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EXHIBIT 10.17
STOCK ACQUISITION AGREEMENT AND PLAN OF MERGER
This STOCK ACQUISITION AGREEMENT AND PLAN OF MERGER (this "Agreement")
is made and entered into as of this 17th day of January, 1997 (the "Execution
Date") by and among IXC Communications, Inc. ("IXC"), a Delaware corporation,
IXC Long Distance, Inc., a Delaware corporation ("IXC-LD"), IXC-One Acquisition
Corp. ("Acquisition Corp."), a California corporation, ▇.▇. Services, Inc. ("LD
Services"), a California corporation, and the Shareholders listed on the
signature page hereof: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, individually and in his capacity as
Trustee of the ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ 1996 Revocable Trust;
▇▇▇▇▇▇ ▇▇▇▇▇▇; ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, individually and in her capacity as Trustee
of the ▇▇▇▇▇▇▇ Family Trust; ▇▇▇ ▇▇▇▇▇▇▇; ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇; ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, individually and in his capacity as Trustee of the ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ Revocable Trust; ▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇▇; and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇.
R E C I T A L S
A. LD Services owns and operates a long distance
telecommunications business (the "Business").
B. The Shareholders own 93.75% of the issued and outstanding
shares of common stock, no par value (the "LD Services Stock"), and the
remaining shareholders (the "Non-Control Shareholders") own 6.25% of issued and
outstanding shares of LD Services Stock which in the aggregate constitute all
of the outstanding capital stock of LD Services. The Non-Control Shareholders
have consented to sell their shares pursuant to Article II below pursuant to
the terms of a Waiver and Consent of even date herewith.
C. IXC-LD, a wholly owned subsidiary of IXC, desires to acquire
all of the capital stock of LD Services by consummating the following
transactions in the following order: (i) first, IXC shall cause Acquisition
Corp., a wholly owned subsidiary of IXC, to be merged with and into LD Services
(the "Merger") in accordance with this Agreement, such that after the Merger,
LD Services shall be the surviving corporation and a wholly owned subsidiary,
and Acquisition Corp. shall cease to exist; and (ii) second, immediately
following the completion of the Merger, IXC shall contribute all of the capital
stock of LD Services to IXC-LD.
D. In connection with the Merger, the LD Services' Stock shall be
converted into a number of shares of IXC Common Stock (defined below), upon the
terms and subject to conditions of this Agreement.
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A G R E E M E N T
In consideration of the foregoing recitals and the respective
covenants, agreements, representations and warranties contained herein, the
parties, intending to be legally bound, hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Defined Terms. For purposes of this Agreement, the following
terms shall have the following meanings:
"Action" shall mean any action, claim, suit, litigation,
proceeding, arbitration, mediation or other dispute.
"Additional Purchase Price" shall mean the dollar amount equal
to the product of 150,000 and the Price Increase.
"Ancillary Agreement" shall mean each other agreement executed
in connection with this Agreement, including, without limitation, the
Employment Agreements, the Revised Independent Agent Agreements and the
Registration Rights Agreement (as defined below).
"Auditors" shall mean Ernst & Young LLP.
"Books and Records" shall mean all books, ledgers, files,
records, manuals and other materials (in any form or medium) related to the
Business, including, but not limited to, all correspondence, personnel records,
vendor lists, operation and quality control records and procedures, research
and development files, Intellectual Property disclosures and documentation,
accounting records and systems, litigation files, sales order files, purchase
order files, advertising materials, catalogs, product brochures, mailing lists,
customer lists, distribution lists, sales and promotional materials and all
other records utilized by LD Services in connection with the Business and all
computer hardware, software and data files necessary to access or review or
continue to compile or utilize any of the foregoing.
"Closing Share Price" shall mean the average closing price as
publicly reported by the Nasdaq Stock Market as of 4:00 p.m. Eastern Time of
IXC Common Stock over the last five trading days ending with (and not
including) the Actual Closing Date.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Consideration" shall be the sum of (i) the number of shares
of IXC Common Stock (the "Initial Share Amount") which, when multiplied by the
Initial Share Price, equals the Initial Purchase Price plus (ii) the number of
shares of IXC Common Stock (the "Additional
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Share Amount") which, when multiplied by the Closing Share Price, equals the
Additional Purchase Price.
"Deemed Closing Date" shall mean the date which is the last
day of the month in which the conditions set forth in Section 7.7 and 8.5 have
been satisfied.
"Deemed Closing Date Audit" shall mean the financial audit
conducted by the Auditors of LD Services' balance sheet as of the Deemed
Closing Date.
"Employee Benefit Plan(s)" shall mean any deferred
compensation plan, bonus plan, profit sharing plan, stock option plan, employee
stock purchase plan and any other employee benefit plan, agreement, arrangement
or commitment (a) which LD Services sponsors or to which LD Services
contributes or is required to contribute, or under which LD Services may incur
any liability, and (b) which covers an employee or former employee of LD
Services.
"Encumbrances" shall mean any claim, lien, pledge, option,
charge, security interest, deed of trust, mortgage, restriction, encumbrance or
other right of third parties, of any kind or nature.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time, and any successor statute, including the
rules and regulations promulgated thereunder.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect on the date of the Agreement.
"Independent Agents" shall mean those individuals listed as
Independent Agents on the Disclosure Schedule attached hereto, each of which
has been engaged by LD Services for the purpose of selling commercial long
distance telecommunications services under the terms and conditions of an
Independent Agent Agreement signed by such individual with LD Services.
"Initial Purchase Price" shall mean the dollar amount equal to
(i) 10.8 times $2.75 million; less (ii) the Net Liabilities as of the Deemed
Closing Date (which shall be based upon LD Services' audited balance sheet
produced from the Deemed Closing Date Audit); plus (iii) the Net Assets as of
Deemed Closing Date (which shall be based upon LD Services' audited balance
sheet produced from the Deemed Closing Date Audit).
"Initial Share Price" shall mean the average closing price as
publicly reported by the Nasdaq Stock Market as of 4:00 p.m. Eastern Time of
IXC Common Stock over the last twenty trading days ending with and including
the Execution Date.
"Intellectual Property" shall mean all of LD Services'
intellectual property rights including, without limitation, all of LD Services'
right, title and interest in and to any (a) trademarks, trademark registrations
and applications, service marks and trade names, copyrights,
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copyright registrations, trade secrets and business confidential information;
(b) computer software programs and systems and documentation relating to the
foregoing or used or useable in the Business; and (c) other proprietary
information owned, controlled, created or used or useable by or on behalf of LD
Services in connection with the conduct of the Business in which LD Services
has any interest whatsoever, whether or not registered, including rights or
obligations under any license agreement with any other person.
"IXC Affiliate" shall mean IXC, IXC-LD and any direct or
indirect subsidiary thereof.
"IXC Common Stock" shall mean shares of common stock, par
value $.01 per share, of IXC. The issuance of the IXC Common Stock under this
Agreement shall not be registered under the federal securities laws, and
therefore, shall be "restricted stock" under such laws; provided, however, that
such shares shall be covered by the terms of the Registration Rights Agreement.
"IXC Network" shall mean the long distance telecommunications
network of IXC and its subsidiaries.
"Laws" shall mean all federal, state or local statutes,
regulations, ordinances, orders, decrees, or any other laws, common law
theories or reported decisions of any state or federal court including, without
limitation, now or at any time hereafter in effect, including, without
limitation, any of the foregoing relating to, or imposing liability or
standards of conduct concerning, any hazardous, toxic or dangerous waste,
substance or material.
"Net Assets" as of any date shall be zero except if Net
Liabilities are zero in which event "Net Assets" shall mean the difference
between (i) the total current assets of LD Services as of such date less (ii)
the total current liabilities (excluding shareholders' equity), determined in
accordance with GAAP on an accrual basis. For purposes of the foregoing, Net
Assets at the Deemed Closing Date shall reflect accrual for all legal and
accounting fees and expenses of LD Services relating to the transactions
contemplated hereby, regardless of whether such amounts have been billed to LD
Services prior to the Deemed Closing Date.
"Net Liabilities" as of any date shall mean the difference
between (i) the total current liabilities of LD Services as of such date
(excluding shareholders' equity) less (ii) the total current assets, determined
in accordance with GAAP on an accrual basis. In the event such total
liabilities are less than such total assets, Net Liabilities shall be zero.
For purposes of the foregoing, Net Liabilities at the Deemed Closing Date shall
reflect accrual for all legal and accounting fees and expenses of LD Services
relating to the transactions contemplated hereby, regardless of whether such
amounts have been billed to LD Services prior to the Deemed Closing Date.
"Per Share Consideration" shall equal the Consideration
divided by the Outstanding LD Services Shares.
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"Permits" shall mean all franchises, permits, licenses,
qualifications, rights-of-way, easements, municipal and other approvals,
authorizations, orders, consents and other rights from, and filings with, any
governmental authority of any jurisdiction worldwide relating to the conduct of
the Business.
"Price Increase" shall mean the excess, if any, of (i) the
Closing Share Price over (ii) the Initial Share Price.
"Purchase Price" shall mean the sum of the Initial Purchase
Price and the Additional Purchase Price.
"Regulatory Approvals" shall mean all necessary regulatory
approvals from the Federal Communications Commission and state public service
commissions, more fully described in Exhibit A attached hereto, required for
the transfer of ownership or control over LD Services.
"Representatives" shall mean any officer, director, principal,
shareholder, partner, attorney, accountant, advisor, agent, employee or other
representative of a party hereto.
"Tax(es)" shall mean all taxes, charges, fees, levies or other
assessments imposed by and required to be paid to any federal, state, local, or
foreign taxing authority, including, without limitation, income, excise,
property, sales, transfer, ad valorem, payroll and franchise taxes (including
any interest, penalties or additions attributable to or imposed on or with
respect to any such assessment) and any estimated payments or estimated Taxes.
"Tax Return" shall mean any return, report, information return
or other document (including any related or supporting information) filed or
required to be filed with any federal, state, local or foreign governmental
entity or other authority in connection with the determination, assessment or
collection of any Tax (whether or not such Tax is imposed on a Shareholder) or
the administration of any Laws, regulations or administrative requirements
relating to any Tax.
ARTICLE 2
MERGER
2.1 Merger. On the terms and subject to the conditions of this
Agreement, on the Effective Date (defined below), Acquisition Corp. shall be
merged with and into LD Services in a statutory merger pursuant to the terms
and conditions of this Agreement, in accordance with the California General
Corporation Law ("CGCL"). On and after the Effective Date, the separate
existence and corporate organization of Acquisition Corp. shall cease, and LD
Services shall succeed to and possess all of the properties, rights, privileges
and powers and be subject to all of the liabilities and obligations of
Acquisition Corp., all without further act or deed.
2.2 Shareholder Approval. The Shareholders hereby approve this
Agreement and hereby consent to the Merger described in Section 2.1 above.
IXC, as the sole stockholder of
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Acquisition Corp., hereby approves this Agreement and hereby consents to the
Merger. Each of the Shareholders and IXC hereby waive any appraisal rights to
which it may be entitled under the CGCL, in accordance with the provisions of
the CGCL.
2.3 Effective Date of Merger. As soon as practicable following
the Actual Closing, LD Services and Acquisition Corp. shall cause an agreement
of merger with the required officers' certificates (the "Certificate of
Merger"), executed at the Actual Closing, to be filed with the Secretary of
State of the State of California in accordance with the CGCL. The Merger shall
become effective at the time of the filing of the Certificate of Merger. The
time and date on which the Merger shall become effective is referred to herein
as the "Effective Date."
2.4 Articles of Incorporation, Bylaws, Directors and Officers.
(i) Articles of Incorporation. The Articles of
Incorporation of LD Services as in effect at the Effective Date shall remain in
effect and will be the Articles of Incorporation of the surviving corporation,
until amended in accordance with the CGCL.
(ii) Bylaws. The Bylaws of LD Services, as in effect at
the Effective Date, shall remain in effect until amended in accordance with the
terms of such Bylaws.
(iii) Directors and Officers. The directors and officers
of LD Services immediately prior to the Effective Date shall be the directors
and officers, respectively, of LD Services, to serve until their respective
successors are duly elected and qualified.
2.5 Conversion. On the Effective Date and by virtue of the
Merger, (i) each outstanding share of common stock, no par value of Acquisition
Corp., outstanding as of the Effective Date shall be converted into one share
of common stock, no par value, of LD Services; and (ii) each outstanding share
of common stock, no par value of LD Services shall be automatically converted,
without any action on the part of the holder thereof, into and represent the
right to receive from IXC the Per Share Consideration in accordance with the
terms of this Agreement. The Per Share Consideration shall be paid by delivery
of one or more certificates of IXC Common Stock registered in the name of each
Shareholder on the dates and subject to the adjustments set forth below in
Section 2.5(a).
(a) Payment of Purchase Price. Subject to the conditions
set forth herein, IXC shall deliver to each Shareholder the Per Share
Consideration multiplied by the number of shares of LD Services Stock owned by
such Shareholder immediately prior to the Merger (with respect to each
Shareholder, the "Shareholder's IXC Shares"). For purposes of calculating the
number of shares contained in the Shareholder's IXC Shares, the numbers shall
be rounded to the nearest whole share as required to avoid issuance of
fractional shares.
(b) Adjustments Relating to Stock Splits and Other
Events. If after the first date that enters into the calculation of the
Initial Share Price and/or the Additional Share Price and before the date on
which the Initial Share Amount and/or the Additional Share Amount are
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actually issued and delivered to the Shareholders, the number of shares of IXC
Common Stock outstanding shall be increased due to a subdivision of shares, the
payment of a stock dividend, a stock split or any other change in
capitalization effective without receipt of consideration by IXC or with
receipt of consideration by IXC which is grossly inadequate (excluding grants
of stock options under any of IXC's stock plans then in effect), or if such
outstanding shares shall have been changed into or exchanged for a different
number or kind of shares or other securities through a reorganization,
recapitalization, reclassification, merger, consolidation, share exchange or
similar transaction, then a proportionate adjustment in the number and an
appropriate adjustment in the kind of securities issuable under Section 2.5(a)
above shall be made.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS AND LD SERVICES
The Shareholders and LD Services hereby represent and warrant to IXC
and IXC-LD that the following statements are true and complete and not
misleading as of the date of this Agreement and the Shareholders and LD
Services hereby expressly acknowledge that IXC and IXC-LD, in agreeing to
consummate the transactions contemplated by this Agreement, have relied upon
the following representations and warranties with respect to the Business and
the LD Services Stock in its decision to enter into this Agreement:
3.1 Organization and Qualification of LD Services. LD Services is
a corporation duly organized, validly existing and in good standing under the
Laws of the State of California. LD Services has the requisite corporate power
and authority to own, lease and operate its assets and properties and to
conduct the Business in the manner in which it is presently conducted. LD
Services is duly qualified and licensed in each jurisdiction where the nature
of the business conducted by it requires such qualification, except where the
failure to so qualify would not have a material adverse effect upon LD
Services' financial condition or results of operations. LD Services has
delivered to IXC-LD true and complete copies of its Articles of Incorporation
and Bylaws. Except as set forth in the Disclosure Schedule, LD Services has no
subsidiaries or affiliated companies and does not otherwise own or control
directly or indirectly, any equity interest in any corporation, association or
business entity.
3.2 Capitalization of LD Services. The authorized capital stock
of LD Services consists solely of 1,000 shares of LD Services Stock. The
number of shares of the LD Services Stock issued and outstanding is set forth
on the Disclosure Schedule. Other than this Agreement, and except as set forth
on the Disclosure Schedule, there is not outstanding any subscription, option,
warrant, call, right or other agreement or commitment obligating LD Services or
any of the Shareholders to issue, sell, deliver or transfer (including any
right of conversion or exchange under any outstanding security or other
instrument) any shares of the LD Services Stock or any shares of any other
capital stock of LD Services.
