-2-
SECURITIES AND EXCHANGE COMMISSION
Washington, DC. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
June 30, 1994
0-16690
(Commission File Number)
ML MEDIA OPPORTUNITY PARTNERS, L.P.
(Exact name of registrant as specified in its governing
instruments)
Delaware
(State or other jurisdiction of organization)
13-3429969
(IRS Employer Identification No.)
World Financial Center
South Tower - 14th Floor
New York, New York 10080-6114
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(212) 236-6472
N/A
Former name, former address and former fiscal year if changed
since last report
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No .
MOPP10K\MOP2Q.94
ML MEDIA OPPORTUNITY PARTNERS, L.P.
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
TABLE OF CONTENTS
Page
Consolidated Balance Sheets as of June 30, 1994
(Unaudited) and December 31, 1993 (Unaudited) 3-4
Consolidated Statements of Operations for the
thirteen and twenty-six week periods ended June
30, 1994 (Unaudited), and June 30, 1993
(Unaudited) 5-8
Consolidated Statements of Cash Flows for the
thirteen and twenty-six week periods ended June
30, 1994 (Unaudited), and June 30, 1993
(Unaudited) 9-12
Notes to the Consolidated Financial Statements
for the twenty-six week periods ended June 30,
1994 (Unaudited) 13-28
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 1994 (UNAUDITED) AND
DECEMBER 31, 1993 (UNAUDITED)
June 30, December 31,
Notes 1994 1993
ASSETS:
Cash and cash
equivalents 2 $ 3,783,364 $ 4,657,815
Accounts receivable
(net of allowance for
doubtful accounts of
$242,684 at June 30,
1994 and $171,390
at December 31, 1993) 2,983,319 3,959,680
Prepaid expenses and
deferred charges
(net of accumulated
amortization of
$2,964,956 at
June 30, 1994,
and $2,711,667 at
December 31, 1993) 911,150 1,208,573
Property, plant and
equipment (net of
accumulated
depreciation of
$12,687,823 at
June 30, 1994 and
$12,372,024 at
December 31, 1993) 2 5,921,004 5,723,402
Intangible assets (net
of accumulated
amortization of
$21,106,934 at
June 30, 1994 and
$20,481,214 at
December 31, 1993) 2 36,150,122 36,454,624
Investment in joint
ventures and common
stock 1,261,666 1,261,666
Other assets 654,449 867,723
TOTAL ASSETS $ 51,665,074 $ 54,133,483
(Continued on the following page)
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 1994 (UNAUDITED)
AND DECEMBER 31, 1993 (UNAUDITED)
(continued)
June 30, December 31,
Notes 1994 1993
LIABILITIES AND
PARTNERS' DEFICIT:
Liabilities:
Borrowings 2 $ 42,999,804 $ 42,999,804
Accounts payable and
accrued liabilities 9,696,643 8,711,807
Net liabilities of
discontinued
operations-Cable
television systems
segment 2,3 120,787,548 113,678,564
Total Liabilities 173,483,995 165,390,175
Minority interest 99,360 99,854
Partners' Deficit:
General Partners:
Capital contributions,
net of offering
expenses 1 1,019,428 1,019,428
Cumulative loss (2,297,247) (2,112,501)
(1,277,819) (1,093,073)
Limited Partners:
Capital contributions,
net of offering
expenses
(112,147.1 Units of
Limited Partnership
Interest) 1 100,914,316 100,914,316
Tax allowance cash
distribution (2,040,121) (2,040,121)
Cumulative loss (219,514,657) (209,137,668)
(120,640,462) (110,263,473)
Total Partners' Deficit (121,918,281) (111,356,546)
TOTAL LIABILITIES AND
PARTNERS' DEFICIT $ 51,665,074 $ 54,133,483
See Notes to Consolidated Financial Statements (Unaudited).
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THIRTEEN AND TWENTY-SIX WEEK PERIODS ENDED JUNE 30, 1994
(UNAUDITED) AND JUNE 30, 1993 (UNAUDITED)
Thirteen Weeks Twenty-Six Weeks
June 30, June 30, June 30, June 30,
1994 1993 1994 1993
Operating
Re- $ 3,662,613 $ 9,065,764 $ 7,077,976 $ 9,951,936
venues:
Operating Expenses:
Property
opera-
ting
expenses 1,673,674 7,074,402 3,272,805 8,175,563
General
and
adminis-
trative 971,060 712,627 2,197,535 869,537
Depre-
ciation
and
amorti-
zation 636,559 1,189,665 1,219,916 1,362,528
Manage-
ment fees 790,610 790,008 1,575,253 1,536,708
Loss on
write-
down of
assets -- 815,919 -- 815,919
4,071,903 10,582,621 8,265,509 12,760,255
Operating
loss from
con-
tinuing
opera-
tions (409,290) (1,516,857) (1,187,533) (2,808,319)
Other
(Expense)
Income:
Interest
expense (1,296,486) (1,264,134) (2,576,217) (1,264,134)
Interest
income 32,489 41,284 57,683 98,641
(continued on the following page)
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THIRTEEN AND TWENTY-SIX WEEK PERIODS ENDED JUNE 30, 1994
(UNAUDITED) AND JUNE 30, 1993 (UNAUDITED)
Thirteen Weeks Twenty-Six Weeks
June 30, June 30, June 30, June 30,
1994 1993 1994 1993
Other
expenses (44,851) (46,492) (70,518) (89,081)
(1,308,848) (1,269,342) (2,589,052) (1,254,574)
Loss from
con-
tinuing
oper-
ations
before
equity in
loss of
joint
venture
and minor-
ity in-
terest
share of
net loss/-
(income)
of consoli-
dated
joint
venture
(1,718,138) (2,786,199) (3,776,585) (4,062,893)
(continued on the following page)
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THIRTEEN AND TWENTY-SIX WEEK PERIODS ENDED JUNE 30, 1994
(UNAUDITED) AND JUNE 30, 1993 (UNAUDITED)
Thirteen Weeks Twenty-Six Weeks
June 30, June 30, June 30, June 30,
1994 1993 1994 1993
Equity in
loss of
joint
venture - - - (1,288,838)
Minority
in-terest
share of
net loss/-
(income)
of consoli-
dated
joint
venture
163 (940) (168) 26,029
Loss from
con-
tinuing
oper-
ations (1,717,975) (2,787,139) (3,776,753) (5,325,702)
Discon-tinu
ed opera-
tions:
- - - -
Loss from discontinued
operations of:
Cable tele-
vision
systems
segment
- (7,276,729) (6,784,982) (14,111,987)
(continued on the following page)
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THIRTEEN AND TWENTY-SIX WEEK PERIODS ENDED JUNE 30, 1994
(UNAUDITED) AND JUNE 30, 1993 (UNAUDITED)
Thirteen Weeks Twenty-Six Weeks
June 30, June 30, June 30, June 30,
1994 1993 1994 1993
Business
informa-
tion
services
segment - (352,397) - (492,689)
NET LOSS $(1,717,975) $(10,416,265) $(10,561,735) $(19,930,378)
Per Unit of
Limited
Part-
nership
Interest:
Loss from
con-
tinuing
oper-
ations $ (15.17) $ (24.60) $ (33.35) $ (47.01)
Loss from
discon-
tinued
oper-
ations -- (67.35) (59.89) (128.93)
NET LOSS $ (15.17) $ (91.95) $ (93.24) $ (175.94)
Number of
Units 112,147.1 112,147.1 112,147.1 112,147.1
See Notes to Consolidated Financial Statements (Unaudited).
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR TWENTY-SIX WEEK PERIODS ENDED JUNE 30, 1994
(UNAUDITED) AND JUNE 30, 1993 (UNAUDITED)
June 30, June 30,
1994 1993
Cash flows from
operating activities:
Net loss $(10,561,735) $(19,930,378)
Adjustments to reconcile
net loss to net cash
provided by operating
activities:
Depreciation and
amortization 1,219,916 405,136
Bad debt reserve
adjustment 79,833 510
Equity in loss of joint
ventures - 1,288,838
Minority interest share
of net (income) loss 168 (26,969)
Loss on Writedown of
assets - 815,919
(continued on the following page)
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE TWENTY-SIX WEEK PERIODS ENDED JUNE 30, 1994
(UNAUDITED) AND JUNE 30, 1993 (UNAUDITED)
(Continued)
June 30, June 30,
1994 1993
Change in operating
assets and liabilities:
Decrease in accounts
receivable 905,067 794,113
Decrease/(Increase) in
prepaid expenses and
deferred charges 44,134 (6,006)
Decrease in other assets 213,274 4,836,308
Increase in accounts
payable and accrued
liabilities 984,836 1,569,736
Increase in net
liabilities of
discontinued operations 7,108,984 14,138,821
(continued on the following page)
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE TWENTY-SIX WEEK PERIODS ENDED JUNE 30, 1994
(UNAUDITED) AND JUNE 30, 1993 (UNAUDITED)
(continued)
June 30, June 30,
1994 1993
Decrease in deferred - (4,247,495)
revenue
Net cash used in operating
activities (5,523) (361,467)
Cash flows from investing
activities:
Purchase of property,
plant and equipment (513,401) (832,481)
Increase in intangible
assets (355,527) (100,502)
Net cash used in investing
activities (868,928) (932,983)
(continued on the following page)
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE TWENTY-SIX WEEK PERIODS ENDED JUNE 30, 1994
(UNAUDITED) AND JUNE 30, 1993 (UNAUDITED)
(continued)
June 30, June 30,
1994 1993
Net decrease in cash and
cash equivalents (874,451) (1,294,450)
Cash and cash equivalents
at beginning of period 4,657,815 7,637,846
Cash and cash equivalents
at end of period 3,783,364 $ 6,343,396
Cash paid for interest $1,674,214 $ 1,603,654
See Notes to Consolidated Financial Statements (Unaudited).
ML MEDIA OPPORTUNITY PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE TWENTY-SIX WEEK PERIODS ENDED JUNE 30, 1994 (UNAUDITED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ML Media Opportunity Partners, L.P. (the "Partnership"), was
formed and the Certificate of Limited Partnership was filed under
the Delaware Revised Uniform Limited Partnership Act on June 23,
1987. Operations commenced on March 23, 1988 with the first
closing of the sale of units of limited partnership interest.
Media Opportunity Management Partners (the "General Partner") is
a joint venture, organized as a general partnership under New
York law, between RP Opportunity Management, L.P., a limited
partnership under Delaware law, and ML Opportunity Management
Inc., a Delaware corporation and an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc. The General Partner was
formed for the purpose of acting as general partner of the
Partnership. The General Partner's total capital contribution
was $1,132,800 at December 31, 1993 which represents 1% of the
total Partnership capital contributions.
Pursuant to the terms of the Amended and Restated Agreement of
Limited Partnership, the General Partner is liable for all
general obligations of the Partnership to the extent not paid by
the Partnership. The limited partners are not liable for the
obligations of the Partnership in excess of the amount of their
contributed capital.
The purpose of the Partnership is to acquire, finance, hold,
develop, improve, maintain, operate, lease, sell, exchange,
dispose of and otherwise invest in and deal with media businesses
and direct and indirect interests therein.
Certain 1993 items have been reclassified to conform to 1994
presentation.
In the opinion of the General Partner, the financial statements
include all adjustments necessary to reflect fairly the results
of the interim periods presented. All adjustments are of a
normal recurring nature, except as disclosed in Note 3.
Additional information, including the audited year end 1993
Financial Statements and the Summary of Significant Accounting
Policies, is included in the Partnership's filing on Form 10-K
for the year ended December 31, 1993 on file with the Securities
and Exchange Commission.
Statement of Financial Accounting Standards No. 112
Effective January 1, 1994, the Partnership adopted Statement of
Financial Accounting Standards No. 112, "Employers' Accounting
for Postemployment Benefits" ("SFAS No. 112"). The effect of the
adoption of SFAS No. 112 was not material to the Partnership's
financial position or results of operations.
2. Liquidity
At June 30, 1994, the Partnership had $3,783,364 in cash and cash
equivalents, of which $1,904,570 was limited for use at the
operating level and $1,878,794 was the Partnership's working
capital.
The Partnership has begun the process of selling or disposing of
certain of its investments. The Partnership sold the assets of
IMPLP/IMPI/Intelidata in July 1993, entered into an Option
Agreement to sell WMXN-FM in January, 1994, and sold its Windsor
Cable Systems on May 18, 1994. In addition, the Partnership's
Prepackaged Plan of Reorganization of Maryland Cable has been
confirmed by the United States bankruptcy court (see below). The
status of all of the Partnership's investments is discussed in
more detail below.
Sale of Windsor
On May 18, 1994, the Partnership completed the sale of the assets
of the Windsor Systems to Tar River Communications Inc. ("Tar
River") for $3,443,200, subject to post-closing adjustments. At
closing, the Partnership repaid the $2,050,058 of principal and
interest then due under the Windsor Note, as required by the
terms of the Windsor Note. In addition, as required by the Asset
Purchase Agreement with Tar River, at closing, $342,160 was
placed into two separate escrow accounts to cover the potential
costs of improving pole attachments as well as other possible
post-closing expenses. A significant portion of the remaining
$1,050,982 of sale proceeds will be used to cover certain pre-
closing liabilities to third parties, as well as the final
closing costs of the transaction, such as legal fees. The
Partnership has deferred its anticipated gain on the sale of
Windsor, which is currently estimated to range from approximately
$0.6 million to approximately $1.1 million depending upon post-
closing expenses, due to the presentation of its Cable Television
Systems Segment(which includes Windsor and Maryland Cable) as
discontinued operations (see Note 3). The Partnership will
recognize the final gain on the sale of Windsor upon the
disposition of its entire Cable Television Systems Segment.
Maryland Cable
Proposed Restructuring
On May 2, 1994, the United States Bankruptcy Court - Southern
District of New York confirmed the Amended Prepackaged Plan of
Reorganization of Maryland Cable and Holdings (the "Prepackaged
Plan"). Consummation of the Prepackaged Plan is subject to
various conditions specified in the Plan, including approval by
the franchising authorities and the FCC of the transfer of the
cable systems operated by Maryland Cable to a newly formed
limited partnership ("Newco") that would acquire all of the
assets of Maryland Cable, subject to the liabilities of Maryland
Cable, and the payment upon consummation of each of the payments
described below. The Prepackaged Plan requires that the Plan be
consummated on or before September 30, 1994. There is no
assurance that the conditions to the Prepackaged Plan will be
satisfied or that the Plan will be consummated.
If the Prepackaged Plan is consummated, control of Maryland Cable
will be transferred to Newco. As such, Maryland Cable has been
deconsolidated in the accompanying balance sheets and Maryland
Cable's operations have been included as discontinued operations
through the first quarter of 1994 (see Note 3). Maryland Cable's
operating losses subsequent to March 31, 1994 through the date of
disposal have not been provided for since the Partnership
anticipates a gain on the disposal of Maryland Cable.
Under the Prepackaged Plan, the Partnership would receive a 4.9%
interest in Newco in satisfaction of: (a) the $3,600,000 in
Subordinated Promissory Notes held by the Partnership, plus
accrued interest of approximately $2,700,000; (b) the $5,379,833
in deferred management fees payable to the Partnership; and (c)
certain other amounts payable to the Partnership. The
Partnership has the right, and intends to exercise the right, to
sell its interest in Newco to Newco or to Water Street Corporate
Recovery Fund I, L.P., the holder of 85% of the outstanding
principal amount of the 15-3/8% Subordinated Discount Notes due
1998 (the "Discount Notes") of Maryland Cable on the date the
Prepackaged Plan is consummated (the "Effective Date") for
$2,846,423. ML Cable Partners, which is 99% owned by the
Partnership, would receive payment in full of the $6,830,000
participation it holds in the senior bank debt of Maryland Cable.
In addition, the Partnership would be paid on the Effective Date
a management fee for managing the Maryland Cable Systems from
January 1, 1994 to the Effective Date based on the gross revenues
of the Systems during that period. If, prior to the Effective
Date, holders of the Discount Notes transfer a majority of the
outstanding principal amount of the Discount Notes, the
Partnership would receive an additional payment equal to 5% of
the amount by which the Value (as defined) of the Systems exceeds
$180,000,000. The Prepackaged Plan also provides for a payment
of $500,000 to MultiVision Cable TV Corp. in settlement of
severance and other costs relating to the termination of
MultiVision as manager of the Systems.
Under the Prepackaged Plan, the holders of Maryland Cable's
senior bank debt agreed to accept newly issued promissory notes
from Newco in a principal amount equal to the principal amount of
the senior bank debt plus accrued interest at the default rate
from the date of filing of the Prepackaged Plan.
The filing of the Prepackaged Plan was made on March 10, 1994
pursuant to the Exchange Agreement dated as of December 31, 1993
among the Partnership, Maryland Cable, Holdings, ML Cable
Partners, Water Street and one other holder of the Discount
Notes.
On January 18, 1994, as a result of the defaults under the senior
bank debt, the holders of the senior bank debt exercised their
rights to collect Maryland Cable's lockbox receipts and apply
such receipts towards the repayment of the outstanding senior
bank debt, related accrued interest, and fees and expenses. As
of March 9, 1994, one day prior to the filing of the Prepackaged
Plan, the holders of the senior bank debt applied approximately
$4,800,000 in lockbox receipts towards the repayment of the
outstanding senior bank debt, related accrued interest, and fees
and expenses.
Impact of Cable Legislation
On October 5, 1992, Congress overrode the President's veto of the
Cable Consumer Protection and Competition Act of 1992 (the "1992
Cable Act") which imposes significant new regulations on the
cable television industry. The 1992 Cable Act required the
development of detailed regulations and other guidelines by the
Federal Communications Commission ("FCC"), most of which have now
been adopted but remain subject to petitions for reconsideration
before the FCC and/or court appeals.
In the area of rate regulation, the 1992 Cable Act establishes an
entirely new regulatory scheme. As an initial effort to
implement this scheme, the FCC, on May 3, 1993, released a Report
and Order ("Rate Order") containing new rules and regulations
governing the rates for certain cable television services and
equipment. The new rules, among other things, set certain
benchmarks which will enable local franchise authorities to
require rates for "basic service" (minimally, local broadcast and
access channels) and the FCC (upon receipt of individual
complaints) to require rates for certain satellite program
services (excluding premium channels) to fall approximately 10%
from September 30, 1992 levels, unless the cable operator is
already charging rates that are at a so-called "competitive"
benchmark level or it can justify a higher rate based on a cost-
of-service showing. Rates of all regulated cable systems will
then be subject to a price cap that will govern the extent to
which rates can be raised in the future without a cost-of-service
showing. The rules announced in May, 1993, became effective on
September 1, 1993, but remained subject to considerable debate
and uncertainty as several major issues and FCC proceedings
awaited resolution.
On February 22, 1994, the FCC adopted a series of additional
measures that expand and substantially alter its cable rate
regulations. (The full text of these further measures was,
however, not released until March 30, 1994.) The major
additional actions taken by the FCC include the following: (1) a
modification of its benchmark methodology in a way which will
effectively require cable rates to be reduced, on average, and
with certain possible exceptions, an additional 7% (i.e., beyond
the 10% reduction previously ordered in 1993) from their
September 30, 1992 level; (2) the issuance of new standards and
requirements to be used in making cost-of-service showings by
cable operators who seek to justify rates above the levels
determined by the benchmark approach; and (3) the clarification
and/or reaffirmation of a number of "going forward" issues that
had been the subject of various petitions for reconsideration of
its May 3, 1993 Rate Order. Several weeks earlier, and partly in
anticipation of these actions, the FCC extended its industry-wide
freeze on rates for regulated cable services until May 15, 1994.
The new benchmark standards and certain interim cost-of-service
rules became effective May 15, 1994.
In deciding to substantially revise its benchmark methodology for
regulated cable rates, the FCC has actually created two benchmark
systems. Thus, whereas the modified rate regulations adopted on
February 22, 1994 became effective as of May 15, 1994, regulated
rates in effect before that date will continue to be governed by
the old benchmark system.
In its May 1993 Rate Order the FCC exempted from rate regulation
the price of packages of "a la carte" channels if certain
conditions were met. Upon reconsideration, however, the FCC on
February 22, 1994 effectively tightened its regulatory treatment
of "a la carte" packages by establishing more elaborate criteria
designed to ensure that such practices are not employed so as to
unduly evade rate regulation. Now, when assessing the
appropriate regulatory treatment of "a la carte" packages, the
FCC will consider, inter alia, the following factors as possibly
suggesting that such packages do not qualify for non-regulated
treatment: whether the introduction of the package avoids a rate
reduction that otherwise would have been required under the FCC's
rules; whether an entire regulated tier has been eliminated and
turned into an "a la carte" package; whether a significant number
or percentage of the "a la carte" channels were removed from a
regulated service tier; whether the package price is deeply
discounted when compared to the price of an individual channel;
and whether the subscriber must pay significant equipment or
other charges to purchase an individual channel in the package.
In addition, the FCC will consider factors that will reflect in
favor of non-regulated treatment such as whether the channels in
the package have traditionally been offered on an "a la carte"
basis or whether the subscriber is able to select the channels
that comprise the "a la carte" package. "A la carte" packages
which are found to evade rate regulation rather than enhance
subscriber choice will be treated as regulated tiers, and
operators engaging in such practices may be subject to
forfeitures or other sanctions by the FCC. Local franchising
authorities may make the initial determination as to whether such
offerings should be treated as regulated or unregulated.
In a separate action on February 22, 1994, the FCC adopted
interim rules to govern cost-of-service proceedings initiated by
cable operators. Operators who elect to pursue cost-of-service
proceedings will have their rates based on their allowable costs,
in a proceeding based on principles similar to those that govern
cost-based rate regulation of telephone companies. Under this
methodology, cable operators may recover, through the rates they
charge for regulated cable service, their normal operating
expenses and a reasonable return on investment. The FCC has, for
these purposes, established an interim industry-wide rate of
return of 11.25% It has also determined that acquisition costs
above book value are presumptively excluded from the rate base.
At the same time, certain intangible, above-book costs, such as
start-up losses (limited to losses actually incurred during a two-
year start-up period) and the costs of obtaining franchise rights
and some start-up organizational costs such as customer lists,
may be allowed. There are no threshold requirements limiting the
cable systems eligible for a cost-of-service showing, except
that, once rates have been set pursuant to a cost-of-service
approach, cable operators may not file a new cost-of-service
showing to justify new rates for a period of two years. Finally,
the FCC notes that it will, in certain individual cases, consider
a special hardship showing (or the need for special rate relief)
where an operator demonstrates that the rates set by a cost-of-
service proceeding would constitute confiscation of investment
and that some higher rate would not represent exploitation of
customers. In considering whether to grant such a request, the
FCC emphasizes that, among other things it would examine the
overall financial condition of the operator and whether there is
a realistic threat of termination of service. The FCC is in the
process of receiving comments on these interim rules and proposes
to adopt them as final rules.
The Partnership is currently unable to assess the full impact of
the FCC's further rate regulation decisions released on March 30,
1994, and the 1992 Cable Act generally upon its business
prospects or future financial results. However, the rate
reductions mandated by the FCC in May of 1993 have had, and will
most likely continue to have, a detrimental impact on the
revenues and profits of Maryland Cable. In addition, the rate
reductions and limits on the pricing of a-la-carte cable services
announced on February 22, 1994 (and released March 30, 1994) are
likely to have a further detrimental impact on those revenues and
profits. Although the impact of the 1992 Cable Act and certain
recent FCC actions cannot yet be ascertained precisely, once
fully implemented, certain aspects of the new law may have a
material negative impact on the Partnership's ability to
consummate the Prepackaged Plan and, consequently, on the
financial condition, liquidity, and value of the Partnership.
As an example of the effects of the 1992 Cable Act, in complying
with the benchmark regulatory scheme without considering the
effect of any future potential cost-of-service showing, Maryland
Cable, on a franchise by franchise basis, was required to reduce
present combined basic service rates (broadcast tier and
satellite service tier) effective September 1, 1993. In
addition, pursuant to the 1992 Cable Act, revenue from secondary
outlets and from remote control units was eliminated or reduced
significantly. At that time, Maryland Cable began instituting
charges for converters, as permitted by the 1992 Cable Act,
offering programming services on an a-la-carte basis, which
services are not subject to rate regulation, and aggressively
marketing unregulated premium services to those subscribers
benefiting from decreased basic rates. Despite the institution
of these actions by Maryland Cable, the rate regulation required
by the Maryland Cable 1992 Cable Act had a detrimental impact on
the revenues and profits of Maryland Cable. The further rate
reduction mandated by the February 22, 1994 FCC action and any
limits imposed by such action on a-la-carte pricing are likely to
have a further detrimental impact on those revenues and profits.
GCC
As of June 30, 1994, the Partnership's 351,665 shares in GCC
represented an ownership percentage equal to approximately 4.2%.
On January 20, 1994, the majority stockholders of GCC and certain
holders of interests in MARKETS Cellular Limited Partnership
("Markets"), and PN Cellular, Inc. ("PNCI") executed a Memorandum
of Intention (the "Memorandum") pursuant to which the parties
thereto expressed their intent to effect a proposed business
combination of GCC and Markets.
The Partnership signed an Exchange Agreement and Plan of Merger
("Agreement"), dated July 20, 1994, to which the majority
stockholders of GCC and the majority owners of Markets are
parties. Pursuant to the Agreement, the Partnership exchanged
its shares in GCC for an equal number of shares in Western
Wireless Corporation ("WWC"), a new company which was organized
to own the equity interest of GCC and Markets. Following the
consummation of the business combination on July 29, 1994, WWC
became the owner of 100% of the partnership interests in Markets
and approximately 95% of the outstanding common stock of GCC.
WWC holds and operates cellular licenses covering approximately
5.2 million net pops (defined as the population in an area
covered by a cellular franchise) including pending acquisitions.
The Partnership's shares represent approximately 2.4% of WWC.
The parties have entered into a stockholders agreement containing
certain restrictions on transfer, registration rights and
corporate governance provisions.
WMXN-FM
During the first half of 1994, revenues generated by WMXN-FM,
combined with the station's cash balances, were sufficient to
cover its operating costs (before management fees).
The Partnership entered into an Option Agreement, effective
January 25, 1994, with U.S. Radio, Inc. ("U.S. Inc."), a Delaware
corporation, and an affiliated entity, U.S. Radio, L.P. ("U.S.
Radio"), a Delaware limited partnership, neither of which is
affiliated with the Partnership. Pursuant to the Option
Agreement, the Partnership granted U.S. Inc. an option (the
"Call") to purchase substantially all of the assets of WMXN-FM
(the "Assets") for a cash price of $3.5 million at any time prior
to January 15, 1995. Also pursuant to the Option Agreement, U.S.
Inc. granted the Partnership the option (the "Put") to sell the
Assets to U.S. Inc. for a cash price of $3.5 million at any time
(a) within 30 days after the expiration of the Call or (b) within
30 days of the termination by the Partnership of the LMA (see
below) as a result of a material breach of the LMA by U.S. Radio.
If the Call or Put is exercised, the Partnership and U.S. Inc.
will immediately revise as necessary and execute an Asset
Purchase Agreement which is an exhibit to the Option Agreement.
If the Call or Put is timely exercised but U.S. Inc. fails to
execute the Asset Purchase Agreement, then, subject to certain
conditions, the Partnership may elect to cause U.S. Radio to sell
its radio stations WOWI-FM, in Norfolk, Virginia, and WSVY-AM in
Portsmouth, Virginia, together with WMXN-FM (collectively, the
"Stations"), with the first $3.5 million of proceeds, less
transaction costs, from such sale to be retained by the
Partnership. The acquisition of WMXN-FM by U.S. Inc., and/or the
sale of the Stations, is subject to the prior approval of the
FCC. There can be no assurance that the sale of WMXN-FM or the
sale of the Stations will be consummated.
Effective January 31, 1994, the Partnership entered into a Time
Brokerage Agreement (the "LMA") with U.S. Radio. The LMA calls
for the Partnership to make broadcasting time available on WMXN-
FM to U.S. Radio and for U.S. Radio to provide radio programs to
be broadcast on WMXN-FM, subject to certain terms and conditions,
including the rules and regulations of the FCC. In exchange for
providing broadcasting time to U.S. Radio, the Partnership will
receive a monthly fee approximately equal to its cost of
operating WMXN-FM. The LMA will continue until the earlier of:
(i) March 1, 1995 (if neither the Call nor Put has been
exercised); (ii) the consummation of the acquisition of WMXN-FM
by U.S. Inc. pursuant to the Option Agreement; or (iii) the
consummation of a joint sale of the Stations.
The Partnership may choose to advance additional funds to WMXN-FM
if any are required; however, the Partnership has no obligation
to advance any additional funds to WMXN-FM and WMXN-FM has no
liability for borrowed funds.
TCS
As of June 30, 1994, TCS was in default of covenants under its
note agreements and failed to make two scheduled principal
payments totaling $1 million due February 28, and May 31,1994.
In addition, TCS expects to default on the majority of its
scheduled principal payments for the remainder of 1994 as well as
in 1995. TCS is engaged in negotiations with its note holders,
although the outcome of these negotiations cannot be predicted at
this time. While TCS remains in default, the note holders have
the option to exercise their rights under the notes, which rights
include the right to foreclose on the stock of the operating
subsidiaries that own the three TCS stations, but not the assets
of the Partnership. It is unlikely that the Partnership will
recover more than a nominal amount of its investment in TCS. As
of and for the twenty-six week period ended June 30, 1994, TCS
represented 88% of the Partnership's total assets, 96% of the
Partnership's operating revenues and 49% of the Partnership's
operating loss from continuing operations.
Paradigm
Paradigm and/or BBAD are not currently producing a sufficient
number of television programs to cover overhead costs
indefinitely, although the Partnership has not advanced any funds
to Paradigm and/or BBAD since the second quarter of 1992.
Paradigm and/or BBAD have taken several steps to reduce operating
costs, primarily by reducing the number and compensation of
employees. However, Paradigm and/or BBAD did not operate
profitably during the second quarter of 1994, and are currently
dependent on outside sources, primarily Associates, to finance
Paradigm's and/or BBAD's monthly operating costs. The
Partnership has elected not to fund such operating costs. The
Partnership has no obligation to advance any additional funds to
Paradigm and/or BBAD and actively sought a strategic partner that
would share in meeting Paradigm's and/or BBAD's potential future
funding needs, but was unable to identify such a partner.
Paradigm and/or BBAD have no liability for borrowed funds. The
Partnership is negotiating with Associates the terms of an
agreement under which Paradigm would retain the three television
movies and the series developed by it, and the other projects and
program concepts developed by Paradigm and/or BBAD would be
assigned to Associates, and Paradigm would retain a percentage
interest in all such projects and concepts. In any event, the
Partnership will most likely recover only a nominal portion, if
any, of its original investment in Paradigm and/or BBAD. Due in
part to the Partnership's unwillingness to advance additional
funds to fund the continuing operating losses and possible
winding down of Paradigm's and BBAD's operating activities, the
Partnership recorded in the second quarter of 1993 a writedown of
approximately $516,000 of certain assets of Paradigm and BBAD to
reduce the Partnership's net investment to a net realizable value
of zero.
Investments and EMP, Ltd.
During the first half of 1994 Investments, EMP, Ltd. and their
affiliates were reliant on their cash balances and/or additional
funding from ALP Enterprises to fund their continuing operations.
Furthermore, the Partnership elected not to advance further funds
to Investments, EMP, Ltd., or their affiliates beyond those funds
already advanced.
Therefore, the Partnership and EMP, Ltd. agreed in principal to
restructure the ownership of EMP, Ltd. and certain of its
subsidiaries in order to enable EMP, Ltd. to attract additional
capital from ALP Enterprises and other third parties. In the
restructuring, based on certain representations from EMP, Ltd.
and ALP Enterprises, the Partnership will sell to Clarendon and
ALP Enterprises for nominal consideration the Partnership's
shares in EMP, Ltd. Simultaneously, the Partnership and EMP,
Ltd. will enter into an agreement whereby EMP, Ltd.'s 10%
interest in Teletext will be transferred, together with a 350,000
loan (approximately $543,000 in current exchange rates) from EMP,
Ltd., to a newly formed entity, MV Technology Limited ("MVT").
After the transfer, the Partnership will own 13.8% of the issued
common shares of MVT, while EMP, Ltd. will own the remaining
86.2%. MVT's sole purpose will be to manage its 10% interest in
Teletext. The Partnership will have the right to require EMP,
Ltd. to purchase the Partnership's interest in MVT at any time
between December 31, 1994 and December 31, 1997. EMP, Ltd. will
have the right to require the Partnership to sell the
Partnership's share in MVT to EMP, Ltd. at any time between
September 30, 1995 and September 30, 1998. MVT will pay an
annual fee to EMP, Ltd. for management services required in the
oversight of MVT's investment in Teletext. Following the
restructuring, the Partnership will no longer have any interest
in EMP, Ltd. It is unlikely Registrant will recover its $2
million investment in Investments either from Investments or from
MVT.
IMP/Intelidata
Effective July 1, 1993, the Partnership entered into three
transactions to sell the business and assets of IMPLP/IMPI and
Intelidata. As a result of these transactions, the Partnership
recorded a writedown of approximately $364,000 of certain assets
of IMPLP/IMPI/Intelidata in the second quarter of 1993 to reduce
the Partnership's net investment to a net realizable value of
zero.
Subsequent to the sale of the businesses, the Partnership
advanced additional funds totaling approximately $0.1 million to
IMPLP/IMPI and Intelidata to fund cash shortfalls resulting from
the pre-sale claims of certain creditors. The Partnership
anticipates that it may be required to make additional such
advances to IMPLP/IMPI and Intelidata during 1994. The total of
any Partnership obligations to fund such advances, including
certain contractual obligations, is not currently anticipated to
exceed the amount of the writedown. It is unlikely that the
Partnership will recover any of its investments in
IMPLP/IMPI/Intelidata.
Summary
In summary of the Partnership's liquidity status, of the
approximately $1.9 million that the Partnership has available for
working capital, a portion may be utilized to support anticipated
funding needs, or possible restructurings, as appropriate, of its
investments. The Partnership has no contractual commitment to
advance funds to any of these investments except for the
commitments described below.
The Partnership, in the appropriate circumstances, will consider
utilizing its working capital to fund cash shortfalls or to
restructure the debt of certain of its investments. As discussed
above, the Partnership is also selling or disposing of certain of
its investments. Any additional use of the Partnership's working
capital to support its existing investments is at the discretion
of the Partnership except for commitments made by the Partnership
for certain obligations of Maryland Cable to the extent that
Maryland Cable does not discharge those obligations.
3. DISCONTINUED OPERATIONS
Cable Television Systems Segment
Due to the sale of Windsor and the likely divestiture of Maryland
Cable (see Note 2), the Partnership has presented its Cable
Television Systems Segment (comprised of Maryland Cable and
Windsor) as discontinued operations as of, and for the twenty-six
week period ended, June 30, 1994. The December 31, 1993
Consolidated Balance Sheet and the June 30, 1993 Consolidated
Statement of Operations and Consolidated Statement of Cash Flows
have been restated to present the Cable Television Systems
Segment as discontinued operations.
The net liabilities of discontinued operations on the
Consolidated Balance Sheet are comprised of the following:
As of As of
June 30, December 31,
1994 1993
Property, plant and
equipment, net $ 43,946,657 $ 45,342,432
Intangible assets, net 84,235,407 85,521,053
Other assets 6,790,296 6,153,656
Borrowings (237,988,202) (242,623,751)
Other liabilities (17,771,706) (8,071,954)
Net liabilities of
discontinued operations $(120,787,548) $(113,678,564)
Summarized results of discontinued operations of this segment on
the Consolidated Statements of Operations are as follows:
Thirteen Weeks Twenty-Six Weeks
June 30, June 30, June 30, June 30,
1994 1993 1994 1993
Operating
Revenues $ -- $11,394,302 $10,714,539 $ 22,567,917
Less:
Operating
Expenses -- 11,145,838 8,873,666 21,847,141
Operating
Income -- 248,464 1,840,873 720,776
Other
Expenses,
net -- (7,525,193) (8,625,855) (14,832,763)
Loss from
dis-
continued
oper-
ations $ -- $(7,276,729) $(6,784,982) $(14,111,987)
Business Information Services Segment
Effective July 1, 1993, the Partnership sold the business and
assets of IMPLP/IMPI and Intelidata (the Business Information
Services Segment). The results of the Business Information
Services Segment have been reported separately in the
Consolidated Statements of Operations as discontinued operations.
Summarized results of the discontinued operations of this segment
are as follows:
Thirteen Weeks Twenty-Six Weeks
June 30 June 30, June 30, June 30,
1994 1993 1994 1993
Operating
Revenues $ -- $ 418,259 $ -- $ 975,321
Less:
Operating
Expenses -- 771,937 -- 1,470,558
Operating Loss
-- (353,678) -- (495,237)
Other Income,
net -- 1,281 -- 2,548
Loss from
discontinued
operations $ -- $ (352,397) $ -- $ (492,689)
There were no net liabilities from the discontinued operations of
the Business Information Services Segment as of June 30, 1994 and
as of December 31, 1993.
4. TCS
The Partnership consolidated TCS as of March 26, 1993, the date
it received regulatory approval for the restructuring of the
ownership of TCS. Through March 25, 1993, the Partnership
utilized the equity method of accounting for TCS. The following
data was prepared to illustrate the effects of TCS on the
operations of the Partnership:
Thirteen Weeks Twenty-Six Weeks
June 30, June 30, June 30, June 30,
1994 1993 1994 1993
Total
Revenues -
TCS $3,541,089 $3,428,274 $ 6,781,036 $ 3,428,274
Total
Expenses -
TCS (4,395,824) (4,344,196) (8,638,267) (4,344,196)
Equity in
loss of
joint
venture -
TCS -- -- -- (1,288,838)
Net Loss -
TCS $ (854,735) $ (915,922) $(1,857,231) $(2,204,760)
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
At June 30, 1994, Registrant had $3,783,364 in cash and cash
equivalents, of which $1,904,570 was limited for use at the
operating level and $1,878,794 was Registrant's working capital.
