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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 26, 1998
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Metrocall, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 0-21924 54-1215634
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) file number) Identification No.)
6677 Richmond Highway, Alexandria, Virginia
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(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (703) 660-6677
Not Applicable
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
On June 26, 1998, Metrocall, Inc. ("Registrant" or "Metrocall")
entered into a Stock Purchase Agreement ("Stock Purchase Agreement") with AT&T
Wireless Services, Inc. ("Wireless"), McCaw Communications Companies, Inc. and
AT&T Two Way Messaging Communications, Inc. to acquire the stock of certain
subsidiaries of Wireless that operate the paging and messaging services
business of AT&T Corp. ("AT&T") and a 50KHz/50KHz Narrowband Personal
Communications Services license ("License").
The purchase price for this acquisition is approximately $205 million,
consisting of $110 million in cash and $95 million in stated value of a new
series of convertible preferred stock of the Registrant to be designated Series
C Convertible Preferred Stock (the "Series C Preferred"). The total purchase
price to be paid by Registrant is subject to adjustment based on the financial
performance of the acquired business prior to the closing, as described in
Article 4 of the Stock Purchase Agreement, which is attached as Exhibit 2.1
hereto.
The Stock Purchase Agreement also provides that AT&T, Wireless and
Metrocall will enter into a Distribution Agreement on the date the transaction
closes. Pursuant to this Distribution Agreement, Wireless will offer Metrocall
branded pagers and paging and messaging services for sale in Wireless' retail
locations on an exclusive basis for five years. In addition, in the event
Wireless elects to offer paging and messaging services under its own brand
identity or in conjunction with other products or services, the Distribution
Agreement provides that Wireless and Metrocall will use their good faith
efforts to agree to terms and conditions under which Metrocall will provide
paging and messaging services related to implementing the offer. Wireless and
Metrocall will also enter into eight transition services agreements, including
agreements granting Metrocall use of certain office space, transmitter sites,
terminals, billing software, and an internet gateway, as well as permitting
Wireless to phase-out use of AT&T trademarks over twelve months.
The specific terms of the Series C Preferred will be set forth in a
Certificate of Designation, Number, Powers, Preferences and Relative,
Participating, Optional and Other Rights of Series C Convertible Preferred
Stock of Metrocall, Inc. ("Certificate of Designation") in the form of Exhibit
2.2 hereto. Dividends will be payable in cash or additional shares of Series C
Preferred, at Registrant's option, semi-annually on outstanding shares of
Series C Preferred at an annual rate of 8% of stated value. The Series C
Preferred will be convertible into Metrocall common stock beginning five years
after issuance. Each share will be convertible into the number of shares of
Metrocall common stock equal to the stated value divided by $10.40, subject to
anti-dilution adjustments. The Series C Preferred is also convertible upon
certain change of control events, as defined in the Certificate of Designation.
Metrocall will have the right to redeem the Series C Preferred beginning at the
third anniversary of issuance, and must redeem the Series C Preferred on the
twelfth anniversary of issuance. The Series C Preferred
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will not be transferrable for 18 months after issuance. The Series C Preferred
will rank junior to Registrant's existing Series A Convertible Preferred Stock
and Series B Junior Convertible Preferred Stock and the future issues of senior
securities. Metrocall will be required to register the Series C Preferred
and/or the common stock into which it is convertible pursuant to a registration
rights agreement.
The issuance of the Series C Preferred is subject to the approval of
the Registrant's stockholders under Nasdaq rules. If Registrant's stockholders
do not approve such issuance, AT&T may terminate the agreement and receive a $9
million termination fee from Metrocall. Stockholders will also be asked to
approve an increase in the Registrant's authorized shares of Common Stock in
order to provide additional shares to be reserved for conversion of the Series
C Preferred. Stockholders that beneficially own approximately 33% of
Metrocall's common stock have agreed to vote their shares in favor of the
issuance of the Series C Preferred.
The Company expects to finance the cash portion of the consideration
from through borrowings under its bank credit facility. Completion of the
transaction is subject to other terms and conditions, including regulatory
approvals.
The foregoing summary of the terms of the transaction is qualified in
its entirety by reference to the Stock Purchase Agreement, form of Certificate
of Designation and the Stockholders Voting Agreements, which are included in
the Exhibits hereto.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
<TABLE>
<CAPTION>
Exhibit Description
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<S> <C>
2.1 Stock Purchase Agreement by and among Metrocall, Inc. and AT&T
Wireless Services, Inc., McCaw Communications Companies, Inc. and
AT&T Two Way Messaging Communications, Inc. dated June 26, 1998
2.2 Form of Certificate of Designation, Number, Powers, Preferences and
Relative, Participating, Optional and Other Rights of Series C Convertible
Preferred Stock of Metrocall, Inc.
2.3 Stockholders Voting Agreement and Proxy between AT&T Wireless
Services, Inc., and certain stockholders of Metrocall, Inc. dated June 26,
1998
2.4 Voting Agreement between AT&T Wireless Services, Inc., and Page
America Group, Inc. dated June 26, 1998
</TABLE>
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
METROCALL, INC.
By: /s/ Vincent D. Kelly
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Vincent D. Kelly
Chief Financial Officer and Treasurer
Date: July 7, 1998
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description
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<S> <C>
2.1 Stock Purchase Agreement by and among Metrocall, Inc. and AT&T
Wireless Services, Inc., McCaw Communications Companies, Inc. and
AT&T Two Way Messaging Communications, Inc. dated June 26, 1998
2.2 Form of Certificate of Designation for the Series C Convertible Preferred
Stock
2.3 Stockholders Voting Agreement and Proxy between Wireless Services,
Inc. and certain stockholders of Metrocall, Inc. dated June 26, 1998
2.4 Voting Agreement between AT&T Wireless Services, Inc., and Page
America Group, Inc. dated June 26, 1998
</TABLE>
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EXHIBIT 2.1
Execution Copy
STOCK PURCHASE AGREEMENT
BY AND AMONG
AT&T WIRELESS SERVICES, INC.,
MCCAW COMMUNICATIONS COMPANIES, INC.,
AT&T TWO WAY MESSAGING COMMUNICATIONS, INC.
AND
METROCALL, INC.
DATED AS OF JUNE 26, 1998
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TABLE OF CONTENTS
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ARTICLE 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Assignment Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Closing Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 Communications Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.7 Confidential Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.8 DOJ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.9 FCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.10 Final Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.11 Force Majeure Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.12 FTC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.13 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.14 Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.15 Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.16 Material Adverse Effect or Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.17 Parents' Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.18 Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.19 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.20 Satellite Force Majeure Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 2 SALE OF SHARES AND 50/50 LICENSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 Agreement of Purchase and Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 Delivery of Share Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 3 CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.1 Determination of Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.2 Time and Place of Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 4 PURCHASE PRICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.1 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.2 Adjustments to the Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.3 Payment of Purchase Price Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 5 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.1 Representations and Warranties of Parents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.1.1 Due Organization, Subsidiaries, Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.1.2 Authorization and Validity of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
5.1.3 No Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
5.1.4 Licenses, Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
5.1.5 Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
5.1.6 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
5.1.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
</TABLE>
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<TABLE>
<S> <C> <C>
5.1.8 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
5.1.9 Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
5.1.10 [Intentionally Omitted.] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
5.1.11 Financial Statements, Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
5.1.12 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
5.1.13 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
5.1.14 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
5.1.15 Liabilities and Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
5.1.16 Labor Matters and Employee Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
5.1.17 [Intentionally Omitted.] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
5.1.19 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
5.1.20 Government Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
5.1.21 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
5.1.22 [Intentionally Omitted.] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
5.1.23 Year 2000 Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
5.1.24 Series C Preferred Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
5.1.25 Accounts Receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
5.2 Representations and Warranties of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
5.2.1 Qualification of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
5.2.2 Authorization and Validity of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
5.2.3 No Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
5.2.4 Licenses, Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
5.2.5 Financial Capabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
5.2.6 Capital Stock of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
5.2.7 Financial Statements and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
5.2.8 Metrocall Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
5.2.9 Spectrum Caps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
ARTICLE 6 CONDUCT PRIOR TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
6.1 Filing of Assignment Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
6.2 Antitrust Laws and Parents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
6.3 Antitrust Laws and Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
6.4 Access to Information Concerning Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
6.5 Stockholder Approval. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
6.6 Control of the Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
6.7 Parents' Pre-Closing Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
6.8 Buyer's Pre-Closing Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
6.9 No Solicitation of Offers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
6.10 Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
6.11 Title Insurance and Surveys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
6.12 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
6.13 Notice to Bargaining Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
6.14 Third Party Consents and Governmental Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
6.15 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
</TABLE>
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ARTICLE 7 EMPLOYMENT, BENEFITS AND TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
7.1 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
7.1.1 Employment of Operating Company Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
7.1.2 Employee Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43
7.1.3 Recognition of Prior Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
7.1.4 Health, Welfare and Fringe Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
7.1.5 Flexible Spending Arrangements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45
7.1.6 No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45
7.2 Wage and Withholding Reporting Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45
7.3 Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
7.4 Apportionment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
7.5 Tax Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
7.6 Tax Sharing Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48
7.7 Allocation of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48
7.8 Tax Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48
7.9 FIRPTA Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49
ARTICLE 8 CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49
8.1 Conditions Precedent to Obligations of Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49
8.1.1 No Injunction, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49
8.1.2 FCC and Other Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49
8.1.3 HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49
8.1.4 No Proceeding or Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49
8.1.5 Stockholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50
8.2 Conditions Precedent to Obligations of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50
8.2.1 Accuracy of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50
8.2.2 Performance of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50
8.2.3 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50
8.2.4 Opinion of Counsel for Parents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50
8.2.5 Other Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50
8.2.6 Consents and Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
8.2.7 Transition Services Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
8.2.8 Distribution Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
8.2.9 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
8.2.10 Financial Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
8.3 Conditions Precedent to the Obligations of Parents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
8.3.1 Accuracy of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
8.3.2 Performance of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52
8.3.3 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52
8.3.4 Payment of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52
8.3.5 Opinion of Counsel for Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52
8.3.6 Other Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52
8.3.7 No Buyer Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52
8.3.8 No Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53
8.3.9 Certificate of Designation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53
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8.3.10 Registration Rights Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53
8.4 Waiver of Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53
ARTICLE 9 TERMINATION AND DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54
9.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54
9.1.1 Mutual Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54
9.1.2 Order or Decree . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54
9.1.3 Failure of Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54
9.1.4 Outside Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54
9.1.5 Union Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54
9.1.6 Stockholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55
9.2 Procedure Upon Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55
9.3 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55
ARTICLE 10 POST-CLOSING TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55
10.1 Transition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55
10.2 Access to Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55
10.3 [Intentionally Omitted.] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56
10.4 Confidentiality of Customer Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56
10.5 Noncompetition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56
10.6 Intercompany Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58
10.7 Provision of Reciprocal Employee Plans for Paging and Cellular Service . . . . . . . . . . . . . . . . . . . . .58
ARTICLE 11 INDEMNIFICATION AND SURVIVAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58
11.1 Indemnification by Parents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58
11.2 Indemnification by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60
11.3 Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60
11.4 Claims for Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .61
11.5 Defense by Indemnifying Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .61
11.6 Manner of Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .61
11.7 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62
11.8 Indemnification Net of Insurance and Collateral Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . .62
11.9 Exclusivity of Remedy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62
ARTICLE 12 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63
12.1 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63
12.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63
12.3 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .64
12.4 Alternative Dispute Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65
12.5 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .66
12.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .66
12.7 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .66
12.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .67
12.9 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .67
12.10 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .67
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12.11 Modification and Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .67
12.12 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .67
12.13 Parties Obligated and Benefited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .67
12.14 Rights to Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .67
12.15 Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .68
12.16 Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .68
12.17 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .68
12.18 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .68
</TABLE>
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
INDEX OF DEFINED TERMS
<S> <C>
50/50 License . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Accountant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
Affiliated Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Affiliated Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Ancillary Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65
Assignment Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
AT&T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
AT&T Two Way . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Audited Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Benefit Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Buyer Indemnified Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58
Buyer Indemnified Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58
Buyer Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
Buyer Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
Buyer Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
Buyer Stockholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
Buyer Third Party Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
Buyer's Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
Cash Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Cash Consideration Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Cause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42
Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53
Charter Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Closing Date Pager Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Closing EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
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Closing Net Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Closing Operating Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Closing Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Closing Working Capital Deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Closing Working Capital Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Communications Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Confidential Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
Copyright . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58
Dispute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65
Dispute Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65
Distribution Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
DOJ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Downward Financial Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Employees on Leave . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
Environmental Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
ERISA Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
FCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Final Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Financial Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Force Majeure Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
FTC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Hazardous Material . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
Hazardous Material Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Indemnification Threshold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60
indemnified party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .61
indemnifying part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .61
Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Licensed Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Mark . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
Material Adverse Effect or Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
McCaw . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Metrocall Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
</TABLE>
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<TABLE>
<S> <C>
Metrocall Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
Multiemployer Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
NPCS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Operating Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Operating Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Operating Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Outside Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54
Owned Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Pager Inventory Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Paging and Messaging Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57
Parent Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57
Parent Indemnified Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60
Parent Indemnified Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60
Parents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Parents' Completion Bonus Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42
Parents' Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Patent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
Permitted Real Property Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
Preferred Stock Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Preferred Stock Consideration Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Prime Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Property Transition Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
PTO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Purchase Price Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Response . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65
Restricted Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56
Satellite Force Majeure Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
SEC Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
Senior Party Representatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65
Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
Stockholders Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
Straddle Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
Structures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Tangible Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
</TABLE>
vii
<PAGE> 9
<TABLE>
<S> <C>
Tax Arbitrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
Tax Proceeding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Tax Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Taxable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Telecom Competitor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53
Territory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56
Third Party Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Third Party Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Third Party Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
Title Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
Title Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
Transition Services Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
Transitioned Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
Upward Financial Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Wireless . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Working Capital Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Year 2000 Compliant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
</TABLE>
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<PAGE> 10
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of June 26,
1998, by and among AT&T WIRELESS SERVICES, INC., a Delaware corporation
("Wireless"), MCCAW COMMUNICATIONS COMPANIES, INC., a Washington corporation
("McCaw"), AT&T TWO WAY MESSAGING COMMUNICATIONS, INC., a Delaware corporation
and wholly owned subsidiary of McCaw ("AT&T Two Way"), and METROCALL, INC., a
Delaware corporation ("Buyer").
RECITALS:
A. McCaw RCC Communications, Inc., a Washington corporation (the
"Company"), together with its wholly-owned subsidiaries and the other entities
set forth on Schedule 5.1.1 (the "Operating Subsidiaries"; each of the Company
and the Operating Subsidiaries will sometimes be referred to in this Agreement
individually as an "Operating Company" and collectively as the "Operating
Companies") are engaged in the business (the "Business") of providing and
selling Paging and Messaging Services (as defined in Section 10.5(d));
B. McCaw is the owner of two hundred (200) shares (the "Shares")
of the Company's common stock, par value $1.00 per Share, which constitute all
of the issued and outstanding shares of capital stock of the Company, and
Wireless is the owner of all of the issued and outstanding shares of capital
stock of McCaw (McCaw and Wireless will sometimes be referred to in this
Agreement collectively as the "Parents");
C. AT&T Two Way is the owner of a 50KHZ/50KHZ Narrowband Personal
Communications Service ("NPCS") license with call sign KNKV203 (the "50/50
License");
D. AT&T Corp. ("AT&T") is the direct owner of all of the issued
and outstanding shares of capital stock of Wireless; and
E. Parents and AT&T Two Way desire to sell the Shares and the
50/50 License to Buyer, and Buyer desires to purchase the Shares and the 50/50
License from Parents and AT&T Two Way upon the terms and subject to the
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the
covenants, agreements, representations and warranties hereinafter contained,
and intending to be legally bound, Parents, AT&T Two Way and Buyer hereby agree
as follows:
ARTICLE 1
DEFINITIONS
As used herein or in the Ancillary Agreements, the following terms
shall have the following meanings:
1.1 ACCOUNTING TERMS. Accounting terms used herein and not
otherwise defined shall be construed in accordance with generally accepted
accounting principles in the United States of America ("GAAP").
<PAGE> 11
1.2 AFFILIATE means, as to a Person, any entity that is controlled
by, under common control with, or controlling the Person; provided, that, for
purposes of Parents' obligations under Section 10.5 hereof and the Distribution
Agreement, the term Affiliate, with respect to Parents, shall be limited (a) in
the case of entities in which AT&T or Parents own a controlling interest on the
date hereof, entities (i) of which AT&T or Parents have the power, directly or
indirectly, to direct the management and affairs and (ii) that market services
or products under the "AT&T Wireless" name and (b) in the case of entities in
which AT&T or Parents acquire a controlling interest after the date hereof,
entities that satisfy (a) (i) above, provided such entities desire to offer
Paging and Messaging Services and are not precluded by pre-existing contractual
obligations with un-affiliated third parties, not entered into in contemplation
of acquisition by AT&T, from assuming the obligations under Section 10.5 hereof
or the Distribution Agreement; and provided, further, that such entities shall
not be deemed to be Affiliates if they are being operated as Paging and
Messaging Services businesses pursuant to the penultimate sentence of Section
10.5(c).
1.3 ASSIGNMENT APPLICATIONS means the applications to be jointly
prepared by Parents, the Operating Companies and Buyer and filed with the FCC
requesting its written consent to the assignment or transfer of control of the
Licenses to Buyer.
1.4 CLOSING QUARTER means the three (3) month period ending on the
last day of the calendar month prior to the calendar month in which the Closing
shall occur.
1.5 CODE means the Internal Revenue Code of 1986, as amended.
1.6 COMMUNICATIONS LAWS means the Communications Act of 1934, as
amended from time to time, the Telecommunications Act of 1996, as amended from
time to time, and the rules, precedents and policies of the FCC promulgated
thereunder.
1.7 CONFIDENTIAL INFORMATION means all information relating to the
Business, Parents, Operating Companies, Buyer, or the transactions contemplated
by this Agreement or the Ancillary Agreements that either Parents, Operating
Companies, their agents or representatives make available to Buyer, its agents
or representatives or that Buyer, its agents or representatives makes available
to Parents, Operating Companies, their agents or representatives in accordance
with this Agreement or the Ancillary Agreements and which information: (a) is
not a matter of public knowledge and has not been made available, without a
requirement of confidentiality, to third parties other than the Buyer, Parents
or Operating Companies or any of their agents or representatives, or filed as
public information with any governmental authority other than as a result of a
breach of the covenant set forth in Section 12.18; and (b) is proprietary
information relating to the Business, Parents, Operating Companies, Buyer, or
the transactions contemplated hereby.
1.8 DOJ means the United States Department of Justice.
1.9 FCC means the Federal Communications Commission.
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<PAGE> 12
1.10 FINAL ORDER means an action by the FCC asserting authority
over the transaction contemplated hereby granting its consent and approval to
the assignment or transfer of control of the Licenses or the transactions that
has not been reversed, stayed, enjoined, set aside, annulled or suspended and
with respect to which no action, request for stay, petition for review or
rehearing, reconsideration or appeal is pending, and as to which the time for
filing any request, petition, or appeal has expired and the time for agency
action to set aside its consent on its own motion has expired.
1.11 FORCE MAJEURE EVENT means circumstances beyond the reasonable
control of the relevant party including inability or delay caused through
accident, fire, explosion, casualty, epidemic, act of God, strike, lockout,
unavailability of materials, transportation, power or other commodity, delay of
common carrier, civil disturbance, riot, war or armed conflict (whether or not
there has been an official declaration of war), legal enactment and/or
regulation of any agency or instrumentality of the United States Government or
any state or local government, or a Satellite Force Majeure Event.
1.12 FTC means the Federal Trade Commission.
1.13 LIABILITIES means all debts, claims, liabilities, obligations,
damages and expenses of every kind and nature, whether known, unknown,
contingent, absolute, determined, indeterminable, or otherwise.
1.14 LICENSES means and includes the 50/50 License and, with
respect to the Business, all licenses, permits, franchises and authorizations
issued by the FCC and/or other relevant government agencies (including pending
applications for any of the foregoing), for the construction or operation of
the Business, including all renewals and extensions thereof and all additional
licenses, permits, franchises, and authorizations obtained or applied for by
the Operating Companies from the date of this Agreement to the Closing Date.
1.15 LIEN means any mortgage, pledge, security interest,
encumbrance, lien, claim or charge of any kind.
1.16 MATERIAL ADVERSE EFFECT OR MATERIAL ADVERSE CHANGE means any
change or effect that is, or is reasonably likely to be, materially adverse to
the Business, results of operations, properties, financial condition, assets
and liabilities, of the Operating Companies, taken as a whole.
1.17 PARENTS' KNOWLEDGE or words of similar import with respect to
a fact or matter shall mean the actual knowledge of the individuals set forth
on Schedule 1.17.
1.18 PERSON means an individual, corporation, association,
partnership, joint venture, joint stock company, trust, estate, limited
liability company, limited liability partnership, governmental entity, or other
entity or organization.
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<PAGE> 13
1.19 REAL PROPERTY means all interests in real property of the
Operating Companies, including, without limitation, appurtenances,
improvements, and fixtures located on such real property, leasehold interests
therein and any other interests in real property.
1.20 SATELLITE FORCE MAJEURE EVENT means circumstances beyond the
reasonable control of the relevant party relating to the satellite
transmissions utilized in the provision of Paging and Messaging Services,
including any material failure or degradation in performance of any satellite
or transponders on such satellites (as applicable) used to deliver the Paging
and Messaging Service signal to any subscriber of the Paging and Messaging
Services.
ARTICLE 2
SALE OF SHARES AND 50/50 LICENSE
2.1 AGREEMENT OF PURCHASE AND SALE.
At the closing of the transactions contemplated hereby (the
"Closing"), Parents and AT&T Two Way agree to sell the Shares and the 50/50
License to Buyer, and Buyer agrees to purchase the Shares and the 50/50 License
from Parents and AT&T Two Way, upon the terms and subject to the conditions set
forth in this Agreement.
2.2 DELIVERY OF SHARE CERTIFICATES.
At the Closing, Parents shall deliver to Buyer the certificate or
certificates representing the Shares, duly endorsed in favor of Buyer or
accompanied by a duly executed assignment separate from certificate in favor of
Buyer.
ARTICLE 3
CLOSING
3.1 DETERMINATION OF CLOSING DATE.
Subject to the satisfaction or waiver of the conditions set forth in
Article 8, the Closing shall occur on the first business day of the first
calendar month after the later to occur of (the "Closing Date"): (a) the
consents of the FCC to the Assignment Applications becoming Final Orders, or
(b) if applicable, the expiration of the applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), or such other date to which the parties agree.
3.2 TIME AND PLACE OF CLOSING.
The Closing shall take place at the offices of Wilmer, Cutler &
Pickering, 2445 M Street, N.W., Washington, D.C. 20037 at 10:00 a.m.,
Washington, D.C. time, on the Closing Date or at such other place agreed to by
Parents and Buyer. The physical presence of any party or their representatives
shall not be a required condition of the Closing if such party has performed
all
4
<PAGE> 14
acts and delivered to an escrow agent all items and documents necessary for the
Closing, together with written instructions of the party which permit such
escrow agent to complete the obligations of the party in connection with the
Closing.
ARTICLE 4
PURCHASE PRICE
4.1 PURCHASE PRICE.
(a) In consideration for the Shares, the 50/50 License
and the agreements set forth herein, and subject to and upon the terms and
conditions set forth herein, Buyer shall pay to McCaw (i) cash consideration in
the amount of One Hundred Ten Million Dollars ($110,000,000), as such amount
may be adjusted pursuant to Section 4.2 and 4.3 (the "Cash Consideration"),
plus (ii) shares of Series C Convertible Preferred Stock of Buyer (the "Series
C Preferred Stock") having the terms set forth in Exhibit 4.1 hereto with a
stated value of Ninety Five Million Dollars ($95,000,000), as such amount may
be adjusted pursuant to Section 4.2 and 4.3 (the "Preferred Stock
Consideration" and together with the Cash Consideration, the "Purchase Price").
(b) The Purchase Price shall be payable as follows:
(i) At the Closing, Buyer shall pay the Cash
Consideration, without taking into account any adjustments pursuant to Sections
4.2 and 4.3, by wire transfer of immediately available funds to an account
designated by McCaw not less than two (2) business days prior to Closing; and
(ii) At the Closing, Buyer will issue to McCaw
stock certificates representing the Preferred Stock Consideration, without
taking into account any adjustments pursuant to Sections 4.2 and 4.3.
