AGREEMENT AND PLAN OF MERGER
BY AND AMONG
ACC CORP.,
ACC ACQUISITION-BLUE CORP.,
AND
US WATS, INC.
Dated as of October 28, 1997
TABLE OF CONTENTS
ARTICLE I DEFINITIONS ...................................................... 1
ARTICLE II THE MERGER ..................................................... 8
Section 2.1 The Merger................................................... 8
Section 2.2 Closing; Effective Time of the Merger........................ 8
Section 2.3 Effects of Merger; Certificate of Incorporation and By-Laws.. 8
Section 2.4 Directors and Officers ...................................... 9
Section 2.5 Additional Actions .......................................... 9
ARTICLE III CONVERSION OF SECURITIES...................................... 10
Section 3.1 Conversion of Capital Stock.................................. 10
Section 3.2 Exchange of Certificates..................................... 14
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF USW........................... 17
Section 4.1 Organization, Standing and Power; Qualification; Entities.... 17
Section 4.2 Organization, Standing and Power and Qualification of the
USW Entities................................................. 18
Section 4.3 USW Capital Structure........................................ 18
Section 4.4 Power and Authority; Non-Contravention; Filings
and Consents................................................. 19
Section 4.5 USW SEC Documents; Financial Information..................... 20
Section 4.6 Related Party Transactions................................... 21
Section 4.7 Accounts Receivable.......................................... 21
Section 4.8 Absence of Certain Changes or Events......................... 22
Section 4.9 Taxes........................................................ 24
Section 4.10 Tangible Assets and Real Property............................ 25
Section 4.11 Intellectual Property........................................ 26
Section 4.12 Contracts.................................................... 28
Section 4.13 Labor Matters................................................ 29
Section 4.14 Environmental Matters........................................ 29
Section 4.15 Employee Benefit Plans....................................... 30
Section 4.16 Compliance with Laws......................................... 32
Section 4.17 Litigation................................................... 32
Section 4.18 Indemnification Claims....................................... 32
Section 4.19 Restrictions on Business Activities.......................... 33
Section 4.20 Governmental Authorization................................... 33
Section 4.21 Insurance.................................................... 33
Section 4.22 Payments Resulting from Mergers.............................. 33
Section 4.23 Pooling of Interests......................................... 34
Section 4.24 Power of Attorney............................................ 34
Section 4.25 Certain Documents............................................ 34
Section 4.26 Vote Required................................................ 34
ARTICLE VREPRESENTATIONS AND WARRANTIES OF ACC AND SUB....................... 34
Section 5.1 Organization................................................. 34
Section 5.2 ACC Capital Structure........................................ 35
Section 5.3 Power and Authority; Non-Contravention; Required Filings
and Consents................................................. 35
Section 5.4 SEC Filings; Financial Statements............................ 36
Section 5.5 Absence of Undisclosed Liabilities........................... 37
Section 5.6 Absence of Certain Changes or Events......................... 37
Section 5.7 Interim Operations of Sub.................................... 38
Section 5.8 Pooling of Interests......................................... 38
Section 5.9 Litigation................................................... 38
ARTICLE VI CONDUCT OF BUSINESS.............................................. 38
Section 6.1 Covenants of USW............................................. 38
Section 6.2 Cooperation.................................................. 41
ARTICLE VII ADDITIONAL AGREEMENTS........................................... 41
Section 7.1 No Solicitation.............................................. 41
Section 7.2 Registration Statement; Information Statement................ 42
Section 7.3 Governmental Filings......................................... 43
Section 7.4 Consents..................................................... 44
Section 7.5 Access to Information 44
Section 7.6 Legal Conditions to Merger................................... 44
Section 7.7 Tax-Free Reorganization 44
Section 7.8 Pooling Accounting........................................... 45
Section 7.9 Affiliate Agreements......................................... 45
Section 7.10 Stock Options................................................ 45
Section 7.11 Registration................................................. 46
Section 7.12 Expenses..................................................... 46
Section 7.13 Brokers or Finders........................................... 46
Section 7.14 Voting Agreements............................................ 47
Section 7.15 Indemnification and Insurance................................ 47
Section 7.16 Additional Agreements; Reasonable Efforts.................... 48
Section 7.17 Notification of Certain Matters.............................. 49
Section 7.18 Meeting of USW Shareholders.................................. 49
Section 7.19 Confidentiality.............................................. 49
Section 7.20 Public Disclosures........................................... 50
Section 7.21 Resignation of Directors and Officers........................ 50
Section 7.22 Cooperation.................................................. 50
Section 7.23 Noncompete and Nonsolicitation Agreement..................... 50
Section 7.24 SEC and Stockholder Filings.................................. 51
Section 7.25 Takeover Statutes............................................ 51
Section 7.26 Nasdaq Notice of Listing of Additional Shares................ 51
Section 7.27 Filing of Financial Results.................................. 51
ARTICLE VIII CONDITIONS TO MERGER........................................... 51
Section 8.1 Conditions to Each Party's Obligation to Effect the Merger... 51
Section 8.2 Additional Conditions to Obligations of ACC and Sub.......... 52
Section 8.3 Additional Conditions to Obligations of USW.................. 53
ARTICLE IX TERMINATION AND AMENDMENT........................................ 54
Section 9.1 Termination.................................................. 54
Section 9.2 Effect of Termination........................................ 54
Section 9.3 Amendment.................................................... 55
Section 9.4 Extension; Waiver............................................ 55
ARTICLE X CONFIDENTIALITY AND NON-DISCLOSURE................................ 55
Section 10.1 Evaluation Material.......................................... 55
Section 10.2 Use of Evaluation Material................................... 56
Section 10.3 Mandatory Disclosure......................................... 56
Section 10.4 Return of Evaluation Material................................ 56
Section 10.5 Injunctive Relief............................................ 57
ARTICLE XI GENERAL PROVISIONS............................................... 57
Section 11.1 Notices...................................................... 57
Section 11.2 Interpretation............................................... 58
Section 11.3 Schedules.................................................... 59
Section 11.4 Severability................................................. 59
Section 11.5 Nonsurvival of Representations, Warranties and Agreements.... 59
Section 11.6 Entire Agreement............................................. 59
Section 11.7 Governing Law................................................ 59
Section 11.8 Assignment................................................... 60
Section 11.9 Third Party Beneficiary...................................... 60
Section 11.10 No Rule of Construction..................................... 60
Section 11.11 Counterparts................................................ 60
Exhibits
Exhibit A Form of Pooling Letter
Exhibit B Form of Affiliate Agreement
Exhibit C Form of Non-Compete/Non-Solicitation Agreement
Exhibit D Shareholder Tender Agreement
Schedules
Schedule 5.2(a) ACC Capital Structure
Schedule 5.3(b)(ii) Non-Contravention
Schedule 5.5 Undisclosed Liabilities
Schedule 7.23
Schedule 8.2(k) Disclosure Documents List
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated
as of October 28, 1997, by and among ACC Corp., a Delaware
corporation ("ACC"), ACC Acquisition-Blue Corp., a Delaware
corporation and a wholly-owned subsidiary of ACC ("Sub"), and US
WATS, Inc., a New York corporation ("USW").
WHEREAS, the Boards of Directors of ACC, Sub and USW
each (i) deem it advisable and in the best interests of each
corporation and its respective stockholders and shareholders that
ACC and USW combine, and (ii) have approved the execution,
delivery and performance of this Agreement, the Merger (as
defined in Section 2.1) and the other transactions contemplated
by this Agreement, subject to authorization by resolution of the
shareholders of USW and to the other terms and conditions set
forth in this Agreement;
WHEREAS, the combination of ACC and USW shall be
effected by the terms of this Agreement through a transaction in
which Sub will merge with and into USW, USW will become a
wholly-owned subsidiary of ACC and the USW shareholders will
become stockholders of ACC;
WHEREAS, for federal income tax purposes, it is
intended that the Merger shall qualify as a reorganization within
the meaning of Section 368(a) of the Internal Revenue Code of
1986, as amended, and the regulations thereunder (the "Code");
and
WHEREAS, for accounting purposes, it is intended that
the Merger shall be accounted for as a pooling of interests.
NOW, THEREFORE, in consideration of the foregoing and
the respective representations, warranties, covenants and
agreements set forth below, the parties hereto do hereby agree as
follows:
ARTICLE I
DEFINITIONS
When used in this Agreement, the following terms shall
have the meanings indicated below:
"ACC" has the meaning set forth in the first paragraph
of this Agreement.
"ACC Balance Sheet" has the meaning given such term in
Section 5.4 hereof.
"ACC Class A Common Stock" has the meaning given such
term in Section 3.1(d) hereof.
"ACC Material Adverse Effect" has the meaning given
such term in Section 5.1 hereof.
"ACC SEC Reports" has the meaning given such term in
Section 5.4( a) hereof.
"ACC Transaction Documents" has the meaning given such
term in Section 5.3(a) hereof.
"Acquisition Proposal" has the meaning given such term
in Section 7.1(a) hereof.
"Affiliate" means, with respect to any Person, any
subsidiary, officer or director of such Person and any other
Person which directly or indirectly controls, is controlled by or
is under common control with such Person, whether through the
ownership of securities, by contract or otherwise.
"Affiliate Agreement" has the meaning given such term
in Section 7.9 hereof.
"Agreement" has the meaning set forth in the first
paragraph of this Agreement.
"Average Pre-Agreement Trading Price" has the meaning
set forth in Section 3.1(g) hereof.
"Average Pre-Closing Trading Price" has the meaning set
forth in Section 3.1(g) hereof.
"Balance Sheet Date" has the meaning set forth in
Section 4.5 hereof.
"Business" means the provision of voice and data
telecommunications services as currently conducted by USW and the
USW Entities.
"Certificate" or "Certificates" have the meanings set
forth in Section 3.2(b) hereof.
"Closing" has the meaning set forth in Section 2.2
hereof.
"Closing Date" has the meaning set forth in Section 2.2
hereof.
"Code" has the meaning set forth in the recitals
hereto.
"Constituent Corporations" shall have the meaning given
such term in Section 2.3(a) hereof.
"Delaware Certificate of Merger" has the meaning set
forth in Section 2.2 hereof.
"Delaware Secretary of State" has the meaning set forth
in Section 2.2 hereof.
"DGCL" has the meaning set forth in Section 2.1 hereof.
"Disclosing Company" has the meaning set forth in
Section 10.1 hereof.
"Effective Time" has the meaning set forth in
Section 2.2 hereof.
"Environmental Laws" has the meaning set forth in
Section 4.14(b) hereof.
"Environmental Permits" has the meaning set forth in
Section 4.14(c) hereof.
"ERISA" means the Employee Retirement Income Security
Act of 1977, as amended.
"ERISA Affiliate" has the meaning set forth in
Section 4.15(c) hereof.
"Evaluation Material" has the meaning given such term
in Section 10.1 hereof.
"Exchange Act" means the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated
thereunder.
"Exchange Fund" has the meaning set forth in
Section 3.2(a) hereof.
"GAAP" means United States generally accepted
accounting principles consistently applied.
"Governing Documents" means (i) with respect to a
corporation, its articles of incorporation and Bylaws, (ii) with
respect to a limited liability company, its articles of
organization and operating agreement, (iii) with respect to a
partnership, its certificate of partnership or limited
partnership and its partnership agreement, and (iv) with respect
to any other entity, its governing documents, such as
certificates or articles of formation, trust or operating
agreements and similar documents.
"Governmental Entity" means any (i) nation, state,
commonwealth, province, territory, county, municipality, district
or other jurisdiction of any nature; (ii) federal, state, local,
municipal, foreign or other government; or (iii) governmental or
quasi-governmental authority of any nature (including any
governmental division, department, agency, commission, official,
organization, authority and any court or other tribunal).
"Hazardous Material" has the meaning set forth in
Section 4.14(a) hereof.
"HSR Act" has the meaning set forth in Section 4.4(c)
hereof.
"Indemnification Agreements" has the meaning given
such term in Section 4.18 hereof.
"Information Statement" has the meaning given such term
in Section 7.2(a) hereof.
"Initial USW Common Stock Exchange Ratio" has the
meaning given such term in Section 3.1(g) hereof.
"Licensed Intellectual Property" has the meaning given
such term in Section 4.11(b) hereof.
"Liens or Other Encumbrance" means any lien, pledge,
mortgage, security interest, claim, lease, charge, option, right
of first refusal, easement, servitude, transfer restriction under
any shareholder or other agreement or encumbrance or any other
rights of third parties.
"Merger" has the meaning set forth in Section 2.1
hereof.
"Merger Consideration" has the meaning given such term
in Section 3.1(d) hereof.
"NASDAQ" means the Nasdaq National Market.
"New York Certificate of Merger" has the meaning set
forth in Section 2.2 hereof.
"Non-Compete/Non-Solicitation Agreement" has the
meaning set forth in Section 7.23 hereof.
"NYBCL" has the meaning set forth in Section 2.1
hereof.
"Other Filings" has the meaning set forth in
Section 7.3 hereof.
"Person" means and includes an individual, a
corporation, a partnership, a limited liability company, a
limited liability partnership, a joint venture, a trust, an
unincorporated association, a Governmental Entity or any other
entity, wherever located or organized.
"Receiving Party" has the meaning set forth in
Section 10.1 hereof.
"Registration Statement" has the meaning given such
term in Section 7.2(a) hereof.
"Representatives" has the meaning given such term in
Section 10.2.
"Returns" has the meaning given such term in
Section 4.9 hereof.
"Rule 145" has the meaning given such term in
Section 7.9 hereof.
"SEC" has the meaning set forth in Section 4.4(c)
hereof.
"Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Shareholder Tender Agreement" has the meaning set
forth in Section 7.14 hereof.
"Sub" has the meaning set forth in the first paragraph
of this Agreement.
"Subsidiary" means, with respect to any entity, any
corporation, partnership or limited liability company, at least a
majority of the securities or other interests having by their
terms ordinary voting power to elect a majority of the Board of
Directors or others performing similar functions with respect to
such corporation or other organization is directly or indirectly
owned or controlled by such entity or by any one or more of its
Subsidiaries, or by such entity and one or more of its
Subsidiaries.
"Surviving Corporation" has the meaning given such term
in Section 2.3(a) hereof.
"Takeover Statute" has the meaning set forth in
Section 7.25 hereof.
"Transfer Agent" has the meaning set forth in
Section 3.2(a) hereof.
"USW" has the meaning set forth in the first paragraph
of this Agreement.
"USW Affiliate" has the meaning given such term in
Section 7.9 hereof.
"USW Aggregate Value" has the meaning set forth in
Section 3.1(g).
"USW Authorizations" has the meaning set forth in
Section 4.20 hereof.
"USW Balance Sheet" has the meaning set forth in
Section 4.5 of this Agreement.
"USW Benefit Plans" has the meaning set forth in
Section 4.15(a) hereof.
"USW Capital Stock" has the meaning given such term in
Section 3.1(d)(ii) hereof.
"USW Common Stock" has the meaning given such term in
Section 3.1(d)(i) hereof.
"USW Common Stock Exchange Ratio" has the meaning given
such term in Section 3.1(g) hereof.
"USW Components" has the meaning given such term in
Section 4.11(e) hereof.
"USW Convertible Securities" has the meaning given such
term in Section 3.1(d) hereof.
"USW Disclosure Letter" has the meaning given such term
in Article IV hereof.
"USW Entity" or "USW Entities" means any corporation,
limited liability company, partnership, limited partnership or
other organization, whether incorporated or unincorporated,
(i) of which at least a majority of the securities or interests
having by the terms thereof ordinary voting power to elect at
least a majority of the Board of Directors or others performing
similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by USW
and/or by any one or more of the USW Entities, (ii) of which USW
or any one or more of the USW Entities is the general partner or
managing member or (iii) which USW or any one or more of the USW
Entities otherwise controls.
"USW Financial Statements" has the meaning given such
term in Section 4.5 hereof.
"USW Fully Diluted Shares" has the meaning given such
term in Section 3.1(g).
"USW Intellectual Property Rights" has the meaning
given such term in Section 4.11(a) hereof.
"USW Material Adverse Effect" has the meaning given
such term in Section 4.1 hereof.
"USW Per Share Price" has the meaning given such term
in Section 3.1(g) hereof.
"USW Preferred Stock" has the meaning given such term
in Section 3.1(d)(ii) hereof.
"USW Product" has the meaning given such term in
Section 4.11(b) hereof.
"USW SEC Documents" has the meaning given such term in
Section 4.5 hereof.
"USW Shareholder Consents" has the meaning given such
term in Section 7.2(a) hereof.
"USW Shareholders Meeting" has the meaning given such
term in Section 7.18 hereof.
"USW Stock Options" has the meaning given such term in
Section 3.1(e) hereof.
"USW Transaction Documents" has the meaning given such
term in Section 4.4(a) hereof.
"USW Warrant" has the meaning given such term in
Section 3.1(f) hereof.
"Voting Agreements" has the meaning given such term in
Section 7.14 hereof.
