<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
--------------------
Date of Report (Date of earliest event reported):
SEPTEMBER 5, 1996
--------------------
CHARTER COMMUNICATIONS INTERNATIONAL, INC.
--------------------
NEVADA
(State or other jurisdiction of incorporation or organization)
33-25129-LA 84-1097751
(Commission File No.) (I.R.S. Employer
Identification No.)
17100 EL CAMINO REAL
SUITE 100
HOUSTON, TEXAS 77058
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 486-8337
----------------------------------------------
(Former address, if changed since last report)
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<PAGE>
INFORMATION INCLUDED IN THIS REPORT
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On September 5, 1996, Articles of Merger were filed with the Secretary of
State of North Carolina pursuant to which Charter Communications
International, Inc., a Nevada corporation (the "Registrant"), through its
wholly owned subsidiary OCI Acquisition Corp., a North Carolina corporation
("Merger Sub"), acquired Overlook Communications International Corporation, a
North Carolina corporation ("OCI") in a reverse triangular merger. The
filing of the Articles of Merger and the consummation of the acquisition were
pursuant to an Acquisition Agreement between Charter and OCI (the
"Acquisition Agreement") a copy of which is attached hereto, and an Agreement
and Plan of Merger between OCI and Merger Sub, a copy of which is attached
hereto. In the merger, OCI was the surviving corporation and succeeded to
all the properties, liabilities, rights and obligations of Merger Sub. The
transaction will be accounted for as a purchase.
The consideration paid to the former shareholders of OCI in the merger
consisted of 8,999,960 shares of common stock, $.00001 par value per share
("Common Stock"), of the Registrant issued in a private placement exempt from
registration under applicable federal and state securities laws. The shares
of Common Stock issued in the transaction are, therefore, "restricted"
securities and the certificates representing such shares bear legends
prohibiting their transfer except pursuant to an effective registration under
applicable federal and state securities laws. The shares of Common Stock of
the Registrant issued to the former shareholders of OCI equals approximately
35% of the total issued and outstanding Common Stock of the Company after
taking into account the consummation of the transaction. The amount of
consideration paid to the former shareholders of OCI was determined through
arms-length negotiations.
OCI had in excess of five shareholders. Among OCI's shareholders were
Messrs. Stephen E. Raville and Patrick E. Delaney, who held between them a
majority of the common stock of OCI. Mr. Raville is (and was at all relevant
times prior to the merger) a director and stockholder of the Registrant.
Following consummation of the acquisition, Mr. Raville was elected Chairman
of the Board of Directors of the Registrant. Mr. Delaney was elected to the
board of directors of the Registrant on September 5, 1996, the day the merger
was consummated, and has also been elected Chief Financial Officer of the
Registrant. In connection with the acquisition of OCI, Messrs. Raville and
Delaney have received registration rights covering certain shares of Common
Stock received by them in the transaction. The registration rights granted
to Messrs. Raville and Delaney require the registration of a number of shares
equal to that which could be sold under the provisions of Rule 144 were such
rule applicable, upon the date on which David G. Olson, the Chief Executive
Officer of the Registrant, is permitted to sell shares of Common Stock
pursuant to Rule 144. The Registrant is required to file a registration
statement covering such shares only in the event of a demand by Mr. Raville
or Mr. Delaney and only so long as such shares are not eligible for sale
pursuant to the terms of Rule 144.
OCI is principally engaged in the business of providing a full range of
interactive and other call processing and support services to the national
telepromotions and telecommunications industry. The principal executive
offices of OCI are located at 2839 Paces Ferry Road, Suite 500, Atlanta,
Georgia 30339, and the telephone number at such offices is (770) 432-6800.
The Registrant intends that OCI will continue to employ its properties and
personel in such business.
2
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statement of business acquired:
The audited financial statements of OCI for the year ended December 31,
1995 are attached hereto. It is not practicable at this time for the Registrant
to provide the interim financial statements of OCI. The Registrant will file
such financial information required pursuant to Item 310 of Regulation S-B under
cover of Form 8-K as soon as practicable and, in any event, within 60 days of
the date hereof.
(b) PRO FORMA financial information:
It is not practicable at this time for the Registrant to provide the pro
forma financial information required in response to this Item 7. The
Registrant is in the process of preparing the pro forma financial information
required pursuant to Item 310(d) of Regulation S-B and will file such
financial statements under cover of Form 8-K as soon as practicable and, in
any event, within 60 days of the date hereof.
(c) Exhibits:
The following exhibits have been furnished in accordance with the
provisions of Item 601 of Regulation S-B.
Exhibit 2.01 - Agreement and Plan of Merger
Exhibit 2.02 - Acquisition Agreement
3
<PAGE>
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.
Dated: September 19, 1996
CHARTER COMMUNICATIONS INTERNATIONAL, INC.
By: /s/ David G. Olson
----------------------------------------
David G. Olson, Chief Executive Officer
4
<PAGE>
FINANCIAL STATEMENTS
OVERLOOK COMMUNICATIONS
INTERNATIONAL CORPORATION
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
WITH REPORT OF INDEPENDENT AUDITORS
<PAGE>
OVERLOOK COMMUNICATIONS INTERNATIONAL CORPORATION
FINANCIAL STATEMENTS
Years ended December 31, 1995, 1994, and 1993
CONTENTS
Report of Independent Auditors
Financial Statements
Balance Sheets
Statements of Operations
Statements of Shareholders' Equity (Deficit)
Statements of Cash Flows
Notes to Financial Statements
1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
Overlook Communications International, Inc.
We have audited the accompanying consolidated balance sheets of Overlook
Communications International, Inc. (the "Company") as of December 31, 1995
and 1994 and the related consolidated statements of operations, stockholders'
equity (deficit) and cash flows for the three years ended December 31, 1995.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Overlook
Communications International, Inc. at December 31, 1995 and 1994 and the
results of its operations and its cash flows for the three years ended
December 31, 1995 in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
July 19, 1996
<PAGE>
OVERLOOK COMMUNICATIONS INTERNATIONAL CORPORATION
BALANCE SHEETS
<TABLE>
December
-------------------------------
1995 1994
---------- ----------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 41,840 $ 178,145
Accounts receivable, net of allowance for
doubtful account of $33,840 in 1995 and
$27,233 in 1994 201,526 141,893
Receivables from related party 258,961 87,810
Other assets 182,563 61,093
---------- ----------
Total current assets 684,890 468,941
Property and equipment:
Projects in development 148,019 124,679
Furniture and fixtures 58,843 57,498
Equipment 953,380 662,830
Software 353,536 199,532
---------- ----------
1,513,778 1,044,539
Less accumulated depreciation (429,039) (215,928)
---------- ----------
1,084,739 828,611
---------- ----------
Total assets $1,769,629 $1,297,552
---------- ----------
---------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $984,300 $204,532
Accrued liabilities 294,622 147,428
Accrued commissions 55,298 182,329
Advances from shareholders 808,893 -
Capital lease obligation due within one year 10,935 9,704
---------- ----------
Total current liabilities 2,154,048 543,993
Long-term note payable 50,000 -
Capital lease obligation, less current portion 36,429 47,363
---------- ----------
Total liabilities 2,240,477 591,356
Shareholders' equity (deficit):
Common stock, $.001 par value, 50,000,000
shares authorized, 27,443,333 and 25,776,667 shares
issued at December 31, 1995 and
1994, respectively 27,443 25,776
Paid-in capital in excess of par value 1,610,057 1,511,724
Accumulated deficit (1,934,048) (831,304)
Treasury stock, 2,905,000 shares of common
stock, at cost (174,300) -
---------- ----------
Total shareholders' equity (deficit) (470,848) 706,196
---------- ----------
Total liabilities and shareholders' equity $1,769,629 $1,297,552
---------- ----------
---------- ----------
</TABLE>
SEE ACCOMPANYING NOTES.
3
<PAGE>
OVERLOOK COMMUNICATIONS INTERNATIONAL CORPORATION
STATEMENTS OF OPERATIONS
Year ended December 31
1995 1994 1993
----------- ---------- ----------
Revenues $ 1,793,598 $1,459,404 $1,948,684
Cost of services 646,366 248,937 869,882
----------- ---------- ----------
1,147,232 1,210,467 1,078,802
Selling, general, and
administrative expense 1,968,674 1,884,050 988,091
Depreciation 213,111 127,290 88,638
----------- ---------- ----------
Income (loss) from operations (1,034,553) (800,873) 2,073
Interest expense 68,191 19,356 13,148
----------- ---------- ----------
Net loss $(1,102,744) $ (820,229) $ (11,075)
----------- ---------- ----------
----------- ---------- ----------
SEE ACCOMPANYING NOTES.
4
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OVERLOOK COMMUNICATIONS INTERNATIONAL CORPORATION
STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
<TABLE>
Total
Shareholders'
Common Paid-in- Accumulated Treasury Equity
Stock Capital Deficit Stock (Deficit)
------- ---------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C>
Balances at December 31, 1992 $ 8,250 $ 291,750 $ - $ - $ 300,000
Common stock issued 345 182,155 - - 182,500
Net loss - - (11,075) - (11,075)
------- ---------- ----------- --------- -----------
Balances at December 31, 1993 8,595 473,905 (11,075) - 471,425
Common stock issued 11,603 733,697 - - 745,300
Conversion of advances
to common stock 5,078 299,622 - - 304,700
Exercise of warrants 500 4,500 - - 5,000
Net loss - - (820,229) - (820,229)
------- ---------- ----------- --------- -----------
Balances at December 31, 1994 25,776 1,511,724 (831,304) - 706,196
Common stock issued 1,667 98,333 - - 100,000
Purchase of common
stock for treasury - - - (174,300) (174,300)
Net loss - - (1,102,744) - (1,102,744)
------- ---------- ----------- --------- -----------
Balances at December 31, 1995 $27,443 $1,610,057 $(1,934,048) $(174,300) $ (470,848)
------- ---------- ----------- --------- -----------
------- ---------- ----------- --------- -----------
</TABLE>
SEE ACCOMPANYING NOTES.
5
<PAGE>
OVERLOOK COMMUNICATIONS INTERNATIONAL CORPORATION
STATEMENTS OF CASH FLOWS
<TABLE>
December 31
1995 1994 1993
----------- --------- ---------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss $(1,102,744) $(820,229) $ (11,075)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation expense 213,111 127,290 88,638
Changes in operating assets and liabilities:
Accounts receivable (59,633) 331,615 (378,508)
Receivable from related party (171,151) (87,810) -
Other assets (121,470) 207,161 (268,254)
Accounts payable 779,768 144,793 59,739
Accrued liabilities 20,163 (213,721) 466,531
----------- --------- ---------
Net cash flows used in operating activities (441,956) (310,901) (42,929)
INVESTING ACTIVITIES
Investments in property, and equipment (469,239) (449,264) (61,222)
----------- --------- ---------
Net cash flows used in investing activities (469,239) (449,264) (61,222)
FINANCING ACTIVITIES
Repayment of capital lease obligations (9,703) (2,986) -
Proceeds from shareholder loans and advances 808,893 250,000 282,500
Repayment of shareholder loans - (100,853) (150,000)
Proceeds from note payable 50,000 - -
Repayment of notes payable - - (264,162)
Proceeds from issuance of common stock 100,000 750,300 182,500
Purchase of treasury stock (174,300) - -
----------- --------- ---------
Net cash flows from financing activities 774,890 896,461 50,838
----------- --------- ---------
Net (decrease) increase in cash (136,305) 136,296 (53,313)
Cash at the beginning of the year 178,145 41,849 95,162
----------- --------- ---------
Cash at the end of the year $41,840 $178,145 $41,849
----------- --------- ---------
----------- --------- ---------
SUPPLEMENTAL INFORMATION
Interest paid $9,183 $4,210 $15,011
----------- --------- ---------
----------- --------- ---------
Conversion of advances to common stock $ - $ 304,700 $ -
----------- --------- ---------
----------- --------- ---------
</TABLE>
SEE ACCOMPANYING NOTES.
6
<PAGE>
OVERLOOK COMMUNICATIONS INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
1. DESCRIPTION OF THE BUSINESS AND OPERATIONS
Overlook Communications International Corporation (the "Company" or "OCI"),
a North Carolina corporation, is an independent telecommunications service
bureau and reseller of domestic and international long-distance services
including prepaid calling cards and 800 and 900 traffic to customers
in the United States. Operations commenced in December 1992 with the
purchase of certain assets and equipment from TelAmerica Corporation and
the assumption of certain notes payable.
The Company has a limited operating history and has sustained net losses
since its inception. In addition, the Company has working capital
deficiencies of $1,469,158 and $75,052 at December 31, 1995 and 1994,
respectively, and has generated negative cash flows from operations of
$441,956, $310,901, and $42,929 during the years ended December 31, 1995,
1994 and 1993, respectively. Further, since its formation, the Company
has experienced changes in its operations which have required substantial
additional capital. The Company's changes in operations and its plans for
growth have placed and will continue to place, significant demands on the
Company's financial and other resources. Certain shareholders have
agreed to provide additional financial support, if necessary, such that the
Company will be able to meet its obligations.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the
financial statements and reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
REVENUE RECOGNITION
The Company recognizes revenue when services are provided.
ADVERTISING EXPENSES
The Company accounts for advertising costs in accordance with the
American Institute of Certified Public Accountants Statement of Position
No. 93-7 "Reporting on Advertising Costs." Costs of print or other
advertising are expensed when such costs are incurred. Advertising
expenses amounted to $22,103, $34,894, and $6,883 for the years ended
December 31, 1995, 1994, and 1993, respectively. At December 31, 1995, the
Company capitalized approximately
7
<PAGE>
OVERLOOK COMMUNICATIONS INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
$41,000 in costs paid to develop a marketing campaign, which the Company
expects to launch in 1996. The capitalized costs will be expensed at
the date of the initiation of the campaign.
KEY SUPPLIERS
The Company does not own a transmission network and, accordingly, relies on
both facilities-based and non-facilities based long-distance carriers and
other companies to provide transmission of its subscribers' long-distance
calls. Although management feels that alternative telecommunications
facilities could be found in a timely manner, disruption of these services
for more than a brief period would have an adverse effect on operating
results. During 1995, certain carriers utilized by the Company
experienced regional network outages. The effect of these outages on the
Company was not material.
ACCOUNTS RECEIVABLE
Accounts receivable are unsecured and the Company is at risk to the extent
such amounts become uncollectible. Credit losses relating to the
companies business areas have consistently been within management's
expectations.
OPERATING EQUIPMENT
Operating equipment is stated at cost. Depreciation is computed on the
straight-line method over the estimated useful life of the assets.
The estimated use life of all telecommunications equipment and operating
software is 5 years.
The Company capitalizes as part of the equipment the cost of initial
installation. Repairs and maintenance are expensed as incurred. The
cost of developing software for operations, developed internally and by
contractors, is accumulated as projects in development until software is
fully operational. Once development is completed, the asset is capitalized
as software and depreciation is recorded.
LONG-LIVED ASSETS
In 1995, the Company adopted Statement of Financial Accounting Standards
("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed of." SFAS No. 121 establishes
accounting standards for the impairment of long-lived assets, certain
identifiable intangibles, and goodwill related to those assets to be held
and used for long-lived assets and certain identifiable intangibles to be
disposed of. The effect of adopting SFAS No. 121 was not material.
The Company periodically reviews the values assigned to long-lived assets,
such as property and equipment to determine whether any impairments are
other than temporary. Management believes that the long-lived assets in
the accompanying balance sheets are appropriately valued.
8
<PAGE>
OVERLOOK COMMUNICATIONS INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. ADVANCES FROM SHAREHOLDERS
Three major shareholders advanced funds to the Company during 1994 and
1995 to be used for working capital purposes and the acquisition of
equipment. These advances are unsecured and accrue interest at prime rate
plus 3% ($58,441 at December 31, 1995).
During 1994 $304,700 in shareholder advances were converted to 5,078,333
shares of common stock.
4. LONG-TERM NOTE PAYABLE
In May 1995 the Company borrowed $50,000 due June 9, 1998 with interest
payable quarterly at prime rate plus 3%. A warrant to purchase 416,000
shares of common stock for $.06 per share was issued in conjunction with
this transaction. The Company exercised its right to make early payment of
the note on June 9, 1996, which reduced the number of shares of common
stock available under the warrant to 208,333. The warrants were
simultaneously converted to shares of common stock.
5. LEASES
The Company leases office space under noncancelable operating lease
agreements. In 1994, the Company executed a long-term lease agreement
for its internal phone system. It is treated as a capital lease and its
cost of $75,066 is included as equipment under fixed assets.
Future minimum payments at December 31, 1995 are:
Operating Capital
Lease Lease
---------- -------
1996 $ 219,212 $16,030
1997 219,212 16,030
1998 219,212 16,030
1999 219,212 10,687
2000 182,676 --
---------- --------
Total minimum lease payments $1,059,524 $58,777
Less amount representing interest ---------- 11,413
---------- --------
Present value of net minimum lease payments $47,364
--------
--------
Rental expense under operating leases amounted to $217,034, $229,696, and
$161,091 for each of the three years ended December 31, 1995.
