UNITED STATES
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) November 1, 1999
FIRSTCOM CORPORATION
(Exact name of registrant as specified in its charter)
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Texas 0-25194 87-0464860
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation or organization) File Number) Identification No.)
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220 Alhambra Circle
Suite 910
Coral Gables, Florida 33134
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(Address, including zip code, of principal executive office)
(305) 448-4422
Registrant's telephone number, including area code
(Former name, former address and fiscal year, if changed since last report)
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ITEM 5. OTHER EVENTS
On November 1, 1999, FirstCom Corporation, a Texas corporation
("FirstCom"), entered into an Agreement and Plan of Merger (the "Merger
Agreement") with AT&T Corp., a New York corporation ("AT&T"), Kiri Inc., a
Delaware corporation ("AT&T Latin America") and an indirect wholly-owned
subsidiary of AT&T, and Frantis, Inc., a Delaware corporation which is a direct
wholly-owned subsidiary of AT&T Latin America ("Frantis"). The Merger Agreement
provides for the merger (the "Merger") of FirstCom with and into Frantis.
Pursuant to the Merger, the shareholders of FirstCom will receive (i) one share
of Class A Common Stock, par value $0.01 per share ("Class A Shares"), of AT&T
Latin America in exchange for each share of common stock, par value $0.001 per
share, of FirstCom; and (ii) one share of Series A convertible preferred stock,
par value $0.001 per share, of AT&T Latin America in exchange for each share of
Series A Preferred Stock, par value $0.001 per share, of FirstCom. The terms of
the Merger Agreement and the Merger were determined through arms-length
negotiations among the parties.
On August 20, 1999, Jamtis, Inc., a Delaware corporation and an
indirect wholly-owned subsidiary of AT&T ("Jamtis"), entered into agreements
(the "Netstream Acquisition Agreements") to acquire quotas (the "Netstream
Shares") representing 100% of the outstanding equity interest in Netstream
Telecom Ltda., a Brazilian company ("Netstream"). Further, pursuant to the
Netstream Acquisition Agreements, Promon Tecnologia S.A., a Brazilian
corporation (sociedade anonima) (together with its affiliates, "Promon"), has
agreed to purchase, prior to the closing under the Merger Agreement, a 10%
interest in the capital of AT&T Latin America, in the form of Class A Shares.
Prior to the closing of the Merger, Netstream will become an indirect
wholly-owned subsidiary of AT&T Latin America.
Upon consummation of the Merger, on a fully-diluted basis AT&T will own
approximately 60% of the shares of common stock of AT&T Latin America, in the
form of Class B Common Stock ("Class B Shares"), Promon will own approximately
6% of the shares of common stock of AT&T Latin America, in the form of Class A
Shares, and the former shareholders of FirstCom will own approximately 34% of
the common stock of AT&T Latin America in the form of Class A Shares.
Each Class A Share will be entitled to one vote per share and each
Class B Share will be entitled to ten votes per share, on all matters submitted
to a vote of the stockholders of AT&T Latin America. Upon the closing of the
Merger, the Class A Shares will be listed for trading on the NASDAQ National
Market, and the common stock of FirstCom will no longer be traded.
Upon the closing under the Merger Agreement, AT&T and AT&T Latin
America will enter into a "Regional Vehicle Agreement" that provides for various
ways in which AT&T Latin America will interface with AT&T, AT&T's Concert
venture with British Telecom and AT&T's Global Network services business. The
Regional Vehicle Agreement contemplates that AT&T Latin America will serve as
AT&T's strategic vehicle in the countries of South America (excluding Venezuela)
and the Caribbean (excluding Cuba) for the provision of broadband high-speed
connectivity to business customers, and certain other telecommunications
services, upon the terms and conditions of the agreement. A copy of the Regional
Vehicle Agreement is
2
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attached as an exhibit to the Merger Agreement and is being filed herewith. The
services to be provided by AT&T Latin America will be provided under the "AT&T"
brand name, pursuant to the terms and conditions of a Service Mark License
Agreement, a copy of which is attached as an exhibit to the Merger Agreement and
is being filed herewith.
The closing of the Merger Agreement is subject to certain conditions,
including the completion of the Netstream acquisition, the contribution by the
stockholders of AT&T Latin America (other than the stockholders of FirstCom) to
AT&T Latin America of not less than $70 million in cash equity and the provision
by AT&T of a $100 million revolving credit facility to AT&T Latin America and,
if requested by AT&T, the successful completion of a tender offer for FirstCom's
14% Senior Notes due 2007. Further, the Merger is subject to the approval of the
Merger by FirstCom's shareholders and certain regulatory approvals, including
those required under the Hart-Scott Rodino Antitrust Improvement Act of 1976, as
amended.
Certain shareholders of FirstCom have agreed to vote in favor of the
Merger, upon the terms and subject to the conditions of voting agreements,
copies of which are being filed herewith.
Copies of the Merger Agreement and the exhibits thereto are attached
hereto as Exhibits 2.1 through 2 9. A copy of the joint press release announcing
the Merger issued by FirstCom and AT&T on November 1, 1999 is attached hereto as
Exhibit 99.1. Each of such documents is incorporated herein by reference.
The foregoing description of the Merger Agreement, the Merger and the
related transactions may contain "forward looking" statements which are based on
management's beliefs as well as on a number of assumptions concerning future
events made by and information currently available to management. Readers are
cautioned not to put undue reliance on such forward looking statements, which
are not a guarantee of performance and are subject to a number of uncertainties
and other factors, many of which are outside FirstCom's control, that could
cause actual results to differ materially from such statements. For a more
detailed, description of the factors that could cause such a difference, please
see FirstCom's filings with the United States Securities and Exchange
Commission. FirstCom disclaims any intention or obligation to update or revise
any forward-looking statements, whether as a result of new information, future
events or otherwise.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits.
2.1 Agreement and Plan of Merger dated November 1, 1999.
2.2 Form of Amended and Restated Certificate of Incorporation
and By-laws of AT&T Latin America
2.3 Form of AT&T Latin America Board Policy
2.4 Form of Service Mark License Agreement
2.5 Form of Regional Vehicle Agreement
2.6 Terms of Credit Facility
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2.7 Form of Certificate of Designation
2.8 Voting Agreement between AT&T and each of Patricio E.
Northland, George Cargill and Eleazar Donoso
2.9 Voting Agreement between AT&T and Douglas G. Geib II
99.1 Press release announcing the Merger from FirstCom and AT&T.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: November 4, 1999 By: /s/ Douglas G. Geib II
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Douglas G. Geib II
Executive Vice President and
Chief Financial Officer
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EXHIBIT INDEX
EXHIBIT DESCRIPTION
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2.1 Agreement and Plan of Merger dated November 1, 1999.
2.2 Form of Amended and Restated Certificate of Incorporation
and By-laws of AT&T Latin America
2.3 Form of AT&T Latin America Board Policy
2.4 Form of Service Mark License Agreement
2.5 Form of Regional Vehicle Agreement
2.6 Terms of Credit Facility
2.7 Form of Certificate of Designation
2.8 Voting Agreement between AT&T and each of Patricio E.
Northland, George Cargill and Eleazar Donoso
2.9 Voting Agreement between AT&T and Douglas G. Geib II
99.1 Press release announcing the Merger from FirstCom and AT&T.
EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
among
AT&T CORP.,
KIRI INC.,
FRANTIS, INC.
and
FIRSTCOM CORPORATION
Dated as of November 1, 1999
================================================================================
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TABLE OF CONTENTS
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ARTICLE I THE MERGER..........................................................................2
1.1. The Merger..........................................................................2
1.2. Closing.............................................................................2
1.3. Effective Time of the Merger........................................................2
1.4. Certificate of Incorporation and By-Laws............................................3
1.5. Directors; Officers.................................................................3
ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS; EXCHANGE
OF CERTIFICATES.....................................................................3
2.1. Effect on Capital Stock.............................................................3
2.2. Delivery of Certificates............................................................4
2.3. Company Stock Options...............................................................7
ARTICLE III REPRESENTATIONS AND WARRANTIES......................................................8
3.1. Representations and Warranties of the Company.......................................8
3.2. Representations and Warranties of Parent...........................................22
ARTICLE IV COVENANTS..........................................................................26
4.1. No Solicitation....................................................................26
4.2. Conduct of Business................................................................27
4.3. Filings; Other Action..............................................................32
4.4. Access to Information; Pre-Closing Review..........................................33
4.5. Publicity..........................................................................34
4.6. Further Action.....................................................................34
4.7. Insurance; Indemnity...............................................................35
4.8. Shareholder Approval; Preparation of Proxy Statement...............................35
4.9. Certain Tax Matters................................................................36
4.10. Senior Notes.......................................................................37
4.11. Ancillary Agreements...............................................................38
4.12. Netstream Purchase Price Adjustment................................................38
4.13. Conduct of Business of RV and Netstream............................................38
4.14. RV Public Shares...................................................................41
4.15. Credit Facility....................................................................41
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ARTICLE V CONDITIONS.........................................................................41
5.1. Conditions to Each Party's Obligations.............................................41
5.2. Additional Conditions to Obligations of Parent, RV and
Merger Sub.........................................................................42
5.3. Additional Conditions to Obligations of the Company................................44
ARTICLE VI TERMINATION........................................................................45
6.1. Termination........................................................................45
6.2. Effect of Termination..............................................................47
ARTICLE VII GENERAL PROVISIONS.................................................................47
7.1. Nonsurvival of Representations and Warranties......................................47
7.2. Amendment..........................................................................47
7.3. Extension; Waiver..................................................................48
7.4. Notices............................................................................48
7.5. Assignment; Binding Effect.........................................................49
7.6. Entire Agreement...................................................................49
7.7. Fees and Expenses..................................................................49
7.8. Governing Law......................................................................50
7.9. Headings...........................................................................50
7.10. Interpretation.....................................................................50
7.11. Investigations.....................................................................51
7.12. Severability.......................................................................51
7.13. Enforcement of Agreement...........................................................51
7.14. Counterparts.......................................................................51
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AGREEMENT AND PLAN OF MERGER, dated as of November 1, 1999
("AGREEMENT"), among AT&T Corp., a New York corporation ("PARENT"), Kiri Inc., a
Delaware corporation ("RV"), Frantis, Inc., a Delaware corporation and
wholly-owned subsidiary of RV ("MERGER SUB"), and FirstCom Corporation, a Texas
corporation (the "COMPANY"). Certain capitalized terms used herein are defined
in Schedule A attached hereto.
RECITALS
A. Each of Parent, RV, Merger Sub and the Company desire to enter
into the business combination transaction described herein, in which the Company
would merge with and into Merger Sub (the "MERGER").
B. The Boards of Directors of Parent and the respective Boards of
Directors or shareholders (as the case may be) of each of RV and Merger Sub have
duly adopted resolutions approving the transactions contemplated hereby.
C. The Board of Directors of the Company, acting on the
recommendation of a special committee of independent directors, has approved
this Agreement and the Merger, has determined by unanimous resolution that the
Merger is in the best interests of the Company and its shareholders and intends
to recommend to the shareholders of the Company that they vote to approve the
Merger.
D. Concurrently with the execution of this Agreement and as a
condition and inducement to Parent's willingness to enter into this Agreement,
certain shareholders of the Company have entered into a voting agreement, dated
as of the date hereof (the "VOTING AGREEMENT"), among Parent and the several
shareholders named therein, providing, among other things, that such
shareholders will vote in favor of the Merger.
E. JAMTIS, Inc., a Delaware corporation ("JAMTIS"), and an indirect
wholly-owned subsidiary of Parent, has entered into agreements (the "NETSTREAM
ACQUISITION AGREEMENTS") to acquire quotas (the "NETSTREAM SHARES") representing
100% of the outstanding equity interest in Netstream Telecom Ltda., a Brazilian
company ("NETSTREAM").
F. Parent intends to cause Jamtis to merge with a wholly-owned
subsidiary of RV, such that, following such merger, (I) Jamtis will be a direct
wholly-owned subsidiary of RV, and (II) Netstream will be an indirect
wholly-owned subsidiary of RV.
G. Pursuant to the Netstream Acquisition Agreements, Promon
Tecnologia S.A., a Brazilian corporation (sociedade anonima) (together with its
affiliates, "PROMON")
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2
has agreed to purchase, prior to the Closing a 10% interest in the capital of
RV, in the form of RV Class A Shares.
H. Each of Parent, RV, Merger Sub and the Company intend that the
Merger qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "CODE").
I. Each of Parent, RV, Merger Sub and the Company intend that,
immediately following the Effective Time, on a fully-diluted basis, (I) the
former shareholders of the Company will own, collectively, approximately 34% of
the shares of common stock of RV, in the form of RV Class A Common Stock or RV
Preferred Stock, as the case may be, (II) Promon will own, directly or
indirectly, approximately 6% of the shares of common stock of RV, in the form of
RV Class A Common Stock, and (III) Parent will own, directly or indirectly,
approximately 60% of the shares of common stock of RV, in the form of RV Class B
Common Stock (as defined herein).
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE I
THE MERGER
I.1. THE MERGER. On the terms and subject to the conditions set forth
in this Agreement, and in accordance with applicable state corporation laws, the
Company shall be merged with and into Merger Sub at the Effective Time (as
defined in Section 1.3 below). Upon the Effective Time, the separate existence
of the Company shall cease, and Merger Sub shall continue as the surviving
corporation (the "SURVIVING CORPORATION").
I.2. CLOSING. Unless this Agreement shall have been terminated
pursuant to Section 6.1, and subject to the satisfaction or waiver of the
conditions set forth in Article V, the closing of the Merger (the "CLOSING")
shall take place as promptly as practicable (and in any event within two
business days) following satisfaction or waiver of the conditions set forth in
Article V (the "CLOSING DATE"), at the offices of Debevoise & Plimpton, 875
Third Avenue, New York, New York 10022, unless another date or place is agreed
to in writing by the parties hereto.
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3
I.3. EFFECTIVE TIME OF THE MERGER. As soon as practicable following
the satisfaction or waiver of the conditions set forth in Article V, the
Surviving Corporation shall file a certificate of merger (the "CERTIFICATE OF
MERGER") executed in accordance with the relevant provisions of the Delaware
General Corporation Law ("DGCL"). The Merger shall become effective at such time
as the Certificate of Merger is duly filed with the Secretary of State of the
State of Delaware, or at such other time thereafter as is provided in the
Certificate of Merger (the "EFFECTIVE TIME").
I.4. CERTIFICATE OF INCORPORATION AND BY-LAWS. The Articles of
Incorporation and By-Laws of Merger Sub as in effect immediately prior to the
Effective Time shall be the Articles of Incorporation and By-Laws of the
Surviving Corporation following the Merger, until amended in accordance with the
DGCL.
I.5. DIRECTORS; OFFICERS. (a) The directors of Merger Sub at the
Effective Time shall be the initial directors of the Surviving Corporation,
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
(b) The officers of Merger Sub at the Effective Time shall be the
officers of the Surviving Corporation, until the earlier of their resignation or
removal or until their respective successors are duly elected and qualified, as
the case may be.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
II.1. EFFECT ON CAPITAL STOCK. As of the Effective Time, by virtue of
the Merger and without any further act or deed on the part of Parent, RV, Merger
Sub, the Company or any holder of any of the following securities:
(a) COMMON STOCK OF THE COMPANY. Each issued and outstanding share of
common stock, par value $0.001 per share, of the Company (together with
any rights appurtenant thereto, "COMPANY COMMON STOCK") shall be converted
into the right to receive one fully paid and non-assessable share of Class
A common stock, par value $0.01 per share, of RV ("RV CLASS A COMMON
STOCK").
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(b) PREFERRED STOCK OF THE COMPANY. Each issued and outstanding share
of Series A convertible preferred stock, par value $0.001 per share, of
the Company ("PREFERRED STOCK") shall be converted into the right to
receive one fully paid and non-assessable share of Series A convertible
preferred stock, par value $0.001 per share, of RV ("RV PREFERRED STOCK").
II.2. DELIVERY OF CERTIFICATES. (a) EXCHANGE AGENT; EXCHANGE FUND. As
of the Effective Time, Parent and the Company shall cause to be deposited, with
a bank or trust company designated by Parent (and reasonably acceptable to the
Company) (the "EXCHANGE AGENT"), for exchange in accordance with this Article
II, through the Exchange Agent, for the benefit of the holders of shares of
Company Common Stock, certificates representing the shares of RV Class A Common
Stock issuable pursuant to Section 2.1 in exchange for issued and outstanding
shares of Company Common Stock. All of such deposited certificates representing
shares of RV Class A Common Stock, collectively, together with any dividends or
distributions with respect thereto, are referred to hereinafter as the "EXCHANGE
FUND."
(b) EXCHANGE PROCEDURES. As soon as reasonably practicable after the
Effective Time, Parent shall instruct the Exchange Agent to mail to each holder
of record of a certificate or certificates which immediately prior to the
Effective Time represented outstanding shares of Company Common Stock
(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 form and have such other provisions as Parent and
the Company may reasonably specify) and (II) instructions to effect the
surrender of the Certificates in exchange for certificates representing shares
of RV Class A Common Stock. Upon surrender of one or more Certificates for
cancellation to the Exchange Agent together with such letter of transmittal,
duly executed, and such other customary or other reasonable documents as may be
required pursuant to such instructions, the holder of such Certificates shall be
entitled to receive in exchange therefor a certificate representing that number
of whole shares of RV Class A Common Stock which such holder has the right to
receive in respect of the Certificates surrendered by such holder pursuant to
the provisions of this Article II, and the Certificates so surrendered shall
forthwith be cancelled. In the event of transfer of ownership of Company Common
Stock which is not registered in the transfer of records of the Company, a
certificate representing the proper number of shares of RV Class A Common Stock
may be issued to a transferee if the Certificate representing such Company
Common Stock 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 by this Section 2.2, each Certificate shall be deemed at any
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5
time after the Effective Time to present only the right to receive upon such
surrender a certificate representing shares of RV Class A Common Stock, and cash
in lieu of any fractional shares of RV Class A Common Stock as contemplated by
this Section 2.2.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends or
other distributions declared or made after the Effective Time with respect to RV
Class A Common Stock with a record date after the Effective Time shall be paid
to the holder of any unsurrendered Certificate with respect to the shares of RV
Class A Common Stock represented thereby, and no cash payment in lieu of
fractional shares shall be paid to any such holder pursuant to Section 2.2(e)
until the holder of such Certificate shall have duly surrendered such
Certificate in accordance with Section 2.2(b). Subject to the effect of
applicable laws, following surrender of any such Certificate, there shall be
paid to the holder of the certificates representing whole shares of RV Class A
Common Stock issued in exchange therefor, without interest, (I) at the time of
such surrender or as promptly thereafter as practicable, the amount of any cash
payable with respect to a fractional share of RV Class A Common Stock to which
such holder is entitled pursuant to Section 2.2(e) and the amount of dividends
or other distributions, if any, with a record date after the Effective Time
theretofore paid with respect to such whole shares of RV Class A Common Stock,
and (II) at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but prior to surrender
and a payment date subsequent to surrender payable with respect to such whole
shares of RV Class A Common Stock.
(d) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All shares
of RV Class A Common Stock issued upon conversion of shares of Company Common
Stock in accordance with the terms hereof (including any cash paid pursuant to
Section 2.2(c) or 2.2(e)) shall be deemed to have been issued in full
satisfaction of all rights pertaining to such shares of Company Common Stock,
and there shall be no further registration of transfers on the stock transfer
books of the Surviving Corporation of the shares of Company Common Stock which
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be cancelled and exchanged as provided in this Article II.
(e) TREATMENT OF FRACTIONAL SHARES. (i) No certificates or scrip
representing fractional shares of RV Class A Common Stock shall be issued upon
the surrender for exchange of Certificates, and such fractional interests will
not entitle the owner thereof to vote or to any rights of a stockholder of the
Surviving Corporation.
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6
(ii) As promptly as practicable following the Effective Time, the
Exchange Agent will determine the excess of (x) the aggregate number of shares
of RV Class A Common Stock delivered to the Exchange Agent over (y) the
aggregate number of whole shares of RV Class A Common Stock to be distributed in
connection with the Merger (such excess being referred to herein as the "EXCESS
SHARES"). Following the Effective Time, Parent and RV will cause the Exchange
Agent, on behalf of the former stockholders of the Company, to sell the Excess
Shares at then-prevailing prices on the securities exchange on which they are
listed in the manner provided in clause (iii) of this Section.
(iii) The sale of the Excess Shares by the Exchange Agent will be
executed through one or more member firms and will be executed in round lots to
the extent practicable. The Exchange Agent will use reasonable efforts to
complete the sale of the Excess Shares as promptly following the Effective Time,
as, in its sole judgment, is practicable consistent with obtaining the best
execution of such sales in light of prevailing market conditions. Until the net
proceeds of such sale or sales have been distributed to the former stockholders
of the Company, the Exchange Agent will hold such proceeds in trust for such
holders (the "EXCESS SHARES Trust"). All commissions, transfer taxes and other
out-of-pocket transaction costs incurred in connection with such sale of Excess
Shares shall be paid by RV. The Exchange Agent will determine the portion of the
Excess Shares Trust to which each holder of Company Common Stock, is entitled,
if any, by multiplying the amount of the aggregate proceeds comprising the
Excess Shares Trust by a fraction, the numerator of which is the amount of the
fractional share interest to which such holder of Company Common Stock is
entitled (after taking into account all such shares held at the Effective Time
by such holder) and the denominator of which is the aggregate amount of
fractional share interests to which all holders of Company Common Stock are
entitled pursuant to the Merger are entitled pursuant to the Merger PROVIDED,
that no holder of Company Common Stock will be entitled to receive cash in an
amount equal to or greater than the value of one full share of RV Class A Common
Stock.
(iv) As soon as practicable after the determination of the amount of
cash, if any, to be paid to holders of Company Common Stock with respect to
fractional share interests, the Exchange Agent will make available such amounts
to such holders.
(f) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund
that remains undistributed to the stockholders of the Company for six months
after the Effective Time shall be delivered to RV upon demand, and any
stockholders of the Company who have not theretofore complied with this Article
II shall thereafter look only to RV for payment of their claim for RV Class A
Common Stock, any cash in lieu of
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7
fractional shares of RV Class A Common Stock and any dividends or distributions
with respect to RV Class A Common Stock.
(g) NO LIABILITY. None of Parent, RV and the Surviving Corporation
shall be liable to any holder of shares of Company Common Stock or RV Class A
Common Stock, as the case may be, for such shares (or dividends or distributions
with respect thereto) or cash from the Exchange Fund delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
(h) WITHHOLDING RIGHTS. RV or the Exchange Agent shall be entitled to
deduct and withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of shares of Company Common Stock such amounts as the
Surviving Corporation or the Exchange Agent is required to deduct and withhold
with respect to the making of such payment under the Code, or any provision of
state, local or foreign tax law, or any court order. To the extent that amounts
are so withheld by RV or the Exchange Agent, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder of
the shares of Company Common Stock in respect of which such deduction and
withholding was made by RV or the Exchange Agent.
II.3. COMPANY STOCK OPTIONS. (a) Each option (each, a "COMPANY STOCK
OPTION" and collectively, the "COMPANY STOCK OPTIONS") to purchase shares of
Company Common Stock granted under the Company's long-term incentive plans and
directors stock option plans or pursuant to the authority of the Board of
Directors of the Company that is outstanding immediately prior to the Closing
Date shall be deemed to constitute an option to acquire one share of RV Class A
Common Stock (each, an "ASSUMED AWARD"), PROVIDED that any fractional share of
RV Class A Common Stock resulting from an aggregation of all of the shares of a
holder subject to Company Stock Options shall be rounded to the nearest whole
share, and PROVIDED, FURTHER, that, for any Company Stock Option to which
Section 421 of the Code applies by reason of its qualification under any of
Sections 422 through 424 of the Code, the option price, the number of shares
purchasable pursuant to such option and the terms and conditions of exercise of
such option shall be determined in order to comply with Section 424 of the Code.
Each such Assumed Award, to the extent permissible under Section 424(a) of the
Code, shall thereafter be exercisable until the end of the period during which
the Company Stock Option was exercisable and shall otherwise have terms no less
favorable to the holder thereof than the original Company Stock Option.
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8
(b) RV shall take such actions as are necessary for the assumption of
Company Stock Options pursuant to this Section 2.3, including the reservation,
issuance and listing of RV Class A Common Stock as is necessary to effectuate
the transactions contemplated by this Section 2.3. RV shall prepare and file
with the SEC a registration statement on an appropriate form, or a
post-effective amendment to a registration statement previously filed under the
Securities Act (as defined herein), with respect to the shares of RV Class A
Common Stock subject to the Assumed Awards and, where applicable, shall use its
reasonable best efforts to have such registration statement declared effective
by Closing Date and to maintain the effectiveness of such Assumed Awards (and to
maintain the current status of the prospectus contained therein) for so long as
such Assumed Awards remain outstanding. With respect to those individuals, if
any, who, subsequent to the Closing, will be subject to the reporting
requirements under Section 16(a) of the Exchange Act, where applicable, RV shall
use its reasonable efforts to administer Company Stock Options assumed pursuant
to this Section 2.3 in a manner that complies with Rule 16b-3 promulgated under
the Exchange Act (as defined herein).
ARTICLE III
REPRESENTATIONS AND WARRANTIES
III.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to Parent, RV and Merger Sub as of the date
hereof and as of the Closing Date as follows:
(a) EXISTENCE; GOOD STANDING; CORPORATE AUTHORITY. Each of the
Company and its Subsidiaries is (i) a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and (II) duly licensed or qualified to do business as a foreign
corporation and is in good standing under the laws of any other state of the
United States or (to the extent the concepts of "qualified to do business" and
"good standing" exist) any other jurisdiction in which the character of the
properties owned or leased by it or in which the transaction of its business
makes such licensure, qualification or good standing necessary, except where the
failure to be so in good standing or to be so licensed or qualified,
individually or in the aggregate, would not have a material adverse effect on
(X) the business, operations, results of operations, assets or financial
condition of the Company or any Subsidiary, or (Y) the ability of the Company to
perform its obligations under this Agreement or any Ancillary Agreement (any of
the foregoing events or circumstances being referred to herein as a "MATERIAL
ADVERSE EFFECT"). Each of the Company and its Subsidiaries has the requisite
corporate power and authority to own, operate and lease its properties and
assets and carry on its
<PAGE>
9
business as now conducted and proposed to be conducted as discussed in the
Company Reports (as defined below). The Company has delivered to Parent true and
correct copies of the Certificate of Incorporation and By-Laws of the Company
and of the comparable organizational documents of each Subsidiary of the
Company, each of which is in full force and effect.
(b) AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS. The Company has
the requisite corporate power and authority to execute and deliver this
Agreement and the Ancillary Agreements to which it is a party, to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by the Company of
this Agreement and such Ancillary Agreements, the performance of its obligations
hereunder and thereunder and the consummation by the Company of the transactions
contemplated hereby and thereby have been duly and validly authorized by the
Board of Directors of the Company, and no other action on the part of the
Company or any shareholder thereof is necessary to authorize the execution and
delivery by the Company of this Agreement or such Ancillary Agreements, to
perform the obligations hereunder or thereunder or to consummate the
transactions contemplated hereby or thereby (other than the approval of this
Agreement and the Merger by the holders of a majority of the shares of Company
Common Stock). The Board of Directors of the Company, acting on the
recommendation of a duly constituted special committee of independent directors,
has duly adopted resolutions determining that the Merger is advisable and the
terms of this Agreement and the Merger are fair to, and in the best interests
of, the Company and the Company's shareholders. This Agreement has been, and
upon execution as contemplated herein, each Ancillary Agreement to which the
Company is a party, will have been, duly and validly executed and delivered by
the Company, and (assuming due execution and delivery of this Agreement and each
of such Ancillary Agreements by each other party hereto and thereto) constitutes
the valid and binding obligation of the Company, enforceable against the Company
in accordance with its terms.
(c) COMPLIANCE WITH LAWS. Except as set forth on Schedule 3.1(c) of
the Disclosure Letter, neither the Company nor any of its Subsidiaries is in
violation of any foreign, federal, state or local law, statute, ordinance, rule,
regulation, order, judgment, ruling or decree ("LAWS") of any foreign, federal,
state or local judicial, legislative, executive, administrative or regulatory
body or authority or any court, arbitration, board or tribunal (each such
entity, a "GOVERNMENTAL ENTITY") applicable to the Company or any of its
Subsidiaries or any of their respective properties or assets, except for
violations which, individually or in the aggregate, would not have a Material
Adverse Effect.
<PAGE>
10
(d) CAPITALIZATION OF THE COMPANY. (i) As of the date hereof, the
authorized capital stock of the Company consists of 50,000,000 shares of Company
Common Stock and 10,000,000 shares of Preferred Stock and (A) 24,376,556 shares
of Company Common Stock are issued and outstanding, (B) 1,313,086 shares of
Preferred Stock are issued and outstanding, (C) options to purchase an aggregate
of 10,578,500 shares of Company Common Stock are outstanding (the "OPTIONS"),
10,578,500 shares of Company Common Stock are reserved for issuance upon the
exercise of outstanding Options and 300,000 shares are reserved for future
grants under all stock option or other incentive plans or arrangements of the
Company (the "COMPANY STOCK PLANS"), and there are no stock appreciation rights
or limited stock appreciation rights or other equity-related rights or awards
outstanding other than the Options, (D) warrants to purchase 5,758,771 shares of
Company Common Stock are outstanding (the "WARRANTS"), and 5,758,771 shares are
reserved for issuance upon the exercise of the Warrants, and (E) no shares of
Company Common Stock or Preferred Stock are held by the Company's Subsidiaries
or in treasury. Except for the Warrants, the Options and the shares of Preferred
Stock outstanding, the Company has no outstanding bonds, debentures, notes or
other obligations, instruments or securities entitling the holders thereof to
vote (or which are convertible into or exercisable for securities having the
right to vote) with the shareholders of the Company on any matter. Schedule
3.1(d) of the Disclosure Letter sets forth for each Option and Warrant
outstanding as of the date hereof, (I) its exercise price, (II) its expiration
date, (III) the first date upon which it becomes exercisable, and (IV) the
number of shares of Company Common Stock (or other securities) for which it is
exercisable.
(ii) Except as set forth on Schedule 3.1(d)(ii), of the Disclosure
Letter, since June 30, 1999 the Company has not (A) issued any shares of its
capital stock, (B) granted any options or warrants to purchase any shares of its
capital stock or (C) split, combined or reclassified any shares of its capital
stock. All issued and outstanding shares of Company Common Stock and Preferred
Stock are duly authorized, validly issued, fully paid, nonassessable and free of
preemptive rights.
(iii) Except for the Options, the Warrants, the outstanding shares of
Preferred Stock and the rights (the "COMPANY RIGHTS") distributed to holders of
Company Common Stock pursuant to the Rights Agreement, dated as of April 1, 1998
(in the form attached as Exhibit 2.1 to the SEC Form 8-A filed by the Company on
April 3, 1998), between the Company and American Stock Transfer & Trust Company
(the "RIGHTS AGREEMENT"), and except as set forth in this Section 3.1(d) or in
Schedule 3.1(d) of the Disclosure Letter, there are no other shares of capital
stock of the Company, no securities of the Company convertible into or
exchangeable for shares of capital stock or voting securities of the
<PAGE>
11
Company, and no existing options, warrants, calls, subscriptions, convertible
securities, or other rights, agreements or commitments which obligate the
Company or any of its Subsidiaries to issue, transfer or sell any shares of
capital stock of, or equity interests in, the Company or any of its
Subsidiaries. Except as set forth in the certificate of designation relating to
the outstanding shares of Preferred Stock, there are no outstanding obligations
of the Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any shares of capital stock of the Company and, other than outstanding
Options, there are no awards outstanding under any Company Stock Plans or any
other outstanding stock-related awards. There are no voting agreements, voting
trusts or other agreements or understandings to which the Company or any of its
Subsidiaries is a party (or, to the knowledge of the Company, to which any two
or more shareholders are parties, other than the Voting Agreement) with respect
to the voting of capital stock of the Company or any of its Subsidiaries.
(e) SUBSIDIARIES. Schedule 3.1(e) of the Disclosure Letter sets forth
for each Subsidiary of the Company: (I) its name and jurisdiction of
incorporation or organization; (II) its authorized capital stock or share or
equity capital; (III) the number of issued and outstanding shares of capital
stock or equity capital; and (IV) the legal and beneficial owner or owners of
such shares. Except as set forth on Schedule 3.1(e) of the Disclosure Letter,
each of the outstanding shares of capital stock or other equity interest of each
of the Company's Subsidiaries is duly authorized, validly issued, fully paid and
nonassessable, and is owned, directly or indirectly, by the Company free and
clear of all liens, pledges, security interests, claims or other encumbrances
(collectively, "ENCUMBRANCES"). Except for interests in the Company's
Subsidiaries or as set forth on Schedule 3.1(e) of the Disclosure Letter,
neither the Company nor any of its Subsidiaries owns directly or indirectly any
interest or investment (whether equity or debt) in any corporation, firm,
partnership, limited liability company, joint venture, business, association,
trust, business trust or other entity (each individually, along with any natural
person and any Government Entity, a "PERSON").
(f) NO VIOLATION; CONSENTS. (i) Except as set forth on Schedule
3.1(f) of the Disclosure Letter, neither the execution, delivery or performance
by the Company of this Agreement or any of the Ancillary Agreements nor the
consummation by the Company of the transactions contemplated hereby or thereby
will: (A) violate, conflict with or result in a breach of any provisions of the
Certificate of Incorporation or By-Laws (or comparable organizational documents)
of the Company or any of its Subsidiaries; (B) violate, conflict with, result in
a breach of any provision of, constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, result in
the termination or in a right of termination of, accelerate the performance
required by
<PAGE>
12
or benefit obtainable under, result in the triggering of any payment or other
obligations pursuant to, result in the creation of any Encumbrance upon any of
the properties or assets of the Company or any of its Subsidiaries under, or
result in there being declared void, voidable, subject to withdrawal, or without
further binding effect, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust or any license, franchise, Permit,
lease, contract, plan, agreement or other instrument, commitment or obligation
to which the Company or any of its Subsidiaries is a party, by which the Company
or any of its Subsidiaries or any of their respective properties is bound, or
under which the Company or any of its Subsidiaries or any of their respective
properties is entitled to a benefit (each of the foregoing, to the extent the
same have any continuing force or effect, a "CONTRACT" and collectively,
"CONTRACTS"), except for any of the foregoing matters which, individually or in
the aggregate, would not have a Material Adverse Effect or prevent or materially
delay the consummation of the transactions contemplated hereby (a "MATERIAL
DELAYING EFFECT"); or (C) violate any Laws applicable to the Company, any of its
Subsidiaries or any of their respective assets or properties, except for
violations which, individually or in the aggregate, would not have a Material
Adverse Effect.
(ii) Except as set forth on Schedule 3.1(f) of the Disclosure Letter,
and other than the filings required under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR ACT"), the Securities Exchange Act of 1934,
as amended (together with the rules and regulations promulgated thereunder, the
"EXCHANGE ACT"), the Securities Act of 1933, as amended (with respect to the
Registration Statement) or filings in connection with the maintenance of
qualification to do business in other jurisdictions (the filings disclosed in
the Disclosure Letter relating to this clause (ii), the other filings referred
to in this clause (ii) and the Other Antitrust Filings and Consents required or
permitted to be made or obtained, collectively, the "REGULATORY FILINGS"),
neither the execution, delivery or performance by the Company of this Agreement
or any of the Ancillary Agreements nor the consummation by the Company of the
transactions contemplated hereby or thereby will require any consent, approval
or authorization of, or declaration, filing or registration with, (A) any
Governmental Entity, including any such consent, approval, authorization,
declaration, filing or registration under any Laws of any foreign jurisdiction
relating to antitrust matters or competition ("FOREIGN ANTITRUST LAWS"), (B) any
other Law of any foreign jurisdiction, or (C) any other Person, except for those
consents, approvals, authorizations, declarations, filings or registrations the
failure of which to obtain or make, individually or in the aggregate, would not
have a Material Adverse Effect or a Material Delaying Effect.
<PAGE>
13
(g) COMPANY REPORTS; ABSENCE OF UNDISCLOSED LIABILITIES. (i) Each
registration statement, report (including annual and quarterly reports), proxy
statement or information statement (as defined under the Exchange Act) and all
attachments and exhibits thereto prepared by the Company or relating to its
securities or properties since January 1, 1997, each in the form (including all
exhibits and amendments thereto) filed with the Securities and Exchange
Commission (the "SEC") (collectively, as amended or restated, the "COMPANY
REPORTS"), as of their respective dates (or the respective dates of the latest
amendments thereto or restatements thereof), (A) complied as to form in all
material respects with the applicable requirements of the Securities Act of
1933, as amended, and the rules and regulations thereunder (the "SECURITIES
ACT") and the Exchange Act and (B) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. Each of the consolidated balance
sheets included in or incorporated by reference in the Company Reports fairly
presented the financial position of the entity or entities to which it relates
as of its date, and each of the consolidated statements of results of operations
and consolidated statements of cash flows included in or incorporated by
reference in the Company Reports fairly presented the results of operations or
cash flows, as the case may be, of the entity or entities to which it relates
for the periods set forth therein, in each case in accordance with United States
generally accepted accounting principles consistently applied during the periods
involved.
(ii) Except as set forth on Schedule 3.1(g) of the Disclosure Letter,
neither the Company nor any of its Subsidiaries has any liabilities or
obligations, whether liquidated, accrued, contingent or otherwise, except (X)
liabilities and obligations in the respective amounts reflected or reserved
against in the consolidated balance sheet of the Company and its Subsidiaries as
of June 30, 1999 included in the Company Reports and (Y) liabilities and
obligations incurred in the ordinary course of business since that date which
individually or in the aggregate would not have a Material Adverse Effect.
(h) RIGHTS AGREEMENT; ABSENCE OF AFFILIATED SHAREHOLDER. (i) The
Company has duly amended the Rights Agreement to provide that none of the
approval, execution or delivery of this Agreement or the consummation of the
Merger will cause (X) the Company Rights to become exercisable under the Rights
Agreement, (y) Parent or Merger Sub (or any of their respective affiliates), to
be deemed an "Acquiring Person" (as defined in the Rights Agreement), or (Z)
result in the occurrence of a "Distribution Date" or "Triggering Event" (as
defined, respectively, in the Rights Agreement).
(ii) No shareholder of the Company is or, at any time during the
three-year period preceding the date hereof or the Effective Time, has been, an
"affiliated
<PAGE>
14
shareholder" of the Company as such term is defined in Part Thirteen of the
Texas Business Corporation Act.
(i) LITIGATION. Except as disclosed in the Company Reports, there are
no claims, actions, suits, proceedings, arbitrations, investigations or audits
(collectively, "LITIGATION") by a third party (including a Governmental Entity)
pending or, to the knowledge of the Company, threatened against the Company or
any of its Subsidiaries, other than those which, individually or in the
aggregate, would not have a Material Adverse Effect. Except as disclosed in the
Company Reports, no Governmental Entity has advised the Company or any of its
Subsidiaries of an intention to conduct any audit, investigation or other review
with respect to the Company or any of its Subsidiaries that the Company
reasonably believes would be material.
(j) ABSENCE OF CERTAIN CHANGES. Except as set forth in the Company
Reports or on Schedule 3.1(j) or 3.1(d) of the Disclosure Letter, since June 30,
1999, the Company and its Subsidiaries have conducted their business only in the
ordinary course of such business consistent with past practices, and there has
not occurred (I) any Material Adverse Effect; (II) any declaration, setting
aside or payment of any dividend or other distribution with respect to the
capital stock of the Company or any of its Subsidiaries (other than Subsidiaries
that, at all times since June 30, 1999, have been wholly-owned, directly or
indirectly, by the Company) or any repurchase, redemption or any other
acquisition by the Company or any of its Subsidiaries of any outstanding shares
of capital stock or other securities of, or other ownership interests in, the
Company or any of its Subsidiaries; (III) any change in accounting principles,
practices or methods used by the Company or any of its Subsidiaries; (IV) any
entering into or amendment of any employment agreement, which is, or would be
required to be, set forth on Schedule 3.1(m), with, or any increase in the rate
or terms (including, without limitation, any acceleration of the right to
receive payment) of compensation payable, or to become payable, by the Company
or any of its Subsidiaries to, their respective directors, officers or
employees; (V) any entering into or amendment of any increase in the rate or
terms (including, without limitation, any acceleration of the right to receive
payment) of any bonus, insurance, pension or other employee benefit plan or
arrangement covering any such directors, officers or employees; (VI) any
revaluation by the Company or any of its Subsidiaries of any of their respective
assets except for write-downs and write-offs not exceeding $500,000 or
equivalent in the aggregate or for which specific reserves were made in the
preparation of the consolidated balance sheet of the Company and its
Subsidiaries, as at June 30, 1999, included in the Company Reports; (VII) any
transaction or commitment made by the Company or any of its Subsidiaries to buy
or sell any assets that are or would be material to the Company's business; or
(VIII) any other transaction or
<PAGE>
15
event that, had it occurred after the date of this Agreement, would constitute a
breach of the covenant set forth in Section 4.2(b).
(k) TAXES. Except as set forth on Schedule 3.1(k) of the Disclosure
Letter:
(i)(A) All Tax Returns relating to the Company and each of its
Subsidiaries or the business or assets thereof that were required to be filed on
or before the Closing Date have been duly and timely filed and are correct and
complete in all material respects, (B) all Taxes shown as owing on such Tax
Returns have been paid, and (C) neither the Company nor any of its Subsidiaries
is currently the beneficiary of any extension of time within which to file any
Tax Return which has not been filed.
(ii)(A) All material Taxes that are or may become payable by the
Company or any of its Subsidiaries or chargeable as an Encumbrance upon the
assets thereof as of the Closing Date for which the filing of a Tax Return is
not required have been duly and timely paid, (B) the Company and each of its
Subsidiaries has duly and timely withheld all material Taxes required to be
withheld in connection with the business or assets of such person, and such
withheld Taxes have been either duly and timely paid to the proper governmental
authorities or properly set aside in accounts for such purpose, and (C) the
Company Reports reflect an adequate reserve for all material Taxes payable or
asserted to be payable by the Company or any of its Subsidiaries for all taxable
periods or portions thereof through the date of the most recent financial
statements set forth therein.
(iii) There has been no claim or issue (other than a claim or issue
that has been finally settled) concerning any liability for Taxes of the Company
or any of its Subsidiaries asserted, raised or, to the knowledge of the Company,
threatened by any taxing authority.
(iv) Schedule 3.1(k) of the Disclosure Letter lists all Income Tax
Returns that have been filed with respect to the Company and any of its
Subsidiaries for taxable periods ended on or after January 1, 1992 and that have
not yet been audited or are currently the subject of audit.
(v) Neither the Company nor any of its Subsidiaries has (A) waived
any statute of limitations, (B) agreed to any extension of the period for
assessment or collection or (C) executed or filed any power of attorney with
respect to Taxes, which waiver, agreement or power of attorney is currently in
force.
<PAGE>
16
(vi)(A) There are no outstanding adjustments under Section 481 of the
Code (or similar or analogous provision of state, local or foreign law) for
Income Tax purposes applicable to the Company or any of its Subsidiaries
required as a result of changes in methods of accounting effected on or before
the Closing Date, and (B) no material elections for Income Tax purposes have
been made by the Company or any of its Subsidiaries that are currently in force
or by which the Company or any of its Subsidiaries is bound.
(vii) Neither the Company nor any of its Subsidiaries (A) is a party
to or bound by or has any obligation under any Tax allocation, sharing,
indemnity or similar agreement or arrangement, or (B) is or has been a member of
any group of companies filing a consolidated, combined or unitary Income Tax
Return.
(l) EMPLOYEE BENEFIT PLANS. (i) Schedule 3.1(l) of the Disclosure
Letter lists all bonus, deferred compensation, pension, retirement,
profit-sharing, thrift, savings, employee stock ownership, stock bonus, stock
purchase, restricted stock, stock option plans, or any other employee benefit
plan, program, agreement, or arrangement, whether written or unwritten and
regardless of whether they are funded or unfunded or U.S. or non-U.S., with, for
the benefit of, or covering employees or former employees of the Company and its
Subsidiaries whether maintained by the Company or its Subsidiaries or with
respect to which the Company or its Subsidiaries have any liability, including
any "employee benefit plans" within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") ("COMPANY BENEFIT
PLANS"). The Company has provided Parent with a true and correct copy of each of
the Company Benefit Plans (or a true and correct description of any unwritten
Company Benefit Plan) and all contracts relating thereto, or to the funding
thereof, and the two most recent annual reports and actuarial valuations (if
applicable) relating to each Company Benefit Plan.
(ii) The Company is not aware that any officer, executive or key
employee or any group of employees of the Company or any of its Subsidiaries has
any plans to terminate his, her or its employment.
(iii) Each Company Benefit Plan and Employment Agreement conforms in
all material respects to, and its administration is in conformity in all
material respects with, all applicable laws. No material liability has been or
is expected to be incurred by the Company or any of its Subsidiaries with
respect to any Company Benefit Plan and Employment Agreement except for benefits
payable or contributions due under the terms of such plans or agreements, and
full payment has been made of all amounts that the
<PAGE>
17
Company or any of its Subsidiaries is required to have paid as contributions to
each Company Benefit Plan and Employment Agreement. All Company Benefit Plans
intended and Employment Agreements to satisfy applicable tax qualification
requirements or other requirements necessary to secure favorable tax or other
legal treatment comply in all material respects with such requirements, and
adequate accruals for all obligations under the Company Benefit Plans and
Employment Agreements are reflected in the financial statements of the Company.
Neither the Company nor any of its Subsidiaries nor any of their ERISA
Affiliates has ever maintained, contributed to or incurred or expects to incur
any liability under Title IV of ERISA. Except as set forth on Schedule 3.1(l) of
the Disclosure Letter, (A) the execution of, and performance of the transactions
contemplated in, this Agreement will not (either alone or upon the occurrence of
any additional or subsequent events) constitute an event under any benefit plan,
policy, arrangement or agreement or any trust or loan that will or may result in
any payment (whether of severance pay or otherwise), acceleration, forgiveness
of indebtedness, vesting, distribution, increase in benefits or obligation to
fund benefits with respect to any employee and (B) no payment or benefit which
will or may be made by the Company, any of its Subsidiaries or Parent with
respect to any employee, officer or director will constitute an "excess
parachute payment" within the meaning of Section 280G(b)(1) of the Code.
(iv) Except as described in the Company Reports or listed on Schedule
3.1(l) of the Disclosure Letter, neither the Company nor any of its Subsidiaries
maintains or contributes to any plan or arrangement which provides or has any
liability to provide life insurance or medical or other employee welfare
benefits to any employee or former employee upon his or her retirement or
termination of employment, and neither the Company nor any of its Subsidiaries
has ever represented, promised or contracted (whether in written form or, to the
knowledge of the Company, in unwritten form) to any employee or former employee
that such benefits would be provided. None of the Company Benefit Plans is a
Multiemployer Plan or a Single Employer Plan within the meaning of ERISA.
(m) LABOR AND EMPLOYMENT MATTERS. (i) Schedule 3.1(m) of the
Disclosure Letter lists , as of October 15, 1999, each officer and employee of
the Company and any of its Subsidiaries. Not more than 30 additional employees
were hired by the Company and its Subsidiaries between October 15, 1999 and the
date hereof. Except as set forth on Schedule 3.1(m) of the Disclosure Letter,
(I) neither the Company nor any of its Subsidiaries is a party to, or bound by,
any collective bargaining agreement or other Contracts or understanding with a
labor union or labor organization; and (II) there is no (X) unfair labor
practice, labor dispute (other than routine individual grievances) or labor
<PAGE>
18
arbitration proceeding pending or, to the knowledge of the Company, threatened
against the Company or any of its Subsidiaries, (Y) activity or proceeding by a
labor union or representative thereof to organize any employees of the Company
or any of its Subsidiaries, or (Z) lockouts, strikes, slowdowns, work stoppages
or threats thereof by or with respect to such employees. The Company and each of
its Subsidiaries is in substantial compliance with all Laws regarding
employment, employment practices, terms and conditions of employment and wages
and hours.
(ii) There are no pending or, to the knowledge of the Company,
threatened claims for indemnification by the Company or any of its subsidiaries
in favor of directors, officers, employees and agents of the Company or any of
its Subsidiaries.
(iii) Except for (a) any benefits to be provided to employees under
any Company Benefit Plan, (b) any benefits to be provided to employees under any
Employment Agreement and (iii) compensation payable in the ordinary course for
services rendered within the payroll period immediately preceding the date
hereof, the Company and its Subsidiaries have no liabilities with respect to any
employees, other than as reflected in the Company Reports or on Schedule 3.1(m)
of the Disclosure Letter.
(n) BROKERS AND FINDERS. Except for CIBC World Markets Corp. pursuant
to an engagement letter, a true and complete copy of which has previously been
delivered to Parent, no broker, dealer or financial advisor is entitled to
receive from the Company or any of its Subsidiaries any broker's, finder's or
investment banking fee in connection with this Agreement or the transactions
contemplated hereby.
(o) LICENSES AND PERMITS. Schedule 3.1(o) of the Disclosure Letter
sets forth a complete and correct list of all licenses, concessions, permits,
certificates of need, approvals and authorizations (collectively, "PERMITS")
from all Governmental Entities held by the Company and its Subsidiaries. Such
Permits are sufficient to enable the Company and its Subsidiaries to lawfully
conduct their respective businesses as presently conducted in all material
respects. No Permit listed, or required to be listed, on Schedule 3.1(o) of the
Disclosure Letter is subject to revocation, forfeiture or renegotiation by
virtue of any existing circumstances affecting the Company and its Subsidiaries
or by virtue of the execution and delivery of this Agreement by the Company and
the consummation of the transactions contemplated hereby. There is no Litigation
pending or, to the knowledge of the Company, threatened to modify or revoke any
Permit, and no Permit is subject to any outstanding order, decree, judgment,
stipulation, or investigation that would be likely to affect such Permit or the
rights of the Company or
<PAGE>
19
any of its Subsidiaries thereunder, except for instances of any of the foregoing
matters which, individually or in the aggregate, would not have a Material
Adverse Effect.