3.3 Title to the LD Services Stock. Each Shareholder owns
beneficially and of record the number of shares of LD Services Stock as set
forth for him in the Disclosure Schedule, free
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and clear of all Encumbrances affecting his ability to transfer such shares to
LD Services for cancellation. All of the shares of the LD Services Stock are
duly and validly authorized, issued and outstanding, fully paid,
non-assessable.
3.4 Authorization. LD Services has the requisite corporate power
and authority to execute and deliver this Agreement and the Certificate of
Merger and to consummate the transactions contemplated hereby, and to perform
any of its obligations hereunder. Each of the Shareholders has the requisite
power and authority to execute and deliver this Agreement, and to consummate
the transactions contemplated hereby, and to perform all such Shareholder's
obligations hereunder. All actions and proceedings on the part of LD Services,
its officers, directors and shareholders necessary to authorize the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly taken or will be taken prior to
the Actual Closing Date.
3.5 Due Execution and Delivery; Binding Obligations. The
Ancillary Agreements have been duly executed and delivered by LD Services and
the Shareholders as the case may be. The Ancillary Agreements constitute the
legal, valid and binding agreement and obligation of LD Services and the
Shareholders, as the case may be, enforceable against them in accordance with
its terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or conveyance or similar Laws
relating to or limiting creditors' rights generally or by equitable principles
relating to enforceability and except as rights of indemnity or contribution
may be limited by federal or state securities or other laws or the public
policy underlying such Laws.
3.6 Compliance with Other Instruments. LD Services is not in
violation of any term of its Articles of Incorporation or Bylaws, or in any
material respect of any term or provision of any mortgage, indebtedness,
indenture, contract, agreement, instrument, order, writ, injunction, judgment
or decree. LD Services is not in violation of any order, statute, rule or
regulation applicable to LD Services, its officers, directors and shareholders.
LD Services has all licenses, permits and certificates from governmental
agencies necessary for the conduct of its business as now conducted. No claim
has been made by any governmental authority to the effect that the business
conducted by LD Services fails to comply, in any respect (and no such claim is
anticipated by LD Services), with any Laws.
3.7 No Conflict or Violation. Neither the execution and delivery
of this Agreement, nor the consummation of the transactions contemplated
hereby, will result in: (a) a violation of, or a conflict with, LD Services'
Articles of Incorporation, Bylaws or any subscription, shareholders' or similar
types of agreements or understandings to which LD Services or a Shareholder is
a party thereto; (b) a material breach of, or a material default (or an event
which, with notice or lapse of time or both would constitute a material
default) under or result in the termination of, or accelerate the performance
required by, or create a right of termination or acceleration under, any
material Contract, agreement, instrument, license, Encumbrance or Permit to
which LD Services is a party or by which LD Services or the Business is bound
or affected, other than LD Services' close corporation or S corporation status;
(c) the payment by, or the
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creation of any obligation (absolute or contingent) to pay on behalf of LD
Services or any of its current or former shareholders of any severance,
termination, "golden parachute" or other similar payments pursuant to any
employment or other agreements of LD Services or any of its current or former
officers, directors or employees; (d) a violation by LD Services or the
Shareholders of any Law, order, judgment, writ, injunction decree or award to
which LD Services or any of the Shareholders is a party or by which it is
bound; or (e) an imposition of any material Encumbrance on LD Services or its
assets.
3.8 Consents and Approvals. Except as set forth on the Disclosure
Schedule, the execution and delivery of this Agreement by LD Services and the
Shareholders, and the consummation of the transactions contemplated hereby, do
not and will not require LD Services or any Shareholder to obtain as of the
Actual Closing Date any authorization, registration or filing with, or consent
or approval of, any person or entity, including, without limitation, any
federal, state or other governmental authority or regulatory body (other than
the filing of the Certificate of Merger as contemplated by Section 2.3 above),
and any state and federal filings that may be required under applicable
securities Laws and the Regulatory Approvals. The Disclosure Schedule sets
forth a complete list of the states in which LD Services conducts business or
has customers.
3.9 Financial Statements. LD Services has furnished and/or will
furnish to IXC-LD copies of: (a) the balance sheets of LD Services as of
December 31, 1995 and 1994, and the related statements of income, shareholders'
equity and cash flows for the years then ended, together with the related notes
thereto (the "1994-1995 Financial Statements"), and (b) LD Services' audited
balance sheet (the "Balance Sheet") as of September 30, 1996 (the "Balance
Sheet Date"), and the unaudited related statement of income, cash flows and
shareholder's equity for the months ended September 30, 1996, together with the
related notes thereto (the "September 1996 Financial Statement"). The
1994-1995 Financial Statements are true, complete and correct. The September
1996 Financial Statements are true, correct and complete, have been prepared in
accordance with GAAP, applied on a consistent basis, and fairly present the
financial condition of LD Services as of September 30, 1996 and the results of
operations of LD Services for the period covered by the statements of income
contained therein.
3.10 Undisclosed Liabilities. Except as set forth on the
Disclosure Schedule, LD Services does not have any liabilities or obligations
(absolute, accrued, contingent or otherwise) related to the Business or the LD
Services Stock except (a) liabilities reflected on the Balance Sheet, and (b)
liabilities incurred since the Balance Sheet Date in the ordinary course of
conducting the Business.
3.11 Absence of Certain Changes or Events. Since the Balance Sheet
Date and except as set forth on the Disclosure Schedule there has not been:
(a) Any adverse change in the financial condition,
assets, liabilities, earnings, business or prospects of LD Services, which is
material to LD Services, taken as a whole ("Material Adverse Change");
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(b) Any destruction, damage to, or loss of any of LD
Services' material assets (whether or not covered by insurance) used or useable
in the Business;
(c) Any labor dispute or other event or condition of any
character which constitutes a Material Adverse Change;
(d) Any change in accounting methods or practices by LD
Services (including, without limitation, any change in depreciation,
amortization or valuation policies or rates) or revaluation of any of its
assets, liabilities or reserves reflected on the Balance Sheet, or any change
in any assumption underlying or methods of calculating any bad debt,
contingency or other reserves related to the Business other than the change of
LD Services from an S corporation to a C corporation for tax purposes and a
corresponding change from cash to accrual basis accounting, which should take
place at the Actual Closing;
(e) Except as has been expressly approved in writing by
IXC-LD, any of the following: an increase in the salary or other compensation
payable or to become payable by LD Services to any of its officers, directors,
independent contractors or employees; the declaration, payment, or commitment
or obligation of any kind for the payment, by LD Services, of a bonus or other
additional salary or compensation to any such person; the repayment by LD
Services of any loan from such person; or the payment by LD Services of any
accrued but unpaid salaries, dividends, distributions or any other payments,
whether in cash or property, to any such person;
(f) Other than in the ordinary course of business
consistent with past practice, any amendment or termination of any Contract,
Permit or other agreement related to LD Services' assets or the Business, or by
which LD Services or any of its assets or properties used or useable in
connection with the Business are subject;
(g) Other than in the ordinary course of business
consistent with past practice, any cancellation of indebtedness or waiver or
release of any material right or claim of LD Services related in any way to the
Business;
(h) Any declaration of or agreement to declare or make,
any payment or distribution of any assets used or useable in connection with
the Business of any kind whatsoever;
(i) Other than in the ordinary course of business
consistent with past practice, any sales, transfers, disposal of or agreements
to sell, transfer or otherwise dispose of any of the assets, properties or
rights of LD Services related to the Business;
(j) Other than in the ordinary course of business
consistent with past practice, any capital expenditure or incurring of any
obligation to make any capital expenditure in connection with the conduct of
the Business;
(k) Any making of any loan by LD Services to any person
or entity;
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(l) Any creation or assumption of any mortgage, pledge or
other Encumbrance on any asset of LD Services;
(m) Any failure to pay or satisfy when due any obligation
of LD Services except where such failure would not constitute a Material
Adverse Change;
(n) Other than in the ordinary course of business
consistent with past practice, any disposition or lapsing of any Intellectual
Property or any disclosure to any person (other than persons subject to
confidentiality agreements) of any Intellectual Property not theretofore a
matter of public knowledge;
(o) Any other event or condition of any character which
it is reasonable to expect will, individually or in the aggregate constitute a
Material Adverse Change; or
(p) Any agreement by LD Services or the Shareholders to
do or cause any of the things described in clauses (a) through (o), above.
3.12 Properties. The Disclosure Schedule sets forth a complete and
correct list of all assets owned by LD Services as of the Balance Sheet Date
which have been treated as capital assets. LD Services does not own any real
property. Except as set forth on the Disclosure Schedule, LD Services has
good, indefeasible and marketable title to, or a valid leasehold interest in,
or a valid license to use, all of the personal property used in and material to
the Business, in each case free and clear of all Encumbrances. All personal
property owned or leased by LD Services is in good order and operating
condition, ordinary wear and tear excepted, and free from any defects, except
for such minor defects which do not substantially interfere with the continued
use thereof in the conduct of normal operations in the manner and to the extent
such assets are presently being used.
3.13 Intellectual Property.
(a) Set forth in the Disclosure Schedule is a complete
and correct list of all of the Intellectual Property. Except as set forth on
the Disclosure Schedule, (i) the Intellectual Property is owned by LD Services
or LD Services has a valid license or other right to use the same, (ii) neither
LD Services nor the Shareholders have received any notice or claim disputing LD
Services' right to own or use any such Intellectual Property, and (iii) to the
best knowledge of the Shareholders, LD Services' right to own or use the
Intellectual Property is not disputed by any third party. Except as set forth
on the Disclosure Schedule, the Intellectual Property is owned by LD Services
free and clear of any Encumbrances. The Intellectual Property constitutes all
the proprietary rights necessary and sufficient for the lawful and efficient
operation of the Business as presently conducted. LD Services is not
infringing upon or otherwise acting adversely to any property owned by any
other person with respect to the Intellectual Property which has been received
and used by LD Services, nor is there any Action by any person pending or
threatened with respect thereto.
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(b) The Disclosure Schedule accurately discloses all
licenses, sublicenses or agreements by which LD Services holds or has given to
others the right to use the Intellectual Property. LD Services is not in
default and, to the Shareholder's knowledge, no third party is in default,
under any such license, sublicense or agreement.
(c) LD Services has provided IXC-LD with a copy of the
form or forms of agreements used by LD Services to protect its proprietary
information and trade secrets and otherwise to protect the Intellectual
Property, including without limitation, any non- solicitation agreements. The
Disclosure Schedule sets forth a complete and accurate description of such
agreements which have been entered into by and between LD Services and other
persons or entities.
3.14 Leases. The Disclosure Schedule sets forth a true, correct
and complete list and description of all leases, subleases, licenses and other
occupancy or lease agreements, together with all amendments, supplements and
nondisturbance agreements pertaining thereto, under which LD Services leases,
subleases, licenses, occupies or uses any real or personal property (the
"Leases"). All of the Leases are in good standing, legal, valid, binding and
in full force and effect, all rents and additional rents due to date under each
such Lease have been paid in full and there is not under any of such Leases any
existing default, violation or breach by LD Services or event or condition
which after notice or lapse of time or both would constitute a default,
violation or breach. The Shareholders have provided IXC-LD with true and
correct copies of all such Leases and none of such Leases have been or will
hereafter be terminated, amended or otherwise modified.
3.15 Receivables. All receivables of LD Services which are
reflected in the Balance Sheet, and all such receivable which have arisen since
the Balance Sheet Date shall, have arise only from bona fide transactions in
the ordinary course of business. To the Shareholder's knowledge, there are no
facts or circumstances which would result in any material increase in the
uncollectability of such receivables as a class in excess of the reserves
therefor set forth on the Balance Sheet.
3.16 Contracts.
(a) The Disclosure Schedule contains a complete and
correct list of all material agreements, contracts and commitments
(collectively, the "Contracts"), whether written or oral, (i) to which LD
Services is a party or by which it is bound, or (ii) by which any of the
assets, properties or the Business is bound, and in either case, which
constitute:
(i) Mortgages, indentures, security agreements,
and other agreements and instruments relating to the borrowing of money by or
from, or any extension or credit to or from, LD Services;
(ii) Sales agency or marketing agreement;
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13
(iii) Agreements or commitments for capital
expenditures;
(iv) Brokerage or finder's agreements;
(v) Partnership, joint venture or other
arrangements or agreements involving a sharing of profits or expenses;
(vi) Contracts or commitments to sell, lease or
otherwise dispose of any assets, properties or business other than in the
ordinary course of the Business;
(vii) Contracts or commitments limiting the freedom
of LD Services to compete in any line of business or in any geographic area or
with any person;
(viii) Other agreements, contracts and commitments
which in any case involve payments or receipts of more than $5,000 per annum;
and
(ix) Any other agreements, contracts and
commitments material to the Business, operations or financial condition of LD
Services.
(b) LD Services has delivered to IXC-LD or its
Representatives complete and correct copies of all written Contracts, together
with all amendments thereto, and accurate descriptions of all oral Contracts.
All of the Contracts are valid and in full force and effect and LD Services has
duly performed all of its obligations under each Contract to the extent those
obligations have accrued and no default, violation or breach by LD Services
under any Contract has occurred which affects the enforceability of such
Contract or any party's rights thereunder.
3.17 Customer Contracts. The Disclosure Schedule sets forth a
correct and complete list of the 100 largest customers (by sales volume) (the
"Major Customers") of the Business during December 1996 indicating the sales to
such Major Customers within such period. As of December 31, 1996, each
Shareholder and LD Services had no outstanding Contracts with customers
requiring payments or credits, except as described on the Disclosure Schedule.
There are no outstanding disputes with any Major Customer and no Major Customer
has refused to do business with LD Services or has stated its intention not to
continue to do business with or increase or reduce its purchases from LD
Services upon consummation of the transactions contemplated hereby.
3.18 Employment Matters; Employee Benefits.
(a) The Disclosure Schedule sets forth a complete and
correct list of all the names, current annual rates of salary, bonuses,
employee benefits, accrued vacation times, sick pay and other compensation of
all the present employees and agents (other than Independent Agents) of LD
Services who provide services in connection with the Business and whose current
annual cash compensation from LD Services (salary and bonus) is expected to
equal or exceed $2,000. No employee or agent of LD Services is in violation of
any term of any employment
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14
contract, confidentiality agreement or other contract or agreement relating to
the relationship of such employee with LD Services, or to the best of
Shareholders' knowledge, any other party, because of the nature of the business
now conducted or proposed to be conducted by LD Services. Except as disclosed
in the Disclosure Schedule, there are no employment or consulting contracts or
arrangements, including pensions, bonus or profit sharing plans, or other
severance or termination contracts or arrangements which constitute contractual
obligations of LD Services not terminable on 30 days' notice. No key employee
of LD Services terminated his or her relationship with LD Services since the
Balance Sheet Date, and no current key employee has indicated any present or
future intention to terminate his or her relationship with LD Services.
(b) The Disclosure Schedule contains a complete and
correct list of all Employee Benefit Plans. LD Services has delivered to
IXC-LD or its Representatives complete and correct copies of all written
Employee Benefit Plans, together with all amendments thereto. All such
Employee Benefit Plans comply with the provisions of and have been administered
in compliance with the provisions of the ERISA and LD Services is not in
default under or in violation of any of such Employee Benefit Plans.
(c) The Disclosure Schedule contains a list of all
Independent Agents of LD Services. The Independent Agent Agreements also
listed on the Disclosure Schedule represent valid and binding agreements and
obligations of each of the Independent Agents fully enforceable by LD Services.
No Independent Agent has terminated his or her relationship with LD Services
since the Balance Sheet Date, and, except as contemplated by this Agreement, no
Independent Agent has indicated any present or future intention to terminate
his or her relationship with LD Services.
3.19 Transactions with Affiliated Parties. Set forth in the
Disclosure Schedule is a true and complete list and description of all
transactions engaged in between LD Services and the Shareholders, or any
director, officer, employee, shareholder, partner or agent of LD Services, or
any of their respective spouses or children, any trust of which any such person
is the grantor, trustee or beneficiary, any corporation of which any such
person or party is a shareholder, employee, officer or director, or any
partnership or other person in which any such person or party owns an interest
(all such persons, trusts, corporations and partnerships being herein referred
to collectively as "Affiliated Parties" and individually as an "Affiliated
Party"). No Affiliated Party is a party to any agreement, contract or
commitment with LD Services except as set forth in the Disclosure Schedule.
