AGREEMENT AND PLAN OF MERGER
dated as of
September 13, 1998
among
ICON CMT CORP.,
QWEST COMMUNICATIONS INTERNATIONAL INC.
and
QWEST 1998-I ACQUISITION CORP.
TABLE OF CONTENTS
Page
ARTICLE I
THE TRANSACTIONS................... 2
Section 1.1 The Merger....................................... 2
Section 1.2 Qwest/Principal Stockholders Transactions........ 9
Section 1.3 Qwest Credit Transactions........................ 9
Section 1.4 Qwest Private Line Service Agreement............. 10
ARTICLE II
CLOSING............................. 10
Section 2.1 Time of Closing................................... 10
Section 2.2 Location of Closing............................... 10
ARTICLE III
CONDITIONS OF CLOSING................. 10
Section 3.1 Conditions Precedent to Closing................... 10
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY..................... 13
Section 4.1 Corporate Existence and Power..................... 13
Section 4.2 Authorization; Contravention...................... 13
Section 4.3 Approvals......................................... 14
Section 4.4 Binding Effect.................................... 14
Section 4.5 Financial Information............................. 14
Section 4.6 Absence of Certain Changes or Events.............. 16
Section 4.7 Taxes............................................. 18
Section 4.8 Undisclosed Liabilities........................... 20
Section 4.9 Litigation........................................ 20
Section 4.10 Compliance with Regulations....................... 20
Section 4.11 Licenses.......................................... 21
Section 4.12 Employee Matters.................................. 21
Section 4.13 Capitalization.................................... 26
Section 4.14 Subsidiaries...................................... 28
Section 4.15 Property.......................................... 29
Section 4.16 Proprietary Rights................................ 30
Section 4.17 Insurance......................................... 31
Section 4.18 Environmental Matters............................. 31
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Page
Section 4.19 Books and Records................................. 32
Section 4.20 Material Contracts................................ 32
Section 4.21 Transactions with Affiliates...................... 34
Section 4.22 SEC Documents..................................... 34
Section 4.23 Proxy Statement/Prospectus; Registration Statement;
Other Information................................. 35
Section 4.24 Company Board Approval............................ 35
Section 4.25 Required Vote..................................... 36
Section 4.26 Business Combination Transactions................. 36
Section 4.27 Fees for Financial Advisors, Brokers and Finders.. 36
Section 4.28 Ownership of Qwest Common Stock................... 36
Section 4.29 Continuing Representations and Warranties......... 36
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF QWEST AND QWEST SUBSIDIARY............. 37
Section 5.1 Corporate Existence and Power..................... 37
Section 5.2 Authorization; Contravention...................... 37
Section 5.3 Approvals......................................... 37
Section 5.4 Binding Effect.................................... 38
Section 5.5 Financial Information............................. 38
Section 5.6 Absence of Certain Changes or Events.............. 39
Section 5.7 Litigation........................................ 39
Section 5.8 Compliance with Regulations....................... 39
Section 5.9 Capitalization.................................... 40
Section 5.10 SEC Documents..................................... 40
Section 5.11 Proxy/Statement/Prospectus; Registration Statement;
Other Information................................. 41
Section 5.12 Ownership of Company Common Stock................. 41
Section 5.13 Continuing Representations and Warranties......... 41
ARTICLE VI
COVENANTS OF THE PARTIES................ 42
Section 6.1 Covenants of the Parties.......................... 42
Section 6.2 Proxy Statement/Prospectus; Registration Statement 44
Section 6.3 Letters of Accountants............................ 45
ARTICLE VII
ADDITIONAL COVENANTS OF
THE COMPANY...................... 46
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Page
Section 7.1 Affirmative Covenants of the Company............... 46
Section 7.2 Negative Covenants of the Company.................. 49
ARTICLE VIII
ADDITIONAL COVENANTS OF QWEST.............. 57
Section 8.1 NASDAQ Listing..................................... 57
Section 8.2 Directors' and Officers' Insurance; Indemnification 57
Section 8.3 Employee Benefits Matters.......................... 59
Section 8.4 Access to Information.............................. 59
ARTICLE IX
TERMINATION....................... 59
Section 9.1 Termination........................................ 59
Section 9.2 Costs, Expenses and Fees........................... 61
ARTICLE X
MISCELLANEOUS...................... 63
Section 10.1 Notices....................................................... 63
Section 10.2 No Waivers; Remedies; Specific Performance.................... 63
Section 10.3 Amendments, Etc............................................... 63
Section 10.4 Successors and Assigns; Third Party Beneficiaries............. 63
Section 10.5 Accounting Terms and Determinations........................... 64
Section 10.6 Governing Law................................................. 64
Section 10.7 Counterparts; Effectiveness................................... 64
Section 10.8 Severability of Provisions.................................... 64
Section 10.9 Headings and References....................................... 65
Section 10.10 Entire Agreement.............................................. 65
Section 10.11 Survival...................................................... 65
Section 10.12 Exclusive Jurisdiction........................................ 65
Section 10.13 Waiver of Jury Trial.......................................... 65
Section 10.14 Affiliate..................................................... 65
Section 10.15 Non-Recourse.................................................. 65
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ANNEX
Annex 1 - Definitions
EXHIBITS
Exhibit A - Form of Option Agreement
Exhibit B - Form of Voting Agreement and Proxy
Exhibit C - Form of Stockholder Agreement
Exhibit D - Term Sheet
Exhibit E - Form of Warrants
Exhibit F - Form of Registration Rights Agreement
Exhibit 3.1(j)(1) - Form of Qwest Tax Representation Letter
Exhibit 3.1(j)(2) - Form of Company Tax Representation Letter
Exhibit 3.1(j)(3) - Form of Tax Opinion
Exhibit 3.1(k)(7) - Form of U.S. Real Property Interest Certification
Exhibit 3.1(l) - Form of Affiliate Letter for Affiliates of the Company
SCHEDULES
Company's Disclosure Schedule
Qwest's Disclosure Schedule
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of September 13, 1998
among ICON CMT CORP., a Delaware corporation (together with its successors and
assigns, the "Company"), QWEST COMMUNICATIONS INTERNATIONAL INC., a Delaware
corporation (together with its successors and assigns, "Qwest"), and QWEST
1998-I ACQUISITION CORP., a Delaware corporation (together with its successors
and assigns, "Qwest Subsidiary").
Terms not otherwise defined in this Agreement have the
meanings stated in Annex 1 attached hereto.
RECITALS
A. The respective Boards of Directors of the Company, Qwest
and Qwest Subsidiary have approved and have declared advisable the merger of
Qwest Subsidiary with and into the Company (the "Merger"), upon the terms and
subject to the conditions set forth in this Agreement, whereby each issued and
outstanding share of common stock, par value $.001 per share, of the Company
(the "Company Common Stock") not owned by the Company, Qwest, Qwest Subsidiary
or their respective Wholly-Owned Subsidiaries will be converted into the right
to receive shares of common stock, par value $.01 per share, of Qwest (the
"Qwest Common Stock") in accordance with the provisions of this Agreement, and
have determined that the Merger and the other transactions contemplated by this
Agreement are consistent with, and in furtherance of, their respective business
strategies and goals.
B. The parties desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to
prescribe various conditions to the Merger.
C. For federal income tax purposes, the parties intend that
the Merger qualify as a reorganization under the provisions of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code").
AGREEMENT
The parties agree as follows:
ARTICLE I
THE TRANSACTIONS
Section 1.1 The Merger.
(a) Merger. Subject to the terms and conditions set forth in
this Agreement, on the Closing Date the Company and Qwest Subsidiary shall file
a certificate of merger (the "Certificate of Merger") with the Secretary of
State of the State of Delaware, and make all other filings or recordings
required by the DGCL to effect the Merger. The Merger shall become effective at
such time as the Certificate of Merger is duly filed with the Secretary of State
of the State of Delaware or at such later time as is specified in the
Certificate of Merger (the "Effective Time"). At the Effective Time:
(1) Qwest Subsidiary shall be merged with and into the
Company in accordance with the DGCL, whereupon (A) the separate
existence of Qwest Subsidiary shall cease, (B) the Company shall be the
surviving corporation (together with its successors and assigns, the
"Surviving Corporation"), having all the rights, privileges and powers
and being subject to all of the restrictions, disabilities and duties
of the Company and Qwest Subsidiary, all as provided in the DGCL, (C)
the bylaws of Qwest Subsidiary as in effect immediately prior to the
Merger shall be the bylaws of the Surviving Corporation, (D) the
certificate of incorporation of Qwest Subsidiary as in effect
immediately prior to the Merger shall be the certificate of
incorporation of the Surviving Corporation, except that Article I of
the certificate of incorporation of the Surviving Corporation shall be
amended to read in its entirety as follows: "The name of this
Corporation is `Icon CMT Corp.'" and (E) the directors and officers of
Qwest Subsidiary, in each case at the Effective Time, shall, from and
after the Effective Time, be the initial directors and initial
officers, respectively, of the Surviving Corporation until their
successors shall have been duly elected or appointed and qualified or
until their earlier death, resignation or removal in accordance with
the certificate of incorporation and bylaws of the Surviving
Corporation;
(2) each outstanding share of Company Common Stock
shall cease to be outstanding and, subject to the exceptions in
Sections 1.1(a)(4), 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"). The "Exchange Ratio" is
determined as follows:
(A) if the Average Market Price (as defined below) is
equal to a price that is not more than $37.50 or less than
$27.00, the Exchange Ratio shall be equal to (x) $12.00
divided by (y) the Average Market Price;
(B) if the Average Market Price is more than $37.50,
the Exchange Ratio shall be equal to 0.3200; and
2
(C) if the Average Market Price is less than $27.00,
the Exchange Ratio shall be equal to 0.4444.
The "Average Market Price" means the average (rounded to the nearest
1/10,000) of the daily volume weighted averages (rounded to the nearest
1/10,000) of the trading prices of Qwest Common Stock on the 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 that is three Business Days before the
date of the Company Stockholder Meeting;
(3) the stock transfer books of the Company shall be
closed and there shall be no further registration of transfers of
shares of Company Common Stock on the records of the Company;
(4) any shares of Company Common Stock held by the
Company, Qwest, Qwest Subsidiary or their respective Wholly-Owned
Subsidiaries shall be cancelled and no consideration shall be delivered
in exchange therefor; and
(5) each outstanding share of common stock of Qwest
Subsidiary shall be converted into and exchangeable for one share (or
such greater number of shares as Qwest shall determine before the
Effective Time) of common stock of the Surviving Corporation.
(b) No Further Ownership Rights in Company Common Stock. From
and after the Effective Time, holders of a certificate or certificates that
immediately before the Effective Time represented shares of Company Common Stock
(the "Certificates") shall have no right to vote or to receive any dividends or
other distributions with respect to any shares of Company Common Stock that were
theretofore represented by such Certificates, other than any dividends or other
distributions payable to holders of record as of a date prior to the Effective
Time, and shall have no other rights in respect thereof other than as provided
herein or by law. If, after the Effective Time, Certificates are presented to
the Surviving Corporation, they shall be cancelled and exchanged for Merger
Consideration as provided in Section 1.1(d). Until surrendered in accordance
with the provisions of Section 1.1(d), each Certificate (other than Certificates
representing shares of Company Common Stock held by any of the Company, Qwest,
Qwest Subsidiary and their respective Wholly-Owned Subsidiaries) shall represent
for all purposes only the right to receive (1) certificates representing the
number of whole shares of Qwest Common Stock into which such shares shall have
been converted pursuant to Section 1.1(a) (the "Qwest Certificates"), without
interest, (2) certain dividends and other distributions in accordance with
Section 1.1(e), without interest, and (3) cash in lieu of fractional shares of
Qwest Common Stock in accordance with Section 1.1(f), without interest. Holders
of unsurrendered Certificates shall have no right to vote or consent with
respect to shares of Qwest Common Stock exchangeable therefor.
(c) Exchange Agent. Prior to the Effective Time, Qwest
Subsidiary shall or, in the event Qwest Subsidiary shall fail to do so, Qwest
shall (1) designate a bank or trust company to act as exchange agent in the
Merger (the "Exchange Agent") and shall enter into
3
a mutually acceptable agreement with the Exchange Agent pursuant to which, after
the Effective Time, the Exchange Agent will distribute the Merger Consideration
on a timely basis and (2) according to the terms of the agreement with Exchange
Agent, deposit or cause to be deposited with the Exchange Agent as of the
Effective Time, for the benefit of the holders of shares of Company Common
Stock, for exchange in accordance with this Section 1.1, through the Exchange
Agent, Qwest Certificates representing the number of whole shares of Qwest
Common Stock issuable pursuant to Section 1.1(a) in exchange for outstanding
shares of Company Common Stock. Such shares of Qwest Common Stock, together with
any dividends or distributions with respect thereto with a record date after the
Effective Time, any Excess Shares and any cash (including cash proceeds from the
sale of the Excess Shares) payable in lieu of any fractional shares of Qwest
Common Stock are referred to as the "Exchange Fund."
(d) Exchange Procedures. As soon as practicable after the
Effective Time, the Exchange Agent shall be instructed to mail to each record
holder (other than the Company, Qwest, Qwest Subsidiary and their respective
Wholly-Owned Subsidiaries) of a Certificate or Certificates a form of letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss shall pass, only upon proper delivery of the Certificates to the Exchange
Agent) and instructions for use in effecting the surrender of the Certificates
in exchange for the Merger Consideration. Upon surrender to the Exchange Agent
of a Certificate, together with such letter of transmittal duly executed and
completed in accordance with the instructions thereon, the holder of such
Certificate shall be entitled to receive in exchange therefor (1) a Qwest
Certificate representing that number of whole shares of Qwest Common Stock which
such holder has the right to receive pursuant to the provisions of Section
1.1(a), (2) certain dividends or other distributions in accordance with Section
1.1(e) and (3) cash in lieu of any fractional share in accordance with Section
1.1(f), and such Certificate shall forthwith be cancelled. No interest shall be
paid or accrued on the Merger Consideration, on any such dividend or other
distribution or on cash payable in lieu of any fractional share of Qwest Common
Stock. All distributions to holders of Certificates shall be subject to any
applicable federal, state, local and foreign tax withholding, and such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the holder of Certificates in respect of which such deduction and withholding
was made. If the Merger Consideration is to be distributed to a person other
than the person in whose name the Certificate surrendered is registered, it
shall be a condition of such distribution that the Certificate so surrendered
shall be properly endorsed or otherwise in proper form for transfer (including
signature guarantees, if required by the Surviving Corporation in its sole
discretion) and that the person requesting such distribution shall pay any
transfer or other taxes required by reason of such distribution to a person
other than the registered holder of the Certificate surrendered or, in the
alternative, establish to the satisfaction of the Qwest Subsidiary that such tax
has been paid or is not applicable. The Surviving Corporation shall pay all
charges and expenses, including those of the Exchange Agent, in connection with
the distribution of the Merger Consideration.
(e) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions with respect to 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
represented thereby, and no cash payment in lieu of fractional shares shall be
paid to any such holder pursuant to Section 1.1(f), and all such dividends,
other distributions and
4
cash in lieu of fractional shares of Qwest Common Stock shall be paid such
dividends, other distributions and cash in lieu of fractional shares of Qwest
Common Stock shall be paid by Qwest to the Exchange Agent and shall be included
in the Exchange Fund, in each case until the surrender of such Certificate in
accordance with Section 1(d). Subject to the effect of applicable escheat or
similar laws following surrender of any such Certificate, there shall be paid to
the holder thereof (1) at the time of surrender, a Qwest Certificate
representing whole shares of Qwest Common Stock issued in exchange therefor,
without interest, (2) at the time of such surrender, 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 the amount of any
cash payable in lieu of a fractional share of Qwest Common Stock to which such
holder is entitled pursuant to Section 1.1(f) and (3) 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 with a payment date
subsequent to such surrender payable with respect to such whole shares of Qwest
Common Stock, without interest. Qwest shall make available to the Exchange Agent
cash for these purposes to the extent sufficient funds are not then available in
the Exchange Fund.
(f) No Fractional Shares.
(1) No Qwest Certificates or scrip representing
fractional shares of Qwest Common Stock shall be issued upon the
surrender for exchange of Certificates, no dividend or distribution of
Qwest shall relate to such fractional share interests and such
fractional share interests will not entitle the owner thereof to vote
or to any rights of a stockholder of Qwest.
(2) As promptly as practicable following the Effective
Time, the Exchange Agent shall determine the excess (the "Excess
Shares") of (A) the number of whole shares of Qwest Common Stock
delivered to the Exchange Agent by Qwest pursuant to Section 1.1(a)
over (B) the aggregate number of whole shares of Qwest Common Stock to
be distributed to holders of Company Common Stock pursuant to Section
1.1(d). Following the Effective Time, the Exchange Agent shall, on
behalf of former stockholders of Company, sell the Excess Shares at
then-prevailing prices on NASDAQ, all in the manner provided in Section
1.1(f)(3).
(3) The sale of the Excess Shares by the Exchange
Agent shall be executed on NASDAQ through one or more member firms of
the NASD and shall be executed in round lots to the extent practicable.
The Exchange Agent shall use reasonable efforts to complete the sale of
the Excess Shares as promptly following the Effective Time as, in the
Exchange Agent's sole judgment, is practicable consistent with
obtaining the best execution of such sales in light of prevailing
market conditions. Until the net proceeds of such sale or sales have
been distributed to the holders of Company Common Stock, the Exchange
Agent shall hold such proceeds in trust for the holders of the Company
Common Stock. The Surviving Corporation shall pay all commissions,
transfer taxes and other out-of-pocket transaction costs, including the
expenses and compensation of the Exchange Agent, incurred in connection
with such sale of the Excess Shares. The Exchange Agent shall determine
the portion of such trust to which such
5
holder of Company Common Stock is entitled, if any, by multiplying the
amount of the aggregate net proceeds comprising such trust by a
fraction, the numerator of which is the amount of the fractional share
interest to which such holder of Company Common Stock is entitled
(after taking into account all shares of Company Common Stock held at
the Effective Time by such holder) and the denominator of which is the
aggregate amount of fractional share interests to which all holders of
Company Common Stock are entitled.
(4) Notwithstanding the provisions of Section
1.1(f)(2) and (3), the Surviving Corporation may by written notice
delivered to the Company before the Effective Time, in lieu of the
issuance and sale of Excess Shares and the making of the payments
contemplated by Sections 1.1(f)(2) and (3), elect to pay each holder of
Company Common Stock an amount in cash equal to the product obtained by
multiplying (A) the fractional share interest to which such holder
(after taking into account all shares of Company Common Stock held at
the Effective Time by such holder) would otherwise be entitled by (B)
the Closing Price of the Qwest Common Stock on the Closing Date, and,
in such case, all references herein to the cash proceeds of the sale of
the Excess Shares and similar references will be deemed to mean and
refer to the payments calculated as set forth in this Section
1.1(f)(4).
(5) As soon as practicable after the determination of
the amount of cash, if any, to be paid to holders of Company Common
Stock with respect to any fractional share interests, the Exchange
Agent shall make available such amounts to such holders of Company
Common Stock subject to and in accordance with the terms of Section
1.1(e).
(g) Termination of Exchange Fund. Any portion of the Exchange
Fund which remains undistributed to the holders of the Certificates for six
months after the Effective Time shall be delivered to Qwest, upon demand, and
any holders of the Certificates who have not theretofore complied with this
Section 1.1 shall thereafter look only to Qwest as general creditors thereof for
payment of their claim for Merger Consideration or shares, any cash in lieu of
fractional shares of Qwest Common Stock and any dividends or distributions with
respect to Qwest Common Stock.
(h) No Liability. None of the Company, Qwest, Qwest Subsidiary
and the Exchange Agent shall be liable to any person in respect of any shares of
Qwest Common Stock (or dividends or distributions with respect thereto) or cash
from the Exchange Fund in each case delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law. If any Certificate
shall not have been surrendered prior to seven years after the Effective Time
(or immediately prior to such earlier date of which any Merger Consideration,
any cash payable to the holder of such Certificate pursuant to this Section 1.1
or any dividends or distributions payable to the holder of such Certificate
would otherwise escheat to or become the property of any governmental body or
authority) any such Merger Consideration or cash, dividends or distributions in
respect of such Certificate shall, to the extent permitted by applicable law,
become the property of the Surviving Corporation, free and clear of the claims
or interest of any person previously entitled thereto.
6
(i) Investment of Exchange Fund. The Exchange Agent shall
invest any cash included in the Exchange Fund, as directed by Qwest, on a daily
basis. Any interest and other income arising from such investments shall be paid
to Qwest.
(j) Lost, Stolen or Destroyed Certificates. In the event any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
deliver in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof, the Merger
Consideration with respect to such Certificates as may be required pursuant to
Section 1.1(a); provided that the Surviving Corporation may, in its sole
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed Certificates to deliver a bond in such
sum as it may reasonably direct as indemnity against any claim that may be made
against any of Qwest, the Surviving Corporation and the Exchange Agent with
respect to the Certificates alleged to have been lost, stolen or destroyed.
(k) Adjustments. The Merger Consideration shall be adjusted in
the event of any change in Qwest Common Stock by reason of split-ups, mergers,
recapitalizations, combinations, subdivisions, conversions, dividends or other
distributions of Equity Securities of the Company, exchanges of shares or the
like occurring after the date of this Agreement and before the Effective Time,
such that, after the record date therefor the Merger Consideration shall be
equal to the number and class of shares or other securities or property that
would have been received in respect of a share of Company Common Stock, as the
case may be, if the Effective Time had occurred immediately prior to such record
date.
(l) Assumption of Company Stock Options and Warrants.
(1) Each option outstanding at the Effective Time to
purchase shares of Company Common Stock (a "Company Stock Option")
granted under the Company Stock Option Plan shall be assumed by Qwest
and deemed to constitute an option to acquire, on the same terms and
conditions, mutatis mutandis, as were applicable under such Company
Stock Option prior to the Effective Time, the number of shares of Qwest
Common Stock as the holder of such Company Stock Option would have been
entitled to receive pursuant to the Merger had such holder exercised
such Company Stock Option 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 Company Common Stock otherwise purchasable pursuant to such
Company Stock Option (provided that such aggregate exercise price shall
not exceed $12.00 multiplied by the number of shares of Company Common
Stock otherwise purchasable pursuant to such Company Stock Option)
divided by (B) the number of shares of Qwest Common Stock deemed
purchasable pursuant to such assumed Company Stock Option; provided
that the number of shares of Qwest Common Stock that may be purchased
upon exercise of any such Company Stock Option shall not include any
fractional share and, upon exercise of such Company Stock Option, a
cash payment shall be made for any fractional share based upon the
Closing Price of a share of Qwest Common Stock on the Trading Day
immediately preceding the date of exercise. Within three Business Days
after the Effective Time, Qwest shall cause to be delivered to each
holder of an outstanding Company Stock Option an appropriate notice
setting forth such
7
holder's rights pursuant thereto, and such assumed Company Stock Option
(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 Company Stock Option Plan pursuant to
which the Company Stock Options were granted. The adjustments provided
in this Section 1.1(k) 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) At the Effective Time, each warrant to purchase
shares of Company Common Stock (a "Company Warrant") shall be assumed
by Qwest and deemed to constitute a warrant to acquire, on the same
terms and conditions, mutatis mutandis, as were applicable under such
Company Warrant prior to the Effective Time, the number of shares of
Qwest Common Stock as the holder of such Company Warrant would have
been entitled to receive pursuant to the Merger had such holder
exercised such Company Warrant in full immediately prior to the
Effective Time (not taking into account whether or not such Company
Warrant was in fact exercisable) at a price per share equal to (A) the
aggregate exercise price for Company Common Stock otherwise purchasable
pursuant to such Company Warrant divided by (B) the number of shares of
Qwest Common Stock deemed purchasable pursuant to such assumed Company
Warrant; provided that the number of shares of Qwest Common Stock that
may be purchased upon exercise of any such Company Warrant shall not
include any fractional share and, upon exercise of such Company
Warrant, a cash payment shall be made for any fractional share based
upon the Closing Price of a share of Qwest Common Stock on the Trading
Day immediately preceding the date of exercise.
(3) 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 Company Stock Options
and Company Warrants in accordance with this Section 1.1(l). Within 30
Business Days after the Effective Time, Qwest shall cause the Qwest
Common Stock subject to Company Stock Options to be 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 reasonable
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 Company Stock Options
remain outstanding.
(m) Tax Matters. The parties intend that the Merger qualify as
a tax-free reorganization under Sections 368(a)(1)(A) and 368(a)(2)(E) of the
Code. The parties hereby accept this Agreement as a "plan of reorganization"
within the meanings of sections 1.368-2(g) and 1.368-3(a) of the United States
Treasury Regulations.
8
Section 1.2 Qwest/Principal Stockholders Transactions.
(a) Concurrently with the execution and delivery of this
Agreement, Qwest and each of the Principal Stockholders are executing and
delivering an Option Agreement substantially in the form of Exhibit A attached
hereto (collectively, the "Option Agreements"), pursuant to which, among other
things, such Principal Stockholder is (1) granting to Qwest an option (an
"Option") to acquire all the shares of Company Common Stock beneficially owned
by such Principal Stockholder (collectively, the "Option Shares") and (2)
agreeing to certain restrictions on the voting and the sale or other transfer of
such Option Shares.
(b) Concurrently with the execution and delivery of this
Agreement, Qwest and each of the Principal Stockholders are executing and
delivering a Voting Agreement and Proxy substantially in the form of Exhibit B
attached hereto (collectively, the "Voting Agreements"), pursuant to which,
among other things, each of the Principal Stockholders is (1) agreeing to vote
all the shares of Company Common Stock beneficially owned by such Principal
Stockholder to approve this Agreement and the Merger and against any Business
Combination Transaction (other than the Transactions), (2) granting to Qwest an
irrevocable proxy in connection therewith, (3) agreeing to certain other
restrictions on the voting and the sale or other transfer of such shares of
Company Common Stock, (4) agreeing to certain restrictions on such Principal
Stockholder with respect to Business Combination Transactions (other than the
Transactions) with respect to any of the Company and its Subsidiaries and (5)
agreeing to execute and deliver a Stockholder Agreement, as contemplated by
Section 1.2(d).
(c) At or before the Closing, Qwest and each of the Principal
Stockholders shall enter into a Stockholder Agreement substantially in the form
of Exhibit C attached hereto (collectively, the "Stockholder Agreements"),
pursuant to which each such person shall be subject to certain restrictions on
the sale or other transfer of the shares of Qwest Common Stock payable to such
person pursuant to the Merger.
Section 1.3 Qwest Credit Transactions.
(a) Qwest commits to lend to the Company up to $15,000,000 in
the aggregate on the terms and conditions set forth in the term sheet attached
as Exhibit D hereto, subject to the execution of definitive loan and security
documentation in form and substance satisfactory to the Company and Qwest. The
Company and Qwest shall use reasonable best efforts to negotiate and enter into
definitive loan and security documentation, including, without limitation, a
credit agreement, schedules, exhibits and ancillary documentation (collectively,
the "Qwest Credit Facility"), as soon as practicable but in no event later than
October 7, 1998. The commitment stated in this Section 1.3 terminates on the
Termination Date if definitive loan and security documentation shall then not
have been executed. Notwithstanding anything herein to the contrary, a binding
agreement with respect to the Qwest Credit Facility and the loan to be advanced
thereunder will result only from the execution of such definitive documentation
and in each case subject to the terms and conditions stated therein, and this
Agreement, the issuance of the Warrants and the Registration Rights Agreement do
not create by estoppel or otherwise a contract with respect to the Qwest Credit
Facility.
9
(b) Concurrently with execution and delivery of this
Agreement, the Company is issuing to Qwest Series Q Warrants to purchase 750,000
shares of Common Stock substantially in the form of Exhibit E attached hereto
(the "Series Q Warrants").
(c) Concurrently with the execution and delivery of this
Agreement, the Company and Qwest are entering into a Registration Rights
Agreement substantially in the form of Exhibit F attached hereto (the
"Registration Rights Agreement") to provide for, among other things, the
registration under the Securities Act of the disposition of the shares of
Company Common Stock issuable upon exercise of the Series Q Warrants.
Section 1.4 Qwest Private Line Service Agreement. Concurrently
with the execution and delivery of this Agreement, Qwest and the Company are
entering into the Qwest Private Line Service Agreement, pursuant to which Qwest
will provide certain services to the Company.
ARTICLE II
CLOSING
Section 2.1 Time of Closing. The closing of the Merger shall
take place (the "Closing") on the Business Day following the date on which all
the conditions precedent to the obligations of the parties under this Agreement
with respect thereto (other than conditions that, by their terms, cannot be
satisfied until the Closing Date) shall have been satisfied or waived, as the
case may be, or such later date as the parties may agree (the "Closing Date").
Section 2.2 Location of Closing. The Closing shall take place
at the offices of O'Melveny & Xxxxx LLP, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, or at such other location as approved by the parties.
ARTICLE III
CONDITIONS OF CLOSING
Section 3.1 Conditions Precedent to Closing. The respective
obligations of each party under this Agreement with respect to the Merger are
subject to the satisfaction of each of the following conditions, unless waived
by each of the parties that is the beneficiary of the satisfaction of such
condition, at or before the Closing:
(a) holders of a majority of the outstanding shares of Company
Common Stock shall have approved this Agreement and the Merger in accordance
with the DGCL, the certificate of incorporation and bylaws of the Company and
the Regulations of the NASDAQ;
(b) the Registration Statement shall have become effective in
accordance with the provisions of the Securities Act and no stop order
suspending such effectiveness shall have been issued and remain in effect;
10
(c) the shares of Qwest Common Stock issuable in the Merger
shall have been approved for inclusion in NASDAQ, if necessary, subject only to
official notice of issuance;
(d) each of the Company, its Subsidiaries, Qwest and Qwest
Subsidiary shall have obtained from each Governmental Body or other person each
Approval or taken all actions required to be taken in connection with each
Approval, and all waiting, review or appeal periods under the Xxxx-Xxxxx-Xxxxxx
Act or otherwise prescribed with respect to each Approval shall have terminated
or expired, as the case may be, in each case with respect to an Approval that is
required or advisable on the part of such person for (1) the due execution and
delivery by such person of each Transaction Document to which it is or may
become a party, (2) the conclusion of the Transactions, (3) the performance by
such person of its obligations with respect to the Transactions under each
Transaction Document to which it is or may become a party and (4) the exercise
by such person of its rights and remedies with respect to the Transactions under
each Transaction Document to which it is or may become a party or with respect
to which it is or may become an express beneficiary, except in each case
referred to in the preceding clauses (1), (2), (3) and (4) where the failure to
obtain such Approval, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on such person;
(e) no Regulation shall have been enacted, entered,
promulgated or enforced by any Governmental Body which is in effect and (1) has
the effect of making the Merger illegal or otherwise prohibiting the
consummation of the Merger or (2) could reasonably be expected to have a
Material Adverse Effect on any of the Company, its Subsidiaries, Qwest and Qwest
Subsidiary;
(f) none of the Company, its Subsidiaries, Qwest and Qwest
Subsidiary (1) is in violation or breach of or default with respect to (A) any
Regulation of any Governmental Body or any decision, ruling, order or award of
any arbitrator applicable to it or its business, properties or operations or (B)
any agreement, indenture or other instrument to which it is a party or by which
it or its properties may be bound or affected, (2) would be in violation or
breach of or default with respect to any Regulation of any Governmental Body or
any decision, ruling, order or award of any arbitrator applicable to it or its
business, properties or operations in connection with or as a result of the
conclusion of any of the Transactions or (3) has received notice that, in
connection with or as a result of the conclusion of any of the Transactions, it
is or would be in violation or breach of or default with respect to any
Regulation of any Governmental Body or any decision, ruling, order or award of
any arbitrator applicable to it or its business, properties or operations,
except in each case referred to in the preceding clauses (1), (2), (3), and (4)
for violations, breaches or defaults that, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect on such
person;
(g) each Transaction Document required to be executed and
delivered prior to the Effective Time shall have been so executed and delivered
by the respective parties thereto;
(h) the representations and warranties of each other party
contained in each Transaction Document to which such other party is a party
shall be true and correct in all respects on and as of the Closing Date, with
the same force and effect as though made on and as of the Closing Date (except
for those representations and warranties that address matters only
11
as of a particular date or only with respect to a particular period of time,
which representations or warranties shall be true and correct as of such date or
with respect to such period), except where the failure of such representations
or warranties to be so true and correct (without giving effect to any limitation
as to "material," "materiality," "Material Adverse Effect," specified dollar
amount thresholds or other similar qualifiers), individually or in the
aggregate, has not had and could not reasonably be expected to have a Material
Adverse Effect on such person;
(i) each other party shall have performed, in all material
respects, all of the covenants and other obligations required by each
Transaction Document required to be performed by such other party at or before
the Closing;
(j) counsel to the Company shall have received tax
representation letters substantially in the form of Exhibits 3.1(j)(1) and
3.1(j)(2) attached hereto, and the Company shall have received an opinion from
its counsel on the Closing Date dated as of the Closing Date, substantially in
the form of Exhibit 3.1(j)(3) attached hereto;
(k) each party shall have received from each other party the
following, each dated the Closing Date, in form and substance reasonably
satisfactory to the receiving party:
(1) a certificate of the Secretary or an Assistant
Secretary of such other party with respect to (A) the certificate of
incorporation or articles of incorporation, as the case may be, of such
other party, (B) the bylaws of such other party, (C) the resolutions of
the Board of Directors of such other party, approving each Transaction
Document to which such other party is a party and the other documents
to be delivered by it under the Transaction Documents, and (D) the
names and true signatures of the officers of such other party who
signed each Transaction Document to which such other party is a party
and the other documents to be delivered by such other party under the
Transaction Documents;
(2) a certificate of the President or a Vice President
of such other party to the effect that (A) the representations and
warranties of such other party contained in the Transaction Documents
to which it is a party are true and correct in all material respects as
of the Closing Date and (B) such other party has performed, in all
material respects, all covenants and other obligations required by the
Transaction Documents to which it is a party to be performed by it on
or before the Closing Date;
(3) with respect to the Company, certified copies, or
other evidence reasonably satisfactory to Qwest and Qwest Subsidiary,
of all Approvals of all Governmental Bodies and other persons with
respect to the Company referred to in Section 4.3;
(4) with respect to Qwest, certified copies, or other
evidence reasonably satisfactory to the Company, of all Approvals of
all Governmental Bodies and other persons with respect to Qwest
referred to in Section 5.3;
12
(5) with respect to Qwest Subsidiary, certified
copies, or other evidence reasonably satisfactory to the Company, of
all Approvals of all Governmental Bodies and other persons with respect
to Qwest Subsidiary referred to in Section 5.3;
(6) a certificate of the Secretary of State of the
jurisdiction in which such other party is incorporated, dated as of a
recent date, as to the good standing of and payment of taxes by such
other party and as to the charter documents of such other party on file
in the office of such Secretary of State; and
(7) with respect to the Company, a certificate of the
President or a Vice President of the Company with respect to U.S. real
property interests, substantially in the form of Exhibit 3.1(k)(7)
attached hereto; and
(l) Qwest and Qwest Subsidiary shall have received from the
Company a written agreement of each person who is identified as an "affiliate"
on the list furnished by the Company pursuant to Section 7.1(h), which is
substantially in the form of Exhibit 3.1(l) attached hereto, without material
cost or other liability to any of the Company, its Subsidiaries, Qwest and Qwest
Subsidiary and any other person.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company represents and warrants to Qwest and Qwest
Subsidiary as follows:
Section 4.1 Corporate Existence and Power. Each of the Company
and its Subsidiaries (1) is a corporation duly incorporated, validly existing
and in good standing under the laws of the jurisdiction of its incorporation,
(2) has all necessary corporate power and authority and all material licenses,
authorizations, consents and approvals required to own, lease, license or use
its properties now owned, leased, licensed or used and proposed to be owned,
leased, licensed or used and to carry on its business as now conducted and
proposed to be conducted, in each case as described in the Company SEC Documents
filed with the SEC prior to the date hereof, (3) is duly qualified as a foreign
corporation under the laws of each jurisdiction in which qualification is
required either to own, lease, license or use its properties now owned, leased,
licensed and used or to carry on its business as now conducted, except where the
failure to effect or obtain such qualification, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect,
and (4) has all necessary corporate power and authority to execute and deliver
each Transaction Document to which it is or may become a party and to perform
its obligations thereunder.
Section 4.2 Authorization; Contravention. Subject to obtaining
the Approvals referred to in Section 4.3, except as expressly disclosed in
Section 4.3 of the Company's Disclosure Schedule, the execution and delivery by
each of the Company and its Subsidiaries of each Transaction Document to which
it is or may become a party and the performance by it
13
of its obligations under each of those Transaction Documents have been duly
authorized by all necessary corporate action and do not and will not (1)
contravene, violate, result in a breach of or constitute a default under (A) its
certificate of incorporation, articles of incorporation or bylaws, as
applicable, (B) any Regulation of any Governmental Body or any decision, ruling,
order or award of any arbitrator by which any of the Company and its
Subsidiaries or any of their properties may be bound or affected, including,
without limitation, the Exchange Act, the Xxxx-Xxxxx-Xxxxxx Act and the DGCL, or
(C) any agreement, indenture or other instrument to which any of the Company and
its Subsidiaries is a party or by which any of the Company and its Subsidiaries
or their properties may be bound or affected, (2) result in or require the
creation or imposition of any Lien on any of the properties now owned or
hereafter acquired by any of the Company and its Subsidiaries or (3) to the
knowledge of the representing party, impair or disadvantage the business of any
of the Company and its Subsidiaries or adversely affect any Company License,
except in each case referred to in the preceding clauses (1), (2) and (3) for
contraventions, violations, breaches, defaults or Liens that, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
Section 4.3 Approvals. Except as expressly referred to in this
Agreement or otherwise disclosed in Section 4.3 of the Company's Disclosure
Schedule, no Approval of any Governmental Body or other person is required or
advisable on the part of any of the Company and its Subsidiaries for (1) the due
execution and delivery by the Company or such Subsidiary, as the case may be, of
any Transaction Document to which it is or may become a party, (2) the
conclusion of the Transactions, (3) the performance by the Company or such
Subsidiary, as the case may be, of its obligations under each Transaction
Document to which it is or may become a party and (4) the exercise by Qwest or
Qwest Subsidiary, as the case may be, of its rights under each Transaction
Document to which Qwest or Qwest Subsidiary, as the case may be, is or may
become a party, except in each case referred to in the preceding clauses (1),
(2), (3) and (4) where the failure to obtain such Approval, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
Section 4.4 Binding Effect. Each Transaction Document to which
any of the Company and its Subsidiaries is or may become a party is, or when
executed and delivered in accordance with this Agreement will be, the legally
valid and binding obligation of the Company or such Subsidiary, as the case may
be, enforceable against it in accordance with its terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting creditors' rights generally and general principles
of equity, including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing and the possible unavailability of
specific performance or injunctive relief, regardless of whether considered in a
proceeding in equity or at law.
Section 4.5 Financial Information.
(a) The consolidated balance sheet of the Company and its
consolidated Subsidiaries as of December 31, 1997 (the "Company Balance Sheet")
and the related consolidated statements of income (loss) and stockholders'
equity and cash flows for the fiscal year then ended, reported on by
PricewaterhouseCoopers LLP, true and complete copies of which have been
delivered to Qwest and Qwest Subsidiary, fairly present the consolidated
14
financial position of the Company and its consolidated Subsidiaries as of that
date and their consolidated results of operations and cash flows for the year
then ended, in accordance with GAAP applied on a consistent basis except as
described in the footnotes to the financial statements or as disclosed in
Section 4.5(a) of the Company's Disclosure Schedule.
(b) The unaudited financial statements of the Company and its
consolidated Subsidiaries as of June 30, 1998 filed with the SEC in the
Company's quarterly report on Form 10-Q for the quarter then ended, true and
complete copies of which have been delivered to Qwest and Qwest Subsidiary,
fairly present, subject to normal year-end adjustments, the consolidated
financial position of the Company and its consolidated Subsidiaries as of that
date and their consolidated results of operations and cash flows for the six
months then ended.
(c) The unaudited consolidated balance sheet of the Company
and its consolidated Subsidiaries as of July 31, 1998 and the related
consolidated statements of income (loss) and stockholders' equity and cash flows
for the seven months then ended, true and complete copies of which have been
delivered to Qwest and Qwest Subsidiary, fairly present, subject to normal
year-end adjustments, the consolidated financial position of the Company and its
consolidated Subsidiaries as of that date and their consolidated results of
operations and cash flows for the seven months then ended.
(d) At the respective dates of the balance sheets referred to
in this Section 4.5, none of the Company and its Subsidiaries had any material
Liability that, in accordance with GAAP applied on a consistent basis, should
have been shown or reflected in the balance sheets but was not, except for the
omission of notes in unaudited balance sheets with respect to contingent
liabilities that in the aggregate did not materially exceed those so reported in
the latest audited balance sheets previously delivered and that were of
substantially the same type as so reported.
(e) All receivables of the Company and its Subsidiaries
(including accounts receivable, loans receivable and advances) which are
reflected in the balance sheets referred to in this Section 4.5, and all such
receivables which have arisen thereafter and prior to the Effective Time, have
arisen or will have arisen in all material respects from bona fide transactions
in the Ordinary Course, the carrying value of such receivables approximate their
fair market values in all material respects and adequate reserves for the
Company's receivables have been established on the balance sheets in accordance
with prior practice and GAAP.
(f) Except as disclosed in Section 4.5(f) of the Company's
Disclosure Schedule, since December 31, 1997, none of the Company and its
Subsidiaries has provided any material special promotions, discounts or other
incentives to its employees, agents, distributors or customers in connection
with the solicitation of new orders for goods or services provided by the
Company or any Subsidiary except in the Ordinary Course, nor has any customer
pre-paid any material amount for goods or services to be provided by the Company
or any Subsidiary in the future, except in the Ordinary Course.
(g) The Company has made available to Qwest and Qwest
Subsidiary copies of each management letter delivered to any of the Company and
its Subsidiaries by
15
PricewaterhouseCoopers LLP in connection with the financial statements referred
to in this Section 4.5 or relating to any review by them of the internal
controls of the Company and its Subsidiaries during the two years ended December
31, 1996 and December 31, 1997, respectively, and has made available for
inspection and, subject to the approval of PricewaterhouseCoopers LLP, after the
date of this Agreement will make available for inspection all reports and
working papers produced or developed by them or management in connection with
their examination of those financial statements, as well as all such reports and
working papers for prior periods for which any liability of any of the Company
and its Subsidiaries for Taxes has not been finally determined or barred by
applicable statutes of limitation.
(h) Since January 1, 1996, there has been no material
disagreement (within the meaning of Item 304(a)(1)(iv) of Regulation S-K under
the Securities Act) between any of the Company and its Subsidiaries, on the one
part, and any of its independent accountants, on the other part, with respect to
any aspect of the manner in which the Company or such Subsidiary, as the case
may be, maintained or maintains its books and records or the manner in which the
Company or the Subsidiary, as the case may be, has reported upon the financial
condition and results of operations of any of the Company and its Subsidiaries
since such date, that has not been resolved to the satisfaction of the relevant
independent accountants.
Section 4.6 Absence of Certain Changes or Events.
(a) Except as disclosed in Section 4.6(a) of the Company's
Disclosure Schedule or the Company SEC Documents filed with the SEC prior to the
date hereof, since December 31, 1997, no circumstance has existed and no event
has occurred that has had, will have or could reasonably be expected to have a
Material Adverse Effect.
(b) Except as disclosed in Section 4.6(b) of the Company's
Disclosure Schedule or the Company SEC Documents filed with the SEC prior to the
date hereof, since December 31, 1997, none of the Company and its Subsidiaries
has done the following or entered into any agreement or other arrangement with
respect to the following, except in each case with respect or pursuant to each
Transaction Document to which it is or may become a party:
(1) acquired or transferred any material asset, except
in each case for fair value and in the Ordinary Course; or
(2) incurred, assumed or guaranteed any Liability or
paid, discharged or satisfied any Liability, except in each case in the
Ordinary Course; or
(3) created, assumed or suffered the existence of any
Lien (other than Permitted Liens), except in each case in the Ordinary
Course; or
(4) waived, released, cancelled, settled or
compromised any debt, claim or right of any material value, except in
each case in the Ordinary Course; or
16
(5) declared, made or set aside any amount for the
payment of any Restricted Payment to any person other than any of the
Company and its Wholly- Owned Subsidiaries; or
(6) transferred or waived any right under any lease,
license or agreement or any Proprietary Right or other intangible
asset, except in each case in the Ordinary Course; or
(7) paid or agreed to pay any bonus, extra
compensation, pension, continuation, severance or termination pay, or
otherwise increased the wage, salary, pension, continuation, severance
or termination pay or other compensation (of any nature) to its
stockholders, directors or executive officers, officers or employees,
except for increases made in the Ordinary Course or as required by law;
or
(8) to the knowledge of the representing party,
suffered (A) any damage, destruction or casualty loss (whether or not
covered by insurance) of property the greater of cost or fair market
value of which exceeds $50,000 individually or $100,000 in the
aggregate for the Company and its Subsidiaries or (B) any taking by
condemnation or eminent domain of any of its property or assets the
greater of cost or fair market value of which exceeds $50,000
individually or $100,000 in the aggregate for the Company and its
Subsidiaries; or
(9) made any loan to or entered into any transaction
with any of its stockholders having beneficial ownership of 5.0% or
more of the shares of Company Common Stock then issued and outstanding,
directors, officers or employees giving rise to any claim or right of,
by, or against any person in an amount or having a value in excess of
$25,000 individually or $50,000 in the aggregate for the Company and
its Subsidiaries; or
(10) entered into any material agreement, arrangement,
commitment, contract or transaction (including, without limitation, any
letter of intent or other agreement with respect to a Business
Combination Transaction), amended or terminated any of the same,
received any notice of termination or purported termination with
respect to the same or otherwise conducted any of its affairs, except
in each case in the Ordinary Course; or
(11) made any contribution to any Company Employee
Plan, other than regularly scheduled contributions and contributions
required to maintain the funding levels of any Company Employee Plan,
or made or incurred any commitment to establish or increase the
obligation of the Company or a Subsidiary to any Company Employee Plan;
or
(12) except as disclosed in the footnotes to the
financial statements referred to in Section 4.5 or in Section 4.6 of
the Company's Disclosure Schedule, changed any accounting methods or
principles used in recording transactions on the books
17
of the Company or a Subsidiary or in preparing the financial statements
of the Company or a Subsidiary;
and none of the events disclosed in Section 4.6 of the Company's Disclosure
Schedule, individually or in the aggregate, could reasonably be expected to have
a Material Adverse Effect; provided that the representations made in this
Section 4.6 with respect to Frontier Media Group, Inc. are made, with respect to
all events or facts occurring or existing before May 27, 1998, to the knowledge
of the representing party.