4.2 ADJUSTMENTS TO THE PURCHASE PRICE.
(a) The Purchase Price shall be subject to adjustment
after the Closing as follows:
(i) if either (A) the Company's Net Revenue for
the Closing Quarter ("Closing Net Revenue") is less than 90% of the Net Revenue
Target, or (B) the Company's EBITDA for the Closing Quarter, excluding expenses
and costs (a) for which Parents are fully indemnifying Buyer under this
Agreement, and (b) which (i) are incurred in connection with the transactions
contemplated hereby, and (ii) are legal fees and expenses, fees and expenses of
Merrill Lynch, fees and expenses payable pursuant to Section 12.3, Coopers &
Lybrand (or their replacement, if any) fees and expenses, or payments under the
Parent's Completion Bonus Program ("Closing EBITDA") is less than 90% of the
EBITDA Target, then the Purchase Price shall be decreased by the greater of (x)
the Net Revenue Multiple times the difference between 90% of the Net Revenue
Target and Closing Net Revenue, provided, that, for purposes of such
5
<PAGE> 15
adjustment, Closing Net Revenue shall be no less than 80% of the Net Revenue
Target, and (y) the EBITDA Multiple times the difference between 90% of the
EBITDA Target and Closing EBITDA, provided, that, for purposes of such
adjustment, Closing EBITDA shall be no less than 80% of the EBITDA Target;
(ii) if both (A) Closing Net Revenue is greater
than 110% of the Net Revenue Target and (B) Closing EBITDA is greater than 110%
of the EBITDA Target, then the Purchase Price shall be increased by the greater
of (x) the Net Revenue Multiple times the difference between Closing Net
Revenue and 110% of the Net Revenue Target, provided, that, for purposes of
such adjustment, Closing Net Revenue shall be no greater than 120% of the Net
Revenue Target, and (y) the EBITDA Multiple times the difference between
Closing EBITDA and 110% of the EBITDA Target, provided, that, for purposes of
such adjustment, Closing EBITDA shall be no greater than 120% of the EBITDA
Target;
(iii) for purposes of this Section 4.2, if a
material portion of the Business is suspended, disrupted, discontinued or
interrupted during the Closing Quarter due to a Force Majeure Event and the
Operating Companies reduce their fees, make or are obligated to make a refund
of fees, or otherwise suffer a reduction in revenue or incur costs or other
damages to remedy or address the Force Majeure Event Closing Net Revenue and
Closing EBITDA shall be calculated without giving effect to any Force Majeure
Event. In the event it is not possible to reasonably estimate the impact of a
Force Majeure Event, and the parties do not mutually agree on a corresponding
adjustment to the Closing Net Revenue and the Closing EBITDA, as described in
the preceding sentence, the Closing Quarter shall exclude the month or months
in which the Force Majeure Event adversely affected Closing Net Revenue or
Closing EBITDA and shall include the immediately preceding month or months
prior to the Closing Quarter in which Closing Net Revenue and Closing EBITDA
were not adversely affected by the Force Majeure Event equal to the number of
months excluded. Notwithstanding any other provision hereof to the contrary,
Parents shall indemnify Buyer pursuant to Section 11.1(a)(iii) for any refunds,
credits or other reduction in fees related to a Force Majeure Event that have
not been paid or provided for prior to the Closing Date;
(iv) if the amount by which the Company's combined
current liabilities as of the last day of the month prior to the month in which
the Closing occurs, excluding current liabilities which Parents are obligated
to pay under this Agreement or for which Parents are fully indemnifying Buyer,
exceeds combined current assets ("Closing Working Capital Deficit") is greater
than $19,100,000, the Purchase Price shall be decreased by the excess of the
Closing Working Capital Deficit over $19,100,000 (the "Working Capital
Adjustment"). Combined current liabilities and combined current assets shall
be calculated in accordance with GAAP, in a manner consistent with the Audited
Financial Statements; and
(v) if the number of New Motorola Pagers included
in the Company's Inventory as of the Closing Date ("Closing Date Pager
Inventory") is less than 50,000, the Purchase Price shall be decreased by $78
times the difference between (x) 50,000 and (y) Closing Date Pager Inventory
(the "Pager Inventory Adjustment"). New Motorola Pagers means pagers
manufactured by Motorola (and up to 7,500 pagers manufactured by Persons other
than
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Motorola) which have not yet been placed in service with customers (other than
as part of the Operating Companies normal testing procedures). The Company's
Inventory refers to pagers held at (i) the Company's Retail Distribution Center
located in Bothell, Washington, (ii) the warehouse in Sparks, Nevada managed
on the Company's behalf by Logistic Services Division of Aftermarket Technology
Corp. (formerly known as Fred Jones Enterprises), or (iii) held for sale at the
Operating Companies' offices.
(b) Any adjustment to the Purchase Price made pursuant to
Section 4.2(a)(i) shall be referred to as a "Downward Financial Adjustment,"
and any adjustment to the Purchase Price made pursuant to Section 4.2(a)(ii)
shall be referred to as an "Upward Financial Adjustment."
(c) [Intentionally Omitted.]
(d) Within ninety (90) business days after the Closing
Date, Buyer shall prepare and deliver to Parents the following documents,
certified by Buyer's chief financial officer: (i) an unaudited consolidated
Statement of Closing Working Capital of Operating Companies (the "Closing
Working Capital Statement") as of the last day of the month prior to the month
in which the Closing occurs; (ii) an unaudited consolidated statement of
operations for the Closing Quarter (the "Closing Operating Statement"); and
(iii) a calculation of the Downward Financial Adjustment or Upward Financial
Adjustment, as the case may be (the "Financial Adjustment"), Working Capital
Adjustment and Pager Inventory Adjustment; provided, that, the Pager Inventory
Adjustment shall be calculated jointly by Parents and Buyer.
(e) The Closing Working Capital Statement and Closing
Operating Statement shall be prepared in accordance with the books and records
of the Operating Companies, and shall be prepared on a basis consistent with
the Audited Financial Statements, including GAAP consistently applied, except
as noted therein or set forth on Schedule 4.2(g). The Closing Date Pager
Inventory shall be determined based on a physical inventory to be conducted by
Parents' representatives and observed by Buyer's representatives.
(f) (i) The Closing Working Capital Statement, the
Closing Operating Statement and the Purchase Price Adjustment shall be final
and binding on the parties unless Parents object, by giving written notice
within ninety (90) business days after Parents' receipt of the Closing Working
Capital Statement and Closing Operating Statement, to any items presented
therein, or to the computation of the Financial Adjustment, if any, Working
Capital Adjustment, if any, or Pager Inventory Adjustment, if any. Prior to
the expiration of such 90-business day period, Parents shall have the right to
cause their accountants to conduct reasonable procedures specified by Parents
with respect to the accounts and records of the Operating Companies in order to
verify Buyer's calculations of the Financial Adjustment, if any, Working
Capital Adjustment, if any, and Pager Inventory Adjustment, if any, and Parents
and their accountants shall have full access to the books, records and
personnel of Buyer and the Operating Companies during normal business hours.
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(ii) In the event of a dispute regarding any of
the Financial Adjustment, if any, Working Capital Adjustment, if any, or Pager
Inventory Adjustment, if any, Buyer and Parents will use their reasonable
efforts to resolve any such dispute. If Buyer and Parents do not resolve any
such dispute within thirty (30) business days after receipt by Buyer of
Parents' written notice of dispute, Buyer and Parents shall, within five (5)
business days after the end of the thirty (30) business day period, submit any
such unresolved dispute to a mutually acceptable accounting firm (the
"Accountant") which firm shall, within thirty (30) business days of such
submission, resolve such remaining dispute and such resolution shall be binding
and conclusive upon the parties. If Buyer and Parents cannot agree on the
Accountant within such five (5) business day period, an Accountant shall be
appointed by AAA who shall be a partner in a major public accounting firm with
at least 15 years of public accounting experience, proven technical accounting
skills and substantial experience as an arbitrator in connection with
disagreements of purchase price adjustments. The fees and expenses of the
Accountant shall be shared equally by Buyer and Parents. If issues in dispute
are submitted to the Accountant for resolution, each party will furnish to the
Accountant such work papers and other documents and information relating to the
disputed issues as the Accountant may request and are available to that party,
and each party will be afforded the opportunity to present to the Accountant
any material relating to the determination and to discuss the determination
with the Accountant.
(g) The terms Net Revenue, Net Revenue Target, EBITDA,
EBITDA Target, Net Revenue Multiple, and EBITDA Multiple shall have the meaning
set forth in Schedule 4.2 (g).
4.3 PAYMENT OF PURCHASE PRICE ADJUSTMENTS.
(a) (i) The Preferred Stock Consideration will be
reduced or increased, as the case may be, by one-half of the amount of the
Financial Adjustment, if any (the "Preferred Stock Consideration Adjustment");
and
(ii) the Cash Consideration will be reduced or
increased, as the case may be, by one-half of the amount of the Financial
Adjustment, if any, and reduced by the amount of the Working Capital
Adjustment, if any, and Pager Inventory Adjustment, if any (the "Cash
Consideration Adjustment" and, together with the Preferred Stock Consideration
Adjustment, the "Purchase Price Adjustment").
(b) After the final determination of the Financial
Adjustment, if any, Working Capital Adjustment, if any, and Pager Inventory
Adjustment, if any, pursuant to Section 4.2(f), the Purchase Price Adjustment
shall be paid by the party owing such amount to the other party by the fifth
business day following such final determination. Payment, with respect to the
Cash Consideration Adjustment, shall be made by wire transfer of immediately
available funds, and shall be accompanied by accrued interest from the Closing
Date to the date of payment at an annual rate equal to the Prime Rate.
Payment, with respect to the Preferred Stock Consideration Adjustment, shall be
made by issuance or cancellation, as the case may be, of Series C Preferred
Stock with stated value equal to the Preferred Stock Consideration Adjustment.
In the case of cancellation of Series C Preferred Stock, any Series C Preferred
Stock paid as dividends on such
8
<PAGE> 18
canceled Series C Preferred Stock from the Closing Dates to the date of
cancellation shall also be canceled and any cash paid as dividends on such
canceled Series C Preferred Stock from the Closing Date to the date of
cancellation shall be repaid by wire transfer of immediately available funds
and shall be accompanied by accrued interest from the date of payment of the
cash dividend to the date of repayment at an annual rate equal to the Prime
Rate. Dividends on the Series C Preferred Stock issued pursuant to this
section shall be deemed to accrue from the Closing Date. The term "Prime Rate"
means the rate published in the "Money Rates" column of The Wall Street Journal
as a guide to the Prime Rate, which is currently defined as the base rate on
corporate loans posted by at least 75% of the nation's 30 largest banks. If a
range is published, the average rate shall be the Prime Rate. The Prime Rate
will increase or decrease each time and as of the date the Prime Rate changes.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
5.1 REPRESENTATIONS AND WARRANTIES OF PARENTS.
To induce Buyer to enter into this Agreement and consummate the
transactions contemplated hereby, each of Wireless and McCaw jointly and
severally represents and warrants to the Buyer, as of the date hereof (unless
another date or period of time is specifically stated herein for a
representation or warranty), as follows:
5.1.1 Due Organization, Subsidiaries, Capital Stock.
(a) Each of the Parents has all requisite
corporate power and authority to enter into this Agreement and perform its
obligations hereunder.
(b) Each of the Operating Companies is a
corporation or limited partnership duly organized, validly existing, and in
good standing under the laws of the jurisdiction of its organization. Each of
the Operating Companies has all requisite corporate or partnership power and
authority to own and operate the Business as it currently is being conducted
and to own and lease the properties and assets owned or leased by it. Each of
the Operating Companies is licensed or qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the
properties owned, leased or operated by it or the nature of the Business makes
such qualification or licensing necessary, other than in such jurisdictions
where the failure to be so qualified or licensed would not have a Material
Adverse Effect.
(c) Schedule 5.1.1 contains a list of all of the
Operating Companies, identifying each Operating Company's jurisdiction of
organization, authorized and issued capital stock, stockholders and all
jurisdictions in which such Operating Companies are authorized or qualified to
do business. Except as set forth on Schedule 5.1.1, the Company has no direct
or indirect subsidiaries. Except as set forth on Schedule 5.1.1, the Company
does not presently own, of record or beneficially, or control, directly or
indirectly, any capital stock, securities
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convertible into capital stock or any other equity interest in any corporation,
association or business entity, nor is the Company, directly or indirectly, a
member of any joint venture, or partnership.
(d) Parents have delivered to Buyer true,
complete and correct copies of the Articles of Incorporation and Bylaws (or
comparable instruments) of each Operating Company. Such Articles of
Incorporation and Bylaws (or comparable instruments) are collectively referred
to as the "Charter Documents." None of the Operating Companies is in violation
in any material respect of its Charter Documents. The minute books of the
Operating Companies have been made available to Buyer and except as set forth
in Schedule 5.1.1(d), are complete in all material respects.
(e) All of the issued and outstanding shares of
the capital stock of the Operating Companies have been duly authorized and
validly issued, are fully paid and nonassessable and are owned of record and
beneficially by the stockholders in the amounts set forth on Schedule 5.1.1
free and clear of all Liens. All of the issued and outstanding shares of the
capital stock of the Operating Companies were offered, issued, sold and
delivered by the Operating Companies in compliance with all applicable state
and federal laws concerning the issuance of securities. Further, none of such
shares was issued in violation of any preemptive rights. There are no voting
agreements or voting trusts with respect to any of the outstanding shares of
the capital stock of the Operating Companies.
(f) No option, warrant, call, subscription right,
conversion right or other contract or commitment of any kind exists of any
character, written or oral, which may obligate any of the Operating Companies
to issue, sell or otherwise become outstanding any shares of capital stock.
None of the Operating Companies has any obligation (contingent or otherwise) to
purchase, redeem or otherwise acquire any of its equity securities or any
interests therein or to pay any dividend or make any distribution in respect
thereof. Upon consummation of transactions contemplated hereby, Buyer will be
the record and beneficial owner of all outstanding capital stock of the Company
and rights to acquire capital stock of the Company.
5.1.2 Authorization and Validity of Agreement. The
execution, delivery and performance by Parents of this Agreement and the other
agreements, certificates, documents, and instruments contemplated hereby or
referred to herein, and the consummation by them of the transactions
contemplated hereby, have been duly authorized by all necessary corporate
action of Parents. This Agreement has been duly executed and delivered by each
of the Parents and, assuming the due authorization, execution and delivery
hereof by Buyer, is a legal, valid and binding obligation of each of the
Parents, enforceable against them in accordance with its terms, except as and
to the extent such enforceability may be subject to bankruptcy or similar laws
affecting creditor rights.
5.1.3 No Conflicts. Except as set forth on Schedule 5.1.3,
the execution, delivery and performance of this Agreement, the consummation of
the transactions contemplated hereby, and the fulfillment of the terms hereof
will not:
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(a) conflict with, or result in a breach or
violation of, the provisions of the charter or bylaws of either Parent or any
of the Charter Documents;
(b) conflict with, or result in a default (or
would constitute a default but for any requirement of notice or lapse of time
or both) under or require notice under any material document, material
agreement or other material instrument to which any Operating Company or either
Parent is a party or by which any Operating Company or either Parent is bound
(the "Third Party Contracts") or, require any third party consent, waiver or
approval in order that any Third Party Contract remain in effect without
material modification after the Closing Date and without giving rise to any
right to termination, cancellation, acceleration or loss of any material right
or benefit (those consents set forth on Schedule 5.1.3 being referred to as
"Third Party Consents");
(c) result in the creation or imposition of any
Lien on any of the Operating Companies' properties pursuant to (i) any law or
regulation to which any Operating Company or either Parent or any of their
respective property is subject, or (ii) any judgment, order or decree to which
any Operating Company or either Parent is bound or any of their respective
property is subject;
(d) result in termination or any material
impairment of any material License; or
(e) violate any law, order, judgment, rule,
regulation, decree or ordinance to which any Operating Company or either Parent
is subject or by which any Operating Company or either Parent is bound.
5.1.4 Licenses, Compliance with Law.
(a) Except as otherwise indicated, the Operating
Companies are the holders of the Licenses issued by the FCC represented by the
call signs listed on Schedule 5.1.4(a) and the other Licenses listed on
Schedule 5.1.4(a). The Licenses so listed constitute all of the Licenses
issued or required by the FCC and any other governmental agency of the United
States Government or any state or local government that are required for and/or
used in and are material to the operation of the Business as currently
conducted. Each of the Licenses so listed is in full force and effect and,
except as disclosed on Schedule 5.1.4(a), Parents and Operating Companies are
in compliance in all material respects with the terms and requirements thereof
and all the Communications Laws and other governmental regulations pertaining
thereto. There is not pending or, to Parents' Knowledge, threatened, any
action, investigation, complaint or other proceeding by the FCC or any other
governmental agency of the United States Government or any state or local
government to revoke, cancel, suspend, modify in any material respect or refuse
to renew any of the Licenses so listed (except such actions, investigations,
complaints, or other proceedings which relate to the paging industry generally
and do not relate to any specific Licenses). Except as set forth on Schedule
5.1.4(a), there is not issued, pending or, to Parents' Knowledge, threatened,
any notice of violation or complaint by the FCC or any other governmental
agency of the United States Government or any state or local government against
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<PAGE> 21
either Parent or any Operating Company with respect to the Business or the
transactions contemplated hereby, except violations or complaints that would
not have a Material Adverse Effect.
(b) Except as set forth on Schedule 5.1.4(b),
accurate and complete copies of all of the Licenses set forth on Schedule
5.1.4(a) have been delivered to Buyer. Accurate and complete copies of all of
the Licenses granted by the FCC after the date hereof and prior to Closing,
will be delivered to Buyer by Parents prior to the Closing Date. All of the
Licenses previously delivered to Buyer contain and, upon delivery to the Buyer
as provided above, the Licenses granted by the FCC after the date hereof and
prior to Closing will contain, no defect which would cause a Material Adverse
Effect. No present or former officer, manager, member or employee of either
Parent or any Operating Company or any Affiliate thereof, or any other Person,
owns material interest in any of the Licenses so listed.
(c) Parents and Operating Companies have complied
with, and are in compliance with, all federal, state, county and local laws,
regulations and orders that are applicable to the Business, including, but not
limited to, the Communications Laws and the rules and regulations of the states
and municipalities in which the Business is located, and have timely filed with
the proper authorities all statements and reports required by the laws,
regulations and orders to which Parents, Operating Companies and the Business
are subject, except where noncompliance or failure to file would not have a
Material Adverse Effect. The transactions contemplated by this Agreement will
not result in a material default under, or a material breach or material
violation of, or materially adversely affect the rights and benefits afforded
by either Parent or any of the Operating Companies of, the Licenses.
5.1.5 Personal Property.
(a) Schedule 5.1.5 sets forth a complete and
accurate list, in all material respects, of all system fixed assets and
non-system fixed assets by category owned or leased by the Operating Companies'
which assets were capitalized consistent with the Operating Companies' then
current capitalization policy (the "Personal Property") including an indication
as to which assets are currently owned, by either Parent or any Affiliate of
either Parent (other than the Operating Companies). Other than the Personal
Property, none of the Operating Companies owns or leases any single piece of
Personal Property (excluding cash and accounts receivable) with a current net
book value in excess of $50,000. Parents have made available to Buyer true,
complete and correct copies, in all material respects, of all leases for
material equipment.
(b) All of the vehicles and other material,
machinery and equipment of the Operating Companies, including those listed on
Schedule 5.1.5, are in good working order and condition, ordinary wear and tear
excepted, except to the extent that any such vehicles, material, machinery and
equipment that could be repaired or replaced for an aggregate of no more than
$100,000 so as to be in good working order and condition, ordinary wear and
tear excepted. All leases for material Personal Property set forth on Schedule
5.1.5 are in full force
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and effect and constitute valid and binding agreements of the Operating
Companies, and none of the Operating Companies is in material breach of their
terms.
(c) The Operating Companies are the true and
lawful owner or lessee of the Personal Property and have good and marketable
title to all of the owned Personal Property (subject, with respect to the
Licenses, to procuring the consent of the FCC to the transfer or assignment of
such Licenses) in each case, free and clear of any Lien other than (a) Liens
for taxes not yet delinquent, (b) Liens set forth on Schedule 5.1.5, (c)
purchase money security interests securing liabilities, and (d) Liens and
defects in title that, together with the Permitted Real Property Liens, do not
have a Material Adverse Effect (the Liens identified in clauses (a), (b), (c)
and (d) above being herein referred to as "Permitted Personal Property Liens").
5.1.6 Taxes.
(a) All material Tax Returns required to be filed
by or with respect to the Operating Companies (including Tax Returns of
affiliated, combined, consolidated, unitary or similar groups that include any
Operating Company (each an "Affiliated Group")) have been filed. All such Tax
Returns are, to the extent that they relate to the Operating Companies,
materially true, correct and complete.
(b) All material amounts of Taxes owed by or with
respect to each Operating Company have been paid in full on a timely basis,
whether or not shown on any Tax Return.
(c) The amount of the liability of the Operating
Companies for unpaid Taxes on the Audited Financial Statements, other than
those that are the liability of Parents under this Agreement, did not
materially exceed the current liability accruals for Taxes (excluding reserves
for deferred Taxes) shown on the Audited Financial Statements, and the amount
of the liability of the Operating Companies for unpaid Taxes on the books and
records of the Operating Companies, other than those that are the liability of
Parents under this Agreement, do not materially exceed the current liability
accruals for Taxes (excluding reserves for deferred Taxes) shown on such books
and records.
(d) Except as set forth on Schedule 5.1.6, there
are no material Tax Proceedings presently pending with regard to any Tax
Returns or Taxes of any of the Operating Companies or any Affiliated Group
(except for Tax Returns or Taxes of an Affiliated Group to the extent that such
proceedings relate solely to members of such Affiliated Group other than the
Operating Companies), and to Parents' Knowledge no notice has been received
from any governmental authority of the expected commencement of such a Tax
Proceeding.
(e) Except as set forth on Schedule 5.1.6, there
are no outstanding agreements or waivers extending the statutory period of
limitation applicable to any Tax Returns required to be filed by or with
respect to any of the Operating Companies, and no extensions of
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time within which to file a Tax Return have been requested for any Tax Return
which has not yet been filed.
(f) Each of the Operating Companies has withheld
and paid over to the proper governmental authorities all material amounts of
Taxes required to have been withheld and paid over, and has complied with all
material information reporting and backup withholding requirements, including
maintenance of required records with respect thereto, in connection with
amounts paid to any employee, independent contractor, creditor or other third
party.
(g) To the best of Parents' Knowledge, there are
no Liens on any of the assets of the Operating Companies, or on the 50/50
License, relating or attributable to Taxes, except for Liens for Taxes not yet
due and payable.
(h) Parents have delivered to Buyer materially
complete and correct copies of all U.S. federal income Tax Returns filed by or
with respect to the Operating Companies (or if such U.S. federal income Tax
Returns are filed by an Affiliated Group, pro forma versions of such U.S.
federal income Tax Returns reflecting all items relating to the Operating
Companies) for Taxable periods ending after December 31, 1994. Schedules
showing adjustments to the amortizable Tax basis of intangible assets, as
adjusted pursuant to the Internal Revenue Service Intangible Settlement
Program, have also been provided to Buyer. The U.S. federal income Tax
Returns, in conjunction with the Intangible Settlement schedules, contain
materially accurate and complete descriptions of each Operating Company's basis
in its depreciable and amortizable assets. Any adjustments to the basis of the
assets, as reflected on the U.S. federal income Tax Returns, will be provided
to Buyer within forty-five (45) days of the Closing Date.
(i) None of the Operating Companies is, or has at
any time been, a "United States real property holding corporation" within the
meaning of Section 897(c)(2) of the Code.
(j) No election or consent under section 341 of
the Code has been made with respect to any of the Operating Companies or with
respect to any of the assets of any of the Operating Companies.
(k) None of the assets of any of the Operating
Companies is "tax exempt use property" within the meaning of section 168(f)(8)
of the Code.
(l) None of the Operating Companies has made any
payments, is obligated to make any payments, or is a party to any agreement
that under certain circumstances could obligate it to make any payments that
will not be deductible under section 280G of the Code.
(m) Schedule 5.1.6(m)(i) contains accurate and
complete descriptions of (i) each Operating Company's basis in its assets; (ii)
the material amount of any separate filing
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state net operating loss, net capital loss, unused investment or other credit,
unused foreign tax, or excess charitable contribution allocable to each
Operating Company as of December 31, 1997; and (iii) tax elections affecting
each Operating Company. Except as set forth on Schedule 5.1.6(m)(ii), no
Operating Company has any material net operating losses or other tax attributes
presently subject to limitation under Code sections 382, 383, or 384, or the
federal consolidated return regulations. Schedule 5.1.6(m)(i) and (ii) will be
provided to Buyer with forty-five (45) days after the Closing Date.
(n) None of the Operating Companies will be
required to include any adjustment increasing taxable income for any Tax period
or portion thereof that ends after the Closing Date under Section 481(c) of the
Code (or any similar provision of state, local or foreign law) as a result of a
change in method of accounting for a Tax period ending prior to the Closing
Date or pursuant to the provisions of any agreement entered into with any
taxing authority with regard to the Tax liability of any of the Operating
Companies for any Tax period ending prior to the Closing Date.
