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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
DATE OF REPORT: APRIL 10, 1995
(Date of earliest event reported)
ALC COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
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DELAWARE COMMISSION FILE NO. 1-10831 38-2643582
(State of incorporation) (IRS Employer I.D. No.)
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30300 TELEGRAPH ROAD, SUITE 350
BINGHAM FARMS, MI 48025
(Address of principal executive offices)
(810) 647-4060
(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS
On April 10, 1995, ALC Communications Corporation (the "Company") and
Frontier Corporation ("Frontier") announced that they have entered into an
Agreement and Plan of Merger (the "Merger Agreement") providing, subject to the
terms and conditions set forth therein, for the merger of a wholly-owned
subsidiary of Frontier ("Sub") with and into the Company. Copies of the press
release and the Merger Agreement are attached as exhibits hereto and are
incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits
(2) Agreement and Plan of Merger, dated as of April 9,
1995, by and among the Company, Frontier and Sub.
(99) Press release announcing the execution of the Merger
Agreement.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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ALC COMMUNICATIONS CORPORATION
Dated: April 13, 1995 By: /s/ John M. Zrno
-------------------------------------------
John M. Zrno, President
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EXHIBIT INDEX
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Sequentially
Exhibit No. Description Numbered Page
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(2) Agreement and Plan of Merger, dated as of
April 9, 1995, by and among the Company,
Frontier and Sub.
(99) Press release announcing the execution of
the Merger Agreement.
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EXHIBIT 2
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AGREEMENT AND PLAN OF MERGER
dated as of April 9, 1995,
among
FRONTIER CORPORATION,
FRONTIER SUBSIDIARY ONE, INC.
and
ALC COMMUNICATIONS CORPORATION
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ARTICLE I THE MERGER
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Effective Time of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Certificate of Incorporation and By-Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.6 Directors; Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
2.1 Effect on Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(a) Common Stock of Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(b) Cancellation of Treasury Stock and Frontier-Owned Stock . . . . . . . . . . . . . . . . . . . 4
(c) Conversion of ALC Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 Exchange of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(a) Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(b) Exchange Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(c) Distributions with Respect to Unexchanged Shares . . . . . . . . . . . . . . . . . . . . . . . 6
(d) No Further Ownership Rights in ALC Common Stock . . . . . . . . . . . . . . . . . . . . . . . . 6
(e) No Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(f) Termination of Exchange Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(g) No Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(h) Withholding Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of ALC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(a) Organization, Standing and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(b) Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(c) Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(d) SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(e) Information Supplied . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(f) Compliance with Applicable Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(g) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(h) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(i) Certain Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(j) Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(k) Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
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(l) Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(m) Section 203 of the DGCL Not Applicable . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(n) Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(o) Accounting Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(p) ALC Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(q) Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(r) Ownership of Frontier Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(s) Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(t) Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(u) Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(v) Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.2 Representations and Warranties of Frontier and Sub . . . . . . . . . . . . . . . . . . . . . . . . . 24
(a) Organization, Standing and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(b) Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(c) Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(d) SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(e) Information Supplied . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(f) Compliance with Applicable Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(g) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(h) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(i) Certain Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(j) Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(k) Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(l) Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(m) Section 912 of the NYBCL Not Applicable . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(n) Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(o) Accounting Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(p) Frontier Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(q) Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(r) Ownership of ALC Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(s) Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(t) Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(u) Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(v) Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 Covenants of ALC and Frontier . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
(a) Ordinary Course . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
(b) Dividends; Changes in Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
(c) Issuance of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(d) Governing Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(e) No Solicitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(f) No Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
(g) No Dispositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
(h) Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
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(i) Other Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
(j) Advice of Changes; Government Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
(k) Accounting Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
(l) Pooling and Tax-Free Reorganization Treatment . . . . . . . . . . . . . . . . . . . . . . . . 46
(m) Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
(n) Tax Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
(o) Network Transition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE V ADDITIONAL AGREEMENTS
5.1 Preparation of S-4 and the Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.2 Letter of ALC's Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.3 Letter of Frontier's Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.4 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.5 Stockholder Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
5.6 Legal Conditions to Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
5.7 Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
5.8 Stock Exchange Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.9 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.10 Stock Options and Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.11 Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
5.12 Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
5.13 Indemnification; Directors' and Officers' Insurance . . . . . . . . . . . . . . . . . . . . . . . . 54
5.14 Elimination of Certain Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
5.15 Financial Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
5.16 Additional Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE VI CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation To Effect the Merger . . . . . . . . . . . . . . . . . . . . . 57
(a) Stockholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
(b) NYSE Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
(c) Other Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
(d) S-4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
(e) No Injunctions or Restraints; Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
(f) Pooling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
(g) Burdensome Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
6.2 Conditions to Obligations of Frontier and Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
(a) Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
(b) Performance of Obligations of ALC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
(c) Consents Under Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
(d) Tax Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
(e) Burdensome Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
(f) Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
(g) Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
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6.3 Conditions to Obligations of ALC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
(a) Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
(b) Performance of Obligations of Frontier and Sub . . . . . . . . . . . . . . . . . . . . . . . . 61
(c) Consents Under Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
(d) Tax Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
(e) Burdensome Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
(f) Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE VII TERMINATION AND AMENDMENT
7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
7.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
7.3 Fees, Expenses and Other Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
7.4 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
7.5 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
ARTICLE VIII GENERAL PROVISIONS
8.1 Nonsurvival of Representations, Warranties and Agreements . . . . . . . . . . . . . . . . . . . . . 71
8.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
8.3 Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
8.4 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
8.5 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
8.6 Entire Agreement; No Third Party Beneficiaries; Rights
of Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
8.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
8.8 Severability; Limitations on Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
8.9 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
8.10 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
EXHIBIT 3.1(i) Form of Amended and Restated Employment Agreement
EXHIBIT 5.7 Form of Affiliate Letter
EXHIBIT 5.12 Officers
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affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ALC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ALC Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ALC Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ALC Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ALC Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ALC Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ALC SAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ALC SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ALC Series E Preferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ALC Stock Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ALC Stock Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ALC Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
AMEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
beneficial ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
beneficially own . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Business Combination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Certificate of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Communications Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Competing Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Confidentiality Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Conversion Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
DGCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Distribution Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Environmental Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Exchange Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Frontier . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Frontier Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Frontier Class A Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
</TABLE>
v
<PAGE> 7
<TABLE>
<CAPTION>
Page
----
<S> <C>
Frontier Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Frontier Convertible Debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Frontier Cumulative Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Frontier Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Frontier Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Frontier Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Frontier SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Frontier Series A Preferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Frontier Vote Matter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Governmental Entity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Grumman Hill Associates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Grumman Hill Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Indemnified Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Indemnified Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Injunction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
material . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
material adverse effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
NYBCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
qualified stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Requisite Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
S-4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Significant Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Tax return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Voting Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Warrant Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
vi
<PAGE> 8
AGREEMENT AND PLAN OF MERGER dated as of April 9, 1995 (this
"Agreement"), among FRONTIER CORPORATION, a New York corporation ("Frontier"),
FRONTIER SUBSIDIARY ONE, INC., a Delaware corporation and a wholly-owned
subsidiary of Frontier ("Sub"), and ALC COMMUNICATIONS CORPORATION, a Delaware
corporation ("ALC").
WHEREAS, the Boards of Directors of Frontier, Sub and ALC have
approved, and deem it advisable and in the best interests of their respective
stockholders to consummate, the business combination transaction provided for
herein in which Sub would merge with and into ALC (the "Merger");
WHEREAS, Frontier and ALC desire to make certain
representations, warranties and agreements in connection with the Merger and
also to prescribe various conditions to the Merger;
WHEREAS, for federal income tax purposes, it is intended that
the Merger shall qualify as a reorganization under the provisions of Section
368 of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, for accounting purposes, it is intended that the
Merger shall be accounted for as a "pooling of interests";
<PAGE> 9
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 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 ALC at the
Effective Time (as defined in Section 1.3 below). Upon the Effective Time, the
separate existence of Sub shall cease, and ALC shall continue as the surviving
corporation (the "Surviving Corporation") and shall continue under the name
"ALC Communications Corporation".
1.2 Closing. Unless this Agreement shall have been
terminated pursuant to Section 7.1 and subject to the satisfaction or waiver of
the conditions set forth in Article VI, the closing of the Merger (the
"Closing") will take place as promptly as practicable (and in any event within
two business days) following satisfaction or waiver of the conditions set forth
in Article VI (the "Closing Date"), at the offices of Simpson Thacher &
Bartlett, 425 Lexington Avenue, New York, New York 10017, unless another date,
time or place is agreed to in writing by the parties hereto.
2
<PAGE> 10
1.3 Effective Time of the Merger. As soon as practicable
following the satisfaction or waiver of the conditions set forth in Article VI,
the Surviving Corporation shall file a certificate of merger (the "Certificate
of Merger") executed in accordance with the relevant provisions of the DGCL.
The Merger shall become effective at such time as the Certificate of Merger is
duly filed with the Secretary of State of the State of Delaware, or at such
other time thereafter as is provided in the Certificate of Merger (the
"Effective Time").
1.4 Effects of the Merger. The Merger shall have the effects
set forth in Section 259 of the DGCL.
1.5 Certificate of Incorporation and By-Laws. At the
Effective Time, the Certificate of Incorporation of the Surviving Corporation
shall be amended in accordance with the DGCL such that, at the Effective Time,
the Certificate of Incorporation of the Surviving Corporation shall consist of
the provisions set forth in the Certificate of Incorporation of Sub, as in
effect immediately prior to the Effective Time, except that Article I of the
Certificate of Incorporation of the Surviving Corporation shall read in its
entirety as follows: "The name of this Corporation is 'ALC Communications
Corporation'." At the Effective Time, the By Laws of Sub, as in effect
immediately prior to the Effective Time, shall be the By-Laws of the Surviving
Corporation.
3
<PAGE> 11
1.6 Directors; Officers. (a) The directors of Sub at the
Effective Time shall be the directors of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.
(b) The officers of ALC at the Effective Time shall be the
officers of the Surviving Corporation, until the earlier of their resignation
or removal or until their respective successors are duly elected and qualified,
as the case may be.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
2.1 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 Common Stock, par value $.01 per share of ALC (the "ALC Common
Stock"), or any shares of capital stock of Sub:
(a) Common Stock of Sub. Each share of common stock of Sub
issued and outstanding immediately prior to the Effective Time shall
be converted into one share of Common Stock, par value $.01 per share,
of the Surviving Corporation and shall be the issued and outstanding
capital stock of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Frontier-Owned Stock.
Each share of ALC Common Stock that is owned by ALC or by any
subsidiary of ALC, and each share of ALC Common Stock that is owned by
Frontier, Sub or any other subsidiary
4
<PAGE> 12
of Frontier shall automatically be cancelled and retired and shall
cease to exist, and no stock of Frontier or other consideration shall
be delivered or deliverable in exchange therefor.
(c) Conversion of ALC Common Stock. Subject to Section
2.2(e), each issued and outstanding share of ALC Common Stock (other
than shares to be cancelled in accordance with Section 2.1(b)) shall
be converted into 2.0 (the "Conversion Number") fully paid and
nonassessable shares of Common Stock, par value $1.00 per share of
Frontier (the "Frontier Common Stock"). All such shares of ALC Common
Stock shall no longer be outstanding and shall automatically be
cancelled and retired and shall cease to exist, and each certificate
previously representing any such shares shall thereafter represent the
shares of Frontier Common Stock into which such ALC Common Stock has
been converted. Certificates previously representing shares of ALC
Common Stock shall be exchanged for certificates representing whole
shares of Frontier Common Stock issued in consideration therefor upon
the surrender of such certificates in accordance with Section 2.2,
without interest.
2.2 Exchange of Certificates. (a) Exchange Agent. As of
the Effective Time, Frontier shall deposit, or shall cause to be deposited,
with a bank or trust company designated by Frontier (and reasonably acceptable
to ALC) (the "Exchange Agent"), for the benefit of the holders of shares of ALC
Common Stock, for exchange in accordance with this Article II,
5
<PAGE> 13
through the Exchange Agent, certificates representing the shares of Frontier
Common Stock (such certificates for shares of Frontier Common Stock, together
with any dividends or distributions with respect thereto, being hereinafter
referred to as the "Exchange Fund") issuable pursuant to Section 2.1 in
exchange for outstanding shares of ALC Common Stock.
(b) Exchange Procedures. As soon as reasonably practicable
after the Effective Time, Frontier shall instruct the Exchange Agent to mail to
each holder of record of a certificate or certificates which immediately prior
to the Effective Time represented outstanding shares of ALC Common Stock (the
"Certificates"), (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 proper delivery of the Certificates to the Exchange Agent and shall
be in such form and have such other provisions as Frontier and ALC may
reasonably specify) and (ii) instructions to effect the surrender of the
Certificates in exchange for certificates representing shares of Frontier
Common Stock. Upon surrender of one or more Certificates for cancellation to
the Exchange Agent together with such letter of transmittal, duly executed, and
such other customary or other reasonable documents as may be required pursuant
to such instructions, the holder of such Certificates shall be entitled to
receive in exchange therefor a certificate representing that number of whole
shares of Frontier Common Stock which such holder has the right to receive in
respect of the Certificates surrendered pursuant to the provisions of this
Article II, and the Certificates so surrendered
6
<PAGE> 14
shall forthwith be cancelled. In the event of a transfer of ownership of ALC
Common Stock which is not registered in the transfer records of ALC, a
certificate representing the proper number of shares of Frontier Common Stock
may be issued to a transferee if the Certificate representing such ALC Common
Stock is presented to the Exchange Agent, accompanied by all documents required
to evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated by this
Section 2.2, each Certificate shall be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender a certificate
representing shares of Frontier Common Stock and cash in lieu of any fractional
shares of Frontier Common Stock as contemplated by this Section 2.2.
(c) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions declared or made after the Effective Time with
respect to Frontier Common Stock with a record date after the Effective Time
shall be paid to the holder of any unsurrendered Certificate with respect to
the shares of Frontier Common Stock represented thereby, and no cash payment in
lieu of fractional shares shall be paid to any such holder pursuant to Section
2.2(e) until the holder of such Certificate shall surrender such Certificate.
Subject to the effect of applicable laws, following surrender of any such
Certificate, there shall be paid to the holder of the certificates representing
whole shares of Frontier Common Stock issued in exchange therefor, without
interest, (i) at the time of such surrender or as
7
<PAGE> 15
promptly thereafter as practicable, the amount of any cash payable with respect
to a fractional share of Frontier Common Stock to which such holder is entitled
pursuant to Section 2.2(e) and the amount of dividends or other distributions
with a record date after the Effective Time theretofore paid with respect to
such whole shares of Frontier Common Stock, and (ii) at the appropriate payment
date, the amount of dividends or other distributions with a record date after
the Effective Time but prior to surrender and a payment date subsequent to
surrender payable with respect to such whole shares of Frontier Common Stock.
(d) No Further Ownership Rights in ALC Common Stock. All
shares of Frontier Common Stock issued upon conversion of shares of ALC Common
Stock in accordance with the terms hereof (including any cash paid pursuant to
Section 2.2(c) or 2.2(e)) shall be deemed to have been issued in full
satisfaction of all rights pertaining to such shares of ALC Common Stock, and
there shall be no further registration of transfers on the stock transfer books
of the Surviving Corporation of the shares of ALC Common Stock which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be cancelled and exchanged as provided in this Article II.
(e) No Fractional Shares. No certificates or scrip
representing fractional shares of Frontier Common Stock shall be issued upon
the surrender for exchange of Certificates, and such fractional share interests
will not entitle the owner thereof to vote or to
8
<PAGE> 16
any rights of a stockholder of Frontier. In lieu of any such fractional
shares, each holder of ALC Common Stock upon surrender of a Certificate for
exchange pursuant to this Section shall be paid an amount in cash (without
interest), rounded to the nearest cent, equal to the product obtained by
multiplying the fractional share interest to which such holder would otherwise
be entitled (after taking into account all shares of ALC Common Stock then held
by such holder) by the closing price for a share of Frontier Common Stock on
the NYSE Composite Transaction Tape on the first business day immediately
preceding the Effective Time. For this purpose, shares of any holder
represented by two or more certificates may be aggregated, and in no event
shall any holder be paid any amount in respect of more than one share of
Frontier Common Stock.
