<PAGE> 1
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) March 27, 1997
- --------------------------------------------------------------------------------
World Access, Inc.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 0-19998 65-0044209
- --------------------------------------------------------------------------------
(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation) Identification Number)
945 East Paces Ferry Road
Suite 2240, Atlanta, GA 30326
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (404) 231-2025
----------------------------
<PAGE> 2
Item 2. Acquisition or Disposition of Assets.
On March 27, 1997, World Access, Inc. (the "Company"), CIS Acquisition
Corp., a Delaware corporation and wholly-owned subsidiary of the Company
("Acquisition"), Cellular Infrastructure Supply, Inc., a Nevada corporation
("CIS"), and Thomas R. Canham, Brian A. Schuchman and John T. Simon
(collectively the "CIS Stockholders") entered into an Agreement and Plan of
Merger (the "Merger Agreement") and consummated the transactions contemplated
thereby (the "Merger"). Pursuant to the Merger Agreement, CIS, a Burr Ridge,
Illinois based provider of new and/or upgraded cellular network equipment and
related design, installation and technical support services, was merged with
and into Acquisition with Acquisition as the surviving corporation. The issued
and outstanding shares of CIS, all of which were held by the CIS Stockholders,
were converted into the right to receive an aggregate of 1,285,884 shares of
World Access common stock, $.01 par value per share, of which 845,010 shares
are subject to the terms of the Escrow Agreement attached as exhibit 2.1(b) to
the Merger Agreement; plus an amount equal to Three Million Five Hundred
Thousand Dollars ($3,500,000); plus additional consideration in the form of
cash not to exceed Six Million Five Hundred Thousand Dollars ($6,500,000) in
the aggregate, as set forth in the Merger Agreement (the "Additional
Consideration"), payable in three installments not to exceed Three Million Five
Hundred Thousand Dollars ($3,500,000), on February 15, 1998, Two Million
Dollars ($2,000,000) on February 15, 1999 and One Million Dollars ($1,000,000)
on February 15, 2000 provided that Acquisition's Pre-Tax Net Income, as defined
in the Merger Agreement, equals or exceeds predefined levels for the three
performance periods: January 1, 1997 to and including December 31, 1997;
January 1, 1998 to and including December 31, 1998 and January 1, 1999 to and
including December 31, 1999. If the Pre-Tax Net Income levels are not
obtained, the Additional Consideration will be reduced as set forth in the
Merger Agreement. Other conditions to the payment of the Additional
Consideration are set forth in the Merger Agreement.
Thomas R. Canham, President, Brian A. Schuchman, Executive Vice
President and John T. Simon, Executive Vice President also entered into
employment agreements with Acquisition, copies of which are attached to the
Merger Agreement as exhibits.
The consideration for the Merger was determined as a result of
negotiations between the Company and the CIS Stockholders and was approved by
the board of directors of the Company and Acquisition. The Company presently
intends to fund the Additional Consideration, which is based on the achievement
by Acquisition of certain profitability levels, out of working capital at the
time it becomes payable. Prior to the Merger, neither the Company nor any of
its affiliates, directors or officers, nor any associate of any such director
or officer, had any relationship with CIS or the CIS Stockholders.
The description contained herein of the Merger Agreement is qualified
in its entirety by reference to the Merger Agreement and the Press Release
dated March 31, 1997, which are attached hereto as Exhibits 2 and 99,
respectively and incorporated herein by this reference.
<PAGE> 3
Item 7. Financial Statements. Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business Acquired. As of the date of
the filing of this Current Report on Form 8-K, it is
impracticable for the Company to provide the financial
statements required by this Item 7(a). In accordance with Item
7(a) (4) of Form 8-K, such financial information shall be filed
by amendment to this Form 8-K no later than 75 days after the
due date of this Report on Form 8-K.
(b) Pro Forma Financial Information. As of the date of the filing
of this Current Report on Form 8-K, it is impracticable
for the Company to provide the pro forma financial information
required by this Item 7(b). In accordance with Item 7(b) of
Form 8-K, such financial information shall be filed by
amendment to this Form 8-K no later than 75 days after the due
date of this Report on Form 8-K.
(c) Exhibits. The following is a list of the Exhibits attached
hereto.
Exhibit No. 2 Agreement and Plan of Merger between and among
World Access, Inc. and CIS Acquisition Corp.
and Thomas R. Canham; Brian A. Schuchman; and
John T. Simon and Cellular Infrastructure
Supply, Inc. (with exhibits thereto).
Exhibit No. 99 Press Release
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this Report to be signed on its behalf
by the undersigned, thereunto duly authorized.
WORLD ACCESS, INC.
By: /s/ Mark A. Gergel
--------------------------------
Mark A. Gergel
Its Executive V.P and Chief
Financial Officer
Dated as of April 9, 1997
<PAGE> 1
EXHIBIT 2
================================================================================
AGREEMENT AND PLAN OF MERGER
BETWEEN AND AMONG
WORLD ACCESS, INC. AND
CIS ACQUISITION CORP.
AND
THOMAS R. CANHAM;
BRIAN A. SCHUCHMAN; AND
JOHN T. SIMON
AND
CELLULAR INFRASTRUCTURE SUPPLY, INC.
AS OF MARCH 27, 1997
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE 1. THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.1. Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.2. Certificate of Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.3. Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.4. Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.5. Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.6. Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2. CONVERSION OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.1. CIS Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.2. Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.3. Exchange of CIS Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.4. Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF CIS AND THE
STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.1. Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.2. Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.3. Absence of Restrictions and Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 3.4. Capitalization; Ownership of CIS Stock; Capital Stock of CIS
Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 3.5. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3.6. Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.7. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.8. Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.9. CIS Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.10. CIS Customer Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 3.11. Tax Returns; Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 3.12. Officers, Directors and Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 3.13. CIS Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.14. Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 3.15. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 3.16. Title to Properties and Related Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.17. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.18. Patents, Trademarks, Trade Names . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.19. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.20. Qualification of Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 3.21. Brokers, Finders and Investment Bankers . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 3.22. Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.23. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF WORLD
ACCESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.1. Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.2. Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.3. Absence of Restrictions and Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 4.4. Capitalization of World Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 4.5. World Access SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.6. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 5. CERTAIN COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 5.1. Noncompetition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 5.2. No Interference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 5.3. Listing Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 5.4. Other Covenants of the Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 5.5. Guarantee of Collectibility of Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE 6. OTHER AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 6.1. Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 6.2. Repayment of Stockholders' Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 6.3. Registration Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 6.4. Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 6.5. Tax Reporting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 6.6. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE 7. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 7.1. Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 7.2. Deliveries by Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 7.3. Deliveries by World Access and Merger Sub . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 7.4. Deliveries by Others. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE 8. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 8.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 8.2. Agreement of CIS Indemnitors to Indemnify . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 8.3. Agreement of World Access Indemnitors to Indemnify . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 8.4. Procedures for Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 8.5. Third Party Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 8.6. Other Rights and Remedies Not Affected . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 8.7. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 8.8. Time Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 8.9. Limitations as to Amount Payable by CIS Indemnitors . . . . . . . . . . . . . . . . . . . . . 37
SECTION 8.10. Limitations as to Amount Payable by World Access and Surviving
Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 8.11. Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C> <C>
SECTION 8.12. Appointment of CIS Indemnitors Representative . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 8.13. Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE 9. MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 9.1. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 9.2. Disclosure Letters and Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 9.3. Assignment; Successors in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 9.4. Number; Gender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 9.5. Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 9.6. Controlling Law; Jurisdiction; Integration; Amendment . . . . . . . . . . . . . . . . . . . . 41
SECTION 9.7. Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 9.8. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 9.9. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 9.10. Enforcement of Certain Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 9.11. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 9.12. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
</TABLE>
<TABLE>
<CAPTION>
EXHIBITS:
<S> <C>
Exhibit 2.1(a) CIS Shareholders
Exhibit 2.1(b) Escrow Agreement
Exhibit 6.1(a) Employment Agreement with Thomas R. Canham
Exhibit 6.1(b) Employment Agreement with Brian A. Schuchman
Exhibit 6.1(c) Employment Agreement with John T. Simon
Exhibit 6.3 Registration Rights Agreement
Exhibit 6.5 Tax Reporting Agreement
</TABLE>
iii
<PAGE> 5
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
1996 Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1996 Subsidiary Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
401 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Acquiror . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Adjustment Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Ancillary Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Articles of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Average Closing Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Certificate of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
CIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
CIS Benefit Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
CIS Customer Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
CIS Disclosure Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
CIS ERISA Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
CIS Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
CIS Indemnitees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
CIS Indemnitors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
CIS Indemnitors Representative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
CIS Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
CIS Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Contingent Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
DGCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
EEOC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Employee benefit plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Environmental Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Escrow Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Escrow Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
First Performance Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
</TABLE>
iv
<PAGE> 6
<TABLE>
<S> <C>
First Performance Period Adjusted Average Closing Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Geneva Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Hazardous Substances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Indemnification Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Indemnitee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Indemnitor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Indemnitors Representative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
JTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Letter of Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Licensed Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Merger Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Merger Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
NGCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
NLRB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Noncompete Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Payment Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
PBGC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Performance Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Pre-Tax Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Proportionate Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Proprietary Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Registration Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Reportable Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Second Performance Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Stockholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Stockholder Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Subsidiary Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Tax Reporting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Third Party Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Third Performance Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Voting Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
WIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
World Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
</TABLE>
v
<PAGE> 7
<TABLE>
<S> <C>
World Access Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
World Access Disclosure Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
World Access Indemnitees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
World Access Indemnitors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
World Access Indemnitors Representative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
World Access SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
World Access Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
</TABLE>
vi
<PAGE> 8
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of March 27, 1997 (the
"Agreement"), by and among WORLD ACCESS, INC., a Delaware corporation ("World
Access"), CIS ACQUISITION CORP., a Delaware corporation and a wholly owned
subsidiary of World Access ("Merger Sub"), CELLULAR INFRASTRUCTURE SUPPLY,
INC., a Nevada corporation ("CIS"), and THOMAS R. CANHAM, an individual
resident of the State of Illinois, BRIAN A. SCHUCHMAN, an individual resident
of the State of Illinois and JOHN T. SIMON, an individual resident of the State
of New Jersey (each a "Stockholder" and collectively the "Stockholders").
WITNESSETH:
WHEREAS, certain of the parties hereto have entered into a letter of intent
dated as of March 11, 1997 (the "Letter of Intent") confirming their tentative
agreement to combine the businesses of World Access and CIS;
WHEREAS, the parties to the Letter of Intent wish to more fully set forth
their agreement with respect to the combination of World Access and CIS and to
consummate such transaction on the terms hereof;
WHEREAS, the respective Boards of Directors of World Access, Merger Sub and
CIS each have approved this Agreement and the merger (the "Merger") of CIS with
and into Merger Sub upon the terms and conditions contained herein and in
accordance with the General Corporation Law of the State of Nevada (the "NGCL")
and the General Corporation Law of the State of Delaware ("DGCL");
WHEREAS, World Access, as the sole stockholder of Merger Sub, has approved
this Agreement, the Merger and the transactions contemplated hereby pursuant to
action taken by unanimous written consent in accordance with the requirements
of the DGCL and the Certificate of Incorporation and the Bylaws of Merger Sub;
and
WHEREAS, the Stockholders, comprising all of the stockholders of CIS, have
approved this Agreement, the Merger and the transactions contemplated hereby
pursuant to action taken by unanimous written consent in accordance with the
requirements of the NGCL and the Articles of Incorporation and the Bylaws of
CIS;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements set forth herein, the parties hereto hereby agree as
follows:
<PAGE> 9
ARTICLE 1.
THE MERGER
SECTION 1.1. SURVIVING CORPORATION. Subject to the provisions of
this Agreement, the DGCL and the NGCL, at the Effective Time (as hereinafter
defined), CIS shall be merged with and into Merger Sub and the separate
corporate existence of CIS shall cease. Merger Sub shall be the surviving
corporation in the Merger (hereinafter sometimes called the "Surviving
Corporation") and shall continue its corporate existence under the laws of the
State of Delaware. The Merger shall have the effects set forth in Section 259
of the DGCL and Section 92A.250 of the NGCL.
SECTION 1.2. CERTIFICATE OF INCORPORATION. The Certificate of
Incorporation of Merger Sub shall be the Certificate of Incorporation of the
Surviving Corporation until thereafter duly amended in accordance with its
terms and the DGCL.
SECTION 1.3. BYLAWS. The Bylaws of Merger Sub shall be the Bylaws
of the Surviving Corporation until thereafter duly amended in accordance with
their terms and the DGCL.
SECTION 1.4. DIRECTORS. The directors of the Surviving
Corporation shall consist of the directors of Merger Sub immediately prior to
the Effective Time, such directors to hold office from the Effective Time until
their respective successors are duly elected and qualified.
SECTION 1.5. OFFICERS. The officers of the Surviving Corporation
shall consist of the officers of Merger Sub immediately prior to the Effective
Time, such officers to hold office from the Effective Time until their
respective successors are duly elected and qualified.
SECTION 1.6. EFFECTIVE TIME. The parties hereto shall cause a
Certificate of Merger meeting the requirements of the DGCL (the "Certificate of
Merger") and Articles of Merger meeting the requirements of the NGCL (the
"Articles of Merger") to be properly executed and filed on the Closing Date (as
hereinafter defined) with the Secretaries of State of the States of Delaware
and Nevada, respectively. The Merger shall become effective as of the later of
the filing of a properly executed Certificate of Merger or properly executed
Articles of Merger. The date and time when the Merger becomes effective is
herein referred to as the effective time (the "Effective Time").
ARTICLE 2.
CONVERSION OF SHARES
SECTION 2.1. CIS STOCK. As of the Effective Time, by virtue of
the Merger and without any action on the part of any holder thereof:
(a) Subject to Section 2.2, all of the shares of the common stock
of CIS ("CIS Stock") issued and outstanding immediately prior to the Effective
Time shall be converted
2
<PAGE> 10
into the right to receive the following (the "Merger Consideration"): (i) an
aggregate of 1,285,884 shares (the "World Access Shares") of World Access
common stock, $.01 par value per share (the "World Access Common Stock"), of
which 440,874 World Access Shares will be issued as of the Effective Time and
delivered to the Stockholders within ten (10) business days following the
Closing and of which 845,010 World Access Shares will be deposited and held in
escrow pursuant to Section 2.1(b) below (the "Escrow Shares"); plus (ii) cash
in the aggregate amount of Three Million Five Hundred Thousand Dollars
($3,500,000) (the "Cash Consideration"); plus (iii) cash up to an aggregate
amount of Six Million Five Hundred Thousand Dollars ($6,500,000) payable
pursuant to Section 2.1(c) below (the "Contingent Consideration"). Each
Stockholder shall be entitled to that portion of the aggregate Merger
Consideration payable with respect to the CIS Stock provided by this Section
2.1(a) that equals such Stockholder's proportionate interest as set forth after
such Stockholder's name in column C (the "Proportionate Interest") of Exhibit
2.1(a) attached hereto.
(b) The Escrow Shares shall be deposited with the Escrow Agent (as
hereinafter defined) within ten (10) business days of the Closing to be
held and distributed pursuant to the terms of the Escrow Agreement by and
between World Access, Merger Sub, the Stockholders and Cauthen & Feldman,
P.A., as the escrow agent (the "Escrow Agent"), substantially in the form
attached hereto as Exhibit 2.1(b) (the "Escrow Agreement").
(c) The Contingent Consideration shall be payable in installments
on the payment dates specified below (each a "Payment Date") based upon the
"Pre-Tax Net Income" (as defined below) of the Surviving Corporation for
the performance period set forth below (each a "Performance Period") which
corresponds with such Payment Date, with the aggregate amount of each
installment to be determined by reference to the payment tables set forth
below:
<TABLE>
<CAPTION>
PERFORMANCE PERIOD PAYMENT DATE
---------------------------------------------------- -----------------------------------
<S> <C>
January 1, 1997 to and including December 31, 1997 February 15, 1998
(the "First Performance Period")
January 1, 1998 to and including December 31, 1998 February 15, 1999
(the "Second Performance Period")
January 1, 1999 to and including December 31, 1999 February 15, 2000
(the "Third Performance Period")
</TABLE>
3
<PAGE> 11
The aggregate amount of the Contingent Consideration installment
payable by World Access to the Stockholders on the Payment Date which
corresponds to the First Performance Period will be determined on a pro rata
basis based on the Pre-Tax Net Income of the Surviving Corporation as set forth
in Payment Table No. 1 below.
PAYMENT TABLE NO. 1
<TABLE>
<CAPTION>
Pre-Tax Net Income Payment Amount
----------------------------------------- ----------------------------
<S> <C> <C>
Minimum Maximum
------------- ------------
$4,000,000 to and including $4,999,999 $2,000,000 $2,499,999
$5,000,000 to and including $5,999,999 $2,500,000 $2,999,999
$6,000,000 to and including $6,999,999 $3,000,000 $3,499,999
$7,000,000 and more . . . . . . . . . . N/A $3,500,000
</TABLE>
In addition, if the arithmetic average of the daily closing price per
share, rounded to four decimal places, of the World Access Shares as reported
on the Nasdaq National Market (or other principal exchange on which the World
Access Shares are then traded) for each of the twenty (20) consecutive trading
days ending (and including) the trading day that occurs two trading days prior
to (and not including) the Payment Date which corresponds to the First
Performance Period (the "First Performance Period Adjusted Average Closing
Price") is less than $8.1656 (the "Average Closing Price"), then World Access
shall deliver to the Stockholders, with each Stockholder receiving his
Proportionate Interest therein, on the Payment Date that corresponds to the
First Performance Period, additional consideration consisting of a combination
of cash and additional shares of World Access Common Stock in the relative
proportions determined by World Access in its sole discretion, provided that
the value of such shares does not constitute less than 50% of the aggregate
value of such additional consideration (the "Additional Contingent
Consideration"), such that the aggregate value of (i) the Escrow Shares to be
released on the Payment Date which corresponds to the First Performance Period
pursuant to the Escrow Agreement (valued at the First Performance Period
Adjusted Average Closing Price) and (ii) the Additional Contingent
Consideration (valued at the First Performance Period Adjusted Average Closing
Price to the extent that the Additional Contingent Consideration consists of
shares of World Access Common Stock) to be delivered pursuant hereto would
equal the product of the number of Escrow Shares to be released to the
Stockholders pursuant to the Escrow Agreement multiplied by the Average Closing
Price; provided, however, that if the First Performance Period Adjusted Average
Closing Price is less than $5.00, then the First Performance Period Adjusted
Average Closing Price shall be deemed to equal $5.00 for all purposes
hereunder.
The aggregate amount of the Contingent Consideration installment
payable by World Access to the Stockholders on the Payment Date which
corresponds to the Second Performance Period will be as set forth in Payment
Table No. 2 below.
4
<PAGE> 12
PAYMENT TABLE NO. 2
<TABLE>
<CAPTION>
Pre-Tax Net Income Payment Amount
------------------ --------------
<S> <C>
Greater than $4,500,000 . . . . . . . . . . . . $2,000,000
</TABLE>
If the Pre-Tax Net Income for the First Performance Period exceeds
$7,000,000, then such excess may be carried over and added to the Pre-Tax Net
Income for the Second Performance Period, provided that the Pre-Tax Net Income
for the Second Performance equals at least $3,000,000 without taking into
account any amount permitted to be carried over from the First Performance
Period.
In addition, if the arithmetic average of the daily closing price per
share, rounded to four decimal places, of the World Access Shares as reported
on the Nasdaq National Market (or other principal exchange on which the World
Access Shares are then traded) for each of the twenty (20) consecutive trading
days ending (and including) the trading day that occurs two trading days prior
to (and not including) the Payment Date which corresponds to the Second
Performance Period (the "Second Performance Period Adjusted Average Closing
Price") is less than the Average Closing Price, then World Access will deliver
to the Stockholders, with each Stockholder receiving his Proportionate Interest
therein, on the Payment Date that corresponds to the Second Performance Period,
Additional Contingent Consideration such that the aggregate value of (i) the
Escrow Shares to be released on the Payment Date which corresponds to the
Second Performance Period pursuant to the Escrow Agreement (valued at the
Second Performance Period Adjusted Average Closing Price) and (ii) the
Additional Contingent Consideration (valued at the Second Performance Period
Adjusted Average Closing Price to the extent that the Additional Contingent
Consideration consists of shares of World Access Common Stock) to be delivered
pursuant hereto would equal the product of the number of Escrow Shares to be
released valued at the Average Closing Price per share to the Stockholders
pursuant to the Escrow Agreement multiplied by the Average Closing Price;
provided, however, that if the Second Performance Period Adjusted Average
Closing Price is less than $5.00, then the Second Performance Period Adjusted
Average Closing Price shall be deemed to equal $5.00 for all purposes
hereunder.
The aggregate amount of the Contingent Consideration installment
payable by World Access to the Stockholders on the Payment Date which
corresponds to the Third Performance Period will be as set forth in Payment
Table No. 3 below.
PAYMENT TABLE NO. 3
<TABLE>
<CAPTION>
Pre-Tax Net Income Payment Amount
------------------ --------------
<S> <C>
Greater than $5,000,000 . . . . . . . . . . . . . . $1,000,000
</TABLE>
If the aggregate Pre-Tax Net Income for the First and Second
Performance Periods exceeds $11,500,000, then such excess may be carried over
and added to the Pre-Tax Net Income for the Third Performance Period, provided
that (i) the Pre-Tax Net Income for the
5
<PAGE> 13
Second Performance Period equals at least $3,000,000 and (ii) the Pre-Tax Net
Income for the Third Performance Period equals at least $3,000,000, without in
either case taking into account any amount permitted to be carried over from
any prior Performance Period.
In addition, if the arithmetic average of the daily closing price per
share, rounded to four decimal places, of the World Access Shares as reported
on the Nasdaq National Market (or other principal exchange on which the World
Access Shares are then traded) for each of the twenty (20) consecutive trading
days ending (and including) the trading day that occurs two trading days prior
to (and not including) the Payment Date which corresponds to the Third
Performance Period (the "Third Performance Period Adjusted Average Closing
Price") is less than the Average Closing Price, then World Access will deliver
to the Stockholders, with each Stockholder receiving his Proportionate Interest
therein, on the Payment Date that corresponds to the Third Performance Period,
Additional Contingent Consideration such that the aggregate value of (i) the
Escrow Shares to be released on the Payment Date which corresponds to the Third
Performance Period pursuant to the Escrow Agreement (when valued at the Third
Performance Period Adjusted Average Closing Price) and (ii) the Additional
Contingent Consideration (valued at the Third Performance Period Adjusted
Average Closing Price to the extent that the Additional Contingent
Consideration consists of shares of World Access Common Stock) to be delivered
pursuant hereto would equal the product of the number of Escrow Shares to be
released to the Stockholders pursuant to the Escrow Agreement multiplied by the
Average Closing Price; provided, however, that if the Third Performance Period
Adjusted Average Closing Price is less than $5.00, then the Third Performance
Period Adjusted Average Closing Price shall be deemed to equal $5.00 for all
purposes hereunder.
(1) World Access will determine whether to pay the
Contingent Consideration based upon the books and records of the
Surviving Corporation (which will be maintained in accordance with
generally accepted accounting principles applied on a basis
consistent with that employed by CIS on a historical basis) as
soon as practicable after the end of each Performance Period, and
World Access will promptly deliver to the Stockholders a letter
setting out in reasonable detail the computations made and
expressing its opinion that the conditions for the payment of the
Contingent Consideration have been satisfied in accordance with
the requirements hereof. The computations set forth in such
letter from World Access will be final and binding on all parties
unless the Stockholders shall have notified World Access in
writing within thirty (30) days after receipt of such letter that
they disagree with such computations. In such event, if the
parties cannot agree on the computations within thirty (30) days
after their receipt of such letter, then the independent public
accountants then servicing the Surviving Corporation will make
such computations as soon thereafter as practicable. Such
independent public accountants will deliver to the parties a
letter setting out their computations with respect to the payment
of the Contingent Consideration and expressing their opinion that
their computations have been accurately made in accordance with
the requirements hereof, and such computations will be final and
binding on the parties. The cost of any such computations by the
independent
6
<PAGE> 14
public accountants will be paid by the Stockholders if their
computations result in the Contingent Consideration being the same
as or less than that set forth in the letter from World Access, or
by World Access if such computations result in the Contingent
Consideration being greater than that set forth in such letter.
World Access will pay to the Stockholders the amount of Contingent
Consideration set forth in its letter at the time of delivery of
such letter, and any additional amount computed by the independent
public accountants (if such computations are made) will be paid to
the Stockholders within ten (10) business days after delivery of
the accountants' report. The Stockholders will within ten (10)
business days return to World Access any amount of the Contingent
Consideration paid to them that is in excess of the Contingent
Consideration computed by the independent public accountants if
its computation is less than that set forth in the letter from
World Access.
(2) For purposes hereof, "Pre-Tax Net Income" means the
income of the Surviving Corporation before (a) income and
deductions not related to primary operations (i.e., gains or
losses on disposal of fixed assets and other miscellaneous
unrelated items), (b) taxes based on income, (c) cumulative
effects of accounting changes, (d) extraordinary items, and (e)
allocations or charges of expenses to the Surviving Corporation
from its parent or any of its parent's subsidiaries or affiliates
unless the expense is for funds loaned to the Surviving
Corporation (which funds shall be deemed to bear interest at a
rate equal to the rate actually paid or payable by World Access
for its short-term borrowings) or for services rendered or goods
provided in direct relation to the Surviving Corporation's
business (which services or goods will be valued at a fair market
value price as negotiated in good faith by the management of the
Surviving Corporation and World Access). Revenues earned from the
operations and assets held by the Surviving Corporation as of the
Closing Date shall be credited to the Surviving Corporation for
purposes of determining Pre-Tax Net Income regardless of the
entity in which the revenue is earned during the Performance
Periods.