3.20 Certain Payments. Neither the Shareholders', LD Services',
nor to the Shareholders' knowledge, any person or other entity has, directly or
indirectly, on behalf of or with respect to LD Services: (a) made an
unreported political contribution; (b) made or received any payment which was
not legal to make or receive; (c) engaged in any transaction or made or
received any payment which was not properly recorded in the Books and Records;
or (d) created or used any "off-book" bank or cash account or "slush fund."
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15
3.21 Taxes. Except as set forth in the Disclosure Schedule, all
Taxes which are due and payable by LD Services have been paid in full and any
Taxes that become due and owing by LD Services before the Actual Closing Date
(whether or not shown on any Tax Return) will be paid, other than Taxes which
are not delinquent and subject to a late payment; all Tax Returns required to
be filed in connection therewith have been accurately prepared and duly and
timely filed, or will be accurately prepared and duly and timely filed, and all
deposits required by Law to be made by LD Services with respect to any such
Taxes have been duly made. LD Services is not delinquent in the payment of any
Taxes nor does LD Services have any Tax deficiency or claim outstanding,
proposed or assessed against it, and there is no basis for any such deficiency
of claim. There is not now in force any extension of time with respect to the
date on which any Tax Return was or is due to be filed by or with respect to LD
Services, or any waiver or agreement by LD Services for the extension or the
assessment of any Tax. LD Services has withheld and paid all Taxes required to
be withheld and paid in connection with amounts paid or owing to any employee,
creditor, independent contractor, shareholder or other third parties. There
are no liens on any of the assets of LD Services as a result of any Tax
liabilities except for Taxes not yet due and payable. LD Services has
delivered to IXC-LD complete and correct copies of all federal, state, local
and foreign income or franchise Tax Returns for the last three taxable periods
for which such Tax Returns have been filed and will deliver copies of Tax
Returns filed by LD Services after the date hereof and before the Actual
Closing Date. LD Services is not required to file a Tax Return in any state or
local jurisdiction for any tax period except in the jurisdiction in which it
has filed. LD Services has delivered to IXC-LD complete and correct copies of
all audit reports (or portions thereof) and statements of deficiencies assessed
against or agreed to by LD Services for any taxable period ending on or after
December 31, 1993.
3.22 Pending Litigation. Except as disclosed on the Disclosure
Schedule, there is no pending or, to the Shareholders' knowledge, threatened
Action or investigation, at Law or in equity or otherwise, in, for or by any
court or governmental board, commission, agency, department or office arising
from, relating to or affecting (a) the past, present or proposed operations of
the Business, (b) any alleged act or omission of LD Services, a Shareholder or
any of LD Services' officers, directors or employees, or (c) the consummation
of the transactions contemplated hereby.
3.23 Compliance with Laws. LD Services has complied with all
existing Law now or hereafter applicable to the Business, as presently
conducted, including, without limitation, (a) all Environmental Laws, and (b)
all provision of Law relating to labor relations, equal employment practices,
fair employment practices, entitlement, prohibited discrimination, terms and
conditions of employment, wages and hours, or other similar employment
practices or acts. Neither the Shareholders nor LD Services has received any
notice from or otherwise been advised that any governmental authority or other
person is claiming any violation or potential violation of any Law.
3.24 Permits. The Disclosure Schedule contains a complete and
correct list of all Permits which are necessary for the lawful and efficient
operation of the Business. All such
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Permits have been duly made or obtained and are in full force and effect, and
there are no proceedings pending or, to any Shareholder's knowledge, threatened
which may result in the revocation, cancellation or suspension, or any adverse
modification, of any such Permit.
3.25 Insurance. LD Services maintains insurance with respect to
its properties and the Business of such a nature, with such terms and in such
amounts as a prudent person would maintain with respect to similar properties
and a similar business and maintains insurance on all of its properties of a
character usually insured by persons engaged in the same or similar business
similarly situated against loss or damage or the kinds and in the amounts
customarily insured against, and carries, with such insurers and customary
amounts, such other insurance, including public liability insurance, as is
usually carried by persons engaged in the same or a similar business similarly
situated. The Disclosure Schedule contains a true and complete list of all
insurance maintained by LD Services with respect to the Business during the
past three years.
3.26 Brokers, Finders, etc.. All negotiations relating to this
Agreement and the transaction contemplated hereby have been carried on without
the intervention of any person acting on behalf of LD Services or any
Shareholder in such manner as to give rise to any claim against IXC-LD, IXC-LD,
Acquisition Corp., LD Services or any of their respective Representatives for
any brokerage of finders' commission, fee of similar compensation.
3.27 Books and Records. LD Services has made and kept (and given
IXC-LD's Representatives access to) the Books and Records, which, in reasonable
detail, accurately and fairly reflect the activities and transactions of LD
Services related to the Business, the dispositions of assets related to the
Business, and the financial condition of LD Services and the Business,
including, without limitation, the existence of any and all liabilities,
whether actual or contingent, that are required to be disclosed in a balance
sheet prepared in accordance with GAAP.
3.28 LOAs. LD Services has made available to IXC-LD, true and
complete copies of all customer letters of agency ("LOAs") as of September 30,
1996. All such LOAs were obtained in accordance with applicable law and were
valid as of that date.
3.29 Full Disclosure. No representation, warranty or other
statement of a Shareholder or LD Services contained in this Agreement, or any
other document, certificate or written statement furnished to IXC-LD in
connection with the transactions contemplated by this Agreement contains any
untrue statement of a fact or omits to state a fact necessary in order to make
the statements contained herein or therein not misleading. There is no fact
known to the Shareholders or LD Services which adversely affects the prospects,
earnings, properties or condition, financial or otherwise, of the Business that
has not been disclosed herein or in such other documents, certificates and
statements furnished to IXC-LD for use in connection with the transactions
contemplated hereby.
3.30 Purchase for Own Account. Shareholders are acquiring IXC
Common Stock for investment and for their own account, and not with a view to
or for sale in connection with any distribution of any part thereof.
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3.31 Investment Experience. Each Shareholder has such knowledge
and experience in financial and business matters that they are capable of
evaluating the risks of their proposed investment in IXC Common Stock and are
able to bear the economic risk of their proposed investment.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF IXC, IXC-LD AND ACQUISITION CORP.
IXC, IXC-LD and Acquisition Corp. hereby, jointly and severally,
represent and warrant to the Shareholders as follows:
4.1 Organization. IXC and IXC-LD are corporations duly organized,
validly existing and in good standing under the Laws of the State of Delaware.
Acquisition Corp. is a corporation duly organized, validly existing and in good
standing under the Laws of the State of California. IXC, IXC-LD and
Acquisition Corp. each has the requisite corporate power and authority to own,
lease and operate its assets and to conduct its business in the manner in which
it is presently conducted.
4.2 Authorization. IXC, IXC-LD and Acquisition Corp. each has the
requisite corporate power and authority to execute and deliver this Agreement,
and to consummate the transactions contemplated hereby, and to perform any of
its obligations hereunder. All actions and proceedings on the part of IXC,
IXC-LD and Acquisition Corp. necessary to authorize the execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly taken.
4.3 Valid Issuance of IXC Common Stock. Each of the shares of IXC
Common Stock when issued, sold and delivered in accordance with the terms
hereof, shall be duly and validly issued, fully paid and nonassessable. The
shares of IXC Common Stock shall not be registered under the Securities Act of
1933, as amended.
4.4 Due Execution and Delivery; Binding Obligations. This
Agreement has been duly executed and delivered by IXC, IXC-LD and Acquisition
Corp. This Agreement constitutes the legal, valid and binding agreement and
obligation of IXC, IXC-LD and Acquisition Corp. enforceable against IXC,
IXC-LD and Acquisition Corp. in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or conveyance or similar Laws relating to or
limiting creditors' rights generally or by equitable principles relating to
enforceability and except as rights of indemnity or contribution may be limited
by federal or state securities or other laws or the public policy underlying
such Laws.
4.5 No Conflict or Violation. Neither the execution and delivery
of this Agreement, nor IXC's, IXC-LD's or Acquisition Corp.'s consummation of
the transactions contemplated hereby, will result in: (a) a violation of, or a
conflict with, IXC's, IXC-LD's or Acquisition
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Corp.'s charter documents, or any subscription, stockholders' or similar types
of agreements or understandings; or (b) a violation by IXC, IXC- LD or
Acquisition Corp. of any Law, order, judgment, writ, injunction decree or award
to which any of them is a party or by which any of their assets are bound.
4.6 SEC Documents. None of the documents and reports filed by IXC
with the Securities and Exchange Commission contain any untrue statement of
material fact or omit to state any material fact necessary to make the
information contained therein, in light of the circumstances under which they
were made, misleading as of the date of such document or report.
ARTICLE 5
SHAREHOLDERS' AND LD SERVICES' OBLIGATIONS BEFORE CLOSING
LD Services and, with respect to Sections 5.3 and 5.4, the
Shareholders covenant that during the period from the date of this Agreement to
the Actual Closing Date:
5.1 Conduct of Business. Except as specifically contemplated by
this Agreement, LD Services will conduct the Business in the ordinary course of
business and consistent with past practice, and will use all reasonable effort
to preserve intact its advantageous business relationships, to keep available
the service of its employees and to maintain satisfactory relationships with
its contractors, distributors, customers and other persons sharing business
relationships with them. Without limiting the generality of the foregoing, LD
Services will not, without the prior written consent of IXC-LD, take or
undertake or incur or permit to exist any of the acts, transactions, events or
occurrences specified in Section 5.8, above, unless such actions are
specifically contemplated by this Agreement. LD Services shall give IXC-LD
prompt written notice of any change in any of the information contained in the
representations and warranties made in Article 3 referred to herein which
occurs prior to the Actual Closing Date.
5.2 Access to Information. IXC and its counsel, accountants and
other Representatives shall have full access during normal business hours to
all properties, Books and Records, Contracts, Permits and other documents of or
relating to LD Services and the Business so that IXC-LD may have full
opportunity to make such investigation as it shall desire to make of the
affairs of LD Services relating to the Business. LD Services shall furnish or
cause to be furnished to IXC-LD and its Representatives all data and
information concerning the Business, finances and properties that may
reasonably be requested. LD Services shall remain fully liable and responsible
for all of LD Services' representations, warranties, covenants, agreements and
conditions in this Agreement, notwithstanding any such investigation performed
or information received by IXC-LD.
5.3 Confidentiality. Each of the Shareholders and LD Services
will hold, and will cause each of LD Services' employees, officers, directors
and other Representatives to hold, in strict confidence, and to not use to the
detriment of IXC or Acquisition Corp., any information or data concerning IXC,
IXC-LD or Acquisition Corp. furnished to them in connection with the
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transaction contemplated by this Agreement, except for information or data
generally known to the public; and if the transaction contemplated by this
Agreement is not consummated, such confidence shall be maintained and the
Shareholders and LD Services will return to IXC-LD all such information and
data as IXC-LD may request.
5.4 No Solicitation. Neither the Shareholders nor LD Services
will, directly or indirectly, through any officer, director, partner, agent or
otherwise, solicit, initiate or encourage submission of proposals or offers
from any person relating to any acquisition or purchase of any equity interest
in, or all or a substantial portion of the assets of, LD Services or any
business combination with LD Services, or participate in any negotiations
regarding or furnish to any other person any information with respect to, or
otherwise cooperate in any way with, or assist or participate in, facilitate or
encourage, any effort or attempt by any other person to do or seek any of the
foregoing, except as provided for herein.
5.5 Consents; Regulatory Approvals; Reasonable Efforts. Each of
the Shareholders and LD Services agree to utilize their respective best efforts
and cooperate with each other in every way, to take, as promptly as possible,
or cause to be taken, all action and do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective the
transactions contemplated by this Agreement and each Shareholder and LD
Services, as the case may be, will use his or its best efforts to obtain the
Regulatory Approvals, all waivers, Permits, consents, other approvals,
authorizations and clearances and to effect all registrations, filings and
notices with or to third parties or governmental, regulatory or public bodies
or authorities which are in the opinion of IXC-LD necessary or desirable in
connection with the transactions contemplated by this Agreement. Until such
time as the Regulatory Approvals have been obtained, there shall be no change
in the ownership or management of LD Services and no transfer of control
whatsoever over LD Services' certificates of public convenience and necessity
and daily operations. Pending receipt of the Regulatory Approvals, LD
Services, its current shareholders, officers, directors and employees shall
remain directly and solely responsible for the operation of LD Services'
telecommunications services and for compliance with all applicable provisions
of federal telecommunications law, state public service commission laws and all
applicable regulations and policies thereunder. Further, pending receipt of
the Regulatory Approvals, LD Services, its current shareholders, officers,
directors and employees shall manage and operate LD Services'
telecommunications services in a manner that is fully consistent with the terms
and conditions of LD Services' certificates of public convenience and
necessity, the public interest and the best interest of LD Services'
shareholders.
5.6 Fulfillment of Conditions and Covenants. Neither the
Shareholders nor LD Services shall take any course of action inconsistent with
satisfaction of the requirements or conditions applicable to the Shareholders
and LD Services set forth in this Agreement. The Shareholders and LD Services
shall each promptly do all acts and take all measures as may be appropriate to
enable them to perform as early as possible the obligations herein provided to
be performed by them.
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5.7 Compliance with Other Instruments. LD Services will not take
any action which would be in violation of any term of its Articles of
Incorporation or Bylaws, or in any material respect of any term or provision of
any mortgage, indebtedness, indenture, contract, agreement, instrument, order,
writ, injunction, judgment or decree. LD Services will not take any action
which would be in violation of any material order, statute, rule or regulation
applicable to LD Services, its officers, directors and shareholders. LD
Services will take all action necessary to obtain and to maintain in force all
licenses, Permits and certificates from governmental agencies necessary for the
conduct of its business as now conducted.
5.8 Conduct Prior to Closing. Other than as set forth in the
Disclosure Schedule or expressly approved in writing by IXC-LD, LD Services
shall conduct its business in the ordinary course and shall not take any action
which would cause any of the following:
(a) An increase in the salary or other compensation
payable or to become payable by LD Services to any of its officers, directors
or independent contractors; the declaration, payment, or commitment or
obligation of any kind for the payment, by LD Services, of a bonus or other
additional salary or compensation to any such person; the repayment by LD
Services of any loan from such person; or the payment by LD Services of any
accrued but unpaid salaries, dividends, distributions or any other payments,
whether in cash or property, to any such person;
(b) Other than in the ordinary course of business
consistent with past practice, any amendment or termination of any Contract,
Permit or other agreement related to LD Services' assets or the Business, or by
which LD Services or any of its assets or properties used or useable in
connection with the Business are subject;
(c) Any cancellation of indebtedness or waiver or release
of any material right or claim of LD Services related in any way to the
Business other than invoices from LD Services' customers;
(d) Any declaration of or agreement to declare or make,
any payment or distribution of any assets used or useable in connection with
the Business of any kind whatsoever;
(e) Any sales, transfers, disposal of or agreements to
sell, transfer or otherwise dispose of any of the assets, properties or rights
of LD Services related to the Business that, in the aggregate, exceed $50,000;
(f) Any making of any loan by LD Services to any person
or entity;
(g) Any creation or assumption of any mortgage, pledge or
other Encumbrance on any asset of LD Services that, in the aggregate, exceed
$50,000;
(h) Any failure to pay or satisfy when due any obligation
of LD Services except where such failure would not constitute a Material
Adverse Change;
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(i) Any disposition or lapsing of any Intellectual
Property or any disclosure to any person (other than persons subject to
confidentiality agreements) of any Intellectual Property not theretofore a
matter of public knowledge;
(j) The issuance of any shares of capital stock or any
options, warrants, convertible securities or other rights to acquire capital
stock without IXC-LD's consent; or
(k) LD Services to have less than 30 days of working
capital sufficient for its business operations on any date during such period.
