Execution Copy
AGREEMENT AND PLAN OF MERGER
AND REORGANIZATION
DATED AS OF JULY 21, 1999
BY AND BETWEEN
FIRSTLINK COMMUNICATIONS, INC.
AND
USOL HOLDINGS, INC.
TABLE OF CONTENTS
ARTICLE/SECTION HEADING PAGE
ARTICLE I DEFINITIONS..........................................................2
1.1 Definitions............................................................2
ARTICLE II THE MERGER.........................................................10
2.1 Merger; Effective Time................................................10
2.2 Closing...............................................................10
2.3 Effect of the Merger..................................................10
2.4 Articles of Incorporation; By-laws....................................11
2.5 Directors and Officers................................................11
2.6 Effect on Capital Stock...............................................11
2.7 Exchange of Certificates..............................................12
2.8 Stock Transfer Books..................................................14
2.9 Dissenting Shares.....................................................14
2.10 No Further Ownership Rights in USOL Stock............................14
2.11 Lost, Stolen or Destroyed Certificates...............................15
2.12 Tax and Accounting Consequences......................................15
2.13 Adjustments..........................................................15
ARTICLE III REPRESENTATIONS AND WARRANTIES OF FLCI............................15
3.1 Organization..........................................................15
3.2 Capitalization........................................................16
3.3 SEC Filings...........................................................16
3.4 Qualification in Foreign Jurisdictions................................17
3.5 Authority Relative to this Agreement..................................17
3.6 No Conflict; Required Filings and Consents............................17
3.7 Compliance with Laws; Permits.........................................18
3.8 Financial Statements..................................................18
3.9 Absence of Certain Changes or Events..................................19
3.10 Material Contracts...................................................19
3.11 Accounts Receivable..................................................20
3.12 No Undisclosed Liabilities...........................................20
3.13 Absence of Litigation................................................21
3.14 Employee Matters.....................................................21
3.15 Labor Matters........................................................22
3.16 Restrictions on Business Activities..................................22
3.17 Real Property........................................................22
3.18 Equipment and Vehicles...............................................23
3.19 Inventories..........................................................23
3.20 Taxes................................................................23
3.21 Environmental Matters................................................24
3.22 Brokers..............................................................25
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3.23 Interested Party Transactions........................................25
3.24 Insurance Policies...................................................25
3.25 Vote Required........................................................25
3.26 Other Negotiations...................................................26
3.27 Full Disclosure......................................................26
3.28 Anti-takeover Law....................................................26
3.29 Intellectual Property................................................26
3.30 Absence of Certain Business Practices................................28
3.31 Territorial Restrictions.............................................28
3.32 Year 2000 Compliance.................................................28
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF USOL.............................28
4.1 Organization..........................................................28
4.2 Capitalization........................................................29
4.3 Qualification in Foreign Jurisdictions................................30
4.4 Authority Relative to this Agreement..................................30
4.5 No Conflict; Required Filings and Consents............................30
4.6 Brokers...............................................................31
4.7 Other Negotiations....................................................31
4.8 Full Disclosure.......................................................31
4.9 Lockup Agreement......................................................32
4.10 Incorporation of Representations and Warranties By Reference.........33
ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER..............................33
5.1 Conduct of Business by USOL and FLCI Pending the Merger...............33
5.2 No Solicitation by USOL or FLCI.......................................35
ARTICLE VI ADDITIONAL AGREEMENTS..............................................36
6.1 Proxy Statement.......................................................36
6.2 FLCI Stockholders'Meeting.............................................37
6.3 Access to Information; Confidentiality................................37
6.4 Consents, Approvals...................................................38
6.5 Stock Options.........................................................38
6.6 Warrants..............................................................39
6.7 Notification of Certain Matters.......................................39
6.8 Public Announcements..................................................40
6.9 Application For Nasdaq Approval.......................................40
6.10 Delivery of Additional Filings.......................................40
6.11 Accountant's Comfort Letters.........................................40
6.12 Indemnification; Directors'and Officers'Insurance....................40
6.13 Employee Benefits....................................................41
6.14 Stockholder Litigation...............................................42
6.15 Accredited Investors.................................................42
ARTICLE VII CONDITIONS TO THE MERGER..........................................42
7.1 Conditions to Obligation of Each Party to Effect the Merger...........42
7.2 Additional Conditions to Obligations of FLCI..........................43
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7.3 Additional Conditions to Obligation of USOL...........................44
ARTICLE VIII TERMINATION......................................................45
8.1 Termination...........................................................45
8.2 Certain Actions Prior to Termination..................................47
8.3 Effect of Termination.................................................48
8.4 Fees and Expenses.....................................................49
ARTICLE IX ARBITRATION; CONSENT TO JURISDICTION...............................50
9.1 Submission to Jurisdiction............................................50
9.2 Waiver of Immunity and Inconvenient Forum.............................51
9.3 Arbitration Procedures................................................51
9.4 Final Arbitration Decisions...........................................51
9.5 Claims for Unpaid Balance.............................................51
ARTICLE X GENERAL PROVISIONS..................................................52
10.1 Attorney's Fees......................................................52
10.2 Effectiveness of Representations, Warranties and Agreements;
Knowledge, Etc.......................................................52
10.3 Notices..............................................................52
10.4 Amendment............................................................54
10.5 Waiver...............................................................54
10.6 Severability.........................................................54
10.7 Assignment...........................................................55
10.8 Parties in Interest..................................................55
10.9 Failure or Indulgence Not Waiver; Remedies Cumulative................55
10.10 Governing Law........................................................55
10.11 Counterparts.........................................................56
10.12 Captions.............................................................56
10.13 Time.................................................................56
ATTACHMENTS TO AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
SCHEDULES:
Schedule 1.1 -- USOL Permitted Liens
Schedule 2.5(a) -- Directors of Surviving Corporation
Schedule 3.1 -- FLCI Investments and Extensions of Credit
Schedule 3.2 -- FLCI Stock Options, Warrants, and Registration Rights
Schedule 3.4 -- FLCI Qualification in Foreign Jurisdictions
Schedule 3.5 -- FLCI Stockholder Consents
Schedule 3.6(a) -- FLCI Conflicts, Required Filings and Consents
Schedule 3.6(b) -- Requirements of State Government Authorities
Schedule 3.7 -- Permits of FLCI
Schedule 3.10(a) -- FLCI Material Contracts
Schedule 3.12 -- Material Liabilities not on FLCI Financial Statements
Schedule 3.14(a) -- FLCI Employee Benefit Plans
EX 99.4 - iii
Schedule 3.14(b) -- Certain Employment Agreements
Schedule 3.14(c) -- Outstanding Options and Option Holders
Schedule 3.17(a) -- Legal Descriptions of FLCI Leased Real Property
Schedule 3.18-1 -- FLCI Equipment
Schedule 3.18-2 -- FLCI Personal Property Leases
Schedule 3.20(a) -- Certain Tax Matters
Schedule 3.23 -- FLCI Interested Party Transactions
Schedule 3.29(a) -- All FLCI Intellectual Property Assets
Schedule 3.29(b) -- Intellectual Property Infringements by Third Parties
Schedule 3.29(c) -- FLCI Intellectual Property Licensing Agreements
Schedule 3.29(d) -- Intellectual Property Litigation
Schedule 3.29(e) -- Filing Offices Where FLCI Intellectual Property
Assets are Registered
Schedule 4.1(b) -- USOL Subsidiaries
Schedule 4.2(a) -- USOL Stock Options, Warrants
Schedule 4.2(b) -- Terms of Senior Note Commitment
Schedule 4.2(c) -- USOL Debt Obligations
Schedule 4.3 -- USOL Qualification in Foreign Jurisdictions
Schedule 4.5(b) -- USOL Required Consents, Approvals and Permits
Schedule 4.6 -- USOL Brokers
Schedule 4.9 -- Permitted Transfers
Schedule 5.1(g) -- Normal Salary/Wage Increases
EXHIBITS:
Exhibit 1.1(a) -- Form of TSD Asset Purchase Agreement
Exhibit 1.1(b) -- Form of USOC Asset Purchase Agreement
Exhibit 2.6(b)-1 -- Form of Certificate of Designations of Preferences,
Limitations and Relative Rights of USOL Series A
Convertible Preferred Stock
Exhibit 2.6(b)-2 -- Form of Certificate of Designations of Preferences,
Limitations and Relative Rights of USOL Series B
Convertible Preferred Stock
Exhibit 2.6(c)-1 -- Form of USOL Other Warrants
Exhibit 2.6(c)-2 -- Form of USOL TSD Warrants
Exhibit 7.2(f) -- Opinion of Jenkens & Xxxxxxxxx
Exhibit 7.3(f) -- Opinion of Xxxxxx Xxxxxxx & Stone, LLC
EX 99.4 - iv
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION, dated as of July 21,
1999 (this "AGREEMENT"), is by and between FIRSTLINK COMMUNICATIONS, INC., an
Oregon corporation ("FLCI"), and USOL HOLDINGS, INC., a Delaware corporation
("USOL").
W I T N E S S E T H:
WHEREAS, each of the Boards of Directors of FLCI and USOL has determined
that it is advisable and in the best interests of the respective stockholders
for FLCI and USOL to enter into a strategic business combination upon the terms
and subject to the conditions set forth herein; and
WHEREAS, USOL, Inc., a Delaware corporation and a wholly-owned
subsidiary of USOL ("USOL SUB"), has acquired substantially all of the assets
and assumed substantially all of the remaining liabilities of US Online
Communications, Inc., a Delaware corporation ("USOC"), and
XxxXxxxxxxxXxxx.xxx,Inc., a Delaware corporation and a wholly-owned subsidiary
of USOL Sub ("TRC"), has acquired certain of the assets of the Tenant Services
Division ("TSD") of GMAC Commercial Mortgage Corporation, a California
corporation ("GMAC-CM"); and
WHEREAS, in furtherance of such combination, each of the Boards of
Directors of FLCI and USOL has approved the merger of USOL with and into FLCI
(the "MERGER") in accordance with the applicable provisions of the Oregon Law
(as defined herein) and the Delaware Law (as defined herein) and upon the terms
and subject to the conditions set forth herein; and
WHEREAS, concurrently with the execution and delivery of this Agreement
and as a condition and inducement to each of USOL's and FLCI's willingness to
enter into this Agreement, certain stockholders of FLCI have entered into
agreements with USOL, dated as of the date of this Agreement ("STOCKHOLDER
SUPPORT AGREEMENTS"), pursuant to which such stockholders have agreed, among
other things, to vote all voting securities of FLCI beneficially owned by them
in favor of adoption of the Merger; and
WHEREAS, FLCI and USOL intend this Agreement to be a plan of
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "CODE"), and the regulations thereunder;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, FLCI and USOL hereby agree as
follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. As used in this Agreement, the following terms have the
following meanings:
"ACQUISITION PROPOSAL" has the meaning set forth in Section 5.2(a).
"ACTION" has the meaning set forth in Section 7.2(d).
"AFFILIATE" means, with respect to a Person, a Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, the first mentioned Person; including, without
limitation, any partnership or joint venture in which such Person (either alone,
or through or together with any other subsidiary) has, directly or indirectly,
an interest of ten percent or more.
"AGREEMENT" means this Agreement and includes exhibits and schedules
delivered pursuant to the terms of this Agreement.
"ARBITRATION NOTICE" has the meaning set forth in Section 9.3(b).
"ARBITRATION PANEL" has the meaning set forth in Section 9.3(a).
"ARTICLES OF MERGER" means the articles of merger filed in connection
with the Merger with the Secretary of State of the State of Oregon pursuant to
Section 60.494 of the Oregon Law.
"BALANCE SHEET DATE" means May 31, 1999.
"BENEFICIAL OWNER" means, with respect to any shares of stock, a Person
who shall be deemed to be the beneficial owner of such shares (i) which such
Person or any of its Affiliates or associates (as such term is defined in Rule
12b-2 of the Exchange Act) beneficially owns, directly or indirectly, (ii) which
such Person or any of its Affiliates or associates has, directly or indirectly,
(A) the right to acquire (whether such right is exercisable immediately or
subject only to the passage of time), pursuant to any agreement, arrangement or
understanding or upon the exercise of consideration rights, exchange rights,
warrants or options, or otherwise, or (B) the right to vote pursuant to any
agreement, arrangement or understanding or (iii) which are beneficially owned,
directly or indirectly, by any other Persons with whom such Person or any of its
Affiliates or associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any shares.
"BUSINESS DAY" means any day of the year (other than any Saturday or
Sunday) on which the Federal Reserve Bank is open for business in Los Angeles,
California.
"CANCELLED SHARES" has the meaning set forth in Section 2.6(d).
EX 99.4 - 2
"CASH" means all cash, certificates of deposits, bank deposits and other
cash equivalents, together with all accrued but unpaid interest thereon.
"CERTIFICATE OF MERGER" means the certificate of merger filed in
connection with the Merger with the Secretary of State of the State of Delaware
in accordance with Section 252 of the Delaware Law.
"CLOSING" has the meaning set forth in Section 2.2.
"CODE" has the meaning set forth in the Recitals.
"COMPANY" means (a) USOL at all times prior to the Effective Time, and
(b) FLCI upon the Effective Time and at all times thereafter.
"COMPANY COMMON STOCK" means (a) USOL Common Stock at all times prior to
the Effective Time, and (b) FLCI Common Stock upon the Effective Time and at all
times thereafter.
"COMPANY OTHER WARRANTS" means (a) USOL Other Warrants at all times
prior to the Effective Time, and (b) FLCI Other Warrants upon the Effective Time
and at all times thereafter.
"COMPANY PREFERRED STOCK" means (a) USOL Preferred Stock at all times
prior to the Effective Time, and (b) FLCI Preferred Stock upon the Effective
Time and at all times thereafter.
"COMPANY WARRANTS" means (a) USOL Warrants at all times prior to the
Effective Time, and (b) FLCI Warrants upon the Effective Time and at all times
thereafter.
"CONTRACT" means any contract, lease, commitment, sales order, purchase
order, agreement, indenture, mortgage, note, bond, instrument, plan, permit or
license.
"CONTROL" (including the terms "CONTROLLED BY" and "UNDER COMMON CONTROL
WITH") means the possession, directly or indirectly or as trustee or executor,
of the power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of stock, as trustee or executor, by
contract or credit arrangement or otherwise.
"DELAWARE LAW" means the Delaware General Corporation Law, Chapter 1 of
Title 8, Section 101 et seq.
"DISSENTING SHARES" has the meaning set forth in Section 2.9(a).
"EFFECTIVE TIME" has the meaning set forth in Section 2.1.
"ENVIRONMENTAL LAW" means any Law which relates to or otherwise imposes
liability or standards of conduct concerning discharges, releases or threatened
releases of noises, odors or any pollutants, contaminants or hazardous or toxic
wastes, substances or materials, whether as
EX 99.4 - 3
matter or energy, into ambient air, water or land, or otherwise relating to the
manufacture, processing, generation, distribution, use, treatment, storage,
disposal, cleanup, transport or handling of pollutants, contaminants or
hazardous or toxic wastes, substances or materials, including the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, the
Superfund Amendments and Reauthorization Act of 1986, as amended, the Resource
Conservation and Recovery Act of 1976, as amended, the Toxic Substances Control
Act of 1976, as amended, the Federal Water Pollution Control Act Amendments of
1972, the Clean Water Act of 1977, as amended, any so-called "Superfund" or
"Superlien" Law (including those already referenced in this definition) and any
other Law of any Governmental Authority having a similar subject matter.
"ENVIRONMENTAL PERMIT" means any Permit required by or pursuant to any
applicable Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXCHANGE AGENT" has the meaning set forth in Section 2.7(a).
"FCC" means the Federal Communications Commission or any successor
agency thereto.
"FLCI ACCOUNTS RECEIVABLE" has the meaning set forth in Section 3.11.
"FLCI" has the meaning set forth in the Recitals.
"FLCI BALANCE SHEETS" has the meaning set forth in Section 3.8.
"FLCI CERTIFICATES" has the meaning set forth in Section 2.7(b).
"FLCI COMMON STOCK" means the common stock, par value $.001 per share,
of FLCI.
"FLCI EMPLOYEE PLANS" has the meaning set forth in Section 3.14(a).
"FLCI EQUIPMENT" has the meaning set forth in Section 3.18.
"FLCI FCC PERMITS" has the meaning set forth in Section 3.7.
"FLCI FINANCIAL STATEMENTS" has the meaning set forth in Section 3.8.
"FLCI INTELLECTUAL PROPERTY ASSETS" has the meaning set forth in Section
3.29(a).
"FLCI MATERIAL CONTRACTS" has the meaning set forth in Section 3.10(a).
"FLCI PREFERRED STOCK" means, collectively, the FLCI Series A Preferred
Stock and the FLCI Series B Preferred Stock.
EX 99.4 - 4
"FLCI REAL PROPERTY LEASES" has the meaning set forth in Section
3.17(a).
"FLCI SEC REPORTS" has the meaning set forth in Section 3.3.
"FLCI SERIES A PREFERRED STOCK" means the Series A Convertible Preferred
Stock, par value $.001 per share, of FLCI, with the identical rights,
preferences and privileges as the USOL Series A Preferred Stock.
"FLCI SERIES B PREFERRED STOCK" means the Series B Convertible Preferred
Stock, par value $.001 per share, of FLCI, with the identical rights,
preferences and privileges as the USOL Series B Preferred Stock.
"FLCI STOCK" means the shares of FLCI Common Stock and FLCI Preferred
Stock, collectively.
"FLCI STOCK OPTION PLAN" means FLCI's 1998-1999 Combined Incentive Stock
Option and Nonqualified Stock Option Plan.
"FLCI STOCKHOLDERS MEETING" has the meaning set forth in Section
3.27(b).
"FLCI TSD WARRANTS" means the separate warrants to be issued in the
Merger in exchange for the USOL TSD Warrants.