(3) If prior to the expiration of the First Performance
Period, World Access sells a controlling interest in the Surviving
Corporation to an entity other than an affiliate of World Access
(whether by merger, sale of stock or sale of assets or otherwise)
(an "Acquiror"), then World Access shall pay to the Stockholders
on the Payment Dates that correspond to the Performance Periods
the maximum Payment Amount that would be then payable with respect
to such Performance Period without regard to the Pre-Tax Net
Income of the Surviving Corporation. If after the expiration of
the First Performance Period and before the expiration of the
Second Performance Period, World Access sells a controlling
interest in the Surviving Corporation to an Acquiror (whether by
merger, sale of stock or sale of assets or otherwise) and during
the First Performance Period the Pre-Tax Net Income of the
Surviving Corporation was at least $7,000,000, then World Access
shall pay to the
7
<PAGE> 15
Stockholders on the Payment Dates that correspond to the Second
and Third Performance Periods the Payment Amounts then payable
without regard to the Pre-Tax Net Income of the Surviving
Corporation. If after the expiration of the Second Performance
Period and before the expiration of the Third Performance Period,
World Access sells a controlling interest in the Surviving
Corporation to an Acquiror (whether by merger, sale of stock or
sale of assets or otherwise) and during the First Performance
Period the Pre-Tax Net Income of the Surviving Corporation was at
least $7,000,000 and the Stockholders are entitled to receive the
Payment Amount with respect to the Second Performance Period, then
World Access shall pay to the Stockholders on the Payment Date
that corresponds to the Third Performance Period the Payment
Amount then payable without regard to the Pre-Tax Net Income of
the Surviving Corporation. If, at any time following the
expiration of the First Performance Period, World Access proposes
to sell a controlling interest in the Surviving Corporation to an
Acquiror (whether by merger, sale of stock or sale of assets or
otherwise) and the Stockholders would not be entitled to the
Payment Amounts pursuant to this Section 2.1(c)(3), then World
Access may not consummate such sale without the consent of the
Stockholders unless the Acquiror assumes and agrees to satisfy in
cash the obligations of World Access with respect to the payment
of (i) the Contingent Consideration as provided herein and (ii)
the additional consideration represented by the Escrow Shares
valued at the Average Closing Price, with World Access remaining
liable to the Stockholders if and to the extent that such Acquiror
does not satisfy such obligations.
(d) Each share of common stock, par value $.01 per share, of Merger
Sub that is issued and outstanding immediately prior to the Effective Time
shall remain outstanding and shall be unchanged after the Merger, all of
which shares shall be issued to World Access and shall thereafter
constitute the only outstanding shares of capital stock of the Surviving
Corporation.
(e) Each share of the CIS Stock issued and outstanding immediately
prior to the Effective Time that is then held in the treasury of CIS shall
be cancelled and retired and all rights in respect thereof shall cease to
exist, without any conversion thereof or payment of any consideration
therefor.
(f) Each warrant, stock option or other right, if any, to purchase
shares of CIS Stock issued and outstanding immediately prior to the
Effective Time shall be cancelled (whether or not such warrant, option or
other right is then exercisable).
SECTION 2.2. FRACTIONAL SHARES. No scrip or fractional shares of World
Access Common Stock shall be issued pursuant to this Agreement. In lieu
thereof, if a Stockholder would otherwise have been entitled to a fractional
share of World Access Common Stock hereunder, then such Stockholder shall be
entitled, after the later of (a) the Effective Time or (b) the surrender of his
Certificate(s) (as hereinafter defined) that represent such shares of CIS
8
<PAGE> 16
Stock, to receive from World Access an amount in cash in lieu of such
fractional share, based on the Average Closing Price per share.
SECTION 2.3. EXCHANGE OF CIS STOCK.
(a) From and after the Effective Time, upon surrender of a
certificate or certificates which immediately prior thereto represented
outstanding shares of CIS Stock duly endorsed in blank (the "Certificate"
or "Certificates"), the Certificate or Certificates so surrendered shall
forthwith be canceled, and a Stockholder thereafter shall be entitled to
receive the Merger Consideration in accordance with Sections 2.1 and 2.2
hereof. No interest shall be paid or accrued on the cash payable upon the
surrender of any Certificate. No portion of the consideration to be
received pursuant to Sections 2.1 and 2.2 upon exchange of a Certificate
(whether a certificate representing shares of World Access Stock or by
check representing any cash payable hereunder) may be issued or paid to a
person other than the person in whose name the Certificate surrendered in
exchange therefor is registered, other than such person's heirs and
personal representatives. From the Effective Time until surrender in
accordance with the provisions of this Section 2.3, each Certificate shall
represent for all purposes only the right to receive the consideration
provided in Sections 2.1 and 2.2. If all payments in respect of shares of
CIS that are made in accordance with the terms hereof, such payments shall
be deemed to have been made in full satisfaction of all rights pertaining
to such securities.
(b) In the case of any lost, mislaid, stolen or destroyed
Certificate, a Stockholder may be required, as a condition precedent to
delivery to such Stockholder of the consideration described in Sections 2.1
and 2.2, to deliver to World Access a bond in such reasonable sum or a
satisfactory indemnity agreement as World Access may direct as indemnity
against any claim that may be made against World Access or the Surviving
Corporation with respect to the Certificate alleged to have been lost,
mislaid, stolen or destroyed.
(c) After the Effective Time, there shall be no transfers on the
stock transfer books of the Surviving Corporation of the shares of CIS
Stock that were outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation for transfer, they shall be canceled and exchanged for the
consideration described in Sections 2.1 and 2.2.
9
<PAGE> 17
SECTION 2.4. ADJUSTMENTS. In the event of any change in World Access
Common Stock after the date hereof by reason of any stock dividend, stock
split, subdivision, reclassification, recapitalization, combination, exchange
of shares or the like (an "Adjustment Event"), then the Average Closing Price
shall be adjusted appropriately such that the adjustments contemplated by
Section 2.1(c) arising out of the payment of Additional Contingent
Consideration yield the economic consequences contemplated herein at the time
of any such payment.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF CIS AND THE STOCKHOLDERS
With such exceptions, if any, as may be set forth in a letter (the "CIS
Disclosure Letter") delivered by CIS to World Access prior to the execution
hereof, CIS and the Stockholders hereby jointly and severally represent and
warrant to World Access as follows:
SECTION 3.1. ORGANIZATION. Each of CIS and its subsidiaries is a
corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation and has all requisite corporate power
and authority to own, lease and operate its respective properties and to carry
on its business as now being conducted. Each of CIS and its subsidiaries is
duly qualified to transact business, and is in good standing, as a foreign
corporation or branch of a foreign corporation in each jurisdiction where the
character of its activities requires such qualification, except where the
failure to so qualify would not have a material adverse effect on the assets,
liabilities, results of operations, financial condition, business or prospects
of CIS and its subsidiaries taken as a whole. Each of CIS and its subsidiaries
has heretofore made available to World Access accurate and complete copies of
its Articles of Incorporation and Bylaws, as currently in effect, and has made
available to World Access its respective minutes books and stock records. The
CIS Disclosure Letter contains a true and correct list of the jurisdictions in
which each of CIS and its subsidiaries is qualified to do business as a foreign
corporation or branch of a foreign corporation. As used in this Agreement, the
word "subsidiary," when used with respect to any party, means any corporation,
partnership, limited liability company or other organization, whether
incorporated or unincorporated, which is consolidated with such party for
financial reporting purposes.
SECTION 3.2. AUTHORIZATION. CIS has full corporate power and
authority to execute and deliver this Agreement and to perform its obligations
under this Agreement and to consummate the Merger and the other transactions
contemplated hereby. The execution and delivery of this Agreement by CIS and
the performance by CIS of its obligations hereunder and the consummation of the
Merger and the other transactions provided for herein have been duly and
validly authorized by all necessary corporate action on its part. The Board of
Directors of CIS has approved the execution, delivery and performance of this
Agreement and the consummation of the Merger and the other transactions
contemplated hereby. The Stockholders have approved this Agreement, the Merger
and the transactions contemplated hereby in accordance with the requirements of
the NGCL and the Articles of Incorporation and Bylaws of CIS. This
10
<PAGE> 18
Agreement has been duly executed and delivered by CIS and the Stockholders
and constitutes the valid and binding agreement of CIS and the Stockholders,
enforceable against each of them in accordance with its terms, subject to
applicable bankruptcy, insolvency and other similar laws affecting the
enforceability of creditors' rights generally, general equitable principles and
the discretion of courts in granting equitable remedies.
SECTION 3.3. ABSENCE OF RESTRICTIONS AND CONFLICTS. The execution,
delivery and performance of this Agreement, the consummation of the Merger and
the other transactions contemplated by this Agreement and the fulfillment of
and compliance with the terms and conditions of this Agreement do not and will
not, with the passing of time or the giving of notice or both, violate or
conflict with, constitute a breach of or default under, result in the loss of
any material benefit under, or permit the acceleration of any obligation under,
(i) any term or provision of the Articles of Incorporation or Bylaws of CIS,
(ii) any CIS Material Contract (as hereinafter defined), (iii) any judgment,
decree or order of any court or governmental authority or agency to which CIS,
any of its subsidiaries or any Stockholder is a party or by which CIS, any of
its subsidiaries or any Stockholder or any of their respective properties is
bound, or (iv) any statute, law, regulation or rule applicable to CIS or any of
its subsidiaries, so as to have in the case of subsections (ii) through (iv)
above, a material adverse effect on the assets, liabilities, results of
operations, financial condition, business or prospects of CIS and its
subsidiaries taken as a whole. Except for the filing and recordation of the
Certificate of Merger and the Articles of Merger, no consent, approval, order
or authorization of, or registration, declaration or filing with, any
governmental agency or public or regulatory unit, agency, body or authority
with respect to CIS or any Stockholder is required in connection with the
execution, delivery or performance of this Agreement by CIS or any Stockholder
or the consummation of the transactions contemplated by this Agreement by CIS,
the failure to obtain which would have a material adverse effect upon the
assets, liabilities, results of operations, financial condition, business or
prospects of CIS and its subsidiaries taken as a whole.
SECTION 3.4. CAPITALIZATION; OWNERSHIP OF CIS STOCK; CAPITAL STOCK OF CIS
SUBSIDIARIES.
(a) CAPITALIZATION. The authorized capital stock of CIS consists
of 2,500 shares of common stock, no par value. As of the date hereof,
there are 300 shares of CIS Stock issued and outstanding. Each share of
capital stock of CIS which is outstanding as of the date hereof is duly
authorized, validly issued, fully paid and nonassessable and free of
pre-emptive rights. There are no subscriptions, options, convertible
securities, calls, rights, warrants or other agreements, claims or
commitments of any nature whatsoever obligating CIS or any of its
subsidiaries to issue, transfer, deliver or sell, or cause to be issued,
transferred, delivered or sold, additional shares of the capital stock or
other securities of CIS or obligating CIS or any of its subsidiaries to
grant, extend or enter into any such agreement or commitment.
(b) OWNERSHIP. The Stockholders are the record and beneficial
owners of all shares of CIS Stock to be exchanged pursuant to Section 2.3;
their relative share ownership is as
11
<PAGE> 19
set forth on Exhibit 2.1(a); and they own all such shares free and clear of
any liens, claims, options, charges, encumbrances or rights of others.
(c) CAPITAL STOCK OF CIS SUBSIDIARIES. The CIS Disclosure Letter
sets forth a true and complete list of all of its subsidiaries, the
jurisdiction in which each such subsidiary is incorporated or organized,
and all shares of capital stock or other ownership interests authorized,
issued and outstanding of each such subsidiary. The outstanding shares of
capital stock or other equity interests of each such subsidiary have been
duly authorized and are validly issued, fully paid and nonassessable. All
shares of capital stock or other equity interests of each such subsidiary
owned by CIS or any of its subsidiaries are set forth in the CIS Disclosure
Letter and are owned by CIS, either directly or indirectly, free and clear
of all liens, encumbrances, equities or claims.
SECTION 3.5. FINANCIAL STATEMENTS.
(a) CIS FINANCIAL STATEMENTS. CIS has made available to World
Access the unaudited balance sheet of CIS as of December 31, 1996 and 1995,
and the related statements of operations and cash flow for the twelve month
periods then ended. All of the foregoing financial statements are
hereinafter collectively referred to as the "CIS Financial Statements" and
the balance sheet as of December 31, 1996 is hereinafter referred to as the
"1996 Balance Sheet." The books and records of CIS are maintained on an
accrual basis and the CIS Financial Statements have been prepared from, and
are in accordance with, the books and records of CIS and present fairly the
financial position and results of operations of CIS as of the dates and for
the periods indicated. CIS has no liability or obligation of any nature
whatsoever, whether accrued, absolute, contingent or otherwise, required by
generally accepted accounting principles to be reflected in the CIS
Financial Statements other than (x) current liabilities and obligations
which are recurring in nature and not overdue on their terms, (y)
liabilities and obligations reflected and adequately provided for on the
1996 Balance Sheet and (z) liabilities and obligations arising in the
ordinary course of business of CIS and its subsidiaries since the date of
the 1996 Balance Sheet. The CIS Disclosure Letter sets forth a true and
complete list of all loss contingencies (within the meaning of Statement of
Financial Accounting Standards No. 5) of CIS or any subsidiary exceeding
$5,000 in the case of any single loss contingency or $10,000 in the case of
all loss contingencies.
(b) WIS FINANCIAL STATEMENTS. CIS has made available to World
Access the unaudited balance sheet of Wireless Installation Services, Inc.
("WIS"), which will become a wholly-owned subsidiary of CIS immediately
prior to the Effective Time, as of December 31, 1995, and the federal
income tax return of WIS for the year ended December 31, 1996 and the
related statements of operations and cash flow for the twelve month periods
then ended. All of the foregoing financial statements and the tax return
are hereinafter collectively referred to as the "Subsidiary Financial
Statements" and the tax return for the year ended December 31, 1996 is
hereinafter referred to as the "1996 Subsidiary Balance Sheet." The books
and records of WIS are maintained on an accrual basis and the Subsidiary
Financial Statements have been prepared from, and are in accordance with,
the
12
<PAGE> 20
books and records of WIS and present fairly the financial position and
results of operations of WIS as of the dates and for the periods indicated.
WIS has no liability or obligation of any nature whatsoever, whether
accrued, absolute, contingent or otherwise, required by generally accepted
accounting principles to be reflected in the Subsidiary Financial
Statements other than (x) current liabilities and obligations which are
recurring in nature and not overdue on their terms, (y) liabilities and
obligations reflected and adequately provided for on the 1996 Subsidiary
Balance Sheet and (z) liabilities and obligations arising in the ordinary
course of business of WIS since the date of the 1996 Subsidiary Balance
Sheet.
SECTION 3.6. ABSENCE OF CERTAIN CHANGES.
(a) CERTAIN FINANCIAL MATTERS; PROPERTY; DIVIDENDS. Since the
date of the 1996 Balance Sheet, there has not been (i) any material adverse
change in the assets, liabilities, results of operations, financial
condition, business or prospects of CIS, (ii) any damage, destruction, loss
or casualty to property or assets of CIS or any of its subsidiaries,
whether or not covered by insurance, which property or assets are material
to its operations or business, (iii) any declaration, setting aside or
payment of any dividend or distribution (whether in cash, stock or
property) in respect of the capital stock of CIS, or any redemption or
other acquisition by CIS of any of the capital stock of CIS or any split,
combination or reclassification of shares of capital stock declared or made
by CIS, or (iv) any agreement to do any of the foregoing.
(b) OTHER CHANGES. Since the date of the 1996 Balance Sheet,
there have not been (i) any losses suffered, (ii) any material assets
mortgaged, pledged or made subject to any lien, charge or other
encumbrance, (iii) any material liability or obligation (absolute, accrued
or contingent) incurred or any material bad debt, contingency or other
reserve increase suffered, except, in each such case, in the ordinary
course of business and consistent with past practice, (iv) any material
claims, liabilities or obligations (absolute, accrued or contingent) paid,
discharged or satisfied, other than the payment, discharge or satisfaction,
in the ordinary course of business and consistent with past practice, of
claims, liabilities and obligations reflected or reserved against in the
CIS Financial Statements or the Subsidiary Financial Statements or incurred
in the ordinary course of business and consistent with past practice since
the date of such financial statements, (v) any material guarantees, checks,
notes or accounts receivable written off as uncollectible, except
write-offs in the ordinary course of business and consistent with past
practice, (vi) any write down of the value of any asset or investment on
CIS's or WIS's books or records, except for depreciation and amortization
taken in the ordinary course of business and consistent with past practice,
(vii) any cancellation of any material debts or waiver of any material
claims or rights of substantial value, or sale, transfer or other
disposition of any material properties or assets (real, personal or mixed,
tangible or intangible) of substantial value, except, in each such case, in
transactions in the ordinary course of business and consistent with past
practice and which in any event do not exceed $10,000 in the aggregate,
(viii) any single capital expenditure or commitment in excess of $5,000 for
additions to property or equipment, or aggregate capital expenditures and
commitments in excess of $5,000 for additions to property
13
<PAGE> 21
or equipment, (ix) any material transactions entered into other than in the
ordinary course of business, (x) any agreements to do any of the foregoing,
or (xi) any other events, developments or conditions of any character that
have had or are reasonably likely to have a material adverse effect on the
assets, liabilities, results of operations, financial condition business or
prospects of CIS and its subsidiaries taken as a whole.
SECTION 3.7. LEGAL PROCEEDINGS. There are no suits, actions, claims,
proceedings or investigations pending or, to the best knowledge of the
Stockholders, threatened against, relating to or involving CIS or any of its
subsidiaries (or any of their officers or directors) before any court,
arbitrator or administrative or governmental body, which, if finally determined
adversely, are reasonably likely, individually or in the aggregate, to have a
material adverse effect on the assets, liabilities, results of operations,
financial condition, business or prospects of CIS and its subsidiaries taken as
a whole. All pending or threatened suits, actions, claims, proceedings or
investigations relating to or involving CIS or any of its subsidiaries (or any
of their officers or directors) before any court, arbitrator or administrative
or governmental body are adequately provided for in the 1996 Balance Sheet or
the 1996 Subsidiary Balance Sheet. Neither CIS nor any of its subsidiaries is
subject to any judgment, decree, injunction, rule or order of any court nor is
CIS or any of its subsidiaries subject to any governmental restriction
applicable to it, which is reasonably likely (a) to have a material adverse
effect on its assets, liabilities, results of operations, financial condition,
business or prospects, or (b) to cause a material limitation on the ability of
World Access to operate the business of CIS after the Closing.
SECTION 3.8. COMPLIANCE WITH LAW. Each of CIS and its subsidiaries
has all material authorizations, approvals, licenses and orders of and from all
governmental and regulatory officers and bodies necessary to carry on its
business as it is currently being conducted, to own or hold under lease the
properties and assets it owns or holds under lease and to perform all of its
obligations under the agreements to which it is a party, and each of CIS and
its subsidiaries has been and is in compliance with all applicable laws,
regulations and administrative orders of any country, state or municipality or
of any subdivision thereof to which its business or its employment of labor or
its use or occupancy of properties or any part thereof are subject, the failure
to obtain or the violation of which would have a material adverse effect upon
assets, liabilities, results of operations, financial condition, business or
prospects of CIS and its subsidiaries taken as a whole.
SECTION 3.9. CIS MATERIAL CONTRACTS. The CIS Disclosure Letter
contains a correct and complete list of the following (hereinafter referred to
as the "CIS Material Contracts"):
(i) all bonds, debentures, notes, mortgages, indentures or
guarantees to which CIS or any of its subsidiaries is a party or by which
any of their respective properties or assets (real, personal or mixed,
tangible or intangible) is bound;
(ii) all leases to which CIS or any of its subsidiaries is a party or
by which any of their respective properties or assets (real, personal or
mixed, tangible or intangible) is bound;
14
<PAGE> 22
(iii) all loans and credit commitments to CIS or any of its
subsidiaries which are outstanding, together with a brief description of
such commitments and the name of each financial institution granting the
same;
(iv) all contracts or agreements which limit or restrict CIS or any
of its subsidiaries from engaging in any business in any jurisdiction or
limit or restrict others from competing with CIS or any of its subsidiaries
in any jurisdiction;
(v) all agreements and documentation evidencing currently
outstanding loans or advances made by CIS or any of its subsidiaries to or
on behalf of its customers; and
(vi) all existing contracts and commitments (other than those
described in subparagraphs (i), (ii), (iii), (iv) or (v) of this Section
3.9, the CIS Customer Contracts (as hereinafter defined), and the CIS
Benefit Plans (as hereinafter defined)) to which CIS or any of its
subsidiaries is a party or by which their respective properties or assets
may be bound involving an annual commitment or annual payment by any party
thereto of more than $5,000 individually, or which have a fixed term
extending more than twelve (12) months from the date hereof and which
involve a total commitment or payment by any party thereto of more than
$10,000.
True and complete copies of all CIS Material Contracts, including all
amendments thereto, have been made available to World Access. The CIS Material
Contracts are valid and enforceable in accordance with their respective terms
with respect to CIS or its subsidiaries, as the case may be, and valid and
enforceable in accordance with their respective terms with respect to any other
party thereto, in each case to the extent material to the business and
operations of CIS and its subsidiaries taken as a whole, and subject to
applicable bankruptcy, insolvency and other similar laws affecting the
enforceability of creditors' rights generally, general equitable principles and
the discretion of courts in granting equitable remedies. Except for events or
occurrences, the consequences of which, individually or in the aggregate, would
not have a material adverse effect on the assets, liabilities, results of
operations, financial condition, business or prospects of CIS and its
subsidiaries taken as a whole, there is not under any of the CIS Material
Contracts any existing breach, default or event of default by CIS or its
subsidiaries, as the case may be, or event that with notice or lapse of time or
both would constitute a breach, default or event of default by CIS or its
subsidiaries, as the case may be, nor do the Stockholders know of, and CIS or
its subsidiaries, as the case may be, has not received notice of, or made a
claim with respect to, any breach or default by any other party thereto.
SECTION 3.10. CIS CUSTOMER CONTRACTS. The CIS Disclosure Letter sets
forth a true and complete list of all agreements or contracts pursuant to which
CIS or any of its subsidiaries are providing goods or services to its customers
(the "CIS Customer Contracts") other than purchase orders and invoices arising
in the ordinary course of business. Neither CIS nor any of its subsidiaries
provide goods or services to their customers pursuant to verbal or oral
agreements or contracts. The CIS Disclosure Letter sets forth a true and
complete list of all
15
<PAGE> 23
customers of CIS or any of its subsidiaries which the management of CIS
reasonably believes in good faith may terminate their contracts with CIS or any
such subsidiary or may assert a claim for damages against CIS or any such
subsidiary as a result of a default by CIS or any such subsidiary of its
obligations under such contract or for any other reason, other than customer
terminations arising in the ordinary course of business consistent with past
practices and which do not in any event in the aggregate involve annual
revenues of $50,000 or more. The execution, delivery and performance of this
Agreement by CIS and the Stockholders and the consummation of the transactions
contemplated hereby by CIS and the Stockholders will not, with the passing of
time or giving of notice or both, violate or conflict with or constitute a
default under or give rise to a termination right under any CIS Customer
Contract except such violations, conflicts and defaults which in the aggregate
would not have a material adverse effect on the assets, liabilities, results of
operations, financial condition, business or prospects of CIS and its
subsidiaries taken as a whole.
SECTION 3.11. TAX RETURNS; TAXES. CIS is a "small business
corporation" and has maintained a valid election to be an "S" corporation under
Subchapter S of the Internal Revenue Code of 1986 (the "Code") and the
equivalent provisions of all applicable state income tax statutes since the
later of (i) the date of its incorporation or (ii) December 31, 1986. Neither
the tax imposed on certain built-in gains under Section 1374 of the Code nor
the tax imposed on excess net passive income under Section 1375 of the Code
applies to CIS. Each of CIS and its subsidiaries has duly filed all federal,
state, local and foreign tax returns required to be filed by it and has duly
paid or made adequate provision for the payment of all taxes which are due and
payable pursuant to such returns or pursuant to any assessment with respect to
taxes in such jurisdictions, whether or not in connection with such returns.
Notwithstanding anything herein to the contrary, the Stockholders acknowledge
that they shall be responsible for all taxes arising from the operations of CIS
and its subsidiaries prior to and including the date of the 1996 Balance Sheet.
All deficiencies asserted as a result of any examinations by the Internal
Revenue Service ("IRS") or any other taxing authority have been paid, fully
settled or adequately provided for in the 1996 Balance Sheet or the 1996
Subsidiary Balance Sheet. There are no pending claims asserted for taxes of
CIS or any of its subsidiaries or outstanding agreements or waivers extending
the statutory period of limitation applicable to any tax return of CIS or any
of its subsidiaries for any period. Each of CIS and its subsidiaries has made
all estimated income tax deposits and all other required tax payments or
deposits and has complied for all prior periods in all material respects with
the tax withholding provisions of all applicable federal, state, local, foreign
and other laws. CIS has made available to World Access true, complete and
correct copies of federal income tax returns of CIS and its subsidiaries for
the last three (3) taxable years and made available such other tax returns of
requested by World Access.
SECTION 3.12. OFFICERS, DIRECTORS AND EMPLOYEES. The CIS Disclosure
Letter contains a true and complete list of all of the officers and directors
of CIS and each of its subsidiaries, specifying their office and annual rate of
compensation, and a true and complete list of all of the employees of CIS and
each of its subsidiaries as of the date hereof with whom CIS or its
subsidiaries has a written employment agreement or to whom CIS or its
subsidiaries has made
16
<PAGE> 24
verbal or oral commitments which are binding on such corporation or who have
an annual rate of compensation in excess of $25,000.
SECTION 3.13. CIS EMPLOYEE BENEFIT PLANS.
(a) DEFINITION OF BENEFIT PLANS. For purposes of this Section
3.13, the term "CIS Benefit Plan" means any plan, program, arrangement,
fund, policy, practice or contract which, through which or under which CIS
or a CIS ERISA Affiliate (as hereinafter defined) provides benefits or
compensation to or on behalf of employees or former employees of CIS or a
CIS ERISA Affiliate (as hereinafter defined), whether formal or informal,
whether or not written, including but not limited to the following:
(i) Arrangements -- any bonus, incentive compensation,
stock option, deferred compensation, commission, severance pay, golden
parachute or other compensation plan or rabbi trust;
(ii) ERISA Plans -- any "employee benefit plan" (as defined
in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")), including, but not limited to, any multi-
employer plan (as defined in Section 3(37) and Section 4001(a)(3) of
ERISA), defined benefit plan, profit sharing plan, money purchase
pension plan, 401(k) plan, savings or thrift plan, stock bonus plan,
employee stock ownership plan, or any plan, fund, program, arrangement
or practice providing for medical (including post-retirement medical),
hospitalization, accident, sickness, disability, or life insurance
benefits; and
(iii) Other Employee Fringe Benefits -- any stock purchase,
vacation, scholarship, day care, prepaid legal services, dependent
care, telephone, automobile, dependent travel or other fringe benefit
plans, programs, arrangements, contracts or practices.