(c) Except as disclosed in Section 4.6 of the Company's
Disclosure Schedule or in the Company SEC Documents filed with the SEC prior to
the date hereof, the occurrence of any fire, explosion, accident, strike,
lockout, or other labor dispute, drought, storm, hail, earthquake, embargo, act
of God or of the public enemy, or other casualty (whether or not covered by
insurance), individually or in the aggregate, has not had and could not
reasonably be expected to have a Material Adverse Effect.
Section 4.7 Taxes. Except as disclosed in Section 4.7 of the
Company's Disclosure Schedule:
(a) Each of the Company and its Subsidiaries has (1) filed (or
has caused to be filed) all Tax Returns that are required to be filed with any
Governmental Body with respect to each of the Company and its Subsidiaries,
except for the filing of Tax Returns as to which the failure to file,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect, and (2) paid (or has caused to be paid) all Taxes of or
with respect to each of the Company and its Subsidiaries required to be paid
when due whether or not shown on such Tax Returns and all assessments received
by it, except Taxes being contested in good faith by appropriate proceedings,
for which adequate reserves or other provisions are maintained in accordance
with GAAP and which Taxes are specified in Section 4.7(a) of the Company's
Disclosure Schedule, or amounts of Taxes and assessments which, individually or
in the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
(b) Federal income tax returns of the Company and its
Subsidiaries are closed through the year ended December 31, 1994, either by the
expiration of the applicable statute of limitations or closing agreement. None
of the Company and its Subsidiaries know of any basis for the assessment of any
material amount of Taxes for any period covered by the Tax Returns that are
referred to in Section 4.7(a) that is not reflected on those Tax Returns. None
of the Company and its Subsidiaries is a party to any pending Action by any
Governmental Body with respect to the payment of Taxes of or with respect to any
of the Company and its Subsidiaries, and no claim has been asserted in writing,
or to the knowledge of the Company, threatened against it for assessment or
collection of any Taxes which has not been resolved, other than Actions or
claims which, individually or in the aggregate, could not reasonably be expected
to have a Material Adverse Effect. None of the Company and its Subsidiaries has
executed or filed with the Internal Revenue Service or any other taxing
authority any agreement extending the period of assessment or collection of any
Taxes which has not expired or any consent to have the provisions of Section
341(f) of the Code (or any similar provision of state, local or foreign law)
applied to it.
18
(c) All Taxes that the Company or a Subsidiary is required to
withhold or collect have been withheld or collected and, to the extent required,
have been paid over to the proper Governmental Body on a timely basis, and each
of the Company and its Subsidiaries has withheld proper amounts from its
employees, independent contractors, creditors, stockholders or other third
parties for all periods in full compliance with tax withholding provisions of
applicable Regulations, except for withholdings or collections as to which the
failure to withhold or collect, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
(d) No portion of the real property or plant, structures,
fixtures or improvements of the Company or a Subsidiary is subject to any
special assessment, the liability with respect to which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect. None
of the Company and its Subsidiaries has any knowledge of any proposal for any
such assessment.
(e) None of the Company or its Subsidiaries is obligated to
make, or is a party to an agreement or arrangement that obligates it to make,
any payment that will not be deductible for federal income tax purposes by
virtue of Section 280G of the Code.
(f) None of the Company and its Subsidiaries has any liability
for the Taxes of any person other than the Company and its Subsidiaries (1)
under Treasury Regulations ss.1.1502-6 (or any similar provision of state, local
or foreign law), (2) as a transferee or successor, (3) by contract or (4)
otherwise.
(g) None of the Company and its Subsidiaries has adopted a
plan of complete liquidation.
(h) (1) None of the Company and its Subsidiaries is obligated
under any agreement with respect to industrial development bonds or other
obligations with respect to which the excludability from gross income of the
holder for federal or state income tax purposes could be affected by the
execution and delivery of the Transaction Documents or the conclusion of any of
the Transactions, (2) none of the Company and its Subsidiaries has filed or been
included in a combined, consolidated or unitary return (or substantial
equivalent thereof) of any person other than the Company and its Subsidiaries,
(3) with respect to Wholly-Owned Subsidiaries, none of the Company and its
Subsidiaries is a party to any joint venture, partnership or other arrangement
or contract which is treated as a partnership for United States federal income
tax purposes, (4) the prices for any property or services (or for the use of
property) provided by any of the Company and its Subsidiaries to any other
Subsidiary or to the Company have been arm's length prices determined using a
method permitted by the Treasury Regulations under Section 482 of the Code, and
(5) none of the Company and its Subsidiaries has made an election or is required
to treat any of its assets as owned by another person for federal income tax
purposes or as tax-exempt bond financed property or tax-exempt use property
within the meaning of Section 168 of the Code (or any similar provision of
state, local or foreign law.
19
Section 4.8 Undisclosed Liabilities. Except as disclosed in
Section 4.8 of the Company's Disclosure Schedule, none of the Company and its
Subsidiaries has any material Liabilities, except Liabilities (1) shown or
reflected in the Company Balance Sheet or the notes thereto, (2) expressly
contemplated by the Transaction Documents or (3) in an aggregate amount not
greater than $25,000.
Section 4.9 Litigation.
(a) Except as disclosed in Section 4.9(a) of the Company's
Disclosure Schedule or in the Company SEC Documents filed with the SEC prior to
the date hereof, there is no Action pending or, to the knowledge of the
representing party, threatened against any of the Company and its Subsidiaries,
that (1) as of the date of this Agreement involves any of the Transactions or
(2) individually or in the aggregate, if determined adversely to any of them,
could reasonably be expected to result in a liability to any of them in an
amount that exceeds $25,000 individually or $50,000 in the aggregate.
(b) Except as disclosed in Section 4.9(b) of the Company's
Disclosure Schedule or in the Company SEC Documents filed with the SEC prior to
the date hereof, there is no Action pending against any of the Company and its
Subsidiaries or, to the knowledge of the representing party, threatened against
any of the Company and its Subsidiaries or any other person that involves any of
the Transactions or any property owned, leased, licensed or used by the Company
or such Subsidiary, as the case may be, that, individually or in the aggregate,
if determined adversely to any of them, could reasonably be expected to have a
Material Adverse Effect.
(c) Except as disclosed in Section 4.9(c) of the Company's
Disclosure Schedule or in the Company SEC Documents filed with the SEC prior to
the date hereof, other than billing disputes with customers arising in the
ordinary course of business that in the aggregate involve immaterial amounts,
there is no Action pending against any of the Company and its Subsidiaries or,
to the knowledge of the representing party, threatened against any of the
Company and its Subsidiaries, one stated purpose of which is to seek, facilitate
or effect (1) a reduction of rates charged to customers, (2) a reduction of
earnings or (3) refunds of amounts previously charged to customers, except in
each case referred to in the preceding clauses (1), (2) and (3) for Actions
that, individually or in the aggregate, if determined adversely to any of the
Company and its Subsidiaries, could not reasonably be expected to have a
Material Adverse Effect.
Section 4.10 Compliance with Regulations.
(a) None of the Company and its Subsidiaries is in, and none
of them has received written notice of, a violation of or default with respect
to, any Regulation of any Governmental Body or any decision, ruling, order or
award of any arbitrator applicable to it or its business, properties or
operations, including individual products or services sold or provided by it,
except for violations or defaults that, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect.
20
(b) Each of the Company and its Subsidiaries has filed or
caused to be filed with each applicable Governmental Body all reports,
applications, documents, instruments and information required to be filed by it
pursuant to all applicable Regulations, other than those as to which the failure
to file, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.
Section 4.11 Licenses.
(a) To the knowledge of the representing party, one or more of
the Company and its Subsidiaries are the registered holders of each License that
is required to be held by the Company or such Subsidiary, as the case may be, so
that it may carry on its business as now conducted and proposed to be conducted,
the failure to hold which License, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect (each such License, a
"Company License").
(b) To the knowledge of the representing party, each Company
License is validly issued, in good standing and in full force and effect,
unimpaired by any act or omission by the Company or such Subsidiary, as the case
may be. Each of the Company and its Subsidiaries is in compliance with such
Company License. None of the Company and its Subsidiaries has suffered a
revocation, termination, suspension or material and adverse modification of a
License that was, at the time of such event, a Company License. There is no
Action pending or, to the knowledge of the representing party, threatened
against any of the Company and its Subsidiaries, and no other circumstance
exists or event has occurred (whether or not with the giving of notice or the
passage of time or both), that could reasonably be expected to result in the
revocation, termination, suspension or material and adverse modification of any
Company License. If a Company License is subject to termination upon the
expiration of a term, the existence of another circumstance or the occurrence of
another event, the representing party does not have any reason to believe that
such Company License will not be renewed in the ordinary course. No Company
License is subject to renegotiation by any Governmental Body. The execution and
delivery of the Transaction Documents and the conclusion of any of the
Transactions will not (and will not give any Governmental Body a right to)
terminate or modify any rights of, or accelerate or increase any obligation of,
the Company or any Subsidiary under any Company License.
Section 4.12 Employee Matters.
(a) Employment and Labor Relations.
(1) Except as disclosed in Section 4.12(a) of the
Company's Disclosure Schedule or in the Company SEC Documents filed
with the SEC prior to the date hereof:
(A) none of Company and its Subsidiaries is a
party to any collective bargaining agreement or other labor
agreement with any union or labor organization, and no union
or labor organization has been recognized by any of the
Company and its Subsidiaries as a bargaining representative
for employees of any of the Company and its Subsidiaries;
21
(B) there is no representation claim or
petition pending before the National Labor Relations Board
respecting the employees of any of the Company and its
Subsidiaries, nor does Company have any knowledge of any
significant activity or proceeding of any labor organization
(or representative thereof) or employee group to organize any
such employees;
(C) there is no unfair labor practice charge
or complaint against any of the Company and its Subsidiaries
pending or, to the knowledge of the representing party,
threatened before the National Labor Relations Board or any
similar Governmental Body;
(D) there has not occurred nor has there been
threatened since January 31, 1994, a labor strike, labor
dispute, request for representation, work stoppage, work
slowdown or lockout of or by employees of any of the Company
and its Subsidiaries;
(E) no grievance or arbitration proceeding
arising out of any collective bargaining agreement to which
any of the Company and its Subsidiaries is a party is pending;
(F) no charge with respect to or relating to
any of the Company and its Subsidiaries is pending before the
Equal Employment Opportunity Commission or any state, local or
foreign agency responsible for the prevention of unlawful
employment practices;
(G) no claim relating to employment or loss
of employment with any of the Company and its Subsidiaries is
pending in any federal, state or local court or in any other
adjudicatory body and, to the knowledge of the representing
party, no such claim against any of the Company and its
Subsidiaries has been threatened;
(H) none of the Company and its Subsidiaries
has received notice of the intent of any federal, state, local
or foreign agency responsible for the enforcement of labor or
employment Regulations to conduct an investigation of or
relating to any of the Company and its Subsidiaries, and no
such investigation is in progress;
(I) since the enactment of the Worker
Adjustment and Retraining Notification Act of 0000 (xxx "XXXX
Xxx"), xxxx of the Company and its Subsidiaries has
effectuated (1) a "plant closing" (as defined in the WARN Act)
affecting any site of employment or one or more facilities or
operating units within any site of employment or facility of
the Company or any of its Subsidiaries or (2) a "mass layoff"
(as defined in the WARN Act) affecting any site of employment
or facility of the Company or any of its Subsidiaries; and
none of the Company and its Subsidiaries has been affected by
any transaction or
22
engaged in layoffs or employment terminations sufficient in
any number to trigger application of any similar Regulation;
(J) none of the Company and its Subsidiaries
is delinquent in any material respect in payments to any of
its current or former officers, directors, employees,
consultants or agents for any wages, salaries, commissions or
other direct compensation for any services performed by them
or amounts required to be reimbursed to such officers,
directors, employees, consultants, or agents;
(K) in the event of termination of the
employment or service of any of its current or former
officers, directors, employees, consultants or agents, none of
the Company, its Subsidiaries, Qwest and Qwest Subsidiary will
be liable to any such persons for severance, continuation or
termination pay pursuant to any agreement or by reason of any
action taken or not taken by any of the Company and its
Subsidiaries prior to the Effective Time; and
(L) since December 31, 1997, there has not
been any termination of employment of any officer, director or
employee of any of the Company and its Subsidiaries receiving
annual base salary in excess of $150,000.
(2) Section 4.12(a) of the Company's Disclosure
Schedule sets forth a correct and complete list of (A) all employment,
consulting, severance pay, continuation pay, termination pay or
indemnification agreements or other agreements of any nature whatsoever
between any of the Company and its Subsidiaries, on the one part, and
any current officer, director, employee, consultant or agent thereof,
on the other part, in each case whether written or oral, to which any
of the Company and its Subsidiaries is a party or by which any of them
is bound, except with respect to agreements approved by Qwest in
writing, and (B) all collective bargaining, labor and similar
agreements (other than any Employee Plans), in each case whether
written or oral, currently in effect or under negotiation, to which any
of the Company and its Subsidiaries is a party or by which any of them
is bound or proposed to be bound, as the case may be. The Company has
provided to Qwest and Qwest Subsidiary true and complete copies of all
such agreements. Each of the Company and its Subsidiaries has complied
with its obligations related to, and is not in default under, any of
such agreements, except where the failure to comply with or a default
under such agreements, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
(3) Except as disclosed in Section 4.12(a) of the
Company's Disclosure Schedule, the execution and delivery of the
Transaction Documents and the conclusion of the Transactions (A) will
not require any of the Company and its Subsidiaries to make a payment
to, or obtain any consent or waiver from, any current or former
officer, director, employee, consultant or agent of any of the Company
and its Subsidiaries and (B) will not result in any change in the
nature of any rights of any current or former officer, director,
employee, consultant or agent of any of the Company and its
Subsidiaries under any agreement referred to in Section 4.12(a)(2),
including any
23
acceleration or change in the award, grant, vesting or determination of
stock options, stock purchase, stock appreciation rights, phantom
stock, restricted stock or other stock-based rights (other than
exercise price and number of shares adjusted in accordance with Section
1.1(l)), severance pay, continuation pay, termination pay or other
contingent obligations of any nature whatsoever of any of the Company
and its Subsidiaries, or a change in the term of any such agreement.
(4) Except as disclosed in Section 4.12(a) of the
Company's Disclosure Schedule, each of the Company and its Subsidiaries
is, and at all times since December 31, 1997 has been, in compliance
with all applicable Regulations respecting employment and employment
practices, terms and conditions of employment, wages and hours, and
occupational safety and health, and is not, and since January 31, 1994
has not, engaged in any unfair labor practices, except where the
failure to so comply or such engagement, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse
Effect.
(b) Company Employee Plans.
(1) Section 4.12(b) of the Company's Disclosure
Schedule sets forth a correct and complete list of all Company Employee
Plans. The Company has made available to Qwest Subsidiary true and
complete copies of the Company Employee Plans and all related summary
descriptions, including, without limitation, copies of any employee
handbooks listing or describing any Company Employee Plans and summary
descriptions of any Company Employee Plan not otherwise in writing.
(2) Except for any failure or default that could not
reasonably be expected to have a Material Adverse Effect, each of the
Company and its Subsidiaries has fulfilled or has taken all actions
necessary to enable it to fulfill when due all of its obligations under
each Company Employee Plan, and there is no existing default or event
of default or any event which, with or without the giving of notice or
the passage of time, would constitute a default by it under any Company
Employee Plan. No Regulation currently in effect or, to the knowledge
of the representing party, proposed to be in effect materially or
adversely affects, or if adopted would materially or adversely affect,
the rights or obligations of any of the Company and its Subsidiaries
under any Company Employee Plan. There are no material negotiations,
demands or proposals which are pending or which have been made to any
of the Company and its Subsidiaries which concern matters now covered,
or that would be covered, by any Company Employee Plan.
(3) Each of the Company and its Subsidiaries is in
full compliance with all Regulations applicable to each Company
Employee Plan, except where noncompliance could not reasonably be
expected to have a Material Adverse Effect. There has been no Employee
Plan Event which is continuing or in respect of which there is any
outstanding liability of any of the Company or its Subsidiaries that,
individually or in the aggregate, could reasonably be expected to have
a Material Adverse Effect, and no such Employee
24
Plan Event is reasonably expected to occur, with respect to any Company
Employee Plan.
(4) Except as disclosed in Section 4.12(b) of the
Company's Disclosure Schedule, the execution and delivery of the
Transaction Documents and the conclusion of the Transactions will not
cause the acceleration of vesting in, or payment of, any benefits under
any Company Employee Plan.
(5) None of the Company and its Subsidiaries has any
formal plan or commitment, whether legally binding or not, to create
any additional Employee Plan or to modify or change any existing
Employee Plan that would affect any current or former employee of any
of the Company and its Subsidiaries and that could reasonably be
expected to result in a material liability.
(6) All employment, consulting, deferred compensation,
bonus, stock option, stock appreciation rights, phantom stock,
severance, termination or indemnification agreements, arrangements or
understandings, or other Employee Plans, between any of the Company and
its Subsidiaries, on the one part, and any current or former officer or
director of any of the Company and its Subsidiaries, on the other part,
which are required to be disclosed under the Securities Act or the
Exchange Act have been disclosed.
(c) Employee Plans of the Company's ERISA Affiliates. Section
4.12(c) of the Company's Disclosure Schedule sets forth a correct and
complete list of all ERISA Plans and Multiemployer Plans of any person
that is an ERISA Affiliate of the Company or its Subsidiaries, other
than any such ERISA Plans or Multiemployer Plans disclosed pursuant to
Section 4.12(b). There has been no Employee Plan Event with respect to
any ERISA Plan or Multiemployer Plan of any person that is an ERISA
Affiliate of the Company or its Subsidiaries or who was an ERISA
Affiliate of the Company or its Subsidiaries at any time since January
31, 1992, other than any ERISA Plan or Multiemployer Plan disclosed in
Section 4.12 of the Company's Disclosure Schedule, in respect of which
there is any outstanding liability, or, to the knowledge of the
Company, in respect of which any liability could be expected to be
incurred by any of the Company and its Subsidiaries. At no time since
the organization of the Company or any of its Subsidiaries has any
entity (other than the Company or any such Subsidiaries) been an ERISA
Affiliate of any of the Company and its Subsidiaries.
(d) Company Qualified Plans.
(1) Each Company Qualified Plan satisfies, in all
material respects, the requirements of Section 401(a) of the Code, and
each trust under each such plan is exempt from Tax under Section 501(a)
of the Code. To the knowledge of the Company, no event has occurred
that will or could reasonably be expected to give rise to
disqualification or loss of tax-exempt status of any such plan or trust
under such sections.
25
(2) The Company has made available to Qwest and Qwest
Subsidiary for each Company Qualified Plan copies of the following
documents: (A) the Form 5500 filed for each of the three most recent
plan years, including all schedules thereto and financial statements
with attached opinions of independent accountants; (B) the most recent
determination letter from the IRS; (C) the consolidated statement of
assets and liabilities of such plan as of its most recent valuation
date; and (D) the statement of changes in fund balance and in financial
position or the statement of changes in net assets available for
benefits under such plan for the most recently ended plan year. Such
financial statements fairly present the financial condition and the
results of operations of each Company Qualified Plan as of such dates,
in accordance with GAAP.
(3) No Company Employee Plan is an employee stock
ownership plan (an "ESOP") within the meaning of Section 4975(e)(7) of
the Code.
(e) Company ERISA Plans and Multiemployer Plans. No Company
Employee Plan is, and no employee benefit plan formerly maintained by
any of the Company and its Subsidiaries was, an ERISA Plan. Neither the
Company nor any of its Subsidiaries has ever contributed to, or
withdrawn in a complete or partial withdrawal from, any Multiemployer
Plan or incurred any contingent liability under Section 4204 of ERISA.
Section 4.13 Capitalization.
(a) As of the date of this Agreement, the authorized capital
stock of the Company consists of 50,000,000 shares of Company Common Stock and
1,000,000 shares of preferred stock, par value $.01 per share, of the Company
(the "Company Preferred Stock").
(b) As of the date of this Agreement, there are (1) 15,884,378
shares of Company Common Stock issued and outstanding, of which 6,550,354 shares
are registered in the names of the Principal Stockholders, (2) no shares of
Company Preferred Stock issued and outstanding, (3) no shares of Company Common
Stock held in the treasury of the Company, (4) 1,445,405 shares of Company
Common Stock reserved for issuance upon exercise of outstanding Company Stock
Options issued to current or former employees and directors of the Company and
its Subsidiaries pursuant to the Company Stock Option Plan, (5) 621,186 shares
of Company Common Stock reserved for issuance upon exercise of authorized but
unissued Company Stock Options pursuant to the Company Stock Option Plan and (6)
1,683,349 shares of Company Common Stock reserved for issuance upon exercise of
outstanding Company Warrants, including 750,000 shares of Company Common Stock
reserved for issuance upon exercise of the Series Q Warrants.
(c) All outstanding shares of Company Common Stock are and all
shares of Company Common Stock issuable upon the exercise of the Company Stock
Options and Company Warrants, including, without limitation, the Series Q
Warrants, upon issuance thereof in accordance with the terms of such Company
Stock Options and Company Warrants, as the case may be, will be duly authorized,
validly issued, fully paid and nonassessable, free from any Liens created by the
Company with respect to the issuance and delivery thereof and not subject to
preemptive rights.
26
(d) Except with respect to the outstanding shares of Company
Common Stock, the Company Stock Options and the Company Warrants, there are no
outstanding bonds, debentures, notes or other indebtedness or other securities
of the Company having the right to vote (or convertible into, or exchangeable
for, securities having the right to vote) on any matters on which stockholders
of the Company may vote.
(e) Except with respect to the Company Stock Options and the
Company Warrants, there are no outstanding securities, options, warrants, calls,
rights, commitments, agreements, arrangements or undertakings of any kind to
which the Company is a party or by which the Company is bound obligating the
Company to issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock or other Equity Securities of the Company or
obligating the Company to issue, grant, extend or enter into any such security,
option, warrant, call, right, commitment, agreement, arrangement or undertaking.
Section 4.13(e) of the Company's Disclosure Schedule sets forth a correct and
complete list of the outstanding Company Stock Options and Company Warrants.
(f) Except as disclosed in Schedule 4.13(f) of the Company's
Disclosure Schedule and except with respect to the Transaction Documents, to the
knowledge of the representing party, there is no agreement or arrangement (1)
restricting the voting or transfer of any of the Equity Securities of the
Company, (2) restricting (A) the acquisition of any shares of Company Common
Stock or other securities pursuant to any Option (B) the acquisition of any
shares of Company Common Stock pursuant to the Series Q Warrants or (C) the
voting or transfer of any shares of Company Common Stock or other securities so
acquired, (3) that affords to any person "drag-along" or "tag-along" rights with
respect to the sale or other transfer of any shares of Company Common Stock or
other securities acquired by Qwest and its permitted assigns pursuant to the
exercise of any Option or Series Q Warrant, or (4) that would impose limitations
on the legal rights to be enjoyed by any of Qwest and its permitted assigns, as
a stockholder of the Company, upon the acquisition of shares of Company Common
Stock or other securities pursuant to the exercise of any Option or Series Q
Warrant.
(g) Except with respect to the Company Stock Options and the
Company Warrants, there are no outstanding contractual obligations, commitments,
understandings or arrangements of any of the Company and its Subsidiaries to
repurchase, redeem or otherwise acquire, require or make any payment in respect
of any shares of Equity Securities of the Company.
(h) Except as disclosed in Section 4.13(h) of the Company's
Disclosure Schedule and with respect to the Company Credit Facilities, the
Transaction Documents and statutory restrictions of general application, there
are no legal, contractual or other restrictions on the payment of dividends or
other distributions or amounts on or in respect of any of the Equity Securities
of the Company.
(i) Except as disclosed in Section 4.13(i) of the Company's
Disclosure Schedule and with respect to the Transaction Documents, there are no
agreements or arrangements to which the Company or any of its Subsidiaries is a
party pursuant to which the
27
Company is or could be required to register shares of Company Common Stock or
other securities under the Securities Act.
(j) All outstanding Equity Securities of the Company were
issued in compliance with all applicable Regulations, including, without
limitation, the registration provisions of applicable federal and state
securities laws. Equity Securities of the Company that were issued and
reacquired by the Company were so reacquired (and, if reissued, so reissued) in
compliance with all applicable Regulations, and the Company has no liability
with respect to the reacquisition or reissuance of such Equity Securities.
Section 4.14 Subsidiaries.
(a) Section 4.14(a) of the Company's Disclosure Schedule sets
forth a correct and complete list of each of its Subsidiaries and the directors
and officers of the Subsidiary as of the date of this Agreement. All outstanding
shares of capital stock or other equity interests of each Subsidiary are duly
authorized, validly issued, fully paid and nonassessable or, with respect to
partnership interests, limited liability company membership interests or their
equivalent, are validly issued, the consideration therefor has been paid and no
unmet calls for capital contributions or similar payments are outstanding.
(b) All shares of capital stock or other equity interests of
each Subsidiary, are owned beneficially and of record by the Company, free and
clear of all Liens other than Permitted Liens. No other Equity Securities of any
Subsidiary are outstanding.
(c) Except with respect to the outstanding shares of capital
stock or other Equity Securities of each Subsidiary, there are no outstanding
bonds, debentures, notes or other indebtedness or other securities of such
Subsidiary having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which stockholders of
such Subsidiary may vote.
(d) There are no outstanding securities, options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings of any kind
to which any of the Company and its Subsidiaries is a party or by which any of
them is bound obligating any of the Company and its Subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
capital stock or other Equity Securities of any of the Subsidiaries or
obligating any of the Company and its Subsidiaries to issue, grant, extend or
enter into any such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking.
(e) Except with respect to the Transaction Documents, there is
no agreement or arrangement restricting the voting or transfer of any of the
Equity Securities of any of the Subsidiaries.
(f) There are no outstanding contractual obligations,
commitments, understandings or arrangements of any of the Company and its
Subsidiaries to repurchase, redeem or otherwise acquire, require or make any
payment in respect of any of the Equity Securities of any of the Subsidiaries.
28
(g) Except with respect to the Company Credit Facilities, the
Transaction Documents and statutory restrictions of general application, there
are no legal, contractual or other restrictions on the payment of dividends or
other distributions or amounts on or in respect of any of the Equity Securities
of any of the Subsidiaries.
(h) All outstanding Equity Securities of each of the
Subsidiaries were issued in compliance with all applicable Regulations,
including, without limitation, the registration provisions of applicable federal
and state securities laws. Equity Securities of any of the Subsidiaries that
were issued and reacquired by such Subsidiary were so reacquired (and, if
reissued, so reissued) in compliance with all applicable Regulations, and none
of the Company and its Subsidiaries has any liability with respect to the
reacquisition or reissuance of such Equity Securities.
Section 4.15 Property.
(a) Each of the Company and its Subsidiaries owns, leases or
licenses all real property and personal property, tangible or intangible, that
are used or useful in its business and operations as now conducted and proposed
to be conducted, the failure to own, lease or license which real or personal
property, individually or in the aggregate, could reasonably be expected to have
a Material Adverse Effect (collectively, the "Company Properties").
(b) All Company Properties are reflected in the financial
statements referred to in Section 4.5 in the manner and to the extent required
to be reflected therein by GAAP (other than any Company Properties disposed of
in the Ordinary Course).
(c) All tangible Company Properties are in such condition and
repair, and are suitable, sufficient in amount, size and type and so situated,
as is appropriate and adequate for the uses for which they are used and intended
and to carry on the business of the Company or such Subsidiary, as the case may
be, as now conducted and as proposed to be conducted.
(d) To the knowledge of the representing party, all Company
Properties comply in all material respects with the terms and conditions of all
agreements relating to such real property and personal property and are in
conformity in all material respects with all Regulations of any Governmental
Body currently in effect, scheduled to come into effect or proposed to be
adopted, entered or issued, as the case may be, and all decisions, rulings,
orders and awards of any arbitrator applicable to it or its business, properties
or operations, except where the failure to so comply or conform, individually or
in the aggregate, could not reasonably be expected to have a Material Adverse
Effect. Except as disclosed in Section 4.15(d) of the Company's Disclosure
Schedule, there exists no default by any party under any lease agreement with
respect to any Company Property, which default, individually or together with
other defaults under the same lease agreement or other lease agreements, could
reasonably be expected to have a Material Adverse Effect.
(e) The interest of any of the Company and its Subsidiaries in
each Company Property is free and clear of all Liens other than Permitted Liens,
except where the absence of
29
such title, individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect.
(f) None of the hardware or software used or useful in the
business and operations of any of the Company and its Subsidiaries as now
conducted and proposed to be conducted contains imbedded logic or code that will
fail to recognize the year 2000 as such, or that might fail or cause other
hardware or software to cease to perform according to specifications or to the
needs of the business of the Company or the Subsidiary, as the case might be, by
reason of the date change after December 31, 1999, or cannot accurately and
correctly process data, including dates, from different countries, except where
such condition, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
Section 4.16 Proprietary Rights.
(a) Each of the Company and its Subsidiaries owns or licenses
all Proprietary Rights that are used or useful in its business and operations as
now conducted and proposed to be conducted, the failure to own or license which
Proprietary Rights could reasonably be expected to have a Material Adverse
Effect (collectively, the "Company Proprietary Rights").
(b) One or more of the Company and its Subsidiaries have good
title to each of the interests created by, or an implied license to use, the
Company Proprietary Rights. None of the Company and its Subsidiaries has
received notice that the validity of any such Company Proprietary Right or its
title to or use of any Company Proprietary Right is being questioned in any
Action. The right, title and interest of the Company or a Subsidiary in and to
each such Company Proprietary Right and the authority to use the same are free
and clear of all Liens other than Permitted Liens. To the knowledge of the
representing party, no use has been or is being made of any Company Proprietary
Right by any person other than the Company, the Subsidiary or a person duly
authorized to make that use. All Company Proprietary Rights used by the Company
or a Subsidiary but previously owned or held by any of its directors, officers,
employees or agents have been duly transferred to the Company or the Subsidiary,
as the case may be. There is no liability or obligation of the Company or a
Subsidiary with respect to any Company Proprietary Right that is required to
have been paid or otherwise performed, as of the date of this Agreement, that
has not been paid or otherwise performed in full.
(c) The representing party has no knowledge of any valid
grounds for any bona fide claims (1) to the effect that the sale, licensing or
use of any product or service as now sold, licensed or used, or proposed for
sale, license or use, by any of the Company and its Subsidiaries infringes on
any Proprietary Right, (2) against the use by any of the Company and its
Subsidiaries of any Company Proprietary Rights used in the business and
operations of any of the Company and its Subsidiaries as now conducted or as
proposed to be conducted or (3) challenging the ownership, validity,
effectiveness or right of use of any of the Company Proprietary Rights.
(d) The execution and delivery of the Transaction Documents
and the conclusion of any of the Transactions will not (and will not give any
person a right to) terminate
30
or modify any rights of, or accelerate or increase any obligation of, any of the
Company and its Subsidiaries under any Company Proprietary Right.
Section 4.17 Insurance. One or more of the Company and its
Subsidiaries maintain insurance with reputable insurance companies in such
amounts and covering such risks as are usually carried by companies engaged in
the same or similar business and similarly situated. There are no currently
outstanding material losses for which the Company or such Subsidiary, as the
case may be, has failed to give or present notice or claim under any policy.
There are no requirements by any insurance company or by any board of fire
underwriters or other body exercising similar functions or by any Governmental
Body of which the representing party has knowledge requiring any repairs or
other work to be done to any of the properties owned, leased, licensed or used
by the Company or such Subsidiary, as the case may be, or requiring any
equipment or facilities to be installed on or in connection with any of the
properties, the failure to complete which could result in the cancellation of
the policy of insurance. Policies for all the insurance are in full force and
effect and none of the Company and its Subsidiaries is in default in any
material respect under any of the policies. The representing party has no
knowledge of the cancellation or proposed cancellation of any of the insurance
or of any proposed increase in the contributions for workers' compensation
applicable to each employee or unemployment insurance or of any conditions or
circumstances applicable to the business of the Company or such Subsidiary, as
the case may be, which might result in a material increase in those
contributions. The Company has delivered to Qwest and Qwest Subsidiary true and
complete copies of policies for all material fire and casualty, general
liability, business interruption, product liability and other insurance
maintained by any of the Company and its Subsidiaries.
Section 4.18 Environmental Matters.
(a) Each of the Company and its Subsidiaries has obtained all
environmental, health and safety permits, authorizations and other Licenses
required under all Environmental Laws to carry on its business as now conducted
or proposed to be conducted, except to the extent failure to have any such
permit, authorization or other License would not have a Material Adverse Effect.
Each of such permits, authorizations and other Licenses is in full force and
effect and each of the Company and its Subsidiaries is in compliance with the
terms and conditions thereof, and is also in compliance with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in any applicable Environmental
Law or in any regulation, code, plan, order, decree, judgment, injunction,
notice or demand letter issued, entered, promulgated or approved thereunder,
except to the extent failure to comply therewith could not reasonably be
expected to have a Material Adverse Effect.
(b) None of the Company and its Subsidiaries has generated,
used, transported, treated, stored, released or disposed of, or has permitted
anyone else to generate, use, transport, treat, store, release or dispose of,
any Hazardous Substance in a manner which has created or might reasonably be
expected to create any liability or which would require reporting or giving
notice to any Governmental Body, except for such events or occurrences for which
the Company or its Subsidiaries would not reasonably be expected to incur
liability or costs, individually or
31
in the aggregate, in excess of $150,000 (exclusive of any amount with respect to
which a reserve has been taken by the Company or a Subsidiary on or before
December 31, 1997).
Section 4.19 Books and Records.
(a) The records and books of account of each of the Company
and its Subsidiaries are correct and complete in all material respects, have
been maintained in accordance with good business practices and are reflected
accurately in the financial statements referred to in Section 4.5. Each of the
Company and its Subsidiaries has accounting controls sufficient to insure that
its transactions are (1) executed in accordance with management's general or
specific authorization and (2) recorded in conformity with GAAP so as to
maintain accountability for assets.
(b) The minute books of each of the Company and its
Subsidiaries true and correct copies of which have been made available to Qwest
and Qwest Subsidiary, contain accurate records of all meetings and accurately
reflect all corporate action of the stockholders and the board of directors
(including committees) of the Company or such Subsidiary, as the case may be.
(c) The stock books and ledgers of each of the Company and its
Subsidiaries, true and correct copies of which have been made available to Qwest
and Qwest Subsidiary, correctly record all transfer and issuances of all capital
stock of the Company or the Subsidiary.
Section 4.20 Material Contracts.
(a) Section 4.20(a) of the Company's Disclosure Schedule sets
forth a correct and complete list of the following agreements to which any of
the Company and its Subsidiaries is a party (collectively, the "Company Material
Contracts"), true and correct copies of which have been delivered to Qwest and
Qwest Subsidiary:
(1) agreements with investment bankers, brokers,
finders, consultants and advisers engaged by the Company or a
Subsidiary (including, without limitation, the Company's Financial
Advisor) with respect to the Transactions, other Business Combination
Transactions, the purchase or sale by the Company or a Subsidiary of
assets not in the ordinary course of business or the issuance and sale
by the Company or a Subsidiary of any Equity Securities;
(2) Company Affiliate Agreements;
(3) agreements made by any of the Company and its
Subsidiaries not in the Ordinary Course that may require the payment or
provision by or to any of the Company and its Subsidiaries of money in
an aggregate amount, or goods or services having an aggregate value, in
each case in excess of $100,000;
(4) agreements made by any of the Company and its
Subsidiaries since December 31, 1997, whether or not in the Ordinary
Course, contemplating the
32
acquisition by the Company or the Subsidiary, as the case may be, of
any Equity Securities of any person or all or substantially all of the
assets of any person;
(5) agreements that by their terms may be cancelled,
terminated, amended or modified, or pursuant to which payments might be
required or acceleration of benefits may be required, in connection
with or as the result of the execution and delivery of the Transaction
Documents or the conclusion of any of the Transactions, in each case
the consequence of which could reasonably be expected to adversely
affect any of the Company and the Subsidiaries in an amount in excess
of $100,000;
(6) agreements that provide for the acceleration or
payment of benefits upon the occurrence of a change of control (however
defined), whether or not resulting from the execution and delivery of
the Transaction Documents or the conclusion of any of the Transactions;
(7) agreements that provide for the indemnification by
any of the Company and its Subsidiaries of any director, officer,
employee or agent of any of the Company and its Subsidiaries, other
than agreements referred to in the preceding clause (1);
(8) agreements that grant a power of attorney, agency
or similar authority to another person;
(9) joint venture, partnership and limited liability
agreements;
(10) agreements giving any person the right to
renegotiate or require an increase or reduction in the price of goods
or services provided by or to any of the Company and its Subsidiaries,
an increase in amounts previously paid by any of the Company and its
Subsidiaries with respect to any goods or services or the repayment by
any of the Company and the Subsidiaries of amounts previously paid to
any of them with respect to any goods or services;
(11) agreements with any Governmental Body; and
(12) agreements requiring the payment or provision by
or to any of the Company and its Subsidiaries of money in an aggregate
amount, or goods or services having an aggregate value, in each case in
excess of $250,000 during the year ending December 31, 1998.
(b) Each Company Affiliate Agreement is in full force and
effect, and except as disclosed in Section 4.20(b) of the Company's Disclosure
Schedule, no term or condition thereof has been amended, modified or waived
after the execution thereof, in each case in any material respect, except in
accordance with this Agreement. Each such Company Affiliate Agreement is the
legally valid and binding obligation of the parties thereto, enforceable against
such parties in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or limiting creditors' rights generally and
33
by general principles of equity, including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing and the possible
unavailability of specific performance or injunctive relief, regardless of
whether considered in a proceeding in equity or law.
(c) Each agreement referred to in Sections 4.20(a)(5) and
4.20(a)(12) has, to the knowledge of the representing party with respect to
parties other than the Company or the Subsidiary, as the case may be, been duly
authorized, executed and delivered by the parties to such agreement, is in full
force and effect and constitutes the legally valid and binding obligation of the
parties to such agreement or their respective successors or assigns, enforceable
against them in accordance with the terms of such agreement. Except as disclosed
in Section 4.20(c) of the Company's Disclosure Schedule, there is no liability
or obligation of the Company or a Subsidiary with respect to any such agreement
referred to in Section 4.20(a)(5) or Section 4.20(a)(12) that, under the terms
of such agreement, has not been paid or otherwise performed in full. The right,
title and interest of the Company or a Subsidiary in, to and under each such
agreement is free and clear of all Liens other than Permitted Liens. Except as
disclosed in Section 4.20(c) of the Company's Disclosure Schedule, there exists
no default under any such agreement by any party, which default, individually or
together with other defaults under the same agreement or other agreements, could
reasonably be expected to have a Material Adverse Effect. The execution and
delivery of the Transaction Documents and the conclusion of any of the
Transactions will not (and will not give any person a right to) terminate or
modify any rights of, or accelerate or increase any obligation of, any of the
Company and its Subsidiaries under any such agreement.
Section 4.21 Transactions with Affiliates. Except as disclosed
in Section 4.21 of the Company's Disclosure Schedule or in the Company SEC
Documents filed with the SEC prior to the date hereof, at no time since December
31, 1997 has any of the Company and its Subsidiaries entered into any
transaction (including, but not limited to, the purchase, sale or exchange of
property or the rendering of any service) with any Affiliate except as
contemplated by the Transaction Documents.
Section 4.22 SEC Documents. The Company has filed with the
Securities and Exchange Commission all reports, schedules, forms, statements and
other documents required by the Securities Act or the Exchange Act to be filed
by the Company since January 31, 1994 (collectively, and in each case including
all exhibits and schedules thereto and documents incorporated by reference
therein, the "Company SEC Documents"). As of their respective dates, except to
the extent revised or superseded by a subsequent filing with the Securities and
Exchange Commission on or before the date of this Agreement, the Company SEC
Documents filed by the Company complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
none of the Company SEC Documents (including any and all financial statements
included therein) filed by the Company as of such dates contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The consolidated
financial statements of the Company and its consolidated Subsidiaries included
in the Company SEC Documents, including any amendments thereto, comply as to
form in all material respects with
34
applicable accounting requirements and the published rules and regulations of
the Securities and Exchange Commission with respect thereto. The Company has
filed with the Securities and Exchange Commission as exhibits to the Company SEC
Documents all agreements, contracts and other documents or instruments required
to be so filed, and such exhibits are true and complete copies of such
agreements, contracts and other documents or instruments, as the case may be.
None of the Subsidiaries of the Company is required to file any reports,
schedules, statements or other documents with the Securities and Exchange
Commission.
Section 4.23 Proxy Statement/Prospectus; Registration
Statement; Other Information. None of the information with respect to any of the
Company and its Subsidiaries to be included in the Proxy Statement/Prospectus or
the Registration Statement will, in the case of the Proxy Statement/Prospectus
or any amendments thereof or supplements thereto, at the time of the mailing of
the Proxy Statement/Prospectus or any amendments thereof or supplements thereto,
and at the time of the Company Stockholders Meeting, or, in the case of the
Registration Statement, at the time it becomes effective, contain any untrue
statement of a material fact, 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, except that no
representation is made by the representing party with respect to information
supplied in writing by Qwest, Qwest Subsidiary or any Affiliate thereof
specifically for inclusion in the Proxy Statement/Prospectus. The letters to
stockholders, notices of meeting, proxy statement and forms of proxies to be
distributed to stockholders in connection with this Agreement and the Merger and
any schedules required to be filed with the Securities and Exchange Commission
in connection therewith are collectively referred to as the "Proxy
Statement/Prospectus."
Section 4.24 Company Board Approval.
(a) The Board of Directors of the Company, by resolutions duly
adopted at a meeting duly called and held and not subsequently rescinded or
modified in any way (the "Company Board Approval"), but subject to clause (2) of
the proviso to Section 7.2(z), has duly (1) determined that this Agreement and
the Merger are in the best interests of the Company and its stockholders, (2)
approved this Agreement and the Merger and determined that this Agreement and
the Merger are advisable, (3) determined that the other Transaction Documents
and the other Transactions are in the best interests of the Company and its
stockholders and approved such other Transaction Documents and Transactions and
(4) recommended that the stockholders of the Company approve this Agreement and
the Merger.
(b) The Company Board Approval constitutes approval of this
Agreement and the Merger for purposes of Section 251 of the DGCL and of each of
the Transaction Documents and each of the Transactions (including, without
limitation, the Qwest/Principal Stockholder Transactions, the Qwest Credit
Transactions and the Qwest Private Line Services Agreement) for purposes of
Section 203 of the DGCL if the provisions thereof were to apply to any of the
Transaction Documents or any of the Transactions.
(c) The Company's Financial Advisor has delivered to the Board
of Directors of the Company its opinion, dated as of the date of this Agreement,
to the effect that the Merger
35
Consideration to be received by the holders of Company Common Stock (other than
holders of Company Common Stock who are Affiliates of the Company) in the
Transactions is fair to such holders.
Section 4.25 Required Vote. The affirmative vote, at a duly
convened meeting of the holders of Company Common Stock at which the necessary
quorum is present, of a majority of the outstanding shares of Company Common
Stock is the only vote or consent of the holders of any class or series of the
Equity Securities of the Company necessary to approve this Agreement and the
Merger. The other Transaction Documents and the other Transactions are not
required to be approved by the holders of shares of any class or series of
Equity Securities of the Company.
Section 4.26 Business Combination Transactions. None of the
Company and its Subsidiaries has entered into any agreement with any person
which has not been terminated as of the date of this Agreement and under which
there remains any liability or obligation of any of the Company and its
Subsidiaries with respect to a Business Combination Transaction (other than the
Transactions).
Section 4.27 Fees for Financial Advisors, Brokers and Finders.
None of the Company, its Subsidiaries and the Principal Stockholders has
authorized any person other than the Company's Financial Advisor to act as
financial advisor, broker, finder or other intermediary that might be entitled
to any fee, commission, expense reimbursement or other payment of any kind from
any of the Company and its Subsidiaries upon the conclusion of or in connection
with any of the Transactions. The Company has disclosed to Qwest and Qwest
Subsidiary the terms of the engagement of the Company's Financial Advisor by the
Company.
Section 4.28 Ownership of Qwest Common Stock. None of the
Company and its Subsidiaries owns any shares of Qwest Common Stock or other
Equity Securities of Qwest (exclusive of any shares of Qwest Common Stock owned
by any Company Employee Plan).
Section 4.29 Continuing Representations and Warranties.
(a) Each of the representations and warranties made by the
Company or a Subsidiary in this Agreement or in any other Transaction Document
as of any date other than the Closing Date shall be true and correct in all
material respects on and as of the Closing Date, except as otherwise
contemplated by such Transaction Document.
(b) Not less than three Business Days prior to the Closing
Date, the Company shall prepare and deliver to Qwest and Qwest Subsidiary such
updates or other revisions of the written disclosures referred to in this
Article IV as have been delivered by the Company to Qwest and Qwest Subsidiary
as shall be necessary in order to make each of such written disclosures true and
correct in all material respects on and as of the Closing Date. The requirement
to prepare and deliver updates or other revisions of the written disclosures,
and the receipt by Qwest and Qwest Subsidiary of information pursuant to Section
6.1 or otherwise on or before the Closing Date, shall not limit the right of
Qwest and Qwest Subsidiary under Article III to require as a condition precedent
to the performance of its obligations under this Agreement
36
on such Closing Date the accuracy in all material respects of the
representations and warranties made by the representing party in any Transaction
Document and the performance in all material respects of the covenants of the
Company made in any Transaction Document (without regard to such updates or
other revisions) and to receive an unqualified certificate with respect to the
same.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF QWEST AND QWEST SUBSIDIARY
Each of Qwest and Qwest Subsidiary, jointly and severally,
represents and warrants to the Company as follows:
Section 5.1 Corporate Existence and Power. Each of Qwest and
Qwest Subsidiary (1) is a corporation duly incorporated, validly existing and in
good standing under the laws of the jurisdiction of its incorporation, (2) has
all necessary corporate power and authority and all material licenses,
authorizations, consents and approvals required to own, lease, license or use
its properties now owned, leased, licensed or used and proposed to be owned,
leased, licensed or used and to carry on its business as now conducted and
proposed to be conducted, (3) is duly qualified as a foreign corporation under
the laws of each jurisdiction in which qualification is required either to own,
lease, license or use its properties now owned, leased, licensed or used or to
carry on its business as now conducted, except where the failure to effect or
obtain such qualification, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect, and (4) has all
necessary corporate power and authority to execute and deliver each Transaction
Document to which it is or may become a party and to perform its obligations
thereunder.
