SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934.
Date of Report (Date of earliest event reported): September 11, 1995
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AMERICAN WIRELESS SYSTEMS, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 0-11412 41-1616965
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(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
Incorporation or Organization) Identification No.)
7426 E. Stetson Drive, Suite 220, Scottsdale, AZ 85251
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (602) 994-4301
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11811 N. Tatum Blvd., Suite 1060, Phoenix, AZ 85028
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(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events
An Agreement and Plan of Merger between the Registrant, Heartland
Mergersub, Inc, a Delaware corporation and Heartland Wireless Communications,
Inc., a Delaware corporation was signed on September 11, 1995. The Registrant
will receive approximately $34,000,000 in Heartland Wireless Communications,
Inc. common stock, subject to adjustments in certain events.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
Exhibit No.
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Exhibit 10.30 Agreement and Plan of Merger dated September 11, 1995 between
the Registrant, Heartland Mergersub, Inc. and Heartland Wireless
Communications, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
AMERICAN WIRELESS SYSTEMS, INC.
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(Registrant)
DATED: September 25, 1994 By: /s/Steven G. Johnson
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Steven G. Johnson
President and
Chief Executive Officer
Exhibit 10.30
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), is made and
entered into as of the 11th day of September, 1995, by and among AMERICAN
WIRELESS SYSTEMS, INC., a Delaware corporation ("AWS"), HEARTLAND MERGERSUB,
INC., a Delaware corporation ("MergerSub") and HEARTLAND WIRELESS
COMMUNICATIONS, INC., a Delaware corporation ("Heartland").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of AWS, MergerSub and
Heartland have approved the merger of MergerSub with and into AWS pursuant and
subject to the terms and conditions of this Agreement, whereby each issued and
outstanding share of common stock, par value $.01 per share, of AWS ("AWS Common
Share") will be converted into the right to receive the Conversion Amount as
hereinafter defined; and
WHEREAS, AWS, MergerSub and Heartland desire to make certain
representations, warranties and agreements in connection with the Merger and
also to set forth the various conditions to the Merger; and
WHEREAS, the Board of Directors of AWS, MergerSub and Heartland have
adopted resolutions approving this Agreement; and
WHEREAS, the terms used in this Agreement shall have the meanings
respectively ascribed to them in Article 12 hereof.
NOW, THEREFORE, the parties hereto hereby adopt the above recitals and
agree as follows:
ARTICLE 1. THE MERGER
1.1 The Merger. At the Effective Time, MergerSub will merge
with and into AWS (the "Merger") in accordance with the terms and conditions of
this Agreement. AWS shall be the corporation surviving the Merger (the
"Surviving Corporation") and shall continue to be governed by the laws of the
State of Delaware. The Merger shall have the effects specified under the
Delaware General Corporation Law ("DGCL").
1.2 Effect of the Merger.
(a) Effective Time. At the Effective Time, subject in all
instances to each of the terms, conditions, provisions and limitations contained
in this Agreement, (i) MergerSub will merge with and into AWS by the filing with
the Secretary of the State of Delaware of a Certificate of Merger; (ii) each AWS
Common Share outstanding at the Effective Time, by said occurrence and with no
further action on the part of the holder thereof, shall be transformed and
converted into the right to receive, upon surrender of the certificate for such
AWS Common Share, the Conversion Amount, without interest or any similar payment
thereon or with respect thereto; (iii) each share of common stock of MergerSub
outstanding prior to the Merger will, by said occurrence and with no further
action on the part of the holder thereof, be transformed and converted into one
share of common stock of the Surviving Corporation, so that thereafter Heartland
will be the sole and exclusive owner of equity securities of the Surviving
Corporation; (iv) each warrant or AWS Stock Option to acquire AWS Common Stock
outstanding at the Effective Time and not exercised or terminated, which are
convertible by their respective terms into the right to receive Heartland Common
Shares upon the consummation of the Merger, shall be so converted; and (v) the
Surviving Corporation shall be the owner of all of the business, assets, rights
and other attributes thereto of, or held by, either AWS or MergerSub.
(b) Conversion Amount. On the Closing Date, each outstanding
AWS Common Share shall be converted into the right to receive the number of
Heartland Common Shares (the "Conversion Amount") equal to the sum of (i) the
Initial Amount and (ii) upon the expiration of the Escrow Period and after any
adjustments in accordance with Article 11, the Contingent Amount. As used
herein, the "Initial Amount" shall mean the number of Heartland Common Shares
equal to the product of (i) the Initial Consideration divided by the Merger
Consideration, multiplied by (ii) the Conversion Ratio, and the "Contingent
Amount" shall mean the number of Heartland Common Shares equal to the product of
(i) the Contingent Consideration divided by the Merger Consideration, multiplied
by (ii) the Conversion Ratio, subject to adjustment as provided in Article 11,
as such amounts may be adjusted for the rounding of fractional shares as
provided in Section 2.1(i). As used herein, the "Conversion Ratio" means the
number of Heartland Common Shares to be exchanged for each AWS Common Share,
which number of Heartland Common Shares is equal to (i) the Merger Consideration
divided by (ii) the product of (A) the total number of Outstanding AWS Shares at
the Effective Time multiplied by (B) the Exchange Price.
(c) Outstanding AWS Shares. As used herein, the "Outstanding
AWS Shares" means (i) the total number of AWS Common Shares outstanding at the
Effective Time plus (ii) the aggregate number of AWS Common Shares, determined
for each AWS Stock Option or warrant to acquire AWS Common Shares outstanding at
the Effective Time, equal to the quotient of (A) the AWS Share Value minus the
exercise price of such option or warrant, divided by (B) the AWS Share Value. As
used herein, the "AWS Share Value" means the Merger Consideration divided by the
aggregate number of AWS Common Shares outstanding at the Effective Time.
(d) Exchange Price. As used herein, "Exchange Price" means
(i) if the Closing Share Price is greater than or equal to the Minimum Collar
Price and less than or equal to the Maximum Collar Price, then the Closing Share
Price, (ii) if the Closing Share Price is less than the Minimum Collar Price,
then the Minimum Collar Price, or (iii) if the Closing Share Price is greater
than the Maximum Collar Price, then the Maximum Collar Price; subject to each
party's respective right to terminate this Agreement as set forth in Section
10.2 or 10.3, as applicable, for the failure of the applicable condition
precedent to the Merger set forth in Section 8.15 or 9.6, as applicable, if the
Closing Share Price is either greater than the Maximum Termination Price or less
than the Minimum Termination Price.
(e) Certificate of Incorporation of the Surviving
Corporation. The certificate of incorporation of the Surviving Corporation shall
be the certificate of incorporation of MergerSub immediately prior to the
Effective Time.
(f) Bylaws of the Surviving Corporation. The bylaws of the
Surviving Corporation shall be the bylaws of MergerSub immediately prior to the
Effective Time.
(g) Board of Directors and Officers of the Surviving
Corporation. The board of directors and officers of MergerSub immediately prior
to the Effective Time shall be the board of directors and the officers of the
Surviving Corporation, respectively, immediately upon the Effective Time, and
such persons shall serve in such positions for the respective terms provided by
law or in the bylaws of the Surviving Corporation and until their respective
successors are elected and qualified.
(h) Heartland to Establish Escrow. Norwest Bank, N.A. shall
act as exchange agent hereunder (the "Exchange Agent"). In the event Norwest
Bank is unable or unwilling to act as the Exchange Agent, AWS and Heartland
shall, upon mutual agreement, seek to select a comparable party to act as
Exchange Agent. Heartland Common Shares shall be held by the Exchange Agent
pursuant to the terms of an Escrow Agreement (the "Escrow Agreement") in the
form attached hereto as Exhibit 1.2(h) hereto. Immediately prior to the
Effective Time, Heartland shall deposit, or cause to be deposited, with the
Exchange Agent, in trust for the holders of AWS Common Shares the aggregate
Conversion Amount issuable pursuant to Section 1.2(i) in exchange for
outstanding AWS Common Shares (the "Exchange Fund").
(i) Exchange Procedures. As soon as practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record of AWS
Common Shares a letter of transmittal, which shall specify that delivery shall
be effected, and risk of loss and title to the certificates representing AWS
Common Shares (the "Certificates") shall pass, only upon actual delivery of the
Certificates to the Exchange Agent and shall contain instructions for use in
effecting the surrender of the Certificates in exchange for the Conversion
Amount. Upon surrender of a Certificate for cancellation to the Exchange Agent,
together with such letter of transmittal, duly executed, the holder of such
Certificate shall receive in exchange therefor (subject to the rounding of any
fractional shares as provided in this Section 1.2(i)) the Initial Amount and
shall be entitled to receive, upon the expiration of the Escrow Period, the
Contingent Amount (as adjusted in accordance with Article 11) for the AWS Common
Shares represented by such Certificate, and the Certificate so surrendered shall
forthwith be cancelled. Until surrendered as contemplated by this Section
1.2(i), each Certificate shall, at and after the Effective Time, be deemed to
represent only the right to receive, upon surrender of such Certificate, the
Conversion Amount with respect to each AWS Common Share represented thereby in
accordance with the terms of this Agreement, as follows:
(i) Upon the Closing Date, each holder of a
Certificate shall receive the Initial Amount (rounded up to the nearest whole
Heartland Common Share) for the AWS Common Shares represented by a Certificate;
and
(ii) Upon the expiration of the Escrow Period and
upon the satisfaction of the conditions set forth in Article 11 (subject to the
adjustments provided for therein), each holder of a Certificate shall be
entitled to receive the Contingent Amount, minus any fractional shares not
distributed pursuant to Subsection (i) above ("Holdback Amount") for the AWS
Common Shares represented by a Certificate, subject to adjustment as provided in
Article 11.
(j) Dividends; Transfer Taxes. No dividends or other
distributions that are declared on or after the Effective Time on Heartland
Common Shares or are payable to the holders of record of Heartland Common Shares
on or after the Effective Time will be paid to persons entitled by reason of the
Merger to receive Heartland Common Shares until such persons surrender their
Certificates, as provided in this Article 1. Subject to the effect of applicable
law, there shall be paid to the record holder of Heartland Common Shares (i) at
the time of such surrender or as promptly as practicable thereafter, the amount
of any dividends or other distributions theretofore paid with respect to whole
Heartland Common Shares and having a record date on or after the Effective Time
and a payment date prior to such surrender and (ii) at the appropriate payment
date or as promptly as practicable thereafter, the amount of dividends or other
distributions payable with respect to Heartland Common Shares and having a
record date on or after the Effective Time but prior to surrender and a payment
date subsequent to surrender. In no event shall the person entitled to receive
such dividends or other distributions be entitled to receive interest on such
dividends or other distributions. If any dividends, cash in lieu of fractional
shares or Heartland Common Shares are to be paid to or issued in a name other
than that in which the Certificate surrendered in exchange therefor is
registered, it shall be a condition of such exchange that the Certificate so
surrendered shall be properly endorsed and otherwise in proper form for transfer
and that the person requesting such exchange shall pay to the Exchange Agent any
transfer or other taxes required by reason of the issuance of Heartland Common
Shares in a name other than that of the registered holder of the Certificate
surrendered or shall establish to the satisfaction of the Exchange Agent that
such tax has been paid or is not applicable.
(k) No Fractional Shares. No certificates or scrip
representing fractional Heartland Common Shares shall be issued upon the
surrender for exchange of Certificates pursuant to this Article 1, and, except
as provided in this Section 1.2(k), no dividend or other distribution, stock
split or interest shall relate to any such fractional security, and such
fractional interests shall not entitle the owner thereof to vote or to any
rights of a security holder of Heartland. In lieu of any fractional security,
each holder of AWS Common Shares who would otherwise have been entitled to a
fraction of a Heartland Common Share upon surrender of Certificates for exchange
pursuant to this Article 1 will be paid an amount in cash (without interest)
equal to the value of the fractional share based upon the Closing Share Price.
No fractional interests shall be issued in connection with the disbursement of
the Initial Amount, as further provided in Section 1.2(i). Upon the expiration
of the Escrow Period, in connection with the distribution of Heartland Common
Shares remaining in the Exchange Fund, Heartland shall repurchase any fractional
shares from the Exchange Fund at the Exchange Price, and the proceeds thereof
shall be disbursed to the former holders of AWS Common Shares as a part of the
Contingent Amount, in accordance with the Escrow Agreement.
(l) Return of Exchange Fund. Any portion of the Exchange Fund
and any dividends or distributions with respect to Heartland Common Shares which
remain undistributed to the former holders of AWS Common Shares for three (3)
months after the expiration of the Escrow Period shall be delivered to
Heartland, upon demand of Heartland, and any former holders of AWS Common Shares
who have not theretofore complied with this Article 1 shall thereafter look only
to the Surviving Corporation and Heartland for payment of their claim for the
Conversion Amount into which such AWS Common Shares are convertible, any cash in
lieu of fractional Heartland Common Shares, and any dividends or distributions
with respect to Heartland Common Shares.
(m) No Further Ownership Rights in Common Stock. All
Heartland Common Shares issued, and all cash paid pursuant to this Section 1.2,
upon the surrender for exchange of Certificates in accordance with the terms
hereof, shall be deemed to have been issued or paid, as the case may be, in full
satisfaction of all rights pertaining to the AWS Common Shares.
(n) Closing of AWS Transfer Books. At the Effective Time, the
stock transfer books of AWS shall be closed and no transfer of AWS Common Shares
shall thereafter be made. If, after the Effective Time, Certificates are
presented to the Surviving Corporation, they shall be cancelled and exchanged as
provided in this Article 1.
(o) Further Assurances. If at any time after the Effective
Time the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments or assurances or any other acts or things are
necessary, desirable or proper (i) to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation, its right, title or interest in, to or
under any of the rights, privileges, powers, franchises, properties or assets of
AWS, or (ii) otherwise to carry out the purposes of this Agreement, the
Surviving Corporation and its proper officers and directors or their designees
shall be authorized to execute and deliver, in the name and on behalf of each
such corporation, all such deeds, bills of sale, assignments and assurances and
do, in the name and on behalf of each of such corporations, all such other acts
and things necessary, desirable or proper to vest, perfect or confirm its right,
title or interest in, to or under any of the rights, privileges, powers,
franchises, properties or assets of such corporations and otherwise to carry out
the purposes of this Agreement.
(p) Dissenters' Rights. To the extent that holders of AWS
Common Shares exercise dissenters' rights pursuant to applicable provisions of
the DGCL, the AWS Common Shares of such holders shall not be converted to a
right to receive the Conversion Amount, but Heartland Common Shares representing
the Conversion Amount attributable to such shares shall be held by Escrow Agent
subject to the provisions of such law. If any such holder fails to perfect or
withdraws or loses its dissenter's rights, such AWS Common Shares shall then be
treated as if they had been converted as of the Effective Time into a right to
receive the Conversion Amount (in accordance with Section 1.2(i)).
1.3 Closing. The Closing of the Merger (the "Closing") shall take place
at 10:00 a.m. on a date (the "Closing Date") to be specified by the parties,
which shall be no later than the fifth (5th) business day after the satisfaction
or waiver of the conditions set forth in Articles 7, 8 and 9 hereof, unless
another date or place is agreed to in writing by the parties hereto, at the
offices of Arter, Hadden, Johnson & Bromberg, Dallas, Texas, or some other
mutually agreeable location in Dallas, Texas.
1.4 Escrow Note. Upon the Closing of the Merger, the aggregate amount
of all Exclusivity Fees (as defined in Section 6.17) previously offset against
the Escrow Note (as defined in Section 6.17) shall be added back to the
principal amount outstanding under the Escrow Note and shall be repaid in
accordance with the terms thereof.
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF AWS.
AWS hereby represents and warrants to Heartland and MergerSub, that as
of the date hereof, and subject to the provisions of Article 3 and Article 11:
2.1 Organization; Good Standing. AWS is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
AWS is qualified as a foreign corporation in all jurisdictions in which it is
required to qualify as a result of the conduct of its business or ownership of
its properties and where the failure to be so qualified would have a Material
Adverse Effect, which jurisdictions are set forth in Schedule 2.1.