Registrant has begun the process of selling or disposing of
certain of its investments. Registrant sold the assets of
IMPLP/IMPI/Intelidata in July 1993, entered into an Option
Agreement to sell WMXN-FM in January, 1994 and sold its Windsor
Cable Systems on May 18, 1994. In addition, Registrant's
Prepackaged Plan of Reorganization of Maryland Cable has been
confirmed by the United States bankruptcy court (see below). The
status of all of Registrant's investments is discussed in more
detail below.
In summary of Registrant's liquidity status, of the approximately
$1.9 million that Registrant has for working capital, a portion
may be utilized to support anticipated funding needs or possible
restructurings, as appropriate, of its investments. Registrant
has no contractual commitment to advance funds to any of its
investments except for the commitments described below.
Registrant, in the appropriate circumstances, will consider
utilizing its working capital to fund cash shortfalls or to
restructure the debt of certain of its investments. As discussed
above, Registrant is also in the process of selling or disposing
of certain of its investments. Any additional use of
Registrant's working capital to support its existing investments
is at the discretion of Registrant except for commitments made by
Registrant for certain obligations of Maryland Cable to the
extent that Maryland Cable does not discharge those obligations.
Sale of Windsor
On May 18, 1994, Registrant completed the sale of the assets of
the Windsor Systems to Tar River Communications Inc. ("Tar
River") for $3,443,200, subject to post-closing adjustments. At
closing, Registrant repaid the $2,050,058 of principal and
interest then due under the Windsor Note, as required by the
terms of the Windsor Note. In addition, as required by the Asset
Purchase Agreement with Tar River, at closing, $342,160 was
placed into two separate escrow accounts to cover the potential
costs of improving pole attachments as well as other possible
post-closing expenses. A significant portion of the remaining
$1,050,982 of sale proceeds will be used to cover certain pre-
closing liabilities to third parties, as well as the final
closing costs of the transaction, such as legal fees. Registrant
has deferred its anticipated gain on the sale of Windsor, which
is currently estimated to range from approximately $0.6 million
to approximately $1.1 million depending upon post-closing
expenses, due to the presentation of its Cable Television Systems
Segment (which includes Windsor and Maryland Cable) as
discontinued operations (see Note 3 to Item 1. Financial
Statements). Registrant will recognize the final gain on the
sale of Windsor upon the disposition of its entire Cable
Television Systems Segment.
Maryland Cable
Proposed Restructuring
On May 2, 1994, the United States Bankruptcy Court - Southern
District of New York confirmed the Amended Prepackaged Plan of
Reorganization of Maryland Cable and Holdings (the "Prepackaged
Plan"). Consummation of the Prepackaged Plan is subject to
various conditions specified in the Plan, including approval by
the franchising authorities and the FCC of the transfer of the
cable systems operated by Maryland Cable to a newly formed
limited partnership ("Newco") that would acquire all of the
assets of Maryland Cable, subject to the liabilities of Maryland
Cable, and the payment upon consummation of each of the payments
described below. The Prepackaged Plan requires that the Plan be
consummated on or before September 30, 1994. There is no
assurance that the conditions to the Prepackaged Plan will be
satisfied or that the Plan will be consummated.
Under the Prepackaged Plan, Registrant would receive a 4.9%
interest in Newco in satisfaction of: (a) the $3,600,000 in
Subordinated Promissory Notes held by Registrant, plus accrued
interest of approximately $2,700,000; (b) the $5,379,833 in
deferred management fees payable to Registrant; and (c) certain
other amounts payable to Registrant. Registrant has the right,
and intends to exercise the right, to sell its interest in Newco
to Newco or to Water Street Corporate Recovery Fund I, L.P., the
holder of 85% of the outstanding principal amount of the 15-3/8%
Subordinated Discount Notes due 1998 (the "Discount Notes") of
Maryland Cable on the date the Prepackaged Plan is consummated
(the "Effective Date") for $2,846,423. ML Cable Partners, which
is 99% owned by Registrant, would receive payment in full of the
$6,830,000 participation it holds in the senior bank debt of
Maryland Cable. In addition, Registrant would be paid on the
Effective Date a management fee for managing the Maryland Cable
Systems from January 1, 1994 to the Effective Date based on the
gross revenues of the Systems during that period. If, prior to
the Effective Date, holders of the Discount Notes transfer a
majority of the outstanding principal amount of the Discount
Notes, Registrant would receive an additional payment equal to 5%
of the amount by which the Value (as defined) of the Systems
exceeds $180,000,000. The Prepackaged Plan also provides for a
payment of $500,000 to MultiVision Cable TV Corp. in settlement
of severance and other costs relating to the termination of
MultiVision as manager of the Systems.
Under the Prepackaged Plan, the holders of Maryland Cable's
senior bank debt agreed to accept newly issued promissory notes
from Newco in a principal amount equal to the principal amount of
the senior bank debt plus accrued interest at the default rate
from the date of filing of the Prepackaged Plan.
The filing of the Prepackaged Plan was made on March 10, 1994
pursuant to the Exchange Agreement dated as of December 31, 1993
among Registrant, Maryland Cable, Holdings, ML Cable Partners,
Water Street and one other holder of the Discount Notes.
On January 18, 1994, as a result of the defaults under the senior
bank debt, the holders of the senior bank debt exercised their
rights to collect Maryland Cable's lockbox receipts and apply
such receipts towards the repayment of the outstanding senior
bank debt, related accrued interest, and fees and expenses. As
of March 9, 1994, one day prior to the filing of the Prepackaged
Plan, the holders of the senior bank debt applied approximately
$4,800,000 in lockbox receipts towards the repayment of the
outstanding senior bank debt, related accrued interest, and fees
and expenses.
Impact of Cable Legislation
Refer to discussion in Item 1. Financial Statements - Note 2.
GCC
As of June 30, 1994, Registrant's 351,665 shares in GCC
represented an ownership percentage equal to approximately 4.2%.
On January 20, 1994, the majority stockholders of GCC and certain
holders of interests in MARKETS Cellular Limited Partnership
("Markets"), and PN Cellular, Inc. ("PNCI") executed a Memorandum
of Intention (the "Memorandum") pursuant to which the parties
thereto expressed their intent to effect a proposed business
combination of GCC and Markets.
Registrant signed an Exchange Agreement and Plan of Merger
("Agreement"), dated July 20, 1994, to which the majority
stockholders of GCC and the majority owners of Markets are
parties. Pursuant to the Agreement, Registrant exchanged its
shares in GCC for an equal number of shares in Western Wireless
Corporation ("WWC"), a new company which was organized to own the
equity interest of GCC and Markets. Following the consummation
of the business combination on July 29, 1994, WWC became the
owner of 100% of the partnership interests in Markets and
approximately 95% of the outstanding common stock of GCC. WWC
holds and operates cellular licenses covering approximately 5.2
million net pops (defined as the population in an area covered by
a cellular franchise) including pending acquisitions.
Registrant's shares represent approximately 2.4% of WWC. The
parties have entered into a stockholders agreement containing
certain restrictions on transfer, registration rights and
corporate governance provisions.
Paradigm
Paradigm and/or BBAD are not currently producing a sufficient
number of television programs to cover overhead costs
indefinitely, although Registrant has not advanced any funds to
Paradigm and/or BBAD since the second quarter of 1992. Paradigm
and/or BBAD have taken several steps to reduce operating costs,
primarily by reducing the number, and compensation, of employees.
However, Paradigm and/or BBAD did not operate profitably during
the first quarter of 1994, and are currently dependent on outside
sources, primarily Associates, to finance BBAD's monthly
operating costs. Registrant elected not to fund such operating
costs. Registrant has no obligation to advance any additional
funds to Paradigm and/or BBAD and actively sought a strategic
partner that would share in meeting Paradigm's and/or BBAD's
potential future funding needs, but was unable to identify such a
partner. Paradigm and/or BBAD have no liability for borrowed
funds. Registrant is negotiating with Associates the terms of an
agreement under which Paradigm would retain the three television
movies and the series developed by it, and the other projects and
program concepts developed by Paradigm and/or BBAD would be
assigned to Associates for further development at Associates'
expense, while Paradigm would retain a percentage interest in all
such projects and concepts. In any event, Registrant will most
likely recover only a nominal portion, if any, of its original
investment in Paradigm and/or BBAD. Due in part to Registrant's
unwillingness to advance additional funds to fund the continuing
operating losses and possible winding down of Paradigm's and
BBAD's operating activities, Registrant recorded in the second
quarter of 1993 a writedown of approximately $516,000 of certain
assets of Paradigm and BBAD to reduce Registrant's net investment
to a net realizable value of zero.
TCS
As of June 30, 1994, TCS was in default of covenants under its
note agreements and failed to make scheduled principal payments
totaling $1 million due February 28, and May 31, 1994. In
addition, TCS expects to default on the majority of its scheduled
principal payments for the remainder of 1994 as well as in 1995.
TCS is engaged in negotiations with its note holders, although
the outcome of these negotiations cannot be predicted at this
time. While TCS remains in default, the note holders have the
option to exercise their rights under the notes, which rights
include the right to foreclose on the stock of the operating
subsidiaries that own the three TCS stations, but not the assets
of Registrant. It is unlikely that Registrant will recover more
than a nominal amount of its investment in TCS. As of and for
the twenty-six week period ended June 30, 1994, TCS represented
88% of Registrant's total assets, 96% of Registrant's operating
revenues and 49% of Registrant's operating loss from continuing
operations.
Investments and EMP, Ltd.
During the first half of 1994, Investments, EMP, Ltd. and their
affiliates were reliant on their cash balances and/or additional
funding from ALP Enterprises to fund their continuing operations.
Furthermore, Registrant elected not to advance no further funds
to Investments, EMP, Ltd., or their affiliates beyond those funds
already advanced by Registrant.
Therefore, Registrant and EMP, Ltd. agreed in principal to
restructure the ownership of EMP, Ltd. and certain of its
subsidiaries in order to enable EMP, Ltd. to attract additional
capital from ALP Enterprises and other third parties. In the
restructuring, based on certain representations from EMP, Ltd.
and ALP Enterprises, Registrant will sell to Clarendon and ALP
Enterprises for nominal consideration Registrant's shares in EMP,
Ltd. Simultaneously, Registrant and EMP, Ltd. will enter into an
agreement whereby EMP, Ltd.'s 10% interest in Teletext will be
transferred, together with a 350,000 loan (approximately $543,000
in current exchange rates) from EMP, Ltd., to a newly formed
entity, MV Technology Limited ("MVT"). After the transfer,
Registrant will own 13.8% of the issued common shares of MVT,
while EMP, Ltd. will own the remaining 86.2%. MVT's sole purpose
will be to manage its 10% interest in Teletext. Registrant will
have the right to require EMP, Ltd. to purchase Registrant's
interest in MVT at any time between December 31, 1994 and
December 31, 1997. EMP, Ltd. will have the right to require
Registrant to sell Registrant's share in MVT to EMP, Ltd. at any
time between September 30, 1995 and September 30, 1998. MVT will
pay an annual fee to EMP, Ltd. for management services required
in the oversight of MVT's investment in Teletext. Following the
restructuring, Registrant will no longer have any interest in
EMP, Ltd. In any event, it is unlikely that Registrant will
recover its $2 million investment in Investments either from
Investments or from MVT.
WMXN-FM
During the first half of 1994, revenues generated by WMXN-FM,
combined with the station's cash balances, were sufficient to
cover its operating costs (before management fees).
Registrant entered into an Option Agreement, effective January
25, 1994, with U.S. Radio , Inc. ("U.S. Inc."), a Delaware
corporation, and an affiliated entity, U.S. Radio, L.P. ("U.S.
Radio"), a Delaware limited partnership, neither of which is
affiliated with Registrant. Pursuant to the Option Agreement,
Registrant granted U.S. Inc. an option (the "Call") to purchase
substantially all of the assets of WMXN-FM (the "Assets") for a
cash price of $3.5 million at any time prior to January 15, 1995.
Also pursuant to the Option Agreement, U.S. Inc. granted
Registrant the option (the "Put") to sell the Assets to U.S. Inc.
for a cash price of $3.5 million at any time (a) within 30 days
after the expiration of the Call or (b) within 30 days of the
termination by Registrant of the LMA (see below) as a result of a
material breach of the LMA by U.S. Radio. If the Call or Put is
exercised, Registrant and U.S. Inc. will immediately revise as
necessary and execute an Asset Purchase Agreement which is an
exhibit to the Option Agreement. If the Call or Put is timely
exercised but U.S. Inc. fails to execute the Asset Purchase
Agreement, then, subject to certain conditions, Registrant may
elect to cause U.S. Radio to sell its radio stations WOWI-FM, in
Norfolk, Virginia, and WSVY-AM in Portsmouth, Virginia, together
with WMXN-FM (collectively, the "Stations"), with the first $3.5
million of proceeds from such sale, less transaction costs, to be
retained by Registrant. The acquisition of WMXN-FM by U.S. Inc.,
and/or the sale of the Stations, is subject to the prior approval
of the FCC. There can be no assurance that the sale of WMXN-FM
or the sale of the Stations will be consummated.
Effective January 31, 1994, Registrant entered into a Time
Brokerage Agreement (the "LMA") with U.S. Radio. The LMA calls
for Registrant to make broadcasting time available on WMXN-FM to
U.S. Radio and for U.S. Radio to provide radio programs to be
broadcast on WMXN-FM, subject to certain terms and conditions,
including the rules and regulations of the FCC. In exchange for
providing broadcasting time to U.S. Radio, Registrant will
receive a monthly fee approximately equal to its cost of
operating WMXN-FM. The LMA will continue until the earlier of:
(i) March 1, 1995 (if neither the Call nor Put has been
exercised); (ii) the consummation of the acquisition of WMXN-FM
by U.S. Inc. pursuant to the Option Agreement; or (iii) the
consummation of a joint sale of the Stations.
Registrant may choose to advance additional funds to WMXN-FM if
any are required; however, Registrant has no obligation to
advance any additional funds to WMXN-FM and WMXN-FM has no
liability for borrowed funds.
IMP/Intelidata
Effective July 1, 1993, Registrant entered into three
transactions to sell the business and assets of IMPLP/IMPI and
Intelidata. In two separate transactions, Registrant sold the
entire business and substantially all of the assets of IMPLP/IMPI
and a portion of the business and assets of Intelidata to
Phillips Business Information, Inc. ("PBI") for future
consideration based on the revenues of IMPLP/IMPI and the portion
of the Intelidata business acquired by PBI. PBI is not
affiliated with Registrant. At closing, PBI made advances of
$100,000 and $150,000 to IMPLP/IMPI and Intelidata, respectively,
which advances would be recoverable by PBI from any future
consideration payable by PBI to Registrant. In addition, PBI
agreed to assume certain liabilities of IMPLP/IMPI and
Intelidata.
In the third transaction, Registrant sold the remaining business
and assets of Intelidata, which were not sold to PBI, to Romtec
plc ("Romtec") in exchange for future consideration, based on
both the amount of assets and liabilities transferred to Romtec
and the combined profits of the portion of the Intelidata
business acquired by Romtec and another, existing division of
Romtec. In addition, certain liabilities of Intelidata were
assumed by Romtec. Romtec is not affiliated with Registrant.
As a result of the above transactions, Registrant recorded a
writedown of approximately $364,000 of certain assets of
IMPLP/IMPI/Intelidata in the second quarter of 1993 to reduce
Registrant's net investment to a net realizable value of zero.
Subsequent to the sale of the businesses, Registrant advanced
additional funds totaling approximately $0.1 million to
IMPLP/IMPI and Intelidata to fund cash shortfalls resulting from
the pre-sale claims of certain creditors. Registrant anticipates
that it may be required to make additional such advances to
IMPLP/IMPI and Intelidata during 1994. The total of any
Registrant obligations to fund such advances, including certain
contractual obligations, is not currently anticipated to exceed
the amount of the writedown. It is unlikely that Registrant will
recover its investments in IMPLP/IMPI/Intelidata.
Results of Operations
The following discussion of Registrant's 1994 and 1993 operating
results from continuing operations do not include the results of
Maryland Cable, Windsor, and IMPLP/IMPI and Intelidata, which are
presented as discontinued operations. The results of operations
of these properties are reported on Registrant's Consolidated
Statement of Operations under the heading "Loss from discontinued
operations". However, because Maryland Cable represented
Registrant's major investment as of June 30, 1994, the results of
operations of Maryland Cable are discussed in more detail below.
For the thirteen week periods ended June 30, 1994 and June 30,
1993:
Registrant had a loss from continuing operations in the second
quarter of 1994 of approximately $1.7 million, which was
comprised primarily of the following components: (1) Registrant's
combined loss recognized from its investments in TCS, Paradigm
and WMXN-FM of approximately $0.9 million; and (2) management
fees and other general and administrative expenses.
Consolidated operating revenue decreased from approximately $9.1
million in the second quarter of 1993 to approximately $3.7
million in the second quarter of 1994 primarily as a result of:
The winding down of Paradigm and/or BBAD, which resulted in
reduced program production activity (a decrease of approximately
$5.2 million in revenues); and $0.3 million at WMXN-FM due to the
implementation on January 31, 1994 of the LMA (refer to
"Liquidity and Capital Resources" above), which generally reduced
the amount of operating revenue reported by the station. These
decreases were partially offset by an increase of approximately
$0.1 million of TCS due to improved market conditions in
Columbus, Georgia and St. Joseph, Missouri.
Consolidated property operating expenses decreased from
approximately $7.1 million in the second quarter of 1993 to
approximately $1.7 million in the second quarter of 1994 as a
result of decreases of approximately: $5.3 million at Paradigm,
due to reduced program production activity; and approximately
$0.3 million at WMXN-FM due to the implementation on January 31,
1994 of the LMA, which generally reduced the amount of operating
expenses reported by the station. The decreases were partially
offset by an increase of approximately $0.2 million at TCS
primarily due to increased expenses for news research, higher
sales commissions due to increased revenues, and increased costs
for technical repairs.
Consolidated general and administrative expenses increased from
approximately $0.7 million in the second quarter of 1993 to
approximately $1.0 million in the second quarter of 1994, due
mostly to an increase of approximately $0.4 million at TCS. This
increase was partially offset by a $0.1 million decrease at WMXN-
FM as a result of the implementation on January 31, 1994 of the
LMA (refer to "Liquidity and Capital Resources" above), which
generally reduced the amount of general and administrative
expenses reported by the station.
Depreciation and amortization expense decreased to approximately
$0.6 million in the second quarter of 1994 from approximately
$1.2 million in the second quarter of 1993. The primary reason
for this decline was a decrease of approximately $0.5 million at
TCS due to the full amortization of certain intangible assets
during the second quarter of 1993.
Interest expense was relatively flat when comparing the second
quarter of 1993 to the second quarter of 1994.
For the twenty-six week periods ended June 30, 1994 and June 30,
1993:
Registrant had a loss from continuing operations for the first
two quarters of 1994 of approximately $3.8 million, which was
comprised primarily of the following components: (1) Registrant's
combined loss recognized from its investments in TCS, Paradigm
and WMXN-FM of approximately $2.2 million; and (2) management
fees and other general and administrative expenses.
Consolidated operating revenue decreased from approximately $9.9
million for the first two quarters of 1993 to approximately $7.1
million for the first two quarters of 1994 primarily as a result
of decreases of approximately $5.7 million at Paradigm/BBAD, due
to reduced program production activity and $0.5 million at WMXN-
FM due to the implementation on January 31, 1994 of the LMA
(refer to "Liquidity and Capital Resources" above), which
generally reduced the amount of operating revenue reported by the
station. These decreases were partially offset by an increase of
approximately $3.3 million at TCS due primarily to the
consolidation of TCS's operations in the first half of 1994,
while the first quarter of 1993 reflected TCS's operations under
the equity method of accounting.
Consolidated property operating expenses decreased from
approximately $8.2 million for the first two quarters of 1993 to
approximately $3.3 million for the first two quarters of 1994
primarily as a result of decreases of approximately: $6.1 million
at Paradigm, due to reduced program production activity; and
approximately $0.5 million at WMXN-FM due to the implementation
on January 31, 1994 of the LMA, which generally reduced the
amount of operating expenses reported by the station. These
decreases were partially offset by an increase of approximately
$1.6 million at TCS due to the consolidation of TCS's operations
in the first half of 1994, while the first quarter of 1993
reflected TCS's operations under the equity method of accounting.
Consolidated general and administrative expenses increased from
approximately $0.9 million for the first two quarters of 1993 to
approximately $2.2 million for the first two quarters of 1994,
primarily as a result of: the consolidation of TCS's operations
for the first two quarters of 1994, which contributed
approximately $0.7 million in general and administrative expenses
(the equity method of accounting was utilized for TCS in the
first quarter of 1993); and an increase of approximately $0.6
million at TCS. The remaining increases or decreases in general
and administrative expenses at Registrant's other properties were
immaterial, either individually or in the aggregate.
Depreciation and amortization expense decreased to approximately
$1.2 million in the first half of 1994 from approximately $1.4
million in the first half of 1993. This decrease in depreciation
expense of approximately $0.2 million was comprised of increases
or decreases at Registrant's properties which were immaterial,
both individually and in the aggregate.
Interest expense increased from $1.3 million for the first two
quarters of 1993 to approximately $2.6 million for the first two
quarters of 1994. This increase resulted from the consolidation
of TCS's operations for the first two quarters of 1994, which
accounted for an increase of approximately $1.3 million of
interest expense for the first two quarters of 1994 (when TCS's
operations were not consolidated during the first quarter.)
Maryland Cable Systems
For purposes of the following discussion, Maryland Cable is
comprised of the remaining systems, located in Maryland, which
are referred to as the Lanham System, except in the discussions
of depreciation and amortization expense and interest expense in
which discussions Maryland Cable is comprised in 1993 of both the
Lanham System and the Leesburg System. Second quarter 1993
results, including the results of the Leesburg System, which was
sold on September 30, 1993, are presented in parenthesis.
For the thirteen week period ended June 30, 1994 and June 30,
1993:
For the second quarter of 1994, the Lanham System incurred a net
loss of approximately $1,987,000 as compared to a net loss of
approximately $7,889,000 ($7,649,000 including Leesburg) for the
same period in 1993. The decrease in net loss is primarily due
to the non-accrual of interest expense on the Discount Notes
subsequent to March 10, 1994, the date of Maryland Cable's
bankruptcy filing, as the interest will not be payable pursuant
to the terms of the Prepackaged Plan. Depreciation and
amortization expense also decreased, partially offset by higher
cable television system expenses.
For the second quarter of 1994, the Lanham System's operating
revenues increased slightly to approximately $10,786,000 from
approximately $10,659,000 ($11,152,000 including Leesburg) for
the second quarter of 1993. Potential increases in operating
revenues from higher levels of basic subscribers at the Lanham
System were mitigated by basic service rate decreases (due
primarily to the 1993 FCC rate regulations) resulting in the
modest increase in actual operating revenues. The average basic
revenue per subscriber per month decreased to $25.61 in the
second quarter of 1994 from $32.21 ($31.80 including Leesburg) in
the second quarter of 1993. The decrease in basic revenue per
subscriber per month is attributable to the restructuring of the
basic rate and various equipment charges along with the loss of
additional outlet revenue as a result of the 1993 FCC rate
regulations. The number of average basic subscribers increased
to 77,584 at June 30, 1994 from 75,122 (80,160 including
Leesburg) at June 30, 1993. The increase in the number of basic
subscribers and average basic subscribers was due primarily to
increased staffing in the direct sales area along with an
increase in promotion expense during the second quarter of 1994.
For the second quarter of 1994, premium service units decreased
to an average of 77,255 from an average of 78,148 (80,411
including Leesburg) in the second quarter of 1993. The decline
is attributable to a price increase in premium service and
sluggish local economic conditions. The average premium rate for
the second quarter of 1994 and the second quarter of 1993 was
$10.57 and $9.57 ($9.58 including Leesburg), respectively. The
increase in rates is primarily attributable to the instituting of
a new pricing structure on September 1, 1993 which increased
premium service rates on additional outlets within a household.
Revenue from pay-per-view services increased to approximately
$537,000 for the second quarter of 1994 from $393,000 ($396,000
including Leesburg) for the second quarter of 1993. This
increase was a result of more special events and an increase in
pay-per-view promotions.
Revenue from advertising sales increased to approximately
$356,000 for the second quarter of 1994 from approximately
$336,000 ($357,000 including Leesburg) for the second quarter of
1993. The increase resulted from improved marketing efforts by
the in-house advertising sales force.
For the second quarter of 1994, cable television system expenses
(which include all expenses other than depreciation and
amortization, interest, management fees and expenses, and related
expenses) increased as a percentage of revenue to 63% from 61%
(61% including Leesburg) during the second quarter of 1993. The
increase in expenses is primarily due to increases in payroll and
related costs, programming expenses and copyright fees. The
payroll and related costs increase is due primarily to increased
technician wages, technician overtime and sales commissions to
attain subscriber gains. Programming expenses increased in 1994
due to increased basic subscriber counts and increased
programming rates. Copyright fees increased in 1994 due to an
extensive September 1, 1993 rate and programming restructuring in
response to the 1993 FCC rate regulations.
Maryland Cable's depreciation and amortization expenses decreased
to approximately $3,302,000 for the second quarter of 1994 from
approximately $3,950,000 in the second quarter of 1993. The
decrease was due to the sale of the Leesburg System assets and to
a decrease in amortization expense resulting from fully amortized
deferred finance charges.
Maryland Cable's interest expense decreased to approximately $2.1
million in the second quarter of 1994 from $7.5 million in the
second quarter of 1993. The decrease was primarily due to the
non-accrual of interest expense on the Discount Notes subsequent
to March 10, 1994, the date of Maryland Cable's bankruptcy
filing, as the interest will not be payable pursuant to the terms
of Prepackaged Plan. In addition, interest expense on the senior
debt decreased due to lower outstanding principal in the second
quarter of 1994 as a result of a required principal payment
related to the sale of the Leesburg System on September 30, 1993.
These decreases were partially offset by increases due to higher
interest rates in the second quarter of 1994 compared to the
second quarter of 1993.
For the twenty-six week periods ended June 30, 1994 and June 30,
1993:
For the first half of 1994, the Lanham System incurred a net loss
of approximately $9,124,000 as compared to a net loss of
approximately $15,303,000 for the same period in 1993
($14,812,000 including Leesburg). The decrease in net loss is
primarily due to the non-accrual of interest expense on the
Discount Notes subsequent to March 10, 1994, the date of Maryland
Cable's bankruptcy filing, as the interest will not be payable
pursuant to the terms of the Prepackaged Plan. Depreciation and
amortization expense also decreased, partially offset by higher
cable television system expenses.
The Lanham System's operating revenues increased slightly to
approximately $21,281,000 for the first half of 1994 from
approximately $21,113,000 ($22,086,000 including Leesburg) for
the first half of 1993. Potential increases in operating
revenues from higher levels of basic subscribers at the Lanham
System were mitigated by basic service rate decreases (due
primarily to the 1993 FCC rate regulations) resulting in the
modest increase in actual operating revenues. The average basic
revenue per subscriber per month decreased to $25.60 in the first
half of 1994 from $32.15 ($31.76 including Leesburg) in the first
half of 1993. The decrease in basic revenue per subscriber per
month is attributable to the restructuring of the basic rate and
various equipment charges along with the loss of additional
outlet revenue as a result of the 1993 FCC rate regulations. The
number of basic subscribers increased to 78,036 at June 30, 1994
from 75,045 (80,122 including Leesburg) at June 30, 1993 and from
76,564 at December 31, 1993. The number of average basic
subscribers for the first half of 1994 increased to 77,142 from
74,775 (79,721 including Leesburg) in the first half of 1993.
The increase in the number of basic subscribers and average basic
subscribers is primarily attributable to increased staffing in
the direct sales area along with an increase in promotion expense
during the first half of 1994.
Premium service units decreased to approximately 76,621 (98.2%
premium unit to basic subscriber ratio) at June 30, 1994 from
77,112 (103% premium unit to basic subscriber ratio) (79,286 or
99% including Leesburg) at June 30, 1993 and from 77,728 (102%
premium unit to basic subscriber ratio) at December 31, 1993.
The decline is attributable to a price increase in premium
service, and sluggish local economic conditions. The average
premium revenue rate for the first half of 1994 and 1993 was
$10.57 and $9.55 ($9.56 including Leesburg), respectively. The
increase in rates is primarily attributable to the institution of
a new pricing structure on September 1, 1993 which increased
premium service rates on additional outlets within a household.
Revenue from pay-per-view services increased to approximately
$953,000 for the first half of 1994 from approximately $775,000
($779,000 including Leesburg) for the first half of 1993. This
increase was a result of more special events and an increase in
pay-per-view promotions.
Revenue from advertising sales increased to approximately
$620,000 for the first half of 1994 from approximately $540,000
($579,000 including Leesburg) for the first half of 1993.
Cable television system expenses as a percentage of revenues
increased to 61% during the first half of 1994 from 60% for the
first half of 1993 (59% including Leesburg). The increase in
expenses is primarily due to payroll and related costs,
programming expenses and copyright fees. The payroll and related
costs increase is due primarily to increased technician wages,
technician overtime and sales commissions to attain subscriber
gains. Programming expenses increased in 1994 due to increased
basic subscriber counts and increased programming rates.
Copyright fees increased in 1994 due to the September 1, 1993
rate and programming restructuring as a result of 1993 FCC rate
regulations.
Maryland Cable's depreciation and amortization expense decreased
to approximately $6,603,000 for the first half of 1994 from
approximately $7,852,000 for the first half of 1993. The
decrease was due to the sale of the Leesburg System assets and to
a decrease in amortization expense resulting from fully amortized
deferred finance charges.
Maryland Cable's interest expense decreased to approximately
$8,547,000 in the first half of 1994 from approximately
$14,800,000 in the first half of 1993. The decrease was primarily
due to the non-accrual of interest expense on the Discount Notes
subsequent to March 10, 1994, the date of Maryland Cable's
bankruptcy filing, as the interest will not be payable pursuant
to the terms of Prepackaged Plan. In addition, interest expense
on the senior debt decreased due to lower outstanding principal
in the first half of 1994 as a result of a required principal
payment related to the sale of the Leesburg System on September
30, 1993. This decrease was partially offset by increases due to
higher interest rates in the first half of 1994 compared to the
first half of 1993 and increased accrued interest on the fully
accreted Discount Notes for the period from January 1, 1994 to
March 10, 1994, the date of Maryland Cable's bankruptcy filing.
PART II - OTHER INFORMATION
Item 3. Defaults Upon Senior Securities
Reference is hereby made to Part I Item 1. Financial Statements
Footnote 2. Liquidity.
Item 5. Other Information
Reference is hereby made to Part I, Item 2. Management's
Discussion and Analysis of Financial Condition and Results of
Operations Liquidity and Capital Resources regarding the
confirmation on May 2, 1994 by the United States Bankruptcy
Court, Southern District of New York, of the Amended Prepackaged
Plan of Reorganization of Maryland Cable Corp. and Maryland Cable
Holdings Corp.
Item 6. Exhibits and Reports on Form 8-K
10.01 Exchange agreement and plan of merger by and among
Registrant, Western Wireless Corporation, Markets
Cellular Limited Partnership and others dated July 20,
1994.
10.02 Stockholders agreement by and among Western Wireless
Corporation, Registrant and others dated July 29, 1994.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
ML MEDIA OPPORTUNITY PARTNERS,
L.P.
By: RP Opportunity Management, L.P.
General Partner
By: IMP Opportunity Management Inc.
Dated: August 15, 1994 /s/ I. Martin Pompadur
I. Martin Pompadur
Director and President
(principal executive officer)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
ML MEDIA OPPORTUNITY PARTNERS,
L.P.
By: Media Opportunity Management
Partners
General Partner
By: ML Opportunity Management Inc.
Dated: August 15, 1994 /s/ Kevin K. Albert
Kevin K. Albert
Director and President
Dated: August 15, 1994 /s/ Robert F. Aufenanger
Robert F. Aufenanger
Director and Executive Vice
President
Dated: August 15, 1994 /s/ David G. Cohen
David G. Cohen
Treasurer
(principal financial officer and
principal accounting officer)
ed in parenthesis.
For the thirteen week period ended June 30, 1994 and June 30,
1993:
For the second quarter of 1994, the Lanham System incurred a net
loss of approximately $1,987,000 as compared to a net loss of
approximately $7,889,000 ($7,649,000 including Leesburg) for the
same period in 1993. This decrease in net loss is primarily due
to not accruing original issue discount interest on Maryland
Cable's Discount Notes after March 10, 1994, resulting in
substantially lower interest expense. Depreciation and
amortization expense also decreased, partially offset by higher
cable television system expenses.
For the second quarter of 1994, the Lanham System's operating
revenues increased slightly to approximately $10,786,000 from
approximately $10,659,000 ($11,152,000 including Leesburg) for
the second quarter of 1993. Potential increases in operating
revenues from higher levels of basic subscribers at the Lanham
System were mitigated by basic service rate decreases (due
primarily to the 1993 FCC rate regulations) resulting in the
modest increase in actual operating revenues. The average basic
revenue per subscriber per month decreased to $25.61 in the
second quarter of 1994 from $28.93 ($28.63 including Leesburg) in
the second quarter of 1993. The number of [average] basic
subscribers increased to 77,584 [at June 30,] 1994 from 75,122
(80,160 including Leesburg) [at June 30,] 1993. The increase in
the average basic subscribers was due primarily to ___________.
For the second quarter of 1994, premium service units decreased
to an average of 77,255 from an average of 78,148 (80,411
including Leesburg) in the second quarter of 1993. The average
premium rate for the second quarter of 1994 and the second
quarter of 1993 was $10.57 and $9.57 ($9.58 including Leesburg),
respectively. The cause of the decline in units and the rate
increase was _____________.
Revenue from pay-per-view services increased to approximately
$537,000 for the second quarter of 1994 from $393,000 ($396,000
including Leesburg) for the second quarter of 1993. This
increase was a result of more special events and an increase in
pay-per-view promotions.
Revenue from advertising sales increased to approximately
$356,000 for the second quarter of 1994 from approximately
$336,000 ($357,000 including Leesburg) for the second quarter of
1993. The increase resulted from improved marketing efforts by
the in-house advertising sales force.
For the second quarter of 1994, cable television expenses
increased as a percentage of revenue to 62% from 57% (57%
including Leesburg) during the second quarter of 1993. The
increase in expenses is primarily due to increases in payroll and
related costs, programming expenses and copyright fees. The
payroll and related costs increase is due primarily to technician
wages, technician overtime and sales commissions to attain
subscriber gains. Programming expenses increased in 1994 due to
increased basic subscriber counts and increased programming
rates. Copyright fees increased in 1994 due to an extensive
September 1, 1993 rate and programming in response to the 1993
FCC rate regulations.
Depreciation and amortization expenses decreased to approximately
$3,302,000 for the second quarter of 1994 from approximately
$3,950,000 in the second quarter of 1993. The decrease was due
to the sale of the Leesburg System assets and to a decrease in
amortization expense resulting from fully amortized deferred
finance charges.
Interest expense decreased to $_____ in the second quarter of
1994 from $_____ in the second quarter of 1993. The decrease was
primarily due to the non-accrual of original issue discount
interest expense on the Discount Notes subsequent to March 10,
1994, the date of Maryland Cable's bankruptcy filing, and
pursuant to the terms of Prepackaged Plan. In addition, interest
expense on the senior debt decreased due to lower outstanding
principal in the second quarter of 1994 as a result of a required
principal payment related to the sale of the Leesburg System on
September 30, 1993. This decrease was partially offset by
increases due to higher interest rates in the second quarter of
1994 compared to the second quarter of 1993 and increased accrued
interest on the fully accreted Discount Notes for the period from
January 1, 1994 to March 10, 1994.
For the twenty-six week periods ended June 30, 1994 and June 30,
1993:
For the first half of 1994, the Company incurred a net loss of
approximately $9,124,000 as compared to a net loss of
approximately $15,303,000 for the same period in 1993
($14,812,000 including Leesburg). This decrease in net loss is
primarily due to not accruing original issue discount interest on
the Discount Notes after March 10, 1994, resulting in
substantially lower interest expense. Depreciation and
amortization expense also decreased, partially offset by higher
cable television system expenses.
The Lanham System's operating revenues increased slightly to
approximately $21,281,000 for the first half of 1994 from
approximately $21,113,000 ($22,086,000 including Leesburg) for
the first half of 1993. Potential increases in operating
revenues from higher levels of basic subscribers at the Lanham
System were mitigated by basic service rate decreases (due
primarily to the 1993 FCC rate regulations) resulting in the
modest increase in actual operating revenues. The average basic
revenue per subscriber per month decreased to $25.60 in the first
half of 1994 from $28.90 ($28.64 including Leesburg) in the first
half of 1993. The number of basic subscribers increased to
78,036 at June 30, 1994 from 75,045 (80,122 including Leesburg)
at June 30, 1993 and from 76,564 at December 31, 1993. The
number of average basic subscribers for the first half of 1994
increased to 77,142 from 74,775 (79,721 including Leesburg) in
the first half of 1993. The number of average basic subscribers
for the first half of 1994 increased to 77,142 from 74,775
(79,721 including Leesburg) in the first half of 1993. The
increase in the number of basic subscribers and average basic
subscribers is primarily attributable to increased staffing in
the direct sales area along with an increase in promotion expense
during the first half of 1994.