ARTICLE II
THE MERGER
Section 2.1 The Merger. Upon the terms
and subject to the conditions set forth in this Agreement and in
accordance with the New York Business Corporation Law (the
"NYBCL") and the Delaware General Corporation Law (the "DGCL"),
Sub shall be merged with and into USW (the "Merger"). At the
Effective Time, as defined in Section 2.2 hereof, the outstanding
shares of capital stock of Sub and USW shall be converted or
cancelled in the manner provided in Article III of this
Agreement; the separate corporate existence of Sub shall cease;
and USW shall be the surviving corporation in the Merger and
shall become a wholly-owned subsidiary of ACC.
Section 2.2 Closing; Effective Time of the
Merger. The closing of the Merger (the "Closing") will take
place at 10:00 a.m., New York time, on a date to be specified by
ACC and USW, which shall be no later than the third business day
after satisfaction (or waiver in accordance with Section 9.4) of
all conditions set forth in Article VIII, at the offices of
Nixon, Hargrave, Devans & ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, unless another date or place is agreed to in
writing by ACC and USW. It is the intent of the parties that the
Closing occur, and the Merger become effective, on or before
January 31, 1998, or as promptly as practicable thereafter.
Subject to the provisions of this Agreement, (i) a Certificate of
Merger (the "New York Certificate of Merger") shall be duly
prepared, executed and acknowledged by Sub and by USW as the
Surviving Corporation (as defined in Section 2.3(a)) and
simultaneously with or immediately prior to the Closing delivered
to the Secretary of State of the State of New York (the "New York
Secretary of State") for filing, and (ii) a Certificate of Merger
(the "Delaware Certificate of Merger") shall be duly prepared,
executed and acknowledged by USW and Sub and simultaneously with
or as soon as practicable following the Closing delivered to the
Secretary of State of the State of Delaware (the "Delaware
Secretary of State") for filing.
The Merger shall become effective upon the latest of:
(a) the date and time of the filing of the New York Certificate
of Merger with the New York Secretary of State, (b) the date and
time of the filing of the Delaware Certificate of Merger with the
Delaware Secretary of State or (c) such other date and time as is
provided in the New York Certificate of Merger (the "Effective
Time"). The date on which the Effective Time occurs in herein
referred to as the "Closing Date."
Section 2.3 Effects of Merger; Certificate
of Incorporation and By-Laws.
(a) At the Effective Time: (i) the separate existence
of Sub shall cease and Sub shall be merged with and into USW (Sub
and USW are sometimes referred to collectively herein as the
"Constituent Corporations" and USW is sometimes referred to
herein as the "Surviving Corporation"); (ii) the Certificate of
Incorporation and Bylaws of Sub as in effect immediately prior to
the Effective Time shall be the Certificate of Incorporation and
Bylaws of the Surviving Corporation until amended in accordance
with the terms thereof and in accordance with applicable law.
(b) The Merger shall have the effects set forth in
this Agreement and in the NYBCL and the DGCL. Without limiting
the generality of the foregoing, from and after the Effective
Time, the Surviving Corporation shall possess all the rights,
privileges, powers and franchises of a public as well as of a
private nature, and be subject to all the restrictions,
disabilities and duties of each of the Constituent Corporations;
and all and singular rights, privileges, powers and franchises of
each of the Constituent Corporations, and all property, real,
personal and mixed, and all debts due to either of the
Constituent Corporations on whatever account, as well as for
stock subscriptions and all other things in action or belonging
to each of the Constituent Corporations, shall be vested in the
Surviving Corporation, and all property, rights, privileges,
powers and franchises, and all and every other interest shall be
thereafter as effectually the property of the Surviving
Corporation as they were of the Constituent Corporations, and the
title to any real estate vested by deed or otherwise, in either
of the Constituent Corporations, shall not revert or be in any
way impaired; but all rights of creditors and all liens upon any
property of either of the Constituent Corporations shall be
preserved unimpaired, and all debts, liabilities and duties of
the Constituent Corporations shall thereafter attach to the
Surviving Corporation, and may be enforced against it to the same
extent as if such debts and liabilities had been incurred by it.
Section 2.4 Directors and Officers. The
directors and officers of Sub immediately prior to the Effective
Time shall be the initial directors and officers of the Surviving
Corporation, and shall hold office until their respective
successors are duly elected or appointed.
Section 2.5 Additional Actions. If, at
any time after the Effective Time, USW shall consider or be
advised that any deeds, bills of sale, assignments, assurances or
any other actions or things are necessary or desirable to vest,
perfect or confirm of record or otherwise in USW its right, title
or interest in, to or under any of the rights, properties or
assets of Sub or otherwise to carry out this Agreement, the
officers and directors of USW shall be authorized to execute and
deliver, in the name and on behalf of Sub, all such deeds, bills
of sale, assignments and assurances and to take and do, in the
name and on behalf of Sub, all such other actions and things as
may be necessary or desirable to vest, perfect or confirm any and
all right, title and interest in, to and under such rights,
properties or assets in USW as the Surviving Corporation or
otherwise to carry out this Agreement.
ARTICLE III
CONVERSION OF SECURITIES
Section 3.1 Conversion of Capital Stock.
At the Effective Time, by virtue of the Merger and without any
action on the part of the Constituent Corporations or any holder
of any shares of USW Capital Stock (as defined in
Section 3.1(d)(ii)) or capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding
share of the capital stock of Sub shall be converted into and
become one fully paid and nonassessable share of Common Stock of
the Surviving Corporation. Such one share of common stock of the
Surviving Corporation shall constitute all of the issued and
outstanding capital stock of the Surviving Corporation and shall
be owned by ACC.
(b) Cancellation of ACC-Owned Stock. All shares of
USW Capital Stock that are owned by ACC, Sub or any other
wholly-owned subsidiary of ACC shall be cancelled and retired and
shall cease to exist and no stock of ACC or other consideration
shall be delivered in exchange therefor.
(c) USW Treasury Stock. Each share of USW Capital
Stock held in the treasury of USW or by a wholly owned subsidiary
of USW shall be cancelled as of the Effective Time and no Merger
Consideration shall be payable with respect thereto.
(d) USW Capital Stock. The shares of USW Capital
Stock which are issued and outstanding at the Effective Time
(other than shares to be cancelled in accordance with
Section 3.1(b)) shall be converted, in the aggregate, into the
right to receive the number of shares of Class A common stock,
$.015 par value, of ACC ("ACC Class A Common Stock"), set forth
in Section 3.1(g) (the "Merger Consideration"). Subject to the
foregoing limitations and any applicable backup or other
withholding requirements, each such issued and outstanding share
of USW Capital Stock shall be converted into the consideration
set forth below:
(i) Each share of USW Common Stock, par value
$.001 per share (the "USW Common Stock"), which is
issued and outstanding as of the Effective Time (other
than shares to be cancelled in accordance with
Section 3.1(b) and other than Dissenting Shares (as
defined in Section 3.1(i))) shall be converted into the
right to receive a fraction of a fully paid and
non-assessable share of ACC Class A Common Stock that
is equal to one multiplied by the USW Common Stock
Exchange Ratio; and
(ii) Each share of USW 9% Series Convertible
Preferred Stock, par value $.01 per share (the "USW
Preferred Stock" and, collectively with the USW Common
Stock, "USW Capital Stock"), which is issued and
outstanding as of the Effective Time (other than shares
to be cancelled in accordance with Section 3.1(b) and
other than Dissenting Shares) shall be converted
pursuant to its terms into USW Common Stock and
immediately thereafter converted into ACC Class A
Common Stock as provided in Section 3.1(d)(i) above.
All such shares of USW Capital Stock, when so
converted, shall no longer be outstanding and shall automatically
be cancelled 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 shares of ACC Class A Common Stock upon the surrender
of such certificate in accordance with Section 3.2, with
out interest.
(e) USW Stock Options. All then outstanding options to
acquire Capital Stock of USW, whether vested or unvested ("USW
Stock Options") shall be assumed by ACC in accordance with
Section 7.10.
(f) Warrant Conversion. Each warrant to acquire shares
of USW Capital Stock (each a "USW Warrant"), which is outstanding
at the Effective Time and which has not theretofore been
exercised, shall be treated as if such USW Warrant had been
exercised immediately prior to the Effective Time, and as if the
price for such USW Warrant exercise has been paid by subtracting
from the number of shares issuable upon the exercise of such USW
Warrant that number of shares of USW Capital Stock that equals in
value the aggregate price to be paid for such exercise, as
calculated using the USW Per Share Price.
(g) Merger Consideration. Subject to the provisions
of Section 3.1(h), Merger Consideration shall be the USW Common
Stock Exchange Ratio times (the number of shares of USW Common
Stock outstanding at the Effective Time plus the number of shares
of USW Common Stock issuable upon the conversion of all
outstanding shares of USW Preferred Stock and the number of
shares of USW Common Stock issuable pursuant to Section 3.1(f)
hereof) calculated in the following manner and using the
following definitions:
"Average Pre-Agreement Trading Price" means the average
of the daily closing prices per share of ACC Class A Common
Stock, as quoted by NASDAQ as reported in The Wall Street
Journal, Eastern Edition, or if not reported thereby, The New
York Times, for the twenty consecutive full NASDAQ trading days
ending on the third full NASDAQ trading day immediately
preceding the date of this Agreement.
"Average Pre-Closing Trading Price" means the average
of the daily closing prices per share of ACC Class A Common
Stock, as quoted by NASDAQ as reported in The Wall Street
Journal, Eastern Edition, or if not reported thereby, The New
York Times, for the twenty consecutive full NASDAQ trading days
ending on the third full NASDAQ trading day immediately preceding
the Closing Date.
"USW Aggregate Value" shall be $46 million + the
aggregate exercise price to be paid upon exercise of all
outstanding options + the aggregate exercise price of all
warrants.
"USW Fully Diluted Shares" shall equal the number of
shares of USW Common Stock outstanding + the number of shares
issuable upon the exercise of outstanding options + the number
of shares issuable upon the exercise of USW Warrants + the number
of shares of USW Common Stock issuable upon conversion of all
outstanding shares of USW Preferred Stock.
"USW Per Share Price" shall equal USW Aggregate
Value/USW Fully Diluted Shares.
(i) The "Initial USW Common Stock Exchange Ratio"
shall equal:
USW Per Share Price
Divided by
the Average Pre-Agreement Trading Price.
(ii) The Initial USW Common Stock Exchange Ratio will
be adjusted at Closing (as adjusted, the "USW Common
Stock Exchange Ratio") using the following formulae:
(A) If (x) the positive difference between the
Average Pre-Closing Trading Price and the Average
Pre-Agreement Trading Price is 10% or less or (y)
the negative difference between the Average Pre-
Closing Trading Price and the Average Pre-
Agreement Trading Price is 15% or less, the USW
Common Stock Exchange Ratio shall equal:
USW Per Share Price
Divided by
The Average Pre-Closing Trading Price.
(B) If the Average Pre-Closing Trading Price
represents an increase of 10% or more over the
Average Pre-Agreement Trading Price, the USW
Common Stock Exchange Ratio shall equal:
(USW Aggregate Value + ($46 million x 0.5 x
(that amount, but no more than 20%, representing
the amount by which the percentage difference in
stock price exceeds 10% ))) /USW Fully Diluted
Shares
Divided by
The Average Pre-Closing Trading Price.
(C) If the Average Pre-Closing Trading Price
represents a decrease of 15% or more over the
Average Pre-Agreement Trading Price, the USW
Common Stock Exchange Ratio shall equal:
USW Per Share Price x 115%
Divided by
The Average Pre-Agreement Trading Price.
(h) Adjustments.
(i) If between the date of this Agreement and the
Effective Time, the outstanding shares of ACC Class A
Common Stock or USW Capital Stock shall have been
changed into a different number of shares or a
different class or series by reason of any
reclassification, recapitalization, split-up, stock
dividend, stock combination, exchange of shares,
readjustment or otherwise, then the USW Common Stock
Exchange Ratio shall be correspondingly adjusted;
provided, however, that no adjustment shall be made
with respect to a change in USW Capital Stock unless
such changes have been made in compliance with the
requirements of Section 6.1 or the requirements thereof
have been waived by ACC.
(ii) In addition, except as contemplated by
subsection (iii) below, (A) for each liability of USW,
that (I) was not reflected on the USW Balance Sheet and
was required under GAAP to be reflected on the USW
Balance Sheet, (II) was not disclosed on the USW
Disclosure Letter or (III) was not incurred in the
ordinary course of USW's Business and that is
identified by ACC in writing to USW prior to Closing
(an "Undisclosed Liability"), to the extent that such
Undisclosed Liability exceeds $50,000 and the total of
such Undisclosed Liabilities in the aggregate does not
exceed $250,000, the USW Aggregate Value shall be
adjusted down by the amount of such excess of such
items over $50,000. For Undisclosed Liabilities that
in the aggregate exceed $250,000, the USW Aggregate
Value shall be adjusted down by the amount of such
excess; provided, however, that (B) for each
Undisclosed Liability of USW relating to the matters
addressed by Section 4.9 hereof, the USW Aggregate
Value shall be adjusted down by the amount of such
Undisclosed Liability, without regard to any deductible
provided for in subsection (ii)(A) hereof. The
adjustments provided for in subsections (ii)(A) and (B)
hereof shall not be exclusive but shall be in addition
to all other rights and remedies of ACC.
(iii) In addition to the foregoing,
the following adjustments shall apply:
(A) With respect to the
litigation described in paragraph 1 of
Section 4.17 of the USW Disclosure Letter
(the "Litigation") , (I) if such Litigation
is settled prior to the Closing for any
amount up to and including $1,000,000, the
USW Aggregate Value shall be reduced by the
amount of such settlement and (II) if such
Litigation is not settled prior to the
Closing, the USW Aggregate Value shall be
reduced by $1,000,000.
(B) If the default referenced
in Section 4.12(c) of the USW Disclosure
Letter is not cured, if permitted to be cured
by the agreement referenced therein, prior to
Closing or waived, together with any
penalties relating thereto, by the other
party to such agreement , then the USW
Aggregate Value shall be reduced by $200,000.
(C) If USW shall settle the
litigation brought by it against U.S West
prior to Closing, such settlement amount,
including any attorneys' fees included
therein for periods prior to and including
October 31, 1997, shall be an offset against
the amounts, if any, in subsections (iii)(A)
and (B) hereof by which the USW Aggregate
Value shall be reduced.
(i) Dissenting Shares. Notwithstanding any provision
of this Agreement to the contrary, each outstanding share of USW
Capital Stock held by a holder exercising dissenter's, appraisal
or other similar rights ("Dissenter's Rights") with respect to
such shares pursuant to Sections 910 and 623 or other applicable
provisions of the NYBCL, who has not effectively withdrawn or
lost such rights (a "Dissenting Share"), shall not be converted
into or represent a right to receive shares of ACC Class A Common
Stock pursuant to this Article III, but the holder thereof shall
be entitled only to such rights as are granted by the applicable
provisions of the NYBCL; provided, however, that each Dissenting
Share held by a person at the Effective Time who shall, after the
Effective Time, lose such Dissenter's Rights or withdraw such
demand for appraisal or payment of fair market value pursuant to
the NYBCL, shall be deemed to be converted, as of the Effective
Time, into the right to receive shares of ACC Class A Common
Stock pursuant to this Article III. USW shall give ACC
(i) prompt notice and copies of all notices of dissent, demands
for appraisal or payment of fair market value, withdrawals of
demands for appraisal or payment of fair market value, and other
instruments received by USW relating to the exercise of
Dissenter's Rights received by USW and (ii) the opportunity to
direct all negotiations and proceedings with respect thereto
under the NYBCL. USW will not, except with the prior written
consent of ACC, voluntarily make any payment with respect to any
demands for appraisal or payment of fair market value and will
not, except with the prior written consent of ACC, settle or
offer to settle any such demands.
Section 3.2 Exchange of Certificates. The
procedures for exchanging outstanding shares of USW Capital Stock
for ACC Class A Common Stock pursuant to the Merger are as
follows:
(a) Transfer Agent. As of the Effective Time, ACC
shall deposit with a transfer agent designated by ACC, reasonably
acceptable to USW (the "Transfer Agent"), for the benefit of the
holders of shares of USW Capital Stock, for exchange in
accordance with Article III of this Agreement, through the
Transfer Agent, certificates representing the Merger
Consideration (such shares of ACC Class A Common Stock, together
with any dividends or distributions with respect thereto, being
hereinafter referred to as the "Exchange Fund") issuable pursuant
to Article III of this Agreement in exchange for outstanding
shares of USW Capital Stock.
The Transfer Agent shall not be entitled to vote or
exercise any rights of ownership with respect to the ACC Class A
Common Stock held by it from time to time hereunder.
(b) Exchange Procedures. As soon as reasonably
practicable after the Effective Time, the Transfer Agent shall
mail to each holder of record of a certificate or certificates
which immediately prior to the Effective Time represented
outstanding shares of USW Capital Stock (each a "Certificate" and
collectively, the "Certificates") whose shares were converted
pursuant to Article III of this Agreement into the right to
receive shares of ACC Class A Common Stock (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 Transfer Agent and shall
be in such form and have such other provisions as ACC and USW may
reasonably specify) and (ii) instructions for use in effecting
the surrender of the Certificates in exchange for certificates
representing shares and/or fractions of shares of ACC Class A
Common Stock. Upon surrender of a Certificate for cancellation
to the Transfer Agent or to such other agent or agents reasonably
acceptable to USW as may be appointed by ACC, together with such
letter of transmittal, duly executed, and such other documents as
may be reasonably required by the Transfer Agent, the holder of
such Certificate shall be entitled to receive in exchange
therefor a certificate representing that number of shares and/or
fractions of shares of ACC Class A Common Stock which such holder
has the right to receive pursuant to the provisions of
Section 3.1 (with any fraction of a share rounded in accordance
with Section 3.2(e)), and the Certificate so surrendered shall
immediately be cancelled.