(p) ENVIRONMENTAL MATTERS. Except as set forth on Schedule 3.1(p) of
the Disclosure Letter, and except where the failure of any of the following to
be true and correct would not have a Material Adverse Effect:
(i) The Company and its Subsidiaries are in compliance with all
Environmental Laws and the requirements of any permits issued under such
Environmental Laws with respect to any properties or assets of the Company
or any of its Subsidiaries ("COMPANY PROPERTY");
(ii) There are no past, pending or, to the knowledge of the Company,
threatened material Environmental Claims against the Company, any of its
Subsidiaries or any Company Property; and
(iii) There are no facts, circumstances, conditions or occurrences
regarding any Company Property or any property adjoining or in the
vicinity of any Company Property, that could reasonably be anticipated (i)
to form the basis of a material claim under any Environmental Law against
the Company, any of its Subsidiaries or any Company Property or (II) to
cause such Company Property or assets to be subject to any restrictions on
its ownership, occupancy, use or transferability under any Environmental
Law.
(q) MATERIAL CONTRACTS. Except as set forth on Schedule 3.1(q) of the
Disclosure Letter, none of the Company and any of its Subsidiaries is bound by
(A) any agreement, contract or commitment providing for annual payments of more
than $250,000, (B) any agreement, indenture or other instrument which contains
restrictions with respect to payment of dividends or any other distribution in
respect of its capital stock providing for annual payments of more than
$250,000, (C) any agreement, indenture or instrument relating to indebtedness
providing for annual payments of more than $250,000, (D) any agreement or
contract with any Affiliate providing for annual payments of more than $250,000,
(E) any interconnection agreement providing for annual payments of more than
$250,000, (F) any employment, consulting, severance, "change of control" or
other similar agreements, understandings or arrangements, whether written or
unwritten, which cover any employee or former employee of the Company or any of
its Subsidiaries (the "EMPLOYMENT AGREEMENTS"). The Company has provided Parent
with a true and correct copy of each of the Employment Agreements (or a true and
complete description of each unwritten Employment Agreement) (in each case,
which may entitle any Person
<PAGE>
20
to receive payments from the Company or any of its Subsidiaries in excess of
$100,000 per year) or any other similar type of contract, (G) any material
license, contract or agreement transferring, providing for or restricting the
use of, or settling any claim with respect to, any Intellectual Property, or (H)
any agreement, contract or commitment limiting the ability of the Company or any
of its Subsidiaries to engage in any line of business or to compete with any
Person or to otherwise acquire property or conduct business in any area. Except
as otherwise set forth on Schedule 3.1(q) of the Disclosure Letter, each
contract or agreement set forth on Schedule 3.1(q) of the Disclosure Letter (or
required to be set forth in Section 3.1(q) of the Disclosure Letter) is in full
force and effect and there exists no material default or material event of
default or to the knowledge of each of the Company and each of its Subsidiaries,
event, occurrence, condition or act (including the consummation of the Merger)
which, with the giving of notice, the lapse of time or the happening of any
other material event or condition, would become a default or event of default
thereunder.
(r) ASSETS. Except as set forth in the Company Reports, the Company
and its Subsidiaries own, or otherwise have sufficient and legally enforceable
rights to use, all of the properties and assets (real, personal or mixed,
tangible or intangible), used or held for use in connection with, necessary for
the conduct of, or otherwise material to, the business and operations of the
Company and its Subsidiaries (the "ASSETS"). The Company and its Subsidiaries
have good, valid and marketable title to, or in the case of leased property has
good and valid leasehold interests in, all Assets that are material to their
respective businesses and operations, including but not limited to all such
Assets reflected in the Company Reports or acquired since the date most recent
thereof (except any that have been disposed of in the ordinary course of
business after the date hereof and in accordance with this Agreement), in each
case free and clear of any Encumbrance, except Permitted Encumbrances. The
Company and its Subsidiaries have maintained all tangible Assets that are
material to their respective businesses and operations in good repair, working
order and operating condition subject only to ordinary wear and tear, and all
such tangible Assets are fully adequate and suitable for the purposes for which
they are presently being used. Schedule 3.1(r) of the Disclosure Letter sets
forth a list as of August 31, 1999 of all tangible Assets that are material to
the business and operations of the Company and its Subsidiaries and identifies
the location of such Assets.
(s) INTELLECTUAL PROPERTY; TECHNOLOGY. (i) Except as otherwise
indicated on Schedule 3.1(s) of the Disclosure Letter the Company and its
Subsidiaries own the entire right, title and interest in and to the Marks, the
Copyrights and the Patents free and clear of any Encumbrances except for
Permitted Encumbrances. Each item that is indicated as registered on Schedule
3.1(s) of the Disclosure Letter has been duly registered, filed with
<PAGE>
21
or issued by the appropriate authorities in the countries indicated on Schedule
3.1(s) of the Disclosure Letter and to the knowledge of the Company, all such
registrations, filings and issuances remain in full force and effect. Except as
otherwise indicated on Schedule 3.1(s) of the Disclosure Letter, none of the
Marks, the Copyrights or the Patents are the subject of any pending, or to the
Company's knowledge, threatened opposition, interference, cancellation
proceeding or other legal or governmental proceeding before a registration or
issuing authority in any jurisdiction. Except as otherwise disclosed in Schedule
3.1(s) of the Disclosure Letter, the conduct of the business of the Company and
its Subsidiaries as presently conducted does not infringe, violate, or
constitute misappropriation of any Intellectual Property of any other Person,
nor, since January 1, 1997, has the Company or any of its Subsidiaries received
notice to the contrary from any Person. The Company and its Subsidiaries own or
have the right to use through assignment, lease, license or other agreement all
Intellectual Property necessary for the conduct of the business as presently
conducted. Except as set forth in Schedule 3.1(s) of the Disclosure Letter,
there are no pending, or to the Company's knowledge, threatened material claims
by any Person for infringement of any Intellectual Property or unfair
competition by the Company or any of its Subsidiaries. Except as set forth in
Schedule 3.1(s) of the Disclosure Letter, to the Company's knowledge no Person
is infringing upon the Intellectual Property owned by, assigned to or subject to
assignment of, the Company or any of its Subsidiaries, and the Company and its
Subsidiaries are aware of no facts that would support such a claim. The
consummation of the transaction contemplated hereby will not result in the loss
or impairment of the Company's or any of its Subsidiaries' right to own or use
any of the Intellectual Property necessary to the conduct of the business as
presently conducted (including, but not limited to the Marks, the Copyrights and
the Patents) nor will it require the consent of any governmental authority or
third party.
(ii) The costs to the Company and its Subsidiaries of reprogramming
required to permit the proper functioning in and following the year 2000, of the
(I) computer systems and (II) equipment containing embedded microchips, in each
case, owned or operated by the Company or any of its Subsidiaries and the
testing of all such systems and equipment (including, without limitation,
reprogramming errors) could, individually or in the aggregate, not reasonably be
expected to have a Material Adverse Effect. Except for the cost of such of the
reprogramming referred to in this Section 3.1(s) as may be necessary, the
computer and management information systems of the Company and its Subsidiaries
are sufficient to permit the Company and its Subsidiaries to conduct its
business without material interruption arising out of any failure to be Year
2000 Compliant and without such conduct resulting in a Material Adverse Effect.
<PAGE>
22
(t) INSURANCE. All insurance policies maintained by or on behalf of
any the Company or any Subsidiary are in full force and effect, and all premiums
due thereon have been paid. The Company and each Subsidiary has complied in all
material respects with the terms and provisions of such policies. The Company
has delivered to Parent complete and correct copies of its directors and
officers liability insurance policies, which policies are in full force and
effect.
(u) AFFILIATE TRANSACTIONS. Except as otherwise described in the
Company's Proxy statement for its 1999 annual meeting of shareholders (the "1999
PROXY") or on Schedule 3.1(u) of the Disclosure Letter, each agreement,
contract, arrangement, understanding, transfer of assets or liabilities or other
commitment or transaction between the Company or any Subsidiary of the Company,
on one hand, and any Person who is (or, at the time such agreement, contract,
arrangement, understanding, transfer, commitment or transaction was entered into
or made, was) a shareholder, director or employee of the Company or any
Subsidiary of the Company (or other Person controlled, directly or indirectly,
by any of the foregoing), on the other hand (collectively, "AFFILIATE
TRANSACTIONS"), is on terms and conditions at least as favorable to the Company
(or such Subsidiary, as the case may be) as would be obtainable by it in a
comparable arm's-length transaction with a Person unrelated to any shareholder,
director or employee of the Company or any of its Subsidiaries. All Affiliate
Transactions having effect or outstanding as of the date hereof that are
material to the Company or any of its Subsidiaries are described in the 1999
Proxy or on Schedule 3.1(u) of the Disclosure Letter.
(v) OPINION. The board of directors of the Company has received an
opinion of CIBC World Markets Corp. (the "OPINION"), to the effect that, as of
the date of such opinion, the equity ownership of the Company's shareholders in
RV is fair from a financial point of view to the holders of the Company Common
Stock. The Company has been authorized by CIBC World Markets Corp. to permit the
inclusion of the Opinion in its entirety and references thereto, subject to
prior review of, and consent to, such inclusion and references by CIBC World
Markets Corp. and its counsel (such consents not to be unreasonably withheld or
delayed), in the Proxy Statement.
(w) STATE STATUTES. The Board of Directors of the Company has
approved the terms of this Agreement and the Merger, and such approval is
sufficient to render inapplicable the provisions of Part Thirteen of the Texas
Business Corporation Act (the "TBCA") to the extent, if any, that such Section
is applicable to the Merger, this Agreement and the transactions contemplated
hereunder. To the knowledge of the Company (based on consultation with outside
legal counsel), except for the DGCL and the TBCA,
<PAGE>
23
no other state takeover statute or similar statute or regulation applies or
purports to apply to the Merger, this Agreement or the transactions contemplated
hereunder.
(x) NO EXTORTION PAYMENTS. None of the Company or any of its
Subsidiaries has made, or has agreed to make, any payment in connection with any
Person's scheme or plan to demand money or property in exchange for (i) the
safety of any Person or (II) the ability of any Person to conduct otherwise
legal business.
(y) NO IMPROPER PAYMENTS. None of the Company or any of its
Subsidiaries nor any Person acting on behalf of any of them has paid or
delivered, or promised to pay or deliver, directly or indirectly through any
other Person, any monies or anything of value to (I) any person or firm employed
by or acting for or on behalf of any customer or supplier, whether private or
governmental, or (II) any government official or employee or any political
party, for the purpose of illegally or improperly inducing or rewarding any
action by such customer, supplier, official, employee or political party
favorable to the Company or any of its Subsidiaries.
(z) NO VENEZUELAN INVESTMENTS. As of the date hereof, the Company
does not operate any business or have any investment in any person operating any
business in Venezuela.
III.2. REPRESENTATIONS AND WARRANTIES OF PARENT. Parent hereby
represents and warrants to the Company as of the date hereof and as of the
Closing Date as follows:
(a) EXISTENCE; GOOD STANDING; CORPORATE AUTHORITY. Each of Parent, RV
and Merger Sub, and each member of the Jamtis Group, is (I) a corporation or
limited liability company, as the case may be, duly organized, validly existing
and in good standing (to the extent that "good standing" is a cognizable legal
concept under applicable law) under the laws of its jurisdiction of
incorporation and (II) is duly licensed or qualified to do business and is in
good standing under the laws of any other state of the United States or any
other jurisdiction in which the character of the properties owned or leased by
it or in which the transaction of its business makes such licensure,
qualification or good standing necessary, except where the failure to be so in
good standing or to be so licensed or qualified, individually or in the
aggregate, would not have a material adverse effect on the business, operations,
results of operations, assets or financial condition of RV or Merger Sub, or on
the ability of Parent, RV or Merger Sub to consummate the transactions
contemplated herein (an "ACQUIROR MATERIAL ADVERSE EFFECT"). Each of RV and
Merger Sub, and each member of the Jamtis Group, has the requisite corporate
power and authority to own, operate and lease its properties and assets and
carry on its business.
<PAGE>
24
True and correct copies of the Certificate of Incorporation and Bylaws of each
of RV and Merger Sub as of the date hereof are attached as Exhibit A. The
organizational documents of RV, Merger Sub and, as of the Closing Date, each
member of the Jamtis Group, are or will be in full force and effect.
(b) AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS. Each of Parent,
RV and Merger Sub has the requisite corporate power and authority to execute and
deliver this Agreement and the Ancillary Agreements to which it is a party, to
perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The execution and delivery by each
of Parent, RV and Merger Sub of this Agreement and the Ancillary Agreements to
which it is a party, the performance of its obligations hereunder and thereunder
and the consummation by it of the transactions contemplated hereby and thereby
have been duly and validly authorized by the Board of Directors of Parent or by
the shareholder or shareholders of RV and Merger Sub, as the case may be, and no
other corporate proceedings on the part of Parent, RV or Merger Sub are
necessary to authorize this Agreement or the Ancillary Agreements (to which any
of them is a party), to perform the obligations hereunder or thereunder or to
consummate the transactions contemplated hereby or thereby. This Agreement and,
upon execution as contemplated herein, each Ancillary Agreement to which Parent,
RV or Merger Sub is a party, has been duly and validly executed and delivered by
Parent, RV and/or Merger Sub, as the case may be, and (assuming due execution
and delivery of this Agreement and each of the Ancillary Agreements by each
other party hereto and thereto), constitutes the valid and binding obligation of
Parent, RV or Merger Sub, as the case may be, enforceable against Parent, RV or
Merger Sub, as the case may be, in accordance with its terms.
(c) COMPLIANCE WITH LAWS. None of Parent, RV, Merger Sub or any
member of the Jamtis Group is in violation of any Laws applicable to Parent, RV,
Merger Sub or such member, or any of its properties or assets, except for
violations which, individually or in the aggregate, would not have an Acquiror
Material Adverse Effect.
(d) CAPITALIZATION. (i) As of the date hereof, the authorized capital
stock of RV consists of 1,000 shares of common stock, par value $.01 per share,
and 1,000 shares of common stock are issued and outstanding. As of the Closing
Date, the aggregate number of shares of capital stock of RV shall be not more
than the sum of (I) 80,848,204, plus (II) the product of (X) such number of
shares of Preferred Stock issued or accrued as paid-in-kind dividends from
November 1, 1999 to the Closing Date, and (Y) 2.077. All issued and outstanding
shares of capital stock of RV and of Merger Sub are duly authorized, validly
issued, fully paid, non-assessable and free of pre-emptive rights. As
<PAGE>
25
of the Closing, except for approximately 10% of the aggregate number of shares
of capital stock of RV that will be owned by Promon, in the form of shares of RV
Class A Common Stock, all issued and outstanding shares of capital stock of RV
will be owned, directly or indirectly, by Parent, in the form of shares of RV
Class B Common Stock, all issued and outstanding shares of capital stock of
Merger Sub are owned directly by RV and all issued and outstanding shares or
quota, as the case may be, of each member of the Jamtis Group are owned
indirectly by RV, in each case free and clear of Encumbrances (other than any
Encumbrances created by Promon as to the shares of RV Class A Common Stock owned
by it). None of RV, Merger Sub or any member of the Jamtis Group has any
outstanding bonds, debentures, notes or other similar obligations, instruments
or securities entitling the holders thereof to vote (or which are convertible
into or exercisable for securities having the right to vote) with the
shareholders of RV, Merger Sub or such member on any matter. As of the date
hereof and as of the Closing Date, the amount and ownership of the issued equity
capital of each member of the Jamtis Group are as set forth on Schedule 3.2(d)
of the RV Disclosure Letter.
(ii) Except as described in this Agreement or in the Netstream
Acquisition Agreements, or as set forth in the RV Disclosure Letter, there are
no other shares of capital stock (or quota, as the case may be) of RV, Merger
Sub or any member of the Jamtis Group, no securities of RV, Merger Sub or any
member of the Jamtis Group convertible or exchangeable for shares of capital
stock, voting securities (or quota, as the case may be) of RV, Merger Sub or any
member of the Jamtis Group, and no existing options, warrants, calls,
subscriptions, convertible securities, or other rights, agreements or
commitments which obligate RV, Merger Sub or any member of the Jamtis Group to
issue, transfer or sell any shares of capital stock of RV, Merger Sub or any
member of the Jamtis Group.
(e) NO VIOLATION; CONSENTS. (i) Neither the execution, delivery or
performance by Parent, RV and Merger Sub of this Agreement or any of the
Ancillary Agreements nor the consummation by Parent, RV and Merger Sub of the
transactions contemplated hereby or thereby will: (X) violate, conflict with or
result in a breach of any provisions of the Certificate of Incorporation or
Bylaws of any of Parent, RV, Merger Sub or any member of the Jamtis Group; (Y)
violate, conflict with, result in a breach of any provision of, constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, result in the termination or in a right of
termination of, accelerate the performance required by or benefit obtainable
under, result in the triggering of any payment or other obligations pursuant to,
result in the creation of any Encumbrance upon any of the properties or assets
of RV, Merger Sub or any member of the Jamtis Group under, or result in there
being declared void, voidable, subject to
<PAGE>
26
withdrawal, or without further binding effect, any of the terms, conditions or
provisions of any contract to which any of RV or Merger Sub is a party, by which
any of RV, Merger Sub or any member of the Jamtis Group or any of their
respective properties are bound, or under which any of RV, Merger Sub or any
member of the Jamtis Group or any of their respective properties are entitled to
a benefit, except for any of the foregoing matters which, individually or in the
aggregate, would not have an Acquiror Material Adverse Effect or a Material
Delaying Effect; or (Z) violate any Laws applicable to any of RV, Merger Sub or
any member of the Jamtis Group or any of its assets or properties, except for
violations which, individually or in the aggregate, would not have an Acquiror
Material Adverse Effect.
(ii) Other than the filings required under the HSR Act, the Exchange
Act, notifications to the SUPERINTENDENCIA DE VALORES Y SEGUROS of Chile and the
SUPERINTENDENCIA DE INDUSTRIA Y COMERCIO of Colombia and filings in connection
with the maintenance of qualification to do business in other jurisdictions
required or permitted to be made or obtained by Parent, RV or Merger Sub,
neither the execution, delivery or performance by Parent, RV and Merger Sub of
this Agreement or any of the Ancillary Agreements nor the consummation by
Parent, RV and Merger Sub of the transactions contemplated hereby or thereby
will require any consent, approval or authorization of, or declaration, filing
or registration with, (A) any Governmental Entity, including any such consent,
approval, authorization, declaration, filing or registration under any Foreign
Antitrust Laws, (B) any other Law of any foreign jurisdiction, or (C) any other
Person, except for those consents, approvals, authorizations, declarations,
filings or registrations the failure of which to obtain or make, individually or
in the aggregate, would have an Acquiror Material Adverse Effect or a Material
Delaying Effect.
(iii) Neither RV nor any of its Subsidiaries has any liabilities or
obligations, contingent or otherwise, except liabilities and obligations arising
hereunder or under the Netstream Acquisition Agreements and/or, as of the
Closing, liabilities and obligations (A) arising under the Brand License, the RV
Agreement, the Executive Agreement and under any bond tender offer arrangements
being undertaken by RV, if any, and (B) incurred in the ordinary course of
business following the Final Closing under the Netstream Acquisition Agreements
which individually or in the aggregate would not have an Acquiror Material
Adverse Effect.
(f) NETSTREAM ACQUISITION AGREEMENTS. Parent has delivered to the
Company complete and correct copies of the Netstream Acquisition Agreements
(including all exhibits, schedules and other attachments thereto), as executed
and delivered by the parties thereto (or in the form to be executed and
delivered at the closing thereunder).
<PAGE>
27
Each of the Netstream Acquisition Agreements is (or, following execution and
delivery, as the case may be, will be) in full force and effect in accordance
with its terms.
(g) LITIGATION. There is no Litigation claim by a third party
(including a Governmental Entity) pending or, to the knowledge of Parent,
threatened against Parent, RV, Merger Sub or any member of the Jamtis Group,
other than those which, individually or in the aggregate, would not have an
Acquiror Material Adverse Effect. No Governmental Entity has indicated an
intention to conduct any audit, investigation or other review with respect to RV
or Merger Sub.
(h) PROXY STATEMENT. None of the information supplied by Parent for
inclusion in the Proxy Statement, at the respective times filed with the SEC and
distributed to shareholders of the Company, will contain any untrue statement of
a material fact or omit to state any material fact relating to Parent, RV,
Merger Sub or any member of the Jamtis Group required to be stated therein or
necessary in order to make the statements therein relating to Parent, RV, Merger
Sub or any member of the Jamtis Group in light of the circumstances under which
they were made, not misleading.
(i) BROKERS AND FINDERS. No actions by Parent, RV or Merger Sub or by
any Person acting on behalf of either of them has given rise to any valid claim
against the Company, RV, Merger Sub or any member of the Jamtis Group for any
broker's, finder's or investment banking fee in connection with this Agreement
or the transactions contemplated hereby.
ARTICLE IV
COVENANTS
IV.1. NO SOLICITATION. (a) The Company and its Subsidiaries shall,
and shall direct and use reasonable best efforts to cause their respective
officers, directors, employees, representatives and agents to, immediately cease
any discussions or negotiations with any parties other than Parent (or RV or
Merger Sub) that may be ongoing with respect to an Acquisition Proposal. The
Company and its Subsidiaries shall not, and shall not authorize or permit any of
their respective officers, directors or employees or any investment banker,
financial advisor, attorney, accountant or other representative to, directly or
indirectly, (I) solicit, initiate or encourage (including by way of furnishing
non-public information), or take any other action to facilitate, any inquiries
or the making of any proposal that constitutes, or may reasonably be expected to
lead to,
<PAGE>
28
an Acquisition Proposal, (II) participate in any discussions or negotiations
regarding an Acquisition Proposal; PROVIDED, HOWEVER, that if, at any time prior
to the approval of the Merger by the holders of a majority of the shares of
Company Common Stock, the Board of Directors of the Company determines in good
faith, having received the advice of outside counsel concerning its fiduciary
duties to the Company's shareholders under applicable law, the Company, in
response to an Acquisition Proposal that (A) was unsolicited or that did not
otherwise result from a breach of this Section 4.1(a) (subject to compliance
with Sections 4.1(c) and 4.1(d)), and (B) constitutes a Superior Proposal, may
(I) furnish non-public information with respect to the Company and its
Subsidiaries to the person who made such Acquisition Proposal pursuant to a
customary confidentiality agreement and (II) participate in negotiations
regarding such Acquisition Proposal. Without limiting the foregoing, it is
understood that any violation of the restrictions set forth in the preceding
sentence by any director or officer of the Company or any of its Subsidiaries or
any authorized investment banker, financial advisor, attorney, accountant or
other representative of the Company or any of its Subsidiaries, acting on behalf
of the Company or any of its Subsidiaries, shall be deemed to be a breach of
this Section 4.1(a) by the Company.
(b) Neither the Board of Directors of the Company nor any committee
thereof shall (I) withdraw or modify, or propose to withdraw or modify, in a
manner adverse to Parent, the approval or recommendation by such Board of
Directors or such committee of the Merger unless there is a Superior Proposal
outstanding, (II) approve or recommend, or propose to approve or recommend, an
Acquisition Proposal unless such Acquisition Proposal is a Superior Proposal or
(III) cause the Company to enter into any letter of intent, agreement in
principle, acquisition agreement or other agreement (an "ACQUISITION AGREEMENT")
with respect to an Acquisition Proposal unless such Acquisition Proposal is a
Superior Proposal, and unless, in each case, such Board of Directors shall have
(A) determined in good faith, based on the advice of outside counsel, that
failure to do so would constitute a breach of its fiduciary duties to the
Company's shareholders under applicable law and (B) delivered a notice of
termination to Parent pursuant to Section 6.1(c).
(c) The Company shall promptly (but in any event within one day)
advise Parent orally and in writing of any Acquisition Proposal or any inquiry
delivered to or received by the chief executive officer, any other senior
officer or any director of the Company regarding the making of an Acquisition
Proposal including any request for information, the material terms and
conditions of such request, Acquisition Proposal or inquiry and the identity of
the person making such request, Acquisition Proposal or inquiry. The Company
will, to the extent reasonably practicable, keep Parent fully
<PAGE>
29
informed of the status and details (including amendments or proposed amendments)
of any such request, Acquisition Proposal or inquiry. In addition to the
foregoing, the Company will deliver to Parent a written notice (the "ACQUISITION
AGREEMENT NOTICE") not less than five days prior to entering into any
Acquisition Agreement.
(d) Nothing contained in this Section 4.1 shall prohibit the Company
from at any time taking and disclosing to its shareholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act or from making
any disclosure to the Company's shareholders if, in the good faith judgment of
its Board of Directors, based upon the advice of outside counsel, failure so to
disclose would constitute a breach of its fiduciary duties to the Company's
shareholders under applicable law; PROVIDED, HOWEVER, that neither the Company
nor its Board of Directors nor any committee thereof shall, except as permitted
by Section 4.1(b), withdraw or modify, or propose to withdraw or modify, its
position with respect to this Agreement or approve or recommend, or propose to
approve or recommend, an Acquisition Proposal; and PROVIDED, FURTHER, that the
taking of a position by the Company pursuant to Rule 14e-2(a)(2) or (3) of the
Exchange Act in respect of an Acquisition Proposal shall not be deemed a
withdrawal, a modification or a proposal to do either, of its position with
respect to this Agreement for purposes hereof.
IV.2. CONDUCT OF BUSINESS. (a) From the date hereof to and including
the Closing Date, except as set forth on Schedule 4.2(a) of the Disclosure
Letter or as otherwise required pursuant to this Agreement, unless Parent has
consented in writing thereto, the Company shall, and shall cause each of its
Subsidiaries to:
(i) conduct its operations according to its usual, regular
and ordinary course of business in accordance with its current business
plan;
(ii) use its reasonable best efforts to preserve intact its
business organization and goodwill, to maintain in effect all existing
qualifications, licenses, Permits, approvals and other authorizations
referred to in Sections 3.1(a) and 3.1(o), to keep available the services
of its officers and employees and to maintain satisfactory relationships
with customers, suppliers, distributors, brokers, sales agents and all
other persons having business relationships with it;
(iii) promptly notify Parent upon becoming aware of any
material breach of any representation, warranty or covenant contained in
this Agreement or the occurrence of any event that would cause any
representation or warranty of the Company contained in this Agreement no
longer to be true and correct or any covenant of the Company contained in
this Agreement not to be complied with;
<PAGE>
30
(iv) timely file with the SEC, and promptly deliver to
Parent, true and correct copies of all reports, statements or schedules or
other filings required to be filed by the Company under the Securities Act
or Exchange Act with the SEC subsequent to the date of this Agreement; and
(v) deliver, as promptly as reasonably practicable but in any
event within 30 business days after the end of each accounting month,
monthly consolidated financial statements for the Company and its
Subsidiaries for and as of the end of each such month.
(b) From the date hereof to and including the Closing Date, except as
set forth on Schedule 4.2(b) of the Disclosure Letter, unless Parent has
consented in writing thereto, the Company shall not, and shall not permit any of
its Subsidiaries to:
(i) amend its Certificate of Incorporation or By-Laws or
comparable governing instruments;
(ii) except as otherwise provided in this Section 4.2(b),
issue, sell, pledge or otherwise dispose of any shares of its capital
stock or other ownership interest in the Company or any of the
Subsidiaries, or any securities convertible into or exchangeable for any
such shares or ownership interest, or any rights, warrants or options to
acquire or with respect to any such shares of capital stock, ownership
interest, or convertible or exchangeable securities, except (A) issuances
of shares of Company Common Stock in respect of any exercise of Options or
Warrants outstanding on the date hereof and disclosed in the Disclosure
Letter, (B) issuances of shares of Company Common Stock in respect of any
conversion of the Company's Series A preferred stock outstanding at the
time immediately prior to such issuance, and (C) issuance of newly created
shares of preferred stock of the Company that are redeemable at the option
of the Company (and the Surviving Corporation or RV, as the case may be)
on or, at the Company's election, at any time after the Closing Date,
PROVIDED that the sum of (1) the aggregate redemption price of such
newly-created shares of preferred stock as of the Closing Date, and (2)
the aggregate principal amount of any indebtedness incurred under
subclause (B) of clause (xi) of this Section 4.2, does not exceed
US$20,000,000; or accelerate any right to convert or exchange or acquire
any securities of the Company or any of its Subsidiaries for any such
shares or ownership interest;
<PAGE>
31
(iii) effect any stock split, reverse stock split, stock
dividend, subdivision, reclassification or similar transaction, or
otherwise change its capital structure as it exists on the date hereof;
(iv) grant, confer, award or amend any option, warrant,
convertible security or other right to acquire any shares of its capital
stock or take any action to cause to be exercisable any otherwise
unexercisable option under any Company Stock Plan, PROVIDED that this
Section 4.2(b) shall not prohibit or restrict the Company from granting
unvested options to acquire up to 300,000 shares of Company Common Stock
prior to the Closing Date ("INTERIM COMPANY OPTIONS"), PROVIDED FURTHER,
that no Interim Company Options (I) shall be granted except in the
ordinary course of business to employees of the Company and its
Subsidiaries as of the date hereof and employees of the Company and its
Subsidiaries hired by the Company or such Subsidiaries after the date
hereof, or (II) shall become vested according to their terms as a result
of the consummation of the Merger and other transactions contemplated
hereby;
(v) declare, set aside or pay any dividend or make any other
distribution or payment with respect to any shares of Common Stock or
other capital stock or ownership interests (other than such payments by a
majority-owned Subsidiary to the Company or another majority-owned
Subsidiary);
(vi) directly or indirectly redeem, purchase or otherwise
acquire any shares of its capital stock or the capital stock of any of its
Subsidiaries;
(vii) sell, lease, assign, transfer or otherwise dispose of
(by merger or otherwise) any of its property, business or assets
(including, without limitation, receivables, leasehold interests or
Intellectual Property and including any sale and leaseback transaction)
except for fair value in the ordinary course of business provided that the
proceeds of such sales do not exceed $50,000 in any single transaction or
$100,000 in the aggregate prior to the Closing Date;
(viii) settle or compromise any pending or threatened
Litigation other than settlements of Litigations which involve solely the
payment of money (without admission of liability) not to exceed $250,000
in any one case or $500,000 in the aggregate;
(ix) make any advance, loan, extension of credit or capital
contribution to, or purchase or acquire (by merger or otherwise) any
stock, bonds,
<PAGE>
32
notes, debentures or other securities of, or any assets constituting a
business unit of, or make any other investment in (other than capital
contributions to Subsidiaries of the Company made in accordance with the
Company's current business plan), any person, firm or entity, except (A)
extensions of trade credit and endorsements of negotiable instruments and
other negotiable documents in the ordinary course of business, (B)
investments in cash and cash equivalents, (c) payroll and travel advances
in the ordinary course of business and (D) investments in majority-owned
Subsidiaries;
(x) make any capital expenditures in the aggregate for the
Company and its Subsidiaries in excess of the amounts specified in the
Company's current budget for capital expenditures, a true and complete
copy of which has been delivered to Parent, or otherwise acquire assets
having a value, in the aggregate, in excess of $150,000 not in the
ordinary course of business;
(xi) incur, assume or create any indebtedness for borrowed
money or for the deferred purchase price for property or services or
pursuant to any capital lease or other financing, except (A) indebtedness
incurred in the ordinary course of business consistent with past practice
for working capital purposes pursuant to the Company's existing credit
facilities as disclosed in the Disclosure Letter or equipment financing
facilities referred to in the Company's current budget for capital
expenditures and (b) for the incurrence or creation of such indebtedness
that is prepayable by its terms without penalty or premium in excess of
___% of the proceeds received from the incurrence or creation of such
indebtedness at any time on or after the Closing Date, PROVIDED that the
sum of (1) the aggregate principal amount of such indebtedness incurred or
created pursuant to this subclause, and (2) the aggregate redemption price
of all shares of preferred stock issued under clause (ii) of this Section
4.2(b), does not exceed US$20,000,000;
(xii) take any action to assume, guarantee or otherwise
become liable or responsible (whether directly, contingently or otherwise)
for the obligations of any other Person except majority-owned Subsidiaries
of the Company and except for obligations in the ordinary course of
business consistent with the past practice of the Company not exceeding
$50,000 individually and $150,000 in the aggregate;
(xiii) make any material Tax election (unless required by law
or unless consistent with prior practice) or settle or compromise any
material Income Tax liability except, in each case, with the express
consent of Parent;
<PAGE>
33
(xiv) waive or amend any term or condition of any
confidentiality or "standstill" agreement to which the Company is a party
and which relates to a business combination with or involving the Company
or the purchase of shares or assets of the Company;
(xv) grant or amend any stock-related or performance awards
except as otherwise permitted herein;
(xvi) enter into or amend any legally binding employment,
severance, retention, change in control, consulting or salary continuation
agreement with any officer, director, employee or former employee of the
Company or any of its Subsidiaries (which would involve, together with all
other such agreements, aggregate payments by the Company or any of its
Subsidiaries the payment by Company or any of its Subsidiaries of more
than $250,000 in the aggregate or grant any increases in compensation or
benefits to employees other than increases to officers and employees in
the ordinary course of business consistent with the past practice of the
Company;
(xvii) adopt, amend or terminate any employee benefit plan,
policy, understanding or arrangement;
(xviii) enter into any agreements that would constitute
Material Contracts; or amend any of the foregoing agreements as exist on
the date hereof other than in the ordinary course of business;
(xix) amend, change or waive (or exempt any Person from the
effect of) the Rights Agreement, except for Parent, RV and Merger Sub in
connection with the transactions contemplated by this Agreement;
(xx) make any material changes in the type or amount of
insurance coverage;
(xxi) except as may be required by law or generally
acceptable accounting principles and with prior written notice to Parent,
change any accounting principles or practices used by the Company or its
Subsidiaries;
(xxii) effect any material change in the Company's
advertising, services promotion or brand support policies or programs or
commit to any significant new product promotion or advertising campaign
except, in each case, for matters in the ordinary course of business of
the Company;
<PAGE>
34
(xxiii) effect any material change in the Company's billing
practices or sales terms, or cause a material acceleration or delay in the
collection of accounts or notes receivable or the payment of accounts or
notes payable;
(xxiv) waive, relinquish, release or terminate any right or
claim, including any such right or claim under any Material Contract or
permit any rights of material value to use any Intellectual Property to
lapse or be forfeited, in each case, except in the ordinary course of
business consistent with the past practice of the Company;
(xxv) apply for, consent to, or acquiesce in, the appointment
of a trustee, receiver, sequestrator or other custodian for any
substantial part of the property of the Company or any Subsidiary, or make
a general assignment for the benefit of creditors, or permit or suffer to
exist the commencement of any bankruptcy, reorganization, debt arrangement
or other case or proceeding under any bankruptcy or insolvency law, or any
dissolution, winding up or liquidation proceeding, in respect of the
Company or any Subsidiary;
(xxvi) acquire, invest in or enter into any arrangement or
contract with any person having operations in Venezuela of a nature
conducted by any of the parties hereto; or
(xxvii) agree in writing or otherwise to take any of the
foregoing actions.
(c) If the Company shall have given notice to Parent of an action as
to which it seeks consent pursuant to section 4.2(b), such notice to describe
the relevant matters in reasonable detail, and Parent shall not have objected
within 15 days, the Company may take the action described in such notice.
IV.3. FILINGS; OTHER ACTION. Subject to the terms and conditions
herein provided, the Company and Parent shall: (I) promptly make their
respective filings and thereafter make any other required submissions under the
HSR Act with respect to the Merger; (II) cooperate and consult with one another
in (A) determining which Regulatory Filings are required or, in the case of
Other Antitrust Filings, permitted to be made prior to the Effective Time with,
and which consents, approvals, Permits, authorizations or waivers (collectively,
"CONSENTS") are required or, in the case of Other Antitrust Consents, permitted
to be obtained prior to the Closing Date from Governmental Entities or other
Persons in connection with the execution and delivery of this Agreement and the
<PAGE>
35
consummation of the transactions contemplated hereby, including, without
limitation, (I) all such Regulatory Filings and Consents as relate to Foreign
Antitrust Laws (the "OTHER ANTITRUST FILINGS" and the "OTHER ANTITRUST
CONSENTS," respectively; collectively, the "OTHER ANTITRUST FILINGS AND
CONSENTS") and (II) all Consents required to transfer to the Company any Permits
or registrations held on behalf of the Company or any of its Subsidiaries by or
in the name of distributors, brokers or sales agents; (B) preparing all
Regulatory Filings and all other filings, submissions and presentations required
or prudent to obtain all Consents, including by providing to the other party
drafts of such material reasonably in advance of the anticipated filing or
submission dates; and (C) timely making all such Regulatory Filings and timely
seeking all such Consents (it being understood that the parties will make or
seek to obtain all Other Antitrust Filings and Consents, whether mandatory or
voluntary); and (III) use their reasonable best efforts to take, or cause to be
taken, all other action and do, or cause to be done, all other things necessary,
proper or appropriate to consummate and make effective the transactions
contemplated by this Agreement. Each of Parent and the Company shall use its
reasonable best efforts to contest any proceeding seeking a preliminary
injunction or other legal impediment to, and to resolve any objections as may be
asserted by any Governmental Entity with respect to the Merger under the HSR Act
or Foreign Antitrust Laws; PROVIDED that the foregoing shall not require Parent
to take any action that could directly or indirectly (A) impose limitations on
the ability of Parent (or any of its affiliates or Subsidiaries) effectively to
acquire, operate or hold, or require Parent or the Company or any of their
respective affiliates or Subsidiaries to dispose of or hold separate, any
portion of their respective assets or business that (I) is either material to
the business of Parent and its Subsidiaries or material to the business of the
Company and its Subsidiaries, or (II) is reasonably likely to have a Material
Adverse Effect, (B) restrict any future business activity by Parent, the Company
or any of their affiliates or Subsidiaries that (I) is either material to the
business of Parent and its Subsidiaries or material to the business of the
Company and its Subsidiaries, or (II) is reasonably likely to have a Material
Adverse Effect, including, without limitation, requiring the prior consent of
any Governmental Entity to future transactions by Parent, the Company or any of
their affiliates or Subsidiaries, or (C) otherwise adversely affect Parent, the
Company or any of their respective affiliates or Subsidiaries in a manner that
(I) is either material to the business of Parent and its Subsidiaries or
material to the business of the Company and its Subsidiaries, or (II) is
reasonably likely to have a Material Adverse Effect. If, at any time after the
Closing Date, any further action is necessary or desirable to carry out the
purpose of this Agreement, the proper officers and directors of Parent and the
Company shall take all such necessary action.
<PAGE>
36
IV.4. ACCESS TO INFORMATION; PRE-CLOSING REVIEW. From the date of
this Agreement to the Closing Date, the Company shall, and shall cause its
Subsidiaries to, (I) give Parent and its authorized representatives full access
during normal business hours to all books, records, personnel, research and
other consultants, offices and other facilities and properties of the Company
and its Subsidiaries and its accountants (and shall use its reasonable best
efforts to give Parent and such representatives access to such accountants' work
papers, as Parent may reasonably request), (II) permit Parent to make such
copies and inspections thereof as Parent may reasonably request and (III)
furnish Parent with such financial and operating data and other information with
respect to the business and properties of the Company and its Subsidiaries as
Parent may from time to time reasonably request; provided that no investigation
or information furnished pursuant to this Section 4.4 shall affect any
representations or warranties made by the Company herein or the conditions to
the obligations of Parent to consummate the transactions contemplated hereby.
The Company acknowledges that it has been afforded an adequate opportunity to
investigate the properties, assets, liabilities, personnel and records of
Netstream. Prior to the closing under the Netstream Acquisition Agreements,
Parent will use its reasonable best efforts to assist the Company in obtaining
any further information as to Netstream that the Company may reasonably request.
From and after the date of the Final Closing under the Netstream Acquisition
Agreements, Parent shall, and shall cause its Subsidiaries to, (I) give the
Company and its authorized representatives full access during normal business
hours to all books, records, personnel, research and other consultants, offices
and other facilities and properties of Netstream and Netstream's accountants
(and shall use its reasonable best efforts to give the Company and such
representatives access to such accountants' work papers), (II) permit the
Company to make such copies and inspections thereof as the Company may
reasonably request and (III) furnish the Company with such financial and
operating data and other information with respect to the business and properties
of Netstream as the Company may from time to time reasonably request.
IV.5. PUBLICITY. Except as otherwise required by law, each of the
Company and Parent shall obtain the prior written consent of the other party
(which consent will not be unreasonably withheld or delayed) before issuing any
press release or otherwise making (or proposing publicly to make) any public
statement with respect to the transactions contemplated hereby or by any of the
Ancillary Agreements and in making any filings with any national securities
exchange with respect thereto.
IV.6. FURTHER ACTION. (a) Each party hereto shall, subject to the
fulfillment at or before the Closing Date of each of the conditions of
performance set forth herein or the
<PAGE>
37
waiver thereof, perform such further acts and execute such documents as may be
reasonably required to effect the Merger.
(b) The Company shall not, and cause its Subsidiaries not to, and
Parent shall not, and shall cause RV and Merger Sub not to, take any action that
could reasonably be expected to result in (I) any of its representations and
warranties set forth in this Agreement that are qualified by materiality
becoming untrue, (ii) any of such representations and warranties that are not so
qualified becoming untrue in any material respect or (III) any of the conditions
set forth in Article V not being satisfied (subject to the Company's right to
take actions specifically permitted by Section 4.1). The Company shall use, and
the Company shall cause its Subsidiaries to use, and each of Parent, RV and
Merger Sub shall use, their reasonable efforts to take, or cause to be taken,
all action, 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 by this Agreement, including, without limitation,
using their reasonable efforts to satisfy the conditions contained in Article V.
(c) The Company and Parent shall confer on a regular and frequent
basis as reasonably requested by either of them. Each of Parent and the Company
shall promptly notify the other in writing of the occurrence of any event that
will or may result in the failure to satisfy any of the conditions to the other
party's obligations specified in Article V. The Company will promptly provide to
Parent (and its counsel) copies of all filings made by the Company with any
Governmental Entity in connection with this Agreement and the transactions
contemplated hereby and shall promptly advise Parent orally and, if requested by
Parent, in writing of any Material Adverse Effect.
IV.7. INSURANCE; INDEMNITY. For a period of six years after the
Closing Date, Parent shall cause RV or the Surviving Corporation to maintain
officers' and directors' liability insurance covering the parties who are
currently covered, in their capacities as officers and directors, by the
Company's existing officers' and directors' liability insurance policies (the
"CURRENT POLICIES") on terms substantially no less advantageous to such parties
than such Current Policies and providing for aggregate coverage of 300% of the
amount covered by the Current Policies.
IV.8. SHAREHOLDER APPROVAL; PREPARATION OF PROXY STATEMENT. (a)
Subject to the provisions of this Agreement, the Company will (I) duly call,
give notice of, convene and hold a special meeting of its shareholders (the
"SHAREHOLDER MEETING") for the purpose of obtaining a vote upon the Merger and
(II) through its Board of Directors,
<PAGE>
38
declare the advisability of the Merger and recommend to its shareholders that
the Company Shareholder Approval be given.
(b) Subject to the provisions of this Agreement, the Company and RV
will prepare and file a preliminary proxy statement (such proxy statement, and
any amendments or supplements thereto, the "PROXY Statement") and a registration
statement in appropriate form (the "REGISTRATION STATEMENT") with the SEC and
will use their respective reasonable best efforts to respond to any comments of
the SEC or its staff, to cause the Proxy Statement to be cleared by the SEC and
to have the Registration Statement declared effective under the Securities Act
as soon as practicable after responding to all such comments to the satisfaction
of the staff. Each of the Company and RV will notify the other party promptly of
its receipt of any comments from the SEC or its staff and of any request by the
SEC or its staff for amendments or supplements to the Proxy Statement and/or the
Registration Statement or for additional information and will supply the other
party with copies of all correspondence between it or any of its
representatives, on the one hand, and the SEC or its staff, on the other hand,
with respect to the Proxy Statement, the Registration Statement or the Merger.
The Company agrees to notify RV a reasonable time prior to any filing or
distribution of the Proxy Statement or the Registration Statement of such filing
or distribution. Each of the Company and RV shall give the other party and its
counsel (who shall provide any comments thereon as soon as practicable) the
opportunity to review and approve the Proxy Statement and the Registration
Statement prior to filing with the SEC and shall give the other party and its
counsel (who shall provide any comments thereon as soon as practicable) the
opportunity to review all amendments and supplements to the Proxy Statement and
the Registration Statement and all responses to requests for additional
information and replies to comments prior to their being filed with, or sent to,
the SEC. Each of the Company and RV agrees to use its reasonable best efforts,
after consultation with the other party, to respond promptly to all such
comments of and requests by the SEC. As promptly as practicable after the Proxy
Statement has been cleared by the SEC, the Company shall mail the Proxy
Statement to the shareholders of the Company. If at any time prior to the
Shareholders Meeting there shall occur any event that should be set forth in an
amendment or supplement to the Proxy Statement, the Company will promptly
prepare and mail to its shareholders such an amendment or supplement. The
Company will not mail or distribute any proxy statement or (except with respect
to shares of Company Common Stock reserved for issuance upon the exercise of
Options or Warrants outstanding on the date hereof not exceeding 100,000 of such
shares) registration statement, or any amendment or supplement thereto, to which
RV reasonably objects; PROVIDED that RV shall identify its objections and fully
cooperate with the Company to create a mutually satisfactory Proxy Statement and
Registration Statement.
<PAGE>
39
(c) Notwithstanding anything to the contrary in this Agreement,
without the prior written consent of RV, the Company shall neither (I) call a
Shareholder Meeting for the purpose of voting on the Merger, nor (II) file a
proxy statement or offering document with the SEC or otherwise publish a proxy
statement or offering document, unless and until the Company shall be in
compliance with all reporting requirements applicable to the Company under the
Securities Act and the Exchange Act except such requirements, the failure of
with which to comply, would not, individually or in the aggregate, have a
Material Adverse Effect.
IV.9. CERTAIN TAX MATTERS. (a) Each of Parent, RV, Merger Sub and the
Company intend the Merger to qualify as a reorganization under Sections
368(a)(1)(A) and 368(a)(2)(D) of the Code and shall use their best efforts to
cause the Merger to so qualify. Each of Parent, RV, Merger Sub and the Company
shall take the position for all purposes that the Merger qualifies as a
reorganization under those Sections of the Code. None of Parent, RV, Merger Sub
or the Company shall take any action that would reasonably be expected to cause
the Merger to fail to qualify as a reorganization within the meaning of Section
368(a) of the Code.
(b) Each of Parent, RV, Merger Sub and the Company shall cooperate
and use their best efforts in obtaining the opinions of Debevoise & Plimpton,
counsel to Parent, RV and Merger Sub, and Baker & McKenzie, counsel to the
Company, described in Sections 5.2(f) and 5.3(g), respectively. In connection
therewith, both the Company, on the one hand, and Parent, RV and Merger Sub, on
the other hand, shall deliver to Debevoise & Plimpton and Baker & McKenzie
representation letters substantially in the form attached hereto as Annex A (the
"REPRESENTATION LETTERS").
IV.10. SENIOR NOTES. As promptly as practicable following the date
hereof, the Company shall solicit waivers from holders of a requisite majority
or majorities of the Company's outstanding 14% Senior Notes due 2007 (the
"NOTES") of the applicability to the transactions contemplated hereby of certain
covenants set forth in the indenture governing the Notes, as identified by
Parent to the Company (such waivers, the "REQUISITE WAIVERS"). If requested by
RV, the Company shall prepare and distribute to the holders of the Notes, as
promptly as reasonably practicable following the date on which the Registration
Statement shall have been declared effective, an offer to purchase and consent
solicitation statement, on terms and conditions and in a form satisfactory to RV
(together with all related transmittal and consent forms and other documents
delivered to such holders, the "TENDER OFFER STATEMENT"), seeking the tender,
and the delivery of an accompanying consent by holders
<PAGE>
40
of a requisite majority or majorities of outstanding principal amount of the
Notes ("REQUISITE MAJORITY") to the amendments to the indenture constituting the
Notes as are considered necessary or appropriate by RV. RV shall be entitled to
participate in the preparation of the Tender Offer Statement and in any
discussions with holders of Notes relating to the terms of any offer to purchase
Notes or solicitation of consents or waivers. The Company shall not distribute
to any Person the Tender Offer Statement or any written material relating to any
offer to purchase Notes or to the solicitation of any consents or waivers from
holders of the Notes, or make any announcement with respect to the Tender Offer
Statement or any such offer or solicitation, or engage, directly or through
intermediaries, in any discussions with any holder of Notes after the date
hereof, without the prior express approval of RV. Any registration statement, if
any, required in connection with any such offer or solicitation shall be in form
and substance satisfactory to RV, and RV shall be entitled to participate in the
preparation and filing thereof, and the Company shall cooperate in such
preparation and filing as the registrant thereunder. If RV shall have requested
the distribution of a Tender Offer Statement, at the Closing (provided that the
Requisite Majority has been obtained) the Company shall execute and deliver to
the trustee under the indenture relating to the Notes a supplemental indenture
in the form specified in, and otherwise in accordance with, such Tender Offer
Statement. On or prior to the settlement date of any tender offer, Parent shall,
and shall cause RV to, provide financing as necessary to enable the Company to
pay for tendered Notes, in a manner not inconsistent with the terms of the
Tender Offer Statement. The Company shall be responsible for all out-of-pocket
expenses incurred by it in connection with the making of any offers to purchase
Notes or solicitation as contemplated in this Section, PROVIDED that RV shall
pay and reimburse the Company for all out-of-pocket fees and expenses of outside
advisers actually incurred by the Company prior to the Closing if this Agreement
is terminated in accordance with Section 6.1(b)(i).
IV.11. ANCILLARY AGREEMENTS. At or prior to the Closing, and subject
to the fulfillment or waiver of all other conditions to Closing, each of Parent,
RV and the Company shall execute and deliver the Ancillary Agreements to which
it is a party.
IV.12. NETSTREAM PURCHASE PRICE ADJUSTMENT. If the amount Jamtis pays
to purchase the Netstream Shares is reduced pursuant to the Netstream
Acquisition Agreements, Parent shall, or shall cause its affiliates to, make a
cash capital contribution to RV in the amount of such reduction prior to the
Closing.
IV.13. CONDUCT OF BUSINESS OF RV AND NETSTREAM. (a) From the date
hereof to and including the date of the "Final Closing" (as such term is defined
in the Netstream Acquisition Agreements), Parent, as soon as reasonably
practicable, shall consult in good
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41
faith with the Company concerning (I) any approval or waiver by Parent or Jamtis
with respect to actions by or concerning Netstream that are restricted under
Section 7.1(a) of the Netstream Master Agreement and (II) designating Nancy
Parent (or an affiliate of Nancy Parent) as a preferred supplier to Netstream.
Such consultation shall include meetings between the parties as reasonably
necessary.