(o) For purposes of this Agreement:
(i) "Tax" (including with correlative
meaning the terms "Taxes" and "Taxable") means (a) all foreign, federal, state,
local and other income, gross receipts, sales, use, ad valorem, value-added,
intangible, unitary, transfer, franchise, license, payroll, employment,
estimated, excise, environmental, stamp, occupation, premium, property,
prohibited transactions, windfall or excess profits, customs, duties or other
taxes, levies, fees, assessments or charges of any kind whatsoever, together
with any interest and any penalties, additions to tax or additional amounts
with respect thereto, (b) any Liability for payment of amounts described in
clause (a) as a result of transferee liability, of being a member of an
affiliated, consolidated, combined or unitary group for any period, or
otherwise through operation of law, and (c) any Liability for payment of
amounts described in clause (a) or (b) as a result of any tax sharing, tax
indemnity or tax allocation agreement or any other express or implied agreement
to indemnify any other person for Taxes;
(ii) "Tax Proceeding" means any audit,
examination, claim or other administrative or judicial proceeding relating to
Taxes or Tax Returns; and
(iii) "Tax Return" means any return
(including any information return), report, statement, schedule, notice, form,
estimate, or declaration of estimated tax relating to or required to be filed
with any governmental authority in connection with the determination,
assessment, collection or payment of any Tax.
5.1.7 Litigation. Except as described on Schedule 5.1.7,
there are no material claims, actions, suits, proceedings or governmental
investigations (collectively, "Litigation") pending or, to the Parents'
Knowledge, threatened against the Operating Companies or the Business. None of
the Operating Companies is in violation, in any material respect, of any term
of any judgment, decree, injunction or order outstanding against it.
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5.1.8 Insurance. Schedule 5.1.8 sets forth the Insurance
maintained by the Operating Companies with respect to the Business, and the
Operating Companies are in compliance with all material requirements and
provisions thereof.
5.1.9 Assets. The assets of the Operating Companies,
together with the rights to be provided to Buyer pursuant to the Ancillary
Agreements to be entered into at the Closing, shall represent all assets
reasonably necessary to the conduct of the Business as currently conducted by
the Operating Companies.
5.1.10 [Intentionally Omitted.]
5.1.11 Financial Statements, Books and Records.
(a) Attached hereto as Schedule 5.1.11 are true
and complete copies of the audited balance sheet of the Operating Companies as
of December 31, 1997 and the related consolidated statement of operations for
the fiscal year ending December 31, 1997 (collectively, including the notes
thereto, the "Audited Financial Statements"). The Audited Financial Statements
have been prepared in accordance with the books and records of the Operating
Companies and present fairly, in all material respects, the financial position
and the results of operations of the Operating Companies as of the dates or for
the periods set forth therein. The Audited Financial Statements have been
prepared in accordance with GAAP, consistently applied, except for the
variations set forth on Schedule 5.1.11.
(b) None of the Operating Companies has
maintained any bank account, or used any corporate funds except for bank
accounts, and funds which have been and are reflected in its normally
maintained books and records.
5.1.12 Real Property.
(a) Schedule 5.1.12 contains a complete and
accurate description of all Real Property (including street address, legal
description (where known), owner, and use thereof). Schedule 5.1.12 indicates
whether the Real Property is owned ("Owned Real Property") or leased or
licensed ("Licensed Real Property"). Schedule 5.1.12 also specifies those
premises which are now owned or leased by Parents, portions of which are
occupied or used for collocated offices and retail locations, collocated
terminals and collocated transmitters by Operating Companies and, as to such
portions of the premises occupied or used for collocated offices and retail
locations, collocated terminals and collocated transmitters, leasehold,
subleasehold or license interests will be created and granted by Parents to
Operating Companies prior to the Closing or to Buyer at the Closing by (i) site
licenses under the Terminal Access Agreement which is attached hereto as
Exhibit 5.1.12(a)(i); (ii) leases or subleases under Shared Transmitter Sites
Agreement which is attached hereto as Exhibit 5.1.12(a)(ii); and (iii) leases
or subleases under the Shared Office Space Agreement which is attached hereto
as Exhibit 5.1.12(a)(iii) (the Shared Transmitter Sites Agreement, the Terminal
Access Agreement and the Shared Office Space Agreement are collectively
referred to as the "Property Transition Agreements"). Schedule 5.1.12 also
specifies those leasehold interests in real estate that are now
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held by Operating Companies which Operating Companies reserve the right to
assign to Parents (or affiliates of Parents) prior to Closing, and those fee
title interests in real estate now owned by Operating Companies which Operating
Companies reserve the right to convey to Parents (or affiliates of Parents)
prior to Closing. The Real Property listed on Schedule 5.1.12 includes all
interests in real property necessary to conduct the Business.
(b) Except as otherwise disclosed on Schedule
5.1.12 and in the site licenses under Terminal Access Agreement, leases or
subleases under the Shared Transmitter Sites Agreement, and leases or subleases
under the Shared Office Space Agreement:
(i) The Operating Companies have good
and marketable undivided and insurable title to the Owned Real Property free
and clear of any claims, liabilities, security interests, mortgages, liens,
defects in title, pledges, conditions, charges, covenants, easements,
restrictions, encroachments, leases or encumbrances of any nature
("Encumbrances") other than (A) liens for current taxes not yet due and
payable, (B) easements, covenants, conditions, restrictions, and title defects
that, together with the Permitted Personal Property Liens, do not have a
Material Adverse Effect or that have been disclosed on Schedule 5.1.12, and (C)
liens securing indebtedness for borrowed money that Buyer or one of its
Affiliates shall elect at Closing to assume, as set forth on Schedule 5.1.12
(collectively, "Permitted Real Property Liens").
(ii) The legal descriptions for the Owned
Real Property contained in the respective deeds thereof describe the properties
fully and adequately. All structures, facilities and improvements to the Owned
Real Property ("Structures") are located within the boundary lines of the Owned
Real Property and no structures, facilities or other improvements on any parcel
adjacent to the Owned Real Property encroach onto any portion of the Owned Real
Property except where any such encroachments, together with the Permitted Real
Property Liens and the Permitted Personal Property Liens, do not have a
Material Adverse Effect. The Structures do not encroach on any easement which
burdens any portion of the Owned Real Property, and none of the Owned Real
Property serves any adjacent parcel for any purpose inconsistent with the use
of the Owned Real Property except where any such encroachment and or such
burden benefiting any adjacent parcel, together with the Permitted Real
Property Liens and the Permitted Personal Property Liens, does not have a
Material Adverse Effect.
(iii) The Operating Companies have valid
rights of ingress and egress to and from all Owned Real Property from and to
the public street systems for road and utility purposes.
(iv) All structures and all structural,
mechanical and other physical systems thereof that constitute part of the Owned
Real Property and all structures and all structural, mechanical and other
physical systems thereof that constitute those parts of the Leased Real
Property which the Operating Companies are obligated to maintain, repair or
replace pursuant to the provisions of the applicable lease agreements or
license agreements, including but not limited to the walls, roofs and
structural elements thereof and the heating, ventilation, air
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conditioning, plumbing, electrical, mechanical, sewer, waste water, storm
water, paving and parking equipment, systems and facility included therein, and
other material items at the Real Property (collectively, the "Tangible
Assets"), are free of defects and in good operating condition and repair. For
purposes of this Section, a defect shall mean a condition relating to the
structures or any structural, mechanical or physical system which requires an
expenditure of more than $100,000 to correct. No maintenance or repair to the
Owned Real Property, Structures or any Tangible Asset has been unreasonably
deferred. There is no water, chemical or gaseous seepage, diffusion or other
intrusion into said buildings, including any subterranean portions, that would
impair beneficial use of the Owned Real Property, Structures or any Tangible
Asset.
(v) All water, sewer, gas, electric,
telephone and drainage facilities, and all other utilities required by any
applicable law or by the use and operation of the Owned Real Property in the
conduct of the Business are installed to the property lines of the Owned Real
Property, are connected pursuant to valid permits to municipal or public
utility services or proper drainage facilities, are fully operable and are
adequate to service the Owned Real Property in the operation of the Business
and to permit full compliance with the requirements of all laws in the
operation of such business except where any impairment of such utility
services, together with the Permitted Real Property Liens and the Permitted
Personal Property Liens, does not have a Material Adverse Effect. No fact or
condition exists which could result in the termination or material reduction of
access from the Real Property to roads or to sewer or other utility services
serving the Real Property except where any impairment of such access, together
with the Permitted Real Property Liens and the Permitted Personal Property
Liens, does not have a Material Adverse Effect.
(vi) The Real Property and all present
uses and operations of the Real Property comply with all applicable statutes,
rules, regulations, ordinances, orders, writs, injunctions, judgments, decrees,
awards or restrictions of any government entity having jurisdiction over any
portion of the Real Property (including, without limitation, applicable
statutes, rules, regulations, orders and restrictions relating to zoning, land
use, safety, health, employment and employment practices and access by the
handicapped) (collectively, "Laws"), covenants, conditions, restrictions,
easements, disposition agreements and similar matters affecting the Real
Property but the foregoing representation and warranty shall not apply to any
condition of non-compliance which requires the expenditure of less than
$100,000 to correct or cure. The Operating Companies have obtained all
approvals of governmental authorities (including certificates of use and
occupancy, licenses and permits) required in connection with the construction,
ownership, use, occupation and operation of the Real Property but the foregoing
representation and warranty shall not apply to any approval, certificate of use
and occupancy, license or permit which requires the expenditure of less than
$100,000 to obtain.
(vii) Except as set forth on the surveys
previously made available to Buyer, none of the Structures, the appurtenances
thereto or the equipment therein or the operation or maintenance thereof, or
the conduct of the Business, violates any restrictive covenant or encroaches on
any property owned by others or any easement, right of way or other Encumbrance
or restriction affecting such Owned Real Property except where any such
violation
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or encroachment, together with the Permitted Real Property Liens and the
Permitted Personal Property Liens, does not have a Material Adverse Effect.
(viii) There are no pending or, to the
Parents' Knowledge, threatened condemnation, fire, health, safety, building,
zoning or other land use regulatory proceedings, lawsuits or administrative
actions relating to any portion of the Real Property or any other matters which
would have a Material Adverse Effect.
(ix) There are no parties other than the
Operating Companies in possession of any of the Real Property or any portion
thereof, and there are no leases, subleases, licenses, concessions or other
agreements, written or oral, granting to any party or parties the right of use
or occupancy of any portion of the Real Property or any portion thereof.
(x) There are no outstanding options or
rights of first refusal to purchase the Owned Real Property, or any portion
thereof or interest therein. None of the Operating Companies has transferred
any air rights or development rights relating to the Owned Real Property.
(xi) There are no service contracts or
other agreements relating to the use or operation of the Real Property that
constitute Encumbrances.
(xii) Use of any portion of the Owned Real
Property to conduct the Business will not violate any requirement of the United
States Corps of Engineers or Laws relating to any flood plain, flood plain
district, flood hazard area, or area of similar characterization or wetlands
areas, but the foregoing representation and warranty shall not apply to any
violation which requires the expenditure of less than $100,000 to correct or
cure.
(xiii) All real property taxes and
assessments that are due and payable with respect to the Real Property have
been paid or will be paid at or prior to Closing.
(xiv) All oral or written leases,
subleases, licenses, concession agreements or other use or occupancy agreements
pursuant to which any of the Operating Companies leases from any other party
any real property, including all amendments, renewals, extensions,
modifications or supplements to any of the foregoing or substitutions for any
of the foregoing (collectively, the "Leases") are valid and in full force and
effect. Parents have provided Buyer with access to true and complete copies of
all of the Leases, all amendments, renewals, extensions, modifications or
supplements thereto, and all material correspondence related thereto, including
all correspondence pursuant to which any party to any of the Leases declared a
default thereunder or provided notice of the exercise of any operation granted
to such party under such Lease. The Leases and the Operating Companies'
interests thereunder are free of all Liens.
(xv) Except as set forth in Schedule
5.1.12, none of the Leases requires the consent or approval of any party
thereto in connection with the consummation of the transactions contemplated
hereby.
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5.1.13 Environmental Matters.
Other than as set forth on Schedule 5.1.13:
(a) Hazardous Material. No underground storage
tanks and no amount of any substance that has been designated by any
Governmental Entity or Environmental Law or other applicable law to be
radioactive, toxic, hazardous or otherwise a danger to health or the
environment, including, without limitation, PCBs, asbestos, petroleum,
urea-formaldehyde and all substances listed as hazardous substances pursuant to
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended, or defined as a hazardous waste pursuant to the Resource
Conservation and Recovery Act of 1976, as amended, and the regulations
promulgated pursuant to said laws, but excluding office and janitorial supplies
properly and safely maintained (a "Hazardous Material"), are present in amounts
that either violate or reasonably could be expected to give rise to Liability
under applicable Environmental Laws in, on or under any property, including the
land and the improvements, ground water and surface water thereof, that any
Operating Company has at any time owned, operated, occupied or leased.
(b) Hazardous Materials Activities. None of the
Operating Companies have transported, stored, used, manufactured, disposed of
or released, or exposed their employees or others to, Hazardous Materials in
violation of any law in effect prior to or as of the Closing Date, nor has any
Operating Company disposed of, transported, sold, or manufactured any product
containing a Hazardous Material (collectively, "Hazardous Material Activities")
in violation of any rule, regulation, treaty or statute promulgated by any
Governmental Entity in effect prior to or as of the date hereof to prohibit,
regulate or control Hazardous Materials or any Hazardous Material Activity.
(c) Permits. The Operating Companies currently
hold in full force and effect all environmental approvals, permits, licenses,
clearances and consents (the "Environmental Permits") necessary for the conduct
of the Hazardous Material Activities and other activities of the Operating
Companies as such activities are currently being conducted. The Operating
Companies (A) are in compliance in all material respects with all terms and
conditions of the Environmental Permits and (B) are in compliance in all
material respects with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in the laws of all Governmental Entities relating to pollution or
protection of the environment or contained in any regulation, code, plan,
order, decree, judgment, notice or demand letter issued, entered, promulgated
or approved thereunder including, but not limited to, the Resource Conservation
and Recovery Act of 1976, U.S.C. Sections 6901-6987, as amended by the
Hazardous and Solid Waste Amendments of 1984; the Comprehensive Environmental
Response, Compensation and Liability Act, as amended by the Superfund
Amendments and Reauthorization Act of 1986, 42 U.S.C. Sections 9601-9657; the
Hazardous Materials Transportation Act of 1975, 49 U.S.C. Sections 1801-1812;
the Toxic Substances Control Act, the Clean Air Act, 42 U.S.C. Sections 7401 et
seq.; the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. Sections
136 et seq.; the Clean Water Act, 33 U.S.C. Sections 1251 et seq., the Clean
Air Act, 42 U.S.C. Sections 7401 et seq., and any substantially similar state
and local
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environmental laws and common law principles of tort liability (collectively,
as may be amended from time to time prior to the Closing, the "Environmental
Laws"). To the Parents' Knowledge, there are no circumstances that may prevent
or interfere with such compliance in the future.
(d) Environmental Liabilities. No action,
proceeding, revocation proceeding, amendment procedure, writ, injunction or
claim is pending, or to Parents' Knowledge, threatened concerning any
Environmental Permit, Hazardous Material or any Hazardous Material Activity.
There are no past or present actions, activities, circumstances, conditions,
events, or incidents that would be expected to involve the Operating Companies
(or any person or entity whose liability the Operating Companies have retained
or assumed, either by contract or operation of law) in any litigation under the
Environmental Laws, or impose upon the Operating Companies (or any person or
entity whose liability the Operating Companies have retained or assumed, either
by contract or operation of law) any environmental liability including, without
limitation, common law tort liability.
5.1.14 Contracts.
(a) Schedule 5.1.14(a) lists all currently
effective written contracts or arrangements, or in the case of (viii) below,
oral contracts or arrangements (collectively, the "Contracts") to which any
Operating Company is a party and which:
(i) relate to a reseller contract
involving more than 500 paging units or a direct contract involving more than
500 paging units;
(ii) provide for the Operating Companies
to resell the services of third parties and pursuant to which the Operating
Companies purchased at least $30,000 of services in the first three months of
calendar year 1998;
(iii) require the payment by any Operating
Company after the date hereof of more than $100,000;
(iv) cannot be terminated by an Operating
Company within one year after the Closing Date without incurring any cost in
excess of $25,000 individually or $100,000 in the aggregate;
(v) are financing documents for borrowed
money;
(vi) are for the purchase, sale or
license of goods or services not in the ordinary course of business consistent
with past practice;
(vii) relate to the provision of products
or services between the Operating Companies and Parents after the Closing; or
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(viii) oral contracts or arrangements which
require the payment by any of the Operating Companies of $50,000 or more
annually or $200,000 in the aggregate after the date hereof.
True and complete copies of all such written contracts have been provided to
the Buyer or its counsel.
(b) None of the Operating Companies or, to the
Parents' Knowledge, any other party to any Contract is in material default in
the performance of, or is not in material compliance with any material
provision of, any Contract relating to the Business. The Operating Companies
have no intention, and Parents have no knowledge of any intention by any other
party, not to perform in all material respects its obligations under any
Contract.
5.1.15 Liabilities and Obligations.
(a) None of the Operating Companies is liable for
or subject to any Liabilities except for:
(i) those Liabilities reflected on the
Audited Financial Statements or disclosed on the Schedules hereto;
(ii) those Liabilities arising in the
ordinary course of the Business consistent with past practice; and
(iii) those Liabilities for which Parents
will indemnify Buyer fully.
(b) As of the Closing Date, none of the Operating
Companies will be liable to Parents or their Affiliates for any advances or
notes payable (as defined in the Audited Financial Statements).
(c) Schedule 5.1.15(c) includes a summary
description of 1998 budgeted Operating Company capital expenditures for
projects currently in progress and which, if pursued after the Closing Date,
are budgeted to require any additional expenditures of capital after the
Closing.
5.1.16 Labor Matters and Employee Plans.
(a) Benefit Plans; ERISA. All Benefit Plans are
listed in Schedule 5.1.16(a), and a summary of each Benefit Plan, including,
where applicable, a summary plan description, has been delivered or made
available to Buyers. Except as disclosed in Schedule 5.1.16(a):
(i) to Parents' Knowledge, each Benefit
Plan has at all times been maintained and administered in all material respects
in accordance with its terms and with
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the requirements of all applicable law, including ERISA and the Code, and each
Benefit Plan intended to qualify under section 401(a) of the Code has at all
times since its adoption been so qualified, and each trust which forms a part
of any such plan has at all times since its adoption been tax-exempt under
section 501(a) of the Code;
(ii) no Benefit Plan is a "defined
benefit plan" within the meaning of section 414(j) of the Code, other than a
Benefit Plan described in section 401(a)(1) of ERISA;
(iii) no Benefit Plan is a multiemployer
plan, and the Parents and/or Operating Companies have never sponsored or
maintained a multiemployer plan covering Operating Company employees, within
the meaning of section 3(37) of ERISA;
(iv) no direct, contingent or secondary
liability has been incurred or is expected to be incurred by Parents and/or
Operating Companies under Title IV of ERISA to any party with respect to any
Benefit Plan, or with respect to any other Plan presently or heretofore
maintained or contributed to by any ERISA Affiliate which could be expected to
result in any liability to the Buyer;
(v) neither Parents nor Operating
Companies have any knowledge of any investigation, proceedings, administrative
review or other administrative process which could result in imposition on
Buyer or Operating Companies of any penalty or other assessment in connection
with any of the Benefit Plans listed in Schedule 5.1.16(a);
(vi) all Benefit Plans are sponsored by
Wireless and neither McCaw nor any Operating Company sponsors any Benefit Plan;
(vii) the Operating Companies have not
incurred any liability for any tax imposed under section 4971 through 4980B of
the Code or civil liability under section 502(i) or (l) of ERISA;
(viii) no benefit under any Benefit Plan
for which the Operating Companies or the Buyer would be liable, including,
without limitation, any severance or parachute payment plan or agreement, will
be established or become accelerated, vested or payable by reason of any
transaction contemplated under this Agreement ;
(ix) neither the Parents nor the
Operating Companies have any post retirement benefit obligations, within the
meaning of, and determined in accordance with, FAS 106 with respect to
Operating Company employees;
(x) no suit, actions or other litigation
(excluding claims for benefits incurred in the ordinary course of plan
activities) have been brought or, to the knowledge of Parents and/or Operating
Companies, threatened against or with respect to any Benefit Plan affecting the
benefits of Operating Company employees, and there are no facts or
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circumstances known to Parents and/or Operating Companies that could reasonably
be expected to give rise to any such suit, action or other litigation; and
(xi) all contributions to Benefit Plans
that were required to be made under such Benefit Plans with respect to
Operating Company employees have been made, and all benefits accrued under any
unfunded Benefit Plan have been paid, accrued or otherwise adequately reserved,
all of which accruals under unfunded Benefit Plans are as disclosed in Schedule
5.1.16(a), and Parents and Operating Companies have performed all material
obligations required to be performed under all Benefit Plans.
(b) Labor and Employee Matters.
(i) Schedule 5.1.16(b)(i) hereto lists
separately the job title, location, annual base wages, targeted commissions (if
applicable), targeted performance bonus (if applicable), accrued vacation
hours, date of hire, status (i.e. on leave or active; type of leave) of all
employees of each Operating Company.
(ii) Schedule 5.1.16(b)(ii) hereto lists
separately the names and locations of the principal offices of each contractor
or independent contractor that provides workers to perform services for
Operating Companies at Operating Companies' U.S. premises and with respect to
each, the number of its personnel and a description of the services being
performed.
(iii) To Parents' Knowledge, each
Operating Company is in material compliance with all applicable laws respecting
labor, employment and employment practices, terms and conditions of employment,
and wages and hours, including without limitation any such laws respecting
minimum wage and overtime payments, child labor, employment discrimination,
workers' compensation, family and medical leave, the Immigration Reform and
Control Act, and occupational safety and health requirements, and has not and
is not engaged in any unfair labor practice; and no sex, age, disability,
gender, race, religious, or other discrimination claim is pending against
Parents and/or Operating Companies except as set forth on Schedule
5.1.16(b)(iii). No complaint or grievance against Parents and/or Operating
Companies is pending or, to the best of the knowledge of Parents and/or
Operating Companies, threatened, before any labor relations board or comparable
governmental authority or entity with respect to the business other than as set
forth on Schedule 5.1.16(b)(iii).
(iv) Other than as set forth on Schedule
5.1.16(b)(iv), no employee of any Operating Company has any agreement as to
length or terms of notice required to terminate his or her employment, or the
circumstances under which employment may be terminated, other than such as
results by law from the employment of an employee without an expressed or
implied employment agreement.
(v) Other than as set forth on Schedule
5.1.16(b)(v), all vacation pay (including all banked vacation pay),bonuses,
commissions and other employee
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benefit payments are reflected and have been accrued and reflected on the
Audited Financial Statements.
(vi) No payments have been made or
authorized since December 31, 1997 by any Operating Company to its officers,
directors, former directors, shareholders or employees or to any person not
dealing at arm's length with any of the foregoing, except in the ordinary
course of the business and in accordance with past practices and at the regular
rate payable to them of salary, pension, bonuses, rents or other remuneration
of any nature.
(vii) The employees of Operating Companies
are not represented by any labor union or association and no collective
bargaining agreement is binding and in force against Parents or Operating
Companies; no collective bargaining agreement, or any part thereof, or any
other agreement with a labor union that is binding upon any Affiliate of
Parents or of Operating Companies will, in any way be binding upon Operating
Companies or expose Operating Companies to liability of any type relating to
such agreement or agreements after the Closing Date; no collective bargaining
agreement is currently being negotiated or is required to be negotiated by
Parents or Operating Companies with respect to any employees of Operating
Companies. No union or association representation question or demand for
recognition or representation exists respecting the employees of Operating
Companies. There is not now, nor within the past three years has there been,
any labor or association picketing, boycotting, handbilling, strike, dispute,
lockout, work slowdown or work stoppage pending or involving or, to the best of
the knowledge of Parents or Operating Companies, threatened against or directly
affecting the Operating Companies, except as set forth in Schedule
5.1.16(b)(vii).
(viii) Except as set forth in Schedule
5.1.16(b)(viii), no labor or association representation organization effort
exists, nor to Parents' Knowledge has there been any such activity within the
past three years.
(ix) Except as set forth in Schedule
5.1.16(b)(ix), no litigation, administrative proceeding, mediation or
arbitration proceeding arising out of employment with the Operating Companies
is pending, and no claims therefor exist or have been threatened.
(x) The Operating Companies have fully
and accurately reported the compensation of all persons classified by the
Operating Companies as independent contractors on IRS forms 1099 when required
to do so.
(c) As used in this Agreement, the following
terms have the meanings set forth below.
(i) "Benefit Plan" means any Plan,
existing at the Closing Date or prior thereto, established or to which
contributions have at any time prior to the Closing Date been made by Parents
or Operating Company, or any predecessor of any of the foregoing, for the
benefit of any employee, former employee, director, agent or independent
contractor of the Messaging Division or any Operating Company or any
beneficiary thereof, on the day prior to the Closing Date.
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(ii) "ERISA" means the Employee
Retirement Income Security Act of 1974, as amended, and the rules and
regulations promulgated thereunder.