Until surrendered as contemplated by this Section 3.2,
each Certificate shall be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender
the certificate representing shares of ACC Class A Common Stock
as contemplated by this Section 3.2.
(c) Distributions with Respect to Unexchanged Shares.
No dividends or other distributions declared or made after the
Effective Time with respect to ACC Class A Common Stock with a
record date after the Effective Time shall be paid to the holder
of any unsurrendered Certificate with respect to the shares of
ACC Class A Common Stock represented thereby until the holder of
record of such Certificate shall surrender such Certificate.
Subject to the effect of applicable laws, following surrender of
any such Certificate, there shall be paid to the record holder of
the certificates representing shares and/or fractions of shares
of ACC Class A Common 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 previously paid with respect to such shares of ACC
Class A Common Stock, 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 surrender and a payment
date subsequent to surrender payable with respect to such shares
of ACC Class A Common Stock.
(d) No Further Ownership Rights in USW Capital Stock.
All shares of ACC Class A Common Stock issued upon the surrender
for exchange of shares of USW Capital Stock in accordance with
the terms hereof shall be deemed to have been issued in full
satisfaction of all rights pertaining to such shares of USW
Capital Stock, 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 USW on such shares of USW Capital Stock
in accordance with the terms of this Agreement on or prior to the
date hereof and 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 USW
Capital Stock which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are
presented to the Surviving Corporation for any reason, they shall
be cancelled and exchanged as provided in this Section 3.2.
(e) No Fractional Shares. No fractional shares of ACC
Common Stock shall be issued pursuant to the Merger nor will any
fractional share interest involved entitle the holder thereof to
vote, to receive dividends or to exercise any other rights of a
shareholder of ACC. In lieu thereof, any Person who would
otherwise be entitled to a fractional share of ACC Common Stock
pursuant to the provisions hereof shall receive an amount in cash
equal to the value of such fractional share. The value of such
fractional share shall be the product of such fraction multiplied
by the Average Pre-Closing Trading Price, subject to appropriate
adjustment in the event of a stock split, stock dividend or
recapitalization after the date of this Agreement applicable to
shares of ACC Common Stock and not reflected in the Average Pre-
Closing Trading Price.
(f) Termination of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the shareholders of
USW for one year after the Effective Time shall be delivered to
ACC, upon demand, and any former shareholders of USW who have not
previously complied with this Section 3.2 shall thereafter look
only to ACC for payment of their claim for ACC Class A Common
Stock, and any dividends or distributions with respect to ACC
Class A Common Stock.
(g) No Liability. Neither the Transfer Agent, nor
ACC, Sub or USW shall be liable to any holder of shares of USW
Capital Stock or ACC Class A Common Stock, as the case may be,
with respect to any shares of ACC Class A Common Stock (or
dividends or distributions with respect thereto) delivered to a
public official pursuant to any applicable abandoned property,
escheat or similar law.
(h) Lost, Stolen or Destroyed Certificates. In the
event any Certificates shall have been lost, stolen or destroyed,
the Transfer Agent shall issue in exchange for such lost, stolen
or destroyed Certificates, upon the making of an affidavit of
that fact by the holder thereof and the delivery of such bond as
the Transfer Agent may reasonably require, such shares of ACC
Class A Common Stock and any dividends or other distributions
with respect to ACC Class A Common Stock to which such holder is
entitled.
(i) Transfer Taxes. No transfer taxes shall be payable
by any shareholder of USW in respect of the issuance of the ACC
Class A Common Stock under this Section 3.2, except that if any
ACC Class A Common Stock is to be issued in a name other than
that in which the Certificate surrendered has been registered, it
shall be a condition of such issuance that the person requesting
such issuance shall pay to ACC any transfer taxes payable by
reason thereof, or of any prior transfer of such surrendered
certificate, or establish to the satisfaction of ACC that such
taxes have been paid or are not payable.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF USW
Except as set forth in the disclosure schedule
delivered by USW to ACC and Sub on or before the date of this
Agreement (which disclosure schedule shall be organized into
numbered sections corresponding with the section numbers of this
Agreement) (the "USW Disclosure Letter"), USW represents and
warrants to ACC and Sub as follows:
Section 4.1 Organization, Standing and
Power; Qualification; Entities. USW is a corporation duly
organized, validly existing and in good standing under the laws
of the State of New York. USW has all requisite corporate power
and authority to own, lease, operate and transfer its properties
and to carry on its business as currently being conducted and as
currently proposed to be conducted. USW is duly qualified to do
business and is in good standing in each jurisdiction in which
the failure to be so qualified and in good standing could have a
material adverse effect on the business, assets (including
intangible assets), properties, liabilities (contingent or
otherwise), financial condition, operations, or results of
operations of USW taken together with the USW Entities as a whole
(a "USW Material Adverse Effect"). Section 4.1 of the USW
Disclosure Letter sets forth a complete and accurate list of all
USW Entities and their jurisdiction of incorporation or
organization and qualification or license, and a description of
the interest of USW in each such entity. Except for the
interests in the USW Entities listed in Section 4.1 of the USW
Disclosure Letter, USW does not directly or indirectly own any
equity or similar interest in, or any interest convertible or
exchangeable or exercisable for any equity or similar interest
in, any corporation, partnership, limited liability company,
joint venture or other business association or entity. USW has
delivered true and correct copies of the Certificate of
Incorporation and By-laws of USW, each as amended to date, to
ACC. USW is not in violation of any of the provisions of its
Certificate of Incorporation or By-laws.
Section 4.2 Organization, Standing and
Power and Qualification of the USW Entities. Each of the USW
Entities is duly organized, validly existing and in good standing
under the laws of its state of formation; has all requisite
corporate or other power to own, lease and operate its properties
and to carry on its business as currently being conducted and as
currently proposed to be conducted; is duly qualified to do
business and is in good standing in each jurisdiction in which
the failure to be so qualified and in good standing could have a
USW Material Adverse Effect. USW will, by the Closing Date, have
delivered to ACC true and correct copies of the Governing
Documents of each of the USW Entities, each as amended to date;
and none of the USW Entities is in violation of any of the
provisions of its Governing Documents.
Section 4.3 USW Capital Structure.
(a) The authorized capital stock of USW consists of
30,000,000 shares of USW Common Stock, par value $.001 per share
and 1,000,000 shares of preferred stock, par value $.001 per
share. As of the date of this Agreement,
(i) 15,989,100 shares of USW Common Stock and
30,000 Shares of USW Preferred Stock are issued and
outstanding, all of which are validly issued, fully
paid and nonassessable;
(ii) 250,000 shares of USW Common Stock are held
by USW as treasury shares;
(iii) no shares of USW Common Stock are held by any
of the USW Entities;
(iv) options to purchase an aggregate of
3,026,000 shares of USW Common Stock; and
(v) 1,188,000 shares of USW Common Stock are
reserved for issuance pursuant to certain outstanding
warrants; and
(vi) 300,000 shares of USW Common Stock are
reserved for issuance upon conversion of USW Preferred
Stock.
Section 4.3(a) of the USW Disclosure Letter sets forth a complete
and accurate list of all outstanding options, warrants and other
securities exercisable for or convertible into shares of USW
Capital Stock (together with a vesting schedule and the exercise
price of each option grant) as of October 23, 1997 and no
additional USW stock options have been issued or granted since
such date. All shares of USW Common Stock and USW Preferred
Stock subject to issuance as specified above, upon issuance on
the terms and conditions specified in the instruments pursuant to
which they are issuable, shall be duly authorized, validly
issued, fully paid and nonassessable. There are no obligations,
contingent or otherwise, of USW or any of the USW Entities to
repurchase, redeem or otherwise acquire any shares of USW Capital
Stock or the capital stock of any of the USW Entities or make any
investment (in the form of a loan, capital contribution or
otherwise) in any of the USW Entities or any other entity. All
of the outstanding shares of capital stock or other equity
interests of each of the USW Entities are duly authorized,
validly issued, fully paid and nonassessable, and all such shares
or equity interests are owned by USW free and clear of all
security interests, liens, claims, pledges, agreements,
limitations on USW's voting rights, charges or other encumbrances
of any nature. Except as set forth in Section 4.3 of the USW
Disclosure Letter, there are no outstanding USW debt securities
or other agreements or instruments issued by USW entitling the
holders thereof or parties thereto to vote or to direct or
otherwise restrict the vote of the holders of shares of USW
Common Stock or USW Preferred Stock or which are convertible into
or exchangeable for capital stock of USW.
(b) Except as set forth in Section 4.3(a), there are
no equity securities of any class of USW or any of the USW
Entities, or any security exchangeable into or exercisable for
such equity securities, issued, reserved for issuance or
outstanding. Except as set forth in Section 4.3(a), there are no
options, warrants, equity securities, calls, rights, commitments
or agreements of any character to which USW or any of the USW
Entities is a party or by which it is bound obligating USW or any
of the USW Entities to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock of
USW or any of the USW Entities or obligating USW or any of the
USW Entities to grant, extend, accelerate the vesting of or enter
into any such option, warrant, equity security, call, right,
commitment or agreement, and, except for the Voting Agreements
and related proxies contemplated by this Agreement, there are no
voting trusts, proxies or other agreements or understandings with
respect to the shares of capital stock of USW.
Section 4.4 Power and Authority; Non-
Contravention; Filings and Consents.
(a) USW has full corporate power and authority to
execute, deliver and perform its obligations under this Agreement
and the other documents required to be executed and delivered by
USW hereunder (collectively, the "USW Transaction Documents") and
to consummate the transactions contemplated hereby and thereby.
The execution and delivery of this Agreement and the other USW
Transaction Documents and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by the
Board of Directors of USW and, prior to the Closing will have
been duly authorized by the shareholders of USW, and no other
corporate proceedings on the part of USW, its shareholders or
directors are necessary to authorize the execution, delivery and
performance of the obligations of USW under this Agreement or the
USW Transaction Documents. This Agreement and the other USW
Transaction Documents have been duly executed and delivered by
USW and constitute the valid and binding obligations of USW,
enforceable against USW in accordance with their terms.
(b) Except as set forth on Section 4.4(b) of the USW
Disclosure Letter, the execution and delivery by USW of this
Agreement (subject to the receipt of the requisite vote of USW's
shareholders) and the other USW Transaction Documents do not, and
the consummation of the transactions contemplated hereby and
thereby will not, (i) conflict with, or result in any violation
or breach of any provision of the Certificate of Incorporation or
By-laws of USW, (ii) conflict with, or result in any violation of
or breach of any provision of the Governing Documents of any of
the USW Entities, (iii) result in any violation or breach of, or
constitute (with or without notice or lapse of time, or both) a
default under, or give rise to a right of termination,
cancellation or acceleration of any material obligation or loss
of any benefit under any note, mortgage, indenture, lease,
contract or other agreement or obligation to which USW or any of
the USW Entities is a party or by which USW or any of the USW
Entities or any of their respective properties or assets may be
bound, or (iv) conflict with or violate any judgment, order,
decree, statute, law, ordinance, rule or regulation or any
material permit, concession, franchise or license applicable to
USW, any of the USW Entities or any of their respective
properties or assets.
(c) No consent, approval, order or authorization of,
or registration, declaration or filing with, any Governmental
Entity is required by or with respect to USW or any of the USW
Entities in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated
hereby, except for (i) the filing of a pre-merger notification
report under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended (the "HSR Act"), (ii) the filing by ACC of the
Registration Statement (as defined in Section 7.2) with the
Securities and Exchange Commission (the "SEC") in accordance with
the Securities Act, (iii) the filing of the New York Certificate
of Merger and related certificates with and by the New York
Secretary of State in accordance with the NYBCL and the Delaware
Certificate of Merger with the Delaware Secretary of State in
accordance with the DGCL, (iv) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be
required under applicable federal and state securities laws and
the laws of any foreign country, and (v) such other consents,
authorizations, filings, approvals and registrations that are
disclosed on the USW Disclosure Letter or which, if not obtained
or made, would not have a USW Material Adverse Effect and would
not prevent or materially delay the consummation of the
transactions contemplated by this Agreement or otherwise prevent
USW from performing its obligations hereunder in any material
respect.
Section 4.5 USW SEC Documents; Financial
Information. USW has filed with the SEC and has made available to
ACC all reports, proxy statements, forms, and other documents
required to be filed with the SEC three full fiscal years prior
to the date hereof (the "USW SEC Documents"), and, as of the
Closing Date, USW shall have filed with the SEC all USW SEC
Documents required to be filed prior thereto. As of their
respective dates, (i) the USW SEC Documents complied, and all
similar documents filed with the SEC after the date of this
Agreement but prior to the Closing will comply, in all material
respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations
of the SEC promulgated thereunder applicable to such USW SEC
Documents and similar documents and (ii) none of the USW SEC
Documents contained, nor will any similar documents filed after
the date of this Agreement but prior to the Closing contain, any
untrue statement of a material fact and none of the USW SEC
Documents omitted, nor will any similar document filed after the
date of this Agreement but prior to the Closing omit, to state a
material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances
under which they were made, not misleading. The consolidated
financial statements (including any related notes and schedules)
of USW included in the USW SEC Documents (including any similar
documents filed with the SEC after the date of this Agreement but
prior to the Closing)(collectively, the "USW Financial
Statements") comply as to form in all material respects with
applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto and have been or will
be prepared in accordance with GAAP (except, in the case of
unaudited statements, as permitted by Form 10-Q under the
Exchange Act) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and
fairly present in all material respects the consolidated
financial position of USW and its consolidated subsidiaries
(including all applicable USW Entities) as of the dates thereof
and the consolidated results of their operations and cash flows
for the periods then-ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments consistent with
prior years). Except as set forth on Section 4.5 of the USW
Disclosure Letter or as disclosed in the USW SEC Documents and
the June 30, 1997 consolidated balance sheet included in the USW
SEC Documents (the "USW Balance Sheet"), and except for
liabilities and obligations incurred in the ordinary course of
business consistent with past practice since the date of the USW
Balance Sheet, neither USW nor any of USW's consolidated
subsidiaries has any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) which would
be required by GAAP to be set forth on a consolidated balance
sheet of USW and its consolidated subsidiaries or in the notes
thereto that are not so included or disclosed.
Section 4.6 Related Party Transactions.
No Affiliate of USW is an officer, director, employee or
consultant of, or owns or otherwise controls any Person which is,
or is engaged in business as, a competitor, customer or supplier
of the Business.
Section 4.7 Accounts Receivable. Except
as set forth on Section 4.7 of the USW Disclosure Letter, the
accounts receivable shown on the USW Balance Sheet arose in the
ordinary course of business and have been collected or are
reasonably expected to be collectible in the book amounts
thereof, less an amount not in excess of the allowance for
doubtful accounts and returns provided for in the USW Balance
Sheet. The accounts receivable of USW arising after the date of
the USW Balance Sheet (the "Balance Sheet Date") and before the
date of this Agreement arose in the ordinary course of business
and have been collected or will be collectible in the book
amounts thereof, less allowances for doubtful accounts and
returns determined in accordance with the past practices of USW.
None of such accounts receivable is subject to any valid and
material claim of offset or recoupment or counterclaim, and USW
has no knowledge of any specific facts that would be likely to
give rise to any such claim; no material amount of such accounts
receivable is contingent upon the performance by USW or any of
the USW Entities of any obligation; and no agreement for
deduction or discount has been made with respect to any such
accounts receivable.