(b) From the date hereof to and including the Closing Date, except as
set forth in Schedule 4.13(b) of the RV Disclosure Letter or as otherwise
required pursuant to this Agreement, unless the Company has consented in writing
thereto, RV shall, and shall cause each of its Subsidiaries to:
(i) use its reasonable best efforts to preserve intact its
business organization and goodwill, to maintain in effect all existing
qualifications, licenses, permits, approvals and other authorizations, to
keep available the services of its officers and employees and to maintain
satisfactory relationships with customers, suppliers, distributors,
brokers, sales agents and all other persons having business relationships
with it; and
(ii) promptly notify the Company upon becoming aware of any
material breach of any representation, warranty or covenant contained in
this Agreement or the occurrence of any event that would cause any
representation or warranty of Parent relating to RV or any of its
Subsidiaries no longer to be true and correct;
(c) From the date hereof to and including the Closing Date, except as
contemplated hereby or as set forth in Schedule 4.13(c) of the RV Disclosure
Letter, unless the Company has consented in writing thereto, RV shall not, and
shall not permit any of its Subsidiaries to (and Parent shall not, and/or shall
not cause RV and its Subsidiaries to):
(i) amend its Certificate of Incorporation or By-Laws or
comparable governing instruments;
(ii) issue, sell, pledge or otherwise dispose of any shares
of its capital stock or other ownership interest in RV or any of the
Subsidiaries, or any securities convertible into or exchangeable for any
such shares or ownership interest, or any rights, warrants or options to
acquire or with respect to any such shares of capital stock, ownership
interest, or convertible or exchangeable securities, except (a) issuances
related to the merger of Jamtis with a wholly-owned subsidiary of RV, (b)
issuances related to the contributions to the capital of RV contemplated
hereby,
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42
and (C) following the closing under the Netstream Acquisition Agreements
and prior to the Closing, issuance or granting of unvested options to
acquire up to 625,000 shares of RV Class A Common Stock ("INTERIM RV
OPTIONS") to officers and employees of Netstream, PROVIDED that no Interim
RV Options shall become vested according to their terms as a result of the
consummation of the Merger and the other transactions contemplated hereby
and by the Netstream Acquisition Agreements;
(iii) effect any stock split, reverse stock split, stock
dividend, subdivision, reclassification or similar transaction, or
otherwise change its capital structure as it exists on the date hereof,
except as required in order to achieve an appropriate number of shares to
effect the share exchange contemplated in the Merger;
(iv) declare, set aside or pay any dividend or make any other
distribution or payment with respect to any shares of capital stock or
ownership interests (other than such payments by a wholly-owned Subsidiary
of RV to RV or to another such wholly-owned Subsidiary);
(v) directly or indirectly redeem, purchase or otherwise
acquire any shares of its capital stock or the capital stock of any of its
Subsidiaries;
(vi) sell, lease, assign, transfer or otherwise dispose of
(by merger or otherwise) any of its property, business or assets
(including, without limitation, receivables, leasehold interests or
Intellectual Property and including any sale and leaseback transaction)
except for fair value in the ordinary course of business provided that the
proceeds of such sales do not exceed $50,000 in any single transaction or
$100,000 in the aggregate prior to the Closing Date;
(vii) settle or compromise any pending or threatened
Litigation other than settlements of Litigations which involve solely the
payment of money (without admission of liability) not to exceed $50,000 in
any one case or $100,000 in the aggregate;
(viii) make any advance, loan, extension of credit or capital
contribution to, or purchase or acquire (by merger or otherwise) any
stock, bonds, notes, debentures or other securities of, or any assets
constituting a business unit of, or make any other investment in, any
person, firm or entity, except (A) extensions of trade credit and
endorsements of negotiable instruments and other negotiable documents in
the ordinary course of business, (B) investments in cash and cash
<PAGE>
43
equivalents, (C) payroll and travel advances in the ordinary course of
business and (D) investments in majority-owned Subsidiaries;
(ix) incur, assume or create any indebtedness for borrowed
money or for the deferred purchase price for property or services or
pursuant to any capital lease or other financing, except indebtedness
incurred in the ordinary course of business for working capital or capital
expenditures;
(x) waive, relinquish, release or terminate any right or
claim, including any such right or claim under any Material Contract or
permit any rights of material value to use any Intellectual Property to
lapse or be forfeited, in each case, except in the ordinary course of
business;
(xi) apply for, consent to, or acquiesce in, the appointment
of a trustee, receiver, sequestrator or other custodian for any
substantial part of the property of RV or any Subsidiary, or make a
general assignment for the benefit of creditors, or permit or suffer to
exist the commencement of any bankruptcy, reorganization, debt arrangement
or other case or proceeding under any bankruptcy or insolvency law, or any
dissolution, winding up or liquidation proceeding, in respect of RV or any
Subsidiary;
(xii) amend the Netstream Acquisition Agreements in any
material respect;
(xiii) agree in writing or otherwise to take any of the
foregoing actions.
(d) If Parent or RV shall have given notice to the Company of an
action as to which it seeks consent pursuant to Section 4.13(c), such notice to
describe the relevant matters in reasonable detail, and the Company shall not
have objected within 15 days, RV and its Subsidiaries (and Parent, if
applicable) may take the action described in such notice.
IV.14. RV PUBLIC SHARES. Parent shall not take, or cause its
affiliates to take, any action in the twelve-month period following the
Effective Time to increase above 80% Parent's direct and indirect percentage
interest in the capital stock of RV, without the approval of all of the
Disinterested Directors of RV.
IV.15. CREDIT FACILITY. RV and Parent shall enter into a Credit
Facility containing terms and conditions in accordance with those in the term
sheet attached hereto as Exhibit F.
<PAGE>
44
ARTICLE V
CONDITIONS
V.1. CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective
obligation of each party to consummate the transactions contemplated hereby
shall be subject to the satisfaction or, where permissible, waiver, on or prior
to the Closing Date, of the following conditions:
(a) The waiting period applicable to the Merger under the HSR Act
shall have expired or been terminated.
(b) None of the parties shall be subject to any order, judgment,
injunction, decree or ruling, or other action of a court or other Governmental
Entity of competent jurisdiction restraining, enjoining or otherwise prohibiting
the Merger or any other transactions contemplated by this Agreement; PROVIDED
that each of the parties shall have used its reasonable best efforts to appeal
as promptly as practicable any such order, judgment, injunction, decree, ruling
or other action.
(c) The Company Shareholder Approval shall have been obtained in
accordance with the Texas Business Corporation Act and the Company's Certificate
of Incorporation and By-laws.
(d) The Registration Statement shall have become effective under the
Securities Act and shall not be the subject of any stop order or proceedings
seeking a stop order.
(e) All Regulatory Filings and Consents (including, without
limitation, the Other Antitrust Filings and Consents) which are necessary for
the consummation of the Merger shall have been made or obtained, or any waiting
period (whether requisite or voluntary) under any Foreign Antitrust Laws shall
have expired, in each case, to the extent that the failure to make or obtain
such Regulatory Filings or Consents or of the waiting period to have expired, in
the aggregate, is reasonably likely, individually or in the aggregate, to have a
Material Delaying Effect (all such Consents, Regulatory Filings and the lapse of
all such waiting periods being referred to as the "REQUISITE REGULATORY
APPROVALS"), and all such Requisite Regulatory Approvals shall be in full force
and effect.
<PAGE>
45
There shall not be any statute, law, rule or regulation that makes consummation
of the transactions contemplated hereby illegal or prohibited.
(f) The Company shall have received the Requisite Waivers, and, if
Parent shall have requested the Company to prepare and distribute a Tender Offer
Statement, the holders of a Requisite Majority shall have tendered the Notes
held by them, and the Company shall have received written notice of the approval
of a Requisite Majority for the amendments and/or waivers described in the final
version of such Tender Offer Statement distributed to holders of Notes, and,
with respect to any Notes which remain outstanding, the Trustee with respect to
the Notes shall have executed and delivered to the Company a supplemental
indenture acceptable in form and substance to Parent.
(g) RV shall have acquired, directly or indirectly, the Netstream
Shares free and clear of any Encumbrances other than any Encumbrances created
pursuant to this Agreement.
V.2. ADDITIONAL CONDITIONS TO OBLIGATIONS OF PARENT, RV AND MERGER
SUB. The obligations of Parent, RV and Merger Sub to consummate the transactions
contemplated hereby shall be subject to the satisfaction or, where permissible,
waiver, on or prior to the Closing Date, of the following conditions:
(a) (I) The representations and warranties made by the Company in
this Agreement shall be true and correct in all respects as of the date hereof,
and shall be true and correct in all respects as of the Closing Date as if made
as of the Closing Date (other than representations and warranties made as of a
specified date), except where the failure to be so true and correct (without
giving effect to any materiality qualifications or thresholds contained in such
representations and warranties), individually and in the aggregate, would not
have a Material Adverse Effect, (II) the Company shall not have breached or
failed to comply in any material respect with any of its obligations under this
Agreement or any of the Ancillary Agreements to which it is a party, PROVIDED
that the Company shall have a 15 day period in which to cure breaches that are
reasonably likely to be curable, and (III) the Company shall have delivered to
Parent a certificate dated the Closing Date and signed by the Company's
President or a Vice President to the effect set forth above in this Section
5.2(a)(i).
(b) Each Ancillary Agreement shall have been executed and delivered
by each party thereto other than Parent, RV or Merger Sub and shall be in full
force and effect, in accordance with its terms.
<PAGE>
46
(c) There shall not have been issued, delivered, sold or granted any
shares of Common Stock pursuant to the Rights Agreement.
(d) The Executive Agreement shall be in full force and effect in
accordance with its terms.
(e) All directors of the Company whose resignations shall have been
requested by Parent not less than five days prior to the Closing Date shall have
submitted their resignations or been removed from office effective as of the
Closing Date.
(f) Parent, RV and Merger Sub shall have received an opinion of
Debevoise & Plimpton, counsel to Parent, RV and Merger Sub, or other counsel of
national reputation, dated on or about the date of the mailing to the Company
shareholders of the Proxy Statement, which opinion shall be reconfirmed as of
the Effective Time, to the effect that, on the basis of the facts,
representations and assumptions set forth in such opinion, the Merger will be
treated for U.S. federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code, and that RV, Merger Sub and the Company
will each be a party to that reorganization within the meaning of Section 368(b)
of the Code. In rendering such opinion, such counsel may require and rely upon
the Representation Letters.
(g) FirstCom Colombia SA shall have duly completed a FUSION IMPROPIA
as provided in Schedule 5.2(g) (or such other corporate transaction as is
approved by Parent) and shall have received all requisite governmental approvals
with respect to the transfer or assumption of all material licenses and
concessions held by FirstCom Colombia SA as of the date such FUSION IMPROPIA is
effective, and Parent shall have received from Baker & McKenzie an opinion with
regard to the status of FirstCom Colombia in substantially the form previously
delivered to the Company.
(h) Parent shall have received such evidence as reasonably requested
that the Company has good and valid title to the shares owned by it of all of
its Subsidiaries.
(i) The Federal Communications Commission shall have given any
approval required in connection with the change of control of the Company.
V.3. ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE COMPANY. The
obligations of the Company to consummate the transactions contemplated hereby
are subject to the satisfaction or, where permissible, waiver, on or prior to
the Closing Date, of the following conditions:
<PAGE>
47
(a) (i0 The representations and warranties made by Parent in this
Agreement shall be true and correct in all respects as of the date hereof, and
shall be true and correct in all respects as of the Closing Date as if made as
of the Closing Date (other than representations and warranties made as of a
specified date), except where the failure to be so true and correct (without
giving effect to any materiality qualifications or thresholds contained in such
representations and warranties), individually and in the aggregate, would not
have a Material Adverse Effect, (II) none of Parent, RV or Merger Sub shall have
breached or failed to comply in any material respect with any of its obligations
under this Agreement to which it is a party, or any of the Ancillary Agreements
to which it is a party, PROVIDED that Parent, RV and Merger Sub shall have a 15
day period in which to cure breaches that are reasonably likely to be curable,
and (III) Parent shall have delivered to the Company a certificate dated the
Closing Date and signed by an authorized officer of Parent to the effect set
forth above in this Section 5.3(a).
(b) Each Ancillary Agreement shall have been executed and delivered
by each party thereto other than the Company and shall be in full force and
effect, in accordance with its terms.
(c) Parent shall have delivered a certificate to the Company
certifying as to the amount of any reduction, if any, in the purchase price paid
by Jamtis under the Netstream Acquisition Agreements, and the shareholders of RV
shall have contributed to the capital of RV an aggregate of not less than
$70,000,000 plus any additional amount required by Section 4.12, as equity in
cash.
(d) The RV Class A Common Stock shall have been accepted for listing
by a national securities exchange.
(e) Parent shall have caused to be duly elected as members of the
board of directors of RV (I) the Chief Executive Officer of the Company, (II) if
requested by Promon, one "Disinterested Director" (as defined in the Articles of
Incorporation of RV) nominated by Promon, and (III) two or, if Promon shall not
have nominated any Disinterested Director, three Disinterested Directors
proposed by Parent and agreed by the Company, and each of such Disinterested
Directors shall have agreed to serve in such capacity.
(f) The shareholders of RV shall have duly adopted the Amended and
Restated Certificate of Incorporation and Amended and Restated By-Laws of RV in
the form attached as Exhibit C, and the board of directors of RV shall have duly
adopted (I) a
<PAGE>
48
Board Policy in the form of Exhibit B and (II) if any shares of Series A
preferred stock of the Company are outstanding, a Certificate of Designation
substantially in the form of Exhibit G.
(g) The Company shall have received an opinion of Baker & McKenzie,
counsel to the Company, or other counsel of national reputation, dated on or
about the date of the mailing to the Company shareholders of the Proxy
Statement, which opinion shall be reconfirmed as of the Effective Time, to the
effect that, on the basis of the facts, representations and assumptions set
forth in such opinion, the Merger will be treated for U.S. federal income tax
purposes as a reorganization within the meaning of Section 368(a) of the Code,
and that RV, Merger Sub and the Company will each be a party to that
reorganization within the meaning of Section 368(b) of the Code. In rendering
such opinion, such counsel may require and rely upon the Representation Letters.
ARTICLE VI
TERMINATION
VI.1. TERMINATION. This Agreement may be terminated at any time prior
to the Closing Date, notwithstanding approval thereof by the shareholders of the
Company:
(a) by mutual written consent of the Company and Parent;
(b) by Parent or the Company by written notice if:
(i) the Closing Date shall not have occurred on or before
April 30, 2000 (PROVIDED that the right to terminate this Agreement
pursuant to this clause (i) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the cause
of or resulted in the failure of the Closing Date to occur on or before
such date); or
(ii) there shall be any statute, law, rule or regulation that
makes consummation of the transactions contemplated hereby illegal or
prohibited or if any court or other Governmental Entity of competent
jurisdiction shall have issued an order, judgment, decree or ruling, or
taken any other action restraining, enjoining or otherwise prohibiting the
Merger and such order, judgment, injunction, decree, ruling or other
action shall have become final and non-appealable, PROVIDED that the party
<PAGE>
49
terminating this Agreement has complied with the provisions of the
penultimate sentence of Section 4.3;
(c) by the Company by written notice if:
(i) the Company shall have entered into or agreed to enter
into an Acquisition Agreement, PROVIDED that the Company shall have
delivered an Acquisition Agreement Notice in accordance with Section
4.1(c) and paid the Termination Amount and Parent Expenses as provided in
Section 7.7(b);
(ii) the Final Closing under the Netstream Acquisition
Agreements shall have failed to occur, or shall be incapable of occurring,
prior to April 30, 2000 in either case as a result of a breach of any
covenant of Parent or any of its affiliates thereunder; or
(iii) a "Material Adverse Effect", as defined in the
Netstream Master Agreement, shall have occurred with respect to Netstream.
(d) by Parent by written notice if:
(i) Any Person, other than Parent, RV, Merger Sub and any
other Person that would be included with the Parent in a "group" within
the meaning of Section 13(d) of the Securities Exchange Act of 1934, as
amended, shall have acquired beneficial ownership of 20% or more of the
outstanding shares of Company Common Stock;
(ii) Since the date hereof, there shall have occurred any
event, change, effect or development that, individually or in the
aggregate, would have a Material Adverse Effect, PROVIDED that such a
notice from Parent with respect to this subparagraph (ii) must be given
not later than 15 days after any notice from the Company to Parent that
such an event, change, effect or development has occurred, such notice to
describe the same in reasonable detail;
(iii) The Company shall have entered into an Acquisition
Agreement or the Board of Directors of the Company shall have (A)
withdrawn, modified or failed to maintain its recommendation to the
shareholders of the Company to approve the Merger in any manner adverse to
the ability of Merger Sub and Parent to complete the Merger hereunder, (B)
recommended an Acquisition Proposal or received from a financial advisor
to the Company of nationally recognized standing a fairness opinion with
respect to an Acquisition Proposal that indicates such
<PAGE>
50
Acquisition Proposal is a Superior Proposal, or (C) authorized the
execution of an agreement in principle or a definitive agreement
relating to an Acquisition Proposal with a Person other than Parent;
or
(iv) The Shareholder Approval shall not have been obtained at
the Shareholder Meeting (including any postponement or adjournment
thereof).
VI.2. EFFECT OF TERMINATION. If this Agreement is terminated pursuant
to Section 6.1 hereof, this Agreement, except for the provisions of Section 6
and Article VII, shall terminate, without any liability on the part of any party
or its directors, officers or shareholders. Nothing herein shall relieve any
party to this Agreement from any liability for breach of this Agreement or
prejudice the ability of the non-breaching party to seek damages from any other
party for any breach of this Agreement, including without limitation, attorneys'
fees and the right to pursue any remedy at law or in equity. Notwithstanding
anything to the contrary in the foregoing, no party hereto shall be entitled to
bring any action, suit or claim under this Agreement for damages against any
other party hereto unless the amount of such damages exceeds $500,000 (provided
that, if the damages of the claiming party are found to have, or are agreed as
having, exceeded such amount on a cumulative basis, the full amount of such
damages will be recoverable).
ARTICLE VII
GENERAL PROVISIONS
VII.1. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement or in any document delivered
pursuant to this Agreement shall survive the Effective Time.
VII.2. AMENDMENT. To the extent permitted by applicable law, this
Agreement may be amended by action taken by or on behalf of the respective
Boards of Directors of the Company and Parent at any time before or after
approval of the Merger by the shareholders of the Company but, after any such
shareholder approval, no amendment shall be made which adversely affects the
rights of the Company's shareholders hereunder without the approval of such
shareholders owning a majority of the outstanding shares of Company Common
Stock. This Agreement may not be amended except by an instrument in writing
signed on behalf of the parties.
<PAGE>
51
VII.3. EXTENSION; WAIVER. At any time prior to the Closing Date,
either party, may (I) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (II) waive any
inaccuracies in the representations and warranties contained herein by any other
applicable party or in any document, certificate or writing delivered pursuant
hereto by any other applicable party or (III) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of any
party to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
VII.4. NOTICES. Any notice required to be given hereunder shall be
sufficient if in writing, and sent by facsimile transmission (with a
confirmatory copy sent by overnight courier), by courier service (with proof of
service), hand delivery or certified or registered mail (return receipt
requested and first-class postage prepaid), addressed as follows:
If to Parent, RV or Merger Sub: If to the Company:
AT&T Corp. FirstCom Corporation
295 North Maple Avenue 220 Alhambra Circle, Suite 910
Basking Ridge, NJ 07920 Coral Gables, FL 33134
Telephone: (908) 221-4057 Telephone: (305) 448-1422
Facsimile: (908) 221-4408 Facsimile: (305) 448-2636
Attention: Gary A. Swenson Attention: General Counsel
General Attorney
With a copy (which copy shall not With a copy (which copy shall
constitute notice) to: not constitute notice) to:
Debevoise & Plimpton Baker & McKenzie
875 Third Avenue 1200 Brickell Avenue
New York, New York 10022 Miami, FL 33131
Telephone: (212) 909-6000 Telephone: (305) 789-8985
Facsimile: (212) 909-6836 Facsimile: (305) 789-8953
Attention: Paul H. Wilson, Jr. Attention: Andrew Hulsh
<PAGE>
52
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
VII.5. ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties; PROVIDED, HOWEVER, that Parent may assign
its rights hereunder to an affiliate but nothing shall relieve the assignor from
its obligations hereunder. Subject to the preceding sentence, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and assigns. Notwithstanding anything contained in
this Agreement to the contrary, nothing in this Agreement, expressed or implied,
is intended to confer on any person other than the parties hereto or their
respective heirs, successors, executors, administrators and assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
VII.6. ENTIRE AGREEMENT. This Agreement, the Disclosure Letter, the
Ancillary Agreements and any other documents delivered by the parties in
connection herewith or therewith constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings among the parties with respect thereto.
VII.7. FEES AND EXPENSES. (a) Except as expressly provided otherwise
herein, whether or not the transactions contemplated hereby are consummated, all
costs and expenses incurred in connection with the transactions contemplated
hereby shall be paid by the party incurring such expenses PROVIDED that any such
costs and expenses incurred by RV or Merger Sub shall be paid, or shall be
reimbursed to RV or Merger Sub, as the case may be, by Parent.
(b) If this Agreement is terminated pursuant to Section 6.1(c)(i) or
any of clauses (i) and (iii) of Section 6.1(d), the Company shall pay to Parent
as promptly as practicable in same-day funds an aggregate amount equal to the
sum of (I) $10,000,000 (the "TERMINATION AMOUNT") and (II) the out-of-pocket
expenses of Parent and its affiliates incurred in connection with or arising out
of this Agreement, the Ancillary Agreements and the transactions contemplated
hereby and thereby (including, without limitation, amounts paid or payable to
investment bankers (if any), information agents, lending banks, fees and
expenses of counsel, accountants and consultants and printing and mailing
expenses, regardless of when such expenses are incurred) (the "PARENT
<PAGE>
53
EXPENSES"), PROVIDED that the maximum amount of Parent Expenses payable shall be
$1,000,000.
(c) If this Agreement is terminated pursuant to Section 6.1(c)(ii),
Parent shall pay to the Company the out-of-pocket expenses of the Company and
its affiliates incurred in connection with or arising out of this Agreement, the
Ancillary Agreements and the transactions contemplated hereby and thereby
(including, without limitation, any amounts paid or payable to investment
bankers, information agents, lending banks, fees and expenses of counsel,
accountants and consultants and printing and mailing expenses, regardless of
when such expenses are incurred) (the "COMPANY EXPENSES,") PROVIDED that the
maximum amount of Company Expenses payable shall be $1,000,000.
(d) If the Company fails to pay promptly any amounts owing pursuant
to Section 7.7(b) when due, the Company shall in addition thereto pay to Parent,
or if Parent fails to pay promptly any amounts owing pursuant to Section 7.7(c)
when due, Parent shall in addition thereto pay to the Company, in each case, all
costs and expenses (including, pursuant to Section 7.7(b), fees and
disbursements of counsel) incurred in collecting such amounts, together with
interest on such amounts (or any unpaid portion thereof) from the date such
payment was required to be made until the date such payment is received by
Parent or the Company, as the case may be, at the prime rate of The Chase
Manhattan Bank as in effect from time to time during such period.
VII.8. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard to
its rules of conflict of laws. Each of the Company and Parent hereby irrevocably
and unconditionally consents to submit to the exclusive jurisdiction of the
courts of the State of New York and of the United States of America located in
the State of New York (the "NEW YORK COURTS") for any litigation arising out of
or relating to this Agreement and the transactions contemplated hereby (and
agrees not to commence any litigation relating thereto except in such courts),
waives any objection to the laying of venue of any such litigation in the New
York Courts and agrees not to plead or claim in any New York Court that such
litigation brought therein has been brought in an inconvenient forum.
VII.9. HEADINGS. Headings of the Articles and Sections of this
Agreement are for the convenience of the parties only, and shall be given no
substantive or interpretive effect whatsoever.
VII.10. INTERPRETATION. In this Agreement, unless the context
otherwise requires, words describing the singular number shall include the
plural and vice versa,
<PAGE>
54
and words denoting any gender shall include all genders and words denoting
natural persons shall include corporations and partnerships and vice versa.
Whenever the words "include," "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation." As used in this Agreement, the words "SUBSIDIARY," "AFFILIATE" and
"ASSOCIATE" shall have the meanings ascribed thereto in Rule 12b-2 under the
Exchange Act. For purposes of this Agreement, one party shall be considered
"wholly owned" by another party if all of the shares of its outstanding capital
stock, other than directors' qualifying shares, are beneficially owned by such
other party.
VII.11. INVESTIGATIONS. No action taken pursuant to this Agreement,
including, without limitation, any investigation by or on behalf of any party,
shall be deemed to constitute a waiver by the party taking such action of
compliance with any representations, warranties, covenants or agreements
contained in this Agreement.
VII.12. SEVERABILITY. Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
VII.13. ENFORCEMENT OF AGREEMENT. (a) The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any New York Court, this
being in addition to any other remedy to which they are entitled at law or in
equity.
(b) The prevailing party in any judicial action shall be entitled to
receive from the other party reimbursement for the prevailing party's reasonable
attorneys' fees and disbursements, and court costs.
VII.14. COUNTERPARTS. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument. Each counterpart may consist of a number of copies
hereof each signed by less than all, but together signed by all, of the parties
hereto.
<PAGE>
55
IN WITNESS WHEREOF, the parties have executed this Agreement and
caused the same to be duly delivered on their behalf on the day and year first
written above.
AT&T CORP.
By: /s/ JOHN A. HAIGH
---------------------------------------
Name: John A. Haigh
Title: Vice President
KIRI INC.
By: /s/ ALFREDO DIBLASIO
---------------------------------------
Name: Alfredo DiBlasio
Title: President
FRANTIS, INC.
By: /s/ ALFREDO DIBLASIO
---------------------------------------
Name: Alfredo DiBlasio
Title: President
FIRSTCOM CORPORATION
By: /s/ PATRICIO E. NORTHLAND
---------------------------------------
Name: Patricio E. Northland
Title: Chairman, President and
Chief Executive Officer
<PAGE>
SCHEDULE A
DEFINITIONS
1. DEFINED TERMS. The following capitalized terms, when used in this
Agreement, shall have the following respective meanings:
"ACQUISITION PROPOSAL" means any proposal or offer from any person
relating to any direct or indirect acquisition or purchase of 10% or more of the
assets of the Company or any of its Subsidiaries or any shares of any class of
outstanding equity securities of the Company or any of its Subsidiaries, any
tender offer or exchange offer that if consummated would result in any person
beneficially owning 10% or more of any class of equity securities of the Company
or any of its Subsidiaries or any merger, consolidation, business combination,
sale of substantially all the assets, joint venture, management or operating
agreement, recapitalization, liquidation, dissolution or similar transaction
involving the Company or any of its Subsidiaries, other than the transactions
contemplated by this Agreement.
"ANCILLARY AGREEMENTS" means the Voting Agreement, the RV Agreement
(in the form of Exhibit E), the Brand License, the Employment Agreements and the
Credit Facility Agreement between Parent and RV (based on the terms set forth in
Exhibit F).
"BRAND LICENSE" means the Service Mark License Agreement between
Parent and RV, in the form of Exhibit D).
"COPYRIGHTS" shall mean all material copyrights, whether registered
or unregistered, owned by, assigned to or subject to assignment to the Company
or any of its Subsidiaries anywhere in the world.
"DISCLOSURE LETTER" means the letter dated as of the date hereof
delivered by the Company to Parent and identified as such and initialed by the
parties to this Agreement.
"ENVIRONMENTAL LAWS" means laws relating to the protection of human
health or the environment
"ERISA AFFILIATE" means any person (as defined in Section 3(9) of
ERISA) that is or has been a member of any group of persons described in Section
414(b), (c), (m) or (o) of the Code, including Company or any one of its
Subsidiaries.
<PAGE>
ii
"EXECUTIVE AGREEMENT" means the Employment Agreement dated as of
November 1, 1999, between RV FirstCom and Patricio E. Northland, including the
exhibits thereto.
"INCOME TAX" means any Tax computed in whole or in part based on or
by reference to net income and any alternative, minimum, accumulated earnings or
personal holding company Tax (including all interest and penalties thereon and
additions thereto).
"INCOME TAX RETURN" means any return, report, declaration, form,
claim for refund or information return or statement relating to Income Taxes,
including any schedule or attachment thereto, and including any amendment
thereof.
"INTELLECTUAL PROPERTY" means the United States and foreign
trademarks, service marks, trade names, trade dress, domain names, copyrights,
and similar rights, including registrations and applications to register or
renew the registration of any of the foregoing, the United States and foreign
letters patent and patent applications, inventions, processes, designs,
formulae, trade secrets, know-how, ideas, research and development, technical
data, copyrightable works, engineering notebooks, confidential information,
Software, firmware, Internet Web sites, mask works and other semiconductor chip
rights and applications, registrations and renewals thereof, and all similar
intellectual property rights (including moral rights), all rights to sue for and
remedies against past, present and future infringements of any or all of the
foregoing and rights of priority and protection of interests therein under the
Laws of any jurisdiction, tangible embodiments of any of the foregoing (in any
medium including electronic media), and licenses of any of the foregoing.
"JAMTIS GROUP" means, collectively, Jamtis, Inc., Jamtis LLC,
Atlantis Holdings do Brasil Ltda. and Atlantis do Brasil Ltda..
"MARKS" shall mean all registrations for trademarks, service marks
and domain names and all pending applications for such registrations owned by,
assigned to or subject to assignment to the Company or any of its Subsidiaries
anywhere in the world and all material unregistered trademarks, trade names,
service makers, brand names, and business names.
"NETSTREAM MASTER AGREEMENT" means the Master Agreement, dated as of
August 20, 1999, between Jamtis and the individuals listed on Schedule 4.8(b)
attached thereto.
<PAGE>
iii
"PATENTS" shall mean all patents and patent applications owned by,
assigned to or subject to assignment to the Company or any of its Subsidiaries
anywhere in the world.
"PERMITTED ENCUMBRANCES" means (A) Encumbrances reserved against or
reflected in the Company Reports, to the extent reserved or reflected or
described in the notes to any balance sheet set forth therein, (b) Encumbrances
for Taxes not yet due and payable or which are being contested in good faith and
by appropriate proceedings if adequate reserves with respect thereto are
maintained on the Company's books in accordance with GAAP, (C) those
Encumbrances set forth in Section 3.1(r) of the Disclosure Schedule and (D)
those Encumbrances that, individually and in the aggregate with all other
Permitted Encumbrances, do not and will not materially interfere with the use of
the properties or assets of the Company and its Subsidiaries taken as a whole as
currently used, or otherwise have or result in a Material Adverse Effect.
"RV DISCLOSURE LETTER" means the letter dated as of the date hereof
delivered by RV to the Company and identified as such and initialed by the
parties to this Agreement.
"SUPERIOR PROPOSAL" means any bona fide proposal made by a third
party to acquire, directly or indirectly, for consideration consisting of cash
and/or securities, 50% or more of the voting power of the common stock of, or
all or substantially all the assets of, the Company and its Subsidiaries and
otherwise on terms which the Board of Directors determines in good faith (after
receiving the advice of a financial advisor of nationally recognized standing
(which advice shall be disclosed in reasonable detail to Parent)) to be more
favorable to the Company's shareholders than the Merger and for which financing,
to the extent necessary with respect to such proposal, is then committed or
which, in the good faith judgment of the Board of Directors, is reasonably
capable of being obtained by such third party.
"TAX" means any federal, state, local or foreign income, alternative,
minimum, accumulated earnings, personal holding company, franchise, capital
stock, profits, windfall profits, gross receipts, sales, use, value added,
transfer, registration, stamp, premium, excise, customs duties, severance,
environmental (including taxes under section 59A of the Code), real property,
personal property, ad valorem, occupancy, license, occupation, employment,
payroll, social security, disability, unemployment, workers' compensation,
withholding, estimated or other similar tax, duty, fee, assessment or other
governmental charge or deficiencies thereof (including all interest and
penalties thereon and additions thereto).
<PAGE>
iv
"TAX RETURN" means any return, report, declaration, form, claim for
refund or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"YEAR 2000 COMPLIANT" means that software, hardware and equipment (X)
correctly perform date data century recognition, and calculations that
accommodate same century and multi-century formulas and date values; (y) operate
or are expected to operate on a basis comparable to their current operation
during and after calendar year 2000 A.D., including but not limited to leap
years; and (Z) shall not end abnormally or provide invalid or incorrect results
as a result of date data which represents or references different centuries or
more than one century.
2. OTHER DEFINED TERMS. The following capitalized terms, when used in
this Agreement without definition, shall have the meanings set forth in the
Sections of this Agreement indicated below:
DEFINED TERM SECTION REFERENCE
"1999 Proxy" Section 3.1(u)
"Acquiror Material Adverse Effect" Section 3.2(a)
"Acquisition Agreement" Section 4.1(b)
"Acquisition Agreement Notice" Section 4.1(c)
"affiliate" Section 7.10
"Affiliate Transactions" Section 3.1(u)
"Agreement" First Paragraph
"Assets" Section 3.1(r)
"associate" Section 7.10
"Assumed Award" Section 2.3(a)
"Certificate of Merger" Section 1.3
"Certificates" Section 2.2(b)
"Closing" Section 1.2
"Closing Date" Section 1.2
"Code" Recitals
"Company" First Paragraph
"Company Benefit Plans" Section 3.1(l)
<PAGE>
v
DEFINED TERM SECTION REFERENCE
"Company Common Stock" Section 2.1(a)
"Company Expenses" Section 7.7(c)
"Company Property" Section 3.1(p)
"Company Reports" Section 3.1(g)
"Company Rights" Section 3.1(d)
"Company Shareholder Approval" Section 3.1(h)
"Company Stock Option" Section 2.3(a)
"Company Stock Plans" Section 3.1(d)
"Consents" Section 4.3
"Consent Solicitation Statement" Section 4.10
"Contract" or "Contracts" Section 3.1(f)
"Current Policies" Section 4.7
"Effective Time" Section 1.3
"Employment Agreements" Section 3.1(l)
"Encumbrances" Section 3.1(e)
"ERISA" Section 3.1(l)
"excess parachute payment" Section 3.1(l)
"Excess Shares Trust" Section 2.2(e)
"Exchange Act" Section 3.1(f)
"Exchange Agent" Section 2.2(a)
"Exchange Fund" Section 2.2(a)
"Fairness Opinion" Section 3.1(v)
"Foreign Antitrust Laws" Section 3.1(f)
"Governmental Entity" Section 3.1(c)
"HSR Act" Section 3.1(f)
"Interim RV Options" Section 4.13(c)
"Jamtis" Recitals
"Laws" Section 3.1(c)
"Litigation" Section 3.1(i)
"Material Adverse Effect" Section 3.1(a)
<PAGE>
vi
DEFINED TERM SECTION REFERENCE
"Material Contracts" Section 3.1(q)
"Material Delaying Effect" Section 3.1(f)
"Merger" Recitals
"Merger Sub" First Paragraph
"Netstream Acquisition Agreements" Recitals
"Netstream Shares" Recitals
"New York Courts" Section 7.8
"Notes" Section 4.10
"Option" or "Options" Section 3.1(d)
"Other Antitrust Consents" Section 4.3
"Other Antitrust Filings" Section 4.3
"Other Antitrust Filings and Consents" Section 5.3
"Parent" First Paragraph
"Parent Expenses" Section 7.7(b)
"Permits" Section 3.1(o)
"Person" Section 3.1(e)
"Preferred Stock" Section 2.1(b)
"Proxy Statement" Section 4.8(b)
"Registration Statement" Section 4.8(b)
"Regulatory Filings" Section 3.1(f)
"Representation Letters" Section 4.9(b)
"Requisite Majority" Section 4.10
"Requisite Regulatory Approvals" Section 5.1(e)
"Rights Agreement" Section 3.1(d)
"RV" First paragraph
"RV Class A Common Stock" Section 2.1(a)
"RV Class B Common Stock" Section 2.1(b)
"RV Preferred Stock" Section 2.1(b)
"SEC" Section 3.1(g)
"Securities Act" Section 3.1(g)
<PAGE>
vii
DEFINED TERM SECTION REFERENCE
"Shareholder Meeting" Section 4.8(a)
"Subsidiary" Section 7.10
"Surviving Corporation" Section 1.1
"TBCA" Section 3.1(w)
"Termination Amount" Section 7.7(b)
"Voting Agreement" Recitals
"Warrants" Section 3.1(d)
EXHIBIT 2.2
Exhibit C-1 to Agreement
and Plan of Merger
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
KIRI INC.
----------
ARTICLE FIRST
Name of Corporation
The name of the corporation is AT&T Latin America, Inc. (the
"Corporation").
ARTICLE SECOND
Registered Office and Registered Agent
The address of the Corporation's registered office in the State of
Delaware is The Corporation Trust Center, 1209 Orange Street, Wilmington, New
Castle County, Delaware 19801. The name of the registered agent of the
Corporation at such address is The Corporation Trust Company.
ARTICLE THIRD
Purpose
The purpose of the Corporation is to engage in the business of
providing telecommunications services and related or incidental activities in
the Territory. "Territory" means Antigua and Barbuda, Argentina, Bahamas,
Barbados, Bolivia, Brazil, Chile, Colombia, Dominica, Dominican Republic,
Ecuador, Grenada, Guyana, Haiti, Jamaica, Panama, Paraguay, Peru, Saint Lucia,
Saint Vincent and the Grenadines, Suriname, St. Kitts and Nevis, Trinidad and
Tobago, Uruguay and Venezuela.
<PAGE>
2
ARTICLE FOURTH
Capital Stock
A. The total number of shares of all classes of capital stock which
the Corporation shall have authority to issue is 460,000,000 shares consisting
of: (1) 300,000,000 shares of Class A Common Stock, par value $.01 per share
(the "Class A Common Stock"), (2) 150,000,000 shares of Class B Common Stock,
par value $.01 per share (the "Class B Common Stock" and, together with the
Class A Common Stock, the "Common Stock") and (3) 10,000,000 shares of Preferred
Stock, par value $.01 per share (the "Preferred Stock"). Except as otherwise
provided herein, the number of authorized shares of Class A Common Stock, Class
B Common Stock or Preferred Stock may be increased or decreased (but not below
the number of shares thereof then outstanding or reserved for issuance upon
reclassification or conversion of the Class B Common Stock or any series of
Preferred Stock, or upon the exercise of outstanding options, warrants or other
instruments or securities outstanding from time to time that are convertible
into, or exchangeable for Common Stock or Preferred Stock) by the affirmative
vote of a majority of the combined voting power of outstanding shares of capital
stock of the Corporation entitled to vote thereon, voting as a single class
irrespective of the provisions of Section 242(b)(2) of the General Corporation
Law of the State of Delaware (or any successor provision thereto). This
paragraph A of Article FOURTH shall not in any way limit the provisions of
Section 242(b)(1) of the General Corporation Law of the State of Delaware other
than with respect to the elimination of any class vote that would otherwise be
required pursuant to Section 242(b)(2).
B. The Board of Directors shall have the full authority permitted by
law, at any time and from time to time, to provide for the issuance of shares of
Preferred Stock in one or more series and to determine by resolution or
resolutions the following provisions, designations, powers, preferences and
relative, participating, optional and other special rights, and the
qualifications, limitations or restrictions, of the shares of any such series of
Preferred Stock:
(1) the designation of such series (which may be by distinguishing
number, letter or title), the number of shares to constitute such series
(which number the Board of Directors may thereafter increase or decrease
(but not below the number of shares thereof then outstanding) and the
stated or liquidation value thereof, if different from the par value
thereof;
<PAGE>
3
(2) whether the shares of such series shall have voting rights in
addition to any voting rights provided by law, and, if so, the terms of
such voting rights, which may be full or limited;
(3) the dividends, if any, payable on such series, whether any such
dividends shall be cumulative and, if so, from what dates, the conditions
and dates upon which such dividends shall be payable, the preference or
relation which such dividends shall bear to the dividends payable on any
shares of any other class of capital stock or any other series of
Preferred Stock;
(4) whether the shares of such series shall be subject to redemption
at the election of the Corporation or the holders of such series, or upon
the occurrence of a specified event and, if so, the times, prices and
other terms and conditions of such redemption, including the manner of
selecting shares for redemption if less than all shares are to be redeemed
and the securities or other property payable on such redemption, if any;
(5) the amount or amounts payable on, if any, and the preferences, if
any, of shares of such series in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of, or upon any
distribution of the assets of, the Corporation;
(6) whether the shares of such series shall be subject to the
operation of a retirement or sinking fund and, if so, the extent to and
manner in which any such retirement or sinking fund shall be applied to
the purchase or redemption of the shares of such series for retirement or
other corporate purposes and the terms and provisions relative to the
operation thereof;
(7) whether the shares of such series shall be convertible into, or
exchangeable for, shares of any other class of capital stock or any other
series of Preferred Stock or any other securities (whether or not issued
by the Corporation) and, if so, the price or prices or the rate or rates
of conversion or exchange and the method, if any, of adjusting the same,
and any other terms and conditions of conversion or exchange;
(8) the limitations and restrictions, if any, to be effective while
any shares of such series are outstanding upon the payment of dividends or
the making of other distributions on, or upon the purchase, redemption or
other acquisition by the Corporation of, the Common Stock or shares of any
other class of capital stock or any other series of Preferred Stock;
<PAGE>
4
(9) the conditions or restrictions, if any, upon the creation of
indebtedness of the Corporation or upon the issuance of any additional
stock, including additional shares of any other series of Preferred Stock
or of any other class of capital stock;
(10) the ranking (be it pari passu, junior or senior) of each series
vis-a-vis any other class of capital stock or series of Preferred Stock as
to the payment of dividends, the distribution of assets and all other
matters; and
(11) any other powers, preferences and relative, participating,
optional or other special rights, and any qualifications, limitations or
restrictions of such series of Preferred Stock, insofar as they are not
inconsistent with the provisions of this Certificate of Incorporation, to
the full extent permitted in accordance with the General Corporation Law
of the State of Delaware.
C. The powers, preferences and relative, participating, optional or
other special rights, if any, of each series of Preferred Stock, and the
qualifications, limitations or restrictions thereof, if any, may differ from
those of any and all other series of Preferred Stock at any time outstanding.
All shares of any one series of Preferred Stock shall be identical in all
respects with all other shares of such series, except that shares of any one
series issued at different times may differ as to the dates from which dividends
thereon shall be cumulative.
D. Subject to the other provisions of this Article FOURTH and actions
taken by the Board of Directors pursuant to this Article FOURTH:
(1) The holders of shares of Class A Common Stock and Class B Common
Stock shall be entitled to receive such dividends or other distributions
payable in cash, capital stock or otherwise, when, as and if declared by
the Board of Directors at any time or from time to time, out of funds
legally available for the payment thereof, and shall share equally on a
per share basis in all such dividends or other distributions. No dividend
or other distribution may be declared or paid on any share of Class A
Common Stock unless a like dividend or other distribution is
simultaneously declared or paid, as the case may be, on each share of
Class B Common Stock, nor shall any dividend or other distribution be
declared or paid on any share of Class B Common Stock unless a like
dividend or other distribution is simultaneously declared or paid, as the
case may be, on each share of Class A Common Stock, in each case without
preference or priority of any kind; provided, however, that if a dividend
or other distribution payable in shares of any class of Common Stock or in
rights, options, warrants or other securities convertible into or
<PAGE>
5
exchangeable or exercisable for shares of Common Stock shall be declared
with respect to the Common Stock, the dividend or other distribution
payable to holders of Class A Common Stock shall be payable in shares of
Class A Common Stock or in rights, options, warrants or other securities
convertible into or exchangeable or exercisable for shares of Class A
Common Stock, as the case may be, and the dividend or other distribution
payable to holders of Class B Common Stock shall be payable in shares of
Class A Common Stock or in rights, options, warrants or other securities
convertible into or exchangeable or exercisable for shares of Class A
Common Stock, as the case may be. Neither the shares of Class A Common
Stock nor the shares of Class B Common Stock may be reclassified,
subdivided or combined unless such reclassification, subdivision or
combination occurs simultaneously and in the same proportion for each
class of Common Stock.
(2) Except as may be designated by the Board of Directors with
respect to any Preferred Stock issued by the Corporation, the voting power
of the Corporation shall be exclusively vested in the Common Stock.
(3) Holders of Preferred Stock and holders of Common Stock shall not
have any preemptive, preferential or other right to subscribe for or
purchase or acquire any shares of any class or series of capital stock or
any other securities of the Corporation, whether now or hereafter
authorized, and whether or not convertible into, or evidencing or carrying
the right to purchase, shares of any class or series of capital stock or
any other securities now or hereafter authorized and whether the same
shall be issued for cash, services or property, or by way of dividend or
otherwise, other than such right, if any, as the Board of Directors in its
discretion from time to time may determine. If the Board of Directors
shall offer to the holders of the Preferred Stock or the holders of the
Common Stock, or any of them, any such shares or other securities of the
Corporation, such offer shall not in any way constitute a waiver or
release of the right of the Board of Directors subsequently to dispose of
other portions of said shares or securities without so offering the same
to said holders.
(4) The shares of Preferred Stock may be issued for such
consideration and for such corporate purposes as the Board of Directors
may from time to time determine.
(5) The powers, preferences and relative, participating, optional or
other special rights, if any, and any qualifications, limitations or
restrictions with respect to Class A Common Stock and Class B Common Stock
shall be in all respects identical,
<PAGE>
6
except as otherwise required by law or expressly provided in this
Certificate of Incorporation.
(6) With respect to all matters upon which holders of Common Stock
are entitled to vote or to which holders of Common Stock are entitled to
give consent, except as may be provided in this Certificate of
Incorporation or by applicable law, every holder of Class A Common Stock
shall be entitled to cast thereon one vote in person or by proxy for each
share of Class A Common Stock standing in such holder's name on the
transfer books of the Corporation, and every holder of Class B Common
Stock shall be entitled to cast thereon ten votes in person or by proxy
for each share of Class B Common Stock standing in such holder's name on
the transfer books of the Corporation. Except as otherwise required by law
or as otherwise provided in this Certificate of Incorporation, the holders
of Class A Common Stock and Class B Common Stock shall vote together as a
single class, subject to any voting rights which may be granted to holders
of any outstanding Preferred Stock, on all matters submitted to a vote of
stockholders of the Corporation.
E. In the event of any liquidation, dissolution or winding up of the
affairs of the Corporation, whether voluntary or involuntary, and subject to the
rights of the holders of any series of Preferred Stock, the net assets of the
Corporation available for distribution to stockholders of the Corporation shall
be distributed pro rata to the holders of Common Stock in accordance with their
respective rights and interests and shares of Class B Common Stock shall rank
pari passu with shares of Class A Common Stock as to such distribution. For
purposes of this paragraph E of Article FOURTH, the voluntary sale, conveyance,
lease, exchange or transfer (for cash, shares of capital stock, securities or
other consideration) of all or substantially all the assets of the Corporation
or a consolidation, merger or other restructuring of the corporation with or
into one or more other corporations or other entities (whether or not the
Corporation is the corporation surviving such consolidation, merger or other
restructuring) shall not be deemed to be a liquidation, dissolution or winding
up of the affairs of the Corporation.
F. (1) Each share of Class B Common Stock is convertible while held
by the Original Class B Holder (as defined below), at the option of the holder
thereof and in the manner described below, into one share of Class A Common
Stock, subject to adjustment as provided in paragraph F(1)(b) of this Article
FOURTH and subject to the conditions and limitations described below:
(a) In order to voluntarily convert shares of Class B Common Stock
into shares of Class A Common Stock pursuant to this paragraph F(l) of
Article FOURTH, the
<PAGE>
7
holder thereof shall deliver to the office of the Secretary of the
Corporation (or at such additional place or places as may from time
to time be designated by the Secretary of the Corporation) (the
"Office of the Corporation") (I) the certificate or certificates
representing the shares of Class B Common Stock to be converted, duly
endorsed in blank or accompanied by proper instruments of transfer
and, if required by paragraph F(9) of this Article FOURTH, by any
required tax transfer stamps and (II) written notice (the "Conversion
Notice") to the Corporation that such holder elects to convert such
shares of Class B Common Stock into shares of Class A Common Stock
and stating the name and address in which each certificate
representing shares of Class A Common Stock issued upon such
conversion is to be issued. To the extent permitted by law, such
voluntary conversion shall be deemed to have been effected at the
close of business on the date when such delivery is made to the
Office of the Corporation of the certificate representing the shares
to be converted together with the Conversion Notice, and the person
exercising such voluntary conversion shall be treated for all
purposes as the holder of the number of shares of Class A Common
Stock issuable upon such voluntary conversion at such time; provided,
however, that, subject to paragraph F(6) of this Article FOURTH, such
holder shall be entitled to receive, when paid, any dividends or
other distributions declared on Class B Common Stock with a record
date preceding the time of such voluntary conversion and unpaid as of
the time of such voluntary conversion. Following a voluntary
conversion, the Corporation shall promptly issue and deliver, or
cause to be issued and delivered, a certificate or certificates
representing the number of fully paid and nonassessable shares of
Class A Common Stock into which the shares of Class B Common Stock
formerly represented by such certificate has been converted at the
address set forth in the Conversion Notice.
(b) If there occurs any capital reorganization or any
reclassification of the capital stock of the Corporation (other than a
reclassification, subdivision or combination described in paragraph D(l)
of this Article FOURTH or pursuant to a merger, consolidation or other
restructuring referred to in paragraph G of this Article FOURTH), each
share of Class B Common Stock shall thereafter be convertible into, in
lieu of one share of Class A Common Stock, the same kind and amount of
securities or other assets, or both, that were issuable or distributable
to the holders of shares of outstanding Class A Common Stock upon such
reorganization or reclassification with respect to that number of shares
of Class A Common Stock into which such share of Class B Common Stock
would have been converted had such share of Class B Common Stock been
converted into Class A Common Stock immediately prior to such
reorganization or reclassification.
<PAGE>
8
The "Original Class B Holder" shall mean AT&T Corp., a New York
corporation (including any successor thereof) or any one or more persons or
entities, other than the Corporation, in which AT&T Corp. beneficially owns,
directly or indirectly, 50 percent or more of the outstanding voting stock,
voting power or similar voting interests ("AT&T Parties").