(f) Termination of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the stockholders of ALC for six
months after the Effective Time shall be delivered to Frontier upon demand, and
any stockholders of ALC who have not theretofore complied with this Article II
shall thereafter look only to Frontier for payment of their claim for Frontier
Common Stock, any cash in lieu of fractional shares of Frontier Common Stock
and any dividends or distributions with respect to Frontier Common Stock.
(g) No Liability. Neither Frontier nor ALC shall be liable
to any holder of shares of ALC Common Stock or Frontier Common Stock, as the
case may be, for such shares (or dividends or distributions with respect
thereto) or cash from the Exchange Fund
9
<PAGE> 17
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
(h) Withholding Rights. Frontier or the Exchange Agent shall
be entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of shares of ALC Common Stock such
amounts as Frontier or the Exchange Agent is required to deduct and withhold
with respect to the making of such payment under the Code, or any provision of
state, local or foreign tax law, or any court order. To the extent that
amounts are so withheld by Frontier or the Exchange Agent, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the holder of the shares of ALC Common Stock in respect of which such
deduction and withholding was made by Frontier or the Exchange Agent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of ALC. ALC represents
and warrants to Frontier and Sub as follows:
(a) Organization, Standing and Power. Each of ALC and its
Significant Subsidiaries (as defined below) is a corporation, partnership or
other legal entity duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization, has all
requisite power and authority and all necessary
10
<PAGE> 18
governmental approvals to own, lease and operate its properties and to carry on
its business as it is now being conducted and is duly qualified and in good
standing to do business in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification
necessary other than in such jurisdictions where the failure to be so
organized, existing or in good standing or to have such power, authority and
governmental approvals or so to qualify would not, individually or in the
aggregate, have a material adverse effect on ALC. As used in this Agreement,
(i) a "Significant Subsidiary" means any subsidiary of ALC or Frontier, as the
case may be, that would constitute a Significant Subsidiary of such party
within the meaning of Rule 1-02 of Regulation S-X of the Securities and
Exchange Commission (the "SEC"), (ii) any reference to any event, change or
effect being "material" with respect to any entity means an event, change or
effect which is material in relation to the condition (financial or otherwise),
prospects, properties, assets, liabilities, businesses or operations of such
entity and its subsidiaries taken as a whole and (iii) the term "material
adverse effect" means, with respect to ALC or Frontier, a material adverse
effect on the business, assets, prospects, results of operations or financial
condition of such party and its subsidiaries taken as a whole or on the ability
of such party (and, with respect to Frontier, of Sub) to perform its
obligations hereunder.
(b) Capital Structure. (i) As of the date hereof, the
authorized capital stock of ALC consists of 200,000,000 shares of ALC Common
Stock and 15,500,000 shares of
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Preferred Stock, par value of $.01 per share, of which 500,000 shares have been
designated as Series E Participating Preferred Stock (the "ALC Series E
Preferred"). At the close of business on April 7, 1995, (A) 33,719,441 shares
of ALC Common Stock were outstanding; (B) 3,851,968 shares of ALC Common Stock
were reserved for issuance upon exercise of outstanding warrants, consisting
solely of (1) 660,000 shares reserved for issuance upon exercise of outstanding
warrants issued pursuant to the Warrant Agreement dated as of December 15, 1985
between ALC and Continental Illinois National Bank and Trust Company of
Chicago, as Warrant Agent, (2) 329,300 shares reserved for issuance upon
exercise of outstanding warrants issued pursuant to the Amended and Restated
Stock Subscription Warrant to Subscribe for 329,300 Shares of Common Stock
dated June 4, 1992 issued by ALC to Grumman Hill Investments, L.P. ("Grumman
Hill Investments"), (3) 98,790 shares reserved for issuance upon exercise of
outstanding warrants issued pursuant to the Amended and Restated Stock
Subscription Warrant to Subscribe for 98,790 Shares of Common Stock dated June
4, 1992 issued by ALC to Grumman Hill Associates, Inc. ("Grumman Hill
Associates") and (4) 2,763,878 shares reserved for issuance upon exercise of
outstanding warrants issued pursuant to the Warrant Agreement dated July 1,
1992 between ALC and Star Bank, National Association (the warrants referenced
in this clause (B), collectively, the "ALC Warrants", and the agreements
referenced in this clause (B), collectively, the "Warrant Agreements"); (C)(1)
153,163 shares of ALC Common Stock were reserved for issuance upon
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<PAGE> 20
exercise of outstanding stock options granted pursuant to the Advisory
Agreement with Stock Option dated September 7, 1988, as amended on June 6,
1990, May 2, 1994 and May 12, 1994, between ALC and Grumman Hill Associates and
Grumman Hill Investments, and (2) 14,000 shares of ALC Common Stock were
reserved for issuance upon exercise of outstanding stock options granted
pursuant to the Stock Option dated as of May 12, 1994 between ALC and Grumman
Hill Associates (the options and agreements referenced in this clause (C),
collectively, the "Grumman Hill Options"); (D) 3,914,374 shares were reserved
for issuance upon exercise of outstanding options granted pursuant to ALC's
1986 Stock Option Plan, as amended and restated as of May 12, 1994, ALC's 1990
Stock Option Plan, as amended and restated as of May 12, 1994, and ALC's 1994
Non-Employee Director Stock Option Plan; (E) 2,185,626 shares of ALC Common
Stock were reserved for issuance upon exercise of authorized but unissued stock
options pursuant to the plans referenced in clause (D) above; (F) 80,000 shares
of ALC Common Stock were reserved for issuance upon exercise of outstanding
options granted to certain directors of ALC not pursuant to ALC's 1994
Non-Employee Director Stock Option Plan; (G) no shares of ALC Common Stock were
held by ALC in its treasury or by its subsidiaries; (H) no shares of ALC
Preferred Stock were issued or outstanding; and (I) 500,000 shares of ALC
Series E Preferred were reserved for issuance upon exercise of the rights (the
"ALC Rights") issued to holders of ALC Common Stock pursuant to the Rights
Agreement dated as of January 12, 1995 between ALC and
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Mellon Bank, N.A., as Rights Agent (the "ALC Rights Agreement"). Except as set
forth above, no shares of capital stock of ALC were issued, reserved for
issuance or outstanding as of April 7, 1995.
(ii) At the close of business on April 7, 1995, no stock
appreciation rights (each an "ALC SAR") or other grants, other than to the
extent specified in the foregoing clause (i), with respect to shares of ALC
Common Stock were outstanding, whether or not issued pursuant to any plan or
arrangement providing for the granting of ALC SARs or such other grants. The
options listed in clauses (C), (D) and (F) of the foregoing clause (i) (each an
"ALC Stock Option") constitute all of the options to purchase shares of ALC
Common Stock which were outstanding as of April 7, 1995, whether or not issued
pursuant to any plan or arrangement (any such plan or arrangement, together
with any plan or arrangement referred to in the preceding sentence, an "ALC
Stock Plan").
(iii) As of the date hereof, no bonds, debentures, notes or
other indebtedness having the right to vote (or convertible into or exercisable
for securities having the right to vote) on any matters on which stockholders
may vote ("Voting Debt") of ALC were issued or outstanding. All outstanding
shares of ALC capital stock are validly issued, fully paid and nonassessable
and not subject to preemptive rights.
(iv) As of the date hereof, except for this Agreement, the
ALC Stock Options, the ALC Warrants and the ALC Rights, there are no options,
warrants, calls, rights,
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commitments or agreements of any character to which ALC or any subsidiary of
ALC is a party or by which it is bound obligating ALC or any subsidiary of ALC
to issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or any Voting Debt of ALC or of any subsidiary of ALC
or obligating ALC or any subsidiary of ALC to grant, extend or enter into any
such option, warrant, call, right, commitment or agreement. After the
Effective Time, there will be no option, warrant, call, right or agreement
obligating ALC or any subsidiary of ALC to issue, deliver or sell, or cause to
be issued, delivered or sold, any shares of capital stock or any Voting Debt of
ALC or any subsidiary of ALC, or obligating ALC or any subsidiary of ALC to
grant, extend or enter into any such option, warrant, call, right or agreement.
As of the date hereof, there are no outstanding contractual obligations or any
understandings of ALC or any of its subsidiaries to repurchase, redeem or
otherwise acquire any shares of capital stock of ALC or any of its
subsidiaries. True and complete copies of the Warrant Agreements have been
provided to Frontier.
(v) Except in connection with the declaration of a dividend
of one ALC Right for each outstanding share of ALC Common Stock, since December
31, 1994, ALC has not (A) issued or permitted to be issued any shares of
capital stock, or any rights, options or warrants to acquire any capital stock,
or securities exercisable for or convertible into shares of capital stock, of
ALC or any of its Significant Subsidiaries, other than pursuant to and as
required by the terms of any ALC Stock Options or ALC Warrants that were issued
and
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outstanding on such date; (B) repurchased, redeemed or otherwise acquired,
directly or indirectly through one or more subsidiaries of ALC, any shares of
capital stock of ALC or any of its Significant Subsidiaries; or (C) declared,
set aside, made or paid to the stockholders of ALC dividends or other
distributions on the outstanding shares of capital stock of ALC. For purposes
of clause (B) of this clause (iv), ALC shall be deemed to include any affiliate
or associate (as defined in the Exchange Act) of ALC or any person that ALC has
caused or requested to purchase or acquire such shares.
(c) Authority. (i) ALC has all requisite corporate power
and authority to enter into this Agreement and, subject to approval of this
Agreement by the stockholders of ALC, to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of ALC, subject to approval of
this Agreement by the stockholders of ALC. This Agreement has been duly
executed and delivered by ALC and constitutes a valid and binding obligation of
ALC enforceable in accordance with its terms.
(ii) Except as set forth on Schedule 3.1(c), the execution
and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby 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, cancellation or acceleration of
any
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obligation or the loss of a material benefit under, or the creation of a lien,
pledge, security interest, charge or other encumbrance on assets (any such
conflict, violation, default, right of termination, cancellation, acceleration,
loss or creation, a "Violation") pursuant to, any provision of the Certificate
of Incorporation or By-laws of ALC or any subsidiary of ALC, any provision of
the Warrant Agreements, any provision of the ALC Stock Plans or any provision
of any agreement or understanding governing the outstanding ALC Stock Options
or ALC SARs, or, subject to obtaining or making the consents, approvals,
orders, authorizations, registrations, declarations and filings referred to in
paragraph (iii) below, result in any Violation of any loan or credit agreement,
note, mortgage, indenture, lease, Benefit Plan (as defined in Section 3.1(j))
or other agreement, obligation, instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to ALC or any subsidiary of ALC or their respective properties or
assets which Violation would have a material adverse effect on ALC.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission, or entity created by rule, regulation or order of any commission or
other governmental authority or other governmental authority or
instrumentality, domestic or foreign (a "Governmental Entity"), is required by
or with respect to ALC or any subsidiary of ALC in connection with the
execution and delivery of this Agreement by ALC or the consummation by ALC of
the transactions contemplated
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hereby, the failure to obtain which would have a material adverse effect on
ALC, except for (A) the filing with the SEC of (1) a joint proxy statement in
definitive form relating to the meetings of ALC's and Frontier's stockholders
to be held in connection with the Merger (the "Proxy Statement") and (2) such
other filings under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as may be required in connection with this Agreement and the
transactions contemplated hereby and the obtaining from the SEC of such orders
as may be required in connection therewith, (B) the filing of the Certificate
of Merger as contemplated by Section 1.3 and appropriate documents with the
relevant authorities of states in which ALC is qualified to do business, (C)
filings pursuant to the rules of the American Stock Exchange (the "AMEX"), (D)
notices under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), and (E) filings under the Communications Act of 1934,
as amended (the "Communications Act"), and under state or foreign utility or
telecommunication regulatory laws.
(d) SEC Documents. ALC has made available to Frontier a true
and complete copy of each report, schedule, registration statement and
definitive proxy statement filed by ALC with the SEC since January 1, 1992 (as
such documents have since the time of their filing been amended, the "ALC SEC
Documents"), which are all the documents (other than preliminary material) that
ALC was required to file with the SEC since such date. As of their respective
dates, the ALC SEC Documents complied in all material respects with the
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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 thereunder applicable to such ALC SEC Documents, and none of the ALC SEC
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of ALC included in the ALC SEC
Documents comply as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto or, in the case of the
unaudited statements, as permitted by Form 10-Q of the SEC) and fairly present
the consolidated financial position of ALC and its consolidated subsidiaries as
at the dates thereof and the consolidated results of their operations and cash
flows for the periods then ended. All material agreements, contracts and other
documents required to be filed as exhibits to any of the ALC SEC Documents have
been so filed.
(e) Information Supplied. None of the information supplied
or to be supplied by ALC for inclusion or incorporation by reference in (i) the
registration statement on Form S-4 to be filed with the SEC by Frontier in
connection with the issuance of shares of Frontier Common Stock in the Merger
(the "S-4") will, at the time the S-4 is filed with the SEC and
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at the time it 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, in light of the
circumstances under which they were made, not misleading, and (ii) the Proxy
Statement will, at the date of mailing to stockholders and at the times of the
meetings of stockholders to be held in connection with the Merger, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
Proxy Statement (except for such portions thereof that relate only to Frontier)
will comply as to form in all material respects with the provisions of the
Exchange Act and the rules and regulations thereunder.
(f) Compliance with Applicable Laws. ALC and its
subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities which are material to the operation of
the businesses of ALC and its subsidiaries, taken as a whole (the "ALC
Permits"), except to the extent the failure to hold the ALC Permits will not
have a material adverse effect on ALC. ALC and its subsidiaries are in
compliance with the terms of the ALC Permits and all applicable laws and
regulations, except where the failure so to comply would not have a material
adverse effect on ALC. Except as disclosed in the ALC SEC Documents filed
prior to the date of this Agreement, the businesses of ALC and its subsidiaries
are not being conducted in violation of any law, order, ordinance or regulation
of
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any Governmental Entity, except for possible violations which individually or
in the aggregate do not, and, insofar as reasonably can be foreseen, in the
future will not, have a material adverse effect on ALC. As of the date of this
Agreement, to the knowledge of ALC, no investigation by any Governmental Entity
with respect to ALC or any of its subsidiaries is pending or threatened, other
than, in each case, those the outcome of which, as far as reasonably can be
foreseen, will not have a material adverse effect on ALC.
(g) Litigation. As of the date of this Agreement, except as
disclosed in the ALC SEC Documents filed prior to the date of this Agreement,
there is no suit, action or proceeding pending or, to the knowledge of ALC,
threatened, against or affecting ALC or any subsidiary of ALC as to which there
is a reasonable possibility of an adverse determination and which, if adversely
determined, would, individually or in the aggregate, have a material adverse
effect on ALC, nor is there any judgment, decree, injunction, rule or order of
any Governmental Entity or arbitrator outstanding against ALC or any subsidiary
of ALC or which, insofar as reasonably can be foreseen, in the future could
have, any such effect.
(h) Taxes. ALC and each of its subsidiaries (and any
consolidated, combined, unitary or aggregate group for tax purposes of which
ALC or any of its subsidiaries is or has been a member) have timely filed all
tax returns required to be filed by any of them and have paid (or ALC has paid
on their behalf), or have set up an adequate reserve for the payment of, all
taxes required to be paid as shown on such returns, and the most recent
financial
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statements contained in the ALC SEC Documents reflect an adequate reserve for
all taxes payable by ALC and its subsidiaries (whether or not shown on such
returns) accrued through the date of such financial statements. Except as set
forth on Schedule 3.1(h), no material deficiencies for any taxes have been
proposed, asserted or assessed against ALC or any of its subsidiaries that are
not adequately reserved for, no audit of any tax return of ALC or any of its
subsidiaries is being conducted by a tax authority, and no extension of the
statute of limitations on the assessment of any taxes has been granted to ALC
or any of its subsidiaries and is currently in effect. For the purpose of this
Agreement, the term "tax" (including, with correlative meaning, the terms
"taxes" and "taxable") shall include, except where the context otherwise
requires, all federal, state, local and foreign income, profits, franchise,
gross receipts, payroll, sales, employment, use, property, withholding, excise,
occupancy and other taxes, duties or assessments (including assessments against
telecommunications providers for universal service support, disabled access,
emergency communications (911) and other purposes mandated by law, regulation
or order of any Governmental Entity) of any nature whatsoever, together with
all interest, penalties and additions imposed with respect to such amounts, and
the term "tax return" shall mean any return, report or statement required to be
filed with any governmental authority with respect to taxes.