(iii) "ERISA Affiliate" means any Person
who is, or at any time was, a member of a controlled group (within the meaning
of section 412(n)(6) of the Code) that includes, or at any time included, one
or more of the Parents or Operating Companies, or any predecessor of any of the
foregoing.
(iv) "Multiemployer Plan" means a
multiemployer plan within the meaning of section 4001(a)(3) of ERISA with
respect to which one or more of the Parents and/or Operating Companies or any
ERISA Affiliate has an obligation to contribute or has or could have withdrawal
liability under section 4201 of ERISA.
(v) "Plan" means any bonus, incentive
compensation, deferred compensation, pension, profit sharing, retirement, stock
purchase, stock option, stock ownership, stock appreciation rights, phantom
stock, leave of absence, layoff, vacation, day or dependent care, legal
services, cafeteria, life, health, accident, disability, workmen's compensation
or other insurance, severance, separation or other employee benefit plan,
practice, policy or arrangement of any kind, whether written or oral, or
whether for the benefit of a single individual or more than one individual
including, but not limited to, any "employee benefit plan" within the meaning
of section 3(3) of ERISA.
5.1.17 [Intentionally Omitted.]
5.1.18 Transactions with Affiliates. Except as set forth on
Schedule 5.1.18, since January 1, 1997, there have been no transactions,
contracts or agreements ("Affiliated Transactions") of any kind relating to the
Business in excess of $100,000 between the Operating Companies and any
Affiliate of the Operating Companies.
5.1.19 Absence of Certain Changes or Events. Since December
31, 1997, except as set forth on Schedule 5.1.19, the Business has been
operated only in the ordinary course (except as expressly contemplated by this
Agreement), and there has not been any:
(a) Material Adverse Change;
(b) sale, assignment or transfer, other than in
the ordinary course of business and consistent with past practice, of any
assets which are material, individually or in the aggregate, to the Business;
(c) acquisition by merger, consolidation with,
purchase of substantially all of the assets or capital stock of, or any other
acquisition of any material assets or business of, any corporation,
partnership, association or other business organization or division thereof;
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(d) change in accounting methods or practices by
the Operating Companies, except as required by GAAP;
(e) entry into, or termination, amendment or
modification of, any contract, agreement, commitment, transactions, License,
permit or other instrument (including, without limitation, any borrowing,
capital expenditure, capital contribution or capital financing) which is or was
material to the Business other than in the ordinary course of business
consistent with past practices;
(f) any action taken by either Parent or any
Operating Company that, if taken after the date hereof, would constitute a
breach of any of the covenants set forth in Section 6.7;
(g) creation, amendment or termination of a
Benefit Plan;
(h) other than in the ordinary course of business
consistent with past practices, increase, or obligation to increase or enhance,
the rate of wages, salaries, bonuses or other remuneration, or other benefits
payable to any of its officers, directors or employees, or initiation of new
benefit programs or policies beyond those disclosed in Schedule 5.1.19, or
grant of any severance or termination pay, or entry into any employment
agreement or other agreement (written or oral) with any officers, directors or
employees;
(i) labor union or association organizing,
strike, lockout, work slowdown or stoppage, or petition for election or demand
for recognition or representation;
(j) recognition of a labor union or association
as the lawful representative for collective bargaining for current employees;
(k) entry into any collective bargaining
negotiations or agreements or other negotiations with a labor union or
association;
(l) bonus or profit sharing distribution or
similar payment of any kind except as may be required by the terms of any
Benefit Plan or material contract or Parents' or Operating Companies' policy in
respect of discretionary bonuses; or
(m) agreement or authorization by Parents or
Operating Companies to do any of the foregoing.
5.1.20 Government Contracts.
(a) To the Parents' Knowledge, none of the
Operating Companies has been suspended or debarred from bidding on contracts or
subcontracts for any agency or instrumentality of the United States Government
or any state or local government, nor, has any suspension or debarment action
been threatened or commenced. There is no valid basis for any
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Operating Company's suspension or debarment from bidding on contracts or
subcontracts for any agency of the United States Government or any state or
local government.
(b) Except as set forth in Schedule 5.1.20, to
Parents' Knowledge, none of the Operating Companies has been, nor is any now
being, audited, investigated or subject to an employment practice related
contract compliance review, by any government agency or the inspector general
or auditor general or similar functionary of any agency or instrumentality, nor
has any such audit or investigation been threatened.
(c) To the Parents' Knowledge, each of the
Operating Companies' government contracts has been properly issued, awarded or
novated to the Operating Companies in the Operating Companies' name.
5.1.21 Intellectual Property.
(a) The Operating Companies do not own any Marks
registered in the United States Patent and Trademark Office ("PTO") or the
equivalent thereof in any state of the United States or in any foreign country.
For purposes of this Section 5.1.21, the term "Mark" shall mean all right,
title and interest in and to any United States or foreign trademarks, service
marks and trade names now held by the Operating Companies, including any
registration or application for registration of any trademarks and services
marks in the PTO or the equivalent thereof in any state of the United States or
in any foreign country, as well as any unregistered marks used by the Operating
Companies, and any trade dress (including logos, designs, company names,
business names, fictitious names and other business identifiers) used by the
Operating Companies in the United States or any foreign country.
(b) The Operating Companies do not own any Patent
or Copyright registrations. For purposes of this Section 5.1.21, the term
"Patent" shall mean any United States or foreign patent to which the Operating
Companies have title as of the date of this Agreement, as well as any
application for a United States or foreign patent filed by the Operating
Companies as of the date of this Agreement, the term "Copyright" shall mean any
United States or foreign copyright owned by the Operating Companies as of the
date of this Agreement, including any registration of copyrights, in the United
States Copyright Office or the equivalent thereof in any foreign county, as
well as any application for a United States or foreign copyright registration
made by the Operating Companies as of the date of this Agreement.
(c) The execution and delivery of this Agreement
by the Operating Companies will not infringe upon any Mark, Patent or Copyright
of any third party ("Third Party Intellectual Property"). The Operating
Companies are not, nor will they be as a result of the execution and delivery
of this Agreement or the performance of their obligations hereunder, in
violation of any material Third Party Intellectual Property license, sublicense
or agreement. Except as set forth on Schedule 5.1.21, no claims with respect
to Third Party Intellectual Property are currently pending or, to Parents'
Knowledge, are threatened by any Person, nor, to Parents' Knowledge, do any
grounds for any claims exist: (i) to the effect that the sale, licensing or use
of any product as now used, sold or licensed or proposed for use, sale or
license by the
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Operating Companies infringes on any copyright, patent, trademark, service mark
or trade secret; (ii) against the use by the Operating Companies of any
trademarks, trade names, trade secrets, copyrights, patents, technology,
know-how or computer software programs and applications used in the Business as
currently conducted by the Operating Companies; or (iii) challenging the
Operating Companies' license or legally enforceable right to use of the Third
Party Intellectual Property. None of the Operating Companies has been sued or
charged in writing as a defendant in any claim, suit, action or proceeding
which involves a claim or infringement of trade secrets, any patents,
trademarks, service marks, or copyrights and which has not been finally
terminated.
5.1.22 [Intentionally Omitted.]
5.1.23 Year 2000 Compliance. The Operating Companies have
performed the testing as described on Schedule 5.1.23, which includes all
material software and computer systems used in the Business. To the extent
that such testing indicated that the Operating Companies' software or computer
systems are not Year 2000 Compliant, such software and/or computer systems were
modified or will be modified prior to Closing so that they are Year 2000
Compliant. For purposes of this Agreement, "Year 2000 Compliant" means that
the Operating Companies' software or computer systems receive, record, store,
process, route, transfer or present calendar dates and any related information
falling on or after January 1, 2000 with similar functionality, in all material
respects, as such software or computer systems perform such functions for
calendar dates and related information falling prior to January 1, 2000.
5.1.24 Series C Preferred Stock. McCaw is acquiring the
Series C Preferred Stock hereunder without a present intention of resale or
distribution in violation of the Securities Act of 1933, as amended (the
"Securities Act"), and shall not sell or otherwise transfer such Series C
Preferred Stock except when such sale or transfer is made in compliance with
the Securities Act and all applicable state laws.
5.1.25 Accounts Receivable. Attached as Schedule 5.1.25 is
a complete and accurate list, as of a date not more than twelve (12) business
days prior to the date hereof, of the accounts and notes receivable of the
Operating Companies (including without limitation receivables from and advances
to employees and stockholders), which includes an aging of all accounts and
notes receivable showing amounts due in 30-day aging categories (collectively,
the "Accounts Receivable"). All Accounts Receivable represent valid
obligations arising from sales actually made or services actually performed in
the ordinary course of business and have been executed on terms consistent with
past practices of the Business.
5.2 REPRESENTATIONS AND WARRANTIES OF BUYER.
To induce Parents to enter into this Agreement and consummate the
transactions contemplated hereby, Buyer represents and warrants to Parents, as
of the date hereof (unless another date or period of time for a representation
or warranty is specifically stated herein), as follows:
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5.2.1 Qualification of Buyer. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Buyer has all requisite corporate power and authority to own and
operate its business as it currently is being conducted, to own and lease the
properties and assets owned or leased by it and to enter into this Agreement
and perform the obligations hereunder. Buyer is licensed or qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
in which the properties owned, leased or operated by it or the nature of the
business conducted by it makes such qualification or licensing necessary other
than in such jurisdictions where the failure to be so qualified or licensed
would or would be reasonably likely to have a material adverse effect to the
business, results of operations, properties, financial condition, assets and
liabilities of the Buyer and its subsidiaries, taken as a whole (a "Buyer
Material Adverse Effect" or "Buyer Material Adverse Change").
5.2.2 Authorization and Validity of Agreement. The
execution, delivery and performance by Buyer of this Agreement and the other
agreements, certificates, documents and instruments contemplated hereby or
referred to herein, the filing of the Series C Certificate of Designation, the
issuance of the Series C Preferred Stock and the consummation by it of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action of Buyer. This Agreement has been duly executed and delivered
by Buyer and, assuming the due authorization, execution, and delivery hereof by
the Parents, is a legal, valid and binding obligation of Buyer, enforceable
against Buyer, in accordance with its terms, except as and to the extent such
enforceability may be subject to bankruptcy or similar laws affecting creditors
rights.
5.2.3 No Conflicts. Except as set forth on Schedule 5.2.3,
the execution, delivery and performance of this Agreement, the consummation of
the transactions contemplated hereby, and the fulfillment of the terms hereof
will not:
(a) conflict with, or result in a breach or
violation of, the provisions of the charter or bylaws of the Buyer;
(b) conflict with, or result in a default (or
would constitute a default but for any requirement of notice or lapse of time
or both) under or require notice under any material document, material
agreement or other material instrument to which Buyer is a party or by which
Buyer is bound (the "Buyer Third Party Contracts") or, require any third party
consent, waiver or approval in order that any Buyer Third Party Contract remain
in effect without material modification after the Closing Date and without
giving rise to any right to termination, cancellation, acceleration or loss of
any material right or benefit;
(c) result in the creation or imposition of any
Lien, on the Buyer's properties pursuant to (i) any law or regulation to which
Buyer or any of its property is subject, or (ii) any judgment, order or decree
to which Buyer is bound or any its property is subject;
(d) result in termination or any material
impairment of any material license held by Buyer; or
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(e) violate any law, order, judgment, rule,
regulation, decree or ordinance to which Buyer is subject or bound.
5.2.4 Licenses, Compliance with Law.
(a) Buyer holds all licenses issued or required
by the FCC and any other governmental agency of the United States Government or
any state or local government that are required for an/or used in and are
material to the operation of Buyer's business as currently conducted. Each of
Buyer's material licenses is in full force and effect, and Buyer is in
compliance in all material respects with the terms and requirements of the
material licenses used in the operation of its business as currently conducted
and all the Communications Laws and other governmental regulations pertaining
thereto. There is not pending or, to Buyer's Knowledge, threatened, any
action, investigation, complaint or other proceeding by the FCC, or any other
governmental agency of the United States Government or any state or local
government to revoke, cancel, suspend, modify in any material respect or refuse
to renew, any of the material licenses used in the operation of its business as
currently conducted (except such actions, investigations, complaints, or other
proceedings which relate to the paging industry generally and do not relate to
any specific licenses). Except as set forth on Schedule 5.2.4(a), there is not
issued, pending or, to Buyer's Knowledge, threatened, any notice of violation
or complaint by the FCC or any other governmental agency of the United States
Government or any state or local government against Buyer with respect to the
Buyer's business or the transactions contemplated hereby, except violations or
complaints that would not have a Buyer Material Adverse Effect.
(b) All of Buyer's existing licenses contain, and
Buyer's licenses granted by the FCC after the date hereof and prior to Closing
will contain, no defects which would cause a Buyer Material Adverse Effect. No
present or former officer, manager, member or employee of Buyer or any
Affiliate thereof, or any other Person, owns material interest in any of
Buyer's material licenses.
(c) Buyer has complied with, and are in
compliance with, all federal, state, county and local laws, regulations and
orders that are applicable to Buyer's business, including, but not limited to
the Communications Laws and the rules and regulations of the state and
municipalities in which Buyer's business is located, and have timely filed with
proper authorities all statements and reports required by the laws, regulations
and orders to which Buyer and Buyer's business are subject, except where
noncompliance or failure to file would not have a Buyer Material Adverse
Effect. The transactions contemplated by this Agreement will not result in a
material default under, or a material breach or material violation of, or
materially adversely affect the rights and benefits afforded Buyer, of Buyer's
material licenses.
5.2.5 Financial Capabilities. Buyer has the financial
ability to consummate the transactions contemplated hereby, and has uncommitted
cash or cash equivalents or commitments from financial institutions or its
shareholders for funds in amounts equal to or greater than the Cash
Consideration.
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5.2.6 Capital Stock of Buyer. The duly authorized capital
stock of Buyer consists of 80,000,000 shares of common stock, par value $.01
per share, ("Metrocall Common Stock") and 1,000,000 shares of preferred stock,
par value $.01 per share ("Metrocall Preferred Stock"). As of May 15, 1998,
197,206 shares of Metrocall Preferred Stock were issued and outstanding and
40,866,548 shares of Metrocall Common Stock were issued and outstanding. Since
May 15, 1998, no Metrocall Common Stock has been issued except pursuant to
Buyer's stock option plans and no Metrocall Preferred Stock has been issued.
All of the issued and outstanding shares of capital stock of Buyer have been
duly and validly issued and are fully paid and nonassessable. Except pursuant
to Buyer's stock option plans or as disclosed in the SEC Filings (as
hereinafter defined) or as set forth on Schedule 5.2.6, there are no
outstanding options, warrants or other rights to subscribe for or purchase or
otherwise acquire any shares of capital stock (or securities directly or
indirectly convertible into or exchangeable or exercisable for shares of
capital stock) of Buyer.
5.2.7 Financial Statements and Reports. Buyer has
furnished Parents copies of (i) Buyer's Annual Report on Form 10-K for the
fiscal year ended December 31, 1997, and (ii) all other reports, statements and
registration statements filed by Buyer with the Securities and Exchange
Commission ("SEC") since January 1, 1998 (collectively, the "SEC Filings").
The SEC Filings were prepared and filed in accordance with the rules and
regulations of the SEC. As of their respective dates, the SEC Filings did not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. The
financial statements of Buyer included in the SEC Filings were prepared in
accordance with GAAP as in effect from time to time applied on a consistent
basis (except as otherwise noted in such financial statements) and present
fairly in all material respects the consolidated financial condition, results
of operations and cash flows of Buyer as of the dates and for the periods
indicated, subject, in the case of interim financial statements, to normal year
end audit adjustments. Since December 31, 1997, (a) Buyer has conducted its
business in a manner consistent with prior practice and in the ordinary course,
and (b) there has not been any Buyer Material Adverse Change.
5.2.8 Metrocall Preferred Stock. The Metrocall Preferred
Stock to be issued to McCaw pursuant to the Series C Preferred Stock, when so
issued, will be duly and validly authorized and issued, fully paid and
nonassessable, free and clear of any preemptive rights or Liens.
5.2.9 Spectrum Caps. Except as set forth on Schedule
5.2.9, the Buyer has no attributable interests in CMRS spectrum in the
broadband PCS, cellular or SMR services which is subject to the CMRS spectrum
aggregation limit in Section 20.6 of the FCC's rules. Schedule 5.2.9 lists all
narrowband PCS licenses in which the Buyer has an attributable interest or is
considered a narrowband PCS licensee determined pursuant to applicable FCC's
rules.
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ARTICLE 6
CONDUCT PRIOR TO CLOSING
6.1 FILING OF ASSIGNMENT APPLICATIONS.
As soon as practicable, Buyer, Parents and Operating Companies shall
join in and file the Assignment Applications with the FCC and any similar
applications required by other agencies. The parties will cooperate and use
reasonable efforts to prosecute such applications diligently and expeditiously
to a favorable conclusion. The Parents, Operating Companies and Buyer mutually
agree to provide, in a timely manner, whatever additional information the FCC
or other agency may request in processing such applications.
6.2 ANTITRUST LAWS AND PARENTS.
Parents will, or will cause their "ultimate parent" to, timely and
promptly make all filings which are required under the HSR Act. Parents will
furnish to Buyer such information and assistance as Buyer may reasonably
request in connection with its preparation of necessary filings or submissions
to any governmental agency, including, without limitation, any filings
necessary under the provisions of the HSR Act. Parents will supply Buyer with
a copy of any correspondence, filing or communication (or memorandum setting
forth the substance thereof) between Parents or their "ultimate parent" or
their respective representatives, on the one hand, and the FTC, the DOJ or any
other governmental agency or authority or members of their respective staffs,
on the other hand, with respect to this Agreement or the transactions
contemplated hereby to the extent that any such correspondence, filing,
communication or memorandum is required by Buyer to meet its obligations under
the HSR Act.
6.3 ANTITRUST LAWS AND BUYER.
Buyer will timely and promptly make all filings which are required
under the HSR Act. Buyer will furnish to Parents such information and
assistance as Parents may reasonably request in connection with their
preparation of necessary filings or submissions to any governmental agency,
including, without limitation, any filings necessary under the provisions of
the HSR Act. Buyer will supply Parents with a copy of any correspondence,
filing or communication (or memorandum setting forth the substance thereof)
between Buyer or its representatives, on the one hand, and the FTC, the DOJ or
any other governmental agency or authority or members of their respective
staffs, on the other hand, with respect to this Agreement or the transactions
contemplated hereby to the extent that any such correspondence, filing,
communication or memorandum is required by Parents to meet their obligations
under the HSR Act.
6.4 ACCESS TO INFORMATION CONCERNING BUSINESS.
Prior to the Closing Date, subject to compliance with Laws (including,
without limitation, not providing competitively sensitive information
concerning the Business) and any confidentiality restrictions, Parents shall,
upon reasonable request, afford to Buyer, its counsel, accountants and other
authorized representatives, reasonable access during normal business hours
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to all plants, properties, books, accounts, contracts, documents and records of
Parents and the Operating Companies to the extent they relate to the Business
or the transactions contemplated hereby in order that they may have the
opportunity to make such reasonable investigations as they shall desire to make
of the affairs of the Business. Parents will furnish to Buyer, subject to
compliance with Laws (including, without limitation, not providing
competitively sensitive information concerning the Business) and any
confidentiality restrictions, such existing data and information concerning the
Business, finances and properties that Buyer may reasonably request and such
additional existing financial, operating data and billing information as Buyer
shall from time to time reasonably request to facilitate the efficient transfer
of billing and other accounting and management functions. Prior to Closing,
subject to compliance with Laws (including, without limitation, not providing
competitively sensitive information concerning the Business) and any
confidentiality restrictions, Parents will afford Buyer with reasonable access
to the vendors, employees and officers of Parents and the Operating Companies
and will otherwise cooperate and use commercially reasonable efforts to assist
Buyer in achieving the uninterrupted continuation of the Business under Buyer's
control after the Closing, provided that Buyer will give Parents reasonable
notice prior to Buyer's contacting any vendor, employee, or officer. At the
request of Buyer for a period of two years after the Closing Date, Parents
shall provide to Buyer any historical financial information requested by Buyer
concerning the Business in the possession of Parents, and shall cooperate with
Buyer and assist Buyer, at Buyer's reasonable request and at Buyer's expense,
in preparing any such financial information that is not in the possession of
Parents, in each case to permit Buyer (or an Affiliate of Buyer) to meet any
requirements that are or may become applicable to Buyer (or such Affiliate)
under the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated under such act and/or any other Law. Buyer shall use
commercially reasonable efforts to coordinate its requests and activities under
this Section 6.4 with Parents' and the Operating Companies' need for security
and to assist Parents and the Operating Companies in minimizing disruption to
the Business.
6.5 STOCKHOLDER APPROVAL.
(a) Buyer will take all action necessary in accordance
with applicable law, the rules of Nasdaq, this Agreement and Buyer's charter
and bylaws to convene a meeting of its stockholders (the "Stockholders
Meeting") to consider and vote upon a proposal to approve the issuance of
Metrocall Preferred Stock in connection with the transactions contemplated
hereby (the "Proposal"), and will use its reasonable best efforts to cause the
Stockholders Meeting to occur as promptly as practicable after the date hereof.
Buyer will (i) recommend that its stockholders vote in favor of the Proposal
and (ii) use its reasonable best efforts to cause to be solicited proxies from
stockholders to be voted at the Stockholders Meeting in favor of the Proposal
and to take all other actions necessary or advisable to secure the vote or
consent of the minimum number of shares required to approve the Proposal
("Buyer Stockholder Approval").
(b) Within fifteen (15) business days after the date
hereof, Buyer shall prepare and file the preliminary proxy statement for the
Stockholders Meeting (the "Proxy Statement") with the SEC. Buyer shall use its
reasonable best efforts to have the Proxy Statement cleared by the SEC and
shall thereafter promptly mail the definitive Proxy Statement to its
stockholders.
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Parents shall furnish Buyer with all information and shall take such other
action as Buyer may reasonably request in connection with the Proxy Statement
and the Stockholders Meeting. The Proxy Statement shall contain the unanimous
recommendation of the Board of Directors of Buyer that Buyer's stockholders
approve and adopt the Proposal.
(c) Buyer shall notify Parents of the receipt of the
comments of the SEC and of any requests by the SEC for amendments or
supplements to the Proxy Statement or for additional information.
(d) From the date hereof until the Stockholders Meeting,
Buyer will not enter into any transaction that would result in any material
delay in convening the Stockholders Meeting, nor will Buyer take any action
that would be reasonably likely to have an adverse effect on obtaining the
Buyer Stockholder Approval.
6.6 CONTROL OF THE BUSINESS.
The transactions contemplated by this Agreement shall not be
consummated until the Closing Date. Between the date of this Agreement and the
Closing Date, Buyer and its employees or agents shall not directly or
indirectly control, supervise or direct, or attempt to control, supervise or
direct, the conduct or operation of the Business, and notwithstanding any other
provision of this Agreement, such operation and conduct shall be the sole
responsibility, and in the complete discretion, of Parents and the Operating
Companies; provided, however, that this Section 6.6 shall not limit the
specific rights and obligations of Buyer and Parents set forth in this
Agreement, which are not intended to confer control of the Operating Companies
or of the Business to Buyer prior to the Closing Date.
6.7 PARENTS' PRE-CLOSING COVENANTS.
Except as otherwise consented to in writing by Buyer, each Parent
covenants that, throughout the period commencing on the date hereof and ending
on the Closing Date, it shall, and it shall cause the Operating Companies to:
(a) conduct the Business only in the ordinary course,
including maintaining, consistent with past practices, its material properties,
machinery and equipment used in the Business, taken as a whole, in the same
condition in all material respects as at present, except for ordinary wear and
tear;
(b) use their reasonable efforts (without the obligation
to pay money) to facilitate Buyer's discussions with certain agreed upon
employees with respect to such employees entering into non-competition
agreements;
(c) not enter into any agreement for the purchase, sale
or other disposition, or purchase, sell or dispose of, any equipment, supplies,
inventory, investments or other assets, except in the ordinary course of the
Business consistent with past business practices;
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(d) in the ordinary course, consistent with its past
business practices, (i) perform all its material obligations under material
contracts, leases and documents relating to or affecting the Business and, (ii)
pay accounts payable which become due prior to the Closing Date; provided,
that, for purposes hereof, "ordinary course" shall mean payment of accounts
payable within forty-five (45) days;
(e) in the ordinary course, consistent with its past
business practices, use its reasonable efforts to maintain and preserve the
Business including, but not limited to, maintaining and preserving the Licenses
and prosecuting diligently all currently filed applications for Licenses,
including any renewal applications;
(f) comply with and perform in all material respects all
obligations and duties imposed upon it by all federal, state and local laws and
all rules, regulations and orders imposed by federal, state or local
governmental authorities;
(g) maintain its existence as a corporation validly
existing and in good standing under the laws of its state of incorporation;
(h) use its reasonable efforts to satisfy, to the extent
within its control, as soon as is reasonably practicable, the conditions
required to consummate the transactions contemplated hereby, including but not
limited to, the filing and prosecution of all requests for regulatory
approvals;
(i) use its reasonable efforts to obtain, as soon as
practicable after the date hereof, the Third Party Consents;
(j) continue to operate the Business in compliance, in
all material respects, with the Licenses and the Communications Laws, including
without limitation, the timely filing of any required reports, notices or fees;
(k) at its sole cost and expense, attempt to cure all
material noncompliance as set forth on Schedule 5.1.4(a) by Parents and the
Operating Companies with the terms and conditions of Licenses issued by the FCC
or noncompliance with the Communications Laws;
(l) promptly notify Buyer upon the Parents' Knowledge
thereof of any fact, event, circumstance or action (i) which, if known on the
date hereof would have been required to be disclosed to Buyer pursuant to this
Agreement, or (ii) the existence or occurrence of which would cause Parents'
representations or warranties not to be correct and complete in all material
respects; and
(m) provide Buyer no later than thirty (30) business days
after the first day of each calendar month, an unaudited consolidated balance
sheet of Operating Companies as of the last day of the preceding calendar
month, and unaudited statements of operations for the period ended on such
date.
