EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
DATED AS OF MARCH 8, 1998
AMONG
QWEST COMMUNICATIONS INTERNATIONAL INC.,
QWEST 1998-L ACQUISITION CORP.
AND
LCI INTERNATIONAL, INC.
TABLE OF CONTENTS
ARTICLE I
THE MERGER............................... 2
1.1 The Merger................................................. 2
1.2 Closing.................................................... 2
1.3 Effective Time............................................. 2
1.4 Effects of the Merger...................................... 2
1.5 Certificate of Incorporation............................... 2
1.6 By-Laws.................................................... 3
1.7 Officers and Directors of Surviving Corporation............ 3
1.8 Effect on Capital Stock.................................... 3
1.9 Voting Agreement........................................... 4
ARTICLE II
EXCHANGE OF CERTIFICATES......................... 4
2.1 Exchange Fund.............................................. 4
2.2 Exchange Procedures........................................ 4
2.3 Distributions with Respect to Unexchanged Shares........... 5
2.4 No Further Ownership Rights in LCI Common Stock............ 5
2.5 No Fractional Shares of Qwest Common Stock................. 5
2.6 Termination of Exchange Fund............................... 6
2.7 No Liability............................................... 6
2.8 Investment of the Exchange Fund............................ 6
2.9 Lost Certificates.......................................... 6
2.10 Withholding Rights......................................... 7
2.11 Further Assurances......................................... 7
2.12 Stock Transfer Books....................................... 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES...................... 8
3.1 Representations and Warranties of LCI...................... 8
(a) Organization, Standing and Power................... 8
(b) Capital Structure.................................. 8
(c) Authority; No Conflicts............................ 9
(d) Reports and Financial Statements................... 11
(e) Information Supplied............................... 12
(f) Board Approval..................................... 12
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(g) Vote Required...................................... 13
(h) Rights Agreement................................... 13
(i) Brokers or Finders................................. 13
(j) Opinion of LCI Financial Advisor................... 13
(k) Affiliate Letter................................... 13
3.2 Representations and Warranties of Qwest.................... 13
(a) Organization, Standing and Power................... 13
(b) Capital Structure.................................. 14
(c) Authority; No Conflicts............................ 15
(d) Reports and Financial Statements................... 16
(e) Information Supplied............................... 17
(f) Board Approval..................................... 17
(g) Vote Required...................................... 17
(h) Brokers or Finders................................. 18
3.3 Representations and Warranties of Qwest and Merger Sub..... 18
(a) Organization and Corporate Power................... 18
(b) Corporate Authorization............................ 18
(c) Non-Contravention.................................. 18
(d) No Business Activities............................. 18
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS................ 19
4.1 Covenants of LCI........................................... 19
(a) Ordinary Course.................................... 19
(b) Dividends; Changes in Share Capital................ 19
(c) Issuance of Securities............................. 20
(d) Governing Documents................................ 20
(e) No Acquisitions.................................... 20
(f) No Dispositions.................................... 20
(g) Investments; Indebtedness.......................... 21
(h) Tax-Free Qualification............................. 21
(i) Compensation....................................... 21
(j) Other Actions...................................... 21
(k) Accounting Methods; Income Tax Elections........... 21
(l) Rights Agreement................................... 22
4.2 Covenants of Qwest......................................... 22
(a) Ordinary Course.................................... 22
(b) Dividends; Changes in Share Capital................ 22
(c) Issuance of Securities............................. 23
(d) Governing Documents................................ 23
(e) No Acquisitions.................................... 23
(f) No Dispositions.................................... 23
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(g) Investments......................................... 24
(h) Tax-Free Qualification.............................. 24
(i) Other Actions....................................... 24
(j) Accounting Methods; Income Tax Elections............ 24
4.3 Advice of Changes; Governmental Filings..................... 24
4.4 Transition Planning......................................... 25
4.5 Control of Other Party's Business........................... 25
ARTICLE V
ADDITIONAL AGREEMENTS........................... 25
5.1 Preparation of Proxy Statement; LCI Stockholders Meeting.... 25
5.2 Qwest Board of Directors.................................... 26
5.3 Access to Information....................................... 27
5.4 Best Efforts................................................ 27
5.5 Acquisition Proposals....................................... 29
5.6 Assumption of LCI Stock Options; Other Stock Plans;
Employee Benefits Matters................................... 30
5.7 Fees and Expenses........................................... 31
5.8 Directors' and Officers' Indemnification and Insurance...... 31
5.9 Rights Agreement............................................ 31
5.10 Public Announcements........................................ 32
5.11 Accountants' Letters........................................ 32
5.12 Listing of Shares of Qwest Common Stock..................... 32
5.13 Voting Trust................................................ 32
ARTICLE VI
CONDITIONS PRECEDENT............................ 32
6.1 Conditions to Each Party's Obligation to Effect the Merger.. 32
(a) Stockholder Approval................................ 33
(b) No Injunctions or Restraints, Illegality............ 33
(c) FCC and Public Utility Commission Approvals......... 33
(d) HSR Act............................................. 33
(e) NASDAQ Listing...................................... 33
(f) Effectiveness of the Form S-4....................... 33
6.2 Additional Conditions to Obligations of Qwest and Merger Sub. 33
(a) Representations and Warranties...................... 33
(b) Performance of Obligations of LCI................... 33
(c) Tax Opinion......................................... 34
6.3 Additional Conditions to Obligations of LCI................. 34
(a) Representations and Warranties...................... 34
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(b) Performance of Obligations of Qwest................ 34
(c) Tax Opinion........................................ 34
ARTICLE VII
TERMINATION AND AMENDMENT........................ 35
7.1 Termination................................................ 35
7.2 Effect of Termination...................................... 36
7.3 Amendment.................................................. 37
7.4 Extension; Waiver.......................................... 37
ARTICLE VIII
GENERAL PROVISIONS............................ 38
8.1 Non-Survival of Representations, Warranties and Agreements. 38
8.2 Notices.................................................... 38
8.3 Interpretation............................................. 39
8.4 Counterparts............................................... 39
8.5 Entire Agreement; No Third Party Beneficiaries............. 40
8.6 Governing Law.............................................. 40
8.7 Severability............................................... 40
8.8 Assignment................................................. 40
8.9 Submission to Jurisdiction; Waivers........................ 40
8.10 Enforcement................................................ 41
8.11 Definitions................................................ 41
8.12 Other Agreements........................................... 42
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LIST OF EXHIBITS
EXHIBIT TITLE
1.9 Form of Voting Agreement
5.6 Assumption of LCI Stock Options and LCI Warrant
6.2(c)(1) Form of Qwest Tax Opinion
6.2(c)(2) Form of Qwest Representations Letter
6.2(c)(3) Form of LCI Representations Letter
6.3(c)(1) Form of LCI Tax Opinion
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GLOSSARY DEFINED TERMS
Definition Location of Definition
Acquisition Proposal.................................................Section 5.5
Adjustment Election...............................................Section 7.1(i)
Adjustment Election Period........................................Section 7.1(i)
Affiliate Agreement...............................................Section 3.1(k)
Agreement...............................................................Preamble
Average Price.....................................................Section 1.8(a)
Benefit Plans....................................................Section 8.11(a)
Blue Sky Laws................................................Section 3.1(c)(iii)
Board Approval....................................................Section 3.1(f)
Board of Directors...............................................Section 8.11(b)
Business Day.....................................................Section 8.11(c)
Certificate.......................................................Section 1.8(b)
Closing..............................................................Section 1.2
Closing Date.........................................................Section 1.2
Code....................................................................Recitals
Communications Act...........................................Section 3.1(c)(iii)
Confidentiality Agreement............................................Section 5.3
Delaware Certificate of Merger.......................................Section 1.3
Determination Date................................................Section 1.8(a)
DGCL.................................................................Section 1.1
DOJ...............................................................Section 5.4(b)
Effective Time.......................................................Section 1.3
ERISA............................................................Section 8.11(a)
Exchange Act.................................................Section 3.1(c)(iii)
Exchange Agent.......................................................Section 2.1
Exchange Fund........................................................Section 2.1
Exchange Ratio....................................................Section 1.8(a)
Expenses.............................................................Section 5.7
FCC..........................................................Section 3.1(c)(iii)
Form S-4..........................................................Section 5.1(a)
GAAP...........................................................Section 3.1(d)(i)
Governmental Entity..........................................Section 3.1(c)(iii)
HSR Act......................................................Section 3.1(c)(iii)
LCI.....................................................................Preamble
LCI Affiliate Letter..............................................Section 3.1(k)
LCI Benefit Plans................................................Section 5.6.(b)
LCI Common Stock........................................................Recitals
LCI Disclosure Schedule..............................................Section 3.1
LCI Draft Disclosures.........................................Section 3.1(d)(ii)
LCI Employees.....................................................Section 5.6(b)
LCI Evaluation Period.............................................Section 7.1(i)
LCI Financial Advisor.............................................Section 3.1(i)
LCI SEC Reports................................................Section 3.1(d)(i)
LCI Stockholders Meeting..........................................Section 5.1(b)
LCI Stock Option Plans.........................................Section 3.1(b)(i)
LCI Stock Options..............................................Section 3.1(b)(i)
LCI Transaction Information...................................Section 3.1(d)(ii)
LCI Voting Debt...............................................Section 3.1(b)(ii)
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LCI Warrant....................................................Section 3.1(b)(i)
Material Adverse Effect..........................................Section 8.11(d)
Merger..................................................................Recitals
Merger Consideration..............................................Section 1.8(a)
Merger Sub..............................................................Preamble
NASDAQ............................................................Section 1.8(a)
Person...........................................................Section 8.11(f)
Principal Stockholder...................................................Recitals
PUCs.........................................................Section 3.1(c)(iii)
Qwest...................................................................Preamble
Qwest Charter Amendment........................................Section 3.2(c)(i)
Qwest Common Stock......................................................Recitals
Qwest Disclosure Schedule............................................Section 3.2
Qwest Draft Disclosures.......................................Section 3.2(d)(ii)
Qwest Financial Advisor...........................................Section 3.2(h)
Qwest SEC Reports.............................................Section 3.2 (d)(i)
Qwest Stockholders Meeting........................................Section 5.1(c)
Qwest Transaction Information.................................Section 3.2(d)(ii)
Qwest Voting Debt.............................................Section 3.2(b)(ii)
Qwest Warrants.................................................Section 3.2(b)(i)
Regulatory Law....................................................Section 5.4(b)
Required Consents............................................Section 3.1(c)(iii)
Required LCI Vote.................................................Section 3.l(g)
Required Qwest Vote...............................................Section 3.2(g)
Rights.........................................................Section 3.1(b)(i)
Rights Agreement...............................................Section 3.1(b)(i)
Rule 145..........................................................Section 3.1(k)
SAS 72..............................................................Section 5.11
SEC............................................................Section 3.1(d)(i)
Securities Act...............................................Section 3.1(c)(iii)
Share Issuance.................................................Section 3.2(c)(i)
Subsidiary.......................................................Section 8.11(g)
Superior Proposal................................................Section 8.11(h)
Surviving Corporation................................................Section 1.1
Termination Date..................................................Section 7.1(b)
Termination Fee...................................................Section 7.2(b)
Termination Notice................................................Section 7.1(i)
the other party..................................................Section 8.11(e)
Violation.....................................................Section 3.1(c)(ii)
Voting Agreement.....................................................Section 1.9
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of March 8, 1998 (this
"AGREEMENT"), among QWEST COMMUNICATIONS INTERNATIONAL INC., a Delaware
corporation ("QWEST"), QWEST 1998-L ACQUISITION CORP., a Delaware corporation
and a direct wholly-owned subsidiary of Qwest ("MERGER SUB"), and LCI
INTERNATIONAL, INC., a Delaware corporation ("LCI").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Qwest, Merger Sub and
LCI have each determined that the merger of Merger Sub with and into LCI (the
"MERGER") is in the best interests of their respective stockholders, and such
Boards of Directors have approved such Merger, upon the terms and subject to the
conditions set forth in this Agreement, pursuant to which each outstanding share
of common stock, par value $.01 per share, of LCI ("LCI COMMON STOCK") issued
and outstanding immediately prior to the Effective Time (as defined in Section
1.3), other than shares owned or held directly or indirectly by Qwest or
directly by LCI will be converted into the right to receive shares of common
stock, par value $.01 per share, of Qwest ("QWEST COMMON STOCK") as set forth in
Section 1.8;
WHEREAS, Qwest, Merger Sub and LCI desire to make certain
representations, warranties, covenants and agreements in connection with the
transactions contemplated hereby and also to prescribe various conditions to the
transactions contemplated hereby;
WHEREAS, Qwest, Merger Sub and LCI intend, by approving resolutions
authorizing this Agreement, to adopt this Agreement as a plan of reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "CODE"), and the regulations promulgated thereunder; and
WHEREAS, concurrently herewith the record and beneficial owners of not
less than 80% of the outstanding shares of Qwest Common Stock (collectively, the
"PRINCIPAL STOCKHOLDER") has agreed to vote such shares in favor of the
transactions contemplated hereby pursuant to the Voting Agreement (as defined in
Section 1.9).
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with the Delaware General Corporation Law
(the "DGCL"), Merger Sub shall be merged with and into LCI at the Effective
Time. Following the Merger, the separate corporate existence of Merger Sub shall
cease and LCI shall continue as the surviving corporation (the "SURVIVING
CORPORATION") under the name "LCI International, Inc."
1.2 CLOSING. The closing of the Merger (the "CLOSING") will take place
on the second Business Day after the satisfaction or waiver (subject to
applicable law) of the conditions (excluding conditions that, by their terms,
cannot be satisfied until the Closing Date) set forth in Article VI (the
"CLOSING DATE"), PROVIDED, HOWEVER, that, if the Average Price is less than
$26.9531, then the Closing shall not occur prior to (i) if LCI shall not deliver
a Termination Notice (as defined in Section 7.1(i)) to Qwest in accordance with
Section 7.1(i), the second Business Day following the expiration of the LCI
Evaluation Period (as defined in Section 7.1(i)) or (ii) if LCI shall deliver a
Termination Notice to Qwest in accordance with Section 7.1(i), the second
Business Day following the earlier of (A) Qwest's delivery of an Adjustment
Election (as defined in Section 7.1(i)) and (B) the expiration of the Adjustment
Election Period (as defined in Section 7.1(i)), in each case, unless another
time or date is agreed to in writing by the parties hereto. The Closing shall be
held at the offices of O'Melveny & Xxxxx LLP, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx,
Xxx Xxxx, 00000, unless another place is agreed to in writing by the parties
hereto.
1.3 EFFECTIVE TIME. As soon as practicable following the Closing, the
parties shall (i) file a certificate of merger (the "DELAWARE CERTIFICATE OF
MERGER") in such form as is required by and executed in accordance with the
relevant provisions of the DGCL and (ii) make all other filings or recordings
required under the DGCL. The Merger shall become effective at such time as the
Delaware Certificate of Merger is duly filed with the Delaware Secretary of
State or at such subsequent time as Qwest and LCI shall agree and be specified
in the Delaware Certificate of Merger (the date and time the Merger becomes
effective being the "EFFECTIVE TIME").
1.4 EFFECTS OF THE MERGER. At and after the Effective Time, the Merger
will have the effects set forth in the DGCL. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time all the property,
rights, privileges, powers and franchises of LCI and Merger Sub shall be vested
in the Surviving Corporation, and all debts, liabilities and duties of LCI and
Merger Sub shall become the debts, liabilities and duties of the Surviving
Corporation.
1.5 CERTIFICATE OF INCORPORATION. At the Effective Time, the
certificate of incorporation of the Surviving Corporation shall be amended in
accordance with the DGCL such that the certificate of incorporation of the
Surviving Corporation shall consist of the provisions of the certificate of
incorporation of Merger Sub, except that Article I of the
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Certificate of Incorporation of the Surviving Corporation shall be amended to
read in its entirety as follows: "The name of this Corporation is `LCI
International, Inc.'".
1.6 BY-LAWS. The by-laws of Merger Sub as in effect at the Effective
Time shall be the by-laws of the Surviving Corporation until thereafter changed
or amended as provided therein or by applicable law.
1.7 OFFICERS AND DIRECTORS OF SURVIVING CORPORATION. The officers of
LCI as of the Effective Time shall be the officers of the Surviving Corporation,
until the earlier of their resignation or removal or otherwise ceasing to be an
officer or until their respective successors are duly elected and qualified, as
the case may be. The directors of Merger Sub as of the Effective Time shall be
the directors of the Surviving Corporation until the earlier of their
resignation or removal or otherwise ceasing to be a director or until their
respective successors are duly elected and qualified.
1.8 EFFECT ON CAPITAL STOCK.
(a) At the Effective Time by virtue of the Merger and without any
action on the part of the holder thereof, each share of LCI Common Stock issued
and outstanding immediately prior to the Effective Time (other than shares of
LCI Common Stock owned by Qwest or Merger Sub or held by LCI, all of which shall
be canceled as provided in Section 1.8(c)) shall be converted into the right to
receive that number of shares of Qwest Common Stock equal to the Exchange Ratio
(as defined below) (the "MERGER CONSIDERATION"). "EXCHANGE RATIO" means the
quotient (rounded to the nearest 1/10,000) determined by dividing $42 by the
average (rounded to the nearest 1/10,000) (the "AVERAGE PRICE") of the volume
weighted averages (rounded to the nearest 1/10,000) of the trading prices of
Qwest Common Stock on the Nasdaq National Market ("NASDAQ"), as reported by
Bloomberg Financial Markets (or such other source as the parties shall agree in
writing), for each of the 15 consecutive trading days ending on the trading day
immediately preceding the date on which all the conditions to Closing (other
than conditions that, by their terms, cannot be satisfied until the Closing
Date) set forth in Article VI shall have been satisfied or waived (the
"DETERMINATION DATE"); PROVIDED, that the Exchange Ratio shall not be less than
1.0625 or, unless Qwest shall have exercised its rights under Section 7.1(i),
greater than 1.5583.