5.9 Compliance with Laws. From and after the date of this
Agreement until the Actual Closing Date, LD Services shall comply with all
existing material Laws applicable to the Business, as presently conducted,
including, without limitation, (a) all Environmental Laws, and (b) all
provision of Law relating to labor relations, equal employment practices, fair
employment practices, entitlement, prohibited discrimination, terms and
conditions of employment, wages and hours, or other similar employment
practices or acts.
5.10 Material Contract. LD Services shall not enter into any
material contract, agreement or commitment other than in the ordinary course of
business without the written consent of IXC-LD.
5.11 Cash Maximum. LD Services shall not have more than $100,000
in cash or cash equivalents on the Deemed Closing Date. LD Services shall not
make or declare any distributions or dividends with respect to any of LD
Services' stock between the Deemed Closing Date and Actual Closing Date.
ARTICLE 6
IXC'S, IXC-LD'S AND ACQUISITION CORP.'S OBLIGATIONS BEFORE CLOSING
IXC, IXC-LD and Acquisition Corp. covenant that during the period from
the date of this Agreement to the Actual Closing Date:
6.1 Confidentiality. IXC, IXC-LD and Acquisition Corp. will hold,
and will cause each of their affiliates, employees, officers, directors and
other Representatives to hold, in strict confidence, and to not use to the
detriment of the Shareholders or LD Services, any information or data
concerning the Shareholders or LD Services furnished to them in connection with
the transaction contemplated by this Agreement, except for information or data
generally known to the public; and if the transaction contemplated by this
Agreement is not consummated, such confidence shall be maintained and IXC-LD
will return to the Shareholders and LD Services all such information and data
as the Shareholders and LD Services may request.
6.2 Fulfillment of Conditions and Covenants. IXC-LD and
Acquisition Corp. shall not take any course of action inconsistent with the
satisfaction of the requirements or conditions
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applicable to it set forth in this Agreement. IXC-LD and Acquisition Corp.
shall promptly do all acts and take all measures as may be appropriate to
enable them to perform as early as possible the obligations herein provided to
be performed by them.
6.3 Consents; Regulatory Approvals; Reasonable Efforts. IXC-LD
agrees to utilize reasonable efforts to take, as promptly as possible, or cause
to be taken, all action and do, or cause to be done, all things necessary,
proper or advisable to consummate and make effective the transactions
contemplated by this Agreement and will use its reasonable efforts to assist LD
Services in obtaining the Regulatory Approvals, all waivers, Permits, consents,
other approvals, authorizations and clearances and to effect all registrations,
filings and notices with or to third parties or governmental, regulatory or
public bodies or authorities which are necessary in connection with the
transactions contemplated by this Agreement.
6.4 SEC Documents. Upon request, IXC shall make available to LD
Services its filings with the Securities and Exchange Commission.
ARTICLE 7
CONDITIONS TO OBLIGATIONS OF IXC, IXC-LD AND ACQUISITION CORP.
The obligations of IXC, IXC-LD and Acquisition Corp. to perform their
obligations under this Agreement are subject to the satisfaction, on or before
to the Actual Closing Date, of each of the following conditions, unless waived
in writing by IXC-LD:
7.1 Accuracy of Representations and Warranties. All
representations and warranties of the Shareholders and LD Services contained in
this Agreement or in any document delivered pursuant hereto shall be true and
correct in all material respects when made and on and as of the Actual Closing
Date as though made on and as of the Actual Closing Date; provided, however,
that the representations and warranties contained in Section 3.6, 3.10, 3.11,
3.15, 3.16, 3.17, 3.18, 3.22, 3.23, and 3.24 shall only be required to be true
and correct in all material respects when made.
7.2 Shareholders' and LD Services' Performance of Covenants. All
covenants, agreements and obligations required by the terms of this Agreement
to be performed, satisfied or complied with by the Shareholders or LD Services
at or before the Actual Closing Date shall have been duly and properly
performed in all material respects.
7.3 Shareholders' and LD Services' Officer's Certificate. IXC-LD
shall have received a certificate, dated the Actual Closing Date, signed and
verified by each of the Shareholders and the President of LD Services, and
certifying that the conditions specified in Sections 7.1 and 7.2, above, have
been fulfilled.
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7.4 Employment of Key Employees. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ (each, a "Key Employee") shall each be employed by LD Services subject
to the death or disability of any Key Employee.
7.5 Opinion of Counsel. IXC-LD shall have received from ▇▇▇▇▇▇▇ &
Berlin, legal counsel for the Shareholders and LD Services, an opinion, dated
the Actual Closing Date, in a form reasonably satisfactory to IXC-LD.
7.6 Authorization of the Shareholders and LD Services. All
actions necessary to authorize the execution, delivery and performance of this
Agreement by each of the Shareholders and LD Services, and the consummation of
the transactions contemplated herein, shall have been duly and validly taken.
7.7 Consents and Regulatory Approvals. The Regulatory Approvals,
all licenses, Permits, authorizations, consents and approvals of and filings
with any governmental or regulatory agency required to be obtained or made in
connection with the consummation of the transactions contemplated by this
Agreement shall have been duly obtained or made by or on behalf of the
Shareholders or LD Services. All consents of other third-parties required to
have been obtained in connection with the consummation of such transactions
shall have been obtained by or on behalf of the Shareholders or LD Services.
7.8 Employment Agreements. IXC-LD shall have obtained fully
executed original counterparts of the employment agreements to be entered into
between LD Services and each of the Key Employees in the form of Exhibit B
attached hereto (the "Employment Agreements").
7.9 Revised Independent Agent Agreements. IXC-LD shall have
obtained fully executed agreements replacing all Independent Agent Agreements
listed in the Disclosure Schedule hereto, such agreements to be in the form of
Exhibit C, attached hereto (the "Revised Independent Agent Agreements").
7.10 Waiver and Consent. IXC-LD shall have obtained the Waiver and
Consent executed by each Non-Control Shareholder.
7.11 Certificate of Merger. IXC-LD shall have received
confirmation that the Certificate of Merger was executed by LD Services and is
ready for filing with the Secretary of State of the State of California.
7.12 Registration Rights Agreement. IXC-LD shall have obtained a
fully executed counterpart to a registration rights agreement from each of the
Shareholders in the form of Exhibit D, attached hereto (the "Registration
Rights Agreement").
7.13 Payment of Loans. IXC-LD shall have received confirmation in
a form satisfactory to IXC-LD that the loan obligations of Business Options,
Inc. to LD Services have been satisfied and paid in full.
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7.14 Working Capital. IXC-LD shall receive evidence satisfactory to
IXC-LD that LD Services has at least 30 days of working capital sufficient for
its business operations as of the Actual Closing Date.
ARTICLE 8
CONDITIONS TO OBLIGATIONS OF SHAREHOLDERS AND LD SERVICES
The obligations of the Shareholders and LD Services to perform their
respective obligations under this Agreement are subject to the satisfaction, on
or before to the Actual Closing Date, of each of the following conditions,
unless waived in writing by the Shareholders or LD Services:
8.1 Accuracy or Representations and Warranties. All
representations and warranties of IXC, IXC-LD and Acquisition Corp. contained
in this Agreement shall be true and correct in all material respects when made
and on and as of the Actual Closing Date as though made on and as of the Actual
Closing Date.
8.2 Performance of Covenants. All covenants, agreements and
obligations required by the terms of this Agreement to be performed, satisfied
or complied with by IXC, IXC-LD and Acquisition Corp. at or before the Actual
Closing Date shall have been duly and properly performed in all material
respects.
8.3 Officer's Certificate. The Shareholders shall have received a
certificate, dated the Actual Closing Date, signed and verified by the
President of IXC, IXC-LD and Acquisition Corp., certifying that the conditions
specified in Sections 8.1 and 8.2, above, have been fulfilled.
8.4 Authorization. All actions necessary to authorize the
execution, delivery and performance of this Agreement by IXC, IXC-LD and
Acquisition Corp., and the consummation of the transactions contemplated
herein, shall have been duly and validly taken.
8.5 Consents and Regulatory Approvals. The Regulatory Approvals,
all licenses, Permits, authorizations, consents and other approvals of and
filing with any governmental or regulatory agency required to be obtained or
made in connection with the consummation of the transactions contemplated by
this Agreement shall have been duly obtained or made by or on behalf of the
Shareholders or LD Services. All consents of other third-parties required to
have been obtained in connection with the consummation of such transactions
shall have been obtained by or on behalf of the Shareholders or LD Services.
8.6 Certificate of Merger. LD Services shall have executed and
obtained confirmation that the Certificate of Merger is ready for filing with
the Secretary of State of the State of California.
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8.7 Registration Rights Agreement. The Shareholders shall have
obtained a fully executed counterpart to the Registration Rights Agreement from
IXC.
ARTICLE 9
THE CLOSING
9.1 The Actual Closing. On the terms and subject to the
satisfaction of the conditions contained in this Agreement, the closing of the
sale and purchase of the LD Services Stock (the "Actual Closing") shall take
place 15 business days after the completion and delivery to IXC-LD of the
Deemed Closing Date Audit, in the offices of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ commencing at
9:00 a.m., or at such other place, time and date as may be mutually agreed to
by the parties. The date and time at which the Actual Closing actually occurs
is herein referred to as the "Actual Closing Date."
9.2 Deliveries by Shareholders. At the Actual Closing, the
Shareholders shall deliver the following:
(a) Evidence satisfactory to IXC-LD that all of the
shares of common stock, no par value of LD Services held by the Shareholders
have been cancelled and that such is reflected in the stock records of LD
Services;
(b) The certificates contemplated by Section 7.4, above;
(c) The legal opinion contemplated by Section 7.5, above;
(d) Evidence of having obtained consents required to be
obtained by the Shareholders pursuant to Section 7.7, above;
(e) The Employment Agreements referred to in Section 7.8,
above;
(f) The Registration Rights Agreement referred to in
Section 7.12 above; and
(g) All other agreements, documents, instruments and
writings required to be delivered by the Shareholders at the Actual Closing
pursuant to this Agreement.
9.3 Deliveries by LD Services. At the Actual Closing, LD Services
shall deliver the following:
(a) A stock certificate representing the number of shares
of common stock, no par value of LD Services issued in the name of IXC,
required to consummate the Merger;
(b) Confirmation that the Certificate of Merger has been
executed and is ready to be filed with the Secretary of State of the State of
California;
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(c) The certificates contemplated by Section 7.4, above;
(d) Evidence of having obtained consents required to be
obtained by LD Services pursuant to Section 7.7, above;
(e) The Revised Independent Agent Agreements referred to
in Section 7.9, above;
(f) The Waiver and Consent referred to in Section 7.10
above; and
(g) All other agreements, documents, instruments and
writings required to be delivered by LD Services at the Actual Closing pursuant
to this Agreement.
9.4 Deliveries by IXC, IXC-LD and Acquisition Corp. At the Actual
Closing, IXC, IXC-LD and Acquisition Corp. shall deliver the following:
(a) Stock certificates representing the number of shares
of IXC Common Stock required to be delivered pursuant to Section 2.5(a), above.
(b) The officer's certificate contemplated by Section
8.3, above;
(c) The Registration Rights Agreement completed by Section
8.7 above; and
(d) All other agreements, documents, instruments and
writings required to be delivered by IXC, IXC-LD and Acquisition Corp. at the
Actual Closing pursuant to this Agreement.
ARTICLE 10
POST CLOSING
10.1 Survival of Representations and Warranties. Regardless of any
investigation at any time made by or on behalf of any party, or of any
information any party may have in respect thereof, all representations and
warranties made hereunder or pursuant hereto or in connection with the
transactions contemplated hereby shall survive the Deemed Closing and the
Actual Closing for a period of one year from the Actual Closing, except all
representations and warranties with respect to tax matters shall survive three
years from the Actual Closing (each, a "Survival Date").
10.2 Indemnification by the Parties.
(a) Subject to the limitations set forth in Section 10.1
and Section 10.2(d), each of the Shareholders severally, with, responsibility
proportionate to such Shareholder's percentage interest in the common stock, no
par value of LD Services relative to that held by all the
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Shareholders in the aggregate immediately prior to the Actual Closing Date and
with, in the case of subparagraphs (i) and (iii) below, 100% of responsibility,
shall indemnify, defend and hold harmless IXC, IXC-LD and any of their
affiliates and Representatives, and shall reimburse IXC, IXC-LD and any of
their affiliates and Representatives, on demand, for any claim, demand, loss,
liability, damage or expense (including without limitation, any claim for
breach of contract or for tort which would be allowable under applicable law if
this indemnity provision was not a provision of this Agreement), including
without limitation interest, penalties and reasonable attorneys', accountants'
and experts' fees and costs of investigation incurred as a result thereof
(collectively "Damages"), resulting from any of the following:
(i) Any breach or default in the performance by
such Shareholder of any covenant or agreement of such Shareholder contained
herein;
(ii) Any breach or default in the performance by
LD Services of any covenant or agreement of LD Services to be performed on or
prior to the Actual Closing;
(iii) Any breach of warranty or inaccurate or
erroneous representation made by such Shareholder severally herein, or pursuant
to any certificate delivered or to be delivered by or on behalf of the
Shareholders or LD Services pursuant hereto;
(iv) Any breach of warranty or inaccurate or
erroneous representation made by the Shareholders jointly and severally or LD
Services herein, or pursuant to any certificate delivered or to be delivered by
or on behalf of the Shareholders or LD Services pursuant hereto; or
(v) Any liability arising out of any and all
Actions, demands, judgments, costs and expenses incident to any of the
foregoing.
(b) IXC or IXC-LD shall indemnify, defend and hold
harmless the Shareholders and any of their affiliates and shall reimburse the
Shareholders and any of their affiliates on demand, for any Damages resulting
from (i) any breach or default in the performance by IXC, IXC-LD or Acquisition
Corp. of any covenant or agreement of IXC, IXC-LD or Acquisition Corp.
contained herein or (ii) any breach of warranty or inaccurate or erroneous
representation made by IXC, IXC-LD or Acquisition Corp. herein, or pursuant to
any certificate delivered or to be delivered by or on behalf of IXC, IXC-LD or
Acquisition Corp. pursuant hereto.
(c) A party entitled to indemnification hereunder
("Indemnitee") shall promptly notify the other party ("Indemnitor") of any such
liability, breach of warranty, inaccuracy, misrepresentation or any other claim
arising under the foregoing indemnification provision. Indemnitor may contest
and defend in good faith any claim of third parties covered by this Section at
their own expense; provided that within 30 days of the Indemnitor's receipt of
notice of such claim, Indemnitor notify Indemnitee of Indemnitor's desire to
defend and contest such claim.
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(d) Notwithstanding the foregoing, in the absence of
fraud, the Shareholders shall have no obligation to indemnify, defend, hold
harmless or reimburse IXC, IXC-LD or any of their affiliates or Representatives
with respect to the matters described in Sections 10.2(a)(iii), (iv) or (v),
unless and until the aggregate amount of all Damages with respect to such
matters exceeds $500,000 (the "Basket"), in which event, such persons or
entities shall be entitled to indemnification for all amounts in excess of the
Basket. Notwithstanding the foregoing, each Shareholder's liability under this
Section 10.2 shall not exceed an amount equal to the Purchase Price divided by
the number of shares of LD Services Stock owned by such Shareholder immediately
prior to the Merger and this Section 10.2 shall be IXC's, IXC-LD's and any of
their affiliates' and Representative's sole remedy with respect to claim's with
respect to matters based on Sections 10.2(a)(iii), (iv) or (v).
10.3 Further Assurances. The Shareholders, at any time on or after
the Actual Closing, will execute, acknowledge and deliver any further
assignments and other assurances, documents and instruments of transfer,
reasonably requested by IXC-LD, and will take any other action that may be
requested by IXC-LD, for the purpose of assigning, transferring, granting,
conveying and confirming to IXC-LD, or reducing to possession, any or all of
the LD Services Stock to be conveyed and transferred by this Agreement.
10.4 Expenses. Each of the parties shall pay all costs and
expenses incurred by it or on its behalf in connection with this Agreement and
the transactions contemplated hereby, including, without limiting the
generality of the foregoing, fees and expenses of its own financial
consultants, accountants and counsel.
10.5 Resale of IXC Common Stock. Each of the Shareholders shall
comply with any applicable federal and state securities laws and any required
holding periods thereunder in connection with subsequent sales by each of the
Shareholders of the IXC Common Stock acquired hereunder. In addition, each
Shareholder agrees not to sell, dispose of, encumber, pledge or otherwise
transfer any shares of IXC Common Stock acquired hereunder until such time as
financial results covering at least 30 days of combined post-merger operations
have been publicly reported.
ARTICLE 11
COVENANT NOT TO COMPETE
11.1 Non-Compete Covenant.
(a) During the Applicable Period (as defined below) each
Shareholder will not, without the prior written consent of IXC- LD, directly or
indirectly, in the Territory (as defined below), Compete (as defined below)
with the Business or own any equity interest in, or be a stockholder, partner,
owner, officer, director or employee or agent of, or give financial assistance
to, any person or entity engaged in any business that Competes with the
Business; provided, however, that nothing herein shall prevent any Shareholder
from owning, directly or indirectly,
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as a passive investor, in the aggregate not more than 5% of the outstanding
publicly traded stock of any corporation engaged in such competition.
(b) For purposes of this Article 11, the term "Applicable
Period" shall mean, in the case of a Shareholder, the period beginning on the
Actual Closing Date and ending on the date one year following the termination
of such Shareholder's employment with LD Services.
(c) For purposes of this Article 11, the term "Territory"
shall mean Alabama, Arizona, Alaska, California, Colorado, Delaware, Florida,
Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland,
Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, New Jersey,
New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania,
South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Washington,
West Virginia and Wisconsin.
11.2 Definition of Compete. For purposes of this Article 11, the
term "Competes" shall mean (a) calling on, soliciting or taking away, as a
client or customer, any individual, partnership, corporation or association
that is a client or customer of LD Services or was a client or customer of LD
Services during the 12 calendar month period immediately preceding any such act
for the purpose of competing with LD Services or IXC-LD; (b) hiring,
soliciting, taking away or attempting to hire, solicit or take away any
employee of LD Services or IXC-LD either on behalf of itself or any other
person or entity; or (c) hiring, soliciting, taking away or attempting to hire,
solicit or take away any independent sales representative that is engaged in
the solicitation of customers on LD Services's behalf or was engaged in the
solicitation of customers on LD Services's behalf during the 12 calendar month
period immediately preceding any such act for the purpose of competing with LD
Services or IXC-LD.
11.3 Direct or Indirect Competition. For purposes of this
Agreement, the words "directly or indirectly" as they modify the word
"Competes" shall mean (a) acting as an agent, representative, consultant,
officer, director, independent contractor or employee of any entity or
enterprise, which Competes (as defined in Section 11.2, above) with the
Business; (b) participating in any such competing entity or enterprise, or the
affiliate of such entity or enterprise, as a holder of an equity interest or as
an owner, partner, limited partner, joint venturer, creditor or stockholder; or
(c) communicating to any such competing entity or enterprise the names or
addresses or any other information concerning any past, present or identified
prospective client or customer of LD Services.
11.4 Confidential Data. The Shareholders agree that, during the
period set forth in Section 11.1, above, each of them will keep confidential
and not directly or indirectly divulge, furnish, make accessible to anyone, or
appropriate for their own use any confidential information of LD Services, and
that at no time will either of them divulge, furnish and make accessible to
anyone or appropriate for their own use any trade secrets of LD Services. Each
of the Shareholders and LD Services further acknowledge and agree that IXC-LD
has a legitimate interest in protecting proprietary customer information from
misappropriation or diversion by the Shareholders or any competitor. The
Shareholders hereby acknowledge and agree that the
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prohibitions against disclosure of confidential data recited herein are in
addition to, and not in lieu of, any rights or remedies which IXC-LD may have
available pursuant to the Laws of any jurisdiction or at common law to prevent
the disclosure of trade secrets and other confidential proprietary data, and
the enforcement by IXC-LD of its rights and remedies pursuant to this Agreement
shall not be construed as a waiver of any other rights or available remedies
which it may possess in Law or equity absent this Agreement.
11.5 Reasonableness of Restrictions. The Shareholders recognize
that the territorial and time limitations set forth in Section 11.1, above, are
reasonable, not burdensome and are properly required by Law for the adequate
protection of IXC-LD, and in the event that such territorial or time
limitations are deemed to be unreasonable by a court of competent jurisdiction,
then the Shareholders and IXC-LD agree and submit to the reduction of either
said territorial or time limitation, or both, to such an area or period as said
court shall deem reasonable.
11.6 Injunctive Relief. The Shareholders acknowledge that their
expertise in the Business is of a special, unique, unusual, extraordinary and
intellectual character, which gives said expertise a peculiar value, and that a
breach by either or all of them of the provisions of this Agreement cannot be
reasonably or adequately compensated in damages in an action at Law and that
such breach will cause IXC- LD and LD Services irreparable injury and damage.
The Shareholders further acknowledge that each of them possesses unique skills,
knowledge and ability that competition in violation of this Agreement would be
extremely detrimental to IXC-LD and LD Services. By reason thereof, the
Shareholders agree that IXC-LD and LD Services shall be entitled, in addition
to any other remedies each of them may have under this Agreement or otherwise,
to temporary, preliminary and/or permanent injunctive and other equitable
relief to prevent or curtail any breach of this Agreement, without proof of
actual damages that have been or may be caused to IXC-LD or LD Services by such
breach or threatened breach; provided, however, that no specification in this
Agreement of a specific legal or equitable remedy shall be construed as a
waiver or prohibition against the pursuing of other legal or equitable remedies
in the event of a breach, by either party.
ARTICLE 12
TERMINATION
12.1 Termination. This Agreement and the transactions contemplated
herein may be terminated at any time:
(a) Upon the written consent of each of the parties to
this Agreement; or
(b) By IXC-LD or LD Services upon written notice to the
other, without liability on account of such termination, if the Shareholders
and/or LD Services are unable to duly obtain any material regulatory approvals
required by Sections 7.7 and 8.7 after all appeals relating thereto have been
exhausted.
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12.2 Effect on Obligations. Termination of this Agreement pursuant
to this Article 12 shall terminate all obligations and liability of the parties
hereunder and this Agreement shall become void and no party shall have any
obligation or liability thereunder, except for the obligations under Sections
5.3, 6.1. and 10.2.
ARTICLE 13
MISCELLANEOUS PROVISIONS
13.1 Entire Agreement. This Agreement, together with the Ancillary
Agreements, the Certificate of Merger and the Disclosure Schedule, set forth
the entire agreement between the parties with regard to the subject matter of
this Agreement.
13.2 Governing Law. The validity, construction and performance of
this Agreement, and any Action arising out of or relating to this Agreement or
any of the Ancillary Agreements, shall be governed by the Laws, without regard
to the Laws as to choice or conflict of Laws, of the State of Texas.
13.3 Interpretation. The language in all parts of this Agreement
and each of the other Ancillary Agreements shall be in all cases construed
simply according to its fair meaning and not strictly for or against any party.
Whenever the context requires, all words used in the singular will be construed
to have been used in the plural, and vice versa. The captions of the Sections
and Subsections of this Agreement are for convenience only and shall not affect
the construction or interpretation of any of the provisions of this Agreement.
13.4 Waiver and Amendment. This Agreement may be amended,
supplemented, modified and/or rescinded only through an express written
instrument signed by all parties or their respective successors and permitted
assigns. Any party may specifically and expressly waive in writing any portion
of this Agreement or any breach hereof, but only to the extent such provision
is for the benefit of the waiving party, and no such waiver shall constitute a
further or continuing waiver of any preceding or succeeding breach of the same
or any other provision. The consent by one party to any act for which such
consent was required shall not be deemed to imply consent or waiver of the
necessity of obtaining such consent for the same or similar acts in the future,
and no forbearance by a party to seek a remedy for noncompliance or breach by
another party shall be construed as a waiver of any right or remedy with
respect to such noncompliance or breach.
13.5 Assignment. Except as specifically provided otherwise in this
Agreement, neither this Agreement nor any interest herein shall be assignable
(voluntarily, involuntarily, by judicial process, operation of Law or
otherwise), in whole or in part, by either party without first obtaining the
prior written consent of the non-assigning party. Notwithstanding the
foregoing, this Agreement and any Ancillary Agreement may be assigned without
prior notice or consent to any IXC Affiliate or any entity which merges with or
into IXC or IXC-LD or acquires substantially all of the assets of IXC or
IXC-LD. Any voluntary attempt at such an assignment,
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except pursuant to this Section shall be void and, at the option of the
non-assigning party, shall be an incurable breach of this Agreement resulting
in the termination of this Agreement.
13.6 Successors and Assigns. Each of the terms, provisions and
obligations of this Agreement shall be binding upon, shall inure to the benefit
of, and shall be enforceable by the parties and their respective legal
representatives, successors and permitted assigns.
13.7 Notices. All notices, requests, demands and other
communications made under this Agreement shall be in writing, correctly
addressed to the recipient at the addresses set forth under such recipient's
signature on the signature page hereto and shall be deemed to have been duly
given; (i) upon delivery, if served personally on the party to whom notice is
to be given; or (ii) on the date or receipt, refusal or non-delivery indicated
on the receipt if mailed to the party to whom notice is to be given by first
class mail, registered or certified, postage prepaid, or by air courier. Any
party may give written notice of a change of address in accordance with the
provisions of this Section and after such notice of change has been received,
any subsequent notice shall be given to such party in the manner described at
such new address.
13.8 Severability. Each provision of this Agreement is intended to
be severable. Should any provision of this Agreement or the application
thereof be judicially declared to be or becomes illegal, invalid, unenforceable
or void, 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 illegal, 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 illegal,
void or unenforceable provision.
13.9 Warranty of Authority. Each of the individuals signing this
Agreement on behalf of a party hereto warrants and represents that such
individual is duly authorized and empowered to enter into this Agreement and
bind such party hereto.
13.10 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute a single agreement.
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IN WITNESS WHEREOF, each of the parties has executed this Agreement as
of the date first set forth above.
▇.▇. SERVICES, INC., IXC COMMUNICATIONS, INC.,
a California corporation a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------- --------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, President ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Executive Vice President
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇, Secretary Address: 5000 Plaza on the ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Address: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ Phone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Suite D2 Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
IXC-ONE ACQUISITION CORP.,
a California corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Executive Vice President
Address: 5000 Plaza on the ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Phone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
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IXC LONG DISTANCE, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Executive Vice President
Address: ▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Phone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
THE "SHAREHOLDERS":
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, individually and in his
capacity as Trustee of the ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
& ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ 1996 Revocable Trust
Address:
Phone No.:
Fax No.:
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
Address:
Phone No.:
Fax No.:
/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------------------
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, individually and in her
capacity as Trustee of the ▇▇▇▇▇▇▇ Family Trust
Address:
Phone No.:
Fax No.:
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/s/ ▇▇▇ ▇▇▇▇▇▇▇
------------------------------------------------
▇▇▇ ▇▇▇▇▇▇▇
Address:
Phone No.:
Fax No.:
/s/ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
------------------------------------------------
▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Address:
Phone No.:
Fax No.:
/s/ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------------------
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, individually and in his
capacity as Trustee of the ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Revocable Trust
Address:
Phone No.:
Fax No.:
/s/ ▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇▇
-------------------------------------------------
▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇▇
Address:
Phone No.:
Fax No.:
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/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Address:
Phone No.:
Fax No.:
Agreed and Accepted:
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
/s/ Dorda ▇▇▇▇▇▇▇▇
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Dorda ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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EXHIBIT A
Regulatory Approvals
Jurisdictions Requiring
Approval of Transfer of Control
Federal:
FCC -- International resale Section 214 authorization
States:
Arkansas
Delaware
Georgia
Indiana
Louisiana
Minnesota
Mississippi
Missouri
New York
North Carolina
Pennsylvania
Washington
West Virginia
Jurisdictions Requiring
Notification of Transfer of Control
States:
Alabama
Arizona
California
Florida
Idaho
Illinois
Kansas
Kentucky
Maryland
Massachusetts
Montana
New Mexico
North Dakota
Ohio
38
Oklahoma
Oregon
South Carolina
South Dakota
Tennessee
Texas
Utah
Wisconsin
No Filings Required
Iowa
Michigan
New Jersey
Virginia
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EXHIBIT B
Form of Employment Agreement
THIS AGREEMENT ("this Agreement"), made and entered into as of
_____________, 1997 by and between ▇.▇. Services, Inc., a California
corporation ("LD Services"), and _____________ ("Employee");
W I T N E S S E T H
In consideration of the covenants and conditions herein contained, and
for good and valuable consideration, the parties hereto agree as follows:
1. Engagement. Employee hereby agrees to provide to LD Services
Employee's services as ______________________, and in such other capacities as
the Board of Directors of LD Services may reasonably require, and to perform
such other services in connection with the business operation, activities and
affairs of LD Services as LD Services may direct. Employee shall render all
services usually and customarily rendered by and required of persons engaged in
such capacity in the telecommunications industry.
2. Term. The term of this Agreement shall commence on
_____________ (the "Start Date") and shall continue until June 30, 1998 unless
otherwise terminated as set forth herein (the "Term").
3. Compensation. In full consideration for the undertakings of
and the services to be rendered by Employee to LD Services, LD Services agrees
to pay Employee, and Employee agrees to accept, the following:
(a) Salary: $_________ per year during the Term, payable
ratably on the regular paydays of LD Services.
(b) Stock Options: Employee shall be granted options to
purchase _________ (___) shares of common stock, $.01 par value, of IXC
Communications, Inc., the parent of LD Services, under the IXC Communications,
Inc. 1996 Stock Plan (the "Plan") pursuant to the terms of an option agreement
with IXC Communications, Inc. in the form of Exhibit ___ attached hereto.
4. Benefits. Employee will be entitled to all rights and
benefits for which Employee is otherwise eligible under any health, life and
disability insurance plans, vacation policies, sick leave policies, profit
sharing plans, automobile allowances and club dues reimbursements that LD
Services provides or during the Term of this Agreement may provide to its
employees or officers in comparable positions (collectively, "Additional
Benefits").
5. Reimbursement of Business Expenses. LD Services will, upon
submission of appropriate documentation, promptly reimburse employee for
reasonable and authorized expenses
40
(including travel, entertainment, business meetings, telephone and similar
items) incurred by Employee during the term of this Agreement.
6. Freedom to Execute Agreement. Employee represents, warrants
and agrees that Employee is free to enter into this Agreement and to grant the
services and rights set forth herein, and that Employee has not made any grant
or assignment which will or might conflict with or impair the complete
enjoyment of the rights and privileges granted to LD Services hereunder.
7. Exclusivity. Employee shall devote Employee's full-time
attention, energies, skills, learning and best efforts to the business of LD
Services and, during the Term, shall not be engaged, directly or indirectly, in
any other business activity or render services of a business, professional or
commercial nature to any other person, firm or corporation, in direct
competition with LD Services.
8. Property. All results and proceeds of Employee's services
hereunder, and all inventions, improvements, systems, designs, ideas, business
plans, sales techniques and approaches which Employee made or conceived or
which Employee may make or conceive, at any time after the commencement of
Employee's employment with LD Services and until the termination thereof,
either individually or jointly with others, or which Employee utilizes in
carrying out Employee's duties hereunder (hereinafter "Property"), shall be the
exclusive property of LD Services as a "work for hire", and Employee hereby
assigns and agrees to assign to LD Services all of Employee's rights in and to
all such Property, and to all copyrights (statutory and common law), covering
any or all of the Property.