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6.8 BUYER'S PRE-CLOSING COVENANTS.
Except as otherwise consented to in writing by Parents, Buyer
covenants that, throughout the period commencing on the date hereof and ending
on the Closing Date, it shall:
(a) maintain its existence as a corporation validly
existing and in good standing under the laws of its state of incorporation;
(b) use its reasonable efforts to satisfy, to the extent
within its control, as soon as is reasonably practicable, the conditions
required to consummate the transactions contemplated hereby, including but not
limited to, the filing and prosecution of all requests for regulatory
approvals, and obtaining necessary third party consents;
(c) in the ordinary course, consistent with its past
business practices, use its reasonable efforts to maintain and preserve its
business including, but not limited to, maintaining and preserving the material
licenses used in its business as currently conducted and prosecuting diligently
all currently filed applications for material licenses, including any renewal
applications;
(d) comply with and perform in all material respects all
obligations and duties imposed upon it by all federal, state and local laws and
all rules, regulations and orders imposed by federal, state or local
governmental authorities;
(e) maintain its existence as a corporation validly
existing and in good standing under the laws of its state of incorporation;
(f) continue to operate its business in compliance, in
all material respects, with the material licenses its used in business as
currently conducted and the Communication Laws, including without limitation,
the timely filing of any required reports, notices or fees;
(g) at its sole cost and expense, attempt to cure all
material noncompliance as set forth on Schedule 5.2.4(a) by Buyer with the
terms and conditions of material licenses issued by the FCC or noncompliance
with the Communications Laws; and
(h) promptly notify Parents upon Buyer's Knowledge
thereof of any fact, event, circumstance or action (i) which, if known on the
date hereof would have been required to be disclosed to Parents pursuant to
this Agreement, or (ii) the existence or occurrence of which would cause
Buyer's representations and warranties not to be correct and complete in all
material respects. For these purposes, the term "Buyer's Knowledge" means the
actual knowledge of the individuals listed on Schedule 6.8(c).
6.9 NO SOLICITATION OF OFFERS.
Unless and until this Agreement shall have been terminated by either
party pursuant to Article 9 hereof, each Parent covenants that following the
date hereof it will not (and shall use its
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best efforts to ensure that none of its officers, directors, agents,
representatives or Affiliates) take or cause, directly or indirectly, any of
the following actions with any party other than Buyer or its designees: (i)
solicit, initiate, or participate in any negotiations, inquiries or discussions
with respect to any offer or proposal to acquire all or a significant part of
the Business, assets of the Business or capital shares whether by merger,
consolidation, other business combination, purchase of assets, tender or
exchange offer or otherwise (each of the foregoing, an "Acquisition Proposal")
provided that in response to inquiries from third parties, Parents may inform
such parties that Parents have entered into this Agreement with Buyer for the
sale of the Business; (ii) disclose, in connection with an Acquisition
Proposal, any Confidential Information (except to the extent that such party
would be permitted to do so under the provisions of Section 12.18 hereof) with
respect to, or otherwise cooperate in any way with, or assist or participate
in, any effort or attempt by any other Person to do or seek any of the
foregoing; (iii) enter into or execute any agreement relating to an Acquisition
Proposal; or (iv) make or authorize any public statement, recommendation or
solicitation in support of any Acquisition Proposal other than with respect to
the transactions contemplated by this Agreement.
6.10 RISK OF LOSS.
Parents will bear the risk of loss or damage to the assets of the
Operating Companies resulting from fire, theft, or other casualty at all times
prior to Closing net of any insurance proceeds.
6.11 TITLE INSURANCE AND SURVEYS.
Except as set forth on Schedule 6.11:
(a) With respect to the Owned Real Property, Parents will
obtain and deliver to Buyer (i) as soon as practicable after the date of this
Agreement, a title commitment disclosing the condition of title to such Owned
Real Property and all easements, rights of way, and restrictions of record with
respect thereto, as of a date not earlier that the date of this Agreement,
accompanied by copies of all instruments evidencing the scope and extent of all
such easements, rights of way, and restrictions of record (the "Title
Commitment"), and (ii) at or prior to Closing, an ALTA Owner's Policy of Title
Insurance on a form customarily used in the state in which the Real Property is
located, issued by a title insurer satisfactory to Buyer, in an amount equal to
the fair market value of the Real Property (as reasonably determined by Buyer),
insuring title to such property to be in the name of a party designated by
Buyer, subject only to Permitted Real Property Liens (each a "Title Policy").
(b) Each Title Policy obtained and delivered to Buyer
pursuant to this Agreement shall, except to the extent that title insurers in
the state in which the applicable property is located are not lawfully
permitted to issue such policies (i) insure title to the property described in
the policy and all recorded easements benefitting such property, (ii) contain
an "extended coverage endorsement" or similar modification insuring over or
otherwise eliminating the general exceptions customarily contained in title
policies, (iii) contain an endorsement insuring that the property described in
the policy is the same real estate shown in the survey
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delivered with respect to such property, (iv) contain a "contiguity"
endorsement with respect to any property consisting of more than one record
parcel, (v) provide full coverage against mechanics' and materialmen's liens
arising out of the construction, repair or alteration of any of the Owned Real
Property, (vi) contain any special endorsements reasonably required by Buyer,
including, without limitation, an endorsement insuring that the improvements
included in the Real Property are a permitted use under the zoning designation
applicable to the Owned Real Property, and (vii) not be subject to any
exception for matters disclosed by any survey delivered with respect to such
property other than matters which do not constitute a breach of the
representations and warranties contained in Section 5.1.12 (b)(ii), (iii) and
(vii).
(c) With respect to each Owned Real Property interest as
to which a Title Policy is to be procured pursuant to this Agreement, Parents
will obtain and deliver to Buyer as soon as practicable after the date of this
Agreement a current survey of the relevant parcel, prepared and certified to
Buyer and to the title insurer of such Owned Real Property interest by a
licensed surveyor and conforming to current ALTA Minimum Detail Requirements
for Land Title Surveys, disclosing the location of all improvements, easements,
party walls, sidewalks, roadways, utility lines, and other matters customarily
shown on such surveys, and showing access affirmatively to public streets and
roads.
(d) Parents shall be responsible for all costs associated
with obtaining the title commitments and surveys described above, and Buyer
shall be responsible for the costs of purchasing the Title Policies described
above.
6.12 EMPLOYEE MATTERS.
(a) The parties shall identify in a side letter all those
employees ("the Non-Transitioned Employees") of the Operating Companies who
will be transferred out of the Operating Companies and will no longer be
employed prior to the Closing Date.
(b) Parents and the Operating Companies shall assure that
individuals on long term disability are no longer employees of the Operating
Companies on the day prior to the Closing Date. Parents shall be solely
responsible for any and all liability in connection with the employment of all
such individuals. For those employees of the Operating Companies on leave of
absence or on short-term disability on the Closing Date ("Employees on Leave"),
Parents shall be solely responsible for any and all liability for short-term
and long term disability benefits. An Employee on Leave shall be entitled to
return to the active service of the Operating Companies, if he or she reports
for active service with Buyer on or immediately after the expiration of his or
her short-term disability leave or leave of absence, with employment (as a
"Transitioned Employee" as described in Section 7.1.1(a)) effective on the date
he or she reports; however, in no event, shall such individual report for
active service later than 90 days following the Closing Date. Notwithstanding
the foregoing, if such individual reports for active service within the time
required in the preceding sentence, but no employment position meeting the
requirements of Section 7.1.1(d) is available when he or she so reports for
active service, then he or she will be eligible for benefits under the
Transition Severance Pay Plan described in Section 7.1.1 (b)(1), and Parents
shall be responsible for their share of the costs of such benefits, as provided
in
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Section 7.1.1(b)(1). Schedule 5.1.16(b)(i) shall be updated by the Operating
Companies three weeks prior to the scheduled Closing Date.
(c) In addition to any other obligations relating to
Wireless's Tuition Assistance Plan, Parents shall pay tuition and other costs,
pursuant to the Tuition Assistance Plan, for classes in which employees of the
Operating Companies are enrolled as of the Closing Date.
(d) Except as may be required by Law or with the written
consent of Buyer or as disclosed in Schedule 6.12(d), Parents and/or Operating
Companies will, until after the Closing Date, refrain from directly or
indirectly:
(i) making any representation or promise, oral or
written, to any employee of the Operating Companies promising or guaranteeing:
(A) any additional benefits under any Benefit Plan, or (B) the creation,
amendment, or termination of a Benefit Plan that would affect any employees of
the Operating Companies;
(ii) other than in the ordinary course of business
consistent with past practices, increasing, or creating the obligation to
increase or enhance, the rate of wages, salaries, bonuses or other
remuneration, or other benefits payable to any of its officers, directors or
employees, or initiating of new benefit programs or policies beyond those
disclosed in Schedule 5.1.19, or granting any severance or termination pay, or
entering into any employment agreement or other agreement (written or oral)
with any officers, directors or employees;
(iii) establishing or modifying any (i) targets,
goals, pools or similar provisions in respect of any fiscal year under any
Benefit Plan or any employment contract or other compensation arrangement with
or for employees of the Operating Companies or (ii) salary ranges, increase
guidelines or similar provisions in respect of any Benefit Plan or any
employment contract or other compensation arrangement with or for employees of
the Operating Companies;
(iv) making a bonus or profit sharing distribution
or similar payment of any kind except as may be required by the terms of any
Benefit Plan or material contract or Parents' or Operating Companies' policy in
respect of discretionary bonuses;
(v) without limiting the generality of Section
6.12(d), entering into, amending, modifying or terminating (partially or
completely), any contract that is, or had it been in existence on the date of
this Agreement would have been required to be, disclosed in Schedule 6.12(d);
(vi) recognizing a labor union or association as
the lawful representative for collective bargaining for any Operating Company
employees; or
(vii) entering voluntarily into any collective
bargaining negotiations or agreements or other negotiations or agreements with
a labor union or association.
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(e) Prior to the Closing Date, Buyer will communicate
with the employees of the Operating Companies, other than the Non-Transitioned
Employees, regarding the human resources policies and procedures of the Buyer,
and the employee benefit programs that will be available to those employees who
continue in employment with the Operating Companies following the Closing Date.
(f) Parents and/or Operating Companies will administer
each Benefit Plan, or cause the same to be so administered, in all material
respects in accordance with the applicable provisions of the Code, ERISA and
all other applicable Laws. Parents and/or Operating Companies will promptly
notify Buyer in writing of each receipt by Parents and/or Operating Companies
(and furnish Buyer with copies) of any notice of investigation or
administrative proceeding by the IRS, Department of Labor, or other Person
affecting the benefits of the employees of the Operating Companies under any
Benefit Plan.
6.13 NOTICE TO BARGAINING AGENTS.
Prior to Closing Date, Parents shall satisfy any requirement for
notice of the transactions contemplated by this Agreement under applicable
collective bargaining agreements, if requested by Buyer, and shall provide
Buyer with proof that any required notice has been sent.
6.14 THIRD PARTY CONSENTS AND GOVERNMENTAL LICENSES.
Parents shall use their good faith commercially reasonable efforts to
obtain Third Party Consents and consents to transfer Governmental Licenses.
Buyer shall cooperate with Parents in obtaining Third Party Consents and
consents to transfer Governmental Licenses.
6.15 FINANCIAL STATEMENTS.
Parents shall deliver to Buyer, within forty-five (45) days following
the close of each calendar quarter after the date hereof through the last
quarter that ends on or before forty-six (46) days prior to the Closing,
quarterly financial statements prepared by Coopers & Lybrand, L.L.P. in
accordance with SAS 71 review procedures. All of the costs associated with
such reviews shall be paid by Parents and not the Operating Companies.
ARTICLE 7
EMPLOYMENT, BENEFITS AND TAX MATTERS
7.1 EMPLOYEE MATTERS.
7.1.1 Employment of Operating Company Employees.
(a) Employees of the Operating Companies who are
not listed on the side letter referred to in Section 6.12(a) and who are in
active employment on the Closing Date ("Transitioned Employees") shall, in
addition to the requirements set forth in Section 7.1.2
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and 7.1.3 hereof, be placed in positions comparable to the positions held by
such employees of the Operating Companies immediately prior to the Closing
Date. Employees not listed on the side letter referred to in Section 6.12(a)
and who are on short term disability or on leave of absence on the Closing Date
shall, in addition to the requirements set forth in Sections 7.1.2 and 7.1.3
hereof, be placed in positions comparable to the positions held by such
employees of the Operating Companies immediately prior to the Closing Date, if
such positions are available, only if such employees report for active service
with Buyer consistent with the terms set forth in Section 6.12(b).
(b) (i) A Transitioned Employee may become
eligible for certain "Transition Severance Benefits," provided that he or she
meets all requirements of Buyer's Transition Severance Pay Plan. In general,
to be eligible for benefits under the Transition Severance Pay Plan, an
employee of the Operating Companies must be involuntarily terminated by the
Buyer prior to the end of the twelve-month period following the Closing Date,
other than for Cause, must not have refused an offer of a comparable position
of employment with Buyer, and must sign a release of employment-related claims
against the Buyer, its affiliates, and their directors, officers, employees,
and agents. An eligible employee of the Operating Companies who meets the
requirements of the Transition Severance Pay Plan shall receive a severance
benefit equal to one month's salary, for each year of employment, taking into
account all service with Parents and Operating Companies prior to the Closing
Date as set forth on Schedule 5.1.16(b)(i), and all service with the Buyer or
any of its Affiliates after the Closing Date, up to a maximum of 6 months'
salary, less any amounts that the individual would be entitled to under the
Worker Adjustment Retraining and Notification Act. In addition, such employee
will, upon election of health care continuation (COBRA) coverage under ERISA,
and for the number of months (not to exceed 6) equal to the number of years of
employment as described in the preceding sentence, be required to pay only that
portion of the monthly COBRA premium for which an active employee of Buyer
covered under the same health care plan would be responsible. Subject to
Section 7.1.1(d), the definition of a "month's salary," "comparable position of
employment," and all other terms used in the Transition Severance Pay Plan
shall be as set forth in such Plan. Parents shall reimburse Buyer for
one-half of the costs of all benefits under the Transition Severance Pay Plan
paid to, or on behalf of, any individual who was involuntarily terminated
during the six-month period immediately following the Closing Date, and who was
entitled to receive a bonus payment under either the AT&T Wireless Services
Messaging Division Group I Key Employees Bonus Plan or the AT&T Wireless
Services Messaging Division Group II Key Employees Bonus Plan (jointly referred
to as the "Parents' Completion Bonus Program").
(ii) For purposes of this Agreement,
"Cause" for termination shall mean (i) conviction (including a plea of guilty
or nolo contendere) of a crime involving violence, theft, fraud, dishonesty or
moral turpitude; (ii) intentional or negligent disclosure of confidential or
trade secret information of Buyer or Operating Companies (or any of their
Affiliates) to anyone who is not entitled to receive such information, (iii)
omission or dereliction of any statutory or common law duty of loyalty to Buyer
or Operating Companies or any of their Affiliates, (iv) violation of the
Buyer's or Operating Companies' Code of Conduct or other written policies or
procedures, or (v) repeated failure to carry out the duties of the employee's
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position despite specific instruction to do so. Buyer reserves the right to
determine, in its sole discretion, whether Cause exists to terminate an
employee (or otherwise take other appropriate action, which may or may not lead
to termination).
(c) Each employee of the Operating Companies
eligible to participate in the Parents' Completion Bonus Plan (other than
Non-Transitioned Employees), as listed on Schedule 7.1.1(c) shall be entitled
to receive from the Plan such amounts, if any, as are payable under the Plan.
(d) For purposes of Section 7.1.1(a) and (b), a
position shall be considered to be "comparable to the position held by such
employee of the Operating Companies immediately prior to the Closing Date," a
"comparable employment position," and to be a "comparable position of
employment," if the position: (1) offers cash compensation of not less than
100% of the employee's monthly salary (excluding any target bonus opportunity,
commission or fringe benefits) which such employee of the Operating Companies
was receiving immediately prior to the Closing Date as listed on Schedule
5.1.16(b)(i) (as it may be updated) and, if applicable, an opportunity to earn
commissions; and (2) has duties and responsibilities which are not
significantly less than the duties and responsibilities of such employee
immediately prior to the Closing Date , and is at a work location which (i) is
not located more than 50 highway miles from such employee's current work site,
and (ii) does not add more than 50 highway miles to such employee's daily
commute, and (iii) does not result in a daily round-trip commute in excess of
100 highway miles from such employee's principal residence.
7.1.2 Employee Plans.
(a) Parents shall retain all liabilities with
respect to benefits accrued and claims incurred with respect to all employees
of the Operating Companies under any Benefit Plan of Parents and/or Operating
Companies (but not including accrued vacation) as of the last moment of the day
before the Closing Date, or, to the extent the third sentence of Section 7.1.4
applies, as of the last moment of the last day of the month in which the
Closing occurs, including, but not limited to, with respect to individuals who
are receiving short-term disability benefits on the day prior to the closing
Date, the remainder of any short-term disability benefits to which such
individuals would be entitled under the Parents' plan (but for the transaction
set forth in this Agreement). Except as otherwise provided in this Agreement,
as of the last moment of the Closing Date, all Transitioned Employees will
cease to participate as active employees in or accrue benefits under Parents'
Benefit Plans. Thereafter, neither the Buyer nor any of its Affiliates nor any
employee of the Operating Companies shall assume or be entitled to participate
in any of Parents' Benefit Plans, except to the extent such plans provide by
their terms for participation after the Closing Date, Parents are required to
provide certain benefits pursuant to this Agreement, or as otherwise required
by law. Except as otherwise expressly provided herein, Parents shall be solely
responsible for any and all costs, liabilities and obligations under any
Benefit Plan relating to any period of employment with the Operating Companies
prior to the Closing Date, whether arising as a matter of contract, Law or
otherwise.
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(b) As of the first moment of the Closing Date,
all Transitioned Employees shall be eligible to participate in the 401(k) plan
and the health and welfare benefit plans, programs and practices of the Buyer
generally applicable to other similarly-situated employees of the Buyer (the
"Buyer Plans").
(c) Parents and Operating Companies will
effectuate the Transitioned Employees' participation in the Buyer's 401(k) plan
through a trustee to trustee transfer of account balances to Buyer's 401(k)
plan upon Closing. Buyer's 401(k) plan will be amended prior to the trustee
to trustee transfer to preserve the protected benefits of the Transitioned
Employees.
7.1.3 Recognition of Prior Service. The Buyer shall
recognize, from and after the Closing Date, each Transitioned Employee's
service with the Operating Companies, as set forth on Schedule 5.1.16(b) of
this Agreement with respect to each such employee, for purposes of determining
eligibility to participate in and vesting, and, if applicable, eligibility to
commence retirement benefits, but not benefit accruals, under the 401(k) plan
in which Transitioned Employees may participate, or such other qualified
pension or profit-sharing plans maintained by Buyer or established on or after
the Closing in which Transitioned Employees participate, and for purposes of
determining eligibility to participate in, and the schedule of benefits
provided by any group health plans, vacation and other paid time-off plans and
policies, severance, disability and other welfare benefit plans established or
maintained by the Buyer or its Affiliate on or after the Closing Date;
provided, that, each Transitioned Employee will be credited with: (a) the
lesser of (1) his or her accrued sick leave under the Parents' and/or Operating
Companies' sick leave policy in effect immediately prior to the Closing Date,
or (2) 80 hours of sick leave; and (b) his or her accrued (but unused) vacation
under the Parents' and/or Operating Companies' vacation policy in effect
immediately prior to the Closing Date. Notwithstanding the foregoing, for the
calendar year in which the Closing Date takes place, each Transitioned Employee
shall be entitled to take only the number of vacation days which he or she had
accrued during 1998, and had not used as of the Closing Date.
7.1.4 Health, Welfare and Fringe Benefit Plans.
(a) Without limiting the scope of the Section
7.1.2(a) hereto Parents shall be responsible for all claims regarding all
injuries or illnesses occurring prior to the Closing, and shall be responsible
for providing continuation health coverage as required under Part 6 of Title I
of ERISA and Code Section 4980B with respect to any qualifying event that
occurred on or prior to the Closing Date.
(b) For at least the one-year period after the
Closing Date, Buyer shall provide to all Transitioned Employees (who continue
in active employment with the Operating Companies for such entire one-year
period) medical, dental, vision care, life insurance, accidental death and
dismemberment and disability insurance benefits that are available to similarly
situated employees of the Buyer, and which shall contain no restrictions or
limitations with respect to pre-existing conditions, except to the extent any
such restrictions or limitations actually applied to such Transitioned
Employees prior to Closing Date. Parents shall not have
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any liabilities or obligations with respect to benefit claims under any such
Buyer Plans, or any other plans sponsored, maintained or contributed to the
Buyer for or in respect of any Transitioned Employee after the end of the day
before the Closing Date or, to the extent the following sentence applies, after
the last day of the month in which the Closing occurs. To the extent that the
Closing takes place on a date other than the last day of a month, and as a
result, Transitioned Employees remain covered by the Parents' group health
plans through the last day of the month in which the Closing occurs, coverage
of Transitioned Employees under the corresponding group health plans of the
Buyer following the Closing shall not commence until the first day of the month
following Closing.
(c) For purposes of determining whether any
Transitioned Employee or his or her covered dependents have satisfied any
required co-payments, annual deductibles and out-of-pocket maximums from and
after the Closing under the terms of the Buyer's or their Affiliate's group
health plan for the calendar year in which the Closing occurs, Transitioned
Employees and their covered dependents shall be credited with the amount of
deductibles and co-payments made by, or on behalf of, such Transitioned
Employees and their covered dependents under Parents' and/or Operating
Companies' group health plan for such year prior to the Closing Date.
7.1.5 Flexible Spending Arrangements. With respect to
flexible spending arrangements in which Transitioned Employees participate, to
the extent permitted under ERISA or the Code, Parents shall continue to apply
amounts credited to the accounts of Transitioned Employees for covered medical
expenses to the extent that such expenses are incurred on or before the Closing
Date and with respect to dependent care expenses to the extent such expenses
are incurred on or before December 31, 1998.
7.1.6 No Solicitation. Until the second anniversary of the
Closing Date, Parents shall not, on their own behalf or on behalf of any of
their Affiliates, directly or indirectly, solicit (with the exception of any
general solicitation of employment through some general advertising medium in
the ordinary course of business) the employment of any Transitioned Employee
who is employed by the Operating Companies, the Buyer or its Affiliate on the
date of such solicitation, and shall not employ any Transitioned Employee
included on Buyer's list of Key Employees set forth in Schedule 7.1.6. The
foregoing restrictions shall not apply to any individual whose employment with
the Operating Companies, Buyer or its Affiliate has been involuntarily
terminated.
7.2 WAGE AND WITHHOLDING REPORTING OBLIGATIONS.
Parents, Operating Companies and Buyer agree that, pursuant to the
"Alternative Procedure" provided in Section 5 of Revenue Procedure 84-77,
1984-2 C.B. 753, with respect to filing and furnishing forms W-2, W-3, and 941,
(a) Parents and/or Operating Companies and Buyer shall each report on a
predecessor-successor basis as set forth therein, (b) Parents and/or Operating
Companies shall be relieved from furnishing Forms W-2 to the Transferred
Employees, and (c) Buyer shall assume the obligations of Parents and/or
Operating Companies to furnish Forms W-2 to the Transferred Employees (without
regard to the actual length of
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employment with Buyer) for the full calendar year in which the Closing occurs.
Parents and/or Operating Companies shall fully cooperate with Buyer to allow
Buyer to fulfill its obligations hereunder.