Premium service units decreased to approximately 76,621 (98.2%
premium unit to basic subscriber ratio) at June 30, 1994 from
77,112 (103% premium unit to basic subscriber ratio) (79,286 or
99% including Leesburg) at June 30, 1993 and from 77,728 (102%
premium unit to basic subscriber ratio) at December 31, 1993.
The decline is attributable to a price increase in premium
service, and sluggish local economic conditions. The average
premium revenue rate for the first half of 1994 and 1993 was
$10.57 and $9.55 ($9.56 including Leesburg), respectively. The
increase in rates is primarily attributable to the institution of
a new pricing structure on September 1, 1993 which increased
premium service rates on additional outlets within a household.
Revenue from pay-per-view services increased to approximately
$953,000 for the first half of 1994 from approximately $775,000
($779,000 including Leesburg) for the first half of 1993. This
increase was a result of more special events and an increase in
pay-per-view promotions.
Revenue from advertising sales increased to approximately
$620,000 for the first half of 1994 from approximately $540,000
($579,000 including Leesburg) for the first half of 1993.
Cable television system expenses (which include all expenses
other than depreciation and amortization, interest, management
fees and expenses, and related expenses) as a percentage of
revenues increased to 62% during the first half of 1994 from 58%
for the first half of 1993 (57.5% including Leesburg). The
increase in expenses is primarily due to payroll and related
costs, programming expenses and copyright fees. The payroll and
related costs increase is due primarily to technician wages,
technician overtime and sales commissions to attain subscriber
gains. Programming expenses increased in 1994 due to increased
basic subscriber counts and increased programming rates.
Copyright fees increased in 1994 due to the September 1, 1993
rate and programming restructuring as a result of 1993 FCC rate
regulations.
Depreciation and amortization expense decreased to approximately
$6,603,000 for the first half of 1994 from approximately
$7,852,000 for the first half of 1993. The decrease was due to
the sale of the Leesburg System assets and to a decrease in
amortization expense resulting from fully amortized deferred
finance charges.
Interest expense decreased to approximately $8,547,000 in the
first half of 1994 from approximately $14,949,000 in the first
half of 1993. The decrease was primarily due to the non-accrual
of original issue discount interest expense on the Discount Notes
subsequent to March 10, 1994, the date of Maryland Cable's
bankruptcy filing, and pursuant to the terms of Prepackaged Plan.
In addition, interest expense on the senior debt decreased due to
lower outstanding principal in the first half of 1994 as a result
of a required principal payment related to the sale of the
Leesburg System on September 30, 1993. This decrease was
partially offset by increases due to higher interest rates in the
first half of 1994 compared to the first half of 1993 and
increased accrued interest on the fully accreted Discount Notes
for the period from January 1, 1994 to March 10, 1994, the date
of Maryland Cable's bankruptcy filing.
PART II - OTHER INFORMATION
Item 3. Defaults Upon Senior Securities
Reference is hereby made to Part I Item 1. Financial Statements
Footnote 2. Liquidity.
Item 5. Other Information
Reference is hereby made to Part I, Item 2. Management's
Discussion and Analysis of Financial Condition and Results of
Operations Liquidity and Capital Resources regarding the
confirmation on May 2, 1994 by the United States Bankruptcy
Court, Southern District of New York, of the Amended Prepackaged
Plan of Reorganization of Maryland Cable Corp. and Maryland Cable
Holdings Corp.
Item 6. Exhibits and Reports on Form 8-K
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
ML MEDIA OPPORTUNITY PARTNERS, L.P.
By: RP Opportunity Management, L.P.
General Partner
By: IMP Opportunity Management Inc.
Dated: _____,1994 /s/ I. Martin Pompadur
I. Martin Pompadur
Director and President
(principal executive officer)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
ML MEDIA OPPORTUNITY PARTNERS, L.P.
By: Media Opportunity Management Partners
General Partner
By: ML Opportunity Management Inc.
Dated: _____, 1994 /s/ Kevin K. Albert
Kevin K. Albert
Director and President
Dated: _____, 1994 /s/ Robert F. Aufenanger
Robert F. Aufenanger
Director and Executive Vice President
Dated: _____, 1994 /s/ David G. Cohen
David G. Cohen
Treasurer
(principal financial officer and
principal accounting officer)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
ML MEDIA OPPORTUNITY PARTNERS, L.P.
By: RP Opportunity Management, L.P.
General Partner
By: IMP Opportunity Management Inc.
Dated:
I. Martin Pompadur
Director and President
(principal executive officer)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
ML MEDIA OPPORTUNITY PARTNERS, L.P.
By: Media Opportunity Management Partners
General Partner
By: ML Opportunity Management Inc.
Dated: _______________________________
Kevin K. Albert
Director and President
Dated: _______________________________
Robert F. Aufenanger
Director and Executive Vice President
Dated: _______________________________
David G. Cohen
Treasurer
(principal financial officer and
principal accounting officer)
STOCKHOLDERS AGREEMENT
This STOCKHOLDERS AGREEMENT (this "Agreement") is made and
entered into as of this 29th day of July, 1994 by and among Western
Wireless Corporation, a Delaware corporation (the "Company"),
Hellman & Friedman Capital Partners II, L.P., a California limited
partnership ("HFCP II"), H & F Orchard Partners, L.P., a California
limited partnership ("Orchard"), H & F International Partners,
L.P., a California limited partnership ("International"; HFCP II,
Orchard and International, including any Affiliated Successor of
any of them, are hereinafter referred to collectively as "H&F"),
John W. Stanton ("JWS"), Theresa E. Gillespie ("TEG"), PN Cellular,
Inc., a Washington corporation ("PN"), Stanton Communications
Corporation, a Washington corporation ("SCC"; JWS, TEG, PN and SCC,
including any Affiliated Successor of any of them, are hereinafter
referred to collectively as "Stanton"), GS Capital Partners, L.P.,
a Delaware limited partnership ("GSCP"), GS Capital Partners Media
Holding I, L.P., a Delaware limited partnership ("GSCPMH"), Bridge
Street Fund 1992, L.P., a Delaware limited partnership ("BSF"),
Stone Street Fund 1992, L.P., a Delaware limited partnership
("SSF"; GSCP, GSCPMH, BSF and SSF, including any Affiliated
Successor of any of them, are hereinafter referred to collectively
as "GSC"), Odyssey Partners, L.P., a Delaware limited partnership
(including any Affiliated Successor, "Odyssey"), Providence Media
Partners L.P. (including any Affiliated Successor, "Providence"),
Bayer Investment Group, a Florida partnership (including any
Affiliated Successor, "Bayer"), M.L. Media Opportunity Partners
L.P., a Delaware limited Partnership (including any Affiliated
Successor, "ML Media"), Media/Communications Partners II Limited
Partnership, a Delaware limited partnership, ("M/C Partners"),
Media/Communications Investors Limited Partnership, a Delaware
limited partnership ("M/C Investors"; M/C Partners and M/C
Investors, including any Affiliated Successor of either of them,
are hereinafter referred to collectively as the "M/C Entities")
(each of H&F, Stanton, GSC, Odyssey, Providence, Bayer, ML Media,
M/C Entities, and any other Person who executes a counterpart of
this Agreement agreeing to be bound by the terms hereof, are
hereinafter referred to individually as an "Investor" and
collectively as the "Investors").
R E C I T A L S
WHEREAS, the Company is authorized to issue 25,000,000 shares
of Common Stock, par value $.001 per share (the "Common Stock"), of
which 14,529,983 shares are issued and outstanding;
WHEREAS, each of the Investors owns the number of shares of
Common Stock set forth opposite its respective name on Schedule 1
annexed hereto;
WHEREAS, as a result of the Exchange Agreement and Plan of
Merger and the consummation of the transactions contemplated
thereby, the Investors own collectively approximately 90% of the
issued and outstanding shares of Common Stock; and
WHEREAS, the Investors desire to enter into this Agreement in
order to provide for the management of the Company and to regulate
certain aspects of the Company's and the Investors' relationship
with regard to each other and the Company.
NOW THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the
Investors agree as follows:
1. Certain Definitions.
1.1 "Affiliate" means with respect to any Person, any
other Person that, either directly or indirectly through one or
more intermediaries, controls, or is controlled by or is under
common control with such Person. As used in this Agreement,
"control", "controlled" or "controlling" shall mean possession,
directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or other-
wise. In addition, with respect to any natural Person, any member
of such Person's Immediate Family, or any trust for the benefit of
such natural Person and/or any member of such Person's Immediate
Family, shall also be deemed to be an "Affiliate" of such natural
Person. For purposes of Section 5 hereof, "Affiliate" and
"Affiliated Successor" shall also mean, and for purposes of Section
11 hereof, "Affiliate" shall also mean, in the case of any Investor
that is not a natural person, any partner or employee of such
Investor.
1.2 "Affiliated Successor" shall mean with respect to
any Person an Affiliate of any Person that is a successor in
interest to any or all of such Person's Common Stock.
1.3 "Beneficially Own" shall have the meaning set forth
in Rule 13d-3 of the Exchange Act.
1.4 "Board" shall mean the Board of Directors of the
Company.
1.5 "Commission" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering
the Securities Act.
1.6 "Common Stock" shall have the meaning set forth in
the Recitals.
1.7 "Company Indemnitees" shall have the meaning set
forth in Section 6.7(a).
1.8 "Demand Registration Notice" shall have the meaning
set forth in Section 6.1(a).
1.9 "Demand Registrations" shall have the meaning set
forth in Section 6.1(a).
1.10 "Equity Security" shall have the meaning set forth
in Section 7.1.
1.11 "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended.
1.12 "Exchange Agreement and Plan of Merger", shall mean
the Exchange Agreement and Plan of Merger, dated July 20, 1994, by
and among MARKETS, MCLP, Inc., WWC Holding Co., Inc., PN, PN
Cellular Limited Partnership, JWS, TEG, SCI Communications, Inc.,
H&F, Bayer, ML Media and the M/C Entities.
1.13 "Exercise Notice" shall have the meaning set forth
in Section 5.1.
1.14 "GCC" shall have the meaning set forth in Section
12.1.
1.15 "Immediate Family" means an individual's spouse,
children (including adopted children), grandchildren, parents,
grandparents and siblings.
1.16 "Indemnified Party" shall have the meaning set
forth in Section 6.7(c).
1.17 "Indemnifying Party" shall have the meaning set
forth in Section 6.7(c).
1.18 "MARKETS" shall mean MARKETS Cellular Limited
Partnership, a Delaware limited partnership.
1.19 "Minority Stockholders" shall mean all of the
stockholders of the Company other than the Investors.
1.20 "Person" shall mean an individual, corporation,
association, partnership, trust or estate, an unincorporated
organization, a joint venture, a government or any agency or
political subdivision thereof, or any other entity of whatever
nature.
1.21 "Piggyback Registration" shall have the meaning set
forth in Section 6.2(a).
1.22 "Piggyback Registration Notice" shall have the
meaning set forth in Section 6.2(a).
1.23 "Preemptive Notice" shall have the meaning set
forth in Section 7.2.
1.24 "Preemptive Right" shall have the meaning set forth
in Section 7.2.
1.25 "Proportionate Share" shall have the meaning set
forth in Section 6.4(a).
1.26 "Public Offering" shall mean a firm commitment
underwritten public offering of the Common Stock having estimated
aggregate minimum gross proceeds to the Company and the partici-
pating Investors and participating Minority Stockholders of at
least $10,000,000 (based upon the then current market price or fair
value estimated by the underwriters).
1.27 The terms "Register", "Registered" and "Registra-
tion" refer to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act and
the rules and regulations promulgated thereunder ("Registration
Statement"), and the declaration or ordering of the effectiveness
of such Registration Statement.
1.28 "Registering Parties" shall have the meaning set
forth in Section 6.1(a).
1.29 "Registrable Common Stock" shall mean (a) the
shares of Common Stock held by all of the Investors and the
Minority Stockholders, and (b) all Common Stock issued, or issuable
upon conversion, exchange or exercise of an equity security which
is issued, pursuant to a stock split, stock dividend or other
similar distribution or event with respect to Registrable Common
Stock.
1.30 "Registration Expenses" shall mean all expenses
incurred by the Company in complying with Section 6 (other than
Selling Expenses), including, without limitation, all federal and
state registration, qualification and filing fees, so-called "Blue
Sky" filing fees and expenses, printing expenses, fees and
disbursements of counsel for the Company (but not counsel for the
Investors and Minority Stockholders participating in the
Registration), underwriting expenses, and fees and expenses of the
Company's independent accountants.
1.31 "Registration Statement" shall have the meaning set
forth in Section 1.27.
1.32 "Representative" shall have the meaning set forth
in Section 6.2(b).
1.33 "Requesting Holders" shall have the meaning set
forth in Section 6.2(b).
1.34 "Requesting Holders' Indemnitees" shall have the
meaning set forth in Section 6.7(b).
1.35 "Securities Act" shall mean the Securities Act of
1933, as amended, or any similar federal statute, and the rules and
regulations of the Commission promulgated thereunder, all as the
same shall be in effect at the time.
1.36 "Selling Investors" shall have the meaning set
forth in Section 5.1.
1.37 "Selling Expenses" shall mean all underwriting
discounts and selling commissions applicable to the sale of Reg-
istrable Common Stock.
1.38 "Subsidiary" shall mean any Person that is,
directly or indirectly, controlled by the Company.
1.39 "Tag-Along Notice" shall have the meaning set forth
in Section 5.1.
1.40 "Transfer" shall have the meaning set forth in
Section 5.1.
1.41 "Underwriting" shall have the meaning set forth in
Section 6.2(b).
1.42 "Valid Business Reason" shall have the meaning set
forth in Section 6.1(d).
Each definition or pronoun herein shall be deemed to
refer to the singular, plural, masculine, feminine or neuter as the
context requires. Words such as "herein, "hereinafter," "hereof,"
"hereto" and "hereunder" refer to this Agreement as a whole, unless
the context otherwise requires.
2. Certificate of Incorporation and By-Laws.
The Certificate of Incorporation of the Company as
amended and in effect as of the date hereof is in the form of
Exhibit A attached hereto. The By-laws of the Company as amended
and in effect as of the date hereof are in the form of Exhibit B
attached hereto.
3. Legend.
All certificates representing shares of Common Stock now
or hereafter issued by the Company to any of the Investors and any
Person who becomes a party to this Agreement shall be subject to
this Agreement and shall bear the following legend:
"The shares evidenced by this certifi-
cate or any certificate issued in exchange or
transfer therefor are and will be subject to,
and may not be transferred except in accor-
dance with, the terms of a certain Stock-
holders' Agreement, dated as of July 29, 1994,
by and among certain stockholders of the
Company and the Company, which agreement pro-
vides, among other things, for restrictions on
the sale, transfer and disposition of the
shares of the Company, an executed copy of
which agreement is on file at the principal
office of the Company."
4. Management of the Corporation.
4.1 Board of Directors. Each of the Investors agrees
to use its best efforts, including voting all of its shares of
Common Stock, to cause the Board to consist of seven (7) directors
selected as set forth in this Section 4.1. All directors of the
Company shall be citizens of the United States. Each of the
Investors agrees that, from and after the date hereof, it will
vote, or cause to be voted, all of the shares of Common Stock owned
or held of record by it and its Affiliates (whether now owned or
hereafter acquired), in person or by proxy, so as to elect and
thereafter to continue in office a Board consisting of the
following members: the Chief Executive Officer of the Company,
three designees of H&F, one designee of GSC, and two designees
selected by a plurality vote of Stanton, Odyssey and Providence
(voting as a single class; it being understood that such two
designees are in addition to JWS for so long as JWS shall serve on
the Board by reason of his holding the office of Chief Executive
Officer of the Company); provided, however, that if such shares of
Common Stock are owned by or held of record by an Affiliate of an
Investor and such Affiliate is not controlled by such Investor,
such Investor shall be obligated only to use its best efforts to
cause such Affiliate to so vote such shares of Common Stock as set
forth herein. Stanton agrees with respect to one of the two
designees to the Board selected by the plurality vote of Stanton,
Odyssey and Providence that from and after the date hereof and for
so long as (i) JWS is serving as the Chief Executive Officer of the
Company, (ii) Stanton, Odyssey and Providence shall collectively
Beneficially Own at least 15% of the total number of shares of
Common Stock outstanding, and (iii) Odyssey shall Beneficially Own
all of the shares of Common Stock set forth opposite its name on
Schedule 1 annexed hereto, Stanton shall so vote, or cause to be
voted, all of the shares of Common Stock owned or held of record by
Stanton and its Affiliates for one designee of Odyssey. Stanton
agrees with respect to one of the two designees to the Board
selected by the plurality vote of Stanton, Odyssey and Providence
that from and after the date hereof and for so long as (i) JWS is
serving as the Chief Executive Officer of the Company, (ii)
Stanton, Odyssey and Providence shall collectively Beneficially Own
at least 15% of the total number of shares of Common Stock
outstanding, and (iii) Providence shall Beneficially Own all of the
shares of Common Stock set forth opposite its name on Schedule 1
annexed hereto, Stanton shall so vote, or cause to be voted, all of
the shares of Common Stock owned or held of record by Stanton and
its Affiliates for one designee of Providence. Any Investor or
group of Investors who has the right to designate any member(s) of
the Board shall have the right to replace any member(s) so
designated by it (whether or not such member is removed from the
Board with or without cause or ceases to be a member of the Board
by reason of death, disability or for any other reason) upon
written notice to the Company and the other members of the Board,
which notice shall set forth the name of the member(s) being
replaced and the name of the new member(s). Each of the Investors
agrees to vote its shares of Common Stock, or shall otherwise take
any action as is necessary, desirable or appropriate, so as to
cause the election of any successor director designated by any of
the Investors pursuant to this Section 4.1. Notwithstanding the
foregoing,
(a) if at any time H&F shall cease to
Beneficially Own at least (i) 20% of the total number of shares of
Common Stock outstanding, then in such event, H&F shall be entitled
to designate only two members of the Board; (ii) 15% of the total
number of shares of Common Stock outstanding, then in such event,
H&F shall be entitled to designate only one member of the Board;
and (iii) 7.5% of the total number of shares of Common Stock
outstanding, then in such event, H&F shall not be entitled to
designate any member of the Board;
(b) if at any time GSC shall cease to
Beneficially Own at least 7.5% of the total number of shares of
Common Stock outstanding, then in such event, GSC shall not be
entitled to designate any member of the Board; and
(c) if at any time Stanton, Odyssey and
Providence shall cease collectively to Beneficially Own at least
(ithen in such event, they shall be entitled to designate only one
member of the Board; and (ii) 7.5% of the total number of shares of
Common Stock outstanding, then in such event, they shall not be
entitled to designate any member of the Board (except that JWS
shall continue to serve on the Board for so long as he holds the
office of Chief Executive Officer of the Company).
Any vacancies on the Board created by reason of the provisions of
subsections (a) through (c) above shall be filled annually by a
vote of a majority of all stockholders of the Company.
4.2 Transaction between the Company and Investors or
their Affiliates. No Investor or its Affiliates shall enter into
any transaction with the Company or any Subsidiary of the Company
unless such transaction is approved by a majority of the
disinterested members of the Board. For purposes hereof, a member
of the Board shall be deemed to be disinterested with respect to
any such transaction if such member was not designated a member of
the Board by the Investor which (or an Affiliate of which) proposed
to engage in such transaction with the Company or any Subsidiary of
the Company and such member is not an officer, director, partner,
employee, stockholder of, or consultant to, such Investor or any of
its Affiliates.
5. Tag-Along.
5.1 Tag-Along Notice. Except for a transfer of shares
of Common Stock by HFCP II, Orchard, International, JWS, TEG, PN,
SCC, GSCP, GSCPMH, BSF, SSF, Odyssey Partners, L.P., Providence
Media Partners L.P., Bayer Investment Group, M.L Media Opportunity
Partners, L.P., M/C Partners or M/C Investors to an Affiliated
Successor of such Person, no Investor, whether acting alone or in
concert with any other Investor (such parties being referred to
herein as "Selling Investors") shall, directly or indirectly,
participate or otherwise engage, whether pursuant to a common plan,
understanding, agreement, arrangement, or otherwise, or through one
or more intermediaries, and whether by selling, transferring,
conveying, tendering or otherwise disposing of, or voting or
consenting with respect to its, Common Stock or other securities of
the Company (each such action hereinafter a "Transfer"), in any
single transaction or series of related transactions involving the
acquisition by any Person or group of Persons (within the meaning
of Rule 13d-5 under the Exchange Act) from one or more Investors or
Minority Stockholders of 25% or more of the outstanding shares of
Common Stock unless each other Investor and Minority Stockholder is
given the opportunity to Transfer up to that number of shares of
Common Stock then owned by such Investor or Minority Stockholder
that bears the same proportion to the total number of shares of
Common Stock at that time owned by such Investor or Minority
Stockholder as the number of shares of Common Stock being
Transferred by the Selling Investors (including shares of Common
Stock theretofore Transferred if in a series of related
transactions) bears to the total number of shares of Common Stock
at the time owned by the Selling Investors (including shares of
Common Stock theretofore Transferred if in a series of related
transactions), such sale to be concurrent with the Transfer by the
Selling Investors and at a price, on terms and subject to
conditions that are not less favorable to such Investor or Minority
Stockholder than those to the Selling Investors; provided, however,
that the Investors and Minority Stockholders who are not Selling
Investors and who elect to Transfer shares in accordance with such
opportunity shall be obligated only to make representations and
warranties as to their title in and to the shares of Common Stock
being sold by each of them. No such opportunity shall have been
given for purposes of this Section 5.1 unless each of the other
Investors and the Minority Stockholders shall have been given
notice in writing (the "Tag-Along Notice") of such opportunity,
setting forth (i) the names of the Selling Investors, (ii) the
names and addresses of the proposed acquiring Person, (iii) the
amount of shares proposed to be Transferred and the price, form of
consideration and other terms and conditions of such opportunity
(including, if in a series of related transactions, such
information with respect to shares of Common Stock theretofore
Transferred), (iv) that the acquiring Person has been informed of
the tag-along right provided for in this Section 5 and has agreed
to purchase shares of Common Stock in accordance with the terms
hereof, and (v) the date by which the other Investor or Minority
Stockholder may exercise its rights contained in this Section 5.1,
which date shall not be less than thirty (30) days after the giving
of the Tag-Along Notice. All notices from the Selling Investors to
the other Investors and the Minority Stockholders shall be sent to
them at their addresses set forth in the stockholder records
maintained by the Company. In order for any other Investor or
Minority Stockholder to exercise such opportunity, such other
Investor or Minority Stockholder shall, within thirty (30) days
after the giving of the Tag-Along Notice, deliver to the Selling
Investors a written notice (the "Exercise Notice") specifying that
such other Investor or Minority Stockholder has elected to (and
specifying the number of shares it has elected to) Transfer shares
of Common Stock owned by such party in accordance with the terms of
such opportunity set forth in the Tag-Along Notice, whereupon such
Transfer by such other Investor or Minority Stockholder shall be
completed contemporaneously with the Transfer by the Selling
Investors. In the event that the acquiring Person does not agree
to purchase all of the shares of Common Stock specified in each
Exercise Notice on the same terms and conditions as those specified
in the Tag-Along Notice, then the Selling Investors shall not be
permitted to Transfer any shares of Common Stock to the acquiring
Person and no Transfer by any other Investors or Minority
Stockholders to the acquiring Person shall be consummated pursuant
to this Section 5.1. If no Exercise Notice is received from any
other Investors or Minority Stockholders within thirty (30) days
after the giving of the Tag-Along Notice by the Selling Investors,
the Selling Investors shall have the right, for a sixty (60) day
period after the expiration of such thirty (30) day period (or for
such longer period of time as may be required for any regulatory
approvals), to Transfer (or, in the case of a Transfer which
requires regulatory approval, agree to Transfer) the shares of
Common Stock they propose to Transfer to the acquiring Person on
the terms and conditions set forth in the Tag-Along Notice. In the
event the Selling Investors do not Transfer (or, in the case of a
Transfer which requires regulatory approval, do not agree to
Transfer) the shares of Common Stock they propose to Transfer to
the acquiring Person on the terms and conditions set forth in the
Tag-Along Notice within such sixty (60) day period, then any
subsequent Transfer by such Selling Investors will be subject to
this Section 5.1.
5.2 Stop-Transfer. The Company agrees not to effect
any Transfer of shares of Common Stock by any Selling Investors
whose proposed Transfer is subject to Section 5.1 until it has
received evidence reasonably satisfactory to it that the rights
provided to the Investors and Minority Stockholders pursuant to
Section 5.1, if applicable to such Transfer, have been complied
with and satisfied in all respects.
6. Registration Rights.
6.1 Demand Registration.
(a) Exercise of Demand Registration Right. At
any time and from time to time after the first anniversary of the
date of execution and delivery of this Agreement, any Investor or
Investors holding an aggregate of 10% or more of the issued and
outstanding shares of Common Stock may demand Registration under
the Securities Act of all or part of its or their Registrable
Common Stock on Form S-1 or any similar long-form Registration
Statement or on Forms S-2 or S-3 or other comparable short-form
Registration Statement by a written notice given to the Company
signed by each Investor making such demand (such Investor or
Investors being referred to herein as the "Registering Party" or
"Registering Parties"); provided, however, that in the case of each
such Registration so requested by Investors, the aggregate offering
value of the Registrable Common Stock to be included in such
Registration by such Investors shall equal at least $25,000,000
(based upon the then current market price or fair value estimated
by the underwriters). Within fifteen (15) days after receipt of
any such request for Registration from Registering Parties, the
Company will give written notice (the "Demand Registration Notice")
of such requested Registration to all of the other Investors and to
each Minority Stockholder. Subject to the provisions of Section
6.1(c) hereof, the Company will include in such Registration all
Registrable Common Stock with respect to which the Company has
received written requests from Investors and Minority Stockholders
for inclusion therein within thirty (30) days of the date of the
Company's Demand Registration Notice. Subject to Section 6.1(c)
hereof, the Company will also have the right during such thirty
(30) day period to notify the Investors that it proposes to
register shares of Common Stock pursuant to such Registration. All
registrations demanded under this Section 6.1 are referred to
herein as "Demand Registrations."
(b) Requests for Registrations. During the
term of this Agreement, the Investors will be entitled to request
and have effective three (3) separate Demand Registrations. Demand
Registrations may be short-form registrations on Form S-2, S-3 or
other comparable forms whenever the Company is permitted to use any
applicable short form. Following the initial Public Offering of
its securities, the Company will use its reasonable efforts to
qualify for use of short-form registrations.
(c) Priority on Demand Registrations. If a
Demand Registration is an underwritten offering, and the managing
underwriter or underwriters advise the Company in writing that in
its or their opinion a limitation on the total number of shares of
Common Stock to be included in such Registration is advisable, the
Company will include in such Registration such number of shares of
Common Stock which in the opinion of such underwriter or
underwriters may be sold, allocated among (i) first, the shares of
Registrable Common Stock which the Investors and the Minority
Stockholders propose to sell pursuant to such Registration
(including the shares of Common Stock owned by the Registering
Parties), on a pro rata basis, with respect to each such party,
based upon the respective percentage ownership by each such party
of the aggregate number of shares of Common Stock requested to be
Registered by all such parties, and (ii) second, the shares of
Common Stock the Company proposes to sell pursuant to such
Registration.
(d) Restrictions on Demand Registrations. The
Company will not be obligated to effect (i) more than two (2)
separate Demand Registrations during any twelve (12) month period
during the term of this Agreement, or (ii) any Demand Registration
if prior to receipt of any notice from a Registering Party or
Registering Parties requesting a Demand Registration the Board
shall have adopted a resolution to the effect that the Company
intends to Register shares of Common Stock under the Securities Act
within the subsequent six-month period until such period has
elapsed or the Company shall have abandoned such intention prior to
the expiration of such six-month period or, in the event such
Registration becomes effective, during the one hundred eighty (180)
day period after the effective date of such Registration. In
addition, if the Board, in its good faith judgment, determines that
any registration of Registrable Common Stock should not be made or
continued because it would materially interfere with any material
financing, acquisition, corporate reorganization or merger
involving the Company (collectively, a "Valid Business Reason"),
the Company may postpone filing a Registration Statement relating
to any Demand Registration until such Valid Business Reason has
been consummated or terminated, but in no event for more than six
(6) months, and, in case any such Registration Statement has
already been filed the Company may cause such Registration
Statement to be withdrawn and its effectiveness prematurely
terminated or may postpone amending or supplementing such
Registration Statement (and the Company shall give written notice
of its determination to postpone or withdraw a Registration
Statement and of the fact that the Valid Business Reason for such
postponement or withdrawal has been consummated or prematurely
terminated, in each case, promptly after the occurrence thereof).
If the Company shall give any notice of postponement or withdrawal
of any Registration Statement, the Company shall not, during the
period of postponement or withdrawal, Register any Equity Security
other than pursuant to a Registration Statement on Form S-4 or Form
S-8 (or any equivalent Registration form then in effect). Each
Investor agrees that, upon receipt of any notice from the Company
that the Company has determined to withdraw any Registration
Statement pursuant to this Section 6.1(d), such Investor will
discontinue its disposition of Registrable Common Stock pursuant to
such Registration Statement 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 such Investor's
possession of the prospectus covering such Registrable Common Stock
that was in effect at the time of receipt of such notice. If the
Company shall give any notice of withdrawal or postponement of a
Registration Statement the Company shall, at such time as the Valid
Business Reason that caused such withdrawal or postponement no
longer exists (but in no event later than six (6) months after the
date of the withdrawal or postponement), with respect to a
withdrawn Registration Statement, as soon as practicable file a new
Registration Statement covering the Registrable Common Stock that
were covered by the withdrawn Registration Statement or, with
respect to a postponed Registration Statement, use its best efforts
to effect the Registration under the Act of Registrable Common
Stock in accordance with Section 6.1 (unless, as a result of
Investors having withdrawn any Demand Registration Notice,
Investors owning fewer than the requisite number of shares of
Registrable Common Stock, if applicable, are requesting
Registration of Registrable Common Stock), and such Registration
Statement shall be maintained effective for the full period of time
required by this Agreement for Registration Statements effected
pursuant to Section 6 and shall not be withdrawn or postponed
pursuant to this Section 6.1(d). If the Company shall have
withdrawn or prematurely terminated a Registration Statement filed
pursuant to Section 6.1 (whether pursuant to this clause 6.1(d) or
as a result of any stop order, injunction or other order or
requirement of the Commission or any other governmental agency or
court), the Company shall not be considered to have effected an
effective Registration for the purposes of Section 6.1 until the
Company shall have filed a new Registration Statement covering the
Registrable Common Stock covered by the withdrawn Registration
Statement and such Registration Statement shall have been declared
effective and shall not have been withdrawn or prematurely
terminated.
6.2 Notice of Registration and Inclusion of Registrable
Common Stock.
(a) Piggyback Registration. In the event that
the Company decides to Register any of its Common Stock under the
Securities Act (other than pursuant to a Demand Registration), on
a form that would permit the inclusion of Registrable Common Stock
held by the Investors and Minority Stockholders (any such Registra-
tion to be a "Piggyback Registration"), the Company will: (i)
promptly give each of the Investors and the Minority Stockholders
written notice thereof (the "Piggyback Registration Notice") (which
notice shall include a list of the states and other jurisdictions
in which the Company intends to attempt to qualify such Common
Stock under applicable Blue Sky or other state securities laws),
and (ii) subject to the provisions of Section 6.2(c) hereof,
include in such Registration (and any related qualification under
Blue Sky laws or other state securities laws), and in any
underwriting involved therein, all of the Registrable Common Stock
specified in a written notice given to the Company by any Investor
and any Minority Stockholder within thirty (30) days after the date
of the Piggyback Registration Notice to such Investors and Minority
Stockholders.
(b) Notice of Underwriting. If the Registra-
tion with respect to which the Company provides a Piggyback
Registration Notice is for a Registered public offering involving
an underwriting (the "Underwriting"), the Company shall so advise
all of the Investors and the Minority Stockholders in the Piggyback
Registration Notice. In such event, the right of any such Investor
or Minority Stockholder to participate in such Piggyback
Registration shall be conditioned upon the Underwriting and the
inclusion of such party's Registrable Common Stock in the
Underwriting to the extent provided in Section 6.2(c). All such
Investors and Minority Stockholders proposing to distribute their
Registrable Common Stock through the Underwriting (collectively,
the "Requesting Holders") shall, together with the Company, enter
into an underwriting agreement with the underwriters'
representative or representatives (collectively the
"Representative") selected for such underwriting in accordance with
Section 6.8. The Requesting Holders shall have no right under
Section 6.2 to participate in the selection of the underwriters or
their Representative.
(c) Marketing Limitations in Underwriting. In
the event the Representative gives notice to the Requesting Holders
in writing that in the opinion of the underwriters a limitation on
the total number of shares of Common Stock to be included in the
Underwriting is advisable, the Company will include in such
Registration such number of shares of Common Stock which in the
opinion of such underwriters or Representative may be sold,
allocated among (i) first, the securities the Company proposes to
sell pursuant to such Registration, (ii) second, the shares of
Registrable Common Stock which were requested to be included in
such Registration by the Requesting Holders, on a pro rata basis,
with respect to each such party, based upon the respective
percentage ownership by each Requesting Holder of the aggregate
number of shares of Common Stock requested to be Registered by all
Requesting Holders. No such reduction shall reduce the amount of
securities being offered by the Company for its own account to be
included in such Registration and underwriting until all shares of
Registrable Common Stock which were requested to be included in
such Registration by the Requesting Holders shall have been
excluded from such Registration.
(d) Withdrawal from Underwriting. If any
Requesting Holder whose Registrable Common Stock is included in the
Underwriting disapproves of the terms of the Underwriting, it may
elect to withdraw therefrom by written notice to the Company and
the Representative delivered at least ten (10) days prior to the
effective date of the Registration Statement. Any Registrable
Common Stock withdrawn from the Underwriting shall be withdrawn
from the Registration. If any shares of Registrable Common Stock
which were requested to be included in such Registration by any
Requesting Holder were excluded from such Registration on a pro
rata basis by application of clause (ii) of Section 6.2(c), the
Company shall use reasonable efforts to permit each such Requesting
Holder to include in such Registration its pro rata portion, based
on the respective percentage ownership by each Requesting Holder of
the aggregate number of shares of Common Stock requested to be
Registered by all Requesting Holders (excluding the shares of
Registrable Common Stock owned by any Requesting Holder who
withdraws his shares of Registrable Common Stock from the
Underwriting), of any shares of Registrable Common Stock withdrawn
from the Underwriting by a Requesting Holder.
6.3 Compliance with Blue Sky Laws. In the event of any
Registration of Registrable Common Stock pursuant to this Section
6, the Company will use its reasonable best efforts to Register and
qualify the securities included in the Registration under such Blue
Sky or other securities laws of such states or other jurisdictions
as shall be reasonably requested by the Registering Parties, in the
case of a Registration that does not involve an Underwriting, or by
the Representative, in the case of a Registration involving an
Underwriting, to effect the plan of distribution of such
securities; provided, however, that the Company shall not be
required to subject itself to taxation in any such state or
jurisdiction, qualify to do business in any such state or jurisdic-
tion or file a general consent to service of process in any such
state or jurisdiction solely by reason of such qualification of
such securities.
6.4 Expenses of Registration.
(a) Demand Registration Expenses. In the event of
a Demand Registration the Company shall bear all of the
Registration Expenses and each of the Investors and the Minority
Stockholders who participate in such Demand Registration shall be
responsible for (i) its own legal fees and expenses in connection
with such Demand Registration, and (ii) its proportionate share of
all Selling Expenses, such proportionate share to be equal to a
fraction, the numerator of which is the number of shares of Common
Stock being so Registered by such Investor or Minority Stockholder
and the denominator of which is the aggregate number of shares of
Common Stock being Registered by all Investors and Minority
Stockholders participating in such Demand Registration
("Proportionate Share"); provided, however, that if in connection
with a Demand Registration a special audit of the Company's
financial statements shall be conducted by the Company's
independent accountants each of the Investors and Minority
Stockholders participating in such Demand Registration shall bear
its Proportionate Share of the costs and expenses of such audit;
provided further, however, that if a special audit is conducted in
connection with a Demand Registration and such Demand Registration
shall be postponed or withdrawn pursuant to Section 6.1(d) hereof
because of a Valid Business Reason, and as a result of such
postponement or withdrawal such special audit is not incorporated
into such Demand Registration, the Company shall bear the costs and
expenses of such special audit.
(b) Piggyback Registration Expenses. All Registration
Expenses incurred in connection with a Piggyback Registration by
the Company as contemplated by Section 6.2 shall be borne by the
Company. Each of the Investors and Minority Stockholders shall be
responsible for its own legal fees and expenses and each of the
Company, the Investors and the Minority Stockholders shall be
responsible for its Proportionate Share of all Selling Expenses
incurred in connection with such Piggyback Registration.
6.5 Registration Procedures. The Company will keep
each Investor and Minority Stockholder whose Registrable Common
Stock is included in any Registration pursuant to this Agreement
advised as to the initiation and completion of such Registration.
At its expense the Company will: (a) use its reasonable best
efforts to effect such Registration and to keep any such
Registration effective for a period of 120 days or until such
Investors and Minority Stockholders have completed the distribution
described in the Registration Statement relating thereto, whichever
first occurs; and (b) furnish such number of prospectuses
(including preliminary prospectuses) and other documents to any
such Investor or Minority Stockholder from time to time as any such
party may reasonably request.
6.6 Information. It is a condition precedent to the
Company's obligations under this Agreement that each Investor and
Minority Stockholder, whose shares of Common Stock are not freely
transferable under the Securities Act, requesting that Registrable
Common Stock be included in a Registration pursuant to this Section
6 furnish to the Company, or to the underwriters or Representative
participating in such Registration, such information regarding such
Investor or Minority Stockholder, and the distribution proposed by
such Investor or Minority Stockholder as the Company or such under-
writers or Representatives may reasonably request. In addition
each such Minority Stockholder shall enter into such agreements
with the Company and the underwriters or Representatives participa-
ting in such Registration, including agreements with respect to
indemnification, as the Company and the underwriter or Representa-
tive participating in such Registration may reasonably request.
6.7 Indemnification.
(a) Company's Indemnification. To the extent
permitted by law, the Company will indemnify each Investor and
Minority Stockholder holding Registrable Common Stock with respect
to which Registration or qualification has been effected pursuant
to this Agreement, and each of its agents, employees, controlling
persons within the meaning of the Securities Act, officers,
directors and partners and each underwriter, if any, participating
in such Registration or qualification and each person which
controls any such underwriter within the meaning of the Securities
Act (collectively the "Company Indemnitees"), against all claims,
losses, damages and liabilities (or actions in respect thereof)
arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any Registration
Statement, prospectus or other document incident to any such
Registration or qualification or based on any omission (or alleged
omission) to state therein a material fact required to be stated
therein or necessary to make the statements contained therein not
misleading, or any violation by the Company of the Securities Act
or any rule or regulation thereunder applicable to the Company in
connection with any such Registration or qualification, and will
reimburse each Company Indemnitee for any legal and any other
expenses reasonably incurred by any such party in connection with
investigating or defending any such claim, loss, damage, liability
or action; provided, however, that the indemnity contained in this
Section 6.7(a) shall not apply to amounts paid in settlement of any
such claim, loss, damage, liability or action if settlement is
effected without the prior written consent of the Company (which
consent shall not be unreasonably withheld); and provided further,
however, that the Company will not be liable in any such case to
the extent that any such claim, loss, damage, liability or expense
arises out of or is based on any untrue statement or omission based
upon written information furnished to the Company by any such
Company Indemnitee and stated to be specifically for use therein.
(b) Investor's and Minority Stockholder's
Indemnification. To the extent permitted by law, each Investor and
Minority Stockholder holding Registrable Common Stock with respect
to which Registration or qualification has been effected pursuant
to this Agreement, severally and not jointly, will indemnify the
Company and each of its agents, employees, controlling persons
within the meaning of the Securities Act, directors, partners and
officers and each underwriter, if any, participating in such
Registration or qualification and each person which controls any
such underwriter within the meaning of the Securities Act, and each
other Investor and Minority Stockholder participating in such
Registration and qualification and each of their respective agents,
employees, controlling persons within the meaning of the Securities
Act, officers, directors and partners (collectively, the
"Requesting Holders' Indemnitees"), against all claims, losses,
damages and liabilities (or actions in respect thereof) arising out
of or based on any untrue statement (or alleged untrue statement)
of a material fact contained in any Registration Statement,
prospectus or other document incident to such Registration or
qualification or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or
necessary to make the statements contained therein not misleading,
and will reimburse each Requesting Holders' Indemnitee for any
legal and any other expenses reasonably incurred by any such party
in connection with investigating or defending any such claim, loss,
damage, liability or action, in each case to the extent, but only
to the extent, that such untrue statement (or alleged untrue state-
ment) or omission (or alleged omission) is made in such Regis-
tration Statement, prospectus or other document in reliance upon
and in conformity with written information furnished to the Company
by such Investor or Minority Stockholder or any agent, employee,
officer, director, partner or controlling person thereof and stated
to be specifically for use therein; provided, however, that the
indemnity contained in this Section 6.7(b) shall not apply to
amounts paid in settlement of any such claim, loss, demand, lia-
bility or action if such settlement is effected without the prior
written consent of such Investor or Minority Stockholder (which
consent shall not be unreasonably withheld); and provided further,
however, that such Investor's or Minority Stockholder's liability
under this Section 6.7(b) shall not exceed such Investor's or
Minority Stockholder's aggregate net proceeds from the sale of the
Registrable Common Stock included in such Registration or
qualification.
(c) Indemnification Procedure. Each party
entitled to indemnification under this Section 6.7 (the
"Indemnified Party") shall give written notice, which is reasonably
detailed, to the party required to provide indemnification (the
"Indemnifying Party") promptly after such Indemnified Party has
actual knowledge of any claim as to which indemnity may be sought,
and shall permit the Indemnifying Party to assume the defense of
any such claim or any litigation resulting therefrom, with counsel
chosen by such Indemnifying Party (such counsel to be reasonably
acceptable to Indemnified Party), and the Indemnifying Party shall
not be obligated to indemnify the Indemnified Party for any legal
and any other expenses incurred by the Indemnified Party in
connection with investigating and defending such action after the
Indemnifying Party assumes the defense of such claim; provided,
however, that nothing contained herein shall prevent the
Indemnified Party from participating in such defense at such
party's expense. If the Indemnified Party reasonably determines,
based upon written advice of its counsel, that there is a conflict
between the position of the Indemnified Party and the Indemnifying
Party in conducting the defense of such action, then the
Indemnified Party shall be entitled to conduct the defense of such
action, at the expense of the Indemnifying Party, to the extent
reasonably determined by such counsel to be necessary to protect
the interest of the Indemnified Party. The failure of any In-
demnified Party to give notice as provided herein shall not relieve
the Indemnifying Party of its obligations under this Section 6.7(c)
provided that the parties to this Agreement reserve any rights to
make a claim under this Agreement for damages actually incurred by
reason of any failure of an Indemnified Party to give prompt
written notice of a claim to an Indemnifying Party. No
Indemnifying Party, in the defense of any such claim or litigation,
shall, except with the prior written consent of each Indemnified
Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof
the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect of such claim or
litigation. Each Indemnified Party shall furnish such information
regarding itself or the claim in question as an Indemnifying Party
may reasonably request in writing and as shall be reasonably
required in connection with the defense of such claim and the
litigation resulting therefrom.
(d) Contribution. Each of the Company, the
Investors and any Minority Stockholders holding Registrable Common
Stock with respect to which Registration or qualification has been
effected pursuant to this Agreement agrees that, if for any reason
the indemnification provisions contemplated by Section 6.7(a) or
Section 6.7(b) hereof are unavailable to or insufficient to hold
harmless an Indemnified Party in respect of any claims, losses,
damages or liabilities (or actions in respect thereof) referred to
therein, then each Indemnifying Party shall contribute to the
amount paid or payable by the Indemnified Party as a result of such
claims, losses, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party and the Indemnified Party
in connection with the statements or omissions which resulted in
the claims, losses, damages or liabilities (or action in respect
thereof), as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party
shall be determined by reference to, among other things, whether
the untrue statement (or alleged untrue statement) of a material
fact or omission (or alleged omission) to state a material fact
relates to information supplied by the Indemnifying Party or by the
Indemnified Party, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent the
statement or omission. The parties hereto agree that it would not
be just and equitable if contribution pursuant to this Section
6.7(d) were determined by pro rata allocation (even if the Company,
Investors or Minority Stockholders or all of them were treated as
one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations
referred to in this Section 6.7(d). The amount paid or payable by
an Indemnified Party as a result of the claims, losses, damages or
liabilities (or actions in respect thereof) referred to above shall
be deemed to include any legal or other fees or expenses reasonably
incurred by the Indemnified Party in connection with investigating
or defending any such action or claim. Notwithstanding the
provisions of this Section 6.7(d), no Investor or Minority
Stockholder shall be required to contribute any amount in excess of
the amount by which the dollar amount of the proceeds received by
such Investor or Minority Stockholder from the sale of any Common
Stock so Registered (after deducting any fees, discounts and
commissions applicable thereto) exceeds the amount of any damages
which the Company, such Investor or Minority Stockholder has
otherwise been required to pay by reason of any untrue or alleged
untrue statement or omission or alleged omission. Subject to the
limitations set forth in the immediately preceding sentence, the
Company's, Investors' and Minority Stockholders' obligations in
this Section 6.7(d) to contribute shall be several and not joint.
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 fraudulent
misrepresentation.
6.8 Selection of Underwriters. In the case of a Demand
Registration or Piggyback Registration, the Company shall have the
right, in its sole discretion, to select the investment banker(s)
and manager(s) and to administer the offering of any such Reg-
istration pursuant to this Section 6.
6.9 Holdback Agreements. Each Investor hereby agrees
that it shall not, to the extent requested by the Company or any
underwriter or Representative of securities of the Company, sell or
otherwise transfer or dispose of any shares of Common Stock (other
than those included in a Registration) for a period of up to one
hundred eighty (180) days following the effective date of a
Registration Statement (other than pursuant to a Registration
Statement on Form S-4 or Form S-8 (or any equivalent Registration
form then in effect)) of the Company filed under the Securities Act
other than (i) with the prior written consent of the Company or
such underwriter or Representative, (ii) pursuant to a bona fide
gift to a person or entity who agrees in writing to be bound by the
provisions of this Section 6.9 or (iii) distributions of shares of
Common Stock by an Investor to its partners or investors who agree
in writing, if requested by the Company or such underwriter or
Representative, to be bound by the provisions of this Section 6.9.
Nothing contained in this Section 6.9 shall prohibit HFCP II,
Orchard, International, JWS, TEG, PN, SCC, GSCP, GSCPMH, BSF, SSF,
Odyssey Partners, L.P., Providence Media Partners L.P., Bayer
Investment Group, M.L Media Opportunity Partners, L.P., M/C
Partners or M/C Investors from transferring any shares of Common
Stock owned by it to an Affiliated Successor.
6.10 Delay of Registration. No Investor or Minority
Stockholder shall have any right to obtain or seek an injunction
restraining or otherwise delaying any Registration of the
securities of the Company as the result of any controversy that
might arise with respect to the interpretation or implementation of
this Section 6.
7. Additional Issuances of Equity Securities; Preemptive
Rights.
7.1 Additional Issuances of Equity Securities. Except
for the issuance of options to purchase Common Stock to certain
holders of rights to receive Class B Limited Partnership Units in
MARKETS as contemplated by the Exchange Agreement and Plan of
Merger, the Company shall not sell any Equity Security unless (i)
the terms of such sale are approved by the Board; (ii) the sale
price equals or exceeds the fair market value of such Equity
Security as determined by the Board; and (iii) if, as a result of
such sale and other related transactions, any Person or group of
Persons (within the meaning of Rule 13d-5 under the Exchange Act),
which are not Investors, would Beneficially Own 10% or more of the
outstanding shares of Common Stock, such Person or group of Persons
shall have executed a counterpart of this Agreement agreeing to be
an Investor and to be bound by the terms hereof; provided, however,
that clause (ii) shall not be deemed to prohibit the issuance of
Equity Securities to members of the Company's management for a sale
price equal to at least 85% of fair market value. For purposes of
clause (ii) above, the determination of fair market value of any
such Equity Security by the Board shall be conclusive, final and
binding. As used herein "Equity Security" shall mean the Common
Stock or any other class or series of common stock or preferred
stock of the Company, or options, rights, warrants, conversion
rights or appreciation rights relating thereto, or any other type
of equity security that the Company may lawfully issue.
7.2 Preemptive Rights. If at any time the Company
proposes to offer, issue, sell or otherwise dispose of Equity
Securities to any one or more of the Investors or their Affiliates,
(i) the Company shall, prior to any such issuance or sale, give
written notice (a "Preemptive Notice") to each holder of Common
Stock setting forth the purchase price of such Equity Securities,
the type and aggregate number of Equity Securities to be so
offered, issued, sold, or otherwise dispose of the terms and
conditions of such offer, issuance, sale or other disposition and
the rights, powers and duties inhering in such additional Equity
Securities and (ii) each holder of Common Stock shall have the
right (the "Preemptive Right") to acquire the percentage of such
Equity Securities equal to the number of shares of Common Stock
then held by such holder divided by the aggregate number of shares
of Common Stock held by all stockholders of the Company. Any
holder of Common Stock may exercise such Preemptive Right, in whole
or in part, on the terms and conditions and for the purchase price
set forth in the Preemptive Notice, by giving to the Company notice
to such effect, within thirty (30) days after the giving of the
Preemptive Notice. After the expiration of such thirty (30) day
period and subject to Section 7.1, the Company shall have the power
to issue and sell any or all of the Equity Securities referred to
in the applicable Preemptive Notice as to which no Preemptive Right
has been exercised but only upon the terms and conditions, and for
a purchase price not lower than the purchase price, set forth in
the Preemptive Notice. In the event the Company does not issue and
sell the Equity Securities referred to in the applicable Preemptive
Notice on the terms and conditions set forth in such Preemptive
Notice within ninety (90) days after the expiration of such thirty
(30) day period then any subsequent proposal by the Company to
offer, issue, sell or otherwise dispose of Equity Securities to any
one or more Investors or their Affiliates shall be subject to this
Section 7.2.
8. Representations and Warranties.
8.1 Representations and Warranties of the Investors.
Each of HFCP II, Orchard, International, JWS, TEG, PN, SCC, GSCP,
GSCPMH, BSF, SSF, Odyssey Partners, L.P., Providence Media Partners
L.P., Bayer Investment Group, M.L. Media Opportunity Partners L.P.,
M/C Partners and M/C Investors hereby represents and warrants to
the other parties and the Company as follows:
(i) Such Person has full power and authority to
execute, deliver and perform its obligations under this Agreement;
(ii) This Agreement and all transactions
contemplated hereby have been duly and validly authorized by all
necessary action on the part of such Person and this Agreement
constitutes the legal, valid and binding obligation of such Person
enforceable against it in accordance with its terms;
(iii) Neither the execution, delivery or
performance of this Agreement by such Person, nor the consummation
of the transactions contemplated hereby will, with or without the
giving of notice of passage of time, or both conflict with, result
in a default or loss of rights (or give rise to any right of
termination, cancellation or acceleration) under, (A) any provision
of the certificate of incorporation, by-laws, partnership agreement
or comparable constituent document of such Investor, (B) any
material note, bond, indenture, mortgage, deed of trust, contract,
agreement, lease or other instrument or obligation to which any
such Person is a party or by which it or its properties may be
bound or affected or (C) any law, order, judgment, ordinance, rule,
regulation or decree to which any such Investor is a party or by
which it or any of its properties are bound or affected; and
(iv) Such Person has no written or oral
agreement providing for it to, has no present plan or intention to,
and knows of no such agreement or present plan or intention by any
of such other Persons to, sell, exchange, transfer by gift or
otherwise dispose of any shares of Common Stock set forth on
Schedule 1 hereto (including, with respect to PN, shares of Common
Stock to be distributed to PN upon the liquidation of PN Cellular
Limited Partnership) or that may be received by any of them
pursuant to Article 12 of the Exchange Agreement and Plan of
Merger.
8.2 Representations and Warranties of the Company. The
Company hereby represents and warrants to each of the Investors
that it has no written or oral agreement for it to, and has no
present plan or intention to, either redeem or otherwise reacquire
any shares of Common Stock set forth on Schedule 1 annexed hereto,
to issue any shares of Common Stock in addition to those set forth
on such Schedule 1 or to sell, or to cause or allow to be sold, any
shares of Common Stock owned by any of its Subsidiaries except for
the issuance of Common Stock (i) to the former holders of rights to
receive Class B Limited Partnership Units in MARKETS, as
contemplated by the Exchange Agreement and Plan of Merger, (ii)
pursuant to employee or management stock option plans adopted by
the Company after the date hereof and (iii) pursuant to Article 12
of the Exchange Agreement and Plan of Merger; provided, however,
that the Company has no written or oral agreement to, and has no
present plan or intention to, issue shares of Common Stock pursuant
to clauses (i) and (ii) in excess of 8% of the total number of
shares of Common Stock outstanding on the date hereof.
9. Covenants and Agreements.
9.1 Covenants and Agreements of the Investors. Each of
HFCP II, Orchard, International, JWS, TEG, PN, SCC, GSCP, GSCPMH,
BSF, SSF, Odyssey Partners, L.P., Providence Media Partners L.P.,
Bayer Investment Group, M.L. Media Opportunity Partners L.P., M/C
Partners and M/C Investors hereby covenants and agrees that it will
not engage in any transaction (including any transaction by such
Person with any Affiliate of such Person) that would disqualify the
transactions pursuant to which each of them acquired the shares of
Common Stock set forth opposite its respective name on Schedule 1
annexed hereto from qualification under Section 351 of the Internal
Revenue Code of 1986, as amended (the "Code"). Each of such
Persons further covenants and agrees that it will not vote or
consent to the taking of any action by the Company that would
disqualify such transactions from qualification under Section 351
of the Code.
9.2 Covenants and Agreements of the Company. The
Company covenants and agrees that it will not, and it will not
permit any of its Subsidiaries to, sell, transfer, convey, assign
or otherwise dispose of the shares of Common Stock or other
property transferred to it or its Subsidiaries pursuant to the
transactions consummated in connection with the Exchange Agreement
and Plan of Merger (the "Combination Transactions") in any
transaction that would disqualify the Combination Transactions from
qualification under Section 351 of the Code; provided, however,
that the Company shall be permitted to effect the transfer of the
entire limited partnership interest in MARKETS to WWC Holdings as
contemplated by the Exchange Agreement and Plan of Merger.
10. Term; Survival.
10.1 Term. Subject to Section 10.2, this Agreement
shall terminate upon the earliest to occur of any of the following
events:
(a) The consent in writing of all of the
parties hereto; or
(b) The expiration of ten (10) years from the
date of execution and delivery of this Agreement; or
(c) The filing by the Company of a petition in
bankruptcy or the expiration of sixty (60) days after a petition in
bankruptcy shall have been filed against the Company and such
petition shall not have been stayed or discharged during such sixty
(60) day period; or upon the expiration of sixty (60) days after
the commencement of any proceeding under any law for the relief of
debtors seeking the relief or readjustment of the Company's
indebtedness either through reorganization, winding-up, extension
or otherwise, and such proceedings involving the Company as debtor
shall not have been vacated or stayed within such sixty (60) day
period; or upon the appointment of a receiver, custodian or trustee
for all or substantially all of the Company's property, or the
making by the Company of any general assignment for the benefit of
creditors, or the admitting in writing by the Company of its
inability to pay its debts as they mature; or upon the voluntary or
involuntary liquidation or dissolution of the Company; or
(d) The beneficial ownership of all of the
Common Stock by only one Investor; or
(e) The consummation of a Public Offering.
10.2 Survival. Nothing contained in this Section 10
shall affect or impair any rights or obligations of any party
hereto arising prior to the time of the termination of this
Agreement, or which may arise by an event causing the termination
of this Agreement. Anything to the contrary contained herein
notwithstanding, the provisions of Section 6 shall survive any
termination of this Agreement pursuant to Section 10.1(e) and shall
continue in full force and effect until a termination of this
Agreement occurs pursuant to one of the other provisions of Section
10.1; provided, however, that only Persons and their Affiliates who
are either Investors or Minority Stockholders immediately prior to
the consummation of a Public Offering shall have any rights
pursuant to Section 6 hereof after the consummation of a Public
Offering.
11. Restrictions on Transfer. Except pursuant to a Public
Offering, no Investor shall sell, transfer, convey, tender or
otherwise dispose of shares of Common Stock to any Person or group
of Persons (within the meaning of Rule 13d-5 under the Exchange
Act), or enter into any agreement, contract or commitment, or vote
or consent, to do any of the foregoing, if, as a result of such
sale, transfer, conveyance, tender or other disposition, such
Person or group of Persons would Beneficially Own more than 5% of
the outstanding Common Stock, unless such Person or group of
Persons shall have executed a counterpart of this Agreement
agreeing to be an Investor and to be bound by the terms hereof;
provided, however, that an Investor shall not be deemed to be in
breach of this Section 11 if as a result of the sale by an Investor
over the facilities of a national securities exchange or pursuant
to ordinary brokerage transactions which do not involve the
solicitation of an offer to purchase shares of Common Stock a
Person or group of Person would Beneficially Own more than 5% of
the outstanding Common Stock without such Person or group of Person
executing a counterpart of this Agreement agreeing to be an
Investor and bound by the terms hereof. Any sale, transfer,
conveyance, tender or other disposition of shares of Common Stock
by any Investor without compliance with this Section 11 shall be
null and void and no such purchaser or transferee shall have any
rights as a stockholder of the Company.
12. Miscellaneous.
12.1 Certain Subsequent Transactions. If the Company
Registers any of its securities under the Securities Act or the
Company is acquired by way of a merger, sale of assets, exchange of
stock or otherwise, and at the time of any such Registration,
merger, sale of assets, exchange of stock or other acquisition, the
Company's subsidiary, General Cellular Corporation, a Delaware
corporation ("GCC"), is not wholly owned by the Company, the
Investors will use reasonable efforts to cause the Company to
effect one or more transactions that will result in the issuance to
any minority stockholders of GCC of one (1) share of Common Stock
(adjusted for any stock splits, stock dividends, reverse stock
splits, or similar changes in the capitalization of the Company or
by reason of any adjustment in the number of shares of Common Stock
issued to holders of GCC Common Stock pursuant to Section 12.2 of
the Exchange Agreement and Plan of Merger), or the fair market
value thereof in cash (or such other property or consideration
which in the good faith judgment of the Board is fair to the
minority stockholders of GCC), in exchange for each share of common
stock owned by such minority stockholder in GCC; provided, however,
that in the case of an acquisition of the Company, the Investors
may, instead of causing the Company to issue Common Stock, cause
the delivery to such minority stockholders in GCC of the securities
or other property, or the fair market value thereof in cash (or
such other property or consideration which in the good faith
judgment of the Board is fair to the minority stockholders of GCC),
they would have received in the acquisition had such Common Stock
been issued to them as contemplated by this provision.
12.2 Successors, Assigns and Transferees. This Agree-
ment shall be binding upon and inure to the benefit of the parties
hereto and their respective legal representatives, heirs,
successors and assigns. No Transfer by HFCP II, Orchard,
International, JWS, TEG, PN, SCC, GSCP, GSCPMH, BSF, SSF, Odyssey
Partners, L.P., Providence Media Partners L.P., Bayer Investment
Group, M.L Media Opportunity Partners, L.P., M/C Partners or M/C
Investors to any Affiliated Successor of such Person shall be
effective unless such Affiliated Successor executes a counterpart
of this Agreement agreeing to be an Investor and bound by the terms
hereof.
12.3 Specific Performance, Etc. The Company and each
Investor, in addition to being entitled to exercise all of the
rights provided herein or in the Company's Certificate of
Incorporation or granted by law, including recovery of damages,
will be entitled to specific performance of its rights under this
Agreement. Each of the Company and the Investors agree that
monetary damages would not be adequate compensation for any loss
incurred by it by reason of a breach by any other party hereto of
the provisions of this Agreement and hereby agrees to waive the
defense in any action for specific performance that a remedy at law
would be adequate.
12.4 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware
as applied to agreements entered into and wholly to be performed
within the State of Delaware.
12.5 Headings. The captions in this Agreement are for
convenience only and shall not be considered a part of or affect
the construction or interpretation of any provision of this
Agreement.
12.6 Notices. Any notice required or permitted here-
under shall be given in writing and shall be conclusively deemed
effectively received by the addressee upon personal delivery, on
the date of receipt if sent by facsimile or overnight courier,
charges prepaid, or five days after deposit in the United States
mail, by registered or certified mail, postage prepaid, addressed
as follows:
(a) if to the
Company: Western Wireless Corporation
330 120th Avenue, Northeast
Suite 200
Bellevue, Washington 98005
Attention: John W. Stanton
Facsimile: (206) 635-0126
with copies to: Barry A. Adelman, Esq.
Rubin Baum Levin Constant & Friedman
30 Rockefeller Plaza
New York, New York 10112
Facsimile: (212) 698-7825
and
Paul J. Mundie, Esq.
Heller, Ehrman, White
& McAuliffe
333 Bush Street
San Francisco, CA 94104-2878
Facsimile: (415) 772-6268
(b) if to HFCP II,
Orchard or
International: c/o Hellman & Friedman
One Maritime Plaza, Suite 1200
San Francisco, California 94111
Attention: John L. Bunce, Jr.
General Partner
Facsimile: (415) 788-0176
with a copy to: Paul J. Mundie, Esq.
Heller Ehrman White
& McAuliffe
333 Bush Street
San Francisco, CA 94104-2878
Facsimile: (415) 772-6268
(c) if to JWS, TEG
PN or SCC: c/o Stanton Communications, Inc.
330 120th Avenue, Northeast
Suite 200
Bellevue, Washington 98005
Attention: John W. Stanton
Facsimile: (206) 635-0126
with a copy to: Barry A. Adelman, Esq.
Rubin Baum Levin Constant & Friedman
30 Rockefeller Plaza
New York, New York 10112
Facsimile: (212) 698-7825
(d) if to GSCP, GSCPMH,
BSF or SSF: c/o Goldman Sachs & Co.
85 Broad Street
New York, New York 10004
Attention: Terence M. O'Toole
Facsimile: (212) 902-4103
with a copy to: Alison S. Ressler, Esq.
Sullivan & Cromwell
444 South Flower Street
Los Angeles, California 90071
Facsimile: (213) 683-0457
(e) if to Odyssey: Odyssey Partners, L.P.
31 West 52nd Street
New York, New York 10019
Attention: Brian Kwait
Facsimile: (212) 708-0730
with a copy to: Norman D. Chirite, Esq.
Weil Gotshal & Manges
767 Fifth Avenue
New York, New York 10153
Facsimile: (212) 310-8007
(f) if to Providence Providence Ventures, Inc.
900 Fleet Center
50 Kennedy Plaza
Providence, Rhode Island 02903
Attention: Jonathan M. Nelson
Facsimile: (401) 751-1790
with a copy to: David K. Duffell, Esq.
Edwards & Angell
2700 Hospital Tower
Providence, Rhode Island 02903
Facsimile: (401) 276-6611
(g) if to Bayer: Bayer Investment Group
6800 Pelican Bay Boulevard
Naples, Florida 33963
Attention: David A. Bayer
Facsimile:
with a copy to: John Short, Esq.
Peper Martin Jensen Maichel & Hetlage
720 Olive Street - 24th Floor
St. Louis, Missouri 63101
Facsimile: (314) 621-4834
(h) if to ML Media: M.L. Media Opportunity
Partners L.P.
350 Park Avenue - 16th Floor
New York, New York 10022
Attention: Mr. I. Martin Pompadour
Facsimile: (212) 980-8374
with a copy to : Steven L. Kirshenbaum, Esq.
Proskauer Rose Goetz & Mendelsohn
1585 Broadway
New York, New York 10036
Facsimile: (212) 969-2900
(i) if to M/C Partners: Media/Communications Partners II
Limited Partnership
75 State Street
Boston, Massachusetts 02109
Attention: Mr. Jim Wade
Facsimile:
with a copy to: Leonard Q. Slap, Esq.
Edwards & Angell
101 Federal Street
Boston, Massachusetts 02110
Facsimile: (617) 439-4170 or 7748
(j) if to M/C Investors: Media/Communications Investors
Limited Partnership
75 State Street
Boston, Massachusetts 02109
Attention: Mr. Jim Wade
Facsimile:
with a copy to: Leonard Q. Slap, Esq.
Edwards & Angell
101 Federal Street
Boston, Massachusetts 02110
Facsimile: (617) 439-4170 or 7748
or to such other address or facsimile number as any party may have
furnished in writing to the other parties in the manner provided
above.
12.7 Exchanges, Recapitalizations, Etc. Affecting the
Company's Common Stock. The provisions of this Agreement shall
apply, to the full extent set forth herein with respect to the
shares of Common Stock now or hereinafter owned by each Investor,
to any and all securities of the Company or any successor or assign
of the Company (whether by merger, consolidation or otherwise) that
may be issued in respect of, in exchange for, or in substitution of
such shares of Common Stock, and shall be appropriately adjusted
for any stock dividends, stock splits, reverse splits,
combinations, recapitalizations and the like occurring after the
date hereof.
12.8 Inspection and Compliance with Law. Copies of this
Agreement will be available for inspection or copying by any
interested Person at the offices of the Company through the Sec-
retary of the Company. The Company will otherwise take all actions
as may be necessary or appropriate to comply with any applicable
law relating to the validity and enforceability of stockholders
agreements containing the provisions of this Agreement.
12.9 Waivers. The failure of any party hereto to give
notice of the breach or non-fulfillment of any term or condition of
this Agreement shall not constitute a waiver thereof, nor shall the
waiver of any breach or non-fulfillment of any term or condition of
this Agreement constitute a waiver of any other breach or non-ful-
fillment of that term or condition or any other term or condition
of this Agreement.
12.10 Amendments. This Agreement may be amended or
modified at any time by a writing setting forth such amendment or
modification, signed by the Company and by Investors owning in the
aggregate at least 75% of the Common Stock; provided, however,
that, unless such amendment is signed by the Company and by all of
the Investors, no such amendment or modification shall (i)
eliminate any right of any Investor to designate the member or
members of the Board it is entitled to designate in accordance with
Section 4.1 hereof (it being understood and agreed that this clause
(i) shall not prohibit the enlargement of the Board), or (ii) amend
Sections 5.1, 6, 7, 10, 11 or 12.1 hereof.
12.11 Multiple Counterparts. This Agreement may be
executed in any number of counterparts, each of which when so
executed shall constitute an original copy hereof, but all of which
together shall constitute one agreement.
12.12 Severability. In the event that any one or more of
the provisions contained in this Agreement or in any other
document, instrument or agreement referred to herein, shall, for
any reason, be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not
affect any other provision of this Agreement or any other such
document, instrument or agreement.
12.13 Obligations Several. The obligations of each of
the Investors under this Agreement shall be several with respect to
each such Investor.
12.14 Entire Agreement. Except for the Agreement, dated
of even date herewith, among the H&F Entities, the GSC Entities and
Stanton, this Agreement contains the entire understanding among the
parties hereto concerning the subject matter hereof and supersedes
all prior agreements and undertakings, whether written or oral,
with respect to the subject matter hereof. Without limiting the
generality of the foregoing, (i) GCC, Bayer, HFCP II, Orchard and
International hereby agree that the Shareholders Agreement, by and
among GCC, Bayer, HFCP II, Orchard and International is hereby
terminated and shall be of no further force or effect; (ii) GCC,
HFCP II, Orchard, International and SCI Communications, Inc.
(formerly known as Stanton Communications, Inc., "SCI") hereby
agree that the Shareholders Agreement, by and among GCC, HFCP II,
Orchard, International and SCI is hereby terminated and shall be of
no further force or effect; and (iii) GCC, M/C Partners, M/C
Investors, HFCP II, Orchard, International and SCI hereby agree
that the Shareholders Agreement, by and among GCC, M/C Partners (as
successor in interest to NovAtel Finance, Inc.), M/C Investors (as
successor in interest to NovAtel Finance, Inc.), HFCP II, Orchard,
International and SCI is hereby terminated and shall be of no
further force or effect. <PAGE>
IN WITNESS WHEREOF, each of the parties has
executed or caused this Agreement to be executed by its duly authorized
officer as of the date first above written.
WESTERN WIRELESS CORPORATION
By:_____________________________________
Name:
Title:
HELLMAN & FRIEDMAN CAPITAL PARTNERS
II, L.P., a California limited partnership
By: Hellman & Friedman Investors,
L.P., its general partner
By: Hellman & Friedman Investors,
Inc., its general partner
By:_____________________________________
Name:
Title:
H & F ORCHARD PARTNERS, L.P.,
a California limited partnership
By: H & F Orchard Investors, L.P.,
its general partner
By: H & F Orchard Investors, Inc.,
its general partner
By:_____________________________________
Name:
Title: Vice president
H & F INTERNATIONAL PARTNERS, L.P.,
a California limited partnership
By: H & F International Investors,
L.P., its general partner
By: H & F International Investors,
Inc., its general partner
By:_____________________________________
Name:
Title:
________________________________________
JOHN W. STANTON
________________________________________
THERESA E. GILLESPIE
PN CELLULAR, INC.
By:_____________________________________
Name:
Title:
STANTON COMMUNICATIONS CORPORATION
By:_____________________________________
Name:
Title:
GS CAPITAL PARTNERS, L.P.
By: GS Advisors L.P., General Partner
By: GS Advisors, Inc., General Partner
By:_____________________________________
Name:
Title:
GS CAPITAL PARTNERS MEDIA HOLDING I, L.P.
By: GS Capital Partners, L.P.,
General Partner
By: GS Advisors L.P., General Partner
By: GS Advisors, Inc., General Partner
By:_____________________________________
Name:
Title:
BRIDGE STREET FUND 1992, L.P.
By: Stone Street Performance Corp.,
Managing General Partner
By:_____________________________________
Name:
Title:
STONE STREET FUND 1992, L.P.
By: Stone Street Performance Corp.,
General Partner
By:_____________________________________
Name:
Title:
ODYSSEY PARTNERS, L.P.,
By:_____________________________________
Name:
Title:
PROVIDENCE MEDIA PARTNERS L.P.
By: Providence Media GP Limited Partnership
Its: General Partner
By: Providence Ventures L.P.
Its: General Partner
By:_____________________________________
Name:
Title:
BAYER INVESTMENT GROUP
By: David A. Bayer Trust u/a/d August 21, 1992
By:_____________________________________
David A. Bayer, Trustee
M.L. MEDIA OPPORTUNITY PARTNERS L.P.
By:_____________________________________
Name:
Title:
MEDIA/COMMUNICATIONS PARTNERS II
LIMITED PARTNERSHIP
By:_____________________________________
Name:
Title:
MEDIA/COMMUNICATIONS INVESTORS
LIMITED PARTNERSHIP
By:_____________________________________
Name:
Title:
By its execution below the undersigned, General Cellular Corporation and
SCI Communications, Inc. hereby agree to be bound by the provisions of
Section 12.14 of the foregoing Stockholders Agreement.
SCI COMMUNICATIONS, INC.
By:_____________________________________
Name:
Title:
GENERAL CELLULAR CORPORATION
By:_____________________________________
Name:
Title: STOCKHOLDERS AGREEMENT
BY AND AMONG
WESTERN WIRELESS CORPORATION,
HELLMAN & FRIEDMAN CAPITAL PARTNERS II, L.P.,
H&F ORCHARD PARTNERS, L.P., H&F INTERNATIONAL PARTNERS, L.P.,
JOHN W. STANTON and THERESA E. GILLESPIE,
PN CELLULAR, INC., STANTON COMMUNICATIONS CORPORATION,
GS CAPITAL PARTNERS, L.P.,
GS CAPITAL PARTNERS MEDIA HOLDING I, L.P.,
BRIDGE STREET FUND 1992, L.P., STONE STREET FUND 1992, L.P.,
ODYSSEY PARTNERS, L.P., PROVIDENCE MEDIA PARTNERS L.P.
BAYER INVESTMENT GROUP, M.L. MEDIA OPPORTUNITY PARTNERS L.P.,
MEDIA/COMMUNICATIONS PARTNERS II LIMITED PARTNERSHIP
AND
MEDIA/COMMUNICATIONS INVESTORS LIMITED PARTNERSHIP
DATED: July 29, 1994
<PAGE>
TABLE OF CONTENTS
Section Page
1. Certain Definitions . . . . . . . . . . . . . . . . . . . 3
2. Certificate of Incorporation and By-Laws. . . . . . . . . 8
3. Legend. . . . . . . . . . . . . . . . . . . . . . . . . . 8
4. Management of the Corporation . . . . . . . . . . . . . . 9
4.1 Board of Directors. . . . . . . . . . . . . . . . 9
4.2 Transaction between the Company and Investors or
their Affiliates. . . . . . . . . . . . . . . . . 12
5. Tag-Along . . . . . . . . . . . . . . . . . . . . . . . . 13
5.1 Tag-Along Notice. . . . . . . . . . . . . . . . . 13
5.2 Stop-Transfer . . . . . . . . . . . . . . . . . . 16
6. Registration Rights . . . . . . . . . . . . . . . . . . . 16
6.1 Demand Registration . . . . . . . . . . . . . . . 16
6.2 Notice of Registration and Inclusion of
Registrable Common Stock. . . . . . . . . . . . . 22
6.3 Compliance with Blue Sky Laws . . . . . . . . . . 25
6.4 Expenses of Registration. . . . . . . . . . . . . 25
6.5 Registration Procedures . . . . . . . . . . . . . 27
6.6 Information . . . . . . . . . . . . . . . . . . . 27
6.7 Indemnification . . . . . . . . . . . . . . . . . 28
6.8 Selection of Underwriters . . . . . . . . . . . . 34
6.9 Holdback Agreements . . . . . . . . . . . . . . . 34
6.10 Delay of Registration . . . . . . . . . . . . . . 35
7. Additional Issuances of Equity Securities; Preemptive
Rights. . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.1 Additional Issuances of Equity Securities . . . . 36
7.2 Preemptive Rights . . . . . . . . . . . . . . . . 37
8. Representations and Warranties. . . . . . . . . . . . . . 38
8.1 Representations and Warranties of the
Investors . . . . . . . . . . . . . . . . . . . . 38
8.2 Representations and Warranties of the Company . . 39
9. Covenants and Agreements. . . . . . . . . . . . . . . . . 40
9.1 Covenants and Agreements of the Investors . . . . 40
9.2 Covenants and Agreements of the Company . . . . . 41
10. Term; Survival. . . . . . . . . . . . . . . . . . . . . . 41
10.1 Term. . . . . . . . . . . . . . . . . . . . . . . 41
10.2 Survival. . . . . . . . . . . . . . . . . . . . . 42
11. Restrictions on Transfer. . . . . . . . . . . . . . . . . 43
12. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . 44
12.1 Certain Subsequent Transactions . . . . . . . . . 44
12.2 Successors, Assigns and Transferees . . . . . . . 45
12.3 Specific Performance, Etc.. . . . . . . . . . . . 45
12.4 Governing Law . . . . . . . . . . . . . . . . . . 46
12.5 Headings. . . . . . . . . . . . . . . . . . . . . 46
12.6 Notices . . . . . . . . . . . . . . . . . . . . . 46
12.7 Exchanges, Recapitalizations, Etc. Affecting the
Company's Common Stock. . . . . . . . . . . . . . 49
12.8 Inspection and Compliance with Law. . . . . . . . 49
12.9 Waivers . . . . . . . . . . . . . . . . . . . . . 50
12.10 Amendments. . . . . . . . . . . . . . . . . . . . 50
12.11 Multiple Counterparts . . . . . . . . . . . . . . 50
12.12 Severability. . . . . . . . . . . . . . . . . . . 51
12.13 Obligations Several . . . . . . . . . . . . . . . 51
12.14 Entire Agreement. . . . . . . . . . . . . . . . . 51
EXCHANGE AGREEMENT AND PLAN OF MERGER
AGREEMENT, dated July 20, 1994 (the "Agreement"), by and among
WESTERN WIRELESS CORPORATION, a Delaware corporation ("WWC"),
MARKETS CELLULAR LIMITED PARTNERSHIP, a Delaware limited
partnership ("MARKETS"), MCLP, Inc., a Delaware corporation
("MCLPI"; MARKETS and MCLPI being sometimes referred to hereinafter
as the "Constituent Parties"), WWC HOLDING CO., INC., a Delaware
corporation ("WWC Holding"), PN CELLULAR, INC., a Washington
corporation ("PNC"), PN CELLULAR LIMITED PARTNERSHIP, a Delaware
limited partnership ("PNCLP"), JOHN W. STANTON and THERESA E.
GILLESPIE (collectively "Stanton"), HELLMAN & FRIEDMAN CAPITAL
PARTNERS II, L.P., a California limited partnership ("HFCP"), H&F
ORCHARD PARTNERS, L.P., a California limited partnership ("HFOP"),
H&F INTERNATIONAL PARTNERS, L.P., a California limited partnership
("HFIP"; HFCP, HFOP AND HFIP being sometimes referred to
individually as an "H&F Entity" and collectively as the "H&F
Entities"), BAYER INVESTMENT GROUP, a Florida general partnership
("Bayer"), M.L. MEDIA OPPORTUNITY PARTNERS L.P., a Delaware limited
partnership ("ML Media"), MEDIA/COMMUNICATIONS PARTNERS II LIMITED
PARTNERSHIP, a Delaware limited partnership ("M/C Partners"), and
MEDIA/COMMUNICATIONS INVESTORS LIMITED PARTNERSHIP, a Delaware
limited partnership ("M/C Investors"; M/C Partners and M/C
Investors being sometimes referred to individually as a
"Media/Communications Entity" and collectively as the
"Media/Communications Entities"; the H&F Entities, Bayer, ML Media,
the Media/Communications Entities and Stanton being sometimes
referred to individually as a "GCC Stockholder" and collectively as
the "GCC Stockholders").
R E C I T A L S:
1. Stanton, PNC, GS CAPITAL PARTNERS, L.P., GS CAPITAL
PARTNERS MEDIA HOLDING I, L.P., BRIDGE STREET FUND 1992, L.P.,
STONE STREET FUND 1992, L.P., ODYSSEY PARTNERS, L.P. and PROVIDENCE
MEDIA PARTNERS L.P. (collectively the "MARKETS Subscribers") and
the H&F Entities and Bayer entered into a Memorandum of Intention
(the "Memorandum of Intention"), pursuant to which, among other
things, the parties expressed their non-binding intention (with
each party having the right in its discretion to withdraw from the
Memorandum of Intention at any time prior to the execution of this
Agreement) to effect, inter alia, the following transactions: (i)
WWC would, subject to certain conditions, exchange one share of its
common stock, par value $.001 per share (the "WWC Common Stock"),
for each share of common stock, par value $.01 per share (the "GCC
Common Stock"), of General Cellular Corporation, a Delaware
corporation ("GCC"), owned by the GCC Stockholders, such that after
the consummation of such exchanges by the GCC Stockholders WWC
would own, directly or through wholly-owned subsidiaries, more than
80% of the outstanding GCC Common Stock, and (ii) WWC would,
subject to certain conditions, enter into a transaction with
MARKETS, PNC and with certain of MARKETS' affiliates, or the
holders, directly or indirectly of interests in MARKETS that would
result in WWC owning, directly or indirectly, more than 80% of the
assets of MARKETS in exchange for shares of WWC Common Stock.
2. As of the date of this Agreement, the authorized capital
stock of GCC consists of 10,000,000 shares of GCC Common Stock, of
which an aggregate of 8,436,737 shares are issued and outstanding
and an aggregate of 600,000 are reserved for issuance pursuant to
outstanding employee stock option plans, of which 342,339 shares
are subject to issuance pursuant to employee stock option
agreements.
3. As of the date hereof, the authorized capital stock of
WWC consists of 25,000,000 shares of WWC Common Stock, of which 10
shares are issued and outstanding and owned by Stanton. As of the
date hereof, the authorized capital stock of WWC Holding consists
of 100 shares of common stock, par value $.01 per share (the "WWC
Holding Common Stock"), all of which are issued and outstanding and
owned by WWC. As of the date hereof, the authorized capital stock
of MCLPI consists of 100 shares of Common Stock, par value $.01 per
share (the "MCLPI Common Stock"), all of which are issued and
outstanding and owned by WWC.
4. PNCLP, the general partner of MARKETS, has agreed that on
the Effective Date (as hereinafter defined) immediately after,
among other things, the consummation of the GCC Exchanges (as
hereinafter defined), the Merger (as hereinafter defined), the SCI
Exchange (as hereinafter defined), the MARKETS Affiliates
Transactions (as hereinafter defined) and the transfer described in
Paragraph 8 below, PNCLP will transfer to WWC its entire general
partnership interest in MARKETS in exchange for 617,971 shares of
WWC Common Stock (the "PNCLP Transfer").
5. Prior to the Effective Date, WWC shall make an exchange
offer under Regulation D promulgated under the Securities Act of
1933, as amended (the "Act"), to each holder of an Allocated Class
B Limited Partnership Unit (as such term is defined in the MARKETS
Class B Unit Participation Plan (the "Class B Plan")) which shall
not have become an Award (as such term is defined in the Class B
Plan). Pursuant to such exchange offer, each such holder shall
have the right, subject to the consummation of the Merger, to
exchange such Allocated Class B Limited Partnership Unit for an
option to acquire from WWC 75 shares of WWC Common Stock at a price
per share of $3.40 (the "Class B Exchange").
6. The Advisory Committee of MARKETS has resolved, subject
to the requisite approval by the general and limited partners of
MARKETS (the "Partners") of this Agreement and the transactions
contemplated hereby (the "MARKETS Partners' Approval"), in
accordance with the Revised Uniform Limited Partnership Act of the
State of Delaware (the "Limited Partnership Act") and the MARKETS
Agreement of Limited Partnership, dated October 5, 1992 (as amended
from time to time, the "MARKETS Partnership Agreement"), that on
the Effective Date and subject to the consummation of the
transactions contemplated by this Agreement, MCLPI be merged with
and into MARKETS (the "Merger") under and pursuant to the Limited
Partnership Act and the General Corporation Law of the State of
Delaware (the "General Corporation Law"), into a single limited
partnership existing under the laws of the State of Delaware, to
wit, MARKETS, one of the Constituent Parties, which shall be the
surviving limited partnership and whose name shall be "MARKETS
Cellular Limited Partnership" (such limited partnership in its
capacity as such surviving party being referred to as the
"Surviving Partnership").
7. The Advisory Committee of MARKETS has approved, subject
to the MARKETS Partners' Approval, and the Board of Directors and
sole stockholder of MCLPI have approved, the Merger upon the terms,
and subject to the conditions, set forth in this Agreement and have
approved and adopted the Certificate of Merger attached hereto as
Schedule 1 ("Certificate of Merger").
8. On the Effective Date, immediately after the consummation
of the Merger and immediately prior to the PNCLP Transfer, WWC will
transfer the entire limited partnership interest in MARKETS
received by it pursuant to the Merger to WWC Holding.
9. As a result of the PNCLP Transfer, the GSCP Note Exchange
(as hereinafter defined) and the Merger, WWC will own directly, and
indirectly through WWC Holding, all of the general and limited
partnership interests in MARKETS, and the Partners will (i) own,
(ii) in the case of holders of Allocated Class B Limited
Partnership Units who consummate the Class B Exchange, have the
right to acquire by option, or (iii) in the case of holders of
Allocated Class B Limited Partnership Units who do not consummate
the Class B Exchange, have the right, subject to the terms of the
Class B Plan and the Equity Participation Agreement executed by
MARKETS and such holder, to receive, an aggregate of 75 shares of
WWC Common Stock.
10. On the Effective Date and subject to the consummation of
the transactions contemplated by this Agreement, pursuant to this
Agreement, each of the GCC Stockholders will exchange each of the
shares of GCC Common Stock owned by it as set forth opposite its
name on Schedule 2 annexed hereto for one share of WWC Common Stock
(the "GCC Exchanges"), and Stanton will surrender for cancellation
the 10 shares of WWC Common Stock issued and outstanding on the
date hereof and owned by it such that after the consummation of the
GCC Exchanges WWC will own, directly or indirectly, approximately
95% of the issued and outstanding GCC Common Stock.
11. As of the date hereof, MARKETS owns 54,926 shares of GCC
Common Stock and SCI Communications, Inc. (formerly known as
Stanton Communications, Inc.), a Washington corporation ("SCI"),
owns 396,239 shares of GCC Common Stock. As of the date hereof,
the authorized capital stock of SCI consists of 400,000 shares of
Class A common stock, no par value (the "SCI Common Stock"), of
which 153,869.9 shares are owned by MARKETS and 230,802.4 shares
are owned by Stanton, and 600,000 shares of Class B common stock,
no par value (the "SCI Class B Common Stock"), none of which are
issued and outstanding.
12. On the Effective Date and subject to the consummation of
the transactions contemplated by this Agreement, Stanton will
exchange the 230,802.4 shares of SCI Common Stock owned by it for
237,743 shares of WWC Common Stock (the "SCI Exchange").
13. As a result of the SCI Exchange and subject to the
consummation of the transactions contemplated by this Agreement,
WWC will own, directly or indirectly, 100% of the SCI Common Stock.
14. On the Effective Date and subject to the consummation of
the transactions contemplated by this Agreement, (I) Stanton will
transfer its 1% partnership interest in JWT Partnership II, a
Washington general partnership ("JWT"), to WWC in exchange for
4,567 shares of WWC Common Stock and the assumption by WWC (or such
subsidiary) of all of the liabilities of Stanton as a partner in
JWT, (II) PNC will transfer its (x) 1.17% partnership interest in
Hood River Cellular Telephone Company, a Washington general
partnership ("HRCTC"), and (y) 1% partnership interest in KETS
Partnership, a Washington general partnership ("KETS"), to WWC in
exchange for 8,259 shares of WWC Common Stock and the assumption by
WWC (or such subsidiaries) of all of the liabilities of PNC as a
partner in HRCTC and KETS, and (III) PNCLP will liquidate and
distribute the WWC Common Stock received by it pursuant to the
PNCLP Transfer to PNC, its general partner, and GCC Holdings, its
limited partner (the transactions described in clauses (I), (II)
and (III) are hereinafter referred to as the "MARKETS Affiliates
Transactions").
15. On the Effective Date and subject to the consummation of
the transactions contemplated by this Agreement, WWC shall issue to
GS Capital Partners, L.P. ("GSCP") 8,705 shares of WWC Common Stock
(the "GSCP Note Exchange"), in exchange for the assignment by GSCP
to WWC of all of its right, title and interest in and to that
certain Note, due December 31, 2002 of MARKETS to GSCP in the
principal amount of $250,000 (the "MARKETS Note").
16. The parties intend that the GCC Exchanges, the Merger,
the SCI Exchange, the MARKETS Affiliates Transactions, the PNCLP
Transfer and the GSCP Note Exchange all be treated as one
transaction structured so as to qualify under Section 351 of the
Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the premises and the
mutual covenants, conditions and promises hereinafter set forth,
the parties hereby agree as follows:
ARTICLE 1
EXCHANGE OF GCC COMMON STOCK FOR WWC COMMON STOCK
Subject to the terms and conditions hereof and in reliance
upon the representations, warranties, covenants and agreements
herein contained, on the Effective Date, each of the GCC
Stockholders shall exchange, transfer, convey, assign and deliver
to WWC, free and clear of all liabilities, liens, claims, pledges,
security interest, charges or encumbrances, restrictions, title
retention agreements, proxies or other voting arrangements, rights
of first refusal, tag along or similar rights of any nature
whatsoever (all of the foregoing collectively "Liens") each share
of GCC Common Stock owned by it for one share of WWC Common Stock.
ARTICLE 2
MERGER AND CLASS B EXCHANGE
2.1 The Merger. Subject to the terms and conditions hereof
and in reliance upon the representations, warranties, covenants and
agreements herein contained, on the Effective Date, MCLPI shall,
pursuant to the Limited Partnership Act and General Corporation
Law, be merged with and into MARKETS, which shall be the Surviving
Partnership and whose name shall be MARKETS Cellular Limited
Partnership. The Certificate of Merger will be filed with the
Secretary of State of the State of Delaware as soon as practicable
following fulfillment of all conditions to the obligations of the
parties contained herein (other than such conditions as shall have
been waived in accordance with the terms hereof). The date on
which the Certificate of Merger is filed is herein referred to as
the "Effective Date".
2.2 Partnership Agreement. The MARKETS Partnership Agreement
as in effect on the Effective Date, shall continue to be the
Partnership Agreement of the Surviving Partnership until further
amended as provided by law and the MARKETS Partnership Agreement.
2.3 Property and Liabilities of Constituent Parties. When
the Merger shall have become effective, the separate existence of
MCLPI shall cease and MCLPI shall be merged with and into MARKETS
which as the Surviving Partnership shall possess all the rights,
privileges, powers and franchises of a public as well as of a
private nature, and be subject to all the restrictions, dis-
abilities and duties of each of the Constituent Parties; and all
and singular, the rights, privileges, powers and franchises of each
of the Constituent Parties, and all property, real, personal and
mixed, tangible and intangible, and all debts due to either of the
Constituent Parties on whatever account, as well for stock
subscriptions as all other things in action or belonging to each of
the Constituent Parties shall be vested in the Surviving
Partnership; and all property, rights, privileges, powers and fran-
chises, and all and every other interest shall be thereafter as
effectually the property of the Surviving Partnership as they were
of the several and respective Constituent Parties, and the title to
any real estate vested by deed or otherwise, under the laws of
Delaware or any other state, in either of the Constituent Parties,
shall not revert or be in any way impaired; but all rights of
creditors and all liens upon any property of either of the
Constituent Parties shall be preserved unimpaired, and all debts,
liabilities and duties of the respective Constituent Parties shall
thenceforth attach to the Surviving Partnership and may be enforced
against it to the same extent as if said debts, liabilities and
duties had been incurred or contracted by it.
2.4 MCLPI Stockholders' Approval and MARKETS Partners'
Approval and Class B Exchange.
(a) MCLPI Stockholders' Approval. WWC, as the sole
stockholder of MCLPI, adopted this Agreement in accordance with the
General Corporation Law on July 19, 1994.
(b) MARKETS Partners' Approval. Prior to the Effective
Date, MARKETS will submit to the Partners, for their adoption and
approval in accordance with the MARKETS Partnership Agreement, this
Agreement and the transactions contemplated hereby.
(c) Class B Exchange. Prior to the Effective Date,
MARKETS agrees to offer to each holder of an Allocated Class B
Limited Partnership Unit which shall not have become an Award the
opportunity to make the Class B Exchange.
2.5 Further Assurances. If at any time the Surviving
Partnership shall consider or be advised that any further
assignments, conveyances or assurances in law are necessary or
desirable to vest, perfect or confirm of record in the Surviving
Partnership the title to any property or rights of the Constituent
Parties, or otherwise to carry out the provisions hereof, the
proper officers and directors of the Constituent Parties
immediately prior to the Merger becoming effective shall execute
and deliver any and all proper deeds, assignments and assurances in
law, and do all things necessary or proper to vest, perfect or
confirm title to such property or rights in the Surviving
Partnership and otherwise carry out the provisions hereof.
2.6 Effect of Merger on Constituent Parties' Securities.
(a) The general partnership interest of PNCLP in MARKETS
shall, at such time by virtue of the Merger without any action on
the part of PNCLP, continue to be the entire general partnership
interest in MARKETS. Each Class A Limited Partnership Unit in
MARKETS outstanding on the Effective Date shall, at such time and
by virtue of the Merger without any action on the part of the
holder thereof, be cancelled and converted into shares of WWC
Common Stock as follows: (i) each outstanding Class A Limited
Partnership Unit, which was issued or subscribed for prior to
December 31, 1992 (other than those issued to certain persons who,
upon executing the MARKETS Partnership Agreement, paid full
consideration for all Class A Limited Partnership Units they
subscribed for and did not have Additional Unit Subscription
Obligations (as defined in the MARKETS Partnership Agreement)),
shall be converted into 1,939.901 shares of WWC Common Stock; (ii)
each outstanding Class A Limited Partnership Unit, which was issued
or subscribed for prior to December 31, 1992 by certain persons
who, upon executing the MARKETS Partnership Agreement, paid full
consideration for all Class A Limited Partnership Units they
subscribed for and did not have Additional Unit Subscription
Obligations, shall be converted into 1,957.793 shares of WWC Common
Stock; (iii) each of the 353 outstanding Class A Limited
Partnership Units which were issued to GSCP on October 6, 1992
shall be converted into 1,915.242 shares of WWC Common Stock; and
(iv) each other outstanding Class A Limited Partnership Unit shall
be converted into 2,063.563 shares of WWC Common Stock. Each Class
B Limited Partnership Unit in MARKETS which, in accordance with the
Class B Plan and the terms of the Equity Participation Agreement
executed by MARKETS and such holder in connection therewith, shall
have become an Award on or prior to the Effective Date, shall, at
such time and by virtue of the Merger without any action on the
part of the holder thereof, be cancelled and converted into, and
the holder thereof shall be entitled to receive, 75 shares of WWC
Common Stock. Each Allocated Class B Limited Partnership Unit
which, in accordance with the Class B Plan and the terms of the
Equity Participation Agreement executed by MARKETS and such holder
in connection therewith, shall not have become an Award on or prior
to the Effective Date and which shall have been exchanged by the
holder thereof pursuant to the Class B Exchange shall, at such time
and by virtue of the Merger, be cancelled and the holder thereof
shall receive an option to acquire from WWC 75 shares of WWC Common
Stock at a price of $3.40 per share. Each Allocated Class B
Limited Partnership Unit which, in accordance with the Class B Plan
and the terms of the Equity Participation Agreement executed by
MARKETS and such holder in connection therewith, shall not have
become an Award on or prior to the Effective Date and which shall
not have been exchanged by the holder thereof pursuant to the Class
B Exchange shall, at such time and by virtue of the Merger without
any action on the part of the holder thereof, become the right to
receive 75 shares of WWC Common Stock at such time, if any, as such
Allocated Class B Limited Partnership Unit would have become an
Award in accordance with the Class B Plan and the terms of such
Equity Participation Agreement.
(b) The shares of MCLPI Common Stock outstanding on the
Effective Date shall, at such time and by virtue of the Merger
without any action on the part of WWC, the holder thereof, be
converted into the entire limited partnership interest in the
Surviving Partnership. Accordingly, after the Merger and the
consummation of the PNCLP Transfer MARKETS, as the Surviving
Partnership, shall be wholly owned by WWC and WWC Holding.
2.7 Surrender of MARKETS Class A and Awarded Class B Unit.
On and after the Effective Date, each record holder of a Class A
Limited Partnership Unit certificate or certificates and each
record holder of an Awarded Class B Limited Partnership Unit
certificate may surrender such certificate or certificates to WWC
together with such assignments and other documents as WWC shall
require, and shall receive as promptly as practicable in exchange
therefor a certificate representing that number of shares of WWC
Common Stock which such holder has a right to receive pursuant to
this Agreement. From and after the Effective Date, such holders of
a certificate previously representing Class A or Awarded Class B
Limited Partnership Units shall have no rights with respect to such
Units except to surrender such certificate to WWC in exchange for
the number of shares of WWC Common Stock which such holder has the
right to receive pursuant to this Agreement.
2.8 Class B Units Exchanged Pursuant to Class B Exchange. On
the Effective Date and subject to the consummation of the
transactions contemplated hereby, each holder of an Allocated Class
B Limited Partnership Unit who shall have agreed, pursuant to the
Class B Exchange, to exchange its Allocated Class B Limited
Partnership Units for options to acquire WWC Common Stock shall, in
accordance with the terms and conditions of the Class B Exchange,
receive an option to acquire from WWC 75 shares of WWC Common Stock
at a price per share of $3.40 for each such Allocated Class B
Limited Partnership Unit.
2.9 Class B Units Not Exchanged Pursuant to Class B Exchange.
On the Effective Date and subject to the consummation of the
transactions contemplated hereby, each holder of an Allocated Class
B Limited Partnership Unit who shall not have agreed, pursuant to
the Class B Exchange, to exchange its Allocated Class B Limited
Partnership Unit for options to acquire WWC Common Stock shall,
subject to the terms of the Class B Plan and the Equity
Participation Agreement executed by MARKETS and such holder, have
the right to receive 75 shares of WWC Common Stock at such time, if
any, as such Allocated Class B Limited Partnership Unit would have
become an Award in accordance with the Class B Plan and the terms
of such Equity Participation Agreement.
2.10 No Fractional Shares. No fractional shares of WWC Common
Stock shall be issued. In lieu of a fractional share of WWC Common
Stock each holder of (x) Class A Limited Partnership Units, (y)
Awarded Class B Limited Partnership Units and (z) Allocated Class
B Limited Partnership Units which, in accordance with the Class B
Plan and the terms of the Equity Participation Agreement executed
by MARKETS and such holder in connection therewith, shall not have
become an Award on or prior to the Effective Date and which shall
not have been exchanged by the holder thereof pursuant to the Class
B Exchange, shall receive on the Effective Date or, in the case of
such Allocated Class B Limited Partnership Units not so exchanged,
on such date(s), if any, on which such Allocated Class B Limited
Partnership Units would have become an Award in accordance with the
Class B Plan and the terms of such holder's Equity Participation
Agreement, an amount of cash equal to the product of the fractional
share such holder is otherwise entitled to receive times $33.91.
ARTICLE 3
COVENANTS AND AGREEMENTS OF CERTAIN OF THE PARTIES
3.1 Covenants of WWC, WWC Holdings and MCLPI. Each of WWC,
WWC Holdings and MCLPI covenants and agrees that, prior to the
Effective Date, it will not engage in any business activities or
enter into any transaction whatsoever except such as are related to
this Agreement and the performance of its obligations hereunder.
On the Effective Date and subject to the consummation of the
transactions contemplated by this Agreement, WWC will execute and,
deliver the Stock Purchase Agreement with GSCP, substantially in
the form of Schedule 3.1 annexed hereto pursuant to which the GSCP
Note Exchange will be consummated. On the Effective Date,
immediately after the consummation of the Merger and immediately
prior to the PNCLP Transfer, WWC will transfer the entire limited
partnership interest in MARKETS received by it pursuant to the
Merger to WWC Holding. On the Effective Date, immediately after
the consummation of the Merger and the transfer by WWC of the
entire limited partnership interest in MARKETS to WWC Holding, WWC
will consummate the PNCLP Transfer.
3.2 Additional Covenants of WWC. WWC covenants and agrees
that on the Effective Date it shall assume and agree to discharge
and perform any and all obligations and liabilities, whether
arising before, on or after the Effective Date, (i) of PNCLP
arising under the MARKETS Partnership Agreement or arising by
reason of PNCLP's serving as the General Partner of MARKETS; (ii)
of PNC arising under the Partnership Agreement of HRCTC, dated as
of May 3, 1991, as from time to time amended, or arising by reason
of PNC's serving as a general partner in HRCTC; (iii) of PNC
arising under the Partnership Agreement of KETS, dated as of
December 31, 1992, as from time to time amended, or arising by
reason of PNC's serving as a general partner in KETS; (iv) of PNC
arising under the Partnership Agreement of PNCLP, dated as of
October 5, 1992, as from time to time amended, or arising by reason
of PNC's serving as the general partner of PNCLP; and (v) of
Stanton arising under the Partnership Agreement of JWT, dated as of
July 31, 1988, as from time to time amended, or arising by reason
of Stanton's serving as a general partner of JWT. Other than as
specified herein, WWC shall not be obligated to assume, pay,
perform, discharge or be responsible or liable for any obligations,
duties or liabilities of PNCLP, PNC, or Stanton.
3.3 Covenants of Stanton. Subject to the consummation of the
transactions contemplated by this Agreement, Stanton covenants and
agrees that (i) except as contemplated by this Agreement, Stanton
shall not sell, exchange, transfer, convey, assign or dispose of,
or grant or suffer to exist any Lien on, or enter into any Contract
(as hereinafter defined) to do any of the foregoing, the shares of
GCC Common Stock owned by him as set forth opposite his name on
Schedule 2 annexed hereto and (ii) Stanton shall take all action
necessary to consummate his portion of the GCC Exchanges. On the
Effective Date and subject to the consummation of the transactions
contemplated by this Agreement, Stanton will (i) consummate his
portion of the GCC Exchanges, (ii) consummate the MARKETS
Affiliates Transactions to which he is a party, and (iii)
consummate the SCI Exchange.
3.4 Covenants of PNC. On the Effective Date and subject to
the consummation of the transactions contemplated by this
Agreement, PNC will (i) cause PNCLP to consummate the PNCLP
Transfer, and (ii) consummate the MARKETS Affiliates Transactions
to which it is a party.
3.5 Covenants of PNCLP. On the Effective Date immediately
after the consummation of the GCC Exchanges, the Merger, the SCI
Exchange, the MARKETS Affiliates Transactions and the GSCP Note
Exchange, PNCLP will consummate the PNCLP Transfer. On the
Effective Date and subject to the consummation of the transactions
contemplated by this Agreement, PNCLP will consummate the MARKETS
Affiliates Transactions to which it is a party.
3.6 Covenants of the H&F Entities, Bayer, ML Media and the
Media/Communications Entities. Subject to the consummation of the
transactions contemplated by this Agreement, each of the H&F
Entities, Bayer, ML Media and the Media/Communications Entities
covenants and agrees that (i) except as contemplated by this
Agreement, it shall not sell, exchange, transfer, convey, assign or
dispose of, or grant or suffer to exist any Lien on, or enter into
any Contract to do any of the foregoing, the shares of GCC Common
Stock owned by it as set forth opposite its name on Schedule 2
annexed hereto, and (ii) it shall take all actions necessary to
consummate its portion of the GCC Exchanges. On the Effective Date
and subject to the consummation of the transactions contemplated by
this Agreement, each of the H&F Entities, Bayer, ML Media and the
Media/Communications Entities will consummate its respective
portion of the GCC Exchanges.
ARTICLE 4
GOVERNMENTAL FILINGS
Each of the parties hereto represents, warrants, covenants and
agrees from and after the execution and delivery of this Agreement
to and including the Effective Date as follows:
(a) It is understood that the consummation of the GCC
Exchanges and the Merger is subject to prior approval of the FCC
and may be subject to the prior approval of one or more state
regulatory commissions. The parties shall have filed with the FCC
and all relevant state agencies all required applications relating
to the assignment or transfer of control of any respective cellular
telephone systems and licenses of GCC and MARKETS. Each of the
parties hereto shall diligently take or cooperate in the taking of
all steps which are necessary or appropriate to expedite the pros-
ecution and favorable consideration of such applications. The
parties covenant and agree to undertake all actions and file such
material as shall be necessary or required to obtain any necessary
waivers or other authority from the FCC or such state agency or
agencies in connection with the foregoing applications.
(b) Each of the parties has filed with the Federal Trade
Commission and the Antitrust Division of the Department of Justice
any and all reports or notifications which are required to be filed
under the Hart-Scott-Rodino Anti-Trust Improvements Act of 1976, as
amended (the "HSR Act") or other Federal law or administrative
regulations.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
5.1 Representations and Warranties of the H&F Entities. The
H&F Entities, jointly and severally, represent and warrant to each
of the other parties hereto as follows:
(a) Due Organization. Each of the H&F Entities is a
partnership duly organized, validly existing and in good standing
under the laws of its state of organization, has all requisite
partnership power and authority to own, operate and lease its
property, carry on its business as now conducted and is duly qual-
ified to do business and is in good standing in all states where
the conduct of its business or the ownership of its properties
makes such qualification necessary, except where the failure to so
qualify would not have a material adverse effect on such entity or
the transactions contemplated hereby.
(b) Title. Each of the H&F Entities has good and valid
title to the shares of GCC Common Stock set forth opposite its name
on Schedule 2 annexed hereto and being exchanged by it pursuant to
the GCC Exchanges free and clear of all Liens, and upon the
consummation by each of the H&F Entities of its respective portion
of the GCC Exchanges WWC will have good and valid title to such
shares, free and clear of all Liens.
(c) Power and Authority; Enforceability; No Violation.
Each of the H&F Entities has full power and authority to execute,
deliver and perform its obligations under this Agreement, and to
consummate the transactions contemplated hereby, including, without
limitation, its respective portion of the GCC Exchanges. The
execution, delivery and performance of this Agreement and the
transactions contemplated hereby have been duly and validly autho-
rized by all necessary action on the part of each of the H&F
Entities. This Agreement has been duly and validly executed and
delivered by each of the H&F Entities and constitutes a legal,
valid and binding obligation of each of the H&F Entities
enforceable in accordance with its terms. Neither the execution,
delivery or performance of this Agreement by the H&F Entities, nor
the consummation of the transactions contemplated hereby will, with
or without the giving of notice or the passage of time, or both (i)
violate, conflict with, result in a default or loss of rights (or
give rise to any right of termination, cancellation or accelera-
tion) under, or result in the creation of any Lien, pursuant to (A)
any provision of the certificate of incorporation, by-laws or
partnership agreement, as applicable, of any H&F Entities, (B)
except as set forth on Schedule 5.1(c)(i) annexed hereto (as to
which all requisite waivers have been obtained or will be obtained
prior to the Effective Date), any material Contract (as hereinafter
defined), including, without limitation, any stockholders or
similar agreement, to which any H&F Entity is a party; or (C) any
law, order, judgment, ordinance, rule, regulation or decree to
which any H&F Entity is a party or by which any of their respective
properties are bound or affected; or (ii) give rise to any right of
first refusal or similar right with respect to the GCC Common Stock
being exchanged by it. Except for the Federal and state
governmental or regulatory approvals set forth on Schedule
5.1(c)(ii) annexed hereto, no permit, consent, filing or approval
of any third party is required to be obtained or made by any H&F
Entity in connection with the execution and delivery of this Agree-
ment or the consummation of the transactions contemplated hereby in
order to (x) render this Agreement and the transactions contem-
plated hereby valid and effective and (y) enable the H&F Entities
to consummate their respective portions of the GCC Exchanges and
the transactions contemplated hereby.
(d) No Brokers. No agent, broker, investment banker,
Person (as hereinafter defined) or firm is or will be entitled to
any broker's or finder's fee or any other commission or similar fee
directly or indirectly in connection with the transactions
contemplated by this Agreement based in any way on any arrange-
ments, agreements or understandings made by or on behalf of the H&F
Entities, and the H&F Entities hereby agree, jointly and severally,
to indemnify MARKETS and WWC and agrees to hold harmless MARKETS
and WWC against and in respect of any claims for brokerage and
other commissions relating to such transactions based in any way on
any arrangements, agreements or understandings made by or on behalf
of the H&F Entities.
(e) No Distribution. The shares of WWC Common Stock
being delivered to the H&F Entities in exchange for the GCC Common
Stock are being acquired as of the Effective Date by each of the
H&F Entities for its sole benefit and account for investment only
and not with a view to, or in connection with, any resale,
distribution or fractionalization thereof.
advised and understands that the shares of WWC Common Stock being
delivered to it in exchange for the GCC Common Stock have not been
registered under the Act or the applicable securities laws of any
state or other jurisdiction and, accordingly, that the shares of
WWC Common Stock being delivered to it pursuant to the terms of
this Agreement may not be resold (i) without registration thereof
under the Act and any applicable state securities laws (unless
exemptions from such registration are available and WWC has been
furnished with an opinion of counsel, reasonably satisfactory to
WWC, to the effect that an exemption from such registration) or
(ii) in violation of any law.
(g) Accredited Investor. Each of the H&F Entities is an
"Accredited Investor" as that term is defined under Rule 501 of
Regulation D promulgated under the Act and, except as provided in
the WWC Stockholders Agreement (as hereinafter defined), WWC shall
have no obligation whatsoever to register at any time the WWC
Common Stock being delivered to it pursuant to the GCC Exchanges
under the Act or any applicable state securities laws or to obtain
any exemption from such registration.
5.2 Representations and Warranties of Bayer, ML Media and the
Media/Communications Entities. Each of Bayer, ML Media and the
Media/Communications Entities represents and warrants (with respect
to itself only) to each of the other parties hereto as follows:
(a) Due Organization. Each of Bayer, ML Media and the
Media Communications Entities is a partnership duly organized,
validly existing and in good standing under the laws of its state
of organization, has all requisite partnership power and authority
to own, operate and lease its property, carry on its business as
now conducted and is duly qualified to do business and is in good
standing in all states where the conduct of its business or the
ownership of its properties makes such qualification necessary,
except where the failure to so qualify would not have a material
adverse effect on such entity.
(b) Title. Each of Bayer, ML Media and the Media
Communications Entities has good and valid title to the shares of
GCC Common Stock set forth opposite its name on Schedule 2 annexed
hereto and being exchanged by it pursuant to the GCC Exchanges free
and clear of all Liens, and upon the consummation by each of Bayer,
ML Media and the Media/Communications Entities of its respective
portion of the GCC Exchanges WWC will have good and valid title to
such shares, free and clear of all Liens.
(c) Power and Authority; Enforceability; No Violation.
Each of Bayer, ML Media and the Media Communications Entities has
full power and authority to execute, deliver and perform its
obligations under this Agreement, and to consummate the transac-
tions contemplated hereby, including, without limitation, its
respective portion of the GCC Exchanges. The execution, delivery
and performance of this Agreement and the transactions contemplated
hereby have been duly and validly authorized by all necessary
action on the part of each of Bayer, ML Media and the
Media/Communications Entities. This Agreement has been duly and
validly executed and delivered by each of Bayer, ML Media and the
Media/Communications Entities and constitutes a legal, valid and
binding obligation of each of Bayer, ML Media or the
Media/Communications Entities enforceable in accordance with its
terms. Neither the execution, delivery or performance of this
Agreement by each of Bayer, ML Media or the Media/Communications
Entities, nor the consummation of the transactions contemplated
hereby will, with or without the giving of notice or the passage of
time, or both (i) violate, conflict with, result in a default or
loss of rights (or give rise to any right of termination, can-
cellation or acceleration) under, or result in the creation of any
Lien, pursuant to (A) any provision of its partnership agreement,
(B) except as set forth on Schedule 5.2(c)(i) annexed hereto (as to
which all requisite waivers have been obtained or will be obtained
prior to the Effective Date), any material Contract, including,
without limitation, any stockholders or similar agreement, to which
it is a party, or (C) any law, order, judgment, ordinance, rule,
regulation or decree to which it is a party or by which any of its
properties are bound or affected; or (ii) give rise to any right of
first refusal or similar right with respect to the GCC Common Stock
being exchanged by it. Except for the Federal and state
governmental or regulatory approvals set forth on Schedule
5.2(c)(ii) annexed hereto, no permit, consent, filing or approval
of any third party is required to be obtained or made by Bayer, ML
Media or the Media/Communications Entities in connection with its
execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby in order to (x) render this Agree-
ment and the transactions contemplated hereby valid and effective
and (y) enable it to consummate its portion of the GCC Exchanges
and the transactions contemplated hereby.
(d) No Brokers. No agent, broker, investment banker,
Person or firm is or will be entitled to any broker's or finder's
fee or any other commission or similar fee directly or indirectly
in connection with the transactions contemplated by this Agreement
based in any way on any arrangements, agreements or understandings
made by or on behalf of Bayer, ML Media and the Media/Communica-
tions Entities, and each of Bayer, ML Media and the Media/Communi
cations Entities hereby agrees to indemnify MARKETS and WWC and
agree to hold harmless MARKETS and WWC against and in respect of
any claims for brokerage and other commissions relating to such
transactions based in any way on any arrangements, agreements or
understandings made by or on behalf of it.
(e) No Distribution. The shares of WWC Common Stock
being delivered to each of Bayer, ML Media and the
Media/Communications Entities in exchange for the GCC Common Stock
are being acquired as of the Effective Date by each of Bayer, ML
Media and the Media/Communications Entities for its sole benefit
and account for investment only and not with a view to, or in
connection with, any resale, distribution or fractionalization
thereof.
(f) No Registration. Each of Bayer, ML Media and the
Media/Communications Entities has been advised and understands that
the shares of WWC Common Stock being delivered to it in exchange
for the GCC Common Stock have not been registered under the Act or
the applicable securities laws of any state or other jurisdiction
and, accordingly, that the shares of WWC Common Stock being
delivered to it pursuant to the terms of this Agreement may not be
resold (i) without registration thereof under the Act and any
applicable state securities laws (unless exemptions from such
registration are available and WWC has been furnished with an
opinion of counsel, reasonably satisfactory to WWC, to the effect
that such resale is pursuant to an exemption from such
registration) or (ii) in violation of any law.