Section 4.8 Absence of Certain Changes or
Events. Except as set forth in Section 4.8 of the USW Disclosure
Letter, and except as reflected in the USW Financial Statements,
since the Balance Sheet Date, USW and the USW Entities have
conducted their respective businesses in the ordinary course and
in a manner consistent with past practices, and have not:
(a) suffered any event or occurrence that has had or
could reasonably be expected to have a USW Material Adverse
Effect;
(b) suffered any damage, destruction or loss, whether
covered by insurance or not, adversely affecting its properties
or business;
(c) granted any increase in the compensation payable
or to become payable by USW or any of the USW Entities to their
respective officers, employees, consultants or agents except for
compensation increases granted in the ordinary course of business
and in a manner consistent with past practices to the non-officer
employees of USW and the USW Entities in connection with such
employees' annual performance review;
(d) declared, set aside or paid any dividend or made
any other distribution on or in respect of the shares of its
capital stock or declared any direct or indirect redemption,
retirement, purchase or other acquisition of such shares, except
for purchases of stock from terminated non-officer employees in
the ordinary course of business and in a manner consistent with
past practices, as itemized in Section 4.8(d) of the USW
Disclosure Letter;
(e) issued any shares of its capital stock or any
warrants, rights, or options for, or entered into any commitment
relating to such capital stock, except for issuances made in the
ordinary course of business and in a manner consistent with past
practices (including issuances made upon exercises and
conversions of employee stock options) as described in Section
4.8(e) of the USW Disclosure Letter;
(f) made any change in the accounting methods or
practices it follows, whether for general financial or tax
purposes, or any change in depreciation or amortization policies
or rates;
(g) sold, leased, abandoned or otherwise disposed of
any real property or machinery, equipment or other operating
property except in the ordinary course of business and in a
manner consistent with past practices and in an amount that is
not material to USW;
(h) sold, assigned, transferred, licensed or otherwise
disposed of any patent, trademark, trade name, brand name,
copyright (or pending application for any patent, trademark or
copyright), invention, work of authorship, process, know-how,
formula or trade secret or interest thereunder or other material
intangible asset, except for non-exclusive licenses which were
granted in the ordinary course of business and in a manner
consistent with past practices and in an amount that is not
material to USW;
(i) entered into any material commitment or
transaction (including without limitation any borrowing or
capital expenditure) except as set forth on Section 4.8(i) of the
USW Disclosure Letter;
(j) incurred any liability, except in the ordinary
course of business and consistent with past practice and except
as set forth on Section 4.8(j) of the USW Disclosure Letter;
(k) permitted or allowed any of its property or assets
to be subjected to any mortgage, deed of trust, pledge, lien,
security interest or other encumbrance of any kind, except for
liens for current taxes not yet due and purchase money security
interests incurred in the ordinary course of business;
(l) made any capital expenditure or commitment for
additions to property, plant or equipment which were in excess of
One Hundred Thousand dollars ($100,000) in the aggregate, except
as set forth on Section 4.8(l) of the USW Disclosure Letter;
(m) paid, loaned or advanced any amount to, or sold,
transferred or leased any properties or assets to, or entered
into any agreement or arrangement with any of its officers,
directors or shareholders or any affiliate of any of the
foregoing, other than employee compensation and benefits and
reimbursement of employment related business expenses incurred
in the ordinary course of business;
(n) increased or established any reserve for Taxes or
any other liability which, if paid in full, would have a USW
Material Adverse Effect except as set forth on Section 4.8(n) of
the USW Disclosure Letter;
(o) waived any rights material to USW or any USW
Entity;
(p) taken any action to (i) amend its Certificate of
Incorporation, By-Laws or Governing Documents or (ii) liquidate,
dissolve, merge, consolidate, restructure, recapitalize or
reorganize USW or any USW Entity; or
(q) entered into any agreement, contract, commitment
or arrangement to take any of the actions (i) described in this
Section 4.8 or (ii) which would constitute a breach of any of the
representations or warranties of USW contained in this Agreement,
or authorized, recommended, proposed or announced an intention to
take any such action.
Section 4.9 Taxes. As used in this
Agreement, the terms "Tax" and, collectively, "Taxes" mean any
and all federal, state and local taxes of any country,
assessments and other governmental charges, duties, impositions
and liabilities, including taxes based upon or measured by gross
receipts, income, profits, sales, use and occupation, and value
added, ad valorem, transfer, franchise, withholding, payroll,
recapture, employment, excise and property taxes, together with
all interest, penalties and additions imposed with respect to
such amounts and any obligations under any agreements or
arrangements with any other person with respect to such amounts
and including any liability for taxes of a predecessor entity.
(a) USW has prepared and timely filed all returns,
estimates, information statements and reports required to be
filed with any taxing authority ("Returns") relating to any and
all Taxes concerning or attributable to USW or its operations
with respect to Taxes for any period ending on or before the
Closing Date and such Returns have been completed in all material
respects in accordance with applicable law or an adequate reserve
has been made for such Taxes on the USW Balance Sheet.
(b) USW, as of the Closing Date: (i) will have paid
all Taxes shown to be payable on such Returns covered by
Section 4.9(a) and (ii) will have withheld with respect to its
employees all Taxes required to be withheld and remitted all
withheld amounts in accordance with applicable laws, rules and
regulations.
(c) Except as set forth on Section 4.9 of the USW
Disclosure Letter, there is no Tax deficiency outstanding or
assessed against USW that is not reflected as a liability on the
USW Balance Sheet.
(d) USW has no material liabilities for unpaid Taxes
that have not been accrued for or reserved on the USW Balance
Sheet, whether asserted or unasserted, contingent or otherwise.
(e) USW is not a party to any tax-sharing agreement or
similar arrangement with any other party, or any contractual
obligation to pay any Tax obligations of, or with respect to any
transaction relating to, any other person or to indemnify any
other person with respect to any Tax.
(f) Section 4.9 of the USW Disclosure Letter sets
forth the date or dates through which the IRS has examined the
federal tax returns of USW and the date or dates through which
any foreign, state, local or other taxing authority has examined
any other tax returns of USW. Section 4.9 of the USW Disclosure
Letter also contains a complete list of each year for which any
federal, state, local or foreign tax authority has obtained or
has requested an extension of the statute of limitations from USW
and lists each tax case of USW currently pending in audit, at the
administrative appeals level or in litigation. Section 4.9 of
the USW Disclosure Letter further lists the date and issuing
authority of each statutory notice of deficiency, notice of
proposed assessment and revenue agent's report issued to USW
within the last two (2) years. Except as set forth in
Section 4.9 of the USW Disclosure Letter, neither the IRS nor any
foreign, state, local or other taxing authority has, in the three
years preceding the date hereof, examined or is in the process of
examining any federal, foreign, state, local or other tax returns
of USW. To the knowledge of USW, neither the IRS nor any
foreign, state, local or other taxing authority is now asserting
or threatening to assert any deficiency or claim for additional
taxes (or interest thereon or penalties in connection therewith).
Section 4.10 Tangible Assets and Real
Property.
(a) Each of USW and the USW Entities own or lease all
tangible assets and properties which are used in the conduct of
their respective businesses as currently conducted and as
currently planned to be conducted or which are reflected on the
USW Balance Sheet or acquired since the date of the USW Balance
Sheet ("Material Tangible Assets"). The Material Tangible Assets
are in good operating condition and repair, except as would be
expected in the ordinary course of business.
(b) Except as set forth on Section 4.10(b) of the USW
Disclosure Letter, each of USW and the USW Entities have good and
marketable title to all Material Tangible Assets that they own,
free and clear of all mortgages, liens, pledges, charges or
encumbrances of any kind or character, except for liens for
current taxes not yet due and payable, purchase money security
interests, mechanics and other statutory liens and minor liens
which do not in any case materially detract from the value of the
property subject thereto or materially impair the operations of
USW, and which have arisen in the ordinary course of business.
(c) Assuming the due execution and delivery thereof by
the other parties thereto, all leases of Material Tangible Assets
to which USW or any of the USW Entities is a party are in full
force and effect and are valid, binding and enforceable in
accordance with their respective terms, except as such
enforceability may be limited by (i) bankruptcy laws and other
similar laws affecting creditors' rights generally and
(ii) general principles of equity, regardless of whether asserted
in a proceeding in equity or at law. True and correct copies of
all such leases have been provided to ACC.
(d) Section 4.10(d) of the USW Disclosure Letter sets
forth true and complete lists all real property leased by USW and
each of the USW Entities. USW does not own any real property.
All real properties owned or leased by USW, and the structures
thereon, are in good condition, consistent with their present
use. None of such facilities, properties or structures violates
any applicable laws, rules or regulations in any material
respects. Assuming the due execution and delivery thereof by the
other parties thereto, all such real property leases are in full
force and effect and are valid, binding and enforceable in
accordance with their respective terms, except as such
enforceability may be limited by (i) bankruptcy laws and other
similar laws affecting creditors' rights generally and
(ii) general principles of equity, regardless of whether asserted
in a proceeding in equity or at law. True and correct copies of
all such real property leases have been provided to ACC.
Section 4.11 Intellectual Property.
(a) USW and the USW Entities own, or are licensed or
otherwise possess legally enforceable rights to use, all patents,
trademarks, trade names, service marks, copyrights and mask
works, and any applications for and registrations of such
patents, trademarks, trade names, service marks, copyrights and
mask works and all processes, formulae, methods, schematics,
technology, know-how, inventions, computer software programs or
applications and tangible or intangible proprietary information
or material that are necessary to conduct the business of USW and
the USW Entities as currently conducted (all of which are
referred to as the "USW Intellectual Property Rights"), none of
which is subject to any Taxes or maintenance or license fees.
(b) Section 4.11 of the USW Disclosure Letter contains
an accurate and complete list of (i) all patents and patent
applications and all trademarks, trade names, service marks and
registered copyrights, included in the USW Intellectual Property
Rights, including the jurisdictions in which each such USW
Intellectual Property Right has been issued or registered or in
which any such application for such issuance and registration has
been filed, (ii) all licenses, sublicenses, distribution
agreements and other agreements to which USW or any of the USW
Entities is a party and pursuant to which any person is
authorized to use any USW Intellectual Property Rights or has the
right to manufacture, reproduce, market or exploit any product of
USW or any of the USW Entities (an "USW Product") or any
adaptation, translation or derivative work based on any USW
Product or any portion thereof, (iii) all licenses, sublicenses
and other agreements to which USW or any of the USW Entities is a
party and pursuant to which USW or any of the USW Entities is
authorized to use any third party technology, trade secret,
know-how, process, patent, trademark or copyright, including
software ("Licensed Intellectual Property"), which is
incorporated in or forms a part of any USW Product, (iv) all
joint development agreements to which USW or any of the USW
Entities is a party, and (v) all agreements with Governmental
Entities or other third parties pursuant to which USW or any of
the USW Entities has obtained funding for research and
development activities.
(c) Neither USW nor any of the USW Entities is, nor
will any of them be, as a result of the execution and delivery of
this Agreement or the performance of any obligation under this
Agreement, in breach of any license, sublicense or other material
agreement relating to the USW Intellectual Property Rights or
Licensed Intellectual Property.
(d) Neither USW nor any of the USW Entities (i) has
received notice of any suit, action or proceeding which involves
a claim of infringement of any patent, trademark, service ▇▇▇▇,
copyright, trade secret or other proprietary right of any third
party; (ii) has knowledge that the manufacturing, marketing,
licensing or sale of any USW Product infringes any patent,
trademark, service ▇▇▇▇, copyright, trade secret or other
proprietary right of any third party; and (iii) has knowledge of
any claim challenging or questioning the validity or
effectiveness of any license or agreement relating to any USW
Intellectual Property Rights or Licensed Intellectual Property.
(e) All designs, drawings, specifications, source
code, object code, documentation, flow charts and diagrams
incorporating, embodying or reflecting any USW Product at any
stage of its development (the "USW Components") were written,
developed and created solely and exclusively by employees of USW
or the USW Entities without the assistance of any third party or
were created by third parties who assigned ownership of their
rights with respect thereto to USW by means of valid and
enforceable agreements, copies of which have been provided at
USW's offices to ACC. USW and the USW Entities have at all times
used commercially reasonable efforts to treat the USW Products
and USW Components as containing trade secrets and have not
disclosed or otherwise dealt with such items in such a manner as
to cause the loss of such trade secrets by their release into the
public domain.
(f) Each person currently or formerly employed by USW
or any of the USW Entities (including independent contractors, if
any) that has or had access to confidential information of USW or
any of the USW Entities has executed and delivered to USW a
confidentiality and non-disclosure agreement substantially in the
form previously provided to ACC. To the best of USW's knowledge,
neither the execution nor the delivery of any such agreement, nor
the carrying on of the business of USW and the USW Entities as
currently conducted by any such person, as an employee or
independent contractor, has or will conflict with or result in a
breach of the terms, conditions or provisions of, or constitute a
default under, any contract, covenant or instrument under which
any of such persons is obligated.
Section 4.12 Contracts.
(a) Except as set forth in Section 4.12 of the USW
Disclosure Letter, neither USW nor any of the USW Entities is a
party or subject to any agreement, obligation or commitment,
written or oral:
(i) that calls for any fixed and/or contingent
payment or expenditure or any related series of fixed
and/or contingent payments or expenditures by or to USW
or any of the USW Entities totaling more than ten
thousand dollars ($10,000) per month except for vendor
agreements for which the threshhold shall be $50,000
per month;
(ii) that restricts USW or any of the USW Entities
from carrying on anywhere in the world any portion of
their respective businesses as currently conducted;
(iii) to provide funds to or to make any investment
in any other person or entity (in the form of a loan,
capital contribution or otherwise);
(iv) with respect to obligations as guarantor,
surety, co-signer, endorser, co-maker, indemnitor or
otherwise in respect of the obligation of any other
person or entity;
(v) for any line of credit, standby financing,
revolving credit or other similar financing
arrangement;
(b) To the best of USW's knowledge, no party to any
such contract, agreement or instrument has expressed its
intention to cancel, withdraw, modify or amend such contract,
agreement or instrument.
(c) Except as set forth on Section 4.12(c) of the USW
Disclosure Letter, neither USW nor any of the USW Entities is in
default under or in breach or violation of, nor to USW's
knowledge is there any valid basis for any claim of default by
USW or any of the USW Entities under, or breach or violation by
USW or any of the USW Entities of, any contract, commitment or
restriction to which USW or any of the USW Entities is a party or
by which USW or any of the USW Entities or any of their
respective properties or assets is bound or affected, except for
such breaches, violations and claims of default as would not be
reasonably likely, either individually or in the aggregate, to
have a USW Material Adverse Effect. To the best of USW's
knowledge, no other party is in default under or in breach or
violation of, nor, to the best of USW's knowledge, is there any
valid basis for any claim of default by any other party under, or
any breach or violation by any other party of, any contract,
commitment, or restriction to which USW or any of the USW
Entities is a party or by which USW or any of the USW Entities or
any of their respective properties or assets is bound or
affected, except for such breaches, violations and claims of
default as would not be reasonably likely, either individually or
in the aggregate, to have a USW Material Adverse Effect.
Section 4.13 Labor Matters. There is no unfair labor
practice complaint against USW or any of the USW Entities
pending, or to the best of USW's knowledge threatened, before any
Governmental Entity. There is no strike, labor dispute, walkout,
slowdown, work stoppage or lockout pending, or to the best of
USW's knowledge threatened, against USW or any of the USW
Entities. Neither USW nor any of the USW Entities is now and
neither USW nor any USW Entity has ever been subject to any union
organizing activities. Neither USW nor any of the USW Entities
has ever experienced any strike, labor dispute, walkout,
slowdown, work stoppage, lockout or other labor difficulty. To
the best of USW's knowledge, except as set forth in Section 4.13
of the USW Disclosure Letter, no officer of USW or any of the USW
Entities intends to leave his or her employment, whether as a
result of the transactions contemplated by this Agreement or
otherwise.
Section 4.14 Environmental Matters.
(a) Except as set forth in Section 4.14 of the USW
Disclosure Letter, no material amount of any substance that has
been designated by applicable law or regulation to be
radioactive, toxic, hazardous or otherwise a danger to health or
the environment (a "Hazardous Material"), is present, as a result
of the actions of USW or any of the USW Entities or, to the best
of USW's knowledge, as a result of any actions of any third party
or otherwise, in, on or under any property, including the land
and the improvements, ground water and surface water, that USW or
any of the USW Entities has at any time owned, operated, occupied
or leased. To the best of USW's knowledge, no underground
storage tanks are present under any property that USW or any of
the USW Entities has at any time owned, operated, occupied or
leased.
(b) At no time has USW or any of the USW Entities
transported, stored, used, manufactured, disposed of, released or
exposed its employees or others to Hazardous Materials in
violation of any law, rule, regulation or treaty promulgated by
any Governmental Entity (collectively, "Environmental Laws").
(c) USW and the USW Entities currently hold all
environmental approvals, permits, licenses, clearances and
consents (the "Environmental Permits") necessary for the conduct
of the business of USW and the USW Entities as such business is
currently being conducted.
(d) No action, proceeding, writ, injunction or claim
is pending or, to the best of USW's knowledge, threatened
concerning any Environmental Permit or Environmental Law as it
relates to USW or any of the USW Entities. Neither USW nor any
of the USW Entities is aware of any fact or circumstance which
could involve USW or any of the USW Entities in any environmental
litigation or impose upon USW or any of the USW Entities any
liability concerning Hazardous Materials, Environmental Laws or
Environmental Permits that could have a USW Material Adverse
Effect.
Section 4.15 Employee Benefit Plans.