Section 5.2 Authorization; Contravention. Subject to obtaining
the Approvals referred to in Section 5.3, the execution and delivery by each of
Qwest and Qwest Subsidiary of each Transaction Document to which it is or may
become a party and the performance by it of its obligations under each of those
Transaction Documents have been duly authorized by all necessary corporate
action and do not and will not (1) contravene, violate, result in a breach of or
constitute a default under, (A) its certificate of incorporation or bylaws, (B)
any Regulation of any Governmental Body or any decision, ruling, order or award
of any arbitrator by which it or any of its properties may be bound or affected,
including, but not limited to, the Xxxx-Xxxxx- Xxxxxx Act or (C) any agreement,
indenture or other instrument to which it is a party or by which it or its
properties may be bound or affected or (2) result in or require the creation or
imposition of any Lien on any property now owned or hereafter acquired by it,
except in each case referred to in the preceding clauses (1) and (2) for
contraventions, violations, breaches, defaults or Liens that, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
Section 5.3 Approvals. Except as disclosed in Section 5.3 of
Qwest and Qwest Subsidiary's Disclosure Schedule, no Approval of any
Governmental Body or other person is
37
required or advisable on the part of Qwest or Qwest Subsidiary for (1) the due
execution and delivery by Qwest or Qwest Subsidiary, as the case may be, of any
Transaction Document, (2) the conclusion of the Transactions, (3) the
performance by Qwest or Qwest Subsidiary, as the case may be, of its obligations
under each Transaction Document to which it is or may become a party and (4) the
exercise by the Company of its rights under each Transaction Document to which
the Company is or may become a party, except in each case referred to in the
preceding clauses (1), (2), (3) and (4) where the failure to obtain such
Approval, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.
Section 5.4 Binding Effect. Each Transaction Document to which
Qwest or Qwest Subsidiary is or may become a party is, or when executed and
delivered in accordance with this Agreement will be, the legally valid and
binding obligation of Qwest or Qwest Subsidiary, as the case may be, enforceable
against it in accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally and general principles of equity,
including, without limitation, concepts of materiality, reasonableness, good
faith and fair dealing and the possible unavailability of specific performance
or injunctive relief, regardless of whether considered in a proceeding in equity
or at law.
Section 5.5 Financial Information.
(a) The consolidated balance sheet of Qwest and its
consolidated Subsidiaries as of December 31, 1997 and the related consolidated
statements of income (loss) and stockholders' equity and cash flows for the
fiscal year then ended, reported on by KPMG Peat Marwick LLP, true and complete
copies of which have been delivered to the Company, fairly present the
consolidated financial position of Qwest and its consolidated Subsidiaries as of
that date and their consolidated results of operations and cash flows for the
year then ended, in accordance with GAAP applied on a consistent basis except as
described in the footnotes to the financial statements or as disclosed in
Section 5.5 of Qwest and Qwest Subsidiary's Disclosure Schedule.
(b) The unaudited consolidated balance sheet of Qwest and its
consolidated Subsidiaries as of June 30, 1998 and the related consolidated
statements of income (loss) and stockholders' equity and cash flows for the six
months then ended, true and complete copies of which have been delivered to the
Company, fairly present, subject to normal year-end adjustments, the
consolidated financial position of Qwest and its consolidated Subsidiaries as of
that date and their consolidated results of operations and cash flows for the
six months then ended.
(c) At the respective dates of the balance sheets referred to
in this Section 5.5, none of Qwest and its Subsidiaries had any material
Liability that, in accordance with GAAP applied on a consistent basis, should
have been shown or reflected in the balance sheets but was not, except for the
omission of notes in unaudited balance sheets with respect to contingent
liabilities that in the aggregate did not materially exceed those so reported in
the latest audited balance sheets previously delivered and that were of
substantially the same type as so reported.
38
(d) Since January 1, 1997, there has been no material
disagreement (within the meaning of Item 304(a)(1)(iv) of Regulation S-K under
the Securities Act) between any of Qwest and its Subsidiaries, on the one part,
and any of its independent accountants, on the other part, with respect to any
aspect of the manner in which the Company or such Subsidiary, as the case may
be, maintained or maintains its books and records or the manner in which the
Company or the Subsidiary, as the case may be, has reported upon the financial
condition and results of operations of any of the Company and its Subsidiaries
since such date, that has not been resolved to the satisfaction of the relevant
independent accountants.
Section 5.6 Absence of Certain Changes or Events. Except as
disclosed in Section 5.6 of Qwest and Qwest Subsidiary's Disclosure Schedule or
the Qwest SEC Documents filed with the SEC prior to the date hereof, since
December 31, 1997, no circumstance has existed and no event has occurred that
has had, will have or could reasonably be expected to have a Material Adverse
Effect.
Section 5.7 Litigation.
(a) There is no Action pending against Qwest or Qwest
Subsidiary or, to the knowledge of the representing party, threatened against
Qwest, Qwest Subsidiary or any other person that restricts in any material
respect or prohibits (or, if successful, would restrict or prohibit) the
conclusion of any of the Transactions.
(b) There is no Action pending against any of Qwest and its
Subsidiaries or, to the knowledge of the representing party, threatened against
any of Qwest and its Subsidiaries or any other person that involves any of the
Transactions or any property owned, leased, licensed or used by any of Qwest and
its Subsidiaries, as the case may be, that, individually or in the aggregate, if
determined adversely to any of them, could reasonably be expected to have a
Material Adverse Effect on Qwest.
Section 5.8 Compliance with Regulations.
(a) None of Qwest and its Subsidiaries is in, and none of them
has received written notice of, a violation of or default with respect to, any
Regulation of any Governmental Body or any decision, ruling, order or award of
any arbitrator applicable to it or its business, properties or operations,
including individual products or services sold or provided by it, except for
violations or defaults that, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
(b) Each of Qwest and its Subsidiaries has filed or caused to
be filed with each applicable Governmental Body all reports, applications,
documents, instruments and information required to be filed by it pursuant to
all applicable Regulations, other than those as to which the failure to file,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
39
Section 5.9 Capitalization.
(a) As of the date of this Agreement, the authorized capital
stock of Qwest consists of 600,000,000 shares of Qwest Common Stock and
25,000,000 shares of preferred stock, par value $.01 per share, of Qwest (the
"Qwest Preferred Stock").
(b) As of August 31, 1998, there are approximately (1)
332,123,281 shares of Qwest Common Stock issued and outstanding, (2) no shares
of Qwest Common Stock held in the treasury of Qwest, (3) no shares of Qwest
Preferred Stock issued and outstanding, (4) 35,855,624 shares of Qwest Common
Stock reserved for issuance upon exercise of outstanding stock options issued by
Qwest to current or former employees and directors of Qwest and its
Subsidiaries, (5) 14,787,963 shares of Qwest Common Stock reserved for issuance
upon exercise of authorized but unissued stock options and (6) 8,600,000 shares
of Qwest Common Stock reserved for issuance upon exercise of a warrant issued to
Anschutz Family Investment Company LLC.
(c) All outstanding shares of Qwest Common Stock are duly
authorized, validly issued, fully paid and nonassessable, free from any Liens
created by Qwest with respect to the issuance and delivery thereof and not
subject to preemptive rights.
(d) Except with respect to the outstanding shares of Qwest
Common Stock, there are no outstanding bonds, debentures, notes or other
indebtedness or other securities of Qwest having the right to vote (or
convertible into, or exchangeable for, securities having the right to vote) on
any matters on which stockholders of Qwest may vote.
(e) All outstanding Equity Securities of Qwest were issued in
compliance with all applicable Regulations, including, without limitation, the
registration provisions of applicable federal and state securities laws. Equity
Securities of Qwest that were issued and reacquired by Qwest were so reacquired
(and, if reissued, so reissued) in compliance with all applicable Regulations,
and Qwest has no liability with respect to the reacquisition or reissuance of
such Equity Securities.
Section 5.10 SEC Documents. Qwest has filed with the
Securities and Exchange Commission all reports, schedules, forms, statements and
other documents required by the Securities Act or the Exchange Act to be filed
by Qwest since April 18, 1997 (collectively, and in each case including all
exhibits and schedules thereto and documents incorporated by reference therein,
the "Qwest SEC Documents"). As of their respective dates, except to the extent
revised or superseded by a subsequent filing with the Securities and Exchange
Commission on or before the date of this Agreement, the Qwest SEC Documents
filed by Qwest complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and none of the Qwest
SEC Documents (including any and all financial statements included therein)
filed by Qwest as of such dates contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The consolidated financial
statements of Qwest and its consolidated Subsidiaries included in the Qwest SEC
Documents, including any amendments thereto, comply as to form
40
in all material respects with applicable accounting requirements and the
published rules and regulations of the Securities and Exchange Commission with
respect thereto. Qwest has filed with the Securities and Exchange Commission as
exhibits to the Qwest SEC Documents all agreements, contracts and other
documents or instruments required to be so filed, and such exhibits are true and
complete copies of such agreements, contracts and other documents or
instruments, as the case may be. None of the Subsidiaries of Qwest is required
to file any reports, schedules, statements or other documents with the
Securities and Exchange Commission.
Section 5.11 Proxy/Statement/Prospectus; Registration
Statement; Other Information. None of the information with respect to any of
Qwest and its Subsidiaries to be included in the Proxy Statement/Prospectus or
the Registration Statement will in the case of the Proxy Statement/Prospectus or
any amendments thereof or supplements thereto, at the time of the mailing of the
Proxy Statement/Prospectus or any amendments thereof or supplements thereto, and
at the time of the Company Stockholders Meeting, or, in the case of the
Registration Statement, at the time it becomes effective, 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, except that no
representation is made by the representing party with respect to information
supplied in writing by the Company or any Affiliate of the Company specifically
for inclusion in the Proxy Statement/Prospectus or the Registration Statement.
The Registration Statement will comply in all material respects with the
provisions of the Securities Act. The registration statement on Form S-4, in
which the Proxy Statement/Prospectus will be included, and all exhibits thereto,
required to be filed with the Securities and Exchange Commission in connection
with this Agreement and the Merger are collectively referred to as the
"Registration Statement".
Section 5.12 Ownership of Company Common Stock. None of Qwest
and its Subsidiaries owns any shares of Company Common Stock or other Equity
Securities of the Company (exclusive of any shares of Company Common Stock owned
by any Employee Plan of Qwest and its Subsidiaries).
Section 5.13 Continuing Representations and Warranties.
(a) Each of the representations and warranties made by Qwest
or Qwest Subsidiary in this Agreement or in any other Transaction Document as of
any date other than the Closing Date shall be true and correct in all material
respects on and as of the Closing Date, except as otherwise contemplated by such
Transaction Document.
(b) Not less than three Business Days prior to the Closing
Date, Qwest and Qwest Subsidiary shall prepare and deliver to the Company such
updates or other revisions of the written disclosures referred to in this
Article V as have been delivered by Qwest and Qwest Subsidiary to the Company as
shall be necessary in order to make each of such written disclosures correct and
complete in all material respects on and as of the Closing Date. The requirement
to prepare and deliver updates or other revisions of the written disclosures,
and the receipt by the Company of information pursuant to Section 6.1 or
otherwise on or before the Closing Date, shall not limit the right of the
Company under Article III to require as a condition
41
precedent to the performance of its obligations under this Agreement on such
Closing Date the accuracy in all material respects of the representations and
warranties made by the representing party in any Transaction Document and the
performance in all material respects of the covenants of Qwest or Qwest
Subsidiary, as the case may be, made in any Transaction Document (without regard
to such updates or other revisions) and to receive an unqualified certificate
with respect to the same.
ARTICLE VI
COVENANTS OF THE PARTIES
Section 6.1 Covenants of the Parties. The Company covenants
and agrees for the benefit of Qwest and Qwest Subsidiary with respect to the
Company, and Qwest and Qwest Subsidiary, jointly and severally, covenant and
agree for the benefit of the Company, in each case that the party with respect
to which the covenant and agreement is made shall (and, with respect to the
Company, that the Company shall cause its Subsidiaries to) do the following
until the Effective Time and, with respect to Sections 6.1(e) and 6.1(f),
indefinitely after the date of this Agreement:
(a) Maintenance of Existence. Preserve and maintain its
corporate existence and good standing in the jurisdiction of its incorporation
and qualify and remain qualified as a foreign corporation in each jurisdiction
in which qualification is required either (1) to own, lease, license or use its
properties now owned, leased, licensed or used and proposed to be owned, leased,
licensed or used or (2) to carry on its business as now conducted or proposed to
be conducted, except where the failure to effect or obtain such qualification,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
(b) Compliance With Regulations. Comply in all respects with
all Regulations of each Governmental Body and all decisions, rulings, orders and
awards of each arbitrator applicable to it or its business, properties or
operations in connection with the Transactions if a failure to comply with any
of the foregoing, individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect, including, without limitation, use its
reasonable best efforts to comply (and exchange information with other parties
to enable them to comply) with any applicable requirements under the
Xxxx-Xxxxx-Xxxxxx Act relating to filing and furnishing information to the
Department of Justice and the Federal Trade Commission, including, without
limitation, the following:
(1) assisting in the preparation and filing of each applicable
"Antitrust Improvements Act Notification and Report Form for Certain
Mergers and Acquisitions" and taking all other action required by 16
C.F.R. Parts 801-803 (or any successor form or Regulation);
(2) complying with any additional request for documents or
information made by the Department of Justice or the Federal Trade
Commission or by a court; and
42
(3) causing all affiliated persons of the "ultimate parent
entity" of the party within the meaning of the Xxxx-Xxxxx-Xxxxxx Act to
cooperate and assist in such filing and compliance.
(c) Reasonable Best Efforts. Upon the terms and subject to the
conditions provided in this Agreement or the other Transaction Documents, use
its reasonable best efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, and to assist and cooperate with the other parties to
this Agreement or any other Transaction Document in doing all things necessary,
proper or advisable to cause the satisfaction of the conditions to the
conclusion of the Transactions contemplated hereby or thereby as soon as
reasonably practicable, including, without limitation, using its reasonable best
efforts to obtain all Approvals that are required or advisable on the part of
any party with respect to the Transactions. Nothing in this Section 6.1(c) or
any other provision of any Transaction Document shall (1) require any of Qwest
and its Subsidiaries to sell or otherwise dispose of any substantial amount of
the assets of any of Qwest, the Company and their respective Subsidiaries,
whether as a condition to obtaining any Approval from a Governmental Body or any
other person or for any other reason, or (2) prevent Qwest from engaging in any
activities, discussions or negotiations with respect to a Business Combination
Transaction with respect to any of Qwest and its Subsidiaries, entering into any
agreements or other arrangements with respect to the same or concluding any
transactions contemplated by, or believed by any of Qwest and its Subsidiaries
to be in furtherance of, such Business Combination Transaction, and no such
actions by any of Qwest and its Subsidiaries with respect to such a Business
Combination Transaction shall constitute a breach of any representation,
warranty, covenant or agreement of Qwest or Qwest Subsidiary in any Transaction
Document.
(d) Notification. Give prompt notice to the other parties to
this Agreement or any other Transaction Document, as the case may be, of (1) the
occurrence, or failure to occur, of any event that would be likely to cause any
representation or warranty of the party contained herein or therein to be untrue
or inaccurate in any material respect at any time from the date of this
Agreement to the Closing Date, any failure of the party to perform or otherwise
comply with, in any material respect, any covenant, condition or agreement to be
performed or complied with by it hereunder or thereunder and (2) the receipt by
the party of written or oral notice from any Governmental Body or other person
stating, or causing such party to believe, that there is a reasonable likelihood
that an Approval required by this Agreement to be obtained from such
Governmental Body or other person will not be obtained timely or at all; which
covenant of notification shall not limit the right of any other party hereunder
or thereunder to require as a condition precedent to the performance of its
obligations hereunder or thereunder the continuing accuracy and performance of
the representations and warranties and covenants of the notifying party made
herein or therein and to receive an unqualified certificate with respect to the
same.
(e) Publicity and Reports; Communications with Employees.
Except as may be required by applicable laws, court process or by obligations
pursuant to any Regulation of the NASD, as the case may be, refrain from issuing
any press release or make any public filings with respect to the Transactions,
without affording the other parties the opportunity to review and comment upon
such release or filing; and, until the Effective Time, cooperate with the other
43
parties in determining the method and content of written and oral communications
by the parties and their respective Subsidiaries to employees of the Company and
its Subsidiaries.
(f) Confidentiality. Keep confidential any information
disclosed by any other party or its representatives to the covenanting party or
its representatives, whether before or after the date of this Agreement, in
connection with the Transactions or the discussions and negotiations preceding
the execution of the Transaction Documents, and to not use such information
other than as contemplated by the Transaction Documents, in each case unless
such information (1) becomes generally available to the public other than as a
result of a disclosure by the receiving party or its representatives or (2) was
available or becomes available to the receiving party or any of its
representatives on a non-confidential basis, provided that the source of such
information was not then known by the receiving party or its representatives,
after reasonable investigation, to be bound by a confidentiality agreement with
or other obligation of confidentiality to the other party or any of its
affiliates with respect to such information, except in each case to the extent
the duty as to confidentiality is waived in writing by the other party; and if
this Agreement is terminated, use reasonable efforts to return upon written
request from any other party all documents (and reproductions of those
documents) received by it or its representatives from the other party (and, in
the case of reproductions, all reproductions made by the receiving party) unless
the recipients provide assurances reasonably satisfactory to the requesting
party that the documents have been destroyed.
(g) Tax-Free Reorganization. Use, and cause its Affiliates to
use, reasonable best efforts to cause the Merger to qualify as a tax-free
reorganization under Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code
including, without limitation, complying with the recording and reporting
requirements under Section 1.368-3 of the United States Treasury Regulations;
and not take, and cause its Affiliates not to take, any action that could cause
the Merger not to qualify as a tax-free reorganization under those Sections and
take the position for all purposes that the Merger qualifies as a tax-free
reorganization under those Sections.
(h) Further Assurances. Promptly upon request by any other
party, correct any defect or error that may be discovered in any Transaction
Document or in the execution or acknowledgement of any Transaction Document and
execute, acknowledge, deliver, file, re-file, register and re-register, any and
all such further acts, certificates, assurances and other instruments as the
requesting party may reasonably require from time to time in order (1) to carry
out more effectively the purposes of each Transaction Document, (2) to enable
the requesting party to exercise and enforce its rights and remedies and collect
any payments and proceeds under each Transaction Document, (3) to enable any
party to prepare, execute and file all Tax Returns and other documents with
respect to any real property transfer or gains, sales, use, transfer, value
added, stock transfer and stamp taxes, transfer, recording, registration and
other fees and similar taxes that become due in connection with the Transactions
and (4) to better transfer, preserve, protect and confirm to the requesting
party the rights granted or now or hereafter intended to be granted to the
requesting party under each Transaction Document or under each other instrument
executed in connection with any Transaction Document.
Section 6.2 Proxy Statement/Prospectus; Registration
Statement. As soon as practicable following the execution of this Agreement,
each of the Company and Qwest shall
44
prepare and file with the Securities and Exchange Commission the Proxy
Statement/Prospectus and each of the Company and Qwest shall use its reasonable
best efforts to have the Proxy Statement/Prospectus cleared by the Securities
and Exchange Commission as promptly as practicable. As soon as practicable
following such clearance, Qwest shall prepare and file with the Securities and
Exchange Commission the Registration Statement, of which the Proxy
Statement/Prospectus will form a part, and shall use its reasonable best efforts
to have the Registration Statement declared effective by the Securities and
Exchange Commission as promptly as practicable thereafter. The Company and Qwest
shall cooperate with each other in the preparation of the Proxy
Statement/Prospectus, and each shall provide to the other promptly copies of all
correspondence between it or any of its representatives and the Securities and
Exchange Commission. Each of the Company and Qwest shall furnish to the other
all information concerning it and its Affiliates required to be included in the
Proxy Statement/Prospectus and the Registration Statement. As promptly as
practicable after the effectiveness of the Registration Statement, the Company
shall mail the Proxy Statement/Prospectus to the stockholders of the Company and
Qwest shall mail the Proxy Statement/Prospectus to the stockholders of Qwest. No
amendment or supplement to the Proxy Statement/Prospectus or the Registration
Statement shall be made without the approval of each of the Company and Qwest,
which approval shall not be unreasonably withheld, conditioned or delayed. Each
of the Company and Qwest shall advise the other, promptly after it receives
notice thereof, of the time when the Registration Statement has become effective
or any amendment thereto or any supplement or amendment to the Proxy
Statement/Prospectus has been filed, or the issuance of any stop order, or the
suspension of the qualification of Qwest Common Stock to be issued in the Merger
for offering or sale in any jurisdiction, or of any request by the Securities
and Exchange Commission or the NASD for amendment of the Registration Statement
or the Proxy Statement/Prospectus. The parties shall take any action required to
be taken under state blue sky or securities Regulations in connection with the
Transactions.
Section 6.3 Letters of Accountants. Each of the Company and
Qwest shall use commercially reasonable efforts to cause to be delivered to the
other "comfort" letters of PricewaterhouseCoopers LLP, the Company's independent
public accountants, and of KPMG Peat Marwick LLP, Qwest's independent public
accountants, respectively, in each case, dated and delivered on the date on
which the Registration Statement shall become effective and as of the Effective
Time, and addressed to the Boards of Directors of the Company and Qwest, in form
and substance reasonably satisfactory to the other and reasonably customary in
scope and substance for letters delivered by independent public accountants in
connection with transactions such as those contemplated by this Agreement.
45
ARTICLE VII
ADDITIONAL COVENANTS OF
THE COMPANY
Section 7.1 Affirmative Covenants of the Company. The Company
agrees for the benefit of Qwest and Qwest Subsidiary that, until the Effective
Time (or, with respect to the covenant set forth in Section 7.1(m), for the
period set forth therein), the Company shall, and shall cause each of its
Subsidiaries to, do the following:
(a) NASDAQ. Take all action required, if any, to cause the
Company Common Stock to continue to be listed for trading on the NASDAQ and give
such notice to the NASDAQ as shall be required, if any, with respect to the
Transaction Documents and the Transactions.
(b) Maintenance of Records. Keep adequate records and books of
account reflecting all its financial transactions, keep minute books containing
accurate records of all meetings and accurately reflecting all corporate action
of its stockholders and its Board of Directors (including committees) and keep
stock books and ledgers correctly recording all transfers and issuances of all
capital stock, in each case in the Ordinary Course.
(c) Maintenance of Properties. Maintain, keep and preserve all
the Company Properties in the Ordinary Course.
(d) Conduct of Business. Except as otherwise contemplated by
this Agreement, continue to engage in the Ordinary Course in the same lines of
business as conducted by it on the date of this Agreement; use its reasonable
best efforts to keep available the services of its present officers, employees
and consultants who are integral to the operation of its business as so
conducted; and use its reasonable best efforts to preserve the business of the
Company and its Subsidiaries and to preserve the goodwill of customers,
suppliers and others having business relations with any of the Company and its
Subsidiaries.
(e) Maintenance of Insurance. Maintain insurance in the
Ordinary Course.
(f) Payment of Taxes. (1) Timely file (or cause to be filed)
all Tax Returns that are required to be filed by it, except for the filing of
such Tax Returns as to which the failure to file, individually or in the
aggregate, could not reasonably be expected to have a Materially Adverse Effect,
and (2) pay (or cause to be paid) before they become delinquent all Taxes
required to be paid when due whether or not shown or such Tax Returns and any
assessment received by it or otherwise required to be paid, except Taxes being
contested in good faith by appropriate proceedings and for which adequate
reserves or other provisions are maintained in accordance with GAAP, or amounts
of Taxes and assessments which, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
46
(g) Reporting Requirements. Furnish to Qwest and Qwest
Subsidiary:
(1) Adverse events. Promptly after the occurrence, or
failure to occur, of any such event, information with respect to any
event (A) which could reasonably be expected to have a Material Adverse
Effect, (B) which, if known as of the date of this Agreement, would
have been required by any Transaction Document to be disclosed to Qwest
or Qwest Subsidiary, (C) which could reasonably be expected to cause
any representation or warranty contained in any Transaction Document
with respect to the Company or a Subsidiary to be untrue or inaccurate
in any material respect at any time from the date of this Agreement to
the Effective Time or (D) which constitutes an Option Trigger (as
defined in the Option Agreements) or which would enable Qwest to
exercise an Option;
(2) Monthly financial statements. As soon as
available, and in any event within 30 days after the end of each month,
the consolidated balance sheet of the Company and its consolidated
Subsidiaries as of the end of the month and the related consolidated
statements of income (loss) for the portion of the fiscal year of the
Company ended with the last day of the month, all in reasonable detail
and stating in comparative form the respective consolidated figures for
the corresponding date and period in the previous fiscal year (subject
to year-end adjustments);
(3) Notice of litigation. Promptly after the
commencement of each such matter, notice of all Actions affecting the
Company or a Subsidiary that, individually or in the aggregate, if
determined adversely to any of them, could reasonably be expected to
have a Material Adverse Effect;
(4) Access to information. Afford to Qwest and Qwest
Subsidiary and their respective officers, employees, financial
advisors, attorneys, accountants and other representatives, reasonable
access and duplicating rights (at the requesting party's expense)
during normal business hours and upon reasonable advance notice to all
its properties, books, contracts, commitments, personnel and records;
furnish as promptly as practicable to Qwest and Qwest Subsidiary and
their respective officers, employees, financial advisors, attorneys,
accountants and other representatives such information with respect to
the business, properties, operations, prospects or condition (financial
or otherwise) of the Company and its Subsidiaries as they may from time
to time reasonably request and instruct the officers, employees,
financial advisors, attorneys, accountants and other representatives of
each of the Company and its Subsidiaries to cooperate with Qwest and
Qwest Subsidiary and their respective officers, employees, financial
advisors, attorneys, accountants and other representatives in their
investigation of each of the Company and the Subsidiaries;
(5) Reports to creditors and other persons. Promptly
after the furnishing of each such document, copies of any statement or
report furnished to any other person pursuant to the terms of the
Company Credit Facilities or any other indenture, loan or credit or
similar agreement and not otherwise required by any other clause of
this Section 8.1 to be furnished to Qwest and Qwest Subsidiary; and
47
(6) General information. Such other information
respecting the condition or operations, financial or otherwise, of any
of the Company and its Subsidiaries as Qwest or Qwest Subsidiary may
from time to time reasonably request.
(h) Affiliate Agreements. Deliver to Qwest and Qwest
Subsidiary a list (reasonably satisfactory to counsel for Qwest and Qwest
Subsidiary), setting forth names and addresses who are, at the time of the
Company Stockholders Meeting, in the Company's reasonable judgment, "affiliates"
of the Company for purposes of Rule 145 under the Securities Act; furnish such
information and documents as Qwest and Qwest Subsidiary may reasonably request
for the purpose of reviewing such list; and obtain from each such person the
written agreement referred to in Section 3.1(l), without cost or other liability
to any of the Company, its Subsidiaries, Qwest and Qwest Subsidiary.
(i) Company Stock Options. Cancel all securities of any of the
Company and the Subsidiaries which, after the Effective Time, would be
convertible into or exchangeable or exercisable for any shares of capital stock
of any of the Surviving Corporation and its Subsidiaries, and use reasonable
best efforts to obtain the written acknowledgement of each holder of a Company
Stock Option that such Company Stock Option from and after the Effective Time is
exercisable for shares of Qwest Common Stock as provided in Section 1.1(l), in
each case without cost or other liability to any of the Company, its
Subsidiaries, Qwest and Qwest Subsidiary.
(j) Stockholder Agreements. Obtain from the Principal
Stockholders the Stockholders Agreements, without cost or other liability to any
of the Company, its Subsidiaries, Qwest and Qwest Subsidiary.
(k) Company Stockholders Meeting; Proxy Statement/Prospectus.
(1) The Company (to the extent necessary, acting
through its Board of Directors) shall, in accordance with applicable
Regulations and as soon as practicable following the execution and
delivery of this Agreement, (A) duly call, give notice of, convene and
hold a meeting of the stockholders of the Company (the "Company
Stockholders Meeting") for the purpose of considering the approval of
this Agreement and the Merger, which date shall be not less than 20
days after the date the Proxy Statement/Prospectus shall be first
mailed to the stockholders of the Company, (B) fix a record date for
determining stockholders entitled to vote at the Company Stockholders
Meeting and (C) subject to Section 7.2(z), include in the Proxy
Statement/Prospectus the recommendation by the Board of Directors of
the Company that the stockholders of the Company approve this Agreement
and the Merger.
(2) Notwithstanding the provisions of Section 7.2(z)
and this Section 7.1(k), the obligations of the Company under Section
7.1(k)(1) shall not be affected by the withdrawal or modification by
the Board of Directors of the Company Board Approval with respect to
any matter. Without limiting the generality of the foregoing, the
Company shall submit this Agreement and the Merger to the stockholders
of the Company whether or not the Board of Directors of the Company
determines that
48
this Agreement and the Merger are no longer advisable and recommends
that the stockholders of the Company reject this Agreement and the
Merger.
(l) Teleway Agreement. Use reasonable best efforts to amend
and restate the Agreement of General Partnership of Icon CMT Corp. and Teleway
Corporation Partners dated as of November 17, 1997, so as to reorganize the
partnership created thereunder as a limited liability partnership or limited
liability company organized under the laws of the State of Delaware, on terms no
less favorable to the Company than those in effect on the date of this
Agreement.
(m) Qwest Services. If a Business Combination Transaction
(other than the Transactions) with respect to any of the Company and its
Subsidiaries shall be consummated within 12 months following the termination of
obligations of the parties under this Agreement pursuant to Section 9.1(a)
(other than pursuant to Section 9.1(a)(4)), (1) the Company and its Subsidiaries
shall purchase from one or more of Qwest and its Subsidiaries products and
services (including tariff and non-tariff services and facilities) selected by
the Company in its sole discretion that are generally offered for sale by Qwest
or such Subsidiary, at the prices and on the terms and conditions generally
offered by Qwest or such Subsidiary from time to time during such period to
customers of similar products and services at similar volume and commitment
levels, for an aggregate purchase price equal to (A) $30,000,000 less (B) the
aggregate purchase price for products and services purchased by the Company and
its Subsidiaries from any of Qwest and its Subsidiaries from the Termination
Date to the date of the consummation of such Business Combination Transaction,
provided that purchases pursuant to commitments or agreements in existence on
such date of consumation that were made by the other parties to such Business
Combination Transaction and their respective Affiliates shall not be included in
determining whether the Company shall have satisfied its obligation under this
Section 7.1(m), (2) the Company shall purchase such products and services within
a period of months following such date of consummation that is equal to (A) 12
months less (B) the quotient obtained by dividing 2 into the number of whole
months (determined as periods of 30 or 31 consecutive days, as appropriate) that
shall have elapsed between the Termination Date and such date of consummation
and (3) on such date of consummation, and as a condition to such consummation,
the Company shall pay to Qwest a portion of the amount determined pursuant to
the preceding clause (1) that is equal to (A) $2,500,000 times the number of
whole months (determined as periods of 30 or 31 consecutive days, as
appropriate) that shall have elapsed between the Termination Date and such date
of consummation less (B) the aggregate purchase price for products and services
purchased from any of Qwest and its Subsidiaries from the Termination Date to
such date of consummation.
Section 7.2 Negative Covenants of the Company. The Company
agrees for the benefit of Qwest and Qwest Subsidiary that, until the Effective
Time (or, with respect to the covenant set forth in Section 7.2(aa) for the
period set forth therein) and except as contemplated by the Transaction
Documents or unless the Company shall have obtained the prior written approval
of Qwest and Qwest Subsidiary (which approval may be granted, withheld, delayed
or conditioned in their sole discretion), the Company shall not, and shall not
permit any of its Subsidiaries to, do any of the following or enter into any
agreement or other arrangement (other than the Transaction Documents) with
respect to any of the following:
49
(a) Dissolution. Dissolve any of the Company and its
Subsidiaries, or take any action in contemplation thereof.
(b) Charter documents. Amend its articles of incorporation,
certificate of incorporation, bylaws, operating agreement or limited partnership
agreement, as applicable.
(c) Capitalization. Any of (1) issue any shares of capital
stock or other Equity Securities, except in connection with the exercise of any
Company Stock Options or Company Warrants, (2) enter into an agreement or other
arrangement having the effect of restricting the voting or transfer of any
Equity Securities of any of the Company and its Subsidiaries, (3) split, combine
or reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, or (4) amend the terms or change the period of
exercisability of, purchase, repurchase, redeem or otherwise acquire, any of its
securities including, without limitation, shares of Company Common Stock or any
option, warrant or right, directly or indirectly, to acquire shares of Company
Common Stock; provided that the Company may amend the Company's 1995 Stock
Option Plan in the manner contemplated by the Proxy Statement dated August 24,
1998 of the Company..
(d) Debt. Create, incur, assume or suffer to exist any Debt,
except:
(1) any Debt under the Company Credit Facilities on
the terms and conditions thereof in existence as of the date of this
Agreement in an aggregate amount not exceeding $10,000,000 at any time
outstanding;
(2) any Debt as lessee under capitalized leases
entered into in the Ordinary Course in an aggregate amount not
exceeding $2,000,000 in the aggregate at any time outstanding;
(3) any other Debt existing on the date of this
Agreement, and all amendments, extensions, modifications, refunding,
renewals, refinancings and substitutions thereof, 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 the Company and
its Subsidiaries than those in existence as of the date of this
Agreement; and
(4) any Debt under the Qwest Credit Facility.
(e) Liens. Create, incur, assume, or suffer to exist any Lien
upon or with respect to any of its properties, now owned or hereafter acquired,
except Permitted Liens.
(f) Liabilities. Either (1) incur any Liability, except
Liabilities (A) incurred in the Ordinary Course or (B) expressly contemplated by
the Transaction Documents or (2) pay, discharge or satisfy any Liabilities,
except Liabilities (A) reflected or reserved against in, or contemplated by, the
financial statements (or the notes thereto) of the Company and its
50
Subsidiaries referred to in Section 4.5, (B) incurred in the Ordinary Course,
(C) legally required to be paid, discharged or satisfied or (D) expressly
contemplated by the Transaction Documents.
(g) Settle Litigation. Settle or compromise any litigation
(whether or not commenced prior to the date of this Agreement) or settle, pay or
compromise any claims not required to be paid (which are not payable or
reimbursable under policies of insurance maintained by or on behalf of any of
the Company and its Subsidiaries), individually in an amount in excess of
$50,000 and in the aggregate in an amount in excess of $100,000, other than in
consultation and cooperation with Qwest and Qwest Subsidiary, and, with respect
to any such settlement, with the prior written consent of Qwest and Qwest
Subsidiary.
(h) Restricted Payments. Declare or make any Restricted
Payment to any person other than any of the Company and its Wholly-Owned
Subsidiaries.
(i) Capital Expenditures. Make (or commit to make) any Capital
Expenditures except in accordance with the Company's budget for 1998, as
delivered to Qwest, and, thereafter, in accordance with a budget approved by
Qwest and Qwest Subsidiary.
(j) Acquisitions. Acquire (1) by merger, consolidation,
acquisition of stock or assets, or otherwise, all or substantially all of the
Equity Securities of any corporation, partnership, limited liability company,
joint venture, association, trust, unincorporated association or other entity or
organization or (2) any assets, in each case, except for fair value and in the
Ordinary Course.
(k) Investments. Make or acquire any Investment in any person,
other than (1) Investments in Wholly-Owned Subsidiaries, (2) Investments
existing on the date of this Agreement in other Subsidiaries and (3) Investments
pursuant to the cash management policy approved by the Board of Directors of the
Company as of the date hereof, including, without limitation, any extension of
the maturity, renewal, refunding or modification of such existing Investments in
other Subsidiaries and all amendments, extensions, modifications, refundings,
renewals and substitutions of such existing Investments, but only if the
aggregate amount of such existing Investments shall not increase except as a
result of the accrual of interest, dividends and other amounts payable in
respect of such Investments.
(l) Mergers, Etc. Merge or consolidate with any person, sell,
lease, license or dispose of all or substantially all of its assets (whether now
owned or hereafter acquired) to any person or acquire all or substantially all
of the assets or the business of any person, or take any other action to effect,
any Business Combination Transaction (other than the Transactions), in each case
whether in one transaction or in a series of transactions, except that a
Subsidiary may merge into or transfer assets to the Company or a Wholly-Owned
Subsidiary.
(m) Leases. Create, incur, assume or suffer to exist, pursuant
to a Guarantee or otherwise, any obligation as lessee for the rental or hire of
any real or personal property, except the following:
51
(1) conditional sale contracts that are Permitted
Liens and any extensions or renewals of those contracts;
(2) capitalized leases that are permitted under
Section 7.2(d) and any extensions or renewals of those leases;
(3) leases existing on the date of this Agreement and
any extensions or renewals of those leases;
(4) leases (other than capitalized leases) entered
into in the Ordinary Course and any extensions or renewals of those
leases; and
(5) leases for office space in Philadelphia.
(n) Sale and Leaseback. Transfer any real or personal property
to any person and thereafter directly or indirectly lease back the same or
similar property for an aggregate sales price in excess of $2,000,000 in any
calendar quarter.
(o) Sale or Lease of Assets. Transfer any of its assets now
owned or hereafter acquired (including, but not limited to, shares of capital
stock and indebtedness of Subsidiaries and leasehold interests), except the
following:
(1) assets that are no longer used or useful in the
conduct of its business; and
(2) assets that are transferred for fair value and in
the Ordinary Course.
(p) Conduct of Business. Either (1) engage in any line of
business that is not conducted by it on the date of this Agreement or (2) except
as contemplated by the Transaction Documents or otherwise in furtherance of the
conclusion of the Transactions, enter into any agreement, arrangement,
commitment, contract or transaction, amend or terminate any of the same, take
any action or omit to take any action or otherwise conduct any of its affairs,
in any case not in the Ordinary Course.
(q) Confidential Information. Except as otherwise expressly
permitted by the proviso to Section 7.2(z) with respect to a Business
Combination Transaction or pursuant to confidentiality agreements with respect
to the business, properties and operations of the Company and its Subsidiaries
in effect as of the date of this Agreement or entered into thereafter in the
Ordinary Course, use or disclose to any person (other than Qwest, Qwest
Subsidiary and their Affiliates), except as required by law, any material
non-public information concerning the business, properties, operations,
prospects or condition (financial or otherwise) of any of the Company and its
Subsidiaries.
(r) Transactions with Affiliates. Enter into any transaction
(including, but not limited to, the purchase, sale or exchange of property or
the rendering of any service or the amendment, modification or termination of
any of, or waiver of any provision of, the Company
52
Affiliate Agreements) with any of its directors, officers or stockholders having
beneficial ownership of 5.0% or more of the shares of Company Common Stock then
issued and outstanding, or with any of its Affiliates or the directors, officers
or such stockholders thereof, except (1) transactions among the Company and its
Wholly-Owned Subsidiaries, (2) transactions pursuant to agreements, arrangements
or understandings that are set forth in Section 7.2(r) of the Company's
Disclosure Schedule, (3) transactions that are expressly contemplated by the
Transaction Documents, and (4) transactions that do not require the payment or
provision by or to any of the Company and its Subsidiaries of money in an
aggregate amount, or goods or services having an aggregate value, in excess of
$25,000.
(s) Compliance With ERISA. Permit there to occur an Employee
Plan Event that results in any material liability of any of the Company and its
Subsidiaries.
(t) Compensation. Permit (1) an increase in the amount of
compensation of any senior executive officer of any of the Company and its
Subsidiaries (including wages, salaries, bonuses, extra compensation, pension
and continuation, severance or termination pay of all types, whether paid or
accrued) that is not required by an existing agreement or, if not so required,
is not in the Ordinary Course, (2) except as contemplated by Section 1.1(l), the
adoption or amendment of, or acceleration of payment or vesting of the amounts
payable or to become payable under, any bonus, profit sharing, compensation,
severance, termination, stock option, stock purchase, stock appreciation rights,
phantom stock, restricted stock or other stock-based plan, pension, retirement,
employment or other employee benefit agreement, trust, plan or other arrangement
for the benefit or welfare of any current or former officer, director, employee,
consultant or agent of any of the Company and its Subsidiaries, (3) issuance of
any additional Company Stock Options except for grants in the Ordinary Course in
connection with the employment of new hires (x) in an aggregate amount not in
excess of Company Stock Options exercisable for 50,000 shares of Company Common
Stock in any calendar month and (y) in an amount for each such person not in
excess of Company Stock Options exercisable for 15,000 shares of Company Common
Stock, provided that this individual limit may be exceeded with the prior
approval of Qwest, which approval shall not be unreasonably withheld,
conditioned or delayed, (4) the payment of any benefit not required by any
existing agreement, except for payments not material to the Company made in the
Ordinary Course, (5) the adoption or amendment of any existing, employment,
consulting, continuation pay, severance pay or termination pay agreement
(including, without limitation, any such agreement that provides for the
acceleration or payment of any benefit upon the occurrence of a change in
control, however defined) with any officer, director or employee of any of the
Company and its Subsidiaries or, except in accordance with the existing written
policies of the Company or the Subsidiary, as the case may be, in existence as
of the date of this Agreement, the grant of any continuation, severance or
termination pay to any officer, director or employee of any of the Company and
its Subsidiaries, except for severance or termination payments in each case not
in excess of one month's salary or (6) the placement of any assets in any trust
for the benefit of officers, directors or employees of any of the Company and
its Subsidiaries; provided, however, that notwithstanding the foregoing, (w)
each of the Company and its Subsidiaries may amend the provisions of any
employee pension plan which is intended to be qualified under Section 401(a) of
the Code in order to maintain such qualified status, (x) none of the Company and
its Subsidiaries shall take any action, or refrain from taking any action, as
the result of which the
53
Company and its Subsidiaries shall be, or upon the occurrence of any change of
control (however defined) or other event become, obligated to pay any benefits,
except for the acceleration in the vesting of Company Stock Options and the
creation of the obligation to make certain parachute payments under employment
agreements with the Principal Shareholders, (y) the Company may amend the
Company's 1995 Stock Option Plan in the manner contemplated by the Proxy
Statement dated August 24, 1998 of the Company and (z) each of the Company and
the Subsidiaries may replace an existing benefit plan with a substantially
similar plan containing terms and conditions on the whole not less favorable to
the Company or the Subsidiary than the benefit plan so replaced.
(u) New Executive Officers. Employ, directly or indirectly
(including as a consultant), any executive officers of any of the Company and
its Subsidiaries not employed by the Company or such Subsidiary, as the case may
be, in the same position or capacity on the date of this Agreement; provided
that the consent of Qwest and Qwest Subsidiary with respect thereto shall not be
unreasonably withheld, conditioned or delayed.
(v) Union Contracts. Enter into or amend any agreements with
any labor union or other collective bargaining group, other than in the Ordinary
Course.
(w) Stock of Subsidiary. Transfer any shares of capital stock
of any Subsidiary, except in connection with a transaction permitted by Section
7.2(z).
(x) Taxes. Make any material Tax election or waiver or settle
or compromise any material Tax liability.
(y) Accounting Changes. Except as disclosed in Section 7.2(y)
of the Company's Disclosure Schedule, make or permit any significant change in
accounting policies or reporting practices, except for any change required by
GAAP, in the opinion of the Company's independent accountants.
