EXHIBIT 10.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
AND SHARE EXCHANGE AGREEMENT
dated as of
January 9, 2000
by and among
CONCENTRIC NETWORK CORPORATION,
NEXTLINK COMMUNICATIONS, INC.
EAGLE RIVER INVESTMENTS, L.L.C.,
and
NM ACQUISITION CORP.
TABLE OF CONTENTS
-----------------
PAGE
----
ARTICLE 1. DEFINITIONS.........................................................2
SECTION 1.1. Definitions.................................................2
ARTICLE 2. THE MERGERS........................................................11
SECTION 2.1. The Mergers................................................11
SECTION 2.2. LHP Share Exchange.........................................12
SECTION 2.3. Certificate of Incorporation and
Bylaws of the Surviving Corporation.......................13
SECTION 2.4. Directors and Officers of the
Surviving Corporation.....................................13
SECTION 2.5. Alternative Transaction Structure..........................13
SECTION 2.6. Closing....................................................15
ARTICLE 3. CONVERSION OF SECURITIES...........................................15
SECTION 3.1. Effect on Capital Stock....................................15
SECTION 3.2. Exchange of Certificates...................................19
SECTION 3.3. Stock Options..............................................23
SECTION 3.4. Withholding Rights.........................................25
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF CONCENTRIC.......................25
SECTION 4.1. Corporate Existence and Power..............................25
SECTION 4.2. Corporate Authorization....................................25
SECTION 4.3. Governmental Authorization.................................26
SECTION 4.4. Non-contravention..........................................26
SECTION 4.5. Capitalization.............................................27
SECTION 4.6. Subsidiaries...............................................28
SECTION 4.7. SEC Filings28
SECTION 4.8. Financial Statements.......................................29
SECTION 4.9. Information Supplied.......................................29
SECTION 4.10. Absence of Certain Changes................................30
SECTION 4.11. No Undisclosed Material Liabilities.......................30
SECTION 4.12. Compliance with Laws and Court Orders.....................30
SECTION 4.13. Litigation................................................31
SECTION 4.14. Finders' Fees.............................................31
SECTION 4.15. Opinion of Financial Advisor..............................31
SECTION 4.16. Taxes.....................................................31
SECTION 4.17. Tax Opinions..............................................32
SECTION 4.18. Employee Benefit Plans and Labor Matters..................33
SECTION 4.19. Environmental Matters.....................................36
SECTION 4.20. Intellectual Property.....................................37
SECTION 4.21. Contracts.................................................37
SECTION 4.22. Vote Required.............................................38
SECTION 4.23. Antitakeover Statutes; Rights Agreement...................38
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF NEXTLINK.........................39
SECTION 5.1. Corporate Existence and Power..............................39
SECTION 5.2. Corporate Authorization....................................39
SECTION 5.3. Governmental Authorization.................................40
i
SECTION 5.4. Non-contravention..........................................40
SECTION 5.5. Capitalization.............................................41
SECTION 5.6. Subsidiaries...............................................42
SECTION 5.7. SEC Filings................................................43
SECTION 5.8. Financial Statements.......................................43
SECTION 5.9. Information Supplied.......................................44
SECTION 5.10. Absence of Certain Changes................................44
SECTION 5.11. No Undisclosed Material Liabilities.......................44
SECTION 5.12. Compliance with Laws and Court Orders.....................44
SECTION 5.13. Litigation................................................45
SECTION 5.14. Finders' Fees.............................................45
SECTION 5.15. Taxes.....................................................45
SECTION 5.16. Tax Opinions..............................................46
SECTION 5.17. Environmental Matters.....................................46
SECTION 5.18. Intellectual Property.....................................47
SECTION 5.19. Contracts.................................................47
SECTION 5.20. Vote Required.............................................48
SECTION 5.21. Reliance of Eagle River on NEXTLINK
Representations and Warranties............................48
ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF EAGLE RIVER......................49
SECTION 6.1. Organization and Authority.................................49
SECTION 6.2. Due Authorization etc......................................49
SECTION 6.3. No Conflicts, etc..........................................49
SECTION 6.4. Consents...................................................49
SECTION 6.5. Title to Contributed Interest, etc.........................49
SECTION 6.6. No Actions.................................................50
SECTION 6.7. Brokers, Finders, etc......................................50
SECTION 6.8. Acquisition for Investment.................................50
ARTICLE 7. COVENANTS OF CONCENTRIC............................................50
SECTION 7.1. Concentric Interim Operations..............................50
SECTION 7.2. Concentric Stockholders' Meeting; Proxy Material...........54
SECTION 7.3. No Solicitation............................................55
SECTION 7.4. Bondholder and Preferred Consent...........................56
SECTION 7.5. The Exchange Offer.........................................57
ARTICLE 8. COVENANTS OF NEXTLINK..............................................62
SECTION 8.1. Eagle River Consent........................................62
SECTION 8.2. Director and Officer Liability.............................62
SECTION 8.3. Quotation of Stock.........................................63
SECTION 8.4. NEXTLINK Board of Directors................................64
SECTION 8.5. Employee Matters...........................................64
SECTION 8.6. Assumption of Concentric Stock Option
Plans; Form S-8 Employee Plans.............................65
ARTICLE 9. COVENANTS OF NEXTLINK, CONCENTRIC AND EAGLE RIVER..................66
SECTION 9.1. Reasonable Efforts.........................................66
SECTION 9.2. Proxy Statement; Registration Statement....................66
SECTION 9.3. Public Announcements.......................................67
SECTION 9.4. Further Assurances.........................................68
-ii-
SECTION 9.5. Access to Information......................................68
SECTION 9.6. Notices of Certain Events..................................69
SECTION 9.7. Tax-free Reorganization....................................69
SECTION 9.8. Affiliates.................................................70
SECTION 9.9. Certain Other Agreements and
Acknowledgments of NEXTLINK and Eagle
River Relating to the LHP Share Exchange...................71
ARTICLE 10. CONDITIONS TO THE MERGERS.........................................73
SECTION 10.1. Conditions to the Obligations of
Concentric and NEXTLINK to Consummate the Mergers.........73
SECTION 10.2. Conditions to the Obligations of NEXTLINK.................73
SECTION 10.3. Conditions to the Obligations of Concentric...............76
SECTION 10.4. Conditions to the Obligations of
Eagle River and LHP.......................................77
SECTION 10.5. Waiver of NEXTLINK and Eagle River Conditions.............78
ARTICLE 11. TERMINATION.......................................................78
SECTION 11.1. Termination...............................................78
SECTION 11.2. Effect of Termination.....................................80
SECTION 11.3. Fees and Expenses.........................................80
SECTION 11.4. Termination of LHP Share Exchange.........................81
SECTION 11.5. Survival of NEXTLINK and Eagle River
Representations and Warranties
Relating to the LHP Share Exchange; Indemnification.......83
ARTICLE 12. MISCELLANEOUS.....................................................83
SECTION 12.1. Notices...................................................83
SECTION 12.2. Survival of Representations and Warranties................84
SECTION 12.3. Amendments; No Waivers....................................84
SECTION 12.4. Successors and Assigns....................................85
SECTION 12.5. Governing Law.............................................85
SECTION 12.6. Jurisdiction..............................................85
SECTION 12.7. WAIVER OF JURY TRIAL......................................85
SECTION 12.8. Counterparts; Effectiveness...............................86
SECTION 12.9. Entire Agreement..........................................86
SECTION 12.10. Captions.................................................86
SECTION 12.11. Severability.............................................86
SECTION 12.12. Specific Performance.....................................86
SECTION 12.13. Schedules................................................87
EXHIBITS
Exhibit A -- Form of NEXTLINK Voting Agreement
Exhibit B -- Form of Concentric Voting Agreement
Exhibit C -- Form of Concentric Rule 145 Affiliate Letter
-iii-
Exhibit D -- Form of Eagle River Registration Rights Agreement
-iv-
AGREEMENT AND PLAN OF MERGER AND SHARE EXCHANGE AGREEMENT
AGREEMENT AND PLAN OF MERGER AND SHARE EXCHANGE AGREEMENT dated as of
January 9, 2000 by and among Concentric Network Corporation, a Delaware
corporation ("CONCENTRIC"), NEXTLINK Communications, Inc., Inc. a Delaware
corporation ("NEXTLINK"), Eagle River Investments, L.L.C, a Washington limited
liability company ("EAGLE RIVER") and NM Acquisition Corp., a Delaware
corporation ("NEWCO").
WHEREAS, the respective Boards of Directors of NEXTLINK and Concentric
have approved this Agreement, and deem it advisable and in the best interests of
their respective stockholders to consummate the Mergers (as defined herein) of
each of Concentric and NEXTLINK into Newco on the terms and conditions set forth
herein;
WHEREAS, as a condition and inducement to Concentric's entering into
this Agreement, concurrently with the execution and delivery of this Agreement,
Concentric and Eagle River are entering into a Voting Agreement in the form
attached as Exhibit A hereto (the "NEXTLINK VOTING AGREEMENT"), pursuant to
which Eagle River has agreed to deliver its consent as majority stockholder
approving the Mergers (the "EAGLE RIVER CONSENT");
WHEREAS, as a condition and inducement to NEXTLINK's entering into this
Agreement, concurrently with the execution and delivery of this Agreement,
NEXTLINK, Concentric and the Concentric stockholders parties thereto are
entering into the Voting Agreements in the form attached hereto as Exhibit B
(the "CONCENTRIC VOTING AGREEMENT");
WHEREAS, Eagle River and NEXTLINK together own 100% of the limited
liability company interests in LHP, L.L.C., a Washington limited liability
company ("LHP") and LHP owns 100% of the limited liability company interests in
INTERNEXT, L.L.C., a Delaware limited liability company ("INTERNEXT");
WHEREAS, immediately after the closing of the Mergers, Eagle River will
contribute to Newco all of the LHP limited liability company interests (or
capital stock of LHP in the event that LHP is converted into a corporation)
owned by Eagle River (the "CONTRIBUTED INTEREST") in consideration of the
issuance by Newco of shares of Newco Common Stock (as hereinafter defined) to
Eagle River as set forth herein (the "LHP SHARE EXCHANGE"); and
WHEREAS, it is intended that, for federal income tax purposes, the
Mergers shall qualify as reorganizations within the meaning of the provisions of
Section 368(a) of the Internal Revenue Code of 1986 (the "CODE") and the LHP
Share Exchange in conjunction with the Mergers shall qualify as a tax-free
exchange under Section 351 of the Code;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth below, the
parties agree as follows:
ARTICLE 1.
DEFINITIONS
SECTION 1.1. Definitions. (a) The following terms, as used herein, have
the following meanings:
"ACQUISITION PROPOSAL" means any bona fide offer or proposal made,
renewed or continued after the date hereof for (i) a merger, consolidation,
share exchange, business combination, reorganization, recapitalization or other
similar transaction involving Concentric or any Concentric Significant
Subsidiary or (ii) the acquisition, directly or indirectly, of (A) an equity
interest representing more than 25% of the voting securities of Concentric or
any Concentric Significant Subsidiary or (B) assets, securities or ownership
interests representing an amount equal to or greater than 25% of the
consolidated assets or earning power of the Concentric Group, other than the
transactions contemplated by this Agreement or permitted pursuant to Section 7.1
hereof.
"AFFILIATE" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with
such Person.
"BENEFIT ARRANGEMENT" means, with respect to any Person, any
employment, severance or similar contract or arrangement (whether or not
written) providing for compensation, bonus, profit-sharing, stock option, or
other stock-related rights or other forms of incentive or deferred compensation,
vacation benefits, insurance coverage (including any self-insured arrangements),
health or medical benefits, disability benefits, workers' compensation,
supplemental unemployment benefits, severance benefits and post-employment or
retirement benefits (including compensation, pension, health, medical or life
insurance or other benefits) that (i) is not an Employee Plan, (ii) is entered
into, maintained, administered, or contributed to or obligated to contribute to,
as the case may be, by such Person or any of its Subsidiaries and (iii) covers
any employee or former employee of such Person or any of its Subsidiaries.
"CONCENTRIC BENEFIT ARRANGEMENTS" means the Benefit Arrangements of Concentric
or the Concentric Subsidiaries and "NEXTLINK BENEFIT ARRANGEMENTS" means the
Benefit Arrangements of NEXTLINK or the NEXTLINK Subsidiaries.
"BUSINESS DAY" means a day other than a Saturday, Sunday or other day
on which commercial banks in New York City are authorized or required by law to
close.
"COMMON STOCK RATIO" means the quotient (rounded to the nearest
1/10,000) determined by dividing $45.00 by the Weighted
-6-
Average Sale Price; provided that the Common Stock Ratio shall not be less than
.495 or greater than .650.
"CONCENTRIC BALANCE SHEET" means the Consolidated Balance Sheets of
Concentric and its consolidated subsidiaries as of September 30, 1999 and the
footnotes thereto set forth in the Concentric 10-Q.
"CONCENTRIC BALANCE SHEET DATE" means September 30, 1999.
"CONCENTRIC COMMON STOCK" means Common Stock, par value $0.001 per
share, of Concentric.
"CONCENTRIC DEBENTURES" means Concentric's 13 1/2% Subordinated
Debentures due 2010 issuable in exchange for Concentric Series B Preferred Stock
at the option of Concentric.
"CONCENTRIC GROUP" means Concentric and the Concentric Subsidiaries.
"CONCENTRIC MATERIAL ADVERSE EFFECT" means a material adverse effect on
financial condition, assets or results of operations of the Concentric Group
taken as a whole, excluding any such effect resulting from or arising in
connection with (i) this Agreement, the transactions contemplated hereby or the
pendancy or announcement thereof including, but not limited to the Concentric
Board of Directors' decision to enter into this Agreement or the failure to
receive the consent of the holders of Concentric Senior Notes, Concentric
Debentures, Concentric Series B Preferred Stock and Concentric Series C
Preferred Stock described in Section 7.4 hereof or any default under or any
obligation of Concentric to offer to repurchase the subject securities under the
respective indentures for the Concentric Senior Notes or the Concentric
Debentures or under the certificate of designations for the Concentric Series B
Preferred Stock or Concentric Series C Preferred Stock or any appraisal
liability in respect of the Concentric Series B Preferred Stock or Concentric
Series C Preferred Stock under Section 262 of the Delaware General Corporation
Law resulting from the consummation of the Mergers, (ii) changes or conditions
generally affecting the industries in which the Concentric Group operates or
(iii) changes in general economic, regulatory or political conditions.
"CONCENTRIC SENIOR NOTES" means the 12-3/4% Senior Notes due 2007 of
Concentric.
"CONCENTRIC PREFERRED STOCK" means Concentric Series B Preferred Stock
and CONCENTRIC Series C Preferred Stock, collectively.
"Concentric RIGHTS AGREEMENT" means the Preferred Shares Rights
Agreement, dated as of November 10, 1999.
-7-
"CONCENTRIC SERIES A JUNIOR PREFERRED STOCK" means the Series A Junior
Participating Preferred Stock of Concentric.
"CONCENTRIC SERIES B PREFERRED STOCK" means the 13 1/2% Series B
Redeemable Exchangeable Preferred Stock, par value $1.00 per share, of
Concentric.
"CONCENTRIC SERIES C PREFERRED STOCK" means the 7% Series C Convertible
Redeemable Preferred Stock, par value $1.00 per share, of Concentric.
"CONCENTRIC SIGNIFICANT SUBSIDIARY" means any Concentric Subsidiary
that would constitute a "significant subsidiary" within the meaning of Rule 1-02
of Regulation S-X of the SEC as of September 30, 1999.
"CONCENTRIC SUBSIDIARY" means any entity of which securities or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions are at any
time, directly or indirectly, owned by Concentric, including any Concentric
subsidiary included in the Concentric consolidated financial statements in
accordance with GAAP.
"CONCENTRIC 10-K" means Concentric's annual report on Form 10-K for the
fiscal year ended December 31, 1998.
"CONCENTRIC 10-Q" means Concentric's quarterly report on Form 10-Q for
the quarter ended September 30, 1999.
"DEFERRED COMPENSATION PLAN" means, with respect to any Person, any
plan, agreement or arrangement that (i) is described under Sections 4(b)(5) or
401(a)(1) of ERISA (or similar plan covering one or more non-employee directors
of a Person), (ii) is maintained, administered or contributed to or required to
be contributed to by such Person or any of its Affiliates and (iii) covers any
current or former employee or director of such Person or any of its
Subsidiaries. "CONCENTRIC DEFERRED COMPENSATION PLAN" means a Deferred
Compensation Plan of Concentric or any Concentric Affiliate for the benefit of
any current or former employee or director of Concentric or any Concentric
Subsidiary.
"DELAWARE LAW" means the General Corporation Law of the State of
Delaware.
"EMPLOYEE PLAN" means, with respect to any Person, any "employee
benefit plan," as defined in Section 3(3) of ERISA, that (i) is subject to any
provision of ERISA, (ii) is maintained, administered, contributed to or
obligated to contribute to by such Person or any of its Affiliates and (iii)
covers any employee or former employee of such Person or any of its
Subsidiaries. "CONCENTRIC EMPLOYEE PLAN" means an Employee Plan of Concentric or
any of the Concentric Subsidiaries.
-8-
"NEXTLINK EMPLOYEE PLAN" means an Employee Plan of NEXTLINK or any of the
NEXTLINK Subsidiaries.
"ENVIRONMENTAL LAWS" means any federal, state, local or foreign law
(including, without limitation, common law), treaty, judicial decision,
regulation, rule, judgment, order, decree, injunction, permit or governmental
restriction or requirement or any agreement with any Governmental Authority or
other third party, relating to human health and safety, the environment or to
pollutants, contaminants, wastes or chemicals or any toxic, radioactive,
ignitable, corrosive, reactive or otherwise hazardous substances, wastes or
materials.
"ENVIRONMENTAL PERMITS" means, with respect to any Person, all permits,
licenses, franchises, certificates, approvals and other similar authorizations
of any Governmental Authority relating to or required by Environmental Laws and
affecting, or relating in any way to, the business of such Person or any of its
Subsidiaries as currently conducted.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA AFFILIATE" of any entity means any other entity that, together
with such entity, would be treated as a single employer under Section 414 of the
Code.
"FCC" means the Federal Communications Commission.
"FORSTMANN LITTLE AGREEMENT" means the Stock Purchase Agreement, dated
as of December 7, 1999, by and between NEXTLINK and the purchasers named therein
and all agreements contemplated thereby.
"HSR ACT" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976.
"KNOWLEDGE" means, with respect to any fact, the conscious awareness of
such fact by an executive officer (as defined under the ▇▇▇▇ ▇▇▇) of the
relevant Person.
"LEVEL 3" means ▇▇▇▇▇ ▇ Communications, L.L.C., a Delaware limited
liability company.
"LEVEL 3 AGREEMENT" means the Cost Sharing and IRU Agreement, dated
July 18, 1998, between Level 3 and INTERNEXT.
"LIEN" means, with respect to any property or asset, any mortgage,
lien, pledge, charge, security interest, encumbrance or other adverse claim of
any kind in respect of such property or asset. For purposes of this Agreement, a
Person shall be deemed to own subject to a Lien any property or asset that it
has acquired or holds subject to the interest of a vendor or lessor
-9-
under any conditional sale agreement, capital lease or other title retention
agreement relating to such property or asset.
"MULTIEMPLOYER PLAN" means each Employee Plan that is a multiemployer
plan, as defined in Section 3(37) of ERISA.
"NASDAQ" means The Nasdaq National Market.
"NEWCO CLASS B COMMON STOCK" means the Class B Common Stock, par value
$0.02, of Newco.
"NEWCO COMMON STOCK" means the Class A Common Stock, par value $0.02
per share, of Newco.
"NEWCO PREFERRED STOCK" means the Newco Series A Preferred Stock, Newco
Series B Preferred Stock, Newco Series C Preferred Stock, Newco Series E
Preferred Stock and Newco Series F Preferred Stock, collectively.
"NEWCO SERIES A PREFERRED STOCK" means the series of Newco 14%
redeemable preferred stock, par value $0.01 per share, to be designated by Newco
as Series A Preferred Stock in accordance with Section 8.6 hereof.
"NEWCO SERIES B PREFERRED STOCK" means the series of Newco 6 1/2%
convertible preferred stock, par value $0.01 per share, to be designated by
Newco as Series B Preferred Stock in accordance with Section 8.6 hereof.
"NEWCO SERIES C PREFERRED STOCK" means the series of cumulative
participating preferred stock, par value $0.01 per share, to be designated by
Newco as Series C Preferred Stock in accordance with Section 8.6 hereof.
"NEWCO SERIES D PREFERRED STOCK" means the series of cumulative
participating preferred stock, par value $0.01 per share, to be designated by
Newco as Series D Preferred Stock in accordance with Section 8.6 hereof.
"NEWCO SERIES E PREFERRED STOCK" means the series of Newco 13 1/2%
redeemable exchangeable preferred stock, par value $1.00 per share, to be
designated as by Newco as Series E Preferred Stock in accordance with Section
8.6 hereof.
"NEWCO SERIES F PREFERRED STOCK" means the series of Newco 7%
convertible redeemable preferred stock, par value $1.00 per share, to be
designated as by Newco as Series F Preferred Stock in accordance with Section
8.6 hereof.
"NEXTLINK BALANCE SHEET" means the Consolidated Balance Sheet of
NEXTLINK and its consolidated subsidiaries as of September 30, 1999 and the
footnotes thereto, as set forth in the NEXTLINK 10-Q.
-10-
"NEXTLINK BALANCE SHEET DATE" means September 30, 1999.
"NEXTLINK CLASS B COMMON STOCK" means the Class B Common Stock, par
value $.02 per share, of NEXTLINK.
"NEXTLINK COMMON STOCK" means the Class A Common Stock, par value $.02
per share, of NEXTLINK.
"NEXTLINK 14% PREFERRED STOCK" means the series of NEXTLINK redeemable
preferred stock, par value $0.01 per share, currently designated as NEXTLINK 14%
Redeemable Preferred Stock.
"NEXTLINK GROUP" means NEXTLINK and the NEXTLINK Subsidiaries.
"NEXTLINK MATERIAL ADVERSE EFFECT" means a material adverse effect on
the financial condition, assets or results of operations of NEXTLINK Group,
taken as a whole, excluding any such effect resulting from or arising in
connection with (i) this Agreement, the transactions contemplated hereby or
pendancy or the announcement thereof including, but not limited to the NEXTLINK
Board of Director's decision to enter into this Agreement, (ii) changes or
conditions generally affecting the industries in which NEXTLINK and the NEXTLINK
Subsidiaries operate or (iii) changes in general economic, regulatory or
political conditions.
"NEXTLINK PREFERRED STOCK" means the NEXTLINK 14% Preferred Stock,
NEXTLINK Series C Preferred Stock, NEXTLINK Series D Preferred Stock and
NEXTLINK 6 1/2% Preferred Stock, collectively.
"NEXTLINK SERIES C PREFERRED STOCK" means the Series C Cumulative
Convertible Participating Preferred Stock of NEXTLINK.
"NEXTLINK SERIES D PREFERRED STOCK" means the Series D Cumulative
Convertible Participating Preferred Stock of NEXTLINK.
"NEXTLINK SIGNIFICANT SUBSIDIARY" means any NEXTLINK Subsidiary that
would constitute a "significant subsidiary" within the meaning of Rule 1-02 of
Regulation S-X of the SEC as of September 30, 1999.
"NEXTLINK 6 1/2% PREFERRED STOCK" means the series of NEXTLINK
preferred stock, par value $0.01 per share, currently designated as NEXTLINK 6
1/2% Convertible Preferred Stock.
"NEXTLINK SUBSIDIARY" means any entity of which securities or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions are at any
time, directly or indirectly, owned by NEXTLINK, including any NEXTLINK
subsidiary included in the NEXTLINK consolidated financial statements in
accordance with GAAP.
-11-
"NEXTLINK 10-K" means NEXTLINK's annual report on Form 10-K for the
fiscal year ended December 31, 1998.
"NEXTLINK 10-Q" means NEXTLINK's quarterly report on Form 10-Q for the
quarter ended September 30, 1999.
"1933 ACT" means the Securities Act of 1933.
"1934 ACT" means the Securities Exchange Act of 1934.
"PENSION PLAN" means any plan (other than a Multiemployer Plan) that is
subject to Title IV of ERISA.
"PERSON" means an individual, corporation, partnership, limited
liability company, association, trust or other entity or organization, including
a government or political subdivision or an agency or instrumentality thereof.
"PRIME RATE" means, at any time, the rate of interest per annum equal
to the rate of interest per annum quoted, published and commonly known as the
"prime rate" of the Bank of America, which the Bank of America establishes at
its main office in New York, New York, as the reference rate of interest in
order to determine interest rates for loans in U.S. dollars to its U.S.
borrowers, adjusted automatically with each quoted or published change in such
rate.
"REGISTRATION RIGHTS AGREEMENT" means the registration rights agreement
to be entered into between Eagle River and NEXTLINK or Eagle River and Newco, as
the case may be, for the registration of NEXTLINK Common Stock or Newco Common
Stock, as the case may be, received by Eagle River in the LHP Share Exchange,
which Registration Rights Agreement shall be substantially in the form set forth
as Exhibit D hereto.
"RIGHTS" means the rights to purchase one one-thousandth share of
Concentric Series A Junior Preferred Stock issued pursuant to the Rights
Agreement.
"SEC" means the Securities and Exchange Commission.
"SPECIAL COMMITTEE" means the special committee of the independent
directors of NEXTLINK formed to pass upon the LHP Share Exchange.
"SUBSEQUENT TRANSACTION" means any transaction whereby (i) any member
of the NEXTLINK Group would acquire or divest (by merger, consolidation,
purchase or sale of stock or assets or otherwise) any corporation, limited
liability company, partnership, other business organization or assets or
division thereof, (ii) any member of the NEXTLINK Group would acquire or divest
an investment interest in any of the foregoing, (iii) any member of the NEXTLINK
Group would issue or retire any equity interest or incur or repay any
indebtedness whether in connection
-12-
with any item described in (i) or (ii) or otherwise, (iv) any member of the
NEXTLINK Group enters into or engages in a strategic alliance or other
commercial relationship or (v) any member of the NEXTLINK Group is acting in the
ordinary course consistent with past practice; provided, however, in connection
with a Subsequent Transaction described in items (i), (ii), (iii) or (iv) of
this definition, (other than (A) the pending acquisition through Wispra, a
Canadian entity in which NEXTLINK owns 65% of the equity and 35% of the voting
rights, of fixed wireless spectrum from Industry Canada, (B) the issuance of
NEXTLINK Series C Preferred Stock and NEXTLINK Series D Preferred Stock pursuant
to the Forstmann Little Agreement and (C) the implementation by NEXTLINK of a
secured bank credit facility in an amount up to $2,000,000,000) which is
material to the business or financial condition of NEXTLINK Group taken as a
whole, NEXTLINK shall have received an opinion from a nationally recognized
investment bank, acting as financial advisor to NEXTLINK, to the effect that,
from a financial point of view, such Subsequent Transaction is fair to the
holders of NEXTLINK Common Stock and, if applicable, NEXTLINK, and such
transaction would not cause (x) the Mergers or the Alternative Merger, as
applicable, to be treated as other than 368 Reorganizations, (y) the LHP Share
Exchange in conjunction with the Mergers or the Alternative Merger, as
applicable, to be treated as other than a 351 Transaction or (z) any of the
conditions set forth in Article 10 hereof not to be satisfied.
"SUBSIDIARY" means, with respect to any Person, any entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at any time directly or indirectly owned by such Person, including any
subsidiary included in consolidated financial statements in accordance with
GAAP.
"SUPERIOR PROPOSAL" means any bona fide, unsolicited written
Acquisition Proposal that the Board of Directors of Concentric determines in
good faith by a majority vote, after consultation with its financial advisor of,
and taking into account all the terms and conditions of the Acquisition
Proposal, is more favorable to Concentric's stockholders than the Mergers and
for which financing, to the extent required, is then fully committed or
reasonably determined to be available by the Board of Directors of Concentric.
"TEN DAY AVERAGE CLOSING PRICE" means the average closing price of one
share of NEXTLINK Common Stock as quoted by the National Association of
Securities Dealers Automated Quotation System for the ten trading days
immediately preceding January 15, 2000.
"WEIGHTED AVERAGE SALES PRICE" means, for the twenty trading day period
ending on third trading day prior to the Effective Times, the average (rounded
to the nearest 1/10,000) of the
-13-
volume weighted averages (rounded to the nearest 1/10,000) of the trading prices
of NEXTLINK Common Stock on Nasdaq for each day during such period, as reported
by Bloomberg, L.P.
Any reference in this Agreement to a statute shall be to such statute,
as amended from time to time, and to the rules and regulations promulgated
thereunder.
(b) Each of the following terms is defined in the Section set
forth opposite such term:
TERM SECTION
---- -------
Adjusted Option............................................ 3.3(a)
Alternative Merger......................................... 2.5
Certificates............................................... 3.2(b)
Certificates of Merger..................................... 2.1(b)
Closing.................................................... 2.6
Closing Date............................................... 2.6
Code....................................................... Preamble
Common Stock Consideration................................. 3.1(c)
Concentric................................................. Preamble
Concentric Benefit Arrangements............................ 1.1(a)
Concentric Employee Plan................................... 1.1(a)
Concentric Intellectual Property........................... 4.20
Concentric Rule 145 Affiliate.............................. 9.8
Concentric SEC Documents................................... 4.7(a)
Concentric Series B Consideration.......................... 3.1(h)
Concentric Series C Consideration.......................... 3.1(i)
Concentric Stockholders' Meeting........................... 4.9
Concentric Stockholders' Approval.......................... 4.22
Concentric Stock Option.................................... 3.3(a)
Concentric Voting Agreement................................ Preamble
Confidentiality Agreement.................................. 7.3(a)
Contributed Interest....................................... Preamble
Eagle River................................................ Preamble
Effective Times............................................ 2.1(b)
End Date................................................... 11.1(b)
Exchange Agent............................................. 3.2(a)
Exchange Consideration..................................... 7.5(a)
Exchange Fund.............................................. 3.2(a)
Exchange Offer............................................. 7.5(a)
Exchange Offer Conditions.................................. 7.5(a)
Exchange Offer Documents................................... 7.5(b)
Exchange Offer Merger...................................... 7.5(g)
Exchange Offer Transactions................................ 9.7(a)
Exchange Registration Statement............................ 7.5(b)
GAAP....................................................... 4.8
Governmental Authority..................................... 4.3
Indemnified Person......................................... 8.2(a)
INTERNEXT.................................................. Preamble
INTERNEXT Guarantee........................................ 9.1(c)
IRS........................................................ 4.16
LHP........................................................ Preamble
-14-
TERM SECTION
---- -------
LHP Consideration.......................................... 2.2(a)
LHP Share Exchange......................................... Preamble
Merger Consideration....................................... 3.1(i)
Mergers.................................................... 2.1(a)
Newco...................................................... Preamble
New Directors.............................................. 8.4
New Directors Committee.................................... 8.4
NEXTLINK................................................... Preamble
NEXTLINK 6 1/2% Preferred Consideration.................... 3.1(e)
NEXTLINK 14% Preferred
Consideration............................................ 3.1(d)
NEXTLINK Benefit Arrangements.............................. 1.1(a)
NEXTLINK Employee Plan..................................... 1.1(a)
NEXTLINK Intellectual Property............................. 5.18
NEXTLINK SEC Documents..................................... 5.7(a)
NEXTLINK Securities........................................ 5.5(c)
NEXTLINK Series C Preferred
Consideration............................................ 3.1(f)
NEXTLINK Series D Preferred
Consideration............................................ 3.1(g)
NEXTLINK Stock Options..................................... 3.3(b)
NEXTLINK Subsidiary........................................ 1.1(a)
Offer to Exchange.......................................... 7.5(c)
Proxy Statement............................................ 4.9
Registration Statement..................................... 4.9
Schedule 14D-1............................................. 7.5(b)
Schedule 14D-9............................................. 7.5(d)
Standstill Agreement....................................... 7.3(a)
Stockholders' Meetings..................................... 4.9
Successor Plan............................................. 8.5(b)
Surviving Corporation...................................... 2.1(a)
Taxes...................................................... 4.16
Tax Return................................................. 4.16
Termination Fee............................................ 11.3(b)
Third Party................................................ 7.3(a)
Transferred Employees...................................... 8.5(a)
351 Transaction............................................ 9.7(a)
368 Reorganization......................................... 9.7(a)
ARTICLE 2.
THE MERGERS
SECTION 2.1. The Mergers. (a) At the applicable Effective Time,
NEXTLINK shall be merged with and into Newco, and Concentric shall immediately
thereafter be merged with and into Newco (collectively, the "MERGERS") in
accordance with Delaware Law and upon the terms set forth in this Agreement,
whereupon the separate existence of Concentric and NEXTLINK shall cease and
Newco shall be the surviving corporation (the "SURVIVING CORPORATION").
-15-
(b) As soon as practicable (and, in any event, within 5
Business Days) after satisfaction or, to the extent permitted hereunder, waiver
of all conditions to the Mergers set forth in Article 10, other than conditions
that by their nature are to be satisfied at the Effective Times and will in fact
be satisfied at the Effective Times, certificates of merger shall be duly
prepared, executed and acknowledged by Concentric and Newco and by NEXTLINK and
Newco, respectively and thereafter delivered to the Secretary of State of
Delaware for filing pursuant to Delaware Law. Such certificate of merger shall
be referred to herein as the "CERTIFICATES OF MERGER." The Mergers shall become
effective at such time (their respective "EFFECTIVE TIMES") as the relevant
Certificates of Merger are duly filed with the Secretary of State of Delaware
(or at such later time as may be agreed by Concentric and NEXTLINK and specified
in the Certificates of Merger).