(2) Except as otherwise provided in this paragraph F(2) of Article
FOURTH, upon the sale or other transfer (whether by merger, operation of law or
otherwise) by a stockholder of the Corporation of shares of Class B Common Stock
such that any person or persons, other than the Original Class B Holder, shall
have beneficial ownership thereof, including pursuant to any private placement
or public sale of such shares (including a public offering registered under the
Securities Act of 1933, as amended, and/or a sale pursuant to Rule 144 or Rule
144A under the Securities Act of 1933, as amended, or any similar rule then in
force), such shares shall automatically convert into an equal number of shares
of Class A Common Stock without any further action on the part of the
Corporation or any other person, and the certificates representing such shares
of Class B Common Stock shall thereafter be deemed to represent shares of Class
A Common Stock. For purposes of this paragraph F of Article FOURTH, (I)
"beneficial ownership" shall mean control, directly or indirectly, through
record ownership or any contract, arrangement, understanding, relationship or
otherwise, of the voting power (which includes the power to vote or to direct
the voting of such shares, except where such power arises solely from a
revocable proxy or consent given in response to a proxy or consent solicitation)
of such Class B Common Stock, (II) a "person" shall mean a corporation, trust,
limited liability company, association, partnership, joint venture,
organization, business, individual, government (or subdivision thereof),
governmental agency or other legal entity and (III) the term "transfer" shall
not include a bona fide unforeclosed pledge.
Immediately upon any automatic conversion of shares of Class B Common
Stock into shares of Class A Common Stock pursuant to this Article FOURTH, the
rights of the holders of such converted shares of Class B Common Stock as such
shall cease and such holders shall be treated for all purposes as having become
holders of the shares of Class A Common Stock issuable upon such conversion;
provided, however, that, subject to paragraph F(6) of this Article FOURTH, such
holders shall be entitled to receive, when paid, any dividends or other
distributions declared on Class B Common Stock with a record date preceding the
time of such automatic conversion and unpaid as of the time of such automatic
conversion.
<PAGE>
9
As promptly as practicable on or after the date of any conversion of
shares of Class B Common Stock into shares of Class A Common Stock pursuant to
this Article FOURTH, upon the delivery to the Corporation of a certificate
formerly representing shares of Class B Common Stock, the Corporation shall
issue and deliver or cause to be delivered, to or upon the written order of the
holder of the surrendered certificate formerly representing shares of Class B
Common Stock, a certificate or certificates representing the number of fully
paid and nonassessable shares of Class A Common stock into which the shares of
Class B Common Stock formerly represented by such certificate have been
converted in accordance herewith.
(3) Holders of shares of Class B Common Stock may (A) sell or
otherwise dispose of or transfer any or all of such shares held by them,
respectively, only in connection with a transfer which meets the qualifications
of paragraph F(4) of this Article FOURTH, and under no other circumstances, or
(B) convert any or all of such shares into shares of Class A Common Stock, as
provided in paragraph F(1) of this Article FOURTH, for the purpose of effecting
the sale or disposition of such shares of Class A Common Stock to any person. No
person other than the Original Class B Holder (including any transferees or
successive transferees who receive shares of Class B Common Stock in connection
with a transfer which meets the qualifications set forth in paragraph F(4) of
this Article FOURTH), shall by virtue of the acquisition of a certificate for
shares of Class B Common Stock have the status of an owner or holder of shares
of Class B Common Stock or be recognized as such by the Corporation or be
otherwise entitled to enjoy for such person's own benefit the special rights and
powers of a holder of shares of Class B Common Stock.
(4) Shares of Class B Common Stock shall be transferred on the books
of the Corporation, and a new certificate or certificates issued therefor, upon
presentation for transfer at the Office of the Corporation of the certificate
for such shares, in proper form for transfer and accompanied by all requisite
stock transfer tax stamps, only if such certificate when so presented shall also
be accompanied by an affidavit from AT&T Corp. stating that such certificate is
being presented to effect a transfer by one AT&T Party of such shares to another
AT&T Party.
Each affidavit of AT&T Corp. furnished pursuant to paragraph F(4) of
this Article FOURTH shall be verified by an officer of AT&T Corp. as of a date
not earlier than five days prior to the date of delivery thereof.
If a holder of shares of Class B Common Stock shall present a
certificate for such shares, endorsed by said holder for transfer or accompanied
by an instrument of
<PAGE>
10
transfer signed by said holder, to a person who receives such shares in
connection with a transfer which does not meet the qualifications set forth in
paragraph F(4) of this Article FOURTH, then such shares shall automatically
convert into an equal number of shares of Class A Common Stock in accordance
with paragraph F(2) of this Article FOURTH.
If the Board of Directors (or any committee of the Board of Directors
or officer of the Corporation, designated for such purpose by the Board of
Directors) shall determine, upon the basis of facts not disclosed in any
affidavit or other document accompanying the certificate for shares of Class B
Common Stock when presented for transfer, that such shares of Class B Common
Stock have been registered in violation of the provisions of paragraph F(4) of
this Article FOURTH, or shall determine that a person is enjoying for such
person's own benefit the special rights and powers of shares of Class B Common
Stock in violation of such provisions, then the Corporation shall take such
action at law or in equity as is appropriate under the circumstances. A bona
fide unforeclosed pledge of shares of Class B Common Stock shall not be deemed
to violate such provisions; PROVIDED that such shares shall not be voted by or
registered in the name of the pledgee.
(5) Each certificate for shares of Class B Common Stock shall bear a
legend on the face thereof reading as follows:
"The shares of Class B Common Stock represented by this certificate
may not be transferred to any person in connection with a transfer that
does not meet the qualifications set forth in paragraph F(4) of Article
FOURTH of the Restated Certificate of Incorporation, as amended, of this
corporation. Any person who receives such shares in connection with a
transfer which does not meet the qualifications prescribed by paragraph
F(4) of Article FOURTH is not entitled to own or to be registered as the
holder of such shares of Class B Common Stock, and such shares of Class B
Common Stock shall automatically convert into an equal number of shares of
Class A Common Stock. Each holder of this certificate, by accepting the
same, accepts and agrees to all of the foregoing."
(6) If (I) any dividend or other distribution has been declared with
respect to shares of Class B Common Stock which will be converted into shares of
Class A Common Stock pursuant to the provisions of this paragraph F of Article
FOURTH, (II) the record date or payment date therefor will be subsequent to such
conversion and (III) such dividend or other distribution was declared prior to
such conversion, then such dividend or other distribution shall be deemed to
have been declared, and shall be payable, with respect to the shares of Class A
Common Stock into which such shares of
<PAGE>
11
Class B Common Stock shall have been converted (without duplication), and any
such dividend or other distribution which shall have been declared on such
shares payable in shares of Class B Common Stock or rights, options, warrants or
other securities convertible into or exchangeable or exercisable for shares of
Class B Common Stock, shall be deemed to have been declared, and shall be
payable, in corresponding shares of Class A Common Stock or rights, options,
warrants or other securities convertible into or exchangeable or exercisable for
shares of Class A Common Stock, as the case may be.
(7) The Corporation shall not reissue or resell any shares of Class B
Common Stock which shall have been converted into shares of Class A Common Stock
pursuant to or as permitted by the provisions of this paragraph F of Article
FOURTH, or any shares of Class B Common Stock which shall have been acquired by
the Corporation in any other manner. The Corporation shall, from time to time,
as determined by the Board of Directors, take such appropriate action as may be
necessary to retire such shares and to reduce the authorized amount of Class B
Common Stock accordingly.
The Corporation shall at all times reserve and keep available, free
from preemptive rights, out of its authorized but unissued shares of Class A
Common Stock and its issued Class A Common Stock held in its treasury, solely
for the purpose of effecting any conversion of Class B Common Stock pursuant to
this Article FOURTH, the full number of shares of Class A Common Stock then
issuable or deliverable upon any such conversion of all of the then outstanding
shares of Class B Common Stock. All shares of Class A Common Stock issued upon
any conversion of Class B Common Stock pursuant to this Article FOURTH shall be
duly and validly issued, fully paid and nonassessable. The Corporation shall
take all such actions as it deems necessary or appropriate to ensure that all
such shares of Class A Common Stock may be so issued without violation of any
applicable law or governmental regulation or any requirements of any securities
exchange upon which shares of Class A Common Stock may be listed.
(8) In connection with any transfer or conversion of any capital
stock of the Corporation pursuant to or as permitted by the provisions of this
paragraph F of Article FOURTH, or in connection with the making of any
determination referred to in this paragraph F of Article FOURTH:
(a) the Corporation shall be under no obligation to make any
investigation of facts unless an officer, employee or agent of the
Corporation responsible for making such transfer or determination or
issuing Class A Common Stock pursuant to such conversion has substantial
reason to believe, or unless the Board of Directors (or a committee of the
Board of Directors designated for the purpose) determines that
<PAGE>
12
there is substantial reason to believe, that any affidavit or other
document is incomplete or incorrect in a material respect or that an
investigation would disclose facts indicating that such conversion
was in violation of paragraph F(4) of this Article FOURTH, in either
of which events the Corporation shall (i) make or cause to be made
such investigation as it may deem necessary or desirable in the
circumstances and (II) have a reasonable time to complete such
investigation; and
(b) neither the Corporation nor any director, officer, employee or
agent of the Corporation shall be liable in any manner for any action
taken or omitted to be taken in good faith.
(9) The Corporation shall pay any and all documentary, stamp or
similar issue or transfer taxes payable in respect of the issue or delivery of
shares of Class A Common Stock upon any conversion of shares of Class B Common
Stock pursuant hereto; provided, however, that the Corporation shall not be
required to pay any tax which may be payable in respect of any registration of
transfer involved in the issue or delivery of shares of Class A Common Stock in
a name other than that of the registered holder of the shares of Class B Common
Stock to be converted, and no such issue or delivery shall be made unless and
until the person requesting such issue has paid to the Corporation the amount of
any such tax or has established, to the satisfaction of the Corporation, that
such tax has been paid.
G. In the event of a merger, consolidation or other restructuring of
the Corporation with or into one or more entities (whether or not the
Corporation is the surviving entity), the holders of Class A Common Stock and
Class B Common Stock shall be entitled to receive the same per share
consideration.
H. The Corporation shall not be entitled to issue additional shares
of Class B Common Stock, or issue rights, options, warrants or other securities
convertible into or exchangeable or exercisable for shares of Class B Common
Stock, except that the Corporation may make an offer to all holders of Common
Stock of rights to purchase additional shares of the class of Common Stock
already held by such holders; provided, however, that the holders of each share
of Class A Common Stock and Class B Common Stock shall be entitled to purchase
the same number of additional shares or rights, options, warrants or other
securities convertible into or exchangeable or exercisable for additional
shares, and on the same terms as the holders of each share of such other class
of capital stock. Class A Common Stock and Class B Common Stock will be treated
equally with respect to any offer made by the Corporation to all of the holders
of
<PAGE>
13
Common Stock of rights, options, warrants or other securities convertible into
or exchangeable or exercisable for shares of any other capital stock of the
Corporation.
ARTICLE FIFTH
Board of Directors
A. Subject to the rights of the holders of any series of Preferred
Stock to elect additional directors under specified circumstances, the number of
directors of the Corporation shall initially be fixed at nine.
B. Unless and except to the extent that the Bylaws so require, the
election of directors of the Corporation need not be by written ballot.
C. A stockholder may raise business or make nominations for the
election of directors at a stockholders' meeting only by complying with all of
the provisions of the By-laws specifying the manner and extent to which advance
notice shall be given of and any other procedures regarding (I) the submission
of proposals to be considered at any meeting of stockholders or (II) nominations
for the election of directors to be held at any such meeting.
ARTICLE SIXTH
Amendments
A. The Corporation reserves the right to adopt, repeal, alter or
amend any provision of this Certificate of Incorporation, in the manner now or
hereafter prescribed by the laws of the State of Delaware and this Certificate
of Incorporation, and all rights, preferences and privileges conferred on
stockholders, directors, officers, employees, agents and other persons in this
Certificate of Incorporation, if any, are granted subject to this reservation.
B. Except where the Board of Directors is permitted by law or by this
Certificate of Incorporation to act without any action by the stockholders and
except as otherwise provided by law or as otherwise provided in this Certificate
of Incorporation, and subject to any voting rights granted to holders of any
outstanding shares of Preferred Stock, provisions of this Certificate of
Incorporation shall not be adopted, repealed,
<PAGE>
14
altered or amended, in whole or in part, without the approval of a majority of
the combined voting power of the outstanding shares of capital stock of the
Corporation entitled to vote thereon, voting as a single class; provided,
however, that with respect to any proposed amendment of this Certificate of
Incorporation which would alter or change the relative powers, preferences or
participating, optional or other special rights of the shares of Class A Common
Stock or Class B Common Stock so as to affect them adversely, the approval of a
majority of the combined voting power of the outstanding shares of capital stock
of the Corporation entitled to be voted by the holders of all of the shares so
adversely affected by the proposed amendment, voting separately as a class,
shall be obtained in addition to the affirmative vote of a majority of the
combined voting power of the outstanding shares of capital stock of the
Corporation entitled to vote thereon, voting as a single class, as hereinbefore
provided. Any increase or decrease (but not below the number of shares thereof
then outstanding ox reserved for issuance upon conversion of the Class B Common
Stock or any series of Preferred Stock) in the authorized number of shares of
any class or classes of capital stock of the corporation or creation,
authorization or issuance of any rights, options, warrants or other securities
convertible into or exchangeable or exercisable for shares of any such class or
classes of capital stock shall be deemed not to affect adversely the powers,
preferences or special rights of the shares of Class A Common Stock or Class B
Common Stock.
ARTICLE SEVENTH
Limitation on Director Liability
A. To the fullest extent permitted by the General Corporation Law of
the State of Delaware as it now exists and as it may hereafter be amended, no
director shall be personally liable to the corporation or any of its
stockholders for monetary damages for breach of any fiduciary or other duty as a
director.
B. The rights and authority conferred in this Article EIGHTH shall
not be exclusive of any other right which any person may otherwise have or
hereafter acquire.
C. Neither the amendment, alteration or repeal of this Article
EIGHTH, nor the adoption of any provision inconsistent with this Article EIGHTH,
shall adversely affect any right or protection of a director of the Corporation
existing at the time of such amendment, alteration or repeal with respect to
acts or omissions occurring prior to such amendment, alteration, repeal or
adoption.
<PAGE>
15
ARTICLE EIGHTH
Amendments to By-laws by the Board of Directors
In furtherance of, and not in limitation of, the powers conferred by
law, and subject to the provisions of the By-laws relating to amendments
thereto, the Board of Directors is expressly authorized and empowered to:
(1) adopt any By-laws a majority of the entire Board of Directors may
deem necessary or desirable in connection with the conduct of the affairs
of the Corporation, including provisions governing the conduct of, and the
matters which may properly be brought before, meetings of the stockholders
and provisions specifying the manner and extent to which advance notice
shall be given of and any other procedures regarding (I) the submission of
proposals to be considered at any such meeting or (II) nominations for the
election of directors to be held at any such meeting; and
(2) repeal, alter or amend the By-laws by the affirmative vote of a
majority of the entire Board of Directors.
<PAGE>
Exhibit C-2 to Agreement
and Plan of Merger
================================================================================
KIRI INC.
AMENDMENT AND RESTATEMENT OF BY-LAWS
As Adopted on _______________
================================================================================
<PAGE>
i
KIRI INC.
AMENDMENT AND RESTATEMENT OF BY-LAWS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
<S> <C>
ARTICLE I STOCKHOLDERS...................................................................................1
Section 1.01. ANNUAL MEETINGS..................................................................1
Section 1.02. SPECIAL MEETINGS.................................................................1
Section 1.03. NOTICE OF MEETINGS; WAIVER.......................................................1
Section 1.04. QUORUM...........................................................................2
Section 1.05. VOTING...........................................................................2
Section 1.06. VOTING BY BALLOT.................................................................3
Section 1.07. ADJOURNMENT......................................................................3
Section 1.08. PROXIES..........................................................................3
Section 1.09. ORGANIZATION; PROCEDURE..........................................................4
Section 1.10. SHAREHOLDER ACTION...............................................................4
ARTICLE II BOARD OF DIRECTORS............................................................................4
Section 2.01. GENERAL POWERS...................................................................4
Section 2.02. NUMBER AND TERM OF OFFICE........................................................4
Section 2.03. ELECTION OF DIRECTORS; CHAIR.....................................................5
Section 2.04. ANNUAL AND REGULAR MEETINGS......................................................5
Section 2.05. SPECIAL MEETINGS; NOTICE.........................................................5
Section 2.06. QUORUM; VOTING...................................................................5
Section 2.07. ADJOURNMENT......................................................................6
Section 2.08. ACTION WITHOUT A MEETING.........................................................6
Section 2.09. REGULATIONS; MANNER OF ACTING....................................................6
Section 2.10. ACTION BY TELEPHONIC COMMUNICATIONS..............................................6
Section 2.11. RESIGNATIONS.....................................................................6
Section 2.12. REMOVAL OF DIRECTORS.............................................................6
Section 2.13. VACANCIES AND NEWLY CREATED DIRECTORSHIPS........................................7
Section 2.14. COMPENSATION.....................................................................7
Section 2.15. RELIANCE ON ACCOUNTS AND REPORTS, ETC............................................7
</TABLE>
<PAGE>
<TABLE>
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<S> <C>
ARTICLE III COMMITTEES...................................................................................7
Section 3.01. HOW CONSTITUTED..................................................................7
Section 3.02. POWERS...........................................................................8
Section 3.03. PROCEEDINGS......................................................................8
Section 3.04. QUORUM AND MANNER OF ACTING......................................................9
Section 3.05. ACTION BY TELEPHONIC COMMUNICATIONS..............................................9
Section 3.06. ABSENT OR DISQUALIFIED MEMBERS...................................................9
Section 3.07. RESIGNATIONS.....................................................................9
Section 3.08. REMOVAL..........................................................................9
Section 3.09. VACANCIES........................................................................9
ARTICLE IV OFFICERS.....................................................................................10
Section 4.01. NUMBER..........................................................................10
Section 4.02. ELECTION........................................................................10
Section 4.03. SALARIES........................................................................10
Section 4.04. REMOVAL AND RESIGNATION; VACANCIES..............................................10
Section 4.05. AUTHORITY AND DUTIES OF OFFICERS................................................10
Section 4.06. THE PRESIDENT...................................................................10
Section 4.07. THE SECRETARY...................................................................11
Section 4.08. THE TREASURER...................................................................12
Section 4.09. ADDITIONAL OFFICERS.............................................................13
Section 4.10. SECURITY........................................................................13
ARTICLE V CAPITAL STOCK.................................................................................13
Section 5.01. CERTIFICATES OF STOCK, UNCERTIFICATED SHARES....................................13
Section 5.02. SIGNATURES; FACSIMILE...........................................................14
Section 5.03. LOST, STOLEN OR DESTROYED CERTIFICATES..........................................14
Section 5.04. TRANSFER OF STOCK...............................................................14
Section 5.05. RECORD DATE.....................................................................14
Section 5.06. REGISTERED STOCKHOLDERS.........................................................15
Section 5.07. TRANSFER AGENT AND REGISTRAR....................................................15
ARTICLE VII NDEMNIFICATION..............................................................................16
Section 6.01. NATURE OF INDEMNITY.............................................................16
Section 6.02. SUCCESSFUL DEFENSE..............................................................17
Section 6.03. DETERMINATION THAT INDEMNIFICATION IS PROPER....................................17
Section 6.04. ADVANCE PAYMENT OF EXPENSES.....................................................17
Section 6.05. PROCEDURE FOR INDEMNIFICATION OF DIRECTORS AND OFFICERS.........................18
Section 6.06. SURVIVAL; PRESERVATION OF OTHER RIGHTS..........................................18
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
iii
<S> <C>
Section 6.07. INSURANCE.......................................................................19
Section 6.08. SEVERABILITY....................................................................19
ARTICLE VII OFFICES.....................................................................................19
Section 7.01. REGISTERED OFFICE...............................................................19
Section 7.02. OTHER OFFICES...................................................................19
ARTICLE VIII GENERAL PROVISIONS.........................................................................20
Section 8.01. DIVIDENDS.......................................................................20
Section 8.02. RESERVES........................................................................20
Section 8.03. EXECUTION OF INSTRUMENTS........................................................20
Section 8.04. CORPORATE INDEBTEDNESS..........................................................20
Section 8.05. DEPOSITS........................................................................21
Section 8.06. CHECKS..........................................................................21
Section 8.07. SALE, TRANSFER, ETC. OF SECURITIES..............................................21
Section 8.08. VOTING AS STOCKHOLDER...........................................................21
Section 8.09. FISCAL YEAR.....................................................................22
Section 8.10. SEAL............................................................................22
Section 8.11. BOOKS AND RECORDS; INSPECTION...................................................22
Section 9.02. AFFILIATED PARTY TRANSACTIONS...................................................22
ARTICLE X AMENDMENT OF BY-LAWS..........................................................................23
Section 10.01. AMENDMENT......................................................................23
ARTICLE XI CONSTRUCTION.................................................................................24
Section 11.01. CONSTRUCTION...................................................................24
</TABLE>
<PAGE>
Kiri Inc.
KIRI INC.
BY-LAWS
As adopted on [______ __, __]
ARTICLE I
STOCKHOLDERS
Section I.1. ANNUAL MEETINGS. The annual meeting of the
stockholders of the Corporation for the election of directors and for the
transaction of such other business as properly may come before such meeting
shall be held at such place, either within or outside the State of Delaware, and
at 9:00 a.m. local time on the fifteenth of May (or, if such day is a legal
holiday, then on the next succeeding business day), or at such other date and
hour, as may be fixed from time to time by resolution of the Board of Directors
and set forth in the notice or waiver of notice of the meeting.
Section I.2. SPECIAL MEETINGS. Special meetings of the
stockholders may be called at any time by the President (or, in the event of his
or her absence or disability, by any Vice President), or by the Board of
Directors. A special meeting shall be called by the President (or, in the event
of his or her absence or disability, by any Vice President), or by the
Secretary, immediately upon receipt of a written request therefor by
stockholders holding in the aggregate not less than a majority of the
outstanding shares of the Corporation at the time entitled to vote at any
meeting of the stockholders. If such officers or the Board of Directors shall
fail to call such meeting within twenty days after receipt of such request, any
stockholder executing such request may call such meeting. Such special meetings
of the stockholders shall be held at such places, within or outside the State of
Delaware, as shall be specified in the respective notices or waivers of notice
thereof.
Section I.3. NOTICE OF MEETINGS; WAIVER. The Secretary or any
Assistant Secretary shall cause written notice of the place, date and hour of
each meeting of the stockholders, and, in the case of a special meeting, the
purpose or purposes for which such meeting is called, to be given personally or
by mail, not less than ten nor more than sixty days prior to the meeting, to
each stockholder of record entitled to vote at such meeting. If such notice is
mailed, it shall be deemed to have been given to a stockholder when deposited in
the United States mail, postage prepaid, directed to the stockholder at his or
her address as it appears on the record of stockholders of the Corporation, or,
if he
<PAGE>
Kiri Inc.
2
or she shall have filed with the Secretary of the Corporation a written request
that notices to him or her be mailed to some other address, then directed to him
or her at such other address. Such further notice shall be given as may be
required by law.
No notice of any meeting of stockholders need be given to any
stockholder who submits a signed waiver of notice, whether before or after the
meeting. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders need be specified in a written
waiver of notice. The attendance of any stockholder at a meeting of stockholders
shall constitute a waiver of notice of such meeting, except when the stockholder
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business on the ground that the meeting is
not lawfully called or convened.
Section I.4. QUORUM. Except as otherwise required by law or by
the Certificate of Incorporation, the presence in person or by proxy of the
holders of record of one-third of the shares entitled to vote at a meeting of
stockholders shall constitute a quorum for the transaction of business at such
meeting. For purposes of calculating pursuant to this Section 1.04 the number of
shares entitled to vote at a meeting of stockholders, each share of Class A
Common Stock and Class B Common Stock shall be counted equally.
Section I.5. VOTING. If, pursuant to Section 5.05 of these
By-Laws, a record date has been fixed, (A) every holder of record of a share of
Class A Common Stock entitled to vote at a meeting of stockholders shall be
entitled to one vote for each such share outstanding in his or her name on the
books of the Corporation at the close of business on such record date and (B)
every holder of record of a share of Class B Common Stock entitled to vote at a
meeting of stockholders shall be entitled to ten votes for each such share
outstanding in his or her name on the books of the Corporation at the close of
business on such record date. If no record date has been fixed, then (X) every
holder of record of a share of Class A Common Stock entitled to vote at a
meeting of stockholders shall be entitled to one vote for each such share of
stock standing in his or her name on the books of the Corporation at the close
of business on the day next preceding the day on which notice of the meeting is
given, or, if notice is waived, at the close of business on the day next
preceding the day on which the meeting is held and (Y) every holder of record of
a share of Class B Common Stock entitled to vote at a meeting of stockholders
shall be entitled to ten votes for each such share of stock standing in his or
her name on the books of the Corporation at the close of business on the day
next preceding the day on which notice of the meeting is given, or, if notice is
waived, at the close of business on the day next preceding the day on which the
meeting is held. Except as otherwise required by law or by the Certificate of
Incorporation or by these By-Laws, a
<PAGE>
Kiri Inc.
3
majority of the votes of shares represented in person or by proxy at any meeting
at which a quorum is present shall be sufficient for the transaction of any
business at such meeting.
Section I.6. VOTING BY BALLOT. No vote of the stockholders
need be taken by written ballot unless otherwise required by law. Any vote which
need not be taken by ballot may be conducted in any manner approved by the
meeting.
Section I.7. ADJOURNMENT. If a quorum is not present at any
meeting of the stockholders, the stockholders present in person or by proxy
shall have the power to adjourn any such meeting from time to time until a
quorum is present. Notice of any adjourned meeting of the stockholders of the
Corporation need not be given if the place, date and hour thereof are announced
at the meeting at which the adjournment is taken, provided, however, that if the
adjournment is for more than thirty days, or if after the adjournment a new
record date for the adjourned meeting is fixed pursuant to Section 5.05 of these
By-Laws, a notice of the adjourned meeting, conforming to the requirements of
Section 1.03 of these By-Laws, shall be given to each stockholder of record
entitled to vote at such meeting. At any adjourned meeting at which a quorum is
present, any business may be transacted that might have been transacted on the
original date of the meeting.
Section I.8. PROXIES. Any stockholder entitled to vote at any
meeting of the stockholders may authorize another person or persons to vote at
any such meeting for him or her by proxy. A stockholder may authorize a valid
proxy by executing a written instrument signed by such stockholder, or by
causing his or her signature to be affixed to such writing by any reasonable
means including, but not limited to, by facsimile signature, or by transmitting
or authorizing the transmission of a telegram, cablegram or other means of
electronic transmission to the person designated as the holder of the proxy, a
proxy solicitation firm or a like authorized agent. No such proxy shall be voted
or acted upon after the expiration of three years from the date of such proxy,
unless such proxy provides for a longer period. Every proxy shall be revocable
at the pleasure of the stockholder executing it, except in those cases where
applicable law provides that a proxy shall be irrevocable. A stockholder may
revoke any proxy which is not irrevocable by attending the meeting and voting in
person or by filing an instrument in writing revoking the proxy or by filing
another duly executed proxy bearing a later date with the Secretary. Proxies by
telegram, cablegram or other electronic transmission must either set forth or be
submitted with information from which it can be determined that the telegram,
cablegram or other electronic transmission was authorized by the stockholder.
Any copy, facsimile telecommunication or other reliable reproduction of a
writing or transmission created pursuant to this section may be substituted or
used in lieu of the original writing or transmission for any and all purposes
for which the original writing or transmission could be used, provided that such
copy, facsimile telecommunication or other
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reproduction shall be a complete reproduction of the entire original writing or
transmission.
Section I.9. ORGANIZATION; PROCEDURE. At every meeting of
stockholders the presiding officer shall be the President or, in the event of
his or her absence or disability, a presiding officer chosen by a majority of
the stockholders present in person or by proxy. The Secretary, or in the event
of his or her absence or disability, the Assistant Secretary, if any, or if
there be no Assistant Secretary, in the absence of the Secretary, an appointee
of the presiding officer, shall act as Secretary of the meeting. The order of
business and all other matters of procedure at every meeting of stockholders may
be determined by such presiding officer.
Section I.10. SHAREHOLDER ACTION. Any action required or
permitted to be taken under law by the stockholders of the Corporation shall be
effected at a duly called annual or special meeting of stockholders of the
Corporation and may not be effected by any consent in writing by such
stockholders.
ARTICLE II
BOARD OF DIRECTORS
Section II.1. GENERAL POWERS. Except as may otherwise be
provided by law, by the Certificate of Incorporation or by these By-Laws, the
property, affairs and business of the Corporation shall be managed by or under
the direction of the Board of Directors and the Board of Directors may exercise
all the powers of the Corporation.
Section II.2. NUMBER AND TERM OF OFFICE. The number of
Directors constituting the entire Board of Directors shall be nine. The total
number of Directors constituting the entire Board of Directors shall include
three Disinterested Directors, which number may be modified from time to time by
resolution of the Board of Directors (which resolution shall have been approved
by (i) all of the Disinterested Directors, if the total number of Disinterested
Directors then in office shall be four or less, or (ii) not less than 80% of the
Disinterested Directors, if the total number of Disinterested Directors then in
office shall be more than four), but in no event shall the number of
Disinterested Directors be less than one. "Disinterested Directors" shall mean
the directors of the Corporation who are not officers or employees of either
AT&T Corp., a New York corporation ("AT&T") or any of its affiliates or the
Corporation, or directors of AT&T or any of its affiliates. Each Director
(whenever elected) shall hold office until his or her successor has been duly
elected and qualified, or until his or her earlier death, resignation
<PAGE>
Kiri Inc.
5
or removal. "Affiliate" shall have the meaning set forth in Rule 12b-2 under the
Securities Exchange Act of 1934.
Section II.3. ELECTION OF DIRECTORS; CHAIR. Except as
otherwise provided in Sections 2.12 and 2.13 of these By-Laws, the Directors
shall be elected at each annual meeting of the stockholders. If the annual
meeting for the election of Directors is not held on the date designated
therefor, the Directors shall cause the meeting to be held as soon thereafter as
convenient. At each meeting of the stockholders for the election of Directors,
provided a quorum is present, the Directors shall be elected by a plurality of
the votes validly cast in such election.
Section II.4. ANNUAL AND REGULAR MEETINGS. The annual meeting
of the Board of Directors for the purpose of electing officers and for the
transaction of such other business as may come before the meeting shall be held
as soon as possible following adjournment of the annual meeting of the
stockholders at the place of such annual meeting of the stockholders. Notice of
such annual meeting of the Board of Directors need not be given. The Board of
Directors from time to time may by resolution provide for the holding of regular
meetings and fix the place (which may be within or outside the State of
Delaware) and the date and hour of such meetings. Notice of regular meetings
need not be given, provided, however, that if the Board of Directors shall fix
or change the time or place of any regular meeting, notice of such action shall
be mailed promptly, or sent by telegram, radio or cable, to each Director who
shall not have been present at the meeting at which such action was taken,
addressed to him or her at his or her usual place of business, or shall be
delivered to him or her personally. Notice of such action need not be given to
any Director who attends the first regular meeting after such action is taken
without protesting the lack of notice to him or her, prior to or at the
commencement of such meeting, or to any Director who submits a signed waiver of
notice, whether before or after such meeting.
Section II.5. SPECIAL MEETINGS; NOTICE. Special meetings of
the Board of Directors shall be held whenever called by (i) the President or, in
the event of his or her absence or disability, by any Vice President, or (ii)
any three Directors, at such place (within or outside the State of Delaware),
date and hour as may be specified in the respective notices or waivers of notice
of such meetings. Special meetings of the Board of Directors may be called on
twenty-four hours' notice, if notice is given to each Director personally or by
telephone or telegram, or on five days' notice, if notice is mailed to each
Director, addressed to him or her at his or her usual place of business. Notice
of any special meeting need not be given to any Director who attends such
meeting without protesting the lack of notice to him or her, prior to or at the
commencement of such meeting, or to any Director who submits a signed waiver of
notice, whether before or after such meeting, and any business may be transacted
thereat.
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Section II.6. QUORUM; VOTING. At all meetings of the Board of
Directors, the presence of a majority of the total authorized number of
Directors shall constitute a quorum for the transaction of business. Except as
otherwise required by law, the vote of a majority of the entire Board of
Directors shall be required for an act of the Board of Directors.
Section II.7. ADJOURNMENT. A majority of the Directors
present, whether or not a quorum is present, may adjourn any meeting of the
Board of Directors to another time or place. No notice need be given of any
adjourned meeting unless the time and place of the adjourned meeting are not
announced at the time of adjournment, in which case notice conforming to the
requirements of Section 2.05 of these By-Laws shall be given to each Director.
Section II.8. ACTION WITHOUT A MEETING. Any action required or
permitted to be taken at any meeting of the Board of Directors may be taken
without a meeting if all members of the Board of Directors consent thereto in
writing, and such writing or writings are filed with the minutes of proceedings
of the Board of Directors.
Section II.9. REGULATIONS; MANNER OF ACTING. To the extent
consistent with applicable law, the Certificate of Incorporation and these
By-Laws, the Board of Directors may adopt such rules and regulations for the
conduct of meetings of the Board of Directors and for the management of the
property, affairs and business of the Corporation as the Board of Directors may
deem appropriate. The Directors shall act only as a Board, and the individual
Directors shall have no power as such.
Section II.10. ACTION BY TELEPHONIC COMMUNICATIONS. Members of
the Board of Directors may participate in a meeting of the Board of Directors by
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and
participation in a meeting pursuant to this provision shall constitute presence
in person at such meeting.
Section II.11. RESIGNATIONS. Any Director may resign at any
time by delivering a written notice of resignation, signed by such Director, to
the President or the Secretary. Unless otherwise specified therein, such
resignation shall take effect upon delivery.
Section II.12. REMOVAL OF DIRECTORS. Any Director may be
removed at any time, either for or without cause, upon the affirmative vote of
the holders of a majority of the outstanding shares of stock of the Corporation
entitled to vote for the election of such Director. Any vacancy in the Board of
Directors caused by any such
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Kiri Inc.
7
removal may be filled at such meeting by the stockholders entitled to vote for
the election of the Director so removed. If such stockholders do not fill such
vacancy at such meeting (or in the written instrument effecting such removal, if
such removal was effected by consent without a meeting), such vacancy may be
filled in the manner provided in Section 2.13 of these By-Laws.
Section II.13. VACANCIES AND NEWLY CREATED DIRECTORSHIPS. If
any vacancies shall occur in the Board of Directors, by reason of death,
resignation, removal or otherwise, or if the authorized number of Directors
shall be increased, the Directors then in office shall continue to act, and such
vacancies and newly created directorships may be filled by a majority of the
Directors then in office, although less than a quorum. A Director elected to
fill a vacancy or a newly created directorship shall hold office until his or
her successor has been elected and qualified or until his or her earlier death,
resignation or removal. Any such vacancy or newly created directorship may also
be filled at any time by vote of the stockholders.
Section II.14. COMPENSATION. The amount, if any, which each
Director shall be entitled to receive as compensation for his or her services as
such shall be fixed from time to time by resolution of the Board of Directors.
Section II.15. RELIANCE ON ACCOUNTS AND REPORTS, ETC. A
Director, or a member of any Committee designated by the Board of Directors
shall, in the performance of his or her duties, be fully protected in relying in
good faith upon the records of the Corporation and upon information, opinions,
reports or statements presented to the Corporation by any of the Corporation's
officers or employees, or Committees designated by the Board of Directors, or by
any other person as to the matters the member reasonably believes are within
such other person's professional or expert competence and who has been selected
with reasonable care by or on behalf of the Corporation.
ARTICLE III
COMMITTEES
Section III.1. HOW CONSTITUTED. The Board of Directors may
designate one or more Committees, including an Audit Committee, Nominating
Committee, and Compensation Committee, each such Committee to consist of such
number of Directors as from time to time may be fixed by the Board of Directors.
The Board of Directors may designate one or more Directors as alternate members
of any such Committee, who may replace any absent or disqualified member or
members at any meeting of such Committee. Thereafter, members (and alternate
members, if any) of each such
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Committee may be designated at the annual meeting of the Board of Directors. Any
such Committee may be abolished or re-designated from time to time by the Board
of Directors. Each member (and each alternate member) of any such Committee
(whether designated at an annual meeting of the Board of Directors or to fill a
vacancy or otherwise) shall hold office until his or her successor shall have
been designated or until he or she shall cease to be a Director, or until his or
her earlier death, resignation or removal.
Section III.2. POWERS. Each such Committee, except as
otherwise provided in this section, shall have and may exercise such powers of
the Board of Directors as may be provided by resolution or resolutions of the
Board of Directors. No Committee shall have the power or authority:
(a) to amend the Certificate of Incorporation (except that a
Committee may, to the extent authorized in the resolution or
resolutions providing for the issuance of shares of stock adopted by
the Board of Directors as provided in Section 151(a) of the General
Corporation Law, fix the designations and any of the preferences or
rights of such shares relating to dividends, redemption, dissolution,
any distribution of assets of the Corporation or the conversion into,
or the exchange of such shares for, shares of any other class or
classes or any other series of the same or any other class or classes
of stock of the Corporation or fix the number of shares of any series
of stock or authorize the increase or decrease of the shares of any
series);
(b) to adopt an agreement of merger or consolidation;
(c) to recommend to the stockholders the sale, lease or
exchange of all or substantially all of the Corporation's property and
assets;
(d) to recommend to the stockholders a dissolution of the
Corporation or a revocation of a dissolution; and
(e) to amend the By-Laws of the Corporation.
Any Committee may be granted by the Board of Directors the power to authorize
the seal of the Corporation to be affixed to any or all papers which may require
it.
Section III.3. PROCEEDINGS. Each such Committee may fix its
own rules of procedure and may meet at such place (within or outside the State
of Delaware), at such time and upon such notice, if any, as it shall determine
from time to time. Each such Committee shall keep minutes of its proceedings and
shall report such proceedings to the
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Board of Directors at the meeting of the Board of Directors next following any
such proceedings.
Section III.4. QUORUM AND MANNER OF ACTING. Except as may be
otherwise provided in the resolution creating such Committee, at all meetings of
any Committee the presence of members (or alternate members) constituting a
majority of the total authorized membership of such Committee shall constitute a
quorum for the transaction of business. The act of the majority of the members
present at any meeting at which a quorum is present shall be the act of such
Committee. Any action required or permitted to be taken at any meeting of any
such Committee may be taken without a meeting, if all members of such Committee
shall consent to such action in writing and such writing or writings are filed
with the minutes of the proceedings of the Committee. The members of any such
Committee shall act only as a Committee, and the individual members of such
Committee shall have no power as such.
Section III.5. ACTION BY TELEPHONIC COMMUNICATIONS. Members of
any Committee designated by the Board of Directors may participate in a meeting
of such Committee by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in a meeting pursuant to this provision shall
constitute presence in person at such meeting.
Section III.6. ABSENT OR DISQUALIFIED MEMBERS. In the absence
or disqualification of a member of any Committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he, she
or they constitute a quorum, may unanimously appoint another member of the Board
of Directors to act at the meeting in the place of any such absent or
disqualified member.
Section III.7. RESIGNATIONS. Any member (and any alternate
member) of any Committee may resign at any time by delivering a written notice
of resignation, signed by such member, to the Chairman or the President. Unless
otherwise specified therein, such resignation shall take effect upon delivery.
Section III.8. REMOVAL. Any member (and any alternate member)
of any Committee may be removed from his or her position as a member (or
alternate member, as the case may be) of such Committee at any time, either for
or without cause, by resolution adopted by a majority of the whole Board of
Directors.
Section III.9. VACANCIES. If any vacancy shall occur in any
Committee, by reason of disqualification, death, resignation, removal or
otherwise, the remaining
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members (and any alternate members) shall continue to act, and any such vacancy
may be filled by the Board of Directors.
ARTICLE IV
OFFICERS
Section IV.1. NUMBER. The officers of the Corporation shall be
chosen by the Board of Directors and shall be a President, a Secretary and a
Treasurer. The Board of Directors also may elect one or more Assistant
Secretaries and Assistant Treasurers in such numbers as the Board of Directors
may determine. Any number of offices may be held by the same person. No officer
need be a Director of the Corporation.
Section IV.2. ELECTION. Unless otherwise determined by the
Board of Directors, the officers of the Corporation shall be elected by the
Board of Directors at the annual meeting of the Board of Directors, and shall be
elected to hold office until the next succeeding annual meeting of the Board of
Directors. In the event of the failure to elect officers at such annual meeting,
officers may be elected at any regular or special meeting of the Board of
Directors. Each officer shall hold office until his or her successor has been
elected and qualified, or until his or her earlier death, resignation or
removal.
Section IV.3. SALARIES. The salaries of all officers and
agents of the Corporation shall be fixed by the Board of Directors.
Section IV.4. REMOVAL AND RESIGNATION; VACANCIES. Any officer
may be removed for or without cause at any time by the Board of Directors. Any
officer may resign at any time by delivering a written notice of resignation,
signed by such officer, to the Board of Directors or the President. Unless
otherwise specified therein, such resignation shall take effect upon delivery.
Any vacancy occurring in any office of the Corporation by death, resignation,
removal or otherwise, shall be filled by the Board of Directors.
Section IV.5. AUTHORITY AND DUTIES OF OFFICERS. The officers
of the Corporation shall have such authority and shall exercise such powers and
perform such duties as may be specified in these By-Laws, except that in any
event each officer shall exercise such powers and perform such duties as may be
required by law.
Section IV.6. THE PRESIDENT. The President shall preside at
all meetings of the stockholders at which he or she is present, shall be the
chief executive officer and the chief operating officer of the Corporation,
shall have general control and supervision of
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the policies and operations of the Corporation and shall see that all orders and
resolutions of the Board of Directors are carried into effect. He or she shall
manage and administer the Corporation's business and affairs and shall also
perform all duties and exercise all powers usually pertaining to the office of a
chief executive officer and a chief operating officer of a corporation. He or
she shall have the authority to sign, in the name and on behalf of the
Corporation, checks, orders, contracts, leases, notes, drafts and other
documents and instruments in connection with the business of the Corporation,
and together with the Secretary or an Assistant Secretary, conveyances of real
estate and other documents and instruments to which the seal of the Corporation
is affixed. He or she shall have the authority to cause the employment or
appointment of such employees and agents of the Corporation as the conduct of
the business of the Corporation may require, to fix their compensation, and to
remove or suspend any employee or agent elected or appointed by the President or
the Board of Directors. The President shall perform such other duties and have
such other powers as the Board of Directors or the Chairman may from time to
time prescribe.
Section IV.7. THE SECRETARY. The Secretary shall have the
following powers and duties:
(a) He or she shall keep or cause to be kept a record of all
the proceedings of the meetings of the stockholders and of the Board of
Directors in books provided for that purpose.
(b) He or she shall cause all notices to be duly given in
accordance with the provisions of these By-Laws and as required by law.
(c) Whenever any Committee shall be appointed pursuant to a
resolution of the Board of Directors, he or she shall furnish a copy of
such resolution to the members of such Committee.
(d) He or she shall be the custodian of the records and of the
seal of the Corporation and cause such seal (or a facsimile thereof) to
be affixed to all certificates representing shares of the Corporation
prior to the issuance thereof and to all instruments the execution of
which on behalf of the Corporation under its seal shall have been duly
authorized in accordance with these By-Laws, and when so affixed he or
she may attest the same.
(e) He or she shall properly maintain and file all books,
reports, statements, certificates and all other documents and records
required by law, the Certificate of Incorporation or these By-Laws.
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(f) He or she shall have charge of the stock books and ledgers
of the Corporation and shall cause the stock and transfer books to be
kept in such manner as to show at any time the number of shares of
stock of the Corporation of each class issued and outstanding, the
names (alphabetically arranged) and the addresses of the holders of
record of such shares, the number of shares held by each holder and the
date as of which each became such holder of record.
(g) He or she shall sign (unless the Treasurer, an Assistant
Treasurer or an Assistant Secretary shall have signed) certificates
representing shares of the Corporation the issuance of which shall have
been authorized by the Board of Directors.
(h) He or she shall perform, in general, all duties incident
to the office of secretary and such other duties as may be specified in
these By-Laws or as may be assigned to him or her from time to time by
the Board of Directors, or the President.
Section IV.8. THE TREASURER. The Treasurer shall be the
chief financial officer of the Corporation and shall have the following powers
and duties:
(a) He or she shall have charge and supervision over and be
responsible for the moneys, securities, receipts and disbursements of
the Corporation, and shall keep or cause to be kept full and accurate
records of all receipts of the Corporation.
(b) He or she shall cause the moneys and other valuable
effects of the Corporation to be deposited in the name and to the
credit of the Corporation in such banks or trust companies or with such
bankers or other depositaries as shall be selected in accordance with
Section 8.05 of these By-Laws.
(c) He or she shall cause the moneys of the Corporation to be
disbursed by checks or drafts (signed as provided in Section 8.06 of
these By-Laws) upon the authorized depositaries of the Corporation and
cause to be taken and preserved proper vouchers for all moneys
disbursed.
(d) He or she shall render to the Board of Directors or the
President, whenever requested, a statement of the financial condition
of the Corporation and of all his or her transactions as Treasurer, and
render a full financial report at the annual meeting of the
stockholders, if called upon to do so.
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(e) He or she shall be empowered from time to time to require
from all officers or agents of the Corporation reports or statements
giving such information as he or she may desire with respect to any and
all financial transactions of the Corporation.
(f) He or she may sign (unless an Assistant Treasurer or the
Secretary or an Assistant Secretary shall have signed) certificates
representing stock of the Corporation the issuance of which shall have
been authorized by the Board of Directors.
(g) He or she shall perform, in general, all duties incident
to the office of treasurer and such other duties as may be specified in
these By-Laws or as may be assigned to him or her from time to time by
the Board of Directors, or the President.
Section IV.9. ADDITIONAL OFFICERS. The Board of Directors may
appoint such other officers and agents as it may deem appropriate, and such
other officers and agents shall hold their offices for such terms and shall
exercise such powers and perform such duties as may be determined from time to
time by the Board of Directors. The Board of Directors from time to time may
delegate to any officer or agent the power to appoint subordinate officers or
agents and to prescribe their respective rights, terms of office, authorities
and duties. Any such officer or agent may remove any such subordinate officer or
agent appointed by him or her, for or without cause.
Section IV.10. SECURITY. The Board of Directors may require
any officer, agent or employee of the Corporation to provide security for the
faithful performance of his or her duties, in such amount and of such character
as may be determined from time to time by the Board of Directors.
ARTICLE V
CAPITAL STOCK
Section V.1. CERTIFICATES OF STOCK, UNCERTIFICATED SHARES. The
shares of the Corporation shall be represented by certificates, provided that
the Board of Directors may provide by resolution or resolutions that some or all
of any or all classes or series of the stock of the Corporation shall be
uncertificated shares. Any such resolution shall not apply to shares represented
by a certificate until each certificate is surrendered to the Corporation.
Notwithstanding the adoption of such a resolution by the Board of Directors,
every holder of stock in the Corporation represented by certificates and upon
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request every holder of uncertificated shares shall be entitled to have a
certificate signed by, or in the name of the Corporation, by the President or a
Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary
or an Assistant Secretary, representing the number of shares registered in
certificate form. Such certificate shall be in such form as the Board of
Directors may determine, to the extent consistent with applicable law, the
Certificate of Incorporation and these By-Laws.
Section V.2. SIGNATURES; FACSIMILE. All of such signatures on
the certificate referred to in Section 5.01 of these By-Laws may be a facsimile,
engraved or printed, to the extent permitted by law. In case any officer,
transfer agent or registrar who has signed, or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer, transfer
agent or registrar before such certificate is issued, it may be issued by the
Corporation with the same effect as if he or she were such officer, transfer
agent or registrar at the date of issue.
Section V.3. LOST, STOLEN OR DESTROYED CERTIFICATES. The Board
of Directors may direct that a new certificate be issued in place of any
certificate theretofore issued by the Corporation alleged to have been lost,
stolen or destroyed, upon delivery to the Board of Directors of an affidavit of
the owner or owners of such certificate, setting forth such allegation. The
Board of Directors may require the owner of such lost, stolen or destroyed
certificate, or his or her legal representative, to give the Corporation a bond
sufficient to indemnify it against any claim that may be made against it on
account of the alleged loss, theft or destruction of any such certificate or the
issuance of any such new certificate.
Section V.4. TRANSFER OF STOCK. Upon surrender to the
Corporation or the transfer agent of the Corporation of a certificate for
shares, duly endorsed or accompanied by appropriate evidence of succession,
assignment or authority to transfer, the Corporation shall issue a new
certificate to the person entitled thereto, cancel the old certificate and
record the transaction upon its books. Within a reasonable time after the
transfer of uncertificated stock, the Corporation shall send to the registered
owner thereof a written notice containing the information required to be set
forth or stated on certificates pursuant to Sections 151, 156, 202(a) or 218(a)
of the General Corporation Law of the State of Delaware. Subject to the
provisions of the Certificate of Incorporation and these By-Laws, the Board of
Directors may prescribe such additional rules and regulations as it may deem
appropriate relating to the issue, transfer and registration of shares of the
Corporation.
Section V.5. RECORD DATE. In order to determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, the Board of Directors may fix, in advance, a record
date, which record date shall not precede
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the date on which the resolution fixing the record date is adopted by the Board
of Directors, and which shall not be more than sixty nor less than ten days
before the date of such meeting. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting, provided, however, that the Board of Directors may
fix a new record date for the adjourned meeting.
In order that the Corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the Board
of Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which date shall not be more than ten days after the date upon
which the resolution fixing the record date is adopted by the Board of
Directors.
In order that the Corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights of the stockholders entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the Board of Directors may fix a record date, which record date
shall not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty days prior to such
action. If no record date is fixed, the record date for determining stockholders
for any such purpose shall be at the close of business on the day on which the
Board of Directors adopts the resolution relating thereto.
Section V.6. REGISTERED STOCKHOLDERS. Prior to due surrender
of a certificate for registration of transfer, the Corporation may treat the
registered owner as the person exclusively entitled to receive dividends and
other distributions, to vote, to receive notice and otherwise to exercise all
the rights and powers of the owner of the shares represented by such
certificate, and the Corporation shall not be bound to recognize any equitable
or legal claim to or interest in such shares on the part of any other person,
whether or not the Corporation shall have notice of such claim or interests.
Whenever any transfer of shares shall be made for collateral security, and not
absolutely, it shall be so expressed in the entry of the transfer if, when the
certificates are presented to the Corporation for transfer or uncertificated
shares are requested to be transferred, both the transferor and transferee
request the Corporation to do so.
Section V.7. TRANSFER AGENT AND REGISTRAR. The Board of
Directors may appoint one or more transfer agents and one or more registrars,
and may require all certificates representing shares to bear the signature of
any such transfer agents or registrars.