(b) As a result of the Merger and without any action on the part of
the holders thereof, at the Effective Time, all shares of LCI Common Stock shall
cease to be outstanding and shall be canceled and retired and shall cease to
exist, and each holder of a certificate which immediately prior to the Effective
Time represented any such shares of LCI Common Stock (a "CERTIFICATE") (other
than Merger Sub, Qwest and LCI) shall thereafter cease to have any rights with
respect to such shares of LCI Common Stock, except the right to receive the
applicable Merger Consideration in accordance with Article II upon the surrender
of such certificate.
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(c) Each share of LCI Common Stock issued and owned or held by Qwest,
Merger Sub or LCI at the Effective Time shall, by virtue of the Merger, cease to
be outstanding and shall be canceled and retired and no stock of Qwest or other
consideration shall be delivered in exchange therefor.
(d) Each share of common stock, par value $.01 per share, of Merger
Sub issued and outstanding immediately prior to the Effective Time, shall remain
issued, outstanding and unchanged as validly issued, fully paid and
nonassessable shares of common stock, par value $.01 per share, of the Surviving
Corporation as of the Effective Time.
1.9 VOTING AGREEMENT. Concurrently with the execution and delivery of
this Agreement, LCI, and the Principal Stockholder are executing and delivering
an agreement substantially in the form of Exhibit 1.9 hereto, pursuant to which,
among other things, the Principal Stockholder is agreeing to vote all of the
shares of Qwest Common Stock owned, beneficially or of record, by it to approve
the Share Issuance and the Qwest Charter Amendment (as defined in Section
3.2(c)(i)).
ARTICLE II
EXCHANGE OF CERTIFICATES
2.1 EXCHANGE FUND. Prior to the Effective Time, Qwest shall appoint
Xxxxx Xxxxxx Shareholder Services or another commercial bank or trust company
having net capital of not less than $100,000,000, or a subsidiary thereof, to
act as exchange agent hereunder for the purpose of exchanging Certificates for
the Merger Consideration (the "EXCHANGE AGENT"). At or prior to the Effective
Time, Qwest shall deposit with the Exchange Agent, in trust for the benefit of
holders of shares of LCI Common Stock, certificates representing the Qwest
Common Stock issuable pursuant to Section 1.8 in exchange for outstanding shares
of LCI Common Stock. Qwest agrees to make available to the Exchange Agent from
time to time as needed, cash sufficient to pay cash in lieu of fractional shares
pursuant to Section 2.5 and any dividends and other distributions pursuant to
Section 2.3. Any cash and certificates of Qwest Common Stock deposited with the
Exchange Agent shall hereinafter be referred to as the "EXCHANGE FUND".
2.2 EXCHANGE PROCEDURES. As soon as reasonably practicable after the
Effective Time, the Surviving Corporation shall cause the Exchange Agent to mail
to each holder of a Certificate (i) a letter of transmittal which shall specify
that delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates to the Exchange Agent, and
which letter shall be in customary form and have such other provisions as Qwest
may reasonably specify and (ii) instructions for effecting the surrender of such
Certificates in exchange for the applicable Merger Consideration. Upon surrender
of a Certificate to the Exchange Agent together with such letter of transmittal,
duly executed and completed in accordance with the instructions thereto, and
such other documents as may reasonably be required by the Exchange Agent, the
holder of such Certificate shall be entitled to receive in exchange therefor (A)
one or more shares of Qwest
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Common Stock representing, in the aggregate, the whole number of shares that
such holder has the right to receive pursuant to Section 1.8 (after taking into
account all shares of LCI Common Stock then held by such holder) and (B) a check
in the amount equal to the cash that such holder has the right to receive
pursuant to the provisions of this Article II, including cash in lieu of any
fractional shares of Qwest Common Stock pursuant to Section 2.5. No interest
will be paid or will accrue on any cash payable pursuant to Section 2.3 or
Section 2.5. In the event of a transfer of ownership of LCI Common Stock which
is not registered in the transfer records of LCI, one or more shares of Qwest
Common Stock evidencing, in the aggregate, the proper number of shares of Qwest
Common Stock, a check in the proper amount of cash in lieu of any fractional
shares of Qwest Common Stock pursuant to Section 2.5 and any dividends or other
distributions to which such holder is entitled pursuant to Section 2.3, may be
issued with respect to such LCI Common Stock to such a transferee if the
Certificate representing such shares of LCI Common Stock is presented to the
Exchange Agent, accompanied by all documents required to evidence and effect
such transfer and to evidence that any applicable stock transfer taxes have been
paid.
2.3 DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends or
other distributions declared or made with respect to shares of Qwest Common
Stock with a record date after the Effective Time shall be paid to the holder of
any unsurrendered Certificate with respect to the shares of Qwest Common Stock
that such holder would be entitled to receive upon surrender of such Certificate
and no cash payment in lieu of fractional shares of Qwest Common Stock shall be
paid to any such holder pursuant to Section 2.5 until such holder shall
surrender such Certificate in accordance with Section 2.2. Subject to the effect
of applicable laws, following surrender of any such Certificate, there shall be
paid to such holder of shares of Qwest Common Stock issuable in exchange
therefor, without interest, (a) promptly after the time of such surrender, the
amount of any cash payable in lieu of fractional shares of Qwest Common Stock to
which such holder is entitled pursuant to Section 2.5 and the amount of
dividends or other distributions with a record date after the Effective Time
theretofore paid with respect to such whole shares of Qwest Common Stock, and
(b) at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but prior to such
surrender and a payment date subsequent to such surrender payable with respect
to such shares of Qwest Common Stock.
2.4 NO FURTHER OWNERSHIP RIGHTS IN LCI COMMON STOCK. All shares of
Qwest Common Stock issued and cash paid upon conversion of shares of LCI Common
Stock in accordance with the terms of Article I and this Article II (including
any cash paid pursuant to Section 2.3 or 2.5) shall be deemed to have been
issued or paid in full satisfaction of all rights pertaining to the shares of
LCI Common Stock.
2.5 NO FRACTIONAL SHARES OF QWEST COMMON STOCK.
(a) No certificates or scrip or shares of Qwest Common Stock
representing fractional shares of Qwest Common Stock shall be issued upon the
surrender for exchange of Certificates and such fractional share interests will
not entitle the owner thereof to vote
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or to have any rights of a shareholder of Qwest or a holder of shares of Qwest
Common Stock.
(b) Notwithstanding any other provision of this Agreement, each holder
of shares of LCI Common Stock exchanged pursuant to the Merger who would
otherwise have been entitled to receive a fraction of a share of Qwest Common
Stock (after taking into account all Certificates delivered by such holder)
shall receive, in lieu thereof, cash (without interest) in an amount equal to
the product of (i) such fractional part of a share of Qwest Common Stock
multiplied by (ii) the last sales price per share of Qwest Common Stock reported
on NASDAQ in THE WALL STREET JOURNAL, Eastern edition, with respect to the
Closing Date. As promptly as practicable after the determination of the amount
of cash, if any, to be paid to holders of fractional interests, the Exchange
Agent shall so notify Qwest, and Qwest shall cause the Surviving Corporation to
deposit such amount with the Exchange Agent and shall cause the Exchange Agent
to forward payments to such holders of fractional interests subject to and in
accordance with the terms hereof.
2.6 TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund
which remains undistributed to the holders of Certificates for twelve months
after the Effective Time shall be delivered to the Surviving Corporation or
otherwise on the instruction of the Surviving Corporation, and any holders of
the Certificates who have not theretofore complied with this Article II shall
thereafter look only to the Surviving Corporation and Qwest for the Merger
Consideration with respect to the shares of LCI Common Stock formerly
represented thereby to which such holders are entitled pursuant to Section 1.8
and Section 2.2, any cash in lieu of fractional shares of Qwest Common Stock to
which such holders are entitled pursuant to Section 2.5 and any dividends or
distributions with respect to shares of Qwest Common Stock to which such holders
are entitled pursuant to Section 2.3. Any such portion of the Exchange Fund
remaining unclaimed by holders of shares of LCI Common Stock five years after
the Effective Time (or such earlier date immediately prior to such time as such
amounts would otherwise escheat to or become property of any Governmental Entity
(as defined in Section 3.1(c)(iii))) shall, to the extent permitted by law,
become the property of the Surviving Corporation free and clear of any claims or
interest of any Person previously entitled thereto.
2.7 NO LIABILITY. None of Qwest, Merger Sub, LCI, the Surviving
Corporation or the Exchange Agent shall be liable to any Person in respect of
any Merger Consideration from the Exchange Fund delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
2.8 INVESTMENT OF THE EXCHANGE FUND. The Exchange Agent shall invest
any cash included in the Exchange Fund as directed by the Surviving Corporation
on a daily basis. Any interest and other income resulting from such investments
shall promptly be paid to the Surviving Corporation.
2.9 LOST CERTIFICATES. If any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the
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posting by such Person of a bond in such reasonable amount as the Surviving
Corporation may direct as indemnity against any claim that may be made against
it with respect to such Certificate, the Exchange Agent will deliver in exchange
for such lost, stolen or destroyed Certificate the applicable Merger
Consideration with respect to the shares of LCI Common Stock formerly
represented thereby, any cash in lieu of fractional shares of Qwest Common
Stock, and unpaid dividends and distributions on shares of Qwest Common Stock
deliverable in respect thereof, pursuant to this Agreement.
2.10 WITHHOLDING RIGHTS. Each of the Surviving Corporation and Qwest
shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of shares of LCI Common Stock
such amounts as it is required to deduct and withhold with respect to the making
of such payment under the Code and the rules and regulations promulgated
thereunder, or any provision of state, local or foreign tax law. To the extent
that amounts are so withheld by the Surviving Corporation or Qwest, as the case
may be, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares of LCI Common Stock in
respect of which such deduction and withholding was made by the Surviving
Corporation or Qwest, as the case may be.
2.11 FURTHER ASSURANCES. At and after the Effective Time, the officers
and directors of the Surviving Corporation will be authorized to execute and
deliver, in the name and on behalf of LCI or Merger Sub, any deeds, bills of
sale, assignments or assurances and to take and do, in the name and on behalf of
LCI or Merger Sub, any other actions and things to vest, perfect or confirm of
record or otherwise in the Surviving Corporation any and all right, title and
interest in, to and under any of the rights, properties or assets acquired or to
be acquired by the Surviving Corporation as a result of, or in connection with,
the Merger.
2.12 STOCK TRANSFER BOOKS. At the close of business, New York City
time, on the day the Effective Time occurs, the stock transfer books of LCI
shall be closed and there shall be no further registration of transfers of
shares of LCI Common Stock thereafter on the records of LCI. From and after the
Effective Time, the holders of Certificates shall cease to have any rights with
respect to such shares of LCI Common Stock formerly represented thereby, except
as otherwise provided herein or by law. On or after the Effective Time, any
Certificates presented to the Exchange Agent or Qwest for any reason shall be
converted into the Merger Consideration with respect to the shares of LCI Common
Stock formerly represented thereby, any cash in lieu of fractional shares of
Qwest Common Stock to which the holders thereof are entitled pursuant to Section
2.5 and any dividends or other distributions to which the holders thereof are
entitled pursuant to Section 2.3.
7
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF LCI. Except as set forth in the
LCI Disclosure Schedule delivered by LCI to Qwest prior to the execution of this
Agreement (the "LCI DISCLOSURE SCHEDULE") (each section of which qualifies the
correspondingly numbered representation and warranty or covenant to the extent
specified therein), LCI represents and warrants to Qwest as follows:
(a) ORGANIZATION, STANDING AND POWER. Each of LCI and each of its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or organization,
has all requisite power and authority to own, lease and operate its properties
and to carry on its business as now being conducted and is duly qualified and in
good standing to do business in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification
necessary other than in such jurisdictions where the failure so to qualify would
not, either individually or in the aggregate, have a Material Adverse Effect (as
defined in Section 8.11(d)) on LCI. The copies of the certificate of
incorporation and by-laws of LCI which were previously furnished to Qwest are
true, complete and correct copies of such documents as in effect on the date of
this Agreement.
(b) CAPITAL STRUCTURE.
(i) As of February 28, 1998, the authorized capital stock of LCI
consisted of (A) 300,000,000 shares of LCI Common Stock, of which
96,814,777 shares were outstanding and (B) 15,000,000 shares of Preferred
Stock, par value $.01 per share, of which no shares were outstanding and
500,000 shares of which have been designated Junior Participating Preferred
Stock and reserved for issuance upon exercise of the rights (the "RIGHTS")
distributed to the holders of LCI Common Stock pursuant to Rights Agreement
dated as of January 22, 1997, between LCI and Fifth Third Bank, as Rights
Agent, as amended (the "RIGHTS AGREEMENT"). Since February 28, 1998 to the
date of this Agreement, there have been no issuances of shares of the
capital stock of LCI or any other securities of LCI other than issuances of
shares (and accompanying Rights) pursuant to options or rights outstanding
as of February 28, 1998 under the Benefit Plans (as defined in Section
8.11(a)) of LCI. All issued and outstanding shares of the capital stock of
LCI are duly authorized, validly issued, fully paid and nonassessable, and
no class of capital stock is entitled to preemptive rights. There were
outstanding as of February 28, 1998 no options, warrants or other rights to
acquire capital stock from LCI other than (x) the Rights, (y) options
representing in the aggregate the right to purchase 14,302,838 shares of
LCI Common Stock (collectively, the "LCI STOCK OPTIONS") under the LCI
International, Inc. 1992 Stock Option Plan, LiTel Communications, Inc. 1993
Stock Option Plan, LCI International, Inc. 1994/1995 Stock Option Plan, LCI
International, Inc. 1995/1996 Stock Option Plan, 1997/1998 LCI
International, Inc. Stock Option Plan, LCI International, Inc. and
Subsidiaries Nonqualified Stock Option Plan for Directors,
8
USLD Communications Corp. 1990 Employee Stock Option Plan, and USLD
Communications Corp. 1993 Non-Employee Director Plan, (collectively, the
"LCI STOCK OPTION PLANS"), and (z) a warrant representing the right to
purchase 75,760 shares of LCI Common Stock (the "LCI WARRANT"). As of
February 28, 1998, LCI had further reserved 623,081 shares of LCI Common
Stock for purchase pursuant to the LCI International, Inc. Amended and
Restated Employee Stock Purchase Plan and 474,393 shares of LCI Common
Stock for purchase pursuant to the LCI International 401(k) Savings Plan.
Other than the associated Rights issued with the shares issued as described
above and options or warrants or other rights to acquire no more than
100,000 shares of LCI Common Stock in the aggregate, no options or warrants
or other rights to acquire capital stock from LCI have been issued or
granted since February 28, 1998 to the date of this Agreement.
(ii) As of the date of this Agreement, no bonds, debentures, notes
or other indebtedness of LCI having the right to vote on any matters on
which stockholders may vote ("LCI VOTING DEBT") are issued or outstanding.
(iii) Except as otherwise set forth in this Section 3.1(b) and as
contemplated by Section 5.6, as of the date of this Agreement, there are no
securities, options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which LCI or any of its
Subsidiaries is a party or by which any of them is bound obligating LCI or
any of its Subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or other voting
securities of LCI or any of its Subsidiaries or obligating LCI or any of
its Subsidiaries to issue, grant, extend or enter into any such security,
option, warrant, call, right, commitment, agreement, arrangement or
undertaking. As of the date of this Agreement, there are no outstanding
obligations of LCI or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any shares of capital stock of LCI or any of its
Subsidiaries.
(c) AUTHORITY; NO CONFLICTS.
(i) LCI has all requisite corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby,
subject in the case of the consummation of the Merger to the adoption of
this Agreement by the Required LCI Vote (as defined in Section 3.1(g)). The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of LCI, subject in the case of the
consummation of the Merger to the adoption of this Agreement by the
Required LCI Vote. This Agreement has been duly executed and delivered by
LCI and constitutes a valid and binding agreement of LCI, enforceable
against it in accordance with its terms, except as such enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium and
similar laws relating to or affecting creditors generally, by general
equity principles (regardless of whether such enforceability is considered
in a proceeding in equity or at law) or by an implied covenant of good
faith and fair dealing.