(i) Certain Agreements. Except as disclosed in the ALC SEC
Documents filed prior to the date of this Agreement, except as set forth on
Schedule 3.1(i) hereto and except
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for this Agreement, as of the date of this Agreement, neither ALC nor any of
its subsidiaries is a party to any oral or written (i) consulting agreement
involving the payment of more than $250,000 per annum, or union, guild or
collective bargaining agreement which agreement covers any employees, (ii)
agreement with any executive officer or other key employee of ALC or any
subsidiary of ALC the benefits of which are contingent, or the terms of which
are materially altered, upon the occurrence of a transaction involving ALC or
any subsidiary of ALC of the nature contemplated by this Agreement and which
provides for the payment of in excess of $250,000, (iii) agreement with respect
to any executive officer of A or any subsidiary of ALC providing any term of
employment or compensation guarantee extending for a period longer than one
year and for the payment of in excess of $250,000 per annum or (iv) agreement
or plan, including any stock option plan, stock appreciation rights plan,
restricted stock plan or stock purchase plan, any of the benefits of which will
be increased, or the vesting of the benefits of which will be accelerated, by
the occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement. Except as set forth on
Schedule 3.1(i) hereto and except for this Agreement, neither ALC nor any of
its subsidiaries is a party to any agreement restricting (i) the declaration or
payment of any dividends upon any of the capital stock of ALC, (ii) the
purchase, redemption, retirement or other acquisition of any shares of capital
stock of ALC, (iii) the distribution of cash, property
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<PAGE> 31
or assets among the holders of capital stock of ALC or (iv) the making of any
change in the capital structure of ALC. As of the date hereof, the executive
officers of ALC listed on Schedule 3.1(i) hereto have executed amended and
restated employment agreements effective as of the Effective Time (the
"Employment Agreements") substantially in the form attached hereto as Exhibit
3.1(i).
(j) Benefit Plans. (i) With respect to each employee
benefit plan (including, without limitation, any "employee benefit plan", as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) (all the foregoing being herein called "Benefit Plans"),
maintained or contributed to by ALC or any member of its controlled group
within the meaning of Section 414 of the Code (the "ALC Benefit Plans"), ALC
has made available to Frontier, to the extent applicable, a true and correct
copy of (A) the most recent annual report (Form 5500) filed with the IRS, (B)
such ALC Benefit Plan (or where no formal plan exists, a written description
thereof), (C) each trust agreement relating to such ALC Benefit Plan, (D) the
most recent summary plan description for each ALC Benefit Plan for which a
summary plan description is required, (E) the most recent actuarial report or
valuation relating to an ALC Benefit Plan subject to Title IV of ERISA and (F)
the most recent determination letter issued by the IRS with respect to any ALC
Benefit Plan qualified under Section 401 (a) of the Code.
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(ii) With respect to the ALC Benefit Plans, individually and
in the aggregate, no event has occurred and, to the knowledge of ALC, there
exists no condition or set of circumstances, in connection with which ALC or
any members of its controlled group could be subject to any liability that is
reasonably likely to have a material adverse effect on ALC (except liability
for benefits claims and funding obligations payable in the ordinary course)
under ERISA, the Code or any other applicable law.
(iii) True and complete copies of the ALC Stock Plans as in
effect on the date hereof have been provided to Frontier.
(k) Subsidiaries. Schedule 3.1(k) hereto lists all of the
Significant Subsidiaries of ALC as of the date hereof, each of which is
wholly-owned by ALC. All of the shares of capital stock of each of the
subsidiaries held by ALC or by another subsidiary of ALC are fully paid and
nonassessable and are owned by ALC or a subsidiary of ALC free and clear of any
claim, lien or encumbrance.
(l) Absence of Certain Changes or Events. Except as
disclosed in the ALC SEC Documents filed prior to the date of this Agreement,
since December 31, 1994, ALC and its subsidiaries have not incurred any
material liability, except in the ordinary course of their business consistent
with their past practices, nor has there been any change, or any event
involving a prospective change, in the business, prospects, financial condition
or results of operations of ALC or any of its subsidiaries which has had, or is
reasonably likely to have, a
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material adverse effect on ALC (other than as a result of changes in laws or
regulations of general applicability or interpretations thereof).
(m) Section 203 of the DGCL Not Applicable. The restrictions
of Section 203 of the DGCL will not, prior to the termination of this
Agreement, assuming the accuracy of the representations contained in Section
3.2(r) (without giving effect to the knowledge qualification thereof), apply to
this Agreement, the Merger or the transactions contemplated hereby.
(n) Vote Required. The affirmative vote of the holders of a
majority of the outstanding shares of ALC Common Stock entitled to vote thereon
is the only vote of the holders of any class or series of ALC capital stock or
other securities necessary to approve this Agreement and the transactions
contemplated hereby (assuming for purposes of this representation the accuracy
of the representations contained in Section 3.2(r), without giving effect to
the knowledge qualification thereof).
(o) Accounting Matters. Neither ALC nor, to its best
knowledge, any of its affiliates, has through the date of this Agreement, taken
or agreed to take any action that would prevent Frontier from accounting for
the business combination to be effected by the Merger as a "pooling of
interests".
(p) ALC Rights Agreement. Concurrently with the execution
and delivery of this Agreement, ALC has amended the ALC Rights Agreement, to
provide that (i) none of the
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approval, execution or delivery of this Agreement or the consummation of the
Merger will cause (1) the ALC Rights to become exercisable under the ALC Rights
Agreement, (2) Frontier or any of its subsidiaries to be deemed an "Acquiring
Person" (as defined in the ALC Rights Agreement), or (3) the "Stock Acquisition
Date" (as defined in the ALC Rights Agreement) to occur upon any such event and
(ii) the "Expiration Date" (as defined in the ALC Rights Agreement) of the ALC
Rights shall occur immediately prior to the Effective Time. The "Distribution
Date" (as defined in the ALC Rights Agreement) has not occurred.
(q) Properties. Except as disclosed in the ALC SEC Documents
filed prior to the date of this Agreement, ALC or one of its subsidiaries (i)
has good, clear and marketable title to all the properties and assets reflected
in the latest audited balance sheet included in such ALC SEC Documents as being
owned by ALC or one of its subsidiaries or acquired after the date thereof
which are material to ALC's business on a consolidated basis (except properties
sold or otherwise disposed of since the date thereof in the ordinary course of
business), free and clear of all claims, liens, charges, security interests or
encumbrances of any nature whatsoever except (A) statutory liens securing
payments not yet due and (B) such imperfections or irregularities of title,
claims, liens, charges, security interests or encumbrances as do not materially
affect the use of the properties or assets subject thereto or affected thereby
or otherwise materially impair business operations at such properties and (ii)
is the lessee of all leasehold estates reflected in the latest audited
financial statements
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<PAGE> 35
included in such ALC SEC Documents or acquired after the date thereof which are
material to its business on a consolidated basis (except for leases that have
expired by their terms since the date thereof) and is in possession of the
properties purported to be leased thereunder, and each such lease is valid
without default thereunder by the lessee or, to ALC's knowledge, the lessor.
(r) Ownership of Frontier Common Stock. As of the date
hereof, neither ALC nor, to its best knowledge, any of its affiliates or
associates (as defined under the Exchange Act), (i) beneficially own, directly
or indirectly, or (ii) are parties to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of,
any shares of Frontier Common Stock, except for shares which may be held by ALC
Benefit Plans which shares do not, in the aggregate, represent 1% or more of
the outstanding shares of Frontier Common Stock.
(s) Intellectual Property. ALC and its Significant
Subsidiaries own or possess adequate licenses or other valid rights to use all
material computer software and firmware, patents, patent rights, trademarks,
trademark rights, trade names, trade name rights, brand names, copyrights,
service marks, trade secrets, applications for trademarks and for service
marks, know-how and other proprietary rights and information used or held for
use in connection with the business of ALC and its Significant Subsidiaries as
currently conducted or as contemplated to be conducted, and ALC is unaware of
any assertion or claim
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<PAGE> 36
challenging the validity of any of the foregoing which, individually or in the
aggregate, would have a material adverse effect. To the best knowledge of ALC,
except as disclosed on Schedule 3.1(s) hereto, the conduct of the business of
ALC and its Significant Subsidiaries as currently conducted does not conflict
in any way with any patent, patent right, license, trademark, trademark right,
trade name, trade name right, service mark or copyright of any third party
that, individually or in the aggregate, would have a material adverse effect.
To the best knowledge of ALC, there are no infringements of any proprietary
rights owned by or licensed by or to ALC or any of its Significant Subsidiaries
which, individually or in the aggregate, would have a material adverse effect.
(t) Undisclosed Liabilities. Except as disclosed in the ALC
SEC Documents filed prior to the date of this Agreement, neither ALC nor any of
its Significant Subsidiaries has incurred any liabilities or obligations
(absolute, accrued, contingent or otherwise) other than liabilities or
obligations which would not, individually or in the aggregate, have a material
adverse effect.
(u) Environmental Matters. (i) Except as disclosed in the
ALC SEC Documents filed prior to the date of this Agreement, there are no
Environmental Liabilities (as defined below) of ALC or any of its Significant
Subsidiaries which would, individually or in the aggregate, have a material
adverse effect.
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(ii) As used in this Agreement, "Environmental Laws" means any
and all federal, state, local or municipal laws, rules, orders, regulations,
statutes, ordinances, codes, decisions, injunctions, orders, decrees,
requirements of any Governmental Entity, any and all common law requirements,
rules and bases of liability regulating, relating to or imposing liability or
standards of conduct concerning pollution, Hazardous Materials or protection of
human health or the environment, as now or may at any time hereafter be in
effect. "Environmental Liabilities" with respect to any person means any and
all liabilities of or relating to such person or any of its Significant
Subsidiaries (including any entity which is, in whole or in part, a predecessor
of such person or any of such Subsidiaries), whether vested or unvested,
contingent or fixed, actual or potential, known or unknown, which (i) arise
under or relate to matters covered by Environmental Laws and (ii) relate to
actions occurring or conditions existing on or prior to the Closing Date.
"Hazardous Materials" means any hazardous or toxic substances, materials or
wastes, defined, listed, classified or regulated as such in or under any
Environmental Laws, including, without limitation, asbestos, petroleum or
petroleum products (including gasoline, crude oil or any fraction thereof),
polychlorinated biphenyls, and urea-formaldehyde insulation.
(v) Opinion of Financial Advisor. ALC has received the
opinion of Salomon Brothers Inc dated April 9, 1995 to the effect that, as of
such date, the exchange ratio
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reflected in the Conversion Number is fair to the stockholders of ALC from a
financial point of view, a copy of which opinion has been delivered to
Frontier.
3.2 Representations and Warranties of Frontier and Sub.
Frontier and Sub jointly and severally represent and warrant to ALC as follows:
(a) Organization, Standing and Power. Each of Frontier and
its Significant Subsidiaries and Sub is a corporation, partnership or other
legal entity duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization, has all
requisite power and authority and all necessary governmental approvals to own,
lease and operate its properties and to carry on its business as it is now
being conducted, and is duly qualified and in good standing to do business in
each jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification necessary other than in such
jurisdictions where the failure to be so organized, existing or in good
standing or to have such power, authority and governmental approvals or so to
qualify would not, individually or in the aggregate, have a material adverse
effect on Frontier.
(b) Capital Structure. (i) As of the date hereof, the
authorized capital stock of Frontier consists of 300,000,000 shares of Frontier
Common Stock, 4,000,000 shares of Class A Preferred Stock, par value $100.00
per share, of Frontier ("Frontier Class A Preferred Stock"), and 850,000 shares
of Cumulative Preferred Stock, $100.00 par value per share, of
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Frontier ("Frontier Cumulative Preferred Stock"). As of the close of business
on April 6, 1995, (A) 81,864,958 shares of Frontier Common Stock were
outstanding; (B) 1,030,619 shares of Frontier Common Stock were reserved for
issuance upon exercise of outstanding stock options granted pursuant to the
Directors Stock Option Plan of Frontier and the Restated Executive Stock Option
Plan of Frontier; (C) 1,869,516 shares of Frontier Common Stock were reserved
for issuance upon exercise of authorized but unissued stock options pursuant to
the plans referenced in clause (B) above or in connection with Frontier's
dividend reinvestment and employee stock purchase plans (such plans, together
with the plans referenced in clause (B) above, the "Frontier Stock Plans"); (D)
251,483 shares of Frontier Common Stock were reserved for issuance upon
conversion of $5,300,000 in principal amount of 10.46% Convertible Debentures
due 2008 (the "Frontier Convertible Debentures"); (E) 6,375 shares of Frontier
Common Stock were held by Frontier in its treasury or by its subsidiaries; (F)
no shares of Frontier Class A Preferred Stock were issued or outstanding; and
(G) 200,000 shares of Frontier Cumulative Preferred Stock were outstanding,
consisting solely of 60,000 shares of Cumulative Preferred Stock, 5% Series,
40,000 shares of Cumulative Preferred Stock, Second 5% Series, 50,000 shares of
Cumulative Preferred Stock, 5.65% Series, and 50,000 shares of Cumulative
Preferred Stock, 4.60% Series. Except as set forth above, no shares of capital
stock of Frontier were issued, reserved for issuance or outstanding as of April
6, 1995.
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(ii) As of the date hereof, no Voting Debt of Frontier was
issued or outstanding. All outstanding shares of Frontier capital stock are,
and the shares of Frontier Common Stock (A) to be issued pursuant to or as
specifically contemplated by this Agreement, and (B) when issued in accordance
with this Agreement upon exercise of the ALC Stock Options and the ALC
Warrants, as the case may be, will be, validly issued, fully paid and
nonassessable and not subject to preemptive rights.
(iii) As of the date hereof, except for this Agreement, the
Frontier Stock Plans, the Frontier Convertible Debentures and the rights (the
"Frontier Rights") to be issued to holders of Frontier Common Stock pursuant to
the Rights Agreement between Frontier and The First National Bank of Boston, as
Rights Agent (the "Frontier Rights Agreement"), substantially in the form
previously provided to ALC, there are no options, warrants, calls, rights,
commitments or agreements of any character to which Frontier or any subsidiary
of Frontier is a party or by which it is bound obligating Frontier or any
subsidiary of Frontier to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or any Voting Debt of
Frontier or of any subsidiary of Frontier or obligating Frontier or any
subsidiary of Frontier to grant, extend or enter into any such option, warrant,
call, right, commitment or agreement. As of the date hereof, there are no
outstanding contractual obligations or any understandings of Frontier or any of
its subsidiaries to repurchase, redeem or otherwise acquire any shares of
capital stock of Frontier or any of its subsidiaries.
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(iv) Except in connection with the declaration of a dividend
of one Frontier Right for each outstanding share of Frontier Common Stock,
since December 31, 1994, Frontier has not (A) issued or permitted to be issued
any shares of capital stock, or securities exercisable for or convertible into
shares of capital stock, of Frontier or any of its Significant Subsidiaries or
Sub, other than pursuant to and as required by the terms of Frontier's dividend
reinvestment and employee stock purchase plans, and any employee stock options
that were issued and outstanding on such date; (B) repurchased, redeemed or
otherwise acquired, directly or indirectly through one or more subsidiaries of
Frontier, any shares of capital stock of Frontier or any of its Significant
Subsidiaries or Sub; or (C) declared, set aside, made or paid to the
stockholders of Frontier dividends or other distributions on the outstanding
shares of capital stock of Frontier, other than regular quarterly cash
dividends at a rate not in excess of the regular quarterly cash dividends most
recently declared by Frontier prior to the date of this Agreement, or as
required by the terms of the Frontier Preferred Stock as in effect on the date
hereof. For purposes of clause (B) of this clause (iv), Frontier shall be
deemed to include any affiliate or associate (as defined in the Exchange Act)
of Frontier or any person that Frontier has caused or requested to purchase or
acquire such shares.
(v) As of the date hereof, the authorized capital stock of
Sub consists of 100 shares of Common Stock, par value $1.00 per share, all of
which are validly issued, fully paid and nonassessable and are owned by
Frontier.