7.3 TAX RETURNS.
(a) Parents shall (i) cause AT&T to include the Operating
Companies in its consolidated federal income Tax Returns for all Taxable
periods through and including the Closing Date; (ii) cause the Operating
Companies to be included in state and local income Tax Returns of Parents or
their Affiliates that are filed on a consolidated, combined or unitary basis
for all Taxable periods through and including the Closing Date; and (iii)
prepare or cause to be prepared and file or cause to be filed on a timely basis
all other Tax Returns that are required to be filed by or with respect to the
Operating Companies for Taxable periods ending on or before the Closing Date,
including such Tax Returns as are due after the Closing Date. Parents shall
pay or cause to be paid all Taxes due with respect to the Tax Returns described
in the immediately preceding sentence.
(b) Buyer shall prepare or cause to be prepared and file
or cause to be filed all Tax Returns of the Operating Companies for any Taxable
period that includes but does not end on the Closing Date ("Straddle Periods").
Buyer shall pay or cause to be paid all Taxes shown as due on the Tax Returns
described in the preceding sentence; provided, however, that Parents shall
reimburse Buyer, in accordance with the procedure set forth in Section
7.3(b)(i) and (b)(ii), for the portion of any such Taxes that relates to the
portion of the Straddle Period ending on the Closing Date.
(i) With respect to any Tax Return for a
Straddle Period, Buyer shall deliver, at least thirty (30) Business Days prior
to the due date for filling of such Tax Return (including extensions), to
Parents a statement setting forth the amount of Taxes for which Parents have a
reimbursement obligation pursuant to this Section 7.3(b) (the "Statement"), and
copies of such Tax Return. Parents shall have the right to review and approve
or disapprove such Tax Return and Statement prior to the filing of such Tax
Return. Parents and Buyer agree to negotiate and resolve in good faith any
issue arising as a result of the review of such Tax Return and the Statement
and mutually consent to the filling as promptly as possible of such Tax Return.
In the event the parties are unable to resolve any dispute within ten (10)
business days following the delivery of such Tax Return and the Statement,
Parents and Buyer shall jointly select a public accounting firm with nationally
recognized tax expertise ("Tax Arbitrator") to resolve the dispute. If the Tax
Arbitrator has not resolved the dispute within five (5) business days prior to
the due date (including extensions) for the filing of the Tax Return in
question, the Buyer may file such Tax Return without Parent's consent.
Notwithstanding the filing of such Tax Return, the Tax Arbitrator shall make a
determination with respect to any disputed issue, and the amount of Taxes for
which Parents have a reimbursement obligation under this Section 7.3(b) shall
be as determined by the Tax Arbitrator. The fees and expenses of the Tax
Arbitrator shall be shared equally by the Buyer and the Parents.
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(ii) Not later than (x) five (5) business days before the due
date for the payment of Taxes with respect to a Tax Return for a Straddle
Period or (y) in the event of a dispute, five (5) business days after notice to
Parents of resolution thereof, Parents shall pay to Buyer an amount equal to
the Taxes shown on the Statement or determined by the Tax Arbitrator as being
the responsibility of the Parents under this Section 7.3(b). Notwithstanding
the foregoing, in the case of a dispute, Parents shall pay to Buyer not later
than five (5) business days before the due date for the payment of Taxes with
respect to such Tax Return, the amount of Taxes that Parents reasonably believe
at such time is properly the responsibility of Parents under this Section
7.3(b). No payment pursuant to this Section 7.3(b) shall excuse Parents from
their indemnification obligations pursuant to this Agreement if the amount of
Taxes as ultimately determined (on audit or otherwise) for the periods covered
by such Tax Returns that are the responsibility of Parents exceeds the amount
of Parents' payment under this Section 7.3(b).
(c) All Tax Returns for Taxable periods ending on or
before the Closing Date or for Straddle Periods shall, insofar as they relate
to any Operating Company, be prepared on a basis consistent with the last
previous such Tax Returns filed in respect of such Operating Company, unless
Parents or Buyer, as the case may be, conclude that there is no reasonable
basis for such position.
7.4 APPORTIONMENT.
For purposes of apportioning any Taxes to the portion of a Straddle
Period that ends on the Closing Date, the determination shall be made assuming
that there was a closing of the books as of the close of business on the
Closing Date, and, in the case of Taxes attributable to any Operating Company's
ownership of any interest in any partnership or other "flowthrough" entity, as
if the taxable period of such partnership or other "flowthrough" entity ended
as of the close of business on the Closing Date; provided, however, that real
property, personal property and intangible property Taxes shall be apportioned
ratably on a daily basis between the periods in question.
7.5 TAX COOPERATION.
Parents and Buyer shall, and shall cause their Affiliates to, (a)
cooperate fully, as reasonably requested, in connection with the preparation
and filing of Tax Returns pursuant to Section 7.3 and in any Tax Proceeding;
(b) make available to the other, as reasonably requested, all information,
records or documents with respect to Tax matters pertinent to the Operating
Companies for all periods ending prior to or including the Closing Date; and
(c) preserve information, records or documents relating to Tax matters
pertinent to the Operating Companies that is in their possession or under their
control until the expiration of any applicable statute of limitations or
extensions thereof, and give the other party reasonable notice and an
opportunity to take possession of such information, records or documents prior
to destroying or discarding them.
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7.6 TAX SHARING AGREEMENTS.
Any Tax sharing agreements or arrangements (other than this
Agreement), written or unwritten, binding any of the Operating Companies shall
be terminated as of the Closing Date and none of the Operating Companies will
as of the Closing Date have any further obligations or liabilities under such
Tax sharing agreements or arrangements.
7.7 ALLOCATION OF PURCHASE PRICE.
The parties have agreed that the portion of the Purchase Price that is
allocable to the 50/50 License is $30,000,000, and that the portion of the
Purchase Price that is allocable to the noncompetition covenant contained in
Section 10.5 is $20,000,000.
7.8 TAX PROCEEDINGS.
(a) If any party receives written notice from any
governmental authority of a Tax Proceeding with respect to any Tax for which
the other party is obligated to provide indemnification under this Agreement,
such party shall give prompt written notice thereof to the other party;
provided, however, that the failure to give such notice shall not affect the
indemnification provided hereunder except to the extent that the failure to
give such notice materially prejudices the indemnifying party.
(b) Whenever any taxing authority sends a notice of an
audit, initiates an examination of an Operating Company or otherwise asserts a
claim, makes an assessment, or disputes the amount of Taxes (i) for any Taxable
period for which Parents are or may be liable under this Agreement, or (ii) for
any Taxable period that involves an issue that could potentially affect a
Taxable period for which Parents are or may be liable under this Agreement,
Buyer shall promptly inform Parents pursuant to the procedures in Section
7.8(a), and Parents shall have the right to control, at their cost, any
resulting Tax Proceedings and to determine whether and when to settle any such
claim, assessment or dispute to the extent such Tax Proceedings or
determinations affect the amount of Taxes for which Parents are liable under
this Agreement; provided, that Parents shall indemnify Buyer if such settlement
increases the past, present or future Tax liability of Buyer or any of its
Affiliates, or any Tax liability of any Operating Company for any Taxable
period or portion thereof beginning after the Closing Date provided that
Parents shall not be liable to indemnify Buyer pursuant to this sentence if
Parents obtain consent from Buyer for such settlement, which consent will not
be unreasonably withheld. Whenever any taxing authority sends a notice of an
audit, initiates an examination of the Operating Companies or otherwise asserts
a claim, makes an assessment or disputes the amount of Taxes (i) for any
taxable period for which Buyer is liable under this Agreement or (ii) for any
taxable period that involves an issue that could potentially affect a taxable
period for which Buyer is or may be liable under this Agreement, Parents shall
promptly inform Buyer pursuant to the procedures in Section 7.8(a), and Buyer
shall have the right to control, at its cost, any resulting Tax Proceedings and
to determine whether and when to settle any such claim, assessment or dispute,
except to the extent such Tax Proceedings or determinations affect the amount
of Taxes for which Parents are liable under this Agreement.
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(c) Parents and Buyer shall jointly control the conduct
of any Tax Proceeding relating to Taxes of any Operating Company for any
Straddle Period, and neither party shall settle such a Tax Proceeding without
the prior written consent of the other.
(d) Except as otherwise provided in this Section 7.8,
Buyer shall control all Tax Proceedings relating the Operating Companies.
(e) In the event that the provisions of this Section 7.8
and Sections 11.4 and 11.5 conflict or otherwise each apply by their terms,
this Section 7.8 shall exclusively govern all matters concerning Tax
Proceedings.
7.9 FIRPTA COMPLIANCE.
Parents shall deliver to Buyer at the Closing a certificate or
certificates in form and substance reasonably satisfactory to Buyer, duly
executed and acknowledged, certifying all facts necessary to exempt the
transactions contemplated hereunder from withholding under section 1445 of the
Code.
ARTICLE 8
CONDITIONS PRECEDENT
8.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF PARTIES.
The respective obligations of Buyer, on the one hand, and Parents on
the other, to consummate the transactions contemplated by this Agreement are
subject to the satisfaction, at or prior to the Closing Date, of each of the
following conditions:
8.1.1 No Injunction, Etc. No preliminary or permanent
injunction or other order shall have been issued by any federal or state court
of competent jurisdiction in the United States or by any United States federal
or state governmental or regulatory body nor any statute, rule, regulation or
executive order promulgated or enacted by any United States federal or state
governmental authority which restrains, enjoins or otherwise prohibits in any
material respects the transactions contemplated hereby and shall remain in
effect.
8.1.2 FCC and Other Approvals. The FCC shall have granted
its consent and approval, in all material respects, to the assignment or
transfer of the Licenses to Buyer. This condition shall be deemed to be
satisfied once all such consents and approvals have become Final Orders.
8.1.3 HSR Act. Any waiting period under the HSR Act
applicable to the consummation of the transactions contemplated hereby shall
have expired.
8.1.4 No Proceeding or Litigation. No suit, action or
proceeding before any court or any governmental or regulatory authority shall
have been commenced and be pending by
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any governmental or regulatory authority, no investigation by any governmental
or regulatory authority shall have been commenced and be pending, against any
of the parties hereto or any of their Affiliates, associates, officers or
directors seeking to restrain, prevent or change in any material respect the
transactions contemplated hereby or seeking material damages in connection with
any such transactions.
8.1.5 Stockholder Approval. Buyer Stockholder Approval
shall have been obtained.
8.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER.
In addition to the conditions set forth in Section 8.1, the
obligations of Buyer to consummate the transactions to be consummated at the
Closing are subject to the satisfaction, at or prior to the Closing Date, of
each of the additional conditions set forth below:
8.2.1 Accuracy of Representations and Warranties. The
representations and warranties of Parents contained herein or any certificate
delivered pursuant to this Agreement shall be true and correct in all material
respects on the date when made and shall be repeated at and as of the Closing
Date and shall be true and correct in all material respects on the Closing Date
as so made again (unless a representation is made as of a specific date, and in
such event it shall be true and correct in all material respects as of such
date).
8.2.2 Performance of Agreements. Each of Parents shall
have performed in all material respects all obligations and agreements, and
complied in all material respects with all covenants and conditions contained
in this Agreement, to be performed or complied with by it prior to or at the
Closing Date.
8.2.3 Certificates. Buyer shall have received a
certificate from each Parent, dated the Closing Date, signed by the President
or any authorized Vice President of such Parent, in his capacity as an officer
of such Parent, to the effect that, to the best of their knowledge, information
and belief, the conditions specified in Section 8.2.1 and Section 8.2.2 have
been satisfied.
8.2.4 Opinion of Counsel for Parents. Buyer shall have
received an opinion of Parents' Counsel and Parents' FCC Counsel, in each case
dated the Closing Date, addressed to Buyer and in each case in a form agreed to
by the parties.
8.2.5 Other Deliveries. Parents shall have delivered to
Buyer at the Closing the following:
(a) a certificate of incumbency for the officers
executing documents on behalf of Parents and certified copies of the
resolutions duly adopted by the directors of each Parent, and signed by the
Secretary or Assistant Secretary, each authorizing the transactions
contemplated by this Agreement;
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(b) a certificate of the Secretary or Assistant
Secretary certifying the resolutions referred to in Section 8.2.5(a) have not
been rescinded, modified, or withdrawn and that such resolutions are in full
force and effect as of the Closing Date;
(c) a complete and accurate list, in all material
respects, as of a date no more than ten (10) business days prior to the Closing
Date, of the Accounts Receivable;
(d) accurate and complete copies of all Licenses
listed on Schedule 5.1.4(b) and all Licenses acquired after the date hereof and
prior to the Closing;
(e) evidence reasonably satisfactory to Buyer of
the release of any and all Liens not constituting Permitted Liens; and
(f) such further certificates and documents
evidencing consummation by Parents of the transactions contemplated hereby as
Buyer shall reasonably request.
8.2.6 Consents and Filings. Parents shall have made each
of the notice filings set forth in Schedule 5.1.3.
8.2.7 Transition Services Agreements. Parents shall have
entered into transition services agreements in the forms provided in Exhibit
8.2.7 (the "Transition Services Agreements").
8.2.8 Distribution Agreement. Parents shall have entered
into a distribution agreement with Buyer in the form provided in Exhibit 8.2.8
(the "Distribution Agreement").
8.2.9 No Material Adverse Change. There shall have been no
Material Adverse Changes since the date hereof, and Buyer shall have received a
certificate dated the Closing Date to such effect. For purposes of this
Agreement, a reduction of Net Revenue and/or EBITDA in an amount up to 20% of
the Net Revenue Target and/or the EBITDA Target, respectively, shall be
excluded from any determination of Material Adverse Effect or Change.
8.2.10 Financial Conditions. Closing Net Revenue, as
defined in Section 4.2(a)(i), shall be at least 80% of the Net Revenue Target
and Closing EBITDA, as defined in Section 4.2(a)(i), shall be at least 80% of
the EBITDA Target.
8.3 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PARENTS.
In addition to the conditions set forth in Section 8.1, the
obligations of Parents to consummate the transactions to be consummated at the
Closing are subject to the satisfaction, at or prior to the Closing Date, of
each of the additional conditions set forth below:
8.3.1 Accuracy of Representations and Warranties. The
representations and warranties of Buyer contained herein or any certificate
delivered pursuant to this Agreement shall be true and correct in all material
aspects on the date when made and shall be repeated at and as
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of the Closing Date and shall be true and correct in all material respects on
the Closing Date as so made again (unless a representation is made as of a
specific date, and in such event it shall be true and correct in all material
respects as of such date).
8.3.2 Performance of Agreements. Buyer shall have
performed in all material respects all obligations and agreements, and complied
in all material respects with all covenants and conditions contained in this
Agreement, to be performed or complied with by it prior to or at the Closing
Date.
8.3.3 Certificates. Parents shall have received a
certificate from Buyer, dated the Closing Date, signed by the President or any
authorized Vice President of Buyer, in his capacity as an officer of Buyer, to
the effect that, to the best of his knowledge, information and belief, the
conditions specified in Section 8.3.1 and Section 8.3.2 have been satisfied.
8.3.4 Payment of Purchase Price. McCaw shall have received
satisfactory evidence of payment of the Purchase Price at Closing in accordance
with Article 4.
8.3.5 Opinion of Counsel for Buyer. Parents shall have
received an opinion of Buyer's Counsel and Buyer's FCC Counsel, dated the
Closing Date, in each case in a form agreed to by the parties.
8.3.6 Other Deliveries. Buyer shall have delivered to
Parents at the Closing the following:
(a) a certificate of incumbency for the officers
executing the documents on behalf of Buyer and certified copies of the
resolutions duly adopted by the directors of Buyer, and signed by the Secretary
or Assistant Secretary, each authorizing the transactions contemplated by this
Agreement;
(b) a certificate of the Secretary or Assistant
Secretary certifying that the resolutions referred to in Section 8.3.6(a) have
not been rescinded, modified or withdrawn and that such resolutions are in full
force and effect as of the Closing Date; and
(c) such further certificates and documents
evidencing the consummation by Buyer of the transactions contemplated hereby as
Parents shall reasonably request.
8.3.7 No Buyer Material Adverse Change. There shall have
been no Buyer Material Adverse Change since the date hereof, and Parents shall
have received a certificate dated the Closing Date to such effect.
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8.3.8 No Change of Control.
(a) No Change of Control of Buyer shall have
occurred. For purposes of this Agreement, "Change of Control" of Buyer will be
deemed to have occurred at such time as (i) any Telecom Competitor becomes or
enters into an agreement to become the beneficial owner (within the meaning of
Rule 13d-3 or any successor rule or regulation promulgated under the Securities
Exchange Act of 1934, as amended) of twenty-five percent (25%) or more of the
total voting power of Buyer's voting securities, (ii) Buyer becomes a Telecom
Competitor, or becomes or enters into an agreement to become the beneficial
owner (within the meaning of Rule 13d-3 or any successor rule or regulation
promulgated under the Securities Exchange Act of 1934, as amended) of
twenty-five (25%) or more of the total voting power of the voting securities of
any Telecom Competitor, (iii) there shall be consummated, or an agreement shall
be entered into for, any consolidation or merger involving Buyer in which Buyer
will not be the continuing or surviving entity or pursuant to which the voting
securities of Buyer will be converted into cash, securities or other property,
and any Telecom Competitor becomes or will become the beneficial owner of
twenty-five percent (25%) or more of the voting securities of the surviving
entity after such consolidation or merger, or (iv) any Telecom Competitor has
the right to nominate and elect or cause to be nominated and elected a director
or an individual to a comparable position of Buyer or any of its Affiliates or
any officer, director, employee or other representative of any Telecom
Competitor is elected or appointed as a director or comparable position of
Buyer or any of its Affiliates.
(b) For purposes of this Agreement, "Telecom
Competitor" means the Persons set forth in a side letter between the parties,
and any other Person (other than AT&T and its Affiliates) that derives annual
revenue in excess of $1 billion (adjusted annually to account for inflation
based on changes in the Consumer Price Index, as adjusted by the U.S.
Department of Labor, bureau of Labor Statistics) from the offering of
telecommunications services (excluding Paging and Messaging Services) and their
Affiliates.
8.3.9 Certificate of Designation. Buyer shall have filed
with the Secretary of State of the State of Delaware a certificate of
designation for the Series C Preferred Stock in the form provided in Exhibit
8.3.9.
8.3.10 Registration Rights Agreement. Buyer shall have
entered into a registration rights agreement with Parents in the form provided
in Exhibit 8.3.10.
8.4 WAIVER OF CONDITIONS.
Buyer, in its discretion, may waive, in whole or in part, at or prior
to the Closing Date, the failure of satisfaction of any of the conditions
precedent to its obligations set forth herein. Parents may, in their
discretion, waive, in whole or in part, at or prior to the Closing Date, the
failure of satisfaction of any of the conditions precedent to their obligations
set forth herein. No such waiver by Buyer or Parents shall be effective unless
made in writing.
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ARTICLE 9
TERMINATION AND DEFAULT
9.1 GENERAL.
This Agreement may be terminated and the transactions contemplated
hereby may be abandoned at any time prior to the Closing Date, as set forth
below:
9.1.1 Mutual Consent. This Agreement may be terminated by
the mutual consent of Buyer and Parents.
9.1.2 Order or Decree. This Agreement may be terminated by
Parents or Buyer if any court of competent jurisdiction in the United States or
other United States governmental body shall have issued an order, decree,
ruling or taken any other action restraining, enjoining or otherwise
prohibiting in any material respects the transactions contemplated hereby and
such order, decree, ruling or other action shall have become final and
nonappealable.
9.1.3 Failure of Conditions.
(a) The Agreement may be terminated by Parents
upon five (5) days written notice to Buyer, in the event that any of the
conditions precedent to the Parents' obligations set forth in Section 8.1 and
Section 8.3 with respect to Buyer are not satisfied at or during the respective
times therein indicated (other than by reason of the material breach by Parents
of any of its representations, warranties, covenants, or agreements set forth
herein) and such conditions are not either (i) cured by Buyer within five (5)
days after Parents give Buyer such notice, or (ii) waived by Parents at or
prior to the Closing Date.
(b) This Agreement may be terminated by Buyer
upon five (5) days written notice to Parents, in the event that any of the
conditions precedent to Buyer's obligations set forth in Section 8.1 and
Section 8.2 with respect to Parents are not satisfied at or during the
respective times therein indicated (other than by reason of the material breach
by Buyer of any of its representations, warranties, covenants, or agreements
set forth herein) and such conditions are not either (i) cured by Parents
within five (5) days after Buyer gives Parents such notice, or (ii) waived by
Buyer at or prior to the Closing Date.
9.1.4 Outside Date. This Agreement may be terminated by
Parents or Buyer (a) if the Closing shall not have occurred within nine months
following the date hereof (the "Outside Date") or (b) if one or more of the
conditions to such party's obligation to consummate the transactions
contemplated hereby cannot be satisfied within nine months following the date
hereof; provided however, that no party may exercise its rights under this
Section 9.1.4 if such party is in material breach or default under this
Agreement.
9.1.5 Union Activity. This Agreement may be terminated by
Buyer if any of the Operating Companies enters into collective bargaining
negotiations or an agreement or other negotiations or agreement with a labor
union or association.
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9.1.6 Stockholder Approval. This Agreement may be
terminated by Parents if (x) Buyer's stockholders fail to approve the Proposal
at the Stockholders Meeting, or (y) the Stockholders Meeting has not occurred
within one hundred fifty (150) days of the date hereof, unless any delay beyond
such date is the result of a breach of this Agreement by either Parents or
their Affiliates.
9.2 PROCEDURE UPON TERMINATION.
In the event of the termination of this Agreement, written notice
thereof shall promptly be given to the other parties hereto and this Agreement
shall terminate, all further obligations of the parties hereunder to satisfy
the conditions precedent to the Closing shall terminate, and the transactions
contemplated hereby shall be abandoned without further action by any of the
parties hereto except that Section 12.18 (Confidentiality) shall survive such
termination.
9.3 EFFECT OF TERMINATION.
Nothing in this Article 9 shall relieve any party hereto of any
liability for intentional or willful breach of this Agreement. The parties
shall have no liability for termination of this Agreement for any reason other
than an intentional or willful breach of this Agreement; provided, that, Buyer
shall promptly pay Parents a termination fee of $9,000,000 by wire transfer of
immediately available funds if this Agreement is terminated by Parents pursuant
to Section 9.1.6, unless (x) the failure of the Stockholders Meeting to occur
is due to events beyond the reasonable control of Buyer, or (y) Buyer has the
right to terminate this Agreement pursuant to any provision of Section 9.1,
without regard to any requirement of notice.
ARTICLE 10
POST-CLOSING TRANSACTIONS
10.1 TRANSITION.
Parents shall cooperate with Buyer, at Buyer's expense, and agree to
use their reasonable efforts to assist Buyer in a smooth transition of the
ownership of the Operating Companies on the Closing Date, including the
preservation of the continued services of employees that Buyer wishes to retain
and the preservation for Buyer of the goodwill of the Operating Companies'
suppliers, customers and others having business relations with the Operating
Companies.
10.2 ACCESS TO BOOKS AND RECORDS.
After the Closing, Parents shall allow representatives of Buyer
reasonable opportunity from time to time during normal business hours to
inspect and copy records which pertain to the operation of the Business prior
to the Closing Date and which are not transferred to Buyer hereunder. After
the Closing, Buyer shall allow representatives of Parents reasonable
opportunity from time to time during normal business hours to inspect and copy
records which
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pertain to the operation of the Business prior to the Closing Date and which
are transferred to Buyer hereunder.
10.3 [INTENTIONALLY OMITTED.]
10.4 CONFIDENTIALITY OF CUSTOMER LISTS.
All documents and computer files containing the names and addresses of
the paging customers of the Operating Companies shall become Buyer's property
as of the Closing, and all copies thereof shall be turned over to Buyer, and
shall not be retained or used in whole or part by Parents or any of their
Affiliates after the Closing; provided, however, that Parents and their
Affiliates may retain any information obtained (a) by Parents and their
Affiliates in the ordinary course of business prior to the Closing which is
integrated with information related to Persons not customers of the Operating
Companies or (b) pertaining to common customers.
10.5 NONCOMPETITION.
(a) For purposes of this Agreement, the term "Restricted
Period" shall mean the period from the Closing Date until the earliest of:
(i) the date that is five (5) years from the
Closing Date;
(ii) a Change of Control; or
(iii) the Distribution Agreement shall have been
terminated by Parents because Buyer is in material breach thereunder (other
than any such breach which is the result of a Force Majeure Event).
(b) As further consideration for the transactions
contemplated hereby, neither Parent nor its Affiliates will during the
Restricted Period, for any reason whatsoever, directly or indirectly, for
itself or on behalf of or in conjunction with any other person, persons,
company, partnership, corporation or business of whatever nature, engage in any
business that involves the selling of Paging or Messaging Services anywhere in
the United States (the "Territory"), except as expressly permitted pursuant to
this Agreement or the Distribution Agreement.