(a) Except as set forth on Section 4.15(a) of the USW
Disclosure Letter, neither USW nor any USW Entity has established
or maintains or is obligated to make contributions to or under or
otherwise participates in with respect to any current or former
employee, director, officer or agent of USW or any of the USW
Entities: (i) any stock option, restricted stock, stock
appreciation rights, bonus or other type of incentive
compensation plan, program, agreement or arrangement; (ii) any
severance, pension, profit-sharing, thrift or savings,
retirement, deferred compensation, employee stock ownership,
employee stock purchase or supplemental executive retirement
plan, agreement or arrangement, including, but not limited to,
those described in Section 3(2) of ERISA; (iii) any life
insurance, death benefit, health and hospitalization, disability,
cafeteria or Section 125, employee assistance, education or
tuition assistance, vacation benefit or fringe benefit plan, or
other employee benefit plan, program, agreement or arrangement,
including, but not limited to, those described in Section 3(1) of
ERISA; or (iv) any grantor trust to provide funding for
non-tax-qualified employee benefits or compensation. All such
plans listed in such Section in which United States-based
employees participate (collectively, the "USW Benefit Plans")
have been operated and administered in all material respects in
accordance with all applicable laws, rules and regulations,
including, but not limited to ERISA and the Code (and any similar
statute of a state or other jurisdiction, domestic or foreign, if
applicable). With respect to each USW Benefit Plan, USW and the
USW Entities have made available to ACC the following (to the
extent they exist with respect to such USW Benefit Plan):
(i) the document(s) governing such plan, including, if
applicable, the plan document, the trust agreement, any insurance
contract, administrative services agreement, investment manager
agreement, and any amendments thereto; (ii) the two most recent
annual reports of such plan on the appropriate IRS Form
5500-series form; (iii) the financial statements of the plan for
the two most recent plan years, and if applicable, actuarial
valuation or other actuarial reports for the plan for the two
most recent plan years; (iv) the most recent summary plan
description for the plan and any subsequent summary of material
modifications; (v) the most recent ruling letter with respect to
the tax-exempt status of any voluntary employee's beneficiary
association under Section 501(c)(9) of the Code which is
implementing such plan; and (i) for each plan that is intended to
be qualified under Section 401(a) of the Code, a copy of the most
recent IRS determination or opinion letter. No act or failure to
act by USW or any of the USW Entities (i) has resulted in a
"prohibited transaction" (as defined in ERISA) with respect to
the USW Benefit Plans that is not subject to a statutory or
regulatory exception; or (ii) has resulted or could reasonably be
expected to result in the imposition of any Tax or penalty in any
material amount on USW or any of the USW Entities pursuant to any
provision of the Code or ERISA or any other applicable law. No
USW Benefit Plan is subject to Title IV of ERISA; and no
circumstance exists or will exist as a result of the consummation
of the transactions contemplated by this Agreement that could
result in the existence of any Liens or Other Encumbrances on the
property of USW or any of the USW Entities under the provisions
of Title IV of ERISA. Neither USW nor any USW Entity has
previously made, is currently making, or is obligated in any way
to make, any contributions to any multi-employer plan within the
meaning of Section 3(37) of ERISA. USW and each USW Entity has
made all contributions or payments required under the terms of or
in connection with all USW Benefit Plans or has properly reserved
for such amounts on the USW Balance Sheet. No USW Benefit Plan
provides health and hospitalization or other medical or life
insurance benefits to terminated or retired employees or
independent contractors (other than benefits mandated by
applicable law). Neither USW nor any USW Entity has any
obligation or commitment (formal or informal) to create any new
benefit plan or program, or to amend any existing USW Benefit
Plan to increase the benefits thereunder. USW and each USW
Entity is in compliance in all material respects with all
requirements applicable to any retirement or other employee
benefit plan maintained for its non-United States employees, and
there is no unfunded liability with respect to any such plan
which is not properly reflected in or reserved for in the USW
Balance Sheet.
(b) Neither USW nor any USW Entity is a party to any
oral or written (i) union, guild or collective bargaining
agreement which covers employees in the United States (nor is USW
aware of any union organizing activity currently being conducted
in respect to any of USW's or any USW Entity's employees),
(ii) agreement with any director, officer, employee or agent the
material benefits of which are contingent, or the terms of which
are materially altered, upon the occurrence of a transaction of
the nature contemplated by this Agreement or which provides for
any payment or payments (including any compensation guarantee,
severance, unemployment compensation, golden parachute, bonus or
otherwise) of more than an aggregate of $50,000 to such officer
or employee upon such occurrence, or (iii) agreement or plan,
including any stock option plan, stock appreciation rights plan,
restricted stock plan or stock purchase plan, any of the benefits
of which will be increased, or with respect to vesting, will be
accelerated, by the occurrence of any of the transactions
contemplated by this Agreement.
(c) None of the companies with which USW is a member
of a "controlled group" within the meaning of Section 1563(a) of
the Code (each, an "ERISA Affiliate") nor any administrator or
fiduciary of any employee benefit plan adopted by a member of
such controlled group (or any agent of any of the foregoing) has
engaged in any transaction or acted or failed to act in a manner
which is reasonably likely to subject ACC or Sub to any material
liability (to individuals, the Internal Revenue Service, the
Pension Benefit Guaranty Corporation, or any other party) for
breach of fiduciary duties, accumulated funding deficiencies,
termination or other liability under ERISA, the Code, or any
other applicable laws with respect to an employee benefit plan.
(d) Neither USW nor any ERISA Affiliate, nor any
officer, director, agent or employee of USW or any ERISA
Affiliate has made any oral or written statement regarding any
USW Benefit Plan which is reasonably likely to result in
additional material liability to ACC, USW or any ERISA Affiliate,
whether direct or indirect, in excess of any current or potential
liability of USW or any ERISA Affiliate as of the Closing Date.
(e) Except as required by Section 4980B of the Code,
neither USW nor any ERISA Affiliate has promised any former
employee or other individual not employed by USW or any ERISA
Affiliate medical or other benefit coverage, and neither USW nor
any ERISA Affiliate maintains or contributes to any plan or
arrangement providing medical benefits, life insurance or other
welfare benefits to former employees, their spouses or dependents
or any other individual not employed by USW or any ERISA
Affiliate.
Section 4.16 Compliance with Laws. Each of USW and the
USW Entities has complied in all material respects with all
applicable federal, state, local and foreign statutes, laws and
regulations, and is not in violation of, and has not received any
notices of violation with respect to, any such statute, law or
regulation, with respect to the conduct of its business or the
ownership or operation of its business, including, without
limitation, the Americans with Disabilities Act, the federal
Foreign Corrupt Practices Act and all United States statutes,
laws and regulations as from time to time govern the license and
delivery of technology and products abroad by persons subject to
the jurisdiction of the United States.
Section 4.17 Litigation. Except as set forth in
Section 4.17 of the USW Disclosure Letter, there is no action,
suit, proceeding, claim, arbitration or investigation pending
before any agency, court or tribunal, or to the best of USW's
knowledge, threatened, against USW or any of the USW Entities or
any of their respective properties or officers or directors (in
their capacities as such). There is no judgment, decree or order
against USW or any of the USW Entities or, to the best of USW's
knowledge, any of their respective directors or officers (in
their capacities as such) that is reasonably expected to result
in an outcome adverse to USW and which could prevent, enjoin or
materially alter or delay any of the transactions contemplated by
this Agreement, or could reasonably be expected to have a USW
Material Adverse Effect.
Section 4.18 Indemnification Claims. Section 4.18 of
the USW Disclosure Letter sets forth a list of all persons who
are parties to director, officer and/or employee indemnification
agreements with USW or any of the USW Entities (the
"Indemnification Agreements"). There are no outstanding claims
under any of the Indemnification Agreements or under any
indemnification rights granted pursuant to the Certificate of
Incorporation or Bylaws of USW or under the Governing Documents
of any of the USW Entities (as currently or previously in
effect); and to the best of USW's knowledge, there are no facts
or circumstances that either now, or with the passage of time,
could reasonably be expected to provide a basis for a claim under
any such Indemnification Agreement or under any indemnification
rights granted pursuant to the Certificate of Incorporation or
Bylaws of USW or the Governing Documents of any USW Entity.
Section 4.19 Restrictions on Business Activities.
There is no agreement, judgment, injunction, order or decree
binding upon USW or any of the USW Entities which has or could
reasonably be expected to have the effect of prohibiting or
materially impairing any current business practice of USW or any
of the USW Entities, or the conduct of business by USW or any of
the USW Entities as currently conducted.
Section 4.20 Governmental Authorization. USW and each
USW Entity has obtained each governmental consent, license,
permit, grant or other authorization of a Governmental Entity
that is required for the operation of its business as currently
conducted (collectively, the "USW Authorizations"), and all such
USW Authorizations are in full force and effect, except for such
USW Authorizations that, if not obtained by USW, would not,
either individually or in the aggregate, have a USW Material
Adverse Effect. USW and each USW Entity is, and at all times
since January 1, 1997, has been, in compliance with the terms and
requirements of each USW Authorization. Since January 1, 1997,
neither USW nor any USW Entity has received any notice or other
communication from any Governmental Entity asserting (a) any
violation of or failure to comply with any term or requirement of
any USW Authorization, or (b) any revocation, withdrawal,
suspension, cancellation, termination or modification of any USW
Authorization, except where any such violation, failure to
comply, revocation, withdrawal, suspension, cancellation,
termination or modification would not have a Material Adverse
Effect.
Section 4.21 Insurance. Section 4.21 of the USW
Disclosure Letter contains a list of all policies of insurance
maintained by USW and the USW Entities, all of which are
maintained with responsible and reputable insurance companies in
such amounts, on such terms and covering such risks, as is
reasonably deemed necessary by USW and all of which are in full
force and effect. There is no material claim pending under any
of such policies as to which coverage has been questioned, denied
or disputed by the underwriters of such policies. All premiums
due and payable under all such policies have been paid, and USW
and the USW Entities are otherwise in compliance with the terms
of such policies. USW has no knowledge of any threatened
termination of, or material premium increase with respect to, any
of such policies.
Section 4.22 Payments Resulting from Mergers. Neither
the consummation nor announcement of any transaction contemplated
by this Agreement will (either alone or upon the occurrence of
any additional or further acts or events) result in any material
payment (whether of severance pay or otherwise) becoming due from
USW or any of the USW Entities to any director, officer, employee
or former employee thereof under (i) any management, employment,
deferred compensation, severance (including any payment, right or
benefit resulting from a change in control), bonus or other
contract for personal services with any officer, director or
employee or any plan, agreement or understanding similar to any
of the foregoing, or any "rabbi trust" or similar arrangement, or
(ii) material benefit under any USW Benefit Plan being
established or becoming accelerated, vested or payable.
Section 4.23 Pooling of Interests. To the best of
USW's knowledge, neither USW nor any of the USW Entities nor any
director, officer, shareholder, partner, manager, member or
similar person of USW or any of the USW Entities has taken any
action which could reasonably be expected to impair ACC's ability
to account for the Merger as a pooling of interests.
Section 4.24 Power of Attorney. USW has not granted to
any person a power of attorney or similar authorization or
authority that is currently in effect.
Section 4.25 Certain Documents. USW has furnished to
ACC, or its representatives, for its examination USW's and the
USW Entities' minute books and Governing Documents. The minute
books of USW and each of the USW Entities accurately reflect in
all material respects all actions taken to this date by the
shareholders, boards of directors and committees of USW and the
USW Entities. USW has made available to ACC true and complete
copies of all documents and information requested by ACC.
Section 4.26 Vote Required. The affirmative vote of
the holders of two-thirds of the outstanding shares of USW Common
Stock is the only vote of the holders of any class or series of
USW's capital stock necessary to approve and adopt this Agreement
and consummate the transactions contemplated by this Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ACC AND SUB
ACC and Sub represent and warrant to USW as follows:
Section 5.1 Organization. Each of ACC and Sub is a
corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, has all
requisite corporate power to own, lease and operate its property
and to carry on its business as now being conducted and as
proposed to be conducted, and is duly qualified to do business
and is in good standing as a foreign corporation in each
jurisdiction in which the failure to be so qualified would have a
material adverse effect on the ability of ACC or Sub to
consummate the transactions contemplated in this Agreement or on
the business, assets (including intangible assets), properties,
liabilities (contingent or otherwise), financial condition,
operations, or results of operations of the business of ACC taken
together with its Subsidiaries as a whole (an "ACC Material
Adverse Effect"). Each of ACC and Sub has made available to USW
copies of its Certificate of Incorporation and By-laws as in
effect as of the date of this Agreement.
Section 5.2 ACC Capital Structure.
Set forth in Schedule 5.2(a) hereto is a description of
the authorized and unissued and issued and outstanding capital
stock of ACC. There are no other classes or series of capital
stock of ACC authorized, issued or outstanding.
(b) Except as set forth in Schedule 5.2(a), there are
no equity securities of any class of ACC, or any security
exchangeable into or exercisable for such equity securities,
issued, reserved for issuance or outstanding. Except as set
forth in Schedule 5.2(a), there are no options, warrants, equity
securities, calls, rights, commitments or agreements of any
character to which ACC is a party or by which it is bound
obligating ACC to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock of ACC or
obligating ACC to grant, extend, accelerate the vesting of or
enter into any such option, warrant, equity security, call,
right, commitment or agreement. To the best knowledge of ACC,
there are no voting trusts, proxies or other agreements or
understandings with respect to the shares of capital stock of
ACC.
(c) The shares of ACC Class A Common Stock to be
issued pursuant to the Merger, when issued, will be duly
authorized, validly issued, fully paid, and nonassessable, and
free of and not subject to any preemptive rights or rights of
first refusal created by statute or the Certificate of
Incorporation or By-laws of ACC or any agreement to which ACC is
a party or by which it is bound.
Section 5.3 Power and Authority; Non-Contravention;
Required Filings and Consents.
(a) ACC and Sub have all requisite corporate power and
authority to enter into this Agreement and the other documents
required to be executed and delivered by ACC or Sub hereunder
(collectively, the "ACC Transaction Documents") and to consummate
the transactions contemplated hereby and thereby. The execution
and delivery of this Agreement and the other ACC Transaction
Documents and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by all necessary
corporate action on the part of ACC and Sub, respectively. This
Agreement and the ACC Transaction Documents to which they are
parties have been duly executed and delivered by ACC and Sub and
constitute the valid and binding obligations of ACC and Sub,
respectively, enforceable in accordance with their terms, except
as such enforceability may be limited by (i) bankruptcy laws and
other similar laws affecting creditors' rights generally and
(ii) general principles of equity, regardless of whether asserted
in a proceeding in equity or at law.[ADD TO ARTICLE 4]
(b) The execution and delivery of this Agreement by
ACC and Sub and the other ACC Transaction Documents do not, and
the consummation of the transactions contemplated hereby or
thereby will not, (i) conflict with, or result in any violation
or breach of any provision of the Certificate of Incorporation or
Bylaws of ACC or Sub, (ii) except as set forth on
Schedule 5.3(b)(ii), result in any violation or breach of, or
constitute (with or without notice or lapse of time, or both) a
default (or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of any material benefit)
under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, lease, contract or other agreement,
instrument or obligation to which ACC or Sub is a party or by
which either of them or any of their properties or assets may be
bound, or (iii) conflict with or violate any permit, concession,
franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to ACC or Sub or any of
its or their properties or assets, except in the case of (ii) and
(iii) for any such conflicts, violations, defaults, terminations,
cancellations or accelerations which would not be reasonably
likely to have an ACC Material Adverse Effect.
(c) The outstanding shares of Sub Common Stock are the
only shares of Sub capital stock entitled to vote with respect to
the Merger, and the approval of this Agreement by the holders of
a majority of the issued and outstanding shares of Sub Common
Stock is the only approval of Sub stockholders required for the
consummation of the Merger, no other class vote of any series or
class of Sub capital stock being required. No consent, approval,
order or authorization of, or registration, declaration or filing
with, any Governmental Entity is required by or with respect to
ACC or any of its Subsidiaries in connection with the execution
and delivery of this Agreement or the consummation of the
transactions contemplated hereby, except for (i) the filing of a
pre-merger notification report under the HSR Act and, in the case
of this Agreement and the transactions contemplated hereby,
(ii) the filing by ACC of the Registration Statement with the SEC
in accordance with the Securities Act, (iii) the filing of the
New York Certificate of Merger with the New York Secretary of
State in accordance with the NYBCL and the Delaware Certificate
of Merger with the Delaware Secretary of State in accordance with
the DGCL, (iv) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under
applicable federal and state securities laws and the laws of any
foreign country and (v) such other consents, authorizations,
filings, approvals and registrations which, if not obtained or
made, would not be reasonably likely to have an ACC Material
Adverse Effect.
Section 5.4 SEC Filings; Financial Statements.
(a) ACC has filed with the SEC and made available to
USW all forms, proxy statements, reports and documents required
to be filed by ACC with the SEC since June 30, 1997 other than
registration statements on Form S-8 (collectively, the "ACC SEC
Reports") and as of the Closing Date ACC shall have filed all
ACC SEC Reports required to be filed prior thereto. The ACC SEC
Reports (i) at the time filed, complied in all material respects
with the applicable requirements of the Exchange Act, and
(ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then
on the date of such filing) contain any untrue statement of a
material fact or omit to state a material fact required to be
stated in such ACC SEC Reports or necessary in order to make the
statements in such ACC SEC Reports, in the light of the
circumstances under which they were made, not misleading. None
of ACC's Subsidiaries is required to file any forms, reports or
other documents with the SEC.
(b) Each of the consolidated financial statements
(including, in each case, any related notes) contained in the ACC
SEC Reports, including any ACC SEC Reports filed after the date
of this Agreement until the Closing, complied or will comply as
to form in all material respects with the applicable published
rules and regulations of the SEC with respect thereto, was or
will be prepared in accordance with GAAP applied on a consistent
basis throughout the periods involved (except as may be indicated
in the notes to such financial statements or, in the case of
unaudited statements, as permitted by Form 10-Q promulgated by
the SEC) and fairly presented or will present the consolidated
financial position of ACC and its Subsidiaries as at the
respective dates and the consolidated results of its operations
and cash flows for the periods indicated, except that the
unaudited interim financial statements do not contain notes and
were or are subject to normal and recurring year-end adjustments
which were not or are not expected to be material in amount. The
consolidated balance sheet of ACC as of June 30, 1997 is referred
to herein as the "ACC Balance Sheet." Since June 30, 1997,
there has been no change in ACC's accounting policies except as
described in the notes to ACC's consolidated financial statements
and except as required by changes to GAAP and SEC accounting
principles.