(c) From and after the Effective Times, the Surviving
Corporation shall possess all the rights, powers, privileges and franchises and
be subject to all of the obligations, liabilities, restrictions and disabilities
of NEXTLINK and Concentric, all as provided under Delaware Law.
SECTION 2.2. LHP Share Exchange. (a) At the Closing immediately after
the Effective Times, Eagle River shall contribute to Newco, and Newco shall
accept from Eagle River all of Eagle River's right, title and interest in and to
the Contributed Interest, free and clear of any Liens other than Liens created
by NEXTLINK or Newco, for the consideration described and payable as provided in
Section 2.2(d) (the "LHP CONSIDERATION").
(b) Immediately after the Effective Times, Newco shall assume,
and shall thereafter perform and be bound by, and indemnify Eagle River against,
any and all of the conditions, covenants and obligations of Eagle River solely
as a member of LHP arising after the Effective Times, and effective as of the
Effective Times, Newco shall become the sole member of LHP and Eagle River shall
cease to be a member of LHP.
(c) At the Closing, immediately after the Effective Times,
Eagle River shall deliver to Newco, free and clear of any Liens other than Liens
created by NEXTLINK or Newco, the Contributed Interest.
(d) At the Closing, Newco shall pay the LHP Consideration in
full by issuing a certificate registered in the name of Eagle River
representing:
(i) if the Ten Day Average Closing Price is greater than
or equal to $42.80, but less than or equal to $64.20, 4,112,150 shares
of Newco Common Stock;
-16-
(ii) if the Ten Day Average Closing Price is greater
than $64.20, 3,426,791 shares of Newco Common Stock; or
(iii) if the Ten Day Average Closing Price is less than
$42.80, 5,140,187 shares of Newco Common Stock.
(e) Newco shall reimburse Eagle River in cash all amounts
advanced or loaned by Eagle River to LHP after December 6, 1999 to enable
INTERNEXT to satisfy payments due to ▇▇▇▇▇ ▇ under the Level 3 Agreement,
together with interest on such amounts from the transfer date or dates to the
Closing, at the rate per annum equal to the Prime Rate.
SECTION 2.3. Certificate of Incorporation and Bylaws of the Surviving
Corporation. Upon the filing of the Certificate of Merger relating to the merger
of NEXTLINK with and into Newco, the Surviving Corporation's certificate of
incorporation shall be amended changing the name of Newco to NEXTLINK
Communications, Inc. and further amended so as to contain the substantive
provisions of the NEXTLINK certificate of incorporation in effect immediately
prior to the Effective Time of such Merger, provided, that the number of
authorized shares of Newco Common Stock and Newco Class B Common Stock shall be
two times the number of authorized shares of NEXTLINK Common Stock and NEXTLINK
Class B Common Stock, respectively, and the NEXTLINK Preferred Stock shall be
redesignated as provided herein. Upon the filing of the Certificate of Merger
relating to the merger of Concentric with and into Newco, the Surviving
Corporation's certificate of incorporation shall be further amended to provide
for the designation of series of Newco Preferred Stock issuable upon the
conversion of Concentric Preferred Stock as provided herein. The bylaws of
NEXTLINK in effect at the Effective Time shall be the bylaws of the Surviving
Corporation until amended in accordance with applicable law.
SECTION 2.4. Directors and Officers of the Surviving Corporation. From
and after the Effective Times, until successors are duly elected or appointed
and qualified in accordance with applicable law, (i) the directors of NEXTLINK
at the Effective Time of the NEXTLINK Merger, together with the New
Directors as specified in Section 8.4, shall be the directors of the
Surviving Corporation and (ii) the officers of NEXTLINK at the Effective Time of
the NEXTLINK Merger shall be the officers of the Surviving Corporation.
SECTION 2.5. Alternative Transaction Structure. (a) The parties
anticipate and intend that immediately following the Effective Times (i) Newco
will be deemed to be a successor issuer to NEXTLINK and Concentric for purposes
of Rule 12g-3 under the 1934 Act, (ii) Newco will be entitled to include the
prior activities and status of NEXTLINK and Concentric in determining whether
Newco meets the eligibility requirements for the use of Form S-3 (iii) Newco
will be entitled to include the prior
-17-
reporting history of NEXTLINK and Concentric in determining whether it has
complied with the public information requirements of Rule 144(c)(1) and (iv)
Newco will not be required to comply with the prospectus or delivery
requirements of Section 4(3) of the 1933 Act by virtue of Rule 174(b)
promulgated thereunder. If, prior to the Effective Time, the parties shall not
have received a no-action letter or other similar assurance from the Securities
and Exchange Commission reasonably satisfactory to NEXTLINK and Concentric to
the foregoing effect, the parties will restructure the transaction to provide
for the merger of Concentric with and into NEXTLINK in the manner contemplated
by this Section 2.5. In such event, all references to the term "Mergers" shall
be deemed references to the transactions contemplated by this Section 2.5; all
references to the term "Surviving Corporation" shall be deemed references to
NEXTLINK as the Surviving Corporation in the merger of Concentric into NEXTLINK;
all references to the term "Effective Time" in this Agreement shall be deemed
references to the time at which the certificate of merger is duly filed with the
Secretary of State of the State of Delaware (or at such later time as is
specified in the certificate of merger) with respect to the merger as
restructured in the manner contemplated by this Section 2.5; Section 2.1 shall
no longer be of any force or effect; and the provisions of this Section 2.5
shall govern the terms of the Merger. The Merger, restructured as contemplated
by this Section 2.5 is sometimes referred to as the "ALTERNATIVE MERGER." The
Alternative Merger shall not affect the consummation of the LHP Share Exchange,
which shall take place between Eagle River and NEXTLINK, whether or not it
qualifies as a 351 Transaction.
(b) The following terms shall apply to the Alternative Merger:
At the Effective Time of the Alternative Merger, Concentric shall be merged with
and into NEXTLINK in accordance with Delaware Law and upon the terms set forth
in this Agreement, whereupon the separate existence of Concentric shall cease;
the representations, warranties and other provisions of this Agreement shall be
appropriately amended to account for the change while otherwise effecting the
intent of the parties as expressed in this Agreement; for the avoidance of doubt
at the effective time of the Alternative Merger, (i) each issued and outstanding
share of Concentric Common Stock shall be converted into the right to receive a
number of fully paid and nonassessable shares of NEXTLINK Common Stock equal to
the Common Stock Ratio (together with cash in lieu of fractional shares of
NEXTLINK Common Stock as specified below), (ii) each issued and outstanding
share of Concentric Series B Preferred Stock shall be converted into the right
to receive one share of a series of preferred stock to be designated by
NEXTLINK, which series shall have terms that are identical to those of
Concentric Series B Preferred Stock (giving effect to any amendments thereto as
contemplated by Section 7.4 and except that such series shall rank pari passu
with the NEXTLINK 14% Preferred Stock), (iii) each issued and outstanding share
of Concentric Series C Preferred Stock shall be converted into the right to
receive one
-18-
share of a series of preferred stock to be designated by NEXTLINK, which series
shall have terms that are identical to those of Concentric Series C Preferred
Stock (except that such series shall rank pari passu with the NEXTLINK 6 1/2%
Preferred Stock), (iv) each outstanding option to acquire Concentric Common
Stock then outstanding shall be assumed by NEXTLINK, (v) each outstanding
warrant to purchase Concentric Common Stock will become exercisable for NEXTLINK
Common Stock in accordance with its terms, (vi) the Alternative Merger shall not
otherwise affect the provisions of Article 3 hereof; provided, that the
provisions of Sections 3.1(a), 3.1(b), 3.1(d), 3.1(e), 3.1(f), 3.1(g) and 3.1(h)
shall be of no force or effect and the current references to Newco Common Stock
and Newco Preferred Stock in Article 3 shall be deemed to be references to
NEXTLINK Common Stock and NEXTLINK Preferred Stock, respectively, and the
current references to NEXTLINK Common Stock shall be disregarded, (vii) all
obligations of NEXTLINK set forth herein shall not be affected or limited by the
Alternative Merger, (viii) all obligations of Newco hereunder shall cease, and,
as applicable, shall become obligations of NEXTLINK, (ix) the LHP Share Exchange
shall be consummated, except that the LHP Consideration shall be in the form of
NEXTLINK Common Stock rather than Newco Common Stock and (xi) NEXTLINK shall be
responsible for the obligations of the Surviving Corporation under Section 8.2
hereof. The parties shall execute and deliver an amendment and restatement of
this Agreement giving effect to the intentions of the parties to implement the
Alternative Merger as described in this Section 2.5.
SECTION 2.6. Closing. The closing of the Mergers and the LHP Share
Exchange (the "CLOSING") will take place on a date and time to be specified by
the parties (the "CLOSING DATE"), which shall be no later than the fifth
Business Day after satisfaction or waiver of the conditions set forth in Article
9 (other than those conditions that by their nature are to be satisfied at the
Closing, but subject to the satisfaction or waiver of those conditions), unless
another time or date is agreed to by the parties hereto. The Closing will be
held at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such other location as may be agreed to by the parties
hereto.
ARTICLE 3.
CONVERSION OF SECURITIES
SECTION 3.1. Effect on Capital Stock. As of the Effective Time, by
virtue of the Mergers and without any action on the part of the holder of any
shares of capital stock of Concentric, NEXTLINK or Newco:
(a) NEXTLINK Common Stock. Each share of NEXTLINK Common Stock
issued and outstanding immediately prior to the Effective Time (other than
shares to be canceled in accordance with Section 3.1(j)) shall, by operation of
the merger of
-19-
NEXTLINK with and into Newco, be converted into one share of Newco Common Stock
and each certificate representing shares of NEXTLINK Common Stock immediately
prior to the Effective Time shall be deemed to represent the same number of
shares of Newco Common Stock.
(b) NEXTLINK Class B Common Stock. Each share of NEXTLINK
Class B Common Stock issued and outstanding immediately prior to the Effective
Time (other than shares to be canceled in accordance with Section 3.1(j)) shall,
by operation of the merger of NEXTLINK with and into Newco, be converted into
one share of Newco Class B Common Stock and each certificate representing shares
of NEXTLINK Class B Common Stock immediately prior to the Effective Time shall
be deemed to represent the same number of shares of Newco Class B Common Stock.
(c) Conversion of Concentric Common Stock. Subject to Section
3.1(m), each issued and outstanding share (other than shares to be canceled in
accordance with Section 3.1(j)) of Concentric Common Stock shall be converted
into the right to receive a number of fully paid and nonassessable shares of
Newco Common Stock equal to the Common Stock Ratio (together with the cash in
lieu of fractional shares of Newco Common Stock as specified below, the "COMMON
STOCK CONSIDERATION") and the associated Rights shall be terminated immediately
prior thereto. As of the Effective Time, all such shares of Concentric Common
Stock shall no longer be outstanding and shall automatically be canceled and
retired and shall cease to exist, and each holder of a certificate representing
any such shares shall cease to have any rights with respect thereto, except the
right to receive the Concentric Common Stock Consideration upon surrender of
such certificate in accordance with Section 3.2. Holders of fractional shares of
Concentric Common Stock as a result of the Mergers shall, in lieu of such
fractional shares, receive cash in the amount of the fair market value thereof,
as provided in Section 3.2(e).
(d) Conversion of NEXTLINK 14% Preferred Stock. Subject to
Section 3.1(m), each issued and outstanding share (other than shares to be
canceled in accordance with Section 3.1(j)) of NEXTLINK 14% Preferred Stock
outstanding immediately prior to the Effective Time shall be converted into the
right to receive one share of Newco Series A Preferred Stock (the "NEXTLINK 14%
PREFERRED CONSIDERATION") that shall have terms that are identical to those of
NEXTLINK 14% Preferred Stock, provided that (A) the Newco Series A Preferred
Stock shall rank on parity with the Newco Series E Preferred Stock and senior to
all other shares of Newco Preferred Stock with respect to the payment of
dividends and the distribution of assets upon liquidation, dissolution or
winding up, (B) as a result of the Mergers, the issuer thereof shall be Newco
rather than NEXTLINK; and (C) Newco's obligations with respect to quarterly
dividends on Newco Series A Preferred Stock shall accrue from the date of the
last dividend paid on NEXTLINK 14% Preferred Stock.
-20-
(e) Conversion of NEXTLINK 6 1/2% Preferred Stock. Subject to
Section 3.1(m), each issued and outstanding share (other than shares to be
canceled in accordance with Section 3.1(j)) of NEXTLINK 6 1/2% Preferred Stock
outstanding immediately prior to the Effective Time shall be converted into the
right to receive one share of Newco Series B Preferred Stock (the "NEXTLINK 6
1/2% PREFERRED CONSIDERATION") that shall have terms that are identical to those
of NEXTLINK 6 1/2% Preferred Stock, provided that (A) the Newco Series B
Preferred Stock shall rank on parity with the Newco Series F Preferred Stock and
junior to all other series of Newco Preferred Stock with respect to the payment
of dividends and the distribution of assets upon liquidation, dissolution or
winding up, (B) as a result of the Mergers, the issuer thereof shall be Newco
rather than NEXTLINK; and (C) Newco's obligations with respect to quarterly
dividends on Newco Series B Preferred Stock shall accrue from the date of the
last dividend paid on NEXTLINK 6 1/2% Preferred Stock.
(f) Conversion of NEXTLINK Series C Preferred Stock. Subject
to Section 3.1(m), each issued and outstanding share (other than shares to be
canceled in accordance with Section 3.1(j)) of NEXTLINK Series C Preferred Stock
outstanding immediately prior to the Effective Time shall be converted into the
right to receive one share of Newco Series C Preferred Stock (the "NEXTLINK
SERIES C PREFERRED CONSIDERATION") that shall have terms that are identical to
those of NEXTLINK Series C Preferred Stock, provided that (A) the Newco Series C
Preferred Stock shall rank on parity with the Newco Series D Preferred Stock,
senior to the Newco Series B Preferred Stock and Newco Series F Preferred Stock,
and junior to the Newco Series A Preferred Stock and Newco Series E Preferred
Stock with respect to the payment of dividends and the distribution of assets
upon liquidation, dissolution or winding up, (B) as a result of the Mergers, the
issuer thereof shall be Newco rather than NEXTLINK; and (C) Newco's obligations
with respect to quarterly dividends on Newco Series C Preferred Stock shall
accrue from the date of the last dividend paid on NEXTLINK Series C Preferred
Stock, or the date of issuance, if no such dividends have been paid.
(g) Conversion of NEXTLINK Series D Preferred Stock. Subject
to Section 3.1(m), each issued and outstanding share (other than shares to be
canceled in accordance with Section 3.1(j)) of NEXTLINK Series D Preferred Stock
outstanding immediately prior to the Effective Time shall be converted into the
right to receive one share of Newco Series D Preferred Stock (the "NEXTLINK
SERIES D PREFERRED CONSIDERATION") that shall have terms that are identical to
those of NEXTLINK Series D Preferred Stock, provided that (A) the Newco Series D
Preferred Stock shall rank on parity with the Newco Series C Preferred Stock,
senior to the Newco Series B Preferred Stock and Newco Series F Preferred Stock,
and junior to the Newco Series A Preferred Stock and Newco Series E Preferred
Stock with respect to the payment of dividends and the distribution of assets
upon liquidation, dissolution or winding up, (B) as a result of the Mergers, the
issuer thereof
-21-
shall be Newco rather than NEXTLINK; and (C) Newco's obligations with respect to
quarterly dividends on Newco Series D Preferred Stock shall accrue from the date
of the last dividend paid on NEXTLINK Series D Preferred Stock, or the date of
issuance, if no such dividends have been paid.
(h) Conversion of Concentric Series B Preferred Stock. Each
issued and outstanding share (other than shares to be canceled in accordance
with Section 3.1(j)) of Concentric Series B Preferred Stock outstanding
immediately prior to the Effective Time shall be converted into the right to
receive one share of Newco Series E Preferred Stock (the "CONCENTRIC SERIES B
CONSIDERATION") that shall have terms that are identical to those of Concentric
Series B Preferred Stock (giving effect to any amendments thereto contemplated
by Section 7.4), provided that (A) the Newco Series E Preferred Stock shall rank
on parity with the Newco Series A Preferred Stock and senior to all other Newco
Preferred Stock with respect to the payment of dividends and the distribution of
assets upon liquidation, dissolution or winding up, (B) as a result of the
Mergers, the issuer thereof shall be Newco rather than Concentric; and (C)
Newco's obligations with respect to quarterly dividends on Newco Series E
Preferred Stock shall accrue from the date of the last dividend paid on
Concentric Series B Preferred Stock.
(i) Conversion of Concentric Series C Preferred Stock. Each
issued and outstanding share (other than shares to be canceled in accordance
with Section 3.1(m)) of Concentric Series C Preferred Stock outstanding
immediately prior to the Effective Time shall be converted into the right to
receive one share of Newco Series F Preferred Stock (the "CONCENTRIC SERIES C
CONSIDERATION" and, together with the Common Stock Consideration, the NEXTLINK
14% Preferred Consideration, the NEXTLINK 6 1/2% Preferred Consideration, the
NEXTLINK Series C Preferred Consideration, the NEXTLINK Series D Preferred
Consideration and the Concentric Series B Consideration, the "MERGER
CONSIDERATION") that shall have terms that are identical to those of Concentric
Series C Preferred Stock, provided that (A) the Newco Series F Preferred Stock
shall rank on a parity with the Newco Series B Preferred Stock and junior to all
other Newco Preferred Stock with respect to the payment of dividends and the
distribution of assets upon liquidation, dissolution or winding up, (B) as a
result of the Mergers, the issuer thereof shall be Newco rather than Concentric;
(C) Newco's obligations with respect to quarterly dividends on Newco Series F
Preferred Stock shall accrue from the date of the last dividend paid on
Concentric Series C Preferred Stock; (D) the last sentence of Section 3 of the
Amended Certificate of Designation relating thereto shall be omitted; and (E)
the Newco Series F Preferred Stock shall initially be convertible into a number
of shares of Newco Common Stock equal to (x) the "Conversion Rate" of Concentric
Series C Preferred Stock in effect immediately prior to the Effective Time
multiplied by (y) the Common Stock Ratio.
-22-
(j) Cancellation of Stock. All shares of Concentric Common
Stock, NEXTLINK Common Stock, Concentric Preferred Stock and NEXTLINK Preferred
Stock that are directly owned by Concentric or NEXTLINK shall automatically be
canceled and retired and shall cease to exist, and no consideration shall be
delivered in exchange therefor. The Concentric Series A Junior Preferred Stock
shall cease to exist as a class, and any outstanding shares thereof shall be
canceled.
(k) Options. At the Effective Time, all stock options to
purchase Concentric Common Stock and NEXTLINK Common Stock then outstanding
shall be assumed by Newco in accordance with Section 3.3.
(l) Warrants. Outstanding warrants to purchase Concentric
Common Stock and NEXTLINK Common Stock will become exercisable for Newco Common
Stock in accordance with their terms.
(m) Anti-Dilution Provisions. In the event NEXTLINK changes
(or establishes a record date for changing) the number of shares of its common
stock issued and outstanding prior to the Effective Date as a result of a stock
split, stock dividend, recapitalization, subdivision, reclassification,
combination, exchange of shares or similar transaction with respect to its
outstanding common stock and the record date therefor shall be prior to the
Effective Date, the Common Stock Ratio shall be proportionately adjusted to
reflect such stock split, stock dividend, recapitalization, subdivision,
reclassification, combination, exchange of shares of similar transaction.
(n) Treatment of NEXTLINK Common Certificates. Each
certificate representing shares of NEXTLINK Common Stock and NEXTLINK Class B
Common Stock immediately prior to the Effective Time shall from and after the
Effective Time be deemed to evidence the ownership of shares of Newco Common
Stock and Newco Class B Common Stock, respectively, into which such shares were
converted in accordance with Sections 3.1(a) and 3.1(b) hereof, and each holder
of such a certificate shall have and be entitled to exercise any voting and
other rights with respect to, and to receive any dividend and other distribution
upon, the shares of Newco Common Stock and Newco Class B Common Stock evidenced
by such outstanding certificates.
SECTION 3.2. Exchange of Certificates.
(a) Exchange Agent. Prior to the Effective Time, Newco shall
appoint a bank or trust company to act as exchange agent hereunder for the
purpose of exchanging Certificates, as defined below, for the Merger
Consideration (the "EXCHANGE AGENT"). At or prior to the Effective Time,
NEXTLINK shall cause Newco to deposit with the Exchange Agent, in trust for the
benefit of the holders of Concentric Common Stock, Concentric Preferred Stock
and NEXTLINK Preferred Stock, certificates representing the Newco
-23-
Common Stock and Newco Preferred Stock issuable pursuant to Section 3.1 in
exchange for the outstanding shares of Concentric Common Stock, Concentric
Preferred Stock and NEXTLINK Preferred Stock, respectively, and such cash as it
deems likely to be sufficient to pay cash in lieu of fractional shares pursuant
to Section 3.2(e) and any dividends and other distributions pursuant to Section
3.2(c). The cash and certificates of Newco Common Stock, and Newco Preferred
Stock deposited with the Exchange Agent shall hereinafter be referred to as the
"EXCHANGE FUND."
(b) Exchange Procedures. As soon as is practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Concentric Common Stock, Concentric Preferred
Stock, and NEXTLINK Preferred Stock (the "CERTIFICATES") whose shares were
converted into the right to receive the Merger Consideration pursuant to Section
3.1: (i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Exchange Agent and shall be in such form and
have such other provisions as NEXTLINK may reasonably specify) and (ii)
instructions for use in surrendering the Certificates in exchange for
certificates representing the Merger Consideration. Upon surrender of a
Certificate for cancellation to the Exchange Agent, together with such letter of
transmittal, duly executed, and such other documents as may reasonably be
required by the Exchange Agent, the holder of such Certificate shall be entitled
to receive in exchange therefor a certificate representing that number of whole
shares of Newco Common Stock or Newco Preferred Stock that such holder has the
right to receive pursuant to the provisions of this Article 3, certain dividends
or other distributions in accordance with Section 3.2(c), and cash in lieu of
any fractional share of Newco Common Stock in accordance with Section 3.2(e),
and the Certificate so surrendered shall forthwith be canceled. In the event of
a transfer of ownership of Concentric Common Stock, Concentric Preferred Stock,
or NEXTLINK Preferred Stock that is not registered in the transfer records of
Concentric or NEXTLINK, respectively, a certificate representing the proper
number of shares of Newco Common Stock, or Newco Preferred Stock may be issued
to a Person other than the Person in whose name the Certificate so surrendered
is registered if such Certificate has been properly endorsed or otherwise is in
proper form for transfer, and if the Person requesting such issuance shall pay
any transfer or other taxes required by reason of the issuance of shares of
Newco Common Stock or Newco Preferred Stock to a Person other than the
registered holder of such Certificate (or shall establish to the satisfaction of
NEXTLINK that such tax has been paid or is not applicable). Until surrender as
contemplated by this Section 3.2(b), each Certificate shall be deemed at any
time after the Effective Time to represent only the right to receive upon such
surrender the Merger Consideration and any cash in lieu of fractional shares to
be issued or paid in consideration therefor upon surrender of
-24-
such certificate in accordance with this Section 3.2. No interest shall be paid
or will accrue on any cash payable to holders of Certificates pursuant to the
provisions of this Article 3.
(c) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions with respect to Newco Common Stock or Newco
Preferred Stock with a record date after the Effective Time shall be paid to the
holder of any unsurrendered Certificate with respect to the shares of Newco
Common Stock or Newco Preferred Stock represented thereby, and no cash payment
in lieu of fractional shares shall be paid to any such holder pursuant to
Section 3.2(e), until the holder of record of such Certificate shall surrender
such Certificate in accordance with this Article 3. Subject to the effect of
applicable escheat or similar laws, following surrender of any such Certificate
there shall be paid to the holder of the certificate representing whole shares
of Newco Common Stock or Newco Preferred Stock issued in exchange therefor,
without interest: (i) 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 Newco Common Stock or Newco Preferred Stock
and the amount of any cash payable in lieu of a fractional share of Newco Common
Stock to which such holder is entitled pursuant to Section 3.2(e); and (ii) at
the appropriate payment date, the amount of dividends or other distributions
with a record date after the Effective Time but prior to such surrender and with
a payment date subsequent to such surrender payable with respect to such whole
shares of Newco Common Stock or Newco Preferred Stock.
(d) No Further Ownership Rights in Concentric and NEXTLINK
Stock. All shares of Newco Common Stock and Newco Preferred Stock issued upon
the exchange of Certificates in accordance with the terms of this Article 3
(including any cash paid pursuant to this Article 3) shall be deemed to have
been issued (and paid) in full satisfaction of all rights pertaining to the
shares of Concentric Common Stock, Concentric Preferred Stock, and NEXTLINK
Preferred Stock previously represented by such Certificates, subject, however,
to the Surviving Corporation's obligation to pay any dividends or make any other
distributions with a record date prior to the Effective Time which may have been
declared or made by Concentric or NEXTLINK on shares of Concentric Common Stock,
Concentric Preferred Stock, and NEXTLINK Preferred Stock which remain unpaid at
the Effective Time, and there shall be no further registration of transfers on
the stock transfer books of the Surviving Corporation of the shares of
Concentric Common Stock, Concentric Preferred Stock and NEXTLINK Preferred Stock
which were outstanding immediately prior to the Effective Time. The stock
transfer books of NEXTLINK relating to the NEXTLINK Common Stock and NEXTLINK
Class B Common Stock immediately prior to the Effective Time shall be the stock
transfer books of Newco at the Effective Time with respect to Newco Common Stock
and Newco Class B Common Stock. If, after the Effective Time, Certificates are
presented to the Surviving
-25-
Corporation or the Exchange Agent for any reason, they shall be canceled and
exchanged as provided in this Article 3.
(e) No Fractional Shares. No certificates or scrip
representing fractional shares of Newco Common Stock shall be issued upon the
surrender for exchange of Certificates, no dividend or distribution by Newco
shall relate to such fractional share interests and such fractional share
interests shall not entitle the owner thereof to vote or to any rights of a
stockholder of Newco. All fractional shares of Newco Common Stock that a holder
of shares of Concentric Common Stock is entitled to as a result of the Mergers
shall be aggregated and if a fractional share results from such aggregation,
such holder shall be entitled to receive, in lieu thereof, cash (without
interest) in an amount, less the amount of any withholding taxes that may be
required thereon, equal to such fractional part of a share of NEXTLINK Common
Stock multiplied by the volume-weighted average per share closing price of
NEXTLINK Common Stock on the Closing Date as reported by Bloomberg, L.P.
(f) Termination. Any holders of the Certificates who have not
complied with this Article 3 shall thereafter look only to Newco for payment of
their claim for Merger Consideration, any dividends or distributions with
respect to Newco Common Stock and Newco Preferred Stock and any cash in lieu of
fractional shares of Newco Common Stock.
(g) No Liability. None of NEXTLINK, Concentric, Newco or the
Exchange Agent shall be liable to any Person in respect of any shares of Newco
Common Stock and Newco Preferred Stock, any dividends or distributions with
respect thereto, any cash in lieu of fractional shares of Newco Common Stock or
any cash from the Exchange Fund, in each case delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law. If any
Certificate shall not have been surrendered prior to the earlier date on which
any Merger Consideration, any dividends or distributions payable to the holder
of such Certificate or any cash payable to the holder of such Certificate
pursuant to this Article 3, would otherwise escheat to or become the property of
any Governmental Authority, any such Merger Consideration, dividends or
distributions in respect of such Certificate or such cash shall, to the extent
permitted by applicable law, become the property of the Surviving Corporation,
free and clear of all claims or interest of any Person previously entitled
thereto.
(h) Investment. The Exchange Agent shall invest any cash
provided to it pursuant to this Article 3, as directed by NEXTLINK, and any
interest and other income resulting from such investments shall be paid to
NEXTLINK.
(i) Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
Person claiming such Certificate to be lost, stolen or destroyed and, if
required by Newco, and subject to the
-26-
posting by such Person of a bond in such reasonable amount as Newco may direct
as indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent shall issue in exchange for such lost, stolen or
destroyed Certificate the Merger Consideration and, if applicable, any unpaid
dividends and distributions on shares of Newco Common Stock or Newco Preferred
Stock deliverable in respect thereof and any cash in lieu of fractional shares,
in each case pursuant to this Agreement.
(j) Return of Consideration. Any portion of the Concentric
Series B Consideration or Concentric Series C Consideration made available to
the Exchange Agent pursuant to Section 3.2(a) to pay for shares of Concentric
Series B Preferred Stock or Concentric Series C Preferred Stock for which
appraisal rights have been perfected shall be returned to Newco upon demand.
SECTION 3.3. Stock Options. (a) After the Effective Time, each
outstanding option to purchase shares of Concentric Common Stock granted under
any Concentric stock option or compensation plans or arrangements (a "CONCENTRIC
STOCK OPTION"), whether or not exercisable or vested, shall be adjusted as
necessary to provide that, at the Effective Time, each Concentric Stock Option
outstanding immediately prior to the Effective Time shall be deemed to
constitute an option to acquire, on the same terms and conditions as were
applicable under such Concentric Stock Option (including terms regarding
vesting), the same number of shares of Newco Common Stock as the holder of such
Concentric Stock Option would have been entitled to receive pursuant to the
Mergers had such holder exercised such Concentric Stock Option in full
immediately prior to the Effective Time, at a price per share of Newco Common
Stock equal to (A) the aggregate exercise price for the shares of Concentric
Common Stock otherwise purchasable pursuant to such Concentric Stock Option
divided by (B) the aggregate number of shares of Newco Common Stock deemed
purchasable pursuant to such Concentric Stock Option (each, as so adjusted, an
"ADJUSTED OPTION") rounded up to the nearest cent; provided that any fractional
share of Newco Common Stock resulting from an aggregation of all the shares of a
holder subject to Concentric Stock Option shall be rounded down to the nearest
whole share, and provided further that, for any Concentric Stock Option to which
Section 421 of the Code applies by reason of its qualification under any of
Sections 422 through 424 of the Code, the option price, the number of shares
purchasable pursuant to such option and the terms and conditions of exercise of
such option shall be determined in order to comply with Section 424 of the Code.
(b) After the Effective Time, each outstanding option to
purchase shares of NEXTLINK Common Stock granted under any NEXTLINK stock option
or compensation plans or arrangements (a "NEXTLINK STOCK OPTION"), whether or
not exercisable or vested, shall be deemed to constitute an option to acquire
the same
-27-
number of shares of Newco Common Stock, on the same terms and conditions as were
applicable under such NEXTLINK Stock Option (including terms regarding vesting),
as the number of shares of NEXTLINK Common Stock which could be acquired on
exercise of such NEXTLINK Stock Option prior to the Effective Time. Newco shall
take such actions as are necessary for the assumption of the NEXTLINK Stock
Options pursuant to this Section 3.3 and any obligations to issue NEXTLINK
Common Stock under the existing terms of any other plans, agreements or
arrangements of NEXTLINK covering any current or former employee or director of
NEXTLINK or any NEXTLINK Subsidiary, including the reservation, issuance and
listing of Newco Common Stock as is necessary to effectuate the transactions
contemplated by this Section 3.3(b). Each NEXTLINK Benefit Arrangement and
NEXTLINK Employee Plan shall be assumed by Newco and continue in full force and
effect after the Effective Time. Newco shall take such actions as are necessary
for the assumption of any obligations to issue NEXTLINK Common Stock under the
existing terms of any other plans, agreements or arrangements of NEXTLINK
covering any current or former employee or director of NEXTLINK or any NEXTLINK
Subsidiary, including the reservation, issuance and listing of Newco Common
Stock as is necessary to effectuate the transactions contemplated by this
Section 3.3.
(c) Newco shall take such actions as are necessary for the
assumption of the Concentric Stock Options pursuant to this Section 3.3 and any
obligations to issue Concentric Common Stock under the existing terms of any
other plans, agreements or arrangements of Concentric covering any current or
former employee or director of Concentric or any Concentric Subsidiary,
including the reservation, issuance and listing of Newco Common Stock as is
necessary to effectuate the transactions contemplated by this Section 3.3.
(d) On or before the next Business Day following the Effective
Time, Newco shall prepare and file with the SEC a registration statement on Form
S-8 (or any other appropriate form) or a post-effective amendment to a
registration statement previously filed under the 1933 Act, with respect to the
shares of Newco Common Stock subject to the Adjusted Options and the assumed
NEXTLINK Stock Options and, where applicable, shall use its reasonable best
efforts to have such registration statement declared effective as soon as
practicable following the Effective Time and to maintain the effectiveness of
such registration statement covering such Adjusted Options and the assumed
NEXTLINK Stock Options (and to maintain the current status of the prospectus
contained therein) for so long as such Adjusted Options and the assumed NEXTLINK
Stock Options remain outstanding. With respect to those individuals, if any,
who, subsequent to the Effective Time, will be subject to the reporting
requirements under Section 16(a) of the 1934 Act, where applicable, Newco shall
use all reasonable efforts to administer any Adjusted Options and assumed
NEXTLINK Stock Options assumed pursuant to Section 3.3 in a manner that complies
with Rule 16b-3
-28-
promulgated under the 1934 Act to the extent that the Concentric Stock Option in
respect of which such Adjusted Option has been issued complied with such rule
prior to the Mergers.
(e) Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will result in the
acceleration of the vesting of any Concentric Stock Option.