9
<PAGE>
OVERLOOK COMMUNICATIONS INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
6. COMMON STOCK
The Company has 50,000,000 shares of common stock authorized. During
1995, the shareholders approved a change from no par stock to $.001 per
share and this change is reflected retroactively in the financial
statements.
7. STOCK OPTIONS
In 1995, the shareholders approved the Overlook Communications
International Corporation Incentive Stock Option Plan ("ISO Plan"), which
is intended to encourage certain employees to increase their proprietary
interest in the success of the Company and to remain in the employ of the
Company.
It is intended that the ISO Plan and the options granted qualify within
the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended. The ISO Plan is administered by a committee of the Board.
In June 1995, the Board authorized 2,000,000 options to purchase common
stock for $.06 per share. Stock option grants were made for 1,920,000
shares in November 1995 to eligible employees. These grants vest
ratably over a four year period.
In 1995, the Financial Accounting Standards Board issued SFAS No.
123, "Accounting for Stock-Based Compensation." The Company has not yet
determined which of the acceptable approaches it will use under the stock
compensation standard. Adoption of certain approaches under the stock
compensation standard could result in noncash charges, which if made are
not expected to be material. At a minimum, the standard will require
disclosures about the fair value of the employee stock options.
8. WARRANT ACTIVITY
In December 1992 Memphis Business Capital Corporation was issued a warrant
for 10,000 shares of common stock with an exercise price of $.53, which
expires on December 17, 1997. The warrants were issued in conjunction with
a loan, which was paid in full in April 1993.
In September 1994, a warrant to purchase 2,400,000 shares of common stock
at $.12 per share was granted by the Board to The Willy Group, Ltd. in
exchange for prior warrants and a change in a royalty agreement. The
warrant was exercised in June 1996.
In September 1994, a founder and Board member was granted a warrant to
purchase 400,000 shares of common stock at $.12 per share. The warrant
expires on December 31, 1996.
In 1994, the Company issued various warrants to a major shareholder in
connection with loans made to the Company. These warrants expire on
April 1, 1996 and give the shareholder the right
10
<PAGE>
OVERLOOK COMMUNICATIONS INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
to purchase 277,777 shares of common stock at $.09 per share. At March 31,
1996, these warrants were exercised.
9. INCOME TAX
Due to the uncertainty of future operating income levels, net deferred tax
assets of $1,052,743 and $876,711 at December 31, 1995 and 1994 have been
offset by valuation allowances of the same amounts. Deferred tax assets
come about primarily from net operating loss carryforwards.
At December 31, 1995, the Company had net operating loss carryforwards of
approximately $1,884,047, which expire between 2008 and 2011.
No income taxes were paid in 1995 and 1994.
10. FINANCIAL INSTRUMENTS
In 1995, the Company adopted SFAS No. 107, "Disclosures about Fair Value
of Financial Instruments," which requires disclosure of fair value
information about financial instruments, whether or not recognized in the
balance sheet.
The carrying amount of cash and receivables approximates fair value because
their maturity is generally less than one year in duration. The fair
value of the notes payable and capital lease obligation approximates their
carrying value at December 31, 1995 and 1994.
11. RELATED PARTY TRANSACTIONS
The Company paid a shareholder $72,000 and $54,000 for consulting
services during 1995 and 1994, respectively.
During 1995 and 1994; OCI and a company owned by several OCI shareholders
shared long-distance services. OCI received and paid all invoices for
services to both entities and subsequently billed the related entity for
its portion of the invoice. This arrangement was established to create
volume and reduce price per minute to both entities. At December 31, 1995
and 1994, the related company owed OCI $258,961 and $87,810, respectively,
relating to this arrangement.
During 1995, a shareholder of the Company funded the construction of
approximately 80 debit card vending machines. These machines were placed
in service in late 1995 and 1996, and are used to distribute the
Company's prepaid debit cards. In July 1996, the Company purchased all
vending machines that were owned by the shareholder in exchange for a
$302,000 note payable, due July 31, 1997, bearing interest at prime rate.
11
<PAGE>
OVERLOOK COMMUNICATIONS INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
12. MAJOR CUSTOMER INFORMATION
During 1993, 36% of the Company's operating revenue was derived from
services provided to one customer. During 1995 and 1994, 41% and 49%,
respectively, of the Company's revenue was derived from commissions earned
by the Company from a long-distance carrier based on an agency agreement
between the Company and the carrier.
13. LITIGATION AND CONTINGENCIES
During 1995, the Company settled various claims of a former employee and
shareholder. As a result of this settlement, all claims were dropped and
the Company agreed to repurchase all shares of common stock held by the
former employee.
Various legal actions arising in the normal course of business have been
brought against the Company and certain of its subsidiaries. Management
believes that the ultimate resolution of these actions will not have a
material adverse effect on the Company's financial position or results of
operations, taken as a whole.
14. SUBSEQUENT EVENTS
SHAREHOLDER ADVANCES
On March 13, 1996, the Board of Directors approved a resolution that
converted advances made to the Company by three shareholders into notes
payable due two years from the date of the advance. These notes bear
interest at prime plus 3%. In addition, each note will have warrants to
purchase common stock of the Company at $.06 per share, exercisable for a
period of two years beginning one year after the advance, for a number of
shares equal to one-half of the dollar value (at $.06 per share) of the
amount of the advance. In the event the Company repays the note within
one year of the date of the related advance, 50% of the warrants relating
to the repaid advance will be canceled.
On July 12, 1996, the Board of Directors, by unanimous consent, modified
the terms of these notes to allow conversion of the notes and all accrued
interest to common stock of the Company at a rate of $.06 per share.
MERGER
On May 21, 1996, the Company agreed to merge with Charter
Communications International, Inc. ("C.Com"). Under the provisions of the
proposed transaction, C.Com will exchange approximately 40% of its common
stock for the stock of OCI. C.Com is an international
telecommunications provider and Internet communications network located in
Houston, Texas.
12
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("PLAN" or "MERGER AGREEMENT") dated as
of August 13, 1996, between OCI ACQUISITION CORP., a North Carolina corporation
("NEWCO"), and OVERLOOK COMMUNICATIONS INTERNATIONAL CORPORATION, a North
Carolina corporation ("OVERLOOK"). Newco and Overlook are hereinafter
collectively referred to as the "CONSTITUENT CORPORATIONS."
RECITALS:
WHEREAS, Newco is a corporation duly organized and existing under the laws
of the State of North Carolina, having filed its Articles of Incorporation in
the office of the Secretary of State of North Carolina on July 22, 1996, and
having total authorized capital stock of 1,000 shares of common stock, $.01 par
value ("NEWCO STOCK"), of which 1,000 shares are issued and outstanding and
owned by Charter Communications International, Inc., a Nevada corporation
("CHARTER"); and
WHEREAS, Overlook is a corporation duly organized and existing under the
laws of the State of North Carolina, having filed its Articles of Incorporation
in the office of the Secretary of State of North Carolina on December 10, 1992,
and having an authorized capital stock of (i) 50,000,000 shares of common stock,
$.001 par value ("OVERLOOK COMMON STOCK"), of which 42,534,858 shares are issued
and outstanding.
WHEREAS, the respective Boards of Directors of the Constituent Corporations
deem it advisable and in the best interests of the Constituent Corporations and
their shareholders that Newco be merged with and into Overlook, which shall be
the surviving corporation, as authorized by the statutes of the State of North
Carolina and pursuant to the terms and conditions hereinafter set forth, and
each such Board has duly approved this Agreement and Plan of Merger;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, and for the purpose of setting forth the terms
of the merger (the "MERGER") provided by this Merger Agreement, the mode of
carrying the same into effect and such other details and provisions as are
deemed necessary or desirable, the parties hereto have agreed and do hereby
agree, subject to the approval or adoption of this Merger Agreement by the
requisite vote of the shareholders of each Constituent Corporation, and subject
to the conditions hereinafter set forth, as follows:
ARTICLE I
THE MERGER
SECTION 1.01. THE MERGER. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with North Carolina
Law, at the Effective Time (as defined in Section 1.02), Newco shall be merged
with and into Overlook. As a result of the Merger, the separate corporate
existence of Newco shall cease and Overlook shall continue as the surviving
corporation in the Merger (the "SURVIVING CORPORATION"). The name of the
Surviving Corporation shall remain "Overlook Communications International
Corporation."
<PAGE>
SECTION 1.02. EFFECTIVE TIME. As promptly as practicable after the
approval hereof by the shareholders of each Constituent Corporation and the
execution and delivery of this Agreement by each of the parties hereto, the
parties hereto shall cause the Merger to be consummated by filing of articles of
merger (the "ARTICLES OF MERGER") with the Secretary of State of the State of
North Carolina, in such form as required by, and executed in accordance with the
relevant provisions of, North Carolina Law (the date and time of such filing
being the "EFFECTIVE TIME").
SECTION 1.03. EFFECT OF THE MERGER. At the Effective Time, the
effect of the Merger shall be as provided in the applicable provisions of North
Carolina Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, except as otherwise provided herein, all the
property, rights, privileges, powers and franchises of Newco and Overlook shall
vest in the Surviving Corporation, and all debts, liabilities and duties of
Newco and Overlook shall become the debts, liabilities and duties of the
Surviving Corporation.
SECTION 1.04. ARTICLES OF INCORPORATION; BYLAWS. At the Effective
Time, the Articles of Incorporation and the Bylaws of Overlook, as in effect
immediately prior to the Effective Time, shall be the Articles of Incorporation
and the Bylaws of the Surviving Corporation; PROVIDED THAT Article 2 of the
Articles of Incorporation of Overlook shall be amended as follows to reflect
that, after the Merger, the capitalization of Overlook shall be 1,000 shares of
Common Stock issued to and outstanding in the name of Charter:
"The total number of shares of all classes of stock which the
corporation shall be authorized to issue is one thousand (1,000)
shares of common stock, $.01 par value per share."
SECTION 1.05. DIRECTORS AND OFFICERS. The directors of Overlook
immediately prior to the Effective Time shall be the directors of the Surviving
Corporation, each to hold office in accordance with the Articles of
Incorporation and Bylaws of the Surviving Corporation, and the officers of
Overlook immediately prior to the Effective Time shall be the officers of the
Surviving Corporation, in each case until their respective successors are duly
elected or appointed and qualified.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01. CONVERSION OF SECURITIES. At the Effective Time, by
virtue of the Merger and without any action on the part of Newco, Overlook or
the holders of any of the following securities:
(a) all shares of Overlook Common Stock issued and outstanding
immediately prior to the Effective Time, excluding any treasury shares held by
Overlook and Dissenting Shares (as defined in Section 2.04), if any, and all
warrants and options of Overlook representing the right to purchase Overlook
Common Stock, if any, outstanding immediately prior to the Effective Time
("OVERLOOK WARRANT"), shall be converted, on a pro rata basis, into the right to
receive nine million (9,000,000) shares of fully paid, nonassessable shares of
common stock, par
2
<PAGE>
value $.00001 per share, of Charter ("CHARTER COMMON STOCK"), with Overlook
Common Stock being converted into Charter Common Stock and Overlook Warrants
being converted into warrant to purchase Charter Common Stock ("CHARTER
WARRANT"); on a per share or per warrant basis, such conversion shall be
calculated as set forth in this Subsection in accordance with the Common
Stock Exchange Ratio (as defined herein) as follows:
(i) Each share of common stock, $.001 par value per share, of
Overlook Common Stock issued and outstanding immediately prior to the
Effective Time, excluding any treasury shares held by Overlook, shares held
by Charter and Dissenting Shares (as defined in Section 2.04), if any,
shall be converted into the right to receive .20258928 shares (the "COMMON
STOCK EXCHANGE RATIO") of fully paid, nonassessable shares of common stock,
par value $.00001 per share, of Charter Common Stock; such Common Stock
Exchange Ratio being determined by dividing 9,000,000 shares of Charter
Common Stock by the total number of outstanding shares of OCI Common Stock
issued and outstanding or represented by an Overlook Warrant outstanding
immediately prior to the Effective Time, which number equals 44,424,858;
such Common Stock Exchange Ratio shall be modified as necessary to properly
effectuate the conversion as set forth in this Section.
(ii) Each Overlook Warrant outstanding immediately prior to the
Effective Time shall be converted into a Charter Warrant exercisable for
that number of shares of Charter Common Stock equal to the product of the
number of shares of Overlook Common Stock covered by Overlook Warrants
immediately prior to the Effective Time multiplied by the Common Stock
Exchange Ratio rounded up to the nearest whole number of shares of Charter
Common Stock. The date of grant of a Charter Warrant issued in exchange
for a Overlook Warrant shall be deemed to be the date on which such
Overlook Warrant was originally granted. Charter Warrants issued in
exchange for Overlook Warrants pursuant hereto shall have a per share
exercise price equal to the exercise price for the Overlook Warrant
multiplied by the total number of shares of Overlook Common Stock covered
by the Overlook Warrant divided by the total number of shares of Charter
Common Stock covered by the Charter Warrant issued in exchange for such
Overlook Warrant. Charter Warrants issued in exchange for Overlook
Warrants pursuant hereto shall have the same vesting dates and shall vest
on such dates in the same proportion of the total as the Overlook Warrants
exchanged for such Charter Warrants.
(b) All shares of Overlook Stock and each Overlook Warrant shall no
longer be outstanding and shall automatically be canceled and retired and shall
cease to exist, and each certificate previously evidencing any such Overlook
Stock and each Overlook Warrant shall thereafter represent the right to receive
the Merger Consideration (as defined in Section 2.02(b) below). The holders of
such certificates previously evidencing such shares of Overlook Stock
outstanding immediately prior to the Effective Time shall cease to have any
rights with respect to such shares of Overlook Stock, except as otherwise
provided herein or by law. Such certificates previously evidencing shares of
Overlook Common Stock shall be exchanged for certificates evidencing shares of
Charter Common Stock issued in consideration therefor in accordance with the
allocation procedures of this Section 2.01 and upon the surrender of such
certificates in accordance with the provisions of Section 2.02. Each Overlook
Warrant shall be exchanged for a Charter Warrant in accordance with the
provisions of Section 2.02.
3
<PAGE>
(c) Each share of Overlook Stock held in the treasury of Overlook and
each share of Overlook Stock owned by Charter or any direct or indirect wholly
owned subsidiary of Charter or of Overlook immediately prior to the Effective
Time shall be canceled and extinguished without any conversion thereof and no
payment shall be made with respect thereto.
SECTION 2.02. EXCHANGE OF CERTIFICATES; WARRANTS. (a) EXCHANGE
AGENT. As of the date hereof, Newco has deposited, or caused to be deposited,
with Corporate Stock Transfer (the "EXCHANGE AGENT"), for the benefit of the
holders of shares of Overlook Stock, for exchange in accordance with this
Article II through the Exchange Agent (i) certificates evidencing such number of
shares of Charter Common Stock equal to the Common Stock Exchange Ratio
multiplied by the number of shares of Overlook Common Stock; and (ii) Charter
Warrants evidencing the right to purchase such number of shares of Charter
Common Stock equal to the Common Stock Exchange Ratio multiplied by the number
of shares of Overlook Common Stock represented by Overlook Warrants at an
exercise price determined in accordance with Section 2.01(c). The Exchange
Agent shall, pursuant to irrevocable instructions, deliver the Charter Stock and
Charter Warrants to the holders of Overlook Stock and Overlook Warrants.
(b) EXCHANGE PROCEDURES. As soon as reasonably practicable after the
Effective Time, Overlook will instruct the Exchange Agent to mail to each holder
of record of Overlook Stock or Overlook Warrants which immediately prior to the
Effective Time evidenced outstanding shares of Overlook Stock (other than
Dissenting Shares) or outstanding Overlook Warrants (such stock certificates and
documents evidencing Overlook Warrants being collectively, the "CERTIFICATES"),
(i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
proper delivery of the Certificates to the Exchange Agent and shall be in such
form and have such other provisions as Overlook may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for certificates evidencing shares of Charter Stock or Charter Warrants. Upon
surrender of a Certificate for cancellation to the Exchange Agent together with
such letter of transmittal, duly executed, and such other customary documents as
may be required pursuant to such instructions, the holder of such Certificate
shall be entitled to receive in exchange therefor (i) certificates evidencing
that number of shares of Charter Common Stock which such holder has the right to
receive in respect of the shares of Overlook Common Stock, and (ii) a Charter
Warrant evidencing the right to purchase that number of shares of Charter Common
Stock which such holder has the right to receive in respect of Overlook Warrants
in each case in accordance with Section 2.01 (such Charter Common Stock and
Charter Warrants being collectively, the "MERGER CONSIDERATION") and the
Certificates so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of shares of Overlook Stock or a Overlook Warrant which
transfer is not registered in the transfer records of Overlook, a certificate
evidencing the proper number of shares of Charter Common Stock or a Charter
Warrant, as appropriate, may be issued in accordance with this Article II to a
transferee if the Certificate evidencing such Overlook Common Stock or Overlook
Warrant is presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated in this Section 2.02, each Certificate shall be deemed at any time
after the Effective Time to evidence only the right to receive, upon such
surrender, the Merger Consideration.
(c) NO FURTHER RIGHTS IN OVERLOOK COMMON STOCK OR OVERLOOK WARRANTS.