Section 5.5 Absence of Undisclosed Liabilities.
Except as disclosed in Schedule 5.5, or as reflected in the ACC
Balance Sheet, ACC and its Subsidiaries do not have any
liabilities, either accrued or contingent (whether or not
required to be reflected in financial statements in accordance
with GAAP), and whether due or to become due, which individually
or in the aggregate would be reasonably likely to have an ACC
Material Adverse Effect other than normal or recurring
liabilities incurred since the date of such ACC Balance Sheet, in
the ordinary course of business consistent with past practices.
Section 5.6 Absence of Certain Changes or Events.
Except as disclosed in writing to USW or as disclosed in the ACC
SEC Reports, or as reflected in the ACC Balance Sheet, since June
30, 1997, ACC has conducted its business only in the ordinary
course and in a manner consistent with past practice and, since
such date, there has not been: (i) any ACC Material Adverse
Effect; (ii) any damage, destruction or loss (whether or not
covered by insurance) with respect to ACC having an ACC Material
Adverse Effect; (iii) any material change by ACC in its
accounting methods, principles or practices to which USW has not
previously consented in writing; (iv) any revaluation by ACC of
any of its assets having an ACC Material Adverse Effect; or
(v) any sale of a material amount of property except in the
ordinary course.
Section 5.7 Interim Operations of Sub. Sub was formed
solely for the purpose of engaging in the transactions
contemplated by this Agreement, has engaged in no other business
activities and has conducted its operations only as contemplated
by this Agreement.
Section 5.8 Pooling of Interests. To the best of
ACC's knowledge, neither ACC nor any Subsidiary of ACC nor any
director, officer or stockholder of ACC or any Subsidiary of ACC
has taken any action which could reasonably be expected to impair
ACC's ability to account for the Merger as a pooling of
interests.
Section 5.9 Litigation. There is no action, suit,
proceeding, claim, arbitration or investigation pending, or to
the best knowledge of ACC, threatened, against ACC or Sub which
in any manner challenges or seeks to prevent, enjoin, alter or
materially delay any of the transactions contemplated by this
Agreement.
ARTICLE VI
CONDUCT OF BUSINESS
Section 6.1 Covenants of USW. During the period from
the date of this Agreement until the earlier of the termination
of this Agreement or the Effective Time, USW agrees (and shall
cause each of the USW Entities) to carry on its business and that
of the USW Entities in the usual, regular and ordinary course in
substantially the same manner as previously conducted except to
the extent that ACC shall otherwise consent or request, to pay
its debts and taxes when due, subject to good faith disputes over
such debts or taxes, to pay or perform its other obligations when
due, and, to the extent consistent with such business, to use all
reasonable efforts consistent with past practices and policies to
(i) preserve intact its present business organization, (ii) keep
available the services of its present officers and key employees
and (iii) preserve its relationships with customers, suppliers,
distributors, licensors, licensees and others having business
dealings with it. USW shall promptly notify ACC of any event or
occurrence not in the ordinary course of business of USW and any
of the USW Entities where such event or occurrence would result
in a breach of any covenant of USW set forth in this Agreement or
cause any representation or warranty of USW set forth in this
Agreement to be untrue as of the date of, or giving effect to,
such event or occurrence; provided, however, that any failure by
USW to provide such notice shall not in and of itself give rise
to a right in favor of ACC to terminate this Agreement. Except
as expressly contemplated by this Agreement, neither USW nor any
of the USW Entities shall, without the prior written consent of
ACC:
(a) transfer or license to any person or entity or
otherwise extend, amend or modify any rights to the USW
Intellectual Property Rights other than in the ordinary course of
business consistent with past practices;
(b) declare or pay any dividends on or make any other
distributions (whether in cash, stock or property) in respect of
any of its capital stock, or split, combine or reclassify any of
its capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for
shares of its capital stock, or purchase or otherwise acquire,
directly or indirectly, any shares of its capital stock except
from former employees, directors and consultants in accordance
with agreements providing for the repurchase of shares in
connection with any termination of service by such party;
(c) issue, deliver or sell or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock or
securities convertible into shares of its capital stock, or
subscriptions, rights, warrants or options to acquire, or other
agreements or commitments of any character obligating it to issue
any such shares or other convertible securities (except for
exercises and conversions of securities outstanding on the date
of this Agreement in the ordinary course of business consistent
with past practices);
(d) acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial equity
interest in or substantial portion of the assets of, or by any
other manner, any business or any corporation, partnership or
other business organization or division, or otherwise acquire or
agree to acquire any assets other than acquisitions involving
aggregate consideration of not more than fifty thousand dollars
($50,000) and inventory purchased in the ordinary course of
business consistent with past practices;
(e) sell, lease, license or otherwise dispose of any
of its properties or assets except for transactions entered into
in the ordinary course of business consistent with past practice;
(f) take any action to: (i) increase or agree to
increase the compensation payable or to become payable to its
officers or employees (except for compensation increases granted
in the ordinary course of business and in a manner consistent
with past practices, to the non-officer employees of USW and the
USW Entities in connection with such employees' annual
performance reviews), (ii) grant any severance or termination pay
to, or enter into any employment or severance agreements with,
any officer or employee, (iii) enter into any collective
bargaining agreement, (iv) establish, adopt, enter into or amend
in any material respect any bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination,
severance or other plan, trust, fund, policy or arrangement for
the benefit of any directors, officers or employees, (v) hire
employees or consultants so that the total number of employees of
USW and the USW Entities exceeds seventy-five (75), and
(vi) terminate employees and consultants so that the total number
of employees of USW and the USW Entities is less than sixty (60)
(including those who terminate their employment voluntarily);
(g) revalue any of its assets, including writing down
the value of inventory or writing off notes or accounts
receivable other than in the ordinary course of business;
(h) incur any indebtedness for borrowed money or
guarantee any such indebtedness or issue or sell any debt
securities or warrants or rights to acquire any debt securities
or guarantee any debt securities of others, other than
indebtedness incurred under outstanding lines of credit in the
ordinary course of business consistent with past practice;
(i) amend or propose to amend its Certificate of
Incorporation or By-laws, including by reincorporation, by merger
or otherwise, in any other jurisdiction;
(j) incur or commit to incur any capital expenditure
which individually exceeds fifty thousand dollars ($50,000),
other than the existing commitments set forth in the USW
Disclosure Letter;
(k) enter into or amend any agreements pursuant to
which any third party is granted exclusive marketing or
manufacturing rights with respect to any USW Product;
(l) amend or terminate any material contract,
agreement or license to which it is a party except in the
ordinary course of business;
(m) accelerate, amend or change the period of
exercisability of options or restricted stock granted under any
employee stock plan of USW or authorize cash payments in exchange
for any options granted under any of such plans except as
required by the terms of such plans or any related agreements in
effect as of the date of this Agreement;
(n) waive or release any material right or claim,
except in the ordinary course of business;
(o) initiate any litigation or arbitration proceeding;
(p) compromise or otherwise settle or adjust any
assertion or claim of a deficiency in taxes (or interest thereon
or penalties in connection therewith), extend the statute of
limitations with any tax authority, file any pleading in court in
any tax litigation or any appeal from an asserted deficiency, or
make any tax election;
(q) change any of USW's accounting policies and
practices, except such changes as may be required in the opinion
of USW's management to respond to economic or market conditions
or as may be required by the rules of the Institute of Certified
Public Accountants or Financial Accounting Standards Board or by
applicable governmental authorities;
(r) change its personnel policies;
(s) permit any insurance policy naming USW or any of
the USW Entities as a beneficiary or a loss payee to be canceled
or terminated;
(t) other than in the ordinary course of business
consistent with past practice, enter into, or permit any USW
Entity to enter into any transaction or agreement, arrangement or
understanding, directly or indirectly, with any related party or
Affiliate except on terms no less favorable than would be
available in competitive arm's-length transactions;
(u) act or fail or omit to act, or permit any USW
Entity to act or fail or omit to act, so as to cause any USW
Material Adverse Effect;
(v) adopt, or permit a USW Entity to adopt, a plan of
complete or partial liquidation, dissolution, merger,
consolidation, share exchange, restructuring, recapitalization or
other reorganization of USW or any of the USW Entities;
(w) grant any person a power of attorney or similar
authority; or
(x) take, or agree in writing or otherwise to take,
any of the actions described in subsections (a) through (w)
above, or any action which is reasonably likely to make any of
its representations or warranties contained in this Agreement
untrue or incorrect in any material respect on the date made (to
the extent so limited) or as of the Effective Time.
Section 6.2 Cooperation. Subject to compliance with
applicable law, from the date hereof until the Effective Time,
each of ACC and USW shall confer on a regular and frequent basis
with one or more representatives of the other party to report
operational matters of materiality and the general status of
ongoing operations and shall promptly provide the other party or
its counsel with copies of all filings made by such party with
any Governmental Entity in connection with this Agreement, the
Merger and the other transactions contemplated hereby.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 No Solicitation.
(a) From and after the date of this Agreement until
the earlier of the Effective Time or the termination of this
Agreement in accordance with its terms, USW shall not, directly
or indirectly through any officer, director, employee,
representative or agent of USW or otherwise, (i) solicit,
initiate, or encourage any inquiries or proposals that
constitute, or could reasonably be expected to lead to, a
proposal or offer for a merger, consolidation, share exchange,
business combination, sale of all or substantially all assets,
sale of shares of capital stock (including without limitation by
way of a tender offer) or similar transactions involving USW
other than the transactions contemplated by this Agreement (any
of the foregoing inquiries or proposals being referred to in this
Agreement as an "Acquisition Proposal"), (ii) engage or
participate in negotiations or discussions concerning, or provide
any information to any person or entity relating to, any
Acquisition Proposal, or (iii) agree to, enter into, accept,
approve or recommend any Acquisition Proposal.
(b) USW shall notify ACC immediately (and no later
than 24 hours) after receipt by USW (or its advisors) of any
Acquisition Proposal or any request for information in connection
with an Acquisition Proposal or for access to the properties,
books or records of USW by any person or entity that informs USW
that it is considering making, or has made, an Acquisition
Proposal. Such notice shall be made orally and in writing and
shall indicate in reasonable detail the identity of the offeror
and the terms and conditions of such proposal, inquiry or
contact.
Section 7.2 Registration Statement; Information
Statement.
(a) USW hereby covenants and agrees that the
information supplied and to be supplied to ACC by USW for
inclusion in the registration statement of ACC on Form S-4
pursuant to which shares of ACC Class A Common Stock issued in
the Merger will be registered with the SEC (the "Registration
Statement") shall not contain, either at the time such
information is provided to ACC or at the time the Registration
Statement is declared effective by the SEC, any untrue statement
of a material fact or omit to state any material fact required to
be stated in the Registration Statement or necessary in order to
make the statements in the Registration Statement, in light of
the circumstances under which they were made, not misleading.
The information supplied and to be supplied by USW for inclusion
in the information statement/prospectus (the "Information
Statement") to be sent to the shareholders of USW in connection
with the solicitation of the written consent of the shareholders
of USW concerning the approval of this Agreement and the Merger
(the "USW Shareholder Consents") shall not, on the date the
Information Statement is first mailed to shareholders of USW, on
the date the USW Shareholder Consents are required to be returned
to USW, or at the Effective Time, contain any statement which, at
such time and in light of the circumstances under which it was
made, is false or misleading with respect to any material fact,
or omit to state any material fact necessary in order to make the
statements made in the Information Statement not false or
misleading or omit to state any material fact necessary to
correct any statement in any earlier communication with respect
to the solicitation of the USW Shareholder Consents which has
become false or misleading. If at any time prior to the
Effective Time any event relating to USW, any of the USW Entities
or any of their respective officers, directors or affiliates
should be discovered by USW which should be set forth in an
amendment to the Registration Statement or a supplement to the
Information Statement, USW shall promptly inform ACC.
(b) ACC hereby covenants and agrees that the
information supplied and to be supplied by ACC for inclusion or
incorporation by reference 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 in the
Registration Statement or necessary in order to make the
statements in the Registration Statement, in light of the
circumstances under which they were made, not misleading. The
information supplied and to be supplied by ACC for inclusion or
incorporation by reference in the Information Statement shall
not, on the date the Information Statement is first mailed to
shareholders of USW, on the date the USW Shareholder Consents are
required to be returned to USW, or at the Effective Time, contain
any statement which, at such time and in light of the
circumstances under which it shall be made, is false or
misleading with respect to any material fact, or omit to state
any material fact necessary in order to make the statements made
in the Information Statement not false or misleading; or omit to
state any material fact necessary to correct any statement in any
earlier communication with respect to the solicitation of the USW
Shareholder Consents which has become false or misleading. If at
any time prior to the Effective Time any event relating to ACC or
any of its officers, directors or affiliates should be discovered
by ACC which should be set forth in an amendment to the
Registration Statement or a supplement to the Information
Statement, ACC shall promptly inform USW.
Section 7.3 Governmental Filings. As promptly as
practicable after the execution of this Agreement, ACC shall
prepare and file with the SEC the Registration Statement. ACC
shall use its best efforts to respond to any comments of the SEC,
to have the Registration Statement declared effective under the
Securities Act as promptly as practicable after such filing, and
to cause the Prospectus contained in the Registration Statement
to be mailed to USW's shareholders at the earliest practicable
time. As promptly as practicable after the date of this
Agreement, ACC and USW shall prepare and file any other filings
required under any other federal or state laws (including blue
sky laws) relating to the Merger and the transactions
contemplated by this Agreement, including, without limitation,
under the HSR Act (the "Other Filings"). USW will notify ACC
promptly of the receipt of any request for additional information
under the HSR Act and will supply ACC with copies of all
correspondence between USW or any of its representatives, on the
one hand, and any government officials. The Registration
Statement and the Other Filings shall comply in all material
respects with all applicable requirements of law. As promptly as
practicable after the execution of this Agreement, under the
direction and subject to the review and approval of ACC, USW
shall prepare and, after receiving the authorization of ACC,
distribute the Information Statement to its shareholders for the
purpose of soliciting the USW Shareholders. The Information
Statement shall include the recommendation of the Board of
Directors of USW in favor of the Merger and this Agreement.
Whenever any event occurs which is required to be set forth in an
amendment or supplement to the Registration Statement, the
Information Statement or any other filing, ACC or USW, as the
case may be, shall promptly inform the other of such occurrence
and cooperate in filing with the applicable government officials,
and/or mailing to shareholders of USW, such amendment or
supplement.
Section 7.4 Consents. Each of ACC and USW shall use
its best efforts to obtain all necessary consents, waivers and
approvals under its respective material agreements, contracts,
licenses and leases as may be necessary or advisable to
consummate the Merger and the other transactions contemplated by
this Agreement.
Section 7.5 Access to Information. Upon reasonable
notice, USW shall afford to the officers, employees, accountants,
counsel and other representatives of ACC, reasonable access,
during normal business hours during the period prior to the
Effective Time, to all its and the USW Entities' properties,
books, contracts, commitments and records and, during such
period, USW shall furnish promptly to ACC (i) a copy of each
report, schedule, registration statement and other document filed
or received by it during such period from any Governmental Entity
and (ii) all other information concerning the business,
properties and personnel of USW and each of the USW Entities as
ACC may reasonably request. No information or knowledge obtained
in any investigation pursuant to this Section 7.5 shall affect or
be deemed to modify any representation or warranty contained in
this Agreement or the conditions to the obligations of the
parties to consummate the Merger.
Section 7.6 Legal Conditions to Merger. Each of ACC
and USW will take all reasonable actions necessary to comply
promptly with all legal requirements which may be imposed on
itself with respect to the Merger (which actions shall include,
without limitation, furnishing all information required under the
HSR Act and in connection with approvals of or filings with any
other Governmental Entity) and will promptly cooperate with and
furnish information to each other in connection with any such
requirements imposed upon any of them or any of their
Subsidiaries in connection with the Merger. Each of ACC and USW
will, and will cause its Subsidiaries to, take all reasonable
actions necessary (i) to obtain (and will cooperate with each
other in obtaining) any consent, authorization, order or approval
of, or any exemption by, any Governmental Entity or other public
third party, required to be obtained or made by USW, ACC or any
of their Subsidiaries in connection with the Merger or the taking
of any action contemplated by this Agreement, (ii) to lift,
rescind or mitigate the effect of any injunction or restraining
order or other order adversely affecting its ability to
consummate the transactions contemplated hereby, (iii) to fulfill
all conditions applicable to ACC, USW or Sub pursuant to this
Agreement, and (iv) to prevent, with respect to a threatened or
pending temporary, preliminary or permanent injunction or other
order, decree or ruling or statute, rule, regulation or executive
order, the entry, enactment or promulgation thereof, as the case
may be.
Section 7.7 Tax-Free Reorganization. ACC and USW
shall each use its best efforts to cause the Merger to be treated
as a reorganization within the meaning of Section 368(a) of the
Code.
