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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
the Securities Exchange Act of 1934
MAY 15, 1996
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(Date of Report)
INTERNET COMMUNICATIONS CORPORATION
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(Exact name of Registrant as specified in its charter)
COLORADO
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(State or other jurisdiction of incorporation)
0-19578 84-1095516
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(Commission File Number) (IRS Employer Identification Number)
7100 E. BELLEVIEW AVE., SUITE 201, ENGLEWOOD, COLORADO 80111
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(Address of principal executive offices including zip codes)
(303) 770-7600
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(Registrant's telephone number including area code)
NOT APPLICABLE
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(Former name of former address, if changed since last report)
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This report consists of _______ sequentially numbered pages including exhibits.
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ITEM 5. OTHER EVENTS.
On May 14, 1996, Internet Communications Corporation (the "Registrant")
entered into a letter of intent with Interwest Group, Inc. ("Group") in which
all outstanding shares of capital stock of Interwest Communications C.S.
Corporation ("Interwest"), a Colorado corporation and a wholly-owned
subsidiary of Group, would be exchanged for shares of common stock, no par
value, of the Registrant, such that the number of shares of the Registrant's
common stock issued to Group would equal 49.0% of the shares of the
Registrant's common stock issued and outstanding immediately following
consummation of the share exchange, without taking into account the issuance
of certain shares of the Registrant's common stock after the date of the
letter of intent (including shares issuable upon conversion of the
convertible promissory note of the Registrant referred to herein) and (2) the
proposed acquisition by Group on or about May 31, 1996, of a promissory note
issued by the Registrant in the pricipal amount of $900,000 that, in the
event of a failure of the Registrant to repay in full the principal amount
thereof and all interest accrued thereon at the maturity thereof (whether at
the scheduled maturity of December 31, 1996, on the date of any required
prepayment or upon acceleration), is convertible into 300,000 shares of the
Registrant's common stock at $3.00 per share.
In addition, the letter of intent provides that each party, prior to
closing, shall obtain consents from its shareholders, creditors, governmental
authorities and such other consents as the parties deem appropriate. Each
party has further warranted to cooperate fully in preparing and executing the
definitive Stock Exchange Agreement and permit access to their respective
books and records relating to their respective operations, assets,
obligations and liabilities. The closing of the Registrant's promissory note
is to occur not later than May 31, 1996 and the share exchange is to occur
not later than August 1, 1996. The Registrant's Board of Directors will be
increased from four (4) to seven (7) members with three (3) members to be
appointed by Group to serve until the next annual meeting of the Registrant's
shareholders.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits. Letter of Intent, dated May 14, 1996 between the
Registrant and Interwest Group, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
INTERNET COMMUNICATIONS CORPORATION
By: /s/ Thomas C. Galley
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Thomas C. Galley, President
Date: May 15, 1996
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ITEM 5. OTHER EVENTS.
On May 1, 1996, Internet Communications Corporation (the "Registrant")
entered into a letter of intent with Interwest Group, Inc. ("Group") in which
all outstanding shares of capital stock of Interwest Communications C.S.
Corporation ("Interwest"), a Colorado corporation and a wholly-owned
subsidiary of Group, would be exchanged for shares of common stock, no par
value, of the Registrant, such that the number of shares of the Registrant's
common stock issued to Group would equal 49.0% of the shares of the
Registrant's common stock issued and outstanding immediately following
consummation of the share exchange, without taking into account the issuance
of certain shares of the Registrant's common stock after the date of the
letter of intent (including shares issuable upon conversion of the
convertible promissory note of the Registrant referred to herein) and (2) the
proposed acquisition by Group on or about May 31, 1996, of a promissory note
issued by the Registrant in the principal amount of $900,000 that, in the
event of a failure of the Registrant to repay in full the principal amount
thereof and all interest accrued thereon at the maturity thereof (whether at
the scheduled maturity of December 31, 1996, on the date of any required
prepayment or upon accleration), is convertible into 300,000 shares of the
Registrant's common stock at $3.00 per share.
In addition, the letter of intent provides that each party, prior to
closing, shall obtain consents from its shareholders, creditors, governmental
authorities and such other consents as the parties deem appropriate. Each party
has further warranted to cooperate fully in preparing and executing the
definitive Stock Exchange Agreement and permit access to their respective books
and records relating to their respective operations, assets, obligations and
liabilities. The closing of the Registrant's promissory note is to occur not
later than May 31, 1996 and the share exchange is to occur not later than August
1, 1996. The Registrant's Board of Directors will be increased from four (4) to
seven (7) members with three (3) members to be appointed by Group to serve until
the next annual meeting of the Registrant's shareholders.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits. Letter of Intent, dated May 14, 1996 between the
Registrant and Interwest Group, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
INTERNET COMMUNICATIONS CORPORATION
By: /s/ Thomas C. Galley
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Thomas C. Galley, President
Date: May 15, 1996
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INTERWEST GROUP, INC.
12201 EAST ARAPAHOE ROAD, SUITE C10
ENGLEWOOD, COLORADO 80112
May 14, 1996
CONFIDENTIAL
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Internet Communications Corporation
7100 East Belleview Avenue, Suite 201
Greenwood Village, Colorado 80111
Re: Share Exchange between Internet Communications Corporation
and Interwest Group, Inc.
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Gentlemen:
This letter sets forth our mutual understanding with respect to
certain principal terms of (1) the proposed share exchange (the "SHARE
EXCHANGE") between Internet Communications Corporation, a Colorado corporation
("INTERNET"), and Interwest Group, Inc., a Colorado corporation ("GROUP"), in
which all outstanding shares of capital stock of Interwest Communications C.S.
Corporation, a Colorado corporation and a wholly-owned subsidiary of Group
("INTERWEST"), would be exchanged for shares of common stock, no par value, of
Internet ("INTERNET COMMON STOCK"), such that the number of shares of Internet
Common Stock issued to Group would equal 49.0% of the shares of Internet Common
Stock issued and outstanding immediately following consummation of the Share
Exchange, without taking into account the issuance of certain shares of Internet
Common Stock after the date of this letter (including shares issuable upon
conversion of the convertible promissory note of Internet referred to below) and
(2) the proposed acquisition by Group of a promissory note issued by Internet in
the principal amount of $900,000 that, upon the failure of Internet to pay in
full the principal amount thereof and all interest accrued thereon at the
maturity thereof (whether at scheduled maturity, on the date of any required
prepayment or upon acceleration), is convertible into 300,000 shares of Internet
Common Stock.
Internet and Group currently expect that the terms and conditions of
any agreement with respect to the foregoing will be included in a Share Exchange
Agreement, a Note and a Registration Rights Agreement (each as defined below
and, collectively, with such additional documents as shall be approved by the
parties, the "TRANSACTION DOCUMENTS"), each as more fully described below and
containing such terms and conditions as are satisfactory to each party in its
sole discretion. The transactions contemplated by any of the Transaction
Documents are collectively referred to as the "TRANSACTIONS".
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1. THE TRANSACTIONS.
(a) SHARE EXCHANGE AGREEMENT. Internet and Group will undertake
to negotiate the definitive terms of, and if they reach agreement will enter
into on or before May 23, 1996, a Share Exchange Agreement (the "SHARE EXCHANGE
AGREEMENT") providing for and including the following, among other things:
(1) the issuance and sale by Internet to Group, on a
date that is not later than May 31, 1996 (the "FIRST CLOSING DATE"), at par
and for cash, of a promissory note of Internet (the "NOTE") (A) in the
principal amount of $900,000, (B) having a maturity on December 31, 1996,
or, if earlier, the date that is 30 days after the earlier to occur of (i)
the failure of the shareholders of Internet to approve the Transaction
Documents and the Transactions at the Shareholders Meeting (as defined
below) and (ii) the termination of the Share Exchange Agreement by Group
pursuant to the terms thereof, including, without limitation, upon the
breach by Internet of any representation or warranty in the Share Exchange
Agreement, the determination by Group that the conditions to its
obligations with respect to the Second Closing Transactions are not capable
of being met by August 1, 1996, any modification or amendment of the
Recommendations (as defined below) by Internet in any respect materially
adverse to Group or the occurrence of a Subsequent Event (as defined below)
with respect to Internet or a subsidiary, and (C) bearing interest at the
rate of 8.0% per annum from the First Closing Date to and including a date
that is 60 days after the First Closing Date (or, if the Second Closing
Date shall then have occurred, the date that is 90 days after the First
Closing Date) and the rate of 12.5% per annum thereafter, payable monthly
in arrears or, upon the occurrence and during the continuation of a default
under the Note, at a rate of interest 3.5% per annum greater than the rate
otherwise applicable; PROVIDED that, if Internet shall fail to pay in full
the principal amount of the Note and all interest accrued there on at the
maturity thereof (whether at scheduled maturity, on the date of any
required prepayment or, after the expiration of applicable grace periods
and cure periods, upon acceleration), then, at any time during the period
commencing the day after the date of such maturity of the Note (if the
principal amount thereof and all interest accrued thereon shall then not
have been paid in full) and ending on a date that is 45 days after the date
of such maturity, Group may elect to convert the Note into 300,000 shares
of Internet Common Stock (the "CONVERSION SHARES") at a price of $3.00 per
share (as such number of shares and price per share may be adjusted
pursuant to the terms thereof);
(2) the exchange, on a date that is not later than
August 1, 1996 (the "SECOND CLOSING DATE"), of all the outstanding shares
of capital stock of Interwest for a number of shares of Internet Common
Stock issued by Internet (the "ADDITIONAL SHARES" and, collectively with
the Conversion Shares, the "INTERNET SHARES") such that the number of
Additional Shares issued to Group would equal 49.0% of the shares of
Internet Common Stock issued and outstanding immediately following
consummation of the Share Exchange, assuming for these purposes that there
are no stock options, warrants or other rights then outstanding to acquire
shares of Internet Common Stock other than (A) options granted under the
1995 Non-Employee Director Stock
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Option Plan or the 1996 Incentive Stock Plan, respectively, of Internet to
acquire not more than 335,000 shares of Internet Common Stock in the
aggregate, (B) options granted to three persons previously identified to
Group to acquire not more than 34,000 shares of Internet Common Stock in
the aggregate and (C) the Note, and without taking into account the
issuance of any shares of Internet Common Stock after the date of this
letter and on or before the Second Closing Date pursuant to the exercise of
any of such stock options, warrants or other rights, including, without
limitation, the issuance of the Conversion Shares pursuant to the
conversion of the Note;
(3) such representations and warranties by each party,
as are appropriate for the Transactions, including, without limitation,
representations and warranties regarding corporate existence and power,
authorization, approvals and consents, binding effect, financial
information, financial condition, absence of defaults under outstanding
debt instruments (with respect to which waivers have not been obtained),
absence of certain changes or events, taxes, litigation, compliance with
laws, licenses, employee matters, labor disputes, subsidiaries, property,
equipment, leases, proprietary rights (including, with respect to Internet,
all necessary rights to the use of the name "Internet" in the State of
Colorado), insurance, liens and encumbrances, debt, capitalization,
environmental matters, books and records, material contracts, misstatements
and omissions, documents filed by Internet with the Securities and Exchange
Commission, the approval of the boards of directors, shareholders and
creditors of the respective parties, the absence of other merger agreements
and other agreements with respect to Business Combination Transactions (as
defined below), the absence of fees for brokers and finders and continuing
representations and warranties;
(4) such covenants of each party as are appropriate for
the Transactions, including, without limitation, (A) a covenant not to
solicit Business Combination Transactions, consistent with Section 3(a)(2),
(B) a covenant by Internet, upon consummation of the Share Exchange, to
increase the size of its board of directors from four to seven and to cause
three individuals designated by Group to be elected as directors of
Internet to serve until the next annual meeting of shareholders of
Internet, (C) additional affirmative covenants of each party, as
applicable, requiring the maintenance of records, maintenance of
properties, conduct of business, maintenance of insurance, compliance with
laws, payment of taxes, reporting of specified information to the other
party, reservation by Internet of the Internet Shares to be issued pursuant
to the Transaction Documents, qualification by Internet of the Internet
Shares for inclusion in the National Association of Securities Dealers
Automated Quotations/Small Cap Market ("NASDAQ/SMALL CAP MARKET"),
maintenance of existence, compliance with laws, use of best efforts to
complete the Transactions, coordination of publicity regarding the
Transactions, maintenance of confidentiality of information and further
assurances, (D) negative covenants of each party, as applicable and subject
to certain transactions undertaken in the ordinary course of business, with
respect to amendment of charter documents, issuance of securities, creation
of liens and encumbrances, incurrence of debt, restricted payments,