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(c) Authority. (i) Frontier and Sub have all requisite
corporate power and authority to enter into this Agreement and, subject to
approval by the stockholders of Frontier of the issuance of Frontier Common
Stock pursuant to the Merger (the "Frontier Vote Matter"), to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Frontier and Sub,
subject to approval of the Frontier Vote Matter by the stockholders of
Frontier. This Agreement has been duly executed and delivered by Frontier and
Sub and constitutes a valid and binding obligation of Frontier and Sub,
enforceable in accordance with its terms.
(ii) The execution and delivery of this Agreement does not,
and the consummation of the transactions contemplated hereby will not, result
in any Violation pursuant to any provision of the Certificate of Incorporation
or By-laws of Frontier, Sub, or any other subsidiary of Frontier or, except as
disclosed in writing to the other party prior to the date hereof and subject to
obtaining or making the consents, approvals, orders, authorizations,
registrations, declarations and filings referred to in paragraph (iii) below,
result in any Violation of any loan or credit agreement, note, mortgage,
indenture, lease, Benefit Plan or other agreement, obligation, instrument,
permit, concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Frontier, Sub,
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or any other subsidiary of Frontier or their respective properties or assets
which Violation would have a material adverse effect on Frontier.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required
by or with respect to Frontier, Sub, or any other subsidiary of Frontier in
connection with the execution and delivery of this Agreement by Frontier or Sub
or the consummation by Frontier or Sub of the transactions contemplated hereby,
the failure to obtain which would have a material adverse effect on Frontier,
except for (A) the filing with the SEC of (1) the S-4, (2) the Proxy Statement
and (3) such other filings under the Exchange Act as may be required in
connection with this Agreement and the transactions contemplated hereby and the
obtaining from the SEC of such orders as may be required in connection
therewith, (B) such filings and approvals as are required to be made or
obtained under the securities or blue sky laws of various states in connection
with the transactions contemplated by this Agreement, (C) the filing of the
Certificate of Merger as contemplated by Section 1.3 and appropriate documents
with the relevant authorities of states in which Frontier is qualified to do
business, (D) filings pursuant to the rules of the NYSE, (E) notices under the
HSR Act and (F) filings under the Communications Act and under state or foreign
utility or telecommunication regulatory laws.
(d) SEC Documents. Frontier has made available to ALC a true
and complete copy of each report, schedule, registration statement and
definitive proxy statement filed by
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Frontier with the SEC since January 1, 1992 (as such documents have since the
time of their filing been amended, the "Frontier SEC Documents"), which are all
the documents (other than preliminary material) that Frontier was required to
file with the SEC since such date. As of their respective dates, the Frontier
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 thereunder applicable to such Frontier SEC Documents,
and none of the Frontier SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. The financial statements of
Frontier included in the Frontier SEC Documents comply as to form in all
material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis during the periods involved (except as may be indicated in
the notes thereto or, in the case of the unaudited statements, as permitted by
Form 10-Q of the SEC) and fairly present the consolidated financial position of
Frontier and its consolidated subsidiaries as at the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended. All material agreements, contracts and other documents required to be
filed as exhibits to any of the Frontier SEC Documents have been so filed.
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(e) Information Supplied. None of the information supplied
or to be supplied by Frontier or Sub for inclusion or incorporation by
reference in (i) the S-4 will, at the time the S-4 is filed with the SEC and at
the time it 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, in light of the
circumstances under which they were made, not misleading and (ii) the Proxy
Statement will, at the date of mailing to stockholders and at the times of the
meetings of stockholders to be held in connection with the Merger, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
Proxy Statement, except for such portions thereof that relate only to ALC, will
comply as to form in all material respects with the provisions of the Exchange
Act and the rules and regulations thereunder, and the S-4, except for such
portions thereof that relate only to ALC, will comply as to form in all
material respects with the provisions of the Securities Act and the rules and
regulations thereunder.
(f) Compliance with Applicable Laws. Frontier and its
subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities which are material to the operation of
the businesses of Frontier and its subsidiaries, taken as a whole (the
"Frontier Permits"), except to the extent the failure to hold the Frontier
Permits
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would not have a material adverse effect on Frontier. Frontier and its
subsidiaries are in compliance with the terms of the Frontier Permits and all
applicable laws and regulations, except where the failure so to comply would
not have a material adverse effect on Frontier. Except as disclosed in the
Frontier SEC Documents filed prior to the date of this Agreement, the
businesses of Frontier and its subsidiaries are not being conducted in
violation of any law, order, ordinance or regulation of any Governmental
Entity, except for possible violations which individually or in the aggregate
do not, and, insofar as reasonably can be foreseen, in the future will not,
have a material adverse effect on Frontier. As of the date of this Agreement,
to the knowledge of Frontier, no investigation by any Government Entity with
respect to Frontier or any of its subsidiaries is pending or threatened, other
than, in each case, those the outcome of which, as far as reasonably can be
foreseen, will not have a material adverse effect on Frontier.
(g) Litigation. As of the date of this Agreement, except as
disclosed in the Frontier SEC Documents filed prior to the date of this
Agreement, there is no suit, action or proceeding pending or, to the knowledge
of Frontier, threatened, against or affecting Frontier or any subsidiary of
Frontier as to which there is a reasonable possibility of an adverse
determination and which, if adversely determined, would, individually or in the
aggregate, have a material adverse effect on Frontier, nor is there any
judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against Frontier or any
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subsidiary of Frontier having, or which, insofar as reasonably can be foreseen,
in the future could have, any such effect.
(h) Taxes. Frontier and each of its subsidiaries (and any
consolidated, combined, unitary or aggregate group for tax purposes of which
Frontier or any of its subsidiaries is or has been a member) have timely filed
all tax returns required to be filed by any of them and have paid (or Frontier
has paid on their behalf), or have set up an adequate reserve for the payment
of, all taxes required to be paid as shown on such returns, and the most recent
financial statements contained in the Frontier SEC Documents reflect an
adequate reserve for all taxes payable by Frontier and its subsidiaries
(whether not shown on such returns) accrued through the date of such financial
statements. Except as disclosed on Schedule 3.2(h), (i) no material
deficiencies for any taxes have been proposed, asserted or assessed against
Frontier or any of its subsidiaries that are not adequately reserved for, (ii)
no audit of any tax return of Frontier or any of its subsidiaries is being
conducted by a tax authority, and (iii) no extension of the statute of
limitations on the assessment of any taxes has been granted to Frontier or any
of its subsidiaries and is currently in effect.
(i) Certain Agreements. Except as disclosed in the Frontier
SEC Documents filed prior to the date of this Agreement, except as set forth on
Schedule 3.2(i) hereto and except for this Agreement, as of the date of this
Agreement, neither Frontier nor any of its subsidiaries is a party to any oral
or written (i) consulting agreement involving the payment
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of more than $250,000 per annum, or union, guild or collective bargaining
agreement which agreement covers any employees, (ii) agreement with any
executive officer or other key employee of Frontier or any subsidiary of
Frontier the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving Frontier or
any subsidiary of Frontier of the nature contemplated by this Agreement and
which provides for the payment of in excess of $250,000, (iii) agreement with
respect to any executive officer of Frontier or any subsidiary of Frontier
providing any term of employment or compensation guarantee extending for a
period longer than one year and for the payment of in excess of $250,000 per
annum or (iv) agreement or plan, including any stock option plan, stock
appreciation rights plan, restricted stock plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting of the benefits of
which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contemplated by this
Agreement.
(j) Benefit Plans. (i) With respect to each Benefit Plan
maintained or contributed to by Frontier or any member of its controlled group
within the meaning of Section 414 of the Code (the "Frontier Benefit Plans"),
Frontier has made available to ALC, to the extent applicable, a true and
correct copy of (A) the most recent annual report (Form 5500) filed with the
IRS, (B) such Frontier Benefit Plan (or where no formal plan exists, a
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written description thereof), (C) each trust agreement relating to such
Frontier Benefit Plan, (D) the most recent summary plan description for each
Frontier Benefit Plan for which a summary plan description is required, (E) the
most recent actuarial report or valuation relating to a Frontier Benefit Plan
subject to Title IV of ERISA and (F) the most recent determination letter
issued by the IRS with respect to any Frontier Benefit Plan qualified under
Section 401(a) of the Code.
(ii) With respect to the Frontier Benefit Plans, individually
and in the aggregate, no event has occurred and, to the knowledge of Frontier,
there exists no condition or set of circumstances in connection with which
Frontier or any member of its controlled group could be subject to any
liability that is reasonably likely to have a material adverse effect upon
Frontier (except liability for benefits claims and funding obligations payable
in the ordinary course) under ERISA, the Code or any other applicable law.
(iii) True and complete copies of the Frontier Stock Plans as
in effect on the date hereof have been provided to A.
(k) Subsidiaries. Schedule 3.2(k) hereto lists all of the
Significant Subsidiaries of Frontier as of the date hereof, each of which is
wholly-owned by Frontier. All of the shares of capital stock of each of the
subsidiaries held by Frontier or by another subsidiary of Frontier are fully
paid and nonassessable and are owned by Frontier or a subsidiary of Frontier
free and clear of any claim, lien or encumbrance.
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(l) Absence of Certain Changes or Events. Except as
disclosed in the Frontier SEC Documents filed prior to the date of this
Agreement, since December 31, 1994, Frontier and its subsidiaries have not
incurred any material liability, except in the ordinary course of their
business consistent with their past practices, nor has there been any change,
or any event involving a prospective change, in the business, prospects,
financial condition or results of operations of Frontier or any of its
subsidiaries which has had, or is reasonably likely to have, a material adverse
effect on Frontier (other than as a result of changes in laws or regulations of
general applicability or interpretations thereof).
(m) Section 912 of the NYBCL Not Applicable. The provisions
of Section 912 of the New York Business Corporation Law (the "NYBCL") will not,
prior to the termination of this Agreement, assuming the accuracy of the
representations contained in Section 3.1(r) (without giving effect to the
knowledge qualification thereof), apply to this Agreement, the Merger or the
transactions contemplated hereby.
(n) Vote Required. The affirmative vote of the holders of
shares of Frontier Common Stock representing a majority of the total votes cast
by the holders of all outstanding shares of Frontier Common Stock is the only
vote of the holders of any class or series of Frontier capital stock necessary
to approve the Frontier Vote Matter and the transactions contemplated hereby,
provided that the total votes cast by such holders represent a majority of the
outstanding shares of Frontier Common Stock entitled to vote on the
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Frontier Vote Matter (assuming for purposes of this representation (including
the proviso) the accuracy of the representations contained in Section 3.1(r)
without giving effect to the knowledge qualification thereof).
(o) Accounting Matters. Neither Frontier nor, to its best
knowledge, any of its affiliates, has through the date of this Agreement taken
or agreed to take any action that would prevent Frontier from accounting for
the business combination to be effected by the Merger as a "pooling of
interests".
(p) Frontier Rights Agreement. Under the Frontier Rights
Agreement, which will be executed as promptly as practicable following the date
hereof, and assuming that no stockholder of ALC would constitute an "Acquiring
Person" after giving effect to the Merger, (i) none of the approval, execution
or delivery of this Agreement or the consummation of the Merger will cause (1)
the Frontier Rights to become exercisable, (2) ALC or any of its subsidiaries
to be deemed an "Acquiring Person" (as defined in the Frontier Rights
Agreement), or (3) the "Stock Acquisition Date" (as defined in the Frontier
Rights Agreement) to occur upon any such event. The "Distribution Date" (as
defined in the Frontier Rights Agreement) has not occurred.
(q) Properties. Except as disclosed in the Frontier SEC
Documents filed prior to the date of this Agreement or as disclosed in Schedule
3.2(q) hereto, Frontier or one of subsidiaries (i) has good, clear and
marketable title to all the properties and assets reflected in
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the latest audited balance sheet included in such Frontier SEC Documents as
being owned by Frontier or one of its subsidiaries or acquired after the date
thereof which are material to Frontier's business on a consolidated basis
(except properties sold or otherwise disposed of since the date thereof in the
ordinary course of business), free and clear of all claims, liens, charges,
security interests or encumbrances of any nature whatsoever except (A)
statutory liens securing payments not yet due and (B) such imperfections or
irregularities of title, claims, liens, charges, security interests or
encumbrances as do not materially affect the use of the properties or assets
subject thereto or affected thereby or otherwise materially impair business
operations at such properties and (ii) is the lessee of all leasehold estates
reflected in the latest audited financial statements included in such Frontier
SEC Documents or acquired after the date thereof which are material to its
business on a consolidated basis (except for leases that have expired by their
terms since the date thereof) and is in possession of the properties purported
to be leased thereunder and each such lease is valid without default thereunder
by the lessee or, to Frontier's knowledge, the lessor.
(r) Ownership of ALC Common Stock. As of the date hereof,
neither Frontier nor, to its best knowledge, any of its affiliates or
associates (as defined under the Exchange Act), (i) beneficially own, directly
or indirectly, or (ii) are parties to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of,
any shares of ALC Common Stock, except for shares which may be held by Frontier
Benefit
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Plans which shares do not, in the aggregate, represent 1% or more of the
outstanding shares of ALC Common Stock.
(s) Intellectual Property. Frontier and its Significant
Subsidiaries own or possess adequate licenses or other valid rights to use all
material computer software and firmware, patents, patent rights, trademarks,
trademark rights, trade names, trade name rights, brand names, copyrights,
service marks, trade secrets, applications for trademarks and for service
marks, know- how and other proprietary rights and information used or held for
use in connection with the business of Frontier and its Significant
Subsidiaries as currently conducted or as contemplated to be conducted, and
Frontier is unaware of any assertion or claim challenging the validity of any
of the foregoing which, individually or in the aggregate, would have a material
adverse effect. To the best knowledge of Frontier, the conduct of the business
of Frontier and its Significant Subsidiaries as currently conducted does not
conflict in any way with any patent, patent right, license, trademark,
trademark right, trade name, trade name right, service mark or copyright of any
third party that, individually or in the aggregate, would have a material
adverse effect. To the best knowledge of Frontier, there are no infringements
of any proprietary rights owned by or licensed by or to Frontier or any of its
Significant Subsidiaries which, individually or in the aggregate, would have a
material adverse effect.
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(t) Undisclosed Liabilities. Except as disclosed in the
Frontier SEC Documents filed prior to the date of this Agreement, neither
Frontier nor any of its Significant Subsidiaries has incurred any liabilities
or obligations (absolute, accrued, contingent or otherwise) other than
liabilities or obligations which would not, individually or in the aggregate,
have a material adverse effect.
(u) Environmental Matters. Except as disclosed in the
Frontier SEC Documents filed prior to the date of this Agreement, there are no
Environmental Liabilities of Frontier or any of its Significant Subsidiaries
which would, individually or in the aggregate, have a material adverse effect.
(v) Opinion of Financial Advisor. Frontier has received the
opinion of Lazard Freres & Co. dated April 9, 1995, to the effect that, as of
such date, the exchange ratio reflected in the Conversion Number is fair to the
stockholders of Frontier from a financial point of view, a copy of which
opinion has been delivered to ALC.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 Covenants of ALC and Frontier. During the period from
the date of this Agreement and continuing until the Effective Time, ALC and
Frontier each agrees as to itself and its subsidiaries that (except as
expressly contemplated or permitted by this Agreement or to the extent that the
other party shall otherwise consent in writing):
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(a) Ordinary Course. Such party and its subsidiaries shall
carry on their respective businesses in the usual, regular and ordinary course
in substantially the same manner as heretofore conducted and use all reasonable
efforts to preserve intact their present business organizations, maintain their
rights and franchises and preserve their relationships with customers,
suppliers and others having business dealings with them to the end that their
goodwill and ongoing businesses shall not be impaired in any material respect
at the Effective Time. No party shall, or shall permit any of its subsidiaries
to, (i) enter into any new material line of business or (ii) incur or commit to
any capital expenditures or any obligations or liabilities in connection
therewith other than capital expenditures and obligations or liabilities
incurred or committed to in the ordinary course of business consistent with
past practice or as contemplated by business plans or budgets provided, or
otherwise disclosed in writing, to the other party prior to the date hereof.
