscriptions or
rights of any kind to acquire or sell any shares of, the capital stock or
other securities of Web, or of Parent or any Active Parent Subsidiary, as
the case may be, including, but not limited to, any securities convertible
into or exchangeable for shares of stock of any class of Web, or of Parent
or any Active Parent Subsidiary, as the case may be; PROVIDED, HOWEVER, that
Web may issue capital stock pursuant to the exercise of options and warrants
outstanding on the date of this Restated Agreement;
(c) except as provided for in this Restated Agreement, the Restated
Company Agreement or the Restated Big Stuff Agreement, split, combine or
reclassify any shares of its capital stock or declare, pay or set aside any
dividend or other distribution (whether in cash, stock or property or any
combination thereof) in respect of its capital stock, other than dividends
or distributions to the Web Shareholders (but only if the entire amount of
such dividend is paid to Big Stuff as a capital contribution), or to Parent
or a Parent subsidiary, as the case may be, or redeem, purchase or otherwise
acquire or offer to acquire any shares of its capital stock or other
securities; PROVIDED, HOWEVER, that Web may make a dividend or distribution
to the Web Shareholders in the amount of cash or other consideration
received by Web on or before the Closing Date from the exercise of options
and warrants to purchase Web Common Stock;
(d) except for debt (including, but not limited to, obligations in
respect of capital leases, but excluding obligations under the Convertible
Note) not in excess of $50,000 in the aggregate for all Persons combined,
(i) create, incur or assume any short-term debt (excluding trade payables
incurred in the ordinary course of business), long-term debt or obligations
in respect of capital leases, except for indebtedness contemplated by this
Restated Agreement; (ii) assume, guarantee, endorse or otherwise become
liable or responsible (whether directly, indirectly, contingently or
otherwise) for the obligations of any Person, except for obligations
permitted by this Restated Agreement of any Active Parent Subsidiary, in the
ordinary course of business consistent with past practice; (iii) except as
contemplated in this Restated Agreement, make any capital expenditures or
make any loans, advances or capital contributions to, or investments in, any
other Person (other than customary advances to employees made in the
ordinary course of business consistent with past practice), provided Web
will continue to make capital expenditures, maintain, upgrade and expand its
facilities, and otherwise operate in the ordinary course and consistent with
past practice; (iv) acquire the stock or assets of, or merge or consolidate
with, any other Person or business, except as contemplated in this Restated
Agreement and except the contemplated merger with Big Stuff or the
contemplated acquisition of all of the issued and outstanding capital stock,
either
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directly or indirectly, of the Company; or (v) voluntarily incur any
material liability or obligation (absolute, accrued, contingent or
otherwise), except in the ordinary course of business;
(e) except for the contemplated sale of the Parent's CLEC Operations,
sell, transfer, mortgage, pledge or otherwise dispose of, or encumber, or
agree to sell, transfer, mortgage, pledge or otherwise dispose of or
encumber, any material assets or properties, real, personal or mixed, except
in the ordinary course of business, in the case of Parent and the Active
Parent Subsidiaries;
(f) increase in any manner the compensation of any of its officers,
agents or employees other than any increases required pursuant to their
employment agreements in accordance with their terms in effect on the date
of this Restated Agreement and increases in the ordinary course of business
consistent with past practice not in excess on an individual basis of the
lesser of 10% of the current compensation of such individual or $10,000 per
annum;
(g) enter into, establish, amend, make non-routine or material
interpretations or determinations with respect to, or terminate any
employment, consulting, retention, change in control, collective bargaining,
bonus or other incentive compensation, profit sharing, health or other
welfare, stock option, stock purchase, restricted stock, or other equity,
pension, retirement, vacation, severance, deferred compensation or other
compensation or benefit plan, policy, agreement, trust, fund or arrangement
with, for or in respect of, any shareholder, officer, director, other
employee, agent, consultant or affiliate, other than actions contemplated by
this Restated Agreement, the Restated Company Agreement and the Restated Big
Stuff Agreement;
(h) make any elections with respect to Taxes that are inconsistent with
the prior elections reflected in the Financial Statements as of and to the
period ended December 31, 1998;
(i) except with regard to the Saville matter referenced on SCHEDULE 3.7
attached hereto, compromise, settle, grant any waiver or release relating to
or otherwise adjust any Litigation, except routine Litigation in the
ordinary course of business consistent with past practice, involving only a
payment not in excess of $50,000 individually or $100,000 when aggregated
with all such payments by Web or by Parent and the Active Parent
Subsidiaries combined, as the case may be;
(j) take any action or omit to take any action, which action or omission
would result in a breach of any of the covenants, representations and
warranties of Web, the Web Shareholders or Parent or the Active Parent
Subsidiaries set forth in this Restated Agreement or would have a Web
Material Adverse Effect, with regard to Web and the Web Shareholders, or a
Parent Material Adverse Effect, with regard to Parent and the Active Parent
Subsidiaries;
(k) except in the ordinary course of business enter into any lease or
other agreement, or amend any lease or other agreement, with respect to real
property;
(l)
(i) except as set forth in SECTION 6.6(l)(ii) or SECTION 11.1 or 11.2
hereof, enter into or amend any agreement or transaction (A) pursuant to
which the aggregate financial obligation of Web, or of Parent or an
Active Parent Subsidiary, as the case may be, or the value of the
services to be provided could exceed $50,000, (B) having a term of more
than twelve (12) months and pursuant to which the aggregate financial
obligation of Web, or of Parent or an Active Parent Subsidiary, as the
case may be, or the value of the services to be provided could exceed
$100,000 per year, or (C) which is not terminable by Web or Parent or the
Active Parent Subsidiaries, as the case may be, upon no more than thirty
(30) days' notice without penalty in excess of $50,000 individually or
$100,000 when aggregated with the penalties under all such agreements or
transactions;
(ii) The parties hereto expressly agree that, notwithstanding
anything in this Restated Agreement to the contrary, Parent may modify,
amend or waive its rights, including those respecting its indemnification
obligations, under (A) the Ionex Agreement referenced on
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SCHEDULE 3.13 attached hereto; (B) the Restated Company Agreement; and
(C) the Restated Big Stuff Agreement; PROVIDED, that such modifications,
amendments and/or waivers do not, or would not reasonably be expected to,
materially increase Parent's obligations or materially adversely affect
Parent's rights under each respective agreement, or otherwise materially
affect the consideration to be received under each respective agreement.
(m) except as set forth in SECTION 6.6(l)(ii) hereof, take any action
with respect to the indemnification of any Person;
(n) change any accounting practices or policies, except as required by
generally accepted accounting principles or Laws or as agreed to or
requested by Web's or Parent's auditors after consultation with Parent's or
Web's auditors, as the case may be; PROVIDED, HOWEVER, that notice and a
description of any change pursuant to this SECTION 6.6(n) shall be provided
promptly after such change is effected to Web or Parent, as the case may be;
(o) except as set forth in SECTION 6.6(l)(ii) hereof, or except in the
ordinary course of business, enter into, amend, modify, terminate or waive
any rights under any contract which would result in a Web Material Adverse
Effect, with respect to Web, or a Parent Material Adverse Effect, with
respect to Parent;
(p) adopt a plan of liquidation, dissolution, merger, consolidation,
share exchange, restructuring, recapitalization, or other reorganization;
PROVIDED, HOWEVER, that Parent may adopt such a plan and may cause the
liquidation or dissolution of any Parent subsidiary if Parent is unable to
sell such Parent subsidiary (i) at a price which Parent determines to be
reasonable, and (ii) during a time period which Parent determines to be
reasonable; PROVIDED, FURTHER, HOWEVER, that if Parent adopts such a plan or
causes such liquidation or dissolution, Parent promptly shall provide to Web
notice of such adoption, liquidation or dissolution, as the case may be; or
(q) resolve, agree, commit or arrange to do any of the foregoing.
Notwithstanding anything in this SECTION 6.6 to the contrary, it is
understood that Web has been accelerating and intensifying its business
activities since March 31, 1999 and will continue to do so. Accordingly,
(x) "ordinary course of business" and "consistent with past practice", as used
in this SECTION 6.6 with respect to Web, shall be interpreted to include such
acceleration and intensification; and (y) in considering requests for consent
from Web, Parent shall take into account such acceleration and intensification.
Furthermore, Parent covenants, represents and warrants that from and after
the date hereof, unless Web shall otherwise expressly consent in writing, Parent
shall use its reasonable business efforts to:
(1) keep in full force and effect insurance comparable in amount and
scope of coverage to insurance now carried by it;
(2) pay all accounts payable and other obligations consistent with
prudent cash management principles, except if the same are contested in good
faith, and, in the case of the failure to pay any material accounts payable
or other obligations which are contested in good faith, only after
consultation with Web; and
(3) comply in all material respects with all Laws applicable to it or
any of its properties, assets or business, except for such Laws the failure
to comply with which would not have a Parent Material Adverse Effect and
maintain in full force and effect all Parent Permits necessary for, or
otherwise material to, such business, except for such Parent Permits the
failure of which to maintain in full force and effect would not have a
Parent Material Adverse Effect.
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Furthermore, Web covenants, represents and warrants that from and after the
date hereof, unless Parent shall otherwise expressly consent in writing, Web
shall use its or their reasonable business efforts to:
(1) keep in full force and effect insurance comparable in amount and
scope of coverage to insurance now carried by it;
(2) pay all accounts payable and other obligations, when they become due
and payable, in the ordinary course of business consistent with past
practice and with the provisions of this Restated Agreement, except if the
same are contested in good faith, and, in the case of the failure to pay any
material accounts payable or other obligations which are contested in good
faith, only after consultation with Parent; and
(3) comply in all material respects with all Laws applicable to it or
any of its properties, assets or business, and maintain in full force and
effect all Web Permits necessary for, or otherwise material to, such
business.
6.7 NO SOLICITATION OF ACQUISITION PROPOSAL. Unless Parent, Web and the
Web Shareholders shall otherwise agree in advance, in writing, neither the Web
Shareholders, Web, Parent nor any of their Associates shall, directly or
indirectly, make, encourage, facilitate, solicit, assist or initiate any inquiry
or proposal, or provide any information to or participate in any negotiations
with, any Person or group other than the parties to this Restated Agreement and
their Associates relating to any of the following transactions ("EXTRAORDINARY
TRANSACTIONS"): (i) liquidation, dissolution, recapitalization, share exchange,
business combination, merger or consolidation of Web or Parent or an Active
Parent Subsidiary; (ii) sale of a significant amount of assets of Web or Parent
or an Active Parent Subsidiary; (iii) purchase or sale of shares of capital
stock of Web or Parent or an Active Parent Subsidiary; or (iv) any similar
actions or transactions involving Web or Parent or an Active Parent Subsidiary
(other than the Merger and the transactions contemplated by this Restated
Agreement, the Restated Company Agreement and the Restated Big Stuff Agreement),
or agree to or consummate any Extraordinary Transaction. Each of Parent and Web
shall immediately inform the other party of any inquiry, proposal, or request
for information or offer (including the terms thereof and the Person making such
inquiry, proposal, request or offer) which it may receive in respect of an
Extraordinary Transaction and provide the other party with a copy of any such
written inquiries, proposals, requests for information and offers, and
thereafter keep the other party fully informed of the status and details
thereof. The parties hereto acknowledge and agree that the provisions of this
SECTION 6.7 shall not apply to: (a) the sale of the CLEC Operations by Parent or
any Active Parent Subsidiary; or (b) to the acquisition of Big Stuff or the
Company; or (c) any communications between or actions by Parent (or any Parent
subsidiary), the Company and ICL, acting jointly, on the one hand, and any
Person not a party to this Restated Agreement, on the other hand, which occurred
prior to the date that this Restated Agreement becomes effective pursuant to
SECTION 1.2 hereof.
6.8 RESIGNATIONS. Web shall use its reasonable best efforts to cause the
officers and/or directors of Web as Parent may request to voluntarily resign
their positions as such effective as of the Closing Date. The instruments
effecting such resignations are herein referred to as the "RESIGNATIONS."
6.9 CONFIDENTIALITY. Unless (i) otherwise expressly provided in this
Restated Agreement, (ii) required by applicable Law or any listing agreement
with, or the rules and regulations of, any applicable securities exchange,
(iii) necessary to secure any required Consents as to which the other party has
been advised, or (iv) consented to in writing by Parent and Web, this Restated
Agreement and any information or documents furnished in connection with this
Restated Agreement, the June 3 Web YP Agreement or the Confidentiality Agreement
dated April 11, 1999 by and among Parent, the Company, Web, Big Stuff and O'Neal
shall be kept strictly confidential by Web, Parent and their respective
officers, directors, employees and agents. Prior to any disclosure pursuant to
the preceding sentence, the party intending to make such disclosure shall
consult with the other party regarding the
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nature and extent of the disclosure. Nothing contained herein shall preclude
disclosures to the extent necessary to comply with accounting, SEC and other
disclosure obligations imposed by applicable Law. To the extent required by such
disclosure obligations, Parent, after consultation with Web, may file with the
SEC a Report on Form 8-K pursuant to the Securities Exchange Act with respect to
the Merger, which report may include, among other things, financial statements
and pro forma financial information with respect to the other party. In
connection with any filing with the SEC of a registration statement or amendment
thereto under the Securities Act, Parent, after consultation with Web, may
include a prospectus containing any information required to be included therein
with respect to the Merger, including, but not limited to, financial statements
and pro forma financial information with respect to the other party, and
thereafter distribute said prospectus. Parent and Web shall cooperate with the
other and provide such information and documents as may be required in
connection with any such filings. In the event the Merger is not consummated,
Parent and Web shall return to the other all documents furnished by the other
and will hold in absolute confidence any information obtained from the other
party except to the extent (i) such party is required to disclose such
information by Law or such disclosure is required by discovery, subpoena or
other similar legal process in a proceeding involving a third Person; (ii) such
party received such information on a non-confidential basis from a source, other
than the other party, which is not known by such party to be bound by a
confidentiality obligation with respect thereto; or (iii) such information
becomes generally available to the public or is otherwise no longer
confidential. Prior to any disclosure of information pursuant to the exception
in clause (i) of the preceding sentence, the party intending to disclose the
same shall so notify, in writing, the party which provided the same in order
that such party may seek a protective order or other appropriate remedy should
it choose to do so.
6.10 OPTIONS; STOCK ISSUANCES. The Board of Directors of Parent shall have
the right to grant or issue, as the case may be, (i) restricted stock or options
to acquire shares of Parent Common Stock pursuant to the Parent's 1997 Stock
Awards Plan, provided that no more than the number of shares authorized under
the 1997 Stock Awards Plan have been issued; (ii) restricted stock valued at or
warrants to purchase up to 90,000 shares of Parent Common Stock to be issued to
certain non-employee directors of Parent who were responsible for negotiating
the June 3 Web YP Agreement at an exercise price of $6.96 per share, the
Restated Company Agreement and the Restated Big Stuff Agreement; (iii) the
shares of Parent Common Stock issuable upon conversion at Closing of the Great
Western Notes at a conversion price of $5.50 per share; (iv) up to 1,090,909
shares of Parent Common Stock issuable upon conversion of one or more notes
which may be issued to the Web Shareholders who may lend up to Six Million
Dollars ($6,000,000.00) to Web or Big Stuff as provided in this Restated
Agreement, at a conversion price of $5.50 per share; (v) shares of Parent Common
Stock to be issued upon exercise of options or warrants to be granted at Closing
to those Persons designated by Company in the Restated Company Agreement;
(vi) those shares of Parent Common Stock issuable upon exercise of previously
granted options; and (vii) one (1) share of Parent Class B Voting Preferred
Stock to be issued to the trustee under the Exchange and Voting Trust Agreement.
ARTICLE VII--CONDITIONS TO CLOSING
7.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO CLOSING. The respective
obligations of each party to consummate this Restated Agreement and effect the
Merger shall be subject to the satisfaction or waiver at or prior to the Closing
Date of the following conditions:
(a) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No temporary restraining
order, preliminary or permanent injunction or other order issued by any
court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger shall be in effect, nor shall any
proceeding brought by an administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, seeking any
of the foregoing be pending; nor
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shall there be any action taken, or any statute, rule, regulation or order
enacted, entered, enforced or deemed applicable to the Merger, which makes
the consummation of the Merger illegal.
(b) OTHER AGREEMENTS. The Restated Company Agreement and the Restated
Big Stuff Agreement and all documents related to the Restated Company
Agreement and the Restated Big Stuff Agreement shall have been duly executed
and delivered by all parties thereto and shall be in full force and effect.
(c) EMPLOYMENT AND NON-COMPETITION AGREEMENTS. The Employment and
Non-Competition Agreements described in SECTION 6.2 hereof shall have been
duly executed and delivered by all parties thereto and shall be in full
force and effect.
(d) GOVERNMENT APPROVALS. Except for those Consents the failure of
which to be obtained, (i) in the reasonable judgment of Parent, would not
have a Parent Material Adverse Effect or a Web Material Adverse Effect, and
(ii) in the reasonable judgment of Web, would not have a Web Material
Adverse Effect or a Parent Material Adverse Effect, all Consents of any
domestic or foreign Governmental Authority required for the consummation of
the Merger shall have been obtained by Final Order.
(e) RELATED TRANSACTIONS. (i) The acquisition by Parent, or a direct
or indirect subsidiary of Parent, of Web and Big Stuff in a tax-free
reorganization shall have been consummated prior to or simultaneously with
the acquisition of the Company and any registration statement(s) required
for the registration of Parent Common Stock issued to the Web Shareholders,
the Company shareholders and the shareholders of Big Stuff as consideration
in connection with the acquisition of Web, the Company and Big Stuff by
Parent shall have been declared effective, (ii) no stop order suspending the
effectiveness of such registration statement(s) shall have been issued and
no proceeding for that purpose shall have been initiated or threatened by
the SEC or any other Governmental Authority, and (iii) the Great Western
Notes shall have been satisfied by the issuance of Parent Common Stock to
the Great Western Shareholders.
(f) FINANCING. Parent and Web shall have received from their lenders
an extension of all of their and their subsidiaries' debt owing by them on
terms and conditions satisfactory to Parent and Web or all such debts shall
be refinanced on terms satisfactory to Parent and Web or any consents and
approvals required from such lenders is received.
(g) SHAREHOLDER APPROVAL. All necessary approvals of the Web
Shareholders and the shareholders of Parent in connection with the Merger
shall have been obtained.
(h) REQUIRED CONSENTS. Any required Consents of any Person to the
Merger or the transactions contemplated by this Restated Agreement shall
have been obtained on terms and conditions reasonably acceptable to Parent
and Web and be in full force and effect, except for those the failure of
which to obtain, in the reasonable judgment of Parent and Web, would not
have a Parent Material Adverse Effect or a Web Material Adverse Effect.
(i) HSR ACT. Any waiting period applicable to the Merger under the HSR
Act shall have expired or earlier termination thereof shall have been
granted and no action shall have been instituted by either the United States
Department of Justice or the Federal Trade Commission to prevent the
consummation of the transactions contemplated by this Restated Agreement or
to modify or amend such transactions in any material manner, or if any such
action shall have been instituted, it shall have been withdrawn or a final
judgment shall have been entered against such Department or Commission, as
the case may be.
(j) REGISTRATION STATEMENT(S). The Registration Statement(s) shall
have been declared effective and no stop order suspending the effectiveness
of the Registration Statement(s) shall have
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been issued and no proceeding for that purpose shall have been initiated or
threatened by the SEC or any Governmental Authority, whether state or
federal.
(k) BLUE SKY. Parent shall have received all state securities Law
authorizations necessary to consummate the transactions contemplated hereby.
(l) FAIRNESS OPINION. The written opinion received by Parent's Board
of Directors from its financial advisors, PaineWebber Incorporated, pursuant
to SECTION 1.2 hereof shall not have been withdrawn.
(m) TAX OPINION. Parent shall have received an opinion from Blackwell
Sanders Peper Martin LLP based on customary representations contained in
certificates of Parent, to the effect that, if the Merger is consummated in
accordance with the provisions of this Restated Agreement, the Merger will
qualify as a tax-free reorganization within the meaning of the Code.
(n) NYSE LISTING APPROVAL. Parent shall have received from the NYSE
approval for listing with the NYSE of the Parent Common Stock to be issued
pursuant to this Restated Agreement, the Restated Company Agreement and the
Restated Big Stuff Agreement.
(o) SALE OF CLEC OPERATIONS. The sale of the CLEC Operations,
contemplated under the Ionex Agreement referenced on SCHEDULE 3.13 hereof,
shall have closed.
7.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF WEB SHAREHOLDERS AND WEB. The
obligations of the Web Shareholders and Web to consummate and effect this
Restated Agreement and the transactions contemplated hereby shall be subject to
the satisfaction at or prior to the Closing Date of each of the following
conditions, any of which may be waived, in writing, exclusively by Web:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS.
(i) The representations and warranties of Parent in this Restated
Agreement that are modified by materiality or Parent Material Adverse
Effect ("PARENT MODIFIED REPRESENTATION") shall be true and correct in
all respects and those that are not so modified ("PARENT NONMODIFIED
REPRESENTATION") shall be true and correct in all material respects on
the date hereof and, except for changes not prohibited by this Restated
Agreement, as of the Closing Date as if made at the Closing Date.
Furthermore, none of the representations or warranties of Parent
contained in this Restated Agreement, disregarding any qualifications
therein or in this SECTION 7.2(a) regarding materiality or Parent
Material Adverse Effect, shall be untrue or incorrect to the extent that
such untrue or incorrect representations or warranties, when taken
together as a whole, have had or would have a Parent Material Adverse
Effect; and
(ii) Parent shall have performed and complied with all of the
covenants and agreements in all material respects and satisfied in all
material respects all of the conditions required by this Restated
Agreement to be performed or complied with or satisfied by Parent at or
prior to the Closing Date. Notwithstanding anything in this Restated
Agreement to the contrary, the parties hereto acknowledge and agree that
the consummation of the transactions contemplated by this Restated
Agreement and the subsequent disposition of the CLEC Operations
constitutes a significant change from the plans and strategies described
in the 1998 10-K such that the representations and warranties of Parent
that reference the 1998 10-K will not be true and correct as of the
Closing Date as they relate to the plans and strategies of the business
of Parent at the Closing Date.
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(b) CERTIFICATE OF PARENT AND OTHER DELIVERIES. Web shall have been
provided, with (i) a certificate executed on behalf of Parent by an Officer
to the effect that, as of the Closing Date, all representations and
warranties made by Parent under this Restated Agreement are true and
complete except as qualified by SECTION 7.2(a)(i) hereof; and all covenants,
obligations and conditions of this Restated Agreement to be performed by
Parent on or before such date have been so performed; (ii) a certificate of
good standing from the Secretary of State of the State of Delaware that
Parent is a validly existing corporation; (iii) duly adopted resolutions of
the Board of Directors of Parent approving the execution, delivery and
performance of this Restated Agreement and the Parent Transaction Agreements
to which it is a party and the instruments contemplated hereby and thereby,
certified by its Secretary or Assistant Secretary; and (iv) such other
documents and instruments as Web may reasonably request.
(c) SHAREHOLDER APPROVAL. Web shall have received from Parent's
transfer agent a certificate indicating that a sufficient number of Parent's
shareholders voted to approve the Merger such that the Merger was deemed
approved by the Parent shareholders.
(d) LEGAL OPINION. Web shall have received a legal opinion of
Blackwell Sanders Peper Martin LLP, legal counsel to Parent, in a form to be
agreed upon by the parties hereto, acting reasonably.
(e) NO MATERIAL ADVERSE CHANGE. There shall not have occurred after
the date hereof any Event that has or reasonably could be expected to have a
Parent Material Adverse Effect.
(f) LITIGATION. Except as set forth on SCHEDULE 3.7 attached hereto,
there shall be no action, suit, claim or proceeding of any nature pending,
or overtly threatened, against Parent, its properties or any of its officers
or directors, arising out of, or in any way connected with, the Merger or
the other transactions contemplated by the terms of this Restated Agreement
which individually or in the aggregate may cause a Parent Material Adverse
Effect.
7.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF PARENT. The obligations of
Parent to consummate and effect this Restated Agreement and the transactions
contemplated hereby shall be subject to the satisfaction at or prior to the
Closing Date of each of the following conditions, any of which may be waived, in
writing, exclusively by Parent:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS.
(i) The representations and warranties of Web and the Web
Shareholders contained in this Restated Agreement that are modified by
materiality or Web Material Adverse Effect ("WEB MODIFIED
REPRESENTATION") shall be true and correct in all respects, and those
that are not so modified ("WEB NONMODIFIED REPRESENTATION") shall be true
and correct in all material respects, on the date hereof and, except for
changes not prohibited by this Restated Agreement, as of the Closing Date
as if made at the Closing Date. Furthermore, none of the representations
or warranties of Web or the Web Shareholders contained in this Restated
Agreement, disregarding any qualifications therein or in this
SECTION 7.3(a) regarding materiality or Web Material Adverse Effect,
shall be untrue or incorrect to the extent that such untrue or incorrect
representations or warranties, when taken together as a whole, have had
or would have a Web Material Adverse Effect; and
(ii) Web and the Web Shareholders shall have performed and complied
with all the covenants and agreements in all material respects and
satisfied in all material respects all the conditions required by this
Restated Agreement to be performed or complied with or satisfied by Web
and the Web Shareholders at or prior to the Closing Date.
(b) CERTIFICATE OF WEB AND OTHER DELIVERIES. Parent shall have been
provided with (i) a certificate executed on behalf of Web by its Chief
Executive Officer to the effect that, as of the
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Effective Time all representations and warranties made by Web in this
Restated Agreement are true and correct, except as qualified by
SECTION 7.3(a)(i) hereof, and all covenants, obligations and conditions of
this Restated Agreement to be performed by Web and the Web Shareholders on
or before such date have been so performed; (ii) a certificate of good
standing from the proper authority in the jurisdictions in which Web is
incorporated or qualified to do business stating that each is a validly
existing corporation in good standing; (iii) duly adopted resolutions of the
Web Board of Directors and Web Shareholders approving the execution,
delivery and performance of this Restated Agreement and the Web Transaction
Agreements to which Web is a party and the instruments contemplated hereby
and thereby, certified by the Secretary or Assistant Secretary of Web;
(iv) a true and complete copy of the Articles or Certificate of
Incorporation or comparable governing instruments, as amended, of Web
certified by the Secretary of State of the state of incorporation or
comparable authority in other jurisdictions, and a true and complete copy of
the Bylaws or comparable governing instruments, as amended, of Web certified
by the Secretary thereof; (v) the duly executed Resignations on terms and
conditions reasonably acceptable to Parent; and (vi) such other documents
and instruments as Parent reasonably may request.
(c) LEGAL OPINION. Parent shall have received a legal opinion from
Steinhart & Falconer LLP, legal counsel to Web, in a form to be agreed upon
by the parties hereto, acting reasonably.
(d) LITIGATION. There shall be no action, suit, claim or proceeding of
any nature pending, or overtly threatened, against Web, its respective
properties or any of its officers or directors, arising out of, or in any
way connected with, the Merger or the other transactions contemplated by the
terms of this Restated Agreement which individually or in the aggregate may
cause a Web Material Adverse Effect.
(e) NO MATERIAL ADVERSE CHANGE. There shall have not occurred after
the date hereof any Event that has or reasonably could be expected to have a
Web Material Adverse Effect.
(f) AFFILIATE AGREEMENTS. At least thirty (30) days prior to the
Effective Time, Parent shall have received the duly executed Affiliate
Agreements.
ARTICLE VIII--TERMINATION AND ABANDONMENT
8.1 TERMINATION. This Restated Agreement may be terminated and the Merger
contemplated hereby may be abandoned at any time prior to the Closing Date only
as follows, whether before or after approval by the Web Shareholders:
(a) by mutual written consent of Web and Parent, duly authorized by the
Board of Directors of each;
(b) by Web or Parent if the Closing shall not have occurred on or before
January 31, 2000, as such date may be extended pursuant to SECTION 1.2(b)
hereof (or such other date as may be agreed to by Web and Parent); PROVIDED,
THAT, no party may terminate this Restated Agreement under this
SECTION 8.1(b) if such party's breach of this Restated Agreement has caused
or resulted in the failure of the Closing to occur on or before such date;
(c) by Web if (i) there are any breaches of any Parent Modified
Representation or any material breaches of any Parent Nonmodified
Representation, or (ii) Parent has breached or failed to perform,
notwithstanding satisfaction or due waiver of all conditions thereto, any of
its material covenants or agreements contained herein as to which notice
specifying such breach or failure has been given to Parent promptly after
the discovery thereof and Parent has failed to cure or otherwise resolve the
same to the reasonable satisfaction of Web within thirty (30) days after
receipt of such notice;
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(d) by Parent if (i) there are any breaches of any Web Modified
Representations or any material breaches of any Web Nonmodified
Representations, or (ii) Web has breached or failed to perform,
notwithstanding satisfaction or due waiver of all conditions thereto, any of
its material covenants or agreements contained herein as to which notice
specifying such breach or failure has been given to Web promptly after the
discovery thereof and Web has failed to cure or otherwise resolve the same
to the reasonable satisfaction of Parent within thirty (30) days after
receipt of such notice;
(e) by Web or Parent if a court of competent jurisdiction or other
Governmental Authority shall have issued an order, decree or ruling or taken
any other action permanently restraining, enjoining or otherwise prohibiting
the Merger, the Restated Company Agreement or any of the transactions
contemplated by this Restated Agreement or such other agreements and such
order, decree, ruling or other action shall have become final and
nonappealable;
(f)(i) by Web if the stockholders of Parent fail to approve and adopt
the Merger or the issuance of the Parent Common Stock pursuant to this
Restated Agreement or the other transactions contemplated or otherwise
referenced herein or therein, as applicable, at the meeting duly convened
therefor;
(f)(ii) by Parent if the stockholders of Parent fail to approve and
adopt the Merger pursuant to this Restated Agreement or the other
transactions contemplated or otherwise referenced herein or therein, as
applicable;
(g) by Parent, if Web or its Board of Directors breaches any provision
of SECTION 6.7; or
(h) by Web, if Parent or its Board of Directors breaches any provision
of SECTION 6.7;
The party desiring to terminate this Restated Agreement pursuant to this
SECTION 8.1 shall give written notice of such termination to the other party in
accordance with SECTION 11.1 below.
8.2 PROCEDURE UPON TERMINATION. In the event of termination pursuant to
this ARTICLE VIII, the Merger shall be abandoned without further action by Web
or Parent, provided that the obligations of the applicable parties to this
Restated Agreement contained in ARTICLE IX and SECTION 6.9 hereof shall remain
in full force and effect. If this Restated Agreement is terminated as provided
herein, each party shall use its reasonable best efforts to redeliver all
documents, work papers and other material (including any copies thereof) of any
other party relating to the transactions contemplated hereby, whether obtained
before or after the execution hereof, to the party furnishing the same. Nothing
contained in this Restated Agreement shall relieve any party from any liability
for any inaccuracy, misrepresentation or breach of this Restated Agreement prior
to termination.
ARTICLE IX--SURVIVAL OF REPRESENTATIONS
AND WARRANTIES; INDEMNIFICATION
9.1 INDEMNIFICATION BY THE WEB SHAREHOLDERS.
(a) If the Closing has occurred, subject to the terms and conditions of
this ARTICLE IX, the Web Shareholders shall indemnify Parent, and its
officers, directors, agents and representatives (THE "INDEMNITEES"), from
and in respect of, and hold the Indemnitees harmless against, any and all
damages, fines, penalties, losses, liabilities, excise and other taxes,
judgments, and deficiencies (including without limitation amounts paid in
settlement and interest and reasonable out-of-pocket legal and accounting
fees), but which amount shall be offset or reduced by the amount of any
insurance proceeds received by Parent in respect of any of the foregoing,
incurred or suffered by any of the Indemnitees ("DAMAGES") resulting from,
relating to or in connection with any misrepresentation or breach of
warranty of the Web Shareholders contained in this Restated Agreement.
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(b) The Web Shareholders acknowledge that their indemnification
obligations hereunder are solely in their capacity as former shareholders of
Web, and, accordingly, the indemnification obligations in this ARTICLE IX
shall not entitle any Web Shareholder who was or is a current or former
officer, director or employee of Web to any indemnification from Web
pursuant to the organizational or governing documents of Web or pursuant to
this Restated Agreement.
9.2 METHOD OF ASSERTING CLAIMS.
(a) Prior to the date (THE "REPORT DATE") that is thirty (30) days after
the completion of Parent's audit report by Parent's independent auditors for
the fiscal year ended December 31, 1999, each Indemnitee shall give written
notice (THE "CLAIM NOTICE") to the Representative, as agent for the Web
Shareholders, of any and all claims or events known to it which gives rise
to a claim for indemnification hereunder by the Indemnitee against the Web
Shareholders (AN "INDEMNIFIABLE CLAIM"). The Claim Notice shall specify the
nature and estimated amount of such claimed Damages (THE "CLAIMED AMOUNT").