investments, merger agreements or agreements with respect to other business
combinations, leases, disposing of assets, transactions with affiliates,
accounting
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changes, disposing of capital stock of a subsidiary, compensation of
executive officers, union contracts, settling or compromising tax
liabilities, settling litigation, delisting securities of Internet from
NASDAQ/Small Cap Market, amending any of the Transaction Documents without
the prior approval of the other party and imposing limitations on the
rights enjoyed by Group as a shareholder of Internet after the Share
Exchange; and
(5) such conditions precedent to the closing of the
transactions of the First Closing Date (collectively, the "FIRST CLOSING
TRANSACTIONS") and on the Second Closing Date (collectively, the "SECOND
CLOSING TRANSACTIONS") as are appropriate for the Transactions, including,
without limitation, satisfaction of each party with the terms and
conditions of the other Transaction Documents, receipt of all necessary
approvals and consents from the shareholders and creditors of the
respective parties, governmental authorities and other persons, the absence
of pending or threatened actions that would restrict in any material
respect or prohibit the consummation of the First Closing Transactions or
the Second Closing Transactions, the determination that the Share Exchange
will be characterized as a tax-free reorganization under Section
368(a)(1)(A) or 368(a)(1)(B) of the Internal Revenue Code of 1986, as
amended, the absence of any violation or default with respect to any
regulation of any governmental body by any of the parties or their
respective subsidiaries, the continued accuracy and correctness of the
representations and warranties of each party as contained in the
Transaction Documents, the performance by each party of its obligations
under the Transaction Documents, the delivery of certificates from
appropriate officers of the respective parties as are appropriate for the
Transactions, the delivery of opinions of counsel for each party acceptable
to the other party in its sole discretion and the satisfaction of other
conditions or appropriate for the Transactions.
(b) REGISTRATION RIGHTS AGREEMENT. Internet and Group will
undertake to negotiate the definitive terms of, and if they reach agreement will
enter into on the First Closing Date, a registration rights agreement (the
"REGISTRATION RIGHTS AGREEMENT") pursuant to which Group and its successors and
assigns will have the right on five occasions, commencing on the second
anniversary of the First Closing Date, to cause Internet to register the
Internet Shares for sale under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), and, commencing on the first anniversary of the First Closing
Date, to cause Internet to include the Internet Shares in any registration
statement filed under the Securities Act offering any other shares of Internet
Common Stock.
2. RECOMMENDATIONS. The Company, acting through its Board of
Directors, shall, in accordance with applicable law, as soon as practicable
following the execution and delivery of this letter (1) duly call, give notice
of, convene and hold the annual meeting of its shareholders or a special meeting
thereof (such meeting, including any adjournments thereof, the "SHAREHOLDERS
MEETING") for the purpose, among other things, of considering and taking action
with respect to the Transaction Documents and Transactions and prepare and file
with the Securities and Exchange Commission a proxy statement (such proxy
statement including the form of proxy and all such other materials distributed
in connection therewith, as amended or supplemented from time to time, the
"PROXY STATEMENT"), (2) use its best efforts (A) to obtain
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and furnish the information required to be included by it in the Proxy Statement
and, after consultation with Group, respond promptly to any comments made by the
Securities and Exchange Commission with respect to the Proxy Statement and any
preliminary version thereof and cause the Proxy Statement to be mailed to its
shareholders at the earliest practicable time following the execution and
delivery of the Share Exchange Agreement and (B) to solicit proxies in favor of
the Transaction Documents and the Transactions and otherwise obtain the approval
by its shareholders of the Transaction Documents and the Transactions and (3)
cause the Proxy Statement and the distribution thereof to comply in all material
respects with the Exchange Act and ensure that the Proxy Statement will not, at
the date the Proxy Statement (or any amendment thereof or supplement thereto) is
first mailed to shareholders and at the time of the Shareholders Meeting, be
false or misleading with respect to any material fact, or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they are
made, not misleading or necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the Shareholders
Meeting which has become false or misleading. The Company shall include in the
Proxy Statement the recommendations (the "RECOMMENDATIONS") of its Board of
Directors that holders of Internet Common Stock vote in favor of the approval of
the Transaction Documents and the Transactions.
3. REPRESENTATIONS AND WARRANTIES. Each of Internet and Group
represents and warrants, with respect to itself only, as follows (Internet or
Interwest, as the case may be, being referred to below as a "REPRESENTING
PARTY"):
(a) EXISTENCE AND POWER. The representing party (A) is a
corporation duly incorporated, validly existing and in good standing under the
laws of the state of its incorporation, (B) has all necessary corporate power
and authority and all material licenses, authorizations, consents and approvals
required to own, lease, license or use its properties now owned, leased,
licensed or used and proposed to be owned, leased, licensed or used and to carry
on its business as now conducted and proposed to be conducted, (C) is duly
qualified as a foreign corporation under the laws of each jurisdiction in which
both (i) qualification is required either (x) to own, lease, license or use its
properties now owned, leased, licensed or used and proposed to be owned, leased,
licensed or used or (y) to carry on its business as now conducted and proposed
to be conducted and (ii) the failure to be so qualified could materially and
adversely affect either or both of (x) its business, properties, operations,
prospects or condition (financial or otherwise) and (y) its ability to perform
its obligations under this letter and (iv) has all necessary corporate power and
authority to execute and deliver this letter.
(b) AUTHORIZATION; CONTRAVENTION. The execution and delivery of
this letter and the performance by the representing party of its obligations
under this letter have been duly authorized by all necessary corporate action
and do not and will not (i) contravene, violate, result in a breach of or
constitute a default under, (A) its articles of incorporation or its bylaws, (B)
any law or regulation or any decision, ruling, order or award of any arbitrator
by which the representing party or any of its properties may be bound or
affected, or (C) any agreement, indenture or other instrument to which it is a
party or by which it or its properties may be bound
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or affected or (ii) result in or require the creation or imposition of any lien
on any property now owned or hereafter acquired by it.
(c) BINDING EFFECT. This letter, to the extent provided in
Section 9, is the legally valid and binding obligation of the representing
party, enforceable against it in accordance with its terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or affecting creditors' rights generally and general principles of
equity, including, without limitation, concepts of materiality, reasonableness,
good faith and fair dealing and the possible unavailability of specific
performance or injunctive relief, regardless of whether considered in a
proceeding in equity or at law.
4. COVENANTS.
(a) PRIOR TO EXECUTION OF SHARE EXCHANGE AGREEMENT. Prior to
the execution and delivery of the Share Exchange Agreement, and thereafter to
the extent provided therein, Internet shall do the following and Group shall
cause Interwest to do the following (Internet or Interwest, as the case may be,
being referred to below as a "COVENANTING PARTY"):
(1) CONDUCT OF BUSINESS. Except as contemplated by this
letter, the covenanting party and its subsidiaries shall conduct their
respective businesses only in the ordinary course, and the covenanting
party and its subsidiaries shall not take any action except in the ordinary
course, except that a covenanting party may undertake certain acquisitions
previously identified by the covenanting party to the other party. No
additional equity securities or stock options, warrants or other rights to
purchase equity securities of the covenanting party or any of its
subsidiaries will be issued or granted after the date hereof. Without the
approval of the other party, the covenanting party shall not and shall
cause its subsidiaries not to adopt or amend any bonus, profit sharing,
compensation, severance, termination, stock option, stock appreciation
right, restricted stock, pension, retirement, employment or other employee
benefit agreement, trust, plan or other arrangement for the benefit or
welfare of any director, officer or, other than in the ordinary course of
business, any other employee, or increase in any manner the compensation or
fringe benefits of any director, officer or, other than in the ordinary
course of business, any other employee of the covenanting party or any of
its subsidiaries or pay any benefit not required by any existing agreement
or place any assets in any trust for the benefit of employees or directors.