Section 7.8 Pooling Accounting. Each of ACC and USW
agrees not to take any action and to use its best efforts to
cause its respective affiliates not to take any action after the
date of this Agreement that would adversely affect the ability of
ACC to treat the business combination to be effected by the
Merger as a pooling of interests, and each of ACC and USW agrees
to take such actions and to use its best efforts to cause its
respective affiliates to take such actions as may be reasonably
required to negate the impact of any past actions that would
adversely impact the ability of ACC to treat the business
combination to be effected by the Merger as a pooling of
interests. USW shall cause its affiliates to sign and deliver to
ACC a customary "pooling letter", substantially in the form
attached hereto as Exhibit A; and ACC shall close the trading
window provided for under the ACC ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Policy not less
than 30 days prior to the Closing Date and shall not reopen the
trading window until such time as ACC has published (within the
meaning of Accounting Series Release No. 130, as amended, of the
SEC) in an effective registration statement, Annual Report on
Form 10-K, Quarterly Report on Form 10-Q or Current Report on
Form 8-K filed with the SEC, or any publicly disclosed quarterly
earnings report or press release or other authorized public
disclosure by ACC, financial results covering at least 30 days of
combined post-Merger operations of ACC and USW.
Section 7.9 Affiliate Agreements. Upon the execution
of this Agreement, USW will provide ACC with a list of those
persons who are, in the reasonable knowledge and judgment of USW,
after consultation with legal counsel, "affiliates" of USW,
within the meaning of Rule 145 promulgated under the Securities
Act ("Rule 145")(each such person who is an "affiliate" of USW
within the meaning of Rule 145 is referred to herein as a "USW
Affiliate"). USW shall provide ACC with such information and
documents as ACC shall reasonably request for purposes of
reviewing such list and shall notify ACC in writing regarding any
change in the identity of such USW Affiliates prior to the
Closing Date. USW shall use its reasonable efforts to deliver or
cause to be delivered to ACC by the date of this Agreement from
each of the USW Affiliates, an executed Affiliate Agreement,
substantially in the form attached hereto as Exhibit B, by which
each such USW Affiliate agrees to comply with the applicable
requirements of Rule 145 ("Affiliate Agreement"). ACC shall be
entitled to place appropriate legends on the certificates
evidencing any ACC Class A Common Stock to be received by such
USW Affiliates pursuant to the terms of this Agreement, and to
issue appropriate stop transfer instructions to the transfer
agent for the ACC Class A Common Stock, consistent with the terms
of the Affiliate Agreements.
Section 7.10 Stock Options.
(a) At the Effective Time, each USW Stock Option,
whether vested or unvested, shall be, in connection with the
Merger, assumed by ACC. Each USW Stock Option so assumed by ACC
under this Agreement shall continue to have, and be subject to,
the same terms and conditions set forth in the agreement,
document or plan governing such option and/or as provided in the
respective option agreements governing such USW Stock Option
immediately prior to the Effective Time, except that (i) such USW
Stock Option shall be exercisable for that number of whole shares
of ACC Class A Common Stock equal to that number of shares of ACC
Class A Common Stock (rounded up to the nearest whole share) into
which the number of shares of USW Common Stock subject to such
USW Stock Option immediately prior to the Effective Time would be
converted under Section 3.1; (ii) the per share exercise price
for the shares of ACC Class A Common Stock issuable upon exercise
of such assumed USW Stock Option shall be equal to (A) the
aggregate exercise price for the shares of USW Common Stock
otherwise purchasable pursuant to such USW Stock Option, divided
by (B) the number of full shares of ACC Common Stock deemed
purchasable pursuant to such USW Stock Option (rounded up to the
nearest whole cent). As soon as practicable after the
Effective Time, ACC shall deliver to each holder of a USW Stock
Option a document confirming the foregoing assumption of each USW
Stock Option by ACC.
(b) ACC shall take all corporate action necessary to
reserve for issuance a sufficient number of shares of ACC Class A
Common Stock to satisfy the exercise of the assumed USW Stock
Options in full.
(c) It is the intention of the parties that the USW
Stock Options assumed by ACC qualify after the Effective Time as
incentive stock options, as defined in Section 422 of the Code,
to the extent that such USW Stock Options qualified as incentive
stock options immediately prior to the Effective Time.
Section 7.11 Registration. ACC shall prepare and file
with the SEC and shall use its best efforts to cause to become
effective, a registration statement on Form S-8 with respect to
the shares of ACC Class A Common Stock issuable upon exercise of
the assumed USW Stock Options as soon as practicable after the
Closing Date.
Section 7.12 Expenses. The parties shall each pay
their own legal, accounting and other similar out-of-pocket
expenses related to the negotiation, preparation and carrying out
of this Agreement and the transactions herein contemplated. If
the Merger is consummated, reasonable legal and accounting fees
and expenses and other similar out-of-pocket expenses reasonably
incurred by USW relating to the negotiation, preparation and
carrying out of this Agreement and the transactions herein
contemplated shall be borne by the Surviving Corporation and
shall be paid at the Effective Time to the person or persons
designated by USW. A schedule of all such fees and expenses to
be incurred through the Closing shall be submitted to ACC prior
to the Closing.
Section 7.13 Brokers or Finders. Each of ACC and USW
represents, as to itself, its Subsidiaries and its affiliates,
that no agent, broker, investment banker, financial advisor or
other firm or person is or will be entitled to any broker's or
finder's fee or any other commission or similar fee in connection
with any of the transactions contemplated by this Agreement,
except First Union Capital Markets Corp., whose fees and expenses
will be paid by ACC at or prior to the Effective Time, and each
of ACC and USW agrees to indemnify and hold the other harmless
from and against any and all claims, liabilities or obligations
with respect to any other fees, commissions or expenses asserted
by any person on the basis of any act or statement alleged to
have been made by such party or its affiliates.
Section 7.14 Voting Agreements. USW shall cause each
director and officer of USW and (and the affiliates thereof) to
execute and deliver to ACC, by the date of this Agreement, voting
agreements and irrevocable proxies in the forms annexed hereto as
Exhibit D (the "Shareholder Tender Agreement"), agreeing, among
other things, to vote in favor of the Merger.
Section 7.15 Indemnification and Insurance. From
and after the Effective Time, the Surviving Corporation and ACC
will fulfill, assume and honor in all respects the obligations of
USW pursuant to USW's Certificate of Incorporation and By-Laws
and any indemnification agreement between USW and any of USW's
directors and officers existing and in force as of the Effective
Time.
Section 7.16 Additional Agreements; Reasonable Efforts.
Subject to the terms and conditions of this Agreement, each of
the parties agrees to use all reasonable efforts to take, or
cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions
contemplated by this Agreement, subject to the appropriate vote
of shareholders of USW described in Section 8.1(a), including
cooperating fully with the other party, including by provision of
information and making all necessary filings under the HSR Act.
ACC and USW will use their reasonable best efforts to resolve any
competitive issues relating to or arising under the HSR Act or
any other federal or state antitrust or fair trade law raised by
any Governmental Entity. If such offers are not accepted by such
Governmental Entity, ACC (with USW's cooperation) may pursue all
litigation resulting from such issues. The parties hereto will
consult and cooperate with one another, and consider in good
faith the views of one another, in connection with any analyses,
appearances, presentations, memoranda, briefs, arguments,
opinions and proposals made or submitted by or on behalf of any
party hereto in connection with proceedings under or relating to
the HSR Act or any other federal or state antitrust or fair trade
law. In the event of a challenge to the transactions
contemplated by this Agreement pursuant to the HSR Act, ACC and
USW shall use all reasonable efforts to defeat such challenge,
including by institution and defense of litigation, or to settle
such challenge on terms that permit the consummation of the
Merger; provided, however, that nothing herein shall require
either party to agree to divest or hold separate any portion of
its business or otherwise take action that could reasonably be
expected to have an ACC Material Adverse Effect or a USW Material
Adverse Effect. In case, at any time after the Effective Time,
any further action is necessary or desirable to carry out the
purposes of this Agreement or to vest the Surviving Corporation
with full title to all properties, assets, rights, approvals,
immunities and franchises of either of the Constituent
Corporations, the proper officers and directors of each party to
this Agreement shall take all such necessary action.
Section 7.17 Notification of Certain Matters. USW
shall give prompt notice to ACC, and ACC and Sub shall give
prompt notice to USW, of the occurrence, or failure to occur, of
any event, which occurrence or failure to occur, if uncured,
would be likely to cause the failure of any of the conditions set
forth in Article VIII of this Agreement.
Section 7.18 Meeting of USW Shareholders. USW shall
take all steps reasonably necessary in accordance with its
Certificate of Incorporation and By-laws and the NYBCL to call,
set a record date, give notice of, convene and hold a special
meeting of its stockholders (the "USW Shareholders Meeting") to
occur as soon as practicable for the purpose of approving and
adopting this Agreement and authorizing the Merger and for such
other purposes as may be necessary. The Board of Directors of
USW shall (i) take all steps reasonably necessary to present and
recommend to its stockholders the approval and adoption of this
Agreement and approval of the transactions contemplated hereby to
which it is a party and any other matters to be submitted to its
stockholders in connection therewith and (ii) use all reasonable
efforts to obtain the approval and adoption by the USW
stockholders of this Agreement and any of the transactions
contemplated hereby requiring such stockholder approval.
Section 7.19 Confidentiality. USW and ACC acknowledge
and confirm that they have entered into a Non-Disclosure
Agreement dated August 1, 1997 and that the same shall remain in
full force and effect in accordance with its terms,
notwithstanding the execution of this Agreement and whether or
not the transactions contemplated by this Agreement are
consummated or terminated.
Section 7.20 Public Disclosures. USW and ACC shall
consult with each other before issuing any press release or
otherwise making any public statement with respect to the
transactions contemplated by this Agreement, and shall not issue
any such press release or make any such public statement prior to
such consultation except as may be required by applicable law or
requirements of the Exchange Act, NASDAQ or any national
securities exchange as advised by counsel, in which case the
parties shall use their reasonable efforts to consult with each
other prior to issuing such a release or making such a statement.
ACC and USW shall issue a joint press release, mutually
acceptable to USW and ACC, promptly upon execution and delivery
of this Agreement. USW and ACC shall cooperate and consult with
each other to develop and implement guidelines for communications
to employees, customers and suppliers of USW regarding the
transactions contemplated by this Agreement.
Section 7.21 Resignation of Directors and Officers.
At or prior to the Closing, USW shall deliver to ACC if and as
requested by ACC evidence satisfactory to ACC of the resignation
of the directors and officers, solely in their capacities as
such, of USW and any USW Entity, such resignations to be
effective at the Effective Time.
Section 7.22 Cooperation. Each of USW and ACC shall
use its best efforts (i) to cooperate with each other in
determining whether any filings are required to be made or
consents are required to be obtained in any jurisdiction prior to
the Closing, in connection with the consummation of the
transactions contemplated hereby and cooperate in making any such
filings promptly and in seeking to obtain any such consents in a
timely manner, or (ii) to take, or cause to be taken, all actions
necessary to comply promptly with all legal requirements which
may be imposed by agency or court order on such party (or any
subsidiaries or other Affiliates of such party) with respect to
this Agreement, and (iii) to take, or cause to be taken, all
actions necessary to obtain (and to cooperate with the other
party to obtain) any consent, authorization, order or approval
of, or any exemption by, any Governmental Entity and/or any other
public entity which is required to be obtained or made by such
party or any of its subsidiaries or other Affiliates in
connection with this Agreement and the transactions contemplated
hereby. USW shall reasonably cooperate with ACC in furnishing
financial information relating to the business of USW for periods
prior to the Closing to the extent such information may be
required to prepare financial information required to be filed
under the Securities Act, the Exchange Act or the rules and
regulations promulgated by the SEC thereunder.
Section 7.23 Noncompete and Nonsolicitation Agreement.
Subject to the satisfaction of the conditions to its obligations
in Article VIII, below, the persons listed on Schedule 7.23 shall
execute and deliver to ACC at the Closing, without further
consideration, a non-compete and non-solicitation agreement in
substantially the form attached hereto as Exhibit C (the "Non-
Compete/Non-Solicitation Agreement")
Section 7.24 SEC and Stockholder Filings. Each of USW
and ACC shall send to the other a copy of all material public
reports and materials as and when it sends the same to its
stockholders, the SEC or any state or foreign securities
commission.
Section 7.25 Takeover Statutes. If any "fair price,"
"moratorium," "business combination," "control share acquisition"
or other similar antitakeover statute or regulation enacted under
state or federal laws in the United States (each a "Takeover
Statute"), including Section 203 of the DGCL and Section 912 of
the NYBCL, is or may become applicable to the Merger, USW, ACC
and the members of their respective Boards of Directors will
grant such approvals, and take such actions as are necessary so
that the transactions contemplated by this Agreement may be
consummated as promptly as practicable on the terms contemplated
hereby and thereby and otherwise act to eliminate or minimize the
effects of any Takeover Statute on any of the transactions
contemplated hereby or thereby.
Section 7.26 Nasdaq Notice of Listing of Additional
Shares. ACC shall file a Notice of Listing of Additional Shares,
pay all requisite filing fees with the Nasdaq and otherwise
comply with all requirements to list the shares of ACC Class A
Common Stock being issued pursuant hereto on the Nasdaq National
Market.
Section 7.27 Filing of Financial Results. As soon as
practicable after the Effective Time, ACC shall use its best
efforts to include in an effective registration statement, Annual
Report on Form 10-K, Quarterly Report on Form 10-Q or Current
Report on Form 8-K filed with the SEC, financial results covering
at least 30 days of combined post-Merger operations of ACC and
USW.
ARTICLE VIII
CONDITIONS TO MERGER
Section 8.1 Conditions to Each Party's Obligation to
Effect the Merger. The respective obligations of each party to
this Agreement to effect the Merger shall be subject to the
satisfaction prior to the Closing Date of the following
conditions:
(a) Shareholder Approval. This Agreement and the
Merger shall have been approved and adopted by the requisite
votes of holders of USW Capital Stock (including any requisite
class votes) pursuant to the NYBCL.
(b) Governmental Approvals. The waiting period
applicable to the consummation of the Merger under the HSR Act
shall have expired or been terminated, and no action shall have
been instituted by the Department of Justice or Federal Trade
Commission challenging or seeking to enjoin the consummation of
the Merger, which action shall not have been withdrawn or
terminated. All authorizations, consents, orders or approvals of
any Governmental Entity required to consummate the transactions
contemplated by this Agreement, the absence of which would be
reasonably likely to result in an ACC Material Adverse Effect or
a USW Material Adverse Effect, shall have been obtained and be in
effect.
(c) Securities Requirements. The Registration
Statement shall have become effective under the Securities Act
and shall not be the subject of any stop order or proceedings
seeking a stop order. All permits and other authorizations
required (if any) under applicable state blue sky laws for the
issuance of shares of ACC Class A Common Stock pursuant to the
Merger, shall have been obtained.
(d) No Injunctions or Restraints; Illegality. No
temporary restraining order, preliminary or permanent injunction
or other order issued by any court of competent jurisdiction or
other legal or regulatory restraint or prohibition preventing the
consummation of the Merger or limiting or restricting ACC's or
USW's conduct or operation of the business of ACC or USW after
the Merger shall have been issued and be in effect, nor shall any
proceeding brought by a domestic administrative agency or
commission or other domestic Governmental Entity, seeking any of
the foregoing be pending; nor shall there be any action taken, or
any statute, rule, regulation or order enacted, entered, enforced
or deemed applicable to the Merger which makes the consummation
of the Merger illegal or prevents or prohibits the Merger.
(e) Tax Opinions. ACC and USW shall each have
received written opinions, dated as of the Closing Date, from
their respective counsel Nixon, Hargrave, Devans & ▇▇▇▇▇ LLP and
▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP in form and substance reasonably
satisfactory to them to the effect that the Merger will be
treated for federal income tax purposes as a tax-free
reorganization within the meaning of Section 368(a) of the Code.
In rendering such opinion, counsel may rely upon reasonable
representations and certificates of ACC, Sub, USW and certain
shareholders of USW, and the parties to this Agreement agree to
make, and to use reasonable efforts to cause the shareholders of
USW to make, such representations and deliver such certificates.
(f) Pooling.
(i) ACC shall have received a letter from ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, LLP and USW shall have received a letter from Deloitte
& Touche, LLP, dated as of the Effective Time, confirming the
appropriateness of pooling of interest accounting for the Merger
under Accounting Principles Board Opinion No. 16 if the Merger is
closed and consummated in accordance with this Agreement; and
(ii) Neither ACC nor USW shall have received any
notice, response or indication from the Securities and Exchange
Commission that pooling of interest accounting for the Merger
under Accounting Principles Board Opinion No. 16 will be
unavailable or inappropriate if the Merger is closed and
consummated in accordance with this Agreement.
(g) Moratorium. There shall not have occurred and be
continuing any general banking moratorium in the United States or
any general suspension of trading of securities on any national
stock exchange or in the over-the-counter market.