All Charter Common Stock and Charter Warrants issued upon conversion of Overlook
Common
4
<PAGE>
Stock or Overlook Warrants in accordance with the terms hereof shall be
deemed to have been issued or paid in full satisfaction of all rights
pertaining to such Overlook Common Stock and Overlook Warrants.
SECTION 2.03. STOCK TRANSFER BOOKS. At the Effective Time, the stock
transfer books of Overlook shall be closed and there shall be no further
registration of transfers of shares of Overlook Stock thereafter on the records
of Overlook. On or after the Effective Time, any Certificates presented to the
Exchange Agent for any reason shall be converted into the Merger Consideration.
SECTION 2.04. DISSENTING SHARES. If required under North Carolina
Law, notwithstanding any other provisions of this Agreement to the contrary,
shares of Overlook Stock that are outstanding immediately prior to the Effective
Time and which are held by stockholders who shall have not voted in favor of the
Merger or consented thereto in writing and who shall have demanded properly in
writing appraisal for such shares in accordance with Articles 55-13-01 to
55-13-31 (collectively, the "DISSENTING SHARES") shall not be converted into or
represent the right to receive the Merger Consideration. Such stockholders
shall be entitled to receive payment of the appraised value of such shares of
Overlook Stock held by them in accordance with the provisions of such sections
of North Carolina Law, except that all Dissenting Shares held by stockholders
who shall have failed to perfect or who effectively shall have withdrawn or lost
their rights to appraisal of such shares of Overlook Stock under such sections
of North Carolina Law shall thereupon be deemed to have been converted into and
to have become exchangeable, as of the Effective Time, for the right to receive
shares of Charter Common Stock, upon surrender, in the manner provided in
Section 2.02, of the certificate or certificates that formerly evidenced such
shares of Overlook Stock.
ARTICLE III
APPROVAL AND EFFECTIVE TIME OF THE MERGER
The Merger shall become effective when the Articles of Merger are filed and
recorded in the office of the Secretary of State of the State of North Carolina.
ARTICLE IV
MISCELLANEOUS PROVISIONS
(a) For the convenience of the parties, any number of counterparts
hereof may be executed, and each such counterpart shall be deemed to be an
original instrument.
(b) It is the intention of the parties that the internal laws, and
not the laws of conflicts, of the State of North Carolina shall govern the
enforceability and validity of this Merger Agreement, the construction of
its terms and the interpretation of the rights and duties of the parties;
PROVIDED, HOWEVER, that with respect to matters of law concerning the
internal affairs of any entity that is a party to or the subject of this
Merger Agreement the law of the jurisdiction of organization of such entity
shall govern.
5
<PAGE>
(c) This Merger Agreement may not be altered or amended except
pursuant to an instrument in writing signed on behalf of the parties
hereto.
IN WITNESS WHEREOF, Overlook has caused this Merger Agreement to be signed
by its President and attested by its Secretary and its corporate seal to be
affixed hereto pursuant to authorization contained in a resolution adopted by
its Board of Directors approving this Merger Agreement, and Newco has caused
this Merger Agreement to be signed by its President and attested by its
Secretary and its corporate seal to be affixed hereto pursuant to authorization
contained in a resolution adopted by its Board of Directors approving this
Merger Agreement, all on the date first above written.
[Signature pages to follow]
6
<PAGE>
OVERLOOK COMMUNICATIONS
INTERNATIONAL CORPORATION
ATTEST:
By By
---------------------------------- ----------------------------------
Patrick Delaney, President
[CORPORATE SEAL]
7
<PAGE>
ATTEST: OCI ACQUISITION CORP.
By By
---------------------------------- ----------------------------------
David G. Olson, President
[CORPORATE SEAL]
8
<PAGE>
ACQUISITION AGREEMENT
BY AND AMONG
CHARTER COMMUNICATIONS INTERNATIONAL, INC.
OCI ACQUISITION CORP.
OVERLOOK COMMUNICATIONS INTERNATIONAL CORPORATION
and
PATRICK E. DELANEY and STEPHEN E. RAVILLE
Dated as of July 15, 1996
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE I
THE MERGER. . . . . . . . . . . . . . . . 2
SECTION 1.01. The Merger . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.02. Effective Time . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF OCI. . . . . . . . . 2
SECTION 2.01. Organization and Qualification; Subsidiaries . . . . . . 2
SECTION 2.02. Articles of Incorporation and By-Laws. . . . . . . . . . 2
SECTION 2.03. Capitalization . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.04. Authority. . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.05. No Conflict; Required Filings and Consent. . . . . . . . 3
SECTION 2.06. Permits; Compliance. . . . . . . . . . . . . . . . . . . 4
SECTION 2.07. Financial Statements . . . . . . . . . . . . . . . . . . 4
SECTION 2.08. No Undisclosed Liabilities . . . . . . . . . . . . . . . 4
SECTION 2.09. Absence of Certain Changes or Events . . . . . . . . . . 4
SECTION 2.10. Absence of Litigation. . . . . . . . . . . . . . . . . . 5
SECTION 2.11. Employee Benefit Plans . . . . . . . . . . . . . . . . . 6
SECTION 2.12. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.13. Brokers. . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.14. OCI Corporate Action . . . . . . . . . . . . . . . . . . 6
SECTION 2.15. Contract Rights. . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.16. Environmental Laws and Regulations . . . . . . . . . . . 7
SECTION 2.17 Compliance with Securities Laws. . . . . . . . . . . . . 7
SECTION 2.18. No Misleading Statements . . . . . . . . . . . . . . . . 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF C.COM AND NEWCO. . . . . . 8
SECTION 3.01. Organization and Qualification . . . . . . . . . . . . . 8
SECTION 3.02. Articles of Incorporation and By-Laws. . . . . . . . . . 8
SECTION 3.03. Capitalization . . . . . . . . . . . . . . . . . . . . . 8
SECTION 3.04. Authority. . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.05. No Conflict; Required Filings and Consents . . . . . . . 9
SECTION 3.06. Permits; Compliance. . . . . . . . . . . . . . . . . . . 10
SECTION 3.07. Reports; Financial Statements. . . . . . . . . . . . . . 10
SECTION 3.08. Absence of Certain Changes or Events . . . . . . . . . . 11
SECTION 3.09. No Undisclosed Liabilities . . . . . . . . . . . . . . . 12
SECTION 3.10. Absence of Litigation. . . . . . . . . . . . . . . . . . 12
SECTION 3.11. Ownership of Newco; No Prior Activities. . . . . . . . . 12
SECTION 3.12. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.13. Brokers. . . . . . . . . . . . . . . . . . . . . . . . . 13
i
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PAGE
----
SECTION 3.14. Environmental Laws and Regulations.. . . . . . . . . . . 13
SECTION 3.15. Contract Rights. . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.16. Employee Benefit Plans . . . . . . . . . . . . . . . . . 14
SECTION 3.17. No Misleading Statements . . . . . . . . . . . . . . . . 14
ARTICLE IV
ADDITIONAL AGREEMENTS. . . . . . . . . . . . . 14
SECTION 4.01. Appropriate Action; Consents; Filings. . . . . . . . . . 14
SECTION 4.02. Tax Treatment; Pooling of Interests. . . . . . . . . . . 15
SECTION 4.03. Indemnification. . . . . . . . . . . . . . . . . . . . 15
SECTION 4.04. Directors of C.COM . . . . . . . . . . . . . . . . . . . 18
SECTION 4.05. Lockup Arrangements. . . . . . . . . . . . . . . . . . . 18
SECTION 4.06. Opinion of Counsel to C.COM. . . . . . . . . . . . . . . 18
ARTICLE V
COVENANTS. . . . . . . . . . . . . . . . 18
SECTION 5.01. Covenants of OCI . . . . . . . . . . . . . . . . . . . . 18
SECTION 5.02. Covenants of C.COM . . . . . . . . . . . . . . . . . . . 20
SECTION 5.03. No Solicitations . . . . . . . . . . . . . . . . . . . . .21
SECTION 5.04. Access to Information. . . . . . . . . . . . . . . . . . 22
SECTION 5.05. Best Efforts . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 5.06. Stockholders Meetings. . . . . . . . . . . . . . . . . . 22
SECTION 5.07. Publicity. . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE VI
SECURITIES MATTERS
SECTION 6.01. Registration Statement . . . . . . . . . . . . . . . . . 23
SECTION 6.02. Listing Application. . . . . . . . . . . . . . . . . . . 24
SECTION 6.03. Agreements by Affiliated Stockholders of OCI . . . . . . 24
SECTION 6.04. Indemnification. . . . . . . . . . . . . . . . . . . . . 24
SECTION 6.05. Registration Expenses. . . . . . . . . . . . . . . . . . 26
ARTICLE VII
CONDITIONS TO CLOSING. . . . . . . . . . . . . 26
SECTION 7.01. Conditions to Each Party's Obligation to Effect the
Merger . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 7.02. Conditions to Obligations of OCI . . . . . . . . . . . . 27
SECTION 7.03. Conditions to Obligations of C.COM and Newco . . . . . . 27
ARTICLE VIII
CLOSING . . . . . . . . . . . . . . . . 28
ii
<PAGE>
PAGE
----
ARTICLE IX
DELIVERIES AT CLOSING. . . . . . . . . . . . . 28
SECTION 9.01. Deliveries by OCI. . . . . . . . . . . . . . . . . . . . 29
SECTION 9.02. Deliveries by C.COM. . . . . . . . . . . . . . . . . . . 29
ARTICLE X
TERMINATION AND AMENDMENT. . . . . . . . . . . . 30
SECTION 10.01. Termination . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 10.02. Effect of Termination . . . . . . . . . . . . . . . . . 30
SECTION 10.03. Amendment . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 10.04. Extension; Waiver . . . . . . . . . . . . . . . . . . . 30
ARTICLE XI
OTHER POST CLOSING COVENANTS.. . . . . . . . . . . 31
SECTION 11.01. Nonsolicitation . . . . . . . . . . . . . . . . . . . . 31
SECTION 11.02. Certain Tax Matters . . . . . . . . . . . . . . . . . . 32
ARTICLE XII
GENERAL PROVISIONS. . . . . . . . . . . . . . 32
SECTION 12.01. Effectiveness of Representations, Warranties and
Agreements . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 12.02. Notices . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 12.03. Certain Definitions . . . . . . . . . . . . . . . . . . 34
SECTION 12.04. Headings. . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 12.05. Severability. . . . . . . . . . . . . . . . . . . . . . 35
SECTION 12.06. Entire Agreement. . . . . . . . . . . . . . . . . . . . 35
SECTION 12.07. Assignment. . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 12.08. Parties in Interest . . . . . . . . . . . . . . . . . . 35
SECTION 12.09. Failure or Indulgence Not Waiver; Remedies Cumulative . 35
SECTION 12.10. Governing Law . . . . . . . . . . . . . . . . . . . . . 35
SECTION 12.11. Jurisdiction. . . . . . . . . . . . . . . . . . . . . . 35
SECTION 12.12. Counterparts. . . . . . . . . . . . . . . . . . . . . . 36
iii
<PAGE>
ACQUISITION AGREEMENT
AGREEMENT effective as of July 15, 1996 ("AGREEMENT"), among CHARTER
COMMUNICATIONS INTERNATIONAL, INC., a Nevada corporation ("C.COM"), OCI
ACQUISITION CORP., a North Carolina corporation ("NEWCO") wholly owned by C.COM,
and OVERLOOK COMMUNICATIONS INTERNATIONAL CORPORATION, a North Carolina
corporation ("OCI"), and PATRICK E. DELANEY ("DELANEY") and STEPHEN E. RAVILLE
("RAVILLE") the principal stockholders of OCI.
RECITALS
WHEREAS, upon the terms and subject to the conditions of this
Agreement and in accordance with the North Carolina Business Corporation Act
("NORTH CAROLINA LAW"), Newco will merge with and into OCI (the "MERGER") as a
result of which C.COM will own all of the issued and outstanding shares of the
common stock, $.001 par value, of OCI and the stockholders of OCI will own
9,000,000 shares of the common stock, $.00001 per share par value ("C.COM
STOCK") of C.COM;
WHEREAS, the Board of Directors of OCI has determined that the Merger
is fair to, and in the best interests of, OCI and its stockholders and has
approved and adopted this Agreement and the transactions contemplated herein;
WHEREAS, the Board of Directors of C.COM has determined that the
Merger is in the best interests of C.COM and its stockholders and has approved
and adopted this Agreement and the transactions contemplated herein;
WHEREAS, the Board of Directors of Newco has determined that the
Merger is in the best interests of Newco and its stockholder and the Board of
Directors of Newco and C.COM, as the sole stockholder of Newco, have approved
and adopted this Agreement and the transactions contemplated herein;
WHEREAS, for Federal income tax purposes, it is intended that the
Merger qualify as a reorganization under the provisions of section 368(a) of the
United States Internal Revenue Code of 1986, as amended (the "CODE") and that
this Agreement and the Annexes hereto shall constitute a "plan of
reorganization" for the purposes of section 368 of the Code;
WHEREAS, for accounting purposes, it is intended that the parties
shall use their best efforts to allow for the Merger to be accounted for as a
"pooling of interests";
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:
<PAGE>
ARTICLE I
THE MERGER
SECTION 1.01. THE MERGER. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with North Carolina
Law, at the Effective Time (as defined in Section 1.02), Newco and OCI shall
effect a merger by executing the Plan and Agreement of Merger (the "PLAN") in
substantially the form attached hereto as ANNEX I, and by executing and filing
Articles of Merger (the "ARTICLES"), substantially in the form attached hereto
as ANNEX II, in the manner provided in Chapter 55-11 of the North Carolina
Business Corporation Act. As a result of the Merger, the separate corporate
existence of Newco shall cease and OCI shall continue as the surviving
corporation in the Merger (the "SURVIVING CORPORATION"). The name of the
Surviving Corporation shall continue to be "Overlook Communications
International Corporation". Prior to the Merger, C.COM shall, pursuant to the
terms of the Subscription Agreement, a copy of which is attached as ANNEX III
hereto (the "SUBSCRIPTION AGREEMENT"), issue and deliver to Newco shares of
C.COM Stock equivalent to the number of shares of C.COM Stock to be transferred
pursuant to the terms and provisions of the Plan.
SECTION 1.02. EFFECTIVE TIME. As promptly as practicable after the
execution and delivery of this Agreement by each of the parties hereto, and upon
satisfaction of all the conditions to Closing (as hereinafter defined) the
parties hereto shall cause the Merger to be consummated by filing the Articles
with the Secretary of State of the State of North Carolina in such form as
required by, and executed in accordance with, the relevant provisions of North
Carolina Law (the date and time of such filing being the "EFFECTIVE TIME").
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF OCI
OCI hereby represents and warrants to C.COM and Newco, as follows:
SECTION 2.01. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. OCI is
a corporation duly organized, validly existing and in good standing under the
laws of the State of North Carolina, has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as it is now being conducted, and is duly qualified and in good standing to do
business in each jurisdiction in which the nature of the business conducted by
it or the ownership or leasing of its properties makes such qualification
necessary. OCI has no direct or indirect subsidiaries.
SECTION 2.02. ARTICLES OF INCORPORATION AND BY-LAWS. OCI has
heretofore furnished to C.COM complete and correct copies of the Articles of
Incorporation and the By-Laws, in each case as amended or restated, of OCI. OCI
is not in violation of any of the provisions of its Articles of Incorporation or
By-Laws.
SECTION 2.03. CAPITALIZATION. The authorized capital stock of OCI
consists of 50,000,000 shares of common stock, $.001 par value ("OCI COMMON
STOCK"). As of the date hereof 27,424,443 shares of OCI Common Stock are issued
and outstanding, all of which are duly authorized, validly issued, fully paid
and nonassessable and not subject to preemptive rights
2
<PAGE>
created by statute, OCI's Articles of Incorporation or By-Laws or any
agreement to which OCI is a party or bound. There are no bonds, debentures,
notes or other indebtedness issued or outstanding having the right to vote on
any matters on which OCI's stockholders may vote. Except as set forth on
SCHEDULE 2.03, there are no options, warrants, calls or other rights
(including registration rights), agreements, arrangements or commitments
presently outstanding obligating OCI to issue, deliver or sell shares of its
capital stock or debt securities, or obligating OCI to grant, extend or enter
into any such option, warrant, call or other such right, agreement,
arrangement or commitment.
SECTION 2.04. AUTHORITY. OCI has all requisite corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated herein. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated herein have been duly authorized by all necessary corporate action,
other than the vote of the stockholders of OCI as herein contemplated, and no
corporate proceeding (other than such shareholder vote) on the part of OCI is
necessary to authorize this Agreement or to consummate the transactions
contemplated herein. This Agreement has been duly executed and delivered by OCI
and, assuming the due authorization, execution and delivery thereof by C.COM and
Newco, constitutes the legal, valid and binding obligation of OCI enforceable in
accordance with its terms (i) except as limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to or affecting creditors' rights generally, and without limitation,
the effect of statutory or other laws regarding fraudulent conveyances and
preferential transfers and (ii) subject to the limitations imposed by general
rules of equity (regardless of whether such enforceability is considered at law
or in equity).