"FLCI UNAUDITED BALANCE SHEETS" has the meaning set forth in Section
3.8.
"FLCI UNAUDITED FINANCIAL STATEMENTS" has the meaning set forth in
Section 3.8.
"FLCI WARRANTS" means, collectively, the FLCI Other Warrants and the
FLCI TSD Warrants.
"GAAP" means U.S. generally accepted accounting principles at the time
in effect.
"GMAC-CM" has the meaning set forth in the Recitals.
"GOVERNMENTAL APPROVAL" means any consent of any Governmental Authority.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or
other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, including, without limitation, any multilateral authority or any
government authority, agency, department, board, commission or instrumentality
of the United States, any State of the United States or any political
subdivision thereof, and any tribunal or arbitrator(s) of competent
jurisdiction, and any self-regulatory organization.
"GROUP HEALTH PLAN" has the meaning set forth in Section 6.13(c).
EX 99.4 - 5
"HAZARDOUS SUBSTANCES" means any natural or artificial substance,
preparation or article which if generated, transported, stored, treated, used or
disposed of (alone or combined with any other substance, preparation or article)
is harmful to water, air or land or any living organism.
"INTELLECTUAL PROPERTY" means any and all United States and foreign: (a)
patents (including design patents, industrial designs and utility models) and
patent applications (including docketed patent disclosures awaiting filing,
reissues, divisions, continuations-in-part and extensions), patent disclosures
awaiting filing determination, inventions and improvements thereto; (b)
trademarks, service marks, trade names, trade dress, logos, business and product
names, slogans, and registrations and applications for registration thereof; (c)
copyrights (including software) and registrations thereof; (d) inventions,
processes, designs, formulae, trade secrets, know-how, industrial models,
confidential and technical information, manufacturing, engineering and technical
drawings, product specifications and confidential business information; (e)
intellectual property rights similar to any of the foregoing; and (f) copies and
tangible embodiments thereof (in whatever form or medium, including electronic
media).
"IRS" means the Internal Revenue Service.
"ISO" means an incentive stock option within the meaning of Section
422(b) of the Code.
"LAW" means any law, statute, regulation, ordinance, rule, order,
decree, judgment, consent decree, settlement agreement or governmental
requirement enacted, promulgated, entered into, agreed or imposed by any
Governmental Authority.
"LIEN" shall mean any encumbrance, lien, charge, hypothecation, pledge,
mortgage, title retention agreement, security interest of any nature, adverse
claim, exception, reservation, easement, right of occupation, any matter capable
of registration against title, option, right-of-preemption, privilege or any
agreement, indenture, contract, lease, deed of trust, license, option,
instrument or other commitment to create any of the foregoing.
"LOCKUP PERIOD" has the meaning set forth in Section 4.9(b).
"LOSSES" means any and all costs, demands, claims, liabilities, fines,
penalties, assessments, damages and expenses (including the burden and expense
of defending against all of the foregoing even if the assertions therein are
groundless, false or fraudulent), or amounts paid in settlement thereof, and
court costs (including court-awarded interest) and reasonable attorneys' fees
and disbursements of counsel (including legal or other expenses reasonably
incurred in connection with investigating or defending the same); PROVIDED, that
the term "Losses" shall not include costs, demands, claims, liabilities, fines,
penalties, assessments, damages and expenses which are indirect or consequential
in nature.
"LOST USOL CERTIFICATE" has the meaning set forth in Section 2.11.
EX 99.4 - 6
"MERGER" has the meaning set forth in the Recitals.
"MERGER CONSIDERATION" has the meaning set forth in Section 2.7(b).
"NASDAQ" means the Nasdaq Stock Market, Inc.
"NOTICE" has the meaning set forth in Section 10.3.
"OREGON LAW" means the Oregon Business Corporation Act, Oregon Revised
Statutes, 60.001 ET SEQ.
"OTHER LOCKUP PERIOD" has the meaning set forth in Section 4.9(c).
"OUTSIDE DATE" means December 31, 1999.
"PERMIT" means a permit, license, consent, certificate, approval,
franchise, right, waiver, exemption, order or other authorization of a
Governmental Authority.
"PERMITTED LIENS" means
(i) liens for Taxes, assessments and governmental charges due and being
contested in good faith and diligently by appropriate proceedings (and for the
payment of which adequate provision has been made);
(ii) servitudes, easements, restrictions, rights-of-way and other
similar rights in real property or any interest therein; PROVIDED the same are
not of such nature as to materially adversely affect the use of the property
subject thereto;
(iii) liens for Taxes either not due and payable or due but for which
notice of assessment has not been given;
(iv) undetermined or inchoate liens, charges and privileges incidental
to current construction or current operations and statutory liens, charges,
adverse claims, security interests or encumbrances of any nature whatsoever
claimed or held by any governmental authority that have not at the time been
filed or registered against the title to the asset or served upon the Seller
pursuant to law or that relate to obligations not due or delinquent;
(v) liens or rights reserved in any lease for rent or for compliance
with the terms of such lease;
(vi) security given in the ordinary course of the Business to any public
utility, municipality or government or to any statutory or public authority in
connection with the operations of the Business, other than security for borrowed
money;
(vii) statutory liens in favor of a seller of personal property,
mechanic's liens or other statutory liens in favor of a provider of a service;
PROVIDED, that obligations to a secured party are not overdue or delinquent; and
EX 99.4 - 7
(viii) the liens described in SCHEDULE 1.1 (with respect to USOL).
"PERSON" means any individual, corporation, trust, estate, partnership,
joint venture, company, association, governmental bureau or other entity of
whatsoever kind or nature (including as defined in Section 13(d)(3) of the
Exchange Act).
"PREDECESSOR ENTITIES" means, collectively, USOC and TSD.
"PROXY STATEMENT" has the meaning set forth in Section 3.27(b).
"RE-INCORPORATION" means the re-incorporation in the State of Delaware
of the Surviving Corporation.
"RULES OF ARBITRATION" has the meaning set forth in Section 9.3(a).
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SENIOR NOTES" has the meaning set forth in Section 4.2(b).
"STOCKHOLDER SUPPORT AGREEMENTS" has the meaning set forth in the
Recitals.
"SUBSIDIARY" or "SUBSIDIARIES" means, with respect to a Person, any
corporation, partnership, joint venture or other legal entity of such Person
(either alone or through or together with any other subsidiary of such Person)
which owns, directly or indirectly, more than 50% of the stock or other equity
interests the holders of which are generally entitled to vote for the election
of the board of directors or other governing body of such corporation or other
legal entity.
"SUPERIOR OFFER" has the meaning set forth in Section 8.2(c).
"SURVIVING CORPORATION" has the meaning set forth in Section 2.1.
"TAX" or "TAXES" means any federal, state, local, foreign or other tax,
levy, impost, fee, assessment, imposition or other charge of any kind
whatsoever, including without limitation net income, gross income, estimated
income, gross receipts, business, occupation, value added, real property,
payroll, personal property, sales, transfer, stamp, use, employment, commercial
rent, occupancy, franchise, withholding, profits, windfall profits, deemed
profits, license, registration, lease, severance, capital stock, production,
corporation, ad valorem, social security (or similar), unemployment, disability,
alternative, add-on minimum, premium or customs duties, including without
limitation any interest, penalty, or addition thereto, whether disputed or not.
"TAX RETURN" means any return, declaration, report, claim for refund,
information return, statement or other document required to be filed in respect
of Taxes, including without
EX 99.4 - 8
limitation Tax Returns for estimated Taxes, any schedule or attachment thereto,
and any amendment to any of the above.
"TRANSFER" has the meaning set forth in Section 4.9.
"TRC" has the meaning set forth in the Recitals.
"TSD" has the meaning set forth in the Recitals.
"TSD ASSET PURCHASE AGREEMENT" means the Asset Purchase Agreement, dated
as of the date hereof, by and among USOL, TRC and GMAC-CM, in the form attached
hereto as EXHIBIT 1.1(A).
"USOC" has the meaning set forth in the Recitals.
"USOC ASSET PURCHASE AGREEMENT" means the Asset Purchase Agreement,
dated as of the date hereof, by and among USOL Sub, USOL, USOC and certain
selling shareholders, in the form attached hereto as Exhibit 1.1(b).
"USOL" has the meaning set forth in the Recitals.
"USOL CERTIFICATE" or "USOL CERTIFICATES" has the meaning set forth in
Section 2.7(b).
"USOL COMMON STOCK" means the Common Stock, $.001 par value per share,
of USOL.
"USOL MATERIAL CONTRACTS" means those Contracts of USOL set forth in
Section 5.11 of the Disclosure Memorandum to the USOC Asset Purchase Agreement.
"USOL OTHER WARRANTS" means the separate warrants, dated the date
hereof, issued by USOL, in the form attached hereto as EXHIBIT 2.6(C)-1.
"USOL PREFERRED STOCK" means, collectively, the USOL Series A Preferred
Stock and the USOL Series B Preferred Stock.
"USOL SERIES A PREFERRED STOCK" means the Series A Convertible Preferred
Stock, $0.001 par value, of USOL, with the rights, preferences and privileges
set forth in EXHIBIT 2.6(B)-1 hereto.
"USOL SERIES B PREFERRED STOCK" means the Series B Convertible Preferred
Stock, $0.001 par value, of USOL, with the rights, preferences and privileges
set forth in EXHIBIT 2.6(B)-2 hereto.
"USOL STOCK" means the USOL Common Stock and USOL Preferred Stock,
collectively.
"USOL STOCK OPTION PLAN" means the 1999 USOL Holdings, Inc. Incentive
Plan.
EX 99.4 - 9
"USOL STOCKHOLDERS MEETING" has the meaning set forth in Section
3.27(b).
"USOL SUB" has the meaning set forth in the Recitals.
"USOL TSD WARRANTS" means the separate warrants issued under by USOL to
GMAC-CM, in the form attached hereto as EXHIBIT 2.6(C)-2.
"USOL UNAUDITED BALANCE SHEET" means the unaudited balance sheet of USOC
as of May 31, 1999.
"USOL WARRANTS" means, collectively, the USOL Other Warrants and the
USOL TSD Warrants.
ARTICLE II
THE MERGER
2.1 MERGER; EFFECTIVE TIME.
At the Effective Time (as defined below), and subject to and upon the
terms and conditions of this Agreement, the Delaware Law and the Oregon Law,
USOL shall be merged with and into FLCI and FLCI shall continue as the surviving
corporation. FLCI as the surviving corporation after the Merger is hereinafter
sometimes referred to as the "SURVIVING CORPORATION." At the Effective Time, the
identity and separate existence of USOL shall cease. As promptly as practicable
after the satisfaction or waiver, as the case may be, of the conditions set
forth in Article VII, USOL and FLCI shall cause the Merger to be consummated by
filing the Certificate of Merger and the Articles of Merger, together with any
required related instruments, with the Secretaries of State of the States of
Delaware and Oregon, respectively, and USOL and FLCI shall take such other
actions as may be required by Law to make the Merger effective. The time the
Merger becomes effective in accordance with applicable Law is referred to herein
as the "EFFECTIVE TIME".
2.2 CLOSING.
Unless this Agreement shall have been terminated and the transactions
herein contemplated shall have been abandoned pursuant to Section 8.1, and
subject to the satisfaction or waiver of all the conditions set forth in Article
VII, the consummation of the Merger (the "CLOSING") shall take place as promptly
as practicable (and in any event within two business days) after satisfaction or
waiver of the conditions set forth in Article VII, at the offices of USOL, 00000
Xxxxxx Xxxxxxxxx, Xxxxxx, Xxxxx 00000, unless another time or place is agreed to
in writing by USOL and FLCI.
2.3 EFFECT OF THE MERGER.
At the Effective Time, the effect of the Merger shall be as provided in
this Agreement, the Certificate of Merger, the applicable provisions of the
Delaware Law, the Articles of
EX 99.4 - 10
Merger and the applicable provisions of the Oregon Law. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time all the
property, rights, privileges, powers and franchises of USOL shall vest in the
Surviving Corporation, and all debts, liabilities and duties of USOL shall
become the debts, liabilities and duties of the Surviving Corporation.
2.4 ARTICLES OF INCORPORATION; BY-LAWS.
(a) The Articles of Incorporation of FLCI, as in effect immediately
prior to the Effective Time, shall be the Articles of Incorporation of the
Surviving Corporation until thereafter amended in accordance with the Oregon Law
and said Articles of Incorporation except that said Articles of Incorporation
shall be amended as of the Effective Time to the form mutually agreed upon by
the parties.
(b) The By-laws of FLCI, as in effect immediately prior to the Effective
Time, shall be the By-laws of the Surviving Corporation until thereafter amended
in accordance with the Oregon Law, the Articles of Incorporation of the
Surviving Corporation and said By-laws except that said By-laws shall be amended
as of the Effective Time to the form mutually agreed upon by the parties.
2.5 DIRECTORS AND OFFICERS.
(a) The seven individuals listed in SCHEDULE 2.5(A) shall comprise the
full Board of Directors of the Surviving Corporation as of the Effective Time.
(b) The officers of USOL immediately prior to the Effective Time shall
comprise the officers of the Surviving Corporation as of the Effective Time.
2.6 EFFECT ON CAPITAL STOCK.
At the Effective Time, by virtue of the Merger and without any action on
the part of FLCI or USOL or the holders of any securities issued by either of
them:
(a) Each share of USOL Common Stock issued and outstanding immediately
prior to the Effective Time shall be cancelled and converted, subject to
Sections 2.6(e), 2.7(f) and 2.13, into the right to receive one (1) share of
validly issued, fully paid and nonassessable FLCI Common Stock.
(b) Each share of USOL Series A Preferred Stock and USOL Series B
Preferred Stock issued and outstanding immediately prior to the Effective Time
shall be cancelled and converted, subject to Sections 2.6(e), 2.7(f) and 2.13,
into the right to receive one (1) share of validly issued, fully paid and
nonassessable FLCI Series A Preferred Stock or FLCI Series B Preferred Stock,
respectively. The terms of the FLCI Preferred Stock that will be issued
hereunder will be identical to the terms of the USOL Preferred Stock. EXHIBITS
2.6(B)-1 and 2.6(B)-2 set forth the forms of the Certificates of Designations of
Preferences,
EX 99.4 - 11
Limitations and Relative Rights with respect to the USOL Series A Preferred
Stock and the USOL Series B Preferred Stock, respectively.
(c) Each USOL Other Warrant issued and outstanding immediately prior to
the Effective Time shall be cancelled and converted, subject to Sections 2.6(e),
2.7(f) and 2.13, into the right to receive one (1) FLCI Other Warrant to
purchase the same number of shares as the USOL Other Warrant; and each USOL TSD
Warrant issued and outstanding immediately prior to the Effective Time shall be
converted into the right to receive one (1) FLCI TSD Warrant to purchase the
same number of shares as the USOL TSD Warrant. The FLCI Other Warrants which
will be issued hereunder shall be identical to the terms of the USOL Other
Warrants. EXHIBITS 2.6(C)-1 and 2.6(C)-2 set forth the form of the USOL Other
Warrants and the USOL TSD Warrants, respectively.
(d) Each share of USOL Stock held in the treasury of USOL and each share
of USOL Stock owned by any direct or indirect subsidiary of USOL immediately
prior to the Effective Time (the "CANCELLED SHARES") shall, by virtue of the
Merger and without any action on the part of the holder thereof, cease to be
outstanding and be cancelled and retired without payment of any consideration
therefor.
(e) No fraction of a share of FLCI Stock shall be issued, but in lieu
thereof, each holder of USOL Stock who would otherwise be entitled to a fraction
of a share of FLCI Stock (after aggregating all fractional shares of FLCI Stock
to be received by such holder and providing for any shares to be withheld
pursuant to Section 2.7(f), it being the intention of the parties that no holder
of USOL Stock will receive cash in an amount equal to or greater than the value
of one full share of FLCI Stock), shall receive from FLCI an amount of cash
(rounded to the nearest cent), without interest, equal to the product of (i)
such fraction, multiplied by (ii) $2.00, subject to Section 2.13.
(f) Each USOL Stock Option issued and outstanding immediately prior to
the Effective Time shall be cancelled and converted, pursuant to the provisions
of Section 6.5, into an option to acquire, on the same terms and conditions as
were applicable under such USOL Stock Option prior to the Effective Time, the
whole number of shares of FLCI Common Stock as the holder of such USOL Stock
Option would have been entitled to receive pursuant to the Merger had such
holder exercised such option in full immediately prior to the Effective Time
(not taking into account whether or not such option was in fact exercisable).
2.7 EXCHANGE OF CERTIFICATES.
(a) As of the Effective Time, FLCI shall supply, or cause to be
supplied, to or for the account of a bank or trust company to be designated by
FLCI (the "EXCHANGE AGENT"), in trust for the benefit of the holders of USOL
Stock (other than the Cancelled Shares), for exchange in accordance with this
Section 2.7, certificates evidencing the FLCI Stock issuable pursuant to
Sections 2.6(a) and 2.6(b) in exchange for outstanding USOL Stock and all cash
required to be paid pursuant to Sections 2.6(e) and 2.7(c).