In the case of any claim for indemnification hereunder arising out of a
claim, action, suit or proceeding brought by any Person who is not a party
to this Restated Agreement (A "THIRD-PARTY CLAIM"), prior to the Report
Date, the Indemnitee also shall give the Representative, as agent for the
Web Shareholders, copies of any written claims, process or legal pleadings
with respect to such Third-Party Claim.
(b) Within forty-five (45) days after delivery of a Claim Notice, the
Representative shall notify the Parent in writing of his objections, if any,
to the claim. If the Representative has no objections to the claim, the
Representative shall remit to the Parent the Claimed Amount within thirty
(30) days. If the Representative has objections to the claim, the
Representative and the Indemnitee shall proceed in good faith to negotiate a
resolution of the dispute regarding the claim, and, if not resolved through
negotiations, such dispute shall be resolved by litigation in an appropriate
court of competent jurisdiction.
9.3 THIRD PARTY CLAIMS.
(a) Except as otherwise provided in paragraph (c) below, the
Representative, as agent for the Web Shareholders, may elect to compromise
or defend, at the Web Shareholders' own expense and by the Web Shareholders'
own counsel reasonably satisfactory to the Indemnitee, any Third-Party
Claim; provided that (i) the Representative provides the Indemnitee with
reasonable evidence that the Web Shareholders will have the financial
resources to defend against such claim and fulfill their indemnification
obligations hereunder; and (ii) the giving of a Defense Notice (as defined
below) by the Representative shall constitute an acknowledgment by the Web
Shareholders of their obligation to indemnify the Indemnitee with respect to
such Third-Party Claim in accordance with the terms of this ARTICLE IX. If
the Representative, as agent for the Web Shareholders, elects to compromise
or defend a Third-Party Claim, the Representative shall, within thirty
(30) days of its receipt of the notice provided pursuant to SECTION 9.2(a)
hereof (or sooner, if the nature of such Third-Party Claim so requires),
notify the related Indemnitee of its intent to do so (A "DEFENSE NOTICE"),
and such Indemnitee shall reasonably cooperate in the compromise of, or
defense against, such Third-Party Claim. The Web Shareholders shall be
responsible for the payment of such Indemnitee's actual out-of-pocket
expenses (other than legal and accounting fees) incurred in connection with
such cooperation, and such expenses shall constitute Damages incurred or
suffered by Parent within the meaning of SECTION 9.1(a) hereof. After notice
from the Representative, as agent for the Web Shareholders, to an Indemnitee
of its election to assume the defense of a Third-Party Claim, the Web
Shareholders shall not be liable to such Indemnitee under this ARTICLE IX
for any legal expenses subsequently incurred by such Indemnitee in
connection with the defense thereof. If the Representative, as agent for the
Web Shareholders, elects not to compromise or defend against a Third-Party
Claim, or fails to notify an Indemnitee of its election as provided in this
SECTION 9.3, such Indemnitee may pay, compromise or defend such Third-Party
Claim on
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behalf of and for the account and risk of the Web Shareholders (and any
amount paid or expenses incurred in connection therewith shall constitute
Damages incurred or suffered by Parent within the meaning of SECTION 9.1(a)
hereof). The Representative may not consent to entry of any judgment or
enter into any settlement without the written consent of each related
Indemnitee (which consent shall not be unreasonably withheld), unless such
judgment or settlement provides solely for money damages or other money
payments for which such Indemnitee is entitled to indemnification hereunder
and includes as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnitee of a release from all liability in respect of
such Third-Party Claim.
(b) In respect of any claim, action, suit or proceeding brought by a
taxing authority in respect of Taxes for which the Web Shareholders may be
required to indemnify the Parent (A "TAX CLAIM"), the Representative, as
agent for the Web Shareholders, shall have the sole right to control any Tax
Claim, provided, however, that the Representative shall provide the
Indemnitee with copies of all correspondence with any taxing authority in
connection with any such Tax Claim and shall keep the Indemnitee reasonably
informed of all progress with such taxing authority, and provided further
that the Representative shall consult with the Indemnitee in good faith in
contesting any proposed adjustment and shall consider any reasonable advice
from the Indemnitee concerning such Tax Claim so long as the Representative,
as agent for the Web Shareholders, shall (subject to the immediately
following sentence) ultimately be entitled to control any such Tax Claim
concerning any indemnity obligation of the Web Shareholders. The
Representative shall not be entitled to compromise or settle any Tax
liability of the Company for any pre-Closing Period that would have the
effect of materially decreasing the Company's deductions for credits or
materially increasing the Company's taxable income for any taxable year or
period subsequent to the pre-Closing Period without the prior written
consent of Parent, which consent shall not be unreasonably withheld. Parent
will cooperate fully with Representative in defending any Tax Claim.
(c) If there is a reasonable likelihood that a Third-Party Claim may
have a material adverse effect on an Indemnitee, other than as a result of
money damages or other money payments for which such Indemnitee is entitled
to indemnification hereunder, such Indemnitee will have the right, after
consultation with the Representative, and at the cost and expense of the Web
Shareholders (which costs and expenses, other than legal and accounting
fees, shall constitute Damages within the meaning of SECTION 9.1(a) hereof
to the extent provided therein), to defend such Third-Party Claim. If the
Third-Party Claim involves a third party with whom Parent has a significant
on-going or prospective relationship, the Indemnitee will have the right,
after consultation with the Representative, and at the cost and expense of
the Web Shareholders (which costs and expenses, other than legal and
accounting fees, shall constitute Damages within the meaning of
SECTION 9.1(a) hereof to the extent provided therein), to defend such
Third-Party Claim; provided that the Web Shareholders shall not be obligated
to pay Damages to the extent it is determined (by agreement between the
Representative and Indemnitees or by arbitration or court judgment) that the
Third-Party Claim was settled on terms that were not fair and reasonable to
the Indemnitors.
9.4 SURVIVAL. The representations and warranties of Web set forth in this
Restated Agreement shall survive the Closing and shall continue until the Report
Date. The representations and warranties shall not be affected by any
examination made for or on behalf of Parent or the knowledge of any of Parent's
officers, directors, stockholders, employees or agents, except that the
representations and warranties are qualified by the matters disclosed in the
Disclosure Schedules to the representations and warranties of Web and the Web
Shareholders contained in ARTICLE II hereof and Parent agrees that Parent has
knowledge of such matters. Notwithstanding anything to the contrary herein, if a
claim for indemnification is made before the expiration of the periods of
survival set forth above in this
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SECTION 9.4, then (notwithstanding the expiration of such time period) the
representation or warranty applicable to such claim shall survive until, but
only for purposes of, the resolution of such claim.
9.5 LIMITATIONS.
(a) The Web Shareholders shall not be liable under this ARTICLE IX
unless and until the aggregate amount of Damages incurred or suffered by
Indemnitees exceeds $100,000, (at which point the Web Shareholders shall
become liable for the entire amount of such Damages in excess of $75,000).
For purposes of the preceding sentence, no independent claims of less than
$1,000 may be made; PROVIDED, HOWEVER, that all claims arising out of a
common set of facts shall be aggregated for purposes of determining whether
the $1,000 threshold has been met.
(b) The Web Shareholders' liability under this ARTICLE IX shall not
exceed $850,000.
(c) The Web Shareholders may, at their option, satisfy their
indemnification obligations under this Restated Agreement by (i) the payment
of that amount of cash sufficient to satisfy such indemnification claim, but
in any event not exceeding the amount set forth in SECTION 9.5(b) hereof,
and subject to the provisions of SECTION 9.5(a) hereof; or (ii) the delivery
of stock certificates representing that number of shares of Parent Common
Stock sufficient to satisfy such indemnification claim, the value of which
shall be determined in accordance with SECTION 9.5(d) hereof; PROVIDED,
HOWEVER, that any stock certificates delivered in satisfaction of an
indemnification claim must be delivered to Parent within three (3) business
days following (as applicable) (A) the date calculated in accordance with
SECTION 9.2 or SECTION 9.3 hereof, if the claim is not in dispute;
(B) resolution of such indemnification claim, whether prior to or following
commencement of litigation; or (C) the entry of a final and non-appealable
judgment by a court of competent jurisdiction.
(d) The parties hereto agree that, for purposes of valuing shares of
Parent Common Stock delivered pursuant to SECTION 9.5(c) to satisfy any
indemnification claims pursuant to SECTION 9.2 or SECTION 9.3, Parent Common
Stock shall be valued at a price per share equal to the greater of: (A) the
weighted average of the closing prices, as reported on the NYSE, of the
Parent Common Stock on the twenty (20) trading days prior to the date on
which the stock certificates for the Parent Common Stock are to be delivered
pursuant to clause (ii) of SECTION 9.5(c), or (B) $5.50.
(e) No claim for indemnification pursuant to SECTION 9.1 shall be made
unless asserted by a written notice given to the Representative on or before
the Report Date.
9.6 THE REPRESENTATIVE.
(a) Web and the Web Shareholders hereby authorize, direct and appoint
Reid to act as sole and exclusive agent, attorney-in-fact and representative
of the Web Shareholders (THE "REPRESENTATIVE"), and authorizes and directs
the Representative to (i) take any and all actions (including without
limitation executing and delivering any documents, incurring any costs and
expenses for the account of the Web Shareholders (which will constitute
Damages incurred or suffered by Parent within the meaning of SECTION 9.1(a)
hereof) and making any and all determinations) which may be required or
permitted by this Restated Agreement to be taken by the Web Shareholders or
the Representative, (ii) exercise such other rights, power and authority as
are authorized, delegated and granted to the Representative hereunder in
connection with the transactions contemplated hereby and (iii) exercise such
rights, power and authority as are incidental to the foregoing. Any such
actions taken, exercises of rights, power or authority, and any decision or
determination made by the Representative consistent therewith, shall be
absolutely and irrevocably binding on each indemnifying party as if such
indemnifying party personally had taken such action, exercised such rights,
power or authority or made such decision or determination in such
indemnifying party's individual capacity. Notwithstanding any other
provision of this Restated Agreement, if the Closing occurs, then with
respect to the matters covered by ARTICLE IX, (i) each
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of the Web Shareholders irrevocably relinquishes such Web Shareholder's
right to act independently and other than through the Representative, except
with respect to the removal of the Representative or appointment of a
successor Representative as provided in SECTION 9.6(b) below, and (ii) no
Web Shareholders shall have any right under this Restated Agreement or
otherwise to institute any suit, action or proceeding against Web or Parent
with respect to any such matter, any such right being irrevocably and
exclusively delegated to the Representative. The Representative hereby
acknowledges and accepts the foregoing authorization and appointment and
agrees to serve as the Representative in accordance with this Restated
Agreement.
(b) The Representative shall serve as Representative until his
resignation, removal from office, incapacity or death; provided, however,
that the Representative shall not have the right to resign without
(i) prior written notice to the Web Shareholders, and (ii) picking a
successor reasonably satisfactory to Parent to serve until a successor
thereto is elected by the Web Shareholders. The Representative may be
removed at any time, and a successor representative, reasonably satisfactory
to Parent, may be appointed, pursuant to written action by Web Shareholders.
Any successor to the Representative shall, for purposes of this Restated
Agreement, be deemed to be, from the time of the appointment thereof in
accordance with the terms hereof, the Representative, and from and after
such time, the term "REPRESENTATIVE" as used herein and therein shall be
deemed to refer to such successor. No appointment of a successor shall be
effective unless such successor agrees in writing to be bound by the terms
of this Restated Agreement.
(c) The Representative shall be permitted to retain counsel, consultants
and other advisors and shall promptly notify Parent after retaining any such
Person.
(d) The provisions of this SECTION 9.6 shall in no way impose any
obligations on Parent (other than those set forth in paragraph (c) above).
In particular, notwithstanding any notice received by Parent to the contrary
(except any notice of the appointment of a successor Representative approved
by Parent in accordance with paragraph (b) of this SECTION 9.6), Parent
shall be entitled to assume that all actions, decisions and determinations
of the Representative are fully authorized by the Web Shareholders.
(e) The Representative shall not be liable to the Web Shareholders for
the performance of any act or the failure to act so long as he acted or
failed to act in good faith in what he reasonably believed to be the scope
of his authority and for a purpose which he reasonably believed to be in the
best interests of the Web Shareholders.
9.7 INDEMNIFICATION BY THE PARENT.
(a) INDEMNITY. If the Closing has occurred, subject to the terms and
conditions of this SECTION 9.7, Parent shall indemnify the Web Shareholders
from and in respect of all, and hold the Web Shareholders harmless against,
any and all damages, fines, penalties, losses, liabilities, judgments and
deficiencies (including without limitation amounts paid in settlement and
interest) ("WEB SHAREHOLDER DAMAGES") resulting from, relating to or in
connection with any misrepresentation or breach of warranty of the Parent
contained in this Restated Agreement.
(b) SURVIVAL. The representations and warranties of Parent set forth
in this Restated Agreement shall survive the Closing and shall continue
until the Report Date. The representations and warranties shall not be
affected by any examination made for or on behalf of Web or Web Shareholders
or the knowledge of any of the Web's officers, directors, stockholders,
employees or agents, except that the representations and warranties are
qualified by the matters disclosed in the Disclosure Schedules to the
representations and warranties of the Parent contained in ARTICLE III
hereof, and Web agrees that Web has knowledge of such matters.
Notwithstanding anything to the contrary herein, if a claim for
indemnification is made before the expiration of the periods of
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survival set forth above in this SECTION 9.7, then (notwithstanding the
expiration of such time period) the representation or warranty applicable to
such claim shall survive until, but only for purposes of, the resolution of
such claim.
(c) LIMITATIONS. Parent shall not be liable under this SECTION 9.7
unless and until the aggregate amount of Web Shareholder Damages incurred or
suffered by the Web Shareholders exceeds $100,000 (at which point Parent
shall become liable for the entire amount of Web Shareholder Damages in
excess of $75,000). Furthermore, the liability of Parent under this
SECTION 9.7 shall be $850,000. No claim for indemnification pursuant to
SECTION 9.7 shall be made unless asserted by a written notice given to
Parent on or before the Report Date.
ARTICLE X--MUTUAL RELEASE
10.1 MUTUAL RELEASE OF ALL CLAIMS.
(a) Parent, for itself and for all of its stockholders, directors,
officers, agents, employees, representatives, divisions, subsidiaries,
affiliates, insurers, successors and assigns, hereby releases, remises,
acquits and forever discharges Web and the Web Shareholders, and each of
them and each of their respective stockholders, directors, officers, agents,
employees, representatives, divisions, parents, subsidiaries, affiliates,
insurers, successors and assigns, of and from any and all manner of claims,
actions, causes of action, suits, debts, dues, accounts, contracts,
agreements, continuing obligations, judgments, claims and demands
whatsoever, whether in law or in equity, which now exist or may hereafter
arise from any matter, fact, circumstance, happening or thing whatsoever
occurring or failing to occur in connection with the negotiation, execution
and performance of their respective obligations under the June 3 Web YP
Agreement.
(b) Web and the Web Shareholders, each for itself and for all of their
respective stockholders, directors, officers, agents, employees,
representatives, divisions, subsidiaries, affiliates, insurers, successors
and assigns, hereby releases, remises, acquits and forever discharges Parent
and its stockholders, directors, officers, agents, employees,
representatives, divisions, parents, subsidiaries, affiliates, insurers,
successors and assigns, of and from any and all manner of claims, actions,
causes of action, suits, debts, dues, accounts, contracts, agreements,
continuing obligations, judgments, claims and demands whatsoever, whether in
law or in equity, which now exist or may hereafter arise from any matter,
fact, circumstance, happening or thing whatsoever occurring or failing to
occur in connection with the negotiation, execution and performance of its
obligations under the June 3 YPtel Agreement.
(c) Parent and each of Web and the Web Shareholders hereby represent,
warrant and acknowledge that the mutual covenants and agreements in this
ARTICLE X are made in good faith.
10.2 COVENANT NOT TO SUE.
(a) Parent hereby agrees that it will not institute any action against
Web and the Web Shareholders arising out of the June 3 Web YP Agreement,
including, but not limited to, any claim for contractual indemnity or
implied indemnity.
(b) Each of Web and the Web Shareholders hereby agrees that it will not
institute any action against Parent arising out of the June 3 Web YP
Agreement, including, but not limited to, any claim for contractual
indemnity or implied indemnity.
10.3 NO ADMISSION OF LIABILITY. None of Parent, Web or the Web
Shareholders admits liability to any other party hereto and, in fact, each of
Parent, Web and the Web Shareholders denies any liability relating to the
June 3 Web YP Agreement.
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ARTICLE XI--AMENDMENT AND WAIVER
11.1 AMENDMENT OF THIS RESTATED AGREEMENT. Prior to Parent stockholder
approval and except as is otherwise required by Applicable Law, this Restated
Agreement may be amended by the parties hereto at any time by execution of an
instrument in writing signed on behalf of each of the parties hereto. Following
receipt of approval by the Parent shareholders, the parties hereto acknowledge
and agree that this Restated Agreement may be amended by the parties hereto by
execution of an instrument in writing signed on behalf of each of the parties
hereto; PROVIDED, HOWEVER, that any such amendment shall not have a material
adverse effect upon Parent.
11.2 EXTENSION; WAIVER. At any time prior to the Effective Time, Parent
and Acquisition Subsidiary, on the one hand, and Web and the Web Shareholders,
on the other, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations of the other party hereto, (ii) waive any
inaccuracies in the representations and warranties made by such other party
contained herein or in any document delivered pursuant hereto, and (iii) waive
compliance with any of the agreements or conditions for the benefit of such
party contained herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party; PROVIDED, HOWEVER, that an extension pursuant to
SECTION 1.2(b) hereof need not be set forth in writing in order to be effective,
unless such extension is to a date after March 1, 2000.
ARTICLE XII--GENERAL PROVISIONS
12.1 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or mailed by registered or certified mail (return receipt
requested) or sent via facsimile (with acknowledgment of complete transmission)
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
(a) if to Parent, to:
Advanced Communications Group, Inc.
390 South Woods Mill Road, Suite 150
St. Louis, Missouri 63017
Attn: Mr. Richard O'Neal
Facsimile: (314) 205-8141
with a copy to:
Blackwell Sanders Peper Martin LLP
720 Olive Street, Suite 2400
St. Louis, Missouri 63101-4834
Attn: Mr. Craig A. Adoor
Facsimile: (314) 345-6060
(b) if to Web and Web Shareholders, to:
Web YP, Inc.
4515 South Georgia, Suite 118
Amarillo, Texas 79102
Attn: Mr. Richard L. Reid
Facsimile: (806) 354-2974
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with a copy to:
Steinhart & Falconer
333 Market Street
32(nd) Floor
San Francisco, California 94105-2150
Attn: Mr. Robb A. Scott
Facsimile: (415) 442-0856
12.2 INTERPRETATION. The words "INCLUDE," "INCLUDES" and "INCLUDING" when
used herein shall be deemed in each case to be followed by the words "without
limitation". The table of contents and headings contained in this Restated
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Restated Agreement. All Disclosure Schedules
to this Restated Agreement constitute a part of this Restated Agreement as if
set forth in full herein and are incorporated herein.
12.3 COUNTERPARTS. This Restated Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
12.4 ENTIRE AGREEMENT; ASSIGNMENT. Subject to its becoming effective in
accordance with SECTION 1.2 hereof, this Restated Agreement (including, but not
limited to, the Recitals hereto), the Disclosure Schedules hereto, and the
documents and instruments and other agreements among the parties hereto
referenced herein: (i) constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof including, but not limited to, (A) the June 3 Web YP
Agreement; and (B) the Letter of Intent dated April 11, 1999 by and among the
Parent, the Company, Web, Big Stuff and O'Neal and the Confidentiality Agreement
dated April 11, 1999 by and among Parent, the Company, Web, Big Stuff and
O'Neal; (ii) are not intended to confer upon any Person not a party hereto any
rights or remedies hereunder except that the Representative shall have the
express rights articulated in ARTICLE IX; and (iii) shall not be assigned by
operation of law or otherwise, except that Parent may assign its rights and
delegate its obligations hereunder to its affiliates, provided that Parent shall
remain liable hereunder.
12.5 SEVERABILITY. In the event that any provision of this Restated
Agreement or the application thereof, becomes or is declared by a court of
competent jurisdiction to be illegal, void or unenforceable, the remainder of
this Restated Agreement will continue in full force and effect and the
application of such provision to other Persons or circumstances will be
interpreted so as reasonably to effect the intent of the parties hereto so long
as consideration of the Restated Agreement is not materially affected for any
party hereof. The parties further agree to replace such void or unenforceable
provision of this Restated Agreement with a valid and enforceable provision that
will achieve, to the extent possible, the economic, business and other purposes
of such void or unenforceable provision.
12.6 OTHER REMEDIES. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby, or by law or equity upon
such party, and the exercise by a party of any one remedy will not preclude the
exercise of any other remedy.
12.7 GOVERNING LAW. This Restated Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof. Each of the parties hereto irrevocably consents to the exclusive
jurisdiction and venue of any court within the State of California, City and
County of
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San Francisco, in connection with any matter based upon or arising out of this
Restated Agreement or the matters contemplated herein, agrees that process may
be served upon them in any manner authorized by the laws of the State of
California, City and County of San Francisco for such Persons and waives and
covenants not to assert or plead any objection which they might otherwise have
to such jurisdiction, venue and such process.
12.8 RULES OF CONSTRUCTION. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Restated
Agreement and, therefore, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
ARTICLE XIII--DEFINITIONS
13.1 DEFINITIONS.
"Acquisition Subsidiary" shall have the meaning ascribed to it in the
preamble hereto.
"Active Parent Subsidiaries" shall mean Feist; FirsTel; Value; Great Western
Directories, Inc.; Telecom Resources, Inc.; the Switchboard of Oklahoma
City, Inc.; Long Distance Management of Kansas, Inc.; Long Distance Management
II, Inc.; and National Telecom, a proprietorship.
"Affiliate Agreements" shall have the meaning set forth in SECTION 4.8
hereof.
"Anniversary Date" shall mean the first anniversary of the Closing Date.
"Associates" shall mean affiliates of any Person (including, without
limitation, directors, officers, employees, agents, representatives and
shareholders or any affiliates or associates thereof).
"Benefit Plan" shall have the meaning ascribed to such term in SECTION 2.14
hereof.
"Big Stuff" shall have the meaning ascribed to such term in Recital E
hereto.
"Certificate of Merger" shall have the meaning ascribed to such term in
SECTION 1.1 hereof.
"Certificates" shall mean the certificates which, prior to the Merger,
represented the Web Shares, and shall include a certificate issued upon due
execution and delivery of an affidavit of loss and a bond, if required by
Parent, in the event that a Web Shareholder is unable to produce and deliver, at
the Closing, the original certificate which prior to the Merger, represented any
Web Shares.
"Claim Notice" shall have the meaning ascribed to such term in
SECTION 9.2(a) hereof.
"Claimed Amount" shall have the meaning ascribed to such term in
SECTION 9.2(a) hereof.
"Class A Special Shares" shall have the meaning set forth in the Restated
Company Agreement.
"CLEC Operations" shall mean Feist, FirsTel, Valu, and such other non-yellow
pages operating subsidiaries or operations of Parent as shall be determined by
the Board of Directors of Parent.
"Closing" shall mean the closing of the Merger.
"Closing Date" shall mean the date on which the Closing actually occurs.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and the
Treasury regulations thereunder.
"Company" shall have the meaning set forth in Recital E hereto.
"Company Shareholders" shall have the meaning set forth in Recital E hereto.
"Consent" shall have the meaning ascribed to such term in SECTION 2.5
hereof.
"Conversion Stock" shall have the meaning ascribed to such term in
SECTION 4.9 hereof.
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"Convertible Note" shall have the meaning ascribed to such term
SECTION 1.10 hereof.
"Corporation Laws" shall have the meaning ascribed to such term in
SECTION 1.1 hereof.
"Damages" shall have the meaning ascribed to such term in SECTION 9.1(a)
hereof.
"Defense Notice" shall have the meaning ascribed to such term in
SECTION 9.3(a) hereof.
"Disclosure Schedules" shall mean, collectively, that information required
to be delivered by Web to Parent, and by Parent to Web, pursuant to this
Restated Agreement.
"Effective Time" shall have the meaning ascribed to such term in
SECTION 1.2 hereof.
"Enforceability Exceptions" shall have the meaning ascribed to such term in
SECTION 2.4 hereof.
"Environmental Laws" shall have the meaning ascribed to such term in
SECTION 2.17 hereof.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, together with all regulations thereunder.
"Event" shall mean any event, occurrence, fact, condition, change,
development or effect.
"Exchange Ratio" shall have the meaning ascribed to such term in
SECTION 1.3 hereof.
"Extraordinary Transactions" shall have the meaning ascribed to such term in
SECTION 6.7 hereof.
"Feist" shall mean Feist Long Distance Service, Inc.
"Final Order", with respect to any Consent of a Governmental Authority,
shall mean an action by the appropriate Governmental Authority as to which:
(i) no request for stay by such Governmental Authority of the action is pending,
no such stay is in effect, and, if any deadline for filing any such request is
designated by statute or regulation, it has passed; (ii) no petition for
rehearing or reconsideration of the action is pending before such Governmental
Authority, and no appeal or comparable administrative remedy is pending before
such Governmental Authority, and the time for filing any such petition, appeal
or administrative remedy has passed; (iii) such Governmental Authority does not
have the action under reconsideration on its own motion and the time for such
reconsideration has passed; and (iv) no appeal to a court, or request for stay
by a court, of the Governmental Authority action is pending or in effect, and if
any deadline for filing any such appeal or request is designated by statute or
rule, it has passed.
"FirsTel" shall mean FirsTel, Inc.
"Governmental Authority" shall mean a nation or government, any state or
other political subdivision thereof, any Person, authority or body exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government including, without limitation, any governmental or
regulatory authority, agency, department, board, commission or instrumentality,
any court, tribunal or arbitrator and any self-regulatory organization.
"Great Western Credit Agreement" shall mean the Loan Agreement dated as of
May 14, 1999, by and among Great Western Directories, Inc., the lenders
signatories thereto, and Bank of America National Trust and Savings Association
as Administrative Agent.
"Great Western Notes" shall have the meaning ascribed to such term in
Recital E hereto.
"Great Western Shareholders" shall have the meaning ascribed to such term in
Recital E hereto.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"ICL" shall have the meaning ascribed to such term in Recital E hereto.
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"Indemnifiable Claim" shall have the meaning ascribed to such term in
SECTION 9.2(a) hereof.
"Indemnitees" shall have the meaning ascribed to such term in
SECTION 9.1(a) hereof.
"Intellectual Property" shall have the meaning ascribed to such term in
SECTION 2.18 hereof.
"IP Claim Notice" shall have the meaning ascribed to such term in
SECTION 2.18 hereof.
"IRS" shall mean the United States Internal Revenue Service, or any
successor thereto.
"June 3 Web YP Agreement" shall have the meaning ascribed to such term in
SECTION 1.2(a) hereof.
"Law" shall mean applicable provision of any constitution, treaty, statute,
law, code, rule, regulation, ordinance, policy or order of any Governmental
Authority or other matters having the force of law including, but not limited
to, any orders, decisions, injunctions, judgments, awards and decrees of or
agreements with any court or other Governmental Authority.
"Letter of Transmittal" shall have the meaning ascribed to such term in
SECTION 1.5 hereof.
"Litigation" shall have the meaning ascribed to such term in SECTION 2.7
hereof.
"Merger" shall have the meaning ascribed to such term in Recital B hereto.
"Merger Consideration" shall have the meaning ascribed to such term in
SECTION 1.3 hereof.
"Multi-employer Plan" shall have the meaning ascribed to such term in
SECTION 2.14 hereof.
"NYSE" shall mean the New York Stock Exchange, Inc.
"O'Neal" shall have the meaning ascribed to such term in the preamble
hereto.
"Parent" shall have the meaning ascribed to such term in the Preamble
hereto.
"Parent Common Stock" shall have the meaning ascribed to such term in
SECTION 1.3 hereof.
"Parent Financial Statements" shall have the meaning ascribed to such term
in SECTION 3.8 hereof.
"Parent Guaranty" shall mean that certain Guaranty of Parent given pursuant
to the Great Western Credit Agreement.
"Parent Material Adverse Effect" shall mean a material adverse effect on
(i) the business, assets, condition (financial or otherwise), properties,
liabilities or the results of operations of Parent and the Active Parent
Subsidiaries taken as a whole, (ii) the ability of Parent to perform its
obligations set forth in this Restated Agreement and the Parent Transaction
Agreements, or (iii) the ability of Parent to timely consummate the transactions
contemplated by this Restated Agreement and the Parent Transaction Agreements.
"Parent Material Contract" shall have the meaning ascribed to such term in
SECTION 3.13 hereof.
"Parent Modified Representations" shall have the meaning ascribed to such
term in SECTION 7.2(a)(i) hereof.
"Parent Nonmodified Representation" shall have the meaning ascribed to such
term in SECTION 7.2(a)(i) hereof.
"Parent Permits" shall have the meaning ascribed to such term in
SECTION 3.11 hereof.
"Parent Securities Filings" shall have the meaning ascribed to such term in
SECTION 3.7 hereof.
"Parent Series A Stock "shall have the meaning ascribed to such term in
SECTION 3.2 hereof.
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<PAGE>
"Parent Transaction Agreements" shall have the meaning ascribed to such term
in SECTION 3.4 hereof.
"Person" shall mean and include an individual, corporation, partnership,
association, trust or other entity or organization, including a Governmental
Authority.
"Registration Statements" shall have the meaning ascribed to such term in
SECTION 6.1(b) hereof.
"Reid" shall have the meaning ascribed to such term in the preamble hereto.
"Report Date" shall have the meaning ascribed to such term in
SECTION 9.2(a) hereof.
"Representative" shall have the meaning ascribed to such term in
SECTION 9.6 hereof.
"Resignations" shall have the meaning ascribed to such term in SECTION 6.8
hereof.
"Restated Agreement" shall have the meaning ascribed to it in the preamble
hereto.
"Restated Big Stuff Agreement" shall mean that certain Amended and Restated
Acquisition Agreement dated as of October 26, 1999, among the Parent, ACG
Acquisition VII Corp., Big Stuff and the Big Stuff shareholders.
"Restated Company Agreement" shall have the meaning set forth in Recital E
hereto.
"SEC" shall mean the U.S. Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended, and all
rules and regulations promulgated thereunder.
"Securities Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and all rules and regulations promulgated thereunder.
"Surviving Corporation" shall have the meaning ascribed to such term in
SECTION 1.1 hereof.
"Surviving Corporation Common Stock" shall have the meaning ascribed to such
term in SECTION 1.3 hereof.
"Surviving Corporation Material Adverse Effect" shall mean a material
adverse effect on (i) the business, assets, condition (financial or otherwise),
properties, liabilities or the results of operations of the Surviving
Corporation, or (ii) the ability to timely consummate the transactions
contemplated by this Restated Agreement.
"Tax" shall have the meaning ascribed to such term in SECTION 2.15(a)
hereof.
"Tax Claim" shall have the meaning ascribed to such term in SECTION 9.3(b)
hereof.
"Third-Party Claim" shall have the meaning ascribed to such term in
SECTION 9.2(a) hereof.
"Transaction Expenses" shall have the meaning ascribed to such term in
SECTION 5.9 hereof.
"Valu" shall mean, collectively, Valu-line of Louisiana, Inc. and Valu-line
of Longview, Inc.
"Web" shall have the meaning ascribed to such term in the preamble hereto.
"Web Common Stock" shall have the meaning ascribed to such term in
SECTION 1.3 hereof.
"Web Financial Statements" shall have the meaning ascribed to such term in
SECTION 2.8 hereof.
"Web Material Adverse Effect" shall mean a material adverse effect on
(i) the business, assets, condition (financial or otherwise), properties,
liabilities or the results of operations of Web taken as a whole, (ii) the
ability of Web to perform its obligations set forth in this Restated Agreement
and the Web Transaction Agreements, or (iii) the ability of Web or the Web
Shareholders to timely
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consummate the transactions contemplated by this Restated Agreement and the Web
Transaction Agreements.
"Web Material Contract" shall have the meaning ascribed to such term in
SECTION 2.13 hereof.
"Web Modified Representations" shall have the meaning ascribed to such term
in SECTION 7.3(a)(i) hereof.
"Web Nonmodified Representations" shall have the meaning ascribed to such
term in SECTION 7.3(a)(i) hereof.
"Web Permits" shall have the meaning ascribed to such term in SECTION 2.11
hereof.
"Web Real Property Leases" shall have the meaning ascribed to such term in
SECTION 2.19(b) hereof.
"Web Shares" shall have the meaning ascribed to such term in SECTION 1.3
hereof.
"Web Shareholders" shall have the meaning ascribed to such term in the
preamble hereto.
"Web Shareholder Damages" shall have the meaning ascribed to such term in
SECTION 9.7(a) hereof.
"Web Stock" shall have the meaning set forth in SECTION 2.2 hereof.
"Web Transaction Agreements" shall have the meaning ascribed to such term in
SECTION 2.4 hereof.
"WorldPages" shall have the meaning ascribed to such term in Recital E
hereto.
"Year 2000 Compliant" shall have the meaning ascribed to such term in
SECTION 2.27 hereof.
[SIGNATURES ON FOLLOWING PAGE]
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<PAGE>
[Signature pages to the Amended and Restated Web YP Acquisition Agreement]
IN WITNESS WHEREOF, Parent, the Acquisition Subsidiary, Web and the Web
Shareholders have caused this Restated Agreement to be signed by their duly
authorized respective officers, all as of the date first written above.
<TABLE>
<S> <C> <C>
ADVANCED COMMUNICATIONS GROUP, INC.
By: /s/ MICHAEL PRUSS
-----------------------------------------
Name: Michael Pruss
Title: Chief Financial Officer and
Secretary
ACG ACQUISITION VI CORP.
By: /s/ MICHAEL PRUSS
-----------------------------------------
Name: Michael Pruss
Title: Secretary
WEB YP, INC.
By: /s/ RICHARD L. REID
-----------------------------------------
Title: CEO
/s/ RICHARD O'NEAL
-----------------------------------------
RICHARD O'NEAL
/s/ RICHARD L. REID
-----------------------------------------
RICHARD L. REID
</TABLE>
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<PAGE>
<TABLE>
<C> <S> <C>
ARTICLE I--TERMS OF THE MERGER..................................... B-2
1.1 THE MERGER.................................................. B-2
1.2 EFFECTIVE TIME.............................................. B-2
1.3 MERGER CONSIDERATION........................................ B-3
1.4 STOCKHOLDERS' RIGHT UPON MERGER............................. B-3
1.5 SURRENDER AND EXCHANGE OF SHARES............................ B-3
1.6 BYLAWS...................................................... B-4
1.7 OTHER EFFECTS OF MERGER..................................... B-4
1.8 TAX-FREE REORGANIZATION..................................... B-4
1.9 CONVERTIBLE NOTE............................................ B-4
1.11 ADDITIONAL ACTIONS.......................................... B-5
ARTICLE II--REPRESENTATIONS AND WARRANTIES OF WEB AND THE WEB
SHAREHOLDERS..................................................... B-5
2.1 ORGANIZATION AND GOOD STANDING.............................. B-5
2.2 CAPITALIZATION.............................................. B-5
2.3 SUBSIDIARIES................................................ B-6
2.4 AUTHORIZATION; BINDING AGREEMENT............................ B-6
2.5 GOVERNMENTAL APPROVALS...................................... B-6
2.6 NO VIOLATIONS............................................... B-6
2.7 LITIGATION.................................................. B-6
2.8 WEB FINANCIAL STATEMENTS.................................... B-7
2.9 ABSENCE OF CERTAIN CHANGES OR EVENTS........................ B-7
2.10 COMPLIANCE WITH LAWS........................................ B-8
2.11 PERMITS..................................................... B-8
2.12 FINDERS AND INVESTMENT BANKERS.............................. B-8
2.13 CONTRACTS................................................... B-8
2.14 EMPLOYEE BENEFIT PLANS...................................... B-8
2.15 TAXES AND RETURNS........................................... B-9
2.16 LIABILITIES................................................. B-10
2.17 ENVIRONMENTAL MATTERS....................................... B-10
2.18 INTELLECTUAL PROPERTY; FICTITIOUS NAMES..................... B-11
2.19 REAL ESTATE................................................. B-11
2.20 CORPORATE RECORDS........................................... B-11
2.21 TITLE TO AND CONDITION OF PERSONAL PROPERTY................. B-11
2.22 NO ADVERSE ACTIONS.......................................... B-11
2.23 LABOR MATTERS............................................... B-12
2.24 INSURANCE................................................... B-12
2.25 DISCLOSURE.................................................. B-12
2.26 TAX......................................................... B-12
2.27 YEAR 2000 COMPLIANCE........................................ B-12
ARTICLE III--REPRESENTATIONS AND WARRANTIES OF PARENT.............. B-13
3.1 ORGANIZATION AND GOOD STANDING.............................. B-13
3.2 CAPITALIZATION.............................................. B-13
3.3. SUBSIDIARIES................................................ B-13
3.4 AUTHORIZATION; BINDING AGREEMENT............................ B-14
3.5 GOVERNMENTAL APPROVALS...................................... B-14
3.6 NO VIOLATIONS............................................... B-14
3.7 SECURITIES FILINGS AND LITIGATION........................... B-14
3.8 PARENT FINANCIAL STATEMENTS................................. B-15
3.9 ABSENCE OF CERTAIN CHANGES OR EVENTS........................ B-15
3.10 COMPLIANCE WITH LAWS........................................ B-16
3.11 PERMITS..................................................... B-16
3.12 FINDERS AND INVESTMENT BANKERS.............................. B-16
3.13 CONTRACTS................................................... B-16
</TABLE>
<PAGE>
<TABLE>
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3.14 CORPORATE RECORDS........................................... B-16
3.15 TAX......................................................... B-16
3.16 DISCLOSURE.................................................. B-16
ARTICLE IV--ADDITIONAL COVENANTS OF WEB AND THE WEB
SHAREHOLDERS..................................................... B-17
4.1 NOTIFICATION OF CERTAIN MATTERS............................. B-17
4.2 ACCESS AND INFORMATION...................................... B-17
4.3 WEB SHAREHOLDER APPROVAL.................................... B-17
4.4 REASONABLE BEST EFFORTS..................................... B-18
4.5 COMPLIANCE.................................................. B-18
4.6 BENEFIT PLANS............................................... B-18
4.7 TAX OPINION CERTIFICATION................................... B-18
4.8 AFFILIATE AGREEMENTS........................................ B-18
4.9 TRANSFER RESTRICTIONS....................................... B-18
ARTICLE V--ADDITIONAL COVENANTS OF PARENT.......................... B-19
5.1 CONDUCT OF BUSINESS OF PARENT AND THE ACTIVE PARENT
SUBSIDIARIES.............................................. B-19
5.2 NOTIFICATION OF CERTAIN MATTERS............................. B-19
5.3 ACCESS AND INFORMATION...................................... B-20
5.4 COMPLIANCE.................................................. B-20
5.5 SEC AND SHAREHOLDER FILINGS................................. B-20
5.6 TAX TREATMENT............................................... B-20
5.7 EMPLOYMENT AND EMPLOYEE BENEFIT PLANS....................... B-20
5.8 EXPENSES....................................................
5.9 PARENT SHAREHOLDER APPROVAL.................................
ARTICLE VI--ADDITIONAL COVENANTS OF THE PARENT, WEB
AND THE WEB SHAREHOLDERS......................................... B-21
6.1 REGISTRATION OF SECURITIES.................................. B-21
6.3 CONSENTS.................................................... B-22
6.3 LEGAL REQUIREMENTS..........................................
6.4 PUBLIC ANNOUNCEMENTS........................................
6.5 CONDUCT OF BUSINESS PRIOR TO CLOSING DATE...................
6.7 NO SOLICITATION OF ACQUISITION PROPOSAL..................... B-26
6.8 RESIGNATIONS................................................ B-26
6.9 CONFIDENTIALITY............................................. B-26
ARTICLE VII--CONDITIONS TO CLOSING................................. B-27
7.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO CLOSING.......... B-27
7.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF SHAREHOLDERS AND
COMPANY................................................... B-29
7.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF PARENT.......... B-30
ARTICLE VIII--TERMINATION AND ABANDONMENT.......................... B-31
8.1 TERMINATION................................................. B-31
8.2 PROCEDURE UPON TERMINATION.................................. B-32
ARTICLE IX--SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION.................................................. B-32
9.1 INDEMNIFICATION BY THE WEB SHAREHOLDERS..................... B-32
9.2 METHOD OF ASSERTING CLAIMS.................................. B-33
9.3 THIRD PARTY CLAIMS.......................................... B-33
9.4 SURVIVAL.................................................... B-34
9.5 LIMITATIONS................................................. B-35
9.6 THE REPRESENTATIVE.......................................... B-35
9.7 INDEMNIFICATION BY THE PARENT............................... B-36
ARTICLE X--MUTUAL RELAEASE......................................... B-37
10.1 MUTUAL RELEASE OF ALL CLAIMS................................ B-37
</TABLE>
<PAGE>
<TABLE>
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10.2 COVENANT NOT TO SUE......................................... B-37
10.3 NO ADMISSION OF LIABILITY................................... B-37
ARTICLE XI--AMENDMENT AND WAIVER................................... B-38
11.1 AMENDMENT OF THIS RESTATED AGREEMENT........................ B-38
11.2 EXTENSION; WAIVER........................................... B-38
ARTICLE XII--GENERAL PROVISIONS.................................... B-38
12.1 NOTICES..................................................... B-38
12.2 INTERPRETATION.............................................. B-39
12.3 COUNTERPARTS................................................ B-39
12.4 ENTIRE AGREEMENT; ASSIGNMENT................................ B-39
12.5 SEVERABILITY................................................ B-39
12.6 OTHER REMEDIES.............................................. B-39
12.7 GOVERNING LAW............................................... B-39
12.8 RULES OF CONSTRUCTION....................................... B-40
ARTICLE XIII--DEFINITIONS.......................................... B-40
13.1 DEFINITIONS................................................. B-40
</TABLE>
SCHEDULES
<TABLE>
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Schedule 2.1 Jurisdictions of Incorporation and Qualification
Schedule 2.2 Capitalization
Schedule 2.5 Governmental Approvals
Schedule 2.6 No Violations
Schedule 2.7 Litigation
Schedule 2.9 Absence of Certain Changes or Events
Schedule 2.13 Contracts
Schedule 2.14 Employee Benefit Plans
Schedule 2.15 Taxes
Schedule 2.16 Liabilities
Schedule 2.17 Environmental Matters
Schedule 2.18 Intellectual Property
Schedule 2.19(b) Real Estate--Leased
Schedule 2.20 Corporate Records
Schedule 2.22 No Adverse Actions
Schedule 2.23 Labor Matters
Schedule 2.27 Year 2000 Compliance
Schedule 3.1 Parent Jurisdictions of Incorporation and Qualification
Schedule 3.2 Parent Securities Filings
Schedule 3.3 Parent Subsidiaries
Schedule 3.7(b) Parent Litigation
Schedule 3.8 Parent Liabilities
Schedule 3.9 Absence of Certain Changes or Events
Schedule 3.13 Parent Contracts
Schedule 6.6(b)(i) Web Securities Issuances, Etc.
Schedule 6.6(b)(ii) Parent Securities Issuances, Etc.
</TABLE>
<PAGE>
AMENDED AND RESTATED
BIG STUFF AGREEMENT
This AMENDED AND RESTATED BIG STUFF ACQUISITION AGREEMENT (the "RESTATED
AGREEMENT") is made and entered into as of this 26th day of October, 1999, by
and among Advanced Communications Group, Inc., a Delaware corporation ("PARENT")
and ACG Acquisition VII Corp., a Delaware corporation and a wholly-owned
subsidiary of Parent ("ACQUISITION SUBSIDIARY"), on the one hand and Big
Stuff, Inc., a Texas corporation ("BIG STUFF"), Richard O'Neal, a resident of
the State of Texas ("O'NEAL"), and Richard L. Reid, a resident of the State of
Texas ("REID") (O'Neal and Reid are together referred to herein as the "BIG
STUFF SHAREHOLDERS"), on the other.
RECITALS
A. Parent desires to acquire, and Big Stuff and the Big Stuff Shareholders
desire Parent to acquire, all of the outstanding common stock of Big Stuff, on
the terms and subject to the conditions set forth in this Restated Agreement.
B. In furtherance of such acquisition, the respective Boards of Directors
of Parent, Acquisition Subsidiary and Big Stuff have approved the merger (the
"MERGER") of Acquisition Subsidiary with and into Big Stuff in accordance with
the Corporation Laws, all on the terms and conditions set forth in this Restated
Agreement.
C. The Boards of Directors of each of Big Stuff, Acquisition Subsidiary and
Parent believe it is in the best interests of each company and their respective
stockholders and the Board of Directors of Parent has directed or will direct
that the Restated Agreement be submitted to the shareholders of Parent with the
recommendation that the Restated Agreement, including, but not limited to, the
issuance of shares of Parent Common Stock pursuant to this Restated Agreement,
be approved by the Parent's stockholders and the Boards of Directors of Big
Stuff and Acquisition Subsidiary have directed or will direct that the Merger be
submitted to their respective shareholders in accordance with the Corporation
Laws.
D. The Big Stuff Shareholders own all outstanding shares of Big Stuff Common
Stock, believe that the Merger and the transactions contemplated by this
Restated Agreement are in their best interests and desire to enter into this
Restated Agreement.
E. The parties intend that the Closing will occur prior to or concurrently
with, among other actions: (i) the closing of the acquisition by Parent or a
direct or indirect subsidiary of Parent of all of the outstanding capital stock
of YPtel Corporation, a corporation incorporated under the laws of Canada (the
"COMPANY") pursuant to that certain Amended and Restated YPtel Acquisition
Agreement, a form of which has been provided by Parent to Big Stuff (the
"RESTATED COMPANY AGREEMENT"), dated as of October 26, 1999, among the Parent,
the Company, the shareholders of the Company (the "COMPANY SHAREHOLDERS"),
Jeffrey L. Rosenthal, Stephen D. Lister, Edward Truant, Douglas G. McIntyre, The
J.L.R. Family Trust, The Paisley Family Trust, Imperial Capital Limited, a
corporation organized under the laws of the Province of Ontario ("ICL"), Cold
Trust, Global Investment Trust, Freezer Trust, Storage Trust, Directory Trust
and Publisher Trust; (ii) the closing of the acquisition by Parent or a
subsidiary of Parent of all of the outstanding capital stock of Web YP, Inc.
("WEB") (Big Stuff and Web are sometimes collectively referred to as
"WORLDPAGES") whether by merger, exchange or otherwise; (iii) the redemption of
the promissory notes (collectively, the "GREAT WESTERN NOTES") in the aggregate
original principal amount of Fifteen Million Dollars ($15,000,000.00) (plus
accrued but unpaid interest at the time of redemption) owed by Parent to O'Neal
and certain other former shareholders of Great Western Directories, Inc.
(collectively, the "GREAT WESTERN SHAREHOLDERS") by the issuance of Parent
Common Stock to the Great Western Shareholders; and (iv) the satisfaction of the
other conditions to closing set forth in this Restated Agreement, the Restated
Company Agreement and the Restated Web YP Agreement.
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NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties agree
as follows:
ARTICLE I--TERMS OF THE MERGER
1.1 THE MERGER. Upon the terms and subject to the conditions of this
Restated Agreement, the Merger shall be consummated in accordance with the Texas
Business Corporation Act (the "TEXAS CORPORATION ACT") and the General
Corporation Law of the State of Delaware (together with the Texas Corporation
Act, the "CORPORATION LAWS"). At the Effective Time, upon the terms and subject
to the conditions of this Restated Agreement, Acquisition Subsidiary shall be
merged with and into Big Stuff in accordance with the Corporation Laws and the
separate existence of Acquisition Subsidiary shall thereupon cease, and Big
Stuff, as the surviving corporation in the Merger (the "SURVIVING CORPORATION"),
shall continue its corporate existence under the laws of the State of Texas as a
subsidiary of Parent and under the corporate name "Big Stuff YP, Inc." The
Certificate of Incorporation of Big Stuff shall be the certificate of
incorporation of the Surviving Corporation. The parties shall prepare and
execute a certificate of merger in a form to be agreed to by the parties hereto,
acting reasonably (the "CERTIFICATE OF MERGER"), in order to comply in all
respects with the requirements of the Corporation Laws and with the provisions
of this Restated Agreement.
1.2 EFFECTIVE TIME.
(a) EFFECTIVE TIME OF THIS RESTATED AGREEMENT. Despite its execution,
no term, provision, right or obligation under or pursuant to this Restated
Agreement shall be effective, unless and until the later of (i) the
execution of this Restated Agreement; and (ii) receipt by Parent's Board of
Directors from its financial advisors, PaineWebber Incorporated or such
other investment banking firm selected by Parent's Board of Directors, of a
written opinion addressed to it for inclusion in the Proxy
Statement/Prospectus to the effect that the consideration to be paid, in the
aggregate, by the Parent in the transactions contemplated by this Restated
Agreement, the Restated Company Agreement, the Restated Web Agreement,
including the lending by Richard O'Neal and Richard Reid to Big Stuff and/or
Web of up to an aggregate of Six Million Dollars ($6,000,000) and the
agreement relating to the redemption of the Great Western Notes, is fair to
Parent from a financial point of view. The parties to this Restated
Agreement are parties to that certain Big Stuff Acquisition Agreement dated
as of June 3, 1999 (the "JUNE 3 BIG STUFF AGREEMENT"). Unless and until the
later of the events described in clauses (i) and (ii) hereof occurs, the
June 3 Big Stuff YP Agreement shall remain in full force and effect, subject
to termination of such agreement in accordance with its terms. Immediately
upon the execution of this Restated Agreement, as described in clause (i)
above, and the receipt by Parent's Board from its financial advisors of a
written opinion, as described in clause (ii) above, this Restated Agreement
shall become effective and the June 3 Big Stuff YP Agreement shall terminate
and none of the parties thereto shall have any obligations thereunder.
(b) EFFECTIVE TIME OF THE MERGER. The Merger shall become effective as
of the time of the filing of the Certificate of Merger with the Secretary of
State of the State of Texas and the Secretary of State of the State of
Delaware in accordance with the applicable provisions of the Corporation
Laws or at such later time as may be specified in the Certificate of Merger.
The Certificate of Merger shall be filed, and the closing of the Merger (the
"CLOSING") shall occur three (3) business days after all of the conditions
set forth in this Restated Agreement have been satisfied or waived by the
party or parties entitled to the benefit of the same; PROVIDED, HOWEVER,
that if such conditions are not satisfied or waived by January 31, 2000, the
Closing shall be automatically postponed for seven (7) days and will
continue to be postponed for continuous seven (7) day periods until
February 28, 2000, unless another time is agreed to by Parent and Big Stuff.
If such conditions are not satisfied or waived by February 28, 2000, the
Closing shall be
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automatically postponed until March 1, 1999, unless another time is agreed
to in writing by Parent and Big Stuff. The Closing shall occur at the
offices of Blackwell Sanders Peper Martin LLP, 720 Olive Street,
Suite 2400, St. Louis, Missouri 63101, unless another place is agreed to in
writing by Parent and Big Stuff. The time when the Merger shall become
effective is herein referred to as the "EFFECTIVE TIME" and the date on
which the Effective Time occurs is herein referred to as the "CLOSING DATE."
1.3 MERGER CONSIDERATION. Subject to the provisions of this Restated
Agreement and any applicable backup or other withholding requirements, each of
the issued and outstanding shares ("BIG STUFF SHARES") of common stock, no par
value per share, of Big Stuff ("BIG STUFF COMMON STOCK") as of the Effective
Time shall be converted into the right to receive, and there shall be paid and
issued as hereinafter provided, in exchange for the Big Stuff Shares, 415.584
shares (the "EXCHANGE RATIO") of Parent Common Stock, par value $.0001 per share
("PARENT COMMON STOCK"), plus cash in lieu of any fractional share as
hereinafter provided (the "MERGER CONSIDERATION").
No fractional shares of Parent Common Stock shall be issued pursuant to the
Merger nor will any fractional share interest involved entitle the holder
thereof to vote, to receive dividends or to exercise any other rights as a
shareholder of Parent. In lieu thereof, any Person who would otherwise be
entitled to a fractional share of Parent Common Stock pursuant to the provisions
hereof shall receive an amount in cash equal to the value of such fractional
share. The value of such fractional share for purposes hereof shall be the
product of such fraction multiplied by Five and 50/100 Dollars ($5.50).
Each share of Big Stuff Common Stock held in the treasury of Big Stuff or by
a wholly-owned subsidiary of Big Stuff shall be cancelled as of the Effective
Time and no Merger Consideration shall be payable with respect thereto. From and
after the Effective Time, there shall be no further transfers on the stock
transfer books of Big Stuff of any of the Big Stuff Shares outstanding prior to
the Effective Time.
Subject to the provisions of this Restated Agreement, at the Effective Time,
all the shares of Acquisition Subsidiary common stock outstanding immediately
prior to the Merger shall be converted, by virtue of the Merger and without any
action on the part of the holder thereof, into one share of the common stock of
the Surviving Corporation (the "SURVIVING CORPORATION COMMON STOCK"), which one
share of the Surviving Corporation Common Stock shall constitute all of the
issued and outstanding capital stock of the Surviving Corporation.
1.4 STOCKHOLDERS' RIGHTS UPON MERGER. Upon consummation of the Merger, the
Certificates shall cease to represent any rights with respect thereto, and,
subject to applicable Law (as hereinafter defined) and this Restated Agreement,
the Certificates shall only represent the right to receive the Merger
Consideration including the amount of cash, if any, payable in lieu of
fractional shares of Parent Common Stock into which the Big Stuff Shares have
been converted pursuant to this Restated Agreement.
1.5 SURRENDER AND EXCHANGE OF SHARES. At the Effective Time, each holder
of a Big Stuff Share shall surrender and deliver the Certificates and
transmittal letter (the "LETTER OF TRANSMITTAL") to Continental Stock Transfer
and Trust Company. Upon such surrender and delivery, the holder shall receive a
certificate representing the number of whole shares of Parent Common Stock into
which such holder's Big Stuff Shares have been converted pursuant to this
Restated Agreement plus the amount of cash payable in lieu of any fractional
share. Until so surrendered and exchanged, each outstanding Certificate after
the Effective Time shall be deemed for all purposes to evidence the right to
receive that number of whole shares of Parent Common Stock into which the Big
Stuff Shares have been converted pursuant to this Restated Agreement, plus the
amount of cash payable in lieu of any fractional share; PROVIDED, HOWEVER, that
no dividends or other distributions, if any, in respect of the shares of Parent
Common Stock, declared after the Effective Time and payable to holders of record
after the Effective Time, shall be paid to the holders of any unsurrendered
Certificates until such
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Certificates and Letters of Transmittal are surrendered and delivered as
provided herein. Subject to applicable Law, after the surrender and exchange of
the Certificates, the record holders thereof will be entitled to receive any
such dividends or other distributions without interest thereon, which
theretofore have become payable with respect to the number of shares of Parent
Common Stock for which such Certificates were exchangeable. Holders of any
unsurrendered Certificates shall not be entitled to vote Parent Common Stock
until such Certificates are exchanged pursuant to this Restated Agreement.
1.6 DIRECTORS. Immediately following the Closing Date, the Board of
Directors of the Parent shall be restructured to be composed of eight
(8) members as follows: (i) one director chosen by Parent and one director
chosen by ICL to serve three (3) year terms; (ii) one director chosen by Parent
and one director chosen by ICL and one director to be agreed to by Parent, ICL
and WorldPages to serve two (2) year terms; and (iii) one director chosen by
Parent and one director chosen by ICL and one director to be agreed to by
Parent, ICL and WorldPages to serve one (1) year terms. Parent currently intends
to nominate Richard O'Neal and two (2) individuals to be named at or prior to
Closing. The directors to be nominated by ICL are currently anticipated to be
Wilmot Matthews, George Anderson and Robert Flynn. In addition, for a period of
one (1) year following the Closing Date, each of Parent and ICL may designate
one party to attend any and all Board of Directors meetings, as non-voting,
non-participating observers only (the "OBSERVERS"). Parent shall reimburse the
Observers for those expenses incurred in connection with attending Board of
Directors meetings, including travel expenses, in the same manner and to the
same extent that Parent reimburses its directors for such expenses. The parties
hereto expressly acknowledge and agree that this SECTION 1.6 is not intended to,
and does not, except with regard to the initial Board of Directors of Parent
referenced in this SECTION 1.6, impose any requirement that the Board of
Directors of Parent be comprised of the individuals listed in this SECTION 1.6
or that any Person has a right to designate a certain individual or a certain
number of individuals as nominees to the Board of Directors of Parent.
1.7 BYLAWS. At and after the Effective Time, the Bylaws of Acquisition
Subsidiary in effect at the Effective Time shall be the Bylaws of the Surviving
Corporation (subject to any subsequent amendment).
1.8 OTHER EFFECTS OF MERGER. The Merger shall have all further effects as
specified in the applicable provisions of the Corporation Laws.
1.9 TAX-FREE REORGANIZATION. The parties intend that the Merger qualify as
a tax-free reorganization pursuant to Section 368 of the Code. The parties
hereto hereby adopt this Restated Agreement as a "plan of reorganization" within
the meaning of Sections 1.368-2(g) and 1.368(a) of the Treasury regulations.
1.10 CONVERTIBLE NOTE. At any time between the date hereof and Closing,
O'Neal and Reid may continue to lend up to Six Million Dollars ($6,000,000) to
Big Stuff or Web pursuant to a "CONVERTIBLE NOTE", described below. The
Convertible Note includes amounts lent by O'Neal and Reid to Big Stuff or Web
since January 1, 1999. The Convertible Note will provide additional working
capital required by Big Stuff or Web (i) to consummate the contemplated
contractual arrangements with Excite and to fulfill its obligations thereunder,
(ii) to pay for extraordinary capital expenditures approved in advance by a
disinterested majority of the Board of Directors of the Parent, including
consummation of contractual arrangements with other entities similar to those
with Excite, or (iii) for working capital purposes, including for ordinary
capital expenditures. The conversion feature of the Convertible Note shall
provide that the principal amount of the Convertible Note, but not the accrued
but unpaid interest, shall be automatically converted into Parent common stock
at Closing at a conversion price of $5.50 per share. If the acquisition of
WorldPages contemplated by this Restated Agreement and the Restated Web
Agreement shall not be consummated, the conversion feature shall not be
operable, and Parent shall have no obligations under the Convertible Note. The
parties agree that notwithstanding anything herein or in the Restated Web
Agreement to the contrary, there shall be no "doubling" of the
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<PAGE>
amount which may be lent by O'Neal and Reid to Big Stuff or Web and that an
aggregate maximum amount of $6,000,000 may be lent by O'Neal and Reid to Big
Stuff and Web, collectively.
1.11 ADDITIONAL ACTIONS. If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm or record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of Acquisition Subsidiary or Big Stuff or otherwise to
carry out this Restated Agreement, the officers and directors of the Surviving
Corporation shall be authorized to execute and deliver, in the name and on
behalf of Acquisition Subsidiary or Big Stuff, all such deeds, bills of sale,
assignments and assurances and to take and do, in the name and on behalf of
Acquisition Subsidiary or Big Stuff, all such other actions and things as may be
necessary or desirable to vest, perfect or confirm any and all right, title and
interest in, to and under such rights, properties or assets in the Surviving
Corporation or otherwise to carry out this Restated Agreement.
ARTICLE II--REPRESENTATIONS AND WARRANTIES OF
BIG STUFF AND THE BIG STUFF SHAREHOLDERS
Big Stuff, on behalf of itself and the Big Stuff Shareholders, jointly and
severally represent and warrant to and covenant with Parent as follows:
2.1 ORGANIZATION AND GOOD STANDING. Big Stuff is a corporation duly
organized and validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization and has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as now being conducted. Big Stuff is duly qualified or
licensed and in good standing to do business in each jurisdiction in which the
character of the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification or licensing necessary, except
where the failure to be so duly qualified or licensed and in good standing would
not have a Big Stuff Material Adverse Effect. SCHEDULE 2.1 sets forth a complete
and accurate list of the jurisdictions of incorporation or organization and
qualification or license of Big Stuff. Big Stuff has heretofore delivered to
Parent accurate and complete copies of the Certificates or Articles of
Incorporation and Bylaws, or equivalent governing instruments, as currently in
effect, of Big Stuff.
2.2 CAPITALIZATION. As of the date hereof, the authorized capital stock of
Big Stuff (the "BIG STUFF STOCK") consists of 10,000 shares of common stock. As
of the date hereof, (a) 3,500 shares of Big Stuff Stock were issued and
outstanding, and (b) no options or warrants to purchase any shares of Big Stuff
capital stock were issued or outstanding. No other capital stock of Big Stuff is
issued or outstanding. All issued and outstanding shares of the Big Stuff Stock
are duly authorized, validly issued, fully paid and non-assessable and were
issued free of preemptive rights and in compliance with applicable corporate and
securities Laws. Except as set forth on SCHEDULE 2.2, as of the date of this
Restated Agreement there are no outstanding rights, reservations of shares,
subscriptions, warrants, puts, calls, unsatisfied preemptive rights, options or
other agreements of any kind relating to any of the capital stock or any other
security of Big Stuff, and there is no authorized or outstanding security of any
kind convertible into or exchangeable for any such capital stock or other
security. There are no restrictions upon the transfer of or otherwise pertaining
to the securities (including, but not limited to, the ability to pay dividends
thereon) or retained earnings of Big Stuff or the ownership thereof other than
those, if any, described on SCHEDULE 2.2 or those imposed generally by the
Securities Act, the Securities Exchange Act, applicable state or foreign
securities Laws or applicable corporate Law.
2.3 SUBSIDIARIES. Big Stuff does not and will not, from the date of this
Restated Agreement until the Closing Date, hold, directly or indirectly, any
capital stock or other interest in any Person.
2.4 AUTHORIZATION; BINDING AGREEMENT. Big Stuff and the Big Stuff
Shareholders have all requisite power and authority to execute and deliver this
Restated Agreement and the Big Stuff Transaction
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Agreements and to consummate the transactions contemplated hereby and thereby.
The execution and delivery of this Restated Agreement and the other agreements
and documents referred to herein and to be executed in connection herewith to
which Big Stuff or any Big Stuff Shareholder is or will be a party or a
signatory (the "BIG STUFF TRANSACTION AGREEMENTS") and the consummation of the
transactions contemplated hereby and thereby including, but not limited to the
Merger, have been or will be duly and validly authorized by Big Stuff's Board of
Directors and no other corporate or other proceedings on the part of Big Stuff
or any Big Stuff Shareholder are necessary to authorize the execution and
delivery of this Restated Agreement and the Big Stuff Transaction Agreements or
to consummate the transactions contemplated hereby or thereby (other than the
adoption of this Restated Agreement by the Big Stuff Shareholders in accordance
with the Texas Corporation Act and the Articles of Incorporation and Bylaws of
Big Stuff). This Restated Agreement has been duly and validly executed and
delivered by Big Stuff and the Big Stuff Shareholders and constitutes, and upon
execution and delivery thereof as contemplated by this Restated Agreement, the
Big Stuff Transaction Agreements will constitute, the legal, valid and binding
obligations of Big Stuff and the Big Stuff Shareholders, enforceable against Big
Stuff and the Big Stuff Shareholders in accordance with its and their respective
terms, except to the extent that enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and by principles of
equity regarding the availability of remedies (collectively, the "ENFORCEABILITY
EXCEPTIONS").
2.5 GOVERNMENTAL APPROVALS. No consent, approval, waiver or authorization
of, notice to or declaration or filing with ("CONSENT") any Governmental
Authority on the part of Big Stuff or any of the Big Stuff Shareholders is
required in connection with the execution or delivery by Big Stuff or the Big
Stuff Shareholders of this Restated Agreement and the Big Stuff Transaction
Agreements or the consummation by Big Stuff or the Big Stuff Shareholders of the
transactions contemplated hereby or thereby other than (i) the filing of the
Certificate of Merger with the Secretary of State of the States of Texas and
Delaware; (ii) filings with the SEC and state securities laws administrators,
(iii) Consents from or with Governmental Authorities set forth on SCHEDULE 2.5,
(iv) filings under the HSR Act, and (v) those Consents that, if they were not
obtained or made, do not or would not have a Big Stuff Material Adverse Effect.