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ARTICLE VI
INDEMNIFICATION
Section VI.1. NATURE OF INDEMNITY. The Corporation shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that he
or she is or was or has agreed to become a director or officer of the
Corporation, or is or was serving or has agreed to serve at the request of the
Corporation as a director or officer, of another corporation, partnership, joint
venture, trust or other enterprise, or by reason of any action alleged to have
been taken or omitted in such capacity, and may indemnify any person who was or
is a party or is threatened to be made a party to such an action, suit or
proceeding by reason of the fact that he or she is or was or has agreed to
become an employee or agent of the Corporation, or is or was serving or has
agreed to serve at the request of the Corporation as an employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him or her or on his or her
behalf in connection with such action, suit or proceeding and any appeal
therefrom, if he or she acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the Corporation, and,
with respect to any criminal action or proceeding had no reasonable cause to
believe his or her conduct was unlawful; except that in the case of an action or
suit by or in the right of the Corporation to procure a judgment in its favor
(1) such indemnification shall be limited to expenses (including attorneys'
fees) actually and reasonably incurred by such person in the defense or
settlement of such action or suit, and (2) no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the Corporation unless and only to the extent that the
Delaware Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Delaware Court of
Chancery or such other court shall deem proper. Notwithstanding the foregoing,
but subject to Section 6.05 of these By-Laws, the Corporation shall not be
obligated to indemnify a director or officer of the Corporation in respect of a
Proceeding (or part thereof) instituted by such director or officer, unless such
Proceeding (or part thereof) has been authorized by the Board of Directors.
The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of NOLO CONTENDERE or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner
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which he or she reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his or her conduct was
unlawful.
Section VI.2. SUCCESSFUL DEFENSE. To the extent that a present
or former director, officer, employee or agent of the Corporation has been
successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in Section 6.01 of these By-Laws or in defense of any
claim, issue or matter therein, he or she shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him or her in
connection therewith.
Section VI.3. DETERMINATION THAT INDEMNIFICATION IS PROPER.
Any indemnification of a present or former director or officer of the
Corporation under Section 6.01 of these By-Laws (unless ordered by a court)
shall be made by the Corporation only upon a determination that indemnification
of such person is proper in the circumstances because such person has met the
applicable standard of conduct set forth in Section 6.01 of these By-Laws. Any
indemnification of a present or former employee or agent of the Corporation
under Section 6.01 of these By-Laws (unless ordered by a court) may be made by
the Corporation upon a determination that indemnification of the employee or
agent is proper in the circumstances because he or she has met the applicable
standard of conduct set forth in Section 6.01 of these By-Laws. Any such
determination shall be made, with respect to a person who is a director or
officer at the time of such determination (1) by a majority vote of the
Directors who are not parties to such action, suit or proceeding, even though
less than a quorum, or (2) by a committee of such directors designated by
majority vote of such directors, even though less than a quorum, or (3) if there
are no such directors, or if such directors so direct, by independent legal
counsel in a written opinion, or (4) by the stockholders.
Section VI.4. ADVANCE PAYMENT OF EXPENSES. Expenses (including
attorneys' fees) incurred by a present director or officer in defending any
civil, criminal, administrative or investigative action, suit or proceeding
shall be paid by the Corporation in advance of the final disposition of such
action, suit or proceeding upon receipt of an undertaking by or on behalf of the
director or officer to repay such amount if it shall ultimately be determined
that he or she is not entitled to be indemnified by the Corporation as
authorized in this Article. Such expenses (including attorneys' fees) incurred
by former directors and officers or other employees and agents may be so paid
upon such terms and conditions, if any, as the Corporation deems appropriate.
The Corporation, or in respect of a present director or officer the Board of
Directors, may authorize the Corporation's counsel to represent such present or
former director, officer, employee or agent in any action, suit or proceeding,
whether or not the Corporation is a party to such action, suit or proceeding.
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Section VI.5. PROCEDURE FOR INDEMNIFICATION OF DIRECTORS AND
OFFICERS. Any indemnification of a director, officer, employee or agent of the
Corporation under Sections 6.01 and 6.02 of these By-Laws, or advance of costs,
charges and expenses to such person under Section 6.04 of these By-Laws, shall
be made promptly, and in any event within thirty days, upon the written request
of such person. If a determination by the Corporation that such person is
entitled to indemnification pursuant to this Article is required, and the
Corporation fails to respond within sixty days to a written request for
indemnity, the Corporation shall be deemed to have approved such request. If the
Corporation denies a written request for indemnity or advancement of expenses,
in whole or in part, or if payment in full pursuant to such request is not made
within thirty days, the right to indemnification or advances as granted by this
Article shall be enforceable by such person in any court of competent
jurisdiction. Such person's costs and expenses incurred in connection with
successfully establishing his or her right to indemnification, in whole or in
part, in any such action shall also be indemnified by the Corporation. It shall
be a defense to any such action (other than an action brought to enforce a claim
for the advance of costs, charges and expenses under Section 6.04 of these
By-Laws where the required undertaking, if any, has been received by or tendered
to the Corporation) that the claimant has not met the standard of conduct set
forth in Section 6.01 of these By-Laws, but the burden of proving such defense
shall be on the Corporation. Neither the failure of the Corporation (including
its Board of Directors or any committee thereof, its independent legal counsel,
and its stockholders) to have made a determination prior to the commencement of
such action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in
Section 6.01 of these By-Laws, nor the fact that there has been an actual
determination by the Corporation (including its Board of Directors or any
committee thereof, its independent legal counsel, and its stockholders) that the
claimant has not met such applicable standard of conduct, shall be a defense to
the action or create a presumption that the claimant has not met the applicable
standard of conduct.
Section VI.6. SURVIVAL; PRESERVATION OF OTHER RIGHTS. The
foregoing indemnification provisions shall be deemed to be a contract between
the Corporation and each director, officer, employee and agent who serves in any
such capacity at any time while these provisions as well as the relevant
provisions of the Delaware Corporation Law are in effect and any repeal or
modification thereof shall not affect any right or obligation then existing with
respect to any state of facts then or previously existing or any action, suit or
proceeding previously or thereafter brought or threatened based in whole or in
part upon any such state of facts. Such a "contract right" may not be modified
retroactively without the consent of such director, officer, employee or agent.
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The indemnification provided by this Article VI shall not be
deemed exclusive of any other rights to which those indemnified may be entitled
under any by-law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his or her official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person.
Section VI.7. INSURANCE. The Corporation may purchase and
maintain insurance on behalf of any person who is or was or has agreed to become
a director or officer of the Corporation, or is or was serving at the request of
the Corporation as a director or officer of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him or her and incurred by him or her or on his or her behalf in any such
capacity, or arising out of his or her status as such, whether or not the
Corporation would have the power to indemnify him or her against such liability
under the provisions of this Article, PROVIDED that such insurance is available
on acceptable terms, which determination shall be made by a vote of a majority
of the entire Board of Directors.
Section VI.8. SEVERABILITY. If this Article or any portion
hereof shall be invalidated on any ground by any court of competent
jurisdiction, then the Corporation shall nevertheless indemnify each director or
officer and may indemnify each employee or agent of the Corporation as to costs,
charges and expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement with respect to any action, suit or proceeding, whether
civil, criminal, administrative or investigative, including an action by or in
the right of the Corporation, to the fullest extent permitted by any applicable
portion of this Article that shall not have been invalidated and to the fullest
extent permitted by applicable law.
ARTICLE VII
OFFICES
Section VII.1. REGISTERED OFFICE. The registered office of the
Corporation in the State of Delaware shall be located at Corporation Trust
Center, 1209 Orange Street in the City of Wilmington, County of New Castle.
Section VII.2. OTHER OFFICES. The Corporation may maintain
offices or places of business at such other locations within or outside the
State of Delaware as the
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Board of Directors may from time to time determine or as the business of the
Corporation may require.
ARTICLE VIII
GENERAL PROVISIONS
Section VIII.1. DIVIDENDS. Subject to any applicable
provisions of law and the Certificate of Incorporation, dividends upon the
shares of the Corporation may be declared by the Board of Directors at any
regular or special meeting of the Board of Directors and any such dividend may
be paid in cash, property, or shares of the Corporation's capital stock.
A member of the Board of Directors, or a member of any
Committee designated by the Board of Directors shall be fully protected in
relying in good faith upon the records of the Corporation and upon such
information, opinions, reports or statements presented to the Corporation by any
of its officers or employees, or Committees of the Board of Directors, or by any
other person as to matters the Director reasonably believes are within such
other person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Corporation, as to the value and amount
of the assets, liabilities and/or net profits of the Corporation, or any other
facts pertinent to the existence and amount of surplus or other funds from which
dividends might properly be declared and paid.
Section VIII.2. RESERVES. There may be set aside out of any
funds of the Corporation available for dividends such sum or sums as the Board
of Directors from time to time, in its absolute discretion, thinks proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation or for such other
purpose as the Board of Directors shall think conducive to the interest of the
Corporation, and the Board of Directors may similarly modify or abolish any such
reserve.
Section VIII.3. EXECUTION OF INSTRUMENTS. The President, any
Vice President, the Secretary or the Treasurer may enter into any contract or
execute and deliver any instrument in the name and on behalf of the Corporation.
The Board of Directors or the President may authorize any other officer or agent
to enter into any contract or execute and deliver any instrument in the name and
on behalf of the Corporation. Any such authorization may be general or limited
to specific contracts or instruments.
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Section VIII.4. CORPORATE INDEBTEDNESS. No loan shall be
contracted on behalf of the Corporation, and no evidence of indebtedness shall
be issued in its name, unless authorized by the Board of Directors or the
President. Such authorization may be general or confined to specific instances.
Loans so authorized may be effected at any time for the Corporation from any
bank, trust company or other institution, or from any firm, corporation or
individual. All bonds, debentures, notes and other obligations or evidences of
indebtedness of the Corporation issued for such loans shall be made, executed
and delivered as the Board of Directors or the President shall authorize. When
so authorized by the Board of Directors or the President, any part of or all the
properties, including contract rights, assets, business or good will of the
Corporation, whether then owned or thereafter acquired, may be mortgaged,
pledged, hypothecated or conveyed or assigned in trust as security for the
payment of such bonds, debentures, notes and other obligations or evidences of
indebtedness of the Corporation, and of the interest thereon, by instruments
executed and delivered in the name of the Corporation.
Section VIII.5. DEPOSITS. Any funds of the Corporation may be
deposited from time to time in such banks, trust companies or other depositaries
as may be determined by the Board of Directors or the President, or by such
officers or agents as may be authorized by the Board of Directors or the
President to make such determination.
Section VIII.6. CHECKS. All checks or demands for money and
notes of the Corporation shall be signed by such officer or officers or such
agent or agents of the Corporation, and in such manner, as the Board of
Directors or the President from time to time may determine.
Section VIII.7. SALE, TRANSFER, ETC. OF SECURITIES. To the
extent authorized by the Board of Directors or by the President, any Vice
President, the Secretary or the Treasurer or any other officers designated by
the Board of Directors or the President may sell, transfer, endorse, and assign
any shares of stock, bonds or other securities owned by or held in the name of
the Corporation, and may make, execute and deliver in the name of the
Corporation, under its corporate seal, any instruments that may be appropriate
to effect any such sale, transfer, endorsement or assignment.
Section VIII.8. VOTING AS STOCKHOLDER. Unless otherwise
determined by resolution of the Board of Directors, the President or any Vice
President shall have full power and authority on behalf of the Corporation to
attend any meeting of stockholders of any corporation in which the Corporation
may hold stock, and to act, vote (or execute proxies to vote) and exercise in
person or by proxy all other rights, powers and privileges incident to the
ownership of such stock. Such officers acting on behalf of the Corporation shall
have full power and authority to execute any instrument expressing consent to or
dissent from any action of any such corporation without a meeting. The Board of
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Kiri Inc.
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Directors may by resolution from time to time confer such power and authority
upon any other person or persons.
Section VIII.9. FISCAL YEAR. The fiscal year of the
Corporation shall commence on the first day of January of each year (except for
the Corporation's first fiscal year which shall commence on the date of
incorporation) and shall terminate in each case on December 31.
Section VIII.10. SEAL. The seal of the Corporation shall be
circular in form and shall contain the name of the Corporation, the year of its
incorporation and the words "Corporate Seal" and "Delaware". The form of such
seal shall be subject to alteration by the Board of Directors. The seal may be
used by causing it or a facsimile thereof to be impressed, affixed or
reproduced, or may be used in any other lawful manner.
Section VIII.11. BOOKS AND RECORDS; INSPECTION. Except to the
extent otherwise required by law, the books and records of the Corporation shall
be kept at such place or places within or outside the State of Delaware as may
be determined from time to time by the Board of Directors.
ARTICLE IX
CERTAIN TRANSACTIONS
Section IX.1. GENERAL. The provisions of this Article IX are
in addition to, and not in limitation of, the provisions of the Delaware General
Corporation Law and the provisions of the Certificate of Incorporation of the
Corporation. Any contract or business relation which does not comply with
procedures set forth in this Article IX shall not by reason thereof be deemed
void or voidable or to result in any breach of any fiduciary duty to, or duty of
loyalty to, or failure to act in good faith or in the best interests of, the
Corporation, or to result in the derivation of any improper personal benefit,
but shall be governed by the remaining provisions of the Certificate of
Incorporation of the Corporation, these Bylaws, the Delaware General Corporation
Law and other applicable law.
Section IX.2. AFFILIATED PARTY TRANSACTIONS. No contract,
agreement, arrangement or transaction between AT&T or its affiliates (other than
the Corporation and any controlled affiliate thereof) (an "AT&T ENTITY") and the
Corporation, including amendments, modifications or terminations thereof, shall
be void or voidable solely because any directors or officers of an AT&T Entity
are present at or participate in the
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Kiri Inc.
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meeting of the Board of Directors or committee thereof which authorizes such
contract, agreement, arrangement, transaction, amendment, modification or
termination (each a "TRANSACTION") or solely because his or their votes are
counted for such purpose, PROVIDED that:
(a) the material facts as to the Transaction are disclosed or
known to the Board of Directors of the Corporation or any relevant committee
thereof, the Board of Directors or such committee approves it and such approval
includes a majority of the Disinterested Directors of the Corporation;
(b) the Transaction is approved by a majority of the
outstanding shares of the Corporation entitled to vote thereon not owned by an
AT&T Entity, voting together as a single class;
(c) the Transaction is effected in accordance with
arrangements, standards or guidelines that were approved as set forth in (a) or
(b) above; or
(d) the transaction is fair to the Corporation at the time it
is entered into.
Directors of the Corporation who are not Disinterested Directors may be counted
in determining the presence of a quorum at a meeting of the Board of Directors
or of a committee thereof that authorizes or approves any such Transaction or
any such guidelines. Shares of the Corporation owned by an AT&T Entity may be
counted in determining the presence of a quorum at a meeting of stockholders
that authorizes or approves any such Transaction or any such guidelines. No vote
cast or other action taken by any person who is an officer, director or other
representative of AT&T, which vote is cast or action is taken by such person in
his capacity as a director of the Corporation, shall constitute an action of, or
the exercise of a right by, or a consent of, AT&T for the purpose of any such
Transaction.
ARTICLE X
AMENDMENT OF BY-LAWS
Section X.1. AMENDMENT. These By-Laws may be amended, altered
or repealed:
(a) by resolution adopted by a majority of the entire Board of
Directors at any special or regular meeting of the Board if, in the
case of such special meeting only, notice of such amendment, alteration
or repeal is contained in the notice or waiver of notice of such
meeting (provided that any such resolution amending
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Kiri Inc.
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Section 2.02 or Article IX of these By-laws shall have been approved by
(i) all of the Disinterested Directors, if the total number of
Disinterested Directors then in office shall be four or less, or (ii)
not less than 80% of the Disinterested Directors, if the total number
of Disinterested Directors then in office shall be more than four); or
(b) at any regular or special meeting of the stockholders if,
in the case of such special meeting only, notice of such amendment,
alteration or repeal is contained in the notice or waiver of notice of
such meeting ( provided that any such resolution amending Section 2.02
or Article IX of these By-laws shall have been approved by a majority
of the votes attaching to the outstanding shares of Class A Common
Stock, voting as a class).
ARTICLE XI
CONSTRUCTION
Section XI.1. CONSTRUCTION. In the event of any conflict
between the provisions of these By-Laws as in effect from time to time and the
provisions of the Certificate of Incorporation of the Corporation as in effect
from time to time, the provisions of such Certificate of Incorporation shall be
controlling.
EXHIBIT 2.3
Exhibit B to the
Merger Agreement
REGIONAL VEHICLE ("RV") BOARD POLICY
CORPORATE OPPORTUNITIES. AT&T Corp. and its non-RV affiliates (an
"AT&T Entity") and persons affiliated with them shall only be required to make a
corporate opportunity available to RV if the corporate opportunity:
-- directly relates to the Territory (as defined in the Regional
Vehicle Agreement, between AT&T Corp. and RV (a form of which is
attached to the Agreement and Plan of Merger, dated November 1, 1999,
among AT&T Corp., Kiri Inc., Frantis Inc. and FirstCom
Corporation)(the "REGIONAL VEHICLE AGREEMENT")),
-- directly relates to the provision of RV Services (as defined in
the Regional Vehicle Agreement),
-- can, in the good faith judgment of AT&T Corp., be financed by the
RV without issuance of additional debt or equity to an AT&T Entity,
and
-- has been presented to (1) an RV officer or director who is not an
employee, officer or director of an AT&T Entity, (2) an RV officer or
director, who is also an employee (but not an officer or director) of
an AT&T Entity, (3) an RV officer or director, who is also an officer
or director of an AT&T Entity specifically in his capacity as an
officer of director of the RV or (4) a senior AT&T employee
specifically for consideration by the RV.
AT&T may consider all other opportunities as the province of AT&T
Entities. The AT&T Entities will be free to pursue, or to direct to other
Persons, corporate opportunities presented to the RV pursuant to this Board
Policy, which the RV determines not to pursue.
This Board Policy may not be amended except with the approval of a
majority of the Disinterested Directors (as such term is defined in the Bylaws
of RV).
EXHIBIT 2.4
SERVICE MARK LICENSE AGREEMENT
SERVICE MARK LICENSE AGREEMENT dated as of _________________, by and
between AT&T CORP., a New York corporation ("Licensor"), and KIRI INC., a
Delaware corporation ("Licensee").
WHEREAS, Licensor has, for many years, used the service marks AT&T and
AT&T with a fanciful globe design, as identified in Schedule A attached hereto
(the "Licensed Master Service Marks"), all in connection with telecommunications
services; and
WHEREAS, Licensee wishes to use the Licensed Master Service Marks, and
the Licensed Trade Dress in the Licensed Territory as defined herein in
connection with the marketing and provision of certain services; and
WHEREAS, Licensee also wishes to use the service mark "It's all within
your reach" and certain foreign equivalents thereof that are owned by Licensor
and may wish to use certain other service marks which are or will be owned by
Licensor in connection with the Licensed Services ; and
WHEREAS, Licensor is willing to license and allow Licensee to use the
Licensed Marks under the terms and conditions set forth in this Agreement.
NOW, THEREFORE, the parties hereby agree as follows:
1. DEFINITIONS.
"AFFILIATE": Of a party shall mean an entity which is under common
control with, controls, or is controlled by, such party.
"BANKRUPTCY": With respect to a Person shall mean the filing by such
Person of a voluntary petition, or by a third party with respect to such Person,
requesting liquidation, dissolution, reorganization, suspension, rearrangement
or re-adjustment, in any form, of
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its debts under the laws of the United States (or corresponding provisions of
future laws), the laws of the Licensed Territory, or any other bankruptcy or
insolvency law, or such Person's consenting to or acquiescing in any such
petition, the making by such Person of any assignment for the benefit of its
creditors or the admission by such Person in writing of its inability to pay its
debts as they mature, an application for the appointment of a receiver for the
assets of such Person, or an involuntary petition seeking liquidation,
dissolution, reorganization, suspension, rearrangement or readjustment of its
debts or similar relief under any bankruptcy or insolvency law.
"CLAIM": As defined in Section 20.1 hereof.
"CLAIMANT": As defined in Section 20.2 hereof.
"COMMUNICATIONS DIRECTOR": The individual described in Section 8.5.
"CORPORATE BRAND": As defined in Section 5.3(d) hereof.
"CORPORATE BRAND EFFORTS": As defined in Section 5.3(d) hereof.
"EFFECTIVE DATE": As defined in Section 23.12 hereof.
"EXCLUSIVE SERVICES": As defined in Schedule F hereto.
"FINAL CURE PERIOD": As defined in Section 9 hereof.
"GRAPHIC STANDARDS MANUAL": As defined in Schedule D hereto.
"GROSS SERVICE REVENUE": Revenues received by Licensee and its
sublicensees for the Licensed Services, before any deductions or offsets.
"INCLUDING": The terms "including" and "such as" are illustrative and
not limitative.
"INITIAL CURE PERIOD": As defined in Section 9 hereof.
"LICENSED ANCILLARY SERVICE MARKS": Service marks that may be developed
for each of the Licensed Services by Licensor or by Licensee that become
Licensed Ancillary
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Service Marks pursuant to Section 2.2, and any additional marks that are added
to this Agreement pursuant to Section 4.3 and which shall be owned by Licensor
and licensed to Licensee pursuant to this Agreement (and as such service marks
may be modified or supplemented as contemplated by Section 4.2 or Section 4.3),
as set forth in Schedule C1, as it may be amended from time to time.
Registrations and applications covering the Licensed Ancillary Service Marks in
the Licensed Territory include those set forth in Schedule C2 of this Agreement.
The listing of goods or services in the specification of any of these
registrations or applications which are outside the scope of services licensed
under this Agreement shall not be construed as inclusion of such goods or
services in the license granted by this Agreement. It is understood that the
only services licensed under this Agreement are as expressly set forth in this
Agreement.
"LICENSED MARKS": Collectively, the Licensed Master Service Marks,
Licensed Ancillary Service Marks, and Licensed Trade Dress.
"LICENSED MASTER SERVICE MARKS": The service marks AT&T and AT&T with a
fanciful globe design as identified in Schedule A (and as such service marks may
be modified or supplemented as contemplated by Section 4.2 or Section 4.3).
Registrations and applications covering the Licensed Master Service Marks in the
Licensed Territory are set forth in Schedule B of this Agreement, as it may be
amended from time to time. The listing of goods or services in the specification
of any of these registrations or applications which are outside the scope of
services licensed under this Agreement shall not be construed as inclusion of
such goods or services in the license granted by this Agreement. It is
understood that the only services licensed under this Agreement are as expressly
set forth in this Agreement.
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"LICENSED SERVICES": The services described in Schedule F attached
hereto.
"LICENSED TERRITORY": Antigua and Barbuda, Argentina, Bahamas,
Barbados, Bolivia, Brazil, Chile, Colombia, Dominica, Dominican Republic,
Ecuador, Grenada, Guyana, Haiti, Jamaica, Panama, Paraguay, Peru, Saint Lucia,
Saint Vincent and the Grenadines, Suriname, St. Kitts and Nevis, Trinidad and
Tobago and Uruguay.
"LICENSED TRADE DRESS": The general image, appearance or dress of the
marketing of services performed under the Licensed Master Service Marks and the
Licensed Ancillary Service Marks consisting of colors, designs, configurations,
publication formats, lettering and the like as set forth in Schedule D attached
hereto, and such other trade dress and get-up as may be added thereto or
substituted therefor in accordance with this Agreement.
"LICENSEE": As defined in the first paragraph hereof.
"LICENSEE BRAND EFFORTS": Marketing communications activities developed
in support of specific Licensee products and services, such as advertising,
direct mail and promotions for specific Licensed Services or rates, or for any
activity not specified in this Agreement.
"LICENSOR": As defined in the first paragraph hereof.
"MANAGED NETWORK SERVICES" means the provision of (a) service to a
customer consisting solely of the provisioning and maintenance of the logical
and physical elements of the customer's wide area communications network, and,
to the extent relating to a customer's wide area communications network,
directly related planning, design, installation, maintenance and ongoing life
cycle support functions, and (b) equipment on the customer's premises at the
interface between a wide area communications network and the remainder of the
customer's networking environment insofar as the equipment so provided
facilitates (i) the maintenance of the customer's wide area communication
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services, (ii) the recording of performance data with respect to the customer's
wide area communications services, (iii) the provisioning of new wide area
communications services to the customer or changes in the parameters of the wide
area communications services provided to the customer, or (iv) the integration
of multiple wide area communications services, but excluding in the case of
clause (a) or (b) any such service or equipment that materially extends services
beyond the interface described above further into the customer's non-wide area
communications network.
"MARK": Any name, brand, mark, trademark, service mark, trade dress,
trade name, business name or other indicia of origin.
"MARKETING MATERIALS": Any and all materials, whether written, audio,
visual or in any other medium, used by Licensee to market, advertise or
otherwise offer or provide any Licensed Service under the Licensed Marks.
"MARKETING SPECIFICATIONS": Licensor's standards and guidelines
relating to the permitted use, depiction and graphic display of the Licensed
Marks that are contained in Schedule E hereto, and those standards and
guidelines relating to such use, depiction and graphic display that Licensor
shall provide to Licensee from time to time.
"MATERIAL": As defined in Section 21 hereof.
"MERGER AGREEMENT": The Agreement and Plan of Merger among AT&T Corp.,
Kiri Inc., Frantis, Inc. and FirstCom Corporation, dated as of November 1, 1999.
"MINIMUM GUARANTEE": As defined in Section 5.1(b) hereof.
"MONITORING SERVICES": As defined in Section 5.3(a) hereof.
"NEW YORK COURTS": As defined in Section 19 hereof.
"NONEXCLUSIVE SERVICES": As defined in Schedule F hereto.
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"PAYMENT PERIOD": Each period of six (6) full calendar months or
portion thereof during the term of this Agreement, commencing on the first day
of the first month after the Effective Date.
"PAYMENTS": As defined in Section 22.1 hereof.
"PERSON": Any individual, partnership, limited partnership, joint
venture, syndicate, sole proprietorship, company or corporation with or without
share capital, unincorporated association, trust, trustee, executor,
administrator or other legal personal representative, regulatory body or agency,
government or governmental agency, authority or entity however designed or
constituted.
"PROPRIETARY INFORMATION": Any information that is so designated by the
party disclosing it or deemed to be such under this Agreement.
"QUALITY CONTROL REPRESENTATIVES": Representatives of Licensor
appointed in accordance with Section 8 hereof.
"REGISTERED USER APPLICATION": An application by the parties to the
appropriate Regulatory Authority in the Licensed Territory where an owner of a
Mark (i) licenses a licensee to use the registered Mark, under conditions in
which the nature and quality of the products and/or services offered under the
Mark are required to be subject to quality control by the owner, in accordance
with local law and practice for acceptable trademark licensing to ensure the
validity and enforceability of the Mark licensed and (ii) allows the licensee to
be recorded by that administrative agency as a permitted user of the Licensed
Marks.
"REGULATORY APPROVAL": Any governmental or regulatory approval, consent
or authorization or waiver required to be obtained from or any filing required
to be made with
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or notice required to be given to any governmental or Regulatory Authority,
commission, tribunal, ministry, official or agency.
"REGULATORY AUTHORITY": Any applicable regulatory, administrative or
governmental entity, authority, commission, tribunal, official or agency,
including without limitation the Export Licensing Office of the U.S. Department
of Commerce.
"REQUEST": As defined in Section 20.2 hereof.
"RESPONDENT": As defined in Section 20.2 hereof.
"SECOND CURE PERIOD": As defined in Section 9.2 hereof.
"SERVICE SPECIFICATIONS": The standards of quality relating to
Marketing Specifications, technical performance, customer service, and customer
satisfaction, including technical network performance, marketing, design, and
use of Marketing Materials, advertising and promotion that will be set forth in
Schedule E to this Agreement (and as they may be amended, modified or
supplemented from time to time in accordance with this Agreement).
"SIGNIFICANT BREACH BY LICENSEE": As defined in Section 12 hereof.
"SUBSIDIARY": With respect to a party, any Person in which the party
directly owns more than 50% of the voting rights.
"SUCCESSOR": With respect to any party, any successor, monitor,
coordinator, transferee or assignee, including without limitation any receiver,
debtor in possession, trustee, conservator or similar Person with respect to
such party or such party's assets.
"TECHNICAL INFORMATION": Information provided by either party under
this Agreement, whether Proprietary Information or otherwise.
2. SCOPE OF LICENSE
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2.1 GRANT OF LICENSE.
(a) Subject to the terms and conditions of this Agreement, Licensor
hereby grants to Licensee a non-exclusive, non-transferable, non-sublicensable
(except as provided herein) license to use the Licensed Marks solely in
connection with the marketing, advertising, promotion and provision of the
Licensed Services in the Licensed Territory. Licensee may use the Licensed Marks
in marketing, advertising and promotion outside the Licensed Territory so long
as such marketing, advertising and promotion relates to the provision of
Licensed Services in the Licensed Territory. The foregoing notwithstanding, the
rights granted herein do not include the right to use the Licensed Marks in
connection with the marketing, advertising, promotion or provision of any
services through the global venture between Licensor and British
Telecommunications plc, which shall be covered by separate agreements with such
global venture.
Licensor and its other Affiliates retain all rights to use the Licensed
Marks in the Licensed Territory. The Licensed Marks may not be used by Licensee
in connection with any service except as expressly set forth in this Agreement.
Licensee shall not use the Licensed Marks, or any other Mark of Licensor, or any
confusingly similar Marks in connection with any service or product not within
the scope of this Agreement without Licensor's express written consent.
Licensee may sublicense the rights granted in this Section 2.1(a) to
its Subsidiaries in connection with their operations in the Licensed Territory,
provided that:
(i) such Subsidiaries meet and continue to meet the criteria
set forth in Schedule G of this Agreement;
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(ii) such Subsidiaries enter a written agreement with Licensee
in which such Subsidiaries agree to assume all of the same obligations
as Licensee (except for the obligation to make payments pursuant to
Section 5.1, as such payments will be made by Licensee) and which is
otherwise consistent with this Agreement; and
(iii) Licensee notifies Licensor within ten (10) days each
time a sublicense is granted and furnishes Licensor with a copy of the
relevant sublicense agreement.
(b) Subject to the terms and conditions of this Agreement and provided
that at least half of the Licensed Services offered by Licensee (namely, those
grossing the highest revenue) are in full compliance with the Service
Specifications furnished by Licensor, Licensee shall have a non-exclusive,
non-sublicensable right (except as otherwise provided herein) to use "AT&T" as
part of the corporate name and trade name set forth in Schedule H of this
Agreement for the remainder of the term of this Agreement. By way of example, if
Licensee offers six (6) Licensed Services, the three (3) Licensed Services
grossing the highest revenue for Licensee would have to be compliant with the
Service Specifications in order to use "AT&T" as part of the corporate name and
trade name. The foregoing notwithstanding, if all of the Licensed Services
contemplated by this Agreement will be provided through Subsidiaries of the
Licensee and not by the Licensee itself, then Licensee may, subject to the terms
and conditions of this Agreement, use "AT&T" as part of the corporate and trade
name set forth in Schedule H for the entire term of this Agreement. In the event
that Licensee wishes to have one or more of its Subsidiaries which has been
granted a sublicense to use the Licensed Marks pursuant to Section 2.1(a) use
"AT&T" as part of its corporate and trade name, Licensee may request Licensor's
written approval to sublicense such use, and Licensee shall not unreasonably
withhold such written approval,
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provided that such Subsidiaries demonstrate to Licensor's satisfaction that at
least half of the Licensed Services (namely, those grossing the highest
revenues) offered by such Subsidiaries are in full compliance with the
applicable Service Specifications and provided that such use is otherwise
subject to the terms and conditions and conditions of this Agreement.
2.2 USE OF LICENSED MASTER SERVICE MARKS AND DEVELOPMENT AND
USE OF LICENSED ANCILLARY SERVICE MARKS.
(a) Subject to the terms and conditions of this Agreement, the Licensed
Marks and Licensed Trade Dress shall be used exclusively in connection with all
Licensed Services.
(b) Licensee may use ancillary service marks owned by Licensor with
Licensor's express written consent for one or more service plan names or feature
names. Licensee may develop and use with Licensor's prior written approval
ancillary service marks with respect to one or more service plan names or
feature names, which approval will not be unreasonably withheld. Such ancillary
service marks developed by Licensee and approved by Licensor shall become
Licensed Ancillary Service Marks. Licensee shall assign to Licensor all rights
in and to any such ancillary service marks developed by Licensee that shall
become Licensed Ancillary Service Marks, including all rights in any application
to register or registration of the Licensed Ancillary Service Marks. Upon the
termination of this Agreement, including termination under any renewal and any
transition period provided under Section 12.3, Licensor shall assign to
Licensee, without further consideration, all of its rights, title and interest
in and to such Licensed Ancillary Service Marks developed by Licensee, including
the goodwill attached thereto, in the Licensed Territory. With the
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exception of ancillary service marks developed by Licensee and assigned to
Licensor as provided above, Licensor shall be and remain the owner of all
Licensed Ancillary Service Marks, and any foreign language equivalents thereof,
that are not developed by Licensee.
3. AGREEMENT PERSONAL. In recognition of the unique nature of the
relationship between Licensor and Licensee, the parties agree that the rights,
obligations and benefits of this Agreement shall be personal to Licensee and its
authorized sublicensees, and, Licensor shall not be required to accept
performance from or render performance to an entity other than Licensee and its
authorized sublicensees. In the event of the Bankruptcy of the Licensee or its
sublicensees, this Agreement and any sublicense granted pursuant to this
Agreement may not be assigned or assumed by the Licensee, its sublicensees, or
any Successor, and may be terminated by Licensor pursuant to Section 12.2(c)
hereof, and the Licensor shall be excused from rendering performance to or
accepting performance from Licensee, its sublicensees or any Successor.
4. OTHER MARKS
4.1 NO OTHER MARK TO BE USED Licensee shall not use any other Mark or
create by use, adoption or practice any alternate Mark or ancillary Mark in
connection with the Exclusive Services, without Licensor's express written
consent. In the marketing of the Licensed Services, any use or display by
Licensee of its corporate, business, trade name, or trading style shall adhere
to the Marketing Specifications of the Service Specifications or shall be with
Licensor's express written consent. So long as Licensee is not providing a
Nonexclusive Service in a particular country in the Licensed Territory using the
Licensed Marks, Licensee may, after consultation with Licensor, use Marks that
are not Licensed Marks on such Nonexclusive Service in such country, provided
that Licensee agrees to
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conduct reasonable searches to determine the availability of such Marks prior to
commencing use. In the event that Licensee commences providing a Nonexclusive
Service using the Licensed Marks in a particular country in the Licensed
Territory, Licensee shall immediately cease providing such Nonexclusive Service
using other Marks in such country unless Licensor consents to the continued use
of such other Marks.
4.2 MODIFICATION OF LICENSED SERVICE MARKS. Modifications to or
replacements of the Licensed Ancillary Service Marks may be initiated by
Licensee, with the concurrence of Licensor as provided in Section 2.2(b), as to
any modification or replacement of the Licensed Ancillary Service Marks as they
are used by Licensee with respect to the Licensed Services.
If Licensor modifies or replaces any of the Licensed Master Service
Marks, Licensed Ancillary Service Marks, or the Licensed Trade Dress as used by
Licensor, Licensee shall agree with Licensor on a program to cease, over a
reasonable period of time, not to exceed one hundred-twenty (120) days, use of
the previous Licensed Mark(s) and to introduce and adopt the modified or
replacement Licensed Mark(s), at Licensee's cost, but without undue expense to
Licensee or disruption to Licensee's business or marketing programs, and
Licensor shall reimburse Licensee from the Brand Fund Fee one-half of such
reasonable costs incurred by Licensee. In either case, such modified or replaced
Licensed Master Service Mark(s), Licensed Ancillary Service Mark(s), or the
Licensed Trade Dress shall be considered the Licensed Mark(s) contemplated by
this Agreement.
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If Licensor modifies a Licensed Ancillary Service Mark for certain uses
outside the Licensed Territory but does not terminate all usage of the
unmodified version, Licensee may choose to adopt the modified version but is not
obliged to do so.
4.3 USE OF ADDITIONAL MARKS AT LICENSOR'S REQUEST. Licensor may, from
time to time, in consultation with Licensee, request Licensee to adopt and use
in addition to the Licensed Master Service Marks, Licensed Ancillary Service
Marks and Licensed Trade Dress, any Mark or Marks used or to be used by
Licensor, including any Marks owned by a third party that Licensor has the right
to use and sublicense, in connection with the marketing and provision of
Licensed Services. Such additional Mark or Marks shall be licensed hereunder on
the same terms as the Licensed Marks. All costs associated with adopting and
using such additional Mark or Marks shall be borne by Licensor, and shall be
paid out of the Brand Fund Fees.
5. ANNUAL PAYMENTS.
5.1 BRAND FUND FEE. In consideration of the license granted in this
Agreement and for other good and valuable consideration including Licensor brand
building activities in the Licensed Territory, during the term of this Agreement
with respect to each Payment Period, Licensee shall pay Licensor a Brand Fund
Fee, as provided in Section 5.3, which shall be the greater of:
(a)(i) in Years 1 and 2 of this Agreement, four percent (4%)
of Gross Service Revenues from the Licensed Services;
(ii) in Year 3 of this Agreement, three and one-quarter
percent (3.25%) of Gross Service Revenues from Licensed
Services;
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(iii) in Years 4 and 5, and for each year during the renewal
term, two and one-half percent (2.5%) of Gross Service
Revenues from Licensed Services; and
(b) two million five hundred thousand dollars ($2,500,000)
(the "Minimum Guarantee").
5.2 ACCOUNTING. With respect to each Payment Period as defined herein,
Licensee shall furnish to Licensor a statement, in form reasonably acceptable to
Licensor, certified by a responsible officer of Licensee, showing all Gross
Service Revenues during such Payment Period, and the Brand Fund Fee as provided
in Section 5.1. payable thereon. During the term of this Agreement, such
statement shall be furnished to Licensor not later than forty-five (45) days
after the end of each Payment Period.
5.3 PAYMENT. With respect to each Payment Period as defined herein,
Licensee shall, irrespective of its own business and accounting method, pay
Licensor or Licensor's designee the Brand Fund Fee as provided in Section 5.1,
forty-five (45) days after the end of each Payment Period. The Brand Fund Fee
will be paid in U.S. currency. Licensee agrees that all of the Brand Fund Fees
received for each Payment Period will be designated and spent by Licensor, with
active participation of Licensee's CEO, on the following activities in support
of Licensor's brand strategy and to ensure proper positioning of the Licensee:
(a) the monitoring of the brand, including the development and
implementation of the Service Specifications set forth in Schedule E
and the requirements set forth in Schedule D of this Agreement,
customer satisfaction surveys, market research, and the management of
corporate identity ("MONITORING
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SERVICES"). Except as provided in the last sentence of this Section
5.3(a), no more than three million dollars ($3,000,000) of the Brand
Fund Fees shall be used each year of this Agreement for Monitoring
Services. Monitoring Services shall be subject to the following
conditions: (i) payments for Monitoring Services shall only be made to
Persons that are not Affiliates of Licensee or Licensor, (ii)
Monitoring Services shall be obtained on a cost effective basis using a
reasonably competitive process to the extent practicable and (iii)
Monitoring Services shall be implemented through the Communications
Director and his/her team. Following consultation between Licensor and
Licensee's CEO, Brand Fund Fees in excess of $3,000,000 per year may be
designated and spent by Licensor for Monitoring Services, upon the
submission of reasonable supporting documentation and subject to
compliance with the conditions set forth above in the immediately
preceding sentence.
(b) the manpower, including salary and benefits, required to
implement the responsibilities of the Communications Director and
his/her team of five (5) country managers across all of Licensee's
communications, provided that such country managers shall be paid at
competitive rates giving effect to the business conditions in each
country and shall devote, in a manner consistent with the terms of this
Agreement, all of their efforts to support Licensee's business, except
that Licensor shall have the right, with the approval of Licensee's
CEO, which shall not be unreasonably withheld, to use such persons from
time to time to support other Licensor activities in the Latin American
region;
(c) any additional manpower, including salary and benefits,
based on the needs of Licensor and Licensee's business and with the
agreement of Licensee's
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CEO, required to implement the responsibilities of the Communications
Director and his/her team;
(d) following consultation with Licensee's CEO, the
implementation of activities in support of the Licensed Master Service
Marks ("the Corporate Brand") and the position of the RV, as follows:
corporate events, media placement, creativity/production; brand agency
costs, sponsorships/events, and media relations ("Corporate Brand
Efforts") and
(e) other items specified in this Agreement.
The foregoing obligation shall not apply to Brand Fund Fees received
for the last Payment Period of the renewal term (unless the parties enter a new
service mark license agreement with regard to the Licensed Marks), and shall
immediately cease if this Agreement terminates for any other reason.
5.4 AUDIT OF LICENSEE'S RECORDS. Licensee and any sublicensees shall
keep accurate books and records of all Gross Service Revenues, payments and
Brand Fund Fees, together with such other data as is necessary and material to
determine accurately the amounts payable hereunder. Licensor and Licensor's
designee shall be entitled to inspect, during normal business hours, the books
and records of Licensee and any sublicensees to ensure the proper reporting of
Gross Service Revenues, payments and Brand Fund Fees and Licensee and any
sublicensee's compliance with the terms and conditions of this Agreement. If
such inspection discloses no deficit or a cumulative deficit over the term of
this Agreement through the last Payment Period ending before the date of the
inspection of less than five percent (5%) from the statements provided under
Section 5.2, the cost of such inspection shall be borne by Licensor. If any such
cumulative deficit
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is five percent (5%) or greater, the cost of such inspection shall be borne by
Licensee or the appropriate sublicensee. Any payments due under this Section
shall be made in accordance with Section 22 hereof.
5.5 CURE OR TERMINATION. If Licensee is in default of any payment or
fee due hereunder, Licensee shall have thirty (30) days after receipt of written
notice of such default to it by Licensor to cure said default, failing which
this Agreement shall be subject to termination by Licensor exercisable thirty
(30) days after delivery of written notice to Licensee. If Licensee is in
default two (2) or more times in any two (2) year period, the Licensor shall
have the right to terminate this Agreement immediately by delivery of written
notice to Licensee by Licensor.
6. BRAND SUPPORT FUNCTIONS. Upon mutual agreement, Licensor and
Licensee may enter into a separate agreement, whereby Licensee may procure from
Licensor and Licensor would provide to Licensee certain marketing, promotion and
sales support functions in connection with the Licensed Services.
7. RETENTION OF RIGHTS. All existing goodwill in the Licensed Marks
inures to the sole benefit of the Licensor. Licensee's use of the Licensed Marks
and any and all goodwill that derives from such use, shall, except as provided
in Section 2.2(b), inure to the sole benefit of the Licensor. Except as
otherwise expressly provided in this Agreement, Licensor shall retain all rights
in and to the Licensed Marks, including all rights of ownership in and to the
Licensed Marks and the right to license others to use the Licensed Marks for any
product or service in the Licensed Territory and the rest of the Universe.
Licensee shall execute all documents required to effect any transfer of rights
to Licensor.
8. QUALITY CONTROL.
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8.1 GENERAL. Licensee acknowledges that the Licensed Services covered
by this Agreement must be of sufficiently high quality as to provide maximum
enhancement to and protection of the Licensed Marks and the goodwill they
symbolize. Licensee further acknowledges that the maintenance of high quality
services is of the essence of this Agreement and that it will utilize only
Marketing Materials which do not disparage or place in disrepute Licensor, its
businesses or its business reputation, or adversely affect or detract from
Licensor's goodwill.
8.2 SERVICE SPECIFICATIONS. Licensee shall use the Licensed Marks only
in accordance with, and in connection with, the marketing and provision of
Licensed Services that meet the Service Specifications. The Service
Specifications shall consist of technical performance, customer service,
customer satisfaction and Marketing Specifications, shall be set forth in
writing by Licensor and become Schedule E to this Agreement, and shall be
defined further as the Licensed Services are developed for introduction and may
evolve to meet market and other needs. The Service Specifications are deemed to
be Proprietary Information under Section 21 hereof. Licensee shall not commence
or continue to offer any Licensed Service under the Licensed Marks unless it
meets each of the relevant Service Specifications. The initial definition of the
Service Specifications will be determined solely by Licensor, following
consultation with Licensee, and shall be provided to Licensee for the countries
of Brazil, Chile, Colombia and Peru within three (3) months of the Effective
Date of this Agreement, and for any other country or jurisdiction in the
Licensed Territory, within three (3) months of written notice to Licensor that
Licensee intends to begin offering the Licensed Services in such country or
jurisdiction. Licensee shall use its commercially reasonable best efforts to
become fully compliant with the relevant Service
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Specifications within six (6) months after the delivery of such Service
Specifications by Licensor to Licensee.
8.3 CHANGES TO SERVICE SPECIFICATIONS.
(a) Except with respect to Marketing Specifications, the
Service Specifications may be amended, modified or supplemented from time to
time by Licensor, following consultation with Licensee. Following any such
amendment, modification or supplement to the Service Specifications, Licensee
shall within a reasonable time determined in the reasonable judgment of Licensor
following consultation with Licensee adhere to such amendment, modification or
supplement.
(b) The Marketing Specifications may be amended, modified or
supplemented from time to time by Licensor in its sole discretion. Within sixty
(60) days of Licensor's request to amend, modify, or supplement the Marketing
Specifications, Licensee shall adhere to such amendment, modification or
supplement.
8.4 QUALITY SERVICE REVIEWS: RIGHT OF INSPECTION. Licensor shall have
the right to designate from time to time one or more Quality Control
Representatives, who shall have the right at any time upon fifteen (15) days
prior notice to conduct during Licensee's regular business hours an inspection,
test, survey and review of Licensee's facilities and otherwise to determine
compliance with the applicable Service Specifications. Licensee agrees to
furnish to the Quality Control Representatives (i) samples or simulations of
Licensed Services and Marketing Materials that are marketed or provided under
the Licensed Marks as Licensor may request from time to time, for inspections,
surveys, tests and reviews to assure conformance of the Licensed Services and
the Marketing Materials with the applicable Service Specifications and (ii) all
performance data in its control relating
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to the conformance of such Licensed Services with the applicable Service
Specifications. Licensor may independently conduct continuous customer
satisfaction surveys to determine if Licensee is meeting the Service
Specifications. Any information obtained by either party or disclosed by one
party to the other party pursuant hereto shall be deemed to be Proprietary
Information of the party obtaining the information or disclosing the information
pursuant to Section 21 hereof. If Licensee has actual knowledge that it is not
complying with any Service Specification it shall notify Licensor and the
provisions of Section 9 shall apply to such noncompliance.
8.5 COMMUNICATIONS DIRECTOR. As set forth in Section 5.3(b) and (c), a
Communications Director and at least five (5) persons reporting to the
Communications Director shall be employed by Licensor at Licensor's sole cost
and expense from the Brand Fund Fee. The Communications Director shall have
several responsibilities relating to Licensee's use of the Licensed Marks, which
shall include: (i) brand management, (ii) marketing communications, (iii)
advertising and direct marketing, (iv) public relations, and (v) the monitoring
of compliance with Service Specifications. The Communications Director shall (i)
review and approve, subject to the concurrence of the Licensor's Vice President
of Communications for Latin America or other Licensor-designated representative,
all Licensee-produced Marketing Materials to ensure adherence to Licensor's
brand positioning, policies and values and shall receive directions regarding
brand position, brand strategy, brand values and implementation parameters from
Licensor's Vice-President of Communications for Latin America or other
Licensor-
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designated representative; (ii) ensure coordination and alignment of Licensee's
and Licensor's brand activities, including brand alignment of all of Licensee's
corporate communications, including advertising, sponsorship/events, and
identity; (iii) provide feedback to Licensee on reports required in the Service
Specifications and reporting Licensee's performance with regard to Service
Specifications to Licensor, (iv) planning and execution of public relations and
media relations programs as further described herein, (v) planning and execution
of marketing communications programs as further described herein, and (vi)
manage, along with Licensor's Vice President of Communications for Latin America
or other Licensor-designated representative, the advertising, direct marketing
and public relations brand agencies used by Licensee. All activities relating to
the Corporate Brand Efforts that are funded by the Brand Fund Fee shall be
planned and implemented in the Latin American region by the Licensor's Latin
America Communications Group with the participation of Licensee's CEO and the
Communications Director. The parties agree that all communications efforts,
whether Corporate Brand Efforts or Licensee Brand Efforts, shall be aligned to
Licensor's brand positioning and strategy, but their implementation shall ensure
relevancy to the markets to which they will be targeted. The Communications
Director shall also attend all Marketing Task Force or similar meetings of
Licensor and Licensee , and will attend relevant marketing and strategy meetings
of both Licensor and Licensee. The Communications Director will work closely
with Licensee's CEO and his/her senior management team and the Licensor's Vice
President of Communications for Latin America in coordinating the overall
alignment of Licensee's and Licensor's brand building activities in the Licensed
Territory. Specifically, Licensee's CEO and his/her senior management team shall
provide the Communications Director with the Licensee's business
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direction, strategies and plans for the Communications Director's use in the
planning and execution of marketing communications, public relations and media
relations programs which support Licensee's business goals. Communications
programs developed for Licensee Brand Efforts shall be approved by Licensee's
senior management team. Public relations and media relations programs developed
for Licensee Brand Efforts shall be approved by Licensee's CEO. Licensor and
Licensee shall jointly evaluate the performance of the Communications Director,
and Licensor's Vice President of Communications for Latin America or other
Licensor-designated representative shall provide performance reviews to the
Communications Director. After consultation with Licensee, Licensor will have
the sole right to replace the Communications Director as well as any person
reporting to the Communications Director who was designated by Licensor.
Licensee's CEO shall contact Licensor's Vice President for Latin America
regarding problems or concerns which may arise from time to time with regard to
the Communications Director and his/her team, and Licensor's Vice President for
Latin America shall consult with Licensee's CEO regarding the appropriate
corrective measures to be taken. Funding for Corporate Brand Efforts in Latin
America will be defined and managed by Licensor with the active participation of
Licensor's Communications Director and Licensee's CEO. Licensee shall use brand
agencies designated by Licensor provided that their cost, service and quality
are competitive with local first class international agencies operating in Latin
America. The Licensor's Vice President of Communications for Latin America or
other Licensor-designated representative shall oversee the performance of and
shall have responsibility for employing any corrective measures required with
regard to the brand agencies, but Licensee's CEO and his/her senior
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management team shall provide input to Licensor in connection with the
evaluation of the brand agencies. In the event that one or more of the brand
agencies designated by Licensor do not meet or continue to meet relevant cost,
service and quality criteria after corrective measures are implemented,
Licensor's Vice President of Communications for Latin America or other
Licensor-designated representative, with Licensee CEO's active participation,
shall select alternative agencies. Licensee's CEO and his/her senior management
team shall communicate directly with the Communications Director to enable the
effective performance of his/her responsibilities and management of issues
related to the Licensed Marks.