EX 99.4 - 12
(b) As soon as reasonably practicable after the Effective Time, FLCI
shall instruct the Exchange Agent to mail to each holder of record of a
certificate or certificates (the "USOL CERTIFICATES") which immediately prior to
the Effective Time evidenced outstanding shares of USOL Stock, other than
Cancelled Shares, (i) a letter of transmittal, which letter shall specify, among
other conditions, that delivery shall be effected, and risk of loss and title to
the USOL Certificates shall pass, only upon proper delivery of the USOL
Certificates to the Exchange Agent, and (ii) instructions to effect the
surrender of the USOL Certificates in exchange for the certificates evidencing
shares of FLCI Stock (the "FLCI CERTIFICATES") and, in lieu of any fractional
shares thereof, cash. Upon surrender of a USOL Certificate for cancellation to
the Exchange Agent , together with such letter of transmittal, duly executed,
and such other customary documents as may be reasonably required by FLCI or the
Exchange Agent, the holder of such USOL Certificate shall be entitled to receive
in exchange therefor (A) FLCI Certificates evidencing that whole number of
shares of FLCI Stock which such holder has the right to receive in respect of
the shares of USOL Stock formerly evidenced by such USOL Certificate in
accordance with applicable provisions hereof; (B) any dividends or other
distributions to which such holder is entitled pursuant to Section 2.7(c); and
(C) cash in lieu of a fractional share of FLCI Stock to which such holder is
entitled pursuant to Section 2.6(e) (such FLCI Stock, rights, dividends,
distributions and cash in lieu of fractional shares together with any amounts to
be withheld pursuant to Section 2.7(f) being collectively referred to as the
"MERGER CONSIDERATION"), and the USOL Certificate so surrendered shall forthwith
be cancelled. In the event of a transfer of ownership of shares of USOL Stock
which is not registered in the transfer records of USOL as of the Effective
Time, FLCI Stock and cash may be issued and paid in accordance with this Article
II to a transferee if the applicable certificate is presented to the Exchange
Agent, accompanied by all documents required by law to evidence and effect such
transfer pursuant to this Section 2.7(b) and by evidence that any applicable
stock transfer taxes have been paid. Until so surrendered, each outstanding USOL
Certificate which represented shares of USOL Stock, shall be deemed from and
after the Effective Time, for all corporate purposes other than the payment of
dividends, to evidence the ownership of the number of full shares of FLCI Stock
into which such shares of USOL Stock may be exchanged in accordance herewith and
the right to receive an amount in cash in lieu of the issuance of any fractional
shares in accordance with Section 2.6(e).
(c) No dividends or other distributions with respect to FLCI Stock with
a record date after the Effective Time shall be paid to the holder of any
unsurrendered USOL Certificate with respect to the FLCI Stock such holder is
entitled to receive until such holder shall surrender such USOL Certificate.
Subject to applicable law, following the surrender of any such USOL Certificate,
there shall be paid to the record holder of the FLCI Certificates issued in
exchange therefor, without interest, 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 FLCI Stock.
(d) If any FLCI Certificate is to be issued in a name other than that in
which the USOL Certificate surrendered in exchange therefor is registered, it
shall be a condition of the issuance thereof that the USOL Certificate so
surrendered shall be properly endorsed and otherwise in proper form for transfer
and that the Person requesting such exchange shall have
EX 99.4 - 13
paid to FLCI, or any agent designated by FLCI, any transfer or other taxes
required by reason of the issuance of an FLCI Certificate in any name other than
that of the registered holder of the USOL Certificate surrendered.
(e) FLCI and USOL shall have no liability to any holder of USOL Stock
for any Merger Consideration (or dividends or distributions with respect
thereto) which are delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(f) FLCI or the Exchange Agent shall be entitled to deduct and withhold
from the Merger Consideration otherwise payable to any holder of USOL Stock such
amounts as FLCI or the Exchange Agent may be required to deduct and withhold
with respect to any provision of Federal, state, local or foreign Tax laws. To
the extent that amounts are so withheld by FLCI or the Exchange Agent, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of the shares in respect of which such deduction and
withholding was made by FLCI or the Exchange Agent.
2.8 STOCK TRANSFER BOOKS.
At the Effective Time, the stock transfer books of USOL shall be closed,
and there shall be no further registration of transfers of USOL Stock on the
records of USOL.
2.9 DISSENTING SHARES.
(a) Notwithstanding any provision of this Agreement to the contrary, any
shares of FLCI Common Stock held by a holder who has exercised appraisal rights
for such shares in accordance with the applicable provisions of the Oregon Law
and who, as of the Effective Time, has not effectively withdrawn or lost such
appraisal rights (the "DISSENTING SHARES"), shall not be converted into, or
represent a right to receive, the Merger Consideration pursuant to Section
2.7(b), but the holder thereof shall be entitled only to such rights as are
granted by the Oregon Law with respect to such Dissenting Shares.
(b) FLCI shall give USOL prompt written notice of any demands received
by FLCI to require FLCI to purchase Dissenting Shares, the withdrawal of any
such demands, and any other notices or instruments served pursuant to the Oregon
Law and received by FLCI. FLCI shall not, except with the prior written consent
of USOL, voluntarily make any payment with respect to any Dissenting Shares or
offer to settle, or settle, any such demands with respect thereto.
2.10 NO FURTHER OWNERSHIP RIGHTS IN USOL STOCK.
The Merger Consideration delivered upon the surrender of USOL
Certificates in accordance with the terms hereof shall be deemed to have been
delivered in full satisfaction of all rights pertaining to such USOL
Certificates, and there shall be no further registration of transfers on the
records of the Surviving Corporation of shares of USOL Stock which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, USOL
EX 99.4 - 14
Certificates are presented to the Surviving Corporation for any
reason, they shall be cancelled and converted as provided in this Article II.
2.11 LOST, STOLEN OR DESTROYED CERTIFICATES.
In the event any USOL Certificate shall have been lost, stolen or
destroyed (a "LOST USOL Certificate"), the Exchange Agent shall, upon the making
of an affidavit of that fact by the registered owner thereof, deliver to the
registered owner thereof such Merger Consideration as may be required pursuant
to Sections 2.6 and 2.7; PROVIDED, HOWEVER, that FLCI may, in its sole
discretion and as a condition precedent to the delivery of such Merger
Consideration, require the registered owner of such Lost USOL Certificate to
deliver a bond in such sum as it may reasonably direct as indemnity against any
claim that may be made against FLCI or the Exchange Agent with respect to the
Lost USOL Certificate.
2.12 TAX AND ACCOUNTING CONSEQUENCES.
It is intended by FLCI and USOL that the Merger shall constitute a
reorganization within the meaning of Section 368(a) of the Code. FLCI and USOL
hereby adopt this Agreement as a "plan of reorganization" within the meaning of
Sections 1.368-2(g) and 1.368-3(a) of the United States Treasury Regulations.
2.13 ADJUSTMENTS.
If, between the date of this Agreement and the Effective Time, the
outstanding shares of FLCI Common Stock shall be changed into a different number
of shares or a different class by reason of any reclassification,
recapitalization, split-up, combination, exchange of shares or readjustment, or
a stock dividend thereon shall be declared with a record date prior to the
Effective Time, the amount of consideration to be received pursuant to this
Article II in exchange for each outstanding share of USOL Stock or USOL Warrant
shall be correspondingly adjusted.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF FLCI
FLCI hereby represents and warrants to USOL that each of the following
is true, correct and complete as of the date hereof:
3.1 ORGANIZATION.
(a) FLCI is a corporation duly organized, validly existing and in good
standing under the laws of Oregon. FLCI has full corporate power and authority
to own, lease and operate its properties and to carry on its business as such
business is now conducted and proposed to be conducted. The copies of the
Articles of Incorporation of FLCI, certified by the Secretary of State of
Oregon, and the By-laws of FLCI, each of which have been delivered
EX 99.4 - 15
to USOL by FLCI, are true and complete copies thereof, and are in full force and
effect. FLCI is not in violation of its Articles of Incorporation or By-laws.
(b) FLCI has no subsidiaries and does not, directly or indirectly, own
or have the contractual right or obligation to acquire any equity interest in
any other corporation, partnership, joint venture, trust or other business
organization. Except as disclosed in SCHEDULE 3.1, FLCI has not made any
investment in, loan to, or advance of cash or other extension of credit to any
Person other than in the ordinary course of its business.
3.2 CAPITALIZATION.
The authorized capital stock of FLCI consists of 20,000,000 shares of
common stock, no par value per share, of which 3,615,617 shares are currently
issued and outstanding, and 1,000,000 shares of preferred stock, no par value
per share, none of which shares are currently issued or outstanding, and no
designation of any series of preferred stock has been made. All of the
outstanding shares of FLCI's capital stock have been duly authorized, are
validly issued, fully paid and non-assessable, and the holders thereof are not
entitled to cumulative voting rights or preemptive rights. There are no
obligations, contingent or otherwise, of FLCI to repurchase, redeem or otherwise
acquire any shares of FLCI's capital stock or to provide funds to or make any
investment (in the form of a loan, capital contribution or otherwise) in any
entity. Except as set forth in SCHEDULE 3.2 or 3.14(C), there are no outstanding
options to purchase, registration rights, or warrants, privileges or rights to
subscribe to or purchase, any shares of FLCI's capital stock or securities
issued by FLCI convertible into or exchangeable for shares of FLCI's capital
stock or other securities of FLCI or commitments, understandings or intentions
to issue any additional shares or options, warrants, privileges or rights to
subscribe for shares of FLCI's capital stock. At the Effective Time, the
authorized capital stock of FLCI will consist of 50,000,000 shares of FLCI
Common Stock and 5,000,000 shares of FLCI Preferred Stock, 1,700,000 shares of
which shall be designated as the "FLCI SERIES A PREFERRED STOCK" and 300,000
shares of which shall be designated as the "FLCI SERIES B PREFERRED STOCK."
3.3 SEC FILINGS.
FLCI has filed all forms, reports and documents required to be filed
with the SEC under the Securities Act and the Exchange Act since the date FLCI
first registered the FLCI Common Stock under the Exchange Act and has delivered
to USOL true and complete copies of (i) its Annual Report on Form 10-K for the
fiscal year ended December 31, 1998, (ii) its Quarterly Reports on Form 10-Q for
the periods ended September 30, 1998, and Xxxxx 00, 0000, (xxx) Amendment No. 3
to its Registration Statement on Form SB-2 filed with the SEC on May 14, 1998,
(iv) all other reports or registration statements filed by FLCI with the SEC
since it first registered the FLCI Common Stock under the Exchange Act, and (v)
all amendments, supplements and exhibits (including, without duplication,
exhibits incorporated by reference) to all such reports and registration
statements (the reports referred to in subsections (i) - (v), collectively, the
"FLCI SEC REPORTS"). The FLCI SEC Reports (i) were prepared in accordance with
the requirements of the Securities Act or the Exchange Act,
EX 99.4 - 16
as applicable, and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
3.4 QUALIFICATION IN FOREIGN JURISDICTIONS.
FLCI is duly qualified or licensed and in good standing as a foreign
corporation duly authorized to do business in each jurisdiction in which the
character of the properties owned or leased or the nature of the activities
conducted by it makes such qualification or licensing necessary, except for any
jurisdiction(s) in which the failure to so qualify would not have a material
adverse effect upon FLCI. SCHEDULE 3.4 lists the jurisdictions in which FLCI is
qualified to do business as a foreign corporation.
3.5 AUTHORITY RELATIVE TO THIS AGREEMENT.
FLCI has all necessary corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by FLCI and the consummation by FLCI of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of the Board of
Directors of FLCI are necessary to authorize this Agreement or to consummate the
transactions so contemplated. FLCI has obtained, and has delivered to USOL,
separate Stockholder Support Agreements executed by, and has obtained the proxy
of, the holders of the outstanding shares of FLCI Stock listed in SCHEDULE 3.5
in favor of the approval and adoption of the Merger. The Board of Directors of
FLCI has determined that it is advisable and in the best interest of FLCI's
stockholders for FLCI to enter into the Merger with USOL upon the terms and
subject to the conditions of this Agreement. This Agreement has been duly and
validly executed and delivered by FLCI and, assuming the due authorization,
execution and delivery by USOL, constitutes a legal, valid and binding
obligation of FLCI enforceable in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, moratorium,
reorganization and similar laws from time to time in effect that affect
creditors' rights generally, and by legal and equitable limitations on the
availability of specific remedies.
3.6 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Except as set forth in SCHEDULE 3.6(A), the execution and delivery
of this Agreement by FLCI does not, and the performance of this Agreement by
FLCI will not, (i) conflict with or violate the Articles of Incorporation or
By-laws of FLCI, (ii) conflict with or violate any Law applicable to FLCI or by
which any of its properties is bound or affected, (iii) result in any breach of
or constitute a default (or an event that with notice or lapse of time or both
would constitute a default), or impair FLCI's rights or alter the rights or
obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any FLCI Material
Contract, (iv) result in the termination of, or accelerate the
EX 99.4 - 17
payment or performance required by, or result in the creation of a Lien on any
of the properties or assets of FLCI pursuant to any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which FLCI is a party or by which FLCI, or any of
its properties, is bound or affected, or (v) give any Person the right to
require FLCI to purchase assets from or sell assets to such Person or trigger a
"change of control" provision in any Contract to which FLCI is a party; except
in the case of clause (ii) for such violations or conflicts that would not,
individually or in the aggregate, have a material adverse effect on FLCI.
(b) The execution and delivery of this Agreement by FLCI does not, and
the performance of this Agreement and the transactions contemplated hereby by
FLCI will not, require any consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Authority, except (i) for
applicable requirements of any state Governmental Authorities as set forth in
SCHEDULE 3.6(B), the Securities Act, the Exchange Act, state securities laws,
Nasdaq, and the filing and recordation of appropriate merger or other documents
as required by the Oregon Law and the Delaware Law, and (ii) where the failure
to obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not prevent or delay consummation of the Merger,
or otherwise prevent or delay FLCI from performing its obligations under this
Agreement, or would not otherwise have a material adverse effect upon FLCI.
3.7 COMPLIANCE WITH LAWS; PERMITS.
To FLCI's knowledge, the operation of its business has been and is being
conducted in accordance with all Laws applicable thereto. No investigation by
any Governmental Authority or alleged violation of or noncompliance with such
Laws is pending or, to the best knowledge of FLCI, threatened. FLCI holds all of
the Permits listed in SCHEDULE 3.7, and no other Permits are currently necessary
for the lawful operation of FLCI's business, except where the failure to possess
the same would not have a material adverse effect on the financial condition,
results of operations or business of FLCI. All Permits listed are in full force
and effect. No violation of any Permit has occurred which is continuing, and no
proceeding is pending or threatened to revoke or limit any Permit. FLCI holds
all Permits of the FCC necessary for the lawful conduct of its business (the
"FLCI FCC PERMITS"), except where failure to possess the same would not have a
material adverse effect on the financial condition, results of operations or
business of FLCI. FLCI is in compliance with the terms of all FLCI FCC Permits
and the applicable rules and regulations of the FCC in all material respects.
3.8 FINANCIAL STATEMENTS.
FLCI has delivered to USOL FLCI's audited balance sheets as at December
31, 1997 and December 31, 1998 (the "FLCI BALANCE SHEETS"), and FLCI's audited
statements of income and changes in financial position for the years then ended
(collectively, with the FLCI Balance Sheets, the "FLCI FINANCIAL STATEMENTS").
The FLCI Financial Statements have been audited by the independent public
accounting firm of KPMG Peat Marwick, LLP. FLCI has also delivered to USOL
FLCI's unaudited balance sheets as at March 31, 1998, March 31,
EX 99.4 - 18
1999 and May 31, 1999 (the "FLCI UNAUDITED BALANCE SHEETS"), and FLCI's
unaudited statements of income and changes in financial position for the three
month period ended March 31, 1999 (collectively, with the FLCI Unaudited Balance
Sheets, the "FLCI UNAUDITED FINANCIAL STATEMENTS"). The FLCI Financial
Statements and the FLCI Unaudited Financial Statements were prepared in
accordance with SEC requirements and such financial statements (including the
notes thereto) were prepared in accordance with GAAP applied on a consistent
basis throughout the periods involved (except for the absence of footnote
disclosures in the FLCI Unaudited Financial Statements, and except as may be
indicated in the notes thereto) and each fairly presented in all material
respects the financial position of FLCI as at the date thereof and the results
of its operations and cash flows for the periods indicated, except that the FLCI
Unaudited Financial Statements were or are subject to normal and recurring
year-end adjustments which are not in the aggregate material in amount.
3.9 ABSENCE OF CERTAIN CHANGES OR EVENTS.
Except as reflected in the FLCI Financial Statements, since December 31,
1998, FLCI has conducted its business in the ordinary course and there has not
occurred: (i) any amendments or changes in the Articles of Incorporation or
By-laws of FLCI; (ii) any damage to, destruction or loss of any assets of FLCI
(whether or not covered by insurance) that could have a material adverse effect
upon FLCI; (iii) any change by FLCI in its accounting methods, principles or
practices; (iv) any revaluation by FLCI of any of its assets, including, without
limitation, the writing down of the value of capitalized software or inventory
or the writing off of promissory notes or accounts receivable other than in the
ordinary course of business in amounts that would not individually or in the
aggregate have a material adverse effect on FLCI; (v) any sale of a material
amount of property or assets of FLCI; or (vi) any other action or event that
would have required the consent of USOL pursuant to Section 5.1 had such action
or event occurred after the date of this Agreement. Since December 31, 1998,
there has been no material adverse change in the financial condition, results of
operations or business of FLCI.
3.10 MATERIAL CONTRACTS.
(a) SCHEDULE 3.10(A) sets forth a true and complete list of (i) (A) each
Contract with respect to which FLCI has any liability or obligation, contingent
or otherwise, involving more than $25,000; or which places any material
limitations on the method of conducting, or scope of, FLCI's business; (B) all
Contracts of FLCI pursuant to which benefits accrue to the other parties to such
Contracts as a result of the Merger; (C) all Contracts of FLCI with its
directors, officers, employees, agents or consultants, or its Affiliates; (D)
all Contracts to which FLCI is a party relating to the borrowing of money, or
the guaranty of any obligation for the borrowing of money; (E) all Contracts
relating to any securities of FLCI or rights in connection therewith, and (ii)
all Contracts which, as of the date hereof, would be required to be filed by
FLCI with the SEC as "material contracts" pursuant to applicable securities laws
((i) and (ii) being collectively referred to as the "FLCI MATERIAL CONTRACTS").