(c) During the Restricted Period, Parents and their
Affiliates will not, directly or indirectly, purchase the stock or assets of
any entity which derives a majority of its revenues from Paging and Messaging
Services. If Parents or any of their Affiliates purchase the stock or assets
of an entity with a business providing Paging and Messaging Services during the
Restricted Period, they shall offer to sell such Paging and Messaging Services
business to Buyer upon such terms and conditions as Buyer and Parents may
mutually agree. If Buyer and Parents cannot agree upon the price for such a
transaction, Parents shall obtain a valuation for the business from a
nationally recognized investment banker and offer to sell the business to Buyer
on terms and conditions in accordance with such valuation. The cost of
obtaining such valuation shall be borne by Parents; provided, that, for any
Paging and Messaging Services business with
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annual net revenues of less than $20,000,000, such cost shall be borne equally
by Parents, on the one hand, and Buyer, on the other hand. Parents may operate
a Paging and Messaging Services business acquired subject to the limitations
described herein until Buyer purchases such business from Parents or, if Buyer
elects not to purchase the business from Parents, Parents may operate such
business (or sell to third parties such business) for any time thereafter.
Notwithstanding anything to the contrary, Parents and their Affiliates ("Parent
Group") may own and/or acquire, solely as an investment, securities of any
entity which is publicly traded if Parent Group does not, directly or
indirectly, beneficially own five percent (5%) or more of any class of
securities of such entity.
(d) For purposes of this Agreement, "Paging and Messaging
Services" means wireless telecommunications services:
(i) which use a one-way signaling path, or a
non-symmetrical two-way signal path having an inbound (i.e., return path)
signaling speed of 9.6kbps or less, and
(ii) which are transmitted to portable,
battery-powered devices which devices are used solely, and not in conjunction
with other devices, to transmit and receive messages, and
(iii) where messages transmitted to and from such
devices are read directly by individuals.
The parties' intent in defining "Paging and Messaging Services" as set
forth above is to restrict Parents and their Affiliates, pursuant to this
Section 10.5, from competing in the traditional paging market. "Paging and
Messaging Services" shall expressly exclude any paging or messaging services in
cellular, digital cellular, ESMR and/or CDPD applications, or in other services
used for the transmission of voice communications.
(e) Because of the difficulty of measuring economic
losses to Buyer as a result of a breach of any of the foregoing covenants, and
because of the immediate and irreparable damage that could be caused to Buyer
for which it would have no other adequate remedy, each Parent agrees that the
foregoing covenants may be enforced by Buyers in the event of breach by such
Parent, by injunctions and restraining orders.
(f) The parties agree that the foregoing covenants impose
a reasonable restraint on each Parent in light of the Business on the date of
the execution of this Agreement, assuming the completion of the transactions
contemplated hereby.
(g) The covenants in this Section 10.5 are severable and
separate, and the unenforceability of any specific covenant shall not affect
the provisions of any other covenant. Moreover, in the event any court of
competent jurisdiction shall determine that the scope, time or territorial
restrictions set forth are unreasonable, then it is the intention of the
parties that such restrictions be enforced to the fullest extent which the
court deems reasonable, and the Agreement shall thereby be reformed.
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(h) It is specifically agreed that the period of five (5)
years stated at the beginning of this Section 10.5 during which the agreements
and covenants of Parents made in this Section 10.5 shall be effective, shall be
computed by excluding from such computation any time during which Parents are
found by a court of competent jurisdiction to have been in violation of any
provision of this Section 10.5. The covenants contained in this Section 10.5
shall not be affected by any breach of any other provision hereof by any party
hereto except as provided in this Section 10.5.
10.6 INTERCOMPANY AGREEMENTS
Except for this Agreement, the Distribution Agreement, the Transition
Agreements and the agreements set forth on Schedule 5.1.4(a), each and every
agreement, whether written or oral, in effect exclusively between one or more
of the Operating Companies, on the one hand, and one or more of the Parents or
any subsidiary of parents (other than the Operating Companies), on the other
hand, shall automatically terminate effective as of the Closing.
10.7 PROVISION OF RECIPROCAL EMPLOYEE PLANS FOR PAGING AND CELLULAR
SERVICE
Parents and Buyer each agree to reciprocally extend employee and
dependent rate plans for Paging and Messaging Services and cellular services to
existing employees on those accounts in place at Closing; provided, that, Buyer
shall not be obligated to pay for any cellular services received by employees
under such plans. The parties' respective obligations will terminate the
earlier of (a) two years from the Closing Date or (b) upon notification of
employee's termination of employment with Parent/Buyer.
ARTICLE 11
INDEMNIFICATION AND SURVIVAL
11.1 INDEMNIFICATION BY PARENTS.
Each Parent shall, jointly and severally, indemnify, defend, protect
and hold harmless Buyer and its officers, directors, employees, stockholders,
assigns, successors and Affiliates (each a "Buyer Indemnified Party" and
collectively, the "Buyer Indemnified Parties") from, against and in respect of:
(a) all liabilities, losses, claims, damages, punitive
damages, causes of action, lawsuits, administrative proceedings (including
informal proceedings), investigations, audits, demands, assessments,
adjustments, judgments, settlement payments, deficiencies, penalties, fines,
interest (including interest from the date of such damages) and costs and
expenses (including without limitation reasonable attorneys' fees and
disbursements of every kind, nature and description) (collectively, "Damages")
suffered, sustained, incurred or paid by Buyer Indemnified Parties to the
extent resulting from or arising out of, directly or indirectly:
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(i) any breach of any representation or warranty
of Parents set forth in this Agreement or any Schedule or certificate delivered
by or on behalf of Parents in connection herewith; or
(ii) any non-fulfillment of any covenant or
agreement by Parents under this Agreement; or
(iii) any liabilities of the Operating Companies
with respect to unpaid accounts payable on the Closing Date that had not been
paid within forty-five (45) days,` Litigations disclosed on Schedule 5.1.7,
other than such matters described in (a)(v) below, and liabilities not
expressly disclosed in the Financial Statements, this Agreement or the
Schedules hereto to the extent relating to the business, operations or assets
of the Operating Companies prior to the Closing Date; provided, that, Parents
shall not be liable for any such liabilities with respect to Litigations
disclosed on Schedule 5.1.7, other than such matters described in (a)(v) below,
or undisclosed liabilities which are incurred in the ordinary course of
business (e.g., liability for workers compensation claims), unless such
liabilities exceed $50,000 individually or, for such liabilities that do not
exceed $50,000, Parents shall be liable to Buyer solely to the extent they
exceed $500,000 in the aggregate; or
(iv) all payments due pursuant to the terms of the
Parent's Completion Bonus Program, and except as otherwise expressly provided
herein, all payments due pursuant to the terms of any Benefit Plan with respect
to employment prior to the Closing Date and to the extent all events requiring
such payment occurred prior to the Closing Date; or
(v) any liability with respect to the
Interconnection Litigation set forth on Schedule 5.1.7; or
(vi) the existence or release of any Hazardous
Material from, at, on, or under any Owned Real Property or Leased Real Property
prior to the Closing Date, and any activities or circumstances associated with
the Operating Companies' operations prior to the Closing Date which constituted
Hazardous Material Activities regardless of whether such releases, Hazardous
Material Activities, or circumstances were in compliance with Environmental
Laws or were disclosed to Buyer hereunder; or
(vii) any noncompliance prior to the Closing Date
by any Operating Company with applicable Environmental Laws, regardless of
whether such activities or circumstances were disclosed to Buyer hereunder; or
(viii) any Liability of any Operating Company for
Taxes (A) for any Taxable period or portion thereof ending on or before the
Closing Date, (B) resulting from or attributable to such Operating Company
having been a member of any Affiliated Group on or prior to the Closing Date or
as a result of any tax sharing, tax indemnity or tax allocation agreement or
any other express or implied agreement to indemnify any other person for Taxes
or (C) resulting from an inclusion of any adjustment in taxable income for any
Tax period or portion thereof that ends after the Closing Date under Section
481(c) of the Code as a result of a
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change in method of accounting for a Tax period ending prior to the Closing
Date or pursuant to the provisions of any agreement entered into with any
taxing authority with regard to the Tax liability of any of the Operating
Companies for any Tax period ending prior to the Closing Date; and, without
limiting any of the foregoing and for the avoidance of doubt, any liability or
other amount payable as a result of or in connection with any of the Tax
Proceedings described on Schedule 5.1.6(d).
(b) [Intentionally Omitted.]
11.2 INDEMNIFICATION BY BUYER.
Buyer shall indemnify, defend, protect and hold harmless Parents and
their officers, directors, employees, stockholders, assigns, successors and
Affiliates (each a "Parent Indemnified Party" and collectively, the "Parent
Indemnified Parties") from, against and in respect of:
(a) any and all Damages suffered, sustained, incurred or
paid by the Parent Indemnified Parties to the extent resulting from or arising
out of, directly or indirectly:
(i) any breach of any representation or warranty
of Buyer in this Agreement or any Schedule or certificate delivered by or on
behalf of Buyer in connection herewith; or
(ii) any non-fulfillment of any covenant or
agreement by Buyer under this Agreement; or
(iii) the business, assets, operations and
activities of the Operating Companies, except for Damages against which Parents
have expressly agreed to indemnify Buyer pursuant to this Article 11. Without
limiting Buyer's obligations under this Section 11.2(a)(iii), if, with respect
to the Interconnection Litigation set forth on Schedule 5.1.7, it is finally
adjudicated that the LECs are entitled to compensation for Dedicated
Transmission Facilities (as defined in Schedule 5.1.7), the Parents shall be
obligated to indemnify Buyer only for Damages resulting from the use of those
facilities prior to Closing.
(b) [Intentionally Omitted.]
11.3 LIMITATION.
Notwithstanding the foregoing:
(a) there shall be no liability for indemnification under
this Article 11 unless, and solely to the extent that, the aggregate amount of
Damages to Buyer Indemnified Parties on the one hand, and Parent Indemnified
Parties on the other, exceeds $500,000 (the "Indemnification Threshold");
provided, however, that the Indemnification Threshold shall not
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apply to (i) adjustments to the Purchase Price as set forth in Sections 4.2 and
4.3; (ii) Damages described in Sections 11.1(a)(ii)-(viii) or Sections
11.2(a)(ii) or (iii);
(b) the aggregate amount of Buyer's liability on the one
hand, and Parents' liability on the other, under this Article 11 shall not
exceed $8,000,000; provided, however, that Parents' liability for Damages
described in Sections 11.1(a)(ii)-(viii) and Buyer's liability for Damages
described in Sections 11.2(a)(ii) and (iii) shall not be subject to, or count
toward, such limitation; and
(c) for purposes of the indemnity in this Article 11, (i)
all representations and warranties contained in Article 5 are made without any
limitations as to materiality and (ii) the limitations set forth in Sections
11.3(a), 11.3(b) and 11.7 with respect to the representations and warranties
contained in Article 5 shall in no way limit the obligations to indemnify for
Damages described in Sections 11.1(a)(ii)-(viii) or Sections 11.2(a)(ii) and
(iii).
11.4 CLAIMS FOR INDEMNIFICATION.
Whenever any claim shall arise for indemnification hereunder, the
party entitled to indemnification (the "indemnified party") shall promptly
notify the other party (the "indemnifying party") of the claim and, when known,
the facts constituting the basis for such claim. In the event of any claim for
indemnification hereunder resulting from or in connection with any claim or
legal proceedings by a third party, the notice to the indemnifying party shall
specify, if known, the amount of the liability arising therefrom. The
indemnified party shall not settle or compromise any claim by a third party for
which it is entitled to indemnification hereunder without the prior written
consent of the indemnifying party.
11.5 DEFENSE BY INDEMNIFYING PARTY.
In connection with any claim giving rise to a right of indemnification
hereunder resulting from or arising out of any claim or legal proceeding by a
person who is not a party to this Agreement, the indemnifying party at its sole
cost and expense may, upon written notice to the indemnified party, assume the
defense of any such claim or legal proceeding. The indemnified party shall be
entitled to participate in (but not control) the defense of any such action,
with its counsel and at its own expense. If the indemnifying party does not
assume the defense of any such claim or litigation resulting therefrom, (a) the
indemnified party may defend against such claim or litigation, in such manner
as it may deem appropriate, including, but not limited to, settling such claim
or litigation with the written consent of the indemnifying party, and (b) the
indemnifying party shall be entitled to participate in (but not control) the
defense of such action, with its counsel and at its own expense.
11.6 MANNER OF INDEMNIFICATION.
Subject to Section 11.5 above, the obligations of the indemnifying
party hereunder shall be effected by payment of cash or delivery of a certified
or cashier's check or redemption of
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Metrocall Preferred Stock, with accreted stated value, plus accrued dividends,
in the amount of the indemnification liability.
11.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
All covenants and obligations to be performed after the Closing Date
contained in this Agreement or in any other certificate or document delivered
pursuant to this Agreement shall survive the Closing. All representations and
warranties contained in this Agreement or in any other certificate or document
delivered pursuant to this Agreement shall survive the Closing for a period of
eighteen (18) months.
11.8 INDEMNIFICATION NET OF INSURANCE AND COLLATERAL BENEFITS.
The liability of an indemnifying party under this Agreement shall be
determined after taking into account insurance proceeds received by the
indemnified party, and no insurer of an indemnified party shall be entitled to
subrogation to the indemnified party's indemnification rights against the
indemnifying party. In addition, the liability of an indemnifying party shall
be (a) reduced to take into account any net Tax benefit arising from the
deductibility of any Damages to which an indemnification payment relates, and,
(b) increased to take into account any net Tax cost, which does not result from
an adjustment to asset basis (whether tangible or intangible), arising from the
receipt of indemnity payments thereunder. Any indemnification payment
hereunder shall initially be made without regard to this paragraph and shall be
reduced to reflect any net Tax benefit or increased to reflect any net Tax cost
only after the indemnified party has actually realized such benefit or such
cost. For purposes of this Agreement, an indemnified party shall be deemed to
have actually realized a net Tax benefit or net Tax cost to the extent that,
and at such time as, the amount of Taxes payable by such indemnified party is
(i) reduced below the amount of Taxes that such Indemnified Party would have
been required to pay but for deductibility of such Damages, and (ii) increased
above the amount of Taxes that such indemnified party would have been required
to pay but for the receipt of such indemnification payments. The amount of any
reduction or increase hereunder shall be adjusted to reflect any Final
Determination with respect to the indemnified party's liability for Taxes and,
if necessary, Parents or Buyer, as the case may be, shall make payments to the
other to reflect such adjustment. Any indemnity payment under this Agreement
shall be treated as an adjustment to the Purchase Price for Tax purposes,
unless a Final Determination with respect to the indemnified party or any of
its Affiliates causes any such payment not to be treated as an adjustment to
the Purchase Price for U.S. federal income tax purposes.
11.9 EXCLUSIVITY OF REMEDY.
Parents and Buyer acknowledge that, following the Closing, this
Article 11 and the respective indemnification rights provided for herein shall,
to the extent permitted by law, be the exclusive remedy of each of them with
respect to this Agreement and the transactions contemplated hereby, except to
the extent expressly provided otherwise.
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ARTICLE 12
MISCELLANEOUS
12.1 BROKERS.
Except as disclosed on Schedule 12.1, the transactions contemplated
hereby have been and shall be carried on by Buyer and Parents in such manner as
not to give rise to any valid claims against Parents or Buyer for a brokerage
commission, finder's fee or other like payment and each party agrees to
indemnify and hold the other harmless from and against any claims for brokerage
commissions or finder's fees insofar as such claims shall be alleged to be
based upon arrangements or agreements made by the indemnifying party or on its
behalf. Such indemnity shall include the cost of reasonable counsel fees in
connection with the defense of any such claims.
12.2 NOTICES.
Except as otherwise provided, all notices which are permitted or
required under this Agreement shall be in writing and shall be deemed given (a)
when delivered personally, (b) if by fax upon transmission with confirmation of
receipt by the receiving party's facsimile terminal, (c) if sent by documented
overnight delivery service on the date delivered or (d) if sent by mail, five
(5) business days after being mailed by registered or certified mail, postage
prepaid, addressed as follows, or to such other person or address as may be
designated by notice to the other party:
If to Buyer, to:
Metrocall, Inc.
6677 Richmond Highway
Alexandria, Virginia 22306
Attn: Vincent D. Kelly, Chief Financial Officer and Treasurer
Fax Number: (703) 768-9625
with a copy (which shall not constitute notice) to:
Wilmer, Cutler & Pickering,
2445 M Street, NW
Washington, DC 20037-1420
Attn: George P. Stamas or John B. Watkins
Fax Number: (202) 663-6363
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or if to Parents, to both:
AT&T Corp.
295 North Maple Avenue
Basking Ridge, NJ 07920
Attention: Michael Waks, Director, Mergers and Acquisitions
Facsimile Number: (908) 221-2150
and
AT&T Corp.
295 North Maple Avenue
Basking Ridge, NJ 07920
Attention: Marilyn Wasser, Esq.
Facsimile Number: (908) 221-4408
With copies (which shall not constitute notice) to:
AT&T Wireless Services, Inc.
Suite 200
110 110th Avenue, N.E.
Bellevue, Washington 98004
Attn: Michael C. Schwartz, Esq.
Facsimile Number: (425) 990-4634
and
Frank C. Woodruff
Graham & James LLP/Riddell Williams P.S.
Suite 4500
1001 Fourth Avenue Plaza
Seattle, Washington 98154
Facsimile Number: (206) 389-1708
12.3 FEES AND EXPENSES.
Buyer and Parents shall share equally all transfer, documentary,
recordation, sales or other taxes or fees assessed or levied in connection with
the transactions contemplated hereby, regardless of whether Parents or Buyer is
obligated for collection and remittance of such taxes or fees. Parents shall
cooperate with Buyer in the filing for any available exemptions from such taxes
or fees. Parents and Buyer shall share equally the filing fees, if any,
required by the FCC. Each Party shall pay the filing fee relating to any filing
required by it, if any, in accordance with the HSR Act. All other expenses
incurred in connection with the negotiation, preparation, execution and
performance of this Agreement shall be paid by the party incurring such
expenses.
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12.4 ALTERNATIVE DISPUTE RESOLUTION.
12.4.1 If a dispute arises out of or relating to this
Agreement or the Transition Services Agreements, the Distribution Agreement or
the Property Transition Agreements (collectively, without this Agreement, the
"Ancillary Agreements") or the transactions contemplated hereby or thereby or
the construction, interpretation, performance, breach, termination,
enforceability or validity thereof, whether such claim is based on rights,
privileges or interests recognized by or based upon contract, tort, fraud,
misrepresentation, statute, common law or any other legal or equitable theory,
and whether such claim existed prior to or arises on or after the date hereof
(a "Dispute"), the dispute resolution processes set forth in this Section 12.4
shall govern the resolution of such dispute.
12.4.2 If a Dispute cannot be resolved by the executives
having primary managerial responsibility for the matter to which the Dispute
pertains, the parties shall attempt in good faith to resolve such Dispute
promptly by negotiation between executives who have authority to settle the
Dispute and who are at the level of the executives who have negotiated this
Agreement ("Senior Party Representatives").
12.4.3 A party may provide any other party notice (a
"Dispute Notice") of any Dispute that has not been resolved in the normal
course of business. Within ten (10) business days after delivery of the
Dispute Notice, the receiving party shall submit to each other party a response
(the "Response"). The Dispute Notice and the Response shall each include (a) a
statement setting forth the position of the party providing such notice and a
summary of arguments supporting such position, and (b) the name and title of
such party's Senior Party Representative and any other Persons who will
accompany the Senior Party Representative at the meeting at which the parties
will attempt to settle the Dispute. Within thirty (30) business days after
delivery of the Dispute Notice, the Senior Party Representatives of the parties
shall meet at a mutually acceptable time and place, and thereafter as often as
they reasonably deem necessary, to attempt to resolve the Dispute. All
reasonable requests for information made by one party to another will be
honored.
12.4.4 If the Dispute has not been resolved within fifty
(50) business days after delivery of the Dispute Notice, or if the parties fail
to meet within thirty (30) business days after delivery of the Dispute Notice,
any party may initiate arbitration of the Dispute as provided below. If no
party initiates arbitration within sixty (60) business days after delivery of
the Dispute Notice, then the parties shall automatically be released from any
and all liability for the Dispute.
12.4.5 All negotiations pursuant to this Section 12.4 shall
be treated as compromise and settlement negotiations. Nothing said or
disclosed, nor any document produced, in the course of such negotiations that
is not otherwise independently discoverable shall be offered or received as
evidence or used for impeachment or for any other purpose in any current ore
future arbitration.
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12.4.6 If the Dispute is not resolved as provided in
Sections 12.4.2 through 12.4.4, then any party may initiate arbitration
proceedings by providing each other party notice of such initiation of
arbitration. The Dispute shall then be settled by arbitration in accordance
with the CPR Non-Administered arbitration Rules in effect on the date hereof,
by a panel of three arbitrators. Each Party shall select one of the three
arbitrators and the two arbitrators so chosen shall select the third
arbitrator. The arbitrators shall be governed by the United States Arbitration
Act, 9 U.S.C. Sections 1-16, and judgment upon the award rendered by the
arbitrators may be entered by any court having jurisdiction thereof. The place
of arbitration shall be chosen by the three arbitrators. The arbitrators shall
be empowered to award only damages that are recoverable under the provisions of
Article 11, and each party hereby irrevocably waives any right to recover any
other damages with respect to any Dispute. The arbitrators shall not order
pre-hearing discovery of documents or the taking of depositions, although the
arbitrators may compel the attendance of witnesses and the production of
documents at the hearing to the extent permitted by the CPR Non-Administered
Arbitration Rules. Notwithstanding the foregoing, nothing in this Agreement
shall preclude the parties from seeking injunctive or other equitable relief
from a court with regard to any breach of this Agreement.
12.4.7 If a party does not provide a Dispute Notice within
one (1) year following the time the party first knows of the existence of the
acts or omissions that give rise to the Dispute, the party shall be forever
estopped from asserting the Dispute against any other party.
12.5 ASSIGNMENT.
This Agreement and the transactions contemplated hereby may not be
assigned or otherwise transferred, in whole or in part, by operation of law or
otherwise, without the prior written consent of the other party; provided,
however, that Buyer may assign any or all of its rights under this Agreement to
a subsidiary of Buyer but such assignment shall not release, affect or reduce
in any way Buyer's obligations to Parents hereunder.
12.6 COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of
which when so executed and delivered, shall be an original instrument, but such
counterparts together shall constitute a single agreement.
12.7 ENTIRE AGREEMENT.
This Agreement, including all Schedules and Exhibits hereto, and all
certificates and documents executed and delivered in connection with this
Agreement, when executed and delivered, together with the Confidentiality
Agreement dated November 25, 1997, constitute the entire agreement of the
parties, superseding and extinguishing all prior agreements and understandings,
representations and warranties, relating to the subject matter hereof.
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12.8 GOVERNING LAW.
This Agreement and the rights and obligations of the parties hereunder
shall be governed by the substantive laws of the State of New York applicable
to contracts made and to be performed therein, without reference to the
principles of conflicts of laws.
12.9 HEADINGS.
The section and other headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
12.10 SEVERABILITY.
Any provision of this Agreement which is invalid or unenforceable
shall be ineffective to the extent of such invalidity or unenforceability,
provided that such invalidity or unenforceability does not deny any party the
material benefits of the transactions for which it has bargained, such
invalidity or unenforceability shall not affect in any way the remaining
provisions hereof.
12.11 MODIFICATION AND AMENDMENT.
This Agreement may not be modified or amended except by written
agreement specifically referring to this Agreement and signed by the parties
hereto.
12.12 WAIVER.
No waiver of a breach or default hereunder shall be considered valid
unless in writing and signed by the party giving such waiver, and no such
waiver shall be deemed a waiver of any subsequent breach or default of the same
or similar nature.
12.13 PARTIES OBLIGATED AND BENEFITED.
Subject to the limitations set forth below, this Agreement will be
binding upon the parties hereto and their respective assignees and successors
in interest and will inure solely to the benefit of such parties and their
respective assigns and successors in interest, and no other Person will be
entitled to any of the benefits conferred by this Agreement.
12.14 RIGHTS TO SPECIFIC PERFORMANCE.
Parents acknowledge that the unique nature of the transactions
contemplated hereby renders money damages an inadequate remedy for the breach
by Parents of their obligations under this Agreement, and Parents agree that in
the event of such breach, Buyer will, upon proper action instituted by it, be
entitled to a decree of specific performance of this Agreement in lieu of any
monetary damages for such breach.
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12.15 ACTIONS.
Each party will execute and deliver to the other, from time to time at
or after the Closing, for no additional consideration and at no additional cost
to the requesting party, (without incurring any obligation to pay money) such
further assignments, certificates, instruments, records or other documents,
assurances or things as may be reasonably necessary to give full effect to this
Agreement and to allow each party fully to enjoy and exercise the rights
accorded and acquired by it under this Agreement.
12.16 TERMS.
Terms used with initial capital letters will have the meanings
specified, applicable to both singular and plural forms, for all purposes of
this Agreement. The words "include" and "exclude" and derivatives of those
words are used in this Agreement in an illustrative sense rather than limiting
sense.