(z) Business Combination Transactions. Do, or permit any of
its officers, directors, employees, financial advisors and other representatives
to do, any of the following or to enter into an agreement or other arrangement
(other than the Transaction Documents) with respect to any of the following:
(1) enter into any agreement or other arrangement with
respect to, or take any other action to effect, any Business
Combination Transaction (other than the Transactions) with respect to
any of the Company and its Subsidiaries or publicly announce any
intention to do any of the foregoing;
(2) solicit, initiate or encourage (including, without
limitation, by way of furnishing information), or take any other action
to facilitate, any inquiry or the making of any proposal to any of the
Company, its Subsidiaries and its stockholders from any person (other
than Qwest, Qwest Subsidiary or any Affiliate of, or any person acting
in concert with, Qwest or Qwest Subsidiary) which constitutes, or may
reasonably be expected to lead to, a proposal with respect to a
Business Combination Transaction (other
54
than the Transactions) with respect to any of the Company and its
Subsidiaries, or endorse any Business Combination Transaction (other
than the Transactions) with respect to any of the Company and its
Subsidiaries;
(3) continue, enter into or participate in any
activities, discussions or negotiations regarding any of the foregoing,
or furnish to any other person any information with respect to the
business, properties, operations, prospects or condition (financial or
otherwise) of any of the Company and its Subsidiaries or any of the
foregoing, or otherwise cooperate in any way with, or assist or
participate in, facilitate or encourage, any effort or attempt by any
other person to do or seek any of the foregoing; or
(4) recommend that the stockholders of the Company
accept or approve any Business Combination Transaction (other than the
Transactions) with respect to any of the Company and its Subsidiaries,
modify or amend the Company Board Approval in any respect materially
adverse to Qwest or Qwest Subsidiary or withdraw the Company Board
Approval, or publicly announce any intention to do any of the
foregoing;
provided, that this Section 7.2(z) shall not prohibit (1) the Company from (A)
furnishing to any person (other than a Principal Stockholder or an Affiliate of,
or other person acting in concert with, the Company or a Principal Stockholder)
that has made an unsolicited, bona fide written proposal with respect to a
Business Combination Transaction with respect to any of the Company and its
Subsidiaries information concerning the Company and its Subsidiaries and the
business, properties, operations, prospects or condition (financial or
otherwise) of the Company and its Subsidiaries or (B) engaging in discussions or
negotiations with such a person that has made such written proposal with respect
to a Business Combination Transaction, (2) following receipt of such written
proposal with respect to a Business Combination Transaction, the Company from
taking and disclosing to its stockholders a position contemplated by Rule
14e-2(a) under the Exchange Act, (3) following receipt of such written proposal
with respect to a Business Combination Transaction, the Board of Directors of
the Company from withdrawing or modifying the Company Board Approval or (4)
following the payment by the Company of all amounts then owed by the Company to
Qwest and Qwest Subsidiary pursuant to Section 9.2, the Board of Directors from
terminating the obligations of the parties pursuant to Section 9.1(a)(9) in
order to enter into an agreement with any person (other than Qwest, Qwest
Subsidiary or any Affiliate of, or any person, acting in concert with, Qwest or
Qwest Subsidiary) to effect a Superior Proposal; provided, however, that the
Company or the Board of Directors of the Company, as the case may be,
(x) shall take any action referred to in the preceding
clauses (3) and (4) with respect to such written proposal if such
written proposal satisfies each of the following requirements (a
"Superior Proposal"): (A) such written proposal is for (i) the
acquisition from the Company or any holder thereof of Equity Securities
of the Company as a result of which the holders of shares of Company
Common Stock immediately before such transaction or series of
transactions would beneficially own less than 40% of the shares of
Company Common Stock issued and outstanding immediately after such
transaction or series of transactions, (ii) the merger or consolidation
of the Company with
55
or into any person other than a Wholly-Owned Subsidiary or (iii) the
transfer of all or substantially all the assets of the Company and its
Subsidiaries and (B) with respect to such written proposal after the
Board of Directors of the Company shall have concluded in good faith
that (i) based on the advice of a financial advisor of nationally
recognized reputation, taking into account the terms and conditions of
such proposed Business Combination Transaction and the Merger Agreement
respectively, all other legal, financial, regulatory and other aspects
of such proposed Business Combination Transaction and the Merger, and
respectively, the identity of the person making such written proposal,
(a) such proposed Business Combination Transaction is reasonably
capable of being completed and would, if completed, result in a
transaction more favorable to the Company and its stockholders, other
than the Principal Stockholders, from a financial point of view than
would the Merger and (b) financing for such proposed Business
Combination Transaction, to the extent required, is then committed by a
financial institution or other source able to provide such financing
and (ii) based on the advice of independent counsel for the Company,
the failure to take such action would breach its fiduciary duties to
the stockholders of the Company, other than the Principal Stockholders,
(y) shall furnish to the person making such written
proposal any information referred to in the preceding clause (1)(A) and
engage in the negotiations or discussions referred to in the preceding
clause (B) only if the Board of Directors of the Company shall have
determined in good faith that such written proposal is or is reasonably
likely to be a Superior Proposal, and the Company shall then furnish
such information to Qwest and Qwest Subsidiary (or shall have
previously furnished such information to Qwest or Qwest Subsidiary) and
such information shall be so furnished to such person pursuant to a
customary confidentiality agreement and
(z) shall take any action referred to in the preceding
clauses (1), (2) and (3) only if the Board of Directors of the Company
shall, by written notice delivered to Qwest and Qwest Subsidiary not
less than 24 hours prior thereto, inform Qwest and Qwest Subsidiary of
its intention to take such action;
provided further, that the Company or the Board of Directors of the Company
shall not take any action referred to in the preceding clauses (1), (3) and (4)
if the Company Stockholders Meeting shall have occurred. The Company shall cease
and cause to be terminated any existing activities, discussions or negotiations
with all persons (other than Qwest, Qwest Subsidiary or any Affiliate of, or any
person acting in concert with, Qwest or Qwest Subsidiary) conducted on or before
the date of this Agreement with respect to any Business Combination Transaction.
The Company shall inform each of its officers, directors, employees, financial
advisors and other representatives of the obligations undertaken in this Section
7.2(z). If the Company, or any member of the Board of Directors thereof,
receives a proposal or inquiry, in each case whether written or oral, with
respect to a Business Combination Transaction with respect to any of the Company
and its Subsidiaries, then the Company and its financial advisers and
independent counsel shall, by written notice delivered within 24 hours after the
receipt of such proposal or inquiry, inform Qwest and Qwest Subsidiary of the
terms and conditions of such proposal or inquiry and the identity of the person
making the proposal or inquiry with respect to such
56
Business Combination Transaction and shall keep Qwest and Qwest Subsidiary
generally informed with reasonable promptness of any steps it is taking pursuant
to the proviso to the first sentence of this Section 7.2(z) with respect to such
proposal or inquiry. Nothing in this Section 7.2(z) shall permit the Company to
terminate any obligations under this Agreement except pursuant to Article IX.
(aa) Restrictions on Qwest. If any Series Q Warrants or
Options are then outstanding, take or recommend to its stockholders any action
that would impose limitations on the legal rights to be enjoyed by any of Qwest
and its permitted assigns, as the holder of Series Q Warrants or as a
stockholder of the Company, upon the acquisition of shares of Company Common
Stock or other securities pursuant to the exercise of then Series Q Warrants or
any Option, including, without limitation, any action which would impose or
increase restrictions on any of Qwest and its permitted assigns, based upon the
size of its security holdings, the business in which it is engaged or other
considerations applicable to it and not to security holders generally, whether
(a) by means of the issuance of or proposal to issue any other class of
securities having voting power disproportionately greater than the equity
investment in the Company represented by the Series Q Warrants, such shares of
Company Common Stock or other securities, (b) by implementing or adopting a
shareholder rights plan (sometimes referred to as a "poison pill") or issuing a
similar security which has a "trigger" threshold of not less than the greatest
number of shares of Company Common Stock that may be acquired by Qwest or its
permitted assigns pursuant to the exercise of all Series Q Warrants and Options,
(c) by charter or by-law amendment or (d) by contract, arrangement or other
means.
ARTICLE VIII
ADDITIONAL COVENANTS OF QWEST
Section 8.1 NASDAQ Listing. Qwest agrees for the benefit of
the Company that Qwest shall take all action required, if any, to cause the
Qwest Common Stock that shall be issued in the Merger to be approved for
inclusion in NASDAQ, if necessary, subject only to official notice of issuance,
and give such notice to the NASD as shall be required, if any, with respect this
Agreement and the Merger.
Section 8.2 Directors' and Officers' Insurance;
Indemnification. Qwest agrees for the benefit of the Indemnified Persons as
follows:
(a) For six years after the Effective Time, each of the
Surviving Corporation and its Subsidiaries shall indemnify each person who is
now, or has been at any time prior to the date of this Agreement, a director,
officer, employee or agent of any of the Company and its Subsidiaries, and the
successors and assigns of such person (individually, an "Indemnified Person"
and, collectively the "Indemnified Persons"), to the same extent and in the same
manner as is now provided in the respective certificates of incorporation,
articles of incorporation, by-laws, operating agreements or limited partnership
agreements, as applicable, of the Company and its Subsidiaries in effect on the
date of this Agreement, with respect to any
57
claim, liability, loss, damage, cost or expense, whenever asserted or claimed
(an "Indemnified Liability"), based in whole or in part on, or arising in whole
or in part out of, any matter existing or occurring at or prior to the Effective
Time; provided that if any claim for indemnification shall be asserted or made
within such six-year period, all rights to such indemnification in respect of
such claim shall continue until the disposition of such claim.
(b) For six years after the Effective Time, the Surviving
Corporation shall in effect policies of directors' and officers' liability
insurance in amounts and for coverage agreed by the Company and Qwest to be
appropriate in respect of the activities and operations of the Company and its
Subsidiaries.
(c) Promptly after receipt by an Indemnified Person of notice
of the assertion (an "Assertion") of any claim or the commencement of any action
against the person in respect of which indemnity or reimbursement may be sought
hereunder against any of the Surviving Corporation and its Subsidiaries
(collectively, "Indemnitors"), such Indemnified Person shall notify any
Indemnitor in writing of the Assertion, but the failure to so notify any
Indemnitor shall not relieve any Indemnitor of any liability it may have to such
Indemnified Person hereunder except where such failure shall have materially
prejudiced Indemnitor in defending against such Assertion. The Indemnitors shall
be entitled to participate in and, to the extent the Indemnitors elect by
written notice to such Indemnified Person within 30 days after receipt by any
Indemnitor of notice of such Assertion, to assume the defense of such Assertion,
at their own expense, with counsel chosen by the Indemnitors and reasonably
satisfactory to an Indemnified Person. Notwithstanding that the Indemnitors
shall have elected by such written notice to assume the defense of any
Assertion, such Indemnified Person shall have the right to participate in the
investigation and defense thereof, with separate counsel chosen by such
Indemnified Person, but in such event the fees and expenses of such counsel
shall be paid by such Indemnified Person. No Indemnified Person shall settle any
Assertion without the prior written consent of Qwest nor shall Qwest settle any
assertion without either (1) the written consent of all Indemnified Persons
against whom such Assertion was a made or (2) obtaining a general release from
the party making the Assertion for all Indemnified Persons as a condition of
such settlement.
(d) If any Indemnified Person becomes involved in any capacity
in any action, proceeding or investigation based in whole or in part on, or
arising in whole or in part out of, any matter, including the Transactions,
existing or occurring at or prior to the Effective Time, then to the extent
permitted by law the Surviving Corporation shall periodically advance to such
Indemnified Person its legal and other expenses (including the cost of any
investigation and preparation incurred in connection herewith), subject to the
provision by such Indemnified Person of an undertaking to reimburse the amounts
so advanced in the event of a final determination by a court of competent
jurisdiction that such Indemnified Person is not entitled thereto.
58
Section 8.3 Employee Benefits Matters.
(a) Except as otherwise set forth in Section 1.1(l), in the
case of any Company Employee Plans under which the employees' interests are
based upon the Company Common Stock or the market price thereof (but which
interests do not constitute stock options), Company and Qwest agree that such
interests shall, from and after the Effective Time, be based on Qwest Common
Stock determined in accordance with the Exchange Ratio.
(b) Except as otherwise expressly set forth in any Transaction
Document, none of the Transaction Documents and none of the Transactions shall
(1) before or after the Effective Time, require the continued employment of any
person by any of the Company, Qwest, the Surviving Corporation and their
respective Subsidiaries or (2) after the Effective Time, prevent any of the
Company, the Surviving Corporation and their respective Subsidiaries from taking
any action or refraining from taking any action with respect to any person that
may then be permitted by law.
Section 8.4 Access to Information. Qwest shall afford to the
Company and its officers, employees, financial advisers, attorneys, accountants
and other representatives, reasonable access during normal business hours and
upon reasonable advance notice to senior management of Qwest to discuss publicly
available information with respect to the business, properties, operations,
prospects or condition (financial or otherwise) of Qwest and its Subsidiaries.
ARTICLE IX
TERMINATION
Section 9.1 Termination.
(a) The obligations of the parties under Articles I (other
than Section 1.2) and VI (other than Section 6.1(f)) may be terminated on any
date (the "Termination Date") prior to the Effective Time, whether before or
after this Agreement and the Merger shall have been approved by the stockholders
of the Company, in each case by:
(1) the agreement of the parties;
(2) the Company, on or after the date that is six
months after the date of this Agreement, if (A) the Closing shall then
not have occurred for any reason other than the breach or violation by
the Company, in any material respect, of any of its representations,
warranties, covenants and agreements set forth in this Agreement (a
"Company Breach"), (B) a Company Breach shall not then have occurred
and be continuing and (C) the Company shall have paid in full to Qwest
and Qwest Subsidiary all amounts then owed to Qwest and Qwest
Subsidiary pursuant to Section 9.2;
59
(3) Qwest or Qwest Subsidiary, on or after the date
that is six months after the date of this Agreement, if (A) the Closing
shall then not have occurred for any reason other than the breach or
violation by Qwest or Qwest Subsidiary, in any material respect, of any
of their respective representations, warranties, covenants and
agreements set forth in this Agreement (a "Qwest Breach") and (B) a
Qwest Breach shall then not have occurred and be continuing;
(4) the Company, on or after the date that is four
months after the date of this Agreement, if (A) a Qwest Breach shall
then have occurred and be continuing and (B) a Company Breach shall
then not have occurred and be continuing;
(5) Qwest or Qwest Subsidiary, on or after the date
that is four months after the date of this Agreement, if (A) a Company
Breach shall have occurred and be continuing and (B) a Qwest Breach
shall then not have occurred and be continuing;
(6) the Company, on or after the date of the Company
Stockholders Meeting, and all adjournments thereof, if the stockholders
of the Company shall not have approved this Agreement and the Merger
and the Company shall have paid in full to Qwest and Qwest Subsidiary
all amounts then owed to Qwest and Qwest Subsidiary pursuant to Section
9.2;
(7) Qwest or Qwest Subsidiary, on or after the date of
the Company Stockholders Meeting, and all adjournments thereof, if the
stockholders of the Company shall not have approved this Agreement and
the Merger;
(8) Qwest or Qwest Subsidiary, if the Company or the
Board of Directors of the Company shall have (A) authorized,
recommended or proposed (or publicly announced its intention to
authorize, recommend or propose) an agreement with respect to a
Business Combination Transaction with respect to any of the Company and
its Subsidiaries (other than the Transactions), (B) recommended (or
publicly announced its intention to recommend) that the stockholders of
the Company accept or approve any such Business Combination Transaction
or (C) modified or amended (or publicly announced its intention to
modify or amend) the Company Board Approval in any respect materially
adverse to Qwest or Qwest Subsidiary or withdrawn (or publicly
announced its intention to withdraw) the Company Board Approval;
provided that (x) a communication of the Company to Qwest and Qwest
Subsidiary that advises that the Company has received a written
proposal with respect to a Business Combination Transaction and that
takes no position with respect to such proposal or that advises that
the Company is engaging in an activity permitted by clause (1) or (2)
of the proviso to the first sentence of Section 7.2(z) with respect to
a Superior Proposal, shall not be deemed to be a modification,
amendment or withdrawal of the Company Board Approval and (y) a
"stop-look-and-listen" communication of the nature contemplated in Rule
14d-9(e) under the Exchange Act with respect to an unsolicited tender
offer or exchange offer that, if concluded in accordance with the terms
thereof, would constitute or result in a Business Combination
Transaction with respect to any of the Company and its Subsidiaries
(other than the Transactions), without more, shall not be deemed to be
a
60
modification, amendment or withdrawal of the Company Board Approval if,
within the time period contemplated by Rule 14e-2 under the Exchange
Act, the Board of Directors of the Company shall publicly confirm the
Company Board Approval and recommend against the acceptance of such
tender offer or exchange offer by the stockholders of the Company;
(9) the Company, prior to the date of the Company Stockholders
Meeting, if (A) the Board of Directors of the Company shall have
determined that an unsolicited, bona fide written proposal made by any
person (other than a Principal Stockholder or an Affiliate of, or other
person acting in concert with, the Company or a Principal Stockholder)
with respect to a Business Combination Transaction with respect to any
of the Company and its Subsidiaries is a Superior Proposal, (B) the
Board of Directors of the Company shall have complied in all material
respects with Section 7.2(z) with respect to actions taken or proposed
to be taken by the Company or the Board of Directors of the Company
with respect to such Superior Proposal, (C) the Company shall have
notified Qwest and Qwest Subsidiary in writing, in each case not less
than three full Business Days in advance of taking such action, of its
election to terminate the obligations of the parties pursuant to this
Section 9.1(a)(9) for the purpose of entering into an agreement to
effect such Superior Proposal concurrently with such termination, (D)
the Company and its advisors and representatives shall have discussed
with Qwest and Qwest Subsidiary the modifications to the terms of this
Agreement that would permit the Company to conclude the Merger in lieu
of concluding such Superior Proposal, (E) at the end of such three
Business Day period the Board of Directors of the Company shall have
determined that such Superior Proposal continues to constitute a
Superior Proposal, and (F) the Company shall have paid in full to Qwest
and Qwest Subsidiary all amounts then owed to Qwest and Qwest
Subsidiary pursuant to Section 9.2; or
(10) Qwest or Qwest Subsidiary, if there shall have occurred a
Business Combination Transaction (other than the Transactions) with
respect to any of the Company and its Subsidiaries.
(b) Any termination of the obligations of the parties pursuant
to this Section 9.1 shall be made by written agreement or by written notice from
the terminating party to the other parties.
(c) The termination of the obligations of the parties pursuant
to this Section 9.1 shall not relieve any party of any liability for a breach of
any warranty, covenant or agreement, or for any misrepresentation, under this
Agreement, or be deemed to constitute a waiver of any available remedy
(including specific performance, if available) for any breach or
misrepresentation.
Section 9.2 Costs, Expenses and Fees.
(a) Termination Fee. The Company shall pay to Qwest in
immediately available funds the sum of $7,000,000 (the "Termination Fee") as
follows (1) in connection with the termination of the obligations of the parties
or of this Agreement pursuant to any of
61
clauses (6), (7), (8), (9) and (10) of Section 9.1(a), or, (2) if (A) the
Company or Qwest shall terminate the obligations of the parties or this
Agreement pursuant to any of clauses (2) and (3) of Section 9.1(a), (B) at any
time after the date of this Agreement and at or before the time of such
termination there shall exist a proposal for a Business Combination Transaction
with respect to any of the Company and its Subsidiaries (or the public
announcement of a third party to commence or of its intention to pursue or
engage in such a transaction) and (C) within 12 months of such termination, the
Company enters into a definitive agreement with any third party with respect to
a Business Combination Transaction with respect to any of the Company and its
Subsidiaries or such a transaction is consummated.
(b) Collection Expenses; Interests. In addition to the other
provisions of this Section 9.2, the Company shall promptly, but in no event
later than three Business Days following receipt of written demand therefor,
together with related bills or receipts, reimburse Qwest and Qwest Subsidiary
for all reasonable out-of-pocket costs, fees and expenses (including, without
limitation, the reasonable fees and disbursements of counsel and the expenses of
litigation) incurred in connection with collecting fees, expenses and other
amounts due under this Section 9.2. Interest shall be paid on the amount of any
unpaid fee at the publicly announced prime rate of Citibank, N.A. from the date
such fee was required to be paid.
(c) Other Expenses. Except as otherwise provided in this
Section 9.2, whether or not the Merger is concluded, all costs and expenses
incurred or paid by a party (including, without limitation, attorney's fees and
expenses related to the Transactions and the preparation of the Transaction
Documents, the Registration Statement or the Proxy Statement Prospectus) shall
be paid by the party incurring or paying such expenses. Notwithstanding the
foregoing, each of the Company and Qwest shall pay 50% of the costs and expenses
of complying with the Securities Act, the Exchange Act and the Xxxx-Xxxxx-Xxxxxx
Act (other than the attorney's fees and expenses related thereto or as stated in
the preceding sentence).
(d) Company's Fees for Financial Advisors, Brokers and
Finders. The Company shall pay or cause to be paid to the Company's Financial
Advisor the entire amount of the fee, commission, expense reimbursement or other
payment to which the Company's Financial Advisor shall become so entitled in
connection with the Transactions, all without cost, expense or any other
liability whatsoever to any of Qwest, Qwest Subsidiary and any other person.
(e) Qwest's Fees for Financial Advisors, Brokers and Finders.
Qwest and Qwest Subsidiary shall pay or cause to be paid to any financial
advisor retained by or on behalf of Qwest, the entire amount of the fee,
commission, expense reimbursement or other payment to which such financial
advisor shall become so entitled in connection with the Transactions, all
without cost, expense or any other liability whatsoever to any of the Company,
its Subsidiaries and any other person.
62
ARTICLE X
MISCELLANEOUS
Section 10.1 Notices. All notices, requests and other
communications to any party or under any Transaction Document shall be in
writing. Communications may be made by telecopy or similar writing. Each
communication shall be given to a party at its address stated on the signature
pages of this Agreement or any other Transaction Document or at any other
address as the party may specify for this purpose by notice to the other
parties. Each communication shall be effective (1) if given by telecopy, when
the telecopy is transmitted to the proper address and the receipt of the
transmission is confirmed, (2) if given by mail, 72 hours after the
communication is deposited in the mails properly addressed with first class
postage prepaid or (3) if given by any other means, when delivered to the proper
address and a written acknowledgement of delivery is received.
Section 10.2 No Waivers; Remedies; Specific Performance.
(a) No failure or delay by any party to or express beneficiary
of any Transaction Document in exercising any right, power or privilege under
such Transaction Document shall operate as a waiver of the right, power or
privilege. A single or partial exercise of any right, power or privilege shall
not preclude any other or further exercise of the right, power or privilege or
the exercise of any other right, power or privilege. The rights and remedies
provided in the Transaction Documents shall be cumulative and not exclusive of
any rights or remedies provided by law.
(b) In view of the uniqueness of the Transactions and the
business, properties, operations, prospects and condition (financial and
otherwise) of the Company and its Subsidiaries, a party to or express
beneficiary of any Transaction Document would not have an adequate remedy at law
for money damages in the event that such Transaction Document were not performed
in accordance with its terms, and therefore each of the parties agrees that the
other parties to and express beneficiaries of such Transaction Document shall be
entitled to specific enforcement of the terms of such Transaction Document in
addition to any other remedy to which it may be entitled, at law or in equity.
Section 10.3 Amendments, Etc. No amendment, modification,
termination, or waiver of any provision of any Transaction Document, and no
consent to any departure by a party to any Transaction Document from any
provision of the Transaction Document, shall be effective unless it shall be in
writing and signed and delivered by the other parties to the Transaction
Document, and then it shall be effective only in the specific instance and for
the specific purpose for which it is given.
Section 10.4 Successors and Assigns; Third Party
Beneficiaries.
(a) No party may assign its rights or delegate its obligations
under this Agreement. Any assignment or delegation in contravention of this
Section 10.4 shall be void
63
ab initio and shall not relieve the assigning or delegating party of any
obligation under this Agreement.
(b) The provisions of each Transaction Document shall be
binding upon and inure solely to the benefit of the parties to such Transaction
Document, and, except and to the extent that persons are expressly identified
therein as beneficiaries of one or more of the provisions thereof, nothing in
any Transaction Document is intended to or shall confer upon any other person
any right, benefit or remedy whatsoever under or by reason of any Transaction
Document (including, without limitation, by means of subrogation). Without
limiting the generality of the foregoing, (1) the provisions of Section 7.2(aa)
are intended to be for the express benefit of Qwest and its permitted assigns
under each Option Agreement, (2) the provisions of Section 8.2 are intended to
be for the express benefit of Indemnified Persons and their respective heirs,
executors, legal representatives, successors and permitted assigns, and no other
person and (3) the provisions of Section 8.3 are not intended for the benefit
of, and may not be relied upon or enforced by, any employee of any of the
Company, Qwest, the Surviving Corporation or their respective Subsidiaries and
their respective heirs, executors, legal representatives, successors and
permitted assigns.
Section 10.5 Accounting Terms and Determinations. Unless
otherwise specified, all accounting terms shall be interpreted, all accounting
determinations shall be made, all records and books of account shall be kept and
all financial statements required to be prepared or delivered shall be prepared
in accordance with GAAP, applied on a basis consistent (except for changes
approved by the Company's independent public accountants) with the latest
audited financial statements referred to in Section 4.5.
Section 10.6 Governing Law. Each Transaction Document shall be
governed by and construed in accordance with the internal laws of the State of
New York, without regard to conflicts of laws principles, except that the
Certificate of Merger shall be governed by and construed in accordance with the
laws of the State of Delaware.
Section 10.7 Counterparts; Effectiveness. Each Transaction
Document may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if all signatures were on the same instrument.
Section 10.8 Severability of Provisions.
(a) Any provision of any Transaction Document that is
prohibited or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of the prohibition or unenforceability without
invalidating the remaining provisions of the Transaction Document or affecting
the validity or enforceability of the provision in any other jurisdiction.
(b) The parties agree that the amount of the fees provided in
Section 9.2(b) is fair and reasonable. If a court of competent jurisdiction
shall nonetheless, by a final, non-appealable judgment, determine that the
amount of any such fee exceeds the maximum amount permitted by law, then the
amount of such fee shall be reduced to the maximum amount permitted by law in
the circumstances, as determined by a court of competent jurisdiction.
64
Section 10.9 Headings and References. Article and section
headings in any Transaction Document are included in the Transaction Document
for the convenience of reference only and do not constitute a part of the
Transaction Document for any other purpose. References to parties, express
beneficiaries, articles and sections in any Transaction Document are references
to the parties to or the express beneficiaries, articles and sections of the
Transaction Document, as the case may be, unless the context shall require
otherwise.
Section 10.10 Entire Agreement. The Transaction Documents
embody the entire agreement and understanding of the respective parties, and
supersede all prior agreements or understandings, with respect to the subject
matters of the Transaction Documents.
Section 10.11 Survival. Except as otherwise specifically
provided in any Transaction Document, each representation and warranty of each
party to the Transaction Document contained in or made pursuant to the
Transaction Document shall remain in full force and effect notwithstanding any
investigation or notice to the contrary or any waiver by any other party of a
related condition precedent to the performance by such other party of an
obligation under the Transaction Document.
Section 10.12 Exclusive Jurisdiction. Each party, and each
express beneficiary as a condition to its right to enforce or defend its rights
under or in connection with any Transaction Document, (1) agrees that any Action
with respect to any Transaction Document or any Transaction shall be brought
exclusively in the courts of the State of New York or of the United States of
America for the Southern District of New York, in each case sitting in the
Borough of Manhattan, State of New York, (2) accepts for itself and in respect
of its property, generally and unconditionally, the jurisdiction of those courts
and (3) irrevocably waives any objection, including, without limitation, any
objection to the laying of venue or based on the grounds of forum non
conveniens, which it may now or hereafter have to the bringing of any Action in
those jurisdictions; provided, however, that any party may assert in an Action
in any other jurisdiction or venue each mandatory defense, third-party claim or
similar claim that, if not so asserted in such Action, may thereafter not be
asserted by such party in an original Action in the courts referred to in clause
(1) above.
Section 10.13 Waiver of Jury Trial. Each party, and each
express beneficiary as a condition to its right to enforce or defend its rights
under or in connection with any Transaction Document, waives any right to a
trial by jury in any Action to enforce or defend any right under any Transaction
Document and agrees that any Action shall be tried before a court and not before
a jury.
Section 10.14 Affiliate. Nothing contained in any Transaction
Document shall constitute Qwest or Qwest Affiliate an "affiliate" of any of the
Company and its Subsidiaries within the meaning of the Securities Act and the
Exchange Act, including, without limitation, Rule 501 under the Securities Act
and Rule 13e-3 under the Exchange Act.
Section 10.15 Non-Recourse. No recourse under any Transaction
Document shall be had against any "controlling person" (within the meaning of
Section 20 of the Exchange Act) of any party or the stockholders, directors,
officers, employees, agents and Affiliates of the
65
party or such controlling persons, whether by the enforcement of any assessment
or by any legal or equitable proceeding, or by virtue of any Regulation, it
being expressly agreed and acknowledged that no personal liability whatsoever
shall attach to, be imposed on or otherwise be incurred by such controlling
person, stockholder, director, officer, employee, agent or Affiliate, as such,
for any obligations of the party under this Agreement or any other Transaction
Document or for any claim based on, in respect of or by reason of such
obligations or their creation.
--------------------
[Intentionally Left Blank]
66
IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the date first written above in New York, New York.
ICON CMT CORP.
By: /s/ XXXXX X. XXXXXX
Xxxxx X. Xxxxxx
President and Chief Executive Officer
Address: 0000 Xxxxxx Xxxxxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
Fax: 000-000-0000
With a copy to:
Xxxxxx Xxxxxx Flattau & Klimpl, LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxx
Fax: 000-000-0000
S-1
QWEST COMMUNICATIONS INTERNATIONAL
INC.
By: /s/ XXXXXX X. XXXXXXX
Xxxxxx X. Xxxxxxx
President and Chief Executive Officer
Address: 1000 Qwest Tower
000 Xxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxx
Fax: 000-000-0000
With a copy to:
O'Melveny & Xxxxx LLP
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Drake S. Tempest
Fax: 000-000-0000
QWEST 1998-I ACQUISITION CORP.
By: /S/ XXXX X. XXXXXXXX
Xxxx X. Xxxxxxxx
Vice President
Address: 1000 Qwest Tower
000 Xxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxx
Fax: 000-000-0000
With a copy to:
O'Melveny & Xxxxx LLP
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Drake S. Tempest
Fax: 000-000-0000
S-2
ANNEX 1
DEFINITION ANNEX
"Access Agreement" means the Security Agreement dated as of
August ____, 1996, between the Company and Access Graphics, Inc., as of the date
of this Agreement.
"Action" against a person means an action, suit,
investigation, complaint or other proceeding threatened or pending against or
affecting the person or its property, whether civil or criminal, in law or in
equity or before any arbitrator or Governmental Body.
"Affiliate" of a person means (1) any other person that
directly or indirectly controls, is controlled by or is under common control
with, such person or any of its Subsidiaries and (2) if such person is an
individual, any other individual that is a relative (by blood or marriage) of
such person. The term "control" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
person, whether through the ownership of voting securities, by contract or
otherwise.
"Approval" means an authorization, consent, approval or waiver
of, clearance by, notice to or registration or filing with, or any other similar
action by or with respect to a Governmental Body or any other person and the
expiration or termination of all prescribed waiting, review or appeal periods
with respect to any of the foregoing.
"Average Market Price" has the meaning stated in Section
1.1(a)(2) of this Agreement.
"beneficially own" or "beneficial ownership" with respect to
any securities means having "beneficial ownership" of such securities (as
determined pursuant to Regulation 13D-G under the Exchange Act), except as
provided below, including pursuant to any agreement, arrangement or
understanding, whether or not in writing. Without duplicative counting of the
same securities by the same holder, securities beneficially owned by a person
shall include securities beneficially owned by all Affiliates of such person and
all other persons with whom such person would constitute a Group.
"Business Combination Transaction" with respect to any person
and its Subsidiaries means, whether concluded or intended to be concluded in one
transaction or a series of related transactions, each of the following:
(1) the acquisition from any of such person and its
Subsidiaries, or from any holder thereof, of any Equity Securities of
any of such person and its Subsidiaries as a result of which the
holders of Equity Securities of any of such person and its Subsidiaries
immediately before such transaction or series of transactions would
beneficially own less than 80% of the Equity Securities of such person
or such
DEF-1
Subsidiary, as the case may be, issued and outstanding immediately
after such transaction or series of transactions;
(2) the merger or consolidation of any of such person
and its Subsidiaries with or into any person other than such person or
its Wholly-Owned Subsidiary;
(3) the transfer of a substantial portion of the
assets of any of such person and its Subsidiaries to any person or
Group other than such person or its Wholly- Owned Subsidiary; or
(4) any transaction (whether or not any of such person
and its Subsidiaries shall be a party thereto) as a result of which a
majority of the members of the board of directors, or similar
officials, of such person or such Subsidiary would not be persons who
on the day after the closing date of such transaction were members of
the board of directors, or similar officials, or who were nominated for
election or elected with the approval of a majority of the directors,
or similar officials, who were directors, or similar officials, on that
date or whose nomination or election was previously so approved.
"Business Day" means any day excluding Saturday, Sunday and
any day which is a legal holiday in the State of New York or is a day on which
banking institutions located in such state are authorized or required by law or
other governmental action to close.
"Capital Expenditure" of a person means payments that are made
by the person for the rental, lease, purchase, construction or use of any
property the value or cost of which should be capitalized and appear on the
balance sheet of the person in the category of property, plant or equipment,
without regard to the manner in which the payments or the instrument pursuant to
which they are made are characterized by the person including, without but not
limited to, payments for the installment purchase of property under conditional
sale contracts and payments under capitalized leases.
"Certificate of Merger" has the meaning stated in Section
1.1(a) of this Agreement.
"Certificates" has the meaning stated in Section 1.1(b) of
this Agreement.
"Closing" has the meaning stated in Section 2.1 of this
Agreement.
"Closing Date" has the meaning stated in Section 2.1 of this
Agreement.
"Code" has the meaning stated in Recital C to this Agreement.
"Company" has the meaning stated in the heading to this
Agreement.
DEF-2
"Company Affiliate Agreements" means, collectively, the
agreements between any of the Company and its Subsidiaries, on the one part, and
any director or officer of any of the Company and its Subsidiaries, any
stockholder having beneficial ownership of 5.0% or more of the shares of Company
Common Stock then issued and outstanding or any Affiliate of any of the
foregoing, and all stockholders' agreements and voting trusts with respect to
the Company.
"Company Balance Sheet" has the meaning stated in Section
4.5(a).
"Company Board Approval" has the meaning stated in Section
4.24(a) of this Agreement.
"Company Breach" has the meaning stated in Section 9.1(a)(2)
of this Agreement.
"Company Common Stock" has the meaning stated in Section
1.1(a)(2) of this Agreement.
"Company Credit Facilities" means the Financing Agreement
dated August 13, 1996, between The CIT Group/Business Credit, Inc., as lender,
and the Company, as borrower, as amended and modified as of the date hereof and
the Security Agreement dated October 9, 1996, between Frontier Media Group,
Inc., a Pennsylvania corporation, and Meridian Bank.
"Company Employee Plan" means any Employee Plan of any of the
Company and its Subsidiaries.
"Company ERISA Plan" means any ERISA Plan of any of the
Company and its Subsidiaries.
"Company Licenses" has the meaning stated in Section 4.11 of
this Agreement.
"Company Material Contracts" has the meaning stated in Section
4.20(a) of this Agreement.
"Company Preferred Stock" has the meaning stated in Section
4.13(a) of this Agreement.
"Company Properties" has the meaning stated in Section 4.15(a)
of this Agreement.
"Company Proprietary Rights" has the meaning stated in Section
4.16(a) of this Agreement.
DEF-3
"Company Qualified Plan" means any Qualified Plan of any of
the Company and its Subsidiaries.
"Company SEC Documents" has the meaning stated in Section 4.22
of this Agreement.
"Company Stock Option" has the meaning stated in Section
1.1(l)(1) of this Agreement.
"Company Stock Option Plan" means the Company's 1995 Stock
Option Plan, as amended as of the date of this Agreement and as further amended
in accordance with the terms of this Agreement.
"Company Stockholders Meeting" has the meaning stated in
Section 7.1(k) of this Agreement.
"Company Warrants" has the meaning stated in Section 1.1(l)(2)
of this Agreement.
"Company's Disclosure Schedule" means the schedule with
respect to certain matters referred to in Article IV of this Agreement that has
been delivered by the Company to Qwest or Qwest Subsidiary, as such schedule may
be modified in accordance with this Agreement.
"Company's Financial Advisor" means Xxxxxxxxx, Xxxxxx &
Xxxxxxxx Securities Corporation.
"consolidated" means, as applied to any financial or
accounting term, the term determined on a consolidated basis for a person and
its Subsidiaries, excluding intercompany items and minority interests.
"Debt" of a person at any date means, without duplication, the
sum of the following:
(1) all obligations of the person (A) for borrowed
money, (B) evidenced by bonds, debentures, notes or other similar
instruments, (C) to pay the deferred purchase price of property or
services, except current trade accounts payable arising in the ordinary
course of business, (D) as purchaser under conditional sales contracts,
(E) as lessee under capitalized leases, (F) under letters of credit
issued for the account of the person and (G) arising under acceptance
facilities; plus
(2) all Debt of others Guaranteed by the person; plus
DEF-4
(3) all Debt of others secured by a Lien on any asset
of the person and whether or not such Debt is assumed by the person;
plus
(4) any balance sheet liability with respect to an
ERISA Plan recognized pursuant to Financial Accounting Standards Board
Statement 87 or 88, or with respect to post-retirement benefits other
than pension benefits recognized pursuant to Financial Accounting
Standards Board Statement 106; plus
(5) any withdrawal liability under Section 4201 of
ERISA with respect to a withdrawal from a Multiemployer Plan, as such
liability shall have been set forth in a notice of withdrawal liability
under Section 4219 of ERISA, and as adjusted from time to time
subsequent to the date of such notice.
"Debt Securities" of a person means the bonds, debentures,
notes and other similar instruments of the person and all other securities
convertible into or exchangeable or exercisable for any such debt securities,
all rights or warrants to subscribe for or to purchase, all options for the
purchase of, and all calls, commitments or claims of any character relating to,
such debt securities and any securities convertible into or exchangeable or
exercisable for any of the foregoing.
"Department of Justice" means the Department of Justice of the
United States of America.
"DGCL" means the General Corporation Law of the State of
Delaware, Title 8 Del. Code ss.ss.101 et seq., as amended.
"Dollars" and "$" refer to United States dollars and other
lawful currency of the United States of America from time to time in effect.
"Effective Time" has the meaning stated in Section 1.1(a) of
this Agreement.
"Employee Plan" of a person means any plan, contract,
commitment, program, policy, arrangement or practice maintained or contributed
to by the person and providing benefits to any current or former employee,
director or agent of the person, or any spouse or dependent of such beneficiary,
including, without limitation, (1) any ERISA Plan, (2) any Multiemployer Plan,
(3) any other "employee benefit plan" (within the meaning of Section 3(3) of
ERISA), (4) any profit-sharing, deferred compensation, bonus, stock option,
stock purchase, stock appreciation rights, phantom stock, restricted stock,
other stock-based pension, retainer, consulting, retirement, severance, welfare
or incentive plan, contract, commitment, program, policy, arrangement or
practice and (5) any plan, contract, commitment, program, policy, arrangement or
practice providing for "fringe benefits" or perquisites, including, without
limitation, benefits relating to automobiles, clubs, vacation, child care,
parenting, sabbatical or sick leave and medical, dental, hospitalization, life
insurance and other types of insurance.
DEF-5
"Employee Plan Event" means any of the following:
(1) "reportable event" (within the meaning of Section
4043 of ERISA) with respect to any ERISA Plan for which the requirement
of notice to the PBGC has not been waived by regulation;
(2) the failure to meet the minimum funding standard
of Section 412 of the Code with respect to any ERISA Plan (whether or
not waived in accordance with Section 412(d) of the Code) or the
failure to make by its due date a required installment under Section
412(m) of the Code with respect to any ERISA Plan or the failure to
make any required contribution to a Multiemployer Plan;
(3) the provision by the administrator of any ERISA
Plan pursuant to Section 4041(a)(2) of ERISA of a notice of intent to
terminate such plan in a distress termination described in Section
4041(c) of ERISA;
(4) the withdrawal from any ERISA Plan during a plan
year by a "substantial employer" as defined in Section 4001(a)(2) of
ERISA resulting in liability pursuant to Section 4062(e) or Section
4063 of ERISA;
(5) the institution by the PBGC of proceedings to
terminate any ERISA Plan, or the occurrence of any event or condition
which might constitute grounds under ERISA for the termination of, or
the appointment of a trustee to administer, any ERISA Plan;
(6) the imposition of liability pursuant to Sections
4064 or 4069 of ERISA or by reason of the application of Section
4212(c) of ERISA;
(7) the withdrawal in a complete or partial withdrawal
(within the meaning of Sections 4203 and 4205 of ERISA) from any
Multiemployer Plan if there is any potential liability therefor, or the
receipt of notice from any Multiemployer Plan that it is in
reorganization or insolvency pursuant to Sections 4241 or 4245 of
ERISA, or that it intends to terminate or has terminated under Sections
4041A or 4042 of ERISA;
(8) the occurrence of an act or omission which could
give rise to the imposition of fines, penalties, taxes or related
charges under Chapter 43 of the Code or under Sections 409, 502(c),
502(i), 502(l) or 4071 of ERISA in respect of any such Employee Plan;
(9) the assertion of a material claim (other than
routine claims for benefits) against any Employee Plan other than a
Multiemployer Plan or the assets of any Employee Plan, or against the
person maintaining or contributing to such plan in connection with any
such plan;
DEF-6
(10) receipt from the IRS of notice of the failure of
any Qualified Plan to qualify under Section 401(a) of the Code, or the
failure of any trust forming part of any Qualified Plan to fail to
qualify for exemption from taxation under Section 501(a) of the Code;
or
(11) the imposition of a lien pursuant to Sections
401(a)(29) or 412(n) of the Code or pursuant to ERISA with respect to
any ERISA Plan.
"Environmental Laws" means any and all presently existing
federal, state, local and foreign Regulations, and any orders or decrees, in
each case as now or hereafter in effect, relating to the regulation or
protection of human health, safety or the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals or toxic or hazardous substances or wastes into the indoor or outdoor
environment, including, without limitation, ambient air, soil, surface water,
ground water, wetlands, land or subsurface strata, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, chemicals or toxic or
hazardous substances or wastes.
"Equity Securities" of a person means the capital stock of the
person and all other securities convertible into or exchangeable or exercisable
for any shares of its capital stock, all rights or warrants to subscribe for or
to purchase, all options for the purchase of, and all calls, commitments or
claims of any character relating to, any shares of its capital stock and any
securities convertible into or exchangeable or exercisable for any of the
foregoing.
"ERISA" means the Employee Retirement Income Security Act of
1974 and the related Regulations, in each case as amended as of the date hereof
and as the same may be amended or modified from time to time. References to
titles, subtitles, sections, paragraphs or other provisions of ERISA and the
related Regulations also refer to successor provisions.
"ERISA Affiliate", as applied to any person, means (1) any
corporation which is a member of a controlled group of corporations within the
meaning of Section 414(b) of the Code of which such person is a member, (2) any
trade or business (whether or not incorporated) which is a member of a group of
trades or businesses under common control within the meaning of Section 414(c)
of the Code of which such person is a member, and (3) any member of an
affiliated service group within the meaning of Section 414(m) or (o) of the Code
of which such person, any corporation described in clause (1) above or any trade
or business described in clause (2) above is a member. Any former ERISA
Affiliate of Company or its Subsidiaries shall continue to be considered an
ERISA Affiliate within the meaning of this definition with respect to the period
such entity was an ERISA Affiliate of Company or its Subsidiaries and with
respect to liability arising after such period for which Company or its
Subsidiaries could be liable under the Code or ERISA.
"ERISA Plan" of a person means an "employee pension benefit
plan" (within the meaning of Section 3(2) of ERISA), other than a Multiemployer
Plan, that is covered by Title
DEF-7
IV of ERISA or subject to the minimum funding standards of Section 412 of the
Code or Section 302 of ERISA that is maintained by the person, to which the
person contributes or has an obligation to contribute or with respect to which
the person is an "employer" (within the meaning of Section 3(5) of ERISA).
"Excess Shares" has the meaning stated in Section 1.1(f)(2) of
this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the related rules and regulations thereunder.
"Exchange Agent" has the meaning stated in Section 1.1(c) of
this Agreement.
"Exchange Fund" has the meaning stated in Section 1.1(c) of
this Agreement.
"Exchange Ratio" has the meaning stated in Section 1.1(a)(2)
of this Agreement.
"Federal Trade Commission" means the Federal Trade Commission
of the United States of America.
"GAAP" means generally accepted accounting principles as in
effect in the United States of America from time to time.
"Governmental Body" means any agency, bureau, commission,
court, department, official, political subdivision, tribunal or other
instrumentality of any government, whether federal, state, county or local,
domestic or foreign.
"Group" has the meaning given such term in Section 13(d)(3) of
the Exchange Act.
"Guarantee" by any person means any obligation, contingent or
otherwise, of the person directly or indirectly guaranteeing the payment or
other performance of any Liability of any other person or in any manner
providing for the payment or other performance of any Liability of any other
person or the investment of funds in any other person or otherwise protecting
the holder of such Liability against loss (whether by agreement to indemnify, to
lease assets as lessor or lessee, to purchase assets, goods, securities or
services, or to take-or-pay or otherwise), but the term "Guarantee" does not
include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a correlative meaning.
"Xxxx-Xxxxx-Xxxxxx Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, and the related rules, regulations and
published interpretations thereunder.
DEF-8
"Hazardous Substance" means, collectively, (1) any petroleum
or petroleum products, geothermal products, natural gas, flammable explosives,
radioactive materials, asbestos, urea formaldehyde foam insulation, and
transformers or other equipment that contain dielectric fluid containing
polychlorinated biphenyls (PCB's), (2) any chemicals or other materials or
substances which are now or hereafter become defined as or included in the
definition of "hazardous substances", "hazardous wastes", "hazardous materials",
"extremely hazardous wastes", "restricted hazardous wastes", "toxic substances",
"toxic pollutants", "contaminants", "pollutants" or words of similar import
under any Environmental Law and (3) any other chemical or other material or
substance, exposure to which is now or hereafter prohibited, limited or
regulated under any Environmental Law and which is present in concentrations or
at locations that present a threat to human health or the environment.
"Indemnified Persons" has the meaning stated in Section 8.2(a)
of this Agreement.
"Investment" of a person means any investment in any other
person (other than a Subsidiary), whether by means of loan, capital
contribution, purchase of capital stock, obligations or other securities, or any
commitment or option to make an investment or otherwise.
"IRS" means the United States Internal Revenue Service or any
Governmental Body succeeding to any or all of its functions.
"knowledge" of (1) an individual means the actual knowledge of
such individual with respect to a representation or warranty of such person
contained in any Transaction Document or (2) if a person that is not an
individual, means, after reasonable inquiry by such person of each of the
following persons, the actual knowledge of any of the officers or other
employees of such person and its Subsidiaries having managerial responsibility
for the portion of the operations, assets or liabilities of such person and its
Subsidiaries with respect to which such knowledge of such person is being
represented.
"Liabilities" means all debts, claims, Actions, demands,
rights, costs, expenses, liabilities, losses, damages, commitments and
obligations (in each case whether fixed, contingent or absolute, matured,
unmatured, or inchoate, liquidated or unliquidated, accrued or not accrued,
known or unknown, whenever or however arising and whether or not the same would
be required by generally accepted accounting principles to be reflected in
financial statements of any person or disclosed in the notes thereto).
"License" means any license, permit, franchise, certificate of
authority, or order, or any extension, modification or waiver of the foregoing,
required to be issued by a Governmental Body.
"Lien" means any mortgage, deed of trust, lien (statutory or
otherwise), pledge, hypothecation, charge, deposit arrangement, preference,
priority, security interest, restriction on transfer or encumbrance of any kind
(including, without limitation, any conditional sale
DEF-9
contract, any capitalized lease or any financing lease having substantially the
same economic effect as the foregoing and the filing of or agreement to give any
financing statement under the Uniform Commercial Code or comparable law of any
jurisdiction to evidence any of the foregoing).
"Loss" means, with respect to any person, any cost, damage,
disbursement, expense, liability, judgment, loss, deficiency, obligation, Tax,
penalty or settlement of any kind or nature, whether foreseeable or
unforeseeable (including, without limitation, interest or other carrying costs,
penalties, legal, accounting, expert witness, consultant and other professional
fees and expenses incurred by such person in the investigation, collection,
prosecution and defense of Actions (including, without limitation, claims in
connection with the enforcement of any rights under any of the Transaction
Documents) and amounts paid in settlement), that may be imposed on or otherwise
incurred or suffered by such person.