(g) Accredited Investor. Each of Bayer, ML Media and
the Media/Communications Entities is an "Accredited Investor" as
that term is defined under Rule 501 of Regulation D promulgated
under the Act and, except as provided in the WWC Stockholders
Agreement, WWC shall have no obligation whatsoever to register at
any time the WWC Common Stock being delivered to it pursuant to the
GCC Exchanges under the Act or any applicable state securities laws
or to obtain any exemption from such registration.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF MARKETS
MARKETS represents and warrants to each of the other parties
hereto as follows:
6.1 Due Organization. MARKETS is a limited partnership duly
organized, validly existing and in good standing under the laws of
the State of Delaware, has all requisite partnership power and
authority to own, operate and lease its property, carry on its
business as now conducted and is duly qualified to do business and
is in good standing in all states where the conduct of its business
or the ownership of its properties makes such qualification neces-
sary, except where the failure to so qualify would not have a
MARKETS Material Adverse Effect (as hereinafter defined). Each
subsidiary or MARKETS is a corporation or partnership duly
organized, validly existing and in good standing under the laws of
its state of incorporation or organization, has all requisite cor-
porate or partnership power and authority to own, operate and lease
its property, carry on its business as now conducted and is duly
qualified to do business and is in good standing in all states
where the conduct of its business or the ownership of its
properties makes such qualification necessary, except where the
failure to so qualify would not have a MARKETS Material Adverse
Effect.
6.2 Capitalization of MARKETS. PNCLP is the sole general
partner of MARKETS. The Class A Limited Partnership Units and the
Class B Limited Partnership Units are the only authorized limited
partnership interests in MARKETS. As of the date hereof, 3,107
Class A Limited partnership Units were authorized and outstanding.
As of the date hereof, 2,320 Class B Limited Partnership Units were
authorized 548 of which were Awarded and 1,385 of which were
Allocated under the Class B Plan. On the Effective Date and upon
consummation of the Merger and the PNCLP Transfer, WWC will own,
directly or indirectly, all of the limited and general partnership
interests in MARKETS. On the Effective Date and upon consummation
of the Merger and the PNCLP Transfer, there will be no outstanding
subscriptions, options, warrants, rights or convertible or
exchangeable securities issued by MARKETS or any of its
Subsidiaries or other agreements or commitments to which MARKETS or
any of its Subsidiaries is a party of any character relating to the
issued or unissued partnership interests or other securities of
MARKETS, including, without limitation, any agreement or commitment
obligating MARKETS or any of its Subsidiaries to issue, deliver or
sell, or cause to be issued, delivered or sold, partnership
interests or other securities of MARKETS or obligating MARKETS or
any of its Subsidiaries to grant, extend or enter into any
subscription, option, warrant, right or convertible or exchangeable
security, right of first refusal, right to receive notification of
the transactions contemplated hereby or other similar agreement or
commitment with respect to MARKETS or obligating MARKETS to make
any payments pursuant to any equity-based or equity-related plan or
award.
6.3 Power and Authority; Enforceability; No Violation.
Subject to the MARKETS Partners' Approval, MARKETS has full power
and authority to execute, deliver and perform its obligations under
this Agreement, and to consummate the transactions contemplated
hereby. Subject to the MARKETS Partners' Approval, the execution,
delivery and performance of this Agreement and the transactions
contemplated hereby have been duly and validly authorized by all
necessary action on the part of MARKETS. Subject to the MARKETS
Partners' Approval, this Agreement has been duly and validly
executed and delivered by MARKETS and constitutes a legal, valid
and binding obligation of MARKETS enforceable in accordance with
its terms. Subject to the MARKETS Partners' Approval, neither the
execution, delivery or performance of this Agreement by MARKETS,
nor the consummation of the transactions contemplated hereby will,
with or without the giving of notice or the passage of time, or
both (i) violate, conflict with, result in a default or loss of
rights (or give rise to any right of termination, cancellation or
acceleration) under, or result in the creation of any Lien, pursu-
ant to (A) any provision of the MARKETS Partnership Agreement or
the partnership agreement of any Subsidiary (as hereinafter
defined) of MARKETS which is a partnership or the certificate of
incorporation or by-laws of any MARKETS Subsidiary Corporation (as
hereinafter defined); (B) except as set forth on Schedule 6.3(i)
annexed hereto (as to which all requisite waivers have been
obtained or will be obtained prior to the Effective Date), any
material Contract, including, without limitation, any stockholders
or similar agreement, to which any MARKETS Company (as hereinafter
defined) is a party; or (C) any law, order, judgment, ordinance,
rule, regulation or decree to which any MARKETS Company is a party
or by which any of their respective properties are bound or af-
fected; or (ii) give rise to any right of first refusal or similar
right with respect to any partnership interest in MARKETS or the
capital stock of any MARKETS Subsidiary Corporation or any
partnership interest in any Subsidiary of MARKETS which is a
partnership, or any properties or assets of any MARKETS Company.
Except for the Federal and state governmental or regulatory
approvals set forth on Schedule 6.3(ii) annexed hereto, no permit,
consent, filing or approval of any third party is required to be
obtained or made by any MARKETS Company in connection with the
execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby in order to (x) render this Agree-
ment and the transactions contemplated hereby valid and effective
and (y) enable MCLPI and MARKETS to consummate the Merger and the
transactions contemplated hereby.
6.4 No Brokers. Except for the payment of a fee (payable in
shares of WWC Common Stock) to Goldman, Sachs & Co. ("GSC"), no
agent, broker, investment banker, Person or firm is or will be
entitled to any broker's or finder's fee or any other commission or
similar fee directly or indirectly in connection with the
transactions contemplated by this Agreement based in any way on any
arrangements, agreements or understandings made by or on behalf of
MARKETS and MARKETS hereby agrees to indemnify the GCC Stockholders
and WWC and agrees to hold harmless the GCC Stockholders and WWC
against and in respect of any claims for brokerage and other
commissions relating to such transactions based in any way on any
arrangements, agreements or understandings made by or on behalf of
MARKETS.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES AS TO
SCI, STANTON, PNCLP and PNC
7.1 Representations and Warranties as to SCI. MARKETS
represents and warrants to each of the other parties hereto as
follows:
(a) Due Organization. SCI is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Washington, has all requisite corporate power and
authority to own, operate and lease its property, carry on its
business as now conducted and is duly qualified to do business and
is in good standing in all states where the conduct of its business
or the ownership of its properties makes such qualification
necessary, except where the failure to so qualify would not have a
material adverse effect on such entity.
(b) Capitalization of SCI. The SCI Common Stock and the
SCI Class B Common Stock are the only authorized classes of capital
stock of SCI. As of the date hereof, none of the Class B Common
Stock is issued and outstanding and 384,672.3 shares of SCI Common
Stock are issued and outstanding, of which 153,869.9 shares are
owned by MARKETS and 230,802.4 shares are owned by Stanton. All of
the issued and outstanding shares of SCI Common Stock outstanding
on the Effective Date are validly issued, fully paid and
nonassessable. There are no outstanding subscriptions, options,
warrants, rights or convertible or exchangeable securities issued
by Stanton, MARKETS or SCI or other agreements or commitments to
which Stanton, MARKETS or SCI is a party of any character relating
to the issued or unissued capital stock or other securities of SCI,
including, without limitation, any agreement or commitment
obligating Stanton, MARKETS or SCI to issue, deliver or sell, or
cause to be issued, delivered or sold, shares of capital stock or
other securities of SCI or obligating Stanton, MARKETS or SCI to
grant, extend or enter into any subscription, option, warrant,
right or convertible or exchangeable security, right of first
refusal, right to receive notification of the transactions
contemplated hereby or other similar agreement or commitment with
respect to SCI or obligating SCI to make any payments pursuant to
any stock based or stock related plan or award.
hereinafter defined), in progress or pending, or, to the knowledge
of MARKETS, threatened against or relating to SCI or its assets,
nor does MARKETS know or have reason to be aware of any basis for
the same. There is outstanding no order, writ, injunction,
judgment or decree of any court, governmental agency or arbitration
tribunal by which SCI or its properties are bound or affected.
(d) No Other Assets. At the date hereof and at the
Effective Date, the principal asset of SCI is, and will be, 396,239
shares of GCC Common Stock.
7.2 Representations and Warranties of Stanton.
Stanton represents and warrants to each of the other
parties hereto as follows:
(a) Title. Stanton has good and valid title to (i) the
230,802.4 shares of SCI Common Stock owned by him, (ii) the shares
of GCC Common Stock set forth opposite his name on Schedule 2
annexed hereto and being exchanged by him pursuant to the GCC
Exchanges and (iii) his 1% partnership interest in JWT free and
clear of all Liens other than the Liens set forth on Schedule
7.2(a) annexed hereto, and upon the consummation of the SCI
Exchange, Stanton's respective portion of the GCC Exchanges and the
MARKETS Affiliates Transactions WWC will have good and valid title
to such shares of GCC Common Stock and such partnership interest in
JWT free and clear of all Liens.
(b) Power and Authority; Enforceability; No Violation.
Stanton has full power and authority to execute, deliver and
perform its obligations under this Agreement, and to consummate the
transactions contemplated hereby, including, without limitation,
the transfer of his partnership interest in JWT and his respective
portion of the GCC Exchanges. This Agreement has been duly and
validly executed and delivered by Stanton and constitutes a legal,
valid and binding obligation of Stanton enforceable in accordance
with its terms. Neither the execution, delivery or performance of
this Agreement by Stanton, nor the consummation of the transactions
contemplated hereby will, with or without the giving of notice or
the passage of time, or both (i) violate, conflict with, result in
a default or loss of rights (or give rise to any right of termi-
nation, cancellation or acceleration) under, or result in the
creation of any Lien, pursuant to (A) except as set forth on
Schedule 7.2(b)(i) annexed hereto (as to which all requisite
waivers have been obtained or will be obtained prior to the
Effective Date), any material Contract, including, without
limitation, any stockholders or similar agreement, to which he is
a party, or (B) any law, order, judgment, ordinance, rule,
regulation or decree to which he is a party or by which any of his
properties are bound or affected; or (ii) give rise to any right of
first refusal or similar right with respect to the partnership
interest in JWT or the GCC Common Stock being exchanged by him.
Except for the Federal and state governmental or regulatory
approvals set forth on Schedule 7.2(b)(ii) annexed hereto, no per-
mit, consent, filing or approval of any third party is required to
be obtained or made by Stanton in connection with his execution and
delivery of this Agreement or the consummation of the transactions
contemplated hereby in order to (x) render this Agreement and the
transactions contemplated hereby valid and effective and (y) enable
him to consummate his portion of the GCC Exchanges, the MARKETS
Affiliates Transactions to which he is a party and the transactions
contemplated hereby.
((payable in shares of WWC Common Stock) to GSC, no agent, broker,
investment banker, Person or firm is or will be entitled to any
broker's or finder's fee or any other commission or similar fee
directly or indirectly in connection with the transactions
contemplated by this Agreement based in any way on any
arrangements, agreements or understandings made by or on behalf of
Stanton and Stanton hereby agrees to indemnify the H&F Entities,
Bayer, ML Media, the Media/Communications Entities and WWC and
agrees to hold harmless the H&F Entities, Bayer, ML Media, the
Media/Communications Entities and WWC against and in respect of any
claims for brokerage and other commissions relating to such trans-
actions based in any way on any arrangements, agreements or under-
standings made by or on behalf of him.
(d) No Distribution. The shares of WWC Common Stock
being delivered to Stanton in exchange for the GCC Common Stock and
the 1% partnership interest in JWT are being acquired as of the
Effective Date by Stanton for his sole benefit and account for
investment only and not with a view to, or in connection with, any
resale, distribution or fractionalization thereof.
(e) No Registration. Stanton has been advised and
understands that the shares of WWC Common Stock being delivered to
him in exchange for the GCC Common Stock and the 1% partnership
interest in JWT have not been registered under the Act or the
applicable securities laws of any state or other jurisdiction and,
accordingly, that the shares of WWC Common Stock being delivered to
him pursuant to the terms of this Agreement may not be resold (i)
without registration thereof under the Act and any applicable state
securities laws (unless exemptions from such registration are
available and WWC has been furnished with an opinion of counsel,
reasonably satisfactory to WWC, to the effect that such resale is
pursuant to an exemption from such registration) or (ii) in
violation of any law.
(f) Accredited Investor. Stanton is an "Accredited
Investor" as that term is defined under Rule 501 of Regulation D
promulgated under the Act and, except as provided in the WWC
Stockholders Agreement, WWC shall have no obligation whatsoever to
register at any time the WWC Common Stock being delivered to him
pursuant to the GCC Exchanges or the MARKETS Affiliates
Transactions under the Act or any applicable state securities laws
or to obtain any exemption from such registration.
7.3 Representations and Warranties of PNCLP. PNCLP
represents and warrants to each of the other parties hereto as
follows:
(a) Due Organization. PNCLP is a limited partnership
duly organized, validly existing and in good standing under the
laws of the State of Delaware, has all requisite partnership power
and authority to own, operate and lease its property, carry on its
business as now conducted and is duly qualified to do business and
is in good standing in all states where the conduct of its business
or the ownership of its properties makes such qualification neces-
sary, except where the failure to so qualify would not have a
material adverse effect on such entity.
(b) Title. PNCLP has good and valid title to its
general partnership interest in MARKETS free and clear of all
Liens, and upon the consummation of the PNCLP Transfer WWC will
have good and valid title to such interest free and clear of all
Liens.
(c) Power and Authority; Enforceability; No Violation.
PNCLP has full power and authority to execute, deliver and perform
its obligations under this Agreement, and to consummate the trans
actions contemplated hereby, including, without limitation, the
PNCLP Transfer and the MARKETS Affiliates Transactions to which it
is a party. The execution, delivery and performance of this Agree-
ment and the transactions contemplated hereby have been duly and
validly authorized by all necessary action on the part of PNCLP.
This Agreement has been duly and validly executed and delivered by
PNCLP and constitutes a legal, valid and binding obligation of
PNCLP enforceable in accordance with its terms. Neither the
execution, delivery or performance of this Agreement by PNCLP, nor
the consummation of the transactions contemplated hereby will, with
or without the giving of notice or the passage of time, or both (i)
violate, conflict with, result in a default or loss of rights (or
give rise to any right of termination, cancellation or accelera-
tion) under, or result in the creation of any Lien, pursuant to (A)
any provision of its partnership agreement, (B) except as set forth
on Schedule 7.3(c)(i) annexed hereto (as to which all requisite
waivers have been obtained or will be obtained prior to the
Effective Date), any material Contract, including, without
limitation, any stockholders or similar agreement, to which it is
a party, or (C) any law, order, judgment, ordinance, rule,
regulation or decree to which it is a party or by which any of its
properties are bound or affected; or (ii) give rise to any right of
first refusal or similar right with respect to the PNCLP Transfer.
Except for the Federal and state governmental or regulatory
approvals set forth on Schedule 7.3(c)(ii) annexed hereto, no per-
mit, consent, filing or approval of any third party is required to
be obtained or made by PNCLP in connection with its execution and
delivery of this Agreement or the consummation of the transactions
contemplated hereby in order to (x) render this Agreement and the
transactions contemplated hereby valid and effective and (y) enable
it to consummate the PNCLP Transfer, the MARKETS Affiliates
Transactions to which it is a party and the transactions
contemplated hereby.
(d) No Brokers. Except for the payment of a fee
(payable in shares of WWC Common Stock) to GSC, no agent, broker,
investment banker, Person or firm is or will be entitled to any
broker's or finder's fee or any other commission or similar fee
directly or indirectly in connection with the transactions
contemplated by this Agreement based in any way on any
arrangements, agreements or understandings made by or on behalf of
PNCLP, and PNCLP hereby agrees to indemnify the H&F Entities,
Bayer, ML Media, the Media/Communications Entities and WWC and
agree to hold harmless the H&F Entities, Bayer, ML Media, the
Media/Communications Entities and WWC against and in respect of any
claims for brokerage and other commissions relating to such trans-
actions based in any way on any arrangements, agreements or under-
standings made by or on behalf of it.
(e) No Distribution. The shares of WWC Common Stock
being delivered to PNCLP are being acquired as of the Effective
Date by PNCLP pursuant to the PNCLP Transfer for its sole benefit
and account for investment only and not with a view to, or in
connection with, any resale, distribution or fractionalization
thereof other than pursuant to the liquidation of PNCLP as
contemplated by the MARKETS Affiliates Transactions.
(f) No Registration. PNCLP has been advised and
understands that the shares of WWC Common Stock being delivered to
it pursuant to the PNCLP Transfer have not been registered under
the Act or the applicable securities laws of any state or other
jurisdiction and, accordingly, that the shares of WWC Common Stock
being delivered to it pursuant to the terms of this Agreement may
not be resold (i) without registration thereof under the Act and
any applicable state securities laws (unless exemptions from such
registration are available and WWC has been furnished with an
opinion of counsel, reasonably satisfactory to WWC, to the effect
that such resale is pursuant to an exemption from such
registration) or (ii) in violation of any law.
(g) Accredited Investor. PNCLP is an "Accredited
Investor" as that term is defined under Rule 501 of Regulation D
promulgated under the Act and, except as provided in the WWC
Stockholders Agreement, WWC shall have no obligation whatsoever to
register at any time the WWC Common Stock being delivered to it
pursuant to the PNCLP Transfer under the Act or any applicable
state securities laws or to obtain any exemption from such
registration.
7.4 Representations and Warranties of PNC. PNC represents
and warrants to each of the other parties hereto as follows:
(a) Due Organization. PNC is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Delaware, has all requisite corporate power and
authority to own, operate and lease its property, carry on its
business as now conducted and is duly qualified to do business and
is in good standing in all states where the conduct of its business
or the ownership of its properties makes such qualification neces-
sary, except where the failure to so qualify would not have a
material adverse effect on such entity.
(b) Title. PNC has good and valid title to its
partnership interests in HRCTC and KETS being exchanged pursuant to
the MARKETS Affiliates Transactions free and clear of all Liens
other than Liens set forth on Schedule 7.4(b) annexed hereto, and
upon the consummation of such transfers to WWC pursuant to the
MARKETS Affiliates Transactions WWC will have good and valid title
to such interests free and clear of all Liens.
(c) Power and Authority; Enforceability; No Violation.
PNC has full power and authority to execute, deliver and perform
its obligations under this Agreement, and to consummate the trans
actions contemplated hereby, including, without limitation, the
MARKETS Affiliates Transactions to which it is a party. The
execution, delivery and performance of this Agreement and the
transactions contemplated hereby have been duly and validly autho-
rized by all necessary action on the part of PNC. This Agreement
has been duly and validly executed and delivered by PNC and
constitutes a legal, valid and binding obligation of PNC
enforceable in accordance with its terms. Neither the execution,
delivery or performance of this Agreement by PNC, nor the
consummation of the transactions contemplated hereby will, with or
without the giving of notice or the passage of time, or both (i)
violate, conflict with, result in a default or loss of rights (or
give rise to any right of termination, cancellation or accelera-
tion) under, or result in the creation of any Lien, pursuant to (A)
any provision of its certificate of incorporation or by-laws, (B)
except as set forth on Schedule 7.4(c)(i) annexed hereto (as to
which all requisite waivers have been obtained or will be obtained
prior to the Effective Date), any material Contract, including,
without limitation, any stockholders or similar agreement, to which
it is a party, or (C) any law, order, judgment, ordinance, rule,
regulation or decree to which it is a party or by which any of its
properties are bound or affected; or (ii) give rise to any right of
first refusal or similar right with respect to the transfer of the
interests in HRCTC and KETS. Except for the Federal and state
governmental or regulatory approvals set forth on Schedule
7.4(c)(ii) annexed hereto, no permit, consent, filing or approval
of any third party is required to be obtained or made by PNC in
connection with its execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby in order to
(x) render this Agreement and the transactions contemplated hereby
valid and effective and (y) enable it to consummate the MARKETS
Affiliates Transactions to which it is a party and the transactions
contemplated hereby.
(d) No Brokers. Except for the payment of a fee
(payable in shares of WWC Common Stock) to GSC, no agent, broker,
investment banker, Person or firm is or will be entitled to any
broker's or finder's fee or any other commission or similar fee
directly or indirectly in connection with the transactions
contemplated by this Agreement based in any way on any
arrangements, agreements or understandings made by or on behalf of
PNC, and PNC hereby agrees to indemnify the H&F Entities, Bayer, ML
Media, the Media/Communications Entities and WWC and agree to hold
harmless the H&F Entities, Bayer, ML Media, the
Media/Communications Entities and WWC against and in respect of any
claims for brokerage and other commissions relating to such trans-
actions based in any way on any arrangements, agreements or under-
standings made by or on behalf of it.
(e) No Distribution. The shares of WWC Common Stock
being delivered to PNC are being acquired as of the Effective Date
by PNC pursuant to the MARKETS Affiliates Transactions for its sole
benefit and account for investment only and not with a view to, or
in connection with, any resale, distribution or fractionalization
thereof.
understands that the shares of WWC Common Stock being delivered to
it pursuant to the MARKETS Affiliates Transactions to which it is
a party have not been registered under the Act or the applicable
securities laws of any state or other jurisdiction and,
accordingly, that the shares of WWC Common Stock being delivered to
it pursuant to the terms of this Agreement may not be resold (i)
without registration thereof under the Act and any applicable state
securities laws (unless exemptions from such registration are
available and WWC has been furnished with an opinion of counsel,
reasonably satisfactory to WWC, to the effect that such resale is
pursuant to an exemption from such registration) or (ii) in
violation of any law.
(g) Accredited Investor. PNC is an "Accredited
Investor" as that term is defined under Rule 501 of Regulation D
promulgated under the Act and, except as provided in the WWC
Stockholders Agreement, WWC shall have no obligation whatsoever to
register at any time the WWC Common Stock being delivered to it
pursuant to the MARKETS Affiliates Transactions to which it is a
party under the Act or any applicable state securities laws or to
obtain any exemption from such registration.
ARTICLE 8
CONDITIONS TO MARKETS', STANTON'S,
PNCLP'S AND PNC'S OBLIGATIONS
The obligations of MARKETS, Stanton, PNCLP and PNC to perform
or fulfill or carry out their agreements, undertakings and obliga-
tions herein made or expressed to be performed, fulfilled or
carried out on the Effective Date are and shall be subject to
fulfillment of or compliance with, on or prior to the Effective
Date, the following conditions precedent, any of which may be
waived by them, in their sole discretion, in whole or in part:
(a) Each of the H&F Entities', Bayer's, ML Media's and
the Media/Communications Entities' representations and warranties
contained in this Agreement shall be deemed to have been made again
at and as of the Effective Date and shall then be true in all
material respects except for changes contemplated by this
Agreement; the H&F Entities, Bayer, ML Media and the Media/Communi-
cations Entities shall have performed and complied, in all material
respects, with all agreements, covenants and conditions required by
this Agreement to be performed or complied with by each of them
prior to or on the Effective Date. MARKETS shall have been
furnished with a certificate of each of the H&F Entities, Bayer, ML
Media and the Media/Communications Entities signed by their
respective Presidents, the President of their general partners or
by an authorized general partner, as applicable, dated the
Effective Date, certifying to the fulfillment of the foregoing
conditions by the H&F Entities, Bayer, ML Media and the
Media/Communications Entities, and to the truth and correctness in
all material respects, except for changes contemplated by this
Agreement, as of the Effective Date of the representations and
warranties of the H&F Entities, Bayer, ML Media and the
Media/Communications Entities contained herein.
(b) During the period between the date hereof and the
Effective Date, (i) each of the parties and its agents and
representatives shall have received reasonable access during normal
business hours to all of GCC's personnel, premises, properties,
assets, financial statements and records, books, contracts,
documents and commitments (such access not to unreasonably
interfere with GCC's business), and shall have been furnished with
all such information concerning the affairs of GCC as such party
may reasonably request, (ii) the business and affairs of GCC and
its Subsidiaries shall have been conducted only in the ordinary
course and consistent with past practices, (iii) the goodwill of
suppliers, subscribers and others dealing with GCC shall have been
preserved and the services of key managerial employees shall have
been retained, (iv) GCC and each of its Subsidiaries shall have
complied with all applicable laws, rules, ordinances, regulations,
codes, orders, decrees, licenses and permits of all applicable
jurisdictions and governmental authorities or agencies relating to
it, its properties or the conduct of its business except where a
failure to so comply would not have a material adverse effect on
the business, operations, properties, assets, liabilities,
condition (financial or otherwise), or the results of operations or
prospects of GCC and its Subsidiaries, or on the FCC licenses of
GCC and its Subsidiaries, or the transactions contemplated hereby,
including, without limitation, the GCC Exchanges (any such material
adverse effect being hereinafter referred to as a "GCC Material
Adverse Effect"), (v) neither GCC nor any of its Subsidiaries shall
have issued, sold, transferred, assigned or disposed of any shares
of its capital stock or other securities, or issued options,
warrants or rights of any kind to acquire, or any securities con-
vertible into, exchangeable for or representing a right to purchase
or receive, or entered into any contract, plan, understanding or
arrangement with respect to the issuance of, any stock-based or
stock-related awards, shares of its capital stock or other
securities, or entered into any arrangement or contract with
respect to the purchase or voting of shares of its capital stock,
or adjusted, split, combined or reclassified any of its securities,
or made any other changes in its capital structure nor shall GCC or
any of its Subsidiaries have created, incurred or suffered to exist
any Lien except pursuant to agreements or binding commitments set
forth or described in Schedule 8(b) annexed hereto or entered into
any voting rights agreement, restriction on transfer or granted any
right of first refusal relating to the capital stock or any equity
interest in it or any of its Subsidiaries, (vi) neither GCC nor any
of its Subsidiaries shall have declared or made any dividends,
distributions or other payments (whether of loans or otherwise) to
any stockholder of GCC or any of its Subsidiaries, or any of their
respective Affiliates, except dividends, distributions or other
payments to GCC or any Subsidiary which is wholly-owned by GCC and
made in the ordinary course of business and consistent with past
practices, and (vii) neither GCC nor any of its Subsidiaries shall
have defaulted in any material respect under, or breached any term
or provision of, or suffered or permitted to exist any condition or
event which, after notice or lapse of time, or both, would
constitute a material default under, any material Contract to which
any GCC Company is a party.
As used herein "Affiliate" means, as to any Person, any
other Person that, either directly or indirectly through one or
more intermediaries, controls, or is controlled by or is under
common control with the Person specified.
As used herein "control" or "controlling" shall mean
possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or
otherwise. In addition, with respect to any natural Person, any
member of such Person's immediate family, or any trust for the
benefit of such natural Person and/or any member of such Person's
immediate family, shall also be deemed to be an "Affiliate" of such
natural Person.
As used herein "Subsidiary" of a Person shall mean any
corporation or other entity (including joint ventures, partnerships
and other business associations) in which such person, directly or
indirectly, owns at least a majority of any class of the
outstanding voting securities or equity. GCC and its Subsidiaries
are sometimes hereinafter referred to individually as a "GCC
Company" and collectively as the "GCC Companies".
As used herein "Contracts" means all leases, rental
agreements, insurance policies, collective bargaining agreements,
union contracts, licenses, agreements, permits, purchase orders,
sales orders, agreements with suppliers, reseller agreements,
agreements with agents, agreements with customers, commitments and
any and all other contracts, consents or binding arrangements or
understandings (including, without limitation, capital commitments
and arrangements with respect to construction in progress), whether
written or oral, express or implied, to which a Person is a party
and which in any way relate to the operations or the properties of
such Person or which will be binding upon such Person, its
operations or properties, after the Effective Date. As used herein
the term "Person" means any general or limited partnership,
corporation, joint venture, trust, business trust, governmental
agency, cooperative, association, individual or other entity, and
heirs, executors, administrators, legal representatives, successors
and assigns of such person.
(c) The following assumptions concerning the GCC
Companies shall be true and correct in all material respects on the
Effective Date:
(i) Organization and Capitalization of GCC
Companies. Each of the GCC Companies is a corporation validly
existing and in good standing under the laws of its state of
organization, has all requisite corporate power and authority to
own, operate and lease its property, carry on its business as now
conducted and is duly qualified to do business and is in good
standing in all states where the conduct of its business or the
ownership of its properties makes such qualification necessary,
except where the failure to so qualify would not have a GCC
Material Adverse Effect. The GCC Common Stock is the only
authorized class of capital stock of GCC. There are 8,436,737
shares of GCC Common Stock issued and outstanding. All of the
issued and outstanding shares of GCC Common Stock including,
without limitation, the shares of GCC Common Stock being exchanged
by the GCC Stockholders pursuant to this Agreement, were validly
issued, fully paid and nonassessable and not subject to preemptive
rights. Except as set forth on Schedule 8(c)(i), there are no
outstanding subscriptions, options, warrants, rights or convertible
or exchangeable securities issued by GCC or any of its Subsidiaries
or other agreements or commitments to which GCC or any of its
Subsidiaries is a party of any character relating to the issued or
unissued capital stock or other securities of GCC, including,
without limitation, any agreement or commitment obligating GCC or
any of its Subsidiaries to issue, deliver or sell, or cause to be
issued, delivered or sold, shares of capital stock or other
securities of GCC or obligating GCC or any of its Subsidiaries to
grant, extend or enter into any subscription, option, warrant,
right or convertible or exchangeable security, right of first
refusal, right to receive notification of the transactions
contemplated hereby or other similar agreement or commitment with
respect to GCC or obligating GCC to make any payments pursuant to
any equity-based or equity-related plan or award.
(ii) Subsidiaries.
(A) Schedule 8(c)(ii)(A)(i) annexed hereto
sets forth a list of all of GCC's Subsidiaries which are
corporations ("GCC Subsidiary Corporations") and the number of
outstanding shares of capital stock of each of such Subsidiaries.
Except as set forth on Schedule 8(c)(ii)(A)(i), GCC is, directly or
indirectly, the record and beneficial owner of all of the
outstanding shares of capital stock of each of the GCC Subsidiary
Corporations. All of the outstanding shares of capital stock of
each GCC Subsidiary Corporation are validly issued, fully paid and
nonassessable and not subject to preemptive rights, and, except as
disclosed on Schedule 8(b), all shares of capital stock of such GCC
Subsidiary Corporation are owned by GCC free and clear of all
Liens. Except as set forth on Schedule 8(c)(i), there are no
outstanding subscriptions, options, warrants, rights or convertible
or exchangeable securities issued by GCC or any GCC Subsidiary
Corporation or other agreements or commitments to which GCC or any
GCC Subsidiary Corporation is a party of any character relating to
the issued or unissued capital stock, partnership interests or
other securities of any GCC Subsidiary Corporation, including,
without limitation, any agreement or commitment obligating GCC or
any GCC Subsidiary Corporation to issue, deliver or sell, or cause
to be issued, delivered or sold, shares of capital stock or other
securities of any GCC Subsidiary Corporation or obligating GCC or
any GCC Subsidiary Corporation to grant, extend or enter into any
subscription, option, warrant, right or convertible or exchangeable
security, right of first refusal, right to receive notification of
the transactions contemplated hereby or other similar agreement or
commitment with respect to any GCC Subsidiary Corporation, or
obligating any GCC Subsidiary Corporation to make any payments
pursuant to any equity-based or equity-related plan or award.
Except as set forth on Schedule 8(c)(ii)(A)(ii), neither GCC nor
any Subsidiary Corporation is subject to any obligation or
requirement to provide funds for or to make any investment (in the
form of a loan, capital contribution or otherwise) to or in any
other Person, corporation, joint venture or partnership.
(B) Schedule 8(c)(ii)(B) annexed hereto is a
true and complete list of each partnership, joint venture or other
non-corporate entity in which GCC or any Subsidiary of GCC owns an
interest, and correctly sets forth GCC's or such Subsidiary's
percentage interest therein as of the date hereof. Except as set
forth on Schedule 8(b), GCC or such GCC Subsidiary has good and
marketable title in and to such interests free and clear of any
Liens. Except as set forth on Schedule 8(c)(i), there are no
outstanding subscriptions, options, warrants, rights or convertible
or exchangeable securities issued by GCC or any of its Subsidiaries
or such partnership, joint venture or other entity or other
agreements or commitments to which GCC or any of its Subsidiaries
or such partnership, joint venture or other entity is a party, of
any character relating to the issued or unissued securities or
interests of such partnership, joint venture or other entity,
including, without limitation, any agreement or commitment
obligating GCC, any of its Subsidiaries or such partnership, joint
venture or other entity to issue, deliver or sell, or cause to be
issued, delivered or sold, securities or partnership interests of
such partnership, joint venture or other entity or obligating GCC,
any of its Subsidiaries or such partnership, joint venture or other
entity to grant, extend or enter into any subscription, option,
warrant, right or convertible or exchangeable security, right of
first refusal, right to receive notification of the transactions
contemplated hereby, or other similar agreement or commitment with
respect to such partnership, joint venture or other entity, or
obligating such partnership, joint venture or other entity to make
any payments pursuant to any equity-based or equity-related plan or
award.
(iii) Financial Statements. The audited consol-
idated balance sheet, consolidated statement of income and
stockholders equity and consolidated statement of cash flows and
the notes thereto of GCC and its consolidated Subsidiaries for the
fiscal years ended December 31, 1993 and December 31, 1992
certified by Arthur Anderson & Co., independent certified public
accountants for GCC, and the unaudited interim consolidated balance
sheet, consolidated statement of income and consolidated statement
of cash flows of GCC and its consolidated Subsidiaries for the
three month period ended March 31, 1994 (the audited and unaudited
financial statements of GCC and its consolidated Subsidiaries are
hereinafter collectively referred to as the "GCC Financial
Statements"), have been prepared in accordance with generally
accepted accounting principals applied on a consistent basis
("GAAP") and fairly present the financial position of GCC and its
consolidated Subsidiaries as of the dates thereof and the result of
operations and cash flows for the periods then ended, subject, in
the case of the unaudited interim financial statements, to normal,
recurring audit adjustments.
(iv) Liabilities of GCC. The GCC Companies have not
incurred nor are they subject to any liabilities or obligations,
whether accrued, absolute or contingent, other than liabilities (A)
arising in the ordinary course of business and incurred after the
date of the GCC Financial Statements, (B) described on Schedule
8(c)(iv) annexed hereto or any other Schedule to this Agreement,
(C) that have been reflected or accrued against in the GCC Finan-
cial Statements, or (D) for capital expenditures or the acquisition
of cellular systems as set forth on Schedule 8(c)(iv) annexed
hereto (collectively the "Disclosed GCC Liabilities").
(v) Legal Matters. Except as set forth on Schedule
8(c)(v) annexed hereto, there is no claim, legal action, counter-
claim, suit, arbitration, governmental investigation or other
legal, administrative or tax proceeding, nor any order, decree or
judgment (collectively "Legal Matters"), in progress, pending, or
threatened against or relating to any GCC Company, or their
respective assets which if adversely determined would individually
or in the aggregate have a GCC Material Adverse Effect. There is
outstanding no order, writ, injunction, judgment or decree of any
court, governmental agency or arbitration tribunal which would
individually or in the aggregate have a GCC Material Adverse
Effect.
(vi) Compliance with Laws. Each of the GCC
Companies is in compliance with all applicable laws, regulations
and administrative orders of the United States and the states in
which it transacts business (including, without limitation, all
applicable rules and regulations of the FCC, any state public util-
ities or public service commission, or any other Federal or state
governmental agency or instrumentality exercising jurisdiction over
any GCC Company or its properties or business), and of each
municipality, county or subdivision of any thereof, to which its
business or its properties may be subject, the non-compliance with
which would have a GCC Material Adverse Effect.
(vii) Authorizations.
(A) The GCC Companies have (I) all requisite
franchises, licenses, authorizations, consents, permits and
approvals of the FCC and of all state public utility or public
service commissions and (II) all other material franchises,
licenses, authorizations, consents, permits and approvals of
governmental agencies exercising jurisdiction over any GCC Company
or their respective businesses or assets (all such franchises, li-
censes, authorizations, consents, permits and approvals, as amended
to the date hereof, are collectively referred to as the "GCC
Authorizations"), required to carry on the businesses of the GCC
Companies as now conducted. All GCC cellular radio and microwave
licenses included in such GCC Authorizations are listed on Schedule
8(c)(vii)(A) annexed hereto.
(B) The GCC Authorizations are in full force
and effect and have not been suspended, modified in any material
adverse respect, cancelled or revoked, and each GCC Company has
operated in compliance with all terms thereof or any renewals
thereof applicable to it except, in the case of non-material state
and local GCC Authorizations, where failure to so comply would not
have a GCC Material Adverse Effect. No event has occurred with
respect to any of the GCC Authorizations which permits, or after
notice or lapse of time or both would permit, revocation or
termination thereof or would result in any other material impair-
ment of the rights of the holder of any such GCC Authorizations.
Except as set forth on Schedule 8(c)(vii)(A) annexed hereto, there
is not pending as of the date hereof any application, petition,
objection or other pleading with the FCC or any public service
commission or similar body having jurisdiction or authority over
the communications operations of any GCC Company which questions
the validity of or contests any GCC Authorization or which presents
a substantial risk that, if accepted or granted, would result in
the revocation, cancellation, suspension or any materially adverse
modification of any GCC Authorization.
(C) Except as set forth on Schedule
8(c)(vii)(C) annexed hereto, no permit, consent, approval, author-
ization, qualification or registration of, or declaration to or
filing with, any governmental or regulatory authority or agency is
required to be obtained or made by any GCC Company in connection
with the execution and delivery of this Agreement or the con-
summation of the transactions contemplated hereby in order to (x)
render this Agreement and the transactions contemplated hereby
valid and effective and (y) enable the GCC Stockholders to
consummate the GCC Exchanges and the transactions contemplated
hereby.
(viii) Title of GCC Companies to Property.
(A) Except as disclosed in Schedule
8(c)(viii)(i) annexed hereto, the GCC Companies have good and
marketable title to all property owned (including all property and
assets, real and personal, included in the GCC Financial
Statements), and a good and valid leasehold interest in all prop-
erty leased, by them, free and clear of all Liens except for (I)
Liens for taxes, assessments, governmental charges or levies which
shall not at this time be due and delinquent or which hereafter can
be paid without penalty or with respect to which any GCC Company is
currently contesting the validity thereof in good faith by
appropriate proceedings and for which it shall have set aside
adequate reserves on its books as required by GAAP, (II) Liens
imposed by law, such as warehousemen's, mechanics', carriers',
landlords', repairmen's, or other similar liens, which arise in the
ordinary course of business with respect to obligations not yet due
or being contested in good faith by appropriate proceedings and for
which it shall have set aside adequate reserves on its books as
required by GAAP and (III) Liens arising out of pledges or deposits
under worker's compensation laws, unemployment insurance, old age
pensions, or other social security benefits other than any Lien
imposed by ERISA as hereinafter defined). Schedule 8(c)(viii)
annexed hereto correctly identifies (x) each parcel of real
property owned by any GCC Company and (y) each lease by any GCC
Company of any real property.
(B) All of the buildings and other material
tangible personal property owned or leased by any GCC Company are
in good working condition (normal wear and tear excepted), and are
adequate and suitable for the purposes for which they are presently
being used. All such property is being operated in conformity with
applicable statutes, regulations, and ordinances, the failure of
which to so conform would have a GCC Material Adverse Effect. All
such assets are, in the aggregate, sufficient in all material
respects to continue operating the businesses of the GCC Companies
as have been heretofore conducted.
(C) Neither the whole nor any material portion
of any real property owned or leased by any GCC Company has been
condemned, requisitioned or otherwise taken by any public
authority. None of the real or personal properties owned, leased
or operated by any GCC Company, or the ownership, occupancy or
operation thereof, is in violation in any material respect of any
law or any building, zoning or other ordinance, code, rule, regula-
tion or requirement, and no notice from any governmental body or
other Person has been served upon any GCC Company claiming any
violation of any such law, ordinance, code, rule or regulation or
requiring, or calling attention to the need for, any work, repairs,
construction, alterations or installation on or in connection with
said property which has not been complied with.
(ix) Indebtedness. Schedule 8(c)(ix) annexed hereto
describes all indentures, trust deeds, loan agreements, or other
instruments pursuant to which any GCC Company has incurred
Indebtedness or has guaranteed the Indebtedness of any Person.
Other than as set forth in Schedule 8(c)(ix) annexed hereto and
other than intercompany Indebtedness and advances to employees in
the ordinary course of business, no GCC Company is indebted to any
Affiliate, director, officer, employee, agent or partner of any GCC
Company and no Affiliate, stockholder, director, officer, employee,
agent or partner of any GCC Company is indebted to any GCC Company.
As used herein "Indebtedness" shall mean obligations in
respect of borrowed money or for the deferred purchase price of
property or services or evidenced by notes, bonds or other
instruments, (A) lease obligations which would normally be
capitalized under generally accepted principles of tax basis
accounting, or (B) obligations under direct or indirect guarantees
of (including obligations (contingent or otherwise) to assure a
creditor against loss in respect of) indebtedness or obligations of
others of types referred to in subclauses (A) and (B) above.
(x) Tax Returns, Audits and Liabilities. Except as
set forth on Schedule 8(c)(x) annexed hereto, each GCC Company has
(A) timely filed in accordance with all applicable laws, all
Returns (as defined below) required to be filed by it, (B) paid all
Taxes (as defined below) shown to have become due pursuant to such
Returns, and (C) paid all Taxes (other than those being contested
in good faith, all of which are disclosed on Schedule 8(c)(x)) for
which a notice of, or assessment or demand for, payment has been
received or which are otherwise due and payable, in each case other
than failures to so file or pay that would not have a GCC Material
Adverse Effect. All Returns filed by each GCC Company were true
and correct in all material respects as of the date on which they
were filed or as subsequently amended to the date hereof. Except
as set forth on Schedule 8(c)(x), (I) there is no action, suit,
proceeding, investigation, audit, claim or assessment pending or
proposed with respect to any liability for Tax that relates to any
GCC Company, (II) all amounts required to be collected or withheld
by any GCC Company with respect to Taxes have been duly collected
or withheld and any such amounts that are required to be remitted
to any taxing authority have been duly remitted, (III) no extension
of time within which to file any Return that relates to any GCC
Company has been requested which Return has not since been filed,
(IV) there are no waivers or extensions of any applicable statute
of limitations for the assessment or collection of Taxes with
respect to any Return that relates to any GCC Company which remain
in effect, and (V) all federal, state and local consolidated,
combined or unitary Income Tax Returns which include any GCC
Company have been filed on a timely basis and no notice of audit
has been received. Except as set forth on Schedule 8(c)(x), (x) no
GCC Company has filed any agreement with the Internal Revenue
Service described in Section 1.1503-2A(c)(3) of the Treasury
Regulations, (y) no GCC Company has filed a consent or made any
agreement with the Internal Revenue Service under Section 341(f) of
the Code or any comparable provision of state revenue statutes, and
(z) GCC is not a "foreign person" within the meaning of Section
1445(f)(3) of the Code. As a result of the GCC Exchanges, no GCC
Company or WWC will be obligated to make a payment to an individual
that would be a "parachute payment" to a "disqualified individual"
as those terms are defined in Section 280G of the Code without
regard to whether such payment is reasonable compensation for
personal services performed or to be performed in the future.
Definitions. For purposes of this Agreement, except as
otherwise expressly provided, unless the context otherwise
requires:
"Income Taxes" means any federal, state, local or
foreign income, franchise or similar Tax and in each instance any
interest, penalties or additions to tax attributable to such Tax;
"Return" means any report, return, statement,
estimate, declaration, form or other information required to be
supplied to a taxing authority in connection with Taxes; and
"Tax" or "Taxes" means taxes of any kind, levies or
other like assessments, customs, duties, imposts, charges or fees,
including, without limitation, income, profits, gross receipts, ad
valorem, value added, excise, real or personal property, asset,
sales, use, license, payroll, transaction, capital, net worth and
franchise taxes, estimated taxes, withholding, employment, social
security, workers compensation, utility, severance, production,
unemployment compensation, occupation, premium, windfall profits,
environmental, stamp, transfer and gains taxes or other
governmental taxes imposed or payable to the United States, or any
state, county, local or foreign government or subdivision or agency
thereof, and in each instance such term shall include any interest,
penalties or additions to tax attributable to any such Tax.
(xi) Employee Benefit Plans.
(A) Generally. Schedule 8(c)(ix)(A) annexed
hereto contains a true and complete list of each plan, program,
policy, practice, contract, agreement or other arrangement
providing for compensation, severance, termination pay, performance
awards, stock or stock-related awards, fringe benefits or other
employee benefits of any kind, whether formal or informal, proposed
or final, funded or unfunded and whether or not legally binding,
including, without limitation, each "employee benefit plan" within
the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), which is now, or ever
has been, maintained, contributed to, or required to be contributed
to, for the benefit of any current or former employee, independent
contractor, agent or consultant ("Employee") of any GCC Company, or
any current or former Employee of any entity required to be
aggregated with any GCC Company pursuant to Section 414(b), (c),
(m), or (o) of the Code ("GCC Employee Plan") for which any GCC
Company may have liability and each management, employment,
severance or consulting agreement or contract between any GCC
Company or any of their respective Affiliates and any Employee
which provides for annual compensation in excess of $75,000 and is
not terminable at will without liability on 30 days' or less prior
notice ("GCC Employee Agreement"). True and complete copies of all
documents, if any, embodying each GCC Employee Plan and GCC
Employee Agreement shall be made available to the parties, in-
cluding all amendments thereto and written interpretations thereof;
the two most recent annual reports filed (Form 5500 Series with
applicable schedules) with respect to each GCC Employee Plan
required under ERISA; the most recent summary plan description, if
any, with respect to each GCC Employee Plan required under ERISA;
and all material communications, if any, to any Employee relating
to each GCC Employee Plan.
(B) Compliance. The GCC Companies have
performed in all material respects all obligations required to be
performed by them under each GCC Employee Plan and each GCC
Employee Agreement, and each GCC Employee Plan has been established
and maintained in all material respects in accordance with its
terms and in compliance with all applicable laws, statutes, orders,
rules and regulations, including but not limited to ERISA or the
Code. No GCC Employee Plan is a pension plan within the meaning of
Section 3(2) of ERISA, nor a multiemployer plan within the meaning
of Section 3(37) of ERISA, and no GCC Company has liability with
respect to any such plan for any reason, including liability as a
result of having been part of a "controlled group" within the
meaning of Section 414(b), (c), (m), and (o) of the Code, nor is
there any basis for such liability being imposed. There are no
material actions, suits or claims pending (other than routine
claims for benefits) against any GCC Employee Plan or the assets of
any GCC Employee Plan; each GCC Employee Plan can be amended,
terminated, or otherwise discontinued after the Effective Date in
accordance with its terms, without liability to any GCC Company or
any of their respective Affiliates; all premiums required by any
GCC Employee Plan have been paid thereunder; all outstanding
indebtedness for services performed for any GCC Company or accrued
vacation, holiday pay, earned commissions, accrued bonuses or other
benefits owed to any current or former Employee of any GCC Company
has been paid when due or accrued on the books of the GCC
Companies; no "prohibited transaction" within the meaning of
Section 4975 of the Code or Section 406 of ERISA has occurred with
respect to any GCC Employee Plan; and no action or failure to act
with respect to any GCC Employee Plan will subject any GCC Company
or any of their respective Affiliates to any tax or penalty.
(C) No Post-Employment Obligations. No GCC
Company maintains or contributes to any GCC Employee Plan or GCC
Employee Agreement which provides, or has any liability to provide,
life insurance, medical or other employee welfare benefits (other
than severance and accrued vacation and holiday pay) to any current
or former Employee of any GCC Company upon his retirement or
termination of employment, except as may be required by statute and
no GCC Company has ever represented, promised, or contracted
(orally or in writing) to any such Employee (individually or as a
group) that life insurance, medical or other employee welfare
benefits (other than severance and accrued vacation and holiday
pay) would be provided upon their retirement or termination of
employment, except to the extent required by statute.
(D) COBRA. Each GCC Employee Plan that is a
"group health plan" within the meaning of Section 4980B(g)(2) of
the Code has been administered in good faith in compliance with the
continuation coverage requirements contained in the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"), as
set forth at Section 4980B of the Code and any regulations
promulgated or proposed (if such proposed regulations constitute
substantial authority within the meaning of Section 6662 of the
Code and any regulations promulgated thereunder) thereunder.
(E) Effect of Transaction. Except as set
forth on Schedule 8(c)(xi)(E) annexed hereto, the execution of this
Agreement and the consummation of the transactions contemplated
hereby will not (either alone or when taken together with any
additional or subsequent events) constitute an event under any GCC
Employee Plan or GCC Employee Agreement that will or may result in
any payment, upon a change in control or otherwise, whether of
severance or otherwise, acceleration, vesting, distribution,
increase in benefits or obligation to fund benefits with respect to
any Employee. No payment or benefit which will or may be made by
any GCC Company with respect to any Employee as a result of the
transactions contemplated hereby will be characterized as an
"excess parachute payment" within the meaning of Section 280G(b)(1)
of the Code.
(F) Employment Matters. Each of the GCC
Companies (I) are in compliance with all applicable Federal and
state laws, rules and regulations respecting employment, employment
practices, terms and conditions of employment and wages and hours,
in each case, with respect to Employees, except where the failure
to be in compliance would not, singly or in the aggregate, have a
GCC Material Adverse Effect; (II) have withheld all amounts
required by law or by agreement to be withheld from the wages,
salaries and other payments to Employees; (III) are not liable for
any arrears of wages or any taxes or any penalty for failure to
comply with any of the foregoing, except as would not have a GCC
Material Adverse Effect; and (IV) (other than routine payments to
be made in the normal course of business and consistent with past
practice) are not liable for any payment to any trust or other fund
or to any governmental or administrative authority, with respect to
unemployment compensation benefits, Social Security or other
benefits for Employees.
(G) Labor. No work stoppage or labor strike
against any GCC Company is pending or threatened. Except as set
forth on Schedule 8(c)(xi)(G) annexed hereto, no GCC Company is in-
volved in nor threatened with any labor dispute, grievance or
litigation relating to labor, safety or discrimination matters
involving any Employee, including, without limitation, charges of
unfair labor practices or discrimination complaints, which, if ad-
versely determined, would, individually or in the aggregate, have
a GCC Material Adverse Effect. No GCC Company has engaged in any
unfair labor practices within the meaning of the National Labor
Relations Act.
(H) Unions. No GCC Company is presently or
has been in the past a party to, or bound by, any collective
bargaining agreement or union contract with respect to Employees
and no collective bargaining agreement is at the date hereof being
negotiated by or on behalf of any GCC Company.
(I) Investment Company Act. GCC is not an
"investment company" within the meaning of the Investment Company
Act of 1940, as amended (the "40 Act").
(d) There shall not then be pending by any third party
any suit or proceeding to restrain or invalidate, in whole or in
part, this Agreement or the transactions contemplated hereby.
(e) MARKETS shall have been furnished with opinion[s] of
Heller, Ehrman, White & McAuliffe, counsel for the GCC Stock-
holders, dated the Effective Date, in form and substance reasonably
satisfactory to MARKETS.
(f) MARKETS shall have received an opinion of Jones,
Day, Reavis & Pogue, dated the Effective Date, to the effect
described in the Confidential Private Placement Memorandum of WWC,
dated July 20, 1994. In rendering such opinion, Jones Day, Reavis
& Pogue may rely upon factual representations, covenants and
agreements contained in the WWC Stockholders Agreement and in
certificates of MARKETS, GCC, WWC, Stanton, and others, including,
without limitation, tax matters certificates.
(g) MARKETS shall have been furnished with an opinion of
Latham & Watkins, FCC counsel for the GCC Stockholders, dated the
Effective Date, in form and substance reasonably satisfactory to
MARKETS.
(h) All consents, approvals and actions of third
parties, including, without limitation, all approvals from Federal,
state and local authorities (including the FCC and all public
service commissions and public utility commissions or comparable
bodies exercising jurisdiction over GCC, MARKETS or WWC) as may be
required for the consummation of the transactions contemplated
herein, including, without limitation, the GCC Exchanges, the PNCLP
Transfer, the SCI Exchange, the MARKETS Affiliates Transactions and
the Merger, shall have been obtained or made pursuant to a Final
Order which consents and approvals shall not contain any conditions
or restrictions which (i) in the case of FCC approvals, are not
customary in transactions of this nature, and (ii) in the case of
third party consents and approvals, have a GCC Material Adverse
Affect or a MARKETS Material Adverse Effect. "Final Order" means
an action or decision as to which: (i) no request for a stay is
pending, no stay is in effect, and any deadline for filing such
request that may be designated by statute or regulation has passed;
(ii) no petition for rehearing or reconsideration or application
for review is pending and the time for filing any such petition or
application has passed; (iii) the FCC or public utility commission,
public service commission (or comparable bodies exercising
jurisdiction over the parties) does not have the action or decision
under reconsideration on its own motion and the time for initiating
such reconsideration has passed; and (iv) no appeal is pending or
in effect and any deadline for filing any such appeal that may be
designated by statute or rule has passed.
(i) The H&F Entities shall deliver to MARKETS with re-
spect to each of GCC and each of GCC's Subsidiaries (A) a copy of
its certificate of incorporation certified by the Secretary of
State of its state of incorporation, and (B) a certificate of good
standing of recent date from its Secretary of State of the State of
its incorporation and jurisdictions in which it is qualified to do
business.
(j) The GCC Exchanges, the SCI Exchange, the GSCP Note
Exchange and the MARKETS Affiliates Transactions shall have been
consummated in accordance with the provisions of this Agreement;
provided, however, that the consummation of the SCI Exchange and
the MARKETS Affiliates Transactions shall not be a condition to the
obligations of Stanton, PNCLP and PNC.
(k) No GCC Material Adverse Effect shall have occurred
and there shall exist no fact or circumstance which could have a
GCC Material Adverse Effect.
(l) No statute, rule or regulation shall have been
enacted by any state or Federal government or governmental agency
in the United States which would render the consummation of this
Agreement unlawful.
(m) The waiting periods, if applicable, of the HSR Act
shall have expired or been terminated.
(n) The WWC Stockholders Agreement, substantially in the
form of Schedule 8(n) annexed hereto (the "WWC Stockholders
Agreement"), shall have been executed by each of the parties listed
on Schedule 8(n).
(o) MARKETS shall have obtained the MARKETS Partners'
Approval and the amendment to the MARKETS Partnership Agreement,
substantially in the form of Schedule 8(o) annexed hereto, shall
have been approved and adopted by the requisite Partners in
accordance with the MARKETS Partnership Agreement.
(p) GCC Holdings, in its capacity as the sole limited
partner of PNCLP, shall have consented to the PNCLP Transfer and
the liquidation of PNCLP and distribution of the shares of WWC
Common Stock received by PNCLP pursuant to the PNCLP Transfer to
PNC and GCC Holdings.
ARTICLE 9
CONDITIONS TO THE GCC STOCKHOLDERS OBLIGATIONS
The obligations of each of the GCC Stockholders to perform or
fulfill or carry out their agreements, undertakings and obligations
herein made or expressed to be performed, fulfilled or carried out
on the Effective Date are and shall be subject to fulfillment of or
compliance with, on or prior to the Effective Date, the following
conditions precedent, any of which may be waived by it, in its sole
discretion, in whole or in part:
(a) Each of MARKETS', Stanton's, PNCLP's and PNC's
representations and warranties contained in this Agreement shall be
deemed to have been made again at and as of the Effective Date and
shall then be true in all material respects, except for changes
contemplated by this Agreement; MARKETS, Stanton, PNCLP and PNC
shall have performed and complied in all material respects with all
agreements, covenants and conditions required by this Agreement to
be performed or complied with by MARKETS, Stanton, PNCLP and PNC
prior to or on the Effective Date. The H&F Entities, Bayer, ML
Media and the Media/Communications Entities shall have been
furnished with certificates of MARKETS, Stanton, PNCLP and PNC
signed by such person(s) or its Chairman, or the Chairman of its
general partner, dated the Effective Date, certifying to the
fulfillment of the foregoing conditions by MARKETS, Stanton, PNCLP
and PNC and to the truth and correctness in all material respects,
except for changes contemplated by this Agreement, as of the
Effective Date of the representations and warranties of MARKETS,
Stanton, PNCLP and PNC contained herein.
(b) During the period between the date hereof and the
Effective Date, (i) each of the parties and its agents and
representatives shall have received reasonable access during normal
business hours to all of MARKETS' personnel, premises, properties,
assets, financial statements and records, books, contracts,
documents and commitments (such access not to unreasonably
interfere with MARKETS' business), and shall have been furnished
with all such information concerning the affairs of MARKETS as such
party may reasonably request, (ii) the business and affairs of
MARKETS and its Subsidiaries shall have been conducted only in the
ordinary course and consistent with past practices, (iii) the
goodwill of suppliers, subscribers and others dealing with MARKETS
shall have been preserved and the services of key managerial
employees shall have been retained, (iv) MARKETS and each of its
Subsidiaries shall have complied with all applicable laws, rules,
ordinances, regulations, codes, orders, decrees, licenses and
permits of all applicable jurisdictions and governmental
authorities or agencies relating to it, its properties or the
conduct of its business except where a failure to so comply would
not have a material adverse effect on the business, operations,
properties, assets, liabilities, condition (financial or
otherwise), or the results of operations or prospects of MARKETS
and its Subsidiaries, or on the FCC licenses of MARKETS and its
Subsidiaries, or the transactions contemplated hereby, including,
without limitation, the Merger (any such material adverse effect
being hereinafter referred to as a "MARKETS Material Adverse
Effect"), (v) except for the issuance of Class B Limited
Partnership Units by MARKETS, neither MARKETS nor any of its
Subsidiaries shall have issued, sold, transferred, assigned or
disposed of any shares of its capital stock or other securities, or
issued options, warrants or rights of any kind to acquire, or any
securities convertible into, exchangeable for or representing a
right to purchase or receive, or entered into any contract, plan,
understanding or arrangement with respect to the issuance of, any
stock-based or stock-related awards, shares of its capital stock or
other securities, or entered into any arrangement or contract with
respect to the purchase or voting of shares of its capital stock,
or adjusted, split, combined or reclassified any of its securities,
or made any other changes in its capital structure nor shall
MARKETS or any of its Subsidiaries have created, incurred or
suffered to exist any Lien except pursuant to agreements or binding
commitments set forth or described in Schedule 9(b)(v) annexed
hereto or entered into any voting rights agreement, restriction on
transfer or granted any right of first refusal relating to the
capital stock or any equity interest in it or any of its
Subsidiaries, (vi) neither MARKETS nor any of its Subsidiaries
shall have declared or made any dividends, distributions or other
payments (whether of loans or otherwise) to any partner of MARKETS
or any of its Subsidiaries, or any of their respective Affiliates,
except dividends, distributions or other payments to MARKETS or any
Subsidiary which is wholly-owned by MARKETS and made in the ordi-
nary course of business and consistent with past practices, or
(vii) neither MARKETS nor any of its Subsidiaries shall have
defaulted in any material respect under, or breached any term or
provision of, or suffered or permitted to exist any condition or
event which, after notice or lapse of time, or both, would
constitute a material default under, any material Contract to which
any MARKETS Company is a party.
(c) The following assumptions concerning the MARKETS
Companies shall be true and correct in all material respects on the
Effective Date:
(i) Subsidiaries.
(A) Schedule 9(c)(i)(A)(i) annexed hereto sets
forth a list of all of MARKETS' Subsidiaries which are corporations
("MARKETS Subsidiary Corporations") and the number of outstanding
shares of capital stock of each of such Subsidiaries. Except as
set forth on Schedule 9(c)(i)(A)(i), MARKETS is, directly or
indirectly, the record and beneficial owner of all of the
outstanding shares of capital stock of each of the MARKETS
Subsidiary Corporations. All of the outstanding shares of capital
stock of each MARKETS Subsidiary Corporation are validly issued,
fully paid and nonassessable and not subject to preemptive rights,
and, except as disclosed on Schedule 9(b)(v), all shares of capital
stock of such MARKETS Subsidiary Corporation are owned by MARKETS
free and clear of all Liens. Except as set forth on Schedule
9(c)(i)(A)(ii), there are no outstanding subscriptions, options,
warrants, rights or convertible or exchangeable securities issued
by MARKETS or any MARKETS Subsidiary Corporation or other
agreements or commitments to which MARKETS or any MARKETS
Subsidiary Corporation is a party of any character relating to the
issued or unissued capital stock, partnership interests or other
securities of any MARKETS Subsidiary Corporation, including,
without limitation, any agreement or commitment obligating MARKETS
or any MARKETS Subsidiary Corporations to issue, deliver or sell,
or cause to be issued, delivered or sold, shares of capital stock
or other securities of any MARKETS Subsidiary Corporation or
obligating any MARKETS Subsidiary Corporation to grant, extend or
enter into any subscription, option, warrant, right or convertible
or exchangeable security, right of first refusal, right to receive
notification of the transactions contemplated hereby, or other
similar agreement or commitment with respect to any MARKETS
Subsidiary Corporation, or obligating any MARKETS Subsidiary
Corporation to make any payments pursuant to any equity-based or
equity-related plan or award. Except as set forth on Schedule
9(c)(i)(A)(iii), neither MARKETS nor any Subsidiary Corporation is
subject to any obligation or requirement to provide funds for or to
make any investment (in the form of a loan, capital contribution or
otherwise) to or in any other Person, corporation, joint venture or
partnership.
(B) Schedule 9(c)(i)(B) annexed hereto is a
true and complete list of each partnership, joint venture or other
non-corporate entity in which MARKETS or any Subsidiary of MARKETS
owns an interest, and correctly sets forth MARKETS or such
Subsidiary's percentage interest therein as of the date hereof.
Except as set forth on Schedule 9(b)(v), MARKETS or such MARKETS
Subsidiary has good and marketable title in and to such interests
free and clear of any Liens. Except as set forth on Schedule
9(c)(i)(A)(ii), there are no outstanding subscriptions, options,
warrants, rights or convertible or exchangeable securities issued
by MARKETS, any of its Subsidiaries or such partnership, joint
venture or other entity or other agreements or commitments to which
MARKETS, any of its Subsidiaries or such partnership, joint venture
or other entity is a party, of any character relating to the issued
or unissued securities or interests of such partnership, joint
venture or other entity, including, without limitation, any
agreement or commitment obligating MARKETS, any of its Subsidiaries
or such partnership, joint venture or other entity to issue,
deliver or sell, or cause to be issued, delivered or sold,
securities or partnership interests of such partnership, joint
venture or other entity or obligating MARKETS, any of its
Subsidiaries or such partnership, joint venture or other entity to
grant, extend or enter into any subscription, option, warrant,
right or convertible or exchangeable security, right of first
refusal, right to receive notification of the transactions
contemplated hereby or other similar agreement or commitment with
respect to such partnership, joint venture or other entity or
obligating any partnership, joint venture or other entity to make
any payments pursuant to any equity-based or equity-related plan or
award.
(ii) Financial Statements. The audited consolidated
balance sheet, consolidated statement of income and stockholders
equity and consolidated statement of cash flows and the notes
thereto of MARKETS and its consolidated Subsidiaries for the fiscal
years ended December 31, 1993 and December 31, 1992 certified by
Arthur Andersen & Co., independent certified public accountants for
MARKETS, and the unaudited interim consolidated balance sheet,
consolidated statement of income and consolidated statement of cash
flows of MARKETS and its consolidated subsidiaries for the three
month period ended March 31, 1994, (the audited and unaudited
financial statements of MARKETS and its consolidated subsidiaries
are hereinafter referred to as the "MARKETS Financial Statements")
have been prepared in accordance with GAAP and fairly present the
financial position of MARKETS and its consolidated subsidiaries as
of the dates thereof and the result of operations and cash flows
for the periods then ended, subject, in the case of the unaudited
interim financial statements, to normal, recurring audit
adjustments.
(iii) Liabilities of MARKETS. The MARKETS
Companies have not incurred nor are they subject to any liabilities
or obligations, whether accrued, absolute or contingent, other than
liabilities (A) arising in the ordinary course of business and
incurred after the date of the MARKETS Financial Statements, (B)
described on Schedule 9(c)(iii) annexed hereto or any other
Schedule to this Agreement, (C) that have been reflected or accrued
against in the MARKETS Financial Statements, or (D) for capital
expenditures or the acquisition of cellular systems as set forth on
Schedule 9(c)(iii) annexed hereto (collectively the "Disclosed
MARKETS Liabilities").
(iv) Legal Matters. Except as set forth on Schedule
9(c)(iv) annexed hereto, there is no Legal Matter, in progress,
pending or threatened against or relating to any MARKETS Company,
or their respective assets which if adversely determined would
individually or in the aggregate have a MARKETS Material Adverse
Effect. There is outstanding no order, writ, injunction, judgment
or decree of any court, governmental agency or arbitration tribunal
which would individually or in the aggregate have a MARKETS
Material Adverse Effect.
(v) Compliance with Laws. Each of the MARKETS
Companies is in compliance with all applicable laws, regulations
and administrative orders of the United States and the states in
which it transacts business (including, without limitation, all
applicable rules and regulations of the FCC, any state public util-
ities or public service commission, or any other Federal or state
governmental agency or instrumentality exercising jurisdiction over
any MARKETS Company or its properties or business), and of each
municipality, county or subdivision of any thereof, to which its
business or its properties may be subject, the non-compliance with
which would have a MARKETS Material Adverse Effect.
(vi) Authorizations.
(A) The MARKETS Companies have (i) all
requisite franchises, licenses, authorizations, consents, permits
and approvals of the FCC and of all state public utility or public
service commissions and (ii) all other material franchises,
licenses, authorizations, consents, permits and approvals of
governmental agencies exercising jurisdiction over any MARKETS
Company or their respective businesses or assets (all such fran-
chises, licenses, authorizations, consents, permits and approvals,
as amended to the date hereof, are collectively referred to as the
"MARKETS Authorizations"), required to carry on the businesses of
the MARKETS Companies as now conducted. All MARKETS cellular radio
and microwave licenses included in such MARKETS Authorizations are
listed on Schedule 9(c)(vi)(A) annexed hereto.
(B) The MARKETS Authorizations are in full
force and effect and have not been suspended, modified in any mate-
rial adverse respect, cancelled or revoked, and each MARKETS
Company has operated in compliance with all terms thereof or any
renewals thereof applicable to it except, in the case of non-
material state and local MARKETS Authorizations, where failure to
so comply would not have a MARKETS Material Adverse Effect. No
event has occurred with respect to any of the MARKETS Autho-
rizations which permits, or after notice or lapse of time or both
would permit, revocation or termination thereof or would result in
any other material impairment of the rights of the holder of any
such MARKETS Authorizations. Except as set forth on Schedule
9(c)(vi)(A) annexed hereto, there is not pending as of the date
hereof any application, petition, objection or other pleading with
the FCC or any public service commission or similar body having
jurisdiction or authority over the communications operations of any
MARKETS Company which questions the validity of or contests any
MARKETS Authorization or which presents a substantial risk that, if
accepted or granted, would result in the revocation, cancellation,
suspension or any materially adverse modification of any MARKETS
Authorization.
(C) Except as set forth on Schedule
9(c)(vi)(C) annexed hereto, no permit, consent, approval, author-
ization, qualification or registration of, or declaration to or
filing with, any governmental or regulatory authority or agency is
required to be obtained or made by any MARKETS Company in con-
nection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby in order to
(x) render this Agreement and the transactions contemplated hereby
valid and effective and (y) enable MARKETS to consummate the Merger
and the transactions contemplated hereby.
(vii) Title of MARKETS Companies to Property.
(A) Except as disclosed in Schedule
9(c)(vii)(i) annexed hereto, the MARKETS Companies have good and
marketable title to all property owned (including all property and
assets, real and personal, included in the MARKETS Financial
Statements), and a good and valid leasehold interest in all prop-
erty leased, by them, free and clear of all Liens except for (I)
Liens for taxes, assessments, governmental charges or levies which
shall not at this time be due and delinquent or which hereafter can
be paid without penalty or with respect to which any MARKETS
Company is currently contesting the validity thereof in good faith
by appropriate proceedings and for which it shall have set aside
adequate reserves on its books as required by GAAP, (II) liens
imposed by law, such as warehousemen's, mechanics', carriers',
landlords', repairmen's, or other similar liens, which arise in the
ordinary course of business with respect to obligations not yet due
or being contested in good faith by appropriate proceedings and for
which it shall have set aside adequate reserves on its books as
required by GAAP and (III) Liens arising out of pledges or deposits
under worker's compensation laws, unemployment insurance, old age
pensions, or other social security benefits other than any Lien
imposed by ERISA. Schedule 9(c)(viii)(ii) annexed hereto correctly
identifies (x) each parcel of real property owned by any MARKETS
Company and (y) each lease by any MARKETS Company of any real
property.
(B) All of the buildings and other material
tangible personal property owned or leased by any MARKETS Company
are in good working condition (normal wear and tear excepted), and
are adequate and suitable for the purposes for which they are
presently being used. All such property is being operated in
conformity with applicable statutes, regulations and ordinances,
the failure of which to so conform would have a MARKETS Material
Adverse Effect. All such assets are, in the aggregate, sufficient
in all material respects to continue operating the businesses of
the MARKETS Companies as have been heretofore conducted.
(C) Neither the whole nor any material portion
of any real property owned or leased by any MARKETS Company has
been condemned, requisitioned or otherwise taken by any public
authority. None of the real or personal properties owned, leased
or operated by any MARKETS Company, or the ownership, occupancy or
operation thereof, is in violation in any material respect of any
law or any building, zoning or other ordinance, code, rule, regula-
tion or requirement, and no notice from any governmental body or
other Person has been served upon any MARKETS Company claiming any
violation of any such law, ordinance, code, rule or regulation or
requiring, or calling attention to the need for, any work, repairs,
construction, alterations or installation on or in connection with
said property which has not been complied with.
(viii) Indebtedness. Schedule 9(c)(viii) annexed
hereto describes all indentures, trust deeds, loan agreements, or
other instruments pursuant to which any MARKETS Company has
incurred Indebtedness or has guaranteed the Indebtedness of any
Person. Other than as set forth in Schedule 9(c)(viii) annexed
hereto and other than intercompany Indebtedness and advances to
employees in the ordinary course of business, no MARKETS Company is
indebted to any Affiliate, director, officer, employee, agent or
partner of any MARKETS Company and no Affiliate, stockholder,
director, officer, employee, agent or partner of any MARKETS
Company is indebted to any MARKETS Company.
(ix) Tax Returns, Audits and Liabilities. Except as
set forth on Schedule 9(c)(ix) annexed hereto, each MARKETS Company
has (A) timely filed in accordance with all applicable laws, all
Returns required to be filed by it, (B) paid all Taxes shown to
have become due pursuant to such Returns, and (C) paid all Taxes
(other than those being contested in good faith, all of which are
disclosed on Schedule 9(c)(ix)) for which a notice of, or
assessment or demand for, payment has been received or which are
otherwise due and payable, in each case other than failures to so
file or pay that would not have a MARKETS Material Adverse Effect.
All Returns filed by each MARKETS Company were true and correct in
all material respects as of the date on which they were filed or as
subsequently amended to the date hereof. Except as set forth on
Schedule 9(c)(ix), (I) there is no action, suit, proceeding,
investigation, audit, claim or assessment pending or proposed with
respect to any liability for Tax that relates to any MARKETS
Company, (II) all amounts required to be collected or withheld by
any MARKETS Company with respect to Taxes have been duly collected
or withheld and any such amounts that are required to be remitted
to any taxing authority have been duly remitted, (III) no extension
of time within which to file any Return that relates to any MARKETS
Company has been requested which Return has not since been filed,
(IV) there are no waivers or extensions of any applicable statute
of limitations for the assessment or collection of Taxes with
respect to any Return that relates to any MARKETS Company which
remain in effect, and (V) all federal, state and local
consolidated, combined or unitary Income Tax Returns which include
any MARKETS Company have been filed on a timely basis and no notice
of audit has been received. Except as set forth on Schedule
9(c)(ix), (w) MARKETS has not filed any election to be excluded
from the provisions of Subchapter K of the Code, (x) no MARKETS
Company has filed any agreement with the Internal Revenue Service
described in Section 1.1503-2A(c)(3) of the Treasury Regulations,
(y) no MARKETS Company has filed a consent or made any agreement
with the Internal Revenue Service under Section 341(f) of the Code
or any comparable provision of state revenue statutes, and (z)
MARKETS is not a "foreign person" within the meaning of Section
1445(f)(3) of the Code. As a result of the Merger, no MARKETS
Company or WWC will be obligated to make a payment to an individual
that would be a "parachute payment" to a "disqualified individual"
as those terms are defined in Section 280G of the Code without
regard to whether such payment is reasonable compensation for
personal services performed or to be performed in the future.
(x) Employee Benefit Plans.
(A) Generally. Schedule 9(c)(x)(A) annexed
hereto contains a true and complete list of each plan, program,
policy, practice, contract, agreement or other arrangement
providing for compensation, severance, termination pay, performance
awards, stock or stock-related awards, fringe benefits or other
employee benefits of any kind, whether formal or informal, proposed
or final, funded or unfunded and whether or not legally binding,
including, without limitation, each "employee benefit plan" within
the meaning of Section 3(3) of the ERISA, which is now, or ever has
been, maintained, contributed to, or required to be contributed to,
for the benefit of any current or former Employee of any MARKETS
Company, or any current or former Employee of any entity required
to be aggregated with any MARKETS Company pursuant to Section
414(b), (c), (m), or (o) of the Code ("MARKETS Employee Plan") for
which any MARKETS Company may have liability and each management,
employment, severance or consulting agreement or contract between
any MARKETS Company or any of their respective Affiliates and any
Employee which provides for annual compensation in excess of
$75,000 and is not terminable at will without liability on 30 days'
or less prior notice ("MARKETS Employee Agreement"). True and
complete copies of all documents, if any, embodying each MARKETS
Employee Plan and MARKETS Employee Agreement shall be made
available to the parties, including all amendments thereto and
written interpretations thereof; the two most recent annual reports
filed (Form 5500 Series with applicable schedules) with respect to
each MARKETS Employee Plan required under ERISA; the most recent
summary plan description, if any, with respect to each MARKETS
Employee Plan required under ERISA; and all material communica-
tions, if any, to any Employee relating to each MARKETS Employee
Plan.
performed in all material respects all obligations
required to be performed by them under each MARKETS Employee Plan and each
MARKETS Employee Agreement, and each MARKETS Employee Plan has been
established and maintained in all material respects in accordance
with its terms and in compliance with all applicable laws,
statutes, orders, rules and regulations, including but not limited
to ERISA or the Code. No MARKETS Employee Plan is a pension plan
within the meaning of Section 3(2) of ERISA, nor a multiemployer
plan within the meaning of Section 3(37) of ERISA, and no MARKETS
Company has liability with respect to any such plan for any reason,
including liability as a result of having been part of a
"controlled group" within the meaning of Section 414(b), (c), (m),
and (o) of the Code, nor is there any basis for such liability
being imposed. There are no material actions, suits or claims
pending (other than routine claims for benefits) against any
MARKETS Employee Plan or the assets of any MARKETS Employee Plan;
each MARKETS Employee Plan can be amended, terminated, or otherwise
discontinued after the Effective Date in accordance with its terms,
without liability to any MARKETS Company or any of their respective
Affiliates; all premiums required by any MARKETS Employee Plan have
been paid thereunder; all outstanding indebtedness for services
performed for any MARKETS Company or accrued vacation, holiday pay,
earned commissions, accrued bonuses or other benefits owed to any
current or former Employee of any MARKETS Company has been paid
when due or accrued on the books of the MARKETS Companies; no
"prohibited transaction" within the meaning of Section 4975 of the
Code or Section 406 of ERISA has occurred with respect to any
MARKETS Employee Plan; and no action or failure to act with respect
to any MARKETS Employee Plan will subject any MARKETS Company or
any of their respective Affiliates to any tax or penalty.