2.2 Subsidiaries. AWS Holdings, Inc., a Delaware corporation ("AWS
Holdings"), the Texas joint venture formed to own and operate a wireless cable
television system in Fort Worth, Texas ("AWS Fort Worth") and American Wireless
System of Minneapolis, L.L.C., a Delaware limited liability company that owns
and operates a wireless cable television system in Minneapolis, Minnesota ("AWS
Minneapolis"), are the only Subsidiaries of AWS. Except as set forth on Schedule
2.2, (a) AWS owns directly, free and clear of liens, all outstanding shares or
equity interests of AWS Holdings, and all such shares are validly issued, fully
paid, non-assessable and not subject to preemptive rights, (b) AWS owns
directly, free and clear of liens, a 20.01% joint venture interest in AWS Fort
Worth and (c) AWS owns directly, free and clear of liens, a 25% membership
interest in AWS Minneapolis. Except as set forth on Schedule 2.2, there are no
outstanding subscriptions, options, warrants, calls, conversion or exchange
rights, commitments or agreements of any character obligating AWS Minneapolis,
AWS Holdings, or to the Knowledge of AWS, AWS Fort Worth, to issue, deliver or
sell additional shares of its capital stock or equity interests of any class or
any securities convertible into or exchangeable for any such capital stock or
equity interests, and there are no rights of first refusal, transfer
restrictions or similar rights or obligations with respect to the ownership
interests of AWS in any Subsidiary. Except as set forth on Schedule 2.2, AWS
does not own, directly or indirectly, any shares of stock or any other equity or
long-term debt securities of any corporation or have any equity interest in any
firm, partnership, Joint Venture, association or other Person. Schedule 2.2 sets
forth the record and, to the Knowledge of AWS, the beneficial owners of AWS Fort
Worth, AWS Minneapolis, and the equity owners of any partnership or similar
organization (other than AWS) formed to own an equity interest in AWS Fort Worth
or AWS Minneapolis.
2.3 Capitalization. The authorized capital stock of AWS as of the date
of this Agreement consists of 40,000,000 shares of common stock, $.01 par value
per share, of which 5,709,187 are issued and outstanding. Schedule 2.3 sets
forth as of the date of this Agreement, a true and correct list of all
outstanding options, warrants, calls, puts, commitments and other rights to
purchase, or securities or other rights convertible or exchangeable into,
capital stock of AWS indicating the record and, to the Knowledge of AWS, the
beneficial owner thereof, the exercise, conversion or exchange price and period
thereof, the term and any vesting or other conditions thereof. All securities
issued or issuable by AWS have been paid for and delivered in accordance with
the terms of applicable agreements or instruments, duly authorized and validly
issued and are fully paid and non-assessable; the holders thereof have no rights
of rescission with respect thereto and are not subject to personal liability by
reason of being such holders; none of such securities were issued in violation
of the preemptive rights of any holder of any security of AWS or any similar
rights granted by AWS or applicable laws.
2.4 Authority; Enforceability; Non-Contravention. AWS has the corporate
power and authority to conduct the business and activities conducted by it and
to own or lease the assets owned or leased by it. AWS has the corporate power
and authority (subject to shareholder approval as set forth in Section 9.1 and
obtaining all required Consents as set forth in Sections 5.2 and 8.3) to execute
and deliver this Agreement and all other documents required to be executed and
delivered by AWS hereunder, to consummate the transactions hereby contemplated,
and to take all other actions required to be taken by AWS pursuant to the
provisions hereof. This Agreement and all other documents required to be
executed and delivered by AWS hereunder have been duly authorized by all
corporate action necessary on the part of AWS (subject to shareholder approval
as set forth in Section 9.1 and obtaining all required Consents as set forth in
Sections 5.2 and 8.3) and have been duly or will when executed and delivered be
duly executed and delivered by AWS and constitute the legal, valid and binding
obligations of AWS, enforceable against AWS in accordance with their terms.
Except as disclosed in Schedule 2.4, neither the execution nor the delivery of
this Agreement and all other documents required to be executed and delivered by
AWS hereunder or the consummation of the transactions hereby contemplated by AWS
(i) conflicts with or constitutes any violation or breach of the Certificate of
Incorporation or the Bylaws of AWS; (ii) to the Knowledge of AWS, constitutes
any violation or breach of, or gives any other Person any rights (including any
right of acceleration, termination or cancellation) under, any Material
Contract, License, Channel Lease, Governmental Permit, or other document or
agreement to which AWS is a party; (iii) to the Knowledge of AWS, constitutes a
violation of any Order or Legal Requirement; or (iv) to the Knowledge of AWS,
will result in the creation of any Lien on any of the assets or properties of
AWS.
2.5 Financial Statements. (a) Schedule 2.5 lists the audited financial
statements of AWS as of, and for the period(s) ending, December 31, 1992 and
1993 including the balance sheets and related statements of income and expense,
and unaudited consolidated financial statements of AWS and each Subsidiary as of
and for the year ending December 31, 1994 and the three (3) month periods ending
March 31, 1995 and June 30, 1995 (collectively, the "Financial Statements"). The
Financial Statements and all notes thereto are complete and correct in all
material respects, in accordance with the books and records of AWS and each
Subsidiary, fairly present the financial position and results of operations of
AWS and each Subsidiary as of the date thereof and for the periods referenced
therein, all in accordance with GAAP, and have been delivered to Heartland.
(b) Since June 30, 1995, except as set forth on Schedule 2.5, (i)
AWS, AWS Holdings, AWS Minneapolis and, to the Knowledge of AWS, AWS Fort Worth
have conducted its or their businesses in the ordinary, regular course thereof;
(ii) there has been no change in the financial condition of AWS, AWS Holdings,
AWS Minneapolis nor, to the Knowledge of AWS, AWS Fort Worth which has had a
Material Adverse Effect, or any damage, destruction or loss, not covered by
insurance, which has had a Material Adverse Effect, or any change in the nature,
or in the condition, of the businesses of AWS, AWS Holdings, AWS Minneapolis or,
to the Knowledge of AWS, AWS Fort Worth which has had a Material Adverse Effect;
or any event, condition or state of facts or any character whatsoever, the
occurrence of which has had a Material Adverse Effect; and (iii) except in the
ordinary and regular course of its or their businesses, neither AWS, AWS
Holdings, AWS Minneapolis nor, to the Knowledge of AWS, AWS Fort Worth has made
any dispositions of any of its or their assets; disposed of any records relating
to its or their assets or properties; borrowed any funds; incurred, assumed or
become subject to any obligation or liability, indebtedness for borrowed money,
absolute or contingent; paid, discharged, or satisfied any claim, liability or
obligation, absolute, accrued, contingent or otherwise; cancelled any debts owed
to it or them; waived any claims or rights of value; granted or extended any
power of attorney; or acted as any guarantor.
(c) Neither AWS, AWS Holdings, AWS Minneapolis nor, to the
Knowledge of AWS, AWS Fort Worth has any Liabilities (including, without
limitation, any Liabilities arising from the Pittsburgh Sale Agreements), except
as described or provided for in the Financial Statements or otherwise set forth
on Schedule 2.5 which individually or in the aggregate would constitute a
Material Adverse Effect. There has been no capital stock of AWS repurchased, any
dividend declared or paid or any distribution made by AWS with respect to such
capital stock, since June 30, 1995.
2.6 Taxes.
(a) All federal, state, county, local and foreign taxes, including
without limitation, income, excise, payroll, sales, use, unemployment, social
security, occupation, franchise, property, and other taxes, duties or charges
(collectively, "Taxes") levied, assessed, or imposed upon AWS or any Subsidiary
or its or their businesses, assets or properties as of such date have been duly
and fully paid or have been adequately provided for on the Balance Sheet of AWS
or any Subsidiary as of June 30, 1995. In addition, all filings, returns, and
reports with respect to Taxes required by any foreign or domestic law or
regulation to be filed by AWS or any Subsidiary on or prior to the date hereof
have been duly and timely filed. There are no agreements, waivers or other
arrangements (oral or written) providing for extensions of time with respect to
the assessment or collection of unpaid Taxes, nor are there any actions, suits,
proceedings, inquiries, investigations or claims of any nature or kind
whatsoever now pending or, to the Knowledge of AWS, threatened, against AWS or
any Subsidiary with respect to any such returns or reports, or any such Taxes,
or any matters under discussion with any federal, state, county, local or other
authority relating to Taxes.
(b) Except as otherwise disclosed on Schedule 2.6, (i) AWS and
each Subsidiary has made all payments of estimated Taxes required to be made
under Section 6655 of the Code and any comparable provisions of state, local,
federal or other law; (ii) all amounts of any Taxes, including payroll and
federal excise taxes, that are required to be collected or withheld by AWS or
any Subsidiary have been duly collected or withheld, and have been duly remitted
or deposited in accordance with law; (iii) no power of attorney has been granted
by AWS or any Subsidiary that is currently in force with respect to any matter
relating to Taxes; (iv) none of AWS nor any Subsidiary has any deferred gain or
loss (A) arising from deferred inter-company transactions, within the meaning of
Treas. Regs. Section 1.1502-13 or any successor regulations, or (B) with respect
to the stock or obligations of any member of the affiliated group of which AWS
is the common parent, as described in Treas. Regs. Section 1.1502-14; (v) no
taxes relating to periods ending before December 31, 1994 were paid by or
charged to any Subsidiary on or after such date; (vi) neither AWS nor any
Subsidiary is required to include in income any adjustment pursuant to Section
481(a) of the Code (or any similar provision of law or regulations) by reason of
a change in accounting method, nor is the IRS or any other taxing authority
considering any such change in accounting method; (vii) neither AWS nor any
Subsidiary has disposed of any property which has been accounted for Tax
purposes under the installment method; (viii) other than AWS Fort Worth, AWS
Minneapolis, and the Joint Venture owning the wireless cable television system
in Pittsburgh, Pennsylvania, neither AWS nor any Subsidiary owns any interest in
any entity which is characterized as a partnership for federal income tax
purposes; (ix) neither AWS nor any Subsidiary would be liable for any increase
in Tax under Section 47 of the Code, were such entity to dispose of all of its
assets on the Closing Date; (x) neither AWS nor any Subsidiary will have any
"non-recaptured net Section 1231 losses," within the meaning of Section 1231(c)
of the Code on the Closing Date; (xi) no election under Section 1504(d) of the
Code has been made with respect to any Subsidiary; (xii) no claim or assertion
has been made against AWS or any Subsidiary by any tax authority in any
jurisdiction in which no tax return has been filed by AWS or said Subsidiary
that it may be subject to Tax in that jurisdiction or otherwise is required to
file a tax return.
(c) AWS has a regular tax operating loss carryforward from its
last filed federal corporate income tax return for the year ending February 28,
1994, in the amount of $2,447,845. The March 1, 1994 through December 31, 1994,
tax return has not yet been prepared, but AWS has estimated a net operating loss
for that year of 4.8 million dollars leaving a total net operating loss through
December 31, 1994, of approximately $7,250,000. AWS represents that it has not
undergone a Section 382 ownership change which would limit the ability to
utilize these losses.
2.7 Property.
(a) Schedule 2.7(a) lists and describes, as of the date thereof,
all of the Equipment, except small hand tools, office equipment and supplies,
and similar equipment which are generally described by category and number.
(b) Schedule 2.7(b) lists all Facilities, designating whether such
Facility is owned or leased, including whether there is any
construction-in-progress of any towers, fixtures,
vaults or pedestals attributable to any Site.
(c) AWS and each Subsidiary own and hold good title, free and
clear of any Liens, to all of the Equipment and Facilities, except as set forth
on Schedule 2.7(c) or 2.9, and all of such Equipment and Facilities necessary to
the conduct of the business of AWS and each Subsidiary at their present levels
of operation is in serviceable condition; conforms to or complies with all
applicable Orders and Legal Requirements, the violation of which has not had or
would not have a Material Adverse Effect; and constitutes all of the Equipment
and Facilities that are used, usable, held for use in or in conjunction with or
otherwise associated with, required or necessary to the business operations of
AWS and each Subsidiary.
2.8 Receivables. All accounts receivable of AWS and each Subsidiary
reflected in the Balance Sheet of AWS or each Subsidiary, as applicable, as of
June 30, 1995, represent valid obligations arising from sales made in the
ordinary and regular course of the Business. The accounts receivable reflected
in the Balance Sheet of AWS or each Subsidiary, as applicable, as of June 30,
1995, are net of reserves therefor, valid receivables that have arisen in the
ordinary course of the operations of AWS and each Subsidiary and, to the
Knowledge of AWS, are net of reserves therefor, collectible and not subject to
setoff or counterclaim, nor to any agreement to reduce or discount.
2.9 Contracts.
(a) Except as set forth elsewhere on Schedules 2.10, 2.11, 2.26 or
2.31, Schedule 2.9 sets forth a complete and correct list of the following types
of contracts to which AWS or any Subsidiary is a party and which as of the date
hereof are executory in nature or under which AWS or any Subsidiary has any
obligation to pay, or right to receive, money; provided that the contracts to be
disclosed pursuant to subsections (xiii) or (xiv) below shall include all of
such contracts to which AWS or any Subsidiary is or has ever been a party
(collectively, the "Material Contracts"):
(i) all contracts of a character required to be described in
AWS's Annual Report on Form 10-KSB for the fiscal year ended December 31, 1994
or Quarterly Report Form 10-Q for the fiscal quarter ended June 30, 1995;
(ii) all Channel Leases;
(iii) all contracts or agreements of any kind with any
director, executive officer or other officer of AWS or any Subsidiary;
(iv) any loan agreements, lease agreements, notes, mortgages,
indentures, guarantees, security agreements, letters of credit, financing
documents or other agreements for the borrowing or lending of money by AWS or
any Subsidiary in excess of $25,000;
(v) all agreements relating to the acquisition of any
Subsidiary;
(vi) all Joint Venture agreements;
(vii) all agreements involving an aggregate amount in excess
of $50,000 to provide goods or perform services or for the payment for goods or
services;
(viii) any commitment or agreement for any capital
expenditure or leasehold improvement in excess of $25,000;
(ix) any agreement, contract or commitment limiting or
restraining AWS or any Subsidiary from engaging or competing in any manner or in
any business;
(x) all programming agreements;
(xi) all agreements with respect to resolution of
interference issues;
(xii) all collective bargaining agreements, employment
agreements, consulting agreements and severance agreements;
(xiii) all agreements for the offer or sale of securities
whether outstanding on the date hereof or to which AWS or any Subsidiary has
been a party in the past;
(xiv) all agreements with investment bankers or brokers
whether outstanding on the date hereof or to which AWS or any Subsidiary has
been a party in the past;
(xv) all agreements under which either AWS or any Subsidiary
is entitled to indemnification and under which the potential claims subject to
indemnification could reasonably be expected to exceed $25,000;
(xvi) all agreements to which either AWS or any Subsidiary is
a party and involving an aggregate amount in excess of $10,000 under which
either AWS or any Subsidiary or the other party to the agreement has, or has
been alleged to have, breached, failed to perform under or otherwise failed to
comply with the terms of, such agreement;
(xvii) any agreement with any Governmental Authority;
(xviii) any material agreement, contract or commitment not
made in the ordinary course of business; and
(xix) any agreement or other arrangement with any Affiliate
of AWS, or any Subsidiary or, to the Knowledge of AWS, any former officer or
director of AWS (such agreements or arrangements shall be separately identified
or described in such other Schedules or in Schedule 2.9 as "Affiliate
Agreements").
(b) True and correct copies of all the Material Contracts have
been delivered to Heartland by or on behalf of AWS. To the Knowledge of AWS,
each of the Material Contracts is valid and enforceable in accordance with its
terms. To the Knowledge of AWS, neither AWS nor any Subsidiary is in default in
the performance, observance or fulfillment of any material obligation, covenant
or condition contained therein, and no event has occurred which with or without
the giving of notice or lapse of time, or both, would constitute such a default
thereunder.
2.10 FCC Matters.
(a) Schedule 2.10(a) is a true and correct list of all Channel
Leases. Except as set forth on Schedule 2.10(a), (i) AWS and each Subsidiary
have performed in all material respects all obligations required to be performed
by it under each of the Channel Leases; (ii) all of the Channel Leases are
legal, valid and binding obligations enforceable against them in accordance with
their respective terms and in full force and effect, and there are no defaults
(or to the Knowledge of AWS events which, with notice or lapse of time or both,
would constitute a default) by AWS or any other party to any such Channel
Leases; (iii) Channel Leases set forth in the name of Persons other than AWS or
a Subsidiary, as lessee, are identified on Schedule 2.10(a) and have been duly
and validly assigned with all requisite consents and approvals of all parties
thereto to AWS or a Subsidiary, and remain in full force and effect as if AWS or
a Subsidiary were the initial "lessee" thereunder; (iv) to the Knowledge of AWS,
no default or termination has been threatened in writing under any of the
Channel Leases by any party thereto; and (v) the Channel Leases comply in all
respects with the Act and the FCC Rules, and each of the Channel Leases, and all
amendments thereto, have been filed with and approved by the FCC.