"Material Adverse Effect" means, with respect to a
circumstance or event that is a condition to the obligation of a person in any
Transaction Document or is the subject of a representation, warranty, covenant
or other agreement of a person in any Transaction Document that includes a
reference therein to the possible occurrence of a Material Adverse Effect,
whether considered individually or together in the aggregate with all other
circumstances or events that are included in the same condition or are the
subject either of the same representation, warranty, covenant or other agreement
or of other representations, warranties, covenants or other agreements by such
person in the Transaction Documents, any one or more of the following:
(1) a material adverse effect on the business, properties,
operations, prospects or condition (financial or otherwise) of such
person and its Subsidiaries, taken as a whole;
(2) a material adverse effect on the ability of such person to
perform its obligations under any Transaction Document to which it is
or may become a party; or
(3) the term or condition of an Approval, a Regulation, a
decision, ruling, order or award of any arbitrator applicable to such
person or its business, properties or operations or an Action, pending
or threatened, in each case that restricts in any material respect or
prohibits (or, if successful, would restrict or prohibit) the
conclusion of any of the Transactions.
"Merger" has the meaning stated in Recital A to this
Agreement.
"Merger Consideration" has the meaning stated in Section
1.1(a)(2) of this Agreement.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 3(37) of ERISA.
DEF-10
"NASD" means the National Association of Securities Dealers,
Inc. and each person succeeding to the authority thereof with respect to matters
contemplated by or arising from the Transaction Documents and the Transactions.
"NASDAQ" means the National Association of Securities Dealers
Automated Quotation/National Market.
"Option" has the meaning stated in Section 1.2(a) of this
Agreement.
"Option Agreement" has the meaning stated in Section 1.2(a) of
this Agreement.
"Option Documents" means, collectively, the Option Agreements
and all other agreements, instruments and other documents executed and delivered
by any Principal Stockholder pursuant to any Option Agreement.
"Option Shares" has the meaning stated in Section 1.2(a) of
this Agreement.
"Ordinary Course" means, with respect to any person and as of
any date of determination, the conduct or operation of a line of business of
such person in the ordinary course of such business, as then conducted and
proposed to be conducted, in a manner consistent with the past business
practices of such person and in accordance with the reasonable requirements of
such business, in each case as determined with respect to such business as of
such date of determination.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Permitted Liens" means, collectively, with respect to any of
the Company and its Subsidiaries, (1) Liens for Taxes or governmental
assessments, charges or claims the payment of which is not yet due, or for Taxes
the validity of which are being contested in good faith by appropriate
proceedings, (2) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other similar persons and other Liens
imposed by applicable Regulations of any Governmental Body incurred in the
ordinary course of business for sums not yet delinquent or being contested in
good faith, (3) Liens relating to deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other types of social security, (4) Liens on real property which do not in the
aggregate materially interfere with or impair the operation of any parcel of
such real property for the purposes for which it is or may reasonably be
expected to be used, (5) Liens securing the executory obligations of any person
under any lease that constitutes an "operating lease" under GAAP, (6) Liens
securing Debt permitted to be created, incurred, assumed or suffered to exist by
any of the Company and its Subsidiaries pursuant to Section 7.2(d) of this
Agreement, (7) Liens securing indebtedness created, incurred, assumed or
suffered under the Access Agreement, and (8) other Liens approved by Qwest and
Qwest Subsidiary in writing; provided, however, that, with respect to each of
clauses (1) - (6) above, to the extent that any such Lien
DEF-11
relates to, or secures the payment of, a Liability that is required to be
accrued under GAAP, such Lien shall not be a Permitted Lien unless adequate
accruals for such Liability have been established therefor by the Company or
such Subsidiary on the financial statements referred to in Section 4.5 in
conformity with GAAP. Notwithstanding the foregoing, no Lien arising under the
Code or ERISA with respect to the operation, termination, restoration or funding
of any employee benefit plan or arrangement sponsored by, maintained by or
contributed to by the Company or any of its ERISA Affiliates or arising in
connection with any excise tax or penalty tax with respect to such plan or
arrangement shall be a Permitted Lien.
"person" means an individual, a corporation, a partnership, a
limited liability company, a joint venture, an association, a trust, an
unincorporated association or any other entity or organization, including a
Governmental Body.
"Principal Stockholders" means, collectively, Xxxxx X. Xxxxxx,
Xxxxxxx X. Xxxxx and Xxxxx Xxxxxxxx.
"Property" means any right or interest in or to property of
any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Proprietary Rights" means all copyrights, uncopyrighted
works, trademarks, trademark rights, service marks, trade names, trade name
rights, patents, patent rights, unpatented inventions, licenses, permits, trade
secrets, know-how, inventions, computer software, seismic data and intellectual
property rights and other proprietary rights together with applications and
licenses for, and the goodwill of the business relating to, any of the
foregoing.
"Proxy Statement/Prospectus" has the meaning stated in Section
4.28 of this Agreement.
"Qualified Plan" of a person means any ERISA Plan of the
person and any other pension, profit sharing or stock bonus plan within the
meaning of Section 401(a) of the Code maintained by the person or to which the
person contributes or has an obligation to contribute.
"Qwest" has the meaning stated in the heading to this
Agreement.
"Qwest Breach" has the meaning stated in Section 9.1(a)(3) of
this Agreement.
"Qwest Common Stock" has the meaning stated in Section
1.1(a)(2) of this
Agreement.
"Qwest Credit Facility" has the meaning stated in Section
1.3(c) of this Agreement.
"Qwest Credit Transactions" means, collectively, the
transactions undertaken pursuant to, or otherwise contemplated by, the Qwest
Credit Facility.
DEF-12
"Qwest Preferred Stock" has the meaning stated in Section
5.13(a) of this Agreement.
"Qwest Private Line Services Agreement" means, collectively,
the Private Line Services Agreement and the Master Collocation License
Agreement, each dated as of September 13, 1998 and between Qwest Communications
Corporation and the Company.
"Qwest SEC Documents" has the meaning stated in Section 5.20
of this Agreement.
"Qwest Subsidiary" has the meaning stated in the heading to
this Agreement.
"Qwest/Principal Stockholders Documents" means, collectively,
the Option Documents, the Voting Documents and the Stockholder Documents.
"Qwest/Principal Stockholders Transactions" means,
collectively, the transactions undertaken pursuant to, or otherwise contemplated
by, the Qwest/Principal Stockholders Documents.
"Qwest's Disclosure Schedule" means the schedule with respect
to certain matters referred to in Article V of this Agreement that has been
delivered by Qwest and Qwest Subsidiary to the Company, as such schedule may be
modified in accordance with this Agreement.
"reasonable best efforts" means the use of all reasonable
efforts, including, without limitation, the expenditure of amounts reasonably
related to the objective sought to be achieved, with respect to matters and
actions over which the person has or could reasonably be expected to exert any
control or influence.
"Registration Rights Agreement" has the meaning stated in
Section 1.3(b) of this Agreement.
"Registration Statement" has the meaning stated in Section
5.21 of this
Agreement.
"Regulation" means (1) any applicable law, rule, regulation,
ordinance, judgment, decree, ruling, order, award, injunction, recommendation or
other official action of any Governmental Body, and (2) any official change in
the interpretation or administration of any of the foregoing by the Governmental
Body or by any other Governmental Body or other person responsible for the
interpretation or administration of any of the foregoing.
"Restricted Payment" with respect to a person means the
following:
DEF-13
(1) any dividend or other distribution of any kind on
any shares of the person's capital stock, except dividends payable
solely in shares of its capital stock, other than an Equity Security of
the person which by its terms (or by the terms of any security into
which it is convertible or for which it is exchangeable or
exercisable), or upon the happening of any event or with the passage of
time, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of the holder
thereof, in whole or in part, or which is convertible into or
exchangeable or exercisable for debt securities of the person or any of
its Subsidiaries, and
(2) any payments in cash or otherwise, on account of
the purchase, redemption, retirement or acquisition of any Equity
Securities of the person.
"Securities Act" means the Securities Act of 1933, as amended,
and the related rules and regulations thereunder.
"Series Q Warrants" has the meaning stated in Section 1.3(b)
of this Agreement.
"Stockholder Agreement" has the meaning stated in Section
1.2(d) of this Agreement.
"Stockholder Documents" means, collectively, the Stockholder
Agreements and all other agreements, instruments and other documents executed by
any Principal Stockholder pursuant to any Stockholder Agreement.
"Subsidiary" of a person means (1) any corporation or other
entity of which securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other persons performing
similar functions are at the time directly or indirectly owned by the person or
(2) a partnership or limited liability company in which the person or a
Subsidiary of the person is, at the date of determination, a general partner,
limited partner or member, as the case may be, but only if the person or its
Subsidiary is entitled at any time to receive more than 50% of the amounts
distributed or distributable by such partnership or limited liability company to
the partners or members thereof whether upon dissolution or otherwise. Unless
the context requires otherwise, references to one or more Subsidiaries shall be
references to Subsidiaries of the Company.
"Superior Proposal" has the meaning stated in the proviso to
the first sentence of Section 7.2(z) of this Agreement.
"Tax Return" means a report, return or other information
required to be filed by a person with or submitted to a Governmental Body with
respect to Taxes, including, where permitted or required, combined or
consolidated returns for any group of entities that includes the person.
DEF-14
"Taxes" means all taxes, charges, fees, levies, duties,
tariffs, imposts, withholdings, and governmental impositions or charges of any
kind in the nature of (or similar to) taxes, payable to any Governmental Body,
including (without limitation) income, franchise, profits, gross receipts, ad
valorem, net worth, value added, sales, use, service, real or personal property,
special assessments, capital stock, license, payroll, withholding, employment,
social security, workers' compensation, unemployment compensation, utility,
severance, production, excise, stamp, occupation, premiums, windfall profits,
transfer and gains taxes, and interest, penalties (civil and criminal), and
additions to tax imposed with respect thereto.
"Termination Date" has the meaning stated in Section 9.1(a) of
this Agreement.
"Trading Day" means, as applied to any class of stock, any day
on which the NASDAQ or, if shares of such stock are not listed or admitted to
trading on the NASDAQ, the principal national securities exchange on which the
shares of such stock are listed or admitted for trading or, if the shares of
such stock are not listed or admitted for trading on any national securities
exchange, the NASDAQ or, if the shares of such stock are not included therein,
any similar interdealer system then in general use in which the shares of such
stock are included, is open for the trading of securities generally and with
respect to which information regarding the sale of securities included therein,
or with respect to which sales information is reported, is generally available.
"Transaction Documents" means, collectively, this Agreement,
the Qwest/Principal Stockholders Documents, the Qwest Credit Facility, the Qwest
Private Line Services Agreement and all other instruments and documents executed
and delivered by any person in connection with the conclusion of one or more of
the transactions contemplated hereby and thereby.
"Transactions" means, collectively, the transactions
undertaken pursuant to, or otherwise contemplated by, the Transaction Documents.
"transfer" means a sale, an assignment, a lease, a license, a
pledge, a grant, a transfer or other disposition of, or the creating of a Lien
on, an asset or any interest of any nature in an asset, including, without
limitation, the beneficial ownership of such asset. The term "transfer" used as
a verb has a correlative meaning.
"Voting Agreement" has the meaning stated in Section 1.2(a) of
this Agreement.
"Voting Documents" means, collectively, the Voting Agreements
and all other agreements, instruments and other documents executed by any
Principal Stockholder pursuant to any Voting Agreement.
"Wholly-Owned Subsidiary" of a person means any Subsidiary all
of the shares of capital stock or other ownership interests of which, except
directors' qualifying shares, are at the time directly or indirectly owned by
the person. Unless the context requires otherwise,
DEF-15
references to one or more Wholly-Owned Subsidiaries shall be references to
Wholly-Owned Subsidiaries of the Company.
DEF-16
Exhibit 3.1(j)(1)
FORM OF QWEST TAX REPRESENTATION LETTER
[LETTERHEAD OF QWEST COMMUNICATIONS INTERNATIONAL INC.]
[Date]
[Counsel for the Company]
[Address]
Re: Representation Letter for Proposed Merger Opinion
-------------------------------------------------
Gentlemen:
This letter is being furnished in connection with the merger
(the "Merger") of Qwest 1998-I Acquisition Corp., a Delaware corporation ("Qwest
Subsidiary") and a wholly-owned subsidiary of Qwest Communications International
Inc., a Delaware corporation ("Qwest"), with and into Icon CMT Corp., a Delaware
corporation (the "Company"), in exchange for shares of voting common stock, par
value $.01 per share, of Qwest ("Qwest Common Stock") pursuant to the Agreement
and Plan of Merger dated as of September 13, 1998 (the "Merger Agreement"),
among Qwest, Qwest Subsidiary, and the Company. All capitalized terms not
otherwise defined herein have the meanings ascribed to them in the Merger
Agreement.
Qwest represents and warrants as follows:
1. The representations and warranties set forth in the Merger
Agreement will be true, correct and complete as if made at the Effective Time.
The facts relating to the Merger as described in the Merger Agreement insofar as
they relate to Qwest or Qwest Subsidiary are true, correct and complete in all
material respects.
2. The fair market value of Qwest Common Stock and other
consideration (including cash in lieu of fractional shares), if any, received by
each stockholder of the Company in the Merger will be approximately equal to the
fair market value of the Company stock surrendered by such stockholder in the
Merger.
3. Neither Qwest nor any person related to Qwest has any plan
or intention to redeem or acquire any shares of Qwest Common Stock issued
pursuant to the Merger. For purposes of this representation, persons are
considered to be "related" if such persons are related within the meaning of
Treasury Regulation ss.1.368-1(e).
[Counsel for the Company]
[Date]
Page 2
4. None of the compensation received by any
stockholder-employee of the Company will be separate consideration for, or
allocable to, any of his shares of Company Common Stock. None of the shares of
Qwest Common Stock received by any stockholder- employee will be separate
consideration for, or allocable to, any employment agreement. The compensation
paid to any stockholder-employee will be for services actually rendered and will
be commensurate with amounts paid to unrelated third parties bargaining at arm's
length for similar services.
5. Immediately following the Merger, the Company will hold at
least 90 percent of the fair market value of Qwest Subsidiary's net assets and
at least 70 percent of the fair market value of Qwest Subsidiary's gross assets
held immediately prior to the Merger. Following the Merger, Qwest intends to,
and absent a change in circumstances which occurs after, and is not in
connection with, the Merger, will, cause the Company to hold (a) at least 90
percent of the fair market value of its net assets and at least 70 percent of
the fair market value of its gross assets held immediately prior to the Merger,
and (b) at least 90 percent of the fair market value of Qwest Subsidiary's net
assets and at least 70 percent of the fair market value of Qwest Subsidiary's
gross assets held immediately prior to the Merger. For purposes of this
representation, amounts paid to Company stockholders who receive cash or other
property (including cash for fractional shares), amounts used by the Company or
Qwest Subsidiary to pay reorganization expenses, and all redemptions and
distributions (except for regular, normal dividends) made by the Company will be
included in the assets of the Company or Qwest Subsidiary, as the case may be,
immediately prior to the Merger.
6. Prior to the Merger, Qwest will be in control of Qwest
Subsidiary within the meaning of Section 368(c) of the Internal Revenue Code of
1986, as amended (the"Code").
7. Qwest has no plan or intention to cause the Company,
following the Merger, to issue additional shares of its stock that would result
in Qwest's losing control of the Company within the meaning of Section 368(c) of
the Code. Immediately following the Merger, the Company will not have
outstanding any warrants, options, convertible securities, or any other type of
right pursuant to which any person could acquire stock in the Company that, if
exercised or converted, would affect Qwest's acquisition or retention of control
of the Company, as defined in Section 368(c) of the Code.
8. Qwest has no plan or intention (a) to liquidate the
Company, (b) to merge the Company with or into another corporation, (c) to sell
or otherwise dispose of the stock of the Company except for transfers of stock
to a member of Qwest's qualified group or to a qualified partnership, or (d) to
cause the Company to sell or otherwise dispose of any of its assets or of any of
the assets acquired from Qwest Subsidiary, except for dispositions made in
Exhibit 3.1(j)(1)-2
[Counsel for the Company]
[Date]
Page 3
the ordinary course of business or transfers to a member of Qwest's qualified
group or to a qualified partnership. For purposes of this representation,
"Qwest's qualified group" is the qualified group within the meaning of Treasury
Regulation ss.1.368-1(d)(4)(ii) in which Qwest is the issuing corporation, and a
"qualified partnership" is a partnership in which members of Qwest's qualified
group, in the aggregate, own at least 331/3 percent of the capital and profits
interests in the partnership.
9. Qwest Subsidiary will have no liabilities assumed by the
Company, and will not transfer to the Company any assets subject to liabilities,
in the Merger.
10. Qwest Subsidiary has been newly formed solely to
consummate the Merger and, prior to the Effective Time, Qwest Subsidiary has not
conducted and will not conduct any business activity or other operation of any
kind (except for the issuance of its stock to Qwest).
11. Following the Merger, Qwest intends to, and absent a
change in circumstances which occurs after, and is not in connection with, the
Merger, will, cause the Company to continue its historic business or use a
significant portion of its historic business assets in a business within the
meaning of Treasury Regulation ss.1.368-1(d).
12. Qwest, Qwest Subsidiary, the Company, and the stockholders
of the Company will pay their respective expenses, if any, incurred in
connection with the Merger. Neither Qwest nor Qwest Subsidiary will pay or
assume any expense of the Company in connection with the transactions described
in the Merger Agreement.
13. There is no intercorporate indebtedness existing between
Qwest and the Company or between Qwest Subsidiary and the Company that was
issued, acquired, or will be settled at a discount.
14. In the Merger, shares of Company stock representing
control of the Company, as defined in Section 368(c) of the Code, will be
exchanged solely for Qwest Common Stock. For purposes of this representation,
shares of Company stock exchanged for cash or other property originating with
Qwest will be treated as outstanding Company stock on the date of the Merger.
15. Qwest does not own, nor has it owned during the past five
years, any shares of the stock of the Company.
16. Neither Qwest nor Qwest Subsidiary is an investment
company as defined in Section 368(a)(2)(F) of the Code.
Exhibit 3.1(j)(1)-3
[Counsel for the Company]
[Date]
Page 4
17. The payment of cash in lieu of fractional shares of Qwest
Common Stock is solely for the purpose of avoiding the expense and inconvenience
to Qwest of issuing fractional shares and does not represent separately
bargained-for consideration. The total cash consideration that will be paid in
the Merger to the Company stockholders instead of issuing fractional shares of
Qwest Common Stock will be issued in the Merger to the Company stockholders in
exchange for their shares of Company stock. The fractional share interests of
each Company stockholder will be aggregated (except in cases where the
beneficial interests cannot be identified or it would be improper to aggregate),
and no Company stockholder will receive cash in an amount equal to or greater
than the value of one full share of Qwest Common Stock.
18. Qwest and Qwest Subsidiary and after the Merger, the
Company, will treat the Merger as a tax-free reorganization within the meaning
of Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code. Neither Qwest nor Qwest
Subsidiary, nor after the Merger, the Company, will take any position that is
inconsistent with the treatment of the Merger as a tax-free reorganization
within the meaning of Section 368(a) of the Code, unless otherwise required by a
determination within the meaning of Section 1313(a)(1) of the Code or by
applicable state or local income or franchise tax law.
19. Other than those described in the Merger Agreement, the
Joint Proxy Statement/Prospectus of Qwest and the Company or Qwest's
Registration Statement on Form S-4, there are no agreements, arrangements or
understandings (whether written or oral) between or among (a) any of Qwest, its
subsidiaries, affiliates or stockholders, on the one hand, and (b) any of the
Company, its subsidiaries, affiliates or stockholders on the other hand,
concerning the Merger.
Qwest represents and warrants that the foregoing
representations are true, correct and complete at the Effective Time as well as
on the date hereof, and Qwest will notify you in writing of any changes therein
prior to the Effective Time and prior to the Closing.
Qwest understands the foregoing representations and has had
the opportunity to discuss these representations, their meaning and factual
support therefor with its tax advisors before signing this letter. Qwest
recognizes that you will be relying on these representations in connection with
your rendering an opinion regarding the federal income tax treatment of the
Merger to the Company and its stockholders.
Exhibit 3.1(j)(1)-4
[Counsel for the Company]
[Date]
Page 5
The undersigned has authority to sign this representation
letter on behalf of Qwest and is an executive officer of Qwest fully familiar
with its operations and ownership.
Very truly yours,
QWEST COMMUNICATIONS INTERNATIONAL INC.
By:
Name:
Title:
Exhibit 3.1(j)(1)-5
Exhibit 3.1(j)(2)
FORM OF COMPANY TAX REPRESENTATION LETTER
[LETTERHEAD OF ICON CMT CORP.]
[Date]
[Counsel for the Company]
[Address]
Re: Representation Letter for Proposed Merger Opinion
-------------------------------------------------
Gentlemen:
This letter is being furnished in connection with the merger
(the "Merger") of Qwest 1998-I Acquisition Corp., a Delaware corporation ("Qwest
Subsidiary") and a wholly-owned subsidiary of Qwest Communications International
Inc., a Delaware corporation ("Qwest"), with and into Icon CMT Corp., a Delaware
corporation (the "Company"), in exchange for shares of voting common stock, par
value $.01 per share, of Qwest ("Qwest Common Stock") pursuant to the Agreement
and Plan of Merger dated as of September 13, 1998 (the "Merger Agreement"),
among Qwest, Qwest Subsidiary, and the Company. All capitalized terms not
otherwise defined herein have the meanings ascribed to them in the Merger
Agreement.
The Company represents and warrants as follows:
1. The representations and warranties set forth in the Merger
Agreement will be true, correct and complete as if made at the Effective Time.
The facts relating to the Merger as described in the Merger Agreement insofar as
they relate to the Company are true, correct and complete in all material
respects.
2. The fair market value of Qwest Common Stock and other
consideration (including cash in lieu of fractional shares), if any, received by
each stockholder of the Company in the Merger will be approximately equal to the
fair market value of the Company stock surrendered by such stockholder in the
Merger.
3. At least 50 percent of the aggregate value of all Company
stock outstanding immediately prior to the Merger is preserved in the Merger
within the meaning of Treasury Regulation ss.1.368-1(e). For purposes of this
representation, the value of a share of Company stock is considered to be
preserved in the Merger if the share of Company stock is exchanged
[Counsel for the Company]
[Date]
Page 2
for Qwest Common Stock in the Merger. However, the value of a share of Company
stock is not preserved in the Merger (and is treated as outstanding immediately
prior to the Merger) if and to the extent that (a) in connection with the
Merger, the share of Company stock is acquired by Qwest or a person related to
Qwest for consideration other than Qwest Common Stock, (b) if, prior to the
Merger, the share of Company stock was redeemed by the Company or acquired by a
person related to the Company, (c) if, in connection with the Merger, Qwest
Common Stock issued in the Merger is redeemed or acquired by a person related to
Qwest, or (d) to the extent that prior to and in connection with the Merger, an
extraordinary distribution (as such term is used in Treasury Regulation
ss.1.368-1T(e)) is made with respect to the share of Company stock.
Neither the Company nor any person related to the Company has
redeemed or acquired nor does the Company or any person related to the Company
have any plan or intention to redeem or acquire any shares of Company stock or
make an extraordinary distribution with respect to any shares of Company stock.
To the best of the Company's knowledge, neither Qwest nor any person related to
Qwest has any plan or intention to redeem or acquire any shares of Qwest Common
Stock issued pursuant to the Merger.
For purposes of this representation, persons are considered
"related" if such persons are related within the meaning of Treasury Regulation
ss.1.368-1(e).
4. None of the compensation received by any
stockholder-employee of the Company will be separate consideration for, or
allocable to, any of his shares of Company Common Stock. None of the shares of
Qwest Common Stock received by any stockholder- employee will be separate
consideration for, or allocable to, any employment agreement. The compensation
paid to any stockholder-employee will be for services actually rendered and will
be commensurate with amounts paid to unrelated third parties bargaining at arm's
length for similar services.
5. Following the Merger, the Company will hold (a) at least 90
percent of the fair market value of its net assets and at least 70 percent of
the fair market value of its gross assets held immediately prior to the Merger,
and (b) to the best of the Company's knowledge, at least 90 percent of the fair
market value of Qwest Subsidiary's net assets and at least 70 percent of the
fair market value of Qwest Subsidiary's gross assets held immediately prior to
the Merger. For purposes of this representation, amounts paid to Company
stockholders who receive cash or other property (including cash for fractional
shares), amounts used by the Company or Qwest Subsidiary to pay reorganization
expenses, all redemptions and distributions (except for regular, normal
dividends) made by the Company and all assets disposed of by the
Exhibit 3.1(j)(2)- 2
[Counsel for the Company]
[Date]
Page 3
Company in contemplation of the Merger (except in the ordinary course of
business) will be included in the assets of the Company or Qwest Subsidiary as
the case may be, immediately prior to the Merger.
6. To the best of the Company's knowledge, prior to the
Merger, Qwest will be in control of Qwest Subsidiary within the meaning of
Section 368(c) of the Internal Revenue Code of 1986, as amended (the "Code").
7. The Company has no plan or intention to issue additional
shares of its stock that would result in Qwest's losing control of the Company
within the meaning of Section 368(c) of the Code. At the Effective Time, the
Company will not have outstanding any warrants, options, convertible securities,
or any other type of right pursuant to which any person could acquire stock in
the Company that, if exercised or converted, would affect Qwest's acquisition or
retention of control of the Company, as defined in Section 368(c) of the Code.
8. To the best of the Company's knowledge, Qwest has no plan
or intention (a) to liquidate the Company, (b) to merge the Company with or into
another corporation, (c) to sell or otherwise dispose of the stock of the
Company except for transfers of stock to a member of Qwest's qualified group or
to a qualified partnership, or (d) to cause the Company to sell or otherwise
dispose of any of its assets or of any of the assets acquired from Qwest
Subsidiary, except for dispositions made in the ordinary course of business or
transfers to a member of Qwest's qualified group or to a qualified partnership.
For purposes of this representation, "Qwest's qualified group" is the qualified
group within the meaning of Treasury Regulation ss.1.368-1(d)(4)(ii) in which
Qwest is the issuing corporation, and a "qualified partnership" is a partnership
in which members of Qwest's qualified group, in the aggregate, own at least
331/3 percent of the capital and profits interests in the partnership.
9. Qwest Subsidiary will have no liabilities assumed by the
Company, and will not transfer to the Company any assets subject to liabilities,
in the Merger.
10. To the best of the Company's knowledge, Qwest Subsidiary
has been newly formed solely to consummate the Merger and, prior to the
Effective Time, Qwest Subsidiary has not conducted and will not conduct any
business activity or other operation of any kind (except for the issuance of its
stock to Qwest).
11. To the best of the Company's knowledge, following the
Merger, the Company will continue its historic business assets in a business or
use a significant portion of its historic business assets in a business within
the meaning of Treasury Regulation ss.1.368-1(d).
Exhibit 3.1(j)(2)- 3
[Counsel for the Company]
[Date]
Page 4
No assets of the Company have been disposed of in any manner prior to the Merger
nor does the Company have any plan or intention to dispose of any such assets,
except in the ordinary course of business.
12. Qwest, Qwest Subsidiary, the Company, and the stockholders
of the Company will pay their respective expenses, if any, incurred in
connection with the Merger. Neither Qwest nor Qwest Subsidiary will pay or
assume any expense of the Company in connection with the transactions described
in the Merger Agreement.
13. There is no intercorporate indebtedness existing between
Qwest and the Company or between Qwest Subsidiary and the Company that was
issued, acquired, or will be settled at a discount.
14. In the Merger, shares of Company stock representing
control of the Company, as defined in Section 368(c) of the Code, will be
exchanged solely for Qwest Common Stock. For purposes of this representation,
shares of Company stock exchanged for cash or other property originating with
Qwest will be treated as outstanding Company stock on the date of the Merger.
15. Qwest does not own, nor has it owned during the past five
years, any shares of the stock of the Company.
16. The Company, and to the best of the Company's knowledge,
Qwest and Qwest Subsidiary are not investment companies as defined in Section
368(a)(2)(F) of the Code.
17. At the Effective Time, the fair market value of the assets
of the Company will exceed the sum of its liabilities, plus the amount of
liabilities, if any, to which the assets are subject.
18. The Company is not under the jurisdiction of a court in a
Title 11 or similar case within the meaning of Section 368(a)(3)(A) of the Code.
19. The payment of cash in lieu of fractional shares of Qwest
Common Stock is solely for the purpose of avoiding the expense and inconvenience
to Qwest of issuing fractional shares and does not represent separately
bargained-for consideration. The total cash consideration that will be paid in
the Merger to the Company stockholders instead of issuing fractional shares of
Qwest Common Stock will be issued in the Merger to the Company stockholders in
exchange for their shares of Company stock. The fractional share interests of
Exhibit 3.1(j)(2)- 4
[Counsel for the Company]
[Date]
Page 5
each Company stockholder will be aggregated (except in cases where the
beneficial interests cannot be identified or it would be improper to aggregate),
and no Company stockholder will receive cash in an amount equal to or greater
than the value of one full share of Qwest Common Stock.
20. The Company will treat the Merger as a tax-free
reorganization within the meaning of Sections 368(a)(1)(A) and 368(a)(2)(E) of
the Code. The Company will not take any position that is inconsistent with the
treatment of the Merger as a tax-free reorganization within the meaning of
Section 368(a) of the Code, unless otherwise required by a determination within
the meaning of Section 1313(a)(1) of the Code or by applicable state or local
income or franchise tax law.
21. Other than those described in the Merger Agreement, the
Joint Proxy Statement/Prospectus of Qwest and the Company or Qwest's
Registration Statement on Form S-4, there are no agreements, arrangements or
understandings (whether written or oral) between or among (a) any of Qwest, its
subsidiaries, affiliates or stockholders, on the one hand, and (b) any of the
Company, its subsidiaries, affiliates or stockholders on the other hand,
concerning the Merger.
22. The Company represents and warrants that the foregoing
representations are true, correct and complete at the Effective Time as well as
on the date hereof, and the Company will notify you in writing of any changes
therein prior to the Effective Time and prior to the Closing.
The Company understands the foregoing representations and has
had the opportunity to discuss these representations, their meaning and factual
support therefor with its tax accountants before signing this letter. The
Company recognizes that you will be relying on these representations in
connection with your rendering an opinion regarding the federal income tax
treatment of the Merger to the Company and its stockholders.
Exhibit 3.1(j)(2)- 5
[Counsel for the Company]
[Date]
Page 6
The undersigned has authority to sign this representation
letter on behalf of the Company and is an executive officer of the Company fully
familiar with its operations and ownership.
Very truly yours,
ICON CMT CORP.
By:
Name:
Title:
Exhibit 3.1(j)(2)-6
Exhibit 3.1(j)(3)
FORM OF TAX OPINION
[Date]
Icon CMT Corp.
0000 Xxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Re: Tax Consequences of Merger of Icon CMT Corporation
--------------------------------------------------
Gentlemen:
We have acted as counsel to Icon CMT Corp., a Delaware
corporation (the "Company"), in connection with the proposed merger (the
"Merger") of Qwest 1998-I Acquisition Corp. ("Subsidiary"), a Delaware
corporation and a wholly-owned subsidiary of Qwest Communications International
Inc., a Delaware corporation ("Parent"), with and into the Company, pursuant to
the terms of the Agreement and Plan of Merger dated as of September 13, 1998
(the "Merger Agreement"), among the Company, Parent and Subsidiary. This opinion
is being rendered pursuant to the Merger Agreement. All capitalized terms not
otherwise defined herein have the meaning assigned to them in the Merger
Agreement.
In connection with this opinion, we have examined a copy of
the Merger Agreement and Qwest's Registration Statement on Form S-4 as filed
with the Securities Exchange Commission on ________, 1998 (the "Form S-4"). In
our examination, we have assumed the genuineness of all signatures, the legal
capacity and corporate authority of all parties, and the authenticity and
conformity to originals of all documents submitted to us. In rendering the
opinion set forth below, we have assumed that the parties will act in accordance
with the terms, representations and covenants contained in the Merger Agreement.
In addition, we have relied upon certain written representations and covenants
of Qwest and the Company, copies of which are annexed hereto (the
"Representation Letters"), and have assumed that the parties will act in
accordance with the representations and covenants set forth therein.
Based upon and subject to the foregoing, we are of the opinion
that the Merger will, under current law, constitute a tax-free reorganization
under Section 368(a) of the Internal
Icon CMT Corp.
[Date]
Page 2
Revenue Code of 1986, as amended (the "Code"), and Qwest and the Company will
each be a party to the reorganization within the meaning of Section 368(b) of
the Code.
As a tax-free reorganization, the Merger will have the
following Federal income tax consequences for the Company and its stockholders:
1. The Company will not recognize any gain or loss as a result
of the Merger.
2. No gain or loss will be recognized by holders of Company
Common Stock as a result of the exchange of such shares for shares of Qwest
Common Stock pursuant to the Merger, except to the extent of any cash received
in lieu of a fractional share of Qwest Common Stock. Each stockholder of the
Company receiving cash in lieu of a fractional share of Qwest Common Stock will
be treated as having received such fractional share and as having sold it for
the cash received, thereby recognizing gain or loss equal to the difference
between the amount of cash received and that stockholder's tax basis in the
fractional share. Such gain or loss will generally be capital gain or loss,
unless the deemed sale is essentially equivalent to a dividend within the
meaning of Section 302 of the Code.
3. The tax basis of the shares of Qwest Common Stock received
by each stockholder of the Company (including any fractional share deemed to
have been received by that stockholder) will be equal to the tax basis of such
stockholder's shares of Company Common Stock exchanged in the Merger.
4. The holding period for the shares of Qwest Common Stock
received by each stockholder of the Company (including any fractional share
deemed to have been received by that stockholder) will include the holding
period for the shares of Company Common Stock of such stockholder exchanged in
the Merger.
The foregoing opinion relates only to the U.S. federal income
tax consequences of the Merger to a U.S. person who holds the Company Common
Stock as a capital asset within the meaning of Section 1221 of the Code. In
addition, it does not apply to certain types stockholders who are subject to
special treatment under the Code in light of their particular situations.
Our opinion is based upon our analysis of those provisions of
the Code, Treasury Regulations, administrative rulings and proceedings and case
law as of the date hereof which we deem relevant. It should be noted that such
authority is subject to change retroactively as well as prospectively, and that
we have no duty to advise you of any such changes or their effect
Exhibit 3.1(j)(3)-2
Icon CMT Corp.
[Date]
Page 3
upon this opinion. It should also be recognized that the Internal Revenue
Service may disagree with our conclusions and that a court may uphold such
contrary positions. Finally, in expressing our opinions, we have relied on the
facts, representations and covenants as set forth in the Merger Agreement, the
Form S-4 and the Representation Letters. We have not made any independent
analysis of any of any item or information set forth therein or reviewed any
other documentation in connection therewith. If any of the facts are determined
to be different than those stated therein or any of the representations or
covenants are breached, our conclusions may no longer be applicable.
Except as set forth above, we express no opinion as to the tax
consequences, whether Federal, state, local or foreign, of the Merger to any
party, or of any transactions related to the Merger or contemplated by the
Merger Agreement. This opinion is being furnished only to you in connection with
the Merger and may be relied upon solely by your and your stockholders in
connection with the Merger. This opinion may not be used or relied upon by any
other person or for any other purpose and may not be circulated, quoted or
otherwise referred to for any other purpose without our express written consent.
Very truly yours,
Exhibit 3.1(j)(3)- 3
Exhibit 3.1(k)(7)
FORM OF
U.S. REAL PROPERTY INTEREST CERTIFICATION
The undersigned is __________ of Icon CMT Corp., a Delaware
corporation (the "Company"). This certificate is delivered to Qwest
Communications International Inc., a Delaware corporation ("Qwest"), and Qwest
1998-I Acquisition Corp., a Delaware corporation ("Qwest Subsidiary"), pursuant
to Section 3.1(k)(7) of the Agreement and Plan of Merger dated as of September
13, 1998 among the Company, Qwest and Qwest Subsidiary, as the same may have
been amended as of the date hereof (the "Merger Agreement"). Terms not otherwise
defined herein have the meanings stated in the Merger Agreement.
To inform Qwest and Qwest Subsidiary that no withholding is
required pursuant to section 1445 of the Code with respect to Qwest's
acquisition of the Company, the undersigned hereby certifies the following on
behalf of the Company that the Company is not, and has not been at any time
during the period specified in section 897(c)(1)(A)(ii) of the Code, a "United
States real property holding corporation" as that term is defined in section
897(c)(2) of the Code.
Under penalties of perjury, I declare that I have examined
this certification and to the best of my knowledge and belief it is true,
correct and complete, and I further declare that I have authority to sign this
document on behalf of the Company.
ICON CMT CORP.
Date: ____________________ ____________________
Name:
Title:
Exhibit 3.1(l)
FORM OF
AFFILIATE LETTER FOR AFFILIATES OF THE COMPANY
[Date]
Qwest Communications International Inc.
0000 Xxxxx Xxxxx
000 Xxxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention of Xxxx X. Xxxxxxxx
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may
be deemed to be an "affiliate" of Icon CMT Corp., a Delaware corporation (the
"Company"), as the term "affiliate" is defined for purposes of paragraphs (c)
and (d) of Rule 145 of the Securities and Exchange Commission under the
Securities Act of 1933, as amended (together with the rules and regulations
thereunder, the "Securities Act").
Pursuant to the terms of the Agreement and Plan of Merger
dated as of September 13, 1998 among the Company, Qwest Communications
International Inc., a Delaware corporation ("Qwest"), and Qwest Subsidiary, a
Delaware corporation ("Qwest Subsidiary"), as amended (the "Merger Agreement"),
Qwest Subsidiary will be merged with and into the Company, with the Company
continuing as the Surviving Corporation (the "Merger"). Capitalized terms used
in this letter without definition shall have the meanings assigned to them in
the Merger Agreement.
As a result of the Merger, I may receive shares of common
stock, par value $.01 per share, of Qwest (the "Qwest Common Stock") in exchange
for shares (or upon exercise of options for shares) of common stock, par value
$.001 per share, of the Company ( the "Company Common Stock") owned by me.
1. I hereby represent, warrant and covenant to Qwest that, if
I receive any shares of Qwest Common Stock in the Merger:
(a) I shall not make any sale or other transfer
of such shares (or any interest therein) in violation of the Securities Act.
(b) I have carefully read this letter and the
Merger Agreement and discussed with my counsel or counsel for the Company the
requirements of such documents and other applicable limitations upon my ability
to sell or otherwise transfer such shares (or any interest therein), to the
extent I felt necessary.
(c) I have been advised that the issuance of such
shares to me in the Merger has been registered with the Securities and Exchange
Commission under the Securities Act on a Registration Statement on Form S-4.
However, I have also been advised that, because at the time the Merger is
submitted for a vote of the stockholders of the Company, (i) I may be deemed to
be an affiliate of the Company and (ii) the distribution by me of such shares
has not been registered under the Securities Act, I may not sell or otherwise
transfer such shares (or any interest therein) issued to me in the Merger unless
(x) such sale, transfer or other disposition is made in conformity with the
volume and other limitations of Rule 145 under the Securities Act, (y) such sale
or other transfer has been registered under the Securities Act or (z) in the
opinion of counsel reasonably acceptable to Qwest, such sale or other transfer
is otherwise exempt from registration under the Securities Act.
(d) I understand that, except as provided for in
the Merger Agreement, Qwest is under no obligation to register the sale or other
transfer of such shares (or any interest therein) by me or on my behalf under
the Securities Act, except as provided in paragraph 2(a) below, to take any
other action necessary in order to make compliance with an exemption from such
registration available.
(e) I also understand that there will be place
d on the certificates for such shares issued to me, or any substitutions
therefor, a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE
ISSUED IN A TRANSACTION TO WHICH RULE 145 PROMULGATED
UNDER THE SECURITIES ACT OF 1933 APPLIES. THE SHARES
REPRESENTED BY THIS CERTIFICATE MAY ONLY BE
TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN
AGREEMENT DATED SEPTEMBER 13, 1998 BETWEEN THE
REGISTERED HOLDER HEREOF AND THE COMPANY, A COPY OF
WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF
THE COMPANY."
(f) I also understand that unless a sale or transfer
of such shares by me is made in conformity with the provisions of Rule 145, or
pursuant to a registration statement, Qwest reserves the right to put the
following legend on the certificates issued to my transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND
Exhibit 3.1(l)-2
WERE ACQUIRED FROM A PERSON WHO RECEIVED SUCH SHARES
IN A TRANSACTION TO WHICH RULE 145 UNDER THE
SECURITIES ACT OF 1933 APPLIES. THE SHARES HAVE BEEN
ACQUIRED BY THE HOLDER NOT WITH A VIEW TO, OR FOR
RESALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF
WITHIN THE MEANING OF THE SECURITIES ACT OF 1933 AND
MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT IN ACCORDANCE WITH AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF
1933."
(g) Execution of this letter should not be
considered an admission on my part that I am an "affiliate" of the Company as
described in the first paragraph of this letter, nor as a waiver of any rights I
may have to object to any claim that I am such an affiliate on or after the date
of this letter.
2. By Qwest's acceptance of this letter, Qwest agrees with me
that, if I receive any shares of Qwest Common Stock in the Merger:
(a) For so long as and to the extent necessary to
permit me to sell such shares pursuant to Rule 145 and, to the extent
applicable, Rule 144 under the Securities Act, Qwest shall (i) use its
reasonable best efforts to (x) file, on a timely basis, all reports and data
required to be filed with the Securities and Exchange Commission by it pursuant
to Section 13 of the Securities Exchange Act of 1934, as amended (together with
the rules and regulations thereunder, the "Exchange Act"), and (y) furnish to me
upon request a written statement as to whether Qwest has complied with such
reporting requirements during the 12 months preceding any proposed sale of the
shares by me under Rule 145, and (ii) otherwise use its reasonable efforts to
permit such sales pursuant to Rule 145 and Rule 144. Qwest has filed all reports
required to be filed with the Securities and Exchange Commission under Section
13 of the Exchange Act during the preceding 12 months.
Exhibit 3.1(l)-3
(b) It is understood and agreed that certificates
for such shares having the legends set forth in paragraphs (e) and (f) above
will be substituted by delivery of certificates without such legend if (i) one
year shall have elapsed from the date of the consummation of the Merger and the
provisions of Rule 145(d)(2) under the Securities Act are then available to me
or (ii) Qwest has received either an opinion of counsel, which opinion and
counsel shall be reasonably satisfactory to Qwest, or a "no-action" letter
obtained by the undersigned from the staff of the Securities and Exchange
Commission, to the effect that the restrictions imposed by Rule 144 and Rule 145
under the Securities Act no longer apply to such shares.
Very truly yours,
Name:
ACCEPTED AND AGREED:
QWEST COMMUNICATIONS INTERNATIONAL INC.
By:
Name:
Title:
Date:
Exhibit 3.1(l)-4
EXHIBIT A
FORM OF
OPTION AGREEMENT
The Option granted by this Option Agreement has not, and the shares of Company
Common Stock transferable upon the exercise thereof have not, been registered
under the Securities Act of 1933, as amended, and may not be offered, sold,
transferred or otherwise disposed of except in compliance with said Act.
OPTION AGREEMENT dated as of September 13, 1998 between
__________ ("Optionor") and QWEST COMMUNICATIONS INTERNATIONAL INC., a Delaware
corporation (together with its successors and assigns, "Optionee").
RECITALS
A. Optionor beneficially owns __________ shares of common
stock, par value $.001 per share (the "Company Common Stock"), of Icon CMT
Corp., a Delaware corporation (the "Company") [, including __________ shares of
Company Common Stock issuable upon the exercise of Company Stock Options vested
as of the date of this Agreement]. All such shares, together with all other
shares of Company Common Stock with respect to which Optionor has beneficial
ownership as of the date of this Agreement or acquires beneficial ownership on
or before the Option Termination Date, are collectively referred to as the
"Option Shares".
B. Concurrently with the execution and delivery of this
Agreement, the Company, Optionee and Qwest Subsidiary, a Delaware corporation
("Qwest Subsidiary"), are entering into the Agreement and Plan of Merger dated
as of September 13, 1998 (as amended or modified from time to time, the "Merger
Agreement"). Terms not otherwise defined in this Agreement have the meanings
stated in the Merger Agreement.
C. Concurrently with the execution and delivery of this
Agreement, Optionor and Optionee are entering into the Voting Agreement and
Proxy dated as of September 13, 1998 (the "Voting Agreement") to provide for,
among other things, (1) the obligation of Optionor to vote the Option Shares to
approve the Merger Agreement and the merger contemplated thereby (the "Merger")
and against any Business Combination (other than the Transactions), (2) the
grant by Optionor to each of Optionee and Qwest Subsidiary of an irrevocable
proxy in connection therewith, (3) certain other restrictions on the voting and
the sale or other transfer of the Option Shares by Optionor, (4) certain
restrictions on Optionor with respect to Business Combination Transactions
(other than the Transactions)
A-1
with respect to any of the Company and its Subsidiaries and (5) the obligation
of Optionor to execute and deliver the Stockholder Agreement at or before the
Closing of the Merger.
D. As contemplated by Section 1.2(b) of the Merger Agreement,
Optionor and Optionee desire to enter into this Agreement to provide for, among
other things, (1) the grant by Optionor to Qwest of an option to acquire the
Option Shares, and (2) certain restrictions on the voting and the sale or other
transfer of the Option Shares. This Agreement and each Assignment of Rights
Agreement (as defined below) and all other agreements, instruments and other
documents executed and delivered by Optionor in connection with any of the
foregoing, are collectively referred to as the "Option Documents".
E. Optionor acknowledges that Qwest and Qwest Subsidiary are
entering into the Merger Agreement in reliance on the representations,
warranties, covenants and other agreements of Optionor set forth in this
Agreement and would not enter into the Merger if Optionor did not enter into
this Agreement.
AGREEMENT
The parties agree as follows:
Section 1. Term of Option; Exercise of Option; Adjustment of
Option.