(b) Dividends; Changes in Stock. Except in connection with
the declaration and issuance of the Frontier Rights by Frontier, no party
shall, or shall permit any of its Significant Subsidiaries to, or shall propose
to, (i) declare or pay any dividends on or make other distributions in respect
of any of its capital stock, except (A) Frontier may continue the declaration
and payment of regular quarterly cash dividends not in excess of $.2075 per
share of Frontier Common Stock and regular quarterly cash dividends as provided
by and in accordance with the terms of the Frontier Cumulative Preferred Stock,
in each case with usual
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record and payment dates for such dividends in accordance with Frontier's past
dividend practice, and (B) for dividends by a wholly-owned subsidiary of such
party, (ii) split, combine or reclassify any of its capital stock or issue or
authorize or propose the issuance of any other securities in respect of, in
lieu of or in substitution for shares of its capital stock or (iii) repurchase,
redeem or otherwise acquire, or permit any subsidiary to purchase or otherwise
acquire any shares of its capital stock or any securities convertible into or
exercisable for any shares of its capital stock, except in the case of
Frontier, as described on Schedule 3.2(b).
(c) Issuance of Securities. No party shall, or shall permit
any of its subsidiaries to, issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock of any class,
any Voting Debt or any securities convertible into or exercisable for, or any
rights, warrants or options to acquire, any such shares or Voting Debt, or
enter into any agreement with respect to any of the foregoing, other than (i)
the issuance of Frontier Common Stock or ALC Common Stock, as the case may be,
upon the exercise of the stock options and warrants referred to in this
Agreement, in each case outstanding on the date of this Agreement, or pursuant
to Frontier Stock Plans or ALC Stock Plans, in each case in accordance with
their present terms, (ii) in the case of Frontier, grants of options to
purchase shares of Frontier Common Stock pursuant to the Frontier Stock Plans,
(iii) issuances by a wholly-owned subsidiary of its capital stock to its
parent, (iv) in the case of Frontier, the issuance of Frontier Rights and
shares of Series A Junior Participating Class
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A Preferred Stock of Frontier the ("Frontier Series A Preferred") upon exercise
of the Frontier Rights, in each case in accordance with the terms of the
Frontier Rights Agreement, and the reservation for issuance of shares of
Frontier Series A Preferred and (v) in the case of ALC, the issuance of ALC
Rights and shares of ALC Series E Preferred upon exercise of ALC Rights, in
each case in accordance with the terms of the ALC Rights Agreement (as amended
as described in Section 3.1(p)), and the reservation for issuance of shares of
ALC Series E Preferred.
(d) Governing Documents. No party shall amend or propose to
amend, or shall permit any of its Significant Subsidiaries to amend, the
Certificate of Incorporation or By-laws of such party or any of its Significant
Subsidiaries (or, in the case of Frontier, of Sub), except as contemplated by
Section 5.12; provided, however, the foregoing shall not prevent the amendment
of Sub's Certificate of Incorporation to increase the number of authorized
shares of its common stock or to change the par value thereof. Frontier shall
not amend the Frontier Rights Agreement in any way adverse to ALC or its
ability to consummate the transactions contemplated hereby and ALC shall not
amend the ALC Rights Agreement (as amended as described in Section 3.1(p)) in
any way adverse to Frontier or its ability to consummate the transactions
contemplated hereby. ALC shall not amend the Warrant Agreements or the Grumman
Hill Options.
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(e) No Solicitations. No party shall, or shall permit any of
its subsidiaries to, directly or indirectly, through any officer, director,
agent or otherwise, initiate, solicit or knowingly encourage (including by way
of furnishing non-public information or assistance), or take any other action
to facilitate knowingly, any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Competing
Transaction (as defined below), or enter into or maintain or continue
discussions or negotiate with any person in furtherance of such inquiries or to
obtain a Competing Transaction, or agree to or endorse any Competing
Transaction, or authorize or permit any of the officers, directors or employees
of such party or any of its subsidiaries or any investment banker, financial
advisor, attorney, accountant or other representative retained by such party or
any of such party's subsidiaries to take any such action, and each party shall
notify the other party hereto orally (within twelve hours) and in writing (as
promptly as practicable), in reasonable detail, as to any inquiries and
proposals which it or any of such party's subsidiaries or any such officer,
director, employee, investment banker, financial advisor, attorney, accountant
or other representative may receive and if such inquiry or proposal is in
writing, such party shall deliver to the other party a copy of such inquiry or
proposal; provided, however, that nothing contained in this Section 4.1(e)
shall prohibit the Board of Directors of Frontier or ALC, as the case may be,
from (i) furnishing information to, or entering into discussions or
negotiations with, any person or entity that makes an unsolicited written, bona
fide proposal to acquire such party pursuant to
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a merger, consolidation, share exchange, business combination, sale of assets,
tender or exchange offer or other similar transaction, if, and only to the
extent that, (A) the Board of Directors of such party, after consultation with
and based upon the advice of independent legal counsel (who may be such party's
regularly engaged independent legal counsel), determines in good faith that
such action is required for the Board of Directors of such party to comply with
its fiduciary duties to stockholders under applicable law and (B) prior to
furnishing such information to, or entering into discussions or negotiations
with, such person, such party (x) provides reasonable notice (no less than one
business day) to the other party to the effect that it is furnishing
information to, or entering into discussions or negotiations with, such person
and (y) receives from such person an executed confidentiality agreement in
reasonably customary form on terms not more favorable to such person than the
terms contained in the letter dated September 27, 1994 between ALC and Frontier
(the "Confidentiality Agreement"); provided further, that the party furnishing
to any such person or entity any material, non-public information not
previously delivered to the other party shall deliver to the other party copies
of all such information (provided that the party furnishing to any such person
any such material, non-public information of which copies are not delivered to
the other party pursuant to the foregoing shall deliver to the other party a
list of all such information so provided), (ii) complying with Rule 14e-2
promulgated under the Exchange Act with regard to a tender or exchange offer or
(iii) failing to make or withdrawing or
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modifying its recommendation referred to in Section 5.5 following the
occurrence of a Competing Transaction if the Board of Directors of such party,
after consultation with and based upon the advice of independent legal counsel
(who may be such party's regularly engaged independent legal counsel),
determines in good faith that such action is required for the Board of
Directors of such party to comply with its fiduciary duties to stockholders
under applicable law. As used in this Agreement, "Competing Transaction" shall
mean any of the following (other than the transactions contemplated or
permitted by this Agreement) involving a party hereto or any of its Significant
Subsidiaries: (i) any merger, consolidation, share exchange, business
combination, or other similar transaction; (ii) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition of 20% or more of the assets of
such party and its subsidiaries, taken as a whole, in a single transaction or
series of transactions; (iii) any tender offer or exchange offer for 20% or
more of the outstanding shares of capital stock of such party or the filing of
a registration statement under the Securities Act in connection therewith; (iv)
any person or group having acquired beneficial ownership of 20% or more of the
outstanding shares of capital stock of such party; or (v) any proposal, plan or
intention to do any of the foregoing either publicly announced or otherwise
communicated to ALC or Frontier, as the case may be, or any agreement to engage
in any of the foregoing. This Section 4.1(e) shall not prohibit accurate
disclosure by a party that is required in any ALC SEC Document or Frontier SEC
Document (including the Proxy Statement and the S-4) or
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otherwise under applicable law in the opinion of the Board of Directors of such
party, after consultation with and based upon the advice of independent legal
counsel (who may be such party's regularly engaged legal counsel), as of the
date of such ALC SEC Document or Frontier SEC Document or such other required
disclosure as to the transactions contemplated hereby or as to any Competing
Transaction.
(f) No Acquisitions. Other than (i) acquisitions disclosed
in the ALC SEC Documents or the Frontier SEC Documents, as the case may be,
(ii) acquisitions for which a party has entered into a definitive agreement
prior to the date hereof, (iii) acquisitions for which a party has an
outstanding bona fide offer as of the date hereof and (iv) if there shall have
occurred after the date hereof a Competing Transaction with respect to either
ALC or Frontier, acquisitions in connection with which the total fair market
value of the consideration paid by the acquiror shall not exceed an aggregate
of $100,000,000, no party shall, or shall permit any of its subsidiaries to,
without the prior written consent of the other party (which shall not be
unreasonably withheld), acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial equity interest in or a substantial
portion of the assets of, or by any other manner, any business or any
corporation, partnership, association or other business organization or
division thereof or otherwise acquire or agree to acquire any assets in each
case which are material, individually or in the aggregate, to such party and
its subsidiaries taken as a whole; provided, however, that the foregoing shall
not prohibit (i)
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internal reorganizations or consolidations involving existing subsidiaries or
(ii) the creation of new subsidiaries organized to conduct or continue
activities otherwise permitted by this Agreement.
(g) No Dispositions. Other than (i) dispositions referred to
in ALC SEC Documents or Frontier SEC Documents filed prior to the date of this
Agreement or as previously disclosed in writing by a party to the other party,
or (ii) as may be required by law to consummate the transactions contemplated
hereby, no party shall, or shall permit any of its subsidiaries to, sell,
lease, encumber or otherwise dispose of, or agree to sell, lease, encumber or
otherwise dispose of any of its assets (including capital stock of
subsidiaries), except, subject to Section 4.1(l), for dispositions in the
ordinary course of business consistent with past practice or which,
individually do not exceed $10,000,000 or which, in the aggregate, do not
exceed $25,000,000.
(h) Indebtedness. No party shall, or shall permit any of its
subsidiaries to, incur any long-term indebtedness for borrowed money or
guarantee any such long-term indebtedness or issue or sell any long-term debt
securities or warrants or rights to acquire any long-term debt securities of
such party or any of its subsidiaries or guarantee any long-term debt
securities of others (other than such party or any of its wholly owned
subsidiaries) or enter into or amend any contract, agreement, commitment or
arrangement with respect to any of the foregoing, other than (i) in replacement
for existing or maturing debt, (ii) indebtedness
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of any subsidiary of a party to such party or another subsidiary of such party,
(iii) borrowings under existing lines of credit or under commercial paper
programs in the ordinary course of business consistent with prior practice,
(iv) borrowings by Rochester Telephone Corp. to the extent that the aggregate
long-term indebtedness of Rochester Telephone Corp. does not exceed
$200,000,000, (v) borrowings by either party under its lines of credit
existing on the date hereof, (vi) indebtedness assumed or indebtedness of any
person or entity acquired pursuant to any acquisitions referred to in Section
4.1(f) or (vii) other borrowings which, in the aggregate, do not exceed
$10,000,000.
(i) Other Actions. No party shall, or shall permit any of
its subsidiaries to, take any action that would or reasonably might be expected
to, result in any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect, or in any of the
conditions to the Merger set forth in Article VI not being satisfied, or
(unless such action is required by applicable law) which would adversely affect
the ability of any of them to obtain any of the Requisite Regulatory Approvals
without imposition of a condition or restriction of the type referred to in
Sections 6.1(g), 6.2(e) or 6.3(e).
(j) Advice of Changes; Government Filings. Each party shall
confer on a regular and frequent basis with the other, report on operational
matters and promptly advise the other, orally and in writing of any change or
event having, or which, insofar as can
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reasonably be foreseen, could have, a material adverse effect on such party or
which would cause or constitute a material breach of any of the
representations, warrants or covenants of such party contained herein.
Frontier and ALC shall file all reports required to be filed by each of them
with the SEC between the date of this Agreement and the Effective Time and
shall deliver to the other party copies of all such reports promptly after the
same are filed. Frontier and ALC shall cooperate with each other in
determining whether any filings are required to be made with or consents
required to be obtained from, any third party or Governmental Entity prior to
the Effective Time in connection with this Agreement or the transactions
contemplated hereby, and shall cooperate in making any such filings promptly
and in seeking to obtain timely any such consents. Each party shall promptly
provide the other (or its counsel) with copies of all other filings made by
such party with any state or federal Governmental Entity in connection with
this Agreement or the transactions contemplated hereby.
(k) Accounting Methods. Neither Frontier nor ALC shall
change its methods of accounting in effect at December 31, 1994, except as
required by changes in generally accepted accounting principles as concurred in
by such party's independent auditors. Neither Frontier nor ALC will change its
fiscal year.
(l) Pooling and Tax-Free Reorganization Treatment. Neither
Frontier nor ALC shall intentionally take or cause to be taken any action,
whether before or after the
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Effective Time, which would disqualify the Merger as a "pooling of interests"
for accounting purposes or as a "reorganization" within the meaning of Section
368(a) of the Code.
(m) Benefit Plans. During the period from the date of this
Agreement and continuing until the Effective Time, each of Frontier and ALC
agrees as to itself and its subsidiaries that it will not, without the prior
written consent of the other party, (i) enter into, adopt, amend (except as may
be required by law), renew or terminate any Frontier Benefit Plan or ALC
Benefit Plan, as the case may be, or any other employee benefit plan or any
agreement, arrangement, plan or policy between such party and one or more of
its directors or officers, (ii) except for normal increases in the ordinary
course of business consistent with past practice that, in the aggregate, do not
result in a material increase in benefits or compensation expense to such
party, increase in any manner the compensation or fringe benefits of any
director, officer or employee or pay any benefit not required by any plan and
arrangement as in effect as of the date hereof, (iii) in the case of ALC, grant
any stock options, stock appreciation rights, restricted stock, restricted
stock units or performance units or shares other than as required by existing
agreements with individual employees, or enter into any contract, agreement,
commitment or arrangement to do any of the foregoing or (iv) except for the
Employment Agreements, enter into or renew any contract, agreement, commitment
or arrangement providing for the payment to any director, officer or employee
of
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such party of compensation or benefits contingent, or the terms of which are
materially altered, upon the occurrence of any of the transactions contemplated
by this Agreement.
(n) Tax Elections. Except in the ordinary course of business
and consistent with past practice, without the prior written consent of the
other, neither Frontier nor ALC shall make any material tax election or settle
or compromise any material federal, state, local or foreign income tax
liability.
(o) Network Transition. Promptly following the date hereof,
Frontier and ALC shall consider and discuss the manner in which they may, to
the extent not violative of any contracts, arrangements or agreements, written
or oral, to which any party hereto or any of its subsidiaries or affiliates is
a party, cause their respective long distance subsidiaries (the "Long Distance
Subs") to take the actions reasonably necessary to begin to transition their
respective switched long distance traffic of each other for termination and
obtain the maximum network optimization and other synergies as necessary for
the Long Distance Subs' future business plans, including but not limited to
joint purchasing of transmission capacity.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Preparation of S-4 and the Proxy Statement. Frontier and
ALC shall promptly prepare and file with the SEC the Proxy Statement and
Frontier shall prepare and file with the SEC the S-4, in which the Proxy
Statement will be included as a prospectus.
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Each of Frontier and ALC shall use all reasonable efforts to have the S-4
declared effective under the Securities Act as promptly as practicable after
such filing. Frontier shall also take any action (other than qualifying to do
business in any jurisdiction in which it is now not so qualified) required to
be taken under any applicable state securities laws in connection with the
issuance of Frontier Common Stock in the Merger and Frontier Common Stock upon
the exercise of the ALC Stock Options and the ALC Warrants, and ALC shall
furnish all information concerning ALC and the holders of ALC Common Stock, ALC
Stock Options and ALC Warrants as may be reasonably requested in connection
with any such action.
5.2 Letter of ALC's Accountants. ALC shall use its
reasonable best efforts to cause to be delivered to Frontier a letter of Ernst
& Young, ALC's independent auditors, dated a date within two business days
before the date on which the S-4 shall become effective and addressed to
Frontier, in form and substance reasonably satisfactory to Frontier and
customary in scope and substance for letters delivered by independent public
accountants in connection with registration statements similar to the S-4.
5.3 Letter of Frontier's Accountants. Frontier shall use its
reasonable best efforts to cause to be delivered to ALC a letter of Price
Waterhouse, Frontier's independent auditors, dated a date within two business
days before the date on which the S-4 shall become effective and addressed to
ALC, in form and substance reasonably satisfactory to ALC and
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customary in scope and substance for letters delivered by independent public
accountants in connection with registration statements similar to the S-4.
5.4 Access to Information. Upon reasonable notice, ALC and
Frontier shall each (and shall cause each of their respective subsidiaries to)
afford to the officers, employees, accountants, counsel and other
representatives of the other, access, during normal business hours during the
period prior to the Effective Time, to all its properties, books, contracts,
commitments and records and, during such period, each of ALC and Frontier shall
(and shall cause each of their respective subsidiaries to) make available to
the other (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 securities laws and (b) all other information
concerning its business, properties and personnel as such other party may
reasonably request. The parties will hold any such information which is
nonpublic in confidence to the extent required by, and in accordance with, the
provisions of the Confidentiality Agreement. No investigation by either
Frontier or ALC shall affect the representations and warranties of the other,
except to the extent such representations and warranties are by their terms
qualified by disclosures made to such first party.