9
(ii) The execution and delivery of this Agreement by LCI does not
or will not, as the case may be, and the consummation of the Merger by LCI
and the other transactions contemplated hereby will not, conflict with, or
result in any violation of, or constitute a default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
amendment, cancellation or acceleration of any obligation or the loss of a
material benefit under, or the creation of a lien, pledge, security
interest, charge or other encumbrance on any assets (any such conflict,
violation, default, right of termination, amendment, cancellation or
acceleration, loss or creation, a "VIOLATION") pursuant to: (A) any
provision of the certificate of incorporation or by-laws of LCI or any
Subsidiary of LCI, or (B) except as would not have a Material Adverse
Effect on LCI, subject to obtaining or making the consents, approvals,
orders, authorizations, registrations, declarations and filings referred to
in paragraph (iii) below, any loan or credit agreement, note, mortgage,
bond, indenture, lease, benefit plan or other agreement, obligation,
instrument, permit, concession, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to LCI or
any Subsidiary of LCI or their respective properties or assets.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any supranational, national,
state, municipal or local government, any instrumentality, subdivision,
court, administrative agency or commission or other authority thereof, or
any quasi-governmental or private body exercising any regulatory, taxing,
importing or other governmental or quasi-governmental authority (a
"GOVERNMENTAL ENTITY"), is required by or with respect to LCI or any
Subsidiary of LCI in connection with the execution and delivery of this
Agreement by LCI or the consummation of the Merger and the other
transactions contemplated hereby, except for those required under or in
relation to (A) the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended (the "HSR ACT"), (B) the Communications Act of 1934, as amended
(the "COMMUNICATIONS ACT"), and any rules, regulations, practices and
policies promulgated by the Federal Communications Commission ("FCC"), (C)
state securities or "blue sky" laws (the "BLUE SKY LAWS"), (D) the
Securities Act of 1933, as amended (the "SECURITIES ACT"), (E) the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), (F) the
DGCL with respect to the filing of the Delaware Certificate of Merger, (G)
laws, rules, regulations, practices and orders of any state public service
commissions ("PUCS"), foreign telecommunications regulatory agencies or
similar state or foreign regulatory bodies, (H) rules and regulations of
NASDAQ and the New York Stock Exchange, Inc. (the "NYSE"), (I) antitrust or
other competition laws of other jurisdictions, and (J) such consents,
approvals, orders, authorizations, registrations, declarations and filings
the failure of which to make or obtain would not have a Material Adverse
Effect on LCI. Consents, approvals, orders, authorizations, registrations,
declarations and filings required under or in relation to any of the
foregoing clauses (A) through (I) are hereinafter referred to as "REQUIRED
CONSENTS."
10
(d) REPORTS AND FINANCIAL STATEMENTS.
(i) LCI has filed all required reports, schedules, forms,
statements and other documents required to be filed by it with the
Securities and Exchange Commission (the "SEC") since January 1, 1997
(collectively, including all exhibits thereto, the "LCI SEC REPORTS"). No
Subsidiary of LCI is required to file any form, report or other document
with the SEC. None of the LCI SEC Reports, as of their respective dates
(and, if amended or superseded by a filing prior to the date of this
Agreement or the Closing Date, then on the date of such filing), contained
or will contain any untrue statement of a material fact or omitted or will
omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading. Each of the financial statements (including the
related notes) included in the LCI SEC Reports presents fairly, in all
material respects, the consolidated financial position and consolidated
results of operations and cash flows of LCI and its Subsidiaries as of the
respective dates or for the respective periods set forth therein, all in
conformity with United States generally accepted accounting principles
("GAAP") consistently applied during the periods involved except as
otherwise noted therein, and subject, in the case of the unaudited interim
financial statements, to normal and recurring year-end adjustments that
have not been and are not expected to be material in amount. All of such
LCI SEC Reports, as of their respective dates (and as of the date of any
amendment to the respective LCI SEC Report), complied as to form in all
material respects with the applicable requirements of the Securities Act
and the Exchange Act and the rules and regulations promulgated thereunder.
(ii) LCI has made available to Qwest drafts of the consolidated
financial statements of LCI and its Subsidiaries at and for the year ended
December 31, 1997 of LCI and a proxy statement of LCI with respect to the
proposed 1998 annual meeting of stockholders of LCI (each in the respective
form thereof as of the date of this Agreement, collectively, the "LCI DRAFT
DISCLOSURES"). To the knowledge of LCI, each of the LCI Draft Disclosures
is in substantially final form, except that the LCI Draft Disclosures do
not disclose any information with respect to this Agreement, the
transactions contemplated hereby or the effect that this Agreement or such
transactions might have on the business, financial condition or results of
operations (actual, pro forma or projected) of LCI and its Subsidiaries
(collectively, the "LCI TRANSACTION INFORMATION"). The LCI Draft
Disclosures were not prepared for the purpose of providing to Qwest or any
other Person any LCI Transaction Information. To the knowledge of LCI,
except in each case with respect to LCI Transaction Information, (x) the
draft proxy statement included in the LCI Draft Disclosures, as of the date
of this Agreement, does not contain any untrue statement of a material fact
and does not omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they are made, not misleading, (y) the draft financial
statements (including the related notes) included in the LCI Draft
Disclosures present fairly, in all material respects, the consolidated
financial position and consolidated results of operations and cash flows of
LCI and its Subsidiaries as of the respective dates or for
11
the respective periods set forth therein, all in conformity with GAAP
consistently applied during the periods involved except as otherwise noted
therein and (z) all of the LCI Draft Disclosures comply as to form in all
material respects with the applicable requirements of the Exchange Act and
the rules and regulations promulgated thereunder.
(iii) From December 31, 1997 until the date of this Agreement, LCI
and its Subsidiaries have not incurred any liabilities that are of a nature
that would be required to be disclosed on a balance sheet of LCI and its
Subsidiaries or the footnotes thereto prepared in conformity with GAAP,
other than (A) liabilities incurred in the ordinary course of business or
(B) liabilities that would not have a Material Adverse Effect on LCI and
its Subsidiaries, taken together.
(e) INFORMATION SUPPLIED.
(i) None of the information supplied or to be supplied by LCI for
inclusion or incorporation by reference in (A) the registration statement
on Form S-4 (as defined in Section 5.1) to be filed with the SEC by Qwest
in connection with the issuance of the Qwest Common Stock in the Merger
will, at the time the Form S-4 is filed with the SEC, at any time it is
amended or supplemented or at the time it becomes effective under the
Securities Act, 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 not misleading and (B) the Joint Proxy
Statement/Prospectus (as defined in Section 5.1) included in the Form S-4
related to the LCI Stockholders Meeting and the Qwest Stockholders Meeting
(each, as defined in Section 5.1) and the Qwest Common Stock to be issued
in the Merger will, on the date it is first mailed to LCI stockholders or
Qwest Stockholders or at the time of the LCI Stockholders Meeting or the
Qwest Stockholders Meeting, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(ii) Notwithstanding the foregoing provisions of this Section
3.1(e), no representation or warranty is made by LCI with respect to
statements made or incorporated by reference in the Form S-4 or the Joint
Proxy Statement/Prospectus based on information supplied by Qwest for
inclusion or incorporation by reference therein.
(f) BOARD APPROVAL. The Board of Directors of LCI, by resolutions duly
adopted at a meeting duly called and held and not subsequently rescinded or
modified in any way (the "BOARD APPROVAL"), has duly (i) determined that this
Agreement and the Merger are in the best interests of LCI and its stockholders,
(ii) approved this Agreement and the Merger and (iii) recommended that the
stockholders of LCI approve this Agreement and the Merger. The LCI Board
Approval constitutes approval of this Agreement and the Merger for purposes of
Section 203 of the DGCL.
12
(g) VOTE REQUIRED. The affirmative vote of the holders of a majority
of the outstanding shares of LCI Common Stock to approve the Merger (the
"REQUIRED LCI VOTE") is the only vote of the holders of any class or series of
LCI capital stock necessary to adopt this Agreement and approve the transactions
contemplated hereby (assuming that Qwest is not an "interested stockholder" of
LCI under Section 203 of the DGCL immediately before the execution and delivery
of this Agreement).
(h) RIGHTS AGREEMENT. The Board of Directors of LCI has approved an
amendment to the Rights Agreement to the effect that Qwest, Merger Sub and their
affiliates shall not become an "Acquiring Person" (as defined in the Rights
Agreement) by reason of the execution of the Merger Agreement or the
consummation of the Merger.
(i) BROKERS OR FINDERS. No agent, broker, investment banker, financial
advisor or other firm or Person is or will be entitled to any broker's or
finder's fee or any other similar commission or fee in connection with any of
the transactions contemplated by this Agreement, except Xxxxxx Brothers Inc.
(the "LCI FINANCIAL ADVISOR"), whose fees and expenses will be paid by LCI in
accordance with LCI's agreement with such firm, based upon arrangements made by
or on behalf of LCI and previously disclosed to Qwest.
(j) OPINION OF LCI FINANCIAL ADVISOR. LCI has received the opinion of
the LCI Financial Advisor, dated the date of this Agreement, to the effect that,
as of such date, the Exchange Ratio is fair, from a financial point of view, to
the holders of LCI Common Stock, a copy of which opinion has been made available
to Qwest.
(k) AFFILIATE LETTER. On or prior to the date of the LCI Stockholder
Meeting, LCI will deliver to Qwest a letter (the "LCI AFFILIATE LETTER")
identifying all persons who are "affiliates" of LCI for purposes of Rule 145
under the Securities Act ("RULE 145"). On or prior to the Closing Date, LCI will
use all reasonable efforts to cause each person identified as an "affiliate" in
the LCI Affiliate Letter to deliver a written agreement (an "AFFILIATE
AGREEMENT") in connection with restrictions on affiliates under Rule 145.
3.2 REPRESENTATIONS AND WARRANTIES OF QWEST. Qwest represents and
warrants to LCI as follows:
(a) ORGANIZATION, STANDING AND POWER. Each of Qwest and each of its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or organization,
has all requisite power and authority to own, lease and operate its properties
and to carry on its business as now being conducted and is duly qualified and in
good standing to do business in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification
necessary other than in such jurisdictions where the failure so to qualify or to
be in good standing would not, either individually or in the aggregate, have a
Material Adverse Effect on Qwest. The copies of the certificate of incorporation
and by-laws of Qwest which were previously furnished to LCI are true, complete
and correct copies of such documents as in effect on the date of this Agreement.
13
(b) CAPITAL STRUCTURE.
(i) As of February 28, 1998, the authorized capital stock of Qwest
consisted of (A) 400,000,000 shares of Qwest Common Stock of which
206,669,874 shares were outstanding and in excess of 80% of such
outstanding shares were held of record by the Principal Stockholder as of
such date and (B) 25,000,000 shares of Preferred Stock, par value $.01 per
share, of which no shares were outstanding. Since February 28, 1998 to the
date of this Agreement, there have been no issuances of shares of the
capital stock of Qwest or any other securities of Qwest other than
issuances of shares pursuant to options or rights outstanding as of
February 28, 1998 under the Benefit Plans (as defined in Section 8.11(h))
of Qwest. All issued and outstanding shares of the capital stock of Qwest
are duly authorized, validly issued, fully paid and nonassessable, and no
class of capital stock is entitled to preemptive rights. There were
outstanding as of February 28, 1998 no options, warrants or other rights to
acquire capital stock from Qwest other than (x) options representing in the
aggregate the right to purchase 15,374,000 shares of Qwest Common Stock
issued to current or former employees and directors of Qwest and its
Subsidiaries pursuant to Qwest's Equity Incentive Plan, (y) warrants
representing in the aggregate the right to purchase 8,600,000 shares of
Qwest Common Stock issued by Qwest to Anschutz Family Investment Company
LLC (the "QWEST WARRANTS") and (z) rights to acquire shares of Qwest Common
Stock pursuant to the Amended and Restated Agreement and Plan of Merger
dated as of December 3, 1997 among Phoenix Network, Inc., Qwest and a
subsidiary of Qwest. Other than options or warrants or other rights to
acquire no more than 1,800,000 shares of Qwest Common Stock in the
aggregate, no options or warrants or other rights to acquire capital stock
from Qwest have been issued or granted since February 28, 1998 to the date
of this Agreement.
(ii) As of the date of this Agreement, no bonds, debentures, notes
or other indebtedness of Qwest having the right to vote on any matters on
which stockholders may vote ("QWEST VOTING DEBT") are issued or
outstanding.
(iii) Except as otherwise set forth in this Section 3.2(b), as of
the date of this Agreement, there are no securities, options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings of any
kind to which Qwest or any of its Subsidiaries is a party or by which any
of them is bound obligating Qwest or any of its Subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other voting securities of Qwest or any of its
Subsidiaries or obligating Qwest or any of its Subsidiaries to issue,
grant, extend or enter into any such security, option, warrant, call,
right, commitment, agreement, arrangement or undertaking. As of the date of
this Agreement, there are no outstanding obligations of Qwest or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any shares of
capital stock of Qwest or any of its Subsidiaries.
14
(c) AUTHORITY; NO CONFLICTS.
(i) Qwest has all requisite corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby,
subject, in the case of the issuance of the shares of Qwest Common Stock to
be issued in the Merger (the "SHARE ISSUANCE"), to the adoption of this
Agreement and the adoption of an amendment to the certificate of
incorporation of Qwest increasing the number of authorized shares of Qwest
Common Stock to not less than 600,000,000 shares (the "QWEST CHARTER
AMENDMENT") by the Required Qwest Vote (as defined in Section 3.2(g)) and
the filing of the Qwest Charter Amendment with the Delaware Secretary of
State. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Qwest, subject to the approval by
the stockholders of Qwest of the Share Issuance. This Agreement has been
duly executed and delivered by Qwest and constitutes a valid and binding
agreement of Qwest, enforceable against it in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and similar laws relating to or affecting
creditors generally, by general equity principles (regardless of whether
such enforceability is considered in a proceeding in equity or at law) or
by an implied covenant of good faith and fair dealing.
(ii) The execution and delivery of this Agreement by Qwest does
not or will not, as the case may be, and the consummation by Qwest of the
Merger and the other transactions contemplated hereby will not, conflict
with, or result in a Violation pursuant to: (A) any provision of the
certificate of incorporation or by-laws of Qwest or any Subsidiary of
Qwest, (B) except as would not have a Material Adverse Effect on Qwest,
subject to obtaining or making the consents, approvals, orders,
authorizations, registrations, declarations and filings referred to in
paragraph (iii) below, any loan or credit agreement, note, mortgage, bond,
indenture, lease, benefit plan or other agreement, obligation, instrument,
permit, concession, franchise, license, judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to Qwest or any Subsidiary of
Qwest or their respective properties or assets.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is
required by or with respect to Qwest or any Subsidiary of Qwest in
connection with the execution and delivery of this Agreement by Qwest or
the consummation of the Merger and the other transactions contemplated
hereby, except for the Required Consents and such consents, approvals,
orders, authorizations, registrations, declarations and filings the failure
of which to make or obtain would not have a Material Adverse Effect on
Qwest.
15
(d) REPORTS AND FINANCIAL STATEMENTS.
(i) Qwest has filed all required reports, schedules, forms,
statements and other documents required to be filed by it with the SEC
since January 1, 1997 (collectively, including all exhibits thereto, the
"QWEST SEC REPORTS"). No Subsidiary of Qwest is required to file any form,
report or other document with the SEC. None of the Qwest SEC Reports, as of
their respective dates (and, if amended or superseded by a filing prior to
the date of this Agreement or the Closing Date, then on the date of such
filing), contained or will contain any untrue statement of a material fact
or omitted or will omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Each of the
financial statements (including the related notes) included in the Qwest
SEC Reports presents fairly, in all material respects, the consolidated
financial position and consolidated results of operations and cash flows of
Qwest and its Subsidiaries as of the respective dates or for the respective
periods set forth therein, all in conformity with GAAP consistently applied
during the periods involved except as otherwise noted therein, and subject,
in the case of the unaudited interim financial statements, to normal and
recurring year-end adjustments that have not been and are not expected to
be material in amount. All of such Qwest SEC Reports, as of their
respective dates (and as of the date of any amendment to the respective
Qwest SEC Report), complied as to form in all material respects with the
applicable requirements of the Securities Act and the Exchange Act and the
rules and regulations promulgated thereunder.
(ii) Qwest has made available to LCI drafts of the consolidated
financial statements of Qwest and its Subsidiaries at and for the year
ended December 31, 1997 of Qwest and a proxy statement of Qwest with
respect to the proposed 1998 annual meeting of stockholders of Qwest (each
in the respective form thereof as of the date of this Agreement,
collectively, the "QWEST DRAFT DISCLOSURES"). To the knowledge of Qwest,
each of the Qwest Draft Disclosures, including the financial statements
included therein, is in substantially final form, except that the Qwest
Draft Disclosures do not disclose any information with respect to this
Agreement, the transactions contemplated hereby or the effect that this
Agreement or such transactions might have on the business, financial
condition or results of operations (actual, pro forma or projected) of
Qwest and its Subsidiaries (collectively, the "QWEST TRANSACTION
INFORMATION"). The Qwest Draft Disclosures were not prepared for the
purpose of providing to LCI or any other Person any Qwest Transaction
Information. To the knowledge of Qwest, except in each case with respect to
Qwest Transaction Information, (x) the draft proxy statement included in
the Qwest Draft Disclosures, as of the date of this Agreement, does not
contain any untrue statement of a material fact and does not omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they are
made, not misleading, (y) the draft financial statements (including the
related notes) included in the Qwest Draft Disclosures present fairly, in
all material respects, the consolidated financial position and
16
consolidated results of operations and cash flows of Qwest and its
Subsidiaries as of the respective dates or for the respective periods set
forth therein, all in conformity with GAAP consistently applied during the
periods involved except as otherwise noted therein and (z) all of the Qwest
Draft Disclosures comply as to form in all material respects with the
applicable requirements of the Exchange Act and the rules and regulations
promulgated thereunder.