(b) Listed in Schedule 2.10(b) are all of the Licenses and FCC
Permits held or leased by AWS or any Subsidiary. All Licenses and FCC Permits
are in the name of the Person set forth in Schedule 2.10(b). All reports or
other documents required to be filed by AWS or any Subsidiary and to the
Knowledge of AWS, any third party, with respect to any such Licenses have been
filed. The Licenses and the FCC Permits listed on Schedule 2.10(b), constitute
all of the Authorizations held or leased by AWS and are all of the
Authorizations used, useable, held for use in or in conjunction with or
otherwise associated with, required or necessary for AWS and Subsidiary to
lawfully conduct its and their business operations. To the Knowledge of AWS,
each of the Licenses and the FCC Permits, except as otherwise expressly noted on
Schedule 2.10(b), (i) is currently and validly held by the Person identified as
the holder thereof on Schedule 2.10(b); (ii) authorizes said holder to construct
and operate a facility transmitting video and audio programming on the Channels;
(iii) was validly issued; (iv) is validly existing and in full force and effect;
and (v) is not subject to any conditions other than such conditions as are
generally applicable to licenses and permits issued by the FCC with respect to
ITFS, MDS or MMDS Channels. To the Knowledge of AWS, there are no existing or
threatened investigations, inquiries or proceedings by or before the FCC or
other Governmental Entity which, if adversely determined, would result in the
revocation, cancellation, suspension, forfeiture or material adverse
modification of any Application or Material Authorization.
(c) Schedule 2.10(c) indicates all Applications and all amendments
or other filings thereto. To the Knowledge of AWS, the information contained in
each Application is true and correct in all material respects, and each Person
which is a signatory to an Application is authorized under FCC rules to file
such Application.
(d) Except as otherwise expressly noted on Schedule 2.10(d), AWS
and each Subsidiary and, to the Knowledge of AWS, the FCC Licensees and the FCC
Permittees have each submitted to the FCC, the FAA and all other Governmental
Authorities all notices, reports and other documents which have been or are
required by the Act, the FCC Rules, the FAA Rules and other Legal Requirements,
the Licenses and the FCC Permits except where the failure to do so would not (i)
have a Material Adverse Effect; or (ii) hinder the ability of AWS and Subsidiary
to fully perform its and their material obligations under this Agreement. Except
as otherwise expressly noted on Schedule 2.10(d), to the Knowledge of AWS, no
petitions to deny or informal objections have been filed against any of the
amendments listed on Schedule 2.10(c). True and accurate copies of all
amendments, notices, reports and other documents filed by AWS and, to the
Knowledge of AWS, the FCC Licensees and the FCC Permittees with respect to the
Licenses and the FCC Permits, with the FCC, the FAA, the copyright office and
other governmental authorities have been either delivered to Heartland by AWS or
otherwise identified by AWS and made available for Heartland's review.
2.11 Insurance. Schedule 2.11 is a certificate of insurance which lists
all insurance policies held by AWS and which are in full force and effect.
2.12 Litigation. Except as set forth on Schedule 2.12, there is no
Proceeding, in each case domestic or foreign, pending or, to the Knowledge of
AWS, threatened against, or involving the properties or business of AWS or any
Subsidiary which (a) questions the validity of the issuance of the capital stock
or equity interests of AWS or any Subsidiary, this Agreement or any action taken
or to be taken by AWS pursuant to or in connection with this Agreement; (b) is
required to be, and has not been so, disclosed in the filings with the SEC by
AWS (and such proceedings are as summarized in such SEC Filings accurately
summarized in all material respects); (c) materially adversely affects the
Channel Leases or FCC Licenses or the operation of the Channels and transmission
facilities relating thereto and the Wireless Cable Business; or (d) would
otherwise have a Material Adverse Effect.
2.13 Registration Rights. Except as set forth on Schedule 2.13, no
Person has rights to the registration of any securities of AWS, AWS Holdings,
AWS Minneapolis or, to the Knowledge of AWS, AWS Fort Worth.
2.14 Key-Person Insurance. Neither AWS nor any Subsidiary has any
key-person insurance on the life of any officer, director or employee of AWS,
AWS Holdings, AWS Minneapolis or, to the Knowledge of AWS, AWS Fort Worth.
2.15 Certain Activities and Services. Except as set forth on Schedule
2.15, neither AWS, AWS Holdings, AWS Minneapolis nor, to the Knowledge of AWS,
AWS Fort Worth engages in any business other than the Wireless Cable Business.
2.16 Governmental Permits. AWS and each Subsidiary own, hold or possess
all Governmental Permits which are necessary to entitle it to own or lease,
operate and use its assets and to carry on and conduct their business as
currently conducted, except with respect to Applications for which Licenses have
not been granted, if any.
2.17 Compliance With Laws. To the Knowledge of AWS, except for
violations that would not have a Material Adverse Effect, AWS and each
Subsidiary have complied in all respects with all applicable Legal Requirements
and Orders of any Governmental Authority having jurisdiction over it or them or
its or their operations, including, but not limited to, all FCC Rules and any
laws (including Environmental Laws), rules or regulations regulating, if
applicable, zoning, fair and equal employment practices, the safety of the
workplace, the discharge of materials into the Environment or otherwise relating
to the protection of the Environment, antitrust, anti-monopoly or
anti-competitive activities, wages, hours, collective bargaining and the payment
of withholding and social security taxes. Except as set forth on Schedule 2.17,
there are no Orders outstanding and in effect against AWS or any Subsidiary, its
or their assets, the transactions contemplated by this Agreement, or, to the
Knowledge of AWS, any of the parties to Channel Leases, other than Orders issued
with respect to the wireless cable industry generally and in the normal course
of regulation, which would, individually or in the aggregate: (i) have a
Material Adverse Effect, or (ii) hinder in any material respect the ability of
AWS or any Subsidiary to fully perform its or their material obligations under
this Agreement. Except as set forth in Schedule 2.17, AWS has not received any
notice (written or otherwise) from any Person to the effect that, or otherwise
been advised that, AWS or any Subsidiary is not in compliance with any
applicable law, ordinance, regulation, building or zoning law, and AWS and each
Subsidiary have no Knowledge that any presently existing circumstances would
result in a violation of any such law, statute, ordinance or regulation, the
non-compliance with which would have a Material Adverse Effect.
2.18 Environmental Matters. Except as disclosed on Schedule 2.18, to
the Knowledge of AWS:
(a) Neither AWS nor any Subsidiary, nor any predecessor thereof or
anyone else, has Managed or Released any Hazardous Substances at, on, in, to or
from any property or business now or previously owned, operated, leased,
controlled, used, occupied or conducted by AWS or any Subsidiary, or any
predecessor thereof in quantities or concentrations which violate any applicable
Environmental Law such as to have a Material Adverse Effect.
(b) Neither AWS nor any Subsidiary has received any request for
information, notice of claims, demand or notification that it is or may be a
potentially responsible party with respect to any investigation or clean-up of
any threatened or actual release of any Hazardous Substance, and no
environmental inspections, audits, tests, reviews or other analysis are being
conducted in relation to any property now or previously owned, operated, leased,
controlled, used, occupied or conducted by AWS or any Subsidiary.
(c) No written notification of a Release or threat of Release of a
Hazardous Substance has been filed by or on behalf of AWS or any Subsidiary in
relation to any property or business now or previously owned, operated, leased,
controlled, used, occupied or conducted by AWS or any Subsidiary.
(d) There are no facts or circumstances related to environmental
matters concerning its properties or business now or previously owned, operated,
leased, controlled, used, occupied, or conducted by AWS or any Subsidiary, or
any predecessor thereof, that would reasonably be expected to lead to any
material future environmental claims, liabilities or responsibilities against
Heartland or against AWS or any Subsidiary, or any predecessor thereof.
2.19 Intellectual Property. To the Knowledge of AWS, Schedule 2.19 is a
true and correct list of all Intellectual Property owned or used by AWS or any
Subsidiary. To the Knowledge of AWS, no person has any right to receive any
royalty or similar payment arising from the Intellectual Property. Except as set
forth on Schedule 2.19, AWS owns each of said properties; has not granted to any
other Person any interest in any of said properties, as licensee or otherwise;
and has filed all certificates, affidavits and other documents, and taken all
other actions, necessary to retain its title to said properties and to keep the
same in effect. To the Knowledge of AWS, none of said properties is invalid and
none infringes upon the personal or property rights of any third party.
2.20 Liens. Except as set forth on Schedule 2.20, AWS and each
Subsidiary have good title to all of its and their assets, free and clear of all
Liens, except for the lien, if any, of current Taxes not yet due and payable and
except for those assets disposed of in the ordinary course of business.
2.21 Regulatory Compliance. Except as otherwise expressly noted on the
Schedules attached hereto, to the Knowledge of AWS, AWS, each Subsidiary, the
Licensees and the FCC Permittees, are in material compliance with, and not in
default under or in violation of, the Act, the FCC Rules, the FAA Rules, the
Copyright Act, the Copyright Rules, and other Legal Requirements applicable to
the Licenses or FCC Permits. Except as otherwise expressly noted on the
Schedules attached hereto, to the Knowledge of AWS, neither AWS nor any
Subsidiary has received any notice of noncompliance with, default under or
violation of the Act, the FCC Rules, the FAA Rules, the Copyright Act, the
Copyright Rules, other Legal Requirements and the applicable Licenses or FCC
Permits. Except as set forth in Schedule 2.21, to the Knowledge of AWS, no
condition exists or event has occurred with respect to AWS or any Subsidiary,
the Licensees, the FCC Permittees, or any of the Licenses or FCC Permits which,
in itself or with giving of notice or the lapse of time or both, would (i)
constitute or result in a violation of the Act, any FCC Rule, any FAA Rule, the
Copyright Act or the Copyright Rules; (ii) constitute a default in the due
performance and observation of any term, covenant or condition of any of the
Licenses or FCC Permits, (iii) result in a forfeiture, the denial, dismissal or
rejection of any of the Schedule 2.10(c) or 2.10(d) amendments, or the
suspension, termination, revocation, material impairment, material adverse
modification or non-renewal of any License or FCC Permit, or (iv) adversely
affect any of the material rights of AWS or any Subsidiary, any FCC Licensee or
FCC Permittee under any of the Licenses or FCC Permits.
2.22 Interference. To the Knowledge of AWS, except as set forth in
Schedule 2.22, neither AWS or any Subsidiary, nor any other party to a Channel
Lease Agreement, has accepted the electrical interference to the channels from
any source, has consented to the grant of any application involved with the FCC
that demonstrates any electrical interference to the Channels, or has failed to
timely petition to deny any application that proposes facilities which
demonstrate that they would cause objectionable electrical interference to the
Channels. To the Knowledge of AWS, except as otherwise expressly noted on
Schedule 2.22, neither AWS, any Subsidiary, any FCC Licensee, any FCC Permittee,
nor any other party to a Channel Lease Agreement, will experience interference
which will materially and adversely impact operation of the Facilities it has
constructed and/or operated, or is constructing once such Facilities are
constructed and operated, or will create interference which will materially and
adversely impact the operation of other facilities licensed by the FCC to other
Persons; for purposes of this Section 2.22, interference shall be deemed to
exist if within an FCC Licensee's protected service area, the ratio of the
desired signal to the undesired signal, at the antenna input terminals of the
affected receiver, is less than 45 dB.
2.23 Employee Plans. To the Knowledge of AWS:
(a) Schedule 2.23 sets forth a true and complete list of each
"employee benefit plan," as such term is defined in section 3(3) of the ERISA,
whether or not subject to ERISA, and each bonus, incentive or deferred
compensation, severance, termination, retention, change of control, stock
option, stock appreciation, stock purchase, phantom stock or other equity-based,
performance or other employee or retiree benefit or compensation plan, program,
arrangement, agreement, policy or understanding, whether written or unwritten,
that provides or may provide benefits or compensation in respect of any employee
or former employee of AWS or any Subsidiary or the beneficiaries or dependents
of any such employee or former employee (such employees, former employees,
beneficiaries and dependents collectively, the "Employees") or under which any
Employee is or may become eligible to participate or derive a benefit and that
is or has been maintained or established by AWS or to which AWS or any
Subsidiary contributes or is or has been obligated or required to contribute or
with respect to which AWS or any Subsidiary may have any liability or obligation
(collectively, the "Plans"). AWS has not communicated to any Employee any
intention or commitment to modify any Plan or to establish or implement any
other employee or retiree benefit or compensation arrangement.
(b) All Plans conform (and at all times within the five years
preceding the date hereof have conformed) in all material respects to, and are
being administered and operated (and have at all times within the five years
preceding the date hereof been administered and operated) in material compliance
with, the requirements of ERISA, the Code and all other applicable laws. All
returns, reports and disclosure statements required to be made under ERISA and
the Code with respect to all Plans have been timely filed or delivered. There
have not been any "prohibited transactions," as such term is defined in Section
4975 of the Code or Section 406 of ERISA involving any of the Plans, that could
subject AWS or any Subsidiary to any penalty or tax imposed under the Code or
ERISA. Neither AWS nor any Subsidiary maintains or has maintained any Plan
qualified under Section 401(a) of the Code and exempt from tax under Section
501(a) of the Code. Neither AWS nor any Subsidiary has any announced plan or
legally binding commitment to create any Plans or to materially amend or modify
any existing Plan.
(c) There are no pending or threatened claims asserted or
instituted against (i) any Plans or its assets, (ii) any fiduciary with respect
to any such Plan or (iii) AWS or any Subsidiary or any of its officers,
directors or employees under ERISA or any other applicable laws and rules and
regulations promulgated thereunder, or claiming benefit payments other than
those made in the ordinary operation of such plans, nor is there any basis for
such claim. To the Knowledge of AWS, the Plans are not the subject of any
investigation, audit or action by any governmental agency, including, but not
limited to, the IRS, the Department of Labor, the Equal Employment Opportunity
Commission or the Pension Benefit Guaranty Corporation ("PBGC").
2.24 Finder's Fees. Except as set forth on Schedule 2.24, neither AWS,
AWS Holdings, AWS Minneapolis nor, to the Knowledge of AWS, AWS Fort Worth has
taken any action which would impose upon Heartland any obligation or liability
to any person for finder's fees, agent's commissions or like payments in
connection with the execution and delivery of this Agreement or the consummation
of the transactions contemplated hereby.
2.25 Copyright Act. Except as set forth in Schedule 2.25, AWS and each
Subsidiary have submitted all requisite notices (if any are required) under the
Copyright Act of 1976, as amended (together with all rules and regulations
thereunder, the "Copyright Act"), for the carriage of all broadcast stations as
currently carried over any of the Wireless Cable Television Systems. Except as
set forth in Schedule 2.25, AWS and each Subsidiary have filed with the
Copyright Office all required documents, instruments and statements of account
and has remitted payments of all required royalty fees with respect to the
compulsory licenses provided for in Section 111 of the Copyright Act for the
carriage of broadcast signals in connection with the Wireless Cable Television
Systems. Except as set forth in Schedule 2.25, neither AWS nor any Subsidiary is
liable to any Person for copyright infringement under the Copyright Act as a
result of its business operations. Except as set forth in Schedule 2.25, there
have been no inquiries received from the Copyright Office, or, any other party,
which questioned such statements of account or any copyright royalty payments
made by AWS or any Subsidiary with respect to the Wireless Cable Television
Systems, and no claim, action or demand for copyright infringement or for
non-payment of royalties is pending or, to the Knowledge of AWS, threatened
against AWS or any Subsidiary with respect to the Wireless Cable Television
Systems.
2.26 Programming Agreements. Schedule 2.26 sets forth a true and
correct list of all agreements for programming and for each programming
agreement (i) the name of the programmer; (ii) the programming service; (iii)
the rate, and all factors that affect rate changes through the end of the term
of such agreement; (iv) the term and any rights for early termination or
extensions of the term of any party thereof; (v) any renegotiation rights; (vi)
the relevant channels and geographic market; and (vii) any provisions relating
to advertising. Neither AWS, AWS Holdings, AWS Minneapolis nor, to the Knowledge
of AWS, AWS Fort Worth is a party to any agreements providing for the
retransmission of any broadcast signals.
