EXHIBIT 2.1
CONFORMED COPY
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AGREEMENT AND PLAN OF MERGER
Dated as of July 20, 1999
By and Among
CINCINNATI ▇▇▇▇ INC.,
IVORY MERGER INC.
And
IXC COMMUNICATIONS, INC.
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TABLE OF CONTENTS
Page
ARTICLE I
The Merger
SECTION 1.01. The Merger.......................................... 2
SECTION 1.02. Closing............................................. 2
SECTION 1.03. Effective Time...................................... 3
SECTION 1.04. Effects of the Merger............................... 3
SECTION 1.05. Certificate of Incorporation and
By-laws........................................... 3
SECTION 1.06. Board of Directors of the Surviving
Corporation....................................... 3
SECTION 1.07. Board of Directors of CBI........................... 4
ARTICLE II
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.01. Effect on Capital Stock............................. 4
(a) Capital Stock of Sub..................................... 4
(b) Cancelation of Treasury Stock and
CBI-Owned Stock........................................ 4
(c) Conversion of IXC Common Stock........................... 4
(d) Conversion of IXC 7 1/4% Preferred Stock
and IXC 6 3/4% Preferred Stock......................... 5
(e) Effect on IXC 12 1/2% Preferred Stock.................... 6
(f) Anti-Dilution Provisions................................. 6
SECTION 2.02. Exchange of Certificates............................ 6
(a) Exchange Agent........................................... 6
(b) Exchange Procedures...................................... 7
(c) Distributions with Respect to
Unsurrendered Certificates............................. 8
(d) No Further Ownership Rights in IXC Common
Stock, IXC 7 1/4% Preferred Stock or
IXC 6 3/4% Preferred Stock............................. 8
(e) No Fractional Shares..................................... 9
(f) Termination of Exchange Fund............................. 10
(g) No Liability ............................................ 11
(h) Investment of Exchange Fund.............................. 11
(i) Lost Certificates........................................ 11
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of
IXC............................................... 11
(a) Organization, Standing and Corporate
Power.................................................. 12
(b) Subsidiaries ............................................ 12
(c) Capital Structure........................................ 12
(d) Authority; Noncontravention.............................. 14
(e) SEC Documents; Undisclosed Liabilities................... 16
(f) Information Supplied..................................... 17
(g) Absence of Certain Changes or Events..................... 18
(h) Litigation............................................... 19
(i) Compliance with Applicable Laws.......................... 19
(j) Contracts... ............................................ 20
(k) Absence of Changes in Benefit Plans...................... 20
(l) ERISA Compliance......................................... 21
(m) Taxes.................................................... 22
(n) Voting Requirements...................................... 24
(o) State Takeover Statutes.................................. 24
(p) Brokers.................................................. 25
(q) Opinions of Financial Advisors........................... 25
(r) Intellectual Property; Year 2000......................... 25
(s) IXC Rights Agreement..................................... 27
(t) Title to Properties...................................... 27
SECTION 3.02. Representations and Warranties of
CBI and Sub....................................... 27
(a) Organization, Standing and Corporate
Power.................................................. 27
(b) Capital Structure........................................ 28
(c) Authority; Noncontravention.............................. 30
(d) SEC Documents; Undisclosed Liabilities................... 32
(e) Information Supplied..................................... 33
(f) Absence of Certain Changes or Events..................... 33
(g) Litigation............................................... 34
(h) Compliance with Applicable Laws.......................... 34
(i) Contracts................................................ 35
(j) Absence of Changes in Benefit Plans...................... 35
(k) ERISA Compliance......................................... 36
(l) Taxes.................................................... 37
(m) Voting Requirements...................................... 38
(n) Brokers.................................................. 39
(o) Opinion of Financial Advisor............................. 39
(p) Interim Operations of Sub................................ 39
(q) Intellectual Property; Year 2000......................... 39
(r) Ownership of IXC Stock................................... 40
(s) CBI Rights Agreement..................................... 40
(t) Title to Properties...................................... 40
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business.................................. 41
(a) Conduct of Business by IXC................................ 41
(b) Conduct of Business by CBI................................ 44
(c) Other Actions............................................. 45
(d) Advice of Changes......................................... 45
SECTION 4.02. Transition Team...................................... 46
SECTION 4.03. No Solicitation by IXC............................... 46
SECTION 4.04. No Solicitation by CBI............................... 47
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of the Form S-4 and
Joint Proxy Statement;
Stockholder Meetings............................... 49
SECTION 5.02. Letters of IXC's Accountants......................... 51
SECTION 5.03. Letters of CBI's Accountants......................... 51
SECTION 5.04. Access to Information;
Confidentiality.................................... 51
SECTION 5.05. Reasonable Efforts................................... 52
SECTION 5.06. IXC Stock Options and IXC Warrants................... 53
SECTION 5.07. Employee Benefit Plans; Existing
Agreements......................................... 55
SECTION 5.08. Indemnification, Exculpation and
Insurance.......................................... 56
SECTION 5.09. Fees and Expenses.................................... 57
SECTION 5.10. Public Announcements................................. 59
SECTION 5.11. Affiliates........................................... 60
SECTION 5.12. Stock Exchange Listings.............................. 60
SECTION 5.13. Tax Treatment........................................ 60
SECTION 5.14. Further Assurances................................... 60
SECTION 5.15. IXC Rights Agreement................................. 60
SECTION 5.16. CBI Rights Agreement................................. 61
SECTION 5.17. Transfer Taxes....................................... 61
SECTION 5.18. Stockholders Agreements Legend....................... 61
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's Obligation
to Effect the Merger.............................. 62
(a) Stockholder Approvals.................................... 62
(b) HSR Act ............................................ 62
(c) FCC and PUC Approvals.................................... 62
(d) No Litigation............................................ 62
(e) Form S-4 ............................................ 62
(f) Stock Exchange Listings.................................. 63
(g) Equity Investment........................................ 63
SECTION 6.02. Conditions to Obligations of CBI
and Sub........................................... 63
(a) Representations and Warranties........................... 63
(b) Performance of Obligations of IXC........................ 63
SECTION 6.03. Conditions to Obligations of IXC.................... 63
(a) Representations and Warranties........................... 63
(b) Performance of Obligations of CBI and
Sub.................................................... 64
(c) Tax Opinion ............................................ 64
SECTION 6.04. Frustration of Closing Conditions................... 64
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination......................................... 64
SECTION 7.02. Effect of Termination............................... 66
SECTION 7.03. Amendment........................................... 66
SECTION 7.04. Extension; Waiver................................... 66
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations and
Warranties........................................ 67
SECTION 8.02. Notices............................................. 67
SECTION 8.03. Definitions......................................... 68
SECTION 8.04. Interpretation...................................... 69
SECTION 8.05. Counterparts........................................ 70
SECTION 8.06. Entire Agreement; No Third-Party
Beneficiaries..................................... 70
SECTION 8.07. Governing Law....................................... 70
SECTION 8.08. Assignment.......................................... 70
SECTION 8.09. Enforcement......................................... 70
SECTION 8.10. Severability........................................ 71
SECTION 8.11. Additional Agreement of IXC......................... 71
Annex I Index of Defined Terms
Exhibit A Form of Affiliate Letter
Exhibit B Corporate Governance of CBI following the
Effective Time
Exhibit C Form of IXC Representation Letter
Exhibit D Form of CBI Representation Letter
Exhibit E Form of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Opinion
Exhibit F Form of Amendment to IXC Rights Agreement
AGREEMENT AND PLAN OF MERGER (this
"Agreement") dated as of July 20, 1999, among
CINCINNATI ▇▇▇▇ INC., an Ohio corporation ("CBI"),
IVORY MERGER INC., a Delaware corporation and a
wholly owned subsidiary of CBI ("Sub"), and IXC
COMMUNICATIONS, INC., a Delaware corporation
("IXC").
WHEREAS the respective Boards of Directors of CBI, Sub and
IXC have approved and declared advisable this Agreement and the merger
of Sub with and into IXC (the "Merger"), upon the terms and subject to
the conditions set forth in this Agreement, whereby (a) each issued
and outstanding share of common stock, par value $.01 per share, of
IXC (the "IXC Common Stock"), other than any such shares directly
owned by CBI, Sub or IXC, will be converted into the right to receive
the Common Stock Merger Consideration; (b) each issued and outstanding
share of 7 1/4% Junior Convertible Preferred Stock Due 2007, par value
$.01 per share, of IXC (the "IXC 7 1/4% Preferred Stock"), other than
any such shares directly owned by CBI, Sub or IXC, will be converted
into the right to receive the 7 1/4% Preferred Stock Merger
Consideration; and (c) each issued and outstanding share of 6 3/4%
Cumulative Convertible Preferred Stock, par value $.01 per share, of
IXC (the "IXC 6 3/4% Preferred Stock"), other than any such shares
directly owned by CBI, Sub or IXC, will be converted into the right to
receive the 6 3/4% Preferred Stock Merger Consideration;
WHEREAS the respective Boards of Directors of CBI, Sub and
IXC have each determined that the Merger and the other transactions
contemplated hereby are consistent with, and in furtherance of, their
respective business strategies and goals;
WHEREAS simultaneously with the execution and delivery of
this Agreement and as a condition and inducement to the willingness of
CBI and Sub to enter into this Agreement, CBI and certain principal
stockholders of IXC (the "Principal Stockholders") are entering into
certain stockholder and stock purchase agreements (collectively, the
"Stockholders Agreements") pursuant to which the Principal
Stockholders will agree to vote to adopt the Merger Agreement and to
take certain other actions in furtherance of the Merger upon the terms
and subject to the conditions set forth in the Stockholders
Agreements;
WHEREAS immediately following the execution and delivery of
this Agreement, CBI and IXC will enter into (a) a stock option
agreement (the "IXC Stock Option
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Agreement") pursuant to which IXC will grant CBI an option to purchase
shares of IXC Common Stock, upon the terms and subject to the
conditions set forth therein and (b) a stock option agreement (the
"CBI Stock Option Agreement" and, together with the IXC Stock Option
Agreement, the "Option Agreements") pursuant to which CBI will grant
IXC an option to purchase shares of CBI Common Stock, upon the terms
and subject to the conditions set forth therein;
WHEREAS concurrently with the execution and delivery of this
Agreement, CBI, Oakhill Capital Partners, L.P. ("Oakhill") and OHCP
Ocean I, LLC (together with Oakhill, the "Investors") will enter into
an agreement (the "Investment Agreement") relating to the Investors'
investment in CBI;
WHEREAS for U.S. Federal income tax purposes, it is intended
that (a) the Merger will qualify as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), and the rules and regulations promulgated
thereunder, (b) this Agreement constitutes a plan of reorganization
and (c) CBI, Sub and IXC will each be a party to such reorganization
within the meaning of Section 368(b) of the Code; and
WHEREAS CBI, Sub and IXC desire to make certain
representations, warranties, covenants and agreements in connection
with the Merger and also to prescribe various conditions to the
Merger.
NOW, THEREFORE, in consideration of the represen tations,
warranties, covenants and agreements contained in this Agreement, the
parties hereto agree as follows:
ARTICLE I
The Merger
SECTION 1.01. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the
Delaware General Corporation Law (the "DGCL"), Sub shall be merged
with and into IXC at the Effective Time. Following the Effective Time,
IXC shall be the surviving corporation (the "Surviving Corporation")
and shall succeed to and assume all the rights and obligations of Sub
in accordance with the DGCL.
SECTION 1.02. Closing. The closing of the Merger (the
"Closing") will take place at 10:00 a.m. on a date to
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be specified by the parties (the "Closing Date"), which shall be no
later than the second Business Day after satisfaction or waiver of the
conditions set forth in Article VI (other than those conditions that
by their nature are to be satisfied at the Closing, but subject to the
satisfaction or waiver of those conditions), at the offices of
Cravath, Swaine & ▇▇▇▇▇, Worldwide Plaza, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, unless another time, date or place is agreed to by the
parties hereto.
SECTION 1.03. Effective Time. Subject to the provisions of
this Agreement, as soon as practicable on or after the Closing Date,
the parties shall file a certificate of merger or other appropriate
documents (in any such case, the "Certificate of Merger") executed in
accordance with the relevant provisions of the DGCL and shall make all
other filings or recordings required under the DGCL. The Merger shall
become effective at such time as the Certificate of Merger is duly
filed with the Delaware Secretary of State, or at such other time as
CBI and IXC shall agree and specify in the Certificate of Merger (the
time the Merger becomes effective being hereinafter referred to as the
"Effective Time").
SECTION 1.04. Effects of the Merger. The Merger shall have
the effects set forth in Section 259 of the DGCL.
SECTION 1.05. Certificate of Incorporation and By-laws. (a)
The Restated Certificate of Incorporation of IXC, as in effect
immediately prior to the Effective Time, shall be amended as of the
Effective Time so that the first sentence of Article IV of such
Restated Certificate of Incorporation reads in its entirety as
follows: "The total number of shares of stock which the Corporation
shall have authority to issue is 6,000,000 consisting of (i) three
million (3,000,000) shares of common stock, par value $.01 per share
and (ii) three million (3,000,000) shares of preferred stock, par
value $.01 per share." and, as so amended, such Restated Certificate
of Incorporation shall be the Certificate of Incorporation of the
Surviving Corporation until thereafter changed or amended as provided
therein or by applicable law.
(b) The By-laws of Sub, as in effect immediately prior to
the Effective Time, shall be the By-laws of the Surviving Corporation
until thereafter changed or amended as provided therein or by
applicable law.
SECTION 1.06. Board of Directors of the Surviving
Corporation. The directors of Sub immediately prior to the Effective
Time shall be the directors of the Surviving
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Corporation, until the earlier of their resignation or removal or
until their respective successors are duly elected and qualified, as
the case may be.
SECTION 1.07. Board of Directors of CBI. The Board of
Directors of CBI shall be as set forth on or designated in accordance
with Exhibit B hereto until the earlier of the resignation or removal
of any individual set forth on or designated in accordance with
Exhibit B hereto or until their respective successors are duly elected
and qualified, as the case may be, it being agreed that if any
director shall be unable or unwilling to serve as a director at the
Effective Time the party which designated such individual as indicated
in Exhibit B shall designate another individual to serve in such
individual's place.
ARTICLE II
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.01. Effect on Capital Stock. As of the Effective
Time, by virtue of the Merger and without any action on the part of
the holder of any shares of capital stock of IXC or any shares of
capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share
of capital stock of Sub shall be converted into and become one fully
paid and nonassessable share of common stock, par value $.01 per
share, of the Surviving Corporation.
(b) Cancelation of Treasury Stock and CBI-Owned Stock. Each
share of IXC Common Stock, IXC 7 1/4% Preferred Stock and IXC 6 3/4%
Preferred Stock that is directly owned by IXC, Sub or CBI shall
automatically be canceled and shall cease to be outstanding, and no
consideration shall be delivered in exchange therefor.
(c) Conversion of IXC Common Stock. Subject to Section
2.02(e), each issued and outstanding share (other than shares to be
canceled in accordance with Section 2.01(b)) of IXC Common Stock shall
be converted into the right to receive 2.0976 (the "Exchange Ratio")
fully paid and nonassessable shares of common stock, par value $.01
per share, of CBI ("CBI Common Stock") (the "Common Stock Merger
Consideration"). As of the Effective Time, all such shares of IXC
Common Stock shall no longer be outstanding and shall automatically be
canceled and shall cease to be outstanding, and each holder of a
certificate that immediately prior to
5
the Effective Time represented any such shares of IXC Common Stock
shall cease to have any rights with respect thereto, except the right
to receive the Common Stock Merger Consideration and any cash in lieu
of fractional shares of CBI Common Stock to be issued or paid in
consideration therefor upon surrender of such certificate in
accordance with Section 2.02, without interest.
(d) Conversion of IXC 7 1/4% Preferred Stock and IXC 6 3/4%
Preferred Stock. (i) Each issued and outstanding share of IXC 7 1/4%
Preferred Stock shall be converted into the right to receive one fully
paid and nonassessable share of 7 1/4% Junior Convertible Preferred
Stock Due 2007, par value $.01 per share, of CBI (the "CBI 7 1/4%
Preferred Stock") (the "7 1/4% Preferred Stock Merger Consideration"),
which CBI 7 1/4% Preferred Stock shall have terms that are identical
to the IXC 7 1/4% Preferred Stock except that (x) the issuer thereof
shall be CBI rather than IXC, (y) the CBI 7 1/4% Preferred Stock shall
become convertible into CBI Common Stock as required by Paragraph (g)
of the Certificate of Designation for the IXC 7 1/4% Preferred Stock
and (z) each share of CBI 7 1/4% Preferred Stock shall be entitled to
one vote per share on all matters voting together with the CBI Common
Stock as a single class; provided that the number of authorized shares
of CBI 7 1/4% Preferred Stock may be increased or decreased without
any additional vote of the holders of CBI 7 1/4% Preferred Stock
voting as a separate class. As of the Effective Time, all such shares
of IXC 7 1/4% Preferred Stock shall no longer be outstanding and shall
automatically be canceled and shall cease to exist, and each holder of
a certificate that immediately prior to the Effective Time represented
any such shares shall cease to have any rights with respect thereto,
except the right to receive the 7 1/4% Preferred Stock Merger
Consideration.
(ii) Each issued and outstanding share of IXC 6 3/4% Preferred
Stock shall be converted into the right to receive one fully paid and
nonassessable share of 6 3/4% Cumulative Convertible Preferred Stock,
par value $.01 per share, of CBI (the "CBI 6 3/4% Preferred Stock") (the
"6 3/4% Preferred Stock Merger Consideration"), which CBI 6 3/4%
Preferred Stock shall have terms that are identical to the IXC 6 3/4%
Preferred Stock except that (x) the issuer thereof shall be CBI rather
than IXC, (y) the CBI 6 3/4% Preferred Stock shall become convertible
into CBI Common Stock as required by Paragraph 7 of the Certificate of
Designations for the IXC 6 3/4% Preferred Stock and (z) each share of
CBI 6 3/4% Preferred Stock shall be entitled to one vote per share on
all matters voting together with the CBI Common Stock as a single class;
provided that the number of authorized shares of CBI 6 3/4% Preferred
Stock may be increased or decreased without any
6
additional vote of the holders of CBI 6 3/4% Preferred Stock voting as a
separate class. As of the Effective Time, all such shares of IXC 6 3/4%
Preferred Stock shall no longer be outstanding and shall automatically
be canceled and shall cease to exist, and each holder of a certificate
that immediately prior to the Effective Time represented any such shares
shall cease to have any rights with respect thereto, except the right to
receive the 6 3/4% Preferred Stock Merger Consideration. The Common
Stock Merger Consideration, the 7 1/4% Preferred Stock Merger
Consideration and the 6 3/4% Preferred Stock Merger Consideration shall
be referred to collectively in this Agreement as the "Merger
Consideration".
(e) Effect on ▇▇▇ ▇▇ ▇/▇% ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. Each share of 12
1/2% Junior Exchangeable Preferred Stock Due 2009, par value $.01 per
share, of IXC (the "IXC 12 1/2% Preferred Stock") outstanding
immediately prior to the Effective Time shall remain outstanding as 12
1/2% Preferred Stock of the Surviving Corporation, without any change to
the powers, preferences or special rights of such IXC 12 1/2% Preferred
Stock provided for in the Certificate of Designation for the 12 1/2%
Junior Exchangeable Preferred Stock Due 2009 of IXC (the "IXC 12 1/2%
Certificate of Designation").
(f) Anti-Dilution Provisions. In the event CBI changes (or
establishes a record date for changing) the number of shares of CBI
Common Stock issued and outstanding prior to the Effective Time as a
result of a stock split, stock dividend, recapitalization, subdivision,
reclassification, combination, exchange of shares or similar transaction
with respect to the outstanding CBI Common Stock and the record date
therefor shall be prior to the Effective Time, the Exchange Ratio shall
be proportionately adjusted to reflect such stock split, stock dividend,
recapitalization, subdivision, reclassification, combination, exchange
of shares or similar transaction.