(C) No Post-Employment Obligations. No
MARKETS Company maintains or contributes to any MARKETS Employee
Plan or MARKETS Employee Agreement which provides, or has any
liability to provide, life insurance, medical or other employee
welfare benefits (other than severance and accrued vacation and
holiday pay) to any current or former Employee of any MARKETS
Company upon his retirement or termination of employment, except as
may be required by statute and no MARKETS Company has ever
represented, promised or contracted (orally or in writing) to any
such Employee (individually or as a group) that life insurance,
medical or other employee welfare benefits (other than severance
and accrued vacation and holiday pay) would be provided upon their
retirement or termination of employment, except to the extent
required by statute.
(D) COBRA. Each MARKETS Employee Plan that is
a "group health plan" within the meaning of Section 4980B(g)(2) of
the Code has been administered in good faith in compliance with the
continuation coverage requirements contained in COBRA, as set forth
at Section 4980B of the Code and any regulations promulgated or
proposed (if such proposed regulations constitute substantial
authority within the meaning of Section 6662 of the Code and any
regulations promulgated thereunder) thereunder.
(E) Effect of Transaction. Except as set
forth on Schedule 9(c)(x)(E) annexed hereto, the execution of this
Agreement and the consummation of the transactions contemplated
hereby will not (either alone or when taken together with any
additional or subsequent events) constitute an event under any
MARKETS Employee Plan or MARKETS Employee Agreement that will or
may result in any payment, upon a change in control or otherwise,
whether of severance or otherwise, acceleration, vesting,
distribution, increase in benefits or obligation to fund benefits
with respect to any Employee. No payment or benefit which will or
may be made by any MARKETS Company with respect to any Employee as
a result of the transactions contemplated hereby will be
characterized as an "excess parachute payment" within the meaning
of Section 280G(b)(1) of the Code.
(F) Employment Matters. Each of the MARKETS
Companies (I) are in compliance with all applicable Federal and
state laws, rules and regulations respecting employment, employment
practices, terms and conditions of employment and wages and hours,
in each case, with respect to Employees, except where the failure
to be in compliance would not, singly or in the aggregate, have a
MARKETS Material Adverse Effect; (II) have withheld all amounts
required by law or by agreement to be withheld from the wages,
salaries and other payments to Employees; (III) are not liable for
any arrears of wages or any taxes or any penalty for failure to
comply with any of the foregoing, except as would not have a
MARKETS Material Adverse Effect; and (IV) (other than routine
payments to be made in the normal course of business and consistent
with past practice) are not liable for any payment to any trust or
other fund or to any governmental or administrative authority, with
respect to unemployment compensation benefits, Social Security or
other benefits for Employees.
(G) Labor. No work stoppage or labor strike
against any MARKETS Company is pending or threatened. Except as
set forth on Schedule 9(c)(x)(G) annexed hereto, no MARKETS Company
is involved in nor threatened with, any labor dispute, grievance or
litigation relating to labor, safety or discrimination matters
involving any Employee, including, without limitation, charges of
unfair labor practices or discrimination complaints, which, if ad-
versely determined, would, individually or in the aggregate, have
a MARKETS Material Adverse Effect. No MARKETS Company has engaged
in any unfair labor practices within the meaning of the National
Labor Relations Act.
(H) Unions. No MARKETS Company is presently
or has been in the past a party to, or bound by, any collective
bargaining agreement or union contract with respect to Employees
and no collective bargaining agreement is at the date hereof being
negotiated by or on behalf of any MARKETS Company.
(I) Investment Company Act. MARKETS is not an
"investment company" within the meaning of the 40 Act.
(d) There shall not then be pending by any third party
any suit or proceeding to restrain or invalidate, in whole or part,
this Agreement or the transactions contemplated hereby.
(e) The GCC Stockholders shall have been furnished with
an opinion of Rubin Baum Levin Constant & Friedman, counsel for
MARKETS, Stanton, PNCLP and PNC, dated the Effective Date, in form
and substance reasonably satisfactory to them.
(f) The GCC Stockholders shall have received an opinion
of Heller, Ehrman, White & McAuliffe, dated the Effective Date, to
the effect that for federal income tax purposes no income, gain or
loss will be recognized by any GCC Stockholders as a result of the
GCC Exchanges. In rendering such opinion, Heller, Ehrman, White &
McAuliffe may rely upon factual representations, covenants and
agreements contained in the WWC Stockholders Agreement and in
certificates of MARKETS, GCC, WWC, Stanton and the GCC Stockholders
and others, including, without limitation, tax matters
certificates.
(g) The GCC Stockholders shall have been furnished with
an opinion of Gurman, Kurtis, Blask & Freedman, FCC counsel for
MARKETS, Stanton, SCI, PNCLP and PNC, dated the Effective Date, in
form and substance reasonably satisfactory to them.
(h) All consents, approvals and actions of third
parties, including, without limitation, all approvals from Federal,
state and local authorities (including the FCC and all public
service commission and public utilities commission or comparable
bodies exercising jurisdiction over GCC, MARKETS or WWC) as may be
required for the consummation of the transactions contemplated
herein, including, without limitation, the GCC Exchanges, the PNCLP
Transfer, the SCI Exchange and the MARKETS Affiliates Transactions
and the Merger, shall have been obtained or made pursuant to a
Final Order which consents and approvals shall not contain any
conditions or restrictions which (i) in the case of FCC Approvals,
are not customary in transactions of this nature, and (ii) in the
case of third party consents and approvals, have a GCC Material
Adverse Effect or a MARKETS Material Adverse Effect.
(i) MARKETS shall deliver to the H&F Entities, Bayer, ML
Media and the Media/Communications Entities with respect to each of
MARKETS' Subsidiaries (A) a copy of its certificate of
incorporation certified by the Secretary of State of its state of
incorporation, and (B) a certificate of good standing of recent
date from its Secretary of State of the State of its incorporation
and jurisdictions in which it is qualified to do business.
(j) The GCC Exchanges (other than the portion of the GCC
Exchanges to which such entity is a party), the Merger, the SCI
Exchange, the GSCP Note Exchange and the MARKETS Affiliates
Transactions shall have been consummated in accordance with the
provisions of this Agreement.
(k) No MARKETS Material Adverse Effect shall have
occurred and there shall exist no fact or circumstance which could
have a MARKETS Material Adverse Effect.
(l) No statute, rule or regulation shall have been
enacted by any state or Federal government or governmental agency
in the United States which would render the consummation of this
Agreement unlawful.
(m) The waiting periods, if applicable, of the HSR Act
shall have expired or been terminated.
(n) The WWC Stockholders Agreement shall have been
executed and delivered by each of the other parties listed on
Schedule 8(n).
(o) MARKETS shall have obtained the MARKETS Partners'
Approval.
ARTICLE 10
CLOSING
The closing of the GCC Exchanges, the Merger, the PNCLP
Transfer, the SCI Exchange, the GSCP Note Exchange and the MARKETS
Affiliates Transactions shall take place at 10:00 a.m. on the third
business day following the satisfaction or waiver of all conditions
to the consummation of the transactions contemplated hereby at the
office of Rubin Baum Levin Constant & Friedman, 30 Rockefeller
Plaza, 29th Floor, New York, New York 10112 (or at such other time,
date or place as may be agreed upon by the parties), subject to
postponement at the request of either party (by notice given to the
other party at least three (3) business days before the scheduled
time and date of closing) for not more than ten (10) business days,
or otherwise as mutually agreed upon.
ARTICLE 11
ABANDONMENT AND TERMINATION
11.1 Termination; Amendment Subsequent to MARKETS Partners'
Approval.
(a) This Agreement may be terminated and the trans-
actions contemplated hereby may be abandoned, without further
obligation of any of the H&F Entities, Bayer, ML Media and the
Media/Communications Entities, on the one hand, and MARKETS,
Stanton, PNCLP and PNC, on the other hand, at any time prior to the
Effective Date as follows:
(i) by mutual written consent duly authorized by
the H&F Entities, on behalf of the H&F Entities, Bayer, ML Media
and the Media/Communications Entities, and the Advisory Committee
of MARKETS, on behalf of MARKETS, Stanton, PNCLP and PNC; or
(ii) by the H&F Entities, on behalf of the H&F
Entities, Bayer, ML Media and the Media/Communications Entities, or
the Advisory Committee of MARKETS, on behalf of MARKETS, Stanton,
PNCLP and PNC, if the Effective Date shall not have occurred on or
before December 31, 1994, or such later date, if any, as the H&F
Entities, on behalf of the H&F Entities, Bayer, ML Media and the
Media/Communications Entities, and the Advisory Committee of
MARKETS, on behalf of MARKETS, Stanton, PNCLP and PNC, shall agree
in writing; provided that the party exercising such right has not
failed to satisfy the conditions to consummate the transactions
contemplated hereby or is not otherwise in default of its
obligations under this Agreement in a manner which results in the
failure to satisfy the conditions to consummate the transactions of
the other parties (it being understood that in the event the H&F
Entities exercise such right on behalf of the H&F Entities, Bayer,
ML Media and the Media/Communications Entities, that such proviso
shall apply to each of the H&F Entities, Bayer, ML Media and the
Media/Communications Entities and in the event the Advisory
Committee of MARKETS exercises such right on behalf of MARKETS,
Stanton, PNCLP and PNC, that such proviso shall apply to each of
MARKETS, Stanton, PNCLP and PNC); or
(iii) by the H&F Entities, on behalf of the H&F
Entities, Bayer, ML Media and the Media/Communications Entities, or
the Advisory Committee of MARKETS, on behalf of MARKETS, Stanton,
PNCLP and PNC, if the consummation of the transactions contemplated
hereby shall be prohibited by a final, non-appealable order, decree
or injunction of a court of competent jurisdiction;
(iv) by the Advisory Committee of MARKETS, on behalf
of MARKETS, Stanton, PNCLP and PNC, if any condition to the
obligations of MARKETS, Stanton, PNCLP and PNC set forth in Article
8 hereof shall have become impossible to be fulfilled; or
(v) by the H&F Entities, on behalf of the H&F
Entities, Bayer, ML Media and the Media/Communications Entities, if
any condition to the obligations of the GCC Stockholders set forth
in Article 9 shall have become impossible to be fulfilled.
(b) In the event of a termination of this Agreement, no
party hereto shall have any liability or further obligation to any
other party to this Agreement except that nothing herein will
relieve any party from liability for any breach of this Agreement.
(c) The H&F Entities, Bayer, ML Media and the
Media/Communications Entities and the Advisory Committee of
MARKETS, Stanton, PNCLP and PNC may amend this Agreement at any
time prior to the Effective Date, provided that an amendment made
subsequent to the adoption of this Agreement by the stockholders or
partners of any Constituent Party shall not (A) alter or change the
amount or kind of shares, securities, cash, property or rights to
be received in exchange for or on conversion of all or any of the
shares of any class or series thereof of any Constituent Party, or
(B) alter or change any of the terms and conditions of this
Agreement if such alteration or change would adversely affect the
holders of shares or interests of any class or series thereof of
any Constituent Party.
ARTICLE 12
SURVIVAL; ISSUANCE OF ADDITIONAL
SHARES OF WWC COMMON STOCK
12.1 Survival. The representations and warranties made in
this Agreement shall terminate on the Effective Date and shall be
of no further force and effect except that the representations and
warranties of (i) the H&F Entities contained in Sections 5.1(b),
5.1(d), 5.1(e), 5.1(f) and 5.1(g), (ii) Bayer, ML Media and the
Media/Communications Entities contained in Sections 5.2(b), 5.2(d),
5.2(e), 5.2(f) and 5.2(g), (iii) Stanton contained in Sections
7.2(a), 7.2(c), 7.2(d), 7.2(e) and 7.2(f), (iv) PNCLP contained in
Sections 7.3(b), 7.3(d), 7.3(e), 7.3(f) and 7.3(g), and (v) PNC
contained in Section 7.4(b), 7.4(d), 7.4(e), 7.4(f) and 7.4(g)
shall survive the Effective Date until the earlier to occur of (I)
the second anniversary of the Effective Date, and (II) the sale by
WWC of all or substantially all of its assets, the merger or con-
solidation of WWC with or into any Person, the consummation of a
private offering of equity securities of WWC for an aggregate pur-
chase price of at least $65,000,000 or the consummation of a public
offering of equity securities of WWC (the "Survival Period").
12.2 Undisclosed Liabilities of MARKETS. In the event that
MARKETS has any liabilities based on acts or omissions occurring
prior to the Closing (other than Disclosed MARKETS Liabilities),
and as a result thereof a claim or demand is asserted, during the
period from the Effective Date through the Survival Period, against
WWC or any MARKETS Company in respect thereof, including in respect
of any damages, Taxes (including excise and penalty Taxes),
penalties, costs or other expenses (including, without limitation,
interest, expenses of investigation, reasonable fees and
disbursements of counsel, accountants and other experts)
(collectively "Losses"), then (I) the respective values of MARKETS
and GCC (which value for GCC is that percentage of the total value
of GCC represented by the number of shares of GCC Common Stock
owned by the GCC Stockholders at the Effective Date divided by the
total number of shares of GCC Common Stock outstanding at the
Effective Date assuming full exercise of all outstanding options)
as set forth on Schedule 12.2 annexed hereto shall be recomputed by
reducing the value of MARKETS on such Schedule by the amount of
such Losses, and (II) each GCC Stockholder who received shares of
WWC Common Stock pursuant to the GCC Exchanges shall be issued by
WWC, as an adjustment to the number of shares of WWC Common Stock
issued to such stockholder for each share of GCC Common Stock
exchanged pursuant to the GCC Exchanges, additional shares of WWC
Common Stock such that, after such additional issuances, the total
number of shares of WWC Common Stock issued at any time to the GCC
Stockholders pursuant to this Agreement, as a percentage of all of
the shares of WWC Common Stock issued or to be issued at any time
pursuant to this Agreement, is equal to the percentage of the total
value of WWC attributable to the value of GCC, as recomputed in
accordance with clause (I) above; provided, however, that no such
adjustment in the ownership of the WWC Common Stock pursuant to
this Section 12.2 shall be made unless the aggregate amount of
such Losses exceeds $5,000,000, in which event the GCC Stockholders
who received shares of WWC Common Stock pursuant to the GCC
Exchanges shall be issued additional shares of WWC Common Stock in
respect of the entire amount of such Losses.
12.3 Undisclosed Liabilities of GCC. In the event that GCC
has any liabilities based on acts or omissions occurring prior to
the Closing (other than Disclosed GCC Liabilities), and as a result
thereof a claim or demand is asserted, during the period from the
Effective Date through the Survival Period, against WWC or any GCC
Company in respect thereof, including in respect of any Loss, then
(I) the respective values of MARKETS and GCC (which value for GCC
is that percentage of the total value of GCC represented by the
number of shares of GCC Common Stock owned by the GCC Stockholders
at the Effective Date divided by the total number of shares of GCC
Common Stock outstanding at the Effective Date assuming full
exercise of all outstanding options) as set forth on Schedule 12.2
annexed hereto shall be recomputed by reducing the value of GCC on
such Schedule by the amount of such Losses, and (II) there shall be
issued by WWC to the Partners, PNCLP, Stanton, PNC, GSCP and the
holders of Allocated Class B Limited Partnership Units who do not
consummate the Class B Exchange, as an adjustment to the number of
shares of WWC Common Stock to be issued to such Persons in
connection with the Merger, the SCI Exchange, the PNCLP Transfer,
the GSCP Note Exchange and the MARKETS Affiliates Transactions, as
applicable, additional shares, or in the case of holders of
Allocated Class B Limited Partnership Units who agree to make the
Class B Exchange, options to acquire additional shares, of WWC
Common Stock such that, after such additional issuances, the total
number of shares of WWC Common Stock issued (or subject to options)
at any time to the Partners, PNCLP, Stanton, PNC, GSCP and the
holders of Allocated Class B Limited Partnership Units, as a
percentage of all of the shares of WWC Common Stock issued or to be
issued at any time pursuant to this Agreement, is equal to the
percentage of the total value of WWC attributable to the value of
MARKETS, as recomputed in accordance with clause (I) above;
provided, however, that no such adjustment in the ownership of the
WWC Common Stock pursuant to this Section 12.3 shall be made unless
the aggregate amount of such Losses exceeds $5,000,000, in which
event the Partners, PNCLP, Stanton, PNC and GSCP shall be issued
additional shares, the holders of Allocated Class B Limited
Partnership Units who agree to make the Class B Exchange shall be
issued additional options to acquire additional shares, of WWC
Common Stock in respect of the entire amount of such Losses and the
holders of Allocated Class B Limited Partnership Units who do not
consummate the Class B Exchange pursuant to this Section 12.3 shall
be issued additional shares of WWC Common Stock at such time, if
any, as such Allocated Class B Limited Partnership Units would have
become an Award in accordance with the Class B Plan and the terms
of such Equity Participation Agreement.
12.4 Procedure. In the event that any Losses are sustained
which require an adjustment in the ownership of the WWC Common
Stock by the GCC Stockholders, the Partners, PNCLP, Stanton, PNC
and the holders of Allocated Class B Limited Partnership Units
pursuant to Section 12.2 or Section 12.3 above, WWC shall give
notice, in the case of GCC, to H&F, the authorized representative
of the GCC Stockholders for such purposes, and, in the case of
MARKETS, to Stanton, GSCP, Providence and Odyssey, the authorized
representatives of the Partners, PNCLP, Stanton, PNC and the
holders of Allocated Class B Limited Partnership Units for such
purposes. If there shall be any dispute between such authorized
representatives as to the amount of such Losses or the adjustment
in the ownership of WWC Common Stock as a result of such Losses
which is not resolved within thirty (30) business days after
receipt of such notice from WWC, such dispute shall immediately
thereafter be submitted to Arthur Andersen & Co. for resolution of
such dispute (the "Arbitrator"). The Arbitrator shall agree to
resolve such dispute within thirty (30) business days of submission
of such dispute to it. The Arbitrator's resolution of such dispute
shall be final and binding upon all of the parties.
ARTICLE 13
MISCELLANEOUS
13.1 Restrictions on Transfer.
(a) WWC Common Stock Legend. All certificates
representing shares of WWC Common Stock issued pursuant to the GCC
Exchanges, the PNCLP Transfer, the SCI Exchange, the MARKETS
Affiliates Transactions and the Merger shall bear the following
legend:
"The shares evidenced by this certificate
have not been registered under the Securities
Act of 1933, as amended, or the securities
laws of any state and may be offered and sold
only if so registered or if the Company has
been furnished with an opinion of counsel,
reasonably satisfactory to the Company, to the
effect that an exemption from such registra-
tion is available to the holder of the
shares."
(b) Opinions of Counsel in Connection with Transfers.
Each of the parties hereto agrees that in connection with any
transfer of shares of WWC Common Stock, except pursuant to an
effective registration statement, it will, if requested by WWC,
deliver at its expense to WWC an opinion of counsel (including in-
house or special counsel), in form and substance and from counsel
reasonably satisfactory to WWC and its counsel, that such transfer
is not in violation of the securities laws of the United States or
any state thereof; provided, however, that in case of any transfer
of shares of Common Stock to a Person who is an "Accredited
Investor" as that term is defined under Rule 501 of Regulation D
promulgated under the Act, no opinion of counsel shall be required
if the transferor obtains a representation in writing from such
Person that it is an accredited investor and is acquiring such
shares for its own account and with no intention of distributing or
reselling such Shares or any part thereof, or interest therein, in
any transaction that would violate the securities laws of the
United States or any state thereof, without prejudice, however, to
such Person's right at all times to sell or otherwise dispose of
all or any part of such Shares pursuant to an effective
registration statement or an exemption from registration, and
subject, nevertheless, to such Person's disposition of its property
being at all times within its control.
13.2 Indemnity of WWC. From and after the Effective Date, WWC
shall indemnify and hold harmless the GCC Stockholders, the MARKETS
Subscribers, PNCLP and PNC, and each of their respective officers,
directors, partners, employees and agents, from and against all
claims, losses, damages, liabilities, costs and expenses
(including, without limitation, reasonable attorneys fees and
expenses) incurred by any of them by reason of any claim made by
the holders of GCC Common Stock (other than the GCC Stockholders),
the Partners of MARKETS (other than the MARKETS Subscribers) or the
holders of Allocated Class B Limited Partnership Units arising from
the GCC Exchanges, the Merger, the Class B Exchange the PNCLP
Transfer, the MARKETS Affiliates Transactions, the GSCP Note
Exchange and the transactions contemplated hereby.
13.3 Expenses. Each party shall bear its own expenses
incident to the negotiation, preparation, authorization and
consummation of this Agreement and the transactions contemplated
hereby, including, without limitation, all fees and expenses of its
counsel and accountants, whether or not such transactions are
consummated.
13.4 Equitable Remedies. The parties hereto agree that
irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly
agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, this being in
addition to any other remedy to which they are entitled at law or
in equity. Each party agrees that it will not assert, as a defense
against a claim for specific performance, that the party seeking
specific performance has an adequate remedy at law.
13.5 Notices. All notices, claims and other communications
hereunder shall be in writing and shall be made by hand delivery,
registered or certified mail (postage prepaid, return receipt
requested), telex, facsimile, or overnight air courier guaranteeing
next day delivery (a) if to MARKETS, Stanton, PNCLP or PNC to it at
11400 Southeast Eighth Street, Suite 445, Bellevue, Washington
98004, Attention: John W. Stanton and William W. Hague, Esq. (Fax
No. 206-635-0126), with a copy (which shall not constitute notice)
to Rubin Baum Levin Constant & Friedman, 30 Rockefeller Plaza, New
York, New York 10112, Attention: Barry A. Adelman, Esq. (Fax No.
212-698-7825) or (b) if to the H&F Entities, to the H&F Entities at
One Maritime Plaza, San Francisco, California 94111, Attention:
Mitchell Cohen, Esq. (Fax No. 415-788-0176), with copies (which
shall not constitute notice) to Heller, Ehrman, White & McAuliffe,
333 Bush Street, San Francisco, California 94104-2878 Attention:
Paul J. Mundie, Esq. (Fax No. 415-772-6268), or (c) if to Bayer, to
it at 6800 Pelican Bay Boulevard, Naples, Florida _______
Attention: Mr. David A. Bayer (Fax No. 314-721-3410), with copies
(which shall not constitute notice) to Peper Martin Jensen Maichel
& Hetlage, 720 Olive Street, 24th Floor, St. Louis, Missouri 63101
Attention: John Short, Esq. (Fax No. 314-621-4834), or (d) if to
ML Media, to it at 350 Park Avenue, 16th Floor, New York, New York
10022, Attention: Mr. I. Martin Pompadour (Fax No. 212-980-8374),
with copies (which shall not constitute notice) to Proskauer Rose
Goetz & Mendelsohn, 1585 Broadway, New York, New York 10036,
Attention: Steven L. Kirshenbaum, Esq. (Fax No. 212-969-2900), or
(e) if to the Media/Communications Entities, to it at 75 State
Street, Boston, Massachusetts 02109, Attention: Mr. Jim Wade (Fax
No. ____________), with copies (which shall not constitute notice)
to Edwards & Angell, 101 Federal Street, Boston, Massachusetts
02110, Attention: Leonard Q. Slap, Esq. (Fax No. 617-439-4170 or
7748), or (f) if to Odyssey Partners, L.P., to it at 31 West 52nd
Street, New York, New York 10019, Attention: Mr. Brian Kwait (Fax
No. 212-708-0730), with copies (which shall not constitute notice)
to Weil Gotshal & Manges, 767 Fifth Avenue, New York, NY 10153,
Attention: Norman Chirite, Esq. (Fax No. 212-310-8007), or (g) if
to Providence Ventures, Inc., to it at 900 Fleet Center, 50 Kennedy
Plaza, Providence, Rhode Island 02903, Attention: Mr. Jonathan M.
Nelson (Fax No. 401-751-1790), with copies to (which shall not
constitute notice) to Edwards & Angell, 2700 Hospital Tower,
Providence, Rhode Island 02903, Attention: David K. Duffell, Esq.
(Fax No. 401-276-6611), or at such other address as any party may
from time to time furnish to the other parties by a notice given in
accordance with the provisions of this Section 13.5. All such
notices and communications shall be deemed to have been duly given
at the time delivered by hand, if personally delivered; five
business days after being deposited in the mail, first class
postage prepaid, return receipt requested, if mailed; when answered
back, if telexed; when receipt confirmed, if sent by facsimile; and
the next business day after timely delivery to the courier, if sent
by an overnight air courier service guaranteeing next day delivery.
13.6 Entire Agreement. This Agreement, together with the
Schedules annexed hereto, contains the entire understanding among
the parties hereto concerning the subject matter hereof and may not
be changed, modified, altered or terminated except by an agreement
in writing executed by the parties hereto. Any waiver by any party
of any of its rights under this Agreement or of any breach of this
Agreement shall not constitute a waiver of any other rights or of
any other or future breach.
13.7 Remedies Cumulative. Except as otherwise provided
herein, each and all of the rights and remedies in this Agreement
provided, and each and all of the rights and remedies allowed at
law and in equity in like case, shall be cumulative, and the
exercise of one right or remedy shall not be exclusive of the right
to exercise or resort to any and all other rights or remedies
provided in this Agreement or at law or in equity.
13.8 Governing Law. This Agreement shall be construed in
accordance with and subject to the laws and decisions of the State
of Delaware applicable to contracts made and to be performed
entirely therein.
13.9 Counterparts. This Agreement may be executed in several
counterparts hereof, and by the different parties hereto on
separate counterparts hereof, each of which shall be an original;
but such counterparts shall together constitute one and the same
instrument.
13.10 Waivers. No provision in this Agreement shall be
deemed waived by course of conduct, including the act of Merger,
unless such waiver is in writing signed by the parties and stating
specifically that it was intended to modify this Agreement. Any
waiver by MARKETS hereto of any provision of this Agreement
including, without limitation, a waiver of the breach of any
representation, warranty, covenant, agreement or a waiver of the
failure to satisfy any condition to any party's obligations under
this Agreement to consummate the transactions contemplated hereby,
may be granted only by the Advisory Committee of MARKETS (or the
Advisory's Committee's designated representative for such
purposes).
13.11 Successors and Assigns. This Agreement shall be
binding upon and, except for rights expressly conferred on
stockholders of GCC, shall inure only to the benefit of the parties
hereto and their respective successors and assigns.
13.12 Disclosures.
(a) Each of the parties hereto acknowledges and confirms
in connection with the negotiation of this Agreement, the execution
hereof and during the period from the date hereof through the
Effective Date, the parties hereto will have furnished to one
another certain materials, information, data and other documen-
tation ("Disclosures") concerning their business, financial condi-
tion and operations which are proprietary and confidential. Each
party acknowledges the party disclosing such Disclosures considers
them secret and confidential and asserts a proprietary interest
therein. Accordingly, each of the parties covenants and agrees
that it shall maintain all Disclosures made by another party in
strict confidence and shall not use such Disclosures for its own
benefit or disclose them to third parties, except to its agents,
representatives, bankers, investment bankers, counsel and employees
involved in evaluating the transactions contemplated by this
Agreement, its partners or as otherwise required by law.
(b) No public announcement by any party hereto with
regard to the transactions contemplated hereby or the material
terms hereof shall be issued by any party without the mutual prior
consent of the other parties, except in the event the parties are
unable to agree on a press release and legal counsel for one party
is of the opinion that such press release is required by law and
such party furnishes the other parties a written opinion of outside
legal counsel, or other counsel reasonably acceptable to the party
being furnished such opinion, to that effect, then such party may
issue the legally required press release.
(c) This Agreement shall not restrict any party hereto
from using information already known to it, to which it is entitled
under existing agreements, or information generally in the public
domain or any information coming into its possession after it
becomes public knowledge unless it became public knowledge through
a breach of this Agreement.<PAGE>
IN WITNESS WHEREOF, the parties hereto have
duly executed this Agreement as of the date first above written.
ATTEST: WESTERN WIRELESS CORPORATION
________________________ By:________________________________
Title:
[Corporate Seal]
ATTEST:
MARKETS CELLULAR LIMITED PARTNERSHIP
By: PN Cellular Limited Partnership,
its general partner
By: PN Cellular, Inc., its general
partner
_________________________ By:_________________________________
Title:
ATTEST: MCLP, INC.
_________________________ By:________________________________
Title:
WWC HOLDING CO., INC.
By:_______________________________
Title:
PN CELLULAR, INC.
By:________________________________
Title:
PN CELLULAR LIMITED PARTNERSHIP
By: PN Cellular, Inc., its general
partner
By:_______________________________
Title:
__________________________________
JOHN W. STANTON
__________________________________
THERESA E. GILLESPIE
HELLMAN & FRIEDMAN CAPITAL PARTNERS
II, L.P., a California limited
partnership
By: Hellman & Friedman Investors,
L.P., its general partner
By: Hellman & Friedman Investors,
Inc., its general partner
By:_______________________________
Name:
Title:
H & F ORCHARD PARTNERS, L.P.,
a California limited partnership
By: H & F Orchard Investors, L.P.,
its general partner
By: H & F Orchard Investors, Inc.,
its general partner
By:_______________________________
Name:
Title: Vice president<PAGE>
H & F INTERNATIONAL PARTNERS, L.P.,
a California limited partnership
By: H & F International Investors,
L.P., its general partner
By: H & F International Investors,
Inc., its general partner
By:_______________________________
Name:
Title:
BAYER INVESTMENT GROUP
By: David A. Bayer Trust u/a/d
August 21, 1992
By:_______________________________
David A. Bayer, Trustee
M.L. MEDIA OPPORTUNITY PARTNERS L.P.
By:_______________________________
Title:
MEDIA/COMMUNICATIONS PARTNERS II
LIMITED PARTNERSHIP
By:_______________________________
Title:
MEDIA/COMMUNICATIONS INVESTORS
LIMITED PARTNERSHIP
By:_______________________________
Title:
Each of the undersigned MARKETS Subscribers hereby covenants and
agrees (i) to vote, or grant its written consent with respect to,
the Class A Limited Partnership Units owned by it to approve and
adopt the Merger and the transactions contemplated hereby and (ii)
to execute the amendment to the MARKETS Partnership Agreement
substantially in the form of Schedule 8(o) annexed hereto.
PACIFIC NORTHWEST CELLULAR INC.
By:__________________________________
Name:
Title:
_____________________________________
JOHN W. STANTON
_____________________________________
THERESA E. GILLESPIE
GS CAPITAL PARTNERS, L.P.
By: GS Advisors L.P., General Partner
By: GS Advisors, Inc., General Partner
By:__________________________________
Name:
Title:
GS CAPITAL PARTNERS MEDIA HOLDING I, L.P.
By: GS Capital Partners, L.P.,
General Partner
By: GS Advisors L.P., General Partner
By: GS Advisors, Inc., General Partner
By:___________________________________
Name:
Title:
BRIDGE STREET FUND 1992, L.P.
By: Stone Street Performance Corp.,
Managing General Partner
By:___________________________________
Name:
Title:
STONE STREET FUND 1992, L.P.
By: Stone Street Performance Corp.,
General Partner
By:___________________________________
Name:
Title:
ODYSSEY PARTNERS, L.P.
By:___________________________________
Name:
Title:
PROVIDENCE MEDIA PARTNERS L.P.
By: Providence Media GP Limited Partnership
Its: General Partner
By: Providence Ventures L.P.
Its: General Partner
By:___________________________________
Name:
Title:
<PAGE>
EXCHANGE AGREEMENT AND PLAN OF MERGER
BY AND AMONG
WESTERN WIRELESS CORPORATION,
MARKETS CELLULAR LIMITED PARTNERSHIP,
MCLP, INC., WWC HOLDING CO., INC.,
PN CELLULAR, INC., PN CELLULAR LIMITED PARTNERSHIP,
JOHN W. STANTON and THERESA E. GILLESPIE,
HELLMAN & FRIEDMAN CAPITAL PARTNERS II, L.P.,
H&F ORCHARD PARTNERS, L.P., H&F INTERNATIONAL PARTNERS, L.P.,
BAYER INVESTMENT GROUP, M.L. MEDIA OPPORTUNITY PARTNERS L.P.,
MEDIA/COMMUNICATIONS PARTNERS II LIMITED PARTNERSHIP
AND
MEDIA/COMMUNICATIONS INVESTORS LIMITED PARTNERSHIP
DATED: July 20, 1994
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TABLE OF CONTENTS
Section Page
ARTICLE 1 - EXCHANGE OF GCC COMMON STOCK FOR WWC COMMON
STOCK. . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 2 - MERGER AND CLASS B EXCHANGE . . . . . . . . . . . 9
2.1 The Merger. . . . . . . . . . . . . . . . . . . . 9
2.2 Partnership Agreement . . . . . . . . . . . . . . 9
2.3 Property and Liabilities of Constituent
Parties . . . . . . . . . . . . . . . . . . . . . 9
2.4 MCLPI Stockholders' Approval and MARKETS
Partners' Approval and Class B Exchange . . . . . 10
2.5 Further Assurances. . . . . . . . . . . . . . . . 11
2.6 Effect of Merger on Constituent Parties'
Securities. . . . . . . . . . . . . . . . . . . . 11
2.7 Surrender of MARKETS Class A and Awarded Class B
Unit. . . . . . . . . . . . . . . . . . . . . . . 14
2.8 Class B Units Exchanged Pursuant to Class B
Exchange. . . . . . . . . . . . . . . . . . . . . 14
2.9 Class B Units Not Exchanged Pursuant to Class B
Exchange. . . . . . . . . . . . . . . . . . . . . 15
2.10 No Fractional Shares. . . . . . . . . . . . . . . 15
ARTICLE 3 - COVENANTS AND AGREEMENTS OF CERTAIN OF THE
PARTIES. . . . . . . . . . . . . . . . . . . . . 16
3.1 Covenants of WWC, WWC Holdings and MCLPI. . . . . 16
3.2 Additional Covenants of WWC . . . . . . . . . . . 16
3.3 Covenants of Stanton. . . . . . . . . . . . . . . 17
3.4 Covenants of PNC. . . . . . . . . . . . . . . . . 18
3.5 Covenants of PNCLP. . . . . . . . . . . . . . . . 18
3.6 Covenants of the H&F Entities, Bayer, ML Media
and the Media/Communications Entities . . . . . . 18
ARTICLE 4 - GOVERNMENTAL FILINGS. . . . . . . . . . . . . . . 19
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES. . . . . . . . . . 20
5.1 Representations and Warranties of the H&F
Entities. . . . . . . . . . . . . . . . . . . . 20
5.2 Representations and Warranties of Bayer, ML
Media and the Media/Communications Entities.. . . 24
ARTICLE 6 - REPRESENTATIONS AND WARRANTIES OF MARKETS . . . . 28
6.1 Due Organization. . . . . . . . . . . . . . . . . 28
6.2 Capitalization of MARKETS . . . . . . . . . . . . 29
6.3 Power and Authority; Enforceability; No
Violation . . . . . . . . . . . . . . . . . . . . 30
6.4 No Brokers. . . . . . . . . . . . . . . . . . . . 31
ARTICLE 7 - REPRESENTATIONS AND WARRANTIES AS TO SCI,
STANTON, PNCLP and PNC . . . . . . . . . . . . . 32
7.1 Representations and Warranties as to SCI. . . . . 32
7.2 Representations and Warranties of Stanton.. . . . 34
7.3 Representations and Warranties of PNCLP.. . . . . 37
7.4 Representations and Warranties of PNC.. . . . . . 41
ARTICLE 8 - CONDITIONS TO MARKETS', STANTON'S, PNCLP'S AND
PNC'S OBLIGATIONS. . . . . . . . . . . . . . . . 45
ARTICLE 9 - CONDITIONS TO THE GCC STOCKHOLDERS OBLIGATIONS. . 70
ARTICLE 10 - CLOSING . . . . . . . . . . . . . . . . . . . . . 91
ARTICLE 11 - ABANDONMENT AND TERMINATION . . . . . . . . . . . 92
11.1 Termination; Amendment Subsequent to MARKETS
Partners' Approval. . . . . . . . . . . . . . . . 92
ARTICLE 12 - SURVIVAL; ISSUANCE OF ADDITIONAL SHARES OF WWC
COMMON STOCK . . . . . . . . . . . . . . . . . . 95
12.1 Survival. . . . . . . . . . . . . . . . . . . . . 95
12.2 Undisclosed Liabilities of MARKETS. . . . . . . . 95
12.3 Undisclosed Liabilities of GCC. . . . . . . . . . 97
12.4 Procedure . . . . . . . . . . . . . . . . . . . . 98
ARTICLE 13 - MISCELLANEOUS . . . . . . . . . . . . . . . . . . 99
13.1 Restrictions on Transfer. . . . . . . . . . . . . 99
13.2 Indemnity of WWC. . . . . . . . . . . . . . . . .101
13.3 Expenses. . . . . . . . . . . . . . . . . . . . .101
13.4 Equitable Remedies. . . . . . . . . . . . . . . .101
13.5 Notices . . . . . . . . . . . . . . . . . . . . .102
13.6 Entire Agreement. . . . . . . . . . . . . . . . .104
13.7 Remedies Cumulative . . . . . . . . . . . . . . .104
13.8 Governing Law . . . . . . . . . . . . . . . . . .104
13.9 Counterparts. . . . . . . . . . . . . . . . . . .105
13.10 Waivers . . . . . . . . . . . . . . . . . . . . .105
13.11 Successors and Assigns. . . . . . . . . . . . . .105
13.12 Disclosures . . . . . . . . . . . . . . . . . . .105