(a) Term of Option. Subject to the conditions and on the terms
of this Agreement, Optionor hereby grants Optionee the right (the "Option"),
during the period commencing at the consummation of an Alternative Transaction
(other than the Transactions) with respect to any of the Company and its
Subsidiaries occurring after an Option Trigger and terminating at the Option
Termination, to purchase from Optionor any or all of the Option Shares, in each
case upon exercise of the Option and the payment therefor of an amount in cash
equal to the product of the number of such Option Shares so purchased multiplied
by $12.00 (the "Option Consideration"). The Option shall be void, have no value
and be of no further effect with respect to any Exercise Notice delivered to
Optionor after the Option Termination. The term "Option Trigger" means the first
to occur of (1) the termination or purported termination of the Merger Agreement
or the obligations of the parties thereunder, in any case without the prior
written approval of Optionee, (2) the time of the occurrence or existence of any
event or circumstance that would entitle any party to the Merger Agreement to
exercise its right to terminate certain obligations of the parties thereunder
pursuant to Section 9.1 of the Merger Agreement, (3) the public announcement (or
written communication that is or becomes the subject of public disclosure) of a
bona fide proposal by any person (other than Optionee or any Affiliate of, or
any person acting in concert with, Optionee) with respect to a Business
Combination Transaction (other than the Transactions) with respect to any of the
Company and its Subsidiaries, and (4) the occurrence of a breach by any
Principal Stockholder of any
A-2
obligation under an Option Agreement or a Voting Agreement. The term "Option
Termination" means 5:00 p.m., New York City time, on the date that is the first
anniversary of the Option Commencement. The term "Alternative Transaction"
means, whether concluded or intended to be concluded in one transaction or a
series of transactions (other than the Transactions), (i) the acquisition from
the Company or any holder thereof of Equity Securities of the Company as a
result of which the holders of shares of Company Common Stock immediately before
such transaction or series of transactions would beneficially own less than 40%
of the shares of Company Common Stock issued and outstanding immediately after
such transaction or series of transactions, (ii) the acquisition of shares of
Common Stock from Stockholder and transferees of shares of Company Common Stock
pursuant to clauses (b), (c) and (d) of the provision to Section 3 as a result
of which Stockholder and such transferees would beneficially own in the
aggregate less than 50% of the shares of Company Common Stock beneficially owned
by Stockholder and such transferees in the aggregate immediately before such
transaction or series of transactions, (iii) the merger or consolidation of the
Company with or into any person other than a Wholly-Owned Subsidiary or (iv) the
transfer of all or substantially all the assets of the Company and its
Subsidiaries.
(b) Exercise of Option. The Option may be exercised in whole
or in part, at any time, by delivery by Optionee to Optionor (no earlier than in
connection with the consummation of an Alternative Transaction following the
occurrence of an Option Trigger and no later than the Option Termination) of
written notice (the "Exercise Notice") stating that Optionee is exercising the
Option in respect of the number of Option Shares specified therein.
(c) Option Payment Election. In connection with the delivery
of an Exercise Notice, Optionee may elect, in its sole discretion, to require
Optionor to repurchase the Option, or portion thereof, with respect to the
Option Shares specified in the Exercise Notice for cash in an amount equal to
the excess of the consideration per Option Share that would be received by the
Optionor in the Alternative Transaction pursuant to which the Option may be
exercised (such consideration, the "Alternative Transaction Consideration") over
$12.00. The value of any Alternative Transaction Consideration other than cash
shall be determined by a nationally recognized investment banking firm selected
by Optionee and reasonably acceptable to Optionor. The fees and expenses of such
investment bank or financial advisor shall be shared equally by Optionor and
Optionee.
(d) Adjustment of Option. The number of Option Shares and the
Option Exercise Price shall be adjusted in the event of any change in Company
Common Stock by reason of the issuance of any Equity Securities of the Company,
stock or other non-cash dividends, extraordinary cash dividends, split-ups,
mergers, recapitalizations, combinations, subdivisions, conversions, exchanges
of shares or the like on or after the date hereof and on or before the Option
Termination Date, such that, in each case, the Optionee shall receive upon the
payment of the Option Exercise Price the number and class of shares of Company
Common Stock or other securities or property that would have been received in
respect of an Option Share if the date on which the Option Share is acquired
upon exercise of the
A-3
Option had occurred immediately prior to such event, or the record date
therefor, as applicable.
(e) Option Closing.
(1) The closing of the exercise of the Option or the
repurchase referenced in Section 1(c) shall take place (the "Option
Closing") on the second Business Day after the conditions set forth in
Section 1(d)(2) with respect thereto shall have been satisfied or
waived, as the case may be, or on such other date as approved by
Optionor and Optionee in writing (the "Option Closing Date"). The
Option Closing shall take place at the offices of O'Melveny & Xxxxx
LLP, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other
location as approved by Optionor and Optionee in writing. At the Option
Closing, (1) Optionee shall pay to Optionor the Option Consideration or
the Alternative Transaction Consideration then required to be paid by
delivery of a certified or official bank check payable to Optionor or
by wire transfer of immediately available funds in accordance with
written wire instructions to be provided by Optionor and (2) Optionor
shall deliver to Optionee one or more certificates representing any
Option Shares then purchased by Optionee, duly endorsed in blank for
transfer or accompanied by a stock power duly executed in blank, which
certificates may bear any legends required by any agreement with the
Company to appear thereon.
(2) The obligations of each party under this
Agreement with respect to the sale or purchase of the Option Shares at
any Option Closing are subject to the satisfaction of the following
conditions, unless waived by such party at or before the Option
Closing:
(A) Optionee shall have obtained the Approval
required under the Xxxx-Xxxxx-Xxxxxx Act, and all waiting,
review or appeal periods under the Xxxx-Xxxxx-Xxxxxx Act or
otherwise prescribed with respect to each Approval shall have
terminated or expired, as the case may be; and
(B) the sale or purchase, as the case may be, of such
Option Shares shall not violate, result in a breach of or
constitute a default under any Regulation of any Governmental
Body or any decision, ruling, order or award of any arbitrator
by which any of such party and its Subsidiaries or any of
their properties may be bound or affected, except for
violations, breaches or defaults that, individually or in the
aggregate, could not reasonably be expected to have a Material
Adverse Effect on such party.
Section 2. Covenants of Optionor.
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(a) Voting. Until the later of the day following the
Termination Date and payment in full by the Company of all amounts then owed to
Optionee and Qwest Subsidiary pursuant to Section 9.2 of the Merger 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, Optionor 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 the Company,
however called, or in connection with any written consent of the
stockholders of the Company, so that all Option 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 and with respect to each
such written consent, except as otherwise approved in writing in
advance by Optionee (which approval may be granted, withheld,
conditioned or delayed in its sole discretion), vote (or cause to be
voted) all such Option Shares (A) against any action or agreement that
would result in any breach of any representation, warranty, covenant or
agreement of Optionor contained in any Option Document, that would or
could reasonably be expected to impede, interfere with, prevent or
materially delay the conclusion of any of the transactions contemplated
by this Agreement or that would or could reasonably be expected to
materially reduce the benefits to Optionee of such transactions and (B)
against any amendment to the articles of incorporation or the
certificate of incorporation, as the case may be, or bylaws of the
Company.
(b) Compliance With Regulations. Optionor shall comply in all
respects with all Regulations of each Governmental Body and all decisions,
rulings, orders and awards of each arbitrator applicable to it or its business,
properties or operations, in connection with the exercise of the Option,
including, without limitation, use its reasonable best efforts to comply (and
exchange information with other persons to enable them to comply) with any
applicable requirements under the Xxxx-Xxxxx-Xxxxxx Act relating to filing and
furnishing information to the Department of Justice and the Federal Trade
Commission, including, without limitation, the following:
(1) assisting in the preparation and filing of the
"Antitrust Improvements Act Notification and Report Form for Certain
Mergers and Acquisitions" and taking all other action required by 16
C.F.R. Parts 801-803 (or any successor form or Regulation);
(2) complying with any additional request for
documents or information made by the Department of Justice or the
Federal Trade Commission or by a court; and
A-5
(3) causing all affiliated persons of the "ultimate
parent entity" of the party within the meaning of the Xxxx-Xxxxx-Xxxxxx
Act to cooperate and assist in the filing and compliance.
(c) Further Assurances. Promptly upon request by Optionee,
Optionor shall correct any defect or error that may be discovered in any Option
Document or in the exercise of the Option in whole or in part and execute,
acknowledge, deliver, file, re-file, register and re-register, any and all such
further acts, certificates, assurances and other instruments as Optionee may
require from time to time in order (1) to carry out more effectively the
purposes of each Option Document, (2) to enable Optionee to exercise and enforce
its rights and remedies under each Option Document and (3) to better transfer,
preserve, protect and confirm to Optionee the rights granted or now or hereafter
intended to be granted to Optionee under each Option Document or under each
other instrument executed in connection with or pursuant to each Option
Document.
(d) Option Commencement Notice. Optionor shall notify Optionee
promptly in writing of the occurrence of the Option Commencement and of the
consummation of any Business Combination Transaction (other than the
Transactions) prior to such consummation, it being understood that the giving of
such notice by Optionor shall not be a condition to the right of Optionee to
exercise the Option.
Section 3. Transfer of Option Shares. Until the day following
the Option Termination Date, Optionor shall not sell or otherwise transfer (or
offer to sell or otherwise transfer) any Option Shares, or any interest therein,
to any person other than Optionee; provided that Optionor may (a) transfer
Option Shares to Qwest Subsidiary or any Affiliate thereof in connection with
the conclusion of the Transactions (b) transfer Option Shares to one or more
members of Optionor's immediate family or trusts with respect to which one or
more of Optionor and such members are the exclusive beneficiaries, (c) pledge or
create a security interest in or other Lien on not more than __________ Option
Shares in the aggregate to secure bona fide indebtedness, of Option or owned to
one or more financial institutions, (d) transfer Option Shares to any other
person approved in advance in writing by Optionee, which approval may be
granted, withheld, conditioned or delayed in the sole discretion of Optionee
[and (e) sell the minimum number of Option Shares required to be sold to satisfy
the express obligations of Optionor under Section 7.1 of the Property Settlement
and Support Agreement dated as of August 10, 1998 between Optionor and his wife
(in the form delivered by Optionor to Optionee, the "Property Settlement and
Support Agreement")]; provided further that it shall be a condition to (x) each
such transfer referred to in the preceding clauses (b) and (d) that such
transferee shall (1) execute and deliver to Optionee the Transferee Agreement in
the form of Annex 1 attached hereto and (2) execute and deliver to Optionee a
replacement option identical in all respects to this Agreement except for the
change in the name of Optionor and (y) each such transfer referred to in the
preceding clause (c) that such transferee shall agree that Optionor shall have
the right to exercise all voting rights with respect to the Option Shares so
transferred and that no such transfer shall prevent, limit or interfere with
Optionor's compliance with, or performance of its obligations under, this
Agreement, absent a default under the terms of the related
A-6
pledge or security agreement. The term "transfer" means a sale, an assignment, a
pledge, a grant, a transfer or other disposition of, or the creation of a Lien
on, any Option Shares or any interest of any nature in any Option Shares,
including, without limitation, the beneficial ownership of such Option Shares.
The terms "beneficially own" or "beneficial ownership" with respect to any
securities means having "beneficial ownership" of such securities (as determined
pursuant to Regulation 13D-G under the Exchange Act).
Section 4. Transfer of Option. Optionee may transfer its
rights and delegate its obligations under this Agreement (including, without
limitation, the rights of Optionee under Sections 5 and 6) with respect to any
Option Shares to any person at any time; provided that the proposed assignee
shall execute and deliver to Optionor the Assignee Agreement in the form of
Annex 2 attached hereto.
Section 5. Power of Attorney.
(a) Appointment. Optionor hereby irrevocably appoints the
Optionee (acting in its capacity as attorney-in-fact pursuant hereto, the
"Attorney-in-Fact") as the true and lawful attorney-in-fact and agent of
Optionor, with power of substitution and resubstitution, to act in the name,
place and stead of Optionor solely with respect to the following:
(1) to take all actions necessary or appropriate to
transfer or cause the transfer to the Optionee of any Option Shares
purchased by the Optionee in accordance with the terms of this
Agreement; and
(2) to instruct the Company, on behalf of Optionor,
to issue and deliver to the Optionee the Option Shares acquired upon
exercise of the Option pursuant to this Agreement.
(b) Confirmation. Optionor hereby acknowledges and confirms
that the Power of Attorney granted pursuant to this Section 5 is coupled with an
interest and, therefore, shall be irrevocable and shall not be terminated by any
act of Optionor or by operation of law, whether by the death, disability,
liquidation or dissolution of Optionor or by the occurrence of any other event
or events, and if, after the execution hereof, Optionor dies or is disabled,
liquidated or dissolved, or if any other such event or events shall occur before
the completion of the transactions contemplated by this Agreement, the
Attorney-in- Fact shall nevertheless be authorized and directed to complete all
such transactions as if such death, disability, liquidation or dissolution or
other event or events had not occurred and regardless of notice thereof.
(c) Termination. The Power of Attorney granted under this
Section 5 shall terminate at 5:00 p.m., New York City time, on the Option
Termination Date.
A-7
Section 6. Legend. Optionor shall cause the following legend
to be printed, typed, stamped or otherwise impressed on each certificate for the
Option Shares and any certificates issued in exchange therefor or upon transfer
thereof (other than to Optionee), other than certificates for Option Shares
referred to in clause (c) of the proviso to Section 3:
"The shares represented by this certificate are subject to an
option to purchase and certain voting and transfer
restrictions contained in the Option Agreement dated as of
September 13, 1998 from the registered holder to Qwest
Communications International Inc."
Section 7. Representations and Warranties of Optionor.
Optionor represents and warrants to Optionee as follows:
(a) Existence and Power. If Optionor is not a natural person,
Optionor (1) is a corporation duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or is a limited
liability company, general partnership or limited partnership formed and validly
existing under the laws of the jurisdiction of its formation and (2) has all
necessary power and authority (as a corporation, limited liability company,
general partnership or limited partnership, as the case may be) to execute and
deliver each Option Document to which it is or may become a party.
(b) Authorization; Contravention. Subject to obtaining the
Approval referred to in Section 7(c), the execution and delivery by Optionor of
each Option Document to which it is or may become a party and the performance by
it of its obligations under each of those Option Documents have been duly
authorized by all necessary action (as a corporation, limited liability company,
general partnership or limited partnership, as the case may be), if Optionor is
not a natural person, and do not and will not (1) contravene, violate, result in
a breach of or constitute a default under, (A) its articles of incorporation,
certificate of incorporation, operating agreement, partnership agreement, bylaws
or articles or deed of trust, as applicable, (B) any Regulation of any
Governmental Body or any decision, ruling, order or award of any arbitrator by
which Optionor, the Option Shares or any of its other properties may be bound or
affected or (C) any agreement, indenture or other instrument to which Optionor
is a party or by which Optionor, the Option Shares or any of its other
properties may be bound or affected or (2) result in or require the creation or
imposition of any Lien on the Option Shares or any of the other properties now
owned or hereafter acquired by it.
(c) Approvals. Except with respect to the Approval required
under the Xxxx-Xxxxx-Xxxxxx Act, no Approval of any Governmental Body or other
person is required or advisable on the part of Optionor for (1) the due
execution and delivery by Optionor of any Option Document to which it is or may
become a party, (2) the conclusion of the transactions contemplated by this
Agreement and the other Option Documents, (3) the performance by Optionor of its
obligations under each Option Document to which it is or
A-8
may become a party and (4) the exercise by Optionee of its rights and remedies
under each Option Document to which Optionor is or may become a party. Each such
Approval shall have been obtained, all actions by each person required to be
taken in connection with each such Approval shall have been taken and all
prescribed waiting, review or appeal periods with respect to each such Approval
shall have terminated or expired, as the case may be, in each case on or before
the Option Closing Date.
(d) Binding Effect. Each Option Document is, or when executed
and delivered by Optionor will be, the legally valid and binding obligation of
Optionor, enforceable against Optionor in accordance its terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting creditors' rights generally and general principles
of equity, including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing and the possible unavailability of
specific performance or injunctive relief, regardless of whether considered in a
proceeding in equity or at law.
(e) Ownership. Optionor is the sole beneficial owner of all
the Option Shares, free and clear of all Liens except the Liens created by this
Agreement and the Voting Agreement and Liens permitted by clause (c) of the
proviso to Section 3. As of the date of this Agreement, Optionor does not
beneficially own any Equity Securities of the Company other than the Option
Shares. At the Option Closing, Optionor will be the sole beneficial owner of the
Option Shares to be sold, assigned and transferred by it under this Agreement on
such date, and no other person will have any beneficial ownership interest in or
to such Option Shares. Optionor has, and, at the Option Closing, will have, good
right, full power and lawful authority to sell, assign and transfer to Optionee
all its right, title and interest in and to such Option Shares, free and clear
of all Liens. Immediately after the sale, assignment and transfer of such Option
Shares pursuant to this Agreement, upon the registration of such Option Shares
in the name of Optionee in the stock records of the Company and assuming that
Optionee is a purchaser for value and without notice of any adverse claim,
Optionee will have all the rights, title and interest of Optionor in and to such
Option Shares, free and clear of all Liens.
(f) Litigation. There is no Action pending against Optionor
or, to the knowledge of Optionor, threatened against Optionor 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 Option Document or the performance by any party of its
obligations under any Option Document.
(g) Voting and Transfer Restrictions. To the knowledge of
Optionor, except with respect to the Option Documents and the Voting Documents,
there is no agreement or arrangement restricting the voting of any Option Shares
or, except with respect to the Option Documents, the Voting Documents and the
pledge or security agreements creating the Liens permitted by clause (c) to the
proviso to Section 3, there is no agreement or arrangement restricting the
transfer of any Option Shares, or any interest therein.
A-9
(h) Fees for Financial Advisers, Brokers and Finders. Optionor
has not authorized any person to act as financial adviser, broker, finder or
other intermediary that might be entitled to any fee, commission, expense
reimbursement or other payment of any kind from any person upon the conclusion
of or in connection with any of the transactions contemplated by this Agreement.
(i) Continuing Representations and Warranties. Each of the
representations and warranties made by Optionor in any Option Document as of any
date other than the date on which Optionor first executes this Agreement shall
be true and correct in all material respects on and as of each Option Closing
Date.
Section 8. Miscellaneous Provisions.
(a) Notices. All notices, requests and other communications to
any party under any Option Document shall be in writing. Communications may be
made by telecopy or similar writing. Each communication 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.
Each communication shall be effective (1) if given by telecopy, when the
telecopy is transmitted to the proper address and the receipt of the
transmission is confirmed, (2) if given by mail, 72 hours after the
communication is deposited in the mails properly addressed with first class
postage prepaid or (3) if given by any other means, when delivered to the proper
address and a written acknowledgement of delivery is received.
(b) No Waivers; Remedies; Specific Performance.
(1) No failure or delay by Optionee in exercising any
right, power or privilege under any Option 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 Option 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 Option Documents and the transactions contemplated
hereby and thereby and the fact that Optionee would not have an
adequate remedy at law for money damages in the event that any
obligation under any Option Document is not performed in accordance
with its terms, Optionor therefore agrees that Optionee shall be
entitled to specific enforcement of the terms of each Option Document
in addition to any other remedy to which Optionee may be entitled, at
law or in equity.
(c) Amendments, Etc. No amendment, modification, termination,
or waiver of any provision of any Option Document, and no consent to any
departure by Optionor or Optionee from any provision of any Option Document,
shall be effective unless
A-10
it shall be in writing and signed and delivered by Optionor and Optionee, 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) Optionee may assign its rights and delegate its
obligations under each Option Document only pursuant to Section 4.
Optionor may assign its rights and delegate its obligations under any
Option Document only pursuant to Section 3. Any assignment or
delegation in contravention of this Section 8(d) shall be void ab
initio and shall not relieve the assigning or delegating party of any
obligation under any Option Document.
(2) The provisions of each Option Document shall be
binding upon and inure to the benefit of the parties, 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 Option Document shall be governed by
and construed in accordance with the internal laws of the State of New York.
(f) Counterparts; Effectiveness. Each Option Document may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if all signatures were on the same instrument.
(g) Severability of Provisions. Any provision of any Option
Document that is prohibited or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of the prohibition or
unenforceability without invalidating the remaining provisions of the Option
Document or affecting the validity or enforceability of the provision in any
other jurisdiction.
(h) Headings and References. Article and section headings in
any Option Document are included for the convenience of reference only and do
not constitute a part of the Option Document for any other purpose. References
to parties, express beneficiaries, articles and sections in any Option Document
are references to parties to or the express beneficiaries and sections of the
Option Document, as the case may be, unless the context shall require otherwise.
(i) Entire Agreement. The Option Documents embody the entire
agreement and understanding of Optionor and Optionee, and supersedes all prior
agreements or understandings, with respect to the subject matters of the Option
Documents.
(j) Survival. Except as otherwise specifically provided in any
Option Document, each representation, warranty or covenant of a party contained
in the Option 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
A-11
precedent to the performance by the other party or beneficiary of an obligation
under the Option Document.
(k) Exclusive Jurisdiction. Each party, and each express
beneficiary of an Option Document as a condition of its right to enforce or
defend any right under or in connection with such Option Document, (1) agrees
that any Action with respect to any Option Document or any transaction
contemplated by any Option Document shall be brought exclusively in the courts
of the State of New York or of the United States of America for the Southern
District of New York, in each case sitting in the Borough of Manhattan, State of
New York, (2) accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of those courts and (3) irrevocably waives any
objection, including, without limitation, any objection to the laying of venue
or based on the grounds of forum non conveniens, which it may now or hereafter
have to the bringing of any legal action in those jurisdictions; provided,
however, that any party may assert in an Action in any other jurisdiction or
venue each mandatory defense, third-party claim or similar claim that, if not so
asserted in such Action, may thereafter not be asserted by such party in an
original Action in the courts referred to in clause (1) above.
(l) Waiver of Jury Trial. Each party, and each express
beneficiary of an Option Document as a condition of its right to enforce or
defend any right under or in connection with such Option Document, waives any
right to a trial by jury in any Action to enforce or defend any right under any
Option Document and agrees that any Action shall be tried before a court and not
before a jury.
(m) Affiliate. Nothing contained in any Option Document shall
constitute Optionee an "affiliate" of any of the Company and its Subsidiaries
within the meaning of the Securities Act and the Exchange Act, including,
without limitation, Rule 501 under the Securities Act and Rule 13e-3 under the
Exchange Act.
(n) Non-Recourse. No recourse under any Option Document shall
be had against any "controlling person" (within the meaning of Section 20 of the
Exchange Act) of any party or the stockholders, directors, officers, employees,
agents and Affiliates of the party or such controlling persons, whether by the
enforcement of any assessment or by any legal or equitable proceeding, or by
virtue of any Regulation, it being expressly agreed and acknowledged that no
personal liability whatsoever shall attach to, be imposed on or otherwise be
incurred by such controlling person, stockholder, director, officer, employee,
agent or Affiliate, as such, for any obligations of the party under any Option
Document or for any claim based on, in respect of or by reason of such
obligations or their creation.
--------------------
[Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the date first written above in New York, New York.
OPTIONOR:
Name:
Address: 0000 Xxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Fax: 000-000-0000
With a copy to:
Xxxxxx Xxxxxx Flattau &
Klimpl, LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxx
Fax: 000-000-0000
QWEST COMMUNICATIONS INTERNATIONAL
INC.
By:
Xxxxxx X. Xxxxxxx
President and Chief Executive Officer
Address: 1000 Qwest Tower
000 Xxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxx
Fax: 000-000-0000
With a copy to:
O'Melveny & Xxxxx LLP
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Drake S. Tempest
Fax: 000-000-0000
S-1
ANNEX 1
FORM OF
TRANSFEREE AGREEMENT
[Date]
Qwest Communications International Inc.
0000 Xxxxx Xxxxx
000 Xxxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Re: Option Agreement dated as of September 13, 1998
between [Optionor] and Qwest Communications International Inc.
-------------------------------------------------------------
Ladies and Gentlemen:
__________ ("Transferor") proposes to transfer to the
undersigned __________ shares of common stock, par value $.001 per share, of
Icon CMT Corp. (the "Transferred Shares") that are subject to the Option
Agreement dated as of September 13, 1998 (the "Option Agreement") between
[Optionor] and Qwest Communications International Inc. ("Qwest"). Terms not
otherwise defined in this letter agreement have the meanings stated in the
Option Agreement.
This letter agreement is delivered to you pursuant to Section
3 of the Option Agreement. The undersigned has reviewed the Option Agreement
and, to the extent necessary to understand the meaning of terms used in the
Option Agreement that are defined in the Merger Agreement, the Merger Agreement.
The undersigned acknowledges that the Option Agreement provides that the
execution and delivery of this letter agreement by the undersigned is a
condition precedent to the validity and effectiveness of the proposed transfer.
The undersigned agrees that, if and for so long as it holds
any Transferred Shares, the undersigned:
(1) shall be deemed to be the "Optionor" with respect to such
Transferred Shares under the Option Agreement;
Annex 1 - 1
(2) shall be bound by all of the terms and provisions of the
Option Agreement with respect to such Transferred Shares, including,
without limitation, Section 5 (Power of Attorney) of the Option
Agreement;
(3) shall assume all obligations of Transferor under the
Option Agreement with respect to such Transferred Shares, including,
without limitation, Section 5 (Power of Attorney) of the Option
Agreement; and
(4) until the day after the Option Termination Date, shall not
transfer any Transferred Shares, or any interest therein, except in
accordance with the provisions of the Option Agreement.
The undersigned understands that, if the undersigned were not to agree with the
foregoing, Transferor would be forbidden by the Option Agreement from
transferring the Option Shares to the undersigned and that any such purported
transfer would be void.
Very truly yours,
[TRANSFEREE]
By:
Name:
Title:
Address:
Telecopy:
ANNEX 2
FORM OF
ASSIGNEE AGREEMENT
[Date]
[Optionor]
------------------------
------------------------
------------------------
Re: Option Agreement dated as of September 13, 1998
between [Optionor] and Qwest Communications International Inc.
-------------------------------------------------------------
Ladies and Gentlemen:
__________ ("Assignor") proposes to transfer to the
undersigned the rights of Assignor under the Option Agreement (the "Option
Agreement") dated as of September 13, 1998 and between [Optionor] and Qwest
Communications International Inc. ("Qwest") with respect to __________ shares of
common stock, par value $.001 per share, of Icon CMT Corp. (the "Shares") [,
except that Assignor does not propose to transfer to the undersigned the rights
of Assignor under Sections 2(a), _____ and _____ of the Option Agreement with
respect to the Shares]. This letter agreement is delivered to you pursuant to
Section 4 of the Option Agreement.
The undersigned has reviewed the Option Agreement and, to the
extent necessary to understand the meaning of terms used in the Option Agreement
that are defined in the Merger Agreement, the Merger Agreement. The undersigned
acknowledges that the Option Agreement states that the execution and delivery of
this letter agreement by the undersigned is a condition precedent to the
validity and effectiveness of the proposed assignment.
The undersigned agrees that, if and for so long as it holds
any rights under the Option Documents, the undersigned:
Annex 2 - 1
(1) shall be deemed to be the "Optionee" under the Option
Agreement with respect to the Shares;
(2) shall be bound by all of the terms and provisions of the
Option Agreement with respect to the Shares, including, without
limitation, Section 5 (Power of Attorney) of the Option Agreement;
(3) shall assume all obligations of Assignor under the Option
Agreement with respect to the Shares; and
(4) [shall have no rights under Sections 2(a), _____ and _____
of the Option Agreement with respect to the Shares.]
The undersigned understands that, if the undersigned were not to agree with the
foregoing, the Assignor would be forbidden by the Option Agreement from
assigning to the undersigned any of its rights under the Option Agreement and
that any such purported assignment would be void.
Very truly yours,
[ASSIGNEE]
By:
Name:
Title:
Address:
Telecopy:
ANNEX 2 - 2
EXHIBIT B
FORM OF
VOTING AGREEMENT AND PROXY
VOTING AGREEMENT AND PROXY dated as of September 13, 1998
between __________ ("Stockholder") and QWEST COMMUNICATIONS INTERNATIONAL INC.,
a Delaware corporation (together with its successors and assigns, "Qwest").
RECITALS
A. Stockholder beneficially owns __________ shares of common
stock, par value $.001 per share (the "Company Common Stock"), of Icon CMT
Corp., a Delaware corporation (the "Company") [, including __________ shares of
Company Common Stock issuable upon the exercise of Company Stock Options vested
as of the date of this Agreement]. All such shares, together with all other
shares of capital stock of the Company with respect to which Stockholder has
beneficial ownership as of the date of this Agreement or acquires beneficial
ownership on or before the Termination Date, are collectively referred to as the
"Restricted Company Shares".
B. Concurrently with the execution and delivery of this
Agreement, the Company, Qwest and Qwest Subsidiary, a Delaware corporation
("Qwest Subsidiary"), are entering into the Agreement and Plan of Merger dated
as of September 13, 1998 (as amended or modified from time to time, the "Merger
Agreement"), providing for, among other things, the merger of Qwest Subsidiary
with and into the Company (the "Merger"). Terms not otherwise defined in this
Agreement have the meanings stated in the Merger Agreement.
C. Concurrently with the execution and delivery of this Option
Agreement, Stockholder and Qwest are entering into the Option Agreement dated as
of September 13, 1998 (the "Option Agreement") to provide for, among other
things, (1) the grant by Stockholder to Qwest of an option to acquire the
Restricted Company Shares and (2) certain restrictions on the voting and the
sale or other transfer of the Restricted Company Shares.
D. As contemplated by Section 1.2(c) of the Merger Agreement,
Stockholder and Qwest desire to enter into this Agreement to provide for, among
other things, (1) the obligation of Stockholder to vote the Restricted Company
Shares to approve the Merger Agreement and the merger contemplated thereby (the
"Merger") and against any Business Combination (other than the Transactions),
(2) the grant by Stockholder to each of Qwest and Qwest Subsidiary of an
irrevocable proxy in connection therewith, (3) certain
B-1
restrictions on the voting and the sale or other transfer of the Restricted
Company Shares by Stockholder, (4) certain restrictions on Stockholder with
respect to Business Combination Transactions (other than the Transactions) with
respect to any of the Company and its Subsidiaries and (5) the obligation of
Stockholder to execute and deliver the Stockholder Agreement at or before the
Closing of the Merger. This Agreement and all other agreements, instruments and
other documents executed and delivered by Stockholder in connection with this
Agreement are collectively referred to as the "Voting Documents".
E. Stockholder acknowledges that Qwest and Qwest Subsidiary
are entering into the Merger Agreement in reliance on the representations,
warranties, covenants and other agreements of Stockholder set forth in this
Agreement and would not enter into the Merger Agreement if Stockholder did not
enter into this Agreement.
AGREEMENT
The parties agree as follows:
Section 1. Covenants of Stockholder.
(a) Voting. Until the later of the day following the
Termination Date and payment in full by the Company of all amounts then owed to
Qwest and Qwest Subsidiary pursuant to Section 9.2 of the Merger 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, Stockholder 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 the Company,
however called, or in connection with any written consent of the
stockholders of the Company, so that all Restricted Company 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) the Restricted Company Shares (A) to approve each of the
Merger Agreement and the Merger, and any action required in furtherance
thereof, (B) except as otherwise approved in writing in advance by
Qwest (which approval may be granted, withheld, conditioned or delayed
in its sole discretion), against any action or agreement that would
result in any breach of any representation, warranty, covenant or
agreement of Stockholder or the Company contained in any Transaction
Document, that would or could reasonably be expected to impede,
interfere with, prevent or materially delay the conclusion of any of
the Transactions or that would or could reasonably be expected to
materially reduce the benefits to Qwest or Qwest Subsidiary of the
Transactions, (C) except as otherwise approved in writing in advance by
Qwest (which approval may be granted, withheld, conditioned or delayed
in its sole discretion), against any
B-2
Business Combination Transaction (other than the Transactions) and (D)
except as otherwise approved in writing in advance by Qwest (which
approval may be granted, withheld, conditioned or delayed in its sole
discretion), against any amendment to the articles of incorporation or
the certificate of incorporation, as the case may be, or bylaws of the
Company.
(b) Business Combination Transactions. Until the day following
the Termination Date, Stockholder shall not do any of the following or enter
into any agreement or other arrangement (other than the Voting Documents and the
Option Documents) with respect to any of the following:
(1) enter into any agreement with respect to or take
any other action to effect any Business Combination Transaction (other
than the Transactions) with respect to any of the Company and its
Subsidiaries;
(2) solicit, initiate or encourage (including,
without limitation, by way of furnishing information) any inquiry or
the making of any proposal to any of the Company, its Subsidiaries and
its stockholders from any person (other than Qwest, Qwest Subsidiary or
any Affiliate of, or any person acting in concert with, Qwest or Qwest
Subsidiary) which constitutes, or may reasonably be expected to lead
to, a proposal with respect to a Business Combination Transaction
(other than the Transactions) with respect to any of the Company and
its Subsidiaries, or endorse any Business Combination Transaction
(other than the Transactions) with respect to any of the Company and
its Subsidiaries; or
(3) continue, enter into or participate in any
discussions or negotiations regarding any of the foregoing, or furnish
to any other person any information with respect to the business,
properties, operations, prospects or condition (financial or otherwise)
of the Company and its Subsidiaries or any of the foregoing, or
otherwise cooperate in any way with, or assist or participate in,
facilitate or encourage, any effort or attempt by any other person to
do or seek any of the foregoing;
provided that the restrictions set forth in this Section 1(b) shall not prevent
Stockholder from serving as a director of any of the Company and its
Subsidiaries and in that capacity complying with his fiduciary obligations. If
Stockholder receives a proposal with respect to a Business Combination
Transaction with respect to any of the Company and its Subsidiaries, then
Stockholder shall, by written notice delivered within 24 hours after receipt of
such proposal, inform Qwest and Qwest Subsidiary of the terms and conditions of
such proposal and the identity of the person making the a proposal with respect
to such Business Combination Transaction. Stockholder agrees that the
restrictions in this Section 1(b) are reasonable and properly required to
accomplish the purposes of this Agreement.
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(c) Stockholder Agreement. At or before the Closing,
Stockholder shall execute and deliver to Qwest a Stockholder Agreement
substantially in the form of Exhibit B to the Merger Agreement (the "Stockholder
Agreement").
Section 2. Irrevocable Proxy. Stockholder hereby revokes any
previous proxies and appoints each of Qwest and Qwest Subsidiary, with full
power of substitution, as attorney and proxy of the undersigned, (1) to attend
any and all meetings of stockholders of the Company, (2) to vote in accordance
with the provisions of Section 1 the Restricted Company Shares that the
undersigned is then entitled to vote, (3) to grant or withhold in accordance
with the provisions of Section 1 all written consents with respect to the
Restricted Company Shares that the undersigned is then entitled to vote, and (4)
to represent and otherwise to act for the undersigned in the same manner and
with the same effect as if the undersigned were personally present, with respect
to all matters subject to Section 1. This proxy shall be deemed to be a proxy
coupled with an interest, is irrevocable until the day following the Termination
Date and shall not be terminated by operation of law upon the occurrence of any
event. Stockholder authorizes such attorney and proxy to substitute any other
person to act hereunder, to revoke any substitution and to file this proxy and
any substitution or revocation with the Secretary of the Company.
Section 3. Transfer of Restricted Company Shares. Until the
day following the Termination Date, Stockholder shall not transfer any
Restricted Company Shares to any person other than Qwest; provided that
Stockholder may (a) transfer Restricted Company Shares to Qwest Subsidiary or
any Affiliate thereof in connection with the conclusion of the Transactions, (b)
transfer Restricted Company Shares to one or more members of Stockholder's
immediate family or trusts with respect to which one or more of Stockholder and
such members are the exclusive beneficiaries, (c) pledge or create security
interest in or other Liens on not more than ___________ Restricted Company
Shares in the aggregate to secure bona fide indebtedness of Stockholder owed to
one or more financial institutions, (d) any other person approved in advance in
writing by Qwest, which approval may be granted, withheld, conditioned or
delayed in the sole discretion of Qwest [and (e) sell the minimum number of
Restricted Company Shares required to be sold to satisfy the express obligations
of Stockholder under Section 7.1 of the Property Settlement and Support
Agreement dated as of August 10, 1998 between Stockholder and his wife (in the
form delivered by Stockholder to Qwest)]; provided further that it shall be a
condition to (x) each such transfer referred to in the preceding clauses (b) and
(d) that such transferee shall (1) execute and deliver to Stockholder the
Transferee Agreement in the form of Annex 1 attached hereto and (2) execute and
deliver to Qwest an agreement identical in all respects to this Agreement except
for the change in the name of Stockholder and the number of shares of Company
Common Stock beneficially owned by Stockholder and (y) each such transfer
referred to in the preceding clause (c) that such transferee shall agree that
Stockholder (and Qwest with respect to the proxy referred to in Section 2) shall
have the right to exercise all voting rights with respect to the Restricted
Company Shares so transferred and that no such transfer shall prevent, limit or
interfere with Stockholder's compliance with, or performance of its obligations
under, this Agreement, absent a default under the terms of the related pledge or
security agreement. The term "transfer" means a
B-4
sale, an assignment, a pledge, a grant, a transfer or other disposition of, or
the creation of a Lien on, any Restricted Company Shares or any interest of any
nature in any Restricted Company Shares, including, without limitation, the
beneficial ownership of such Restricted Company Shares. The terms "beneficially
own" or "beneficial ownership" with respect to any securities means having
"beneficial ownership" of such securities (as determined pursuant to Regulation
13D-G under the Exchange Act).
Section 4. Representations and Warranties of Stockholder.
Stockholder represents and warrants to Qwest as follows:
(a) Existence and Power. If Stockholder is not a natural
person, Stockholder (1) is a corporation duly incorporated, validly existing and
in good standing under the laws of the jurisdiction of its incorporation or is a
limited liability company, general partnership or limited partnership formed and
validly existing under the laws of the jurisdiction of its formation and (2) has
all necessary power and authority (as a corporation, limited liability company,
general partnership or limited partnership, as the case may be) to execute and
deliver each Voting Document to which it is or may become a party.
(b) Authorization; Contravention. The execution and delivery
by Stockholder of each Voting Document and the performance by it of its
obligations under each Voting Document have been duly authorized by all
necessary action (as a corporation, limited liability company, general
partnership or limited partnership, as the case may be), if Stockholder is not a
natural person, and do not and will not (1) contravene, violate, result in a
breach of or constitute a default under, (A) its articles of incorporation,
certificate of incorporation, operating agreement, partnership agreement, bylaws
or articles or deed of trust, as applicable, (B) any Regulation of any
Governmental Body or any decision, ruling, order or award of any arbitrator by
which Stockholder, the Restricted Company Shares or any of its other properties
may be bound or affected or (C) any agreement, indenture or other instrument to
which Stockholder is a party or by which Stockholder, the Restricted Company
Shares or any of its other properties may be bound or affected or (2) result in
or require the creation or imposition of any Lien on the Restricted Company
Shares or any of the other properties now owned or hereafter acquired by it.
(c) Approvals. No Approval of any Governmental Body or other
person is required or advisable on the part of Stockholder for (1) the due
execution and delivery by Stockholder of any Voting Document to which it is or
may become a party, (2) the conclusion of the transactions contemplated by this
Agreement and the other Voting Documents, (3) the performance by Stockholder of
its obligations under each Voting Document to which it is or may become a party
and (4) the exercise by Qwest of its rights and remedies under each Voting
Document to which Stockholder is or may become a party.
(d) Binding Effect. Each Voting Document is, or when executed
and delivered by Stockholder will be, the legally valid and binding obligation
of Stockholder, enforceable against Stockholder in accordance with its terms,
except as may be limited by
B-5
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting creditors' rights generally and general principles of
equity, including, without limitation, concepts of materiality, reasonableness,
good faith and fair dealing and the possible unavailability of specific
performance or injunctive relief, regardless of whether considered in a
proceeding in equity or at law.
(e) Ownership. Stockholder is the sole beneficial owner of all
the Restricted Company Shares, free and clear of all Liens except the Liens
created by this Agreement and the Option Agreement and Liens permitted by clause
(c) of the proviso to Section 3. As of the date of this Agreement, Stockholder
does not beneficially own any Equity Securities of the Company other than the
Restricted Company Shares. As of the time of the Company Stockholders Meeting,
Stockholder will be the sole beneficial owner of all the Restricted Company
Shares, free and clear of all Liens except the Liens created by this Agreement
and the Option Agreement and Liens permitted by clause (c) of the proviso to
Section 3.
(f) Litigation. There is no Action pending against Stockholder
or, to the knowledge of Stockholder, threatened against Stockholder 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 5. Restrictions.
(a) Legend. The following legend shall be printed, typed,
stamped or otherwise impressed on each certificate for the Restricted Company
Shares and any certificates issued in exchange therefor or upon transfer thereof
(other than to Qwest or Qwest Subsidiary), other than certificates for
Restricted Company Shares referred to in clause (c) of the proviso to Section 3:
"The shares represented by this certificate are subject to
certain voting and transfer restrictions contained in the
Voting Agreement dated as of September 13, 1998 from the
registered holder to Qwest Communications International Inc."
(b) Stop Order. Qwest may direct the Company to impose stop
orders to prevent the transfer of the Restricted Company Shares on the books of
the Company in violation of this Agreement.
Section 6. Miscellaneous Provisions.
(a) Notices. All notices, requests and other communications to
any party under any Voting Document shall be in writing. Communications may be
made by telecopy or similar writing. Each communication 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
B-6
purpose by notice to the other party. Each communication shall be effective (1)
if given by telecopy, when the telecopy is transmitted to the proper address and
the receipt of the transmission is confirmed, (2) if given by mail, 72 hours
after the communication is deposited in the mails properly addressed with first
class postage prepaid or (3) if given by any other means, when delivered to the
proper address and a written acknowledgement of delivery is received.
(b) No Waivers; Remedies; Specific Performance.
(1) No failure or delay by Qwest 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 Qwest 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,
Stockholder therefore agrees that Qwest shall be entitled to specific
enforcement of the terms of each Voting Document in addition to any
other remedy to which Qwest may be entitled, at law or in equity.
(c) Amendments, Etc.
(1) No amendment, modification, termination, or
waiver of any provision of any Voting Document, and no consent to any
departure by Stockholder or Qwest from any provision of any Voting
Document, shall be effective unless it shall be in writing and signed
and delivered by Stockholder and Qwest, and then it shall be effective
only in the specific instance and for the specific purpose for which it
is given.
(2) Qwest may by written notice delivered from time
to time to Stockholder terminate any or all of its rights under this
Agreement and the proxy granted pursuant to Section 2 of this
Agreement.
(d) Successors and Assigns; Third Party Beneficiaries.
(1) Qwest may assign any of its rights or delegate
any of its obligations under any Voting Document. Stockholder may
assign its rights and delegate its obligations under any Option
Document only pursuant to Section 3. Any assignment or delegation in
contravention of this Section 6(d) shall be void ab initio
B-7
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 to the benefit of the parties, 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 shall be governed by
and construed in accordance with the internal laws of the State of New York.
(f) Severability of Provisions. Any provision of any Voting
Document that is prohibited or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of the prohibition or
unenforceability without invalidating the remaining provisions of the Voting
Document or affecting the validity or enforceability of the provision in any
other jurisdiction.
(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, articles and sections
of the Voting Document, as the case may be, unless the context shall require
otherwise.
(h) Entire Agreement. The Voting Documents embody the entire
agreement and understanding of Stockholder and Qwest, 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) Exclusive Jurisdiction. 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, (1) agrees
that any Action with respect to any Voting Document or any transaction
contemplated by any Voting Document shall be brought exclusively in the courts
of the State of New York or of the United States of America for the Southern
District of New York, in each case sitting in the Borough of Manhattan, State of
New York, (2) accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of those courts and (3) irrevocably waives any
objection, including, without limitation, any objection to the laying of venue
or based on the grounds of forum non conveniens, which it may now or hereafter
have to the bringing of any legal action in those jurisdictions; provided,
however, that any party may assert in an Action in
B-8
any other jurisdiction or venue each mandatory defense, third-party claim or
similar claim that, if not so asserted in such Action, may thereafter not be
asserted by such party in an original Action in the courts referred to in clause
(1) above.
(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) Affiliate. Nothing contained in any Voting Document shall
constitute Qwest an "affiliate" of any of the Company and its Subsidiaries
within the meaning of the Securities Act and the Exchange Act, including,
without limitation, Rule 501 under the Securities Act and Rule 13e-3 under the
Exchange Act.
(m) Non-Recourse. No recourse under any Voting Document shall
be had against any "controlling person" (within the meaning of Section 20 of the
Exchange Act) of any party or the stockholders, directors, officers, employees,
agents and Affiliates of the party or such controlling persons, whether by the
enforcement of any assessment or by any legal or equitable proceeding, or by
virtue of any Regulation, it being expressly agreed and acknowledged that no
personal liability whatsoever shall attach to, be imposed on or otherwise be
incurred by such controlling person, stockholder, director, officer, employee,
agent or Affiliate, as such, for any obligations of the party under any Voting
Document or for any claim based on, in respect of or by reason of such
obligations or their creation.
--------------------
[Intentionally Left Blank]
B-9
IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the date first written above in New York, New York.
STOCKHOLDER:
Name:
Address: 0000 Xxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Telecopy: 000-000-0000
With a copy to:
Xxxxxx Xxxxxx Flattau & Klimpl, LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxx
Telecopy: 000-000-0000
QWEST COMMUNICATIONS INTERNATIONAL
INC.
By:
Xxxxxx X. Xxxxxxx
President and Chief Executive Officer
Address: 1000 Qwest Tower
000 Xxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxx
Fax: 000-000-0000
With a copy to:
O'Melveny & Xxxxx LLP
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Drake S. Tempest
Fax: 000-000-0000
ANNEX 1
FORM OF
TRANSFEREE AGREEMENT
[Date]
Qwest Communications International Inc.
0000 Xxxxx Xxxxx
000 Xxxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Re: Voting Agreement and Proxy dated as of September 13, 1998
between Stockholder and Qwest Communications International Inc.
--------------------------------------------------------------
Ladies and Gentlemen:
__________ ("Transferor") proposes to transfer to the
undersigned __________ shares of common stock, par value $.001 per share, of
Icon CMT Corp. (the "Transferred Shares") that are subject to the Voting
Agreement and Proxy dated as of September 13, 1998 (the "Option Agreement")
between Stockholder and Qwest Communications International Inc. ("Qwest"). Terms
not otherwise defined in this letter agreement have the meanings stated in the
Option Agreement.
This letter agreement is delivered to you pursuant to Section
3 of the Voting Agreement and Proxy. The undersigned has reviewed the Voting
Agreement and Proxy and, to the extent necessary to understand the meaning of
terms used in the Voting Agreement and Proxy that are defined in the Merger
Agreement, the Merger Agreement. The undersigned acknowledges that the Voting
Agreement and Proxy provides that the execution and delivery of this letter
agreement by the undersigned is a condition precedent to the validity and
effectiveness of the proposed transfer.