2.27 SEC Filings. AWS has previously delivered to Heartland the AWS SEC
Filings. Except as set froth in Schedule 2.27, each AWS SEC Filing was timely
filed with the SEC and does not contain a misstatement of a material fact or an
omission of a material fact required to be stated therein or necessary to make
the statements therein not misleading as of the time such document was filed.
Except as set forth in Schedule 2.27, no other document or report has been
required to be filed by AWS with the SEC which has not been filed, and no event
or transaction has occurred prior to the date hereof, which will hereafter be
required to be disclosed by AWS in a Form 10-Q, Form 8-K or similar filing.
2.28 Directors, Officers and Employees. Schedule 2.28 sets forth a list
of all directors and officers of AWS and AWS Holdings and managers of AWS Fort
Worth and AWS Minneapolis. Except as set forth on Schedule 2.28, neither AWS,
AWS Holdings, AWS Minneapolis nor, to the Knowledge of AWS, AWS Fort Worth has
any outstanding loans or extension of credit to, or any contracts, agreements or
understandings with, any executive officer or director or member of their
immediate family or any person with which any such person has a material
relationship. Schedule 2.28 sets forth a list of (a) the names and positions of
each employee of AWS, AWS Holdings, AWS Minneapolis and, to the Knowledge of
AWS, AWS Fort Worth who was paid an aggregate compensation for the fiscal year
ended December 31, 1994 in excess of $50,000, together with the amount thereof;
and (b) any agreement or arrangement with any current or former employees,
officers or directors of such parties that would entitle such person to receive
any compensation or other payment upon or arising from (i) the termination of
such person's services as an employee, officer or director, or (ii) the
consummation of the Merger, together with the amount thereof (such aggregate
amount, other than the amount payable to Steven G. Johnson, is referred to
herein as "Severance Obligations"). AWS has made available to Heartland a true
and correct copy of the current payroll which lists all employees of AWS, AWS
Holdings, AWS Minneapolis and, to the Knowledge of AWS, AWS Fort Worth by
category of employment and salary.
2.29 Bank Accounts, etc. Schedule 2.29 sets forth a list of all (i)
bank accounts of AWS, AWS Holdings, AWS Minneapolis and, to the Knowledge of
AWS, AWS Fort Worth and the persons authorized to draw thereon and the balances
thereof as of the date of this Agreement; (ii) safe deposit boxes of AWS, AWS
Holdings, AWS Minneapolis and, to the Knowledge of AWS, AWS Fort Worth and the
persons who have access thereto; and (iii) powers of attorney for tax purposes
or otherwise and a summary of the terms thereof.
2.30 Certain Claims. With respect to the Potential Claims (as defined
in Section 6.13), AWS has previously delivered to Heartland a claim inventory
for each Potential Claim that contains copies of all written correspondence
between AWS and the potential claimant, and summaries of all material oral
correspondence between such parties. Each such claim inventory is true and
correct in all material respects.
2.31 Site Leases and Site Options. Schedule 2.31 sets forth a true and
correct list of each Site Lease and Site Option which AWS or any Subsidiary is a
party or is otherwise bound. Each Site Lease and Site Option allows for the use
and operation on the leased property of transmitters, antenna structures,
antennas and other associated facilities, and permits the transmissions from the
property of signals containing video and audio programming.
2.32 Subscribers. Schedule 2.32 sets forth a true and correct list of
the number of subscribers for each Wireless Cable Television System.
2.33 Further Representation. No representation or warranty of AWS
contained in this Agreement contains any untrue statement of, or omits to state,
a material fact necessary in order to make the statements made herein, in light
of the circumstances under which they are made, not misleading. To the Knowledge
of AWS, all books, statements, documents, schedules and records furnished or
given by it to Heartland or Heartland's agents during the negotiation of or
preparatory to the execution of this Agreement or the consummation of the
transactions contemplated hereby, are true, complete and genuine (and contain no
misstatements or omissions of material facts).
ARTICLE 3. SCOPE OF AWS REPRESENTATIONS AND WARRANTIES.
3.1 Minneapolis and Fort Worth Markets. AWS owns a 25% membership
interest in AWS Minneapolis and a 20.01% venture interest in AWS Fort Worth,
which entities were formed to own and operate wireless cable television systems
in Minneapolis, Minnesota ("Minneapolis System") and Fort Worth, Texas ("Fort
Worth System"), and each of which are a Subsidiary of AWS for purposes of this
Agreement. AWS is presently acting as the manager of the Fort Worth System and
AWS Minneapolis but has no right to remain in the position of manager of either
the Fort Worth System and AWS Minneapolis should AWS's Joint Venture partners
terminate AWS as manager. AWS shall use reasonable efforts to assist Heartland
in acquiring the interest of third parties in AWS Minneapolis and AWS Fort
Worth. All representations, warranties and covenants regarding AWS and its
Subsidiaries contained herein shall, to the extent provided in such
representation, warranty or covenant, include, without limitation, AWS
Minneapolis and AWS Fort Worth; provided that Heartland's right to
indemnification as provided in Article 11 and in the Escrow Agreement for
breaches of representations, warranties and covenants by AWS with respect to the
Fort Worth System or Minneapolis System shall be reduced to reflect the
percentage ownership interest of AWS in AWS Fort Worth or AWS Minneapolis,
meaning that the liability of AWS for any Damages arising therefrom shall be
proportionately reduced; provided further that all representations and
warranties regarding the Fort Worth System shall be limited to the Knowledge of
AWS. In the event AWS is terminated as the manager of either AWS Fort Worth or
AWS Minneapolis after the date hereof but prior to the Closing Date, then the
representations and warranties contained herein with respect to such
Subsidiaries shall be true and correct as of the date hereof and the date of
such termination, AWS shall be in compliance with all covenants contained in
Article 5 and to the extent applicable Article 6 regarding such Subsidiaries as
of such termination date, and AWS shall have no liabilities hereunder for
breaches of either (a) the representations and warranties made by AWS with
respect to such Subsidiary arising from changes in conditions or circumstances
occurring after the date of termination, or (b) the failure to perform any
covenants regarding such Subsidiaries after any such termination; provided,
however, that AWS shall use its good faith efforts to remain as the manager of
each such Subsidiary through the Closing Date and shall not voluntarily withdraw
or resign as the manager of either such Subsidiary.
3.2 Pittsburgh Market. AWS has agreed to sell its interest in the Joint
Venture ("Pittsburgh Venture") which operates the wireless cable television
system in the Pittsburgh, Pennsylvania area ("Pittsburgh System") and has
entered into that certain agreement ("Pittsburgh Sale Agreement") in connection
therewith. The Pittsburgh Sale Agreement is a Material Contract and is listed on
Schedule 2.9. As set forth in Section 7.4 hereof, the consummation of the sale
of the Pittsburgh Market in accordance with the terms of the Pittsburgh Sale
Agreement is a condition precedent to the closing of the Merger. None of the
representations, warranties or schedules contained in this Agreement are being
made with respect to or contain the assets being transferred to or liabilities
being assumed by the purchaser of the Pittsburgh System under the Pittsburgh
Sale Agreement; provided that nothing contained herein shall limit the
indemnification obligations of AWS hereunder for liabilities arising under or
from the Pittsburgh Sale Agreement.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF MERGERSUB AND
HEARTLAND.
Heartland and MergerSub each hereby represent and warrant to AWS and to
the shareholders of AWS, the following:
4.1 Organization and Good Standing. Heartland is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. MergerSub is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware.
4.2 Authority; Enforceability; Non-Contravention. Heartland has the
corporate power and authority to conduct the business and activities conducted
by it and to own or lease the assets owned or leased by it. Heartland has
corporate power and authority (subject to shareholder approval and obtaining
lenders' Consents as set forth in Sections 7.6 and 8.1) to execute and deliver
this Agreement and all other documents required to be executed by Heartland
hereunder, to consummate the transactions hereby contemplated, and to take all
other actions required to be taken by Heartland pursuant to the provisions
hereof. This Agreement and all other documents required to be executed and
delivered by Heartland hereunder have been duly authorized by all corporate
action necessary on the part of Heartland (subject to shareholder approval and
obtaining lenders' Consents as set forth in Sections 7.6 and 8.1) and have been
duly or will when executed and delivered be duly executed and delivered by
Heartland, and constitute the legal, valid and binding obligations of Heartland
enforceable against Heartland in accordance with their terms. Neither the
execution nor the delivery of this Agreement and all the documents required to
be executed and delivered by Heartland hereunder or the consummation of the
transactions hereby contemplated by Heartland conflict with or constitute any
violation or breach of the Certificate of Incorporation or the Bylaws of
Heartland. MergerSub has the corporate power and authority to conduct the
business and activities conducted by it and to own or lease the assets owned or
leased by it. MergerSub has corporate power and authority (subject to
shareholder approval and obtaining lenders' Consents as set forth in Sections
7.6 and 8.1) to execute and deliver this Agreement and all other documents
required to be executed by MergerSub, to consummate the transactions hereby
contemplated, and to take all other actions required to be taken by MergerSub
pursuant to the provisions hereof. This Agreement and all other documents
required to be executed and delivered by MergerSub hereunder have been duly
authorized by all corporate action necessary on the part of MergerSub (subject
to shareholder approval and obtaining lenders' Consents as set forth in Sections
7.6 and 8.1) and have been duly or will when executed and delivered be duly
executed and delivered by MergerSub, and constitute the legal, valid and binding
obligations of MergerSub enforceable against MergerSub in accordance with their
terms. Neither the execution nor delivery of this Agreement and all other
documents required to be executed and delivered by MergerSub hereunder or the
consummation of the transactions hereby contemplated by MergerSub conflict with
or constitute a violation or breach of the Certificate of Incorporation or the
Bylaws of MergerSub.
4.3 Litigation. There is no Proceeding pending or, to Heartland's
Knowledge, threatened against or affecting Heartland that could reasonably be
expected to result in issuance of an Order restraining, enjoining or otherwise
prohibiting or making illegal the consummation of any of the transactions
contemplated hereby. There is no Proceeding pending or, to MergerSub's
Knowledge, threatened against or affecting MergerSub that could reasonably be
expected to result in issuance of an Order restraining, enjoining or otherwise
prohibiting or making illegal the consummation of any of the transactions
contemplated hereby.
4.4 Consents and Approvals. Other than any filings required under the
HSR Act, FCC Consents or the filing of the Registration Statement, no consent,
approval or authorization of, or declaration, filing or registration with, any
Governmental Authority is required on behalf of Heartland or MergerSub in
connection with the execution, delivery or performance of this Agreement and all
documents contemplated hereby or the transactions contemplated hereby.
4.5 Capitalization. The authorized capital stock of Heartland as of the
date hereof consists of 50,000,000 shares of common stock, par value $.001 per
share, and 10,000,000 of preferred stock, par value $.01 per share, of which
12,476,393 shares of Heartland common stock are issued and outstanding and no
shares of preferred stock have been issued. Heartland Common Shares to be issued
pursuant to this Agreement will be, upon issuance, validly issued, fully paid
and non-assessable.
4.6 Financial Statements. The financial statements contained in the
Heartland SEC Filings are correct and complete and fairly present the financial
position and results of operations of Heartland as of the date thereof and for
the periods referenced therein, all in accordance with GAAP.
4.7 SEC Filings. Heartland has previously delivered to AWS copies of
(i) its Form 10-K for the fiscal year ended December 31, 1994, (ii) its Form
10-Q for the three (3) month periods ended March 31, 1995 and June 30, 1995,
(iii) its Registration Statement on Form S-3 (File No. 33-94838) declared
effective by the SEC on August 4, 1995, and (iv) all Form 8-Ks filed with the
SEC after June 30, 1995 and prior to the date of this Agreement ("Heartland SEC
Filings"). Each such filing was timely filed with the SEC, and did not contain
any misstatement of material fact or an omission of a material fact required to
be stated therein necessary to make the statements therein not misleading as of
the time such document was filed. Heartland has filed all documents required to
be filed with the SEC. As of their respective dates, such reports complied in
all material respects with the applicable requirements of the Securities
Exchange Act of 1934, as amended.
4.8 Finder's Fees. Heartland has not taken any action which would
impose upon AWS any obligation or liability to any person for finder's fees,
agent's commissions or like payments in connection with the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby.
4.9 Further Representation. No representation or warranty of MergerSub
or Heartland contained in this Agreement contains or will contain any untrue
statement of, or omit to state, a material fact necessary in order to make the
statements made herein, in light of the circumstances under which they are made,
not misleading. To the Knowledge of Heartland and MergerSub, all books,
statements, documents, schedules and records furnished or given by it or them to
AWS or AWS's agents during the negotiation of or preparatory to the execution of
this Agreement or the consummation of the transactions contemplated hereby, are
true, complete and genuine (and contain no misstatement or omissions of material
facts).
ARTICLE 5. COVENANTS OF AWS.
AWS hereby agrees to perform as follows:
5.1 Operation Prior to the Closing Date. Subject to the provisions of
Section 5.4, from the date hereof through the Closing Date:
(a) AWS shall give Heartland prior written notice before AWS, AWS
Holdings, AWS Minneapolis or, to the Knowledge of AWS, AWS Fort Worth, shall
engage in any practice, take any action or enter into any transaction other than
in the customary and ordinary course of business.
(b) AWS will, and will cause each Subsidiary to, use reasonable
efforts to keep its business, properties and business relationships
substantially intact.
(c) AWS will (i) pay and perform all of its debts, liabilities and
obligations as and when due, except to the extent either (A) being contested in
good faith or (B) as to which adequate liabilities have been accrued and
recorded (determined in accordance with GAAP), (ii) perform its material
obligations under all Authorizations and Material Contracts, and (iii) comply in
all material respects with all Governmental Rules.
(d) AWS agrees that (i) AWS will not take any action, and will
endeavor in good faith not to permit any event to occur, which would cause or
constitute a material breach; (ii) AWS will, in the event of, and promptly after
the occurrence of, or promptly after becoming aware of the occurrence of or the
impending or threatened occurrence of, any event which would cause or constitute
a material breach or would, if it had occurred immediately prior to the date
hereof, have caused or constituted a material breach of any of the
representations and warranties set forth in said Article 2, give notice thereof
to Heartland; (iii) use reasonable efforts not to allow the aggregate Net
Permitted Liabilities (excluding the indebtedness evidenced by the Escrow Note)
of AWS on the Closing Date to exceed the Net Permitted Liability Basket; and
(iv) AWS shall use reasonable efforts to prevent or promptly to remedy such
breach.
(e) AWS will, and will cause each of its Subsidiaries to, use
reasonable efforts to preserve, protect and maintain its and their rights and
interests in the Channel Leases, FCC Licenses, and Material Contracts,
including, but not limited to, filing or having licensees or permittees file
with the FCC any and all reports, applications or other documents necessary to
preserve the FCC Licenses in full force and effect.
(f) AWS will not, and will not cause any of its Subsidiaries to,
enter into, amend or terminate, or agree to enter into, amend, except to comply
with this Agreement, or terminate any Channel Lease, License, Permit,
Application or Material Contract without giving prior written notice to
Heartland.
(g) AWS shall not repurchase, declare or pay any dividends, or
make any other distributions consisting of cash or marketable securities or any
contribution thereof, nor shall AWS or any of its Subsidiaries issue, sell or
agree to sell any shares of its capital stock, or any securities convertible
into, or options with respect to, or warrants to purchase or rights to subscribe
for, any shares of its capital stock.
(h) AWS will not, and will not cause any of its Subsidiaries to,
sell, lease, transfer or otherwise dispose of any of its assets, except as
provided for by, or contemplated in, this Agreement, or in the ordinary course
of business.
(i) AWS will not, and will not cause any of its Subsidiaries to,
increase in any manner the base compensation of, or enter into any new bonus or
incentive agreement or arrangement with, any of its directors, officers or
employees, pay bonuses to any such director, officer of employee, to the extent
the aggregate of the foregoing exceeds $125,000, or pay any salaries except in
the ordinary course of business, except as required under any existing written
employment agreement with any officer, director or employee of AWS or any
Subsidiary.
(j) AWS shall not transfer any interest in any Subsidiary.
5.2 Estoppel Certificates and Consents. Except as otherwise provided
herein, AWS shall use reasonable efforts to obtain or cause to be made, all
consents, governmental authorizations, approvals and filings necessary by virtue
of the Merger contemplated by this Agreement on or before the Closing Date, so
as to endeavor to ensure that the Surviving Corporation will as of the Effective
Time enjoy all of the rights and privileges currently enjoyed by AWS and each
Subsidiary under each of the Channel Leases, Licenses and Material Contracts.