5.5 Stockholder Meetings. ALC and Frontier each shall call a
meeting of its respective stockholders to be held as promptly as practicable
for the purpose of voting upon the approval of this Agreement in the case of
ALC and the Frontier Vote Matter in the case
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of Frontier. ALC and Frontier will, through their respective Boards of
Directors, recommend to their respective stockholders approval of such matters,
unless otherwise required under the applicable fiduciary duties of the
respective directors of ALC and Frontier, as determined by such directors in
good faith after consultation with and based upon the advice of independent
legal counsel (who may be such party's regularly engaged independent legal
counsel). ALC and Frontier shall coordinate and cooperate with respect to the
timing of such meetings and shall use their best efforts to hold such meetings
on the same day and as soon as practicable after the date on which the S-4
becomes effective. This Section 5.5 shall not prohibit accurate disclosure by
a party that is required in any ALC SEC Document or Frontier SEC Document
(including the Proxy Statement and the S-4) or otherwise under applicable law
of the opinion of the Board of Directors of such party as of the date of such
SEC Document or such other required disclosure as to the transactions
contemplated hereby or as to any takeover proposal.
5.6 Legal Conditions to Merger. Each of ALC and Frontier
shall, and shall cause its subsidiaries to, use all reasonable efforts (i) to
take, or cause to be taken, all actions necessary to comply promptly with all
legal requirements which may be imposed on such party or its subsidiaries with
respect to the Merger and to consummate the transactions contemplated by this
Agreement, subject to the appropriate vote of stockholders of ALC and Frontier
described in Section 6.1(a), and (ii) to obtain (and to cooperate with the
other party
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to obtain) any consent, authorization, order or approval of, or any exemption
by, any Governmental Entity and or any other public or private third party
which is required to be obtained or made by such party or any of its
subsidiaries in connection with the Merger and the transactions contemplated by
this Agreement; provided, however, that a party shall not be obligated to take
any action pursuant to the foregoing if the taking of such action or such
compliance or the obtaining of such consent, authorization, order, approval or
exemption is likely, in such party's reasonable opinion, (x) to be materially
burdensome to such party and its subsidiaries taken as a whole or to impact in
a materially adverse manner the economic or business benefits of the
transactions contemplated by this Agreement so as to render inadvisable the
consummation of the Merger or (y) to result in the imposition of a condition or
restriction on such party or on the Surviving Corporation of the type referred
to in Sections 6.1(g), 6.2(e) or 6.3(e). Each of ALC and Frontier will
promptly cooperate with and furnish information to the other in connection with
any such burden suffered by, or requirement imposed upon, any of them or any of
their subsidiaries in connection with the foregoing.
5.7 Affiliates. At least 40 days prior to the Closing Date,
ALC shall deliver to Frontier a letter identifying all persons who are, at the
time this Agreement is submitted for approval to the stockholders of ALC,
"affiliates" of ALC for purposes of Rule 145 under the Securities Act. ALC
shall use all reasonable efforts to cause each person named on the letter
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delivered by it to deliver to Frontier at least 30 days prior to the Closing
Date a written agreement, substantially in the form attached as Exhibit 5.7.
5.8 Stock Exchange Listing. Frontier shall use all
reasonable efforts to cause the shares of Frontier Common Stock to be issued in
the Merger and the shares of Frontier Common Stock to be reserved for issuance
upon exercise of ALC Stock Options and ALC Warrants to be approved for listing
on the NYSE, subject to official notice of issuance, prior to the Closing Date.
5.9 Employee Benefit Plans. Following the Effective Time,
Frontier shall establish, or maintain, in good faith, Benefit Plans for the
Surviving Corporation and its subsidiaries effective as of the Effective Time.
Except as otherwise provided in Section 5.10, in the case of ALC Benefit Plans
under which the employees' interests are based upon ALC Common Stock, Frontier
and ALC agree that such interests shall be based on Frontier Common Stock in an
equitable manner.
5.10 Stock Options and Warrants. (a) At the Effective Time,
each outstanding ALC Stock Option and ALC SAR, in each case whether vested or
unvested, and ALC Warrant shall be assumed by Frontier. Each ALC Stock Option
shall be deemed to constitute an option to acquire, and each ALC Warrant shall
be deemed to constitute a warrant to acquire, on the same terms and conditions
as were applicable under such ALC Stock Option or such ALC Warrant, as the case
may be, the same number of shares of
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Frontier Common Stock as the holder of such ALC Stock Option or such ALC
Warrant, as the case may be, would have been entitled to receive pursuant to
the Merger had such holder exercised such ALC Stock Option or ALC Warrant in
full immediately prior to the Effective Time, at a price per share equal to (y)
the aggregate exercise price for the shares of ALC Common Stock otherwise
purchasable pursuant to such ALC Stock Option or ALC Warrant divided by (z) the
number of full shares of Frontier Common Stock deemed purchasable pursuant to
such ALC Stock Option or ALC Warrant; provided, however, that in the case of
any option to which section 421 of the Code applies by reason of its
qualification under section 422 of the Code ("qualified stock options"), the
option price, the number of shares purchasable pursuant to such option and the
terms and conditions of exercise of such option shall be determined in order to
comply with section 424(a) of the Code. Each holder of an ALC SAR shall be
entitled to that number of stock appreciation rights of Frontier determined in
the same manner as set forth above with respect to ALC Stock Options assumed by
Frontier. As soon as practicable following the date of this Agreement, the
Board of Directors of ALC (and/or the appropriate committee thereof) shall take
all other actions necessary in order to effectuate the foregoing and to ensure
that following the Effective Time no holder of an ALC Stock Option, ALC SAR or
ALC Warrant nor any participant in any ALC Benefit Plan shall have any right
thereunder to acquire equity securities of ALC or the Surviving Corporation.
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(b) ALC shall deliver to the holders of the Warrants
appropriate notices setting forth such holders' rights in connection with the
Merger in accordance with the provisions of the respective Warrant Agreements.
As soon as practicable after the Effective Time, Frontier shall deliver to the
holders of ALC Stock Options and ALC SARs appropriate notices setting forth
such holders' rights pursuant to the ALC Stock Plans in connection with the
Merger. The agreements evidencing the grants of ALC Stock Options, ALC SARs or
ALC Warrants, as the case may be, shall continue in effect on the same terms
and conditions (subject to the adjustments required by this Section 5.10 after
giving effect to the Merger and the assumption by Frontier as set forth above).
If necessary, Frontier shall use its reasonable best efforts to comply with the
terms of the ALC Stock Plans and to ensure, to the extent required by, and
subject to the provisions of, the ALC Stock Plans, that ALC Stock Options which
qualified as qualified stock options prior to the Effective Time continue to
qualify as qualified stock options of Frontier after the Effective Time.
(c) Frontier shall take all corporate action necessary to
reserve for issuance a sufficient number of shares of Frontier Common Stock for
delivery upon exercise of ALC Stock Options and ALC Warrants assumed by it in
accordance with this Section 5.10. As soon as practicable after the Effective
Time, Frontier shall file one or more registration statements on appropriate
forms with respect to the shares of Frontier Common Stock subject to such ALC
Stock Options and, to the extent required by the respective Warrant Agreements,
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with respect to the shares of Frontier Common Stock subject to such ALC
Warrants, and shall use its best efforts to maintain the effectiveness of such
registration statement or registration statements for so long as such options
or warrants, as applicable, remain outstanding.
5.11 Brokers or Finders. Except as disclosed to the other
party prior to the date hereof, each of Frontier and ALC represents, as to
itself, its subsidiaries and its affiliates, that no agent, broker, investment
banker, financial advisor or other firm or person is or will be entitled to any
broker's or finder's fee or any other commission or similar fee in connection
with any of the transactions contemplated by this Agreement, except Salomon
Brothers Inc, whose fees and expenses will be paid by ALC in accordance with
ALC's agreement with such firm (a copy of which has been delivered by ALC to
Frontier prior to the date of this Agreement), and Lazard Freres & Co., whose
fees and expenses will be paid by Frontier in accordance with Frontier's
agreement with such firm (a copy of which has been delivered by Frontier to ALC
prior to the date of this Agreement), and each party agrees to indemnify the
other party and hold the other party harmless from and against any and all
claims, liabilities or obligations with respect to any other fees, commissions
or expenses asserted by any person on the basis of any act or statement alleged
to have been made by such first party or its affiliate.
5.12 Governance. (a) Frontier's Board of Directors shall
take action to cause John M. Zrno, William H. Oberlin, Richard J. Uhl and
Michael E. Faherty to be elected to
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Frontier's Board of Directors as of the Effective Time or as soon thereafter as
practical. Frontier's Board of Directors shall amend Frontier's By-laws to
increase the size of the Frontier Board of Directors to the extent necessary to
comply with this Section. Frontier's Board of Directors shall also take action
to cause the persons set forth on Exhibit 5.12 to be elected to the offices
specified in such Exhibit effective as of the Effective Time.
(b) ALC shall use its reasonable best efforts to obtain
the resignation of each director of ALC effective as of the Effective Time.
5.13 Indemnification; Directors' and Officers' Insurance.
(a) From and after the Effective Time, Frontier shall, or shall cause the
Surviving Corporation to, indemnify, defend and hold harmless each person who
is now, or has been at any time prior to the date hereof or who becomes prior
to the Effective Time, an officer, director or employee of ALC or any of its
subsidiaries (the "Indemnified Parties") against (i) all losses, claims,
damages, costs, expenses, liabilities or judgments or amounts that are paid in
settlement with the approval of Frontier (which approval shall not be
unreasonably withheld) of or in connection with any claim, action, suit,
proceeding or investigation based in whole or in part on or arising in whole or
in part out of the fact that such person is or was a director, officer or
employee of ALC or any subsidiary of ALC, whether pertaining to any matter
existing or occurring at or prior to the Effective Time and whether asserted or
claimed prior to, or at or after, the Effective Time ("Indemnified
Liabilities") and (ii) all Indemnified Liabilities based
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in whole or in part on, or arising in whole or in part out of, or pertaining to
this Agreement or the transactions contemplated hereby, in each case to the
full extent ALC would have been permitted under Delaware law and its
Certificate of Incorporation and By-laws to indemnify such person, consistent
with applicable law (and Frontier shall pay expenses (including attorneys'
fees) in advance of the final disposition of any such action or proceeding to
each Indemnified Party to the full extent permitted by law upon receipt of any
undertaking required by applicable law). Without limiting the foregoing, in
the event any such claim, action, suit, proceeding or investigation is brought
against any Indemnified Party (whether arising before or after the Effective
Time), (i) any counsel retained by the Indemnified Parties for any period after
the Effective Time shall be reasonably satisfactory to Frontier and (ii) after
the Effective Time, Frontier will use all reasonable efforts to assist in the
vigorous defense of any such matter, provided that Frontier shall not be liable
for any settlement of any claim effected without its written consent, which
consent, however, shall not be unreasonably withheld. Any Indemnified Party
wishing to claim indemnification under this Section 5.13, upon learning of any
such claim, action, suit, proceeding or investigation, shall notify Frontier
(but the failure so to notify Frontier shall not relieve it from any liability
which it may have under this Section 5.13 except to the extent such failure
materially prejudices Frontier), and shall deliver to Frontier any undertaking
required by applicable law. The Indemnified Parties as a group may retain only
one law firm to represent them with respect to each such matter unless there
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is, under applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more Indemnified Parties.
(b) For a period of seven years after the Effective Time,
Frontier shall cause to be maintained in effect the current policies of
directors' and officers' liability insurance maintained by ALC (provided that
Frontier may substitute therefor policies of at least the same coverage and
amounts containing terms and conditions which are no less advantageous) with
respect to claims arising from facts or events which occurred before the
Effective Time; provided, however, that Frontier shall not be obligated to make
annual premium payments for such insurance to the extent such premiums exceed
200% of the premiums paid as of the date hereof by ALC for such insurance.
Notwithstanding anything to the contrary contained elsewhere herein, Frontier's
agreement set forth above shall be limited to cover claims only to the extent
that those claims are not covered under ALC's directors' and officers'
insurance policies (or any substitute policies permitted by this Section
5.13(b)).
(c) The provisions of this Section 5.13 are intended to
be for the benefit of, and shall be enforceable by, each Indemnified Party, and
his or her heirs and representatives.
5.14 Elimination of Certain Restrictions. The parties shall
make all reasonable efforts to eliminate the application, after the Effective
Time, of certain restrictive covenants contained in the Indenture dated as of
May 15, 1993 among Allnet Communication Services, Inc., ALC and Star Bank,
National Association, as Trustee, relating to ALC's 9% Senior
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Subordinated Notes due May 15, 2003, by such means, including without
limitation, consent, amendment or defeasance, as may be mutually agreeable.
5.15 Financial Reporting. If the Effective Time shall have
occurred in either the first or last month of a fiscal quarter of Frontier,
Frontier shall seek to accelerate the release of 30 days of combined earnings
of Frontier and the Surviving Corporation to the fullest extent reasonably
practicable, taking into account the best interests of Frontier.
5.16 Additional Agreements. In case at any time after the
Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement or to vest the Surviving Corporation with full title
to all properties, assets, rights, approvals, immunities and franchises of
either Sub or ALC, the proper officers and directors of each party to this
Agreement shall take all such necessary action.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation To Effect the
Merger. The respective obligation of each party to effect the Merger shall be
subject to the satisfaction prior to the Closing Date of the following
conditions:
(a) Stockholder Approval. This Agreement shall have been
approved and adopted by the affirmative vote of the holders of a majority of
the outstanding shares of ALC Common Stock entitled to vote thereon, and the
Frontier Vote Matter shall have been
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approved by a majority of the votes cast thereon by the holders of shares of
Frontier Common Stock, provided that the total votes cast by such holders shall
represent a majority of the outstanding shares of Frontier Common Stock
entitled to vote thereon.
(b) NYSE Listing. The shares of Frontier Common Stock
issuable to ALC stockholders pursuant to this Agreement and such other shares
required to be reserved for issuance in connection with the Merger shall have
been authorized for listing on the NYSE upon official notice of issuance.
(c) Other Approvals. Other than the filing contemplated by
Section 1.3, all authorizations, consents, orders or approvals of, or
declarations or filings with, and all expirations of waiting periods imposed
by, any Governmental Entity (all the foregoing, "Consents") which are necessary
for the consummation of the Merger, other than immaterial Consents the failure
to obtain which would have no material adverse effect on the consummation of
the Merger or on Frontier and its subsidiaries (after giving effect to the
Merger), taken as a whole, shall have been filed, occurred or been obtained
(all such permits, approvals, filings and consents and the lapse of all such
waiting periods being referred to as the "Requisite Regulatory Approvals") and
all such Requisite Regulatory Approvals shall be in full force and effect.
Frontier shall have received all state securities or blue sky permits and other
authorizations necessary to issue the Frontier Common Stock in exchange for ALC
Common Stock and to consummate the Merger.
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(d) S-4. The 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.
(e) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint or prohibition (an
"Injunction") preventing the consummation of the Merger shall be in effect, nor
shall any proceeding by any Governmental Entity seeking any of the foregoing be
pending. There shall not be any action taken, or any statute, rule, regulation
or order enacted, entered, enforced or deemed applicable to the Merger, which
makes the consummation of the Merger illegal.
(f) Pooling. Frontier and ALC shall have received letters
from Price Waterhouse and from Ernst & Young to the effect that the Merger
qualifies for "pooling of interests" accounting treatment if consummated in
accordance with this Agreement.
(g) Burdensome Condition. There shall not be any action
taken, or any statute, rule, regulation or order enacted, entered, enforced or
deemed applicable to the Merger, by any federal or state Governmental Entity
which, in connection with the grant of a Requisite Regulatory Approval, imposes
any condition or restriction upon Frontier or its subsidiaries (after giving
effect to the Merger) which would so materially adversely impact the economic
or business benefits of the transactions contemplated by this Agreement as to
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render inadvisable the consummation of the Merger, provided that the parties
shall have contested in good faith the imposition of any such condition or
restriction.
6.2 Conditions to Obligations of Frontier and Sub. The
obligations of Frontier and Sub to effect the Merger are subject to the
satisfaction of the following conditions unless waived by Frontier and Sub:
(a) Representations and Warranties. The representations and
warranties of ALC set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and (except to the extent
such representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date, except as otherwise
contemplated by this Agreement, and Frontier shall have received a certificate
signed on behalf of ALC by the President and Chief Executive Officer of ALC or
the Executive Vice President and Chief Operating Officer of ALC, and by the
Executive Vice President and Chief Financial Officer of ALC to such effect.
(b) Performance of Obligations of ALC. ALC shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and Frontier shall
have received a certificate signed on behalf of ALC by the President and Chief
Executive Officer of ALC or the Executive Vice President and Chief Operating
Officer of ALC, and by the Executive Vice President and Chief Financial Officer
of ALC to such effect.
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(c) Consents Under Agreements. ALC shall have obtained the
consent or approval of each person (other than the Governmental Entities
referred to in Section 6.1(c)) whose consent or approval shall be required, and
filed or delivered all certificates or other documents required (other than
filings with or deliveries to the Governmental Entities referred to in Section
6.1(c)), in order to permit the succession by the Surviving Corporation
pursuant to the Merger to any obligation, right or interest of ALC or any
subsidiary of ALC under any loan or credit agreement, note, mortgage,
indenture, lease, license or other agreement or instrument, except those for
which failure to obtain such consents and approvals, or to make such filings or
deliveries, would not, in the reasonable opinion of Frontier, individually or
in the aggregate, have a material adverse effect on Frontier and its
subsidiaries (after giving effect to the Merger), taken as a whole, or upon the
consummation of the transactions contemplated hereby.
(d) Tax Opinion. Frontier shall have received the opinion of
Simpson Thacher & Bartlett, counsel to Frontier, dated on or about the date
that is two business days prior to the date the Proxy Statement is first mailed
to stockholders of Frontier and ALC, to the effect that the Merger will be
treated for federal income tax purposes as a reorganization within the meaning
of Section 368(a) of the Code, and that Frontier, Sub and ALC will each be a
party to that reorganization within the meaning of Section 368(b) of the Code,
which opinion shall not have been withdrawn or modified in any material
respect.
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(e) Burdensome Condition. Prior to the Effective Time, there
shall not be any action taken, or any statute, rule, regulation or order
enacted, entered, enforced or deemed applicable to the Merger, by any
Governmental Entity which, in connection with the grant of a Requisite
Regulatory Approval, imposes any requirement upon Frontier or its subsidiaries
(after giving effect to the Merger) to dispose of any asset which would be
deemed to constitute a significant amount of assets to Frontier under
Instruction 4 of Item 2 of Form 8-K, provided that Frontier shall have
contested in good faith the imposition of any such requirement.
(f) Employment Agreements. Each of the Employment
Agreements shall be in full force and effect, and each of the employees of ALC
who is a party to an Employment Agreement shall have performed in all material
respects all obligations required to be performed by such employee under his or
her respective Employment Agreement.
(g) Opinion of Financial Advisor. Lazard Freres & Co. shall
not have withdrawn its opinion referred to in Section 3.2(v).
6.3 Conditions to Obligations of ALC. The obligation of ALC
to effect the Merger is subject to the satisfaction of the following conditions
unless waived by ALC:
(a) Representations and Warranties. The representations and
warranties of Frontier and Sub set forth in this Agreement shall be true and
correct in all material respects as of the date of this Agreement and (except
to the extent such representations and warranties
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speak as of an earlier date) as of the Closing Date as though made on and as of
the Closing Date, except as otherwise contemplated by this Agreement, and ALC
shall have received a certificate signed on behalf of Frontier by the Chairman,
President and Chief Executive Officer of Frontier or a Corporate Vice President
of Frontier, and by the Corporate Vice President-Finance of Frontier to such
effect.
(b) Performance of Obligations of Frontier and Sub. Frontier
and Sub shall have performed in all material respects all obligations required
to be performed by them under this Agreement at or prior to the Closing Date,
and ALC shall have received a certificate signed on behalf of Frontier by the
Chairman, President and Chief Executive Officer of Frontier or a Corporate Vice
President of Frontier, and by the Corporate Vice President-Finance of Frontier
to such effect.
(c) Consents Under Agreements. Frontier shall have obtained
the consent or approval of each person (other than the Governmental Entities
referred to in Section 6.1(c)) whose consent or approval shall be required, and
filed or delivered all certificates or other documents required (other than
filings with or deliveries to the Governmental Entities referred to in Section
6.1(c)), in connection with the transactions contemplated hereby under any loan
or credit agreement, note, mortgage, indenture, lease, license or other
agreement or instrument, except those for which failure to obtain such consents
and approvals, or to make such filings or deliveries, would not, in the
reasonable opinion of ALC, individually or in the
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aggregate, have a material adverse effect on Frontier and its subsidiaries
(after giving effect to the Merger), taken as a whole, or upon the consummation
of the transactions contemplated hereby.
(d) Tax Opinion. ALC shall have received the opinion of
Debevoise & Plimpton, counsel to ALC dated on or about the date that is two
business days prior to the date the Proxy Statement is first mailed to
stockholders of Frontier and ALC, to the effect that the Merger will be treated
for federal income tax purposes as a reorganization within the meaning of
Section 368(a) of the Code, and that Frontier, Sub and ALC will each be a party
to that reorganization within the meaning of Section 368(b) of the Code, which
opinion shall not have been withdrawn or modified in any material respect.
(e) Burdensome Condition. Prior to the Effective Time, there
shall not be any action taken, or any statute, rule, regulation or order
enacted, entered, enforced or deemed applicable to the Merger, by any
Governmental Entity which, in connection with the grant of a Requisite
Regulatory Approval, imposes any requirement upon ALC or its subsidiaries to
dispose of any asset which would be deemed to constitute a significant amount
of assets to Frontier (after giving effect to the Merger) under Instruction 4
of Item 2 of Form 8-K, provided that ALC shall have contested in good faith the
imposition of any such requirement.
(f) Opinion of Financial Advisor. Salomon Brothers Inc shall
not have withdrawn its opinion referred to in Section 3.1(v).
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ARTICLE VII
TERMINATION AND AMENDMENT
7.1 Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after approval of the
matters presented in connection with the Merger by the stockholders of ALC or
Frontier:
(a) by mutual consent of Frontier and ALC in a written
instrument;
(b) by Frontier, upon a wilful breach of any material
representation, warranty, covenant or agreement on the part of ALC set forth in
this Agreement, or if any such representation or warranty of ALC shall have
become untrue, in each case such that the conditions set forth in Section
6.2(a) or Section 6.2(b), as the case may be, would be incapable of being
satisfied (following notice and a reasonable opportunity to cure) by December
31, 1995;
(c) by ALC, upon a wilful breach of any material
representation, warranty, covenant or agreement on the part of Frontier set
forth in this Agreement, or if any such representation or warranty of ALC shall
have become untrue, in each case such that the conditions set forth in Section
6.3(a) or Section 6.3(b), as the case may be, would be incapable of being
satisfied (following notice and a reasonable opportunity to cure) by December
31, 1995;
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(d) by either Frontier or ALC, if any permanent injunction or
action by any Governmental Entity preventing the consummation of the Merger
shall have become final and nonappealable; provided that such right of
termination shall not be available to any party if such party shall have failed
to make reasonable efforts to contest the imposition of such injunction or
action and such failure materially contributed to such imposition;
(e) by either Frontier or ALC, if the Merger shall not have
been consummated on or prior to December 31, 1995;
(f) by either Frontier or ALC, if any approval of the
stockholders of ALC or of Frontier required for the consummation of the Merger
shall not have been obtained by reason of the failure to obtain the required
vote at a duly held meeting of stockholders or at any adjournment thereof;
(g) by Frontier, if (i) the Board of Directors of ALC shall
have withdrawn, modified or changed its approval or recommendation of this
Agreement or the Merger in any manner which is adverse to Frontier or Sub or
shall have resolved to do the foregoing; or (ii) the Board of Directors of ALC
shall have approved or have recommended to the stockholders of ALC a Competing
Transaction or shall have resolved to do the foregoing; or (iii) a tender offer
or exchange offer for 20% or more of the outstanding shares of ALC Common Stock
is commenced (other than by Frontier or any of its subsidiaries or affiliates),
and the Board of Directors of ALC recommends that the stockholders of ALC
tender their shares in such tender
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or exchange offer or otherwise fails to recommend that such stockholders reject
such tender offer or exchange offer within ten business days of the
commencement thereof; or (iv) any person (including ALC or any of its
subsidiaries or affiliates) or group (other than Frontier or any of its
subsidiaries or affiliates) shall have acquired beneficial ownership of 20% or
more of the outstanding shares of ALC Common Stock;
(h) by ALC, if the Board of Directors of ALC (i) shall fail
to make or shall withdraw or modify its recommendation of this Agreement or the
Merger if there shall exist at such time a tender offer or exchange offer or a
written, bona fide proposal by a third party to acquire ALC pursuant to a
merger, consolidation, share exchange, business combination, tender or exchange
offer or other similar transaction or (ii) recommends to ALC's stockholders
approval or acceptance of any such transaction, in each case only if the Board
of Directors of ALC, after consultation with and based upon the advice of
independent legal counsel (who may be such party's regularly engaged
independent legal counsel), determines in good faith that such action is
required for the Board of Directors of ALC to comply with its fiduciary duties
to stockholders under applicable law;
(i) by ALC, if (i) the Board of Directors of Frontier shall
have withdrawn, modified or changed its recommendation of the Frontier Vote
Matter in any manner which is adverse to ALC or shall have resolved to do the
foregoing; or (ii) the Board of Directors of Frontier shall have approved or
recommended to the stockholders of Frontier a Competing
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Transaction or shall have resolved to do the foregoing; or (iii) a tender offer
or exchange offer for 20% or more of the outstanding shares of Frontier Common
Stock is commenced, and the Board of Directors of Frontier recommends that the
stockholders of Frontier tender their shares in such tender or exchange offer
or otherwise fails to recommend that such stockholders reject such tender offer
or exchange offer within ten business days of the commencement thereof; or (iv)
any person (including Frontier or any of its subsidiaries or affiliates) or
group (other than ALC or any of its subsidiaries or affiliates) shall have
acquired beneficial ownership of 20% or more of the outstanding share of
Frontier Common Stock; and
(j) by Frontier, if the Board of Directors of Frontier (i)
shall fail to make or shall withdraw or modify its recommendation of the
Frontier Vote Matter if there shall exist at such time a tender offer or
exchange offer or a written, bona fide proposal by a third party to acquire
Frontier pursuant to a merger, consolidation, share exchange, business
combination, tender or exchange offer or other similar transaction or (ii)
recommends to Frontier's stockholders approval or acceptance of any of the
foregoing, in each case only if the Board of Directors of Frontier, after
consultation with and based upon the advice of independent legal counsel (who
may be such party's regularly engaged independent legal counsel), determines in
good faith that such action is required for the Board of Directors of Frontier
to comply with its fiduciary duties to stockholders under applicable law. The
right of any party hereto
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to terminate this Agreement pursuant to this Section 7.1 shall remain operative
and in full force and effect regardless of any investigation made by or on
behalf of any party hereto, any person controlling any such party or any of
their respective officers or directors, whether prior to or after the execution
of this Agreement.
7.2 Effect of Termination. In the event of termination of
this Agreement by either ALC or Frontier as provided in Section 7.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Frontier, Sub or ALC or their respective officers or
directors except (i) with respect to the penultimate sentence of Section 5.4,
and Sections 5.11 and 7.3 and (ii) with respect to any liabilities or damages
incurred or suffered by a party as a result of the wilful breach by the other
party of any of its representations, warranties, covenants or agreements set
forth in this Agreement except as provided in Section 8.8; provided that, if
this Agreement shall be terminated under circumstances that would require a
payment to be made pursuant to Section 7.3(b) or Section 7.3(c)
contemporaneously with such termination, then such termination by any party
required to make such payment shall not be effective until such payment shall
have been made pursuant to Section 7.3(f).
7.3 Fees, Expenses and Other Payments. (a) Except as
otherwise provided in this Section 7.3, whether or not the Merger is
consummated, all out-of-pocket costs and expenses actually incurred in
connection with this Agreement and the transactions
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contemplated hereby (including, without limitation, fees and disbursements of
counsel, financial advisors and accountants) shall be borne solely and entirely
by the party which has incurred such costs and expenses (with respect to such
party, its "Expenses"), except that expenses related to printing, filing and
mailing the Proxy Statement and the S-4 shall be shared equally by Frontier and
ALC.
(b) ALC agrees that if this Agreement shall be terminated
pursuant to:
(i) Section 7.1(b) and (x) such termination is the
result of wilful breach of any material covenant, agreement,
representation or warranty contained herein and (y) at any time during
the period commencing on the date hereof and ending twelve umonths
after the date of termination of this Agreement, a Business
Combination (as defined in Section 7.3(g) below) involving ALC shall
have occurred or ALC shall have entered into a definitive agreement
providing for such a Business Combination;
(ii) Section 7.1(e) and (x) there shall exist a
Competing Transaction with respect to ALC, (y) at any time during the
period commencing on the date hereof and ending twelve months after
the date of termination of this Agreement, a Business Combination
involving ALC that is at least as favorable to ALC and its
stockholders from a financial point of view as such Competing
Transaction shall have occurred or ALC shall have entered into a
definitive agreement providing for such a Business
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Combination and (z) if such termination is by Frontier, Frontier shall
have offered to extend the date set forth in Section 7.1(e) until at
least March 31, 1996;
(iii) Section 7.1(f) because the Agreement and the Merger
shall fail to receive the requisite vote for approval and adoption by
the stockholders of ALC at a meeting of stockholders of ALC called to
vote thereon and at the time of such meeting there shall exist a
Competing Transaction with respect to ALC;
(iv) Section 7.1(g)(i) and at the time of the
withdrawal, modification or change (or resolution to do so) of its
recommendation by the Board of Directors of ALC, there shall exist a
Competing Transaction with respect to ALC; or
(v) Sections 7.1(g)(ii), (iii) or (iv), or Section
7.1(h);
then ALC shall pay to Frontier an amount equal to $45,000,000, plus all of
Frontier's Expenses, not to exceed $5,000,000.
(c) Frontier agrees that if this Agreement shall be
terminated pursuant to:
(i) Section 7.1(c) and (x) such termination is the
result of wilful breach of any material covenant, agreement,
representation or warranty contained herein and (y) at any time during
the period commencing on the date hereof and ending twelve months
after the date of termination of this Agreement, a Business
Combination involving Frontier shall have occurred or Frontier shall
have entered into a definitive agreement providing for such a Business
Combination;
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(ii) Section 7.1(e) and (x) there shall exist a
Competing Transaction with respect to Frontier, (y) at any time during
the period commencing on the date hereof and ending twelve months
after the date of termination of this Agreement, a Business
Combination involving Frontier that is at least as favorable to
Frontier and its stockholders from a financial point of view as such
Competing Transaction shall have occurred or Frontier shall have
entered into a definitive agreement providing for such a Business
Combination and (z) if such termination is by ALC, ALC shall have
offered to extend the date set forth in Section 7.1(e) until at least
March 31, 1996;
(iii) Section 7.1(f) because the Frontier Vote Matter
shall fail to receive the requisite vote for approval by the
stockholders of Frontier at the meeting of the stockholders of
Frontier called to vote thereon and at the time of such meeting there
shall exist a Competing Transaction with respect to Frontier;
(iv) Section 7.1(i)(i) and at the time of the
withdrawal, modification or change (or resolution to do so) of its
recommendation by the Board of Directors of Frontier, there shall
exist a Competing Transaction with respect to Frontier; or
(v) Sections 7.1(i)(ii), (iii) or (iv), or Section
7.1(j);
then Frontier shall pay to ALC an amount equal to $45,000,000, plus all
of ALC's Expenses, not to exceed $5,000,000.
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(d) ALC agrees that if this Agreement shall be terminated
pursuant to Section 7.1(f) because the Agreement and the Merger shall fail to
receive the requisite vote for approval and adoption by the stockholders of ALC
at a meeting of stockholders of ALC called to vote thereon, or pursuant to
Section 7.1(b) or Section 7.1(g)(i), then, in any such event, ALC shall pay to
Frontier an amount equal to Frontier's Expenses, not to exceed $5,000,000,
provided that ALC shall not be obligated to make any payment pursuant to this
Section 7.3(d) if ALC shall be obligated to make a payment to Frontier pursuant
to Section 7.3(b).
