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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 8-K
CURRENT REPORT
Pursuant to Section 10 or 15(d) of the
Securities Exchange Act of 1934
JUNE 30, 1996
----------------------------------------------------
Date of Report (date of earliest event reported)
NETWORK LONG DISTANCE, INC.
-----------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 0-23172 72-1122018
- ---------------- ------------ -------------------
(State or Other (Commission (IRS Employer Iden-
Jurisdiction of File Number) tification Number)
Incorporation)
525 FLORIDA STREET
BATON ROUGE, LOUISIANA 70801
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(Address of Principal Executive Offices
Including Zip Code)
(504) 343-3125
-----------------------------------
(Registrant's telephone number,
including area code)
Page 1 of 5.
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Item 1. CHANGES IN CONTROL OF REGISTRANT
N/A
Item 2. ACQUISITION OR DISPOSITION OF ASSETS
On June 30, 1996, the Registrant signed a definitive agreement to
acquire all of the issued and outstanding shares of Long Distance
Telecom, Inc., a Virginia corporation ("LDT"). The Registrant valued
the transaction at approximately $3,650,000 and issued to the
shareholders of LDT a total of 337,058 shares of its "restricted"
common stock for the outstanding shares of LDT.
Registrant believes the acquisition of LDT to be beneficial as it will
allow for the consolidation and reduction in overhead costs while
increasing overall revenues from operations. Registrant also believes
the acquisition will enhance its corporate image in an area of the
country in which it has had limited operations and may provide
additional acquisition opportunities.
There exists no material relationship between the Registrant, its
officers and directors and LDT and its officers, directors or
affiliates. The "restricted" common stock used by the Registrant to
purchase the LDT shares was from the Registrant's authorized but
unissued common stock.
Based outside of Washington, D.C., LDT is a switched-based inter-
exchange carrier providing telecommunications services primarily to
commercial customers.
Item 3. BANKRUPTCY OR RECEIVERSHIP
N/A
Item 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANTS
N/A
Item 5. OTHER EVENTS
N/A
Item 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS
N/A
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Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) and (b) The pro forma financial information and audited
financial statements required by this Item will be
filed as an amendment to this Report no later than
sixty (60) days from the date of this Report.
(c) Exhibits: Filed herewith pursuant to Reg. S-K Item 601
Exhibit No. Page Description
- ----------- ---- -----------
1 5 Share Exchange Agreement between the Registrant
and Long Distance Telecom, Inc., dated June 30,
1996.
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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.
NETWORK LONG DISTANCE, INC.
Dated: July 8, 1996 By: /s/ Marc I. Becker
-------------------------------
Marc I. Becker,
Executive Vice President
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SHARE EXCHANGE AGREEMENT
dated as of
June 30, 1996
between
NETWORK LONG DISTANCE, INC.
and
LONG DISTANCE TELECOM, INC.
and
SHAREHOLDERS
OF
LONG DISTANCE TELECOM, INC.
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TABLE OF CONTENTS
PAGE
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ARTICLE I
TRANSACTION
Section 1.1 Share Exchange 1
ARTICLE II
CLOSING
Section 2.1 Closing 2
Section 2.2 Location of Closing 2
ARTICLE III
CONDITIONS OF CLOSING
Section 3.1 Conditions Precedent to the Closing 2
Section 3.2 Additional Conditions Precedent to the Closing 3
Section 3.3 Legends 4
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 Corporate Existence and Power 4
Section 4.2 Authorization; Contravention; Modifications 5
Section 4.3 Approvals 5
Section 4.4 Binding Effect 5
Section 4.5 Financial Information 6
Section 4.6 Taxes 6
Section 4.7 Litigation 6
Section 4.8 Compliance with Laws 7
Section 4.9 Subsidiaries 7
Section 4.10 Debt 7
Section 4.11 No Default 7
Section 4.12 Capitalization 7
Section 4.13 Material Contracts 9
Section 4.14 Investment Intent 9
Section 4.15 Fees for Brokers and Finders 10
Section 4.16 Misstatements 10
Section 4.17 Company Representations 10
Section 4.18 LDT Representations 11
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ARTICLE V
TERMINATION
Section 5.1 Termination 12
Section 5.2 Expenses and Fees 13
ARTICLE VI
MISCELLANEOUS
Section 6.1 Notices 13
Section 6.2 No Waivers; Remedies; Specific Performance 13
Section 6.3 Amendments, Etc 14
Section 6.4 Accounting Terms and Determinations 14
Section 6.5 Governing Law 14
Section 6.6 Counterparts; Effectiveness 14
Section 6.7 Severability of Provisions 14
Section 6.8 Headings and References 14
Section 6.9 Survival 14
Section 6.10 Non-Exclusive Jurisdiction 15
Section 6.11 Waiver of Jury Trial 15
Section 6.12 Affiliate 15
Section 6.13 Non-Recourse 15
Section 6.14 Entire Agreement 15
Section 6.15 Attorney's Fees 16
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ANNEX
Annex A - Definitions
EXHIBITS
Exhibit 3.1(f)(1) - Certificate of Secretary of the Company or LDT
Exhibit 3.1(f)(2) - Certificate of Officer of the Company or LDT
Exhibit 3.1(f)(5) - Opinion of Counsel for the Company
Exhibit 3.1(f)(6) - Opinion of Counsel for LDT
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SHARE EXCHANGE AGREEMENT
SHARE EXCHANGE AGREEMENT dated as of June 30, 1996 between NETWORK
LONG DISTANCE, INC., a Delaware corporation (the "COMPANY"), and LONG DISTANCE
TELECOM, INC., a Virginia corporation and the SHAREHOLDERS OF LONG DISTANCE
TELECOM, INC. (collectively known as "LDT").
Terms not otherwise defined in this Share Exchange Agreement have the
meanings stated in Annex A.
The parties agree as follows:
ARTICLE I
TRANSACTIONS
SECTION 1.1 SHARE EXCHANGE. Subject to the terms and conditions set
forth in this Agreement,
(a) at the Closing,
(1) the Company shall issue, sell and deliver to LDT shareholders, in
consideration of the sale and delivery to the Company all of the LDT Shares, and
LDT shall purchase, accept and acquire from the Company, that number of shares
of Common Stock (the "COMPANY SHARES") which has been valued at $3,650,000, with
the number of shares of Common Stock determined by dividing $3,650,000 by the
average of the closing price of the Company's Common Stock as reported by the
National Association of Securities Dealers, Inc. Automated Quotation System
("NASDAQ") over the fifteen trading days prior to the Closing; and
(2) LDT shall sell and deliver to the Company, in consideration of the
issuance, sale and delivery to LDT of the Company Shares, and the Company shall
purchase, accept, and acquire from LDT, 100,000,000 shares of voting common
stock, no par value, of LDT (the "LDT SHARES"), which represent all the issued
and outstanding shares of such common stock; and
(3) The Company shall file a registration with respect to the Company
Shares, with the Securities and Exchange Commission, in full compliance with all
the applicable rules thereof, within sixty (60) days of the Closing Date and
maintain a current registration statement with respect to the Company Shares for
a period of two (2) years from the effective date of the registration statement.