2.6 NO VIOLATIONS. The execution and delivery of this Restated Agreement
and the Big Stuff Transaction Agreements, the consummation of the transactions
contemplated hereby and thereby and compliance by Big Stuff and the Big Stuff
Shareholders with any of the provisions hereof or thereof will not (i) conflict
with or result in any breach of any provision of the Certificate and/or Articles
of Incorporation or Bylaws or other governing instruments of Big Stuff,
(ii) except as set forth on SCHEDULE 2.6, require any Consent under or result in
a violation or breach of, or 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 or augment the performance required) under any of the terms,
conditions or provisions of any Big Stuff Material Contract or other obligation
to which Big Stuff or any Big Stuff Shareholder is a party or by which any of
them or any of their properties or assets may be bound, (iii) result in the
creation or imposition of any lien or encumbrance of any kind upon any of the
assets of Big Stuff or (iv) subject to obtaining the Consents from Governmental
Authorities referred to in SECTION 2.5 above, contravene any Law currently in
effect to which Big Stuff or any Big Stuff Shareholder or its or any of its
respective assets or properties are subject, except in the case of clauses (ii),
(iii) and (iv) above, for any deviations from the foregoing which do not or
would not have a Big Stuff Material Adverse Effect.
2.7 LITIGATION. Except as set forth in SCHEDULE 2.7, there is no action,
cause of action, claim, demand, suit, proceeding, citation, summons, subpoena,
inquiry or investigation of any nature, civil, criminal, regulatory or
otherwise, in law or in equity, by or before any court, tribunal, arbitrator,
mediator or other Governmental Authority ("LITIGATION") pending or, to the
knowledge of the Big Stuff
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Shareholders or Big Stuff, threatened against Big Stuff or any officer,
director, employee or agent thereof, in his or her capacity as such, or as a
fiduciary with respect to any Benefit Plan of Big Stuff, or otherwise relating,
in a manner that could have a Big Stuff Material Adverse Effect, to Big Stuff or
the securities of Big Stuff, or any properties or rights of Big Stuff or that
could prevent or delay the consummation of the transactions contemplated by this
Restated Agreement.
2.8 BIG STUFF FINANCIAL STATEMENTS. The unaudited interim financial
statements of Big Stuff as of and for the fiscal year ended December 31, 1998,
and as of and for the six months ended June 30, 1999 (the "BIG STUFF FINANCIAL
STATEMENTS") have been provided to Parent. The Big Stuff Financial Statements
were prepared in accordance with generally accepted accounting principles
applicable to the business of Big Stuff consistently applied in accordance with
past accounting practices and fairly present (including, but not limited to, the
inclusion of all adjustments with respect to interim periods which are necessary
to present fairly the financial condition and assets and liabilities or the
results of operations of Big Stuff except as may be indicated therein or in the
notes thereto, subject to normal year-end adjustment in the ordinary course with
respect to certain items immaterial in amount or effect and the exclusion of
footnote disclosure in interim Big Stuff Financial Statements) the financial
condition and assets and liabilities or the results of operations of Big Stuff
as of the dates and for the periods indicated. Except as reflected in the Big
Stuff Financial Statements, as of their respective dates, Big Stuff did not have
any debts, obligations, guaranties of obligations of others or liabilities
(contingent or otherwise) that would be required in accordance with generally
accepted accounting principles to be disclosed in the Big Stuff Financial
Statements.
2.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
SCHEDULE 2.9, since June 30, 1999, through the date of this Restated Agreement,
there has not been: (i) any Event that could reasonably be expected to have a
Big Stuff Material Adverse Effect; (ii) any declaration, payment or setting
aside for payment of any dividend (except to the Big Stuff Shareholders, but
only if the entire amount of such dividend is paid to Web as a capital
contribution) or other distribution or any redemption, purchase or other
acquisition of any shares of capital stock or securities of Big Stuff;
(iii) any return of any capital or other distribution of assets to stockholders
of Big Stuff (except to Big Stuff or a subsidiary wholly owned by Big Stuff);
(iv) other than in the ordinary course of business any investment of a capital
nature by Big Stuff by the purchase of any property or assets except to the
extent such investment is in the ordinary course of business and is individually
or in the aggregate, not in excess of $75,000; (v) any acquisition (by merger,
consolidation, acquisition of stock or assets or otherwise) of any Person or
business; (vi) any sale, disposition, pledge, mortgage or other transfer of
assets or properties of Big Stuff other than in the ordinary course of business
consistent with past practice; (vii) any action or agreement or undertaking by
Big Stuff to take any action that, if taken or done on or after the date hereof,
would result in a breach of SECTION 6.6 below; (viii) any employment, severance
or consulting agreement entered into by Big Stuff with any stockholder, officer,
director, agent, employee or consultant of Big Stuff or any amendment or
modification to, or termination of, any current employment, severance or
consulting agreement to which Big Stuff is a party or by which it is bound;
(ix) any forgiveness, cancellation, compromise, settlement, waiver or release of
any debts, claims, rights or Litigation, in each case in excess, individually or
in the aggregate, of $25,000; (x) any agreement, authorization or commitment to
take, whether in writing or otherwise, any action which, if taken prior to the
date hereof, would have made any representation or warranty of Big Stuff in this
Restated Agreement untrue or incorrect in any material respect; (xi) any failure
by Big Stuff to conduct its business in the ordinary course consistent with past
practice, it being understood, however, that Big Stuff has accelerated and
intensified its business activities since March 31, 1999.
2.10 COMPLIANCE WITH LAWS. The business of Big Stuff has been operated in
compliance with all Laws applicable thereto, except for any instances of
non-compliance which do not and would not have a Big Stuff Material Adverse
Effect.
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2.11 PERMITS. (i) Big Stuff has all permits, certificates, licenses,
approvals, and other authorizations required in connection with the operation of
its business (collectively, "BIG STUFF PERMITS"), (ii) Big Stuff is not in
violation of any Big Stuff Permit, and (iii) no proceedings are pending or, to
the knowledge of Big Stuff, threatened, to revoke or limit any Big Stuff Permit,
except, in the case of clause (i) or (ii) above, those the absence or violation
of which do not and would not have a Big Stuff Material Adverse Effect.
2.12 FINDERS AND INVESTMENT BANKERS. Neither Big Stuff nor any of its
officers or directors has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders' fees in connection
with the transactions contemplated hereby.
2.13 CONTRACTS. Except as set forth in SCHEDULE 2.13, Big Stuff is not a
party or subject to any material note, bond, mortgage, indenture, contract,
lease, license, agreement, understanding, instrument, bid or proposal ("BIG
STUFF MATERIAL CONTRACT"). For purposes of this SECTION 2.13, a note, bond,
mortgage, indenture, contract, lease, license, agreement, understanding,
instrument, bid or proposal shall be considered a Big Stuff Material Contract
(a) if it is with an affiliate of Big Stuff, (b) if the financial obligation of
Big Stuff thereunder or, if applicable, to the assets or properties of Big Stuff
could exceed $25,000 after the Closing Date, or (c) if it provides for any
exclusivity or non-competition restrictions applicable to Big Stuff. Big Stuff
has made available to Parent true and accurate copies of the Big Stuff Material
Contracts. All such Big Stuff Material Contracts are valid and binding and are
in full force and effect and enforceable in accordance with their respective
terms, subject to the Enforceability Exceptions. Any and all transactions
between or involving Big Stuff and an affiliate thereof were entered into in the
ordinary course of business and are upon fair and reasonable terms not
materially less favorable than Big Stuff could obtain or become entitled to in
an arm's-length transaction with a Person that is not an affiliate. Except as
set forth in SCHEDULE 2.5 (i) no Consent of any Person is needed in order that
each such Big Stuff Material Contract shall continue in full force and effect in
accordance with its terms without penalty, acceleration or rights of early
termination by reason of the consummation of the transactions contemplated by
this Restated Agreement, and (ii) Big Stuff is not in material violation or
breach of or default under any such Big Stuff Material Contract, nor to Big
Stuff's knowledge is any other party to any such Big Stuff Material Contract in
material violation or breach of or default under any such Big Stuff Material
Contract.
2.14 EMPLOYEE BENEFIT PLANS. Except as set forth in SCHEDULE 2.14, there
are no Benefit Plans (as defined below) maintained or contributed to by Big
Stuff under which Big Stuff could incur any liability. A "BENEFIT PLAN" shall
mean (i) an employee benefit plan as defined in Section 3(3) of the ERISA, even
if, because of some other provision of ERISA, such plan is not subject to any or
all of ERISA's provisions, and (ii) whether or not described in the preceding
clause, (a) any pension, profit sharing, stock bonus, deferred or supplemental
compensation, retirement, thrift, stock purchase or stock option plan, or any
other compensation, welfare, insurance, medical, hospitalization, fringe benefit
or retirement plan, program, policy, course of conduct, understanding or
arrangement of any kind whatsoever, whether formal or informal, oral or written,
providing for benefits for or the welfare of any or all of the current or former
employees or agents of Big Stuff or their beneficiaries or dependents, (b) a
multi-employer plan as defined in Section 3(37) of ERISA (a "MULTI-EMPLOYER
PLAN") or in any other applicable Law, or (c) a multiple employer plan as
defined in Section 413 of the Code or in any other applicable Law.
With respect to each Benefit Plan (where applicable): Big Stuff has made
available to Parent complete and accurate copies of (i) all plan and trust texts
and agreements, insurance contracts and other funding arrangements; (ii) annual
reports on the Form 5500 series for the last three (3) years; (iii) financial
statements and/or annual and periodic accountings of plan assets for the last
three (3) years; (iv) the most recent determination letter received from the
IRS; (v) actuarial valuations for the last three (3) years; and (vi) the most
recent summary plan description as defined in ERISA.
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No Big Stuff Benefit Plan is a defined benefit pension plan subject to Title
IV of ERISA or Section 412 of the Code. Each of the Big Stuff Benefit Plans has
been maintained in compliance with its terms and all applicable Law, except
where the failure to do so would not result in a Big Stuff Material Adverse
Effect or a Surviving Corporation Material Adverse Effect. Big Stuff does not
contribute to, and does not have any outstanding liability with respect to, any
Multi-employer Plan.
Except as set forth in SCHEDULE 2.14, the consummation of the Merger will
not, either alone or in conjunction with another Event: (i) entitle any
individual to severance pay, or (ii) accelerate the time of payment or vesting
of benefits or increase the amount of compensation due to any individual.
2.15 TAXES AND RETURNS.
(a) Except as disclosed in SCHEDULE 2.15, Big Stuff has timely filed, or
caused to be timely filed, all federal, state, local and foreign income,
gross receipts, sales, use, property, production, payroll, franchise,
withholding, employment, social security, license, excise, transfer, gains,
and other tax returns or reports required to be filed by it, and has paid,
collected or withheld, or caused to be paid, collected or withheld, all
taxes and governmental charges, assessments and contributions of any nature
whatsoever including, but not limited to, any related penalties, interest
and liabilities (any of the foregoing being referred to herein as a "TAX"),
required to be paid, collected or withheld, other than such Taxes for which
adequate reserves in the Big Stuff Financial Statements have been
established or which are being contested in good faith and have been
disclosed in writing to Parent prior to the date of this Restated Agreement.
Except as set forth in SCHEDULE 2.15, there are no claims or assessments
pending against Big Stuff for any alleged deficiency in any Tax, and Big
Stuff does not know of any threatened Tax claims or assessments against Big
Stuff (other than those for which adequate reserves in the Big Stuff
Financial Statements have been established or which are being contested in
good faith and have been disclosed in writing to Parent prior to the date of
this Restated Agreement). Except as set forth in SCHEDULE 2.15, Big Stuff
has not made an election under Section 338 of the Code and has not taken any
action that would result in any Tax liability of Big Stuff as a result of a
deemed election within the meaning of Section 338 of the Code. Except as set
forth in SCHEDULE 2.15, Big Stuff does not have any waivers or extensions of
any applicable statute of limitations to assess any Taxes. Except as set
forth in SCHEDULE 2.15, there are no outstanding requests by Big Stuff for
any extension of time within which to file any return or within which to pay
any Taxes shown to be due on any return. Big Stuff (i) has elected to be
treated as, and from the date of such election until the date hereof has
met, and currently meets, the eligibility requirements for treatment as, an
"S" corporation under the Code; and (ii) as of the date hereof, has no
subsidiaries for Tax purposes.
(b) A listing of all Tax sharing agreements or similar arrangements with
respect to or involving Big Stuff is set forth in SCHEDULE 2.15.
(c) Except as set forth in SCHEDULE 2.15, Big Stuff has not made or
become obligated to make, or will, as a result of the transactions
contemplated by this Restated Agreement, make or become obligated to make,
any "excess parachute payment" as defined in Section 280G of the Code
(without regard to subsection (b)(4) thereof).
(d) Big Stuff has disclosed on its federal income tax returns all
positions taken therein that could give rise to a substantial understatement
of federal income tax liability within the meaning of Section 6662(d) of the
Code.
(e) There are no liens for Taxes on the assets of Big Stuff except for
statutory liens for current Taxes not yet due and payable.
(f) All elections with respect to Taxes affecting Big Stuff are set
forth in SCHEDULE 2.15 or, with respect to elections made on or before
December 31, 1996, are reflected in the Tax returns of Big Stuff filed and
provided to Parent prior to the date of this Restated Agreement. Big Stuff
has
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not: (i) made and will not make a deemed dividend election under Treas. Reg.
Section 1.1502-32(f)(2) or a consent dividend election under Section 565 of
the Code; (ii) consented at any time under Section 341(f)(l) of the Code to
have the provisions of Section 341(f)(2) of the Code apply to any
disposition of the assets of Big Stuff; (iii) agreed, and is not required,
to make any adjustment under Section 481(a) of the Code by reason of a
change in accounting method or otherwise; (iv) made an express election, and
is not required, to treat any asset of Big Stuff as owned by another Person
for federal income Tax purposes or as tax-exempt bond financed property or
tax-exempt use property within the meaning of Section 168 of the Code;
(v) made any of the foregoing elections and is not required to apply any of
the foregoing rules under any comparable state, foreign or local income Tax
provision.
(g) Except as set forth in SCHEDULE 2.15, Big Stuff is not a partner or
member in any joint venture, partnership, limited liability company or other
arrangement or contract that is or could be treated as a partnership for
federal income Tax purposes.
(h) Except as set forth in SCHEDULE 2.15, Big Stuff is not a party to or
otherwise subject to any arrangement having the effect of or giving rise to
the recognition of a deduction or loss before the Closing Date and a
corresponding recognition of taxable income or gain after the Closing Date,
or any other arrangement that would have the effect of or give rise to the
recognition of taxable income or gain by Big Stuff after the Closing Date
without the receipt of or entitlement to a corresponding amount of cash.
2.16 LIABILITIES. From June 30, 1999, through the date of this Restated
Agreement, except as expressly disclosed in SCHEDULE 2.16 or in the Big Stuff
Financial Statements, Big Stuff does not have any direct or indirect
indebtedness, liability, claim, loss, damage, deficiency, obligation or
responsibility, fixed or unfixed, choate or inchoate, liquidated or
unliquidated, secured or unsecured, accrued, absolute, contingent or otherwise,
whether or not of a kind required by generally accepted accounting principles to
be set forth in a financial statement, other than those incurred in the ordinary
course of business or in an amount not in excess of $25,000 individually or
$100,000 in the aggregate. Except as set forth on SCHEDULE 2.16 or in the Big
Stuff Financial Statements, as of the date of this Restated Agreement, Big Stuff
is not subject to any (i) obligations in respect of borrowed money,
(ii) obligations evidenced by bonds, debentures, notes or other similar
instruments, (iii) obligations which would be required by generally accepted
accounting principles to be classified as "capital leases," (iv) obligations to
pay the deferred purchase price of property or services, except trade accounts
payable arising in the ordinary course of business and payable not more than
twelve (12) months from the date of incurrence, and (v) guaranties of any
obligations of any other Person.
2.17 ENVIRONMENTAL MATTERS. As of the date of this Restated Agreement,
(i) except where the failure to so comply will not have a Big Stuff Material
Adverse Effect, Big Stuff is in compliance with all applicable Environmental
Laws (as hereinafter defined), (ii) there is no civil, criminal or
administrative judgment, action, suit, demand, claim, hearing, notice of
violation, investigation, proceeding, notice or demand letter pending or, to the
knowledge of Big Stuff, threatened against Big Stuff or any of its properties
pursuant to Environmental Laws, and (iii) except as set forth on SCHEDULE 2.17,
there are no past or present Events which reasonably may be expected to prevent
compliance with, or which have given rise to or which reasonably may be expected
to give rise to liability on the part of Big Stuff under Environmental Laws,
except for those which would not reasonably be expected to give rise to a Big
Stuff Material Adverse Effect. As used herein the term "ENVIRONMENTAL LAWS"
shall mean Laws relating to pollution, waste control, the generation, presence
or disposal of asbestos, hazardous or toxic wastes or substances, the protection
of the environment, environmental activity or public health and safety.
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2.18 INTELLECTUAL PROPERTY; FICTITIOUS NAMES. For purposes of this
Restated Agreement, "INTELLECTUAL PROPERTY" shall mean all patents, trademarks,
service marks, trade names, copyrights, franchises and similar rights of or used
by Big Stuff, all applications for any of the foregoing and all permits, grants
and licenses or other rights running to or from Big Stuff relating to any of the
foregoing. Except as set forth on SCHEDULE 2.18, (i) Big Stuff owns, or is
licensed to, or otherwise has, the full right to use all Intellectual Property
currently used or proposed to be used in its business, (ii) Big Stuff has not
received, as of the date of this Restated Agreement, notice of any charge or
claim of any Person relating to such Intellectual Property or any process or
confidential information of Big Stuff ("IP CLAIM NOTICE") and does not know of
any basis for any such charge or claim, and Big Stuff has sufficient rights in
the Intellectual Property to use it in the manner currently used or proposed to
be used in its business, and (iii) Big Stuff and its corporate predecessors, if
any, have not conducted business at any time during the period beginning five
(5) years prior to June 3, 1999 under any corporate, trade or fictitious names
other than their current corporate names. Big Stuff shall promptly notify Parent
of any IP Claim Notice received by Big Stuff after the date of this Restated
Agreement.
2.19 REAL ESTATE.
(a) Big Stuff owns no real property.
(b) SCHEDULE 2.19(b) sets forth a true, correct and complete schedule as
of the date of this Restated Agreement of all material leases, subleases,
easements, rights-of-way, licenses or other agreements under which Big Stuff
uses or occupies, or has the right to use or occupy, now or in the future,
any real property or improvements thereon (the "BIG STUFF REAL PROPERTY
LEASES"). Except for the matters listed on said SCHEDULE 2.19(b), Big Stuff
holds the leasehold estate under or other interest in each Big Stuff Real
Property Lease free and clear of all liens, encumbrances and other rights of
occupancy other than statutory landlords' or mechanics' liens which have not
been executed upon.
2.20 CORPORATE RECORDS. The corporate record books of or relating to Big
Stuff made available to Parent by Big Stuff contain accurate and complete
records of (i) all corporate actions of the stockholders and directors (and
committees thereof) of Big Stuff, (ii) the Certificate and/or Articles of
Incorporation, Bylaws and/or other governing instruments, as amended, of Big
Stuff, and (iii) the issuance and transfer of stock of Big Stuff. Except as set
forth on SCHEDULE 2.20, Big Stuff does not have any of its material records or
information recorded, stored, maintained or held off the premises of Big Stuff.
2.21 TITLE TO AND CONDITION OF PERSONAL PROPERTY. Big Stuff has good and
marketable title to, or a valid leasehold interest in, all material items of any
personal property reflected in the Big Stuff Financial Statements dated
June 30, 1999, or currently used in the operation of its business, and such
property or leasehold interests are free and clear of all liens, claims,
charges, security interests, options, or other title defects or encumbrances,
except for property disposed of in the ordinary course since the date thereof
consistent with the provisions of SECTION 2.9 above, and such exceptions to
title and liens, claims, charges, security interests, options, title defects or
encumbrances which do not and would not have a Big Stuff Material Adverse
Effect. As of the date of this Restated Agreement, all such personal property is
in good operating condition and repair (ordinary wear and tear excepted), is
suitable for the use to which the same is customarily put by Big Stuff, is free
from material defects and is of a quality and quantity presently usable in the
ordinary course of the operation of the business of Big Stuff, except where such
failure would not have a Big Stuff Material Adverse Effect.
2.22 NO ADVERSE ACTIONS. Except as set forth on SCHEDULE 2.22, there is no
existing, pending or, to the knowledge of Big Stuff, threatened termination,
cancellation, limitation, modification or change in the business relationship of
Big Stuff, with any supplier, customer or other Person except as are immaterial
individually and in the aggregate and are in the ordinary course of business.
None of Big Stuff, or, to the knowledge of Big Stuff or any Big Stuff
Shareholder, any director, officer, agent,
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employee or other Person acting on behalf of Big Stuff or any Big Stuff
Shareholder has used any corporate funds for unlawful contributions, payments,
gifts, entertainment or other unlawful expenses relating to political activity,
or made any direct or indirect unlawful payments to governmental or regulatory
officials or others.
2.23 LABOR MATTERS. Except as may be set forth on SCHEDULE 2.13 or 2.23,
Big Stuff does not have any obligations, contingent or otherwise, under any
employment, severance or consulting agreement, collective bargaining agreement
or other contract with a labor union or other labor or employee group. To the
knowledge of Big Stuff or any Big Stuff Shareholder, as of the date of this
Restated Agreement, there are no efforts presently being made or threatened by
or on behalf of any labor union with respect to the unionizing of employees of
Big Stuff. As of the date of this Restated Agreement, there is no claim by an
employee, an employee group, a labor union or other labor group or a
Governmental Authority against Big Stuff pending or, to the knowledge of Big
Stuff or any Big Stuff Shareholder, threatened before the National Labor
Relations Board or any other court or tribunal respecting employment and
employment practices, terms and conditions of employment, termination of
employment or the compliance with any legislation concerning labor matters,
including, without limiting the generality of what precedes, labor relations,
occupational health and safety, minimum labor standards, industrial accidents
and occupational diseases; there is no labor strike, dispute, slowdown or
stoppage pending or, to the knowledge of Big Stuff or any Big Stuff Shareholder,
threatened against or involving Big Stuff; no representation question exists
respecting the employees of Big Stuff; no grievance or internal or informal
complaint exists, no arbitration proceeding arising out of or under any
collective bargaining agreement is pending and no claim therefor has been
asserted. As of the date of this Restated Agreement, there has not been any
material adverse change in relations with employees or agents of Big Stuff as a
result of any announcement of the transactions contemplated by this Restated
Agreement. Big Stuff shall promptly notify Parent upon knowledge by Big Stuff or
any Big Stuff Shareholder of the occurrence after the date hereof of any matter
referenced in this SECTION 2.23.
2.24 INSURANCE. Big Stuff has obtained and maintains in full force and
effect insurance with responsible and reputable insurance companies or
associations in such amounts, on such terms and covering such risks, including
fire and other risks insured against by extended coverage, public liability
insurance and insurance against claims for personal injury or death or property
damage occurring in connection with the activities of Big Stuff or any
properties owned, occupied or controlled by it, as is customary and prudent.
Since January 1, 1997, Big Stuff has not received notice of default under, or
intended cancellation or nonrenewal of, any policies of insurance, and Big Stuff
has not been refused any insurance coverage by an insurance carrier to which it
has applied for insurance.
2.25 DISCLOSURE. All information and documents provided prior to the date
of this Restated Agreement, and all information and documents subsequently
provided, to Parent or its representatives or lenders by or on behalf of Big
Stuff in connection with the transactions contemplated by this Restated
Agreement are or contain, or will be or will contain as to subsequently provided
information or documents, true, accurate and complete information in all
material respects with respect to the subject matter thereof and are, or will be
as to subsequently provided information or documents, reasonably responsive to
any specific request made by or on behalf of Parent or its representatives or
lenders.
2.26 TAX. Neither Big Stuff nor the Big Stuff Shareholders know of any
fact or have taken any action, in each case with respect to Big Stuff or the Big
Stuff Shareholders, that could be reasonably expected to prevent the transaction
contemplated hereby from qualifying as a tax-free reorganization pursuant to
Section 368 of the Code.
2.27 YEAR 2000 COMPLIANCE. Except as set forth in SCHEDULE 2.27 attached
hereto, Big Stuff has taken all commercially reasonable and prudent measures
designed to make all material aspects of Big Stuff's operations Year 2000
Compliant, to the extent within Big Stuff's control. As used in this section,
"YEAR 2000 COMPLIANT" shall mean that any and all computer hardware including
but not limited to
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mainframe computers, personal computers, servers and related equipment),
computer software, programming languages, code, electronic applications and
systems (including but not limited to LANs, WANs, inter/intranet systems and
client/server systems), programs, files, databases, chips, microprocessors and
any and all electronic or mechanical functionalities in any way used in
connection with, relied upon or relating to a specified subject matter (e.g., a
business, product or service) accurately and completely process (in the manner
intended, including but not limited to calculating, comparing and sequencing) on
a timely basis any and all data which are in any way dependent upon usage of
calendar dates, including but not limited to dates on or after January 1, 2000,
or time.
ARTICLE III--REPRESENTATIONS AND WARRANTIES
OF PARENT
Parent represents and warrants to and covenants with Big Stuff as follows:
3.1 ORGANIZATION AND GOOD STANDING. Parent is a corporation duly organized
and validly existing under the laws of the State of Delaware and 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 Active Parent
Subsidiaries is a corporation, duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization
and has all requisite corporate, power and authority to own, lease and operate
its properties and to carry on its business as now being conducted, except where
the failure to be so duly organized, validly existing and in good standing or to
have such power and authority would not have a Parent Material Adverse Effect.
Parent and each of the Active Parent Subsidiaries is duly qualified or licensed
and in good standing to do business in each jurisdiction in which the character
of the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary, except where
the failure to be so duly qualified or licensed and in good standing would not
have a Parent Material Adverse Effect. SCHEDULE 3.1 sets forth a complete and
accurate list of the jurisdictions of incorporation or organization and
qualifications or licenses of Parent and the Active Parent Subsidiaries. Parent
has heretofore made available to Big Stuff accurate and complete copies of the
Certificates or Articles of Incorporation and Bylaws, or equivalent governing
instruments, as currently in effect, of Parent and each of the Active Parent
Subsidiaries.
3.2 CAPITALIZATION. As of the date hereof, the authorized capital stock of
Parent consists of 180,000,000 shares of Parent Common Stock and 20,000,000
shares of preferred stock, par value $0.0001 per share. As of the opening of
business on the date of this Restated Agreement, (a) 20,083,953 shares of Parent
Common Stock were outstanding; (b) no shares of Parent preferred stock were
issued and outstanding; and (c) 163,307 shares of Parent Common Stock were held
as treasury shares. No other capital stock of Parent is issued or outstanding.
All issued and outstanding shares of the Parent Common Stock are duly
authorized, validly issued, fully paid and non-assessable and were issued free
of preemptive rights and in compliance with applicable corporate and securities
Laws. Except as set forth in the Parent Securities Filings or on SCHEDULE 3.2,
as of the date of this Restated Agreement there are no outstanding rights,
reservations of shares, subscriptions, warrants, puts, calls, unsatisfied
preemptive rights, options or other agreements of any kind relating to any of
the capital stock or any other security of Parent, and there is no authorized or
outstanding security of any kind convertible into or exchangeable for any such
capital stock or other security. There are no restrictions upon the transfer of
or otherwise pertaining to the securities (including, but not limited to, the
ability to pay dividends thereon) or retained earnings of Parent and the Active
Parent Subsidiaries or the ownership thereof other than those pursuant to the
Parent Guaranty, the Great Western Credit Agreement or those imposed generally
by the Securities Act, the Securities Exchange Act, applicable state or foreign
securities Laws or applicable corporate Law.
3.3 SUBSIDIARIES. Except as set forth on SCHEDULE 3.3, all of the capital
stock and other interests of the Active Parent Subsidiaries held by Parent are
owned by it or a Parent subsidiary, free and clear
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of any claim, lien, encumbrance, security interest or agreement with respect
thereto. All of the outstanding shares of capital stock in each of the Active
Parent Subsidiaries held directly or indirectly by Parent are duly authorized,
validly issued, fully paid and non-assessable and were issued free of preemptive
rights and in compliance with applicable corporate and securities Laws.
3.4 AUTHORIZATION; BINDING AGREEMENT. Parent and Acquisition Subsidiary
have all requisite corporate power and authority to execute and deliver this
Restated Agreement and the Parent Transaction Agreements and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Restated Agreement and the other agreements and documents referred to herein and
to be executed in connection herewith to which Parent or Acquisition Subsidiary
is or will be a party or a signatory (the "PARENT TRANSACTION AGREEMENTS") and
the consummation of the transactions contemplated hereby and thereby have been
duly and validly authorized by the respective Boards of Directors of Parent and
Acquisition Subsidiary, as appropriate, and except for the approval of the
holders of the Parent Common Stock, no other corporate proceedings on the part
of Parent or Acquisition Subsidiary are necessary to authorize the execution and
delivery of this Restated Agreement and the Parent Transaction Agreements or to
consummate the transactions contemplated hereby or thereby, except for the
concurrence of Bank of America National Trust and Savings Association under the
Great Western Credit Agreement. This Restated Agreement has been duly and
validly executed and delivered by each of Parent and Acquisition Subsidiary and
constitutes, and upon execution and delivery thereof as contemplated by this
Restated Agreement, the Parent Transaction Agreements will constitute, the
legal, valid and binding obligations of Parent and Acquisition Subsidiary,
enforceable against each of Parent and Acquisition Subsidiary in accordance with
its and their respective terms, subject to the Enforceability Exceptions.
3.5 GOVERNMENTAL APPROVALS. No Consent from or with any Governmental
Authority on the part of Parent or any of the Active Parent Subsidiaries, is
required in connection with the execution or delivery by Parent and Acquisition
Subsidiary of this Restated Agreement and the Parent Transaction Agreements or
the consummation by Parent and Acquisition Subsidiary of the transactions
contemplated hereby or thereby other than (i) filings with the SEC, state
securities laws administrators and the NYSE, (ii) Consents from or with
Governmental Authorities, (iii) filings under the HSR Act, and (iv) those
Consents that, if they were not obtained or made, do not or would not have a
Parent Material Adverse Effect.
3.6 NO VIOLATIONS. The execution and delivery of this Restated Agreement
and the Parent Transaction Agreements, the consummation of the transactions
contemplated hereby and thereby and compliance by Parent and Acquisition
Subsidiary with any of the provisions hereof or thereof will not (i) conflict
with or result in any breach of any provision of the Certificate and/or Articles
of Incorporation or Bylaws or other governing instruments of Parent or any of
the Active Parent Subsidiaries, except as set forth on SCHEDULE 3.6,
(ii) except for compliance with the requirements under the Parent Guaranty,
require any Consent under or result in a violation or breach of, or 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 or augment the
performance required) under any of the terms, conditions or provisions of any
Parent Material Contract or other obligation to which Parent or any Active
Parent Subsidiary, is a party or by which any of them or any of their properties
or assets may be bound, (iii) result in the creation or imposition of any lien
or encumbrance of any kind upon any of the assets of Parent or any Parent
Subsidiary, or (iv) subject to obtaining the Consents from Governmental
Authorities referred to in SECTION 3.5 above, contravene any Law currently in
effect to which Parent or any Active Parent Subsidiary or its or any of their
respective assets or properties are subject, except in the case of clauses (ii),
(iii) and (iv) above, for any deviations from the foregoing which do not or
would not have a Parent Material Adverse Effect.
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3.7 SECURITIES FILINGS AND LITIGATION.
(a) Parent has made available to Big Stuff true and complete copies of
(i) its Annual Reports on Form 10-K, as amended, for the years ended
December 31, 1997 and 1998, as filed with the SEC, (ii) its proxy statement
relating to the meeting of shareholders held on July 29, 1998, as filed with
the SEC, and (iii) all other reports, statements and registration statements
and amendments thereto (including, without limitation, Quarterly Reports on
Form 10-Q and Current Reports on Form 8-K, as amended) filed by Parent with
the SEC since February 18, 1998. The reports and statements set forth in
clauses (i) through (iii) above, and those subsequently provided or required
to be provided pursuant to this section, are referred to collectively as the
"PARENT SECURITIES FILINGS." As of their respective dates, or as of the date
of the last amendment thereof, if amended after filing, none of the Parent
Securities Filings (including all schedules thereto and disclosure documents
incorporated by reference therein), contained or, as to Parent Securities
Filings subsequent to the date hereof, will contain any untrue statement of
a material fact or omitted or, as to Parent Securities Filings subsequent to
the date hereof, will 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 Parent
Securities Filings at the time of filing or as of the date of the last
amendment thereof, if amended after filing, complied or, as to Parent
Securities Filings subsequent to the date hereof, will comply in all
material respects with the Securities Exchange Act or the Securities Act, as
applicable.