8.6 COSTS. Each party shall bear its own costs associated with, and all
risk of loss and damage resulting from, all inspections, surveys, tests and
reviews under this Section. Except as otherwise agreed herein, Licensee shall
bear the costs for marketing communications, public relations and local
advertising; while Licensor shall bear the cost of regional advertising in Latin
America from the Brand Fund Fee.
8.7 SPONSORSHIP. Licensee shall not use the Licensed Marks to sponsor,
endorse, or claim affiliation with any event, meeting, charitable endeavor or
any other undertaking without the express written permission of Licensor. Any
breach of this provision shall be deemed a Significant Breach by Licensee.
9. REMEDIES FOR NONCOMPLIANCE WITH SERVICE SPECIFICATIONS.
9.1 INITIAL CURE PERIOD. If Licensor becomes aware that Licensee is not
complying with any Service Specifications, or otherwise is in breach as defined
by Sections 12.2(d) or (e), Licensor shall notify Licensee in writing, setting
forth, in reasonable detail, a written description of the noncompliance and any
suggestions for curing such
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noncompliance. Licensee shall have sixty (60) days from receipt of the
description of noncompliance to correct such noncompliance, in the case of all
Service Specifications, except those Service Specifications relating to
Marketing Specifications (an "Initial Cure Period"). In the case of Licensee's
noncompliance with respect to Service Specifications relating to Marketing
Materials or Marketing Specifications, or where the Licensee otherwise is in
breach as defined by Sections 12.2(a) or (f), Licensee shall immediately cease
using any and all Marketing Materials which are in noncompliance with Service
Specifications relating to Marketing Materials or Marketing Specifications,
cease any other activity in noncompliance with these Service Specifications, and
withdraw all Marketing Material in noncompliance with the Marketing
Specifications. If there is any other noncompliance with respect to Service
Specifications or if the Licensee is otherwise in breach as defined in Sections
12.2(a) or (f), and such breach continues beyond a twenty (20) day period,
Licensee shall within a reasonable time but in any event within sixty (60) days
of the end of such twenty (20) day period either comply with the Service
Specifications or shall be deemed to be in breach of this Agreement.
9.2 SECOND CURE PERIOD. If the noncompliance with the technical
performance, customer service or customer satisfaction Service Specifications
other than Marketing Specifications is not cured within the Initial Cure Period,
either party may notify the other party thereof, setting forth, in detail, the
reasons for noncompliance. Within ninety (90) days of receipt of any such
notification, Licensor and Licensee shall create a mutually acceptable, detailed
plan to rectify such noncompliance and Licensee and Licensor shall agree upon a
reasonable and prompt timetable (the "Second Cure Period") to develop and
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implement this plan. Each party shall use all reasonable efforts to develop and
implement this plan.
9.3 FINAL CURE PERIOD. If the noncompliance with the technical
performance, customer service or customer satisfaction Service Specifications
continues beyond the Second Cure Period, or if the parties are unable to reach
agreement on a plan within the ninety (90) day time period set forth in Section
9.2 hereof and the Licensee is still in noncompliance, either party may notify
the other party thereof and Licensee shall either cease offering the Licensed
Service(s) which is or are not in compliance until it can comply with the
Service Specifications or be deemed to be in breach of this Agreement.
9.4 POTENTIAL INJURY TO PERSONS OR PROPERTY. Notwithstanding the
foregoing, in the event that Licensor reasonably determines that any
noncompliance with any Service Specification creates a material threat of
personal injury or injury to property of any third party, upon written notice
thereof by Licensor to Licensee, Licensee shall either cease offering the
applicable Licensed Service under the Licensed Marks until it can comply with
the Service Specifications or be deemed to be in breach of this Agreement.
9.5 COSTS. Except as otherwise expressly provided herein, all costs
relating to effecting cures, including Licensor's and any consulting firm's
and/or arbitrator's time and expenses and any additional monitoring required,
shall be borne by Licensee.
10. PROTECTION OF LICENSED MARKS.
10.1 OWNERSHIP AND RIGHTS. Except as otherwise expressly provided in
Section 2.2(b) Licensee acknowledges that Licensor is the sole owner of all
rights, title and interest in and to the Licensed Marks. Licensee admits the
validity of, and agrees not to challenge the ownership or validity of the
Licensed Marks. Licensee shall take no action with respect
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to obtaining intellectual property rights in the Licensed Marks without the
approval of Licensor. Licensor represents and warrants that the use of the
Licensed Master Service Marks by the Licensee for the Licensed Services does not
infringe the registered marks of any third party. Licensor shall use reasonable
efforts to ensure that each Licensed Ancillary Service Mark (other than those
Licensed Ancillary Service Marks developed by Licensee as provided in Section
2.2) is a Mark which is available for use and registration in the Licensed
Territory for the particular service at issue. Licensee shall not disparage or
adversely affect the validity of the Licensed Master Service Marks, the Licensed
Ancillary Service Marks, or the Licensed Trade Dress. Licensee will not grant or
attempt to grant a security interest in the Licensed Master Service Marks, the
Licensed Ancillary Service Marks, or the Licensed Trade Dress, or this
Agreement, or to record any such security interest in the Licensed Territory or
elsewhere against any trademark or service mark application or registration
belonging to Licensor. Licensee agrees to execute all documents including a
Registered User Application reasonably requested by Licensor to effect further
registration, maintenance and renewal of the Licensed Master Service Marks and
the Licensed Ancillary Service Marks and, where applicable, to record Licensee
as a registered user of the Licensed Master Service Marks and the Licensed
Ancillary Service Marks. For purposes of this Agreement, Licensee shall be
considered a "registered user" of the Licensed Master Service Marks and Licensed
Ancillary Service Marks under the laws of the countries in the Licensed
Territory, from time to time applicable.
10.2 SIMILAR MARKS. Licensee further agrees not to use, acquire or
register in any country any Mark resembling or confusingly similar or deceptive
or misleading with respect
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to the Licensed Marks and not to use or register the Licensed Marks or any part
thereof as part of its corporate or trade name except as authorized in this
Agreement. Licensee further agrees not to use or register in any country any
Mark which dilutes the Licensed Marks. If any application for registration is or
has been filed in any country or political entity by Licensee which relates to
any Mark which, in the sole opinion of Licensor acting in good faith, is
confusingly similar, deceptive or misleading with respect to the Licensed Master
Service Marks, the Licensed Ancillary Service Marks, or the Licensed Trade
Dress, or which dilutes the Licensed Master Service Marks, the Licensed
Ancillary Service Marks, or the Licensed Trade Dress, Licensee shall, within a
reasonable time, but in any event within 30 days of written request from
Licensor, at Licensor's sole discretion acting in good faith, immediately
abandon any such application or registration or assign it to Licensor. If
Licensee uses any Mark which, in the sole opinion of Licensor acting in good
faith, is confusingly similar, deceptive or misleading with respect to the
Licensed Master Service Marks, the Licensed Ancillary Service Marks, or the
Licensed Trade Dress, or which dilutes the Licensed Master Service Marks, the
Licensed Ancillary Service Marks, or the Licensed Trade Dress, or if Licensee
uses the Licensed Master Service Marks, the Licensed Ancillary Service Marks, or
the Licensed Trade Dress in connection with any product or in connection with
any service not specifically authorized hereunder, Licensee shall, within a
reasonable time, but in any event within thirty (30) days of receiving written
request from Licensor, permanently cease such use. Licensee shall reimburse
Licensor for all the costs and expenses of any litigation, opposition,
cancellation or related legal proceedings, including legal fees, instigated by
Licensor or its authorized representative, in connection with any such use,
registration or application.
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10.3 INFRINGEMENT. In the event that Licensee learns of any
infringement or threatened infringement of the Licensed Marks or any unfair
competition, passing-off or dilution with respect to the Licensed Master Service
Marks, the Licensed Ancillary Service Marks, or the Licensed Trade Dress, or any
third party alleges or claims that either the Licensed Master Service Marks, the
Licensed Ancillary Service Marks, or the Licensed Trade Dress are liable to
cause deception or confusion to the public, or are liable to dilute or infringe
any right of such third party, Licensee shall immediately notify Licensor or its
authorized representative giving particulars thereof and Licensee shall provide
necessary information and assistance to Licensor or its authorized
representatives in the event that Licensor decides that proceedings should be
commenced or defended.
Licensor shall have exclusive control of any litigation, opposition,
cancellation or related legal proceedings, or the settlement or compromise of
any claim. The decision whether to bring, defend, maintain or settle any such
proceedings shall be at the exclusive option and expense of Licensor and all
recoveries shall belong exclusively to Licensor and all reasonable expenses or
losses of Licensee in connection therewith shall be paid by Licensor to
Licensee. Licensee will not initiate any such litigation, opposition,
cancellation or related legal proceedings in its own name but, at Licensor's
request, agrees to be joined as a party in any action taken by Licensor to
enforce its rights in the Licensed Master Service Marks, the Licensed Ancillary
Service Marks, or the Licensed Trade Dress. Licensor shall reimburse Licensee
for all reasonable expenses of Licensee solely in its role as a party in the
action. Nothing in this Agreement shall require or be deemed to require Licensor
to enforce the Licensed Master Service Marks, the Licensed Ancillary Service
Marks, or the Licensed Trade Dress.
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In the event of any claim, action, proceeding or suit by a third party
against Licensee alleging an infringement by any of the Licensed Marks or
copyright, by reason of the use, in accordance with the Service Specifications,
of the Licensed Master Service Marks, the Licensed Ancillary Service Marks, or
the Licensed Trade Dress in association with the Licensed Service(s), Licensor,
at its expense, will defend Licensee subject to the following conditions:
Licensor will reimburse Licensee for any reasonable costs, expenses,
and legal fees incurred in connection with obtaining advice concerning its
liability with respect to the claim, action, proceeding or suit, but not legal
fees, costs and expenses involved in connection with the defense of the claim,
action, proceeding or suit, unless incurred at Licensor's written request or
authorization in which case Licensor will promptly reimburse Licensee in full
for such amounts. Licensor also will indemnify Licensee against any liability
(including any fines, penalties and punitive damages) assessed against Licensee
by final judgment or order from which no appeal lies or the time for appeal has
expired on account of such infringement or violation arising out of such use.
10.4 COMPLIANCE WITH LAWS. In the performance of this Agreement,
Licensee and Licensor shall comply with all applicable laws and regulations,
including those laws and regulations particularly pertaining to the proper use
and designation of Marks in the countries in the Licensed Territory. Should
either party be or become aware of any applicable laws or regulations which are
inconsistent with the provisions of this Agreement, such party shall promptly
notify the other of such inconsistency. In such event, Licensor may, at its
option, either waive the performance of such inconsistent provisions or
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negotiate with Licensee to make changes in such provisions to comply with
applicable laws and regulations.
11. NO TRANSFER OF LICENSED RIGHTS.
11.1 NO SUBLICENSING; ASSIGNMENT; RIGHTS TO MARKETING MATERIALS AND
TRADE DRESS. Licensee shall not, except as provided in Section 2.1, (i) assign,
license, transfer or part with any of its rights or obligations hereunder
(whether by amalgamation, merger, consolidation, sale or otherwise), or (ii)
grant or purport to grant any sublicense in respect of the Licensed Marks.
11.2 COPYRIGHT LICENSE. Licensee acknowledges that the Marketing
Materials and all proprietary rights therein are owned by or licensed to and
reserved to Licensor and they are valid. Licensor hereby grants Licensee a
royalty-free, non-exclusive, copyright license in the Licensed Territory to
reproduce, distribute, display, perform and create derivative works from all
Marketing Materials in connection with the provision of Licensed Services
pursuant to this Agreement. Licensee shall neither acquire nor assert copyright,
patent, industrial design, service mark or trademark ownership or any other
proprietary rights in and to the Marketing Materials or in any derivation,
adaptation or variation thereof. Any and all trademarks, service marks,
copyrights (subject to any moral rights of Licensee which may not be assigned by
operation of applicable law), or related rights accruing to Licensee in the
Marketing Materials by virtue of its sale, distribution, performance or
provision of the services in the Licensed Territory shall vest automatically at
the time of accrual solely and exclusively in Licensor. Licensee shall sign all
documents requested by Licensor to effectuate the transfer of these rights to
Licensor, failing which Licensor may, and Licensee hereby grants Licensor the
right to, execute documents on behalf of
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Licensee to secure or effectuate such rights. In the event this Agreement is
terminated, canceled or expires, Licensee shall immediately upon such
termination, cancellation or expiration cease all use in any manner of such
Marketing Materials and shall assign any and all right, title and interest in
and to any and all trademarks, service marks, copyrights, (subject to any moral
rights of Licensee which may not be assigned by operation of applicable law) and
other related proprietary rights in the Marketing Materials or in any
derivation, adaptation or variation thereof the Licensee owns to Licensor.
11.3 TRADE DRESS. Licensee shall assign to Licensor all rights, title,
interest and related goodwill in and to any Licensed Trade Dress it develops or
uses in connection with the provision of services under this Agreement. Such
assignment shall be made on a non-fee, royalty-free basis.
12. TERMS AND TERMINATION.
12.1 TERM.
(a) Unless earlier terminated in accordance with this Section
12, the initial term of this Agreement shall be five (5) years from the
Effective Date. This Agreement shall automatically be renewed at the end of the
initial term for an additional five (5) year term, provided that Licensee is not
in default pursuant to Section 5 or in breach pursuant to Section 12.2.
(b) Licensor in its sole discretion may terminate this
Agreement if Licensor and/or its other Affiliates cease to own, directly and
indirectly, a majority of the voting power of Licensee.
(c) All sublicenses granted hereunder shall terminate upon the
termination of this Agreement.
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(d) This Agreement shall terminate in the event of the
termination for failure of Licensee to perform under the Nancy Investment
Agreement or other agreements related thereto.
12.2 BREACH BY LICENSEE. Licensor may terminate this Agreement at any
time in the event of a Significant Breach by Licensee. A "Significant Breach by
Licensee" shall mean, after exhaustion of any applicable cure provisions set
forth in Sections 9 or 5 hereof, any of the following:
(a) Licensee's use of any Mark (including the Licensed Master Service
Marks, the Licensed Ancillary Service Marks, or Licensed Trade Dress) contrary
to this Agreement including any use which disparages or places in disrepute
Licensor, its businesses, or its business reputation, or adversely affects or
detracts from Licensor's goodwill;
(b) Licensee's refusing or neglecting a request by Licensor for access
to Licensee's facilities or Marketing Materials, which continues for thirty (30)
days following a written description of the noncompliance and any suggestions
for curing such noncompliance;
(c) Licensee's Bankruptcy or Licensee's licensing, assigning,
transferring or parting with (or purporting to license, assign, transfer or part
with) any of the rights granted in this Agreement to others without the prior
written approval of Licensor;
(d) Licensee's failure to maintain the Service Specifications and other
information furnished under this Agreement in confidence or failing to restrict
the transmission of information, products and commodities as required by this
Agreement;
<PAGE>
Page 33
(e) Licensee's failure to abide by the Service Specifications in the
sale, distribution, performance or provision of the Licensed Services, other
than relating to Marketing Materials;
(f) Licensee's failure to abide by the Service Specifications relating
to Marketing Materials in the sale, distribution, performance or provision of
the Licensed Services;
(g) Licensee's failing to make any payment specified in this Agreement,
including without limitation payments required under Sections 4 or 5 or 8 or 9
hereof;
(h) Licensee's failure to abide by Section 8.7 of this Agreement
relating to sponsorship; or
(i) Licensee's failure to obtain the recordal, approval or permits
required under Section 17 hereof.
12.3 TERMINATION OBLIGATIONS. In the event this Agreement terminates,
expires or is canceled in accordance with Section 12.2 hereunder, Licensee shall
immediately, and permanently cease all use of the Licensed Marks, the use of
"AT&T" as part of its corporate and trade name, and use of any proprietary
materials of Licensor furnished hereunder and shall not use any confusingly
similar name, Mark or trade dress, and Licensee shall have no further rights
under this Agreement. In the event this Agreement terminates or expires in
accordance with any other provision of this Agreement, Licensee shall have six
(6) months to cease all use of the Licensed Marks and any proprietary materials
of Licensor furnished hereunder and to change its corporate name and to cause
its Subsidiaries that are using "AT&T" as part of their corporate names to
change their names, and shall thereafter not use any confusingly similar name,
Mark or trade dress and Licensee shall have no further rights under this
Agreement.
<PAGE>
Page 34
12.4 NO WAIVER OF RIGHTS. In addition to any other provision of this
Section 12, each party will retain all rights to any other remedy it may have at
law or equity for any breach by the other of this Agreement.
13. INDEMNITY. Licensee shall defend, indemnify and hold Licensor, its
other Affiliates and authorized representatives harmless against all claims,
suits, proceedings, costs, damages and judgments incurred, claimed or sustained
by third parties whether for personal injury, or property damage, due to
Licensee's marketing, sale, or use of services bearing the Licensed Master
Service Marks, the Licensed Ancillary Service Marks, or the Licensed Trade Dress
and shall indemnify Licensor for all damages, losses, costs and expenses
(including reasonable attorneys' fees and expenses) due to such use or any
improper or unauthorized use of the Licensed Marks.
14. INSURANCE.
14.1 INSURANCE POLICY. Licensee shall maintain, at its own expense, in
full force and effect at all times during which services bearing the Licensed
Master Service Marks, the Licensed Ancillary Service Marks or the Licensed Trade
Dress are being sold, with a responsible insurance carrier acceptable to
Licensor, at least a Five (5) Million U.S. Dollar (U.S. $5,000,000.00)
comprehensive general liability insurance policy with respect to the services
offered under the Licensed Marks. This insurance shall name Licensor as an
insured party, shall be for the benefit of Licensor and Licensee and shall
provide for at least ten (10) days prior written notice to Licensor and Licensee
of the cancellation or any substantial modification of the policy. This
insurance may be obtained for Licensor by Licensee in conjunction with a policy
which covers services and/or products other than the Licensed Services covered
under this Agreement.
<PAGE>
Page 35
14.2 EVIDENCE OF INSURANCE. Licensee shall, from time to time upon
reasonable request by Licensor, promptly furnish or cause to be furnished to
Licensor evidence in form and substance satisfactory to Licensor, of the
maintenance of the insurance required by Section 14.1 hereof, including without
limitation originals or copies of policies, certificates of insurance (with
applicable riders and endorsements) and proof of premium payments.
15. NOTICES, ETC. All notices, requests, demands or other
communications required by or otherwise with respect to this Agreement shall be
in writing and shall be deemed to have been duly given to any party when
delivered personally (by courier service or otherwise), when delivered by
telecopy and confirmed by return telecopy, or seven days after being mailed by
first-class mail, postage prepaid in each case to the applicable addresses set
forth below:
If to Licensee:
Kiri Inc.
2333 Ponce de Leon Blvd.
Coral Gables, FL 33134
Attn: Chief Executive Officer
General Counsel
Fax No.: 305-774-2001
If to Licensor:
AT&T Corp.
295 N. Maple Avenue
Basking Ridge, New Jersey 07920
Attn: General Counsel
Fax No.: 908-953-8360
and
AT&T Corp.
Frank L. Politano, Esq.
Trademark and Copyright Counsel
295 North Maple Avenue
Basking Ridge, New Jersey 07920
Fax No.: 908-221-5783
<PAGE>
Page 36
or to such other address as such party shall have designated by notice so given
to each other party.
16. COMPLIANCE WITH LAW. Nothing in this Agreement shall be construed
to prevent Licensor or Licensee from complying fully with all applicable laws
and regulations, whether now or hereafter in effect.
17. GOVERNMENTAL LICENSES, PERMITS AND APPROVALS. Licensee, at its
expense, shall be responsible for obtaining and maintaining all licenses,
permits and Regulatory Approvals which are required by all Regulatory
Authorities with respect to this Agreement, and to comply with any requirements
of such Regulatory Authorities for the registration, approval or recording of
this Agreement or any related Registered User Applications and for making
payments hereunder. Licensee shall furnish to Licensor written evidence from
such Regulatory Authorities of any such licenses, approvals, permits,
clearances, authorizations, Regulatory Approvals, registration or recording.
Licensor and Licensee agree that Licensor shall record this License Agreement
with the appropriate authorities in the Licensed Territory where such licenses
shall be recorded, pay the necessary fees and do all that may be required to
effect such recordation and to obtain recognition of Licensee as an authorized
or registered user of the Licensed Marks.
18. EXPORT
Licensee acknowledges that any products, software, and technical
information (including, but not limited to services and training) provided under
this Agreement are subject to U.S. export laws and regulations and any use or
transfer of such products,
<PAGE>
Page 37
software, and technical information must be authorized under those regulations.
Licensee agrees that it will not use, distribute, transfer, or transmit the
products, software, or technical information (even if incorporated into other
products) except in compliance with U.S. export regulations. If requested by
Licensor, Licensee also agrees to sign those export-related documents which may
be required for Licensor to comply with U.S. export regulations. The obligations
of this section shall survive and continue after any termination of rights under
this Agreement.
19. APPLICABLE LAW; JURISDICTION. The construction, performance and
interpretation of this Agreement shall be governed by the laws of the State of
New York, U.S.A. without giving effect to its principles or rules of conflicts
of law to the extent that such principles or rules would require or permit the
application of the laws of another jurisdiction, provided that if the foregoing
laws should be modified during the term hereof in such a way as to adversely
affect the original intent of the parties, the parties will negotiate in good
faith to amend this Agreement to effectuate their original intent as closely as
possible. Subject to Section 20, Licensee and Licensor hereby irrevocably and
unconditionally consent to submit to the exclusive jurisdiction of the courts of
the State of New York and of the United States of America located in the State
of New York (the "New York Courts") for any litigation arising out of or
relating to this Agreement and the transactions contemplated hereby (and agrees
not to commence any litigation relating thereto in a court except in such
courts), waives any objection to the laying of venue of any such litigation in
the New York Courts and agrees not to plead or claim in any New York Court that
such litigation brought therein has been brought in an inconvenient forum.
Licensee and Licensor hereby waive any right to a trial by jury.
<PAGE>
Page 38
20. DISPUTE RESOLUTION.
20.1 ARBITRATION Any dispute, controversy or claim arising out of,
relating to, or in connection with, this Agreement, or the breach, termination
or validity thereof, whether based on contract, tort, statute, fraud,
misrepresentation or any other legal or equitable theory (each a "Claim"), shall
be finally settled by binding arbitration. The arbitration shall be conducted in
accordance with the CPR Rules for Non-Administered Arbitration in effect at the
time of the arbitration, except as they may be modified herein or by mutual
agreement of the parties. The seat of the arbitration shall be New York City,
New York, and it shall be conducted in the English language. Notwithstanding
Section 19 hereof, the arbitration and this clause shall be governed by Title 9
(Arbitration) of the United States Code. Any request for interim measures
pursuant to Section 23.5 hereof or otherwise shall not be deemed incompatible
with, or a waiver of, this agreement to arbitrate.
20.2 NUMBER OF ARBITRATORS/SELECTION. The arbitration shall be
conducted by three arbitrators. The party initiating arbitration (the
"Claimant") shall appoint an arbitrator in its request for arbitration (the
"Request"). The other party (the "Respondent") shall appoint an arbitrator
within 30 days of receipt of the Request and shall notify the Claimant of such
appointment in writing. If within 30 days of receipt of the Request by the
Respondent, either party has not appointed an arbitrator, then that arbitrator
shall be appointed by CPR Institute for Dispute Resolution. The first two
arbitrators appointed in accord with this provision shall appoint a third
arbitrator within 30 days after the Respondent has notified Claimant of the
appointment of the Respondent's arbitrator or, in the event of a failure by a
party to appoint, within 30 days after the CPR Institute for Dispute Resolution
has notified the parties and any arbitrator already appointed of its
<PAGE>
Page 39
appointment of an arbitrator on behalf of the party failing to appoint. When the
third arbitrator has accepted the appointment, the two arbitrators making the
appointment shall promptly notify the parties of the appointment. If the first
two arbitrators appointed fail to appoint a third arbitrator or so to notify the
parties within the time period prescribed above, then the CPR Institute for
Dispute Resolution shall appoint the third arbitrator and shall promptly notify
the parties of the appointment. The third arbitrator shall act as Chair of the
tribunal.
20.3 CERTAIN PROCEDURES. The arbitration panel shall strictly limit
discovery to the production of documents directly relevant to the facts alleged
by the Claimant and the Respondent, and if depositions are required, each party
shall be limited to five depositions. Each party shall bear its own expenses,
but those related to the compensation of the arbitrators shall be borne equally.
20.4 ARBITRAL AWARD. The arbitral award shall be in writing, state
only the damages and injunctive relief granted and be final and binding on the
parties. The parties hereto expressly waive and forgo any right to punitive,
exemplary or similar damages as a result of any Claim. The arbitrators shall
orally state the reasoning on which the arbitral award rests but shall not state
such reasoning in any writing. The arbitration panel shall endeavor to issue the
arbitral award within six months of the Request, but failure to do so shall not
effect the validity of the arbitral award. The parties agree that the existence
and contents of the entire arbitration, including the award, shall be deemed a
compromise of a dispute under Rule 408 of the Federal Rules of Evidence, shall
not be discoverable in any proceeding, shall not be admissible in any court
(except for the enforcement thereof)
<PAGE>
Page 40
or arbitration and shall not bind or collaterally estop either party with
respect to any claim or defense made by any third party.
20.5 CONFIDENTIALITY OF PROCEEDINGS. All proceedings in connection
with any arbitration, including its existence, the content of the proceedings
and any decision, shall be kept confidential to the maximum extent possible
consistent with the law. The arbitrator shall issue an order preventing the
parties, CPR Institute for Dispute Resolution and any other participants to the
arbitration from disclosing to any third party any information obtained via the
arbitration, including discovery of documents, evidence, testimony and the award
except as may be required by law.
20.6 JUDGMENT. Judgment upon the decision may be entered by any court
having jurisdiction thereof or having jurisdiction over the relevant party or
its assets, PROVIDED that the party entering the award shall request that the
court prevent the award from becoming publicly available except as may be
required by law.
21. CONFIDENTIALITY OF INFORMATION AND USE RESTRICTION
The Service Specifications disclosed and/or furnished to Licensee by
Licensor under this Agreement and all copies of the Service Specifications made
by Licensee, including translations, compilations and partial copies (the
"Material") shall remain the property of the Licensor and shall be returned to
Licensor upon request. Licensee shall use the Material solely for the purposes
described in this Agreement. Licensee shall hold in confidence during and after
the termination, expiration or cancellation of this Agreement and shall not
disclose such Material to any third party without the prior written consent of
the Licensor.
The Proprietary Information disclosed and/or furnished by one party to
another
<PAGE>
Page 41
under this Agreement and all copies thereof made by the receiving party,
including translations, compilations and partial copies shall remain the
property of the disclosing party and shall be returned to the disclosing party
upon request. The receiving party shall use the Proprietary Information solely
for the purposes described in this Agreement. The receiving party shall hold in
confidence during and after the termination, expiration or cancellation of this
Agreement and not disclose, provide, or otherwise make available, in whole or in
part such Proprietary Information to any third party without the prior written
consent of the disclosing party, except Proprietary Information which, as
established by reasonable proof by the receiving party:
(i) at the time of the alleged disclosure, is known to the public;
(ii) after the time of disclosure, becomes known to the public
other than by or through a violation of this Agreement by the
receiving party either directly or indirectly;
(iii) at the time of disclosure, is in the possession of the
receiving party and was not acquired directly or indirectly
from the disclosing party;
(iv) after the time of disclosure is lawfully received by the
receiving party from a third party who has lawfully received
it; or
(v) at the time of disclosure, is required to be disclosed by law
or by any government or regulatory agency having jurisdiction
for telecommunication services, the receiving party making
reasonable effort to have the agency retain the Proprietary
Information in confidence.
Both parties shall ensure that only its employees with a need to know
the Proprietary Information shall have access to it and then only if those
employees have
<PAGE>
Page 42
entered an appropriate confidentiality and use restriction agreement obligating
them at least to the same extent as the Licensee is obligated under this
Agreement.
The receiving party of the Proprietary Information shall exercise a
standard of care under this Section that is not less than the standard of care
Licensor exercises under its own corporate policy for confidentiality and use
restrictions for its own Proprietary Information.
If and when Licensor receives Proprietary Information of Licensee
through inspection, test, survey and review of Licensee's facilities and
otherwise to determine compliance with the applicable Service Specifications,
Licensor's non-disclosure requirements hereunder shall be for a period not to
exceed three years from the termination or expiration of this Agreement.
22. PAYMENTS.
22.1 PAYMENTS. All payments or fees due under this Agreement
("Payments") shall be made on the date that they are due and shall be subject to
a late payment charge equal to the lesser of (i) U.S. dollar LIBOR rate (London
Inter Bank Offer Rate) quoted for sixty (60) day advances (quoted on TELERATE, a
service of Dow Jones) plus 600 basis points starting on the date the Payment is
due plus 600 basis points accruing from the due date to date of receipt of the
balance owed by the Licensee and (ii) the maximum rate permitted by law. If
receipt occurs later than sixty (60) days from the due date, a weighted average
is computed based on successive sixty (60) day rates (e.g., if a year elapses
six rates taken sixty (60) days apart would be averaged.)
22.2 TAXES. All Payments due under this Agreement shall be made in full
without any deduction or withholding whatsoever for taxes or duties imposed by
the countries in
<PAGE>
Page 43
the Licensed Territory or any subdivision or local jurisdiction
thereof, unless such withholding or deduction is required by law in which event
Licensee shall pay to Licensor such additional amount so that the net amount
received by Licensor after the deduction or withholding will equal the full
amount which would have been received by it had no such deduction or withholding
been made.
22.3 PAYMENT OF BRAND FUND FEES. The payment of the Brand Fund Fees and
any associated late charges under Section 22.1 shall be made via electronic
funds transfer to a bank account designated by Licensee solely for this purpose
with notice to Licensor as to its existence and signing authority, and the funds
in such account shall be accessible solely by the Licensor Vice President for
Latin America and/or other Licensor-designated representative.
23. MISCELLANEOUS.
23.1 NAME, CAPTIONS. The name assigned this Agreement and the section
captions used herein are for convenience of reference only and shall not affect
the interpretation or construction hereof.
23.2 ENTIRE AGREEMENT. The provisions of this Agreement (including the
Schedules hereto) contain the entire agreement between the parties relating to
use by Licensee of the Licensed Marks and supersede all prior agreements and
understandings relating to the subject matter hereof. No rights are granted to
use the Licensed Marks except as specifically set forth in this Agreement. In
the event of any conflict between the provisions of this Agreement and
provisions of other agreements involving Licensor and Licensee, the provisions
of this Agreement shall prevail. This Agreement is not a franchise, does not
create a partnership or joint venture and shall not be deemed to
<PAGE>
Page 44
constitute an assignment of any rights of Licensor to Licensee. Licensee is an
independent contractor, not an agent or employee of Licensor, and Licensor is
not liable for any acts or omissions by Licensee. The continuing obligations of
Licensee in this Agreement, including those obligations set forth in Sections
10.2 and 18, shall survive and continue after the expiration, cancellation, or
termination of this Agreement. With respect to Section 21, the obligations shall
survive and continue for a period of three (3) years following such expiration,
cancellation or termination of this Agreement. Notwithstanding the foregoing,
the confidentiality provisions of the Purchase Agreement are not in any way
altered, amended, extended, contracted or superseded by this Section 23.2 of
this Agreement.
23.3 AMENDMENTS, WAIVERS, ETC. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified except by an instrument in
writing signed by the parties.
23.4 SEVERABILITY. If any term of this Agreement or the application
thereof to any party or circumstance shall be held invalid or unenforceable to
any extent, the remainder of this Agreement and the application of such term to
the other parties or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by applicable law.
23.5 SPECIFIC PERFORMANCE. The parties acknowledge that money damages
are not an adequate remedy for violations of this Agreement and that any party
may, in its sole discretion, apply to a court of competent jurisdiction for
specific performance, interim or injunctive or such other relief as such court
may deem just and proper in order to enforce this Agreement or prevent any
violation hereof and, to the extent permitted by applicable
<PAGE>
Page 45
law, each party waives any objection to the imposition of such relief.
23.6 REMEDIES CUMULATIVE. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise or beginning of
the exercise of any thereof by any party shall not preclude the simultaneous or
later exercise of any other such right, power or remedy by such party.
23.7 NO WAIVER. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
23.8 NO THIRD PARTY BENEFICIARIES. This Agreement is not intended to be
for the benefit of and shall not be enforceable by any person or entity who or
which is not a party hereto.
23.9 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one instrument. Each counterpart may consist of a
number of copies each signed by less than all, but together signed by all, the
parties hereto.
23.10 FURTHER ASSURANCES. Each of the parties shall, and shall cause
its Affiliates to, from time to time, execute and deliver such additional
instruments, documents, conveyances or assurances and take other such actions as
shall be necessary or otherwise reasonably requested by a party, to confirm and
assure the rights and
<PAGE>
Page 46
obligations provided for in this Agreement and render effective the consummation
of the transactions contemplated hereby, or otherwise carry out the intent and
purposes of this Agreement.
23.11 CONSTRUCTION OF THIS AGREEMENT. In any construction of this
Agreement, this Agreement shall not be construed against any party based upon
the identity of the drafter of the Agreement or any provision of it.
23.12 EFFECTIVE DATE. This Agreement shall become effective upon the
date of the consummation of the Merger under the Merger Agreement (the
"Effective Date") and shall have no force or effect prior to such time.
<PAGE>
Page 47
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed in duplicate originals by its duly authorized representatives as of the
date first stated above.
KIRI INC. AT&T CORP.
By: ________________________ By: _________________________
Name: ______________________ Name: _______________________
Title: _____________________ Title: ______________________
Date: ______________________ Date: _______________________
<PAGE>
Page 48
SCHEDULE A
LICENSED MASTER SERVICE MARKS
[GRAPHIC OMITTED][GRAPHIC OMITTED]
-----------------------------------------------------------------
[GRAPHIC OMITTED]
[GRAPHIC OMITTED]
<PAGE>
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SCHEDULE B
REGISTRATIONS FOR LICENSED MASTER SERVICE MARKS
REGISTRATION REGISTRATION
OR APPLICATION OR APPLICATION
COUNTRY MARK NO. DATE
- ------- ---- -------------- --------------
Argentina AT&T 1099877 Feb. 28, 1995
Argentina AT&T & Globe Design 1518137 Apr. 29, 1994
Brazil AT&T 811983030 Aug. 5, 1986
Brazil AT&T & Globe Design 819860573 Mar. 24, 1997
Chile AT&T 389224 Mar. 8, 1993
Chile AT&T & Globe Design 420096 Jan. 18, 1994
Colombia AT&T 112857 Apr. 4, 1986
Colombia AT&T & Globe Design 148388 Jan. 28, 1994
Peru AT&T 2468 Jan. 25, 1984
Peru AT&T & Globe Design 14617 Jun. 2, 1998
<PAGE>
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SCHEDULE C1
LICENSED ANCILLARY SERVICE MARKS
RESTRICTIONS ON LICENSE
-----------------------
MARK LICENSED TERRITORY LICENSED SERVICES
- ---- ------------------ -----------------
IT'S ALL WITHIN YOUR REACH All All
TODO A SEU ALCANCE All Portuguese- All
speaking countries
TODO A TU ALCANCE All Spanish- All
speaking countries
<PAGE>
Page 51
SCHEDULE C2
REGISTRATIONS FOR LICENSED ANCILLARY SERVICE MARKS
REGISTRATION REGISTRATION
OR APPLICATION OR APPLICATION
COUNTRY MARK NO. DATE
- ------- ---- -------------- --------------
Argentina IT'S ALL WITHIN
YOUR REACH 2151848 May 20, 1998
Argentina TODO A TU
ALCANCE 2151851 May 20, 1998
Bolivia IT'S ALL WITHIN
YOUR REACH 6065 May 5, 1998
Bolivia TODO A TU
ALCANCE 6064 May 5, 1998
Brazil IT'S ALL WITHIN
YOUR REACH 819891959 Apr. 22, 1997
Brazil TODO A SEU
ALCANCE 820880574 Jun. 29, 1998
Chile IT'S ALL WITHIN
YOUR REACH 414215 May 8, 1999
Chile TODO A TU
ALCANCE 414213 May 8, 1999
Colombia IT'S ALL WITHIN
YOUR REACH 98028803 May 21, 1999
Colombia TODO A TU
ALCANCE 98028799 May 21, 1999
Peru IT'S ALL WITHIN
YOUR REACH 15536 Sep. 10, 1998
Peru TODO A TU
ALCANCE 15442 Aug. 31, 1998
<PAGE>
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SCHEDULE D
LICENSED TRADE DRESS
1. The overall configurations of the AT&T and globe design corporate
signature as set forth more fully in the AT&T document CORPORATE
IDENTITY PROGRAM: GRAPHIC STANDARDS MANUAL ("Graphic Standards
Manual").
2. The AT&T Garamond typeface, namely AT&T's proprietary typeface used for
all marketing communications materials, including print and television
advertising, promotional brochures, pamphlets and other Marketing
Materials and as set forth in the AT&T document GUIDELINES FOR PRINT
AND TV ADVERTISING.
3. The AT&T identification stripes, namely a rectangular band consisting
of three parallel lines: the top line being red (PANTONE(R) 485); the
middle, blue (PANTONE(R) Process Blue); the bottom, black (PANTONE(R)
Process Black), as set forth in the GRAPHIC STANDARDS MANUAL.
4. The acceptable color applications of the AT&T and globe design
corporate signature as set forth in the GRAPHIC STANDARDS MANUAL.
<PAGE>
Page 53
SCHEDULE D (CONT.)
LICENSED TRADE DRESS
5. The acceptable graphic techniques relating to the AT&T and globe design
corporate signature as set forth in the GRAPHIC STANDARDS MANUAL.
6. The acceptable applications of the AT&T globe design corporate
signature and typography, as well as the visual style and design
techniques (layout) as applied to any product marking, as set forth in
the AT&T document PRODUCT MARKING REFERENCE MANUAL.
7. The acceptable applications of the AT&T globe design corporate
signature and typography, as well as the visual style and design
techniques, as applied to business stationery, and as set forth in the
AT&T document BUSINESS STATIONERY SPECIFICATIONS.
8. Nothing in this Schedule shall restrict or limit AT&T's claim of trade
dress rights in or protection of AT&T's Trade Dress.
<PAGE>
Page 54
SCHEDULE E
SERVICE SPECIFICATIONS
<PAGE>
Page 55
SCHEDULE F
LICENSED SERVICES
EXCLUSIVE SERVICES
o Local voice delivered through fixed-line connectivity
o Domestic long distance
o International long distance
o Point-to-point dedicated line
o Asynchronous Transfer Mode (ATM)
o Frame relay
o Internet access
o 1-800/toll free
o Packet X.25 (data)
o Virtual network services (data)
o Switched digital (data)
NONEXCLUSIVE SERVICES
o AT&T card services
o AT&T Direct(R) services
o E-commerce
o Web-hosting
o Fixed wireless for connectivity
o Voice over Internet Protocol
o Managed Network Services (as defined herein)
<PAGE>
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SCHEDULE G
Criteria for Sublicensees
Neither sublicensees nor their affiliates (including any joint venture and
business alliance in which sublicensee is a participant) conduct business or
engage in business practices in any of the following areas:
o Illegal activities;
o Content or practices which demean, ridicule or attack individuals
or groups on the basis of age, color, national origin, race,
religion, sex, sexual orientation or handicap;
o Pornographic, obscene or sexually explicit/suggestive material or
content;
o Material deemed to be harmful to children;
o Tobacco or alcoholic beverages;
o Firearms, ammunition or fireworks;
o Gambling;
o Contraceptives;
o Violence;
o Vulgar or obscene language;
o Solicitation of funds;
o Extreme political or social activism.
<PAGE>
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SCHEDULE H
LICENSEE CORPORATE AND TRADE NAME
AT&T Latin America, Inc.
EXHIBIT 2.5
================================================================================
REGIONAL VEHICLE AGREEMENT
dated as of
________________ ___, 1999
between
AT&T CORP.
and
KIRI INC.
================================================================================
<PAGE>
TABLE OF CONTENTS
ARTICLE I
SCOPE
Page
----
1.1. RV Business......................................................... 2
ARTICLE II
RV SERVICES
2.1. RV Exclusive Services............................................. 2
2.2. RV Non-Exclusive Services......................................... 2
2.3. Preferred Supplier to Parent ......................................3
ARTICLE III
EXCLUDED ACTIVITIES
3.1. Excluded Activities ...............................................3
ARTICLE IV
GLOBAL VENTURE
4.1. Regional Vehicle's Provision of RV Services to the Global Venture..3
4.2. Regional Vehicle's Distribution of Services of and Purchase of
Services from the Global Venture ..................................3
4.3. Services Reserved to the Global Venture ...........................4
4.4. Managed Network Services ..........................................4
ARTICLE V AT&T
GLOBAL NETWORK
5.1. AT&T Global Network Services ......................................5
5.2. Regional Vehicle's Provision of Services to the AT&T Global
Network ...........................................................5
5.3. AT&T Global Network Distribution Arrangements .....................5
ARTICLE VI
PARENT ACQUISITIONS, ETC.
6.1. Territory Acquisitions ............................................5
i
<PAGE>
6.2. FMV Determination .................................................7
6.3. Easymail Chile ....................................................8
ARTICLE VII
TERM 8
7.1. Term ..............................................................8
ARTICLE VIII
ARBITRATION
8.1. Arbitration .......................................................9
8.2. Number of Arbitrators/Selection ...................................9
8.3. Certain Procedures ................................................9
8.4. Arbitral Award ....................................................9
8.5. Confidentiality of Proceedings ...................................10
8.6. Judgment .........................................................10
ARTICLE IX
MISCELLANEOUS
9.1. Amendment ........................................................10
9.2. Waiver ...........................................................10
9.3. Notices ..........................................................10
9.4. Assignment; Binding Effect .......................................11
9.5. Entire Agreement .................................................12
9.6. Governing Law ....................................................12
9.7. Further Assurances ...............................................12
9.8. Headings .........................................................12
9.9. Interpretation ...................................................12
9.10. Severability .....................................................12
9.11. Enforcement ......................................................12
9.12. Counterparts .....................................................13
EXHIBITS
Exhibit A. Definitions
SCHEDULES
Schedule A-1 RV Exclusive Services
Schedule A-2 Parent Group Activities
Schedule B. RV Non-Exclusive Services
Schedule C. Excluded Activities
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REGIONAL VEHICLE AGREEMENT, dated as of ______ __, 1999, between AT&T
Corp., a New York corporation ("AT&T") and Kiri Inc., a Delaware corporation
("Regional Vehicle"). Certain capitalized terms used herein without definition
shall have the meanings specified in Exhibit A.
RECITALS
A. Parent, Regional Vehicle, a Delaware Corporation, FirstCom
Corporation, a Texas Corporation (the "COMPANY"), and a subsidiary of Regional
Vehicle ("MERGER SUB") have entered into an Agreement and Plan of Merger, dated
November 1, 1999 (the "MERGER AGREEMENT"), pursuant to which the Company will
merge with and into Merger Sub (the "MERGER"). Immediately following the Merger,
it is intended that, on a fully-diluted basis, (I) the former shareholders of
the Company will own, collectively, approximately 34% of the shares of common
stock of Regional Vehicle, (II) Parent will own, directly or indirectly,
approximately 60% of the shares of common stock of Regional Vehicle, and (III)
Promon Tecnologia S.A., or an Affiliate thereof, will own approximately 6% of
the shares of common stock of the Regional Vehicle.
B. Parent and Regional Vehicle anticipate that the establishment of
Regional Vehicle and the commercial arrangements contemplated hereby will enable
the delivery of competitive, comprehensive packages of end-to-end integrated
broadband services to customers in the Territory.
C. Regional Vehicle will benefit from its relationship with Parent as a
result of certain contractual arrangements of Parent, including the Framework
Agreement, dated as of October 23, 1998, among Parent, VLT Corporation, British
Telecommunications PLC, BT (Netherlands) Holdings B.V. and Thistle B.V. (as
amended from time to time, the "FRAMEWORK AGREEMENT"). Regional Vehicle is also
expected to have increased demand for its services as a result of the commercial
arrangements contemplated hereby. Parent will grant concurrently with the Merger
a non-exclusive license to Regional Vehicle to use certain Brands (the "LICENSED
BRANDS") pursuant to the Brand License Agreement.
D. Regional Vehicle shall serve as Parent's strategic vehicle for
in-country investments in the Territory for the provision of broadband
high-speed connectivity to business customers in the Territory and for the
provision of certain other telecommunications services in the Territory, in each
case to the extent set forth in this Agreement.
E. In consideration of the mutual undertakings of the parties contained
herein and as an inducement to the parties to enter into the Merger Agreement,
Regional Vehicle and Parent
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desire to define the scope of Regional Vehicle's business and its relationship
with Parent and certain Affiliates and joint ventures of Parent as set forth in
this Agreement.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
conditions hereinafter set forth, the sufficiency of which is hereby
acknowledged, intending to be legally bound, the parties hereby agree as
follows:
ARTICLE I
SCOPE
1.1. RV BUSINESS. (a) Regional Vehicle has been established primarily
to provide broadband, high-speed connectivity to business customers in the
Territory and, in connection therewith, to provide, offer, distribute, market
and sell primarily to business customers RV Exclusive Services and RV
Non-Exclusive Services, own facilities and other assets related thereto and
engage in incidental activities related thereto, in each case in the Territory,
in accordance with the terms of this Agreement. Regional Vehicle may conduct its
business through its Subsidiaries in the Territory, PROVIDED that Regional
Vehicle shall cause such Subsidiaries to comply with all of the provisions of
this Agreement applicable to Regional Vehicle as if they were signatories
hereof.
(b) Regional Vehicle shall provide, offer, distribute, market and sell
all of its RV Exclusive Services and RV Non-Exclusive Services under (I) the
Licensed Brands, (II) Brands specified by the Global Venture, subject to the
prior written consent of the Global Venture, in the case of services relating to
the Global Venture or (III) subject to the approval of Parent as provided in the
Brand License Agreement, Brands created by Regional Vehicle and owned by Parent
or Regional Vehicle.
ARTICLE II
RV SERVICES
2.1. RV EXCLUSIVE SERVICES. The services listed in the Schedule of RV
Exclusive Services attached hereto as Schedule A-1 are referred to herein as the
"RV EXCLUSIVE SERVICES." Except as identified in the Schedule of Parent Group
Activities attached hereto as Schedule A-2 hereof or as provided in Article V,
Parent will not, and will cause the other members of the Parent Group not to,
provide, offer, distribute, market or sell RV Exclusive Services in the
Territory unless Regional Vehicle supplies such services to Parent or such
member of the Parent Group.
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2.2. RV NON-EXCLUSIVE SERVICES. The services listed in the Schedule of
RV Non-Exclusive Services attached hereto as Schedule B may, subject to the
terms of this Agreement, be provided, offered, distributed, marketed or sold by
any Person and such services are referred to herein as the "RV NON-EXCLUSIVE
SERVICES," and, together with the RV Exclusive Services, as the "RV SERVICES."
2.3. PREFERRED SUPPLIER TO PARENT. The Regional Vehicle shall be a
Preferred Supplier of RV Exclusive Services in the Territory to Parent and its
wholly-owned Subsidiaries, except to the extent Parent and its wholly-owned
Subsidiaries are obligated to purchase such services from the Global Venture.
ARTICLE III
EXCLUDED ACTIVITIES
3.1. EXCLUDED ACTIVITIES. Regional Vehicle shall not provide, offer,
distribute, market or sell any service listed in the schedule of Excluded
Activities attached hereto as Schedule C or take any other action that
contravenes Section 4.3 relating to the Global Venture (collectively, the
"EXCLUDED ACTIVITIES").
ARTICLE IV
GLOBAL VENTURE
4.1. REGIONAL VEHICLE'S PROVISION OF RV SERVICES TO THE GLOBAL VENTURE.
The Regional Vehicle shall be a Preferred Supplier of RV Services in the
Territory to the Global Venture in accordance with and subject to the Framework
Agreement on commercially reasonable terms as agreed between Regional Vehicle
and the Global Venture.
4.2. REGIONAL VEHICLE'S DISTRIBUTION OF SERVICES OF AND PURCHASE OF
SERVICES FROM THE GLOBAL VENTURE. (a) Parent shall request that the Global
Venture grant to Regional Vehicle distribution rights with respect to Global
Business Communications Services of the Global Venture in the Territory on
commercially reasonable terms in accordance with and subject to the terms of the
Framework Agreement.
(b) Regional Vehicle shall purchase all of its requirements for Global
Communications Services from the Global Venture pursuant to commercially
reasonable terms to be set forth in (I) an agreement between the Regional
Vehicle and the Global Venture or (II) if applicable, an agreement between
Parent and the Global Venture governing the purchase of Global Communications
Services by Parent and its Subsidiaries.
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(c) Regional Vehicle shall purchase all of its requirements for
International Traffic Termination Services from the Global Venture, PROVIDED
that such services are provided by the Global Venture to Regional Vehicle on
commercially reasonable terms.
4.3. SERVICES RESERVED TO THE GLOBAL VENTURE. Unless Regional Vehicle
is a Limited Cross Border Network Services Provider or as otherwise agreed by
Parent and the Global Venture and any other party whose consent may be required
under the Framework Agreement, Regional Vehicle shall not:
(a) offer, sell or distribute Global Business Communications Services
or any services competitive with the Global Business Communications Services
provided through the Global Venture except as permitted pursuant to Section 4.2;
(b) offer, sell or distribute any Communications Services, except
through the Global Venture, to any Person that is a Qualifying MNC Customer (as
such term is defined in the Framework Agreement)(each such Person, a "QUALIFYING
MNC"), a list of which Parent has previously delivered to Regional Vehicle, and
which Parent will update periodically;
(c) own, operate, lease or manage Global Network Facilities; or
(d) provide any International Carrier Services.
Regional Vehicle shall be deemed a "LIMITED CROSS BORDER NETWORK SERVICES
PROVIDER" for so long as Regional Vehicle and any Person in which it has a
direct or indirect equity interest do not derive aggregate annual revenues
("CROSS BORDER REVENUES") that exceed $150 million, directly or indirectly,
whether acting alone or in association with, or through one or more Persons,
from Global Business Communications Services and other services provided over a
cross border network owned by Regional Vehicle or its Subsidiaries or provided
by any cross border network, alliance or consortium in which Regional Vehicle
has any direct or indirect equity interest. For purposes of calculating such
aggregate annual revenues, the actual pro rata share of revenues of any Persons
in which Regional Vehicle owns a direct or indirect equity interest shall be
included with respect to any investments in a Person that is not wholly-owned by
the Regional Vehicle. Within 90 days of the end of each Regional Vehicle fiscal
year, Regional Vehicle shall provide Parent with a certificate executed by the
chief executive officer and chief financial officer of Regional Vehicle
certifying the amount of Cross Border Revenues for such fiscal year and setting
forth the breakdown and calculation thereof in reasonable detail.