9. Trade Secrets. Since the work for which Employee is employed
and upon which Employee will be engaged will include knowledge and information
of a confidential nature to, and the secret property of, LD Services, or
persons, firms, entities or corporations with whom LD Services is affiliated,
or customers of LD Services or its affiliates (including but not limited to
inventions, improvements, designs systems, ideas, financial and technical data,
trade secrets, business plans, financing systems and techniques, sales
techniques and approaches, and customer and supplier information), Employee
shall receive all knowledge and information in confidence, and shall not at any
time (during or after employment with LD Services) except as required in the
conduct of LD Services business, or authorized in writing by LD Services,
publish, disclose or use or authorize anyone else to publish, disclose or make
use of any such information or knowledge unless and until such information or
knowledge shall have ceased to be secret or confidential as evidenced by
general public knowledge. In the event that Employee's employment with LD
Services shall cease, Employee authorizes LD Services to send a copy of this
Section 9, in its sole discretion, to any and all future employers which
Employee may have and to any and all persons, firms, entities and corporations
with whom Employee may become affiliated in a business or commercial
enterprise, and inform any and all such employers, persons, firms, entities or
corporations that LD Services intends to exercise its legal rights should
Employee breach the terms of this Agreement or should another party induce a
breach by Employee.
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10. Injunction; Confidential Materials. Employee hereby consents
and agrees that for any violation of any of the provisions of Sections 8, or 9
of this Agreement, a restraining order and/or an injunction may issue against
Employee in addition to any other rights LD Services may have at law or in
equity. Employee agrees that records containing secret or confidential
knowledge and information prepared by Employee or which come into Employee's
possession during Employee's employment by LD Services, are and remain the
property of LD Services, and if and when Employee's employment with LD Services
terminates, all such records and all copies thereof shall be left with LD
Services.
11. Remedies. Employee acknowledges and agrees that the services
to be rendered by Employee hereunder and the rights and privileges herein
granted to LD Services are by reason of Employee's skill and experience, of a
special, unique, unusual, extraordinary and intellectual character which gives
them a peculiar value, the loss of which cannot reasonably or adequately be
compensated in damages in an action at law, and that a breach by Employee of
any of the provisions contained herein will cause LD Services irreparable
injury and damage. Employee expressly agrees that LD Services shall be
entitled as a matter of right to injunctive or other equitable relief to
prevent a breach of this Agreement by Employee. Resort to such equitable
relief, however, shall not be construed as a waiver of any other rights or
remedies which LD Services may have for damages or otherwise hereunder.
Employee specifically agrees that LD Services may recover by appropriate action
the amount of the actual damage caused LD Services by any failure, refusal or
neglect of Employee to keep and perform all of the agreements and warranties
herein contained.
12. Termination.
(a) Termination of Employment. During the term of this
Agreement, should LD Services terminate the Employee's employment (a) upon the
disability of the Employee, (b) upon the death of the Employee, (c) for cause,
or (d) for any other reason, the following terms shall apply:
(i) Disability. For purposes of this Agreement,
"disability" shall mean a physical or mental sickness or any injury
which renders the Employee incapable of performing the services
required as an employee of LD Services and which does or may be
expected to continue for more than three months during any six month
period. The Board of Directors of LD Services and the Employee shall
determine the existence of a disability and the date upon which it
occurred. In the event of a dispute regarding whether or when a
disability occurred, the matter shall be referred to a medical doctor
selected by the Board of Directors of LD Services and the Employee.
In the event of their failure to agree upon such a medical doctor, the
Board of Directors and the Employee shall each select a medical doctor
who together shall select a third medical doctor who shall make the
determination. Such determination shall be conclusive and binding
upon the parties.
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(ii) Payments Upon Disability or Death. In the
event of termination for disability or death, Employee shall receive
as severance, payments of the Employee's salary to be made to the
Employee or Employee's estate, and the Employee and Employee's family
shall continue to receive health and medical insurance, until the
first to occur of (i) June 30, 1998 and (ii) the date six months after
the date of such termination.
[To be used for ▇▇▇▇]
(iii) Cause. For purposes of this Agreement,
"cause" shall mean (a) misconduct which is demonstrably and
substantially injurious to LD Services, or (b) failure to follow a
reasonable lawful directive of LD Services's Board of Directors or an
authorized LD Services officer, director or supervisor of Employee
following notice that such failure shall constitute grounds for
termination for cause. In the event LD Services seeks to terminate
the Employee's employment with LD Services for cause, LD Services
shall provide the Employee with a written notice stating the facts and
circumstances constituting the cause for such termination, and may in
such notice or otherwise prescribe the Employee's duties, if any, to
be performed until the date of termination.
[To be used for other Shareholders]
(iii) Cause. For purposes of this Agreement,
"cause" shall mean (a) the failure or inability of the Employee to
substantially perform Employee's duties, other than a failure
resulting from incapacity due to physical or mental illness (subject
to the Chief Executive Officer's approval), (b) misconduct which is
demonstrably and substantially injurious to LD Services, (c) violation
of any of LD Services' rules, policies, procedures or other standards
of conduct or performance (subject to the Chief Executive Officer's
approval) or (d) failure to follow a reasonable lawful directive of LD
Services's Board of Directors or an authorized LD Services officer,
director or supervisor of Employee following notice that such failure
shall constitute grounds for termination for cause. In the event LD
Services seeks to terminate the Employee's employment with LD Services
for cause, LD Services shall provide the Employee with a written
notice stating the facts and circumstances constituting the cause for
such termination, and may in such notice or otherwise prescribe the
Employee's duties, if any, to be performed until the date of
termination.
[To be used for ▇▇▇▇]
(iv) Termination For Other Reasons. Termination
of employment by the Employee's request shall be considered a
termination for cause for purposes of this Agreement except if such
request occurs within 30 days after (a) Employee's duties have been
materially changed by the Board of Directors of LD Services, and/or
(b) Employee has been asked to render services for LD Services outside
Los Angeles County or Orange County for either a continuous period in
excess of four weeks or an aggregate of 30 days
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during the Term of this Agreement. In the event of termination for
cause, payments of salary pursuant to Section 3 shall be prorated to
the date of termination and Employee shall not receive any severance.
[For all other shareholders]
(iv) Termination For Other Reasons. Termination
of employment by the Employee's request shall be considered a
termination for cause for purposes of this Agreement except if such
request occurs within 30 days after (a) Employee's duties have been
materially changed by the Board of Directors of LD Services, without
approval of the Chief Executive Officer of LD Services, and/or (b)
Employee has been asked to render services for LD Services outside Los
Angeles County or Orange County for either a continuous period in
excess of four weeks or an aggregate of 30 days during the Term of
this Agreement. In the event of termination for cause, payments of
salary pursuant to Section 3 shall be prorated to the date of
termination and Employee shall not receive any severance.
(b) Termination Without Cause. If the Employee's
employment is terminated by LD Services for (a) any reason other than for
cause, disability or death, or (b) what LD Services believes is cause or
disability and it is ultimately determined that the Employee was wrongfully
terminated, the Employee shall have been terminated "without cause" and shall
receive as damages (i) Employee's salary, as set forth in Section 3, for six
months following such termination or until June 30, 1998, whichever is less
(such date is referred to as the "Severance Date") and (ii) fringe benefits, as
set forth in Section 5 until the Severance Date.
13. Headings. The headings contained in this Agreement are for
convenience only and shall not be referred to for the purpose of limiting or
construing this Agreement in any way.
14. Notices. Any notice required or permitted to be given under
this Agreement shall be sufficient if in writing, and if sent by regular,
first-class mail or by certified or registered mail or facsimile as follows:
To Employee:
_________________________________________________
_________________________________________________
Telecopy No._____________________________________
To LD Services:
_________________________________________________
_________________________________________________
_________________________________________________
Attention:_______________________________________
Telecopy No._____________________________________
or other such address as either party shall specify in a notice to the other.
Employee shall promptly notify LD Services in writing of any change of
Employee's address. Notice shall be
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44
deemed given on the earlier of the date of actual receipt by the party to whom
it is addressed or the date it is placed, postage prepaid, in a depository for
U.S. mail or delivered to toll prepaid to a telegraph office.
15. Successor of LD Services to Assume. LD Services will require
any successor (whether direct or indirect by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or the assets of LD
Services, by agreement in form and substance satisfactory to Employee, to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that LD Services would be required to perform this Agreement if
no such succession had taken place. As used in this Section, "LD Services"
shall mean LD Services as hereinbefore defined and any successor to its
business and/or assets which executes and delivers this Agreement as provided
for in this Section, or which otherwise becomes bound by all of the terms and
provisions of this Agreement by operation of law.
16. Law Governing. This Agreement shall be deemed to be entered
into and performed in California, and shall, in all respects, be interpreted in
accordance with and governed by the laws of California and the parties agree
that they will be subject to the jurisdiction of the courts of California.
17. Waiver. The failure of either party to insist, in any one or
more instances, upon performance of the terms or conditions of this Agreement
shall not be construed as a waiver or a relinquishment of any right granted
hereunder or of the future performance of any such term, covenant or condition.
18. Severability. In the event that any provision shall be held
to be invalid or unenforceable for any reason whatsoever, it is agreed such
invalidity or unenforceability shall not affect any other provision of this
Agreement and the remaining covenants, restrictions and provisions hereof shall
remain in full force and effect and any court of competent jurisdiction may so
modify the objectionable provision as to make it valid, reasonable and
enforceable.
19. Entire Agreement. This instrument and the exhibits hereto
constitute the entire agreement between the Company and the Employee relating
to the Employee's employment by the Company and supersede any prior agreements,
promises and understandings.
20. Amendment. This Agreement may only be amended by an agreement
in writing signed by the LD Services and the Employee.
21. Attorneys' Fees. If any legal action or proceeding is brought
to enforce the terms of this Agreement, the prevailing party shall be entitled
to reasonable attorneys' fees in addition to any other relief to which that
party may be entitled.
23. Arbitration. All controversies, claims, disputes, and matters
in question arising out of, or relating to, this Agreement including, without
limitation, any asserted breach thereof, shall be decided by arbitration in
accordance with the provisions of this Section. The arbitration
- 6 -
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proceedings shall be conducted under the applicable rules of the American
Arbitration Association or its successor in effect at the time a demand for
arbitration under the rules is made. The arbitration board will consist of
three arbitrators, one chosen by LD Services, one chosen by Employee and the
third selected by the two arbitrators so chosen. The decision of the majority
of the arbitrators, including determination of amount of any damages suffered,
shall by conclusive, final, and binding on LD Services and on Employee, on all
respective heirs, legal representatives, successors, and assigns. The
arbitrators shall be bound to follow the applicable state law and case
precedent. The losing party shall pay to the successful party its expenses in
the arbitration for arbitration costs, including arbitrator's fees, attorneys
fees, fees for expert testimony, and for other expenses of presenting its case.
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IN WITNESS WHEREOF, the parties have executed this Employment
Agreement as of the date first above written.
▇.▇. Services, Inc.
By: _____________________________
Its: _____________________________
EMPLOYEE:
_____________________________________
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EXHIBIT C
Form of Revised Independent Agent Agreement
This is an agreement ("Agreement") entered into this ____ day of
________ 199_, by and between ▇.▇. Services, Inc., (hereinafter, the
"Company"), and _____________________________, representing
__________________________, and other persons and principals acting on or for
its services or in the interests of any principal or their assigns,
(hereinafter, "Contractor").
WHEREAS, the Company is in the business of providing long distance
telecommunications services (the "Services") to commercial, non- residential
customers and residential customers;
WHEREAS, in order to increase sales of the Services, the Company has
determined that it is in its best interests to engage Contractor as an
independent contractor for the purpose of selling the Services on terms and
conditions hereinafter set forth; and
WHEREAS, Contractor wishes to become an independent contractor of the
Company for the purpose of selling the Services, and is willing to accept such
engagement and undertake the sale of the Services, all upon the terms and
conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein, the parties agree as follows:
1. RELATIONSHIP OF THE PARTIES
The Company hereby appoints Contractor and Contractor hereby
accepts the appointment as a non-exclusive, authorized sales agent of the
Company in the area described in Exhibit A, attached hereto (the "Area"). In
its capacity as sales agent, Contractor shall solicit customers for the
Services in the Area (customers which Contractor obtains for the Company are
referred to as "Customers"), and except as set forth in paragraph 2 below, the
Company reserves the right to appoint other independent contractors to sell the
Services, and to locate such independent contractors in the geographic areas of
its choice. Contractor's relationship with the Company is solely that of an
independent contractor, and nothing herein shall be construed to constitute a
joint venture, partnership, employment, or franchise relationship between the
Company and Contractor.
2. TERMS AND CONDITIONS OF RELATIONSHIP
A. During the term hereof, the Services which Contractor
sells on behalf of the Company shall be sold by Contractor at agreed upon
rates, terms and conditions.
B. The Company shall determine and may periodically
modify rates for the Services, and shall notify Contractor of each modification
prior to such modifications taking effect. Contractor shall take no action
inconsistent with, and agrees to support the Company's
48
efforts before regulatory authorities regarding any modification of the
Company's rates. Modification of rates may apply to both existing and future
Customers. Where Contractor establishes contracts with Customers that
guarantee rates for specific periods of time and Company agrees to same,
Company will not violate such contracts by changing rate plans for those
customers during the term.
C. Contractor shall not reveal, divulge, make known,
sell, exchange, give away, or transfer in any way any part or all of any list
of Customers during or after the term of this Agreement; provided however, that
Contractor shall be under no restriction regarding the use of such information
as long as such use is consistent with the terms of this Agreement and is in
the best interest of the Company.
D. Contractor shall have reviewed all oral or written
applications and letters of agency ("LOAs") for the Services submitted by
Customers to Contractor and shall reject those applications for LOAs which do
not meet the written standards of the Company.
E. All Customer applications and LOAs submitted by
Contractor to the Company and, if accepted such Customers will become the
Customers of the Company and not of Contractor. The Company will furnish to
Contractor written procedures to be followed by Contractor in processing
customer applications of LOAs. Company will "▇▇▇▇▇▇/Geasar" (in applicable
LEC's), LEC ▇▇▇▇ and do customer service on all orders accepted by Customer.
Contractor shall not be responsible for any such billing services or for the
collection from any Customer of any unpaid charges owed to the Company. The
Company has the unfettered right, subject to applicable law and regulatory
review, if any, to reject the application or LOA of any Customer applications
or LOAs, including billing information to the Company via computer equipment
compatible with the Company's computer equipment.
E-1. At Company's discretion, it may agree to take over the
provisioning functions including "▇▇▇▇▇▇/Geasar" with applicable LECs. If such
change in procedure occurs, compensation for same will be agreed upon by both
parties.
F. Contractor shall maintain regular customer contact
with all Customers solicited by Contractor whose monthly ▇▇▇▇▇▇▇▇ exceed $1,000
per month, and Contractor shall remain accessible to such Customers for
on-going customer support and customer inquires.
G. Contractor shall not use any written materials with
Company's name on it to advertise or to solicit Customer orders other than
those written materials provided or approved by the Company.
H. Other than its employees, Contractor shall neither
engage any other party to meet its duties or obligations hereunder nor shall it
contract in the name of or bind the Company in any manner whatsoever, without
the prior written approval of the Company.
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I. Contractor reserves the right to employ and discharge
such salespeople and other employees as it shall, in its sole judgment, deem
necessary, and such salespeople and other employees shall be employees of
Contractor and not of the Company.
J. Both the Company and Contractor shall faithfully,
honestly, and diligently perform their obligations hereunder.
3. COMPENSATION
A. Company shall pay Contractor as set forth in Exhibit
B within 5 business days of the date Company has been paid for Contractor's
billing.
B. Except as provided herein, compensation hereunder
shall survive the termination of this Agreement and continue until Customers no
longer use the Services.
C. All federal, state, local, and other taxes, which may
be payable as a result of compensation paid by the Company to Contractor, are
the sole responsibility of Contractor.