Upon request of Heartland, AWS shall assist Heartland to obtain from each of the
other respective parties to each of such Channel Leases and Material Contracts
(a) estoppel certificates in the form of Exhibit 5.2 ("Estoppel Certificates"),
certifying (i) that AWS or a Subsidiary, as applicable, is not in breach or
violation of or in default under any of such Channel Leases or Material
Contracts and that it will not be by virtue of the transaction contemplated
hereby, and (ii) other matters specified therein, and (b) consents ("Affiliate
Transfer Consents") to future assignments of the rights thereunder to an
affiliate of Heartland as further described therein. AWS shall seek any
appropriate amendments, modifications or changes to each of such Channel Leases
and Material Contracts so as to ensure that after the Effective Time, the
licensees, permittees or other parties thereto notify Heartland directly in the
event of a breach or violation of or default under any such Channel Lease or
Material Contract. In addition to the other Estoppel Certificates to be
delivered pursuant to this Section 5.2, AWS shall obtain Estoppel Certificates,
dated no more than 15 days prior to the Closing Date, from each Person that
would be owed, or is anticipated to be owed, in excess of $50,000 on the Closing
Date, certifying the amount then owed to such Person and amount anticipated to
be owing to such Person by AWS as of the Closing Date ("Account Estoppels").
5.3 Renewal or Extension of FCC Authorizations. AWS shall, and shall
cause each Subsidiary to:
(a) timely file, or cause to be filed, all applications, reports
and other submissions in such form and with such information as may be required
by the FCC, including but not limited to renewal applications, applications for
extensions of time to complete construction and Annual FCC Reports, to assure
that all Channels licensed or authorized to either AWS or any Subsidiary remain
in full force and effect without material adverse alteration or modification,
except to the extent that such alteration or modification result from changes in
the FCC's rules or policies of general applicability. After the applications are
filed for FCC consent to the transfer of control of the FCC Licenses for said
Channels to Heartland or an affiliate of Heartland, AWS shall file, or cause to
be filed, at the request of and as an accommodation to Heartland, such
reasonable applications for modification of their outstanding construction
permits or licenses to implement the Merger. AWS shall utilize reasonable
efforts to prosecute in good faith all applications, reports and submissions
submitted in accordance with this Section 5.3.
(b) use reasonable efforts to assure that the licensees or
permittees under the Channel Leases timely file all applications, reports, and
other submissions in such form and with such information as may be required by
the FCC, including, but not limited to, renewal applications, applications for
extensions of time to complete construction and Annual FCC Reports, to assure
that such FCC Licenses remain in full force and effect without material adverse
alteration or modification, except to the extent that such alteration or
modification result from changes in the FCC's rules or policies of general
applicability. AWS shall use its reasonable efforts to assure that the licensees
or permittees under the Channel Leases diligently prosecute in good faith all
such applications, reports and submissions. AWS shall promptly disclose to
Heartland any information it receives regarding any conditions or circumstances
that would cause, or might cause, the FCC to decline to issue such
authorizations as may be necessary or desirable to keep the Licenses in full
force and effect.
5.4 No Solicitation. Subject to the provisions of Section 6.18
(regarding the sale of the Memphis Market), from and after the date hereof, AWS
will not, and will not authorize any of its officers, directors, employees,
agents and other representatives or those of any Subsidiary (collectively, "AWS
Representatives") to, solicit, initiate or encourage (including by way of
furnishing information) any inquiries or the making of any proposal which
constitutes, or may reasonably be expected to lead to, an Acquisition Proposal
(as defined herein) from any Person or engage in any discussion or negotiations
relating thereto, or accept any Acquisition Proposal. AWS shall immediately
cease and cause to be terminated any existing solicitation, discussion or
negotiation with any parties conducted heretofore by AWS or any AWS
Representatives with respect to any of the foregoing. To the extent permitted by
applicable law, AWS will promptly notify Heartland of any such discussion or
negotiations, requests for such information or the receipt of any Acquisition
Proposal, including the identity of the person or group engaging in such
discussions or negotiations requesting such information or making such
Acquisition Proposal, and the material terms and conditions of any Acquisition
Proposal. As used in this Agreement, "Acquisition Proposal" shall mean any
proposal or offer considered by the Board of Directors of AWS to be bona fide,
other than a proposal or offer by Heartland or any of its affiliates, for a
tender or exchange offer, a merger, consolidation or other business combination
involving AWS or any Subsidiary or any proposal to acquire in any manner (a) a
substantial equity interest in AWS or any Subsidiary, (b) any rights of AWS or
any Subsidiary to any Channels or (c) any Wireless Cable Television System.
Notwithstanding the foregoing, nothing in this Section 5.4 shall prohibit the
Board of Directors of AWS from (i) furnishing information to or entering into
discussions or negotiations with, any person or entity that makes an unsolicited
bona fide proposal to acquire AWS or any Subsidiary pursuant to a merger,
consolidation, share exchange, purchase of a substantial portion of the assets,
business combination or some other transaction, if, and only to the extent that
(A) the Board of Directors determines in good faith that such action is required
for the Board of Directors to comply with its fiduciary duty to its
stockholders, (B) prior to furnishing such information to, or entering into
discussions with or negotiations with, such person or entity, to the extent
permitted by applicable law, AWS provides notice to Heartland to the effect that
it is furnishing information to, or entering into discussions or negotiations
with, such person or entity, and (C) to the extent permitted by applicable law,
AWS keeps Heartland informed, on a current basis, of the status of any such
discussions or negotiations; (ii) complying with Rule 14e-2 promulgated under
the Exchange Act with regard to an Acquisition Proposal; and (iii) soliciting or
receiving offers for negotiating the sale of, or selling, the Memphis Market in
accordance with Section 6.18. AWS will use reasonable efforts to cause a person
provided proprietary information in accordance with the foregoing to enter into
a confidentiality agreement.
5.5 Audit of Financial Statements. Prior to the filing of the
Registration Statement, AWS will have audits conducted and completed so that AWS
can provide audited financial statements of AWS as of, and for the period
ending, December 31, 1994, including the balance sheets and related statements
of income and expense, and such financial statements shall conform in all
material respects with the unaudited financial statements previously delivered
by AWS to Heartland.
5.6 Delivery of Schedules or Other Items. Notwithstanding any other
statements contained herein to the contrary, AWS shall deliver to Heartland all
schedules and documents stated to have been delivered herein within twenty (20)
days of the date hereof.
5.7 Resignation of Directors of AWS. AWS shall deliver to Heartland on
the Closing Date, except as otherwise requested by Heartland, the written
resignation of all directors of AWS and AWS Holdings.
ARTICLE 6. ADDITIONAL AGREEMENTS.
6.1 Shareholders Meeting. AWS and Heartland shall each take all action
necessary in accordance with applicable law and in accordance with their
respective certificates of incorporation and bylaws to convene a meeting of
their respective stockholders as promptly as practicable after the Registration
Statement is declared effective by the SEC, to consider and vote upon the
approval of this Agreement. AWS and Heartland each, through its board of
directors, shall recommend to its stockholders (and, if applicable, its lenders)
approval of this Agreement and shall use reasonable efforts to obtain approval
and adoption of this Agreement by such stockholders and lenders. AWS
acknowledges that the consummation of the transactions contemplated by this
Agreement by MergerSub and Heartland requires (and therefore is subject to) the
approval of certain lenders of Heartland and Heartland agrees to seek to obtain
the written approval of such lenders within forty-five (45) days of the date
hereof.
6.2 Registration Statement and Proxy Statement.
(a) Heartland shall prepare and file with the SEC as soon as
practicable a Registration Statement on Form S-4 ("Registration Statement") with
respect to the Heartland Common Shares issuable in the Merger and in the
acquisition of the Fort Worth Interest and Minneapolis Interest, a portion of
which shall also serve as the joint proxy statement/prospectus with respect to
the meetings of the stockholders of Heartland and AWS to approve the Merger, and
shall use all reasonable efforts to have the Registration Statement declared
effective by the SEC as soon as practicable. Heartland shall also take any
action required to be taken under blue sky or securities laws in connection with
Heartland Common Shares prior to the Closing. AWS shall furnish Heartland all
information concerning AWS and its Subsidiaries and the holders of its common
stock required for use in the Registration Statement, and AWS shall take such
other actions as Heartland may reasonably request in connection with the
preparation of such Registration Statement and the actions to be taken by AWS
pursuant to this Section 6.2. None of the information furnished by or on behalf
of AWS for use in the Registration Statement shall contain any material
misstatement of fact or omit to state a material fact or any fact necessary to
make the statements contained therein not misleading.
(b) AWS shall prepare and file with the SEC as soon as practicable
a proxy statement that will be the same proxy statement/prospectus contained in
the Registration Statement and a form of proxy, in connection with the vote of
AWS's stockholders with respect to the consummation of the transactions set
forth in this Agreement (such proxy statement/prospectus, together with any
amendments thereof or supplements thereto, in any case in the form or forms
mailed to AWS's stockholders, is herein called the "Proxy Statement"). Heartland
shall furnish AWS all information concerning Heartland and MergerSub required
for use in the Proxy Statement, and Heartland shall take such other action as
AWS may reasonably request in connection with the preparation of the Proxy
Statement. None of the information furnished by or on behalf of Heartland for
use in the Registration Statement shall contain any material misstatement of
fact or omit to state a material fact necessary to make the statements contained
therein not misleading.
6.3 Access. Heartland and its officers, employees and representatives
(including independent public accountants, investment bankers, environmental
consultants and counsel), as applicable, will at all reasonable times during
regular business hours be permitted reasonable access to the Facilities and
AWS's corporate offices; will be permitted to make copies of or abstracts from
all of the books and records, financial and operating data and other information
of AWS and each Subsidiary; and will be permitted to discuss the affairs and
accounts of AWS and each Subsidiary with the directors, officers, employees,
counsel, and accountants of AWS and each Subsidiary. Such investigation shall
not, however, affect the representations and warranties of AWS set forth in
Article 2 hereof. In the event the transactions contemplated hereby should not
close for any reason, Heartland agrees that it will promptly return to AWS all
such documents (including copies thereof) furnished by or on behalf of AWS
and/or each Subsidiary to Heartland and its representatives and Heartland shall
hold in confidence and shall not use or disclose to any third party any
information concerning AWS and/or each Subsidiary obtained from such documents
or otherwise in connection with the transactions contemplated by this Agreement
unless (a) such information was at the time of its use or disclosure to any
third party by Heartland in the public domain other than as a result of any
breach of this provision by Heartland or (b) such disclosure is required by law.
6.4 Compliance with Securities Act. AWS has caused to be prepared and
delivered to Heartland and MergerSub a list identifying all persons who, to the
Knowledge of AWS, as of the date hereof, may be deemed to be "Affiliates" of AWS
and its Subsidiaries as that term is defined under Paragraphs (c) and (d) of
Rule 145 of the Securities Act ("Rule 145 Affiliates"), and prior to the Closing
Date, AWS shall cause to be prepared and delivered to Heartland and MergerSub an
updated list (reasonably satisfactory to counsel for Heartland) identifying all
persons who at the time of AWS's shareholder meeting may be deemed to be a Rule
145 Affiliate.
6.5 Stock Options.
(a) All options and stock appreciation rights previously granted,
if any, under any AWS stock option plan for its directors or employees or the
directors or employees of any Subsidiary (the "AWS Stock Option Plans") that are
unexercised, whether or not then exercisable (the "AWS Stock Options"), shall
be, on or prior to the Effective Time, immediately exercisable. AWS will permit
all of the AWS Stock Options to be exercised by the tender to AWS of any of (i)
cash in the amount of the exercise price, (ii) shares of Common Stock of AWS
with a fair market value (as such term is defined in the AWS Stock Option Plans)
equal to the exercise price, or (iii) the withholding by AWS of whole shares of
Common Stock of AWS having a fair market value equal to the exercise price from
the shares issued upon the exercise of the AWS Stock Options. Holders of the AWS
Stock Options who so exercise such Stock Options prior to the Effective Time
shall be entitled to exchange the shares of AWS Common Stock subject to such
Stock Options for the Conversion Amount on the same basis as the other
shareholders of AWS Common Stock. Any AWS Stock Options remaining unexercised at
the Effective Time shall be either terminated or, if such AWS Stock Option is
convertible by its terms into the right to receive Heartland Common Shares upon
the consummation of the Merger, so converted. All AWS Stock Option Plans shall
terminate as of the Effective Time and the provisions in any other plan, program
or arrangement providing for the issuance or grant of any other interest in
respect of the capital stock of AWS or any Subsidiary, shall be deleted as of
the Effective Time, and AWS shall take all action necessary to ensure that
following the Effective Time no participant in any AWS Stock Option Plan or
other plans, programs or arrangements shall have any right thereunder to acquire
equity securities of AWS, the Surviving Corporation or any subsidiary thereof,
and to terminate all such rights.
(b) AWS shall cause each holder of Non-Plan Options (whether or
not exercisable) to consent to the cancellation of the Non-Plan Options to take
effect on or prior to the Effective Time in consideration for the payment to
such holders of the Conversion Amount for each share of AWS Common Stock subject
to the Non-Plan Options, upon the payment by each holder of the applicable
option exercise price. AWS will permit holders of Non-Plan Options to tender the
applicable option exercise price by the tender to AWS of any of (i) cash in the
amount of the exercise price, (ii) shares of Common Stock of AWS with a fair
market value equal to the exercise price, or (iii) the withholding by AWS of
whole shares of Common Stock of AWS having a fair market value equal to the
exercise price from the shares issued upon the exercise of the Non-Plan Options.
Cancellation of the Non-Plan Options in exchange for the consideration set forth
in this Section 6.5 shall be deemed a release of any and all rights each holder
had or may have had in the Non-Plan Options or the AWS Common Stock in respect
of such options. The agreement or resolutions referenced in clauses (i) and (ii)
of this subsection (b) shall be terminated and be of no further force and effect
following the Effective Time. "Non-Plan Options" shall mean the options to
acquire AWS common stock that are unexercised and were previously granted to
Jeffrey D. Howes and Ernie Huls.
(c) No employee of AWS or any Subsidiary who held options for AWS
Common Stock prior to the Effective Time shall have any right to participate in
Heartland's stock option plan with respect to all or any portion of any calendar
year unless expressly so provided in any agreement between Heartland and such
employee.
6.6 Warrants. AWS will use reasonable efforts to cause each holder of
warrants to acquire AWS Common Stock (whether or not then exercisable) to
consent to the cancellation of such warrants to take effect on or prior to the
Effective Time in consideration of the payment to such holder of the Conversion
Amount for each share of AWS Common Stock subject to such warrant, upon the
payment by such holder of the applicable warrant exercise price. Cancellation of
such warrants in exchange for the consideration set forth in this Section 6.6
shall be deemed a release of any and all rights the holder had or may have had
in the warrant or the AWS Common Stock in respect of such warrant.
6.7 Reasonable Efforts. Upon the terms and subject to the conditions
set forth in this Agreement, each of the parties agrees to use its reasonable
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Merger and the other transactions
contemplated by this Agreement, including (a) the obtaining of all necessary
actions or non-actions, waivers, consents and approvals from Governmental
Authorities and the making of all necessary registrations and filings (including
filings with Governmental Entities) and the taking of all reasonable steps as
may be necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by any Governmental Entity; (b) the obtaining of all necessary
consents, approvals or waivers from third parties; (c) the defending of any
lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the transactions contemplated
hereby including seeking to have any stay or temporary restraining order entered
by any court or other Governmental Entity vacated or reversed; and (d) the
execution and delivery of any additional instruments necessary to consummate the
transactions contemplated by this Agreement.
6.8 Public Announcements. Heartland and MergerSub, on the one hand, and
AWS, on the other hand, will consult with each other before issuing any press
release with respect to the transactions contemplated by this Agreement, and
shall not issue any such press release prior to such consultation, unless
otherwise required under applicable law.
6.9 Notification of Certain Matters. AWS shall give to Heartland prompt
notice of: (i) any notice of, or other communication relating to, a default or
event that, with notice or lapse of time or both, would become a default,
received subsequent to the date of this Agreement and prior to the Effective
Time under any note, license, agreement or other instrument or obligation other
than in respect of defaults which, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect; and (ii) any
Material Adverse Effect or the occurrence of any event which, so far as
reasonably can be foreseen at the time of its occurrence, is reasonably likely
to result in a Material Adverse Effect. Heartland shall give AWS (a) from and
after the date of this Agreement, prompt notice of the occurrence of any event
that would require Heartland to file a current report on Form 8-K or issue a
press release under applicable securities laws, and (b) from and after the date
of the mailing of the Proxy Statement, prompt notice of the occurrence of any
event that would require the information regarding Heartland contained in the
Proxy Statement to be amended or supplemented under applicable securities laws.
Each party shall give the other prompt notice of any written notice or other
written communication from any third party alleging that the consent of such
third party is or may be required in connection with the transactions
contemplated by this Agreement.
6.10 Letters of AWS's Accountants. AWS shall use reasonable efforts to
cause to be delivered to Heartland a letter of Arthur Andersen, L.L.P., AWS's
independent auditors, dated a date within two business days before the date on
which the Registration Statement shall become effective and addressed to
Heartland, in form and substance reasonably satisfactory to Heartland and
customary in scope and substance for consent letters delivered by independent
public accountants in connection with registration statements similar to the
Registration Statement ("Accountant's Consent Letter").
6.11 Hart-Scott-Rodino Act Filing. The parties will cooperate in
preparing and filing any Notification and Report Forms and related material that
it may be required to file with the Federal Trade Commission and the Antitrust
Division of the United States Department of Justice under the HSR Act, and will
use their respective best efforts to obtain an early termination of the
applicable waiting period, and will make any further filings pursuant thereto
that may be necessary, proper, or advisable.
6.12 D&O Insurance; Release. Until the first anniversary of the
Effective Time, Heartland shall cause the Surviving Corporation to maintain in
effect with respect to matters occurring prior to the Effective Time, to the
extent available, the policies of directors' and officers' liability insurance
currently maintained by AWS; provided that the Surviving Corporation may
substitute therefor policies containing coverage, terms and conditions which are
no less advantageous. On the Closing Date, Heartland shall, and shall cause the
Surviving Corporation to, execute a written release of the parties listed on
Schedule 6.12 in the form attached hereto as Exhibit 6.12 ("Release").
6.13 Certain Claims. Prior to the Effective Time, AWS shall use
reasonable efforts to respond to and defend any claims asserted (a) by TruVision
Cable, Inc. ("TruVision") relative to the wireless cable rights and assets of
AWS in Memphis, Tennessee ("Memphis Market"), (b) by American Telecasting, Inc.
("ATI") relative to the acquisition of AWS, (c) by Laidlaw regarding certain
broker fees, and (d) by William Jenkins arising from the termination of his
employment with AWS (collectively the "Potential Claims"). AWS shall give
Heartland prior written notice of any settlement of a Potential Claim.
6.14 SEC Filings. AWS shall cause to be filed and deliver to Heartland
its Form 10-KSB for the fiscal year ended December 31, 1994 and its Form 10-QSB
for the period ended March 31, 1995, and June 30, 1995, and all periodic and
current reports required to be filed with the SEC for all periods after the
execution of this Agreement through the Closing Date. Heartland shall cause to
be filed and deliver to AWS all periodic and current reports required to be
filed with SEC for all periods after the execution of this Agreement through the
Closing Date.
6.15 Acquisition of Certain Interests. Heartland shall use reasonable
good faith efforts to enter into a binding contract to acquire (a) the 79.99%
joint venture interest held by Fort Worth Wireless Cable TV Associates, a
California general partnership, in AWS Fort Worth ("Fort Worth Interest") and
(b) the 75% membership interest held by WCTVA38, a California general
partnership, in AWS Minneapolis ("Minneapolis Interest"), and to have such
agreement (or a letter of intent for such agreement) executed within forty-five
(45) days from the date of this Agreement. As a part of Heartland's good faith
effort to acquire such interests, Heartland shall initially offer to acquire the
Minneapolis Interest for $15,000,000 and the Fort Worth Interest for
$10,000,000, in each case with customary closing conditions and representations,
warranties, indemnifications and releases reasonably acceptable to Heartland.
6.16 Supplemental Schedules. AWS may supplement any Schedule to this
Agreement (a) at any time through the date of the Due Diligence Notice without
the consent or approval of Heartland, and (b) after the date of the Due
Diligence Notice but prior to the Closing Date without the prior consent or
approval of Heartland; provided that, if the disclosure in such supplemental
Schedule represents a material change from any disclosure to Heartland on or
prior to the date of the Due Diligence Notice, adverse to Heartland, Heartland
shall be entitled to terminate this Agreement within fifteen (15) days of its
receipt of such supplemental Schedule, as further provided in Article 10.
6.17 Exclusivity Fee. As consideration for the covenant of AWS
contained in Section 5.4, Heartland shall pay to AWS, until the Closing
hereunder or earlier termination hereof in accordance with Article 10, a fee
("Exclusivity Fee") of $350,000 upon the date of the execution of this Agreement
and $150,000 on the first date of each calendar month thereafter. The
Exclusivity Fee shall be paid solely from the offset of such amounts against the
accrued interest and outstanding principal amount under the Promissory Note from
AWS to Heartland dated May 26, 1995 in the original principal amount of
$1,800,000 ("Escrow Note") (all of which remains outstanding as of the date
hereof), which offset shall occur automatically and without further notice from
Heartland on each such date until the Closing under or earlier termination of
this Agreement.
6.18 Sale of Memphis Market. Notwithstanding any provisions contained
herein to the contrary, AWS shall have the right to solicit bids for and
negotiate the sale of the Wireless Cable Television System and related assets
servicing the Memphis Market; provided that (i) AWS shall keep Heartland fully
informed regarding the status of any negotiations regarding the sale of the
Memphis Market or offers therefore, including without limitation, the identity
of the proposed purchaser and the consideration offered or requested, (ii)
Heartland shall have the right to approve, in its reasonable discretion, the
terms of any disposition of the Memphis Market for an aggregate consideration of
less than $3,900,000 and AWS shall not execute a definitive agreement to dispose
of the Memphis Market for an aggregate consideration of less than $3,900,000
without Heartland's written approval, which shall not be unreasonably withheld,
and (iii) the gross proceeds of any such disposition received by AWS ("Memphis
Proceeds") shall reduce, dollar for dollar, the amount of the Net Permitted
Liability Basket, and the excess Memphis Proceeds (meaning the amount of Memphis
Proceeds in excess of $3,000,000) shall either be placed into an escrow account
and shall remain in such account through the Closing Date or shall reduce,
dollar for dollar, the Merger Consideration.
6.19 Termination of Certain Agreements. On the Closing Date and at the
request of Heartland, AWS shall terminate any Affiliate Agreements and
employment or other management agreements designated by Heartland.
6.20 Exhibits. Heartland and AWS agree that any Exhibits not attached
hereto on the date hereof shall be prepared and attached within forty-five (45)
days of the date hereof, and agree to cooperate and negotiate in good faith in
the preparation of such exhibits.
ARTICLE 7. CONDITIONS PRECEDENT TO MERGER.
The obligation of the parties hereto to consummate the Merger is
subject to fulfillment, or written waiver signed by all parties hereto, of each
of the following conditions precedent on or prior to the Closing Date or the
date specified therein.
7.1 Registration Statement. The Registration Statement shall have
become effective in accordance with the provisions of the Securities Act. No
stop order suspending the effectiveness of the Registration Statement shall have
been issued by the SEC and remain in effect. All necessary state securities or
blue sky authorizations shall have been received.
7.2 No Order. No Governmental Authority or court of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
law, rule, regulation, executive order, decree, injunction or other order
(whether temporary, preliminary or permanent) which is then in effect and has
the effect of prohibiting the Merger or any of the transactions contemplated
hereby or otherwise making the consummation of the Merger or any of the
transactions contemplated hereby illegal.
7.3 Other Approvals. The waiting period applicable to the consummation
of the Merger under the HSR Act shall have expired or been terminated and all
filings required to be made prior to the Effective Time with, and all consents,
approvals, permits and authorizations required to be obtained prior to the
Effective Time from, any Governmental Authority in connection with the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby by AWS, Heartland and MergerSub, shall have been made or
obtained (as the case may be) without restrictions.
7.4 Sale of Pittsburgh System. The sale of the Pittsburgh System shall
be consummated in accordance with the terms of the Pittsburgh Sale Agreement.
7.5 Due Diligence Notice. Heartland shall have delivered to AWS written
notice ("Due Diligence Notice") that Heartland is satisfied, in its sole
discretion, with the results of the due diligence investigations of AWS
conducted through the date of the Due Diligence Notice, which date shall be not
later than forty-five (45) days following the date of this Agreement.
Heartland's failure to deliver such notice within the time period specified
herein shall constitute a waiver of such condition by Heartland and a waiver of
its right to terminate this Agreement for matters set forth in the Disclosure
Schedules delivered to Heartland on or before the thirty-fifth (35th) day
following the date of this Agreement.
7.6 Lenders' Consents. Heartland shall have delivered to AWS written
notice ("Approval Notice") that the Merger has been approved or consented to by
Jupiter Partners, L.P. and the holders of the $100,000,000 of 13% Senior Notes
due 2003 of Heartland relative to the transactions contemplated by this
Agreement on or before the forty-fifth (45th) day following the date of this
Agreement.
7.7 Other Acquisitions. Heartland shall have delivered to AWS written
notice ("Notice of Agreement") that it has entered into binding agreements to
acquire the Fort Worth Interest and Minneapolis Interest. Such notice shall be
delivered within forty-five (45) days of the execution of this Agreement, and
shall be accompanied by a copy of the agreement to acquire the Fort Worth
Interest or Minneapolis Interest, as applicable.
7.8 Fairness Opinions. AWS shall have delivered to Heartland and Merger
Sub (i) on or before the 20th day following the date of this Agreement, an
opinion of the AWS Advisor as to the fairness of the Merger to the stockholders
of AWS from a financial point of view and (ii) on or before the date the joint
proxy statement/prospectus constituting a part of the Registration Statement
referred to in Section 6.2(a) shall be first mailed to stockholders of AWS, a
letter from the AWS Advisor, dated as of the date of such joint proxy
statement/prospectus, confirming its opinion (collectively, the "Fairness
Opinion"). The Fairness Opinion shall be satisfactory in form and substance to
AWS on the date of initial delivery thereof and on the date of any confirmation
thereof contemplated in the preceding sentence, and on the Closing Date shall
not have been withdrawn.
7.9 Exhibits. On or before the forty-fifth (45th) day following the
date hereof, Heartland and AWS shall have agreed upon the form of each exhibit
to this Agreement and each such Exhibit shall be attached hereto.
ARTICLE 8. CONDITIONS PRECEDENT TO CLOSING BY HEARTLAND AND MERGERSUB.
The obligations of Heartland and MergerSub to consummate the Merger are
subject to fulfillment, or written waiver signed by Heartland and MergerSub, of
each of the following conditions precedent on or prior to the Closing Date.
8.1 Stockholder Approval. The Merger and the acquisition of the Fort
Worth Interest and Minneapolis Interest shall have been approved by the
requisite vote of the holders of Heartland Common Shares in accordance with
applicable law and its Certificate of Incorporation and Bylaws.
8.2 Representations and Warranties. Each and every representation and
warranty made by AWS shall be true and correct in all material respects when
made and shall be true and correct in all material respects as if originally
made on and as of the Closing Date.
8.3 AWS Documents. AWS shall have delivered the following to Heartland
in form and substance satisfactory to Heartland and its counsel:
(a) A certificate signed by the chief executive officer of AWS, on
behalf of and in his capacity as an officer of AWS, confirming, on and as of the
Closing Date, that each representation and warranty set forth in Section 2
hereof was true and correct in all material respects on the date made and is
true and correct in all material respects on and as of the Closing Date and that
AWS is in compliance with the applicable covenants set forth in Articles 5, 6
and 7.
(b) Evidence that Channel Leases are in place for the Channels and
that such agreements are in full force and effect.
(c) An opinion of special counsel to AWS and an opinion of FCC
counsel to AWS and each Subsidiary in the forms attached hereto as Exhibit
8-3(c).1 and Exhibit 8-3(c).2, respectively.
(d) The minute books, bylaws, certificate of incorporation and
other organizational documents of AWS and each Subsidiary and the stock books
and stock ledgers of AWS Holdings.
(e) All Account Estoppels and Estoppel Certificates and other
necessary and appropriate governmental and third party Consents, approvals and
clearances for consummation of the transactions contemplated herein, including,
but not limited to, receipt of a "final" order by the FCC approving, without any
materially adverse or onerous conditions, of the transfer of control of AWS as
licensee of the owned Licenses. For purposes of this Section, the term "final"
shall mean an order of the FCC which has not been stayed and, by lapse of time
or otherwise, is no longer subject to administrative or judicial
reconsideration, review, appeal or stay.
8.4 No Material Adverse Change. No change shall have occurred with
respect to AWS or any Subsidiary, or their respective assets from the date
hereof through the Closing Date which would have a Material Adverse Effect.
8.5 Dissenters' Rights. The shareholders of AWS Common Stock requesting
an appraisal of their shares of AWS Common Stock or exercising the dissenter
rights referred to in Section 1.2(p) hereof shall not hold more than an
aggregate of 10% of all outstanding AWS Common Shares.
8.6 Voting Trust Agreement. Each of the AWS shareholders identified on
Schedule 8.6 shall have executed the Voting Trust Agreement in the form attached
hereto as Exhibit 8.6 and such agreement shall be in effect on the Closing Date.
8.7 Acquisitions of Other Interests. Heartland shall have acquired, or
shall simultaneously acquire, the Fort Worth Interest and Minneapolis Interest.
8.8 Accountant's Consent Letter. Heartland shall have received from AWS
the Accountant's Consent Letter.
8.9 Satisfaction or Waiver of Conditions Precedent of AWS. Each of the
conditions precedent to the obligations of AWS set forth in Article 7 or 9 shall
have been satisfied or waived by AWS, except for the provisions of Section 9.1,
which shall be satisfied and may not be waived by AWS.
8.10 AWS Obligations Performed. All obligations of AWS to be performed
hereunder through and including the Closing Date shall have been performed in
all material respects.
8.11 Warrants. Each warrant to purchase AWS Common Shares that would
give the holder thereof the right to purchase any shares of capital stock of AWS
(meaning warrants that do not by their terms convert into the right to purchase
Heartland Common Shares) after the Closing Date shall have been exercised,
cancelled or otherwise terminated.
8.12 Closing Share Price. The Closing Share Price shall not be greater
than the Maximum Termination Price.
ARTICLE 9. CONDITIONS PRECEDENT TO CLOSING BY AWS.
The obligation of AWS to consummate the Merger is subject to
fulfillment, or written waiver signed by AWS, of each of the following
conditions precedent on or prior to the Closing Date.
9.1 Stockholder Approval. The Merger shall have been approved by the
requisite vote of the holders of the AWS Common Shares in accordance with
applicable law and its Certificate of Incorporation and Bylaws.
9.2 Representations and Warranties. Each and every representation and
warranty made by Heartland and/or MergerSub shall be true and correct in all
material respects when made and shall be true and correct in all material
respects as if originally made on and as of the Closing Date.
9.3 Heartland and/or MergerSub Documents. Heartland and/or MergerSub,
as the applicable case may be, shall have executed and delivered to AWS in form
and substance satisfactory to AWS and to counsel:
(a) A certificate of the chief executive officer of Heartland and
MergerSub, on behalf of and in his respective capacity as an officer of
Heartland or MergerSub, confirming, on and as of the Closing Date, that each of
the representations and warranties set forth in Section 4 hereof was true and
correct in all material respects on the date made and are true and correct in
all material respects on and as of the Closing Date.
(b) An opinion of counsel to Heartland and/or MergerSub in the
form attached hereto as Exhibit 9.3.
(c) The Escrow Agreement, executed by Heartland and the Exchange
Agent.
9.4 Satisfaction or Waiver of Conditions Precedent of Heartland and
MergerSub. Each of the conditions precedent to the obligations of Heartland and
MergerSub set forth in Article 8 shall have been satisfied or otherwise waived
by Heartland and MergerSub.
9.5 Heartland and MergerSub Obligations Performed. All obligations of
Heartland and MergerSub to be performed hereunder through and including the
Closing Date shall have been performed in all material respects.
9.6 Closing Share Price. The Closing Share Price shall not be less than
the Minimum Termination Price.
9.7 No Material Changes. No event shall have occurred that would
require the information regarding Heartland contained in the Proxy Statement to
be amended or supplemented under applicable securities laws.