In no event will the Company allow the registration statement to be declared
effective prior to a public announcement by the Company of one (1) full month's
combined operations of LDT and the Company. Said public announcement shall be
made within fifteen (15) days after one (1) full month of combined operations of
LDT and the Company, and not later than August 15, 1996. The first full month
of combined operations of the Company shall commence on July 1, 1996 and end on
July 31, 1996.
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ARTICLE II
CLOSING
SECTION 2.1 CLOSING. The closing of the transaction subject to
Section 1.1 ( the "CLOSING TRANSACTION") shall take place (the "CLOSING") on or
before June 30, 1996 (the "CLOSING DATE").
SECTION 2.2 LOCATION OF CLOSING. The Closing shall take place at the
corporate offices of the Company at its address stated on the signature pages of
this Share Exchange Agreement or at such other location as agreed to by the
parties.
ARTICLE III
CONDITIONS OF CLOSING
SECTION 3.1 CONDITIONS PRECEDENT TO THE CLOSING. The obligations of
each party under this Share Exchange Agreement with respect to the Transaction
are subject to the satisfaction of each of the following conditions, unless such
conditions either are required to be satisfied by such party (for the benefit of
the other party) or are waived by such party at or before the Closing:
(a) each party shall have obtained, if necessary, from each
Governmental Body or other person any Approval necessary or taken all actions
required to be taken in connection with each Approval, for (1) the due execution
and delivery by such party of each Transaction Document to which it is or may
become a party, and (2) the conclusion of the Closing Transaction;
(b) no Action shall be pending or, to the knowledge of either
party, threatened against such party or any other person that restricts in any
material respect or prohibits (or, if successful, would restrict or prohibit)
the conclusion of the Closing;
(c) neither party (1) is in violation of or default, in any
material respect, with respect to any Regulation of any Governmental Body or any
decision, ruling, order or award of any arbitrator applicable to it or its
business, properties or operations, (2) would be in violation of or default, in
any material respect, with respect to the same in connection with or as a result
of the conclusion of the Closing, or (3) has received notice that, in connection
with or as a result of the conclusion of the Closing Transaction, as the case
may be, it is or would be in violation of or default, in any material respect,
with respect to the same;
(d) the representations and warranties of the other party
contained in each Transaction Document to which such other party is a party
shall be true and correct in all material respects on and as of the Closing
Date, with the same force and effect as though made on and as of the Closing
Date;
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(e) the other party shall have performed, in all material
respects, all of the covenants and other obligations that are required by the
Transaction Documents to which it is a party to be performed by such other party
at or before the Closing; and
(f) the party shall have received from the other party the
following, each dated the Closing Date, in form and substance reasonably
satisfactory to the receiving party, and upon which the parties have expressly
relied in entering into this Transaction:
(1) a certificate of the Secretary or an Assistant Secretary of such
other party substantially in the form of EXHIBIT 3.1(f)(1), with respect
to (i) the articles of incorporation of such other party, (ii) the bylaws
of such other party, (iii) the resolutions of the Board of Directors of
such other party approving each Transaction Document and the other
documents to be delivered by it under the Transaction Documents and (iv)
the names and true signatures of the officers of such other party
authorized to sign each Transaction Document to which such other party is a
party as of the Closing Date, and the other documents to be delivered by
such other party under such Transaction Documents;
(2) a certificate of the President or a Vice President of such other
party, substantially in the form of EXHIBIT 3.1(f)(2) to the effect that
(i) the representations and warranties of such other party contained in the
Transaction Documents to which it is a party are true and correct in all
material respects as of the Closing Date, and (ii) such other party has
performed, in all material respects, all covenants and other obligations
required by the Transaction Documents to which it is a party to be
performed by it at or before the Closing;
(3) a certificate of the Secretary of State of each jurisdiction in
which such other party is incorporated, dated as of a recent date, as to
the good standing of and payment of assessments by such other party and as
to the charter documents of such other party on file in the office of the
Secretary of State;
(4) with respect to the Company and LDT, a favorable opinion of one
or more counsel for the Company and LDT, which together are substantially
in the form of EXHIBIT 3.1(f)(5) AND EXHIBIT 3.1(f)(6) RESPECTIVELY, in
each case to the extent indicated therein as applicable to the Closing and
as to other matters reasonably requested by the receiving party.
SECTION 3.2 ADDITIONAL CONDITIONS PRECEDENT TO THE CLOSING. The
obligations of each party under this Share Exchange Agreement with respect to
the Closing Transaction are also subject to the satisfaction of each of the
following conditions at or before the Closing, unless the conditions either are
required to be satisfied by such party (for the benefit of the other party) or
are waived by the party:
(a) at least two-thirds (2/3) of the voting shares of LDT shall
have duly approved this Agreement.;
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(b) on or within ten (10) business days of the Closing Date, the
Company shall have duly executed and delivered to each of the Shareholders of
LDT, who have not exercised dissenter's rights, one or more certificates
representing the Company Shares; and
(c) on or within ten (10) days of the Closing Date, LDT shall
have delivered to the Company one or more certificates representing all of the
LDT Shares, duly endorsed for transfer or together with a stock power duly
endorsed for transfer.
SECTION 3.3 LEGENDS.
(a) Each certificate for Company Shares and any certificate for
Company Shares issued in exchange or on conversion or upon transfer, except
certificates for the Company Shares issued in connection with a sale registered
under the Securities Act and except as provided below, shall bear legends
similar to or having the following effect:
(1) "The shares represented by this certificate have not been
registered under the Securities Act of 1933 and may not be offered, sold,
transferred or otherwise disposed of except in compliance with said Act."
(2) "The shares represented by this certificate are subject to the
restrictions contained in the Share Exchange Agreement dated as of June 30,
1996, a copy of which is on file at the office of the Secretary of the
Company."
(b) The legend stated in Section 3.3(a)(1) shall be removed by
delivery of one or more substitute certificates without such legend if the
holder thereof shall have delivered to the Company a copy of a letter from the
staff of the Securities and Exchange Commission or an opinion of legal counsel,
in form and substance reasonably satisfactory to the Company, to the effect that
the legend is not required for purposes of the Securities Act.
(c) The legend stated in Section 3.3(a)(2) shall be removed at
such time as the related securities are no longer subject to the Share Exchange
Agreement or as may be sold under any exemptions from registration as provided
by the Securities Act of 1933, as amended.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Each party represents and warrants, with respect to itself as follows
(the Company or LDT being referred to in this Article IV as a "SUBJECT
COMPANY"):
SECTION 4.1 CORPORATE EXISTENCE AND POWER. The representing party,
and the Subject Company each (1) is a corporation duly incorporated, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, (2) has all necessary corporate power and
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authority and all material licenses, authorizations, consents and approvals
required to own, lease, license or use its properties now owned, leased,
licensed or used and proposed to be owned, leased, licensed or used and to carry
on its business as now conducted and proposed to be conducted, (3) is duly
qualified as a foreign corporation under the laws of each jurisdiction in which
both (A) qualification is required either (i) to own, lease, license or use its
properties now owned, leased, licensed and used or (ii) to carry on its business
as now conducted and (B) the failure to be so qualified could materially and
adversely affect either or both of (i) the business, properties, operations,
prospects or condition (financial or otherwise) of the Subject Company, and
(ii) the ability of the representing party or the Subject Company to perform its
obligations under any Transaction Document to which it is or may become a party
and (4) has all necessary corporate power and authority to execute and deliver
each Transaction Document to which it is or may become a party.