SECTION 2.05. NO CONFLICT; REQUIRED FILINGS AND CONSENT.
(a) Except as set forth on SCHEDULE 2.05(a), the execution and
delivery of this Agreement by OCI does not, and the performance of this
Agreement by OCI will not (i) conflict with or violate the Articles of
Incorporation or By-Laws, in each case as amended or restated, of OCI, (ii)
conflict with or violate any federal, state, foreign or local law, statute,
ordinance, rule, regulation, order, judgment or decree (collectively,
"LAWS") in effect as of the date of this Agreement and applicable to OCI or
by which the properties thereof are bound or subject, or (iii) result in
any breach of or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, or
require payment under, or result in the creation of an Encumbrance on, any
of the properties or assets of OCI pursuant to any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which OCI is a party or by which OCI or its
properties is bound or subject, except for breaches, defaults, events,
rights of termination, amendment, acceleration or cancellation, payment
obligations or liens or Encumbrances that would not have a material adverse
effect on the business, properties, assets, condition (financial or
otherwise) operations or prospects of OCI ("OCI MATERIAL ADVERSE EFFECT").
(b) Except as set forth on SCHEDULE 2.05(b), the execution and
delivery of this Agreement by OCI does not, and the performance of this
Agreement by OCI will not, require OCI to obtain any consent, approval,
authorization or permit of, or to make any
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filing with or notification to, any governmental or regulatory authority,
domestic or foreign ("GOVERNMENTAL ENTITIES"), based on laws, rules,
regulations and other requirements of Governmental Entities in effect as
of the date of this Agreement, except for applicable requirements, if any,
of (i) federal or state securities laws and the filing and recordation of
appropriate merger documents as required by North Carolina Law and (ii)
where the failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not, either
individually or in the aggregate, prevent OCI from performing its
obligations under this Agreement or have an OCI Material Adverse Effect.
SECTION 2.06. PERMITS; COMPLIANCE. Except as set forth on SCHEDULE
2.06, OCI is in possession of all franchises, grants, authorizations, licenses,
permits, easements, variances, exemptions, consents, certificates, approvals and
orders necessary to own, lease and operate its properties and to carry on its
business as it is now being conducted (collectively, the "OCI PERMITS"), and
there is no action, proceeding or investigation pending or, to the knowledge of
OCI, threatened, regarding suspension or cancellation of any of the OCI Permits.
OCI is not in conflict with, or in default or violation of (a) any Law
applicable to OCI or by which any of the properties of OCI is bound or subject
or (b) any of the OCI Permits, except for any such conflicts, defaults or
violations which would not have an OCI Material Adverse Effect.
SECTION 2.07. FINANCIAL STATEMENTS. Attached hereto as SCHEDULE 2.07
which is hereby incorporated herein by reference, are (i) the unaudited
financial statements of OCI as of April 30, 1996, (the "BALANCE SHEET DATE")
containing the balance sheet of OCI and the related statement of operations,
statement of changes in cash flows, and statement of shareholders' equity at and
as of such date, and (ii) the audited financial statements of OCI as of December
31, 1993, 1994 and 1995, containing the balance sheet of OCI and the related
statement of operations, statement of shareholders' equity and statement of cash
flows, in each case for the periods then ended (collectively, the "OCI FINANCIAL
STATEMENTS") accompanied by the unqualified opinion of the independent auditors
of OCI in a form suitable for filing by C.COM in a Current Report on Form 8-K
with the Securities and Exchange Commission ("SEC"). The OCI Financial
Statements have been prepared in accordance with generally accepted accounting
principles and practices consistently followed by OCI throughout the periods
indicated, and fairly present the financial position of OCI as of the dates
thereof and the results of its operations and cash flows for the period
indicated.
SECTION 2.08. NO UNDISCLOSED LIABILITIES. Except as set forth on
SCHEDULE 2.08, there are no liabilities of OCI of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or otherwise, and there
is no existing condition, situation or set of circumstances which could
reasonably be expected to result in such a liability, other than liabilities
fully reflected or reserved against on the OCI Financial Statements and
liabilities which, individually or in the aggregate, would not have an OCI
Material Adverse Effect.
SECTION 2.09. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set
forth on SCHEDULE 2.09, with respect to OCI, since the Balance Sheet Date, there
has not been, nor with the lapse of time is there expected to be:
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(a) any change in its financial condition, assets, liabilities
(contingent or otherwise), income, operations, business or prospects which
would have an OCI Material Adverse Effect;
(b) any damage, destruction or loss (whether or not covered by
insurance) to its assets, properties, business or prospects which would
have an OCI Material Adverse Effect;
(c) any change or agreement to change its authorized capital or the
ownership of its outstanding securities;
(d) any declaration or payment of, or any agreement to declare or
pay, any dividend or distribution in respect of any of its equity interests
or any direct or indirect redemption, purchase or other acquisition of any
of its equity interests;
(e) any material increase in the compensation payable or to become
payable by it to any of its officers, employees or agents, or any accrual
or arrangement for or payment of any material bonus or other special
compensation of any kind or any severance or termination pay paid to any of
its present or former officers or other key employees;
(f) any (i) sale or transfer, or any agreement, plan or arrangement
to sell or transfer, any of its assets, properties or rights to any other
Person except in the ordinary course of business and in the aggregate
amount of not more than $25,000, or (ii) cancellation or agreement to
cancel any indebtedness or other obligation of any of its stockholders or
any affiliate thereof to it;
(g) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of its assets, properties
or rights (other than consents to the assignment of contracts) requiring
consent of any party to the transfer and assignment of any such assets,
property or rights;
(h) any purchase or acquisition, or agreement, plan or arrangement to
purchase or acquire, any assets, properties, or rights except in the
ordinary course of business and in the aggregate amount of not more than
$50,000;
(i) any waiver of any of its material rights or claims;
(j) other than in the ordinary course of its business, any amendment
or termination of any material contract, agreement, license, permit or
other right to which it is a party; or
(k) any material transaction by it outside the ordinary course of its
business.
SECTION 2.10. ABSENCE OF LITIGATION. Except as set forth on SCHEDULE
2.10, there is no claim, action, suit, litigation, proceeding, arbitration or
investigation of any kind, at law or in equity (including actions or proceedings
seeking injunctive relief), pending or, to the knowledge of OCI, threatened
against OCI or any properties or rights of OCI and OCI is not
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subject to any continuing order of, consent decree, settlement agreement or
other similar written agreement with, or, to the knowledge of OCI, continuing
investigation by, any Governmental Entity, or any judgment, order, writ,
injunction, decree or award of any Governmental Entity or arbitrator,
including, without limitation, cease-and-desist or other orders.
SECTION 2.11. EMPLOYEE BENEFIT PLANS.
(a) Except as set forth on SCHEDULE 2.11(A), OCI does not have, and
has not had, any employee benefit plan (including, without limitation, any
"employee benefit plan" as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), or any
bonus, pension, profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock option, phantom stock,
retirement, vacation, severance, disability, death benefit,
hospitalization, insurance or other plan, arrangement or understanding
(whether or not legally binding).
(b) OCI is not a party to any collective bargaining agreement.
(c) OCI has no obligation for retiree health, medical or life
insurance benefits under any plan or arrangement.
SECTION 2.12. TAXES. OCI has filed all federal, state and local tax
returns required by law, or has filed proper extensions, and has paid all Taxes
(as defined in Section 11.03 hereof), assessments and penalties due and payable.
The provisions for Taxes, if any, reflected in the most recent balance sheet
included in the OCI Financial Statements at the Balance Sheet Date are adequate
for any and all federal, state, county and local taxes for the period ending on
such Balance Sheet Date and for all prior periods, whether or not disputed.
There are no present disputes as to Taxes of any nature payable by OCI.
SECTION 2.13. BROKERS. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated in this Agreement based upon arrangements
made by or on behalf of OCI.
SECTION 2.14. OCI CORPORATE ACTION. The Board of Directors of OCI
(at a meeting duly called and held) has by the unanimous vote of all directors
present (a) determined that the Merger is advisable and fair and in the best
interests of OCI and its stockholders, (b) approved the Merger in accordance
with the provisions of G.S. 55-11-03 of the North Carolina Law, and (c)
recommended the approval of this Agreement and the Merger by the holders of OCI
Common Stock and directed that the Merger be submitted for consideration by
OCI's stockholders.
SECTION 2.15 CONTRACT RIGHTS. Except for this Agreement and the
agreements contemplated herein or as described on SCHEDULE 2.15 or referenced in
any other Schedule hereto, OCI is not a party to or bound by any material
contract or agreement, whether written or oral, including, without limitation,
any contract or agreement for employment, consulting or similar services, for
capital expenditures or the acquisition or construction of fixed assets, which
constitutes any note, bond, indenture or other evidence of indebtedness or
guaranty or security for indebtedness of others, for the sale of any asset, or
the grant of any right or option to purchase such asset, or which constitutes a
material lease, or which purports to limit the freedom
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of OCI or any of its affiliates to compete in any line of business or in any
geographic area or to borrow money or incur indebtedness.
SECTION 2.16. ENVIRONMENTAL LAWS AND REGULATIONS.
(a) OCI is in material compliance with all applicable foreign, federal
(including but not limited to the Outer Continental Shelf Lands Act, the
Clean Water Act, the Oil Pollution Act, the Resource Conservation and
Recovery Act, the Clean Air Act, the Comprehensive Environmental Response
Compensation and Liability Act, the Occupational Safety and Health Act and
the Hazardous Materials Transportation Act), state and local laws and
regulations and common law relating to pollution or protection of human
health or the environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata
(collectively, "ENVIRONMENTAL LAWS"), which compliance includes, but is not
limited to, the possession by OCI of all material permits and other
governmental authorizations required under applicable Environmental Laws,
and compliance with the terms and conditions thereof and compliance with
notification, reporting and registration provisions under applicable
Environmental Laws; OCI has not received notice of, or, to the knowledge of
OCI, it is not the subject of, any action, cause of action, claim,
investigation, demand or notice by any person or entity alleging liability
under or noncompliance with any Environmental Law ("ENVIRONMENTAL CLAIM");
and to the knowledge of OCI, there are no circumstances that are reasonably
likely to prevent or interfere with such material compliance in the future,
or to require material expenditures to maintain such material compliance in
the future.
(b) There are no Environmental Claims that are pending or, to the
knowledge of OCI, threatened against OCI, or, to the knowledge of OCI,
against any person or entity whose liability for any Environmental Claim
OCI has or may have retained or assumed either contractually or by
operation of law.
(c) To the knowledge of OCI, there are no circumstances that could
form the basis for an Environmental Claim against OCI, or against any
person or entity whose liability for any Environmental Claim OCI has or may
have retained or assumed either contractually or by operation of law.
SECTION 2.17 COMPLIANCE WITH SECURITIES LAWS. All outstanding OCI
Common Stock was issued pursuant to a valid exemption from both Federal and all
applicable state securities laws.
SECTION 2.18 NO MISLEADING STATEMENTS. This Agreement, the
Schedules hereto and all other documents and information furnished by or on
behalf of OCI to C.COM, Newco and their representatives pursuant hereto do not
and will not include any untrue statement of a material fact or omit to state
any material fact necessary to make the statements made and to be made not
misleading.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF C.COM AND NEWCO
C.COM, with respect to C.COM, Newco and all material operating
subsidiaries of C.COM (the "SUBSIDIARIES"), and Newco, hereby jointly and
severally represent and warrant to OCI that:
SECTION 3.01. ORGANIZATION AND QUALIFICATION. Each of C.COM and
Newco is a corporation duly organized, validly existing and in good standing
under the laws of the state under the laws of which it was incorporated and has
all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as it is now being conducted, and is
duly qualified and in good standing to do business in each jurisdiction in which
the nature of the business conducted by it or the ownership or leasing of its
properties makes such qualification necessary. Set forth on SCHEDULE 3.01
hereto is a list of the Subsidiaries of C.COM as of the date hereof. Each of
the Subsidiaries is duly organized and validly existing and in good standing in
its respective jurisdiction of organization and has all requisite corporate
power and authority to own, lease and operate its properties and to carry on its
business as it is now being conducted, and is duly qualified and in good
standing to do business in each jurisdiction in which the nature of the business
conducted by it or the ownership or leasing of its properties makes such
qualification necessary.
SECTION 3.02. ARTICLES OF INCORPORATION AND BY-LAWS. C.COM has
heretofore furnished to OCI a complete and correct copy of the Articles of
Incorporation and the By-Laws, as amended or restated to the date hereof, of
each of C.COM, Newco and the Subsidiaries. Neither C.COM, Newco nor any of the
Subsidiaries is in violation of any of the provisions of its Articles of
Incorporation or By-Laws.
SECTION 3.03. CAPITALIZATION.
(a) The authorized capital stock of C.COM consists of 40,000,000
shares of common stock, $.00001 par value ("C.COM COMMON STOCK") and
100,000 shares of preferred stock, $.01 par value ("C.COM PREFERRED
STOCK"). As of the date hereof (before giving effect to the transactions
contemplated herein) (i) 11,618,233 shares of C.COM Common Stock are issued
and outstanding, all of which are duly authorized, validly issued, fully
paid and nonassessable and not subject to preemptive rights created by
statute, C.COM's Articles of Incorporation or By-Laws or any agreement to
which C.COM is a party or is bound; and (ii) no shares of C.COM Preferred
Stock are outstanding. Except as set forth on SCHEDULE 3.03 hereto, there
are no options, warrants, calls or other rights (including registration
rights), agreements, arrangements or commitments presently outstanding
obligating C.COM to issue, deliver, sell or register shares of its capital
stock or debt securities, or obligating C.COM to grant, extend or enter
into any such option, warrant, call or other such right, agreement,
arrangement or commitment.
(b) All of the outstanding shares of capital stock of Newco and the
Subsidiaries are duly authorized, validly issued, fully paid and
nonassessable, and are owned by C.COM free and clear of any Encumbrances.
There are no options, warrants, calls or
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other rights (including registration rights), agreements, arrangements or
commitments of any character to which C.COM, Newco or any Subsidiary is a
party relating to the issued or unissued capital stock of, or other equity
interests in, Newco or any Subsidiary or obligating C.COM, Newco or any
Subsidiary to grant, issue or sell any shares of the capital stock of Newco
other than as contemplated in this Agreement and that certain subscription
agreement between C.COM and Newco dated July 18, 1996.
(c) The shares of C.COM Stock issued to Newco and to be exchanged
pursuant to the Merger as contemplated herein, upon issuance to Newco and
upon exchange for the OCI Common Stock in accordance with this Agreement
and the Plan, will be duly authorized, validly issued, fully paid and
nonassessable and will not be subject to preemptive rights created by
statute, C.COM's Articles of Incorporation or By-Laws or any agreement to
which C.COM is a party or is bound.
(d) Except as described on SCHEDULE 3.03(D) hereto, C.COM does not
have any subsidiaries or own any interest in any enterprise (whether or not
such enterprise is a corporation).
SECTION 3.04. AUTHORITY. Each of C.COM and Newco has all requisite
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
herein. The execution and delivery of this Agreement and the consummation of
the transactions contemplated herein have been duly authorized by all necessary
corporate action and no other corporate proceeding on the part of C.COM or Newco
(including, without limitation, any approval by the shareholders of C.COM of
this Agreement or the transactions contemplated herein) is necessary to
authorize this Agreement or to consummate the transactions contemplated herein.
This Agreement has been duly executed and delivered by C.COM and Newco and,
assuming the due authorization, execution and delivery hereof by OCI,
constitutes the legal, valid and binding obligation of C.COM and Newco
enforceable in accordance with its terms (i) except as limited by bankruptcy,
insolvency, reorganization, moratorium or other similar law now or hereafter in
effect relating to or affecting creditors' rights generally, and without
limitation, the effect of statutory or other laws regarding fraudulent
conveyances and preferential transfers and (ii) subject to the limitations
imposed by general rules of equity (regardless of whether such enforceability is
considered at law or in equity).
SECTION 3.05. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by C.COM and Newco
does not, and the performance of this Agreement by C.COM and Newco will not
(i) conflict with or violate the charter or By-Laws, as amended or
restated, of C.COM or Newco, (ii) conflict with or violate any Laws in
effect as of the date of this Agreement applicable to C.COM or Newco or by
which any of their respective properties are bound, or (iii) result in any
breach of or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or require payment
under, or result in the creation of a lien or Encumbrance on, any of the
properties or assets of C.COM or Newco pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise
or other instrument or obligation to which C.COM or Newco is a party
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or by which C.COM or Newco or any of their respective properties is bound
or subject except for breaches, defaults, events, rights of termination,
amendment, acceleration or cancellation, payment obligations or liens or
Encumbrances that would not have a material adverse effect on the business,
properties, assets, condition (financial or otherwise) operations or
prospects of C.COM and its subsidiaries, taken as a whole, or on the
transactions herein contemplated (herein a "C.COM MATERIAL ADVERSE
EFFECT").