(e) Frontier agrees that if this Agreement shall be
terminated pursuant to Section 7.1(f) because the Frontier Vote Matter shall
fail to receive the requisite vote for approval by the stockholders of Frontier
at a meeting of stockholders of Frontier called to vote thereon, or pursuant to
Section 7.1(c) or Section 7.1(i)(i), then, in any such event, Frontier shall
pay to ALC an amount equal to ALC's Expenses, not to exceed $5,000,000,
provided that Frontier shall not be obligated to make any payment pursuant to
this Section 7.3(e) if Frontier shall be obligated to make a payment to ALC
pursuant to Section 7.3(c).
(f) Any payment required to be made pursuant to Section
7.3(b) through Section 7.3(e), inclusive, shall be made contemporaneously with
the termination of this Agreement and shall be made by wire transfer of
immediately available funds to an account designated by the recipient of such
payment, and termination by any party required to make
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such payment contemporaneously therewith shall not be effective until such
payment shall have been made pursuant hereto, except that any payment to be
made as the result of an event described in Section 7.3(b)(i) or Section
7.1(c)(i) shall be made as promptly as practicable but not later than five
business days after the occurrence of the Business Combination or the execution
of the definitive agreement providing for a Business Combination. Any payment
made pursuant to Sections 7.3(b) through 7.3(e), inclusive, shall not preclude
the recipient of such payment from seeking monetary damages from the other
party as described in clause (ii) of Section 7.2.
(g) For purposes of this Section 7.3, the term "Business
Combination" shall mean any of the following involving a party hereto: (i) any
merger, consolidation, share exchange, business combination or similar
transaction; (ii) any sale, lease, exchange, transfer or other disposition of
20% or more of the assets of such party and its subsidiaries, taken as a whole,
in a single transaction or series of transactions; or (iii) the acquisition by
a person or any group of beneficial ownership of 20% or more of the capital
stock of such party whether by tender offer or exchange offer or otherwise.
(h) If the Merger is consummated, ALC agrees to pay, or cause
to be paid, any and all property or transfer taxes imposed on ALC or its
subsidiaries and any real property transfer or gains taxes imposed on any
holder of shares of ALC Common Stock resulting from the Merger.
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7.4 Amendment. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors,
at any time before or after approval of the matters presented in connection
with the Merger by the stockholders of ALC or of Frontier, but, after any such
approval, no amendment shall be made which by law requires further approval by
such stockholders without such further approval. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
7.5 Extension; Waiver. At any time prior to the Effective
Time, the parties hereto, by action taken or authorized by their respective
Board of Directors, may, to the extent legally allowed, (i) extend the time for
the performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and (iii) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall
be valid only if set forth in a written instrument signed on behalf of such
party.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Nonsurvival of Representations, Warranties and
Agreements. None of the representations, warranties, covenants and agreements
in this Agreement or in any instrument
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delivered pursuant to this Agreement shall survive the Effective Time, except
for the agreements contained in Sections 2.1, 2.2, 4.1(l), 5.9 through 5.16,
7.3, the last sentence of Section 7.4 and Article VIII, and the agreements of
the "affiliates" of ALC delivered pursuant to Section 5.7.
8.2 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (with confirmation) or mailed by registered or certified mail
(return receipt requested) 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 Frontier or Sub, to
Louis L. Massaro
Corporate Vice President-Treasurer
Frontier Corporation
180 South Clinton Avenue
Rochester, New York 14646
Telecopy No. (716) 546-7823
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with copies to
Martin T. McCue, Esq.
Frontier Corporation
180 South Clinton Avenue
Rochester, New York 14646
Telecopy No. (716) 546-7823
Helen A. Zamboni, Esq.
Frontier Corporation
180 South Clinton Avenue
Rochester, New York 14646
Telecopy No. (716) 546-7823
Richard I. Beattie, Esq.
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Telecopy No. (212) 455-2502
and
(b) if to ALC, to
Marvin C. Moses
Executive Vice President and Chief Financial Officer
ALC Communications Corporation
30300 Telegraph Road
Bingham Farms, Michigan 48025
Telecopy No.
with copies to
Connie R. Gale, Esq.
ALC Communications Corporation
30300 Telegraph Road
Bingham Farms, Michigan 48025
Telecopy No.
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Christopher Smeall, Esq.
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Telecopy No. (212) 909-6386
8.3 Certain 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;
(b) "beneficially own" or "beneficial ownership" with respect
to any securities, means having "beneficial ownership" of such securities in
accordance with the provisions of Rule 13d-3 under the Exchange Act. Without
duplicative counting of the same securities by the same holder, securities
beneficially owned by a person include securities beneficially owned by all
other persons with whom such person would constitute a group.
(c) "group" means two or more persons acting together for the
purpose of acquiring, holding, voting or disposing of any securities, which
persons would be required to file a Schedule 13D or Schedule 13G with the SEC
as a "person" within the meaning of Section 13(d)(3) of the Exchange Act if
such persons beneficially owned a sufficient amount of such securities to
require such a filing under the Exchange Act.
(d) "person" means an individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or other entity;
and
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(e) 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.
8.4 Interpretation. When a reference is made in this
Agreement to Sections, Exhibits or Schedules, such reference shall be to a
Section of or Exhibit to this Agreement or a Schedule delivered by a party in
connection with its delivery of 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 phrase "made available" in this Agreement shall mean
that the information referred to has been made available if requested by the
party to whom such information is to be made available. The phrases "the date
of this Agreement", "the date hereof" and terms of similar import, unless the
context otherwise requires, shall be deemed to refer to April 9, 1995.
8.5 Counterparts. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the parties and
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delivered to the other parties, it being understood that all parties need not
sign the same counterpart.
8.6 Entire Agreement; No Third Party Beneficiaries; Rights of
Ownership. This Agreement (including the documents and the instruments
referred to herein) (a) constitutes the entire agreement and supersedes all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof, provided that the Confidentiality
Agreement shall survive the execution and delivery of this Agreement and (b)
except as provided in Section 5.13, is not intended to confer upon any person
other than the parties hereto any rights or remedies hereunder. The parties
hereby acknowledge that, except as hereinafter agreed to in writing, no party
shall have the right to acquire or shall be deemed to have acquired shares of
common stock of the other party pursuant to the Merger until consummation
thereof.
8.7 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of New York, except to the
extent Delaware law shall govern the Merger, without regard to any applicable
conflicts of law.
8.8 Severability; Limitations on Remedies. If any term,
provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction or a federal or state regulatory agency to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in
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no way be affected, impaired or invalidated. Each party agrees that, should
any such court or agency make such a holding, or should any such court or
agency order any party to take any action inconsistent herewith or not to take
any action required herein, the other party shall not be entitled to specific
performance of such provision or part hereof or to any other remedy, including
but not limited to money damages, for breach hereof or of any other provision
of this Agreement or part hereof as a result of such holding or order. This
provision is not intended to render null or unenforceable any obligation
hereunder that would be valid and enforceable if this provision were not in
this Agreement.
8.9 Publicity. Except as otherwise required by law or the
rules of the NYSE or the AMEX, so long as this Agreement is in effect, neither
ALC nor Frontier shall, or shall permit any of its subsidiaries to, issue or
cause the publication of any press release or other public announcement with
respect to the transactions contemplated by this Agreement without the consent
of the other party, which consent shall not be unreasonably withheld.
8.10 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.
95
<PAGE> 103
IN WITNESS WHEREOF, Frontier, Sub and ALC have caused this Agreement
to be signed by their respective officers thereunto duly authorized, all as of
April 9, 1995.
<TABLE>
<S> <C>
FRONTIER CORPORATION
By /s/ Ronald L. Bittner
---------------------------------------
Name: Ronald L. Bittner
Title: Chairman, President &
Chief Executive Officer
Attest:
/s/ Josephine S. Trubek
- -----------------------------------------
Name: Josephine S. Trubek
Title: Corporate Secretary
FRONTIER SUBSIDIARY ONE, INC.
By /s/ Ronald L. Bittner
---------------------------------------
Name: Ronald L. Bittner
Title: President
Attest:
/s/ Josephine S. Trubek
- -------------------------------------------
Name: Josephine S. Trubek
Title: Secretary
</TABLE>
96
<PAGE> 104
<TABLE>
<S> <C>
ALC COMMUNICATIONS CORPORATION
By /s/ John M. Zrno
--------------------------------------
Name: John M. Zrno
Title: President and Chief
Executive Officer
Attest:
/s/ Connie R. Gale
- ---------------------------------
Name: Connie R. Gale
Title: Vice President, General Counsel and Secretary
</TABLE>
97
<PAGE> 105
SCHEDULES TO THE AGREEMENT AND PLAN OF MERGER
Schedules Delivered by ALC
3.1(c) Certain Agreements
3.1(h) Taxes
3.1(i) Employment Agreements
3.1(k) Significant Subsidiaries
3.1(s) Intellectual Property
Schedules Delivered by Frontier
3.2(h) Taxes
3.2(i) Employment Agreements
3.2(k) Significant Subsidiaries
3.2(q) Properties
3.2(s) Intellectual Property
In accordance with Item 601(b)(2) of Regulation S-K, the exhibits
described in the Table of Contents of this Agreement and Plan of Merger and the
schedules described in the list of Schedules above have not been filed with the
Current Report on Form 8-K to which this Agreement and Plan of Merger is an
Exhibit. The Registrant hereby agrees to furnish supplementally copies of such
exhibits and schedules to the Commission upon request.
98
<PAGE> 1
EXHIBIT 99
FOR IMMEDIATE RELEASE
Frontier Corporation and ALC Communications Corporation Announce
Definitive Agreement to Merge
$1.8 Billion Deal Creates Fifth Largest
Long Distance Company in U.S.
New York, NY, April 10, 1995 -- Frontier Corporation (NYSE:FRO) and ALC
Communications Corporation (AMEX:ALC) today announced the two companies have
signed a definitive agreement to merge, creating the fifth-largest long
distance company in the U.S. This transaction firmly establishes the combined
company, which will operate under the name Frontier Corporation, as a
nationwide leader in this rapidly consolidating high-growth industry. This
synergistic merger of equals will create a combined company with consolidated
revenues approaching $2 billion, and long distance revenues in the $1.4
billion range -- ranking the new company behind only AT&T, MCI, Sprint and
LDDS. The Boards of Directors of both companies have approved the merger.
Under the terms of the merger agreement, shareowners of ALC will receive a
total of 79.3 million shares (equivalent to 49% of the combined company's
shares) of Frontier common stock, or 2.0 shares of Frontier for each share of
ALC stock. Based on the approximately 39.7 million
<PAGE> 2
2
shares of ALC stock outstanding and the closing stock price of Frontier on
Friday, April 7, 1995, the transaction will have a total value of approximately
$1.8 billion. The merger is intended to qualify as a tax-free reorganization
and a "pooling of interests" for accounting and financial purposes.
"With this merger, Frontier is superbly positioned as an emerging force in the
high-growth long distance telephone industry," said Ronald L. Bittner, Chairman
and Chief Executive Officer of Frontier. "By combining the rapidly expanding
long distance businesses at Frontier and ALC, we have achieved critical size
and scope -- two strategic elements necessary for long-term success in this
industry. On its own, each company has a demonstrated track record of superior
revenue and customer growth in the long distance industry and now together, we
expect to be at the forefront of the changing telecommunications landscape."
"This combination is a perfect fit of operating philosophies, cultures,
products, and services," said John M. Zrno, President and Chief Executive
Officer of ALC. "ALC, like Frontier, has successfully focused its strategy on
bundling a portfolio of high-quality, integrated communications services to its
customers. By creating an even more powerful long distance franchise, we
expect additional opportunities to provide these bundled services."
The merger of Frontier and ALC brings together two success stories and
immediately creates one of the most innovative telecommunications companies in
the U.S. Frontier's $500 million long
<PAGE> 3
3
distance business, its strong financial condition, superior cash flow and loyal
customer base are a natural fit with ALC's established position as one of the
best managed and fastest growing companies in the long distance industry. The
combined company will serve nearly two million customers throughout the U.S.
Executives from both Frontier and ALC will assume critical management roles at
the new company, creating one of the strongest and most progressive management
teams in the industry. The structure of the new management team is: Ronald L.
Bittner, Chairman of the Board and Chief Executive Officer; John M. Zrno, Vice
Chairman of the Board; William H. Oberlin, President and Chief Operating
Officer; Marvin C. Moses, Chief Financial Officer; Louis L. Massaro, Chief
Administrative and Technology Officer; Dale M. Gregory, President, Long
Distance; Jeremiah T. Carr, President, Telephone; and James Whelehan,
President, Wireless. Messrs. Zrno and Oberlin, as well as two of ALC's current
outside Directors will join the enlarged Frontier Board. The company will
appoint a transition team consisting of senior officers which will oversee
organizational issues and assure the integration of the combined long distance
customer base.
The ALC senior management team has signed long-term employment contracts with
Frontier, effective upon completion of the transaction.
<PAGE> 4
4
Both companies expect to report first quarter results within 10 days. ALC
expects to report results that are somewhat ahead of current analyst
expectations, while Frontier expects its results to be in line with current
Wall Street earnings expectations. Based on current Wall Street estimates and
targeted synergies of at least $40 million annually, the company would
experience greater than 10% earnings dilution in 1995 as a result of this
transaction, diminishing significantly in 1996 to less than 5% and becoming
accretive to earnings in 1997. "Our plan is to reduce costs through
significant network efficiencies, lowering corporate expenses and overhead, and
combining operations. At the same time we will be increasing revenues by
reducing customer attrition and cross-selling each others' products to a larger
customer base," said Mr. Bittner.
The combined company will have total consolidated long distance, local and
cellular revenues approaching $2 billion and more than 6,500 employees
throughout the U.S. Long distance revenues are expected to account for
approximately 70% of the total.
This merger represents fulfillment of the two companies objectives and allows
the combined company to expand aggressively into the domestic and international
long distance business. In addition to this merger, Frontier recently
completed the acquisition of American Sharecom and is expected to close on the
announced WCT Communications acquisition in May 1995. ALC has also recently
completed the acquisition of ConferTech International, Inc.
<PAGE> 5
5
At the Frontier Board of Directors meeting which approved the merger agreement,
the Directors also adopted a Shareowner Rights Plan, which protects existing
shareowners from unsolicited and unreasonable takeover offers. ALC's Board of
Directors approved a similar rights plan several months ago.
The merger is subject to the approval of shareowners of Frontier and ALC at
separate meetings anticipated in August, 1995 and other customary conditions.
Frontier recently increased its dividend in December, 1994 and the company
anticipates no change in its dividend policy as a result of this merger.
Advisors on the transactions were Lazard Freres & Co. for Frontier Corporation
and Salomon Brothers for ALC Corporation.
Frontier is a provider of integrated telecommunications solutions to more than
1.5 million customers through its long distance, local telephone and wireless
communications operations. Incorporated in 1920 as Rochester Telephone
Corporation and named Frontier on January 1, 1995, the company's landmark Open
Market Plan makes it the first in the nation to open a local telephone market
to competition.
<PAGE> 6
6
ALC, through its wholly-owned subsidiary Allnet Communications Services, Inc.
provides long distance products and services to small to medium-sized business
customers nationwide. Recently, Allnet announced the offering of cellular and
paging services to customers nationwide and continues to focus on expanding
communications services both domestically and internationally.
<PAGE> 7
7
For more information, contact:
<TABLE>
<CAPTION>
ALC Frontier
--- --------
<S> <C>
Media/Investors Investors
Marvin C. Moses Louis L. Massaro
Chief Financial Officer Chief Financial Officer
(810) 433-4999 (716) 777-7940
David J. Thomas Philip H. Yawman
VP - Treasurer Manager, Investor Relations
(810) 433-4935 (716) 777-6179
Media
John Purcell
Corporate Vice President
(716) 777-7944
Catherine A. Duda
VP Corporate
Communications
(716) 777-5897
Linda Crociata
Manager, Corp.
Communications
(716) 777-7693
</TABLE>