SECTION 3.4. Withholding Rights. Newco shall be entitled to deduct and
withhold from the consideration otherwise payable to any Person pursuant to this
Article 3 such amounts as it is required to deduct and withhold with respect to
the making of such payment under any provision of federal, state, local or
foreign tax law. If Newco so withholds amounts, such amounts shall be treated
for all purposes of this Agreement as having been paid to the holders of
Concentric Common Stock, Concentric Preferred Stock, NEXTLINK Common Stock,
NEXTLINK Class B Common Stock or NEXTLINK Preferred Stock as the case may be, in
respect of which NEXTLINK made such deduction and withholding.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF CONCENTRIC
Except as set forth in the Concentric Disclosure Schedule or as
disclosed in the Concentric SEC Documents filed prior to the date hereof and
after December 31, 1998, Concentric represents and warrants to NEXTLINK as
follows:
SECTION 4.1. Corporate Existence and Power. Concentric is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware and has all corporate powers required to carry on its business
as now conducted. Concentric is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where such
qualification is necessary, except for those jurisdictions where failure to be
so qualified, individually or in the aggregate, has not had and would not be
reasonably expected to have a Concentric Material Adverse Effect. Concentric has
heretofore delivered or made available to NEXTLINK true and complete copies of
the certificate of incorporation and bylaws of Concentric as currently in
effect.
SECTION 4.2. Corporate Authorization. The execution, delivery and
performance by Concentric of this Agreement and the consummation by Concentric
of the transactions contemplated hereby are within Concentric's corporate powers
and, except for the required approval of Concentric's stockholders of this
Agreement and except as contemplated by Section 7.2(b), have been duly
authorized by all necessary corporate action on the part of Concentric. At a
meeting duly called and held prior to the execution of this Agreement,
Concentric's Board of Directors: (i) determined that this Agreement and the
transactions contemplated hereby are advisable and fair to and in the best
-29-
interests of Concentric's stockholders; (ii) approved and adopted this Agreement
and the transactions contemplated hereby; and (iii) resolved to recommend
approval and adoption of this Agreement by its stockholders, subject to the
provisions of Section 7.2(b). This Agreement constitutes a valid and binding
agreement of Concentric, enforceable against Concentric in accordance with its
terms, except (i) as the same may be limited by applicable bankruptcy,
insolvency, moratorium or similar laws of general application relating to or
affecting creditors' rights, and (ii) for the limitations imposed by general
principles of equity.
SECTION 4.3. Governmental Authorization. The execution, delivery and
performance by Concentric of this Agreement and the consummation by Concentric
of the transactions contemplated hereby require no action by or in respect of,
or filing with, any governmental body, agency, official or authority, domestic
or foreign (a "GOVERNMENTAL AUTHORITY"), other than: (i) the filing of a
certificate of Merger with respect to the Mergers with the Delaware Secretary of
State and appropriate documents with the relevant authorities of other states in
which Concentric is qualified to do business; (ii) compliance with the
applicable requirements of the HSR Act; (iii) compliance with any applicable
requirements of the 1933 Act, 1934 Act, and any other applicable securities
laws, whether state or foreign; and (iv) any actions or filings the absence of
which, individually or in the aggregate, would not be reasonably expected to
have a Concentric Material Adverse Effect or materially impair or delay the
ability of Concentric to consummate the transactions contemplated by this
Agreement.
SECTION 4.4. Non-contravention. The execution, delivery and performance
by Concentric of this Agreement and the consummation by Concentric of the
transactions contemplated hereby do not and will not (i) contravene, conflict
with, or result in any violation or breach of any provision of the certificate
of incorporation or bylaws of Concentric; (ii) assuming compliance with the
matters referred to in Section 4.3, contravene, conflict with or result in a
violation or breach of any provision of any applicable law, statute, ordinance,
rule, regulation, judgment, injunction, order, or decree; (iii) require any
consent or other action by any Person under, constitute a default (or an event
that, with or without notice or lapse of time or both, would constitute a
default) under, or cause or permit the termination, cancellation, acceleration,
triggering or other change of any right or obligation or the loss of any benefit
to which any member of the Concentric Group is entitled under (A) any provision
of any agreement or other instrument binding upon any member of the Concentric
Group or (B) any license, franchise, permit, certificate, approval or other
similar authorization held by, or affecting, or relating in any way to, the
assets or business of, any member of the Concentric Group; or (iv) result in the
creation or imposition of any Lien on any asset of any member of the Concentric
Group, other than
-30-
such exceptions in the case of clauses (ii), (iii) and (iv) as would not be,
individually or in the aggregate, reasonably expected to have a Concentric
Material Adverse Effect or materially impair or delay the ability of Concentric
to consummate the transactions contemplated by this Agreement.
SECTION 4.5. Capitalization. (a) As of December 31, 1999, the
authorized capital stock of Concentric consists of 100,000,000 shares of
Concentric Common Stock and 10,000,000 shares of Preferred Stock, par value
$.001 per share, of which 500,000 shares have been designated as Concentric
Series A Junior Preferred Stock and reserved for issuance upon the exercise of
Rights, (ii) 295,000 shares have been designated as Concentric Series B
Preferred Stock; and (iii) 110,000 shares have been designated as Concentric
Series C Preferred Stock. As of December 30, 1999, there were outstanding (i)
45,556,564 shares of Concentric Common Stock (inclusive of all shares of
restricted stock granted under any compensatory plans or arrangements), (ii)
Concentric Stock Options to purchase an aggregate of not more than 8,939,367
shares of Concentric Common Stock (of which options to purchase an aggregate of
not more than 1,509,332 shares of Concentric Common Stock were vested and
exercisable), (iii) phantom shares or stock units issued under any stock option,
compensation or deferred compensation plan or arrangement with respect to an
aggregate of no shares of Concentric Common Stock (except in respect of share
purchase rights under Concentric's 1997 employee stock purchase plan), (iv) no
shares of Concentric Series A Preferred Stock, (v) 176,589.4 shares of
Concentric Series B Preferred Stock, and (vi) 51,478 shares of Concentric Series
C Preferred Stock, and there has been no change to the foregoing capitalization
since December 31, 1999 (other than option exercises in the ordinary course).
All outstanding shares of capital stock of Concentric have been, and all shares
that may be issued pursuant to any compensatory plan or arrangement will be,
when issued in accordance with the respective terms thereof, duly authorized,
validly issued, fully paid and nonassessable. Concentric has also reserved for
issuance 4,244,510 shares of Concentric Common Stock for issuance upon exercise
of outstanding warrants.
(b) Except as set forth in this Section 4.5 and for changes
since December 30, 1999 resulting from the exercise of employee stock options
outstanding on such date or granted thereafter in the ordinary course of
business within the limitations described in the Concentric Disclosure Schedule
and the conversion of Concentric Series C Preferred Stock outstanding on such
date, there are no outstanding (i) shares of capital stock or voting securities
of Concentric, (ii) securities of Concentric convertible into or exchangeable
for shares of capital stock or voting securities of Concentric or (iii) options,
warrants or other rights to acquire from Concentric, or other obligation of
Concentric to issue any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities of
Concentric. There are no
-31-
outstanding obligations of Concentric or any Concentric Subsidiary to
repurchase, redeem or otherwise acquire any of the securities referred to in
clauses (i), (ii) and (iii) above.
SECTION 4.6. Subsidiaries. (a) Each Concentric Subsidiary is a
corporation or other legal entity duly organized, validly existing and in good
standing (where applicable) under the laws of its jurisdiction of organization
and has all corporate, LLC, partnership or other similar powers required to
carry on its business as now conducted, other than such exceptions as,
individually or in the aggregate, have not had and would not be reasonably
expected to have a Concentric Material Adverse Effect. Each Concentric
Subsidiary is duly qualified to do business as a foreign corporation or other
foreign legal entity and is in good standing in each jurisdiction where such
qualification is necessary, with such exceptions, individually or in the
aggregate, as have not had and would not be reasonably expected to have a
Concentric Material Adverse Effect. The Concentric Disclosure Schedule sets
forth a list of all Concentric Subsidiaries and their respective jurisdictions
of organization and identifies Concentric's (direct or indirect) percentage
ownership interest therein.
(b) All of the outstanding capital stock of, or other voting
securities or ownership interests in, each Concentric Subsidiary, is owned by
Concentric, directly or indirectly, free and clear of any Lien and free of any
other limitation or restriction (including any restriction on the right to vote,
sell or otherwise dispose of such capital stock or other voting securities or
ownership interests) other than transfer restrictions under the 1933 Act and the
Rules promulgated thereunder. There are no outstanding (i) securities of any
member of the Concentric Group convertible into or exchangeable for shares of
capital stock or other voting securities or ownership interests in any
Concentric Subsidiary or (ii) options or other rights to acquire from any member
of the Concentric Group, or other obligation of any member of the Concentric
Group to issue any capital stock, or other voting securities or ownership
interests in, or any securities convertible into or exchangeable for any capital
stock or other voting securities or ownership interests in, any Concentric
Subsidiary. There are no outstanding obligations of Concentric or any Concentric
Significant Subsidiary to repurchase, redeem or otherwise acquire any of the
items referred to in clauses (i) and (ii) above. Except as set forth in the
Concentric Disclosure Schedule or provided hereunder, no member of the
Concentric Group is obligated to make any investment in any other Person.
SECTION 4.7. SEC Filings. (a) Concentric has timely filed all reports
required to be filed by it with the SEC since July 31, 1997 pursuant to the 1934
Act. Concentric has delivered or made available to NEXTLINK: (i) Concentric's
annual report on Form 10-K for its fiscal year ended December 31, 1998 and the
Concentric 10-K; (ii) its proxy or information statements
-32-
relating to meetings of, or actions taken without a meeting by, the stockholders
of Concentric held since December 31, 1998; and (iii) all of its other reports,
statements, schedules and registration statements filed with the SEC since
December 31, 1998 (the documents referred to in this Section 4.7(a), including
any exhibits thereto or documents incorporated therein by reference,
collectively, the "CONCENTRIC SEC DOCUMENTS").
(b) As of its filing date, each Concentric SEC Document
complied as to form in all material respects with the applicable requirements of
the 1933 Act and the 1934 Act, as the case may be.
(c) As of its filing date, each Concentric SEC Document filed
pursuant to the 1934 Act did not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading.
(d) Each Concentric SEC Document that is a registration
statement, as amended or supplemented, if applicable, filed pursuant to the 1933
Act, as of the date such registration statement or amendment became effective,
did not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading.
SECTION 4.8. Financial Statements. The audited consolidated financial
statements and unaudited consolidated interim financial statements of Concentric
included in the Concentric SEC Documents fairly present, in all material
respects, in conformity with generally accepted accounting principles ("GAAP")
applied on a consistent basis (except as may be indicated in the notes thereto),
the consolidated financial position of Concentric and its consolidated
Subsidiaries as of the respective dates thereof and their consolidated results
of operations and cash flows for the periods then ended (subject to normal
year-end adjustments in the case of any unaudited interim financial statements)
and except that unaudited financial statements may not contain all notes
required under GAAP with respect to audited financial statements.
SECTION 4.9. Information Supplied. The information supplied by
Concentric for inclusion or incorporation in the registration statement on Form
S-4 or any amendment or supplement thereto pursuant to which shares of Newco
Common Stock (or NEXTLINK Common Stock, as applicable) issuable in the Mergers
will be registered with the SEC (the "REGISTRATION STATEMENT") shall not at the
time the Registration Statement is declared effective by the SEC contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not
-33-
misleading. The information supplied by Concentric for inclusion in the joint
proxy statement/information statement/prospectus (the "PROXY STATEMENT") to be
sent to the stockholders of Concentric in connection with their meeting to
consider this Agreement and the Mergers (the "CONCENTRIC STOCKHOLDERS' MEETING")
and to the stockholders of NEXTLINK in connection with the Mergers shall not, on
the date the Proxy Statement is first mailed to the stockholders of Concentric
and NEXTLINK or at the time of either of the Stockholders' Meetings or at the
Effective Time, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
SECTION 4.10. Absence of Certain Changes. Since the Concentric Balance
Sheet Date, the business of Concentric and the Concentric Subsidiaries has been
conducted in the ordinary course consistent with past practices and there has
not been:
(a) any event, occurrence or development of a state of
circumstances or facts which, individually or in the aggregate, has had or would
be reasonably expected to have a Concentric Material Adverse Effect; or
(b) any action, event, occurrence or transaction that would
have been prohibited by clause (a), (b), (c), (d), (f), (g) or (i) of the second
sentence of Section 7.1 (or committed to do any of the foregoing) if this
Agreement had been in effect as of the time thereof.
SECTION 4.11. No Undisclosed Material Liabilities. There are no
liabilities or obligations of Concentric or any Concentric Subsidiary of any
kind whatsoever, whether accrued, contingent, absolute, determined, determinable
or otherwise, and there is no existing condition, situation or set of
circumstances that could be reasonably expected to result in such a liability or
obligation, other than:
(a) liabilities or obligations disclosed and provided for in
the Concentric Balance Sheet or in the notes thereto or in Concentric SEC
Documents filed prior to the date hereof or in the Concentric 10-K;
(b) liabilities or obligations incurred in the ordinary course
of business consistent with past practice since the Concentric Balance Sheet;
and
(c) liabilities or obligations that, individually or in the
aggregate have not had and would not be reasonably expected to have a Concentric
Material Adverse Effect.
SECTION 4.12. Compliance with Laws and Court Orders. Each member of the
Concentric Group holds all licenses, franchises, certificates, consents,
permits, qualifications and
-34-
authorizations from all Governmental Authorities necessary for the lawful
conduct of their business, except where the failure to hold any of the
foregoing, individually or in the aggregate, has not had and would not be
reasonably expected to have a Concentric Material Adverse Effect. Each member of
the Concentric Group is and has been in compliance with, and to the Knowledge of
Concentric, is not under investigation with respect to and has not been
threatened to be charged with or given notice of any violation of, any such
license, franchise, certificate, consent, permit, qualification or
authorization, applicable law, statute, ordinance, rule, regulation, judgment,
injunction, order or decree, except for failures to comply or violations that,
individually or in the aggregate, have not had and would not be reasonably
expected to have a Concentric Material Adverse Effect.
SECTION 4.13. Litigation. There is no action, suit, investigation or
proceeding (or, to the Knowledge of Concentric, any reasonable basis therefor)
pending against, or, to the Knowledge of Concentric, threatened against or
affecting, Concentric or any Concentric Subsidiary or any of their respective
properties before any court or arbitrator or before or by any other Governmental
Authority, that, individually or in the aggregate, would be reasonably expected
to have a Concentric Material Adverse Effect.
SECTION 4.14. Finders' Fees. Except for Bear, ▇▇▇▇▇▇▇ & Co., Inc. there
is no investment banker, broker, finder or other intermediary that has been
retained by or is authorized to act on behalf of Concentric or any Concentric
Subsidiary who might be entitled to any fee or commission from NEXTLINK, any of
the NEXTLINK Subsidiaries, Concentric or any of the Concentric Subsidiaries in
connection with the transactions contemplated by this Agreement. A copy of Bear,
▇▇▇▇▇▇▇ & Co., Inc.'s engagement agreement has been provided to NEXTLINK.
SECTION 4.15. Opinion of Financial Advisor. The Board of Directors of
Concentric has received an opinion of Bear ▇▇▇▇▇▇▇ & Co., Inc., financial
advisor to Concentric, to the effect that the Common Stock Consideration is fair
to the holders of Concentric Common Stock from a financial point of view.
SECTION 4.16. Taxes. Except as set forth in the Concentric Balance
Sheet (including the notes thereto) and except as would not be, individually or
in the aggregate, reasonably expected to have a Concentric Material Adverse
Effect, (i) all Concentric Tax Returns required to be filed with any taxing
authority by, or with respect to, Concentric and the Concentric Subsidiaries
have been filed in accordance with all applicable laws; (ii) Concentric and the
Concentric Subsidiaries have timely paid all Taxes shown as due and payable on
the Concentric Tax Returns that have been so filed (other than Taxes which are
being contested in good faith and for which adequate reserves are reflected on
the Concentric Balance Sheet), and, as of the time of filing, the Concentric Tax
Returns were correct and complete; (iii)
-35-
Concentric and the Concentric Subsidiaries have made provision for all Taxes
payable by Concentric and the Concentric Subsidiaries for which no Concentric
Tax Return has yet been filed (other than Taxes which are being contested in
good faith and for which adequate reserves are reflected on the Concentric
Balance Sheet and other than payroll and similar taxes (excluding the income
taxes of Concentric or a Concentric Subsidiary) incurred in the ordinary course
of business since the Concentric Balance Sheet Date); (iv) the charges, accruals
and reserves for Taxes with respect to Concentric and the Concentric
Subsidiaries reflected on the Concentric Balance Sheet are adequate under GAAP
to cover the Tax liabilities accruing through the date thereof; (v) there is no
action, suit, proceeding, audit or claim now proposed or pending against or with
respect to Concentric or any Concentric Subsidiary in respect of any Tax where
there is a reasonable possibility of an adverse determination; (vi) the federal
income Tax Returns of Concentric and the Concentric Subsidiaries have been
examined and settled with the Internal Revenue Service (the "IRS") (or the
applicable statutes of limitation for the assessment of federal income Taxes for
such periods have expired) for all years through 1995; and (vii) there are no
material Liens or encumbrances for Taxes on any of the assets of Concentric or
any Concentric Subsidiary except liens for current Taxes not yet due. For
purposes of this Agreement, "TAXES" shall mean any and all taxes, charges, fees,
levies or other assessments, including, without limitation, all net income,
gross income, gross receipts, excise, stamp, real or personal property, ad
valorem, withholding, social security (or similar), unemployment, occupation,
use, service, service use, license, net worth, payroll, franchise, severance,
transfer, recording, employment, premium, windfall profits, environmental
(including taxes under Section 59A of the Code), customs duties, capital stock,
profits, disability, sales, registration, value added, alternative or add-on
minimum, estimated or other taxes, assessments or charges imposed by any
federal, state, local or foreign governmental entity and any interest,
penalties, or additions to tax attributable thereto. For purposes of this
Agreement, "TAX RETURNS" shall mean any return, report, form or similar
statement required to be filed with respect to any Tax (including any attached
schedules), including, without limitation, any information return, claim for
refund, amended return or declaration of estimated Tax.
SECTION 4.17. Tax Opinions. There are no facts or circumstances
relating to Concentric or, to the Knowledge of Concentric, that would prevent
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Professional Corporation from delivering the
opinion referred to in Section 10.3(b) as of the date hereof.
-36-
SECTION 4.18. Employee Benefit Plans and Labor Matters. Except as have
not had and would not be reasonably expected to have, individually or in the
aggregate, a Concentric Material Adverse Effect:
(a) The Concentric Disclosure Schedule contains a true and
complete list, as of the date hereof, of all Concentric Employee Plans and all
Concentric Benefit Arrangements. Copies of each Concentric Employee Plan and
each Concentric Benefit Arrangement (and, if applicable, related trust
agreements) and all amendments thereto and formal, written interpretations
thereof have been made available to NEXTLINK as of the date hereof or will have
been made available to NEXTLINK within thirty days after the date hereof,
together with the three most recent annual reports (Form 5500 including, if
applicable, Schedule B thereto) and the most recent actuarial valuation report
prepared in connection with any Concentric Employee Plan.
(b) None of the Concentric Employee Plans is a Multiemployer
Plan and neither the Concentric nor any Concentric ERISA Affiliate has withdrawn
in a complete or partial withdrawal from any Multiemployer Plan, nor has any of
them incurred any liability due to the termination or reorganization of a
Multiemployer Plan.
(c) None of the Concentric Employee Plans is a Pension Plan
and neither Concentric nor any Concentric ERISA Affiliate has any liability with
respect to any Pension Plan.
(d) Each Concentric Employee Plan that is intended to qualify
under Section 401 of the Code has either received a favorable determination,
opinion, notification or advisory letter, as applicable, from the Internal
Revenue Service to the effect that it meets the requirements of Code Section
401(a) or has a remaining period of time under applicable Treasury Regulations
or IRS pronouncements in which to apply for such a letter and any trust
maintained pursuant to any such Concentric Employee Plan is intended to be
exempt from federal income taxation under Section 501 of the Code, and to
Concentric's Knowledge nothing has occurred with respect to the operation of any
such Concentric Employee Plan that could cause the loss of such qualification or
exemption or the imposition of any liability, penalty or tax under ERISA or the
Code.
(e) There is no contract, plan or arrangement (written or
otherwise) covering any employee or former employee of Concentric or any
Concentric Subsidiary that, individually or collectively, could give rise to the
payment of any amount that would not be deductible pursuant to the terms of
Sections 162(m) or 280G of the Code.
(f) All contributions (including all employer contributions
and employee salary reduction contributions) required to have been made under
any of the Concentric Employee
-37-
Plans and Concentric Benefit Arrangements or by law to any funds or trusts
established thereunder or in connection therewith have been made by the due date
thereof (including any valid extension), and all contributions for any period
ending on or before the Closing Date which are not yet due will have been paid
or accrued on or prior to the Closing Date.
(g) There has been no material violation of ERISA or the Code
with respect to the filing of applicable reports, documents and notices
regarding the Concentric Employee Plans and Concentric Benefit Arrangements with
the Secretary of Labor or the Secretary of the Treasury or the furnishing of
required reports, documents or notices to the participants or beneficiaries of
the Concentric Employee Plans and Concentric Benefit Arrangements.
(h) Each Concentric Employee Plan and Concentric Benefit
Arrangement has been maintained, in all material respects, in accordance with
its terms and with all provisions of ERISA and the Code (including rules and
regulations thereunder) and other applicable federal and state laws and
regulations, and neither Concentric, nor, to the Knowledge of Concentric, any
"party in interest" or "disqualified person" with respect to the Concentric
Employee Plans has engaged in a "prohibited transaction" within the meaning of
Section 406 of ERISA or 4975 of the Code, and not otherwise exempt under Section
4975 of the Code or Section 408 of ERISA (or any administrative class exemption
issued thereunder). To the Knowledge of Concentric, no fiduciary has any
liability for breach of fiduciary duty or any other failure to act or comply in
connection with the administration or investment of the assets of any Employee
Benefit Plan.
(i) There are no actions, claims or lawsuits which are pending
or, to the Knowledge of Concentric, threatened against any Concentric Employee
Plan or Concentric Benefit Arrangement, the assets of any of the trusts under
such plans or arrangements or the sponsors or the administrators, or against any
fiduciary of such plans or arrangements with respect to their operation (other
than routine benefit claims), nor does Concentric have Knowledge of facts which
could form the basis for any such claim or lawsuit.
(j) All amendments and actions required to bring the
Concentric Employee Plans into conformity in all material respects with all of
the applicable provisions of ERISA, the Code and other applicable laws have been
made or taken except to the extent that such amendments or actions are not
required by law to be made or taken until a date after the Closing Date.
(k) None of the Concentric Employee Plans or Concentric
Benefit Arrangements provide retiree health benefits except as may be required
under Section 4980B of the Code, Section 601 of ERISA or any similar provision
of state law, or at
-38-
the expense of the participant or the participant's beneficiary. Concentric and
the Concentric ERISA Affiliates have at all times complied with the notice and
health care continuation requirements of Section 4980B of the Code and Sections
601 through 608 of ERISA.
(l) Except as set forth in the Concentric Disclosure Schedule
hereto, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment becoming due to any employee (current, former or retired) of Concentric,
(ii) increase any benefits otherwise payable under any Concentric Employee Plan
or Concentric Benefit Arrangement, (iii) result in the acceleration of the time
of payment or vesting of any benefits under any Concentric Employee Plan or
Concentric Benefit Arrangement (except to the extent required by the Code and
ERISA if NEXTLINK causes a partial or full termination to occur under any
Concentric Employee Plan), or (iv) qualify as a "change of control" or similar
event under any Concentric Employee Plan or Concentric Benefit Arrangement.
(m) Except as set forth in the Concentric Disclosure Schedule,
no stock or other security issued by Concentric or any Affiliate forms or has
formed a material part of the assets of any Concentric Employee Plan.
(n) There has been no "mass layoff" or "plant closing" as
defined by the Worker Adjustment and Retraining Notification Act or any similar
state or local "plant closing" law in the four years prior to the Effective
Times.
(o) The Concentric Disclosure Schedule contains a complete and
accurate list of the following information for each key employee or officer of
the Company, including such employee on leave of absence or layoff status:
employer; name; and job title.
(p) Except as set forth on the Concentric Disclosure Schedule,
no stock appreciation rights were granted that are currently outstanding under
the Concentric 1995 Stock Incentive Plan for Employees and Consultants, the
Concentric Amended and Restated 1996 Stock Plan, the Concentric 1997 Stock Plan
or the Concentric 1999 Nonstatutory Stock Option Plan or any other equity-based
compensation plan maintained by Concentric or any Concentric Subsidiary (the
"Concentric Equity Plans"). Set forth on the Concentric Disclosure Schedule is a
complete list of stock options granted and currently outstanding under all of
the Concentric Equity Plans, separately identifying the optionholders and number
of options held, vesting status and exercise price for each stock option.
(q) To Concentric's Knowledge, no employee or director of
Concentric or any Concentric Subsidiary is a party to, or is otherwise bound by,
any agreement or arrangement, including any
-39-
confidentiality, noncompetition, or proprietary rights agreement, between such
employee or director and any other person or entity ("Proprietary Rights
Agreement") that in any way adversely affects or will affect (i) the performance
of his duties as an employee of Newco or an employee or director of Concentric
or any Concentric Subsidiary, or (ii) the ability of Concentric or any
Concentric Subsidiary to conduct its business, including any Proprietary Rights
Agreement with Concentric or any Concentric Subsidiary by any such employee or
director. To Concentric's Knowledge, no employees of Concentric or any
Concentric Subsidiary intend to terminate their employment with Concentric.
(r) Neither Concentric nor any Concentric Subsidiary has for
the last two years been nor currently is a party to any collective bargaining or
other labor contract. For the last two years, there has not been, there is not
presently pending or existing, and to Concentric's Knowledge there is not
threatened, (a) any strike, slowdown, picketing, work stoppage, or employee
grievance process, (b) any proceeding against or affecting Concentric or any
Concentric Subsidiary relating to the alleged violation of any legal requirement
pertaining to labor relations or employment matters, including any charge or
complaint filed by an employee or union with the National Labor Relations Board,
the Equal Employment Opportunity Commission, or any comparable governmental
body, organizational activity, or other labor or employment dispute against or
affecting the Concentric or any Concentric Subsidiary or its premises, or (c)
any application for certification of a collective bargaining agent. To
Concentric's Knowledge, no event has occurred or circumstance exists that could
provide the basis for any such work stoppage or other labor dispute. There is no
lockout of any employees by Concentric or any Concentric Subsidiary, and no such
action is contemplated by Concentric or any Concentric Subsidiary. Concentric
and each Concentric Subsidiary has complied in all material respects with all
legal requirements relating to employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective bargaining,
the payment of social security and similar taxes, occupational safety and
health, and plant closing. Neither Concentric nor any Concentric Subsidiary is
liable for the payment of any compensation, damages, taxes, fines, penalties, or
other amounts, however designated, for failure to comply with any of the
foregoing legal requirements.
SECTION 4.19. Environmental Matters. (a) Except as have not had and
would not be reasonably expected to have, individually or in the aggregate, a
Concentric Material Adverse Effect:
(i) no notice, notification, demand, request for information,
citation, summons or order has been received, no complaint has been
filed, no penalty has been assessed, and no investigation, action,
claim, suit, proceeding or review (or, to the Knowledge of Concentric,
any reasonable basis therefor) is pending or, to the Knowledge of
-40-
Concentric, is threatened by any Governmental Authority or other Person
relating to or arising out of any Environmental Law;
(ii)Each member of the Concentric Group is and has been in
compliance with all Environmental Laws and all Environmental Permits;
and
(iii)there are no liabilities of or relating to any member of
the Concentric Group of any kind whatsoever, whether accrued,
contingent, absolute, determined, or arising under or relating to
Environmental Laws or any facts, conditions, situations or set of
circumstances that could reasonably be expected to result in or be the
basis for any such liability.
(b) To the Knowledge of Concentric, there have been no
environmental investigations, studies, audits, tests, reviews or other analyses
conducted in relation to the current or prior business of any member of the
Concentric Group or any property or facility now or previously owned or leased
by any member of the Concentric Group that reveal matters that, individually or
in the aggregate, have had or would reasonably be expected to have a Concentric
Material Adverse Effect.
(c) For purposes of this Section 4.19, the terms "CONCENTRIC
GROUP" shall include any entity that is, in whole or in part, a predecessor of
any member of the Concentric Group.
SECTION 4.20. Intellectual Property. With such exceptions as,
individually or in the aggregate, have not had and would not be reasonably
expected to have a Concentric Material Adverse Effect, each member of the
Concentric Group owns or has a valid license to use each trademark, service
▇▇▇▇, trade name, invention, patent, trade secret, copyright, know-how
(including any registrations or applications for registration of any of the
foregoing) or any other similar type of proprietary intellectual property right
(collectively, the "CONCENTRIC INTELLECTUAL PROPERTY") necessary to carry on its
business substantially as currently conducted. No member of the Concentric Group
has received any notice of infringement of or conflict with, and to Concentric's
Knowledge, there are no infringements of or conflicts with, the rights of any
Person with respect to the use of any Concentric Intellectual Property that, in
either such case, individually or in the aggregate, have had or would be
reasonably expected to have, a Concentric Material Adverse Effect.
SECTION 4.21. Contracts. Except as disclosed in Concentric SEC
Documents, no member of the Concentric Group is a party to or bound by (i) any
"material contract" (as such term is defined in Item 601(b)(10) of Regulation
S-K of the SEC) or any agreement, contract or commitment that would be such a
"material contract" but for the exception for contracts entered into in the
ordinary
-41-
course of business, (ii) any non-competition agreement or any other agreement or
obligation which materially limits or will materially limit any member of the
Concentric Group (or after the Mergers, any member of the NEXTLINK Group) from
engaging in any line of business, or (iii) any material agreement, contract or
commitment to which SBC, ▇▇▇▇▇▇▇▇, Microsoft or any of their respective
Affiliates is a party that is not in the ordinary course of business of the
Concentric Group. With such exceptions as, individually or in the aggregate,
have not had, and would not be reasonably expected to have, a Concentric
Material Adverse Effect, (x) each of the contracts, agreements and commitments
of the Concentric Group is valid and in full force and effect and (y) no member
of the Concentric Group has violated any provision of, or committed or failed to
perform any act which, with or without notice, lapse of time, or both, would
constitute a default under the provisions of any such contract, agreement or
commitment. To the Knowledge of Concentric, no counterparty to any such
contract, agreement or commitment has violated any provision of, or committed or
failed to perform any act which, with or without notice, lapse of time, or both
would constitute a default or other breach under the provisions of, such
contract, agreement or commitment, except for defaults or breaches which,
individually or in the aggregate, have not had, or would not reasonably be
expected to have, a Concentric Material Adverse Effect. Neither Concentric nor
any Concentric Subsidiary is a party to, or otherwise a guarantor of or liable
with respect to, any interest rate, currency or other swap or derivative
transaction, other than any such transactions which are not material to the
business of the Concentric Group. Concentric has provided or made available to
NEXTLINK a copy of each agreement described in item (i), (ii) or (iii) above
(except for such agreements filed as exhibits to the Concentric SEC Documents).
SECTION 4.22. Vote Required. The only vote of the holders of any class
or series of capital stock of Concentric necessary to approve this Agreement and
the transactions contemplated hereby is the affirmative vote of the holders of a
majority of the outstanding shares of Concentric Common Stock (the "CONCENTRIC
STOCKHOLDERS' APPROVAL")
SECTION 4.23. Antitakeover Statutes; Rights Agreement. (a) Concentric
has taken all action necessary to exempt the Mergers and this Agreement and the
transactions contemplated hereby from the restrictions of Section 203 of
Delaware Law, and, accordingly, neither such Section nor any other antitakeover
or similar statute or regulation applies or purports to apply to any such
transactions. No other "control share acquisition," "fair price," "moratorium"
or other antitakeover laws or regulations enacted under U.S. state or federal
laws apply to this Agreement or any of the transactions contemplated hereby.
(b) Concentric and the Concentric Board have taken all
necessary action to (i) render the Rights Agreement inapplicable to the Mergers
and the other transactions contemplated by this
-42-
Agreement, (ii) provide that (A) none of NEXTLINK, any NEXTLINK Subsidiary or
Newco shall be deemed an Acquiring Person (as defined in the Rights Agreement)
as a result of this Agreement or any of the transactions contemplated hereby,
(B) no Distribution Date (as defined in the Rights Agreement) shall be deemed to
have occurred as a result of this Agreement or the consummation of any of the
transactions contemplated hereby and (C) the rights issuable pursuant to the
Rights Agreement will not separate from the shares of Concentric Common Stock,
as a result of the approval, execution or delivery of this Agreement or the
consummation of the transactions contemplated hereby.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF NEXTLINK
Except as set forth in the NEXTLINK Disclosure Schedule or as disclosed
in the NEXTLINK SEC Documents filed prior to the date hereof, NEXTLINK
represents and warrants to Concentric (and to Eagle River to the extent provided
in Section 5.21) that:
SECTION 5.1. Corporate Existence and Power. (a) NEXTLINK is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and has all corporate powers required to carry on
its business as now conducted. NEXTLINK is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where such
qualification is necessary except for those jurisdictions where failure to be so
qualified, individually or in the aggregate, has not had and would not be
reasonably expected to have a NEXTLINK Material Adverse Effect. NEXTLINK has
heretofore delivered or made available to Concentric true and complete copies of
the certificate of incorporation and bylaws of NEXTLINK, as currently in effect.
(b) Newco is a corporation duly incorporated, validly existing
and in good standing under the laws of the Sate of Delaware and has all
corporate powers required to carry on its business as now conducted.
SECTION 5.2. Corporate Authorization. (a) The execution, delivery and
performance by NEXTLINK and the consummation by NEXTLINK of the transactions
contemplated hereby are within the corporate powers of NEXTLINK and, except for
the approval of Nextlink's stockholders of this Agreement, have been duly
authorized by all necessary corporate action including, without limitation,
NEXTLINK's Board of Directors having: (i) determined that this Agreement and the
transactions contemplated hereby are fair to and in the best interests of
NEXTLINK's stockholders; (ii) approved this Agreement and the transactions
contemplated hereby; and (iii) resolved to recommend approval and adoption of
this Agreement by its stockholders. This Agreement constitutes a valid and
binding agreement of NEXTLINK enforceable against NEXTLINK in accordance with
its terms, except (i) as the same may be limited by applicable bankruptcy,
insolvency, moratorium or
-43-
similar laws of general application relating to or affecting creditors' rights,
(ii) provisions providing for indemnity for liability under the securities laws
and (iii) for the limitations imposed by general principles of equity.
(b) The execution, delivery and performance by Newco and the
consummation by Newco of the transactions contemplated hereby are within the
corporate powers of Newco, and have been duly authorized by all necessary
corporate action. This Agreement constitutes a valid and binding agreement of
Newco enforceable against Newco in accordance with its terms, except (i) as the
same may be limited by applicable bankruptcy, insolvency, moratorium or similar
laws of general application relating to or affecting creditors' rights, (ii)
provisions providing for indemnity for liability under the securities laws and
(iii) for the limitations imposed by general principles of equity.
SECTION 5.3. Governmental Authorization. The execution, delivery and
performance by NEXTLINK and Newco of this Agreement and the consummation by
NEXTLINK and Newco of the transactions contemplated hereby require no action by
or in respect of, or filing with, any Governmental Authority, other than: (i)
the filing of a certificate of Merger with respect to the Mergers with the
Delaware Secretary of State and appropriate documents with the relevant
authorities of other states in which NEXTLINK is qualified to do business; (ii)
compliance with any applicable requirements of the HSR Act; (v) compliance with
any applicable requirements of the 1933 Act, the 1934 Act and any other
applicable securities laws, whether state or foreign; (vi) as set forth in the
NEXTLINK Disclosure Schedule; and (vii) any actions or filings the absence of
which, individually or in the aggregate, would not be reasonably expected to
have a NEXTLINK Material Adverse Effect or materially impair or delay the
ability of NEXTLINK and Newco to consummate the transactions contemplated by
this Agreement.
SECTION 5.4. Non-contravention. The execution, delivery and performance
by NEXTLINK and Newco of this Agreement and the consummation by NEXTLINK and
Newco of the transactions contemplated hereby do not and will not (i)
contravene, conflict with, or result in any violation or breach of any provision
of the certificate of incorporation or bylaws of NEXTLINK or Newco; (ii)
assuming compliance with the matters referred to in Section 5.3, contravene,
conflict with or result in a violation or breach of any provision of any law,
rule, regulation, judgment, injunction, order or decree; (iii) require any
consent or other action by any Person under, constitute a default under (or an
event that, with or without notice or lapse of time or both, would constitute a
default), or cause or permit the termination, cancellation, acceleration,
triggering or other change of any right or obligation or the loss of any benefit
to which NEXTLINK, Newco or any NEXTLINK Subsidiary is entitled under (A) any
provision of any agreement or other instrument binding upon
-44-
NEXTLINK, Newco or any NEXTLINK Subsidiary or (B) any license, franchise,
permit, certificate, approval or other similar authorization held by, or
affecting, or relating in any way to, the assets or business of NEXTLINK, Newco
or any NEXTLINK Subsidiary; or (iv) result in the creation or imposition of any
Lien on any asset of NEXTLINK, Newco or any NEXTLINK Subsidiary, other than such
exceptions in the case of clauses (ii), (iii) and (iv) as would not be,
individually or in the aggregate, reasonably expected to have a NEXTLINK
Material Adverse Effect or materially impair the ability of NEXTLINK or Newco to
consummate the transactions contemplated by this Agreement.
SECTION 5.5. Capitalization. (a) As of December 30, 1999, the
authorized capital stock of NEXTLINK consists of (i) 400,000,000 shares of
NEXTLINK Common Stock (ii) 60,000,000 shares of NEXTLINK Class B Common Stock,
(iii) 25,000,000 shares of Preferred Stock, $0.01 par value per share of which
(A) 11,700,000 shares have been designated 14% Redeemable Preferred Stock, (B)
4,600,000 have been designated 6 1/2% Convertible Preferred Stock, (C) 584,375
shares have been designated as NEXTLINK Series C Preferred Stock and (D) 265,625
shares have been designated as NEXTLINK Series D Preferred Stock. As of December
30, 1999, there were outstanding (i) 75,222,269 shares of NEXTLINK Common Stock,
(ii) 58,902,550 shares of NEXTLINK Class B Common Stock, (iii) employee and
non-employee director and consultant stock options to purchase an aggregate of
not more than 28,146,011 shares of NEXTLINK Common Stock (of which options to
purchase an aggregate of not more than 4,446,178 shares of NEXTLINK Common Stock
were exercisable), (v) 8,324,796 shares of NEXTLINK 14% Preferred Stock, (vi)
4,000,000 shares of NEXTLINK 6 1/2% Preferred Stock and (vii) no shares of
NEXTLINK Series C Preferred Stock or NEXTLINK Series D Preferred Stock. NEXTLINK
has entered into an agreement to issue and sell all of the authorized shares of
NEXTLINK Series C Preferred Stock and NEXTLINK Series D Preferred Stock. All
outstanding shares of capital stock of NEXTLINK have been duly authorized and
validly issued and are fully paid and nonassessable.
(b) Except as set forth in this Section 5.5 and for changes
since December 30, 1999 resulting from (x) the exercise of employee and
non-employee director and consultant stock options outstanding on such date (and
the grant or award of employee and non-employee director and consultant stock
options in the ordinary course of business and the exercise thereof), (y) the
conversion of shares of NEXTLINK 6 1/2% Preferred Stock outstanding on such date
and (z) issuance of NEXTLINK Series C Preferred Stock and NEXTLINK Series D
Preferred Stock pursuant to the Forstmann Little Agreement, there are no
outstanding (i) shares of capital stock or voting securities of NEXTLINK, (ii)
securities of NEXTLINK convertible into or exchangeable for shares of capital
stock or voting securities of NEXTLINK or (iii) options or other rights to
acquire from NEXTLINK or other obligations of NEXTLINK to issue, any capital
stock, voting securities or securities convertible into or exchangeable for
-45-
capital stock or voting securities of NEXTLINK. There are no outstanding
obligations of NEXTLINK or any NEXTLINK Subsidiary to repurchase, redeem or
otherwise acquire any of the securities referred to in clause (i), (ii) or (iii)
above (collectively, the "NEXTLINK SECURITIES").
(c) As of December 30, 1999, the authorized capital stock of
Newco consisted of (i) 800,000,000 shares of Newco Common Stock (ii) 120,000,000
of Newco Class B Common Stock, (iii) 25,000,000 shares of Preferred Stock, $0.01
par value per share and (iv) 10,000,000 shares of Preferred Stock, $0.001 par
value per share. As of December 30, 1999, there were no outstanding shares of
Newco capital stock. There will be no outstanding shares of Newco capital stock
prior to the Effective Time.
(d) The Newco Common Stock and the Newco Preferred Stock or
the NEXTLINK Securities, as applicable, to be issued as part of the Merger
Consideration (or upon exercise of Adjusted Options) have been duly authorized
and, when issued and delivered in accordance with the terms of this Agreement
(or the Adjusted Options, as the case may be), will have been validly issued and
will be fully paid and nonassessable and the issuance thereof is not subject to
any preemptive or similar right.
SECTION 5.6. Subsidiaries. (a) Each NEXTLINK Subsidiary is a
corporation or other legal entity duly organized, validly existing and in good
standing (where applicable) under the laws of its jurisdiction of organization,
has all corporate, LLC, partnership or other similar powers required to carry on
its business as now conducted other than such exceptions as, individually or in
the aggregate, have not had and would not reasonably be expected to have a
NEXTLINK Material Adverse Effect. Each NEXTLINK Subsidiary is duly qualified to
do business as a foreign corporation or other foreign legal entity and is in
good standing in each jurisdiction where such qualification is necessary, with
such exceptions, individually or in the aggregate, as have not had and would not
be reasonably expected to have a NEXTLINK Material Adverse Effect. The NEXTLINK
Disclosure Schedule sets forth a list of all NEXTLINK Significant Subsidiaries
and their respective jurisdictions of incorporation and identifies NEXTLINK's
(direct or indirect) percentage ownership interest therein.
(b) All of the outstanding capital stock of, or other voting
securities or ownership interests in, each NEXTLINK Significant Subsidiary is
owned by NEXTLINK, directly or indirectly, free and clear of any Lien and free
of any other limitation or restriction (including any restriction on the right
to vote, sell or otherwise dispose of such capital stock or other voting
securities or ownership interests, other than transfer restrictions under the
1933 Act and the rules promulgated thereunder). There are no outstanding (i)
securities of NEXTLINK or any NEXTLINK Subsidiary convertible into or
exchangeable for
-46-
shares of capital stock or other voting securities or ownership interests in any
NEXTLINK Significant Subsidiary or (ii) options or other rights to acquire from
NEXTLINK or any NEXTLINK Subsidiary, or other obligations of NEXTLINK or any
NEXTLINK Subsidiary to issue, any capital stock or other voting securities or
ownership interests in, or any securities convertible into or exchangeable for
any capital stock or other voting securities or ownership interests in, any
NEXTLINK Significant Subsidiary. There are no outstanding obligations of
NEXTLINK or any NEXTLINK Significant Subsidiary to repurchase, redeem or
otherwise acquire any of the securities referred to in clauses (i) or (ii)
above.
SECTION 5.7. SEC Filings. (a) NEXTLINK has delivered or made available
to Concentric (i) NEXTLINK's annual reports on Form 10-K for its fiscal years
ended December 31, 1998 and 1997, (ii) its proxy or information statements
relating to meetings of, or actions taken without a meeting by NEXTLINK's
stockholders held since December 31, 1998, and (iii) all of its other reports,
statements, schedules and registration statements filed with the SEC since
December 31, 1998 (the documents referred to in this Section 5.7(a) including
any exhibits thereto or documents incorporated therein by reference,
collectively, the "NEXTLINK SEC DOCUMENTS").
(b) As of its filing date, each NEXTLINK SEC Document complied
as to form in all material respects with the applicable requirements of the 1933
Act and 1934 Act, as the case may be.
(c) As of its filing date, each NEXTLINK SEC Document filed
pursuant to the 1934 Act did not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading.
(d) Each NEXTLINK SEC Document that is a registration
statement, as amended or supplemented, if applicable, filed pursuant to the 1933
Act, as of the date such registration statement or amendment became effective,
did not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading.
SECTION 5.8. Financial Statements. The audited consolidated financial
statements and unaudited consolidated interim financial statements of NEXTLINK
included in the NEXTLINK SEC Documents fairly present, in all material respects,
in conformity with GAAP applied on a consistent basis (except as may be
indicated in the notes thereto), the consolidated financial position of NEXTLINK
and its consolidated Subsidiaries as of the respective dates thereof and their
consolidated results of operations and cash flows for the periods then ended
(subject to normal year-end adjustments in the case of any unaudited interim
financial statements) and except that unaudited financial
-47-
statements may not contain all notes required under GAAP with respect to audited
Financial Statements.
SECTION 5.9. Information Supplied. The information supplied by NEXTLINK
for inclusion in the Registration Statement shall not at the time the
Registration Statement is declared effective by the SEC contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The information
supplied by NEXTLINK for inclusion in the Proxy Statement to be sent to the
stockholders of Concentric in connection with the Concentric Stockholders'
Meeting and to the stockholders of NEXTLINK in connection with the Mergers shall
not, on the date the Proxy Statement is first mailed to the stockholders of
Concentric and NEXTLINK or at the time either of the Stockholders' Meetings or
at the Effective Time, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
SECTION 5.10. Absence of Certain Changes. Since the NEXTLINK Balance
Sheet Date, the business of NEXTLINK and the NEXTLINK Subsidiaries has been
conducted in the ordinary course consistent with past practices. Since the
NEXTLINK Balance Sheet Date, there has not been any event, occurrence or
development of a state of circumstances or facts which, individually or in the
aggregate, has had or would be reasonably expected to have a NEXTLINK Material
Adverse Effect.
SECTION 5.11. No Undisclosed Material Liabilities. There are no
liabilities or obligations of NEXTLINK or any NEXTLINK Subsidiary of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable or
otherwise, and there is no existing condition, situation or set of circumstances
that could be reasonably expected to result in such a liability or obligation,
other than:
(a) liabilities or obligations disclosed and provided for in
the NEXTLINK Balance Sheet or in the notes thereto or in the NEXTLINK SEC
Documents filed prior to the date hereof;
(b) liabilities or obligations incurred in the ordinary course
of business consistent with past practice since the NEXTLINK Balance Sheet Date;
or
(c) liabilities or obligations that, individually or in the
aggregate have not had and would not be reasonably expected to have a NEXTLINK
Material Adverse Effect.
SECTION 5.12. Compliance with Laws and Court Orders. NEXTLINK and the
NEXTLINK Subsidiaries hold all licenses, franchises, certificates, consents,
permits, qualifications and
-48-
authorizations from all Governmental Authorities necessary for the lawful
conduct of their business, except where the failure to hold any of the
foregoing, individually or in the aggregate, has not had and would not be
reasonably expected to have a NEXTLINK Material Adverse Effect. NEXTLINK and
each of the NEXTLINK Subsidiaries are, and have been in compliance with, and to
the Knowledge of NEXTLINK, are not under investigation with respect to and have
not been threatened to be charged with or given notice of any violation of, any
such license, franchise, certificate, consent, permit, qualification or
authorization, applicable law, statute, ordinance, rule, regulation, judgment,
injunction, order or decree, except for failures to comply or violations that,
individually or in the aggregate, have not had and would not be reasonably
expected to have a NEXTLINK Material Adverse Effect.
SECTION 5.13. Litigation. There is no action, suit, investigation or
proceeding (or to the Knowledge of NEXTLINK, any reasonable basis therefor)
pending against, or, to the Knowledge of NEXTLINK, threatened against or
affecting, NEXTLINK, any NEXTLINK Subsidiary, or any of their respective
properties before any court or arbitrator or before or by any other Governmental
Authority, that, individually or in the aggregate, would be reasonably expected
to have a NEXTLINK Material Adverse Effect.
SECTION 5.14. Finders' Fees. Except for ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., a copy of
whose engagement agreement has been provided to Concentric, whose fees will be
paid by NEXTLINK, there is no investment banker, broker, finder or other
intermediary that has been retained by or is authorized to act on behalf of
NEXTLINK, Newco or any NEXTLINK Subsidiary who might be entitled to any fee or
commission from NEXTLINK or any of the NEXTLINK Subsidiaries upon consummation
of the transactions contemplated by this Agreement.
SECTION 5.15. Taxes. Except as set forth in the NEXTLINK Balance Sheet
(including the notes thereto) and except as would not be, individually or in the
aggregate, reasonably expected to have a NEXTLINK Material Adverse Effect: (i)
all NEXTLINK Tax Returns required to be filed with any taxing authority by, or
with respect to, NEXTLINK and the NEXTLINK Subsidiaries have been filed in
accordance with all applicable laws; (ii) NEXTLINK and the NEXTLINK Subsidiaries
have timely paid all Taxes shown as due and payable on the NEXTLINK Tax Returns
that have been so filed, and, as of the time of filing, the NEXTLINK Tax Returns
were correct and complete (other than Taxes which are being contested in good
faith and for which adequate reserves are reflected on the NEXTLINK Balance
Sheet); (iii) NEXTLINK and the NEXTLINK Subsidiaries have made provision for all
Taxes payable by NEXTLINK and the NEXTLINK Subsidiaries for which no NEXTLINK
Tax Return has yet been filed; (iv) the charges, accruals and reserves for Taxes
with respect to NEXTLINK and the NEXTLINK Subsidiaries reflected on the NEXTLINK
Balance Sheet are adequate under GAAP to cover the Tax liabilities accruing
through the date
-49-
thereof; (v) there is no action, suit, proceeding, audit or claim now proposed
or pending against or with respect to NEXTLINK or any NEXTLINK Subsidiary in
respect of any Tax where there is a reasonable possibility of an adverse
determination; (vi) the federal income Tax Returns of NEXTLINK and the NEXTLINK
Subsidiaries have been examined and settled with the IRS (or the applicable
statutes of limitation for the assessment of federal income Taxes for such
periods have expired) for all years through 1991; and (vii) there are no
material Liens or encumbrances for Taxes on any of the assets of NEXTLINK or any
NEXTLINK Subsidiary except liens for current Taxes not yet due.
SECTION 5.16. Tax Opinions. There are no facts or circumstances
relating to NEXTLINK or Newco that would prevent ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ from
delivering the opinion referred to in Section 10.2(a)(ii) as of the date hereof.
SECTION 5.17. Environmental Matters. (a) Except as have not had and
would not be reasonably expected to have, individually or in the aggregate, a
NEXTLINK Material Adverse Effect:
(i) no notice, notification, demand, request for information,
citation, summons or order has been received, no complaint has been
filed, no penalty has been assessed, and no investigation, action,
claim, suit, proceeding or review (or, to the Knowledge of NEXTLINK,
any reasonable basis therefor) is pending or, to the Knowledge of
NEXTLINK, is threatened by any Governmental Authority or other Person
relating to or arising out of any Environmental Law;
(ii) NEXTLINK is and has been in compliance with all
Environmental Laws and all Environmental Permits; and
(iii) there are no liabilities of or relating to NEXTLINK or
any NEXTLINK Subsidiary of any kind whatsoever, whether accrued,
contingent, absolute, determined, or arising under or relating to
Environmental Laws or any facts, conditions, situations or set of
circumstances that could reasonably be expected to result in or be the
basis for any such liability.
(b) To the Knowledge of NEXTLINK, there have been no
environmental investigations, studies, audits, tests, reviews or other analyses
conducted of which NEXTLINK has knowledge in relation to the current or prior
business of NEXTLINK or any NEXTLINK Subsidiary or any property or facility now
or previously owned or leased by NEXTLINK or any NEXTLINK Subsidiary that reveal
matters that, individually or in the aggregate, have had or would reasonably be
expected to have a NEXTLINK Material Adverse Effect.
(c) For purposes of this Section 5.17, the terms "NEXTLINK"
and "NEXTLINK SUBSIDIARY" shall include any entity
-50-
that is, in whole or in part, a predecessor of NEXTLINK or any NEXTLINK
Subsidiary.
SECTION 5.18. Intellectual Property. With such exceptions as,
individually or in the aggregate, have not had and would not be reasonably
expected to have a NEXTLINK Material Adverse Effect, each of NEXTLINK and the
NEXTLINK Subsidiaries own or have a valid license to use each trademark, service
▇▇▇▇, trade name, invention, patent, trade secret, copyright, know-how
(including any registrations or applications for registration of any of the
foregoing) or any other similar type of proprietary intellectual property right
(collectively, the "NEXTLINK INTELLECTUAL PROPERTY") necessary to carry on its
business substantially as currently conducted. Neither NEXTLINK nor any NEXTLINK
Subsidiary has received any notice of infringement of or conflict with, and to
NEXTLINK's knowledge, there are no infringements of or conflicts with, the
rights of any Person with respect to the use of any NEXTLINK Intellectual
Property that, in either such case, individually or in the aggregate, have had
or would be reasonably expected to have, a NEXTLINK Material Adverse Effect.
SECTION 5.19. Contracts. Other than as disclosed in the SEC Documents,
(a) neither NEXTLINK nor any of the NEXTLINK Subsidiaries is a party to or bound
by (i) any "material contract" (as such term is defined in Item 601(b)(10) of
Regulation S-K of the SEC) or any agreement, contract or commitment that would
be such a "material contract" but for the exception for contracts entered into
in the ordinary course of business, (ii) any non-competition agreement or any
other agreement or obligation which materially limits or will materially limit
NEXTLINK or the NEXTLINK Subsidiaries (or after the Mergers, Concentric or the
Concentric Subsidiaries) from engaging in any line of business. With such
exceptions as, individually or in the aggregate, have not had, and would not
reasonably be expected to have, a NEXTLINK Material Adverse Effect, (x) each of
the contracts, agreements and commitments of NEXTLINK and the NEXTLINK
Subsidiaries is valid and in full force and effect and (y) neither NEXTLINK nor
any of the NEXTLINK Subsidiaries has violated any provision of, or committed or
failed to perform any act which, with or without notice, lapse of time, or both,
would constitute a default under the provisions of, any such contract, agreement
or commitment. To the Knowledge of NEXTLINK, no counterparty to any such
contract, agreement or commitment has violated any provision of, or committed or
failed to perform any act which, with or without notice, lapse of time, or both
would constitute a default or other breach under the provisions of such
contract, agreement or commitment, except for defaults or breaches which,
individually or in the aggregate, have not had, or would not reasonably be
expected to have, a NEXTLINK Material Adverse Effect. Neither NEXTLINK nor any
NEXTLINK Subsidiary is a party to, or otherwise a guarantor of or liable with
respect to, any interest rate, currency or other swap or derivative transaction,
other than any such transactions which
-51-
are not material to the business of NEXTLINK and the NEXTLINK Subsidiaries,
taken as a whole. NEXTLINK has provided or made available to Concentric a copy
of each agreement of the type described in item (i) or (ii) above (except for
such agreements filed as exhibits to the NEXTLINK SEC Documents.)
(b) Newco is a newly formed corporation with no operations or
material assets and is not a party to any contracts.
SECTION 5.20. Vote Required. The only vote of the holders of any class
or series of capital stock necessary to approve the issuance of NEXTLINK Common
Stock in the Alternative Merger is the affirmative vote of a majority of the
votes cast by holders of NEXTLINK Common Stock and NEXTLINK Class B Common Stock
(voting as a single class). The NEXTLINK Voting Agreement covers a number of
votes sufficient for such approval. Pursuant to Section 251(f) of the Delaware
Law, no vote of holders of Newco Capital Stock is required to approve the
Mergers or the Alternative Merger.
SECTION 5.21. Reliance of Eagle River on NEXTLINK Representations and
Warranties. Eagle River shall be entitled to rely on the representations of
NEXTLINK contained in Sections 5.1, 5.2, 5.3, 5.4 and 5.14 of this Article 5 to
the extent applicable to the LHP Share Exchange; provided that references to
this Agreement in such representations shall be deemed to include references to
the Registration Rights Agreement, except that the Registration Rights Agreement
is to be executed and delivered on the Closing Date. In addition to the
foregoing, NEXTLINK and Newco hereby represent and warrant to Eagle River as
follows:
(a) Newco is acquiring the Contributed Interest for
investment and not with a view toward any resale or distribution of the
Contributed Interest except in compliance with the 1933 Act.
(b) The shares of Newco Common Stock (or NEXTLINK Common
Stock, as applicable), when issued and delivered to Eagle River in payment of
the LHP Consideration in accordance with the terms of this Agreement, will have
been duly authorized and validly issued and will be fully-paid and
non-assessable.
(c) NEXTLINK has been leading and controlling the business of
LHP and INTERNEXT (assuming that the representation of Eagle River in the first
sentence of Section 6.6 to be true and correct) and, except as otherwise
expressly provided in this Agreement, is not relying on any representation of
Eagle River with respect to the respective business, operations or commercial
prospects of LHP or INTERNEXT.
-52-
ARTICLE 6.
REPRESENTATIONS AND WARRANTIES OF EAGLE RIVER
Eagle River hereby represents and warrants to NEXTLINK that:
SECTION 6.1. Organization and Authority. Eagle River and, to the
Knowledge of Eagle River, LHP, is a limited liability company duly formed,
validly existing and in good standing under the laws of the State of Washington.
Eagle River has all requisite power and authority to execute and deliver this
Agreement and the Registration Rights Agreement, to perform its obligations
under this Agreement and the Registration Rights Agreement, and to consummate
the transactions contemplated in this Agreement and the Registration Rights
Agreement.
SECTION 6.2. Due Authorization etc. The execution, delivery and
performance by Eagle River of this Agreement and the Registration Rights
Agreement have been authorized by all necessary action on Eagle River's behalf.
Eagle River has duly executed and delivered this Agreement and Eagle River will,
by the Closing Date, have duly executed and delivered the Registration Rights
Agreement. This Agreement constitutes and the Registration Rights Agreement
will, by the Closing Date, constitute legal, valid and binding obligations of
Eagle River, enforceable against Eagle River in accordance with their respective
terms.
SECTION 6.3. No Conflicts, etc. The execution, delivery and performance
by Eagle River of this Agreement and the Registration Rights Agreement, and the
consummation of the transactions contemplated by this Agreement and the
Registration Rights Agreement do not: (a) conflict with, contravene, result in a
violation or breach of or default under (with or without the giving of notice or
the lapse of time, or both) (i) any applicable law statute, ordinance, rule,
regulation, judgment, injunction, order or decree; (ii) the certificate of
formation or other organizational documents of Eagle River; or (iii) any
material contract, agreement or other instrument to which Eagle River is a party
or by which its properties or assets may be bound; or (b) create in any other
Person a right or claim of termination, amendment, modification, acceleration or
cancellation of, or result in or require the creation of any Lien (or any
obligation to create any Lien) on, the Level 3 Agreement or the rights of
INTERNEXT therein.
SECTION 6.4. Consents. Eagle River is not required to obtain any
consent, approval or authorization of any Governmental Authority or other
consent in connection with the execution and delivery of this Agreement or the
Registration Rights Agreement, or the consummation of the transactions
contemplated by this Agreement or the Registration Rights Agreement.
SECTION 6.5. Title to Contributed Interest, etc. Eagle River owns,
beneficially and of record, the Contributed Interest,
-53-
free and clear of any Liens other than Liens created by NEXTLINK or Newco. Upon
the payment for the Contributed Interest at the Closing under this Agreement,
Newco will acquire good and valid title to the Contributed Interest free and
clear of any Liens other than Liens created by NEXTLINK or Newco.
SECTION 6.6. No Actions. Except for this Agreement, Eagle River has not
taken any action (i) binding, or purporting to bind, LHP or INTERNEXT or any of
their respective assets in any manner; or (ii) committing, or purporting to
commit, LHP or INTERNEXT to issue any additional limited liability company
interests or admit any Person as a member of LHP or INTERNEXT. To the best
knowledge of Eagle River, neither LHP nor INTERNEXT has any liabilities or
obligations of any nature except those arising hereunder, under the Level 3
Agreement and any that may have been created by NEXTLINK.
SECTION 6.7. Brokers, Finders, etc. All negotiations relating to this
Agreement, and the transactions contemplated by this Agreement, have been
carried on without the participation of any Person acting on behalf of Eagle
River or LHP in such a manner as to give rise to any valid claim against Newco,
LHP or INTERNEXT for any brokerage or finder's commission, fee or similar
compensation.
SECTION 6.8. Acquisition for Investment. Eagle River is acquiring
shares of Newco Common Stock or NEXTLINK Common Stock, as the case may be, for
investment and not with a view toward any resale or distribution of such shares
except in compliance with the 1933 Act.
ARTICLE 7.
COVENANTS OF CONCENTRIC
Concentric agrees that:
SECTION 7.1. Concentric Interim Operations. Except as set forth in the
Concentric Disclosure Schedule or otherwise contemplated by this Agreement and
the other agreements by and between Concentric and its affiliates, on the one
hand, and NEXTLINK and its affiliates, on the other hand, and the several
transactions contemplated hereby and thereby, during the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement or the Effective Time, Concentric agrees (except to the extent that
NEXTLINK shall otherwise have previously consented in writing) to carry on the
Concentric Group's respective business in the usual, regular and ordinary course
in substantially the same manner as heretofore conducted, to pay the debts and
Taxes of Concentric Group when due (unless debts and Taxes are subject to a
dispute that Concentric is reasonably and actively seeking to resolve), to pay
or perform other obligations when due (unless such obligations are the subject
of a dispute that Concentric is actively seeking to resolve) and, to the extent
consistent with such businesses,
-54-
use its reasonable efforts consistent with past practice and policies to
preserve intact Concentric Group's present business organizations, keep
available the services of its present officers and key employees, to maintain in
effect all material foreign, federal, state and local licenses, approvals and
authorizations, including, without limitation, all material licenses and permits
that are required for Concentric or any Concentric Subsidiary to carry on its
business and preserve its relationships with customers, suppliers, distributors,
licensors, licensees, and others having business dealings with it, all with the
goal of preserving the Concentric Group's goodwill and ongoing business at the
Effective Time, and to refrain from taking such action that would cause any of
the conditions contained in Article IX hereof not to be satisfied; provided,
however, that Concentric shall not be deemed in breach of this Section 7.1
because of attrition, if any, among Concentric's employees which may occur as a
result of this Agreement, the transactions contemplated hereby or the
announcement or pendancy thereof, so long as Concentric uses reasonable efforts
to retain such employees at Concentric. Without limiting the generality of the
foregoing, except as set forth in the Concentric Disclosure Schedule or as
otherwise contemplated by this Agreement, from the date hereof until the
Effective Time, without the prior written consent of NEXTLINK, Concentric shall
not, nor shall it permit any Concentric Subsidiary to:
(a) amend its certificate of incorporation or by-laws or other
applicable governing instrument;
(b) amend any material term of any of its outstanding
securities;
(c) split, combine, subdivide or reclassify any shares of its
capital stock or other equity interests or declare, set aside or pay any
dividend or other distribution (whether in cash, stock or property or any
combination thereof) in respect of its capital stock, or redeem, repurchase or
otherwise acquire or offer to redeem, repurchase, or otherwise acquire any of
its securities or any securities of Concentric or any Concentric Subsidiary,
except for (i) regular dividends on outstanding preferred stock pursuant to the
terms of such securities, (ii) dividends paid by any Concentric Subsidiary that
is, directly or indirectly, wholly owned by Concentric;
(d) adopt a plan or agreement of complete or partial
liquidation, dissolution, merger, consolidation, restructuring, recapitalization
or other material reorganization (other than a merger or consolidation between
wholly owned Concentric Subsidiaries and acquisitions or mergers of a Concentric
Subsidiary, in which the sole consideration consists of cash in an amount not to
exceed $5,000,000 in any one transaction or series of related transactions or
$25,000,000 in the aggregate);
-55-
(e) issue, deliver or sell, or authorize the issuance,
delivery or sale of, any shares of its capital stock of any class or other
equity interests or any securities convertible into or exercisable for, or any
rights, warrants or options to acquire, any such capital stock or other equity
interests, other than (i) the issuance of shares of Concentric Common Stock upon
the exercise of stock options or warrants in accordance with their present
terms, (ii) issuances pursuant to the conversion of convertible securities
outstanding on the date hereof in accordance with their present terms, (iii) the
granting of options to acquire shares of Concentric Common Stock in accordance
with Section 6.1(n) of the Concentric Disclosure Schedule;
(f) incur any capital expenditures exceeding by more than $5
million the amount currently budgeted therefor as set forth in the Concentric
Disclosure Schedule;
(g) except for capital expenditures, which shall be governed
by clause (f), acquire (by merger, consolidation, acquisition of stock or assets
or otherwise), directly or indirectly, any assets, other than (i) pursuant to
agreements in effect as of the date hereof and listed in the Concentric
Disclosure Schedule, (ii) assets used in the ordinary course of business of
Concentric and the Concentric Subsidiaries in a manner that is consistent with
past practice or (iii) assets having a fair market value not exceeding
$5,000,000 in individual cases or $25,000,000 in the aggregate;
(h) other than pursuant to agreements in effect as of the date
hereof and listed in the Concentric Disclosure Schedule, sell, lease, license,
encumber or otherwise transfer any domestic assets having a fair market value
exceeding $5,000,000 in any one transaction or series of related transactions or
$25,000,000 in the aggregate;
(i) incur, assume or guarantee any indebtedness for borrowed
money other than as expressly contemplated in the Concentric Disclosure Schedule
or as otherwise agreed with NEXTLINK;
(j) make any loan, advance or capital contributions to or
investment in any Person other than loans, advances or capital contributions to
or investments in its wholly owned Subsidiaries, except for advances to Internet
Technology Group plc not to exceed $12 million in the aggregate;
(k) engage in or enter into any transaction or commitment,
enter into any contract or agreement, or relinquish or amend in any respect any
contract or other right outside of the ordinary course of Concentric's business
consistent with past practice (except as otherwise specifically permitted by
this Section 7.1);
-56-
(l) enter into any agreement or arrangement that materially
limits or otherwise materially restricts Concentric, any Concentric Subsidiary
or any of their respective Affiliates or any successor thereto or that would,
after the Effective Time, materially limit or restrict NEXTLINK, any NEXTLINK
Subsidiary, the Surviving Corporation or any of their Affiliates, from engaging
in any line of business;
(m) except as required pursuant to existing written, binding
agreements listed in the Concentric Disclosure Schedule or as otherwise mandated
by law as of the date hereof (i) enter into any commitment to provide any
severance or termination pay to (or amend any existing arrangement with) any
director, officer or employee of Concentric or any Concentric Subsidiary, (ii)
increase the benefits payable under any existing severance or termination pay
policy or employment agreement (other than as may be increased by function of
the existing terms of any such policy or agreement), (iii) enter into any
employment, deferred compensation or other similar agreement (or amend any such
existing agreement) with any director, officer or employee of Concentric or any
Concentric Subsidiary, (iv) establish, adopt or amend (except as required by
applicable law) any collective bargaining, bonus, profit-sharing, thrift,
pension, retirement, deferred compensation, compensation, stock option,
restricted stock or other benefit plan or arrangement covering any director,
officer or employee of Concentric or any Concentric Subsidiary, except that
Concentric and the Concentric Subsidiaries may amend any such existing agreement
or plan or adopt a successor plan or arrangement to the extent mandated by
applicable law or to the extent that such amendment would not result in a more
than de minimis increase in the costs or liabilities under such agreement or
plan, (v) other as required by any agreement in effect as of the date hereof,
increase the compensation, bonus or other benefits payable to any director,
officer or employee of Concentric or any Concentric Subsidiary or (vi) amend the
terms of any outstanding option to purchase shares in Concentric Common Stock;
provided, that nothing in this Section 7.1(m) shall prohibit raises and option
grants to employees (other than officers and directors) in the ordinary course;
(n) change (i) its methods of accounting or accounting
practices in any material respect, except as required by concurrent changes in
U.S. GAAP or by law or (ii) its fiscal year;
(o) enter into or amend in any material respect any agreement
of general or limited partnership, limited liability company agreement or any
other agreement creating a "joint venture" (as defined in the HSR Act) involving
assets or liabilities in excess of $5 million;
(p) settle, or propose to settle, any litigation,
investigation, arbitration, proceeding or other claim in an aggregate amount for
all such matters in excess of $1,500,000,
-57-
(excluding amounts for which Concentric is contractually entitled to
indemnification from a third party);
(q) make any material tax election or enter into any
settlement or compromise of any material tax liability;
(r) take any action that would make any representation or
warranty of Concentric hereunder inaccurate in any material respect at the
Effective Time; or
(s) agree or commit to do any of the foregoing;
provided that the limitations set forth above shall not apply to any transaction
between Concentric and any Concentric Subsidiary that is wholly owned by
Concentric or between any such wholly owned Concentric Subsidiaries.
SECTION 7.2. Concentric Stockholders' Meeting; Proxy Material. (a)
Concentric shall cause the Concentric Stockholders' Meeting to be duly called
and held as soon as reasonably practicable following the receipt of an order of
the SEC declaring the Registration Statement effective under the 1933 Act for
the purpose of voting on the approval and adoption of this Agreement and the
Mergers. In connection with such meeting, Concentric will (i) subject to Section
7.2(b), use its best efforts to obtain the necessary approvals by its
stockholders of this Agreement and the transactions contemplated hereby and (ii)
otherwise comply with all legal requirements applicable to such meeting.
(b) Except as provided below, the Board of Directors of
Concentric shall unanimously recommend approval and adoption of this Agreement
and the Mergers or the Alternative Merger, as applicable, by Concentric's
stockholders and shall take all lawful action to solicit such approval including
calling a special meeting of its stockholders and mail the Proxy Statement in
connection therewith. The Board of Directors of Concentric shall be permitted to
withdraw, or modify in a manner adverse to NEXTLINK, its recommendation to its
stockholders, but only if: (i) Concentric has complied with the terms of Section
7.3, including, without limitation, the requirement in Section 7.3(b) that it
notify NEXTLINK promptly after its receipt of any Acquisition Proposal, or has
made good faith efforts to comply with such terms of Section 7.3 and has
substantially complied with them; (ii) a Superior Proposal is pending at the
time the Board of Directors determines to take any such action; (iii) the Board
of Directors determines in good faith by a majority vote, after consultation
with Concentric's outside counsel, that it is required to take such action to
satisfy its fiduciary duties under applicable law; and (iv) Concentric shall
have delivered to NEXTLINK a prior written notice advising NEXTLINK that it
intends to take such action (such notice to be delivered not less than two days
prior to the time such action is taken). Unless this Agreement is previously
terminated in accordance with Article 11,
-58-
Concentric shall submit this Agreement to its stockholders at the Concentric
Stockholders' Meeting even if the Concentric Board of Directors determines at
any time after the date hereof that is no longer advisable or recommends that
the Concentric stockholders reject it.
SECTION 7.3. No Solicitation. (a) From the date hereof until the
termination hereof, Concentric will not, and will cause the Concentric
Subsidiaries and the officers, directors, employees, investment bankers,
attorneys, accountants, consultants or other agents or advisors of Concentric
and the Concentric Subsidiaries not to, directly or indirectly: (i) take any
action to solicit, initiate, or knowingly facilitate or encourage the submission
of any Acquisition Proposal; (ii) other than in the ordinary course of business
and not related to an Acquisition Proposal, engage in any discussions or
negotiations with, or disclose any non-public information relating to Concentric
or any Concentric Subsidiary or afford access to the properties, books or
records of Concentric or any Concentric Subsidiary to, any Person who is known
by Concentric to be considering making, or has made, an Acquisition Proposal;
(iii) (A) amend or grant any waiver or release under any standstill or similar
agreement with respect to any class of equity securities of Concentric (a
"STANDSTILL AGREEMENT"), (B) approve any transaction under Section 203 of
Delaware Law, (C) to the fullest extent permitted by Delaware Law, amend or
grant any waiver or release or approve any transaction or redeem any Rights or
(D) approve of any Person's becoming an "interested stockholder" under Section
203 of Delaware Law or (iv) enter into any agreement with respect to an
Acquisition Proposal (other than a confidentiality agreement as described in
item (C) below); provided that Concentric may negotiate or otherwise engage in
substantive discussions with, and furnish non-public information and provide a
waiver or release of a Standstill Agreement to, any Person (a "THIRD PARTY") who
delivers an unsolicited Acquisition Proposal that the Concentric Board of
Directors reasonably believes will lead to a Superior Proposal if: (A)
Concentric has complied with the terms of this Section 7.3, including without
limitation, the requirement in Section 7.3(b) that it notify NEXTLINK promptly
after its receipt of any Acquisition Proposal (or has made good faith efforts to
comply with such terms and has substantially complied with them); (B) the Board
of Directors of Concentric determines in good faith by a majority vote, after
consultation with Concentric's outside legal counsel, that it must take such
action to comply with its fiduciary duties under applicable law; and (C) the
Third Party executes a confidentiality agreement with terms no less favorable in
the aggregate to Concentric than those contained in the Confidentiality
Agreement dated as of November 18, 1999 between Concentric and NEXTLINK (the
"CONFIDENTIALITY AGREEMENT"). Nothing contained in this Agreement shall prevent
the Board of Directors of Concentric from complying with applicable securities
laws and regulations including, without limitation, the 1934 Act
-59-
and Rule 14e-2 and Rule 14d-9 thereunder with regard to an Acquisition Proposal.
(b) Concentric will notify NEXTLINK promptly (but in no event
later than 48 hours) after receipt by Concentric (or any of its advisors) of any
Acquisition Proposal, or of any request (other than in the ordinary course of
business and not related to an Acquisition Proposal) for non-public information
relating to Concentric or any of the Concentric Subsidiaries or for access to
the properties, books or records of Concentric or any Concentric Subsidiary by
any Person who is known to be considering making, or has made, an Acquisition
Proposal. Concentric shall provide such notice orally and in writing and shall
identify the Person making, and the terms and conditions of, any such
Acquisition Proposal, indication or request. Concentric shall keep NEXTLINK
fully informed, on a prompt basis (but in any event no later than 48 hours), of
the status and details of any such Acquisition Proposal, indication or request.
Concentric shall, and shall cause the Concentric Subsidiaries and the directors,
employees and other agents of Concentric and the Concentric Subsidiaries to,
cease immediately and cause to be terminated all activities, discussions or
negotiations, if any, with any Persons conducted prior to the date hereof with
respect to any Acquisition Proposal.
SECTION 7.4. Bondholder and Preferred Consent. (a) Each of Concentric
and NEXTLINK shall (i) solicit, and use its commercially reasonable efforts to
obtain, the consent of holders of the Concentric Senior Notes and the Concentric
Series B Preferred Stock to the Mergers and, at NEXTLINK's request, to the
replacement, as of the Effective Time, of the covenants contained in the
indentures relating to the Concentric Senior Notes and the Concentric Debentures
and the Concentric Series B Preferred Stock covenants substantially identical,
mutatis mutandis, to those applicable to NEXTLINK's 10 1/2% Senior Notes due
2009 and the consent of the holder of the Concentric Series C Preferred Stock to
the items contemplated by clauses (A) and (D) of Section 3.1(i), provided that
any fees or other inducements paid or provided for in connection therewith shall
be paid by NEXTLINK in such amounts, at such times and subject to such
contingencies as NEXTLINK shall determine in its sole discretion and/or, if
NEXTLINK elects to do so, (ii) exchange the Concentric Series B Preferred Stock
for Concentric Debentures in accordance with its terms and subject such
Concentric Notes and the Concentric Debentures to covenant defeasance in
accordance with Section 403 of the respective indentures related thereto,
effective immediately prior to the Mergers, in the case of the Concentric Senior
Notes, and effective immediately prior to the exchange of Concentric Series B
Preferred Stock for Concentric Debentures, in the case of the Concentric
Debentures, in each case with the funds therefor to be supplied by NEXTLINK,
provided that nothing contained in this Agreement will require NEXTLINK to elect
such covenant defeasance.
-60-
(b) If, within forty (40) days after the date Concentric
distributes a consent solicitation contemplated in Section 7.4(a)(i) or such
extension thereof as NEXTLINK shall determine, with the consent of Concentric
not to be unreasonably withheld (the "SOLICITATION TERMINATION DATE"),
Concentric has not received the requisite consents of holders of the Concentric
Senior Notes and Concentric Series B Preferred Stock to the actions described in
Section 7.4(a)(i), NEXTLINK may elect (the "NEXTLINK ELECTION") to commence an
exchange offer as set forth in Section 7.5. NEXTLINK shall exercise the NEXTLINK
Election, if it determined, in its sole discretion, to do so, by delivering
written notice to Concentric within five (5) Business Days after the
Solicitation Termination Date. Concentric agrees to provide NEXTLINK with
written notice of the Solicitation Termination Date at least five (5) Business
Days prior to the occurrence of the Solicitation Termination Date.
SECTION 7.5. The Exchange Offer.
(a) Terms of the Exchange Offer. Upon the making of a NEXTLINK
Election, Newco shall announce as promptly as practicable in accordance with
applicable law the commencement (within the meaning of Rule 14d-2 under the ▇▇▇▇
▇▇▇) of an irrevocable exchange offer (the "EXCHANGE OFFER") to acquire all of
the issued and outstanding shares of Concentric Common Stock and Concentric
Series C Preferred Stock in exchange for the Common Stock Consideration and the
Concentric Series C Consideration, respectively (the "EXCHANGE CONSIDERATION"),
and with such other terms and conditions which make the Exchange Offer at least
as favorable to the exchanging holders of such shares as the Mergers. Newco
shall conduct such Exchange Offer in accordance with this Section 7.5 and
applicable law. To the extent practicable in the context of the Exchange Offer,
the parties hereto shall seek to provide to each other all of the benefits of
the provisions of this Agreement. Newco hereby agrees that within two (2)
Business Days following the later to occur of the expiration of the minimum
statutory period during which exchange offers must remain open and all Exchange
Offer Conditions (as defined below) having been satisfied or waived, Newco shall
accept for exchange all shares of Concentric Common Stock and Concentric Series
C Preferred Stock tendered and promptly issue the Exchange Consideration to the
holders of Concentric Common Stock and Concentric Series C Preferred Stock who
shall have tendered their shares in the Exchange Offer.
The obligation of Newco to consummate the Exchange Offer once
it is commenced and to accept for exchange the shares of Concentric Common Stock
and Concentric Series C Preferred Stock tendered pursuant to the Exchange Offer
shall be subject only to the following conditions (the "EXCHANGE OFFER
CONDITIONS"): (i) the holders of the outstanding Concentric Common Stock and
Concentric Series C Preferred Stock (on a fully converted basis) representing at
least 50.1% of the voting power of the Concentric Common Stock (on a fully
diluted basis) as of
-61-
the date the Exchange Offer is commenced (and all shares of Concentric Common
Stock and Concentric Series C Preferred Stock (on a fully converted basis) held
by Newco, each NEXTLINK Subsidiary and each affiliate thereof shall be deemed to
be included within such 50.1%) accepting the Exchange Offer, (ii) the
resignations of Concentric's directors prior to consummation of the Exchange
Offer and (iii) the satisfaction of the following conditions precedent sections
of this Agreement (to the extent applicable to an exchange offer): 10.1(b),
10.1(c), 10.1(d), 10.1(e), 10.1(f), 10.1(g), 10.2(a)(i), 10.2(a)(ii), 10.3(a)
and 10.3(b). Newco expressly reserves the right to waive any such condition, to
increase the consideration payable in the Exchange Offer and to make any other
changes in the terms and conditions of the Exchange Offer which make the
Exchange Offer more favorable to the holders of the issued and outstanding
shares of Concentric Common Stock and Concentric Series C Preferred Stock than
the Mergers and than the requirements for the Exchange Offer set forth herein.
Notwithstanding the foregoing, no change may be made which (i) causes the
Exchange Offer not to meet the requirements of this Section 7.5, (ii) decreases
or changes the Exchange Consideration to be paid in the Exchange Offer, (iii)
reduces the number of shares of Concentric Common Stock and Concentric Series C
Preferred Stock sought to be purchased in the Exchange Offer, (iv) imposes
conditions to the Exchange Offer other than those permitted by this Section 7.5,
(v) extends the expiration date of the Exchange Offer or (vi) otherwise alters
or amends any term of the Exchange Offer in any manner materially adverse to the
holders of shares of Concentric Common Stock and Concentric Series C Preferred
Stock; provided, however, that subject to the right of the parties to terminate
this Agreement pursuant to Section 10.1, the Exchange Offer may be extended for
any period to the extent required to satisfy any Exchange Offer Condition or to
the extent required by law or by any rule, regulation, interpretation or
position of the SEC or the staff thereof, so long as the Exchange Offer shall
not extend beyond the End Date. Newco shall not acquire less than all of the
shares of Concentric Common Stock and Concentric Series C Preferred Stock or
other securities that are tendered pursuant to the Exchange Offer.
(b) Exchange Offer Documents. As promptly as practicable after
the election by the Newco to commence the Exchange Offer, Newco shall file with
the SEC a registration statement (together with the amendments thereof or
supplements thereto, the "EXCHANGE REGISTRATION STATEMENT") in connection with
the registration under the 1933 Act of the Newco Common Stock and Newco Series F
Preferred Stock to be issued pursuant to the Exchange Offer. Newco shall use all
reasonable efforts to have or cause the Exchange Registration Statement to
become effective as promptly as practicable. As promptly as practicable (and in
any event within five (5) Business Days) after the Exchange Registration
Statement has become effective, Newco shall commence the Exchange Offer. As
promptly as practicable on the date of commencement of the Exchange Offer, Newco
shall file with
-62-
the SEC a Tender Exchange Offer Statement on Schedule 14D-1 promulgated under
the 1934 Act (together with all amendments and supplements thereto, the
"SCHEDULE 14D-1") with respect to the Exchange Offer, and take such steps as are
reasonably necessary to cause the Exchange Offer to be disseminated to the
holders of shares of Concentric Common Stock and Concentric Series C Preferred
Stock as and to the extent required by applicable federal securities laws. The
Schedule 14D-1 shall contain an offer to exchange (the "OFFER TO EXCHANGE") and
forms of the related letter of transmittal and any related summary advertisement
(the Schedule 14D-1, the Exchange Registration Statement, the Offer to Exchange
and such other documents as may be required by the 1934 Act, Nasdaq, the
National Association of Securities Dealers or any other applicable laws, rules
or regulations, together with all amendments and supplements thereto, the
"EXCHANGE OFFER DOCUMENTS"). Newco shall use its best efforts to distribute such
Exchange Offer Documents, and any other documents required by law or this
Agreement to all holders of shares of Concentric Common Stock and Concentric
Series C Preferred Stock, in accordance with the requirements of this Section
7.5. Newco and Concentric shall correct promptly any information provided by any
of them for use in the Exchange Offer Documents if such information shall
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
contained therein, in light of the circumstances under which they were made, not
misleading, and Newco shall use all reasonable efforts to cause the Schedule
14D-1 as so corrected to be filed with the SEC and the other Exchange Offer
Documents as so corrected to be disseminated to holders of shares of Concentric
Common Stock and Concentric Series C Preferred Stock, in each case as and to the
extent required by applicable federal securities laws and this Section 7.5.
Concentric and its counsel shall be given a reasonable opportunity to review and
comment on the Exchange Offer Documents prior to their being filed with the SEC,
and Newco will provide Concentric and its counsel with copies of any written
comments that Newco receives from the SEC or its staff with respect to the
Exchange Offer Documents promptly after receipt of any such comments.
(c) Stock Options. The Exchange Offer will extend to all
shares of Concentric Common Stock which may be issued as a result of the
exercise of outstanding options, warrants and other rights to purchase or
acquire Concentric Common Stock, and will involve assumption of other options,
warrants and rights, to the same extent as required with respect to the Mergers
under Sections 3.1(k) and 3.1(l).
(d) Concentric Recommendation. On the date the Schedule 14D-1
is filed with the SEC, Concentric shall file with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 promulgated under the
1934 Act (together with all amendments and supplements thereto, the "SCHEDULE
14D-9") containing the recommendation of the Board of Directors of Concentric
for the
-63-
stockholders of Concentric to accept the Exchange Offer, except to the extent
the Board of Directors would be permitted to alter its recommendation under
Section 7.2(b) with respect to the Mergers, and shall take such steps as are
necessary to cause the Schedule 14D-9 to be disseminated to the holders of
shares of Concentric Common Stock and Concentric Series C Preferred Stock as and
to the extent required by the National Association of Securities Dealers or any
other applicable laws, rules and regulations, including, without limitation,
applicable federal securities laws. Newco, Concentric and NEXTLINK shall amend
or correct promptly any information provided by any of them for use in the
Schedule 14D-9 which shall have become false or misleading, and Concentric shall
take all steps necessary to cause the Schedule 14D-9 as so amended or corrected
to be filed with the SEC and disseminated to holders of shares of Concentric
Common Stock and Concentric Series C Preferred Stock, in each case as and to the
extent required by applicable federal securities laws. Newco and its counsel
shall be given a reasonable opportunity to review and comment on the Schedule
14D-9 prior to its being filed with the SEC, and Concentric will provide Newco
and its counsel with copies of any written comments that Concentric receives
from the SEC or its staff with respect to the Schedule 14D-9 promptly after
receipt of any such comments.
(e) Stockholder List. In connection with the Exchange Offer,
Concentric shall cause Concentric's transfer agent to furnish Newco promptly
with mailing labels containing the names and addresses of all record holders of
shares of Concentric Common Stock and Concentric Series C Preferred Stock and
with security position listings of shares of Concentric Common Stock and
Concentric Series C Preferred Stock held in stock depositories, each as of a
recent date, together with all other available listings and computer files
containing names, addresses and security position listings of record holders and
beneficial owners of shares of Concentric Common Stock and Concentric Series C
Preferred Stock. Concentric shall furnish Newco with such additional
information, including, without limitation, updated listings and files of
stockholders, mailing labels and security position listings and such other
assistance as Newco or its representatives may reasonably request in
communicating the Exchange Offer to record and beneficial holders of shares of
Concentric Common Stock and Concentric Series C Preferred Stock. Subject to the
requirements of the 1933 Act, the 1934 Act, Nasdaq, the National Association of
Securities Dealers and any other applicable laws, rules or regulations, and
except for such steps as are necessary to disseminate the Exchange Offer
Documents and any other documents necessary to consummate the transactions
contemplated by this Agreement, Newco shall hold in confidence the information
contained in such labels, listings and files, shall use such information only in
connection with the transactions contemplated by this Agreement, and, if this
Agreement shall be terminated in accordance with Section 10, shall deliver to
Concentric all copies of, and any extracts or
-64-
summaries from, such information then in its possession or control.
(f) Cooperation. In connection with the Exchange Offer,
Concentric shall furnish Newco with such information (which will be treated and
held in confidence by Newco except to the extent required to be disclosed
pursuant to the Exchange Offer or this Agreement) and assistance as Newco or its
representatives may reasonably request in connection with the preparation of the
Exchange Offer and communicating the Exchange Offer to the record and beneficial
holders of shares of Concentric Common Stock and Concentric Series C Preferred
Stock.
(g) Merger Following the Closing of the Exchange Offer. Prior
to the closing of the Exchange Offer, Newco shall create a wholly owned
subsidiary ("NEWCO MERGER SUB") and, immediately following the closing of the
Exchange Offer, NEXTLINK shall merge with and into Newco Merger Sub (the
"EXCHANGE OFFER MERGER") in accordance with Delaware Law, with NEXTLINK being
the surviving corporation of such merger and the separate corporate existence of
Newco Merger Sub shall cease. In the Exchange Offer Merger, each outstanding
share of capital stock of Newco Merger Sub will be converted into a share of
capital stock of the surviving corporation of the Exchange Offer Merger, (i)
each issued and outstanding share of NEXTLINK capital stock will be converted
into a share of capital stock of Newco as contemplated for each class and series
thereof by Section 3.1. Immediately following the consummation of the Exchange
Offer Merger and the Exchange Offer, the LHP Share Exchange shall be consummated
as contemplated by Section 2.2.
(h) Subsequent Merger. In the event that the requisite
consents for the actions to be taken pursuant to Section 7.4(a)(i) are obtained
following commencement of the Exchange Offer, Newco will continue with the
Exchange Offer pursuant to this Section 7.5, and promptly following consummation
of the Exchange Offer Newco, NEXTLINK and Concentric will cause the Mergers to
occur, with the Common Stock Ratio equal to the exchange ratio applicable to the
Exchange Offer. Newco, NEXTLINK and Concentric will make all requisite filings
in connection with the Mergers, including the preparation and distribution of a
registration statement and any required information statement. If the requisite
consents are obtained after the Solicitation Termination Date but prior to the
time the Exchange Offer is commenced, Newco shall either proceed as set forth in
this paragraph or abandon the Exchange Offer and (by written notice to
Concentric) restore the obligations of the parties with respect to the Mergers,
fully as though the requisite consents had been obtained prior to commencement
of the Exchange Offer.
-65-
ARTICLE 8.
COVENANTS OF NEXTLINK
NEXTLINK agrees that:
SECTION 8.1. Eagle River Consent. NEXTLINK will set a record date to
obtain the written consent of Eagle River to this Agreement and the consummation
of the transactions contemplated hereunder no later that the date the
Registration Statement is declared effective.
SECTION 8.2. Director and Officer Liability. (a) From and after the
Effective Time, Newco will indemnify each officer and director of the Concentric
Group as of the Effective Time (each an "INDEMNIFIED PERSON") to the fullest
extent permitted under applicable law, the Amended and Restated Certificate of
Incorporation and Bylaws of Concentric or any Concentric subsidiary, as
applicable, and any agreement between the Indemnified Person and Concentric or
any Concentric Subsidiary, as applicable, in each case as in effect as of the
date hereof with respect to any claim, liability, loss, damage, judgment, fine,
penalty, amount paid in settlement or compromise, cost or expense based in whole
or in part on, or arising in whole or in part out of, the fact that the
Indemnified Person was a director or officer of the Concentric Group at or prior
to the Effective Time. The rights under this Section 8.2 are contingent upon the
occurrence of, and will survive consummation of, the transactions contemplated
hereby and are expressly intended to benefit each Indemnified Person.
(b) Without limiting the provisions of paragraph (a), after
the Effective Time Newco will indemnify and hold harmless each Indemnified
Person against any costs or expenses (including reasonable attorneys' fees),
judgments, fines, losses, claims, damages, liabilities and amounts paid in
settlement in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, to the
extent arising out of or pertaining to any action or omission in his or her
capacity as a director or officer of the Concentric Group arising out of or
pertaining to this Agreement or the transactions contemplated by this Agreement
for a period of six years after the Effective Time; provided, however, that if,
at any time prior to the sixth anniversary of the Effective Time, any
Indemnified Person delivers to Newco a written notice asserting a claim for
indemnification under this Section 8.2, then the claim asserted in such notice
shall survive the sixth anniversary of the Effective Time until such time as
such claim is fully and finally resolved. In the event of any such claim,
action, suit, proceeding or investigation Newco will pay the reasonable fees and
expenses of counsel for the Indemnified Person promptly after statements
therefor are received (provided that in the event that any Indemnified Person is
not entitled to indemnification hereunder, any amounts advanced on his or her
behalf shall be remitted to NEXTLINK);
-66-
provided, however, that Newco will not be liable for any settlement effected
without its express written consent which consent will not be unreasonably
withheld. The Indemnified Persons as a group may retain only one law firm (in
addition to local counsel) to represent them with respect to any single action
unless there is, under applicable standards of professional conduct, a conflict
on any significant issue between the positions of any two or more Indemnified
Persons.
(c) For six years after the Effective Time, Newco shall
provide officers' and directors' liability insurance in respect of acts or
omissions occurring prior to the Effective Time (including, without limitation,
for acts or omissions occurring in connection with this Agreement and the
consummation of the transactions contemplated hereby) covering and for the
benefit of each such Indemnified Person currently covered by Concentric's
officers' and directors' liability insurance policy on terms with respect to
coverage and amount (including with respect to the payment of attorney's fees)
no less favorable than those of such policy in effect on the date hereof (which
policy has been provided by Concentric to NEXTLINK); provided that if the
aggregate annual premiums for such insurance during such period shall exceed
200% of the per annum rate of premium paid by Concentric as of the date hereof
for such insurance, then the Surviving Corporation shall provide a policy with
the best coverage as shall then be available at 200% of such rate.
(d) The rights of each Indemnified Person and its heirs and
legal representatives under this Section 8.2 shall be in addition to any rights
such Person may have under the certificate of incorporation or bylaws of
Concentric or any Concentric Subsidiary, or under Delaware Law or any other
applicable laws. These rights shall survive consummation of the Mergers and are
intended to benefit, and shall be enforceable by, each Indemnified Person and
shall be binding on all successors and assigns.
SECTION 8.3. Quotation of Stock. (a) NEXTLINK shall use its best
efforts to cause (i) the shares of Newco Common Stock (or NEXTLINK Common Stock,
as applicable) to be issued in connection with the Mergers, (ii) shares of Newco
Common Stock (or NEXTLINK Common Stock, as applicable) reserved for issuance
upon conversion of the Newco Series B Preferred Stock (or NEXTLINK Common Stock,
as applicable) (iii) shares of Newco Common Stock reserved for issuance in
connection with the Adjusted Options to be approved for quotation on Nasdaq,
subject to official notice of issuance.
(b) NEXTLINK shall use its best efforts to cause the NEXTLINK
14% Preferred Stock and NEXTLINK 6 1/2% Preferred Stock to be approved for
quotation on Nasdaq prior to the record date for the Eagle River consent.
-67-
(c) Concentric shall use its best efforts to cause the
Concentric Series B Preferred Stock to be approved for quotation on Nasdaq prior
to the record date for the Concentric Stockholders Meeting.
SECTION 8.4. NEXTLINK Board of Directors. Immediately prior to the
Effective Time, the Board of Directors of NEXTLINK will take all necessary
action to expand the size of its Board of Directors by two members and to
appoint ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (or, in the event ▇▇. ▇▇▇▇▇▇▇▇ is unable to serve,
such other person as may be designated by Concentric and reasonably satisfactory
to NEXTLINK) and one other person who is currently serving as a Concentric
Director and who is selected by Concentric and reasonably satisfactory to
NEXTLINK (▇▇. ▇▇▇▇▇▇▇▇ and such person, the "NEW DIRECTORS") to the NEXTLINK
Board of Directors. From the Effective Time until and including the second
annual meeting of the stockholders of NEXTLINK taking place after the Effective
Time, (i) the Board of Directors of NEXTLINK will nominate the New Directors for
reelection to the NEXTLINK Board of Directors at each subsequent annual or
special meeting of the stockholders of NEXTLINK at which the New Directors'
terms expire and (ii) and for so long as ▇▇. ▇▇▇▇▇▇▇▇ is a New Director, he will
be a Vice Chairman of the Board.
SECTION 8.5. Employee Matters. (a) Newco shall:
(i) honor the terms of all Concentric Employee Plans and
Concentric Benefit Arrangements in existence at the Effective Time, and
pay the benefits required under the terms of such plans and
arrangements, in each case subject to Section 8.5(c); and
(ii) until December 31, 2000 with respect to employees of
Concentric or any of Concentric Subsidiaries at the Effective Time
("TRANSFERRED EMPLOYEES"), provide a level of employee benefits and
aggregate compensation which is substantially comparable in the
aggregate to the level of employee benefits and aggregate compensation
provided by Concentric and Concentric Subsidiaries as of the Effective
Time (other than the benefits provided under any severance or
termination benefit plans and arrangements of Concentric or any
Concentric Subsidiary).
(b) If Transferred Employees are included in any benefit plan
program or arrangement of the Surviving Corporation, including without
limitation, any plan or arrangement providing vacation benefits, the Transferred
Employees shall receive credit for service prior to the Effective Time with
Concentric and the Concentric Subsidiaries and their predecessors to the same
extent such service was counted under similar Concentric Employee Plans,
Concentric Benefit Arrangements and Concentric International Plans for purposes
of determining eligibility to participate and vesting and benefit accrual
(except that with respect to benefit accrual, such service shall not be counted
to the extent that it
-68-
would result in a duplication of benefits). If Transferred Employees or their
dependents are included in any medical, dental, vision or health plan other than
the plan or plans they participated in at the Effective Time (a "SUCCESSOR
PLAN"), any such Successor Plan shall not include pre-existing condition
exclusions, except to the extent such exclusions were applicable under any
similar Concentric Employee Plan at the Effective Time.
(c) Except as otherwise specifically set forth above, nothing
contained herein shall be construed as requiring NEXTLINK or any NEXTLINK
Subsidiary to continue any specific Employee Plan or Benefit Arrangement
including any Concentric Employee Plan or Concentric Benefit Arrangement to
continue the employment of any specific person, provided however that any
changes that Newco may make to any such Employee Plan or Benefit Arrangement are
permitted by the terms of the applicable Employee Plan or Benefit Arrangement
and under any applicable law.
(d) Following the Effective Time, Newco will implement the
performance incentives described in Section 8.5 of the NEXTLINK Disclosure
Schedule for the benefit of the Transferred Employees.
SECTION 8.6. Assumption of Concentric Stock Option Plans; Form S-8
Employee Plans.
(a) At the Effective Time, Newco shall assume all outstanding
Concentric Stock Options under existing Concentric option plans and such
Concentric option plans shall be canceled with respect to future grants
thereunder, and shall file, no later than five days after the Closing, a
registration statement on Form S-8 covering the shares of Newco Common Stock
issuable pursuant to outstanding Concentric Options granted under the Concentric
Option Plans. Concentric shall cooperate with and assist NEXTLINK in the
preparation of such registration statement prior to the Effective Time.
(b) Immediately prior to the Effective Time, outstanding
purchase rights under Concentric's 1997 Employee Stock Purchase Plan (the
"ESPP") shall be exercised in accordance with the terms of the ESPP and each
share of Concentric Common Stock purchased pursuant to such exercise shall,
without any action on the part of the holder thereof, be converted into the
right to receive a number of shares of NEXTLINK Common Stock determined
according to the Exchange Ratio, without the issuance of certificates
representing issued and outstanding shares of Concentric Common Stock to ESPP
participants. Concentric agrees that it shall terminate the ESPP immediately
following the aforesaid purchase of shares of Concentric Common Stock
thereunder.
-69-
ARTICLE 9.
COVENANTS OF NEXTLINK, CONCENTRIC AND EAGLE RIVER
The parties hereto agree that:
SECTION 9.1. Reasonable Efforts. (a) Subject to the terms and
conditions provided in this Agreement, each of the parties hereto shall use
commercially reasonable efforts to take promptly, or cause to be taken, all
actions, and to do promptly, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated hereby, to obtain all necessary waivers,
consents, tax opinions and approvals and to effect all necessary registrations
and filings and to remove any injunctions or other impediments or delays, legal
or otherwise, in order to consummate and make effective the transactions
contemplated by this Agreement for the purpose of securing to the parties hereto
the benefits contemplated by this Agreement.
(b) In furtherance and not in limitation of the foregoing,
each of NEXTLINK and Concentric agrees to (i) make an appropriate filing of a
Notification and Report Form pursuant to the HSR Act with respect to the
transactions contemplated hereby as promptly as practicable, (ii) supply as
promptly as practicable any additional information and documentary material that
may be requested pursuant to the HSR Act, (iii) use best efforts to complete the
review process under the HSR Act to permit the consummation of the Mergers
including, but not limited to, causing the expiration or termination of the
applicable waiting periods under the HSR Act as soon as practicable and use
their best efforts to cooperate in presenting any applicable arguments,
presentations or materials to any governmental agency requesting such
information in connection with this transaction.
(c) Eagle River and NEXTLINK hereby covenant for the benefit
of each other to use their commercially reasonable efforts to terminate Eagle
River's guarantee (the "INTERNEXT GUARANTEE"), dated as of July 18, 1998, of the
obligations of INTERNEXT under the ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇.
▇▇▇▇▇▇▇ 9.2. Proxy Statement; Registration Statement. (a) As promptly
as practicable after the execution of this Agreement, Newco and Concentric shall
prepare and file the Proxy Statement with the SEC, and Newco shall prepare and
file the Registration Statement (in which the Proxy Statement will be included)
with the SEC. Newco, NEXTLINK and Concentric shall use their reasonable best
efforts to cause the Registration Statement (which Registration Statement, in
the event of an Alternative Merger, shall also register such other securities
issued or assumed in the Mergerw or the Alternative Merger, as applicable, as is
required by applicable law) to become effective under the 1933 Act as soon after
such filing as practicable and to keep the Registration Statement effective as
long as is necessary to consummate the Mergers. The Proxy Statement shall
include the
-70-
recommendation of the Board of Directors of Concentric in favor of approval and
adoption of this Agreement and the Mergers, except to the extent the Board of
Directors of Concentric shall have withdrawn or modified its approval or
recommendation of this Agreement as permitted by Section 7.2(b). NEXTLINK shall
cause the Proxy Statement to be mailed to its stockholders, and Concentric shall
cause the Proxy Statement to be mailed to its stockholders, in each case as
promptly as practicable after the Registration Statement becomes effective. The
parties shall promptly provide copies, consult with each other and prepare
written responses with respect to any written comments received from the SEC
with respect to the Proxy Statement and the Registration Statement and advise
one another of any oral comments received from the SEC. The Registration
Statement and the Proxy Statement shall comply as to form in all material
respects with the rules and regulations promulgated by the SEC under the 1933
Act and the 1934 Act, respectively.
(b) Newco, NEXTLINK and Concentric shall make all necessary
filings with respect to the Mergers and the transactions contemplated thereby
under the 1933 Act and the 1934 Act and applicable state blue sky laws and the
rules and regulations thereunder. Each party will advise the other, promptly
after it receives notice thereof, of the time when the Registration Statement
has become effective or any supplement or amendment has been filed, the issuance
of any stop order, the suspension of the qualification of the Newco Common Stock
issuable in connection with the Mergers for offering or sale in any
jurisdiction, or any request by the SEC for amendment of the Proxy Statement or
the Registration Statement or comments thereon and responses thereto or requests
by the SEC for additional information. No amendment or supplement to the Proxy
Statement or the Registration Statement, or correspondence with the SEC with
respect thereto, shall be filed without the approval of Newco, NEXTLINK and
Concentric, which approval shall not be unreasonably withheld or delayed. If at
any time prior to the Effective Time, any information relating to Newco,
NEXTLINK or Concentric, or any of their respective Affiliates, officers or
directors, should be discovered by NEXTLINK or Concentric that should be set
forth in an amendment or supplement to the Registration Statement or the Proxy
Statement, so that such documents would not include any misstatement of a
material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, the party which discovers such information shall promptly notify
the other parties hereto and an appropriate amendment or supplement describing
such information shall be promptly filed with the SEC and, to the extent
required by law, disseminated to the stockholders of NEXTLINK and Concentric.
SECTION 9.3. Public Announcements. So long as this Agreement is in
effect, (a) Concentric and NEXTLINK will consult with each other before issuing
any press release or making any public statement with respect to this Agreement
or the
-72-
transactions contemplated hereby and (b) Eagle River and NEXTLINK will consult
with each other before issuing any press release or making any public statement
with respect to the LHP Share Exchange and, except as may be required by
applicable law or any listing agreement with any national securities exchange or
Nasdaq, such parties will not issue any such press release or make any such
public statement without the prior consent of the other respective party, which
consent shall not be unreasonably withheld. Notwithstanding the foregoing, any
such press release or public statement as may be required by applicable law or
any listing agreement with any national securities exchange or Nasdaq may be
issued without such consent, if the party making such release or statement has
used its reasonable efforts to consult with the other respective party.
SECTION 9.4. Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of NEXTLINK and Concentric, any
deeds, bills of sale, assignments or assurances and to take and do, in the name
and on behalf of NEXTLINK and Concentric, any other actions and things to vest,
perfect or confirm of record in the Surviving Corporation any and all right,
title and interest in, to and under any of the rights, properties or assets of
NEXTLINK and Concentric acquired or to be acquired by the Surviving Corporation
as a result of, or in connection with, the Mergers.
SECTION 9.5. Access to Information. From the date hereof until the
Effective Time or earlier termination of this Agreement and subject to
applicable law, each of Concentric and NEXTLINK shall, and shall cause their
respective subsidiaries to (i) give to the other party and the other party's
counsel, financial advisors, auditors and other authorized representatives
reasonable access during normal business hours to the offices, properties, books
and records of such party and its Subsidiaries, (ii) furnish to the other party
and the other party's counsel, financial advisors, auditors and other authorized
representatives such financial and operating data and other information as such
Persons may reasonably request and (iii) instruct its employees, counsel,
financial advisors, auditors and other authorized representatives to cooperate
with the other party in such other party's investigation. Any investigation
pursuant to this Section 9.5 shall be conducted in such manner as not to
interfere unreasonably with the conduct of the business of the other party. No
information or knowledge obtained in any investigation pursuant to this Section
9.5 shall affect or be deemed to modify any representation or warranty made by
any party hereunder. Each party will hold such information which is non-public
in confidence in accordance with the provisions of the Confidentiality
Agreement.
-72-
SECTION 9.6. Notices of Certain Events. Each of Concentric and NEXTLINK
shall promptly notify the other of:
(a) any notice or other communication from any Person alleging
that the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement;
(b) any notice or other communication from any Governmental
Authority in connection with the transactions contemplated by this Agreement;
(c) the occurrence, or non-occurrence, of any event the
occurrence, or non-occurrence, of which would be reasonably expected to cause
any representation or warranty contained herein to be untrue or inaccurate in
any material respect at any time during the period commencing on the date hereof
and ending at the Effective Time in a manner such that the conditions set forth
in Section 10.2(a)(i) or Section 10.3(a)(i) would not be satisfied;
(d) any actions or suits commenced, or to the Knowledge of
Concentric or NEXTLINK, threatened with respect to this Agreement or the
transactions contemplated hereby; and
(e) any failure of such party to comply with or satisfy any
condition set forth in Article X hereof;
provided, however, that the delivery of any notice pursuant to this Section 9.6
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
SECTION 9.7. Tax-free Reorganization; Tax-free Exchange. (a) Prior to
the Effective Time, NEXTLINK and Concentric shall use all commercially
reasonable efforts to cause either (i) the Mergers or the Alternative Merger, as
applicable, to qualify as reorganizations within the meaning of the provisions
of Section 368(a) of the Code ("368 REORGANIZATION"), or (ii) as the case may
be, the Exchange Offer, the Exchange Offer Merger, and the LHP Share Exchange,
when taken as a whole (collectively, the "EXCHANGE OFFER TRANSACTIONS"), to
qualify as a transaction described in Section 351 of the Code (a "351
TRANSACTION"), and will not take any action reasonably likely to cause the
Mergers or the Exchange Offer Transactions, as the case may be, not to so
qualify.
(b) NEXTLINK and Concentric covenant and agree to (and to
cause any affiliate or successor to their assets or business to) vigorously and
in good faith defend all challenges to the tax-free status of the Mergers or the
Exchange Offer Transactions, as the case may be.
(c) It is understood and agreed that both ▇▇▇▇▇▇▇ ▇▇▇▇ &
▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Professional Corporation, shall
issue to their respective clients substantially identical opinions to the effect
that either (i)
-73-
the Mergers or the Alternative Merger, as applicable, will qualify as
reorganizations under Code Section 368(a) and related matters for description,
and inclusion as Exhibits, in the S-4 Registration Statement and the Proxy
Statement or (ii) the Exchange Offer and the Exchange Offer Merger will qualify
as 351 Transactions and related matters for description, and inclusion as
Exhibits, in the Exchange Registration Statement and the Proxy Statement.
(d) NEXTLINK and Concentric covenant to each other that none
of NEXTLINK, Concentric or any of their respective subsidiaries has taken (or
will take) any action, including, without limitation, any such action
inconsistent with any representation, warranty, or covenant made or to be made
in connection with opinions to be delivered pursuant to Sections 10.2(a)(ii) or
10.3(b) hereof. In addition, NEXTLINK and Concentric each agree that in the
event such party becomes aware of any such fact or circumstance that is
reasonably likely to prevent the Mergers or the Alternative Merger, as
applicable, from qualifying as a 368 Reorganization or the Exchange Offer and
the Exchange Offer Merger from qualifying as a 351 Transaction, it will promptly
notify the other party in writing.
(e) Subject to Section 2.5, prior to the Effective Time,
NEXTLINK and Concentric shall take such actions as Eagle River may reasonably
request (without material cost or inconvenience to NEXTLINK or Concentric) to
cause the LHP Share Exchange in conjunction with the Mergers or the Alternative
Merger, as applicable, to qualify as a 351 Transaction. Newco or NEXTLINK, as
applicable, shall grant Eagle River registration rights as set forth in the
Registration Rights Agreement, subject to the limitations set forth therein,
with respect to the shares of NEXTLINK Common Stock or Newco Common Stock
received by Eagle River in exchange for the Contributed Interest. None of
NEXTLINK, Concentric or Newco has made any representation or warranty to Eagle
River as to whether the LHP Share Exchange will qualify as a 351 Transaction,
and in no event will any of them have any liability with respect to any failure
to so qualify. Nothing contained in this Section 9.7(e) will limit NEXTLINK's
right to make an election to proceed with an Exchange Offer or to proceed with
the Alternative Merger.
(f) Neither NEXTLINK or Concentric shall file any tax return
or take any position which would be inconsistent with the qualification of the
LHP Share Exchange in conjunction with the Mergers as a 351 Transaction.
NEXTLINK and Concentric shall make customary representations and warranties to
Ernst & Young LLP for the purposes of their rendering to Eagle River a tax
opinion as the qualification of the LHP Share Exchange in conjunction with the
Mergers as a tax-free contribution under Section 351 of the Code.
SECTION 9.8. Affiliates. (a) Within 30 days following the date of this
Agreement, Concentric shall deliver to NEXTLINK a
-74-
letter identifying all known Persons who may be deemed affiliates of Concentric
under Rule 145 of the 1933 Act (a "CONCENTRIC RULE 145 AFFILIATE"). Concentric
shall use its best efforts to obtain a written agreement from each Concentric
Rule 145 Affiliate as soon as practicable and, in any event, at least 30 days
prior to the Effective Time, substantially in the form of Exhibit C hereto.
SECTION 9.9. Certain Other Agreements and Acknowledgments of NEXTLINK
and Eagle River Relating to the LHP Share Exchange.
Eagle River and NEXTLINK make the following covenants and
acknowledgments relating to the LHP Share Exchange, which shall only inure to
the benefit of such parties.
(a) Eagle River acknowledges to NEXTLINK that the shares of
Newco Common Stock acquired in connection with the LHP Share Exchange will not
be registered under the 1933 Act, and, therefore, until such time as such shares
are registered under the 1933 Act, such shares cannot be sold except pursuant to
an exemption from such registration.
(b) Eagle River covenants to NEXTLINK that, for a period of
three years commencing on the Closing of the LHP Share Exchange, it will not
sell, assign or otherwise transfer that number of shares of Newco Class B Common
Stock (including any Newco Common Stock issued upon conversion of such Newco
Class B Common Stock) owned by either Eagle River as is equal to the number of
the shares of Newco Common Stock acquired in the LHP Share Exchange(but may sell
such shares of Newco Common Stock free and clear of this restriction), except:
(i) in connection with a transaction in which all or
substantially all of the shares of the capital stock of Newco are sold,
assigned or otherwise transferred to a Person which is not an Affiliate
of Newco; and
(ii) that such shares of Newco Class B Common Stock (or Newco
Common Stock, as the case may be) may be subject to a bona fide pledge,
and any pledgee of such shares will not be bound in any way by this
restriction.
(c) Newco will, within ten days of submission of such expenses
to Newco, reimburse Eagle River for all its expenses incident to preparing for,
entering into and carrying out the terms of this Agreement relating to the LHP
Share Exchange, and the consummation of the LHP Share Exchange (and any
registration rights granted pursuant to Section 9.7(e), up to a maximum of
$200,000. Otherwise, each of NEXTLINK and Eagle River shall pay its own expenses
arising from the LHP Share Exchange.
(d) In the event that this Agreement terminates or is
terminated prior to the consummation of the Mergers, the Alternative Merger or
the Exchange Offer (other than as a result
-75-
of a breach by Eagle River of its representations, warranties, covenants or
obligations hereunder, unless waived by NEXTLINK) Eagle River and NEXTLINK shall
consummate the LHP Share Exchange within 20 days of the date of such termination
as follows: Eagle River shall exchange LHP limited liability interests (or LHP
shares in the event that LHP is converted into a corporation) for a number of
shares of NEXTLINK Common Stock determined in accordance with the provisions of
Section 2.2(d) hereof; provided that the obligations of the parties under this
Section 9.9(d) shall be subject to the satisfaction or waiver of the conditions
in Sections 10.2(b) and 10.4 hereof, as the case may be.
(e) During the period between the date of this Agreement and
the date of the Closing of the LHP Share Exchange, (i) NEXTLINK shall continue
to control the management of LHP and Internext and (ii) Eagle River shall
continue to advance its proportionate share of payments due to Level 3 pursuant
to the Level 3 Agreement, which payments shall be reimbursed at the Closing of
the LHP Share Exchange as provided in Section 2.2(e) hereof.
(f) In the event that shares of NEXTLINK Common Stock, instead
of Newco Common Stock, are issued to Eagle River in the LHP Share Exchange,
references to Newco Common Stock, Newco Class B Stock and Newco in this Section
9.9 and in Sections 10.2(b) and 10.4 shall be deemed to be references to
NEXTLINK Common Stock, NEXTLINK Class B Stock or NEXTLINK, as the case may be.
SECTION 9.10. Subsequent Transaction.
NEXTLINK shall promptly, and in any case within 48 hours after
the entry into any Subsequent Transaction that is material to the business and
financial condition of the NEXTLINK Group taken as a whole, inform Concentric in
writing of the material terms and conditions of any such Subsequent Transaction
(other than with respect to the transactions noted in the parenthetical in the
definition of "Subsequent Transaction" entered into by NEXTLINK and shall
provide to Concentric a copy of an opinion, which shall not be deemed to be
addressed to Concentric, from a nationally recognized investment bank, acting as
financial advisor to NEXTLINK, to the effect that, from a financial point of
view, such Subsequent Transaction is fair to NEXTLINK or to the holders of
NEXTLINK Common Stock, as applicable and, if applicable, NEXTLINK shall confirm
in writing to Concentric the reasonable belief of NEXTLINK that such Subsequent
Transaction would not cause: (x) the Mergers or the Alternative Merger, as
applicable, to be treated as other than a 368 Reorganization or a 351
Transaction and the Exchange Offer to be treated as other than a 351
Transaction, (y) any of the conditions set forth in Article 10 hereof not to be
satisfied, and (z) any such Subsequent Transaction would not, or would
reasonably not be expected to, prevent, impair or materially delay the ability
of NEXTLINK or Concentric to consummate the
-76-
transactions contemplated hereunder or constitute or result in a NEXTLINK
Material Adverse Effect.
NEXTLINK shall be entitled to update the representations and warranties
made by NEXTLINK in this Agreement solely for informational purposes and solely
to the extent required as a result of the entering into of any such Subsequent
Transaction.
ARTICLE 10.
CONDITIONS TO THE MERGERS
SECTION 10.1. Conditions to the Obligations of Concentric and NEXTLINK
to Consummate the Mergers. The obligations of Concentric and NEXTLINK to
consummate the Mergers or the Alternative Merger, as applicable, are subject to
the satisfaction of the following conditions:
(a) the Concentric Stockholders' Approval shall have been
obtained;
(b) any applicable waiting period under the HSR Act relating
to the Mergers or the Alternative Merger, as applicable, shall have expired or
been terminated;
(c) no provision of any applicable law or regulation and no
judgment, injunction, order or decree shall prohibit the consummation of the
Mergers or the Alternative Merger, as applicable; provided, however, that each
of the parties shall have used its reasonable efforts to prevent the entry of
any such restraints and to appeal as promptly as possible any such restraints
that may be entered;
(d) the Registration Statement shall have been declared
effective and no stop order suspending the effectiveness of the Registration
Statement shall be in effect and no proceedings for such purpose shall be
pending before or threatened by the SEC;
(e) the shares of Newco Common Stock (or NEXTLINK Common
Stock, as applicable) to be issued in the Mergers shall have been approved for
quotation on Nasdaq, subject to official notice of issuance;
(f) Newco's Certificate of Incorporation shall provide for the
issuance of Newco Common Stock and each series of Newco Preferred Stock.
SECTION 10.2. Conditions to the Obligations of NEXTLINK. (a) The
obligations of NEXTLINK to consummate the Mergers or the Alternative Merger, as
applicable, are subject to the satisfaction of the following further conditions:
(i) (A) Concentric shall have performed in all material
respects all of its obligations hereunder required
-77-
to be performed by it at or prior to the Effective Times; provided that
a breach of the covenant of Concentric under Section 6.1(r) shall not
be deemed to be a failure of a condition hereunder unless such breach
is reasonably likely to have a Concentric Material Adverse Effect, (B)
the representations and warranties of Concentric contained in this
Agreement (as modified or supplemented by the Concentric Disclosure
Schedule), disregarding all qualifications and exceptions contained
therein relating to materiality or a Concentric Material Adverse Effect
or any similar standard or qualification, shall be true and correct at
and as of the Effective Times, as if made at and as of such times
(other than representations or warranties that address matters only as
of a certain date which shall be true and correct as of such date),
with only such exceptions as, individually or in the aggregate, have
not had and would not be reasonably expected to have Concentric
Material Adverse Effect, and (C) NEXTLINK shall have received a
certificate signed by an executive officer of Concentric to the
foregoing effect;
(ii) NEXTLINK shall have received an opinion of ▇▇▇▇▇▇▇ ▇▇▇▇ &
▇▇▇▇▇▇▇▇▇ in form and substance reasonably satisfactory to NEXTLINK, on
the basis of certain facts, representations and assumptions set forth
in such opinion, dated the Effective Times, to the effect that either
(x) the Mergers or the Alternative Merger, as applicable, will be
treated for federal income tax purposes as a 368 Reorganization and
that each of NEXTLINK and Concentric will be a party to the
reorganization within the meaning of Section 368(b) of the Code or (y)
the Exchange Offer Transactions will be treated as a 351 Transaction,
as the case may be. In rendering such opinion, such counsel shall be
entitled to rely upon certain documentation including representations
of officers of Concentric and NEXTLINK.
(b) The obligations of NEXTLINK and Newco to consummate the
LHP Share Exchange are subject to the satisfaction of the following further
conditions:
(i) The representations, warranties and covenants of Eagle
River contained in Section 6 shall be true and correct in all material
respects, in each case, on the date of this Agreement and on and as of
the date of the Closing of the LHP Share Exchange with the same force
and effect as though such representations, warranties and covenants had
been made on and as of such date.
(ii) Eagle River shall have duly performed and complied in all
material respects with all agreements or obligations of Eagle River
contained in this Agreement required to be performed or complied with
by them at or before the Closing.
-78-
(iii) Eagle River shall have delivered to Newco a certificate
dated the date of the Closing of the LHP Share Exchange and executed by
an authorized senior officer of Eagle River, in the capacity of such
officer, certifying the fulfillment of the conditions specified in
Sections 10.2(b)(i) and (ii).
(iv) The Special Committee shall not have (i) determined in
the exercise of its fiduciary duties to withdraw its recommendation to
the board of directors of NEXTLINK that the acquisition of the
Contributed Interest by Newco upon the terms and conditions of this
Agreement is in the best interests of NEXTLINK and (ii) so withdrawn
such recommendation.
(v) The board of directors of NEXTLINK shall not have (i)
determined in the exercise of its fiduciary duties to revoke its
authorization and approval of the acquisition of the Contributed
Interest by Newco on the terms and conditions of this Agreement and
(ii) so revoked such authorization and approval.
(vi) The board of directors of NEXTLINK shall have received
the opinion of Credit Suisse First Boston, in form and substance
satisfactory to the board of directors of NEXTLINK, attesting that the
acquisition of the Contributed Interest on the terms and subject to the
conditions of this Agreement is fair to NEXTLINK from a financial point
of view, which opinion shall not have been withdrawn or modified,
except for modifications which are in form and substance satisfactory
to the Special Committee.
(vii) NEXTLINK shall have received from a nationally
recognized expert, an opinion, in form and substance satisfactory to
NEXTLINK, in compliance with Section 1015 of the Indenture, dated as of
April 25, 1996, among NEXTLINK, NEXTLINK Capital, Inc., and United
States Trust Company of New York, which opinion shall not have been
withdrawn or modified, except for modifications which are in form and
substance satisfactory to NEXTLINK.
(viii) NEXTLINK shall have received from its counsel an
opinion, in form and substance reasonably satisfactory to NEXTLINK,
dated as of the date of the Closing of the LHP Share Exchange, as to
the absence of conflicts with NEXTLINK's material agreements.
(ix) NEXTLINK shall have received from the counsel to Eagle
River, an opinion, in form and substance reasonably satisfactory to
NEXTLINK, dated as of the date of the Closing of the LHP Share
Exchange, as to customary matters, including, but not limited to, the
due authorization, execution and delivery of this Agreement by Eagle
River and the absence of conflicts.
-79-
(x) NEXTLINK shall have received evidence, in form and
substance satisfactory to NEXTLINK, that the Level 3 Agreement is in
full force and effect in the form as originally executed and will not
be subject to any limitation or modifications as a result of the
termination of the INTERNEXT Guarantee.
(xi) No action, suit, proceeding, litigation or investigation
shall have been commenced by any Governmental Authority that questions
the validity or legality of the LHP Share Exchange or any action taken
or to be taken in connection therewith. No injunction or other order
issued by a court of competent jurisdiction restraining or prohibiting
the consummation of the LHP Share Exchange shall be in effect.
For avoidance of doubt, neither the conditions contained in this Section 10.2(b)
nor consummation of the LHP Share Exchange shall be conditions to the
obligations of NEXTLINK, Concentric or Newco to consummate the Mergers, the
Alternative Merger or the Exchange Offer.
SECTION 10.3. Conditions to the Obligations of Concentric. The
obligations of Concentric to consummate the Mergers or the Alternative Merger,
as applicable, are subject to the satisfaction of the following further
conditions:
(a) (i) NEXTLINK shall have performed in all material respects
all of its obligations hereunder required to be performed by it at or prior to
the Effective Times, (ii) the representations and warranties of NEXTLINK
contained in this Agreement (as modified or supplemented by the NEXTLINK
Disclosure Schedule) disregarding all qualifications and exceptions contained
therein relating to materiality or NEXTLINK Material Adverse Effect or any
similar standard or qualification shall be true at and as of the Effective Times
as if made at and as of such times (other than representations and warranties
that address matters only as of a certain date, which shall be true as of such
date), with only such exceptions as, individually or in the aggregate, have not
had and would not be reasonably expected to have a NEXTLINK Material Adverse
Effect and (iii) Concentric shall have received a certificate signed by an
executive officer of NEXTLINK to the foregoing effect;
(b) Concentric shall have received an opinion of ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Professional Corporation in form and substance
reasonably satisfactory to Concentric, on the basis of certain facts,
representations and assumptions set forth in such opinion, dated the Effective
Times, to the effect that either (x) the Mergers or the Alternative Merger, as
applicable, will be treated for federal income tax purposes as a 368
Reorganization and that each of NEXTLINK, Concentric and Newco will be a party
to the reorganization within the meaning of Section 368(b) of the Code or (y)
the Exchange Offer will be
-80-
treated as a 351 Transaction, as the case may be. In rendering such opinion,
such counsel shall be entitled to rely upon certain documentation including
representations of officers of Concentric and NEXTLINK and each of Concentric
and NEXTLINK agree to make such reasonable representations as may be requested
by tax counsel in connection with rendering such opinions; and
(c) Notwithstanding anything to the contrary contained in
Section 10.3(a)(ii) or anywhere else in this Agreement, NEXTLINK may enter into
a Subsequent Transaction, and the state of facts resulting from any such
Subsequent Transaction shall not be deemed to be a breach of any representation
or warranty of NEXTLINK contained in this Agreement; provided, in each case,
that any such Subsequent Transaction would not cause: (x) the Mergers or the
Alternative Merger, as applicable, to be treated as other than a 368
Reorganization and the Exchange Offer to be treated as other than a 351
Transaction, (y) any of the conditions set forth in Article 10 hereof not to be
satisfied, and (z) any such Subsequent Transaction would not, or would
reasonably not be expected to, prevent, impair or materially delay the ability
of NEXTLINK or Concentric to consummate the transactions contemplated hereunder
or constitute or result in a NEXTLINK Material Adverse Effect.
(d) The failure of the LHP Share Exchange to be consummated or
the breach by any of NEXTLINK or Eagle River of any representation, warrant,
agreement or obligation relating to the LHP Share Exchange shall not give rise
to any right or claim on the part of Concentric.
SECTION 10.4. Conditions to the Obligations of Eagle River. The
obligations of Eagle River to consummate the LHP Share Exchange are subject to
the satisfaction of the following further conditions:
(a) The representations, warranties and covenants of NEXTLINK
contained in Section 5.21 shall be true and correct in all material respects, in
each case, on the date of this Agreement and on and as of the date of the
Closing of the LHP Share Exchange with the same force and effect as though such
representations, warranties and covenants had been made on and as of such date.
(b) NEXTLINK shall have duly performed and complied in all
material respects with all agreements or obligations of NEXTLINK contained in
this Agreement relating to the LHP Share Exchange required to be performed or
complied with by it at or before the Closing; provided that Eagle River shall
not be relieved of its obligations to consummate the LHP Share Exchange due to
the termination of this Agreement by Concentric or the failure of Concentric and
NEXTLINK to consummate the Mergers.
(c) NEXTLINK shall have delivered to Eagle River a certificate
dated the date of the Closing of the LHP Share
-81-
Exchange and executed by an authorized senior officer of NEXTLINK, in the
capacity of such officer, certifying the fulfillment of the conditions specified
in Sections 10.4 (a) and (b).
(d) Eagle River shall have received evidence reasonably
satisfactory to Eagle River to the effect that the INTERNEXT Guarantee has been
terminated, effective as of the Closing.
(e) Newco shall have delivered to Eagle River the certificate
representing the shares of Newco Common Stock in payment of the LHP
Consideration.
(f) Eagle River shall have received from the counsel to
NEXTLINK, an opinion, in form and substance reasonably satisfactory to Eagle
River, dated as of the date of the Closing of the LHP Share Exchange, as to
customary matters, including, but not limited to, the due authorization,
execution and delivery of this Agreement by NEXTLINK and Newco and the absence
of conflicts (it being understood by the parties that such opinion shall not
include any opinion regarding tax treatment of the LHP Share Exchange).
SECTION 10.5. Waiver of NEXTLINK and Eagle River Conditions. The
conditions to each of NEXTLINK's and Eagle River's obligations to consummate the
LHP Share Exchange are for the sole benefit of such parties and may be waived by
any such party in whole or in part to the extent permitted by applicable law;
provided that the waiver of any such conditions by NEXTLINK requires the consent
of the Special Committee.
ARTICLE 11.
TERMINATION
SECTION 11.1. Termination. This Agreement may be terminated and the
Mergers or the Alternative Merger, as applicable, may be abandoned at any time
prior to the Effective Times (notwithstanding any approval of this Agreement by
the stockholders of Concentric):
(a) by mutual written agreement of Concentric and NEXTLINK;
(b) by either Concentric or NEXTLINK, if:
(i) the Mergers or the Alternative Merger has not been
consummated on or before August 31, 2000 (the "END DATE"); provided
that the right to terminate this Agreement pursuant to this Section
10.1(b)(i) shall not be available to any party whose breach of any
provision of this Agreement results in the failure of the Mergers or
the Alternative Merger to be consummated by the End Date;
-82-
(ii)(A) there shall be any law or regulation that makes
consummation of the Mergers or the Alternative Merger, as applicable,
illegal or otherwise prohibited or (B) any judgment, injunction, order
or decree of any court or other Governmental Authority having competent
jurisdiction enjoining Concentric and NEXTLINK from consummating the
Mergers is entered and such judgment, injunction, judgment or order
shall have become final and non-appealable; or
(iii) Concentric Stockholders' Approval shall not have been
obtained at the Concentric Stockholders' Meeting (or any adjournment or
postponement thereof);
(c) by NEXTLINK if:
(i) the Board of Directors of Concentric shall have failed to
recommend or shall have withdrawn, or modified in a manner adverse to
NEXTLINK, its approval or recommendation of this Agreement and the
Mergers, or shall have materially breached its obligation to call the
Concentric Stockholders' Meeting in accordance with Section 7.2(a) (or
the Board of Directors of Concentric resolves to do any of the
foregoing);
(ii) Concentric shall have willfully and materially breached
any of its obligations under Sections 7.2(b) or 7.3; or
(iii) a breach of any representation, warranty, covenant or
agreement on the part of Concentric set forth in this Agreement shall
have occurred that would cause any of the conditions set forth in
Section 10.2(a)(i) not to be satisfied, and such condition shall be
incapable of being satisfied by the End Date.
(d) by Concentric, if:
(i) Eagle River shall have materially breached the Voting
Agreement;
(ii)a breach of any representation, warranty, covenant or
agreement on the part of NEXTLINK set forth in this Agreement shall
have occurred that would cause the condition set forth in Section
10.3(a) not to be satisfied, and such condition shall be incapable of
being satisfied by the End Date; or
(iii) (A) the Board of Directors of Concentric authorizes
Concentric, subject to complying with the terms of this Agreement, to
enter into a binding written agreement concerning a transaction that
constitutes a Superior Proposal and Concentric notifies NEXTLINK in
writing that it intends to enter into such an agreement, attaching the
most current version of such agreement to such notice (which
-83-
version shall be updated on a current basis as subsequent versions are
delivered by the proposed parties); (B) NEXTLINK does not make, within
five days of receipt of Concentric's written notification of its
intention to enter into a binding agreement for a Superior Proposal, an
offer that the Board of Directors of Concentric determines, in good
faith after consultation with its financial advisors, is at least as
favorable to the stockholders of Concentric as the Superior Proposal;
(C) Concentric, prior to or contemporaneous with such termination
pursuant to this clause (iii), pays to NEXTLINK in immediately
available funds the fees required to be paid pursuant to Section
11.3(b); and (D) Concentric shall have complied with Section 6.3.
Concentric agrees to notify NEXTLINK promptly if its intention to enter
into a written agreement referred to in its notification shall change
at any time after giving such notification.
The party desiring to terminate this Agreement pursuant to this Section 11.1
(other than pursuant to Section 11.1(a)) shall give notice of such termination
to the other party.
SECTION 11.2. Effect of Termination. If this Agreement is terminated
pursuant to Section 11.1, this Agreement shall become void and of no effect
without liability of any party (or any stockholder, director, officer, employee,
agent, consultant or representative of such party) to the other parties hereto,
except that (a) the agreements contained in this Section 11.2, in Section 11.3
and in the Confidentiality Agreement shall survive the termination hereof, (b)
the LHP Share Exchange shall be consummated pursuant to Section 9.9(d) and (c)
no such termination shall relieve any party of any liability or damages
resulting from any willful breach by such party of this Agreement or the Voting
Agreement.
SECTION 11.3. Fees and Expenses. (a) Except as otherwise provided in
this Section 11.3, Section 7.4 and in Section 9.9(c), all costs and expenses
incurred in connection with this Agreement shall be paid by the party incurring
such cost or expense whether or not the Mergers are consummated; provided that
Concentric and NEXTLINK shall share equally all fees and expenses, other than
attorneys' and accounting fees and expenses, incurred in relation to the
printing and filing of the Registration Statement and the Proxy Statement other
than those paid by Eagle River pursuant to Section 9.9(c).
(b) If this Agreement is terminated pursuant to Sections
11.1(c)(i) and Section 11.1(c)(ii), Concentric shall pay to NEXTLINK a cash
termination fee (the "TERMINATION FEE") equal to the sum of $110,000,000 and the
amount of any fees or other inducements theretofore paid by NEXTLINK pursuant to
Section 7.4(a)(i).
-84-
(c) If (A) this Agreement is terminated pursuant to Section
11.1(b)(iii), (B) prior to the Concentric Stockholders' Meeting, an Acquisition
Proposal is made by any Person and not withdrawn prior to such meeting and (C)
within one year of the Concentric Stockholders' Meeting, either (1) Concentric
or any Concentric Subsidiary enters into an agreement with any Person with
respect to an Acquisition Proposal which provides for (x) transfer or issuance
of securities representing more than 50% of the equity or voting interests in
Concentric, (y) a Merger, consolidation, recapitalization or another transaction
resulting in the issuance of cash or securities of any Person (other than a
reincorporation or a holding company Merger that results in the Concentric
stockholders owning all of the equity interests in the surviving corporation) to
Concentric stockholders in exchange for more than 50% of the equity or voting
interests in Concentric, or (z) transfer of assets, securities or ownership
interests representing more than 50% of the consolidated assets or earning power
of the Concentric Group, or (2) any Person commences a tender offer that results
in the acquisition by the Person making the tender offer of a majority of the
Concentric Common Stock, then Concentric shall pay to NEXTLINK the Termination
Fee.
(d) Any payment of the Termination Fee pursuant to this
Section 11.3 shall be made within one Business Day after termination of this
Agreement except that (i) any payment of the Termination Fee pursuant to Section
11.3(c) shall be paid within one Business Day after it becomes payable. Any
payment of the Termination Fee shall be made by wire transfer of immediately
available funds. If one party fails to pay to the other promptly any fee or
expense due hereunder (including the Termination Fee), the defaulting party
shall pay the costs and expenses (including legal fees and expenses) in
connection with any action, including the prosecution of any lawsuit or other
legal action, taken to collect payment, together with interest on the amount of
any unpaid fee at the publicly announced prime rate of The Bank of New York in
New York City from the date such fee was required to be paid to the date it is
paid.
SECTION 11.4. Termination of LHP Share Exchange
(a) The LHP Share Exchange (and the provisions of this
Agreement relating thereto) may be terminated at any time prior to the
consummation of the LHP Share Exchange by an agreement in writing signed by
NEXTLINK and Eagle River, with the concurrence of the Special Committee.
(b) Either NEXTLINK or Eagle River (and in the case of
NEXTLINK, with the concurrence of the Special Committee) may terminate this
Agreement as it relates to the LHP Share Exchange (and the provisions of this
Agreement relating thereto) prior to the consummation of the LHP Share Exchange
if:
(i) any court of competent jurisdiction in the United States
or other Governmental Authority issues an order,
-85-
decree or ruling or taken any other action permanently restraining,
enjoining or otherwise prohibiting the transactions contemplated by
this Agreement with respect solely to the LHP Share Exchange
obligations, and such order, decree, ruling or other action is final
and non-appealable; or
(ii) the Closing of the LHP Share Exchange does not occur by
the 21st day after the End Date, provided that the right to terminate
this Agreement pursuant to this Section 11.4(b) will not be available
to either NEXTLINK or Eagle River if such party fails to fulfill any of
its obligations under this Agreement which failure results in the
failure of the Closing of the LHP Share Exchange to occur on or before
such date.
(c) NEXTLINK (with the concurrence of the Special Committee)
may terminate this Agreement with respect solely to the LHP Share Exchange
obligations if:
(i) Eagle River fails to perform, in any material respect, any
of its material obligations under this Agreement, which failure to
perform is not cured by the Closing of the LHP Share Exchange, provided
that notice of such failure to perform shall have been given by
NEXTLINK to Eagle River; or
(ii) there is a material breach of any of Eagle River's
representations, warranties and covenants contained in this Agreement.
(d) Eagle River may terminate this Agreement with respect
solely to the LHP Share Exchange obligations if:
(i) NEXTLINK fails to perform, in any material respect, any of
its material obligations under this Agreement, which failure to perform
is not cured by the Closing of the LHP Share Exchange, provided that
notice of such failure to perform shall have been given by Eagle River
to NEXTLINK; or
(ii) there is a material breach of any of NEXTLINK's
representations, warranties and covenants contained in this Agreement.
(e) If the LHP Share Exchange is terminated pursuant to this
Section 11.4, such termination will be without liability on the part of NEXTLINK
or Eagle River, or any shareholder, partner, member, director, officer,
employer, agent, consultant or representative of any such party, or to the other
parties, other than the provisions of this Section 11.4, and Sections 9.9 and
11.5; provided that nothing in this Section 11.4 shall be deemed to release any
such party from any liability for any breach by such party of the
representations, warranties or
-86-
covenants of such party, or other terms, contained in this Agreement.
SECTION 11.5. Survival of NEXTLINK and Eagle River Representations and
Warranties Relating to the LHP Share Exchange; Indemnification.
(a) All representations, warranties and covenants of NEXTLINK
and Eagle River pertaining to the LHP Share Exchange contained in this Agreement
will survive the execution and delivery of this Agreement and the Closing.
(b) Eagle River agrees to indemnify NEXTLINK and hold NEXTLINK
harmless from and against, and pay and reimburse NEXTLINK for, any and all
demands, claims, actions, losses, damages, liabilities, obligations,
out-of-pocket costs and expenses (including reasonable consultants' and
attorneys' fees), whether or not resulting from third-party claims, including
interest and penalties with respect thereto, asserted against or incurred or
sustained by NEXTLINK as a result of or arising out of any breach or inaccuracy
of any representation or warranty of Eagle River contained in Section 6, or any
covenant made by Eagle River in this Agreement.
(c) NEXTLINK agrees to indemnify Eagle River and hold Eagle
River harmless from and against, and pay and reimburse Eagle River for, any and
all demands, claims, actions, losses, damages, liabilities, obligations,
out-of-pocket costs and expenses (including reasonable consultants' and
attorneys' fees), whether or not resulting from third-party claims, including
interest and penalties with respect thereto, asserted against or incurred or
sustained by Eagle River as a result of or arising out of any breach or
inaccuracy of any representation or warranty of NEXTLINK made to Eagle River and
contained in Section 5.21, or any covenant made by NEXTLINK for the benefit of
Eagle River in this Agreement.
ARTICLE 12.
MISCELLANEOUS
SECTION 12.1. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including facsimile transmission)
and shall be given,
if to NEXTLINK, to:
NEXTLINK Communications, Inc.,
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
-87-
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
if to Concentric, to:
Concentric Network Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:
Fax: ( )
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Goodrich, Rosati,
Professional Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax: ▇▇▇-▇▇▇-▇▇▇▇
if to Eagle River, to:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other parties hereto. All such notices,
requests and other communications shall be deemed received on the date of
receipt by the recipient thereof if received prior to 5 p.m. on a Business Day,
in the place of receipt. Otherwise, any such notice, request or communication
shall be deemed not to have been received until the next succeeding Business Day
in the place of receipt.
SECTION 12.2. Survival of Representations and Warranties. The
representations and warranties contained herein and in any certificate or other
writing delivered pursuant hereto shall not survive the Effective Times or the
termination of this Agreement, except as provided under Section 11.2 and 11.5.
SECTION 12.3. Amendments; No Waivers. (a) Subject to applicable law,
any provision of this Agreement may be amended or waived prior to the Effective
Times if, but only if, such amendment or waiver is in writing and is signed, in
the case of an amendment, by each party to this Agreement or, in the case of a
waiver, by each party against whom the waiver is to be effective; provided that,
after the adoption of this Agreement by
-88-
the stockholders of Concentric, no such amendment or waiver shall be made or
given that requires the approval of the stockholders of Concentric unless the
required approval is obtained.
(b) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
(c) References to "party" in this Section 12.3 shall, with
respect to any amendment or waiver relating solely to the Mergers, the
Alternative Merger or the Exchange Offer, refer only to NEXTLINK, Concentric and
Newco and shall, with respect to any amendment or waiver relating to solely to
the LHP Share Exchange, refer only to NEXTLINK, Newco and Eagle River.
SECTION 12.4. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of each other party hereto.
SECTION 12.5. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to the conflicts of law rules of such State.
SECTION 12.6. Jurisdiction. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection
with, this Agreement or the transactions contemplated hereby shall be brought in
any federal court located in the State of Delaware or any Delaware state court,
and each of the parties hereby consents to the exclusive jurisdiction of such
courts (and of the appropriate appellate courts therefrom) in any such suit,
action or proceeding and irrevocably waives, to the fullest extent permitted by
law, any objection that it may now or hereafter have to the laying of the venue
of any such suit, action or proceeding in any such court or that any such suit,
action or proceeding brought in any such court has been brought in an
inconvenient form. Process in any such suit, action or proceeding may be served
on any party anywhere in the world, whether within or without the jurisdiction
of any such court. Without limiting the foregoing, each party agrees that
service of process on such party as provided in Section 12.1 shall be deemed
effective service of process on such party.
SECTION 12.7. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY
-89-
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 12.8. Counterparts; Effectiveness. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto. No provision of
this Agreement is intended to confer any rights, benefits, remedies, obligations
or liabilities hereunder upon any Person other than the parties hereto and their
respective successors and assigns except as provided in Sections 7.3, 7.5 and
7.6.
SECTION 12.9. Entire Agreement. This Agreement, together with the
Voting Agreements, the Concentric Disclosure Schedule, the NEXTLINK Disclosure
Schedule (which Disclosure Schedules shall be deemed part of this Agreement) and
the Confidentiality Agreement, constitutes the entire agreement between the
parties with respect to the subject matter of this Agreement and supersedes all
prior agreements and understandings, both oral and written, between the parties
with respect to the subject matter of this Agreement.
SECTION 12.10. Captions. The captions herein are included for
convenience of reference only and shall be ignored in the construction or
interpretation hereof.
SECTION 12.11. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party. Upon such
a determination, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner so that the transactions contemplated hereby be
consummated as originally contemplated to the fullest extent possible.
SECTION 12.12. Specific Performance. The parties hereto agree that
irreparable damage would occur if any provision of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
or to enforce specifically the performance of the terms and provisions hereof in
any federal court located in the State of Delaware or any Delaware state court,
in addition to any other remedy to which they are entitled at law or in equity.
-90-
SECTION 12.13. Schedules. Each of Concentric and NEXTLINK has set forth
information in its respective Disclosure Schedule in a section thereof that
corresponds to the section of this Agreement to which it relates. Such
information will qualify other sections hereof only to the extent that such
applicability is manifestly evident on the face of such disclosures. The fact
that any item of information is disclosed in a Disclosure Schedule to this
Agreement shall not be construed to mean that such information is required to be
disclosed by this Agreement.
[Signature page follows]
-91-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement and
Plan of Merger and Share Exchange Agreement to be duly executed by their
respective authorized officers as of the day and year first above written.
CONCENTRIC NETWORK CORPORATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President and Chief
Executive Officer
NEXTLINK COMMUNICATIONS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman and Chief
Executive Officer
EAGLE RIVER INVESTMENTS, LLC
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
NM ACQUISITION CORP.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President and
Secretary
-92-
Certification
of
Secretary of Newco
The undersigned Secretary of Newco, pursuant to Section 251(f) of the
Delaware General Corporation Law, hereby certifies that:
1. This Agreement has been adopted by Newco by action of its board of
directors without any vote of stockholders, pursuant to Section 251(f) of the
Delaware General Corporation Law.
2. No shares of stock of Newco were issued prior to the adoption by the
board of directors of Newco of the resolution approving this Agreement.
By:
------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇,
Secretary
EXHIBIT A TO AGREEMENT
AND PLAN OF MERGER AND
SHARE EXCHANGE AGREEMENT
VOTING AGREEMENT
VOTING AGREEMENT, dated as of January __, 2000, (this "Agreement") among
CONCENTRIC NETWORK CORPORATION, a Delaware corporation ("Concentric"), NM
Acquisition Corp., a Delaware corporation, "Newco") and EAGLE RIVER INVESTMENTS,
L.L.C., a limited liability company organized under the laws of the State of
Washington ("Stockholder").
WHEREAS, as of the date hereof, Stockholder owns (beneficially and of record)
37,743,574 shares of Class B Common Stock, $0.02 par value per share ("Class B
Common Stock") of NEXTLINK Communications, Inc., a Delaware corporation
("NEXTLINK"), which Class B Common Stock is entitled to ten votes per share and
is convertible on a one-for-one basis into shares of Class A Common Stock, $0.02
par value per share of NEXTLINK ("Class A Common Stock," and together with the
Class B Common Stock, the "NEXTLINK Common Stock");
WHEREAS, the NEXTLINK Common Stock beneficially owned by Stockholder currently
represents more than 50% of the aggregate voting power of all issued and
outstanding shares of NEXTLINK Common Stock entitled to vote on the Merger (as
defined below);
WHEREAS, Concentric, NEXTLINK, Newco and certain other parties have entered into
an Agreement and Plan of Merger and Share Exchange Agreement dated as of the
date hereof (the "Merger Agreement") which provides, upon the terms and subject
to the conditions set forth therein, for the merger of each of Concentric and
NEXTLINK with and into Newco or, at NEXTLINK's election, the merger of
Concentric with and into NEXTLINK (collectively, the "Merger"); and
WHEREAS, as a condition to the willingness of Concentric to enter into the
Merger Agreement, Concentric has required that Stockholder agree, and in order
to induce Concentric to enter into the Merger Agreement, Stockholder has agreed
to enter into this Agreement. Capitalized terms used but not otherwise defined
in this Agreement have the meanings assigned to such terms in the Merger
Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and agreements
contained herein, the parties hereto agree as follows:
Article XIII.
VOTING OF NAVY COMMON STOCK
Section 13.1. Voting Agreement. On the record date set by NEXTLINK pursuant
to Section 8.1 of the Merger Agreement, Stockholder shall duly execute and cause
to be filed with the corporate records of NEXTLINK its irrevocable written
consent (the "Consent") with respect to all shares of NEXTLINK Common Stock
owned by Stockholder or with respect to which Stockholder has voting control,
approving the Merger, the Merger Agreement
(as amended from time to time) and the transactions contemplated by the Merger
Agreement.
Section 13.2. No Inconsistent Actions by Stockholder; No Disposition or
Encumbrance of Shares
(a) Prior to the Expiration Date (as defined in Section 3.4),
Stockholder shall not take any action inconsistent with the provisions of
Section 1.1 of this Agreement, provided, however, that nothing contained in this
Agreement shall be deemed to limit NEXTLINK's right to terminate the Merger
Agreement in accordance with its terms.
(b) Until the Consent has been executed and filed with the corporate
records of NEXTLINK in accordance with Section 1.1 of this Agreement,
Stockholder shall not Transfer (as defined below) any shares of NEXTLINK Common
Stock if the effect of such Transfer would be to reduce its beneficial ownership
of NEXTLINK Common Stock (taking into account shares of NEXTLINK Common Stock
with respect to which Stockholder can exercise voting control by proxy or
contract) to less than a majority of the voting power of the outstanding
NEXTLINK Common Stock. For purposes of this Agreement, Stockholder shall be
deemed to have effected a "Transfer" of a security if, after the date hereof, it
directly or indirectly: (i) sells, pledges, encumbers, grants an option with
respect to, transfers or disposes of such security or any interest in such
security; or (ii) enters into an agreement or commitment providing for the sale
of, pledge of, encumbrance of, grant of an option with respect to, transfer of
or disposition of such a security or any interest therein.
Section 13.3. Additional Documents. Stockholder (in its capacity as such)
hereby covenants and agrees to execute and deliver any additional documents
necessary or desirable, in the reasonable opinion of Concentric, to carry out
the intent of this Agreement.
Article XIV.
REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER
Stockholder hereby represents and warrants to Concentric and Newco as follows:
Section 14.1. Due Organization, Authorization, etc. Stockholder has all
requisite power to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary action on the part of Stockholder. This Agreement
has been duly executed and delivered by or on behalf of Stockholder and,
assuming its due authorization, execution and delivery by Concentric,
constitutes a legal, valid and binding obligation of Stockholder, enforceable
against Stockholder in accordance with its terms.
-2-
Section 14.2. No Conflicts, Required Filings and Consents.
(a) The execution and delivery of this Agreement by Stockholder do
not, and the performance of this Agreement by Stockholder will not, (i) conflict
with or violate any statute, law, ordinance, rule, regulation, order, decree or
judgment applicable to Stockholder or by which it or any of its properties is
bound or affected, or (ii) violate or conflict with any agreement to which
Stockholder is a party or by which any of its properties is bound.
(b) The execution and delivery of this Agreement by Stockholder do
not, and the performance of this Agreement by Stockholder will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any governmental or regulatory authority, domestic or foreign.
Section 14.3. Title to Shares. Stockholder is the record and beneficial
owner of 37, 743,574 shares of Class B Common Stock, which shares represent a
majority of the aggregate voting power of the issued and outstanding NEXTLINK
Common Stock, and Stockholder holds full voting right with respect thereto. In
addition, the shares of Class B Common Stock beneficially owned by Stockholder,
at the date hereof, are free and clear of any liens, claims, options, charges or
other encumbrances that would adversely affect the ability of Stockholder to
carry out the terms of this Agreement.
Article XV.
MISCELLANEOUS
Section 15.1. Expenses. Except as otherwise provided herein, all costs and
expenses incurred in connection with the transactions contemplated by this
Agreement shall be paid by the party incurring such costs and expenses.
Section 15.2. Notices. Any notice or other communication required or
permitted hereunder shall be in writing (including facsimile transmission) and
shall be given,
(i) if to Concentric to:
--------------------
Concentric Network Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a concurrent copy to:
--------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
-3-
(ii) if to Stockholder to:
--------------------
Eagle River Investments, L.L.C.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a concurrent copy to:
-------------------------
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other parties hereto. All such notices,
requests and other communications shall be deemed received on the date of
receipt by the recipient thereof if received prior to 5 p.m. on a Business Day,
in the place of receipt. Otherwise, any such notice, request or communication
shall be deemed not to have been received until the next succeeding Business Day
in the place of receipt.
Section 15.3. Incorporation of other Provisions. Sections 12.3, 12.4, 12.5,
12.6, 12.7, 12.8, 12.9, 12.10, 12.11, and 12.12 of the Merger Agreement are
hereby incorporated by reference and made a part of this Agreement as is
restated in full herein.
Section 15.4. Termination. This Agreement shall terminate (the "Expiration
Date") and be of no further force and effect, automatically and without any
required action of the parties hereto, at the earlier to occur of (a) such date
and time as the Merger Agreement shall have been validly terminated pursuant to
Article 11 thereof or (b) such date and time as the Merger shall become
effective in accordance with the terms and provisions of the Merger Agreement.
[Signature Page follows]
-4-
IN WITNESS WHEREOF, Concentric and Newco have each caused this Agreement to be
executed by an officer thereunto duly authorized and Stockholder has caused this
Agreement to be duly executed by an authorized signatory, all as of the date
first written above.
CONCENTRIC NETWORK CORPORATION
By
-------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President and Chief
Executive Officer
NM ACQUISITION CORP.
By:
------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President and
Secretary
EAGLE RIVER INVESTMENTS, L.L.C.
By
------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
-5-
EXHIBIT B TO AGREEMENT
AND PLAN OF MERGER AND
SHARE EXCHANGE AGREEMENT
VOTING AGREEMENT
VOTING AGREEMENT, dated as of January __, 2000, (this "Agreement") among
NEXTLINK COMMUNICATIONS, INC., a Delaware corporation ("Nextlink"), NM
ACQUISITION CORP., a Delaware corporation ("Newco") and the undersigned
stockholder of CONCENTRIC NETWORK CORPORATION ("Stockholder"). WHEREAS, as of
the date hereof, Stockholder owns (beneficially and of record) the number of
shares of Common Stock, $0.01 par value per share ("Common Stock") of Concentric
Network Corporation, a Delaware corporation ("Concentric") set forth on the
Stockholder signature page hereto;
WHEREAS, the Common Stock owned by Stockholder currently represents the
percentage of the aggregate voting power of all issued and outstanding shares of
Common Stock entitled to vote on the Merger (as hereinafter defined) set forth
on the Stockholder signature page hereto;
WHEREAS, Concentric, Nextlink, Newco and certain other parties have entered into
an Agreement and Plan of Merger and Share Exchange Agreement dated as of January
__, 2000 (the "Merger Agreement") which provides, upon the terms and subject to
the conditions set forth therein, for the mergers of each of Concentric and
Nextlink with and into Newco or, at Nextlink's election, the merger of
Concentric with and into Nextlink (the "Merger"); and
WHEREAS, as a condition to the willingness of Nextlink to enter into the Merger
Agreement, Nextlink has required that Stockholder agree, and in order to induce
Nextlink to enter into the Merger Agreement, Stockholder has agreed to enter
into this Agreement. Capitalized terms used but not otherwise defined in this
Agreement have the meanings assigned to such terms in the Merger Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and agreements
contained herein, the parties hereto agree as follows: Article XVI.
VOTING OF COMMON STOCK
Section 16.1. Voting Agreement. Until the Expiration Date (as defined in
Section 3.4 hereof), at every meeting of the stockholders of Concentric called,
and at every adjournment thereof, and on every action or approval by written
consent of the stockholders of Concentric, Stockholder (in its capacity as such)
shall cause the Concentric Shares (as defined below) to be voted in favor of
approval of the Merger Agreement and the Merger, in favor of each of the other
transactions contemplated by the Merger Agreement, in favor of any matter that
could reasonably be expected to facilitate the Merger and against any matter
that is inconsistent with the prompt consummation of the
Merger and other transactions contemplated by the Merger Agreement.
Section 16.2. Irrevocable Proxy. Concurrently with the execution of this
Agreement, Stockholder agrees to deliver to Concentric a proxy in the form
attached hereto as Exhibit A (the "Proxy"), which shall be irrevocable to the
fullest extent permissible by law, with respect to the Concentric Shares.
Section 16.3. Transfer of Shares.
(a) Transferee of Shares to be Bound by this Agreement. Stockholder
agrees that, during the period from the date of this Agreement through its
termination pursuant to Section 3.4, Stockholder shall not cause or permit any
Transfer (as defined below) of any of the Concentric Shares to be effected
unless such Transfer is in accordance with an agreement between Stockholder and
Nextlink contemplated by the Merger Agreement and each Person to which any of
such Concentric Shares, or any interest in any of such Concentric Shares, is or
may be transferred shall have: (a) executed a counterpart of this Agreement and
a proxy in the form attached hereto as Exhibit A (with such modifications as
Nextlink may reasonably request); and (b) agreed in writing to hold such
Concentric Shares(or interest in such Concentric Shares) subject to all of the
terms and provisions of this Agreement.
(b) Transfer of Voting Rights. Stockholder agrees that, during the
period from the date of this Agreement through its termination pursuant to
Section 3.4, Stockholder shall not deposit (or permit the deposit of) any
Concentric Shares in a voting trust or grant any proxy or enter into any voting
agreement or similar agreement in contravention of the obligations of
Stockholder under this Agreement with respect to any of the Concentric Shares.
Section 16.4. No Inconsistent Actions by Stockholder. While this Agreement
is in effect, Stockholder shall not revoke or rescind, or purport to revoke or
rescind, the Proxy or take any action inconsistent with the provisions of
Section 1.1 of this Agreement, provided, however, that nothing contained in this
Agreement shall be deemed to limit Concentric's right to terminate the Merger
Agreement in accordance with its terms.
Section 16.5. Additional Documents. Stockholder (in its capacity as such)
hereby covenants and agrees to execute and deliver any additional documents
necessary or desirable, in the reasonable opinion of Nextlink, to carry out the
intent of this Agreement.
Section 16.6. Consent and Waiver. Stockholder (in its capacity as such)
hereby gives any consents or waivers that are reasonably required for the
consummation of the Merger under the
-2-
terms of any agreements to which Stockholder is a party or pursuant to any
rights Stockholder may have.
Section 16.7. Legending of Shares. If so requested by Nextlink, Stockholder
agrees that the Concentric Shares shall bear a legend stating that they are
subject to this Agreement and to the Proxy. Subject to the terms of Section 2
hereof, Stockholder agrees that it shall not Transfer the Shares without first
having the aforementioned legend affixed to the certificates representing the
Shares.
Section 16.8. Certain Defined Terms. For purposes of this Agreement, the
following terms shall have the meanings indicated:
(a) "Concentric Shares" shall mean: (i) all securities of Concentric
(including all shares of Common Stock or preferred stock and all options,
warrants and other rights to acquire shares of Common Stock or preferred stock)
beneficially owned by Stockholder as of the date of this Agreement, including
such shares of Common Stock over which Stockholder shares voting control; and
(ii) all additional securities of Concentric (including all additional shares of
Common Stock and all additional options, warrants and other rights to acquire
shares of Common Stock or preferred stock whether or not such securities have a
right to vote on the merger) of which Stockholder acquires beneficial ownership
during the period from the date of this Agreement through the Expiration Date.
(b) Transfer. A Person shall be deemed to have effected a "Transfer"
of a security if such person directly or indirectly: (i) sells, pledges,
encumbers, grants an option with respect to, transfers or disposes of such
security or any interest in such security; or (ii) enters into an agreement or
commitment providing for the sale of, pledge of, encumbrance of, grant of an
option with respect to, transfer of or disposition of such security or any
interest therein.
Article XVII.
REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER
Stockholder hereby represents and warrants to Nextlink and Newco as follows:
Section 17.1. Due Organization, Authorization, etc. Stockholder, if a
corporation, has all requisite corporate power to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary action on the
part of Stockholder. This Agreement has been duly executed and delivered by or
on behalf of Stockholder and, assuming its due authorization, execution and
delivery by Nextlink and Newco, constitutes a legal, valid and binding
-3-
obligation of Stockholder, enforceable against Stockholder in accordance with
its terms.
Section 17.2. No Conflicts, Required Filings and Consents.
(a) The execution and delivery of this Agreement by Stockholder do
not, and the performance of this Agreement by Stockholder will not, (i) conflict
with or violate any statute, law, ordinance, rule, regulation, order, decree or
judgment applicable to Stockholder or by which Stockholder or any of
Stockholder's properties is bound or affected, or (ii) violate or conflict with
any agreement to which Stockholder is a party or by which any of its properties
is bound.
(b) The execution and delivery of this Agreement by Stockholder do
not, and the performance of this Agreement by Stockholder will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any governmental or regulatory authority, domestic or foreign.
Section 17.3. Title to Shares. Stockholder is the record and beneficial
owner of the Concentric Shares set forth on Exhibit A hereto and holds full
voting right with respect thereto. In addition, the Concentric Shares held by
Stockholder, at the date hereof, are free and clear of any liens, claims,
options, charges or other encumbrances that would adversely affect the ability
of Stockholder to carry out the terms of this Agreement.
Article XVIII.
MISCELLANEOUS
Section 18.1. Expenses. Except as otherwise provided herein, all costs and
expenses incurred in connection with the transactions contemplated by this
Agreement shall be paid by the party incurring such costs and expenses.
Section 18.2. Notices. Any notice or other communication required or
permitted hereunder shall be in writing (including facsimile transmission) and
shall be given,
(i) if to Nextlink or Newco to:
--- ---------------------------
NEXTLINK Communications, Inc.,
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
-4-
with a concurrent copy to:
--------------------------
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to Stockholder to:
---------------------
The address and fax number set forth on the
signature page hereto
with a concurrent copy to:
--------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other parties hereto. All such notices,
requests and other communications shall be deemed received on the date of
receipt by the recipient thereof if received prior to 5 p.m. on a Business Day,
in the place of receipt. Otherwise, any such notice, request or communication
shall be deemed not to have been received until the next succeeding Business Day
in the place of receipt.
Section 18.3.. Incorporation of other Provisions. Sections 12.3, 12.4,
12.5, 12.6, 12.7, 12.8, 12.9, 12.10, 12.11, and 12.12 of the Merger Agreement
are hereby incorporated by reference and made a part of this Agreement as if
restated in full herein.
Section 18.4. Termination. This Agreement shall terminate (the "Expiration
Date") and be of no further force and effect, automatically and without any
required action of the parties hereto, at the earlier to occur of (a) such date
and time as the Merger Agreement shall have been validly terminated pursuant to
Article 11 thereof or (b) such date and time as the Merger shall become
effective in accordance with the terms and provisions of the Merger Agreement.
[Signature Pages Follow]
-5-
IN WITNESS WHEREOF, Nextlink and Newco have caused this Agreement to be executed
by their respective officers thereunto duly authorized and Stockholder has
caused this Agreement to be duly executed by an authorized signatory, all as of
the date first written above.
NEXTLINK COMMUNICATIONS, INC.
By:
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman and Chief
Executive Officer
NM ACQUISITION CORP.
By:
------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President and
Secretary
[NEXTLINK and Newco Signature Page to Voting Agreement;
Stockholder Signature Page Follows]
-6-
STOCKHOLDER
By:
------------------------------
Name:
Dated: January __, 2000
Print Name of Stockholder:
Adress of Stockholder:
______________________
______________________
fax: _________________
Concentric Shares beneficially owned:
___________ shares of Common Stock
___________ shares of Common Stock
issuable upon exercise of outstanding
options or warrants
___________ percent ( %) of shares of
Common Stock of Concentric outstanding
[Stockholder Signature Page to Voting Agreement]
-7-
EXHIBIT A
IRREVOCABLE PROXY
The undersigned Stockholder of Concentric Network Corporation, a Delaware
corporation ("Concentric"), hereby irrevocably (to the fullest extent permitted
by law) appoints (______________) and (_______________), and each of them, as
the sole and exclusive attorneys and proxies of the undersigned, with full power
of substitution and re-substitution, to vote and exercise all voting and related
rights (to the full extent that the undersigned is entitled to do so) with
respect to all of the shares of capital stock of Concentric that now are or
hereafter may be beneficially owned by the undersigned, and any and all other
shares or securities of Concentric issued or issuable in respect thereof on or
after the date hereof (collectively, the "Concentric Shares") in accordance with
the terms of this Proxy. The Concentric Shares beneficially owned by the
undersigned Stockholder of Concentric as of the date of this Proxy are listed on
the final page of this Proxy. Upon the undersigned's execution of this Proxy,
any and all prior proxies given by the undersigned with respect to any
Concentric Shares are hereby revoked and the undersigned agrees not to grant any
subsequent proxies with respect to the Concentric Shares until after the
Expiration Date (as defined below).
This Proxy is irrevocable (to the fullest extent permitted by law), is
coupled with an interest and is granted pursuant to that certain Voting
Agreement of even date herewith by and among Nextlink Communications, Inc., a
Delaware corporation ("Nextlink"), NM Acquisition Corp., a Delaware corporation
("Newco") and the undersigned Stockholder (the "Voting Agreement"), and is
granted in consideration of Concentric entering into that certain Agreement and
Plan of Merger and Share Exchange Agreement (the "Merger Agreement"), among
Concentric, Nextlink, NM Acquisition Corp., a Delaware corporation ("Newco") and
certain other parties. The Merger Agreement provides for the mergers of
Concentric and Nextlink into Newco, or at Nextlink's election, the merger of
Concentric with and into Nextlink in accordance with its terms (the "Merger").
As used herein, the term "Expiration Date" shall mean the earlier to occur of
(i) such date and time as the Merger Agreement shall have been validly
terminated pursuant to Article 11 thereof or (ii) such date and time as the
Merger shall become effective in accordance with the terms and provisions of the
Merger Agreement.
The attorneys and proxies named above, and each of them, are hereby
authorized and empowered by the undersigned, at any time prior to the Expiration
Date, to act as the undersigned's attorney and proxy to vote the Concentric
Shares, and to exercise all voting, consent and similar rights of the
undersigned with respect to the Concentric Shares (including, without
limitation, the power to execute and deliver written consents) at every annual,
special or adjourned meeting of Stockholders of Concentric and in every written
consent in lieu of such meeting
in favor of approval of the Merger Agreement and the Merger, in favor of each of
the other transactions contemplated by the Merger Agreement, in favor of any
matter that could reasonably be expected to facilitate the Merger and against
any matter that is inconsistent with the prompt consummation of the Merger or
other transactions contemplated by the Merger Agreement.
The attorneys and proxies named above may not exercise this Proxy on any
other matter except as provided above. The undersigned Stockholder may vote the
Concentric Shares on all other matters. Any obligation of the undersigned
hereunder shall be binding upon the successors and assigns of the undersigned.
This Proxy is irrevocable (to the fullest extent permitted by law). This
Proxy shall terminate, and be of no further force and effect, automatically upon
the Expiration Date.
Dated: January __, 2000
Signature of Stockholder: _____________________
Print Name of Stockholder: ____________________
Concentric Shares beneficially owned:
___________ shares of Common Stock
___________ shares of Common Stock
issuable upon exercise of outstanding
options or warrants
[Signature Page to Irrevocable Proxy]
-2-
EXHIBIT C TO AGREEMENT
AND PLAN OF MERGER AND
SHARE EXCHANGE AGREEMENT
[DATE]
NM Acquisition Corp.
______________________________
______________________________
Ladies and Gentlemen:
The undersigned has been advised that as of the date of this letter
agreement the undersigned may be deemed to be an "affiliate" of Concentric
Network Corporation, a Delaware corporation (the "Company"), as such term is (i)
defined for purposes of paragraphs (c) and (d) of Rule 145 of the rules and
regulations (the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended (the
"Act"), or (ii) used in and for purposes of Accounting Series Releases 130 and
135, as amended, of the Commission. Pursuant to the terms of the Agreement and
Plan of Merger and Share Exchange Agreement, dated as of January 9, 2000 (the
"Merger Agreement"), by and among NEXTLINK Communications, Inc., a Delaware
corporation ("NEXTLINK"), Eagle River Investments, LLC, a Washington limited
liability company and NM Acquisition Corp. ("Newco"), a Delaware corporation,
the Company and NEXTLINK will merge into Newco, or alternatively the Company
will merge into NEXTLINK (collectively, the "Merger").
Pursuant to the Merger, the undersigned will receive shares of Class A
Common Stock, par value $.02 per share, of Newco ("Newco Common Stock") or
shares of Class A Common Stock, par value $.02 per share, of NEXTLINK ("NEXTLINK
Common Stock" and, together with Newco Common Stock "Merger Stock") in exchange
for shares of Common Stock, par value $0.001 per share of Concentric.
The undersigned represents, warrants and covenants to Newco and NEXTLINK
that, with respect to all Merger Stock received by the undersigned as a result
of the Merger:
1. Neither the undersigned nor its "affiliates," as defined for purposes of
Rule 145 under the Act, shall knowingly make any sale, transfer or other
disposition of Merger Stock in violation of the Act or the Rules and
Regulations.
2. The undersigned has carefully read this letter and the Merger Agreement
and has had an opportunity to discuss the
requirements of such documents and any other applicable limitations upon ability
of the undersigned to sell, transfer or otherwise dispose of Merger Stock with
its own counsel or counsel for the Company.
3. The undersigned has been advised that the issuance of Merger Stock to
the undersigned pursuant to the Merger has been registered with the Commission
under the Act on a Registration Statement on Form S-4. However, the undersigned
has also been advised that, since at the time the Merger was submitted for a
vote of the shareholders of the Company, the undersigned may be deemed to have
been an affiliate of the Company and the distribution by the undersigned of
Merger Stock has not been registered under the Act, the undersigned and its
affiliates may not offer to sell, sell, transfer or otherwise dispose of Merger
Stock issued to the undersigned in the Merger unless (i) such offer, sale,
transfer or other disposition has been registered under the Act or is made in
conformity with Rule 145 under the Act, or (ii) in the opinion of counsel
reasonably acceptable to Newco, or pursuant to a "no action" letter obtained by
the undersigned from the staff of the Commission, such sale, transfer or other
disposition is otherwise exempt from registration under the Act.
4. The undersigned understands that neither Newco nor NEXTLINK is under any
obligation to register under the Act the sale, transfer or other disposition of
Merger Stock by or on behalf of the undersigned and its affiliates or to take
any other action necessary in order to make compliance with an exemption from
such registration available.