The undersigned agrees that, if and for so long as it holds
any Transferred Shares, the undersigned:
(1) shall be deemed to be the "Stockholder" with respect to
such Transferred Shares under the Voting Agreement and Proxy;
Annex 1 - 1
(2) shall be bound by all of the terms and provisions of the
Voting Agreement and Proxy with respect to such Transferred Shares,
including, without limitation, Section 2 (Irrevocable Proxy) of the
Voting Agreement and Proxy;
(3) shall assume all obligations of Transferor under the
Voting Agreement and Proxy with respect to such Transferred Shares,
including, without limitation, Section 2 (Irrevocable Proxy) of the
Voting Agreement and Proxy; and
(4) until the day following the Termination Date, shall not
transfer any Transferred Shares, or any interest therein, except in
accordance with the provisions of the Voting Agreement and Proxy.
The undersigned understands that, if the undersigned were not to agree with the
foregoing, Transferor would be forbidden by the Voting Agreement and Proxy from
transferring the Restricted Company Shares to the undersigned and that any such
purported transfer would be void.
Very truly yours,
[TRANSFEREE]
By:
Name:
Title:
Address:
Telecopy:
Annex 1 - 2
EXHIBIT D
Terms and Conditions
Qwest Credit Facility
The following is a summary of the basic terms and conditions for the proposed
financing. It does not include descriptions of all of the terms, conditions and
other provisions that are to be contained in the definitive documentation
relating to the Qwest Credit Facility and is not intended to limit the scope of
discussion and negotiation of any matters not inconsistent with the specific
matters set forth herein. Terms not otherwise defined in this summary have the
meanings stated in the Merger Agreement.
Borrower: Icon CMT Corp. (the "Company").
Lender: Qwest Communications International
Inc. ("Qwest") and its successors
and assigns.
Amount and Availability: Up to $15,000,000 (the "Facility
Amount"), of which (i) up to an
amount equal to the principal
amount of the indebtedness
outstanding under the Company
Credit Facilities, but no more
than $10,000,000, may be borrowed
on the Initial Funding Date and
(ii) up to $ 2,000,000 may be
borrowed upon five day's notice in
one advance during each calendar
month thereafter. Advances shall
be made in a minimum amount of
$500,000 and integral multiplies
thereof. The last advance must be
made on or before January 15,
2000.
Initial Funding Date: January 31, 1999.
Maturity Date: January 31, 2000.
Use of Proceeds: To (i) repay indebtedness
outstanding under the Company
Credit Facilities, (ii) pay
indebtedness owed under the Access
Agreement, (iii) acquire equipment
and (iv) pay general corporate
expenses.
Guarantors: All Subsidiaries of the Company.
Collateral: First perfected security interest
in all existing and after-
acquired real and personal
property of the Company
and its Subsidiaries, including a
pledge of 100% of the stock of all
Subsidiaries.
Negative pledge of all assets of
Company and its Subsidiaries.
Interest: Before occurrence of a Material
Adverse Condition at a floating
rate equal to the rate published
in The Wall Street Journal from
time to time as the Prime Rate
("Prime"), plus 1.00%. After
occurrence of Material Adverse
Condition at a floating rate,
Prime plus 8.00%. The term
"Material Adverse Condition" means
a material adverse effect on the
business, properties, operations,
prospects or condition (financial
or otherwise) of the Company and
its Subsidiaries, taken as a
whole.
After the occurrence and during
the continuance of an event of
default, interest shall accrue at
a rate 2% per annum in excess of
the amount otherwise then payable
and shall be payable upon demand.
Interest will be paid monthly in
arrears and upon the maturity or
termination of the Qwest Credit
Facility and computed on the basis
of a 365-/366-day year.
Warrants;
Registration Rights: 750,000 warrants issued at
execution of Merger Agreement and
exercisable at $12.00 per share
for 10 years with registration
rights. The forms of warrant and
registration rights agreement are
attached as Exhibits E and F to
the Merger Agreement,
respectively.
Prepayments: Optional prepayments of the loans
will be permitted in whole or in
part at the option of the Company
without premium or penalty.
Mandatory prepayments will be
required as follows:
Asset Sale Proceeds: the net
after-tax cash proceeds of the
sale or other disposition of any
property or assets of the Company
or any of the Subsidiaries, other
than net cash proceeds of sales or
other dispositions of inventory in
the ordinary course of business in
each case payable no later than
the first business day following
the date of receipt.
D-2
Insurance/Condemnation Proceeds:
the net cash proceeds received
under any casualty insurance
maintained by the Company or any
of the Subsidiaries or as a result
of the taking of any assets of the
Company or any of the Subsidiaries
pursuant to the power of eminent
domain or condemnation, in each
case payable no later than the
first business day following the
date of receipt.
Proceeds of Equity Offerings: the
net cash proceeds received from
the issuance of equity securities
of the Company any of its
Subsidiaries, in each case payable
no later than the first business
day following the date of receipt.
Proceeds of Debt Issuances: the
net cash proceeds received from
certain issuances of debt
securities by the Company or any
of the Subsidiaries, in each case
payable no later than the first
business day following the date of
receipt.
Prepayments shall be applied first
to outstanding loans, and
thereafter the commitment to make
additional advances shall be
reduced by an equivalent amount to
the remaining proceeds.
Documentation: The Qwest Credit Facility will be
subject to the negotiation,
execution and delivery of
definitive loan and security
documentation prepared by counsel
to Qwest and in form and substance
satisfactory to Qwest.
Representations
and Warranties: Customary and appropriate for
transactions of this type,
including, without limitation, due
organization and authorization,
enforceability, financial
condition, no material adverse
changes, title to properties,
liens, litigation, payment of
taxes, no material adverse
agreements, compliance with laws,
employee benefit liabilities,
environmental liabilities,
perfection and priority of liens
securing the Qwest Credit
Facility, full disclosure, and
incorporating by reference all
representations and warranties in
the Merger Agreement, whether or
not the Merger Agreement remains
in full force and effect.
Covenants: Customary and appropriate
affirmative and negative
covenants, including, without
limitation, to limitations
D-3
on other indebtedness, liens,
investments, guarantees,
restricted junior payments
(dividends, redemptions and
payments on subordinated debt),
mergers and acquisitions, sales of
assets, capital expenditures,
leases, transactions with
affiliates, conduct of business
and other provisions customary and
appropriate for financings of this
type, including exceptions and
baskets to be mutually agreed upon
and incorporating by reference
appropriate covenants in the
Merger Agreement, whether or not
the Merger Agreement remains in
full force and effect.
Events of Default: Customary and appropriate (subject
to customary and appropriate grace
periods), including without
limitation failure to make
payments when due, defaults under
other agreements or instruments of
indebtedness, noncompliance with
covenants, breaches of
representations and warranties,
bankruptcy, judgments in excess of
specified amounts, invalidity of
guaranties, impairment of security
interests in collateral, the
occurrence of any volitional
default under the Merger
Agreement, the termination of the
Merger Agreement pursuant to
Section 9.1(a)(5) of the Merger
Agreement, the consummation of a
Business Combination Transaction
(other than the Transactions) with
respect to the Company and its
Subsidiaries.
Conditions Precedent to Customary and appropriate for a
Initial and Subsequent transaction of this type,
Advances: including, without limitation,
customary closing documentation
including opinions of borrower's
counsel, a certificate of the
chief financial officer of Company
as to the solvency of Company in
form and substance satisfactory to
Qwest, the absence of a volitional
default under the Merger Agreement
and the absence of consummation of
a Business Combination Transaction
(other than the Transactions) with
respect to the Company and the
Subsidiaries. The absence of the
occurrence of a Material Adverse
Change is not a condition to the
initial advance or any subsequent
advance.
Governing Law: New York. The Company will submit
to the non- exclusive jurisdiction
of the federal and state courts of
the State of New York and will
waive any right to trial by jury.
D-4
Expenses and Indemnity: The Company will pay the expenses
of Qwest, including the fees and
expenses of Qwest's counsel,
whether or not the closing of the
facility occurs and shall
indemnify and hold harmless Qwest
and its directors, officers,
employees, agents, attorneys and
affiliates from and against any
losses, claims, damages,
liabilities or other expenses
relating to the Qwest Credit
Facility and pay legal and other
expenses in connection with any
investigation, litigation or other
proceeding relating thereto.
D-5
EXHIBIT E
FORM OF
ICON CMT CORP.
SERIES Q WARRANTS
to Purchase Common Stock
at $.001 Per Share
(subject to adjustment)
The Warrant represented by this certificate and the shares of Common Stock
issuable upon the exercise hereof have not been registered under the Securities
Act of 1933, as amended, and may not be offered, sold, transferred or otherwise
disposed of except in compliance with said Act. This Warrant and such shares are
also subject to the restrictions stated in a Registration Rights Agreement dated
as of September 13, 1998, a copy of which is on file at the office of the
Secretary of the Company.
Certificate Number Certificate for
_________ ______
This certificate is transferable Warrants
in __________, __________
ICON CMT CORP.
Incorporated under the laws of the State of Delaware
THIS CERTIFIES THAT, for value received, QWEST COMMUNICATIONS
INTERNATIONAL INC., a Delaware corporation, or registered assigns, is entitled
to purchase from ICON CMT CORP., a Delaware corporation (the "Company"), at any
time and from time to time after the date of this Warrant and prior to 5:00
p.m., New York time, on the Expiration Date, at the purchase price of $12.00 per
share (as such price may be adjusted pursuant to Section 7, the "Warrant Price")
the total number of shares of common stock, par value $.001 per share (the
"Common Stock"), of the Company, which is equal to the number of Warrants set
forth above (as such number of shares may be adjusted pursuant to Section 7, the
"Warrant Shares"). Terms not otherwise defined herein have the meanings stated
in Section 20.
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Section 1. Transferability of Warrants.
---------------------------
1.1 Warrant Register and Registration. The Secretary of the
Company shall keep or cause to be kept at the office of the Company books for
the registration and transfer (the "Warrant Register") of this Warrant
certificate and any other Warrant certificate issued hereunder (collectively
including the initial Warrant, the "Warrants"). The Warrants shall be numbered
and shall be registered in the Warrant Register as they are issued. The Company
and the Secretary of the Company shall be entitled to treat a person as the
owner in fact for all purposes of each Warrant registered in such person's name
(each registered owner is herein referred to as a "holder" of such Warrant) and
shall not be bound to recognize any equitable or other claim to or interest in
such Warrant on the part of any other person, and shall not be liable for any
registration of transfer of Warrants that are registered or to be registered in
the name of a fiduciary or the nominee of a fiduciary unless made with the
actual knowledge that a fiduciary or nominee is committing a breach of trust in
requesting such registration of transfer, or with such knowledge of such facts
that its participation therein amounts to bad faith.
1.2 Transfer. The Warrants shall be transferable only on the
Warrant Register upon delivery thereof duly endorsed by the holder or by his
duly authorized attorney or representative, which endorsement shall be
guaranteed by a bank or trust company located in the United States of America or
by a broker or dealer that is a member of a registered national securities
exchange, or accompanied by proper evidence of succession, assignment or
authority to transfer. In all cases of transfer by an attorney, the original
power of attorney, duly approved, or an official copy thereof, duly certified,
shall be deposited and remain with the Secretary of the Company. In case of
transfer by executors, administrators, guardians or other legal representatives,
duly authenticated evidence of their authority shall be produced, and may be
required to be deposited and remain with the Secretary of the Company in its
discretion. Upon any registration of transfer, the Company shall deliver a new
Warrant or Warrants to the persons entitled thereto.
1.3 Form of Warrant. The Warrants shall be executed on behalf of
the Company by its Chairman of the Board, President or one of its Vice
Presidents and attested to by the Secretary of the Company or an Assistant
Secretary. The signature of any of such officers on the Warrants may be manual
or facsimile.
Section 2. Exchange of Warrants. Each Warrant may be exchanged at the
---------------------
option of the holder thereof for another Warrant or Warrants entitling the
holder thereof to purchase a like aggregate number of Warrant Shares as the
Warrant or Warrants surrendered then entitle such holder to purchase. Any holder
desiring to exchange a Warrant or Warrants shall make such request in writing
delivered to the Secretary of the Company, and shall surrender, properly
endorsed, which endorsement shall be guaranteed as provided in Section 1.2
hereof if the new Warrant or Warrants are to be issued other than in the name of
the holder, the Warrant or Warrants to be so exchanged at the office of the
Secretary of the Company. Thereupon, a new Warrant or Warrants, as the case may
be, as so requested, shall be delivered to the person entitled thereto.
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Section 3. Term of Warrants; Exercise of Warrants; Distributions.
-----------------------------------------------------
3.1 Term of Warrants. Each holder shall have the right, at any
time before 5:00 p.m., New York time, on September 13, 2008, or, if such date is
not a Business Day, the next Business Day (the "Expiration Date") to purchase
from the Company the number of fully paid and nonassessable Warrant Shares that
the holder may at the time be entitled to purchase on exercise of such Warrants
at the Warrant Price in effect on such date. After the Expiration Date, any
previously unexercised Warrants shall be void, have no value and be of no
further effect.
3.2 Exercise of Warrants.
(a) A Warrant may be exercised upon surrender to the
Company, in care of the Secretary of the Company, of the Warrant to be
exercised, together with the duly completed and signed form of Election to
Purchase attached hereto, and upon payment to the Company of the Warrant Price
for the number of Warrant Shares in respect of which such Warrant is then
exercised. Payment of the aggregate Warrant Price shall be made by wire transfer
of immediately available funds in accordance with written wire transfer
instructions to be provided by the Company.
(b) Subject to Section 5, upon such surrender of the
Warrant and payment of the Warrant Price as aforesaid, the Company shall issue
and cause to be delivered with all reasonable dispatch to or upon the written
order of the holder and in such name or names as the holder may designate, a
certificate or certificates for the number of full Warrant Shares so purchased
upon the exercise of such Warrants, together with a check or cash in respect of
any fraction of a share of Common Stock otherwise deliverable upon such
exercise, as provided in Section 5. Such certificate or certificates shall be
deemed to have been issued and any person so designated to be named therein
shall be deemed to have become a holder of record of such Warrant Shares as of
the date of the surrender of such Warrants and payment of the Warrant Price;
provided that if, at the date of surrender of such Warrant and payment of such
Warrant Price, the transfer books for the Warrant Shares or other class of stock
purchasable upon the exercise of such Warrant shall be closed, the certificates
for the Warrant Shares in respect of which such Warrant is then exercised shall
be issuable as of the date on which such books shall next be opened (whether
before or after the Expiration Date) and until such date the Company shall be
under no duty to deliver any certificate for such Warrant Shares; provided,
further that the transfer books, unless otherwise required by law, shall not be
closed at any one time for a period longer than 20 days.
(c) The rights of purchase represented by the Warrant
shall be exercisable, at the election of the holders thereof, either in full or
from time to time in part. If a Warrant is exercised in respect of less than all
of the Warrant Shares purchasable on such exercise at any time prior to the
Expiration Date, a new Warrant evidencing the remaining Warrant Shares will be
issued, and the Company shall deliver the new Warrant pursuant to the provisions
of this Section 3.2.
E-3
(d) Notwithstanding any other provision hereof, if an
exercise of any portion of this Warrant is to be made in connection with a
public offering of Common Stock or a Business Combination, such exercise may at
the election of the holder be conditioned upon the conclusion of such
transaction, in which case such exercise shall not be deemed to be effective
until the conclusion of such transaction.
3.3 Distributions. If the Company shall at any time (1) issue
rights or warrants to all holders of shares of Common Stock, entitling them (for
a period not exceeding forty-five (45) days after the date of issuance) to
subscribe for or purchase shares of Common Stock at a price per share less than
the Average Market Price per share of Common Stock or to subscribe for or
purchase Derivative Securities providing for the purchase of shares of Common
Stock upon the conversion, exchange or exercise thereof at a price per share of
Common Stock less than the Average Market Price per share of Common Stock, in
each case on the record date fixed for the determination of shareholders
entitled to receive such right or warrant, or (2) declare or pay any dividend or
other distribution on the Common Stock (including, without limitation, any
distribution of other or additional stock or other securities or property or
rights or warrants to subscribe for or purchase securities of any of the Company
and its Subsidiaries by way of dividend or spin-off, reclassification,
recapitalization or similar corporate rearrangement), other than a dividend
payable in shares of Common Stock or Derivative Securities, then the Company
may, at the same time or times, pay a distribution on or in respect of each
Warrant which is equivalent to such dividend or other distribution declared or
paid on each share of Common Stock, multiplied by the number of shares of Common
Stock into which each Warrant may be exercised on the record date for such
action.
Section 4. Adjustment of Warrant Price and Number of Warrant Shares. The
--------------------------------------------------------
number and kind of securities purchasable upon the exercise of each Warrant and
the Warrant Price shall be subject to adjustment from time to time upon the
occurrence of certain events, as hereinafter described.
4.1 Mechanical Adjustments. The number of Warrant Shares
purchasable upon the exercise of each Warrant and the Warrant Price payable in
connection therewith shall be subject to adjustment from time to time as
follows:
(a) If the Company shall at any time pay a dividend on the
Common Stock (including, if applicable, shares of Common Stock held by the
Company in treasury or by a Subsidiary) in shares of the Common Stock, subdivide
its outstanding shares of Common Stock into a larger number of shares or combine
its outstanding shares of Common Stock into a smaller number of shares or
otherwise effect a reclassification or recapitalization of the Common Stock,
then, in each such case, the number of Warrant Shares thereafter issuable upon
exercise of this Warrant shall be adjusted so that this Warrant shall thereafter
be exercisable for the number of Warrant Shares equal to the number of shares of
Common Stock which the holder would have held after the occurrence of any of the
events described above had this Warrant been exercised in full immediately prior
to the occurrence of such event. An adjustment made pursuant to this paragraph
(a) shall become effective retroactively to the related record date in
E-4
the case of a dividend and shall become effective on the related effective date
in the case of a subdivision, combination, reclassification or recapitalization.
(b) Except with respect to Permitted Issuances, if the
Company or a Subsidiary shall at any time issue or sell shares of Common Stock
at a purchase price per share of Common Stock (the value of any consideration,
if other than cash, to be determined as provided in Section 4.1(h)) less than
the Average Market Price per share of Common Stock on the date of issuance or
sale (for the purpose of this paragraph (b), the "Adjustment Date"), then, in
each such case, the number of Warrant Shares thereafter issuable upon exercise
of this Warrant after such Adjustment Date shall be determined by multiplying
the number of Warrant Shares issuable upon exercise of this Warrant on the date
immediately preceding such Adjustment Date by a fraction, the numerator of which
shall be the sum of the number of shares of Common Stock outstanding on such
date of issuance or sale and the number of additional shares of Common Stock so
issued or sold, and the denominator of which shall be the sum of the number of
shares of Common Stock outstanding on such date of issuance or sale and the
number of shares of Common Stock which the aggregate offering price of the total
number of shares so offered would purchase at such Average Market Price. For the
purposes of this paragraph (b), the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury of the Company or by a
Subsidiary.
(c) Except with respect to Permitted Issuances, if the
Company or a Subsidiary shall at any time issue or sell Derivative Securities
(as defined below) providing for the purchase of shares of Common Stock upon the
conversion, exchange or exercise thereof at a price per share of Common Stock
(taking into account any consideration received by the Company upon the issuance
or sale of such Derivative Securities and any additional consideration to be
received upon the conversion, exchange or exercise thereof, the value of such
consideration, if other than cash, to be determined as provided in Section
4.1(h)) less than the Average Market Price per share of Common Stock on the date
of issuance or sale (for the purpose of this paragraph (c), the "Adjustment
Date"), then, in each such case, the number of Warrant Shares thereafter
issuable upon exercise of this Warrant after such Adjustment Date shall be
determined by multiplying the number of Warrant Shares issuable upon exercise of
this Warrant on the date immediately preceding such Adjustment Date by a
fraction, the numerator of which shall be the sum of the number of shares of
Common Stock outstanding on such Adjustment Date and the number of additional
shares of Common Stock so offered for subscription or purchase upon the
conversion, exchange or exercise of such Derivative Securities, and the
denominator of which shall be the sum of the number of shares of Common Stock
outstanding on such Adjustment Date and the number of shares of Common Stock
which the aggregate offering price of the total number of shares so offered
would purchase at such Average Market Price. Such adjustment shall be made
whenever any such Derivative Securities are issued, and shall become effective
on the date of issuance retroactive to the Adjustment Date. If all the shares of
Common Stock so offered for subscription or purchase are not delivered upon the
final conversion, exchange or exercise of such Derivative Securities, then, upon
the final conversion, exchange or exercise of such Derivative Securities, or the
expiration, cancellation or other termination thereof, the number of Warrant
Shares issuable upon exercise of this Warrant shall thereafter be readjusted to
the number of Warrant Shares which would have been
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in effect had the numerator and the denominator of the foregoing fraction and
the resulting adjustment been made based upon the number of shares of Common
Stock actually delivered upon the conversion, exchange or exercise of such
Derivative Securities, or the expiration, cancellation or other termination
thereof rather than upon the number of shares of Common Stock so offered for
subscription or purchase. If the purchase price provided for in any Derivative
Securities, the additional consideration, if any, payable upon the conversion,
exchange or exercise of any Derivative Securities or the rate at which any
Derivative Securities are convertible into or exchangeable or exercisable for
Common Stock shall change at any time (including, without limitation, at the
time of or after such conversion, exchange or exercise but excluding any change
as a result of any event that would cause the number of Warrant Shares to have
been adjusted pursuant to Section 4.1), the number of Warrant Shares issuable
upon exercise of this Warrant in effect at the time of such change shall be
readjusted to the number of Warrant Shares issuable upon exercise of this
Warrant which would have been in effect at such time had such Derivative
Securities still outstanding provided for such changed purchase price,
additional consideration or changed conversion rate, as the case may be, on the
related Adjustment Date, and such readjustment shall become effective on the
date of such change retroactive to the Adjustment Date; provided, that no such
readjustment shall have the effect of decreasing the number of Warrant Shares
issuable upon the exercise of this Warrant by an amount in excess of the amount
of the adjustment initially made with respect to the issuance or sale of the
Derivative Securities. For the purposes of this paragraph (c), the number of
shares of Common Stock at any time outstanding shall not include shares held in
the treasury of the Company or by a Subsidiary.
(d) Except with respect to Permitted Issuances, if the
Company or a Subsidiary shall at any time distribute to all the holders of
Common Stock (1) Derivative Securities providing for the purchase of shares of
Common Stock upon the conversion, exchange or exercise thereof (other than those
referred to in Section 4.1(c)) or any evidence of indebtedness or other
securities of the Company (other than Common Stock) or (2) assets (other than
cash) having a fair market value (as determined in a resolution adopted by the
Board of Directors of the Company, which shall be conclusive evidence of such
fair market value) in an amount during any 12-month period equal to more than
10% of the Market Capitalization of the Company on the day immediately preceding
the date of declaration or authorization of such distribution by the Board of
Directors of the Company (for the purpose of this paragraph (d), the "Adjustment
Date"), then, in each such case, the number of Warrant Shares issuable upon
exercise of this Warrant after the record date with respect to such distribution
shall be determined by multiplying the number of Warrant Shares issuable upon
exercise of one Warrant on the date immediately preceding such Adjustment Date
by a fraction, the numerator of which shall be the Average Market Price per
share of Common Stock on such date of declaration or authorization and the
denominator of which shall be such Average Market Price less the then fair
market value (as determined by the Board of Directors of the Company as provided
above) of the portion of the assets, rights, warrants, evidences of indebtedness
or other securities so distributed applicable to one (1) share of Common Stock.
Such adjustment shall be made whenever any such distribution is made, and shall
become effective on the date of such distribution retroactive to the Adjustment
Date.
E-6
(e) Except with respect to the payment by the Company of a
distribution on or in respect of the Warrants pursuant to Section 3.3, if the
Company shall at any time declare or pay a dividend or other distribution on the
Common Stock other than a stock dividend payable solely in shares of Common
Stock or a cash dividend paid out of current earnings (the value of any such
dividend or other distribution, if other than cash, to be determined as provided
in Section 4.1(h)), then, in each such case, the number of Warrant Shares
thereafter issuable upon exercise of this Warrant after the record date therefor
(for the purpose of this paragraph (d), the "Adjustment Date") shall be
determined by multiplying the number of Warrant Shares issuable upon exercise of
this Warrant on the date immediately preceding such Adjustment Date by a
fraction, the numerator of which shall be the sum of the number of shares of
Common Stock outstanding on such Adjustment Date and the number of additional
shares of Common Stock which the aggregate value of such dividend or
distribution would purchase at the Average Market Price per share of Common
Stock on the date immediately preceding such Adjustment Date and the denominator
of which shall be the number of shares of Common Stock outstanding on such
Adjustment Date. For the purposes of this paragraph (e), the number of shares of
Common Stock at any time outstanding shall not include shares held in the
treasury of the Company or by a Subsidiary.
(f) If the Company or a Subsidiary shall at any time
purchase shares of Common Stock at a price per share of Common Stock (the value
of any consideration, if other than cash, to be determined as provided in
Section 4.1(h)) less than the Average Market Price per share of the Common Stock
on the date of such purchase (for the purpose of this paragraph (f), the
"Adjustment Date"), then, in each such case, the number of Warrant Shares
thereafter issuable upon exercise of this Warrant after such Adjustment Date
shall be determined by multiplying the number of Warrant Shares issuable upon
exercise of this Warrant on the date immediately preceding such Adjustment Date
by a fraction, the numerator of which shall be the sum of the number of shares
of Common Stock outstanding on such Adjustment Date and the number of additional
shares of Common Stock which the aggregate purchase price of the total number of
shares so purchased would purchase at such Average Market Price and the
denominator of which shall be the sum of the number of shares of Common Stock
outstanding on such Adjustment Date and the number of shares of Common Stock so
purchased. For the purposes of this paragraph (f), the number of shares of
Common Stock at any time outstanding shall not include shares held in the
treasury of the Company or by a Subsidiary.
(g) In case of any capital reorganization or any
reclassification (other than a change in par value) of the capital stock of the
Company, or of any exchange or conversion of the Common Stock for or into
securities of another corporation, or in case of the consolidation or merger of
the Company with or into any other person (other than a merger which does not
result in any reclassification, conversion, exchange or cancellation of
outstanding shares of Common Stock) or in case of any sale or conveyance of all
or substantially all of the assets of the Company, the person formed by such
consolidation or resulting from such capital reorganization, reclassification or
merger or which acquires such assets, as the case may be, shall make provision
such that this Warrant shall thereafter be exercisable for the kind and amount
of shares of stock, other securities, cash and other property receivable upon
such capital reorganization, reclassification of capital stock, consolidation,
merger, sale or conveyance, as
E-7
the case may be, by a holder of the shares of Common Stock equal to the number
of Warrant Shares issuable upon exercise of this Warrant immediately prior to
the effective date of such capital reorganization, reclassification of capital
stock, merger, consolidation, sale or conveyance, assuming (1) such holder of
Common Stock of the Company is not a person with which the Company consolidated
or into which the Company merged or which merged into the Company or to which
such sale or transfer was made as the case may be ("constituent entity"), or an
affiliate of a constituent entity, and (2) such person failed to exercise his
rights of election, if any, as to the kind or amount of securities, cash and
other property receivable upon such capital reorganization, reclassification of
capital stock, consolidation, merger, sale or conveyance and, in any case
appropriate adjustment (as determined by the Board of Directors) shall be made
in the application of the provisions herein set forth with respect to rights and
interests thereafter of the holder, to the end that the provisions set forth
herein (including the specified changes in and other adjustments of the number
of Warrant Shares issuable upon exercise of this Warrant) shall thereafter be
applicable, as near as reasonably may be, in relation to any shares of stock or
other securities or other property thereafter deliverable upon exercise of this
Warrant. The provisions of this paragraph (g) shall similarly apply to
successive consolidations, mergers, sales or conveyances.
(h) If any shares of Common Stock or Derivative Securities
are issued or sold or deemed to have been issued or sold for cash, the
consideration received therefor shall be deemed to be the net amount received by
the Company therefor. In case any shares of Common Stock or Derivative
Securities are issued or sold for a consideration other than cash, the amount of
the consideration other than cash received by the Company shall be the fair
value of such consideration, except where such consideration consists of
marketable securities, in which case the amount of consideration received by the
Company shall be the market price thereof as of the date of receipt. In case any
shares of Common Stock or Derivative Securities are issued to the owners of the
non-surviving or selling entity in connection with any merger or consolidation
or sale, lease or conveyance of all or substantially all the assets of such
entity, or other business combination in which the Company is the surviving or
purchasing entity, the amount of consideration therefor shall be deemed to be
the fair value of such portion of the net assets and business of the
non-surviving entity as is attributable to such shares of Common Stock or
Derivative Securities, as the case may be. The fair value of any consideration
received by the Company or dividends or distributions paid by the Company, in
each case, other than cash or marketable securities, shall be determined jointly
by the Company and the holders of at least a majority of the total number of
Warrants then outstanding (the "Required Holders"). If such persons are unable
to reach agreement within a reasonable period of time, such fair value shall be
determined by an appraiser jointly selected by the Company and the Required
Holders, whose determination shall be final and binding on the Company and all
holders of the Warrants. The fees and expenses of such appraiser shall be paid
by the Company.
(i) If the Company takes a record of the holders of Common
Stock for the purpose of entitling them (1) to receive a dividend or other
distribution on the Common Stock or (2) to subscribe for or purchase shares of
Common Stock or Derivative Securities, then such record date shall be deemed to
be the date of the payment or distribution of such dividend or other
distribution or the date of issuance and sale of any shares of Common Stock
deemed to
E-8
have been issued or sold in connection therewith. If shares of Common Stock are
not so issued or sold, then the number of Warrant Shares issuable upon exercise
of this Warrant shall thereafter be readjusted to the number of Warrant Shares
which would have been in effect that such shares of Common Stock not been deemed
to have been issued.
(j) All calculations under this Section 4 shall be made to
the nearest one- thousandth of a share of Common Stock.
(k) Whenever the number of Warrant Shares issuable upon
the exercise of this Warrant is adjusted or readjusted pursuant to paragraphs
(a) through (i), inclusive, above, the Warrant Price payable upon exercise of
this Warrant shall be adjusted or readjusted by multiplying such Warrant Price
immediately prior to the related Adjustment Date by a fraction, the numerator of
which shall be the number of Warrant Shares purchasable upon the exercise of
this Warrant immediately preceding such Adjustment Date, and the denominator of
which shall be the number of Warrant Shares so purchasable immediately
thereafter; provided that no such readjustment pursuant to paragraph (c) above
with respect to the conversion, exchange or exercise, or expiration,
cancellation or other termination, of any Derivative Securities shall have the
effect of increasing the Warrant Price by an amount in excess of the amount of
the adjustment initially made in respect of the issuance or sale of such
Derivative Securities.
(l) If any event occurs of the type contemplated by the
provisions of this Section 4 but not expressly provided for by such provisions
(including, without limitation, the granting of stock appreciation rights,
phantom stock rights or other rights with equity features), then the Company's
board of directors shall make an appropriate adjustment in the number of Warrant
Shares issuable upon exercise of this Warrant and the Warrant Price so as to
protect the rights of this Warrant.
(m) For all purposes of this Warrant, the term "shares of
Common Stock" shall mean (1) the class of stock designated as the Common Stock
of the Company at the date of this Warrant or (2) any other class of stock
resulting from successive changes or reclassification of such shares consisting
solely of changes in par value, or from par value to no par value, or from no
par value to par value. In the event that at any time, as a result of an
adjustment made pursuant to paragraphs (a) through (l), inclusive, above, the
holder shall become entitled to receive any shares of the Company other than
shares of Common Stock, thereafter the number of such other shares so receivable
upon exercise of this Warrant and the Warrant Price shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Warrant Shares contained in
paragraphs (a) through (l), inclusive, above, and the provisions of Sections
4.2, 4.3, 4.4 and 4.5, inclusive, with respect to the Warrant Shares, shall
apply on like terms to any such other shares.
4.2 Time of Adjustments. Each adjustment required by Section 4.1
shall be effective as and when the event requiring such adjustment occurs.
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4.3 Notice of Adjustment. Whenever the number of Warrant Shares
purchasable upon the exercise of each Warrant or the Warrant Price is adjusted
as herein provided, the Company shall promptly mail by first class mail, postage
prepaid, to each holder a certificate of the chief financial officer of the
Company (who may be the regular accountants employed by the Company) setting
forth the number of Warrant Shares purchasable upon the exercise of each Warrant
and the Warrant Price after such adjustment, setting forth a brief statement of
the facts requiring such adjustment and setting forth the computation by which
such adjustment was made. Such certificate shall be conclusive evidence of the
correctness of such adjustment.
4.4 No Adjustment for Dividends. Except as provided in Section
4.1, no adjustment shall be made during the term of this Warrant or upon the
exercise of this Warrant in respect of any dividends declared or paid on the
Common Stock.
4.5 Statement on Warrants. Irrespective of any adjustments in the
Warrant Price or the number or kind of shares purchasable upon the exercise of
Warrants, Warrants theretofore or thereafter issued may continue to express the
same price and number and kind of shares as are stated in the initial Warrant.
Section 5. Fractional Interests. No fractional Warrant Shares shall be
---------------------
issued upon the exercise of Warrants, but in lieu thereof the Company shall pay
therefor in cash an amount equal to the product obtained by multiplying the
Closing Price per Warrant Share on the Trading Day immediately preceding the
date of exercise of the Warrant times such fraction. If more than one Warrant
shall be presented for exercise in full at the same time by the same holder, the
number of full Warrant Shares that shall be issuable upon the exercise thereof
shall be computed on the basis of the aggregate number of Warrant Shares
purchasable on exercise of the Warrants so presented.
Section 6. Taxes. The Company shall pay any and all issue and other taxes
-----
that may be payable in respect of any issue or delivery of Warrant Shares upon
the exercise of this Warrant; provided, however, that the Company shall not be
required to pay any tax or taxes that may be payable in respect of any transfer
involved in the issue or delivery of any Warrant or certificates for Warrant
Shares in a name other than that of the registered holder of such Warrant, and
no such issue or delivery shall be made unless and until the person requesting
the issuance thereof shall have paid to the Company the amount of such tax or
shall have established to the satisfaction of the Company that such tax has been
paid.
Section 7. Reservation of Warrant Shares; Valid Issuance; Purchase of
-------------------------------------------------------------
Warrants; Cancellation of Warrants.
----------------------------------
7.1 Reservation of Warrant Shares. There have been reserved, and
the Company shall at all times reserve and keep available, free from preemptive
rights, out of its authorized and unissued Common Stock, solely for the purpose
of effecting the exercise of the Warrants, the number of shares of Common Stock
that shall from time to time be sufficient to provide for the exercise of the
rights of purchase represented by the outstanding Warrants. All Warrants
surrendered in the exercise of the rights thereby evidenced shall thereupon be
cancelled by the
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Company and retired. Promptly after the Expiration Date, the Secretary of the
Company shall certify to the Company the aggregate number of Warrants then
outstanding, and thereafter no shares of Common Stock shall be subject to
reservation in respect of such Warrants. The Company shall from time to time
take all necessary actions, in accordance with the laws of the State of
Delaware, to increase the authorized amount of its Common Stock if at any time
the number of shares of Common Stock remaining unissued shall not be sufficient
to permit the exercise of all the then outstanding Warrants.
7.2 Valid Issuance. All shares of Common Stock or other
securities issued upon exercise of the Warrants will, upon issuance in
accordance with the terms hereof, be validly issued, fully paid and
nonassessable, free from all liens, charges, security interests and encumbrances
created by the Company with respect to the issuance and delivery thereof and not
subject to preemptive rights.
7.3 Purchase of Warrants by the Company. Any of the Company and
its Subsidiaries shall have the right, except as limited by law, other
agreements or herein, to purchase or otherwise acquire Warrants at such times,
in such manner and for such consideration as it may deem appropriate.
7.4 Cancellation of Warrants. If any of the Company and its
Subsidiaries shall purchase or otherwise acquire Warrants, the same shall
thereupon be cancelled by the Company and retired. The Company shall cancel any
Warrant surrendered for exchange, substitution, transfer or exercise in whole or
in part.
Section 8. Mutilated or Missing Warrants. If any Warrant shall be
--------------------------------
mutilated, lost, stolen or destroyed and the Company shall receive evidence
thereof and indemnity reasonably satisfactory to it, the Company shall issue and
deliver in exchange and substitution for and upon cancellation of the mutilated
Warrant, or in lieu of and substitution for the Warrant lost, stolen or
destroyed, a new Warrant of like tenor and representing an equivalent right or
interest. An applicant for such a substitute Warrant shall comply with such
other reasonable requirements and pay such reasonable charges as the Company may
prescribe.
Section 9. No Rights as Stockholder. Nothing contained in this Warrant or
------------------------
in any of the Warrants shall be construed as conferring upon the holders or
their transferees the right to vote or to receive dividends or to consent or to
receive notice as stockholders in respect of any meeting of stockholders for the
election of directors of the Company or any other matter, or any rights
whatsoever as stockholders of the Company.
Section 10. Notice to Holders. At any time prior to the expiration of
-----------------
the Warrants and prior to their exercise, if any of the following events shall
occur:
(1) the Company shall declare any dividend (or any other
distribution) on Common Stock other than a cash dividend or shall declare
or authorize repurchase of in excess of 10% of the then outstanding
shares of Common Stock; or
E-11
(2) the Company shall authorize the granting to all holders of
Common Stock of rights or warrants to subscribe for or purchase any
shares of Common Stock or any Derivative Securities; or
(3) the Company shall propose any capital reorganization,
recapitalization, subdivision or reclassification of Common Stock (other
than a subdivision or combination of the outstanding Common Stock, or a
change in par value, or from par value to no par value or from no par
value to par value), or any consolidation or merger to which the Company
is a party for which approval of any stockholders of the Company shall be
required, or the sale, transfer or lease of all or substantially all of
the assets of the Company; or
(4) the voluntary or involuntary dissolution, liquidation or
winding up of the Company (other than in connection with a consolidation,
merger, or sale of all or substantially all of its property, assets and
business as an entirety) shall be proposed;
then the Company shall give notice in writing of such event to the holders at
least 15 days prior to the date fixed as a record date or the date of closing
the transfer books for the determination of the stockholders entitled to such
dividend, distribution, or subscription rights, or for the determination of
stockholders entitled to vote on such proposed consolidation, merger, sale,
transfer or lease of assets, dissolution, liquidation or winding up. No failure
to give such notice or any defect therein or in the mailing thereof shall affect
the validity of the corporate action required to be specified in such notice.
Section 11. Notices. All notices, requests and other communications with
-------
respect to the Warrants shall be in writing. Communications may be made by
telecopy or similar writing. Each communication shall be given to the holder at
the address in the Warrant Register and the Company at its offices in 0000
Xxxxxx Xxxxxxxxx, Xxxxxxxxx, Xxx Xxxxxx 00000, fax: 000- 000-0000 (with a copy
to Xxxxxx Xxxxxx Flattau & Klimpl, LLP, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx,
XX 00000, attention: Xxxxxxx Xxxxxxxx, fax: 000-000-0000), or at any other
address as the holder or the Company, as the case may be, may specify for this
purpose by notice to the other party. Each communication shall be effective (1)
if given by telecopy, when the telecopy is transmitted to the proper address and
the receipt of the transmission is confirmed, (2) if given by mail, 72 hours
after the communication is deposited in the mails properly addressed with first
class postage prepaid or (3) if given by any other means, when delivered to the
proper address and a written acknowledgement of delivery is received.
Section 12. No Waivers; Remedies; Specific Performance.
------------------------------------------
(a) Prior to the Expiration Date, no failure or delay by
any holder in exercising any right, power or privilege with respect to the
Warrants 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
Warrants shall be cumulative and not exclusive of any rights or remedies
provided by law.
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(b) In view of the uniqueness of the Warrants, a holder
would not have an adequate remedy at law for money damages in the event that any
of the obligations arising under the Warrants is not performed in accordance
with its terms, and the Company therefore agrees that the holder shall be
entitled to specific enforcement of the terms of the Warrants in addition to any
other remedy to which they may be entitled, at law or in equity.
Section 13. Amendments, Etc. No amendment, modification, termination, or
---------------
waiver of any provision of a Warrant, and no consent to any departure from any
provision of the Warrant, shall be effective unless it shall be in writing and
signed and delivered by the Company and the holder, and then it shall be
effective only in the specific instance and for the specific purpose for which
it is given. The rights of the holder and the terms and provisions of this
Warrant including, without limitation, the performance of the obligations of the
Company hereunder, shall not be affected in any manner whatsoever by the terms
and provisions of any other agreement, whether entered into prior to or after
the date of this Warrant.
Section 14. Governing Law. The Warrants shall be governed by and
--------------
construed in accordance with the internal laws of the State of New York.
Section 15. Severability of Provisions. Any provision of the Warrants
----------------------------
that is prohibited or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of the prohibition or
unenforceability without invalidating the remaining provisions of the Warrants
or affecting the validity or enforceability of the provision in any other
jurisdiction.
Section 16. Headings and References. Headings in the Warrants are
-------------------------
included for the convenience of reference only and do not constitute a part of
the Warrants for any other purpose. References to parties and sections in the
Warrant are references to the parties or the sections of the Warrant, as the
case may be, unless the context shall require otherwise.
Section 17. Exclusive Jurisdiction. Each of the Company and the holder,
-----------------------
by acceptance hereof, (1) agrees that any legal action with respect to the
Warrant shall be brought exclusively in the courts of the State of New York or
of the United States of America for the Southern District of New York, in each
case sitting in the Borough of Manhattan, State of New York, (2) accepts for
itself and in respect of its property, generally and unconditionally, the
jurisdiction of those courts and (3) irrevocably waives any objection,
including, without limitation, any objection to the laying of venue or based on
the grounds of forum non conveniens, which it may now or hereafter have to the
bringing of any legal action in those jurisdictions; provided, however, that any
party may assert in a legal action in any other jurisdiction or venue each
mandatory defense, third-party claim or similar claim that, if not so asserted
in such legal action, may thereafter not be asserted by such party in an
original legal action in the courts referred to in clause (1) above.
Section 18. Waiver of Jury Trial. Each of the Company and the holder
--------------------
waives, by acceptance hereof, any right to a trial by jury in any legal action
to enforce or defend any right under the Warrants or any amendment, instrument,
document or agreement delivered, or which
E-13
in the future may be delivered, in connection with the Warrants and agrees that
any legal action shall be tried before a court and not before a jury.
Section 19. Merger or Consolidation of the Company. The Company will not
--------------------------------------
merge or consolidate with or into any other corporation unless the corporation
resulting from such merger or consolidation (if not the Company) shall expressly
assume, by supplemental agreement, the due and punctual performance and
observance of each and every covenant and condition of this Warrant to be
performed and observed by the Company.
Section 20. Definitions. For purposes of this Warrant, the following
-----------
terms have the following meanings:
(a) "Average Market Price" per share of Common Stock on
any date means the average of the daily Closing Prices for the fifteen (15)
consecutive Trading Days commencing twenty (20) Trading Days before such date.
(b) "Business Day" means any day excluding Saturday,
Sunday and any day which is a legal holiday under the laws of the State of New
York or is a day on which Banking institutions located in such state are
authorized or required by law or other governmental action to close.
(c) "Business Combination" means, whether concluded or
intended to be concluded in one transaction or series of transactions, each of
the following:
(1) the merger or consolidation of any of the Company and its
Subsidiaries with or into any person other than the Company or a
wholly-owned Subsidiary of the Company;
(2) the transfer of a substantial portion of the assets of any of
the Company and its Subsidiaries to any person or group other than the
Company or a wholly-owned Subsidiary of the Company;
(3) an acquisition from any of the Company, it Subsidiaries and
its stockholders of any shares of Common Stock or other securities of the
Company; or
(4) any tender offer (including a self-tender offer) or exchange
offer, recapitalization, liquidation, dissolution or similar transaction
involving any of the Company and its Subsidiaries;
(d) "Closing Price" means, as applied to any class of
stock on any date, the last reported sales price, regular way, per share of such
stock on such day, or if no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in each case, as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if shares of
such stock are not listed or admitted to trading on the New York Stock Exchange,
as reported in the principal consolidated transaction reporting system with
respect to securities listed on the
E-14
principal national securities exchange on which the shares of such stock are
listed or admitted to trading, or, if the shares of such stock are not listed or
admitted to trading on any national securities exchange, the last quoted sale
price or, if not so quoted, the average of the high bid and low asked prices in
the over-the-counter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotations Systems ("NASDAQ") or, if not so
reported, as reported by any similar interdealer system then in general use, or,
if on any such date the shares of stock are not quoted or reported by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the shares of stock selected by the
Board of Directors of the Company, if such stock is the Common Stock, or by
holders of at least a majority of the total number of Warrants, if such stock is
not the Common Stock. If the Common Stock is not publicly held or so listed or
publicly traded, "Closing Price" means the fair market value per share as
determined in good faith by the Board of Directors of the Company.
(e) "Derivative Securities" means securities convertible
into or exchangeable or exercisable for shares of Common Stock, rights or
warrants to subscribe for or purchase shares of Common Stock, options for the
purchase of, or calls, commitments or other claims of any character relating to,
shares of Common Stock or any securities convertible into or exchangeable for
any of the foregoing.
(f) "Market Capitalization" as of any date means the
product obtained by multiplying (A) the number of shares of Common Stock
outstanding on such date by (B) the Average Market Price per share of the Common
Stock on such date.
(g) "Permitted Issuances" means each of the following:
(1) the issuance of shares of Common Stock upon the exercise of
stock options outstanding as of September 13, 1998 and issued by the
Company to current and former employees of the Company and its
Subsidiaries;
(2) the issuance of shares of Common Stock upon the exercise of
warrants outstanding as of September 13, 1998; and
(3) the issuance of shares of Common Stock upon the exercise of
the Warrants; and
(4) the issuance and distribution by the Company of any
securities with respect to which the Company shall pay a distribution on
or in respect of the Warrants pursuant to Section 3.2.
(h) "Subsidiary" means (A) any corporation or other entity
of which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by the Company or (B) a
partnership or limited liability company in which the Company or a Subsidiary of
the Company is, at the date of determination, a general or limited
E-15
partner of such partnership or a member of such limited liability company, but
only if the Company or its Subsidiary is entitled to receive more than fifty
percent of the assets of such partnership or limited liability company upon its
dissolution.
(i) "Trading Day" means, as applied to any class of stock,
any day on which the New York Stock Exchange or, if shares of such stock are not
listed or admitted to trading on the New York Stock Exchange, the principal
national securities exchange on which the shares of such stock are listed or
admitted for trading or, if the shares of such stock are not listed or admitted
for trading on any national securities exchange, the NASDAQ or, if the shares of
such stock are not included therein, any similar interdealer system then in
general use in which the shares of such stock are included, is open for the
trading of securities generally and with respect to which information regarding
the sale of securities included therein, or with respect to which sales
information is reported, is generally available.
----------------------------
[Intentionally Left Blank]
E-16
THIS WARRANT is executed and delivered by the Company on the date
set forth below in New York, New York.
Dated: September 13, 1998 ICON CMT CORP.
Attest: By:
Name: Xxxxx X. Xxxxxx
Title: President and Chief
Executive Officer
S-1
ICON CMT CORP.
Election to Purchase
Mail Address
____________ ____________
____________ ____________
____________ ____________
The undersigned hereby irrevocably elects to exercise the right
of purchase represented by the within Warrant for and to purchase thereunder,
shares of the stock provided for herein, and requests that certificates for such
shares be issued in the name of
___________________________________________________
___________________________________________________
(Please Print Name, Address and Social Security No.)
___________________________________________________
and, if said number of shares shall not be all the shares purchasable
thereunder, that a new Warrant Certificate for the balance remaining of the
shares purchasable under the within Warrant Certificate be registered in the
name of the undersigned holder of this Warrant or his Assignee as below
indicated and delivered to the address stated below.
Date: _________ , 19 __ .
Name of holder of this Warrant or Assignee: _____________________________
(Please Print)
Address: _____________________________________
_____________________________________
Signature: _________________________________
Note: The above signature must correspond with the name as written upon the face
of this Warrant Certificate in every particular without alteration or
enlargement or any change whatever unless this Warrant has been assigned.
Signature Guaranteed: ______________________
F-19
ASSIGNMENT
(To be signed only upon assignment of Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns
and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
[ ]
____________________________________
Attorney to transfer said Warrant on the books of the Company, with full power
of substitution in the premises.
DATED: ____________ , 19 __ .
Signature of Registered holder: __________________________
Note: The above signature must correspond with the name as written upon the face
of this Warrant Certificate in every particular without alteration or
enlargement or any change whatever unless this Warrant has been assigned.
Signature Guaranteed: _________________________
F-20
EXHIBIT F
FORM OF
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT dated as of September 13, 1998
between ICON CMT CORP., a Delaware corporation (the "Company"), and QWEST
COMMUNICATIONS INTERNATIONAL INC., a Delaware corporation ("Stockholder").
RECITALS
A. Concurrently with the execution and delivery of this
Agreement, the Company, Stockholder and Qwest Subsidiary, a Delaware corporation
("Qwest Subsidiary"), are entering into the Agreement and Plan of Merger dated
as of September 13, 1998 (as amended or modified from time to time, the "Merger
Agreement"). Terms not otherwise defined in this Agreement have the meanings
stated in the Merger Agreement.
B. As contemplated by Section 1.3(c) of the Merger Agreement,
concurrently with the execution and delivery of this Agreement the Company is
issuing to Stockholder Warrants dated September 13, 1998 (the "Warrants") for
the purchase of 750,000 shares of common stock, par value $.001 per share, of
the Company (the "Company Common Stock"). Shares of Company Common Stock issued
from time to time upon the exercise of the Warrants are collectively referred to
as the "Registrable Shares".
C. Each of the Company and Stockholder desire to enter into
this Agreement to provide for, among other things, the registration under the
Securities Act of the disposition of the Registrable Shares. The execution and
delivery of this Agreement is a condition precedent to the respective
obligations of the parties on the Option Closing Date.
AGREEMENT
The parties agree as follows:
Section 1. Demand Registration Rights.
(a) From and after September 13, 1998 (the
"Commencement Date") and to and including the date that is the tenth anniversary
of the Commencement Date, subject to extension pursuant to Section 4 (as so
extended from time to time, the "Termination Date"), on one or more occasions
when the Company shall have received the written request of
F-1
Stockholder or holders of at least 100,000 Registrable Shares in the aggregate
(as such number of shares may be adjusted in the event of any change in the
capital stock of the Company by reason of stock dividends, split-ups, reverse
split-ups, mergers, recapitalizations, subdivisions, conversions, exchanges of
shares or the like) that have been acquired directly or indirectly from
Stockholder and to which rights under this Section 1 shall have been assigned
pursuant to Section 13(a) (each such person, when requesting registration under
this Section 1 or under Section 2 and thereafter in connection with any such
registration, being hereinafter referred to as a "Registering Stockholder"), the
Company shall give written notice of the receipt of such request to each
potential Registering Stockholder, and each other person known by the Company to
have rights with respect to the registration under the Securities Act of the
disposition of securities of the Company. The Company shall use commercially
reasonable efforts as promptly as practicable to include in a Registration
Statement the Registrable Shares owned by the Registering Stockholders
(collectively, "Transaction Registrable Shares") that in each case shall have
been duly specified by such Registering Stockholders by written notice received
by the Company not later than 10 Business Days after the Company shall have
given written notice to the Registering Stockholders pursuant to this Section
1(a).
(b) If the Registering Stockholders initiating a
request for registration of Registrable Shares pursuant to Section 1 (a) shall
state in such written notice that they intend to distribute the Transaction
Registrable Shares covered by their request by means of an underwritten
offering, the Company shall include such information in the written notice
delivered by the Company pursuant to Section 1(a). The Registering Stockholders
holding a majority of the Transaction Registrable Shares shall select the
managing underwriter for the offering and any additional investment bankers and
managers to be used in connection with the offering, with the consent of the
Company, which consent shall not be unreasonably withheld, conditioned or
delayed.
(c) Notwithstanding anything herein to the contrary:
(1) The Company shall not be required to prepare and file
pursuant to this Section 1 a Registration Statement including less than
100,000 Transaction Registrable Shares in the aggregate (as such number
of shares may be adjusted in the event of any change in the capital
stock of the Company by reason of stock dividends, split-ups, reverse
split-ups, mergers, recapitalizations, subdivisions, conversions,
exchanges of shares or the like);
(2) subject to the following clause (3), the Company shall not
be required to prepare and file pursuant to this Section 1 more than
two Registration Statements in the aggregate; provided that a
Registration Statement shall be deemed not to have been prepared and
filed if the same does not become effective for any reason other than
the withdrawal therefrom of 50% or more of the Transaction Registrable
Shares requested to be included in such Registration Statement or the
determination by Registering Stockholders owning 50% or more of such
Transaction Registrable Shares not to proceed with the contemplated
distribution of such Transaction Registrable Shares; and
F-2
(3) if a requested registration pursuant to this Section 1
shall involve an underwritten offering, and if the managing underwriter
shall advise the Company, and the Registering Stockholders in writing
that, in its opinion, the number of Transaction Registrable Shares
proposed to be included in the registration is so great as to adversely
affect the offering, including the price at which the Transaction
Registrable Shares could be sold, the Company shall include in the
registration the maximum number of securities which it is so advised
can be sold without the adverse effect, allocated as follows:
(A) first, all Transaction Registrable Shares duly
requested to be included in the registration, allocated pro rata among
all Registering Stockholders on the basis of the relative number of
Transaction Registrable Shares that each Registering Stockholder shall
have duly requested to be included in the registration; and
(B) second, any other securities proposed to be
registered by the Company other than for its own account, including,
without limitation, securities proposed to be registered by the Company
pursuant to the exercise by any person other than a Registering
Stockholder of a "piggy-back" right requesting the registration of
shares of Common Stock in circumstances similar to those contemplated
by Section 2;
provided that if 50% or more of the Transaction Registrable Shares
requested to be included in a registration pursuant to this Section 1
are so excluded from any registration and an investment banking firm of
recognized national standing shall advise the Company that the number
of the Transaction Registerable Shares requested to be registered, at
the time of the request and in light of the market conditions then
prevailing, did not exceed the number that would have an adverse effect
on the offering of such Transaction Registrable Shares, including the
price of which such Transaction Registrable Shares could be sold, there
shall be provided one additional registration under the preceding
clause (2)(A) in respect of each such exclusion.
Section 2. Piggy-back Registration Rights.
(a) From and after the Commencement Date to and
including the date that is the tenth anniversary of the Commencement Date, if
the Company shall determine to register or qualify by a registration statement
filed under the Securities Act and under any applicable state securities laws,
any offering of any Equity Securities of the Company, other than an offering
with respect to which a Registering Stockholder shall have requested a
registration pursuant to Section 1, the Company shall give notice of such
determination to each potential Registering Stockholder and each other person
known by the Company to have rights with respect to the registration under the
Securities Act of the disposition of securities of the Company. The Company
shall use commercially reasonable efforts as promptly as practicable to include
in a Registration Statement the Registrable Shares owned by the Registering
Stockholders (collectively, "Transaction Registrable Shares") that in each case
shall have been duly specified by such Registering Stockholders by written
notice received by the Company not later than 20 Business Days after the Company
shall have given written notice to the Registering Stockholders pursuant to this
Section 2(a).
F-3
(b) Notwithstanding anything herein to the contrary:
(1) The Company shall not be required by this Section 2 to
include any Registrable Shares in a registration statement on Form S-4
or S-8 (or any successor form) or a registration statement filed in
connection with an exchange offer or other offering of securities
solely to the then existing stockholders of the Company; and
(2) if a registration pursuant to this Section 2 involves an
underwritten offering, the Company shall select the managing
underwriter for the offering and any additional investment bankers and
managers to be used in connection with the offering, and if the
managing underwriter advises the Company in writing that, in its
opinion, the number of securities requested to be included in the
registration is so great as to adversely affect the offering, including
the price at which the securities could be sold, the Company shall
include in the registration the maximum number of securities which it
is so advised can be sold without the adverse effect, allocated as
follows:
(A) first, all securities proposed to be registered
by the Company for its own account;
(B) second, all securities proposed to be registered
by the Company pursuant to the exercise by any person other than a
Registering Stockholder of a "demand" right requesting the registration
of shares of Company Common Stock in circumstances similar to those
contemplated by Section 1; and
(C) fourth, any other securities proposed to be
registered by the Company other than for its own account, including,
without limitation, Transaction Registrable Shares duly requested to be
included in the registration and securities proposed to be registered
by the Company pursuant to the exercise by any person other than a
Registering Stockholder or an Other Registering Stockholder of a
"piggy-back" right requesting the registration of shares of Company
Common Stock in circumstances similar to those contemplated by this
Section 2, allocated pro rata among all Registering Stockholders and
such other persons on the basis of the relative number of Transaction
Registrable Shares or other securities that each Registering
Stockholder or other person has duly requested to be included in such
registration.
Section 3. Registration Provisions. With respect to each
registration pursuant to this Agreement:
(a) Notwithstanding anything herein to the contrary,
the Company shall not be required to include in any registration any of the
Registrable Shares owned by a Registering Stockholder if (1) the Company shall
deliver to the Registering Stockholder an opinion, satisfactory in form, scope
and substance to the Registering Stockholder and addressed to the Registering
Stockholder by legal counsel satisfactory to the Registering Stockholder, to the
effect that the distribution of such Registrable Shares proposed by the
Registering Stockholder is exempt from registration under the Securities Act and
all applicable state
F-4
securities laws, (2) such Registering Stockholder or any underwriter of such
Registrable Shares shall fail to furnish to the Company the information in
respect of the distribution of such Registrable Shares that may be required
under this Agreement to be furnished by the Registering Stockholder or the
underwriter to the Company or (3) if such registration involves an underwritten
offering, such Registrable Shares are not included in such underwritten offering
on the same terms and conditions as shall be applicable to the other securities
being sold through underwriters in the registration or the Registering
Stockholder fails to enter into an underwriting agreement in customary form with
the underwriter or underwriters selected for such underwritten offering.
(b) The Company shall make available for inspection
by each Registering Stockholder participating in the registration, each
underwriter of Transaction Registrable Shares owned by the Registering
Stockholder and their respective accountants, counsel and other representatives
all financial and other records, pertinent corporate documents and properties of
the Company as shall be reasonably necessary to enable them to exercise their
due diligence responsibility in connection with each registration of Transaction
Registrable Shares owned by the Registering Stockholder, and shall cause the
Company's officers, directors and employees to supply all information reasonably
requested by any such person in connection with such registration; provided that
records and documents which the Company determines, in good faith, after
consultation with counsel for the Company and counsel for the Registering
Stockholder or underwriter, as the case may be, to be confidential and which it
notifies such persons are confidential shall not be disclosed to them, except in
each case to the extent that (1) the disclosure of such records or documents is
necessary to avoid or correct a misstatement or omission in the Registration
Statement or (2) the release of such records or documents is ordered pursuant to
a subpoena or other order from a court of competent jurisdiction. Each
Registering Stockholder shall, upon learning that disclosure of any such records
or documents is sought in a court of competent jurisdiction, give notice to the
Company, and allow the Company, at the Company's expense, to undertake
appropriate action and to prevent disclosure of any such records or documents
deemed confidential.
(c) Each Registering Stockholder shall furnish, and
shall cause each underwriter of Transaction Registrable Shares owned by the
Registering Stockholder to be distributed pursuant to the registration to
furnish, to the Company in writing promptly upon the request of the Company the
information regarding the Registering Stockholder or the underwriter, the
contemplated distribution of the Transaction Registrable Shares and the other
information regarding the proposed distribution by the Registering Stockholder
and the underwriter that shall be required in connection with the proposed
distribution by the applicable securities laws of the United States of America
and the states thereof in which the Transaction Registrable Shares are
contemplated to be distributed. The information furnished by any Registering
Stockholder or any underwriter shall be certified by the Registering Stockholder
or the underwriter, as the case may be, and shall be stated to be specifically
for use in connection with the registration.
(d) The Company shall use commercially reasonable
efforts to prepare and file with the Securities and Exchange Commission the
Registration Statement, including the
F-5
Prospectus, and each amendment thereof or supplement thereto, under the
Securities Act and as required under any applicable state securities laws, on
the form that is then required or available for use by the Company to permit
each Registering Stockholder, upon the effective date of the Registration
Statement, to use the Prospectus in connection with the contemplated
distribution by the Registering Stockholder of the Transaction Registrable
Shares requested to be so registered. A registration pursuant to Section 1 shall
be effected pursuant to Rule 415 (or any similar provision then in force) under
the Securities Act if the manner of distribution contemplated by the Register
Stockholder initiating the request for such registration shall include an
offering on a delayed or continuous basis. The Company shall furnish to each
Registering Stockholder drafts of the Registration Statement and the Prospectus
and each amendment thereof or supplement thereto for its timely review prior to
the filing thereof with the Securities and Exchange Commission. If any
Registration Statement refers to any Registering Stockholder by name or
otherwise as the holder of any securities of the Company but such reference is
not required by the Securities Act or any similar federal statute then in force,
then the Registering Stockholder shall have the right to require, the deletion
of such reference. The Company shall deliver to each Registering Stockholder,
without charge, one executed copy of the Registration Statement and each
amendment or post-effective amendment thereof and one copy of each document
incorporated therein by reference. If the registration shall have been initiated
solely by the Company or shall not have been initiated by a Registering
Stockholder, Stockholder shall not be obligated to prosecute the registration,
and may withdraw the Registration Statement at any time prior to the
effectiveness thereof, if Stockholder shall determine in good faith not to
proceed with the offering of securities included in the Registration Statement.
In all other cases, Stockholder shall use commercially reasonable efforts to
cause the Registration Statement to become effective and, as soon as practicable
after the effectiveness thereof, shall deliver to each Registering Stockholder
evidence of the effectiveness and a reasonable supply of copies of the
Prospectus and each amendment thereof or supplement thereto. The Company
consents to the use by each Registering Stockholder of each Prospectus and each
amendment thereof and supplement thereto in connection with the distribution, in
accordance with this Agreement, of the Transaction Registrable Shares owned by
the Registering Stockholder. In addition, if necessary for resale by the
Registering Stockholders, the Company shall qualify or register in such states
as may be reasonably requested by each Registering Stockholder the Transaction
Registrable Shares of the Registering Stockholder that shall have been included
in the Registration Statement; provided that the Company shall not be obligated
to file any general consent to service of process or to qualify as a foreign
corporation in any state in which it is not subject to process or qualified as
of the date of the request. The Company shall advise Stockholder and each
Registering Stockholder in writing, promptly after the occurrence of any of the
following, of (1) the filing of the Registration Statement or any Prospectus, or
any amendment thereof or supplement thereto, with the Securities and Exchange
Commission, (2) the effectiveness of the Registration Statement and any
post-effective amendment thereto, (3) the receipt by the Company of any
communication from the Securities Exchange Commission with respect to the
Registration Statement or the Prospectus, or any amendment thereof or supplement
thereto, including, without limitation, any stop order suspending the
effectiveness thereof, any comments with respect thereto and any requests for
amendments or supplements and (4) the receipt by the Company of any notification
with respect to the suspension of the qualification
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of Transaction Registrable Shares owned by the Registering Stockholders for sale
in any jurisdiction or the initiation or threatening of any proceeding for such
purpose.
(e) The Company shall use commercially reasonable
efforts to cause the Registration Statement to remain effective under the
Securities Act and the Prospectus to remain current, including the filing of
necessary amendments, post-effective amendments and supplements, and shall
furnish copies of such amendments, post-effective amendments and supplements to
the Registering Stockholders, so as to permit the Registering Stockholders to
distribute the Transaction Registrable Shares owned by them in their respective
manner of distribution during their respective contemplated periods of
distribution, but in no event longer than nine consecutive months from the
effective date of the Registration Statement; provided that the period shall be
increased by the number of days that any Registering Stockholder shall have been
required by Section 4 to refrain from disposing under the registration any of
the Transaction Registrable Shares owned by the Registering Stockholder. During
such respective contemplated periods of distribution, the Company shall comply
with the provisions of the Securities Act applicable to it with respect to the
disposition of all Transaction Registrable Shares owned by the Registering
Stockholders that shall have been included in the Registration Statement in
accordance with their respective contemplated manner of disposition by the
Registering Stockholders set forth in the Registration Statement, the Prospectus
or the supplement, as the case may be.
(f) The Company shall notify each Registering
Stockholder, at any time when a prospectus with respect to the Transaction
Registrable Shares owned by the Registering Stockholders is required to be
delivered under the Securities Act, when the Company becomes aware of the
happening of any event as a result of which the Prospectus (as then in effect)
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements therein (in the case of the Prospectus or
any preliminary prospectus, in light of the circumstances under which they were
made) not misleading; and, as promptly as practicable thereafter, but subject to
Sections 4 and 5, the Company shall use commercially reasonable efforts to
prepare and file with the Securities and Exchange Commission an amendment or
supplement to the Registration Statement or the Prospectus so that, as
thereafter delivered to the purchasers of such Transaction Registrable Shares,
such Prospectus will not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. The Company also
shall notify each Registering Stockholder, when the Company becomes aware of the
occurrence thereof, of the issuance by the Securities and Exchange Commission of
an order suspending the effectiveness of the Registration Statement; and, as
promptly as practicable thereafter, but subject to Sections 4 and 5, the Company
shall use commercially reasonable efforts to obtain the withdrawal of such order
at the earliest possible moment.
(g) If requested by any Registering Stockholder or an
underwriter of Transaction Registrable Shares owned by the Registering
Stockholder, the Company shall as promptly as practicable prepare and file with
the Securities and Exchange Commission an amendment or supplement to the
Registration Statement or the Prospectus containing such
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information as the Registering Stockholder or the underwriter requests to be
included therein, including, without limitation, information with respect to the
Transaction Registrable Shares being sold by the Registering Stockholder to the
underwriter, the purchase price being paid therefor by such underwriter and
other terms of the underwritten offering of the Transaction Registrable Shares
to be sold in such offering.
(h) Each Registering Stockholder shall (1) offer to
sell or otherwise distribute Registrable Shares in reliance upon a registration
contemplated pursuant to Section 1 or 2 only if such Registrable Securities are
Transaction Registrable Securities and after the related Registration Statement
shall have been filed with the Securities and Exchange Commission, (2) sell or
otherwise distribute Registrable Shares in reliance upon such registration only
if such Registrable Securities are Transaction Registrable Securities and the
related Registration Statement is then effective under the Securities Act, (3)
not sell or otherwise distribute Transaction Registrable Securities during any
period specified in a Suspension Notice delivered to the Registering Stockholder
pursuant to Section 4 or after receiving a Termination Notice pursuant to
Section 5 (until the Registering Stockholder shall have received written notice
from the Company pursuant to Section 3(d) that the registration of such
Transaction Registrable Shares is again effective) and (4) report to the Company
distributions made by the Registering Stockholder of Transaction Registrable
Shares pursuant to the Prospectus. Each Registering Stockholder shall distribute
Transaction Registrable Shares only in accordance with the manner of
distribution contemplated by the Prospectus with respect to the Transaction
Registrable Shares owned by the Registering Stockholder. Each Registering
Stockholder, by participating in a registration pursuant to this Agreement,
acknowledges that the remedies of the Company at law for failure by the
Registering Stockholder to comply with the undertaking contained in this
paragraph (i) would be inadequate and that the failure would not be adequately
compensable in damages and would cause irreparable harm to the Company, and
therefore agrees that undertakings made by the Registering Stockholder in this
paragraph (h) may be specifically enforced.
(i) If the registration involves an underwritten
offering, the Company shall enter into an underwriting agreement in customary
form with the underwriter or underwriters selected for such underwriting and
shall deliver to each Registering Stockholder, its counsel and each underwriter
of Transaction Registrable Shares owned by the Registering Stockholders to be
distributed pursuant to such registration, the certificates, opinions of counsel
and comfort letters that are customarily delivered in connection with
underwritten offerings.
(j) Prior to sales of such Transaction Registrable
Shares, the Company shall cooperate with each Registering Stockholder and each
underwriter of Transaction Registrable Shares owned by the Registering
Stockholder to facilitate the timely preparation and delivery of certificates
(not bearing any restrictive legends) representing the Transaction Registrable
Shares to be sold under the Registration Statement, and to enable such
Transaction Registrable Shares to be in such denominations and registered in
such names as the Registering Stockholder or the underwriter may request.
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(k) The Company shall use commercially reasonable
efforts to comply with all applicable rules and regulations of the Securities
and Exchange Commission, and make available to its securityholders, as soon as
reasonably practicable, an earnings statement covering the period of at least
twelve months, but not more than eighteen months, beginning with the first
calendar month after the effective date of the Registration Statement, which
earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act.
(l) The Company shall use commercially reasonable
efforts to cause the Transaction Registrable Shares to be listed on each
national securities exchange on which Company Common Stock shall then be listed,
if any, and to be qualified for inclusion in the NASDAQ/National Market, as the
case may be, if Company Common Stock is then so qualified, and in each case if
the listing or inclusion of the Transaction Registrable Shares is then permitted
under the rules of such national securities exchange or the NASD, as the case
may be.
(m) For the purposes of this Agreement, the following
terms shall have the following meanings:
(1) "Business Day" means any day excluding Saturday, Sunday
and any day which is a legal holiday under the laws of the State of New
York or is a day on which banking institutions located in such state
are authorized or required by law or other governmental action to
close;
(2) "Prospectus" means (A) the prospectus relating to the
Transaction Registrable Shares owned by the Registering Stockholders
included in a Registration Statement, (B) if a prospectus relating to
the Transaction Registrable Shares shall be filed with the Securities
and Exchange Commission pursuant to Rule 424 (or any similar provision
then in force) under the Securities Act, such prospectus, and (C) in
the event of any amendment or supplement to the prospectus after the
effective date of the Registration Statement, then from and after the
effectiveness of the amendment or the filing with the Securities and
Exchange Commission of the supplement, the prospectus as so amended or
supplemented;
(3) "Registration Statement" means (A) a registration
statement filed by the Company in accordance with Section 3(d),
including exhibits and financial statements thereto, in the form in
which it shall become effective, the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 (or any similar
provision or forms then in force) under the Securities Act and
information deemed to be a part of such registration statement pursuant
to paragraph (b) of Rule 430A (or any similar provision then in force)
and (B) in the event of any amendment thereto after the effective date
of the registration statement, then from and after the effectiveness of
the amendment, the registration statement as so amended; and
(4) information "contained", "included" or "stated" in a
Registration Statement or a Prospectus (or other references of like
import) includes information incorporated by reference.
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Section 4. Blackout Provisions.
(a) Notwithstanding anything in this Agreement to the
contrary, by delivery of written notice to any of the Registering Stockholders
and the other holders of Registrable Shares (a "Suspension Notice"), stating
which one or more of the following limitations shall apply to the addressee of
such Suspension Notice, the Company may (1) postpone effecting a registration
under this Agreement, (2) require such addressee to refrain from disposing of
Transaction Registrable Shares under the registration or (3) require such
addressee to refrain from otherwise disposing of any Registrable Shares or other
Equity Securities of the Company owned by such addressee (whether pursuant to
Rule 144 or 144A under the Securities Act or otherwise), in each case for a
reasonable time specified in the notice but not exceeding 60 days (which period
may not be extended or renewed).
(b) The Company may postpone effecting a registration
or apply to any person specified in clauses (2) and (3) of paragraph (a) above
any of the limitations specified such clauses if (1) the Company is then taking,
or proposes to take, any of the actions referred to in Section 3(f), (2) an
investment banking firm of recognized national standing shall advise the Company
in writing that effecting the registration or the disposition by such person of
Registrable Shares or other Equity Securities of the Company, as the case may
be, would materially and adversely affect an offering of Equity Securities of
the Company the preparation of which had then been commenced or (3) the Company
is in possession of material non-public information the disclosure of which
during the period specified in such notice the Company reasonably believes would
materially and adversely affect the interests of the Company.
(c) If the Company shall take any action pursuant to
paragraph (a) above, the period during which the Registering Stockholders may
exercise their respective rights under Sections 1 and 2 shall be extended by one
day beyond the Termination Date for each day that, pursuant to this Section 4,
the Company postpones effecting a registration, requires any person to refrain
from disposing of Transaction Registrable Shares under a registration or
otherwise requires any person to refrain from disposing of Registrable Shares or
other Equity Securities of the Company.
Section 5. Termination Provisions. Notwithstanding anything in
this Agreement to the contrary, if, in the opinion of counsel for the Company,
there shall have arisen any legal impediment to the offering of Transaction
Registrable Shares pursuant to this Agreement or if any legal action or
administrative proceeding shall have been instituted or threatened or any other
claim shall have been made relating to the registration or the offer made by the
related prospectus or against any of the parties involved in the offering, the
Company may at any time upon written notice (a "Termination Notice") to each
Registering Stockholder participating in the registration (1) terminate the
effectiveness of the related Registration Statement or (2) withdraw from the
Registration Statement the Transaction Registrable Shares owned by the
Registering Stockholder; provided that, promptly after those matters shall be
resolved to the satisfaction of counsel for the Company, then, pursuant to
Section 1 or 2, as the case may be, the Company shall cause the registration of
Transaction Registrable Shares formerly covered by the Registration Statement
that were removed from registration by the action of the Company.
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Section 6. Expenses.
(a) The Company shall bear all expenses of the
following in connection with the registration of Transaction Registrable Shares
pursuant to this Agreement, whether or not any related Registration Statement
shall become effective:
(1) preparing, printing and filing each Registration Statement
and Prospectus and each qualification or notice required to be filed
under federal and state securities laws or the rules and regulations of
the National Association of Securities Dealers, Inc. (the "NASD") in
connection with a registration pursuant to Section 1;
(2) all fees and expenses of complying with federal and state
securities laws and the rules and regulations of the NASD;
(3) furnishing to each Registering Stockholder one executed
copy of the related Registration Statement and the number of copies of
the related Prospectus that may be required by Sections 3(d) and 3(e)
to be so furnished, together with a like number of copies of each
amendment, post-effective amendment or supplement;
(4) performing its obligations under Sections 3(d) and 3(j);
(5) printing and issuing share certificates, including the
transfer agent's fees, in connection with each distribution so
registered; and
(6) preparing audited financial statements required by the
Securities Act and the rules and regulations thereunder to be included
in the Registration Statement and preparing audited financial
statements for use in connection with the registration other than
audited financial statements required by the Securities Act and the
rules and regulations thereunder;
(7) internal expenses of the Company (including, without
limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties);
(8) premiums or other expenses relating to liability insurance
required by the Company or underwriters of the Registering
Stockholders;
(9) fees and disbursements of underwriters of the Registering
Stockholders customarily paid by issuers or sellers of securities;
(10) listing of the Registrable Shares on national securities
exchanges and inclusion of the Registrable Shares on the
NASDAQ/National Market; and
(11) fees and expenses of any special experts retained by the
Company in connection with the registration.
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(b) The Registering Stockholders shall bear all other
expenses incident to the distribution by the respective Registering Stockholders
of the Transaction Registrable Shares owned by them in connection with a
registration pursuant to this Agreement, including, without limitation (but
excluding the expenses referred to in paragraph (a)(8) above), the selling
expenses of the Registering Stockholders, commissions, underwriting discounts,
insurance, fees of counsel for the Registering Stockholders and their
underwriters.
Section 7. Indemnification
(a) The Company shall indemnify and hold harmless
each Registering Stockholder participating in a registration pursuant to this
Agreement, each underwriter of Transaction Registrable Shares owned by the
Registering Stockholder to be distributed pursuant to the registration, each
partner in the Registering Stockholder, the officers and directors of the
Registering Stockholder and the underwriter and each person, if any, who
controls the Registering Stockholder, any partner in the Registering Stockholder
or the underwriter within the meaning of Section 15 (or any successor provision)
of the Securities Act, and their respective successors, against all claims,
losses, damages and liabilities to third parties (or actions in respect thereof)
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in the Registration Statement or the Prospectus or
other document incident thereto or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and shall reimburse each such Registering
Stockholder and each other person indemnified pursuant to this Section 7(a) for
any legal and any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action;
provided that the Company shall not be liable in any case to the extent that any
such claim, loss, damage or liability arises out of or is based on any untrue
statement or omission based upon written information furnished to the Company by
the Registering Stockholder or the underwriter of such Transaction Registrable
Shares specifically for use in the Registration Statement or the Prospectus.
(b) Each Registering Stockholder, by participating in
a registration pursuant to this Agreement, thereby agrees to indemnify and to
hold harmless the Company and its officers and directors and each person, if
any, who controls any of them within the meaning of Section 15 (or any successor
provision) of the Securities Act, and their respective successors, against all
claims, losses, damages and liabilities to third parties (or actions in respect
thereof) arising out of or based upon any untrue statement (or alleged untrue
statement) of a material fact contained in the Registration Statement or the
Prospectus or other document incident thereto or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and shall reimburse the
Company and each other person indemnified pursuant to this Section 7(b) for any
legal and any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action;
provided that (x) this Section 7(b) shall apply only if (and only to the extent
that) the statement or omission was made in reliance upon and in conformity with
information furnished to the Company in writing by the Registering Stockholder
specifically for use in the Registration Statement or the Prospectus and (y) in
no event shall the liability of a
F-12
Registering Stockholder under this Section 7 exceed the amount of the gross
proceeds paid to the Registering Stockholder in consideration of the sale of
Transaction Registrable Shares pursuant to such registration.
(c) If any action or proceeding (including any
governmental investigation or inquiry) shall be brought, asserted or threatened
against any person indemnified under this Section 7, the indemnified person
shall promptly notify the indemnifying party in writing, and the indemnifying
party shall assume the defense of the action or proceeding, including the
employment of counsel satisfactory to the indemnified person and the payment of
all expenses. The indemnified person shall have the right to employ separate
counsel in any action or proceeding and to participate in the defense of the
action or proceeding, but the fees and expenses of that counsel shall be at the
expense of the indemnified person unless:
(1) the indemnifying party shall have agreed to pay those fees
and expenses; or
(2) the indemnifying party shall have failed to assume the
defense of the action or proceeding or shall have failed to employ
counsel reasonably satisfactory to the indemnified person in the action
or proceeding; or
(3) the named parties to the action or proceeding (including
any impleaded parties) include both the indemnified person and the
indemnifying party, and the indemnified person shall have been advised
by counsel that there may be one or more legal defenses available to
the indemnified person that are different from or additional to those
available to the indemnifying party (in which case, if the indemnified
person notifies the indemnifying party in writing that it elects to
employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of
such action or proceeding on behalf of the indemnified person; it being
understood, however, that the indemnifying party shall not, in
connection with any one action or proceeding or separate but
substantially similar or related actions or proceedings in the same
jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more
than one separate firm of attorneys at any time for the indemnified
person, which firm shall be designated in writing by the indemnified
person).
The indemnifying party shall not be liable for any settlement of any action or
proceeding effected without its written consent, but if settled with its written
consent, or if there be a final judgment for the plaintiff in any such action or
proceeding, the indemnifying party shall indemnify and hold harmless the
indemnified person from and against any loss or liability by reason of the
settlement or judgment.
(d) If the indemnification provided for in this
Section 7 is unavailable to an indemnified person (other than by reason of
exceptions provided in this Section 7) in respect of losses, claims, damages,
liabilities or expenses referred to in this Section 7, then each applicable
indemnifying party, in lieu of indemnifying the indemnified person, shall
contribute
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to the amount paid or payable by the indemnified person as a result of the
losses, claims, damages, liabilities or expenses in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and of the indemnified person on the other in connection with the
statements or omissions which resulted in the losses, claims, damages,
liabilities or expenses as well as any other relevant equitable considerations.
The relative fault of the indemnifying party on the one hand and of the
indemnified person on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified person and by these
persons' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The parties agree that it would
not be just and equitable if contribution pursuant to this Section 7(d) were
determined by pro rata allocation or by any other method of allocation that does
not take into account the equitable considerations referred to in the
immediately preceding sentence. The amount paid or payable by a person as a
result of the losses, claims, damages, liabilities and expenses shall be deemed
to include any legal or other fees or expenses reasonably incurred by the person
in connection with investigating or defending any action or claim.
Notwithstanding in the foregoing to the contrary, no Registering Stockholder or
underwriter of Transaction Registrable Shares owned by the Registering
Stockholder shall be required to contribute any amount in excess of the amount
by which (1) in the case of the Registering Stockholder, the gross proceeds paid
to the Registering Stockholder in consideration of the sale pursuant to the
registration of Transaction Registrable Shares owned by it or (2) in the case of
the underwriter, the total price at which such Transaction Registrable Shares
purchased by it and distributed to the public were offered to the public
exceeds, in any such case, the amount of any damages that the Registering
Stockholder or underwriter, as the case may be, has otherwise been required to
pay by reason of any untrue or alleged untrue statement or omission. No person
guilty of fraudulent representation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who is not
guilty of such fraudulent misrepresentation.
(e) Each Registering Stockholder participating in a
registration pursuant to Section 1 shall cause each underwriter of any
Transaction Registrable Shares owned by the Registering Stockholder to be
distributed pursuant to the registration to agree in writing on terms reasonably
satisfactory to the Company to indemnify and to hold harmless the Company and
its officers and directors and each person, if any, who controls any of them
within the meaning of Section 15 (or any similar provision then in force) of the
Securities Act, and their respective successors, against all claims, losses,
damages and liabilities to third parties (or actions in respect thereof) arising
out of or based upon any untrue statement (or alleged untrue statement) of a
material fact contained in the Registration Statement or the Prospectus or other
document incident thereto or any omission (or alleged omission) to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, and to reimburse the Company and each other
person indemnified pursuant to the agreement for any legal or any other expense
reasonably incurred in connection with investigating or defending any claim,
loss, damage, liability or action; provided that the agreement shall apply only
if (and only to the extent that) the statement or omission was made in reliance
upon and in conformity with
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information furnished to the Company in writing by the underwriter specifically
for use in the Registration Statement or the Prospectus.
Section 8. Transfer Restrictions.
(a) Stockholder acknowledges that, the Company has
issued the Warrants and, upon the exercise thereof, will issue the Registrable
Shares to Stockholder pursuant to an exemption from registration under the
Securities Act. Stockholder represents that (1) it has acquired the Warrants and
will acquire Registrable Shares for investment and without any view toward
distribution of any of Registrable Securities to any other person, (2) it will
not sell or otherwise dispose of the Warrants or Registrable Shares except in
compliance with the registration requirements or exemption provisions under the
Securities Act and (3) before any sale or other disposition of any of the
Warrants or Registrable Shares other than in a sale registered under the
Securities Act or pursuant to Rule 144 or 144A (or any similar provisions then
in force) under the Securities Act (unless the Company shall have been advised
by counsel that the sale does not meet the requirements of Rule 144 or Rule
144A, as the case may be, for such sale), it will deliver to the Company an
opinion of counsel, in form and substance reasonably satisfactory to the
Company, to the effect that such registration is unnecessary.
(b) (1) Except as provided to the contrary in this
Section 8, each instrument or certificate evidencing or representing any
Registrable Shares, and any certificate issued in exchange therefor or upon
conversion, exercise or transfer thereof, shall bear legends substantially in
the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH SAID.
ACT THE ARE ALSO SUBJECT TO THE RESTRICTIONS STATED
IN A REGISTRATION RIGHTS AGREEMENT DATED AS OF
SEPTEMBER 13, 1998, A COPY OF WHICH IS ON FILE AT THE
OFFICE OF THE SECRETARY OF THE COMPANY."
(2) Except as provided to the contrary in this
Section 8, each instrument or certificate evidencing or representing any
Warrant, and any certificate issued in exchange therefor or upon conversion,
exercise or transfer thereof, shall bear legends substantially in the following
form:
"THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE
SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE
HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED,
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN
COMPLIANCE WITH SAID ACT. THIS WARRANT AND SUCH
SHARES ARE ALSO SUBJECT TO THE RESTRICTIONS
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STATED IN A REGISTRATION RIGHTS AGREEMENT DATED AS OF
SEPTEMBER 13, 1998, A COPY OF WHICH IS ON FILE AT THE
OFFICE OF THE SECRETARY OF THE COMPANY."
(c) If the holder of any Warrant or any Registrable
Shares shall request in writing that the Company remove any or all of the
legends stated in Section 8(b) from the instruments or certificates evidencing
or representing such Registrable Shares, then, as soon as practicable following
the later of the date of receipt of such request and the date of receipt of such
instruments or certificates bearing such legends, the Company shall issue and
deliver to the registered owner of such Registrable Shares or its registered
transferee instruments or certificates evidencing or representing such Warrant
or such Registrable Shares without such legends if either (1) such substitute
instruments or certificates are issued in connection with a sale that is
registered under the Securities Act or (2) (A) one year shall have elapsed from
the date of the consummation of the Merger and the provisions of Rule 145(d)(2)
under the Securities Act are then available to the holder or (B) Stockholder has
received either an opinion of counsel, which opinion and counsel shall be
reasonably satisfactory to Stockholder, or a "no-action" letter obtained by the
holder from the staff of the Securities and Exchange Commission, to the effect
that the restrictions imposed by Rule 144 and Rule 145 under the Securities Act
no longer apply to such shares.
Section 9. Exempt Sales.
(a) The Company shall make all filings with the
Securities and Exchange Commission required by paragraph (c) of Rule 144 (or any
similar provision then in force) under the Securities Act to permit the sale of
Registrable Shares by any holder thereof (other than an Affiliate of the
Company) to satisfy the conditions of Rule 144 (or any similar provision then in
force). The Company shall, promptly upon the written request of the holder of
Registrable Shares, deliver to such holder a written statement as to whether the
Company has complied with all such filing requirements.
(b) Prior to sales of Registrable Shares proposed to
be sold pursuant to an exemption from the registration requirements of the
Securities Act, the Company shall, subject to Section 8(c), cooperate with
Principal Stockholder and each other holder of Purchaser Securities to
facilitate the timely preparation and delivery of certificates (not bearing any
restrictive legends) representing such Purchaser Securities.
Section 10. Merger, Consolidation, Exchange, Etc. In the
event, directly or indirectly, (1) the Company shall merge with and into, or
consolidate with, any other person or (2) any person shall merge with and into,
or consolidate, the Company and the Company shall be the surviving corporation
of such merger or consolidation and, in connection with such merger or
consolidation, all or part of the Registrable Shares shall be changed into or
exchanged for stock or other securities of any other person, then, in each such
case, proper provision shall be made so that such other person shall be bound by
the provisions of this Agreement and the term the "Company" shall thereafter be
deemed to refer to such other person.
F-16
Section 11. Notices. All notices, requests and other
communications to any party under this Agreement shall be in writing.
Communications may be made by telecopy or similar writing. Each communication
shall be given to the party at its address stated on the signature pages of this
Agreement or at any other address as the party may specify for this purpose by
notice to the other party. Each communication shall be effective (1) if given by
telecopy, when the telecopy is transmitted to the proper address and the receipt
of the transmission is confirmed, (2) if given by mail, 72 hours after the
communication is deposited in the mails properly addressed with first class
postage prepaid or (3) if given by any other means, when delivered to the proper
address and a written acknowledgement of delivery is received.
Section 12. No Waivers; Remedies. No failure or delay by any
party in exercising any right, power or privilege under this Agreement 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 this Agreement
shall be cumulative and not exclusive of any rights or remedies provided by law.
Section 13. Amendments, Etc. No amendment, modification,
termination or waiver of any provision of this Agreement, and no consent to any
departure by a party to this Agreement from any provision of this Agreement,
shall be effective unless it shall be in writing and signed and delivered by the
other party to this Agreement, and then it shall be effective only in the
specific instance and for the specific purpose for which it is given.
Section 14. Successors and Assigns.
(a) Each holder of Registrable Shares may assign to
any transferee of Registrable Shares its rights and delegate to the transferee
its obligations under this Agreement including, without limitation, the rights
of assignment pursuant to this Section 14; provided that such transferee
assignee shall accept such rights and assume such obligations for the benefit of
the Company by written instrument, in form and substance reasonably satisfactory
to the Company. Thereafter, without any further action by any person, all
references in this Agreement to the holder of such Registrable Shares, and all
comparable references, shall be deemed to be references to the transferee, and
the transferor shall be released from each obligation or liability under this
Agreement with respect to the Registrable Shares so transferred.
(b) The provisions of this Agreement shall be binding
upon and inure to the benefit of the parties to this Agreement, the express
beneficiaries thereof and their respective permitted heirs, executors, legal
representatives, successors and assigns, and no other person.
Section 15. Governing Law. This Agreement shall be governed
by and construed in accordance with the internal laws of the State of New York.
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Section 16. Counterparts; Effectiveness. 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.
Section 17. Severability of Provisions. Any provision of this
Agreement that is prohibited or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of the prohibition or
unenforceability without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of the provision in any other
jurisdiction.
Section 18. Headings and References. Section headings in this
Agreement are included for the convenience of reference only and do not
constitute a part of this Agreement for any other purpose. References to
parties, express beneficiaries and sections in this Agreement are references to
the parties to or the express beneficiaries and sections of this Agreement, as
the case may be, unless the context shall require otherwise.
Section 19. Entire Agreement. This Agreement embodies the
entire agreement and understanding of the parties and supersedes all prior
agreements or understandings with respect to the subject matters of this
Agreement.
Section 20. Survival. Except as otherwise specifically
provided in this Agreement, each representation, warranty or covenant of each
party contained in to this Agreement shall remain in full force and effect,
notwithstanding any investigation or notice to the contrary or any waiver by the
other party of a related condition precedent to the performance by such other
party of an obligation under this Agreement.
Section 21. Exclusive Jurisdiction. Each party, and each
express beneficiary of this Agreement as a condition of its right to enforce or
defend any right under or in connection with this Agreement, (1) agrees that any
Action with respect to this Agreement or any transaction contemplated by this
Agreement shall be brought exclusively in the courts of the State of New York or
of the United States of America for the Southern District of New York, in each
case sitting in the Borough of Manhattan, State of New York, (2) accepts for
itself and in respect of its property, generally and unconditionally, the
jurisdiction of those courts and (3) irrevocably waives any objection,
including, without limitation, any objection to the laying of venue or based on
the grounds of forum non conveniens, which it may now or hereafter have to the
bringing of any legal action in those jurisdictions; provided, however, that any
party may assert in an Action in any other jurisdiction or venue each mandatory
defense, third-party claim or similar claim that, if not so asserted in such
Action, may thereafter not be asserted by such party in an original Action in
the courts referred to in clause (1) above.
Section 22. Waiver of Jury Trial. Each party waives any right
to a trial by jury in any Action to enforce or defend any right under this
Agreement or any amendment, instrument, document or agreement delivered, or
which in the future may be delivered, in connection with this Agreement and
agrees that any Action shall be tried before a court and not before a jury.
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Section 23. Affiliate. Nothing contained in this Agreement
shall constitute Stockholder or any Registering Stockholder an "affiliate" of
any of the Company and its Subsidiaries within the meanings of the Securities
Act or the Exchange Act, respectively, including, without limitation, Rule 501
under the Securities Act and Rule 13e-3 under the Exchange Act.
Section 24. Non-Recourse. No recourse under this Agreement
shall be had against any "controlling person" (within the meaning of Section 20
of the Exchange Act) of any party or the stockholders, directors, officers,
employees, agents and Affiliates of such party or such controlling persons,
whether by the enforcement of any assessment or by any legal or equitable
proceeding, or by virtue of any Regulation, it being expressly agreed and
acknowledged that no personal liability whatsoever shall attach to, be imposed
on or otherwise be incurred by such controlling person, stockholder, director,
officer, employee, agent or Affiliate, as such, for any obligations of such
party under this Agreement or for any claim based on, in respect of or by reason
of such obligations or their creation.
Section 25. No Inconsistent Agreements. The Company shall not
enter into, or amend or otherwise modify, any agreement to afford to any person
other than Stockholder and the holders of Registrable Shares rights with respect
to the registration under the Securities Act of shares of Company Common Stock
or other securities or the inclusion of any such shares or other securities in
any registration that are inconsistent with, or conflict with, the rights of
Stockholder and the holders of Registrable Shares under this Agreement,
including, without limitation, Sections 1 and 2.
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[Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the date first written above in New York, New York.
ICON CMT CORP.
By:
Xxxxx X. Xxxxxx
President and Chief Executive Officer
Address: 0000 Xxxxxx Xxxxxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
Fax: 000-000-0000
With a copy to:
Xxxxxx Xxxxxx Flattau & Klimpl, LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxx
Fax: 000-000-0000
S-1
QWEST COMMUNICATIONS INTERNATIONAL
INC.
By:
Xxxxxx X. Xxxxxxx
President and Chief Executive Officer
Address: 1000 Qwest Tower
000 Xxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxx
Fax: 000-000-0000
With a copy to:
O'Melveny & Xxxxx LLP
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Drake S. Tempest
Fax: 000-000-0000