FLCI is not a party to any oral Contract, agreement or other arrangement which,
if reduced to written form, would be required to be listed in SCHEDULE 3.10(A).
EX 99.4 - 19
(b) The FLCI Material Contracts set forth the entire arrangement and
understanding between FLCI and the respective third parties with respect to the
subject matter thereof, and there have been no material amendments or side or
supplemental arrangements to or in respect of any FLCI Material Contract. FLCI
has made available for review by USOL and its representatives true and correct
copies of all FLCI Material Contracts as currently in effect, and will furnish
any further information that USOL may reasonably request in connection
therewith. Each FLCI Material Contract is valid and in full force and effect and
FLCI has performed all material obligations required to be performed thereunder.
FLCI is not in default under or in breach or violation of any material term of
any FLCI Material Contract and, to the knowledge of FLCI, no third party is in
default under any material provision of any FLCI Material Contract, except, in
each such case, for such defaults, breaches or violations which would not,
individually or in the aggregate, have a material adverse effect on FLCI. Each
FLCI Material Contract is enforceable against FLCI in accordance with its terms
and, to the knowledge of FLCI, is enforceable against the other party thereto.
3.11 ACCOUNTS RECEIVABLE.
Each account receivable of FLCI summarized on the FLCI Financial
Statements and the FLCI Unaudited Financial Statements (collectively, the "FLCI
ACCOUNTS RECEIVABLE") represented, at the date of the applicable financial
statement, (a) a sale made in the ordinary course of business and which arose
pursuant to an enforceable contract for an undisputed, bona fide sale of goods
or for services performed, and FLCI had performed all of its obligations to
produce the goods or perform the services to which such FLCI Accounts Receivable
relates; (b) except as adequately reserved against in the FLCI Balance Sheets
and the FLCI Unaudited Balance Sheets, and except for any amounts the failure of
which to collect would not have, individually or in the aggregate, a material
adverse effect on FLCI, amounts owed which were not more than 30 days past due
as of the applicable date, and which were not subject to any claim or reduction,
counterclaim, set-off, recoupment or other claim for credit, allowances or
adjustments by the Person owing such amount; and (c) except as reserved against
on such balance sheets, to FLCI's knowledge, the FLCI Accounts Receivable were
collectible in full within 60 days from the date of the applicable financial
statement, in at least the amount at which they are carried on the books of
FLCI. FLCI has not sold, assigned, or otherwise encumbered the FLCI Accounts
Receivable.
3.12 NO UNDISCLOSED LIABILITIES.
Except as set forth on SCHEDULE 3.12, FLCI has no liabilities (absolute,
accrued, contingent or otherwise) which are, in the aggregate, material to the
business, operations or financial condition of FLCI, taken as a whole, except
(a) liabilities adequately provided for in the FLCI Financial Statements, (b)
contractual liabilities incurred in the ordinary course of business and not
required under GAAP to be reflected on the FLCI Financial Statements, (c)
liabilities incurred in connection with this Agreement, or (d) other liabilities
reflected on the FLCI Unaudited Balance Sheets or incurred since the Balance
Sheet Date in the ordinary
EX 99.4 - 20
course of business which are not, in the aggregate, material to the business
operations or financial condition of FLCI.
3.13 ABSENCE OF LITIGATION.
There are no claims, actions, suits, proceedings or investigations
pending or, to the knowledge of FLCI, threatened against FLCI, or any properties
or rights of FLCI before any court, arbitrator or administrative or Governmental
Authority or body, domestic or foreign, that, individually or in the aggregate,
could have a material adverse effect upon FLCI.
3.14 EMPLOYEE MATTERS.
(a) Except as specifically described in SCHEDULE 3.14(A), FLCI has no
employee benefit plans (including, but not limited to, pension plans and health
or welfare plans), arrangements or understandings, whether formal or informal
("FLCI EMPLOYEE PLANS"). FLCI does not now and has never contributed to a
"multi-employer plan" as defined in Section 400(a)(3) of ERISA. FLCI has
complied with all applicable provisions of ERISA and all rules and regulations
promulgated thereunder, and neither FLCI nor any trustee, administrator,
fiduciary, agent or employee thereof has at any time been involved in a
transaction that would constitute a "prohibited transaction" within the meaning
of Section 406 of ERISA as to any covered plan of FLCI. FLCI is not a party to
any collective bargaining or other labor union agreement. FLCI has not, within
the past five (5) years had, or been threatened with, any labor union
activities, work stoppages or other labor trouble with respect to its employees.
(b) FLCI has made available for review by USOL and its representatives
and SCHEDULE 3.14(B) sets forth (i) a list of true and complete copies of all
employment agreements with officers and directors of FLCI; (ii) a list of true
and complete copies of all agreements with consultants where FLCI has
obligations to make annual cash payments in an amount exceeding $25,000; (iii) a
schedule listing all officers of FLCI who have executed a non-competition
agreement with FLCI; (iv) a list of true and complete copies of all severance
agreements, programs and policies of FLCI with or relating to its employees,
excluding programs and policies required to be maintained by law; and (v) a list
of true and complete copies of all plans, programs, agreements and other
arrangements of FLCI with or relating to its employees which contain
change-in-control provisions.
(c) SCHEDULE 3.14(C) sets forth a true and complete list of each
outstanding option to purchase FLCI Stock as of the date hereof, together with
the identity of the holder of such option, the number of shares of FLCI Stock
subject to such option, the date of grant of such option, the extent to which
such option is or will become vested, the option price of such option (to the
extent determined as of the date hereof), whether such option is intended to
qualify as an ISO, and the expiration date of such option. SCHEDULE 3.14(C) also
sets forth the total number of such ISOs and any nonqualified options.
EX 99.4 - 21
3.15 LABOR MATTERS.
FLCI has been and currently is conducting its business in full
compliance with all Laws relating to employment and employment practices, terms
and conditions of employment, wages and hours and nondiscrimination in
employment. FLCI's relationship with its employees is good, and there is no
labor strike, dispute, slow-down or work stoppage actually pending or threatened
against or involving FLCI which might affect in any material way its business.
None of the employees of FLCI is covered by any collective bargaining agreement,
no collective bargaining agreement is currently being negotiated, and, to the
best knowledge or FLCI, no attempt is currently being made to organize any
employees of FLCI to form or enter a labor union or similar organization. FLCI
has not experienced any work stoppage or other material labor difficulty in the
last five years.
3.16 RESTRICTIONS ON BUSINESS ACTIVITIES.
Except for this Agreement, there is no material agreement, judgment,
injunction, order or decree binding upon FLCI which has or could reasonably be
expected to have the effect of prohibiting or impairing any material business
practice of FLCI, the acquisition of property by FLCI or the conduct of business
by FLCI as currently conducted or as proposed to be conducted by FLCI following
the Merger.
3.17 REAL PROPERTY.
(a) FLCI does not own any real property. SCHEDULE 3.17(A) lists all
leases pursuant to which FLCI holds any real property ("FLCI REAL PROPERTY
LEASES") and includes complete, accurate and insurable legal descriptions of
such leased real property. No parcel of land subject to an FLCI Real Property
Lease relies on or regularly makes use of access to the nearest public road or
right-of-way over land owned by others, except where such access is by means of
one or more valid recorded easements not subject to divestiture, the terms of
which have been disclosed to USOL prior to the date hereof. FLCI has delivered
to USOL true and complete copies of all FLCI Real Property Leases, together with
copies of all reports of any engineers, environmental consultants or other
consultants in its possession relating to any of the property subject to an FLCI
Real Property Lease. All of the FLCI Real Property Leases are valid, enforceable
and effective in accordance with their terms; all rentals, royalties and other
monetary obligations thereunder payable have been fully paid; there is not under
any FLCI Real Property Lease any existing or claimed default by FLCI or any
other party thereto; there is not under any FLCI Real Property Lease any event
or condition, which with or without notice or the passage of time, or both,
would constitute a default by FLCI; and FLCI enjoys peaceable and undisturbed
possession under all FLCI Real Property Leases. None of the FLCI Real Property
Leases are encumbered by any Liens, other than Permitted Liens.
(b) Each separate parcel of real estate subject to an FLCI Real Property
Lease has adequate water supply, storm and sanitary sewer facilities, access to
telephone, gas and electrical connections, fire protection, drainage and other
public utilities, and has parking facilities that meet all requirements imposed
by applicable Laws.
EX 99.4 - 22
(c) There is no pending or, to the best knowledge of FLCI, threatened or
proposed proceeding or governmental action to modify the zoning classification
of, or to condemn or take by the power of eminent domain (or to purchase in lieu
thereof), or to classify as a landmark, or to impose special assessments on, or
otherwise to take or restrict in any way the right to use, develop or alter, all
or any part of the real property subject to the FLCI Real Property Leases.
3.18 EQUIPMENT AND VEHICLES.
SCHEDULE 3.18-1 sets forth a true and complete list of all equipment
owned by FLCI ("FLCI EQUIPMENT"), other than items acquired by FLCI in the
ordinary course of business from the date hereof through the Closing (and FLCI
will identify in writing to USOL, prior to the Closing, each item so acquired
which has a book value of $10,000 or more). SCHEDULE 3.18-2 lists all leases by
FLCI of any item of personal property used in connection with the Business
("FLCI PERSONAL PROPERTY LEASES"). All of the FLCI Equipment and all of the
other personal property leased by FLCI under the FLCI Personal Property Leases
are presently utilized by FLCI in the ordinary course of its business. FLCI has
delivered to USOL true and complete copies of all FLCI Personal Property Leases.
3.19 INVENTORIES.
FLCI does not maintain inventories.
3.20 TAXES.
(a) Except as set forth in SCHEDULE 3.20(A), FLCI has completed and
timely filed with the appropriate taxing authority all Tax Returns required to
be filed by it through the date hereof and will timely file any Tax Returns
required to be filed on or prior to the Closing. FLCI has paid and discharged
all Taxes due in connection with or with respect to all Tax Returns and has paid
all other Taxes when due, and there are no other Taxes that would be due if
asserted by a taxing authority, except such as are being contested in good faith
by appropriate proceedings (to the extent that any such proceedings are
required) and with respect to which FLCI is maintaining reserves to the extent
currently required in all respects adequate for their payment. As of the time of
filing, all Tax Returns were (and, as to Tax Returns not filed as of the date
hereof, will be) complete and correct in all material respects. FLCI has
complied in all material respects with all applicable Laws relating to the
payment and withholding of Taxes and has timely withheld from employee wages or
other payments to creditors or independent contractors or stockholders and paid
over to the proper taxing authority all amounts required to be so withheld and
paid over. Except as set forth in SCHEDULE 3.20(A), no claim has ever been made
by a taxing authority in a jurisdiction where FLCI does not file Tax Returns
that it is or may be subject to Taxes in that jurisdiction. FLCI has disclosed
to the relevant taxing authority any position taken where the failure to make
such disclosure would enable the taxing authority to subject a taxpayer to
penalties or additions to tax that would have a material adverse effect upon
FLCI. No taxing authority or agency is now asserting or, to FLCI's knowledge, is
threatening to assert against FLCI any deficiency or claim for additional Taxes
other than additional Taxes with respect to which an adequate
EX 99.4 - 23
reserve (in conformity with GAAP) has been established, as set forth in the most
recently filed FLCI SEC Report. FLCI is not currently being audited by any
taxing authority. There are no Tax liens on any assets of FLCI. No extension or
waiver of a statute of limitations with respect to Taxes or Tax Returns is
currently in effect for FLCI. The accruals and reserves for Taxes are in all
material respects adequate to cover all Taxes accruable and unpaid through the
Closing Date (including interest and penalties, if any, thereon and Taxes being
contested) in accordance with GAAP, consistently applied with past practice. No
material issue has been raised by a taxing authority on audit that is of a
recurring nature and that would have a material adverse effect upon the Taxes of
FLCI. FLCI has delivered to USOL for inspection all Tax Returns of, and all
examination reports and statements of deficiency assessed against or agreed to
by, FLCI for which the applicable statute of limitations has not expired. All
material elections with respect to Taxes affecting FLCI as of the date hereof
are set forth in SCHEDULE 3.20(A). FLCI has not entered into any transaction
already recharacterized or which could be recharacterized with respect to Taxes
on the grounds of tax avoidance, bad faith, or tax fraud.
(b) FLCI has not made any payments, is not obligated to make any
payments and is not a party to any agreement, contract or arrangement, including
this Agreement, that may result, separately or in the aggregate, in the payment
of any "excess parachute payment" within the meaning of Section 280G of the Code
or any payment that will not be deductible under Section 162(m) of the Code.
FLCI does not own stock in a passive foreign investment company within the
meaning of Section 1296 of the Code. FLCI has not filed a consent pursuant to
Section 341(f) of the Code or agreed to have Section 341(f)(2) of the Code apply
to any disposition of any asset owned by FLCI. No property used by FLCI is
property that FLCI is or will be required to treat as being owned by another
Person pursuant to the provisions of Section 168(f)(8) of the Internal Revenue
Code of 1954 as it existed prior to the enactment of the Tax Reform Act of 1986
or is "tax-exempt use property" within the meaning of Section 168(h) of the
Code. FLCI has not entered into any inter-company transaction within the meaning
of Section 1.1502-13(b)(1) of the United States Treasury Regulations as to which
deferred gains or losses have not been restored. FLCI does not have and has not
had a branch in any foreign country. FLCI is not a party to any tax allocation
or tax sharing agreements or documentation of similar arrangements. FLCI has not
been and is not a member of an affiliated group (within the meaning of Section
1504(a) of the Code or a similar group defined under a similar provision of
state, local, or foreign law, filing a consolidated tax return, and FLCI is not
liable for the Taxes of any other Person or entity under United States Treasury
Regulation Section 1.1502-6 (or any similar provision of state, foreign or local
law), or as a transferee or successor, or by contract, or otherwise. FLCI
operates at least one significant historic business line, or owns at least a
significant portion of its historic business assets, in each case within the
meaning of Section 1.368-1(d) of the United States Treasury Regulations. FLCI is
not an "investment company" as defined in Section 368(a)(2)(F) of the Code.
3.21 ENVIRONMENTAL MATTERS.
FLCI (i) has obtained all required Environmental Permits; (ii) is in
substantial compliance with all material terms and conditions of such required
Environmental Permits, and also is in substantial compliance with all other
limitations, restrictions, conditions,
EX 99.4 - 24
standards, prohibitions, requirements, obligations, schedules and timetables
contained in the Environmental Laws or contained in any regulation, code, plan,
order, decree, judgment, notice or demand letter issued, entered, promulgated or
approved thereunder; (iii) as of the date hereof, is not aware of and has not
received notice of any event, condition, circumstance, activity, practice,
incident, action or plan which would interfere with or prevent continued
compliance with or which would give rise to any material common law or statutory
liability, or otherwise form the basis of any claim, action, suit or proceeding,
based on or resulting from FLCI's (or any of its agent's) manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling, or the emission, discharge or release into the environment, of any
pollutant, contaminant or hazardous or toxic material or waste, and (iv) has
taken all actions necessary under applicable requirements of Laws, including the
Environmental Laws, to register any products or materials required to be
registered by FLCI (or any of its agents) thereunder.
3.22 BROKERS.
No investment bank, broker or finder is entitled to any fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of FLCI.
3.23 INTERESTED PARTY TRANSACTIONS.
Except as set forth in SCHEDULE 3.23, since the effective date of FLCI's
Registration Statement and Prospectus dated July 28, 1998, no event has occurred
that would be required to be reported as a Certain Relationship or Related
Transaction, pursuant to Item 404 of Regulation S-K promulgated by the SEC.
3.24 INSURANCE POLICIES.
There are no disputes with underwriters of FLCI's insurance policies or
bonds, and all premiums due and payable with respect thereto have been paid.
There are no pending or, to the best knowledge of FLCI, threatened terminations
or premium increases with respect to any of such insurance policies or bonds
and, to the best knowledge of FLCI, there is no condition or circumstance
applicable to FLCI's business which is likely to result in such termination or
increase. FLCI's business and the assets insured by such insurance policies are
in compliance with all material conditions contained in such insurance policies
or bonds; and such insurance policies are valid and in full force.
3.25 VOTE REQUIRED.
The affirmative vote of the holders of a majority of the outstanding
shares of FLCI Common Stock is the only vote of the holders of any class or
series of FLCI's capital stock necessary under its Articles of Incorporation,
By-laws, applicable law and the rules of the National Association of Securities
Dealers, Inc., or Nasdaq to approve the Merger and the other transactions
contemplated hereby.
EX 99.4 - 25
3.26 OTHER NEGOTIATIONS.
FLCI is not engaged in discussions or negotiations with any Person or
Persons with respect to, and has not solicited or furnished any information to
any Person or Persons who, to FLCI's knowledge, is or are currently
contemplating negotiations or an offer regarding, a consolidation or merger or
other business combination, recapitalization, liquidation, or similar
transaction, or any other transaction which could be conditioned upon, or
otherwise require, the termination of this Agreement.
3.27 FULL DISCLOSURE.
(a) No statement contained in this Agreement or in any certificate or
schedule furnished or to be furnished by or on behalf of FLCI to USOL pursuant
to this Agreement, when taken together with all other statements contained
herein or in other certificates and schedules furnished pursuant to this
Agreement, contains any untrue statement of a material fact or omits to state
any material fact necessary, in the light of the circumstances under which it
was made, in order to make the statements herein or therein not misleading.