(b) The execution and delivery of this Agreement by C.COM and Newco
and the performance of this Agreement by C.COM and Newco does not require
C.COM or Newco to obtain any consent, approval, authorization or permit of,
or to make any filing with or notification to, any Governmental Entities,
except (i) for applicable requirements, if any, of the Securities Act of
1933, as amended (the "SECURITIES ACT"), the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT") or the securities laws of any other
jurisdiction (the "BLUE SKY LAWS"), the National Association of Securities
Dealers, Inc. and the filing and recordation of appropriate merger
documents as required by North Carolina Law and (ii) where the failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not, either individually or in the
aggregate, prevent C.COM from performing its obligations under this
Agreement or have a C.COM Material Adverse Effect.
SECTION 3.06. PERMITS; COMPLIANCE. Except as set forth on SCHEDULE
3.06, each of C.COM, Newco and the Subsidiaries is in possession of all
franchises, grants, authorizations, licenses, permits, easements, variances,
exemptions, consents, certificates, approvals and orders necessary to own, lease
and operate its properties and to carry on its business as it is now being
conducted (collectively, the "C.COM PERMITS"), and there is no action,
proceeding or investigation pending or, to the knowledge of C.COM, threatened,
regarding suspension or cancellation of any of the C.COM Permits. Neither
C.COM, Newco or any Subsidiary is in conflict with, or in default or violation
of (a) any Law applicable to C.COM, Newco or any Subsidiary or by which any of
their respective properties is bound or subject or (b) any of the C.COM Permits,
except for any such conflicts, defaults or violations which would not have a
C.COM Material Adverse Effect. Neither C.COM, Newco or any Subsidiary has
received from any Governmental Entity any written notification with respect to
possible conflicts, defaults or violations of Laws.
SECTION 3.07. REPORTS; FINANCIAL STATEMENTS.
(a) Except as set forth on SCHEDULE 3.07, C.COM and its subsidiaries
have filed (i) all forms, reports, statements and other documents required
to be filed with or pursuant to (A) the Securities and Exchange Commission
("SEC"), including, without limitation (1) all Annual Reports on Form 10-
KSB, (2) all Quarterly Reports on Form 10-QSB, (3) all Current Reports on
Form 8-K, (4) all amendments and supplements to all such reports and
registration statements (collectively, the "C.COM SEC Reports"), and
(5) all other reports or registration statements and (B) any applicable
Blue Sky Laws and (ii) all forms, reports, statements and other documents
required to be filed with any other applicable federal or state regulatory
authority (all such forms, reports, statements and other documents in
clauses (i) and (ii) of this Section 3.07(a) being referred to herein,
collectively, as the "C.COM Reports"). The C.COM Reports were prepared in
all material respects in accordance with the requirements of applicable Law
(including, with
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respect to the C.COM SEC Reports, the Securities Act and Exchange Act, as
the case may be, and the rules and regulations of the SEC thereunder
applicable to such C.COM SEC Reports) and did not at the time they were
filed contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading.
(b) Each of the financial statements (including, in each case, any
related notes thereto) contained in the C.COM SEC Reports filed prior to or
on the date of this Agreement (i) have been prepared in accordance with,
and complied as to form with, the published rules and regulations of the
SEC and generally accepted accounting principles applied on a consistent
basis throughout the periods involved (except as otherwise noted therein)
and (ii) fairly present the financial position of C.COM as of the
respective dates thereof and the results of its operations and cash flows
for the periods indicated.
SECTION 3.08. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set
forth on SCHEDULE 3.08 and to the extent disclosed in the C.COM SEC Reports and
C.COM Reports filed prior to or on the date of this Agreement, with respect to
C.COM and its Subsidiaries, there has not been since the date of the last such
Report:
(a) any change in its financial condition, accounting methods,
principles or practices, assets, liabilities (contingent or otherwise),
income, operations, business or prospects which would have a C.COM Material
Adverse Effect;
(b) any damage, destruction or loss (whether or not covered by
insurance) to its assets, properties, business or prospects which would
have a C.COM Material Adverse Effect;
(c) any change or agreement to change its authorized capital or
the ownership of its outstanding securities (other than those pursuant to
the "employee benefit plans" as such term is defined for purposes of
Federal securities laws);
(d) any declaration or payment of, or any agreement to declare
or pay, any dividend or distribution in respect of any of its equity
interests or any direct or indirect redemption, purchase or other
acquisition of any of its equity interests;
(e) any material increase in the compensation payable or to
become payable by it to any of its officers, employees or agents, or any
accrual or arrangement for or payment of any material bonus or other
special compensation of any kind or any severance or termination pay paid
to any of its present or former officers or other key employees;
(f) any (i) sale or transfer, or any agreement, plan or
arrangement to sell or transfer, any of its assets, properties or rights to
any other Person except in the ordinary course of business and in the
aggregate amount of not more than $100,000, or (ii) cancellation, or
agreement to cancel, any indebtedness or other obligation of any of its
stockholders or any affiliate thereof to it;
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(g) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of its assets, properties
or rights (other than consents to the assignment of contracts) requiring
consent of any party to the transfer and assignment of any such assets,
property or rights;
(h) any purchase or acquisition, or agreement, plan or
arrangement to purchase or acquire, any assets, properties, or rights
except in the ordinary course of business and in the aggregate amount of
not more than $100,000;
(i) any waiver of any of its rights or claims which in the
aggregate would have a C.COM Material Adverse Effect;
(j) other than in the ordinary course of its business, any
amendment or termination of any material contract, agreement, license,
permit or other right to which it is a party; or
(k) any material transaction by it outside the ordinary course
of its business.
SECTION 3.09. NO UNDISCLOSED LIABILITIES. Except as set forth on
SCHEDULE 3.09, there are no liabilities of C.COM, Newco or any Subsidiary, of
any kind whatsoever, whether accrued, contingent, absolute, determined,
determinable or otherwise, and there is no existing condition, situation or set
of circumstances which could reasonably be expected to result in such a
liability, other than (a) liabilities fully reflected or reserved against on the
balance sheet contained in C.COM's 1995 Annual Report on Form 10-KSB or in the
unaudited consolidated balance sheet contained in the Quarterly Report on
Form 10-QSB for the fiscal quarter ended March 31, 1996; (b) liabilities under
this Agreement and fees and expenses related thereto; and (c) liabilities which,
individually or in the aggregate, would not have a C.COM Material Adverse
Effect.
SECTION 3.10. ABSENCE OF LITIGATION. Except as set forth on SCHEDULE
3.10, there is no claim, action, suit, litigation, proceeding, arbitration or,
to the knowledge of C.COM, investigation of any kind, at law or in equity
(including actions or proceedings seeking injunctive relief), pending or, to the
knowledge of C.COM, threatened in writing against C.COM, Newco or any Subsidiary
or any properties or rights of C.COM, Newco or any Subsidiary and neither C.COM,
Newco nor any Subsidiary is subject to any continuing order of, consent decree,
settlement agreement or other similar written agreement with, or, to the
knowledge of C.COM, continuing investigation by, any Governmental Entity, or any
judgment, order, writ, injunction, decree or award of any Governmental Entity or
arbitrator, including, without limitation, cease and desist or other orders.
SECTION 3.11. OWNERSHIP OF NEWCO; NO PRIOR ACTIVITIES.
(a) Newco was formed solely for the purpose of engaging in the
transactions contemplated in this Agreement and has otherwise conducted no
prior activities.
(b) Except for obligations or liabilities incurred in connection with
its incorporation or organization and the transactions contemplated in this
Agreement and any
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other agreements or arrangements contemplated in this Agreement, Newco
has not incurred, directly or indirectly, through any subsidiary or
affiliate, any obligations or liabilities or engaged in any business
activities of any type or kind whatsoever or entered into any agreements
or arrangements with any person.
SECTION 3.12. TAXES. C.COM and the Subsidiaries have timely filed
all returns or reports required to be filed with any taxing authority with
respect to Taxes for any period ending on or before the Effective Time, taking
into account any extension of time to file granted to or obtained on behalf of
C.COM, Newco or the Subsidiaries, all Taxes shown to be payable on such returns
or reports that are due prior to the Effective Time have been paid and, as of
the date hereof, no deficiency for any material amount of tax has been asserted
or assessed by a taxing authority against C.COM, Newco or the Subsidiaries and
all liability for Taxes of C.COM, Newco or the Subsidiaries that are or will
become due or payable with respect to periods covered by the financial
statements referred to in Section 3.07 hereof have been paid or adequately
reserved for on such financial statements.
SECTION 3.13. BROKERS. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated in this Agreement based upon arrangements
made by or on behalf of C.COM or Newco.
SECTION 3.14. ENVIRONMENTAL LAWS AND REGULATIONS.
(a) C.COM, Newco and the Subsidiaries are in material compliance with
all applicable Environmental Laws, which compliance includes, but is not
limited to, the possession by C.COM, Newco and the Subsidiaries of all
material permits and other governmental authorizations required under
applicable Environmental Laws, and compliance with the terms and conditions
thereof and compliance with notification, reporting and registration
provisions under applicable Environmental Laws; neither C.COM, Newco nor
any of the Subsidiaries has received notice of, or, to the knowledge of
C.COM or Newco, is the subject of any Environmental Claim; and to the
knowledge of C.COM, there are no circumstances that are reasonably likely
to prevent or interfere with such material compliance in the future, or to
require material expenditures to maintain such material compliance in the
future.
(b) There are no Environmental Claims that are pending or, to the
knowledge of C.COM, Newco or the Subsidiaries, threatened against C.COM,
Newco or the Subsidiaries or, to the knowledge of C.COM, Newco or the
Subsidiaries, against any person or entity whose liability for any
Environmental Claim C.COM, Newco or the Subsidiaries has or may have
retained or assumed either contractually or by operation of law.
(c) To the knowledge of C.COM or Newco, there are no circumstances
that could form the basis for an Environmental Claim against C.COM, Newco
or the Subsidiaries or against any person or entity whose liability for any
Environmental Claim C.COM, Newco or the Subsidiaries has or may have
retained or assumed either contractually or by operation of law.
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SECTION 3.15. CONTRACT RIGHTS. Except for this Agreement and the
agreements contemplated herein or as described on SCHEDULE 3.15, neither C.COM,
Newco nor any of the Subsidiaries is a party to or bound by any contract or
agreement, whether written or oral, including, without limitation, any material
contract or agreement for employment, consulting or similar services, for
capital expenditures or the acquisition or construction of fixed assets, which
constitutes any note, bond, indenture or other evidence of indebtedness or
guaranty or security for indebtedness of others, for the sale of any asset, or
the grant of any right or option to purchase such asset, or which constitutes a
material lease, or which purports to limit the freedom of C.COM or any of the
Subsidiaries to compete in any line of business or in any geographic area or to
borrow money or incur indebtedness.
SECTION 3.16. EMPLOYEE BENEFIT PLANS.
(a) Except as described on SCHEDULE 3.16 hereto, neither C.COM, Newco
nor any of the Subsidiaries have, nor have had any employee benefit plan
(including, without limitation, any "employee benefit plan," as defined in
Section 3(3) of the ERISA), or any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase,
stock option, phantom stock, retirement, vacation, severance, disability,
death benefit, hospitalization, insurance or other plan, arrangement or
understanding (whether or not legally binding).
(b) Neither C.COM, Newco nor any of the Subsidiaries are parties to
any collective bargaining agreement.
(c) Neither C.COM, Newco nor any of the Subsidiaries have any
obligation for retiree health, medical or life insurance benefits under any
plan or arrangement.
SECTION 3.17. NO MISLEADING STATEMENTS. This Agreement, the
schedules hereto and all other documents and information furnished by C.COM,
Newco or their representatives to OCI and its representatives pursuant hereto do
not and will not include any untrue statement of a material fact or omit to
state any material fact necessary to make the statements made and to be made not
misleading.
ARTICLE IV
ADDITIONAL AGREEMENTS
SECTION 4.01. APPROPRIATE ACTION; CONSENTS; FILINGS. OCI and C.COM
shall each use its best efforts (i) to take, or cause to be taken, all
appropriate action, and do, or cause to be done, all things necessary, proper or
advisable under applicable Law or otherwise to consummate and make effective the
transactions contemplated in this Agreement, (ii) to obtain from any
Governmental Entities any consents, licenses, permits, waivers, approvals,
authorizations or orders required to be obtained or made by C.COM or OCI or any
of their subsidiaries in connection with the consummation of the transactions
contemplated herein, including, without limitation, the Merger, (iii) make all
necessary filings, and thereafter make any other required submissions, with
respect to this Agreement and the Merger required under (A) the Securities Act
and the Exchange Act and the rules and regulations thereunder (in the case of
C.COM), and any other applicable federal or state securities laws and (B) any
other applicable Law. OCI and
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C.COM shall furnish all information required for any application or other
filing to be made pursuant to the rules and regulations of any applicable Law
in connection with the transactions contemplated in this Agreement.
SECTION 4.02. TAX TREATMENT; POOLING OF INTERESTS. Each of OCI,
C.COM and Newco shall use its best efforts to cause the Merger to qualify, and
will not, hereafter, take any actions either before or after the Merger which
could prevent the Merger from qualifying either (i) as a reorganization under
the provisions of section 368(a) of the Code or (ii) as a pooling of interests
under applicable accounting rules.
SECTION 4.03. INDEMNIFICATION.
(a) C.COM covenants and agrees that it will indemnify the
stockholders of OCI exchanging OCI Common Stock (the "OCI STOCKHOLDERS") in
connection with the Merger from and against any Loss (as hereinafter
defined) asserted against, resulting to, imposed upon or incurred or
suffered, directly or indirectly, by such OCI Stockholders resulting or
arising from any of the following ("OCI INDEMNIFIED CLAIMS"):
(i) Any inaccuracy in any of the representations and warranties
made by C.COM or Newco herein or in any exhibit or schedule
attached hereto or any facts or circumstances constituting
such inaccuracy; and
(ii) Any breach or nonfulfillment by C.COM or Newco of the
covenants or agreements set forth herein or in any
exhibit or schedule attached hereto or any facts or
circumstances constituting such breach or
nonfulfillment;
provided, however, that the OCI Stockholders shall, in the event of a claim
for such indemnification, be entitled to reimbursement for Losses in
connection with such claim only as provided herein.
(b) Each of OCI, Raville and Delaney covenant and agree that each,
jointly and severally, will indemnify C.COM from and against any Loss
asserted against, resulting to, imposed upon or incurred or suffered,
directly or indirectly, by C.COM resulting or arising from any of the
following ("C.COM INDEMNIFIED CLAIMS"):
(i) Any inaccuracy in any of the representations and
warranties made by OCI herein or in any exhibit or
schedule attached hereto or any facts or circumstances
constituting such inaccuracy; and
(ii) Any breach or nonfulfillment by OCI of the covenants or
agreements set forth herein or in any exhibit or
schedule attached hereto or any facts or circumstances
constituting such breach or nonfulfillment;
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provided, however, that C.COM shall, in the event of a claim for such
indemnification, be entitled to reimbursement for Losses in connection with
such claim only as provided herein.
(c) As used herein, "LOSS" or "LOSSES" shall mean any damage,
liability or loss (including, without limitation, reasonable attorneys'
fees and court costs and reasonable costs and expenses incident to, and
amounts paid by a party entitled to indemnification hereunder (in each case
an "INDEMNIFIED PARTY") in settlement of, any claim, suit, action or
proceeding) sustained, incurred, paid or required to be paid by any such
Indemnified Party after the date hereof, plus interest thereon at an annual
rate of interest equal to the lesser of (x) prime rate of interest of Texas
Commerce Bank National Association from the date of such Loss to the date
such claim is paid or (y) the highest applicable nonusurious rate of
interest.
(d) The period of indemnity for Losses (the "INDEMNITY PERIOD")
shall begin on the date hereof and end at midnight of the first anniversary
following the Effective Time of the Merger herein contemplated, and, upon
such expiration, no party shall have any further liability in respect of an
OCI Indemnified Claim or a C.COM Indemnified Claim hereunder; provided,
however, that if there is an outstanding notice of claim at the expiration
of the Indemnity Period, the Indemnity Period shall continue until each
such indemnified claim or claim related to such claimed Loss is resolved.
The Indemnity Period shall not continue as a result of the mere sending of
a general notice of a claim unsupported by a reasonable basis for believing
that grounds for indemnification exist; provided that the party receiving a
notice which it believes meets the exception set forth in the preceding
clause shall raise such objection within five business days of receipt
thereof and the party sending such notice shall have five business days
thereafter to amend such notice to identify the reasonable basis of such
claim.
(e) Notwithstanding anything to the contrary contained herein, no
Indemnified Party shall be permitted indemnification for any claim until
the Losses incurred with respect to all claims for such party or parties
exceed, in the aggregate, $100,000, in which event such Indemnified Party
shall be indemnified for the full value of all such Indemnified Claims and
the full value of all subsequent Indemnified Claims for which,
individually, Losses in excess of $10,000 have been incurred or asserted.
(f) Indemnification for an OCI Indemnified Claim shall be solely in
the form of the issuance of additional shares of C.COM Common Stock to OCI
Stockholders (their successors, assigns and transferees) pro rata in
accordance with their ownership of C.COM Stock equal to the aggregate
amount of the Loss associated with such OCI Indemnified Claim through the
date of issuance. The value of such C.COM Common Stock for the purposes of
this Section 4.03 only in determining the number of shares to be issued to
compensate OCI Stockholders for such OCI Indemnified Claim shall be the
average of the closing bid and asked prices of the C.COM Stock for the 10
trading days next preceding the issuance of such Stock (the "FAIR VALUE").