(iii) From December 31, 1997 until the date of this Agreement,
Qwest and its Subsidiaries have not incurred any liabilities that are of a
nature that would be required to be disclosed on a balance sheet of Qwest
and its Subsidiaries or the footnotes thereto prepared in conformity with
GAAP, other than (A) liabilities incurred in the ordinary course of
business or (B) liabilities that would not have a Material Adverse Effect
on Qwest and its Subsidiaries, taken together.
(e) INFORMATION SUPPLIED.
(i) None of the information supplied or to be supplied by Qwest
for inclusion or incorporation by reference in (A) the Form S-4 will, at
the time the Form S-4 is filed with the SEC, at any time it is amended or
supplemented or at the time it becomes effective under the Securities Act,
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 not misleading, and (B) the Joint Proxy
Statement/Prospectus will, on the date it is first mailed to LCI
stockholders or Qwest stockholders or at the time of the LCI Stockholders
Meeting or the Qwest Stockholders Meeting, contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The Form S-4
and the Joint Proxy Statement/Prospectus will comply as to form in all
material respects with the requirements of the Exchange Act and the
Securities Act and the rules and regulations of the SEC thereunder.
(ii) Notwithstanding the foregoing provisions of this Section
3.2(e), no representation or warranty is made by Qwest with respect to
statements made or incorporated by reference in the Form S-4 or the Joint
Proxy Statement/Prospectus based on information supplied by LCI for
inclusion or incorporation by reference therein.
(f) BOARD APPROVAL. The Board of Directors of Qwest, by resolutions
duly adopted at a meeting duly called and held and not subsequently rescinded or
modified in any way, has duly (i) determined that this Agreement and the Merger
are in the best interests of Qwest and its stockholders, (ii) approved this
Agreement and the Merger, (iii) approved the Qwest Charter Amendment and (iv)
recommended that the stockholders of Qwest approve the Qwest Charter Amendment
and the Share Issuance.
(g) VOTE REQUIRED. The affirmative vote of holders of shares of Qwest
Common Stock representing a majority of the outstanding Qwest Common Stock (in
the
17
case of the Qwest Charter Amendment) and of the total votes cast at a meeting of
the holders of outstanding shares of Qwest Common Stock (in the case of the
Share Issuance) (collectively, the "REQUIRED QWEST VOTE"), is the only vote of
the holders of any class or series of Qwest capital stock necessary to approve
the Qwest Charter Amendment and the Share Issuance.
(h) BROKERS OR FINDERS. No agent, broker, investment banker, financial
advisor or other firm or Person is or will be entitled to any broker's or
finder's fee or any other similar commission or fee in connection with any of
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Qwest, except Salomon Brothers Inc (the "QWEST FINANCIAL
ADVISOR"), whose fees and expenses will be paid by Qwest in accordance with
Qwest's agreement with such firm based upon arrangements made by or on behalf of
Qwest and previously disclosed to LCI.
(i) OPINION OF FINANCIAL ADVISOR. Qwest has received the opinion of
the Qwest Financial Advisor, dated the date of this Agreement, to the effect
that, as of such date, the Exchange Ratio is fair, from a financial point of
view, to Qwest, a copy of which opinion has been made available to LCI.
3.3 REPRESENTATIONS AND WARRANTIES OF QWEST AND MERGER SUB. Qwest and
Merger Sub represent and warrant to LCI as follows:
(a) ORGANIZATION AND CORPORATE POWER. Merger Sub is a corporation duly
incorporated, validly existing and in good standing under the laws of Delaware.
Merger Sub is a direct wholly-owned subsidiary of Qwest.
(b) CORPORATE AUTHORIZATION. Merger Sub has all requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance by
Merger Sub of this Agreement and the consummation by Merger Sub of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Merger Sub. This Agreement has been duly
executed and delivered by Merger Sub and constitutes a valid and binding
agreement of Merger Sub, enforceable against it in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting
creditors generally, by general equity principles (regardless or whether such
enforceability is considered in a proceeding in equity or at law) or by an
implied covenant of good faith and fair dealing.
(c) NON-CONTRAVENTION. The execution, delivery and performance by
Merger Sub of this Agreement and the consummation by Merger Sub of the
transactions contemplated hereby do not and will not contravene or conflict with
the certificate of incorporation or by-laws of Merger Sub.
(d) NO BUSINESS ACTIVITIES. Merger Sub has not conducted any
activities other than in connection with the organization of Merger Sub, the
negotiation and execution
18
of this Agreement and the consummation of the transactions contemplated hereby.
Merger Sub has no Subsidiaries.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 COVENANTS OF LCI. During the period from the date of this
Agreement and continuing until the Effective Time, LCI agrees as to itself and
its Subsidiaries that (except as expressly contemplated or permitted by this
Agreement or as otherwise indicated on the LCI Disclosure Schedule or as
required by a Governmental Entity of competent jurisdiction or to the extent
that Qwest shall otherwise consent in writing):
(a) ORDINARY COURSE.
(i) LCI and its Subsidiaries shall carry on their respective
businesses in the usual, regular and ordinary course in all material
respects, in substantially the same manner as heretofore conducted, and
shall use all reasonable efforts to preserve intact their present lines of
business, maintain their rights and franchises and preserve their
relationships with customers, suppliers and others having business dealings
with them to the end that their ongoing businesses shall not be impaired in
any material respect at the Effective Time; PROVIDED, HOWEVER, that no
action by LCI or its Subsidiaries with respect to matters specifically
addressed by any other provision of this Section 4.1 shall be deemed a
breach of this Section 4.1(a)(i) unless such action would constitute a
breach of one or more of such other provisions.
(ii) LCI shall not, and shall not permit any of its Subsidiaries
to, (A) enter into any new material line of business or (B) incur or commit
to any capital expenditures other than capital expenditures incurred or
committed to in the ordinary course of business consistent with past
practice and which, together with all such expenditures incurred or
committed since January 1, 1998, are not in excess of the respective
amounts by category or in the aggregate set forth in LCI's 1998 capital
expenditure budget, as previously disclosed to Qwest or, if the Closing
Date has not occurred prior to December 31, 1998, such additional amounts
for any subsequent period as may be consented to by Qwest, such consent not
to be unreasonably withheld, or, if Qwest shall not have so consented, an
amount not greater than an amount equal to a pro rata portion of LCI's 1998
Capital Expenditure Budget.
(b) DIVIDENDS; CHANGES IN SHARE CAPITAL. LCI shall not, and shall not
permit any of its Subsidiaries to, and shall not propose to, (i) declare or pay
any dividends on or make other distributions in respect of any of its capital
stock, except dividends by wholly owned Subsidiaries of LCI, (ii) split, combine
or reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for, shares of its capital stock, except for any such transaction by a wholly
owned Subsidiary of LCI which remains a wholly owned Subsidiary after
consummation of
19
such transaction, or (iii) repurchase, redeem or otherwise acquire any shares of
its capital stock or any securities convertible into or exercisable for any
shares of its capital stock except for the purchase from time to time by LCI of
LCI Common Stock (and the associated Rights) in the ordinary course of business
consistent with past practice in connection with the LCI Benefit Plans.
(c) ISSUANCE OF SECURITIES. LCI shall not, and shall not permit any of
its Subsidiaries to, issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock of any class, any
LCI Voting Debt or any securities convertible into or exercisable for, or any
rights, warrants or options to acquire, any such shares or LCI Voting Debt, or
enter into any agreement with respect to any of the foregoing, other than (i)
the issuance of LCI Common Stock (and the associated Rights) upon the exercise
of LCI Warrants or stock options or in connection with other stock-based
benefits plans outstanding on the date hereof in accordance with their present
terms, (ii) issuances by a wholly owned Subsidiary of LCI of capital stock to
such Subsidiary's parent, (iii) issuances in accordance with the Rights
Agreement or (iv) issuances of shares, options, rights or other awards and
amendments to equity-related awards in numbers not greater than those set forth
in Section 4.1(c) of the LCI Disclosure Schedule.
(d) GOVERNING DOCUMENTS. Except to the extent required to comply with
their respective obligations hereunder, required by law or required by the rules
and regulations of the NYSE, LCI and its material Subsidiaries shall not amend,
in the case of Subsidiaries, in any material respect, or propose to so amend
their respective certificates of incorporation, by-laws or other governing
documents.
(e) NO ACQUISITIONS. LCI shall not, and shall not permit any of its
Subsidiaries to, acquire or agree to acquire by merging or consolidating with,
or by purchasing a substantial equity interest in or a substantial portion of
the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof or
otherwise acquire or agree to acquire any assets (other than the acquisition of
assets used in the operations of the business of LCI and its Subsidiaries in the
ordinary course); PROVIDED, HOWEVER, that the foregoing shall not prohibit (x)
internal reorganizations or consolidations involving existing Subsidiaries of
LCI, (y) the creation of new Subsidiaries of LCI organized to conduct or
continue activities otherwise permitted by this Agreement or (z) after September
8, 1998, acquisitions by LCI and its Subsidiaries the fair market value of the
total consideration (including the value of indebtedness or other liability
acquired or assumed) for which does not exceed $400 million in the aggregate.
(f) NO DISPOSITIONS. Other than (i) internal reorganizations or
consolidations involving existing Subsidiaries of LCI, (ii) dispositions
referred to in LCI SEC Reports filed prior to the date of this Agreement, (iii)
as may be required by or in conformance with law or regulation in order to
permit or facilitate the consummation of the transactions contemplated hereby or
(iv) in the ordinary course of business, LCI shall not, and shall not permit any
Subsidiary of LCI to, sell, lease, encumber or otherwise dispose of,
20
or agree to sell, lease, encumber or otherwise dispose of, any of its assets
(including capital stock of Subsidiaries of LCI) which are material,
individually or in the aggregate, to LCI.
(g) INVESTMENTS; INDEBTEDNESS. LCI shall not, and shall not permit any
of its Subsidiaries to, (i) other than in connection with actions permitted by
Section 4.1(e), make any loans, advances or capital contributions to, or
investments in, any other Person, other than by LCI or a Subsidiary of LCI to or
in LCI or any Subsidiary of LCI, (ii) pay, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than loans, advances, capital contributions,
investments, payments, discharges or satisfactions incurred or committed to in
the ordinary course of business consistent with past practice or (iii) other
than in connection with actions permitted by Section 4.1(e), create, incur,
assume or suffer to exist any indebtedness, issuances of debt securities,
guarantees, loans or advances not in existence as of the date of this Agreement
except pursuant to the credit facilities, indentures and other arrangements in
existence on the date of this Agreement and in the ordinary course of business,
and any other indebtedness existing on the date of this Agreement, in each case
as such credit facilities, indentures, other arrangements and other existing
indebtedness may be amended, extended, modified, refunded, renewed or refinanced
after the date of this Agreement, but only if the aggregate principal amount
thereof is not increased thereby, the term thereof is not extended thereby and
the other terms and conditions thereof, taken as a whole, are not less
advantageous to LCI and its Subsidiaries than those in existence as of the date
of this Agreement.
(h) TAX-FREE QUALIFICATION. LCI shall not, and shall not permit any of
its Subsidiaries to, take any action that would prevent or impede the Merger
from qualifying as a reorganization under Section 368 of the Code.
(i) COMPENSATION. Other than as contemplated by Section 5.6 or by
Schedule 4.1(i), LCI shall not, and shall not permit any of its Subsidiaries to,
increase the amount of compensation of any senior executive officer except in
the ordinary course of business consistent with past practice or as required by
an existing agreement, make any increase in or commitment to increase any
employee benefits, issue any additional LCI Stock Options, adopt or make any
commitment to adopt any additional employee benefit plan or make any
contribution, other than regularly scheduled contributions, to any Benefit Plan.
(j) OTHER ACTIONS. LCI shall not, and shall not permit any of its
Subsidiaries to, take any action that would, or that could reasonably be
expected to, result in, except as otherwise permitted by Section 5.5, any of the
conditions to the Merger set forth in Article VI not being satisfied.
(k) ACCOUNTING METHODS; INCOME TAX ELECTIONS. Except as disclosed in
LCI SEC Reports filed prior to the date of this Agreement, or as required by a
Governmental Entity, LCI shall not change its methods of accounting in effect at
December 31, 1997, except as required by changes in GAAP as concurred in by
LCI's independent auditors. LCI
21
shall not (i) change its fiscal year or (ii) make any material tax election,
other than in the ordinary course of business consistent with past practice,
without consultation with Qwest.
(l) RIGHTS AGREEMENT. Except as provided in Section 5.9, LCI shall not
amend, modify or waive any provision of the Rights Agreement, and shall not take
any action to redeem the Rights or render the Rights inapplicable to any
transaction, other than to permit another transaction that the LCI Board has
determined is a Superior Proposal (as defined in Section 8.11), to be
consummated after termination of this Agreement.
4.2 COVENANTS OF QWEST. During the period from the date of this
Agreement and continuing until the Effective Time, Qwest agrees as to itself and
its Subsidiaries that (except as expressly contemplated or permitted by this
Agreement or as otherwise indicated on the Qwest Disclosure Schedule or as
required by a Governmental Entity of competent jurisdiction or to the extent
that LCI shall otherwise consent in writing):
(a) ORDINARY COURSE.
(i) Qwest and its Subsidiaries shall carry on their respective
businesses in the usual, regular and ordinary course in all material
respects, in substantially the same manner as heretofore conducted, and
shall use all reasonable efforts to preserve intact their present lines of
business, maintain their rights and franchises and preserve their
relationships with customers, suppliers and others having business dealings
with them to the end that their ongoing businesses shall not be impaired in
any material respect at the Effective Time; PROVIDED, HOWEVER, that no
action by Qwest or its Subsidiaries with respect to matters specifically
addressed by any other provisions of this Section 4.2 shall be deemed a
breach of this Section 4.2(a)(i) unless such action would constitute a
breach of one or more of such other provisions.
(ii) Qwest shall not, and shall not permit any of its Subsidiaries
to, enter into any new material line of business that is not part of the
communications business, other than incidentally as part of a larger
acquisition within an existing line of business.
(b) DIVIDENDS; CHANGES IN SHARE CAPITAL. Qwest shall not, and shall
not permit any of its Subsidiaries to, and shall not propose to, (i) declare or
pay any dividends on or make other distributions in respect of any of its
capital stock, except dividends by wholly owned Subsidiaries of Qwest, (ii)
split, combine or reclassify any of its capital stock or issue or authorize or
propose the issuance of any other securities in respect of, in lieu of or in
substitution for, shares of its capital stock, except for any such transaction
by a wholly owned Subsidiary of Qwest which remains a wholly owned Subsidiary
after consummation of such transaction, (iii) repurchase, redeem or otherwise
acquire any shares of its capital stock or any securities convertible into or
exercisable for any shares of its capital stock except for the purchase from
time to time by Qwest of Qwest Common Stock in the ordinary course of business
required by its 401(k) plan on a non-discretionary basis or in
22
connection with rights to purchase shares directly from holders who received
such shares in an acquisition by Qwest previously disclosed to LCI and permitted
by Section 4.2(e).
(c) ISSUANCE OF SECURITIES. Qwest shall not, and shall not permit any
of its Subsidiaries to, issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock of any class, any
Qwest Voting Debt or any securities convertible into or exercisable for, or any
rights, warrants or options to acquire, any such shares or Qwest Voting Debt, or
enter into any agreement with respect to any of the foregoing, or amend the
Qwest Warrants other than (i) the issuance of Qwest Common Stock upon the
exercise of stock options, (ii) issuances by a wholly owned Subsidiary of Qwest
of capital stock to such Subsidiary's parent or another wholly owned Subsidiary
of Qwest, (iii) issuances of options, awards, and amendments to equity-related
awards pursuant to Qwest benefit plans as in effect from time to time, or (iv)
issuances in respect of any acquisitions, mergers, share exchanges,
consolidations, business combinations or similar transactions by Qwest or its
Subsidiaries permitted by Sections 4.2(e) and 4.2(k).
(d) GOVERNING DOCUMENTS. Except to the extent required to comply with
their respective obligations hereunder, required by law or required by the rules
and regulations of NASDAQ, Qwest and its material Subsidiaries shall not amend,
in the case of Subsidiaries, in any material respect, or propose to so amend
their respective certificates of incorporation, by-laws or other governing
documents, except that Merger Sub may amend its certificate of incorporation to
increase the number of authorized shares of its common stock.
(e) NO ACQUISITIONS. Other than acquisitions the fair market value of
the total consideration (including the value of indebtedness or other liability
acquired or assumed) for which does not exceed $1 billion in the aggregate,
Qwest shall not, and shall not permit any of its Subsidiaries to, acquire or
agree to acquire by merging or consolidating with, or by purchasing a
substantial equity interest in or a substantial portion of the assets of, or by
any other manner, any business or any corporation, partnership, association or
other business organization or division thereof or otherwise acquire or agree to
acquire any assets (other than the acquisition of assets used in the ordinary
course); PROVIDED, HOWEVER, that the foregoing shall not prohibit (x) internal
reorganizations or consolidations involving existing Subsidiaries of Qwest or
(y) the creation of new Subsidiaries of Qwest organized to conduct or continue
activities otherwise permitted by this Agreement.