(b) CIS ERISA AFFILIATE. For purposes of this Section 3.13, the
term "CIS ERISA Affiliate" means each trade or business (whether or not
incorporated) which together with CIS is treated as a single employer under
Section 414(b), (c), (m) or (o) of the Code.
(c) IDENTIFICATION OF BENEFIT PLANS. Except as described in the
CIS Disclosure Letter, CIS does not maintain, nor has it at any time
established or maintained, nor has it at any time been obligated to make,
or otherwise made, contributions to or under or otherwise participated in
any CIS Benefit Plan.
(d) MEPPA LIABILITY/POST-RETIREMENT MEDICAL BENEFITS. Neither CIS
nor any CIS ERISA Affiliate maintains, nor has at any time established or
maintained, nor has at any time been obligated to make, or made,
contributions to or under any multi-employer plan. Except as described in
the CIS Disclosure Letter, CIS does not maintain, nor has it at any time
established or maintained, nor has it at any time been obligated to make,
or made, contributions to or under (i) any plan which provides
post-retirement medical or health
17
<PAGE> 25
benefits with respect to employees of CIS; (ii) any organization described
in Sections 501(c)(9) or 501(c)(20) of the Code; (iii) any defined benefit
pension plan or money purchase pension plan subject to Title IV of ERISA;
or (iv) any plan which provides retirement benefits in excess of the
limitations in Sections 401(a)(17), 401(k), 401(m), 402(g) or 415 of the
Code. There is no lien upon any property of CIS or any CIS ERISA Affiliate
outstanding pursuant to Section 412(n) of the Code in favor of any CIS
Benefit Plan. No assets of CIS or any CIS ERISA Affiliate have been
provided as security for any CIS Benefit Plan pursuant to Section
401(a)(29) of the Code.
(e) DOCUMENTATION. CIS has made available to World Access a true
and complete copy of the following documents, if applicable, with respect
to each CIS Benefit Plan identified in the CIS Disclosure Letter: (i) all
documents, including any insurance contracts and trust agreements, setting
forth the terms of the CIS Benefit Plan, or if there are no such documents
evidencing the CIS Benefit Plan, a full description of the CIS Benefit
Plan; (ii) the ERISA summary plan description and any other summary of plan
provisions provided to participants or beneficiaries for each such CIS
Benefit Plan; (iii) the annual reports filed for the most recent three (3)
plan years and most recent financial statements or periodic accounting of
related plan assets with respect to each CIS Benefit Plan; (iv) the most
recent favorable determination letter, opinion or ruling from the IRS for
each CIS Benefit Plan, the assets of which are held in trust, to the effect
that such trust is exempt from federal income tax; and (v) each opinion or
ruling from the Department of Labor or the Pension Benefit Guaranty
Corporation ("PBGC") with respect to such CIS Benefit Plans.
(f) QUALIFIED STATUS. Each CIS Benefit Plan that is funded
through a trust or insurance contract has at all times satisfied in all
respects, by its terms and in its operation, all applicable requirements
for an exemption from federal income taxation under Section 501(a) of the
Code. Neither CIS nor any CIS ERISA Affiliate maintains a CIS Benefit Plan
which meets the requirements of Section 401(a) of the Code (each a "401
Plan"). Any determination letter issued by the IRS to the effect that any
such 401 Plan qualifies under Section 401(a) of the Code and that the
related trust is exempt from taxation under Section 501(a) of the Code
remains in effect and has not been revoked. Each such 401 Plan, if any,
currently complies in form with the requirements under Section 401(a) of
the Code, other than changes required by statutes, regulations and rulings
for which amendments are not yet required. Each such 401 Plan, if any, has
been administered according to its terms (except for those terms which are
inconsistent with the changes required by statutes, regulations and ruling
for which changes are not yet required to be made, in which case any such
401 Plan has been administered in accordance with the provisions of those
statutes, regulations and rulings) and in accordance with the requirements
of Section 401(a) of the Code. Each such 401 Plan, if any, has been tested
for compliance with, and has satisfied the requirements of, Section
401(k)(3) and 401(m)(2) of the Code for each plan year ending prior to the
Effective Date.
(g) COMPLIANCE. Each CIS Benefit Plan maintained by CIS or a CIS
ERISA Affiliate has at all times been maintained, by its terms and in
operation, in accordance with all
18
<PAGE> 26
applicable laws in all material respects, including (to the extent
applicable) Code Section 4980B. Further, there has been no failure to
comply with applicable ERISA or other requirements concerning the filing of
reports, documents and notices with the Secretary of Labor and Secretary of
Treasury or the furnishing of such documents to participants or
beneficiaries that could subject any CIS Benefit Plan, CIS, any CIS ERISA
Affiliate, World Access or any of its affiliates to any material civil or
any criminal sanction.
(h) LEGAL ACTIONS. There are no actions, audits, suits or claims
known to the Stockholders which are pending or threatened against any CIS
Benefit Plan, any fiduciary of any of CIS Benefit Plans with respect to the
CIS Benefit Plans or against the assets of any of the CIS Benefit Plans,
except claims for benefits made in the ordinary course of the operation of
such plans.
(i) FUNDING. CIS and each CIS ERISA Affiliate has made full and
timely payment of all amounts required to be contributed under the terms of
each CIS Benefit Plan and applicable law or required to be paid as expenses
under such CIS Benefit Plan, and no excise taxes are assessable as a result
of any nondeductible or other contributions made or not made to a CIS
Benefit Plan. No event or condition exists with respect to any CIS Benefit
Plan subject to Title IV of ERISA which could be deemed a "Reportable
Event" (as defined in Title IV of ERISA) with respect to which the thirty
(30) day notice requirement has not been waived which could result in a
material liability to CIS, and no condition exists which would subject CIS
to a material fine under Section 4071 of ERISA. The assets of all CIS
Benefit Plans which are required under applicable laws to be held in trust
are in fact held in trust, and the assets of each such CIS Benefit Plan
equal or exceed the liabilities of each such plan. The liabilities of each
other plan are properly and accurately reported on the financial statements
and records of CIS. The assets of each CIS Benefit Plan are reported at
their fair market value on the books and records of each plan.
(j) LIABILITIES. Neither CIS nor any CIS ERISA Affiliate is
subject to any material liability, tax or penalty whatsoever to any person
whomsoever as a result of CIS's or any CIS ERISA Affiliate's engaging in a
prohibited transaction under ERISA or the Code, and the Stockholders have
no knowledge of any circumstances which reasonably might result in any such
material liability, tax or penalty as a result of a breach of fiduciary
duty under ERISA. The termination of or withdrawal from any CIS Benefit
Plan maintained by CIS or a CIS ERISA Affiliate which is subject to Title
IV of ERISA or any other CIS Benefit Plan immediately after the Effective
Time will not subject World Access, the Surviving Corporation, Merger Sub
or any CIS ERISA Affiliate to any additional contribution requirement or to
any other liability, tax or penalty whatsoever (excluding any liability,
tax or penalty attributable solely to the fact that such termination or
withdrawal would violate the permanency requirement of Section 401 (a) of
the Code or an excise tax under Code Section 4980). Neither the execution
nor the performance of the transactions contemplated by this Agreement will
create, accelerate or increase any obligations under any CIS Benefit Plan.
Neither CIS nor any CIS ERISA Affiliate has any obligation to any retired
or former employee, or any current employee upon retirement, under any CIS
Benefit Plan.
19
<PAGE> 27
(k) AMENDMENT/NEW PLANS. From the date of this Agreement to the
Effective Time, no amendment shall be made to any CIS Benefit Plan, no
commitment shall be made to amend any CIS Benefit Plan and no commitment
shall be made to continue any CIS Benefit Plan or to adopt any new CIS
Benefit Plan for the benefit of any employees of CIS or any CIS ERISA
Affiliate absent the express written consent of World Access.
(l) EXCESS PARACHUTE PAYMENTS. No payment required to be made to
any employee associated with CIS as a result of the transactions
contemplated hereby under any contract or otherwise will, if made,
constitute an "excess parachute payment" within the meaning of Section 280G
of the Code or be nondeductible under Section 162(m) of the Code.
(m) NO ACCELERATION OF LIABILITY UNDER BENEFIT PLANS. The
consummation of the transactions contemplated hereby will not accelerate or
increase any liability under any CIS Benefit Plan because of an
acceleration or increase of any of the rights or benefits to which
employees of CIS or any CIS ERISA Affiliate may be entitled thereunder.
(n) STATUTORY BENEFITS. CIS has, on a timely basis, made all
payments, withholdings and filings of any kind required of it by, and has
otherwise complied in all material respects with, any applicable law,
regulation or administrative order concerning pension, health, welfare,
unemployment, workers' compensation or similar benefits administered by any
governmental, regulatory or public body.
SECTION 3.14. LABOR RELATIONS. Each of CIS and its subsidiaries is in
compliance in all material respects with all federal, state and foreign laws
respecting employment and employment practices, terms and conditions of
employment, wages and hours, and is not engaged in any unfair labor or unlawful
employment practice. There is no unlawful employment practice discrimination
charge involving CIS or any of its subsidiaries pending before the Equal
Employment Opportunity Commission ("EEOC"), EEOC- recognized state "referral
agency" or any other governmental agency. There is no unfair labor practice
charge or complaint against CIS or any of its subsidiaries pending before the
National Labor Relations Board ("NLRB"). There is no labor strike, dispute,
slowdown or stoppage actually pending or, to the knowledge of the Stockholders,
threatened against or involving or affecting CIS or any of its subsidiaries,
and no NLRB representation question exists respecting any of its employees. No
grievance or arbitration proceeding is pending against CIS or any of its
subsidiaries and no written claim therefor exists. There is no collective
bargaining agreement that is binding on CIS or any of its subsidiaries.
SECTION 3.15. INSURANCE. CIS has heretofore provided to World Access a
true and complete list of the current insurance coverages for CIS and its
subsidiaries, including names of carriers, amounts of coverage and premiums
therefor. Each of CIS
20
<PAGE> 28
and its subsidiaries has been and is insured with respect to its respective
properties and the conduct of its business in such amounts and against such
risks as are reasonable in relation to its business and will use its reasonable
efforts to maintain such insurance at least through the Effective Time. Each
of CIS and its subsidiaries has made available to World Access true and
complete copies of all insurance policies covering CIS and its subsidiaries,
its properties, assets, employees and/or operations.
SECTION 3.16. TITLE TO PROPERTIES AND RELATED MATTERS. Each of CIS and
its subsidiaries has good and valid title to or valid leasehold interests in
its properties reflected in the 1996 Balance Sheet or acquired after the date
thereof (other than properties sold or otherwise disposed of in the ordinary
course of business), and all of such properties are held free and clear of all
title defects, liens, encumbrances and restrictions, except, with respect to
all such properties, (a) mortgages and liens securing debt reflected as
liabilities on the 1996 Balance Sheet and (b)(i) liens for current taxes and
assessments not in default, (ii) mechanics', carriers', workmen's,
materialmen's, repairmen's, statutory or common law liens either not delinquent
or being contested in good faith, and (iii) encumbrances, covenants, rights of
way, building or use restrictions, easements, exceptions, variances,
reservations and other similar matters or limitations, if any, which do not
have a material adverse effect on CIS's use of the property affected.
Notwithstanding the immediately preceding sentence, neither CIS nor any of its
subsidiaries makes any representation or warranty in this Section 3.16 or
otherwise regarding the validity of title to any such properties in which CIS
or such subsidiary has only a leasehold interest.
SECTION 3.17. ENVIRONMENTAL MATTERS. Neither CIS nor any of its
subsidiaries owns, nor has at any time owned, any real property. There has
been no release of a hazardous substance, as that term is defined in the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
42 U.S.C. Section 9601(14), or any petroleum product by CIS or any of its
subsidiaries into the environment at any property ever owned, leased or used by
CIS or any of its subsidiaries (the "Premises"), including, without limitation,
any such release in the soil or groundwater underlying the Premises and, to the
best knowledge of the Shareholders, there has been no such release by any other
party at any of the Premises. Neither CIS nor any of its subsidiaries has
disposed of any material at any hazardous waste treatment or disposal facility
and has not disposed of any hazardous substances (as defined above) at any
location. Neither CIS nor any of its subsidiaries has received notice of any
violation of any Environmental Law nor has it been advised of any claim or
liability pursuant to any Environmental Law brought by any domestic or foreign
governmental agency or private party. There are no Environmental Liabilities
(as defined below) of CIS or any of its subsidiaries that, individually or in
the aggregate, have had or would reasonably be expected to have a material
adverse effect on the assets, liabilities, results of operations, financial
condition, business or prospects of CIS and its subsidiaries taken as a whole.
As used in this Agreement, "Environmental Laws" means any and all federal,
state, local and foreign statutes, laws, judicial decisions, regulations,
ordinances, rules, judgments, orders, decrees, codes, plans, injunctions,
permits, concessions, grants, franchises, licenses, agreements and governmental
restrictions, whether now or hereafter in effect, relating to human health, the
environment or to emissions, discharges or releases of pollutants,
contaminants, Hazardous Substances or wastes into the environment, including
without limitation ambient air, surface water, ground water or land, or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants,
contaminants, Hazardous Substances or wastes or the clean-up or other
remediation
21
<PAGE> 29
thereof. "Environmental Liabilities" with respect to any person means any and
all liabilities of or relating to such person or any of its Subsidiaries
(including any entity which is, in whole or in part, a predecessor of such
Person or any of its Subsidiaries), whether vested or unvested, contingent or
fixed, actual or potential, known or unknown, which (i) arise under or relate
to matters covered by Environmental Laws and (ii) relate to actions occurring
or conditions existing on or prior to the Closing Date. "Hazardous Substances"
means any toxic, radioactive, caustic or otherwise hazardous substance,
including petroleum, its derivatives, by-products and other hydrocarbons, or
any substance having any constituent elements displaying any of the foregoing
characteristics, including, without limitation, any substance regulated under
Environmental Laws.
SECTION 3.18. PATENTS, TRADEMARKS, TRADE NAMES. The CIS Disclosure
Letter sets forth a true and complete list of: (i) all material patents,
trademarks and trade names (including all federal, state and foreign
registrations pertaining thereto) and all material copyright registrations
owned by CIS or any of its subsidiaries (collectively, the "Proprietary
Intellectual Property"); and (ii) all patents, trademarks, trade names,
copyrights and all technology and processes used by CIS or any of its
subsidiaries in their respective business which are material to its business
and are used pursuant to a license or other right granted by a third party
(collectively, the "Licensed Intellectual Property" and, together with the
Proprietary Intellectual Property, herein referred to as "Intellectual
Property"). A true and complete list of all such licenses with respect to
Licensed Intellectual Property is set forth in the CIS Disclosure Letter. Each
of the federal, state and foreign registrations pertaining to the Proprietary
Intellectual Property is valid and in full force and effect. All required
filings in association with such registrations have been properly made and all
required fees have been paid. CIS or such subsidiary owns, or has the right to
use pursuant to valid and effective agreements, all Intellectual Property, and
the consummation of the transactions contemplated hereby will not alter or
impair any such rights, except for such defects in title or other matters which
in the aggregate would not have a material adverse effect on the assets,
liabilities, results of operations, financial condition, business or prospects
of CIS and its subsidiaries taken as a whole. No claims are pending against
CIS or any of its subsidiaries by any person with respect to the use of any
Intellectual Property or challenging or questioning the validity or
effectiveness of any license or agreement relating to the same, and the current
use by CIS or any of its subsidiaries of the Intellectual Property does not
infringe on the rights of any third party. The CIS Disclosure Letter sets
forth a list of all jurisdictions in which CIS or any of its subsidiaries is
operating under a tradename, and each jurisdiction in which any such tradename
is registered.
SECTION 3.19. TRANSACTIONS WITH AFFILIATES. No Stockholder or any
director of CIS or any of its subsidiaries, or any person with whom any such
Stockholder or any director has any direct or indirect relation by blood,
marriage or adoption, or any entity in which any such person, owns any
beneficial interest (other than a publicly held corporation whose stock is
traded on a national securities exchange or in the over-the-counter market and
less than 1% of the stock of which is beneficially owned by all such persons)
has any interest in: (a) any contract, arrangement or understanding with, or
relating to, the business or operations of CIS or any of its subsidiaries other
than transactions with JTS Management, a sole proprietorship of John T.
22
<PAGE> 30
Simon; (b) any loan, arrangement, understanding, agreement or contract for or
relating to indebtedness of CIS or any of its subsidiaries; or (c) any property
(real, personal or mixed, tangible or intangible), used, or currently intended
to be used in, the business or operations of CIS or any of its subsidiaries.
SECTION 3.20. QUALIFICATION OF STOCKHOLDERS. Each of the Stockholders
(i) is an "accredited investor" within the meaning of Regulation D of the
Securities Act of 1933, as amended (the "Securities Act"), and is acquiring the
World Access Common Stock to be issued in the Merger for his own account and
not with a view to, or for resale in connection with, any distribution thereof;
(ii) understands and acknowledges that such World Access Common Stock has not
been registered under the Securities Act or any state securities laws by reason
of certain exemptions from the registration provisions thereof which depend
upon, among other things, the bona fide nature of such Stockholder's investment
intent as expressed herein; (iii) is able to bear the economic risk of
investment in such World Access Common Stock and has such knowledge and
experience in financial and business matters that he is capable of evaluating
the risks and merits of such World Access Common Stock; (iv) has personally
been provided with all information or been given access to all information with
respect to World Access which such Stockholder believes might affect such
Stockholder's decision whether to effect the Merger; and (v) understands and
acknowledges that such World Access Common Stock will be "restricted
securities" as that term is defined in Rule 144 under the Securities Act and
that the Certificate representing such World Access Common Stock will bear a
legend restricting transfer unless (A) the transfer is exempt from the
registration requirements under the Securities Act any applicable state
securities law and an opinion of counsel reasonably satisfactory to World
Access that such transfer is exempt therefrom is delivered to World Access or
(B) the transfer is made pursuant to an effective registration statement under
the Securities Act and any applicable state securities law. In determining to
proceed with the transaction contemplated hereby, each of the Stockholders has
relied solely on the results of his own independent investigation with respect
to World Access and the World Access Shares, upon the representations and
statements of World Access set forth herein and upon the World Access SEC
Reports (as hereinafter defined). Each of the Stockholders acknowledges that
the representations and statements to the Stockholders by World Access set
forth herein and in the World Access SEC Reports constitute the sole and
exclusive representations, warranties, covenants and statements of World Access
or any of its officers, directors, stockholders or other affiliates in
connection with the transactions contemplated hereby, and each of the
Stockholders understands, acknowledges and agrees that all other
representations, warranties, covenants and statements of any kind or nature,
whether oral or contained in any writing other than this Agreement and each of
the other documents contemplated hereby, are specifically disclaimed by World
Access.
SECTION 3.21. BROKERS, FINDERS AND INVESTMENT BANKERS. Neither CIS or
any of its subsidiaries or nor any of their respective officers, directors or
employees has employed any broker, finder or investment banker or incurred any
liability for any investment banking fees, financial advisory fees, brokerage
fees or finders' fees in connection with the transactions contemplated herein.
23
<PAGE> 31
SECTION 3.22. INVENTORY. All inventories of raw materials,
work-in-process and finished goods set forth or reflected on the 1996 Balance
Sheet and the 1996 Subsidiary Balance Sheet or arising since the date thereof
were acquired, and have been maintained, in accordance with the regular
business practices of CIS and WIS, as the case may be, and consist of items of
a quality and quantity usable or saleable in the ordinary course of business of
CIS and WIS, as the case may be, consistent with past practice (except for
slow-moving, damaged or obsolete items and materials of below standard quality,
all of which have been written down to net realizable market value or in
respect of which adequate reserves have been provided, in each case as
reflected on the 1996 Balance Sheet and the 1996 Subsidiary Balance Sheet, as
the case may be). The value at which inventories are carried on the 1996
Balance Sheet and the 1996 Subsidiary Balance Sheet reflect the normal
inventory valuation policy of CIS and WIS, respectively, in accordance with
GAAP, of stating inventory at the lower of cost or market value. There is no
reason to believe that CIS or WIS will experience in the foreseeable future any
difficulty in obtaining, in the desired quantity and quality, the inventory
necessary to conduct its business in the manner proposed to be conducted.
SECTION 3.23. DISCLOSURE. No representation, warranty or covenant made
by CIS and the Stockholders in this Agreement, the CIS Disclosure Letter or any
Exhibit attached hereto contains an untrue statement of a material fact.
Except as set forth herein or in the CIS Disclosure Letter, the Stockholders do
not know of any fact or circumstance which is reasonably likely to have a
material adverse effect on the assets, liabilities, results of operations,
financial condition, business or prospects of CIS and its subsidiaries taken as
a whole.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF WORLD ACCESS
With such exceptions, if any, as may be set forth in a letter (the "World
Access Disclosure Letter") delivered by World Access to CIS prior to the
execution hereof, World Access hereby represents and warrants to CIS and the
Stockholders as follows:
SECTION 4.1. ORGANIZATION. Each of World Access and Merger Sub is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, and World Access has all
requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted. World Access
is duly qualified to transact business, and is in good standing, as a foreign
corporation in each jurisdiction where the character of its activities requires
such qualification, except where the failure to so qualify would not have a
material adverse effect on the assets, liabilities, results of operations,
financial condition, business or prospects of World Access.
SECTION 4.2. AUTHORIZATION. Each of World Access and Merger Sub has
full corporate power and authority to execute and deliver this Agreement and to
perform its obligations under this Agreement and to consummate the Merger and
the other transactions contemplated hereby. The execution and delivery of this
Agreement by World Access and Merger Sub and the
24
<PAGE> 32
performance by World Access and Merger Sub of their respective obligations
hereunder and the consummation of the Merger and the other transactions
provided for herein have been duly and validly authorized by all necessary
corporate action on the part of each of World Access and Merger Sub. The
Boards of Directors of each of World Access and Merger Sub have approved the
execution, delivery and performance of this Agreement and the consummation of
the Merger and the other transactions provided for herein. This Agreement has
been duly executed and delivered by each of World Access and Merger Sub and
constitutes the valid and binding agreement of World Access and Merger Sub,
enforceable against each of World Access and Merger Sub in accordance with its
terms, subject to applicable bankruptcy, insolvency and other similar laws
affecting the enforceability of creditors' rights generally, general equitable
principles and the discretion of courts in granting equitable remedies.
SECTION 4.3. ABSENCE OF RESTRICTIONS AND CONFLICTS. The execution,
delivery and performance of this Agreement, the consummation of the Merger and
the other transactions contemplated by this Agreement, and the fulfillment of
and compliance with the terms and conditions of this Agreement do not and will
not, with the passing of time or the giving of notice or both, violate or
conflict with, constitute a breach of or default under, result in the loss of
any material benefit under, or permit the acceleration of any obligation under,
(i) any term or provision of the Articles of Incorporation or Bylaws of World
Access , (ii) any contract material to the business and operations of World
Access, (iii) any judgment, decree or order of any court or governmental
authority or agency to which World Access is a party or by which World Access
or any of its properties is bound, or (iv) any statute, law, regulation or rule
applicable to World Access, so as to have, in the case of subsections (ii)
through (iv) above, a material adverse effect on the assets, liabilities,
results of operations, financial condition, business or prospects of World
Access. Except for filing and recordation of the Certificate of Merger, no
consent, approval, order or authorization of, or registration, declaration or
filing with, any government agency or public or regulatory unit, agency, body
or authority with respect to World Access is required in connection with the
execution, delivery or performance of this Agreement by World Access or Merger
Sub or the consummation of the transactions contemplated by this Agreement by
World Access or Merger Sub, the failure to obtain which would have a material
adverse effect upon the assets, liabilities, results of operations, financial
condition, business or prospects of World Access.
SECTION 4.4. CAPITALIZATION OF WORLD ACCESS. The authorized capital
stock of World Access consists of 20,000,000 shares of common stock, $.01 par
value per share, of which 16,368,473 shares were issued and outstanding as of
March 13, 1997, and 500,000 shares of non-voting Class B common stock, $.01 par
value per share, of which no shares were issued and outstanding as of the date
hereof. All shares of World Access Common Stock outstanding as of the date
hereof are duly authorized, validly issued, fully paid, nonassessable and free
of pre-emptive rights. The shares of World Access Common Stock to be issued
pursuant to this Agreement will at all times be properly reserved for issuance
and, when issued, will be validly issued, fully paid, nonassessable and free of
pre-emptive rights.
25
<PAGE> 33
SECTION 4.5. WORLD ACCESS SEC REPORTS. World Access has heretofore
made available to the Stockholders its Annual Reports on Form 10-K for the
years ended December 31, 1993, 1994 and 1995 and its Quarterly Reports on Form
10-Q for the quarters ended March 31, June 30 and September 30, 1996 (the
"World Access SEC Reports"). As of their respective dates, the World Access
SEC Reports did not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Since September 30, 1996, there has been no material adverse
change in the assets, liabilities, results of operations, financial condition,
business or prospects of World Access, and there are no existing facts or
circumstances known to the senior management of World Access reasonably likely
to cause such a material adverse change. Since January 1, 1993, World Access
has filed all forms, reports and documents with the Securities and Exchange
Commission required to be filed by it pursuant to the Securities Act and the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations promulgated thereunder, each of which complied as to form, at
the time such form, document or report was filed, in all material respects with
the applicable requirements of the Securities Act and the Exchange Act and the
applicable rules and regulations promulgated thereunder.
SECTION 4.6. DISCLOSURE. No representation, warranty or covenant made
by World Access in this Agreement, the World Access Disclosure Letter or any
Exhibit hereto contains any untrue statement of a material fact or omits to
state a material fact required to be stated herein or therein or necessary to
make the statements contained herein or therein not misleading.
ARTICLE 5.
CERTAIN COVENANTS AND AGREEMENTS
SECTION 5.1. NONCOMPETITION. Each of the Stockholders agrees that,
from the Closing Date until the end of three (3) years after the termination of
such Stockholder's employment by the Surviving Corporation for any reason
whatsoever (each a "Noncompete Period"), such Stockholder, unless acting in
accordance with World Access's prior written consent and except as an employee
of, or consultant to or director of, the Surviving Corporation or of World
Access, will not (directly or indirectly), own, manage, operate, join, control,
finance or participate in the ownership, management, operation, control or
financing of, or be connected as an officer, director, employee, principal,
agent, representative, consultant, investor, owner, partner, manager, joint
venturer or otherwise with, or permit his name to be used by or in connection
with, or lease, sell or permit to use any real property or interest therein
owned by such Stockholder to, any business or enterprise engaged, directly or
indirectly, in the manufacture, repair, refurbishment, sale or distribution of
wireline or wireless transmission, switching, and/or access equipment for
telecommunications, data and/or video applications anywhere in the world;
provided, however, that the provisions of this Section 5.1 shall not be deemed
to prohibit the ownership by a Stockholder of not more than five percent (5%)
of any corporation having a class of securities registered pursuant to the
Exchange Act. Each of the Stockholders acknowledges that (i) the provisions of
this Section 5.1 are reasonable and
26
<PAGE> 34
necessary to protect the legitimate interest of World Access and the business
and goodwill of CIS acquired by World Access hereby, (ii) any violation of this
Section 5.1 will result in irreparable injury to World Access and CIS and that
damages at law would not be reasonable or adequate compensation to World Access
and for a violation of this Section 5.1, and (iii) World Access and CIS shall
be entitled to have the provisions of this Section 5.1 specifically enforced by
preliminary and permanent injunctive relief without the necessity of proving
actual damages and without posting bond or other security as well as to an
equitable accounting of all lost earnings, profits and other benefits,
including, without limitation, future earnings estimated upon a basis of seven
(7) years as the anticipated average tenure of a customer with the Surviving
Corporation, arising out of any violation of this Section 5.1. In the event
that the provisions of this Section 5.1 should ever be deemed to exceed the
time, geographic, product or any other limitations permitted by applicable law,
then such provisions shall be deemed reformed to the maximum extent permitted
by applicable law.
SECTION 5.2. NO INTERFERENCE. Each of the Stockholders agrees,
individually and not on behalf of any other Stockholder, that, during the
Noncompete Period, such Stockholder will not (directly or indirectly): (i)
hire or offer employment to any employee of CIS whose employment is continued
by CIS, the Surviving Corporation or World Access after the Closing Date; or
(ii) solicit, induce or influence any customer, supplier, lender, lessor or any
other person that then has, or at the Closing Date had, a business relationship
with World Access or any of its subsidiaries or CIS, to discontinue or
otherwise change any such relationships.
SECTION 5.3. LISTING APPLICATION. World Access shall cause the World
Access Common Stock to be issued pursuant to this Agreement to be included for
trading in the Nasdaq National Market (or other principal exchange on which the
World Access Common Stock may be traded).
SECTION 5.4. OTHER COVENANTS OF THE STOCKHOLDERS.
(a) None of the Stockholders nor any entity or person controlled
by, related to or affiliated with any such Stockholder (collectively, the
"Stockholder Group") shall, directly or indirectly, acquire any shares of
capital stock of World Access which are then entitled to vote generally in the
election of directors (the "Voting Securities") (except by way of stock
dividend or other distributions or offerings made available to holders of
Voting Securities generally) if the effect of such acquisition would be to
increase the aggregate voting power in the election of directors of all Voting
Securities then owned by all members of the Stockholder Group to greater than
15% of such total combined voting power of all the Voting Securities then
outstanding.
(b) Each of the Stockholders shall take such action as may be
required so that all Voting Securities owned by any member of the Stockholder
Group are voted for nominees to the Board of Directors of World Access and,
unless World Access otherwise consents in writing, on all other matters to be
voted on by the holders of Voting Securities, in the same proportion as the
votes cast by other holders of Voting Securities, provided that provisions of
this subsection (b) shall not apply after a Change in Control of World Access
(as hereafter defined).
27
<PAGE> 35
(c) Except as otherwise permitted hereby, no member of the
Stockholder Group shall deposit any Voting Securities in a voting trust or
subject any Voting Securities to any arrangement or agreement with respect to
the voting of such Voting Securities.
(d) No member of the Stockholder Group shall solicit proxies or
become a "participant" in a "solicitation" (as such terms are defined in
Regulation 14A under the Exchange Act) in opposition to the recommendation of
the majority of the directors of World Access with respect to any matter.
(e) No member of the Stockholder Group shall join a partnership,
limited partnership, syndicate or other group, or otherwise act in concert with
any other person, for the purpose of acquiring, holding, voting or disposing of
Voting Securities, or otherwise become a "person" within the meaning of Section
13(d)(3) of the Exchange Act (in each case other than solely with members of
the Stockholder Group).
(f) For purposes of this Agreement, a "Change in Control" of World
Access shall have occurred if:
(1) a majority of the directors of World Access shall be
persons other than persons: (A) for whose election proxies shall have
been solicited by the Board of Directors of World Access (the
"Board"), or (B) who are then serving as directors appointed by the
Board to fill vacancies on the Board caused by death or resignation
(but not by removal) or to fill newly-created directorships;
(2) a majority of the outstanding voting power of World
Access shall have been acquired or beneficially owned (as defined in
Rule 13d-3 under the Exchange Act or any successor rule thereto) by
any person (other than World Access or a subsidiary of World Access);
or
(3) there shall have occurred:
(A) a merger or consolidation of World Access with or into
another corporation (other than a merger or consolidation with a
subsidiary of World Access or a merger or consolidation in which (aa)
the holders of voting stock of World Access immediately prior to the
merger as a class continue to hold immediately after the merger at
least a majority of all outstanding voting power of the surviving or
resulting corporation or its parent and (bb) all holders of each
outstanding class or series of voting stock of World Access
immediately prior to the merger or consolidation have the right to
receive substantially the same cash, securities or other property in
exchange for their voting stock of World Access as all other holders
of such class or series);
(B) a statutory exchange of shares of one or more classes or
series of outstanding voting stock of World Access for cash,
securities or other property;
28
<PAGE> 36
(C) the sale or other disposition of all or substantially all
of the assets of World Access (in one transaction or a series of
transactions); or
(D) the liquidation or dissolution of World Access.
SECTION 5.5. GUARANTEE OF COLLECTIBILITY OF RECEIVABLES.
(a) GUARANTEE. Subject to the limitations set forth in this Section
5.5, the Stockholders, jointly and severally, guarantee to the Buyer that all
accounts and notes receivable and other receivables arising out of sales made
between January 1, 1997 and the Closing Date by CIS or any of its subsidiaries
(the "Receivables") are valid and legally binding obligations of the persons
owing said amounts to CIS or such subsidiary, as the case may be, and that the
full amount of the Receivables will be paid to the Buyer on or before September
30, 1997, provided that this guarantee shall not be applicable or effective if
the nonpayment of a Receivable results from any claim or offset asserted
against the Buyer by the account debtor.
(b) UNPAID RECEIVABLES. If any part of the Receivables has not been
paid on or before September 30, 1997, and such nonpayment does not result from
any claim or offset asserted against the Buyer by the account debtor, then the
Buyer may reassign to the Stockholders, on or before December 31, 1997, all or
any part of the unpaid part of the Receivables, free and clear of any lien
arising on or after the Closing, in which event the Stockholders shall pay to
the Buyer in cash or by bank check that amount equal to such reassigned part of
the unpaid part of the Receivables.
(c) APPLICATION OF COLLECTIONS. All Receivables collected by the
Buyer after the Closing from any account debtor and any credits given by the
Buyer after the Closing for goods returned by any account debtor shall be
applied first against said account debtor's Receivable.
ARTICLE 6.
OTHER AGREEMENTS
SECTION 6.1. EMPLOYMENT AGREEMENTS. At the Closing, Merger Sub shall
execute and deliver an employment agreement with each of Messrs. Canham,
Schuchman and Simon, respectively, substantially in the forms attached hereto
as Exhibits 6.1(a), (b) and (c) (the "Employment Agreements").
SECTION 6.2. REPAYMENT OF STOCKHOLDERS' LOANS. All loans from (or any
other amounts advanced by) CIS to any of the Stockholders shall be repaid in
full at the Closing.
SECTION 6.3. REGISTRATION RIGHTS AGREEMENT. At the Closing, World
Access and the Stockholders shall execute and deliver a registration rights
agreement substantially in the form attached hereto as Exhibit 6.3 (the
"Registration Rights Agreement").
29
<PAGE> 37
SECTION 6.4. OPINION OF COUNSEL. At the Closing, World Access shall
have received an opinion from counsel for CIS and the Stockholders, dated the
Closing Date, in form and substance reasonably satisfactory to World Access,
substantially to the effect that:
(i) CIS is validly organized, existing, in good standing
and authorized to do business in the state of its incorporation and has all
requisite corporate power and authority to own and operate its properties
and to carry on its business as currently conducted and is duly qualified
to do business in each other state in which the failure to so qualify would
have a material adverse effect on its operations in such state.
(ii) The Stockholders and CIS have full power and authority
to enter into this Agreement and to consummate the transactions
contemplated hereby.
(iii) The officers of CIS who have executed this Agreement
have the authority to so execute this Agreement on behalf of CIS.
(iv) The Stockholders and CIS have taken all requisite
action to authorize, approve and carry out this Agreement and the
transactions on the part of the Stockholders contemplated hereby, and this
Agreement constitutes a legal, valid and binding agreement of the
Stockholders and CIS enforceable against each of them in accordance with
its terms, except that no opinion need be expressed as to the
enforceability of Sections 5.1 and 5.2 of this Agreement, and each of the
Employment Agreements, the Registration Rights Agreement, and the Tax
Reporting Agreement (as hereafter defined) (collectively, the "Ancillary
Agreements") constitutes a legal, valid and binding obligation of the
Stockholders enforceable against the signatory thereto (other than Merger
Sub or World Access) in accordance with its terms, except, in each case, as
such enforcement may be limited by (A) bankruptcy, insolvency,
reorganization, moratorium, and other laws and legal and equitable
principles of general application affecting the rights or remedies of
creditors, and (B) the fact that specific performance and other equitable
remedies provided therein are discretionary with the courts and may not be
enforceable.
(v) The execution, delivery and performance of this
Agreement by the Stockholders and CIS, and of the Ancillary Agreements by
the Stockholders, and the consummation of the transactions on the part of
the Stockholders and CIS contemplated hereby and thereby will not result in
any breach, violation, default or acceleration of the obligations of the
Stockholders, CIS or any of its subsidiaries under the Articles of
Incorporation or Bylaws of CIS or any judgment, decree, order, lease,
license, contract or other agreement which is applicable to the
Stockholders or CIS and of which such counsel is aware following due
inquiry.
(vi) The consummation of the transactions on the part of the
Stockholders or CIS contemplated by this Agreement or any of the Ancillary
Agreements do not require the consent, approval, authorization or order,
giving of notice to, or the registration with, any
30
<PAGE> 38
court or any Federal, state, or other governmental authority, agency or
instrumentality or any other person of which such counsel is aware
following due inquiry.
(vii) To the best of such counsel's knowledge after due
inquiry, (A) no action or proceeding against any Stockholder or CIS is
pending before any court, or before or by any governmental body, to
restrain, prohibit, invalidate or obtain damages with respect to or
otherwise question or attack the transactions contemplated by this
Agreement or any of the Ancillary Agreements, and (B) none of the
Stockholders is involved in any litigation which might have an adverse
effect on CIS and its subsidiaries taken as a whole.
(viii) CIS's authorized capital stock consists of 2,500 shares
of Common Stock, no par value, of which 300 shares are outstanding, all of
which have been duly authorized and validly issued and are fully paid and
nonassessable.
(ix) Each of the Stockholders is the holder of record of that
number of shares of CIS stock set forth opposite his name on Exhibit 2.1(a)
and, to the best of such counsel's knowledge after due inquiry, owns all of
such shares free and clear of any liens, claims, charges, restrictions,
equities or encumbrances of any kind.
SECTION 6.5. TAX REPORTING AGREEMENT. At the Closing, World Access,
Merger Sub, CIS and the Stockholders shall execute and deliver a tax reporting
agreement in substantially the form attached hereto as Exhibit 6.5 (the "Tax
Reporting Agreement").
SECTION 6.6. ASSIGNMENT. JTS Management, a New Jersey sole
proprietorship owned by John T. Simon ("JTS"), will assign to the Surviving
Corporation all of its rights under that certain Brokerage Agreement dated
October 11, 1996 by and between JTS and WMC Partners, L.P. by executing and
delivering to the Surviving Corporation an assignment in form and substance
reasonably satisfactory to the Surviving Corporation.
ARTICLE 7.
CLOSING
SECTION 7.1. CLOSING DATE. The closing (the "Closing") of the
transactions contemplated hereby shall take place at the offices of Rogers &
Hardin, 2700 International Tower, 229 Peachtree Street, Atlanta, Georgia 30303
at 10:00 a.m., local time, on March 27, 1997, or at such other time or place or
on such other date as World Access, Merger Sub and the Stockholders may agree
to in writing. The Closing shall be effective as of 12:01 a.m., local time, on
the Closing Date. The date of the Closing is hereinafter sometimes referred to
as the "Closing Date."
31
<PAGE> 39
SECTION 7.2. DELIVERIES BY STOCKHOLDERS. At the Closing, the
Stockholders shall deliver the following:
(a) Executed counterparts of the Employment Agreements to Merger Sub;
(b) Executed counterparts of the Registration Rights Agreement to
World Access;
(c) Executed counterparts of the Tax Reporting Agreement to World
Access and to Merger Sub;
(d) Executed counterparts of the Escrow Agreement to World Access,
Merger Sub and Escrow Agent; and
(e) the Certificates representing the CIS Stock to World Access.
SECTION 7.3. DELIVERIES BY WORLD ACCESS AND MERGER SUB. At the
Closing, World Access and/or Merger Sub shall deliver the following:
(a) Executed counterparts of the Employment Agreements to the
Stockholders;
(b) An executed counterpart of the Registration Rights Agreement to
the Stockholders;
(c) An executed counterpart of the Tax Reporting Agreement to the
Stockholders;
(d) An executed counterpart of the Escrow Agreement to the
Stockholders and the Escrow Agent;
(e) The Cash Consideration to the Stockholders by check in the amounts
determined by Section 2.1(a) hereof;
(f) An executed counterpart of the Articles of Merger to the Secretary
of State of the State of Nevada; and
(g) An executed Certificate of Merger to the Secretary of State of the
State of Delaware.
SECTION 7.4. DELIVERIES BY OTHERS. At the Closing, the following
deliveries shall be made:
(a) Counsel for the Stockholders and CIS shall deliver to World Access
the opinion specified in Section 6.4 hereof;
(b) CIS shall execute and deliver a counterpart of the Tax Reporting
Agreement to each of the other parities thereto;
32
<PAGE> 40
(c) JTS shall execute and deliver to the Surviving Corporation the
assignment contemplated by Section 6.6 hereof;
(d) The Escrow Agent shall execute and deliver a counterpart of the
Escrow Agreement to each of the other parties thereto;
(e) Counsel to World Access and Merger Sub shall deliver its opinion
to CIS in form and substance reasonably satisfactory to counsel to CIS; and
(f) CIS shall execute and deliver a counterpart of the Articles of
Merger to the Secretary of State of the State of Nevada.
ARTICLE 8.
INDEMNIFICATION
SECTION 8.1. DEFINITIONS. For the purposes of this Article 8:
(i) "CIS Indemnitors" shall mean the Stockholders.
(ii) "CIS Indemnitors Representative" shall mean Thomas R. Canham.
(iii) "CIS Indemnitees" shall mean the Stockholders.
(iv) "Indemnification Claim" shall mean a claim for indemnification
hereunder.
(v) "Indemnitee" or "Indemnitees" shall mean one or more, as the case
may be, of the World Access Indemnitees and the CIS Indemnitees, without
distinction as the context requires.
(vi) "Indemnitor" or "Indemnitors" shall mean one or more, as the case
may be, of the World Access Indemnitors and the CIS Indemnitors, without
distinction.
(vii) "Indemnitors Representative" shall mean World Access or Mr.
Canham, without distinction, as the case may be.
(viii) "Losses" shall mean any and all demands, claims, actions or causes
of action, assessments, losses, damages (including special and consequential
damages), liabilities, costs and expenses, including, without limitation,
interest, penalties, cost of investigation and defense, and reasonable
attorneys' and other professional fees and expenses.
(ix) "World Access Indemnitees" shall mean World Access, the Surviving
Corporation, and their respective agents, representatives, employees, officers,
directors, stockholders, controlling persons and affiliates (other than the
Stockholders).
33
<PAGE> 41
(x) "World Access Indemnitors" shall mean World Access and the
Surviving Corporation, jointly and severally.
(xi) "World Access Indemnitors Representative" shall mean World Access.
(xii) "Third Party Claim" shall mean any claim, suit or proceeding
(including, without limitation, a binding arbitration or an audit by any taxing
authority) that is instituted against an Indemnitee by a person or entity other
than an Indemnitor and which, if prosecuted successfully, would result in a
Loss for which such Indemnitee is entitled to indemnification hereunder.
SECTION 8.2. AGREEMENT OF CIS INDEMNITORS TO INDEMNIFY. Subject to
the terms and conditions of this Article 8, the CIS Indemnitors, jointly and
severally, agree to indemnify, defend and hold harmless World Access
Indemnitees, and each of them, from, against, for and in respect of any and all
Losses asserted against, or paid, suffered or incurred by, a World Access
Indemnitee and resulting from, based upon or arising out of:
(i) the inaccuracy or untruth of any representation or warranty of
CIS contained in or made pursuant to this Agreement or the CIS Disclosure
Letter or in or made pursuant to any exhibit furnished by CIS or the CIS
Indemnitors in connection herewith regardless of whether the same was
deliberate, reckless, negligent, innocent or unintentional;
(ii) a breach of or failure to perform any covenant, undertaking,
condition or agreement of CIS or the CIS Indemnitors made in this Agreement or
any Ancillary Agreement regardless of whether the same was deliberate,
reckless, negligent, innocent or unintentional; or
(iii) the agreement by and between CIS and The Geneva Companies,
Inc. dated December 30, 1996 (the "Geneva Agreement").
SECTION 8.3. AGREEMENT OF WORLD ACCESS INDEMNITORS TO INDEMNIFY.
Subject to the terms and conditions of this Article 8, the World Access
Indemnitors, jointly and severally, agree to indemnify, defend and hold
harmless the CIS Indemnitees, and each of them, from, against, for and in
respect of any and all Losses asserted against, or paid, suffered or incurred
by, each CIS Indemnitee and resulting from, based upon, arising out of or in
connection with:
(i) the inaccuracy or untruth of any representation or warranty of
any World Access Indemnitor, contained in or made pursuant to this Agreement or
the World Access Disclosure Letter or in or made pursuant to any exhibit
furnished by the World Access Indemnitors, or either of them, in connection
herewith regardless of whether the same was deliberate, reckless, negligent,
innocent or unintentional; or
(ii) a breach of or failure to perform any covenant, undertaking,
condition or agreement of the World Access Indemnitors, or either of them, made
in this Agreement or in
34
<PAGE> 42
any Ancillary Agreement regardless of whether the same was deliberate,
reckless, negligent, innocent or unintentional.
SECTION 8.4. PROCEDURES FOR INDEMNIFICATION. The obligations and
liabilities of the parties with respect to an Indemnification Claim shall be
subject to the following terms and conditions:
(i) An Indemnification Claim shall be made by a World Access
Indemnitee by delivery of a written notice to the CIS Indemnitors
Representative requesting indemnification from the CIS Indemnitors and
specifying the basis on which indemnification is sought and the amount of
asserted Losses and, in the case of a Third Party Claim, containing (by
attachment or otherwise) such other information as such Indemnitee shall have
concerning such Third Party Claim.
(ii) An Indemnification Claim shall be made by a CIS Indemnitee by
delivery of a written notice to the World Access Indemnitors Representative
requesting indemnification and specifying the basis on which indemnification is
sought and the amount of asserted Losses and, in the case of a Third Party
Claim, containing (by attachment or otherwise) such other information as such
Indemnitee shall have concerning such Third Party Claim.
(iii) If the Indemnification Claim involves a Third Party Claim,
the procedures set forth in Section 8.4 hereof shall also be observed by the
Indemnitee and the Indemnitors Representative.
(iv) If the Indemnification Claim involves a matter other than a
Third Party Claim, the Indemnitors Representative shall have thirty (30) days
to object to such Indemnification Claim by delivery of a written notice of such
objection to such Indemnitee specifying in reasonable detail the basis for such
objection. Failure to timely so object shall constitute a final and binding
acceptance of the Indemnification Claim by the Indemnitors Representative on
behalf of all the subject Indemnitors, and the Indemnification Claim shall be
paid in accordance with subsection (iv) hereof.
(v) Upon determination of the amount of an Indemnification Claim,
whether by agreement between the Indemnitors Representative and the Indemnitee
or otherwise, the Indemnitors shall pay the amount of such Indemnification
Claim within ten (10) days of the date such amount is determined.
SECTION 8.5. THIRD PARTY CLAIMS. The obligations and liabilities of
the parties hereunder with respect to a Third Party Claim shall be subject to
the following terms and conditions:
(i) The Indemnitee shall give the applicable Indemnitors
Representative written notice of a Third Party Claim promptly after receipt by
the Indemnitee of notice thereof, and the Indemnitors Representative, on behalf
of the Indemnitors, may undertake the defense, compromise and settlement
thereof by representatives of its own choosing reasonably acceptable
35
<PAGE> 43
to the Indemnitee. The failure of the Indemnitee to notify the Indemnitors
Representative of such claim shall not relieve the Indemnitors of any liability
that they may have with respect to such claim except to the extent the
Indemnitors Representative demonstrates that the defense of such claim is
prejudiced by such failure. The assumption of the defense, compromise and
settlement of any such Third Party Claim by the Indemnitors Representative
shall be an acknowledgment of the obligation of the Indemnitors to indemnify
the Indemnitee with respect to such claim hereunder. If the Indemnitee desires
to participate in, but not control, any such defense, compromise and
settlement, it may do so at its sole cost and expense. If, however, the
Indemnitors Representative fails or refuses to undertake the defense of such
Third Party Claim within ten (10) days after written notice of such claim has
been given to the Indemnitors Representative by the Indemnitee, the Indemnitee
shall have the right to undertake the defense, compromise and settlement of
such claim with counsel of its own choosing. In the circumstances described in
the immediately preceding sentence, the Indemnitee shall, promptly upon its
assumption of the defense of such claim, make an Indemnification Claim as
specified in Section 8.3 which shall be deemed an Indemnification Claim that is
not a Third Party Claim for the purposes of the procedures set forth herein.
(ii) If, in the reasonable opinion of the Indemnitee, any Third
Party Claim or the litigation or resolution thereof involves an issue or matter
which could have a material adverse effect on the business, operations, assets,
properties or prospects of the Indemnitee (including, without limitation, the
administration of the tax returns and responsibilities under the tax laws of
the Indemnitee), the Indemnitee shall have the right to control the defense,
compromise and settlement of such Third Party Claim undertaken by the
Indemnitors Representative, and the reasonable costs and expenses of the
Indemnitee in connection therewith shall be included as part of the
indemnification obligations of the Indemnitors hereunder. If the Indemnitee
shall elect to exercise such right, the Indemnitors Representative shall have
the right to participate in, but not control, the defense, compromise and
settlement of such Third Party Claim at its sole cost and expense.
(iii) No settlement of a Third Party Claim involving the asserted
liability of the Indemnitors under this Article 8 shall be made without the
prior written consent by or on behalf of the Indemnitors Representative, which
consent shall not be unreasonably withheld or delayed. Consent shall be
presumed in the case of settlements of $10,000 or less where the Indemnitors
Representative has not responded within five (5) business days of notice of a
proposed settlement. If the Indemnitors Representative assumes the defense of
such a Third Party Claim, (A) no compromise or settlement thereof may be
effected by the Indemnitors Representative without the Indemnitee's consent
unless (i) there is no finding or admission of any violation of law or any
violation of the rights of any person and no effect on any other claim that
may be made against the Indemnitee, (ii) the sole relief provided is monetary
damages that are paid in full by the Indemnitors, and (iii) the compromise or
settlement includes, as an unconditional term thereof, the giving by the
claimant or the plaintiff to the Indemnitee of a release, in form and substance
satisfactory to the Indemnitee, from all liability in respect of such Third
Party Claim, and (B) the Indemnitee shall have no liability with respect to any
compromise or settlement thereof effected without its consent.
36
<PAGE> 44
(iv) In connection with the defense, compromise or settlement of
any Third Party Claim, the parties to this Agreement shall execute such powers
of attorney as may reasonably be necessary or appropriate to permit
participation of counsel selected by any party hereto and, as may reasonably be
related to any such claim or action, shall provide access to the counsel,
accountants and other representatives of each party during normal business
hours to all properties, personnel, books, tax records, contracts, commitments
and all other business records of such other party and will furnish to such
other party copies of all such documents as may reasonably be requested
(certified, if requested).
SECTION 8.6. OTHER RIGHTS AND REMEDIES NOT AFFECTED. The rights of
the Indemnitees under this Article 8 are independent of and in addition to such
rights and remedies as the Indemnitees may have at law or in equity or
otherwise for any misrepresentation, breach of warranty or the failure to
fulfill any agreement or covenant hereunder on the part of any Indemnitor,
including, without limitation, the right to seek specific performance,
recession or restitution, none of which rights or remedies shall be affected or
diminished hereby.
SECTION 8.7. SURVIVAL. Subject to Section 8.8 hereof, all
representations, warranties and agreements contained in this Agreement or in
any certificate, schedule or exhibit delivered pursuant to this Agreement, in
each case as supplemented or amended by the respective Indemnitors' Disclosure
Letter, shall survive the Closing notwithstanding any investigation conducted
with respect thereto or any knowledge acquired as to the accuracy or inaccuracy
of any such representation or warranty.
SECTION 8.8. TIME LIMITATIONS. The CIS Indemnitors shall have no
liability under Section 8.2, unless on or before the third anniversary of the
Closing Date the World Access Indemnitors are given notice asserting an
Indemnification Claim with respect thereto; provided, however, that an
Indemnification Claim based upon a breach of the representations and warranties
of the CIS Indemnitors contained in (i) Sections 3.1, 3.2, 3.3, 3.4 and 3.16
may be made at any time except as limited by law, (ii) Sections 3.11 and 3.18
may be made at any time prior to the expiration of the applicable statute of
limitations relative to the liability relating thereto; and (iii) Section 3.17
may be made at any time prior to the fifth anniversary of the Closing Date.
SECTION 8.9. LIMITATIONS AS TO AMOUNT PAYABLE BY CIS INDEMNITORS. The
CIS Indemnitors shall have no liability with respect to the matters described
in Section 8.2 until the total of all Losses with respect thereto exceeds
$75,000 in which event the Indemnitors shall be obligated to indemnify the
World Access Indemnitees as provided in this Article 8 for all such Losses;
provided, however, that the limitations set forth in this Section 8.9 shall not
apply to Losses related to the Geneva Agreement or related to any intentional
misrepresentation or breach of warranty of the CIS Indemnitors or any
intentional failure to perform or comply with any covenant or agreement of the
CIS Indemnitors, and the CIS Indemnitors shall be liable for all Losses with
respect thereto.
37
<PAGE> 45
SECTION 8.10. LIMITATIONS AS TO AMOUNT PAYABLE BY WORLD ACCESS AND
SURVIVING CORPORATION. The World Access Indemnitors shall have no liability
with respect to the matters described in Section 8.3 until the total of all
Losses with respect thereto exceeds $75,000, in which event the World Access
Indemnitors shall be obligated to indemnify the CIS Indemnitees as provided in
this Article 8 for all such Losses; provided, however, that the limitations set
forth in this Section 8.10 shall not apply to Losses related to any intentional
misrepresentation or breach of warranty of the World Access Indemnitors or any
intentional failure to perform or comply with any covenant or agreement of the
World Access Indemnitors, and the World Access Indemnitors shall be liable for
all Losses with respect thereto.
SECTION 8.11. SUBROGATION. Upon payment in full of any Indemnification
Claim, whether such payment is effected by set-off or otherwise, or the payment
of any judgment or settlement with respect to a Third Party Claim, the
Indemnitors shall be subrogated to the extent of such payment to the rights of
the Indemnitee against any person or entity with respect to the subject matter
of such Indemnification Claim or Third Party Claim.
SECTION 8.12. APPOINTMENT OF CIS INDEMNITORS REPRESENTATIVE. Each CIS
Indemnitor constitutes and appoints the CIS Indemnitors Representative as his
true and lawful attorney-in-fact to act for and on behalf of such CIS
Indemnitor in all matters relating to or arising out of this Article 8 and the
liability or asserted liability of such CIS Indemnitor hereunder, including
specifically, but without limitation, accepting and agreeing to the liability
of such CIS Indemnitor with respect to any Indemnification Claim, objecting to
any Indemnification Claim, disputing the liability of such CIS Indemnitor, or
the amount of such liability, with respect to any Indemnification Claim and
prosecuting and resolving such dispute as herein provided, accepting the
defense, compromise and settlement of any Third Party Claim on behalf of such
CIS Indemnitor or refusing to accept the same, settling and compromising the
liability of such CIS Indemnitor hereunder, instituting and prosecuting such
actions (including arbitration proceedings) as the CIS Indemnitors
Representative shall deem appropriate in connection with any of the foregoing,
retaining counsel, accountants, appraisers and other advisers in connection
with any of the foregoing, all for the account of the CIS Indemnitor, such CIS
Indemnitor agreeing to be fully bound by the acts, decisions and agreements of
the CIS Indemnitor Representative taken and done pursuant to the authority
herein granted. Each CIS Indemnitor hereby agrees to indemnify and to save and
hold harmless the CIS Indemnitors Representative from any liability incurred by
the CIS Indemnitors Representative based upon or arising out of any act,
whether of omission or commission, of the CIS Indemnitors Representative
pursuant to the authority herein granted, other than acts, whether of omission
or commission, of the CIS Indemnitors Representative that constitute willful
misconduct in the exercise by the CIS Indemnitors Representative of the
authority herein granted. The death or incapacity of any CIS Indemnitor shall
not terminate the authority and agency of the CIS Indemnitors Representative.
In the event of the resignation of a CIS Indemnitors Representative, the
resigning CIS Indemnitors Representative shall appoint a successor either from
among the CIS Indemnitors or who shall otherwise be acceptable to World Access
and who shall agree in writing to accept such appointment, and the resigning
CIS Indemnitors Representative's resignation shall not be effective until such
a successor shall exist. If a CIS Indemnitors Representative should die or
38
<PAGE> 46
become incapacitated, his successor shall be appointed within thirty (30) days
of his death or incapacity by a majority of the CIS Indemnitors, and such
successor either shall be a Shareholder or shall otherwise be acceptable to
World Access. The choice of a successor CIS Indemnitors Representative
appointed in any manner permitted above shall be final and binding upon all of
the CIS Indemnitors. The decisions and actions of any successor CIS
Indemnitors Representative shall be, for all purposes, those of a CIS
Indemnitors Representative as if originally named herein.
SECTION 8.13. PAYMENT. In the event that the Indemnitors are required
to make any payment under this Article 8, the Indemnitors shall promptly pay
the Indemnitee the amount so determined. The Indemnitors may satisfy any
indemnity obligation under this Article 8 by delivering shares of World Access
Common Stock, valued for such purpose at the Average Closing Price. World
Access shall have the right to set-off against or to deduct from any payments
to be made to any Stockholder pursuant to Section 2.1 hereof or pursuant to any
of the Ancillary Agreements any amounts claimed by World Access to be owed to
it by the Stockholders pursuant to this Article 8, or to withhold the making of
any such payment based upon any such claimed indebtedness. If there should be
a dispute as to the amount or manner of determination of any indemnity
obligation owed under this Article 8, the Indemnitors shall nevertheless pay
when due such portion, if any, of the obligation as shall not be subject to
dispute. The difference, if any, between the amount of the obligation
ultimately determined as properly payable under this Article 8 and the portion,
if any, theretofore paid shall bear interest as provided below. If all or part
of any indemnification obligation under this Agreement is not paid when due,
then the Indemnitors shall pay the Indemnitee interest on the unpaid amount of
the obligation for each day from the date the amount became due until payment
in full, payable on demand, at the fluctuating rate per annum which at all
times shall be the lowest rate of interest generally charged from time to time
by Morgan Guaranty Trust Company of New York and publicly announced by such
bank as its so-called "prime rate," and the Company shall pay interest on any
amounts set-off pursuant to this Section 8.13 which are subsequently paid to a
Stockholder at a rate equal to the "prime rate" from the day of such set-off
until paid to such Stockholder.
ARTICLE 9.
MISCELLANEOUS PROVISIONS
SECTION 9.1. NOTICES. All notices and other communications under this
Agreement shall be in writing and may be given by any of the following methods:
(i) personal delivery; (ii) facsimile transmission; (iii) registered or
certified mail, postage prepaid, return receipt requested; or (iv) overnight
delivery service requiring acknowledgment of receipt. Any such notice or
communication shall be sent to the appropriate party at its address or
facsimile number given below (or at such other address or facsimile number for
such party as shall be specified by notice given hereunder):
39
<PAGE> 47
To World Access, Merger Sub or the Surviving Corporation:
World Access, Inc.
945 East Paces Ferry Road, Suite 2240
Atlanta, Georgia 30326
Facsimile: (404) 262-2598
Attn: Chief Executive Officer
with a copy to:
Rogers & Hardin
2700 International Tower, Peachtree Center
229 Peachtree Street, N.E.
Atlanta, Georgia 30303
Facsimile: (404) 525-2224
Attn: Steven E. Fox, Esq.
To CIS:
Cellular Infrastructure Supply, Inc.
16 W 127-83rd Street
Burr Ridge, Illinois 60521
Facsimile: 630-325-7251
Attn: Thomas R. Canham
To a Stockholder:
[Name of Stockholder]
c/o Cellular Infrastructure Supply, Inc.
16 W 127-83rd Street
Facsimile: 630-325-7251
Burr Ridge, Illinois 60521
in either case, with a copy to:
Squire, Sanders & Dempsey L.L.P.
Two Renaissance Square
40 North Central Avenue, Suite 2700
Phoenix, Arizona 85004
Attn: Christopher D. Johnson, Esq.
All such notices and communications shall be deemed received upon (i)
actual receipt thereof by the addressee, (ii) actual delivery thereof to the
appropriate address as evidenced by an
40
<PAGE> 48
acknowledged receipt, or (iii) in the case of a facsimile transmission, upon
transmission thereof by the sender and confirmation of receipt.
SECTION 9.2. DISCLOSURE LETTERS AND EXHIBITS. The CIS Disclosure
Letter and the World Access Disclosure Letter and all Exhibits hereto are
hereby incorporated into this Agreement and are hereby made a part hereof as if
set out in full in this Agreement.
SECTION 9.3. ASSIGNMENT; SUCCESSORS IN INTEREST. No assignment or
transfer by World Access, Merger Sub or CIS of their respective rights and
obligations hereunder shall be made except with the prior written consent of
the other parties hereto. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their permitted successors and
assigns, and any reference to a party hereto shall also be a reference to a
permitted successor or assign.
SECTION 9.4. NUMBER; GENDER. Whenever the context so requires, the
singular number shall include the plural and the plural shall include the
singular, and the gender of any pronoun shall include the other genders.
SECTION 9.5. CAPTIONS. The titles, captions and table of contents
contained in this Agreement are inserted herein only as a matter of convenience
and for reference and in no way define, limit, extend or describe the scope of
this Agreement or the intent of any provision hereof. Unless otherwise
specified to the contrary, all references to Articles and Sections are
references to Articles and Sections of this Agreement and all references to
Exhibits are references to Exhibits to this Agreement and the CIS Disclosure
Letter and the World Access Disclosure Letter.
SECTION 9.6. CONTROLLING LAW; JURISDICTION; INTEGRATION; AMENDMENT.
This Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of Georgia without reference to Georgia's
choice of law rules and each of the parties hereto hereby consents to personal
jurisdiction in any federal or state court in the State of Georgia. This
Agreement and the documents executed pursuant hereto supersede all
negotiations, agreements and understandings among the parties with respect to
the subject matter hereof and constitutes the entire agreement among the
parties hereto, this Agreement may not be amended, modified or supplemented
except by written agreement of the parties hereto.
SECTION 9.7. KNOWLEDGE. As used in this Agreement, the terms "the
best knowledge of the Stockholders," "known to the Stockholders" or words of
similar import used herein with respect to the Stockholders shall mean the
actual knowledge of each of the Stockholders, together with the knowledge a
reasonable business person would have obtained after making reasonable inquiry
and after exercising reasonable diligence with respect to the matters at hand.
SECTION 9.8. SEVERABILITY. Any provision hereof which is prohibited
or unenforceable in any jurisdiction will, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such
41
<PAGE> 49
prohibition or unenforceability in any jurisdiction will not invalidate or
render unenforceable such provision in any other jurisdiction. To the extent
permitted by law, the parties hereto waive any provision of law which renders
any such provision prohibited or unenforceable in any respect.
SECTION 9.9. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, and it shall not
be necessary in making proof of this Agreement or the terms hereof to produce
or account for more than one of such counterparts.
SECTION 9.10. ENFORCEMENT OF CERTAIN RIGHTS. Nothing expressed or
implied in this Agreement is intended, or shall be construed, to confer upon or
give any person, firm or corporation other than the parties hereto, and their
successors or assigns, any rights, remedies, obligations or liabilities under
or by reason of this Agreement, or result in such person, firm or corporation
being deemed a third party beneficiary of this Agreement.
SECTION 9.11. WAIVER. At any time prior to the Effective Time, the
parties hereto, by or pursuant to action taken by their respective Boards of
Directors in the case of World Access, Merger Sub and CIS, may, to the extent
legally permitted: (a) extend the time for the performance of any of the
obligations or other acts of any other party; (b) waive any inaccuracies in the
representations or warranties of any other party contained in this Agreement or
in any document or certificate delivered pursuant hereto; (c) waive compliance
or performance by any other party with any of the covenants, agreements or
obligations of such party contained herein; and (d) waive the satisfaction of
any condition that is precedent to the performance by the party so waiving of
any of its obligations hereunder. Any agreement on the part of a party hereto
to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. A waiver by one party of
the performance of any covenant, agreement, obligation, condition,
representation or warranty shall not be construed as a waiver of any other
covenant, agreement, obligation, condition, representation or warranty. A
waiver by any party of the performance of any act shall not constitute a waiver
of the performance of any other act or an identical act required to be
performed at a later time.
SECTION 9.12. FEES AND EXPENSES. Each party hereto shall pay its own
fees, costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby, including, but not limited to, the fees,
costs and expenses of its financial advisors, accountants and counsel;
provided, however, that the Stockholders shall pay all of such fees, costs and
expenses incurred by CIS or the Stockholders in excess of Twenty Thousand
Dollars ($20,000), none of which shall be paid by CIS or out of any of its
assets.
42
<PAGE> 50
IN WITNESS WHEREOF, each of the Stockholders has duly executed and
delivered this Agreement, and World Access, Merger Sub and CIS have each caused
this Agreement to be duly executed under seal and delivered on its behalf by an
officer or representative thereto duly authorized, all as of the date first
above written.
/s/ Thomas R. Canham
----------------------------------------
THOMAS R. CANHAM
/s/ Brian A. Schuchman
----------------------------------------
BRIAN A. SCHUCHMAN
/s/ John T. Simon
----------------------------------------
JOHN T. SIMON
CELLULAR INFRASTRUCTURE SUPPLY, INC.
By: /s/ Thomas R. Canham
----------------------------------------
Its: President
-------------------------------------
Attest: /s/ John T. Simon
------------------------------------
Its: Secretary
---------------------------------
[CORPORATE SEAL]
WORLD ACCESS, INC.
By: /s/ Steven A. Odom
----------------------------------------
Its: Chairman of the Board
-------------------------------------
Attest: /s/ Mark A. Gergel
-----------------------------------
Its: Executive Vice President and CFO
---------------------------------
[CORPORATE SEAL]
43
<PAGE> 51
CIS ACQUISITION CORP.
By: /s/ Steven A. Odom
---------------------------------------
Its: Chairman of the Board
-------------------------------------
Attest: /s/ Mark A. Gergel
------------------------------------
Its: Treasurer
---------------------------------
[CORPORATE SEAL]
44
<PAGE> 52
EXHIBIT 2.1(A)
CIS STOCKHOLDERS
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C
-------- -------- --------
NAME AND ADDRESS
OF STOCKHOLDER NUMBER OF SHARES OWNED PROPORTIONATE INTEREST
- ---------------------------------- ---------------------------------- ----------------------------------
<S> <C> <C>
Thomas R. Canham 100 1/3
Cellular Infrastructure
Supply, Inc.
16 W 127-83rd Street
Burr Ridge, Illinois 60521
Brian A. Schuchman 100 1/3
Cellular Infrastructure
Supply, Inc.
16 W 127-83rd Street
Burr Ridge, Illinois 60521
John T. Simon 100 1/3
Cellular Infrastructure
Supply, Inc.
27-3 Ironia Road
Flanders, New Jersey 07836
</TABLE>
<PAGE> 53
EXHIBIT 2.1(B)
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (the "Agreement") is made and entered into as of
the 27th day of March 1997, by and among WORLD ACCESS, INC. a Delaware
corporation ("World Access"), CIS ACQUISITION CORP., a Delaware corporation
(the "Surviving Corporation"), CAUTHEN & FELDMAN, P.A., a Florida professional
association (the "Escrow Agent"), and THOMAS R. CANHAM, an individual resident
of the State of Illinois, BRIAN A. SCHUCHMAN, an individual resident of the
State of Illinois, and JOHN T. SIMON, an individual resident of the State of
New Jersey (each such person a "Stockholder" and, collectively, the
"Stockholders").
W I T N E S S E T H:
WHEREAS, the Stockholders are all of the stockholders of Cellular
Infrastructure Supply, Inc., a Nevada corporation ("CIS");
WHEREAS, certain of the parties hereto, among others, have entered
into an Agreement and Plan of Merger dated as of March 27, 1997, a copy of
which is attached hereto as Exhibit A and incorporated herein by reference (the
"Merger Agreement"), pursuant to which, among other things, CIS will be merged
with and into the Surviving Corporation, a wholly-owned subsidiary of World
Access, with the separate corporate existence of CIS then terminating (the
"Merger"); and
WHEREAS, Section 2.1(a) of the Merger Agreement requires World Access
to deliver 845,010 shares (the "Escrow Shares") of its common stock, $.01 par
value per share (the "World Access Shares"), to the Escrow Agent, to hold and
distribute such shares pursuant to the terms hereof;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. ESCROW DEPOSIT. Within ten (10) business days of the execution
hereof, World Access shall cause to be delivered to the Escrow Agent, to be
held and distributed as hereinafter provided, stock certificates issued in the
name of each of the Stockholders representing such Stockholder's Proportionate
Interest (as set forth in Column C of Schedule 1 hereto) in the Escrow Shares,
and each of the Stockholders shall deliver to the Escrow Agent a stock power
duly endorsed in blank with signature guarantee with respect to the Escrow
Shares.
2. PROPERTY DISTRIBUTED IN RESPECT OF ESCROW SHARES. During the
term hereof, the Escrow Agent shall receive all of the money, securities,
rights or property distributed in respect of the Escrow Shares, including any
such property distributed as dividends, such property to be held and
administered as herein provided (the "Share Proceeds").
<PAGE> 54
3. VOTING AND TRANSFER OF ESCROW SHARES. For so long as the
Escrow Shares are held by the Escrow Agent, World Access shall be entitled to
exercise any and all voting or consensual rights and powers relating to or
pertaining to the Escrow Shares so held by the Escrow Agent, and the
Stockholders shall execute and deliver to World Access all such proxies, powers
of attorney and other instruments as World Access may request for the purpose
of enabling World Access to exercise the voting and consensual rights and
powers that World Access is entitled to exercise pursuant hereto. Until such
time as they are distributed as hereinafter provided, no Stockholder shall
transfer the Escrow Shares, or any interest therein except under the laws of
descent and distribution.
4. FEES OF ESCROW AGENT. The Escrow Agent shall be entitled to a
fee (the "Escrow Fee") based upon its normal hourly billing rate as
compensation for its services hereunder. Except as otherwise expressly
provided herein, the Escrow Fee and all costs and expenses incurred by the
Escrow Agent in connection with the establishment and maintenance of the escrow
established hereby shall be payable by World Access upon demand therefor from
the Escrow Agent.
5. DISTRIBUTION OF ESCROW SHARES.
(a) Upon receipt of the Certificates of Instruction provided in
Section 7 below, the Escrow Agent shall distribute the Escrow Shares held by it
under this Agreement in the aggregate amounts (each a "Release Amount")
(together with the pro rata portion of the Share Proceeds, if any, allocable
thereto) based upon the Pre-Tax Net Income (as defined in the Merger Agreement)
of the Surviving Corporation on the release dates set forth below (each a
"Release Date") for the performance period set forth below (each a "Performance
Period") which corresponds with such Release Date.
<TABLE>
<CAPTION>
PERFORMANCE PERIOD RELEASE DATE
---------------------------------------------------- -----------------------------------
<S> <C>
January 1, 1997 to and including December 31, 1997 February 15, 1998
(the "First Performance Period")
January 1, 1998 to and including December 31, 1998 February 15, 1999
(the "Second Performance Period")
January 1, 1999 to and including December 31, 1999 February 15, 2000
(the "Third Performance Period")
</TABLE>
(b) The aggregate number of Escrow Shares to be released to the
Stockholders on the Release Date which corresponds to the First Performance
Period will be determined on a pro rata basis based on the Pre-Tax Net Income
as set forth in Release Table No. 1 below.
2
<PAGE> 55
<TABLE>
<CAPTION>
RELEASE TABLE NO. 1
Release Amount
Pre-Tax Net Income (Number of Shares)
--------------------------------------- ------------------
Minimum Maximum
------- -------
<S> <C> <C>
Less than $4,000,000 . . . . . . . . . None None
$4,000,000 to and including
$4,999,999 . . . . . . . . . . . . . 244,929 330,655
$5,000,000 to and including
$5,999,999 . . . . . . . . . . . . . 330,656 416,381
$6,000,000 to and including
$6,999,999 . . . . . . . . . . . . . 416,382 477,613
$7,000,000 and more . . . . . . . . . . N/A 477,615
</TABLE>
Notwithstanding the foregoing, if the arithmetic average of the daily
closing price per share, rounded to four decimal places, of the World Access
Shares as reported on the Nasdaq National Market (or other principal exchange
on which the World Access Shares are then traded) for each of the twenty (20)
consecutive trading days ending (and including) the trading day that occurs two
trading days prior to (and not including) the Release Date which corresponds to
the First Performance Period (the "First Performance Period Adjusted Average
Closing Price") exceeds $14.00 per share, then the number of Escrow Shares to
be released to the Stockholders with respect to the First Performance Period
shall be reduced to a number equal to (i) the number of Escrow Shares to be
released determined by reference to Release Table No. 1 above multiplied by
(ii) the quotient of $14.00 divided by the First Performance Period Adjusted
Average Closing Price.
(c) The aggregate number of Escrow Shares to be released to the
Stockholders on the Release Date which corresponds to the Second Performance
Period will be as set forth in Release Table No. 2 below.
<TABLE>
<CAPTION>
RELEASE TABLE NO. 2
Release Amount
Pre-Tax Net Income (Number of Shares)
---------------------------------------------------- --------------------------
<S> <C>
Greater than $4,500,000 . . . . . . . . . . . . . 244,929
</TABLE>
If the Pre-Tax Net Income for the First Performance Period exceeds
$7,000,000, then such excess may be carried over and added to the Pre-Tax Net
Income for the Second Performance Period, provided that the Pre-Tax Net Income
for the Second Performance equals at least $3,000,000 without taking into
account any amount permitted to be carried over from the First Performance
Period.
3
<PAGE> 56
Notwithstanding the foregoing, if the arithmetic average of the daily
closing price per share, rounded to four decimal places, of the World Access
Shares as reported on the Nasdaq National Market (or other principal exchange
on which the World Access Shares are then traded) for each of the twenty (20)
consecutive trading days ending (and including) the trading day that occurs two
trading days prior to (and not including) the Release Date which corresponds to
the Second Performance Period (the "Second Performance Period Adjusted Average
Closing Price") exceeds $18.00 per share, then the number of Escrow Shares to
be released to the Stockholders with respect to the Second Performance Period
shall be reduced to a number equal to (i) the number of Escrow Shares to be
released determined by reference to Release Table No. 2 above multiplied by
(ii) the quotient of $18.00 divided by the Second Performance Period Adjusted
Average Closing Price.
(d) The aggregate number of Escrow Shares to be released to the
Stockholders on the Release Date which corresponds to the Third Performance
Period will be as set forth in Release Table No. 3 below.
<TABLE>
<CAPTION>
RELEASE TABLE NO. 3
Release Amount
Pre-Tax Net Income (Number of Shares)
---------------------------------------------------- --------------------------
<S> <C>
Greater than $5,000,000 . . . . . . . . . . . . . 122,466
</TABLE>
If the aggregate Pre-Tax Net Income for the First and Second
Performance Periods exceeds $11,500,000, then such excess may be carried over
and added to the Pre-Tax Net Income for the Third Performance Period, provided
that (i) the Pre-Tax Net Income for the Second Performance Period equals at
least $3,000,000 and (ii) the Pre-Tax Net Income for the Third Performance
Period equals at least $3,000,000, without in either case taking into account
any amount permitted to be carried over from any prior Performance Period.
Notwithstanding the foregoing, if the arithmetic average of the daily
closing price per share, rounded to four decimal places, of the World Access
Shares as reported on the Nasdaq National Market (or other principal exchange
on which the World Access shares are then traded) for each of the twenty (20)
consecutive trading days ending (and including) the trading day that occurs two
trading days prior to (and not including) the Release Date which corresponds to
the Third Performance Period (the "Third Performance Period Adjusted Average
Closing Price") exceeds $22.00 per share, then the number of Escrow Shares to
be released to the Stockholders with respect to the Third Performance Period
shall be reduced to a number equal to (i) the number of Escrow Shares to be
released determined by reference to Release Table No. 3 above multiplied by
(ii) the quotient of $22.00 divided by the Third Performance Period Adjusted
Average Closing Price.
6. APPOINTMENT OF STOCKHOLDER REPRESENTATIVE. Each Stockholder
constitutes and appoints Thomas R. Canham (the "Stockholder Representative") as
his true and lawful attorney-in-fact to act for and on behalf of such
Stockholder in all matters relating to or arising out of this Agreement, such
Stockholder agreeing to be fully bound by the acts, decisions and agreements of
the Stockholder Representative taken and done pursuant to the authority herein
4
<PAGE> 57
granted. Each Stockholder hereby agrees to indemnify and to save and hold
harmless the Stockholder Representative from any liability incurred by the
Stockholder Representative based upon or arising out of any act, whether of
omission or commission, of the Stockholder Representative pursuant to the
authority herein granted, other than acts, whether of omission or commission,
of the Stockholder Representative that constitute willful misconduct in the
exercise by the Stockholder Representative of the authority herein granted.
The death or incapacity of any Stockholder shall not terminate the authority
and agency of the Stockholder Representative. In the event of the resignation
of the Stockholder Representative, the resigning Stockholder Representative
shall appoint a successor either from among the Stockholders or who shall
otherwise be acceptable to World Access, the Surviving Corporation and the
Escrow Agent, and who shall agree in writing to accept such appointment, and
the resigning Stockholder Representative's resignation shall not be effective
until such a successor shall exist. If the Stockholder Representative should
die or become incapacitated, his successor shall be appointed within thirty
(30) days of his death or incapacity by a majority of the Stockholders, and
such successor either shall be a Stockholder or shall otherwise be acceptable
to World Access, the Surviving Corporation and the Escrow Agent. The choice of
a successor Stockholder Representative appointed in any manner permitted above
shall be final and binding upon all of the Stockholders. The decisions and
actions of any successor Stockholder Representative shall be, for all purposes,
those of the Stockholder Representative as if originally named herein.
7. CERTIFICATES OF INSTRUCTION.
(a) Within forty (40) days of the end of each Performance
Period, World Access and the Stockholder
Representative shall deliver to the Escrow Agent a
Certificate of Instruction setting forth the Pre-Tax
Net Income of the Surviving Corporation for each such
Performance Period and, in the event that Pre-Tax Net
Income equals an amount for such Performance Period
which permits the release of Escrow Shares in
accordance with Section 5 above, directing the Escrow
Agent to release to the Stockholders the number of
Escrow Shares (together with the pro rata portion of
the Share Proceeds, if any) determined in accordance
with Section 5 above. In the event there is a
disagreement or dispute with respect to the
determination of "Pre-Tax Net Income," World Access
and the Stockholder Representative shall provide
Escrow Agent with one or more supplemental
Certificates of Instruction within five (5) days of
any resolution of such disagreement or dispute,
directing Escrow Agent with respect to the release of
any Escrow Shares in accordance with Section 5 above
which results from such resolution. Upon receipt of
a Certificate of Instruction, the Escrow Agent shall
cause promptly each of the certificates representing
the Escrow Shares to be broken down into two (2)
certificates, one of which will represent the Escrow
Shares to remain subject to the terms of this escrow
and the other of which will be issued to the
respective Stockholder and will represent that number
of the Escrow Shares to be released multiplied by the
Proportionate Interest (as set forth in Column C of
Schedule 1 hereto) of such Stockholder, and
thereafter on the Release Date (or within five (5)
business days of receipt of any
5
<PAGE> 58
supplemental Certificate of Instruction, if
applicable), the Escrow Agent shall deliver to the
Stockholders the certificates representing the Escrow
Shares (together with the pro rata portion of the
Share Proceeds, if any) to be released to the
Stockholders as provided herein.
(b) If, on 5:00 p.m. Eastern Standard Time on February
28, 1998, or on such later date which is ten (10)
days following the date on which a final
determination shall have been made pursuant to
Section 2.1(c)(1) of the Merger Agreement with
respect to the Surviving Corporation's Pre-Tax Net
Income with respect to the First Performance Period,
World Access and the Stockholder Representative shall
have provided Escrow Agent with a Certificate of
Instruction in respect of such final determination,
then the Escrow Agent shall deliver any Escrow Shares
then held by the Escrow Agent (together with any
Share Proceeds in the Escrow Agent's possession)
which were held for release in connection with the
First Performance Period and not delivered to the
Stockholders as hereinabove provided to World Access.
(c) If, on 5:00 p.m. Eastern Standard Time on February
28, 1999, or on such later date which is ten (10)
days following the date on which a final
determination shall have been made pursuant to
Section 2.1(c)(1) of the Merger Agreement with
respect to the Surviving Corporation's Pre-Tax Net
Income with respect to the Second Performance Period,
World Access and the Stockholder Representative shall
have provided Escrow Agent with a Certificate of
Instruction in respect of such final determination,
then the Escrow Agent shall deliver any Escrow Shares
then held by the Escrow Agent (together with any
Share Proceeds in the Escrow Agent's possession)
which were held for release in connection with the
Second Performance Period and not delivered to the
Stockholders as hereinabove provided to World Access.
(d) If, on 5:00 p.m. Eastern Standard Time on February
28, 2000, or on such later date which is ten (10)
days following the date on which a final
determination shall have been made pursuant to
Section 2.1(c)(1) of the Merger Agreement with
respect to the Surviving Corporation's Pre-Tax Net
Income with respect to the Third Performance Period,
World Access and the Stockholder Representative shall
have provided Escrow Agent with a Certificate of
Instruction in respect of such final determination,
then the Escrow Agent shall deliver any Escrow Shares
then held by the Escrow Agent (together with any
Share Proceeds in the Escrow Agent's possession)
which were held for release in connection with the
Third Performance Period and not delivered to the
Stockholders as hereinabove provided to World Access,
and this Agreement shall thereupon be terminated.
6
<PAGE> 59
(e) If the obligation with respect to the payment of the
Contingent Consideration (as defined in the Merger
Agreement) is assumed by an Acquiror (as defined in
the Merger Agreement) pursuant to Section 2.1(c)(3)
of the Merger Agreement, then World Access and the
Stockholder Representative shall provide Escrow Agent
with a Certificate of Instruction directing Escrow
Agent to deliver the Escrow Shares then held by
Escrow Agent (together with any Share Proceeds in the
Escrow Agent's possession) to World Access, and upon
such delivery by Escrow Agent, this Agreement shall
thereupon terminate.
8. DUTIES OF THE ESCROW AGENT. The acceptance by the Escrow Agent
of its duties under this Agreement is subject to the following terms and
conditions, which the parties to this Agreement hereby agree shall fully govern
and control with respect to the Escrow Agent's rights, duties, liabilities and
immunities:
(a) The Escrow Agent shall be protected in acting upon
any written notice, request, waiver, consent, receipt
or other paper or document which the Escrow Agent
believes in good faith emanates from both World
Access and the Stockholder Representative of the
parties hereto, not only as to its due execution and
the validity and effectiveness of its provisions, but
also as to the truth and accuracy of any information
contained therein. The Escrow Agent is also relieved
from the necessity of satisfying itself as to the
authority of the persons executing this Agreement in
a representative capacity.
(b) The Escrow Agent shall not be liable for any error of
judgment, or for any act done or step taken or
omitted by it in good faith, or for any mistake of
fact or law, or for anything that it may do or
refrain from doing in connection herewith, except for
its own gross negligence or willful misconduct.
(c) The Escrow Agent may consult with, and obtain advice
from, independent legal counsel selected by the
Escrow Agent in the event of any question as to any
of the provisions hereof or its duties hereunder (the
cost of obtaining such advice being borne by World
Access in accordance with Section 4 hereof) and it
shall incur no liability and shall be fully protected
in acting in accordance with the opinion and
instructions of such counsel.
(d) The Escrow Agent shall have no duties except those
set forth herein, and the Escrow Agent shall not be
subject to, or obliged to recognize, any other
agreement between, or direction or instruction of,
any of the parties hereto unless signed by World
Access and the Stockholder Representative. The Escrow
Agent shall not be bound by any notice of a claim,
demand or objection with respect to the Escrow Shares
or any waiver, modification, termination or
rescission of this Agreement, unless received by it
in writing signed by World Access and the Stockholder
7
<PAGE> 60
Representative, and, if its duties herein are
materially increased, unless it shall have given its
consent thereto.
(e) The Escrow Agent's acceptance of the appointment as
Escrow Agent hereunder shall not prevent it from
representing any party hereto in any dispute over
disbursement of, or conflicting claims to, the Escrow
Shares, or otherwise. If any dispute arises over
disbursement of, or conflicting claims to, the Escrow
Shares and related Share Proceeds, then the Escrow
Agent may interplead such contested Escrow Shares and
related Share Proceeds into a court of proper
jurisdiction of its choosing, including, but not
limited to, the Circuit Court of Lake County,
Florida, and thereupon the Escrow Agent shall be
fully and completely discharged of its duties as
escrow agent with respect to such contested Escrow
Shares and Share Proceeds.
9. INDEMNIFICATION AND EXPENSE REIMBURSEMENT OF THE ESCROW AGENT.
World Access, the Surviving Corporation and the Stockholders jointly and
severally agree to indemnify, defend and hold harmless the Escrow Agent from
any and all costs, expenses, damages or liability of any kind whatsoever
(including reasonable legal fees) arising by virtue of its services as escrow
agent hereunder, except for liabilities due to the Escrow Agent's gross
negligence or willful misconduct, and to reimburse the Escrow Agent for all
costs and expenses incurred by the Escrow Agent in connection with the
performance of its duties hereunder other than such costs and fees incurred in
connection with the establishment and maintenance of the escrow established
hereby which shall be reimbursed pursuant to Section 4 hereof.
10. NOTICE. All notices and other communications hereunder shall
be in writing and shall be deemed given if (a) delivered by hand, (b) mailed by
registered or certified mail (return receipt requested) or (c) telecommunicated
and immediately confirmed both orally and in writing, to the parties at the
following addresses (or at such other addresses for a party as shall be
specified by like notice) and shall be deemed given on the date on which so
hand-delivered or so telecommunicated or on the third business day following
the date on which so mailed, if deposited in a regularly- maintained receptacle
for United States mail:
8
<PAGE> 61
If to Escrow Agent:
Cauthen & Feldman, P.A.
215 North Joanna Avenue
Tavares, Florida 32778-3200
Attn: William H. Cauthen, Esq.
Telecopier: 352-343-7759
Telephone: 352-343-2225
If to the Stockholders:
In c/o Mr. Thomas R. Canham
16 W 127-83rd Street
Burr Ridge, Illinois 60521
Telecopier: 630-325-7251
Telephone: 630-986-9898
With a copy to:
Squire, Sanders & Dempsey L.L.P.
Two Renaissance Square
40 North Central Avenue, Suite 2700
Phoenix, Arizona 85004
Attn: Christopher D. Johnson, Esq.
Telecopier: 602-528-4046
Telephone: 602-253-8129
If to World Access or the Surviving Corporation:
Name of Addressee
945 E. Paces Ferry Road
Suite 2240
Atlanta, Georgia 30326
Attn: Mr. Mark A. Gergel
Telecopier: 404-262-2598
Telephone: 404-231-2025
With a copy to:
Rogers & Hardin
2700 International Tower
229 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attn: Steven E. Fox, Esq.
Telecopier: 404-525-2224
Telephone: 404-522-4700
9
<PAGE> 62
11. EXECUTION IN COUNTERPARTS. This Agreement may be executed by
facsimile, and may be executed in several counterparts, each of which shall be
an original, and all of which shall constitute one and the same instrument.
12. APPLICABLE LAW. This Agreement shall be construed and governed
exclusively by the laws of the State of Georgia, without giving effect to its
principles of conflicts of laws.
13. AMENDMENT. This Agreement may be amended or modified only in a
writing signed by all parties hereto.
[SIGNATURES ON FOLLOWING PAGE]
10
<PAGE> 63
IN WITNESS WHEREOF, the parties hereto have duly executed and sealed
this Agreement or have caused this Agreement to be duly executed under seal on
its behalf by an officer or representative thereto duly authorized, all as of
the date first above written.
CAUTHEN & FELDMAN, P.A.
By:
-----------------------------------
Its:
--------------------------
WORLD ACCESS, INC.
By:
-----------------------------------
Its:
--------------------------
CIS ACQUISITION CORP.
By:
-----------------------------------
Its:
--------------------------
(SEAL)
--------------------------------
THOMAS R. CANHAM, Individually
(SEAL)
--------------------------------
BRIAN A. SCHUCHMAN, Individually
(SEAL)
--------------------------------
JOHN T. SIMON, Individually
11
<PAGE> 64
SCHEDULE 1
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C
-------- -------- --------
Name and Address of
Stockholder Number of Shares Owned Proportionate Interest
---------------------------------- --------------------------------- ---------------------------------
<S> <C> <C>
Thomas R. Canham 100 33 1/3%
Cellular Infrastructure
Supply, Inc.
16 W 127-83rd Street
Burr Ridge, Illinois 60521
Brian A. Schuchman 100 33 1/3%
Cellular Infrastructure
Supply, Inc.
16 W 127-83rd Street
Burr Ridge, Illinois 60521
John T. Simon 100 33 1/3%
Cellular Infrastructure
Supply, Inc.
27-3 Ironia Road
Flanders, New Jersey 07836
</TABLE>
12
<PAGE> 65
EXHIBIT 6.1(A)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into this
27th day of March 1997, between and among THOMAS R. CANHAM, a resident of the
State of Illinois ("Employee"), and CIS ACQUISITION CORP., a Delaware
corporation ("Company").
WITNESETH:
WHEREAS, execution of this Agreement is contemplated by that certain
Agreement and Plan of Merger dated of date even herewith (the "Merger
Agreement"), whereby Cellular Infrastructure Supply, Inc. ("CIS") will be
merged with and into the Company, a Delaware corporation and a wholly-owned
subsidiary of World Access, Inc. ("World Access");
WHEREAS, the covenants and agreements of Employee herein are made as
an inducement to the merger of CIS into the Company; and
WHEREAS, the Company and Employee each desire to enter into this
Agreement, pursuant to which Employee will be employed by the Company on the
terms and conditions hereinafter set forth, and to make certain other
agreements;
NOW, THEREFORE, in consideration of the premises and of the promises
and agreements hereinafter set forth, the parties hereto, intending to be
legally bound, do hereby agree as follows:
SECTION 1. EMPLOYMENT. Subject to the terms hereof, the Company
hereby employs Employee, and Employee hereby accepts such employment. Employee
shall devote his full time and best efforts to rendering services on behalf of
the Company.
SECTION 2. POSITION. Employee shall serve as President of the
Company and, as such, Employee shall report directly to the President and Chief
Operating Officer of World Access. Employee also consents to serve, without
additional compensation, if elected, as a director of the Company.
SECTION 3. TERM. The employment of Employee hereunder shall
commence on the date hereof (the "Effective Date") and shall continue until the
earlier of (a) the third anniversary of the Effective Date or (b) the
occurrence of any of the following events:
(i) the death or total disability of Employee (total
disability meaning the failure of Employee to perform his normal
required services hereunder at his office for a period of three (3)
consecutive months, by reason of Employee's mental or physical
<PAGE> 66
disability as so determined by a licensed physician selected by the
Company satisfactory to Employee);
(ii) the mutual written agreement of the parties hereto
to terminate Employee's employment hereunder; or
(iii) the Company's termination of Employee's employment
hereunder, upon thirty (30) days' prior written notice to Employee,
for "good cause." For the purposes of this Agreement, "good cause"
for termination of Employee's employment shall exist (a) if Employee
is convicted of (from which no appeal may be taken), or pleads guilty
to, any act of fraud, misappropriation or embezzlement, or any felony,
(b) if, in the sole determination of the Board of Directors of the
Company, Employee has engaged in conduct or activities materially
damaging to the business of the Company (it being understood, however,
that neither conduct nor activities pursuant to Employee's exercise of
his good faith business judgment nor unintentional physical damage to
any property of the Company by Employee shall be a ground for such a
determination by the Board of Directors of the Company) or (c) if
Employee has failed without reasonable cause to devote his full time
and best efforts to the business of the Company and, after notice from
the Company of such failure, Employee at any time thereafter again so
fails.
SECTION 4. COMPENSATION AND BENEFITS.
4.1 SALARY. For the term of his employment hereunder,
Employee shall be paid a salary by the Company at the annual rate of One
Hundred Thousand Dollars ($100,000.00), payable bi-weekly in accordance with
the payroll payment practices from time to time adopted by the Company.
4.2 INCENTIVE COMPENSATION. In addition to salary,
Employee shall receive periodic bonus payments based on the Pre-Tax Net Income
(as defined and calculated pursuant to the Merger Agreement) of the Company
payable in accordance with Exhibit A attached hereto and incorporated herein by
this reference.
4.3 INSURANCE.
(A) LIFE AND OTHER INSURANCE. The Company shall,
at its expense, provide or arrange for and keep in effect, during the term of
Employee's employment hereunder, so long as he is insurable, such group term
life insurance, travel accident, accidental death and dismemberment insurance
and long and short term disability insurance, or their equivalents, as is
provided from time to time for executives of other wholly-owned subsidiaries of
World Access holding positions and responsibilities comparable to those of
Employee.
(B) MEDICAL INSURANCE. During the term of
Employee's employment hereunder, the Company shall, at its expense, provide or
arrange for and keep in effect, hospitalization, major medical and similar
medical and health insurance for Employee and his
2
<PAGE> 67
family, to the same extent as is provided from time to time for executives of
other wholly-owned subsidiaries of World Access holding positions and
responsibilities comparable to those of Employee.
4.4 VACATION. Employee shall be entitled to the same
number of days of paid vacation during each year of his employment hereunder as
is allowed to other executives of other wholly-owned subsidiaries of World
Access holding positions and responsibilities comparable to those of Employee.
4.5 RETIREMENT BENEFITS. During the term of his
employment hereunder, Employee shall have the same right as other executives of
other wholly-owned subsidiaries of World Access holding positions and
responsibilities comparable to those of Employee to participate in all
profit-sharing, pension and other retirement plans as are now, or as may
hereafter be, established by World Access.
4.6 OUT-OF-POCKET EXPENSES. The Company shall reimburse
Employee for all reasonable out-of-pocket expenses incurred by Employee in
connection with the performance of his duties hereunder upon presentation of
appropriate vouchers therefor.
SECTION A. MISCELLANEOUS.
5.1 BINDING EFFECT. This Agreement shall inure to the
benefit of and shall be binding upon Employee, his executor, administrator,
heirs, personal representatives and assigns, and upon the Company and its
successors and assigns; provided, however, that the obligations and duties of
Employee may not be assigned or delegated.
5.2 GOVERNING LAW. This Agreement shall be deemed to be
made in, and in all respects shall be interpreted, construed and governed by
and in accordance with, the laws of the State of Georgia, without giving effect
to principles of conflicts of laws.
5.3 INVALID PROVISIONS. The parties herein hereby agree
that the agreements, provisions and covenants contained in this Agreement are
severable and divisible, that none of such agreements, provisions or covenants
depends upon any other provision, agreement or covenant for its enforceability,
and that each such agreement, provision and covenants constitutes an
enforceable obligation between the Company and Employee. Consequently, the
parties hereto agree that neither the invalidity nor the unenforceability of
any agreement, provision or covenant of this Agreement shall affect the other
agreements, provisions or covenants hereof, and this Agreement shall remain in
full force and effect and be construed in all respects as if such invalid or
unenforceable agreement, provision or covenant were omitted.
5.4 HEADINGS. The section and paragraph headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.
3
<PAGE> 68
5.5 NOTICES. All communications provided for hereunder
shall be in writing and shall be deemed to be given when delivered in person or
deposited in the United States mail, first class, registered mail, return
receipt requested, with proper postage prepaid, and
(a) If to Employee, addressed to:
Mr. Thomas R. Canham
16 W 127-83rd Street
Burr Ridge, Illinois 60521
(b) If to the Company or World Access, addressed
to:
[Name of addressee]
945 E. Paces Ferry Road
Suite 2240
Atlanta, Georgia 30326
Attn: Chief Financial Officer
or at such other place or places or to such other person or persons as shall be
designated in writing by the parties hereto in the manner provided above for
notices.
6.6 COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original but all
of which together shall constitute one and the same instrument.
6.7 WAIVER OF BREACH. The waiver by the Company of a
breach of any provision, agreement or covenant of this Agreement by Employee
shall not operate or be construed as a waiver of any prior or subsequent breach
of the same or any other provision, agreement or covenant by Employee.
6.8 ENTIRE AGREEMENT. This Agreement is intended by the
parties hereto to be the final expression of their agreement with respect to
the subject matter hereof and is the complete and exclusive statement thereof
notwithstanding any representation or statements to the contrary heretofore
made; provided, however, that nothing herein shall affect the validity of
Section 5.1 or 5.2 of the Merger Agreement. This Agreement may be modified
only by written instrument signed by each of the parties hereto.
6.9 RIGHT TO SET OFF. The Company shall have the right
to set off against or to deduct from any payments to be made to Employee
hereunder any amounts claimed by the Company to be owed to it by Employee, or
to withhold the making of any such payment based upon any such claimed
indebtedness, whether such claim or indebtedness arises hereunder or otherwise;
provided, however, that this Section 6.9 does not constitute a waiver or
limitation of any right of garnishment or any other legal remedy (other than a
right of set off or self help) available to the Company against Employee
pursuant to court order.
4
<PAGE> 69
IN WITNESS WHEREOF, Employee has set his hand and seal, and
the Company has caused this Agreement to be duly executed by its duly
authorized officers and has caused its proper corporate seal to be affixed
hereto, and the parties have caused this Agreement to be delivered, all on the
day and year first written above.
(SEAL)
------------------------------
THOMAS R. CANHAM
CIS ACQUISITION CORP.
[CORPORATE SEAL] By:
---------------------------------
Its:
--------------------------------
Attest:
--------------------------
5
<PAGE> 70
EXHIBIT A
<TABLE>
<CAPTION>
BONUS PERIOD PAYMENT DATE BONUS AMOUNT
------------ ------------ ------------
<S> <C> <C>
Calender Year 1997 February 15, 1998 An amount equal to 5% of the
Company's Pre-Tax Net Income
for the First Performance
Period (as defined in the
Merger Agreement) to the
extent such income exceeds
$7,000,000.00
Calender Year 1998 February 15, 1999 An amount equal to 5% of the
Company's Pre-Tax Net Income
for the Second Performance
Period (as defined in the
Merger Agreement) to the
extent such income exceeds
$5,000,000.00
Calender Year 1999 February 15, 2000 An amount equal to 5% of the
Company's Pre-Tax Net Income
for the Third Performance
Period (as defined in the
Merger Agreement) to the
extent such income exceeds
$5,000,000.00
</TABLE>
<PAGE> 71
EXHIBIT 6.1(B)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into this
27th day of March 1997, between and among BRIAN A. SCHUCHMAN, a resident of the
State of Illinois ("Employee"), and CIS ACQUISITION CORP., a Delaware
corporation ("Company").
WITNESETH:
WHEREAS, execution of this Agreement is contemplated by that certain
Agreement and Plan of Merger dated of date even herewith (the "Merger
Agreement"), whereby Cellular Infrastructure Supply, Inc. ("CIS") will be
merged with and into the Company, a Delaware corporation and a wholly-owned
subsidiary of World Access, Inc. ("World Access");
WHEREAS, the covenants and agreements of Employee herein are made as
an inducement to the merger of CIS into the Company; and
WHEREAS, the Company and Employee each desire to enter into this
Agreement, pursuant to which Employee will be employed by the Company on the
terms and conditions hereinafter set forth, and to make certain other
agreements;
NOW, THEREFORE, in consideration of the premises and of the promises
and agreements hereinafter set forth, the parties hereto, intending to be
legally bound, do hereby agree as follows:
SECTION 1. EMPLOYMENT. Subject to the terms hereof, the Company
hereby employs Employee, and Employee hereby accepts such employment. Employee
shall devote his full time and best efforts to rendering services on behalf of
the Company.
SECTION 2. POSITION. Employee shall serve as Executive Vice
President of the Company and, as such, Employee shall report directly to the
President of the Company. Employee also consents to serve, without additional
compensation, if elected, as a director of the Company.
SECTION 3. TERM. The employment of Employee hereunder shall
commence on the date hereof (the "Effective Date") and shall continue until the
earlier of (a) the third anniversary of the Effective Date or (b) the
occurrence of any of the following events:
(i) the death or total disability of Employee (total
disability meaning the failure of Employee to perform his normal
required services hereunder at his office for a period of three (3)
consecutive months, by reason of Employee's mental or physical
<PAGE> 72
disability as so determined by a licensed physician selected by the
Company satisfactory to Employee);
(ii) the mutual written agreement of the parties hereto to
terminate Employee's employment hereunder; or
(iii) the Company's termination of Employee's employment
hereunder, upon thirty (30) days' prior written notice to Employee,
for "good cause." For the purposes of this Agreement, "good cause"
for termination of Employee's employment shall exist (a) if Employee
is convicted of (from which no appeal may be taken), or pleads guilty
to, any act of fraud, misappropriation or embezzlement, or any felony,
(b) if, in the sole determination of the Board of Directors of the
Company, Employee has engaged in conduct or activities materially
damaging to the business of the Company (it being understood, however,
that neither conduct nor activities pursuant to Employee's exercise of
his good faith business judgment nor unintentional physical damage to
any property of the Company by Employee shall be a ground for such a
determination by the Board of Directors of the Company) or (c) if
Employee has failed without reasonable cause to devote his full time
and best efforts to the business of the Company and, after notice from
the Company of such failure, Employee at any time thereafter again so
fails.
SECTION 4. COMPENSATION AND BENEFITS.
4.1 SALARY. For the term of his employment hereunder,
Employee shall be paid a salary by the Company at the annual rate of One
Hundred Thousand Dollars ($100,000), payable bi-weekly in accordance with the
payroll payment practices from time to time adopted by the Company.
4.2 INCENTIVE COMPENSATION. In addition to salary,
Employee shall receive periodic bonus payments based on the Pre-Tax Net Income
(as defined and calculated pursuant to the Merger Agreement) of the Company
payable in accordance with Exhibit A attached hereto and incorporated herein by
this reference.
4.3 INSURANCE.
(A) LIFE AND OTHER INSURANCE. The Company shall,
at its expense, provide or arrange for and keep in effect, during the term of
Employee's employment hereunder, so long as he is insurable, such group term
life insurance, travel accident, accidental death and dismemberment insurance
and long and short term disability insurance, or their equivalents, as is
provided from time to time for executives of other wholly-owned subsidiaries of
World Access holding positions and responsibilities comparable to those of
Employee.
(B) MEDICAL INSURANCE. During the term of
Employee's employment hereunder, the Company shall, at its expense, provide or
arrange for and keep in effect, hospitalization, major medical and similar
medical and health insurance for Employee and his
2
<PAGE> 73
family, to the same extent as is provided from time to time for executives of
other wholly-owned subsidiaries of World Access holding positions and
responsibilities comparable to those of Employee.
4.4 VACATION. Employee shall be entitled to the same
number of days of paid vacation during each year of his employment hereunder as
is allowed to other executives of other wholly-owned subsidiaries of World
Access holding positions and responsibilities comparable to those of Employee.
4.5 RETIREMENT BENEFITS. During the term of his
employment hereunder, Employee shall have the same right as other executives of
other wholly-owned subsidiaries of World Access holding positions and
responsibilities comparable to those of Employee to participate in all
profit-sharing, pension and other retirement plans as are now, or as may
hereafter be, established by World Access.
4.6 OUT-OF-POCKET EXPENSES. The Company shall reimburse
Employee for all reasonable out-of-pocket expenses incurred by Employee in
connection with the performance of his duties hereunder upon presentation of
appropriate vouchers therefor.
SECTION A. MISCELLANEOUS.