ARTICLE 10. TERMINATION.
10.1 Termination by Mutual Consent. This Agreement may be terminated
and may be abandoned at any time prior to the Effective Time, before or after
the approval of this Agreement by the shareholders of AWS and Heartland, by the
mutual consent of Heartland, MergerSub and AWS.
10.2 Termination by AWS. This Agreement may be terminated and the
Merger may be abandoned by AWS if the Closing conditions set forth in Articles 7
and 9 shall not have been satisfied in full or waived on or before January 31,
1996.
10.3 Termination by Heartland or MergerSub. This Agreement may be
terminated and the Merger may be abandoned by Heartland or MergerSub if the
Closing conditions set forth in Articles 7 and 8 shall not have been satisfied
in full or waived on or before January 31, 1996; provided that Heartland shall
have the absolute right to terminate this Agreement (a) at any time prior to the
date of the Due Diligence Notice or (b) within fifteen (15) days after the
occurrence of an event described in Section 6.16.
10.4 Effect of Termination and Abandonment.
(a) In the event of termination of this Agreement and the
abandonment of the Merger pursuant to this Article 10, no party hereto (or any
directors or officers) shall have any liability or further obligation to the
other parties to this Agreement, except as provided in Article 10, and the
remedies set forth below shall be each party's sole and exclusive remedy for any
claims arising from this Agreement or the termination thereof. The payments
specified below to be made hereunder are each party's reasonable estimate of the
Damages arising from the other party's conduct leading to the termination
hereof, and shall constitute liquidated damages for any claims based thereon.
(b) In the event that any Person shall have made an Acquisition
Proposal and the Board of Directors of AWS approves the execution of an
agreement relating thereto or recommends to the AWS stockholders the acceptance
of any Acquisition Proposal, then AWS shall promptly, but in no event later than
two (2) days after the date of such event, pay Heartland a fee equal to the sum
of (i) One Million Eight Hundred Thousand Dollars ($1,800,000) and (ii) the
outstanding principal and accrued interest under the Escrow Note, and (iii) the
aggregate amount of all Exclusivity Fees previously offset against the Escrow
Note pursuant to Section 6.17, which amount shall be paid by wire transfer of
same day funds. AWS acknowledges that the agreements contained in this Section
10.4(b) are integral parts of the transactions contemplated in this Agreement,
and that, without these agreements, Heartland and MergerSub would not enter into
this Agreement; accordingly, if AWS fails to promptly pay the amount due and
pursuant to Section 10.4(b), and, in order to obtain such payment, Heartland or
MergerSub commences a suit which results in a judgment against AWS for the fee
set forth in this subparagraph (b), the non-prevailing party shall pay the
prevailing party its cost and expenses (including attorneys' fees) in connection
with such suit, together with interest on the amount of the fee at the interest
rate specified in the Escrow Note in effect on the date such payment was
required to be made.
(c) In the event that Heartland and/or MergerSub fail to
consummate the Merger after all conditions set forth in Articles 7 and 8 have
been satisfied or waived, then the indebtedness evidenced by the Escrow Note and
the lien of the Asset Security Agreement ("Security Agreement") dated of even
date therewith shall immediately, and without further acts or actions by
Heartland or MergerSub, be released and discharged, AWS shall have no obligation
to repay the amounts outstanding under the Escrow Note, Heartland shall release
the security interest created by the Security Agreement, Heartland shall execute
written releases of all UCC-1 financing statements executed to perfect the lien
of the Security Agreement, the parties shall have no further obligations
hereunder or under the Escrow Note or Security Agreement, and this Agreement
shall terminate.
(d) In the event that this Agreement is terminated (i) by
Heartland in accordance with Section 6.16, (ii) by either party for the failure
of the condition precedent set forth in Section 7.1 primarily as a result of
past or present acts or omissions of AWS, predecessors or Affiliates of AWS, or
their respective officers, directors or agents, (iii) by Heartland for the
failure of the condition precedent set forth in Section 8.3(e) arising solely
from the failure to obtain an FCC Consent, (iv) by AWS for the failure of the
condition precedent set forth in Section 9.1, or (v) by Heartland for the
failure of the condition precedent set forth in Section 8.2 or Section 8.4, then
all Exclusivity Fees previously offset against the Escrow Note shall be added
back to the principal balance of the Escrow Note and the Escrow Note shall
thereafter be repaid to Heartland in accordance with the terms thereof; provided
that, upon any such termination, the Escrow Note shall be modified to enter the
maturity date thereof until the date which is one (1) year from the date of such
termination.
(e) In the event that this Agreement is terminated for any reason
other than as set forth in subsections (b), (c) or (d) above, then the Escrow
Note (less any Exclusivity Fees offset against the Escrow Note in accordance
with Section 6.17, prorated through the date of termination) shall be repaid in
accordance with its terms, and the parties shall have no further liabilities to
each other (other than the obligation of AWS under the Escrow Note and Security
Agreement); provided that, upon any such termination, the Escrow Note shall be
modified to enter the maturity date thereof until the date which is one (1) year
from the date of such termination.
ARTICLE 11. CONDITIONS FOR RELEASE OF HOLDBACK AMOUNT
11.1 Provisions Regarding Representations and Warranties; Indemnifications. The
statements, certifications, representations and warranties made by AWS in this
Agreement, in any Schedule, or in any Exhibit, certificate or other instrument
delivered by or on behalf of AWS or any Subsidiary pursuant to this Agreement
shall survive the Merger for a period of one year from the Closing Date. Subject
to the limitations contained in Section 3.1 regarding the Fort Worth System and
Minneapolis System, AWS shall indemnify and hold Heartland and MergerSub, their
respective officers and directors ("Heartland Indemnitees") harmless from any
and all Damages relating to or arising from the following ("Primary Claims"):
(a) the existence of any Net Permitted Liabilities (excluding the
indebtedness evidenced by the Escrow Note) on the Closing Date in excess of
$3,000,000 ("Net Permitted Liability Basket"), as adjusted pursuant to Section
6.18;
(b) any material breach of the representations and warranties
contained in Section 2.30, which breach may be established by (i) the discovery
of undisclosed correspondence, documents or other materials originated by or
established to have been received by AWS relating to a Potential Claim, or (ii)
the admission, statement or testimony of any executive officer or director of
AWS (including, without limitation, statements or disclosures in interrogatory
responses, deposition testimony, settlement negotiations or other Proceedings),
which conflicts with or contradicts any disclosure which is the subject of the
representations and warranties contained in Section 2.30;
(c) any Potential Claims of Laidlaw and Jenkins; and
(d) any Claims arising from the willful malfeasance or any
fraudulent acts of AWS or its officers or directors;
and AWS shall indemnify and hold the Heartland Indemnitees harmless from fifty
percent (50%) of any Damages relating to or arising out of the following
("Secondary Claims"), to the extent such Damages are not the subject of a
Primary Claim:
(y) any breach or nonperformance (partial or total) of or in any
representation or warranty or covenant of AWS contained in this Agreement; and
(z) the Potential Claims of ATI and TruVision; provided that AWS
shall not have any liability to the Heartland Indemnitees hereunder for any
Damages arising from the Potential Claim of TruVision in excess of $1,800,000
(meaning the maximum liability of AWS to the Heartland Indemnitees hereunder for
such claim shall be $900,000);
provided that, with respect to Secondary Claims, Heartland shall not make any
claim for a Secondary Claim less than $10,000 ("Minimum Claim Amount"), and
Heartland shall not assert any claims hereunder, until the aggregate amount of
all Secondary Claims exceeds $250,000 ("Secondary Claim Floor"), and then
Heartland shall only have the right to make claims hereunder for Secondary
Claims to the extent that the aggregate amount of the Secondary Claims exceeds
the Secondary Claim Floor. AWS, Heartland and MergerSub acknowledge and agree
that, for purposes of determining the Secondary Claim Floor, one hundred percent
(100%) of all Secondary Claims equal to or greater than the Minimum Claim Amount
shall be included, and that the indemnification obligations of AWS for Secondary
Claims in excess of the Secondary Claim Floor shall be limited to fifty percent
(50%) of such excess.
11.2 Escrow Holdback. The Holdback Amount shall be held by the Exchange
Agent pursuant to the terms of the Escrow Agreement (attached as Exhibit
1.2(h)), which shall remain in effect until the expiration of the Escrow Period.
The indemnification obligations of AWS shall be limited to and satisfied solely
from the Holdback Amount in accordance with the terms of the Escrow Agreement.
Upon the expiration of the Escrow Period, the Contingent Amount to be received
by each former holder of AWS Common Shares shall be proportionately reduced by
the aggregate of the Primary Claims and Secondary Claims properly charged
against the Holdback Amount, to the extent such Holdback Amount is reduced by
such claim as provided in the Escrow Agreement and herein. It is acknowledged
and agreed that there shall be no remedy or other recourse by Heartland or
MergerSub, or its successors or assigns, against AWS or its shareholders, or
their successors and assigns (but only in their capacity as shareholders) of any
nature whatsoever, including, but not limited to, breaches of the
representations, warranties or covenants of this Agreement, other than to the
Holdback Amount, and that the Holdback Amount shall be the sole remedy and
recourse by Heartland or MergerSub against AWS or its shareholders (but only in
their capacity as shareholders).
11.3 Adjustment to Contingent Consideration and Initial Consideration.
In the event that the Potential Claim of TruVision is resolved and AWS and
Heartland receive a full release from TruVision regarding its Potential Claim
prior to the Closing Date, then (i) the Contingent Consideration shall be
reduced by $500,000 and (ii) the Initial Consideration shall be increased by
$500,000.
ARTICLE 12. DEFINITIONS.
12.1 The terms used in this Agreement have the respective meanings
specified or referred to in this Article 12:
"Acquisition Proposal" shall have the meaning set forth in Section
5.4.
"Act" means The Communication Act of 1934, as amended.
"Affiliate" means with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under common control
with such Person, and any other Person who or which, directly or
indirectly, has any equity interest in such Person, is a director, officer
or employee of such Person, or a member of the immediate family of any of
the foregoing Persons, whether or not living under the same roof with such
Person.
"Affiliate Transfer Consents" shall have the meaning set forth in
Section 5.2
"Annual FCC Report" means the reports which a licensee in the MMDS
service is required to file annually with the FCC pursuant to Section
21.911 of the FCC Rules.
"Application" means a pending application by AWS or Institution or
other Parties to the FCC for a License.
"Approval Notice" shall have the meaning set forth in Section 7.6.
"ATI" shall have the meaning set forth in Section 6.13.
"Authorization" means any license, permit, authorization,
franchise, grant, registration, certificate, consent and waiver awarded to
AWS by a Governmental Authority which is used, useable or held for use in
or in conjunction with or otherwise associated with the provision of
wireless cable services, including the licenses, permits, authorizations,
franchises, grants, registrations, certificates, consents and waivers
listed on Schedules 2.10(b) and 2.10(d).
"AWS Advisor" shall mean Daniels & Associates.
"AWS Common Shares" shall mean all of the issued and outstanding
capital stock of AWS immediately before the Merger.
"AWS SEC Filings" means AWS's Form 10-KSB filed for the fiscal
years ended December 31, 1993 and 1994, Form SB-2 (File No. 33-78354) filed
with the SEC on April 29, 1994, Form SB-2 (File No. 33-75190) filed with
the SEC on February 14, 1993, and all intervening Form 10-QSBs, 8-Ks and
proxy statements filed with the SEC.
"AWS Fort Worth" shall have the meaning set forth in Section 2.2.
"AWS Holdings" shall have the meaning set forth in Section 2.2.
"AWS Minneapolis" shall have the meaning set forth in Section 2.2.
"AWS Representatives" shall have the meaning set forth in Section
5.4.
"AWS Share Value" shall have the meaning set forth in Section
1.2(c).
"AWS Stock Option Plans" shall have the meaning set forth in
Section 6.5(a).
"AWS Stock Options" shall have the meaning set forth in Section
6.5(a).
"Certificates" shall have the meaning set forth in Section 1.2(i).
"Channel" means a frequency band which may be licensed by the FCC
to an eligible Person for the provision of ITFS, MDS or MMDS service.
"Channel Lease" means an agreement pursuant to which authority
under an Authorization has been leased to the AWS or Subsidiary.
"Close" or "Closing" means the consummation of the transactions
contemplated in Article 1 hereof as provided for in Section 1.3.
"Closing Date" means the date on which the Closing shall occur as
provided for in Section 1.3.
"Closing Share Price" shall mean with respect to Heartland Common
Shares the average of the closing prices of such stock as reported on the
NASDAQ NMS for the ten (10) trading days ending on the fifth (5th) business
day prior to the Closing Date. In the event that the Heartland Common
Shares do not trade on any date within such ten-day period, the closing
price for such date shall be deemed to be the closing price for the day
preceding such date of purposes of determining the Closing Share Price.
"Code" means the Internal Revenue Code of 1986, as amended.
"Consents" means the consents (including, without limitation, FCC
Consents), approvals, authorizations, and waivers of any public,
government, or regulatory body, authority, agency, or unit and any and all
consents, approvals, authorizations and waivers from parties to any of the
Material Contracts or any other Person that are (i) required for the lawful
consummation of this Agreement and/or any other transaction contemplated by
this Agreement, or (ii) necessary or desirable for Heartland to conduct the
operations currently conducted by AWS after the Closing, but does not
include Affiliate Transfer Consents.
"Contingent Amount" shall have the meaning set forth in Section
1.2(b).
"Contingent Consideration" means $3,500,000, as adjusted pursuant
to Section 11.3.
"Conversion Amount" shall be the amount of consideration per share
for the acquisition of AWS as provided for in Section 1.2(b).
"Copyright Act" means the Copyright Act of 1976, as amended.
"Copyright Office" means the United States Copyright Office of the
Library of Congress.
"Copyright Rules" means the rules and regulations promulgated by
the Copyright Office under authority of the Copyright Act, as set forth in
Part 201, Volume 37 of the Code of Federal Regulations.
"Damages" means all losses, obligations, liabilities, settlement
payments, awards, judgments, fines, penalties, damages, deficiencies, court
costs, costs of arbitration or administrative proceedings, attorneys' fees
and other reasonable expenses and costs.
"DGCL" means the Delaware General Corporation Law.
"Due Diligence Notice" shall have the meaning set forth in Section
7.5.
"Effective Time" shall mean the date and time of the filing of the
applicable certificate of merger in the State of Delaware.
"Employee" shall have the meaning set forth in Section 2.23(a).
"Environment" means the soil, surface waters, ground waters, land,
stream, sediments, surface or subsurface strata and ambient air.
"Environmental Laws" means all Legal Requirements relating to
injury to, or the protection of, real or personal property or human health
or the environment, including, without limitation, all Legal Requirements
of courts and other Governmental Authorities pertaining to reporting,
licensing, permitting, investigation, remediation, and removal of,
emissions, discharges, releases or threatened releases of Hazardous
Substances, chemical substances, pesticides, petroleum or petroleum
products, pollutants, contaminants or hazardous or toxic substances,
materials or wastes, whether solid, liquid or gaseous in nature, and
including electro-magnetic fields or discharges into the Environment, or
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Substances,
pollutants, contaminants or hazardous or toxic substances, materials or
wastes, whether solid, liquid or gaseous in nature, which are now or may
hereafter be applicable to AWS.
"Equipment" means all of the furniture, fixtures, furnishings,
machinery, computer hardware, antennas, transmitters, amplifiers, all other
equipment associated with receiving and distributing signals at the
head-end site and all other antenna and all electronic equipment, satellite
receivers, modulators, earth stations and associated equipment, head-end
amplifiers and associated equipment, distribution plant, programming signal
descramblers for service which has commenced scrambling, subscriber's
devices, converters, local origination equipment, test equipment,
machinery, spare equipment and parts inventory, equipment inventory,
supplies, and all other tangible personal property.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"Escrow Agreement" shall have the meaning set forth in Section
1.2(h).
"Escrow Note" shall have the meaning set forth in Section 6.17.
"Escrow Period" means the period commencing on the Closing Date
and continuing for a period of one year, as extended pending the resolution
of any Claims made within one year of the Closing Date and pending the
administration of such Claims, as further provided in the Escrow Agreement.
"Estoppel Certificate" shall have the meaning set forth in Section
5.2.
"Exchange Agent" shall have the meaning set forth in Section
1.2(h).
"Exchange Fund" shall have the meaning set forth in Section
1.2(h).