4. COMPLIANCE
Contractor shall comply with and abide by all federal, state,
and local laws governing the solicitation and sale of the Services which it
sells including, but not limited to, any licenses or permits that may be
required in order to perform its activities or meet its duties and obligations
under this Agreement.
5. FALSE AND MISLEADING STATEMENTS
A. Contractor shall not make any false or misleading
statements concerning the rates, terms and conditions, or any other aspect of
the Services. Contractor understands that any such statement is a breach of
this Agreement which, if continued for more than ten (10) days after notice of
such breach to Contractor, is cause for immediate termination hereof.
B. Neither Contractor nor the Company shall make any
false or misleading statements concerning the other party or the business
relationship between the parties.
C. Contractor shall not falsify any LOA. Contractor
shall comply with all applicable laws regarding LOAs from Customers.
6. LICENSE TO USE SERVICE MARKS OF THE COMPANY
A. The Company hereby grants Contractor a revokable
license to use certain trademarks, trade names, insignia, symbols or decorative
designs or the like, which the Company owns (collectively, the "Marks").
Periodically, the Company will publish a list of the Marks which Contractor is
licensed to use under this Agreement. Contractor agrees to use such Marks
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50
subject to any and all written restrictions, conditions, or limitations
delivered to Contractor from time to time by the Company. Upon termination of
this Agreement for any reason, Contractor shall immediately discontinue its use
of the Marks and shall return to the Company all property or material related
to such Marks provided to Contractor by the Company.
B. Contractor shall not use the Marks as part of its own
corporate or trade name or with any prefix, suffix, or other modifying words,
terms, designs, or symbols, to in any modified form, unless previously
authorized by the Company in writing. Contractor may not use any ▇▇▇▇ in
connection with the sale or lease of any unauthorized product or service or any
other manner not expressly authorized by this Agreement or separately in
writing by the Company. Contractor shall cooperate with the Company in
securing any necessary trade or fictitious business names necessary to use the
Marks and shall be reimbursed by the Company for any reasonable expenses
incurred thereby.
C. The Company reserves the unfettered right to revoke
or modify the license granted hereunder at any time. Contractor shall
discontinue use of any ▇▇▇▇ or substitute one or more additional trade or
service marks as prescribed by the Company as soon as practicable after written
notice is delivered by the Company. In such event the Company shall reimburse
Contractor for its reasonable out-of- pocket costs, if any, of complying with
this obligation.
D. Contractor shall not attack the title or any rights
of the Company in and to the Marks during the term of this Agreement. The
Company shall indemnify and hold Contractor harmless against any damages and
costs from claims or suit arising out of the use by Contractor of the Marks in
the manner authorized in this Agreement, provided that prompt notice is given
to the Company of any such claim or suit, and provided further, that the
Company shall have the option to undertake and conduct the defense of any suit
so brought. No settlement of any such claim or suit is to be made by
Contractor without the prior written consent of the Company.
E. Contractor agrees to assist the Company, and the
Company agrees to reimburse Contractor for all associated costs incurred by
Contractor, in the procurement any protection of the Company's rights to the
Marks. The Company, if it so desires, may commence or prosecute any claims or
suits for such purpose in its own name or may join Contractor as a party
thereto. When known, Contractor shall notify the Company in writing of any
infringements or imitations by others of the Marks which are the same as or
substantially similar to those covered by this Agreement. Contractor shall not
institute any suit or take any action on account of any such infringements or
imitations without first obtaining the written consent of the Company.
7. EXPENSES AND COSTS
Contractor is responsible for all expenses and costs related
to its activities, obligations, and duties hereunder including, but not limited
to, all fees, taxes, and assessments of any type or kind.
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51
8. INDEMNIFICATION
Contractor shall indemnify and hold harmless the Company from
any and all claims, demands, losses, penalties, actions, and judgments for (i)
damages to personal property, (ii) personal injury or death suffered or
sustained by any third party, and (iii) any other claims which arise by reason
of the conduct of Contractor, its affiliates or employees, relative to the
performance of Contractor's activities, duties, or obligations hereunder. This
section and its provision shall survive the termination of this Agreement.
9. CONSEQUENTIAL DAMAGES
In no event, whether for breach of contract, warranty,
negligence, strict liability in tort, or otherwise, will either party by liable
to the other party for incidental, special or consequential damages including,
but not limited to, frustration of economic or business expectations, loss of
profits, cost of capital, cost of substitute products(s), facilities, or
services, or downtime cost, even if advised of the possibility of such damages.
10. ASSIGNMENT AND TRANSFER
This Agreement shall not be assigned or in any manner
transferred by Contractor without the prior written consent of the Company
which consent shall not be unreasonably withheld. This Agreement may be
assigned by the Company to any affiliate of the Company.
11. TERMINATION
A. This Agreement shall terminate two (2) years from the
date of its execution unless earlier terminated by its terms. However, the
Agreement shall be automatically renewed for additional one (1) year periods at
the expiration of any term, unless thirty (30) days prior to any such
expiration written notice is provided to the non-terminating party by the
terminating party that the Agreement is terminated.
B. If Contractor or the Company substantially fail to
perform or comply with any provision of this Agreement in a satisfactory
manner, and if such failure continues for more than ten (10) days after notice
of such breach by the other party, then the such party may, at its option,
immediately terminate this Agreement without any further obligation to the
other, except for the payment of commissions earned as per Section 3 of the
Agreement and Exhibit B, with the exception of violations of Section 12 as
specified in that section (in which case no further commissions would be paid).
12. COVENANT NOT TO COMPETE
Notwithstanding anything herein to the contrary, Contractor
shall not during the term of this Agreement and for a period of three years
after the termination of this Agreement
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52
target or intentionally solicit and will not process any Customer with whom
Contractor had previous contact while engaged as an Independent contractor by
the Company to use the services of any provider of telecommunication services
other than the Company. Violation of this clause constitutes a breach of
contract and, in addition to the fact that no further commissions would be due
and owing to Contractor, Company would take full legal actions against
Contractor for an injunction against such violations of this Agreement.
13. CONFIDENTIALITY
A. Contractor shall not reveal any written or verbal
information which, by its nature and under the circumstances, is confidential
or proprietary, specifically, information regarding the Company, its directors,
officers, employees, or services; the terms and conditions of this Agreement,
or any customer information such as names and addresses of and Customers of the
Company; and any additional materials that shall be specified in writing as
confidential and proprietary. All such written information shall be returned
to the Company immediately upon termination hereof.
B. Upon and after the termination of this Agreement,
Contractor shall not use to its own advantage, or to the advantage of any other
person or entity, the above specified confidential or proprietary information.
14. NOTICES
Any and all notices or other communications required or
permitted by any provision of this Agreement shall be in writing and shall be
hand-delivered, or mailed by certified mail, return receipt requested, to the
addressee at the addressee's address noted on the signature page hereto.
15. MISCELLANEOUS
A. The failure of any party to enforce any provision of
this Agreement shall not be considered a waiver of such provision, but the same
shall nevertheless remain in full force and effect.
B. This Agreement and the Exhibits thereto, which may be
updated or amended from time to time, constitute and contain the entire
agreement of the parties hereto regarding the subject matter hereof and
supersede any and all related discussions, negotiations, correspondence,
understandings, and agreements among the between the parties.
C. This Agreement shall be construed in accordance with
and governed in all respects by the laws of the State of California.
D. In the event that any of the provisions of this
Agreement shall be held to be invalid or unenforceable, then all other
provisions shall nevertheless continue to be valid and
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53
enforceable as though the invalid or unenforceable parts had not been included
in this Agreement. In the event that any provision relating to the time period
or geographic area of any restriction imposed by this Agreement shall be
declared by a court of competent jurisdiction to be unreasonable and
unenforceable, then such restriction shall be automatically reduced to a time
period or geographic area which the court deems reasonable and will enforce.
E. This Agreement shall only be modified by the mutual, written
consent of both parties.
IN WITNESS HEREOF, the parties hereto state that they are
authorized to enter into this Agreement and, based upon such authority, have
executed this Agreement as of the day and year first written above.
THE "COMPANY" "CONTRACTOR"
By: ______________________ By:_________________________
[Name:___________________] [Name:_____________________]
Its:______________________ Its:________________________
Address: Address:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇. #▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇ Phone: ( )
Fax : (▇▇▇) ▇▇▇-▇▇▇▇ Fax : ( )
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EXHIBIT D
Form of Registration Rights Agreement
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into as of this __th day of ______________________ 1997, by and between
IXC Communications, Inc., a Delaware corporation (the "Company"), and each of
the Shareholders listed on the signature page hereof: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
individually and in his capacity as Trustee of the ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ &
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ 1996 Revocable Trust; ▇▇▇▇▇▇ ▇▇▇▇▇▇; ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
individually and in her capacity as Trustee of the ▇▇▇▇▇▇▇ Family Trust; ▇▇▇
▇▇▇▇▇▇▇; ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇; ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, individually and in his
capacity as Trustee of the ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Revocable Trust; ▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇▇; and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇.
R E C I T A L S
A. The Company, IXC Long Distance, Inc., a Delaware corporation
("IXC-LD"), the Shareholders, ▇.▇. Services, Inc., a California corporation
("LD Services"), and IXC-One Acquisition Corp., a California corporation, have
entered into a Stock Acquisition Agreement and Plan of Merger of even date
herewith (the "Acquisition Agreement") pursuant to which IXC-LD, a wholly owned
subsidiary of IXC, is acquiring from the Shareholders all of the issued and
outstanding shares of capital stock of LD Services (the "LD Services Stock").
B. Pursuant to the terms of the Acquisition Agreement, the
Company is obligated to issue to the Shareholders a number of shares of common
stock, $.01 par value, of the Company (the "IXC Shares") as part of the
consideration for the LD Services Stock purchased by the Company pursuant to
the Acquisition Agreement, and the terms of the Acquisition Agreement require
the Company to provide the Shareholders certain registration rights with
respect to the IXC Shares.
A G R E E M E N T
In consideration of the foregoing recitals and the mutual covenants
and conditions contained herein, the parties, intending to be legally bound,
agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Certain Defined Terms. For purposes of this Agreement, the
following terms shall have the following meanings:
"Act" shall mean the Securities Act of 1933, as amended.
"Commission" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Act.
55
"Holder" shall mean the Shareholders and any person
beneficially owning Registerable Securities through permitted assignment
thereof in accordance with Article 6, below.
"Registerable Securities" shall mean the IXC Shares and any
shares of the Company's common stock issued as a dividend or other distribution
with respect to, or in exchange for or in replacement of the IXC Shares,
excluding any Registerable Securities sold by a person in a transaction in
which its, his or her rights under this Agreement are not assigned; provided
further that shares which would otherwise constitute Registerable Securities
shall cease to be so once they have been sold to the public.
"Register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Act and the declaration or ordering of effectiveness of
such registration statement.
1.2 Other Defined Terms. The following capitalized terms shall
have the meanings given to them in the Sections set forth below:
Term Section
---- -------
Advice 6.1
Indemnified Party 4.1
Indemnifying Party 4.1
Necessary Interruptions 6.2
Permitted Interruptions 6.2
Registration Expenses 3.2
Shelf Registration 2.1
1.3 Other Defined Terms. All other capitalized terms
used herein but which are not otherwise defined shall have the meanings given
to them in the Acquisition Agreement.
ARTICLE 2
SHELF REGISTRATION
2.1 Shelf Registration. On or before July 31, 1997 or 30
days after the Actual Closing Date, whichever is later, (such date is referred
to as the "Initial Filing Date"), the Company shall prepare and file with the
Commission, a registration statement on any appropriate form under the Act for
an offering to be made on a continuous basis covering all of the Registerable
Securities (the "Shelf Registration"). The Company shall use commercially
reasonable efforts to cause the Shelf Registration to become effective under
the Act on or about the date 45 days following the Initial Filing Date and,
subject to Permitted Interruptions and/or Necessary Interruptions, the Company
shall use its best efforts to keep the Shelf Registration continuously
effective for the lesser of (a) a period of two years from the date on which
the Shelf
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56
Registration becomes effective under the Act (the "Two Year Period"), (b) a
period ending on the date upon which all Registerable Securities covered by the
Shelf Registration have been sold, (c) a period ending on the date after which
restrictions on sales of securities by persons other than affiliates pursuant
to Commission Rule 144 (or any successor provision) terminate, or (d) a period
ending on the date after which the Holders no longer own any of the
Registerable Securities. The Company shall also, subject to Permitted
Interruptions and/or Necessary Interruptions, supplement or make amendments to
the Shelf Registration if required by the rules, regulations or instructions
applicable to the registration form used by the Company or if otherwise
required by the Act. Each of the Holders agrees to provide the Company with at
least five business days notice prior to selling any Registrable Securities
into the public market while the Shelf Registration remains effective.
2.2 Limitations on Rights. The Company shall not be
required to prepare and file a registration statement pursuant to Section 2.1,
above, which is effected more than two years after the date of this Agreement.
ARTICLE 3
REGISTRATION PROCEDURES
3.1 General. If and when the Company is required by the
provisions of this Agreement to effect, or use its best efforts to effect, the
registration of shares of Registerable Securities, the Company shall:
(a) Subject to Permitted Interruptions and/or Necessary
Interruptions, prepare and file with the Commission, within the time period
specified herein, a registration statement with respect to such shares and use
its best efforts to cause such registration statement to become and remain
effective for the periods provided herein;
(b) Subject to Permitted Interruptions and/or Necessary
Interruptions, prepare and file with the Commission such amendments and
post-effective amendments to each registration statement as may be necessary to
keep such registration statement continuously effective for the applicable
period; and cause the related prospectus to be supplemented by any required
prospectus supplement;
(c) Use its best efforts to notify the Holders promptly
(i) when a prospectus or any prospectus supplement or post- effective amendment
related to such Registerable Securities has been filed, and, with respect to
Registerable Securities, when the same has become effective, (ii) of the
receipt of any comments from the Commission, (iii) of any request by the
Commission for amendments or supplements to a registration statement or related
prospectus or for additional information, (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of a registration
statement of the initiation of any proceeding for that purpose, (v) of the
receipt by the Company of any notification with respect to the suspension of
the
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57
qualification or exemption from qualification of any of the Registerable
Securities for sale in any jurisdiction of the United States of America or the
initiation or threatening of any proceeding for such purpose, (vii) of the
happening of any event (the nature and pendency of which need not be disclosed
during a Permitted Interruption and/or Necessary Interruption) which makes any
statement made in such registration statement or related prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue
or which requires the making of changes in a registration statement or related
prospectus so that such documents will not contain any untrue statement of
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, and (vii) of the Company's
reasonable determination that a post-effective amendment to a registration
statement would be appropriate;
(d) Use its best efforts to obtain the withdrawal of any
order suspending the effectiveness of a registration statement, or the lifting
of any suspension of the qualification (or exemption from qualification) of any
of the Registerable Securities for sale in any jurisdiction of the United
States of America, at the earliest possible moment;
(e) If reasonably requested by any Holder of Registerable
Securities covered by a registration statement, (i) promptly incorporate in a
prospectus supplement or post-effective amendment such information as such
Holder reasonably requests to be included therein or as may be required by
applicable law, (ii) make all required filings of such prospectus supplement or
such post-effective amendment as soon as the Company has received notification
of the matters to be incorporated in such prospectus supplement or
post-effective amendment, and (iii) supplement or make amendments to any
registration statement if reasonably requested by any Holder of Registerable
Securities covered by such registrations statement or as may be required by
applicable law;
(f) Furnish to the Holders of Registerable Securities
covered by the registration statement, without charge, at least one signed copy
of the registration statement or statements and any post-effective amendment
thereto, including financial statements and schedules, all documents
incorporated therein by reference and all exhibits (including those previously
furnished or incorporated by reference), at the earliest practicable time under
the circumstances after the filing of such document;
(g) Deliver to each Holder of Registerable Securities
covered by a registration statement, without charge, as many copies of the
prospectus or prospectuses (including each preliminary prospectus) and any
amendment or supplement thereto as such person may reasonably request; the
Company consents to the use of such prospectus or any amendment or supplement
thereto by each of such Holders in connection with the offering and sale of
Registerable Securities covered by such prospectus or any amendment or
supplement thereto;
(h) Prior to any public offering of Registerable
Securities, to use its best efforts to register or qualify or cooperate with
the Holders of Registerable Securities in connection with the registration or
qualification (or exemption from such registration or qualification) of such
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Registerable Securities for offer and sale under the securities or blue sky
laws of such state or local jurisdictions as any seller reasonably requests in
writing; subject to the provisions herein regarding Permitted Interruptions
and/or Necessary Interruptions, keep such registration or qualification (or
exemption therefrom) effective during the period such registration statement is
required to be kept effective and do any and all other acts or things necessary
or advisable to enable the disposition in such jurisdiction of the Registerable
Securities covered by the applicable registration statement; provided, however,
the Company shall not be required to (i) qualify generally to do business in
any jurisdiction where it is not then so qualified, (ii) take any action which
could subject it to general service of process in any such jurisdiction where
it is not then so subject, or (iii) subject itself to taxation in any such
jurisdiction;
(i) Cooperate with the selling Holders of Registerable
Securities to facilitate the timely preparation and delivery of certificates
representing Registerable Securities to be sold, which certificates shall not
bear any restrictive legends;
(j) Subject to Permitted Interruptions and/or Necessary
Interruptions, cause the Registerable Securities covered by the applicable
registration statement to be registered with or approved by such other federal,
state and local governmental regulatory agencies or authorities in the United
States as may be necessary to enable the seller or sellers thereof to
consummate the disposition of such Registerable Securities; and
(k) Subject to Permitted Interruptions and/or Necessary
Interruptions, upon the occurrence of any event contemplated by Section
3(c)(vi) or 3(c)(vii), above, as promptly as practicable thereafter, prepare
and file with the Commission a supplement or post-effective amendment to the
applicable registration statement or a supplement to the related prospectus of
any document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of the Registerable
Securities being sold thereunder, such prospectus will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
3.2 Registration Expenses. Except as provided below, all
of the expenses incurred by the Company in effecting any registration requested
pursuant to Section 2.1, above, including, without limitation, all registration
and filing fees, printing expenses, expenses of compliance with Blue Sky laws
(including, without limitation, fees and disbursements of underwriters counsel
relating thereto), fees and disbursements of counsel for the Company, and
expenses of any audits incidental to or required by any such registration
("Registration Expenses") shall be paid by the Company. In either event,
notwithstanding anything in this Section 3.2 to the contrary, the Company shall
have no obligation to pay or otherwise bear (a) any underwriting discounts or
brokerage fees or commissions relating to the sale of Registerable Securities
by the Holders, or (b) any Registration Expenses if the payment of such
expenses by the Company is prohibited by the laws of a state in which such
offering is qualified and only to the extent so prohibited, or (c) any expenses
of any compliance with Blue Sky laws which pertains only to an individual
Holder, or (d) any fees and disbursements of counsel for the Holders.