(g) Indemnification for a C.COM Indemnified Claim shall be solely in
the form of the delivery to C.COM of shares of C.COM Stock to C.COM (its
successors, assigns and transferees) equal to the aggregate amount of the
Loss associated with such C.COM
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Indemnified Claim through the date of issuance. The value of such C.COM
Common Stock for the purposes of this Section 4.03 only in determining
the number of shares to be delivered to compensate C.COM for such C.COM
Indemnified Claim shall be the Fair Value of such Stock at the time of
delivery.
(h) A claim for indemnification hereunder shall be sent to the
appropriate Indemnifying Party by registered or certified mail prior to the
expiration of the Indemnity Period and shall set forth (i) a brief
description of the nature of the potential or actual Loss, and (ii) the
total amount of the Loss anticipated or incurred. Upon receiving notice,
if the party receiving the notice rejects any Loss, such party shall give
written notice of such rejection within thirty days after the date of the
notice of claim. If no such rejection of a notice of a claim shall be so
sent within such 30-day period, the party receiving notice of a claim for
any Loss shall be deemed to acknowledge the validity of such claim for the
full amount thereof. Each party shall endeavor to assert each claim for
indemnification, if any, promptly after it has actual notice of such claim,
even if it has not determined the full amount of Loss associated with such
claim. In the event that the other party shall have made timely rejection
of any such claim, and the parties shall have failed to resolve or
compromise such claim within thirty days from the date the receiving party
shall have mailed notice of such rejection, then such claim shall be
settled by binding arbitration in accordance with Section 4.03(i) hereof.
(i) In the case of a claim for indemnification by OCI Stockholders,
such claim shall be settled by binding arbitration in Houston, Harris
County, Texas and shall be subject to the Texas General Arbitration Act in
conjunction with the rules of the American Arbitration Association, in
accordance with this Section. In the case of a claim for indemnification
by C.COM, such claim shall be settled by binding arbitration in Atlanta,
Cobb County, Georgia and shall be subject to the Texas General Arbitration
Act in conjunction with the rules of the American Arbitration Association,
in accordance with this Section. After the initiation of arbitration, the
parties shall attempt to agree upon one arbitrator. In the absence of such
agreement, there shall be three arbitrators, one designated in writing by
the party sending the notice and one designated in writing by the party
receiving notice, both of which shall be designated within thirty days
after arbitration has been initiated. The third arbitrator shall be chosen
by the two designated arbitrators within forty days after arbitration has
been initiated. All expenses of the arbitration shall be borne by the
parties to the arbitration as the arbitrator(s) shall determine. Any award
shall be a conclusive determination of the matter, shall be binding upon
the parties and shall not be contested by them. In the case of an OCI
Indemnified Claim, within 10 days after the liability for indemnity, if
any, hereunder, is finally established, whether by the agreement
(constructive or otherwise) with a notice of claim, settlement, arbitration
or otherwise, C.COM shall issue C.COM Stock at the Fair Value thereof in
the amount of the Loss determined by the arbitrator(s) in accordance with
the terms hereof. In the case of a C.COM Indemnified Claim, within 10 days
after the liability for indemnity hereunder is finally established, whether
by the agreement (constructive or otherwise) with a notice of claim,
settlement, arbitration or otherwise, Raville and Delaney shall surrender
C.COM Stock at the Fair Value thereof in the amount of the Loss determined
by the arbitrator(s) in accordance with the terms hereof.
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SECTION 4.04. DIRECTORS OF C.COM. Prior to the date hereof, the board of
directors of C.COM has been increased in number by one in accordance with the
Articles of Incorporation and By-laws of C.COM and Nevada Law, and, as of the
Effective Date, the board of directors of C.COM shall fill such vacancy on the
board of directors resulting from such increase in number by electing Delaney as
director of C.COM.
SECTION 4.05. LOCKUP ARRANGEMENTS. In connection herewith and as a
condition hereto, immediately following the execution and delivery hereof,
Delaney and Raville (principal stockholders of OCI) shall execute and deliver to
C.COM a Lockup Agreement in the form of SCHEDULE 4.05(A) hereto.
SECTION 4.06. OPINION OF COUNSEL TO C.COM. In connection herewith and as
a condition hereto, Woodburn & Wedge, special Nevada counsel to C.COM, shall
deliver to C.COM a legal opinion to the effect that a vote of the stockholders
of C.COM is not required pursuant to Nevada Law in connection with the Merger or
the transactions herein contemplated.
ARTICLE V
COVENANTS
SECTION 5.01. COVENANTS OF OCI.
(a) Except as expressly contemplated in this Agreement, during the
period from the date hereof and continuing until the Effective Time, OCI
will carry on its business in the regular and ordinary course, consistent
with past practice, and use its best efforts to preserve intact its present
business organization, keep available the services of its present officers
and employees and preserve its relationships with customers, suppliers,
licensors, licensees, contractors, distributors and others having business
dealings with it and without limiting the generality of the foregoing, OCI
will not:
(i) (x) declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of any of its capital stock, (y) split, combine or
reclassify any of its capital stock or issue or authorize or propose
the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock or (z) amend the terms
of, repurchase, redeem or otherwise acquire any of its securities or
propose to do any of the foregoing;
(ii) authorize for issuance, issue, sell, deliver or agree or
commit to issue, sell or deliver (whether through the issuance or
granting of options, warrants, commitments, subscriptions, rights to
purchase or otherwise) any stock of any class or any other securities
(including indebtedness having the right to vote) or equity
equivalents (including, without limitation, stock appreciation
rights), except as required pursuant to the agreements and instruments
outstanding on the date hereof, or amend in any material respect any
of the terms of any such securities or agreements outstanding on the
date hereof;
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(iii) amend or propose to amend its charter or by-laws;
(iv) acquire, sell, lease, encumber, transfer or dispose of any
assets outside the ordinary course of its business, consistent with
past practice, or make any capital expenditures aggregating in excess
of $50,000, except in each case pursuant to obligations in effect on
the date hereof which have been disclosed to C.COM, or enter into any
contract, commitment or transaction outside the ordinary course of its
business, consistent with past practice, or enter into any material
contract, commitment or transaction;
(v) create, incur, assume, guarantee or otherwise become liable
or obligated with respect to any indebtedness for monies borrowed
(other than for obligations incurred under credit arrangements which
are existing as of the date hereof and reflected on the OCI Financial
Statements or schedules hereto) or issue or sell any debt securities
or warrants or rights to acquire any debt securities or guarantee (or
become liable for) any debt of others or pledge or otherwise encumber
any material assets or create or suffer any material lien thereupon;
(vi) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the
ordinary course of business, consistent with past practice, or in
accordance with their terms, of liabilities reflected or reserved
against in, or contemplated in, the OCI Financial Statements (or the
notes thereto) or incurred in the ordinary course of business,
consistent with past practice;
(vii) Except as required by law, (x) enter into, adopt, amend
or terminate any Benefit Plan or any agreement, arrangement, plan or
policy between itself and one or more of its directors or executive
officers or (y) increase in any manner the compensation or benefits of
any director, officer or employee or pay any benefit not required by
any plan and arrangement as in effect as of the date hereof, except in
the case of non-officer employees for normal increases in the ordinary
course of business, consistent with past practice, that, in the
aggregate, do not result in a material increase in benefits or
compensation expense, or enter into any contract, agreement,
commitment or arrangement to do any of the foregoing; or
(viii) (x) Agree to take any of the foregoing actions or (y)
take or agree to take any action that would result in any of its
representations and warranties set forth in this Agreement being
untrue or in any of the conditions to the Merger set forth in Article
VI hereof not being satisfied.
(b) In connection with the preparation of the Proxy
Statement/Prospectus and the Registration Statement in the form to be filed
with the SEC, OCI covenants that the Proxy Statement/Prospectus and the
Registration Statement insofar as they contain information pertaining to
OCI, will comply in all material respects with the requirements of the
Securities Act and the Exchange Act and the respective rules and
regulations adopted under such Acts, and will contain no untrue statement
of any material fact or omit to state any material fact required to be
stated therein or necessary to make the
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statements therein not misleading, and OCI will advise C.COM and Newco
in writing if prior to the Effective Time of the Merger it shall obtain
knowledge of any facts that would make it necessary to amend the
Registration Statement in order to make the statements therein not
misleading or to comply with applicable law.
SECTION 5.02. COVENANTS OF C.COM. Except as expressly contemplated
in this Agreement, during the period from the date of this Agreement and
continuing until the Effective Time, (x) each of C.COM and its Subsidiaries
(including Newco) will carry on its businesses in the regular and ordinary
course, consistent with past practice, and use its best efforts to preserve
intact its present business organization, keep available the services of its
present officers and employees and preserve its relationships with customers,
suppliers, licensors, licensees, contractors, distributors and others having
business dealings with them and (y) without limiting the generality of the
foregoing, neither C.COM nor any of its Subsidiaries will or will propose to,
except as contemplated in the C.COM Reports, the C.COM SEC Reports or this
Agreement:
(a) (i) declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect
of any of its capital stock, (ii) split, combine or reclassify any of its
capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock or (iii) amend the terms of, repurchase, redeem or otherwise
acquire, or permit any Subsidiary to repurchase, redeem or otherwise
acquire, any of its securities or any securities of its Subsidiaries;
(b) authorize for issuance, issue, sell, deliver or agree or commit
to issue, sell or deliver (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase or
otherwise) any stock of any class or any other securities (including
indebtedness having the right to vote) or equity equivalents (including,
without limitation, stock appreciation rights), except as permitted or
required pursuant to agreements or other instruments outstanding on the
date hereof, or amend in any material respect any of the terms of any such
securities or agreements outstanding on the date hereof;
(c) amend or propose to amend its charter or by-laws;
(d) acquire, sell, lease, encumber, transfer or dispose of any assets
outside the ordinary course of its business, consistent with past practice,
or make any capital expenditures aggregating in excess of $100,000, except
in each case pursuant to obligations in effect on the date hereof which
have been disclosed to OCI, or enter into any contract, commitment or
transaction outside the ordinary course of its business, consistent with
past practice, or enter into any material contract, commitment or
transaction;
(e) create, incur, assume, guarantee or otherwise become liable or
obligated with respect to any indebtedness for monies borrowed (other than
for obligations incurred under credit arrangements which are existing as of
the date hereof and reflected on the C.COM SEC Reports, C.COM Reports or
schedules hereto) or issue or sell any debt securities or warrants or
rights to acquire any debt securities or guarantee (or become
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liable for) any debt of others or pledge or otherwise encumber any material
assets or create or suffer any material lien thereupon;
(f) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction in the ordinary course of
business, consistent with past practice, or in accordance with their terms,
of liabilities reflected or reserved against in, or contemplated in, the
C.COM SEC Reports, the C.COM Reports, or the statements hereto, or incurred
in the ordinary course of business, consistent with past practice;
(g) except as required by law, (i) enter into, adopt, amend or
terminate any Benefit Plan or any agreement, arrangement, plan or policy
between itself and one or more of its directors or executive officers or
(ii) increase in any manner the compensation or benefits of any director,
officer or employee or pay any benefit not required by any plan and
arrangement as in effect as of the date hereof, except in the case of
non-officer employees for normal increases in the ordinary course of
business, consistent with past practice, that, in the aggregate, do not
result in a material increase in benefits or compensation expense, or enter
into any contract, agreement, commitment or arrangement to do any of the
foregoing; or
(h) (i) agree to take any of the foregoing actions or (ii) take or
agree to take any action that would result in any of its representations
and warranties set forth in this Agreement being untrue or in any of the
conditions to the Merger set forth in Article VI hereof not being
satisfied.
SECTION 5.03. NO SOLICITATIONS.
(a) NO SOLICITATIONS BY OCI. Except as approved in writing by the
chief executive officer of C.COM, OCI and its representatives will not
enter into discussions or negotiations with any third party with respect to
any merger, business combination, sale of any assets outside of the
ordinary course of business, sale of shares of capital stock outside of the
ordinary course of business or similar transaction involving OCI (an "OCI
TRANSACTION"). Neither OCI nor any representative on its behalf will, and
each of OCI and its representatives shall use its best efforts to ensure
that none of its Affiliates, officers, directors, representatives or agents
will, directly or indirectly, solicit, initiate or encourage (including by
way of furnishing information) any Person to take any action concerning any
OCI Transaction (other than the transactions contemplated in this
Agreement). OCI or its representative shall promptly advise C.COM in
writing of any such inquiry or proposal regarding an OCI Transaction,
including the material terms thereof.
(b) NO SOLICITATIONS BY C.COM. Except as approved in writing by the
chief executive officer of OCI, C.COM and its representatives will not
enter into discussions or negotiations with any third party with respect to
any merger, business combination, sale of any assets outside of the
ordinary course of business, sale of shares of capital stock outside of the
ordinary course of business or similar transaction involving C.COM or the
Subsidiaries, the consideration for which is in excess of either $500,000
or 5% of the C.COM Common Stock (a "C.COM TRANSACTION"). Neither C.COM nor
any representative on its behalf will, and each of C.COM and its
representatives shall use its
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best efforts to ensure that none of its affiliates as the term is
defined by Rule 145 of the Securities Act, officers, directors,
representatives or agents will, directly or indirectly, solicit,
initiate or encourage (including by way of furnishing information) any
Person to take any action concerning a C.COM Transaction (other than the
transactions contemplated in this Agreement). C.COM or its
representatives shall promptly advise OCI in writing of any such inquiry
or proposal regarding a C.COM Transaction, including the material terms
thereof.
SECTION 5.04. ACCESS TO INFORMATION.
(a) Upon reasonable notice and subject to restrictions contained in
confidentiality agreements to which such party is subject (from which such
party shall use reasonable efforts to be released), each party hereto shall
(and shall cause each of its Subsidiaries to) afford to the officers,
employees, accountants, counsel and other representatives of the other,
reasonable access, during normal business hours during the period prior to
the Effective Time, to all its properties, books, contracts, commitments
and records and, during such period, such party shall, and shall cause each
of its Subsidiaries to, furnish promptly to the other all information
concerning its business, properties and personnel as such other party may
reasonably request.
(b) Each party shall keep all such information confidential in
accordance with the terms of paragraphs (5), (6), (7) and (8) of the Letter
of Intent, dated May 20, 1996, by and between C.COM and OCI.
SECTION 5.05. BEST EFFORTS. Subject to the terms and conditions of
this Agreement, each of the parties hereto agrees to use its 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 under applicable Laws to consummate and
make effective the transactions contemplated in this Agreement including,
without limitation, (i) such actions as may be required to be taken under
applicable federal and state securities or Blue Sky laws in connection with the
issuance of C.COM Stock contemplated herein, and (ii) the preparation and filing
of all other forms, registrations and notices required to be filed to consummate
the transactions contemplated herein and the taking of such actions as are
necessary to obtain any requisite approval, consent, order, exemption, waiver by
any public or private third party.
SECTION 5.06. MEETING OF OCI STOCKHOLDERS. OCI will take all action
necessary in accordance with applicable law and its Articles of Incorporation
and By-laws to convene a meeting of its stockholders as promptly as practicable
to consider and vote upon the approval of this Agreement and the transactions
contemplated herein. The Board of Directors of OCI shall recommend such
approval of OCI and shall take all lawful action to solicit such approval,
including, without limitation, timely mailing the Proxy Statement/ Prospectus
(as defined in Section 6.01); PROVIDED, HOWEVER, that such recommendation or
solicitation is subject to any action taken by, or upon authority of, the Board
of Directors of OCI in the exercise of their good faith judgment as to their
fiduciary duties to stockholders as imposed by law.
SECTION 5.07. PUBLICITY. Any press release relating to this
Agreement shall be the joint press release of C.COM and OCI and thereafter each
of C.COM and OCI shall, subject to its respective legal obligations, consult
with each other, and use reasonable efforts to
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agree upon the text of any press release, before issuing any such press
release or otherwise making public statements with respect to the
transactions contemplated herein and in making any filings with any federal
or state governmental or regulatory agency or body.