"Exchange Price" shall have the meaning set forth in Section
1.2(d).
"Exclusivity Fee" shall have the meaning set forth in Section
6.17.
"FAA" means the Federal Aviation Administration or any successor
agency(ies) with jurisdiction over towers and other antenna structures.
"FAA Rules" means the rules promulgated by the FAA and applicable
to antenna towers and other structures.
"Facilities" means all of the plants, offices, broadcast towers,
antenna towers, head-ends, studios, control centers and other real property
interests and related facilities which are either owned by AWS or leased by
or the use of which are leased by the AWS.
"Fairness Opinion" shall have the meaning set forth in Section
7.8.
"FCC" means the Federal Communications Commission.
"FCC Consent" shall mean the consent of the FCC to the transfer of
control or assignment of any MDS and MMDS License or Application.
"FCC Permit" shall mean a permit issued by the FCC to any Party to
construct a facility to transmit signals over one or more ITFS, MDS or MMDS
Channels.
"FCC Permittee" shall mean a person who holds an FCC Permit as
authorized by the FCC.
"FCC Proceeding" means a Proceeding relating to Applications or
Licenses.
"FCC Rules" means the rules and regulations promulgated by the FCC
under authority of the Act, as set forth in Volume 47 of the Code of
Federal Regulations.
"Financial Statements" shall have the meaning set forth in Section
2.5.
"Fort Worth Interest" shall have the meaning set forth in Section
6.15.
"Fort Worth System" shall have the meaning set forth in Section
3.1
"GAAP" means generally accepted accounting principles in effect as
of the applicable time or the date of any financial statements in the
United States of America. The term "generally accepted accounting
principles" shall mean accounting principles which are (a) consistent with
the principles promulgated or adopted by the Financial Accounting Standards
Board and its predecessors as generally accepted accounting principles, and
(b) such that a certified public accountant would, insofar as the use of
accounting principles is pertinent, be in a position to deliver an
unqualified opinion as to financial statements in which such principles
have been properly applied.
"GAAP Liabilities" means liabilities on the Closing Date which
would be properly reportable on a balance sheet for AWS as of the Closing
Date prepared in accordance with GAAP.
"Governmental Authority" means any federal, state, local,
municipal, foreign or other government or any federal, state or local
regulatory authority.
"Governmental Permits" means all licenses, consents, franchises,
permits, privileges, immunities, approvals, certificates and other
authorizations from a Governmental Authority to AWS or Subsidiary.
"Hazardous Substances" means any substance: (a) the presence of
which requires or may hereafter require notification, investigation or
remediation under any Environmental Law; (b) which is defined as a
"hazardous waste", "hazardous material" or "hazardous substance" or
"pollutant" or "contaminant" under any applicable Environmental Law or
amendments thereto, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA") (42
U.S.C. Section 9601 et seq.), the Resource Conservation and Recovery Act
("RCRA") (42 U.S.C. Section 6901 et seq.), the Clean Air Act, (42 U.S.C.
ss. 7401 et seq.) and any Environmental Law applicable to any jurisdiction
in which any Site(s) are located; (c) which is toxic, explosive, corrosive,
flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise
hazardous and is regulated by any Governmental Authority; (d) without
limitation, which contains gasoline, diesel fuel or other petroleum
hydrocarbons or volatile organic compounds; (e) without limitation, which
contains polychlorinated biphenyls (PCBs) or asbestos or urea formaldehyde
foam insulation; or (f) without limitation, which contains or emits
radioactive particles, waves or materials, including radon gas and
electro-magnetic fields.
"Heartland" shall have the meaning set forth in the Recitals.
"Heartland Common Shares" means shares of common stock, $.001 par
value per share, Heartland Wireless Communications, Inc.
"Heartland Indemnitees" shall have the meaning set forth in
Section 11.1.
"Heartland SEC Filings" shall have the meaning set forth in
Section 4.7.
"Holdback Amount" shall have the meaning set forth in Section
1.2(i).
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements
Act of 1976.
"Initial Amount" shall have the meaning set forth in Section
1.2(b).
"Initial Consideration" means $30,500,000, as adjusted pursuant to
Section 11.3.
"Institution" shall mean an accredited institution or a
governmental organization engaged in the formal education of enrolled
students, or a non-profit organization whose purposes are educational,
which is a qualified applicant for and has entered into a Channel Lease
with AWS or any Subsidiary.
"Intellectual Property" means all patents, trademarks, service
marks, tradenames, copyrights, licenses, formulas, computer software,
advertising, technology, advertising slogans, advertising techniques,
operating procedures, know-how, data and other intellectual property rights
of AWS or any Affiliate of AWS which are used or available for use in
connection with the Business.
"IRS" means the Internal Revenue Service.
"ITFS" means Instructional Television Fixed Service.
"Joint Venture" means a joint venture, partnership, limited
liability company or other similar arrangement, whether in corporate,
partnership or other legal form; provided that in no event shall any
corporate Subsidiary of any Person be considered a Joint Venture to which
such Person is a party.
"Knowledge" means (a) with respect to an individual "knowledge" of
a particular fact or other matter if such individual is actually aware or
has reason to know, after due inquiry, of such fact or other matter; and
(b) with respect to a Person (other than an individual) "knowledge" of a
particular fact or other matter if any individual who is serving as a
director or officer of such Person has "knowledge" of such fact or other
matter.
"Laidlaw" means Laidlaw Holdings, Inc.
"Legal Requirement" means any federal, state, local, municipal,
foreign or other law, statute, legislation, act, constitution, ordinance,
code, treaty, rule, regulation or FCC guideline applicable to or against
AWS or Subsidiary.
"Liabilities" means damages, obligations, claims, demands,
judgments or settlements of any nature or kind, known or unknown, fixed,
accrued, absolute or contingent, liquidated or unliquidated, including all
costs and expenses (legal, accounting or otherwise).
"Licenses" means all FCC licenses, conditional licenses,
construction permits, authorizations and approvals which are required to
transmit commercial programming, educational programming or any other use
currently authorized by law.
"Liens" means any lien, pledge, hypothecation, charge, mortgage,
deed of trust, security interest or encumbrance against any assets or
properties of AWS or its Subsidiaries.
"Manage or Management" means the use, possession, processing,
generation, treatment, storage, disposal, recycling, transportation or
arranging for the transportation of any Hazardous Substance.
"Material Adverse Effect" means any event or circumstance which
results in or is reasonably likely to result in a material adverse change
in (i) the financial condition, business, operations or properties of AWS
or any Subsidiary, taken as a whole other than general economic change over
which neither AWS nor any Subsidiary has any control; (ii) the ability of
AWS or any Subsidiary prior to the Effective Time to perform its
obligations under this Agreement, or (iii) the validity or enforceability
of this Agreement.
"Material Contracts" shall have the meaning set forth in Section
2.9.
"Maximum Collar Price" means $26.00.
"Maximum Termination Price" means $32.00.
"MDS" shall mean a Multipoint Distribution Service, including
(unless otherwise specified), the former Operational Fixed Service ("OFS")
H-channels.
"Memphis Market" shall have the meaning set forth in Section 6.12.
"Memphis Proceeds" shall have the meaning set forth in Section
6.18.
"Merger" means the merger described in Section 1.1.
"Merger Consideration" means $34,000,000.00.
"Minimum Claim Amount" shall have the meaning set forth in Section
11.1.
"Minimum Collar Price" means $20.00.
"Minimum Termination Price" means $12.00.
"Minneapolis Interest" shall have the meaning set forth in Section
6.15.
"Minneapolis System" shall have the meaning set forth in Section
3.1.
"MMDS" means the Multichannel Multipoint Distribution Service.
"Net Permitted Liabilities" means (i) Permitted Liabilities minus
(ii) cash held in deposit accounts to be retained and available for use by
the Surviving Corporation following the Merger.
"Net Permitted Liability Basket" shall have the meaning set forth
in Section 11.1(a).
"Non-Plan Options" shall have the meaning set forth in Section
6.5(a).
"Notice of Agreement" shall have the meaning set forth in Section
7.7.
"Order" means any order, judgment, injunction, or FCC ruling
issued, made, entered or rendered by any court, administrative agency or
other Governmental Authority or by any arbitrator as to which AWS or
Subsidiary is a party.
"Outstanding AWS Shares" shall have the meaning set forth in
Section 1.2(c).
"PBGC" shall have the meaning set forth in Section 2.23(c).
"Permitted Liabilities" shall mean the sum of (i) GAAP
Liabilities, (ii) Severance Obligations (excluding Severance Obligations
which are included in the calculation of GAAP Liabilities), and (iii)
twenty-five percent (25%) of the indebtedness of AWS Minneapolis to
Heartland outstanding under that certain promissory note in the original
principal amount of $560,000 for the purpose of repaying the loan to
Tsunami Capital Corporation.
"Person" means any individual, corporation, partnership, joint
venture, estate, trust, cooperative, foundation, union, syndicate, league,
consortium, coalition, committee, society, firm, company or other
enterprise, association, organization or other entity or Governmental
Authority.
"Pittsburgh Sale Agreement" shall have the meaning set forth in
Section 3.2.
"Pittsburgh System" shall have the meaning set forth in Section
3.2.
"Plans" shall have the meaning set forth in Section 2.23(a).
"Potential Claims" shall have the meaning set forth in Section
6.13.
"Primary Claims" shall have the meaning set forth in Section 11.1.
"Proceeding" means any suit, litigation, arbitration, proceeding
(including any civil, criminal, administrative, investigative or appellate
proceeding or FCC Proceeding).
"Proxy Statement" shall have the meaning set forth in Section
6.2(b).
"Registration Statement" shall have the meaning set forth in
Section 6.2(a).
"Release" means the releasing, spilling, leaking, discharging,
pumping, pouring, emitting, emptying, ejecting, leaching, dumping,
disposing or allowing to escape any Hazardous Substance.
"Rule 145 Affiliate" shall have the meaning set forth in Section
6.4.
"SEC" means the United States Securities and Exchange Commission.
"Secondary Claims" shall have the meaning set forth in Section
11.1.
"Secondary Claim Floor" shall have the meaning set forth in
Section 11.1.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Agreement" shall have the meaning set forth in Section
10.4(c).
"Severance Obligations" shall have the meaning set forth in
Section 2.28.
"Site" means a wireless cable television site with respect to
which AWS is operating a Wireless Cable Business and transmitting
programming to subscribers in connection therewith.
"Site Lease" shall mean an agreement for the lease of real estate
or tower space permitting the construction of a transmitter on a Site.
"Site Option" shall mean an option or right to obtain a Site
Lease.
"Subsidiary" means AWS Holdings, AWS Forth Worth and AWS
Minneapolis, or any other entity in which AWS has the ability to direct the
management or affairs, excluding the Pittsburgh Venture.
"Supplemental Disclosure" shall have the meaning set forth in
Section 12.11.
"Surviving Corporation" shall have the meaning set forth in
Section 1.1.
"Tax" or "Taxes" shall have the meaning set forth in Section 2.6.
"TruVision" shall have the meaning set forth in Section 6.13.
"US Trust" means U.S. Trust Company of Texas, N.A.
"Voting Trust Agreement" shall have the meaning set forth in
Section 8.6.
"Wireless Cable Business" means the business of transmitting
programming to subscribers through the use of MMDS, MDS or ITFS licenses.
"Wireless Cable Television Systems" means the Dallas, Fort Worth,
Los Angeles, Memphis and Minneapolis wireless cable television systems,
whether or not operational, and all assets relating thereto.
12.2 Defined Terms. In this Agreement, all definitions shall be equally
applicable to both the singular and the plural forms.
ARTICLE 13. MISCELLANEOUS.
13.1 Expenses of the Transaction. Each of AWS, Heartland and MergerSub
agrees to pay its own fees and expenses in connection with this Agreement and
the transactions hereby contemplated.
13.2 Further Assurances. Each of AWS, Heartland and MergerSub agrees
that it will, at any time and from time to time after the Closing Date, upon the
request of the other party, do, execute, acknowledge and deliver, or will cause
to be done, executed, acknowledged and delivered, all such further acts,
assignments, transfers, conveyances, powers of attorney and assurances as may be
reasonably required from time to time in order to effectuate the provisions and
purposes of this Agreement.
13.3 Notices. All notices or other communications required or permitted
hereunder shall be in writing and shall be deemed given or delivered (a) when
delivered personally or by private courier, (b) when actually delivered by
registered United States mail, return receipt requested, or (c) when sent by
telecopy (provided, however, that, it is telephonically or electronically
confirmed), addressed as follows:
If to Heartland, to:
Heartland Wireless Communications, Inc.
902 N. Bowser, Suite 140
Richardson, Texas 75081
Attn: John R. Bailey
With copy to:
Arter, Hadden, Johnson & Bromberg
1717 Main Street, Suite 4100
Dallas, TX 75202
Attn: Victor B. Zanetti
If to AWS, to:
American Wireless Systems, Inc.
7426 E. Stetson Drive
Suite 220
Scottsdale, AZ 85251
Attn: Steven G. Johnson
With copy to:
O'Connor Cavanagh
One East Camelback Road
Suite 1100
Phoenix, AZ 85012
Attn: Richard Stagg
or such other address as such party may indicate by a notice delivered to the
other parties hereto in the manner herein provided.
13.4 No Modification Except in Writing. This Agreement shall not be
changed, modified, or amended except by a writing signed by the party to be
charged and this Agreement may not be discharged except by performance in
accordance with its terms or by a writing signed by the party to which
performance is to be rendered.
13.5 Entire Agreement. This Agreement, together with the Schedules and
Exhibits hereto, sets forth the entire agreement and understanding among the
parties as to the subject matter hereof.
13.6 Severability. If any provision of this Agreement or the
application of any provision hereof to any person or in any circumstances is
held invalid, the remainder of this Agreement and the application of such
provision to other persons or circumstances shall not be affected unless the
provision held invalid shall substantially impair the benefits of the remaining
portions of this Agreement.
13.7 Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. This Agreement may not be assigned by any party hereto except with the
prior written consent of the other parties. Any purported assignment contrary to
the terms of this Agreement shall be void.
13.8 Publicity; Announcements. Except to the extent required by law,
prior to the Closing Date, all publicity related to the transactions
contemplated hereby shall be subject to the mutual approval of Heartland and
AWS; provided, Heartland and AWS shall be entitled to disclose the transactions
contemplated hereby without the prior approval of the other, but with prior
notice to the other, to the extent reasonably necessary for Heartland or AWS to
comply with applicable securities laws.
13.9 Choice of Law. This Agreement shall be deemed to have been made
in, and shall be construed in accordance with the laws of the State of Delaware,
and its validity, construction, interpretation and legal effect shall be
governed by the laws of the State of Delaware applicable to contracts entered
into and performed entirely therein.
13.10 Captions; Construction. The captions appearing in this Agreement
are inserted only as a matter of convenience and for reference and in no way
define, limit or describe the scope and intent of this Agreement or any of the
provisions hereof. All uses of the term "including" shall be construed as
descriptive and not a limitation of the item described. All words used herein
shall be construed to be of such gender as the circumstances require.
13.11 Schedules. The Schedules referred to herein and delivered to
Heartland and/or MergerSub upon execution hereof are hereby made a part of this
Agreement. All Schedules delivered to Heartland and/or MergerSub shall be
subject to modification prior to the Closing Date, provided that such
modifications are designated as a "Supplemental Disclosure" and delivered
pursuant to notice given in accordance with Section 13.3.
13.12 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original. This Agreement may also
be executed by facsimile signature.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement as of the day and year first above written.
AWS:
AMERICAN WIRELESSS SYSTEMS, INC.
By: /s/ Steve Johnson
--------------------------------------
Name: Steve Johnson
Title: President, CEO
HEARTLAND:
HEARTLAND WIRELESS
COMMUNICATIONS, INC.
By: /s/ John R. Bailey
--------------------------------------
Name: John R. Bailey
Title: CFO
MERGERSUB:
HEARTLAND MERGERSUB, INC.
By: /s/ John R. Bailey
--------------------------------------
Name: John R. Bailey
Title: CFO
<PAGE>
AGREEMENT AND PLAN OF MERGER
dated as of September 11, 1995
between
AMERICAN WIRELESS SYSTEMS, INC.
(a Delaware corporation)
and
HEARTLAND MERGERSUB, INC.
(a Delaware corporation)
and
HEARTLAND WIRELESS COMMUNICATIONS, INC.
(a Delaware corporation)