5.1 BINDING EFFECT. This Agreement shall inure to the
benefit of and shall be binding upon Employee, his executor, administrator,
heirs, personal representatives and assigns, and upon the Company and its
successors and assigns; provided, however, that the obligations and duties of
Employee may not be assigned or delegated.
5.2 GOVERNING LAW. This Agreement shall be deemed to be
made in, and in all respects shall be interpreted, construed and governed by
and in accordance with, the laws of the State of Georgia, without giving effect
to principles of conflicts of laws.
5.3 INVALID PROVISIONS. The parties herein hereby agree
that the agreements, provisions and covenants contained in this Agreement are
severable and divisible, that none of such agreements, provisions or covenants
depends upon any other provision, agreement or covenant for its enforceability,
and that each such agreement, provision and covenants constitutes an
enforceable obligation between the Company and Employee. Consequently, the
parties hereto agree that neither the invalidity nor the unenforceability of
any agreement, provision or covenant of this Agreement shall affect the other
agreements, provisions or covenants hereof, and this Agreement shall remain in
full force and effect and be construed in all respects as if such invalid or
unenforceable agreement, provision or covenant were omitted.
5.4 HEADINGS. The section and paragraph headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.
3
<PAGE> 74
5.5 NOTICES. All communications provided for hereunder
shall be in writing and shall be deemed to be given when delivered in person or
deposited in the United States mail, first class, registered mail, return
receipt requested, with proper postage prepaid, and
(a) If to Employee, addressed to:
Mr. Brian A. Schuchman
16 W 127-83rd Street
Burr Ridge, Illinois 60521
(b) If to the Company or World Access, addressed
to:
[Name of addressee]
945 E. Paces Ferry Road
Suite 2240
Atlanta, Georgia 30326
Attn: Chief Financial Officer
with a copy to:
Rogers & Hardin
2700 International Tower
229 Peachtree Street
Atlanta, Georgia 30303
Attn: Steven E. Fox, Esq.
or at such other place or places or to such other person or persons as shall be
designated in writing by the parties hereto in the manner provided above for
notices.
6.6 COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original but all
of which together shall constitute one and the same instrument.
6.7 WAIVER OF BREACH. The waiver by the Company of a
breach of any provision, agreement or covenant of this Agreement by Employee
shall not operate or be construed as a waiver of any prior or subsequent breach
of the same or any other provision, agreement or covenant by Employee.
6.8 ENTIRE AGREEMENT. This Agreement is intended by the
parties hereto to be the final expression of their agreement with respect to
the subject matter hereof and is the complete and exclusive statement thereof
notwithstanding any representation or statements to the contrary heretofore
made; provided, however, that nothing herein shall affect the validity of
Section 5.1 or 5.2 of the Merger Agreement. This Agreement may be modified
only by written instrument signed by each of the parties hereto.
4
<PAGE> 75
IN WITNESS WHEREOF, Employee has set his hand and seal, and
the Company has caused this Agreement to be duly executed by its duly
authorized officers and has caused its proper corporate seal to be affixed
hereto, and the parties have caused this Agreement to be delivered, all on the
day and year first written above.
(SEAL)
------------------------------
BRIAN A. SCHUCHMAN
CIS ACQUISITION CORP.
[CORPORATE SEAL] By:
--------------------------------
Its:
-------------------------------
Attest:
----------------------
5
<PAGE> 76
EXHIBIT A
<TABLE>
<CAPTION>
BONUS PERIOD PAYMENT DATE BONUS AMOUNT
------------ ------------ ------------
<S> <C> <C>
Calender Year 1997 February 15, 1998 An amount equal to 5% of the
Company's Pre-Tax Net Income
for the First Performance
Period (as defined in the
Merger Agreement) to the
extent such income exceeds
$7,000,000.00
Calender Year 1998 February 15, 1999 An amount equal to 5% of the
Company's Pre-Tax Net Income
for the Second Performance
Period (as defined in the
Merger Agreement) to the
extent such income exceeds
$5,000,000.00
Calender Year 1999 February 15, 2000 An amount equal to 5% of the
Company's Pre-Tax Net Income
for the Third Performance
Period (as defined in the
Merger Agreement) to the
extent such income exceeds
$5,000,000.00
</TABLE>
<PAGE> 77
EXHIBIT 6.1(c)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into this
27th day of March 1997, between and among JOHN T. SIMON, a resident of the
State of New Jersey ("Employee"), and CIS ACQUISITION CORP., a Delaware
corporation ("Company").
WITNESETH:
WHEREAS, execution of this Agreement is contemplated by that certain
Agreement and Plan of Merger dated of date even herewith (the "Merger
Agreement"), whereby Cellular Infrastructure Supply, Inc. ("CIS") will be
merged with and into the Company, a Delaware corporation and a wholly-owned
subsidiary of World Access, Inc. ("World Access");
WHEREAS, the covenants and agreements of Employee herein are made as
an inducement to the merger of CIS into the Company; and
WHEREAS, the Company and Employee each desire to enter into this
Agreement, pursuant to which Employee will be employed by the Company on the
terms and conditions hereinafter set forth, and to make certain other
agreements;
NOW, THEREFORE, in consideration of the premises and of the promises
and agreements hereinafter set forth, the parties hereto, intending to be
legally bound, do hereby agree as follows:
SECTION 1. EMPLOYMENT. Subject to the terms hereof, the Company
hereby employs Employee, and Employee hereby accepts such employment. Employee
shall devote his full time and best efforts to rendering services on behalf of
the Company.
SECTION 2. POSITION. Employee shall serve as Executive Vice
President of the Company and, as such, Employee shall report directly to the
President of the Company. Employee also consents to serve, without additional
compensation, if elected, as a director of the Company.
SECTION 3. TERM. The employment of Employee hereunder shall
commence on the date hereof (the "Effective Date") and shall continue until the
earlier of (a) the third anniversary of the Effective Date or (b) the
occurrence of any of the following events:
(i) the death or total disability of Employee (total
disability meaning the failure of Employee to perform his normal
required services hereunder at his office for a period of three (3)
consecutive months, by reason of Employee's mental or physical
<PAGE> 78
disability as so determined by a licensed physician selected by the
Company satisfactory to Employee);
(ii) the mutual written agreement of the parties hereto to
terminate Employee's employment hereunder; or
(iii) the Company's termination of Employee's employment
hereunder, upon thirty (30) days' prior written notice to Employee,
for "good cause." For the purposes of this Agreement, "good cause"
for termination of Employee's employment shall exist (a) if Employee
is convicted of (from which no appeal may be taken), or pleads guilty
to, any act of fraud, misappropriation or embezzlement, or any felony,
(b) if, in the sole determination of the Board of Directors of the
Company, Employee has engaged in conduct or activities materially
damaging to the business of the Company (it being understood, however,
that neither conduct nor activities pursuant to Employee's exercise of
his good faith business judgment nor unintentional physical damage to
any property of the Company by Employee shall be a ground for such a
determination by the Board of Directors of the Company) or (c) if
Employee has failed without reasonable cause to devote his full time
and best efforts to the business of the Company and, after notice from
the Company of such failure, Employee at any time thereafter again so
fails.
SECTION 4. COMPENSATION AND BENEFITS.
4.1 SALARY. For the term of his employment hereunder,
Employee shall be paid a salary by the Company at the annual rate of One
Hundred Thousand Dollars ($100,000.00), payable bi-weekly in accordance with
the payroll payment practices from time to time adopted by the Company.
4.2 INCENTIVE COMPENSATION. In addition to salary,
Employee shall receive periodic bonus payments based on the Pre-Tax Net Income
(as defined and calculated pursuant to the Merger Agreement) of the Company
payable in accordance with Exhibit A attached hereto and incorporated herein by
this reference.
4.3 INSURANCE.
(A) LIFE AND OTHER INSURANCE. The Company shall,
at its expense, provide or arrange for and keep in effect, during the term of
Employee's employment hereunder, so long as he is insurable, such group term
life insurance, travel accident, accidental death and dismemberment insurance
and long and short term disability insurance, or their equivalents, as is
provided from time to time for executives of other wholly-owned subsidiaries of
World Access holding positions and responsibilities comparable to those of
Employee.
(B) MEDICAL INSURANCE. During the term of
Employee's employment hereunder, the Company shall, at its expense, provide or
arrange for and keep in effect, hospitalization, major medical and similar
medical and health insurance for Employee and his
2
<PAGE> 79
family, to the same extent as is provided from time to time for executives of
other wholly-owned subsidiaries of World Access holding positions and
responsibilities comparable to those of Employee.
4.4 VACATION. Employee shall be entitled to the same
number of days of paid vacation during each year of his employment hereunder as
is allowed to other executives of other wholly-owned subsidiaries of World
Access holding positions and responsibilities comparable to those of Employee.
4.5 RETIREMENT BENEFITS. During the term of his
employment hereunder, Employee shall have the same right as other executives of
other wholly-owned subsidiaries of World Access holding positions and
responsibilities comparable to those of Employee to participate in all
profit-sharing, pension and other retirement plans as are now, or as may
hereafter be, established by World Access.
4.6 OUT-OF-POCKET EXPENSES. The Company shall reimburse
Employee for all reasonable out-of-pocket expenses incurred by Employee in
connection with the performance of his duties hereunder upon presentation of
appropriate vouchers therefor.
SECTION A. MISCELLANEOUS.
5.1 BINDING EFFECT. This Agreement shall inure to the
benefit of and shall be binding upon Employee, his executor, administrator,
heirs, personal representatives and assigns, and upon the Company and its
successors and assigns; provided, however, that the obligations and duties of
Employee may not be assigned or delegated.
5.2 GOVERNING LAW. This Agreement shall be deemed to be
made in, and in all respects shall be interpreted, construed and governed by
and in accordance with, the laws of the State of Georgia, without giving effect
to principles of conflicts of laws.
5.3 INVALID PROVISIONS. The parties herein hereby agree
that the agreements, provisions and covenants contained in this Agreement are
severable and divisible, that none of such agreements, provisions or covenants
depends upon any other provision, agreement or covenant for its enforceability,
and that each such agreement, provision and covenants constitutes an
enforceable obligation between the Company and Employee. Consequently, the
parties hereto agree that neither the invalidity nor the unenforceability of
any agreement, provision or covenant of this Agreement shall affect the other
agreements, provisions or covenants hereof, and this Agreement shall remain in
full force and effect and be construed in all respects as if such invalid or
unenforceable agreement, provision or covenant were omitted.
5.4 HEADINGS. The section and paragraph headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.
3
<PAGE> 80
5.5 NOTICES. All communications provided for hereunder
shall be in writing and shall be deemed to be given when delivered in person or
deposited in the United States mail, first class, registered mail, return
receipt requested, with proper postage prepaid, and
(a) If to Employee, addressed to:
Mr. John T. Simon
27-3 Ironia Road
Flanders, New Jersey 07836
(b) If to the Company or World Access, addressed
to:
[Name of addressee]
945 E. Paces Ferry Road
Suite 2240
Atlanta, Georgia 30326
Attn: Chief Financial Officer
with a copy to:
Rogers & Hardin
2700 International Tower
229 Peachtree Street
Atlanta, Georgia 30303
Attn: Steven E. Fox, Esq.
or at such other place or places or to such other person or persons as shall be
designated in writing by the parties hereto in the manner provided above for
notices.
6.6 COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original but all
of which together shall constitute one and the same instrument.
6.7 WAIVER OF BREACH. The waiver by the Company of a
breach of any provision, agreement or covenant of this Agreement by Employee
shall not operate or be construed as a waiver of any prior or subsequent breach
of the same or any other provision, agreement or covenant by Employee.
6.8 ENTIRE AGREEMENT. This Agreement is intended by the
parties hereto to be the final expression of their agreement with respect to
the subject matter hereof and is the complete and exclusive statement thereof
notwithstanding any representation or statements to the contrary heretofore
made; provided, however, that nothing herein shall affect the validity of
Section 5.1 or 5.2 of the Merger Agreement. This Agreement may be modified
only by written instrument signed by each of the parties hereto.
4
<PAGE> 81
IN WITNESS WHEREOF, Employee has set his hand and seal, and
the Company has caused this Agreement to be duly executed by its duly
authorized officers and has caused its proper corporate seal to be affixed
hereto, and the parties have caused this Agreement to be delivered, all on the
day and year first written above.
(SEAL)
------------------------------
JOHN T. SIMON
CIS ACQUISITION CORP.
[CORPORATE SEAL] By:
---------------------------------
Its:
--------------------------------
Attest:
----------------------
5
<PAGE> 82
EXHIBIT A
<TABLE>
<CAPTION>
BONUS PERIOD PAYMENT DATE BONUS AMOUNT
------------ ------------ ------------
<S> <C> <C>
Calender Year 1997 February 15, 1998 An amount equal to 5% of the
Company's Pre-Tax Net Income
for the First Performance
Period (as defined in the
Merger Agreement) to the
extent such income exceeds
$7,000,000.00
Calender Year 1998 February 15, 1999 An amount equal to 5% of the
Company's Pre-Tax Net Income
for the Second Performance
Period (as defined in the
Merger Agreement) to the
extent such income exceeds
$5,000,000.00
Calender Year 1999 February 15, 2000 An amount equal to 5% of the
Company's Pre-Tax Net Income
for the Third Performance
Period (as defined in the
Merger Agreement) to the
extent such income exceeds
$5,000,000.00
</TABLE>
<PAGE> 83
EXHIBIT 6.3
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and entered
into as of the 27th day of March 1997, by and among WORLD ACCESS, INC., a
Delaware corporation (the "Company"), and THOMAS R. CANHAM, an individual
resident of the State of Illinois, BRIAN A. SCHUCHMAN, an individual resident
of the State of Illinois, and JOHN T. SIMON, an individual resident of the
State of New Jersey, (collectively, the "Sellers").
IN CONSIDERATION of the mutual promises and covenants set forth
herein, and intending to be legally bound, the parties hereto hereby agree as
follows:
1. RESTRICTIONS ON TRANSFERABILITY OF SECURITIES; REGISTRATION RIGHTS
1.1 CERTAIN DEFINITIONS. Any capitalized terms used herein
without definition shall have the meaning ascribed to such terms in the
Agreement and Plan of Merger dated as of a date even herewith, to which the
Company and the Sellers are each a party (the "Merger Agreement"). In
addition, the following terms shall have the meanings set forth below:
(a) "Holder" shall mean any Seller who holds Registrable
Securities and any holder of Registrable Securities to whom the rights
conferred by this Agreement have been transferred in compliance with Section
1.2 hereof.
(b) "Other Stockholders" shall mean persons who, by
virtue of agreements with the Company other than this Agreement, are entitled
to include their securities in certain registrations hereunder.
(c) "Registrable Securities" shall mean shares of World
Access Common Stock issued to the Sellers pursuant to Section 2.1(a) of the
Merger Agreement, provided that Registrable Securities shall not include (i)
any shares of World Access Common Stock held in escrow pursuant to Section
2.1(b) of the Merger Agreement or (ii) any shares of World Access Common Stock
which have previously been registered or which have been sold to the public or
which have been sold in a private transaction in which the transferor's rights
under this Agreement are not assigned.
(d) The terms "register," "registered" and "registration"
shall refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act of 1933, as amended (the
"Securities Act"), and applicable rules and regulations thereunder and the
declaration or ordering of the effectiveness of such registration statement.
<PAGE> 84
(e) "Registration Expenses" shall mean all expenses
incurred in effecting any registration pursuant to this
Agreement, including, without limitation, all registration,
qualification, and filing fees, printing expenses, escrow fees, fees
and disbursements of counsel for the Company, blue sky fees and
expenses, and expenses of any regular or special audits incident to or
required by any such registration, but shall not include (i) Selling
Expenses, (ii) fees and disbursements of counsel for the Holders,
(iii) the compensation of regular employees of the Company, which
shall be paid in any event by the Company, and (iv) blue sky fees and
expenses incurred in connection with the registration or qualification
of any Registrable Securities in any state, province or other
jurisdiction in a registration pursuant to Section 1.3 hereof to the
extent that the Company shall otherwise be making no offers or sales
in such state, province or other jurisdiction in connection with such
registration.
(f) "Restricted Securities" shall mean any Registrable
Securities required to bear the legend set forth in Section 1.2(c)
hereof.
(g) "Rule 144" shall mean Rule 144 as promulgated by the
SEC under the Securities Act, as such Rule may be amended from time
to time, or any similar successor rule that may be promulgated by the
SEC.
(h) "Rule 145" shall mean Rule 145 as promulgated by the
SEC under the Securities Act, as such Rule may be amended from time
to time, or any similar successor rule that may be promulgated by the
SEC.
(i) "Selling Expenses" shall mean all underwriting
discounts, selling commissions and stock transfer taxes applicable to
the sale of Registrable Securities.
1.2 RESTRICTIONS ON TRANSFER.
(a) Each Holder agrees not to make any disposition of all
or any portion of the Registrable Securities unless and until (i) there is then
in effect a registration statement under the Securities Act covering such
proposed disposition and such disposition is made in accordance with such
registration statement, or (ii) (A) such Holder shall have notified the Company
of the proposed disposition and shall have furnished the Company with a
detailed statement of the circumstances surrounding the proposed disposition
and (B) if reasonably requested by the Company, such Holder shall have
furnished the Company with an opinion of counsel, reasonably satisfactory to
the Company, that such disposition will not require registration of such shares
under the Securities Act, it being understood that the Company will not require
opinions of counsel for transactions made pursuant to Rule 144 except in
unusual circumstances.
(b) Notwithstanding the provisions of subparagraphs (i)
and (ii) of paragraph (a) above, no such registration statement or opinion of
counsel shall be necessary for a transfer by a Holder which is (A) a
partnership to its partners in accordance with their partnership interests, (B)
a limited liability company to its members in accordance with their member
interests or (C) to the Holder's family member or a trust for the benefit of
an individual Holder
2
<PAGE> 85
or one or more of his family members, provided the transferee will be subject to
the terms of this Section 1.2 to the same extent as if he were an original
Holder hereunder.
(c) Each certificate representing Registrable Securities
shall (unless otherwise permitted by the provisions of this Agreement) be
stamped or otherwise imprinted with a legend substantially similar to the
following (in addition to any legend required under applicable state securities
laws):
THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD OR
TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER SUCH ACT OR UNLESS THE COMPANY HAS RECEIVED AN
OPINION OF COUNSEL OR OTHER EVIDENCE, SATISFACTORY TO THE COMPANY AND
ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.
(d) The Company shall be obligated to promptly reissue
unlegended certificates at the request of any Holder thereof if the Holder
shall have obtained an opinion of counsel (which counsel may be counsel to the
Company) reasonably acceptable to the Company to the effect that the securities
proposed to be disposed of may lawfully be so disposed of in compliance with
the Securities Act without registration, qualification or legend.
(e) Any legend endorsed on an instrument pursuant to
applicable state securities laws and the stop- transfer instructions with
respect to such securities shall be removed upon receipt by the Company of an
order of the appropriate blue sky authority authorizing such removal or if the
Holder shall request such removal and shall have obtained and delivered to the
Company an opinion of counsel reasonably acceptable to the Company to the
effect that such legend and/or stop-transfer instructions are no longer
required pursuant to applicable state securities laws.
1.3 COMPANY REGISTRATION.
(a) Right to Piggyback. If at any time prior to the one
year anniversary of the date hereof the Company shall determine to register any
of its securities either for its own account or the account of a security
holder or holders exercising their respective demand registration rights, other
than a registration relating solely to employee benefit plans, or a
registration relating solely to a Rule 145 transaction, or a registration on
any registration form that does not permit secondary sales, the Company will:
(i) promptly give to each Holder written notice
thereof, which notice briefly describes the Holders' rights under this Section
1.3 (including notice deadlines); and
(ii) use its best efforts to include in such
registration (and any related filing or qualification under applicable blue sky
laws), except as set forth in Section 1.3(b)
3
<PAGE> 86
below, and in any underwriting involved therein, all the Registrable Securities
specified in a written request or requests, made by any Holder and received by
the Company within ten (10) days after the written notice from the Company
described in clause (i) above is mailed or delivered by the Company, provided
that such Holders shall have requested for inclusion in such registration at
least twenty-five (25%) of the aggregate number of the Registrable Securities
which have been issued to the Holder prior to the date of such written request.
Such written request may specify all or a part of a Holder's Registrable
Securities.
(b) Underwriting. If the registration of which the
Company gives notice is for a registered public offering involving an
underwriting, the Company shall so advise the Holders as a part of the written
notice given pursuant to Section 1.3(a)(i). In such event, the right of any
Holder to registration pursuant to this Section 1.3 shall be conditioned upon
such Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting to the extent provided
herein. All Holders proposing to distribute their securities through such
underwriting shall (together with the Company and the other holders of
securities of the Company with registration rights to participate therein
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the representative of the
underwriter or underwriters selected by the Company.
Notwithstanding any other provision of this Section 1.3, if
the representative of the underwriters advises the Company in writing that
marketing factors require a limitation on the number of shares to be
underwritten, the representative may (subject to the limitations set forth
below) exclude all Registrable Securities from, or limit the number of
Registrable Securities to be included in, the registration and underwriting.
The Company shall so advise all Holders of securities requesting registration,
and the number of shares of securities that are entitled to be included in the
registration and underwriting shall be allocated first to the Company for
securities being sold for its own account and thereafter as set forth in
Section 1.10. If any person does not agree to the terms of any such
underwriting, he shall be excluded therefrom by written notice from the Company
or the underwriter. Any Registrable Securities or other securities excluded or
withdrawn from such underwriting shall be withdrawn from such registration.
If shares are so withdrawn from the registration and if the
number of shares of Registrable Securities to be included in such registration
was previously reduced as a result of marketing factors, the Company shall then
offer to all persons who have retained the right to include securities in the
registration the right to include additional securities in the registration in
an aggregate amount equal to the number of shares so withdrawn, with such
shares to be allocated among the persons requesting additional inclusion in
accordance with Section 1.10. hereof.
1.4 EXPENSES OF REGISTRATION. All Registration Expenses incurred
in connection with any registration, qualification or compliance pursuant to
Section 1.3 hereof shall be borne by the Company. All Selling Expenses
relating to securities so registered shall be borne by the
4
<PAGE> 87
holders of such securities pro rata on the basis of the number of shares of
securities so registered on their behalf.
1.5 REGISTRATION PROCEDURES. In the case of each registration
effected by the Company pursuant to Section 1.3 hereof, the Company will keep
each Holder advised in writing as to the initiation of each registration and as
to the completion thereof. At its expense, the Company will use its best
efforts to:
(a) keep such registration effective for a period of one
hundred twenty (120) days or until the Holder or Holders have completed the
distribution described in the registration statement relating thereto,
whichever first occurs;
(b) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply with
the provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement;
(c) furnish such number of prospectuses and other
documents incident thereto, including any amendment of or supplement to the
prospectus, as a Holder from time to time may reasonably request;
(d) notify each Holder of Registrable Securities covered
by such registration statement at any time when a prospectus relating thereto
is required to be delivered under the Securities Act of the happening of any
event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or incomplete in the light of the
circumstances then existing, and at the request of any such Holder, prepare and
furnish to such Holder a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such Registrable Securities, such prospectus
shall not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading or incomplete in the light of the circumstances then
existing; provided, however, the Company shall not be obligated to prepare and
furnish any such prospectus supplements or amendments relating to any material
nonpublic information at any such time as the Board of Directors of the Company
has determined that, for good business reasons, the disclosure of such material
nonpublic information at that time is contrary to the best interests of the
Company in the circumstances and is not otherwise required under applicable law
(including applicable securities laws);
(e) cause all such Registrable Securities registered pursuant
hereunder to be listed on each securities exchange and/or included in any
national quotation system on which similar securities issued by the Company are
then listed or included;
5
<PAGE> 88
(f) provide a transfer agent and registrar for all Registrable
Securities registered pursuant to such registration statement and a CUSIP
number for all such Registrable Securities, in each case not later than the
effective date of such registration; and
(g) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC, and make available to its security holders,
as soon as reasonably practicable, an earnings statement covering the period of
at least twelve (12) months, but not more than eighteen months, beginning with
the first month after the effective date of the registration statement, which
earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act.
1.6 INDEMNIFICATION.
(a) The Company will indemnify each Holder, each of its officers,
directors and partners, legal counsel, and accountants and each person
controlling such Holder within the meaning of Section 15 of the Securities Act,
with respect to which registration, qualification, or compliance has been
effected pursuant to this Section 1, and each underwriter, if any, and each
person who controls within the meaning of Section 15 of the Securities Act any
underwriter, against all expenses, claims, losses, damages, and liabilities (or
actions, proceedings, or settlements in respect thereof) arising out of or
based on any untrue statement (or alleged untrue statement) of a material fact
contained in any prospectus, offering circular, or other document (including
any related registration statement, notification, or the like) incident to any
such registration, qualification, or compliance, or based on any omission (or
alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, or any
violation by the Company of the Securities Act or any rule or regulation
thereunder applicable to the Company or relating to action or inaction required
of the Company in connection with any such registration, qualification, or
compliance, and will reimburse each such Holder, each of its officers,
directors, partners, legal counsel, and accountants and each person controlling
such Holder, each such underwriter, and each person who controls any such
underwriter, for any legal and any other expenses reasonably incurred in
connection with investigating and defending or settling any such claim, loss,
damage, liability, or action, provided that the Company will not be liable in
any such case to the extent that any such claim, loss, damage, liability, or
expense arises out of or is based on any untrue statement or omission based
upon written information furnished to the Company by such Holder or underwriter
and stated to be specifically for use therein. It is agreed that the indemnity
agreement contained in this Section 1.6(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld).
(b) Each Holder will, if Registrable Securities held by him are
included in the securities as to which such registration, qualification, or
compliance is being effected, indemnify the Company, each of its directors,
officers, partners, legal counsel, and accountants and each underwriter, if
any, of the Company's securities covered by such a registration statement, each
person who controls the Company or such underwriter within the meaning of
Section 15 of the Securities Act, each other such Holder and Other Stockholder,
and each of their officers, direc-
6
<PAGE> 89
tors, and partners, and each person controlling such Holder or Other
Stockholder, against all claims, losses, damages and liabilities (or actions
in respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular, or other document, or any omission
(or alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse the Company and such Holders, Other Stockholders, directors,
officers, partners, legal counsel, and accountants, persons, underwriters, or
control persons for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability, or action,, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Company by such Holder and stated to be specifically for use
therein; provided, however, that the obligations of such Holder hereunder shall
not apply to amounts paid in settlement of any such claims, losses, damages, or
liabilities (or actions in respect thereof) if such settlement is effected
without the consent of such Holder (which consent shall not be unreasonably
withheld) and (ii) that in no event shall any indemnity under this Section 1.6
exceed the gross proceeds from the offering received by such Holder.