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59
ARTICLE 4
INDEMNIFICATION
4.1 Indemnification by the Company. The Company will
indemnify, hold harmless and defend each Holder, its officers, directors,
partners, legal counsel and accountants, and each person who controls a Holder
within the meaning of Section 15 of the Act, against any and all expenses,
claims, losses, damages and liabilities (or actions in respect thereof),
including any of the foregoing incurred in settlement of any litigation,
commenced or threatened, arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any registration
statement, prospectus, offering circular or other document, or any amendment or
supplement thereof, incident to any registration or qualification of the
Registrable Securities, or which arise out of or are based on any omission (or
alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, or any violation by the
Company of any rule or regulation promulgated under the Act or any state
securities laws applicable to the Company and relating to action or inaction
required of the Company in connection with any such registration, qualification
or compliance, and will reimburse each such indemnified party for any legal and
any other expenses reasonably incurred by them in connection with
investigating, preparing or defending any such claim, loss, damage, liability
or action. The Company also shall indemnify any underwriter of the Registrable
Securities, their officers, directors, partners, members and agents and each
person who controls such underwriters on substantially the same basis as that
of the indemnification of the Holders provided in this Section 4.1.
The indemnity agreement contained in this Section 4.1 shall
not apply to amounts paid in settlement of any such loss, claim, damage or
liability or any action in respect thereof if such settlement is effected
without the consent of the Company, which consent shall not be unreasonably
withheld, nor shall the Company be liable to any Holder or its officers,
directors, partners, members or agents in any such case for any loss, claim,
damage, liability or any action in respect thereof to the extent that it arises
solely from or is based solely upon and is in conformity with written
information relating to such Holder furnished expressly for use in connection
with such registration by such Holder or its agents, nor shall the Company be
liable to any Holder for any such loss, claim, damage or liability or any
action in respect thereof to the extent it arises solely from or is based
solely upon (a) any untrue statement or alleged untrue statement of a material
fact contained in any registration statement or prospectus relating to the
Registrable Securities delivered by such Holder after the Company had provided
written notice to such Holder that such registration statement or prospectus
contained such untrue statement or alleged untrue statement of a material fact,
(b) any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading
after the Company had provided written notice to such Holder that such
registration statement or prospectus contained such omission or alleged
omission, or (c) the failure of such Holder to deliver any preliminary or final
prospectus, or any amendments or supplements thereto, required under applicable
securities laws, including the Act, to be so delivered, provided that a
sufficient number of copies thereof had been timely provided by the Company to
such Holder.
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60
4.2 Indemnification by the Holders. Each Holder will, if
Registrable Securities held by such Holder are included in the securities as to
which such registration, qualification or compliance is being effected,
indemnify the Company, and each of its officers, directors, legal counsel and
accountants, and each person who controls the Company within the meaning of
Section 15 of the Act, against all claims, losses, damages and liabilities (or
actions in respect thereof) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, or any
violation by the Holder of any rule or regulation promulgated under the Act or
any state securities laws applicable to the Holder and relating to action or
inaction required by the Holder in connection with any such registration,
qualification or compliance, and will reimburse each such indemnified person
for any legal or any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action,
in each case to the extent, but only to the extent, that such untrue statement
(or alleged omission) is made in such registration statement, prospectus,
offering circular or other document in reliance upon and in conformity with
written information furnished to the Company by an instrument duly executed by
or on behalf of such Holder and stated to be specifically for use therein.
Each Holder shall also indemnify and hold harmless any underwriter of the
Registrable Securities, their officers, directors, partners, members and agents
and each person who controls such underwriters on substantially the same basis
as that of the indemnification of the Company provided in this Section 4.2;
provided, however, that in no event shall any indemnity obligation under this
Section 4.2 exceed the dollar amount of the net proceeds actually received by
such Holder from the sale of Registrable Securities which gave rise to such
indemnification obligations under such registration statement or prospectus.
4.3 Indemnification Procedures. Each person to be
indemnified pursuant to this Article 4 (the "Indemnified Party") will, promptly
after its receipt of written notice of the commencement of any action against
such Indemnified Party in respect of which indemnity may be sought from an
indemnifying person under this Article 4 (the "Indemnifying Party") notify the
Indemnifying Party in writing of the commencement thereof, provided, however,
that the failure of any person to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this Agreement except
to the extent that such Indemnifying Party is actually materially and adversely
prejudiced by such failure to give notice. If any such action shall be brought
against any Indemnified Party and it shall notify an Indemnifying Party of the
commencement thereof, the Indemnifying Party will be entitled to participate
therein and, to the extent it may desire, jointly with any other Indemnifying
Party similarly notified, to assume the defense thereof with counsel
satisfactory to such Indemnified Party, and after notice from the Indemnifying
Party to such Indemnified Party of its election so to assume the defense
thereof, the Indemnifying Party will not be liable to such Indemnified Party
under this Article 4 for any legal or other expenses subsequently incurred by
such Indemnified Party in connection with the defense thereof other than
reasonable costs of investigation unless (a) the Indemnified Party shall have
employed counsel in an action in which the Indemnified Party and Indemnifying
Party are both defendants and there is a conflict of interest between such
parties that would prevent counsel
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61
from adequately representing both parties, (b) the Indemnifying Party shall not
have employed counsel satisfactory within the exercise of reasonable judgment
of the Indemnified Party to represent the Indemnified Party within a reasonable
time after the notice of the commencement of the action, or (c) the
Indemnifying Party has authorized the employment of counsel for the Indemnified
Party at the expense of the Indemnifying Party. The undertaking contained in
this Section 4.3 shall be in addition to any liabilities which the Indemnifying
Party may have pursuant to law.
4.4 Contribution Obligations. If the indemnification
provided for in this Article 4 is held by a court of competent jurisdiction to
be unavailable to an Indemnified Party with respect to any loss, liability,
claim, damage or expense referred to therein, then the Indemnifying Party, in
lieu of indemnifying such Indemnified Party thereunder, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such loss,
liability, claim, damage or expense in such proportion as is appropriate to
reflect the relative fault of the Indemnifying Party on the one hand and of the
Indemnified Party on the other in connection with the statements, actions or
omissions which resulted in such loss, liability, claim, damage or expense as
well as any other relevant equitable considerations. The relative fault of the
Indemnifying Party and of the Indemnified Party shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates
to information supplied by the Indemnifying Party or by the Indemnified Party
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
ARTICLE 5
TRANSFER OF REGISTRATION RIGHTS
The rights to cause the Company to register securities granted to a
Holder under Articles 2, above, may be transferred or assigned by such Holder
to a transferee or assignee in connection with any transfer or assignment of
Registerable Securities, provided that: (a) such transfer or assignment may
otherwise be effected in accordance with applicable securities laws, (b) prompt
written notice of such transfer or assignment is given to the Company, and (c)
such transferee or assignee expressly agrees in a writing delivered to the
Company to be bound by the provisions of this Agreement.
ARTICLE 6
DISCONTINUANCE OF DISPOSITION OF REGISTERABLE SECURITIES
6.1 Certain Discontinuances. Each Holder of Registrable
Securities agrees by acquisition of such Registrable Securities that, upon
receipt of any notice from the Company of the happening of any event of the
kind described in Section 3(c)(iii), 3(c)(iv), 3(c)(v), 3(c)(vi) or 3(c)(vii),
above, or a Permitted Interruption and/or Necessary Interruption, such Holder
will forthwith discontinue disposition of any Registrable Securities covered by
a registration statement
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62
or prospectus until such Holder's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3(k), above, or until it is advised
in writing (the "Advice") by the Company that the use of the applicable
prospectus may be resumed, and has received copies of any additional or
supplemental filings which are incorporated or deemed to be incorporated by
reference in such prospectus.
6.2 Permitted Interruptions and Necessary Interruptions.
Anything in this Agreement to the contrary notwithstanding, it is understood
and agreed that the Company shall not be required to prepare or file a
registration statement, amendment or post-effective amendment thereto or
prospectus supplement or to supplement or amend any registration statement or
otherwise facilitate the resale of Registrable Securities, and it shall be free
voluntarily to take or omit to take any other action that would result in the
impracticality of any such filing, supplement or amendment if such action is
taken or omitted to be taken by the Company in good faith and for valid
business reasons, including, without limitation, matters relating to
acquisitions or divestitures, so long as the Company shall, as promptly as
practicable thereafter, make such filing, supplement or amendment and, so long
as the Company shall as promptly as is practicable thereafter, comply with the
requirements of Section 3(k), above, if applicable (any period described in
this Section 6.2 (other than a Necessary Interruption (defined below)) during
which Holders of Registrable Securities are not able to sell such Registrable
Securities under a registration statement is herein called a "Permitted
Interruption"). The period between Permitted Interruptions shall not be less
than 30 days; provided, however, that if any event occurs which would make the
Registration Statement then in effect materially incorrect or misleading, the
Company shall not be required to keep the Registration Statement effective as
of such date and continuing for five business days thereafter and the Holders
of Registrable Securities shall not sell such securities during such period
(each such period is referred to as a "Necessary Interruption"). The Company
hereby agrees to notify each of the Holders of Registrable Securities of the
occurrence of, and the termination of, each Permitted Interruption and/or
Necessary Interruption (the nature and pendency of which need not be disclosed
during such Permitted Interruption and/or Necessary Interruption). Permitted
Interruptions shall not extend beyond 45 days during the first year of the Two
Year Period and 60 days during the second year of the Two Year Period.
Notwithstanding the foregoing, there shall be no Permitted Interruptions during
the 30-day period immediately following the date the Shelf Registration
initially becomes effective.
6.3 Standoff or Lock-Up Agreement. Each Holder of
Registerable Securities agrees in connection with any firmly underwritten
public offering of the Company's common stock that, upon request of the Company
or the underwriters managing any underwritten offering of the Company's
securities, such Holder shall not sell, make any short sale of, loan, grant any
option for the purchase of, or otherwise dispose of any Registerable Securities
(other than those included in the registration) without the prior written
consent of the Company or such underwriters, as the case may be, during the 14
days prior to, and during the 90-day period (the "Lock-up Period") beginning
on, the effective date of the registration statement relating to such offering
(except as part of such registration statement). In order to enforce the
foregoing covenant, the Company may impose stop-transfer instructions with
respect to the Registerable
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63
Securities until the end of such period. In the event any of ▇▇▇▇▇ ▇. ▇▇▇▇▇,
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ or ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ have entered into a
lock-up agreement with such underwriters relating to such offering with a
lock-up period longer than one day and shorter than 90 days, then such shorter
period shall be the Lock-up Period. The Company shall not be required to keep
any registration statement effective during any Lock-up Period.
ARTICLE 7
TERMINATION OF REGISTRATION RIGHTS
Notwithstanding any provision in this Agreement to the contrary, in no
event shall any Holder be entitled to request registration or inclusion in any
registration pursuant to Article 2, above, after the date on which all
Registrable Securities held by such Holder may be sold under Commission Rule
144 during any 90-day period.
ARTICLE 8
MISCELLANEOUS
8.1 Amendment. Any modification, amendment or waiver of
this Agreement or any provision hereof shall be effective only if in writing
and executed by the Holders of at least a majority of the Registrable
Securities and the Company.
8.2 Governing Law. This Agreement shall be governed in
all respects by the laws of the State of California without regard to its
conflicts of laws principles.
8.3 Successors and Assigns. Except as otherwise
expressly provided herein, the provisions hereof shall inure to the benefit of,
and be binding upon, the successors, permitted assigns, heirs, executors and
administrators of the parties hereto.
8.4 Notices. All notices and other communications
required or permitted hereunder shall be made in accordance with the
Acquisition Agreement.
8.5 Severability. If any provision of this Agreement
shall be judicially determined to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions of this
Agreement shall not in any way be affected or impaired thereby.
8.6 Entire Agreement. This Agreement constitutes the
full and entire understanding and agreement between the parties with regard to
the subject matter hereof.
8.7 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument.
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64
IN WITNESS WHEREOF, each of the parties has executed this Agreement as
of the date first set forth above.
IXC COMMUNICATIONS, INC.,
a Delaware corporation
By:_____________________________
Its:_________________________
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65
THE "SHAREHOLDERS":
________________________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, individually and in his
capacity as Trustee of the ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
& ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ 1996 Revocable Trust
Address:
Phone No.:
Fax No.:
________________________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇
Address:
Phone No.:
Fax No.:
________________________________________________
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, individually and in her
capacity as Trustee of the ▇▇▇▇▇▇▇ Family Trust
Address:
Phone No.:
Fax No.:
________________________________________________
▇▇▇ ▇▇▇▇▇▇▇
Address:
Phone No.:
Fax No.:
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66
________________________________________________
▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Address:
Phone No.:
Fax No.:
________________________________________________
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, individually and in his
capacity as Trustee of the ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Revocable Trust
Address:
Phone No.:
Fax No.:
________________________________________________
▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇▇
Address:
Phone No.:
Fax No.:
________________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Address:
Phone No.:
Fax No.:
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