5. The undersigned understands that Newco or NEXTLINK, as applicable, will
give stop transfer instructions to Newco's or NEXTLINK's transfer agent, as
applicable, with respect to the undersigned's Merger Stock, that the Merger
Stock issued to the undersigned and its affiliates will all be in certificate
form and that the certificates therefor, or any substitutions therefor, will
bear a legend substantially to the following effect:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND EITHER ARE
HELD BY A PERSON TO WHICH RULE 145 UNDER THE ACT APPLIES, OR WERE ACQUIRED
FROM A PERSON WHO RECEIVED SUCH SECURITIES IN A TRANSACTION TO WHICH RULE
145 UNDER THE ACT APPLIES. THE SECURITIES HAVE NOT BEEN ACQUIRED BY THE
HOLDER WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY DISTRIBUTION
THEREOF WITHIN THE MEANING OF THE ACT AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT OR IN ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT."
-2-
6. The undersigned also understands that unless the transfer by the
undersigned and its affiliates of its Merger Stock has been registered under the
Act or is a sale made in conformity with the Rules promulgated thereunder, Newco
and NEXTLINK reserve the right to place a legend substantially as set forth in
paragraph 5 above on the certificates issued to any transferee.
It is understood and agreed that the legend set forth in paragraph 5 above
shall be removed by delivery of substitute certificates without such legend if
such legend is not required for the purposes of the Act. It is understood and
agreed that such legend and the stop orders referred to above will be removed if
(i) the securities evidenced by such certificates are registered under the Act,
(ii) one year shall have elapsed from the date the undersigned acquired Merger
Stock received in the Merger and the provisions of Rule 145(d)(2) are then
available to the undersigned, (iii) two years shall have elapsed from the date
the undersigned acquired Merger Stock received in the Merger and the provisions
of Rule 145(d)(3) are then available to the undersigned, or (iv) Newco or
NEXTLINK, as applicable, received either an opinion of counsel, reasonably
satisfactory to Newco or NEXTLINK, as applicable, or a "no action" letter
obtained by the undersigned from the staff of the Commission to the effect that
the sale, transfer or disposition of the securities evidenced by such
certificates is exempt from registration under the Act.
[Signature page follows]
Execution of this letter should not be considered an admission on the part
of the undersigned that the undersigned or any of its affiliates is an
"affiliate" of the Company as described in the first paragraph of this letter.
Sincerely,
-----------------------------------
Accepted this ___th day of
___________________
[NM ACQUISITION CORP.
By:__________________________
Name:
Title: ]
[NEXTLINK COMMUNICATIONS, INC.
By:__________________________
Name:
Title: ]
-4-
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of _____________, 2000, between [NM
Acquisition Corp.] [NEXTLINK Communications, Inc., a Delaware corporation] (the
"Company"), and Eagle River Investments, L.L.C., a limited liability company
organized under the laws of the State of Washington (the "Stockholder").
RECITALS
--------
A. The Company and the Stockholder each own fifty percent of the
outstanding limited liability company interests in LHP, L.L.C., a limited
liability company organized under the laws of the State of Washington ("LHP");
and LHP owns one hundred percent of the outstanding limited liability company
interests in INTERNEXT, L.L.C., a limited liability company organized under the
laws of the State of Delaware.
B. The Company has entered into an Agreement and Plan of Merger and Share
Exchange Agreement, dated January 9, 2000 (the "Transaction Agreement"), by and
among the Company, NM Acquisition Corp. ("Newco"), the Stockholder, and
Concentric Network Corporation ("Concentric") providing for, among certain other
transactions, the terms and conditions on which the Company (through Newco, as
its successor corporation) is to purchase from the Stockholder, and the
Stockholder is to sell to the Company, all of the Stockholder's right, title and
interest in LHP in exchange for the issuance to the Stockholder of a certain
number of shares of Class A common stock of the Company, par value $.02 per
share (the "Class A Common Stock" and , together with all other classes of
common stock of the Company, the "Common Stock"), and setting forth certain
alternative transaction structures through which the Stockholder's right, title
and interest in LHP may be acquired by the Company or by Newco as a successor to
the Company.
C. In order to induce the Stockholder to enter into the Transaction
Agreement, the Company has agreed to grant the Stockholder certain registration
rights regarding the shares of Class A Common Stock to be received by the
Stockholder pursuant to the Transaction Agreement, all upon the terms and
conditions set forth herein.
D. Capitalized terms used in this Agreement have the meanings given to them
in Section 3.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
Section 19. Registration under the Securities Act.
Section 19.1. Required Registrations. (a) Request. Upon the terms and
subject to the conditions of this Agreement, at any time during the period
beginning on the date hereof and ending on the second anniversary of the date
hereof (the "Registration Period"), upon the written request of the Stockholder
(in such capacity, the "Requesting Holder") requesting that the Company effect
registration under the Securities Act of all or a specified number of
Registrable Securities (which request shall, subject to Section 1.1(g), also
specify the intended method or methods of disposition thereof), the Company
shall use its reasonable best efforts to effect the registration under the
Securities Act of the Registrable Securities that the Company has been so
requested to register by the Requesting Holder, for disposition, according to
the intended method or methods of disposition specified by the Requesting
Holder; subject to Section 1.1(g), provided that the Company shall not be
required to (i) effect more than two registrations pursuant to this Section 1.1;
(ii) effect a registration pursuant to this Section 1.1 if, within the 90 days
immediately preceding the effective date of such registration, a registration
pursuant to this Section 1.1 or a registration in which the Requesting Holder
was entitled to participate (or would have been entitled to participate but for
the provisions of Section 1.2(b)) pursuant to Section 1.2 has been effected; or,
(iii) effect a registration pursuant to this Section 1.1 for Registrable
Securities having an estimated aggregate public offering price of less than $50
million.
(b) Effective Registration Statement. A registration requested pursuant to
this Section 1.1 shall not be deemed to be effected unless a registration
statement with respect thereto becomes effective under the Securities Act and
remains effective for a period of at least 120 days (or such shorter period when
all the Registrable Securities covered by such registration statement have been
sold pursuant thereto).
(c) Registration Statement Form. Registration statements filed under this
Section 1.1 shall be on such form of the Commission as shall be selected by the
Company and approved by the Requesting Holder (which approval shall not be
unreasonably withheld), and as shall permit the disposition of the subject
Registrable Securities according to the intended method or methods of
disposition specified by the Requesting Holder.
(d) Expenses. The Company shall pay all Registration Expenses incurred in
connection with any registration requested pursuant to this Section 1.1;
provided that the Requesting Holder shall pay all of such Registration Expenses
described in clause (g) of the definition of such term contained herein, and
shall pay its pro rata share of such Registration Expenses described in
-2-
clause (h) of such definition on the basis of the number of shares sold.
(e) Selection of Underwriters. If a registration pursuant to this Section
1.1 involves an underwritten offering, the managing or lead underwriter or
underwriters shall be selected by the Requesting Holder with the approval of the
Company, which approval shall not be unreasonably withheld.
(f) Priority in Requested Registrations. If a registration pursuant to this
Section 1.1 involves an underwritten offering and the managing underwriter
advises that the aggregate number of securities proposed to be included in such
offering should be reduced due to market conditions or otherwise, (i) the number
of securities included in such registration shall be limited to that number of
securities that the managing underwriter has so advised may be included in such
offering (the "Maximum Number"), (ii) if no securities other than Registrable
Securities are proposed to be included in such registration, the Registrable
Securities requested to be registered shall be included in such registration up
to the Maximum Number, and (iii) if securities other than Registrable Securities
("Other Securities") are proposed to be included in such registration, such
Other Securities shall be included in, and Registrable Securities requested to
be registered shall be excluded from, such registration to the extent required
by the terms of any Specified Agreements.
(g) Manner of Sale. So long as the Stockholder owns in excess of 2.5% of
the fully diluted Common Stock (after giving effect to the exercise of all
outstanding options, warrants and other rights to purchase Common Stock whether
or not such options, warrants or other rights are then exercisable (the
"Threshold Amount")), the Stockholder agrees that, except as provided in the
following sentence or except with the written consent of the Company (which
consent shall not be unreasonably withheld), the Stockholder shall sell or
otherwise effectuate a distribution of Registrable Securities included in a
registration effected pursuant to this Section 1.1 only (i) pursuant to one or
more firm commitment underwritten public offerings, (ii) in one or more block
trades, or (iii) pursuant to a staged sale in which a block of registered
securities is transferred to an independent trustee who is directed pursuant to
irrevocable instructions to sell a specified number of such shares over a
specified period of time at a specified rate, notwithstanding the market price
level of the Company's securities, provided that the number of such shares sold
on any trading day shall not exceed 25,000. Notwithstanding anything to the
contrary set forth in the preceding sentence, at any time while the Stockholder
owns an amount of Common Stock in excess of the Threshold Amount, the
Stockholder shall have the right to effectuate a distribution of Registrable
Securities included in a registration effected pursuant to this Section 1.1 in
any other manner, including pursuant to a shelf registration statement, if in
the opinion of
-3-
a nationally recognized investment banker selected by the Company and the
Stockholder, distributions of Registrable Securities made in the manner proposed
by the Stockholder would not adversely affect the market for the Common Stock.
Nothing contained herein shall be deemed to impose any restriction on the
transfer of any Common Stock by the Stockholder other than a restriction on the
manner of sale of Registrable Securities included in a registration effected
pursuant to this Section 1.1.
Section 19.2. "Piggy-Back" Registration Rights. (a) Right to Participate.
If the Company at any time proposes to register any of its securities under the
Securities Act (other than by a registration on Form S-4 or S-8 or any successor
or similar forms or filed in connection with an exchange offer or any offering
of securities solely to the Company's existing stockholders, and other than
pursuant to Section 1.1), whether or not for sale for its own account, the
Company shall give prompt written notice to the Stockholder of its intention to
do so. Upon the terms and subject to the conditions of this Agreement, upon the
written request of the Stockholder (in such capacity, the "Participating
Holder") made within 10 days after the delivery of any such notice by the
Company (which request shall specify the number of Registrable Securities
proposed to be included in such registration and to be disposed of by the
Participating Holder and the intended method or methods of such disposition),
the Company shall use its reasonable best efforts to effect the registration
under the Securities Act of all Registrable Securities that the Company has been
so requested to register by such Participating Holder. If, at any time after
giving written notice of its intention to register any such securities and prior
to the effective date of the registration statement filed in connection with
such registration, the Company determines for any reason not to register or to
delay registration of such securities, the Company may, at its election, give
written notice of such determination to the Participating Holder and, thereupon,
(i) in the case of a determination not to register, the Company need not
register any Registrable Securities in connection with such registration,
without prejudice, however, to any rights of the Participating Holder to request
that such registration be effected as a registration under Section 1.1, and (ii)
in the case of a determination to delay registering, the Company may delay
registering any Registrable Securities for the same period as the delay in
registering such other securities. No registration effected under this Section
1.2 shall relieve the Company of its obligation to effect any registration upon
request under Section 1.1.
(b) Priority in Piggy-Back Registration Rights. If a registration pursuant
to this Section 1.2 involves an underwritten offering and the managing
underwriter advises that the aggregate number of securities proposed to be
included in such offering should be reduced due to market conditions or
otherwise, the Company shall include in such registration, to the
-4-
extent permitted by the terms of the Specified Agreements, up to the number of
the following securities that the Company is so advised can be sold, in the
following order of priority: (i) securities proposed to be included by the
Company, (ii) on a pro rata basis in accordance with the number of securities
proposed by the relevant Persons to be included in such registration, securities
proposed to be included by any stockholder triggering such piggy-back
registration and Registrable Securities requested by the Participating Holder to
be included pursuant to Section 1.2(a) and (iii) on a pro rata basis in
accordance with the number of securities proposed by the relevant Persons to be
included in such registration, other securities of the Company requested to be
included by any other holder having the right to include securities in such
registration.
(c) Expenses. All Registration Expenses incurred in connection with any
registration requested pursuant to this Section 1.2 shall be borne by the
Company (or such other Persons, other than the Participating Stockholder,
participating in such registration, if the applicable contract so provides),
provided that the Participating Stockholder shall pay all of such Registration
Expenses described in clause (g) of the definition of such term contained
herein, and shall pay its pro rata share of such Registration Expenses described
in clause (h) of such definition on the basis of the number of shares sold.
(d) Selection of Underwriters. If an incidental registration pursuant to
this Section 1.2 involves an underwritten offering, the managing or lead
underwriter or underwriters shall be selected by the Company with the approval
of the Participating Holder, which approval shall not be unreasonably withheld.
Section 19.3. Registration Procedures. If and whenever the Company is
required to use its reasonable best efforts to effect the registration of any
Registrable Securities as provided in Sections 1.1 and 1.2, the Company shall as
expeditiously as possible:
(a) prepare and as soon thereafter as possible file with the Commission the
requisite registration statement to effect such registration and thereafter use
its reasonable best efforts to cause such registration statement to become
effective;
(b) prepare and file with the Commission such amendments and supplements to
such registration statement and the prospectus used in connection therewith as
may be necessary to keep such registration statement effective for a period of
either (i) not less than 120 days (subject to extension pursuant to the last
paragraph of this Section 1.3) or, if such registration statement relates to an
underwritten offering, such longer period as in the opinion of counsel for the
underwriters a prospectus is required by law to be delivered in connection with
sales of
-5-
securities by an underwriter or dealer; or (ii) such shorter period as is
required for the disposition of all of the Registrable Securities covered by
such registration statement in accordance with the methods of disposition
intended by the Selling Stockholder set forth in such registration statement
(but in any event not before the expiration of any longer period of
effectiveness required under the Securities Act), and to comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities covered by such registration statement until such time as
all of such securities have been disposed of in accordance with the methods of
disposition intended by the Selling Stockholder set forth in such registration
statement;
(c) furnish to the Selling Stockholder such number of conformed copies of
such registration statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the prospectus
contained in such registration statement (including each preliminary prospectus
and any summary prospectus) and any other prospectus filed under Rule 424 under
the Securities Act, in conformity with the requirements of the Securities Act,
and such other documents incorporated by reference in such registration
statement or prospectus, as the Selling Stockholder may reasonably request to
facilitate the disposition of the Registrable Securities in accordance with the
Selling Stockholder's intended method of disposition, but only during such time
as the Company shall be required under the provisions hereof to cause such
registration statement to remain current;
(d) use its reasonable best efforts to register or qualify Registrable
Securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions in the United States as the Selling
Stockholder shall reasonably request, to keep such registration or qualification
in effect for so long as such registration statement remains in effect, and to
take any other action which may be reasonably necessary to enable the Selling
Stockholder to consummate the disposition in such jurisdictions in the United
States of such Registrable Securities owned by such seller, provided that the
Company shall not for any such purpose be required to (i) qualify generally to
do business as a foreign corporation in any jurisdiction where it would not
otherwise be required to qualify but for the requirements of this subsection
(d), (ii) consent to general service of process in any such jurisdiction, (iii)
subject itself to taxation in any such jurisdiction or (iv) conform its
capitalization or the composition of its assets at the time to the securities or
blue sky laws of such jurisdiction;
(e) furnish to the Selling Stockholder a signed counterpart, addressed to
the Selling Stockholder (and the underwriters, if any), of:
-6-
(i) if such registration includes an underwritten public offering, an
opinion of counsel for the Company dated the date of the closing under the
underwriting agreement, and
(ii) a "comfort" letter, dated the effective date of such registration
statement (and, if such registration includes an underwritten public
offering, dated the date of the closing under the underwriting agreement),
signed by the independent public accountants who have certified the
Company's financial statements included in such registration statement,
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of the
accountants' letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of issuer's
counsel and in accountants' letters delivered to the underwriters in
underwritten public offerings of securities;
(f) notify the Selling Stockholder, at any time when a prospectus relating
to such Registrable Securities is required to be delivered under the Securities
Act, upon discovery that, or upon the discovery of the happening of any event as
a result of which, the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under which
they were made, and at the request of the Selling Stockholder promptly prepare
and furnish to the Selling Stockholder a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under which
they were made;
(g) otherwise use its reasonable best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering a
period of at least twelve months beginning after the effective date of such
registration statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act; and
(h) use its reasonable best efforts to cause all such Registrable
Securities covered by such registration statement to be listed on a national
securities exchange (if such Registrable Securities are not already so listed),
and on each other securities exchange on which similar securities issued by the
-7-
Company are then listed, if the listing of such Registrable Securities is then
permitted under the rules of such exchange.
The Company may require the Selling Stockholder to furnish the Company in
writing for inclusion in any registration statement such information regarding
the Selling Stockholder and the distribution of such Registrable Securities
being sold as the Company may from time to time reasonably request.
The Selling Stockholder agrees that upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 1.3(f),
such Selling Stockholder shall forthwith discontinue its disposition of
Registrable Securities pursuant to the registration statement relating to such
Registrable Securities until the Selling Stockholder's receipt of the copies of
the supplemented or amended prospectus contemplated by Section 1.3(f) and, if so
directed by the Company, such Selling Stockholder shall use its reasonable best
efforts to deliver to the Company all copies, other than permanent file copies
then in the Selling Stockholder's possession, of the prospectus relating to such
Registrable Securities current at the time of receipt of such notice. If the
Company shall give any such notice, the applicable time period mentioned in
Section 1.3(b) during which a registration statement is to remain effective
shall be extended by the number of days during the period from and including the
date of the giving of such notice pursuant to Section 1.3(f), to and including
the date when such Selling Stockholder shall have received the copies of the
supplemented or amended prospectus contemplated by Section 1.3(f).
Section 19.4. Delay of Filing or Sales. (a) The Company shall have the
right, upon giving notice to the Selling Stockholder of the exercise of such
right, to delay filing a registration statement or to require such Selling
Stockholder not to sell any Registrable Securities pursuant to a registration
statement for a period of 180 days from the date on which such notice is given,
or such shorter period of time as may be specified in such notice or in a
subsequent notice delivered by the Company to such effect prior to or during the
effectiveness of the registration statement, if (i) the Company is engaged in
negotiations with respect to, or has taken a substantial step to commence, or
there otherwise is pending, any merger, acquisition, other form of business
combination, divestiture, tender offer, financing or other similar transaction,
or there is an event or state of facts relating to the Company, in each case
which is material to the Company (any of the foregoing, a "Material Activity"),
(ii) such Material Activity would, in the opinion of counsel for the Company,
require disclosure so as to permit the Registrable Securities to be sold in
compliance with law, and (iii) such disclosure would, in the reasonable judgment
of the Company, be adverse to its interests; provided that the Company may not
utilize this right more than once in any six-month period.
-8-
(b) Company shall have no obligation to include in any notice contemplated
by Section 1.4(a) any reference to or description of the facts based upon which
the Company is delivering such notice.
Section 19.5. Underwritten Offerings. (a) Required Underwritten Offerings.
If requested by the underwriters of any underwritten offering of Registrable
Securities pursuant to a registration requested under Section 1.1, the Company
shall enter into an underwriting agreement with such underwriters for such
offering. Such agreement shall be reasonably satisfactory in substance and form
to the Selling Stockholder, the Company and the underwriters and shall contain
representations, warranties, indemnities and agreements as are customarily
provided or entered into by an issuer in underwriting agreements of this type,
including indemnities for the benefit of the underwriters to the effect and to
the extent provided to the Selling Stockholder in Section 1.6. The Selling
Stockholder shall be a party to such underwriting agreement.
(b) Piggy-Back Underwritten Offerings. If the Company at any time proposes
to register any of its securities under the Securities Act as contemplated by
Section 1.2 and such securities are to be distributed by or through one or more
underwriters, the Company shall, if requested by the Selling Stockholder
pursuant to Section 1.2 and subject to the provisions of Section 1.2(b), use its
reasonable best efforts to arrange for such underwriters to include those
Registrable Securities designated by the Selling Stockholder among the
securities to be distributed by such underwriters. The Selling Stockholder shall
be a party to the underwriting agreement between the Company and such
underwriters.
(c) Holdback Agreements. The Stockholder agrees by becoming a holder of
Registrable Securities not to effect any public sale or distribution of any
equity securities of the Company, or any securities convertible into or
exchangeable or exercisable for such securities, including a sale pursuant to
Rule 144 under the Securities Act (or any similar provision then in force),
during the ten days before and the 180 days after any underwritten registration
pursuant to Section 1.1 or 1.2 has become effective, except as part of such
underwritten registration.
Section 19.6. Indemnification. (a) Indemnification by the Company. In the
event of any registration of any Registrable Securities of the Company under the
Securities Act pursuant to Section 1.1 or 1.2, the Company shall, and hereby
does, indemnify and hold harmless the Selling Stockholder, its directors,
officers, employees, agents and advisors, each underwriter in the offer or sale
of such securities, and each other Person, if any, who controls the Selling
Stockholder or any such underwriter within the meaning of the Securities Act,
against any losses, claims, damages or liabilities, joint or several, to which
each such Person may become subject under the Securities Act or
-9-
otherwise, insofar as such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon
(i) any untrue statement or alleged untrue statement of any material
fact contained in any registration statement under which such securities
were registered under the Securities Act, any preliminary prospectus, final
prospectus or summary prospectus contained therein or used in connection
with the offering of securities covered thereby, or any amendment or
supplement thereto;
(ii) any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading; or
(iii) any violation or alleged violation by the Company of any law or
regulation applicable to the Company and relating to action or inaction
required of the Company with respect to such registration or the offer or
sale of Registrable Securities;
and the Company will reimburse each such Person for any legal or any other
expenses reasonably incurred by it in connection with investigating or defending
any such loss, claim, liability, action or proceeding; provided that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or expense arises
out of or is based upon an untrue statement or alleged untrue statement, or
omission or alleged omission, made in such registration statement, any such
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement, in reliance upon and in conformity with written information prepared
and furnished to the Company by or on behalf of the Selling Stockholder or any
underwriter specifically for use in the preparation thereof; provided, further,
that the Company shall not be liable to an underwriter in any such registration
or to any other Person who controls such underwriter within the meaning of the
Securities Act, to the extent that any such loss, claim, damage, liability (or
action or proceeding in respect thereof) or expense arises out of such Person's
failure to send or give a copy of the final prospectus, as the same may be then
supplemented or amended, to the Person asserting an untrue statement or alleged
untrue statement or omission or alleged omission at or prior to the written
confirmation of the sale of the securities to such Person if such statement or
omission was timely corrected in such final prospectus. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of any such Person and shall survive the transfer of such securities by
such Person. The Company shall not be obligated to pay the fees and expenses of
more than one counsel or firm of counsel for all parties indemnified in respect
of a claim for each jurisdiction in which such counsel is required unless a
conflict of interest exists between such
-10-
indemnified party and any other indemnified party in respect of such claim.
(b) Indemnification by the Selling Stockholder. As a condition to including
any Registrable Securities held by the Selling Stockholder in any registration
statement filed pursuant to Sections 1.1 or 1.2, the Company shall have received
an undertaking reasonably satisfactory to it from the Selling Stockholder, to
indemnify and hold harmless (in the same manner and to the same extent as set
forth in Section 1.6(a)) the Company, each director, officer, employee, agent
and advisor of the Company; each underwriter in the offering or sale of such
securities; each other Person, if any, who controls the Company or any such
underwriter within the meaning of the Securities Act (other than the Selling
Stockholder); and each other Person who participates as a seller of securities
in such registration and each of its directors, officers, employees, agents and
advisors, and each other Person controlling such seller of securities within the
meaning of the Securities Act, with respect to any untrue statement or alleged
untrue statement in or omission or alleged omission from such registration
statement, any preliminary prospectus, final prospectus or summary prospectus
contained therein, or any amendment or supplement thereto, if such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information prepared and
furnished to the Company by or on behalf of the Selling Stockholder specifically
for use therein. Such indemnity shall remain in full force and effect,
regardless of any investigation made by or on behalf of the Company or any such
director, officer, employee, agent, advisor or controlling Person and shall
survive the transfer of such securities by the Selling Stockholder. The
indemnity provided by the Selling Stockholder under this Section 1.6(b) shall be
only with respect to its own misstatements and omissions and not with respect to
those of any other seller or prospective seller of securities, and not jointly
and severally, and shall be limited in amount to the net amount of proceeds
received by such Selling Stockholder from the sale of Registrable Securities
pursuant to such registration statement.
(c) Notices of Claims, etc. Promptly after receipt by an indemnified party
of notice of the commencement of any action or proceeding involving a claim
referred to in the preceding subsections of this Section 1.6, such indemnified
party will, if a claim in respect thereof is to be made against an indemnifying
party, give written notice to the latter of the commencement of such action;
provided that the failure of any indemnified party to give notice as provided
herein shall not relieve the indemnifying party of its obligations under this
Section 1.6, except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. In case any such action is brought
against an indemnified party, unless a conflict of interest between such
indemnified and indemnifying parties exists in respect of such claim, the
indemnifying party shall be
-11-
entitled to participate in and to assume the defense thereof, jointly with any
other indemnifying party similarly notified to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, if the indemnifying party is entitled to do so hereunder,
the indemnifying party shall not be liable to such indemnified party for any
legal or other expenses subsequently incurred by the latter in connection with
the defense thereof other than reasonable costs of investigation. No
indemnifying party shall, without the consent of the indemnified party, consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation.
(d) Contribution. If for any reason the indemnity set forth in the
preceding subsections of this Section 1.6 is unavailable, or is insufficient to
hold harmless an indemnified party, other than by reason of the exceptions
provided therein, then the indemnifying party shall contribute to the amount
paid or payable by the indemnified party as a result of such losses, claims,
damages or liabilities in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and the indemnified
party on the other hand in connection with the offering of securities and the
statements or omissions or alleged statements or omissions that resulted in such
loss, claim, damage, or liability, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the indemnifying party or by
the indemnified party. No party shall be liable for contribution under this
Section 1.6(d) except to the extent and under such circumstances as such party
would have been liable to indemnify under this Section 1.6 if such
indemnification were enforceable under applicable law.
(e) Other Indemnification. Indemnification and contributions similar to
those specified in the preceding subsections of this Section 1.6 (with
appropriate modifications) shall be given by the Company and the Stockholder
with respect to any required registration or other qualification of securities
under any federal, state or blue sky law or regulation of any Governmental
Authority other than the Securities Act. The indemnification agreements
contained in this Section 1.6 shall be in addition to any other rights to
indemnification or contribution that any indemnified party may have pursuant to
law or contract and shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any indemnified party
and shall survive the transfer of any of the Registrable Securities by the
Stockholder.
-12-
(f) Payments. The indemnification or contribution required by this Section
1.6 shall be made by periodic payments of the amount thereof during the course
of the investigation or defense, as and when bills are received or expense,
loss, damage or liability is incurred, subject to refund if the party receiving
such payments is subsequently found not to have been entitled thereto hereunder.
Section 20. Restriction on Transfer of Registration Rights. This Agreement
and the rights provided herein are personal to and for the benefit of the
Stockholder only, and the same may not be transferred or assigned without the
prior written consent of the Company.
Section 21. Definitions. Capitalized terms, as used in this Agreement, have
the following meanings:
Commission means the Securities and Exchange Commission.
Company has the meaning given to it in the Introduction.
Exchange Act means The Securities Exchange Act of 1934, and the rules and
regulations promulgated thereunder, all as the same shall be in effect at the
time.
Governmental Authority means any government, any political subdivision, any
governmental agency, bureau, department, board or commission, any court or
tribunal or any other governmental instrumentality, whether federal, state or
local, domestic or foreign.
Material Activity has the meaning given to it in Section 1.4.
Participating Holder has the meaning given to it in Section 1.2(a).
Person means an individual, corporation, trust, joint venture, association,
partnership or other entity, or any governmental or political subdivision or an
agency or instrumentality thereof.
Registration Expenses means all expenses incident to the Company's
performance of or compliance with Section 1, including, (a) all registration,
filing and National Association of Securities Dealers fees, (b) all fees and
expenses of complying with securities or blue sky laws, (c) all word processing,
duplicating and printing expenses, (d) messenger and delivery expenses, (e) the
fees and disbursements of counsel for the Company and of its independent public
accountants, including the expenses of any "comfort" letters or any special
audits required by or incident to such performance and compliance,
-13-
(f) any fees and disbursements of underwriters customarily paid by issuers or
sellers of securities, but excluding items described in clause (h) below, (g)
fees and disbursements of counsel to the Selling Stockholder, and (h)
underwriting discounts or commissions and brokerage fees for the sale of
Registrable Securities.
Registrable Securities means (a) the shares of Class A Common Stock issued
by the Company to the Stockholder pursuant to the Transaction Agreement and (b)
any shares of Class A Common Stock or other class of common stock of the Company
issued in respect of the securities in the preceding clause by way of a stock
dividend, stock split or reverse stock split, or in connection with a
combination of shares, recapitalization, merger, consolidation or otherwise. As
to any particular Registrable Securities, such securities shall cease to be
Registrable Securities when (i) a registration statement with respect to the
sale of such securities shall have become effective under the Securities Act and
such securities shall have been disposed of in accordance with such registration
statement, (ii) they shall have been sold to the public pursuant to Rule 144
under the Securities Act, (iii) they shall have been otherwise transferred, or
(iv) they shall have ceased to be outstanding.
Registration Period has the meaning given to it in Section 1.1(a).
Requesting Holder has the meaning given to it in Section 1.1(a).
Securities Act means the Securities Act of 1933, and the rules and
regulations promulgated thereunder, all as the same shall be in effect at the
time.
Selling Stockholder means a Requesting Holder or Participating Holder.
Specified Agreements means these agreements listed on Schedule A hereto.
Stockholder has the meaning given to it in the Introduction.
Section 22. Miscellaneous.
Section 22.1. Termination. This Agreement shall terminate, except for the
provisions of Section 1.6, which shall survive any such termination, upon the
termination of the Registration Period; provided that if the Selling Stockholder
has made a request for registration pursuant to Section 1.1 or 1.2 prior to the
termination of the Registration Period and all obligations with respect to such
registration set forth in this Agreement have not been fulfilled or satisfied
(including for the payment of Registration Expenses or pursuant to Section 1.3),
this
-14-
Agreement shall survive until the satisfaction or fulfillment of all such
obligations with respect thereto.
Section 22.2. Notices. All notices, consents, requests, instructions,
approvals and other communications provided for in, or in connection with, this
Agreement shall be in writing and shall be deemed validly given upon personal
delivery or one day after being sent by overnight courier service or by telecopy
(so long as for notices or other communications sent by telecopy, the
transmitting telecopy machine records electronic confirmation of the due
transmission of the notice), at the following address or telecopy number, or at
such other address or telecopy number as a party may designate to the other
parties:
If to the Company, to:
NEXTLINK Communications, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
With a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
If to the Stockholder, to:
Eagle River Investments, L.L.C.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: C. ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Section 22.3. Choice of Forum. Each of the parties hereby irrevocably
submits to the exclusive jurisdiction of the courts of the State of New York and
the Federal courts of the United States of America located in the State, City,
and County of New York solely in respect of the interpretation and enforcement
of the provisions of this Agreement and of the documents referred to in this
Agreement, and in respect of the transactions contemplated hereby and thereby,
and hereby waives, and agrees not to assert, as a defense in any action, suit,
or proceeding for the interpretation or enforcement hereof or of any such
document, that it is not subject thereto or that such action, suit, or
proceeding may not be brought or is not maintainable in said courts or that the
venue thereof may not be appropriate or that this Agreement or any such document
may not be enforced in or by such courts, and the parties hereto irrevocably
agree that
-15-
all claims with respect to such action or proceeding shall be heard and
determined in such a court. Each of the parties hereby consents to and grants
any such court jurisdiction over the person of such parties and over the subject
matter of any such dispute and agrees that mailing of process or other papers in
connection with any such action or proceeding in the manner provided in Section
4.2 in such other manner as may be permitted by law, shall be valid and
sufficient service thereof.
Section 22.4. Amendments; Waivers, etc. (a) Neither this Agreement nor any
term hereof may be amended, waived, discharged or terminated other than by an
instrument in writing, signed by the party against which enforcement of such
amendment, discharge, waiver or termination is sought.
(b) No failure or delay by any party in exercising any right, power or
privilege under this Agreement shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies provided herein shall be cumulative and not exclusive of any rights or
remedies provided by law.
Section 22.5. Severability. If any provision of this Agreement is held to
be invalid or unenforceable for any reason, it shall be adjusted rather than
voided, if possible, in order to achieve the intent of the parties hereto to the
maximum extent possible. In any event, the invalidity or unenforceability of any
provision of this Agreement in any jurisdiction shall not affect the validity or
enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of this Agreement, including that provision, in any
other jurisdiction.
Section 22.6. Section Headings. The article and section headings of this
Agreement are for convenience of reference only and are not to be considered in
construing this Agreement.
Section 22.7. Integration. This Agreement constitutes the full and entire
understanding and agreement of the parties and supersede any and all prior
agreements, arrangements and understandings relating to the subject matters
hereof and thereof.
Section 22.8. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which shall
together constitute one and the same instrument.
Section 22.9. Specific Performance. In the event of a breach or a
threatened breach by any party to this Agreement of its obligations under this
Agreement, any party injured or to be injured by such breach will be entitled to
specific performance of its rights under this Agreement or to injunctive relief,
in
-16-
addition to being entitled to exercise all rights provided in this Agreement and
granted by law. The parties agree that the provisions of this Agreement shall be
specifically enforceable, it being agreed by the parties that the remedy at law,
including monetary damages, for objection in any action for specific performance
or injunctive relief that a remedy at law would be adequate is waived.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
[NEXTLINK COMMUNICATIONS, INC.]
By:
Name:
Title:
[NM ACQUISITION CORP.]
By:
Name:
Title:
EAGLE RIVER INVESTMENTS, L.L.C.
By:
Name:
Title:
-17-