4.4. MANAGED NETWORK SERVICES. Regional Vehicle shall not provide
Managed Network Services to any Qualifying MNC except as contracted through the
Global Venture.
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ARTICLE V
AT&T GLOBAL NETWORK
5.1. AT&T GLOBAL NETWORK SERVICES. Any current or future services
provided by any member of the Parent Group using any assets owned or controlled
now or in the future by the AT&T Global Network are referred to herein as the
"AT&T GLOBAL NETWORK SERVICES". Notwithstanding Section 2.1, Parent or any
member of the Parent Group may provide, offer, market, distribute or sell to any
Person, and, subject to 5.3, may appoint any Person as a distributor of, AT&T
Global Network Services in the Territory.
5.2. REGIONAL VEHICLE'S PROVISION OF SERVICES TO THE AT&T GLOBAL
NETWORK. Regional Vehicle shall be a Preferred Supplier of RV Services to the
AT&T Global Network on commercially reasonable terms as agreed between Regional
Vehicle and Parent.
5.3. AT&T GLOBAL NETWORK DISTRIBUTION ARRANGEMENTS. Promptly after the
execution of this Agreement, Parent will cause the appropriate AT&T Global
Network Person to discuss with Regional Vehicle possible arrangements for the
distribution of AT&T Global Network Services by Regional Vehicle in the
Territory. While the parties have not reached any understanding as to the
outcome of such discussions, they have agreed that Regional Vehicle shall be an
exclusive distributor of AT&T Global Network Services in one or more countries
in the Territory on commercially reasonable terms as may be agreed between
Regional Vehicle and Parent, PROVIDED that such exclusive distributorship shall
(I) be subject to Regional Vehicle's ability to meet performance and service
level requirements established by AT&T Global Network; (II) not limit the rights
of any Person under the Master Services Agreement, dated December 7, 1998 by and
between International Business Machines Corporation and AT&T Solutions, Inc.,
the Master Asset Purchase Agreement, dated December 7, 1998, between
International Business Machines Corporation and AT&T or any related agreements,
or the ability of any such Person to comply with its obligations thereunder; and
(III) not limit the rights of any member of the Parent Group or any AT&T Global
Network Person to (X) distribute AT&T Global Network Services directly to
customers in the Territory, (Y) have its employees market or sell such services
to customers in the Territory or (Z) appoint remarketers or global value added
resellers (VARs) of AT&T Global Network Services.
ARTICLE VI
PARENT ACQUISITIONS, ETC.
6.1. TERRITORY ACQUISITIONS. (a) If (I) a member of the Parent Group
acquires (including as a result of a merger or any other business combination
transaction) an interest in
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any Person that derived (including through any consolidated Subsidiaries of such
Person) revenues in the immediately preceding fiscal year from assets or
customers in the Territory (such revenues, the "TERRITORY REVENUES") (such
Person, an " ACQUIRED PERSON," and together with its Subsidiaries, if any, an "
ACQUIRED GROUP"), (II) more than 50% of such Territory Revenues were derived
from the provision of RV Exclusive Services and (III) such acquisition would
otherwise result in any member of the Acquired Group becoming a member of the
Parent Group (such case, a "COVERED ACQUISITION"), Parent shall comply with the
provisions of Section 6.1(b).
(b) In the case of a Covered Acquisition, within (I) eighteen months,
if the Territory Revenues of such Acquired Group were greater than 33a% of such
Acquired Group's consolidated gross revenues for its immediately preceding
fiscal year, or (II) thirty months, if the Territory Revenues of such Acquired
Group were less than 33a% of such Acquired Group's consolidated gross revenues
for its immediately preceding fiscal year, after the acquisition of such
Acquired Person, Parent shall either (X) cause the members of such Acquired
Group to cease in all material respects providing RV Exclusive Services in the
Territory or (Y) offer, or cause the relevant member of the Parent Group to
offer, in writing (an "OFFER") to sell to the Regional Vehicle for cash that
portion of the Acquired Group's business that primarily relates to the provision
of such RV Exclusive Services in the Territory (the "OFFERED ASSETS") at their
Fair Market Value, PROVIDED that this Section 6.1(b) shall not apply if selling
such Offered Assets (X) would conflict with or contravene applicable law or a
pre-existing contractual obligation of any member of the Acquired Group or that
is binding on any material assets of such a member and such obligation is not
waived or amended, (Y) would result in a tax obligation for members of the
Parent Group that is material in relation to the consideration paid for the
Offered Assets by the relevant member of the Parent Group or (Z) in the case of
a business that is not owned by a direct or indirect substantially wholly-owned
Subsidiary of Parent, would, in the good faith determination of the Board of
Directors of any relevant member of a Parent Group, having received advice of
outside counsel with respect to fiduciary duties to minority shareholders,
violate any such fiduciary duties (each of subsection (x), (y) and (z), an
"OFFER EXCEPTION"), PROVIDED further that Offered Assets shall not include any
assets held by a Person that is not controlled by Parent. Such Offer may be
accepted by Regional Vehicle by written notice to Parent until the later of (A)
the one hundred twentieth day after the date of the Offer and (B) 25 days after
the date of determination of the Fair Market Value of such Offered Assets
pursuant to Section 6.3 (such period being referred to herein as, the "OFFER
RESPONSE PERIOD").
(c) No member of an Acquired Group shall be included in the Parent
Group except as provided below in the case of a Covered Acquisition. In the case
of a Covered Acquisition, no member of an Acquired Group shall be included as a
member of the Parent Group until the later of (I) the day after the expiration
of the Offer Response Period, (II) two years after such member's acquisition and
(III) the date of the actual transfer of the Offered Assets to Regional Vehicle
if Regional Vehicle accepts the Offer, PROVIDED that, if (X) Regional Vehicle
shall not
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accept an Offer within the Offer Response Period or (Y) a member of a
Acquired Group is subject to an Offer Exception, such member shall not be
included as a member of the Parent Group at any time.
6.2. FMV DETERMINATION. (a) Parent shall set forth in any Offer its
determination of the Fair Market Value of the Offered Assets that are the
subject of such Offer. If Regional Vehicle does not agree that the Fair Market
Value set forth in the Offer represents the value Parent could obtain in an
arm's length sale of the Offered Assets to an unaffiliated third party, Regional
Vehicle shall deliver a written notice (an "FMV NOTICE") to Parent requesting
that a determination of Fair Market Value be made pursuant to this Section 6.2.
If Regional Vehicle does not deliver such FMV Notice within 45 days after the
date of the Offer, the Fair Market Value of the Offered Assets shall be the
amount set forth in the Offer.
(b) If Regional Vehicle delivers an FMV Notice, each of Parent and
Regional Vehicle shall retain within 15 days of such delivery, and provide
relevant information to, an internationally recognized investment banking firm
(each, an "APPRAISER", together the "INITIAL APPRAISERS") to determine the Fair
Market Value of the Offered Assets. Within 30 days following the provision of
relevant information by Parent and Regional Vehicle to the Initial Appraisers,
which information shall be provided within 30 days after retention of the
Initial Appraisers, the Initial Appraisers shall submit their determinations of
the Fair Market Value of the Offered Assets to Parent and Regional Vehicle. If
the difference between the determinations submitted by the Initial Appraisers is
less than 20 percent of the lowest of such determinations, then the average of
the determinations submitted by the appraisers shall be deemed to be the Fair
Market Value for the Offered Assets.
(c) If the difference between the determinations submitted by each
appraiser equals or exceeds 20 percent of the lowest of such determinations, the
Initial Appraisers will within 15 days select a third internationally recognized
investment banking firm to make such determination, PROVIDED if the Initial
Appraisers cannot agree to a third internationally recognized investment banking
firm, such firm shall be chosen by the CPR Institute for Dispute Resolution.
Regional Vehicle and Parent shall provide information to the third appraiser
within ten days after such appraiser is appointed. The third appraiser shall
submit its determination of the Fair Market Value for the Offered Assets to
Regional Vehicle within 30 days following the provision of relevant information
by Regional Vehicle and Parent. The average of the determination provided by
such third appraiser and the determination submitted by the Initial Appraisers
that is closer to the determination provided by such third appraiser shall be
deemed to be the Fair Market Value of the Offered Assets, PROVIDED, however,
that to the extent such average is greater than the higher price submitted by
the Initial Appraisers (the "HIGH PRICE"), the Fair Market Value of the Offered
Assets shall be the High Price or, to the extent such average is less than the
lower price submitted by the Initial Appraisers (the "LOW PRICE"), the Fair
Market Value of the Offered Assets shall be the Low Price. The fees and expenses
of the Initial Appraisers shall be borne by
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the respective parties that appointed them. The fees and expenses of any third
appraiser shall be split equally between Regional Vehicle and Parent.
6.3. EASYMAIL CHILE. Prior to any sale or transfer of any interest in
Easymail Chile S.A. (an "EASYMAIL INTEREST") held by Parent or any Subsidiaries
of Parent (such holder, a "SELLING PERSON") to a Person other than Parent or
another Affiliate of Parent, Parent shall, or cause such Selling Person to,
offer in writing (an "EASYMAIL OFFER") to sell to Regional Vehicle for cash such
Easymail Interest at its Fair Market Value, PROVIDED that this Section 6.3 shall
not apply if selling such Easymail Interest would conflict with or contravene
applicable law or a pre-existing contractual obligation of Parent or such
Selling Person. The Selling Person shall set forth in any Easymail Offer its
determination of the Fair Market Value of such Easymail Interest. If Regional
Vehicle does not agree that the Fair Market Value set forth in the Easymail
Offer represents the value such Selling Person could obtain in an arm's length
sale of such Easymail Interest to an unaffiliated third party, Regional Vehicle
shall deliver a written notice (an "EASYMAIL FMV NOTICE") to Parent requesting
that a determination of Fair Market Value be made in accordance with the
procedures set forth in Sections 6.2(b) and 6.2(c). If Regional Vehicle does not
deliver such Easymail FMV Notice within 45 days after the date of the Easymail
Offer, the Fair Market Value of the Easymail Interest shall be the amount set
forth in the Easymail Offer. Otherwise the Fair Market Value shall be that value
determined in accordance with the procedures set forth in Sections 6.2(b) and
6.2(c), PROVIDED that in the case of any Selling Person other than Parent, a
reference to Parent in such Section shall be deemed to be a reference to such
Selling Person and a reference to Offered Assets shall be deemed to be a
reference to such Easymail Interest. Such Easymail Offer may be accepted by
Regional Vehicle by written notice to Parent until the later of (A) the one
hundred twentieth day after the date of the Easymail Offer and (B) 25 days after
the date of determination of the Fair Market Value of such Easymail Interest in
accordance with the procedures set forth in Sections 6.2(b) and 6.2(c) (such
period being referred to herein as, the "EASYMAIL OFFER RESPONSE PERIOD"). If
Regional Vehicle does not accept such Easymail Offer within the Easymail Offer
Response Period, such Selling Person may sell its Easymail Interest at any time
to any Person.
ARTICLE VII
TERM
7.1. TERM. The term of this Agreement shall begin on the date hereof
and shall terminate upon mutual agreement of the parties hereto; PROVIDED that
Parent may in its sole discretion terminate this Agreement at any time after the
termination of the Brand License Agreement.
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ARTICLE VIII
ARBITRATION
8.1. ARBITRATION. Any dispute, controversy or claim arising out of,
relating to, or in connection with, this Agreement, or the breach, termination
or validity thereof, whether based on contract, tort, statute, fraud,
misrepresentation or any other legal or equitable theory (each a "CLAIM"), shall
be finally settled by binding arbitration. The arbitration shall be conducted in
accordance with the CPR Rules for Non-Administered Arbitration in effect at the
time of the arbitration, except as they may be modified herein or by mutual
agreement of the parties. The seat of the arbitration shall be New York City,
New York, and it shall be conducted in the English language. Notwithstanding
Section 9.6 hereof, the arbitration and this clause shall be governed by Title 9
(Arbitration) of the United States Code. Any request for interim measures
pursuant to Section 9.11 hereof or otherwise shall not be deemed incompatible
with, or a waiver of, this agreement to arbitrate.
8.2. NUMBER OF ARBITRATORS/SELECTION. The arbitration shall be
conducted by three arbitrators. The party initiating arbitration (the
"CLAIMANT") shall appoint an arbitrator in its request for arbitration (the
"REQUEST"). The other party (the "RESPONDENT") shall appoint an arbitrator
within 30 days of receipt of the Request and shall notify the Claimant of such
appointment in writing. If within 30 days of receipt of the Request by the
Respondent, either party has not appointed an arbitrator, then that arbitrator
shall be appointed by CPR Institute for Dispute Resolution. The first two
arbitrators appointed in accord with this provision shall appoint a third
arbitrator within 30 days after the Respondent has notified Claimant of the
appointment of the Respondent's arbitrator or, in the event of a failure by a
party to appoint, within 30 days after the CPR Institute for Dispute Resolution
has notified the parties and any arbitrator already appointed of its appointment
of an arbitrator on behalf of the party failing to appoint. When the third
arbitrator has accepted the appointment, the two arbitrators making the
appointment shall promptly notify the parties of the appointment. If the first
two arbitrators appointed fail to appoint a third arbitrator or so to notify the
parties within the time period prescribed above, then the CPR Institute for
Dispute Resolution shall appoint the third arbitrator and shall promptly notify
the parties of the appointment. The third arbitrator shall act as Chair of the
tribunal.
8.3. CERTAIN PROCEDURES. The arbitration panel shall strictly limit
discovery to the production of documents directly relevant to the facts alleged
by the Claimant and the Respondent, and if depositions are required, each party
shall be limited to five depositions. Each party shall bear its own expenses,
but those related to the compensation of the arbitrators shall be borne equally.
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8.4. ARBITRAL AWARD. The arbitral award shall be in writing, state only
the damages and injunctive relief granted and be final and binding on the
parties. The parties hereto expressly waive and forgo any right to punitive,
exemplary or similar damages as a result of any Claim. The arbitrators shall
orally state the reasoning on which the arbitral award rests but shall not state
such reasoning in any writing. The arbitration panel shall endeavor to issue the
arbitral award within six months of the Request, but failure to do so shall not
effect the validity of the arbitral award. The parties agree that the existence
and contents of the entire arbitration, including the award, shall be deemed a
compromise of a dispute under Rule 408 of the Federal Rules of Evidence, shall
not be discoverable in any proceeding, shall not be admissible in any court
(except for the enforcement thereof) or arbitration and shall not bind or
collaterally estop either party with respect to any claim or defense made by any
third party.
8.5. CONFIDENTIALITY OF PROCEEDINGS. All proceedings in connection with
any arbitration, including its existence, the content of the proceedings and any
decision, shall be kept confidential to the maximum extent possible consistent
with the law. The arbitrator shall issue an order preventing the parties, CPR
Institute for Dispute Resolution and any other participants to the arbitration
from disclosing to any third party any information obtained via the arbitration,
including discovery of documents, evidence, testimony and the award except as
may be required by law.
8.6. JUDGMENT. Judgment upon the decision may be entered by any court
having jurisdiction thereof or having jurisdiction over the relevant party or
its assets, PROVIDED that the party entering the award shall request that the
court prevent the award from becoming publicly available except as may be
required by law.
ARTICLE IX
MISCELLANEOUS
9.1. AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed on behalf of the parties.
9.2. WAIVER. No waivers of or consents to departures from the
provisions hereof shall be effective, unless set forth in a writing signed by
Parent and Regional Vehicle. No failure or delay of any party in exercising any
power or right under this Agreement will operate as a waiver thereof, nor will
any single or partial exercise of any right or power, or any abandonment or
discontinuance of steps to enforce such right or power, preclude any other or
further exercise thereof or the exercise of any other right or power.
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9.3. NOTICES. Any notice required to be given hereunder shall be
sufficient if in writing, and sent by facsimile transmission (with a
confirmatory copy sent by overnight courier), by courier service (with proof of
service), hand delivery or certified or registered mail (return receipt
requested and first-class postage prepaid), addressed as follows:
If to Regional Vehicle: If to Parent:
2333 Ponce de Leon Blvd. AT&T Corp.
Coral Gables, FL 33134 295 North Maple Avenue
Room 3353J1
Basking Ridge, NJ 07920
Facsimile: 1-305-774-2001 Facsimile: 1-908-630-1744
Attention: Chief Executive Officer Attention: John Haigh
Vice President --
Strategy and Development
With a copy (which copy shall not With a copy (which copy shall not
constitute notice) to: constitute notice) to:
2333 Ponce de Leon Blvd. AT&T Corp.
Coral Gables, FL 33134 295 North Maple Avenue
Room 1212P2
Basking Ridge, NJ 07920
Facsimile: 1-305-774-2001 Facsimile: 1-908-221-6618
Attention: General Counsel Attention: Marilyn Wasser
Vice President -- Law and
Corporate Secretary
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
9.4. ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other party. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns. Notwithstanding anything
contained in this Agreement to the contrary, nothing in this Agreement,
expressed or implied, is intended to
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confer on any person other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations or liabilities under or
by reason of this Agreement.
9.5. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
among the parties with respect to the subject matter hereof and supersedes all
prior agreements and understandings among the parties with respect thereto.
9.6. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York without regard to its rules
of conflict of laws. Subject to Article VIII hereof, each of Regional Vehicle
and Parent hereby irrevocably and unconditionally consents to submit to the
exclusive jurisdiction of the courts of the State of New York and of the United
States of America located in the State of New York (the "NEW YORK COURTS") for
any litigation arising out of or relating to this agreement and the transactions
contemplated hereby (and agrees not to commence any litigation in a court
relating thereto except in such courts), waives any objection to the laying of
venue of any such litigation in the New York Courts and agrees not to plead or
claim in any New York Court that such litigation brought therein has been
brought in an inconvenient forum.
9.7. FURTHER ASSURANCES. Each party hereto shall, and shall cause each
of its Subsidiaries (which, in the case of Parent shall not include Regional
Vehicle or its Subsidiaries) to, from time to time, execute and deliver such
additional instruments, documents, conveyances or assurances and take such other
actions as shall be necessary, or otherwise may reasonably be requested by the
other party hereto, to confirm and assure the rights and obligations provided
for in this Agreement, or otherwise to carry out the intent and purposes of this
Agreement.
9.8. HEADINGS. Headings of the Articles and Sections of this Agreement
are for the convenience of the parties only, and shall be given no substantive
or interpretive effect whatsoever.
9.9. INTERPRETATION. In this Agreement, unless the context otherwise
requires, words describing the singular number shall include the plural and vice
versa, and words denoting any gender shall include all genders. Whenever the
words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation."
9.10. SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
12
<PAGE>
9.11. ENFORCEMENT. The parties hereto agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with its specific terms or was otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any New York Court, this being in addition to
any other remedy to which they are entitled at law or in equity.
9.12. COUNTERPARTS. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument. Each counterpart may consist of a number of copies
hereof each signed by less than all, but together signed by all, of the parties
hereto.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS.]
13
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives as of the date first written
above.
AT&T Corp.
-----------------------
By:
Title:
KIRI INC.
----------------------
By:
Title:
14
<PAGE>
Exhibit A
to Regional Vehicle Agreement
DEFINITIONS
1. DEFINED TERMS. The following capitalized terms, when used in this
Agreement, shall have the following respective meanings (each such definition to
be equally applicable to the plural and singular forms of the respective terms
so defined):
"AFFILIATE" means, with respect to any Person, a Person that directly
or indirectly through one or more intermediaries, controls, is controlled by, or
is under common control with, the first Person, including but not limited to a
Subsidiary of the first Person, a Person of which the first Person is a
Subsidiary, or another Subsidiary of a Person of which the first Person is also
a Subsidiary.
"AGREEMENT" means this Regional Vehicle Agreement, as the same may be
amended or modified from time to time in accordance with its terms.
"AT&T GLOBAL NETWORK" means AT&T Global Network Services Group LLC or
AT&T Global Network Services LLC, any other Person in which such Persons own any
direct or indirect equity interest or any of their respective successors or
assigns. Each of such Persons is sometimes referred to herein as an "AT&T GLOBAL
NETWORK PERSON."
"BRAND LICENSE AGREEMENT" means that certain Service Mark License
Agreement between Regional Vehicle and Parent (the form of which was attached as
an Exhibit to the Merger Agreement), as amended from time to time.
"BRANDS" means any name, brand, mark, trademark, service mark, trade
dress, trade name, business name or other indicia of origin.
"CARRIER SERVICES" means the provision of carriage, including hubbing,
routing, transit, reorigination and least cost routing on Global Network
Facilities primarily between two or more countries to other International
Carriers.
"COMMUNICATIONS SERVICES" shall mean any services and applications,
including enhanced services and applications, that involve the transmission of
voice, data, sound, music, still and moving image or video and other elements by
fixed media (such as wire, cable or fiber), or radio or other wave signal, and
any similar or substitute service available or offered from time to time, and
the business of developing, designing or offering content-based applications.
"CONTROL" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly, of the power to
direct or cause the direction of the management policies of a Person, whether
through the ownership of voting securities, by contract or credit arrangement,
as trustee or executor, or otherwise.
Def.-1
<PAGE>
"GLOBAL", when used with respect to Communications Services, shall mean
Communications Services between or among two or more countries.
"GLOBAL BUSINESS COMMUNICATIONS SERVICES" shall mean global
Communications Services provided or targeted to businesses and to their
employees in their capacity as employees.
"GLOBAL COMMUNICATIONS SERVICES" shall mean current or future (A)
global end-to-end managed and (B) all other global Communications Services of a
type intended for use by end user customers and resellers, but excluding
Satellite & Radio Services, basic switched voice and basic telex.
"GLOBAL NETWORK FACILITIES" shall mean all facilities that support
bandwidth, transmission, signaling, routing, network service intelligence,
network control intelligence, switching and Operational Systems Support
(including any related software support) in connection with the transmission of
voice, data, sound, music, still and moving image, or video and other elements
by fixed media (such as wire, cable or fiber), or radio or other wave signal,
exclusively or predominantly between or among two or more countries (it being
understood that facilities that are predominantly designed to support such
transmission between or among two or more countries may also support, as a
non-predominant use, transmission within one or more of such countries). Global
Network Facilities shall not include any system or systems that provide
Communications Services exclusively within a given country.
"GLOBAL VENTURE" means each of those certain Persons formed for the
provision of certain telecommunications and related services pursuant to the
Framework Agreement. Each of such Persons is sometimes referred to herein as a
"GLOBAL VENTURE PERSON."
"INTERNATIONAL CARRIER" shall mean a Person which (A) is licensed or
authorized, or is otherwise permitted to provide, or operates where no license
or authorization is required, crossborder Communications Services to the public,
or (B) owns or operates, or is licensed to own or operate, the underlying
facilities used to provide crossborder Communications Services to the public.
"INTERNATIONAL CARRIER SERVICES" shall mean Carrier Services and
International Traffic Termination Services.
"INTERNATIONAL SETTLEMENT PROCESS" means the system of accounting and
settlement rates for the exchange of international traffic of a type referred to
in Section 64.1001 of the regulations of the FCC and any subsequent regime for
arranging and managing inbound/outbound traffic termination terms and conditions
with an International Carrier.
Def.-2
<PAGE>
"INTERNATIONAL TRAFFIC TERMINATION SERVICES" shall mean the
arrangement, management and delivery of inbound/outbound traffic termination of
all the communications traffic, including voice and Internet Protocol traffic,
of the Parent Group, including through the International Settlement Process and
least cost routing alternatives, but excluding all Global Business
Communications Services.
"LIBERTY MEDIA" means Liberty Media Corporation and any Person in which
Liberty Media Corporation owns any direct or indirect equity interests.
"MANAGED NETWORK SERVICES" shall mean the provision of (A) service to a
customer consisting solely of the provisioning and maintenance of the logical
and physical elements of the customer's wide area communications network, and,
to the extent relating to a customer's wide area communications network,
directly related planning, design, installation, maintenance and ongoing life
cycle support functions, and (B) equipment on the customer's premises at the
interface between a wide area communications network and the remainder of the
customer's networking environment insofar as the equipment so provided
facilitates (I) the maintenance of the customer's wide area communication
services, (II) the recording of performance data with respect to the customer's
wide area communications services, (III) the provisioning of new wide area
communications services to the customer or changes in the parameters of the wide
area communications services provided to the customer, or (IV) the integration
of multiple wide area communications services, but excluding in the case of
clause (a) or (b) any such service or equipment that materially extends services
beyond the interface described above further into the customer's non-wide area
communications network.
"MEDIA ONE" means Mediaone Group, Inc., Meteor Acquisition Inc., any
successors thereto and any Person in which Mediaone Group, Inc., Meteor
Acquisition Inc. or any successors or assigns thereof own any direct or indirect
equity interests.
"OPERATIONAL SUPPORT SYSTEMS" means the computer systems on which a
Person depends for providing management support of all of its operations,
including service delivery and provision, network usage and control, billing of
customers, network planning, fraud identification, resource planning and
facility management.
"OUTSOURCING PROFESSIONAL SERVICES" shall mean the provision of
professional services relating to network architecture validation,
implementation, operations and life cycle management, including business process
consulting, migration planning and implementation, but excluding Managed Network
Services, and may include the ownership and acquisition of assets from and on
behalf of customers related to the provision of Outsourcing Professional
Services.
"OUTSOURCING SERVICES" shall mean Outsourcing Professional Services and
Managed Network Services.
Def.-3
<PAGE>
"PARENT" means AT&T, PROVIDED that Parent shall not include Liberty
Media and Media One.
"PARENT GROUP" means Parent and any Subsidiary of Parent except Liberty
Media and Media One, PROVIDED that (A) neither Regional Vehicle and its
Subsidiaries, any Global Venture Person nor any AT&T Global Network Person or
any Subsidiaries thereof shall be included in the Parent Group and (B) no member
of a Territory Acquired Group excluded from Parent Group as provided in Section
6.1(b) shall be included in the Parent Group.
"PERSON" means any natural person, firm, partnership, association,
corporation, company, limited liability company, trust, business trust or other
entity.
"PREFERRED SUPPLIER" to a Person (the "PURCHASER") means that, to the
extent that the designated Preferred Supplier is able to provide certain
services, products or facilities to the Purchaser on terms and conditions and
standards at least as favorable regarding price, quality and service as the
Purchaser would be able to obtain in an arm's length transaction with a Person
that is not an Affiliate of the Purchaser, such Purchaser shall not, and shall
cause each of its wholly-owned Subsidiaries not to, purchase such services,
products or facilities from any Person other than the designated Preferred
Supplier unless such Person is also a Preferred Supplier to such Purchaser.
"SATELLITE & RADIO SERVICES" shall mean Communications Services (other
than VSAT services) delivered through satellites using existing and future
satellite constellations and associated ground networks and equipment through
any satellite business and terrestrial radio solutions targeted at maritime and
aeronautical applications using existing and future long, medium and short-range
radio systems.
"SUBSIDIARIES" means each corporation or other Person in which a Person
owns or controls, directly or indirectly, capital stock or other equity
interests representing more than 50% of the outstanding voting stock or other
equity interests.
"SYSTEMS INTEGRATION" shall mean advising clients on how best to use
information technology to achieve their ends, to reengineer business processes
to make organizations work more effectively, specifying, designing or building
or specifying, designing and building integrated business systems for or on
behalf of clients managing the change to such systems for or on behalf of
clients, supporting, maintaining, enhancing, operating or further developing
such systems for or on behalf of clients, providing program or project
management and integration of customer defined individual customer solutions and
providing other related services required or requested by clients in connection
with any of the foregoing. Systems Integration does not include (A) the
underlying capability to provide Communications Services or (B) Outsourcing
Services.
Def.-4
<PAGE>
"TERRITORY" means Antigua and Barbuda, Argentina, Bahamas, Barbados,
Bolivia, Brazil, Chile, Colombia, Dominica, Dominican Republic, Ecuador,
Grenada, Guyana, Haiti, Jamaica, Panama, Paraguay, Peru, Saint Lucia, Saint
Vincent and the Grenadines, Suriname, St. Kitts and Nevis, Trinidad and Tobago
and Uruguay.
2. OTHER DEFINED TERMS. All references to "DOLLAR", "US$" or "$" shall
be deemed to be references to the lawful currency of the United States of
America. The following capitalized terms, when used in this Agreement without
definition, shall have the meanings set forth in the Sections of this Agreement
indicated below:
DEFINED TERM SECTION REFERENCE
------------ -----------------
appraiser Section 6.2(b)
Acquired Group Section 6.1(a)
Acquired Person Section 6.1(a)
AT&T First Paragraph
AT&T Global Network Services Section 5.1
Claim Section 8.1
Claimant Section 8.2
Company Recital A
Cross Border Revenues Section 4.3
Covered Acquisition Section 6.1(a)
Excluded Activities Section 3.1
FMV Notice Section 6.2(a)
Framework Agreement Recital B
Global Venture Person Definition of Global Venture
High Price Section 6.2(c)
Initial Appraiser Section 6.2(b)
Licensed Brands Recital B
Limited Cross Border Network
Service Provider Section 4.3
Low Price Section 6.2(c)
Merger Recital A
Merger Agreement Recital A
Merger Sub Recital A
New York Courts Section 9.6
Offer Section 6.1(b)
Offered Assets Section 6.1(b)
Offer Exception Section 6.1(b)
Offer Response Period Section 6.1(b)
Def.-5
<PAGE>
DEFINED TERM SECTION REFERENCE
------------ -----------------
Purchaser Definition of Preferred Supplier
Qualifying MNC Section 4.3(b)
Regional Vehicle First Paragraph
Request Section 8.2
Respondent Section 8.2
RV Exclusive Services Section 2.1
RV Non-Exclusive Services Section 2.2
RV Services Section 2.2
Territory Revenues Section 6.1(a)
Def.-6
<PAGE>
Schedule A-1
to Regional Vehicle Agreement
RV EXCLUSIVE SERVICES
Local voice delivered through fixed-line connectivity
Domestic long distance
International long distance
Point-to-point dedicated line
Asynchronous Transfer Mode (ATM)
Frame relay
Internet access
1-800/toll free
Packet X.25 (data)
Virtual network services (data)
Switched digital (data)
A-1-1
<PAGE>
Schedule A-2
to Regional Vehicle Agreement
PARENT GROUP ACTIVITIES
Any services provided by Parent Group using assets that any member of Parent
Group is obligated under the Framework Agreement, as in effect on the date
hereof, to contribute to the Global Venture.
Service provided to customers in connection with the provision of, or pursuant
to contracts for, Outsourcing Services.
A-2-1
<PAGE>
Schedule B
to Regional Vehicle Agreement
RV NON-EXCLUSIVE SERVICES
AT&T card services
AT&T Direct(R) services
E-commerce
Web-hosting
Fixed wireless for connectivity
Voice over Internet Protocol
Managed Network Services
B-1
<PAGE>
Schedule C
to Regional Vehicle Agreement
EXCLUDED ACTIVITIES
International Carrier Services
Mobile wireless/PCS
Cable and cable telephony
Solution services, including Outsourcing Professional Services, other than
Managed Network Services
Systems Integration
Messaging Services in Chile, to the extent providing such services would cause a
breach of obligations of Parent or any of its Affiliates under the Shareholders
Agreement, dated as of December 9, 1993, among Easymail Chile S.A., AT&T
International, Inc., Inversiones Rapel, S.A. et al or any related agreements.
C-1
EXHIBIT 2.6
REGIONAL VEHICLE REVOLVING CREDIT FACILITY
SUMMARY INDICATIVE TERMS AND CONDITIONS
<TABLE>
<S> <C>
BORROWER: Regional Vehicle ("RV") or its subsidiaries. AT&T will
have the right to decide whether to lend at either the
holding company or individual operating company level.
LENDER: AT&T or AT&T Subsidiary
FACILITY: US $100 million, to be reduced by any new vendor
financing arrangements. AT&T has the option to structure
the facility through debt or redeemable preferred.
PURPOSE: To make loans to RV and its subsidiaries in the Territory
(as defined in the RV Agreement), the proceeds of which
are to be used to (I) fund capital expenditures and working
capital requirements, (II) pay cash interest and (III) fund
operating costs.
AVAILABILITY: In multiple drawdowns prior to Maturity, following request
by RV via a borrowing certificate executed by CEO or CFO
(relating to consistency with business plan, absence of
defaults and other conditions to be agreed).
FINAL MATURITY: 24 months from Closing
AMORTIZATION: Single repayment at maturity
INTEREST RATE: To be paid quarterly and calculated (on the basis of a 360-
day year of 30-day months) at 11.0%
<PAGE>
2
SECURITY: - Lender will have the right at any time to obtain a
security interest in the tangible and intangible assets of
FirstCom/Netstream and subsidiaries to which loans (including
Inter-company Loans) have been extended
- 100% of the capital stock in FirstCom, Netstream and its
subsidiaries
FINANCIAL COVENANTS: Maximum Capital Expenditures
In any month, not more than 110% of level provided for in
latest Board-approved business plan.
Maximum Total Debt
In any month, not more than 110% of level provided for in
latest Board-approved business plan.
MANDATORY PREPAYMENTS: Facility to be repaid without penalty from 100% of
proceeds of (i) any capital markets issues, (ii) equity issues,
(iii) international or local bank financings, and (iv) sales of
material assets.
NEGATIVE COVENANTS: Including but not limited to the following:
- Limitation on other indebtedness (permitted local
currency working capital facilities and vendor
financing, etc.)
- Limitation on liens (US$10 million)
- Limitation on leases (US$10 million) - Disposal of
assets (in excess of US$5 million)
- Limitation on investments (US$5 million)
EVENTS OF DEFAULT: Including but not limited to the following:
- Failure to pay principal or interest when due under the
Facility
- Cross default to other Indebtedness (US$5 million
notional amount)
- Bankruptcy or other insolvency event at any subsidiary
- Monetary judgments (US$3 million)
- Revocation of material licenses
- Political risk events, such as
expropriation/nationalization, currency
inconvertibility/transferability, war/political violence
</TABLE>
EXHIBIT 2.7
[_______________ INC.]
------------------------------
CERTIFICATE OF DESIGNATION
Pursuant to Section 151 of the
Delaware General Corporation Law
------------------------------
Series A Convertible Preferred Stock
------------------------------
_______________, a Delaware corporation (the "Corporation"), certifies
that pursuant to the authority contained in its Amended and Restated Certificate
of Incorporation (the "Certificate of Incorporation"), the Board of Directors of
the Corporation has duly adopted the following recitals and resolution:
WHEREAS, Article FOURTH of the Certificate of Incorporation provides
that the Corporation may issue Preferred Stock, par value $0.001 per share
("Preferred Stock") from time to time in one or more series or classes, having
such voting powers and such designations, preferences and relative,
participating, optional and other special rights and qualifications, limitations
or restrictions, as the Board of Directors determines;
WHEREAS, pursuant to Article FOURTH of the Certificate of Incorporation
and in accordance with the provisions of Section 151 of the General Corporation
Law of the State of Delaware, the Board of Directors has adopted the following
resolution creating a series of its Preferred Stock, designated as Series A
Convertible Preferred Stock:
RESOLVED, that a series of the class of authorized Preferred Stock, par
value $0.001 per share, of the Corporation be hereby created, and that the
voting powers and designation, preferences and relative, participating, optional
and other special rights of the shares of such series, and the qualifications,
limitations and restrictions thereof are as follows:
<PAGE>
1. DESIGNATION AND AMOUNT. This series of Preferred Stock shall be
designated as the Series A Convertible Preferred Stock (the "Series A Preferred
Stock"), and the authorized number of shares constituting such series shall be
1,666,667, par value $0.001 per share.
2. DIVIDENDS.
(a) The holders of Series A Preferred Stock shall have the
right to receive, in preference to the holders of Junior Stock,
dividends, payable when and as declared by the Board of Directors of
the Corporation out of assets legally available therefor, as provided
in this Section 2(a). Dividends shall accrue on each share of Series A
Preferred Stock at an annual rate of fifteen percent (15%) on the sum
of (i) $8.00 (the "Series A Purchase Price") and (ii) all accumulated
and unpaid dividends accrued thereon pursuant to this Section 2(a) from
the date of issuance thereof (the "Series A Dividends" and, the sum of
the Series A Purchase Price and Series A Dividends is referred to
herein as the "Series A Preference Amount"). Such dividends will be
calculated and, to the extent such dividends remain unpaid, compounded
quarterly in arrears on the first day of each January, April, July and
October of each year prorated on a daily basis for partial periods.
Such dividends shall commence to accrue on each share of Series A
Preferred Stock from the date of issuance of such share of Series A
Preferred Stock whether or not they have been declared and whether or
not there are profits, surplus or other funds legally available for the
payment of dividends and shall continue to accrue until paid out of
assets legally available therefor; PROVIDED, HOWEVER, that for the
period from the Original Issue Date until (and including) the first day
of July 2001 (the "PIK Period"), the Corporation shall pay dividends on
each dividend payment date in additional shares of Series A Preferred
Stock (such dividends paid in kind being herein referred to as "PIK
Dividend"); and PROVIDED FURTHER that the amount payable as a PIK
Dividend on the final dividend payment date during the PIK Period shall
be adjusted so that the total number of shares of Series A Preferred
Stock paid as PIK Dividends is equal to _________ 1 and any amount of
unpaid dividend resulting from such adjustment shall accrue as
otherwise provided in this Section 2; and PROVIDED FURTHER that in the
event that the Corporation shall exercise its right to redeem the
Series A Preferred Stock after the closing of a Strategic Investment as
provided in Section 7, then the payment of all PIK Dividends for the
PIK Period shall be accelerated and any PIK Dividends not previously
paid shall be immediately paid to the holders of the Series A Preferred
Stock as described in the next paragraph (notwithstanding any
subsequent conversion pursuant to Section 5 or 6 or redemption pursuant
to Section 8). In addition, the holders of Series A Preferred Stock
shall have the right to receive dividends or other distributions (as
defined below), ratable and equally with the holders of Common Stock,
when and as declared by the Board of Directors of the Corporation out
of assets legally available therefor; provided, however, that each
holder of Series A Preferred Stock shall be entitled to receive
dividends or other distributions on the outstanding shares of Series A
Preferred Stock held by such holder in an amount equal to the product
of (i) the per share amount, if any, of the dividend or other
distribution to be
- --------
1. [1,666,667 less amount issued initially]
2
<PAGE>
declared, paid or set aside for the Common Stock, multiplied by (ii)
the number of whole shares of Common Stock into which such shares of
Series A Preferred Stock are then convertible
(b) PIK Dividends shall be paid by delivering to the record
holders of Series A Preferred Stock a number of shares of Series A
Preferred Stock determined by dividing the amount of the payment which
otherwise would be payable on the dividend payment date to each
respective holder in cash by the Series A Purchase Price per share. The
issuance of any such PIK Dividend in such amount shall constitute full
payment of such dividend. Fractional shares of Series A Preferred Stock
payable as PIK Dividends may be paid in cash by the Corporation. Any
additional shares of Series A Preferred Stock issued pursuant to this
section shall be subject in all respects, except as to issue date and
the date from which dividends accrue and cumulate as set forth above,
to the same terms as the shares of Series A Preferred Stock originally
issued hereunder.
(c) For purposes of this Section 2, unless the context
requires otherwise, "distribution" shall mean the transfer of cash or
property without consideration, whether by way of dividend or
otherwise, or the purchase or redemption of shares of the Corporation
for cash or property, including any such transfer, purchase or
redemption by a subsidiary of this Corporation.
3. LIQUIDATION, DISSOLUTION OR WINDING UP; CERTAIN MERGERS,
CONSOLIDATIONS AND ASSET SALES.
Upon a liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, (each, a "Liquidation"), each holder of Series
A Preferred Stock shall be entitled, after provision for the payment of the
Corporation's debts and other liabilities, to be paid in cash in full, before
any distribution is made on any Junior Stock, an amount in cash equal to the
Series A Preference Amount of all Series A Preferred Shares held by such holder.
If, upon a Liquidation, the net assets of the Corporation distributable among
the holders of all outstanding Series A Preferred Stock shall be insufficient to
permit the payment of the Series A Preference Amount in full, then the entire
net assets of the Corporation remaining after the provision for the payment of
the Corporation's debts and other liabilities shall be distributed among the
holders of the Series A Preferred Stock ratably in proportion to the full
preferential amounts to which they would otherwise be respectively entitled on
account of their Series A Preferred Stock. A merger or consolidation of the
Corporation (except one in which the holders of capital stock of the Corporation
immediately prior to such merger or consolidation continue to hold more than 50%
by voting power of the equity interests of the surviving entity), a single
transaction or a series of transactions pursuant to which holders of capital
stock of the Corporation immediately prior to such transaction or series of
transactions do not continue to hold more than 50% by voting power of the
capital stock after such transaction or series of transactions, or the sale of
all or substantially all the assets of the Corporation, shall be deemed to be a
Liquidation of the Corporation, and all consideration payable to the
stockholders of the Corporation (in the case of a merger or consolidation), or
all consideration payable to the Corporation, together with all other
3
<PAGE>
available assets of the Corporation (in the case of an asset sale), shall be
distributed to the holders of capital stock of the Corporation in accordance
with the foregoing provisions of this Section 3.
4. VOTING.
(a) Each holder of outstanding shares of Series A Preferred
Stock shall be entitled to the number of votes equal to the number of
whole shares of Common Stock into which the shares of Series A
Preferred Stock held by such holder are then convertible (as adjusted
from time to time pursuant to Section 5 hereof), at each meeting of
stockholders of the Corporation (and written actions of stockholders in
lieu of meetings) with respect to any and all matters presented to the
stockholders of the Corporation for their action or consideration
except as provided by law, by the provisions of Subsection 4(b) below
or elsewhere in the Corporation's Certificate of Incorporation, as
amended, holders of Series A Preferred Stock shall vote together with
the holders of Common Stock and Preferred Stock as a single class.
(b) Except as provided by law, the Corporation shall not,
without first obtaining the affirmative vote or written consent of the
holders of at least 75% of the then outstanding shares of Series A
Preferred Stock, voting together as a single class of Preferred Stock:
(i) Amend, repeal, alter or waive any provision of,
or add any provision to, the Corporation's Certificate of
Incorporation or Bylaws, if such action could have a material
adverse effect on the rights, preferences or privileges of the
Series A Preferred Stock;
(ii) Authorize or issue any new or existing class or
classes or series of capital stock having any preference or
priority as to dividends, liquidation preference, assets or
voting superior to or on parity with any such preference or
priority of the Series A Preferred Stock or authorize or issue
shares of stock of any class or any bonds, debentures, notes
or other obligations convertible into or exchangeable for, or
having rights to purchase, any shares of stock of the
Corporation having any preference or priority as to dividends,
liquidation preference, assets or voting superior to or on
parity with any such preference or priority of the Series A
Preferred Stock;
(iii) Redeem, purchase or otherwise acquire, directly
or indirectly, any Junior Stock; or
(iv) Authorize or effect the declaration or payment
of dividends or other distributions upon any Junior Stock.
5. OPTIONAL CONVERSION. The holders of the Series A Preferred Stock
shall have conversion rights as follows (the "Conversion Rights"):
4
<PAGE>
(a) Right to Convert. Each share of Series A Preferred Stock
shall be convertible, at the option of the holder thereof, at any time
and from time to time, and without the payment of additional
consideration by the holder thereof, into such number of fully paid and
nonassessable shares of Common Stock as is determined by dividing $6.00
by the Series A Conversion Price in effect at the time of conversion.
The "Series A Conversion Price" shall initially be $6.00. The rate at
which shares of Series A Preferred Stock may be converted into shares
of Common Stock shall be subject to adjustment as provided below.
In the event of a Liquidation of the Corporation, the Conversion Rights
shall terminate at the close of business on the first full day preceding the
date fixed for the payment of any amounts distributable on Liquidation to the
holders of Series A Preferred Stock.
(b) Fractional Shares. No fractional shares of Common Stock
shall be issued upon conversion of the Series A Preferred Stock. In
lieu of any fractional shares to which the holder would otherwise be
entitled, the Corporation shall pay cash equal to such fraction
multiplied by the then effective Series A Conversion Price.
(c) Mechanics of Conversion.
(i) In order for a holder of Series A Preferred Stock
to convert such shares into shares of Common Stock, such
holder shall surrender the certificate or certificates for
such shares of Series A Preferred Stock at the office of the
transfer agent for the Series A Preferred Stock (or at the
principal office of the Corporation if the Corporation serves
as its own transfer agent), together with written notice (a
"Conversion Demand") that such holder elects to convert all or
any number of the shares of the Series A Preferred Stock
represented by such certificate of certificates. Such
Conversion Demand shall state such holder's name or the names
of the nominees in which such holder wishes the certificate or
certificates for shares of Common Stock to be issued. If
required by the Corporation, certificates surrendered for
conversion shall be endorsed or accompanied by a written
instrument or instruments of transfer, in form satisfactory to
the Corporation, duly executed by the registered holder of his
or its attorney duly authorized in writing. The date of
receipt of such certificates and Conversion Demand notice by
the transfer agent (or by the Corporation if the Corporation
serves as its own transfer agent) shall be the conversion date
("Conversion Date"). The Corporation shall, as soon as
practicable after the Conversion Date, issue and deliver at
such office to such holder of Series A Preferred Stock, or to
his or its nominees, a certificate or certificates for the
number of shares of Common Stock to which such holder shall be
entitled, together with cash in lieu of any fraction of a
share.
(ii) The Corporation shall at all times when the
Series A Preferred Stock shall be outstanding, reserve and
keep available out of its authorized but unissued stock, for
the purpose of effecting the conversion of the Series A
5
<PAGE>
Preferred Stock, such number of its duly authorized shares of
Common Stock as shall from time to time be sufficient to
effect the conversion of all outstanding Series A Preferred
Stock. Before taking any action which would cause an
adjustment reducing the Series A Conversion Price below the
then par value of the shares of Common Stock issuable upon
conversion of the Series A Preferred Stock, the Corporation
will take any corporate action which may, in the opinion of
its counsel, be necessary in order that the Corporation may
validly and legally issue fully paid and nonassessable shares
of Common Stock at such adjusted Series A Conversion Price.
(iii) Upon any such conversion, no adjustment to the
Series A Conversion Price shall be made for any declared but
unpaid dividends on the Series A Preferred Stock surrendered
for conversion or on the Common Stock delivered upon
conversion.
(iv) All shares of Series A Preferred Stock which
shall have been surrendered for conversion as herein provided
shall no longer be deemed to be outstanding and all rights
with respect to such shares, including the rights, if any, to
receive notices and to vote, shall immediately cease and
terminate on the Conversion Date, except only the right of the
holders thereof to receive shares of Common Stock in exchange
therefor and payment of any dividends declared but unpaid
thereon. Any shares of Series A Preferred Stock so converted
shall be retired and canceled and shall not be reissued, and
the Corporation (without the need for stockholder action) may
from time to time take such appropriate action as may be
necessary to reduce the authorized Series A Preferred Stock
accordingly.
(v) The Corporation shall pay any and all issue and
other taxes that may be payable in respect of any issuance or
delivery of shares of Common Stock upon conversion of shares
of Series A Preferred Stock pursuant to this Section 5. The
Corporation shall not, however, be required to pay any tax
which may be payable in respect of any transfer involved in
the issuance and delivery of shares of Common Stock in a name
other than that in which the shares of Series A Preferred
Stock so converted were registered, and no such issuance or
delivery shall be made unless and until the person or entity
requesting such issuance has paid to the Corporation the
amount of any such tax or has established, to the satisfaction
of the Corporation, that such tax has been paid.
(vi) Notwithstanding any other provision hereof, if a
conversion of Series A Preferred Stock is to be made in
connection with a public offering of Common Stock, the
conversion of any shares of Series A Preferred Stock may, at
the election of the holder of such shares, be conditioned upon
the consummation of such public offering in which case such
conversion shall not be deemed to be effective until the
consummation of such public offering.
(d) Adjustments to Conversion Price for Diluting Issues:
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(i) Special Definitions. For purposes of Subsections
5(d)-5(g), the following definitions shall apply:
(A) "Option" shall mean rights, options or
warrants to subscribe for, purchase or otherwise
acquire Common Stock or Convertible Securities,
excluding options described in subsection
5(d)(i)(C)(IV) below.
(B) "Convertible Securities" shall mean any
evidences of indebtedness, shares or other securities
directly or indirectly convertible into or
exchangeable for Common Stock.
(C) "Additional Shares of Common Stock"
shall mean all shares of Common Stock issued (or,
pursuant to Subsection 5(d)(iii) below, deemed to be
issued) by the Corporation after the Original Issue
Date, other than shares of Common Stock (or, in the
case of clause IV below, options or warrants to
purchase shares of Common Stock) issued or issuable:
(I) upon conversion of any
Convertible Securities outstanding on the
Original Issue Date, or upon exercise of any
Options outstanding on the Original Issue
Date;
(II) as a dividend or
distribution on Series A Preferred Stock;
(III) by reason of a
dividend, stock split, split up or other
distribution on shares of Common Stock that
is covered by Subsection 5(c) or 5(f) below;
(IV) to employees,
directors, officers or managers of, or
consultants to, the Corporation or any of
its subsidiaries pursuant in a plan adopted
by the Board of Directors of the Corporation
in good faith; or
(V) to a Strategic Investor
in connection with a Strategic Investment
within nine months after the Original Issue
Date; provided that the average daily
closing or last sale price per share of
Common Stock for the ninety (90) days
immediately following such Strategic
Investment, as reported on a national
securities exchange or NASDAQ, is greater
than or equal to $9.00.
(ii) No Adjustment of Conversion Price. No adjustment
in the number of shares of Common Stock into which the Series
A Preferred Stock is convertible shall be made, by adjustment
in the Series A Conversion Price, as applicable,
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unless the consideration per share (determined pursuant to
Subsection 5(d)(v)) for an Additional Share of Common Stock
issued or deemed to be issued by the Corporation is less than
the Series A Conversion Price in effect on the date of, and
immediately prior to, the issue of such Additional Shares.
(iii) Issue of Securities Deemed Issue of Additional
Shares of Common Stock.