ARTICLE VI
SECURITIES MATTERS
SECTION 6.01. REGISTRATION STATEMENT. If, in the opinion of counsel to
C.COM, the transactions contemplated herein do not qualify for an exemption from
registration under applicable securities laws, C.COM and OCI shall cooperate and
promptly prepare and C.COM shall file with the SEC as soon as practicable a
Registration Statement on Form S-4 (the "FORM S-4") under the Securities Act,
with respect to the C.COM Stock issuable in connection with the transactions
contemplated in this Agreement, a portion of which Registration Statement shall
also serve as the proxy statement with respect to the meeting of the
stockholders of OCI in connection with the Merger (the "PROXY
STATEMENT/PROSPECTUS"). The parties will cause the Proxy Statement/Prospectus
and the Form S-4 to comply as to form in all material respects with the
applicable provisions of the Securities Act, the Exchange Act and the rules and
regulations thereunder. C.COM shall use all reasonable efforts, and OCI will
cooperate with C.COM, to have the Form S-4 declared effective by the SEC as
promptly as practicable. C.COM shall use its best efforts to obtain, prior to
the effective date of the Form S-4, all necessary state securities law or "Blue
Sky" permits or approvals required to carry out the transactions contemplated in
this Agreement and will pay all expenses incident thereto. C.COM agrees that
the Proxy Statement/Prospectus and each amendment or supplement thereto, at the
time of the mailing thereof and at the time of the meeting of stockholders of
OCI, or, in the case of the Form S-4 and each amendment or supplement thereto,
at the time it is filed or becomes effective, will not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; PROVIDED, HOWEVER,
that the foregoing shall not apply to the extent that any such untrue statement
of a material fact or omission to state a material fact was made by C.COM in
reliance upon and in conformity with information concerning OCI furnished to
C.COM by OCI specifically for use in the Proxy Statement/Prospectus or the Form
S-4. OCI agrees that the information provided by it for inclusion in the Proxy
Statement/Prospectus and each amendment or supplement thereto, at the time of
mailing thereof and at the time of the meeting of stockholders of OCI, or, in
the case of information provided by OCI for inclusion in the Form S-4 or any
amendment or supplement thereto, at the time it is filed or becomes effective,
will not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. No amendment or supplement to the Proxy Statement/Prospectus will
be made by C.COM or OCI without the approval of the other party. C.COM will
advise OCI, promptly after it receives notice thereof, of the time when the Form
S-4 has become effective or any supplement or amendment has been filed, the
issuance of any stop order, the suspension of the qualification of the C.COM
Stock issuable in connection with the transactions contemplated in this
Agreement for offering or sale in any jurisdiction, or any request by the SEC
for amendment of the Proxy Statement/Prospectus or the Form S-4 or comments
thereon and responses thereto or requests by the SEC for additional information.
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SECTION 6.02 LISTING APPLICATION. In the event C.COM Stock is
traded on the NASDAQ System at the Effective Time, C.COM shall promptly prepare
and submit to the NASD a listing application covering the shares of C.COM Stock
issuable in connection with the transactions contemplated in this Agreement, and
shall use its best efforts to obtain, prior to the Effective Time, approval for
the listing of such C.COM Stock, subject to official notice of issuance.
SECTION 6.03 AGREEMENTS BY AFFILIATED STOCKHOLDERS OF OCI. At least
30 days prior to the date of the Closing, OCI shall deliver to C.COM a list of
names and addresses of those persons who were, in OCI's reasonable judgment, at
the record date for its stockholders' meeting to approve the Merger,
"affiliates" (each such person, an "AFFILIATE") of OCI within the meaning of
Rule 145 of the rules and regulations promulgated under the Securities Act
("RULE 145"). OCI shall provide C.COM such information and documents as C.COM
shall reasonably request for purposes of reviewing such list. OCI shall deliver
or cause to be delivered to C.COM, prior to the date of the Closing, from each
of the Affiliates of OCI identified in the foregoing list, an Affiliate letter
("AFFILIATES LETTER") in the form attached hereto as EXHIBIT A. C.COM shall be
entitled to place legends as specified in such Affiliate Letters on the
certificates evidencing any C.COM Common Stock to be received by such Affiliates
pursuant to the terms of this Agreement, and to issue appropriate stop transfer
instructions to the transfer agent for the C.COM Common Stock, consistent with
the terms of such Affiliate Letters.
SECTION 6.04 INDEMNIFICATION.
(a) C.COM shall indemnify and hold harmless each OCI Stockholder from
and against any and all Losses in accordance with the indemnity provided to
OCI Stockholders in Section 4.03(a), to which each OCI Stockholder may
become subject under the Securities Act, , the Exchange Act, or state
securities laws in connection with the Merger and shall reimburse such OCI
Stockholder for any legal or other expenses, incurred by such OCI
Stockholder in connection with investigating or defending against any and
all such expenses, losses, claims, damages or liabilities, or actions in
respect thereof, directly or indirectly arising out of or based upon:
(i) any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement or any post-
effective amendment thereto, including the prospectus (and any
amendment or supplement thereto) as a part thereof directed or made
available by C.COM to the OCI Stockholders in connection with the
Merger, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, or
(ii) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus or prospectus
(as amended or as supplemented if C.COM shall have filed with the
Commission any amendment thereof or supplement thereto) directed or
made available by C.COM to the OCI Stockholders in connection with the
Merger, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that the indemnity
agreements of
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C.COM contained in this Section 6.04(a) shall not apply to amounts
paid in settlement of any such claim or action if such settlement
is effected without the consent of C.COM, nor shall it apply to any
Losses if such statement or omission was made in reliance upon and
in conformity with information furnished to C.COM by or on behalf
of OCI or any of the Affiliates of OCI for use in any preliminary
prospectus or prospectus, or any Registration Statement, or any
such amendment thereof or supplement thereto in connection with the
Merger, or the failure of OCI or any of the Affiliates of OCI to
provide such information for inclusion therein as requested by
C.COM, nor shall it apply to any Losses resulting from the failure
of OCI or any of the Affiliates of OCI to use a prospectus directed
to be used or made available by C.COM or from the use of a
prospectus not so directed to be used or made available for such
purpose by C.COM. OCI or any of the Affiliates of OCI shall,
within ten days after receipt by it of notice of any claim or of
the commencement of any action as aforesaid, in respect of which
indemnity may be sought from C.COM under the indemnity agreement
contained in this Section 6.04(a), notify C.COM in writing thereof.
The omission so to notify C.COM of any such claim or action shall
relieve C.COM from any liability which it may have to such OCI
Stockholder under the indemnity agreement contained in this Section
6.04(a), but shall not relieve C.COM from any other liability which
it may have to OCI Stockholders, other than that raised in any such
claim or action explicitly or by reasonable implication or which
may stop C.COM from raising and effecting some defense it might
otherwise have raised had such notice been given properly. In case
any such action shall be brought against one of the OCI
Stockholders, and the OCI Stockholder shall notify C.COM of the
commencement thereof, C.COM shall be entitled to participate in
(and, to the extent that it shall wish, to direct) the defense
thereof at its own expense, but such defense shall be conducted by
counsel satisfactory to such OCI Stockholder if such OCI
Stockholder is a defendant in the action. C.COM shall notify the
OCI Stockholders promptly of the commencement of any action against
it or any of its officers or directors of which it may be advised,
in connection with the issue or sale of any of its securities
pursuant to any Registration Statement, if such action may involve
the OCI Stockholders as defendants. The indemnity agreement of
C.COM contained in this Section 6.04(a) shall remain operative and
in full force and effect, regardless of any investigation made by
or on behalf of any indemnified party.
(b) Each of OCI, Raville and Delaney, severally, shall indemnify and
hold harmless C.COM, each of its officers who signs any Registration
Statement, each person who may be liable as a director of C.COM or as a
person who controls or shall have controlled C.COM within the meaning of
the Securities Act, from and against any and all Losses, joint or several,
including legal and other expenses incurred in connection therewith, to the
same extent as the foregoing indemnity from C.COM to the OCI Stockholders,
but only insofar as such expenses, losses, claims, damages, liabilities or
actions arise out of or are based upon any untrue statement or alleged
untrue statement or omission or alleged omission based upon information
furnished to C.COM by or on behalf of OCI, any Affiliate, Raville or
Delaney for use in any Registration Statement or upon the failure of an OCI
Stockholder to provide information pertinent to the information requested
by C.COM, and also in respect of any expenses, losses, claims, damages,
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liabilities or actions, joint or several, to which any such person may
become subject under the Securities Act, the Exchange Act, or state
securities laws in connection with the Merger. In the case of any claim or
the commencement of any action in respect of which indemnity may be sought
from Raville or Delaney on account of the indemnity agreement contained in
this Section 6.04(b), each person to be indemnified by Raville and Delaney
shall have the same obligation, subject to the same loss of indemnity
hereunder, to notify Raville and Delaney as the OCI Stockholders have to
C.COM in Section 6.04(a). C.COM shall notify each of Raville and Delaney
promptly of the commencement of any action or proceeding against any C.COM
Indemnified Person which may arise in connection with the issue or sale of
any of the securities of C.COM pursuant to the Merger. The indemnity
agreement of Raville and Delaney contained in this Section 6.04(b) shall
remain operative and in full force and effect regardless of any
investigation made by or on behalf of any indemnified party.
(c) As used in this Agreement, the term "made available", when used
in reference to the availability of a prospectus, means the C.COM
prospectus available to be obtained from C.COM in connection with the
Merger, whether or not the OCI Stockholder actually requests delivery of
such prospectus for use in connection with any such offer or transfer.
SECTION 6.05 CONTINGENT DEMAND REGISTRATION RIGHTS. C.COM,
Raville and Delaney acknowledge and agree that neither of David G. Olson,
Raville or Delaney (individually, a "Holder" or collectively, the "Holders")
shall have the right to sell shares of C.COM Common Stock to the public prior to
the time that all Holders are in a position to sell at least an equal number of
such shares. C.COM, Raville and Delaney acknowledge that David G. Olson has
owned shares of C.COM Common Stock for a longer holding period than any other of
the Holders, and thus pursuant to the provisions of Rule 144, that David G.
Olson would be in a position to sell shares of C.COM Common Stock pursuant to
Rule 144 prior to the time that any other Holder would be in such a position.
Accordingly, C.COM, Raville and Delaney agree to enter into an agreement (the
"Registration Agreement") prior to the Effective Time providing that none of the
Holders will sell shares of C.COM Common Stock prior to the time that all such
Holders are able to sell an equivalent number of such shares. C.COM hereby
covenants and agrees to grant certain registration rights as described herein to
the Holders (to be registered in collectively in one sale) in order to achieve
parity of selling ability. The Registration Agreement shall provide that prior
to any sale of C.COM Common Stock to the public by any Holder, each such Holder
shall first notify C.COM and each other Holder of such Holder's proposal to sell
such shares, and shall afford to each other Holder the opportunity to register
an equal number of shares of C.COM Common Stock for sale in a similar type of
transaction as that proposed by such notifying Holder. Such notifying Holder
shall agree not to sell any such shares until such other Holders have their
shares registered. The Registration Agreement shall, among other things,
provide the Holders the right to demand a registration under the Securities Act
of a number of shares of C.COM Common Stock equal to the number of shares of
C.COM Common Stock proposed to be sold to the public by the notifying Holder.
The Registration Agreement shall also provide that, upon receipt of any such
demand, C.COM shall (i) as soon as practicable use its best efforts to register
shares of the C.COM Common Stock, which are the subject of the demand, under the
Securities Act, and (ii) provide an indemnity relating to such registration
pursuant to which C.COM agrees to indemnify the Holders for claims or causes of
action arising from information about C.COM included in the registration
statement. The demand registration
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right shall be exercisable, at the option of any Holder at any time until
such time that all Holders are eligible to sell shares pursuant to Rule 144
(or the analogous provisions of Rule 145). In the event that any Holder
elects a shelf registration, C.COM agrees to maintain the effectiveness of
such registration for a period of not more than 120 days.
SECTION 6.06 REGISTRATION EXPENSES. All expenses incurred by C.COM
in complying with the registration requirements which arise under this Article
VI, including, without limitation, all registration and filing fees, fees and
expenses under state securities laws, printing expenses and fees and
disbursements of accountants and counsel for C.COM shall be borne by C.COM.
Fees and disbursements of counsel for OCI shall be borne by OCI. Fees and
disbursements of counsel for Raville and Delaney shall be borne by Raville and
Delaney.
ARTICLE VII
CONDITIONS TO CLOSING
SECTION 7.01. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The obligations of each party to effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of the following conditions:
(a) This Agreement shall have been approved and adopted by the
majority vote of the holders of all the outstanding shares of OCI voting on
the matter, in accordance with applicable law.
(b) No statute, rule, regulation, executive order, decree or
injunction shall have been enacted, entered, promulgated or enforced by any
United States court or Governmental Entity of competent jurisdiction which
prohibits the consummation of the Merger.
(c) No order to restrain, enjoin or otherwise prevent the
consummation of this Agreement, the Plan, the Articles or the transactions
contemplated in connection therewith shall have been entered and, at the
Effective Time, there shall not be any pending or threatened litigation in
any court, or any proceeding by or before any governmental commission,
board or agency, with a view to seeking to restrain or prohibit
consummation of the Merger or in which divestiture, rescission or
significant damages are sought in connection with the Merger, and no
investigation by any governmental agency shall be pending or threatened
which might result in any such litigation or other proceeding.
(d) There shall have been obtained any and all permits, approvals and
consents of securities or "blue sky" commissions of any jurisdiction and of
any other governmental body or agency, which counsel for C.COM, Newco and
OCI may reasonably deem necessary or appropriate so that consummation of
the Merger will be in compliance with applicable law.
(e) The Registration Statement shall be effective at the Effective
Time and all post-effective amendments filed shall have been declared
effective or shall have been
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withdrawn; and no stop order suspending the effectiveness thereof shall
have been issued and no proceedings for that purpose shall prior to the
Effective Time have been initiated or, to the knowledge of the parties,
threatened by the SEC.
(f) All approvals of applications to public authorities, federal,
state or local, domestic or foreign, and all approvals of private persons
or corporations the granting of which is necessary for the consummation of
the Merger or the transactions contemplated in connection therewith, shall
have been obtained.
(g) Each Affiliate of OCI shall have executed and delivered the
Affiliates Letter.
(h) Holders of not more than 5 percent of the outstanding shares of
OCI Common Stock shall have taken steps to perfect their dissenters rights
respecting the Merger in accordance with the North Carolina Business
Corporation Act.
SECTION 7.02. CONDITIONS TO OBLIGATIONS OF OCI. The obligations of
OCI to effect the Merger are further subject to the satisfaction at or prior to
the Effective Time of the following conditions, unless waived by OCI:
(a) The representations and warranties of C.COM and Newco set forth
in this Agreement shall be true and correct as of the date of this
Agreement and as of the Effective Time, as if made as of the Effective
Time, except where any failures to be true and correct would not, in the
aggregate, have a C.COM Material Adverse Effect.
(b) Each of C.COM and Newco shall have performed and complied, in all
material respects, with all obligations and covenants required to be
performed or complied with by it under this Agreement at or prior to the
Effective Time.
(c) From the date of this Agreement through the Effective Time, C.COM
and its Subsidiaries, considered as a whole, shall not have suffered a
C.COM Material Adverse Effect.
SECTION 7.03. CONDITIONS TO OBLIGATIONS OF C.COM AND NEWCO. The
obligations of C.COM and Newco to effect the Merger are further subject to the
satisfaction at or prior to the Effective Time of the following conditions,
unless waived by such parties:
(a) The representations and warranties of OCI set forth in this
Agreement shall be true and correct as of the date of this Agreement and as
of the Effective Time, as if made as of such time, except where any
failures to be true and correct would not, in the aggregate, have an OCI
Material Adverse Effect.
(b) OCI shall have performed and complied, in all material respects,
with all obligations and covenants required to be performed or complied
with by it under this Agreement at or prior to the Effective Time.
(c) From the date of this Agreement through the Effective Time, OCI
shall not have suffered an OCI Material Adverse Effect.
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(d) C.COM shall have received an opinion from its counsel, Brown,
Parker & Leahy, L.L.P., to the effect that, upon consummation of the
Merger, C.COM will be the owner and holder of all of the issued and
outstanding voting capital stock of OCI and will have the power pursuant to
such ownership to elect all of the members of the Board of Directors of
OCI.
(e) C.COM shall have received an opinion from its special Nevada
counsel, Woodburn & Wedge, to the effect that a vote of the stockholders of
C.COM is not required pursuant to Nevada law to effect the transactions
contemplated herein.
(f) C.COM and Newco shall have received all necessary and proper
consents of third parties to the transactions contemplated herein.
(g) There shall have been no change in OCI (including, without
limitation, the issuance of additional voting securities, any modification
or amendment to the articles of incorporation or bylaws of OCI or the
creation of any agreement) which would prevent or restrict the ability of
C.COM to exercise the voting rights and privileges related to the shares of
capital stock of OCI and, by virtue of such voting rights, to elect 100% of
the board of directors of OCI.
ARTICLE VIII
CLOSING
The closing of the transactions and agreements contemplated herein,
hereinafter referred to as the "CLOSING," shall take place beginning at
10:00 a.m. at the offices of Brown, Parker & Leahy, L.L.P., 3600 Two Allen
Center, 1200 Smith Street, Houston, Harris County, Texas 77002 on the earlier of
September 30, 1996, or at such other time, place and date as parties may
mutually designate in writing and shall occur in the manner and order specified
in the Memorandum of Closing to be prepared in connection with this Agreement.
ARTICLE IX
DELIVERIES AT CLOSING
SECTION 9.01 DELIVERIES BY OCI. Unless waived by either of C.COM or
Newco, at its option, at Closing, OCI shall deliver to C.COM and Newco the
following:
(a) OPINION OF COUNSEL. An opinion of Cushing, Morris, Armbruster, &
Jones, dated the Closing Date, in substantially the form set forth in
EXHIBIT A hereto. Such opinion shall include any matters incident to the
matters herein contemplated as C.COM, Newco and their counsel may
reasonably request, including the form of all papers and the validity of
all proceedings.