(b) The information supplied by FLCI for inclusion or incorporation by
reference in the proxy statement to be sent to the stockholders of FLCI in
connection with the meeting of the stockholders of FLCI to consider the Merger
and related matters (the "FLCI STOCKHOLDERS' MEETING") and relating to the FLCI
Stock to be issued in connection with the Merger (such proxy statement as
amended or supplemented being hereinafter referred to as the "PROXY STATEMENT")
shall not (i) at the time the Proxy Statement (or any amendment thereof or
supplement thereto) is first mailed to holders of FLCI Stock, (ii) at the time
of the FLCI Stockholders' Meeting, and (iii) at the Effective Time, contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they are made, not misleading. If at any time
prior to the Effective Time any event or circumstance relating to FLCI or any of
its Affiliates or its or their respective officers or directors should be
discovered by FLCI which should be set forth in an amendment or a supplement to
the Proxy Statement, FLCI shall promptly inform USOL of such event or
circumstance.
3.28 ANTI-TAKEOVER LAW.
Neither the entering into this Agreement nor the consummation by FLCI of
the transactions contemplated hereby will result in the prohibition of any
business combination pursuant to Sections 60.801 - 60.845 of the Oregon Law.
3.29 INTELLECTUAL PROPERTY.
(a) TITLE. SCHEDULE 3.29(A) sets forth a true and complete list of all
of the Intellectual Property that is owned by FLCI and primarily related to,
currently used in, held for current use in connection with, or currently
necessary for the conduct of, or otherwise material to its business (the "FLCI
INTELLECTUAL PROPERTY ASSETS") other than Intellectual Property that is both not
registered or subject to application or registration and not material to
EX 99.4 - 26
its business as currently conducted. The FLCI Intellectual Property Assets
comprise all of the Intellectual Property necessary for FLCI to conduct and
operate its business as it is now being conducted by FLCI.
(b) NO INFRINGEMENT. The conduct of FLCI's business does not infringe or
otherwise conflict with any rights of any Person in respect of any Intellectual
Property. Except as set forth in SCHEDULE 3.29(B), to the best knowledge of
FLCI, none of the FLCI Intellectual Property Assets is being infringed or
otherwise used or available for use by any other Person.
(c) LICENSING ARRANGEMENTS. SCHEDULE 3.29(C) sets forth all agreements
or arrangements currently in effect (i) pursuant to which FLCI has licensed FLCI
Intellectual Property Assets to, or the use of FLCI Intellectual Property Assets
has been otherwise permitted (through settlement or similar agreements) by, any
other Person and (ii) pursuant to which FLCI has had Intellectual Property
licensed to it or has otherwise been permitted to use Intellectual Property
(through settlement or similar agreements). All of the agreements or
arrangements set forth in SCHEDULE 3.29(C): (x) are in full force and effect in
accordance with their terms and no default exists thereunder by FLCI, or to the
best knowledge of FLCI, by any other party thereto, (y) are free and clear of
all Liens, other than Permitted Liens and (z) do not contain any
change-in-control or other terms or conditions that will become applicable or
inapplicable as a result of the transactions contemplated by the Agreement. FLCI
has delivered to USOL true and complete copies of all licenses and arrangements
(including amendments) set forth in the SCHEDULE 3.29(C).
(d) NO INTELLECTUAL PROPERTY LITIGATION. No claim or demand of any
Person has been made nor is there any proceeding that is pending or, to the best
knowledge of FLCI, threatened, which (i) challenges the rights of FLCI in
respect of any FLCI Intellectual Property Assets, (ii) asserts that FLCI is
infringing or otherwise in conflict with, or is, required to pay any royalty,
license fee, charge or other amount with regard to any Intellectual Property, or
(iii) claims that any default exists under any agreement or arrangement listed
in SCHEDULE 3.29(C). None of the FLCI Intellectual Property Assets is subject to
any outstanding order, ruling, decree, judgment or stipulation by or with any
court, arbitrator, or administrative agency, or any Governmental Authority, or
has been the subject of any litigation, whether or not resolved in favor of
FLCI.
(e) DUE REGISTRATION, ETC. SCHEDULE 3.29(E) sets forth the filing
offices, domestic or foreign, where the FLCI Intellectual Property Assets have
been registered, issued or filed. FLCI has taken such other actions that FLCI
considers reasonably necessary to ensure full protection under any applicable
laws or regulations, and such registrations, filings, issuances and other
actions remain in full force and effect, in each case to the extent material to
its business.
(f) USE OF NAME AND XXXX. There are, and immediately after the Closing
will be, no contractual restriction or limitations pursuant to any orders,
decisions, injunctions, judgments, awards or decrees of any Governmental
Authority on FLCI's right to use the name and xxxx "FIRSTLINK" in the conduct of
its business as presently carried on.
EX 99.4 - 27
3.30 ABSENCE OF CERTAIN BUSINESS PRACTICES.
To the best knowledge of FLCI, neither FLCI nor any officer, employee or
agent of FLCI, nor any other Person acting on their behalf, has, directly or
indirectly, since January 1, 1998 given or agreed to give any gift or similar
benefit to any customer, supplier, governmental employee or other Person who is
or may be in a position to help or hinder FLCI's business (or assist FLCI in
connection with any actual or proposed transaction relating to its business) (i)
which subjected FLCI to any damage or penalty in any civil, criminal or
governmental litigation or proceeding, (ii) which if not given in the past,
might have a material adverse effect, (iii) which if not continued in the
future, might have a material adverse effect or subject FLCI to suit or penalty
in any private or governmental proceeding, or (iv) for the purpose of
establishing or maintaining any concealed fund or concealed bank account.
3.31 TERRITORIAL RESTRICTIONS.
FLCI is not a party to any agreement or understanding, whether written
or oral, with any other Person which restricts it from carrying on its business
anywhere in the world.
3.32 YEAR 2000 COMPLIANCE.
All of the computer hardware, software and information systems,
including without limitation the financial, operational and manufacturing
systems, owned or used by FLCI (i) are prior to, during and after calendar year
2000 A.D. capable of operating in all material respects without errors relating
to date data, including errors relating to date data which represents or
references different calendar centuries or more than one century, and of
providing all date related functionalities, interfaces and data fields,
including the indication of century; (ii) are able to accurately manage and
process data and date-related data (including, but not limited to, calculating,
comparing, sequencing and sorting) from, into and between the 20th and 21st
centuries, including single and multiple centuries and leap years; and (iii)
shall not abnormally terminate or provide invalid or incorrect results due to
date or date-related data, specifically including date data which represents or
references different centuries or more than one century.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF USOL
USOL hereby represents and warrants to FLCI that each of the following
is true, correct, and complete as of the date hereof:
4.1 ORGANIZATION.
(a) USOL is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. USOL has full corporate power
and authority to own, lease and operate its properties and to carry on its
business as such business is now conducted and proposed to be conducted. The
copies of the Certificate of Incorporation of
EX 99.4 - 28
USOL, certified by the Secretary of State of the State of Delaware, and the
By-laws of USOL, each of which have been delivered to FLCI by USOL, are true and
complete copies thereof, and are in full force and effect. USOL is not in
violation of its Certificate of Incorporation or its By-laws.
(b) Except as set forth in SCHEDULE 4.1(B), USOL has no subsidiaries and
does not, directly or indirectly, own or have the contractual right or
obligation to acquire any equity interest in any other corporation, partnership,
joint venture, trust or other business organization. USOL is the record and
beneficial owner of all of the capital stock of each of the corporations listed
in SCHEDULE 4.1(B). Except as disclosed in SCHEDULE 4.1(B), USOL has not made
any investment in, loan to, or advance of cash or other extension of credit to
any Person, other than in the ordinary course of its business.
4.2 CAPITALIZATION.
(a) The authorized capital stock of USOL consists of (i) 30,000,000
shares of common stock, $.001 par value per share, of which 3,175,000 shares are
currently issued and outstanding, and (ii) 2,000,000 shares of Preferred Stock,
$.001 par value per share, 1,700,000 shares of which have been designated as the
"Series A Convertible Preferred Stock," of which 1,262,000 shares are currently
issued and outstanding and 300,000 shares of which have been designated as the
"Series B Convertible Preferred Stock," of which 218,000 shares are currently
issued and outstanding. EXHIBITS 2.6(B)-1 and 2.6(B)-2 set forth the Certificate
of Designations of the USOL Series A Preferred Stock and the USOL Series B
Preferred Stock, respectively. All of the outstanding shares of capital stock of
USOL have been duly authorized, are validly issued, fully paid and
non-assessable, and the holders thereof are not entitled to cumulative voting
rights or preemptive rights. There are no obligations, contingent or otherwise,
of USOL or any of its Subsidiaries to repurchase, redeem or otherwise acquire
any shares of USOL Common Stock or the capital stock of any Subsidiary or to
provide funds to or make any investment (in the form of a loan, capital
contribution or otherwise) in any such subsidiary or any other entity other than
guarantees of bank obligations of Subsidiaries entered into in the ordinary
course of business. Except as set forth in SCHEDULE 4.2(A), there are no
outstanding options to purchase or warrants, privileges or rights to subscribe
to or purchase any shares of USOL's capital stock or securities issued by USOL
convertible into or exchangeable for shares of USOL's capital stock or other
securities of USOL or commitments, understandings or intentions to issue any
additional shares or options, warrants, privileges or rights to subscribe for
shares of USOL's capital stock.
(b) USOL has obtained a commitment for $35 million of senior notes (the
"SENIOR NOTES") on the terms and conditions described in SCHEDULE 4.2(B).
(c) USOL has no short-term or long-term debt obligations, except as set
forth in SCHEDULE 4.2(C), and except for obligations incurred in the ordinary
course of business in individual amounts not greater than $25,000.
EX 99.4 - 29
4.3 QUALIFICATION IN FOREIGN JURISDICTIONS.
USOL is duly qualified or licensed and in good standing as a foreign
corporation duly authorized to do business in each jurisdiction in which the
character of the properties owned or leased or the nature of the activities
conducted by it makes such qualification or licensing necessary, except for any
jurisdiction(s) in which the failure to so qualify would not have a material
adverse effect upon USOL. SCHEDULE 4.3 sets forth each state in which USOL is
qualified to do business as a foreign corporation.
4.4 AUTHORITY RELATIVE TO THIS AGREEMENT.
USOL has all necessary corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by USOL and the consummation by USOL of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of USOL are
necessary to authorize this Agreement or to consummate the transactions so
contemplated. The Board of Directors of USOL has determined that it is advisable
and in the best interest of USOL's stockholders for USOL to enter into the
Merger with FLCI upon the terms and subject to the conditions of this Agreement.
This Agreement has been duly and validly executed and delivered by USOL and,
assuming the due authorization, execution and delivery by FLCI, constitutes a
legal, valid and binding obligation of USOL, enforceable in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, moratorium, reorganization and similar laws from time to time in
effect that affect creditors' rights generally, and by legal and equitable
limitations on the availability of specific remedies.
4.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by USOL does not, and
the performance of this Agreement by USOL will not, (i) conflict with or violate
the Certificate of Incorporation or By-laws of USOL; (ii) conflict with or
violate any Law applicable to USOL or any of its subsidiaries or by which any of
their respective properties is bound or affected; (iii) result in any breach of
or constitute a default (or an event that with notice or lapse of time or both
would become a default), or impair USOL's or any of its Subsidiaries' rights or
alter the rights or obligations of any third party under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any USOL
Material Contract; or (iv) result in the creation of a Lien on any of the
properties or assets of USOL or any of its Subsidiaries pursuant to, any note,
bond mortgage, indenture, contract, agreement, lease, license, permit, franchise
or other instrument or obligation to which USOL or any of its Subsidiaries is a
party or by which USOL or any of its Subsidiaries, or any of their respective
properties, is bound or affected, except in the case of clauses (ii), (iii) and
(iv) for such breaches, defaults or other occurrences that would not,
individually or in the aggregate, have a material adverse effect upon USOL.
EX 99.4 - 30
(b) The execution and delivery of this Agreement by USOL does not, and
the performance of this Agreement and the transactions contemplated hereby by
USOL will not, require any consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Authority, except (i) the
consents, approvals or Permits set forth in SCHEDULE 4.5(B), (ii) for applicable
requirements, if any, of the Securities Act, the Exchange Act, state securities
laws, and the filing and recordation of appropriate merger or other documents as
required by the Delaware Law and the Oregon Law, and (iii) where the failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not prevent or delay consummation of the Merger,
or otherwise prevent or delay USOL from performing its obligations under this
Agreement, or would not otherwise have a material adverse effect on USOL.
4.6 BROKERS.
Except as set forth in SCHEDULE 4.6, no investment bank, broker or
finder is entitled to any fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
USOL. USOL has heretofore furnished to FLCI true and complete copies of all
agreements between USOL and any other Person, pursuant to which such other firm
would be entitled to any payment relating to the transactions contemplated
hereunder.
4.7 OTHER NEGOTIATIONS.
USOL is not engaged in discussions or negotiations with any Person or
Persons with respect to, and has not solicited or furnished any information to
any Person or Persons who, to USOL's knowledge, is or are currently
contemplating negotiations or an offer regarding, a consolidation or merger or
other business combination, recapitalization, liquidation, or similar
transaction, or any other transaction which could be conditioned upon, or
otherwise require, the termination of this Agreement.
4.8 FULL DISCLOSURE.
(a) No statement contained in this Agreement or in any certificate or
schedule furnished or to be furnished by or on behalf of USOL to FLCI pursuant
to this Agreement, when taken together with all other statements contained
herein or in other certificates and schedules furnished pursuant to this
Agreement, contains any untrue statement of a material fact or omits to state
any material fact necessary, in the light of the circumstances under which it
was made, in order to make the statements herein or therein not misleading.
(b) Any information supplied by USOL for inclusion or incorporation by
reference in the Proxy Statement shall not (i) at the time the Proxy Statement
(or any amendment thereof or supplement thereto) is first mailed to holders of
FLCI Stock, (ii) at the time of the FLCI Stockholders' Meeting, or (iii) at the
Effective Time, contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they are made,
not misleading. If at any time prior to the Effective Time any event or
circumstance
EX 99.4 - 31
relating to USOL or its officers or directors should be discovered
by USOL which should be set forth in a supplement to the Proxy Statement, USOL
shall promptly inform FLCI of such event or circumstance.
4.9 LOCKUP AGREEMENT.
(a) USOL has obtained, and has delivered to FLCI, the agreement of each
holder of any share of USOL Preferred Stock that such holder, except as provided
in SCHEDULE 4.9, for a period of one (1) year after the Effective Time, but in
no event later than eighteen (18) months from the date hereof, shall not sell,
pledge, encumber or otherwise transfer or dispose of, and shall not permit to be
sold, encumbered, attached or otherwise disposed of or transferred in any
manner, either voluntarily or by operation of law ("TRANSFER"), all or any
portion of the shares of Company Preferred Stock that such holder owns or
hereafter acquires.
(b) USOL has obtained, through execution and delivery of the Common
Stockholder and Warrant Holder Registration Rights Agreement dated as of the
date hereof, the agreement of each holder of USOL Common Stock and each holder
of a USOL Warrant that such holder, for a period of six months after the
Effective Time, but in no event later than nine (9) months from the date hereof
(the "LOCKUP PERIOD"), shall not Transfer, and shall not permit to be
Transferred, all or any portion of the shares of Company Common Stock or of the
Company Warrants that such holder owns or hereafter acquires; PROVIDED, HOWEVER,
that during the Lockup Period, each such holder may make Transfers to Qualified
Institutional Buyers (as such term is defined in Rule 144A under the Securities
Act); and PROVIDED FURTHER, that each such holder may (i) transfer all or any
part of such holder's USOL Common Stock and/or USOL Warrants to one or more
Affiliates which, for purposes of this Section 4.9(b), shall include members of
any holder which is a limited liability company, employees or directors of each
such holder; (ii) Transfer such holder's USOL Common Stock and/or USOL Warrants
in connection with any exchange, reclassification or other conversion of shares
into any cash, securities or other property pursuant to a merger or
consolidation of the Company or any of its subsidiaries with, or any sale or
transfer by the Company or any of its subsidiaries of all or substantially all
its assets to, any Person; and (iii) Transfer such holder's USOL Common Stock
and/or USOL Warrants in connection with any statutory share exchange or any
recapitalization of the Company or any of its subsidiaries; and PROVIDED
FURTHER, that if the conditions precedent for USOL to exercise the call option
under Section 8 of the USOL Other Warrants exist, then the Lockup Period with
respect to the Company Other Warrants shall terminate.
(c) USOL has obtained, through execution and delivery by Xxx Xxxxxx and
Xxxxxx Xxxxxxx (for the purposes of this paragraph only, the "HOLDERS") of the
Officers Indemnification Agreement dated as of the date hereof, and has
delivered to FLCI, the agreement of each such holder with respect to the Company
Common Stock that such holder, for a period of one year after the Effective
Time, but in no event later than eighteen (18) months from the date hereof (the
"OTHER LOCKUP PERIOD"), shall not Transfer, and shall not
EX 99.4 - 32
permit to be Transferred, all or any portion of the shares of Company Common
Stock that such holder owns or hereafter acquires.
4.10 INCORPORATION OF REPRESENTATIONS AND WARRANTIES BY REFERENCE.
The representations and warranties and related schedules and disclosure
memoranda of (a) USOC set forth in the USOC Asset Purchase Agreement and (b)
GMAC-CM set forth in the TSD Asset Purchase Agreement are hereby incorporated by
reference as though made by USOL and fully set forth herein.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
5.1 CONDUCT OF BUSINESS BY USOL AND FLCI PENDING THE MERGER.
During the period from the date of this Agreement and continuing until
the earlier of the termination of this Agreement or the Effective Time, unless
the other party shall otherwise agree in writing, and except as to USOL, the
actions permitted to be taken by USOL Sub pursuant to the USOC Asset Purchase
Agreement and the transactions contemplated thereby, each of USOL and FLCI shall
conduct its respective business and shall cause the businesses of its
subsidiaries to be conducted only in, and each of USOL and FLCI and its
subsidiaries shall not take any action except in, the ordinary course of
business and in a manner consistent with past practice; and each of USOL and
FLCI shall use reasonable efforts to preserve the business organization of
itself and its subsidiaries, to keep available the services of the present
officers, key employees and consultants of itself and its subsidiaries and to
preserve the present relationships of itself and its subsidiaries with
customers, suppliers and other Persons with which it or any of its subsidiaries
has significant business relations. By way of amplification and not limitation,
except as contemplated by this Agreement, neither USOL nor FLCI, nor any of
their respective subsidiaries shall, during the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Effective Time do, or propose to do, any of the following without the
prior written consent of the other party:
(a) propose to or amend or otherwise change its Articles or Certificate
of Incorporation or By-laws;
(b) issue, sell, pledge, dispose of or encumber, or authorize the
issuance, sale, pledge, disposition or encumbrance of, any shares of capital
stock of any class (other than the sale or issuance of common stock upon the
exercise of outstanding options listed in SCHEDULE 3.2 or SCHEDULE 3.14(C)
hereto (with respect to FLCI); or in SCHEDULE 4.2(A) hereto (with respect to
USOL), or any options, warrants, convertible securities or other rights of any
kind to acquire any shares of capital stock, or any other ownership interest
(including, without limitation, any phantom interest) of FLCI or USOL, as the
case may be, or any of their respective subsidiaries (PROVIDED that consent for
grants of employee stock options to newly
EX 99.4 - 33
hired employees pursuant to existing stock option plans consistent with past
practice shall not be unreasonably withheld);
(c) sell, pledge, mortgage, dispose of or encumber any of its assets or
any assets of its subsidiaries, except for (i) sales of products (or licenses
thereto) and services in the ordinary course of business consistent with past
practice, (ii) dispositions of obsolete or worthless assets, and (iii) sales of
immaterial assets not in excess of $10,000 in the aggregate;
(d) except as is contemplated by Section 6.5, alter the price or
accelerate, amend or change the period (or permit any acceleration, amendment or
change) of exercisability of options or restricted stock granted under the
Employee Plans (including stock option plans) or authorize cash payments in
exchange for any options granted under any of such plans;
(e) (i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of any of its capital stock, except for the declaration and payment of
any required dividend by USOL on the USOL Preferred Stock, (ii) split, combine
or reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, or (iii) amend the terms of, repurchase, redeem
or otherwise acquire, or permit any subsidiary to repurchase, redeem or
otherwise acquire, any of its securities or any securities of its subsidiaries,
or propose to do any of the foregoing;
(f) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or division
thereof; (ii) incur any indebtedness for borrowed money (except for the issuance
of the Senior Notes), or issue any debt securities or assume, guarantee (other
than guarantees of bank debt of such party's subsidiaries entered into in the
ordinary course of business) or endorse or otherwise as an accommodation become
responsible for, the obligations of any Person, or make any loans or advances,
except in each case in the ordinary course of business consistent with past
practice; (iii) enter into or amend any USOL Material Contract or FLCI Material
Contract, as the case may be, other than in the ordinary course of business
consistent with past practice; (iv) authorize any capital expenditures or
purchase of fixed assets which are, in the aggregate, in excess of $25,000 for
such party and its subsidiaries taken as a whole; or (v) enter into or amend any
contract, agreement, commitment or arrangement to effect any of the matters
prohibited by this Section 5.1;
(g) except, as to FLCI, for increases consistent with past practice and
disclosed on SCHEDULE 5.1(G) in salary or wages of employees of FLCI or its
subsidiaries who are not officers and except, as to USOL, for Persons other than
Xxxxxx Xxxxxxx and Xxxxxx Xxxxxx, increase the compensation payable or to become
payable to its officers or employees, or grant any severance or termination pay
to, or enter into any employment or severance agreement with any director,
officer or other employee of such party or any of its subsidiaries, or
establish, adopt, enter into or amend any collective bargaining, bonus, profit
sharing, thrift, compensation, stock option, restricted stock, stock purchase,
pension,
EX 99.4 - 34
retirement, deferred compensation, employment, termination, severance or other
plan, agreement, trust, fund, policy or arrangement for the benefit of any
current or former directors, officers or employees, except, in each case, as may
be required by law, and except for ministerial updating of plans and trusts
which does not affect the benefits thereunder;
(h) take any action to change accounting policies or procedures
(including, without limitation, procedures with respect to revenue recognition,
payments of accounts payable, and collection of accounts receivable);
(i) make any material tax election inconsistent with past practices or
settle or compromise any material Federal, state, local or foreign tax liability
or agree to an extension of a statute of limitations except to the extent the
amount of any such settlement has been reserved for on the USOL Unaudited
Balance Sheet or the FLCI Unaudited Balance Sheet, each as on the Balance Sheet
Date, as the case may be;
(j) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction in the ordinary course of business and
consistent with past practice of liabilities reflected or reserved against in
the financial statements of such party or incurred in the ordinary course of
business and consistent with past practice;
(k) take any action which would make any of the representations or
warranties of such party contained in this Agreement materially untrue or
incorrect or prevent such party from performing in all material respects or
cause such party not to perform in all material respects its covenants
hereunder;
(l) cancel or waive any claim or right of substantial value or settle
any material pending litigation;
(m) pay, discharge, or satisfy any material claim or liability before it
becomes due or fail to pay accounts payable in accordance with their terms;
(n) knowingly take or allow to be taken or fail to take any action which
act or omission would jeopardize qualification of any of the Merger as a
"reorganization" within the meaning of Section 368(a) of the Code; or
(o) agree to do any of the foregoing.
5.2 NO SOLICITATION BY USOL OR FLCI.
(a) During the period from the date of this Agreement and continuing
until the earlier of the termination of this Agreement or the Effective Time,
neither USOL nor FLCI shall, directly or indirectly, through any officer,
director, employee, representative or agent of USOL or FLCI, including, without
limitation, any investment banker, attorney, or accountant retained by FLCI or
USOL, as the case may be, or any of its subsidiaries, (i) initiate, solicit, or
encourage any inquiries or proposals that constitute, or could reasonably be
expected to lead
EX 99.4 - 35
to, a proposal or offer for a merger, consolidation, business combination, sale
of assets representing a substantial portion of the assets of either USOL or
FLCI, as applicable, including a sale of shares representing 20% or more of the
outstanding USOL Stock or FLCI Stock, including, without limitation, by way of
tender offer or exchange offer other than the Merger and the other transactions
relating to this Agreement (any of the foregoing inquiries or proposals being
referred to in this Agreement as an "ACQUISITION PROPOSAL"); or, subject to the
applicable fiduciary duties of the respective directors of USOL and FLCI, as
determined by such directors in good faith after consultation with and based
upon the advice of legal counsel, (ii) engage in negotiations or discussions
concerning, or provide to any Person or entity non-public information or data
regarding FLCI or USOL or any of their respective subsidiaries, as applicable,
for the purpose of, or otherwise cooperate with or assist or participate in,
facilitate or encourage, any inquiries regarding the making of an Acquisition
Proposal, (iii) agree to, approve, or recommend any Acquisition Proposal or (iv)
take any other action inconsistent with the obligations of USOL or FLCI, as
applicable; PROVIDED, HOWEVER, that any conversations, solicitations or
negotiations conducted by either party or their respective representatives
regarding an acquisition proposal solely with respect to the Surviving
Corporation shall not be deemed to violate any of the foregoing provisions of
this Section 5.2(a).
(b) Either party shall immediately notify the other party after receipt
of any Acquisition Proposal or any request for nonpublic information relating to
such party or any of its subsidiaries in connection with an Acquisition Proposal
or for access to the properties, books or records of such party or any
subsidiary by any Person that informs the Board of Directors or officers of such
party or such subsidiary that it intends to make, or has made, an Acquisition
Proposal. Such notice to the other party shall be made orally and in writing and
shall indicate in reasonable detail the identity of the offeror and the terms
and conditions of such proposal, inquiry or contact.
(c) Both parties shall use reasonable efforts to ensure that the
officers and directors of USOL and FLCI and their respective subsidiaries and
any investment banker or other advisor or representative retained by such party
are aware of, and comply with, the restrictions described in this Section 5.2.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 PROXY STATEMENT.
(a) As promptly as practicable after the execution of this Agreement,
FLCI shall prepare and file with the SEC the Proxy Statement, which shall be in
form and substance satisfactory to USOL. FLCI shall cause the Proxy Statement to
comply in all material respects with the Securities Act, the Exchange Act and
the regulations thereunder. FLCI shall use reasonable efforts to have or cause
the Proxy Statement to be cleared as promptly as practicable, and shall take all
actions required under any applicable federal or state
EX 99.4 - 36
securities laws or the rules and regulations of Nasdaq in connection with the
issuance of shares of FLCI Stock pursuant to the Merger. Without limiting the
generality of the foregoing, FLCI agrees to use all reasonable efforts, after
consulting with USOL, to respond promptly to any comments made by the SEC with
respect to the Proxy Statement (including each preliminary version thereof).
(b) Each of USOL and FLCI shall, and shall cause its respective
representatives to, fully cooperate with the other party and its respective
representatives in the preparation of the Proxy Statement, and shall, upon
request, furnish the other party with all information concerning it and its
Affiliates, directors, officers and stockholders as the other may reasonably
request in connection with the preparation of the Proxy Statement.
(c) As promptly as practicable after the Proxy Statement has been
cleared by the SEC, FLCI shall cause the Proxy Statement to be mailed to its
stockholders. Thereafter, USOL and FLCI shall each notify the other as promptly
as practicable upon becoming aware of any event or circumstance which should be
described in an amendment of, or a supplement to, the Proxy Statement. FLCI
shall notify USOL as promptly as practicable after the receipt by it of any
written or oral comments of the SEC on, or of any written or oral request by the
SEC for amendments or supplements to, the Proxy Statement, and FLCI shall
promptly supply USOL with copies of all correspondence between it or any of its
representatives and the SEC with respect to any of the foregoing filings.
6.2 FLCI STOCKHOLDERS' MEETING.
FLCI shall, in accordance with its charter documents, call and hold (i)
the FLCI Stockholders' Meeting as promptly as practicable for the purpose of
voting upon the approval of the Merger and this Agreement, (ii) the approval of
the Re-incorporation, and (iii) the approval of the increase in authorized
capital stock required to consummate the Merger, and FLCI shall use its best
efforts to hold the FLCI Stockholders' Meeting as soon as permitted by the proxy
rules under the Exchange Act. FLCI shall use its best efforts to obtain from the
stockholders owning more than 50% of the FLCI Stock, proxies in favor of the
approval of (i) the Merger and this Agreement, (ii) the Re-incorporation, and
(iii) the increase in authorized capital stock required to consummate the
Merger. Subject to the applicable fiduciary duties of FLCI's directors, as
determined by such directors in good faith after consultation with and based
upon the written advice of legal counsel, FLCI shall take all other action
necessary or advisable to secure the vote or consent of stockholders required by
the applicable Law to obtain such approvals, including, without limitation, the
inclusion in the Proxy Statement of the recommendation of its Board of Directors
that its shareholders vote in favor of the approval and adoption of this
Agreement and the transactions related hereto.
6.3 ACCESS TO INFORMATION; CONFIDENTIALITY.
Upon reasonable notice and subject to restrictions contained in
confidentiality agreements to which USOL or FLCI may be subject (from which USOL
and FLCI shall each use reasonable efforts to be released), USOL and FLCI shall
each (and USOL shall cause each of its subsidiaries to) afford to the officers,
employees, accountants, counsel and other
EX 99.4 - 37
representatives of the other, reasonable access, during the period from the date
of this Agreement to the Effective Time, to all its properties, books,
contracts, commitments and records and, during such period, USOL and FLCI shall
each furnish promptly to the other all information concerning its business,
properties and personnel as such other party may reasonably request, and USOL
and FLCI shall each make available to the other the appropriate individuals
(including attorneys, accountants and other professionals) for discussion of the
other's business, properties and personnel as either FLCI or USOL may reasonably
request. Each party shall keep such information confidential in accordance with
the terms of the Confidentiality and Standstill Agreement, dated May, 1999,
entered into between FLCI and USOL.
6.4 CONSENTS, APPROVALS.
USOL and FLCI shall each use its reasonable best efforts to obtain all
consents, waivers, approvals, authorizations or orders (including, without
limitation, all Governmental Approvals), and USOL and FLCI shall make all
filings (including, without limitation, all filings with Governmental
Authorities or regulatory agencies) required in connection with the
authorization, execution and delivery of this Agreement by USOL and FLCI and the
consummation by them of the transactions contemplated hereby. USOL and FLCI
shall furnish all information required to be included in the Proxy Statement, or
for any application or other filing to be made pursuant to the rules and
regulations of any Governmental Authority in connection with the transactions
contemplated by this Agreement. Upon the terms and subject to the conditions
hereof, each of the parties hereto shall use reasonable efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all other things
necessary, proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement, to obtain in a
timely manner all necessary waivers, consents and approvals and to effect all
necessary registrations and filings, and to otherwise satisfy or cause to be
satisfied all conditions precedent to its obligations under this Agreement. FLCI
and USOL shall each use reasonable efforts to cause the Merger to qualify, and
will not (either before or after consummation of the Merger) take any actions
which could prevent the Merger from qualifying, as a reorganization within the
meaning of Section 368(a)(1)(A) of the Code.
6.5 STOCK OPTIONS.
(a) At the Effective Time, the obligation to issue shares under each
then outstanding option to purchase USOL Common Stock (each a "USOL STOCK
OPTION") granted under USOL's Stock Option Plan, as amended, shall be assumed by
FLCI and each such option shall be converted into an option to acquire, on the
same terms and conditions as were applicable under such USOL Stock Option prior
to the Effective Time, the whole number of shares of FLCI Common Stock as the
holder of such USOL Stock Option would have been entitled to receive pursuant to
the Merger had such holder exercised such option in full immediately prior to
the Effective Time (not taking into account whether or not such option was in
fact exercisable). The exercise price of the options shall be a price per share
equal to the exercise price for shares of USOL Common Stock otherwise
purchasable pursuant to such USOL Stock Option; PROVIDED, HOWEVER, that the
exercisability or the other vesting of the
EX 99.4 - 38
assumed options and the underlying stock shall continue to be determined by
reference to stock option agreements executed pursuant to USOL's Stock Option
Plan; and PROVIDED FURTHER, that references in any USOL Stock Option to USOL,
the Board of Directors of USOL or any committee thereof, and any USOL Stock
Option Plan, shall, commencing at the Effective Time, unless inconsistent with
the context, be to FLCI, the board of directors of FLCI or a committee thereof,
and FLCI's 1998-1999 Combined Incentive Stock Option and Nonqualified Stock
Option Plan, respectively.
(b) As soon as practicable after the Effective Time, FLCI shall deliver
to each holder of an outstanding USOL Stock Option an appropriate notice setting
forth such holder's rights pursuant thereto and such USOL Stock Option shall
continue in effect on the same terms and conditions. FLCI shall comply with the
terms of all such USOL Stock Options and ensure, to the extent required by, and
subject to the provisions of, any USOL Stock Plan, that USOL Stock Options which
qualified for special tax treatment prior to the Effective Time continue to so
qualify after the Effective Time. FLCI shall take all corporate action necessary
to reserve for issuance a sufficient number of shares of FLCI Common Stock for
delivery pursuant to the terms set forth in this Section 6.5.
(c) FLCI shall use its reasonable best efforts after the Effective Time
to file and maintain the effectiveness of a registration statement under the
Securities Act with respect to the issuance by FLCI of shares of FLCI Common
Stock which may be issued pursuant to the USOL Stock Options as provided for
above in this Section 6.5.
6.6 WARRANTS.
At the Effective Time, FLCI shall assume in writing all obligations
under the USOL Other Warrants and the USOL TSD Warrants, and the holders of the
USOL Other Warrants and the USOL TSD Warrants thereafter shall have the right to
acquire, on the same pricing and payment terms and conditions as are currently
applicable under the USOL Other Warrants and the USOL TSD Warrants, as
applicable, the same number of shares of FLCI Common Stock as the holders of
such warrants would have been entitled to receive in the Merger had such holder
exercised such warrants in full immediately prior to the Effective Time.
6.7 NOTIFICATION OF CERTAIN MATTERS.
USOL shall give prompt notice to FLCI, and FLCI shall give prompt notice
to USOL, of (i) the occurrence or non-occurrence of any event which would cause
any representation or warranty made by the respective parties in this Agreement
to be materially untrue or inaccurate, and (ii) any failure of USOL or FLCI, as
the case may be, to materially comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder; PROVIDED, HOWEVER,
that the delivery of any notice pursuant to this Section 6.7 shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice, and PROVIDED FURTHER, that failure to give such notice shall not be
treated as a breach of covenant for the purposes of Sections 7.2(b) or 7.3(b)
unless the failure to give such notice results in material prejudice to the
other party.
EX 99.4 - 39
6.8 PUBLIC ANNOUNCEMENTS.
FLCI and USOL shall consult with each other before issuing any press
release or other public statement with respect to the Merger or this Agreement,
and any such press release shall state that it is being made by both FLCI and
USOL. FLCI and USOL shall not issue any such press release or make any such
public statement without the prior consent of the other party, which shall not
be unreasonably withheld; PROVIDED, HOWEVER, that a party may, without the prior
consent of the other party, issue such press release or make such public
statement as may upon the written advice of counsel be required by law if it has
used reasonable efforts to consult first with the other party, and has provided
the other party with at least 24 hours notice of such release.
6.9 APPLICATION FOR NASDAQ APPROVAL.
FLCI agrees to use its best efforts to prepare and file with Nasdaq such
applications, notices, reports and other information as may be reasonably
required to obtain the approval by Nasdaq of the continued listing of FLCI's
common stock outstanding prior to the consummation of the Merger and the FLCI
Common Stock, and FLCI's warrants outstanding prior to the Effective Time and
the FLCI Warrants that are currently listed on Nasdaq following consummation of
the transactions provided for herein. USOL agrees to provide FLCI with such
documents, information and other materials as FLCI may reasonably request in
connection with effecting such application and to otherwise cooperate with FLCI
in its efforts to obtain such Nasdaq approval. FLCI and USOL shall cooperate
with each other in applying for a new listing of the FLCI Common Stock and the
FLCI Warrants on the Nasdaq National Market and having the FLCI Common Stock and
the FLCI Warrants designated as national market system securities.
6.10 DELIVERY OF ADDITIONAL FILINGS.
Following the execution of this Agreement and until the Closing, FLCI
shall provide USOL with copies of any and all reports, filings, notices or other
information which FLCI may prepare and file with or receive from the SEC, Nasdaq
or any other Governmental Authority (and shall give USOL an opportunity to
review and comment on any such filings).
6.11 ACCOUNTANT'S COMFORT LETTERS.
USOL and FLCI shall each use reasonable efforts to cause their
respective independent public accountants to deliver to the other party a letter
covering such matters as may be requested by such other party, with respect to
such matters as are customarily addressed in certified public accountant's
"comfort" letters with respect to the type of transactions contemplated by this
Agreement.
6.12 INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE.
All rights to indemnification now existing in favor of the present or
former directors or officers of USOL as provided in USOL's Certificate of
Incorporation or By-laws, which rights
EX 99.4 - 40
are in effect as of the date hereof, shall, with respect to matters occurring
prior to the Effective Time, survive the Merger and continue in full force and
effect after the Effective Time. All rights to indemnification in respect of any
such claim or claims shall continue until disposition of such claim or claims.
FLCI and USOL further agree that all rights to indemnification now existing in
favor of the present or former directors or officers of USOL in any
indemnification agreement between such Person and USOL shall survive the Merger
and continue in full force and effect in accordance with the terms of such
agreement. Until the sixth anniversary of the Effective Time, FLCI shall
maintain in effect with respect to matters occurring prior to the Effective
Time, to the extent available, the policy of directors' and officers' liability
insurance currently maintained by USOL on behalf of its officers and directors;
PROVIDED, HOWEVER, that FLCI may substitute therefor a policy containing
coverage, terms and conditions which are no less advantageous to such present or
former directors and officers of USOL. Notwithstanding anything to the contrary
contained in this Agreement, the provisions of this Section 6.12 shall survive
the Effective Time and are intended to be for the benefit of, and shall be
enforceable by, each present and former director and officer of USOL and shall
be binding on all successors and assigns of the Surviving Corporation. In the
event the Surviving Corporation or any of its successors or assigns (i)
consolidates with or merges into any other Person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) transfers all or substantially all of its properties and assets to any
Person, then, and in each such case, proper provision shall be made so that the
successors and assigns of the Surviving Corporation assume the obligations set
forth in this Section 6.12.
6.13 EMPLOYEE BENEFITS
(a) FLCI will maintain without change for a period of twelve months
after the Effective Time each severance program and policy of USOL listed in
Section 5.14 of the Disclosure Memorandum attached to the USOC Asset Purchase
Agreement (including any such plan, program or policy that is subject to the
approval of the Board of Directors of USOL as of the date of this Agreement)
with respect to each FLCI employee who was employed by USOL immediately prior to
the Effective Time and for purposes of any such severance program or policy and
any severance program and policy which USOL was required to maintain by law.
FLCI will give full credit to each such FLCI employee for all service performed
for USOL by such employee. FLCI will honor all severance and retention
agreements of USOL in effect as of the Effective Time.
(b) With respect to each FLCI Employee Plan, each FLCI employee employed
by USOL immediately prior to the Effective Time shall receive credit for all
service performed for USOL; such service credit shall apply for all purposes,
including but not limited to any vacation, sick time, insurance or other
benefits and any eligibility or vesting requirements under any FLCI Employee
Plan.
(c) As of the Effective Time, each FLCI employee who was employed by
USOL immediately prior to the Effective Time shall be enrolled in the Person
Choice Account group health benefit plan for employees of FLCI, or any successor
plan thereto ("GROUP HEALTH PLAN") and shall be entitled to participate in the
Group Health Plan without limitation or
EX 99.4 - 41
exclusion for any preexisting conditions applicable to any such employee or his
or her enrolled dependents, except to the extent that any such preexisting
condition limitation or exclusion applied to such individual under the group
health plan provided by USOL prior to the Effective Time. For purposes of
participation in the Group Health Plan, each FLCI employee employed by USOL
immediately prior to the Effective Time shall also receive credit for all
payments made toward deductible, co-payment and out-of-pocket limits under the
group health plan of USOL in which such employee was a participant immediately
prior to the Effective Time for the plan year which includes the Effective Time
as if such payments had been made for similar purposes for such period under the
Group Health Plan by an employee employed by FLCI immediately prior to the
Effective Time.
6.14 STOCKHOLDER LITIGATION.
Each of FLCI and USOL shall give the other the reasonable opportunity to
participate in the defense of any stockholder litigation arising in connection
with the transactions contemplated hereby against FLCI or USOL, as applicable,
and their respective directors.
6.15 ACCREDITED INVESTORS.
Prior to the Effective Time, USOL shall deliver to FLCI evidence
reasonably satisfactory to FLCI that each holder of USOL Stock is an "Accredited
Investor" as such term is defined in Regulation D of the Securities Act.
ARTICLE VII
CONDITIONS TO THE MERGER
7.1 CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE MERGER.
Unless waived, in whole or in part, by the applicable party, the
respective obligations of each party to effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of the following conditions:
(a) No proceeding in respect of the Proxy Statement shall have been
initiated or threatened by the SEC.
(b) This Agreement, the Merger, the increase in the authorized capital
stock of FLCI required to consummate the Merger, and the Re-incorporation shall
have been approved by the requisite vote of the stockholders of FLCI.
(c) No statute, rule, regulation, order, decree or injunction shall have
been enacted, entered, promulgated or enforced by any court or Governmental
Authority of competent jurisdiction which restrains, enjoins or otherwise
prohibits the consummation of the Merger; PROVIDED, HOWEVER, that USOL and FLCI
shall use their reasonable best efforts to have any such order, decree or
injunction vacated.
EX 99.4 - 42
(d) FLCI and USOL shall have received the written opinion of Jenkens &
Xxxxxxxxx, in form and substance reasonably satisfactory to each of them to the
effect that the Merger will constitute a reorganization within the meaning of
Section 368(a) of the Code.
(e) The shares of FLCI Common Stock to be issued in the Merger shall
have been approved for quotation on Nasdaq, subject to official notice of
issuance.
(f) All corporate and other proceedings and actions taken in connection
with this Agreement and all certificates, opinions, agreements, instruments, and
documents mentioned in this Agreement or incident to any such transactions shall
have been delivered to the appropriate party or third party, and be reasonably
satisfactory in form and substance to USOL, FLCI, and their respective counsel.
(g) There shall not have occurred and be continuing at any time within
30 days prior to the proposed Effective Time (i) any suspension in trading on
Nasdaq, any fixing of minimum or maximum prices for trading on Nasdaq by the
NASD or SEC or any other Governmental Authority, (ii) the declaration of a
banking moratorium by federal, Oregon, Colorado or Texas Governmental
Authorities; (ii) an outbreak or major escalation of hostilities between the
United States and any foreign power or other insurrection or armed conflict
involving the United States.
7.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF FLCI.
Unless waived, in whole or in part, in writing by FLCI, the obligations
of FLCI to effect the Merger are also subject to the fulfillment prior to or at
the Effective Time, of each of the following conditions:
(a) The representations and warranties of USOL contained in this
Agreement shall be true and correct in all material respects on and as of the
Effective Time, except for (i) changes contemplated or permitted by this
Agreement, (ii) those representations and warranties which address matters only
as of a specified date (which shall remain true and correct as of such date),
and (iii) where the failure to be true and correct would not have a material
adverse effect upon USOL.
(b) USOL shall have performed or complied in all material respects with
all agreements and covenants required by this Agreement to be performed or
complied with by USOL on or prior to the Effective Time.
(c) No material adverse change in the business, property, prospects,
results of operations or conditions (financial or otherwise) of USOL shall have
occurred between the date of this Agreement and the Effective Time.
(d) No action or proceeding by any Governmental Authority or other
Person (an "ACTION") shall have been instituted or threatened which (i) might
have a material adverse effect on USOL; (ii) would enjoin, restrain, or
prohibit, or might result in substantial damages in respect of, this Agreement
or the complete consummation of the Merger; or (iii) seeks to
EX 99.4 - 43
prohibit or limit the Surviving Corporation from exercising all material rights
and privileges pertaining to its ownership of all or a material portion of the
business or assets of USOL and the Predecessor Entities, and which would, in the
reasonable judgment of FLCI make it inadvisable to consummate such transactions;
PROVIDED, HOWEVER, that if an Action has been instituted, or an order issued
pursuant to an Action, that FLCI and USOL shall use their reasonable best
efforts to have any such order or Action dismissed or vacated.
(e) USOL shall have delivered to FLCI a certificate signed by USOL's
President and Chief Financial Officer, dated the date of the Closing, certifying
that the conditions specified in Sections 7.2(a), 7.2(b), 7.2(c) and 7.2(d) of
this Agreement have been satisfied.
(f) FLCI shall have received the opinion of Jenkens & Xxxxxxxxx, counsel
to USOL, dated the date of the Closing, containing the opinion set forth in
EXHIBIT 7.2(F) attached hereto.
(g) All corporate and other proceedings and actions taken in connection
with this Agreement and all certificates, opinions, agreements, instruments, and
documents mentioned in this Agreement or incident to any such transactions shall
be reasonably satisfactory in form and substance to FLCI and its counsel.
7.3 ADDITIONAL CONDITIONS TO OBLIGATION OF USOL.
Unless waived, in whole or in part, in writing by USOL, the obligations
of USOL to effect the Merger are also subject to the fulfillment prior to or at
the Effective Time of each of the following conditions:
(a) The representations and warranties of FLCI contained in this
Agreement shall be true and correct in all material respects on and as of the
Effective Time, except for (i) changes contemplated or permitted by this
Agreement, (ii) those representations and warranties which address matters only
as of a specified date (which shall remain true and correct as of such date),
and (iii) where the failure to be true and correct would not have a material
adverse effect upon FLCI.
(b) FLCI shall have performed or complied in all material respects with
all agreements and covenants required by this Agreement to be performed or
complied with by FLCI on or prior to the Effective Time.
(c) No material adverse change in the business, property, prospects,
results of operations or conditions (financial or otherwise) of FLCI shall have
occurred between the date of this Agreement and the Effective Time.
(d) No Action shall have been instituted or threatened which (i) might
have a material adverse effect on FLCI; (ii) would enjoin, restrain, or
prohibit, or might result in substantial damages in respect of, this Agreement
or the complete consummation of the Merger; or (iii) seeks to prohibit or limit
the Surviving Corporation from exercising all
EX 99.4 - 44
material rights and privileges pertaining to its ownership of all or a material
portion of the business or assets of FLCI, and which would, in the reasonable
judgment of USOL make it inadvisable to consummate such transactions; PROVIDED,
HOWEVER, that if an Action has been instituted, or an order issued pursuant to
an Action, that FLCI and USOL shall use their reasonable best efforts to have
any such order or Action dismissed or vacated.
(e) FLCI shall have delivered to USOL a certificate signed by FLCI's
President and Chief Financial Officer, dated the date of the Closing, certifying
that the conditions specified in Sections 7.3(a), 7.3(b), 7.3(c), and 7.3(d) of
this Agreement have been satisfied.
(f) USOL shall have received the opinion of Xxxxxx Xxxxxxx & Stone, LLC,
counsel to FLCI, dated the date of the Closing, containing the opinion set forth
in EXHIBIT 7.3(F) attached hereto.
ARTICLE VIII
TERMINATION
8.1 TERMINATION.
(a) This Agreement may be terminated at any time prior to the Effective
Time, notwithstanding approval thereof by the stockholders of either USOL or
FLCI:
(i) by mutual written consent of the parties hereto duly
authorized by the Boards of Directors of FLCI and USOL;
or
(ii) by either FLCI or USOL if the Merger shall not have been
consummated by the Outside Date, PROVIDED that the right
to terminate this Agreement under this Section
8.1(a)(ii) shall not be available to any party whose
willful failure to fulfill any obligation under this
Agreement has been the cause of or resulted in the
failure of the Merger to occur on or before such date;
or
(iii) by either FLCI or USOL if a court of competent
jurisdiction or Governmental Authority shall have issued
a non-appealable final order, decree or ruling or taken
any other action, in each case having the effect of
permanently restraining, enjoining or otherwise
prohibiting the Merger, except if the party relying on
such order, decree or ruling or other action has not
complied with its obligations under Section 6.4; or
(iv) by either FLCI or USOL, if, at the FLCI Stockholders'
Meeting (including any adjournment or postponement
thereof), the requisite vote of the stockholders of FLCI
shall not have been obtained; or
EX 99.4 - 45
(v) by FLCI, upon a breach of any representation, warranty,
covenant or agreement on the part of USOL set forth in
this Agreement such that the conditions set forth in
Section 7.3(a) or 7.3(b) would not be satisfied, or by
USOL, upon a breach of any representation, warranty,
covenant or agreement on the part of FLCI set forth in
this Agreement such that the conditions set forth in
Section 7.2(a) or 7.2(b), would not be satisfied (any of
such breaches by either party, a "TERMINATING BREACH");
PROVIDED, HOWEVER, that if such Terminating Breach is
curable prior to the Outside Date, by FLCI or USOL, as
the case may be, through the exercise of its reasonable
efforts and for so long as FLCI or USOL, as the case may
be, continues to exercise such reasonable efforts,
neither USOL nor the FLCI, respectively, may terminate
this Agreement under this Section 8.1(a)(v); or
(vi) by FLCI, if (A) the Board of Directors of USOL shall
fail to recommend the Merger or shall withdraw, modify
or change its recommendation of the Merger in a manner
adverse to FLCI or shall have resolved to do any of the
foregoing; (B) after the receipt by USOL of an
Acquisition Proposal, FLCI requests in writing that the
Board of Directors of USOL reconfirm its recommendation
of this Agreement and the Merger to the stockholders of
USOL and the Board of Directors of USOL fails to do so
within 10 business days after its receipt of FLCI's
request; (C) the Board of Directors of USOL shall have
recommended to the stockholders of USOL an Alternative
Transaction (as defined in Section 8.4(e)); or (D) a
tender offer or exchange offer for 20% or more of the
outstanding shares of USOL Stock is commenced (other
than by FLCI or an Affiliate of FLCI) and the Board of
Directors of USOL recommends that the stockholders of
USOL tender their shares in such tender or exchange
offer; or
(vii) by USOL, if (A) the Board of Directors of FLCI shall
fail to recommend the Merger or shall withdraw, modify
or change its recommendation of the Merger in a manner
adverse to USOL or shall have resolved to do any of the
foregoing; (B) after the receipt by FLCI of an
Acquisition Proposal, USOL requests in writing that the
Board of Directors of FLCI reconfirm its recommendation
of this Agreement and the Merger to the stockholders of
USOL and the Board of Directors of FLCI fails to do so
within 10 business days after its receipt of USOL's
request; (C) the Board of Directors of FLCI shall have
recommended to the stockholders of FLCI an Alternative
Transaction; (D) a tender offer or exchange offer for
20% or
EX 99.4 - 46
more of the outstanding shares of FLCI Common Stock is
commenced (other than by USOL or an Affiliate of USOL)
and the Board of Directors of FLCI recommends that the
stockholders of FLCI tender their shares in such tender
or exchange offer; or (E) for any reason FLCI fails to
call and hold the FLCI Stockholders' Meeting by the
Outside Date (PROVIDED that USOL's right to terminate
this Agreement under this clause (E) shall not be
available if at such time FLCI would be entitled to
terminate this Agreement under Section 8.1(a)(v) without
giving effect to the cure period); or
(viii) by USOL, subject to Section 8.2(a), if the Board of
Directors of USOL shall concurrently approve, and USOL
shall concurrently enter into, a definitive agreement
providing for the implementation of a Superior Offer (as
hereinafter defined); PROVIDED, HOWEVER, that (A) USOL
is not then in breach of Section 5.2, (B) the Board of
Directors of USOL shall have complied with Section
8.2(a) in connection with such Superior Offer, and (C)
USOL shall simultaneously make the payment required by
Section 8.4(b); and PROVIDED FURTHER, that USOL agrees
to use its commercially reasonable efforts to have such
Superior Offer include the Surviving Corporation and to
consummate the Merger.
(b) This Agreement may be terminated by FLCI at any time prior to the
approval thereof by the stockholders of FLCI, subject to Section 8.2(b), if the
Board of Directors of FLCI shall concurrently approve, and FLCI shall
concurrently enter into, a definitive agreement providing for the implementation
of a Superior Offer; PROVIDED, HOWEVER, that (i) FLCI is not then in breach of
Section 5.2, (ii) the Board of Directors of FLCI shall have complied with
Section 8.2(b) in connection with such Superior Offer, and (iii) FLCI shall
simultaneously make the payment required by Section 8.4(c); and PROVIDED
FURTHER, that FLCI agrees to use its commercially reasonable efforts to have
such Superior Offer include the Surviving Corporation and to consummate the
Merger.