(f) NO DISPOSITIONS. Other than (i) internal reorganizations or
consolidations involving existing Subsidiaries of Qwest, (ii) dispositions
referred to in Qwest SEC Reports filed prior to the date of this Agreement,
(iii) as may be required by or in conformance with law or regulation in order to
permit or facilitate the consummation of the transactions contemplated hereby or
(iv) in the ordinary course of business, Qwest shall not, and shall not permit
any Subsidiary of Qwest to, sell, lease, encumber or otherwise dispose of, or
agree to sell, lease, encumber or otherwise dispose of, any of its assets
(including capital stock of Subsidiaries of Qwest) which are material,
individually or in the aggregate, to Qwest.
23
(g) INVESTMENTS. Other than in the ordinary course of business or as
permitted by Section 4.2(e), Qwest shall not, and shall not permit any of its
Subsidiaries to make any loans, advances or capital contributions to, or
investments in, any other Person, other than by Qwest or a Subsidiary of Qwest
to or in Qwest or any Subsidiary of Qwest.
(h) TAX-FREE QUALIFICATION. Qwest shall not, and shall not permit any
of its Subsidiaries to, take any action that would prevent or impede the Merger
from qualifying as a reorganization under Section 368 of the Code.
(i) OTHER ACTIONS. Qwest shall not, and shall not permit any of its
Subsidiaries to, take any action that would, or that could reasonably be
expected to, result in any of the conditions to the Merger set forth in Article
VI not being satisfied.
(j) ACCOUNTING METHODS; INCOME TAX ELECTIONS. Except as disclosed in
Qwest SEC Reports filed prior to the date of this Agreement, or as required by a
Governmental Entity, Qwest shall not change its methods of accounting in effect
at December 31, 1997, except as required by changes in GAAP as concurred in by
Qwest's independent auditors. Qwest shall not (i) change its fiscal year or (ii)
make any material tax election, other than in the ordinary course of business
consistent with past practice, without consultation with LCI.
(k) Qwest agrees that prior to the Closing Date it shall not, without
the prior written consent of LCI (such consent not to be unreasonably withheld),
agree to enter into any merger, reorganization, share exchange, business
combination or similar transaction pursuant to which any stockholder of Qwest
shall receive any consideration (whether payable in cash, securities, property
or other consideration) in exchange for its shares of Qwest Common Stock unless
both (i) such transaction is not to be consummated until after the termination
of this Agreement pursuant to Section 7.1 or the Effective Time and (ii) the
consideration per share of Qwest Common Stock payable in connection therewith
has a value, as reasonably determined by Qwest, of not less than $35-15/16.
4.3 ADVICE OF CHANGES; GOVERNMENTAL FILINGS. Each party shall (a)
confer on a regular and frequent basis with the other and (b) report (to the
extent permitted by law or regulation or any applicable confidentiality
agreement) on operational matters. LCI and Qwest shall file all reports required
to be filed by each of them with the SEC (and all other Governmental Entities)
between the date of this Agreement and the Effective Time and shall (to the
extent permitted by law or regulation or any applicable confidentiality
agreement) deliver to the other party copies of all such reports, announcements
and publications promptly after the same are filed. Subject to applicable laws
relating to the exchange of information, each of LCI and Qwest shall have the
right to review in advance, and will consult with the other with respect to, all
the information relating to the other party and each of their respective
Subsidiaries, which appears in any filings, announcements or publications made
with, or written materials submitted to, any third party or any Governmental
Entity in connection with the transactions contemplated by this Agreement. In
exercising the foregoing right, each of the parties hereto agrees to act
reasonably and as promptly as practicable. Each party agrees that, to the extent
practicable and as timely as
24
practicable, it will consult with, and provide all appropriate and necessary
assistance to, the other party with respect to the obtaining of all permits,
consents, approvals and authorizations of all third parties and Governmental
Entities necessary or advisable to consummate the transactions contemplated by
this Agreement and each party will keep the other party apprised of the status
of matters relating to completion of the transactions contemplated hereby.
4.4 TRANSITION PLANNING; CONTINUED OPERATIONS OF LCI. LCI and Qwest
shall each appoint four officers to serve from time to time as their respective
representatives on a committee that will be responsible for coordinating
transition planning and implementation relating to the Merger. The initial
representatives of LCI shall be H. Xxxxx Xxxxxxxx, Xxxxxx Xxxxxxxx, Xxxxx Xxxxxx
and Xxxxx Xxxxx. The initial representatives of Qwest shall be Xxxxxx X.
Xxxxxxx, Xxxxxx X. Xxxxxxxx, Xxxxx X. Xxxxx and Xxxxx X. Xxxxx. It is the
current intention of Qwest that LCI will continue to operate LCI's offices and
facilities in Fairfax County, Virginia and Dublin, Ohio.
4.5 CONTROL OF OTHER PARTY'S BUSINESS. Nothing contained in this
Agreement shall give LCI, directly or indirectly, the right to control or direct
Qwest's operations prior to the Effective Time. Nothing contained in this
Agreement shall give Qwest, directly or indirectly, the right to control or
direct LCI's operations prior to the Effective Time. Prior to the Effective
Time, each of LCI and Qwest shall exercise, consistent with the terms and
conditions of this Agreement, complete control and supervision over its
respective operations.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 PREPARATION OF PROXY STATEMENT; LCI STOCKHOLDERS MEETING.
(a) As promptly as practicable following the date hereof, Qwest shall,
in cooperation with LCI, prepare and file with the SEC preliminary proxy
materials which shall constitute the Joint Proxy Statement/Prospectus (such
proxy statement/prospectus, and any amendments or supplements thereto, the
"JOINT PROXY STATEMENT/PROSPECTUS") and a registration statement on Form S-4
with respect to the issuance of Qwest Common Stock in the Merger (the "FORM
S-4"). The Joint Proxy Statement/Prospectus will be included in the Form S-4 as
Qwest's prospectus. The Form S-4 and the Joint Proxy Statement/Prospectus shall
comply as to form in all material respects with the applicable provisions of the
Securities Act and the Exchange Act and the rules and regulations thereunder.
Each of Qwest and LCI shall use all reasonable efforts to have the Form S-4
cleared by the SEC as promptly as practicable after filing with the SEC and to
keep the Form S-4 effective as long as is necessary to consummate the Merger.
Qwest shall, as promptly as practicable after receipt thereof, provide copies of
any written comments received from the SEC with respect to the Joint Proxy
Statement/Prospectus to LCI and advise LCI of any oral comments with respect to
the Proxy Statement/Prospectus received
25
from the SEC. Qwest agrees that none of the information supplied or to be
supplied by Qwest for inclusion or incorporation by reference in the Joint Proxy
Statement/Prospectus and each amendment or supplement thereto, at the time of
mailing thereof and at the time of the LCI Stockholders Meeting or the Qwest
Stockholders Meeting, will contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading. LCI agrees that none of the information supplied or to be
supplied by LCI for inclusion or incorporation by reference in the Joint Proxy
Statement/Prospectus and each amendment or supplement thereto, at the time of
mailing thereof and at the time of the LCI Stockholders Meeting or the Qwest
Stockholders Meeting, will contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading. For purposes of the foregoing, it is understood and agreed
that information concerning or related to Qwest and the Qwest Stockholders
Meeting will be deemed to have been supplied by Qwest and information concerning
or related to LCI and the LCI Stockholders Meeting shall be deemed to have been
supplied by LCI. Qwest will provide LCI with a reasonable opportunity to review
and comment on any amendment or supplement to the Joint Proxy
Statement/Prospectus prior to filing such with the SEC, and will provide LCI
with a copy of all such filings made with the SEC. No amendment or supplement to
the information supplied by LCI for inclusion in the Joint Proxy
Statement/Prospectus shall be made without the approval of LCI, which approval
shall not be unreasonably withheld or delayed.
(b) Subject to Sections 5.5 and 7.1(f), LCI shall, as promptly as
practicable following the execution of this Agreement, duly call, give notice
of, convene and hold a meeting of its stockholders (the "LCI STOCKHOLDERS
MEETING") for the purpose of obtaining the Required LCI Vote with respect to the
transactions contemplated by this Agreement, shall take all lawful action to
solicit the adoption of this Agreement by the Required LCI Vote and the Board of
Directors of LCI shall recommend adoption of this Agreement by the stockholders
of LCI. Without limiting the generality of the foregoing but subject to its
rights pursuant to Sections 5.5 and 7.1(f), LCI agrees that its obligations
pursuant to the first sentence of this Section 5.1(b) shall not be affected by
the commencement, public proposal, public disclosure or communication to LCI of
any Acquisition Proposal.
(c) Qwest shall, as promptly as practicable following the execution of
this Agreement, duly call, give notice of, convene and hold a meeting of its
stockholders (the "QWEST STOCKHOLDERS MEETING") for the purpose of obtaining the
Required Qwest Vote, shall take all lawful action to solicit the approval of the
Share Issuance by the Required Qwest Vote and the Board of Directors of Qwest
shall recommend approval of the transactions contemplated by this Agreement by
the stockholders of Qwest.
5.2 QWEST BOARD OF DIRECTORS. At or prior to the Effective Time, the
Board of Directors of Qwest will take all action necessary to elect the Chief
Executive Officer and one other director of LCI on the date of this Agreement
selected by LCI as members of the Board of Directors of Qwest to serve until the
end of the term beginning at the annual meeting of Qwest's stockholders in 1999.
In the event that such Chief Executive Officer is
26
so elected and agrees to serve as a director of Qwest, the Board of Directors of
Qwest shall appoint him as Vice Chairman of Qwest.
5.3 ACCESS TO INFORMATION. Upon reasonable notice, each party shall
(and shall cause its Subsidiaries to) afford to the officers, employees,
accountants, counsel, financial advisors and other representatives of the other
party reasonable access during normal business hours, during the period prior to
the Effective Time, to all its properties, books, contracts, commitments and
records and, during such period, such party shall (and shall cause its
Subsidiaries to) furnish promptly to the other party (a) a copy of each report,
schedule, registration statement and other document filed, published, announced
or received by it during such period pursuant to the requirements of Federal or
state securities laws, as applicable (other than documents which such party is
not permitted to disclose under applicable law), and (b) consistent with its
legal obligations, all other information concerning its business, properties and
personnel as such other party may reasonably request; PROVIDED, HOWEVER, that
either party may restrict the foregoing access to the extent that (i) a
Governmental Entity requires such party or any of its Subsidiaries to restrict
access to any properties or information reasonably related to any such contract
on the basis of applicable laws and regulations with respect to national
security matters or (ii) any law, treaty, rule or regulation of any Governmental
Entity applicable to such party requires such party or its Subsidiaries to
restrict access to any properties or information. The parties will hold any such
information which is non-public in confidence to the extent required by, and in
accordance with, the provisions of the letter dated February 25, 1998 between
LCI and Qwest (the "CONFIDENTIALITY AGREEMENT"). Any investigation by Qwest or
LCI shall not affect the representations and warranties of LCI or Qwest, as the
case may be.
5.4 BEST EFFORTS.
(a) Subject to the terms and conditions of this Agreement, each party
will use its best efforts to take, or cause to be taken, all actions and to do,
or cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate the Merger and the other transactions
contemplated by this Agreement as soon as practicable after the date hereof. In
furtherance and not in limitation of the foregoing, each party hereto agrees to
make an appropriate filing of a Notification and Report Form pursuant to the HSR
Act with respect to the transactions contemplated hereby as promptly as
practicable after the date hereof and to supply as promptly as practicable any
additional information and documentary material that may be requested pursuant
to the HSR Act and to take all other actions necessary to cause the expiration
or termination of the applicable waiting periods under the HSR Act as soon as
practicable. Nothing in this Section 5.4(a) shall require any of Qwest and its
Subsidiaries to sell or otherwise dispose of, or permit the sale or other
disposition of, any assets of Qwest, LCI or their respective Subsidiaries,
whether as a condition to obtaining any approval from a Governmental Entity or
any other Person or for any other reason, if Qwest reasonably determines that
such sale or other disposition would have or is likely to have a Material
Adverse Effect on Qwest and its Subsidiaries (including the Surviving
Corporation and its Subsidiaries), taken together, after giving effect to the
Merger.
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(b) Each of Qwest and LCI shall, in connection with the efforts
referenced in Section 5.4(a) to obtain all requisite approvals and
authorizations for the transactions contemplated by this Merger Agreement under
the HSR Act or any other Regulatory Law (as defined below), use its best efforts
to (i) cooperate in all respects with each other in connection with any filing
or submission and in connection with any investigation or other inquiry,
including any proceeding initiated by a private party, (ii) promptly inform the
other party of any communication received by such party from, or given by such
party to, the FCC, PUCs, the Antitrust Division of the Department of Justice
(the "DOJ") or any other Governmental Entity and of any material communication
received or given in connection with any proceeding by a private party, in each
case regarding any of the transactions contemplated hereby, and (iii) permit the
other party to review any communication given by it to, and consult with each
other in advance of any meeting or conference with, the FCC, PUCs, the DOJ or
any such other Governmental Entity or, in connection with any proceeding by a
private party, with any other Person, and to the extent permitted by the FCC,
PUCs, the DOJ or such other applicable Governmental Entity or other Person, give
the other party the opportunity to attend and participate in such meetings and
conferences. For purposes of this Agreement, "REGULATORY LAW" means the Xxxxxxx
Act, as amended, the Xxxxxxx Act, as amended, the HSR Act, the Federal Trade
Commission Act, as amended, the Federal Communications Act, as amended, and all
other federal, state and foreign, if any, statutes, rules, regulations, orders,
decrees, administrative and judicial doctrines and other laws that are designed
or intended to prohibit, restrict or regulate actions having the purpose or
effect of monopolization or restraint of trade or lessening of competition,
whether in the communications industry or otherwise through merger or
acquisition.
(c) In furtherance and not in limitation of the covenants of the
parties contained in Sections 5.4(a) and 5.4(b), if any administrative or
judicial action or proceeding, including any proceeding by a private party, is
instituted (or threatened to be instituted) challenging any transaction
contemplated by this Agreement as violative of any Regulatory Law, each of Qwest
and LCI shall cooperate in all respects with each other and use its respective
best efforts to contest and resist any such action or proceeding and to have
vacated, lifted, reversed or overturned any decree, judgment, injunction or
other order, whether temporary, preliminary or permanent, that is in effect and
that prohibits, prevents or restricts consummation of the transactions
contemplated by this Agreement. Notwithstanding the foregoing or any other
provision of this Agreement, nothing in this Section 5.4 shall limit a party's
right to terminate this Agreement pursuant to Section 7.1(b) or 7.1(c) so long
as such party has up to then complied in all respects with its obligations under
this Section 5.4.
(d) If any objections are asserted with respect to the transactions
contemplated hereby under any Regulatory Law or if any suit is instituted by any
Governmental Entity or any private party challenging any of the transactions
contemplated hereby as violative of any Regulatory Law, each of Qwest and LCI
shall use its best efforts to resolve any such objections or challenge as such
Governmental Entity or private party may have to such transactions under such
Regulatory Law so as to permit consummation of the transactions contemplated by
this Agreement.
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(e) Each of Qwest, Merger Sub and LCI shall use its best efforts to
cause the Merger to qualify and will not (both before and after consummation of
the Merger) take any actions which to its knowledge could reasonably be expected
to prevent the Merger from qualifying, as a reorganization under the provisions
of Section 368 of the Code.
5.5 ACQUISITION PROPOSALS. LCI agrees that neither it nor any of its
Subsidiaries nor any of the officers and directors of it or its Subsidiaries
shall, and that it shall direct and use its best efforts to cause its and its
Subsidiaries' employees, agents and representatives (including any investment
banker, attorney or accountant retained by it or any of its Subsidiaries) not
to, directly or indirectly, initiate, solicit, encourage or knowingly facilitate
(including by way of furnishing information) any inquiries or the making of any
proposal or offer with respect to a merger, reorganization, share exchange,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving, or any purchase or sale of all or any
significant portion of the assets or more than 15% (or in the case of
acquisition by an Institutional Investor (as defined in the Rights Plan) more
than 20%) of the common stock of, it or any of its Subsidiaries (any such
proposal or offer (other than a proposal or offer made by Qwest or an affiliate
thereof) being hereinafter referred to as an "ACQUISITION PROPOSAL"). LCI
further agrees that neither it nor any of its Subsidiaries nor any of the
officers and directors of it or its Subsidiaries shall, and that it shall direct
and use its best efforts to cause its and its Subsidiaries' employees, agents
and representatives (including any investment banker, attorney or accountant
retained by it or any of its Subsidiaries) not to, directly or indirectly, have
any discussion with or provide any confidential information or data to any
Person relating to an Acquisition Proposal, or engage in any negotiations
concerning an Acquisition Proposal, or knowingly facilitate any effort or
attempt to make or implement an Acquisition Proposal or accept an Acquisition
Proposal. Notwithstanding the foregoing, LCI or its Board of Directors shall be
permitted to (A) to the extent applicable, comply with Rule 14d-9 and Rule
14e-2(a) promulgated under the Exchange Act with regard to an Acquisition
Proposal, (B) in response to an unsolicited bona fide written Acquisition
Proposal by any Person, recommend approval of such an unsolicited bona fide
written Acquisition Proposal to the stockholders of LCI or withdraw or modify in
any adverse manner the Board Approval or (C) engage in any discussions or
negotiations with, or provide any information to, any Person in response to an
unsolicited bona fide written Acquisition Proposal by any such Person, if and
only to the extent that, in any such case as is referred to in clause (B) or
(C), (i) the LCI Stockholders Meeting shall not have occurred, (ii) the Board of
Directors of LCI concludes in good faith that such Acquisition Proposal (x) in
the case of clause (B) above would, if consummated, constitute a Superior
Proposal or (y) in the case of clause (C) above could reasonably be expected to
constitute a Superior Proposal, (iii) prior to providing any information or data
to any Person in connection with an Acquisition Proposal by any such Person, the
LCI Board of Directors receives from such Person an executed confidentiality
agreement on terms substantially similar to those contained in the
Confidentiality Agreement (except as to the standstill provisions, provided that
if under the aforementioned circumstances LCI enters into any such
confidentiality agreement without standstill provisions substantially similar to
those contained in the Confidentiality Agreement, then Qwest shall to the extent
of the difference be relieved of compliance with the Confidentiality Agreement's
standstill provisions), and (iv) prior to providing any information or data to
any Person or entering
29
into discussions or negotiations with any Person, the Board of Directors of LCI
notifies Qwest promptly of such inquiries, proposals or offers received by, any
such information requested from, or any such discussions or negotiations sought
to be initiated or continued with, any of its representatives indicating, in
connection with such notice, the name of such Person and the material terms and
conditions of any proposals or offers. LCI agrees that it will keep Qwest
informed, on a current basis, of the status and terms of any such proposals or
offers and the status of any such discussions or negotiations. LCI agrees that
it will immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any Acquisition Proposal. LCI agrees that it will take the necessary steps to
promptly inform the individuals or entities referred to in the first sentence of
this Section 5.5 of the obligations undertaken in this Section 5.5. Nothing in
this Section 5.5 shall (x) permit LCI to terminate this Agreement (except as
specifically provided in Article VII hereof) or (y) affect any other obligation
of LCI under this Agreement.
5.6 ASSUMPTION OF LCI STOCK OPTIONS; OTHER STOCK PLANS; EMPLOYEE
BENEFITS MATTERS.
(a) Qwest shall assume the LCI Stock Options on the terms set forth in
Exhibit 5.6 hereto. LCI and Qwest agree that LCI's other stock plans and
treatment of LCI's officers and employees shall be as set forth in Exhibit 5.6
hereto.
(b) EMPLOYEE BENEFITS.
(i) OBLIGATIONS OF QWEST; COMPARABILITY OF BENEFITS. Each Benefit
Plan (as defined in Section 8.11(a)) as to which LCI or any of its
Subsidiaries has any obligation with respect to any current or former
employee (the "LCI EMPLOYEES")(the "LCI BENEFIT PLANS") shall be the
obligations of Qwest and the Surviving Corporation at the Effective Time
and for at least two years thereafter, Qwest shall, or shall cause the
Surviving Corporation to, provide benefits, in the aggregate, that are no
less favorable than the benefits provided, in the aggregate, under such
Benefit Plans to the LCI Employees immediately prior to the Effective Time.
Notwithstanding the foregoing, nothing herein shall require (A) the
continuation of any particular LCI Benefit Plan or prevent the amendment or
termination thereof (subject to the maintenance, in the aggregate, of the
benefits as provided in the preceding sentence) or (B) require Qwest or the
Surviving Corporation to continue or maintain any stock purchase or other
equity plan related to the equity of LCI or the Surviving Corporation.
(ii) PRE-EXISTING LIMITATIONS; DEDUCTIBLE; SERVICE CREDIT. With
respect to any Benefit Plans of Qwest in which the LCI Employees
participate effective as of the Closing Date, Qwest shall, or shall cause
the Surviving Corporation to: (A) not impose any limitations more onerous
than those currently in effect as to pre-existing conditions, exclusions
and waiting periods with respect to participation and coverage requirements
applicable to the LCI Employees under which any welfare Benefit Plan in
which such employees may be eligible to participate after the Effective
Time, (B)
30
provide each LCI Employee with credit for any co-payments and deductibles
paid prior to the Effective Time in satisfying any applicable deductible or
out-of-pocket requirements under any welfare Benefit Plan in which such
employees may be eligible to participate after the Effective Time, and (C)
recognize all service of the LCI Employees with LCI for all purposes
(including, without limitation, purposes of eligibility to participate,
vesting credit, entitlement for benefits, and benefit accrual) in any
Benefit Plan in which such employees may be eligible to participate after
the Effective Time, to the same extent taken into account under a
comparable LCI Benefit Plan immediately prior to the Closing Date.
5.7 FEES AND EXPENSES. Whether or not the Merger is consummated, all
Expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such Expenses, except
(a) if the Merger is consummated, the Surviving Corporation shall pay, or cause
to be paid, any and all property or transfer taxes imposed on LCI or its
Subsidiaries and any real property transfer tax imposed on any holder of shares
of capital stock of LCI resulting from the Merger, (b) Expenses incurred in
connection with the filing, printing and mailing of the Joint Proxy
Statement/Prospectus, which shall be shared equally by Qwest and LCI and (c) as
provided in Section 7.2. As used in this Agreement, "EXPENSES" includes all
out-of-pocket expenses (including, without limitation, all fees and expenses of
counsel, accountants, investment bankers, experts and consultants to a party
hereto and its affiliates) incurred by a party or on its behalf in connection
with or related to the authorization, preparation, negotiation, execution and
performance of this Agreement and the transactions contemplated hereby,
including the preparation, printing, filing and mailing of the Joint Proxy
Statement/Prospectus and the solicitation of stockholder approvals and all other
matters related to the transactions contemplated hereby.
5.8 DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE. The
Surviving Corporation shall cause to be maintained in effect in its certificate
of incorporation and by-laws (i) for a period of six years after the Effective
Time, the current provisions regarding elimination of liability of directors and
indemnification of officers, directors and employees contained in the
certificate of incorporation and by-laws of LCI and (ii) for a period of six
years, the current policies of directors' and officers' liability insurance and
fiduciary liability insurance maintained by LCI (PROVIDED that the Surviving
Corporation may substitute therefor policies of at least the same coverage and
amounts containing terms and conditions which are, in the aggregate, no less
advantageous to the insured) with respect to claims arising from facts or events
that occurred on or before the Effective Time; PROVIDED, HOWEVER, that in no
event shall the Surviving Corporation be required to expend in any one year an
amount in excess of 200% of the annual premiums currently paid by LCI for such
insurance; and, PROVIDED, further, that if the annual premiums of such insurance
coverage exceed such amount, the Surviving Corporation shall be obligated to
obtain a policy with the greatest coverage available for a cost not exceeding
such amount.
5.9 RIGHTS AGREEMENT. The Board of Directors of LCI shall take all
further action (in addition to that referred to in Section 3.1(h)) necessary
(including redeeming the Rights immediately prior to the Effective Time or
amending the Rights Agreement) in order
31
to render the Rights inapplicable to the Merger and the other transactions
contemplated by this Agreement.
5.10 PUBLIC ANNOUNCEMENTS. LCI and Qwest shall use all reasonable
efforts to develop a joint communications plan and each party shall use all
reasonable efforts (i) to ensure that all press releases and other public
statements with respect to the transactions contemplated hereby shall be
consistent with such joint communications plan, and (ii) unless otherwise
required by applicable law or by obligations pursuant to any listing agreement
with or rules of any securities exchange, to consult with each other before
issuing any press release or otherwise making any public statement with respect
to this Agreement or the transactions contemplated hereby.
5.11 ACCOUNTANTS' LETTERS. Upon reasonable notice from the other, LCI
and Qwest shall use their respective reasonable best efforts to cause Xxxxxx
Xxxxxxxx LLP and KPMG Peat Marwick LLP, respectively, to deliver to LCI or
Qwest, as the case may be, a letter, dated within two business days of the
Effective Time of the Form S-4 covering such matters as are requested by Qwest
or LCI, as the case may be, and as are customarily addressed in accountant's
"comfort" letters. In connection with LCI's efforts to obtain such letter, if
requested by Xxxxxx Xxxxxxxx XXX, Xxxxx shall provide a representation letter to
Xxxxxx Xxxxxxxx LLP complying with the statement on Auditing Standards No. 72
("SAS 72"), if then required. In connection with Qwest's efforts to obtain such
letter, if requested by KPMG Peat Marwick LLP, LCI shall provide a
representation letter to KPMG Peat Marwick LLP complying with SAS 72, if then
required.
5.12 LISTING OF SHARES OF QWEST COMMON STOCK. Qwest shall use its best
efforts to cause the shares of Qwest Common Stock to be issued in the Merger and
the shares of Qwest Common Stock to be reserved for issuance upon exercise of
the LCI Stock Options and LCI Warrants to be approved for quotation, upon
official notice of issuance, on NASDAQ.
5.13 VOTING TRUST. If at any time prior to the LCI Stockholders
Meeting a third party shall make an unsolicited tender or exchange offer to
acquire control of LCI, which offer is not recommended by LCI's Board of
Directors, then Qwest and LCI will use their reasonable best efforts to
consummate the transactions contemplated hereby by implementing a "voting trust"
or similar structure permitting consummation of the transactions contemplated
hereby prior to the receipt of final FCC and PUC approvals.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
obligations of LCI, Qwest and Merger Sub to effect the Merger are subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
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(a) STOCKHOLDER APPROVAL. (i) LCI shall have obtained the Required LCI
Vote in connection with the adoption of this Agreement by the stockholders of
LCI and (ii) Qwest shall have obtained the Required Qwest Vote in connection
with the approval of the Share Issuance by the stockholders of Qwest.
(b) NO INJUNCTIONS OR RESTRAINTS, ILLEGALITY. No Laws shall have been
adopted or promulgated, and no temporary restraining order, preliminary or
permanent injunction or other order issued by a court or other Governmental
Entity of competent jurisdiction shall be in effect, having the effect of making
the Merger illegal or otherwise prohibiting consummation of the Merger;
PROVIDED, HOWEVER, that the provisions of this Section 6.1(b) shall not be
available to any party whose failure to fulfill its obligations pursuant to
Section 5.4 shall have been the cause of, or shall have resulted in, such order
or injunction.
(c) FCC AND PUBLIC UTILITY COMMISSION APPROVALS. All approvals for the
Merger from the FCC and from the PUCs shall have been obtained other than those
the failure of which to be obtained would not reasonably be expected to have
individually or in the aggregate a Material Adverse Effect on Qwest and its
Subsidiaries (including the Surviving Corporation and its Subsidiaries), taken
together.
(d) HSR ACT. The waiting period (and any extension thereof) applicable
to the Merger under the HSR Act shall have been terminated or shall have
expired.
(e) NASDAQ LISTING. The shares of Qwest Common Stock to be issued in
the Merger and such other shares to be reserved for issuance in connection with
the Merger shall have been approved upon official notice of issuance for
quotation on NASDAQ.
(f) EFFECTIVENESS OF THE FORM S-4. The Form S-4 shall have been
declared effective by the SEC under the Securities Act. No stop order suspending
the effectiveness of the Form S-4 shall have been issued by the SEC and no
proceedings for that purpose shall have been initiated or threatened by the SEC.
6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF QWEST AND MERGER SUB. The
obligations of Qwest and Merger Sub to effect the Merger are subject to the
satisfaction of, or waiver by Qwest, on or prior to the Closing Date of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of LCI set forth in this Agreement that is qualified as to
materiality shall have been true and correct on the date of this Agreement, and
each of the representations and warranties of LCI that is not so qualified shall
have been true and correct in all material respects on the date of this
Agreement, and Qwest shall have received a certificate of the chief executive
officer and the chief financial officer of LCI to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF LCI. LCI shall have performed or
complied with all agreements and covenants required to be performed by it under
this
33
Agreement at or prior to the Closing Date that are qualified as to materiality
and shall have performed or complied in all material respects with all other
agreements and covenants required to be performed by it under this Agreement at
or prior to the Closing Date that are not so qualified as to materiality, and
Qwest shall have received a certificate of the chief executive officer and the
chief financial officer of LCI to such effect.
(c) TAX OPINION. Qwest shall have received from O'Melveny & Xxxxx LLP,
counsel to Qwest, on the Closing Date, a written opinion dated as of such date
substantially in the form of Exhibit 6.2(c)(1). In rendering such opinion,
counsel to Qwest shall be entitled to rely upon representations of officers of
Qwest and LCI substantially in the form of Exhibits 6.2(c)(2) and 6.2(c)(3)
(allowing for such amendments to the representations as counsel to Qwest deems
necessary).
6.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF LCI. The obligations of
LCI to effect the Merger are subject to the satisfaction of, or waiver by LCI,
on or prior to the Closing Date of the following additional conditions:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of Qwest and Merger Sub set forth in this Agreement that is qualified
as to materiality shall have been true and correct on the date of this
Agreement, and each of the representations and warranties of each of Qwest and
Merger Sub that is not so qualified shall have been true and correct in all
material respects on the date of this Agreement, and LCI shall have received a
certificate of the chief executive officer and the chief financial officer of
Qwest to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF QWEST. Qwest shall have performed or
complied with all agreements and covenants required to be performed by it under
this Agreement at or prior to the Closing Date that are qualified as to
materiality and shall have performed or complied in all material respects with
all agreements and covenants required to be performed by it under this Agreement
at or prior to the Closing Date that are not so qualified as to materiality, and
LCI shall have received a certificate of the chief executive officer and the
chief financial officer of Qwest to such effect.
(c) TAX OPINION. LCI shall have received from Kramer, Levin, Naftalis
& Xxxxxxx, counsel to LCI, on the Closing Date, a written opinion dated as of
such date substantially in the form of Exhibit 6.3(c)(1). In rendering such
opinion, counsel to LCI shall be entitled to rely upon representations of
officers of Qwest and LCI substantially in the form of Exhibits 6.2(c)(2) and
6.2(c)(3) (allowing for such amendments to the representations as counsel to LCI
deems necessary).
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ARTICLE VII
TERMINATION AND AMENDMENT
7.1 TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time, by action taken or authorized by the Board of Directors of
the terminating party or parties, and except as provided below, whether before
or after approval of the matters presented in connection with the Merger by the
stockholders of LCI or Qwest:
(a) By mutual written consent of Qwest and LCI, by action of their
respective Boards of Directors;
(b) By either LCI or Qwest if the Effective Time shall not have
occurred on or before the first anniversary of the date of this Agreement (the
"TERMINATION DATE"); PROVIDED, HOWEVER, that the right to terminate this
Agreement under this Section 7.1(b) shall not be available to any party whose
failure to fulfill any obligation under this Agreement (including without
limitation Section 5.4) has to any extent been the cause of, or resulted in, the
failure of the Effective Time to occur on or before the Termination Date;
(c) By either LCI or Qwest if any Governmental Entity (i) shall have
issued an order, decree or ruling or taken any other action (which the parties
shall have used their best efforts to resist, resolve or lift, as applicable, in
accordance with Section 5.4) permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement, and such order,
decree, ruling or other action shall have become final and nonappealable or (ii)
shall have failed to issue an order, decree or ruling or to take any other
action (which order, decree, ruling or other action the parties shall have used
their best efforts to obtain, in accordance with Section 5.4), in each case (i)
and (ii) which is necessary to fulfill the conditions set forth in subsections
6.1(c) and (d), as applicable, and such denial of a request to issue such order,
decree, ruling or take such other action shall have become final and
nonappealable; PROVIDED, HOWEVER, that the right to terminate this Agreement
under this Section 7.1(c) shall not be available to any party whose failure to
comply with Section 5.4 has to any extent been the cause of such action or
inaction;
(d) By either LCI or Qwest if (i) the approval by the stockholders of
LCI required for the consummation of the Merger shall not have been obtained by
reason of the failure to obtain the Required LCI Vote or (ii) the approval by
the stockholders of Qwest required for the consummation of the Merger shall not
have been obtained by reason of the failure to obtain the Required Qwest Vote,
in each case upon the taking of such vote at a duly held meeting of stockholders
of LCI or Qwest, as the case may be, or at any adjournment thereof;
(e) By Qwest if the Board of Directors of LCI, prior to the LCI
Stockholders Meeting (i) shall withdraw or modify in any adverse manner the
Board Approval, (ii) shall approve or recommend a Superior Proposal pursuant to
Section 5.5 or (iii) shall resolve to take any of the actions specified in
clauses (i) or (ii) above;
35
(f) By LCI at any time prior to the LCI Stockholders Meeting, upon
three Business Days' prior notice to Qwest, if the Board of Directors of LCI
shall approve a Superior Proposal; PROVIDED, HOWEVER, that (i) LCI shall have
complied with Section 5.5, (ii) the Board of Directors of LCI shall have
concluded in good faith, after giving effect to all concessions which may be
offered by Qwest pursuant to clause (iii) below, on the basis of the advice of
its financial advisors and outside counsel, that such proposal is a Superior
Proposal and (iii) prior to any such termination, LCI shall, and shall cause its
financial and legal advisors to, negotiate with Qwest to make such adjustments
in the terms and conditions of this Agreement as would enable Qwest to proceed
with the transactions contemplated hereby; PROVIDED, HOWEVER, that it shall be a
condition to termination by LCI pursuant to this Section 7.l(f) that LCI shall
have made the payment of the Termination Fee to Qwest required by Section
7.2(b);
(g) By Qwest if any Person who is not an affiliate of Qwest shall have
acquired more than 50% of the LCI Common Stock;
(h) By Qwest if a Stock Acquisition Date (as defined in the Rights
Agreement) shall have occurred; and
(i) By LCI, if its Board of Directors so determines by a vote of the
majority of the members of its entire Board, at any time during the
three-Business Day period commencing on the Determination Date (the "LCI
EVALUATION PERIOD"), if the Average Price is less than $26.9531, SUBJECT,
HOWEVER, to the following: (A) if LCI elects to exercise its termination right
pursuant to this Section 7.1(i), it shall give Qwest written notice of its
intention to terminate (the "TERMINATION NOTICE"), which termination shall be
effective at the close of business on the third Business Day following the
delivery of the Termination Notice (which Termination Notice may be withdrawn by
LCI at any time prior to the effectiveness of such termination), (B) during the
two-Business Day period commencing with the delivery of a Termination Notice
(the "ADJUSTMENT ELECTION PERIOD"), Qwest shall have the option of adjusting the
Exchange Ratio to equal the quotient determined by dividing $42 by the Average
Price (rounded to the nearest 1/10,000) by delivering written notice to LCI
within such two-Business Day period of its intention to so adjust the Exchange
Ratio and (C) if Qwest makes an election to adjust the Exchange Ratio pursuant
to the preceding clause (B) (an "ADJUSTMENT ELECTION"), then this Agreement
shall not terminate pursuant to this Section 7.1(i) and this Agreement shall
remain in effect in accordance with its terms (except as the Exchange Ratio
shall have been so modified), and any references in this Agreement to "Exchange
Ratio" shall thereafter be deemed to refer to the Exchange Ratio as adjusted
pursuant to this Section 7.1(i).