(c) Each party entitled to indemnification under this
Section 1.6 (the "Indemnified Party") shall give notice to the party required
to provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may
be sought, and shall permit the Indemnifying Party to assume the defense of
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not unreasonably be withheld), and the Indemnified Party
may participate in such defense at such party's expense, and provided further
that the failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its obligations under this Section
1, to the extent such failure is not prejudicial. No Indemnifying Party, in
the defense of any such claim or litigation, shall, except with the consent of
each Indemnified Party, consent to entry of any judgment or enter into any
settlement that does not include as an unconditional term thereof the giving by
the claimant or plaintiff of a release to such Indemnified Party from all
liability in respect to such claim or litigation. Each Indemnified Party shall
furnish such information regarding itself or the claim in question as an
Indemnifying Party may reasonably request in writing and as shall be reasonably
required in connection with defense of such claim and litigation resulting
therefrom.
(d) If the indemnification provided for in this Section
1.6 is held by a court of competent jurisdiction to be unavailable to an
Indemnified Party with respect to any loss, liability, claim, damage, or
expense referred to therein, then the Indemnifying Party, in lieu of
indemnifying such Indemnified Party hereunder, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such loss, liability,
claim, damage, or expense in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party on the one
7
<PAGE> 90
hand and of the Indemnified Party on the other in connection with the conduct,
statements or omissions that resulted in such loss, liability, claim, damage,
or expense as well as any other relevant equitable considerations. The
relative fault of the Indemnifying Party and of the Indemnified Party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the Indemnifying Party or by the Indemnified
Party and the parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement or omission.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into by the Indemnifying Party and the Indemnified Party in
connection with the underwritten public offering are in conflict with the
foregoing provisions, the provisions in the underwriting agreement shall
control.
1.7 INFORMATION BY HOLDER. Each Holder of Registrable Securities
shall furnish to the Company such information regarding such Holder and the
distribution proposed by such Holder as the Company may reasonably request in
writing and as shall be reasonably required in connection with any
registration, qualification, or compliance referred to in this Section 1.
1.8 RULE 144 REPORTING. With a view to making available the
benefits of certain rules and regulations of the SEC that may permit the sale
of the Restricted Securities to the public without registration, the Company
agrees to use its best efforts to:
(a) make and keep adequate public information regarding the
Company available as those terms are understood and defined in Rule 144 under
the Securities Act;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange
Act; and
(c) so long as a Holder owns any Restricted Securities, furnish to
the Holder forthwith upon written request a written statement by the Company as
to its compliance with the reporting requirements of Rule 144 and of the
Securities Act and the Exchange Act, a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents so filed
as a Holder may reasonably request in availing itself of any rule or regulation
of the SEC allowing a Holder to sell any such securities without registration.
1.9 DELAY OF REGISTRATION. No Holder shall have any right to take
any action to restrain, enjoin, or otherwise delay any registration as the
result of any controversy that might arise with respect to the interpretation
or implementation of this Section 1.
1.10 ALLOCATION OF REGISTRATION OPPORTUNITIES. In any circumstance
in which all of the Registrable Securities and other shares of the Company with
registration rights (the "Other
8
<PAGE> 91
Shares") requested to be included in a registration on behalf of the Holders
or Other Stockholders cannot be so included as a result of limitations of the
aggregate number of shares of Registrable Securities and Other Shares that may
be so included, the number of shares of Registrable Securities and Other Shares
that may be so included shall be allocated among the Holders and Other
Stockholders requesting inclusion of shares pro rata on the basis of the number
of shares of Registrable Securities and Other Shares held by such Holders and
Other Stockholders; provided, however, that such allocation shall not operate to
reduce the aggregate number of Registrable Securities and Other Shares to be
included in such registration, if any Holder or Other Stockholder does not
request inclusion of the maximum number of shares of Registrable Securities and
Other Shares allocated to him pursuant to the above-described procedure, the
remaining portion of his allocation shall be reallocated among those requesting
Holders and Other Stockholders whose allocations did not satisfy their requests
pro rata on the basis of the number of shares of Registrable Securities and
Other Shares which would be held by such Holders and Other Stockholders,
assuming conversion, and this procedure shall be repeated until all of the
shares of Registrable Securities and Other Shares which may be included in the
registration on behalf of the Holders and Other Stockholders have been so
allocated.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
SELLERS
2.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to the Sellers as follows:
(a) The execution, delivery and performance of this
Agreement by the Company have been duly authorized by all requisite corporate
action and will not violate any provision of law, any order of any court or
other agency of government, the Articles of Incorporation or Bylaws of the
Company, or any provision of any material indenture, agreement or other
instrument to which it or any of its properties or assets is bound, or conflict
with, result in a breach of or constitute (with due notice or lapse of time or
both) a default under any such material indenture, agreement or other
instrument, or result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever upon any of the properties or assets of
the Company.
(b) This Agreement has been duly executed and delivered
by the Company and constitutes the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, subject
to applicable bankruptcy, insolvency and other similar laws affecting the
enforceability of creditors' rights generally, general equitable principles,
the discretion of courts in granting equitable remedies and public policy
considerations.
9
<PAGE> 92
2.2 REPRESENTATIONS AND WARRANTIES OF THE SELLERS. The Sellers
(jointly and severally) represent and warrant to the Company as follows:
(a) The execution, delivery and performance of this
Agreement by the Sellers will not violate any provision of law, any order of
any court or any agency or government, or any provision of any material
indenture or agreement or other instrument to which they or any of their
respective properties or assets is bound, or conflict with, result in a breach
of or constitute (with due notice or lapse of time or both) a default under any
such material indenture, agreement or other instrument, or result in the
creation or imposition of any lien, charge, or encumbrance of any nature
whatsoever upon any of the properties or assets of the Sellers.
(b) This Agreement has been duly executed and delivered
by the Sellers and constitutes the legal, valid and binding obligation of the
Sellers, enforceable against the Sellers in accordance with its terms, subject
to applicable bankruptcy, insolvency and other similar laws affecting the
enforceability of creditors' rights generally, general equitable principles,
the discretion of courts in granting equitable remedies and public policy
considerations.
3. MISCELLANEOUS
3.1 GOVERNING LAW. This Agreement shall be governed in all
respects by the laws of the State of Georgia, as if entered into by and between
Georgia residents exclusively for performance entirely within Georgia.
3.2 SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors and administrators of
the parties hereto.
3.3 ENTIRE AGREEMENT; AMENDMENT; WAIVER. This Agreement
constitutes the full and entire understanding and agreement between the parties
with regard to the subject hereof and thereof. Neither this Agreement nor any
term hereof may be amended, waived, discharged or terminated, except by a
written instrument signed by the Company and the Holders of at least fifty-one
percent (51%) of the Registrable Securities and any such amendment, waiver,
discharge or termination shall be binding on all the Holders, but in no event
shall the obligation of any Holder hereunder be materially increased, except
upon the written consent of such Holder.
3.4 NOTICES, ETC. All notices and other communications required
or permitted hereunder shall be in writing and shall be mailed by United States
first-class mail, postage prepaid, or delivered personally by hand or
nationally recognized courier addressed (a) if to a Holder, as indicated in the
stock records of the Company or at such other address as such Holder shall have
furnished to the Company in writing, or (b) if to the Company, at 945 E. Paces
Ferry Road, Suite 2240, Atlanta, Georgia 30326, or at such other address as the
Company shall have furnished to each Holder in writing, together with a copy to
Rogers & Hardin, 2700 International Tower, 229 Peachtree Street, Atlanta,
Georgia 30303, Attn: Steven E. Fox, Esq.
10
<PAGE> 93
All such notices and other written communications shall be effective on the
date of mailing or delivery.
3.5 DELAYS OR OMISSIONS. No delay or omission to exercise any
right, power or remedy accruing to any Holder, upon any breach or default of
the Company under this Agreement shall impair any such right, power or remedy
of such Holder nor shall it be construed to be a waiver of any such breach or
default, or an acquiescence therein, or of or in any similar breach or default
thereafter occurring; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default therefore or thereafter
occurring. Any waiver, permit, consent or approval of any kind or character on
the part of any Holder of any breach or default under this Agreement or any
waiver on the part of any Holder of any provisions or conditions of this
Agreement must be made in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement or by law or otherwise afforded to any Holder, shall be cumulative
and not alternative.
3.6 RIGHTS; SEVERABILITY. Unless otherwise expressly provided
herein, a Holder's rights hereunder are several rights, not rights jointly held
with any of the other Holders. In case any provision of the Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
3.7 INFORMATION CONFIDENTIAL. Each Holder acknowledges that the
information received by them pursuant hereto may be confidential and for its
use only, and it will not use such confidential information in violation of the
Exchange Act or reproduce, disclose or disseminate such information to any
other person (other than its employees or agents having a need to know the
contents of such information, and its attorneys), except in connection with the
exercise of rights under this Agreement, unless the Company has made such
information available to the public generally or such Holder is required to
disclose such information by a governmental body.
3.8 TITLES AND SUBTITLES. The titles of the paragraphs and
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
3.9 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
3.10 JURISDICTION. Any action, suit or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby may be
brought against any of the parties in the United States District Court for the
Northern District of Georgia, or any state court sitting in the City of
Atlanta, Georgia, and each of the parties hereby consents to the exclusive
jurisdiction of such courts (and of the appropriate appellate courts) in any
such suit, action or proceeding and waives any objection to venue laid therein.
Process in any such suit, action or proceeding may be served
11
<PAGE> 94
on any party anywhere in the world, whether within or without the State of
Georgia, without limiting the foregoing, each of the parties hereto agrees that
service of process upon such party at the address referred to in Section 3.4,
together with written notice of such service to such party, shall be deemed
effective service of process upon such party.
12
<PAGE> 95
IN WITNESS WHEREOF, the parties hereto have duly executed and sealed
this Agreement or have caused this Agreement to be duly executed under seal on
its behalf by an officer or representative thereto duly authorized, all as of
the date first above written.
-----------------------------------
THOMAS R. CANHAM
-----------------------------------
BRIAN A. SCHUCHMAN
-----------------------------------
JOHN T. SIMON
WORLD ACCESS, INC.
By:
--------------------------------
Its:
----------------------------
Attest:
----------------------------
Its:
----------------------------
[CORPORATE SEAL]
13
<PAGE> 96
EXHIBIT 6.5
TAX REPORTING AGREEMENT
THIS TAX REPORTING AGREEMENT (the "Agreement"), dated as of March 27,
1997, is made by and among CELLULAR INFRASTRUCTURE SUPPLY, INC., a Nevada
corporation ("CIS"), THOMAS R. CANHAM, an individual resident of the State of
Illinois, BRIAN A. SCHUCHMAN, an individual resident of the State of Illinois,
and JOHN T. SIMON, an individual resident of the State of New Jersey
(collectively, the "Stockholders"), WORLD ACCESS, INC., a Delaware corporation
("World Access"), and CIS ACQUISITION CORP., a Delaware corporation ("Merger
Sub").
WITNESSETH:
WHEREAS, the parties hereto are parties to that certain Agreement and
Plan of Merger, dated as of March 27, 1997 (the "Merger Agreement"), pursuant
to which CIS has been merged with and into Merger Sub (the "Merger");
WHEREAS, CIS, prior to the Merger, was an "S corporation" under
Subchapter S of the Internal Revenue Code of 1986, as amended (the "Code"), and
the equivalent provisions of the applicable state income tax statutes;
WHEREAS, the Merger will be treated as a tax-free reorganization for
federal and state income tax purposes; and
WHEREAS, pursuant to the terms of the Merger Agreement and as a
condition precedent to the obligations of the parties under the Merger
Agreement, the parties hereto have reached certain agreements concerning the
filing of the CIS income tax returns and the reporting of the Merger by the
parties for federal and state income tax purposes as set forth in detail
herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements set forth herein, the parties hereto agree as follows:
1. DEFINITIONS.
(a) Capitalized terms used but not otherwise defined
herein shall have the meanings ascribed to such terms in the Merger Agreement.
(b) "1996 Tax Year" means the taxable year of CIS
beginning January 1, 1996 and ending on (and including) December 31, 1996 (the
"Effective Time").
<PAGE> 97
2. FILING OF INCOME TAX RETURNS OF THE CIS; TAX AND OTHER
MATTERS.
(a) CIS has filed its federal income tax return and all
applicable state income tax returns for the taxable year ended December 31,
1995. Subject to the procedures required by this Agreement, the Stockholders
shall be responsible for the timely preparation and filing of the federal
income tax return (including any amended return) of CIS for its 1996 Tax Year
and for the filing of the state income tax return (including any amended
return) of CIS for the 1996 Tax Year in each state in which it is required to
file a return (collectively, the "S Corporation Returns"). The Stockholders
shall be solely responsible for paying all taxes (including any interest and
penalties) imposed with respect to the income reported on the S Corporation
Returns. The S Corporation Returns shall be prepared by the accounting firm
previously employed by CIS for the preparation of their federal and state
income tax returns (the "CIS Accounting Firm") and reviewed by the chief
financial officer of Merger Sub, and shall be prepared in a manner consistent
with Paragraph 3 of this Agreement. All fees and expenses of the CIS
Accounting Firm attributable to the preparation of the S Corporation Returns
for the 1996 Tax Year shall be paid by the Stockholders. CIS will file the S
Corporation Returns in a manner consistent with its election to be treated as
an S corporation for federal and state income tax purposes. The Stockholders
shall take no position on such returns that would adversely affect World Access
or Merger Sub without the prior written consent of World Access.
(b) Subject to the specific requirements of this
Agreement concerning tax reporting and other procedures, the Stockholders shall
at their own expense have the sole right and authority to initiate, deal with,
handle, and/or resolve any audit, determination request, controversy, or
administrative or judicial proceeding with any tax authority involving any
state, federal or local tax issue, liability, return (including amended return)
or claim for refund (collectively, "tax proceedings") pertaining to CIS for any
tax period of CIS ending on or before the Effective Time with respect to which
the Stockholders have responsibility for tax payments under this Agreement or
the Merger Agreement. The Stockholders shall promptly inform World Access of
the commencement of tax proceedings and any issues considered therein and shall
allow World Access and its counsel an opportunity to participate in such tax
proceedings at the expense of World Access. World Access shall provide, and
shall cause Merger Sub to provide, such cooperation, information and assistance
(including the execution and filing of such amended returns, determination
requests, claims for refund, protests, petitions or pleadings) as the
Stockholders shall reasonably request with respect to any such tax proceeding.
The Stockholders shall not settle any tax proceeding in a manner that would
adversely affect World Access or Merger Sub without the prior written consent
of World Access.
(c) In the event the Stockholders shall desire to amend
any federal, state or local income tax return of CIS relating to periods prior
to January 1, 1997, whether or not as a result of tax proceedings, the
Stockholders shall allow World Access an opportunity to review and comment upon
such amended return and shall take no position on such returns that would
adversely affect World Access or Merger Sub without the prior written consent
of World Access.
2
<PAGE> 98
(d) Merger Sub shall be responsible for paying all taxes
(including interest and penalties) imposed on CIS, the Stockholders or the
Merger Sub after the Effective Time.
(e) World Access shall include in its consolidated
results of operations all of the income attributable to CIS or its successors
after the Effective Time.
3. REPORTING OF THE MERGER FOR INCOME TAX PURPOSES. The parties
shall report the Merger for federal and state income tax purposes as a
reorganization under the provisions of sections 368(a)(1)(A) and 368(a)(2)(D)
of the Code.
4. JURISDICTION, FORUM AND SPECIFIC PERFORMANCE.
(a) The provisions of Section 9.6 of the Merger Agreement
shall apply to any action, suit or proceeding seeking to enforce any provision
of, or based on any matter arising out of or in connection with, this
Agreement.
(b) To the extent that any party has or hereafter may
acquire any immunity from jurisdiction of any court or from any legal process
(whether through service or notice, attachment prior to judgment, attachment in
aid of execution, execution or otherwise) with respect to itself or its
property, such party hereby irrevocably waives such immunity in respect of its
obligations with respect to this Agreement.
(c) The parties hereto each acknowledge that the rights
of each party hereunder are special, unique and of extraordinary character, and
that, in the event that any party violates or fails or refuses to perform any
covenant or agreement made by it herein, the non-breaching party may be without
an adequate remedy at law. The parties each agree, therefore, that in the
event that any party violates or fails or refuses to perform any covenant or
agreement made by such party herein, the non-breaching party or parties may,
subject to the terms of this Agreement and in addition to any remedies at law
for damages or other relief, institute and prosecute an action in any court of
competent jurisdiction to enforce specific performance of such covenant or
agreement or seek any other equitable relief.
5. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS. The
Stockholders (jointly and severally) hereby represent and warrant to each other
party hereto that:
(a) this Agreement has been duly authorized, executed and
delivered by the Stockholders and constitutes the valid and binding agreement
of the Stockholders, enforceable against them in accordance with its terms,
subject to applicable bankruptcy, insolvency and other similar laws affecting
the enforcement of creditors rights generally, general equitable principles and
the discretion of courts in granting equitable remedies; and
(b) the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby will
not, with the passing of time or the giving of notice or both, violate or
conflict with, constitute a breach of or default under, result
3
<PAGE> 99
in the loss of any material benefit under, or permit the acceleration of or
entitle any party to accelerate any obligation under or pursuant to any
material mortgage, lien, lease, agreement, instrument, order, arbitration
award, judgment or decree to which the Stockholders are a party or by which the
Stockholders or any of their assets is bound.
6. REPRESENTATIONS AND WARRANTIES OF WORLD ACCESS. World Access
hereby represents and warrants to each other party hereto that:
(a) this Agreement has been duly authorized, executed and
delivered by World Access, and constitutes the valid and binding agreement of
World Access, enforceable against World Access in accordance with its terms,
subject to applicable bankruptcy, insolvency and other similar laws affecting
the enforcement of creditors rights generally, general equitable principles and
the discretion of courts in granting equitable remedies; and
(b) the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby will
not, with the passing of time or the giving of notice or both, violate or
conflict with, constitute a breach of or default under, result in the loss of
any material benefit under, or permit the acceleration of or entitle any party
to accelerate any obligation under or pursuant to any material mortgage, lien,
lease, agreement, instrument, order, arbitration award, judgment or decree to
which World Access is a party or by which it or any of its assets are bound.
7. REPRESENTATIONS AND WARRANTIES OF MERGER SUB. Merger Sub
hereby represents and warrants to each other party hereto that:
(a) this Agreement has been duly authorized, executed and
delivered by Merger Sub, and constitutes the valid and binding agreement of
Merger Sub, enforceable against Merger Sub in accordance with its terms,
subject to applicable bankruptcy, insolvency and other similar laws affecting
the enforcement of creditors rights generally, general equitable principles and
the discretion of courts in granting equitable remedies; and
(b) the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby will
not, with the passing of time or the giving of notice or both, violate or
conflict with, constitute a breach of or default under, result in the loss of
any material benefit under, or permit the acceleration of or entitle any party
to accelerate any obligation under or pursuant to any material mortgage, lien,
lease, agreement, instrument, order, arbitration award, judgment or decree to
which Merger Sub is a party or by which it or any of its assets are bound.
8. INDEMNIFICATION. World Access will indemnify the Stockholders
against all taxes, expenses, claims, losses, damages, and liabilities (or
actions, proceedings, or settlements in respect thereof) arising out of or
based on any assessment, levy or other tax imposed on CIS or the Stockholders
or any tax proceedings pertaining to CIS or the Merger Sub for any tax period
thereof ending after the Effective Time and for any other claim, liability or
obligation associated
4
<PAGE> 100
with or arising out of the financial reporting of the Merger by World Access
and will reimburse the Stockholders for any legal and any other expenses
reasonably incurred by them in connection with investigating and defending or
settling any such claim, loss, damage, liability, or action. It is agreed that
the indemnity agreement contained in this Section 8 shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability, or action if
such settlement is effected without the consent of World Access (which consent
has not been unreasonably withheld). The Stockholders shall give notice to
World Access promptly after they have actual knowledge of any claim as to which
indemnity may be sought under this Section 8, and shall permit World Access to
assume the defense of such claim or any litigation resulting therefrom,
provided that the Stockholders may participate in such defense at their own
expense, and provided further that the failure of the Stockholders to give
notice as provided herein shall not relieve World Access of its obligations
under this Section 8, to the extent such failure is not prejudicial. World
Access shall not, in the defense of any such claim or litigation, except with
the consent of each of the Stockholders, consent to entry of any judgment or
enter into any settlement that does not include as an unconditional term
thereof the giving by the claimant or plaintiff of a release to the
Stockholders from all liability in respect to such claim or litigation. Each
of the Stockholders shall furnish such information regarding itself or the
claim in question as World Access may reasonably request in writing and as
shall be reasonably required in connection with defense of such claim and
litigation resulting therefrom.
9. NOTICES. The provisions of Section 9.1 of the Merger
Agreement shall apply to this Agreement.
10. MISCELLANEOUS. Nothing in this Agreement is intended to or
shall confer upon anyone other than the parties hereto any legal or equitable
right, remedy or claim. This Agreement shall be governed by, and its
provisions construed in accordance with, the laws of the State of Georgia
(without reference to Georgia's choice of law rules) applicable to contracts
made and to be wholly performed within such state and may be modified only in
writing signed by each of the parties hereto. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, and all such counterparts shall constitute one and the same
instrument. Paragraph headings contained in this Agreement are solely for
convenience of reference and shall not affect the meaning or interpretation of
any term or provision hereof.
11. SEVERABILITY. If any provision of this Agreement or the
application of any such provision to any person or circumstance shall be held
invalid, illegal or unenforceable in any respect by a court of competent
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision hereof.
5
<PAGE> 101
IN WITNESS WHEREOF, each of the Stockholders has duly executed and
delivered this Agreement, and World Access, Merger Sub and CIS have each caused
this Agreement to be duly executed under seal and delivered on its behalf by an
officer or representative thereto duly authorized, all as of the date first
above written.
-------------------------------------
THOMAS R. CANHAM
-------------------------------------
BRIAN A. SCHUCHMAN
-------------------------------------
JOHN T. SIMON
CELLULAR INFRASTRUCTURE SUPPLY, INC.
By:
----------------------------------
Its:
------------------------------
Attest:
------------------------------
Its:
------------------------------
[CORPORATE SEAL]
[SIGNATURES CONTINUED ON NEXT PAGE]
6
<PAGE> 102
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
WORLD ACCESS, INC.
By:
----------------------------------
Its:
--------------------------
Attest:
------------------------------
Its:
--------------------------
[CORPORATE SEAL]
CIS ACQUISITION CORP.
By:
----------------------------------
Its:
----------------------------
Attest:
------------------------------
Its:
--------------------------
[CORPORATE SEAL]
7
<PAGE> 1
EXHIBIT 99
[WORLD ACCESS, INC. LETTERHEAD]
SUMMARY: WORLD ACCESS, INC. ACQUIRES
CELLULAR INFRASTRUCTURE
SUPPLY, INC.
CONTACT: Steven A. Odom Chairman & CEO
Hensley E. West President & COO
Mark A. Gergel Exec. VP & CFO
(404) 231-2025
FOR IMMEDIATE RELEASE
ATLANTA, GEORGIA - MARCH 31, 1997 - WORLD ACCESS, INC. (NASDAQ:WAXS), announced
today that it has completed its acquisition of Cellular Infrastructure Supply,
Inc. ("CIS"), a Burr Ridge, Illinois based provider of equipment and related
design, installation and technical support services to the cellular, PCS and
other wireless service industries. Pursuant to the terms of a Merger
Agreement, the shareholders of CIS will receive $7.1 million, approximately
half in cash and the balance in shares of World Access common stock, in
exchange for their shares of CIS stock. In addition, the CIS shareholders have
the right to receive additional consideration over the next three years,
contingent upon the achievement of certain pre-tax profitability levels by CIS.
Steven A. Odom, Chairman and Chief Executive Officer, said "The acquisition of
CIS is expected to be accretive to both World Access' earnings per share and
net cash flow beginning in 1997. The products and services offered by CIS are
in line with the Company's strategy to broaden its offering of wireless
switching, transmission and access products and fully support its customers as
they build new and/or upgrade existing telecommunications networks. The
cellular equipment and service experience and expertise of CIS and its
management team will significantly strengthen World Access' ability to develop
new wireless product applications and provide its customers with enhanced
technical support services. The principal market served by CIS (wireless
service providers) is forecasted to grow to a $200 billion market by the year
2000. This market is a perfect complement to World Access' principal markets
(traditional telephone service providers and private network operators),
providing both companies with substantial cross-selling opportunities."
"We are pleased that John T. Simon, Brian A. Schuchman and Thomas R. Canham,
the three principals of CIS, and their staff of industry professionals will
continue to manage CIS as a wholly-owned subsidiary of World Access. CIS began
operations in 1995, and sold approximately $13 million of products and services
in its latest fiscal year. We are optimistic that World Access' financial
strength, extensive U.S. and Latin American telecommunications customer base,
advanced digital switching and wireless transmission products and broad range
of electronic manufacturing and repair services will further support CIS's
existing business and provide additional sales and profit growth opportunities
for both companies".
World Access, Inc. develops, manufactures and markets wireline and wireless
switching, transmission and access products primarily for the United States,
Caribbean Basin and Latin American telecommunications markets. The Company
offers digital switches, cellular base stations, fixed wireless local loop
systems, intelligent multiplexers, digital loop carriers, microwave and
millimeterwave radio equipment and other wireless communications products. To
support and complement its product sales, the Company also provides its
customers with a broad range of design, manufacturing, testing, installation,
repair and other value-added services. The Company is headquartered in
Atlanta, Georgia and conducts its operations primarily from facilities in
Orlando, Florida; Lakeland, Florida; Burr Ridge, Illinois; Dallas, Texas;
Scottsdale, Arizona; Livermore, California and South Bend, Indiana.
###