(b) Except as set forth on SCHEDULE 3.7(b) attached hereto, there is no
Litigation pending or, to the knowledge of Parent, threatened against Parent
or any Active Parent Subsidiary, any officer, director, employee or agent
thereof, in his or her capacity as such, or as a fiduciary with respect to
any Benefit Plan of Parent, or otherwise relating, in a manner that could
have a Parent Material Adverse Effect, to Parent, any Active Parent
Subsidiary or the securities of any of them, or any properties or rights of
Parent or any of the Active Parent Subsidiaries, which is required to be
described in any Parent Securities Filing that is not so described. No event
has occurred as a consequence of which Parent would be required to file a
Current Report on Form 8-K pursuant to the requirements of the Securities
Exchange Act as to which such a report has not been timely filed with the
SEC. Any reports, statements and registration statements and amendments
thereof (including, without limitation, Reports on Form 10-K, Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K, as amended) filed by
Parent with the SEC after the date hereof shall be provided to Big Stuff
upon such filing.
3.8 PARENT FINANCIAL STATEMENTS. The audited consolidated and unaudited
interim financial statements of Parent and the Active Parent Subsidiaries
included in the Parent Securities Filings (the "PARENT FINANCIAL STATEMENTS")
have been made available to Big Stuff. Except as noted thereon, the Parent
Financial Statements were prepared in accordance with generally accepted
accounting principles applicable to the business of Parent and the Active Parent
Subsidiaries consistently applied in accordance with past accounting practices
and fairly present (including, but not limited to, the inclusion of all
adjustments with respect to interim periods which are necessary to present
fairly the financial condition and assets and liabilities or the results of
operations of Parent and the Active Parent Subsidiaries, subject to normal
year-end adjustments in the ordinary course with respect to certain items
immaterial in amount or effect and the exclusion of footnote disclosure in
interim Parent Financial Statements) the financial condition and assets and
liabilities or the results of operations of Parent and the Active Parent
Subsidiaries as of the dates and for the periods indicated. Except as set forth
in SCHEDULE 3.8 or as reflected in the Parent Financial Statements, as of their
respective dates, neither Parent nor any Active Parent Subsidiary had any debts,
obligations, guaranties of obligations of others or liabilities (contingent or
otherwise) that would be required in accordance with generally accepted
accounting principles to be disclosed in the Parent Financial Statements.
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3.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in the
Parent Securities Filings made available by Parent to Big Stuff prior to the
date of this Restated Agreement or in SCHEDULE 3.9 since June 30, 1999, through
the date of this Restated Agreement, there has not been: (i) any Event that
could reasonably be expected to have a Parent Material Adverse Effect; or
(ii) any agreement by Parent or Active Parent Subsidiary to take any action that
would result in a breach of SECTION 6.6 below.
3.10 COMPLIANCE WITH LAWS. The business of Parent and the Active Parent
Subsidiaries, has been operated in compliance with all Laws applicable thereto,
except for any instances of non-compliance which do not and would not have a
Parent Material Adverse Effect.
3.11 PERMITS. (i) Parent and the Active Parent Subsidiaries have all
permits, certificates, licenses, approvals, tariffs and other authorizations
required in connection with the operation of their business (collectively,
"PARENT PERMITS"), (ii) neither Parent nor any Active Parent Subsidiary is in
violation of any Parent Permit, and (iii) no proceedings are pending or, to the
knowledge of Parent, threatened, to revoke or limit any Parent Permit, except,
in the case of clause (i) or (ii) above, those the absence or violation of which
do not and would not have a Parent Material Adverse Effect.
3.12 FINDERS AND INVESTMENT BANKERS. Neither Parent nor any of its
officers or directors has employed any broker or finder or otherwise incurred
any liability for any brokerage fees, commissions or finders' fees in connection
with the transactions contemplated hereby except that PaineWebber Incorporated
has been engaged to deliver the fairness opinion required to be delivered
pursuant to SECTION 7.1(l) and NationsBanc Montgomery Securities, L.L.C. has
been engaged to assist in the sale(s) of the CLEC Operations and a copy of the
engagement letters and other related documents have been (or will be, with
respect to the fairness opinion to be issued by PaineWebber Incorporated)
furnished to Big Stuff. Big Stuff will not be liable for any brokerage fees,
commissions, investment banking fees or other amounts to PaineWebber
Incorporated or NationsBanc Montgomery Securities, L.L.C. in connection with
this Restated Agreement, the Company Agreement, the Restated Web Agreement or
any transactions contemplated herein or therein.
3.13 CONTRACTS. Except as set forth in SCHEDULE 3.13 attached hereto,
neither Parent nor any Active Parent Subsidiary is a party to any material note,
bond, mortgage, indenture, contract, lease, license, agreement, understanding,
instrument, bid or proposal ("PARENT MATERIAL CONTRACT") required to be
described in or filed as an exhibit to any Parent Securities Filing that is not
described in or filed as required by the Securities Act or the Securities
Exchange Act, as the case may be. Parent has made available to Big Stuff true
and accurate copies of the Parent Material Contracts. All such Parent Material
Contracts are valid and binding and are in full force and effect and enforceable
in accordance with their respective terms, subject to the Enforceability
Exceptions.
3.14 CORPORATE RECORDS. The respective corporate record books of or
relating to Parent and each of the Active Parent Subsidiaries made available to
Big Stuff by Parent contain accurate and complete records of (i) all corporate
actions of the respective shareholders and directors (and committees thereof) of
Parent and the Active Parent Subsidiaries, (ii) the Certificate and/or Articles
of Incorporation, Bylaws and/or other governing instruments, as amended, of
Parent and the Active Parent Subsidiaries, and (iii) the issuance and transfer
of stock of Parent and the Active Parent Subsidiaries.
3.15 TAX. Parent does not know of any fact and has not taken any action
that could be reasonably expected to prevent the transaction contemplated hereby
from qualifying as a tax-free reorganization pursuant to Section 368 of the
Code.
3.16 DISCLOSURE. All information and documents provided prior to the date
of this Restated Agreement and all information and documents subsequently
provided, to Big Stuff and the Big Stuff Shareholders, or its or their
respective representatives or lenders by or on behalf of Parent in connection
with the transactions contemplated by this Restated Agreement are or contain, or
will be or will contain as to subsequently provided information or documents,
true, accurate and complete
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information in all material respects with respect to the subject matter thereof
and are, or will be as to subsequently provided information or documents,
reasonably responsive to any specific request made by or on behalf of Big Stuff
and the Big Stuff Shareholders or its or their representatives or lenders.
ARTICLE IV--ADDITIONAL COVENANTS OF BIG STUFF
AND THE BIG STUFF SHAREHOLDERS
Big Stuff and the Big Stuff Shareholders covenant and agree as follows:
4.1 NOTIFICATION OF CERTAIN MATTERS. Big Stuff and the Big Stuff
Shareholders shall give prompt notice to Parent if any of the following occur
from the date of this Restated Agreement through the Closing Date: (i) receipt
of any notice of, or other communication relating to, a default or Event which,
with notice or lapse of time or both, would become a default under any Big Stuff
Material Contract; (ii) receipt of any notice or other communication from any
third party alleging that the Consent of such third party is or may be required
in connection with the transactions contemplated by this Restated Agreement;
(iii) receipt of any material notice or other communication from any
Governmental Authority in connection with the transactions contemplated by this
Restated Agreement; (iv) receipt of any notice of or other communication
regarding or otherwise obtaining knowledge of an Event which would have a Big
Stuff Material Adverse Effect; (v) receipt of any notice of or other
communication regarding or otherwise obtaining knowledge of the commencement or
threat of any Litigation involving or affecting any Big Stuff Shareholder, Big
Stuff or any of its or their respective properties or assets, or, to its
knowledge, any employee, agent, director or officer of Big Stuff, in his or her
capacity as such or as a fiduciary under a Benefit Plan of Big Stuff, which, if
pending on the date hereof, would have been required to have been disclosed in
this Restated Agreement or which relates to the consummation of the transactions
contemplated by this Restated Agreement, including the Merger, or the Big Stuff
Transaction Agreements or any material development in connection with any
Litigation disclosed by Big Stuff or any Big Stuff Shareholder in or pursuant to
this Restated Agreement; and (vi) the receipt of any notice of or other
communication regarding or otherwise obtaining knowledge of any event that would
cause a breach by Big Stuff or any Big Stuff Shareholder of any provision of
this Restated Agreement or a Big Stuff Transaction Agreement, including such a
breach that would occur if such event had taken place on or prior to the date of
this Restated Agreement.
4.2 ACCESS AND INFORMATION. Between the date of this Restated Agreement
and the Closing Date, Big Stuff, upon reasonable notice, will give, and shall
direct its accountants and legal counsel to give, Parent, its lenders and their
respective authorized representatives (including, without limitation, financial
advisors, accountants and legal counsel) at all reasonable times access to all
offices and other facilities and to all contracts, agreements, commitments,
books and records (including, but not limited to, Tax returns) of or pertaining
to Big Stuff, will permit the foregoing to make such inspections as they may
require and will cause its officers promptly to furnish Parent with (a) such
financial and operating data and other information with respect to the business
and properties of Big Stuff as Parent may from time to time reasonably request
including, but not limited to, data and information required for inclusion in
Parent's pending registration statements and/or other Parent Securities Filings,
and (b) a copy of each material report, schedule and other document filed or
received by Big Stuff pursuant to the requirements of applicable securities
Laws. The foregoing access will be subject to restrictions contained in
SECTION 6.9 hereof.
4.3 BIG STUFF SHAREHOLDER APPROVAL. As soon as practicable, Big Stuff
will, if required, take all steps necessary to duly call, give notice of,
convene and hold a meeting of the Big Stuff Shareholders for the purpose of
adopting this Restated Agreement and for such other purposes as may be necessary
or desirable in connection with effectuating the transactions contemplated
hereby. The Board of Directors of Big Stuff (i) unless otherwise required under
the fiduciary duties of the directors of Big Stuff, as determined by such
directors in good faith upon advice of legal counsel, will recommend to
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the Big Stuff Shareholders that they adopt this Restated Agreement and approve
the transactions contemplated hereby, and (ii) will use its reasonable best
efforts to obtain any necessary adoption and approval by the Big Stuff
Shareholders of this Restated Agreement and the transactions contemplated hereby
including, without limitation, voting the Big Stuff Shares held for such
adoption and approval.
4.4 REASONABLE BEST EFFORTS. Subject to the terms and conditions herein
provided, Big Stuff and the Big Stuff Shareholders agree to use their reasonable
best efforts to take, or cause to be taken, all actions, and to do, or cause to
be done, all things necessary, proper or advisable to consummate and make
effective as promptly as practicable, but in any event, prior to the Closing,
the Merger and the other transactions contemplated by this Restated Agreement
and the Big Stuff Transaction Agreements including, but not limited to
(i) obtaining the Consent of others to this Restated Agreement, the Big Stuff
Transaction Agreements and the transactions contemplated hereby and thereby,
(ii) the defending of any Litigation against Big Stuff, or involving any Big
Stuff Shareholder challenging this Restated Agreement, the Big Stuff Transaction
Agreements or the consummation of the transactions contemplated hereby or
thereby, excluding any Litigation caused by or relating to Parent or any Active
Parent Subsidiary, (iii) obtaining all Consents from Governmental Authorities
required for the consummation of the exchange and the transactions contemplated
hereby, and (iv) timely making all necessary filings under the HSR Act. Upon the
terms and subject to the conditions hereof, Big Stuff and the Big Stuff
Shareholders agree to use their reasonable best efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary to
satisfy the other conditions of the Closing set forth herein. Big Stuff and the
Big Stuff Shareholders will consult with counsel for Parent as to, and will
permit such counsel to participate in, at Parent's expense, any Litigation
referred to in clause (ii) above brought against or involving Big Stuff or any
Big Stuff Shareholder.
4.5 COMPLIANCE. In consummating the Merger and the transactions
contemplated hereby, Big Stuff and the Big Stuff Shareholders shall comply in
all material respects with the provisions of the Securities Exchange Act and the
Securities Act and shall comply, in all material respects, with all other
applicable Laws.
4.6 BENEFIT PLANS. Between the date of this Restated Agreement and through
the Closing Date, no discretionary award or grant under any Benefit Plan of Big
Stuff shall be made without the consent of Parent. Big Stuff shall not make any
amendment to any Benefit Plan, any awards thereunder or the terms of any
security convertible into or exchangeable for capital stock without the consent
of Parent.
4.7 TAX OPINION CERTIFICATION. Big Stuff and the Big Stuff Shareholders
shall use their best efforts to cause the Merger to qualify, and will not take
any action which to their knowledge could reasonably be expected to prevent the
Merger from qualifying, as a reorganization under Section 368 of the Code. Prior
to the Effective Time, Big Stuff and the Big Stuff Shareholders shall provide
tax counsel rendering an opinion under SECTION 7.1(m) with a certificate
concerning such factual matters as such counsel reasonably requests in
connection with its opinion.
4.8 AFFILIATE AGREEMENTS. Big Stuff shall use its reasonable business
efforts to ensure that each Person who is or may be an "affiliate" of Big Stuff
within the meaning of Rule 145 promulgated under the Securities Act shall enter
into an agreement in a form agreed to by the parties hereto, acting reasonably
(collectively, the "AFFILIATE AGREEMENTS").
4.9 TRANSFER RESTRICTIONS. (a) In addition to any other restrictions
imposed by Law on the ability of any Big Stuff Shareholder to transfer any
Parent Common Stock received by such Big Stuff Shareholder pursuant to this
Restated Agreement, the Big Stuff Shareholders who are "affiliates" of Big Stuff
within the meaning of Rule 145 promulgated under the Securities Act acknowledge
and agree that the following legend will appear on all certificates representing
the Parent Common Stock received by such "affiliates" of Big Stuff pursuant to
this Restated Agreement:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE HELD SUBJECT
TO ALL APPLICABLE PROVISIONS OF THE SECURITIES ACT OF 1933, AS
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AMENDED (THE "SECURITIES ACT"), AND THE RULES AND REGULATIONS PROMULGATED
BY THE SECURITIES AND EXCHANGE COMMISSION ("SEC") THEREUNDER. NO SALES,
TRANSFERS OR OTHER DISPOSITION OF THESE SHARES MAY BE MADE EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OR UPON THE PRIOR DELIVERY TO THE ISSUER OF AN OPINION FROM LEGAL COUNSEL
SATISFACTORY TO THE ISSUER AND IN FORM AND SUBSTANCE SATISFACTORY TO THE
ISSUER AND ITS LEGAL COUNSEL, STATING THAT SUCH SALE OR OTHER DISPOSITION
IS BEING MADE PURSUANT TO AND IN ACCORDANCE WITH THE REQUIREMENTS OF SEC
RULES 144 AND 145 OR IS OTHERWISE EXEMPT FROM REGISTRATION UNDER THE
SECURITIES ACT.
(b) Notwithstanding the foregoing, Parent shall instruct its transfer
agent to remove the legend set forth in SECTION 4.9(a) for those sales of
Parent Common Stock by "affiliates" (as defined in Securities Act Rules 144
and 145) of Parent and Big Stuff made pursuant to Securities Act Rules 144
and 145.
ARTICLE V
ADDITIONAL COVENANTS OF PARENT
Parent covenants and agrees as follows:
5.1 CONDUCT OF BUSINESS OF PARENT AND THE ACTIVE PARENT
SUBSIDIARIES. Parent covenants, represents and warrants that from the date of
this Restated Agreement through the Closing Date, unless Big Stuff shall
otherwise expressly consent in writing, Parent shall, and Parent shall cause
each Active Parent Subsidiary to, use its or their reasonable best efforts to
comply in all material respects with all Laws applicable to it or any of its
properties, assets or business and maintain in full force and effect all the
Parent Authorizations necessary for, or otherwise material to, such business.
5.2 NOTIFICATION OF CERTAIN MATTERS. Parent shall give prompt notice to
Big Stuff if any of the following occur from the date of this Restated Agreement
through the Closing Date: (i) any notice of, or other communication relating to,
a default or Event which, with notice or lapse of time or both, would become a
default under any Parent Material Contract which could have a Parent Material
Adverse Effect; (ii) receipt of any notice or other communication from any third
party alleging that the Consent of such third party is or may be required in
connection with the transactions contemplated by this Restated Agreement;
(iii) receipt of any material notice or other communication from any regulatory
authority (including, but not limited to, the NYSE or any other securities
exchange) in connection with the transactions contemplated by this Restated
Agreement; (iv) receipt of any notice of or other communication regarding or
otherwise obtaining knowledge of an Event which would have a Parent Material
Adverse Effect; (v) receipt of any notice of or other communication regarding or
otherwise obtaining knowledge of the commencement or threat of any Litigation
involving or affecting Parent or any Active Parent Subsidiary or any of their
respective properties or assets, or, to its knowledge, any employee, agent,
director or officer, in his or her capacity as such, of Parent or any Active
Parent Subsidiary which, if pending on the date hereof, would have been required
to have been disclosed in this Restated Agreement or which relates to the
consummation of the Merger or any material development in connection with any
Litigation disclosed by Parent in or pursuant to this Restated Agreement or the
Parent Securities Filings; (vi) receipt of any notice of or other communication
regarding or otherwise obtaining knowledge of any Event that could cause a
breach by Parent of any provision of this Restated Agreement or any Parent
Transaction Agreement, including such a breach that could occur if such Event
had taken place on or prior to the date of this Restated Agreement; and
(vii) amendment, modification or waiver of any provision of the Ionex Agreement
referenced on SCHEDULE 3.7 hereto.
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5.3 ACCESS AND INFORMATION. Between the date of this Restated Agreement
and the Closing Date, Parent: (i) will, upon reasonable notice, give, and direct
its legal counsel and accountants to give, Big Stuff and its authorized
representatives (including, without limitation, its financial advisors,
accountants and legal counsel) at all reasonable times access as reasonably
requested to the offices and other facilities and to all material contracts,
agreements, commitments, books and records (including, but not limited to, Tax
returns) of or pertaining to Parent and the Active Parent Subsidiaries;
(ii) will permit Big Stuff to make such reasonable inspections as it may
require; and (iii) will cause its officers promptly to furnish Big Stuff with
(a) such financial and operating data and other information with respect to the
business and properties of Parent and the Active Parent Subsidiaries as Big
Stuff may from time to time reasonably request, and (b) a copy of each material
report, schedule and other document filed or received by Parent or any Active
Parent Subsidiary pursuant to the requirements of applicable securities Laws,
the NYSE or other securities exchange, in each case as necessary in connection
with the transactions contemplated hereby. The foregoing access will be subject
to the restrictions contained in SECTION 6.9 hereof.
5.4 COMPLIANCE. In consummating the Merger and the transactions
contemplated hereby, Parent shall comply in all material respects with the
provisions of the Securities Exchange Act and the Securities Act and shall
comply, and/or cause the Active Parent Subsidiaries to comply or to be in
compliance, in all material respects, with all other applicable Laws.
5.5 SEC AND SHAREHOLDER FILINGS. Parent shall send to Big Stuff a copy of
all material public reports and materials as and when it sends the same to its
shareholders, the SEC, the NYSE or any other securities commission or exchange.
5.6 TAX TREATMENT. Parent and Acquisition Subsidiary shall use their best
efforts to cause the Merger to qualify, and will not take any action which to
its knowledge could reasonably be expected to prevent the Merger from
qualifying, as a reorganization under Section 368 of the Code. Prior to the
Effective Time, Parent shall provide tax counsel rendering an opinion under
SECTION 7.1(m) with a certificate concerning such factual matters as such
counsel identifies are relevant to its opinion.
5.7 EMPLOYMENT AND EMPLOYEE BENEFIT PLANS. At or before the Closing Date,
Parent shall, after consultation with Big Stuff, offer employment to the
employees of Big Stuff, effective as of the Closing Date, upon terms and
conditions reasonably acceptable to the Big Stuff employees and to Parent. After
the Closing Date, Parent shall arrange for each employee participating in any of
the Benefit Plans of Big Stuff at such time to participate in any counterpart
Benefit Plans of Parent in accordance with the eligibility criteria thereof,
provided that (i) such participants shall receive full credit for years of
service with Big Stuff prior to the Merger for all purposes for which such
service was recognized under the Benefit Plan of Big Stuff including, but not
limited to, recognition of service for eligibility, vesting, and, to the extent
not duplicative of benefits received under such Benefit Plan of Big Stuff, the
amount of benefits, and (ii) such participants shall participate in the Benefit
Plans of Parent on terms no less favorable than those offered by Parent to
similarly situated employees of Parent. Notwithstanding the foregoing, Parent
may continue one or more of the Benefit Plans of Big Stuff, in which case Parent
shall have satisfied its obligations hereunder with respect to the benefits so
provided.
5.9 EXPENSES. If the transactions contemplated by this Restated Agreement
are consummated, all fees and expenses incurred in connection with the
transactions contemplated by this Restated Agreement including, without
limitation, all legal, accounting, financial advisory, consulting fees,
(collectively, the "TRANSACTION EXPENSES") incurred by a party or its
stockholders in connection with the negotiation and effectuation of the terms
and conditions of this Restated Agreement and the transactions contemplated
hereby, shall be the obligation of Parent or any direct or indirect subsidiary
of Parent after Closing. If the Merger is not consummated, all Transaction
Expenses shall be and remain the obligation of the respective parties which
incurred them.
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5.10 PARENT SHAREHOLDER APPROVAL. As soon as practicable, Parent will, if
required, take all steps necessary to duly call, give notice of, convene and
hold a meeting of the Parent shareholders for the purpose of adopting this
Restated Agreement and for such other purposes as may be necessary or desirable
in connection with effectuating the transactions contemplated hereby. The Board
of Directors of Parent (i) unless otherwise required under the fiduciary duties
of the directors of Parent, as determined by such directors in good faith and
upon advice of legal counsel, will recommend to the Parent shareholders that
they adopt this Restated Agreement and approve the transactions contemplated
hereby, and (ii) will use its reasonable best efforts to obtain any necessary
adoption and approval by the Parent shareholders of this Restated Agreement and
the transactions contemplated hereby.
ARTICLE VI--ADDITIONAL COVENANTS OF THE PARENT,
BIG STUFF AND THE BIG STUFF SHAREHOLDERS
6.1 REGISTRATION OF SECURITIES.
(a) On or before the Closing Date, the Parent shall use its reasonable
best efforts to cause the following securities to be registered with the SEC
under the Securities Act and with the appropriate Governmental Authorities
under state blue sky Laws:
(i) Parent Common Stock to be received by Big Stuff Shareholders and
any other shareholders of Big Stuff upon conversion of Big Stuff Common
Stock, as described in SECTION 1.3 hereof; and
(ii) Parent Common Stock to be received by Big Stuff Shareholders
upon conversion of the Convertible Note described in SECTION 1.10 hereof.
(b) The Parent shall hold the meeting of the shareholders of Parent to
consider and to vote upon the approval of the Restated Agreement including
the issuance of Parent Common Stock to the Big Stuff Shareholders and to the
shareholders of the Company and of Web, and Parent and Big Stuff will
cooperate in the preparation of one or more registration statements (such
registration statements, together with any and all amendments and
supplements thereto, being hereinafter referred to as the "REGISTRATION
STATEMENTS"), which will include the preparation of one or more proxy
statements of the Parent satisfying all requirements of applicable state
securities Laws, the Securities Act and the Securities Exchange Act.
(c) Big Stuff will furnish Parent with such information concerning Big
Stuff as is necessary in order to cause the Registration Statements and any
proxy statements, insofar as they relate to Big Stuff, to comply with
applicable Law. None of the information relating to Big Stuff supplied by
Big Stuff for inclusion in the Registration Statements or any proxy
statements will be false or misleading with respect to any material fact or
will 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. Big Stuff agrees
promptly to advise Parent if, at any time prior to the meeting of the
shareholders of the Parent referenced herein, any information provided by it
in the Registration Statements or any proxy statement is or becomes
incorrect or incomplete in any material respect and to provide Parent with
the information needed to correct such inaccuracy or omission. Big Stuff
will furnish Parent with such supplemental information as may be necessary
in order to cause the Registration Statements or the proxy statements,
insofar as it relates to Big Stuff, to comply with applicable Law after the
mailing thereof to the stockholders of Parent, Big Stuff, Web, the Company
and others to whom it must be mailed.
(d) Big Stuff and Parent agree to cooperate in making any preliminary
filings of Registration Statements and the proxy statement with the SEC as
promptly as practicable, on a confidential basis pursuant to
Rule 14a-6(e)(2) under the Securities Exchange Act.
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(e) Parent will file the Registration Statements and the proxy statement
with the SEC and appropriate materials with applicable state securities
agencies and will use all reasonable best efforts to cause the Registration
Statements and the proxy statement to become effective under the Securities
Act and the Exchange Act and all such state filed materials to comply with
applicable state securities Laws. Big Stuff authorizes Parent to utilize in
the Registration Statements and in all such state filed materials, the
information concerning Big Stuff provided to Parent in connection with, or
contained in, the Registration Statements. Parent promptly will advise Big
Stuff when the Registration Statements have become effective and of any
supplements or amendments thereto, and Parent will furnish Big Stuff with
copies of all such documents. Parent shall file any and all amendments,
supplements and related filings to such Registration Statements (and state
filed materials) as may be required. Big Stuff shall not distribute any
written material that might constitute a "prospectus" relating to this
Restated Agreement or any of the transactions contemplated by this Restated
Agreement within the meaning of the Securities Act or any other applicable
securities Law without the prior written consent of Parent.
6.2 EMPLOYMENT AGREEMENTS. At or before the Closing Date, Parent will
enter into Employment and Non-Competition Agreements, in forms agreed to by
Parent and Big Stuff, acting reasonably, with certain individuals, the
identities of whom shall be agreed upon by Parent and Big Stuff, acting
reasonably.
6.3 CONSENTS. Each of Parent and Big Stuff shall promptly apply for or
otherwise seek, and use its best efforts to obtain, all consents and approvals
required to be obtained by it for the consummation of the Merger.
6.4 LEGAL REQUIREMENTS. Subject to the terms and conditions provided in
this Restated Agreement, each of the parties hereto shall use its reasonable
best efforts to take promptly, or cause to be taken, all reasonable actions, and
to do promptly, or cause to be done, all things necessary, proper or advisable
under applicable Laws to consummate and make effective the transactions
contemplated hereby and to obtain all necessary waivers, consents and approvals
and to effect all necessary registrations and filings and to remove any
injunctions or other impediments or delays, legal or otherwise, in order to
consummate and make effective the transactions contemplated by this Restated
Agreement for the purpose of securing for the parties hereto the benefits
contemplated by this Restated Agreement.
6.5 PUBLIC ANNOUNCEMENTS. All press releases and other disseminations of
information to employees, customers or suppliers relating to the Merger or the
transactions contemplated by this Restated Agreement or the Restated Company
Agreement by any party hereto shall require the prior approval of Parent and Big
Stuff, provided Parent shall have the right to make such public announcements
without the approval of the other parties hereto should such disclosure be
required by Law or the policies or requirements of United States securities
regulators, stock exchanges, or other relevant entities in the opinion of
Parent's legal counsel. Should such disclosure be required, Parent agrees to
provide the others with reasonable advance notice of and a copy of, and to
consult with the others regarding, the proposed disclosure.
6.6 CONDUCT OF BUSINESS PRIOR TO CLOSING DATE. Except as expressly
contemplated by this Restated Agreement, during the period from the date of this
Restated Agreement to the Closing Date, Big Stuff shall conduct its business in
the ordinary course and consistent with past practice, subject to the
limitations contained in this Restated Agreement, and Big Stuff shall use its
reasonable business efforts to preserve intact its business organization, to
keep available the services of its officers, agents and employees and to
maintain satisfactory relationships with all Persons with whom it does business.
Except as expressly contemplated by this Restated Agreement, and it being
acknowledged and agreed by each of the parties to this Restated Agreement that
Parent is in the process of a substantial reduction in workforce, and, subject
to the sale of the CLEC Operations, Parent shall, and it shall
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cause the Active Parent Subsidiaries to, use its or their reasonable best
efforts to preserve intact its business organization consistent with the budget
adopted by the Executive Committee of the Board of Directors of Parent, to keep
available the services of only those officers, agents and employees whom Parent
believes are required to maintain satisfactory relationships with all Persons
with whom it does business. Without limiting the generality of the foregoing,
and except as otherwise expressly provided in this Restated Agreement, after the
date of this Restated Agreement and prior to the Closing Date, (i) Big Stuff
will not, without the prior written consent of Parent (which consent shall not
be unreasonably withheld or delayed); and (ii) subject to the sale of the CLEC
Operations, neither Parent nor any Active Parent Subsidiary will, without the
prior written consent of Big Stuff (which consent shall not be unreasonably
withheld or delayed):
(a) except as provided for in this Restated Agreement, the Restated
Company Agreement or the Restated Web Agreement, amend or propose to amend
its Certificate or Articles of Incorporation or Bylaws (or comparable
governing instruments) in any material respect;
(b) except as set forth on SCHEDULE 6.6(b)(i), with regard to Big Stuff,
or Parent Common Stock to be issued pursuant to those options or warrants
listed on SCHEDULE 6.6(b)(ii) or in SECTION 6.10, with regard to Parent or
the Active Parent Subsidiaries, authorize for issuance, issue, grant, sell,
pledge, dispose of or propose to issue, grant, sell, pledge or dispose of
any shares of, or any options, warrants, commitments, subscriptions or
rights of any kind to acquire or sell any shares of, the capital stock or
other securities of Big Stuff, or of Parent or any Active Parent Subsidiary,
as the case may be, including, but not limited to, any securities
convertible into or exchangeable for shares of stock of any class of Big
Stuff, or of Parent or any Active Parent Subsidiary, as the case may be;
PROVIDED, HOWEVER, that Big Stuff may issue capital stock pursuant to the
exercise of options and warrants outstanding on the date of this Restated
Agreement;
(c) except as provided for in this Restated Agreement, the Restated
Company Agreement or the Restated Web Agreement, split, combine or
reclassify any shares of its capital stock or declare, pay or set aside any
dividend or other distribution (whether in cash, stock or property or any
combination thereof) in respect of its capital stock, other than dividends
or distributions to the Big Stuff Shareholders (but only if the entire
amount of such dividend is paid to Web as a capital contribution), or to
Parent or a Parent subsidiary, as the case may be, or redeem, purchase or
otherwise acquire or offer to acquire any shares of its capital stock or
other securities;
(d) except for debt (including, but not limited to, obligations in
respect of capital leases, but excluding obligations under the Convertible
Note) not in excess of $50,000 in the aggregate for all Persons combined,
(i) create, incur or assume any short-term debt (excluding trade payables
incurred in the ordinary course of business), long-term debt or obligations
in respect of capital leases, except for indebtedness contemplated by this
Restated Agreement; (ii) assume, guarantee, endorse or otherwise become
liable or responsible (whether directly, indirectly, contingently or
otherwise) for the obligations of any Person, except for obligations
permitted by this Restated Agreement of any Active Parent Subsidiary, in the
ordinary course of business consistent with past practice; (iii) except as
contemplated in this Restated Agreement, make any capital expenditures or
make any loans, advances or capital contributions to, or investments in, any
other Person (other than customary advances to employees made in the
ordinary course of business consistent with past practice), provided Big
Stuff will continue to make capital expenditures, maintain, upgrade and
expand its facilities, and otherwise operate in the ordinary course and
consistent with past practice; (iv) acquire the stock or assets of, or merge
or consolidate with, any other Person or business, except as contemplated in
this Restated Agreement and except the contemplated merger with Web or the
contemplated acquisition of all of the issued and outstanding capital stock,
either directly or indirectly, of the Company; or (v) voluntarily incur any
material liability or obligation (absolute, accrued, contingent or
otherwise), except in the ordinary course of business;
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(e) except for the contemplated sale of the Parent's CLEC Operations,
sell, transfer, mortgage, pledge or otherwise dispose of, or encumber, or
agree to sell, transfer, mortgage, pledge or otherwise dispose of or
encumber, any material assets or properties, real, personal or mixed, except
in the ordinary course of business, in the case of Parent and the Active
Parent Subsidiaries;
(f) increase in any manner the compensation of any of its officers,
agents or employees other than any increases required pursuant to their
employment agreements in accordance with their terms in effect on the date
of this Restated Agreement and increases in the ordinary course of business
consistent with past practice not in excess on an individual basis of the
lesser of 10% of the current compensation of such individual or $10,000 per
annum;
(g) enter into, establish, amend, make non-routine or material
interpretations or determinations with respect to, or terminate any
employment, consulting, retention, change in control, collective bargaining,
bonus or other incentive compensation, profit sharing, health or other
welfare, stock option, stock purchase, restricted stock, or other equity,
pension, retirement, vacation, severance, deferred compensation or other
compensation or benefit plan, policy, agreement, trust, fund or arrangement
with, for or in respect of, any shareholder, officer, director, other
employee, agent, consultant or affiliate, other than actions contemplated by
this Restated Agreement, the Restated Company Agreement and the Restated Web
Agreement;
(h) make any elections with respect to Taxes that are inconsistent with
the prior elections reflected in the Financial Statements as of and to the
period ended December 31, 1998;
(i) except with regard to the Saville matter referenced on SCHEDULE 3.7
attached hereto, compromise, settle, grant any waiver or release relating to
or otherwise adjust any Litigation, except routine Litigation in the
ordinary course of business consistent with past practice, involving only a
payment not in excess of $50,000 individually or $100,000 when aggregated
with all such payments by Big Stuff or by Parent and the Active Parent
Subsidiaries combined, as the case may be;
(j) take any action or omit to take any action, which action or omission
would result in a breach of any of the covenants, representations and
warranties of Big Stuff, the Big Stuff Shareholders or Parent or the Active
Parent Subsidiaries set forth in this Restated Agreement or would have a Big
Stuff Material Adverse Effect, with regard to Big Stuff and the Big Stuff
Shareholders, or a Parent Material Adverse Effect, with regard to Parent and
the Active Parent Subsidiaries;
(k) except in the ordinary course of business enter into any lease or
other agreement, or amend any lease or other agreement, with respect to real
property;
(l)
(i) except as set forth in SECTION 6.6(l)(ii) or SECTION 11.1 OR 11.2
hereof, enter into or amend any agreement or transaction (A) pursuant to
which the aggregate financial obligation of Big Stuff, or of Parent or an
Active Parent Subsidiary, as the case may be, or the value of the
services to be provided could exceed $50,000, (B) having a term of more
than twelve (12) months and pursuant to which the aggregate financial
obligation of Big Stuff, or of Parent or an Active Parent Subsidiary, as
the case may be, or the value of the services to be provided could exceed
$100,000 per year, or (C) which is not terminable by Big Stuff or Parent
or the Active Parent Subsidiaries, as the case may be, upon no more than
thirty (30) days' notice without penalty in excess of $50,000
individually or $100,000 when aggregated with the penalties under all
such agreements or transactions;
(ii) The parties hereto expressly agree that, notwithstanding
anything in this Restated Agreement to the contrary, Parent may modify,
amend or waive its rights, including those respecting its indemnification
obligations, under (A) the Ionex Agreement referenced on SCHEDULE 3.13
attached hereto; (B) the Restated Company Agreement; and (C) the Restated
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Web Agreement; PROVIDED, that such modifications, amendments and/or
waivers do not, or would not reasonably be expected to, materially
increase Parent's obligations or materially adversely affect Parent's
rights under each respective agreement, or otherwise materially affect
the consideration to be received under each respective agreement.
(m) except as set forth in SECTION 6.6(l)(ii) hereof, take any action
with respect to the indemnification of any Person;
(n) change any accounting practices or policies, except as required by
generally accepted accounting principles or Laws or as agreed to or
requested by Big Stuff's or Parent's auditors after consultation with
Parent's or Big Stuff's auditors, as the case may be; PROVIDED, HOWEVER,
that notice and a description of any change pursuant to this SECTION 6.6(n)
shall be provided promptly after such change is effected to Big Stuff or
Parent, as the case may be;
(o) except as set forth in SECTION 6.6(l)(ii) hereof, or except in the
ordinary course of business, enter into, amend, modify, terminate or waive
any rights under any contract which would result in a Big Stuff Material
Adverse Effect, with respect to Big Stuff, or a Parent Material Adverse
Effect, with respect to Parent;
(p) adopt a plan of liquidation, dissolution, merger, consolidation,
share exchange, restructuring, recapitalization, or other reorganization;
PROVIDED, HOWEVER, that Parent may adopt such a plan and may cause the
liquidation or dissolution of any Parent subsidiary if Parent is unable to
sell such Parent subsidiary (i) at a price which Parent determines to be
reasonable, and (ii) during a time period which Parent determines to be
reasonable; PROVIDED, FURTHER, HOWEVER, that if Parent adopts such a plan or
causes such liquidation or dissolution, Parent promptly shall provide to Big
Stuff notice of such adoption, liquidation or dissolution, as the case may
be; or
(q) resolve, agree, commit or arrange to do any of the foregoing.
Notwithstanding anything in this SECTION 6.6 to the contrary, it is
understood that Big Stuff has been accelerating and intensifying its business
activities since March 31, 1999 and will continue to do so. Accordingly,
(x) "ordinary course of business" and "consistent with past practice", as used
in this SECTION 6.6 with respect to Big Stuff, shall be interpreted to include
such acceleration and intensification; and (y) in considering requests for
consent from Big Stuff, Parent shall take into account such acceleration and
intensification.
Furthermore, Parent covenants, represents and warrants that from and after
the date hereof, unless Big Stuff shall otherwise expressly consent in writing,
Parent shall use its reasonable business efforts to:
(1) keep in full force and effect insurance comparable in amount and
scope of coverage to insurance now carried by it;
(2) pay all accounts payable and other obligations consistent with
prudent cash management principles, except if the same are contested in good
faith, and, in the case of the failure to pay any material accounts payable
or other obligations which are contested in good faith, only after
consultation with Big Stuff; and
(3) comply in all material respects with all Laws applicable to it or
any of its properties, assets or business, except for such Laws the failure
to comply with which would not have a Parent Material Adverse Effect and
maintain in full force and effect all Parent Permits necessary for, or
otherwise material to, such business, except for such Parent Permits the
failure of which to maintain in full force and effect would not have a
Parent Material Adverse Effect.
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Furthermore, Big Stuff covenants, represents and warrants that from and
after the date hereof, unless Parent shall otherwise expressly consent in
writing, Big Stuff shall use its or their reasonable business efforts to:
(1) keep in full force and effect insurance comparable in amount and
scope of coverage to insurance now carried by it;
(2) pay all accounts payable and other obligations, when they become due
and payable, in the ordinary course of business consistent with past
practice and with the provisions of this Restated Agreement, except if the
same are contested in good faith, and, in the case of the failure to pay any
material accounts payable or other obligations which are contested in good
faith, only after consultation with Parent; and
(3) comply in all material respects with all Laws applicable to it or
any of its properties, assets or business, and maintain in full force and
effect all Big Stuff Permits necessary for, or otherwise material to, such
business.
6.7 NO SOLICITATION OF ACQUISITION PROPOSAL. Unless Parent, Big Stuff and
the Big Stuff Shareholders shall otherwise agree in advance, in writing, neither
the Big Stuff Shareholders, Big Stuff, Parent nor any of their Associates shall,
directly or indirectly, make, encourage, facilitate, solicit, assist or initiate
any inquiry or proposal, or provide any information to or participate in any
negotiations with, any Person or group other than the parties to this Restated
Agreement and their Associates relating to any of the following transactions
("EXTRAORDINARY TRANSACTIONS"): (i) liquidation, dissolution, recapitalization,
share exchange, business combination, merger or consolidation of Big Stuff or
Parent or an Active Parent Subsidiary; (ii) sale of a significant amount of
assets of Big Stuff or Parent or an Active Parent Subsidiary; (iii) purchase or
sale of shares of capital stock of Big Stuff or Parent or an Active Parent
Subsidiary; or (iv) any similar actions or transactions involving Big Stuff or
Parent or an Active Parent Subsidiary (other than the Merger and the
transactions contemplated by this Restated Agreement, the Restated Company
Agreement and the Restated Web Agreement), or agree to or consummate any
Extraordinary Transaction. Each of Parent and Big Stuff shall immediately inform
the other party of any inquiry, proposal, or request for information or offer
(including the terms thereof and the Person making such inquiry, proposal,
request or offer) which it may receive in respect of an Extraordinary
Transaction and provide the other party with a copy of any such written
inquiries, proposals, requests for information and offers, and thereafter keep
the other party fully informed of the status and details thereof. The parties
hereto acknowledge and agree that the provisions of this SECTION 6.7 shall not
apply to: (a) the sale of the CLEC Operations by Parent or any Active Parent
Subsidiary; or (b) to the acquisition of Web or the Company; or (c) any
communications between or actions by Parent (or any Parent subsidiary), the
Company and ICL, acting jointly, on the one hand, and any Person not a party to
this Restated Agreement, on the other hand, which occurred prior to the date
that this Restated Agreement becomes effective pursuant to SECTION 1.2 hereof.
6.8 RESIGNATIONS. Big Stuff shall use its reasonable best efforts to cause
the officers and/or directors of Big Stuff as Parent may request to voluntarily
resign their positions as such effective as of the Closing Date. The instruments
effecting such resignations are herein referred to as the "RESIGNATIONS."
6.9 CONFIDENTIALITY. Unless (i) otherwise expressly provided in this
Restated Agreement, (ii) required by applicable Law or any listing agreement
with, or the rules and regulations of, any applicable securities exchange,
(iii) necessary to secure any required Consents as to which the other party has
been advised, or (iv) consented to in writing by Parent and Big Stuff, this
Restated Agreement and any information or documents furnished in connection with
this Restated Agreement, the June 3 Big Stuff YP Agreement or the
Confidentiality Agreement dated April 11, 1999 by and among Parent, the Company,
Big Stuff, Web and O'Neal shall be kept strictly confidential by Big Stuff,
Parent and their respective officers, directors, employees and agents. Prior to
any disclosure pursuant to
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the preceding sentence, the party intending to make such disclosure shall
consult with the other party regarding the nature and extent of the disclosure.
Nothing contained herein shall preclude disclosures to the extent necessary to
comply with accounting, SEC and other disclosure obligations imposed by
applicable Law. To the extent required by such disclosure obligations, Parent,
after consultation with Big Stuff, may file with the SEC a Report on Form 8-K
pursuant to the Securities Exchange Act with respect to the Merger, which report
may include, among other things, financial statements and pro forma financial
information with respect to the other party. In connection with any filing with
the SEC of a registration statement or amendment thereto under the Securities
Act, Parent, after consultation with Big Stuff, may include a prospectus
containing any information required to be included therein with respect to the
Merger, including, but not limited to, financial statements and pro forma
financial information with respect to the other party, and thereafter distribute
said prospectus. Parent and Big Stuff shall cooperate with the other and provide
such information and documents as may be required in connection with any such
filings. In the event the Merger is not consummated, Parent and Big Stuff shall
return to the other all documents furnished by the other and will hold in
absolute confidence any information obtained from the other party except to the
extent (i) such party is required to disclose such information by Law or such
disclosure is required by discovery, subpoena or other similar legal process in
a proceeding involving a third Person; (ii) such party received such information
on a non-confidential basis from a source, other than the other party, which is
not known by such party to be bound by a confidentiality obligation with respect
thereto; or (iii) such information becomes generally available to the public or
is otherwise no longer confidential. Prior to any disclosure of information
pursuant to the exception in clause (i) of the preceding sentence, the party
intending to disclose the same shall so notify, in writing, the party which
provided the same in order that such party may seek a protective order or other
appropriate remedy should it choose to do so.
6.10 OPTIONS; STOCK ISSUANCES. The Board of Directors of Parent shall have
the right to grant or issue, as the case may be, (i) restricted stock or options
to acquire shares of Parent Common Stock pursuant to the Parent's 1997 Stock
Awards Plan, provided that no more than the number of shares authorized under
the 1997 Stock Awards Plan have been issued; (ii) restricted stock valued at or
warrants to purchase up to 90,000 shares of Parent Common Stock to be issued to
certain non-employee directors of Parent who were responsible for negotiating
the June 3 Big Stuff Agreement at an exercise price of $6.96 per share, the
Restated Company Agreement and the Restated Web Agreement; (iii) the shares of
Parent Common Stock issuable upon conversion at Closing of the Great Western
Notes at a conversion price of $5.50 per share; (iv) up to 1,090,909 shares of
Parent Common Stock issuable upon conversion of one or more notes which may be
issued to the Big Stuff Shareholders who may lend up to Six Million Dollars
($6,000,000.00) to Big Stuff or Web as provided in this Restated Agreement, at a
conversion price of $5.50 per share; (v) shares of Parent Common Stock to be
issued upon exercise of options or warrants to be granted at Closing to those
Persons designated by Company in the Restated Company Agreement; (vi) those
shares of Parent Common Stock issuable upon exercise of previously granted
options; and (vii) one (1) share of Parent Class B Voting Preferred Stock to be
issued to the trustee under the Exchange and Voting Trust Agreement.
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ARTICLE VII--CONDITIONS TO CLOSING
7.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO CLOSING. The respective
obligations of each party to consummate this Restated Agreement and effect the
Merger shall be subject to the satisfaction or waiver at or prior to the Closing
Date of the following conditions:
(a) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No temporary restraining
order, preliminary or permanent injunction or other order issued by any
court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger shall be in effect, nor shall any
proceeding brought by an administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, seeking any
of the foregoing be pending; nor shall there be any action taken, or any
statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Merger, which makes the consummation of the Merger
illegal.
(b) OTHER AGREEMENTS. The Restated Company Agreement and the Restated
Web Agreement and all documents related to the Restated Company Agreement
and the Restated Web Agreement shall have been duly executed and delivered
by all parties thereto and shall be in full force and effect.
(c) EMPLOYMENT AND NON-COMPETITION AGREEMENTS. The Employment and
Non-Competition Agreements described in SECTION 6.2 hereof shall have been
duly executed and delivered by all parties thereto and shall be in full
force and effect.
(d) GOVERNMENT APPROVALS. Except for those Consents the failure of
which to be obtained, (i) in the reasonable judgment of Parent, would not
have a Parent Material Adverse Effect or a Big Stuff Material Adverse
Effect, and (ii) in the reasonable judgment of Big Stuff, would not have a
Big Stuff Material Adverse Effect or a Parent Material Adverse Effect, all
Consents of any domestic or foreign Governmental Authority required for the
consummation of the Merger shall have been obtained by Final Order.
(e) RELATED TRANSACTIONS. (i) The acquisition by Parent, or a direct
or indirect subsidiary of Parent, of Big Stuff and Web in a tax-free
reorganization shall have been consummated prior to or simultaneously with
the acquisition of the Company and any registration statement(s) required
for the registration of Parent Common Stock issued to the Big Stuff
Shareholders, the Company shareholders and the shareholders of Web as
consideration in connection with the acquisition of Big Stuff, the Company
and Web by Parent shall have been declared effective, (ii) no stop order
suspending the effectiveness of such registration statement(s) shall have
been issued and no proceeding for that purpose shall have been initiated or
threatened by the SEC or any other Governmental Authority, and (iii) the
Great Western Notes shall have been satisfied by the issuance of Parent
Common Stock to the Great Western Shareholders.
(f) FINANCING. Parent and Big Stuff shall have received from their
lenders an extension of all of their and their subsidiaries' debt owing by
them on terms and conditions satisfactory to Parent and Big Stuff or all
such debts shall be refinanced on terms satisfactory to Parent and Big Stuff
or any consents and approvals required from such lenders is received.
(g) SHAREHOLDER APPROVAL. All necessary approvals of the Big Stuff
Shareholders and the shareholders of Parent in connection with the Merger
shall have been obtained.
(h) REQUIRED CONSENTS. Any required Consents of any Person to the
Merger or the transactions contemplated by this Restated Agreement shall
have been obtained on terms and conditions reasonably acceptable to Parent
and Big Stuff and be in full force and effect, except for those the failure
of which to obtain, in the reasonable judgment of Parent and Big Stuff,
would not have a Parent Material Adverse Effect or a Big Stuff Material
Adverse Effect.
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(i) HSR ACT. Any waiting period applicable to the Merger under the HSR
Act shall have expired or earlier termination thereof shall have been
granted and no action shall have been instituted by either the United States
Department of Justice or the Federal Trade Commission to prevent the
consummation of the transactions contemplated by this Restated Agreement or
to modify or amend such transactions in any material manner, or if any such
action shall have been instituted, it shall have been withdrawn or a final
judgment shall have been entered against such Department or Commission, as
the case may be.
(j) REGISTRATION STATEMENT(S). The Registration Statement(s) shall
have been declared effective and no stop order suspending the effectiveness
of the Registration Statement(s) shall have been issued and no proceeding
for that purpose shall have been initiated or threatened by the SEC or any
Governmental Authority, whether state or federal.
(k) BLUE SKY. Parent shall have received all state securities Law
authorizations necessary to consummate the transactions contemplated hereby.
(l) FAIRNESS OPINION. The written opinion received by Parent's Board
of Directors from its financial advisors, PaineWebber Incorporated, pursuant
to SECTION 1.2 hereof shall not have been withdrawn.
(m) TAX OPINION. Parent shall have received an opinion from Blackwell
Sanders Peper Martin LLP based on customary representations contained in
certificates of Parent, to the effect that, if the Merger is consummated in
accordance with the provisions of this Restated Agreement, the Merger will
qualify as a tax-free reorganization within the meaning of the Code.
(n) NYSE LISTING APPROVAL. Parent shall have received from the NYSE
approval for listing with the NYSE of the Parent Common Stock to be issued
pursuant to this Restated Agreement, the Restated Company Agreement and the
Restated Web Agreement.
(o) SALE OF CLEC OPERATIONS. The sale of the CLEC Operations,
contemplated under the Ionex Agreement referenced on SCHEDULE 3.13 hereof,
shall have closed.
7.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF BIG STUFF SHAREHOLDERS AND BIG
STUFF. The obligations of the Big Stuff Shareholders and Big Stuff to
consummate and effect this Restated Agreement and the transactions contemplated
hereby shall be subject to the satisfaction at or prior to the Closing Date of
each of the following conditions, any of which may be waived, in writing,
exclusively by Big Stuff:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS.
(i) The representations and warranties of Parent in this Restated
Agreement that are modified by materiality or Parent Material Adverse
Effect ("PARENT MODIFIED REPRESENTATION") shall be true and correct in
all respects and those that are not so modified ("PARENT NONMODIFIED
REPRESENTATION") shall be true and correct in all material respects on
the date hereof and, except for changes not prohibited by this Restated
Agreement, as of the Closing Date as if made at the Closing Date.
Furthermore, none of the representations or warranties of Parent
contained in this Restated Agreement, disregarding any qualifications
therein or in this SECTION 7.2(a) regarding materiality or Parent
Material Adverse Effect, shall be untrue or incorrect to the extent that
such untrue or incorrect representations or warranties, when taken
together as a whole, have had or would have a Parent Material Adverse
Effect; and
(ii) Parent shall have performed and complied with all of the
covenants and agreements in all material respects and satisfied in all
material respects all of the conditions required by this Restated
Agreement to be performed or complied with or satisfied by Parent at or
prior to the Closing Date. Notwithstanding anything in this Restated
Agreement to the contrary, the parties hereto acknowledge and agree that
the consummation of the transactions contemplated by this Restated
Agreement and the subsequent disposition of the CLEC Operations
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constitutes a significant change from the plans and strategies described
in the 1998 10-K such that the representations and warranties of Parent
that reference the 1998 10-K will not be true and correct as of the
Closing Date as they relate to the plans and strategies of the business
of Parent at the Closing Date.
(b) CERTIFICATE OF PARENT AND OTHER DELIVERIES. Big Stuff shall have
been provided, with (i) a certificate executed on behalf of Parent by an
Officer to the effect that, as of the Closing Date, all representations and
warranties made by Parent under this Restated Agreement are true and
complete except as qualified by SECTION 7.2(a)(i) hereof; and all covenants,
obligations and conditions of this Restated Agreement to be performed by
Parent on or before such date have been so performed; (ii) a certificate of
good standing from the Secretary of State of the State of Delaware that
Parent is a validly existing corporation; (iii) duly adopted resolutions of
the Board of Directors of Parent approving the execution, delivery and
performance of this Restated Agreement and the Parent Transaction Agreements
to which it is a party and the instruments contemplated hereby and thereby,
certified by its Secretary or Assistant Secretary; and (iv) such other
documents and instruments as Big Stuff may reasonably request.
(c) SHAREHOLDER APPROVAL. Big Stuff shall have received from Parent's
transfer agent a certificate indicating that a sufficient number of Parent's
shareholders voted to approve the Merger such that the Merger was deemed
approved by the Parent shareholders.
(d) LEGAL OPINION. Big Stuff shall have received a legal opinion of
Blackwell Sanders Peper Martin LLP, legal counsel to Parent, in a form to be
agreed upon by the parties hereto, acting reasonably.
(e) NO MATERIAL ADVERSE CHANGE. There shall not have occurred after
the date hereof any Event that has or reasonably could be expected to have a
Parent Material Adverse Effect.
(f) LITIGATION. Except as set forth on SCHEDULE 3.7 attached hereto,
there shall be no action, suit, claim or proceeding of any nature pending,
or overtly threatened, against Parent, its properties or any of its officers
or directors, arising out of, or in any way connected with, the Merger or
the other transactions contemplated by the terms of this Restated Agreement
which individually or in the aggregate may cause a Parent Material Adverse
Effect.
7.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF PARENT. The obligations of
Parent to consummate and effect this Restated Agreement and the transactions
contemplated hereby shall be subject to the satisfaction at or prior to the
Closing Date of each of the following conditions, any of which may be waived, in
writing, exclusively by Parent:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS.
(i) The representations and warranties of Big Stuff and the Big Stuff
Shareholders contained in this Restated Agreement that are modified by
materiality or Big Stuff Material Adverse Effect ("BIG STUFF MODIFIED
REPRESENTATION") shall be true and correct in all respects, and those
that are not so modified ("BIG STUFF NONMODIFIED REPRESENTATION") shall
be true and correct in all material respects, on the date hereof and,
except for changes not prohibited by this Restated Agreement, as of the
Closing Date as if made at the Closing Date. Furthermore, none of the
representations or warranties of Big Stuff or the Big Stuff Shareholders
contained in this Restated Agreement, disregarding any qualifications
therein or in this SECTION 7.3(a) regarding materiality or Big Stuff
Material Adverse Effect, shall be untrue or incorrect to the extent that
such untrue or incorrect representations or warranties, when taken
together as a whole, have had or would have a Big Stuff Material Adverse
Effect; and
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(ii) Big Stuff and the Big Stuff Shareholders shall have performed
and complied with all the covenants and agreements in all material
respects and satisfied in all material respects all the conditions
required by this Restated Agreement to be performed or complied with or
satisfied by Big Stuff and the Big Stuff Shareholders at or prior to the
Closing Date.
(b) CERTIFICATE OF BIG STUFF AND OTHER DELIVERIES. Parent shall have
been provided with (i) a certificate executed on behalf of Big Stuff by its
Chief Executive Officer to the effect that, as of the Effective Time all
representations and warranties made by Big Stuff in this Restated Agreement
are true and correct, except as qualified by SECTION 7.3(a)(i) hereof, and
all covenants, obligations and conditions of this Restated Agreement to be
performed by Big Stuff and the Big Stuff Shareholders on or before such date
have been so performed; (ii) a certificate of good standing from the proper
authority in the jurisdictions in which Big Stuff is incorporated or
qualified to do business stating that each is a validly existing corporation
in good standing; (iii) duly adopted resolutions of the Big Stuff Board of
Directors and Big Stuff Shareholders approving the execution, delivery and
performance of this Restated Agreement and the Big Stuff Transaction
Agreements to which Big Stuff is a party and the instruments contemplated
hereby and thereby, certified by the Secretary or Assistant Secretary of Big
Stuff; (iv) a true and complete copy of the Articles or Certificate of
Incorporation or comparable governing instruments, as amended, of Big Stuff
certified by the Secretary of State of the state of incorporation or
comparable authority in other jurisdictions, and a true and complete copy of
the Bylaws or comparable governing instruments, as amended, of Big Stuff
certified by the Secretary thereof; (v) the duly executed Resignations on
terms and conditions reasonably acceptable to Parent; and (vi) such other
documents and instruments as Parent reasonably may request.
(c) LEGAL OPINION. Parent shall have received a legal opinion from
Steinhart & Falconer LLP, legal counsel to Big Stuff, in a form to be agreed
upon by the parties hereto, acting reasonably.
(d) LITIGATION. There shall be no action, suit, claim or proceeding of
any nature pending, or overtly threatened, against Big Stuff, its respective
properties or any of its officers or directors, arising out of, or in any
way connected with, the Merger or the other transactions contemplated by the
terms of this Restated Agreement which individually or in the aggregate may
cause a Big Stuff Material Adverse Effect.
(e) NO MATERIAL ADVERSE CHANGE. There shall have not occurred after
the date hereof any Event that has or reasonably could be expected to have a
Big Stuff Material Adverse Effect.
(f) AFFILIATE AGREEMENTS. At least thirty (30) days prior to the
Effective Time, Parent shall have received the duly executed Affiliate
Agreements.
ARTICLE VIII--TERMINATION AND ABANDONMENT
8.1 TERMINATION. This Restated Agreement may be terminated and the Merger
contemplated hereby may be abandoned at any time prior to the Closing Date only
as follows, whether before or after approval by the Big Stuff Shareholders:
(a) by mutual written consent of Big Stuff and Parent, duly authorized
by the Board of Directors of each;
(b) by Big Stuff or Parent if the Closing shall not have occurred on or
before January 31, 2000, as such date may be extended pursuant to
SECTION 1.2(b) hereof (or such other date as may be agreed to by Big Stuff
and Parent); PROVIDED, THAT, no party may terminate this Restated Agreement
under this SECTION 8.1(b) if such party's breach of this Restated Agreement
has caused or resulted in the failure of the Closing to occur on or before
such date;
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(c) by Big Stuff if (i) there are any breaches of any Parent Modified
Representation or any material breaches of any Parent Nonmodified
Representation, or (ii) Parent has breached or failed to perform,
notwithstanding satisfaction or due waiver of all conditions thereto, any of
its material covenants or agreements contained herein as to which notice
specifying such breach or failure has been given to Parent promptly after
the discovery thereof and Parent has failed to cure or otherwise resolve the
same to the reasonable satisfaction of Big Stuff within thirty (30) days
after receipt of such notice;
(d) by Parent if (i) there are any breaches of any Big Stuff Modified
Representations or any material breaches of any Big Stuff Nonmodified
Representations, or (ii) Big Stuff has breached or failed to perform,
notwithstanding satisfaction or due waiver of all conditions thereto, any of
its material covenants or agreements contained herein as to which notice
specifying such breach or failure has been given to Big Stuff promptly after
the discovery thereof and Big Stuff has failed to cure or otherwise resolve
the same to the reasonable satisfaction of Parent within thirty (30) days
after receipt of such notice;
(e) by Big Stuff or Parent if a court of competent jurisdiction or other
Governmental Authority shall have issued an order, decree or ruling or taken
any other action permanently restraining, enjoining or otherwise prohibiting
the Merger, the Restated Company Agreement or any of the transactions
contemplated by this Restated Agreement or such other agreements and such
order, decree, ruling or other action shall have become final and
nonappealable;
(f) (i) by Big Stuff if the stockholders of Parent fail to approve and
adopt the Merger or the issuance of the Parent Common Stock pursuant to this
Restated Agreement or the other transactions contemplated or otherwise
referenced herein or therein, as applicable, at the meeting duly convened
therefor;
(f)(ii) by Parent if the stockholders of Parent fail to approve and
adopt the Merger pursuant to this Restated Agreement or the other
transactions contemplated or otherwise referenced herein or therein, as
applicable;
(g) by Parent, if Big Stuff or its Board of Directors breaches any
provision of SECTION 6.7; or
(h) by Big Stuff, if Parent or its Board of Directors breaches any
provision of SECTION 6.7;
The party desiring to terminate this Restated Agreement pursuant to this
SECTION 8.1 shall give written notice of such termination to the other party in
accordance with SECTION 11.1 below.
8.2 PROCEDURE UPON TERMINATION. In the event of termination pursuant to
this ARTICLE VIII, the Merger shall be abandoned without further action by Big
Stuff or Parent, provided that the obligations of the applicable parties to this
Restated Agreement contained in ARTICLE IX and SECTION 6.9 hereof shall remain
in full force and effect. If this Restated Agreement is terminated as provided
herein, each party shall use its reasonable best efforts to redeliver all
documents, work papers and other material (including any copies thereof) of any
other party relating to the transactions contemplated hereby, whether obtained
before or after the execution hereof, to the party furnishing the same. Nothing
contained in this Restated Agreement shall relieve any party from any liability
for any inaccuracy, misrepresentation or breach of this Restated Agreement prior
to termination.
ARTICLE IX--SURVIVAL OF REPRESENTATIONS
AND WARRANTIES; INDEMNIFICATION
9.1 INDEMNIFICATION BY THE BIG STUFF SHAREHOLDERS.
(a) If the Closing has occurred, subject to the terms and conditions of
this ARTICLE IX, the Big Stuff Shareholders shall indemnify Parent, and its
officers, directors, agents and representatives (THE "INDEMNITEES"), from
and in respect of, and hold the Indemnitees harmless against, any and
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all damages, fines, penalties, losses, liabilities, excise and other taxes,
judgments, and deficiencies (including without limitation amounts paid in
settlement and interest and reasonable out-of-pocket legal and accounting
fees), but which amount shall be offset or reduced by the amount of any
insurance proceeds received by Parent in respect of any of the foregoing,
incurred or suffered by any of the Indemnitees ("DAMAGES") resulting from,
relating to or in connection with any misrepresentation or breach of
warranty of the Big Stuff Shareholders contained in this Restated Agreement.
(b) The Big Stuff Shareholders acknowledge that their indemnification
obligations hereunder are solely in their capacity as former shareholders of
Big Stuff, and, accordingly, the indemnification obligations in this
ARTICLE IX shall not entitle any Big Stuff Shareholder who was or is a
current or former officer, director or employee of Big Stuff to any
indemnification from Big Stuff pursuant to the organizational or governing
documents of Big Stuff or pursuant to this Restated Agreement.
9.2 METHOD OF ASSERTING CLAIMS.
(a) Prior to the date (THE "REPORT DATE") that is thirty (30) days after
the completion of Parent's audit report by Parent's independent auditors for
the fiscal year ended December 31, 1999, each Indemnitee shall give written
notice (THE "CLAIM NOTICE") to the Representative, as agent for the Big
Stuff Shareholders, of any and all claims or events known to it which gives
rise to a claim for indemnification hereunder by the Indemnitee against the
Big Stuff Shareholders (AN "INDEMNIFIABLE CLAIM"). The Claim Notice shall
specify the nature and estimated amount of such claimed Damages (THE
"CLAIMED AMOUNT"). In the case of any claim for indemnification hereunder
arising out of a claim, action, suit or proceeding brought by any Person who
is not a party to this Restated Agreement (A "THIRD-PARTY CLAIM"), prior to
the Report Date, the Indemnitee also shall give the Representative, as agent
for the Big Stuff Shareholders, copies of any written claims, process or
legal pleadings with respect to such Third-Party Claim.
(b) Within forty-five (45) days after delivery of a Claim Notice, the
Representative shall notify the Parent in writing of his objections, if any,
to the claim. If the Representative has no objections to the claim, the
Representative shall remit to the Parent the Claimed Amount within thirty
(30) days. If the Representative has objections to the claim, the
Representative and the Indemnitee shall proceed in good faith to negotiate a
resolution of the dispute regarding the claim, and, if not resolved through
negotiations, such dispute shall be resolved by litigation in an appropriate
court of competent jurisdiction.
9.3 THIRD PARTY CLAIMS.
(a) Except as otherwise provided in paragraph (c) below, the
Representative, as agent for the Big Stuff Shareholders, may elect to
compromise or defend, at the Big Stuff Shareholders' own expense and by the
Big Stuff Shareholders' own counsel reasonably satisfactory to the
Indemnitee, any Third-Party Claim; provided that (i) the Representative
provides the Indemnitee with reasonable evidence that the Big Stuff
Shareholders will have the financial resources to defend against such claim
and fulfill their indemnification obligations hereunder; and (ii) the giving
of a Defense Notice (as defined below) by the Representative shall
constitute an acknowledgment by the Big Stuff Shareholders of their
obligation to indemnify the Indemnitee with respect to such Third-Party
Claim in accordance with the terms of this ARTICLE IX. If the
Representative, as agent for the Big Stuff Shareholders, elects to
compromise or defend a Third-Party Claim, the Representative shall, within
thirty (30) days of its receipt of the notice provided pursuant to
SECTION 9.2(a) hereof (or sooner, if the nature of such Third-Party Claim so
requires), notify the related Indemnitee of its intent to do so (A "DEFENSE
NOTICE"), and such Indemnitee shall reasonably cooperate in the compromise
of, or defense against, such Third-Party Claim. The Big Stuff Shareholders
shall be responsible for the payment of such Indemnitee's actual
out-of-pocket
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expenses (other than legal and accounting fees) incurred in connection with
such cooperation, and such expenses shall constitute Damages incurred or
suffered by Parent within the meaning of SECTION 9.1(a) hereof. After notice
from the Representative, as agent for the Big Stuff Shareholders, to an
Indemnitee of its election to assume the defense of a Third-Party Claim, the
Big Stuff Shareholders shall not be liable to such Indemnitee under this
ARTICLE IX for any legal expenses subsequently incurred by such Indemnitee
in connection with the defense thereof. If the Representative, as agent for
the Big Stuff Shareholders, elects not to compromise or defend against a
Third-Party Claim, or fails to notify an Indemnitee of its election as
provided in this SECTION 9.3, such Indemnitee may pay, compromise or defend
such Third-Party Claim on behalf of and for the account and risk of the Big
Stuff Shareholders (and any amount paid or expenses incurred in connection
therewith shall constitute Damages incurred or suffered by Parent within the
meaning of SECTION 9.1(a) hereof). The Representative may not consent to
entry of any judgment or enter into any settlement without the written
consent of each related Indemnitee (which consent shall not be unreasonably
withheld), unless such judgment or settlement provides solely for money
damages or other money payments for which such Indemnitee is entitled to
indemnification hereunder and includes as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnitee of a release from all
liability in respect of such Third-Party Claim.
(b) In respect of any claim, action, suit or proceeding brought by a
taxing authority in respect of Taxes for which the Big Stuff Shareholders
may be required to indemnify the Parent (A "TAX CLAIM"), the Representative,
as agent for the Big Stuff Shareholders, shall have the sole right to
control any Tax Claim, provided, however, that the Representative shall
provide the Indemnitee with copies of all correspondence with any taxing
authority in connection with any such Tax Claim and shall keep the
Indemnitee reasonably informed of all progress with such taxing authority,
and provided further that the Representative shall consult with the
Indemnitee in good faith in contesting any proposed adjustment and shall
consider any reasonable advice from the Indemnitee concerning such Tax Claim
so long as the Representative, as agent for the Big Stuff Shareholders,
shall (subject to the immediately following sentence) ultimately be entitled
to control any such Tax Claim concerning any indemnity obligation of the Big
Stuff Shareholders. The Representative shall not be entitled to compromise
or settle any Tax liability of the Company for any pre-Closing Period that
would have the effect of materially decreasing the Company's deductions for
credits or materially increasing the Company's taxable income for any
taxable year or period subsequent to the pre-Closing Period without the
prior written consent of Parent, which consent shall not be unreasonably
withheld. Parent will cooperate fully with Representative in defending any
Tax Claim.
(c) If there is a reasonable likelihood that a Third-Party Claim may
have a material adverse effect on an Indemnitee, other than as a result of
money damages or other money payments for which such Indemnitee is entitled
to indemnification hereunder, such Indemnitee will have the right, after
consultation with the Representative, and at the cost and expense of the Big
Stuff Shareholders (which costs and expenses, other than legal and
accounting fees, shall constitute Damages within the meaning of
SECTION 9.1(a) hereof to the extent provided therein), to defend such
Third-Party Claim. If the Third-Party Claim involves a third party with whom
Parent has a significant on-going or prospective relationship, the
Indemnitee will have the right, after consultation with the Representative,
and at the cost and expense of the Big Stuff Shareholders (which costs and
expenses, other than legal and accounting fees, shall constitute Damages
within the meaning of SECTION 9.1(a) hereof to the extent provided therein),
to defend such Third-Party Claim; provided that the Big Stuff Shareholders
shall not be obligated to pay Damages to the extent it is determined (by
agreement between the Representative and Indemnitees or by arbitration or
court judgment) that the Third-Party Claim was settled on terms that were
not fair and reasonable to the Indemnitors.
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9.4 SURVIVAL. The representations and warranties of Big Stuff set forth in
this Restated Agreement shall survive the Closing and shall continue until the
Report Date. The representations and warranties shall not be affected by any
examination made for or on behalf of Parent or the knowledge of any of Parent's
officers, directors, stockholders, employees or agents, except that the
representations and warranties are qualified by the matters disclosed in the
Disclosure Schedules to the representations and warranties of Big Stuff and the
Big Stuff Shareholders contained in ARTICLE II hereof and Parent agrees that
Parent has knowledge of such matters. Notwithstanding anything to the contrary
herein, if a claim for indemnification is made before the expiration of the
periods of survival set forth above in this SECTION 9.4, then (notwithstanding
the expiration of such time period) the representation or warranty applicable to
such claim shall survive until, but only for purposes of, the resolution of such
claim.
9.5 LIMITATIONS.
(a) The Big Stuff Shareholders shall not be liable under this
ARTICLE IX unless and until the aggregate amount of Damages incurred or
suffered by Indemnitees exceeds $100,000, (at which point the Big Stuff
Shareholders shall become liable for the entire amount of such Damages in
excess of $75,000). For purposes of the preceding sentence, no independent
claims of less than $1,000 may be made; PROVIDED, HOWEVER, that all claims
arising out of a common set of facts shall be aggregated for purposes of
determining whether the $1,000 threshold has been met.
(b) The Big Stuff Shareholders' liability under this ARTICLE IX shall
not exceed $400,000.
The Big Stuff Shareholders may, at their option, satisfy their
indemnification obligations under this Restated Agreement by (i) the payment of
that amount of cash sufficient to satisfy such indemnification claim, but in any
event not exceeding the amount set forth in SECTION 9.5(b) hereof, and subject
to the provisions of SECTION 9.5(a) hereof; or (ii) the delivery of stock
certificates representing that number of shares of Parent Common Stock
sufficient to satisfy such indemnification claim, the value of which shall be
determined in accordance with SECTION 9.5(d) hereof; PROVIDED, HOWEVER, that any
stock certificates delivered in satisfaction of an indemnification claim must be
delivered to Parent within three (3) business days following (as applicable)
(A) the date calculated in accordance with SECTION 9.2 or SECTION 9.3 hereof, if
the claim is not in dispute; (B) resolution of such indemnification claim,
whether prior to or following commencement of litigation; or (C) the entry of a
final and non-appealable judgment by a court of competent jurisdiction.
(d) The parties hereto agree that, for purposes of valuing shares of
Parent Common Stock delivered pursuant to SECTION 9.5(c) to satisfy any
indemnification claims pursuant to SECTION 9.2 or SECTION 9.3, Parent Common
Stock shall be valued at a price per share equal to the greater of: (A) the
weighted average of the closing prices, as reported on the NYSE, of the
Parent Common Stock on the twenty (20) trading days prior to the date on
which the stock certificates for the Parent Common Stock are to be delivered
pursuant to clause (ii) of SECTION 9.5(c), or (B) $5.50.
(e) No claim for indemnification pursuant to SECTION 9.1 shall be made
unless asserted by a written notice given to the Representative on or before
the Report Date.
9.6 THE REPRESENTATIVE.
(a) Big Stuff and the Big Stuff Shareholders hereby authorize, direct
and appoint Reid to act as sole and exclusive agent, attorney-in-fact and
representative of the Big Stuff Shareholders (THE "REPRESENTATIVE"), and
authorizes and directs the Representative to (i) take any and all actions
(including without limitation executing and delivering any documents,
incurring any costs and expenses for the account of the Big Stuff
Shareholders (which will constitute Damages incurred or suffered by Parent
within the meaning of SECTION 9.1(a) hereof) and making any and all
determinations) which may be required or permitted by this Restated
Agreement to be taken by the Big Stuff Shareholders or the Representative,
(ii) exercise such other rights, power and authority as are authorized,
delegated and granted to the Representative hereunder in connection
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with the transactions contemplated hereby and (iii) exercise such rights,
power and authority as are incidental to the foregoing. Any such actions
taken, exercises of rights, power or authority, and any decision or
determination made by the Representative consistent therewith, shall be
absolutely and irrevocably binding on each indemnifying party as if such
indemnifying party personally had taken such action, exercised such rights,
power or authority or made such decision or determination in such
indemnifying party's individual capacity. Notwithstanding any other
provision of this Restated Agreement, if the Closing occurs, then with
respect to the matters covered by ARTICLE IX, (i) each of the Big Stuff
Shareholders irrevocably relinquishes such Big Stuff Shareholder's right to
act independently and other than through the Representative, except with
respect to the removal of the Representative or appointment of a successor
Representative as provided in SECTION 9.6(b) below, and (ii) no Big Stuff
Shareholders shall have any right under this Restated Agreement or otherwise
to institute any suit, action or proceeding against Big Stuff or Parent with
respect to any such matter, any such right being irrevocably and exclusively
delegated to the Representative. The Representative hereby acknowledges and
accepts the foregoing authorization and appointment and agrees to serve as
the Representative in accordance with this Restated Agreement.
(b) The Representative shall serve as Representative until his
resignation, removal from office, incapacity or death; provided, however,
that the Representative shall not have the right to resign without
(i) prior written notice to the Big Stuff Shareholders, and (ii) picking a
successor reasonably satisfactory to Parent to serve until a successor
thereto is elected by the Big Stuff Shareholders. The Representative may be
removed at any time, and a successor representative, reasonably satisfactory
to Parent, may be appointed, pursuant to written action by Big Stuff
Shareholders. Any successor to the Representative shall, for purposes of
this Restated Agreement, be deemed to be, from the time of the appointment
thereof in accordance with the terms hereof, the Representative, and from
and after such time, the term "REPRESENTATIVE" as used herein and therein
shall be deemed to refer to such successor. No appointment of a successor
shall be effective unless such successor agrees in writing to be bound by
the terms of this Restated Agreement.
(c) The Representative shall be permitted to retain counsel, consultants
and other advisors and shall promptly notify Parent after retaining any such
Person.
(d) The provisions of this SECTION 9.6 shall in no way impose any
obligations on Parent (other than those set forth in paragraph (c) above).
In particular, notwithstanding any notice received by Parent to the contrary
(except any notice of the appointment of a successor Representative approved
by Parent in accordance with paragraph (b) of this SECTION 9.6), Parent
shall be entitled to assume that all actions, decisions and determinations
of the Representative are fully authorized by the Big Stuff Shareholders.
(e) The Representative shall not be liable to the Big Stuff Shareholders
for the performance of any act or the failure to act so long as he acted or
failed to act in good faith in what he reasonably believed to be the scope
of his authority and for a purpose which he reasonably believed to be in the
best interests of the Big Stuff Shareholders.
9.7 INDEMNIFICATION BY THE PARENT.
(a) INDEMNITY. If the Closing has occurred, subject to the terms and
conditions of this SECTION 9.7, Parent shall indemnify the Big Stuff
Shareholders from and in respect of all, and hold the Big Stuff Shareholders
harmless against, any and all damages, fines, penalties, losses,
liabilities, judgments and deficiencies (including without limitation
amounts paid in settlement and interest) ("BIG STUFF SHAREHOLDER DAMAGES")
resulting from, relating to or in connection with any misrepresentation or
breach of warranty of the Parent contained in this Restated Agreement.
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(b) SURVIVAL. The representations and warranties of Parent set forth
in this Restated Agreement shall survive the Closing and shall continue
until the Report Date. The representations and warranties shall not be
affected by any examination made for or on behalf of Big Stuff or Big Stuff
Shareholders or the knowledge of any of Big Stuff's officers, directors,
stockholders, employees or agents, except that the representations and
warranties are qualified by the matters disclosed in the Disclosure
Schedules to the representations and warranties of the Parent contained in
ARTICLE III hereof, and Big Stuff agrees that Big Stuff has knowledge of
such matters. Notwithstanding anything to the contrary herein, if a claim
for indemnification is made before the expiration of the periods of survival
set forth above in this SECTION 9.7, then (notwithstanding the expiration of
such time period) the representation or warranty applicable to such claim
shall survive until, but only for purposes of, the resolution of such claim.
(c) LIMITATIONS. Parent shall not be liable under this SECTION 9.7
unless and until the aggregate amount of Big Stuff Shareholder Damages
incurred or suffered by the Big Stuff Shareholders exceeds $100,000 (at
which point Parent shall become liable for the entire amount of Big Stuff
Shareholder Damages in excess of $75,000). Furthermore, the liability of
Parent under this SECTION 9.7 shall be $400,000. No claim for
indemnification pursuant to SECTION 9.7 shall be made unless asserted by a
written notice given to Parent on or before the Report Date.
ARTICLE X--MUTUAL RELEASE
10.1 MUTUAL RELEASE OF ALL CLAIMS.
(a) Parent, for itself and for all of its stockholders, directors,
officers, agents, employees, representatives, divisions, subsidiaries,
affiliates, insurers, successors and assigns, hereby releases, remises,
acquits and forever discharges Big Stuff and the Big Stuff Shareholders, and
each of them and each of their respective stockholders, directors, officers,
agents, employees, representatives, divisions, parents, subsidiaries,
affiliates, insurers, successors and assigns, of and from any and all manner
of claims, actions, causes of action, suits, debts, dues, accounts,
contracts, agreements, continuing obligations, judgments, claims and demands
whatsoever, whether in law or in equity, which now exist or may hereafter
arise from any matter, fact, circumstance, happening or thing whatsoever
occurring or failing to occur in connection with the negotiation, execution
and performance of their respective obligations under the June 3 Big Stuff
Agreement.
(b) Big Stuff and the Big Stuff Shareholders, each for itself and for
all of their respective stockholders, directors, officers, agents,
employees, representatives, divisions, subsidiaries, affiliates, insurers,
successors and assigns, hereby releases, remises, acquits and forever
discharges Parent and its stockholders, directors, officers, agents,
employees, representatives, divisions, parents, subsidiaries, affiliates,
insurers, successors and assigns, of and from any and all manner of claims,
actions, causes of action, suits, debts, dues, accounts, contracts,
agreements, continuing obligations, judgments, claims and demands
whatsoever, whether in law or in equity, which now exist or may hereafter
arise from any matter, fact, circumstance, happening or thing whatsoever
occurring or failing to occur in connection with the negotiation, execution
and performance of its obligations under the June 3 Big Stuff Agreement.
(c) Parent and each of Big Stuff and the Big Stuff Shareholders hereby
represent, warrant and acknowledge that the mutual covenants and agreements
in this ARTICLE X are made in good faith.
10.2 COVENANT NOT TO SUE.
(a) Parent hereby agrees that it will not institute any action against
Big Stuff and the Big Stuff Shareholders arising out of the June 3 Big Stuff
Agreement, including, but not limited to, any claim for contractual
indemnity or implied indemnity.
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<PAGE>
(b) Each of Big Stuff and the Big Stuff Shareholders hereby agrees that
it will not institute any action against Parent arising out of the June 3
Big Stuff Agreement, including, but not limited to, any claim for
contractual indemnity or implied indemnity.
10.3 NO ADMISSION OF LIABILITY. None of Parent, Big Stuff or the Big Stuff
Shareholders admits liability to any other party hereto and, in fact, each of
Parent, Big Stuff and the Big Stuff Shareholders denies any liability relating
to the June 3 Big Stuff YP Agreement.
ARTICLE XI--AMENDMENT AND WAIVER
11.1 AMENDMENT OF THIS RESTATED AGREEMENT. Prior to Parent stockholder
approval and except as is otherwise required by Applicable Law, this Restated
Agreement may be amended by the parties hereto at any time by execution of an
instrument in writing signed on behalf of each of the parties hereto. Following
receipt of approval by the Parent shareholders, the parties hereto acknowledge
and agree that this Restated Agreement may be amended by the parties hereto by
execution of an instrument in writing signed on behalf of each of the parties
hereto; PROVIDED, HOWEVER, that any such amendment shall not have a material
adverse effect upon Parent.
11.2 EXTENSION; WAIVER. At any time prior to the Effective Time, Parent
and Acquisition Subsidiary, on the one hand, and Big Stuff and the Big Stuff
Shareholders, on the other, may, to the extent legally allowed, (i) extend the
time for the performance of any of the obligations of the other party hereto,
(ii) waive any inaccuracies in the representations and warranties made by such
other party contained herein or in any document delivered pursuant hereto, and
(iii) waive compliance with any of the agreements or conditions for the benefit
of such party contained herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party; PROVIDED, HOWEVER, that an extension
pursuant to SECTION 1.2(b) hereof need not be set forth in writing in order to
be effective, unless such extension is to a date after March 1, 2000.
ARTICLE XII--GENERAL PROVISIONS
12.1 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or mailed by registered or certified mail (return receipt
requested) or sent via facsimile (with acknowledgment of complete transmission)
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
(a) if to Parent, to:
Advanced Communications Group, Inc.
390 South Woods Mill Road, Suite 150
St. Louis, Missouri 63017
Attn: Mr. Richard O'Neal
Facsimile: (314) 205-8141
with a copy to:
Blackwell Sanders Peper Martin LLP
720 Olive Street, Suite 2400
St. Louis, Missouri 63101-4834
Attn: Mr. Craig A. Adoor
Facsimile: (314) 345-6060
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<PAGE>
(b) if to Big Stuff and Big Stuff Shareholders, to:
Big Stuff, Inc.
4515 South Georgia, Suite 118
Amarillo, Texas 79102
Attn: Mr. Richard L. Reid
Facsimile: (806) 354-2974
with a copy to:
Steinhart & Falconer
333 Market Street
32(nd) Floor
San Francisco, California 94105-2150
Attn: Mr. Robb A. Scott
Facsimile: (415) 442-0856
12.2 INTERPRETATION. The words "INCLUDE," "INCLUDES" and "INCLUDING" when
used herein shall be deemed in each case to be followed by the words "without
limitation". The table of contents and headings contained in this Restated
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Restated Agreement. All Disclosure Schedules
to this Restated Agreement constitute a part of this Restated Agreement as if
set forth in full herein and are incorporated herein.
12.3 COUNTERPARTS. This Restated Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
12.4 ENTIRE AGREEMENT; ASSIGNMENT. Subject to its becoming effective in
accordance with SECTION 1.2 hereof, this Restated Agreement (including, but not
limited to, the Recitals hereto), the Disclosure Schedules hereto, and the
documents and instruments and other agreements among the parties hereto
referenced herein: (i) constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof including, but not limited to, (A) the June 3 Big Stuff
Agreement; and (B) the Letter of Intent dated April 11, 1999 by and among the
Parent, the Company, Big Stuff, Web and O'Neal and the Confidentiality Agreement
dated April 11, 1999 by and among Parent, the Company, Big Stuff, Web and
O'Neal; (ii) are not intended to confer upon any Person not a party hereto any
rights or remedies hereunder except that the Representative shall have the
express rights articulated in ARTICLE IX; and (iii) shall not be assigned by
operation of law or otherwise, except that Parent may assign its rights and
delegate its obligations hereunder to its affiliates, provided that Parent shall
remain liable hereunder.
12.5 SEVERABILITY. In the event that any provision of this Restated
Agreement or the application thereof, becomes or is declared by a court of
competent jurisdiction to be illegal, void or unenforceable, the remainder of
this Restated Agreement will continue in full force and effect and the
application of such provision to other Persons or circumstances will be
interpreted so as reasonably to effect the intent of the parties hereto so long
as consideration of the Restated Agreement is not materially affected for any
party hereof. The parties further agree to replace such void or unenforceable
provision of this Restated Agreement with a valid and enforceable provision that
will achieve, to the extent possible, the economic, business and other purposes
of such void or unenforceable provision.
12.6 OTHER REMEDIES. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy
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<PAGE>
conferred hereby, or by law or equity upon such party, and the exercise by a
party of any one remedy will not preclude the exercise of any other remedy.
12.7 GOVERNING LAW. This Restated Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof. Each of the parties hereto irrevocably consents to the exclusive
jurisdiction and venue of any court within the State of California, City and
County of San Francisco, in connection with any matter based upon or arising out
of this Restated Agreement or the matters contemplated herein, agrees that
process may be served upon them in any manner authorized by the laws of the
State of California, City and County of San Francisco for such Persons and
waives and covenants not to assert or plead any objection which they might
otherwise have to such jurisdiction, venue and such process.
12.8 RULES OF CONSTRUCTION. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Restated
Agreement and, therefore, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
ARTICLE XIII--DEFINITIONS
13.1 DEFINITIONS.
"Acquisition Subsidiary" shall have the meaning ascribed to it in the
preamble hereto.
"Active Parent Subsidiaries" shall mean Feist; FirsTel; Value; Great Western
Directories, Inc.; Telecom Resources, Inc.; the Switchboard of Oklahoma
City, Inc.; Long Distance Management of Kansas, Inc.; Long Distance Management
II, Inc.; and National Telecom, a proprietorship.
"Affiliate Agreements" shall have the meaning set forth in SECTION 4.8
hereof.
"Anniversary Date" shall mean the first anniversary of the Closing Date.
"Associates" shall mean affiliates of any Person (including, without
limitation, directors, officers, employees, agents, representatives and
shareholders or any affiliates or associates thereof).
"Benefit Plan" shall have the meaning ascribed to such term in SECTION 2.14
hereof.
"Big Stuff" shall have the meaning ascribed to such term in the preamble
hereto.
"Big Stuff Common Stock" shall have the meaning ascribed to such term in
SECTION 1.3 hereof.
"Big Stuff Financial Statements" shall have the meaning ascribed to such
term in SECTION 2.8 hereof.
"Big Stuff Material Adverse Effect" shall mean a material adverse effect on
(i) the business, assets, condition (financial or otherwise), properties,
liabilities or the results of operations of Big Stuff taken as a whole,
(ii) the ability of Big Stuff to perform its obligations set forth in this
Restated Agreement and the Big Stuff Transaction Agreements, or (iii) the
ability of Big Stuff or the Big Stuff Shareholders to timely consummate the
transactions contemplated by this Restated Agreement and the Big Stuff
Transaction Agreements.
"Big Stuff Material Contract" shall have the meaning ascribed to such term
in SECTION 2.13 hereof.
"Big Stuff Modified Representations" shall have the meaning ascribed to such
term in SECTION 7.3(a)(i) hereof.
"Big Stuff Nonmodified Representations" shall have the meaning ascribed to
such term in SECTION 7.3(a)(i) hereof.
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<PAGE>
"Big Stuff Permits" shall have the meaning ascribed to such term in
SECTION 2.11 hereof.
"Big Stuff Real Property Leases" shall have the meaning ascribed to such
term in SECTION 2.19(b) hereof.
"Big Stuff Shares" shall have the meaning ascribed to such term in
SECTION 1.3 hereof.
"Big Stuff Shareholders" shall have the meaning ascribed to such term in the
preamble hereto.
"Big Stuff Shareholder Damages" shall have the meaning ascribed to such term
in SECTION 9.7(a) hereof.
"Big Stuff Stock" shall have the meaning set forth in SECTION 2.2 hereof.
"Big Stuff Transaction Agreements" shall have the meaning ascribed to such
term in SECTION 2.4 hereof.
"Certificate of Merger" shall have the meaning ascribed to such term in
SECTION 1.1 hereof.
"Certificates" shall mean the certificates which, prior to the Merger,
represented the Big Stuff Shares, and shall include a certificate issued upon
due execution and delivery of an affidavit of loss and a bond, if required by
Parent, in the event that a Big Stuff Shareholder is unable to produce and
deliver, at the Closing, the original certificate which prior to the Merger,
represented any Big Stuff Shares.
"Claim Notice" shall have the meaning ascribed to such term in
Section 9.2(a) hereof.
"Claimed Amount" shall have the meaning ascribed to such term in
SECTION 9.2(a) hereof.
"Class A Special Shares" shall have the meaning set forth in the Restated
Company Agreement.
"CLEC Operations" shall mean Feist, FirsTel, Valu, and such other non-yellow
pages operating subsidiaries or operations of Parent as shall be determined by
the Board of Directors of Parent.
"Closing" shall mean the closing of the Merger.
"Closing Date" shall mean the date on which the Closing actually occurs.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and the
Treasury regulations thereunder.
"Company" shall have the meaning set forth in Recital E hereto.
"Company Shareholders" shall have the meaning set forth in Recital E hereto.
"Consent" shall have the meaning ascribed to such term in SECTION 2.5
hereof.
"Conversion Stock" shall have the meaning ascribed to such term in
SECTION 4.9 hereof.
"Convertible Note" shall have the meaning ascribed to such term in
SECTION 1.10 hereof.
"Corporation Laws" shall have the meaning ascribed to such term in
SECTION 1.1 hereof.
"Damages" shall have the meaning ascribed to such term in SECTION 9.1(a)
hereof.
"Defense Notice" shall have the meaning ascribed to such term in
SECTION 9.3(a) hereof.
"Disclosure Schedules" shall mean, collectively, that information required
to be delivered by Big Stuff to Parent, and by Parent to Big Stuff, pursuant to
this Restated Agreement.
"Effective Time" shall have the meaning ascribed to such term in
SECTION 1.2 hereof.
"Enforceability Exceptions" shall have the meaning ascribed to such term in
SECTION 2.4 hereof.
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<PAGE>
"Environmental Laws" shall have the meaning ascribed to such term in
SECTION 2.17 hereof.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, together with all regulations thereunder.
"Event" shall mean any event, occurrence, fact, condition, change,
development or effect.
"Exchange Ratio" shall have the meaning ascribed to such term in
SECTION 1.3 hereof.
"Extraordinary Transactions" shall have the meaning ascribed to such term in
SECTION 6.7 hereof.
"Feist" shall mean Feist Long Distance Service, Inc.
"Final Order", with respect to any Consent of a Governmental Authority,
shall mean an action by the appropriate Governmental Authority as to which:
(i) no request for stay by such Governmental Authority of the action is pending,
no such stay is in effect, and, if any deadline for filing any such request is
designated by statute or regulation, it has passed; (ii) no petition for
rehearing or reconsideration of the action is pending before such Governmental
Authority, and no appeal or comparable administrative remedy is pending before
such Governmental Authority, and the time for filing any such petition, appeal
or administrative remedy has passed; (iii) such Governmental Authority does not
have the action under reconsideration on its own motion and the time for such
reconsideration has passed; and (iv) no appeal to a court, or request for stay
by a court, of the Governmental Authority action is pending or in effect, and if
any deadline for filing any such appeal or request is designated by statute or
rule, it has passed.
"FirsTel" shall mean FirsTel, Inc.
"Governmental Authority" shall mean a nation or government, any state or
other political subdivision thereof, any Person, authority or body exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government including, without limitation, any governmental or
regulatory authority, agency, department, board, commission or instrumentality,
any court, tribunal or arbitrator and any self-regulatory organization.
"Great Western Credit Agreement" shall mean the Loan Agreement dated as of
May 14, 1999, by and among Great Western Directories, Inc., the lenders
signatories thereto, and Bank of America National Trust and Savings Association
as Administrative Agent.
"Great Western Notes" shall have the meaning ascribed to such term in
Recital E hereto.
"Great Western Shareholders" shall have the meaning ascribed to such term in
Recital E hereto.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"ICL" shall have the meaning ascribed to such term in Recital E hereto.
"Indemnifiable Claim" shall have the meaning ascribed to such term in
SECTION 9.2(a) hereof.
"Indemnitees" shall have the meaning ascribed to such term in
SECTION 9.1(a) hereof.
"Intellectual Property" shall have the meaning ascribed to such term in
SECTION 2.18 hereof.
"IP Claim Notice" shall have the meaning ascribed to such term in
SECTION 2.18 hereof.
"IRS" shall mean the United States Internal Revenue Service, or any
successor thereto.
"June 3 Big Stuff Agreement" shall have the meaning ascribed to such term in
SECTION 1.2(a) hereof.
"Law" shall mean applicable provision of any constitution, treaty, statute,
law, code, rule, regulation, ordinance, policy or order of any Governmental
Authority or other matters having the force
C-42
<PAGE>
of law including, but not limited to, any orders, decisions, injunctions,
judgments, awards and decrees of or agreements with any court or other
Governmental Authority.
"Letter of Transmittal" shall have the meaning ascribed to such term in
SECTION 1.5 hereof.
"Litigation" shall have the meaning ascribed to such term in SECTION 2.7
hereof.
"Merger" shall have the meaning ascribed to such term in Recital B hereto.
"Merger Consideration" shall have the meaning ascribed to such term in
SECTION 1.3 hereof.
"Multi-employer Plan" shall have the meaning ascribed to such term in
SECTION 2.14 hereof.
"NYSE" shall mean the New York Stock Exchange, Inc.
"O'Neal" shall have the meaning ascribed to such term in the preamble
hereto.
"Parent" shall have the meaning ascribed to such term in the Preamble
hereto.
"Parent Common Stock" shall have the meaning ascribed to such term in
SECTION 1.3 hereof.
"Parent Financial Statements" shall have the meaning ascribed to such term
in SECTION 3.8 hereof.
"Parent Guaranty" shall mean that certain Guaranty of Parent given pursuant
to the Great Western Credit Agreement.
"Parent Material Adverse Effect" shall mean a material adverse effect on
(i) the business, assets, condition (financial or otherwise), properties,
liabilities or the results of operations of Parent and the Active Parent
Subsidiaries taken as a whole, (ii) the ability of Parent to perform its
obligations set forth in this Restated Agreement and the Parent Transaction
Agreements, or (iii) the ability of Parent to timely consummate the transactions
contemplated by this Restated Agreement and the Parent Transaction Agreements.
"Parent Material Contract" shall have the meaning ascribed to such term in
SECTION 3.13 hereof.
"Parent Modified Representations" shall have the meaning ascribed to such
term in SECTION 7.2(a)(i) hereof.
"Parent Nonmodified Representation" shall have the meaning ascribed to such
term in SECTION 7.2(a)(i) hereof.
"Parent Permits" shall have the meaning ascribed to such term in
SECTION 3.11 hereof.
"Parent Securities Filings" shall have the meaning ascribed to such term in
SECTION 3.7 hereof.
"Parent Series A Stock "shall have the meaning ascribed to such term in
SECTION 3.2 hereof.
"Parent Transaction Agreements" shall have the meaning ascribed to such term
in SECTION 3.4 hereof.
"Person" shall mean and include an individual, corporation, partnership,
association, trust or other entity or organization, including a Governmental
Authority.
"Registration Statements" shall have the meaning ascribed to such term in
SECTION 6.1(b) hereof.
"Reid" shall have the meaning ascribed to such term in the preamble hereto.
"Report Date" shall have the meaning ascribed to such term in
SECTION 9.2(a) hereof.
"Representative" shall have the meaning ascribed to such term in
SECTION 9.6 hereof.
"Resignations" shall have the meaning ascribed to such term in SECTION 6.8
hereof.
"Restated Agreement" shall have the meaning ascribed to it in the preamble
hereto.
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<PAGE>
"Restated Company Agreement" shall have the meaning set forth in Recital E
hereto.
"Restated Web Agreement" shall mean that certain Amended and Restated
Acquisition Agreement dated as of October 26, 1999, among the Parent, ACG
Acquisition VII Corp., Web and the Web shareholders.
"SEC" shall mean the U.S. Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended, and all
rules and regulations promulgated thereunder.
"Securities Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and all rules and regulations promulgated thereunder.
"Surviving Corporation" shall have the meaning ascribed to such term in
SECTION 1.1 hereof.
"Surviving Corporation Common Stock" shall have the meaning ascribed to such
term in SECTION 1.3 hereof.
"Surviving Corporation Material Adverse Effect" shall mean a material
adverse effect on (i) the business, assets, condition (financial or otherwise),
properties, liabilities or the results of operations of the Surviving
Corporation, or (ii) the ability to timely consummate the transactions
contemplated by this Restated Agreement.
"Tax" shall have the meaning ascribed to such term in SECTION 2.15(a)
hereof.
"Tax Claim" shall have the meaning ascribed to such term in SECTION 9.3(b)
hereof.
"Third-Party Claim" shall have the meaning ascribed to such term in
SECTION 9.2(a) hereof.
"Transaction Expenses" shall have the meaning ascribed to such term in
SECTION 5.9 hereof.
"Valu" shall mean, collectively, Valu-line of Louisiana, Inc. and Valu-line
of Longview, Inc.
"Web" shall have the meaning ascribed to such term in Recital E hereto.
"WorldPages" shall have the meaning ascribed to such term in Recital E
hereto.
"Year 2000 Compliant" shall have the meaning ascribed to such term in
SECTION 2.27 hereof.
[SIGNATURES ON FOLLOWING PAGE]
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<PAGE>
[Signature pages to the Amended and Restated Big Stuff Acquisition Agreement]
IN WITNESS WHEREOF, Parent, the Acquisition Subsidiary, Big Stuff and the
Big Stuff Shareholders have caused this Restated Agreement to be signed by their
duly authorized respective officers, all as of the date first written above.
<TABLE>
<S> <C> <C>
ADVANCED COMMUNICATIONS GROUP, INC.
By: /s/ MICHAEL PRUSS
-----------------------------------------
Name: Michael Pruss
Title: Chief Financial Officer and
Secretary
ACG ACQUISITION VI CORP.
By: /s/ MICHAEL PRUSS
-----------------------------------------
Name: Michael Pruss Title: Secretary
BIG STUFF, INC.