(b) FINANCIAL INFORMATION. Financial information and reports with
respect to OCI for each monthly period ending after the Balance Sheet Date,
balance sheets and income statements, provided that if no such balance
sheet or income statement is available
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for any such month, there shall be provided a good faith estimate of the
pre-tax income for each such month.
(c) OFFICER'S CERTIFICATE. Certificates, dated the date of the
Closing, of the chief executive officer of OCI certifying that, as of the
date of the Closing, (i) there is no, and there has not been and there is
not reasonably expected to be any, breach by such corporation in the
performance of any of the agreements, covenants and conditions herein to be
performed by it in whole or in part, which, singly or in the aggregate, has
had or could reasonably be expected to have an OCI Material Adverse Effect;
and (ii) each of the representations and warranties of OCI contained in
this Agreement, as of the date made and as if made at and as of the date of
the Closing, is true and correct as if made at and as of the date of the
Closing.
(d) MISCELLANEOUS. Any and all documents, agreements, contracts,
certificates or other instruments which C.COM or Newco may reasonably
request as necessary or appropriate for the consummation of the
transactions contemplated in this Agreement.
SECTION 9.02. DELIVERIES BY C.COM. Unless waived by OCI, at its
option, at Closing, C.COM shall deliver to OCI the following:
(a) OPINION OF COUNSEL. An opinion of Brown, Parker & Leahy, L.L.P.,
dated the Closing Date, in substantially the form set forth in EXHIBIT B
hereto. Such opinion shall include any matters incident to the matters
herein contemplated as OCI and its counsel shall reasonably request,
including the form of all papers and the validity of all proceedings.
(b) OFFICERS' CERTIFICATE. Certificates, dated the Closing Date,
of the chief executive officer of each of C.COM and Newco certifying that,
as of the Closing Date, (i) there is no, and there has not been and there
is not reasonably expected to be any, breach by such corporation in the
performance of any of the agreements, covenants and conditions herein to be
performed by it in whole or in part, which, singly or in the aggregate, has
had or could reasonably be expected to have a C.COM Material Adverse
Effect; and (ii) each of the representations and warranties of such
corporation contained in this Agreement, as of the date made and as if made
as and of the Closing Date, is true and correct as if made at and as of the
Closing Date.
(c) MISCELLANEOUS. Any and all documents, agreements, contracts,
certificates or other instruments which OCI may reasonably request as
necessary or appropriate for the consummation of the transactions
contemplated in this Agreement.
ARTICLE X
TERMINATION AND AMENDMENT
SECTION 10.01. TERMINATION. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after approval of the
matters presented in connection with the Merger by the stockholders of Newco and
OCI:
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(a) by mutual consent of the parties hereto;
(b) by either OCI or C.COM, if the Merger shall not have been
consummated before September 30, 1996 (unless the failure to consummate the
Merger by such date shall be a result of the action or failure to act of
the party seeking to terminate this Agreement); or
(c) by any party hereto, if (i) the conditions to such party's
obligations shall have become impossible to satisfy or (ii) any permanent
injunction or other order of a court or other competent authority
preventing the consummation of the Merger shall have become final and
nonappealable.
SECTION 10.02. EFFECT OF TERMINATION. Except as contemplated in
Section 9.04 hereof, in the event of the termination and abandonment of this
Agreement pursuant to Section 9.01 hereof, this Agreement shall forthwith become
void and have no effect, without any liability on the part of any party hereto
or its affiliates, directors, officers or stockholders. Nothing contained in
this Section 9.02 shall relieve any party from liability for any willful breach
of this Agreement.
SECTION 10.03. AMENDMENT. This Agreement may be amended by the
parties hereto at any time before or after approval of the matters presented in
connection with the Merger by the stockholders of Newco or OCI, but, after any
such approval, no amendment shall be made which by applicable Law requires
further approval by such stockholders without such further approval. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.
SECTION 10.04. EXTENSION; WAIVER. At any time prior to the Effective
Time, the parties hereto may, to the extent legally allowed, (i) extend the time
for the performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and (iii) waive
compliance with any of the agreements or conditions 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 a written instrument signed on behalf of such party.
ARTICLE XI
OTHER POST CLOSING COVENANTS.
SECTION 11.01. NONSOLICITATION.
(a) COVENANTS. Each of Raville and Delaney acknowledges and agrees
that C.COM and Newco will suffer great loss and damage if either of Raville
or Delaney or any of their Affiliates should solicit employees or customers
of OCI, C.COM or any of their Affiliates and that it may be difficult or
impossible to compute the amount of such loss or damages, thereby
potentially leaving C.COM and Newco without adequate legal remedy if the
covenants of this Section 11.01 are breached. Each of Raville and Delaney
acknowledges that the covenants and conditions of this Agreement are
reasonable and necessary for the protection of the business of C.COM, Newco
and OCI following the
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Effective Time. In recognition of the foregoing, each of Raville and
Delaney, individually and on behalf of his Affiliates, agrees that for a
period of three years following the Effective Time, such parties shall
not, directly or indirectly:
(i) in any way, for himself or on behalf of or in conjunction
with any other Person solicit, divert, take away, or attempt to take
away the business or patronage of any of the customers of OCI, C.COM
or any of their Affiliates with respect to any product or service
which OCI, C.COM or any of their Affiliates, at the time of such
solicitation, provide or conduct or contemplate providing or
conducting whether such solicitation be by use of customer lists,
trade secrets or through knowledge of such confidential business
parties of any thereof or otherwise (PROVIDED that neither shall be
deemed to have violated the prohibition of this subsection if it
solicits, diverts, takes away or attempts to take away any customer of
OCI, C.COM or any of their Affiliates with respect to any product or
service which OCI, C.COM or any of their Affiliates do not, at the
time of such solicitation, provide or conduct or contemplate providing
or conducting); or
(ii) in any way, for himself or on behalf of or in conjunction
with any other Person, solicit, divert, take away or attempt to take
away any of the employees of OCI, C.COM or any of their Affiliates
(PROVIDED that neither shall be deemed to have violated the
prohibition of this subsection if it employs a former employee of OCI
and has not contacted such former employee regarding employment until
after such former employee has left the employment of OCI).
(b) REFORMATION.
(i) In the event the covenants contained in Section 11.01(a)
should be held by any court or other authority to be effective in a
particular area or jurisdiction only if such covenants are modified to
limit their duration, area or scope, then the parties hereto shall
consider such provisions to be so amended and modified with respect to
that particular area or jurisdiction so as to comply with the order of
any such court or other authority and, as to all other states,
countries, or political subdivisions, the covenants contained in
Section 11.01(a) shall remain in full force and effect as originally
written.
(ii) In the event the covenants contained in Section 11.01(a)
shall be held by any court of competent jurisdiction to be void or
otherwise unenforceable in any manner, then the parties hereto shall
consider this Agreement to be amended and modified so as to eliminate
therefrom such particular provision, area or jurisdiction as to which
this Agreement is so held to be void or otherwise unenforceable, and,
as to all other areas or jurisdictions covered by this Agreement, the
terms and provisions hereof shall remain in full force and effect as
originally written.
(c) REMEDIES. In recognition of the irreparable harm that a
violation of any of the covenants of this Agreement (including without
limitation this Section) would cause C.COM and Newco, each of Raville and
Delaney agrees that, in addition to any other relief afforded by law, an
injunction against such violation or violations may be issued
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against him and every other Person concerned thereby, it being the
understanding of the parties that an injunction shall be the proper mode of
relief.
SECTION 11.02. CERTAIN TAX MATTERS. C.COM will prepare and file or
cause to be prepared and filed all Tax Returns for OCI that are required to be
filed with the appropriate Governmental Entities for all periods as to which
such Tax Returns are due after the Effective Time. Nothing in this Section
shall be interpreted to limit, reduce, expand or augment any of the warranties
or representations of OCI as to Taxes and Tax Returns. A complete list of Tax
Returns reasonably anticipated to be due by OCI within 90 days after the
Effective Time shall be provided by OCI to C.COM at least 15 days prior to the
Effective Time.
ARTICLE XII
GENERAL PROVISIONS
SECTION 12.01. EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. The representations, warranties and agreements of each party hereto
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any other party hereto, any person
controlling any such party or any of their officers or directors, whether prior
to or after the execution of this Agreement, for a period of one year.
SECTION 12.02. NOTICES. All notices and other communications given
or made pursuant hereto shall be in writing and shall be deemed to have been
duly given or made as of the date delivered, mailed or transmitted, and shall be
effective upon receipt, if delivered personally, mailed by registered or
certified mail (postage prepaid, return receipt requested) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like changes of address) or sent by electronic transmission to the telecopier
number specified below:
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(a) If to OCI or Delaney:
Overlook Communications International Corporation
2839 Paces Ferry Road, Suite 500
Atlanta, Georgia 30339
Attention: Patrick E. Delaney
Telecopier No.: (770) 432-0007
with a copy to:
Cushing, Morris, Armbruster & Jones
2110 Peachtree Center Cain Tower
229 Peachtree Street, N.E.
Atlanta Georgia 30303
Attention: Charles Cushing, Jr.
Telecopier No. (404) 658-9865
(b) If to Raville:
-------------------------------------
-------------------------------------
-------------------------------------
Attention: Stephen E. Raville
Telecopier No.: (___)_________
(c) If to C.COM:
Charter Communications International, Inc.
17100 El Camino Real, Suite 100
Houston, Texas 77058
Attention: David G. Olson, Chairman
Telecopier No.: (713) 486-7674
with a copy to:
Brown, Parker & Leahy, L.L.P.
3600 Two Allen Center
1200 Smith Street
Houston, Texas 77002-4595
Attention: Dallas Parker
Telecopier No.: (713) 654-1871
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SECTION 12.03. CERTAIN DEFINITIONS. For purposes of this Agreement,
the term:
"AFFILIATES" or "AFFILIATES" shall have the meaning assigned to such
term under Rule 145 of the rules and regulations promulgated under the
Securities Act ("RULE 145")
"KNOWLEDGE" or "KNOWN" shall mean, with respect to any matter in
question, if an executive officer of C.COM, Newco or OCI, as the case may be,
has actual knowledge of such matter as of the date as of which such matter is
represented;
"PERSON" means an individual, corporation, limited liability company,
partnership, association, trust, unincorporated organization, other entity or
group (as defined in Section 13(d) of the Exchange Act);
"SUBSIDIARY" or "SUBSIDIARIES" of any person, means any corporation,
limited liability company, partnership, joint venture or other legal entity of
which such person, as the case may be (either alone or through or together with
any other subsidiary), owns, directly or indirectly, 50% or more of the capital
stock or other equity interests the holders of which are generally entitled to
vote for the election of the board of directors or other governing body of such
corporation or other legal entity;
"TAX" or "TAXES" shall mean any and all taxes, charges, fees or
levies, payable to any federal, state, local or foreign taxing authority or
agency, including, without limitation, (i) income, franchise, profits, gross
receipts, minimum, alternative minimum, estimated, AD VALOREM, value added,
sales, use, service, real or personal property, capital stock, license, payroll,
withholding, disability, employment, social security, workers compensation,
unemployment compensation, utility, severance, excise, stamp, windfall profits,
transfer and capital gains taxes, (ii) custom duties, imposts, charges, levies
or other similar assessments of any kind, and (iii) interest, penalties and
additions to tax imposed with respect thereto.
SECTION 12.04. HEADINGS. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 12.05. SEVERABILITY. If any term or other provision of this
Agreement is determined to be invalid, illegal or incapable of being enforced by
any rule of law or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated herein is not
affected in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that the transactions contemplated
hereby are fulfilled to the extent possible.
SECTION 12.06. ENTIRE AGREEMENT. This Agreement (together with the
Annexes, Schedules and Exhibits hereto) constitutes the entire agreement of the
parties and supersedes all prior agreements and undertakings, both written and
oral, between the parties with respect to the subject matter hereof, including,
but not limited to, that certain Acquisition Agreement between C.COM, OCI
Acquisition Corp., OCI, Raville and Delaney dated July 15, 1996 and those
certain
35
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letter agreements dated July 23, 1996, and August 2, 1996 extending the
deadline for the parties to provide exhibits and schedules to such Acquisition
Agreement to August 2, 1996 and August 6, 1996, respectively.
SECTION 12.07. ASSIGNMENT. This Agreement shall not be assigned by
operation of law or otherwise without the prior express written consent of the
other parties hereto.
SECTION 12.08. PARTIES IN INTEREST. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement.
SECTION 12.09. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and remedies
existing under this Agreement are in addition to, and not exclusive of, any
rights or remedies otherwise available.
SECTION 12.10. GOVERNING LAW. It is the intention of the parties
that the internal laws, and not the laws of conflicts, of the State of Texas
shall govern the enforceability and validity of this Agreement, the construction
of its terms and the interpretation of the rights and duties of the parties;
PROVIDED, HOWEVER, that with respect to matters of law concerning the internal
affairs of any entity that is a party to or the subject of this Agreement, the
law of the jurisdiction of organization of such entity shall govern.
SECTION 12.11. JURISDICTION. Each party hereby irrevocably submits
to the exclusive jurisdiction of the United States District Court for the
Southern District of Texas or any court of the State of Texas located in the
City of Houston in any action, suit or proceeding arising in connection with
this Agreement or the transactions contemplated herein, and agrees that any such
action, suit or proceeding shall be brought only in such court (and waives any
objection based on forum non conveniens or any other objection to venue
therein); provided, however,that such consent to jurisdiction is solely for the
purpose referred to in this Section 11.11 and shall not be deemed to be a
general submission to the jurisdiction of said Courts or in the State of Texas
other than for such purpose. All parties hereby waive any right to a trial by
jury in connection with any such action, suit or proceeding; provided, however,
that matters to be resolved through arbitration as specified herein shall be
resolved only by such arbitration, and the final arbitration award may
thereafter be enforced as provided in this Section 11.11.
SECTION 12.12. COUNTERPARTS. This Agreement may be executed in one
or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
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IN WITNESS WHEREOF, C.COM, Newco, Raville, Delaney and OCI have caused
this Agreement to be executed as of the date first written above, in the case of
such corporations, by their respective officer thereunto duly authorized.
CHARTER COMMUNICATIONS INTERNATIONAL,
INC.
By:
-----------------------------------
Name:
---------------------------
Title:
---------------------------
OCI ACQUISITION CORP.
By:
-----------------------------------
Name:
---------------------------
Title:
---------------------------
OVERLOOK COMMUNICATIONS INTERNATIONAL
CORPORATION
By:
-----------------------------------
Name:
---------------------------
Title:
---------------------------
STEPHEN E. RAVILLE
---------------------------------------
PATRICK E. DELANEY
---------------------------------------
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ARTICLES OF MERGER
OF
OCI ACQUISITION CORP. AND
OVERLOOK COMMUNICATIONS INTERNATIONAL CORPORATION
The undersigned officer of the Surviving Corporation to a Plan of Merger
submits the following Articles of Merger pursuant to the provisions of the North
Carolina Business Corporation Act ("NCBCA").
ARTICLE I
NAME
The name and place of incorporation of each constituent corporation is:
A. OCI ACQUISITION CORP., a North Carolina corporation (the "DISAPPEARING
CORPORATION");
B. OVERLOOK COMMUNICATIONS INTERNATIONAL CORPORATION, a North Carolina
corporation (the "SURVIVING CORPORATION").
ARTICLE II
ADOPTION OF THE PLAN OF MERGER
The respective Boards of Directors of the Surviving Corporation and the
Disappearing Corporation have duly and validly adopted the Plan of Merger,
containing the information required by Article 55-11-01 et seq. of the NCBCA
which has been adopted by the board of directors of each corporation that is a
party to the merger. Attached hereto and incorporated herein for all purposes
is a true and correct copy of the Agreement and Plan of Merger ("PLAN OF
MERGER").
ARTICLE III
STOCKHOLDER APPROVAL
The Plan of Merger was duly submitted to the stockholders of the Surviving
Corporation, in accordance with NCBCA, and the stockholders of the Disappearing
Corporation in accordance with the NCBCA, and approved thereby.
ARTICLE IV
AMENDMENTS TO THE ARTICLES OF INCORPORATION
OF THE SURVIVING CORPORATION
The Articles of Incorporation of the Surviving Corporation shall continue
as the Articles of Incorporation of the Surviving Corporation in all respects;
except, that on the effective date
<PAGE>
of the Merger, Article 2 of the Articles of Incorporation of the Surviving
Corporation shall be amended to read as follows:
"The total number of shares of all classes of stock which the
corporation shall be authorized to issue is one thousand (1,000)
shares of common stock, $.01 par value per share."
ARTICLE V
EFFECTIVE DATE
The effective date of the Plan of Merger shall be the date when these
Articles of Merger are filed and recorded.
IN WITNESS WHEREOF, the undersigned President and Secretary of the
Surviving Corporation, execute these Articles of Merger and verify that the
statements contained herein are true and complete and are the act and deed of
the constituent corporations this the 3rd day of September, 1996.
OVERLOOK COMMUNICATIONS
INTERNATIONAL CORPORATION
ATTEST:
By By
--------------------------------- -----------------------------------
Patrick Delaney, President
[CORPORATE SEAL]
2