7.2 EFFECT OF TERMINATION.
(a) In the event of termination of this Agreement by either LCI or
Qwest as provided in Section 7.1, this Agreement shall forthwith become void and
there shall be no liability or obligation on the part of Qwest or LCI or their
respective officers or directors except with respect to Section 3.1(i), Section
3.2(h), the second sentence of Section 5.3, Section 5.7, this Section 7.2 and
Article VIII.
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(b) Qwest and LCI agree that LCI shall pay to Qwest the sum of $133
million (the "TERMINATION FEE") solely as follows: (i) if LCI shall terminate
this Agreement pursuant to Section 7.1(f), (ii) if (A) LCI or Qwest shall
terminate this Agreement pursuant to Section 7.1(d)(i) due to the failure of
LCI's stockholders to approve and adopt this Agreement, (B) at any time after
the date of this Agreement and at or before the time of the event giving rise to
such termination there shall exist an Acquisition Proposal with respect to LCI
and (C) within 12 months of the termination of this Agreement, LCI enters into a
definitive agreement with any third party with respect to an Acquisition
Proposal or an Acquisition Proposal is consummated, (iii) if Qwest shall
terminate this Agreement pursuant to Section 7.1(e), 7.1(g) or 7.1(h), or (iv)
if (A) Qwest shall terminate this Agreement pursuant to Section 7.1(b) or LCI or
Qwest shall terminate this Agreement pursuant to Section 7.1(c), (B) at any time
after the date of this Agreement and at or before the time of the event giving
rise to such termination there shall exist an Acquisition Proposal, (C)
following the existence of such Acquisition Proposal and prior to any such
termination, LCI shall have intentionally breached (and not cured after notice
thereof) any of its material covenants or agreements set forth in this Agreement
in any material respect and (D) within 12 months of any such termination of this
Agreement, LCI shall enter into a definitive agreement with any third party with
respect to an Acquisition Proposal or an Acquisition Proposal is consummated.
(c) The Termination Fee required to be paid pursuant to Section 7.2(b)
shall be made prior to, and shall be a pre-condition to the effectiveness of
termination of this Agreement by LCI pursuant to Section 7.1(f). Any other
payment required to be made pursuant to Section 7.2(b) shall be made to Qwest
not later than two Business Days after the entering into of a definitive
agreement with respect to, or the consummation of, an Acquisition Proposal, as
applicable, or a termination pursuant to Section 7.1(e), 7.1(g) or 7.1(h). All
payments under this Section 7.2 shall be made by wire transfer of immediately
available funds to an account designated by the party entitled to receive
payment.
7.3 AMENDMENT. This Agreement may be amended by the parties hereto, by
action taken or authorized by their respective Boards of Directors, at any time
before or after approval of the matters presented in connection with the Merger
by the stockholders of LCI and Qwest, but, after any such approval, no amendment
shall be made which by law or in accordance with the rules of any relevant stock
exchange requires further approval by such stockholders without such further
approval. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto.
7.4 EXTENSION; WAIVER. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party. The failure of
any party to this
37
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of those rights.
ARTICLE VIII
GENERAL PROVISIONS
8.1 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. None
of the representations, warranties, covenants and other agreements in this
Agreement or in any instrument delivered pursuant to this Agreement, including
any rights arising out of any breach of such representations, warranties,
covenants and other agreements, shall survive the Effective Time, except for
those covenants and agreements contained herein and therein that by their terms
apply or are to be performed in whole or in part after the Effective Time and
this Article VIII. Nothing in this Section 8.1 shall relieve any party for any
breach of any representation, warranty, covenant or other agreement in this
Agreement occurring prior to termination.
8.2 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed duly given (a) on the date of delivery if
delivered personally, or by telecopy or telefacsimile, upon confirmation of
receipt, (b) on the first Business Day following the date of dispatch if
delivered by a recognized next-day courier service, or (c) on the tenth Business
Day following the date of mailing if delivered by registered or certified mail,
return receipt requested, postage prepaid. All notices hereunder shall be
delivered as set forth below, or pursuant to such other instructions as may be
designated in writing by the party to receive such notice:
(a) if to Qwest or Merger Sub, to
Qwest Communications International Inc.
0000 Xxxxx Xxxxx
000 Xxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx
with a copy to
O'Melveny & Xxxxx LLP
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Fax: (000) 000-0000
Attention: Drake S. Tempest
and with a copy to
38
Holme Xxxxxxx & Xxxx LLP
0000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxx X. Xxxx
(b) if to LCI to
LCI International, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxx 000
XxXxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
Attention: General Counsel
with a copy to
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Fax: (000) 000-0000
Attention: Xxxxxx X. Xxxxx
and with a copy to
Kramer, Levin, Naftalis
& Xxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx
8.3 INTERPRETATION. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of
contents, glossary of defined terms and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation".
8.4 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that both
parties need not sign the same counterpart.
39
8.5 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES.
(a) This Agreement and the agreements referred to in Sections 1.9 and
5.3 constitute the entire agreement and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, other than the Confidentiality Agreement, which shall
survive the execution and delivery of this Agreement.
(b) This Agreement shall be binding upon and inure solely to the
benefit of each party hereto, and nothing in this Agreement, express or implied,
is intended to or shall confer upon any other Person any right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement, other than
Section 5.8 (which is intended to be for the benefit of the Persons covered
thereby and may be enforced by such Persons).
8.6 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware.
8.7 SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any law or public policy, all
other terms and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner in order that the
transactions contemplated hereby are consummated as originally contemplated to
the greatest extent possible.
8.8 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto, in whole or in part (whether by operation of law or otherwise), without
the prior written consent of the other party, and any attempt to make any such
assignment without such consent shall be null and void, except that Merger Sub
may assign, in its sole discretion, any or all of its rights, interests and
obligations under this Agreement to any direct wholly owned Subsidiary of Qwest
without the consent of LCI, but no such assignment shall relieve Merger Sub of
any of its obligations under this Agreement. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and assigns.
8.9 SUBMISSION TO JURISDICTION; WAIVERS. Each of Qwest and LCI
irrevocably agrees that any legal action or proceeding with respect to this
Agreement or for recognition and enforcement of any judgment in respect hereof
brought by the other party hereto or its successors or assigns may be brought
and determined in the Chancery or other Courts of the State of Delaware, and
each of Qwest and LCI hereby irrevocably submits with regard to any such action
or proceeding for itself and in respect to its property, generally and
unconditionally, to the nonexclusive jurisdiction of the aforesaid courts. Each
of Qwest and LCI hereby irrevocably waives, and agrees not to assert, by way of
motion, as a defense, counterclaim or otherwise, in any action or proceeding
with respect to this
40
Agreement, (a) any claim that it is not personally subject to the jurisdiction
of the above-named courts for any reason other than the failure to serve process
in accordance with this Section 8.9, (b) that it or its property is exempt or
immune from jurisdiction of any such court or from any legal process commenced
in such courts (whether through service of notice, attachment prior to judgment,
attachment in aid of execution of judgment, execution of judgment or otherwise),
and (c) to the fullest extent permitted by applicable law, that (i) the suit,
action or proceeding in any such court is brought in an inconvenient forum, (ii)
the venue of such suit, action or proceeding is improper and (iii) this
Agreement, or the subject matter hereof, may not be enforced in or by such
courts. This Agreement does not involve less than $100,000, and the parties
intend that 6 DEL.C. ss.2708 shall apply to this Agreement.
8.10 ENFORCEMENT. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms. It is accordingly agreed that
the parties shall be entitled to specific performance of the terms hereof, this
being in addition to any other remedy to which they are entitled at law or in
equity.
8.11 DEFINITIONS. As used in this Agreement:
(a) "BENEFIT PLANS" means, with respect to any Person, each employee
benefit plan, program, arrangement and contract (including, without limitation,
any "employee benefit plan," as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") and any bonus,
deferred compensation, stock bonus, stock purchase, restricted stock, stock
option, employment, termination, stay agreement or bonus, change in control and
severance plan, program, arrangement and contract) all of the foregoing in
effect on the date of this Agreement or disclosed on Section 4.1(c) of the LCI
Disclosure Schedule, to which such Person or its Subsidiary is a party, which is
maintained or contributed to by such Person, or with respect to which such
Person could incur material liability under Section 4069, 4201 or 4212(c) of
ERISA.
(b) "BOARD OF DIRECTORS" means the Board of Directors of any specified
Person and any committees thereof.
(c) "BUSINESS DAY" means any day on which banks are not required or
authorized to close in the City of New York.
(d) "MATERIAL ADVERSE EFFECT" means, with respect to any entity, any
adverse change, circumstance or effect that, individually or in the aggregate
with all other adverse changes, circumstances and effects, is or is reasonably
likely to be materially adverse to the business, financial condition or results
of operations of such entity and its Subsidiaries taken as a whole, other than
any change, circumstance or effect relating to (i) the economy or securities
markets in general or (ii) the industries in which Qwest or LCI operate and not
specifically relating to Qwest or LCI.
(e) "THE OTHER PARTY" means, with respect to LCI, Qwest and means,
with respect to Qwest, LCI.
41
(f) "PERSON" means an individual, corporation, limited liability
company, partnership, association, trust, unincorporated organization, other
entity or group (as defined in the Exchange Act).
(g) "SUBSIDIARY" when used with respect to any party means any
corporation or other organization, whether incorporated or unincorporated, (i)
of which such party or any other Subsidiary of such party is a general partner
(excluding partnerships, the general partnership interests of which held by such
party or any Subsidiary of such party do not have a majority of the voting
interests in such partnership) or (ii) at least a majority of the securities or
other interests of which having by their terms ordinary voting power to elect a
majority of the Board of Directors or others performing similar functions with
respect to such corporation or other organization is directly or indirectly
owned or controlled by such party or by any one or more of its Subsidiaries, or
by such party and one or more of its Subsidiaries.
(h) "SUPERIOR PROPOSAL" means a bona fide written Acquisition Proposal
which the Board of Directors of LCI concludes in good faith (after consultation
with its financial advisors and legal counsel), taking into account all legal,
financial, regulatory and other aspects of the proposal and the Person making
the proposal, (i) would, if consummated, result in a transaction that is more
favorable to LCI's stockholders (in their capacities as stockholders), from a
financial point of view, than the transactions contemplated by this Agreement
and (ii) is reasonably capable of being completed (provided that for purposes of
this definition the term Acquisition Proposal shall have the meaning assigned to
such term in Section 5.5 except that the references to "15%" and "20%" in the
definition of "Acquisition Proposal" shall each be deemed to be a reference to
"50%" and "Acquisition Proposal" shall only be deemed to refer to a transaction
involving LCI, or with respect to assets (including the shares of any Subsidiary
of LCI) of LCI and its Subsidiaries, taken as a whole, and not any of its
Subsidiaries alone).
8.12 OTHER AGREEMENTS. The parties hereto acknowledge and agree that,
except as otherwise expressly set forth in this Agreement, the rights and
obligations of LCI and Qwest under any other agreement between the parties shall
not be affected by any provision of this Agreement.
------------------------------
[Intentionally Left Blank]
42
IN WITNESS WHEREOF, Qwest, LCI and Merger Sub have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of March 8, 1998.
QWEST COMMUNICATIONS INTERNATONAL INC.
By: /s/ XXXXXX X. XXXXXXX
------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Xxxxxxxxx
XXXXX 0000-X XXXXXXXXXXX CORP.
By: /s/ XXXXXX X. XXXXXXX
------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President
LCI INTERNATIONAL, INC.
By: /s/ H. XXXXX XXXXXXXX
------------------------------------------
Name: H. Xxxxx Xxxxxxxx
Title: Chairman of the Board and
Chief Executive Officer
S-1
EXHIBIT 1.9
FORM OF
VOTING AGREEMENT
VOTING AGREEMENT dated as of March 8, 1998 (this "AGREEMENT") among
XXXXXX X. XXXXXXXX ("SHAREHOLDER"), ANSCHUTZ COMPANY, a Delaware corporation
that is wholly owned by Shareholder ("RECORD HOLDER"), and LCI INTERNATIONAL,
INC., a Delaware corporation (together with its successors and assigns, "LCI").
RECITALS
A. Shareholder beneficially owns not less than 170,000,000 shares of
Common Stock, par value $.01 per share, of Qwest Corporation, a Delaware
corporation ("QWEST" and the "QWEST COMMON STOCK"). All such shares, together
with all other shares of capital stock of Qwest with respect to which
Shareholder has beneficial ownership as of the date of this Agreement, are
referred to as the "SUBJECT SHARES"; PROVIDED that any such share shall cease to
be a "Subject Share" from and after the time that such share is transferred
pursuant to Section 2 and ceases to be subject to the Voting Documents (as
defined below) in accordance with the terms of Section 2. Record Holder is the
record owner of all of the Subject Shares.
X. Xxxxx, Xxxxx 0000-X Xxxxxxxxxxx Corp., a Delaware corporation
("MERGER SUB"), and LCI are, simultaneously with the execution hereof, entering
into an Agreement and Plan of Merger dated as of March 8, 1998 (the "MERGER
AGREEMENT") providing for the merger of Merger Sub with and into LCI (the
"MERGER"). Terms not otherwise defined in this Agreement have the meanings
stated in the Merger Agreement.
C. The Board of Directors of Qwest has approved an amendment to the
Amended and Restated Certificate of Incorporation of Qwest to increase the
number of authorized shares of Qwest Common Stock.
D. Shareholder, Record Holder and LCI desire to enter into this
Agreement to provide for, among other things, (1) the obligation of Shareholder
to cause Record Holder to vote the Subject Shares at the Qwest Stockholders
Meeting to approve the Share Issuance and the Qwest Charter Amendment and (2)
certain restrictions on (A) the sale or other transfer of the record ownership
or the beneficial ownership, or both, of the Subject Shares by Shareholder and
Record Holder and (B) the acquisition by Shareholder or Record Holder of
beneficial ownership of additional shares of capital stock of Qwest from any
Person other than Qwest, in each case until the consummation of the Merger or
the termination of the Merger Agreement. This Agreement and all other
agreements, instruments and other documents executed and delivered by
Shareholder and Record
Exh. 1.9-2
Holder in connection with this Agreement are collectively referred to as the
"VOTING DOCUMENTS".
E. Shareholder and Record Holder acknowledge that LCI is entering into
the Merger Agreement in reliance on the representations, warranties, covenants
and other agreements of Shareholder and Record Holder set forth in this
Agreement and would not enter into the Merger Agreement if Shareholder and
Record Holder did not enter into this Agreement.
AGREEMENT
The parties agree as follows:
SECTION 1. COVENANTS OF SHAREHOLDER AND RECORD HOLDER.
(a) VOTING. Until the day following the termination of this Agreement,
subject to the receipt of proper notice and the absence of a preliminary or
permanent injunction or other final order by any United States federal court or
state court barring such action, Shareholder shall cause Record Holder to do,
and Record Holder shall do, the following:
(1) be present, in person or represented by proxy, at each
meeting (whether annual or special, and whether or not an adjourned or
postponed meeting) of the stockholders of Qwest, however called, or in
connection with any written consent of the stockholders of Qwest, so
that all Subject Shares then entitled to vote may be counted for the
purposes of determining the presence of a quorum at such meetings; and
(2) at each such meeting held before the Effective Time and
with respect to each such written consent, vote (or cause to be
voted), or deliver a written consent (or cause a consent to be
delivered) covering, all the Subject Shares to approve the Share
Issuance and the Qwest Charter Amendment and any action required in
furtherance thereof.