(2) NO SOLICITATION. The covenanting party and its
subsidiaries shall not, and the covenanting party and its subsidiaries
shall not authorize or permit any of its officers, directors, shareholders
or employees or any financial advisor, attorney, accountant or other
representative retained by it to,
(A) solicit, initiate or encourage (including, without
limitation, by way of furnishing information) any inquiry or the making of
any proposal to the covenanting party or its shareholders from any person
(other than (x) the other party or an affiliate of, or any person acting in
concert with, the other party and (y) the
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persons previously identified by the covenanting party to the other party)
which constitutes, or may reasonably be expected to lead to, in each case
whether in one transaction or in a series of transactions (other than the
Transactions), (i) an acquisition from the covenanting party or its
shareholders of any equity securities of any of the covenanting party and
its subsidiaries, (ii) any acquisition of a substantial amount of assets of
any of the covenanting party and its subsidiaries, (iii) a merger or
consolidation of any of the covenanting party and its subsidiaries or (iv)
any tender offer (including a self-tender offer) or exchange offer,
recapitalization, liquidation, dissolution or similar transaction involving
any of the covenanting party and its subsidiaries or any other transaction
the consummation of which would or could reasonably be expected to impede,
interfere with, prevent or materially delay the conclusion of any of the
Transactions or which would or could reasonably be expected to materially
reduce the benefits to the other party of the Transactions (collectively,
"BUSINESS COMBINATION TRANSACTIONS") or agree to or endorse any Business
Combination Transaction; or
(B) enter into or participate in any discussions or
negotiations regarding any of the foregoing, or furnish to any other person
any information with respect to the business, properties, operations,
prospects or conditions (financial or otherwise) of the covenanting party
and its subsidiaries or any of the foregoing, or otherwise cooperate in any
way with, or assist or participate in, facilitate or encourage, any effort
or attempt by any other person to do or seek any of the foregoing.
Each of Internet and Interwest has advised each of its directors of the
obligations of the covenanting party under this Section 3(a)(2), and each
of its directors has agreed to comply with such obligations.
(b) PRIOR TO THE CLOSING DATE. Prior to the Closing Date, each
party shall obtain such consents from its shareholders, creditors, governmental
authorities and other persons with respect to the Transaction Documents and the
Transactions as the parties determine to be appropriate.
5. COOPERATION. Each party shall, subject to Section 9, (a)
cooperate with the other party to the fullest extent in negotiating, preparing
and executing the Transaction Documents and any related agreements and other
necessary documentation, obtaining all necessary consents from third parties and
complying with all regulatory requirements and (b) take, or cause to be taken,
all action, and to do, or cause to be done, and to cooperate with the other
party in doing, all things necessary, proper or advisable under applicable law
and regulations to make the Transactions effective in the most expeditious
manner practicable. Internet shall, and Group shall cause Interwest to, permit
reasonable access to their respective properties and personnel and property and
personnel of their respective subsidiaries and make available to the other party
and its agents and advisors all books, papers and records relating to their and
their respective subsidiaries' operations, assets, obligations and liabilities.
6. PUBLIC ANNOUNCEMENTS. Each party shall consult with each other
party before issuing any press release or otherwise making any public statements
with respect to the
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Transactions and shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required by law or by
obligations pursuant to any listing agreement with the National Association of
Securities Dealers, Inc.
7. EXPENSES AND FEES.
(a) EXPENSES. Except as otherwise provided in this Section 7,
whether or not the Transactions are concluded, all costs and expenses incurred
in connection with the Transaction Documents and the Transactions shall be paid
by the party incurring such expenses. Notwithstanding the foregoing, the costs
and expenses of preparing and distributing the Proxy Statement and obtaining and
complying with the antitrust requirements of any governmental body shall be paid
by Internet.
(b) SUBSEQUENT EVENT FEE. If a Subsequent Event (as defined
below) occurs on or before the 90th day after the date of this letter with
respect to Interwest or Internet (the "RESPONSIBLE PARTY") or their respective
subsidiaries, then the responsible party shall pay to the other party $400,000
promptly following the public announcement of such Subsequent Event. For
purposes of this letter, "SUBSEQUENT EVENT" means any of the following, in each
case whether or not any party shall have executed and delivered, or exercised
any rights or performed any obligations under, any of the Transaction Documents:
(1) the responsible party or any of its subsidiaries,
without having received the prior written consent of the other party, shall
have entered into an agreement with respect to a Business Combination
Transaction, or the board of directors of the responsible party shall have
recommended that its shareholders approve or accept any Business
Combination Transaction;
(2) the responsible party or any of its subsidiaries,
without having received the prior written consent of the other party, shall
have authorized, recommended, proposed or publicly announced its intention
to authorize, recommend or propose, an agreement with respect to a Business
Combination Transaction with any person other than the other party or an
affiliate of the other party;
(3) any person other than the other party or any
affiliate of the other party (or any person that beneficially owns more
than 30% of the shares of capital stock of the responsible party on the
date of this letter) shall have acquired beneficial ownership or the right
to acquire beneficial ownership of 30% or more of the shares of capital
stock of the responsible party then issued and outstanding; or
(4) any person other than the other party or an
affiliate of the other party shall have proposed a Business Combination
Transaction (A) that the board of directors of the responsible party
determines in its good faith judgment is more favorable to the responsible
party's shareholders than the Transactions and (B) as a result of which the
board of directors of the responsible party concludes in good faith that
termination of the Transaction Documents is necessary or appropriate in
order for the
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board of directors of the responsible party to act in a manner which is
consistent with its fiduciary obligations under applicable law.
(c) FEES FOR BROKERS AND FINDERS. Each party represents and
warrants to the other party that it has not authorized any person to act as
financial advisor, broker, finder or other intermediary that might be entitled
to any fee, commission, expense reimbursement or other payment of any kind from
any person upon the conclusion of or in connection with any of the Transactions.
8. TERMINATION. Other than the obligations set forth in Section 7,
each of which shall survive any termination or expiration, this letter may be
terminated, the respective undertakings of the parties hereunder and the
transactions contemplated hereby may be abandoned or terminated at any time by
any party upon written notice to the other party with respect thereto.
9. INTENT. This letter merely constitutes a statement of the mutual
intentions of the parties and does not contain all matters upon which agreement
must be reached for the proposed transactions to be consummated and, therefore,
does not constitute a binding commitment with respect to the proposed
transactions themselves. This letter also does not create a duty on the part of
either party to negotiate in good faith toward a binding contract, and may not
be relied upon by either party as the basis for a contract by estoppel or
otherwise, but rather evidences a non-binding expression of good faith intention
to endeavor, without obligation, to negotiate mutually agreeable Transaction
Documents. A binding commitment with respect to the proposed transactions
contemplated by the Transaction Documents will result only from execution of
each such Transaction Document, subject to the conditions expressed therein.
Neither party shall have any obligation with respect to any of the transactions
contemplated by such Transaction Documents unless and until each of such
Transaction Documents is satisfactory to each party thereto, as conclusively
evidenced by the execution and delivery thereof by such party. Notwithstanding
the two preceding sentences of this paragraph, upon acceptance hereof as
described below, the provisions of Sections 2, 3, 4, 5, 6, 7, 8 and this Section
9 shall be legally binding and the provisions of Section 7 shall survive any
termination of this letter unless and until they are superseded by the
Transaction Documents.
10. OTHER PROVISIONS.
(a) This letter may be executed in two or more counterparts,
each of which shall be deemed to be an original, but all of which shall
constitute one and the same agreement.
(b) This letter will be governed by and construed in accordance
with the internal laws of the State of Colorado.
(c) All matters referred to herein are subject to and
conditioned upon compliance with all applicable laws.
9
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(d) Each party acknowledges that it has been represented by
counsel in connection with this letter and the transactions contemplated by this
letter. Accordingly, any rule of law or any legal decision that would require
interpretation of any claimed ambiguities in this letter against the party that
drafted this letter has no application and is expressly waived.
(e) If any provision of this letter is determined to be invalid,
illegal or unenforceable, the remaining provisions of this letter to the extent
permitted by law shall remain in full force and effect, PROVIDED that the
economic and legal substance of the transactions contemplated by this letter are
not affected in any manner materially adverse to any party. In event of any
such determination, the parties agree to negotiate in good faith to modify this
letter to fulfill as closely as possible the original intents and purposes
hereof. To the extent permitted by law, the parties hereby to the same extent
waive any provisions of law that renders any provision hereof prohibited or
unenforceable in any respect.
(f) This letter embodies the entire agreement and understanding
of the parties and supersedes all prior agreements or understandings with
respect to the subject matter of this letter.
(g) Each party waives any right to a trial by jury in any action
to enforce or defend any right under this letter and agrees that any action
shall be tried before a court and not before a jury.
--------------------
10
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If this letter reflects your understanding, please so signify on the
enclosed copy of this letter and return it to us at the above address by 5:00
p.m., Denver time, on May 14, 1996.
INTERWEST GROUP, INC.
By /s/ JOHN M. COUZENS
-------------------------
Name: John M. Couzens
Title: Attorney-in-Fact
AGREED:
INTERNET COMMUNICATIONS CORPORATION
By: /s/ THOMAS C. GALLEY
----------------------------
Name: Thomas C. Galley
Title: Chairman & President
Date: May 14, 1996
S-1