SECTION 2.02. Exchange of Certificates. (a) Exchange Agent.
Prior to the Effective Time, CBI shall enter into an agreement with The
Fifth Third Bank or such other bank or trust company as may be
designated by CBI and reasonably acceptable to IXC (the "Exchange
Agent"), which shall provide that CBI shall deposit with the Exchange
Agent as of the Effective Time, for the benefit of the holders of shares
of IXC Common Stock, IXC 7 1/4% Preferred Stock and IXC 6 3/4% Preferred
Stock, for exchange in accordance with this Article II, through the
Exchange Agent, certificates representing the Merger Consideration
issuable pursuant to Section 2.01 in exchange for outstanding shares of
IXC Common Stock, IXC 7 1/4% Preferred Stock and ▇▇▇ ▇ ▇/▇% ▇▇▇▇▇▇▇▇▇
▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇. ▇▇▇ shall make available to the Exchange Agent from
time to time as required after the Effective Time cash necessary to pay
dividends and other distributions in accordance with Section 2.02(c) and
to make payments in lieu of any fractional shares of CBI Common Stock in
accordance with Section 2.02(e).
(b) Exchange Procedures. As soon as reasonably practicable
after the Effective Time, the Exchange Agent shall mail to each holder
of record of a certificate or certificates (the "Certificates") which
immediately prior to the Effective Time represented outstanding shares
of IXC Common Stock, IXC 7 1/4% Preferred Stock or IXC 6 3/4% Preferred
Stock whose shares were converted into the right to receive the Merger
Consideration pursuant to Section 2.01, (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss
and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have
such other provisions as CBI may reasonably specify) and (ii)
instructions for use in surrendering the Certificates in exchange for
certificates representing the Merger Consideration. Upon surrender of a
Certificate for cancelation to the Exchange Agent, together with such
letter of transmittal, duly executed, and such other documents as may
reasonably be required by the Exchange Agent, the holder of such
Certificate shall be entitled to receive in exchange therefor a
certificate representing that number of whole shares of CBI Common
Stock, CBI 7 1/4% Preferred Stock or CBI 6 3/4% Preferred Stock that
such holder has the right to receive pursuant to the provisions of this
Article II, certain dividends or other distributions in accordance with
Section 2.02(c) and cash in lieu of any fractional share of CBI Common
Stock in accordance with Section 2.02(e), and the Certificate so
surrendered shall forthwith be canceled. In the event of a transfer of
ownership of IXC Common Stock, IXC 7 1/4% Preferred Stock or ▇▇▇ ▇ ▇/▇%
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ that is not registered in the transfer records of IXC, a
certificate representing the proper number of shares of CBI Common
Stock, CBI 7 1/4% Preferred Stock or CBI 6 3/4% Preferred Stock, as
applicable, may be issued to a person other than the person in whose
name the Certificate so surrendered is registered if such Certificate
shall be properly endorsed or otherwise be in proper form for transfer
and the person requesting such issuance shall pay any transfer or other
taxes required by reason of the issuance of shares of CBI Common Stock,
CBI 7 1/4% Preferred Stock or CBI 6 3/4% Preferred Stock to a person
other than the registered holder of such Certificate or establish to the
satisfaction of CBI that such tax has been paid or is not applicable.
Until surrendered as contemplated by this Section 2.02(b), each
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Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender the Merger
Consideration that the holder thereof has the right to receive pursuant
to the provisions of this Article II, certain dividends or other
distributions in accordance with Section 2.02(c) and cash in lieu of any
fractional share of CBI Common Stock in accordance with Section 2.02(e).
No interest shall be paid or will accrue on any cash payable to holders
of Certificates pursuant to the provisions of this Article II.
(c) Distributions with Respect to Unsurrendered Certificates.
Any dividends or other distributions with respect to CBI Common Stock,
CBI 7 1/4% Preferred Stock or CBI 6 3/4% Preferred Stock with a record
date after the Effective Time shall be paid to the holder of any
unsurrendered Certificate with respect to the shares of CBI Common
Stock, CBI 7 1/4% Preferred Stock or CBI 6 3/4% Preferred Stock
represented thereby, and any cash payment in lieu of fractional shares
of CBI Common Stock shall be paid to any such holder pursuant to Section
2.02(e) only upon the surrender of such Certificate by the holder of
record of such Certificate in accordance with this Article II. Subject
to the effect of applicable escheat or similar laws, following surrender
of any such Certificate there shall be paid to the holder of the
certificate representing whole shares of CBI Common Stock, CBI 7 1/4%
Preferred Stock or CBI 6 3/4% Preferred Stock issued in exchange
therefor, without interest, (i) at the time of such surrender, the
amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole shares of CBI
Common Stock, CBI 7 1/4% Preferred Stock or CBI 6 3/4% Preferred Stock,
and the amount of any cash payable in lieu of a fractional share of CBI
Common Stock to which such holder is entitled pursuant to Section
2.02(e) and (ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date after the Effective
Time but prior to such surrender and with a payment date subsequent to
such surrender payable with respect to such whole shares of CBI Common
Stock, CBI 7 1/4% Preferred Stock or CBI 6 3/4% Preferred Stock.
(d) No Further Ownership Rights in IXC Common Stock, IXC 7
1/4% Preferred Stock or ▇▇▇ ▇ ▇/▇% ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. All shares of CBI
Common Stock, CBI 7 1/4% Preferred Stock or CBI 6 3/4% Preferred Stock
issued upon the surrender for exchange of Certificates in accordance
with the terms of this Article II (including any cash paid pursuant to
this Article II) shall be deemed to have been issued (and paid) in full
satisfaction of all rights pertaining to the shares of IXC Common Stock,
IXC 7 1/4% Preferred Stock or ▇▇▇ ▇ ▇/▇%
▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ previously represented by such Certificates, subject,
however, to the Surviving Corporation's obligation to pay any dividends
or make any other distributions with a record date prior to the
Effective Time which may have been declared or made by IXC on such
shares of IXC Common Stock, IXC 7 1/4% Preferred Stock or IXC 6 3/4%
Preferred Stock which remain unpaid at the Effective Time, and there
shall be no further registration of transfers on the stock transfer
books of the Surviving Corporation of the shares of IXC Common Stock,
IXC 7 1/4% Preferred Stock or IXC 6 3/4% Preferred Stock which were
outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation
or the Exchange Agent for any reason, they shall be canceled and
exchanged as provided in this Article II.
(e) No Fractional Shares. (i) No certificates or scrip
representing fractional shares of CBI Common Stock shall be issued upon
the surrender for exchange of Certificates formerly representing IXC
Common Stock, no dividend or distribution of CBI shall relate to such
fractional share interests and such fractional share interests will not
entitle the owner thereof to vote or to exercise any rights of a
shareholder of CBI.
(ii) As promptly as practicable following the Effective Time,
the Exchange Agent shall determine the excess of (A) the number of whole
shares of CBI Common Stock delivered to the Exchange Agent by CBI
pursuant to Section 2.02(a) over (B) the aggregate number of whole
shares of CBI Common Stock to be distributed to former holders of IXC
Common Stock pursuant to Section 2.02(b) (such excess being herein
called the "Excess Shares"). Following the Effective Time, the Exchange
Agent shall, on behalf of former stockholders of IXC, sell the Excess
Shares at then-prevailing prices on the New York Stock Exchange, Inc.
(the "NYSE"), all in the manner provided in Section 2.02(e)(iii).
(iii) The sale of the Excess Shares by the Exchange Agent shall
be executed on the NYSE through one or more member firms of the NYSE and
shall be executed in round lots to the extent practicable. The Exchange
Agent shall use reasonable efforts to complete the sale of the Excess
Shares as promptly following the Effective Time as, in the Exchange
Agent's sole judgment, is practicable consistent with obtaining the best
execution of such sales in light of prevailing market conditions. Until
the net proceeds of such sale or sales have been distributed to the
holders of Certificates formerly representing IXC Common Stock, the
Exchange Agent shall hold such proceeds in trust for such
10
holders (the "Common Shares Trust"). IXC shall pay all commissions,
transfer taxes and other out-of-pocket transaction costs, including the
expenses and compensation of the Exchange Agent, incurred in connection
with such sale of the Excess Shares. The Exchange Agent shall determine
the portion of the Common Shares Trust to which each former holder of
IXC Common Stock is entitled, if any, by multiplying the amount of the
aggregate net proceeds comprising the Common Shares Trust by a fraction,
the numerator of which is the amount of the fractional share interest to
which such former holder of IXC Common Stock is entitled (after taking
into account all shares of IXC Common Stock held at the Effective Time
by such holder) and the denominator of which is the aggregate amount of
fractional share interests to which all former holders of IXC Common
Stock are entitled.
(iv) Notwithstanding the provisions of Sections 2.02(e)(ii)
and (iii), CBI may elect at its option, exercised prior to the Effective
Time, in lieu of the issuance and sale of Excess Shares and the making
of the payments hereinabove contemplated, to pay each former holder of
IXC Common Stock an amount in cash equal to the product obtained by
multiplying (A) the fractional share interest to which such former
holder (after taking into account all shares of IXC Common Stock held at
the Effective Time by such holder) would otherwise be entitled by (B)
the closing price for a share of CBI Common Stock as reported on the
NYSE (as reported in The Wall Street Journal or, if not reported
thereby, any other authoritative source) on the Closing Date, and, in
such case, all references herein to the cash proceeds of the sale of the
Excess Shares and similar references shall be deemed to mean and refer
to the payments calculated as set forth in this Section 2.02(e)(iv).
(v) As soon as practicable after the determina tion of the
amount of cash, if any, to be paid to holders of Certificates formerly
representing IXC Common Stock with respect to any fractional share
interests, the Exchange Agent shall make available such amounts to such
holders of Certificates formerly representing IXC Common Stock subject
to and in accordance with the terms of Section 2.02(c).
(f) Termination of Exchange Fund. Any portion of the Exchange
Fund that remains undistributed to the holders of the Certificates for
six months after the Effective Time shall be delivered to CBI, upon
demand, and any holders of the Certificates who have not theretofore
complied with this Article II shall thereafter look only to CBI for
payment of their claim for the Merger Consideration, any dividends or
11
distributions with respect to CBI Common Stock and any cash in lieu of
fractional shares of CBI Common Stock.
(g) No Liability. None of CBI, Sub, IXC or the Exchange Agent
shall be liable to any person in respect of any Merger Consideration,
any dividends or distributions with respect thereto, or any cash in lieu
of fractional shares of CBI Common Stock, in each case delivered to a
public official pursuant to any applicable abandoned property, escheat
or similar law. If any Certificate shall not have been surrendered prior
to three years after the Effective Time (or immediately prior to such
earlier date on which any Merger Consideration, any dividends or
distribu tions payable to the holder of such Certificate or any cash
payable in lieu of fractional shares of CBI Common Stock pursuant to
this Article II, would otherwise escheat to or become the property of
any Governmental Entity), any such Merger Consideration, dividends or
distributions in respect thereof or such cash shall, to the extent
permitted by applicable law, become the property of the Surviving
Corporation, free and clear of all claims or interest of any person
previously entitled thereto.
(h) Investment of Exchange Fund. The Exchange Agent shall
invest any cash included in the Exchange Fund in investment-grade
securities, as directed by CBI, on a daily basis. Any interest and other
income resulting from such investments shall be paid to CBI.
(i) Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact
by the person claiming such Certificate to be lost, stolen or destroyed
and, if required by CBI, the posting by such person of a bond in such
reasonable amount as CBI may direct as indemnity against any claim that
may be made against it with respect to such Certificate, the Exchange
Agent shall issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration and any unpaid dividends and
distributions in respect thereof and any cash in lieu of fractional
shares of CBI Common Stock, in each case pursuant to this Agreement.
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of IXC. Except
(i) with respect to matters expressly permitted by Section 4.01(a), (ii)
as expressly disclosed in IXC SEC Documents filed and publicly available
prior to the date of
12
this Agreement (the "IXC Filed SEC Documents") or (iii) as expressly set
forth on the disclosure schedule delivered by IXC to CBI prior to the
execution of this Agreement (the "IXC Disclosure Schedule"), IXC
represents and warrants to CBI and Sub as follows:
(a) Organization, Standing and Corporate Power. Each of IXC
and its Subsidiaries is a corporation or other legal entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has the requisite corporate or
other power and authority, as the case may be, to carry on its business
as now being conducted. Each of IXC and its Subsidiaries is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership,
leasing or operation of its properties makes such qualification or
licensing necessary, except for those jurisdictions in which the failure
to be so qualified or licensed or to be in good standing individually or
in the aggregate is not reasonably likely to have a Material Adverse
Effect on IXC. IXC has made available to CBI prior to the execution of
this Agreement complete and correct copies of its Restated Certificate
of Incorporation and By-laws, as amended to the date of this Agreement,
and the comparable charter and organizational documents of each
Subsidiary of IXC, in each case as amended to the date of this
Agreement.
(b) Subsidiaries. Section 3.01(b) of the IXC Disclosure
Schedule sets forth a true and complete list of each of IXC's
Subsidiaries as of the date hereof. All the outstanding shares of
capital stock of, or other equity interests in, each Subsidiary of IXC
have been validly issued and are fully paid and nonassessable and are
owned directly or indirectly by IXC, free and clear of all pledges,
claims, liens, charges, encumbrances and security interests of any kind
or nature whatsoever (collectively, "Liens") and free of any restriction
on the right to vote, sell or otherwise dispose of such capital stock or
other ownership interests. Except for the capital stock or other
ownership interests of its Subsidiaries, as of the date hereof, IXC does
not beneficially own directly or indirectly any material capital stock,
membership interest, partnership interest, joint venture interest or
other material equity interest in any person.
(c) Capital Structure. The authorized capital stock of IXC
consists of 320,000,000 shares of capital stock consisting of: (1)
300,000,000 shares of IXC Common Stock, (2) 3,000,000 shares of
preferred stock, par value $.01 per share (the "IXC Ordinary Preferred
Stock"), and
13
(3) 17,000,000 shares of Class B preferred stock, par value $.01 per
share (the "IXC Class B Preferred Stock" and, together with the IXC
Ordinary Preferred Stock, the "IXC Preferred Stock"), of which (A)
1,400,000 shares have been designated as the ▇▇▇ ▇ ▇/▇% ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
(▇) 450,000 shares have been designated as the IXC 12 1/2% Preferred
Stock, (C) 450,000 shares have been designated as 12 1/2% Series B
Junior Exchangeable Preferred Stock Due 2009 (the "IXC 12 1/2% Series B
Preferred Stock"), (D) 55,000 shares have been designated as Series A
Junior Participating Preferred Stock (the "IXC Series A Preferred
Stock") and (E) 155,250 shares have been designated as the ▇▇▇ ▇ ▇/▇%
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. ▇▇ the close of business on July 20, 1999, (i)
37,322,576 shares of IXC Common Stock were issued and outstanding; (ii)
71,363 shares of IXC Common Stock were held by IXC in its treasury;
(iii) 1,074,496 shares of IXC 7 1/4% Preferred Stock were issued and
outstanding; (iv) 371,618 shares of IXC 12 1/2% Preferred Stock were
issued and outstanding; (v) no shares of IXC 12 1/2% Series B Preferred
Stock were issued and outstanding; (vi) 55,000 shares of IXC Series A
Preferred Stock were reserved for issuance in connection with the rights
(the "IXC Rights") to purchase shares of IXC Series A Preferred Stock
issued pursuant to the Rights Agreement dated as of September 9, 1998
(the "IXC Rights Agreement"), between IXC and U.S. Stock Transfer
Corporation, as rights agent; (vii) 155,250 shares of IXC 6 3/4%
Preferred Stock were issued and outstanding; (viii) no other shares of
IXC Preferred Stock were issued and outstanding; (ix) 75,000 shares of
IXC Common Stock were reserved for issuance pursuant to 75,000 warrants
issued and outstanding to purchase IXC Common Stock (the "IXC
Warrants"); (x) 8,664,850 shares of IXC Common Stock were reserved for
issuance pursuant to the Amended and Restated 1994 Stock Plan of IXC, as
amended, the Special Stock Plan of IXC, the IXC 1998 Stock Plan, as
amended, the IXC 1997 Special Executive Stock Plan and grants of options
made to individual employees (such plans and arrangements, collectively,
the "IXC Stock Plans") (of which 8,066,527 shares of IXC Common Stock
are subject to outstanding IXC Stock Options); and (xi) 8,602,577 shares
of IXC Common Stock were reserved for issuance upon conversion of (A)
the IXC 7 1/4% Preferred Stock and (B) the IXC 6 3/4% Preferred Stock.
There are no outstanding stock appreciation rights or other rights
(other than the IXC Stock Options and IXC Warrants) to receive shares of
IXC Common Stock on a deferred basis granted under the IXC Stock Plans
or otherwise. Section 3.01(c)(i) of the IXC Disclosure Schedule sets
forth a complete and correct list, as of July 20, 1999, of (i) the name
of each holder of outstanding stock options or other rights to purchase
or to receive IXC Common Stock granted under the IXC Stock Plans
(collectively, "IXC Stock
14
Options"), (ii) the number of shares of IXC Common Stock subject to each
such IXC Stock Option, (iii) the exercise prices thereof and (iv) the
name of the IXC Stock Plan pursuant to which such IXC Stock Options were
granted. Section 3.01(c)(ii) of the IXC Disclosure Schedule sets forth a
complete and correct list, as of July 20, 1999, of (i) the name of each
holder of outstanding IXC Warrants, (ii) the number of shares of IXC
Common Stock subject to each such IXC Warrant and (iii) the exercise
prices thereof. No bonds, debentures, notes or other indebtedness of IXC
having the right to vote (or convertible into or exchangeable or
exercisable for securities having the right to vote) on any matters on
which stockholders of IXC or any of its Subsidiaries may vote are issued
or outstanding or subject to issuance. All outstanding shares of capital
stock of IXC are, and all shares which may be issued will be, when
issued, duly authorized, validly issued, fully paid and nonassessable
and will be delivered free and clear of all Liens (other than Liens
created by or imposed upon the holders thereof) and not subject to
preemptive rights. Except as set forth in this Section 3.01(c)
(including pursuant to the conversion or exercise of the securities
referred to above), (x) there are not issued, reserved for issuance or
outstanding (A) any shares of capital stock or other voting securities
of IXC or any of its Subsidiaries (other than shares of capital stock or
other voting securities of such Subsidiaries that are directly or
indirectly owned by IXC), (B) any securities of IXC or any of its
Subsidiaries convertible into or exchangeable or exercisable for shares
of capital stock or other voting securities of, or other ownership
interests in, IXC or any of its Subsidiaries or (C) any warrants, calls,
options or other rights to acquire from IXC or any of its Subsidiaries,
and no obligation of IXC or any of its Subsidiaries to issue, any
capital stock or other voting securities of, or other ownership
interests in, or any securities convertible into or exchangeable or
exercisable for any capital stock or other voting securities of, or
other ownership interests in, IXC or any of its Subsidiaries, (y) there
are not any outstanding obligations of IXC or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any such securities or to issue,
deliver or sell, or cause to be issued, delivered or sold, any such
securities and (z) IXC is not a party to any voting agreement with
respect to the voting of any such securities.
(d) Authority; Noncontravention. IXC has the requisite
corporate power and corporate authority to enter into this Agreement
and, subject to receipt of IXC Stockholder Approval, to consummate the
transactions contemplated by this Agreement. IXC has the requisite
15
corporate power and corporate authority to enter into the Option
Agreements and to consummate the transactions contemplated thereby. The
execution and delivery of this Agreement and the Option Agreements by
IXC and the consummation by IXC of the transactions contemplated by this
Agreement and the Option Agreements have been duly authorized by all
necessary corporate action on the part of IXC, subject, in the case of
the Merger, to receipt of IXC Stockholder Approval. This Agreement and
the Option Agreements have been duly executed and delivered by IXC and,
assuming the due authorization, execution and delivery by each of the
other parties hereto and thereto, constitute the legal, valid and
binding obligations of IXC, enforceable against IXC in accordance with
their terms. The execution and delivery of this Agreement and the Option
Agreements do not, and the consummation of the transactions contemplated
by this Agreement and the Option Agreements and compliance with the
provisions hereof and thereof will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancelation or
acceleration of any obligation or loss of a benefit under, or result in
the creation of any Lien upon any of the properties or assets of IXC or
any of its Subsidiaries under, (i) the Restated Certificate of
Incorporation or By-laws of IXC or the comparable organizational
documents of any of its Subsidiaries, (ii) any loan or credit agreement,
note, bond, mortgage, indenture, lease or other agreement, instrument,
permit, concession, franchise, license or similar authorization
applicable to IXC or any of its Subsidiaries or their respective
properties or assets or (iii) subject to the governmental filings and
other matters referred to in the following sentence, any judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to
IXC or any of its Subsidiaries or their respective properties or assets,
other than, in the case of clauses (ii) and (iii), any such conflicts,
violations, defaults, rights, losses or Liens that individually or in
the aggregate are not reasonably likely to (x) have a Material Adverse
Effect on IXC, (y) impair the ability of IXC to perform its obligations
under this Agreement or any of the Option Agreements or (z) prevent or
materially delay the consummation of the transactions contemplated by
this Agreement or any of the Option Agreements. No consent, approval,
order or authorization of, action by or in respect of, or registration,
declaration or filing with, any Federal, state, local or foreign
government, any court, administrative, regulatory or other governmental
agency, commission or authority or any nongovernmental self- regulatory
agency, commission or authority (each a "Governmental Entity") is
required by or with respect to IXC
16
or any of its Subsidiaries in connection with the execution and delivery
of this Agreement or any of the Option Agreements by IXC or the
consummation by IXC of the Merger or the other transactions contemplated
by this Agreement or any of the Option Agreements, except for (1) the
filing of a premerger notification and report form by IXC under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), and any applicable filings and approvals under similar
foreign antitrust or competition laws and regulations; (2) the filing
with the Securities and Exchange Commission (the "SEC") of (A) a joint
proxy statement relating to the IXC Stockholders Meeting and the CBI
Shareholders Meeting (such proxy statement, as amended or supplemented
from time to time, the "Joint Proxy Statement"), and (B) such reports
under Section 13(a), 13(d), 15(d) or 16(a) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), as may be required in
connection with this Agreement, the Stockholders Agreements, the Option
Agreements and the transactions contemplated by this Agreement, the
Stockholders Agreements or any of the Option Agreements; (3) the filing
of the Certificate of Merger with the Delaware Secretary of State and
appropriate documents with the relevant authorities of other states in
which IXC is qualified to do business and such filings with Governmental
Entities to satisfy the applicable requirements of state securities or
"blue sky" laws; (4) filings with and approvals of the Federal
Communications Commission (the "FCC") as required under the
Communications Act of 1934, as amended (the "Communications Act"), and
the rules and regulations promulgated thereunder; (5) such filings with
and approvals of The Nasdaq National Market ("Nasdaq") to permit the
shares of IXC Common Stock that are to be issued pursuant to the IXC
Stock Option Agreement to be quoted on Nasdaq; (6) filings with and
approvals of any state public utility commissions ("PUCs"), foreign
telecommunications regulatory agencies or similar regulatory bodies as
required by applicable statutes, laws, rules, ordinances and
regulations; and (7) such other consents, approvals, orders or
authorizations the failure of which to be made or obtained individually
or in the aggregate is not reasonably likely to (x) have a Material
Adverse Effect on IXC, (y) impair the ability of IXC to perform its
obligations under this Agreement or any of the Option Agreements or (z)
prevent or materially delay the consummation of the transactions
contemplated by this Agreement or any of the Option Agreements.
(e) SEC Documents; Undisclosed Liabilities. IXC has filed all
required reports, schedules, forms, statements and other documents
(including exhibits and all other information incorporated therein) with
the SEC since
17
January 1, 1998 (collectively, the "IXC SEC Documents"). As of their
respective dates, the IXC SEC Documents complied in all material
respects with the requirements of the Securities Act of 1933, as amended
(the "Securities Act"), or the Exchange Act, as the case may be, and the
rules and regulations of the SEC promulgated thereunder applicable to
such IXC SEC Documents, and none of the IXC SEC Documents when filed
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading. Except to the extent that information
contained in any IXC SEC Document has been revised or superseded by a
later filed IXC SEC Document, none of the IXC SEC Documents contains any
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading. The financial statements of IXC included in the
IXC SEC Documents comply as to form, as of their respective dates of
filing with the SEC, in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with
respect thereto (the "Accounting Rules"), have been prepared in
accordance with generally accepted accounting principles ("GAAP")
(except, in the case of unaudited statements, as permitted by Form 10-Q
of the SEC) applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and fairly present in
all material respects the consolidated financial position of IXC and its
consolidated Subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal recurring
year-end audit adjustments and the absence of footnotes, if applicable).
Except (i) as reflected in the IXC Filed SEC Documents, (ii) for
liabilities incurred in connection with this Agreement or any of the
Option Agreements or the transactions contemplated by this Agreement or
any of the Option Agreements or (iii) incurred since March 31, 1999, in
the ordinary course of business consistent with past practice, neither
IXC nor any of its Subsidiaries has any liabilities or obligations of
any nature (whether accrued, absolute, contingent or otherwise) which
individually or in the aggregate are reasonably likely to have a
Material Adverse Effect on IXC.
(f) Information Supplied. None of the informa tion supplied or
to be supplied by IXC specifically for inclusion or incorporation by
reference in (i) the registra tion statement on Form S-4 to be filed
with the SEC by CBI
18
in connection with the issuance of CBI Common Stock in the Merger (the
"Form S-4") will, at the time the Form S-4 becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to
make the statements therein not misleading or (ii) the Joint Proxy
Statement will, at the date it is first mailed to IXC's stockholders and
CBI's shareholders or at the time of the IXC Stockholders Meeting or the
CBI Shareholders Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Joint Proxy
Statement will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations
promulgated thereunder. No representation or warranty is made by IXC
with respect to statements made or incorporated by reference in the
Joint Proxy Statement based on information supplied by CBI or Sub
specifically for inclusion or incorporation by reference in the Joint
Proxy Statement.
(g) Absence of Certain Changes or Events. Except for
liabilities incurred in connection with or expressly permitted by this
Agreement and the Option Agreements and except as disclosed in the IXC
Filed SEC Documents, since March 31, 1999, IXC and its Subsidiaries have
conducted their business only in the ordinary course consistent with
past practice, and since such date there has not been (1) any Material
Adverse Change in IXC, (2) any declaration, setting aside or payment of
any dividend or other distribution (whether in cash, stock or property)
with respect to any of IXC's capital stock, except for dividends or
other distributions declared, set aside or paid by IXC as required by
and in accordance with the respective terms of such capital stock as of
the date hereof, (3) any split, combination or reclassification of any
of IXC's capital stock or any issuance or the authorization of any
issuance of any other securities in respect of, in lieu of or in
substitution for shares of IXC's capital stock, (4) (A) any granting by
IXC or any of its Subsidiaries to any current or former director,
executive officer or other employee of IXC or its Subsidiaries of any
increase in compensation, bonus or other benefits, except for normal
increases in cash compensation in the ordinary course of business
consistent with past practice or as was required under any employment
agreements in effect as of the date of the most recent audited financial
statements included in the IXC Filed SEC Documents, (B) any granting by
IXC or any of its Subsidiaries to any such current or former director,
executive officer or employee of any increase in severance
19
or termination pay, (C) any entry by IXC or any of its Subsidiaries
into, or any amendments of, any employment, deferred compensation,
consulting, severance, termination or indemnification agreement with any
such current or former director, executive officer or employee or (D)
any amendment to, or modification of, any IXC Stock Option or IXC
Warrant, (5) any damage, destruction or loss, whether or not covered by
insurance, that individually or in the aggregate is reasonably likely to
have a Material Adverse Effect on IXC, (6) except insofar as may have
been required by a change in GAAP, any change in accounting methods,
principles or practices by IXC or any of its Subsidiaries materially
affecting the consolidated financial position or results of operations
of IXC or (7) any tax election or any settlement or compromise of any
income tax liability that individually or in the aggregate is reasonably
likely to adversely affect the tax liability or tax attributes of IXC or
any of its Subsidiaries in any material respect or any settlement or
compromise of any material income tax liability.
(h) Litigation. There is no suit, action, proceeding, claim,
grievance or investigation pending or, to the Knowledge of IXC or any of
its Subsidiaries, threatened against or affecting IXC or any of its
Subsidiaries that individually or in the aggregate is reasonably likely
to have a Material Adverse Effect on IXC nor is there any judgment,
decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against IXC or any of its Subsidiaries having, or
that individually or in the aggregate is reasonably likely to have a
Material Adverse Effect on IXC. There are no facts, circumstances or
conditions that are reasonably likely to give rise to any liability of,
or form the basis of a claim against, IXC or any of its Subsidiaries
under any applicable statutes, laws, ordinances, rules or regulations,
which liability or claim is reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on IXC.
(i) Compliance with Applicable Laws. IXC and its Subsidiaries
hold all material permits, licenses, variances, exemptions, orders,
registrations and approvals of all Governmental Entities (the "IXC
Permits") which are required for them to own, lease or operate their
assets and to carry on their businesses. IXC and its Subsidiaries are in
compliance in all material respects with the terms of the IXC Permits
and all applicable statutes, laws, ordinances, rules and regulations. No
action, demand, requirement or investigation by any Governmental Entity
and no suit, action or proceeding by any person, in each case with
respect to IXC or any of its Subsidiaries or any of their respective
properties, which is reasonably likely to have, individually
20
or in the aggregate, a Material Adverse Effect on IXC, is pending or, to
the Knowledge of IXC, threatened. As of the date hereof, Section 3.01(i)
of the IXC Disclosure Schedule sets forth a true and complete list of
all IXC Permits obtained from the FCC and any state PUC.
(j) Contracts. Neither IXC nor any of its Subsidiaries is in
violation of or in default under (nor does there exist any condition
which upon the passage of time or the giving of notice or both would
cause such a violation of or default under) any loan or credit
agreement, bond, note, mortgage, indenture, lease or other contract,
agreement, obligation, commitment, arrangement, under standing,
instrument, permit or license to which it is a party or by which it or
any of its properties or assets is bound, except for violations or
defaults that individually or in the aggregate are not reasonably likely
to have a Material Adverse Effect on IXC. Since December 31, 1998,
through the date hereof, neither IXC nor any of its Subsidiaries has
entered into any contract, agreement, obligation, commitment,
arrangement or understanding with any Affiliate of IXC that would have
been required to be filed as an exhibit to IXC's Annual Report on Form
10-K for the fiscal year ended December 31, 1998 (the "IXC 1998 10- K")
had IXC been a party thereto as of December 31, 1998. Neither IXC nor
any of its Subsidiaries is a party to or bound by any noncompetition
agreement or any other similar agreement or obligation which purports to
limit in any material respect the manner in which, or the localities in
which, all or any material portion of the business of IXC and its
Subsidiaries, taken as a whole, is conducted.
(k) Absence of Changes in Benefit Plans. Since the date of the
most recent audited financial statements included in the IXC Filed SEC
Documents, there has not been (i) any adoption or amendment by IXC or
any of its Subsidiaries of any employment agreement with any director,
officer or employee of IXC or any of its Subsidiaries or of any
collective bargaining agreement or (ii) any adoption or amendment of any
bonus, pension, profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock option, phantom
stock, retirement, vacation, severance, disability, death benefit,
hospitalization, medical, welfare benefit or other plan, arrangement or
understanding providing compensation or benefits to any current or
former director, officer or employee of IXC or any of its Subsidiaries
(collectively, the "IXC Benefit Plans"), or any change in any actuarial
or other assumption used to calculate funding obligations with respect
to any IXC pension plans, or any change in the manner in which
contributions to any IXC pension plans are made or the basis
21
on which such contributions are determined which are reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on
IXC.
(l) ERISA Compliance. (i) With respect to IXC Benefit Plans,
no liability has been incurred and, to the Knowledge of IXC, there
exists no condition or circumstances in connection with which IXC or any
of its Subsidiaries could be subject to any liability that individually
or in the aggregate is reasonably likely to have a Material Adverse
Effect on IXC under the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), the Code or any other applicable law.
(ii) Each IXC Benefit Plan has been administered in accordance
with its terms, except for any failures so to administer any IXC Benefit
Plan that individually or in the aggregate are not reasonably likely to
have a Material Adverse Effect on IXC. IXC, its Subsidiaries and all IXC
Benefit Plans are in compliance with the applicable provisions of ERISA,
the Code and all other applicable laws and the terms of all applicable
collective bargaining agreements, except for any failures to be in such
compliance that individually or in the aggregate are not reasonably
likely to have a Material Adverse Effect on IXC.
(iii) None of IXC or any of its Subsidiaries sponsors or
contributes to any IXC Benefit Plan that is subject to Title IV of
ERISA.
(iv) IXC and its Subsidiaries are in compliance with all
Federal, state, local and foreign requirements regarding employment,
except for any failures to comply that individually or in the aggregate
are not reasonably likely to have a Material Adverse Effect on IXC.
Neither IXC nor any of its Subsidiaries is a party to any collective
bargaining or other labor union contract applicable to persons employed
by IXC or any of its Subsidiaries in the United States and as of the
date of this Agreement no such collective bargaining agreement is being
negotiated by IXC or any of its Subsidiaries. As of the date of this
Agree ment, there is no labor dispute, strike or work stoppage against
IXC or any of its Subsidiaries pending or, to the Knowledge of IXC,
threatened which may interfere with the respective business activities
of IXC or any of its Subsidiaries, except where such dispute, strike or
work stoppage individually or in the aggregate is not reasonably likely
to have a Material Adverse Effect on IXC. As of the date of this
Agreement, to the Knowledge of IXC, none of IXC, any of its Subsidiaries
or any of their respective representatives or employees has committed
any unfair labor
22
practice in connection with the operation of the respective businesses
of IXC or any of its Subsidiaries, and there is no action, charge or
complaint against IXC or any of its Subsidiaries by the National Labor
Relations Board or any comparable governmental agency pending or
threatened in writing, in each case except where such practices,
actions, charges or complaints, individually or in the aggregate, are
not reasonably likely to have a Material Adverse Effect on IXC.
(v) (A) No employee of IXC or its Subsidiaries will be
entitled to any additional benefits or any acceleration of the time of
payment or vesting of any benefits under any IXC Benefit Plan (other
than acceleration of vesting of options in accordance with their terms)
as a result of the transactions contemplated by this Agreement or any of
the Option Agreements, (B) no amount payable, or economic benefit
provided, by IXC or its Subsidiaries (including any acceleration of the
time of payment or vesting of any benefit (other than acceleration of
vesting of options in accordance with their terms)) could be considered
an "excess parachute payment" under Section 280G of the Code and (C) no
person is entitled to receive any additional payment from IXC or its
Subsidiaries or any other person in the event that the excise tax of
Section 4999 of the Code is imposed on such person, in each case except
where such additional benefits or payments or acceleration (other than
acceleration of vesting of options in accordance with their terms),
individually or in the aggregate, are not reasonably likely to have a
Material Adverse Effect on IXC.
(m) Taxes. (i) Each of IXC and its Subsidiaries and each IXC
Consolidated Group has filed or has caused to be filed all material tax
returns and reports required to be filed by it and all such returns and
reports are complete and correct in all material respects, or requests
for extensions to file such returns or reports have been timely filed,
granted and have not expired, except to the extent that such failures to
file, to be complete or correct or to have extensions granted that
remain in effect individually or in the aggregate are not reasonably
likely to have a Material Adverse Effect on IXC. IXC, each of its
Subsidiaries and each IXC Consolidated Group has paid or caused to be
paid (or IXC has paid on its behalf) all material taxes due and owing,
and the most recent financial statements contained in the IXC Filed SEC
Documents reflect an adequate reserve for all material taxes payable by
IXC and its Subsidiaries for all taxable periods and portions thereof
accrued through the date of such financial statements.
23
(ii) No deficiencies, audit examinations, refund litigation,
proposed adjustments or matters in controversy for any taxes have been
proposed, asserted or assessed in writing against IXC or any of its
Subsidiaries or any IXC Consolidated Group that are not adequately
reserved for, except for deficiencies, audit examinations, refund
litigation, proposed adjustments or matters in controversy that
individually or in the aggregate are not reasonably likely to have a
Material Adverse Effect on IXC. The Federal income tax returns prior to
the date set forth in Section 3.01(m)(ii) of the IXC Disclosure Schedule
of IXC and its Subsidiaries consolidated in such returns have closed by
virtue of the applicable statute of limitations. All assessments for
taxes due and owing by IXC, any of its Subsidiaries or any IXC
Consolidated Group with respect to completed and settled examinations or
concluded litigation have been paid.
(iii) Neither IXC nor any of its Subsidiaries has taken or
agreed to take any action or knows of any fact, agreement, plan or other
circumstance that is reasonably likely to prevent the Merger from
qualifying as a reorgani zation within the meaning of Section 368(a) of
the Code.
(iv) No deduction of any amount that would otherwise be
deductible with respect to tax periods ending on or before the Effective
Time could be disallowed under Section 162(m) of the Code, except any
disallowances under Section 162(m) of the Code that alone or with other
such disallowances are not reasonably likely to have a Material Adverse
Effect on IXC.
(v) Neither IXC nor any of its Subsidiaries has constituted
either a "distributing corporation" or a "controlled corporation" in a
distribution of stock qualifying for tax-free treatment under Section
355 of the Code (x) in the two years prior to the date of this Agreement
or (y) in a distribution which could otherwise constitute part of a
"plan" or "series of related trans actions" (within the meaning of
Section 355(e) of the Code) in conjunction with the Merger.
(vi) To the Knowledge of IXC, no shareholder of IXC is a
foreign person who held more than 5% of the IXC stock at some time
during the shorter of the periods described in Section 897(c)(1)(A)(ii)
of the Code.
(vii) Neither IXC nor any of its Subsidiaries has any material
"deferred intercompany gains" (as defined in Treas. Reg. Section
1.1502-13).
24
(viii) Section 3.01(m)(1) of the IXC Disclosure Schedule sets
forth a complete schedule of each IXC Consolidated Group of which IXC is
or has been a member during the last six years. Such schedule sets forth
the names of all members of each such IXC Consolidated Group and the
periods during which IXC or any of its Subsidiaries is or has been a
member.
(ix) As used in this Agreement (1) "taxes" shall include all
(x) Federal, state, local or foreign income, property, sales, excise and
other taxes or similar govern mental charges, including any interest,
penalties or additions with respect thereto, (y) liability for the
payment of any amounts of the type described in clause (x) as a result
of being a member of an affiliated, consolidated, combined or unitary
group, and (z) liability for the payment of any amounts as a result of
being party to any tax sharing agreement or as a result of any express
or implied obligation to indemnify any other person with respect to the
payment of any amounts of the type described in clause (x) or (y) and
(2) "IXC Consolidated Group" means any affiliated group within the
meaning of Section 1504(a) of the Code, in which IXC (or any Subsidiary
of IXC) is or has ever been a member or any group of corporations with
which IXC files, has filed or is or was required to file an affiliated,
consolidated, combined, unitary or aggregate tax return.
(n) Voting Requirements. The affirmative vote of the holders
of a majority of the outstanding shares of IXC Common Stock entitled to
vote at the IXC Stockholders Meeting to (i) adopt this Agreement and
(ii) adopt the agreement referred to in Section 8.11 (collectively, the
"IXC Stockholder Approval") are the only votes or approvals of the
holders of any class or series of IXC's capital stock necessary to adopt
this Agreement and the Option Agreements and to approve the Merger and
the other transactions contemplated hereby or thereby.
(o) State Takeover Statutes. The Board of Directors of IXC
(including the disinterested directors thereof) has approved the terms
of this Agreement, the Stockholders Agreements and the Option Agreements
and the consummation of the Merger and the other transactions
contemplated by this Agreement, the Stockholders Agreements and the
Option Agreements and such approval constitutes approval of the Merger
and the other transactions contemplated by this Agreement, the
Stockholders Agreements and the Option Agreements by the Board of
Directors of IXC under the provisions of Section 203 of the DGCL and
represents all the action necessary to ensure that the
25
restrictions on "business combinations" (as defined in such Section 203)
contained in Section 203 do not apply to CBI in connection with the
Merger and the other transactions contemplated by this Agreement, the
Stockholders Agreements and the Option Agreements. No other state
takeover statute or similar statute or regulation is applicable to this
Agreement, the Stockholders Agreements, the Option Agreements, the
Merger or the other transactions contemplated by this Agreement, the
Stockholders Agreements and the Option Agreements.
(p) Brokers. No broker, investment banker, financial advisor
or other person, other ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
Incorporated, the fees, commissions and expenses of which will be paid
by IXC, is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission, or the reimbursement of expenses, in
connection with the transactions contemplated by this Agreement and the
Option Agreements based upon arrangements made by or on behalf of IXC.
IXC has furnished to CBI true and complete copies of all agreements
under which any such fees, commissions or expenses are payable and all
indemnification and other agreements related to the engagement of the
persons to whom such fees, commissions or expenses are payable.
(q) Opinions of Financial Advisors. IXC has received the
opinions of its financial advisors, dated the date of this Agreement, to
the effect that, as of such date, the Exchange Ratio is fair from a
financial point of view to the stockholders of IXC (other than CBI and
its Affiliates), a signed copy of which has been or promptly will be
delivered to CBI.
(r) Intellectual Property; Year 2000. (i) IXC and its
Subsidiaries own, or are validly licensed or other wise have the right
to use, all patents, patent rights, trademarks, trade secrets, trade
names, service marks, copyrights and other proprietary intellectual
property rights and computer programs (the "Intellectual Property
Rights") which are material to the conduct of the business of IXC and
its Subsidiaries, except where the failure to own or license such
Intellectual Property Rights is not reasonably likely to have a Material
Adverse Effect on IXC.
(ii) To the Knowledge of IXC, neither IXC nor any of its
Subsidiaries has materially interfered with, infringed upon,
misappropriated or otherwise come into conflict with any Intellectual
Property Rights of any other person. Neither IXC nor any of its
Subsidiaries has received any written charge, complaint, claim, demand
or
26
notice alleging any such interference, infringement, misappropriation or
other conflict (including any claim that IXC or any such Subsidiary must
license or refrain from using any Intellectual Property Rights or other
proprietary information of any other person) which has not been settled
or otherwise fully resolved. To IXC's Knowledge, no other person has
materially interfered with, infringed upon, misappropriated or otherwise
come into conflict with any Intellectual Property Rights of IXC or any
of its Subsidiaries.
(iii) As the business of IXC and its Subsidiaries is presently
conducted and proposed to be conducted without giving effect to any
change with respect thereto that may be made by CBI, to IXC's Knowledge,
CBI's use after the Closing of the Intellectual Property Rights which
are material to the conduct of the business of IXC and its Subsidiaries
taken as a whole will not interfere with, infringe upon, misappropriate
or otherwise come into conflict with the Intellectual Property Rights of
any other person.
(iv) The disclosure set forth in the IXC 1998 10-K under the
heading "Year 2000 Readiness" was true and correct in all material
respects on the date thereof and is true and correct in all material
respects as if made as of the date hereof.
(v) As of the Closing Date, IXC and its Subsidiaries have no
Knowledge that they are not Year 2000 Compliant and, as of the date
hereof, IXC and its Subsidiaries have no Knowledge that their respective
suppliers will not be Year 2000 Compliant at January 1, 2000, except, in
each case, for such failures to be Year 2000 Compliant that individually
or in the aggregate are not reasonably likely to have a Material Adverse
Effect on IXC. The term "Year 2000 Compliant", with respect to a
computer system or software program, means that such computer system or
program: (A) is capable of recognizing, processing, managing,
representing, interpreting and manipulating correctly date-related data
for dates earlier and later than January 1, 2000; (B) has the ability to
provide date recognition for any data element without limitation; (C)
has the ability to function automatically into and beyond the Year 2000
without human intervention and without any change in operations
associated with the advent of the Year 2000; (D) has the ability to
interpret data, dates and time correctly into and beyond the Year 2000;
(E) has the ability not to produce noncompliance in existing data, nor
otherwise corrupt such data, into and beyond the Year 2000; (F) has the
ability to process correctly after January 1, 2000, data containing
dates and times before that date; and (G) has the
27
ability to recognize all "leap year" dates, including February 29, 2000.
(s) IXC Rights Agreement. IXC has amended the IXC Rights
Agreement substantially in the form of Exhibit F hereto.
(t) Title to Properties. (i) Section 3.01(t) of the IXC
Disclosure Schedule sets forth a true and complete list of all material
real property and the 20 most significant leasehold properties owned or
leased by IXC or any of its Subsidiaries. Each of IXC and its
Subsidiaries has good and valid title to, or valid leasehold interests
in or valid rights to, all its material properties and assets except for
such as are no longer used or useful in the conduct of its businesses or
as have been disposed of in the ordinary course of business and except
for defects in title, easements, restrictive covenants and similar
encumbrances that individually or in the aggregate do not materially
interfere with its ability to conduct its business as currently
conducted. All such material assets and properties, other than assets
and properties in which IXC or any of its Subsidiaries has a leasehold
interest, are free and clear of all Liens except for Liens that
individually or in the aggregate do not materially interfere with the
ability of IXC and its Subsidiaries to conduct their respective
businesses as currently conducted.
(ii) Each of IXC and its Subsidiaries has complied in all
material respects with the terms of all material leases to which it is a
party and under which it is in occupancy, and all such leases are in
full force and effect. Each of IXC and its Subsidiaries enjoys peaceful
and undisturbed possession under all such leases, except where a failure
to do so individually or in the aggregate are not reasonably likely to
have a Material Adverse Effect on IXC.
SECTION 3.02. Representations and Warranties of CBI and Sub.
Except (i) with respect to matters expressly permitted by Section
4.01(b), (ii) as expressly disclosed in the CBI SEC Documents filed and
publicly available prior to the date of this Agreement (the "CBI Filed
SEC Documents") or (iii) as expressly set forth on the disclosure
schedule delivered by CBI and Sub to IXC prior to the execution of this
Agreement (the "CBI Disclosure Schedule"), CBI and Sub represent and
warrant to IXC as follows:
(a) Organization, Standing and Corporate Power. Each of CBI,
Sub and its Subsidiaries is a corporation or other legal entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it
28
is organized and has the requisite corporate or other power and
authority, as the case may be, to carry on its business as now being
conducted. Each of CBI and its Subsidiaries is duly qualified or
licensed to do business and is in good standing in each jurisdiction in
which the nature of its business or the ownership, leasing or operation
of its properties makes such qualification or licensing necessary,
except for those jurisdictions in which the failure to be so qualified
or licensed or to be in good standing individually or in the aggregate
is not reasonably likely to have a Material Adverse Effect on CBI. CBI
has made available to IXC prior to the execution of this Agreement
complete and correct copies of its Amended Articles of Incorporation and
Amended Regulations, as amended to the date of this Agreement.
(b) Capital Structure. (i) The authorized capital stock of CBI
consists of 485,000,000 shares of capital stock consisting of: (1)
480,000,000 shares of CBI Common Stock, (2) 1,000,000 shares of
non-voting preferred stock without par value (the "Non-Voting Preferred
Stock") and (3) 4,000,000 shares of voting preferred stock without par
value (the "Voting Preferred Stock" and, together with the Non-Voting
Preferred Stock, the "CBI Preferred Stock") of which 2,000,000 shares
have been designated as Series A Preferred Stock (the "CBI Series A
Preferred Stock"). At the close of business on July 15, 1999, (i)
137,792,751 shares of CBI Common Stock were issued and outstanding; (ii)
no shares of CBI Common Stock were held by CBI in its treasury; (iii) no
shares of CBI Preferred Stock were issued and outstanding; (iv)
2,000,000 shares of CBI Series A Preferred Stock were reserved for
issuance in connection with the rights to purchase shares of CBI Common
Stock issued pursuant to the Rights Agreement dated as of April 29, 1997
(the "CBI Rights Agreement"), between CBI and The Fifth Third Bank, as
rights agent; and (v) no shares of CBI Common Stock were reserved for
issuance pursuant to the CBI 1989 Stock Option Plan, the CBI 1997 Stock
Option Plan for Non-Employee Directors, the CBI 1997 Long Term Incentive
Plan, the CBI Executive Deferred Compensation Plan and grants of options
made to individual employees (such plans and arrangements, collectively,
the "CBI Stock Plans") (of which 10,629,687 shares of CBI Common Stock
are subject to outstanding CBI Stock Options). There are no outstanding
stock appreciation rights or rights (other than the CBI Stock Options)
to receive shares of CBI Common Stock on a deferred basis granted under
the CBI Stock Plans or otherwise. Section 3.02(b) of the CBI Disclosure
Schedule sets forth a complete and correct list, as of July 15, 1999, of
all outstanding stock options or other rights to purchase or receive CBI
Common Stock granted under the CBI Stock
29
Plans (collectively, "CBI Stock Options"). No bonds, debentures, notes
or other indebtedness of CBI having the right to vote (or convertible
into or exchangeable or exercisable for securities having the right to
vote) on any matters on which stockholders of CBI or any of its
Subsidiaries may vote are issued or outstanding or subject to issuance.
All outstanding shares of capital stock of CBI are, and all shares which
may be issued will be, when issued, duly authorized, validly issued,
fully paid and nonassessable and will be delivered free and clear of all
Liens (other than Liens created by or imposed upon the holders thereof)
and not subject to preemptive rights. Except as set forth in this
Section 3.02(b) (including pursuant to the conversion or exercise of the
securities referred to above), (x) there are not issued, reserved for
issuance or outstanding (A) any shares of capital stock or other voting
securities of CBI or any of its Subsidiaries (other than shares of
capital stock or other voting secur ities of such Subsidiaries that are
directly or indirectly owned by CBI), (B) any securities of CBI or any
of its Subsidiaries convertible into or exchangeable or exercisable for
shares of capital stock or other voting securities of, or other
ownership interests in, CBI or any of its Subsidiaries or (C) any
warrants, calls, options or other rights to acquire from CBI or any of
its Subsidiaries, and no obligation of CBI or any of its Subsidiaries to
issue, any capital stock or other voting securities of, or other
ownership interests in, or any securities convertible into or
exchangeable or exercisable for any capital stock or other voting
securities of, or other ownership interests in, CBI or any of its
Subsidiaries, (y) there are not any outstanding obligations of CBI or
any of its Subsidiaries to repurchase, redeem or otherwise acquire any
such securities or to issue, deliver or sell, or cause to be issued,
delivered or sold, any such securities and (z) CBI is not a party to any
voting agreement with respect to the voting of any such securities.
Other than the capital stock of, or other equity interests in, its
Subsidiaries, CBI does not directly or indirectly beneficially own any
securities or other beneficial ownership interests in any other entity.
(ii) The authorized capital stock of Sub consists of 1,000
shares of common stock, par value $.01 per share ("Sub Common Stock").
There are issued and outstanding 1,000 shares of Sub Common Stock. All
such shares are owned by CBI. Sub does not have issued or outstanding
any options, warrants, subscriptions, calls, rights, convertible
securities or other agreements or commitments obligating Sub to issue,
transfer or sell any shares of Sub Common Stock. Sub does not have
bonds, debentures, notes or other indebtedness outstanding.
30
(iii) Section 3.02(b)(iii) of the CBI Disclosure Schedule sets
forth a true and complete list of each of CBI's Subsidiaries as of the
date hereof. All the outstanding shares of capital stock of, or other
equity interests in, each Subsidiary of CBI have been validly issued and
are fully paid and nonassessable and are owned directly or indirectly by
CBI, free and clear of any Liens and free of any restriction on the
right to vote, sell or otherwise dispose of such capital stock or other
ownership interests. Except for the capital stock or other ownership
interests of its Subsidiaries, as of the date hereof, CBI does not
beneficially own directly or indirectly any material capital stock,
membership interest, partnership interest, joint venture interest or
other material equity interest in any person.
(c) Authority; Noncontravention. Each of CBI and Sub has the
requisite corporate power and corporate authority to enter into this
Agreement and, subject to receipt of CBI Shareholder Approval, to
consummate the transactions contemplated by this Agreement. CBI has the
requisite corporate power and corporate authority to enter into the
Stockholders Agreements and the Option Agreements and to consummate the
transactions contemplated thereby. The execution and delivery of this
Agreement, the Stock holders Agreements and the Option Agreements by CBI
and the consummation by CBI of the transactions contemplated by this
Agreement, the Stockholders Agreements and the Option Agreements have
been duly authorized by all necessary corporate action on the part of
CBI, subject, in connection with, among other things, the issuance of
shares of CBI Common Stock in the Merger, to receipt of CBI Shareholder
Approval. This Agreement, the Stockholders Agreements and the Option
Agreements have been duly executed and delivered by CBI and, assuming
the due authorization, execution and delivery by each of the other
parties hereto and thereto, constitute the legal, valid and binding
obligations of CBI, enforceable against CBI in accordance with their
terms. The execution and delivery of this Agreement, the Stockholders
Agreements and the Option Agreements do not, and the consummation of the
transactions contemplated by this Agreement, the Stockholders Agreements
and the Option Agreements and compliance with the provisions hereof and
thereof will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or
give rise to a right of termination, cancelation or acceleration of any
obligation or loss of a benefit under, or result in the creation of any
Lien upon any of the properties or assets of CBI or any of its
Subsidiaries under, (i) the Amended Articles of Incorpora tion or
Amended Regulations of CBI or the comparable
31
organizational documents of any of its Subsidiaries, (ii) any loan or
credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise, license or similar
authorization applicable to CBI or any of its Subsidiaries or their
respective properties or assets or (iii) subject to the governmental
filings and other matters referred to in the following sentence, any
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to IXC or any of its Subsidiaries or their respective
properties or assets, other than, in the case of clauses (ii) and (iii),
any such conflicts, violations, defaults, rights, losses or Liens that
individually or in the aggregate are not reasonably likely to (x) have a
Material Adverse Effect on CBI, (y) impair the ability of CBI to perform
its obligations under this Agreement or any of the Option Agreements or
(z) prevent or materially delay the consummation of the transactions
contemplated by this Agreement or any of the Option Agreements. No
consent, approval, order or authorization of, action by or in respect
of, or registration, declaration or filing with, any Governmental Entity
is required by or with respect to CBI or any of its Subsidiaries in
connection with the execution and delivery of this Agreement, the
Stockholders Agreements or any of the Option Agreements by CBI or the
consummation by CBI of the Merger or the other transactions contemplated
by this Agreement, the Stockholders Agreements or any of the Option
Agreements, except for (1) the filing of a premerger notification and
report form by CBI under the HSR Act and any applicable filings and
approvals under similar foreign antitrust or competition laws and
regulations; (2) the filing with the SEC of (A) the Joint Proxy
Statement and (B) such reports under Section 13(a), 13(d), 15(d) or
16(a) of the Exchange Act as may be required in connection with this
Agreement, the Stockholders Agreements and the Option Agreements and the
transactions contemplated by this Agree ment, the Stockholders
Agreements or any of the Option Agreements; (3) the filing of the
Certificate of Merger with the Delaware Secretary of State and
appropriate documents with the relevant authorities of other states in
which CBI is qualified to do business and such filings with Govern
mental Entities to satisfy the applicable requirements of state
securities or "blue sky" laws; (4) filings with and approvals of the FCC
as required under the Communications Act and the rules and regulations
promulgated thereunder; (5) such filings with and approvals of the NYSE
and The Cincinnati Stock Exchange (the "CSE") to permit the shares of
CBI Common Stock that are to be issued in the Merger and pursuant to the
CBI Stock Option Agreement to be listed on the NYSE and the CSE; (6)
filings with and approvals of any state PUCs, foreign telecommunications
regulatory agencies
32
or similar regulatory bodies as required by applicable statutes, laws,
rules, ordinances and regulations; and (7) such other consents,
approvals, orders or authorizations the failure of which to be made or
obtained individually or in the aggregate is not reasonably likely to
(x) have a Material Adverse Effect on CBI, (y) impair the ability of CBI
to perform its obligations under this Agreement or any of the Option
Agreements or (z) prevent or materially delay the consummation of the
transactions contemplated by this Agreement or any of the Option
Agreements.
(d) SEC Documents; Undisclosed Liabilities. CBI has filed all
required reports, schedules, forms, statements and other documents
(including exhibits and all other information incorporated therein) with
the SEC since January 1, 1998 (collectively, the "CBI SEC Documents").
As of their respective dates, the CBI SEC Documents complied in all
material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations of the
SEC promulgated thereunder applicable to such CBI SEC Documents, and
none of the CBI SEC Documents when filed contained any untrue statement
of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
Except to the extent that information contained in any CBI SEC Document
has been revised or superseded by a later filed CBI SEC Document, none
of the CBI SEC Documents contains any untrue statement of a material
fact or omits to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of CBI included in the CBI SEC Documents comply as to form,
as of their respective dates of filing with the SEC, in all material
respects with the Accounting Rules, have been prepared in accordance
with GAAP (except, in the case of unaudited statements, as permitted by
Form 10-Q of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly
present in all material respects the consolidated financial position of
CBI and its consolidated Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal
recurring year-end audit adjustments and the absence of footnotes if
applicable). Except (i) as reflected in the CBI Filed SEC Documents,
(ii) for liabilities incurred in connection with this Agreement, the
Stockholders Agreements or any of the Option Agreements or the
transactions contemplated by this Agreement, the Stockholders Agreements
33
or any of the Option Agreements or (iii) incurred since March 31, 1999,
in the ordinary course of business consistent with past practice,
neither CBI nor any of its Subsidiaries has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or
otherwise) which individually or in the aggregate are reasonably likely
to have a Material Adverse Effect on CBI.
(e) Information Supplied. None of the informa tion supplied or
to be supplied by CBI specifically for inclusion or incorporation by
reference in (i) the Form S-4 will, at the time the Form S-4 becomes
effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading or
(ii) the Joint Proxy Statement will, at the date it is first mailed to
CBI's shareholders and IXC's stockholders or at the time of the CBI
Shareholders Meeting or the IXC Stockholders Meeting, contain any untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Form S-4 and the Joint Proxy Statement will comply as to
form in all material respects with the requirements of the Securities
Act and the Exchange Act, as applicable, and the respective rules and
regulations promulgated thereunder. No representation or warranty is
made by CBI with respect to statements made or incorporated by reference
in the Form S-4 and the Joint Proxy Statement based on information
supplied by IXC specifically for inclusion or incorporation by reference
in the Form S-4 or the Joint Proxy Statement, as the case may be.
(f) Absence of Certain Changes or Events. Except for
liabilities incurred in connection with or expressly permitted by this
Agreement, the Stockholders Agreements and the Option Agreements and
except as disclosed in the CBI Filed SEC Documents, since ▇▇▇▇▇ ▇▇,
▇▇▇▇, ▇▇▇ and its Subsidiaries have conducted their business only in the
ordinary course consistent with past practice, and since such date there
has not been (1) any Material Adverse Change in CBI, (2) any
declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to any of
CBI's capital stock, except for regular quarterly cash dividends
declared, set aside or paid by CBI with respect to CBI Common Stock, (3)
any split, combination or reclassification of any of CBI's capital stock
or any issuance or the authorization of any issuance of any other
securities in respect of, in lieu of or in substitution for shares of
CBI's capital stock, (4) (A) any
34
granting by CBI or any of its Subsidiaries to any current or former
director, executive officer or other employee of CBI or its Subsidiaries
of any increase in compensation, bonus or other benefits, except for
normal increases in cash compensation in the ordinary course of business
consistent with past practice or as was required under any employment
agreements in effect as of the date of the most recent audited financial
statements included in the CBI Filed SEC Documents, (B) any granting by
CBI or any of its Subsidiaries to any such current or former director,
executive officer or employee of any increase in severance or
termination pay, (C) any entry by CBI or any of its Subsidiaries into,
or any amendments of, any employment, deferred compensation, consulting,
severance, termination or indemnification agreement with any such
current or former director, executive officer or employee or (D) any
amendment to, or modification of, any CBI Stock Option, (5) any damage,
destruction or loss, whether or not covered by insurance, that
individually or in the aggregate is reasonably likely to have a Material
Adverse Effect on CBI, (6) except insofar as may have been required by a
change in GAAP, any change in accounting methods, principles or
practices by CBI or any of its Subsidiaries materially affecting the
consolidated financial position or results of operations of CBI or (7)
any tax election or any settlement or compromise of any income tax
liability that individually or in the aggregate is reasonably likely to
adversely affect the tax liability or tax attributes of CBI or any of
its Subsidiaries in any material respect or any settlement or compromise
of any material income tax liability.
(g) Litigation. There is no suit, action, proceeding, claim,
grievance or investigation pending or, to the Knowledge of CBI or any of
its Subsidiaries, threatened against or affecting CBI or any of its
Subsidiaries that individually or in the aggregate is reasonably likely
to have a Material Adverse Effect on CBI nor is there any judgment,
decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against IXC or any of its Subsidiaries having, or
that is individually or in the aggregate reasonably likely to have, a
Material Adverse Effect on CBI. There are no facts, circumstances or
conditions that are reasonably likely to give rise to any liability of,
or form the basis of a claim against, CBI or any of its Subsidiaries
under any applicable statutes, laws, ordinances, rules or regulations,
which liability or claim is reasonably likely to have individually or in
the aggregate a Material Adverse Effect on CBI.
(h) Compliance with Applicable Laws. CBI and its Subsidiaries
hold all material permits, licenses, variances,
35
exemptions, orders, registrations and approvals of all Governmental
Entities (the "CBI Permits") which are required for them to own, lease
or operate their assets and to carry on their businesses. CBI and its
Subsidiaries are in compliance in all material respects with the terms
of the CBI Permits and all applicable statutes, laws, ordinances, rules
and regulations. No action, demand, requirement or investigation by any
Governmental Entity and no suit, action or proceeding by any person, in
each case with respect to CBI or any of its Subsidiaries or any of their
respective properties, that is reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on CBI, is pending or, to
the Knowledge of CBI, threatened. As of the date hereof, Section 3.02(h)
of the CBI Disclosure Schedule sets forth a true and complete list of
all CBI Permits obtained from the FCC and any state PUC.
(i) Contracts. Neither CBI nor any of its Subsidiaries is in
violation of or in default under (nor does there exist any condition
which upon the passage of time or the giving of notice or both would
cause such a violation of or default under) any loan or credit
agreement, bond, note, mortgage, indenture, lease or other contract,
agreement, obligation, commitment, arrangement, under standing,
instrument, permit or license to which it is a party or by which it or
any of its properties or assets is bound, except for violations or
defaults that individually or in the aggregate are not reasonably likely
to have a Material Adverse Effect on CBI. Since December 31, 1998,
through the date hereof, neither of CBI nor any of its Subsidiaries has
entered into any contract, agreement, obligation, commitment,
arrangement or understanding with any Affiliate of CBI that would have
been required to be filed as an exhibit to CBI's Annual Report on Form
10-K for the fiscal year ended December 31, 1998 (the "CBI 1998 10- K")
had CBI been a party thereto as of December 31, 1998. Neither CBI nor
any of its Subsidiaries is a party to or bound by any non-competition
agreement or any other similar agreement or obligation which purports to
limit in any material respect the manner in which, or the localities in
which, all or any material portion of the business of CBI and its
Subsidiaries, taken as a whole, is conducted.
(j) Absence of Changes in Benefit Plans. Since the date of the
most recent audited financial statements included in the CBI Filed SEC
Documents, there has not been (i) any adoption or amendment by CBI or
any of its Subsidiaries of any employment agreement with any director,
officer or employee of CBI or any of its Subsidiaries or of any
collective bargaining agreement or (ii) any adoption or amendment of any
bonus, pension, profit sharing, deferred
36
compensation, incentive compensation, stock ownership, stock purchase,
stock option, phantom stock, retirement, vacation, severance,
disability, death benefit, hospitalization, medical, welfare benefit or
other plan, arrangement or understanding providing compensation or
benefits to any current or former director, officer or employee of CBI
or any of its Subsidiaries (collectively, the "CBI Benefit Plans"), or
any change in any actuarial or other assumption used to calculate
funding obligations with respect to any CBI pension plans, or any change
in the manner in which contributions to any CBI pension plans are made
or the basis on which such contributions are determined which are
reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on CBI.
(k) ERISA Compliance. (i) With respect to CBI Benefit Plans,
no liability has been incurred and, to the Knowledge of CBI, there
exists no condition or circumstances in connection with which CBI or any
of its Subsidiaries could be subject to any liability that individually
or in the aggregate is reasonably likely to have a Material Adverse
Effect on CBI under ERISA, the Code or any other applicable law.
(ii) Each CBI Benefit Plan has been administered in accordance
with its terms, except for any failures so to administer any CBI Benefit
Plan that individually or in the aggregate are not reasonably likely to
have a Material Adverse Effect on CBI. CBI, its Subsidiaries and all CBI
Benefit Plans are in compliance with the applicable provisions of ERISA,
the Code and all other applicable laws and the terms of all applicable
collective bargaining agreements, except for any failures to be in such
compliance that individually or in the aggregate are not reasonably
likely to have a Material Adverse Effect on CBI.
(iii) None of CBI or any of its Subsidiaries sponsors or
contributes to any CBI Benefit Plan that is subject to Title IV of
ERISA.
(iv) CBI and its Subsidiaries are in compliance with all
Federal, state, local and foreign requirements regarding employment,
except for any failures to comply that individually or in the aggregate
are not reasonably likely to have a Material Adverse Effect on CBI.
Neither CBI nor any of its Subsidiaries is a party to any collective
bargaining or other labor union contract applicable to persons employed
by CBI or any of its Subsidiaries in the United States and as of the
date of this Agreement no such collective bargaining agreement is being
negotiated by CBI or any of its Subsidiaries. As of the date of this
37
Agreement, there is no labor dispute, strike or work stoppage against
CBI or any of its Subsidiaries pending or, to the Knowledge of CBI,
threatened which may interfere with the respective business activities
of CBI or any of its Subsidiaries, except where such dispute, strike or
work stoppage individually or in the aggregate is not reasonably likely
to have a Material Adverse Effect on CBI. As of the date of this
Agreement, to the Knowledge of CBI, none of CBI, any of its Subsidiaries
or any of their respective representatives or employees has committed
any unfair labor practice in connection with the operation of the
respective businesses of CBI or any of its Subsidiaries, and there is no
action, charge or complaint against CBI or any of its Subsidiaries by
the National Labor Relations Board or any comparable governmental agency
pending or threatened in writing, in each case except where such
practices, actions, charges or complaints, individually or in the
aggregate, are not reasonably likely to have a Material Adverse Effect
on CBI.
(l) Taxes. (i) Each of CBI and its Subsidiaries and each CBI
Consolidated Group has filed or has caused to be filed all material tax
returns and reports required to be filed by it and all such returns and
reports are complete and correct in all material respects, or requests
for extensions to file such returns or reports have been timely filed,
granted and have not expired, except to the extent that such failures to
file, to be complete or correct or to have extensions granted that
remain in effect individually or in the aggregate are not reasonably
likely to have a Material Adverse Effect on CBI. CBI, each of its
Subsidiaries and each CBI Consolidated Group has paid or caused to be
paid (or CBI has paid on its behalf) all material taxes due and owing,
and the most recent financial statements contained in the CBI Filed SEC
Documents reflect an adequate reserve for all material taxes payable by
CBI and its Subsidiaries for all taxable periods and portions thereof
accrued through the date of such financial statements.
(ii) No deficiencies, audit examinations, refund litigation,
proposed adjustments or matters in controversy, for any taxes have been
proposed, asserted or assessed in writing against CBI or any of its
Subsidiaries or any CBI Consolidated Group that are not adequately
reserved for, except for deficiencies, audit examinations, refund
litigation, proposed adjustments or matters in controversy that
individually or in the aggregate are not reasonably likely to have a
Material Adverse Effect on CBI. The Federal income tax returns of CBI
and its Subsidiaries consolidated in such returns prior to 1993 have
closed by
38
virtue of the applicable statute of limitations. All assessments for
taxes due and owing by CBI, any of its Subsidiaries or any CBI
Consolidated Group with respect to completed and settled examinations or
concluded litigation have been paid.
(iii) Neither CBI nor any of its Subsidiaries has taken or
agreed to take any action or knows of any fact, agreement, plan or other
circumstance that is reasonably likely to prevent the Merger from
qualifying as a reorgani zation within the meaning of Section 368(a) of
the Code.
(iv) No deduction of any amount that would otherwise be
deductible with respect to tax periods ending on or before the Effective
Time could be disallowed under Section 162(m) of the Code, except any
disallowances under Section 162(m) of the Code that alone or with other
such disallowances are not reasonably likely to have a Material Adverse
Effect on CBI.
(v) Section 3.02(l)(1) of the CBI Disclosure Schedule sets
forth a complete schedule of each CBI Consolidated Group of which CBI is
or has been a member during the last six years. Such schedule sets forth
the names of all members of each such CBI Consolidated Group and the
periods during which CBI or any of its Subsidiaries is or has been a
member.
(vi) As used in this Agreement (1) "taxes" shall include all
(x) Federal, state, local or foreign income, property, sales, excise and
other taxes or similar govern mental charges, including any interest,
penalties or additions with respect thereto, (y) liability for the
payment of any amounts of the type described in clause (x) as a result
of being a member of an affiliated, consolidated, combined or unitary
group, and (z) liability for the payment of any amounts as a result of
being party to any tax sharing agreement or as a result of any express
or implied obligation to indemnify any other person with respect to the
payment of any amounts of the type described in clause (x) or (y) and
(2) "CBI Consolidated Group" means any affiliated group within the
meaning of Section 1504(a) of the Code, in which CBI (or any Subsidiary
of CBI) is or has ever been a member or any group of corporations with
which CBI files, has filed or is or was required to file an affiliated,
consolidated, combined, unitary or aggregate tax return.
(m) Voting Requirements. The affirmative vote at the CBI
Shareholders Meeting (the "CBI Shareholder Approval") of the holders of
a majority of all shares of CBI
39
Common Stock casting votes (provided that the total vote cast represents
more than fifty percent in interest of all capital stock of CBI entitled
to vote) is the only vote of the holders of any class or series of CBI's
capital stock necessary to approve, in accordance with the applicable
rules of the NYSE, the issuance of CBI Common Stock in connection with
the Merger and the other transactions contemplated by this Agreement.
(n) Brokers. No broker, investment banker, financial advisor
or other person, other than ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., the fees,
commissions and expenses of which will be paid by CBI, is entitled to
any broker's, finder's, financial advisor's or other similar fee or
commission, or the reimbursement of expenses, in connection with the
transactions contemplated by this Agreement, the Stockholders Agreements
and the Option Agreements based upon arrangements made by or on behalf
of CBI. CBI has furnished to IXC true and complete copies of all
agreements under which any such fees, commissions or expenses are
payable and all indemnification and other agreements related to the
engagement of the persons to whom such fees, commissions or expenses are
payable.
(o) Opinion of Financial Advisor. CBI has received the opinion
of ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc., dated the date of this Agreement, to the
effect that, as of such date, the Exchange Ratio is fair to CBI from a
financial point of view, a signed copy of which has been or promptly
will be delivered to CBI.
(p) Interim Operations of Sub. Sub was formed solely for the
purpose of engaging in the transactions contemplated hereby, has engaged
in no other business activities and has conducted its operations only as
contemplated hereby.
(q) Intellectual Property; Year 2000. (i) CBI and its
Subsidiaries own, or are validly licensed or other wise have the right
to use, all Intellectual Property Rights which are material to the
conduct of the business of CBI and its Subsidiaries, except where the
failure to own or license such Intellectual Property Rights is not
reasonably likely to have a Material Adverse Effect on CBI.
(ii) To the Knowledge of CBI, neither CBI nor any of its
Subsidiaries has materially interfered with, infringed upon,
misappropriated or otherwise come into conflict with any Intellectual
Property Rights of any other person. Neither CBI nor any of its
Subsidiaries has received any written charge, complaint, claim, demand
or
40
notice alleging any such interference, infringement, misappropriation or
other conflict (including any claim that CBI or any such Subsidiary must
license or refrain from using any Intellectual Property Rights or other
proprietary information of any other person) which has not been settled
or otherwise fully resolved. To CBI's Knowledge, no other person has
materially interfered with, infringed upon, misappropriated or otherwise
come into conflict with any Intellectual Property Rights of CBI or any
of its Subsidiaries.
(iii) The disclosure set forth in the CBI 1998 10-K under the
heading "Year 2000 Readiness" was true and correct in all material
respects on the date thereof and is true and correct in all material
respects as if made as of the date hereof.
(iv) As of the Closing Date, CBI and its Subsidiaries have no
Knowledge that they are not Year 2000 Compliant and, as of the date
hereof, CBI and its Subsidiaries have no Knowledge that their respective
suppliers will not be Year 2000 Compliant at January 1, 2000, except, in
each case, for such failures to be Year 2000 Compliant that individually
or in the aggregate are not reasonably likely to have a Material Adverse
Effect on CBI.
(r) Ownership of IXC Stock. Neither CBI nor Sub (nor any other
Subsidiary of CBI) has acquired or, except as the result of the Merger,
will acquire, or has owned in the past three years, any stock of IXC.
(s) CBI Rights Agreement. CBI has amended the CBI Rights
Agreement to provide that IXC shall not be deemed to be an Acquiring
Person (as defined in the CBI Rights Agreement) and the Distribution
Date or Share Acquisition Date (each as defined in the CBI Rights
Agreement) shall not be deemed to occur and that the CBI Rights will not
become separable, distributable, unredeemable or exercisable as a result
of the approval, execution and delivery of this Agreement, the CBI Stock
Option Agreement or the consummation of the Merger and/or the other
transactions contemplated hereby or thereby.
(t) Title to Properties. (i) Section 3.02(t) of the CBI
Disclosure Schedule sets forth a true and complete list of all material
real property and leasehold property owned or leased by CBI or any of
its Subsidiaries. Each of CBI and its Subsidiaries has good and valid
title to, or valid leasehold interests in or valid rights to, all its
material properties and assets except for such as are no longer used or
useful in the conduct of its businesses or as
41
have been disposed of in the ordinary course of business and except for
defects in title, easements, restrictive cove nants and similar
encumbrances that individually or in the aggregate do not materially
interfere with its ability to conduct its business as currently
conducted. All such material assets and properties, other than assets
and properties in which CBI or any of its Subsidiaries has a leasehold
interest, are free and clear of all Liens except for Liens that
individually or in the aggregate do not materially interfere with the
ability of CBI and its Subsidiaries to conduct their respective
businesses as currently conducted.
(ii) Each of CBI and its Subsidiaries has complied in all
material respects with the terms of all material leases to which it is a
party and under which it is in occupancy, and all such leases are in
full force and effect. Each of CBI and its Subsidiaries enjoys peaceful
and undisturbed possession under all such leases, except where a failure
to do so individually or in the aggregate are not reasonably likely to
have a Material Adverse Effect on CBI.
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business. (a) Conduct of Business by
IXC. Except as set forth in Section 4.01(a) of the IXC Disclosure
Schedule, as otherwise expressly permitted by this Agreement or any of
the Option Agreements or as consented to in writing by CBI, during the
period from the date of this Agreement to the Effective Time, IXC shall,
and shall cause its Subsidiaries to, carry on their respective
businesses in the ordinary course consistent with past practice and in
compliance in all material respects with all applicable laws and
regulations. Without limiting the generality of the foregoing, during
the period from the date of this Agreement to the Effective Time, except
as set forth in Section 4.01(a) of the IXC Disclosure Schedule, as
otherwise expressly permitted by this Agreement or any of the Option
Agreements or as consented to in writing by CBI, IXC shall not, and
shall not permit any of its Subsidiaries to:
(i) other than dividends and distributions (including
liquidating distributions) by a direct or indirect wholly owned
Subsidiary of IXC to its parent and dividends and distributions
declared, set aside or paid by IXC as required by and in accordance
with the respective terms of its capital stock as of the date
42
hereof, (x) declare, set aside or pay any dividends on, or make any
other distributions (whether in cash, stock, property or otherwise)
in respect of, any of its capital stock, (y) split, combine or
reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock, or (z) purchase,
redeem or otherwise acquire, directly or indirectly, any shares of
capital stock of IXC or any of its Subsidiaries or any other
securities thereof or any rights, warrants or options to acquire
any such shares or other securities;
(ii) issue, deliver, sell, grant, pledge or other wise
encumber or subject to any Lien any shares of its capital stock,
any other voting securities or any securities convertible into, or
any rights, warrants or options to acquire, any such shares, voting
securities or convertible securities (other than (w) in accordance
with the IXC Rights Agreement, (x) the issuance of shares of IXC
Common Stock upon the exercise of IXC Stock Options as of the date
hereof in accordance with their terms on the date hereof or options
issued after the date hereof with the approval of CBI in its sole
discretion, (y) the issuance of shares of IXC Common Stock upon the
conversion of the IXC 7 1/4% Preferred Stock and the IXC 6 3/4%
Preferred Stock outstanding as of the date hereof in accordance
with their terms on the date hereof or (z) the issuance of shares
of IXC Common Stock pursuant to the IXC Stock Option Agreement);
(iii) amend IXC's Restated Certificate of Incorporation,
By-laws or other comparable organiza tional documents;
(iv) acquire or agree to acquire by merging or consolidating
with, or by purchasing assets of, or by any other manner, any
business or any person, other than purchases of raw materials or
supplies in the ordinary course of business consistent with past
practice;
(v) sell, lease, license, sell and leaseback, mortgage or
otherwise encumber or subject to any Lien or otherwise dispose of
any of its properties or assets (including securitizations), other
than sales or licenses of finished goods and services in the
ordinary course of business consistent with past practice;
(vi) (A) incur any indebtedness for borrowed money or
guarantee any such indebtedness of another person,
43
issue or sell any debt securities or warrants or other rights to
acquire any debt securities of IXC or any of its Subsidiaries,
guarantee any debt securities of another person, enter into any
"keep well" or other agreement to maintain any financial statement
condition of another person or enter into any arrangement having
the economic effect of any of the foregoing, except for (x)
short-term borrowings incurred in the ordinary course of business
(or to refund existing or maturing indebtedness) consistent with
past practice and (y) intercompany indebtedness between IXC and any
of its wholly owned Subsidiaries or between such wholly owned
Subsidiaries, or (B) make any loans, advances or capital
contributions to, or investments in, any other person;
(vii) make or agree to make any new capital expenditure or
expenditures;
(viii) (A) pay, discharge, settle or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise) or litigation (whether or not
commenced prior to the date of this Agreement), other than the
payment, discharge, settlement or satisfaction, in the ordinary
course of business consistent with past practice or in accordance
with its terms, of any liability recognized or disclosed in the
most recent consolidated financial statements (or the notes
thereto) of IXC included in the IXC Filed SEC Documents or incurred
since the date of such financial statements, or (B) waive the
benefits of, or agree to modify in any manner, terminate, release
any person from or fail to enforce any confidentiality, standstill
or similar agreement to which IXC or any of its Subsidiaries is a
party or of which IXC or any of its Subsidiaries is a beneficiary;
(ix) except as required by law or contemplated hereby, enter
into, adopt or amend in any material respect or terminate any IXC
Benefit Plan, collective bargaining agreement, employment
agreement, deferred compensation agreement, consulting agreement,
severance agreement, termination agreement, indemnification
agreement or any other agreement, plan or policy involving IXC or
any of its Subsidiaries, and one or more of its current or former
directors, officers or employees, or change any actuarial or other
assumption used to calculate funding obligations with respect to
any pension plan, or change the manner in which contributions to
any pension plan are made or the basis on which such contributions
are determined;
44
(x) except for normal increases in the ordinary course of
business consistent with past practice that, in the aggregate, do
not materially increase benefits or compensation expenses of IXC or
its Subsidiaries, or as contemplated hereby or by the terms of any
contract the existence of which does not constitute a violation of
this Agreement, increase the compensation, bonus or other benefits
of any director, officer or other employee or pay any benefit or
amount not required by a plan or arrangement as in effect on the
date of this Agreement to any such person;
(xi) transfer or license to any person or entity or otherwise
extend, amend or modify any rights to the Intellectual Property
Rights of IXC and its Subsi diaries other than in the ordinary
course of business consistent with past practices or on a
non-exclusive basis not materially different from past practices;
(xii) take any action that would cause the represen tations
and warranties set forth in paragraph (4)(B), (4)(D), (6) or (7) of
Section 3.01(g) to no longer be true and correct on the Closing
Date;
(xiii) call or hold any meeting of stockholders of IXC other
than in connection with the election of members of the Board of
Directors of IXC or other routine matters in the ordinary course of
business consistent with past practice;
(xiv) enter into any contract, agreement, obligation,
commitment, arrangement or understanding with any Affiliate of IXC
that would have been required to be filed as an exhibit to the IXC
1998 10-K had IXC been a party thereto as of December 31, 1998;
(xv) make any material tax election or settle or compromise
any material tax liability other than in the ordinary course of
business;
(xvi) make any offering of IXC Stock Options under any
employee stock option or stock purchase plan after the date hereof;
or
(xvii) authorize, commit, resolve or agree to take any of the
foregoing actions.
(b) Conduct of Business by CBI. During the period from the
date of this Agreement to the Effective Time, without prior consultation
with IXC, CBI shall not, nor shall it permit any of its Subsidiaries to:
45
(i) make any material acquisition of assets or businesses;
(ii) sell or otherwise dispose of any material part of its
properties or assets other than sales or licenses of services in
the ordinary course of business consistent with past practice; or
(iii) issue or sell a material amount of its shares of capital
stock, any other voting securities or any securities convertible
into any such shares, voting securities or convertible securities
(other than (x) in accordance with the CBI Rights Agreement, (y)
the issuance of shares of CBI Common Stock upon the exercise of CBI
Stock Options in accordance with their terms or (z) the issuance of
shares of CBI Common Stock pursuant to the CBI Stock Option
Agreement).
(c) Other Actions. Except as required by appli cable law or as
expressly permitted by this Agreement, IXC and CBI shall not, and shall
not permit any of their respective Subsidiaries to, voluntarily take any
action that would, or that is reasonably likely to, result in (i) any of
the representations and warranties of such party set forth in this
Agreement or any of the Option Agreements that are qualified as to
materiality becoming untrue at the Effective Time, (ii) any of such
representations and warranties that are not so qualified becoming untrue
in any material respect at the Effective Time or (iii) any of the
conditions to the Merger set forth in Article VI not being satisfied.
(d) Advice of Changes. IXC and CBI shall promptly advise the
other party orally and in writing to the extent it has Knowledge of (i)
any representation or warranty made by it (and, in the case of CBI, made
by Sub) contained in this Agreement or any of the Option Agreements that
is qualified as to materiality becoming untrue or inaccurate in any
respect or any such representation or warranty that is not so qualified
becoming untrue or inaccurate in any material respect or (ii) the
failure of it (and, in the case of CBI, by Sub) to comply with or
satisfy in any material respect any covenant, condition or agreement to
be complied with or satisfied by it under this Agreement or any of the
Option Agreements and (iii) any change or event having, or which is
reasonably likely to have, a Material Adverse Effect on such party or on
the truth of their respective representations and warranties or the
ability of the conditions set forth in Article VI to be satisfied;
provided, however, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties (or
remedies with respect thereto)
46
or the conditions to the obligations of the parties under this Agreement
or any of the Option Agreements.
SECTION 4.02. Transition Team. Immediately following the
execution of this Agreement, the parties will create a special
transition team (the "Transition Team") comprised of the individuals
from CBI and IXC set forth in Section 4.02 of the CBI Disclosure
Schedule and IXC will make available to the Transition Team sufficient
office space, facilities and support within its corporate headquarters.
To the extent permitted under applicable law, CBI and IXC will consult
with each other regarding the business and operations of IXC and its
Subsidiaries. In addition, the Transition Team will develop
recommendations concerning the future structure and operations of the
Surviving Corporation and its Subsidiaries following the Effective Time.
SECTION 4.03. No Solicitation by IXC. (a) From and after the
date of this Agreement, IXC shall not, nor shall it permit any of its
Subsidiaries to, nor shall it authorize or permit any of its directors,
officers or employees or any investment banker, financial advisor,
attorney, accountant or other representative retained by it or any of
its Subsidiaries to, directly or indirectly through another person, (i)
solicit, initiate or encourage (including by way of furnishing
information), or take any other action designed to facilitate, any
inquiries or the making of any proposal that constitutes, an IXC
Takeover Proposal or (ii) participate in any discussions or negotiations
regarding any IXC Takeover Proposal. For purposes of this Agreement,
"IXC Takeover Proposal" means any bona fide inquiry, proposal or offer
from any person relating to any direct or indirect acquisition or
purchase of a business that constitutes 35% or more of the net revenues,
net income or the assets of IXC and its Subsidiaries, taken as a whole,
or 35% or more of any class of equity securities of IXC or any of its
Subsidiaries, any tender offer or exchange offer that if consummated
would result in any person beneficially owning 35% or more of any class
of equity securities of IXC or any of its Subsidiaries, or any merger,
consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving IXC or any of its
Subsidiaries, other than the transactions contemplated by this
Agreement.
(b) Neither the Board of Directors of IXC nor any committee
thereof shall (i) except as required by law as advised by counsel,
withdraw or modify, or propose publicly to withdraw or modify, in a
manner adverse to CBI, the
47
approval or recommendation by such Board of Directors or such committee
of the Merger or this Agreement, (ii) approve or recommend, or propose
publicly to approve or recommend, any IXC Takeover Proposal or (iii)
cause IXC to enter into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement (each, an "IXC
Acquisition Agreement") related to any IXC Takeover Proposal.
(c) In addition to the obligations of IXC set forth in
paragraphs (a) and (b) of this Section 4.03, IXC shall immediately
advise CBI orally and in writing of any request for information or of
any IXC Takeover Proposal, the material terms and conditions of such
request or IXC Takeover Proposal and the identity of the person making
such request or IXC Takeover Proposal. IXC will keep CBI informed of the
status and details (including amendments or proposed amendments) of any
such request or IXC Takeover Proposal.
(d) Nothing contained in this Section 4.03 shall prohibit IXC
from taking and disclosing to its stockholders a position contemplated
by Rule 14d-9 or 14e-2 promulgated under the Exchange Act or from making
any disclosure to IXC's stockholders if, in the good faith judgment of
the Board of Directors of IXC, after consultation with outside counsel,
failure so to disclose would be inconsistent with its obligations under
applicable law; provided, however, that, subject to Section 4.03(b)(i),
neither IXC nor its Board of Directors nor any committee thereof shall
withdraw or modify, or propose publicly to withdraw or modify, its
position with respect to this Agreement or the Merger or approve or
recommend, or propose publicly to approve or recommend, an IXC Takeover
Proposal.
SECTION 4.04. No Solicitation by CBI. (a) From and after the
date of this Agreement, CBI shall not, nor shall it permit any of its
Subsidiaries to, nor shall it authorize or permit any of its directors,
officers or employees or any investment banker, financial advisor,
attorney, accountant or other representative retained by it or any of
its Subsidiaries to, directly or indirectly through another person, (i)
solicit, initiate or encourage (including by way of furnishing
information), or take any other action designed to facilitate, any
inquiries or the making of any proposal that constitutes, a CBI Takeover
Proposal or (ii) participate in any discussions or negotia tions
regarding any CBI Takeover Proposal. For purposes of this Agreement,
"CBI Takeover Proposal" means any bona fide inquiry, proposal or offer
from any person relating to any direct or indirect acquisition or
purchase of a business
48
that constitutes 35% or more of the net revenues, net income or the
assets of CBI and its Subsidiaries, taken as a whole, or 35% or more of
any class of equity securities of CBI or any of its Subsidiaries, any
tender offer or exchange offer that if consummated would result in any
person beneficially owning 35% or more of any class of equity securities
of CBI or any of its Subsidiaries, or any merger, consolidation,
business combination, recapitalization, liquidation, dissolution or
similar transaction involving CBI or any of its Subsidiaries, other than
the transactions contemplated by this Agreement.
(b) Neither the Board of Directors of CBI nor any committee
thereof shall (i) except as required by law as advised by counsel,
withdraw or modify, or propose publicly to withdraw or modify, in a
manner adverse to IXC, the approval or recommendation by such Board of
Directors or such committee of the Merger or this Agreement, (ii)
approve or recommend, or propose publicly to approve or recommend, any
CBI Takeover Proposal or (iii) cause CBI to enter into any letter of
intent, agreement in principle, acquisition agreement or other similar
agreement (each, a "CBI Acquisition Agreement") related to any CBI
Takeover Proposal.
(c) In addition to the obligations of CBI set forth in
paragraphs (a) and (b) of this Section 4.04, CBI shall immediately
advise IXC orally and in writing of any request for information or of
any CBI Takeover Proposal, the material terms and conditions of such
request or CBI Takeover Proposal and the identity of the person making
such request or CBI Takeover Proposal. CBI will keep IXC informed of the
status and details (including amendments or proposed amendments) of any
such request or CBI Takeover Proposal.
(d) Nothing contained in this Section 4.04 shall prohibit CBI
from taking and disclosing to its shareholders a position contemplated
by Rule 14d-9 or 14e-2 promulgated under the Exchange Act or from making
any disclosure to CBI's shareholders if, in the good faith judgment of
the Board of Directors of CBI, after consultation with outside counsel,
failure so to disclose would be inconsistent with its obligations under
applicable law; provided, however, that, subject to Section 4.03(b)(i),
neither CBI nor its Board of Directors nor any committee thereof shall
withdraw or modify, or propose publicly to withdraw or modify, its
position with respect to this Agreement or the Merger or approve or
recommend, or propose publicly to approve or recommend, a CBI Takeover
Proposal.
49
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of the Form S-4 and Joint Proxy
Statement; Stockholder Meetings. (a) As soon as practicable following
the date of this Agreement, IXC and CBI shall prepare and file with the
SEC the Joint Proxy Statement and IXC and CBI shall prepare and CBI
shall file with the SEC the Form S-4, in which the Joint Proxy Statement
will be included as a prospectus. Each of IXC and CBI shall use
reasonable efforts to have the Form S-4 declared effective under the
Securities Act as promptly as practicable after such filing and keep the
Form S-4 effective for so long as necessary to complete the Merger. IXC
will use all reasonable efforts to cause the Joint Proxy Statement to be
mailed to IXC's stockholders, and CBI will use all reasonable efforts to
cause the Joint Proxy Statement to be mailed to CBI's shareholders, in
each case as promptly as practicable after the Form S-4 is declared
effective under the Securities Act. CBI shall also take any action
(other than qualifying to do business in any jurisdiction in which it is
not now so qualified or to file a general consent to service of process)
required to be taken under any applicable state securities laws in
connection with the issuance of CBI Common Stock in the Merger and IXC
shall furnish all information concerning IXC and the holders of capital
stock of IXC as may be reasonably requested in connection with any such
action. No filing of, or amendment or supplement to, or correspondence
to the SEC or its staff with respect to, the Form S-4 will be made by
CBI, or the Joint Proxy Statement will be made by CBI or IXC, without
providing the other party a reasonable opportunity to review and comment
thereon. CBI will advise IXC, promptly after it receives notice thereof,
of the time when the Form S-4 has become effective or any supplement or
amendment thereto has been filed, the issuance of any stop order, the
suspension of the qualification of the CBI Common Stock issuable in
connection with the Merger for offering or sale in any jurisdiction, or
any request by the SEC for amendment of the Form S-4 or the Joint Proxy
Statement or comments thereon and responses thereto or requests by the
SEC for additional information and will, as promptly as practicable,
provide to IXC copies of all correspondence and filings with the SEC
with respect to the Form S-4. IXC will inform CBI, promptly after it
receives notice thereof, of any request by the SEC for the amendment of
the Joint Proxy Statement or comments thereon and responses thereto or
requests by the SEC for additional information and will, as promptly as
practicable, provide to CBI copies of all correspondence and filings
with the SEC with respect to the
50
Joint Proxy Statement. If at any time prior to the Effective Time any
information relating to IXC or CBI, or any of their respective
Affiliates, directors or officers, should be discovered by IXC or CBI
which should be set forth in an amendment or supplement to any of the
Form S-4 or the Joint Proxy Statement, so that any of such documents
would not include any misstatement of a material fact or omit to state
any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, the party
which discovers such information shall promptly notify the other parties
hereto and an appropriate amendment or supplement describing such
information shall be promptly filed with the SEC and, to the extent
required by law, disseminated to the shareholders of CBI and the
stockholders of IXC. For purposes of Sections 3.01(f), 3.02(e) and 5.01,
information concerning or related to CBI, its Subsidiaries or the CBI
Shareholders Meeting will be deemed to have been provided by CBI, and
information concerning or related to IXC, its Subsidiaries or the IXC
Stockholders Meeting will be deemed to have been provided by IXC.
(b) IXC (i) shall, as soon as practicable following the date
of this Agreement, establish a record date (which shall be as soon as
practicable following the date of this Agreement) for, duly call, give
notice of, convene and hold a meeting of its stockholders (the "IXC
Stockholders Meeting") for the purpose of obtaining IXC Stockholder
Approval and (ii) shall, through its Board of Directors, recommend to
its stockholders the approval and adoption of this Agreement, the Merger
and the other transactions contemplated hereby. Without limiting the
generality of the foregoing but subject to its rights to terminate this
Agreement pursuant to Section 7.01, IXC agrees that its obligations
pursuant to the first sentence of this Section 5.01(b) shall not be
affected by the commencement, public proposal, public disclosure or
communication to IXC of any IXC Takeover Proposal.
(c) CBI (i) shall, as soon as practicable following the date
of this Agreement, establish a record date (which shall be as soon as
practicable following the date of this Agreement) for, duly call, give
notice of, convene and hold a meeting of its shareholders (the "CBI
Shareholders Meeting") for the purpose of obtaining CBI Shareholder
Approval and (ii) shall, through its Board of Directors, recommend to
its shareholders the approval of the matters referred to in Section
3.02(m). Without limiting the generality of the foregoing but subject to
its rights to terminate this Agreement pursuant to Section 7.01, CBI
agrees that its obligations pursuant to the first sentence
51
of this Section 5.01(c) shall not be affected by the commencement,
public proposal, public disclosure or communication to CBI of any CBI
Takeover Proposal.
(d) IXC and CBI will use all reasonable efforts to hold the
IXC Stockholders Meeting and the CBI Shareholders Meeting on the same
date and as soon as practicable after the date hereof.
SECTION 5.02. Letters of IXC's Accountants. IXC shall use
reasonable efforts to cause to be delivered to CBI two letters from
IXC's independent accountants, one dated a date within two Business Days
before the date on which the Form S-4 shall become effective and one
dated a date within two Business Days before the Closing Date, each
addressed to CBI, in form and substance reasonably satisfactory to CBI
and customary in scope and substance for comfort letters delivered by
independent public accountants in connection with registration
statements similar to the Form S-4.
SECTION 5.03. Letters of CBI's Accountants. CBI shall use
reasonable efforts to cause to be delivered to IXC two letters from
CBI's independent accountants, one dated a date within two Business Days
before the date on which the Form S-4 shall become effective and one
dated a date within two Business Days before the Closing Date, each
addressed to IXC, in form and substance reasonably satisfactory to IXC
and customary in scope and substance for comfort letters delivered by
independent public accountants in connection with registration
statements similar to the Form S-4.
SECTION 5.04. Access to Information; Confidenti ality. Subject
to the existing confidentiality agreement dated as of May 28, 1999 (the
"Confidentiality Agreement"), between CBI and IXC, upon reasonable
notice, each of CBI and IXC shall, and shall cause each of its
respective Subsidiaries to, afford to the other party and to the
officers, employees, accountants, counsel, financial advisors and other
representatives of such other party, reasonable access during normal
business hours during the period prior to the Effective Time to all
their respective properties, books, contracts, commitments, personnel
and records and, during such period, each of CBI and IXC shall, and
shall cause each of its respective Subsidiaries to, furnish promptly to
the other party (a) a copy of each report, schedule, registration
statement and other document filed or received by it during such period
pursuant to the requirements of Federal or state securities laws and (b)
all other information concerning its business, properties and personnel
as such other party may reasonably request. Neither CBI nor IXC shall be
required to provide access to
52
or disclose information where such access or disclosure would contravene
any applicable law, rule, regulation, order or decree or would, with
respect to any pending matter, result in a waiver of the attorney-client
privilege or the protection afforded attorney work-product. CBI and IXC
shall use reasonable efforts to obtain from third parties any consents
or waivers of confidentiality restrictions with respect to any such
information being provided by it. No review pursuant to this Section
5.04 shall have an effect for the purpose of determining the accuracy of
any representation or warranty given by either party hereto to the other
party hereto. Each of CBI and IXC will hold, and will cause its
respective officers, employees, accountants, counsel, financial advisors
and other representatives and Affiliates to hold, any nonpublic
information in accordance with the terms of the Confidentiality
Agreement.
SECTION 5.05. Reasonable Efforts. (a) Upon the terms and
subject to the conditions set forth in this Agreement, each of the
parties agrees to use its reasonable efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist and
cooperate with the other parties in doing, all things necessary, proper
or advisable to consummate and make effective, in the most expeditious
manner practicable, the Merger and the other transactions contemplated
by this Agreement, the Stock holders Agreements and the Option
Agreements, including using reasonable efforts to accomplish the
following: (i) the taking of all reasonable acts necessary to cause the
conditions to Closing to be satisfied as promptly as practicable, (ii)
the obtaining of all necessary actions or nonactions, waivers, consents
and approvals from Governmental Entities and the making of all necessary
registrations and filings (including filings with Governmental Entities,
if any) and the taking of all reasonable steps as may be necessary to
obtain an approval or waiver from, or to avoid an action or proceeding
by any Governmental Entity, (iii) the obtaining of all necessary
consents, approvals or waivers from third parties, (iv) the defending of
any lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agree ment, the Stockholders Agreements
or any of the Option Agreements or the consummation of the Merger or the
other transactions contemplated by, and to fully carry out the purposes
of, this Agreement, the Stockholders Agreements and the Option
Agreements, including seeking to have any stay or temporary restraining
order entered by any court or other Governmental Entity vacated or
reversed and (v) the execution and delivery of any additional
instruments necessary to consummate the Merger and the other transactions
contemplated by, and to fully carry out the purposes
53
of, this Agreement, the Stockholders Agreements and the Option
Agreements.
(b) In connection with and without limiting the foregoing, IXC
and its Board of Directors and CBI and its Board of Directors shall make
reasonable efforts to: (1) take all action necessary to ensure that no
state takeover statute or similar statute or regulation is or becomes
applicable to this Agreement, the Stockholders Agreements or any of the
Option Agreements or the Merger or any of the other transactions
contemplated by this Agree ment, the Stockholders Agreements or any of
the Option Agreements and (2) if any state takeover statute or similar
statute becomes applicable to this Agreement, the Stock holders
Agreements, any of the Option Agreements, the Merger or any other
transactions contemplated by this Agreement, the Stockholders Agreements
or any of the Option Agreements, take all action necessary to ensure
that the Merger and the other transactions contemplated by this
Agreement, the Stockholders Agreements and the Option Agreements may be
consummated as promptly as practicable on the terms contemplated by this
Agreement, the Stockholders Agreements and the Option Agreements and
otherwise to minimize the effect of such statute or regulation on this
Agreement, the Stockholders Agreements, the Option Agreements, the
Merger and the other transactions contemplated by this Agreement, the
Stockholders Agreements and the Option Agreements. Nothing in this
Agreement shall be deemed to require CBI to agree to, or proffer to,
divest or hold separate any assets or any portion of any business of
CBI, IXC or any of their respective Subsidiaries if the Board of
Directors of CBI determines that so doing would materially impair the
benefit intended to be obtained by CBI in the Merger. Without limiting
the generality of the foregoing, IXC shall give CBI the opportunity to
participate in the defense of any litigation against IXC and/or its
directors relating to the transactions contemplated by this Agreement,
the Stockholders Agreements and the Option Agreements.
SECTION 5.06. IXC Stock Options and IXC Warrants. (a) As soon
as practicable following the date of this Agreement, the Board of
Directors of IXC (or, if appropriate, any committee administering IXC
Stock Plans) shall adopt such resolutions or take such other actions as
may be required to effect the following:
(i) adjust the terms of all outstanding IXC Stock Options,
whether vested or unvested, as necessary to provide that, at the
Effective Time, each IXC Stock Option outstanding immediately prior
to the Effective Time shall be amended and converted into an option
to
54
acquire, on the same terms and conditions as were applicable under
IXC Stock Option, the number of shares of CBI Common Stock (rounded
down to the nearest whole share) determined by multiplying the
number of shares of IXC Common Stock subject to such IXC Stock
Option by the Exchange Ratio, at a price per share of CBI Common
Stock equal to (A) the aggregate exercise price for the shares of
IXC Common Stock otherwise purchasable pursuant to such IXC Stock
Option divided by (B) the aggregate number of shares of CBI Common
Stock deemed purchasable pursuant to such IXC Stock Option (each,
as so adjusted, an "Adjusted Option"); provided that such exercise
price shall be rounded up to the nearest whole cent; and
(ii) make such other changes to IXC Stock Plans as CBI and IXC
may agree are appropriate to give effect to the Merger.
(b) The adjustments provided herein with respect to any IXC
Stock Options to which Section 421(a) of the Code applies shall be and
are intended to be effected in a manner which is consistent with Section
424(a) of the Code.
(c) At the Effective Time, by virtue of the Merger and without
the need of any further corporate action, each IXC Stock Option
outstanding at the Effective Time shall be converted into an option
relating to CBI Common Stock following the Effective Time so as to
substitute CBI Common Stock for IXC Common Stock purchasable thereunder
(subject to the adjustments required by this Section 5.06 after giving
effect to the Merger). Prior to the Effective Time, CBI shall take all
necessary actions (including, if required to comply with Section 162(m)
of the Code (and the regulations thereunder) or applicable law or rule
of Nasdaq, obtaining the approval of its shareholders at the next
regularly scheduled annual meeting of CBI following the Effective Time)
for the conversion of IXC Stock Options, including the reservation,
issuance and listing of CBI Common Stock in a number at least equal to
the number of shares of CBI Common Stock that will be subject to the
Adjusted Options.
(d) As soon as practicable following the Effective Time, CBI
shall prepare and file with the SEC a registration statement on Form S-8
(or another appropriate form) registering a number of shares of CBI
Common Stock equal to the number of shares subject to the Adjusted
Options. Such registration statement shall be kept effective (and the
current status of the prospectus or prospectuses required thereby shall
be maintained) at least
55
for so long as any Adjusted Options or any unsettled awards granted
under IXC Stock Plans after the Effective Time may remain outstanding.
(e) As soon as practicable after the Effective Time, CBI shall
deliver to the holders of IXC Stock Options appropriate notices setting
forth such holders' rights pursuant to the respective IXC Stock Plans
and the agreements evidencing the grants of such IXC Stock Options and
that such IXC Stock Options and agreements shall be assumed by CBI and
shall continue in effect on the same terms and conditions (subject to
the adjustments required by this Section 5.06 after giving effect to the
Merger and to vesting, if any, caused by the Merger).
(f) Except as otherwise expressly provided in this Section
5.06 and except to the extent required under the respective terms of IXC
Stock Options, all restrictions or limitations on transfer and vesting
with respect to IXC Stock Options awarded under IXC Stock Plans or any
other plan, program or arrangement of IXC or any of its Subsidiaries, to
the extent that such restrictions or limitations shall not have already
lapsed, and all other terms thereof, shall remain in full force and
effect with respect to such options after giving effect to the Merger
and the assumption by CBI as set forth above.
(g) At the Effective Time, by virtue of the Merger and without
the need for any further corporate action, each Warrant outstanding
immediately prior to the Effective Time shall be automatically converted
into an option or warrant to acquire, on the same terms and conditions
as were applicable under such Warrant, the number of shares of CBI
Common Stock (rounded down to the nearest whole share) determined by
multiplying the number of shares of IXC Common Stock subject to such
Warrant by the Exchange Ratio, at a price per share of CBI Common Stock
equal to (A) the aggregate exercise price for shares of IXC Common Stock
otherwise purchasable pursuant to such Warrant divided by (B) the
aggregate number of shares of CBI Common Stock deemed purchasable
pursuant to such Warrant; provided, however, that such exercise price
shall be rounded up to the nearest whole cent.
SECTION 5.07. Employee Benefit Plans; Existing Agreements. (a)
During the six-month period following the Effective Time (the
"Transition Period"), CBI shall cause the Surviving Corporation to
either maintain the benefit programs (other than equity-based
arrangements) provided by IXC and its Subsidiaries before the Effective
Time or replace all or any such programs with programs maintained
56
for similarly situated employees of CBI; provided that the aggregate
level of benefits (other than equity-based arrangements) provided during
the Transition Period shall be substantially similar to the aggregate
level of benefits (other than equity-based arrangements) provided by IXC
and its Subsidiaries before the Effective Time. To the extent that any
plan of CBI or any of its Affiliates (a "CBI Plan") becomes applicable
to any employee or former employee of IXC or its Subsidiaries, CBI shall
grant, or cause to be granted, to such employees or former employees
credit for their service with IXC and its Subsidiaries (and any of their
predecessors) for the purpose of determining eligibility to participate
and nonforfeitability of benefits under such CBI Plan and for purposes
of benefit accrual under vacation and severance pay plans (but only to
the extent such service was credited under similar plans of IXC and its
Subsidiaries).
(b) With respect to any welfare benefit plan of CBI or its
Affiliates made available to individuals who immediately prior to the
Closing Date were employees of IXC or any of its Subsidiaries, CBI
shall, or shall cause the Surviving Corporation to, waive any waiting
periods, pre- existing condition exclusions and actively-at-work
requirements to the extent such provisions were inapplicable immediately
before such plan was made available and provide that any expenses
incurred on or before the date such plan was made available by any such
individual or such individual's covered dependents shall be taken into
account for purposes of satisfying applicable deductible, coinsurance
and maximum out-of-pocket provisions.
SECTION 5.08. Indemnification, Exculpation and Insurance. (a)
CBI and Sub agree that all rights to indemnification and exculpation
from liabilities for acts or omissions occurring at or prior to the
Effective Time (and rights for advancement of expenses) now existing in
favor of the current or former directors or officers of IXC or its
Subsidiaries as provided in their respective certificates of
incorporation or by-laws (or comparable organizational documents) and
any indemnification or other agreements of IXC as in effect on the date
hereof shall be assumed by the Surviving Corporation in the Merger,
without further action, as of the Effective Time and shall survive the
Merger and shall continue in full force and effect in accordance with
their terms.
(b) In the event that the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other
person and is not the continuing or surviving corporation or entity of
such consolidation or
57
merger or (ii) transfers or conveys all or substantially all its
properties and assets to any person, then, and in each such case, CBI
shall cause proper provision to be made so that the successors and
assigns of the Surviving Corporation assume the obligations set forth in
this Section 5.08.
(c) For six years from and after the Effective Time, CBI shall
maintain in effect IXC's current directors' and officers' liability
insurance covering acts or omissions occurring prior to the Effective
Time covering each person currently covered by IXC's directors' and
officers' liability insurance policy on terms with respect to such
coverage and amounts no less favorable than those of such policy in
effect on the date hereof; provided that CBI may substitute therefor
policies of CBI or its subsidiaries containing terms with respect to
coverage and amount no less favorable to such directors or officers;
provided, however, that in no event shall CBI be required to pay
aggregate premiums for insurance under this Section 5.08(c) in excess of
200% of the amount of the aggregate premiums paid by IXC in 1998 on an
annualized basis for such purpose; provided that CBI shall nevertheless
be obligated to provide such coverage as may be obtained for such 200%
amount.
(d) The provisions of this Section 5.08 (i) are intended to be
for the benefit of, and will be enforceable by, each indemnified party,
his or her heirs and his or her representatives and (ii) are in addition
to, and not in substitution for, any other rights to indemnification or
contribution that any such person may have by contract or otherwise.
SECTION 5.09. Fees and Expenses. (a) Except as provided in
this Section 5.09, all fees and expenses incurred in connection with the
Merger, this Agreement, the Stockholders Agreements, the Option
Agreements and the transactions contemplated hereby and thereby shall be
paid by the party incurring such fees or expenses, whether or not the
Merger is consummated, except that each of CBI and IXC shall bear and
pay one-half of (1) the costs and expenses incurred in connection with
the filing, printing and mailing of the Form S-4 and the Joint Proxy
Statement (including SEC filing fees) and (2) the filing fees for the
premerger notification and report forms under the HSR Act.
(b) In the event that (1) an IXC Takeover Proposal shall have
been made to IXC or any of its Subsidiaries or shall have been made
directly to the stockholders of IXC generally or shall have otherwise
become publicly known or any person shall have publicly announced an
intention (whether or not conditional) to make an IXC
58
Takeover Proposal and thereafter this Agreement is terminated by either
CBI or IXC pursuant to Section 7.01(b)(i) or (iii) or (2) this Agreement
is terminated by CBI pursuant to Section 7.01(e), then IXC shall
promptly, but in no event later than the date of such termination, pay
CBI a fee equal to $105 million (the "Termination Fee"), payable by wire
transfer of same day funds; provided, however, that no Termination Fee
shall be payable to CBI pursuant to clause (1) of this paragraph (b) or
pursuant to a termination by CBI pursuant to Section 7.01(e) unless and
until within 12 months of such termination IXC or any of its
Subsidiaries enters into any IXC Acquisition Agreement with respect to,
or consummates, any IXC Takeover Proposal (for the purposes of the
foregoing proviso the term "IXC Takeover Proposal" shall have the
meaning assigned to such term in Section 4.03 except that references to
"35%" in the definition of "IXC Takeover Proposal" in Section 4.03 as
they relate to net revenues, net income or assets of IXC and its
Subsidiaries, taken as a whole, shall be deemed to be references to
"50%"), in which event the Termination Fee shall be payable upon the
first to occur of such events. IXC acknowledges that the agreements
contained in this Section 5.09(b) are an integral part of the
transactions contemplated by this Agreement, and that, without these
agreements, CBI would not enter into this Agreement; accordingly, if IXC
fails promptly to pay the amount due pursuant to this Section 5.09(b),
and, in order to obtain such payment, CBI commences a suit which results
in a judgment against IXC for the fee set forth in this Section 5.09(b),
IXC shall pay to CBI its costs and expenses (including attorneys' fees
and expenses) in connection with such suit, together with interest on
the amount of the fee at the prime rate of Citibank, N.A. in effect on
the date such payment was required to be made.
(c) In the event that (1) a CBI Takeover Proposal shall have
been made to CBI or any of its Subsidiaries or shall have been made
directly to the shareholders of CBI generally or shall have otherwise
become publicly known or any person shall have publicly announced an
intention (whether or not conditional) to make a CBI Takeover Proposal
and thereafter this Agreement is terminated by either CBI or IXC
pursuant to Section 7.01(b)(i) or (ii) or (2) this Agreement is
terminated by IXC pursuant to Section 7.01(f), then CBI shall promptly,
but in no event later than the date of such termination, pay IXC the
Termination Fee, payable by wire transfer of same day funds; provided,
however, that no Termination Fee shall be payable to IXC pursuant to
clause (1) of this paragraph (c) or pursuant to a termina tion by IXC
pursuant to Section 7.01(f) unless and until within 12 months of such
termination CBI or any of its
59
Subsidiaries enters into any CBI Acquisition Agreement with respect to,
or consummates, any CBI Takeover Proposal (for the purposes of the
foregoing proviso the term "CBI Takeover Proposal" shall have the
meaning assigned to such term in Section 4.04 except that references to
"35%" in the definition of "CBI Takeover Proposal" in Section 4.04 as
they relate to net revenues, net income or assets of CBI and its
Subsidiaries, taken as a whole, shall be deemed to be references to
"50%"), in which event the Termination Fee shall be payable upon the
first to occur of such events. CBI acknowledges that the agreements
contained in this Section 5.09(c) are an integral part of the
transactions contemplated by this Agreement, and that, without these
agreements, IXC would not enter into this Agreement; accordingly, if CBI
fails promptly to pay the amount due pursuant to this Section 5.09(c),
and, in order to obtain such payment, IXC commences a suit which results
in a judgment against CBI for the fee set forth in this Section 5.09(c),
CBI shall pay to IXC its costs and expenses (including attorneys' fees
and expenses) in connection with such suit, together with interest on
the amount of the fee at the prime rate of Citibank, N.A. in effect on
the date such payment was required to be made.
SECTION 5.10. Public Announcements. Promptly after the date
hereof, CBI and IXC will develop a joint communications plan and each
party hereto shall use all reasonable best efforts to ensure that all
press releases and other public statements with respect to the
transactions contemplated by this Agreement, including the Merger, the
Stockholders Agreements and the Option Agreements shall be consistent
with such joint communications plan. CBI and IXC will consult with each
other before issuing any press release or otherwise making any written
public statement with respect to the transactions contemplated by this
Agreement, including the Merger, the Stockholders Agreements and the
Option Agreements, and shall not issue any such press release or make
any such written public statement prior to such consultation, except as
either party may determine is required by applicable law or by
obligations pursuant to any listing agreement with any national
securities exchange or national trading system. The parties agree that
the initial press release to be issued with respect to the transactions
contemplated by this Agreement, the Stockholders Agreements and the
Option Agreements shall be in the form heretofore agreed to by the
parties.
SECTION 5.11. Affiliates. IXC shall deliver to CBI at least 30
days prior to the Closing Date a letter identifying all persons who are,
at the time this Agreement is submitted for adoption by the stockholders
of IXC,
60
"affiliates" of IXC for purposes of Rule 145 under the Securities Act
and applicable SEC rules and regulations. IXC shall use reasonable
efforts to cause each such person to deliver to CBI at least 30 days
prior to the Closing Date a written agreement substantially in the form
attached as Exhibit A hereto.
SECTION 5.12. Stock Exchange Listings. (a) CBI shall use
reasonable efforts to cause the CBI Common Stock issuable in the Merger
and pursuant to the CBI Stock Option Agreement to be approved for
listing on the NYSE and the CSE, subject to official notice of issuance,
as promptly as practicable after the date hereof, and in any event prior
to the Closing Date.
(b) IXC shall use reasonable efforts to cause the IXC Common
Stock issuable pursuant to the IXC Stock Option Agreement to be approved
for quotation on Nasdaq, subject to official notice of issuance, as
promptly as practicable after the date hereof, and in any event prior to
the Closing Date.
(c) IXC shall use reasonable best efforts to cause the IXC 7
1/4% Preferred Stock, the IXC 6 3/4% Preferred Stock and the IXC 12 1/2%
Preferred Stock to be approved for quotation on Nasdaq, subject to
official notice of issuance, as promptly as practicable after the date
hereof, and in any event prior to the record date for the IXC
Stockholders Meeting.
SECTION 5.13. Tax Treatment. Each of CBI and IXC shall use
reasonable efforts to cause the Merger to qualify as a reorganization
under the provisions of Section 368 of the Code and to obtain the
opinions of counsel referred to in Section 6.03(c), including the
execution of the letters of representation referred to therein.
SECTION 5.14. Further Assurances. IXC shall deliver, or shall
cause to be delivered, if required by the terms of any note, indenture,
credit agreement, warrant or other financing instrument or preferred
stock, as promptly as possible after the date hereof but in no event
less than 15 days prior to the Effective Time, any notice of the Merger
or the transactions contemplated by this Agreement.
SECTION 5.15. IXC Rights Agreement. The Board of Directors of
IXC shall take all further action (in addition to that referred to in
Section 3.01(s)) necessary or desirable (including redeeming IXC Rights
immediately prior to the Effective Time or amending the IXC Rights
Agreement if reasonably requested by CBI) in order to render the IXC
61
Rights inapplicable to the Merger and to the other transactions
contemplated by this Agreement, the Stockholders Agreements and the
Option Agreements to the extent provided herein. Except as provided
above with respect to the Merger and the other transactions contemplated
by this Agreement, the Stockholders Agreements and the Option
Agreements, until the date following the IXC Stockholders Meeting, the
Board of Directors of IXC shall not, without the prior written consent
of CBI, (a) amend the IXC Rights Agreement or (b) take any action with
respect to, or make any determination under, the IXC Rights Agreement,
including a redemption of the IXC Rights or any action to facilitate an
IXC Takeover Proposal.
SECTION 5.16. CBI Rights Agreement. The Board of Directors of
CBI shall take all further action (in addition to that referred to in
Section 3.02(s)) necessary or desirable (including redeeming CBI Rights
immediately prior to the Effective Time or amending the CBI Rights
Agreement if reasonably requested by IXC) in order to render the CBI
Rights inapplicable to the Merger and the other transactions
contemplated by this Agreement, the Stockholders Agreements and the
Option Agreements to the extent provided herein. Except as provided
above with respect to the Merger and the other transactions contemplated
by this Agreement, the Stockholders Agreements and the Option
Agreements, until the date following the CBI Shareholders Meeting, the
Board of Directors of CBI shall not, without the prior written consent
of IXC, (a) amend the CBI Rights Agreement (other than any amendment
made in connection with an acquisition by CBI of any assets or voting
securities of another person) or (b) take any action with respect to, or
make any determination under, the CBI Rights Agreement, including a
redemption of the CBI Rights or any action to facilitate a CBI Takeover
Proposal.
SECTION 5.17. Transfer Taxes. All stock transfer, real estate
transfer, documentary, stamp, recording and other similar taxes
(including interest, penalties and additions to any such taxes) incurred
in connection with this Agreement and the transactions contemplated
hereby shall be paid by IXC.
SECTION 5.18. Stockholders Agreements Legend. IXC will
inscribe upon any certificate representing Subject Shares (as defined in
the Stockholders Agreements) tendered by a Stockholder (as defined in
the Stockholders Agreements) in connection with any proposed transfer of
any Subject Shares by such Stockholder in accordance with the terms of
the Stockholders Agreements the following legend: "THE SHARES OF COMMON
STOCK, PAR VALUE $.01, PER SHARE, OF IXC
62
COMMUNICATIONS, INC., REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
STOCKHOLDERS AGREEMENT DATED AS OF JULY 20, 1999, AND ARE SUBJECT TO THE
TERMS THEREOF. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT THE PRINCIPAL
EXECUTIVE OFFICES OF IXC COMMUNICATIONS, INC."; and IXC will return such
certificate containing such inscription to such Stockholder within three
business days following IXC's receipt thereof.
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's Obligation to Effect
the Merger. The respective obligation of each party to effect the Merger
is subject to the satisfaction or waiver on or prior to the Closing Date
of the following conditions:
(a) Stockholder Approvals. Each of the IXC Stockholder
Approval and the CBI Shareholder Approval shall have been obtained.
(b) HSR Act. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or
shall have expired.
(c) FCC and PUC Approvals. All consents, approvals or orders
of authorization of, or actions by the FCC and all necessary state PUC
approvals shall have been obtained.
(d) No Litigation. No judgment, order, decree, statute, law,
ordinance, rule or regulation, entered, enacted, promulgated, enforced
or issued by any court or other Governmental Entity of competent
jurisdiction or other legal restraint or prohibition (collectively,
"Restraints") shall be in effect, and there shall not be pending or
threatened any suit, action or proceeding by any Governmental Entity (i)
preventing the consummation of the Merger or (ii) which otherwise is
reasonably likely to have a Material Adverse Effect on IXC or CBI, as
applicable; provided, however, that each of the parties shall have used
its reasonable efforts to prevent the entry of any such Restraints and
to appeal as promptly as possible any such Restraints that may be
entered.
(e) Form S-4. The Form S-4 shall have become effective under
the Securities Act and shall not be the subject of any stop order or
proceedings seeking a stop order.
63
(f) Stock Exchange Listings. The shares of CBI Common Stock
issuable to IXC's stockholders as contemplated by this Agreement shall
have been approved for listing on the NYSE, subject to official notice
of issuance.
(g) Equity Investment. CBI shall have received $400 million
pursuant to the terms of the Investment Agreement.
SECTION 6.02. Conditions to Obligations of CBI and Sub. The
obligation of CBI and Sub to effect the Merger is further subject to
satisfaction or waiver of the following conditions:
(a) Representations and Warranties. The representations and
warranties of IXC set forth herein that are qualified as to materiality
shall be true and correct, and those that are not so qualified shall be
true and correct in all material respects, in each case as of the date
hereof and as of the Closing Date, with the same effect as if made at
and as of such time (except to the extent expressly made as of an
earlier date, in which case as of such date). CBI shall have received a
certificate signed on behalf of IXC by the chief executive officer of
IXC to such effect.
(b) Performance of Obligations of IXC. IXC shall have
performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date.
CBI shall have received a certificate signed on behalf of IXC by the
chief executive officer of IXC to such effect.
SECTION 6.03. Conditions to Obligations of IXC. The obligation
of IXC to effect the Merger is further subject to satisfaction or waiver
of the following conditions:
(a) Representations and Warranties. The representations and
warranties of CBI and Sub set forth herein that are qualified as to
materiality shall be true and correct, and those that are not so
qualified shall be true and correct in all material respects, in each
case as of the date hereof and as of the Closing Date, with the same
effect as if made at and as of such time (except to the extent expressly
made as of an earlier date, in which case as of such date). IXC shall
have received a certificate signed on behalf of CBI by the chief
executive officer of CBI to such effect.
64
(b) Performance of Obligations of CBI and Sub. CBI and Sub
shall have performed in all material respects all obligations required
to be performed by them under this Agreement at or prior to the Closing
Date. IXC shall have received a certificate signed on behalf of CBI by
the chief executive officer of CBI to such effect.
(c) Tax Opinion. IXC shall have received from ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, counsel to IXC, on the date on which the Form S-4 is filed
with the SEC and on the Closing Date, an opinion, in each case dated as
of such respective date and to the effect that: (i) the Merger will
qualify for U.S. Federal income tax purposes as a "reorganization"
within the meaning of Section 368(a) of the Code and (ii) IXC, CBI and
Sub will each be a "party to a reorganization" within the meaning of
Section 368(b) of the Code. The issuance of such opinion shall be
conditioned upon the receipt by such tax counsel of representation
letters from each of IXC and CBI in substantially the same form as
Exhibits C and D, respectively. The opinion shall be in substantially
the same form as Exhibit E.
SECTION 6.04. Frustration of Closing Conditions. None of CBI,
Sub or IXC may rely on the failure of any condition set forth in Section
6.01, 6.02 or 6.03, as the case may be, to be satisfied if such failure
was caused by such party's failure to use its reasonable efforts to con
summate the Merger and the other transactions contemplated by this
Agreement, the Stockholders Agreements and the Option Agreements, as
required by and subject to Section 5.05.
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination. This Agreement may be terminated at
any time prior to the Effective Time, whether before or after the CBI
Shareholder Approval or the IXC Stockholder Approval:
(a) by mutual written consent of CBI and IXC;
(b) by either CBI or IXC:
(i) if the Merger shall not have been consummated by
April 30, 2000; provided, however, that if on such date the
condition to the Closing set forth in Section 6.01(c) shall
not have been satisfied, then either CBI or IXC may cause such
65
date to be extended to July 31, 2000, upon delivery of written
notice to the other party; provided further, however, that the
right to terminate this Agreement pursuant to this Section
7.01(b)(i) shall not be available to any party whose failure
to perform any of its obligations under this Agreement results
in the failure of the Merger to be consummated by such time;
(ii) if the CBI Shareholder Approval shall not have been
obtained at a CBI Shareholders Meeting duly convened therefor
or at any adjournment or postponement thereof;
(iii) if the IXC Stockholder Approval shall not have been
obtained at an IXC Stockholders Meeting duly convened therefor
or at any adjournment or postponement thereof; or
(iv) if any Restraint having any of the effects set forth
in Section 6.01(d) shall be in effect and shall have become
final and nonappealable; provided that the party seeking to
terminate this Agreement pursuant to this Section 7.01(b)(iv)
shall have used reasonable efforts to prevent the entry of and
to remove such Restraint;
(c) by CBI, if IXC shall have breached or failed to perform in
any material respect any of its representations, warranties,
covenants or other agreements contained in this Agreement, which
breach or failure to perform (A) would give rise to the failure of
a condition set forth in Section 6.02(a) or (b) and (B) has not
been or is incapable of being cured by IXC within 30 calendar days
after its receipt of written notice from CBI;
(d) by IXC, if CBI shall have breached or failed to perform in
any material respect any of its representations, warranties,
covenants or other agreements contained in this Agreement, which
breach or failure to perform (A) would give rise to the failure of
a condition set forth in Section 6.03(a) or (b) and (B) has not
been or is incapable of being cured by CBI within 30 calendar days
after its receipt of written notice from IXC;
(e) by CBI, if IXC or any of its directors or officers shall
participate in discussions or negotiations in breach of Section
4.03; or
66
(f) by IXC, if CBI or any of its directors or officers shall
participate in discussions or negotiations in breach of Section
4.04.
SECTION 7.02. Effect of Termination. In the event of
termination of this Agreement by either IXC or CBI as provided in
Section 7.01, this Agreement shall forthwith become void and have no
effect, without any liability or obligation on the part of CBI or IXC,
other than the provisions of Section 3.01(p), Section 3.02(n), the last
sentence of Section 5.04, Section 5.09, this Section 7.02 and Article
VIII, which provisions survive such termination, and except to the
extent that such termination results from the wilful and material breach
by a party of any of its representations, warranties, covenants or
agreements set forth in this Agreement. If this Agreement is terminated
under circumstances in which a party is entitled to receive the
Termination Fee, the payment of such Termination Fee shall be the sole
and exclusive remedy available to such party, except if there shall have
been a wilful breach by the other party of Section 4.03 or Section 4.04,
as the case may be.
SECTION 7.03. Amendment. This Agreement may be amended by the
parties at any time before or after the IXC Stockholder Approval or the
CBI Shareholder Approval; provided, however, that after any such
approval, there shall not be made any amendment that by law requires
further approval by the stockholders of IXC or further approval of the
shareholders of CBI without the further approval of such stockholders or
shareholders. This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties.
SECTION 7.04. Extension; Waiver. At any time prior to the
Effective Time, a party may (a) extend the time for the performance of
any of the obligations or other acts of the other parties, (b) waive any
inaccuracies in the representations and warranties of the other parties
contained in this Agreement or in any document delivered pursuant to
this Agreement or (c) subject to the proviso of Section 7.03, waive
compliance by the other party with any of the agreements or conditions
contained in this Agreement. Any agreement on the part of a party to any
such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. The failure of any
party to this Agreement to assert any of its rights under this Agreement
or otherwise shall not constitute a waiver of such rights.
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ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations and Warranties.
None of the representations, warranties, covenants or agreements in this
Agreement or in any instrument delivered pursuant to this Agreement
shall survive the Effective Time. This Section 8.01 shall not limit any
covenant or agreement of the parties which by its terms contemplates
performance after the Effective Time.
SECTION 8.02. Notices. All notices, requests, claims, demands
and other communications under this Agreement shall be in writing and
shall be deemed given if delivered personally, telecopied (which is
confirmed) or sent by overnight courier (providing proof of delivery) to
the parties at the following addresses (or at such other address for a
party as shall be specified by like notice):
(a) if to CBI or Sub, to
Cincinnati ▇▇▇▇ Inc.
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, 102-1900
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
with a copy to:
Cravath, Swaine & ▇▇▇▇▇
Worldwide Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, III, Esq.;
and
(b) if to IXC, to
IXC Communications, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
68
Attention: General Counsel
with a copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
SECTION 8.03. Definitions. For purposes of this Agreement:
(a) an "Affiliate" of any person means another person that
directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, such
first person, where "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the
management policies of a person, whether through the ownership of
voting securities, by contract, as trustee or executor, or
otherwise;
(b) "Business Day" means any day other than Saturday, Sunday
or any other day on which banks are legally permitted to be closed
in New York;
(c) "Knowledge" of any person that is not an individual means,
with respect to any specific matter, the knowledge of such person's
executive officers and other officers having primary responsibility
for such matter;
(d) "Material Adverse Change" or "Material Adverse Effect"
means, when used in connection with IXC or CBI, any change, effect,
event, occurrence, condition, development or state of facts that is
materially adverse to the business, assets, results of operations,
condition (financial or otherwise) or prospects of such party (or
the Surviving Corporation when used with respect to IXC) and its
Subsidiaries, taken as a whole, other than any change, effect,
event, occurrence, condition, development or state of facts (i)
relating to the economy or securities markets in general, (ii)
relating to the industries in which such party operates in general
and not specifically relating to such party, (iii) resulting from
the announcement or
69
anticipated consummation of the transactions contem plated by this
Agreement, the Stockholders Agreements, the Option Agreements, and
the transactions contem plated by this Agreement, or (iv) arising
from a change in generally accepted accounting principles.
(e) "person" means an individual, corporation, partnership,
limited liability company, joint venture, association, trust,
unincorporated organization or other entity; and
(f) a "Subsidiary" of any person means another person, an
amount of the voting securities, other voting ownership or voting
partnership interests of which is sufficient to elect at least a
majority of its Board of Directors or other governing body (or, if
there are no such voting interests, 50% or more of the equity
interests of which) is owned directly or indirectly by such first
person.
SECTION 8.04. Interpretation. When a reference is made in this
Agreement to an Article, Section or Exhibit, such reference shall be to
an Article or Section of, or an Exhibit to, this Agreement unless
otherwise indicated. The table of contents and headings contained in
this Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement. Whenever the
words "include", "includes" or "including" are used in this Agreement,
they shall be deemed to be followed by the words "without limitation".
The words "hereof", "herein" and "hereunder" and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement. All terms defined in
this Agreement shall have the defined meanings when used in any
certificate or other document made or delivered pursuant hereto unless
otherwise defined therein. The definitions contained in this Agreement
are applicable to the singular as well as the plural forms of such terms
and to the masculine as well as to the feminine and neuter genders of
such term. Any agreement, instrument or statute defined or referred to
herein or in any agreement or instrument that is referred to herein
means such agreement, instrument or statute as from time to time
amended, modified or supplemented, including (in the case of agreements
or instruments) by waiver or consent and (in the case of statutes) by
succession of comparable successor statutes and references to all
attachments thereto and instruments incorporated therein. References to
a person are also to its permitted successors and assigns. Terms used
herein that are defined under GAAP are used herein as so defined.
70
SECTION 8.05. Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the
same agreement and shall become effective when one or more counterparts
have been signed by each of the parties and delivered to the other
parties.
SECTION 8.06. Entire Agreement; No Third-Party Beneficiaries.
This Agreement (including the documents and instruments referred to
herein), the Option Agreements, the Stockholders Agreements and the
Confidentiality Agreement (a) constitute the entire agreement, and
supersede all prior agreements and understandings, both written and
oral, among the parties with respect to the subject matter of this
Agreement and (b) except for the provisions of Article II, Section 5.06
and Section 5.08, are not intended to confer upon any person other than
the parties any rights or remedies.
SECTION 8.07. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Delaware,
regardless of the laws that might otherwise govern under applicable
principles of conflict of laws thereof, except to the extent the laws of
the State of Ohio are mandatorily applicable for the rights of CBI
shareholders and directors and corporate governance matters.
SECTION 8.08. Assignment. Neither this Agreement nor any of
the rights, interests or obligations under this Agreement shall be
assigned, in whole or in part, by operation of law or otherwise by
either of the parties hereto without the prior written consent of the
other party. Any assignment in violation of the preceding sentence shall
be void. Subject to the preceding two sentences, this Agreement will be
binding upon, inure to the benefit of, and be enforceable by, the
parties and their respective successors and assigns.
SECTION 8.09. Enforcement. The parties agree that irreparable
damage would occur and that the parties would not have any adequate
remedy at law in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions of this
Agreement in any Federal court located in the State of Delaware or in
Delaware state court, this being in addition to any other remedy to
which they are entitled at law or in equity. In addition, each of the
parties hereto (a) consents to submit itself to the personal
71
jurisdiction of any Federal court located in the State of Delaware or
any Delaware state court in the event any dispute arises out of this
Agreement or any of the transactions contemplated by this Agreement, (b)
agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court,
and (c) agrees that it will not bring any action relating to this
Agreement or any of the transactions contemplated by this Agreement in
any court other than a Federal court sitting in the State of Delaware or
a Delaware state court.
SECTION 8.10. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any
rule of law or public policy, all other conditions and provisions of
this Agreement shall nevertheless remain in full force and effect. Upon
such determination that any term or other provision is invalid, illegal
or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent
of the parties as closely as possible to the fullest extent permitted by
applicable law in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the extent possible.
SECTION 8.11. Additional Agreement of IXC. IXC agrees that (a)
promptly after the date hereof, it will form a wholly owned subsidiary
and enter into a merger agreement with such subsidiary in a form
satisfactory to CBI, including the terms set forth in Section 8.11 to
the IXC Disclosure Schedule and (b) it will submit such merger agreement
for approval of stockholders of IXC at the IXC Stockholders Meeting.
72
IN WITNESS WHEREOF, CBI, Sub and IXC have caused this
Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
CINCINNATI ▇▇▇▇ INC.,
by /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: President and Chief
Executive Officer
IVORY MERGER INC.,
by /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President and
Secretary
IXC COMMUNICATIONS, INC.,
by /s/ ▇▇▇▇ ▇. ▇▇▇▇
-----------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: President and Chief
Executive Officer
ANNEX I
TO THE MERGER AGREEMENT
Index of Defined Terms
Term Page
Accounting Rules............................................... 17
Adjusted Option................................................ 54
Affiliate...................................................... 68
Agreement...................................................... 1
Business Day................................................... 68
CBI............................................................ 1
CBI Acquisition Agreement...................................... 48
CBI Benefit Plans.............................................. 36
CBI Common Stock............................................... 4
CBI Consolidated Group......................................... 38
CBI Disclosure Schedule........................................ ▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇........................................ ▇▇
▇▇▇ ▇▇▇▇ 10-K.................................................. 35
CBI Permits.................................................... 35
CBI Plan....................................................... 56
CBI Preferred Stock............................................ 28
CBI Rights Agreement........................................... 28
CBI SEC Documents.............................................. 32
CBI Series A Preferred Stock................................... 28
CBI 7 1/4 Preferred Stock...................................... 5
CBI Shareholder Approval....................................... 38
CBI Shareholders Meeting....................................... 50
CBI 6 3/4 Preferred Stock...................................... 5
CBI Stock Option Agreement..................................... 2
CBI Stock Options.............................................. 29
CBI Stock Plans................................................ 28
CBI Takeover Proposal.......................................... 47
Certificate of Merger.......................................... 3
Certificates................................................... 7
Closing........................................................ 2
Closing Date................................................... 3
Code........................................................... 2
Common Shares Trust............................................ 10
Common Stock Merger Consideration.............................. 4
Communications Act............................................. 16
Confidentiality Agreement...................................... 51
control........................................................ 68
CSE............................................................ 31
DGCL........................................................... 2
Effective Time................................................. 3
ERISA.......................................................... 21
Excess Shares.................................................. 9
Exchange Act................................................... 16
Exchange Agent................................................. 6
Exchange Ratio................................................. 4
FCC............................................................ 16
Form S-4....................................................... 18
GAAP........................................................... 17
Governmental Entity............................................ 15
HSR Act........................................................ 16
Intellectual Property Rights................................... 25
Investment Agreement........................................... 2
Investors...................................................... 2
IXC............................................................ 1
IXC Acquisition Agreement...................................... 47
IXC Benefit Plans.............................................. 20
IXC Class B Preferred Stock.................................... 13
IXC Common Stock............................................... 1
IXC Consolidated Group......................................... 24
IXC Disclosure Schedule........................................ 12
IXC Filed SEC Documents........................................ 12
IXC 1998 10-K.................................................. 20
IXC Ordinary Preferred Stock................................... 13
IXC Permits.................................................... 19
IXC Preferred Stock............................................ 13
IXC Rights..................................................... 13
IXC Rights Agreement........................................... 13
IXC SEC Documents.............................................. 17
IXC Series A Preferred Stock................................... 13
IXC 7 1/4 Preferred Stock...................................... 1
IXC 6 3/4 Preferred Stock...................................... 1
IXC Stock Option Agreement..................................... 1
IXC Stock Options.............................................. 13
Term Page
IXC Stock Plans................................................ 13
IXC Stockholder Approval....................................... 24
IXC Stockholders Meeting....................................... 50
IXC Takeover Proposal.......................................... 46
IXC 12 1/2 Certificate of Designation.......................... 6
IXC 12 1/2 Preferred Stock..................................... 6
IXC 12 1/2 Series B Preferred Stock............................ 13
IXC Warrants .................................................. 13
Joint Proxy Statement.......................................... 16
Knowledge...................................................... 68
Liens.......................................................... 12
Material Adverse Change........................................ 68
Material Adverse Effect........................................ 68
Merger......................................................... 1
Merger Consideration........................................... 6
Nasdaq......................................................... 16
Non-Voting Preferred Stock..................................... 28
NYSE........................................................... 9
Oakhill........................................................ 2
Option Agreements.............................................. 2
person......................................................... 69
Principal Stockholders......................................... 1
PUCs........................................................... 16
Restraints..................................................... 62
SEC............................................................ 16
Securities Act................................................. 17
7 1/4% Preferred Stock Merger Consideration.................... 5
6 3/4% Preferred Stock Merger Consideration.................... 5
Stockholders Agreements........................................ 1
Sub............................................................ 1
Sub Common Stock............................................... 29
Subsidiary..................................................... 69
Surviving Corporation.......................................... 2
taxes.......................................................... 24
Termination Fee................................................ 58
Transition Period.............................................. 55
Transition Team................................................ 46
Voting Preferred Stock......................................... 28
Year 2000 Compliant............................................ 26