(b) STOCK ACQUISITIONS. Until the day following the termination of
this Agreement, Shareholder shall not, and shall cause Record Holder and his
other affiliates not to, acquire, from any Person other than Qwest, beneficial
ownership of any additional shares of Qwest Common Stock; PROVIDED, HOWEVER,
that Qwest may purchase shares of Qwest Common Stock to the extent permitted by
the Merger Agreement and subject to the terms thereof.
(c) NO INCONSISTENT AGREEMENTS. Until the day following the
termination of this Agreement, Shareholder and Record Holder, shall not enter
into any voting agreement or grant a proxy or power of attorney with respect to
the Subject Shares which is inconsistent with this Agreement.
Exh. 1.9-3
(d) REVIEW OF MERGER AGREEMENT. Both Shareholder and Record Holder
acknowledge receipt and review of a copy of the Merger Agreement.
SECTION 2. TRANSFER OF SUBJECT SHARES. During the term of this
Agreement, Shareholder agrees not to transfer record or beneficial ownership of
any shares of capital stock of Record Holder, and Shareholder and Record Holder
shall not transfer record ownership or beneficial ownership, or both, of any
Subject Shares except in each case to the extent permitted in the following
sentences. Shareholder may transfer record or beneficial ownership, or both, of
any shares of capital stock of Record Holder to any Person that is wholly owned,
directly or indirectly, by Shareholder; PROVIDED that each such Person, and each
Person that directly or indirectly is the record or beneficial owner of the
shares of capital stock of such Person, shall then be a party to this Agreement
or shall have executed and delivered an agreement by which such Person agrees to
be bound by Sections 1, 2 and 4 of this Agreement with respect to such shares.
Shareholder and Record Holder may transfer record ownership or beneficial
ownership, or both, of any Subject Shares, and such shares shall cease to be
subject to the Voting Documents; PROVIDED, that (x) if, as a result of such
transfer, less than 51% of the outstanding shares of Qwest Common Stock would be
subject to the Voting Documents, then the Person to whom record ownership or
beneficial ownership, or both, of such shares shall be transferred shall execute
and deliver to LCI an agreement by which such transferee agrees that such shares
shall be Subject Shares that are subject to the Voting Documents and agrees to
be bound by Sections 1, 2 and 4 of this Agreement with respect to such shares
and (y) in any event, on the record date for the meeting of the stockholders of
Qwest at which the Share Issuance and the Qwest Charter Amendment shall be
presented for their approval or with respect to any written consent in lieu
thereof, the Subject Shares shall constitute a majority of the outstanding
shares of Qwest Common Stock. For the purposes of this Agreement, the term
"TRANSFER" means a sale, an assignment, a grant, a transfer, a pledge, the
creation of a lien or other disposition of any Subject Shares or any interest of
any nature in any Subject Shares, including, without limitation, the "beneficial
ownership" of such Subject Shares (as determined pursuant to Regulation 13D-G
under the Exchange Act).
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER. Shareholder
and Record Holder, jointly and severally, represent and warrant to LCI as
follows:
(a) EXISTENCE AND POWER. Record Holder (1) is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and (2) has all requisite corporate power and authority to execute
and deliver each Voting Document to which it is or may become a party.
(b) AUTHORIZATION; CONTRAVENTION. The execution and delivery by
Shareholder and Record Holder of each Voting Document and the performance by it
of its obligations under each Voting Document have, (1) in the case of Record
Holder, been duly authorized by all necessary corporate action and (2) do not
and will not conflict with or result in a Violation pursuant to, (A) in the case
of Record Holder, any provision of its certificate of incorporation or bylaws,
or (B) in the case of Shareholder and Record Holder,
Exh. 1.9-4
any loan or credit agreement, note, mortgage, bond, indenture, lease, benefit
plan or other agreement, obligation, instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Shareholder or Record Holder, as the case may be, the Subject
Shares or any of Shareholder's or Record Holder's other properties or assets.
(c) BINDING EFFECT. Each Voting Document constitutes, or when executed
and delivered by Shareholder and Record Holder will constitute, a valid and
binding obligation of Shareholder and Record Holder, respectively, enforceable
against Shareholder or Record Holder, as the case may be, in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and similar laws relating to or affecting creditors'
generally, by general equity principles, (regardless of whether such
enforceability is considered in a proceeding in equity or at law) or by an
implied covenant of good faith and fair dealing.
(d) OWNERSHIP. Shareholder and Record Holder are the only beneficial
owners of the Subject Shares, free and clear of all liens, and Record Holder is
the sole record holder of the Subject Shares, free and clear of liens, except in
each case with respect to pledges or other liens that Shareholder or Record
Holder or both would be entitled to effect or create as of the date of this
Agreement pursuant to the third sentence of Section 2 and in accordance with the
terms thereof. As of the date of this Agreement, Shareholder does not own
beneficially or of record any equity securities of Qwest other than the Subject
Shares and Record Holder does not own beneficially or of record any equity
securities of Qwest other than the Subject Shares and the Qwest Warrants.
Shareholder is the sole record and beneficial owner of all of the capital stock
of Record Holder, free and clear of all liens, Neither Shareholder nor Record
Holder has appointed or granted any proxy which is still effective with respect
to Subject Shares.
(e) LITIGATION. There is no action, suit, investigation, complaint or
other proceeding pending against Shareholder or Record Holder or, to the
knowledge of Shareholder or Record Holder, threatened against Shareholder or
Record Holder or any other Person that restricts in any material respect or
prohibits (or, if successful, would restrict or prohibit) the exercise by any
party or beneficiary of its rights under any Voting Document or the performance
by any party of its obligations under any Voting Document.
SECTION 4. MISCELLANEOUS PROVISIONS.
(a) NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed duly given (1) on the date of delivery if
delivered personally, or by telecopy or telefacsimile, upon confirmation of
receipt, (2) on the first Business Day following the date of dispatch if
delivered by a recognized next-day courier service, or (3) on the tenth Business
Day following the date of mailing if delivered by registered or certified mail,
return receipt requested, postage prepaid. All notices hereunder shall be given
the party at its address stated on the signature pages of this Agreement or at
any other address as the party may specify for this purpose by notice to the
other party.
Exh. 1.9-5
(b) NO WAIVERS; REMEDIES; SPECIFIC PERFORMANCE.
(1) No failure or delay by LCI in exercising any right, power
or privilege under any Voting Document shall operate as a waiver of
the right, power or privilege. A single or partial exercise of any
right, power or privilege shall not preclude any other or further
exercise of the right, power or privilege or the exercise of any other
right, power or privilege. The rights and remedies provided in the
Voting Documents shall be cumulative and not exclusive of any rights
or remedies provided by law.
(2) In view of the uniqueness of the agreements contained in
the Voting Documents and the transactions contemplated hereby and
thereby and the fact that LCI would not have an adequate remedy at law
for money damages in the event that any obligation under any Voting
Document is not performed in accordance with its terms, each of
Shareholder and Record Holder therefore agrees that LCI shall be
entitled to specific enforcement of the terms of each Voting Document
in addition to any other remedy to which LCI may be entitled, at law
or in equity.
(c) AMENDMENTS, ETC. No amendment, modification, termination, or
waiver of any provision of any Voting Document, and no consent to any departure
by any of Shareholder, Record Holder and LCI from any provision of any Voting
Document, shall be effective unless it shall be in writing and signed and
delivered by each of Shareholder, Record Holder and LCI, and then it shall be
effective only in the specific instance and for the specific purpose for which
it is given.
(d) SUCCESSORS AND ASSIGNS; THIRD PARTY BENEFICIARIES.
(1) No party shall assign any of its rights or delegate any of
its obligations under any Voting Document. Any assignment or
delegation in contravention of this Section 4(d) shall be void AB
INITIO and shall not relieve the assigning or delegating party of any
obligation under any Voting Document.
(2) The provisions of each Voting Document shall be binding
upon and inure solely to the benefit of the parties hereto, the
express beneficiaries thereof (to the extent provided therein) and
their respective permitted heirs, executors, legal representatives,
successors and assigns, and no other person.
(e) GOVERNING LAW. Each Voting Document and all rights, remedies,
liabilities, powers and duties of the parties hereto and thereto, shall be
governed in accordance with the laws of the State of Delaware without regard to
principles of conflicts of laws.
(f) SEVERABILITY OF PROVISIONS. If any term or other provision of any
Voting Document is invalid, illegal or incapable of being enforced by any law or
public policy, all other terms and provisions of such Voting Document shall
nevertheless remain in full force
Exh. 1.9-6
and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties shall negotiate in good
faith to modify such Voting Document so as to effect the original intent of the
parties as closely as possible in an acceptable manner in order that the
transactions contemplated hereby are consummated as originally contemplated to
the greatest extent possible.
(g) HEADINGS AND REFERENCES. Article and section headings in any
Voting Document are included for the convenience of reference only and do not
constitute a part of the Voting Document for any other purpose. References to
parties, express beneficiaries, articles and sections in any Voting Document are
references to parties to or the express beneficiaries and sections of the Voting
Document, as the case may be, unless the context shall require otherwise. Any of
the terms defined in this Agreement may, unless the context otherwise requires,
be used in the singular or the plural, depending on the reference. The use in
this Agreement of the word "include" or "including," when following any general
statement, term or matter, shall not be construed to limit such statement, term
or matter to the specific items or matters set forth immediately following such
word or to similar items or matters, whether or not nonlimiting language (such
as "without limitation" or "but not limited to" or words of similar import) is
used with reference thereto, but rather shall be deemed to refer to all other
items or matters that fall within the broadest possible scope of such general
statement, term or matter.
(h) ENTIRE AGREEMENT. The Voting Documents embody the entire agreement
and understanding of Shareholder, Record Holder and LCI, and supersedes all
prior agreements or understandings, with respect to the subject matters of the
Voting Documents.
(i) SURVIVAL. Except as otherwise specifically provided in any Voting
Document, each representation, warranty or covenant of a party contained in the
Voting Document shall remain in full force and effect, notwithstanding any
investigation or notice to the contrary or any waiver by any other party or
beneficiary of a related condition precedent to the performance by the other
party or beneficiary of an obligation under the Voting Document.
(j) SUBMISSION TO JURISDICTION; WAIVERS. Each of Shareholder, Record
Holder and LCI irrevocably agrees that any legal action or proceeding with
respect to any Voting Document or for recognition and enforcement of any
judgment in respect hereof or thereof brought by the other party hereto or its
successors or assigns may be brought and determined in the Chancery or other
Courts of the State of Delaware, and each of Shareholder, Record Holder and LCI
hereby irrevocably submits with regard to any such action or proceeding for
itself and in respect to its property, generally and unconditionally, to the
nonexclusive jurisdiction of the aforesaid courts. Each of Shareholder, Record
Holder and LCI hereby irrevocably waives, and agrees not to assert, by way of
motion, as a defense, counterclaim or otherwise, in any action or proceeding
with respect to any Voting
Exh. 1.9-7
Document, (a) any claim that it is not personally subject to the jurisdiction of
the above-named courts for any reason other than the failure to serve process in
accordance with this Section 4(j), (b) that it or its property is exempt or
immune from jurisdiction of any such court or from any legal process commenced
in such courts (whether through service of notice, attachment prior to judgment,
attachment in aid of execution of judgment, execution of judgment or otherwise),
and (c) to the fullest extent permitted by applicable law, that (i) the suit,
action or proceeding in any such court is brought in an inconvenient forum, (ii)
the venue of such suit, action or proceeding is improper and (iii) such Voting
Document, or the subject matter hereof or thereof, may not be enforced in or by
such courts. This Agreement does not involve less than $100,000, and the parties
intend that 6 DEL.C. ss.2708 shall apply to this Agreement.
(k) WAIVER OF JURY TRIAL. Each party, and each express beneficiary of
a Voting Document as a condition of its right to enforce or defend any right
under or in connection with such Voting Document, waives any right to a trial by
jury in any Action to enforce or defend any right under any Voting Document and
agrees that any Action shall be tried before a court and not before a jury.
(l) TERMINATION. LCI may terminate this Agreement at any time upon
written notice to each of Shareholder and Record Holder. Unless terminated
earlier by LCI or by mutual agreement of the parties, this Agreement shall
terminate upon the first to occur of (i) consummation of the Merger and (ii) the
termination of Merger Agreement pursuant to Section 7.1 thereof.
(m) COUNTERPARTS. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if all
signatures were on the same instrument.
--------------------
[Intentionally Left Blank]
Exh. 1.9-8
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
XXXXXX X. XXXXXXXX
------------------------------------------
Address: 0000 Xxxxx Xxxxx
000 Xxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
ANSCHUTZ COMPANY
By:
--------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
Address: 0000 Xxxxx Xxxxx
000 Xxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
LCI INTERNATIONAL, INC.
By:
--------------------------------------
Name: H. Xxxxx Xxxxxxxx
Title: Chairman of the Board and
Chief Executive Officer
Address: 0000 Xxxxxxxxxx Xxxxx
Xxxxx 000
XxXxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
S-1
EXHIBIT 5.6
ASSUMPTION OF LCI STOCK OPTIONS AND LCI WARRANT
(1) Each LCI Stock Option and LCI Warrant outstanding
at the Effective Time shall be assumed by Qwest and deemed to
constitute an option to acquire, and each LCI Warrant shall be deemed
to constitute a warrant to acquire, on the same terms and conditions,
MUTATIS MUTANDIS, as were applicable under such LCI Stock Option or
such LCI Warrant prior to the Effective Time, the number of shares of
Qwest Common Stock as the holder of such LCI Stock Option or LCI
Warrant would have been entitled to receive pursuant to the Merger had
such holder exercised such LCI Stock Option or such LCI Warrant in full
immediately prior to the Effective Time (not taking into account
whether or not such option was in fact exercisable) at a price per
share equal to (a) the aggregate exercise price for LCI Common Stock
otherwise purchasable pursuant to such LCI Stock Option divided by (b)
the number of shares of Qwest Common Stock deemed purchasable pursuant
to such assumed LCI Stock Option or such LCI Warrant; PROVIDED that the
number of shares of Qwest Common Stock that may be purchased upon
exercise of any such LCI Stock Option or such LCI Warrant shall not
include any fractional share and, upon exercise of such LCI Stock
Option or such LCI Warrant, a cash payment shall be made for any
fractional share based upon the last sale price per share of Qwest
Common Stock on the trading day immediately preceding the date of
exercise. All such LCI Stock Options shall be immediately exercisable
by the holder thereof at or after the Effective Time, notwithstanding
any provision to the contrary set forth in any option agreement
(including, without limitation, any provision restricting the
acceleration of such options in respect of any limit on deductibility
under Section 280G of the Code). Within three Business Days after the
Effective Time, Qwest shall cause to be delivered to each holder of an
outstanding LCI Stock Option an appropriate notice setting forth such
holder's rights pursuant thereto, and such assumed LCI Stock Option or
such LCI Warrant (as adjusted with respect to exercise price and the
number of shares of Qwest Common Stock purchasable) shall continue in
effect on the same terms and conditions. From and after the Effective
Time, Qwest shall comply with the terms of the warrant agreement
pursuant to which the LCI Warrant was issued (the "WARRANT AGREEMENTS")
and the LCI Stock Option Plans pursuant to which the LCI Stock Options
were granted. The adjustments provided in this Exhibit 5.6 with respect
to any Stock Options that are "incentive stock options" (as defined in
Section 422 of the Code) shall be effected in a manner consistent with
Section 424(a) of the Code.
(2) Qwest shall cause to be taken all corporate action
necessary to reserve for issuance a sufficient number of shares of
Qwest Common Stock for delivery upon exercise of LCI Stock Options and
LCI Warrants in accordance with this Exhibit 5.6. Within three Business
Days after the Effective Time, Qwest shall cause the Qwest Common Stock
subject to LCI Stock Options and, to the extent required by the
respective Warrant Agreements, subject to the LCI Warrants to be
Ex. 5.6-1
registered under the Securities Act pursuant to a registration
statement on Form S-8 (or any successor or other appropriate forms),
and shall use its best efforts to cause the effectiveness of such
registration statement (and the current status of the prospectus or
prospectuses contained therein) to be maintained for so long as the LCI
Stock Options remain outstanding.
(3) LCI shall take such action as is necessary to
cause the ending date of the then current offering period under each
LCI employee stock purchase plan (including any stock purchase plan of
a company acquired by LCI) to be prior to the Effective Time and on
such date as is determined in accordance with the terms of such plan
(the "FINAL PURCHASE DATE"); PROVIDED that such change in the offering
period shall be conditioned upon the consummation of the Merger. On the
Final Purchase Date, the LCI shall apply the funds credited as of such
date under such LCI Employee Stock Purchase Plan within each
participant's payroll withholding account to the purchase of whole
shares of LCI Common Stock in accordance with the terms of such LCI
employee stock purchase plan.
(4) LCI shall use its best efforts to provide, on or
prior to the Closing Date, a written acknowledgment of each holder of a
LCI Stock Option or an LCI Warrant that such LCI Stock Option or LCI
Warrant from and after the Effective Time is exercisable for shares of
Qwest Common Stock as provided herein; provided that LCI need not do so
if Qwest determines to its reasonable satisfaction that the terms of
such LCI Stock Option or LCI Warrant provide that, after giving effect
to any permitted action by the Board of Directors of LCI or any
committee thereof, from and after the Effective Time, such LCI Stock
Option or LCI Warrant shall be exercisable only for shares of Qwest
Common Stock and not for shares for stock of the Surviving Corporation
or any other entity.
Ex. 5.6-2