SECTION 4.2 AUTHORIZATION; CONTRAVENTION; MODIFICATIONS. Subject to
obtaining the Approvals referred to in Section 4.3, the execution and delivery
by the representing party of each Transaction Document to which the representing
party is or may become a party and the performance by it of its obligations
under each such Transaction Document have been duly authorized by all necessary
corporate action and do not and will not (1) contravene, violate, result in a
breach of or constitute a default under, (A) its articles of incorporation or
bylaws, (B) any Regulation of any Governmental Body or any decision, ruling,
order or award of any arbitrator by which the representing party or any of its
properties may be bound or affected or (C) any agreement, indenture or other
instrument to which the representing party is a party or by which the
representing party or its properties may be bound or affected, (2) except as
contemplated by the Transaction Documents, result in or require the creation or
imposition of any Lien on any of the properties now owned or hereafter acquired
by the representing party.
SECTION 4.3 APPROVALS.
(a) No prior approval of any Governmental Body or other person,
except as provided herein, is required or advisable on the part of the
representing party for (1) the due execution and delivery by the representing
party of any Transaction Document to which it is or may become a party, (2) the
conclusion of the Closing Transaction, and (3) the performance by the
representing party of its obligations under each Transaction Document to which
it is or may become a party with respect to the Closing Transaction.
SECTION 4.4 BINDING EFFECT. Each Transaction Document to which the
representing party is or may become a party is, or when executed and delivered
in accordance with this Share Exchange Agreement will be, the legally valid and
binding obligation of the representing party enforceable against it in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally and general principles of equity, including, without
limitation, concepts of materiality, reasonableness, good faith and fair dealing
and the possible unavailability of specific performance or injunctive relief,
regardless of whether considered in a proceeding in equity or at law.
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SECTION 4.5 FINANCIAL INFORMATION.
(a) The consolidated balance sheets of the Subject Company and
its Consolidated Subsidiaries, if any, as of the last day of its latest two (2)
fiscal years (the "Balance Sheet Date") and the related consolidated statements
of operations, shareholders' equity and cash flows for the last day of its
latest three (3) years then ended, reported on by the independent public
accountants of the representing party (and, with respect to the Company, filed
with the Securities and Exchange Commission in the Company's Annual Report on
Form 10-K for the year ended March 31, 1996 to be filed on or about June 30,
1996), a true and complete copy of which has been delivered to the other party,
fairly present the consolidated financial position of the Subject Company and
its Consolidated Subsidiaries, if any, as of that date and their consolidated
results of operations and cash flows for the year then ended, in accordance with
GAAP and Regulation S-X of the Securities Act of 1933 applied on a consistent
basis except as described in the footnotes to such financial statements or as
disclosed in writing to the other party, which writing makes reference to this
Agreement.
(b) The representing party has made available to the other party
copies of each management letter, if any, delivered to the representing party by
the independent public accountants of the representing party in connection with
the financial statements referred to in this Section 4.5 or relating to any
review by them of the internal controls of the Subject Company and its
Consolidated Subsidiaries, if any, during the three years ended on its Balance
Sheet Date or thereafter, and has made available for inspection all reports and
working papers produced or developed by them or management in connection with
their examination of those financial statements, as well as all such reports and
working papers for prior periods for which any liability of the Subject Company
and its Subsidiaries, if any, for Taxes has not been finally determined or
barred by applicable statutes of limitation.
SECTION 4.6 TAXES. Each of the Subject Company and its Subsidiaries,
if any, has filed all Tax Returns that are required to be filed with any
Governmental Body and has paid all Taxes due pursuant to the Tax Returns or any
assessment received by it or otherwise required to be paid, except Taxes being
contested in good faith by appropriate proceedings and for which adequate
reserves or other provisions are maintained, and except for the filing of Tax
Returns as to which the failure to file could not, individually or in the
aggregate, have a Material Adverse Effect. No issues that have been raised in
writing by the relevant taxing authority in connection with the examination of
the Tax Returns are currently pending
SECTION 4.7 LITIGATION.
(a) Except as previously disclosed to the other party in
writing, which writing makes reference to this Agreement, there is no Action
pending or, to the knowledge of the representing party, threatened against the
Subject Party or any of its Subsidiaries, if any, that (1) involves the
Transaction or (2) individually or in the aggregate, if determined adversely to
any of
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them, could result in a liability to any of them in an amount that could have a
Material Adverse Effect.
(b) There is no Action pending or, to the knowledge of the
representing party, threatened against the representing party, any of its
Subsidiaries, if any, or any other person that involves the Transaction or any
property owned, leased, licensed or used by the representing party or such
Subsidiary that, individually or in the aggregate, if determined adversely to
any of them, could have a Material Adverse Effect.
SECTION 4.8 COMPLIANCE WITH LAWS. None of the Subject Company and
its Subsidiaries, if any, is in, and none of them has received notice of, a
violation of or default with respect to, any Regulation of any Governmental Body
or any decision, ruling, order or award of any arbitrator applicable to it or
its business, properties or operations, including individual products or
services sold or provided by it, except for violations or defaults that,
individually or in the aggregate, could not have a Material Adverse Effect.
SECTION 4.9 SUBSIDIARIES.
(a) The representing party has previously delivered to the other
party a correct and complete list of the Subsidiaries, if any, of the Subject
Company, which list makes reference to this Agreement, showing the following as
of the date of this Share Exchange Agreement with respect to each such
Subsidiary: (1) the jurisdiction of its incorporation; and (2) the directors and
officers of the Subsidiary as of the Closing Date.
SECTION 4.10 DEBT. The representing party has previously disclosed
to the other party in writing, which writing makes reference to this Agreement,
a correct and complete description and list of the following: (1) all credit
agreements, indentures, purchase agreements, Guarantees, Capitalized Leases and
other Investments, agreements and other arrangements presently in effect
providing for or relating to individual Debt in any amount greater than $90,000
with respect to LDT and $250,000 with respect to the Company; (2) the maximum
principal or face amounts of such Debt outstanding or which may be outstanding
under each of those agreements and other arrangements; and (3) the maturity date
or dates of such Debt.
SECTION 4.11 NO DEFAULT. Except as previously disclosed to the other
party in writing, which writing makes reference to this Agreement, none of the
Subject Company and its Subsidiaries, if any, are in default with respect of any
obligation under any credit agreement, indenture, purchase agreement, Guarantee,
Capitalized Lease and other Investment, agreement or arrangement referred to in
Section 4.12, which default either alone or together with any other default,
entitles another party thereto, with the giving of notice or the passage of time
or both, to terminate or modify the rights and obligations of the parties
thereunder or with respect thereto or to accelerate, increase or otherwise
modify any obligation of the Subject Company or any of its Subsidiaries, if any,
thereunder.
SECTION 4.12 CAPITALIZATION.
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(a) With respect to the Company,
(1) the authorized capital stock of the Company as of its fiscal year
ended March 31, 1996 consisted of (A) 20,000,000 shares, par value $.0001,
of Common Stock, of which 3,935,183 shares are issued and outstanding as of
its fiscal year ended March 31, 1996, and (B) 25,000,000 shares of
preferred stock, par value $.01 per share, of which no shares are issued
and outstanding;
(2) the number of shares of Common Stock as of the date hereof (A)
issued and outstanding, (B) held in the treasury of the Company, and (C)
reserved for issuance upon exercise of outstanding stock options granted by
the Company together with the exercise prices therefor has been previously
disclosed to LDT pursuant to the Company's form 10-K for March 31, 1996.
(b) With respect to LDT,
(1) the authorized capital stock of LDT consists of 100,000,000
shares of voting common stock, no par value, of which 100,000,000 shares are
issued and outstanding. LDT does not have a class of preferred stock
authorized;
(c) except as set forth above, no Equity Securities of the
Subject Company are issued, reserved for issuance or currently outstanding.
(d) All outstanding shares of capital stock of the Subject
Company are, and all shares that may be issued pursuant to the exercise of the
Outstanding Options, will be, when issued, duly authorized, validly issued,
fully paid and nonassessable and, except as provided in the Transaction
Documents, are not subject to preemptive rights.
(e) Except with respect to the Outstanding Options and the
Transaction Documents, there are no outstanding bonds, debentures, notes or
other indebtedness or other securities of the Subject Company having the right
to vote (or convertible into, or exchangeable for, securities having the right
to vote) on any matters on which shareholders of the Subject Company may vote.
(f) Except with respect to the Outstanding Options and the
Transaction Documents, there is no agreement or arrangement restricting the
voting or transfer of the Equity Securities of the Subject Company.
(g) Except with respect to the Outstanding Options and the
Transaction Documents, there are no outstanding securities, options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings of any kind
to which any of the Subject Company and its Subsidiaries, if any, is a party or
by which any of them is bound obligating the Subject Company or such Subsidiary,
if any, to issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock or other Equity Securities of the Subject
Company or such Subsidiary, if any,
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or obligating the Subject Company or such Subsidiary, if any, to issue, grant,
extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking.
(h) Except as previously disclosed to the other party in
writing, which writing makes reference to this Share Exchange Agreement, there
are no outstanding contractual obligations, commitments, understandings or
arrangements of any of the Subject Company and its Subsidiaries, if any, to
repurchase, redeem or otherwise acquire, reacquire or make any payment in
respect of any shares of Equity Securities of the Subject Company or such
Subsidiary, if any.
(i) Except with respect to statutory restrictions of general
application, there are no legal, contractual or other restrictions on the
payment of dividends or other distributions or amounts on or in respect of any
of the Equity Securities of the Subject Company.
(j) Except as contemplated by this Share Exchange Agreement ,
there are no agreements or arrangements to which any of the Subject Company and
its Subsidiaries, if any, is a party pursuant to which the Subject Company is or
could be required to register shares of common stock or other securities under
the Securities Act.
(k) Equity Securities of the Subject company that were issued
and reacquired by the Subject Company were so reacquired (and, if reissued, so
reissued) in compliance with all applicable Regulations, and the Subject Company
has no liability with respect to the reacquisition or reissuance of the Equity
Securities.
SECTION 4.13 MATERIAL CONTRACTS. The representing party has
previously disclosed to the other party in writing, which writing makes
reference to this Agreement, a correct and complete description and list of the
following (collectively, the "MATERIAL CONTRACTS") with respect to any of the
Subject Company and its Subsidiaries, if any:
(a) agreements with investment bankers, brokers, finders,
consultants and advisers engaged by or on behalf of the Subject Company or such
Subsidiary with respect to the Transaction;
(b) agreements with any shareholder having beneficial ownership
of 5.0% or more of the shares of common stock of the Subject Company then
issued and outstanding, director or officer of the Subject Company or such
Subsidiary and all shareholders' agreements and voting trusts; and
(c) agreements not made in the ordinary course of business and
which are materially adverse to the business of the Subject Company or such
Subsidiary.
SECTION 4.14 INVESTMENT INTENT.
(a) The representing parties acknowledge that the Company is
issuing the Company Shares and that LDT is selling the LDT Shares, in each case
pursuant to the terms of
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the Transaction Documents, in reliance upon the exemption afforded by Sections
3(b) and Regulation D thereunder and/or Section 4(2) of the Securities Act for
the transactions by an issuer not involving any public offering.
(b) The representing party (1) represents that it is acquiring
securities pursuant to Section 1.1 for investment and without any view toward
distribution of any of the securities to any other person and (2) agrees that it
will not sell or otherwise dispose of the securities except in compliance with
the registration requirements or exemption provisions under the Securities Act.
SECTION 4.15 FEES FOR BROKERS AND FINDERS. The representing party
and its Subsidiaries, if any, and other Affiliates have not authorized any
person to act as financial advisor, broker, finder or other intermediary that
might be entitled to any fee, commission, expense reimbursement or other payment
of any kind from any of the representing party, such Subsidiaries, if any, and
such other Affiliates upon the conclusion of or in connection with the
Transaction.
SECTION 4.16 MISSTATEMENTS. Except to the extent revised or
superseded by a subsequent certificate, schedule or report furnished to the
other party, no information, certificate, schedule or report furnished by or on
behalf of the representing party to the other party with respect to any of the
Subject Company and its Subsidiaries, if any, in connection with the negotiation
of any Transaction Document or the satisfaction of any condition under any
Transaction Document contained as of the date thereof any untrue statement of a
material fact or omitted to state a material fact necessary to make the
statement contained therein, in the light of the circumstances under which it
was made, not misleading.
SECTION 4.17 COMPANY REPRESENTATIONS. With respect to the Company:
(a) RECOMMENDATIONS. The Board of Directors of the Company, at
a meeting duly called and held, has duly (1) determined that the Transaction
Documents and the Transaction, taken as a whole, are in the best interests of
the Company and its shareholders and (2) approved the Transaction Documents and
the Transaction.
(b) SHAREHOLDER APPROVAL. None of the Closing Transactions is
required to be approved by the holders of shares of any class of Equity
Securities of the Company.
(c) NO RESTRICTION ON LDT. No provision of the articles of
incorporation or bylaws of the Company or any other agreement, indenture or
other instrument to which Company or its properties are subject (1) directly or
indirectly restricts or impairs the right or ability of LDT to vote, or
otherwise to exercise the rights and receive the benefits of a shareholder with
respect to, Equity Securities of the Company that may be acquired or controlled
by LDT, including, without limitation, restrictions based upon the size of the
security holdings of LDT, the business in which it is engaged or other
considerations applicable to it and not to security holders generally, or (2)
permits any other securityholder of the Company to acquire securities of the
Company on a basis not available to LDT if LDT were to acquire Equity Securities
of the Company.
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(d) SEC DOCUMENTS. The Company has filed with the Securities
and Exchange Commission all reports, schedules, forms, statements and other
documents required by the Exchange Act to be filed by the Company since January
1, 1994 (collectively, and in each case including all exhibits and schedules
thereto and documents incorporated by reference therein, the "SEC DOCUMENTS").
The Company has delivered to LDT all SEC Documents. As of their respective
dates, except to the extent revised or superseded by a subsequent filing with
the Securities and Exchange Commission, the SEC Documents complied in all
material respects with the requirements of the Securities Act or the Exchange
Act, as the case may be, and none of the SEC Documents (including any and all
financial statements included therein) as of such dates contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The consolidated
financial statements of the Company and the Subsidiaries, if any, included in
all SEC Documents, including any amendments thereto (the "SEC FINANCIAL
STATEMENTS"), comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the
Securities and Exchange Commission with respect thereto.
(e) POOLING OF INTERESTS; REORGANIZATION. To the knowledge of
the Company, the Company has not (i) taken any action or failed to take any
action which action or failure to take action would jeopardize the treatment of
the Transaction as a pooling of interests for accounting purposes or (ii) taken
any action or failed to take any action which action or failure to take action
would jeopardize the qualification of the Transaction as a reorganization within
the meaning of the Code. Without limiting the foregoing: (i) all of the LDT's
assets will continue to be held by the Company immediately after the Closing for
a period of at least two (2) years , (ii) the Company has no plan or intention:
to sell or otherwise dispose of any LDT Stock, or to sell or otherwise dispose
of (except in the ordinary course of business) any of its assets, (iii)
following the Closing, the Company will continue at least one significant
business line of LDT, or use at least a significant portion of LDT's historic
business assets in a business, in each case within the meaning of Treas. Reg.
Section 1.368-1(d), (iv) neither the Company nor any of its Subsidiaries, if
any, own, nor have any of them owned during the past five (5) years, any capital
stock of LDT, and (v) the Company will issue a press release or other form of
public announcement which sets forth the one (1) month financial results of the
combined operations no later than fifteen (15) days from the month following the
Closing Date.
SECTION 4.18 LDT REPRESENTATIONS. With respect to LDT:
(a) TAX AUDITS. LDT became a corporation on June 7, 1996 and
effected a merger with Telecommunications Ventures Limited Partnership I to
exchange their partnership interests in exchange for the Common Stock of LDT
pursuant to a plan of merger. In the event LDT is audited by the IRS prior to
the expiration of the applicable statute of limitations with respect to its
business activities or this Transaction, LDT will so notify the Company. In
addition, LDT agrees to allow Company's accountants to review the short period
federal and state partnership returns for the period therein ending on the
Closing Date of this Transaction. LDT will provide final copies to Company for
review at least ten (10) days prior to filing.
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(b) POOLING OF INTERESTS; REORGANIZATION. To the knowledge of
LDT, it has not (i) taken any action or failed to take any action which action
or failure to take action would jeopardize the treatment of the Transaction as a
pooling of interests for accounting purposes or (ii) taken any action or failed
to take any action which action or failure to take action would jeopardize the
qualification of the Transaction as a reorganization within the meaning of the
Code. Without limiting the foregoing: (i) to the knowledge of the shareholders
and executive officers of LDT, there is no plan or intention on the part of the
holders of LDT Stock to sell, exchange or otherwise dispose of a number of the
Company Shares except as is provided for in this Share Exchange Agreement that
would cause paragraph 2 of Section 7.03 of Rev. Proc. 77-37 (as amplified) not
to be true as applied to the Transactions, and the only LDT shareholder
beneficially owning more than 5% of the outstanding LDT Stock is Margaret
Chopek, (ii) as of the Closing Date and immediately following the Closing Date,
the Company will hold "substantially all" of LDT's assets within the meaning of
the Code and Rev. Proc. 77-37 (as amplified), (iii) there is no intercorporate
indebtedness between the Company and LDT, and (iv) LDT has no plan or intention
for the Company to issue additional shares of its common stock following the
Closing.
ARTICLE V
TERMINATION
SECTION 5.1 TERMINATION.
(a) The obligations of the parties under Section 1.1(a) and
Article IV with respect to the Closing may be terminated at any time prior to
the Closing Date, in each case, as the case may be, by:
(1) the mutual consent of the Company and LDT;
(2) the Company, if the conditions to be satisfied by LDT set forth in
Sections 3.1 and 3.2 shall not have been met within ten (10) days after the
Closing Date;
(3) the Company, if a representation, warranty or covenant of LDT set
forth in a Transaction Document is breached or violated by LDT in any material
respect;
(4) LDT, if the conditions to be satisfied by the Company set forth in
Sections 3.1 and 3.2, 3.3 shall not have been met within ten (10) days after the
Closing Date;
(5) LDT, if a representation, warranty or covenant of the Company set
forth in a Transaction Document is breached or violated by the Company in any
material respect;
(b) Any termination of the obligations of the parties shall be
made by written agreement or by written notice from the terminating party to the
other parties;
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<PAGE>
(c) The termination of the obligations of the parties under this
Section 5.1 shall not relieve any party of any liability for a breach of any
warranty, covenant or agreement, or for any misrepresentation, under this
Agreement, or be deemed to constitute a waiver of any available remedy
(including specific performance if available) for any breach or
misrepresentation; or
(6) Either the Company or LDT if the shareholders of LDT do not approve
the Transaction by September 1, 1996.
SECTION 5.2 EXPENSES AND FEES.
(a) ACCOUNTING FEE. If the Company should terminate this
agreement for any reason prior to Closing the Company shall promptly, but in no
event later than two business days following written notice thereof, together
with related bills or receipts, reimburse LDT for all reasonable accounting fees
and expenses incurred in connection with this Transaction.
(b) OTHER EXPENSES. Except as otherwise provided in this
Section 5.2, whether or not the Transaction is concluded, all costs and expenses
incurred in connection with the Transaction Documents and the Transaction shall
be paid by the party incurring such expenses.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1 NOTICES. All notices, requests and other communications
to any party or under any Transaction Document shall be in writing.
Communications may be made by telecopy or similar writing. Each communication
shall be given to the party at its address stated on the signature pages of this
Share Exchange Agreement or at any other address as the party may specify for
this purpose by notice to the other party. Each communication shall be
effective (1) if given by telecopy, when the telecopy is transmitted to the
proper address and the receipt of the transmission is confirmed, (2) if given by
mail, 72 hours after the communication is deposited in the mails properly
addressed with first class postage prepaid or (3) if given by any other means,
when delivered to the proper address and a written acknowledgment of delivery is
received.
SECTION 6.2 NO WAIVERS; REMEDIES; SPECIFIC PERFORMANCE.
(a) No failure or delay by any party in exercising any right,
power or privilege under any Transaction Document shall operate as a waiver of
the right, power or privilege. A single or partial exercise of any right, power
or privilege shall not preclude any other or further exercise of the right,
power or privilege or the exercise of any other right, power or privilege. The
rights and remedies provided in the Transaction Documents shall be cumulative
and not exclusive of any rights or remedies provided by law.
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<PAGE>
(b) In view of the uniqueness of the Transaction and the
business, properties, operations, prospects and condition (financial and
otherwise) of the Company, LDT and their respective Subsidiaries, if any,
neither party would have an adequate remedy at law for money damages in the
event that any of the Transaction Documents is not performed in accordance with
its terms, and therefore each party agrees that the other party shall be
entitled to specific enforcement of the terms of each Transaction Document in
addition to any other remedy to which it may be entitled, at law or in equity.
SECTION 6.3 AMENDMENTS, ETC. No amendment, modification,
termination, or waiver of any provision of any Transaction Document, and no
consent to any departure by a party to a Transaction Document from any provision
of the Transaction Document, shall be effective unless it shall be in writing
and signed and delivered by the other parties to the Transaction Document, and
then it shall be effective only in the specific instance and for the specific
purpose for which it is given.
SECTION 6.4 ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise
specified, all accounting terms shall be interpreted, all accounting
determinations shall be made, all records and books of account shall be kept and
all financial statements required to be prepared or delivered shall be prepared
in accordance with GAAP and Regulation S-X of the Securities Act of 1933, as
amended, applied on a basis consistent (except for changes approved by the
Company's independent public accountants) with the latest audited financial
statements referred to in Section 4.5.
SECTION 6.5 GOVERNING LAW. Each Transaction Document shall be
governed by and construed in accordance with the internal laws of the State of
Delaware and the State of Virginia. All rights and obligations of the Company
and LDT shall be in addition to and not in limitation of those provided by
applicable law.
SECTION 6.6 COUNTERPARTS; EFFECTIVENESS. Each Transaction Document
may be signed in any number of counterparts, each of which shall be an original,
with the same effect as if all signatures were on the same instrument.
SECTION 6.7 SEVERABILITY OF PROVISIONS. Any provision of any
Transaction Document that is prohibited or unenforceable in any jurisdiction
shall, as to that jurisdiction, be ineffective to the extent of the prohibition
or unenforceability without invalidating the remaining provisions of the
Transaction Document or affecting the validity or enforceability of the
provision in any other jurisdiction.
SECTION 6.8 HEADINGS AND REFERENCES. Article and section headings in
any Transaction Document are included in the Transaction Document for the
convenience of reference only and do not constitute a part of the Transaction
Document for any other purpose. References to parties and articles and sections
in any Transaction Document are references to the parties to or the articles and
sections of the Transaction Document, as the case may be, unless the context
shall require otherwise.
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<PAGE>
SECTION 6.9 SURVIVAL. Except as otherwise specifically provided in
any Transaction Document, and notwithstanding any investigation or notice to the
contrary or any waiver by any other party of a related condition precedent to
the performance by the other party of an obligation under the Transaction
Document, (1) each representation and warranty of each party to the Transaction
Document contained in or made pursuant to the Transaction Document shall survive
the Closing and remain in full force and effect until the date that is the
second anniversary of the Closing Date and (2) the other party may assert or
commence an Action against the party with respect to the breach of any such
representation or warranty of the party on or before such date and may maintain
any such Action thereafter. Each covenant or agreement of a party to a
Transaction Document required to be performed on or after a Closing shall remain
in full force and effect thereafter in accordance with its terms.
SECTION 6.10 NON-EXCLUSIVE JURISDICTION. Each party (1) agrees that
any Action with respect to any Transaction Document may be brought in the courts
of the State of Louisiana, or Virginia or applicable District Court of the
United States of America, (2) accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of those courts and (3)
irrevocably waives any objection, including, without limitation, any objection
to the laying of venue or based on the grounds of FORUM NON CONVENIENS, which
it may now or hereafter have to the bringing of any Action in those
jurisdictions; PROVIDED, HOWEVER, that any party may assert in an Action in any
other jurisdiction or venue each mandatory defense, third-party claim or similar
claim that, if not so asserted in such Action, may thereafter not be asserted by
such party in an original Action in the courts referred to in clause (1) above.
SECTION 6.11 WAIVER OF JURY TRIAL. Each party waives any right to a
trial by jury in any Action to enforce or defend any right under any Transaction
Document or any amendment, instrument, document or agreement delivered, or which
in the future may be delivered, in connection with any Transaction Document and
agrees that any Action shall be tried before a court and not before a jury.
SECTION 6.12 AFFILIATE. Nothing contained in the Transaction
Documents shall constitute LDT an "affiliate" of any of the Company and its
Subsidiaries, if any, within the meaning of Rule 13e-3 under the Exchange Act.
SECTION 6.13 NON-RECOURSE. No recourse under any of the Transaction
Documents shall be had against any "controlling person" (within the meaning of
Section 20 of the Exchange Act) of any party or the shareholders, directors,
officers, employees, agents and Affiliates of the party or such controlling
persons, whether by the enforcement of any assessment or by any legal or
equitable proceeding, or by virtue of any Regulation, it being expressly agreed
and acknowledged that no personal liability whatsoever shall attach to, be
imposed on or otherwise be incurred by such controlling person, shareholder,
director, officer, employee, agent or Affiliate, as such, for any obligations of
the party under this Share Exchange Agreement or any other Transaction Document
or for any claim based on, in respect of or by reason of such obligations or
their creation.
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<PAGE>
SECTION 6.14 ENTIRE AGREEMENT. Except as otherwise specifically
provided in this Section, the Transaction Documents embody the entire agreement
and understanding of the respective parties and supersede all prior agreements
or understandings with respect to the subject matters of those documents. All
references to this Share Exchange Agreement herein and in all opinions,
certificates and other documents delivered pursuant to or otherwise delivered in
connection with this Share Exchange Agreement shall be deemed to refer to this
Agreement.
SECTION 6.15 ATTORNEY'S FEES. If an attorney shall be retained to
interpret or enforce the provisions of this Agreement, the prevailing party
shall be entitled to reasonable attorneys' fees, including any such fees set by
the trial or appellate court upon trial or appeal. A party shall be considered
the prevailing party for the purposes of this section in the event it is awarded
a monetary judgment and/or equitable relief against the other party by a court
of competent jurisdiction, or in the event that a legal proceeding instituted
against it by the other party to interpret or enforce the provisions of this
Share Exchange Agreement is dismissed voluntarily or by court order, or judgment
is entered in favor of the defendant.
IN WITNESS WHEREOF, the parties have executed and delivered this Share
Exchange Agreement as of the date first written above as provided herein.
NETWORK LONG DISTANCE, INC.
By:
--------------------------------
Michael M. Ross, President
Address: 525 Florida Street
Baton Rouge, Louisiana 70801
Telecopy: (800) 349-3579
LONG DISTANCE TELECOM, INC.
By:
--------------------------------
Margaret S. Chopek, President
Address: 142 East Davis Street
Culpeper, Virginia 22701
Telecopy: (540) 825-6427
SHAREHOLDERS OF
LONG DISTANCE TELECOM, INC.
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<PAGE>
By:
--------------------------------
Margaret Stiteler Chopek
Address: 10095 Lawyers Road
Vienna, Virginia 22181
By:
--------------------------------
Linda L. Astle
Address: 47579 Sandbank Square
Sterling, Virginia 20165
By:
--------------------------------
James H. and Carolyn A. Bancroft
Address: 8515 Cottage Street
Vienna, Virginia 22180
By:
--------------------------------
Robert K. and Candia C. Barry
Address: 875 Springbank Lane
Wayne, Pennsylvania 19087-1951
By:
--------------------------------
Robert F. and Kathleen R. Bottone
Address: 55 Beacon Hill Lane
New Canaan, Connecticut 06840
By:
--------------------------------
Mr. Dan Burke
Address: 20860 Cardiff Court
Ashburn, Virginia 22011
By:
--------------------------------
Wesley J. and Jane Cantrall
Address: 17083 Paloma Circle
Round Hill, Virginia 22141
By:
--------------------------------
Joseph B. Chopek
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<PAGE>
Address: 10095 Lawyers Road
Vienna, Virginia 22181
By:
--------------------------------
Joseph J. Coury
Address: Coury Financial Services
One Skyline Tower
5107 Leesburg Pike, Suite 2103
Falls Church, Virginia 22041
By:
--------------------------------
David Harbold
Address: 5610 Willow Crossing Court
Clifton, Virginia 22024
By:
--------------------------------
Cathleen G. Hook
Address: Post Office Box 436
Shadyside, Maryland 20764
By:
--------------------------------
Brian R. and Elizabeth J. Jack
Address: 5108 Dewdrop Lane
Fort Worth, Texas 76123
By:
--------------------------------
Clarence and Elizabeth Kunstmann
Address: 9418 Baybreeze Court
Port Royal, Virginia 22535
By:
--------------------------------
Robert J. and Judith A. Prochko
Address: 8412 Brewster Drive
Alexandria, Virginia 22308
18
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By:
--------------------------------
Charles W. and Marian Rochner
Address: 4867 Ashford Dunnwoody Rd., #4008
Atlanta, Georgia 30338
By:
--------------------------------
Maj. Gen. Robert Seedlock
Address: 3 Plantation Court
Savannah, Georgia 31419-2731
By:
--------------------------------
John Spargo
Address: Spargo & Associates
4400 Fair Lakes Court
Fairfax, Virginia 22033
By:
--------------------------------
Carlton L. and Nina T. Stiteler
Address: 820 Mulberry Lane
Culpeper, Virginia 22701
By:
--------------------------------
Charles O. and Wynnell E. Turner
Address: 201 Johnstone Street
Lexington, Virginia 24450
By:
--------------------------------
Tracy Rutherford
Address: 1348 Rocky Lane
Front Royal, Virginia 22630
By:
--------------------------------
Dr. Gladys H. Hirschman
Address: 700 New Hampshire Ave., #101
Washington, D.C. 20037
By:
--------------------------------
Address: I&B Partnership
8446 Maple Lawn Drive
19
<PAGE>
Rapidan, Virginia 22733
By:
--------------------------------
James L. and Amy L. Inskeep, Jr.
Address: 10215 Inskeep Lane
Rapidan, Virginia 22733
By:
--------------------------------
James W. and Ellen I. Jones
Address: 10249 Inskeep Lane
Rapidan, Virginia 22733
By:
--------------------------------
Joseph Ray Daniel
Address: Post Office Box 1148
Culpeper, Virginia 22701
By:
--------------------------------
The Estate of Norman B. Martin
Address: 1300 Sunset Lane, Suite 3210
Culpeper, Virginia 22701
By:
--------------------------------
Joseph C. Kincheloe
Address: 18039 Birmingham Road
Culpeper, Virginia 22701
By:
--------------------------------
Les Ulanow
Address: Ex-Cell Fiber Supply, Inc.
1312 Half Street, S.E.
Washington, D.C. 20003
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<PAGE>
DEFINITION ANNEX
"ACTION" against a person means an action, suit, investigation,
complaint or other proceeding pending against or affecting the person or its
property, whether civil or criminal, in law or equity or before any arbitrator
or Governmental Body.
"AFFILIATE" of a person means any other person (1) that directly or
indirectly controls, is controlled by or is under common control with, the
person or any of its Subsidiaries, if any, (2) that directly or indirectly
beneficially owns or holds 5.0% or more of any class of voting stock of the
person or any of its Subsidiaries, if any, or (3) 5.0% or more of the voting
stock of which is directly or indirectly beneficially owned or held by the
person or any of its Subsidiaries, if any. The term "CONTROL" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person, whether through the
ownership of voting securities, by contract or otherwise.
"APPROVAL" means an authorization, consent, approval or waiver of,
clearance by, notice to or registration or filing with, or any other similar
action by or with respect to a Governmental Body or any other person and the
expiration or termination of all prescribed waiting, review or appeal periods
with respect to any of the foregoing.
"BENEFICIAL OWNERSHIP" has the meaning assigned to that term in
Section 13(d) of the Exchange Act.
"BEST EFFORTS" means the use of all reasonable efforts, including,
without limitation, the expenditure of amounts reasonably related to the
objective sought to be achieved, with respect to matters and actions over which
the person has or could reasonably be expected to exert any control or
influence.
"BUSINESS DAY" means any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the State of Louisiana or is a day on
which banking institutions located in such state are authorized or required by
law or other governmental action to close.
"CAPITALIZED LEASE" means any lease that is or should be capitalized
and appear on the balance sheet of the lessee.
"CLOSING DATE" means the Closing Date as may be established by the
parties.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMON STOCK" has the meaning stated in Section 1.1 of this
Agreement.
"COMPANY" means Network Long Distance, Inc., a Delaware corporation,
and its successors.
"COMPANY SHARES" means, collectively, the shares to be issued to LDT
at the Closing.
<PAGE>
"CONSOLIDATED" means, as applied to any financial or accounting term,
the term determined on a consolidated basis for a person and its Subsidiaries,
if any, excluding intercompany items and minority interests.
"CONSOLIDATED SUBSIDIARY" of a person at any date means any Subsidiary
of the person or other entity the accounts of which would be consolidated with
those of the person in its consolidated financial statements as of that date.
"DEBT" of a person at any date means, without duplication, the sum of
(1) all obligations of the person (A) for borrowed money, (B) evidenced by
bonds, debentures, notes or other similar instruments, (C) to pay the deferred
purchase price of property or services, except trade accounts payable arising in
the ordinary course of business, (D) as lessee under Capitalized Leases, (E)
under letters of credit issued for the account of the person and (F) arising
under acceptance facilities, plus (2) all Debt of others Guaranteed by the
person, plus (3) all Debt of others secured by a Lien on any asset of the person
and whether or not such Debt is assumed by the person.
"DOLLARS" AND "$" refer to United States dollars and other lawful
currency of the United States of America from time to time in effect.
"EQUITY SECURITIES" of a person means the capital stock of the person
and all other securities convertible into or exchangeable or exercisable for any
shares of its capital stock, all rights to subscribe for or to purchase, all
options for the purchase of, and all calls, commitments or claims of any
character relating to, any shares of its capital stock and any securities
convertible into or exchangeable or exercisable for any of the foregoing.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the related rules and regulations thereunder.
"CLOSING DATE" has the meaning stated in Section 2.1 of this
Agreement.
"GAAP" means generally accepted accounting principles as in effect in
the United States of America from time to time.
"GOVERNMENTAL BODY" means any agency, bureau, commission, court,
department, official, political subdivision, tribunal or other instrumentality
of any government, whether federal, state, county or local, domestic or foreign.
"LDT" means Long Distance Telecom, Inc., a Virginia corporation, and
successors.
"GUARANTEE" by any person means any obligation, contingent or
otherwise, of the person directly or indirectly guaranteeing any Debt of any
other person or in any manner providing for the payment of any Debt of any other
person or the investment of funds in any other person or otherwise protecting
the holder of the Debt against loss (whether by agreement to indemnify, to lease
assets as lessor or lessee, to purchase assets, goods, securities or services,
or to take-or-pay or other-
2
<PAGE>
wise), but the term "GUARANTEE" does not include endorsements for collection or
deposit in the ordinary course of business. The term "GUARANTEE" used as a verb
has a correlative meaning.
"LDT" has the meaning stated in Section 1.1(a)(2).
"LDT SHARES" has the meaning stated in Section 1.1(a)(2) of this
Agreement.
"KNOWLEDGE" with respect to a representation or warranty of a party
contained in any Transaction Document means, after due inquiry by the
representing party of each of the following persons, the actual knowledge of any
of the officers or other employees of the representing party having managerial
responsibility for the portion of the operations, assets or liabilities of the
representing party and its Subsidiaries, if any, with respect to which such
knowledge of the person is being represented.
"LIEN" means any mortgage, deed of trust, lien (statutory or
otherwise), pledge, hypothecation, charge, deposit arrangement, preference,
priority, security interest or encumbrance of any kind (including, but not
limited to, any conditional sale agreement or other title retention agreement,
any Capitalized Lease or financing lease having substantially the same economic
effect as the foregoing and the filing of or agreement to give any financing
statement under the Uniform Commercial Code or comparable law of any
jurisdiction to evidence any of the foregoing).
"MATERIAL ADVERSE EFFECT" means, with respect to a circumstance or
event subject to a representation, warranty, covenant or other agreement of a
person or any of its Subsidiaries, if any, in any Transaction Document that
includes a reference therein to the possible occurrence of a Material Adverse
Effect, whether considered individually or together in the aggregate with all
other circumstances or events that are the subject of the same representation,
warranty, covenant or other agreement, a material adverse effect on the
business, properties, operations, prospects, condition (financial or otherwise)
or capitalization of the person and its Subsidiaries, if any, taken as a whole,
or the ability of the person to perform its obligations under any Transaction
Document to which it is or may become a party.
"MATERIAL CONTRACT" means an agreement referred to in Section 4.15.
"NASDAQ" has the meaning stated in Section 1.1(a)(1) of this
Agreement.
"PERSON" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
Governmental Body.
"PROPERTY" means any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.
"PROPRIETARY RIGHTS" means all copyrights, uncopyrighted works,
trademarks, trademark rights, service marks, trade names, trade name rights,
patents, patent rights, unpatented inventions, licenses, permits, trade secrets,
know-how, inventions, computer software, seismic data
3
<PAGE>
and intellectual property rights and other proprietary rights together with
applications and licenses for, and the goodwill of the business relating to, any
of the foregoing.
"RECOMMENDATIONS" has the meaning set forth in Section 4.19 of this
Agreement.
"REGULATION" means (1) any applicable law, rule, regulation, judgment,
decree, ruling, order, award, injunction, recommendation or other official
action of any Governmental Body and (2) any official change in the
interpretation or administration of any of the foregoing by the Governmental
Body or by any other Governmental Body or other person responsible for the
interpretation or administration of any of the foregoing.
"SEC DOCUMENTS" has the meaning stated in Section 4.19(c) of this
Agreement.
"SEC FINANCIAL STATEMENTS" has the meaning set forth in Section
4.19(c) of this Agreement.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
related rules and regulations thereunder.
"STATE" means the State of Louisiana or Virginia, as appropriate.
"SUBSEQUENT EVENT" means, with respect to a party (the "AFFECTED
PARTY"), any of the following, in each case whether or not any shall have
exercised and delivered, or exercised any rights or performed any obligations
under, any of the Transaction Documents:
(1) the affected party or any of its Subsidiaries, if any,
without having received the prior written consent of the other party, shall
have entered into an agreement with respect to a Business Combination
Transaction, or the board of directors of the affected party shall have
recommended that the shareholders of the affected party approve or accept
any Business Combination Transaction;
(2) the affected party or any of its Subsidiaries, if any,
without having received the prior written consent of the other party, shall
have authorized, recommended, proposed or publicly announced its intention
to authorize, recommend or propose, an agreement with respect to a Business
Combination Transaction, or the board of directors of the affected party
shall have publicly withdrawn or modified, or publicly announced its intent
to withdraw or modify, the Recommendations;
(3) any person other than the other party or any Affiliate of
the other party shall have acquired beneficial ownership or the right to
acquire beneficial ownership of 30% or more of the outstanding shares of
common stock of the affected party then issued and outstanding; or
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(4) any person shall have proposed a Business Combination
Transaction (A) that the board of directors of the affected party
determines in its good faith judgment is more favorable to the affected
party's shareholders than the Transactions and (B) as a result of which the
board of directors of the affected party concludes in good faith that
termination of the Transaction Documents is necessary or appropriate in
order for the board of directors of the affected party to act in a manner
which is consistent with its fiduciary obligations under applicable law.
"SUBSIDIARY" of a person means (i) any corporation or other entity of
which securities or other ownership interests having ordinary voting power to
elect not less than 50% of the board of directors or other persons performing
similar functions are at the time directly or indirectly owned by the person or
(ii) a partnership in which the person or a Subsidiary of the person is, at the
date of determination, a general or limited partner of such partnership, but
only if the person or its Subsidiary is entitled to receive more than fifty
percent of the assets of such partnership upon its dissolution.
"TAXES" means all taxes, charges, fees, levies, duties, imposts,
withholdings, restrictions, fines, interest, penalties, additions to tax or
other assessments or charges, including, but not limited to, income, excise,
property, withholding, sales, use, gross receipts, value added and franchise
taxes, license recording, documentation and registration fees and custom duties
imposed by any Governmental Body.
"TAX RETURN" means a report, return or other information required to
be filed by a person with or submitted to a Governmental Body with respect to
Taxes, including, where permitted or required, combined or consolidated returns
for any group of entities that includes the person.
"TRANSACTION DOCUMENTS" means, collectively, means this Agreement, and
all other instruments and documents executed and delivered by any person in
connection with the conclusion of one or more of the transactions contemplated
thereby.
"TRANSACTION" means, collectively, the transactions undertaken
pursuant to or otherwise contemplated by, the Transaction Documents, including,
without limitation, the Closing Transaction.
"TRANSFER" means a sale, an assignment, a lease, a license, a grant, a
transfer or other disposition of an asset or any interest of any nature in an
asset. The term "TRANSFER" used as a verb has a correlative meaning.
"WHOLLY-OWNED SUBSIDIARY" of a person means any Subsidiary all of the
shares of capital stock or other ownership interests of which, except directors'
qualifying shares, are at the time directly or indirectly owned by the person.
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