8.2 CERTAIN ACTIONS PRIOR TO TERMINATION.
(a) USOL shall provide to FLCI written notice of its intention to
terminate this Agreement pursuant to Section 8.1(a)(viii) advising FLCI (i) that
the Board of Directors of USOL has determined, by action of a majority of the
members of the Board of Directors of USOL who are not affiliated with either
FLCI or the Person making such Acquisition Proposal or their respective
affiliates, that such Acquisition Proposal is a Superior Offer and that, in the
exercise of its good faith judgment as to fiduciary duties to stockholders under
applicable law, after consultation with USOL's outside legal counsel, failure by
the Board of Directors to terminate this Agreement could reasonably be expected
to result in a breach of such duties and (ii) as to the material terms of any
such Acquisition Proposal. At any time after the fifth
EX 99.4 - 47
business day following receipt of such notice by FLCI, USOL may terminate this
Agreement as provided in Section 8.1(a)(viii) only if the Board of Directors of
USOL who are not affiliated with either FLCI or the Person making such
Acquisition Proposal or their respective affiliates, determines that failure by
the Board of Directors to terminate this Agreement continues to be reasonably
expected to result in a breach of its fiduciary duties to stockholders under
applicable law (which determination shall be made in light of any revised
proposal made by FLCI prior to the expiration of such five business day period)
and concurrently enters into a definitive agreement providing for the
implementation of such Acquisition Proposal.
(b) FLCI shall provide to USOL written notice of its intention to
terminate this Agreement pursuant to Section 8.1(b) advising USOL (i) that the
Board of Directors of FLCI has determined, by action of a majority of the
members of the Board of Directors of FLCI who are not affiliated with either
USOL or the Person making such Acquisition Proposal or their respective
affiliates, that such Acquisition Proposal is a Superior Offer and that, in the
exercise of its good faith judgment as to fiduciary duties to stockholders under
applicable law, after consultation with FLCI's outside legal counsel, failure by
the Board of Directors to terminate this Agreement could reasonably be expected
to result in a breach of such duties and (ii) as to the material terms of any
such Acquisition Proposal. At any time after the fifth business day following
receipt of such notice by USOL, FLCI may terminate this Agreement as provided in
Section 8.1(b) only if the Board of Directors of FLCI who are not affiliated
with either USOL or the Person making such Acquisition Proposal or their
respective affiliates, determines that failure by the Board of Directors to
terminate this Agreement continues to be reasonably expected to result in a
breach of its fiduciary duties to stockholders under applicable law (which
determination shall be made in light of any revised proposal made by USOL prior
to the expiration of such five business day period) and concurrently enters into
a definitive agreement providing for the implementation of such Acquisition
Proposal.
(c) For purposes of this Agreement, "SUPERIOR OFFER" means an
Acquisition Proposal which is superior from a financial point of view to (i)
FLCI's stockholders (other than any stockholders affiliated with USOL) or (ii)
USOL's stockholders (other than any stockholders affiliated with FLCI), as
applicable, to the Merger and for which financing, to the extent required, is
then committed or which, in the good faith judgment of FCLI's or USOL's board of
directors, as applicable, after consultation with FLCI's or USOL's financial
advisors is reasonably capable of being obtained.
8.3 EFFECT OF TERMINATION.
In the event of the termination of this Agreement pursuant to Section
8.1, this Agreement shall immediately become void and there shall be no
liability on the part of any party hereto or any of its Affiliates, directors,
officers or stockholders, except as provided in Section 8.4; PROVIDED, HOWEVER,
that termination of this Agreement shall not in any way terminate, limit or
restrict the rights and remedies of any party hereto against any other party
resulting from any breach of this Agreement.
EX 99.4 - 48
8.4 FEES AND EXPENSES.
(a) Except as set forth in this Section 8.4, all fees and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses if the Merger is not
consummated and by the Surviving Corporation if the Merger is consummated, to
the extent such expenses are solely and directly related to such Merger in
accordance with the guidelines established in Revenue Ruling 73-54, 1973-1 C.B.
187; PROVIDED, HOWEVER, that, if the Merger is not consummated, FLCI and USOL
shall share equally all fees and expenses, other than attorneys' fees, incurred
in relation to the printing of the Proxy Statement (including any preliminary
materials related thereto) and any amendments or supplements thereto.
(b) USOL shall pay FLCI a termination fee of $1,000,000 upon the earlier
to occur of the following events:
(i) the termination of this Agreement by FLCI pursuant to
Section 8.1(a)(vi); or
(ii) the termination of this Agreement by USOL pursuant to
Section 8.1(a)(viii).
USOL's payment of a termination fee pursuant to this subsection shall be
the sole and exclusive remedy of FLCI against USOL and its directors, officers,
employees, agents, advisors, and other representatives with respect to the
occurrences giving rise to such payment; PROVIDED that this limitation shall not
apply in the event of a willful breach of this Agreement by USOL.
(c) FLCI shall pay USOL a termination fee of $1,000,000 upon the
earliest to occur of the following events:
(i) the termination of this Agreement by either FLCI or USOL
pursuant to Section 8.1(a)(iv) if (A) the requisite
votes of the stockholders of FLCI to approve the Merger
shall not have been obtained, (B) a proposal for an
Alternative Transaction (as defined below) involving
FLCI shall have been publicly announced prior to the
FLCI Stockholders' Meeting, and (C) either a definitive
agreement for an Alternative Transaction involving FLCI
is entered into, or an Alternative Transaction involving
FLCI is consummated, within eighteen months of such
termination;
(ii) the termination of this Agreement by either FLCI or USOL
pursuant to Section 8.1(a)(iv) if (A) the requisite vote
of the stockholders of FLCI to approve the Merger shall
not have been obtained because one or more of the
stockholders party to the Stockholder Support Agreements
failed to approve the Merger in
EX 99.4 - 49
breach of such agreement, and (B) if such stockholder
had voted for the Merger or not otherwise breached, the
Merger would have been approved by the FLCI
stockholders;
(iii) the termination of this Agreement by USOL pursuant to
Section 8.1(a)(vii); or
(iv) the termination of this Agreement by FLCI pursuant to
Section 8.1(b).
FLCI's payment of a termination fee pursuant to this subsection shall be
the sole and exclusive remedy of USOL against FLCI and any of its subsidiaries
and their respective directors, officers, employees, agents, advisors or other
representatives with respect to the occurrences giving rise to such payment;
provided that this limitation shall not apply in the event of a willful breach
of this Agreement by FLCI.
(d) The fees payable pursuant to Section 8.4(b) or 8.4(c) shall be paid
concurrently with the first to occur of the events described in Section
8.4(b)(i) or (ii) or 8.4(c)(i), (ii), (iii) or (iv), respectively.
(e) As used in this Agreement, "ALTERNATIVE TRANSACTION" means either
(i) a transaction pursuant to which any third party acquires more than 20% of
the outstanding shares of USOL Stock or FLCI Stock, as the case may be, pursuant
to a stock purchase, tender offer or exchange offer or otherwise, (ii) a merger
or other business combination involving USOL or FLCI pursuant to which any third
party (or the stockholders of a third party) acquires more than 20% of the
outstanding shares of USOL Stock or FLCI Stock, as the case may be, or the
entity surviving such merger or business combination, (iii) any other
transaction pursuant to which any third party acquires control of assets
(including for this purpose the outstanding equity securities of subsidiaries of
USOL, and the entity surviving any merger or business combination including any
of them) of USOL or FLCI having a fair market value (as determined by the Board
of Directors of USOL or FLCI, as the case may be, in good faith) equal to more
than 20% of the fair market value of all the assets of USOL or FLCI, as the case
may be, and their respective subsidiaries, taken as a whole, immediately prior
to such transaction.
EX 99.4 - 50
ARTICLE IX
ARBITRATION; CONSENT TO JURISDICTION
9.1 SUBMISSION TO JURISDICTION.
FLCI and USOL each hereby agree that any and all disputes, legal
actions, suits, or proceedings arising out of or relating to this Agreement or
the transactions contemplated hereby may be brought in any state or federal
court located in Portland, Oregon. By their signature to this Agreement, FLCI
and USOL each irrevocably submit to the jurisdiction of the courts located in
Portland, Oregon, in any dispute, legal action, suit, or proceeding arising out
of or relating to this Agreement or the transactions contemplated hereby.
9.2 WAIVER OF IMMUNITY AND INCONVENIENT FORUM.
FLCI and USOL each hereby irrevocably waives all immunity from
jurisdiction, attachment and execution, whether on the basis of sovereignty or
otherwise, to which it might otherwise be entitled in any legal action or
proceeding brought in any state or federal court located in Portland, Oregon,
and further irrevocably waives, to the fullest extent permitted by law, any
objection which it may now or hereafter have to any dispute, legal action, suit,
or proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby being brought in any federal or state court located in
Portland, Oregon, and hereby further irrevocably waives any claim that any such
dispute, legal action, suit, or proceeding brought in any such court has been
brought in an inconvenient forum.
9.3 ARBITRATION PROCEDURES.
(a) All disputes arising in connection with this Agreement or any
contract of sale hereunder shall be finally settled by arbitration in Portland,
Oregon, in accordance with the International Arbitration Rules of the American
Arbitration Association (the "RULES OF ARBITRATION"). Judgment on the award
rendered by the arbitration panel (the "ARBITRATION PANEL") may be entered in
any court of competent jurisdiction.
(b) Any party which desires to initiate arbitration proceedings may do
so by delivering written notice to the other party (the "ARBITRATION NOTICE")
specifying (x) the nature of the dispute or controversy to be arbitrated; (y)
the name and address of the arbitrator appointed by the party initiating such
arbitration; and (z) such other matters as may be required by the Rules of
Arbitration. The party who receives an Arbitration Notice shall appoint an
arbitrator and notify the initiating party of such arbitrator's name and address
within 30 days after delivery of the Arbitration Notice; otherwise, a second
arbitrator shall be appointed by the American Arbitration Association at the
request of the party who delivered the Arbitration Notice. The two arbitrators
so appointed shall appoint a third arbitrator who shall be chairman of the
Arbitration Panel and the "neutral arbitrator" for purposes of the Rules of
Arbitration.
9.4 FINAL ARBITRATION DECISIONS.
All decisions of the Arbitration Panel shall be final, conclusive and
binding on all parties and shall not be subject to judicial review. The parties
expressly waive the provisions of any state statute or regulation that permits a
party to an arbitration in which an award has been made to petition a court of
competent jurisdiction to vacate an arbitration award.
9.5 CLAIMS FOR UNPAID BALANCE.
Notwithstanding anything to the contrary contained in this Article IX,
any claim by either party for a "provisional remedy" as defined in Section
1281.8 of the Rules of
EX 99.4 - 51
Arbitration, may be brought in any court of competent jurisdiction, and any
judgment, order or decree relating thereto shall have precedence over any
arbitral award or proceeding.
ARTICLE X
GENERAL PROVISIONS
10.1 ATTORNEY'S FEES.
In any action at law or in equity or in any arbitration proceeding, for
declaratory relief or to enforce any of the provisions or rights or obligations
under this Agreement, the unsuccessful party to such proceeding, shall pay the
successful party or parties all statutorily recoverable costs, expenses and
reasonable attorneys' fees incurred by the successful party or parties including
without limitation costs, expenses, and fees on any appeals and the enforcement
of any award, judgment or settlement obtained, such costs, expenses and
attorneys' fees shall be included as part of the judgment. The successful party
shall be that party who obtained substantially the relief or remedy sought,
whether by judgment, compromise, settlement or otherwise.
10.2 EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS;
KNOWLEDGE, ETC.
Except as otherwise provided in this Section 10.2, the representations,
warranties and agreements of each party hereto shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
the other party hereto, any Person controlling any such party or any of their
respective officers or directors, whether prior to or after the execution of
this Agreement. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time, except that the agreements set forth in
Sections 6.4, 6.5, 6.6, 6.8, 6.12, 6.13, 6.14 and 8.4 shall survive the
Effective Time. The Confidentiality/Standstill Agreement shall survive
termination of this Agreement as therein provided.
10.3 NOTICES.
(a) Any notice, communication, offer, acceptance, request, consent,
reply, or advice (herein severally and collectively, for convenience, called
"NOTICE"), in this Agreement provided or permitted to be given, served, made, or
accepted by any party or Person to any other party or parties, Person or
Persons, hereunder must be in writing, addressed to the party to be notified at
the address set forth below, or such other address as to which one party
notifies the other in writing pursuant to the terms of this Section, and must be
served by (1) telefax or other similar electronic method, or (2) depositing the
same in the United States mail, certified, return receipt requested and postage
paid to the party or parties, Person or Persons to be notified or entitled to
receive same, or (3) delivering the same in Person to such party. Any party
receiving a facsimile transmission shall be entitled to rely upon a facsimile
transmission to the same extent as if it were the original.
EX 99.4 - 52
(b) All notices and other communications given or made pursuant hereto
shall be deemed to have been given immediately when sent by telefax and
confirmed received or other electronic method or when personally delivered in
the manner hereinabove described, and seventy-two hours after being deposited in
the United States mail. Notice provided in any manner not specified above shall
be effective only if and when received by the party or parties, person or
persons to be, or provided to be notified.
(c) All notices, requests, demands, and other communications required or
permitted under this Agreement shall be addressed as set forth below:
(i) If to FLCI:
FirstLink Communications, Inc.
000 XX Xxxxxxxx
Xxxxxxxx, Xxxxxx 00000
Telecopier No. (000) 000-0000
Attn: A. Xxxxx Xxxxx, President
With a copy to:
Xxxxxx Xxxxxxx & Xxxxx, LLC
0000 XXX Xxxxxxxxx, XX-0
Xxxxxxxxx, XX 00000
Telecopier No. (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
(ii) If to USOL:
USOL Holdings, Inc.
00000 Xxxxxx Xxxxxxxxx
Xxxxxx, Xxxxx 00000
Telecopier No. (000) 000-0000
Attn: Xxx Xxxxxxx, Chief Executive Officer
With a copy to:
Jenkens & Xxxxxxxxx
000 Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Telecopier No. (000) 000-0000
Attention: X. Xxxxxxx Xxxx, Esq.
(iii) Copies to:
EX 99.4 - 53
GMAC Commercial Mortgage Corporation
000 Xxxxxxxx Xxxx
Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx
Xxxxx & Lardner
One IBM Plaza
000 Xxxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxx
Troop Xxxxxxx Pasich Reddick & Xxxxx, LLP
0000 Xxxxxxx Xxxx Xxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxx Xxxxxxxxxx
10.4 AMENDMENT.
This Agreement may be amended by the parties hereto by action taken by
or on behalf of their respective Boards of Directors at any time prior to the
Effective Time; PROVIDED, HOWEVER, that after approval of the Merger by the
stockholders of USOL and FLCI, no amendment may be made which by law requires
further approval by such stockholders without such further approval. This
Agreement may not be amended except by an instrument in writing signed by USOL
and FLCI.
10.5 WAIVER.
At any time prior to the Effective Time, any party hereto may, with
respect to any other party hereto, (a) extend the time for the performance of
any of the obligations or other acts, (b) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document delivered pursuant hereto, and (c) waive compliance by the other party
with any of the agreements or conditions contained herein. Any such extension or
waiver shall be valid only if set forth in an instrument in writing signed by
the party or parties to be bound thereby.
10.6 SEVERABILITY.
If any term or other provision of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal or incapable of being enforced by
any rule of law, or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner adverse to any party. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as
EX 99.4 - 54
to effect the original intent of the parties as closely as possible in an
acceptable manner to the end that transactions contemplated hereby are fulfilled
to the extent possible.
10.7 ASSIGNMENT.
Neither party may directly or indirectly assign or delegate, by
operation of law or otherwise, all or any portion of its rights, obligations or
liabilities under this Agreement without the prior written consent of the other
party, which consent may be withheld at the other party's sole and absolute
discretion. Any purported assignment or delegation without such consent shall be
null and void.
For purposes of this Section, the term "AGREEMENT" shall include this
Agreement and the exhibits, schedules, and other documents attached hereto or
described in this Section 10.7. This Agreement, and other documents delivered
pursuant to this Agreement, contain all of the terms and conditions agreed upon
by the parties relating to the subject matter of this Agreement and supersede
all prior and contemporaneous agreements, letters of intent, representations,
warranties, disclosures, negotiations, correspondence, undertakings and
communications of the parties, oral or written, respecting that subject matter,
including, without limitation, the letter of intent dated May 3, 1999, among
USOC, FLCI, and others, as amended prior to the date hereof.
10.8 PARTIES IN INTEREST.
This Agreement shall be binding upon and inure solely to the benefit of
each party hereto, and nothing in this Agreement (other than Sections 6.5, 6.6
and 6.13), express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement.
10.9 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of any party hereto in the exercise of
any right hereunder shall impair such right or be construed to be a waiver of,
or acquiescence in, any breach by the other party of any representation,
warranty or agreement herein, nor shall any single or partial exercise of any
such right preclude other or further exercise thereof or of any other right. All
rights and remedies existing under this Agreement are cumulative and in addition
to, and not exclusive of, any rights or remedies otherwise available.
10.10 GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO THE CHOICE OF LAW
PROVISIONS THEREOF.
EX 99.4 - 55
10.11 COUNTERPARTS.
This Agreement may be executed in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement. This Agreement shall become binding when
all counterparts taken together shall have been executed and delivered by the
parties. A telecopied facsimile of an executed counterpart of this Agreement
shall be sufficient to evidence the binding agreement of each party to the terms
hereof. However, each party agrees to return to the other parties an originally
executed counterpart of this Agreement promptly after delivery of a telecopied
facsimile thereof.
10.12 CAPTIONS.
The caption and heading of various sections and paragraphs of this
Agreement are for convenience only and are not to be construed as defining or
limiting, in any way, the scope or intent of the provisions hereof.
10.13 TIME.
Time is of the essence with respect to this Agreement and each of its
provisions.
EX 99.4 - 56
IN WITNESS WHEREOF, FLCI and USOL have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
FIRSTLINK COMMUNICATIONS, INC.
By: /S/ A. XXXXX XXXXX
-----------------------------------
Name: A. Xxxxx Xxxxx
Title: President and Chief
Executive Officer
USOL HOLDINGS, INC.
By: /S/ XXX XXXXXXX
-----------------------------------
Name: Xxx Xxxxxxx
Title: President
EX 99.4 - 57