By: /s/ RICHARD L. REID
-----------------------------------------
Title: CEO
/s/ RICHARD O'NEAL
-----------------------------------------
RICHARD O'NEAL
/s/ RICHARD L. REID
-----------------------------------------
RICHARD L. REID
</TABLE>
C-45
<PAGE>
<TABLE>
<C> <S> <C>
ARTICLE I--TERMS OF THE MERGER..................................... C-2
1.1 THE MERGER.................................................. C-2
1.2 EFFECTIVE TIME.............................................. C-2
1.3 MERGER CONSIDERATION........................................ C-3
1.4 STOCKHOLDERS' RIGHT UPON MERGER............................. C-3
1.5 SURRENDER AND EXCHANGE OF SHARES............................ C-3
1.6 BYLAWS...................................................... C-4
1.7 OTHER EFFECTS OF MERGER..................................... C-4
1.8 TAX-FREE REORGANIZATION..................................... C-4
1.9 CONVERTIBLE NOTE............................................ C-4
1.11 ADDITIONAL ACTIONS.......................................... C-5
ARTICLE II--REPRESENTATIONS AND WARRANTIES OF BIG STUFF AND THE BIG
STUFF SHAREHOLDERS............................................... C-5
2.1 ORGANIZATION AND GOOD STANDING.............................. C-5
2.2 CAPITALIZATION.............................................. C-5
2.3 SUBSIDIARIES................................................ C-5
2.4 AUTHORIZATION; BINDING AGREEMENT............................ C-5
2.5 GOVERNMENTAL APPROVALS...................................... C-6
2.6 NO VIOLATIONS............................................... C-6
2.7 LITIGATION.................................................. C-6
2.8 BIG STUFF FINANCIAL STATEMENTS.............................. C-7
2.9 ABSENCE OF CERTAIN CHANGES OR EVENTS........................ C-7
2.10 COMPLIANCE WITH LAWS........................................ C-7
2.11 PERMITS..................................................... C-8
2.12 FINDERS AND INVESTMENT BANKERS.............................. C-8
2.13 CONTRACTS................................................... C-8
2.14 EMPLOYEE BENEFIT PLANS...................................... C-8
2.15 TAXES AND RETURNS........................................... C-9
2.16 LIABILITIES................................................. C-10
2.17 ENVIRONMENTAL MATTERS....................................... C-10
2.18 INTELLECTUAL PROPERTY; FICTITIOUS NAMES..................... C-11
2.19 REAL ESTATE................................................. C-11
2.20 CORPORATE RECORDS........................................... C-11
2.21 TITLE TO AND CONDITION OF PERSONAL PROPERTY................. C-11
2.22 NO ADVERSE ACTIONS.......................................... C-11
2.23 LABOR MATTERS............................................... C-12
2.24 INSURANCE................................................... C-12
2.25 DISCLOSURE.................................................. C-12
2.26 TAX......................................................... C-12
2.27 YEAR 2000 COMPLIANCE........................................ C-12
ARTICLE III--REPRESENTATIONS AND WARRANTIES OF PARENT.............. C-13
3.1 ORGANIZATION AND GOOD STANDING.............................. C-13
3.2 CAPITALIZATION.............................................. C-13
3.3. SUBSIDIARIES................................................ C-13
3.4 AUTHORIZATION; BINDING AGREEMENT............................ C-14
3.5 GOVERNMENTAL APPROVALS...................................... C-14
3.6 NO VIOLATIONS............................................... C-14
3.7 SECURITIES FILINGS AND LITIGATION........................... C-15
3.8 PARENT FINANCIAL STATEMENTS................................. C-15
3.9 ABSENCE OF CERTAIN CHANGES OR EVENTS........................ C-16
3.10 COMPLIANCE WITH LAWS........................................ C-16
3.11 PERMITS..................................................... C-16
3.12 FINDERS AND INVESTMENT BANKERS.............................. C-16
3.13 CONTRACTS................................................... C-16
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C>
3.14 CORPORATE RECORDS........................................... C-16
3.15 TAX......................................................... C-16
3.16 DISCLOSURE.................................................. C-16
ARTICLE IV--ADDITIONAL COVENANTS OF BIG STUFF AND THE BIG STUFF
SHAREHOLDERS..................................................... C-17
4.1 NOTIFICATION OF CERTAIN MATTERS............................. C-17
4.2 ACCESS AND INFORMATION...................................... C-17
4.3 BIG STUFF SHAREHOLDER APPROVAL.............................. C-17
4.4 REASONABLE BEST EFFORTS..................................... C-18
4.5 COMPLIANCE.................................................. C-18
4.6 BENEFIT PLANS............................................... C-18
4.7 TAX OPINION CERTIFICATION................................... C-18
4.8 AFFILIATE AGREEMENTS........................................ C-18
4.9 TRANSFER RESTRICTIONS....................................... C-18
ARTICLE V--ADDITIONAL COVENANTS OF PARENT.......................... C-19
5.1 CONDUCT OF BUSINESS OF PARENT AND THE ACTIVE PARENT
SUBSIDIARIES.............................................. C-19
5.2 NOTIFICATION OF CERTAIN MATTERS............................. C-19
5.3 ACCESS AND INFORMATION...................................... C-20
5.4 COMPLIANCE.................................................. C-20
5.5 SEC AND SHAREHOLDER FILINGS................................. C-20
5.6 TAX TREATMENT............................................... C-20
5.7 EMPLOYMENT AND EMPLOYEE BENEFIT PLANS....................... C-20
5.8 EXPENSES....................................................
5.9 PARENT SHAREHOLDER APPROVAL.................................
ARTICLE VI--ADDITIONAL COVENANTS OF THE PARENT, BIG STUFF AND THE BIG
STUFF SHAREHOLDERS............................................... C-21
6.1 REGISTRATION OF SECURITIES.................................. C-21
6.3 CONSENTS.................................................... C-22
6.3 LEGAL REQUIREMENTS..........................................
6.4 PUBLIC ANNOUNCEMENTS........................................
6.5 CONDUCT OF BUSINESS PRIOR TO CLOSING DATE...................
6.7 NO SOLICITATION OF ACQUISITION PROPOSAL..................... C-26
6.8 RESIGNATIONS................................................ C-26
6.9 CONFIDENTIALITY............................................. C-26
ARTICLE VII--CONDITIONS TO CLOSING................................. C-28
7.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO CLOSING.......... C-28
7.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF SHAREHOLDERS AND
COMPANY................................................... C-29
7.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF PARENT.......... C-30
ARTICLE VIII--TERMINATION AND ABANDONMENT.......................... C-31
8.1 TERMINATION................................................. C-31
8.2 PROCEDURE UPON TERMINATION.................................. C-32
ARTICLE IX--SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION.................................................. C-32
9.1 INDEMNIFICATION BY THE BIG STUFF SHAREHOLDERS............... C-32
9.2 METHOD OF ASSERTING CLAIMS.................................. C-33
9.3 THIRD PARTY CLAIMS.......................................... C-33
9.4 SURVIVAL.................................................... C-35
9.5 LIMITATIONS................................................. C-35
9.6 THE REPRESENTATIVE.......................................... C-35
9.7 INDEMNIFICATION BY THE PARENT............................... C-36
ARTICLE X--MUTUAL RELAEASE......................................... C-37
10.1 MUTUAL RELEASE OF ALL CLAIMS................................ C-37
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C>
10.2 COVENANT NOT TO SUE......................................... C-37
10.3 NO ADMISSION OF LIABILITY................................... C-38
ARTICLE XI--AMENDMENT AND WAIVER................................... C-38
11.1 AMENDMENT OF THIS RESTATED AGREEMENT........................ C-38
11.2 EXTENSION; WAIVER........................................... C-38
ARTICLE XII--GENERAL PROVISIONS.................................... C-38
12.1 NOTICES..................................................... C-38
12.2 INTERPRETATION.............................................. C-39
12.3 COUNTERPARTS................................................ C-39
12.4 ENTIRE AGREEMENT; ASSIGNMENT................................ C-39
12.5 SEVERABILITY................................................ C-39
12.6 OTHER REMEDIES.............................................. C-39
12.7 GOVERNING LAW............................................... C-40
12.8 RULES OF CONSTRUCTION....................................... C-40
ARTICLE XIII--DEFINITIONS.......................................... C-40
13.1 DEFINITIONS................................................. C-40
</TABLE>
SCHEDULES
<TABLE>
<S> <C>
Schedule 2.1 Jurisdictions of Incorporation and Qualification
Schedule 2.2 Capitalization
Schedule 2.5 Governmental Approvals
Schedule 2.6 No Violations
Schedule 2.7 Litigation
Schedule 2.9 Absence of Certain Changes or Events
Schedule 2.13 Contracts
Schedule 2.14 Employee Benefit Plans
Schedule 2.15 Taxes
Schedule 2.16 Liabilities
Schedule 2.17 Environmental Matters
Schedule 2.18 Intellectual Property
Schedule 2.19(b) Real Estate--Leased
Schedule 2.20 Corporate Records
Schedule 2.22 No Adverse Actions
Schedule 2.23 Labor Matters
Schedule 2.27 Year 2000 Compliance
Schedule 3.1 Parent Jurisdictions of Incorporation and Qualification
Schedule 3.2 Parent Securities Filings
Schedule 3.3 Parent Subsidiaries
Schedule 3.7(b) Parent Litigation
Schedule 3.8 Parent Liabilities
Schedule 3.9 Absence of Certain Changes or Events
Schedule 3.13 Parent Contracts
Schedule 6.6(b)(i) Big Stuff Securities Issuances, Etc.
Schedule 6.6(b)(ii) Parent Securities Issuances, Etc.
</TABLE>
<PAGE>
Tuesday August 3, 1999
COMPANY PRESS RELEASE
ADVANCED COMMUNICATIONS COMPLETES
SWITCH INSTALLATION,
BEGINS CARRYING LOCAL CALLS
St. Louis (August 3, 1999) -- Advanced Communications (ACG) (NYSE: ADG) has
completed all phases of installing a Nortel DMS-500 multi-system switching
system at the ACG facility in Wichita KS. "Local calls moving through the system
completes the process that includes equipment, staffing, training and regulatory
elements," says Richard O'Neal, chairman and CEO of ACG. Long distance calls
began moving through the center, earlier this year.
"This is a significant milestone since it meets all present and future needs for
local and long distance calls while providing the technology base on which to
expand state-of-the-art data and voice services," adds O'Neal. The DMS-500
system is capable of serving over 128,000 lines or 80,000 trunks, while
providing a platform capable of supporting the next generation of network
services
"Having full internal capabilities will allow new ownership to move the
operation from being a reseller of telephone services to being a provider of
enhanced services," says Tony Capers, president and COO of ACG. A family of
enhanced services is now being developed by the ACG technology enhancement
division, Telcom Resources, Inc. (TRI) based in Dallas, TX.
On July 15, ACG announced the execution of a definitive agreement to sell its
entire base of telecommunications operations to Compass Telecommunications, Inc.
The transaction is subject to shareholder and various regulatory approvals,
including those of the FCC and state public service commissions.
<PAGE>
Thursday August 5, 1999
COMPANY PRESS RELEASE
Advanced Communications Announces Solid Second Quarter Results
ST. LOUIS (August 5, 1999) - Advanced Communications Group, Inc. (ACG) (NYSE:
ADG) today announced solid operating results for the second quarter ended June
30, 1999. Consistent with previous announcements of a change in business focus
and strategy, ACG's financial statements represent principally the results and
condition of the company's yellow pages subsidiary, Great Western Directories,
Inc. ACG announced previously its plans and related definitive agreement to
divest its telecommunications services operations for $49.8 million subject to
adjustment based on working capital at closing. Accordingly, the results of
telecommunications services operations have been presented as discontinued
operations.
Yellow pages publishing revenue for the quarter ended June 30, 1999, was $14.5
million, representing an increase of 13.1 percent from the comparable quarter of
1998. Earnings before interest, taxes, depreciation, amortization and
stock-based compensation (EBITDA) of $0.1
<PAGE>
million declined 96.4 percent from $2.8 million in the comparable quarter of
1998. Loss per share from continuing operations of $0.06 declined three-fold
from earnings of $0.03 in the comparable quarter of 1998. This decline in
EBITDA is due principally to publishing and distributing a prototype
directory in the greater Austin, TX market. Consistent with industry
marketing practices, ad space was offered to customers either at a steep
discount or free-of-charge in this prototype directory. Consequently, the
company recognized a net loss in the current quarter relating to the Austin
prototype directory of $3.1 million on a pre-tax basis and $0.09 per share
net of income taxes.
Revenue, excluding the Austin prototype directory, for the three months ended
June 30, 1999 was $13.7 million, representing an increase of 6.9 percent over
the comparable quarter of 1998. Excluding the Austin prototype directory, EBITDA
was $3.2 million in second quarter 1999, representing an increase of 14.3
percent over the comparable quarter of 1998. Operating efficiencies drove margin
improvement, as EBITDA margin was 23.6 percent in the second quarter 1999 versus
21.7 percent in the comparable quarter of 1998. Earnings per share from
continuing operations, excluding the Austin prototype directory, of $0.02
declined 33.3 percent from $0.03 in the comparable quarter of 1998 due
principally to greater interest expense in the current period.
Commenting on the current quarter, Richard O'Neal, chairman & CEO, stated,
"These results validate the underlying strength of our print directory assets,
which we plan to leverage to grow the Internet directory. Austin and the
surrounding communities have shown tremendous potential, so much so that we plan
to use that market as one of the launching pads for future services."
For the six months ended June 30, 1999, yellow pages publishing revenue of $33.2
million rose 6.4 percent from the pro forma* results in the comparable period of
1998. EBITDA of $4.6 million in the current six-month period declined 30.3
percent from $6.6 million in the pro forma* comparable period of 1998. This $2.0
million decline in EBITDA is due principally to the prototype directory in
Austin, TX, the $3.1 million impact of which was mitigated by productivity
gains, which accounted for EBITDA growth of $1.1 million. Loss per share from
continuing operations of $0.01 declined 150.0 percent from earnings of $0.02 in
the pro forma* comparable period of 1998 due principally to greater interest
expense in the current period.
Revenue, excluding the Austin prototype directory, was $32.4 million for the six
months ended June 30, 1999, representing an increase of 3.8 percent over the pro
forma* comparable period in 1998. Excluding the Austin prototype directory,
EBITDA was $7.7 million, representing an increase of 16.7 percent over the pro
forma* comparable period of 1998. Operating efficiencies drove margin
improvement, as EBITDA margin was 23.8 percent for the six months ended June 30,
1999, versus 21.0 percent in the pro forma* comparable period of 1998. Earnings
per share from continuing operations, excluding the Austin prototype directory,
of $0.07 declined 12.5 percent from $0.08 excluding stock-based compensation in
the pro forma* comparable period of 1998 due principally to greater interest
expense in the current period. WORLDPAGES.COM PRO FORMA** OPERATIONS
<PAGE>
ACG announced previously the execution of definitive agreements to acquire the
outstanding stock of YPtel Corporation (a yellow pages company), Web YP, Inc.
(an Internet directory d/b/a WorldPages.com) and a related company, Big Stuff,
Inc., a web site production and design company. This proposed transaction is a
major component of ACG's new strategy to focus on print and Internet directories
and subject to various contingencies including shareholder and regulatory
approvals, which management is targeting by the end of the third quarter. If
approved and upon closing, the combined companies will be re-named
WorldPages.com, Inc., and, its stock will continue to be traded on the NYSE
under a new symbol.
O'Neal added, "We are pleased with our progress toward completion of the
WorldPages.com business combination. We submitted our proxy to regulatory
authorities on July 1, 1999, and are awaiting the completion of the review
process. Once the review process is completed, we can set the date of our annual
meeting and final vote count and mail the proxy to shareholders for their
consideration. In the meantime, it is in the best interest of shareholders that
we not engage in promotional activities that might be misinterpreted by
regulatory authorities, which could jeopardize timely completion of the proposed
combination."
For the twelve months ended June 30, 1999, pro forma** revenue was $91 million
and pro forma** EBITDA was $10 million, both unadjusted for prototype directory
results. As of June 30, 1999, pro forma** debt including short-term and current
maturities of long-term debt was $74 million. Pro forma** shares outstanding
assuming conversion of all warrants and options were approximately 40 million at
June 30, 1999. Pro forma** diluted shares outstanding as of June 30, 1999, were
approximately 36 million. It is important to note that these pro forma** results
for WorldPages.com, Inc. specifically exclude telecommunications services and do
not purport to represent the results or financial position that would have
actually occurred if the proposed business combination had in fact occurred on
or before July 1, 1998.
DISCONTINUED OPERATIONS
Telecommunications services revenue for the quarter ended June 30, 1999, was
$24.9 million representing increases of 2.9 percent and 63.6 percent over the
preceding quarter and comparable quarter of 1998, respectively.
Telecommunications services revenue grew as a result of both a growing base of
local access lines and rising minutes of use on ACG's switch-based long distance
network.
Local access lines rose from 138,000 to 141,000 during the second quarter 1999
and grew by 213.3 percent from 45,000 lines at June 30, 1998. In addition, long
distance minutes of use rose 3.3 percent from the first quarter 1999 to 96.9
million during the second quarter and rose 14.0 percent over the comparable
quarter of 1998. This growth in long distance traffic is partially a result of
the Nortel DMS-500 switch that was installed in Wichita, KS, which began
carrying long distance traffic during March 1999 and a small amount of local
traffic recently.
- - The pro forma financial information does not purport to represent the
financial position or results of operations of Advanced Communications
Group, Inc. that would have actually occurred if the initial public
offering and the concurrent acquisitions had in fact occurred on or before
January 1, 1998. Additionally, the pro forma financial information is not
<PAGE>
necessarily representative of the financial position or results of
operations of ACG for any future period. Since the acquired companies were
not under common control or management, historical combined results of
operations may not be comparable to, or indicative of future performance.
- - The pro forma financial information specifically excludes results of
telecommunications services operations and does not purport to represent
the financial position or results of operations of WorldPages.com, Inc.
that would have actually occurred if the proposed business combination had
in fact occurred on or before July 1, 1998. Additionally, the pro forma
financial information is not necessarily representative of the financial
position or results of operations of WorldPages.com, Inc. for any future
period. Since the companies to be combined were not under common control or
management, historical combined results of operations may not be comparable
to, or indicative of future performance.
Please consult WWW.ACGINC.NET and WWW.WORLDPAGES.COM for more information
concerning the companies.
<PAGE>
Wednesday August 25, 1999
COMPANY PRESS RELEASE
Advanced Communications cleared for telecom sale
ST. LOUIS (August 25, 1999) Advanced Communications Group, Inc. (ACG) (NYSE:
ADG) today announced that it received clearance for the proposed sale of its
telecommunications services operations from the Federal Trade Commission and
U.S. Department of Justice. Last month, ACG announced the execution of a
definitive agreement to sell its entire base of telecommunications operations
for cash of $49.8 million. The consideration is subject to adjustment based
on the amount of working capital at closing, which is expected by year-end
and is subject to other approvals and conditions.
Equally significant, ACG announced that it received clearance for its proposed
acquisition of YPtel Corporation from the Federal Trade Commission and U.S.
Department of Justice. Currently, clearance relating to the proposed
acquisitions of Web YP, Inc. and Big Stuff, Inc. is pending. On June 3, 1999,
ACG announced the execution of definitive agreements to acquire the outstanding
stock of YPtel Corporation, WebYP, Inc. (d/b/a WorldPages.com) and Big Stuff,
Inc., a web site production company. Upon closing, regulatory and shareholder
approvals, ACG will be re-named "WorldPages.com" and its stock will continue to
be traded on the New York Stock Exchange under a new symbol.
For more information, please visit WWW.ACGINC.NET and WWW.WORLDPAGES.COM.
<PAGE>
Wednesday October 27, 1999
COMPANY NEWS RELEASE
Advanced Communications Provides Updates Regarding
Proposed Transactions and Announces Board Change
<PAGE>
ST. LOUIS, Oct. 27 /PRNewswire/ -- Advanced Communications Group, Inc. (ACG)
(NYSE: ADG - NEWS) today announced that it has executed a revised definitive
agreement for the proposed acquisition of the outstanding stock of YPtel
Corporation. The revisions relate principally to the number of ACG shares to be
exchanged for YPtel shares, which have been increased to 15.0 million. In
addition, the parties have agreed to extend the termination date to January 31,
2000, with certain extension periods if necessary, and have agreed to remove a
contingency provision that could have resulted in additional shares being issued
to YPtel.
As a result of strong performance at YPtel's operating subsidiary, the value of
YPtel has increased significantly since the signing of the original agreement.
YPtel's new Portland directory posted solid results and, based on the success of
that market, YPtel is establishing a directory in the sizable Seattle market,
which will be its largest single market expansion to date.
YPtel distributes over 3.1 million directories annually in four western states
through its wholly owned subsidiary, Pacific Coast Publishing. Pacific Coast
serves eighteen cities, having added Seattle recently. For the twelve months
ended August 31, 1999, YPtel's revenue and earnings before interest, taxes,
depreciation and amortization (EBITDA) were $40.5 million and $8.3 million,
respectively. At August 31, 1999, YPtel's debt including short-term and current
maturities of long-term obligations was $40.5 million.
Richard O'Neal, Chairman and CEO, commented, "This is the right thing to do. The
revised number of shares more accurately reflects the value that YPtel adds to
the combined enterprise. Additionally, the revised agreement excludes some
contingencies and complexities associated with the former agreement and provides
us with additional time to complete the contemplated transactions. We appreciate
greatly our shareholders standing by us through this lengthy process. We believe
that our shareholders possess the same excitement and enthusiasm as we do for
the strategy to become WorldPages.com and create one of the premier print and
Internet directory companies."
In addition to the stock it plans to issue for YPtel, ACG plans to issue 4.5
million shares for the outstanding stock of Big Stuff, Inc. and Web YP, Inc.
(d/b/a WorldPages.com) as agreed previously. Pro forma* diluted shares
outstanding were 45.5 million at August 31, 1999, which assumes conversion of
$15 million of debt owed by ACG to its chairman and CEO and four other
individuals.
O'Neal added, "Regarding timing, because we must revise certain filings and
obtain shareholder approval of the YPtel/Big Stuff/WorldPages.com transactions,
it is difficult to estimate a precise closing date. However, all parties to the
agreement are working diligently toward achieving this end as soon as possible.
Separately, we expect to close the sale of the telecommunications services
operations before the end of December."
Finally, ACG announced that Marvin Moses has resigned his position on the board
of directors for personal reasons. O'Neal commented, "ACG is fortunate and
grateful for the leadership that Marv provided. We wish him the best in future
endeavors. Looking to the future, we have an opportunity to increase the
Internet bench-strength of our board as we seek to capitalize on the
intersection of the yellow-pages business and Internet advertising."
<PAGE>
- - The pro forma financial information does not purport to represent the
financial position of WorldPages.com, Inc. that would have actually existed
if the proposed business combination had in fact occurred on or before August
31, 1999. Additionally, the pro forma financial information is not
necessarily representative of the financial position of WorldPages.com, Inc.
for any future period.
Please consult WWW.ACGINC.NET and WWW.WORLDPAGES.COM for more information
concerning the companies.
<PAGE>
Wednesday November 3, 1999
COMPANY PRESS RELEASE
Advanced Communications Receives Final Anti-Trust
Clearance and Files Preliminary Proxy Statement
ST. LOUIS, Nov. 3 /PRNewswire/ -- Advanced Communications Group, Inc. (NYSE:
ADG - NEWS) today announced that it received clearance from the Federal Trade
Commission and U.S. Department of Justice in connection with the proposed
issuance of shares to Richard O'Neal, its chairman and CEO. The ACG common
shares are to be issued principally for the conversion of $15 million of debt
owed collectively to Mr. O'Neal and four other individuals and in exchange
for Mr. O'Neal's stock in Web YP, Inc. (d/b/a WorldPages.com) and Big Stuff,
Inc., a web site design and production company. ACG announced previously its
receipt of anti-trust clearances for both its proposed acquisition of YPtel
Corporation and the sale of its telecommunications services operations, both
of which are currently pending.
In addition, on October 27, 1999, ACG announced the execution of revised
definitive agreements to acquire the outstanding stock of YPtel Corporation,
WebYP, Inc. and Big Stuff, Inc. through the issuance of approximately 19.5
million shares. As a result of executing these revised definitive agreements,
ACG has filed today its preliminary proxy statement under rules of
confidentiality seeking clearance to submit a definitive proxy statement to
shareholders for their consideration of management's proposals, including the
previously described acquisitions. Upon shareholder approvals and closing,
ACG will be re-named "WorldPages.com" and its stock will continue to be
traded on the New York Stock Exchange under a new symbol.
For more information, please visit WWW.ACGINC.NET and WWW.WORLDPAGES.COM.
<PAGE>
Friday November 12 1999
COMPANY PRESS RELEASE
Advanced Communications Announces Third Quarter Results
Core Yellow Pages Business Reflects Sound Fundamentals
ST. LOUIS, Nov. 12 /PRNewswire/ -- Advanced Communications Group, Inc. (ACG)
(NYSE: ADG - NEWS) today announced continued solid operating results for the
third quarter ended September 30, 1999. Consistent with previous announcements
of a change in business focus and strategy, ACG's financial statements represent
principally the results and condition of the
<PAGE>
company's yellow pages subsidiary, Great Western Directories, Inc. In April
1999, ACG announced its intent to sell its telecommunications services
operations; accordingly, the results of telecommunications services
operations have been presented as discontinued operations.
Commenting on the results, Richard O'Neal, Chairman & CEO, stated, "We believe
our core yellow pages business reflects sound fundamentals. Quantitatively, our
top line growth was right in line with plan -- double digit for the quarter and
seven percent on a year-to-date basis. Qualitatively, recently compiled market
research data indicates that over 57 percent of those surveyed in the recently
added Austin, Texas market say our directory is the only one they use. We
believe all these results continue to validate the underlying strength of our
print directory assets, which we plan to leverage to execute our proposed
strategy of focusing on the Internet."
Yellow pages publishing revenue for the quarter ended September 30, 1999 was
$9.1 million, representing an increase of 10.4 percent from the comparable
quarter of 1998 and driven by a new directory in a smaller market and an
increase in advertising revenue from recurring directories. Earnings before
interest, taxes, depreciation, amortization and stock-based compensation
(EBITDA) from continuing operations was $0.7 million, representing an increase
of 9.7 percent from the comparable quarter of 1998. EBITDA margin from
continuing operations of 7.3 percent remained unchanged from the comparable
quarter of 1998. Net loss per share from continuing operations was $0.11
compared to a loss of $0.07 in the comparable quarter of 1998, representing a
decline of 57.1 percent due principally to higher interest and income tax
expenses in the current quarter.
For the nine months ended September 30, 1999, yellow pages publishing revenue of
$42.3 million rose 7.2 percent from the pro forma* results in the comparable
period of 1998. EBITDA from continuing operations of $5.3 million in the current
nine-month period declined 26.4 percent from $7.2 million in the pro forma*
comparable period of 1998. As explained in connection with results for the 1999
second quarter, this $1.9 million decline in EBITDA is due principally to the
prototype directory in Austin, Texas, the $3.1 million impact of which was
recognized during the second quarter of 1999. It is noteworthy that productivity
gains of $1.2 million mitigated the short-term dilutive impact of the Austin
prototype. Excluding the impact of the Austin prototype directory, EBITDA margin
for the nine months ended September 30, 1999 was 20.2 percent compared to 18.1
percent for the comparable period in 1998. Net loss per share from continuing
operations was $0.12 compared to a loss of $0.04 in the pro forma* year-ago
period, representing a decline of 200.0 percent due principally to greater
interest expense in the current nine-month period.
WorldPages.com Pro Forma** Operations
ACG announced previously the execution of revised definitive agreements to
acquire the outstanding stock of YPtel Corporation (a yellow pages company), Web
YP, Inc. (an Internet directory d/b/a WorldPages.com) and a related company, Big
Stuff, Inc., (a web site production and design company). This proposed
transaction is a major component of ACG's new strategy to focus on print and
Internet directories and is subject to shareholder approval. If approved and
upon closing, the combined companies will be re-named WorldPages.com, Inc., and,
its stock will continue to be traded on the NYSE under a new symbol.
<PAGE>
"As we announced last week," O'Neal added, "we have filed a revised preliminary
proxy statement under rules of confidentiality. Because this filing included pro
forma** operating results through June 30, 1999, we are abstaining from
reporting pro forma** operating results for subsequent periods while our
documents are under review." As reported with results for second quarter 1999,
for the twelve months ended June 30, 1999, pro forma** revenue was $91 million
and pro forma** EBITDA was $10 million, both unadjusted for prototype directory
results. As of June 30, 1999, pro forma** debt including short-term and current
maturities of long-term debt was $74 million, which does not reflect any
reduction resulting from the application of proceeds from the sale of the
telecommunications services operations. Pro forma** diluted shares outstanding
as of June 30, 1999, were approximately 45.5 million.
- - The pro forma financial information does not purport to represent the
financial position or results of operations of Advanced Communications
Group, Inc. that would have actually occurred if the initial public
offering and the concurrent acquisitions had in fact occurred on or before
January 1, 1998. Additionally, the pro forma financial information is not
necessarily representative of the financial position or results of
operations of ACG for any future period. Since the acquired companies were
not under common control or management, historical combined results of
operations may not be comparable to, or indicative of future performance.
- - The pro forma financial information specifically excludes results of
telecommunications services operations and does not purport to represent
the financial position or results of operations of WorldPages.com, Inc.
that would have actually occurred if the proposed business combination had
in fact occurred on or before July 1, 1998. Additionally, the pro forma
financial information is not necessarily representative of the financial
position or results of operations of WorldPages.com, Inc. for any future
period. Since the companies to be combined were not under common control or
management, historical combined results of operations may not be comparable
to, or indicative of future performance.
Please consult WWW.ACGINC.NET and WWW.WORLDPAGES.COM for more information
concerning the companies.
<PAGE>
Friday November 19, 1999
COMPANY PRESS RELEASE
Advanced Communications Receives Final State Regulatory
Clearance for Sale of Telecom Operations
ST. LOUIS, Nov. 19 /PRNewswire/ -- Advanced Communications Group, Inc.
(ACG)(NYSE: ADG - NEWS) today announced that it received clearance for the
sale of its telecommunications services operations from the last
remaining state regulatory body required for closing. ACG expects the
closing to occur within the next few business days once other administrative
details are finalized. At that time, ACG will have a comprehensive
announcement relating to the closing of the sale of its telecommunications
services operations.
<PAGE>
Please visit WWW.ACGINC.NET for more information.
<PAGE>
Monday November 22, 1999
COMPANY PRESS RELEASE
Advanced Communications Closes Sale of Telecom Operations
ST. LOUIS, Nov. 22 /PRNewswire/ -- Advanced Communications Group, Inc.
(ACG) (NYSE: ADG - NEWS) today announced that it closed the sale of its
telecommunications services operations to Ionex Telecommunications, Inc.
(formerly Compass Telecommunications, Inc.). Net cash proceeds were $42.6
million, representing a gross sales price of $49.8 million less a
preliminary adjustment for working capital of $7.2 million.
Richard O'Neal, ACG Chairman and CEO stated, "We are pleased to leave our
telecom services customers in capable hands and look forward to partnering with
Ionex in the future. This divestiture is consistent with our change in strategic
focus to expand the yellow pages business as WorldPages.com. The combination of
selling our telecom operations and the positive cash flow from our underlying
print yellow pages business provide us needed financial flexibility."
Management expects to use the cash proceeds from the sale for paying down ACG's
revolving credit facility with Bank of America Corporation and general corporate
purposes. ACG and Bank of America have agreed to amend their existing credit
facility to allow borrowings of up to $15.0 million, subject to certain
restrictions.
Effective with the pay-down of the revolving credit facility with Bank of
America, ACG has total debt outstanding of $25.0 million, which is composed of
$8.0 million under the amended facility with Bank of America, $2.0 million of
convertible notes due in February 2000, and $15.0 million of subordinated debt
that will be converted to ACG common stock upon closing the proposed
acquisitions of YPtel Corp., Web YP, Inc. and Big Stuff, Inc.
Pursuant to definitive agreements, ACG plans to acquire the outstanding stock of
YPtel Corp., WebYP, Inc. (d/b/a WorldPages.com) and a web site design and
production company, Big Stuff, Inc. Upon closing and shareholder approval, ACG
will be re-named "WorldPages.com" and its stock will continue to be traded on
the New York Stock Exchange under a new symbol. "This sale," O'Neal added,
"further enables our creating a world-class, integrated network of print and
Internet directories to take advantage of the convergence of these advertising
mediums."
Please visit WWW.ACGINC.NET and WWW.WORLDPAGES.COM for more information.