If the Corporation at any time or from time to time
after the Original Issue Date shall issue any Options or
Convertible Securities or shall fix a record date for the
determination of holders of any class of securities entitled
to receive any such Options or Convertible Securities, then
the maximum number of shares of Common Stock (as set forth in
the instrument relating thereto without regard to any
provision contained therein for a subsequent adjustment of
such number) issuable upon the exercise of such Options or, in
the case of Convertible Securities and Options therefor, the
conversion or exchange of such Convertible Securities, shall
be deemed to be Additional Shares of Common Stock issued as of
the time of such issue or, in case such a record date shall
have been fixed, as of the close of business on such record
date, provided that Additional Shares of Common Stock shall
not be deemed to have been issued unless the consideration per
share (determined pursuant to Subsection 5(d)(v) hereof) of
such Additional Shares of Common Stock would be less than the
Series A Conversion Price, as applicable, in effect on the
date of and immediately prior to such issue, or such record
date, as the case may be, and provided further that in any
such case in which Additional Shares of Common Stock are
deemed to be issued:
(A) No further adjustment in the
Series A Conversion Price shall be made upon
the subsequent issue of Convertible
Securities or shares of Common Stock upon
the exercise of such Options or conversion
or exchange of such Convertible Securities;
(B) If such Options or Convertible
Securities by their terms provide, with the
passage of time or otherwise, for any
increase in the consideration payable to the
Corporation, upon the exercise, conversion
or exchange thereof, the Series A Conversion
Price computed upon the original issue
thereof (or upon the occurrence of a record
date with respect thereto), and any
subsequent adjustments based thereon, shall,
upon any such increase becoming effective,
be recomputed to reflect such increase
insofar as it affects such Options or the
rights of conversion or exchange under such
Convertible Securities;
(C) Upon the expiration or
termination of any unexercised Option or any
unexercised rights of conversion or exchange
under any Convertible Security, the Series A
Conversion
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Price shall be readjusted to eliminate the
Additional Shares of Common Stock deemed
issued as the result of the original issue
of such Option or such Convertible Security.
(D) In the event of any change in
the number of shares of Common Stock
issuable upon the exercise, conversion or
exchange of any Option or Convertible
Security, including, but not limited to, a
change resulting from the anti-dilution
provisions thereof, the Series A Conversion
Price then in effect shall forthwith be
readjusted to such Conversion Price as would
have been obtained had the adjustment which
was made upon the issuance of such Option or
Convertible Security not exercised or
converted prior to such change been made
upon the basis of such change; and
(E) No readjustment pursuant to
clause (B), (C) or (D) above shall have the
effect of increasing the Series A Conversion
Price to an amount which exceeds the lower
of (i) the Series A Conversion Price on the
original adjustment date, or (ii) the Series
A Conversion Price that would have resulted
from any issuances of Additional Shares of
Common Stock between the original adjustment
date and such readjustment date.
In the event the Corporation, after
the Original Issue Date, amends the terms of
any Options or Convertible Securities
(whether such Options or Convertible
Securities were outstanding on the Original
Issue Date or were issued after the Original
Issue Date), then such Options or
Convertible Securities, as so amended, shall
be deemed to have been issued after the
Original Issue Date and the provisions of
this Subsection 5(d)(iii) shall apply.
It is expressly acknowledged that options
issued to persons described in Subsection
5(d)(i)(C)(IV) are excluded from the definition of
"Option" as provided in Subsection 5(d)(i)(A).
(iv) Adjustment of Series A Conversion Price Upon
Issuance of Additional Shares of Common Stock.
In the event the Corporation shall at any time after
the Original Issue Date issue Additional Shares of Common
Stock without consideration or for a consideration per share
less than the applicable Series A Conversion Price in effect
on the date of and immediately prior to such issue, then and
in such event, such Series A Conversion Price shall be
reduced, concurrently with such issue, to a price (calculated
to the nearest cent) determined by multiplying such Series A
Conversion Price by a fraction, (A) the numerator of which
shall be (1) the number of shares of Common Stock outstanding
immediately prior to such issue plus
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<PAGE>
(2) the number of shares of Common Stock with the aggregate
consideration received or to be received by the Corporation
for the total number of Additional Shares of Common stock so
issued would purchase at such Series A Conversion Price; and
(B) the denominator of which shall be the number of shares of
Common Stock outstanding immediately prior to such issue plus
the number of such Additional Shares of Common Stock so
issued; provided that (i) for the purpose of this Subsection
5(d)(iv), all shares of Common Stock issuable upon exercise or
conversion of Options or Convertible Securities outstanding
immediately prior to such issue shall be deemed to be
outstanding, and (ii) the number of shares of Common Stock
deemed issuable upon exercise or conversion of such
outstanding Options and Convertible Securities shall not give
effect to any adjustments to the conversion price or
conversion rate of such Options of Convertible Securities
resulting from the issuance of Additional Shares of Common
Stock that is the subject of this calculation.
(v) Determination of Consideration. For purposes of
this Subsection 5(d), the consideration received by the
Corporation for the issue of any Additional Shares of Common
Stock shall be computed as follows:
(A) Cash and Property: Such consideration
shall:
(I) insofar as it consists of cash,
be computed at the aggregate of cash
received by the Corporation, excluding
amounts paid or payable for accrued
interest;
(II) insofar as it consists of
property other than cash, be computed at the
fair market value thereof at the time of
such issue, as determined in good faith by
the Board of Directors; and
(III) in the event Additional Shares
of Common Stock are issued together with
other shares or securities or other assets
of the Corporation for consideration which
covers both, be the proportion of such
consideration so received, computed as
provided in clauses (I) and (II) above, as
determined in good faith by the Board of
Directors.
(B) Options and Convertible Securities. The
consideration per share received by the Corporation
for Additional Shares of Common Stock deemed to have
been issued pursuant to Subsection 5(d)(iii),
relating to Options and Convertible Securities, shall
be determined by dividing
(x) the total amount, if any, received or receivable
by the Corporation as consideration for the issue of such
Options or Convertible Securities, plus the minimum aggregate
amount of additional consideration (as set forth in the
instruments relating thereto, without regard to any provision
contained therein for
10
<PAGE>
a subsequent adjustment of such consideration) payable to the
Corporation upon the exercise of such Options or the
conversion or exchange of such Convertible Securities, or in
the case of Options for Convertible Securities, the exercise
of such Options for Convertible Securities and the conversion
or exchange of such Convertible Securities, by
(y) the maximum number of shares of Common Stock (as
set forth in the instruments relating thereto, without regard
to any provision contained therein for a subsequent adjustment
of such number) issuable upon the exercise of such Options or
the conversion or exchange of such Convertible Securities.
(vi) Multiple Closing Dates. In the event
the Corporation shall issue on more than one date
Additional Shares of Common Stock, and such issuance
dates occur within a period of no more than 30 days,
then the Series A Conversion Price shall each be
adjusted only once on account of such issuance, with
such adjustment to occur upon the final such issuance
and to give effect to all such issuances as if they
occurred on the date of the final such issuance.
(e) Adjustment for Stock Splits and Combinations. If the
Corporation shall at any time or from time to time after the Original
Issue Date effect a subdivision of the outstanding Common Stock, the
Series A Conversion Price then in effect immediately before that
subdivision shall each be proportionately decreased. For example, if
there are two outstanding shares of Common Stock which are subdivided
into a total of four shares of Common Stock and the Series A Conversion
Price in effect immediately prior to such subdivision is $6.00, then
the Series A Conversion Price after giving effect to such subdivision
shall be $3.00. If the Corporation shall at any time or from time to
time after the Original Issue Date effect a subdivision of the Series A
Preferred Stock, the Series A Conversion Price then in effect
immediately before that subdivision shall be proportionately increased.
If the Corporation shall at any time or from time to time after the
Original Issue Date combine the outstanding shares of Common Stock, the
Series A Conversion Price then in effect immediately before the
combination shall each be proportionately increased. For example, if
there are two outstanding shares of Common Stock which are combined
into a total of one share of Common Stock and the Series A Conversion
Price in effect immediately prior to such combination is [$6.00], then
the Series A Conversion Price after giving effect to such combination
shall be [$12.00]. If the Corporation shall at any time or from time to
time after the Original Issue Date combine the outstanding shares of
Series A Preferred Stock, the Series A Conversion Price then in effect
immediately before the combination shall be proportionately deceased.
Any adjustment under this paragraph shall become effective at the close
of business on the date the subdivision or combination becomes
effective.
(f) Adjustment for Certain Dividends and Distributions. In the
event the Corporation at any time, or from time to time after the
Original Issue Date shall make or issue, or fix a record date for the
determination of holders of Common Stock entitled to
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<PAGE>
receive, a dividend or other distribution payable in Additional Shares
of Common Stock, then and in each such event the Series A Conversion
Price then in effect shall each be decreased as of the time of such
issuance or, in the event such a record date shall have been fixed, as
of the close of business on such record date, by multiplying the Series
A Conversion Price then in effect by a fraction:
(1) the numerator of which shall be the total number
of shares of Common Stock issued and outstanding immediately
prior to the name of such issuance or the close of business on
such record date, and
(2) the denominator of which shall be the total
number of shares of Common Stock issued and outstanding
immediately prior to the time of such issuance or the close of
business on such record date plus the number of shares of
Common Stock issuable in payment of such dividend or
distribution;
provided, however, if such record date shall have been fixed and such
dividend is not fully paid or if such distribution is not fully made on
the date fixed therefor, the Series A Conversion Price shall be
recomputed accordingly as of the close of business on such record date
and thereafter the Series A Conversion Price shall be adjusted pursuant
to this paragraph as of the time of actual payment of such dividends or
distributions; and provided further, however, that no such adjustment
shall be made if the holders of Series A Preferred Stock simultaneously
receive a dividend or other distribution of shares of Common Stock in a
number equal to the number of shares of Common Stock as they would have
received if all outstanding shares of Series A Preferred Stock had been
converted into Common Stock on the date of such event.
(g) Adjustments for Other Dividends and Distributions. In the
event the Corporation at any time or from time to time after the
Original Issue Date shall make or issue, or fix a record date for the
determination of holders of Common Stock entitled to receive, a
dividend or other distribution payable in securities of the Corporation
other than shares of Common Stock, then and in each such event
provision shall be made so that the holders of the Series A Preferred
Stock shall receive upon conversion thereof in addition to the number
of shares of Common Stock receivable thereupon, the amount of
securities of the Corporation that they would have received had the
Series A Preferred Stock been converted into Common Stock on the date
of such event and had they thereafter, during the period from the date
of such event to and including the conversion date, retained such
securities receivable by them as aforesaid during such period, giving
application to all adjustments called for during such period under this
paragraph with respect to the rights of the holders of the Series A
Preferred Stock; and provided further, however, that no such adjustment
shall be made if the holders of Series A Preferred Stock simultaneously
receive a dividend or other distribution of such securities in an
amount equal to the amount of such securities was they would have
received if all outstanding shares of Series A Preferred Stock had been
converted into Common Stock on the date of such event.
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<PAGE>
(h) Adjustment for Reclassification, Exchange, or
Substitution. If the Common Stock issuable upon the conversion of the
Series A Preferred Stock shall be changed into the same or a different
number of shares of any class or classes of stock, whether by capital
reorganization, reclassification, or otherwise (other than a
subdivision or combination of shares or stock dividend, provided for
above, or a reorganization, merger, consolidation, or sale of assets
provided for below), then and in each such event the holder of each
such share of Series A Preferred Stock shall have the right thereafter
to convert such share into the kind and amount of shares of stock and
other securities and property receivable upon such reorganization,
reclassification, or other change, by holders of the number of shares
of Common Stock into which such shares of Series A Preferred Stock
might have been converted immediately prior to such reorganization,
reclassification, or change, all subject to further adjustment as
provided herein.
(i) Adjustment for Merger or Reorganization, etc. In case of
any consolidation or merger of the Corporation with or into another
corporation or the sale of all or substantially all of the assets of
the Corporation to another corporation (other than a consolidation,
merger or sale which is covered by Subsection 2(b)), each share of
Series A Preferred Stock shall thereafter be converted (or shall be
converted into a security which shall be convertible) into the kind and
amount of shares of stock or other securities or property to which a
holder of the number of shares of Common Stock of the Corporation
deliverable upon conversion of such Series A Preferred Stock would have
been entitled upon such consolidation, merger or sale; and, in such
case, appropriate adjustment (as determined in good faith by the Board
of Directors) shall be made in the application of the provisions in
this Section 5 set forth with respect to the rights and interest
thereafter of the holders of the Series A Preferred Stock to the end
that the provisions set forth in this Section 5 (including provisions
with respect to changes in and other adjustments of the Series A
Conversion Price) shall thereafter be applicable, as nearly as
reasonably may be, in relation to any shares of stock or other property
thereafter deliverable upon the conversion of the Series A Preferred
Stock.
(j) No Impairment. The Corporation will not, by amendment of
its Certificate of Incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale
of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or
performed hereunder by the Corporation, but will at all times in good
faith assist in the carrying out of all the provisions of this Section
5 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of
the Series A Preferred Stock.
(k) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Series A Conversion Price pursuant to
this Section 5, the Corporation at its expense shall promptly compute
such adjustment or readjustment in accordance with the terms hereof and
furnish to each holder of Series A Preferred Stock a certificate
setting forth such adjustment or readjustment and showing in detail the
facts upon which such adjustment or readjustment is based. The
Corporation shall, upon the written request
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<PAGE>
at any time of any holder of Series A Preferred Stock, furnish or cause
to be furnished to such holder a similar certificate setting forth (i)
such adjustments and readjustments, (ii) the Series A Conversion Price
then in effect, and (iii) the number of shares of Common Stock and the
amount, if any, of other property which then would be received upon the
conversion of Series A Preferred Stock.
(l) Notice of Record Date. In the event:
(i) that the Corporation declares a dividend (or any
other distribution) on its Common Stock payable in Common
Stock or other securities of the Corporation;
(ii) that the Corporation subdivides or combines its
outstanding shares of Common Stock;
(iii) of any reclassification of the Common Stock of
the Corporation (other than a subdivision or combination of
its outstanding shares of Common Stock or a stock dividend or
stock distribution thereon), or of any consolidation or merger
of the Corporation into or with another corporation, or of the
sale of all or substantially all of the assets of the
Corporation; or
(iv) of the involuntary or voluntary dissolution,
liquidation or winding up of the Corporation;
then the Corporation shall cause to be filed at its principal office or at the
office of the transfer agent of the Series A Preferred Stock and shall cause to
be mailed to the holders of the Series A Preferred Stock at their last addresses
as shown on the records of the Corporation or such transfer agent, at least ten
days prior to the date specified in (A) below or twenty days before the date
specified in (B) below, a notice stating
(A) the record date of such dividend, distribution,
subdivision or combination, or, if a record is not to be taken, the
date as of which the holders of Common Stock of record to be entitled
to such dividend, distribution, subdivision or combination are to be
determined, or
(B) the date on which such reclassification, consolidation,
merger, sale, dissolution, liquidation or winding up is expected to
become effective, and the date as of which it is expected that holders
of Common Stock of record shall be entitled to exchange their shares of
Common Stock for securities or other property deliverable upon such
reclassification, consolidation, merger, sale, dissolution or winding
up.
(m) Notwithstanding anything to the contrary, the provisions
of Section 5(d) shall not apply (i) to any share of Series A Preferred
Stock held by a holder other than a 25% Holder or (ii) on or after the
fifth anniversary of the Original Issue Date.
6 MANDATORY CONVERSION.
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(a) On the first Business Day following a Mandatory Conversion
Period (the "Mandatory Conversion Date"), all outstanding shares of
Series A Preferred Stock shall automatically be converted into shares
of Common Stock at the then effective conversion rate.
(b) All holders of record of shares of Series A Preferred
Stock will be given written notice of the Mandatory Conversion Date and
the place designated for mandatory conversion of all shares of Series A
Preferred Stock pursuant to this Section 6. Such notice shall be sent
by first class or registered mail, postage prepaid, to each record
holder of Series A Preferred Stock at such holder's address last shown
on the records of the transfer agent for the Series A Preferred Stock,
as the case may be (or the records of the Corporation, if it serves as
its own transfer agent). Upon receipt of such notice, each holder of
shares of Series A Preferred Stock shall surrender his or its
certificate or certificates for all such shares to the Corporation at
the place designated in such notice, and shall thereafter receive
certificates for the number of shares of Common Stock to which such
holder is entitled pursuant to this Section 6. On the Mandatory
Conversion Date, all rights with respect to the Series A Preferred
Stock so converted, including the rights, if any, to receive notices
and vote, will terminate, except only the rights of the holder thereof,
upon surrender of their certificate or certificates therefor, to
receive certificates for the number of shares of Common Stock into
which such Series A Preferred Stock has been converted, and payment of
any declared but unpaid dividends thereon. If so required by the
Corporation, certificates surrendered for conversion shall be endorsed
or accompanied by written instrument or instruments of transfer, in
form satisfactory to the Corporation, duly executed by the registered
holder or by his or its attorney duly authorized in writing. As soon as
practicable after the Mandatory Conversion Date and the surrender of
the certificate or certificates for Series A Preferred Stock, the
Corporation shall cause to be issued and delivered to such holder, or
on his or its written order, a certificate or certificates for the
number of full shares of Common Stock issuable on such conversion in
accordance with the provisions hereof and cash as provided in
Subsection 5(b) in respect of any fraction of a share of Common Stock
otherwise issuable upon such conversion.
(c) All certificates evidencing shares of Series A Preferred
Stock which are required to be surrendered for conversion in accordance
with the provisions hereof shall, from and after the Mandatory
Conversion Date, be deemed to have been retired and canceled and the
shares of Series A Preferred Stock represented thereby converted into
Common Stock for all purposes, notwithstanding the failure of the
holder or holders thereof to surrender such certificates on or prior to
such date. The Corporation may thereafter take such appropriate action
(without the need for stockholder action) as may be necessary to reduce
the authorized Series A Preferred Stock accordingly.
(d) Any Series A Preferred Stock converted pursuant to this
Section 6 will be canceled and will not under any circumstances be
reissued, sold or transferred and the
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Corporation may from time to time take such appropriate action as may
be necessary to reduce the authorized Series A Preferred Stock
accordingly.
7 REDEMPTION AT CORPORATION'S OPTION.
(a) The Corporation shall have the right (the "Redemption
Right"), in its sole discretion, to redeem all but not less than all of
the outstanding shares of Series A Preferred Stock in accordance with
the further provisions of this Section 7. The Redemption Rights shall
be exercisable (i) at any time after June 30, 2001 or (ii) at any time
not less than ninety (90) and not more than one hundred and eighty
(180) days after the closing of a Strategic Investment provided that
the closing of such Strategic Investment occurs within nine (9) months
after the Original Issue Date. The redemption price (the "Corporation
Redemption Price") of each share of Series A Preferred Stock redeemed
pursuant to the Redemption Right shall be equal to the Anniversary
Redemption Price as of the Corporation Redemption Date, in the case of
clause (i) in the immediately preceding sentence, or the Strategic
Redemption Price in the case of clause (ii) in the immediately
preceding sentence.
(b) The Corporation may elect to exercise its Redemption Right
pursuant to Section 7(a) by mailing written notice (a "Corporation
Notice of Redemption") to each registered holder specifying the time
and place of such redemption and the number of shares of Series A
Preferred Stock held by such holder to be redeemed. Such Corporation
Notice of Redemption shall be mailed by certified mail, return receipt
requested, at least 30, and not more than 60 days prior to the date
specified for redemption (the "Corporation Redemption Date"), to each
registered holder of the shares of Series A Preferred Stock at such
holder's last address as it appears on the Corporation's books. At the
closing, the Corporation shall pay to each of the holders of the Series
A Preferred Stock called for redemption, against the Corporation's
receipt from such holder of the certificate or certificates
representing the shares of such Series A Preferred Stock then held by
such holder, an amount equal to the aggregate payment due pursuant to
this Section 7 for all such shares, by wire transfer of immediately
available funds, or if such holder shall not have specified wire
transfer instructions to the Corporation prior to the closing, by
certified or official bank check made payable to the order of such
holder.
(c) Notwithstanding anything to the contrary contained in this
Section 7, the outstanding shares of Series A Preferred Stock shall
remain subject to (i) conversion pursuant to Section 5 and 6 and (ii)
redemption pursuant to Section 8, in each case, at all times on or
prior to the Corporation Redemption Date.
(d) In the case of any redemption pursuant to this Section 7,
unless the Corporation defaults in the payment in full of the
Corporation Redemption Price, dividends on the shares called for
redemption shall cease to accumulate on the applicable Corporation
Redemption Date, and all rights of the holders of the shares of Series
A Preferred Stock subject to such redemption by reason of their
ownership of such shares shall cease on such Corporation Redemption
Date, except the right to receive the
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<PAGE>
Corporation Redemption Price on surrender to the Corporation of the
certificates representing such shares. After the applicable Corporation
Redemption Date, the shares shall not be deemed to be outstanding and
shall not be transferable on the books of the Corporation, except to
the Corporation.
(e) Any shares of Series A Preferred Stock redeemed by the
Corporation pursuant to this Section 7 shall be canceled and shall have
the status of authorized and unissued preferred stock, without
designation as to series.
8 REDEMPTION AT HOLDER'S OPTION.
(a) Each holder of Series A Preferred Stock shall have the
right (the "Put Right"), in its sole discretion, to require the
Corporation to redeem all or any portion of its outstanding shares of
Series A Preferred Stock at a redemption price (the "Holder Redemption
Price") equal to the Series A Preference Amount as of the Holder
Redemption Date in accordance with the further provisions of this
Section 8. The Put Right shall be exercisable for a period of 70 days
after (i) the ninety-first day after the Senior Note Maturity Date,
(ii) any Major Liquidity Event or (iii) a Change of Control.
(b) A holder of Series A Preferred Stock may elect to exercise
its Put Right pursuant to Section 8(a) by mailing written notice (a
"Holder Redemption Notice") to the Corporation by certified mail,
return receipt requested. The Holder Redemption Notice shall specify:
(i) the name of the holder of shares of Series A
Preferred Stock delivering such Holder Redemption Notice;
(ii) that such holder is exercising its option,
pursuant to Section 8, to require the Corporation to redeem
shares of Series A Preferred Stock held by such holder; and
(iii) the number of, and a description of, the shares
of Series A Preferred Stock to be subject to such redemption.
(c) The Corporation shall, within thirty (30) days of receipt
of such Holder Redemption Notice, deliver to the holder exercising its
rights to require redemption of shares pursuant to Section 8(b), a
notice (the "Corporation Notice") specifying the date set for such
redemption, which date shall be no more than thirty (30) days after the
Corporation Notice (the "Holder Redemption Date").
(d) Notwithstanding anything contained in this Section 8 to
the contrary, the Corporation shall not be obligated to redeem shares
of Series A Preferred Stock which are the subject of a Holder
Redemption Notice if such redemption would result in a breach of, or
would cause a default or event of default under, the Notes Indenture.
17
<PAGE>
PROVIDED, HOWEVER, if such breach, event of default or default would
not result from the purchase of any number of shares of Series A
Preferred Stock which is less than the total number of shares the
Corporation is obligated to redeem on the Holder Redemption Date, the
Corporation shall purchase on the Holder Redemption Date the maximum
number of shares of Series A Preferred Stock it may so purchase,
allocated among the holders which have elected to have their shares so
repurchased ratably according to the number of shares so tendered;
PROVIDED, FURTHER, however, the Corporation shall use its reasonable
efforts to cure such default or violation on a timely manner and remove
any associated restrictions or limitations which are applicable to the
rights of the holders of Series A Preferred Stock contained in this
Section 8.
(e) In the case of any redemption pursuant to this Section 8,
unless the Corporation defaults in the payment in full of the Holder
Redemption Price, dividends on the shares called for redemption shall
cease to accumulate on the applicable Holder Redemption Date, and all
rights of the holders of the shares of Series A Preferred Stock subject
to such redemption by reason of their ownership of such shares shall
cease on such redemption date, except the right to receive the Holder
Redemption Price on surrender to the Corporation of the certificates
representing such shares. After the applicable Holder Redemption Date,
the shares shall not be deemed to be outstanding and shall not be
transferable on the books of the Corporation, except to the
Corporation.
(f) Any shares of Series A Preferred Stock redeemed by the
Corporation pursuant to this Section 8 shall be canceled and shall have
the status of authorized and unissued preferred stock, without
designation as to series.
9 DEFINITIONS.
As used in this Certificate of Designation, and unless the context
requires a different meaning, the following terms have the meanings indicated:
(i) "Anniversary Redemption Price" shall mean an amount per share equal
to (a) the Series A Purchase Price PLUS (b) an amount then necessary to provide
a holder of Series A Preferred Stock with a 25.0% internal rate of return on
such holder's investment in a share of Series A Preferred Stock as if such
holder held such share of Series A Preferred Stock from ____________, 2000. Such
internal rate of return shall be determined in accordance with the following
formula:
P 1/N
IRR = ( /I) 1
where:
IRR = Internal Rate of Return.
P = Anniversary Redemption Price.
18
<PAGE>
I - Series A Purchase Price
N = Number of years from the Original Issue Date to the
Corporation Redemption Date, calculated on the basis of a 365-day year.
(ii) "Business Day" shall mean each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking institutions in the City
of New York are authorized or obligated by law or executive order to close.
(iii) "Change of Control" shall mean a Change of Control as defined in
the Notes Indenture.
(iv) "Common Stock" shall mean the Common Stock of the Corporation, par
value $.001 per share.
(v) "Junior Stock" shall mean any of the Corporation's Common Stock,
and all other equity securities of the Corporation other than the Series A
Preferred Stock.
(vi) "Major Liquidity Event" shall mean (a) a Public Offering or (b) a
Strategic Investment.
(vii) "Mandatory Conversion Period" shall mean, at any time after the
second anniversary of the Original Issue Date, a period of thirty (30)
consecutive trading days during which the daily closing or last sale price per
share of Common Stock, as reported on a national securities exchange or NASDAQ,
is greater than $15.00 per share.
(viii) "NASDAQ" means the National Association of Securities Dealers,
Inc., Automated Quotation System.
(ix) "Notes Indenture" shall mean that certain Indenture, dated as of
October 27, 1997, between FirstCom Corporation, a Texas corporation, and State
Street Bank and Trust Company, N.A., (as Trustee), as in effect on June 30, 1999
or any supplemental indenture.
(x) "Original Issue Date" shall mean the date on which a share of
Series A Preferred Stock was first issued.
(xi) "Public Offering" shall mean the closing of an underwritten public
offering of shares of Common Stock pursuant to an effective registration
statement filed with the Securities and Exchange Commission for a public
offering and sale of securities of the Corporation (other than a registration
statement on Form S-8 or Form S-4, or their successors, or any other form for a
similar limited purpose, or any registration statement covering only securities
proposed to be issued in exchange for securities or assets of another
corporation).
(xii) "Senior Note Maturity Date" shall mean the date that the Senior
Notes issued pursuant to the Notes Indenture are paid in full.
19
<PAGE>
(xiii) "Strategic Investment" shall mean the purchase by a Strategic
Investor of thirty-five percent (35%) or more (on an as converted basis) of the
capital stock of the Corporation.
(xiv) "Strategic Investor" shall mean (i) a telecommunications operator
with assets in excess of $2 billion or (ii) an entity with controlling equity
investments in excess of $1 billion in companies operating in the
telecommunications industry; provide that such entity is not a private equity
investment firm or other like entity.
(xv) "Strategic Redemption Price" shall mean $9.00.
(xvi) "25% Holder" shall mean SFG-N Inc., the AIG-GE Capital Latin
American Infrastructure Fund L.P. and/or any of its affiliates and any holder of
not less than twenty-five percent (25%) of the shares of Common Stock issued or
issuable upon conversion of the Series A Preferred Stock.
20
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designation of Series A Non-Voting Participating Convertible Preferred Stock to
be duly executed by its Secretary this [___]th day of [______], [_____].
[ INC.]
By
----------------------------------
Name:
Title: Secretary
21
EXHIBIT 2.8
================================================================================
VOTING AGREEMENT
among
AT&T CORP., a New York corporation,
KIRI INC., a Delaware corporation,
Patricio E. Northland, an individual
George Cargill, an individual
and
Eleazar Donoso, an individual
Dated as of November 1, 1999
================================================================================
<PAGE>
VOTING AGREEMENT dated as of November 1, 1999, between AT&T
Corp., a New York corporation ("PARENT"), Kiri Inc., a Delaware corporation
("RV"), Mr. Patricio E. Northland, an individual, Mr.George Cargill, an
individual, and Mr. Eleazar Donoso, an individual (each of such individuals, a
"SHAREHOLDER" and such individuals, collectively, the "SHAREHOLDERS").
A. Parent, RV, Frantis Inc., a Delaware corporation ("MERGER
SUB") and FirstCom Corporation, a Texas corporation (the "COMPANY"), propose to
enter into an Agreement and Plan of Merger dated as of the date hereof (as the
same may be amended or supplemented, the "MERGER AGREEMENT") providing for the
merger of the Company with and into Merger Sub (the "MERGER");
B. Each Shareholder owns, or is the trustee of a trust which
owns, or controls a corporation that is the general partner of a limited
partnership which owns, beneficially and of record, the number of shares of
common stock of the Company ("COMMON STOCK") set forth opposite the name of such
Shareholder on Schedule A hereto (all of such shares of Common Stock, together
with any other shares of capital stock of the Company acquired by any of such
Shareholders, or any trust, corporation, partnership or other legal entity
controlled by any of such Shareholders, after the date hereof and during the
term of this Agreement (including, without limitation through the exercise of
any stock options, warrants or similar instruments), being collectively referred
to herein as the "SUBJECT SHARES");
C. As an essential condition and inducement to their
willingness to enter into the Merger Agreement, Parent and RV have requested
that each Shareholder enter into this Agreement, and each Shareholder has agreed
to do so; and
D. Capitalized terms used herein without definition shall have
the respective meanings specified in the Merger Agreement.
NOW, THEREFORE, to induce Parent and RV to enter into, and in
consideration of their entering into, the Merger Agreement, and in consideration
of the representations, warranties, covenants and agreements contained herein,
the parties hereto hereby agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS. Each
Shareholder hereby, severally and not jointly, represents and warrants to Parent
and RV as of the date hereof in respect of himself as follows:
(a) AUTHORITY. The Shareholder has all requisite capacity and
authority to enter into this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly executed
and delivered by the Shareholder and (assuming this Agreement
constitutes a valid and binding obligation of Parent and of RV)
constitutes the valid and binding obligation of the Shareholder
enforceable against such Shareholder in accordance with its terms.
Neither the execution and delivery by the Shareholder of this Agreement
nor the due performance by the Shareholder of the actions and
obligations contemplated hereby will violate or conflict in any
material respect with, result in a breach
<PAGE>
of any material provision of or constitute a default under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture,
deed of trust, trust agreement, license, franchise, permit, lease,
contract, agreement or other instrument, commitment, judgment, order,
notice, decree, statute, law, ordinance, rule, regulation or obligation
to which the Shareholder is a party or by which the Shareholder or any
of the Shareholder's property or assets is or may be bound. If the
Shareholder is married and the Shareholder's Subject Shares constitute
community property or if this Agreement otherwise requires spousal or
other approval in order to be legal, valid and binding on the
Shareholder, this Agreement has also been duly authorized, executed and
delivered by, and constitutes a valid and binding agreement of, the
Shareholder's spouse, enforceable against such spouse in accordance
with its terms. The execution and delivery of this Agreement by the
Shareholder, and timely the fulfillment by the Shareholder of his
obligations hereunder, do not and will not require the consent or
approval of any other natural or legal person. Within five days after
the date hereof, each Shareholder shall execute and deliver a power of
attorney in favor of such Shareholder's spouse or in favor of at least
one other Shareholder with respect to the matters covered by Sections
3(a) and (b) in the event of incapacity or absence of such Shareholder
shall deliver promptly to Parent a true and correct copy of such power
of attorney.
(b) THE SUBJECT SHARES. The Shareholder is the record and
beneficial owner of (or is trustee of a trust that is the record holder
of, and whose beneficiaries are the beneficial owners of, or controls
the general partner of a limited partnership that is the record and
beneficial owner of), and has good and marketable title to, the Subject
Shares set forth opposite his name on Schedule A hereto, and, except as
set forth on Schedule 1(b), such Subject Shares are free and clear of
any claims, liens, encumbrances and security interests whatsoever. The
Shareholder does not own, of record or beneficially, directly or
indirectly, any shares of capital stock of the Company other than the
Subject Shares set forth opposite his or its name on Schedule A
attached hereto. The Shareholder has the sole right to vote, or to
direct the vote of, such Subject Shares, and none of such Subject
Shares is subject to any voting trust or other agreement, arrangement
or restriction with respect to the voting of such Subject Shares,
except as contemplated by this Agreement.
2. REPRESENTATIONS AND WARRANTIES OF PARENT AND RV. Each of
Parent and RV hereby represents and warrants to each Shareholder as follows:
(a) AUTHORITY. It has all requisite power and authority to
enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly and validly
authorized, executed and delivered by it and (assuming this Agreement
constitutes the valid and binding obligation of each of the other
parties hereto) constitutes its valid and binding obligation and is
enforceable against it in accordance with its terms. The execution and
delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby and compliance with the terms hereof
will not, conflict with, or result in any violation of, or default
(with or without notice or lapse of time or both) under, any provision
of its articles of incorporation or by-laws, any trust agreement, loan
or credit agreement, note, bond, mortgage, indenture, lease or of any
other
<PAGE>
agreement or instrument, permit, concession, franchise, license,
judgment, order, notice, decree, statute, law, ordinance, rule or
regulation applicable to it or to its property or assets.
3. COVENANTS OF EACH SHAREHOLDER. Until the termination of
this Agreement in accordance with Section 7, each Shareholder, severally and not
jointly, agrees as follows:
(a) At any meeting of Shareholders of the Company called to
vote upon the Merger and/or the Merger Agreement or at any adjournment
thereof or in any other circumstances upon which a vote, consent or
other approval (including by written consent) with respect to the
Merger and/or the Merger Agreement is sought, the Shareholder shall
vote (or cause to be voted) the Subject Shares in favor of the Merger,
the adoption by the Company of the Merger Agreement (as it may be
amended from time to time, provided that such amendment is not
materially adverse to such Shareholder) and the approval of the terms
thereof and each of the other transactions contemplated by the Merger
Agreement. Any vote cast in accordance with this Section 3(a) or in
accordance with Section 3(b) shall be cast in such manner as will
insure that such vote is duly counted for purposes of determining
whether a quorum is present and for purposes of determining the result
of such vote.
(b) At any meeting of shareholders of the Company or at any
adjournment thereof or in any other circumstances upon which the
Shareholder's vote, consent or other approval is sought, the
Shareholder shall vote (or cause to be voted) the Subject Shares
against (A) any Acquisition Proposal (as such term is defined in the
Merger Agreement) or (B) any amendment of the Company's certificate of
incorporation or by-laws or other proposal or transaction involving the
Company or any of its subsidiaries, which amendment or other proposal
or transaction would be reasonably likely to impede, frustrate, prevent
or nullify the Merger, the Merger Agreement (as it may be amended from
time to time, provided such amendment is not materially adverse to such
Shareholder), or any of the other transactions contemplated by the
Merger Agreement or change in any manner the voting rights of the
Common Stock. Subject to Section 10, the Shareholder further agrees not
to enter into any agreement, and not to commit or agree to take any
action, inconsistent with the foregoing.
(c) The Shareholder shall not, prior to the earliest of (I)
the Effective Time and (II) the termination of the Merger Agreement in
accordance with its terms, (X) sell, transfer, give, pledge, assign or
otherwise dispose of (including by gift) (collectively, "TRANSFER"), or
consent to or cause any Transfer of, any or all of such Shareholder's
Subject Shares (or the Subject Shares owned by any person or entity
controlled, directly or indirectly, by such Shareholder) or any
interest therein or enter into any contract, option or other
arrangement (including any profit sharing arrangement) with respect to
the Transfer of, such Subject Shares to any person other than pursuant
to the terms of the Merger, except to a person or entity who, as a
condition of such Transfer agrees to be bound by the provisions of this
Agreement and provides such other representations, warranties and
covenants relating to the subject matter hereof as Parent may
reasonably request or (Y)
<PAGE>
enter into any voting arrangement, whether by proxy, voting agreement
or otherwise, in connection with, directly or indirectly, any
Acquisition Proposal and agrees not to commit or agree to take any of
the foregoing actions.
(d) Subject to Section 10 hereof, until after the Merger is
consummated or the Merger Agreement is terminated, the Shareholder
shall use reasonable efforts to take, all actions necessary, proper or
advisable to consummate the Merger and the other transactions
contemplated by the Merger Agreement (as it may be amended from time to
time, provided such amendment is not materially adverse to such
Shareholder).
(e) Such Shareholder, and any beneficiary of a revocable trust
for which such Shareholder serves as trustee, shall not take any action
to revoke or terminate such trust or take any other action which would
restrict, limit or frustrate in any way the transactions contemplated
by this Agreement. Each such beneficiary hereby acknowledges and agrees
to be bound by the terms of this Agreement applicable to it.
4. FURTHER ASSURANCES. Each Shareholder will, from time to
time, (i) provide to Parent true and correct copies of all documents relating to
his record or beneficial ownership of, and/or control over, any shares of common
stock of the Company, as may be reasonably requested by Parent, and (ii) execute
and deliver, or cause to be executed and delivered, such additional or further
consents, documents and other instruments as Parent may reasonably request for
the purpose of effectively carrying out his obligations under this Agreement.
5. CERTAIN EVENTS. Each Shareholder agrees that this Agreement
and the obligations hereunder shall attach to such Shareholder's Subject Shares
and shall be binding upon any person or entity to which legal or beneficial
ownership of such Subject Shares shall pass, whether by operation of law or
otherwise, including without limitation such Shareholder's heirs, guardians,
administrators or successors. In the event of any stock split, stock dividend,
merger, reorganization, recapitalization or other change in the capital
structure of the Company affecting the Company Common Stock, or the acquisition
of additional shares of Company Common Stock or other voting securities of the
Company by any Shareholder, the number of Subject Shares listed in Schedule A
beside the name of such Shareholder shall be adjusted appropriately and this
Agreement and the obligations hereunder shall attach to any additional shares of
Company Common Stock or other securities or instruments issued to or acquired by
such Shareholder.
6. ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties, except that Parent may
assign, as contemplated by Section 7.5 of the Merger Agreement, in its sole
discretion, any and all of its rights, interests and obligations hereunder to
any affiliate, provided that Parent will remain liable for its obligations
hereunder in the event of any assignment pursuant to this Section 6. Subject to
the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns.
<PAGE>
7. TERMINATION. This Agreement, and all rights and obligations
of the parties hereunder, shall terminate upon the date that is the earlier to
occur of (i) the Effective Time, and (ii) the date of any termination of the
Merger Agreement in accordance with its terms.
8. GRANT OF IRREVOCABLE PROXY; APPOINTMENT OF PROXY. (a) Each
Shareholder hereby irrevocably grants to, and appoints, Parent and Mr. John
Haigh in his capacity as an officer of Parent, and any individual who shall
hereafter succeed to such office of Parent, and each of them individually, such
Shareholder's proxy and attorney-in-fact (with full power of substitution), for
and in the name, place and stead of such Shareholder, to vote such Shareholder's
Subject Shares, or grant a consent or approval in respect of such Subject Shares
in connection with any of the matters set forth in Sections 3(a) and 3(b).
(b) Such Shareholder represents that any proxies heretofore
given in respect of such Shareholder's Subject Shares are not irrevocable, and
that any such proxies are hereby revoked.
(c) Such Shareholder hereby affirms that the irrevocable proxy
set forth in this Section 8 is given in connection with the execution of the
Merger Agreement, and that such irrevocable proxy is given to secure the
performance of the duties of the Shareholder under this Agreement. Such
Shareholder hereby further affirms that the irrevocable proxy is coupled with an
interest and may under no circumstances be revoked. Such Shareholder hereby
ratifies and confirms all that such irrevocable proxy may lawfully do or cause
to be done by virtue hereof. Such irrevocable proxy is executed and intended to
be irrevocable in accordance with the provisions of the Texas Business
Corporation Act.
9. GENERAL PROVISIONS.
(A) AMENDMENTS. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
(B) NOTICE. All notices and other communications hereunder
shall be in writing and shall be deemed given if hand delivered or sent by
overnight courier (providing proof of delivery) to Parent and RV in accordance
with Section 7.4 of the Merger Agreement and to the Shareholders at their
respective addresses set forth on Schedule A attached hereto (or at such other
address for a party as shall be specified by like notice).
(C) INTERPRETATION. When a reference is made in this Agreement
to Sections, such reference shall be to a Section to this Agreement unless
otherwise indicated. 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. Wherever the words "include", "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation".
(D) COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become
<PAGE>
effective when one or more of the counterparts have been signed by each of the
parties and delivered to the other party, it being understood that each party
need not sign the same counterpart.
(E) ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This
Agreement (including the documents and instruments referred to herein) (I)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and (II) is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder.
(F) GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York regardless of
the laws that might otherwise govern under applicable principles of conflicts of
law thereof.
(G) VOIDABILITY. If prior to the execution hereof, the Board
of Directors of the Company shall not have duly and validly authorized and
approved the Merger Agreement and the transactions contemplated thereby, so that
the execution and delivery hereof by Parent and RV would trigger the provisions
of Part Thirteen of the Texas Business Corporation Act, then this Agreement
shall be void and unenforceable until such time as such authorization and
approval shall have been duly and validly obtained.
10. SHAREHOLDER CAPACITY. No person executing this Agreement
who is or becomes during the term hereof a director or officer of the Company
makes any agreement or understanding herein in his capacity as such director or
officer. Each Shareholder signs solely in his capacity as the record holder and
beneficial owner of, or the trustee of a trust whose beneficiaries are the
beneficial owners of, such Shareholder's Subject Shares and nothing herein shall
limit or affect any actions taken by a Shareholder in his capacity as an officer
or director of the Company to the extent specifically permitted by the Merger
Agreement.
11. ENFORCEMENT. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of New York or in a New York state court, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (A) consents to submit such party to the
personal jurisdiction of any Federal court located in the State of New York or
any New York state court in the event any dispute arises out of this Agreement
or any of the transactions contemplated hereby, (B) agrees that such party will
not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court, (C) agrees that such party will not bring
any action relating to this Agreement or the transactions contemplated hereby in
any court other than a Federal court sitting in the state of New York or a New
York state court and (D) waives any right to trial by jury with respect to any
claim or proceeding related to or arising out of this Agreement or any of the
transactions contemplated hereby.
<PAGE>
12. PUBLIC ANNOUNCEMENTS. Each Shareholder will consult with
Parent before issuing, and provide Parent with the opportunity to review and
comment upon, any press release or other public statements by such Shareholder
with respect to the transactions contemplated by this Agreement and the Merger
Agreement, and shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required by applicable
law, court process or by obligations pursuant to any listing agreement with any
national securities exchange (including, but not limited to, Nasdaq).
IN WITNESS WHEREOF, Parent, RV and the Shareholders have
caused this Agreement to be duly executed and delivered as of the date first
written above.
AT&T CORP.
By: /s/ GARY A. SWENSON
-----------------------------------------------
Name: Gary A. Swenson
Title: Assistant Secretary
KIRI INC.
By: /s/ GARY A. SWENSON
-----------------------------------------------
Name: Gary A. Swenson
Title: Secretary
SHAREHOLDERS:
/s/ PATRICIO E. NORTHLAND
-----------------------------------------------
Name: Patricio E. Northland
-----------------------------------------------
Name:
/s/ GEORGE A. CARGILL
-----------------------------------------------
Name: George A. Cargill
/s/ ELEAZAR DONOSO
-----------------------------------------------
Name: Eleazar Donoso
<PAGE>
SCHEDULE A
- --------------------------------------------------------------------------------
NUMBER OF SHARES OF COMPANY NUMBER OF
NAME AND ADDRESS OF COMMON STOCK SHAREHOLDER
SHAREHOLDER OWNED OF RECORD OPTIONS
- --------------------------------------------------------------------------------
Patricio E. Northland 1,400,000 4,147,333
- --------------------------------------------------------------------------------
George Cargill 1,700,000 500,000
- --------------------------------------------------------------------------------
Eleazor Denoso 1,440,000 --
- --------------------------------------------------------------------------------
EXHIBIT 2.9
November 1, 1999
AT&T Corp.
Basking Ridge
New Jersey
Dear Sirs:
As I have indicated in connection with FirstCom's extension of my
employment agreement, I agree to vote the shares of FirstCom that I own in favor
of the Merger that is the subject of the Agreement and Plan of Merger executed
today and to work with you to bring the Merger to a successful conclusion.
In addition, so long as I am employed by FirstCom, I will not sell my
shares in a private sale or a sale pursuant to my registration rights. I may
make, however, some contributions to family trusts.
Very truly yours,
/s/ DOUGLAS G. GEIB II
----------------------
Douglas G. Geib II
EXHIBIT 99.1
NEWS RELEASE [GRAPHIC OMITTED]
- --------------------------------------------------------------------------------
AT&T TO MERGE NETSTREAM, ITS BRAZILIAN OPERATION, WITH FIRSTCOM; WILL CREATE NEW
PUBLICLY TRADED COMPANY TO MARKET BROADBAND SERVICES TO BUSINESSES IN LATIN
AMERICA
FOR RELEASE MONDAY, NOV. 1, 1999
New York - AT&T today announced plans to form a new public company, to
be named AT&T Latin America, that will merge the operations of Netstream, the
competitive local exchange company AT&T is acquiring in Brazil, and FirstCom, a
publicly traded company with competitive telecommunications operations in Chile,
Colombia and Peru.
AT&T, together with Promon Tecnologia, its Brazilian partner, will
contribute Netstream and $70 million in cash. In exchange, AT&T will own
approximately 60 percent of the stock in the company, Promon Tecnologia will own
approximately 6 percent, and the former FirstCom shareholders will own
approximately 34 percent on a fully diluted basis. Promon Tecnologia and the
former FirstCom shareholders will own Class A shares of AT&T Latin America, and
have one vote per share; AT&T will own Class B shares, and will have ten votes
per share. AT&T Latin America expects to invest approximately $500 million over
the next five years, and intends to apply for listing on the NASDAQ.
The new company will provide state-of-the-art first-mile data and voice
connectivity in major Latin American countries; it will establish a full range
of business communications services in countries where it operates; and it will
connect its customers to the new Concert, AT&T's global venture with BT.
The new company will begin operation with more than 700 employees
serving more than 1,600 business customers in major metropolitan areas in
Brazil, Chile, Colombia and Peru with 73,500 kilometres
-more-
<PAGE>
- 2 -
(45,900 miles) of metropolitan fiber within these countries.
"AT&T Latin America brings together high-speed local connectivity,
cutting-edge technology and first-class services for business customers,
extending AT&T's reach to key economic and business centers in the region," said
John Zeglis, president of AT&T. "The opportunity for growth is manifest.
Business communications services in South America are valued at $16 billion
today, growing at a rate of 20 percent per year. Brazil, alone, accounts for
over $8 billion of that market."
Additional growth will come from the new company's relationship with
AT&T Global Network Services (AGNS), the business - acquired from IBM - that
offers professionally managed network services throughout the region. AT&T Latin
America is expected to be a valued supplier to AGNS of telecommunications
services, and to be a distributor of the services AGNS produces.
FirstCom, headquartered in the US, is a Latin American emerging
competitive local exchange carrier, traded on the NASDAQ. It has advanced
IP-based networks and operations in five major economic centers in Chile, Peru,
and Colombia.
In August, AT&T announced that it would acquire Netstream from Promon
Tecnologia. Netstream is a Brazilian emerging competitive local exchange carrier
with operations in Sao Paulo, Rio de Janeiro and Belo Horizonte, with plans to
expand its network to five additional cities in Brazil. The combined assets of
FirstCom and Netstream will reach 70 - 80 percent of the business market in the
four countries.
Netstream offers advanced communications services to business customers
over a network based on optical SDH technology. It has more than 700 customers,
nearly 400 connected buildings, and more than 30,000 kilometers of fiber optics.
Promon Tecnologia is one of Brazil's leading corporations, providing
engineering solutions to the telecommunications, energy, petroleum, chemical,
petrochemical, transportation and manufacturing industries.
"AT&T Latin America will harness the power of first-mile broadband
technology and the seamlessness of the Concert global network to enhance the
delivery of advanced communications services, over one connection, to customers
across South America's business centers," said John Haigh, president of AT&T's
International Ventures organization. "It complements our overall global strategy
extremely well."
-more-
<PAGE>
- 3 -
Patricio Northland, currently CEO of FirstCom, will become CEO of AT&T
Latin America. He will report to a board of directors, which will consist of
five AT&T executives and three independent directors. A native of Santiago,
Chile, Northland is a successful entrepreneur with a strong telecommunications
management track record. He has lived and worked in both the U.S. and Latin
America for the past 19 years, and held top management positions at other
leading telecommunications companies.
The newly created AT&T Latin America's in-country operations will
continue to be managed at the local level by the current leadership of FirstCom
and Netstream, which will work closely with AT&T's International Venture
organization and the new Concert.
"FirstCom and Netstream's metropolitan backbone network, first-mile
assets and next generation technology, coupled with AT&T's technology, brand,
extensive customer base, and other strategic relationships, such as Concert,
will make AT&T Latin America the region's premier telecommunications company,"
said Patricio Northland. "We will focus FirstCom's entrepreneurial spirit and
AT&T's management best practices on meeting the advanced telecommunications
needs of Latin American business customers with one-stop shopping, innovative,
quality solutions and customer service."
The transaction has been approved by both AT&T's and FirstCom's boards
of directors, and is expected to close in the first quarter of 2000, subject to
regulatory approval, applicable in-country laws, approval by FirstCom's
shareholders, and the restructuring of certain of FirstCom's debt obligations.
AT&T Latin America will be headquartered in Coral Gables, Florida,
current headquarters of FirstCom and of AT&T's regional Caribbean and Latin
American business.
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EDITOR'S NOTE:
AT&T will hold a media and analysts' teleconference call at 11 a.m. Eastern
Standard Time (US). The call-in number for US callers is 1-800-230-1093. The
call-in numbers for international callers are: 612-332-0720; 612-332-0820; and
612-332-0228.
The teleconference will be rebroadcast from 4 p.m. today until 11:59 p.m.
Wednesday, Nov. 3. To listen, US callers can dial 1-800-475-6701, access code:
478936; international callers can dial 1-320-365-3844, access code: 478936.
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The foregoing are "forward-looking statements" which are based on management's
beliefs as well as on a number of assumptions concerning future events made by
and information currently available to management. Readers are cautioned not to
put undue reliance on such forward-looking statements, which are not a guarantee
of performance and are subject to a number of uncertainties and other factors,
many of which are outside AT&T's control, that could cause actual results to
differ materially from such statements. For a more detailed description of the
factors that could cause such a difference, please see AT&T's filings with the
Securities and Exchange Commission. AT&T disclaims any intention or obligation
to update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