Section 8.2 Additional Conditions to Obligations of
ACC and Sub. The obligations of ACC and Sub to effect the Merger
are subject to the satisfaction of each of the following
additional conditions, any of which may be waived in writing
exclusively by ACC and Sub:
(a) Representations and Warranties. The
representations and warranties of USW set forth in this Agreement
shall be true and correct in all material respects as of the date
of this Agreement and as of the Closing Date as though made on
and as of the Closing Date. ACC shall have received a
certificate signed on behalf of USW by an executive officer of
USW to such effect.
(b) Performance of Obligations. USW shall have
performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing
Date, and ACC shall have received a certificate signed on behalf
of USW by an executive officer of USW to such effect.
(c) Ancillary Agreements and Documentation. ACC shall
have received (i) executed Affiliate Agreements and Pooling
Letters from each of the USW Affiliates; (ii) Non-Compete/Non-
Solicitation Agreement from each of the persons listed on
Schedule 7.23 and (iii) an update of the USW Disclosure Letter as
of the Closing Date.
(d) Third-Party Consents and Waivers. USW shall have
provided all notices to third parties, and shall have received
all third-party consents or waivers, required for or in
connection with the consummation of the transactions contemplated
by this Agreement under any contract set forth (or required to be
set forth) in Section 4.4 of the USW Disclosure Letter or to be
obtained pursuant to Section 7.4.
(e) Lease. The current lease for USW's location at
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ shall be
amended to modify the relocation provision and such amendment
shall be, in form and substance, acceptable to ACC.
(f) Dissenting Shares. The number of Dissenting
Shares shall be less than ten percent (10%) of the shares of USW
Capital Stock outstanding as of the Effective Time.
(g) Stock Options and Warrants. USW shall have
received all consents necessary for ACC to assume all outstanding
USW Stock Options in accordance with Section 7.10 hereof and to
convert all outstanding USW Warrants into the right to receive
that number of shares of ACC Class A Common Stock into which the
shares of USW Capital Stock issuable pursuant to Section 3.1(f)
hereof would be converted.
(h) Accountants Consent. Deloitte & Touche LLP shall
have furnished to ACC an undertaking to consent to the use and
inclusion of financial statements relating to USW audited by it
in filings made by ACC subsequent to the Effective Time with the
SEC, NASDAQ and state securities authorities.
(i) Audit. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP shall have audited
the books and records of USW and the results of such audit shall
be satisfactory to ACC.
(j) Carriers Group, Inc. If requested by ACC prior
to December 31, 1997, Carriers Group, Inc. shall have exercised
its right to terminate the agreement between Carriers Group, Inc.
and Wiltel for network services.
(k) Disclosure Documents List. Within two weeks of
the date of this Agreement, USW shall have provided to ACC true
and complete copies of each of the documents described on the
Disclosure Documents List attached hereto as Schedule 8.2(k),
which shall be in form and substance satisfactory to ACC.
(l) Exhibits. Within two weeks of the date of this
Agreement, USW and ACC shall have agreed upon the form of
Exhibits A, B and C to be attached hereto.
(m) Schedules. Within seven days of the date of this
Agreement, USW shall have furnished ACC with an updated USW
Disclosure Letter which shall not vary materially from the USW
Disclosure Letter delivered to ACC by USW on the date hereof.
Section 8.3 Additional Conditions to Obligations of
USW. The obligation of USW to effect the Merger is subject to
the satisfaction of each of the following additional conditions,
any of which may be waived, in writing, exclusively by USW:
(a) Representations and Warranties. The
representations and warranties of ACC and Sub set forth of this
Agreement shall be true and correct in all material respects as
of the date of this Agreement and as of the Closing Date as
though then made. USW shall have received a certificate signed
on behalf of ACC by an executive officer of ACC to such effect.
(b) Performance Obligations. ACC and Sub shall have
performed in all material respects all obligations required to be
performed by them under this Agreement at or prior to the Closing
Date; and USW shall have received a certificate signed on behalf
of ACC by an executive officer of ACC to such effect.
(c) No ACC Material Adverse Effect. No ACC Material
Adverse Effect shall have occurred, and USW shall have received a
certificate signed on behalf of ACC by an executive officer of
ACC to such effect. Notwithstanding anything herein to the
contrary, neither a decrease in the market price or trading
volume of ACC Class A Common Stock nor the failure of ACC to meet
the earnings predictions of equity analysts for any period ending
(or for which earnings are released) after the date of this
Agreement and prior to the Closing Date shall be deemed by
themselves to constitute an ACC Material Adverse Effect.
(d) Fairness Opinion. USW shall have received an
opinion from ▇▇▇▇▇▇, ▇▇▇▇▇ & Co., Inc. that the terms of the
transactions contemplated by this Agreement are fair to the
shareholders of USW as of the Closing Date.
ARTICLE IX
TERMINATION AND AMENDMENT
Section 9.1 Termination. This Agreement may be
terminated at any time prior to the Effective Time (with respect
to Section 9.1(b) through Section 9.1(d), by written notice by
the terminating party to the other party):
(a) by the mutual written consent of ACC, Sub and USW;
(b) by either ACC or USW if the Merger shall not have
been consummated by March 31, 1998; provided, however, that if
the Merger shall not have been consummated due to the waiting
period (or any extension thereof) under the HSR Act not having
expired or been terminated, or due to an action having been
instituted by the Department of Justice or Federal Trade
Commission challenging or seeking to enjoin the consummation of
the Merger, then such date shall be extended to September 30,
1998, and provided further that the right to terminate this
Agreement under this Section 9.1(b) shall not be available to any
party whose failure to fulfill any obligation under this
Agreement has been the cause of or resulted in the failure of the
Merger to occur on or before such date; or
(c) by either ACC or USW if a court of competent
jurisdiction or other Governmental Entity shall have issued a
nonappealable final order, decree or ruling or taken any other
action, in each case having the effect of permanently
restraining, enjoining or otherwise prohibiting the Merger,
except, if the party relying on such order, decree or ruling or
other action has not complied with its obligations under
Article VII of this Agreement; or
(d) by ACC and Sub if (i) USW shall have misstated any
representation or is in breach of any warranty contained herein
which would result in USW being unable to satisfy the conditions
to Closing set forth in Section 8.1 or 8.2 or (ii) USW shall have
breached any covenant, undertaking or restriction contained
herein which would result in USW being unable to satisfy the
conditions to Closing set forth in Section 8.1 or 8.2 or (iii)
any party to a Shareholder Tender Agreement (other than ACC or
Sub) shall have violated the provisions thereof; or
(e) by USW if (i) ACC or Sub shall have misstated any
representation or is in breach of any warranty contained herein
which would result in ACC being unable to satisfy the conditions
to Closing set forth in Section 8.1 or 8.3 or (ii) ACC or Sub
shall have breached any covenant, undertaking or restriction
contained herein which would result in ACC being unable to
satisfy the conditions to Closing set forth in Section 8.1 or
8.3.
Section 9.2 Effect of Termination. In the event of
termination of this Agreement as provided in Section 9.1, this
Agreement shall forthwith become void and of no effect, and there
shall be no liability or obligation on the part of ACC, USW, Sub
or their respective officers, directors, stockholders,
shareholders or affiliates, except to the extent that such
termination results from the willful breach by a party of any of
its representations, warranties or covenants set forth in this
Agreement; provided, however, that the provisions of Section 7.19
and of Article X concerning the confidentiality of certain
information shall remain in full force and effect and survive any
termination of this Agreement.
Section 9.3 Amendment. This Agreement may not be
amended except by an instrument in writing signed on behalf of
each of the parties hereto. This Agreement may be amended by the
parties hereto, by action taken or authorized by their respective
Boards of Directors, at any time before or after approval of the
matters presented in connection with the Merger by the
shareholders of USW, but, after any such approval, no amendment
shall be made which by law requires further approval by such
shareholders without such further approval.
Section 9.4 Extension; Waiver. At any time prior to
the Effective Time, the parties hereto, by action taken or
authorized by their respective Boards of Directors, may, to the
extent legally allowed, (i) extend the time for the performance
of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant
hereto and (iii) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid only
if set forth in a written instrument signed on behalf of such
party.
ARTICLE X
CONFIDENTIALITY AND NON-DISCLOSURE
Section 10.1 Evaluation Material. In connection with
the Merger and the transactions contemplated by this Agreement,
USW has provided to ACC and ACC has provided to USW (in each case
the providing party is herein referred to as the "Disclosing
Company" and the receiving party is herein referred to as the
"Receiving Party") certain documents and information (including
information in verbal, visual, written and/or electronic format)
relating to the Disclosing Company's business, which are not
generally available to others, and are protected by the
Disclosing Company against unrestricted disclosure to others
("Evaluation Material"). Evaluation Material shall not include
any document or information that (a) was known to the Receiving
Company prior to the commencement of any disclosure of Evaluation
Material by the Disclosing Company or its Representatives (as
defined in Section 10.2) to the Receiving Company; (b) was or is
independently developed by the Receiving Company without use of
Evaluation Material; (c) is now or hereafter becomes available to
the public other than as a consequence of a breach by the
Receiving Party of its obligations under this Article X and (d)
is or becomes available to the Receiving Company on a
nonconfidential basis from a source (other than the Disclosing
Company) which, to the best of the Receiving Company's knowledge
after due inquiry, is not prohibited from disclosing such
information to the Receiving Company by a legal, contractual or
fiduciary obligation to the Disclosing Company.
Section 10.2 Use of Evaluation Material. Unless and
until the Merger is consummated, all Evaluation Material will be
used solely for the purpose of evaluating the Merger and the
transactions contemplated by this Agreement and the planning for
the implementation of the Merger and such Evaluation Material
shall be kept strictly confidential by the Receiving Company and
those of its directors, officers, employees and advisors to whom
disclosure is necessary for the performance of such evaluation
and such planning (collectively referred to as the
"Representatives"), it being understood that these
Representatives have been or shall be informed of the
confidential nature of the Evaluation Material and shall agree to
be bound by the provisions of this Article X, and to refrain from
disclosing and to not disclose the Evaluation Material to any
other person. Without limiting the generality of the foregoing,
upon the consummation of the Merger, only ACC shall be permitted
to disclose the Evaluation Material of both ACC and USW. The
Receiving Company shall cause its Representatives to observe the
terms of this Article X, and the Receiving Company shall be
responsible for any breach of this Article X by any of its
Representatives.
Section 10.3 Mandatory Disclosure. In the event that
the Receiving Company or any of its Representatives become
legally compelled (by deposition, interrogatory, request for
documents, subpoena, civil investigative demand, other demand or
request by a governmental agency or other application of
statutes, rules and regulations under the Federal securities laws
or similar process) to disclose any of the Evaluation Material,
the Receiving Company shall provide the Disclosing Company with
prompt prior written notice of such requirement prior to such
disclosure. In the event that a protective order or other remedy
is not obtained, or that the Disclosing Company waives compliance
with the provision hereof, the Receiving Company agrees to
furnish only that portion of the Evaluation Material which the
Receiving Company is legally required to furnish and, where
appropriate, to exercise its best efforts to obtain assurances
that confidential treatment will be accorded such Evaluation
Material.
Section 10.4 Return of Evaluation Material. If the
Merger is not consummated or if the Disclosing Company so
requests, the Receiving Company shall promptly return to the
Disclosing Company all copies of Evaluation Material in its
possession or in the possession of its Representatives which
consists of written or visual material, and the Receiving Company
shall destroy all copies of any analyses, compilations, studies
or other documents prepared by the Receiving Company or for the
Receiving Company's use containing any Evaluation Material.
Notwithstanding the return or destruction of the Evaluation
Material, each party and its Representatives shall continue to be
bound by its obligations of confidentiality and other obligations
hereunder. Any destruction required pursuant to this
Section 10.4 shall be certified in writing to the applicable
party by an authorized officer supervising such destruction.
Section 10.5 Injunctive Relief. ACC and USW understand
and agree that money damages will not be a sufficient remedy for
any breach of this Article X by either party or any of their
respective Representatives and that the non-breaching party shall
be entitled to equitable relief, including injunction and
specific performance, as a remedy for any such breach. Such
remedies shall not be deemed to be the exclusive remedies for a
breach of this Article X but shall be in addition to all other
remedies available at law or in equity.
ARTICLE XI
GENERAL PROVISIONS
Section 11.1 Notices. All notices and other
communications hereunder shall be in writing and shall be deemed
given if delivered personally or by commercial delivery service,
or mailed by registered or certified mail (return receipt
requested) or sent via facsimile (with confirmation of receipt)
to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to ACC or Sub, to:
ACC Corp.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President and
Chief Operating Officer, ACC North America
Fax: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
ACC Corp.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President Legal & Regulatory
Affairs and
General Counsel, ACC TeleCom
Fax: ▇▇▇-▇▇▇-▇▇▇▇
and a copy to:
Nixon, Hargrave, Devans & ▇▇▇▇▇ LLP
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇ III, Esq.
Fax: ▇▇▇-▇▇▇-▇▇▇▇
(b) if to USW, to:
US WATS, Inc.
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▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Fax: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax: ▇▇▇-▇▇▇-▇▇▇▇
(c) If to the Shareholders or Option Holders (as
defined in Section 7.10 hereof) to: the address of such Holder as
set forth in the stock transfer books and other applicable
records of USW.
Section 11.2 Interpretation. When a reference is made
in this Agreement to a section, such reference shall be to a
Section of this Agreement unless otherwise indicated. The words
"include," "includes" and "including" when used herein shall be
deemed in each case to be followed by the words "without
limitation." The phrase "made available" in this Agreement shall
mean that the information referred to has been made available if
requested by the party to whom such information is to be made
available. The phrases "the date of this Agreement," "the date
hereof," and terms of similar import, unless the context
otherwise requires, shall be deemed to refer to the date first
set forth in the first paragraph of this Agreement. The table of
contents and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Reference to a
party's "knowledge" means actual knowledge of such party and its
Subsidiaries after reasonable inquiry of such party's and its
Subsidiaries' directors, officers, and other management-level
employees who could reasonably be expected to have knowledge of
such matters.
Section 11.3 Schedules. The USW Disclosure Letter,
containing exceptions to certain representations and warranties
in this Agreement shall be arranged in separate parts
corresponding to the numbered and lettered sections, and the
disclosure in any numbered or lettered part shall be deemed to
relate to and to qualify only the particular representation or
warranty set forth in the corresponding numbered or lettered
section, and not any other representation or warranty (unless an
express and specific reference to any other Section of the USW
Disclosure Letter which clearly identifies the particular item
being referred is set forth therein).
Section 11.4 Severability. In the event that any
provision of this Agreement, or the application thereof, becomes
or is declared by a court of competent jurisdiction to be
illegal, void or unenforceable, the remainder of this Agreement
will continue in full force and effect and the application of
such provision to other persons or circumstances will be
interpreted so as reasonably to effect the intent of the parties
hereto. The parties further agree to replace such void or
unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible,
the economic, business and other purposes of such void or
unenforceable provision.
Section 11.5 Nonsurvival of Representations, Warranties
and Agreements. Except as explicitly set forth in this
Agreement, none of the representations, warranties and agreements
in this Agreement or in any closing certificate delivered
pursuant to this Agreement shall survive the Closing and the
Effective Time.
Section 11.6 Entire Agreement. This Agreement
(including the documents and the instruments referred to herein,
including the USW Disclosure Letter) constitutes the entire
agreement and supersedes all prior agreements and understandings
both written and oral, among the parties with respect to the
subject matter hereof, other than the Non-Disclosure Agreement
dated August 1, 1997 between ACC and USW.
Section 11.7 Governing Law. This Agreement shall be
governed and construed in accordance with the laws of the State
of New York without regard to any applicable conflicts of law
except that the DGCL shall, to the extent applicable, govern the
procedures to be taken hereunder to effect the Merger.
Section 11.8 Assignment. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation of
law or otherwise) without the prior written consent of the other
parties. Subject to the preceding sentence, this Agreement will
be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.
Section 11.9 Third Party Beneficiary. Nothing
contained in this Agreement is intended to confer upon any person
other than the parties hereto and their respective successors and
permitted assigns, any rights, remedies or obligations under, or
by reason of this Agreement, except that the persons who are
shareholders of USW immediately prior to the Effective Time of
the Merger (and their successors and assigns) are express
intended third party beneficiaries of Articles II and III,
Section 7.10, and, to the extent relevant to any of the
foregoing, Article XI and as such are entitled to rely on the
provisions hereof as if a party hereto.
Section 11.10 No Rule of Construction. The parties
acknowledge that all parties have read and negotiated the
language used in this Agreement. The parties agree that, because
all parties participated in negotiating and drafting this
Agreement, no rule of construction shall apply to this Agreement
which construes ambiguous language in favor of or against any
party by reason of that party's role in drafting this Agreement.
Section 11.11 Counterparts. This Agreement may be
executed in one or more counterparts, all of which shall be
considered one and the same agreement and shall become effective
when one or more counterparts have been signed by each of the
parties and delivered to the other parties, it being understood
that all parties need not sign the same counterpart.
IN WITNESS WHEREOF, each of ACC, Sub and USW has caused
this Agreement to be signed by its respective officer thereunto
duly authorized, as of the date first written above.
ACC CORP. US WATS, INC.
By:_____________________________ By:______________________________
Title: Title:
ACC ACQUISITION-BLUE CORP.
By:________________________
Title: