-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WDOisK0TpYCfqJIVvC8ucY9cyaVq1Xi95LNUoHtzbBJ71Uw6yqvjnMZ+Tv2HGl+6 T/wSWmx0xDe0bsY6IPspfQ== 0001011438-00-000003.txt : 20000104 0001011438-00-000003.hdr.sgml : 20000104 ACCESSION NUMBER: 0001011438-00-000003 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 20000103 GROUP MEMBERS: AGL INVESTMENT NO. 8 LIMITED PARTNERSHIP GROUP MEMBERS: ANGELA JOY COPPOLA GROUP MEMBERS: ASPEN FOXTROT INVESTMENTS, LLC GROUP MEMBERS: ASPEN ONLINE INVESTMENTS, LLC GROUP MEMBERS: COURTNEY CAMPBELL GROUP MEMBERS: DAIN RAUSCHER CUSTODIAN F/B/O BRENT STAHL SEP GROUP MEMBERS: DAVID ROCKER GROUP MEMBERS: DENNIS DAUTEL GROUP MEMBERS: DOROTHY COHEN GROUP MEMBERS: FIRST MADISON HOLDINGS, LLP GROUP MEMBERS: G. TYLER RUNNELS GROUP MEMBERS: GENERAL MOTORS CORP GROUP MEMBERS: GERMAN AMERICAN CAPITAL CORPORATION GROUP MEMBERS: HENRY GELLIS GROUP MEMBERS: IRVING SOLOMON GROUP MEMBERS: JANET FRANKLIN GROUP MEMBERS: KAYLEN SILVERBERG GROUP MEMBERS: LEON HOROWITZ GROUP MEMBERS: MUSSIE GELLIS GROUP MEMBERS: PARIBAS NORTH AMERICA, INC. GROUP MEMBERS: PEREGRINE EQUITIES 1, L.L.C. GROUP MEMBERS: PEREGRINE EQUITIES 10, L.L.C. GROUP MEMBERS: PEREGRINE EQUITIES 2, L.L.C. GROUP MEMBERS: PEREGRINE EQUITIES 3, L.L.C. GROUP MEMBERS: PEREGRINE EQUITIES 4, L.L.C. GROUP MEMBERS: PEREGRINE EQUITIES 5, L.L.C. GROUP MEMBERS: PEREGRINE EQUITIES 6, L.L.C. GROUP MEMBERS: PEREGRINE EQUITIES 7, L.L.C. GROUP MEMBERS: PEREGRINE EQUITIES 8, L.L.C. GROUP MEMBERS: PEREGRINE EQUITIES 9, L.L.C. GROUP MEMBERS: PEREGRINE INVESTMENT CAPITAL, L.L.C. GROUP MEMBERS: PETER GUBER GROUP MEMBERS: RAMSDELL FAMILY TRUST GROUP MEMBERS: RON BARSHOP GROUP MEMBERS: ROSEWOOD PARTNERS LP GROUP MEMBERS: STARK INVESTMENTS LP SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: FIRSTLINK COMMUNICATIONS INC CENTRAL INDEX KEY: 0001035271 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-TELEPHONE INTERCONNECT SYSTEMS [7385] IRS NUMBER: 931197477 STATE OF INCORPORATION: OR FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-54521 FILM NUMBER: 500716 BUSINESS ADDRESS: STREET 1: 190 SW HARRISON STREET CITY: PORTLAND STATE: OR ZIP: 97201 BUSINESS PHONE: 5033064444 MAIL ADDRESS: STREET 1: 190 SW HARRISON STREET CITY: PORTLAND STATE: OR ZIP: 97201 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: GENERAL MOTORS CORP CENTRAL INDEX KEY: 0000040730 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLES & PASSENGER CAR BODIES [3711] IRS NUMBER: 380572515 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 100 RENAISSANCE CTR CITY: DETROIT STATE: MI ZIP: 48265-1000 BUSINESS PHONE: 3135565000 MAIL ADDRESS: STREET 1: 3044 W GRAND BOULEVARD CITY: DETROIT STATE: MI ZIP: 48202-3091 SC 13D 1 SCHEDULE 13D UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D (RULE 13D-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13D-1(A) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13D-2(A) USOL HOLDINGS, INC. (f/k/a FIRSTLINK COMMUNICATIONS, INC.) - -------------------------------------------------------------------------------- (Name of Issuer) Common Stock, no par value per share - -------------------------------------------------------------------------------- (Title of Class of Securities) 903 38Y 109 - -------------------------------------------------------------------------------- (CUSIP Number) Linda Giunta Michaelson Troop Steuber Pasich Reddick & Tobey, LLP 2029 Century Park East, 24th floor Los Angeles, California 90067 (310) 728-3316 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) December 22, 1999 - -------------------------------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box []. Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7(b) for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter the disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). Page 1 SCHEDULE 13D - -------------------------------------------------------------------------------- PAGE 2 OF 99 PAGES - -------------------------------------------------------------------------------- CUSIP NO. 903 38Y 109 - -------------------------------------------------------------------------------- ----------------------------------------------------------------------------- 1 NAME OR REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON AGL Investments No. 8 Limited Partnership ----------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [] (b) [] ----------------------------------------------------------------------------- 3 SEC USE ONLY ----------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO ----------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [] ----------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Colorado ----------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 4,986,250 shares ------------------------------------------------------ 8 SHARED VOTING POWER BENEFICIALLY OWNED BY 0 (See Response to Item 5) ------------------------------------------------------ 9 SOLE DISPOSITIVE POWER EACH REPORTING 4,986,250 shares ------------------------------------------------------ 10 SHARED DISPOSITIVE POWER PERSON WITH 0 (See Response to Item 5) ----------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 4,986, 250 shares ----------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] ----------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 42.0% (18.8% on a fully diluted basis, See Appendix B) ----------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN ----------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION Page 2 SCHEDULE 13D - -------------------------------------------------------------------------------- PAGE 3 OF 99 PAGES - -------------------------------------------------------------------------------- CUSIP NO. 903 38Y 109 - -------------------------------------------------------------------------------- ----------------------------------------------------------------------------- 1 NAME OR REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON General Motors Corporation, as Parent Holding Company of GMAC Commercial Mortgage Corporation ----------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [] (b) [] ----------------------------------------------------------------------------- 3 SEC USE ONLY ----------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO ----------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [] ----------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware ----------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 5,311,250 shares ------------------------------------------------------ 8 SHARED VOTING POWER BENEFICIALLY 0 (See Response to Item 5) OWNED BY ------------------------------------------------------ 9 SOLE DISPOSITIVE POWER EACH 5,311,250 shares REPORTING ------------------------------------------------------ 10 SHARED DISPOSITIVE POWER PERSON 0 (See Response to Item 5) WITH ----------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 5,311,250 shares ----------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] ----------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 43.6% (20.1% on a fully diluted basis, See Appendix B) ----------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO ----------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION Page 3 SCHEDULE 13D - -------------------------------------------------------------------------------- PAGE 4 OF 99 PAGES - -------------------------------------------------------------------------------- CUSIP NO. 903 38Y 109 - ------------------------------------------------------------------------------- ----------------------------------------------------------------------------- 1 NAME OR REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Aspen Foxtrot Investments, LLC ----------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [] (b) [] ----------------------------------------------------------------------------- 3 SEC USE ONLY ----------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO ----------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [] ----------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Michigan ----------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 2,250,000 shares ------------------------------------------------------ 8 SHARED VOTING POWER BENEFICIALLY OWNED BY 0 (See Response to Item 5) ------------------------------------------------------ 9 SOLE DISPOSITIVE POWER EACH REPORTING 2,250,000 shares ------------------------------------------------------ 10 SHARED DISPOSITIVE POWER PERSON WITH 0 (See Response to Item 5) ----------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,250,000 shares ----------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] ----------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 24.6% (8.5% on a fully diluted basis, See Appendix B) ----------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* OO ----------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION Page 4 SCHEDULE 13D - -------------------------------------------------------------------------------- PAGE 5 OF 99 PAGES - -------------------------------------------------------------------------------- CUSIP NO. 903 38Y 109 - -------------------------------------------------------------------------------- ----------------------------------------------------------------------------- 1 NAME OR REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Aspen Online Investments, LLC ----------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [] (b) [] ----------------------------------------------------------------------------- 3 SEC USE ONLY ----------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO ----------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [] ----------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Michigan ----------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 1,937,500 shares ------------------------------------------------------ 8 SHARED VOTING POWER BENEFICIALLY OWNED BY 0 (See Response to Item 5) ------------------------------------------------------ 9 SOLE DISPOSITIVE POWER EACH REPORTING 1,937,500 shares ------------------------------------------------------ 10 SHARED DISPOSITIVE POWER PERSON WITH 0 (See Response to Item 5) ----------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,937,500 shares ----------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] ----------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 25.8% (7.3% on a fully diluted basis, See Appendix B) ----------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* OO ----------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION Page 5 SCHEDULE 13D - -------------------------------------------------------------------------------- PAGE 6 OF 99 PAGES - -------------------------------------------------------------------------------- CUSIP NO. 903 38Y 109 - -------------------------------------------------------------------------------- ----------------------------------------------------------------------------- 1 NAME OR REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON German American Capital Corporation ----------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [] (b) [] ----------------------------------------------------------------------------- 3 SEC USE ONLY ----------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO ----------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [] ----------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Maryland ----------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 1,750,000 shares ------------------------------------------------------ 8 SHARED VOTING POWER BENEFICIALLY OWNED BY 0 (See Response to Item 5) ------------------------------------------------------ 9 SOLE DISPOSITIVE POWER EACH 1,750,000 shares REPORTING ------------------------------------------------------ 10 SHARED DISPOSITIVE POWER PERSON 0 (See Response to Item 5) WITH ----------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,750,000 shares ----------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] ----------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 20.2% (6.6% on a fully diluted basis, See Appendix B) ----------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO ----------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION Page 6 SCHEDULE 13D - -------------------------------------------------------------------------------- PAGE 7 OF 99 PAGES - -------------------------------------------------------------------------------- CUSIP NO. 903 38Y 109 - -------------------------------------------------------------------------------- ----------------------------------------------------------------------------- 1 NAME OR REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Peregrine Equities 1, L.L.C. ----------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [] (b) [] ----------------------------------------------------------------------------- 3 SEC USE ONLY ----------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO ----------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [] ----------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Oregon ----------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 250,000 shares ------------------------------------------------------ 8 SHARED VOTING POWER BENEFICIALLY OWNED BY 0 (See Response to Item 5) ------------------------------------------------------ 9 SOLE DISPOSITIVE POWER EACH REPORTING 250,000 shares ------------------------------------------------------ 10 SHARED DISPOSITIVE POWER PERSON WITH 0 (See Response to Item 5) ----------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 250,000 shares ----------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] ----------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 3.5% (.95% on a fully diluted basis, See Appendix B) ----------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* OO ----------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION Page 7 SCHEDULE 13D - -------------------------------------------------------------------------------- PAGE 8 OF 99 PAGES - -------------------------------------------------------------------------------- CUSIP NO. 903 38Y 109 - -------------------------------------------------------------------------------- ----------------------------------------------------------------------------- 1 NAME OR REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Peregrine Equities 2, L.L.C. ----------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [] (b) [] ----------------------------------------------------------------------------- 3 SEC USE ONLY ----------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO ----------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [] ----------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Oregon ----------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 250,000 shares ------------------------------------------------------ 8 SHARED VOTING POWER BENEFICIALLY OWNED BY 0 (See Response to Item 5) ------------------------------------------------------ 9 SOLE DISPOSITIVE POWER EACH REPORTING 250,000 shares ------------------------------------------------------ 10 SHARED DISPOSITIVE POWER PERSON WITH 0 (See Response to Item 5) ----------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 250,000 shares ----------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] ----------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 3.5% (.95% on a fully diluted basis, See Appendix B) ----------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* OO ----------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION Page 8 SCHEDULE 13D - -------------------------------------------------------------------------------- PAGE 9 OF 99 PAGES - -------------------------------------------------------------------------------- CUSIP NO. 903 38Y 109 - -------------------------------------------------------------------------------- ----------------------------------------------------------------------------- 1 NAME OR REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Peregrine Equities 3, L.L.C. ----------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [] (b) [] ----------------------------------------------------------------------------- 3 SEC USE ONLY ----------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO ----------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [] ----------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Oregon ----------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 250,000 shares ------------------------------------------------------ 8 SHARED VOTING POWER BENEFICIALLY OWNED BY 0 (See Response to Item 5) ------------------------------------------------------ 9 SOLE DISPOSITIVE POWER EACH REPORTING 250,000 shares ------------------------------------------------------ 10 SHARED DISPOSITIVE POWER PERSON WITH 0 (See Response to Item 5) ----------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 250,000 shares ----------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] ----------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 3.5% (.95% on a fully diluted basis, See Appendix B) ----------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* OO ----------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION Page 9 SCHEDULE 13D - -------------------------------------------------------------------------------- PAGE 10 OF 99 PAGES - -------------------------------------------------------------------------------- CUSIP NO. 903 38Y 109 - -------------------------------------------------------------------------------- ----------------------------------------------------------------------------- 1 NAME OR REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Peregrine Equities 4, L.L.C. ----------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [] (b) [] ----------------------------------------------------------------------------- 3 SEC USE ONLY ----------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO ----------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [] ----------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Oregon ----------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 250,000 shares ------------------------------------------------------ 8 SHARED VOTING POWER BENEFICIALLY OWNED BY 0 (See Response to Item 5) ------------------------------------------------------ 9 SOLE DISPOSITIVE POWER EACH REPORTING 250,000 shares ------------------------------------------------------ 10 SHARED DISPOSITIVE POWER PERSON WITH 0 (See Response to Item 5) ----------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 250,000 shares ----------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] ----------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 3.5% (.95% on a fully diluted basis, See Appendix B) ----------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* OO ----------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION Page 10 SCHEDULE 13D - -------------------------------------------------------------------------------- PAGE 11 OF _ PAGES - -------------------------------------------------------------------------------- CUSIP NO. 903 38Y 109 - -------------------------------------------------------------------------------- ----------------------------------------------------------------------------- 1 NAME OR REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Peregrine Equities 5, L.L.C. ----------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [] (b) [] ----------------------------------------------------------------------------- 3 SEC USE ONLY ----------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO ----------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [] ----------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Oregon ----------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 250,000 shares ------------------------------------------------------ 8 SHARED VOTING POWER BENEFICIALLY OWNED BY 0 (See Response to Item 5) ------------------------------------------------------ 9 SOLE DISPOSITIVE POWER EACH REPORTING 250,000 shares ------------------------------------------------------ 10 SHARED DISPOSITIVE POWER PERSON WITH 0 (See Response to Item 5) ----------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 250,000 shares ----------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] ----------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 3.5% (.95% on a fully diluted basis, See Appendix B) ----------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* OO ----------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION Page 11 SCHEDULE 13D - -------------------------------------------------------------------------------- PAGE 12 OF 99 PAGES - -------------------------------------------------------------------------------- CUSIP NO. 903 38Y 109 - -------------------------------------------------------------------------------- ----------------------------------------------------------------------------- 1 NAME OR REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Peregrine Equities 6, L.L.C. ----------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [] (b) [] ----------------------------------------------------------------------------- 3 SEC USE ONLY ----------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO ----------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [] ----------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Oregon ----------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 250,000 shares ------------------------------------------------------ 8 SHARED VOTING POWER BENEFICIALLY OWNED BY 0 (See Response to Item 5) ------------------------------------------------------ 9 SOLE DISPOSITIVE POWER EACH REPORTING 250,000 shares ------------------------------------------------------ 10 SHARED DISPOSITIVE POWER PERSON WITH 0 (See Response to Item 5) ----------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 250,000 shares ----------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] ----------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 3.5% (.95% on a fully diluted basis, See Appendix B) ----------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* OO ----------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION Page 12 SCHEDULE 13D - -------------------------------------------------------------------------------- PAGE 13 OF 99 PAGES - -------------------------------------------------------------------------------- CUSIP NO. 903 38Y 109 - -------------------------------------------------------------------------------- ----------------------------------------------------------------------------- 1 NAME OR REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Peregrine Equities 7, L.L.C. ----------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [] (b) [] ----------------------------------------------------------------------------- 3 SEC USE ONLY ----------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO ----------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [] ----------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Oregon ----------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 250,000 shares ------------------------------------------------------ 8 SHARED VOTING POWER BENEFICIALLY OWNED BY 0 (See Response to Item 5) ------------------------------------------------------ 9 SOLE DISPOSITIVE POWER EACH REPORTING 250,000 shares ------------------------------------------------------ 10 SHARED DISPOSITIVE POWER PERSON WITH 0 (See Response to Item 5) ----------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 250,000 shares ----------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] ----------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 3.5% (.95% on a fully diluted basis, See Appendix B) ----------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* OO ----------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION Page 13 SCHEDULE 13D - -------------------------------------------------------------------------------- PAGE 14 OF 99 PAGES - -------------------------------------------------------------------------------- CUSIP NO. 903 38Y 109 - -------------------------------------------------------------------------------- ----------------------------------------------------------------------------- 1 NAME OR REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Peregrine Equities 8, L.L.C. ----------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [] (b) [] ----------------------------------------------------------------------------- 3 SEC USE ONLY ----------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO ----------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [] ----------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Oregon ----------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 250,000 shares ------------------------------------------------------ 8 SHARED VOTING POWER BENEFICIALLY OWNED BY 0 (See Response to Item 5) ------------------------------------------------------ 9 SOLE DISPOSITIVE POWER EACH REPORTING 250,000 shares ------------------------------------------------------ 10 SHARED DISPOSITIVE POWER PERSON WITH 0 (See Response to Item 5) ----------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 250,000 shares ----------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] ----------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 3.5% (.95% on a fully diluted basis, See Appendix B) ----------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* OO ----------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION Page 14 SCHEDULE 13D - -------------------------------------------------------------------------------- PAGE 15 OF 99 PAGES - -------------------------------------------------------------------------------- CUSIP NO. 903 38Y 109 - -------------------------------------------------------------------------------- ----------------------------------------------------------------------------- 1 NAME OR REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Peregrine Equities 9, L.L.C. ----------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [] (b) [] ----------------------------------------------------------------------------- 3 SEC USE ONLY ----------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO ----------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO 2(d) or 2(e) [] ----------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Oregon ----------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 250,000 shares ------------------------------------------------------ 8 SHARED VOTING POWER BENEFICIALLY OWNED BY 0 (See Response to Item 5) ------------------------------------------------------ 9 SOLE DISPOSITIVE POWER EACH REPORTING 250,000 shares ------------------------------------------------------ 10 SHARED DISPOSITIVE POWER PERSON WITH 0 (See Response to Item 5) ----------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 250,000 shares ----------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] ----------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 3.5% (.95% on a fully diluted basis, See Appendix B) ----------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* OO ----------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION Page 15 SCHEDULE 13D - -------------------------------------------------------------------------------- PAGE 16 OF 99 PAGES - -------------------------------------------------------------------------------- CUSIP NO. 903 38Y 109 - -------------------------------------------------------------------------------- ----------------------------------------------------------------------------- 1 NAME OR REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Peregrine Equities 10, L.L.C. ----------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [] (b) [] ----------------------------------------------------------------------------- 3 SEC USE ONLY ----------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO ----------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [] ----------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Oregon ----------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 250,000 shares ------------------------------------------------------ 8 SHARED VOTING POWER BENEFICIALLY OWNED BY 0 (See Response to Item 5) ------------------------------------------------------ 9 SOLE DISPOSITIVE POWER EACH REPORTING 250,000 shares ------------------------------------------------------ 10 SHARED DISPOSITIVE POWER PERSON WITH 0 (See Response to Item 5) ----------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 250,000 shares ----------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] ----------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 3.5% (.95% on a fully diluted basis, See Appendix B) ----------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* OO ----------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION Page 16 SCHEDULE 13D - -------------------------------------------------------------------------------- PAGE 17 OF 99 PAGES - -------------------------------------------------------------------------------- CUSIP NO. 903 38Y 109 - -------------------------------------------------------------------------------- ----------------------------------------------------------------------------- 1 NAME OR REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Peregrine Investment Capital, L.L.C. ----------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [] (b) [] ----------------------------------------------------------------------------- 3 SEC USE ONLY ----------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO ----------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [] ----------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Oregon ----------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 1,000,000 shares ------------------------------------------------------ 8 SHARED VOTING POWER BENEFICIALLY OWNED BY 0 (See Response to Item 5) ------------------------------------------------------ 9 SOLE DISPOSITIVE POWER EACH REPORTING 1,000,000 shares ------------------------------------------------------ 10 SHARED DISPOSITIVE POWER PERSON WITH 0 (See Response to Item 5) ----------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,000,000 shares ----------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] ----------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 14.5% (3.8% on a fully diluted basis, See Appendix B) ----------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* OO ----------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION Page 17 SCHEDULE 13D - -------------------------------------------------------------------------------- PAGE 18 OF 99 PAGES - -------------------------------------------------------------------------------- CUSIP NO. 903 38Y 109 - -------------------------------------------------------------------------------- ----------------------------------------------------------------------------- 1 NAME OR REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Dain Rauscher Custodian f/b/o Brent Stahl S.E.P. (IRA) ----------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [] (b) [] ----------------------------------------------------------------------------- 3 SEC USE ONLY ----------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO ----------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [] ----------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States of America ----------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 12,500 shares ------------------------------------------------------ 8 SHARED VOTING POWER BENEFICIALLY OWNED BY 0 (See Response to Item 5) ------------------------------------------------------ 9 SOLE DISPOSITIVE POWER EACH REPORTING 12,500 shares ------------------------------------------------------ 10 SHARED DISPOSITIVE POWER PERSON WITH 0 (See Response to Item 5) ----------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 12,500 shares ----------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] ----------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.2% (.05% on a fully diluted basis, See Appendix B) ----------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN ----------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION Page 18 SCHEDULE 13D - -------------------------------------------------------------------------------- PAGE 19 OF 99 PAGES - -------------------------------------------------------------------------------- CUSIP NO. 903 38Y 109 - -------------------------------------------------------------------------------- ----------------------------------------------------------------------------- 1 NAME OR REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Mussie Gellis ----------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [] (b) [] ----------------------------------------------------------------------------- 3 SEC USE ONLY ----------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO ----------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [] ----------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States of America ----------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 25,000 shares ------------------------------------------------------ 8 SHARED VOTING POWER BENEFICIALLY OWNED BY 0 (See Response to Item 5) ------------------------------------------------------ 9 SOLE DISPOSITIVE POWER EACH REPORTING 25,000 shares ------------------------------------------------------ 10 SHARED DISPOSITIVE POWER PERSON WITH 0 (See Response to Item 5) ----------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 25,000 shares ----------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] ----------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.4% (.095% on a fully diluted basis, See Appendix B) ----------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN ----------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION Page 19 SCHEDULE 13D - -------------------------------------------------------------------------------- PAGE 20 OF 99 PAGES - -------------------------------------------------------------------------------- CUSIP NO. 903 38Y 109 - -------------------------------------------------------------------------------- ----------------------------------------------------------------------------- 1 NAME OR REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Dorothy Cohen ----------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [] (b) [] ----------------------------------------------------------------------------- 3 SEC USE ONLY ----------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO ----------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [] ----------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States of America ----------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 25,000 shares ------------------------------------------------------ 8 SHARED VOTING POWER BENEFICIALLY OWNED BY 0 (See Response to Item 5) ------------------------------------------------------ 9 SOLE DISPOSITIVE POWER EACH REPORTING 25,000 shares ------------------------------------------------------ 10 SHARED DISPOSITIVE POWER PERSON WITH 0 (See Response to Item 5) ----------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 25,000 shares ----------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] ----------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.4% (.095% on a fully diluted basis, See Appendix B) ----------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN ----------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION Page 20 SCHEDULE 13D - -------------------------------------------------------------------------------- PAGE 21 OF 99 PAGES - -------------------------------------------------------------------------------- CUSIP NO. 903 38Y 109 - -------------------------------------------------------------------------------- ----------------------------------------------------------------------------- 1 NAME OR REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Angela Joy Coppola ----------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [] (b) [] ----------------------------------------------------------------------------- 3 SEC USE ONLY ----------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO ----------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [] ----------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States of America ----------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 12,500 shares ------------------------------------------------------ 8 SHARED VOTING POWER BENEFICIALLY OWNED BY 0 (See Response to Item 5) ------------------------------------------------------ 9 SOLE DISPOSITIVE POWER EACH REPORTING 12,500 shares ------------------------------------------------------ 10 SHARED DISPOSITIVE POWER PERSON WITH 0 (See Response to Item 5) ----------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 12,500 shares ----------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] ----------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.2% (.048% on a fully diluted basis, See Appendix B) ----------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN ----------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION Page 21 SCHEDULE 13D - -------------------------------------------------------------------------------- PAGE 22 OF 99 PAGES - -------------------------------------------------------------------------------- CUSIP NO. 903 38Y 109_ - -------------------------------------------------------------------------------- ----------------------------------------------------------------------------- 1 NAME OR REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Janet Franklin ----------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [] (b) [] ----------------------------------------------------------------------------- 3 SEC USE ONLY ----------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO ----------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [] ----------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States of America ----------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 5,000 shares ------------------------------------------------------ 8 SHARED VOTING POWER BENEFICIALLY OWNED BY 0 (See Response to Item 5) ------------------------------------------------------ 9 SOLE DISPOSITIVE POWER EACH REPORTING 5,000 shares ------------------------------------------------------ 10 SHARED DISPOSITIVE POWER PERSON WITH 0 (See Response to Item 5) ----------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 5,000 shares ----------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] ----------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.1% (.019% on a fully diluted basis, See Appendix B) ----------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN ----------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION Page 22 SCHEDULE 13D - -------------------------------------------------------------------------------- PAGE 23 OF 99 PAGES - -------------------------------------------------------------------------------- CUSIP NO. 903 38Y 109 - -------------------------------------------------------------------------------- ----------------------------------------------------------------------------- 1 NAME OR REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Dennis Dautel ----------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [] (b) [] ----------------------------------------------------------------------------- 3 SEC USE ONLY ----------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO ----------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [] ----------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States of America ----------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 175,000 shares ------------------------------------------------------ 8 SHARED VOTING POWER BENEFICIALLY OWNED BY 0 (See Response to Item 5) ------------------------------------------------------ 9 SOLE DISPOSITIVE POWER EACH REPORTING 175,000 shares ------------------------------------------------------ 10 SHARED DISPOSITIVE POWER PERSON WITH 0 (See Response to Item 5) ----------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 175,000 shares ----------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] ----------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.5% (.66% on a fully diluted basis, See Appendix B) ----------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN ----------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION Page 23 SCHEDULE 13D - -------------------------------------------------------------------------------- PAGE 24 OF 99 PAGES - -------------------------------------------------------------------------------- CUSIP NO. 903 38Y 109 - -------------------------------------------------------------------------------- ----------------------------------------------------------------------------- 1 NAME OR REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Ramsdell Family Trust ----------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [] (b) [] ----------------------------------------------------------------------------- 3 SEC USE ONLY ----------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO ----------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [] ----------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION California ----------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 353,467 shares ------------------------------------------------------ 8 SHARED VOTING POWER BENEFICIALLY OWNED BY 0 (See Response to Item 5) ------------------------------------------------------ 9 SOLE DISPOSITIVE POWER EACH REPORTING 353,467 shares ------------------------------------------------------ 10 SHARED DISPOSITIVE POWER PERSON WITH 0 (See Response to Item 5) ----------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 353,467 shares ----------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] ----------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 4.9% (1.3% on a fully diluted basis, See Appendix B) ----------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* OO ----------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION Page 24 SCHEDULE 13D - -------------------------------------------------------------------------------- PAGE 25 OF 99 PAGES - -------------------------------------------------------------------------------- CUSIP NO. 903 38Y 109 - -------------------------------------------------------------------------------- ----------------------------------------------------------------------------- 1 NAME OR REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON David Rocker ----------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [] (b) [] ----------------------------------------------------------------------------- 3 SEC USE ONLY ----------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO ----------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [] ----------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States of America ----------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 150,000 shares ------------------------------------------------------ 8 SHARED VOTING POWER BENEFICIALLY OWNED BY 0 (See Response to Item 5) ------------------------------------------------------ 9 SOLE DISPOSITIVE POWER EACH REPORTING 150,000 shares ------------------------------------------------------ 10 SHARED DISPOSITIVE POWER PERSON WITH 0 (See Response to Item 5) ----------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 150,000 shares ----------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] ----------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.1% (.57% on a fully diluted basis, See Appendix B) ----------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN ----------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION Page 25 SCHEDULE 13D - -------------------------------------------------------------------------------- PAGE 26 OF 99 PAGES - -------------------------------------------------------------------------------- CUSIP NO. 903 38Y 109 - -------------------------------------------------------------------------------- ----------------------------------------------------------------------------- 1 NAME OR REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Kaylen Silverberg ----------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [] (b) [] ----------------------------------------------------------------------------- 3 SEC USE ONLY ----------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO ----------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [] ----------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States of America ----------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 45,000 shares ------------------------------------------------------ 8 SHARED VOTING POWER BENEFICIALLY OWNED BY 0 (See Response to Item 5) ------------------------------------------------------ 9 SOLE DISPOSITIVE POWER EACH REPORTING 45,000 shares ------------------------------------------------------ 10 SHARED DISPOSITIVE POWER PERSON WITH 0 (See Response to Item 5) ----------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 45,000 shares ----------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] ----------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.6% (.17% on a fully diluted basis, See Appendix B) ----------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN ----------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION Page 26 SCHEDULE 13D - -------------------------------------------------------------------------------- PAGE 27 OF 99 PAGES - -------------------------------------------------------------------------------- CUSIP NO. 903 38Y 109 - -------------------------------------------------------------------------------- ----------------------------------------------------------------------------- 1 NAME OR REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Leon Horowitz ----------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [] (b) [] ----------------------------------------------------------------------------- 3 SEC USE ONLY ----------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO ----------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [] ----------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States of America ----------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 15,000 shares ------------------------------------------------------ 8 SHARED VOTING POWER BENEFICIALLY OWNED BY 0 (See Response to Item 5) ------------------------------------------------------ 9 SOLE DISPOSITIVE POWER EACH REPORTING 15,000 shares ------------------------------------------------------ 10 SHARED DISPOSITIVE POWER PERSON WITH 0 (See Response to Item 5) ----------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 15,000 shares ----------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] ----------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.2% (.057% on a fully diluted basis, See Appendix B) ----------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN ----------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION Page 27 SCHEDULE 13D - -------------------------------------------------------------------------------- PAGE 28 OF 99 PAGES - -------------------------------------------------------------------------------- CUSIP NO. 903 38Y 109 - -------------------------------------------------------------------------------- ----------------------------------------------------------------------------- 1 NAME OR REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON First Madison Holdings, LLP ----------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [] (b) [] ----------------------------------------------------------------------------- 3 SEC USE ONLY ----------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO ----------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [] ----------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Texas ----------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 10,000 shares ------------------------------------------------------ 8 SHARED VOTING POWER BENEFICIALLY OWNED BY 0 (See Response to Item 5) ------------------------------------------------------ 9 SOLE DISPOSITIVE POWER EACH REPORTING 10,000 shares ------------------------------------------------------ 10 SHARED DISPOSITIVE POWER PERSON WITH 0 (See Response to Item 5) ----------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 10,000 shares ----------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] ----------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.1% (.038% on a fully diluted basis, See Appendix B) ----------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN ----------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION Page 28 SCHEDULE 13D - -------------------------------------------------------------------------------- PAGE 29 OF 99 PAGES - -------------------------------------------------------------------------------- CUSIP NO. 903 38Y 109 - -------------------------------------------------------------------------------- ----------------------------------------------------------------------------- 1 NAME OR REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Irving Solomon ----------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [] (b) [] ----------------------------------------------------------------------------- 3 SEC USE ONLY ----------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO ----------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [] ----------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States of America ----------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 10,000 shares ------------------------------------------------------ 8 SHARED VOTING POWER BENEFICIALLY OWNED BY 0 (See Response to Item 5) ------------------------------------------------------ 9 SOLE DISPOSITIVE POWER EACH REPORTING 10,000 shares ------------------------------------------------------ 10 SHARED DISPOSITIVE POWER PERSON WITH 0 (See Response to Item 5) ----------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 10,000 shares ----------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] ----------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.1% (.038% on a fully diluted basis, See Appendix B) ----------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN ----------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION Page 29 SCHEDULE 13D - -------------------------------------------------------------------------------- PAGE 30 OF 99 PAGES - -------------------------------------------------------------------------------- CUSIP NO. 903 38Y 109 - -------------------------------------------------------------------------------- ----------------------------------------------------------------------------- 1 NAME OR REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Rosewood Partners LP ----------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [] (b) [] ----------------------------------------------------------------------------- 3 SEC USE ONLY ----------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO ----------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [] ----------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Illinois ----------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 125,000 shares ------------------------------------------------------ 8 SHARED VOTING POWER BENEFICIALLY OWNED BY 0 (See Response to Item 5) ------------------------------------------------------ 9 SOLE DISPOSITIVE POWER EACH REPORTING 125,000 shares ------------------------------------------------------ 10 SHARED DISPOSITIVE POWER PERSON WITH 0 (See Response to Item 5) ----------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 125,000 shares ----------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] ----------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 1.8% (.47% on a fully diluted basis, See Appendix B) ----------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN ----------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION Page 30 SCHEDULE 13D - -------------------------------------------------------------------------------- PAGE 31 OF 99 PAGES - -------------------------------------------------------------------------------- CUSIP NO. 903 38Y 109 - -------------------------------------------------------------------------------- ----------------------------------------------------------------------------- 1 NAME OR REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Peter Guber ----------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [] (b) [] ----------------------------------------------------------------------------- 3 SEC USE ONLY ----------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO ----------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [] ----------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States of America ----------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 25,000 shares ------------------------------------------------------ 8 SHARED VOTING POWER BENEFICIALLY OWNED BY 0 (See Response to Item 5) ------------------------------------------------------ 9 SOLE DISPOSITIVE POWER EACH REPORTING 25,000 shares ------------------------------------------------------ 10 SHARED DISPOSITIVE POWER PERSON WITH 0 (See Response to Item 5) ----------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 25,000 shares. ----------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] ----------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.4% (.095% on a fully diluted basis, See Appendix B) ----------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN ----------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION Page 31 SCHEDULE 13D - -------------------------------------------------------------------------------- PAGE 32 OF 99 PAGES - -------------------------------------------------------------------------------- CUSIP NO. 903 38Y 109 - -------------------------------------------------------------------------------- ----------------------------------------------------------------------------- 1 NAME OR REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Courtney Campbell ----------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [] (b) [] ----------------------------------------------------------------------------- 3 SEC USE ONLY ----------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO ----------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [] ----------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States of America ----------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 5,000 shares ------------------------------------------------------ 8 SHARED VOTING POWER BENEFICIALLY OWNED BY 0 (See Response to Item 5) ------------------------------------------------------ 9 SOLE DISPOSITIVE POWER EACH REPORTING 5,000 shares ------------------------------------------------------ 10 SHARED DISPOSITIVE POWER PERSON WITH 0 (See Response to Item 5) ----------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 5,000 shares ----------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] ----------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.1% (.019% on a fully diluted basis, See Appendix B) ----------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN ----------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION Page 32 SCHEDULE 13D - -------------------------------------------------------------------------------- PAGE 33 OF 99 PAGES - -------------------------------------------------------------------------------- CSUIP NO. 903 38Y 109 - -------------------------------------------------------------------------------- ----------------------------------------------------------------------------- 1 NAME OR REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Stark Investments L.P. ----------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [] (b) [] ----------------------------------------------------------------------------- 3 SEC USE ONLY ----------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO ----------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [] ----------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Washington ----------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 100,000 shares ------------------------------------------------------ 8 SHARED VOTING POWER BENEFICIALLY OWNED BY 0 (See Response to Item 5) ------------------------------------------------------ 9 SOLE DISPOSITIVE POWER EACH REPORTING 100,000 shares ------------------------------------------------------ 10 SHARED DISPOSITIVE POWER PERSON WITH 0 (See Response to Item 5) ----------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 100,000 shares ----------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] ----------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 1.4% (.38% on a fully diluted basis, See Appendix B) ----------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN ----------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION Page 33 SCHEDULE 13D - -------------------------------------------------------------------------------- PAGE 34 OF 99 PAGES - -------------------------------------------------------------------------------- CUSIP NO. 903 38Y 109 - -------------------------------------------------------------------------------- ----------------------------------------------------------------------------- 1 NAME OR REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Ron Barshop ----------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [] (b) [] ----------------------------------------------------------------------------- 3 SEC USE ONLY ----------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO ----------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [] ----------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States of America ----------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 12,500 shares ------------------------------------------------------ 8 SHARED VOTING POWER BENEFICIALLY OWNED BY 0 (See Response to Item 5) ------------------------------------------------------ 9 SOLE DISPOSITIVE POWER EACH REPORTING 12,500 shares ------------------------------------------------------ 10 SHARED DISPOSITIVE POWER PERSON WITH 0 (See Response to Item 5) ----------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 12,500 shares ----------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] ----------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.2% (.048% on a fully diluted basis, See Appendix B) ----------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN ----------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION Page 34 SCHEDULE 13D - -------------------------------------------------------------------------------- PAGE 35 OF 99 PAGES - -------------------------------------------------------------------------------- CUSIP NO. 903 38Y 109 - -------------------------------------------------------------------------------- ----------------------------------------------------------------------------- 1 NAME OR REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Henry Gellis ----------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [] (b) [] ----------------------------------------------------------------------------- 3 SEC USE ONLY ----------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO ----------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [] ----------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States of America ----------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 25,000 shares ------------------------------------------------------ 8 SHARED VOTING POWER BENEFICIALLY OWNED BY 0 (See Response to Item 5) ------------------------------------------------------ 9 SOLE DISPOSITIVE POWER EACH REPORTING 25,000 shares ------------------------------------------------------ 10 SHARED DISPOSITIVE POWER PERSON WITH 0 (See Response to Item 5) ----------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 25,000 shares ----------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] ----------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.4% (.095% on a fully diluted basis, See Appendix B) ----------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN ----------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION Page 35 SCHEDULE 13D - -------------------------------------------------------------------------------- PAGE 36 OF 99 PAGES - -------------------------------------------------------------------------------- CUSIP NO. 903 38Y 109 - -------------------------------------------------------------------------------- ----------------------------------------------------------------------------- 1 NAME OR REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON G. Tyler Runnels ----------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [] (b) [] ----------------------------------------------------------------------------- 3 SEC USE ONLY ----------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO ----------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [] ----------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States of America ----------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 25,000 shares ------------------------------------------------------ 8 SHARED VOTING POWER BENEFICIALLY OWNED BY 0 (See Response to Item 5) ------------------------------------------------------ 9 SOLE DISPOSITIVE POWER EACH REPORTING 25,000 shares ------------------------------------------------------ 10 SHARED DISPOSITIVE POWER PERSON WITH 0 (See Response to Item 5) ----------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 25,000 shares ----------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] ----------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.4% (.095% on a fully diluted basis, See Appendix B) ----------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN ----------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION Page 36 SCHEDULE 13D - -------------------------------------------------------------------------------- PAGE 37 OF 99 PAGES - -------------------------------------------------------------------------------- CUSIP NO. 903 38Y 109 - -------------------------------------------------------------------------------- ----------------------------------------------------------------------------- 1 NAME OR REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Paribas North America, Inc. ----------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [] (b) [] ----------------------------------------------------------------------------- 3 SEC USE ONLY ----------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO ----------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [] ----------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware ----------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 1,000,000 shares ------------------------------------------------------ 8 SHARED VOTING POWER BENEFICIALLY OWNED BY 0 (See Response to Item 5) ------------------------------------------------------ 9 SOLE DISPOSITIVE POWER EACH REPORTING 1,000,000 shares ------------------------------------------------------ 10 SHARED DISPOSITIVE POWER PERSON WITH 0 (See Response to Item 5) ----------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,000,000 shares ----------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] ----------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 12.7% (3.8% on a fully diluted basis, See Appendix B) ----------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO ----------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION Page 37 ITEM 1. SECURITY AND ISSUER. This statement on Schedule 13D relates to the common stock, no par value (the "Common Stock"), of USOL Holdings, Inc., an Oregon corporation, f/k/a FirstLink Communications, Inc. (the "Company"), and is being filed pursuant to Rule 13d-1 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The address of the principal executive offices of the Company is 10300 Metric Boulevard, Austin, Texas 78758. ITEM 2. IDENTITY AND BACKGROUND. (a) This Statement is hereby filed by the following named persons (collectively, the "Reporting Persons"): General Motors Corporation, a Delaware corporation ("GM"), as Parent Holding Company of GMAC Commercial Mortgage Corporation, a Delaware corporation and an indirect wholly-owned subsidiary of GM AGL Investment No. 8 Limited Partnership Aspen Foxtrot Investments, LLC Aspen Online Investments, LLC German American Capital Corporation Peregrine Equities 1, L.L.C. Peregrine Equities 2, L.L.C. Peregrine Equities 3, L.L.C. Peregrine Equities 4, L.L.C. Peregrine Equities 5, L.L.C. Peregrine Equities 6, L.L.C. Peregrine Equities 7, L.L.C. Peregrine Equities 8, L.L.C. Peregrine Equities 9, L.L.C. Peregrine Equities 10, L.L.C. Peregrine Investment Capital, L.L.C. Dain Rauscher Custodian f/b/o Brent Stahl SEP (IRA) Mussie Gellis Dorothy Cohen Angela Joy Coppola Janet Franklin Dennis Dautel Ramsdell Family Trust David Rocker Kaylen Silverberg Leon Horowitz First Madison Holdings, LLP Irving Solomon Page 38 Rosewood Partners LP Peter Guber Courtney Campbell Stark Investments LP Ron Barshop Henry Gellis G. Tyler Runnels Paribas North America, Inc. (b) - (f) The information required by these items is attached hereto for each of the Reporting Persons as Appendix A. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. Each of the Reporting Persons owned (a) shares of the Series A Convertible Preferred Stock and/or Series B Convertible Preferred Stock (which is non-voting) of USOL Holdings, Inc., a Delaware corporation ("Old USOL") and/or (b) common stock of Old USOL and/or (c) a warrant to purchase shares of common stock of Old USOL. Each share of Series A Convertible Preferred Stock, Series B Convertible Preferred Stock and common stock of Old USOL are exchangeable for a like number of shares of the Series A Convertible Preferred Stock, Series B Convertible Preferred Stock and Common Stock of the Company, respectively, and each warrant of Old USOL was converted into a warrant to purchase the same number of shares of Common Stock of the Company (the "Warrants") in connection with the merger of Old USOL and the Company. ITEM 4. PURPOSE OF THE TRANSACTION. Old USOL and the Company entered into an Agreement and Plan of Merger and Reorganization dated as of July 21, 1999 (the "Merger Agreement"), pursuant to which Old USOL would merge with and into the Company (the "Merger"). The Merger was effected on December 22, 1999 by the filing of the applicable documents with the Secretary of State of the State of Oregon and the Secretary of State of the State of Delaware. Under the terms of the Merger Agreement, (a) in exchange for each share of Series A Convertible Preferred Stock, Series B Convertible Preferred Stock and common stock of Old USOL, the applicable Reporting Persons receive one share of Series A Convertible Preferred Stock, Series B Convertible Preferred Stock and Common Stock of the Company, respectively, and (b) for each warrant to purchase shares of common stock of Old USOL, the applicable Reporting Persons receive their respective Warrant. Each share of Series A Convertible Preferred Stock and Series B Convertible Preferred Stock is convertible into that number of shares of Common Stock obtained by dividing the liquidation preference by the then applicable conversion price. The liquidation preference equals $25.00 and the conversion price equals $2.00 per share, as adjusted. Each share of Series B Convertible Preferred Stock is also convertible into one share of Series A Convertible Preferred Stock. As part of the Reporting Persons' acquisition of the stock of Old USOL, each of the Reporting Persons entered into an Agreement Among Investors dated July 21, 1999 (the "Investor Agreement"). Under the terms of the Investor Agreement, the Reporting Persons made certain agreements relating to the voting and transfer of their respective shares of Series A Convertible Preferred Stock and Series B Convertible Preferred Stock of Old Page 39 USOL, which the parties further agreed would apply to their shares of Series A Convertible Preferred Stock and Series B Convertible Preferred Stock of the Company upon consummation of the Merger. Under the Investor Agreement, the Reporting Persons agreed that in advance of any matter requiring the vote of the Company's stockholders, the Reporting Persons would hold a meeting where the holders of the Series A Convertible Preferred Stock (the "Voting Investors") would vote among themselves to determine the collective course of action of the Reporting Persons. The Reporting Persons holding more than 50% of all Voting Percentage Interests (as such number is calculated in accordance with the Investor Agreement) shall constitute a quorum at any meeting of the Reporting Persons. A vote of more than 50% of the percentage interests held by the Voting Investors shall be the act of the Reporting Persons at any meeting (the "Desired Outcome"). Each of the Reporting Persons further agreed to vote its shares of the Company consistent with the Desired Outcome. If there is no Desired Outcome determined by the Reporting Persons, then the Reporting Persons are entitled to vote their shares as they deem appropriate at any meeting of the stockholders of the Company. In addition, each of GMAC Commercial Mortgage Corporation, Aspen Foxtrot Investments, LLC, Peregrine Equities 1, L.L.C. - Peregrine Equities 10, L.L.C. (acting together), and AGL Investments No. 8 Limited Partnership is entitled, subject to certain limitations, to designate an individual to serve as director of the Company and each of the Reporting Persons has agreed to vote its shares in favor of such director nominee. Except for certain permitted transfers, the Investor Agreement further provides that for a period of one year from the date of the Merger, such Reporting Person will not transfer any of the shares of Series A Convertible Preferred Stock or Series B Convertible Preferred Stock of the Company owned by such Reporting Person. The "permitted transfers" include the following: a Reporting Person may (a) subject to and in accordance with the terms of the preferred stock, convert within the one year period following the date of the Merger, up to 25% of its shares of preferred stock into common stock, and, to the extent permitted under applicable securities laws, such common stock may be sold publicly, (b) transfer all or any part of such Reporting Person's preferred stock to one or more affiliates, employees or directors of such Reporting Person, (c) transfer the preferred stock in connection with any exchange, reclassification or other conversion of shares into cash, securities or other property pursuant to a merger or consolidation of the Company or any of its subsidiaries with, or any sale or transfer by the Company or any of its subsidiaries of all or substantially all of its assets to any person, (d) transfer such Reporting Person's preferred stock in connection with any statutory share exchange or recapitalization of the Company, and (e) transfer such Reporting Person's preferred stock in connection with the terms of the tag-along rights provision and drag-along rights provision of the Investor Agreement. Other than in connection with a "permitted transfer" described above or a transfer pursuant to an effective registration statement or pursuant to Rule 144 under the Securities Act of 1933, if at any time a Reporting Person desires to transfer any shares of the Company, the selling investor is required to give notice to the remaining Reporting Persons of an offer to sell. Each of the remaining investors has 15 days to accept the offer on the terms set forth in the notice. There is no obligation to sell any shares unless one or more of the other investors purchases all, but not less than all, of the shares offered. If investors deliver notices electing to purchase shares in excess of the number of shares offered, then the accepting investors have the right to purchase the shares on a pro rata basis. If the shares are not purchased by the remaining investors, then the Page 40 selling investor may sell to a third party on the same terms. However, prior to such sale, the selling investor is required to offer to each remaining investor the opportunity to sell such investor's shares on the same terms. Other than in connection with a "permitted transfer" described above or a transfer pursuant to an effective registration statement or pursuant to Rule 144 under the Securities Act of 1933, if at any time Reporting Persons holding a majority of the securities subject to the Investor Agreement, calculated on a fully-converted basis, desire to transfer all or any part of their securities, which would result in the sale of at least 20% of the voting stock of the Company and the person or group acquiring the stock will become the beneficial owner of a greater percentage of voting capital stock, determined on a fully-converted basis, than any other person or group, each of the other Reporting Persons shall be required to sell all, but not less than all, of their respective shares to the same party on the same terms as the transferring investors. Unless otherwise provided by the Investor Agreement in certain circumstances, the Investor Agreement applies only to the Series A Convertible Preferred Stock and the Series B Convertible Preferred Stock of the Company. Except in certain circumstances, upon conversion of preferred stock to common stock, the stock so converted shall not be bound by the provisions of the Investor Agreement. Except as described above in this Item 4, the Reporting Persons do not have any plans or proposals that relate to or would result in any of the actions or events specified in clauses (a) through (j) of Item 4 of Schedule 13D. Notwithstanding the foregoing, the Reporting Persons may determine to change their intent with respect to the Company at any time in the future. Each Reporting Person reserves the right to acquire additional securities of the Company in the open market, in privately negotiated transactions (which may be with the Company or with third parties) or otherwise, to dispose of all or a portion of its holdings of securities of the Company or to change its intention with respect to any or all of the matters referred to in this Item 4. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. (a) Based on information provided to the Reporting Persons by the Company, there were 6,883,779 shares of Common Stock of the Company outstanding on December 28, 1999 (including the shares to be issued to the common stockholders of Old USOL). By virtue of the Investor Agreement, the Reporting Persons may be deemed to constitute a "group" (within the meaning of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). If so, each of the Reporting Persons would be deemed part of a group beneficially owning 18,500,000 shares of the Common Stock under the Investor Agreement. Each of the Reporting Persons, for the purposes of Section 13(d) of the Exchange Act, expressly disclaims any beneficial ownership of any shares of Common Stock which may be deemed beneficially owned by them as a result of membership in a group with the other Reporting Persons. The remaining information required by items (a)-(e) is set forth on Appendix B attached hereto. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. The following description is a summary only, and is qualified in its entirety by reference to the agreements attached as exhibits hereto. Page 41 In addition to the contracts and agreements described in Item 4 above, the Reporting Parties have certain registration rights with respect to the Common Stock issuable upon conversion of the Series A Convertible Preferred Stock and the Series B Convertible Preferred Stock and upon exercise of any Warrant held by any Reporting Party (collectively, the "Registrable Securities"), pursuant to a preferred stockholder registration rights agreement (the "Preferred Registration Rights Agreement") and a common stockholder and warrant holder registration rights agreement (the "Common and Warrant Registration Rights Agreement"), respectively, each dated as July 21, 1999 among the Company and each stock and warrant holder party thereto. Those Reporting Persons currently holding Common Stock also have the benefit of the Common and Warrant Registration Rights Agreement. Pursuant to the Preferred Registration Rights Agreement, the Reporting Parties holding more than 20% of the Common Stock issued or issuable upon conversion of the Series A Convertible Preferred Stock and the Series B Convertible Preferred Stock that has not already been registered and sold pursuant to these registration rights, at any time after the first to occur of (a) 180 days after the closing of the merger or (b) 180 days after a Qualified IPO (as defined in the Preferred Registration Rights Agreement), demand registration of the Registrable Securities relating to the Series A Convertible Preferred Stock. The Reporting Parties are entitled to five demand registrations. Pursuant to the Common and Warrant Registration Rights Agreement, if holders of the Series A Convertible Preferred Stock and the Series B Convertible Preferred Stock exercise their demand registration rights under the Preferred Registration Rights Agreement, those Reporting Parties holding Warrants and/or Common Stock may demand registration of the Registrable Securities relating to the Warrant and such Common Stock. These demand rights are, under both the Preferred Registration Rights Agreement and the Common and Warrant Registration Rights Agreement, subject to the Company's right to defer the timing of a demand registration and an underwriters' right to cut back shares in an underwritten offering. In addition, under both the Preferred Registration Rights Agreement and the Common and Warrant Registration Rights Agreement, the Reporting Parties party thereto have the right to piggyback on certain registrations for public offerings of the Company's securities. Other than the Preferred Registration Rights Agreement and the Common and Warrant Registration Rights Agreement and the other agreements described in Item 4 above, there are no contracts, arrangements, understandings, or relationships between the Reporting Parties or, to the best of their knowledge, any executive officer or director of the Reporting Parties, and any other person with respect to any securities of the Company, including any contract, arrangement, understanding or relationship concerning the transfer or the voting of any securities of the Company, finder's fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, division of profits or loss, or the giving or withholding of proxies. Except for the shares held by Peregrine Investment Capital, LLC, the securities acquired by the Reporting Persons are not pledged or otherwise subject to a contingency the occurrence of which would give another person voting power or investment power over such securities. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. 99.1 Agreement Among Investors dated July 21, 1999 by and among the Reporting Persons. Page 42 99.2 Certificate of Designation of Series A Convertible Preferred Stock, filed with the Oregon Secretary of State on December 21, 1999. 99.3 Certificate of Designation of Series B Convertible Preferred Stock, filed with the Oregon Secretary of State on December 21, 1999. 99.4 Agreement and Plan of Merger and Reorganization dated July 21, 1999 by and between FirstLink Communications, Inc. and USOL Holdings, Inc. 99.5 Preferred Stockholder Registration Rights Agreement. 99.6 Common Stockholder and Warrant Holder Registration Rights Agreement. Page 43 Agreement This Schedule 13D is filed on behalf of each of the undersigned pursuant to Rule 13d-1(k)(1). SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: December 30, 1999 AGL INVESTMENTS NO. 8 LIMITED PARTNERSHIP BY: AGLP NO. 8 LIMITED PARTNERSHIP ITS GENERAL PARTNER BY: AGLGP NO. 8, INC., ITS GENERAL PARTNER By: /S/ DAVID B. AGNEW --------------------------- Name: David B. Agnew Title: President The original statement shall be signed by each person on whose behalf the statement is filed or his authorized representative. If the statement is signed on behalf of a person by his authorized representative (other than an executive officer or general partner of this filing person), evidence of the representative's authority to sign on behalf of such person shall be filed with the statements, provided, however, that a power of attorney for this purpose which is already on file with the Commission may be incorporated by reference. The name of any title of each person who signs the statement shall be typed or printed beneath his signature. ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001) Page 44 AGREEMENT This Schedule 13D is filed on behalf of each of the undersigned pursuant to Rule 13d-1(k)(1). SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: January 3, 2000 GENERAL MOTORS CORPORATION, AS PARENT HOLDING COMPANY OF GMAC COMMERCIAL MORTGAGE CORPORATION By: /s/ JOHN D. FINNEGAN --------------------------------------- Name: John D. Finnegan Title: Executive Vice President The original statement shall be signed by each person on whose behalf the statement is filed or his authorized representative. If the statement is signed on behalf of a person by his authorized representative (other than an executive officer or general partner of this filing person), evidence of the representative's authority to sign on behalf of such person shall be filed with the statements, provided, however, that a power of attorney for this purpose which is already on file with the Commission may be incorporated by reference. The name of any title of each person who signs the statement shall be typed or printed beneath his signature. ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001) Page 45 AGREEMENT This Schedule 13D is filed on behalf of each of the undersigned pursuant to Rule 13d-1(k)(1). SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: December 29, 1999 ASPEN FOXTROT INVESTMENTS, LLC By: Aspen Enterprises, LTD., Its Manager By: /S/ RONALD A. HOUSE --------------------------------- Name: Ronald A. House Title: Vice President/Chief Operating Officer The original statement shall be signed by each person on whose behalf the statement is filed or his authorized representative. If the statement is signed on behalf of a person by his authorized representative (other than an executive officer or general partner of this filing person), evidence of the representative's authority to sign on behalf of such person shall be filed with the statements, provided, however, that a power of attorney for this purpose which is already on file with the Commission may be incorporated by reference. The name of any title of each person who signs the statement shall be typed or printed beneath his signature. ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001) Page 46 AGREEMENT This Schedule 13D is filed on behalf of each of the undersigned pursuant to Rule 13d-1(k)(1). SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: December 30, 1999 ASPEN ONLINE INVESTMENTS, LLC By: Aspen Enterprises, LTD., Its Manager By: /S/ RONALD A. HOUSE ------------------------------- Name: Ronald A. House Title: Vice President/Chief Operating Officer The original statement shall be signed by each person on whose behalf the statement is filed or his authorized representative. If the statement is signed on behalf of a person by his authorized representative (other than an executive officer or general partner of this filing person), evidence of the representative's authority to sign on behalf of such person shall be filed with the statements, provided, however, that a power of attorney for this purpose which is already on file with the Commission may be incorporated by reference. The name of any title of each person who signs the statement shall be typed or printed beneath his signature. ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001) Page 47 AGREEMENT This Schedule 13D is filed on behalf of each of the undersigned pursuant to Rule 13d-1(k)(1). SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement relataing to German American Capital Corporation or agreements to which German American Capital Corporation is a party is true, complete and correct. Date: January 3, 2000 GERMAN AMERICAN CAPITAL CORPORATION By: /s/ RICHARD FERGUSON ------------------------------- Name: Richard Ferguson Title: Chairman and Vice President By: /s/ JOHN C. CIPRIANI ------------------------------- Name: John C. Cipriani Title: Vice President The original statement shall be signed by each person on whose behalf the statement is filed or his authorized representative. If the statement is signed on behalf of a person by his authorized representative (other than an executive officer or general partner of this filing person), evidence of the representative's authority to sign on behalf of such person shall be filed with the statements, provided, however, that a power of attorney for this purpose which is already on file with the Commission may be incorporated by reference. The name of any title of each person who signs the statement shall be typed or printed beneath his signature. ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001) Page 48 AGREEMENT This Schedule 13D is filed on behalf of each of the undersigned pursuant to Rule 13d-1(k)(1). SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: December 29, 1999 PEREGRINE EQUITIES 1, L.L.C. BY: PEREGRINE EQUITIES HOLDINGS, LLC, MEMBER BY: PEREGRINE CAPITAL, INC., MANAGER By: /S/ DANIEL J. ALDERMAN ------------------------------------------ Name: Daniel J. Alderman Title: Executive Vice President The original statement shall be signed by each person on whose behalf the statement is filed or his authorized representative. If the statement is signed on behalf of a person by his authorized representative (other than an executive officer or general partner of this filing person), evidence of the representative's authority to sign on behalf of such person shall be filed with the statements, provided, however, that a power of attorney for this purpose which is already on file with the Commission may be incorporated by reference. The name of any title of each person who signs the statement shall be typed or printed beneath his signature. ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001) Page 48 AGREEMENT This Schedule 13D is filed on behalf of each of the undersigned pursuant to Rule 13d-1(k)(1). SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: December 29, 1999 PEREGRINE EQUITIES 2, L.L.C. BY: PEREGRINE EQUITIES HOLDINGS, LLC, MEMBER BY: PEREGRINE CAPITAL, INC., MANAGER By: /S/ DANIEL J. ALDERMAN ------------------------------------------ Name: Daniel J. Alderman Title: Executive Vice President The original statement shall be signed by each person on whose behalf the statement is filed or his authorized representative. If the statement is signed on behalf of a person by his authorized representative (other than an executive officer or general partner of this filing person), evidence of the representative's authority to sign on behalf of such person shall be filed with the statements, provided, however, that a power of attorney for this purpose which is already on file with the Commission may be incorporated by reference. The name of any title of each person who signs the statement shall be typed or printed beneath his signature. ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001) Page 50 AGREEMENT This Schedule 13D is filed on behalf of each of the undersigned pursuant to Rule 13d-1(k)(1). SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: December 29, 1999 PEREGRINE EQUITIES 3, L.L.C. BY: PEREGRINE EQUITIES HOLDINGS, LLC, MEMBER BY: PEREGRINE CAPITAL, INC., MANAGER By: /S/ DANIEL J. ALDERMAN ----------------------------------------- Name: Daniel J. Alderman Title: Executive Vice President The original statement shall be signed by each person on whose behalf the statement is filed or his authorized representative. If the statement is signed on behalf of a person by his authorized representative (other than an executive officer or general partner of this filing person), evidence of the representative's authority to sign on behalf of such person shall be filed with the statements, provided, however, that a power of attorney for this purpose which is already on file with the Commission may be incorporated by reference. The name of any title of each person who signs the statement shall be typed or printed beneath his signature. ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001) Page 51 AGREEMENT This Schedule 13D is filed on behalf of each of the undersigned pursuant to Rule 13d-1(k)(1). SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: December 29, 1999 PEREGRINE EQUITIES 4, L.L.C. BY: PEREGRINE EQUITIES HOLDINGS, LLC, MEMBER BY: PEREGRINE CAPITAL, INC., MANAGER By: /S/ DANIEL J. ALDERMAN ----------------------------------------- Name: Daniel J. Alderman Title: Executive Vice President The original statement shall be signed by each person on whose behalf the statement is filed or his authorized representative. If the statement is signed on behalf of a person by his authorized representative (other than an executive officer or general partner of this filing person), evidence of the representative's authority to sign on behalf of such person shall be filed with the statements, provided, however, that a power of attorney for this purpose which is already on file with the Commission may be incorporated by reference. The name of any title of each person who signs the statement shall be typed or printed beneath his signature. ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001) Page 52 AGREEMENT This Schedule 13D is filed on behalf of each of the undersigned pursuant to Rule 13d-1(k)(1). SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: December 29, 1999 PEREGRINE EQUITIES 5, L.L.C. BY: PEREGRINE EQUITIES HOLDINGS, LLC, MEMBER BY: PEREGRINE CAPITAL, INC., MANAGER By: /S/ DANIEL J. ALDERMAN ------------------------------------------ Name: Daniel J. Alderman Title: Executive Vice President The original statement shall be signed by each person on whose behalf the statement is filed or his authorized representative. If the statement is signed on behalf of a person by his authorized representative (other than an executive officer or general partner of this filing person), evidence of the representative's authority to sign on behalf of such person shall be filed with the statements, provided, however, that a power of attorney for this purpose which is already on file with the Commission may be incorporated by reference. The name of any title of each person who signs the statement shall be typed or printed beneath his signature. ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001) Page 53 AGREEMENT This Schedule 13D is filed on behalf of each of the undersigned pursuant to Rule 13d-1(k)(1). SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: December 29, 1999 PEREGRINE EQUITIES 6, L.L.C. BY: PEREGRINE EQUITIES HOLDINGS, LLC, MEMBER BY: PEREGRINE CAPITAL, INC., MANAGER By: /S/ DANIEL J. ALDERMAN ------------------------------------------- Name: Daniel J. Alderman Title: Executive Vice President The original statement shall be signed by each person on whose behalf the statement is filed or his authorized representative. If the statement is signed on behalf of a person by his authorized representative (other than an executive officer or general partner of this filing person), evidence of the representative's authority to sign on behalf of such person shall be filed with the statements, provided, however, that a power of attorney for this purpose which is already on file with the Commission may be incorporated by reference. The name of any title of each person who signs the statement shall be typed or printed beneath his signature. ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001) Page 54 AGREEMENT This Schedule 13D is filed on behalf of each of the undersigned pursuant to Rule 13d-1(k)(1). SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: December 29, 1999 PEREGRINE EQUITIES 7, L.L.C. BY: PEREGRINE EQUITIES HOLDINGS, LLC, MEMBER BY: PEREGRINE CAPITAL, INC., MANAGER By: /S/ DANIEL J. ALDERMAN ------------------------------------------- Name: Daniel J. Alderman Title: Executive Vice President The original statement shall be signed by each person on whose behalf the statement is filed or his authorized representative. If the statement is signed on behalf of a person by his authorized representative (other than an executive officer or general partner of this filing person), evidence of the representative's authority to sign on behalf of such person shall be filed with the statements, provided, however, that a power of attorney for this purpose which is already on file with the Commission may be incorporated by reference. The name of any title of each person who signs the statement shall be typed or printed beneath his signature. ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001) Page 55 AGREEMENT This Schedule 13D is filed on behalf of each of the undersigned pursuant to Rule 13d-1(k)(1). SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: December 29, 1999 PEREGRINE EQUITIES 8, L.L.C. BY: PEREGRINE CAPITAL, INC., MANAGER By: /S/ DANIEL J. ALDERMAN ------------------------------------------- Name: Daniel J. Alderman Title: Executive Vice President The original statement shall be signed by each person on whose behalf the statement is filed or his authorized representative. If the statement is signed on behalf of a person by his authorized representative (other than an executive officer or general partner of this filing person), evidence of the representative's authority to sign on behalf of such person shall be filed with the statements, provided, however, that a power of attorney for this purpose which is already on file with the Commission may be incorporated by reference. The name of any title of each person who signs the statement shall be typed or printed beneath his signature. ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001) Page 56 AGREEMENT This Schedule 13D is filed on behalf of each of the undersigned pursuant to Rule 13d-1(k)(1). SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: December 29, 1999 PEREGRINE EQUITIES 9, L.L.C. BY: PEREGRINE CAPITAL, INC., MANAGER By: /S/ DANIEL J. ALDERMAN ------------------------------------------- Name: Daniel J. Alderman Title: Executive Vice President The original statement shall be signed by each person on whose behalf the statement is filed or his authorized representative. If the statement is signed on behalf of a person by his authorized representative (other than an executive officer or general partner of this filing person), evidence of the representative's authority to sign on behalf of such person shall be filed with the statements, provided, however, that a power of attorney for this purpose which is already on file with the Commission may be incorporated by reference. The name of any title of each person who signs the statement shall be typed or printed beneath his signature. ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001) Page 57 AGREEMENT This Schedule 13D is filed on behalf of each of the undersigned pursuant to Rule 13d-1(k)(1). SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: December 29, 1999 PEREGRINE EQUITIES 10, L.L.C. BY: PEREGRINE CAPITAL, INC., MANAGER By: /S/ DANIEL J. ALDERMAN ------------------------------------------- Name: Daniel J. Alderman Title: Executive Vice President The original statement shall be signed by each person on whose behalf the statement is filed or his authorized representative. If the statement is signed on behalf of a person by his authorized representative (other than an executive officer or general partner of this filing person), evidence of the representative's authority to sign on behalf of such person shall be filed with the statements, provided, however, that a power of attorney for this purpose which is already on file with the Commission may be incorporated by reference. The name of any title of each person who signs the statement shall be typed or printed beneath his signature. ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001) Page 58 AGREEMENT This Schedule 13D is filed on behalf of each of the undersigned pursuant to Rule 13d-1(k)(1). SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: December 29, 1999 PEREGRINE INVESTMENT CAPITAL, L.L.C. BY: PEREGRINE HOLDINGS (OREGON), LTD., ITS MANAGER By: /S/ DANIEL J. ALDERMAN ------------------------------------------- Name: Daniel J. Alderman Title: Executive Vice President The original statement shall be signed by each person on whose behalf the statement is filed or his authorized representative. If the statement is signed on behalf of a person by his authorized representative (other than an executive officer or general partner of this filing person), evidence of the representative's authority to sign on behalf of such person shall be filed with the statements, provided, however, that a power of attorney for this purpose which is already on file with the Commission may be incorporated by reference. The name of any title of each person who signs the statement shall be typed or printed beneath his signature. ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001) Page 59 AGREEMENT This Schedule 13D is filed on behalf of each of the undersigned pursuant to Rule 13d-1(k)(1). SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: December 29, 1999 DAIN RAUSCHER CUSTODIAN F/B/O BRENT STAHL SEP By: /S/ BRENT STAHL ------------------------ The original statement shall be signed by each person on whose behalf the statement is filed or his authorized representative. If the statement is signed on behalf of a person by his authorized representative (other than an executive officer or general partner of this filing person), evidence of the representative's authority to sign on behalf of such person shall be filed with the statements, provided, however, that a power of attorney for this purpose which is already on file with the Commission may be incorporated by reference. The name of any title of each person who signs the statement shall be typed or printed beneath his signature. ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001) Page 60 AGREEMENT This Schedule 13D is filed on behalf of each of the undersigned pursuant to Rule 13d-1(k)(1). SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: January 3, 2000 /s/ MUSSIE GELLLIS --------------------------- MUSSIE GELLIS The original statement shall be signed by each person on whose behalf the statement is filed or his authorized representative. If the statement is signed on behalf of a person by his authorized representative (other than an executive officer or general partner of this filing person), evidence of the representative's authority to sign on behalf of such person shall be filed with the statements, provided, however, that a power of attorney for this purpose which is already on file with the Commission may be incorporated by reference. The name of any title of each person who signs the statement shall be typed or printed beneath his signature. ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001) Page 61 AGREEMENT This Schedule 13D is filed on behalf of each of the undersigned pursuant to Rule 13d-1(k)(1). SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: December 29, 1999 /S/ DOROTHY COHEN ------------------------ DOROTHY COHEN The original statement shall be signed by each person on whose behalf the statement is filed or his authorized representative. If the statement is signed on behalf of a person by his authorized representative (other than an executive officer or general partner of this filing person), evidence of the representative's authority to sign on behalf of such person shall be filed with the statements, provided, however, that a power of attorney for this purpose which is already on file with the Commission may be incorporated by reference. The name of any title of each person who signs the statement shall be typed or printed beneath his signature. ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001) Page 62 AGREEMENT This Schedule 13D is filed on behalf of each of the undersigned pursuant to Rule 13d-1(k)(1). SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: December 30, 1999 /S/ ANGELA JOY COPPOLA --------------------------- ANGELA JOY COPPOLA The original statement shall be signed by each person on whose behalf the statement is filed or his authorized representative. If the statement is signed on behalf of a person by his authorized representative (other than an executive officer or general partner of this filing person), evidence of the representative's authority to sign on behalf of such person shall be filed with the statements, provided, however, that a power of attorney for this purpose which is already on file with the Commission may be incorporated by reference. The name of any title of each person who signs the statement shall be typed or printed beneath his signature. ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001) Page 63 AGREEMENT This Schedule 13D is filed on behalf of each of the undersigned pursuant to Rule 13d-1(k)(1). SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: January 3, 2000 /s/ HENRY GELLIS as power of attorney --------------------------- JANET FRANKLIN The original statement shall be signed by each person on whose behalf the statement is filed or his authorized representative. If the statement is signed on behalf of a person by his authorized representative (other than an executive officer or general partner of this filing person), evidence of the representative's authority to sign on behalf of such person shall be filed with the statements, provided, however, that a power of attorney for this purpose which is already on file with the Commission may be incorporated by reference. The name of any title of each person who signs the statement shall be typed or printed beneath his signature. ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001) Page 64 AGREEMENT This Schedule 13D is filed on behalf of each of the undersigned pursuant to Rule 13d-1(k)(1). SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: December 30, 1999 /S/ DENNIS DAUTEL ------------------------ DENNIS DAUTEL The original statement shall be signed by each person on whose behalf the statement is filed or his authorized representative. If the statement is signed on behalf of a person by his authorized representative (other than an executive officer or general partner of this filing person), evidence of the representative's authority to sign on behalf of such person shall be filed with the statements, provided, however, that a power of attorney for this purpose which is already on file with the Commission may be incorporated by reference. The name of any title of each person who signs the statement shall be typed or printed beneath his signature. ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001) Page 65 AGREEMENT This Schedule 13D is filed on behalf of each of the undersigned pursuant to Rule 13d-1(k)(1). SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: December 29, 1999 RAMSDELL FAMILY TRUST By: /S/ W. ROBERT RAMSDELL, TRUSTEE ------------------------------- Name: W.Robert Ramsdell Title: Trustee By: /S/ MARJORIE RAMSDELL, TRUSTEE ------------------------------- Name: Marjorie Ramsdell Title: Trustee The original statement shall be signed by each person on whose behalf the statement is filed or his authorized representative. If the statement is signed on behalf of a person by his authorized representative (other than an executive officer or general partner of this filing person), evidence of the representative's authority to sign on behalf of such person shall be filed with the statements, provided, however, that a power of attorney for this purpose which is already on file with the Commission may be incorporated by reference. The name of any title of each person who signs the statement shall be typed or printed beneath his signature. ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001) Page 66 AGREEMENT This Schedule 13D is filed on behalf of each of the undersigned pursuant to Rule 13d-1(k)(1). SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: December 29, 1999 /S/ DAVID ROCKER ----------------------------- DAVID ROCKER The original statement shall be signed by each person on whose behalf the statement is filed or his authorized representative. If the statement is signed on behalf of a person by his authorized representative (other than an executive officer or general partner of this filing person), evidence of the representative's authority to sign on behalf of such person shall be filed with the statements, provided, however, that a power of attorney for this purpose which is already on file with the Commission may be incorporated by reference. The name of any title of each person who signs the statement shall be typed or printed beneath his signature. ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001) Page 67 AGREEMENT This Schedule 13D is filed on behalf of each of the undersigned pursuant to Rule 13d-1(k)(1). SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: December 29, 1999 /S/ KAYLEN SILVERBERG --------------------------- KAYLEN SILVERBERG The original statement shall be signed by each person on whose behalf the statement is filed or his authorized representative. If the statement is signed on behalf of a person by his authorized representative (other than an executive officer or general partner of this filing person), evidence of the representative's authority to sign on behalf of such person shall be filed with the statements, provided, however, that a power of attorney for this purpose which is already on file with the Commission may be incorporated by reference. The name of any title of each person who signs the statement shall be typed or printed beneath his signature. ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001) Page 68 AGREEMENT This Schedule 13D is filed on behalf of each of the undersigned pursuant to Rule 13d-1(k)(1). SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: December 29, 1999 /S/ LEON HOROWITZ ----------------------------- LEON HOROWITZ The original statement shall be signed by each person on whose behalf the statement is filed or his authorized representative. If the statement is signed on behalf of a person by his authorized representative (other than an executive officer or general partner of this filing person), evidence of the representative's authority to sign on behalf of such person shall be filed with the statements, provided, however, that a power of attorney for this purpose which is already on file with the Commission may be incorporated by reference. The name of any title of each person who signs the statement shall be typed or printed beneath his signature. ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001) Page 69 AGREEMENT This Schedule 13D is filed on behalf of each of the undersigned pursuant to Rule 13d-1(k)(1). SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: December 29, 1999 FIRST MADISON HOLDINGS, LLP By: /S/ TERRY JONES ----------------------------- Name: Terry Jones Title: Manager The original statement shall be signed by each person on whose behalf the statement is filed or his authorized representative. If the statement is signed on behalf of a person by his authorized representative (other than an executive officer or general partner of this filing person), evidence of the representative's authority to sign on behalf of such person shall be filed with the statements, provided, however, that a power of attorney for this purpose which is already on file with the Commission may be incorporated by reference. The name of any title of each person who signs the statement shall be typed or printed beneath his signature. ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001) Page 70 AGREEMENT This Schedule 13D is filed on behalf of each of the undersigned pursuant to Rule 13d-1(k)(1). SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: December 29, 1999 /S/ IRVING SOLOMON ----------------------------- IRVING SOLOMON The original statement shall be signed by each person on whose behalf the statement is filed or his authorized representative. If the statement is signed on behalf of a person by his authorized representative (other than an executive officer or general partner of this filing person), evidence of the representative's authority to sign on behalf of such person shall be filed with the statements, provided, however, that a power of attorney for this purpose which is already on file with the Commission may be incorporated by reference. The name of any title of each person who signs the statement shall be typed or printed beneath his signature. ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001) Page 71 AGREEMENT This Schedule 13D is filed on behalf of each of the undersigned pursuant to Rule 13d-1(k)(1). SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: January 3, 2000 ROSEWOOD PARTNERS L.P. By: /S/ SCOTT MAENTZ ----------------------------- Scott Maentz Its General Partner The original statement shall be signed by each person on whose behalf the statement is filed or his authorized representative. If the statement is signed on behalf of a person by his authorized representative (other than an executive officer or general partner of this filing person), evidence of the representative's authority to sign on behalf of such person shall be filed with the statements, provided, however, that a power of attorney for this purpose which is already on file with the Commission may be incorporated by reference. The name of any title of each person who signs the statement shall be typed or printed beneath his signature. ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001) Page 72 AGREEMENT This Schedule 13D is filed on behalf of each of the undersigned pursuant to Rule 13d-1(k)(1). SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: January 1, 2000 /S/ PETER GUBER --------------------------- PETER GUBER The original statement shall be signed by each person on whose behalf the statement is filed or his authorized representative. If the statement is signed on behalf of a person by his authorized representative (other than an executive officer or general partner of this filing person), evidence of the representative's authority to sign on behalf of such person shall be filed with the statements, provided, however, that a power of attorney for this purpose which is already on file with the Commission may be incorporated by reference. The name of any title of each person who signs the statement shall be typed or printed beneath his signature. ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001) Page 73 AGREEMENT This Schedule 13D is filed on behalf of each of the undersigned pursuant to Rule 13d-1(k)(1). SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: December 29, 1999 /S/ COURTNEY CAMPBELL ----------------------------- COURTNEY CAMPBELL The original statement shall be signed by each person on whose behalf the statement is filed or his authorized representative. If the statement is signed on behalf of a person by his authorized representative (other than an executive officer or general partner of this filing person), evidence of the representative's authority to sign on behalf of such person shall be filed with the statements, provided, however, that a power of attorney for this purpose which is already on file with the Commission may be incorporated by reference. The name of any title of each person who signs the statement shall be typed or printed beneath his signature. ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001) Page 74 AGREEMENT This Schedule 13D is filed on behalf of each of the undersigned pursuant to Rule 13d-1(k)(1). SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: December 30, 1999 STARK INVESTMENTS L.P. By: /S/ ROBERT STARK ----------------------------- Name: Robert Stark Title: General Partner The original statement shall be signed by each person on whose behalf the statement is filed or his authorized representative. If the statement is signed on behalf of a person by his authorized representative (other than an executive officer or general partner of this filing person), evidence of the representative's authority to sign on behalf of such person shall be filed with the statements, provided, however, that a power of attorney for this purpose which is already on file with the Commission may be incorporated by reference. The name of any title of each person who signs the statement shall be typed or printed beneath his signature. ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001) Page 75 AGREEMENT This Schedule 13D is filed on behalf of each of the undersigned pursuant to Rule 13d-1(k)(1). SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: December 31, 1999 /S/ RON BARSHOP --------------------------- RON BARSHOP The original statement shall be signed by each person on whose behalf the statement is filed or his authorized representative. If the statement is signed on behalf of a person by his authorized representative (other than an executive officer or general partner of this filing person), evidence of the representative's authority to sign on behalf of such person shall be filed with the statements, provided, however, that a power of attorney for this purpose which is already on file with the Commission may be incorporated by reference. The name of any title of each person who signs the statement shall be typed or printed beneath his signature. ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001) Page 76 AGREEMENT This Schedule 13D is filed on behalf of each of the undersigned pursuant to Rule 13d-1(k)(1). SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: January 3, 2000 /s/ HENRY GELLIS --------------------------- HENRY GELLIS The original statement shall be signed by each person on whose behalf the statement is filed or his authorized representative. If the statement is signed on behalf of a person by his authorized representative (other than an executive officer or general partner of this filing person), evidence of the representative's authority to sign on behalf of such person shall be filed with the statements, provided, however, that a power of attorney for this purpose which is already on file with the Commission may be incorporated by reference. The name of any title of each person who signs the statement shall be typed or printed beneath his signature. ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001) Page 77 AGREEMENT This Schedule 13D is filed on behalf of each of the undersigned pursuant to Rule 13d-1(k)(1). SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: December 30, 1999 /S/ G. TYLER RUNNELS --------------------------- G. TYLER RUNNELS The original statement shall be signed by each person on whose behalf the statement is filed or his authorized representative. If the statement is signed on behalf of a person by his authorized representative (other than an executive officer or general partner of this filing person), evidence of the representative's authority to sign on behalf of such person shall be filed with the statements, provided, however, that a power of attorney for this purpose which is already on file with the Commission may be incorporated by reference. The name of any title of each person who signs the statement shall be typed or printed beneath his signature. ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001) Page 78 AGREEMENT This Schedule 13D is filed on behalf of each of the undersigned pursuant to Rule 13d-1(k)(1). SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement relating to Paribas North America, Inc. or agreements to which Paribas North America, Inc. is a party is true, complete and correct. Date: January 3, 2000 PARIBAS NORTH AMERICA, INC. By:/s/ GEORGE T. DEASON ----------------------------- Name: George T. Deason Title: Vice President The original statement shall be signed by each person on whose behalf the statement is filed or his authorized representative. If the statement is signed on behalf of a person by his authorized representative (other than an executive officer or general partner of this filing person), evidence of the representative's authority to sign on behalf of such person shall be filed with the statements, provided, however, that a power of attorney for this purpose which is already on file with the Commission may be incorporated by reference. The name of any title of each person who signs the statement shall be typed or printed beneath his signature. ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001) Page 79 APPENDIX A 1. (a) -(c) AGL Investments No. 8 Limited Partnership, a Colorado limited partnership ("AGL Investments"). The principal business of AGL Investments is investing in equity and other securities. AGL Investments' address of its principal business and principal office is 1050 17th Street, Suite 1200, Denver, Colorado 80265. The general partner of AGL Investments is AGLP No. 8 Limited Partnership, a Colorado limited partnership ("AGLP L.P.") and the general partner of AGLP L.P. is AGLPGP No. 8, Inc. (together with AGLP L.P., the "General Partners"). Set forth on Schedule I hereto are the names, business addresses and titles of each of the directors and executive officers of AGLPGP No. 8, Inc. The principal business of each of the directors and executive officers of AGLPGP No. 8 is acting as executive officer of companies in the Amstar Group, Ltd. The principal business of each of the General Partners is to act as the general partner of investment partnerships of the Amstar Group, Ltd.. The General Partners' address of their respective principal business and principal office is 1050 17th Street, Suite 1200, Denver Colorado 80265. (d) During the past five years, neither AGL Investments, nor either General Partner, has been convicted in any criminal proceeding. (e) During the past five years, neither AGL Investments, nor either General Partner, has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (f) To the best knowledge of AGL Investments No. 8 Limited Partnership, each of the directors and executive officers of AGLPGP No. 8, Inc. is a citizen of the United States of America. 2. (a) This Statement is being filed by General Motors Corporation, a Delaware corporation ("General Motors" or "GM") as Parent Holding Company of GMAC Commercial Mortgage Corporation, a Delaware corporation ("GMACCMC"). GMACCMC is a wholly-owned subsidiary of GMAC Commercial Holding Corp., a Nevada corporation, which is a wholly-owned subsidiary of GMAC Mortgage Group, Inc., a Michigan corporation, which is a wholly-owned subsidiary of General Motors Acceptance Corporation, a Delaware corporation, which is a wholly-owned subsidiary of GM. (b) GM's business address is 100 Renaissance Center, Detroit, Michigan 48243-7301. The names, business addresses and principal businesses of each of the directors and executive officers of GM are set forth on Schedule II hereto and incorporated by reference herein. (c) General Motors is engaged in the design, manufacturing and marketing of cars, trucks, locomotives, and heavy duty transmissions and related parts and accessories, and financing and insurance operations. (d) During the past five years, neither GM nor, to the best of its knowledge, any of its executive Page 80 officers or directors has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). (e) During the past five years, neither GM nor, to the best of its knowledge, any of its executive officers or directors has been party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceedings was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (f) To the best knowledge of GM, each of its executive officers and directors is a United States citizen, other than Nobuyuki Idei, who is a citizen of Japan, Percy N. Barnevik, who is a citizen of Sweden, and Eckhard Pfeiffer, who is a citizen of Germany. 3. (a) Aspen Foxtrot Investments, LLC, a Michigan limited liability company (b) c/o Aspen Enterprises, Ltd., 2757 44th Street, Suite 306, Grand Rapids, MI 49509 (c) Aspen Foxtrot Investments' principal business is its investment in the Company (d) During the past five years, neither Aspen Foxtrot Investments, nor, to the best knowledge of Aspen Foxtrot Investments, managers, nor any directors or executive officers thereof, has been convicted in any criminal proceeding (excluding traffic violations or similar misdemeanors) or has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (e) The name, citizenship, business address and principal occupation or employment of each manager of Aspen Foxtrot Investments and any director or executive officer thereof is set forth below: (a) Ronald A. House, member of Aspen Foxtrot; Vice President and Chief Operating Officer of Aspen Enterprises, Ltd., a manager of Aspen Foxtrot (b) Ronald House is employed by Aspen Enterprises, Ltd., 2757 44th Street, Suite 104, Grand Rapids, Michigan 49509 (c) United States Citizen (a) Robert A. Haveman, member and manager of Aspen Foxtrot (b) Mr. Haveman is the President, Treasurer and Manager of EDP Management Co., LLC, 190 S. River Avenue, Suite 300, Holland, MI 49423 (c) United States Citizen (a) Ronald A. Piasecki, director, vice present and secretary of Aspen Enterprises, Ltd., a manager of Aspen Foxtrot (b) Ronald Piasecki is employed by Aspen Enterprises, Ltd., 2757 44th Street, Suite 104, Grand Rapids, Michigan 49509 (c) United States Citizen Page 81 (a) Arlyn J. Lanting, director, vice present and treasurer of Aspen Enterprises, Ltd., a manager of Aspen Foxtrot (b) Arlyn Lanting is employed by Aspen Enterprises, Ltd., 2757 44th Street, Suite 104, Grand Rapids, Michigan 49509 (c) United States Citizen (a) James R. Lanting, director and president of Aspen Enterprises, Ltd., a manager of Aspen Foxtrot (b) James Lanting is employed by Aspen Enterprises, Ltd., 2757 44th Street, Suite 104, Grand Rapids, Michigan 49509 (c) United States Citizen (a) Leon P. DeVisser, director and vice president of Aspen Enterprises, Ltd., a manager of Aspen Foxtrot (b) Leon P. DeVisser is employed by Aspen Enterprises, Ltd., 2757 44th Street, Suite 104, Grand Rapids, Michigan 49509 (c) United States Citizen 3A. (a) Aspen Online Investments, LLC, a Michigan limited liability company (b) c/o Aspen Enterprises, Ltd., 2757 44th Street, Suite 306, Grand Rapids, MI 49509 (c) Aspen Online Investments' principal business is its investment in the Company (d) During the past five years, neither Aspen Online Investments, nor, to the best knowledge of Aspen Online Investments, members, managers, nor any directors or executive officers thereof, has been convicted in any criminal proceeding (excluding traffic violations or similar misdemeanors) or has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (e) The name, citizenship, business address and principal occupation or employment of each manager of Aspen Online Investments and any director of executive officer thereof is set forth below: (a) Ronald A. House, member of Aspen OnLine; Vice President and Chief Operating Officer of Aspen Enterprises, Ltd., a manager of Aspen OnLine (b) Ronald House is employed by Aspen Enterprises, Ltd., 2757 44th Street, Suite 104, Grand Rapids, MI 49509 (c) United States Citizen (a) Robert A. Haveman, member and manager of Aspen OnLine (b) Mr. Haveman is the President, Treasurer and Manager of EDP Management Co., LLC, 190 S. River Avenue, Suite 300, Holland, MI 49423 (c) United States Citizen Page 82 (a) Ronald A. Piasecki, director, vice present and secretary of Aspen Enterprises, Ltd., a manager of Aspen OnLine (b) Ronald Piasecki is employed by Aspen Enterprises, Ltd., 2757 44th Street, Suite 104, Grand Rapids, Michigan 49509 (c) United States Citizen (a) Arlyn J. Lanting, director, vice present and treasurer of Aspen Enterprises, Ltd., a manager of Aspen OnLine (b) Arlyn Lanting is employed by Aspen Enterprises, Ltd., 2757 44th Street, Suite 104, Grand Rapids, Michigan 49509 (c) United States Citizen (a) James R. Lanting, director and president of Aspen Enterprises, Ltd., a manager of Aspen OnLine (b) James Lanting is employed by Aspen Enterprises, Ltd., 2757 44th Street, Suite 104, Grand Rapids, Michigan 49509 (c) United States Citizen (a) Leon P. DeVisser, director and vice president of Aspen Enterprises, Ltd., a manager of Aspen OnLine (b) Leon DeVisser is employed by Aspen Enterprises, Ltd., 2757 44th Street, Suite 104, Grand Rapids, MI 49509 (c) United States Citizen 4. (a) German American Capital Corporation, a Maryland corporation (b) c/o Deutsche Bank Securities, Inc., 31 West 52nd Street, New York, NY 10019 (c) The principal business of German American Capital Corporation is the purchasing and holding of loans from financial institutions and the securitization of loans and mortgages. (d) During the past five years, neither German American Capital Corporation, nor, to the best knowledge of German American Capital Corporation, its directors or executive officers, has been convicted in any criminal proceeding (excluding traffic violations or similar misdemeanors) or has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Page 83 (e) The name, citizenship, business address and principal occupation or employment of each director and executive officer of German American Capital Corporation is set forth below (the business address of each individual is 31 West 52nd Street, New York, New York 10019):
- ------------------------------------------------------------------------------- Name/Position Citizenship Present Principal Occupation or Employment and Name and Address of Employer - ------------------------------------------------------------------------------- Richard Ferguson/Chairman United States of Business Executive and Vice President of America Gary Handel/Director United States of Business Executive and Treasurer America Richard Uhlig/Director and United States of Business Executive Vice President America Joel Horne/Director and Vice United States of Business Executive President America Donna Milrod/Director and United States of Business Executive President America
5. (a) Peregrine Equities 1, L.L.C. - Peregrine Equities 7, L.L.C. (inclusive). (b) Boardwalk Plaza, 9725 SW Beaverton Hillsdale Hwy, Ste 350, Beaverton, OR 97005 (c) The principal business of Peregrine Equities 1, L.L.C. - Peregrine Equities 7, L.L.C. is the investment in the Company. The Manager and sole Member of each of Peregrine Equities 1, L.L.C. - Peregrine Equities 7, L.L.C. is Peregrine Equities Holdings, L.L.C., an Oregon limited liability company ("PEH"). The Manager of PEH is Peregrine Capital, Inc. ("PCI"). The sole Member of PEH is Peregrine Investment Capital, L.L.C. ("PIC"). The Manager of PIC is Peregrine Holdings (Oregon) Ltd. ("PHL"). The controlling member of PIC is Hampton Holdings, L.L.C. ("HHL"). The members of HHL are Linda Rose, Daniel J. Alderman, Rose Childrens' Trust and Alderman Childrens Trust. Linda Rose is a consultant to PIC. The address of each member of HHL is 9725 SW Beaverton Hillsdale Hwy, Suite 350, Beaverton, Oregon 97005. (d) During the past five years, neither Peregrine Equities 1, L.L.C - Peregrine Equities 7, L.L.C. (inclusive), nor, to the best knowledge of each such entity, its directors or executive officers, has been convicted in any criminal proceeding (excluding traffic violations or similar misdemeanors) or has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (e) The name, citizenship, business address and principal occupation or employment of each director and executive officer of Peregrine Holdings (Oregon) Ltd. is set forth below (the citizenship of each individual listed below is the United States): Page 84
-------------------------------------------------------------------------------------- Name/Position Principal Occupation Address -------------------------------------------------------------------------------------- Roy Rose/Directorand Business Executive 9725 SW Beaverton President and Chief Hillsdale Hwy, Suite 350, Executive Officer Beaverton, Oregon 97005 Daniel J. Alderman/Director Business Executive 9725 SW Beaverton and Executive Vice Hillsdale Hwy, Suite 350, President, Chief Financial Beaverton, Oregon 97005 Officer and Secretary Janet Spuck/Director WSU Instructor and 9725 SW Beaverton Advisor Hillsdale Hwy, Suite 350, Beaverton, Oregon 97005 Robert I. Miller/Director Business Executive 9725 SW Beaverton Hillsdale Hwy, Suite 350, Beaverton, Oregon 97005
(f) The name, citizenship, business address and principal occupation or employment of each director and executive officer of Peregrine Capital, Inc. is set forth below(the citizenship of each individual listed below is the United States):
- --------------------------------------------------------------------------------------------- Name/Position Principal Occupation Address - --------------------------------------------------------------------------------------------- Roy Rose/Directorand Chief Business Executive 9725 SW Beaverton Hillsdale Executive Officer Hwy, Suite 350, Beaverton, Oregon 97005 Daniel J. Alderman/Director Business Executive 9725 SW Beaverton Hillsdale and Executive Vice President, Hwy, Suite 350, Beaverton, Chief Financial Officer and Oregon 97005 Secretary Norman P. Daniels/Director President G.I. Joe's Inc. 9805 Boeckman Road, Wilsonville, OR 97070 Allan A. Fulsher/General General Counsel 9725 SW Beaverton Hillsdale Counsel Hwy, Suite 350, Beaverton, Oregon 97005 John B. DesCamp, Jr./ President and Chief 9725 SW Beaverton Hillsdale President and Chief Operating Officer Hwy, Suite 350, Beaverton, Operating Officer Oregon 97005 T. Renee Stemper/Controller Controller 9725 SW Beaverton Hillsdale Hwy, Suite 350, Beaverton, Oregon 97005
(a) Peregrine Equities 8, L.L.C. - Peregrine Equities 10, L.L.C. (inclusive). (b) Boardwalk Plaza, 9725 SW Beaverton Hillsdale Hwy, Ste 350, Beaverton, OR 97005 (c) The principal business of Peregrine Equities 8, L.L.C. - Peregrine Equities 10, L.L.C. is the investment in the Company. The Manager of each of Peregrine Equities 8, L.L.C. - Peregrine Equities 10, L.L.C. is Peregrine Capital, Inc., an Oregon corporation. The sole member of Peregrine Equities 8, L.L.C. - Peregrine Equities 10, L.L.C. is Wells Fargo Bank, TTEE FBO Page 85 Stoel Rives LLP Retirement Plan for Richard A. Hayden #008323, c/o Wells Fargo Bank, PO Box 91070, Employee Benefit Trust, MAC 6540-066, Seattle, WA 98111 (d) During the past five years, neither Peregrine Equities 8, L.L.C - Peregrine Equities 10, L.L.C. (inclusive), nor, to the best knowledge of each such entity, its directors or executive officers, has been convicted in any criminal proceeding (excluding traffic violations or similar misdemeanors) or has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. 6. (a) Dain Rauscher Custodian f/b/o Brent Stahl SEP (IRA) (b) 301 Congress Avenue, Ste 2200, Austin, Texas 78701 (c) Mr. Stahl is an attorney with Stahl, Martens & Bernal, LLP, 7320 N. MoPac, Suite 211, Austin, Texas 78731 (d) During the past five years, neither Dain Rauscher Custodian f/b/o Brent Stahl SEP nor Brent Stahl, has been convicted in any criminal proceeding (excluding traffic violations or similar misdemeanors) or been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (e) See (d) above (f) Citizen of the United States of America 7. (a) Mussie Gellis (b) 215 E. 68th Street, Apt. 21E, New York, NY 10021 (c) Housewife (d) During the past five years, Mussie Gellis has not been convicted in any criminal proceeding (excluding traffic violations or similar misdemeanors) or been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (e) See (d) above (f) Citizen of the United States of America 8. (a) Dorothy Cohen (b) 2017 S. Ocean Drive, Apt. 1002, Hallandale, Florida 33009 (c) Retired (d) During the past five years, Dorothy Cohen, has not been convicted in any criminal proceeding (excluding traffic violations or similar misdemeanors) or been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or Page 86 mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (e) See (d) above (f) Citizen of the United States of America 9. (a) Angela Joy Coppola (b) 1000 Mason Street, San Francisco, California 94108 (c) Ms. Coppola is employed as an Apparel Manufacturer at 1000 Mason Street, San Francisco, California 94108. (d) During the past five years, Angela Joy Coppola has not been convicted in any criminal proceeding (excluding traffic violations or similar misdemeanors) or been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (e) See (d) above (f) Citizen of the United States of America 10. (a) Janet Franklin (b) 19 Ormadale Road, Yeronga 4104, Queensland, Australia (c) Ms. Franklin is self-employed as a real estate investor (d) During the past five years, Janet Franklin has not been convicted in any criminal proceeding (excluding traffic violations or similar misdemeanors) or been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (e) See (d) above (f) Citizen of the United States of America 11. (a) Dennis Dautel (b) 248 Addie Roy Road, Austin, Texas 78746 (c) Mr. Dautel is currently employed as an Investor with Dunamis Ventures, 248 Addie Roy Road, Austin, Texas 78746 (d) During the past five years, Dennis Dautel has not been convicted in any criminal proceeding (excluding traffic violations or similar misdemeanors) or been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (e) See (d) above (f) Citizen of the United States of America Page 87 12. (a) Ramsdell Family Trust, organized under the laws of California, the trustees of which are Marjorie Ramsdell and W.R. Ramsdell (b) 474 Paseo Miramar, Pacific Palisades, California 90272 (c) During the past five years, neither the Ramsdell Family Trust, Marjorie Ramsdell or W.R. Ramsdell has been convicted in any criminal proceeding (excluding traffic violations or similar misdemeanors) or been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (d) See (c) above (e) Both Marjorie Ramsdell and W.R. Ramsdell are citizens of the United States of America 13. (a) David Rocker (b) 43 Minnisink Road, Short Hills, NJ 07078 (c) Mr. Rocker's employment involves investments and is conducted at Rocker Partners LP, 45 Rockefeller Plaza, Suite 1759, New York, New York 10111. (d) During the past five years, David Rocker has not been convicted in any criminal proceeding (excluding traffic violations or similar misdemeanors) or been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (e) See (d) above (f) Citizen of the United States of America 14. (a) Kaylen Silverberg (b) 3705 Medical Parkway, Suite 420, Austin, Texas 78705 (c) Kaylen Silverberg is a doctor whose employment is with Vaughn, Silverberg & Associates, 3705 Medical Parkway, Suite 420, Austin, Texas 78705. (d) During the past five years, Kaylen Silverberg has not been convicted in any criminal proceeding (excluding traffic violations or similar misdemeanors) or been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (e) See (d) above (f) Citizen of the United States of America 15. (a) Leon Horowitz (b) 5239 Braesvalley Drive, Houston, Texas 77096 (c) Mr. Horowitz is presently retired. Page 88 (d) During the past five years, Leon Horowitz has not been convicted in any criminal proceeding (excluding traffic violations or similar misdemeanors) or been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (e) See (d) above (f) Citizen of the United States of America 16. (a) First Madison Holdings, LLP (b) First Madison Holdings, LLP is a Texas limited liability partnership. (c) The principal business of First Madison Holdings is investments and its address is 4840 Trail Crest, Austin, Texas 78736. (d) During the past five years, neither First Madison Holdings, LLP nor its general partner, Terry Jones, has been convicted in any criminal proceeding (excluding traffic violations or similar misdemeanors) or been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (e) See (d) above (a) The general partner of First Madison Holdings is Terry Jones. (b) Mr. Jones' address is 4840 Trail Crest, Austin, Texas 78735. (c) Mr. Jones is employed by the Company at 10300 Metric Boulevard, Austin, Texas 78758. (d) Citizen of the United States of America. 17. (a) Irving Solomon (b) 7892 Lakewood Drive, Austin, Texas 78750 (c) Mr. Solomon is an accountant and is employed by CSA Realty. Mr. Solomon's business is conducted at 8305 Shoal Creek Boulevard, Austin, Texas 78757. (d) During the past five years, Irving Solomon has not been convicted in any criminal proceeding (excluding traffic violations or similar misdemeanors) or been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (e) See (d) above (f) Citizen of the United States of America 18. (a) Rosewood Partners, LP (b) Illinois (c) Rosewood Partners' principal business is equity investments and the business is conducted at 500 Western Avenue, Ste. 201, Lake Forest, Illinois 60045. (d) During the past five years, neither Rosewood Partners, LP nor its general partner, Scott Maentz, has been convicted in any criminal proceeding (excluding traffic violations or similar misdemeanors) or been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining Page 89 future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (e) See (d) above (a) Scott Maentz is the general partner of Rosewood Partners (b) Mr. Maentz's address is 500 Western Avenue, Ste. 201, Lake Forest, Illinois 60045. (c) Mr. Maentz is employed by Rosewood Partners at 500 Western Avenue, Ste. 201, Lake Forest, Illinois 60045. (d) Citizen of the United States. 19. (a) Peter Guber (b) Mandalay Entertainment, 5555 Melrose Avenue, Hollywood, California 90038. (c) Mr. Guber is Chairman of Mandalay Entertainment and his business is conducted at 5555 Melrose Avenue, Hollywood, California 90038. (d) During the past five years, Peter Guber has not been convicted in any criminal proceeding (excluding traffic violations or similar misdemeanors) or been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (e) See (d) above (f) Citizen of the United States of America 20. (a) Courtney Campbell (b) 439 3rd Avenue, Peltham, New York 10803 (c) Housewife (d) During the past five years, Ms. Campbell has not been convicted in any criminal proceeding (excluding traffic violations or similar misdemeanors) or been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (e) See (d) above (f) Citizen of the United States of America 21. (a) Stark Investments, LP (b) Washington (c) Stark Investments' principal business is the business of investing and its address is 735 Northeast 198 Street, Shoreline, Washington 98155. (d) During the past five years, neither Stark Investments, LP nor Robert Stark, its general partner, has been convicted in any criminal proceeding (excluding traffic violations or similar misdemeanors) or been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (e) See (d) above (a) The general partner of Stark Investments, LP is Robert Stark. (b) Mr. Stark's address is 735 Northeast 198 Street, Shoreline, Washington 98155. (c) Mr. Stark is retired. (d) Citizen of the United States of America. Page 90 22. (a) Ron Barshop (b) Barshop & Associates, 120 Austin Highway, Suite 102, San Antonio, Texas 78209. (c) Principal of Barshop & Associates, 120 Austin Highway, Suite 102, San Antonio, Texas 78209. (d) During the past five years, Mr. Barshop has not been convicted in any criminal proceeding (excluding traffic violations or similar misdemeanors) or been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (e) See (d) above (f) Citizen of the United States of America 23. (a) Henry Gellis (b) 14001 Palawan Way, Marina del Rey, CA 90292 (c) Mr. Gellis is an investment adviser whose business is conducted at 14001 Palawan Way, Marina del Rey, CA 90292 (d) During the past five years, Mr. Gellis has not been convicted in any criminal proceeding (excluding traffic violations or similar misdemeanors) or been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (e) See (d) above (f) Citizen of the United States of America 24. (a) G. Tyler Runnels (b) 1999 Avenue of the Stars, Suite 2530, Los Angeles, California 90067 (c) Mr. Runnels is an investment banker with T.R. Winston & Co. Inc., 1999 Avenue of the Stars, Suite 2530, Los Angeles, California 90067. (d) During the past five years, Mr. Runnels has not been convicted in any criminal proceeding (excluding traffic violations or similar misdemeanors) or been a party to a civil proceeding of a Page 91 judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (e) See (d) above (f) Citizen of the United States of America 25. (a) Paribas North America, Inc., a Delaware corporation (b) 787 Seventh Avenue, New York, New York 10019 (c) The principal business of Paribas North America, Inc. ("PNA") is a holding company through which its parent company, Paribas, a banking organization established under the laws of the Republic of France ("Paribas") holds investments in the United States. (d) During the past five years, neither Paribas North America, Inc., nor, to the best knowledge of Paribas North America, its directors or executive officers, has been convicted in any criminal proceeding (excluding traffic violations or similar misdemeanors) or has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Page 92 (e) The name, citizenship, business address and principal occupation or employment of each director and executive officer of Paribas North America, Inc. is set forth below (Except as otherwise noted, the address of each person below is 787 Seventh Avenue, New York, New York 10019):
- --------------------------------------------------------------------------------------------- Name/Position Citizenship Present Principal Occupation or Employment and Name and Address of Employer - --------------------------------------------------------------------------------------------- Dominique Hoenn/Director of PNA France Member of the Board of Management of Paribas, 3 rue d'Antin, 75002 Paris, France Bernard Allorent/Director of France Paribas, 3 rue d'Antin, PNA 75002 Paris, France Phillippe Blavior/Director of United States and Global Head of Corporate PNA France Banking of Paribas, 3 rue d'Antin 75002 Paris, France David Brunner/Director of PNA United States Banker Alain Louvel/Director of PNA France Paribas, 3 rue d'Antin 75002 Paris, France Christian Manset/Member of the France Member of the Board of Board of Management Management COMPAGNIE FINANCIERE DE PARIBAS Amaury-Daniel de Seze/Director France Member of Board of of PNA Management PARIBAS 3, rue d'Antin Paris France Everett Schenk/Director of PNA United States Managing Director of Paribas, New York Branch, 787 Seventh Avenue, New York, New York 10019 George T. Deason/Vice United States Vice President, Secretary President, Secretary and and General Counsel of PNA General Counsel of PNA Donna Kiernan/Chief Financial United States Chief Financial Officer of Officer of PNA PNA
Page 93 APPENDIX B Item 5. (a)
- --------------------------------------------------------------------------------------------------------------------- NO. OF NO. SHARES NO. SHARES COMMON COMMON NO. SHARES % OWNERSHIP PREFERRED STOCK STOCK STOCK OF COMMON (FULLY NAME OF COMPANY(1) WARRANTS COMPANY(2) STOCK % OWNERSHIP DILUTED)(3) - --------------------------------------------------------------------------------------------------------------------- General Motors Corporation As Parent Holding Company of GMAC Commercial Mortgage Corporation 398,900 325,000(4) 4,986,250 43.6% 20.1% AGL Investment No. 8 Limited Partnership 398,900(5) 4,986,250 42.0% 18.8% Aspen Foxtrot Investments, LLC 180,000 2,250,000 24.6% 8.5% Aspen Online Investments, LLC 625,000(7) 1,312,500 25.8% 7.3% German American Capital Corporation 140,000(6) 1,750,000 20.2% 6.6% Peregrine Equities 1, 20,000 250,000 3.5% .95% L.L.C. Peregrine Equities 2, 20,000 250,000 3.5% .95% L.L.C. Peregrine Equities 3, 20,000 250,000 3.5% .95% L.L.C. Peregrine Equities 4, 20,000 250,000 3.5% .95% L.L.C. Peregrine Equities 5, 20,000 250,000 3.5% .95% L.L.C. Peregrine Equities 6, 20,000 250,000 3.5% .95% L.L.C. Peregrine Equities 7, 20,000 250,000 3.5% .95% L.L.C. Peregrine Equities 8, 20,000 250,000 3.5% .95% L.L.C. Peregrine Equities 9, 20,000 250,000 3.5% .95% L.L.C. Peregrine Equities 10, 20,000 250,000 3.5% .95% L.L.C. - --------------------------------- 1 Unless otherwise noted, represents shares of Series A Convertible Preferred Stock. 2 Issuable upon conversion of Series A Convertible Preferred Stock or Series B Convertible Preferred Stock, convertible within 60 days of the date hereof. 3 Assumes conversion of all outstanding shares of Series A Convertible Preferred Stock, Series B Convertible Preferred Stock and Warrants held by persons party to the Investor Agreement. 4 Warrant is exercisable at a current exercise price of $2.00 per share. 5 David B. Agnew is the sole director, president and shareholder of AGLPGP No. 8, Inc., the ultimate general partner of AGL Investments No. 8 Limited Partnership. Mr. Agnew is also a manager of AGL Capital Investments, LLC, and, accordingly, may be deemed to share voting and dispositive power with respect to 87,000 shares of common stock of the Company issuable upon the exercise of warrants held by AGL Capital Investments, LLC, with the other managers thereof. Mr. Agnew disclaims beneficial ownership of shares held of record by AGL Investments No. 8 Limited Partnership and shares issuable upon the exercise of warrants by AGL Capital Investments LLC. 6 Consists of 65,000 Shares of voting Series A Convertible Preferred Stock, which represents 4.9% of the total issued and outstanding shares of Series A Convertible Preferred Stock, and 75,000 shares of Series B Convertible Preferred Stock. The Series B Convertible Preferred Stock is non-voting. Page 94 Peregrine Investment Capital, LLC 1,000,000 14.5% 3.8% Dain Rauscher Custodian f/b/o Brent Stahl SEP 1,000 12,500 0.2% .05% (IRA) Mussie Gellis 2,000 25,000 0.4% .095% Dorothy Cohen 2,000 25,000 0.4% .095% Angela Joy Coppola 1,000 12,500 0.2% .048% Janet Franklin 400 5,000 0.1% .019% Dennis Dautel 14,000 175,000 2.5% .66% Ramsdell Family Trust, Marjorie Ramsdell & W.R. Ramsdell, Trustees 8,000 120,167(7) 100,000 133,300 4.9% 1.3% David Rocker 12,000 150,000 2.1% .57% Kaylen Silverberg 3,600 45,000 0.6% .17% Leon Horowitz 1,200 15,000 0.2% .057% First Madison Holdings, LLP 800 10,000 0.1% .038% Irving Solomon 800 10,000 0.1% .038% Rosewood Partners LP 10,000 125,000 1.8% .47% Peter Guber 2,000 25,000 0.4% .095% Courtney Campbell 400 5,000 0.1% .019% Stark Investments LP 8,000 100,000 1.4% .38% Dan Bauer 10,000 125,000 1.8% .47% Ron Barshop 1,000 12,500 0.2% .048% Henry Gellis 2,000 25,000 0.4% .095% G. Tyler Runnels 2,000 25,000 0.4% .095% Paribas North America, Inc. 80,000(8) 1,000,000 12.7% 3.8% - ------------------------ 7 Warrant is exercisable at a current exercise price of $5.50 per share. 8 Consists of 80,000 Shares of Series B Convertible Preferred Stock. The Series B Convertible Preferred Stock is non-voting.
Page 95 (b) In the event of any conversion of the Series A Convertible Preferred Stock or Series B Convertible Preferred Stock or the exercise of any Warrant, each of the Reporting Persons named in response to Paragraph (a) has, subject to the restrictions set forth in the Investor Agreement, the sole power to vote or to direct the vote of the shares owned by such Reporting Person and the sole power to dispose or to direct the disposition of the shares owned by such Reporting Person. Based on the terms of the Investor Agreement, the Reporting Persons may be deemed to share the power to vote or direct the vote and dispose or direct the disposition of the shares subject to this Schedule 13D. However, each of the Reporting Persons, for purposes of Section 13(d) of the Exchange Act, expressly disclaims any shared voting power or shared disposition power over the shares held by the other Reporting Persons. (c) There have not been any transactions in the Common Stock effected by or for the account of the Reporting Persons or any of the Reporting Persons' executive officers or directors, if applicable, during the past 60 days, nor has any Reporting Person converted the Series A Convertible Preferred Stock or Series B Convertible Preferred Stock or exercised any Warrant at any time since their acquisition (d) Each of the Reporting Persons does not know of any other person having the right to receive or the power to direct the receipt of dividends from, or the proceeds of, the sale of the securities owned by such Reporting Persons or the underlying shares of Common Stock. Disposition of such securities is subject to the restrictions set forth in the Investor Agreement. (e) Not applicable. Page 96 SCHEDULE I DIRECTORS AND EXECUTIVE OFFICERS OF AGLPGP NO. 8, INC.
POSITION WITH NAME AND BUSINESS ADDRESS AGLPGP NO. 8, INC. ------------------------- ------------------ David G. Agnew Director and President 1050 17th Street Suite 1200 Denver, CO 80265 Kevin J. Martin Vice President, Secretary 1050 17th Street and Treasurer Suite 1200 Denver, CO 80265
Page 97 SCHEDULE II DIRECTORS AND EXECUTIVE OFFICERS OF GENERAL MOTORS CORPORATION The name, business address, present principal occupation or employment, and the name, principal business and address of any corporation or other organization in which such employment is conducted, of each of the directors and executive officers of General Motors Corporation is set forth below. Unless otherwise specified, the business address of each person listed below is 100 Renaissance Center, Detroit, Michigan 48243-7301.
NAME AND BUSINESS POSITION WITH GM PRINCIPAL OCCUPATION, IF ADDRESS OTHER THAN AS EXECUTIVE OFFICER OF GM Percy N. Barnevik Director Chairman, ABB Asea Brown ABB Asea Brown Ltd. Boveri Ltd. Affolternstasse 44 Box 8131 CH-8050 Zurich, Switzerland John H. Bryan Director Chairman and Chief Executive Sara Lee Corporation Officer, Sara Lee Corporation Three First National Plaza, 46th Fl. Chicago, Il 60602-4260 Thomas E. Everhart Director Professor Emeritus and Professor of California Institute of Technology Electrical Engineering and 1200 E. California Blvd. Applied Physics, California Mail Code 202-31 Institute of Technology Pasadena, CA 91125 Charles T. Fischer, III Director John D. Finnegan Executive Vice President; General Motors Acceptance Corporation Chairman and President, 767 Fifth Avenue General Motors Acceptance New York, NY 10153 Corporation George M. C. Fisher Director Chairman of the Board, Eastman Kodak Company Eastman Kodak Company 343 State Street Rochester, NY 14650-0229 Louis R. Hughes Executive Vice President; New Business Strategies Nobuyuki Idei Director President and CEO, Sony Sony Corporation Corporation 6-735 Kitashinagawa Shinagawa-ku Tokyo 141-0001 Page 98 Karen Katen Director President, Pfizer U.S. Pfizer Inc. Pharmaceuticals Group; Executive 235 East 42/nd/ Street V.P., Pfizer Pharmaceuticals New York, NY 10017-5755 Group; J. Michael Losh Executive Vice President; Chief Financial Officer J. Willard Marriott, Jr. Director Chairman and Chief Executive Marriott International, Inc. Officer, Marriott International, Inc. One Marriott Drive Washington, D.C. 20058 Ann D. McLaughlin Director Chairman, The Aspen Institute The Aspen Institute 133 New Hampshire Ave, NW Suite 1070 Washington, D.C. 20036 Harry J. Pearce Vice Chairman of the Board Eckhard Pfeiffer Director President and Chief Executive Compaq Computer Corp. Officer, Compaq Computer 20555 S. H. 249 Corporation Houston, TX 77070 John G. Smale Director The Procter & Gamble Company P.O. Box 599 Mailbox #16 Cincinnati, OH 45201-0599 John F. Smith, Jr. Chairman of the Board and Chief Executive Officer Louis W. Sullivan Director President, Morehouse School of Morehouse School of Medicine Medicine 720 Westview Drive, S.W. Atlanta, GA 30310-1495 G. Richard Wagoner, Jr. President, Chief Operating Officer and Director Dennis Weatherstone Director c/o J. P. Morgan & Co., Incorporated 60 Wall Street, 21/st/ Floor New York, NY 10260 Ronald L. Zarrella Executive Vice President; President, GM North America
Page 99 EX-99.1 2 AGREEMENT AMONG INVESTORS USOL HOLDINGS, INC. AGREEMENT AMONG INVESTORS AGREEMENT AMONG INVESTORS This AGREEMENT ("Agreement") is made and entered into as of the 21st day of July, 1999, by and among USOL HOLDINGS, INC., a Delaware corporation ("USOL"), and each of the parties listed on the signature page hereto which are collectively referred to herein as the "Original Investors"). RECITALS A. The Original Investors own 100% of the issued and outstanding shares of Series A Convertible Preferred Stock and Series B Convertible Preferred Stock of USOL identified opposite their respective names on EXHIBIT A hereto (the "USOL Preferred Stock"). B. USOL, Inc., a Delaware corporation and a wholly-owned subsidiary of USOL ("USOL Sub"), U.S. OnLine Communications, Inc., a Delaware corporation ("OnLine"), USOL and certain stockholders of OnLine have entered into an Asset Purchase Agreement dated as of July 21, 1999, whereby USOL Sub shall purchase substantially all of the assets of OnLine (the "USOL Acquisition"). C. USOL and GMAC Commercial Mortgage Corporation ("GMAC-CM") have entered into an Asset Purchase Agreement dated July 21, 1999, whereby The ResidentClub.com, Inc., a Delaware corporation and a wholly-owned subsidiary of USOL Sub, shall purchase certain of the assets of the Tenant Services Division of GMAC-CM (the "TSD Acquisition"). D. USOL and FirstLink Communications, Inc., an Oregon corporation ("FLCI"), have entered into an Agreement of Merger dated as of July 21, 1999 (the "Merger Agreement"), whereby, subsequent to the USOL Acquisition and the TSD Acquisition and subject to the satisfaction of conditions set forth in the Merger Agreement, USOL shall merge with and into FLCI ("the Merger"). E. Pursuant to the Merger Agreement, each share of USOL Preferred Stock shall be exchanged for one share of Convertible Preferred Stock of FLCI ("FLCI Preferred Stock"). F. The Original Investors believe that it is in their best interests to enter into an agreement pertaining to the voting and transfer of their respective shares of the USOL Preferred Stock, and after the FirstLink Closing the FLCI Preferred Stock, on the terms and conditions set forth below. NOW, THEREFORE, in consideration of the foregoing and the respective covenants, agreements and conditions hereinafter set forth, and intending to be legally bound hereby, the parties hereto agree as follows: USOL HOLDINGS, INC. AGREEMENT AMONG INVESTORS 1. CERTAIN DEFINITIONS 1.1 "Accredited Investor" shall have the meaning ascribed to that term under Rule 501 of Regulation D promulgated under the Securities Act, as amended. 1.2 "Affiliate" shall mean, with respect to any party, any other Person, directly or indirectly, Controlling, Controlled by or under direct or indirect common Control with, such party. To the extent that any Person is a limited liability company, each member of the limited liability company shall be deemed an "Affiliate" of that Person. 1.3 "Affirmative Vote" shall mean the affirmative vote or consent of the Voting Investors holding more than 50% of the Percentage Interests held by all Voting Investors. 1.4 "Chairperson" shall mean the chairperson listed on EXHIBIT B or such other person appointed as chairperson by the Investors pursuant to this Agreement. 1.5 "Company" shall mean (a) USOL at all times prior to the FirstLink Closing, and (b) FLCI upon the FirstLink Closing and at all times thereafter. 1.6 "Company Preferred Stock" shall mean (a) USOL Preferred Stock at all times prior to the FirstLink Closing, and (b) FLCI Preferred Stock upon the FirstLink Closing and at all times thereafter. 1.7 "Control" when used with respect to any Person shall mean the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise. 1.8 "Converted Common Stock" shall mean shares of Company common stock which were converted from Company Preferred Stock in accordance with the Certificates of Designation pertaining to such Company Preferred Stock. 1.9 "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. 1.10 "FirstLink Closing" shall mean the closing of the transactions contemplated by the Merger Agreement. 1.11 "Investor" shall mean each of the owners of Company Preferred Stock who are parties hereto and each of the parties who may hereafter become owners of Company Preferred Stock in accordance with the terms hereof and execute a counterpart of this Agreement. 1.12 "Investor Meeting" shall mean a meeting of the Investors held in accordance with Section 2. EX 99.1 - 2 USOL HOLDINGS, INC. AGREEMENT AMONG INVESTORS 1.13 "Original Voting Investors" shall mean, collectively, GMAC-CM, Aspen Foxtrot Investments, LLC ("Aspen"), Peregrine Equities 1, LLC - Peregrine Equities 10, LLC (as set forth on the signature page, collectively, "Peregrine"), and AGL Investments No. 8 Limited Partnership ("AGL"). 1.14 "Percentage Interest" shall mean, for any Investor, the Investor's percentage interest in Company Preferred Stock held by the Investors, as set forth as a fraction whereby (a) the numerator is equal to the number of shares of Company Preferred Stock owned by the Investor, and (b) the denominator is the number of shares of Company Preferred Stock owned by all Investors. Each Investor's initial Percentage Interest is set forth on EXHIBIT A hereto. 1.15 "Persons" shall mean any individual or entity, and the heirs, executors, administrators, legal representatives, successors, and assigns of such "Person" where the context so permits. 1.16 "Regulated Investor" shall mean any Investor that (i) directly or indirectly, due to its ownership by an entity subject to Regulation Y, is itself subject to the provisions of Regulation Y and (ii) holds shares of Company Preferred Stock or Company common stock. 1.17 "Regulation Y" shall mean Regulation Y of the Board of Governors of the Federal Reserve System, 12 C.F.R. Part 225 (or any successor to such regulation). 1.18 "Regulatory Problem" shall mean, with respect to any Investor, any set of facts, events or circumstances the existence of which could cause such Investor to believe that there is a substantial risk of assertion by a governmental entity (which belief shall be reasonable in light of the prevailing regulatory environment) that such Investor is or would be in violation of any law, regulation, rule or other requirement of any governmental authority (including without limitation, Regulation Y). 1.19 "Securities" shall mean Company Preferred Stock and/or Converted Common Stock, as applicable. 1.20 "Securities Act" shall mean the Securities Act of 1933, as amended. 1.21 "Voting Investor" shall mean an Investor, to the extent that such Investor owns Series A Company Preferred Stock. 1.22 "Voting Percentage Interest" shall mean, for any Investor, the Investor's percentage interest in Series A Company Preferred Stock held by the Investors, as set forth as a fraction whereby (a) the numerator is equal to the number of shares of Series A Company Preferred Stock owned by the Investor, and (b) the denominator is the number of shares of Series A Company Preferred Stock owned by all Investors. Each Investor's initial Voting Percentage Interest is set forth on EXHIBIT A hereto. EX 99.1 - 3 USOL HOLDINGS, INC. AGREEMENT AMONG INVESTORS 2. INVESTOR MEETINGS 2.1 MEETINGS. In advance of any matter requiring the vote or action of the Company's stockholders, the Investors shall hold a meeting where the Voting Investors shall vote among themselves to determine the collective course of action of the Investors. 2.2 QUARTERLY MEETINGS. Without limiting Section 2.1, the Investors shall hold meetings on a quarterly basis, or on a more frequent basis as determined by an Affirmative Vote of the Investors (the "Quarterly Meetings"). 2.3 SPECIAL MEETINGS. Without limiting Section 2.1, a special meeting of the Investors shall be held prior to each special meeting of the stockholders of the Company. Special meetings of the Investors shall also be held as soon as reasonably practical after the Chairperson receives notice that the stockholders of the Company are seeking to take action by written consent. Additionally, special meetings of the Investors, for any valid purpose or purposes, may be called by any Investor or Investors holding at least twenty-five percent (25%) of all Percentage Interests. 2.4 PLACE OF MEETINGS. The Chairperson may designate any place as the place of meeting for any meeting of the Investors. Any representative of an Investor not physically present at a meeting of the Investors may participate via telephone conference. 2.5 NOTICE OF MEETINGS. Written notice stating the place (and, if applicable, all pertinent information regarding the initiation of the telephone conference), day and hour of the meeting and the purpose or purposes for which the meeting is called shall be delivered to each Investor not less than three (3) nor more than thirty (30) days before the date of the meeting, in accordance with the terms of Section 12.3, by or at the direction of the Chairperson or the Investor or Investors calling the meeting. 2.6 MEETING OF ALL INVESTORS. If all of the Investors shall meet at any time and place (or via telephone conference), and consent to the holding of the meeting, such meeting shall be valid without call or notice. 2.7 QUORUM. Investors holding more than fifty percent (50%) of all Voting Percentage Interests, represented in person or by proxy, shall constitute a quorum at any Investor Meeting. In order for an Investor to be present for determining quorum at any Investor Meeting, representatives of the Investors may be present in person or by telephone or other means of telecommunications, provided that all representatives of the Investors can hear each other. 2.8 MANNER OF ACTING. If a quorum is present, an Affirmative Vote of the Investors shall be the act of the Investors. Voting by Voting Investors at Investor Meetings shall be in accordance with and in proportion to their respective Voting Percentage Interests. EX 99.1 - 4 USOL HOLDINGS, INC. AGREEMENT AMONG INVESTORS 2.9 REGULATED INVESTORS. Notwithstanding anything contained in this Agreement to the contrary, insofar as a Regulated Investor owns no Series A Company Preferred Stock, such Regulated Investor shall have no right to vote at the Investor Meetings; except, however, so long as such Regulated Investor is an owner of any Company Preferred Stock, that Regulated Investor shall have the right to appoint a representative to attend and observe Investor Meetings and to receive documents and other information distributed to the Investors. 3. CHAIRPERSON 3.1 NUMBER AND TENURE. There shall be one (1) Chairperson who shall preside over the Investor Meetings. The initial Chairperson's name is set forth on EXHIBIT B attached hereto. The Chairperson shall hold office until his successor shall have been elected or the Chairperson has resigned. The Chairperson shall be responsible, on the Investors' behalf, for (a) assembling such documents and information that are provided by the Company to the Company's directors and stockholders, (b) distributing such documents and information to each of the Investors in a timely manner and (c) assisting the Investors in calling and scheduling Investor Meetings. 3.2 REMOVAL AND VACANCIES. At a meeting called expressly for that purpose, the Chairperson may be removed at any time, with or without cause, by an Affirmative Vote of the Investors. Any vacancy occurring for any reason in the office of Chairperson may be filled by an Affirmative Vote of the Investors. 4. VOTING AGREEMENT 4.1 IN THE EVENT OF AN AFFIRMATIVE VOTE. Except as provided in Section 4.4, if an Affirmative Vote of the Investors is obtained at an Investor Meeting with respect to any matter on which the Investors are entitled to vote as stockholders of the Company Preferred Stock pursuant to the certificate of incorporation or bylaws of the Company or the corporation laws of the state in which the Company is incorporated, each Investor shall, at the applicable meeting of the stockholders of the Company, or in connection with any written consent of the stockholders of the Company, vote (or cause to be voted) all of its Company Preferred Stock in accordance with, and act in a manner consistent with, the desired outcome of the Investors with respect to such matter as determined by the Affirmative Vote ("Desired Outcome"). No Investor shall take any action which would impede, frustrate, prevent or nullify the Desired Outcome. Nothing in this Section 4.1 shall be construed to limit, modify or alter Section 14.5 hereof. 4.2 IN ABSENCE OF AN AFFIRMATIVE VOTE. In the event that an Affirmative Vote of the Investors is not obtained, for any reason, at an Investor Meeting with respect to any matter on which the Investors are entitled to vote as stockholders of the Company Preferred Stock, each Investor may vote (or cause to be voted), at the applicable meeting of the EX 99.1 - 5 USOL HOLDINGS, INC. AGREEMENT AMONG INVESTORS stockholders of the Company or in connection with any written consent, its Company Preferred Stock in any manner it deems fit. 4.3 NO INCONSISTENT ARRANGEMENTS. Each Investor hereby covenants and agrees that, except as contemplated by this Agreement, it shall not (a) grant any proxy, power-of-attorney or other authorization in or with respect to the Company Preferred Stock, (b) deposit the Company Preferred Stock into a voting trust or enter into a voting agreement or arrangement with respect to the Company Preferred Stock or (c) take any other action that would in any way restrict, limit or interfere with its obligations hereunder. 4.4 BOARD REPRESENTATION. (a) The parties hereto acknowledge and agree that each of the Original Voting Investors (or Affiliates, directors and employees of such Original Voting Investor) shall be entitled to (i) designate, on behalf of the Voting Investors, an individual to serve as a director of the Company (each a "Designated Director"), (ii) remove its Designated Director, and (iii) replace its Designated Director in the event of a vacancy created by such Designated Director. Such rights of designation, removal and replacement shall terminate if the Original Voting Investor (or Affiliates, directors and employees of such Investor) owns less than twenty-five percent (25%) of the Securities that such Investor originally purchased from USOL pursuant to that certain Subscription Agreement dated July 21, 1999, by and between the Investor and USOL. Upon termination of such rights of designation, removal and replacement, the director position originally designated by an Original Voting Investor shall become a director position to be filled by the holders of Company common stock. Each of the Original Voting Investors hereby designates the individual identified opposite its name on EXHIBIT C to act as its initial Designated Director. Each Investor entitled to vote its shares of Company Preferred Stock shall vote its shares of Company Preferred Stock at any regular or special meeting of stockholders of the Company or in any written consent executed in lieu of such a meeting of stockholders and shall take all other actions (including using its best efforts to cause the board of directors of the Company to take all actions) necessary to give effect to the agreements contained in this Agreement (including, without limitation, the election of the Designated Directors provided for herein) and to ensure that the certificate of incorporation and bylaws of the Company as in effect at any time hereafter do not conflict in any respect with the provisions of this Agreement. In order to effectuate the provisions of this Agreement, each Investor hereby agrees that when any action or vote is required to be taken by such Investor pursuant to this Agreement, such Investor shall use its best efforts to call, or cause the appropriate officers and directors of the Company to call, a special or annual meeting of stockholders of the Company, as the case may be, or execute or cause to be executed, a consent in writing in lieu of any such meetings pursuant to applicable corporate law. To the extent this Section 4.4(a) does not apply to the election of directors of the Company, Sections 4.1 and 4.2 EX 99.1 - 6 USOL HOLDINGS, INC. AGREEMENT AMONG INVESTORS shall govern the Investors' vote. If any Original Voting Investor transfers less than all of its Company Preferred Stock to one or more Affiliates, directors or employees of such Original Voting Investor, then the right to designate, remove and replace a Designated Director shall be determined, as among the Original Voting Investor and such Affiliates, directors or employees, by agreement of such parties. (b) Notwithstanding anything contained in this Agreement to the contrary, insofar as a Regulated Investor owns no Series A Company Preferred Stock, such Regulated Investor shall have no right to designate, remove or replace any Company directors or otherwise participate in the election of Company directors; except, however, so long as such Regulated Investor is an owner of any Company Preferred Stock, that Regulated Investor shall have the right to appoint a representative to attend and observe Company board meetings and to receive documents and other information distributed to the Company directors. 4.5 OTHER ACTIVITIES OF THE INVESTORS; FIDUCIARY DUTIES. It is understood and accepted that the Investors and their Affiliates have interests in other business ventures which may be in conflict with the activities of the Company and its subsidiaries and that, subject to applicable law, nothing in this Agreement shall limit the current or future business activities of the Investors, whether or not such activities are competitive with those of the Company and its subsidiaries. Nothing in this Agreement, express or implied, shall relieve any officer or director of the Company or any of its subsidiaries, or any Investor, of any fiduciary or other duties or obligations they may have to the Company's stockholders. 5. RESTRICTION ON TRANSFER AND PERMITTED TRANSFERS OF COMPANY PREFERRED STOCK 5.1 RESTRICTIONS ON TRANSFER. Except as provided in Section 5.2 and Section 12, the Investors agree and covenant, for a period of one (1) year after the FirstLink Closing, but in no event later than eighteen (18) months from the date hereof, not to sell, pledge, encumber or otherwise transfer or dispose of, and not to permit to be sold, encumbered, attached, or otherwise disposed of or transferred in any manner, either voluntarily or by operation of law ("Transfer"), all or any portion of the shares of Company Preferred Stock that they own or hereafter acquire in accordance with and subject to the terms of this Agreement. 5.2 PERMITTED TRANSFERS. Notwithstanding the other provisions of this Agreement, but subject to any restrictions that may exist under federal or state securities laws, an Investor may (a) subject to and in accordance with the terms of the Company Preferred Stock, convert within the one (1) year period following the FirstLink Closing up to twenty-five percent (25%) of its shares of Company Preferred Stock, received in the Merger or thereafter acquired, into common stock of the Company, and, to the extent permitted under applicable securities laws, such common stock may be sold publicly, (b) Transfer all or any part of such Investor's Company Preferred Stock to one or more EX 99.1 - 7 USOL HOLDINGS, INC. AGREEMENT AMONG INVESTORS Affiliates, employees or directors of the Investor, (c) Transfer such Investor's Company Preferred Stock in connection with any exchange, reclassification, or other conversion of shares into any cash, securities, or other property pursuant to a merger or consolidation of the Company or any of its subsidiaries with, or any sale or transfer by the Company or any of its subsidiaries of all or substantially all its assets to, any Person, in each case in which holders of common stock and the Company Preferred Stock are treated substantially the same, (d) Transfer such Investor's Company Preferred Stock in connection with any statutory share exchange involving, or any recapitalization of, the Company or any of its subsidiaries in which holders of common stock and the Company Preferred Stock are treated substantially the same ((a) through (d) collectively, "Permitted Transfers"), (e) Transfer all or any part of such Investor's Company Preferred Stock in accordance with the terms of Sections 6 or 7, and (f) subject to compliance with applicable securities laws, Transfer for a period of up to 45 days from the date hereof, an aggregate for all Investors of up to $500,000 of Company Preferred Stock to a limited partner of Barington Capital on the date hereof. 5.3 AMENDMENT TO TRANSFER RESTRICTIONS. The provisions of Section 5.1 and 5.2 may be modified to decrease or eliminate restrictions on Transfer by an Affirmative Vote of the Investors, provided that all Transfer restrictions and all Permitted Transfers, as modified, shall apply to each Investor equally, on a pro rata basis based upon their respective Percentage Interests. 6. TAG-ALONG RIGHTS (a) Other than in connection with a Permitted Transfer or a transfer pursuant to an effective registration statement or pursuant to Rule 144 under the Securities Act or transfers under Section 7, if at any time, any Investor (the "Selling Investor") desires to sell, transfer or otherwise dispose of any Securities, the Selling Investor shall first be required, prior to completing such sale, to give written notice ("Notice of Transfer") to the remaining Investors of its intent to transfer the Securities, which notice shall contain an offer to sell such Securities, the proposed sale price for the Securities and the number of Securities which the Selling Investor proposes to transfer and any other material terms and conditions of the proposed transfer. The date on which such notice is sent to the other Investors is referred to hereinafter as the "Notice Date". Each of the remaining Investors shall have fifteen (15) days following the Notice Date to notify the Selling Investor in writing ("Notice of Acceptance") of its acceptance of such offer to purchase any or all of such Securities, on the material terms and conditions set forth in the Notice of Transfer and at a per-share price set forth in the Notice of Transfer. The Selling Investor shall not be obligated to sell any shares of Securities to other Investors hereunder unless one or more of the Investors purchases all, but not less than all, of the Securities subject to the Notice of Transfer. The closing for the transaction set forth above shall take place no later than 30 days from the Notice Date. If the Selling Investor does not receive a Notice of Acceptance from an Investor within EX 99.1 - 8 USOL HOLDINGS, INC. AGREEMENT AMONG INVESTORS fifteen (15) days after the Notice Date, such Investor shall be deemed to have declined to purchase such shares of Securities. In the event Investors deliver Notices of Acceptance electing to purchase Securities in excess of the Securities subject to the Notice of Transfer, the accepting Investors shall have the right to purchase such shares on a Pro Rata basis. (b) In the event that the remaining Investors collectively do not elect to purchase all of the Securities being offered by the Selling Investor pursuant to Section 6(a), the Selling Investor may transfer all of such Securities to any third parties at not less than the sale price and upon the other terms and conditions set forth in the Notice of Transfer; PROVIDED, HOWEVER, that if the Selling Investor does not complete the contemplated sale within one hundred twenty (120) days of the Notice Date, the provisions of this Section 6(a) shall again apply. As a part of the Notice of Transfer, prior to selling the shares of Securities to any such third party, the Selling Investor shall also be required to offer to each remaining Investor the opportunity to sell any, or all, of its shares of Securities (subject to Section 6(d)) to the same party or parties upon the same terms and conditions as the Selling Investor is selling; PROVIDED, that, if the consideration to be received by the Selling Investor includes any restricted securities, only Investors who have certified to the reasonable satisfaction of the Selling Investor that they are Accredited Investors shall be entitled to participate in such sale, unless the transferee consents otherwise (which consent shall not be unreasonably withheld or delayed). If, within thirty (30) days of receiving the Notice of Transfer from the Selling Investor, any of the remaining Investors elect, by written notice to the Selling Investor, to join the Selling Investor and sell all or any part of their respective shares of Securities, the Selling Investor shall be required to consummate the sale of their Securities and the Securities of the other Investors so electing to join in such sale on the same terms and conditions or, in the alternative, not to sell any of their Securities. The Selling Investor shall, however, use reasonable efforts to persuade the proposed transferee to purchase, from all of the Investors electing to join in such sale pursuant to this Section 6(b), all of the shares of Securities that such Investors desire to sell on the applicable terms and conditions. (c) The term "Pro Rata" as used in this Section 6 shall be determined as follows: (i). To the extent that the applicable sale involves Company Preferred Stock, the Investors' "Pro Rata" number of shares shall be determined based on the applicable Investors' respective percentage ownership of the then issued and outstanding Company Preferred Stock held by all Investors. (ii). To the extent that the applicable sale involves Converted Common Stock, the Investors' "Pro Rata" number of shares shall be determined based on the applicable Investors' respective percentage ownership of the then- EX 99.1 - 9 USOL HOLDINGS, INC. AGREEMENT AMONG INVESTORS issued and outstanding number of Converted Common Stock held by all Investors. (d) In the event the third-party transferee declines to acquire all of the shares of Securities being offered by the Investors in accordance with Section 6(b), the number of shares each Investor may sell (as set forth in Section 6(b)) shall be reduced on a Pro Rata basis. (e) In the event of a sale of any Securities to a third party, made in accordance with this Section 6: (i). No Investor shall receive any fees or compensation from the transferee or the transferee's Affiliates (other than reasonable and customary fees or compensation for actual services rendered) unless each Investor electing to join in the sale receives such fees or compensation on a pro rata basis, based on the number of shares of Securities such Investor sells to the transferee; (ii). No Investor shall be required to make any representations or warranties in connection with such sale other than representations and warranties as to (A) such Investor's ownership of its Securities to be transferred free and clear of all liens, claims and encumbrances, (B) such Investor's power and authority to effect such transfer, and (C) such matters pertaining to compliance with applicable securities laws as the transferee may reasonably require; and (iii). Any agreement of indemnity for the breach of any of the representations or warranties made in connection with such sale shall provide that: (A) such indemnity is several (and not joint and several), and (B) indemnity payments to be made by each Investor shall be limited to the Investor's pro rata share of the claim or the consideration the Investor received in connection with the sale, whichever is less. 7. DRAG-ALONG RIGHTS (a) Other than in connection with a Permitted Transfer or a transfer pursuant to an effective registration statement or pursuant to Rule 144 under the Securities Act, if at any time, Investors (the "Transferring Investors") holding a majority of the Securities, calculated on a fully-converted basis, desire to sell, transfer or otherwise dispose of all or any part of their Securities which would result in (i) the sale of, in the aggregate, at least twenty percent (20%) of the voting capital stock of the Company issued and outstanding on the date of such sale (determined as if all of the issued and outstanding Company Preferred Stock were converted into Converted Common Stock), and (ii) the person or group acquiring EX 99.1 - 10 USOL HOLDINGS, INC. AGREEMENT AMONG INVESTORS the stock will become the beneficial owner (as defined in Rule 13(d)(3) of the Exchange Act) of a greater percentage of voting capital stock of the Company, determined on a fully-converted basis, than any other person or group, each of the other Investors shall, at the Transferring Investors' discretion and subject to this Section 7, be required to sell all, but not less than all, of their respective shares of Securities to the same party or parties and upon the same terms and conditions as the Transferring Investor. The Transferring Investors shall give at least thirty (30) days written notice of such transaction to such other Investors. At the closing of such sale, each Investor shall deliver certificates or other instruments representing the Securities and other securities, if any, to be sold by such Investor, duly endorsed for transfer, with the signature guaranteed, to the purchaser against payment of the appropriate purchase price. (b) In the event of a sale of any Securities made in accordance with this Section 7: (i). No Investor shall receive any fees or compensation from the transferee or the transferee's Affiliates (other than reasonable and customary fees or compensation for actual services rendered) unless each Investor electing to join in the sale receives such fees or compensation on a pro rata basis, based on the number of shares of Securities such Investor sells to the transferee; (ii). No Investor shall be required to make any representations or warranties in connection with such sale other than representations and warranties as to (A) such Investor's ownership of its Securities or other securities to be transferred free and clear of all liens, claims and encumbrances, (B) such Investor's power and authority to effect such transfer, and (C) such matters pertaining to compliance with applicable securities laws as the transferee may reasonably require; (iii). Any agreement of indemnity for the breach of any of the representations or warranties made in connection with such sale shall provide that: (A) such indemnity is several (and not joint and several), and (B) indemnity payments to be made by each Investor shall be limited to the Investor's pro rata share of the claim or the consideration the Investor received in connection with the sale, whichever is less; (iv). No Regulated Investor shall be required to receive consideration in connection with such sale that would cause a Regulatory Problem; and (v). One hundred percent (100%) of the consideration received by the Investors in connection with such sale shall consist of cash and/or publicly traded securities. EX 99.1 - 11 USOL HOLDINGS, INC. AGREEMENT AMONG INVESTORS 8. ENDORSEMENT ON COMPANY PREFERRED STOCK CERTIFICATES All certificates for the Company Preferred Stock owned by the Investors shall be endorsed on the face thereof with a legend reading substantially as follows: "THE VOTING RIGHTS AND THE SALE, ASSIGNMENT, TRANSFER, PLEDGE, OR ANY OTHER DISPOSITION OF THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED BY, AND SUBJECT TO, THE TERMS AND PROVISIONS OF AN AGREEMENT AMONG INVESTORS, DATED AS OF JULY 21, 1999. BY ACCEPTANCE OF THIS CERTIFICATE THE HOLDER HEREOF AGREES TO BE BOUND BY THE TERMS OF SAID AGREEMENT AND ALL AMENDMENTS OR SUPPLEMENTS THERETO." 9. TRANSFEREES SUBJECT TO AGREEMENT Shares of Company Preferred Stock transferred under any of the provisions of this Agreement to any Person who is not a party to this Agreement shall be subject to all of the terms and conditions of this Agreement and as a condition to such Transfer, such Person shall execute a counterpart of this Agreement, which shall be deemed a supplement to this Agreement. Upon the execution of such counterpart, such Person shall become a party to this Agreement and shall be bound hereby, together with all of the then parties to this Agreement as though such Person were an original party hereto. 10. SPECIFIC PERFORMANCE The parties hereby declare that it is impossible to measure in money the damages which would accrue to any party hereto by reason of the failure to perform any of the obligations under this Agreement, and in that event, in addition to other remedies provided by applicable law, the non-breaching parties shall be entitled to immediate issuance of a temporary restraining order or preliminary injunction enforcing this Agreement. 11. REPORTING REQUIREMENTS In the event that any party hereto is subject to the reporting requirements of Section 13(d) of the Exchange Act, as amended (a) such party shall fully comply with said requirements in a timely manner, (b) all parties hereto shall cooperate in filing and amending all required reports to the extent required by law and (c) all parties hereto shall promptly notify all other parties hereto of any change in such party's ownership interest or beneficial ownership interest in the Company. EX 99.1 - 12 USOL HOLDINGS, INC. AGREEMENT AMONG INVESTORS 12. REGULATORY PROBLEM Notwithstanding any other provision of this Agreement to the contrary, in the event a Regulated Investor or any of its Affiliates shall determine that if the Regulated Investor or such Affiliate, shall continue to hold some or all of the shares of the Company Preferred Stock or any other securities of the Company held by it, there is a material risk that such ownership will result in a Regulatory Problem or the cost of continuing to hold such securities has, in the reasonable judgment of the Regulated Investor or such Affiliate, significantly increased, the Regulated Investor or such Affiliate, may sell, exchange or otherwise dispose of such securities, in a prompt and orderly manner and any periods of prior notice set forth in this Agreement shall be reduced to the extent necessary to avoid any Regulatory Problem associated with such notice period. In connection with the foregoing sentence, if requested by the Regulated Investor, the Company shall cooperate with the Regulated Investor or such Affiliate in (a) disposing of such securities to a third party or (b) exchanging all or any portion of such securities on a share-for-share basis for shares of a non-voting security of the Company (such non-voting security to be identical in all respects to such voting securities or other securities, except that they shall be non-voting and shall be convertible or exercisable into voting securities on such conditions as are requested by the Regulated Investor in light of the regulatory considerations prevailing). Without limiting the foregoing, at the request of the Regulated Investor or such Affiliate, the Company shall provide (and authorize the Regulated Investor or such Affiliate, to provide) financial and other information concerning the Company to any prospective purchaser of such securities owned by the Regulated Investor or such Affiliate, and shall amend this Agreement, the certificate of incorporation of the Company, the by-laws of the Company, and any related agreements and instruments and shall take such additional actions in order to effectuate and reflect the foregoing. The Company shall not be required to provide any such information unless the recipient thereof signs a confidentiality agreement reasonably satisfactory to the Company. This Section shall survive the termination of this Agreement, so long as the Regulated Investor owns any Securities. 13. TERMINATION This Agreement shall terminate (a) upon the written agreement of the parties hereto, or (b) in the event that the Investors, in the aggregate, hold on a fully-diluted basis, less than twenty percent (20%) of the issued and outstanding shares of Company common stock. 14. MISCELLANEOUS 14.1 COMMON STOCK. Unless otherwise provided herein, this Agreement shall apply only to the Company Preferred Stock. Unless otherwise provided herein, nothing in this Agreement shall be construed to limit, alter or otherwise affect the rights or privileges of any Investor with respect to any shares of common stock of the Company held by the Investor, including but not limited to an Investor's right to sell, pledge, transfer or EX 99.1 - 13 USOL HOLDINGS, INC. AGREEMENT AMONG INVESTORS otherwise encumber the shares of common stock and to vote the shares of common stock in such manner as such Investor deems appropriate. 14.2 ASSIGNMENT; PARTIES IN INTEREST. (a) ASSIGNMENT. Except as expressly provided herein, the rights and obligations of a party hereunder may not be assigned, transferred or encumbered without the prior written consent of the other parties. (b) PARTIES IN INTEREST. This Agreement shall be binding upon, inure to the benefit of, and be enforceable by the respective successors and permitted assigns of the parties hereto. Nothing contained herein shall be deemed to confer upon any other Person any right or remedy under or by reason of this Agreement. 14.3 NOTICES. Any notice or other communication required or which may be given hereunder shall be in writing and either delivered personally to the addressee, by facsimile to the addressee or mailed, certified or registered mail, postage prepaid, and shall be deemed given when so delivered personally, sent by facsimile, or if mailed, five days after the date of mailing as follows: if to USOL: USOL Holdings, Inc. 10300 Metric Boulevard Austin, Texas 78758 Attention: Robert Solomon with a copy to: Jenkens & Gilchrist, P.C. 600 Congress Avenue Suite 2200 Austin, Texas 78701 Attention: Roland Cook if to AGL: Amstar Group, Inc. 1050 17th Street Suite 1220 Denver, Colorado 80265 Attention: David Agnew Fax: (303) 534-6713 EX 99.1 - 14 USOL HOLDINGS, INC. AGREEMENT AMONG INVESTORS with a copy to: Weil, Gotshal & Manges LLP 100 Crescent Court Suite 1300 Dallas, Texas 75201 Attention: Glenn D. West Fax: (714) 746-7777 if to GMAC-CM: GMAC Commercial Mortgage Corporation 650 Dresher Road Horsham, Pennsylvania 19044 Attention: President Fax: (215) 328-1796 with a copy to: General Motors Legal Staff New Center One Building 3031 West Grand Boulevard Detroit, Michigan 48232 Attention: Mortgage Group General Counsel Fax: (313) 974-0685 and, with a copy to: Newman & Associates, Inc. 904 Manhattan Avenue, Suite 2 Manhattan Beach, California Attention: Mark Sampson Fax: (310) 798-6167 if to Aspen: Aspen Foxtrot Investments, LLC c/o Aspen Enterprises, Ltd. 2757 44th Street Suite 306 Grand Rapids, Michigan 49509 Attention: Ronald A. House Fax: (616) 878-5605 with a copy to: Warner Norcross & Judd 900 Old Kent Bank Building 111 Lyon Street, NW Grand Rapids, Michigan 49503 Attention: Tim Horner Fax: (616) 752-2500 EX 99.1 - 15 USOL HOLDINGS, INC. AGREEMENT AMONG INVESTORS if to GACC: Deutsche Bank Securities 31 West 52nd Street New York, New York 10019 Attention: John Storck Fax: (212) 469-3713 with a copy to: White & Case 1155 Avenue of the Americas New York, New York 10036 Attention: Dan Latham Fax: (212) 354-8113 if to Paribas: Paribas North America, Inc. 787 7th Avenue New York, New York, 10019 Attention: Jeffrey Youle Fax: (212) 841-2369 with a copy to: White & Case 1155 Avenue of the Americas New York, New York, 10036 Attention: John Reiss Fax: (212) 354-8113 if to Peregrine: Peregrine Capital, Inc. Boardwalk Plaza 9725 SW Beaverton Hillsdale Hwy. Suite 350 Beaverton, Oregon 97005-3366 Attention: Roy Rose Fax: (503) 350-0672 EX 99.1 - 16 USOL HOLDINGS, INC. AGREEMENT AMONG INVESTORS with a copy to: Peregrine Capital, Inc. Boardwalk Plaza 9725 SW Beaverton Hillsdale Hwy. Suite 350 Beaverton, Oregon 97005-3366 Attention: Allan A. Fulsher Fax: (503) 350-0672 if to any other Original Investor: To the address for such Original Investor set forth on the books and records of USOL 14.4 LAW GOVERNING AGREEMENT. This Agreement shall be construed and interpreted according to the internal laws of the State of Delaware, excluding any choice of law rules that may direct the application of the laws of another jurisdiction. 14.5 AMENDMENT AND MODIFICATION. Except as provided in Section 5.3, this Agreement may not be amended or modified except in a writing signed by all of the parties hereto. 14.6 COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement shall become binding when all counterparts taken together shall have been executed and delivered by the parties. A telecopied facsimile of an executed counterpart of the Agreement shall be sufficient to endorse the binding agreement of each party to the terms hereof. However, each party agrees to return to the other parties an original, duly executed counterpart of this Agreement promptly after delivery of a telecopied facsimile thereof. 14.7 HEADINGS. The headings in this Agreement are inserted for convenience only and shall not constitute a part hereof. 14.8 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement among the parties hereto relating to the subject matter hereof and supersedes all prior understandings, agreements, or representations by or among the parties, written or oral, related hereto. EX 99.1 - 17 USOL HOLDINGS, INC. AGREEMENT AMONG INVESTORS IN WITNESS WHEREOF, the parties hereto have caused their signatures, or the signatures of their duly authorized representatives, to be set forth below on the day and year first above written. USOL HOLDINGS, INC. By: /S/ ROBERT SOLOMON ----------------------------------- Name: Robert Solomon Title: President INVESTORS: AGL INVESTMENTS NO. 8 LIMITED PARTNERSHIP By: AGLP NO. 8 LIMITED PARTNERSHIP, a Colorado partnership, Its General Partner By: AGLP NO. 8, a Colorado partnership, Its General Partner By: /S/ DAVID B. AGNEW ----------------------------------- Name: David B. Agnew Title: President ASPEN FOXTROT INVESTMENTS, LLC By: ASPEN ENTERPRISES, LTD., Its Manager By: /S/ RONALD A. HOUSE ----------------------------------- Name: Ronald A. House Title: Vice President and Chief Operating Officer EX 99.1 - 18 USOL HOLDINGS, INC. AGREEMENT AMONG INVESTORS GERMAN AMERICAN CAPITAL CORPORATION By: /S/ JOHN C. CIPRIANI ----------------------------------- Name: John C. Cipriani Title: Vice President GERMAN AMERICAN CAPITAL CORPORATION By: /S/ THOMAS MENDOZA ----------------------------------- Name: Thomas C. Mendoza Title: Vice President GMAC COMMERCIAL MORTGAGE CORPORATION By: /S/ ROBERT D. FELLER ----------------------------------- Name: Robert D. Feller Title: Executive Vice President PARIBAS NORTH AMERICA, INC. By: /S/ JOHN G. MARTINEZ ----------------------------------- Name: John G. Martinez Title: Financial Controller PEREGRINE EQUITIES 1, L.L.C. By: /S/ ROY ROSE ----------------------------------- Name: Roy Rose Title: President PEREGRINE EQUITIES 2, L.L.C. By: /S/ ROY ROSE ----------------------------------- Name: Roy Rose Title: President EX 99.1 - 19 USOL HOLDINGS, INC. AGREEMENT AMONG INVESTORS PEREGRINE EQUITIES 3, L.L.C. By: /S/ ROY ROSE ----------------------------------- Name: Roy Rose Title: President PEREGRINE EQUITIES 4, L.L.C. By: /S/ ROY ROSE ----------------------------------- Name: Roy Rose Title: President PEREGRINE EQUITIES 5, L.L.C. By: /S/ ROY ROSE ----------------------------------- Name: Roy Rose Title: President PEREGRINE EQUITIES 6, L.L.C. By: /S/ ROY ROSE ----------------------------------- Name: Roy Rose Title: President EX 99.1 - 20 USOL HOLDINGS, INC. AGREEMENT AMONG INVESTORS PEREGRINE EQUITIES 7, L.L.C. By: /S/ ROY ROSE ----------------------------------- Name: Roy Rose Title: President PEREGRINE EQUITIES 8, L.L.C. By: /S/ ROY ROSE ----------------------------------- Name: Roy Rose Title: President PEREGRINE EQUITIES 9, L.L.C. By: /S/ ROY ROSE ----------------------------------- Name: Roy Rose Title: President PEREGRINE EQUITIES 10, L.L.C. By: /S/ ROY ROSE ----------------------------------- Name: Roy Rose Title: President ----------------------------------- Dennis Dautel /S/ HENRY GELLIS ----------------------------------- Henry Gellis EX 99.1 - 21 USOL HOLDINGS, INC. AGREEMENT AMONG INVESTORS /S/ HENRY GELLIS ----------------------------------- Mussie Gellis By: Henry Gellis, POA /S/ DOROTHY COHEN ----------------------------------- Dorothy Cohen /S/ ROBERT STARK ----------------------------------- Stark Investments L.P. By: Robert Stark, General Partner /S/ ANGELA JOY COPPOLA ----------------------------------- Angela Joy Coppola /S/ JANET FRANKLIN ----------------------------------- Janet Franklin /S/ COURTNEY CAMPBELL ----------------------------------- Courtney Campbell /S/ ALAN ALEXANDER ----------------------------------- Peter Guber By: Alan Alexander, Attorney-in- Fact /S/ W. ROBERT RAMSDELL ----------------------------------- Ramsdell Family Trust By: W. Robert Ramsdell, Trustee /S/ DAVID ROCKER ----------------------------------- David Rocker /S/ KAYLEN SILVERBERG ----------------------------------- Kaylen Silverberg EX 99.1 - 22 USOL HOLDINGS, INC. AGREEMENT AMONG INVESTORS /S/ LEON HOROWITZ ----------------------------------- Leon Horowitz /S/ DAIN RAUSCHER ----------------------------------- Brent Stahl By: Dain Rauscher, Custodian FBO Brent Stahl S.E.P. /S/ RON BARSHOP ----------------------------------- Ron Barshop /S/ TERRY JONES ----------------------------------- Terry Jones for FMH, LLP /S/ IRV SOLOMON ----------------------------------- Irv Solomon /S/ DAN BAUER ----------------------------------- Dan Bauer /S/ SCOTT MAENTZ ----------------------------------- Rosewood Partners L.P. By: Scott Maentz /S/ G. TYLER RUNNELS ----------------------------------- G. Tyler Runnels EX 99.1 - 23 EXHIBIT A INVESTORS AND PERCENTAGE INTERESTS
Voting Percentage Percentage Investor Interest Interest -------- ---------- ---------- GMAC Commercial Mortgage Corporation 26.95% 30.11% AGL Investment No. 8 L.P. (Amstar) 26.95% 30.11% Aspen Foxtrot Investments, LLC 12.16% 13.58% German American Capital Corporation 4.39% 4.90% Peregrine Equities 1, L.L.C. 1.35% 1.51% Peregrine Equities 2, L.L.C. 1.35% 1.51% Peregrine Equities 3, L.L.C. 1.35% 1.51% Peregrine Equities 4, L.L.C. 1.35% 1.51% Peregrine Equities 5, L.L.C. 1.35% 1.51% Peregrine Equities 6, L.L.C. 1.35% 1.51% Peregrine Equities 7, L.L.C. 1.35% 1.51% Peregrine Equities 8, L.L.C. 1.35% 1.51% Peregrine Equities 9, L.L.C. 1.35% 1.51% Peregrine Equities 10, L.L.C. 1.35% 1.51%
Voting Percentage Percentage Investor Interest Interest -------- ---------- ---------- Ron Barshop 0.07% 0.08% Dan Bauer 0.67% 0.75% Courtney Campbell 0.03% 0.03% Dorothy Cohen 0.14% 0.15% Angela Joy Coppola 0.07% 0.08% Dennis Dautel 0.95% 1.06% Janet Franklin 0.03% 0.03% Henry Gellis 0.14% 0.15% Mussie Gellis 0.14% 0.15% Peter Guber 0.14% 0.15% Leon Horowitz 0.08% 0.09% First Madison Holidays, LLP 0.05% 0.06% Ramsdell Family Trust 0.54% 0.60% David Rocker 0.81% 0.91% Rosewood Partners, L.P. (Scott Maentz) 0.67% 0.75% Kaylen Silverberg 0.24% 0.27% Irv Solomon 0.05% 0.06% Dain Rauscher Custodian FBO Brent Stahl S.E.P. 0.07% 0.08% Stark Investments, L.P. 0.54% 0.60% G. Tyler Runnels 0.14% 0.15% German American Capital Corporation 5.07% N/A Paribas North America, Inc. 5.41% N/A
EX 99.1A - 2 EXHIBIT B INITIAL CHAIRPERSON David Agnew EXHIBIT C INITIAL DESIGNATED DIRECTORS
INITIAL DESIGNATED INVESTOR DIRECTOR -------- ---------- AGL Investments No. 8 Limited Partnership David Agnew Aspen Foxtrot Investments, LLC Ronald Piasecki GMAC Commercial Mortgage Corporation Robert D. Feller Peregrine Equities 1-10,L.L.C. Roy Rose
EX-99.2 3 CERTIFICATE OF DESIGNATION OF SERIES A CONVERTIBLE CERTIFICATE OF DESIGNATIONS, PREFERENCES, LIMITATIONS, AND RELATIVE RIGHTS OF SERIES A CONVERTIBLE PREFERRED STOCK OF USOL HOLDINGS, INC. (F/K/A FIRSTLINK COMMUNICATIONS, INC.) 1. DESIGNATION. There is hereby provided for a single series of convertible preferred stock, the designation of which shall be the Series A Convertible Preferred Stock (hereinafter the "Series A Preferred Stock") and the number of authorized shares constituting the Series A Preferred Stock is 1,700,000. The stated value of each share of Series A Preferred Stock is twenty-five dollars ($25.00). The number of authorized shares of Series A Preferred Stock may be reduced or increased by a further resolution duly adopted by the Board of Directors of the Corporation and by the filing of an amendment to the Corporation's Articles of Incorporation pursuant to the provisions of the Oregon Business Corporation Act stating that such reduction or increase has been so authorized. 2. VOTING. Except as required by law, the shares of the Series A Preferred Stock shall not have any voting powers, either general or special, except as provided in this Section 2: (a) Subject to Section 2(b), holders of Series A Preferred Stock shall be entitled to vote on any matter on which the holders of the Corporation's common stock (hereafter, the "Common Stock") are entitled to vote (except for the election of directors which is governed by Section 2(b)) and the votes of the Series A Preferred Stock shall be counted together with the holders of the Common Stock as a single class. The Series A Preferred Stock shall vote with the whole number of shares of Common Stock as if the Series A Preferred Stock had been fully converted pursuant to Section 4 hereof three (3) business days prior to the date of the vote. Any corporate action that may require a vote of the holders of the Series A Preferred Stock as a class shall be deemed to have been approved by that class upon the affirmative vote by the holders of a majority of the issued and outstanding Series A Preferred Stock unless a higher voting requirement is imposed by the Oregon Business Corporation Act. (b) Prior to each annual meeting of stockholders, each of AGL Investments No. 8 Limited Partnership, a Colorado limited partnership ("Amstar"), Aspen Foxtrot Investments, LLC ("Aspen"), GMAC Commercial Mortgage Corporation ("GMACCMC") and Peregrine Capital, Inc. ("Peregrine") shall individually have the right to nominate one of the seven directors (the "Preferred Directors"). The Preferred Directors shall be elected by the holders of the Series A Preferred Stock (which for the purposes of this paragraph shall include Common Stock issuable upon conversion of the Series A Preferred Stock) voting together as a class and separately from all other classes and series. If at any time the number of directors on the Board is increased or decreased, the holders of the Series A Preferred Stock shall have the right to nominate and elect a majority of such number. Unless otherwise required by law, in case of any vacancy occurring among the Preferred Directors, the holder nominating such Preferred Director may appoint a successor to hold office for the unexpired term of the Preferred Director whose place shall be vacant. If any of Amstar, Aspen, GMACCMC or Peregrine or any of their respective affiliates, shareholders, partners, or members to whom Series A Preferred Stock may be transferred cease to own Series A Preferred Stock or Common Stock equal in the aggregate to 25% of the number of shares of Series A Preferred Stock, on a fully converted basis, that such person holds as of the effective date of this Certificate, then such person shall no longer have the right to nominate a Preferred Director and the number of Preferred Directors shall be reduced accordingly and the number of directors to be elected by the holders of Common Stock shall be increased by the same number. (c) Subject to Section 10 herein, the Board of Directors without the vote of the holders of shares of the Series A Preferred Stock may authorize and issue additional shares of Common Stock and preferred stock ranking junior as to dividends and upon liquidation to the shares of the Series A Preferred Stock. No class or series of equity securities of the Corporation may rank senior to or equal in right with the Series A Preferred Stock as to dividends or upon liquidation except for the Series B Convertible Preferred Stock (the "Series B Preferred Stock" and, together with the Series A Preferred Stock, the "Preferred Stock") which shall be equal in right. (d) Notwithstanding anything to the contrary in Section 554(3) of the Oregon Business Corporation Act, the holders of the Series A Preferred Stock shall be entitled to dissenters' rights pursuant to, and to the fullest extent permitted by, Section 554(1) of said Oregon Business Corporation Act in the event of a merger or consolidation in which the Corporation is a constituent corporation or the sale of substantially all of the assets of the Corporation. 3. DIVIDENDS. (a) RATE. Holders of Series A Preferred Stock shall be entitled to receive, out of any funds of the Corporation legally available for that purpose, cumulative dividends from the date of issuance at the rate of 12% per year of the Liquidation Preference (as defined in Section 5(a)below), for each calendar quarter (pro-rated for partial quarters, based upon a 90 day quarter of three 30 day months) (each such calendar quarter, a "Dividend Period") payable in arrears in cash, or, at the option of the Corporation, in shares of its Common Stock (with cash in lieu of fractional shares) based on the determination of Fair Value (defined in Section 4(e)(viii) below), on the last day of December, March, June and September of each year, commencing December 31, 1999 (each such date being hereinafter individually referred to as the "Dividend Payment Date" and collectively as the "Dividend Payment Dates") PROVIDED, that no Regulated Stockholder (as defined in Section 4(a)(iv) below) shall be required to receive any shares of Common Stock pursuant to this Section 3(a) to the extent that immediately prior to payment of such dividend, or as a result of such dividend, the number of shares of Common Stock which constitute Restricted Stock (as defined in Section 4(a)(iv) below) held by all holders thereof would exceed the number of shares of Common Stock which such Regulated Stockholder reasonably determines it and its Affiliates (defined in Section 4(a)(iv) below) may own, control or have the power to vote under any law, regulation, rule or other requirement of any governmental authority at the time applicable to such Regulated Stockholder or its Affiliates and such Regulated Stockholder shall be entitled to receive cash in lieu of such dividend payable in shares of Common Stock. Should the Corporation in its discretion determine to pay said dividends in shares of Common Stock for any Dividend Period, then all such accrued and unpaid dividends shall be paid in shares of Common Stock at the first to occur of the next Dividend Payment Date or the time of conversion of the Series A Preferred Stock, such that upon such Dividend Payment date or such conversion of the Series A Preferred Stock by the holder thereof, the Corporation shall pay all accrued and unpaid dividends owed for such Dividend Period as of the date of such conversion on all then converted shares. Each such dividend shall be paid to the holders of record of the Series A Preferred Stock as they appear on the books of the Corporation on the record date which shall be not less than 30 days prior to the related Dividend Payment Date. Additional dividends, at an annual rate of 12%, shall accrue in respect of, and compound on, any dividends in arrears and may be payable at any time at the discretion of the Corporation. (b) DIVIDENDS ON COMMON STOCK. No dividends (other than those payable solely in Common Stock) shall be paid with respect to the Common Stock or any series of preferred stock ranking junior to the Series A Preferred Stock and the Series B Preferred Stock, which shall be pari passu with the Series A Preferred Stock with respect to dividends, during any fiscal year of the Corporation unless all due and unpaid dividends and the annual current dividend on the shares of Series A Preferred Stock and the Series B Preferred Stock for the then current and all prior Dividend Periods shall have been declared and paid in cash. If dividends are paid partly in cash and partly in Common Stock with respect to the Common Stock or any series of preferred stock ranking junior to the Series A Preferred Stock and the Series B Preferred Stock, then all due and unpaid dividends and the annual current dividend on the shares of Series A Preferred Stock and the Series B Preferred Stock for the then current Dividend Period and all prior Dividend Periods shall have been declared and paid either in cash or in the same proportion of cash and Common Stock proposed to be paid to holders of Common Stock and any series of preferred stock ranking junior to the Series A Preferred Stock and the Series B Preferred Stock; PROVIDED, that no Regulated Stockholder shall be required to receive any shares of Common Stock pursuant to this Section 3(b) to the extent that immediately prior to payment of such dividend, or as a result of such dividend, the number of shares of Common Stock which constitute Restricted Stock held by all holders thereof would exceed the number of shares of Common Stock with such Regulated Stockholder reasonably determines it and its Affiliates may own, control or have the power or vote under any law, regulation, rule or other requirement of any governmental authority at the time applicable to such Regulated Stockholder or its Affiliates and such Regulated Stockholder shall be entitled to receive cash in lieu of such dividend payable in shares of Common Stock. No shares of Common Stock or any series of preferred stock ranking junior to the Series A Preferred Stock and the Series B Preferred Stock shall be purchased, redeemed or acquired by the Corporation, and no funds shall be paid into or set aside or made available for a sinking fund for the EX 99.2 - 2 purchase, redemption or acquisition thereof except in transactions with employees of the Corporation aggregating not more than $100,000.00 per year. (c) LIMITATION ON AMOUNT OF DIVIDENDS. Holders of shares of the Series A Preferred Stock shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of full dividends for each Dividend Period (including any dividends in arrears as provided herein), as herein provided, on the Series A Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any Dividend Payment or Dividend Payments which may be in arrears. (d) PARITY OF DIVIDEND PAYMENTS. When dividends are not paid in full upon the Series A Preferred Stock and the shares of any other series of capital stock ranking on a parity as to dividends with the Series A Preferred Stock, all dividends declared upon the Series A Preferred Stock and such other series shall be declared pro rata so that the amount of dividends declared per share on the Series A Preferred Stock and such other series of capital stock shall in all cases bear to each other the same ratio that full dividends, for the then-current and all prior Dividend Periods, per share on the Series A Preferred Stock and full dividends, including required or permitted accumulations, if any, on such other series of capital stock, bear to each other. 4. CONVERSION. The holders of the Series A Preferred Stock shall have conversion rights as follows (the "Conversion Rights"): (A) AUTOMATIC CONVERSION; OPTIONAL CONVERSION; CONVERSION PRICE. (i) AUTOMATIC CONVERSION. Beginning July 21, 2001, each share of the Series A Preferred Stock, without any action or payment of additional consideration on the part of the Holder thereof, on the earliest of (1) the closing of a firm commitment public offering after such date pursuant to which the Corporation offers its equity securities for gross proceeds to the Corporation in an amount equal to or greater than $40,000,000, (2) the day that the closing sales price of the Common Stock on a national securities exchange or the Nasdaq Stock Market is equal to or greater than $10.00 per share for 15 consecutive trading days (taking into account any stock split or reverse stock split or any other adjustments to the number of shares of Common Stock outstanding after July 21, 1999, the "Reference Date"), or (3) the seventh anniversary of the Reference Date; provided that if the Common Stock is then trading at more than $2.00 per share, taking into account any stock split or reverse stock split or any other adjustments to the number of shares of Common Stock outstanding after the Reference Date, shall convert automatically as provided in Section 4(j) into fully paid and non-assessable shares of Common Stock (with cash paid in lieu of fractional shares), having the powers, relative participating rights and the qualifications, limitations or restrictions of holders of Common Stock as set forth in the Corporation's Articles of Incorporation and bylaws, at the Conversion Price (as defined below); PROVIDED, that no Regulated Stockholder shall be required to convert any shares of its Series A Preferred Stock into Common Stock pursuant to this Section 4(a) to the extent that immediately prior thereto, or as a result of such conversion, the number of shares of Common Stock which constitute such Restricted Stock held by all holders thereof would exceed the number of shares of Common Stock which such Regulated Stockholder reasonably determines it and its Affiliates may own, control or have the power to vote under any law, regulation, rule or other requirement of any governmental authority at the time applicable to such Regulated Stockholder or its Affiliates. (ii) OPTIONAL CONVERSION. At any time, holders of Series A Preferred Stock may elect to convert, in whole or in part, their Series A Preferred Stock into fully paid and non-assessable shares of Common Stock (with cash paid in lieu of fractional shares) at the Conversion Price by following the procedures set forth in Section 4(j) hereof; PROVIDED, HOWEVER, that Series A Preferred Stock constituting Restricted Stock may not be converted into Common Stock to the extent that immediately prior thereto, or as a result of such conversion, the number of shares of Common Stock which constitute such Restricted Stock held by all holders thereof would exceed the number of shares of Common Stock which such Regulated Stockholder reasonably determines it and its Affiliates may own, control or have the power to vote under any law, regulation, rule or other requirement of any governmental authority at the time applicable to such Regulated Stockholder or its Affiliates; and, PROVIDED, FURTHER, that each holder of Series A Preferred Stock may convert such shares into Common Stock if such holder reasonably believes that such converted shares will be transferred within fifteen (15) days or already have been transferred pursuant to a Conversion Event (defined below) and such holder agrees not to vote any such shares of Common EX 99.2 - 3 Stock prior to such Conversion Event and undertakes to promptly convert such shares back into Series A Preferred Stock if such shares are not transferred pursuant to a Conversion Event. Each Regulated Stockholder may provide for further restrictions upon the conversion of any shares of Restricted Stock by providing the Corporation with signed, written instructions specifying such additional restrictions and legending such shares as to the existence of such restrictions. (iii) CONVERSION PRICE. The "Conversion Price" shall initially be $2.00 per share. The number of shares of Common Stock issuable upon conversion is the Liquidation Preference divided by the then applicable Conversion Price, as adjusted from time to time as provided for in Section 4(e), multiplied by the number of shares of Series A Preferred Stock converted. Notwithstanding any provision of this section 4(a)(iii) to the contrary, each holder of Series A Preferred Stock shall be entitled to convert shares of Series A Preferred Stock in connection with any Conversion Event if such holder reasonably believes that such Conversion Event will be consummated, and a written request for conversion from any holder of Series A Preferred Stock to the Corporation stating such holder's reasonable belief that a Conversion Event shall occur shall be conclusive and shall obligate the Corporation to effect such conversion in a timely manner so as to enable each such holder to participate in such Conversion Event. The Corporation will not cancel the shares of Series A Preferred Stock so converted before the 15th day following such Conversion Event and will reserve such shares until such 15th day for resistance in compliance with the next sentence. If any shares of Series A Preferred Stock are converted into shares of Common Stock in connection with a Conversion Event and such shares of Common Stock are not actually distributed, disposed of or sold pursuant to such Conversion Event, such shares of Common Stock shall be promptly converted back into the same number of shares of Series A Preferred Stock. (iv) DEFINED TERMS. For purposes of this Certificate of Designations, the following terms shall be defined as set forth below: 1. "AFFILIATE" shall mean with respect to any Person, any other person, directly or indirectly controlling, controlled by or under common control with such Person. For the purpose of the above definition, the term "control" (including with correlative meaning, the terms "controlling," "controlled by" and "under common control with"), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or by contract or otherwise. 2. "CONVERSION EVENT" shall mean (a) any public offering or public sale of securities of the Corporation (including a public offering registered under the Securities Act of 1933 and a public sale pursuant to Rule 144 of the Securities and Exchange Commission or any similar rule then in force), (b) any sale of securities of the Corporation to a person or group of persons (within the meaning of the Securities Exchange Act of 1934, as amended (the "1934 Act")) if, prior to such sale, such person or group of persons in the aggregate would own or control securities which possess in the aggregate the ordinary voting power to elect a majority of the Corporation's directors (provided that such sale has been approved by the Corporation's Board of Directors or a committee thereof), (c) any sale of Securities of the Corporation to a person or group of persons (within the meaning of the 1934 Act) if, after such sale, such person or group of persons would not, in the aggregate, own, control or have the right to acquire more than two percent (2%) of the outstanding securities of any class of voting securities of the Corporation, (d) any sale of securities of the Corporation to a person or group of persons (within the meaning of the 1934 Act) if, after such sale, such person or group of persons in the aggregate would own or control securities of the Corporation (excluding any Series A Preferred Stock being converted and disposed of in connection with such Conversion Event) which possess in the aggregate the ordinary voting power to elect a majority of the Corporation's directors, and (e) a merger, consolidation or similar transaction involving the Corporation if, after such transaction (but without taking into account the Restricted Stock converted by the Regulated Holder) a person or group of persons (within the meaning of the 1934 Act) in the aggregate would own or control securities which possess in the aggregate the ordinary voting power to elect a majority of the EX 99.2 - 4 surviving corporation's directors (provided that the transaction has been approved by the Corporation's Board of Directors or a committee thereof). 3. "REGULATED STOCKHOLDER" shall mean any stockholder (i) that, directly or indirectly, due to its ownership by an entity subject to Regulation Y of the Board of Governors of the Federal Reserve System, 12 C.F.R. Part 225 (or any successor to such regulation) ("Regulation Y"), is itself subject to the provisions of Regulation Y and (ii) that holds Preferred Stock or Common Stock of the Corporation. 4. "RESTRICTED STOCK" means, with respect to any Regulated Stockholder, any outstanding shares of Common Stock and/or Series A Preferred Stock and/or Series B Preferred Stock ever held of record by such Regulated Stockholder or its Affiliates, excluding treasury shares; provided, however, that any such shares shall cease to be Restricted Stock when such shares are transferred in a transaction which is a Conversion Event or are acquired by the Corporation or any subsidiary of the Corporation; and PROVIDED, FURTHER that the Corporation shall have no responsibility for determining whether any outstanding shares of Common Stock and/or Series A Preferred Stock constitute Restricted Stock with respect to any particular Regulated Stockholder, but shall instead be entitled to receive, and rely exclusively upon, a written notice provided by such Regulated Stockholder designating such shares as Restricted Stock. (b) ISSUANCE OF SHARES OF COMMON STOCK OR OTHER SECURITIES ON CONVERSION. (i) Pursuant to Section 4(j) herein, the Corporation shall issue, at its expense, and shall deliver to such holder of Series A Preferred Stock ("Holder"), (i) a certificate or certificates for the number of full shares of Common Stock issuable upon the conversion of the Series A Preferred Stock, and (ii) cash in lieu of fractional shares as provided in Section 4(d). (ii) Such conversion shall be deemed to have been effected immediately prior to the close of business on the Conversion Date (as defined in Section 4(j)(iii)), and at such time the rights of the Holder shall cease and the Holder shall be deemed to have become the holder or holders of record of the shares of Common Stock issued upon conversion. (c) NO ADJUSTMENTS FOR DIVIDENDS. No payment or adjustment shall be made by or on behalf of the Corporation on account of any dividends on the Common Stock issued upon such conversion which were declared for payment to holders of Common Stock of record as of a date prior to the Conversion Date. (d) CASH PAYMENT IN LIEU OF FRACTIONAL SHARES. No fractional shares of Common Stock shall be issued upon the conversion of the Series A Preferred Stock. In lieu of any fraction of a share of Common Stock to which the Holder would otherwise be entitled upon conversion of the Series A Preferred Stock, the Corporation shall pay a cash adjustment for such fraction in an amount equal to the same fraction of the Fair Value per share of Common Stock at the close of business on the Conversion Date. (e) ADJUSTMENT OF CONVERSION PRICE OF COMMON STOCK. (i) Except as provided in Section 4(e)(vii), in case, at any time or from time to time after the Reference Date, the Corporation shall issue or sell any shares of any class of common stock for a consideration per share less than the Fair Value (as defined in Section 4(e)(viii) below), then forthwith upon such issue or sale the Conversion Price in effect immediately prior to such issue or sale shall be reduced to a price (calculated to the nearest cent) determined by multiplying the Conversion Price in effect prior to the adjustment by a fraction determined by dividing (A) an amount equal to the sum of (1) the number of shares of Common Stock outstanding immediately prior to such issue or sale multiplied by the Fair Value per share of Common Stock immediately prior to such issue or sale, and (2) the consideration, if any, received by the Corporation upon such issue or sale, by (B) the total number of shares of Common Stock outstanding immediately after such issue or sale multiplied by the Fair Value per share of Common Stock immediately prior to such issue or sale. No adjustment of the Conversion Price, however, shall be made in an amount less than one cent per share, but any lesser adjustment EX 99.2 - 5 shall be carried forward and shall be made at the time of and together with the next subsequent adjustment which, together with any adjustments so carried forward, shall amount to two cents per share or more. (ii) For the purposes of Subsection 4(e)(i) above, the following paragraphs (1) to (6), inclusive, shall also be applicable: (1) In case at any time the Corporation shall grant any rights to subscribe for, or any rights or options or warrants to purchase, Common Stock or any stock or other securities convertible into or exchangeable for Common Stock (such convertible or exchangeable stock or securities being herein called "Convertible Securities"), whether or not such rights or options or the right to convert or exchange any such Convertible Securities are immediately exercisable, and the price per share for which Common Stock is issuable upon the exercise of such rights or options or upon conversion or exchange of such Convertible Securities (determined by dividing (A) the total amount, if any, received or receivable by the Corporation as consideration for the granting of such rights or options or warrants, plus the maximum aggregate amount of additional consideration payable to the Corporation upon the exercise of such rights or options, plus, in the case of any such rights or options or warrants which relate to such Convertible Securities, the maximum aggregate amount of additional consideration, if any, payable upon the issue or sale of such Convertible Securities and upon the conversion or exchange thereof, by (B) the total maximum number of shares of Common Stock issuable upon the exercise of such rights or options or upon the conversion or exchange of all such Convertible Securities issuable upon the exercise of such rights or options) shall be less than the Fair Value in effect immediately prior to the time of the granting of such rights or options or warrants, then the total maximum number of shares of Common Stock issuable upon the exercise of such rights or options or upon conversion or exchange of the total maximum amount of such Convertible Securities issuable upon the exercise of such rights or options shall (as of the date of granting of such rights or options) be deemed to be outstanding and to have been issued for such price per share and the current Conversion Price shall be adjusted as provided in Subsection 4(e)(i) above. Except as provided in Subsection 4(e)(v), no further adjustments of the Conversion Price shall be made upon the actual issue of such Common Stock or of such Convertible Securities upon exercise of such rights or options or upon the actual issue of such Common Stock upon conversion or exchange of such Convertible Securities. Notwithstanding the foregoing, if at any time on or after the Reference Date the Corporation shall grant, issue or sell any options or rights to purchase stock, warrants, securities or other property pro rata to the holders of Common Stock of all classes ("Purchase Rights"), then each Holder shall be entitled (but not obligated) to acquire, in lieu of any other adjustment provided for in this Subsection 4(e) and upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which such Holder could have acquired if it had held the number of shares of Common Stock issuable upon conversion of the Series A Preferred Stock immediately prior to the time or times at which the Corporation granted, issued or sold such Purchase Rights. (2) In case at any time the Corporation shall issue or sell any Convertible Securities, whether or not the rights to exchange or convert thereunder are immediately exercisable, and the price per share for which Common Stock is issuable upon such conversion or exchange (determined by dividing (A) the total amount received or receivable by the Corporation as consideration for the issue or sale of such Convertible Securities, plus the minimum aggregate amount of additional consideration, if any, payable to the Corporation upon the conversion or exchange thereof, by (B) the total maximum number of shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities) shall be less than the Fair Value immediately prior to the time of such issue or sale, then the total maximum number of shares of Common Stock issuable upon conversion or exchange of all such Convertible Securities shall (as of the date of the issue or sale of such Convertible Securities) be deemed to be outstanding and to have been issued for such price per share and the Conversion Price shall be adjusted as provided in Subsection 4(e)(i) above, provided that (x) except as provided in Subsection 4(e)(v), no further adjustments of the Conversion Price shall be made upon the actual issue of such Common Stock upon conversion or exchange of EX 99.2 - 6 such Convertible Securities, and (y) if any such issue or sale of such Convertible Securities is made upon exercise of any rights to subscribe for or to purchase or any option to purchase any such Convertible Securities for which adjustments of the Conversion Price have been or are to be made pursuant to other provisions of Subsection 4(e)(ii), no further adjustment of the Conversion Price shall be made by reason of such issue or sale. (3) With respect to any dividend or other distribution upon any stock of the Corporation payable in Common Stock or Convertible Securities, any Common Stock or Convertible Securities, as the case may be, issuable in payment of such dividend or distribution shall be deemed to have been issued or sold without consideration and the Conversion Price shall be adjusted as provided in Subsection 4(e)(i) above. (4) In case at any time any shares of Common Stock or Convertible Securities or any rights or options to purchase any such Common Stock or Convertible Securities shall be issued or sold for cash, the consideration received therefor shall be deemed to be the amount received by the Corporation therefor, without deduction therefrom of any expenses incurred or any underwriting commissions or concessions or discounts paid or allowed by the Corporation in connection therewith. In case any shares of Common Stock or Convertible Securities or any rights or options to purchase any such Common Stock or Convertible Securities shall be issued or sold for a consideration other than cash, the amount of the consideration other than cash received by the Corporation shall be deemed to be the fair value of such consideration as determined by the Board of Directors of the Corporation in good faith, without deduction therefrom of any expenses incurred or any underwriting commissions or concessions or discounts paid or allowed by the Corporation in connection therewith. In case any shares of Common Stock or Convertible Securities or any rights or options to purchase any such Common Stock or Convertible Securities shall be issued in connection with any merger of another corporation into the Corporation, the amount of consideration therefor shall be deemed to be the fair value of the assets of such merged corporation as determined by the Board of Directors of the Corporation in good faith after deducting therefrom all cash and other consideration (if any) paid by the Corporation in connection with such merger. (5) In case at any time the Corporation shall take a record of the holders of Common Stock for the purpose of entitling them (A) to receive a dividend or other distribution payable in Common Stock or in Convertible Securities, or (B) to subscribe for or purchase Common Stock or Convertible Securities, then such record date shall be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be. (6) The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Corporation or any of its subsidiaries, but the disposition of any such shares shall be considered an issue or sale of Common Stock for the purposes of Subsection 4(e). (iii) In the event that the Corporation shall make any distribution of its assets upon or with respect to its Common Stock, as a liquidating or partial liquidating dividend, or other than as a dividend payable out of current earnings or any surplus legally available for dividends under the laws of the state of incorporation of the Corporation, the Holder shall, if the Conversion Date is after the record date for such distribution or, in the absence of a record date, after the date of such distribution, receive, in addition to the shares subscribed for, the amount of such assets (or, at the option of the Corporation, a sum equal to the fair value thereof at the time of distribution as determined by the Board of Directors of the Corporation in good faith) which would have been distributed to such Holder if the Conversion Date had occurred immediately prior to the record date for such distribution or, in the absence of a record date, immediately prior to the date of such distribution. (iv) In case at any time the Corporation shall subdivide its outstanding shares of Common Stock into a greater number of shares or upon any issuance by the Corporation of a greater number of shares of Common Stock in a pro rata exchange for all of its outstanding shares of Common Stock, the Conversion EX 99.2 - 7 Price in effect immediately prior to such subdivision shall be proportionately reduced and conversely, in case the outstanding shares of Common Stock of the Corporation shall be combined into a smaller number of shares or upon any issuance by the Corporation of a lesser number of shares of Common Stock in a pro rata exchange for all of its outstanding shares of Common Stock, the Conversion Price in effect immediately prior to such combination shall be proportionately increased. (v) If the purchase price provided for in any right or option referred to in paragraph (1) of Subsection 4(e)(ii), or the rate at which any Convertible Securities referred to in paragraphs (1) or (2) of said Subsection 4(e)(ii) are convertible into or exchangeable for Common Stock, shall change or a different purchase price or rate shall become effective at any time or from time to time (other than under or by reason of provisions designed to protect against dilution), then, upon such change becoming effective, the Conversion Price then in effect hereunder shall forthwith be increased or decreased to such Conversion Price as would have obtained had the adjustments made upon the granting or issuance of such rights or options or Convertible Securities been made upon the basis of (1) the issuance of the number of shares of Common Stock theretofore actually delivered upon the exercise of such options or rights or upon the conversion or exchange of such Convertible Securities, and the total consideration received therefor, and (2) the granting or issuance at the time of such change of any such options, rights, or Convertible Securities then still outstanding for the consideration, if any, received by the Corporation therefor and to be received on the basis of such changed price. On the expiration of any right or option referred to in paragraph (1) of Subsection 4(e)(ii), or on the termination of any right to convert or exchange any Convertible Securities referred to in paragraphs (1) or (2) of said Subsection 4(e)(ii), the Conversion Price shall forthwith be readjusted to such amount as would have obtained had the adjustment made upon the granting or issuance of such rights or options or Convertible Securities been made upon the basis of the issuance or sale of only the number of shares of Common Stock actually issued upon the exercise of such options or rights or upon the conversion or exchange of such Convertible Securities. If the purchase price provided for in any such right or option, or the rate at which any such Convertible Securities are convertible into or exchangeable for Common Stock, shall change at any time under or by reason of provisions with respect thereto designed to protect against dilution, then in case of the delivery of Common Stock upon the exercise of any such right or option or upon conversion or exchange of any such Convertible Security, the Conversion Price then in effect hereunder shall forthwith be decreased to such Conversion Price as would have obtained had the adjustments made upon the issuance of such right or option or Convertible Security been made upon the basis of the issuance of (and the total consideration received for) the shares of Common Stock delivered as aforesaid. (vi) For so long as shares of Series A Preferred Stock are issued and outstanding, the Corporation may not consolidate or merge with or into (whether or not the Corporation is the surviving entity), another person, unless (i) the Corporation is the surviving entity, or the person formed by or surviving any such consolidation or merger (if other than the Corporation) is a corporation organized or existing under the laws of the United States, any state thereof or the District of Columbia; and (ii) the Series A Preferred Stock shall be converted or exchanged for and shall become shares of such successor, transferee or resulting person, having in respect of such successor, transferee or successor person the same powers, preferences, and relative participating, optional or other special rights and the qualifications, limitations or restrictions thereon, that the Series A Preferred Stock had immediately prior to such transaction. (vii) The following events shall not effect an adjustment to the Conversion Price pursuant to this Section 4(e): (1) The issuance of Common Stock by the Corporation upon the conversion of the Series A Preferred Stock or the Series B Preferred Stock; (2) The issuance of options to acquire shares of Common Stock not to exceed 10% of the outstanding shares of Common Stock, on a fully diluted basis, as of the effective date of this Certificate, from time to time issuable or issued to employees, consultants or directors of the Corporation granted or to be granted with the approval of the Board of Directors of the Corporation and the Common Stock issuable or issued upon exercise thereof; (3) The issuance of warrants to acquire 1,500,000 shares of Common Stock to be issued by the Corporation in exchange for identical warrants issued by USOL Holdings, Inc.. EX 99.2 - 8 a Delaware corporation ("USOL") to former creditors of U.S. Online Communications, Inc. in connection with the sale of assets to USOL and the issuance by the Corporation of Common Stock issuable or issued upon exercise thereof; (4) The issuance of 3,175,000 shares of Common Stock by the Corporation in exchange for 3,175,000 shares of USOL common stock in connection with the merger between the Corporation and USOL; (5) The issuance of warrants to acquire 325,000 shares of Common Stock to be issued by the Corporation in exchange for identical warrants to be issued by USOL to GMAC Commercial Mortgage Corporation in connection with the sale of assets to USOL, and the issuance by the Corporation of Common Stock issuable or issued upon exercise thereof; and (6) The issuance of warrants to acquire 259,000 shares of Common Stock to be issued to Amstar Capital Group or its Affiliates in connection with a financial advisory arrangement, and the issuance by the Corporation of Common Stock issuable or issued upon exercise thereof. (viii) "Fair Value" of the Common Stock as of a particular date shall mean the average of the daily closing prices for the preceding twenty trading days before the day in question. The closing price for each day shall be the last reported sale price or, in case no such reported sale takes place on such day, the average of the reported closing bid and asked prices, in either case on the principal national securities exchange on which the Common Stock is listed or admitted to trading or, if not listed or admitted to trading on any national securities exchange, the average of the closing bid and asked prices as reported by the National Association of Securities Dealers Automated Quotation System. If no price can be determined by the foregoing method, "Fair Value" shall mean the fair value thereof as determined by mutual agreement reached by the Corporation and the holders of a majority of the shares of Series A Preferred Stock and Series B Preferred Stock (the "Majority of the Holders") or, in the event the parties are unable to agree, an opinion of an independent investment banking firm or firms in accordance with the following procedure. In the case of any event which gives rise to a requirement to determine "Fair Value" hereunder, the Corporation shall be responsible for initiating the process by which Fair Value shall be determined as promptly as practicable, but in any event within twenty (20) days following such event and if the procedures contemplated herein in connection with determining Fair Value have not been complied with fully, then any such determination of Fair Value for any purpose hereunder shall be deemed to be preliminary and subject to adjustment pending full compliance with such procedures. Upon the occurrence of an event requiring the determination of Fair Value, the Corporation shall give the holders of Series A Preferred Stock and Series B Preferred Stock notice of such event, and the Corporation and the holders of Series A Preferred Stock and Series B Preferred Stock shall engage in direct good faith discussions to arrive at a mutually agreeable determination of Fair Value. In the event the Corporation and the Majority of the Holders are unable to arrive at a mutually agreeable determination within thirty (30) days of the notice, an independent investment banking firm of national standing selected by the Corporation shall make such determination and render such opinion. The determination so made shall be conclusive and binding on the Corporation and the holders of Series A Preferred Stock and Series B Preferred Stock. The fees and expenses of the investment banking firm retained for such purpose shall be shared equally by the Corporation and the holders of Series A Preferred Stock and Series B Preferred Stock. (ix) If at any time or from time to time conditions arise by reason of action taken by the Corporation which are not adequately covered by the provisions of Subsection 4(e), and which might materially and adversely affect the exercise rights of the Holders of Series A Preferred Stock and Series B Preferred Stock, upon the request of at least a Majority of the Holders, the Corporation shall appoint a firm of independent public accountants of recognized national standing (which may be the regular auditors of the Corporation), which shall give their opinion upon the adjustment, if any, of the number of shares issuable upon the conversion of the Series A Preferred Stock and Series B Preferred Stock, on a basis consistent with the standards established in the other provisions of Subsection 4(e), necessary in order to preserve without diminution the rights of the Holders of the Series A Preferred Stock and Series B Preferred Stock. Upon receipt of such opinion, the Board of Directors shall forthwith make the adjustments, if any, described therein. EX 99.2 - 9 (f) COVENANT TO RESERVE SHARES OF COMMON STOCK FOR CONVERSION. (i) The Corporation covenants that it will reserve and keep available out of its authorized Common Stock and/or shares of its Common Stock then owned or held by or for the account of the Corporation, solely for the purpose of delivery upon conversion of the Series A Preferred Stock as herein provided, such number of shares of Common Stock as shall then be deliverable upon the conversion of the Series A Preferred Stock. All shares of Common Stock which shall be so deliverable shall be duly and validly issued and fully paid and nonassessable. (ii) Before taking any action which would cause an adjustment reducing the Conversion Price at any time in effect below the then par value of the shares of Common Stock issuable upon conversion of the Series A Preferred Stock, the Corporation shall take any corporate action which may be necessary in order that the Corporation may validly and legally issue fully paid and nonassessable shares of such Common Stock at such Conversion Price as so adjusted. (g) COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. If any shares of Common Stock required to be reserved for purposes of conversion of the Series A Preferred Stock hereunder require registration with or approval of any governmental authority under any federal or state law, or listing upon any national securities exchange, before such shares may be issued upon conversion, the Corporation will in good faith and as expeditiously as possible endeavor to cause such shares to be duly registered, approved or listed, as the case may be. (h) NOTICE OF CHANGE OF CONVERSION PRICE OF COMMON STOCK. Whenever the Conversion Price is adjusted, as herein provided, the Corporation shall promptly deliver to each Holder a certificate of a firm of independent public accountants of national standing (who may be the accountants regularly employed by the Corporation) selected by the Board of Directors of the Corporation setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment. (i) NOTICE OF TAKING OF CERTAIN ACTIONS. In case: (i) the Corporation shall declare a dividend (or any other distribution) on its Common Stock payable otherwise than out of its earned surplus; or (ii) the Corporation shall authorize the granting to holders of Common Stock of rights to subscribe for or purchase any shares of capital stock of any class or of any other rights; or (iii) of any capital reorganization or reclassification of the capital stock of the Corporation or of any consolidation or merger of the Corporation with another corporation, or of the sale of all or substantially all of its assets to another corporation which is to be effected in such a way that holders of Common Stock shall be entitled to receive stock, securities or other assets with respect to or in exchange for Common Stock; or (iv) of the voluntary or involuntary dissolution, liquidation or winding up of the Corporation; or (v) of any other action requiring adjustment to the Conversion Price; then the Corporation shall promptly cause to be mailed to each Holder at its last address as set forth on the stock transfer records of the Corporation, at least 14 days prior to the applicable record date hereinafter specified, a notice stating (1) the date on which a record is to be taken for the purpose of such dividend or distribution of rights, or, if a record is not to be taken, the date as of which the holders of Common Stock of record would be entitled to such dividend or distribution of rights, or (2) the date on which such capital reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up is expected to become effective, and the date as of which it is expected that the holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other assets deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up. EX 99.2 - 10 The Corporation shall not convert or directly or indirectly redeem, purchase or otherwise acquire any shares of Common Stock or any other class of capital stock of the Corporation or take any other action affecting the voting rights of such shares, if such action will increase the percentage of any class of outstanding voting securities owned or controlled by any Regulated Stockholder (other than any such stockholder which requested that the Corporation take such action), or which otherwise waives in writing its rights under this Section 4(i)), unless the Corporation gives written notice (the "Deferral Notice") of such action to each Regulated Stockholder. The Corporation will defer making any such conversion, redemption, purchase or other acquisition, or taking any such other action for a period of twenty (20) days (the "Deferral Period") after giving the Deferral Notice in order to allow each Regulated Stockholder to determine whether it wishes to convert or take any other action with respect to the Common Stock it owns, controls or has the power to vote, and if any such Regulated Stockholder then elects to convert any shares of Common Stock, it shall notify the Corporation in writing within ten (10) days of the issuance of the Deferral Notice, in which case the Corporation shall (i) promptly notify from time to time prior to the end of such 20-day period each other Regulated Stockholder holding shares of each proposed conversion, and (ii) effect the conversions requested by all Regulated Stockholders in response to the notice issued pursuant to this Section 4(i) at the end of the Deferral Period. Upon complying with the procedures hereinabove set forth in this Section 4(i), the Corporation may so convert or directly or indirectly redeem, purchase or otherwise acquire any shares of Common Stock or any other class of capital stock of the Corporation or take any other action affecting the voting rights of such shares. The Corporation shall not redeem, purchase, acquire or take any other action affecting outstanding shares of Series A Preferred Stock if, after giving effect to such redemption, purchase, acquisition or other action, a Regulated Stockholder would own more than 4.9% of any class of voting securities of the Corporation (other than any class of voting securities which is (or is made prior to any such redemption, purchase, acquisition or other action)) convertible into a class of non-voting securities which are otherwise identical to the voting securities and convertible into such voting securities on terms reasonably acceptable to such Regulated Stockholder) or more than 24.9% of the total equity of the Corporation or more than 24.9% of the total value of all capital stock of the Corporation (in each case determined by assuming such Regulated Holder (but no other holder) has exercised, converted or exchanged all of its options, warrants and other convertible or exchangeable securities), unless the Corporation gives the Deferral Notice set forth in the immediately preceding paragraph. (j) MECHANICS OF CONVERSION. (i) OPTIONAL CONVERSION. In order to convert Series A Preferred Stock into full shares of Common Stock, a Holder shall deliver, no later than 11:00 a.m., Pacific Standard Time on the business day next preceding the Conversion Date, to the office of the Corporation's designated transfer agent for the Series A Preferred Stock (the "Transfer Agent") (1) a fully executed notice of conversion ("Notice of Conversion"), and (2) the original certificate or certificates evidencing the Series A Preferred Stock being converted (a "Certificate"), duly endorsed. (ii) AUTOMATIC CONVERSION. Upon the satisfaction of the conditions set forth in Section 4(a) above, the Corporation shall, by notice to the Holders of Series A Preferred Stock (the "Automatic Conversion Notice"), require such Holders to convert all shares of Series A Preferred Stock into fully paid and nonassessable shares of Common Stock at the applicable Conversion Price. Such notice shall be delivered by first class mail, postage prepaid, shall be given to the holders of record of the Series A Preferred Stock to be converted, addressed to such holders at their last addresses as shown on the Corporation's stock transfer ledger. Such notice of conversion shall specify the date fixed for conversion; the then effective Conversion Price; that accumulated but unpaid dividends to the date fixed for conversion will be paid, at the Corporation's election in cash or in a number of shares of Common Stock equal to the dividend amount divided by the Conversion Price on the date fixed for conversion (which shall be within thirty (30) days of the notice); and that on and after the Conversion Date, dividends will cease to accumulate on such shares. Tender of shares of Series A Preferred Stock by Holder shall be required for conversion. Any notice which is mailed as herein provided shall be conclusively presumed to have been duly given, whether or not a Holder of the Series A Preferred Stock receives such notice; and failure so to give such notice or any defect in such notice, shall not affect the validity of the proceedings for the conversion. (iii) CONVERSION DATE. The Conversion Date shall be deemed to be (a) for an optional conversion, the date the Notice of Conversion and the original Certificates representing the Series A EX 99.2 - 11 Preferred Stock to be converted are surrendered to the Transfer Agent or (b) for an automatic conversion, the date specified by the Corporation in the Automatic Conversion Notice delivered to the Holder. (iv) ISSUANCE OF COMMON STOCK WITHIN THREE (3) BUSINESS DAYS. Upon receipt of the original Certificates representing the Series A Preferred Stock to be converted, the Corporation shall use its reasonable best efforts to cause the Transfer Agent to issue the appropriate number of shares of Common Stock, and to send Certificates representing such shares, postage prepaid, to each Holder at each such Holder's address as it appears on the stock record books of the transfer agent, no later than three (3) business days thereafter. (v) LOST OR STOLEN CERTIFICATES. Within three (3) business days after receipt by the Corporation of evidence of the loss, theft, destruction or mutilation of a certificate or certificates representing the Series A Preferred Stock, and (in the case of loss, theft or destruction) of indemnity or security reasonably satisfactory to the Corporation and the Transfer Agent, and upon surrender and cancellation of the Series A Preferred Stock certificate or certificates, if mutilated, the Corporation shall use its reasonable best efforts to cause the execution and delivery of new Series A Preferred Stock of like tenor and date. The Corporation shall not be required to deliver new Series A Preferred Stock if the request for replacement is made contemporaneously with the conversion or redemption of such Series A Preferred Stock. 5. RIGHTS ON LIQUIDATION. (a) Upon the voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the Holders of the shares of the Series A Preferred Stock and the Series B Preferred Stock, which shall be pari passu with respect to rights on liquidation, shall be entitled to receive out of the assets of the Corporation available for distribution to stockholders under applicable law, before any payment or distribution of assets shall be made on the Common Stock or on any other class or series of stock of the Corporation ranking junior to the Series A Preferred Stock and Series B Preferred Stock upon liquidation, the amount of $25.00 per share (taking into account any stock split or reverse stock split or any other adjustments to the number of shares of Common Stock into which the Series A Preferred Stock and the Series B Preferred Stock is convertible) (the "Liquidation Preference"), plus a sum equal to all dividends accrued (including any compound dividends) on such shares and unpaid to the date fixed for such liquidation, dissolution or winding up. (b) After the payment in cash to the Holders of the shares of the Series A Preferred Stock and the Series B Preferred Stock of the full preferential amounts for the shares of the Series A Preferred Stock and Series B Preferred Stock, as set forth in paragraph (a) of this Section 5, the Holders of the Series A Preferred Stock and Series B Preferred Stock shall have no further right or claim to any of the remaining assets of the Corporation. (c) In the event the assets of the Corporation available for distribution to the Holders of shares of the Series A Preferred Stock and Series B Preferred Stock upon any voluntary or involuntary liquidation, dissolution or winding up of the Corporation shall be insufficient to pay in full all amounts to which such holders are entitled pursuant to paragraph (a) of this Section 5, no distribution shall be made on account of any shares of any other series of preferred stock or any other class of stock of the Corporation ranking on a parity with the shares of the Series A Preferred Stock and Series B Preferred Stock upon such liquidation, dissolution or winding up unless proportionate amounts shall be paid on account of the shares of the Series A Preferred Stock and Series B Preferred Stock, ratably, in proportion to the full amounts to which holders of all such shares which are on a parity with the shares of the Series A Preferred Stock and the Series B Preferred Stock are respectively entitled upon such dissolution, liquidation or winding up. (d) A merger or consolidation of the Corporation into or with any other corporation or association (in the event that the Corporation is not the surviving entity or the holders of shares of Common Stock prior to the transaction do not hold a majority of the outstanding equity interests of the surviving entity immediately after the transaction) or the sale, conveyance, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or substantially all the property and assets of the Corporation shall be deemed to be a liquidation or winding up of the Corporation for the purposes of this Section 5. In such event, the holders of the Series A Preferred Stock and Series B Preferred Stock shall be entitled to receive, before any payment or distribution of assets shall be made on the Common Stock or on any other class or series ranking junior to the Series A Preferred Stock and Series B Preferred Stock, an amount equal to the greater of (i) the amount payable pursuant to EX 99.2 - 12 Section 5(a) or (ii) the amount such holders would have received if they had converted their shares of Series A Preferred Stock and Series B Preferred Stock into Common Stock immediately prior to such liquidation or winding up (without giving effect to the liquidation preference of or any distributions on any other equity interests ranking prior to the Common Stock). 6. OPTIONAL REDEMPTION. Commencing on the earlier to occur of (x) the tenth anniversary of the Reference Date and (y) the date on which fewer than 25% of the aggregate of the shares of Series A Preferred Stock and Series B Preferred Stock issued on the date of issuance remain outstanding, and at all times thereafter, the Corporation may, at its option, redeem all (but not less than all) outstanding shares of Series A Preferred Stock and Series B Preferred Stock on a date specified by the Corporation (the "Optional Redemption Date") by paying the greater of Fair Value or the Liquidation Preference plus a sum equal to all dividends accrued on such shares and unpaid to the Optional Redemption Date (the "Redemption Price") in cash out of funds legally available for such purpose. (a) NOTICE AND REDEMPTION PROCEDURES. Notice of the redemption of shares of Series A Preferred Stock pursuant to this Section 6 (a "Notice of Redemption") shall be sent to the Holders of record of the shares of Series A Preferred Stock to be redeemed by first class mail, postage prepaid, at each such Holder's address as it appears on the stock record books of the Corporation not more than 120 nor fewer than 90 days prior to the Optional Redemption Date, which date shall be set forth in such notice (the "Redemption Date"); provided that failure to give such Notice of Redemption to any Holder, or any defect in such Notice of Redemption to any Holder shall not affect the validity of the proceedings for the redemption of any shares of Series A Preferred Stock held by any other Holder. In order to facilitate the redemption of shares of Series A Preferred Stock, the Board of Directors may fix a record date for the determination of the holders of shares of Series A Preferred Stock to be redeemed not more than 30 days prior to the date the Notice of Redemption is mailed. On or after the Optional Redemption Date, each Holder of the shares called for redemption shall surrender the certificate evidencing such shares to the Corporation at the place designated in such notice and shall thereupon be entitled to receive payment of the Redemption Price for such shares. From and after the Optional Redemption Date, all dividends on shares of Series A Preferred Stock shall cease to accumulate and all rights of the Holders thereof as Holders of Series A Preferred Stock shall cease and terminate, except to the extent the Corporation shall default in payment thereof on the Optional Redemption Date. (b) DEPOSIT OF FUNDS. The Corporation shall, on or prior to the Optional Redemption Date, deposit with its transfer agent or other redemption agent in the State of Texas having a capital and surplus of at least $500,000,000 selected by the Board of Directors, as a trust fund for the benefit of the holders of the shares of Series A Preferred Stock to be redeemed, cash that is sufficient in amount to redeem the shares to be redeemed in accordance with the Notice of Redemption, with irrevocable instructions and authority to such transfer agent or other redemption agent to pay to the respective holders of such shares, as evidenced by a list of such holders certified by an officer of the Corporation, the Redemption Price upon surrender of their respective share certificates. Such deposit shall be deemed to constitute full payment of the Redemption Price for such shares to the holders, and from and after the date of such deposit, all rights of the holders of the shares of Series A Preferred Stock that are to be redeemed as stockholders of the Corporation with respect to such shares, except the right to receive the Redemption Price upon the surrender of their respective certificates, shall cease and terminate. In case holders of any shares of Series A Preferred Stock called for redemption shall not, within two years after such deposit, claim the cash deposited for redemption thereof, such transfer agent or other redemption agent shall, upon demand, pay over to the Corporation the balance so deposited. Thereupon, such transfer agent or other redemption agent shall be relieved of all responsibility to the holders thereof and the sole right of such holders, with respect to shares to be redeemed, shall be to receive the Redemption Price as general creditors of the Corporation. Any interest accrued on any funds so deposited shall belong to the Corporation, and shall be paid to it from time to time on demand. 7. NOTICE. Any notice required to be given to the holders of Series A Preferred Stock or any securities issued upon conversion thereof shall be in writing and shall be deemed to have been given upon the earlier of personal delivery or three days after deposit in the United States mails by registered or certified mail, return receipt requested, with postage fully prepaid, and addressed to each holder of record at his or its address as it appears on the stock transfer records of the Corporation. Any notice to the Corporation shall be in writing and shall be deemed to have been given upon the earlier of personal delivery or three days after deposit in the United States mails by registered or certified mail, return receipt requested, with postage fully prepaid, to the Corporation at 10300 EX 99.2 - 13 Metric Boulevard, Austin, Texas 78758 or such other address as to which the Corporation shall have given notice to each Holder in accordance with the provisions of this Section 7. 8. LEGEND. All certificates representing the Series A Preferred Stock, all shares of Common Stock issued upon conversion thereof and any and all securities issued in replacement thereof or in exchange therefor shall bear such legends as shall be required by law or contract. 9. RANK. The Series A Preferred Stock shall rank pari passu with the Series B Preferred Stock and shall rank senior to all of the Corporation's Common Stock, par value $0.001 per share (the "Common Stock"), and all other classes and series of preferred or other capital stock of the Corporation hereafter issued by the Corporation as to dividends and as to distributions of assets upon the liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary. 10. PROTECTIVE PROVISIONS. (a) So long as shares of Series A Preferred Stock are outstanding, the Corporation may not waive or amend any term of this Certificate of Designations, including but not limited to Section 4(e)(vi), without first obtaining the approval (by vote or written consent) of a Majority of the Holders then outstanding. (b) So long as shares of Series A Preferred Stock are outstanding, the Corporation shall not, without the consent of the holders of a two-thirds of the shares the Series A Preferred Stock then-outstanding: (i) issue any class or series of preferred or other capital stock senior to or on parity with the Series A Preferred Stock as to payment of dividends or senior to or on a parity with the Series A Preferred Stock as to payments on liquidation, dissolution or winding up of the Corporation; (ii) amend its Articles of Incorporation or bylaws in any manner which would impair or reduce the rights of a Holder of the Series A Preferred Stock; or (iii) permit a liquidation, dissolution, or winding up of the Corporation to occur. (c) Notwithstanding any other provision hereof to the contrary, so long as shares of Series A Preferred Stock are outstanding, the Corporation shall not, without the consent of the Series A Preferred Stock holder so affected, amend its Articles of Incorporation or bylaws to impair or reduce the economic rights of the holders of Series A Preferred Stock, including reducing the Conversion Price or dividend rate. (d) Notwithstanding any other provision hereof to the contrary, so long as shares of Series A Preferred Stock are outstanding, the Corporation shall not, without the consent of the holder of the Series A Preferred Stock so affected, amend its Articles of Incorporation or bylaws to, or otherwise take any action to, treat one holder of Series A Preferred Stock differently from another holder of Series A Preferred Stock. EX 99.2 - 14 NOTICE OF CONVERSION (To be executed by the Registered Holder in order to convert the Series A Preferred Stock) The undersigned hereby irrevocably elects to convert shares of Series A Preferred Stock, represented by stock certificate No(s). `(the "Preferred Stock Certificates") into shares of common stock ("Common Stock") of USOL Holdings, Inc. (f/k/a FirstLink Communications, Inc.)(the "Corporation") according to the conditions of the Certificate of Designations of Series A Preferred Stock, as of the date written below. If shares are to be issued in the name of a person other than undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates. No fee will be charged to the holder for any conversion, except for transfer taxes, if any. The undersigned represents and warrants that all offers and sales by the undersigned of the shares of Common Stock issuable to the undersigned upon conversion of the shares of Series A Preferred Stock represented by the Series A Preferred Stock Certificates shall be made pursuant to and subject to an effective registration statement covering the Common Stock under the Securities Act of 1933, as amended (the "Act"), or pursuant to an exemption from registration under the Act. Conversion Calculations: ----------------------------------- Date of Conversion ----------------------------------- Applicable Conversion Price ----------------------------------- Signature ----------------------------------- Name Address: ----------------------------------- ----------------------------------- No shares of Common Stock will be issued until the original Preferred Stock Certificate(s) to be converted and the Notice of Conversion are received by the Corporation or the Corporation's transfer agent (the "Transfer Agent") as required by the Certificate of Designations of the Series A Preferred Stock. The Series A Preferred Stock to be converted shall be deemed to cease to be outstanding as of the Conversion Date (irrespective as to when the underlying Common Stock is delivered). EX 99.2 - 15 EX-99.3 4 CERTIFICATE OF DESIGNATION OF SERIES B CONVERTIBLE CERTIFICATE OF DESIGNATIONS, PREFERENCES, LIMITATIONS AND RELATIVE RIGHTS OF SERIES B CONVERTIBLE PREFERRED STOCK OF USOL HOLDINGS, INC. (F/K/A FIRSTLINK COMMUNICATIONS, INC.) 1. DESIGNATION. This resolution shall provide for a single series of convertible preferred stock, the designation of which shall be the Series B Convertible Preferred Stock (hereinafter the "Series B Preferred Stock") and the number of authorized shares constituting the Series B Preferred Stock is 300,000. The stated value of each share of Series B Preferred Stock is twenty-five dollars ($25.00). The number of authorized shares of Series B Preferred Stock may be reduced or increased by a further resolution duly adopted by the Board of Directors of the Corporation and by the filing of an amendment to the Corporation's Articles of Incorporation pursuant to the provisions of the Oregon Business Corporation Act stating that such reduction or increase has been so authorized. 2. VOTING. Except as required by law, the shares of the Series B Preferred Stock shall not have any voting powers, either general or special, except as provided in this Section 2: (a) Except as set forth herein or as otherwise required by law, each outstanding share of Series B Preferred Stock shall not be entitled to vote on any matter on which the stockholders of the Corporation shall be entitled to vote, and shares of Series B Preferred Stock shall not be included in determining the number of shares voting or entitled to vote on any such matters; provided that the holders of Series B Preferred Stock shall have the right to vote as a separate class on any merger or consolidation of the Corporation with or into another entity or entities, or any recapitalization or reorganization, in which shares of Series B Preferred Stock would receive or be exchanged for consideration different on a per share basis from consideration received with respect to or in exchange for the shares of Common Stock or would otherwise be treated differently from shares of Common Stock in connection with such transaction, except that shares of Series B Preferred Stock may, without such a separate class vote, receive or be exchanged for non-voting securities which are otherwise identical on a per share basis in amount and form to the voting securities received with respect to or exchanged for the Common Stock so long as (i) such non-voting securities are convertible into such voting securities on the same terms as the Series B Preferred Stock is convertible into Common Stock and (ii) all other consideration is equal on a per share basis. Notwithstanding the foregoing, holders of the shares of the Series B Preferred Stock shall be entitled to vote as a separate class on any amendment to this Section 2(a) and any amendment, repeal or modification of any provision of this Articles of Incorporation that adversely affects the powers, preferences or special rights of holders of the Series B Preferred Stock. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, after payment or provision for payment of the debts and other liabilities of the Corporation, the holders of shares of Series A Convertible Preferred Stock (the "Series A Preferred Stock, and, together with the Series B Preferred Stock, the "Preferred Stock") and Series B Preferred Stock shall be entitled to share ratably, share and share alike, in the remaining net assets of the Corporation. (b) Subject to Section 10 herein, the Board of Directors without the vote of the holders of shares of the Series B Preferred Stock may authorize and issue additional shares of Common Stock and preferred stock ranking junior as to dividends and upon liquidation to the shares of the Series B Preferred Stock. No class or series of equity securities of the Corporation may rank senior to or equal in right with the Series B Preferred Stock as to dividends or upon liquidation except for the Series A Preferred Stock which shall be equal in right. (c) Notwithstanding anything to the contrary in Section 554(3) of the Oregon Business Corporation Act, the holders of the Series B Preferred Stock shall be entitled to dissenters' rights pursuant to, and to the fullest extent permitted by, Section 554(1) of said Oregon Business Corporation Act in the event of a merger or consolidation in which the Corporation is a constituent corporation or the sale of substantially all of the assets of the Corporation. 3. DIVIDENDS. (a) RATE. Holders of Series B Preferred Stock shall be entitled to receive, out of any funds of the Corporation legally available for that purpose, cumulative dividends from the date of issuance at the rate of 12% per year of the Liquidation Preference (as defined in Section 5(a) below), for each calendar quarter (pro-rated for partial quarters, based upon a 90 day quarter of three 30-day months) (each such calendar quarter, a "Dividend Period") payable in arrears in cash, or, at the option of the Corporation, in shares of its Common Stock (with cash in lieu of fractional shares) based on the determination of Fair Value (as defined in Section 4(e)(viii) below) on the last day of December, March, June and September of each year commencing December 31, 1999 (each such date being hereinafter individually referred to as the "Dividend Payment Date," and collectively as the "Dividend Payment Dates"); PROVIDED, that no Regulated Stockholder (as defined in Section 4(a)(iv) below) shall be required to receive any shares of Common Stock pursuant to this Section 3(a) to the extent that immediately prior to payment of such dividend, or as a result of such dividend, the number of shares of Common Stock which constitute Restricted Stock (as defined in Section 4(iv) below) held by all holders thereof would exceed the number of shares of Common Stock with such Regulated Stockholder reasonably determines it and its Affiliates (as defined in Section 4(a)(iv) below) may own, control or have the power or vote under any law, regulation, rule or other requirement of any governmental authority at the time applicable to such Regulated Stockholder or its Affiliates and such Regulated Stockholder shall be entitled to receive cash in lieu of such dividend payable in shares of Common Stock. Should the Corporation in its discretion determine to pay said dividends in shares of Common Stock for any Dividend Period, then all such accrued and unpaid dividends shall be paid in shares of Common Stock at the first to occur of the next Dividend Payment Date or the time of conversion of the Series B Preferred Stock, such that upon such Dividend Payment Date or such conversion of the Series B Preferred Stock by the holder thereof, the Corporation shall pay all accrued and unpaid dividends owed for such Dividend Period as of the date of such conversion on all then converted shares. Each such dividend shall be paid to the holders of record of the Series B Preferred Stock as they appear on the books of the Corporation on the record date which shall be not less than 30 days prior to the related Dividend Payment Date. Additional dividends, at an annual rate of 12%, shall accrue in respect of, and compound on, any dividends in arrears and may be payable at any time in the discretion of the Corporation. (b) DIVIDENDS ON COMMON STOCK. No dividends (other than those payable solely in Common Stock) shall be paid with respect to the Common Stock or any series of preferred stock ranking junior to the Series B Preferred Stock and the Series A Preferred Stock, which shall be pari passu with the Series B Preferred Stock with respect to dividends, during any fiscal year of the Corporation unless all due and unpaid dividends and the annual current dividend on the shares of Series B Preferred Stock and the Series A Preferred Stock for the then current and all prior Dividend Periods shall have been declared and paid in cash. If dividends are paid partly in cash and partly in Common Stock with respect to the Common Stock or any series of preferred stock ranking junior to the Series A Preferred Stock and the Series B Preferred Stock, then all due and unpaid dividends and the annual current dividend on the shares of Series A Preferred Stock and the Series B Preferred Stock for the then current Dividend Period and all prior Dividend Periods shall have been declared and paid either in cash or in the same proportion of cash and Common Stock proposed to be paid to holders of Common Stock and any series of preferred stock ranking junior to the Series A Preferred Stock and the Series B Preferred Stock provided, that no Regulated Stockholder shall be required to receive any shares of Common Stock pursuant to this Section 3(b) to the extent that immediately prior to payment of such dividend, or as a result of such dividend, the number of shares of Common Stock which constitute Restricted Stock held by all holders thereof would exceed the number of shares of Common Stock with such Regulated Stockholder reasonably determines it and its Affiliates may own, control or have the power or vote under any law, regulation, rule or other requirement of any governmental authority at the time applicable to such Regulated Stockholder or its Affiliates and such Regulated Stockholder shall be entitled to receive cash in lieu of such dividend payable in shares of Common Stock. No shares of Common Stock or any series of preferred stock ranking junior to the Series B Preferred Stock and the Series A Preferred Stock shall be purchased, redeemed or acquired by the Corporation, and no funds shall be paid into or set aside or made available for a sinking fund for the purchase, redemption or acquisition thereof except in transactions with employees of the Corporation aggregating not more than $100,000.00 per year. (c) LIMITATION ON AMOUNT OF DIVIDENDS. Holders of shares of the Series B Preferred Stock shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of full dividends for each Dividend Period (including any dividends in arrears as provided herein), as herein provided, on the Series B EX 99.3 - 2 Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any Dividend Payment or Dividend Payments which may be in arrears. (d) PARITY OF DIVIDEND PAYMENTS. When dividends are not paid in full upon the Series B Preferred Stock and the shares of any other series of capital stock ranking on a parity as to dividends with the Series B Preferred Stock, all dividends declared upon the Series B Preferred Stock and such other series shall be declared pro rata so that the amount of dividends declared per share on the Series B Preferred Stock and such other series of capital stock shall in all cases bear to each other the same ratio that full dividends, for the then-current and all prior Dividend Periods, per share on the Series B Preferred Stock and full dividends, including required or permitted accumulations, if any, on such other series of capital stock, bear to each other. 4. CONVERSION. The holders of the Series B Preferred Stock shall have conversion rights as follows (the "Conversion Rights"): (A) AUTOMATIC CONVERSION; OPTIONAL CONVERSION; CONVERSION PRICE. (i) AUTOMATIC CONVERSION. Beginning July 21, 2001, each share of the Series B Preferred Stock, without any action or payment of additional consideration on the part of the Holder thereof, on the earliest of (1) the closing of a firm commitment public offering after such date pursuant to which the Corporation offers its equity securities for gross proceeds to the Corporation in an amount equal to or greater than $40,000,000, (2) the day that the closing sales price of the Common Stock on a national securities exchange or the Nasdaq Stock Market is equal to or greater than $10.00 per share for 15 consecutive trading days (taking into account any stock split or reverse stock split or any other adjustments to the number of shares of Common Stock outstanding after July 21, 1999, the "Reference Date") or (3) the seventh anniversary of the Reference Date, provided that the Common Stock is then trading at more than $2.00 per share, taking into account any stock split or reverse stock split or any other adjustments to the number of shares of Common Stock outstanding after the Reference Date, shall convert automatically as provided in Section 4(j) into fully paid and non-assessable shares of Common Stock or Series A Preferred Stock (with cash paid in lieu of fractional shares), having the powers, relative participating rights and the qualifications, limitations or restrictions of holders of Common Stock or Series A Preferred Stock, as applicable, as set forth in the Corporation's Articles of Incorporation and Bylaws, at the Conversion Price (as defined below); PROVIDED, that no Regulated Stockholder shall be required to convert any shares of its Series B Preferred Stock into Common Stock or Series A Preferred Stock pursuant to this Section 4(a) to the extent that immediately prior thereto, or as a result of such conversion, the number of shares of Common Stock or Series A Preferred Stock which constitute such Restricted Stock held by all holders thereof would exceed the number of shares of Common Stock or Series A Preferred Stock which such Regulated Stockholder reasonably determines it and its Affiliates may own, control or have the power or vote under any law, regulation, rule or other requirement of any governmental authority at the time applicable to such Regulated Stockholder or its Affiliates. (ii) OPTIONAL CONVERSION. At any time, holders of Series B Preferred Stock may elect to convert, in whole or in part, their Series B Preferred Stock into fully paid and non-assessable shares of (A) Common Stock (with cash paid in lieu of fractional shares) at the Conversion Price by following the procedures set forth in Section 4(j) hereof or (B) Series A Preferred Stock at a one to one ratio; PROVIDED, HOWEVER, that Series B Preferred Stock constituting Restricted Stock may not be converted into Common Stock or Series A Preferred Stock to the extent that immediately prior thereto, or as a result of such conversion, the number of shares of Common Stock or Series A Preferred Stock which constitute such Restricted Stock held by all holders thereof would exceed the number of shares of Common Stock or Series A Preferred Stock which such Regulated Stockholder reasonably determines it and its Affiliates may own, control or have the power to vote under any law, regulation, rule or other requirement of any governmental authority at the time applicable to such Regulated Stockholder or its Affiliates; and, provided, further, that each holder of Series B Preferred Stock may convert such shares into Common Stock or Series A Preferred Stock if such holder reasonably believes that such converted shares will be transferred within fifteen (15) days or already have been transferred pursuant to a Conversion Event (defined below) and such holder agrees not to vote any such shares of Common Stock or Series A Preferred Stock prior to such Conversion Event and undertakes to promptly convert such shares back into Series B Preferred Stock if such shares are not transferred pursuant to a Conversion Event. Each Regulated Stockholder may provide for further restrictions upon the EX 99.3 - 3 conversion of any shares of Restricted Stock by providing the Corporation with signed, written instructions specifying such additional restrictions and legending such shares as to the existence of such restrictions. (iii) CONVERSION PRICE. The "Conversion Price" shall initially be $2.00 per share. The number of shares of common Stock issuable upon conversion is the Liquidation Preference divided by the then applicable Conversion Price, as adjusted from time to time as provided in Section 4(e), multiplied by the number of shares of Series B Preferred Stock converted. Notwithstanding any provision of this Section 4(a)(iii) to the contrary, each holder of Series B Preferred Stock shall be entitled to convert shares of Series B Preferred Stock in connection with any Conversion Event if such holder reasonably believes that such Conversion Event will be consummated, and a written request for conversion from any holder of Series B Preferred Stock to the Corporation stating such holder's reasonable belief that a Conversion Event shall occur shall be conclusive and shall obligate the Corporation to effect such conversion in a timely manner so as to enable each such holder to participate in such Conversion Event. The Corporation will not cancel the shares of Series B Preferred Stock so converted before the 15th day following such Conversion Event and will reserve such shares until such 15th day for reissuance in compliance with the next sentence. If any shares of Series B Preferred Stock are converted into shares of Common Stock or Series A Preferred Stock in connection with a Conversion Event and such shares of Common Stock or Series A Preferred Stock are not actually distributed, disposed of or sold pursuant to such Conversion Event, such shares of Common Stock or Series A Preferred Stock shall be promptly converted back into the same number of shares of Series B Preferred Stock. (iv) DEFINED TERMS. For purposes of this Certificate of Designations, the following terms shall be defined as set forth below: 1. "AFFILIATE" shall mean with respect to any Person, any other person, directly or indirectly controlling, controlled by or under common control with such Person. For the purpose of the above definition, the term "control" (including with correlative meaning, the terms "controlling", "controlled by" and "under common control with"), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or by contract or otherwise. 2. "CONVERSION EVENT" shall mean (a) any public offering or public sale of securities of the Corporation (including a public offering registered under the Securities Act of 1933 and a public sale pursuant to Rule 144 of the Securities and Exchange Commission or any similar rule then in force), (b) any sale of securities of the Corporation to a person or group of persons (within the meaning of the Securities Exchange Act of 1934, as amended (the "1934 Act")) if, prior to such sale, such person or group of persons in the aggregate would own or control securities which possess in the aggregate the ordinary voting power to elect a majority of the Corporation's directors (provided that such sale has been approved by the Corporation's Board of Directors or a committee thereof), (c) any sale of securities of the Corporation to a person or group of persons (within the meaning of the 1934 Act) if, prior to such sale, such person or group of persons would not, in the aggregate, own, control or have the right to acquire more than two percent (2%) of the outstanding securities of any class of voting securities of the Corporation, (d) any sale of securities of the Corporation to a person or group of persons (within the meaning of the 1934 Act) if, after such sale, such person or group of persons in the aggregate would own or control securities of the Corporation (excluding any Series B Preferred Stock being converted and disposed of in connection with such Conversion Event) which possess in the aggregate the ordinary voting power to elect a majority of the Corporation's directors, and (e) a merger, consolidation or similar transaction involving the Corporation if, after such transaction (but without taking into account the Restricted Stock converted by the Regulated Holder), a person or group of persons (within the meaning of the 1934 Act) in the aggregate would own or control securities which possess in the aggregate the ordinary voting power to elect a majority of the surviving corporation's directors (provided that the transaction has been approved by the Corporation's Board of Directors or a committee thereof). EX 99.3 - 4 3. "REGULATED STOCKHOLDER" shall mean any stockholder (i) that, directly or indirectly, due to its ownership by an entity subject to Regulation Y of the Board of Governors of the Federal Reserve System, 12 C.F.R. Part 225 (or any successor to such regulation) ("Regulation Y"), is itself subject to the provisions of Regulation Y and (ii) that holds Preferred Stock or Common Stock of the Corporation. 4. "RESTRICTED STOCK" means, with respect to any Regulated Stockholder, any outstanding shares of Common Stock and/or Series A Preferred Stock and/or Series B Preferred Stock ever held of record by such Regulated Stockholder or its Affiliates, excluding treasury shares; provided, however, that any such shares shall cease to be Restricted Stock when such shares are transferred in a transaction which is a Conversion Event or are acquired by the Corporation or any subsidiary of the Corporation; and provided, further, that the Corporation shall have no responsibility for determining whether any outstanding shares of Common Stock and/or Series B Preferred Stock constitute Restricted Stock with respect to any particular Regulated Stockholder, but shall instead be entitled to receive, and rely exclusively upon, a written notice provided by such Regulated Stockholder designating such shares as Restricted Stock. (b) ISSUANCE OF SHARES OF COMMON STOCK OR OTHER SECURITIES ON CONVERSION. (i) Pursuant to Section 4(j) herein, the Corporation shall issue, at its expense, and shall deliver to such holder of Series B Preferred Stock ("Holder"), (i) a certificate or certificates for the number of full shares of Common Stock or Series A Preferred Stock issuable upon the conversion of the Series B Preferred Stock, and (ii) cash in lieu of fractional shares as provided in Section 4(d). (ii) Such conversion shall be deemed to have been effected immediately prior to the close of business on the Conversion Date (as defined in Section 4(j)(iii)), and at such time the rights of the Holder shall cease and the Holder shall be deemed to have become the holder or holders of record of the shares of Common Stock or Series A Preferred Stock issued upon conversion. (c) NO ADJUSTMENTS FOR DIVIDENDS. No payment or adjustment shall be made by or on behalf of the Corporation on account of any dividends on the Common Stock issued upon such conversion which were declared for payment to holders of Common Stock of record as of a date prior to the Conversion Date. (d) CASH PAYMENT IN LIEU OF FRACTIONAL SHARES. No fractional shares of Common Stock shall be issued upon the conversion of the Series B Preferred Stock. In lieu of any fraction of a share of Common Stock to which the Holder would otherwise be entitled upon conversion of the Series B Preferred Stock, the Corporation shall pay a cash adjustment for such fraction in an amount equal to the same fraction of the Fair Value per share of Common Stock at the close of business on the Conversion Date. (e) ADJUSTMENT OF CONVERSION PRICE OF COMMON STOCK. (i) Except as provided in Section 4(e)(vii), in case, at any time or from time to time after the Reference Date, the Corporation shall issue or sell any shares of any class of common stock for a consideration per share less than the Fair Value (as defined in Section 4(e)(viii) below), then forthwith upon such issue or sale the Conversion Price in effect immediately prior to such issue or sale shall be reduced to a price (calculated to the nearest cent) determined by multiplying the Conversion Price in effect prior to the adjustment by a fraction determined by dividing (A) an amount equal to the sum of (1) the number of shares of Common Stock outstanding immediately prior to such issue or sale multiplied by the Fair Value per share of Common Stock immediately prior to such issue or sale, and (2) the consideration, if any, received by the Corporation upon such issue or sale, by (B) the total number of shares of Common Stock outstanding immediately after such issue or sale multiplied by the Fair Value per share of Common Stock immediately prior to such issue or sale. No adjustment of the Conversion Price, however, shall be made in an amount less than one cent per share, but any lesser adjustment shall be carried forward and shall be made at the time of and together with the next subsequent adjustment which, together with any adjustments so carried forward, shall amount to two cents per share or more. EX 99.3 - 5 (ii) For the purposes of Subsection 4(e)(i) above, the following paragraphs (1) to (6), inclusive, shall also be applicable: (1) In case at any time the Corporation shall grant any rights to subscribe for, or any rights or options or warrants to purchase, Common Stock or any stock or other securities convertible into or exchangeable for Common Stock (such convertible or exchangeable stock or securities being herein called "Convertible Securities"), whether or not such rights or options or the right to convert or exchange any such Convertible Securities are immediately exercisable, and the price per share for which Common Stock is issuable upon the exercise of such rights or options or upon conversion or exchange of such Convertible Securities (determined by dividing (A) the total amount, if any, received or receivable by the Corporation as consideration for the granting of such rights or options or warrants, plus the maximum aggregate amount of additional consideration payable to the Corporation upon the exercise of such rights or options, plus, in the case of any such rights or options or warrants which relate to such Convertible Securities, the maximum aggregate amount of additional consideration, if any, payable upon the issue or sale of such Convertible Securities and upon the conversion or exchange thereof, by (B) the total maximum number of shares of Common Stock issuable upon the exercise of such rights or options or upon the conversion or exchange of all such Convertible Securities issuable upon the exercise of such rights or options) shall be less than the Fair Value in effect immediately prior to the time of the granting of such rights or options or warrants, then the total maximum number of shares of Common Stock issuable upon the exercise of such rights or options or upon conversion or exchange of the total maximum amount of such Convertible Securities issuable upon the exercise of such rights or options shall (as of the date of granting of such rights or options) be deemed to be outstanding and to have been issued for such price per share and the current Conversion Price shall be adjusted as provided in Subsection 4(e)(i) above. Except as provided in Subsection 4(e)(v), no further adjustments of the Conversion Price shall be made upon the actual issue of such Common Stock or of such Convertible Securities upon exercise of such rights or options or upon the actual issue of such Common Stock upon conversion or exchange of such Convertible Securities. Notwithstanding the foregoing, if at any time on or after the Reference Date the Corporation shall grant, issue or sell any options or rights to purchase stock, warrants, securities or other property pro rata to the holders of Common Stock of all classes ("Purchase Rights"), then each Holder shall be entitled (but not obligated) to acquire, in lieu of any other adjustment provided for in this Subsection 4(e) and upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which such Holder could have acquired if it had held the number of shares of Common Stock issuable upon conversion of the Series B Preferred Stock immediately prior to the time or times at which the Corporation granted, issued or sold such Purchase Rights. (2) In case at any time the Corporation shall issue or sell any Convertible Securities, whether or not the rights to exchange or convert thereunder are immediately exercisable, and the price per share for which Common Stock is issuable upon such conversion or exchange (determined by dividing (A) the total amount received or receivable by the Corporation as consideration for the issue or sale of such Convertible Securities, plus the minimum aggregate amount of additional consideration, if any, payable to the Corporation upon the conversion or exchange thereof, by (B) the total maximum number of shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities) shall be less than the Fair Value immediately prior to the time of such issue or sale, then the total maximum number of shares of Common Stock issuable upon conversion or exchange of all such Convertible Securities shall (as of the date of the issue or sale of such Convertible Securities) be deemed to be outstanding and to have been issued for such price per share and the Conversion Price shall be adjusted as provided in Subsection 4(e)(i) above, provided that (x) except as provided in Subsection 4(e)(v), no further adjustments of the Conversion Price shall be made upon the actual issue of such Common Stock upon conversion or exchange of such Convertible Securities, and (y) if any such issue or sale of such Convertible Securities is made upon exercise of any rights to subscribe for or to purchase or any option to purchase any such Convertible Securities for which adjustments of the Conversion EX 99.3 - 6 Price have been or are to be made pursuant to other provisions of Subsection 4(e)(ii), no further adjustment of the Conversion Price shall be made by reason of such issue or sale. (3) With respect to any dividend or other distribution upon any stock of the Corporation payable in Common Stock or Convertible Securities, any Common Stock or Convertible Securities, as the case may be, issuable in payment of such dividend or distribution shall be deemed to have been issued or sold without consideration and the Conversion Price shall be adjusted as provided in Subsection 4(e)(i) above. (4) In case at any time any shares of Common Stock or Convertible Securities or any rights or options to purchase any such Common Stock or Convertible Securities shall be issued or sold for cash, the consideration received therefor shall be deemed to be the amount received by the Corporation therefor, without deduction therefrom of any expenses incurred or any underwriting commissions or concessions or discounts paid or allowed by the Corporation in connection therewith. In case any shares of Common Stock or Convertible Securities or any rights or options to purchase any such Common Stock or Convertible Securities shall be issued or sold for a consideration other than cash, the amount of the consideration other than cash received by the Corporation shall be deemed to be the fair value of such consideration as determined by the Board of Directors of the Corporation in good faith, without deduction therefrom of any expenses incurred or any underwriting commissions or concessions or discounts paid or allowed by the Corporation in connection therewith. In case any shares of Common Stock or Convertible Securities or any rights or options to purchase any such Common Stock or Convertible Securities shall be issued in connection with any merger of another corporation into the Corporation, the amount of consideration therefor shall be deemed to be the fair value of the assets of such merged corporation as determined by the Board of Directors of the Corporation in good faith after deducting therefrom all cash and other consideration (if any) paid by the Corporation in connection with such merger. (5) In case at any time the Corporation shall take a record of the holders of Common Stock for the purpose of entitling them (A) to receive a dividend or other distribution payable in Common Stock or in Convertible Securities, or (B) to subscribe for or purchase Common Stock or Convertible Securities, then such record date shall be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be. (6) The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Corporation or any of its subsidiaries, but the disposition of any such shares shall be considered an issue or sale of Common Stock for the purposes of Subsection 4(e). (iii) In the event that the Corporation shall make any distribution of its assets upon or with respect to its Common Stock, as a liquidating or partial liquidating dividend, or other than as a dividend payable out of current earnings or any surplus legally available for dividends under the laws of the state of incorporation of the Corporation, the Holder shall, if the Conversion Date is after the record date for such distribution or, in the absence of a record date, after the date of such distribution, receive, in addition to the shares subscribed for, the amount of such assets (or, at the option of the Corporation, a sum equal to the fair value thereof at the time of distribution as determined by the Board of Directors of the Corporation in good faith) which would have been distributed to such Holder if the Conversion Date had occurred immediately prior to the record date for such distribution or, in the absence of a record date, immediately prior to the date of such distribution. (iv) In case at any time the Corporation shall subdivide its outstanding shares of Common Stock into a greater number of shares or upon any issuance by the Corporation of a greater number of shares of Common Stock in a pro rata exchange for all of its outstanding shares of Common Stock, the Conversion Price in effect immediately prior to such subdivision shall be proportionately reduced and conversely, in case the outstanding shares of Common Stock of the Corporation shall be combined into a smaller number of shares or upon EX 99.3 - 7 any issuance by the Corporation of a lesser number of shares of Common Stock in a pro rata exchange for all of its outstanding shares of Common Stock, the Conversion Price in effect immediately prior to such combination shall be proportionately increased. (v) If the purchase price provided for in any right or option referred to in paragraph (1) of Subsection 4(e)(ii), or the rate at which any Convertible Securities referred to in paragraphs (1) or (2) of said Subsection 4(e)(ii) are convertible into or exchangeable for Common Stock, shall change or a different purchase price or rate shall become effective at any time or from time to time (other than under or by reason of provisions designed to protect against dilution), then, upon such change becoming effective, the Conversion Price then in effect hereunder shall forthwith be increased or decreased to such Conversion Price as would have obtained had the adjustments made upon the granting or issuance of such rights or options or Convertible Securities been made upon the basis of (1) the issuance of the number of shares of Common Stock theretofore actually delivered upon the exercise of such options or rights or upon the conversion or exchange of such Convertible Securities, and the total consideration received therefor, and (2) the granting or issuance at the time of such change of any such options, rights, or Convertible Securities then still outstanding for the consideration, if any, received by the Corporation therefor and to be received on the basis of such changed price. On the expiration of any right or option referred to in paragraph (1) of Subsection 4(e)(ii), or on the termination of any right to convert or exchange any Convertible Securities referred to in paragraphs (1) or (2) of said Subsection 4(e)(ii), the Conversion Price shall forthwith be readjusted to such amount as would have obtained had the adjustment made upon the granting or issuance of such rights or options or Convertible Securities been made upon the basis of the issuance or sale of only the number of shares of Common Stock actually issued upon the exercise of such options or rights or upon the conversion or exchange of such Convertible Securities. If the purchase price provided for in any such right or option, or the rate at which any such Convertible Securities are convertible into or exchangeable for Common Stock, shall change at any time under or by reason of provisions with respect thereto designed to protect against dilution, then in case of the delivery of Common Stock upon the exercise of any such right or option or upon conversion or exchange of any such Convertible Security, the Conversion Price then in effect hereunder shall forthwith be decreased to such Conversion Price as would have obtained had the adjustments made upon the issuance of such right or option or Convertible Security been made upon the basis of the issuance of (and the total consideration received for) the shares of Common Stock delivered as aforesaid. (vi) For so long as shares of Series B Preferred Stock are issued and outstanding, the Corporation may not consolidate or merge with or into another person, unless (i) the Corporation is the surviving entity, or the person formed by or surviving any such consolidation or merger (if other than the Corporation) is a corporation organized or existing under the laws of the United States, any state thereof or the District of Columbia; and (ii) the Series B Preferred Stock shall be converted or exchanged for and shall become shares of such successor, transferee or resulting person having in respect of such successor, transferee or successor person the same powers, preferences, and relative participating, optional or other special rights and the qualifications, limitations or restrictions thereon, that the Series B Preferred Stock had immediately prior to such transaction. (vii) The following events shall not effect an adjustment to the Conversion Price pursuant to this Section 4(e): (1) The issuance of Common Stock by the Corporation upon the conversion of the Series B Preferred Stock or the Series A Preferred Stock; (2) The issuance of options to acquire shares of Common Stock not to exceed 10% of the outstanding shares of Common Stock, on a fully diluted basis, as of the effective date of this Certificate, from time to time issuable or issued to employees, consultants or directors of the Corporation granted or to be granted with the approval of the Board of Directors of the Corporation and the Common Stock issuable or issued upon exercise thereof; (3) The issuance of warrants to acquire 1,500,000 shares of Common Stock to be issued by the Corporation in exchange for identical warrants issued by USOL Holdings, Inc., a Delaware corporation ("USOL") to former creditors of U.S. Online Communications, Inc. in connection with the sale of assets to USOL and the issuance by the Corporation of Common Stock issuable or issued upon exercise thereof; EX 99.3 - 8 (4) The issuance of 3,175,000 shares of Common Stock by the Corporation in exchange for 3,175,000 shares of USOL Common Stock in connection with the merger between USOL and the Corporation; (5) The issuance of warrants to acquire 325,000 shares of Common Stock to be issued by the Corporation in exchange for identical warrants issued by USOL to GMAC Commercial Mortgage Corporation in connection with the sale of assets to USOL and the issuance by the Corporation of Common Stock issuable or issued upon exercise thereof; and (6) The issuance of warrants to acquire 259,000 shares of Common Stock to be issued by the Corporation in exchange for identical warrants issued by USOL to Amstar Capital Group or its affiliates, in connection with any financial advisory arrangements, and the issuance by the Corporation of Common Stock issuable or issued upon exercise thereof. (viii) "Fair Value" of the Common Stock as of a particular date shall mean the average of the daily closing prices for the preceding twenty trading days before the day in question. The closing price for each day shall be the last reported sale price or, in case no such reported sale takes place on such day, the average of the reported closing bid and asked prices, in either case on the principal national securities exchange on which the Common Stock is listed or admitted to trading or, if not listed or admitted to trading on any national securities exchange, the average of the closing bid and asked prices as reported by the National Association of Securities Dealers Automated Quotation System. If no price can be determined by the foregoing method, "Fair Value" shall mean the fair value thereof as determined by mutual agreement reached by the Corporation and the holders of a majority of the shares of Series B Preferred Stock and Series A Preferred Stock (the "Majority of the Holders") or, in the event the parties are unable to agree, an opinion of an independent investment banking firm or firms in accordance with the following procedure. In the case of any event which gives rise to a requirement to determine "Fair Value" hereunder, the Corporation shall be responsible for initiating the process by which Fair Value shall be determined as promptly as practicable, but in any event within twenty (20) days following such event and if the procedures contemplated herein in connection with determining Fair Value have not been complied with fully, then any such determination of Fair Value for any purpose hereunder shall be deemed to be preliminary and subject to adjustment pending full compliance with such procedures. Upon the occurrence of an event requiring the determination of Fair Value, the Corporation shall give the holders of Series B Preferred Stock and Series A Preferred Stock notice of such event, and the Corporation and the holders of Series B Preferred Stock and Series A Preferred Stock shall engage in direct good faith discussions to arrive at a mutually agreeable determination of Fair Value. In the event the Corporation and the Majority of the Holders are unable to arrive at a mutually agreeable determination within thirty (30) days of the notice, an independent investment banking firm of national standing selected by the Corporation shall make such determination and render such opinion. The determination so made shall be conclusive and binding on the Corporation and the holders of Series B Preferred Stock and Series A Preferred Stock. The fees and expenses of the investment banking firm retained for such purpose shall be shared equally by the Corporation and the holders of Series B Preferred Stock and Series A Preferred Stock. (ix) If at any time or from time to time conditions arise by reason of action taken by the Corporation which are not adequately covered by the provisions of Subsection 4(e), and which might materially and adversely affect the exercise rights of the Holders of Series B Preferred Stock and Series A Preferred Stock, upon the request of at least a Majority of the Holders, the Corporation shall appoint a firm of independent public accountants of recognized national standing (which may be the regular auditors of the Corporation), which shall give their opinion upon the adjustment, if any, of the number of shares issuable upon the conversion of the Series B Preferred Stock and Series A Preferred Stock, on a basis consistent with the standards established in the other provisions of Subsection 4(e), necessary in order to preserve without diminution the rights of the Holders of the Series B Preferred Stock and Series A Preferred Stock. Upon receipt of such opinion, the Board of Directors shall forthwith make the adjustments, if any, described therein. EX 99.3 - 9 (f) COVENANT TO RESERVE SHARES OF COMMON STOCK AND SERIES A PREFERRED STOCK FOR CONVERSION. (i) The Corporation covenants that it will reserve and keep available out of its authorized Common Stock and Series A Preferred Stock and/or shares of its Common Stock and Series A Preferred Stock then owned or held by or for the account of the Corporation, solely for the purpose of delivery upon conversion of the Series B Preferred Stock as herein provided, such number of shares of Common Stock or Series A Preferred Stock as shall then be deliverable upon the conversion of the Series B Preferred Stock. All shares of Common Stock and Series A Preferred Stock which shall be so deliverable shall be duly and validly issued and fully paid and nonassessable. (ii) Before taking any action which would cause an adjustment reducing the Conversion Price at any time in effect below the then par value of the shares of Common Stock issuable upon conversion of the Series B Preferred Stock, the Corporation shall take any corporate action which may be necessary in order that the Corporation may validly and legally issue fully paid and nonassessable shares of such Common Stock at such Conversion Price as so adjusted. (g) COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. If any shares of Common Stock or Series A Preferred Stock required to be reserved for purposes of conversion of the Series B Preferred Stock hereunder require registration with or approval of any governmental authority under any federal or state law, or listing upon any national securities exchange, before such shares may be issued upon conversion, the Corporation will in good faith and as expeditiously as possible endeavor to cause such shares to be duly registered, approved or listed, as the case may be. (h) NOTICE OF CHANGE OF CONVERSION PRICE OF COMMON STOCK. Whenever the Conversion Price is adjusted, as herein provided, the Corporation shall promptly deliver to each Holder a certificate of a firm of independent public accountants of national standing (who may be the accountants regularly employed by the Corporation) selected by the Board of Directors of the Corporation setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment. (i) NOTICE OF TAKING OF CERTAIN ACTIONS. In case: (i) the Corporation shall declare a dividend (or any other distribution) on its Common Stock payable otherwise than out of its earned surplus; or (ii) the Corporation shall authorize the granting to holders of Common Stock of rights to subscribe for or purchase any shares of capital stock of any class or of any other rights; or (iii) of any capital reorganization or reclassification of the capital stock of the Corporation or of any consolidation or merger of the Corporation with another corporation, or of the sale of all or substantially all of its assets to another corporation which is to be effected in such a way that holders of Common Stock shall be entitled to receive stock, securities or other assets with respect to or in exchange for Common Stock; or (iv) of the voluntary or involuntary dissolution, liquidation or winding up of the Corporation; or (v) of any other action requiring adjustment to the Conversion Price. then the Corporation shall promptly cause to be mailed to each Holder at its last address as set forth on the stock transfer records of the Corporation, at least 14 days prior to the applicable record date hereinafter specified, a notice stating (1) the date on which a record is to be taken for the purpose of such dividend or distribution of rights, or, if a record is not to be taken, the date as of which the holders of Common Stock of record would be entitled to such dividend or distribution of rights, or (2) the date on which such capital reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up is expected to become effective, and the date as of which it is expected that the holders of Common Stock of record shall be entitled to exchange their shares of EX 99.3 - 10 Common Stock for securities or other assets deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up. The Corporation shall not convert or directly or indirectly redeem, purchase or otherwise acquire any shares of Common Stock or any other class of capital stock of the Corporation or take any other action affecting the voting rights of such shares, if such action will increase the percentage of any class of outstanding voting securities owned or controlled by any Regulated Stockholder (other than any such stockholder which requested that the Corporation take such action, or which otherwise waives in writing its rights under this Section 4(i)), unless the Corporation gives written notice (the "Deferral Notice") of such action to each Regulated Stockholder. The Corporation will defer making any such conversion, redemption, purchase or other acquisition, or taking any such other action for a period of twenty (20) days (the "Deferral Period") after giving the Deferral Notice in order to allow each Regulated Stockholder to determine whether it wishes to convert or take any other action with respect to the Common Stock it owns, controls or has the power to vote, and if any such Regulated Stockholder then elects to convert any shares of Common Stock, it shall notify the Corporation in writing within ten (10) days of the issuance of the Deferral Notice, in which case the Corporation shall (i) promptly notify from time to time prior to the end of such 20-day period each other Regulated Stockholder holding shares of each proposed conversion, and (ii) effect the conversions requested by all Regulated Stockholders in response to the notice issued pursuant to this Section 4(i) at the end of the Deferral Period. Upon complying with the procedures hereinabove set forth in this Section 4(i), the Corporation may so convert or directly or indirectly redeem, purchase or otherwise acquire any shares of Common Stock or any other class of capital stock of the Corporation or take any other action affecting the voting rights of such shares. The Corporation shall not redeem, purchase, acquire or take any other action affecting outstanding shares of Series B Preferred Stock if, after giving effect to such redemption, purchase, acquisition or other action, a Regulated Stockholder would own more than 4.9% of any class of voting securities of the Corporation (other than any class of voting securities which is (or is made prior to any such redemption, purchase, acquisition or other action) convertible into a class of non-voting securities which are otherwise identical to the voting securities and convertible into such voting securities on terms reasonably acceptable to such Regulated Stockholder) or more than 24.9% of the total equity of the Corporation or more than 24.9% of the total value of all capital stock of the Corporation (in each case determined by assuming such Regulated Holder (but no other holder) has exercised, converted or exchanged all of its options, warrants and other convertible or exchangeable securities) unless the Corporation gives the Deferral Notice set forth in the immediately preceding paragraph. (j) MECHANICS OF CONVERSION. (i) OPTIONAL CONVERSION. In order to convert Series B Preferred Stock into full shares of Common Stock or Series A Preferred Stock, a Holder shall deliver, no later than 11:00 a.m., Pacific Standard Time on the business day next preceding the Conversion Date, to the office of the Corporation's designated transfer agent for the Series B Preferred Stock (the "Transfer Agent") (1) a fully executed notice of conversion ("Notice of Conversion"), and (2) the original certificate or certificates evidencing the Series B Preferred Stock being converted (a "Certificate"), duly endorsed. (ii) AUTOMATIC CONVERSION. Upon the satisfaction of the conditions set forth in Section 4(a) above, the Corporation shall, by notice to the Holders of Series B Preferred Stock (the "Automatic Conversion Notice"), require such Holders to convert all shares of Series B Preferred Stock into fully paid and nonassessable shares of Common Stock at the applicable Conversion Price. Such notice shall be delivered by first class mail, postage prepaid, shall be given to the holders of record of the Series B Preferred Stock to be converted, addressed to such holders at their last addresses as shown on the Corporation's stock transfer ledger. Such notice of conversion shall specify the date fixed for conversion; the then effective Conversion Price; that accumulated but unpaid dividends to the date fixed for conversion will be paid, at the Corporation's election in cash or in a number of shares of Common Stock equal to the dividend amount divided by the Conversion Price on the date fixed for conversion (which shall be within thirty (30) days of the notice); and that on and after the Conversion Date, dividends will cease to accumulate on such shares. Tender of shares of Series B Preferred Stock by Holder shall be required for conversion. Any notice which is mailed as herein provided shall be conclusively presumed to have been duly given, whether or not a Holder of the Series B Preferred Stock receives such notice; and failure so to give such notice or any defect in such notice, shall not affect the validity of the proceedings for the conversion. EX 99.3 - 11 (iii) CONVERSION DATE. The Conversion Date shall be deemed to be (a) for an optional conversion, the date the Notice of Conversion and the original Certificates representing the Series B Preferred Stock to be converted are surrendered to the Transfer Agent or (b) for an automatic conversion, the date specified by the Corporation in the Automatic Conversion Notice delivered to the Holder. (iv) ISSUANCE OF COMMON STOCK WITHIN THREE (3) BUSINESS DAYS. Upon receipt of the original Certificates representing the Series B Preferred Stock to be converted, the Corporation shall use its reasonable best efforts to cause the Transfer Agent to issue the appropriate number of shares of Common Stock or Series A Preferred Stock, and to send Certificates representing such shares, postage prepaid, to each Holder at each such Holder's address as it appears on the stock record books of the transfer agent, no later than three (3) business days thereafter. (v) LOST OR STOLEN CERTIFICATES. Within three (3) business days after receipt by the Corporation of evidence of the loss, theft, destruction or mutilation of a certificate or certificates representing the Series B Preferred Stock, and (in the case of loss, theft or destruction) of indemnity or security reasonably satisfactory to the Corporation and the Transfer Agent, and upon surrender and cancellation of the Series B Preferred Stock certificate or certificates, if mutilated, the Corporation shall use its reasonable best efforts to cause the execution and delivery of new Series B Preferred Stock of like tenor and date. The Corporation shall not be required to deliver new Series B Preferred Stock if the request for replacement is made contemporaneously with the conversion or redemption of such Series B Preferred Stock. 5. RIGHTS ON LIQUIDATION. (a) Upon the voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the Holders of the shares of the Series B Preferred Stock and the Series A Preferred Stock, which shall be pari passu with respect to rights on liquidation, shall be entitled to receive out of the assets of the Corporation available for distribution to stockholders under applicable law, before any payment or distribution of assets shall be made on the Common Stock or on any other class or series of stock of the Corporation ranking junior to the Series B Preferred Stock upon liquidation, the amount of $25.00 per share (taking into account any stock split or reverse stock split or any other adjustments to the number of shares of Common Stock into which the Series B Preferred Stock and the Series A Preferred Stock is convertible) (the "Liquidation Preference"), plus a sum equal to all dividends accrued (including any compound dividends) on such shares and unpaid to the date fixed for such liquidation, dissolution or winding up. (b) After the payment in cash to the Holders of the shares of the Series B Preferred Stock and the Series A Preferred Stock of the full preferential amounts for the shares of the Series B Preferred Stock and the Series A Preferred Stock, as set forth in paragraph (a) of this Section 5, the Holders of the Series B Preferred Stock and the Series A Preferred Stock shall have no further right or claim to any of the remaining assets of the Corporation. (c) In the event the assets of the Corporation available for distribution to the Holders of shares of the Series B Preferred Stock and the Series A Preferred Stock upon any voluntary or involuntary liquidation, dissolution or winding up of the Corporation shall be insufficient to pay in full all amounts to which such holders are entitled pursuant to paragraph (a) of this Section 5, no distribution shall be made on account of any shares of any other series of preferred stock or any other class of stock of the Corporation ranking on a parity with the shares of the Series B Preferred Stock and the Series A Preferred Stock upon such liquidation, dissolution or winding up unless proportionate amounts shall be paid on account of the shares of the Series B Preferred Stock and the Series A Preferred Stock, ratably, in proportion to the full amounts to which holders of all such shares which are on a parity with the shares of the Series B Preferred Stock and the Series A Preferred Stock are respectively entitled upon such dissolution, liquidation or winding up. (d) A merger or consolidation of the Corporation into or with any other corporation or association (in the event that the Corporation is not the surviving entity or the holders of shares of Common Stock prior to the transaction do not hold a majority of the outstanding equity interests of the surviving entity immediately after the transaction) or the sale, conveyance, exchange or transfer (for cash, shares of stock, securities or other EX 99.3 - 12 consideration) of all or substantially all the property and assets of the Corporation shall be deemed to be a liquidation or winding up of the Corporation for the purposes of this Section 5. In such event, the holders of the Series B Preferred Stock and the Series A Preferred Stock shall be entitled to receive, before any payment or distribution of assets shall be made on the Common Stock or on any other class or series ranking junior to the Series B Preferred Stock and the Series A Preferred Stock, an amount equal to the greater of (i) the amount payable pursuant to Section 5(a) or (ii) the amount such holders would have received if they had converted their shares of Series B Preferred Stock and Series A Preferred Stock into Common Stock immediately prior to such liquidation or winding up (without giving effect to the liquidation preference of or any distributions on any other equity interests ranking prior to the Common Stock). 6. OPTIONAL REDEMPTION. Commencing on the earlier to occur of (x) the tenth anniversary of the Reference Date and (y) the date on which fewer than 25% of the aggregate of the shares of Series B Preferred Stock and the Series A Preferred Stock issued on the date of issuance remain outstanding, and at all times thereafter, the Corporation may, at its option, redeem all (but not less than all) outstanding shares of Series B Preferred Stock and the Series A Preferred Stock on a date specified by the Corporation (the "Optional Redemption Date") by paying the greater of Fair Value or the Liquidation Preference plus a sum equal to all dividends accrued on such shares and unpaid to the Optional Redemption Date (the "Redemption Price") in cash out of funds legally available for such purpose. (a) NOTICE AND REDEMPTION PROCEDURES. Notice of the redemption of shares of Series B Preferred Stock pursuant to this Section 6 (a "Notice of Redemption") shall be sent to the Holders of record of the shares of Series B Preferred Stock to be redeemed by first class mail, postage prepaid, at each such Holder's address as it appears on the stock record books of the Corporation not more than 120 nor fewer than 90 days prior to the Optional Redemption Date, which date shall be set forth in such notice (the "Redemption Date"); provided that failure to give such Notice of Redemption to any Holder, or any defect in such Notice of Redemption to any Holder shall not affect the validity of the proceedings for the redemption of any shares of Series B Preferred Stock held by any other Holder. In order to facilitate the redemption of shares of Series B Preferred Stock, the Board of Directors may fix a record date for the determination of the holders of shares of Series B Preferred Stock to be redeemed not more than 30 days prior to the date the Notice of Redemption is mailed. On or after the Optional Redemption Date, each Holder of the shares called for redemption shall surrender the certificate evidencing such shares to the Corporation at the place designated in such notice and shall thereupon be entitled to receive payment of the Redemption Price for such shares. From and after the Optional Redemption Date, all dividends on shares of Series B Preferred Stock shall cease to accumulate and all rights of the Holders thereof as Holders of Series B Preferred Stock shall cease and terminate, except to the extent the Corporation shall default in payment thereof on the Optional Redemption Date. (b) DEPOSIT OF FUNDS. The Corporation shall, on or prior to the Optional Redemption Date, deposit with its transfer agent or other redemption agent in the State of Texas having a capital and surplus of at least $500,000,000 selected by the Board of Directors, as a trust fund for the benefit of the holders of the shares of Series B Preferred Stock to be redeemed, cash that is sufficient in amount to redeem the shares to be redeemed in accordance with the Notice of Redemption, with irrevocable instructions and authority to such transfer agent or other redemption agent to pay to the respective holders of such shares, as evidenced by a list of such holders certified by an officer of the Corporation, the Redemption Price upon surrender of their respective share certificates. Such deposit shall be deemed to constitute full payment of the Redemption Price for such shares to the holders, and from and after the date of such deposit, all rights of the holders of the shares of Series B Preferred Stock that are to be redeemed as stockholders of the Corporation with respect to such shares, except the right to receive the Redemption Price upon the surrender of their respective certificates, shall cease and terminate. In case holders of any shares of Series B Preferred Stock called for redemption shall not, within two years after such deposit, claim the cash deposited for redemption thereof, such transfer agent or other redemption agent shall, upon demand, pay over to the Corporation the balance so deposited. Thereupon, such transfer agent or other redemption agent shall be relieved of all responsibility to the holders thereof and the sole right of such holders, with respect to shares to be redeemed, shall EX 99.3 - 13 be to receive the Redemption Price as general creditors of the Corporation. Any interest accrued on any funds so deposited shall belong to the Corporation, and shall be paid to it from time to time on demand. 7. NOTICE. Any notice required to be given to the holders of Series B Preferred Stock or any securities issued upon conversion thereof shall be in writing and shall be deemed to have been given upon the earlier of personal delivery or three days after deposit in the United States mails by registered or certified mail, return receipt requested, with postage fully prepaid, and addressed to each holder of record at his or its address as it appears on the stock transfer records of the Corporation. Any notice to the Corporation shall be in writing and shall be deemed to have been given upon the earlier of personal delivery or three days after deposit in the United States mails by registered or certified mail, return receipt requested, with postage fully prepaid, to the Corporation at 10300 Metric Boulevard, Austin, Texas 78758 or such other address as to which the Corporation shall have given notice to each Holder in accordance with the provisions of this Section 7. 8. LEGEND. All certificates representing the Series B Preferred Stock, all shares of Series A Preferred Stock or Common Stock issued upon conversion of shares of Series B Preferred Stock, and any and all securities issued in replacement thereof or in exchange therefor shall bear such legends as shall be required by law or contract. 9. RANK. The Series B Preferred Stock shall rank pari passu with the Series A Preferred Stock and shall rank senior to all of the Corporation's Common Stock, par value $0.001 per share (the "Common Stock"), and all other classes and series of preferred or other capital stock of the Corporation hereafter issued by the Corporation as to dividends and as to distributions of assets upon the liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary. 10. PROTECTIVE PROVISIONS. (a) So long as shares of Series B Preferred Stock are outstanding, the Corporation may not waive or amend any term of this Certificate of Designations, including but not limited to Section 4(e)(vi), without first obtaining the approval (by vote or written consent) of a majority of the holders of the then-outstanding Series A Preferred Stock and the then-outstanding Series B Preferred Stock, voting as a single class. (b) So long as shares of Series B Preferred Stock are outstanding, the Corporation shall not, without the consent of the holders of two-thirds of the shares of then-outstanding Series A Preferred Stock and then-outstanding Series B Preferred Stock: (i) issue any class or series of preferred or other capital stock senior to or on parity with the Series B Preferred Stock as to payment of dividends or senior to or on a parity with the Series B Preferred Stock as to payments on liquidation, dissolution or winding up of the Corporation; (ii) amend its Articles of Incorporation or bylaws in any manner which would impair or reduce the rights of a Holder of the Series B Preferred Stock; or (iii) permit a liquidation, dissolution or winding up of the Corporation to occur. (c) Notwithstanding any other provision hereof to the contrary, so long as shares of Series B Preferred Stock are outstanding, the Corporation shall not, without the consent of the Series B Preferred Stock holder so affected, amend its Articles of Incorporation or bylaws to impair or reduce the economic rights of the holders of Series B Preferred Stock, including reducing the Conversion Price or dividend rate. (d) Notwithstanding any other provision hereof to the contrary, so long as shares of Series B Preferred Stock are outstanding, the Corporation shall not, without the consent of the holder of the Series B EX 99.3 - 14 Preferred Stock so affected, amend its Articles of Incorporation or bylaws or take any action to treat one holder of Series B Preferred Stock differently from another holder of Series B Preferred Stock. EX 99.3 - 15 NOTICE OF CONVERSION (To be Executed by the Registered Holder in order to Convert the Series B Preferred Stock into Series A Preferred Stock) The undersigned hereby irrevocably elects to convert ___________ shares of Series B Preferred Stock ("Series B Preferred Stock"), represented by stock certificate No(s). ____________ (the "Series B Stock Certificates") into shares of Series A Preferred Stock ("Series A Preferred Stock") of USOL Holdings, Inc. (f/k/a FirstLink Communications, Inc.) (the "Corporation") according to the conditions of the Certificate of Designations of Series B Preferred Stock, as of the date written below. If shares are to be issued in the name of a person other than undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates. No fee will be charged to the holder for any conversion, except for transfer taxes, if any. The undersigned represents and warrants that all offers and sales by the undersigned of the shares of Series A Preferred Stock issuable to the undersigned upon conversion of the shares of Series B Preferred Stock represented by the Series B Stock Certificates shall be made pursuant to an exemption from registration under the Securities A of 1933. Conversion Calculations: ----------------------------------- Date of Conversion ----------------------------------- Applicable Conversion Price ----------------------------------- Signature ----------------------------------- Name Address: ----------------------------------- ----------------------------------- No shares of Series A Preferred Stock will be issued until the original Series B Stock Certificate(s) to be converted and the Notice of Conversion are received by the Corporation or the Corporation's transfer agent (the "Transfer Agent") as required by the Certificate of Designations of the Series B Preferred Stock. The Series B Preferred Stock to be converted shall be deemed to cease to be outstanding as of the Conversion Date (irrespective as to when the underlying Series A Preferred Stock is delivered). EX 99.3 - 16 NOTICE OF CONVERSION (To be Executed by the Registered Holder in order to Convert the Series B Preferred Stock into Common Stock) The undersigned hereby irrevocably elects to convert ___________ shares of Series B Preferred Stock ("Series B Preferred Stock"), represented by stock certificate No(s). ____________ (the "Preferred Stock Certificates") into shares of common stock ("Common Stock") of USOL Holdings, Inc. (f/k/a FirstLink Communications, Inc.) (the "Corporation") according to the conditions of the Certificate of Designations of Series B Preferred Stock, as of the date written below. If shares are to be issued in the name of a person other than undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates. No fee will be charged to the holder for any conversion, except for transfer taxes, if any. The undersigned represents and warrants that all offers and sales by the undersigned of the shares of Common Stock issuable to the undersigned upon conversion of the shares of Series B Preferred Stock represented by the Preferred Stock Certificates shall be made pursuant to and subject to an effective registration statement covering the Common Stock under the Securities Act of 1933, as amended (the "Act"), or pursuant to an exemption from registration under the Act. Conversion Calculations: ----------------------------------- Date of Conversion ----------------------------------- Applicable Conversion Price ----------------------------------- Signature ----------------------------------- Name Address: ----------------------------------- ----------------------------------- No shares of Common Stock will be issued until the original Preferred Stock Certificate(s) to be converted and the Notice of Conversion are received by the Corporation or the Corporation's transfer agent (the "Transfer Agent") as required by the Certificate of Designations of the Series B Preferred Stock. The Series B Preferred Stock to be converted shall be deemed to cease to be outstanding as of the Conversion Date (irrespective as to when the underlying Common Stock is delivered). EX 99.3 - 17 EX-99.4 5 AGREEMENT AND PLAN OF MERGER AND REORGANIZATION Execution Copy AGREEMENT AND PLAN OF MERGER AND REORGANIZATION DATED AS OF JULY 21, 1999 BY AND BETWEEN FIRSTLINK COMMUNICATIONS, INC. AND USOL HOLDINGS, INC. TABLE OF CONTENTS ARTICLE/SECTION HEADING PAGE ARTICLE I DEFINITIONS..........................................................2 1.1 Definitions............................................................2 ARTICLE II THE MERGER.........................................................10 2.1 Merger; Effective Time................................................10 2.2 Closing...............................................................10 2.3 Effect of the Merger..................................................10 2.4 Articles of Incorporation; By-laws....................................11 2.5 Directors and Officers................................................11 2.6 Effect on Capital Stock...............................................11 2.7 Exchange of Certificates..............................................12 2.8 Stock Transfer Books..................................................14 2.9 Dissenting Shares.....................................................14 2.10 No Further Ownership Rights in USOL Stock............................14 2.11 Lost, Stolen or Destroyed Certificates...............................15 2.12 Tax and Accounting Consequences......................................15 2.13 Adjustments..........................................................15 ARTICLE III REPRESENTATIONS AND WARRANTIES OF FLCI............................15 3.1 Organization..........................................................15 3.2 Capitalization........................................................16 3.3 SEC Filings...........................................................16 3.4 Qualification in Foreign Jurisdictions................................17 3.5 Authority Relative to this Agreement..................................17 3.6 No Conflict; Required Filings and Consents............................17 3.7 Compliance with Laws; Permits.........................................18 3.8 Financial Statements..................................................18 3.9 Absence of Certain Changes or Events..................................19 3.10 Material Contracts...................................................19 3.11 Accounts Receivable..................................................20 3.12 No Undisclosed Liabilities...........................................20 3.13 Absence of Litigation................................................21 3.14 Employee Matters.....................................................21 3.15 Labor Matters........................................................22 3.16 Restrictions on Business Activities..................................22 3.17 Real Property........................................................22 3.18 Equipment and Vehicles...............................................23 3.19 Inventories..........................................................23 3.20 Taxes................................................................23 3.21 Environmental Matters................................................24 3.22 Brokers..............................................................25 EX 99.4 - i 3.23 Interested Party Transactions........................................25 3.24 Insurance Policies...................................................25 3.25 Vote Required........................................................25 3.26 Other Negotiations...................................................26 3.27 Full Disclosure......................................................26 3.28 Anti-takeover Law....................................................26 3.29 Intellectual Property................................................26 3.30 Absence of Certain Business Practices................................28 3.31 Territorial Restrictions.............................................28 3.32 Year 2000 Compliance.................................................28 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF USOL.............................28 4.1 Organization..........................................................28 4.2 Capitalization........................................................29 4.3 Qualification in Foreign Jurisdictions................................30 4.4 Authority Relative to this Agreement..................................30 4.5 No Conflict; Required Filings and Consents............................30 4.6 Brokers...............................................................31 4.7 Other Negotiations....................................................31 4.8 Full Disclosure.......................................................31 4.9 Lockup Agreement......................................................32 4.10 Incorporation of Representations and Warranties By Reference.........33 ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER..............................33 5.1 Conduct of Business by USOL and FLCI Pending the Merger...............33 5.2 No Solicitation by USOL or FLCI.......................................35 ARTICLE VI ADDITIONAL AGREEMENTS..............................................36 6.1 Proxy Statement.......................................................36 6.2 FLCI Stockholders'Meeting.............................................37 6.3 Access to Information; Confidentiality................................37 6.4 Consents, Approvals...................................................38 6.5 Stock Options.........................................................38 6.6 Warrants..............................................................39 6.7 Notification of Certain Matters.......................................39 6.8 Public Announcements..................................................40 6.9 Application For Nasdaq Approval.......................................40 6.10 Delivery of Additional Filings.......................................40 6.11 Accountant's Comfort Letters.........................................40 6.12 Indemnification; Directors'and Officers'Insurance....................40 6.13 Employee Benefits....................................................41 6.14 Stockholder Litigation...............................................42 6.15 Accredited Investors.................................................42 ARTICLE VII CONDITIONS TO THE MERGER..........................................42 7.1 Conditions to Obligation of Each Party to Effect the Merger...........42 7.2 Additional Conditions to Obligations of FLCI..........................43 EX 99.4 - ii 7.3 Additional Conditions to Obligation of USOL...........................44 ARTICLE VIII TERMINATION......................................................45 8.1 Termination...........................................................45 8.2 Certain Actions Prior to Termination..................................47 8.3 Effect of Termination.................................................48 8.4 Fees and Expenses.....................................................49 ARTICLE IX ARBITRATION; CONSENT TO JURISDICTION...............................50 9.1 Submission to Jurisdiction............................................50 9.2 Waiver of Immunity and Inconvenient Forum.............................51 9.3 Arbitration Procedures................................................51 9.4 Final Arbitration Decisions...........................................51 9.5 Claims for Unpaid Balance.............................................51 ARTICLE X GENERAL PROVISIONS..................................................52 10.1 Attorney's Fees......................................................52 10.2 Effectiveness of Representations, Warranties and Agreements; Knowledge, Etc.......................................................52 10.3 Notices..............................................................52 10.4 Amendment............................................................54 10.5 Waiver...............................................................54 10.6 Severability.........................................................54 10.7 Assignment...........................................................55 10.8 Parties in Interest..................................................55 10.9 Failure or Indulgence Not Waiver; Remedies Cumulative................55 10.10 Governing Law........................................................55 10.11 Counterparts.........................................................56 10.12 Captions.............................................................56 10.13 Time.................................................................56 ATTACHMENTS TO AGREEMENT AND PLAN OF MERGER AND REORGANIZATION SCHEDULES: Schedule 1.1 -- USOL Permitted Liens Schedule 2.5(a) -- Directors of Surviving Corporation Schedule 3.1 -- FLCI Investments and Extensions of Credit Schedule 3.2 -- FLCI Stock Options, Warrants, and Registration Rights Schedule 3.4 -- FLCI Qualification in Foreign Jurisdictions Schedule 3.5 -- FLCI Stockholder Consents Schedule 3.6(a) -- FLCI Conflicts, Required Filings and Consents Schedule 3.6(b) -- Requirements of State Government Authorities Schedule 3.7 -- Permits of FLCI Schedule 3.10(a) -- FLCI Material Contracts Schedule 3.12 -- Material Liabilities not on FLCI Financial Statements Schedule 3.14(a) -- FLCI Employee Benefit Plans EX 99.4 - iii Schedule 3.14(b) -- Certain Employment Agreements Schedule 3.14(c) -- Outstanding Options and Option Holders Schedule 3.17(a) -- Legal Descriptions of FLCI Leased Real Property Schedule 3.18-1 -- FLCI Equipment Schedule 3.18-2 -- FLCI Personal Property Leases Schedule 3.20(a) -- Certain Tax Matters Schedule 3.23 -- FLCI Interested Party Transactions Schedule 3.29(a) -- All FLCI Intellectual Property Assets Schedule 3.29(b) -- Intellectual Property Infringements by Third Parties Schedule 3.29(c) -- FLCI Intellectual Property Licensing Agreements Schedule 3.29(d) -- Intellectual Property Litigation Schedule 3.29(e) -- Filing Offices Where FLCI Intellectual Property Assets are Registered Schedule 4.1(b) -- USOL Subsidiaries Schedule 4.2(a) -- USOL Stock Options, Warrants Schedule 4.2(b) -- Terms of Senior Note Commitment Schedule 4.2(c) -- USOL Debt Obligations Schedule 4.3 -- USOL Qualification in Foreign Jurisdictions Schedule 4.5(b) -- USOL Required Consents, Approvals and Permits Schedule 4.6 -- USOL Brokers Schedule 4.9 -- Permitted Transfers Schedule 5.1(g) -- Normal Salary/Wage Increases EXHIBITS: Exhibit 1.1(a) -- Form of TSD Asset Purchase Agreement Exhibit 1.1(b) -- Form of USOC Asset Purchase Agreement Exhibit 2.6(b)-1 -- Form of Certificate of Designations of Preferences, Limitations and Relative Rights of USOL Series A Convertible Preferred Stock Exhibit 2.6(b)-2 -- Form of Certificate of Designations of Preferences, Limitations and Relative Rights of USOL Series B Convertible Preferred Stock Exhibit 2.6(c)-1 -- Form of USOL Other Warrants Exhibit 2.6(c)-2 -- Form of USOL TSD Warrants Exhibit 7.2(f) -- Opinion of Jenkens & Gilchrist Exhibit 7.3(f) -- Opinion of Neuman Drennen & Stone, LLC EX 99.4 - iv AGREEMENT AND PLAN OF MERGER AND REORGANIZATION AGREEMENT AND PLAN OF MERGER AND REORGANIZATION, dated as of July 21, 1999 (this "AGREEMENT"), is by and between FIRSTLINK COMMUNICATIONS, INC., an Oregon corporation ("FLCI"), and USOL HOLDINGS, INC., a Delaware corporation ("USOL"). W I T N E S S E T H: WHEREAS, each of the Boards of Directors of FLCI and USOL has determined that it is advisable and in the best interests of the respective stockholders for FLCI and USOL to enter into a strategic business combination upon the terms and subject to the conditions set forth herein; and WHEREAS, USOL, Inc., a Delaware corporation and a wholly-owned subsidiary of USOL ("USOL SUB"), has acquired substantially all of the assets and assumed substantially all of the remaining liabilities of US Online Communications, Inc., a Delaware corporation ("USOC"), and TheResidentClub.com,Inc., a Delaware corporation and a wholly-owned subsidiary of USOL Sub ("TRC"), has acquired certain of the assets of the Tenant Services Division ("TSD") of GMAC Commercial Mortgage Corporation, a California corporation ("GMAC-CM"); and WHEREAS, in furtherance of such combination, each of the Boards of Directors of FLCI and USOL has approved the merger of USOL with and into FLCI (the "MERGER") in accordance with the applicable provisions of the Oregon Law (as defined herein) and the Delaware Law (as defined herein) and upon the terms and subject to the conditions set forth herein; and WHEREAS, concurrently with the execution and delivery of this Agreement and as a condition and inducement to each of USOL's and FLCI's willingness to enter into this Agreement, certain stockholders of FLCI have entered into agreements with USOL, dated as of the date of this Agreement ("STOCKHOLDER SUPPORT AGREEMENTS"), pursuant to which such stockholders have agreed, among other things, to vote all voting securities of FLCI beneficially owned by them in favor of adoption of the Merger; and WHEREAS, FLCI and USOL intend this Agreement to be a plan of reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the "CODE"), and the regulations thereunder; NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, FLCI and USOL hereby agree as follows: ARTICLE I DEFINITIONS 1.1 DEFINITIONS. As used in this Agreement, the following terms have the following meanings: "ACQUISITION PROPOSAL" has the meaning set forth in Section 5.2(a). "ACTION" has the meaning set forth in Section 7.2(d). "AFFILIATE" means, with respect to a Person, a Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, the first mentioned Person; including, without limitation, any partnership or joint venture in which such Person (either alone, or through or together with any other subsidiary) has, directly or indirectly, an interest of ten percent or more. "AGREEMENT" means this Agreement and includes exhibits and schedules delivered pursuant to the terms of this Agreement. "ARBITRATION NOTICE" has the meaning set forth in Section 9.3(b). "ARBITRATION PANEL" has the meaning set forth in Section 9.3(a). "ARTICLES OF MERGER" means the articles of merger filed in connection with the Merger with the Secretary of State of the State of Oregon pursuant to Section 60.494 of the Oregon Law. "BALANCE SHEET DATE" means May 31, 1999. "BENEFICIAL OWNER" means, with respect to any shares of stock, a Person who shall be deemed to be the beneficial owner of such shares (i) which such Person or any of its Affiliates or associates (as such term is defined in Rule 12b-2 of the Exchange Act) beneficially owns, directly or indirectly, (ii) which such Person or any of its Affiliates or associates has, directly or indirectly, (A) the right to acquire (whether such right is exercisable immediately or subject only to the passage of time), pursuant to any agreement, arrangement or understanding or upon the exercise of consideration rights, exchange rights, warrants or options, or otherwise, or (B) the right to vote pursuant to any agreement, arrangement or understanding or (iii) which are beneficially owned, directly or indirectly, by any other Persons with whom such Person or any of its Affiliates or associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares. "BUSINESS DAY" means any day of the year (other than any Saturday or Sunday) on which the Federal Reserve Bank is open for business in Los Angeles, California. "CANCELLED SHARES" has the meaning set forth in Section 2.6(d). EX 99.4 - 2 "CASH" means all cash, certificates of deposits, bank deposits and other cash equivalents, together with all accrued but unpaid interest thereon. "CERTIFICATE OF MERGER" means the certificate of merger filed in connection with the Merger with the Secretary of State of the State of Delaware in accordance with Section 252 of the Delaware Law. "CLOSING" has the meaning set forth in Section 2.2. "CODE" has the meaning set forth in the Recitals. "COMPANY" means (a) USOL at all times prior to the Effective Time, and (b) FLCI upon the Effective Time and at all times thereafter. "COMPANY COMMON STOCK" means (a) USOL Common Stock at all times prior to the Effective Time, and (b) FLCI Common Stock upon the Effective Time and at all times thereafter. "COMPANY OTHER WARRANTS" means (a) USOL Other Warrants at all times prior to the Effective Time, and (b) FLCI Other Warrants upon the Effective Time and at all times thereafter. "COMPANY PREFERRED STOCK" means (a) USOL Preferred Stock at all times prior to the Effective Time, and (b) FLCI Preferred Stock upon the Effective Time and at all times thereafter. "COMPANY WARRANTS" means (a) USOL Warrants at all times prior to the Effective Time, and (b) FLCI Warrants upon the Effective Time and at all times thereafter. "CONTRACT" means any contract, lease, commitment, sales order, purchase order, agreement, indenture, mortgage, note, bond, instrument, plan, permit or license. "CONTROL" (including the terms "CONTROLLED BY" and "UNDER COMMON CONTROL WITH") means the possession, directly or indirectly or as trustee or executor, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of stock, as trustee or executor, by contract or credit arrangement or otherwise. "DELAWARE LAW" means the Delaware General Corporation Law, Chapter 1 of Title 8, Section 101 et seq. "DISSENTING SHARES" has the meaning set forth in Section 2.9(a). "EFFECTIVE TIME" has the meaning set forth in Section 2.1. "ENVIRONMENTAL LAW" means any Law which relates to or otherwise imposes liability or standards of conduct concerning discharges, releases or threatened releases of noises, odors or any pollutants, contaminants or hazardous or toxic wastes, substances or materials, whether as EX 99.4 - 3 matter or energy, into ambient air, water or land, or otherwise relating to the manufacture, processing, generation, distribution, use, treatment, storage, disposal, cleanup, transport or handling of pollutants, contaminants or hazardous or toxic wastes, substances or materials, including the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, the Superfund Amendments and Reauthorization Act of 1986, as amended, the Resource Conservation and Recovery Act of 1976, as amended, the Toxic Substances Control Act of 1976, as amended, the Federal Water Pollution Control Act Amendments of 1972, the Clean Water Act of 1977, as amended, any so-called "Superfund" or "Superlien" Law (including those already referenced in this definition) and any other Law of any Governmental Authority having a similar subject matter. "ENVIRONMENTAL PERMIT" means any Permit required by or pursuant to any applicable Environmental Law. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. "EXCHANGE AGENT" has the meaning set forth in Section 2.7(a). "FCC" means the Federal Communications Commission or any successor agency thereto. "FLCI ACCOUNTS RECEIVABLE" has the meaning set forth in Section 3.11. "FLCI" has the meaning set forth in the Recitals. "FLCI BALANCE SHEETS" has the meaning set forth in Section 3.8. "FLCI CERTIFICATES" has the meaning set forth in Section 2.7(b). "FLCI COMMON STOCK" means the common stock, par value $.001 per share, of FLCI. "FLCI EMPLOYEE PLANS" has the meaning set forth in Section 3.14(a). "FLCI EQUIPMENT" has the meaning set forth in Section 3.18. "FLCI FCC PERMITS" has the meaning set forth in Section 3.7. "FLCI FINANCIAL STATEMENTS" has the meaning set forth in Section 3.8. "FLCI INTELLECTUAL PROPERTY ASSETS" has the meaning set forth in Section 3.29(a). "FLCI MATERIAL CONTRACTS" has the meaning set forth in Section 3.10(a). "FLCI PREFERRED STOCK" means, collectively, the FLCI Series A Preferred Stock and the FLCI Series B Preferred Stock. EX 99.4 - 4 "FLCI REAL PROPERTY LEASES" has the meaning set forth in Section 3.17(a). "FLCI SEC REPORTS" has the meaning set forth in Section 3.3. "FLCI SERIES A PREFERRED STOCK" means the Series A Convertible Preferred Stock, par value $.001 per share, of FLCI, with the identical rights, preferences and privileges as the USOL Series A Preferred Stock. "FLCI SERIES B PREFERRED STOCK" means the Series B Convertible Preferred Stock, par value $.001 per share, of FLCI, with the identical rights, preferences and privileges as the USOL Series B Preferred Stock. "FLCI STOCK" means the shares of FLCI Common Stock and FLCI Preferred Stock, collectively. "FLCI STOCK OPTION PLAN" means FLCI's 1998-1999 Combined Incentive Stock Option and Nonqualified Stock Option Plan. "FLCI STOCKHOLDERS MEETING" has the meaning set forth in Section 3.27(b). "FLCI TSD WARRANTS" means the separate warrants to be issued in the Merger in exchange for the USOL TSD Warrants. "FLCI UNAUDITED BALANCE SHEETS" has the meaning set forth in Section 3.8. "FLCI UNAUDITED FINANCIAL STATEMENTS" has the meaning set forth in Section 3.8. "FLCI WARRANTS" means, collectively, the FLCI Other Warrants and the FLCI TSD Warrants. "GAAP" means U.S. generally accepted accounting principles at the time in effect. "GMAC-CM" has the meaning set forth in the Recitals. "GOVERNMENTAL APPROVAL" means any consent of any Governmental Authority. "GOVERNMENTAL AUTHORITY" means any nation or government, any state or other political subdivision thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including, without limitation, any multilateral authority or any government authority, agency, department, board, commission or instrumentality of the United States, any State of the United States or any political subdivision thereof, and any tribunal or arbitrator(s) of competent jurisdiction, and any self-regulatory organization. "GROUP HEALTH PLAN" has the meaning set forth in Section 6.13(c). EX 99.4 - 5 "HAZARDOUS SUBSTANCES" means any natural or artificial substance, preparation or article which if generated, transported, stored, treated, used or disposed of (alone or combined with any other substance, preparation or article) is harmful to water, air or land or any living organism. "INTELLECTUAL PROPERTY" means any and all United States and foreign: (a) patents (including design patents, industrial designs and utility models) and patent applications (including docketed patent disclosures awaiting filing, reissues, divisions, continuations-in-part and extensions), patent disclosures awaiting filing determination, inventions and improvements thereto; (b) trademarks, service marks, trade names, trade dress, logos, business and product names, slogans, and registrations and applications for registration thereof; (c) copyrights (including software) and registrations thereof; (d) inventions, processes, designs, formulae, trade secrets, know-how, industrial models, confidential and technical information, manufacturing, engineering and technical drawings, product specifications and confidential business information; (e) intellectual property rights similar to any of the foregoing; and (f) copies and tangible embodiments thereof (in whatever form or medium, including electronic media). "IRS" means the Internal Revenue Service. "ISO" means an incentive stock option within the meaning of Section 422(b) of the Code. "LAW" means any law, statute, regulation, ordinance, rule, order, decree, judgment, consent decree, settlement agreement or governmental requirement enacted, promulgated, entered into, agreed or imposed by any Governmental Authority. "LIEN" shall mean any encumbrance, lien, charge, hypothecation, pledge, mortgage, title retention agreement, security interest of any nature, adverse claim, exception, reservation, easement, right of occupation, any matter capable of registration against title, option, right-of-preemption, privilege or any agreement, indenture, contract, lease, deed of trust, license, option, instrument or other commitment to create any of the foregoing. "LOCKUP PERIOD" has the meaning set forth in Section 4.9(b). "LOSSES" means any and all costs, demands, claims, liabilities, fines, penalties, assessments, damages and expenses (including the burden and expense of defending against all of the foregoing even if the assertions therein are groundless, false or fraudulent), or amounts paid in settlement thereof, and court costs (including court-awarded interest) and reasonable attorneys' fees and disbursements of counsel (including legal or other expenses reasonably incurred in connection with investigating or defending the same); PROVIDED, that the term "Losses" shall not include costs, demands, claims, liabilities, fines, penalties, assessments, damages and expenses which are indirect or consequential in nature. "LOST USOL CERTIFICATE" has the meaning set forth in Section 2.11. EX 99.4 - 6 "MERGER" has the meaning set forth in the Recitals. "MERGER CONSIDERATION" has the meaning set forth in Section 2.7(b). "NASDAQ" means the Nasdaq Stock Market, Inc. "NOTICE" has the meaning set forth in Section 10.3. "OREGON LAW" means the Oregon Business Corporation Act, Oregon Revised Statutes, 60.001 ET SEQ. "OTHER LOCKUP PERIOD" has the meaning set forth in Section 4.9(c). "OUTSIDE DATE" means December 31, 1999. "PERMIT" means a permit, license, consent, certificate, approval, franchise, right, waiver, exemption, order or other authorization of a Governmental Authority. "PERMITTED LIENS" means (i) liens for Taxes, assessments and governmental charges due and being contested in good faith and diligently by appropriate proceedings (and for the payment of which adequate provision has been made); (ii) servitudes, easements, restrictions, rights-of-way and other similar rights in real property or any interest therein; PROVIDED the same are not of such nature as to materially adversely affect the use of the property subject thereto; (iii) liens for Taxes either not due and payable or due but for which notice of assessment has not been given; (iv) undetermined or inchoate liens, charges and privileges incidental to current construction or current operations and statutory liens, charges, adverse claims, security interests or encumbrances of any nature whatsoever claimed or held by any governmental authority that have not at the time been filed or registered against the title to the asset or served upon the Seller pursuant to law or that relate to obligations not due or delinquent; (v) liens or rights reserved in any lease for rent or for compliance with the terms of such lease; (vi) security given in the ordinary course of the Business to any public utility, municipality or government or to any statutory or public authority in connection with the operations of the Business, other than security for borrowed money; (vii) statutory liens in favor of a seller of personal property, mechanic's liens or other statutory liens in favor of a provider of a service; PROVIDED, that obligations to a secured party are not overdue or delinquent; and EX 99.4 - 7 (viii) the liens described in SCHEDULE 1.1 (with respect to USOL). "PERSON" means any individual, corporation, trust, estate, partnership, joint venture, company, association, governmental bureau or other entity of whatsoever kind or nature (including as defined in Section 13(d)(3) of the Exchange Act). "PREDECESSOR ENTITIES" means, collectively, USOC and TSD. "PROXY STATEMENT" has the meaning set forth in Section 3.27(b). "RE-INCORPORATION" means the re-incorporation in the State of Delaware of the Surviving Corporation. "RULES OF ARBITRATION" has the meaning set forth in Section 9.3(a). "SEC" means the Securities and Exchange Commission. "SECURITIES ACT" means the Securities Act of 1933, as amended. "SENIOR NOTES" has the meaning set forth in Section 4.2(b). "STOCKHOLDER SUPPORT AGREEMENTS" has the meaning set forth in the Recitals. "SUBSIDIARY" or "SUBSIDIARIES" means, with respect to a Person, any corporation, partnership, joint venture or other legal entity of such Person (either alone or through or together with any other subsidiary of such Person) which owns, directly or indirectly, more than 50% of the stock or other equity interests the holders of which are generally entitled to vote for the election of the board of directors or other governing body of such corporation or other legal entity. "SUPERIOR OFFER" has the meaning set forth in Section 8.2(c). "SURVIVING CORPORATION" has the meaning set forth in Section 2.1. "TAX" or "TAXES" means any federal, state, local, foreign or other tax, levy, impost, fee, assessment, imposition or other charge of any kind whatsoever, including without limitation net income, gross income, estimated income, gross receipts, business, occupation, value added, real property, payroll, personal property, sales, transfer, stamp, use, employment, commercial rent, occupancy, franchise, withholding, profits, windfall profits, deemed profits, license, registration, lease, severance, capital stock, production, corporation, ad valorem, social security (or similar), unemployment, disability, alternative, add-on minimum, premium or customs duties, including without limitation any interest, penalty, or addition thereto, whether disputed or not. "TAX RETURN" means any return, declaration, report, claim for refund, information return, statement or other document required to be filed in respect of Taxes, including without EX 99.4 - 8 limitation Tax Returns for estimated Taxes, any schedule or attachment thereto, and any amendment to any of the above. "TRANSFER" has the meaning set forth in Section 4.9. "TRC" has the meaning set forth in the Recitals. "TSD" has the meaning set forth in the Recitals. "TSD ASSET PURCHASE AGREEMENT" means the Asset Purchase Agreement, dated as of the date hereof, by and among USOL, TRC and GMAC-CM, in the form attached hereto as EXHIBIT 1.1(A). "USOC" has the meaning set forth in the Recitals. "USOC ASSET PURCHASE AGREEMENT" means the Asset Purchase Agreement, dated as of the date hereof, by and among USOL Sub, USOL, USOC and certain selling shareholders, in the form attached hereto as Exhibit 1.1(b). "USOL" has the meaning set forth in the Recitals. "USOL CERTIFICATE" or "USOL CERTIFICATES" has the meaning set forth in Section 2.7(b). "USOL COMMON STOCK" means the Common Stock, $.001 par value per share, of USOL. "USOL MATERIAL CONTRACTS" means those Contracts of USOL set forth in Section 5.11 of the Disclosure Memorandum to the USOC Asset Purchase Agreement. "USOL OTHER WARRANTS" means the separate warrants, dated the date hereof, issued by USOL, in the form attached hereto as EXHIBIT 2.6(C)-1. "USOL PREFERRED STOCK" means, collectively, the USOL Series A Preferred Stock and the USOL Series B Preferred Stock. "USOL SERIES A PREFERRED STOCK" means the Series A Convertible Preferred Stock, $0.001 par value, of USOL, with the rights, preferences and privileges set forth in EXHIBIT 2.6(B)-1 hereto. "USOL SERIES B PREFERRED STOCK" means the Series B Convertible Preferred Stock, $0.001 par value, of USOL, with the rights, preferences and privileges set forth in EXHIBIT 2.6(B)-2 hereto. "USOL STOCK" means the USOL Common Stock and USOL Preferred Stock, collectively. "USOL STOCK OPTION PLAN" means the 1999 USOL Holdings, Inc. Incentive Plan. EX 99.4 - 9 "USOL STOCKHOLDERS MEETING" has the meaning set forth in Section 3.27(b). "USOL SUB" has the meaning set forth in the Recitals. "USOL TSD WARRANTS" means the separate warrants issued under by USOL to GMAC-CM, in the form attached hereto as EXHIBIT 2.6(C)-2. "USOL UNAUDITED BALANCE SHEET" means the unaudited balance sheet of USOC as of May 31, 1999. "USOL WARRANTS" means, collectively, the USOL Other Warrants and the USOL TSD Warrants. ARTICLE II THE MERGER 2.1 MERGER; EFFECTIVE TIME. At the Effective Time (as defined below), and subject to and upon the terms and conditions of this Agreement, the Delaware Law and the Oregon Law, USOL shall be merged with and into FLCI and FLCI shall continue as the surviving corporation. FLCI as the surviving corporation after the Merger is hereinafter sometimes referred to as the "SURVIVING CORPORATION." At the Effective Time, the identity and separate existence of USOL shall cease. As promptly as practicable after the satisfaction or waiver, as the case may be, of the conditions set forth in Article VII, USOL and FLCI shall cause the Merger to be consummated by filing the Certificate of Merger and the Articles of Merger, together with any required related instruments, with the Secretaries of State of the States of Delaware and Oregon, respectively, and USOL and FLCI shall take such other actions as may be required by Law to make the Merger effective. The time the Merger becomes effective in accordance with applicable Law is referred to herein as the "EFFECTIVE TIME". 2.2 CLOSING. Unless this Agreement shall have been terminated and the transactions herein contemplated shall have been abandoned pursuant to Section 8.1, and subject to the satisfaction or waiver of all the conditions set forth in Article VII, the consummation of the Merger (the "CLOSING") shall take place as promptly as practicable (and in any event within two business days) after satisfaction or waiver of the conditions set forth in Article VII, at the offices of USOL, 10300 Metric Boulevard, Austin, Texas 78758, unless another time or place is agreed to in writing by USOL and FLCI. 2.3 EFFECT OF THE MERGER. At the Effective Time, the effect of the Merger shall be as provided in this Agreement, the Certificate of Merger, the applicable provisions of the Delaware Law, the Articles of EX 99.4 - 10 Merger and the applicable provisions of the Oregon Law. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time all the property, rights, privileges, powers and franchises of USOL shall vest in the Surviving Corporation, and all debts, liabilities and duties of USOL shall become the debts, liabilities and duties of the Surviving Corporation. 2.4 ARTICLES OF INCORPORATION; BY-LAWS. (a) The Articles of Incorporation of FLCI, as in effect immediately prior to the Effective Time, shall be the Articles of Incorporation of the Surviving Corporation until thereafter amended in accordance with the Oregon Law and said Articles of Incorporation except that said Articles of Incorporation shall be amended as of the Effective Time to the form mutually agreed upon by the parties. (b) The By-laws of FLCI, as in effect immediately prior to the Effective Time, shall be the By-laws of the Surviving Corporation until thereafter amended in accordance with the Oregon Law, the Articles of Incorporation of the Surviving Corporation and said By-laws except that said By-laws shall be amended as of the Effective Time to the form mutually agreed upon by the parties. 2.5 DIRECTORS AND OFFICERS. (a) The seven individuals listed in SCHEDULE 2.5(A) shall comprise the full Board of Directors of the Surviving Corporation as of the Effective Time. (b) The officers of USOL immediately prior to the Effective Time shall comprise the officers of the Surviving Corporation as of the Effective Time. 2.6 EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue of the Merger and without any action on the part of FLCI or USOL or the holders of any securities issued by either of them: (a) Each share of USOL Common Stock issued and outstanding immediately prior to the Effective Time shall be cancelled and converted, subject to Sections 2.6(e), 2.7(f) and 2.13, into the right to receive one (1) share of validly issued, fully paid and nonassessable FLCI Common Stock. (b) Each share of USOL Series A Preferred Stock and USOL Series B Preferred Stock issued and outstanding immediately prior to the Effective Time shall be cancelled and converted, subject to Sections 2.6(e), 2.7(f) and 2.13, into the right to receive one (1) share of validly issued, fully paid and nonassessable FLCI Series A Preferred Stock or FLCI Series B Preferred Stock, respectively. The terms of the FLCI Preferred Stock that will be issued hereunder will be identical to the terms of the USOL Preferred Stock. EXHIBITS 2.6(B)-1 and 2.6(B)-2 set forth the forms of the Certificates of Designations of Preferences, EX 99.4 - 11 Limitations and Relative Rights with respect to the USOL Series A Preferred Stock and the USOL Series B Preferred Stock, respectively. (c) Each USOL Other Warrant issued and outstanding immediately prior to the Effective Time shall be cancelled and converted, subject to Sections 2.6(e), 2.7(f) and 2.13, into the right to receive one (1) FLCI Other Warrant to purchase the same number of shares as the USOL Other Warrant; and each USOL TSD Warrant issued and outstanding immediately prior to the Effective Time shall be converted into the right to receive one (1) FLCI TSD Warrant to purchase the same number of shares as the USOL TSD Warrant. The FLCI Other Warrants which will be issued hereunder shall be identical to the terms of the USOL Other Warrants. EXHIBITS 2.6(C)-1 and 2.6(C)-2 set forth the form of the USOL Other Warrants and the USOL TSD Warrants, respectively. (d) Each share of USOL Stock held in the treasury of USOL and each share of USOL Stock owned by any direct or indirect subsidiary of USOL immediately prior to the Effective Time (the "CANCELLED SHARES") shall, by virtue of the Merger and without any action on the part of the holder thereof, cease to be outstanding and be cancelled and retired without payment of any consideration therefor. (e) No fraction of a share of FLCI Stock shall be issued, but in lieu thereof, each holder of USOL Stock who would otherwise be entitled to a fraction of a share of FLCI Stock (after aggregating all fractional shares of FLCI Stock to be received by such holder and providing for any shares to be withheld pursuant to Section 2.7(f), it being the intention of the parties that no holder of USOL Stock will receive cash in an amount equal to or greater than the value of one full share of FLCI Stock), shall receive from FLCI an amount of cash (rounded to the nearest cent), without interest, equal to the product of (i) such fraction, multiplied by (ii) $2.00, subject to Section 2.13. (f) Each USOL Stock Option issued and outstanding immediately prior to the Effective Time shall be cancelled and converted, pursuant to the provisions of Section 6.5, into an option to acquire, on the same terms and conditions as were applicable under such USOL Stock Option prior to the Effective Time, the whole number of shares of FLCI Common Stock as the holder of such USOL Stock Option would have been entitled to receive pursuant to the Merger had such holder exercised such option in full immediately prior to the Effective Time (not taking into account whether or not such option was in fact exercisable). 2.7 EXCHANGE OF CERTIFICATES. (a) As of the Effective Time, FLCI shall supply, or cause to be supplied, to or for the account of a bank or trust company to be designated by FLCI (the "EXCHANGE AGENT"), in trust for the benefit of the holders of USOL Stock (other than the Cancelled Shares), for exchange in accordance with this Section 2.7, certificates evidencing the FLCI Stock issuable pursuant to Sections 2.6(a) and 2.6(b) in exchange for outstanding USOL Stock and all cash required to be paid pursuant to Sections 2.6(e) and 2.7(c). EX 99.4 - 12 (b) As soon as reasonably practicable after the Effective Time, FLCI shall instruct the Exchange Agent to mail to each holder of record of a certificate or certificates (the "USOL CERTIFICATES") which immediately prior to the Effective Time evidenced outstanding shares of USOL Stock, other than Cancelled Shares, (i) a letter of transmittal, which letter shall specify, among other conditions, that delivery shall be effected, and risk of loss and title to the USOL Certificates shall pass, only upon proper delivery of the USOL Certificates to the Exchange Agent, and (ii) instructions to effect the surrender of the USOL Certificates in exchange for the certificates evidencing shares of FLCI Stock (the "FLCI CERTIFICATES") and, in lieu of any fractional shares thereof, cash. Upon surrender of a USOL Certificate for cancellation to the Exchange Agent , together with such letter of transmittal, duly executed, and such other customary documents as may be reasonably required by FLCI or the Exchange Agent, the holder of such USOL Certificate shall be entitled to receive in exchange therefor (A) FLCI Certificates evidencing that whole number of shares of FLCI Stock which such holder has the right to receive in respect of the shares of USOL Stock formerly evidenced by such USOL Certificate in accordance with applicable provisions hereof; (B) any dividends or other distributions to which such holder is entitled pursuant to Section 2.7(c); and (C) cash in lieu of a fractional share of FLCI Stock to which such holder is entitled pursuant to Section 2.6(e) (such FLCI Stock, rights, dividends, distributions and cash in lieu of fractional shares together with any amounts to be withheld pursuant to Section 2.7(f) being collectively referred to as the "MERGER CONSIDERATION"), and the USOL Certificate so surrendered shall forthwith be cancelled. In the event of a transfer of ownership of shares of USOL Stock which is not registered in the transfer records of USOL as of the Effective Time, FLCI Stock and cash may be issued and paid in accordance with this Article II to a transferee if the applicable certificate is presented to the Exchange Agent, accompanied by all documents required by law to evidence and effect such transfer pursuant to this Section 2.7(b) and by evidence that any applicable stock transfer taxes have been paid. Until so surrendered, each outstanding USOL Certificate which represented shares of USOL Stock, shall be deemed from and after the Effective Time, for all corporate purposes other than the payment of dividends, to evidence the ownership of the number of full shares of FLCI Stock into which such shares of USOL Stock may be exchanged in accordance herewith and the right to receive an amount in cash in lieu of the issuance of any fractional shares in accordance with Section 2.6(e). (c) No dividends or other distributions with respect to FLCI Stock with a record date after the Effective Time shall be paid to the holder of any unsurrendered USOL Certificate with respect to the FLCI Stock such holder is entitled to receive until such holder shall surrender such USOL Certificate. Subject to applicable law, following the surrender of any such USOL Certificate, there shall be paid to the record holder of the FLCI Certificates issued in exchange therefor, without interest, at the time of such surrender, the amount of dividends or other distributions with a record date after the Effective Time theretofore paid with respect to such whole shares of FLCI Stock. (d) If any FLCI Certificate is to be issued in a name other than that in which the USOL Certificate surrendered in exchange therefor is registered, it shall be a condition of the issuance thereof that the USOL Certificate so surrendered shall be properly endorsed and otherwise in proper form for transfer and that the Person requesting such exchange shall have EX 99.4 - 13 paid to FLCI, or any agent designated by FLCI, any transfer or other taxes required by reason of the issuance of an FLCI Certificate in any name other than that of the registered holder of the USOL Certificate surrendered. (e) FLCI and USOL shall have no liability to any holder of USOL Stock for any Merger Consideration (or dividends or distributions with respect thereto) which are delivered to a public official pursuant to any applicable abandoned property, escheat or similar law. (f) FLCI or the Exchange Agent shall be entitled to deduct and withhold from the Merger Consideration otherwise payable to any holder of USOL Stock such amounts as FLCI or the Exchange Agent may be required to deduct and withhold with respect to any provision of Federal, state, local or foreign Tax laws. To the extent that amounts are so withheld by FLCI 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 in respect of which such deduction and withholding was made by FLCI or the Exchange Agent. 2.8 STOCK TRANSFER BOOKS. At the Effective Time, the stock transfer books of USOL shall be closed, and there shall be no further registration of transfers of USOL Stock on the records of USOL. 2.9 DISSENTING SHARES. (a) Notwithstanding any provision of this Agreement to the contrary, any shares of FLCI Common Stock held by a holder who has exercised appraisal rights for such shares in accordance with the applicable provisions of the Oregon Law and who, as of the Effective Time, has not effectively withdrawn or lost such appraisal rights (the "DISSENTING SHARES"), shall not be converted into, or represent a right to receive, the Merger Consideration pursuant to Section 2.7(b), but the holder thereof shall be entitled only to such rights as are granted by the Oregon Law with respect to such Dissenting Shares. (b) FLCI shall give USOL prompt written notice of any demands received by FLCI to require FLCI to purchase Dissenting Shares, the withdrawal of any such demands, and any other notices or instruments served pursuant to the Oregon Law and received by FLCI. FLCI shall not, except with the prior written consent of USOL, voluntarily make any payment with respect to any Dissenting Shares or offer to settle, or settle, any such demands with respect thereto. 2.10 NO FURTHER OWNERSHIP RIGHTS IN USOL STOCK. The Merger Consideration delivered upon the surrender of USOL Certificates in accordance with the terms hereof shall be deemed to have been delivered in full satisfaction of all rights pertaining to such USOL Certificates, and there shall be no further registration of transfers on the records of the Surviving Corporation of shares of USOL Stock which were outstanding immediately prior to the Effective Time. If, after the Effective Time, USOL EX 99.4 - 14 Certificates are presented to the Surviving Corporation for any reason, they shall be cancelled and converted as provided in this Article II. 2.11 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any USOL Certificate shall have been lost, stolen or destroyed (a "LOST USOL Certificate"), the Exchange Agent shall, upon the making of an affidavit of that fact by the registered owner thereof, deliver to the registered owner thereof such Merger Consideration as may be required pursuant to Sections 2.6 and 2.7; PROVIDED, HOWEVER, that FLCI may, in its sole discretion and as a condition precedent to the delivery of such Merger Consideration, require the registered owner of such Lost USOL Certificate to deliver a bond in such sum as it may reasonably direct as indemnity against any claim that may be made against FLCI or the Exchange Agent with respect to the Lost USOL Certificate. 2.12 TAX AND ACCOUNTING CONSEQUENCES. It is intended by FLCI and USOL that the Merger shall constitute a reorganization within the meaning of Section 368(a) of the Code. FLCI and USOL hereby adopt this Agreement as a "plan of reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the United States Treasury Regulations. 2.13 ADJUSTMENTS. If, between the date of this Agreement and the Effective Time, the outstanding shares of FLCI Common Stock shall be changed into a different number of shares or a different class by reason of any reclassification, recapitalization, split-up, combination, exchange of shares or readjustment, or a stock dividend thereon shall be declared with a record date prior to the Effective Time, the amount of consideration to be received pursuant to this Article II in exchange for each outstanding share of USOL Stock or USOL Warrant shall be correspondingly adjusted. ARTICLE III REPRESENTATIONS AND WARRANTIES OF FLCI FLCI hereby represents and warrants to USOL that each of the following is true, correct and complete as of the date hereof: 3.1 ORGANIZATION. (a) FLCI is a corporation duly organized, validly existing and in good standing under the laws of Oregon. FLCI has full corporate power and authority to own, lease and operate its properties and to carry on its business as such business is now conducted and proposed to be conducted. The copies of the Articles of Incorporation of FLCI, certified by the Secretary of State of Oregon, and the By-laws of FLCI, each of which have been delivered EX 99.4 - 15 to USOL by FLCI, are true and complete copies thereof, and are in full force and effect. FLCI is not in violation of its Articles of Incorporation or By-laws. (b) FLCI has no subsidiaries and does not, directly or indirectly, own or have the contractual right or obligation to acquire any equity interest in any other corporation, partnership, joint venture, trust or other business organization. Except as disclosed in SCHEDULE 3.1, FLCI has not made any investment in, loan to, or advance of cash or other extension of credit to any Person other than in the ordinary course of its business. 3.2 CAPITALIZATION. The authorized capital stock of FLCI consists of 20,000,000 shares of common stock, no par value per share, of which 3,615,617 shares are currently issued and outstanding, and 1,000,000 shares of preferred stock, no par value per share, none of which shares are currently issued or outstanding, and no designation of any series of preferred stock has been made. All of the outstanding shares of FLCI's capital stock have been duly authorized, are validly issued, fully paid and non-assessable, and the holders thereof are not entitled to cumulative voting rights or preemptive rights. There are no obligations, contingent or otherwise, of FLCI to repurchase, redeem or otherwise acquire any shares of FLCI's capital stock or to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in any entity. Except as set forth in SCHEDULE 3.2 or 3.14(C), there are no outstanding options to purchase, registration rights, or warrants, privileges or rights to subscribe to or purchase, any shares of FLCI's capital stock or securities issued by FLCI convertible into or exchangeable for shares of FLCI's capital stock or other securities of FLCI or commitments, understandings or intentions to issue any additional shares or options, warrants, privileges or rights to subscribe for shares of FLCI's capital stock. At the Effective Time, the authorized capital stock of FLCI will consist of 50,000,000 shares of FLCI Common Stock and 5,000,000 shares of FLCI Preferred Stock, 1,700,000 shares of which shall be designated as the "FLCI SERIES A PREFERRED STOCK" and 300,000 shares of which shall be designated as the "FLCI SERIES B PREFERRED STOCK." 3.3 SEC FILINGS. FLCI has filed all forms, reports and documents required to be filed with the SEC under the Securities Act and the Exchange Act since the date FLCI first registered the FLCI Common Stock under the Exchange Act and has delivered to USOL true and complete copies of (i) its Annual Report on Form 10-K for the fiscal year ended December 31, 1998, (ii) its Quarterly Reports on Form 10-Q for the periods ended September 30, 1998, and March 31, 1999, (iii) Amendment No. 3 to its Registration Statement on Form SB-2 filed with the SEC on May 14, 1998, (iv) all other reports or registration statements filed by FLCI with the SEC since it first registered the FLCI Common Stock under the Exchange Act, and (v) all amendments, supplements and exhibits (including, without duplication, exhibits incorporated by reference) to all such reports and registration statements (the reports referred to in subsections (i) - (v), collectively, the "FLCI SEC REPORTS"). The FLCI SEC Reports (i) were prepared in accordance with the requirements of the Securities Act or the Exchange Act, EX 99.4 - 16 as applicable, and (ii) did not at the time they were filed (or if amended or superseded by a filing prior to the date of this Agreement, then on the date of such filing) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. 3.4 QUALIFICATION IN FOREIGN JURISDICTIONS. FLCI is duly qualified or licensed and in good standing as a foreign corporation duly authorized to do business in each jurisdiction in which the character of the properties owned or leased or the nature of the activities conducted by it makes such qualification or licensing necessary, except for any jurisdiction(s) in which the failure to so qualify would not have a material adverse effect upon FLCI. SCHEDULE 3.4 lists the jurisdictions in which FLCI is qualified to do business as a foreign corporation. 3.5 AUTHORITY RELATIVE TO THIS AGREEMENT. FLCI has all necessary corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by FLCI and the consummation by FLCI of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action and no other corporate proceedings on the part of the Board of Directors of FLCI are necessary to authorize this Agreement or to consummate the transactions so contemplated. FLCI has obtained, and has delivered to USOL, separate Stockholder Support Agreements executed by, and has obtained the proxy of, the holders of the outstanding shares of FLCI Stock listed in SCHEDULE 3.5 in favor of the approval and adoption of the Merger. The Board of Directors of FLCI has determined that it is advisable and in the best interest of FLCI's stockholders for FLCI to enter into the Merger with USOL upon the terms and subject to the conditions of this Agreement. This Agreement has been duly and validly executed and delivered by FLCI and, assuming the due authorization, execution and delivery by USOL, constitutes a legal, valid and binding obligation of FLCI enforceable in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization and similar laws from time to time in effect that affect creditors' rights generally, and by legal and equitable limitations on the availability of specific remedies. 3.6 NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a) Except as set forth in SCHEDULE 3.6(A), the execution and delivery of this Agreement by FLCI does not, and the performance of this Agreement by FLCI will not, (i) conflict with or violate the Articles of Incorporation or By-laws of FLCI, (ii) conflict with or violate any Law applicable to FLCI or by which any of its properties is bound or affected, (iii) result in any breach of or constitute a default (or an event that with notice or lapse of time or both would constitute a default), or impair FLCI's rights or alter the rights or obligations of any third party under, or give to others any rights of termination, amendment, acceleration or cancellation of, any FLCI Material Contract, (iv) result in the termination of, or accelerate the EX 99.4 - 17 payment or performance required by, or result in the creation of a Lien on any of the properties or assets of FLCI pursuant to any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which FLCI is a party or by which FLCI, or any of its properties, is bound or affected, or (v) give any Person the right to require FLCI to purchase assets from or sell assets to such Person or trigger a "change of control" provision in any Contract to which FLCI is a party; except in the case of clause (ii) for such violations or conflicts that would not, individually or in the aggregate, have a material adverse effect on FLCI. (b) The execution and delivery of this Agreement by FLCI does not, and the performance of this Agreement and the transactions contemplated hereby by FLCI will not, require any consent, approval, authorization or permit of, or filing with or notification to, any Governmental Authority, except (i) for applicable requirements of any state Governmental Authorities as set forth in SCHEDULE 3.6(B), the Securities Act, the Exchange Act, state securities laws, Nasdaq, and the filing and recordation of appropriate merger or other documents as required by the Oregon Law and the Delaware Law, and (ii) where the failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, would not prevent or delay consummation of the Merger, or otherwise prevent or delay FLCI from performing its obligations under this Agreement, or would not otherwise have a material adverse effect upon FLCI. 3.7 COMPLIANCE WITH LAWS; PERMITS. To FLCI's knowledge, the operation of its business has been and is being conducted in accordance with all Laws applicable thereto. No investigation by any Governmental Authority or alleged violation of or noncompliance with such Laws is pending or, to the best knowledge of FLCI, threatened. FLCI holds all of the Permits listed in SCHEDULE 3.7, and no other Permits are currently necessary for the lawful operation of FLCI's business, except where the failure to possess the same would not have a material adverse effect on the financial condition, results of operations or business of FLCI. All Permits listed are in full force and effect. No violation of any Permit has occurred which is continuing, and no proceeding is pending or threatened to revoke or limit any Permit. FLCI holds all Permits of the FCC necessary for the lawful conduct of its business (the "FLCI FCC PERMITS"), except where failure to possess the same would not have a material adverse effect on the financial condition, results of operations or business of FLCI. FLCI is in compliance with the terms of all FLCI FCC Permits and the applicable rules and regulations of the FCC in all material respects. 3.8 FINANCIAL STATEMENTS. FLCI has delivered to USOL FLCI's audited balance sheets as at December 31, 1997 and December 31, 1998 (the "FLCI BALANCE SHEETS"), and FLCI's audited statements of income and changes in financial position for the years then ended (collectively, with the FLCI Balance Sheets, the "FLCI FINANCIAL STATEMENTS"). The FLCI Financial Statements have been audited by the independent public accounting firm of KPMG Peat Marwick, LLP. FLCI has also delivered to USOL FLCI's unaudited balance sheets as at March 31, 1998, March 31, EX 99.4 - 18 1999 and May 31, 1999 (the "FLCI UNAUDITED BALANCE SHEETS"), and FLCI's unaudited statements of income and changes in financial position for the three month period ended March 31, 1999 (collectively, with the FLCI Unaudited Balance Sheets, the "FLCI UNAUDITED FINANCIAL STATEMENTS"). The FLCI Financial Statements and the FLCI Unaudited Financial Statements were prepared in accordance with SEC requirements and such financial statements (including the notes thereto) were prepared in accordance with GAAP applied on a consistent basis throughout the periods involved (except for the absence of footnote disclosures in the FLCI Unaudited Financial Statements, and except as may be indicated in the notes thereto) and each fairly presented in all material respects the financial position of FLCI as at the date thereof and the results of its operations and cash flows for the periods indicated, except that the FLCI Unaudited Financial Statements were or are subject to normal and recurring year-end adjustments which are not in the aggregate material in amount. 3.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as reflected in the FLCI Financial Statements, since December 31, 1998, FLCI has conducted its business in the ordinary course and there has not occurred: (i) any amendments or changes in the Articles of Incorporation or By-laws of FLCI; (ii) any damage to, destruction or loss of any assets of FLCI (whether or not covered by insurance) that could have a material adverse effect upon FLCI; (iii) any change by FLCI in its accounting methods, principles or practices; (iv) any revaluation by FLCI of any of its assets, including, without limitation, the writing down of the value of capitalized software or inventory or the writing off of promissory notes or accounts receivable other than in the ordinary course of business in amounts that would not individually or in the aggregate have a material adverse effect on FLCI; (v) any sale of a material amount of property or assets of FLCI; or (vi) any other action or event that would have required the consent of USOL pursuant to Section 5.1 had such action or event occurred after the date of this Agreement. Since December 31, 1998, there has been no material adverse change in the financial condition, results of operations or business of FLCI. 3.10 MATERIAL CONTRACTS. (a) SCHEDULE 3.10(A) sets forth a true and complete list of (i) (A) each Contract with respect to which FLCI has any liability or obligation, contingent or otherwise, involving more than $25,000; or which places any material limitations on the method of conducting, or scope of, FLCI's business; (B) all Contracts of FLCI pursuant to which benefits accrue to the other parties to such Contracts as a result of the Merger; (C) all Contracts of FLCI with its directors, officers, employees, agents or consultants, or its Affiliates; (D) all Contracts to which FLCI is a party relating to the borrowing of money, or the guaranty of any obligation for the borrowing of money; (E) all Contracts relating to any securities of FLCI or rights in connection therewith, and (ii) all Contracts which, as of the date hereof, would be required to be filed by FLCI with the SEC as "material contracts" pursuant to applicable securities laws ((i) and (ii) being collectively referred to as the "FLCI MATERIAL CONTRACTS"). FLCI is not a party to any oral Contract, agreement or other arrangement which, if reduced to written form, would be required to be listed in SCHEDULE 3.10(A). EX 99.4 - 19 (b) The FLCI Material Contracts set forth the entire arrangement and understanding between FLCI and the respective third parties with respect to the subject matter thereof, and there have been no material amendments or side or supplemental arrangements to or in respect of any FLCI Material Contract. FLCI has made available for review by USOL and its representatives true and correct copies of all FLCI Material Contracts as currently in effect, and will furnish any further information that USOL may reasonably request in connection therewith. Each FLCI Material Contract is valid and in full force and effect and FLCI has performed all material obligations required to be performed thereunder. FLCI is not in default under or in breach or violation of any material term of any FLCI Material Contract and, to the knowledge of FLCI, no third party is in default under any material provision of any FLCI Material Contract, except, in each such case, for such defaults, breaches or violations which would not, individually or in the aggregate, have a material adverse effect on FLCI. Each FLCI Material Contract is enforceable against FLCI in accordance with its terms and, to the knowledge of FLCI, is enforceable against the other party thereto. 3.11 ACCOUNTS RECEIVABLE. Each account receivable of FLCI summarized on the FLCI Financial Statements and the FLCI Unaudited Financial Statements (collectively, the "FLCI ACCOUNTS RECEIVABLE") represented, at the date of the applicable financial statement, (a) a sale made in the ordinary course of business and which arose pursuant to an enforceable contract for an undisputed, bona fide sale of goods or for services performed, and FLCI had performed all of its obligations to produce the goods or perform the services to which such FLCI Accounts Receivable relates; (b) except as adequately reserved against in the FLCI Balance Sheets and the FLCI Unaudited Balance Sheets, and except for any amounts the failure of which to collect would not have, individually or in the aggregate, a material adverse effect on FLCI, amounts owed which were not more than 30 days past due as of the applicable date, and which were not subject to any claim or reduction, counterclaim, set-off, recoupment or other claim for credit, allowances or adjustments by the Person owing such amount; and (c) except as reserved against on such balance sheets, to FLCI's knowledge, the FLCI Accounts Receivable were collectible in full within 60 days from the date of the applicable financial statement, in at least the amount at which they are carried on the books of FLCI. FLCI has not sold, assigned, or otherwise encumbered the FLCI Accounts Receivable. 3.12 NO UNDISCLOSED LIABILITIES. Except as set forth on SCHEDULE 3.12, FLCI has no liabilities (absolute, accrued, contingent or otherwise) which are, in the aggregate, material to the business, operations or financial condition of FLCI, taken as a whole, except (a) liabilities adequately provided for in the FLCI Financial Statements, (b) contractual liabilities incurred in the ordinary course of business and not required under GAAP to be reflected on the FLCI Financial Statements, (c) liabilities incurred in connection with this Agreement, or (d) other liabilities reflected on the FLCI Unaudited Balance Sheets or incurred since the Balance Sheet Date in the ordinary EX 99.4 - 20 course of business which are not, in the aggregate, material to the business operations or financial condition of FLCI. 3.13 ABSENCE OF LITIGATION. There are no claims, actions, suits, proceedings or investigations pending or, to the knowledge of FLCI, threatened against FLCI, or any properties or rights of FLCI before any court, arbitrator or administrative or Governmental Authority or body, domestic or foreign, that, individually or in the aggregate, could have a material adverse effect upon FLCI. 3.14 EMPLOYEE MATTERS. (a) Except as specifically described in SCHEDULE 3.14(A), FLCI has no employee benefit plans (including, but not limited to, pension plans and health or welfare plans), arrangements or understandings, whether formal or informal ("FLCI EMPLOYEE PLANS"). FLCI does not now and has never contributed to a "multi-employer plan" as defined in Section 400(a)(3) of ERISA. FLCI has complied with all applicable provisions of ERISA and all rules and regulations promulgated thereunder, and neither FLCI nor any trustee, administrator, fiduciary, agent or employee thereof has at any time been involved in a transaction that would constitute a "prohibited transaction" within the meaning of Section 406 of ERISA as to any covered plan of FLCI. FLCI is not a party to any collective bargaining or other labor union agreement. FLCI has not, within the past five (5) years had, or been threatened with, any labor union activities, work stoppages or other labor trouble with respect to its employees. (b) FLCI has made available for review by USOL and its representatives and SCHEDULE 3.14(B) sets forth (i) a list of true and complete copies of all employment agreements with officers and directors of FLCI; (ii) a list of true and complete copies of all agreements with consultants where FLCI has obligations to make annual cash payments in an amount exceeding $25,000; (iii) a schedule listing all officers of FLCI who have executed a non-competition agreement with FLCI; (iv) a list of true and complete copies of all severance agreements, programs and policies of FLCI with or relating to its employees, excluding programs and policies required to be maintained by law; and (v) a list of true and complete copies of all plans, programs, agreements and other arrangements of FLCI with or relating to its employees which contain change-in-control provisions. (c) SCHEDULE 3.14(C) sets forth a true and complete list of each outstanding option to purchase FLCI Stock as of the date hereof, together with the identity of the holder of such option, the number of shares of FLCI Stock subject to such option, the date of grant of such option, the extent to which such option is or will become vested, the option price of such option (to the extent determined as of the date hereof), whether such option is intended to qualify as an ISO, and the expiration date of such option. SCHEDULE 3.14(C) also sets forth the total number of such ISOs and any nonqualified options. EX 99.4 - 21 3.15 LABOR MATTERS. FLCI has been and currently is conducting its business in full compliance with all Laws relating to employment and employment practices, terms and conditions of employment, wages and hours and nondiscrimination in employment. FLCI's relationship with its employees is good, and there is no labor strike, dispute, slow-down or work stoppage actually pending or threatened against or involving FLCI which might affect in any material way its business. None of the employees of FLCI is covered by any collective bargaining agreement, no collective bargaining agreement is currently being negotiated, and, to the best knowledge or FLCI, no attempt is currently being made to organize any employees of FLCI to form or enter a labor union or similar organization. FLCI has not experienced any work stoppage or other material labor difficulty in the last five years. 3.16 RESTRICTIONS ON BUSINESS ACTIVITIES. Except for this Agreement, there is no material agreement, judgment, injunction, order or decree binding upon FLCI which has or could reasonably be expected to have the effect of prohibiting or impairing any material business practice of FLCI, the acquisition of property by FLCI or the conduct of business by FLCI as currently conducted or as proposed to be conducted by FLCI following the Merger. 3.17 REAL PROPERTY. (a) FLCI does not own any real property. SCHEDULE 3.17(A) lists all leases pursuant to which FLCI holds any real property ("FLCI REAL PROPERTY LEASES") and includes complete, accurate and insurable legal descriptions of such leased real property. No parcel of land subject to an FLCI Real Property Lease relies on or regularly makes use of access to the nearest public road or right-of-way over land owned by others, except where such access is by means of one or more valid recorded easements not subject to divestiture, the terms of which have been disclosed to USOL prior to the date hereof. FLCI has delivered to USOL true and complete copies of all FLCI Real Property Leases, together with copies of all reports of any engineers, environmental consultants or other consultants in its possession relating to any of the property subject to an FLCI Real Property Lease. All of the FLCI Real Property Leases are valid, enforceable and effective in accordance with their terms; all rentals, royalties and other monetary obligations thereunder payable have been fully paid; there is not under any FLCI Real Property Lease any existing or claimed default by FLCI or any other party thereto; there is not under any FLCI Real Property Lease any event or condition, which with or without notice or the passage of time, or both, would constitute a default by FLCI; and FLCI enjoys peaceable and undisturbed possession under all FLCI Real Property Leases. None of the FLCI Real Property Leases are encumbered by any Liens, other than Permitted Liens. (b) Each separate parcel of real estate subject to an FLCI Real Property Lease has adequate water supply, storm and sanitary sewer facilities, access to telephone, gas and electrical connections, fire protection, drainage and other public utilities, and has parking facilities that meet all requirements imposed by applicable Laws. EX 99.4 - 22 (c) There is no pending or, to the best knowledge of FLCI, threatened or proposed proceeding or governmental action to modify the zoning classification of, or to condemn or take by the power of eminent domain (or to purchase in lieu thereof), or to classify as a landmark, or to impose special assessments on, or otherwise to take or restrict in any way the right to use, develop or alter, all or any part of the real property subject to the FLCI Real Property Leases. 3.18 EQUIPMENT AND VEHICLES. SCHEDULE 3.18-1 sets forth a true and complete list of all equipment owned by FLCI ("FLCI EQUIPMENT"), other than items acquired by FLCI in the ordinary course of business from the date hereof through the Closing (and FLCI will identify in writing to USOL, prior to the Closing, each item so acquired which has a book value of $10,000 or more). SCHEDULE 3.18-2 lists all leases by FLCI of any item of personal property used in connection with the Business ("FLCI PERSONAL PROPERTY LEASES"). All of the FLCI Equipment and all of the other personal property leased by FLCI under the FLCI Personal Property Leases are presently utilized by FLCI in the ordinary course of its business. FLCI has delivered to USOL true and complete copies of all FLCI Personal Property Leases. 3.19 INVENTORIES. FLCI does not maintain inventories. 3.20 TAXES. (a) Except as set forth in SCHEDULE 3.20(A), FLCI has completed and timely filed with the appropriate taxing authority all Tax Returns required to be filed by it through the date hereof and will timely file any Tax Returns required to be filed on or prior to the Closing. FLCI has paid and discharged all Taxes due in connection with or with respect to all Tax Returns and has paid all other Taxes when due, and there are no other Taxes that would be due if asserted by a taxing authority, except such as are being contested in good faith by appropriate proceedings (to the extent that any such proceedings are required) and with respect to which FLCI is maintaining reserves to the extent currently required in all respects adequate for their payment. As of the time of filing, all Tax Returns were (and, as to Tax Returns not filed as of the date hereof, will be) complete and correct in all material respects. FLCI has complied in all material respects with all applicable Laws relating to the payment and withholding of Taxes and has timely withheld from employee wages or other payments to creditors or independent contractors or stockholders and paid over to the proper taxing authority all amounts required to be so withheld and paid over. Except as set forth in SCHEDULE 3.20(A), no claim has ever been made by a taxing authority in a jurisdiction where FLCI does not file Tax Returns that it is or may be subject to Taxes in that jurisdiction. FLCI has disclosed to the relevant taxing authority any position taken where the failure to make such disclosure would enable the taxing authority to subject a taxpayer to penalties or additions to tax that would have a material adverse effect upon FLCI. No taxing authority or agency is now asserting or, to FLCI's knowledge, is threatening to assert against FLCI any deficiency or claim for additional Taxes other than additional Taxes with respect to which an adequate EX 99.4 - 23 reserve (in conformity with GAAP) has been established, as set forth in the most recently filed FLCI SEC Report. FLCI is not currently being audited by any taxing authority. There are no Tax liens on any assets of FLCI. No extension or waiver of a statute of limitations with respect to Taxes or Tax Returns is currently in effect for FLCI. The accruals and reserves for Taxes are in all material respects adequate to cover all Taxes accruable and unpaid through the Closing Date (including interest and penalties, if any, thereon and Taxes being contested) in accordance with GAAP, consistently applied with past practice. No material issue has been raised by a taxing authority on audit that is of a recurring nature and that would have a material adverse effect upon the Taxes of FLCI. FLCI has delivered to USOL for inspection all Tax Returns of, and all examination reports and statements of deficiency assessed against or agreed to by, FLCI for which the applicable statute of limitations has not expired. All material elections with respect to Taxes affecting FLCI as of the date hereof are set forth in SCHEDULE 3.20(A). FLCI has not entered into any transaction already recharacterized or which could be recharacterized with respect to Taxes on the grounds of tax avoidance, bad faith, or tax fraud. (b) FLCI has not made any payments, is not obligated to make any payments and is not a party to any agreement, contract or arrangement, including this Agreement, that may result, separately or in the aggregate, in the payment of any "excess parachute payment" within the meaning of Section 280G of the Code or any payment that will not be deductible under Section 162(m) of the Code. FLCI does not own stock in a passive foreign investment company within the meaning of Section 1296 of the Code. FLCI has not filed a consent pursuant to Section 341(f) of the Code or agreed to have Section 341(f)(2) of the Code apply to any disposition of any asset owned by FLCI. No property used by FLCI is property that FLCI is or will be required to treat as being owned by another Person pursuant to the provisions of Section 168(f)(8) of the Internal Revenue Code of 1954 as it existed prior to the enactment of the Tax Reform Act of 1986 or is "tax-exempt use property" within the meaning of Section 168(h) of the Code. FLCI has not entered into any inter-company transaction within the meaning of Section 1.1502-13(b)(1) of the United States Treasury Regulations as to which deferred gains or losses have not been restored. FLCI does not have and has not had a branch in any foreign country. FLCI is not a party to any tax allocation or tax sharing agreements or documentation of similar arrangements. FLCI has not been and is not a member of an affiliated group (within the meaning of Section 1504(a) of the Code or a similar group defined under a similar provision of state, local, or foreign law, filing a consolidated tax return, and FLCI is not liable for the Taxes of any other Person or entity under United States Treasury Regulation Section 1.1502-6 (or any similar provision of state, foreign or local law), or as a transferee or successor, or by contract, or otherwise. FLCI operates at least one significant historic business line, or owns at least a significant portion of its historic business assets, in each case within the meaning of Section 1.368-1(d) of the United States Treasury Regulations. FLCI is not an "investment company" as defined in Section 368(a)(2)(F) of the Code. 3.21 ENVIRONMENTAL MATTERS. FLCI (i) has obtained all required Environmental Permits; (ii) is in substantial compliance with all material terms and conditions of such required Environmental Permits, and also is in substantial compliance with all other limitations, restrictions, conditions, EX 99.4 - 24 standards, prohibitions, requirements, obligations, schedules and timetables contained in the Environmental Laws or contained in any regulation, code, plan, order, decree, judgment, notice or demand letter issued, entered, promulgated or approved thereunder; (iii) as of the date hereof, is not aware of and has not received notice of any event, condition, circumstance, activity, practice, incident, action or plan which would interfere with or prevent continued compliance with or which would give rise to any material common law or statutory liability, or otherwise form the basis of any claim, action, suit or proceeding, based on or resulting from FLCI's (or any of its agent's) manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling, or the emission, discharge or release into the environment, of any pollutant, contaminant or hazardous or toxic material or waste, and (iv) has taken all actions necessary under applicable requirements of Laws, including the Environmental Laws, to register any products or materials required to be registered by FLCI (or any of its agents) thereunder. 3.22 BROKERS. No investment bank, broker or finder is entitled to any fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of FLCI. 3.23 INTERESTED PARTY TRANSACTIONS. Except as set forth in SCHEDULE 3.23, since the effective date of FLCI's Registration Statement and Prospectus dated July 28, 1998, no event has occurred that would be required to be reported as a Certain Relationship or Related Transaction, pursuant to Item 404 of Regulation S-K promulgated by the SEC. 3.24 INSURANCE POLICIES. There are no disputes with underwriters of FLCI's insurance policies or bonds, and all premiums due and payable with respect thereto have been paid. There are no pending or, to the best knowledge of FLCI, threatened terminations or premium increases with respect to any of such insurance policies or bonds and, to the best knowledge of FLCI, there is no condition or circumstance applicable to FLCI's business which is likely to result in such termination or increase. FLCI's business and the assets insured by such insurance policies are in compliance with all material conditions contained in such insurance policies or bonds; and such insurance policies are valid and in full force. 3.25 VOTE REQUIRED. The affirmative vote of the holders of a majority of the outstanding shares of FLCI Common Stock is the only vote of the holders of any class or series of FLCI's capital stock necessary under its Articles of Incorporation, By-laws, applicable law and the rules of the National Association of Securities Dealers, Inc., or Nasdaq to approve the Merger and the other transactions contemplated hereby. EX 99.4 - 25 3.26 OTHER NEGOTIATIONS. FLCI is not engaged in discussions or negotiations with any Person or Persons with respect to, and has not solicited or furnished any information to any Person or Persons who, to FLCI's knowledge, is or are currently contemplating negotiations or an offer regarding, a consolidation or merger or other business combination, recapitalization, liquidation, or similar transaction, or any other transaction which could be conditioned upon, or otherwise require, the termination of this Agreement. 3.27 FULL DISCLOSURE. (a) No statement contained in this Agreement or in any certificate or schedule furnished or to be furnished by or on behalf of FLCI to USOL pursuant to this Agreement, when taken together with all other statements contained herein or in other certificates and schedules furnished pursuant to this Agreement, contains any untrue statement of a material fact or omits to state any material fact necessary, in the light of the circumstances under which it was made, in order to make the statements herein or therein not misleading. (b) The information supplied by FLCI for inclusion or incorporation by reference in the proxy statement to be sent to the stockholders of FLCI in connection with the meeting of the stockholders of FLCI to consider the Merger and related matters (the "FLCI STOCKHOLDERS' MEETING") and relating to the FLCI Stock to be issued in connection with the Merger (such proxy statement as amended or supplemented being hereinafter referred to as the "PROXY STATEMENT") shall not (i) at the time the Proxy Statement (or any amendment thereof or supplement thereto) is first mailed to holders of FLCI Stock, (ii) at the time of the FLCI Stockholders' Meeting, and (iii) at the Effective Time, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they are made, not misleading. If at any time prior to the Effective Time any event or circumstance relating to FLCI or any of its Affiliates or its or their respective officers or directors should be discovered by FLCI which should be set forth in an amendment or a supplement to the Proxy Statement, FLCI shall promptly inform USOL of such event or circumstance. 3.28 ANTI-TAKEOVER LAW. Neither the entering into this Agreement nor the consummation by FLCI of the transactions contemplated hereby will result in the prohibition of any business combination pursuant to Sections 60.801 - 60.845 of the Oregon Law. 3.29 INTELLECTUAL PROPERTY. (a) TITLE. SCHEDULE 3.29(A) sets forth a true and complete list of all of the Intellectual Property that is owned by FLCI and primarily related to, currently used in, held for current use in connection with, or currently necessary for the conduct of, or otherwise material to its business (the "FLCI INTELLECTUAL PROPERTY ASSETS") other than Intellectual Property that is both not registered or subject to application or registration and not material to EX 99.4 - 26 its business as currently conducted. The FLCI Intellectual Property Assets comprise all of the Intellectual Property necessary for FLCI to conduct and operate its business as it is now being conducted by FLCI. (b) NO INFRINGEMENT. The conduct of FLCI's business does not infringe or otherwise conflict with any rights of any Person in respect of any Intellectual Property. Except as set forth in SCHEDULE 3.29(B), to the best knowledge of FLCI, none of the FLCI Intellectual Property Assets is being infringed or otherwise used or available for use by any other Person. (c) LICENSING ARRANGEMENTS. SCHEDULE 3.29(C) sets forth all agreements or arrangements currently in effect (i) pursuant to which FLCI has licensed FLCI Intellectual Property Assets to, or the use of FLCI Intellectual Property Assets has been otherwise permitted (through settlement or similar agreements) by, any other Person and (ii) pursuant to which FLCI has had Intellectual Property licensed to it or has otherwise been permitted to use Intellectual Property (through settlement or similar agreements). All of the agreements or arrangements set forth in SCHEDULE 3.29(C): (x) are in full force and effect in accordance with their terms and no default exists thereunder by FLCI, or to the best knowledge of FLCI, by any other party thereto, (y) are free and clear of all Liens, other than Permitted Liens and (z) do not contain any change-in-control or other terms or conditions that will become applicable or inapplicable as a result of the transactions contemplated by the Agreement. FLCI has delivered to USOL true and complete copies of all licenses and arrangements (including amendments) set forth in the SCHEDULE 3.29(C). (d) NO INTELLECTUAL PROPERTY LITIGATION. No claim or demand of any Person has been made nor is there any proceeding that is pending or, to the best knowledge of FLCI, threatened, which (i) challenges the rights of FLCI in respect of any FLCI Intellectual Property Assets, (ii) asserts that FLCI is infringing or otherwise in conflict with, or is, required to pay any royalty, license fee, charge or other amount with regard to any Intellectual Property, or (iii) claims that any default exists under any agreement or arrangement listed in SCHEDULE 3.29(C). None of the FLCI Intellectual Property Assets is subject to any outstanding order, ruling, decree, judgment or stipulation by or with any court, arbitrator, or administrative agency, or any Governmental Authority, or has been the subject of any litigation, whether or not resolved in favor of FLCI. (e) DUE REGISTRATION, ETC. SCHEDULE 3.29(E) sets forth the filing offices, domestic or foreign, where the FLCI Intellectual Property Assets have been registered, issued or filed. FLCI has taken such other actions that FLCI considers reasonably necessary to ensure full protection under any applicable laws or regulations, and such registrations, filings, issuances and other actions remain in full force and effect, in each case to the extent material to its business. (f) USE OF NAME AND MARK. There are, and immediately after the Closing will be, no contractual restriction or limitations pursuant to any orders, decisions, injunctions, judgments, awards or decrees of any Governmental Authority on FLCI's right to use the name and mark "FIRSTLINK" in the conduct of its business as presently carried on. EX 99.4 - 27 3.30 ABSENCE OF CERTAIN BUSINESS PRACTICES. To the best knowledge of FLCI, neither FLCI nor any officer, employee or agent of FLCI, nor any other Person acting on their behalf, has, directly or indirectly, since January 1, 1998 given or agreed to give any gift or similar benefit to any customer, supplier, governmental employee or other Person who is or may be in a position to help or hinder FLCI's business (or assist FLCI in connection with any actual or proposed transaction relating to its business) (i) which subjected FLCI to any damage or penalty in any civil, criminal or governmental litigation or proceeding, (ii) which if not given in the past, might have a material adverse effect, (iii) which if not continued in the future, might have a material adverse effect or subject FLCI to suit or penalty in any private or governmental proceeding, or (iv) for the purpose of establishing or maintaining any concealed fund or concealed bank account. 3.31 TERRITORIAL RESTRICTIONS. FLCI is not a party to any agreement or understanding, whether written or oral, with any other Person which restricts it from carrying on its business anywhere in the world. 3.32 YEAR 2000 COMPLIANCE. All of the computer hardware, software and information systems, including without limitation the financial, operational and manufacturing systems, owned or used by FLCI (i) are prior to, during and after calendar year 2000 A.D. capable of operating in all material respects without errors relating to date data, including errors relating to date data which represents or references different calendar centuries or more than one century, and of providing all date related functionalities, interfaces and data fields, including the indication of century; (ii) are able to accurately manage and process data and date-related data (including, but not limited to, calculating, comparing, sequencing and sorting) from, into and between the 20th and 21st centuries, including single and multiple centuries and leap years; and (iii) shall not abnormally terminate or provide invalid or incorrect results due to date or date-related data, specifically including date data which represents or references different centuries or more than one century. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF USOL USOL hereby represents and warrants to FLCI that each of the following is true, correct, and complete as of the date hereof: 4.1 ORGANIZATION. (a) USOL is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. USOL has full corporate power and authority to own, lease and operate its properties and to carry on its business as such business is now conducted and proposed to be conducted. The copies of the Certificate of Incorporation of EX 99.4 - 28 USOL, certified by the Secretary of State of the State of Delaware, and the By-laws of USOL, each of which have been delivered to FLCI by USOL, are true and complete copies thereof, and are in full force and effect. USOL is not in violation of its Certificate of Incorporation or its By-laws. (b) Except as set forth in SCHEDULE 4.1(B), USOL has no subsidiaries and does not, directly or indirectly, own or have the contractual right or obligation to acquire any equity interest in any other corporation, partnership, joint venture, trust or other business organization. USOL is the record and beneficial owner of all of the capital stock of each of the corporations listed in SCHEDULE 4.1(B). Except as disclosed in SCHEDULE 4.1(B), USOL has not made any investment in, loan to, or advance of cash or other extension of credit to any Person, other than in the ordinary course of its business. 4.2 CAPITALIZATION. (a) The authorized capital stock of USOL consists of (i) 30,000,000 shares of common stock, $.001 par value per share, of which 3,175,000 shares are currently issued and outstanding, and (ii) 2,000,000 shares of Preferred Stock, $.001 par value per share, 1,700,000 shares of which have been designated as the "Series A Convertible Preferred Stock," of which 1,262,000 shares are currently issued and outstanding and 300,000 shares of which have been designated as the "Series B Convertible Preferred Stock," of which 218,000 shares are currently issued and outstanding. EXHIBITS 2.6(B)-1 and 2.6(B)-2 set forth the Certificate of Designations of the USOL Series A Preferred Stock and the USOL Series B Preferred Stock, respectively. All of the outstanding shares of capital stock of USOL have been duly authorized, are validly issued, fully paid and non-assessable, and the holders thereof are not entitled to cumulative voting rights or preemptive rights. There are no obligations, contingent or otherwise, of USOL or any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares of USOL Common Stock or the capital stock of any Subsidiary or to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in any such subsidiary or any other entity other than guarantees of bank obligations of Subsidiaries entered into in the ordinary course of business. Except as set forth in SCHEDULE 4.2(A), there are no outstanding options to purchase or warrants, privileges or rights to subscribe to or purchase any shares of USOL's capital stock or securities issued by USOL convertible into or exchangeable for shares of USOL's capital stock or other securities of USOL or commitments, understandings or intentions to issue any additional shares or options, warrants, privileges or rights to subscribe for shares of USOL's capital stock. (b) USOL has obtained a commitment for $35 million of senior notes (the "SENIOR NOTES") on the terms and conditions described in SCHEDULE 4.2(B). (c) USOL has no short-term or long-term debt obligations, except as set forth in SCHEDULE 4.2(C), and except for obligations incurred in the ordinary course of business in individual amounts not greater than $25,000. EX 99.4 - 29 4.3 QUALIFICATION IN FOREIGN JURISDICTIONS. USOL is duly qualified or licensed and in good standing as a foreign corporation duly authorized to do business in each jurisdiction in which the character of the properties owned or leased or the nature of the activities conducted by it makes such qualification or licensing necessary, except for any jurisdiction(s) in which the failure to so qualify would not have a material adverse effect upon USOL. SCHEDULE 4.3 sets forth each state in which USOL is qualified to do business as a foreign corporation. 4.4 AUTHORITY RELATIVE TO THIS AGREEMENT. USOL has all necessary corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by USOL and the consummation by USOL of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action and no other corporate proceedings on the part of USOL are necessary to authorize this Agreement or to consummate the transactions so contemplated. The Board of Directors of USOL has determined that it is advisable and in the best interest of USOL's stockholders for USOL to enter into the Merger with FLCI upon the terms and subject to the conditions of this Agreement. This Agreement has been duly and validly executed and delivered by USOL and, assuming the due authorization, execution and delivery by FLCI, constitutes a legal, valid and binding obligation of USOL, enforceable in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization and similar laws from time to time in effect that affect creditors' rights generally, and by legal and equitable limitations on the availability of specific remedies. 4.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a) The execution and delivery of this Agreement by USOL does not, and the performance of this Agreement by USOL will not, (i) conflict with or violate the Certificate of Incorporation or By-laws of USOL; (ii) conflict with or violate any Law applicable to USOL or any of its subsidiaries or by which any of their respective properties is bound or affected; (iii) result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default), or impair USOL's or any of its Subsidiaries' rights or alter the rights or obligations of any third party under, or give to others any rights of termination, amendment, acceleration or cancellation of, any USOL Material Contract; or (iv) result in the creation of a Lien on any of the properties or assets of USOL or any of its Subsidiaries pursuant to, any note, bond mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which USOL or any of its Subsidiaries is a party or by which USOL or any of its Subsidiaries, or any of their respective properties, is bound or affected, except in the case of clauses (ii), (iii) and (iv) for such breaches, defaults or other occurrences that would not, individually or in the aggregate, have a material adverse effect upon USOL. EX 99.4 - 30 (b) The execution and delivery of this Agreement by USOL does not, and the performance of this Agreement and the transactions contemplated hereby by USOL will not, require any consent, approval, authorization or permit of, or filing with or notification to, any Governmental Authority, except (i) the consents, approvals or Permits set forth in SCHEDULE 4.5(B), (ii) for applicable requirements, if any, of the Securities Act, the Exchange Act, state securities laws, and the filing and recordation of appropriate merger or other documents as required by the Delaware Law and the Oregon Law, and (iii) where the failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, would not prevent or delay consummation of the Merger, or otherwise prevent or delay USOL from performing its obligations under this Agreement, or would not otherwise have a material adverse effect on USOL. 4.6 BROKERS. Except as set forth in SCHEDULE 4.6, no investment bank, broker or finder is entitled to any fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of USOL. USOL has heretofore furnished to FLCI true and complete copies of all agreements between USOL and any other Person, pursuant to which such other firm would be entitled to any payment relating to the transactions contemplated hereunder. 4.7 OTHER NEGOTIATIONS. USOL is not engaged in discussions or negotiations with any Person or Persons with respect to, and has not solicited or furnished any information to any Person or Persons who, to USOL's knowledge, is or are currently contemplating negotiations or an offer regarding, a consolidation or merger or other business combination, recapitalization, liquidation, or similar transaction, or any other transaction which could be conditioned upon, or otherwise require, the termination of this Agreement. 4.8 FULL DISCLOSURE. (a) No statement contained in this Agreement or in any certificate or schedule furnished or to be furnished by or on behalf of USOL to FLCI pursuant to this Agreement, when taken together with all other statements contained herein or in other certificates and schedules furnished pursuant to this Agreement, contains any untrue statement of a material fact or omits to state any material fact necessary, in the light of the circumstances under which it was made, in order to make the statements herein or therein not misleading. (b) Any information supplied by USOL for inclusion or incorporation by reference in the Proxy Statement shall not (i) at the time the Proxy Statement (or any amendment thereof or supplement thereto) is first mailed to holders of FLCI Stock, (ii) at the time of the FLCI Stockholders' Meeting, or (iii) at the Effective Time, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they are made, not misleading. If at any time prior to the Effective Time any event or circumstance EX 99.4 - 31 relating to USOL or its officers or directors should be discovered by USOL which should be set forth in a supplement to the Proxy Statement, USOL shall promptly inform FLCI of such event or circumstance. 4.9 LOCKUP AGREEMENT. (a) USOL has obtained, and has delivered to FLCI, the agreement of each holder of any share of USOL Preferred Stock that such holder, except as provided in SCHEDULE 4.9, for a period of one (1) year after the Effective Time, but in no event later than eighteen (18) months from the date hereof, shall not sell, pledge, encumber or otherwise transfer or dispose of, and shall not permit to be sold, encumbered, attached or otherwise disposed of or transferred in any manner, either voluntarily or by operation of law ("TRANSFER"), all or any portion of the shares of Company Preferred Stock that such holder owns or hereafter acquires. (b) USOL has obtained, through execution and delivery of the Common Stockholder and Warrant Holder Registration Rights Agreement dated as of the date hereof, the agreement of each holder of USOL Common Stock and each holder of a USOL Warrant that such holder, for a period of six months after the Effective Time, but in no event later than nine (9) months from the date hereof (the "LOCKUP PERIOD"), shall not Transfer, and shall not permit to be Transferred, all or any portion of the shares of Company Common Stock or of the Company Warrants that such holder owns or hereafter acquires; PROVIDED, HOWEVER, that during the Lockup Period, each such holder may make Transfers to Qualified Institutional Buyers (as such term is defined in Rule 144A under the Securities Act); and PROVIDED FURTHER, that each such holder may (i) transfer all or any part of such holder's USOL Common Stock and/or USOL Warrants to one or more Affiliates which, for purposes of this Section 4.9(b), shall include members of any holder which is a limited liability company, employees or directors of each such holder; (ii) Transfer such holder's USOL Common Stock and/or USOL Warrants in connection with any exchange, reclassification or other conversion of shares into any cash, securities or other property pursuant to a merger or consolidation of the Company or any of its subsidiaries with, or any sale or transfer by the Company or any of its subsidiaries of all or substantially all its assets to, any Person; and (iii) Transfer such holder's USOL Common Stock and/or USOL Warrants in connection with any statutory share exchange or any recapitalization of the Company or any of its subsidiaries; and PROVIDED FURTHER, that if the conditions precedent for USOL to exercise the call option under Section 8 of the USOL Other Warrants exist, then the Lockup Period with respect to the Company Other Warrants shall terminate. (c) USOL has obtained, through execution and delivery by Don Barlow and Robert Solomon (for the purposes of this paragraph only, the "HOLDERS") of the Officers Indemnification Agreement dated as of the date hereof, and has delivered to FLCI, the agreement of each such holder with respect to the Company Common Stock that such holder, for a period of one year after the Effective Time, but in no event later than eighteen (18) months from the date hereof (the "OTHER LOCKUP PERIOD"), shall not Transfer, and shall not EX 99.4 - 32 permit to be Transferred, all or any portion of the shares of Company Common Stock that such holder owns or hereafter acquires. 4.10 INCORPORATION OF REPRESENTATIONS AND WARRANTIES BY REFERENCE. The representations and warranties and related schedules and disclosure memoranda of (a) USOC set forth in the USOC Asset Purchase Agreement and (b) GMAC-CM set forth in the TSD Asset Purchase Agreement are hereby incorporated by reference as though made by USOL and fully set forth herein. ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER 5.1 CONDUCT OF BUSINESS BY USOL AND FLCI PENDING THE MERGER. During the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement or the Effective Time, unless the other party shall otherwise agree in writing, and except as to USOL, the actions permitted to be taken by USOL Sub pursuant to the USOC Asset Purchase Agreement and the transactions contemplated thereby, each of USOL and FLCI shall conduct its respective business and shall cause the businesses of its subsidiaries to be conducted only in, and each of USOL and FLCI and its subsidiaries shall not take any action except in, the ordinary course of business and in a manner consistent with past practice; and each of USOL and FLCI shall use reasonable efforts to preserve the business organization of itself and its subsidiaries, to keep available the services of the present officers, key employees and consultants of itself and its subsidiaries and to preserve the present relationships of itself and its subsidiaries with customers, suppliers and other Persons with which it or any of its subsidiaries has significant business relations. By way of amplification and not limitation, except as contemplated by this Agreement, neither USOL nor FLCI, nor any of their respective subsidiaries shall, during the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement or the Effective Time do, or propose to do, any of the following without the prior written consent of the other party: (a) propose to or amend or otherwise change its Articles or Certificate of Incorporation or By-laws; (b) issue, sell, pledge, dispose of or encumber, or authorize the issuance, sale, pledge, disposition or encumbrance of, any shares of capital stock of any class (other than the sale or issuance of common stock upon the exercise of outstanding options listed in SCHEDULE 3.2 or SCHEDULE 3.14(C) hereto (with respect to FLCI); or in SCHEDULE 4.2(A) hereto (with respect to USOL), or any options, warrants, convertible securities or other rights of any kind to acquire any shares of capital stock, or any other ownership interest (including, without limitation, any phantom interest) of FLCI or USOL, as the case may be, or any of their respective subsidiaries (PROVIDED that consent for grants of employee stock options to newly EX 99.4 - 33 hired employees pursuant to existing stock option plans consistent with past practice shall not be unreasonably withheld); (c) sell, pledge, mortgage, dispose of or encumber any of its assets or any assets of its subsidiaries, except for (i) sales of products (or licenses thereto) and services in the ordinary course of business consistent with past practice, (ii) dispositions of obsolete or worthless assets, and (iii) sales of immaterial assets not in excess of $10,000 in the aggregate; (d) except as is contemplated by Section 6.5, alter the price or accelerate, amend or change the period (or permit any acceleration, amendment or change) of exercisability of options or restricted stock granted under the Employee Plans (including stock option plans) or authorize cash payments in exchange for any options granted under any of such plans; (e) (i) declare, set aside, make or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of any of its capital stock, except for the declaration and payment of any required dividend by USOL on the USOL Preferred Stock, (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) amend the terms of, repurchase, redeem or otherwise acquire, or permit any subsidiary to repurchase, redeem or otherwise acquire, any of its securities or any securities of its subsidiaries, or propose to do any of the foregoing; (f) (i) acquire (by merger, consolidation, or acquisition of stock or assets) any corporation, partnership or other business organization or division thereof; (ii) incur any indebtedness for borrowed money (except for the issuance of the Senior Notes), or issue any debt securities or assume, guarantee (other than guarantees of bank debt of such party's subsidiaries entered into in the ordinary course of business) or endorse or otherwise as an accommodation become responsible for, the obligations of any Person, or make any loans or advances, except in each case in the ordinary course of business consistent with past practice; (iii) enter into or amend any USOL Material Contract or FLCI Material Contract, as the case may be, other than in the ordinary course of business consistent with past practice; (iv) authorize any capital expenditures or purchase of fixed assets which are, in the aggregate, in excess of $25,000 for such party and its subsidiaries taken as a whole; or (v) enter into or amend any contract, agreement, commitment or arrangement to effect any of the matters prohibited by this Section 5.1; (g) except, as to FLCI, for increases consistent with past practice and disclosed on SCHEDULE 5.1(G) in salary or wages of employees of FLCI or its subsidiaries who are not officers and except, as to USOL, for Persons other than Robert Solomon and Donald Barlow, increase the compensation payable or to become payable to its officers or employees, or grant any severance or termination pay to, or enter into any employment or severance agreement with any director, officer or other employee of such party or any of its subsidiaries, or establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, stock purchase, pension, EX 99.4 - 34 retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any current or former directors, officers or employees, except, in each case, as may be required by law, and except for ministerial updating of plans and trusts which does not affect the benefits thereunder; (h) take any action to change accounting policies or procedures (including, without limitation, procedures with respect to revenue recognition, payments of accounts payable, and collection of accounts receivable); (i) make any material tax election inconsistent with past practices or settle or compromise any material Federal, state, local or foreign tax liability or agree to an extension of a statute of limitations except to the extent the amount of any such settlement has been reserved for on the USOL Unaudited Balance Sheet or the FLCI Unaudited Balance Sheet, each as on the Balance Sheet Date, as the case may be; (j) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction in the ordinary course of business and consistent with past practice of liabilities reflected or reserved against in the financial statements of such party or incurred in the ordinary course of business and consistent with past practice; (k) take any action which would make any of the representations or warranties of such party contained in this Agreement materially untrue or incorrect or prevent such party from performing in all material respects or cause such party not to perform in all material respects its covenants hereunder; (l) cancel or waive any claim or right of substantial value or settle any material pending litigation; (m) pay, discharge, or satisfy any material claim or liability before it becomes due or fail to pay accounts payable in accordance with their terms; (n) knowingly take or allow to be taken or fail to take any action which act or omission would jeopardize qualification of any of the Merger as a "reorganization" within the meaning of Section 368(a) of the Code; or (o) agree to do any of the foregoing. 5.2 NO SOLICITATION BY USOL OR FLCI. (a) During the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement or the Effective Time, neither USOL nor FLCI shall, directly or indirectly, through any officer, director, employee, representative or agent of USOL or FLCI, including, without limitation, any investment banker, attorney, or accountant retained by FLCI or USOL, as the case may be, or any of its subsidiaries, (i) initiate, solicit, or encourage any inquiries or proposals that constitute, or could reasonably be expected to lead EX 99.4 - 35 to, a proposal or offer for a merger, consolidation, business combination, sale of assets representing a substantial portion of the assets of either USOL or FLCI, as applicable, including a sale of shares representing 20% or more of the outstanding USOL Stock or FLCI Stock, including, without limitation, by way of tender offer or exchange offer other than the Merger and the other transactions relating to this Agreement (any of the foregoing inquiries or proposals being referred to in this Agreement as an "ACQUISITION PROPOSAL"); or, subject to the applicable fiduciary duties of the respective directors of USOL and FLCI, as determined by such directors in good faith after consultation with and based upon the advice of legal counsel, (ii) engage in negotiations or discussions concerning, or provide to any Person or entity non-public information or data regarding FLCI or USOL or any of their respective subsidiaries, as applicable, for the purpose of, or otherwise cooperate with or assist or participate in, facilitate or encourage, any inquiries regarding the making of an Acquisition Proposal, (iii) agree to, approve, or recommend any Acquisition Proposal or (iv) take any other action inconsistent with the obligations of USOL or FLCI, as applicable; PROVIDED, HOWEVER, that any conversations, solicitations or negotiations conducted by either party or their respective representatives regarding an acquisition proposal solely with respect to the Surviving Corporation shall not be deemed to violate any of the foregoing provisions of this Section 5.2(a). (b) Either party shall immediately notify the other party after receipt of any Acquisition Proposal or any request for nonpublic information relating to such party or any of its subsidiaries in connection with an Acquisition Proposal or for access to the properties, books or records of such party or any subsidiary by any Person that informs the Board of Directors or officers of such party or such subsidiary that it intends to make, or has made, an Acquisition Proposal. Such notice to the other party shall be made orally and in writing and shall indicate in reasonable detail the identity of the offeror and the terms and conditions of such proposal, inquiry or contact. (c) Both parties shall use reasonable efforts to ensure that the officers and directors of USOL and FLCI and their respective subsidiaries and any investment banker or other advisor or representative retained by such party are aware of, and comply with, the restrictions described in this Section 5.2. ARTICLE VI ADDITIONAL AGREEMENTS 6.1 PROXY STATEMENT. (a) As promptly as practicable after the execution of this Agreement, FLCI shall prepare and file with the SEC the Proxy Statement, which shall be in form and substance satisfactory to USOL. FLCI shall cause the Proxy Statement to comply in all material respects with the Securities Act, the Exchange Act and the regulations thereunder. FLCI shall use reasonable efforts to have or cause the Proxy Statement to be cleared as promptly as practicable, and shall take all actions required under any applicable federal or state EX 99.4 - 36 securities laws or the rules and regulations of Nasdaq in connection with the issuance of shares of FLCI Stock pursuant to the Merger. Without limiting the generality of the foregoing, FLCI agrees to use all reasonable efforts, after consulting with USOL, to respond promptly to any comments made by the SEC with respect to the Proxy Statement (including each preliminary version thereof). (b) Each of USOL and FLCI shall, and shall cause its respective representatives to, fully cooperate with the other party and its respective representatives in the preparation of the Proxy Statement, and shall, upon request, furnish the other party with all information concerning it and its Affiliates, directors, officers and stockholders as the other may reasonably request in connection with the preparation of the Proxy Statement. (c) As promptly as practicable after the Proxy Statement has been cleared by the SEC, FLCI shall cause the Proxy Statement to be mailed to its stockholders. Thereafter, USOL and FLCI shall each notify the other as promptly as practicable upon becoming aware of any event or circumstance which should be described in an amendment of, or a supplement to, the Proxy Statement. FLCI shall notify USOL as promptly as practicable after the receipt by it of any written or oral comments of the SEC on, or of any written or oral request by the SEC for amendments or supplements to, the Proxy Statement, and FLCI shall promptly supply USOL with copies of all correspondence between it or any of its representatives and the SEC with respect to any of the foregoing filings. 6.2 FLCI STOCKHOLDERS' MEETING. FLCI shall, in accordance with its charter documents, call and hold (i) the FLCI Stockholders' Meeting as promptly as practicable for the purpose of voting upon the approval of the Merger and this Agreement, (ii) the approval of the Re-incorporation, and (iii) the approval of the increase in authorized capital stock required to consummate the Merger, and FLCI shall use its best efforts to hold the FLCI Stockholders' Meeting as soon as permitted by the proxy rules under the Exchange Act. FLCI shall use its best efforts to obtain from the stockholders owning more than 50% of the FLCI Stock, proxies in favor of the approval of (i) the Merger and this Agreement, (ii) the Re-incorporation, and (iii) the increase in authorized capital stock required to consummate the Merger. Subject to the applicable fiduciary duties of FLCI's directors, as determined by such directors in good faith after consultation with and based upon the written advice of legal counsel, FLCI shall take all other action necessary or advisable to secure the vote or consent of stockholders required by the applicable Law to obtain such approvals, including, without limitation, the inclusion in the Proxy Statement of the recommendation of its Board of Directors that its shareholders vote in favor of the approval and adoption of this Agreement and the transactions related hereto. 6.3 ACCESS TO INFORMATION; CONFIDENTIALITY. Upon reasonable notice and subject to restrictions contained in confidentiality agreements to which USOL or FLCI may be subject (from which USOL and FLCI shall each use reasonable efforts to be released), USOL and FLCI shall each (and USOL shall cause each of its subsidiaries to) afford to the officers, employees, accountants, counsel and other EX 99.4 - 37 representatives of the other, reasonable access, during the period from the date of this Agreement to the Effective Time, to all its properties, books, contracts, commitments and records and, during such period, USOL and FLCI shall each furnish promptly to the other all information concerning its business, properties and personnel as such other party may reasonably request, and USOL and FLCI shall each make available to the other the appropriate individuals (including attorneys, accountants and other professionals) for discussion of the other's business, properties and personnel as either FLCI or USOL may reasonably request. Each party shall keep such information confidential in accordance with the terms of the Confidentiality and Standstill Agreement, dated May, 1999, entered into between FLCI and USOL. 6.4 CONSENTS, APPROVALS. USOL and FLCI shall each use its reasonable best efforts to obtain all consents, waivers, approvals, authorizations or orders (including, without limitation, all Governmental Approvals), and USOL and FLCI shall make all filings (including, without limitation, all filings with Governmental Authorities or regulatory agencies) required in connection with the authorization, execution and delivery of this Agreement by USOL and FLCI and the consummation by them of the transactions contemplated hereby. USOL and FLCI shall furnish all information required to be included in the Proxy Statement, or for any application or other filing to be made pursuant to the rules and regulations of any Governmental Authority in connection with the transactions contemplated by this Agreement. Upon the terms and subject to the conditions hereof, each of the parties hereto shall use reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all other things necessary, proper or advisable to consummate and make effective as promptly as practicable the transactions contemplated by this Agreement, to obtain in a timely manner all necessary waivers, consents and approvals and to effect all necessary registrations and filings, and to otherwise satisfy or cause to be satisfied all conditions precedent to its obligations under this Agreement. FLCI and USOL shall each use reasonable efforts to cause the Merger to qualify, and will not (either before or after consummation of the Merger) take any actions which could prevent the Merger from qualifying, as a reorganization within the meaning of Section 368(a)(1)(A) of the Code. 6.5 STOCK OPTIONS. (a) At the Effective Time, the obligation to issue shares under each then outstanding option to purchase USOL Common Stock (each a "USOL STOCK OPTION") granted under USOL's Stock Option Plan, as amended, shall be assumed by FLCI and each such option shall be converted into an option to acquire, on the same terms and conditions as were applicable under such USOL Stock Option prior to the Effective Time, the whole number of shares of FLCI Common Stock as the holder of such USOL Stock Option would have been entitled to receive pursuant to the Merger had such holder exercised such option in full immediately prior to the Effective Time (not taking into account whether or not such option was in fact exercisable). The exercise price of the options shall be a price per share equal to the exercise price for shares of USOL Common Stock otherwise purchasable pursuant to such USOL Stock Option; PROVIDED, HOWEVER, that the exercisability or the other vesting of the EX 99.4 - 38 assumed options and the underlying stock shall continue to be determined by reference to stock option agreements executed pursuant to USOL's Stock Option Plan; and PROVIDED FURTHER, that references in any USOL Stock Option to USOL, the Board of Directors of USOL or any committee thereof, and any USOL Stock Option Plan, shall, commencing at the Effective Time, unless inconsistent with the context, be to FLCI, the board of directors of FLCI or a committee thereof, and FLCI's 1998-1999 Combined Incentive Stock Option and Nonqualified Stock Option Plan, respectively. (b) As soon as practicable after the Effective Time, FLCI shall deliver to each holder of an outstanding USOL Stock Option an appropriate notice setting forth such holder's rights pursuant thereto and such USOL Stock Option shall continue in effect on the same terms and conditions. FLCI shall comply with the terms of all such USOL Stock Options and ensure, to the extent required by, and subject to the provisions of, any USOL Stock Plan, that USOL Stock Options which qualified for special tax treatment prior to the Effective Time continue to so qualify after the Effective Time. FLCI shall take all corporate action necessary to reserve for issuance a sufficient number of shares of FLCI Common Stock for delivery pursuant to the terms set forth in this Section 6.5. (c) FLCI shall use its reasonable best efforts after the Effective Time to file and maintain the effectiveness of a registration statement under the Securities Act with respect to the issuance by FLCI of shares of FLCI Common Stock which may be issued pursuant to the USOL Stock Options as provided for above in this Section 6.5. 6.6 WARRANTS. At the Effective Time, FLCI shall assume in writing all obligations under the USOL Other Warrants and the USOL TSD Warrants, and the holders of the USOL Other Warrants and the USOL TSD Warrants thereafter shall have the right to acquire, on the same pricing and payment terms and conditions as are currently applicable under the USOL Other Warrants and the USOL TSD Warrants, as applicable, the same number of shares of FLCI Common Stock as the holders of such warrants would have been entitled to receive in the Merger had such holder exercised such warrants in full immediately prior to the Effective Time. 6.7 NOTIFICATION OF CERTAIN MATTERS. USOL shall give prompt notice to FLCI, and FLCI shall give prompt notice to USOL, of (i) the occurrence or non-occurrence of any event which would cause any representation or warranty made by the respective parties in this Agreement to be materially untrue or inaccurate, and (ii) any failure of USOL or FLCI, as the case may be, to materially comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder; PROVIDED, HOWEVER, that the delivery of any notice pursuant to this Section 6.7 shall not limit or otherwise affect the remedies available hereunder to the party receiving such notice, and PROVIDED FURTHER, that failure to give such notice shall not be treated as a breach of covenant for the purposes of Sections 7.2(b) or 7.3(b) unless the failure to give such notice results in material prejudice to the other party. EX 99.4 - 39 6.8 PUBLIC ANNOUNCEMENTS. FLCI and USOL shall consult with each other before issuing any press release or other public statement with respect to the Merger or this Agreement, and any such press release shall state that it is being made by both FLCI and USOL. FLCI and USOL shall not issue any such press release or make any such public statement without the prior consent of the other party, which shall not be unreasonably withheld; PROVIDED, HOWEVER, that a party may, without the prior consent of the other party, issue such press release or make such public statement as may upon the written advice of counsel be required by law if it has used reasonable efforts to consult first with the other party, and has provided the other party with at least 24 hours notice of such release. 6.9 APPLICATION FOR NASDAQ APPROVAL. FLCI agrees to use its best efforts to prepare and file with Nasdaq such applications, notices, reports and other information as may be reasonably required to obtain the approval by Nasdaq of the continued listing of FLCI's common stock outstanding prior to the consummation of the Merger and the FLCI Common Stock, and FLCI's warrants outstanding prior to the Effective Time and the FLCI Warrants that are currently listed on Nasdaq following consummation of the transactions provided for herein. USOL agrees to provide FLCI with such documents, information and other materials as FLCI may reasonably request in connection with effecting such application and to otherwise cooperate with FLCI in its efforts to obtain such Nasdaq approval. FLCI and USOL shall cooperate with each other in applying for a new listing of the FLCI Common Stock and the FLCI Warrants on the Nasdaq National Market and having the FLCI Common Stock and the FLCI Warrants designated as national market system securities. 6.10 DELIVERY OF ADDITIONAL FILINGS. Following the execution of this Agreement and until the Closing, FLCI shall provide USOL with copies of any and all reports, filings, notices or other information which FLCI may prepare and file with or receive from the SEC, Nasdaq or any other Governmental Authority (and shall give USOL an opportunity to review and comment on any such filings). 6.11 ACCOUNTANT'S COMFORT LETTERS. USOL and FLCI shall each use reasonable efforts to cause their respective independent public accountants to deliver to the other party a letter covering such matters as may be requested by such other party, with respect to such matters as are customarily addressed in certified public accountant's "comfort" letters with respect to the type of transactions contemplated by this Agreement. 6.12 INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE. All rights to indemnification now existing in favor of the present or former directors or officers of USOL as provided in USOL's Certificate of Incorporation or By-laws, which rights EX 99.4 - 40 are in effect as of the date hereof, shall, with respect to matters occurring prior to the Effective Time, survive the Merger and continue in full force and effect after the Effective Time. All rights to indemnification in respect of any such claim or claims shall continue until disposition of such claim or claims. FLCI and USOL further agree that all rights to indemnification now existing in favor of the present or former directors or officers of USOL in any indemnification agreement between such Person and USOL shall survive the Merger and continue in full force and effect in accordance with the terms of such agreement. Until the sixth anniversary of the Effective Time, FLCI shall maintain in effect with respect to matters occurring prior to the Effective Time, to the extent available, the policy of directors' and officers' liability insurance currently maintained by USOL on behalf of its officers and directors; PROVIDED, HOWEVER, that FLCI may substitute therefor a policy containing coverage, terms and conditions which are no less advantageous to such present or former directors and officers of USOL. Notwithstanding anything to the contrary contained in this Agreement, the provisions of this Section 6.12 shall survive the Effective Time and are intended to be for the benefit of, and shall be enforceable by, each present and former director and officer of USOL and shall be binding on all successors and assigns of the Surviving Corporation. In the event the Surviving Corporation or any of its successors or assigns (i) consolidates with or merges into any other Person and shall not be the continuing or surviving corporation or entity of such consolidation or merger, or (ii) transfers all or substantially all of its properties and assets to any Person, then, and in each such case, proper provision shall be made so that the successors and assigns of the Surviving Corporation assume the obligations set forth in this Section 6.12. 6.13 EMPLOYEE BENEFITS (a) FLCI will maintain without change for a period of twelve months after the Effective Time each severance program and policy of USOL listed in Section 5.14 of the Disclosure Memorandum attached to the USOC Asset Purchase Agreement (including any such plan, program or policy that is subject to the approval of the Board of Directors of USOL as of the date of this Agreement) with respect to each FLCI employee who was employed by USOL immediately prior to the Effective Time and for purposes of any such severance program or policy and any severance program and policy which USOL was required to maintain by law. FLCI will give full credit to each such FLCI employee for all service performed for USOL by such employee. FLCI will honor all severance and retention agreements of USOL in effect as of the Effective Time. (b) With respect to each FLCI Employee Plan, each FLCI employee employed by USOL immediately prior to the Effective Time shall receive credit for all service performed for USOL; such service credit shall apply for all purposes, including but not limited to any vacation, sick time, insurance or other benefits and any eligibility or vesting requirements under any FLCI Employee Plan. (c) As of the Effective Time, each FLCI employee who was employed by USOL immediately prior to the Effective Time shall be enrolled in the Person Choice Account group health benefit plan for employees of FLCI, or any successor plan thereto ("GROUP HEALTH PLAN") and shall be entitled to participate in the Group Health Plan without limitation or EX 99.4 - 41 exclusion for any preexisting conditions applicable to any such employee or his or her enrolled dependents, except to the extent that any such preexisting condition limitation or exclusion applied to such individual under the group health plan provided by USOL prior to the Effective Time. For purposes of participation in the Group Health Plan, each FLCI employee employed by USOL immediately prior to the Effective Time shall also receive credit for all payments made toward deductible, co-payment and out-of-pocket limits under the group health plan of USOL in which such employee was a participant immediately prior to the Effective Time for the plan year which includes the Effective Time as if such payments had been made for similar purposes for such period under the Group Health Plan by an employee employed by FLCI immediately prior to the Effective Time. 6.14 STOCKHOLDER LITIGATION. Each of FLCI and USOL shall give the other the reasonable opportunity to participate in the defense of any stockholder litigation arising in connection with the transactions contemplated hereby against FLCI or USOL, as applicable, and their respective directors. 6.15 ACCREDITED INVESTORS. Prior to the Effective Time, USOL shall deliver to FLCI evidence reasonably satisfactory to FLCI that each holder of USOL Stock is an "Accredited Investor" as such term is defined in Regulation D of the Securities Act. ARTICLE VII CONDITIONS TO THE MERGER 7.1 CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE MERGER. Unless waived, in whole or in part, by the applicable party, the respective obligations of each party to effect the Merger shall be subject to the satisfaction at or prior to the Effective Time of the following conditions: (a) No proceeding in respect of the Proxy Statement shall have been initiated or threatened by the SEC. (b) This Agreement, the Merger, the increase in the authorized capital stock of FLCI required to consummate the Merger, and the Re-incorporation shall have been approved by the requisite vote of the stockholders of FLCI. (c) No statute, rule, regulation, order, decree or injunction shall have been enacted, entered, promulgated or enforced by any court or Governmental Authority of competent jurisdiction which restrains, enjoins or otherwise prohibits the consummation of the Merger; PROVIDED, HOWEVER, that USOL and FLCI shall use their reasonable best efforts to have any such order, decree or injunction vacated. EX 99.4 - 42 (d) FLCI and USOL shall have received the written opinion of Jenkens & Gilchrist, in form and substance reasonably satisfactory to each of them to the effect that the Merger will constitute a reorganization within the meaning of Section 368(a) of the Code. (e) The shares of FLCI Common Stock to be issued in the Merger shall have been approved for quotation on Nasdaq, subject to official notice of issuance. (f) All corporate and other proceedings and actions taken in connection with this Agreement and all certificates, opinions, agreements, instruments, and documents mentioned in this Agreement or incident to any such transactions shall have been delivered to the appropriate party or third party, and be reasonably satisfactory in form and substance to USOL, FLCI, and their respective counsel. (g) There shall not have occurred and be continuing at any time within 30 days prior to the proposed Effective Time (i) any suspension in trading on Nasdaq, any fixing of minimum or maximum prices for trading on Nasdaq by the NASD or SEC or any other Governmental Authority, (ii) the declaration of a banking moratorium by federal, Oregon, Colorado or Texas Governmental Authorities; (ii) an outbreak or major escalation of hostilities between the United States and any foreign power or other insurrection or armed conflict involving the United States. 7.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF FLCI. Unless waived, in whole or in part, in writing by FLCI, the obligations of FLCI to effect the Merger are also subject to the fulfillment prior to or at the Effective Time, of each of the following conditions: (a) The representations and warranties of USOL contained in this Agreement shall be true and correct in all material respects on and as of the Effective Time, except for (i) changes contemplated or permitted by this Agreement, (ii) those representations and warranties which address matters only as of a specified date (which shall remain true and correct as of such date), and (iii) where the failure to be true and correct would not have a material adverse effect upon USOL. (b) USOL shall have performed or complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by USOL on or prior to the Effective Time. (c) No material adverse change in the business, property, prospects, results of operations or conditions (financial or otherwise) of USOL shall have occurred between the date of this Agreement and the Effective Time. (d) No action or proceeding by any Governmental Authority or other Person (an "ACTION") shall have been instituted or threatened which (i) might have a material adverse effect on USOL; (ii) would enjoin, restrain, or prohibit, or might result in substantial damages in respect of, this Agreement or the complete consummation of the Merger; or (iii) seeks to EX 99.4 - 43 prohibit or limit the Surviving Corporation from exercising all material rights and privileges pertaining to its ownership of all or a material portion of the business or assets of USOL and the Predecessor Entities, and which would, in the reasonable judgment of FLCI make it inadvisable to consummate such transactions; PROVIDED, HOWEVER, that if an Action has been instituted, or an order issued pursuant to an Action, that FLCI and USOL shall use their reasonable best efforts to have any such order or Action dismissed or vacated. (e) USOL shall have delivered to FLCI a certificate signed by USOL's President and Chief Financial Officer, dated the date of the Closing, certifying that the conditions specified in Sections 7.2(a), 7.2(b), 7.2(c) and 7.2(d) of this Agreement have been satisfied. (f) FLCI shall have received the opinion of Jenkens & Gilchrist, counsel to USOL, dated the date of the Closing, containing the opinion set forth in EXHIBIT 7.2(F) attached hereto. (g) All corporate and other proceedings and actions taken in connection with this Agreement and all certificates, opinions, agreements, instruments, and documents mentioned in this Agreement or incident to any such transactions shall be reasonably satisfactory in form and substance to FLCI and its counsel. 7.3 ADDITIONAL CONDITIONS TO OBLIGATION OF USOL. Unless waived, in whole or in part, in writing by USOL, the obligations of USOL to effect the Merger are also subject to the fulfillment prior to or at the Effective Time of each of the following conditions: (a) The representations and warranties of FLCI contained in this Agreement shall be true and correct in all material respects on and as of the Effective Time, except for (i) changes contemplated or permitted by this Agreement, (ii) those representations and warranties which address matters only as of a specified date (which shall remain true and correct as of such date), and (iii) where the failure to be true and correct would not have a material adverse effect upon FLCI. (b) FLCI shall have performed or complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by FLCI on or prior to the Effective Time. (c) No material adverse change in the business, property, prospects, results of operations or conditions (financial or otherwise) of FLCI shall have occurred between the date of this Agreement and the Effective Time. (d) No Action shall have been instituted or threatened which (i) might have a material adverse effect on FLCI; (ii) would enjoin, restrain, or prohibit, or might result in substantial damages in respect of, this Agreement or the complete consummation of the Merger; or (iii) seeks to prohibit or limit the Surviving Corporation from exercising all EX 99.4 - 44 material rights and privileges pertaining to its ownership of all or a material portion of the business or assets of FLCI, and which would, in the reasonable judgment of USOL make it inadvisable to consummate such transactions; PROVIDED, HOWEVER, that if an Action has been instituted, or an order issued pursuant to an Action, that FLCI and USOL shall use their reasonable best efforts to have any such order or Action dismissed or vacated. (e) FLCI shall have delivered to USOL a certificate signed by FLCI's President and Chief Financial Officer, dated the date of the Closing, certifying that the conditions specified in Sections 7.3(a), 7.3(b), 7.3(c), and 7.3(d) of this Agreement have been satisfied. (f) USOL shall have received the opinion of Neuman Drennen & Stone, LLC, counsel to FLCI, dated the date of the Closing, containing the opinion set forth in EXHIBIT 7.3(F) attached hereto. ARTICLE VIII TERMINATION 8.1 TERMINATION. (a) This Agreement may be terminated at any time prior to the Effective Time, notwithstanding approval thereof by the stockholders of either USOL or FLCI: (i) by mutual written consent of the parties hereto duly authorized by the Boards of Directors of FLCI and USOL; or (ii) by either FLCI or USOL if the Merger shall not have been consummated by the Outside Date, PROVIDED that the right to terminate this Agreement under this Section 8.1(a)(ii) shall not be available to any party whose willful failure to fulfill any obligation under this Agreement has been the cause of or resulted in the failure of the Merger to occur on or before such date; or (iii) by either FLCI or USOL if a court of competent jurisdiction or Governmental Authority shall have issued a non-appealable final order, decree or ruling or taken any other action, in each case having the effect of permanently restraining, enjoining or otherwise prohibiting the Merger, except if the party relying on such order, decree or ruling or other action has not complied with its obligations under Section 6.4; or (iv) by either FLCI or USOL, if, at the FLCI Stockholders' Meeting (including any adjournment or postponement thereof), the requisite vote of the stockholders of FLCI shall not have been obtained; or EX 99.4 - 45 (v) by FLCI, upon a breach of any representation, warranty, covenant or agreement on the part of USOL set forth in this Agreement such that the conditions set forth in Section 7.3(a) or 7.3(b) would not be satisfied, or by USOL, upon a breach of any representation, warranty, covenant or agreement on the part of FLCI set forth in this Agreement such that the conditions set forth in Section 7.2(a) or 7.2(b), would not be satisfied (any of such breaches by either party, a "TERMINATING BREACH"); PROVIDED, HOWEVER, that if such Terminating Breach is curable prior to the Outside Date, by FLCI or USOL, as the case may be, through the exercise of its reasonable efforts and for so long as FLCI or USOL, as the case may be, continues to exercise such reasonable efforts, neither USOL nor the FLCI, respectively, may terminate this Agreement under this Section 8.1(a)(v); or (vi) by FLCI, if (A) the Board of Directors of USOL shall fail to recommend the Merger or shall withdraw, modify or change its recommendation of the Merger in a manner adverse to FLCI or shall have resolved to do any of the foregoing; (B) after the receipt by USOL of an Acquisition Proposal, FLCI requests in writing that the Board of Directors of USOL reconfirm its recommendation of this Agreement and the Merger to the stockholders of USOL and the Board of Directors of USOL fails to do so within 10 business days after its receipt of FLCI's request; (C) the Board of Directors of USOL shall have recommended to the stockholders of USOL an Alternative Transaction (as defined in Section 8.4(e)); or (D) a tender offer or exchange offer for 20% or more of the outstanding shares of USOL Stock is commenced (other than by FLCI or an Affiliate of FLCI) and the Board of Directors of USOL recommends that the stockholders of USOL tender their shares in such tender or exchange offer; or (vii) by USOL, if (A) the Board of Directors of FLCI shall fail to recommend the Merger or shall withdraw, modify or change its recommendation of the Merger in a manner adverse to USOL or shall have resolved to do any of the foregoing; (B) after the receipt by FLCI of an Acquisition Proposal, USOL requests in writing that the Board of Directors of FLCI reconfirm its recommendation of this Agreement and the Merger to the stockholders of USOL and the Board of Directors of FLCI fails to do so within 10 business days after its receipt of USOL's request; (C) the Board of Directors of FLCI shall have recommended to the stockholders of FLCI an Alternative Transaction; (D) a tender offer or exchange offer for 20% or EX 99.4 - 46 more of the outstanding shares of FLCI Common Stock is commenced (other than by USOL or an Affiliate of USOL) and the Board of Directors of FLCI recommends that the stockholders of FLCI tender their shares in such tender or exchange offer; or (E) for any reason FLCI fails to call and hold the FLCI Stockholders' Meeting by the Outside Date (PROVIDED that USOL's right to terminate this Agreement under this clause (E) shall not be available if at such time FLCI would be entitled to terminate this Agreement under Section 8.1(a)(v) without giving effect to the cure period); or (viii) by USOL, subject to Section 8.2(a), if the Board of Directors of USOL shall concurrently approve, and USOL shall concurrently enter into, a definitive agreement providing for the implementation of a Superior Offer (as hereinafter defined); PROVIDED, HOWEVER, that (A) USOL is not then in breach of Section 5.2, (B) the Board of Directors of USOL shall have complied with Section 8.2(a) in connection with such Superior Offer, and (C) USOL shall simultaneously make the payment required by Section 8.4(b); and PROVIDED FURTHER, that USOL agrees to use its commercially reasonable efforts to have such Superior Offer include the Surviving Corporation and to consummate the Merger. (b) This Agreement may be terminated by FLCI at any time prior to the approval thereof by the stockholders of FLCI, subject to Section 8.2(b), if the Board of Directors of FLCI shall concurrently approve, and FLCI shall concurrently enter into, a definitive agreement providing for the implementation of a Superior Offer; PROVIDED, HOWEVER, that (i) FLCI is not then in breach of Section 5.2, (ii) the Board of Directors of FLCI shall have complied with Section 8.2(b) in connection with such Superior Offer, and (iii) FLCI shall simultaneously make the payment required by Section 8.4(c); and PROVIDED FURTHER, that FLCI agrees to use its commercially reasonable efforts to have such Superior Offer include the Surviving Corporation and to consummate the Merger. 8.2 CERTAIN ACTIONS PRIOR TO TERMINATION. (a) USOL shall provide to FLCI written notice of its intention to terminate this Agreement pursuant to Section 8.1(a)(viii) advising FLCI (i) that the Board of Directors of USOL has determined, by action of a majority of the members of the Board of Directors of USOL who are not affiliated with either FLCI or the Person making such Acquisition Proposal or their respective affiliates, that such Acquisition Proposal is a Superior Offer and that, in the exercise of its good faith judgment as to fiduciary duties to stockholders under applicable law, after consultation with USOL's outside legal counsel, failure by the Board of Directors to terminate this Agreement could reasonably be expected to result in a breach of such duties and (ii) as to the material terms of any such Acquisition Proposal. At any time after the fifth EX 99.4 - 47 business day following receipt of such notice by FLCI, USOL may terminate this Agreement as provided in Section 8.1(a)(viii) only if the Board of Directors of USOL who are not affiliated with either FLCI or the Person making such Acquisition Proposal or their respective affiliates, determines that failure by the Board of Directors to terminate this Agreement continues to be reasonably expected to result in a breach of its fiduciary duties to stockholders under applicable law (which determination shall be made in light of any revised proposal made by FLCI prior to the expiration of such five business day period) and concurrently enters into a definitive agreement providing for the implementation of such Acquisition Proposal. (b) FLCI shall provide to USOL written notice of its intention to terminate this Agreement pursuant to Section 8.1(b) advising USOL (i) that the Board of Directors of FLCI has determined, by action of a majority of the members of the Board of Directors of FLCI who are not affiliated with either USOL or the Person making such Acquisition Proposal or their respective affiliates, that such Acquisition Proposal is a Superior Offer and that, in the exercise of its good faith judgment as to fiduciary duties to stockholders under applicable law, after consultation with FLCI's outside legal counsel, failure by the Board of Directors to terminate this Agreement could reasonably be expected to result in a breach of such duties and (ii) as to the material terms of any such Acquisition Proposal. At any time after the fifth business day following receipt of such notice by USOL, FLCI may terminate this Agreement as provided in Section 8.1(b) only if the Board of Directors of FLCI who are not affiliated with either USOL or the Person making such Acquisition Proposal or their respective affiliates, determines that failure by the Board of Directors to terminate this Agreement continues to be reasonably expected to result in a breach of its fiduciary duties to stockholders under applicable law (which determination shall be made in light of any revised proposal made by USOL prior to the expiration of such five business day period) and concurrently enters into a definitive agreement providing for the implementation of such Acquisition Proposal. (c) For purposes of this Agreement, "SUPERIOR OFFER" means an Acquisition Proposal which is superior from a financial point of view to (i) FLCI's stockholders (other than any stockholders affiliated with USOL) or (ii) USOL's stockholders (other than any stockholders affiliated with FLCI), as applicable, to the Merger and for which financing, to the extent required, is then committed or which, in the good faith judgment of FCLI's or USOL's board of directors, as applicable, after consultation with FLCI's or USOL's financial advisors is reasonably capable of being obtained. 8.3 EFFECT OF TERMINATION. In the event of the termination of this Agreement pursuant to Section 8.1, this Agreement shall immediately become void and there shall be no liability on the part of any party hereto or any of its Affiliates, directors, officers or stockholders, except as provided in Section 8.4; PROVIDED, HOWEVER, that termination of this Agreement shall not in any way terminate, limit or restrict the rights and remedies of any party hereto against any other party resulting from any breach of this Agreement. EX 99.4 - 48 8.4 FEES AND EXPENSES. (a) Except as set forth in this Section 8.4, all fees and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such expenses if the Merger is not consummated and by the Surviving Corporation if the Merger is consummated, to the extent such expenses are solely and directly related to such Merger in accordance with the guidelines established in Revenue Ruling 73-54, 1973-1 C.B. 187; PROVIDED, HOWEVER, that, if the Merger is not consummated, FLCI and USOL shall share equally all fees and expenses, other than attorneys' fees, incurred in relation to the printing of the Proxy Statement (including any preliminary materials related thereto) and any amendments or supplements thereto. (b) USOL shall pay FLCI a termination fee of $1,000,000 upon the earlier to occur of the following events: (i) the termination of this Agreement by FLCI pursuant to Section 8.1(a)(vi); or (ii) the termination of this Agreement by USOL pursuant to Section 8.1(a)(viii). USOL's payment of a termination fee pursuant to this subsection shall be the sole and exclusive remedy of FLCI against USOL and its directors, officers, employees, agents, advisors, and other representatives with respect to the occurrences giving rise to such payment; PROVIDED that this limitation shall not apply in the event of a willful breach of this Agreement by USOL. (c) FLCI shall pay USOL a termination fee of $1,000,000 upon the earliest to occur of the following events: (i) the termination of this Agreement by either FLCI or USOL pursuant to Section 8.1(a)(iv) if (A) the requisite votes of the stockholders of FLCI to approve the Merger shall not have been obtained, (B) a proposal for an Alternative Transaction (as defined below) involving FLCI shall have been publicly announced prior to the FLCI Stockholders' Meeting, and (C) either a definitive agreement for an Alternative Transaction involving FLCI is entered into, or an Alternative Transaction involving FLCI is consummated, within eighteen months of such termination; (ii) the termination of this Agreement by either FLCI or USOL pursuant to Section 8.1(a)(iv) if (A) the requisite vote of the stockholders of FLCI to approve the Merger shall not have been obtained because one or more of the stockholders party to the Stockholder Support Agreements failed to approve the Merger in EX 99.4 - 49 breach of such agreement, and (B) if such stockholder had voted for the Merger or not otherwise breached, the Merger would have been approved by the FLCI stockholders; (iii) the termination of this Agreement by USOL pursuant to Section 8.1(a)(vii); or (iv) the termination of this Agreement by FLCI pursuant to Section 8.1(b). FLCI's payment of a termination fee pursuant to this subsection shall be the sole and exclusive remedy of USOL against FLCI and any of its subsidiaries and their respective directors, officers, employees, agents, advisors or other representatives with respect to the occurrences giving rise to such payment; provided that this limitation shall not apply in the event of a willful breach of this Agreement by FLCI. (d) The fees payable pursuant to Section 8.4(b) or 8.4(c) shall be paid concurrently with the first to occur of the events described in Section 8.4(b)(i) or (ii) or 8.4(c)(i), (ii), (iii) or (iv), respectively. (e) As used in this Agreement, "ALTERNATIVE TRANSACTION" means either (i) a transaction pursuant to which any third party acquires more than 20% of the outstanding shares of USOL Stock or FLCI Stock, as the case may be, pursuant to a stock purchase, tender offer or exchange offer or otherwise, (ii) a merger or other business combination involving USOL or FLCI pursuant to which any third party (or the stockholders of a third party) acquires more than 20% of the outstanding shares of USOL Stock or FLCI Stock, as the case may be, or the entity surviving such merger or business combination, (iii) any other transaction pursuant to which any third party acquires control of assets (including for this purpose the outstanding equity securities of subsidiaries of USOL, and the entity surviving any merger or business combination including any of them) of USOL or FLCI having a fair market value (as determined by the Board of Directors of USOL or FLCI, as the case may be, in good faith) equal to more than 20% of the fair market value of all the assets of USOL or FLCI, as the case may be, and their respective subsidiaries, taken as a whole, immediately prior to such transaction. EX 99.4 - 50 ARTICLE IX ARBITRATION; CONSENT TO JURISDICTION 9.1 SUBMISSION TO JURISDICTION. FLCI and USOL each hereby agree that any and all disputes, legal actions, suits, or proceedings arising out of or relating to this Agreement or the transactions contemplated hereby may be brought in any state or federal court located in Portland, Oregon. By their signature to this Agreement, FLCI and USOL each irrevocably submit to the jurisdiction of the courts located in Portland, Oregon, in any dispute, legal action, suit, or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. 9.2 WAIVER OF IMMUNITY AND INCONVENIENT FORUM. FLCI and USOL each hereby irrevocably waives all immunity from jurisdiction, attachment and execution, whether on the basis of sovereignty or otherwise, to which it might otherwise be entitled in any legal action or proceeding brought in any state or federal court located in Portland, Oregon, and further irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to any dispute, legal action, suit, or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby being brought in any federal or state court located in Portland, Oregon, and hereby further irrevocably waives any claim that any such dispute, legal action, suit, or proceeding brought in any such court has been brought in an inconvenient forum. 9.3 ARBITRATION PROCEDURES. (a) All disputes arising in connection with this Agreement or any contract of sale hereunder shall be finally settled by arbitration in Portland, Oregon, in accordance with the International Arbitration Rules of the American Arbitration Association (the "RULES OF ARBITRATION"). Judgment on the award rendered by the arbitration panel (the "ARBITRATION PANEL") may be entered in any court of competent jurisdiction. (b) Any party which desires to initiate arbitration proceedings may do so by delivering written notice to the other party (the "ARBITRATION NOTICE") specifying (x) the nature of the dispute or controversy to be arbitrated; (y) the name and address of the arbitrator appointed by the party initiating such arbitration; and (z) such other matters as may be required by the Rules of Arbitration. The party who receives an Arbitration Notice shall appoint an arbitrator and notify the initiating party of such arbitrator's name and address within 30 days after delivery of the Arbitration Notice; otherwise, a second arbitrator shall be appointed by the American Arbitration Association at the request of the party who delivered the Arbitration Notice. The two arbitrators so appointed shall appoint a third arbitrator who shall be chairman of the Arbitration Panel and the "neutral arbitrator" for purposes of the Rules of Arbitration. 9.4 FINAL ARBITRATION DECISIONS. All decisions of the Arbitration Panel shall be final, conclusive and binding on all parties and shall not be subject to judicial review. The parties expressly waive the provisions of any state statute or regulation that permits a party to an arbitration in which an award has been made to petition a court of competent jurisdiction to vacate an arbitration award. 9.5 CLAIMS FOR UNPAID BALANCE. Notwithstanding anything to the contrary contained in this Article IX, any claim by either party for a "provisional remedy" as defined in Section 1281.8 of the Rules of EX 99.4 - 51 Arbitration, may be brought in any court of competent jurisdiction, and any judgment, order or decree relating thereto shall have precedence over any arbitral award or proceeding. ARTICLE X GENERAL PROVISIONS 10.1 ATTORNEY'S FEES. In any action at law or in equity or in any arbitration proceeding, for declaratory relief or to enforce any of the provisions or rights or obligations under this Agreement, the unsuccessful party to such proceeding, shall pay the successful party or parties all statutorily recoverable costs, expenses and reasonable attorneys' fees incurred by the successful party or parties including without limitation costs, expenses, and fees on any appeals and the enforcement of any award, judgment or settlement obtained, such costs, expenses and attorneys' fees shall be included as part of the judgment. The successful party shall be that party who obtained substantially the relief or remedy sought, whether by judgment, compromise, settlement or otherwise. 10.2 EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS; KNOWLEDGE, ETC. Except as otherwise provided in this Section 10.2, the representations, warranties and agreements of each party hereto shall remain operative and in full force and effect regardless of any investigation made by or on behalf of the other 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. The representations, warranties and agreements in this Agreement shall terminate at the Effective Time, except that the agreements set forth in Sections 6.4, 6.5, 6.6, 6.8, 6.12, 6.13, 6.14 and 8.4 shall survive the Effective Time. The Confidentiality/Standstill Agreement shall survive termination of this Agreement as therein provided. 10.3 NOTICES. (a) Any notice, communication, offer, acceptance, request, consent, reply, or advice (herein severally and collectively, for convenience, called "NOTICE"), in this Agreement provided or permitted to be given, served, made, or accepted by any party or Person to any other party or parties, Person or Persons, hereunder must be in writing, addressed to the party to be notified at the address set forth below, or such other address as to which one party notifies the other in writing pursuant to the terms of this Section, and must be served by (1) telefax or other similar electronic method, or (2) depositing the same in the United States mail, certified, return receipt requested and postage paid to the party or parties, Person or Persons to be notified or entitled to receive same, or (3) delivering the same in Person to such party. Any party receiving a facsimile transmission shall be entitled to rely upon a facsimile transmission to the same extent as if it were the original. EX 99.4 - 52 (b) All notices and other communications given or made pursuant hereto shall be deemed to have been given immediately when sent by telefax and confirmed received or other electronic method or when personally delivered in the manner hereinabove described, and seventy-two hours after being deposited in the United States mail. Notice provided in any manner not specified above shall be effective only if and when received by the party or parties, person or persons to be, or provided to be notified. (c) All notices, requests, demands, and other communications required or permitted under this Agreement shall be addressed as set forth below: (i) If to FLCI: FirstLink Communications, Inc. 190 SW Harrison Portland, Oregon 97201 Telecopier No. (503) 306-4442 Attn: A. Roger Pease, President With a copy to: Neuman Drennen & Stone, LLC 5445 DTC Boulevard, PH-4 Englewood, CO 80111 Telecopier No. (303) 488-3454 Attention: David H. Drennen, Esq. (ii) If to USOL: USOL Holdings, Inc. 10300 Metric Boulevard Austin, Texas 78758 Telecopier No. (512) 651-3768 Attn: Rob Solomon, Chief Executive Officer With a copy to: Jenkens & Gilchrist 600 Congress Avenue Suite 2200 Austin, Texas 78701 Telecopier No. (512) 404-3520 Attention: J. Rowland Cook, Esq. (iii) Copies to: EX 99.4 - 53 GMAC Commercial Mortgage Corporation 650 Drescher Road Horsham, PA 19044 Attention: Dave E. Creamer Foley & Lardner One IBM Plaza 330 North Wabash Avenue Suite 3300 Chicago, IL 60611-3608 Attention: Edwin D. Mason Troop Steuber Pasich Reddick & Tobey, LLP 2029 Century Park East, 24th Floor Los Angeles, CA 90067 Attention: Linda Giunta Michaelson 10.4 AMENDMENT. This Agreement may be amended by the parties hereto by action taken by or on behalf of their respective Boards of Directors at any time prior to the Effective Time; PROVIDED, HOWEVER, that after approval of the Merger by the stockholders of USOL and FLCI, no amendment may 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 by USOL and FLCI. 10.5 WAIVER. At any time prior to the Effective Time, any party hereto may, with respect to any other party hereto, (a) extend the time for the performance of any of the obligations or other acts, (b) waive any inaccuracies in the representations and warranties of the other party contained herein or in any document delivered pursuant hereto, and (c) waive compliance by the other party with any of the agreements or conditions contained herein. Any such extension or waiver shall be valid only if set forth in an instrument in writing signed by the party or parties to be bound thereby. 10.6 SEVERABILITY. If any term or other provision of this Agreement is held by a court of competent jurisdiction to be invalid, illegal or incapable of being enforced by any rule of law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as EX 99.4 - 54 to effect the original intent of the parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the extent possible. 10.7 ASSIGNMENT. Neither party may directly or indirectly assign or delegate, by operation of law or otherwise, all or any portion of its rights, obligations or liabilities under this Agreement without the prior written consent of the other party, which consent may be withheld at the other party's sole and absolute discretion. Any purported assignment or delegation without such consent shall be null and void. For purposes of this Section, the term "AGREEMENT" shall include this Agreement and the exhibits, schedules, and other documents attached hereto or described in this Section 10.7. This Agreement, and other documents delivered pursuant to this Agreement, contain all of the terms and conditions agreed upon by the parties relating to the subject matter of this Agreement and supersede all prior and contemporaneous agreements, letters of intent, representations, warranties, disclosures, negotiations, correspondence, undertakings and communications of the parties, oral or written, respecting that subject matter, including, without limitation, the letter of intent dated May 3, 1999, among USOC, FLCI, and others, as amended prior to the date hereof. 10.8 PARTIES IN INTEREST. This Agreement shall be binding upon and inure solely to the benefit of each party hereto, and nothing in this Agreement (other than Sections 6.5, 6.6 and 6.13), express or implied, is intended to or shall confer upon any other person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. 10.9 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No failure or delay on the part of any party hereto in the exercise of any right hereunder shall impair such right or be construed to be a waiver of, or acquiescence in, any breach by the other party of any representation, warranty or agreement herein, nor shall any single or partial exercise of any such right preclude other or further exercise thereof or of any other right. All rights and remedies existing under this Agreement are cumulative and in addition to, and not exclusive of, any rights or remedies otherwise available. 10.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO THE CHOICE OF LAW PROVISIONS THEREOF. EX 99.4 - 55 10.11 COUNTERPARTS. This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. This Agreement shall become binding when all counterparts taken together shall have been executed and delivered by the parties. A telecopied facsimile of an executed counterpart of this Agreement shall be sufficient to evidence the binding agreement of each party to the terms hereof. However, each party agrees to return to the other parties an originally executed counterpart of this Agreement promptly after delivery of a telecopied facsimile thereof. 10.12 CAPTIONS. The caption and heading of various sections and paragraphs of this Agreement are for convenience only and are not to be construed as defining or limiting, in any way, the scope or intent of the provisions hereof. 10.13 TIME. Time is of the essence with respect to this Agreement and each of its provisions. EX 99.4 - 56 IN WITNESS WHEREOF, FLCI and USOL have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized. FIRSTLINK COMMUNICATIONS, INC. By: /S/ A. ROGER PEASE ----------------------------------- Name: A. Roger Pease Title: President and Chief Executive Officer USOL HOLDINGS, INC. By: /S/ ROB SOLOMON ----------------------------------- Name: Rob Solomon Title: President EX 99.4 - 57 EX-99.5 6 PREFERRED STOCKHOLDER REGISTRATION RIGHTS AGT ------------------------------------------- PREFERRED STOCKHOLDER REGISTRATION RIGHTS AGREEMENT DATED AS OF JULY 21, 1999 BY AND AMONG USOL HOLDINGS, INC., FIRSTLINK COMMUNICATIONS, INC. AND THE ENTITIES SET FORTH IN SCHEDULE A HERETO (EACH, A "SHAREHOLDER") ------------------------------------------- TABLE OF CONTENTS ARTICLE/SECTION HEADING PAGE - --------------- ------- ---- ARTICLE I DEFINITIONS..........................................................2 1.1 Defined Terms...........................................................2 ARTICLE II TRANSFERS OF SHARES.................................................3 2.1 Shareholder Common Stock Unregistered...................................3 2.2 Rule 144 Reporting......................................................4 ARTICLE III REGISTRATION RIGHTS................................................4 3.1 Demand Registration.....................................................4 3.2 Right to Include Securities.............................................6 3.3 Priority in Incidental Registration.....................................6 3.4 Registration Procedures.................................................7 3.5 Incidental Underwritten Offerings......................................10 3.6 Preparation; Reasonable Investigation..................................10 3.7 Limitations, Conditions and Qualifications to Obligations under Registration Covenants.................................................11 3.8 Expenses...............................................................12 3.9 Indemnification........................................................12 3.10Participation in Underwritten Registrations............................15 ARTICLE IV MISCELLANEOUS......................................................15 4.1 Recapitalizations, Exchanges, Etc., Affecting Shareholder Common Stock..................................................................15 4.2 Binding Effect.........................................................15 4.3 Amendment; Waiver......................................................16 4.4 Notices................................................................16 4.5 Governing Law..........................................................16 4.6 Counterparts...........................................................16 4.7 Invalidity.............................................................16 4.8 Cumulative Remedies....................................................17 4.9 Assumption by FirstLink................................................17 EX 99.5 - i USOL HOLDINGS, INC. PREFERRED STOCK REGISTRATION RIGHTS AGREEMENT REGISTRATION RIGHTS AGREEMENT REGISTRATION RIGHTS AGREEMENT dated as of July 21, 1999, by and among USOL Holdings, Inc., a Delaware corporation ("USOL"), FirstLink Communications, Inc., an Oregon corporation ("FirstLink") and each of the entities set forth on Schedule A attached hereto and any permitted transferee of the shares of Series A Preferred Stock (as defined below) and Series B Preferred Stock (as defined below) held by such entities (each such entity and transferee, a "Shareholder"). W I T N E S S E T H: WHEREAS, pursuant to separate Subscription Agreements, each dated as of July 21, 1999, by and between USOL and each of the Shareholders (the "Subscription Agreements"), the Shareholders have purchased an aggregate of 1,325,000 shares of USOL's Series A Convertible Preferred Stock, par value $0.001 per share ("Series A Preferred Stock") which shall be convertible into shares of USOL's common stock, par value $0.001 per share ("Common Stock"); and 155,000 shares of USOL's Series B Convertible Preferred Stock, par value $0.001 per share ("Series B Preferred Stock") which shall be convertible into shares of Series A Preferred Stock or Common Stock; and WHEREAS, the Subscription Agreements provide that the Shareholders will have certain registration rights and it is a condition to the consummation of the purchase and sale of the Series A Preferred Stock and Series B Preferred Stock that each of the Shareholders and USOL enter into this Registration Rights Agreement; and WHEREAS, USOL, Inc., a Delaware corporation ("USOL Sub"), USOL, U.S. OnLine Communications, Inc., a Delaware corporation ("OnLine") and certain shareholders of Online have entered into an Asset Purchase Agreement dated the date hereof, whereby USOL Sub shall purchase substantially all of the assets of OnLine (the "USOL Acquisition") concurrently with the execution of this Agreement; and WHEREAS, TheResidentClub.com, Inc., a Delaware corporation ("TRC"), GMAC Commercial Mortgage Corporation ("GMAC-CM") and USOL have entered into an Asset Purchase Agreement dated the date hereof, whereby TRC shall purchase certain of the assets of the Tenant Services Division of GMAC-CM (the "TSD Acquisition") concurrently with the execution of this Agreement; and WHEREAS, USOL and FirstLink Communications, Inc., an Oregon corporation ("FirstLink") have entered into an Agreement and Plan of Merger and Reorganization dated as of July 21, 1999 (the "Merger Agreement"), whereby, subsequent to the USOL Acquisition and the TSD Acquisition and subject to the satisfaction of conditions set forth in the Merger Agreement, USOL shall merge with and into FirstLink (the "Merger"); and WHEREAS, pursuant to the Merger Agreement, each share of Series A Preferred Stock and Series B Preferred Stock shall be exchanged for one share of Series A Convertible USOL HOLDINGS, INC. PREFERRED STOCK REGISTRATION RIGHTS AGREEMENT Preferred Stock of FirstLink (the "FirstLink Series A Preferred Stock") and Series B Convertible Preferred Stock of FirstLink (the "Firstlink Series B Preferred Stock"), respectively having equivalent rights and preferences as the USOL Series A Preferred Stock and Series B Preferred Stock (together, "FirstLink Preferred Stock"); and WHEREAS, USOL, FirstLink and the Shareholders believe that it is in their best interests to enter into this Agreement pertaining to the registration of their respective shares of USOL, and after the closing of the Merger, their respective shares of FirstLink, on the terms and conditions set forth below; NOW, THEREFORE, in order to implement the foregoing and in consideration of the mutual representations, warranties, covenants and agreements contained herein, the parties hereto agree as follows: ARTICLE I DEFINITIONS 1.1 DEFINED TERMS. Capitalized terms used herein but not otherwise defined shall have the meaning given to such terms in the Subscription Agreements. "CLOSING" shall mean the consummation of the Subscription Agreements and the transactions contemplated thereby by the Company and the Shareholders. "COMPANY" shall mean (a) USOL at all times prior to the closing of the Merger and (b) FirstLink upon the closing of the Merger and at all times thereafter. "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder as the same may be amended from time to time. "EXCLUDED REGISTRATION" means a registration under the Securities Act of (i) securities pursuant to the demand registration rights pursuant to SECTION 3.1.1 hereof, (ii) securities registered on Form S-8 under the Securities Act or any similar successor form and (iii) securities registered to effect the acquisition of or combination with another Person. "PERSON" shall mean any individual, partnership, joint venture, corporation, limited liability company, trust, joint stock company, business trust, unincorporated association, joint venture, governmental authority or any department or agency thereof or other entity of any nature whatsoever. "QUALIFIED IPO" means a firm commitment underwritten public offering of Common Stock pursuant to a registration statement under the Securities Act where both (i) the proceeds to USOL (prior to deducting any underwriters' discounts and commissions) equal or exceed Twenty-Five Million Dollars ($25,000,000) and (ii) upon consummation of such offering, the Common Stock is listed on the New York Stock Exchange or authorized to be quoted and/or listed on the Nasdaq National Market. EX 99.5 - 2 USOL HOLDINGS, INC. PREFERRED STOCK REGISTRATION RIGHTS AGREEMENT "SEC" shall mean the Securities and Exchange Commission. "SECURITIES ACT" shall mean the Securities Act of 1933, as amended, and all rules and regulations promulgated thereunder as the same may be amended from time to time. "SELLING SECURITYHOLDER" shall mean any seller of Shareholder Common Stock covered by a registration statement. "SHAREHOLDER COMMON STOCK" shall mean shares of Common Stock issued or issuable to the Shareholders upon conversion of the Series A Preferred Stock and Series B Preferred Stock. "WARRANTS" shall mean collectively the warrants dated the date hereof issued by USOL to certain of the creditors of Online and the warrants dated the date hereof issued by USOL to GMAC-CM. ARTICLE II TRANSFERS OF SHARES 2.1 SHAREHOLDER COMMON STOCK UNREGISTERED. Each Shareholder acknowledges and represents that he has been advised by the Company that: (a) the offer and sale of the Shareholder Common Stock have not been registered under the Securities Act; (b) the Shareholder Common Stock must be held and the Shareholder must continue to bear (and is able to bear) the economic risk of the investment in the Shareholder Common Stock, subject to the terms and conditions of the Subscription Agreements until (i) the Shareholder Common Stock is registered pursuant to an effective registration statement under the Securities Act and all applicable state securities laws or (ii) an exemption from such registration is available; (c) when and if shares of the Shareholder Common Stock may be disposed of without registration under the Securities Act in reliance on Rule 144 thereunder ("Rule 144"), such disposition can be made only in limited amounts in accordance with the terms and conditions of such Rule; (d) if the Rule 144 exemption is not available, any offer or sale of Shareholder Common Stock without registration will require compliance with some other exemption under the Securities Act; (e) a restrictive legend in the form set forth in Section 7.2 of the Subscription Agreements shall be placed on the certificates representing the Shareholder Common Stock; and (f) a notation shall be made in the appropriate records of the Company indicating that the Shareholder Common Stock is subject to restrictions on transfer, and EX 99.5 - 3 USOL HOLDINGS, INC. PREFERRED STOCK REGISTRATION RIGHTS AGREEMENT appropriate stop-transfer instructions will be issued to the Company's transfer agent with respect to the Shareholder Common Stock. 2.2 RULE 144 REPORTING. The Company agrees that to the extent reasonably necessary to permit the Shareholders to sell shares of the Shareholder Common Stock in accordance with and in reliance on Rule 144, and for so long as such shares are owned by the Shareholders and such shares are not registered for resale under the Securities Act, the Company will use its reasonable best efforts to: (a) make and keep public information available within the meaning of Rule 144 under the Securities Act, at all times from and after the Closing Date; (b) file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and (c) so long as any Shareholder owns any Shareholder Common Stock, inform such person upon request as to its compliance with the reporting requirements of Rule 144 and of the Securities Act and the Exchange Act, and provide a copy of the most recent annual or quarterly report of the Company and such other reports and documents filed with the SEC and available to the public as may reasonably be requested in availing such Shareholder of any rule or regulation of the SEC allowing a sale of any such securities without registration. Anything to the contrary contained in this Section 2.2 notwithstanding, the Company may deregister any of its securities under the Exchange Act if it is then permitted to do so pursuant to the Exchange Act in which case the provisions of this Section 2.2 insofar as they relate to obligations to make filings under the Exchange Act that would no longer be required as a result of such delisting shall be of no further force or effect. Nothing in this Section shall be deemed to limit in any manner the restriction on sales of Shareholder Common Stock contained in this Agreement. ARTICLE III REGISTRATION RIGHTS 3.1 DEMAND REGISTRATION. 3.1.1 DEMAND RIGHTS. At any time after the first to occur of (i) 180 days after the date of the Closing of the Merger or (ii) 180 days after a Qualified IPO, the holders of more than 20% of the Shareholder Common Stock that has not been registered and sold pursuant to this Article III, may submit a written request that the Company effect a registration of Shareholder Common Stock; PROVIDED HOWEVER, that the Company need effect only five (5) demand registrations pursuant to this Section 3.1.1. Upon receipt of such request, the Company will: (a) promptly give written notice of the proposed registration to all other Shareholders and to the holders of Common Stock and Warrants issued on the date of this Agreement (the "Other Shareholders") who are parties to the Common Stockholder and Warrant Holder Registration Rights Agreement dated as of the date hereof; and EX 99.5 - 4 USOL HOLDINGS, INC. PREFERRED STOCK REGISTRATION RIGHTS AGREEMENT (b) file a registration statement on Form S-1 or Form S-3 or any successor form with the SEC as expeditiously as possible but in any case within 60 days after the selection of an investment banking firm pursuant to Section 3.1.3 and use its best efforts to effect the registration of the Shareholder Common Stock and the Common Stock of the Other Shareholders ("Other Common Stock") (including, without limitation, the execution of an undertaking to file post-effective amendments, appropriate qualifications under applicable blue sky or other state securities laws and appropriate compliance with applicable regulations issued under the Securities Act) as would permit the sale and distribution by the Shareholders and the Other Shareholders of such shares of Shareholder Common Stock and Other Common Stock under applicable law, together with all Shareholder Common Stock and Other Common Stock of any Shareholders and Other Shareholders joining in such request as are specified in a written request received by the Company within 30 days after receipt of such written notice from the Company; provided, however that the Company shall not be obligated to take any action to effect any such registration, qualification or compliance pursuant to this Section 3.1.1: (i) in any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such registration, qualification or compliance unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act; or (ii) with respect to any of the Shareholder Common Stock or Other Common Stock that has been transferred to any holder who is not one of the Shareholders or Other Shareholders listed above or a family member of any such Shareholder or Other Shareholder or a trust for the benefit of any such Shareholder or Other Shareholder or family member, unless such transferee has executed and delivered to the Company a valid undertaking and becomes bound by the terms of this Agreement. 3.1.2 EFFECTIVE REGISTRATION. A registration will not count as a demand registration until it has become effective; PROVIDED, that if, after it has become effective, an offering of Shareholder Common Stock pursuant to a registration is interfered with by any stop order, injunction, or other order or requirement of the SEC or other governmental agency or court, such registration will be deemed not to have been effected and will not count as a demand registration. 3.1.3 SELECTION OF UNDERWRITERS. The offering of Shareholder Common Stock pursuant to a demand registration shall be in the form of a "firm commitment" underwritten offering. The Shareholders holding a majority of the Shareholder Common Stock to be registered in a demand registration shall select the investment banking firm or firms to manage the underwritten offering; PROVIDED, that such selection shall be subject to the consent of USOL, which consent shall not be unreasonably withheld or delayed. 3.1.4 PRIORITY OF DEMAND REGISTRATIONS. All Shareholder Common Stock and Other Common Stock requested to be included in the registration shall be included in a demand registration unless the managing underwriter or underwriters shall advise the Company or the Shareholders and the Other Shareholders in writing that the inclusion of such securities will EX 99.5 - 5 USOL HOLDINGS, INC. PREFERRED STOCK REGISTRATION RIGHTS AGREEMENT materially and adversely affect the price or success of the offering (a "MATERIAL ADVERSE EFFECT"). In the event the managing underwriter or underwriters shall advise the Company or the Shareholders and the Other Shareholders that the amount of Shareholder Common Stock and Other Common Stock proposed to be included in such demand registration by Shareholders and Other Shareholders is sufficiently large to cause a Material Adverse Effect, the Shareholder Common Stock and Other Common Stock to be included in such registration shall equal the number of shares which the Company is so advised can be sold in such offering without a Material Adverse Effect and such shares shall be allocated pro rata among the Shareholders and the Other Shareholders on the basis of the number of shares of Shareholder Common Stock and Other Common Stock requested to be included in such registration. 3.2 RIGHT TO INCLUDE SECURITIES. If at any time all of the shares of Shareholder Common Stock are not then registered under the Securities Act, and the Company proposes to register any shares of its Common Stock under the Securities Act (other than pursuant to an Excluded Registration), whether or not for sale for its own account, it will each such time as soon as practicable give written notice of its intention to do so to the Shareholders. In such event, upon the written request (which request shall specify the total number of shares of Shareholder Common Stock intended to be disposed of by the requesting Shareholder) of any Shareholder made within 15 days after the receipt of any such notice (10 days if the Company gives telephonic notice with written confirmation to follow promptly thereafter), stating that (i) such registration will be on Form S-3 and (ii) such shorter period of time is required because of a planned filing date, the Company will use all reasonable efforts to effect the registration under the Securities Act in the manner initially proposed by the Company of all Shareholder Common Stock held by the Shareholders which the Company has been so requested to register for sale. If the Company thereafter determines for any reason in its sole discretion not to register or to delay registration of the Common Stock, the Company may, at its election, give written notice of such determination to the Shareholder and (i) in the case of a determination not to register, shall be relieved of the obligation to register any Shareholder Common Stock in connection with such registration and (ii) in the case of a determination to delay registering, shall be permitted to delay registering any Shareholder Common Stock of the Shareholder for the same period as the delay in registration of such other securities. The exercise by a Shareholder of any right under this Section 3.2 will not relieve the Company of its obligations to such Shareholder under Section 3.1. 3.3 PRIORITY IN INCIDENTAL REGISTRATION. In a registration pursuant to Section 3.2 hereof, if the managing underwriter of any such underwritten offering to which Section 3.2 pertains shall inform the Company by letter of its belief that the number of shares of Shareholder Common Stock and Other Common Stock to be included in such registration would have a Material Adverse Effect, then the Company will be required to include in such registration only that number of shares of Shareholder Common Stock and Other Common Stock which it is so advised can be included in such offering without causing such Material Adverse Effect. With respect to a registration that is the subject of Section 3.2 hereof, shares of Common Stock proposed by the Company to be registered for issuance by the Company or for sale by any Person exercising "demand" registration rights shall have the first priority and all shares of Shareholder Common Stock owned by the Shareholders exercising incidental registration rights and all shares of Other Common Stock owned by the Other Shareholders EX 99.5 - 6 USOL HOLDINGS, INC. PREFERRED STOCK REGISTRATION RIGHTS AGREEMENT exercising incidental rights shall be given second priority without preference among the relevant Shareholders and Other Shareholders. If less than all of the shares of Shareholder Common Stock and Other Common Stock duly requested to be included in such registration are to be registered therein, such shares of Shareholder Common Stock and Other Common Stock shall be included in the registration PRO RATA based on the total number of such shares sought to be registered other than for issuance by the Company or sale by third parties exercising "demand" registration rights in accordance with the preceding sentence. If, as a result of the provisions of this Section 3.3, any Shareholder or Other Shareholder shall not be entitled to include all of such Shareholder's shares of Shareholder Common Stock or Other Common Stock in such registration, such shareholder may withdraw such shareholder's request to include Shareholder Common Stock or Other Common Stock, as applicable, in such registration. 3.4 REGISTRATION PROCEDURES. In connection with the Company's obligations to register the Shareholder Common Stock pursuant to this Article III, the Company will use its reasonable best efforts to effect such registration in accordance herewith and the Company will promptly: (a) prepare and file with the SEC as expeditiously as possible, but in any case within 60 days after the selection of an investment banking firm pursuant to Section 3.1.3 the requisite registration statement to effect such registration and use its reasonable best efforts to cause such registration statement to become effective and to remain continuously effective until the earlier to occur of (x) 180 days following the date on which such registration statement is declared effective (the "Effective Date") or (y) the termination of the offering being made as set forth thereunder; (b) prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective as set forth above and to comply with the provisions of the Securities Act with respect to the disposition of all shares of Shareholder Common Stock covered by such registration statement until such Shareholder Common Stock has been sold; (c) furnish to the managing underwriter, if any, and to the Shareholders, at least one executed original of the registration statement and to each of the Selling Securityholders such number of conformed copies of such registration statement and of each such amendment and supplement thereto (in each case including all exhibits), such number of copies of the prospectus contained in such registration statement (including each preliminary prospectus and any summary prospectus) and any other prospectus filed under Rule 424 under the Securities Act, in conformity with the requirements of the Securities Act, as may reasonably be requested by such Selling Securityholder (it being understood that the Company consents to the use of the prospectus and any amendment or supplement thereto by each seller of Shareholder Common Stock and the underwriters in connection with the offering and sale of the Shareholder Common Stock covered by the registration of which such prospectus, amendment or supplement is a part). (d) use its reasonable best efforts (i) to register or qualify, to the extent EX 99.5 - 7 USOL HOLDINGS, INC. PREFERRED STOCK REGISTRATION RIGHTS AGREEMENT necessary, all shares of Common Stock covered by such registration statement under the securities or "blue sky" laws of such jurisdictions where an exemption is not available as the Selling Securityholders shall reasonably request, (ii) to keep such registration or qualification in effect for so long as such registration statement remains in effect and (iii) to take any other action which may be reasonably necessary or advisable to enable the Selling Securityholders to consummate the disposition in such jurisdictions of such Common Stock, provided that the Company will not be required to qualify generally to do business or as a dealer in any jurisdiction where it is not then so qualified, subject itself to taxation in any such jurisdiction or take any action which would subject it to general service of process in any such jurisdiction; (e) notify the Selling Securityholders and the managing underwriter, if any, promptly, and confirm such advice in writing (i) when a prospectus or any prospectus supplement or post-effective amendment has been filed, and, with respect to a registration statement or any post-effective amendment, when the same has become effective, (ii) of any request by the SEC for amendments or supplements to a registration statement or related prospectus or for additional information, (iii) of the issuance by the SEC of any stop order suspending the effectiveness of a registration statement or the initiation of any proceedings for that purpose, (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification of any of the registered securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose, (v) of the happening of any event or information becoming known which requires the making of any changes in a registration statement or related prospectus so that such documents will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading and (vi) of the Company's reasonable determination that a post-effective amendment to a registration statement would be appropriate; (f) use reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of a registration statement, or the lifting of any suspension of the qualification of any of the registered securities for sale in any jurisdiction, at the earliest possible moment; (g) upon the occurrence of any event contemplated by clause (e)(v) above, prepare a supplement or post-effective amendment to the applicable registration statement or related prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the Shareholders of the securities being sold thereunder, such prospectus will not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading; (h) use its reasonable best efforts to furnish to the Selling Securityholders a signed counterpart, addressed to the Selling Securityholders and the underwriters, if any, of an opinion of counsel for the Company as to the effectiveness of the registration statement registering the resale of the Shareholder Common Stock under the Securities Act; (i) otherwise use its best efforts to comply with all applicable rules and regulations of the SEC in connection with a registration pursuant hereto; EX 99.5 - 8 USOL HOLDINGS, INC. PREFERRED STOCK REGISTRATION RIGHTS AGREEMENT (j) cooperate with the Selling Securityholders and the managing underwriters, if any, to facilitate the timely preparation and delivery of certificates representing shares of Shareholder Common Stock to be sold; and enable such shares of Shareholder Common Stock to be in such denominations and registered in such names as the Selling Securityholders or the managing underwriters, if any, may request at least two business days prior to any sale of shares of Shareholder Common Stock to the underwriters; (k) cause all shares of Common Stock covered by the registration statement to be listed on each securities exchange, if any, or Nasdaq, on which securities of such class, series and form issued by the Company, if any, are then listed or traded if requested by the managing underwriters, if any, or the holders of a majority of the shares of Common Stock covered by the registration statement and entitled hereunder to be so listed; (l) make generally available to the Company's securityholders an earnings statement satisfying the provisions of Section 11(a) of the Securities Act no later than thirty (30) days after the end of the twelve (12) month period beginning with the first day of the Company's first fiscal quarter commencing after the effective date of a registration statement, which earnings statement shall cover said twelve (12) month period, and which requirement will be deemed to be satisfied if the Company timely files complete and accurate information on the Form 10-Q, 10-K and 8-K under the Exchange Act and otherwise complies with Rule 158 under the Securities Act; and (m) cooperate and assist in any filings required to be made with the National Association of Securities Dealers, Inc. (the "NASD") and in the performance of any due diligence investigation by any underwriter (including any qualified independent underwriter that is required to be retained in accordance with the rules and regulations of the NASD). The Company may require each Selling Securityholder to furnish to the Company such information and documents regarding such Selling Securityholder and the distribution of such securities as the Company may from time to time reasonably request in writing in order to comply with the Securities Act. Each of the Selling Securityholders agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3.4(e)(ii), (iii), (iv), (v) or (vi) hereof, it will forthwith discontinue disposition pursuant to such registration statement of any shares of Common Stock covered by such registration statement or prospectus until its receipt of the copies of the supplemented or amended prospectus relating to such registration statement or prospectus or until it is advised in writing by the Company that the use of the applicable prospectus may be resumed (and the period of such discontinuance shall be excluded from the calculation of the period specified in clause (x) of Section 3.4(a)) and, if so directed by the Company, will deliver to the Company (at the Company's expense) all copies, other than permanent file copies then in their possession, of the prospectus covering such securities in effect at the time of receipt of such notice. Each of the Selling Securityholders agrees to furnish the Company a signed counterpart, addressed to the Company and the underwriters, if any, of an opinion of counsel covering substantially the same matters with respect to such registration statement (and the prospectus included therein) as are EX 99.5 - 9 USOL HOLDINGS, INC. PREFERRED STOCK REGISTRATION RIGHTS AGREEMENT customarily covered in opinions of selling stockholder's counsel delivered to the underwriters in underwritten public offerings of securities (and dated the dates such opinions are customarily dated) and such other legal matters as the Company or the underwriters may reasonably request. 3.5 INCIDENTAL UNDERWRITTEN OFFERINGS. If the Company at any time proposes to register any shares of its common stock under the Securities Act as contemplated by Section 3.2 and such shares are to be distributed by or through one or more underwriters, the Company and, if the managing underwriter shall elect in writing to include the shares of Shareholder Common Stock sought to be included in such registration, the Securityholders who hold Shareholder Common Stock to be distributed by such underwriters in accordance with Section 3.2 hereof shall be parties to the underwriting agreement between the Company and such underwriters and may, at their option, require that any or all of the representations and warranties by, and the other agreements on the part of, the Company to and for the benefit of such underwriters shall also be made to and for the benefit of them and that any or all of the conditions precedent to the obligations of such underwriters under such underwriting agreement be conditions precedent to their obligations. The Company may, at its option, require that any or all of the representations and warranties by, and the other agreements on the part of the Selling Securityholders to and for the benefit of such underwriters shall also be made to and for the benefit of the Company. Notwithstanding the foregoing, no Shareholder shall be required to make any representations or warranties in connection with the registration other than representations and warranties as to (i) such Shareholder's ownership of his or its Shareholder Common Stock to be transferred free and clear of all liens, claims, and encumbrances, (ii) such Shareholder's power and authority to effect such transfer, and (iii) such matters pertaining to compliance with securities laws as may be reasonably requested; PROVIDED FURTHER, HOWEVER, that the obligation of such Shareholder to indemnify pursuant to any such underwriting arrangements shall be several, not joint and several, among such Shareholders selling Shareholder Common Stock, and the liability of each such Shareholder will be in the proportion thereto, and PROVIDED FURTHER that such liability will be limited to, the allocable share of claim net amount received by such Shareholder from the sale of his or its Shareholder Common Stock pursuant to such registration. 3.6 PREPARATION; REASONABLE INVESTIGATION. In connection with the preparation and filing of each registration statement under the Securities Act pursuant to this Agreement, the Company will give the Selling Securityholders, the underwriters, if any, and their respective counsel and accountants the opportunity (but such Persons shall not have the obligation except as set forth herein) to participate (in the case of a registration pursuant to Section 3.2 hereof such participation shall be at their expense) in the preparation of such registration statement, each prospectus included therein or filed with the SEC, and, to the extent practicable, each amendment thereof or supplement thereto, and will give each of them such access to its books and records (to the extent customarily given to the underwriters of the Company's securities) and such opportunities to discuss the business of the Company with its officers and the independent public accountants who have certified its financial statements as shall be necessary, in the opinion of the Selling Securityholders, and the underwriters' respective outside counsel to conduct a reasonable investigation within the meaning of the Securities Act. EX 99.5 - 10 USOL HOLDINGS, INC. PREFERRED STOCK REGISTRATION RIGHTS AGREEMENT 3.7 LIMITATIONS, CONDITIONS AND QUALIFICATIONS TO OBLIGATIONS UNDER REGISTRATION COVENANTS. The obligations of the Company to use its reasonable efforts to cause the Shareholder Common Stock to be registered under the Securities Act are subject to each of the following limitations, conditions and qualifications: (a) The Company shall be entitled to postpone for a reasonable period of time the filing or effectiveness of (but not the preparation of) any registration statement otherwise required to be prepared, filed and made and kept effective by it hereunder if: (i) the Board of Directors of the Company determines in good faith that there is a material undisclosed development in the business or affairs of the Company (including any pending or proposed financing, recapitalization, acquisition or disposition), the disclosure of which at such time would be adverse to the Company's interests (but the duration of such postponement may not exceed the earlier to occur of (u) 30 days after the cessation of the circumstances described in this clause (i) or (v) 90 days after the date of the determination of the Board of Directors to postpone the filing or effectiveness of a registration, and the duration of such postponement shall be excluded from the calculation of the period specified in clause (x) of Section 3.4(a)); or (ii) the Company has filed a registration statement with the SEC, such registration statement has not yet been declared effective, the Company is using its reasonable best efforts to have such registration statement declared effective, and the underwriters with respect to such registration advise that such registration would be adversely affected (but the duration of such postponement or suspension may not exceed the earlier to occur of (u) 30 days after the effectiveness of the previously filed registration statement, or (v) 90 days after the determination of the Board of Directors to postpone filing a registration statement required to be filed hereunder), and the duration of such postponement or suspension shall be excluded from the calculation of the period specified in clause (x) of Section 3.4(a); or (iii) the Board of Directors of the Company determines in good faith prior to the receipt of a request for demand registration to effect a registered underwritten public offering of the Company's equity securities for the Company's account and the Company had taken substantial steps (including, but not limited to, selecting a managing underwriter for such offering) and is proceeding with reasonable diligence to effect such offering (but the duration of such postponement may not exceed the earlier to occur of (u) 30 days after the effectiveness of the previously prepared registration statement, or (v) 90 days after the determination by the Board of Directors to postpone the filing of a registration statement required to filed hereunder). (iv) If the Company shall delay the filing of a registration statement as described in (i), (ii) or (iii) above, it shall, as promptly as practicable, notify the Selling Securityholders of such determination, and the Selling Securityholders shall have the right in the case of a postponement of the filing or effectiveness of a registration statement to withdraw the request for registration by giving written notice to the Company within 10 days after receipt of the Company's notice. Notwithstanding the foregoing, the Company may make such EX 99.5 - 11 USOL HOLDINGS, INC. PREFERRED STOCK REGISTRATION RIGHTS AGREEMENT postponement or suspension no more than one time in any 18 month period. (b) The Company's obligations shall be subject to the obligations of the Selling Securityholders, which each of the Shareholders hereby acknowledges, to furnish all information and materials and to take any and all actions as may be required under applicable federal and state securities laws and regulations to permit the Company to comply with all applicable requirements of the SEC and state securities regulations and to obtain any acceleration of the effective date of such registration statement or maintain the effectiveness or currency thereof. (c) The Company shall not be obligated to cause any special audit to be undertaken in connection with any registration pursuant hereto unless such audit is requested by the underwriters with respect to such registration. (d) Each Shareholder agrees that, in connection with any underwritten public offering by the Company of its equity securities pursuant to an effective registration statement filed under the Securities Act, including a Qualified IPO, the Shareholder shall not publicly sell, make any short sale of, loan, hypothecate, pledge, grant any option for the repurchase of, or otherwise publicly dispose or transfer for value or otherwise agree to engage in any of the foregoing transactions with respect to any equity securities of the Company without the prior written consent of the Company's underwriters, for such period of time from and after the effective date of such registration statement as may be requested by the Company's underwriters, such period of time is not to exceed 180 days in the case of a Qualified IPO and 90 days in the case of a secondary offering by the Company. 3.8 EXPENSES. The Company will pay its own actual expenses (including legal fees) incurred in connection with each demand and incidental registration of Shareholder Common Stock pursuant to Sections 3.1 or 3.2 of this Agreement, including, without limitation, any and all filing fees payable to the SEC, fees with respect to filings required to be made with stock exchanges, Nasdaq and the NASD, fees and expenses of compliance with state securities or blue sky laws, printing expenses, fees and disbursements of counsel and accountants of the Company, including costs associated with comfort letters, and fees and expenses of other Persons retained by the Company, and, in the case of a demand registration pursuant to Section 3.1 of this Agreement, all reasonable costs, expenses and fees of one legal counsel for the Selling Securityholders (which legal counsel shall be chosen by the majority-in-interest of the Selling Securityholders in their discretion), but each Selling Securityholder shall pay its own underwriters' expenses (such as but not limited to discounts, commissions and fees of underwriters and expenses included therein of selling brokers, dealer managers or similar securities industry professionals relating to the distribution of the securities being registered) and legal expenses (except as set forth above). The Company shall pay its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), and the expense of securities law liability insurance and rating agency fees, if any. 3.9 INDEMNIFICATION. EX 99.5 - 12 USOL HOLDINGS, INC. PREFERRED STOCK REGISTRATION RIGHTS AGREEMENT (a) INDEMNIFICATION BY THE COMPANY. In connection with any registration pursuant hereto in which Shareholder Common Stock is to be disposed of, the Company shall indemnify and hold harmless, to the fullest extent permitted by law, each Shareholder and, when applicable, its officers, directors, agents and employees and each Person who controls (or is controlled by or under common control with) any of the Shareholders (within the meaning of the Securities Act or the Exchange Act) against all losses, claims, damages, liabilities and expenses (including, without limitation, all attorneys' fees and expenses) based upon, arising out of or related to, any untrue or alleged untrue statement of a material fact contained in any registration statement, prospectus or preliminary prospectus or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, including, without limitation, any loss, claim, damage, liability or expense resulting from the failure to keep a prospectus current as required hereunder, except insofar as the same (i) are caused by or contained in any information furnished in writing to the Company by or on behalf of any Shareholder expressly for use therein or (ii) are caused by the failure of any of the Shareholders to deliver a copy of the current required prospectus after the Company has furnished any such Shareholders with a sufficient number of copies of such prospectus as requested hereunder or (iii) arise in respect of any offers to sell or sales made during any period when any Shareholder is required to discontinue sales under Section 3.4(e) or otherwise under applicable law. The Company shall also indemnify underwriters, selling brokers, dealer managers and similar securities industry professionals (if any), participating in the distribution of the Shareholder Common Stock, their officers and directors and each person who controls such Persons (within the meaning of the Securities Act and the Exchange Act) to the same extent (and subject to the same exceptions) as provided above with respect to the indemnification of the Shareholders and shall enter into an indemnification agreement with such Persons containing such terms, if requested. The reimbursements required by this SECTION 3.9(A) will be made by periodic payments during the course of the investigation or defense, as and when bills are received or expenses incurred. (b) INDEMNIFICATION BY THE SHAREHOLDERS. In connection with each registration statement effected pursuant hereto in which Shareholder Common Stock is to be disposed of, each of the Selling Securityholders shall, severally but not jointly, indemnify and hold harmless, to the fullest extent permitted by law, the Company, each other Selling Securityholder and their respective directors, officers, agents and employees and each Person who "controls" the Company and each other Selling Securityholder (within the meaning of the Securities Act and the Exchange Act) and the managing underwriter if any, and its directors, officers, agents, and employees and each Person who "controls" such underwriter (within the meaning of the Securities Act and Exchange Act), in each case against any losses, claims, damages, liabilities and expenses resulting from any untrue statement of a material fact or any omission of a material fact required to be stated in such registration statement or prospectus or preliminary prospectus or necessary to make the statements therein not misleading, to the extent but only to the extent, that such untrue statement or omission is contained in any information furnished in writing by such Shareholder to the Company expressly for inclusion in such registration statement or prospectus; PROVIDED, HOWEVER, that such seller of Shareholder Common Stock shall not be liable in any such case to the extent that, prior to the filing of any such registration statement or prospectus or amendment thereof or supplement thereto, such seller of Shareholder Common Stock has furnished in writing to the Company information EX 99.5 - 13 USOL HOLDINGS, INC. PREFERRED STOCK REGISTRATION RIGHTS AGREEMENT expressly for use in such registration statement or prospectus or any amendment thereof or supplement thereto which corrected or made not misleading information previously furnished to the Company. In no event shall the liability of any Shareholder hereunder be greater in amount than the dollar amount of the proceeds received or to be received by such Shareholder upon the sale of the securities giving rise to such indemnification obligation. (c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any Person entitled to indemnification hereunder shall give prompt written notice to the indemnifying party of any claim with respect to which it shall seek indemnification and shall permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party; PROVIDED, however, that any Person entitled to indemnification hereunder shall have the right to employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such Person unless (i) the indemnifying party shall have agreed to pay such fees or expenses, or (ii) the indemnifying party shall have failed to assume the defense of such claim and to employ counsel reasonably satisfactory to such Person or (iii) such assumption would constitute an actual conflict of interest (in which case, if the Person notifies the indemnifying party in writing that such Person elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim on behalf of such Person). If such defense is not assumed by the indemnifying party, the indemnifying party shall not be subject to any liability for any settlement made without its consent (but such consent shall not be unreasonably withheld). No indemnified party shall be required to consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a written release in form and substance reasonably satisfactory to such indemnified party from all liability in respect of such claim or litigation. An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one firm of counsel (and, if necessary, local counsel) for all parties indemnified by such indemnifying party with respect to such claim, unless a conflict of interest as to the subject matter exists between such indemnified party and another indemnified party with respect to such claim, in which event the indemnifying party shall be obligated to pay the fees and expenses of additional counsel for such indemnified party. (d) CONTRIBUTION. If for any reason the indemnification provided for herein is unavailable to an indemnified party or is insufficient to hold it harmless as contemplated hereby, then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect not only the relative benefits received by the indemnified party and the indemnifying party, but also the relative fault of the indemnified party and the indemnifying party, as well as any other relevant equitable considerations, provided that in no event shall the liability of any Shareholder for such contribution and indemnification exceed, in the aggregate, the dollar amount of the proceeds received or to be received by such Shareholder upon the sale of securities giving rise to such indemnification and contribution obligation. The relative fault of such indemnifying party and indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by such indemnifying EX 99.5 - 14 USOL HOLDINGS, INC. PREFERRED STOCK REGISTRATION RIGHTS AGREEMENT party or indemnified party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties hereto agree that it would not be just and equitable if contribution pursuant to this SECTION 3.9(D) were determined by pro rata allocation referred to in this SECTION 3.9(D). No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. If indemnification is available under this SECTION 3.9, the indemnifying parties shall indemnify each indemnified party to the full extent provided in SECTION 3.9(A) and SECTION 3.9(B) without regard to the relative fault of said indemnifying party or indemnified party or any other equitable consideration provided for in this SECTION 3.9(D); subject, in the case of the Holders, to the limited dollar amounts set forth herein. (e) INDEMNIFICATION AND CONTRIBUTION IN FULL FORCE AND EFFECT. The indemnification and contribution provided for under this Agreement will remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director, or controlling person of such indemnified party. 3.10 PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. None of the Shareholders may participate in any underwritten registration hereunder unless the Shareholder which is a Selling Securityholder (a) agrees to sell its Shareholder Common Stock on the basis provided in and in compliance with any underwriting arrangements approved by the persons entitled hereunder to approve such arrangements and to comply with Regulation M under the Exchange Act, and (b) completes and executes all questionnaires, appropriate and limited powers-of-attorney, escrow agreements, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements; PROVIDED that all such documents shall be consistent with the provisions hereof. ARTICLE IV MISCELLANEOUS 4.1 RECAPITALIZATIONS, EXCHANGES, ETC., AFFECTING SHAREHOLDER COMMON STOCK. The provisions of this Agreement shall apply, to the fullest extent set forth herein with respect to Shareholder Common Stock, to any and all shares of capital stock of the Company or any successor or assign of the Company (whether by merger, consolidation, sale of assets or otherwise) which may be issued in respect of, in exchange for, or in substitution of the Shareholder Common Stock, by reason of any stock dividend, stock split, stock issuance, reverse stock split, combination recapitalization, reclassification, merger, consolidation or otherwise; provided, however, that such provisions shall apply only to any class or classes of stock which have the right, without limitation as to amount, either to all or a share of the balance of current dividends and liquidating dividends after payment of dividends and distributions on any shares entitled to preference so issued or issuable upon the conversion, exchange or exercise, as the case may be, of securities of the Company so issued. 4.2 BINDING EFFECT. The provisions of this Agreement shall be binding upon and accrue to the benefit of the parties hereto and their respective heirs, legal representatives, successors and assigns. In the case of a transferee permitted under this Agreement, such EX 99.5 - 15 USOL HOLDINGS, INC. PREFERRED STOCK REGISTRATION RIGHTS AGREEMENT transferee shall be deemed the Shareholder hereunder; PROVIDED, however, that no transferee shall derive any rights under this Agreement unless and until such transferee has executed and delivered to the Company a valid undertaking and becomes bound by the terms of this Agreement. 4.3 AMENDMENT; WAIVER. This Agreement may be amended only by a written instrument signed by the parties hereto. No waiver by either party hereto of any of the provisions hereof shall be effective unless set forth in a writing executed by the party so waiving. 4.4 NOTICES. All notices, requests, demands and other communications which are required or may be given under this Agreement shall be in writing and shall be deemed to have been duly given when received if personally delivered; when transmitted if transmitted by telecopy, electronic or digital transmission method; the day after it is sent, if sent for next day delivery to a domestic address by recognized overnight delivery service (E.G., Federal Express) and upon receipt, if sent by certified or registered mail, return receipt requested. In each case notice shall be sent to: (a) If to USOL, addressed to: USOL Holdings, Inc. 10300 Metric Boulevard Austin, Texas 78758 Attn: President (b) If to FirstLink, addressed to: FirstLink Communications, Inc. 190 Southwest Harrison Street Portland, Oregon 97201 Attn: President (c) If to a Shareholder, to such Shareholder at the address set forth on the signature pages hereto. 4.5 GOVERNING LAW. This Agreement shall be governed by and construed, interpreted and the rights of the parties determined in accordance with the laws of the State of Delaware without regard to the choice of law principles thereof. 4.6 COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. This Agreement shall become binding when all counterparts taken together shall have been executed and delivered by the parties. A telecopied facsimile of an executed counterpart of the Agreement shall be sufficient to evidence the binding agreement of each party to the terms thereof. However, each party agrees to return to the other parties an original, duly executed counterpart of this Agreement promptly after delivery of a telecopied facsimile thereof. EX 99.5 - 16 USOL HOLDINGS, INC. PREFERRED STOCK REGISTRATION RIGHTS AGREEMENT 4.7 INVALIDITY. In the event that any one or more of the provisions contained in this Agreement or in any other instrument referred to herein, shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, then to the maximum extent permitted by law, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement or any other such instrument. 4.8 CUMULATIVE REMEDIES. All rights and remedies of the parties hereto are cumulative of each other and of every other right or remedy each such party may otherwise have at law or in equity, and the exercise of one or more rights or remedies shall not prejudice or impair the concurrent or subsequent exercise of other rights or remedies. 4.9 ASSUMPTION BY FIRSTLINK. Upon the consummation of the Merger by and between FirstLink and USOL, pursuant to which all shares of Series A Preferred Stock and Common Stock will be exchanged for shares of FirstLink preferred stock and common stock, FirstLink agrees to assume all of the obligations hereunder. EX 99.5 - 17 USOL HOLDINGS, INC. PREFERRED STOCK REGISTRATION RIGHTS AGREEMENT IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. USOL HOLDINGS, INC. By: /S/ ROBERT G. SOLOMON ----------------------------------- Name: Robert G. Solomon Title: President FIRSTLINK COMMUNICATIONS, INC. By: /S/ A. ROGER PEASE ----------------------------------- Name: A. Roger Pease Title: President and Chief Executive Officer EX 99.5 - 18 USOL HOLDINGS, INC. PREFERRED STOCK REGISTRATION RIGHTS AGREEMENT AGL INVESTMENTS NO. 8 LIMITED PARTNERSHIP, A COLORADO LIMITED PARTNERSHIP By: AGLP NO. 8 Limited Partnership, a Colorado limited partnership, its General Partner By: AGLGP NO. 8, Inc., a Colorado limited partnership, its General Partner BY: /S/ DAVID B. AGNEW ----------------------------------- David B. Agnew, President ASPEN FOXTROT INVESTMENTS, LLC By: Aspen Enterprises, Ltd. Its Manager /S/ RONALD A. HOUSE ----------------------------------- Name: Ronald A. House Title: Vice President and Chief Operating Officer GERMAN AMERICAN CAPITAL CORPORATION By: /S` / JOHN C. CIPRIANI ----------------------------------- Name: John C. Cipriani Title: Vice President By: /S/ THOMAS MENDOZA ----------------------------------- Name: Thomas Mendoza Title: Vice President EX 99.5 - 19 USOL HOLDINGS, INC. PREFERRED STOCK REGISTRATION RIGHTS AGREEMENT GMAC COMMERCIAL MORTGAGE CORPORATION By: /S/ ROBERT D. FELLER ----------------------------------- Name: Robert D. Feller Title: Executive Vice President PARIBAS NORTH AMERICA, INC. By: /S/ JOHN G. MARTINEZ ----------------------------------- Name: John G. Martinez Title: Financial Controller PEREGINE EQUITIES 1, L.L.C. By: Peregrine Equities Holdings, LLC, Member By: Peregrine Capital, Inc., Member By: /S/ ROY ROSE ----------------------------------- Name: Roy Rose Title: President PEREGINE EQUITIES 2, L.L.C. By: Peregrine Equities Holdings, LLC, Member By: Peregrine Capital, Inc., Member By: /S/ ROY ROSE ----------------------------------- Name: Roy Rose Title: President PEREGINE EQUITIES 3, L.L.C. By: Peregrine Equities Holdings, LLC, Member By: Peregrine Capital, Inc., Member By: /S/ ROY ROSE ----------------------------------- Name: Roy Rose Title: President PEREGINE EQUITIES 4, L.L.C. By: Peregrine Equities Holdings, LLC, Member By: Peregrine Capital, Inc., Member By: /S/ ROY ROSE ----------------------------------- Name: Roy Rose Title: President EX 99.5 - 20 USOL HOLDINGS, INC. PREFERRED STOCK REGISTRATION RIGHTS AGREEMENT PEREGINE EQUITIES 5, L.L.C. By: Peregrine Equities Holdings, LLC, Member By: Peregrine Capital, Inc., Member By: /S/ ROY ROSE ----------------------------------- Name: Roy Rose Title: President PEREGINE EQUITIES 6, L.L.C. By: Peregrine Equities Holdings, LLC, Member By: Peregrine Capital, Inc., Member By: /S/ ROY ROSE ----------------------------------- Name: Roy Rose Title: President PEREGINE EQUITIES 7, L.L.C. By: Peregrine Equities Holdings, LLC, Member By: Peregrine Capital, Inc., Member By: /S/ ROY ROSE ----------------------------------- Name: Roy Rose Title: President PEREGINE EQUITIES 8, L.L.C. By: Peregrine Capital, Inc., Manager By: /S/ ROY ROSE ----------------------------------- Name: Roy Rose Title: President PEREGINE EQUITIES 9, L.L.C. By: Peregrine Capital, Inc., Manager By: /S/ ROY ROSE ----------------------------------- Name: Roy Rose Title: President PEREGINE EQUITIES 10, L.L.C. By: Peregrine Capital, Inc., Manager By: /S/ ROY ROSE ----------------------------------- Name: Roy Rose Title: President EX 99.5 - 21 USOL HOLDINGS, INC. PREFERRED STOCK REGISTRATION RIGHTS AGREEMENT /S/ DENNIS DAUTEL ----------------------------------- Dennis Dautel /S/ DAN BAUER ----------------------------------- Dan Bauer /S/ SCOTT MAENTZ ----------------------------------- Rosewood Partners L.P. By: W. Scott Maentz, General Partner /S/ HENRY GELLIS ----------------------------------- Henry Gellis /S/ W. ROBERT RAMSDELL ----------------------------------- Ramsdell Family Trust UAD 7/7/94 By: W. Robert Ramsdell, Trustee /S/ DAVID ROCKER ----------------------------------- David Rocker /S/ KAYLEN SILVERBERG ----------------------------------- Kaylen Silverberg /S/ RON BARSHOP ----------------------------------- Ron Barshop /S/ TERRY JONES ----------------------------------- Terry Jones for FMH LLP /S/ IRV SOLOMON ----------------------------------- Irv Solomon EX 99.5 - 22 USOL HOLDINGS, INC. PREFERRED STOCK REGISTRATION RIGHTS AGREEMENT /S/ LEON HOROWTIZ ----------------------------------- Leon Horowitz /S/ DAIN RAUSCHER ----------------------------------- By: Dain Rauscher, Custodian FBO Brent Stahl S.E.P. /S/ COURTNEY CAMPBELL ----------------------------------- Courtney Campbell /S/ ANGELA COPPOLA ----------------------------------- Angela Coppola /S/ JANET FRANKLIN ----------------------------------- Janet Franklin /S/ MUSSIE GELLIS ----------------------------------- Mussie Gellis /S/ ALLAN ALEXANDER ----------------------------------- Peter Guber By: Allan Alexander, Attorney-in- Fact /S/ BOB STARK ----------------------------------- Stark Investment, L.P. By: Bob Stark /S/ DOROTHY COHEN ----------------------------------- Dorothy Cohen /S/ G. TYLER RUNNELS ----------------------------------- G. Tyler Runnels EX 99.5 - 23 USOL HOLDINGS, INC. PREFERRED STOCK REGISTRATION RIGHTS AGREEMENT SCHEDULE A SHAREHOLDERS SERIES A PREFERRED STOCK Janet Franklin AGL Investments No. 8 Limited Partnership Henry Gellis Aspen Foxtrot Investments, LLC Mussie Gellis German American Capital Corporation Peter Guber GMAC Commercial Mortgage Corporation Leon Horowitz Paribas North American, Inc. Terry Jones Peregrine Equities 1, L.L.C. Ramsdell Family Trust Peregrine Equities 2, L.L.C. David Rocker Peregrine Equities 3, L.L.C. Rosewood Partners, L.P. Peregrine Equities 4, L.L.C. Kaylen Silverberg Peregrine Equities 5, L.L.C. Irv Solomon Peregrine Equities 6, L.L.C. Dain Rauscher, Custodian FBO Brent Stahl S.E.P. Peregrine Equities 7, L.L.C. Stark Investments, L.P. Peregrine Equities 8, L.L.C. G. Tyler Runnels Peregrine Equities 9, L.L.C. Peregrine Equities 10, L.L.C. Ron Barshop Dan Bauer Courtney Campbell Dorothy Cohen Angela Coppola Dennis Dautel SERIES B PREFERRED STOCK German American Capital Corporation Paribas North America, Inc. EX 99.5A - 2 EX-99.6 7 COMMON STOCKHOLDER AND WARRANT HOLDER REGISTRATION Execution Copy ------------------------------------------- COMMON STOCKHOLDER AND WARRANT HOLDER REGISTRATION RIGHTS AGREEMENT DATED AS OF JULY 21, 1999 BY AND AMONG USOL HOLDINGS, INC., FIRSTLINK COMMUNICATIONS, INC. AND THE ENTITIES SET FORTH IN SCHEDULE A HERETO (EACH, A "SHAREHOLDER") ------------------------------------------- TABLE OF CONTENTS ARTICLE/SECTION HEADING PAGE - --------------- ------- ---- ARTICLE I DEFINITIONS..........................................................1 1.1 Defined Terms...........................................................1 ARTICLE II TRANSFERS OF SHARES.................................................3 2.1 Shareholder Common Stock Unregistered...................................3 2.2 Rule 144 Reporting......................................................3 ARTICLE III REGISTRATION RIGHTS................................................4 3.1 Participation in Demand Registrations...................................4 3.2 Right to Include Securities.............................................4 3.3 Priority in Incidental Registration.....................................5 3.4 Registration Procedures.................................................5 3.5 Incidental Underwritten Offerings.......................................8 3.6 Preparation; Reasonable Investigation...................................9 3.7 Limitations, Conditions and Qualifications to Obligations under Registration Covenants..................................................9 3.8 Expenses...............................................................11 3.9 Indemnification........................................................11 3.10Participation in Underwritten Registrations............................14 ARTICLE IV MISCELLANEOUS......................................................14 4.1 Recapitalizations, Exchanges, Etc., Affecting Shareholder Common Stock..................................................................14 4.2 Binding Effect.........................................................14 4.3 Amendment; Waiver......................................................14 4.4 Notices................................................................15 4.5 Governing Law..........................................................15 4.6 Counterparts...........................................................15 4.7 Invalidity.............................................................15 4.8 Lock-Up Agreement......................................................16 4.9 Cumulative Remedies....................................................16 4.10Assumption by FirstLink................................................16 SIGNATURE PAGES...............................................................17 SCHEDULE A...................................................................A-1 EX 99.6 - i REGISTRATION RIGHTS AGREEMENT REGISTRATION RIGHTS AGREEMENT dated as of July 21, 1999, by and among USOL HOLDINGS, Inc., a Delaware corporation ("USOL"), FirstLink Communications, Inc., an Oregon corporation ("FirstLink") and each of the entities set forth on Schedule A attached hereto and any permitted transferee of the shares of Common Stock (as defined below) held by such entities (each such entity and transferee, a "Shareholder"). W I T N E S S E T H: WHEREAS, Shareholder owns that number of shares of USOL capital stock and/or warrants set forth opposite Shareholder's name on Schedule A hereto. WHEREAS, USOL and FirstLink Communications, Inc., an Oregon corporation ("FirstLink") have entered into an Agreement and Plan of Merger and Reorganization dated as of the date hereof (the "Merger Agreement"), whereby, subject to the satisfaction of the conditions set forth therein, USOL shall merge with and into FirstLink (the "Merger"); and WHEREAS, pursuant to the Merger Agreement, each share of Series A Convertible Preferred Stock, par value $0.001 per share ("USOL Series A Preferred Stock"), USOL Series B Convertible Preferred Stock, par value $0.001 per share ("USOL Series B Preferred Stock"), and Common Stock, par value $0.001 per share ("USOL Common Stock") shall be exchanged for one share of Series A Convertible Preferred Stock, one share of Series B Convertible Preferred Stock and one share of Common Stock of FirstLink, respectively, having equivalent rights and preferences as the USOL Series A Preferred Stock, USOL Series B Preferred Stock, and USOL Common Stock (together, "FirstLink Preferred Stock"); and WHEREAS, USOL, FirstLink and the Shareholders believe that it is in their best interests to enter into this Agreement pertaining to the registration of their respective shares of USOL, and after the closing of the Merger, their respective shares of FirstLink, on the terms and conditions set forth below; NOW, THEREFORE, in order to implement the foregoing and in consideration of the mutual representations, warranties, covenants and agreements contained herein, the parties hereto agree as follows: ARTICLE I DEFINITIONS 1.1 DEFINED TERMS. "CLOSING" shall mean the consummation of the transactions contemplated by the Asset Purchase Agreement dated as of the date hereof by and among USOL, Inc. ("USOL Sub"), USOL, U.S. Online Communications, Inc. ("USOnline") and USOL HOLDINGS, INC. COMMON AND WARRANT REGISTRATION RIGHTS AGREEMENT certain shareholders of USOnline, and the other transactions contemplated by in the Letter of Intent dated as May 3, 1999, as amended. "COMPANY" shall mean (a) USOL at all times prior to the closing of the Merger and (b) FirstLink upon the closing of the Merger and at all times thereafter. "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder as the same may be amended from time to time. "EXCLUDED REGISTRATION" means a registration under the Securities Act of (i) securities pursuant to the demand registration rights pursuant to SECTION 3.1.1 hereof, (ii) securities registered on Form S-8 under the Securities Act or any similar successor form and (iii) securities registered to effect the acquisition of or combination with another Person. "PERSON" shall mean any individual, partnership, joint venture, corporation, limited liability company, trust, joint stock company, business trust, unincorporated association, joint venture, governmental authority or any department or agency thereof or other entity of any nature whatsoever. "QUALIFIED IPO" means a firm commitment underwritten public offering of Common Stock pursuant to a registration statement under the Securities Act where both (i) the proceeds to USOL (prior to deducting any underwriters' discounts and commissions) equal or exceed Twenty-Five Million Dollars ($25,000,000) and (ii) upon consummation of such offering, the Common Stock is listed on the New York Stock Exchange or authorized to be quoted and/or listed on the Nasdaq National Market. "SEC" shall mean the Securities and Exchange Commission. "SECURITIES ACT" shall mean the Securities Act of 1933, as amended, and all rules and regulations promulgated thereunder as the same may be amended from time to time. "SELLING SECURITYHOLDER" shall mean any seller of Shareholder Common Stock covered by a registration statement. "SERIES A PREFERRED STOCK" shall mean (a) USOL Series A Preferred Stock at all times prior to the closing of the Merger and (b) FirstLink Series A Preferred Stock upon the closing of the Merger and at all times thereafter. "SERIES B PREFERRED STOCK" shall mean (a) USOL Series B Preferred Stock at all times prior to the closing of the Merger and (b) FirstLink Series B Preferred Stock upon the closing of the Merger and at all times thereafter. "SHAREHOLDER COMMON STOCK" shall mean shares of Common Stock outstanding and shares of Common Stock issued or issuable to the Shareholders upon exercise of the Warrants. "WARRANTS" shall mean the warrants to acquire 2,084,000 shares of the Common Stock listed on Schedule A. EX 99.6 - 2 USOL HOLDINGS, INC. COMMON AND WARRANT REGISTRATION RIGHTS AGREEMENT ARTICLE II TRANSFERS OF SHARES 2.1 SHAREHOLDER COMMON STOCK UNREGISTERED. The Company advises Shareholder that: (a) the offer and sale of the Shareholder Common Stock have not been registered under the Securities Act; (b) the Shareholder Common Stock must be held and the Shareholder must continue to bear (and is able to bear) the economic risk of the investment in the Shareholder Common Stock, until (i) the Shareholder Common Stock is registered pursuant to an effective registration statement under the Securities Act and all applicable state securities laws or (ii) an exemption from such registration is available; (c) when and if shares of the Shareholder Common Stock may be disposed of without registration under the Securities Act in reliance on Rule 144 thereunder ("Rule 144"), such disposition can be made only in limited amounts in accordance with the terms and conditions of such Rule; (d) if the Rule 144 exemption is not available, any offer or sale of Shareholder Common Stock without registration will require compliance with some other exemption under the Securities Act; (e) a restrictive legend shall be placed on the certificates representing the Shareholder Common Stock; and (f) a notation shall be made in the appropriate records of the Company indicating that the Shareholder Common Stock is subject to restrictions on transfer, and appropriate stop-transfer instructions will be issued to the Company's transfer agent with respect to the Shareholder Common Stock. 2.2 RULE 144 REPORTING. The Company agrees that to the extent reasonably necessary to permit the Shareholders to sell shares of the Shareholder Common Stock in accordance with and in reliance on Rule 144, and for so long as such shares are owned by the Shareholders and such shares are not registered for resale under the Securities Act, the Company will use its reasonable best efforts to: (a) make and keep public information available within the meaning of Rule 144 under the Securities Act, at all times from and after the Closing Date; (b) file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and (c) so long as any Shareholder owns any Shareholder Common Stock, inform such person upon request as to its compliance with the reporting requirements of Rule EX 99.6 - 3 USOL HOLDINGS, INC. COMMON AND WARRANT REGISTRATION RIGHTS AGREEMENT 144 and of the Securities Act and the Exchange Act, and provide a copy of the most recent annual or quarterly report of the Company and such other reports and documents filed with the SEC and available to the public as may reasonably be requested in availing such Shareholder of any rule or regulation of the SEC allowing a sale of any such securities without registration. Anything to the contrary contained in this Section 2.2 notwithstanding, the Company may deregister any of its securities under the Exchange Act if it is then permitted to do so pursuant to the Exchange Act in which case the provisions of this Section 2.2 insofar as they relate to obligations to make filings under the Exchange Act that would no longer be required as a result of such delisting shall be of no further force or effect. Nothing in this Section shall be deemed to limit in any manner the restriction on sales of Shareholder Common Stock contained in this Agreement. ARTICLE III REGISTRATION RIGHTS 3.1 PARTICIPATION IN DEMAND REGISTRATIONS. If holders (the "Other Shareholders") of Series A Preferred Stock or Series B Preferred Stock demand registration of the shares of Common Stock issued or issuable upon conversion (the "Other Common Stock") pursuant to that certain Preferred Stock Registration Rights Agreement of even date herewith, the Company will promptly give written notice of the proposed registration to the Shareholders. All Shareholder Common Stock and Other Common Stock requested to be included in the registration shall be included in a demand registration unless the managing underwriter or underwriters shall advise the Company or the Shareholders and the Other Shareholders in writing that the inclusion of such securities will materially and adversely affect the price or success of the offering (a "Material Adverse Effect"). In the event the managing underwriter or underwriters shall advise the Company or the Shareholders and the Other Shareholders that the amount of Shareholder Common Stock and Other Common Stock proposed to be included in such demand registration by Shareholders and Other Shareholders is sufficiently large to cause a Material Adverse Effect, the Shareholder Common Stock and Other Common Stock to be included in such registration shall equal the number of shares which the Company is so advised can be sold in such offering without a Material Adverse Effect and such shares shall be allocated pro rata among the Shareholders and the Other Shareholders on the basis of the number of shares of Shareholder Common Stock and Other Common Stock requested to be included in such registration. 3.2 RIGHT TO INCLUDE SECURITIES. If at any time all of the shares of Shareholder Common Stock are not then registered under the Securities Act, and the Company proposes to register any shares of its Common Stock under the Securities Act (other than pursuant to an Excluded Registration), whether or not for sale for its own account, it will each such time as soon as practicable give written notice of its intention to do so to the Shareholders. In such event, upon the written request (which request shall specify the total number of shares of Shareholder Common Stock intended to be disposed of by the requesting Shareholder) of any Shareholder made within 15 days after the receipt of any such notice (10 days if the Company gives telephonic notice with written confirmation to follow promptly thereafter), stating that (i) such registration will be on Form S-3 and (ii) such shorter period of time is required because EX 99.6 - 4 USOL HOLDINGS, INC. COMMON AND WARRANT REGISTRATION RIGHTS AGREEMENT of a planned filing date), the Company will use all reasonable efforts to effect the registration under the Securities Act in the manner initially proposed by the Company of all Shareholder Common Stock held by the Shareholders which the Company has been so requested to register for sale. If the Company thereafter determines for any reason in its sole discretion not to register or to delay registration of the Common Stock, the Company may, at its election, give written notice of such determination to the Shareholder and (i) in the case of a determination not to register, shall be relieved of the obligation to register any Shareholder Common Stock in connection with such registration and (ii) in the case of a determination to delay registering, shall be permitted to delay registering any Shareholder Common Stock of the Shareholder for the same period as the delay in registration of such other securities. The exercise by a Shareholder of any right under this Section 3.2 will not relieve the Company of its obligations to such Shareholder under Section 3.1. 3.3 PRIORITY IN INCIDENTAL REGISTRATION. In a registration pursuant to Section 3.2 hereof, if the managing underwriter of any such underwritten offering to which Section 3.2 pertains shall inform the Company by letter of its belief that the number of shares of Shareholder Common Stock and Other Common Stock to be included in such registration would have a Material Adverse Effect, then the Company will be required to include in such registration only that number of shares of Shareholder Common Stock and Other Common Stock which it is so advised can be included in such offering without causing such Material Adverse Effect. With respect to a registration that is the subject of Section 3.2 hereof, shares of Common Stock proposed by the Company to be registered for issuance by the Company or for sale by any Person exercising "demand" registration rights shall have the first priority and all shares of Shareholder Common Stock owned by the Shareholders exercising incidental registration rights and all shares of Other Common Stock owned by the Other Shareholders exercising incidental rights shall be given second priority without preference among the relevant Shareholders and Other Shareholders. If less than all of the shares of Shareholder Common Stock and Other Common Stock duly requested to be included in such registration are to be registered therein, such shares of Shareholder Common Stock and Other Common Stock shall be included in the registration PRO RATA based on the total number of such shares sought to be registered other than for issuance by the Company or sale by third parties exercising "demand" registration rights in accordance with the preceding sentence. If, as a result of the provisions of this Section 3.3, any Shareholder or Other Shareholder shall not be entitled to include all of such Shareholder's shares of Shareholder Common Stock or Other Common Stock in such registration, such shareholder may withdraw such shareholder's request to include Shareholder Common Stock or Other Common Stock, as applicable, in such registration. 3.4 REGISTRATION PROCEDURES. In connection with the Company's obligations to register the Shareholder Common Stock pursuant to this Article III, the Company will use its reasonable best efforts to effect such registration in accordance herewith and the Company will promptly: (a) prepare and file with the SEC, in accordance with the provisions of the Preferred Stockholder Registration Rights Agreement dated as of the date hereof among EX 99.6 - 5 USOL HOLDINGS, INC. COMMON AND WARRANT REGISTRATION RIGHTS AGREEMENT USOL, FirstLink and the shareholders that are parties thereto, the requisite registration statement to effect such registration and use its reasonable best efforts to cause such registration statement to become effective and to remain continuously effective until the earlier to occur of (x) 180 days following the date on which such registration statement is declared effective (the "Effective Date") or (y) the termination of the offering being made as set forth thereunder; (b) prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective as set forth above and to comply with the provisions of the Securities Act with respect to the disposition of all shares of Shareholder Common Stock covered by such registration statement until such Shareholder Common Stock has been sold; (c) furnish to the managing underwriter, if any, and to the Shareholders, at least one executed original of the registration statement and to each of the Selling Securityholders such number of conformed copies of such registration statement and of each such amendment and supplement thereto (in each case including all exhibits), such number of copies of the prospectus contained in such registration statement (including each preliminary prospectus and any summary prospectus) and any other prospectus filed under Rule 424 under the Securities Act, in conformity with the requirements of the Securities Act, as may reasonably be requested by such Selling Securityholder (it being understood that the Company consents to the use of the prospectus and any amendment or supplement thereto by each seller of Shareholder Common Stock and the underwriters in connection with the offering and sale of the Shareholder Common Stock covered by the registration of which such prospectus, amendment or supplement is a part); (d) use its reasonable best efforts (i) to register or qualify, to the extent necessary, all shares of Common Stock covered by such registration statement under the securities or "blue sky" laws of such jurisdictions where an exemption is not available as the Selling Securityholders shall reasonably request, (ii) to keep such registration or qualification in effect for so long as such registration statement remains in effect and (iii) to take any other action which may be reasonably necessary or advisable to enable the Selling Securityholders to consummate the disposition in such jurisdictions of such Common Stock, provided that the Company will not be required to qualify generally to do business or as a dealer in any jurisdiction where it is not then so qualified, subject itself to taxation in any such jurisdiction or take any action which would subject it to general service of process in any such jurisdiction; (e) notify the Selling Securityholders and the managing underwriter, if any, promptly, and confirm such advice in writing (i) when a prospectus or any prospectus supplement or post-effective amendment has been filed, and, with respect to a registration statement or any post-effective amendment, when the same has become effective, (ii) of any request by the SEC for amendments or supplements to a registration statement or related prospectus or for additional information, (iii) of the issuance by the SEC of any stop order suspending the effectiveness of a registration statement or the initiation of any proceedings for that purpose, (iv) of the receipt by the Company of any notification with respect to the EX 99.6 - 6 USOL HOLDINGS, INC. COMMON AND WARRANT REGISTRATION RIGHTS AGREEMENT suspension of the qualification of any of the registered securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose, (v) of the happening of any event or information becoming known which requires the making of any changes in a registration statement or related prospectus so that such documents will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading and (vi) of the Company's reasonable determination that a post-effective amendment to a registration statement would be appropriate; (f) use reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of a registration statement, or the lifting of any suspension of the qualification of any of the registered securities for sale in any jurisdiction, at the earliest possible moment; (g) upon the occurrence of any event contemplated by clause (e)(v) above, prepare a supplement or post-effective amendment to the applicable registration statement or related prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the Shareholders of the securities being sold thereunder, such prospectus will not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading; (h) use its reasonable best efforts to furnish to the Selling Securityholders a signed counterpart, addressed to the Selling Securityholders and the underwriters, if any, of an opinion of counsel for the Company as to the effectiveness of the registration statement registering the resale of the Shareholder Common Stock under the Securities Act; (i) otherwise use its best efforts to comply with all applicable rules and regulations of the SEC in connection with a registration pursuant hereto; (j) cooperate with the Selling Securityholders and the managing underwriters, if any, to facilitate the timely preparation and delivery of certificates representing shares of Shareholder Common Stock to be sold; and enable such shares of Shareholder Common Stock to be in such denominations and registered in such names as the Selling Securityholders or the managing underwriters, if any, may request at least two business days prior to any sale of shares of Shareholder Common Stock to the underwriters; (k) cause all shares of Common Stock covered by the registration statement to be listed on each securities exchange, if any, or Nasdaq, on which securities of such class, series and form issued by the Company, if any, are then listed or traded if requested by the managing underwriters, if any, or the holders of a majority of the shares of Common Stock covered by the registration statement and entitled hereunder to be so listed; (l) make generally available to the Company's securityholders an earnings statement satisfying the provisions of Section 11(a) of the Securities Act no later than thirty (30) days after the end of the twelve (12) month period beginning with the first day of the Company's first fiscal quarter commencing after the effective date of a registration statement, which earnings statement shall cover said twelve (12) month period, and which requirement EX 99.6 - 7 USOL HOLDINGS, INC. COMMON AND WARRANT REGISTRATION RIGHTS AGREEMENT will be deemed to be satisfied if the Company timely files complete and accurate information on the Form 10-Q, 10-K and 8-K under the Exchange Act and otherwise complies with Rule 158 under the Securities Act; and (m) cooperate and assist in any filings required to be made with the National Association of Securities Dealers, Inc. (the "NASD") and in the performance of any due diligence investigation by any underwriter (including any qualified independent underwriter that is required to be retained in accordance with the rules and regulations of the NASD). The Company may require each Selling Securityholder to furnish to the Company such information and documents regarding such Selling Securityholder and the distribution of such securities as the Company may from time to time reasonably request in writing in order to comply with the Securities Act. Each of the Selling Securityholders agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3.4(e)(ii), (iii), (iv), (v) or (vi) hereof, it will forthwith discontinue disposition pursuant to such registration statement of any shares of Common Stock covered by such registration statement or prospectus until its receipt of the copies of the supplemented or amended prospectus relating to such registration statement or prospectus or until it is advised in writing by the Company that the use of the applicable prospectus may be resumed (and the period of such discontinuance shall be excluded from the calculation of the period specified in clause (x) of Section 3.4(a)) and, if so directed by the Company, will deliver to the Company (at the Company's expense) all copies, other than permanent file copies then in their possession, of the prospectus covering such securities in effect at the time of receipt of such notice. Each of the Selling Securityholders agrees to furnish the Company a signed counterpart, addressed to the Company and the underwriters, if any, of an opinion of counsel covering substantially the same matters with respect to such registration statement (and the prospectus included therein) as are customarily covered in opinions of selling stockholder's counsel delivered to the underwriters in underwritten public offerings of securities (and dated the dates such opinions are customarily dated) and such other legal matters as the Company or the underwriters may reasonably request. 3.5 INCIDENTAL UNDERWRITTEN OFFERINGS. If the Company at any time proposes to register any shares of its common stock under the Securities Act as contemplated by Section 3.2 and such shares are to be distributed by or through one or more underwriters, the Company and, if the managing underwriter shall elect in writing to include the shares of Shareholder Common Stock sought to be included in such registration, the Securityholders who hold Shareholder Common Stock to be distributed by such underwriters in accordance with Section 3.2 hereof shall be parties to the underwriting agreement between the Company and such underwriters and may, at their option, require that any or all of the representations and warranties by, and the other agreements on the part of, the Company to and for the benefit of such underwriters shall also be made to and for the benefit of them and that any or all of the conditions precedent to the obligations of such underwriters under such underwriting agreement be conditions precedent to their obligations. The Company may, at its option, EX 99.6 - 8 USOL HOLDINGS, INC. COMMON AND WARRANT REGISTRATION RIGHTS AGREEMENT require that any or all of the representations and warranties by, and the other agreements on the part of the Selling Securityholders to and for the benefit of such underwriters shall also be made to and for the benefit of the Company. Notwithstanding the foregoing, no Shareholder shall be required to make any representations or warranties in connection with the registration other than representations and warranties as to (i) such Shareholder's ownership of his or its Shareholder Common Stock to be transferred free and clear of all liens, claims, and encumbrances, (ii) such Shareholder's power and authority to effect such transfer, and (iii) such matters pertaining to compliance with securities laws as may be reasonably requested; PROVIDED FURTHER, HOWEVER, that the obligation of such Shareholder to indemnify pursuant to any such underwriting arrangements shall be several, not joint and several, among such Shareholders selling Shareholder Common Stock, and the liability of each such Shareholder will be in the proportion thereto, and PROVIDED FURTHER that such liability will be limited to, the allocable share of claim net amount received by such Shareholder from the sale of his or its Shareholder Common Stock pursuant to such registration. 3.6 PREPARATION; REASONABLE INVESTIGATION. In connection with the preparation and filing of each registration statement under the Securities Act pursuant to this Agreement, the Company will give the Selling Securityholders, the underwriters, if any, and their respective counsel and accountants the opportunity (but such Persons shall not have the obligation except as set forth herein) to participate (in the case of a registration pursuant to Section 3.2 hereof such participation shall be at their expense) in the preparation of such registration statement, each prospectus included therein or filed with the SEC, and, to the extent practicable, each amendment thereof or supplement thereto, and will give each of them such access to its books and records (to the extent customarily given to the underwriters of the Company's securities) and such opportunities to discuss the business of the Company with its officers and the independent public accountants who have certified its financial statements as shall be necessary, in the opinion of the Selling Securityholders, and the underwriters' respective outside counsel to conduct a reasonable investigation within the meaning of the Securities Act. 3.7 LIMITATIONS, CONDITIONS AND QUALIFICATIONS TO OBLIGATIONS UNDER REGISTRATION COVENANTS. The obligations of the Company to use its reasonable efforts to cause the Shareholder Common Stock to be registered under the Securities Act are subject to each of the following limitations, conditions and qualifications: (a) The Company shall be entitled to postpone for a reasonable period of time the filing or effectiveness of (BUT NOT THE PREPARATION OF) any registration statement otherwise required to be prepared, filed and made and kept effective by it hereunder if: (i) The Board of Directors of the Company determines in good faith that there is a material undisclosed development in the business or affairs of the Company (including any pending or proposed financing, recapitalization, acquisition or disposition), the disclosure of which at such time would be adverse to the Company's interests (but the duration of such postponement may not exceed the earlier to occur of (u) 30 days after the cessation of the circumstances described in this clause (i) or (v) 90 days after the date of the determination of the Board of Directors to postpone the filing or effectiveness of a registration, and the EX 99.6 - 9 USOL HOLDINGS, INC. COMMON AND WARRANT REGISTRATION RIGHTS AGREEMENT duration of such postponement shall be excluded from the calculation of the period specified in clause (x) of Section 3.4(a)); or (ii) the Company has filed a registration statement with the SEC, such registration statement has not yet been declared effective, the Company is using its reasonable best efforts to have such registration statement declared effective, and the underwriters with respect to such registration advise that such registration would be adversely affected (but the duration of such postponement or suspension may not exceed the earlier to occur of (u) 30 days after the effectiveness of the previously filed registration statement, or (v) 90 days after the determination of the Board of Directors to postpone filing a registration statement required to be filed hereunder), and the duration of such postponement or suspension shall be excluded from the calculation of the period specified in clause (x) of Section 3.4(a); or (iii) the Board of Directors of the Company determines in good faith prior to the receipt of a request for demand registration to effect a registered underwritten public offering of the Company's equity securities for the Company's account and the Company had taken substantial steps (including, but not limited to, selecting a managing underwriter for such offering) and is proceeding with reasonable diligence to effect such offering (but the duration of such postponement may not exceed the earlier to occur of (u) 30 days after the effectiveness of the previously prepared registration statement, or (v) 90 days after the determination by the Board of Directors to postpone the filing of a registration statement required to be filed hereunder); or (iv) the Company shall delay the filing of a registration statement as described in (i), (ii) or (iii) above, it shall, as promptly as practicable, notify the Selling Securityholders of such determination, and the Selling Securityholders shall have the right in the case of a postponement of the filing or effectiveness of a registration statement to withdraw the request for registration by giving written notice to the Company within 10 days after receipt of the Company's notice. Notwithstanding the foregoing, the Company may make such postponement or suspension no more than one time in any 18 month period. (b) The Company's obligations shall be subject to the obligations of the Selling Securityholders, which each of the Shareholders hereby acknowledges, to furnish all information and materials and to take any and all actions as may be required under applicable federal and state securities laws and regulations to permit the Company to comply with all applicable requirements of the SEC and state securities regulations and to obtain any acceleration of the effective date of such registration statement or maintain the effectiveness or currency thereof. (c) The Company shall not be obligated to cause any special audit to be undertaken in connection with any registration pursuant hereto unless such audit is requested by the underwriters with respect to such registration. (d) Each Shareholder agrees that, in connection with any underwritten public offering by the Company of its equity securities pursuant to an effective registration statement filed under the Securities Act, including a Qualified IPO, the Shareholder shall not publicly EX 99.6 - 10 USOL HOLDINGS, INC. COMMON AND WARRANT REGISTRATION RIGHTS AGREEMENT sell, make any short sale of, loan, hypothecate, pledge, grant any option for the repurchase of, or otherwise publicly dispose or transfer for value or otherwise agree to engage in any of the foregoing transactions with respect to any equity securities of the Company without the prior written consent of the Company's underwriters, for such period of time from and after the effective date of such registration statement as may be requested by the Company's underwriters, such period of time is not to exceed 180 days in the case of a Qualified IPO and 90 days in the case of a secondary offering by the Company. 3.8 EXPENSES. The Company will pay its own actual expenses (including legal fees) incurred in connection with each demand and incidental registration of Shareholder Common Stock pursuant to Sections 3.1 or 3.2 of this Agreement, including, without limitation, any and all filing fees payable to the SEC, fees with respect to filings required to be made with stock exchanges, Nasdaq and the NASD, fees and expenses of compliance with state securities or blue sky laws, printing expenses, fees and disbursements of counsel and accountants of the Company, including costs associated with comfort letters, and fees and expenses of other Persons retained by the Company, and, in the case of a demand registration requested by the Other Shareholders, all reasonable costs, expenses and fees of one legal counsel for Shareholders and Other Shareholders (which legal counsel shall be chosen by the majority in interest of the Shareholders and Other Shareholders in their discretion), but each Selling Securityholder shall pay its own underwriters' expenses (such as but not limited to discounts, commissions and fees of underwriters and expenses included therein of selling brokers, dealer managers or similar securities industry professionals relating to the distribution of the securities being registered) and legal expenses (except as set forth above). The Company shall pay its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), and the expense of securities law liability insurance and rating agency fees, if any. 3.9 INDEMNIFICATION. (a) INDEMNIFICATION BY THE COMPANY. In connection with any registration pursuant hereto in which Shareholder Common Stock is to be disposed of, the Company shall indemnify and hold harmless, to the fullest extent permitted by law, each Shareholder and, when applicable, its officers, directors, agents and employees and each Person who controls (or is controlled by or under common control with) any of the Shareholders (within the meaning of the Securities Act or the Exchange Act) against all losses, claims, damages, liabilities and expenses (including, without limitation, all attorneys' fees and expenses) based upon, arising out of or related to, any untrue or alleged untrue statement of a material fact contained in any registration statement, prospectus or preliminary prospectus or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, including, without limitation, any loss, claim, damage, liability or expense resulting from the failure to keep a prospectus current as required hereunder, except insofar as the same (i) are caused by or contained in any information furnished in writing to the Company by or on behalf of any Shareholder expressly for use therein or (ii) in the event such Shareholder has had the obligation to deliver a prospectus, are caused by the failure of any of the Shareholders to deliver a copy of the current required EX 99.6 - 11 USOL HOLDINGS, INC. COMMON AND WARRANT REGISTRATION RIGHTS AGREEMENT prospectus after the Company has furnished any such Shareholders with a sufficient number of copies of such prospectus as requested hereunder or (iii) if such Shareholder has been notified in writing by the Company, arise in respect of any offers to sell or sales made during any period when any Shareholder is required to discontinue sales under Section 3.4(e) or otherwise under applicable law. The Company shall also indemnify underwriters, selling brokers, dealer managers and similar securities industry professionals (if any), participating in the distribution of the Shareholder Common Stock, their officers and directors and each person who controls such Persons (within the meaning of the Securities Act and the Exchange Act) to the same extent (and subject to the same exceptions) as provided above with respect to the indemnification of the Shareholders and shall enter into an indemnification agreement with such Persons containing such terms, if requested. The reimbursements required by this SECTION 3.9(A) will be made by periodic payments during the course of the investigation or defense, as and when bills are received or expenses incurred. (b) INDEMNIFICATION BY THE SHAREHOLDERS. In connection with each registration statement effected pursuant hereto in which Shareholder Common Stock is to be disposed of, each of the Selling Securityholders shall, severally but not jointly, indemnify and hold harmless, to the fullest extent permitted by law, the Company, each other Selling Securityholder and their respective directors, officers, agents and employees and each Person who "controls" the Company and each other Selling Securityholder (within the meaning of the Securities Act and the Exchange Act) and the managing underwriter if any, and its directors, officers, agents, and employees and each Person who "controls" such underwriter (within the meaning of the Securities Act and Exchange Act), in each case against any losses, claims, damages, liabilities and expenses resulting from any untrue statement of a material fact or any omission of a material fact required to be stated in such registration statement or prospectus or preliminary prospectus or necessary to make the statements therein not misleading, to the extent but only to the extent, that such untrue statement or omission is contained in any information furnished in writing by such Shareholder to the Company expressly for inclusion in such registration statement or prospectus; provided, HOWEVER, that such seller of Shareholder Common Stock shall not be liable in any such case to the extent that, prior to the filing of any such registration statement or prospectus or amendment thereof or supplement thereto, such seller of Shareholder Common Stock has furnished in writing to the Company information expressly for use in such registration statement or prospectus or any amendment thereof or supplement thereto which corrected or made not misleading information previously furnished to the Company. In no event shall the liability of any Shareholder hereunder be greater in amount than the dollar amount of the proceeds received or to be received by such Shareholder upon the sale of the securities giving rise to such indemnification obligation. (c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any Person entitled to indemnification hereunder shall give prompt written notice to the indemnifying party of any claim with respect to which it shall seek indemnification and shall permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party; PROVIDED, however, that any Person entitled to indemnification hereunder shall have the right to employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such Person unless (i) the EX 99.6 - 12 USOL HOLDINGS, INC. COMMON AND WARRANT REGISTRATION RIGHTS AGREEMENT indemnifying party shall have agreed to pay such fees or expenses, or (ii) the indemnifying party shall have failed to assume the defense of such claim and to employ counsel reasonably satisfactory to such Person or (iii) such assumption would constitute an actual conflict of interest (in which case, if the Person notifies the indemnifying party in writing that such Person elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim on behalf of such Person). If such defense is not assumed by the indemnifying party, the indemnifying party shall not be subject to any liability for any settlement made without its consent (but such consent shall not be unreasonably withheld). No indemnified party shall be required to consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a written release in form and substance reasonably satisfactory to such indemnified party from all liability in respect of such claim or litigation. An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one firm of counsel (and, if necessary, local counsel) for all parties indemnified by such indemnifying party with respect to such claim, unless a conflict of interest as to the subject matter exists between such indemnified party and another indemnified party with respect to such claim, in which event the indemnifying party shall be obligated to pay the fees and expenses of additional counsel for such indemnified party. (d) CONTRIBUTION. If for any reason the indemnification provided for herein is unavailable to an indemnified party or is insufficient to hold it harmless as contemplated hereby, then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect not only the relative benefits received by the indemnified party and the indemnifying party, but also the relative fault of the indemnified party and the indemnifying party, as well as any other relevant equitable considerations, provided that in no event shall the liability of any Shareholder for such contribution and indemnification exceed, in the aggregate, the dollar amount of the proceeds received or to be received by such Shareholder upon the sale of securities giving rise to such indemnification and contribution obligation. The relative fault of such indemnifying party and indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by such indemnifying party or indemnified party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties hereto agree that it would not be just and equitable if contribution pursuant to this SECTION 3.9(D) were determined by pro rata allocation referred to in this SECTION 3.9(D). No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. If indemnification is available under this SECTION 3.9, the indemnifying parties shall indemnify each indemnified party to the full extent provided in SECTION 3.9(A) and SECTION 3.9(B) without regard to the relative fault of said indemnifying party or indemnified party or any other equitable consideration provided for in this SECTION 3.9(D); subject, in the case of the Holders, to the limited dollar amounts set forth herein. EX 99.6 - 13 USOL HOLDINGS, INC. COMMON AND WARRANT REGISTRATION RIGHTS AGREEMENT (e) INDEMNIFICATION AND CONTRIBUTION IN FULL FORCE AND EFFECT. The indemnification and contribution provided for under this Agreement will remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director, or controlling person of such indemnified party. 3.10 PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. None of the Shareholders may participate in any underwritten registration hereunder unless the Shareholder which is a Selling Securityholder (a) agrees to sell its Shareholder Common Stock on the basis provided in and in compliance with any underwriting arrangements approved by the persons entitled hereunder to approve such arrangements and to comply with Regulation M under the Exchange Act, and (b) completes and executes all questionnaires, appropriate and limited powers-of-attorney, escrow agreements, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements; PROVIDED that all such documents shall be consistent with the provisions hereof. ARTICLE IV MISCELLANEOUS 4.1 RECAPITALIZATIONS, EXCHANGES, ETC., AFFECTING SHAREHOLDER COMMON STOCK. The provisions of this Agreement shall apply, to the fullest extent set forth herein with respect to Shareholder Common Stock, to any and all shares of capital stock of the Company or any successor or assign of the Company (whether by merger, consolidation, sale of assets or otherwise) which may be issued in respect of, in exchange for, or in substitution of the Shareholder Common Stock, by reason of any stock dividend, stock split, stock issuance, reverse stock split, combination recapitalization, reclassification, merger, consolidation or otherwise; provided, however, that such provisions shall apply only to any class or classes of stock which have the right, without limitation as to amount, either to all or a share of the balance of current dividends and liquidating dividends after payment of dividends and distributions on any shares entitled to preference so issued or issuable upon the conversion, exchange or exercise, as the case may be, of securities of the Company so issued. 4.2 BINDING EFFECT. The provisions of this Agreement shall be binding upon and accrue to the benefit of the parties hereto and their respective heirs, legal representatives, successors and assigns. In the case of a transferee permitted under this Agreement, such transferee shall be deemed the Shareholder hereunder; PROVIDED, however, that no transferee shall derive any rights under this Agreement unless and until such transferee has executed and delivered to the Company a valid undertaking and becomes bound by the terms of this Agreement. 4.3 AMENDMENT; WAIVER. This Agreement may be amended only by a written instrument signed by the parties hereto. No waiver by either party hereto of any of the provisions hereof shall be effective unless set forth in a writing executed by the party so waiving. EX 99.6 - 14 USOL HOLDINGS, INC. COMMON AND WARRANT REGISTRATION RIGHTS AGREEMENT 4.4 NOTICES. All notices, requests, demands and other communications which are required or may be given under this Agreement shall be in writing and shall be deemed to have been duly given when received if personally delivered; when transmitted if transmitted by telecopy, electronic or digital transmission method; the day after it is sent, if sent for next day delivery to a domestic address by recognized overnight delivery service (E.G., Federal Express) and upon receipt, if sent by certified or registered mail, return receipt requested. In each case notice shall be sent to: (a) If to USOL, addressed to: USOL Holdings, Inc. 10300 Metric Boulevard Austin, Texas 78758 Attn: President (b) If to FirstLink, addressed to: FirstLink Communications, Inc. 190 Southwest Harrison Street Portland, Oregon 97201 Attn: President (c) If to a Shareholder, to such Shareholder at the address set forth on the Company's books and records. 4.5 GOVERNING LAW. This Agreement shall be governed by and construed, interpreted and the rights of the parties determined in accordance with the laws of the State of Delaware without regard to the choice of law principles thereof. 4.6 COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. This Agreement shall become binding when all counterparts taken together shall have been executed and delivered by the parties. A telecopied facsimile of an executed counterpart of this Agreement shall be sufficient to evidence the binding agreement of each party to the terms thereof. However, each party agrees to return to the other parties an original, duly executed counterpart of this Agreement promptly after delivery of a telecopied facsimile thereof. 4.7 INVALIDITY. In the event that any one or more of the provisions contained in this Agreement or in any other instrument referred to herein, shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, then to the maximum extent permitted by law, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement or any other such instrument. EX 99.6 - 15 USOL HOLDINGS, INC. COMMON AND WARRANT REGISTRATION RIGHTS AGREEMENT 4.8 LOCK-UP AGREEMENT. Each party hereby agrees (this "Lock-Up"), for a period of six months from the closing of the Merger (but no later than nine months from the date hereof), not to sell, pledge, encumber or otherwise transfer or dispose of (a "Transfer"), and shall not permit to be sold, encumbered, attached or otherwise disposed of or transferred in any manner, either voluntarily or by operation of law, all or any portion of the Shareholder Common Stock or Warrants covered by this Agreement; provided, however, that such party may Transfer any Shareholder Common Stock or Warrants (i) to a Qualified Institutional Buyer as defined in Rule 144A of the Securities Act, (ii) to employees and directors of such party; (iii) to one or more Persons directly or indirectly controlling, controlled by, or under common control with, such party, and to the extent such party is a limited liability company, each member of that party, (iv) in connection with any exchange, reclassification, or other conversion of shares into any cash, securities, or other property pursuant to a merger or consolidation of the Company or any of its subsidiaries with, or any sale or transfer by the Company or any of its subsidiaries of all or substantially all of its assets to, any Person and (v) in connection with any statutory share exchange or any recapitalization to the Company or any of its subsidiaries; provided further, however, that to the extent that the Company may exercise its call under Section 8 of the Warrants, this Lock-Up shall terminate with respect to the holders of the Warrants. 4.9 CUMULATIVE REMEDIES. All rights and remedies of the parties hereto are cumulative of each other and of every other right or remedy each such party may otherwise have at law or in equity, and the exercise of one or more rights or remedies shall not prejudice or impair the concurrent or subsequent exercise of other rights or remedies. 4.10 ASSUMPTION BY FIRSTLINK. Upon the consummation of the Merger by and between FirstLink and USOL, pursuant to which all shares of USOL Series A Preferred Stock, USOL Series B Preferred Stock and Common Stock will be exchanged for shares of FirstLink series A preferred stock, series B preferred stock and common stock, FirstLink agrees to assume all of the obligations hereunder. This Agreement shall not apply to any Shareholder Common Stock issuable under any Warrants which have been the subject of a registration statement. EX 99.6 - 16 USOL HOLDINGS, INC. COMMON AND WARRANT REGISTRATION RIGHTS AGREEMENT IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. USOL HOLDINGS, INC. By: /S/ ROBERT SOLOMON ----------------------------------- Name: Robert Solomon Title: President FIRSTLINK COMMUNICATIONS, INC. By: /S/ A. ROGER PEASE ----------------------------------- Name: A. Roger Pease Title: President and Chief Executive Officer EX 99.6 - 17 USOL HOLDINGS, INC. COMMON AND WARRANT REGISTRATION RIGHTS AGREEMENT SHAREHOLDERS/WARRANTHOLDERS: --------------------------- GMAC COMMERCIAL MORTGAGE CORPORATION By: /S/ ROBERT D. FELLER ----------------------------------- Name: Robert D. Feller Title: Executive Vice President ASPEN ONLINE INVESTMENTS, LLC By: /S/ RONALD A. HOUSE ----------------------------------- Name: Ronald A. House Title: Member/Vice President/Chief Operating Officer of Aspen Enterprises Ltd., Its Manager PEREGRINE CAPITAL, INC. By: /S/ ROY ROSE ----------------------------------- Name: Roy Rose Title: Chief Executive Officer U.S. ONLINE COMMUNICATIONS, LLC By: /S/ JOHN M. OREHEK ----------------------------------- Name: John M. Orehek Title: AGL CAPITAL INVESTMENTS LLC By: DAVID B. AGNEW ----------------------------------- Name: David B. Agnew Title: Manager ----------------------------------- Leonard J. Adams ----------------------------------- Ronald B. Alec EX 99.6 - 18 USOL HOLDINGS, INC. COMMON AND WARRANT REGISTRATION RIGHTS AGREEMENT ----------------------------------- Paul R. Alter ----------------------------------- David Babiarz ----------------------------------- Marvin G. Barish BARON ASSOCIATES By: ----------------------------------- Name: Title: ----------------------------------- Jerome Baruffi ----------------------------------- Sonia Bernat Blanch ----------------------------------- Paul M. Bower ----------------------------------- Kathleen Bower ----------------------------------- Howard I. Bulos ----------------------------------- Linda Tedjaksuma EX 99.6 - 19 USOL HOLDINGS, INC. COMMON AND WARRANT REGISTRATION RIGHTS AGREEMENT ----------------------------------- Eldon P. Burdo CASTLE VENTURES LTD. By: ----------------------------------- Name: Title: CENTRAL INVESTMENTS LIMITED By: ----------------------------------- Name: Title: CLFS EQUITIES LLP By: ----------------------------------- Name: Title: ----------------------------------- Robert J. Cotter D. STAKE MILL, INC. By: ----------------------------------- Name: Title: ----------------------------------- Edwin K. Dimes EX 99.6 - 20 USOL HOLDINGS, INC. COMMON AND WARRANT REGISTRATION RIGHTS AGREEMENT ----------------------------------- Alastair Douglas McDougal ----------------------------------- Larry P. Downey ----------------------------------- Connie K. Downey ----------------------------------- Dennis Drebsky ----------------------------------- Albert W. Duffield ----------------------------------- Glen E. Emig ----------------------------------- Roger L. Erickson ----------------------------------- James Fastovsky ----------------------------------- Phillip Fauver DAVID & MAGDA FRIED, TRUSTEES UA MICHAEL LANTOS TRUST DTD 12/14/90 EX 99.6 - 21 USOL HOLDINGS, INC. COMMON AND WARRANT REGISTRATION RIGHTS AGREEMENT By: ----------------------------------- Name: Title: ----------------------------------- Harry Friedman, IRA R/O ----------------------------------- Douglas F. Gill ----------------------------------- Stuart W. Gold ----------------------------------- T. L. Hudson DR. JOHN A. HUNT, INC. PENSION PLAN TRUST By: ----------------------------------- Name: Title: INTERVEST GROUP L.P. By: ----------------------------------- Name: Title: ----------------------------------- Alan Jablon EX 99.6 - 22 USOL HOLDINGS, INC. COMMON AND WARRANT REGISTRATION RIGHTS AGREEMENT ----------------------------------- Joyce Johnson ----------------------------------- James P. Johnson ----------------------------------- Frank T. Juranich ----------------------------------- Robert Katz ----------------------------------- Owen L. Kilgannon ----------------------------------- Richard S. Koreyva IRA ----------------------------------- Barry H. Levites ----------------------------------- John James Magill ----------------------------------- David Maltry ----------------------------------- Paul Matusow ----------------------------------- John McMaster EX 99.6 - 23 USOL HOLDINGS, INC. COMMON AND WARRANT REGISTRATION RIGHTS AGREEMENT ----------------------------------- Robert Moses ----------------------------------- Alonzo Mourning ----------------------------------- Samuel Muskinow ----------------------------------- Dennis J. Mykytyn NANO-CAP HYPER GROWTH PARTNERSHIP, L.P. By: ----------------------------------- Name: Title: ----------------------------------- Steven M. Ostner ----------------------------------- Peter J. Pappas ----------------------------------- Eric Partch ----------------------------------- Susan Partch ----------------------------------- Mohan S. Phanse EX 99.6 - 24 USOL HOLDINGS, INC. COMMON AND WARRANT REGISTRATION RIGHTS AGREEMENT ----------------------------------- Frances Fox Piven ----------------------------------- Michael Pizitz ----------------------------------- Myron H. Reinhart ----------------------------------- Ronald Roth ----------------------------------- Lawrence Rothberg ----------------------------------- Alois Rupp ----------------------------------- Joseph G. Russonielo ----------------------------------- Wayne Saker PAUL H. & LINDA B. SALSGIVER REVOCABLE TRUST DATED NOVEMBER 13, 1996 By: ----------------------------------- Name: Title: ----------------------------------- Michael Schwartzbard ----------------------------------- Stewart A. Shiman EX 99.6 - 25 USOL HOLDINGS, INC. COMMON AND WARRANT REGISTRATION RIGHTS AGREEMENT SIEGEL, SOMERS & SCHWARTZ LLP PROFIT SHARING PLAN DTD 11/1/84 By: ----------------------------------- Name: Title: ----------------------------------- Paul Silpe ----------------------------------- Beverly Silpe ----------------------------------- Dr. Satbir Singh ----------------------------------- C. M. Solomon ----------------------------------- Dr. George Spiegel SPITZER LIVING TRUST By: ----------------------------------- Name: Title: ----------------------------------- Dewey R. Tedder ----------------------------------- Dora F. Tedder EX 99.6 - 26 USOL HOLDINGS, INC. COMMON AND WARRANT REGISTRATION RIGHTS AGREEMENT PAUL N. TEMPLE REVOCABLE TRUST U/A/D 2/11/80 By: ----------------------------------- Name: Title: ----------------------------------- Jack M. Threadgill ----------------------------------- Stella Zimmer ----------------------------------- Cynthia Zimmer EX 99.6 - 27 SCHEDULE A SHAREHOLDERS
NUMBER OF SHARES OF COMMON STOCK NAME SECURITY COVERED BY REGISTRATION RIGHTS ---- -------- ------------------------------- GMAC Commercial Mortgage Warrants 325,000 Corporation Aspen Online Investments, LLC Common Stock 1,312,500 Warrants 625,000 Peregrine Capital, Inc. Common Stock 1,000,000 U.S. Online Communications, LLC Common Stock 125,000 Warrants 250,000 Barington Investors (as a group) Common Stock 312,500 Warrants 625,000 AGL Capital Investments LLC Warrants 259,000
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