12.17 CONSTRUCTION.
This Agreement and the Ancillary Agreements have been negotiated by
the parties and their respective legal counsel, and legal or equitable
principles that might require the construction of this Agreement and the
Ancillary Agreements or any provision hereof or thereof against the party
drafting will not apply in any construction or interpretation hereof or
thereof.
12.18 CONFIDENTIALITY.
(a) Buyer agrees that it will, and will cause its
associates, Affiliates, officers, other personnel and authorized
representatives to, hold in strictest confidence all Confidential Information,
and not disclose such information to others without the prior written consent
of Parents; provided, that, Buyer and such other Persons may provide such
information (i) to lenders, subject to the same requirements of confidentiality
as set forth in this Agreement, or (ii) which is legally required to be
furnished, and provided that Buyer or such other person, as the case may be,
notifies Parents in advance of its obligation to provide such Confidential
Information and fully cooperates with Parents to protect the confidentiality of
such information. The parties acknowledge that the Confidentiality Agreement
dated November 25, 1997 remains in full force and effect.
(b) Each Parent agrees that it will, and will cause its
associates, Affiliates, officers, other personnel and authorized
representatives to, hold in strictest confidence all Confidential Information
related to Buyer's business, and not, disclose such information to others
without the prior written consent of Buyer; provided, that, such Parent and
such other Persons may provide such information which is legally required to be
furnished, and provided that such Parent or such other Person, as the case may
be, notifies Buyer in advance of its obligation to provide such Confidential
Information and fully cooperates with Buyer to protect the confidentiality of
such information.
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(c) Notwithstanding the foregoing provisions of this
Section 12.18, the parties have agreed that any press release or public
announcement with respect to the transactions contemplated hereby will be
issued at such time after the execution of the Agreement and in such manner as
Buyer and Parents shall mutually determine, subject to compliance with all
applicable Laws.
[Execution Page Following]
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EXHIBIT 2.2
CERTIFICATE OF DESIGNATION, NUMBER, POWERS,
PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL AND OTHER RIGHTS OF
SERIES C CONVERTIBLE PREFERRED STOCK
OF
METROCALL, INC.
Metrocall, Inc. (the "Corporation"), a corporation organized
and existing under the General Corporation Law of the State of Delaware, hereby
certifies that, pursuant to the provisions of Section 151 of the General
Corporation Law of the State of Delaware, its Board of Directors,, adopted the
following resolution by unanimous written consent as of June 19, 1998:
WHEREAS, the Board of Directors of the Corporation is
authorized by the Amended and Restated Certificate of Incorporation to issue up
to 1,000,000 shares of preferred stock in one or more classes or series and, in
connection with the creation of any class or series, to fix by the resolutions
providing for the issuance of shares the powers, designations, preferences and
relative, participating, optional or other rights of the class or series and
the qualifications, limitations or restrictions thereof; and
WHEREAS, it is the desire of the Board of Directors of the
Corporation, pursuant to such authority, to authorize and fix the terms and
provisions of a series of preferred stock and the number of shares constituting
the series;
NOW, THEREFORE, BE IT RESOLVED, that there is hereby
authorized a series of preferred stock on the terms and with the provisions
herein set forth on Annex A attached to this resolution.
------------------------------------
Shirley B. White
Assistant Secretary
ATTEST:
- --------------------------
Vincent D. Kelly
Chief Financial Officer
<PAGE> 2
ANNEX A
SERIES C CONVERTIBLE PREFERRED STOCK
The powers, designations, preferences and relative,
participating, optional or other rights of the Series C Convertible Preferred
Stock of Metrocall, Inc. (the "Corporation") are as follows:
1. DESIGNATION AND AMOUNT.
This series of preferred stock shall be designated as "Series
C Convertible Preferred Stock," and shall have $0.01 par value per share. The
number of authorized shares constituting this series shall be 25,000 shares.
Shares of the Series C Convertible Preferred Stock shall have a stated value of
$10,000.00 per share (the "Stated Value"). The Corporation may issue
fractional shares of Series C Convertible Preferred Stock.
2. DIVIDENDS.
(a) Right to Receive Dividends. Holders of the Series C
Convertible Preferred Stock shall be entitled to receive, when and as declared
by the Board of Directors of the Corporation (the "Board of Directors"), to the
extent permitted by the General Corporation Law of the State of Delaware,
cumulative dividends at the rate, in the form, at the times and in the manner
set forth in this Section 2. Such dividends shall accrue on any given share
from the day of issuance of such share and shall accrue from day to day whether
or not earned or declared, provided, that dividends shall accrue on any shares
of Series C Convertible Preferred Stock issued pursuant to Section 4.3(b) of
that certain Stock Purchase Agreement dated June 26, 1998 by and among AT&T
Wireless Services, Inc., et al. and the Corporation from the date of the
initial issuance of Series C Convertible Preferred Stock by the Corporation
(the "Initial Issuance Date").
(b) Form of Dividend. Any dividend payment made with
respect to the Series C Convertible Preferred Stock may be made, at the sole
discretion of the Board of Directors, in cash out of funds legally available
for such purpose or by issuing the number of shares of Series C Convertible
Preferred Stock equal to the amount of the dividend divided by the Stated
Value. Any such dividend payment may be made, in the sole discretion of the
Board of Directors, partially in cash and partially in shares of Series C
Convertible Preferred Stock determined in accordance with the preceding
formula; provided, that, in the event that any such dividend payment is made
partially in cash and partially in shares of Series C Convertible Preferred
Stock, each holder of Series C Convertible Preferred Stock shall receive a
ratable amount of cash and Series C Convertible Preferred Stock that is
proportionate to the amount of Series C Convertible Preferred Stock held by
such holder on which such dividend is paid. All shares of Series C Convertible
Preferred Stock issued as a dividend shall be fully paid and nonassessable.
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(c) Dividend Rate. The dividend rate on the Series C
Convertible Preferred Stock shall be 8% of the Stated Value per share per
annum.
(d) Payment of Dividends. Dividends shall be payable in
arrears, when and as declared by the Board of Directors, on May 15 and November
15 of each year (each such semiannual payment date a "Dividend Payment Date"),
except that if any such date is a Saturday, Sunday or legal holiday then such
dividend shall be payable on the first immediately succeeding calendar day
which is not a Saturday, Sunday or legal holiday. Dividends shall accrue on
each share of Series C Convertible Preferred Stock as set forth in Section
2(a), and, after payment of a dividend as required hereunder, from and after
each Dividend Payment Date based on the number of days elapsed and a 365-day
year. If a payment of a dividend as required hereunder is not made, dividends
shall accrue from the date of the last payment in full of the required
dividend. The dividend payable on each Dividend Payment Date after issuance of
any share of Series C Convertible Preferred Stock shall be the pro rata portion
of the Dividend Rate based upon the number of days from and including the date
of issuance or the last Dividend Payment Date, as the case may be, up to and
including such Dividend Payment Date and a 365-day year. Each dividend shall
be paid to the holders of record of shares of the Series C Convertible
Preferred Stock as they appear on the books of the Corporation on such record
date, not more than 45 days nor fewer than 10 days preceding the respective
Dividend Payment Date, as shall be fixed by the Board of Directors.
(e) Dividend Preference. Dividends in cash on the Series
C Convertible Preferred Stock shall be payable after dividends are paid on the
Series A Convertible Preferred Stock, $.01 par value, of the Corporation (the
"Series A Preferred Stock"), on the Series B Junior Convertible Preferred
Stock, $.01 par value of the Corporation (the "Series B Preferred Stock"), and
on any other class or series of preferred stock of the Corporation that by its
terms is senior to the Series C Convertible Preferred Stock in right of payment
of dividends or liquidation preference (together with the Series A Preferred
Stock and the Series B Preferred Stock, "Senior Stock") and before any
dividends or distributions or other payments shall be paid or set aside for
payment upon the Common Stock or any other stock ranking on liquidation or as
to dividends or distributions junior to the Series C Convertible Preferred
Stock (any such stock, together with the Common Stock, being referred to
hereinafter as "Junior Stock"), other than a dividend, distribution or payment
paid solely in shares of Common Stock or other Junior Stock that is not
Redeemable Stock. If at any time dividends on the outstanding Series C
Convertible Preferred Stock at the rate set forth herein shall not have been
paid or declared and set apart for payment with respect to all preceding and
current periods, the amount of the deficiency shall be fully paid or declared
and set apart for payment, before any dividend, distribution or payment shall
be declared or paid upon or set apart for the shares of any class of Junior
Stock, other than a dividend, distribution or payment paid solely in shares of
Common Stock or other Junior Stock that is not Redeemable Stock. The term
"Redeemable Stock" shall mean any equity security that by its terms or
otherwise is required to be redeemed for cash on or prior to the Final
Redemption Date (as defined in Section 7) or is redeemable for cash at the
option of the holder thereof at any time prior to the Final Redemption Date.
If there shall be outstanding shares of any Parity Securities
(as defined below), no full dividends shall be declared or paid or set apart
for payment on any such Parity Securities for any period unless full cumulative
dividends have been or contemporaneously are declared and paid or
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declared and a sum or additional shares of Series C Convertible Preferred Stock
as permitted hereunder sufficient for the payment thereof set apart for such
payment on the Series C Convertible Preferred Stock for all dividend periods
terminating on or prior to the date of payment of such dividends; provided that
in no event shall any dividends be declared or paid in cash on Parity
Securities unless dividends in cash of not less than a ratable amount are
declared and paid on Series C Convertible Preferred Stock. The term "Parity
Securities" shall mean any class or series of capital stock which is entitled
to share ratably with the Series C Convertible Preferred Stock in the payment
of dividends, including accumulations, if any, and, in the event that the
amounts payable thereon on liquidation are not paid in full, are entitled to
share ratably with the Series C Convertible Preferred Stock in any distribution
of assets; provided that Parity Securities shall not include any shares of
Series C Convertible Preferred Stock issued as dividends pursuant to this
Section 2.
If dividends on the Series C Convertible Preferred Stock and
on any other series of Parity Securities are in arrears, in making any dividend
payment on account of such arrears, the Corporation shall make payments ratably
(and ratably as to cash, in-kind or other payments) upon all outstanding shares
of the Series C Convertible Preferred Stock and shares of such other Parity
Securities in proportion to the respective aggregate amounts of dividends in
arrears on the Series C Convertible Preferred Stock and on such other series of
Parity Securities to the date of such dividend payment.
(f) Common Stock Dividends. If prior to ______, 2003
[fifth anniversary of closing], the Corporation pays or sets aside for payment
any dividend or distribution on the Common Stock (a "Common Stock Dividend")
(other than dividends or distributions paid solely in shares of Common Stock or
of rights, options or warrants to purchase Common Stock), the Series C
Convertible Preferred Stock will be entitled to receive Common Stock Dividends,
as and when paid on the Common Stock, in an amount per share equal to (i) the
Accreted Stated Value (as defined below) per share divided by the Conversion
Price, times (ii) the amount of the Common Stock Dividend payable per share of
Common Stock. Any Common Stock Dividend shall be paid to the holders of record
of shares of the Series C Convertible Preferred Stock as they appear on the
books of the Corporation on such record date as shall be fixed by the Board of
Directors for the payment of the Common Stock Dividend. If the Corporation
declares any Common Stock Dividend on or after ____________, 2003 [fifth
anniversary of closing], the Corporation will provide notice of the record date
for such dividend to the holders of record of shares of the Series C
Convertible Preferred Stock as they appear on the books of the Corporation,
such notice to be provided no later than at least fifteen (15) business days
prior to the record date and no later than the date on which the Corporation is
required to give notice of the record date for such dividend under Rule 10b-17
of the Securities and Exchange Commission or any successor rule or applicable
law.
3. LIQUIDATION PREFERENCE.
In the event of any bankruptcy, liquidation, dissolution or
winding up of the Corporation, either voluntary or involuntary, each holder of
Series C Convertible Preferred Stock at the time thereof shall be entitled to
receive, prior and in preference to any distribution of any of the assets or
funds of the Corporation to the holders of the Common Stock or other Junior
Stock by
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reason of their ownership of such stock, but after payment to holders of the
Senior Stock of any amounts to which they are entitled, an amount per share of
Series C Convertible Preferred Stock equal to the Stated Value plus any accrued
and unpaid dividends to the date of liquidation. If the assets and funds
legally available for distribution among the holders of Series C Convertible
Preferred Stock shall be insufficient to permit the payment to the holders of
the full preferential amount, then the assets and funds shall be distributed
ratably among holders of Series C Convertible Preferred Stock in proportion to
the number of shares of Series C Convertible Preferred Stock owned by each
holder. If any Parity Securities are outstanding, and the assets and funds
legally available for distribution among the Series C Convertible Preferred
Stock and the Parity Securities shall be insufficient to permit the payment to
holders of Series C Convertible Preferred Stock the full preferential amount
and the preferential amount payable upon liquidation to any outstanding Parity
Securities, the holders of Series C Convertible Preferred Stock and the holders
of such other Parity Securities shall share ratably (and ratably as to cash or
other distributions) in any distribution of assets of the Corporation in
proportion to the full respective preferential amounts to which they are
entitled.
4. VOTING RIGHTS.
The holders of the Series C Convertible Preferred Stock shall
have no voting rights except as set forth in the Corporation's Amended and
Restated Certificate of Incorporation, as it may be amended or restated from
time to time (the "Certificate of Incorporation") or as provided by applicable
law, and except for the following:
(a) Changes in Organizational Documents. So long as the
Series C Convertible Preferred Stock is outstanding, the Corporation shall not,
without first obtaining the affirmative vote or written consent of the holders
of a majority of the then outstanding shares of Series C Convertible Preferred
Stock, voting as a single class, amend, repeal, modify or supplement (i) any
provision of the Certificate of Incorporation or the Bylaws of the
Corporation, each as in effect on the Initial Issuance Date, or any successor
bylaws, if such amendment, repeal, modification or supplement in any way
adversely affects the powers, designations, preferences or other rights of the
Series C Convertible Preferred Stock, provided, that nothing contained herein
shall be construed to prohibit the Corporation from issuing any debt or equity
securities, regardless of ranking, or (ii) this Certificate of Designation,
Number, Powers, Preferences and Relative, Participating, Optional and Other
Rights of Series C Convertible Preferred Stock ("Certificate of Designation").
(b) Means of Voting. The rights of the holders of Series
C Convertible Preferred Stock under this Section 4 may be exercised (i) at a
meeting of the holders of shares of such Series C Convertible Preferred Stock,
called for the purpose by the Corporation; or (ii) by written consent signed by
the holders of the requisite percentage of the then outstanding shares of the
Series C Convertible Preferred Stock, delivered to the Secretary or Assistant
Secretary of the Corporation. Except to the extent otherwise provided herein or
to the extent that holders of a majority of the Series C Convertible Preferred
Stock decide otherwise, any meeting of the holders of Series C Convertible
Preferred Stock shall be conducted in accordance with the provisions of the
By-Laws of the Corporation applicable to meetings of stockholders. In the
event of a conflict or inconsistency
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between the By-Laws of the Corporation and any term of this Certificate of
Designation, including, but not limited to this Section 4, the terms of this
Certificate of Designation shall prevail.
5. CONVERSION
Shares of Series C Convertible Preferred Stock may be
converted into shares of Common Stock, on the terms and conditions set forth in
this Section 5.
(a) Optional Conversion. Beginning on _____________,
2003 [fifth anniversary of closing] (except as to any shares which shall have
been called for redemption prior to _____________, 2003 [fifth anniversary of
closing]), each holder of Series C Convertible Preferred Stock shall have
right, at any time and from time to time thereafter, to convert all, but not
less than all, of the shares of Series C Convertible Preferred Stock held by
such holder or its affiliates into that number of shares of Common Stock equal
to the Accreted Stated Value of the shares converted divided by the Conversion
Price, provided, that in the event that on or after ________, 2003 the
Corporation delivers a notice of redemption of Series C Convertible Preferred
Stock pursuant to Section 6(c), the right to convert may be exercised with
respect to shares of Series C Convertible Preferred Stock called for redemption
in such notice only during the period ending fifteen (15) days prior to the
redemption date specified in such notice.
(b) Change of Control. (i) If a Change of Control
occurs prior to ____________, 2003 [fifth anniversary of closing], each holder
of shares of Series C Convertible Preferred Stock may, at its option, at times
specified below, convert all, but not less than all, such shares held by such
holder into the number of fully paid and nonassessable shares of Common Stock
determined by dividing (x) the Stated Value multiplied by the number of shares
surrendered plus any accrued but unpaid dividends on such shares by (y) the
Conversion Price.
(ii) For the purposes of this Section 5(b),
"Change of Control" means the occurrence of one or more of the following
events:
(A) a person or entity or group (as that
term is used in Section 13(d)(3) of the Securities Exchange Act of
1934, as amended) of persons or entities (in each case, a "Beneficial
Owner") shall have become the beneficial owner of a majority (by
voting power or otherwise) of the securities of the Corporation
ordinarily having the right to vote in the election of directors;
(B) during any consecutive three-year
period commencing on or after ____________, 1998 [closing date],
individuals who at the beginning of such period constituted the Board
of Directors (together with any director elected by the Series A
Preferred Stock and any new directors whose election by such Board of
Directors or whose nomination for election by the stockholders of the
Corporation was approved by a vote of 66 2/3% of the directors then
still in office who were either directors at the beginning of such
period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board
of Directors then in office;
- 5 -
<PAGE> 7
(C) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of
all, or substantially all, the assets of the Corporation to any
Beneficial Owner (other than any wholly owned subsidiary of the
Corporation);
(D) the merger or consolidation of the
Corporation with or into another corporation or the merger of another
corporation into the Corporation with the effect that immediately
after such transaction any Beneficial Owner shall have become the
beneficial owner of securities of the surviving corporation of such
merger or consolidation representing a majority of the combined voting
power of the outstanding securities of the surviving corporation
ordinarily having the right to vote in the election of directors; or
(E) the adoption of a plan leading to
the liquidation or dissolution of the Corporation;
(iii) (A) The Corporation shall give the
holders notice pursuant to Section 5(g) of a Change of Control within
five business days after the occurrence of such Change of Control.
Except as set forth in Section 5(b)(iii)(B), the right to convert set
forth in this Section 5(b) shall be exercised by any holder only
within 10 business days after such notice has been given of the
occurrence of the Change of Control.
(B) If the Corporation agrees to enter
into a transaction that, when consummated, would result in a Change of
Control defined in Sections 5(b)(ii)(C) or (D), the Corporation shall
give notice to the holders of such transaction at least 15 business
days prior to the consummation of the transaction, and the holders
may, within 10 business days after the date of such notice, exercise
the right to convert the Series C Convertible Preferred Stock into
Common Stock, such conversion to take effect at or immediately prior
to the record date for holders of Common Stock to receive the
consideration to be paid to such holders in the transaction. In
addition, if the transaction results is a Going Private Transaction
(as defined below), then the Conversion Price for purposes of
conversion as described in the preceding sentence shall be the lesser
of (x) the Conversion Price in effect immediately prior to the notice
by the Corporation given to holders pursuant to the preceding sentence
and (y) the value of the consideration per share of Common Stock
(determined by the Board of Directors, in good faith, as of the date
of the first public announcement of the transaction) to be paid to
holders of Common Stock in the transaction times 1.1, provided, that
in no event shall the Conversion Price for this purpose be less than
$7.40 (as such amount may be adjusted pursuant to that certain Warrant
Agreement between the Corporation and The First National Bank of
Boston dated as of November 15, 1996, which adjustment provisions are
substantially similar to the adjustment provision in 5(i)). For
purposes hereof, a "Going Private Transaction" shall mean a Change of
Control defined in Sections 5(b)(ii) (C) or (D), as a result of which,
immediately after consummation of such transaction, the securities
into which the Series C Convertible Preferred Stock would be
convertible are not listed on a national securities exchange or the
NASDAQ National Market System or, even if such securities are so
listed, the number of issued and outstanding shares of such
securities (excluding (x) shares owned by any beneficial owner of a
majority of such shares and (y) "restricted" shares within the meaning
of Rule 144 under the Securities Act
- 6 -
<PAGE> 8
of 1933, or any successor rule [that have not been held for the
requisite holding period under Rule 144(d)]) is less than three (3)
times the number of shares into which all outstanding shares of the
Series C Convertible Preferred Stock would be convertible after giving
effect to the transaction.
(c) Conversion Price. The Conversion Price of the shares
of Series C Convertible Preferred Stock shall be $10.40, adjusted as set forth
herein.
(d) Common Stock. The Common Stock to be issued upon
conversion hereunder shall be fully paid and nonassessable.
(e) Procedures for Conversion. (i) In order to convert
shares of Series C Convertible Preferred Stock into shares of Common Stock, the
holder shall surrender the certificate or certificates therefore, duly endorsed
for transfer, at any time during normal business hours, to the Corporation at
its principal or at such other office or agency then maintained by it for such
purpose (the "Payment Office"), accompanied (or preceded as required by Section
5(a)) by written notice to the Corporation of such holder's election to convert
and (if so required by the Corporation or any conversion agent) by an
instrument of transfer, in form reasonably satisfactory to the Corporation and
to any conversion agent, duly executed by the registered holder or by his duly
authorized attorney, and any cash payment required pursuant to Section
5(e)(iii). As promptly as practicable after the surrender for conversion of
any share of the Series C Convertible Preferred Stock in the manner provided in
the preceding sentence, and the payment in cash of any amount required by the
provisions of Section 5(e)(iii), but in any event within three Trading Days of
such surrender for payment, the Corporation will deliver or cause to be
delivered at the Payment Office to or upon the written order of the holder of
such shares, certificates representing the number of full shares of Common
Stock issuable upon such conversion, issued in such name or names as such
holder may direct. Such conversion shall be deemed to have been made
immediately prior to the close of business on the date of such surrender of the
shares in proper order for conversion, and all rights of the holder of such
share as a holder of such shares shall cease at such time and the person or
persons in whose name or names the certificates for such shares of Common Stock
are to be issued shall be treated for all purposes as having become the record
holder or holders thereof at such time; provided, however, that any such
surrender and payment on any date when the stock transfer books of the
Corporation shall be closed shall constitute the person or persons in whose
name or names the certificates for such shares of Common Stock are to be issued
as the record holder or holders thereof for all purposes immediately prior to
the close of business on the next succeeding day on which such stock transfer
books are opened.
(ii) The Corporation shall not be required to
issue fractional shares of Common Stock upon conversion of shares of Series C
Convertible Preferred Stock. At the Corporation's discretion, in the event the
Corporation determines not to issue fractional shares, in lieu of any
fractional shares to which the holder would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by the Conversion
Price.
(iii) The issuance of certificates for shares of
Common Stock upon conversion shall be made without charge for any issue, stamp
or other similar tax in respect of such
- 7 -
<PAGE> 9
issuance. However, if any such certificate is to be issued in a name other
than that of the holder of record of the shares converted, the person or
persons requesting the issuance thereof shall pay to the Corporation the amount
of any tax which may be payable in respect of any transfer involved in such
issuance or shall establish to the satisfaction of the Corporation that such
tax has been paid or is not payable.
(f) Reservation of Stock Issuable Upon Conversion. The
Corporation shall reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of the Series C Convertible Preferred Stock, 11,500,000 shares of
Common Stock. If at any time the number of authorized and unissued shares of
Common Stock that are reserved for issuance upon conversion of the shares of
Series C Convertible Preferred Stock, shall not be sufficient to effect the
conversion of all then outstanding shares of the Series C Convertible Preferred
Stock, the Corporation will take such corporate action as may, in the opinion
of its counsel, be necessary to increase its authorized but unissued shares of
Common Stock to such number of shares as shall be sufficient for such purpose,
including, without limitation, taking appropriate board action, recommending
such an increase to the holders of Common Stock, holding shareholders meetings,
soliciting votes and proxies in favor of such increase to obtain the requisite
stockholder approval and upon such approval, the Corporation shall reserve and
keep available such additional shares solely for the purpose of effecting the
conversion of the shares of the Series C Convertible Preferred Stock.
(g) Notices. Any notice required by the provisions of
this Certificate of Designation to be given to the holders of shares of Series
C Convertible Preferred Stock shall be deemed given five days after such notice
is deposited in the United States mail, postage prepaid, and addressed to each
holder of record at its address appearing on the books of the Corporation, or
the next business day after such notice is delivered to a recognized overnight
courier service with next-business day delivery specified.
(h) Reorganization, Merger or Sale of the Corporation.
(i) Notwithstanding any other provision hereof,
in case of (A) any reorganization or any reclassification of the
capital stock of the Corporation or (B) any merger or consolidation of
the Corporation, that in any such case results in the Common Stock
being converted into other securities or property, or the right to
receive other securities or property, then, to the extent the
Corporation or the holders do not otherwise redeem or convert all
outstanding shares of Series C Convertible Preferred Stock,
appropriate adjustment (as determined by the Board of Directors) shall
be made in the application of the provisions herein set forth with
respect to the rights and interests of the holders of the Series C
Convertible Preferred Stock, to the end that the provisions set forth
herein shall thereafter be applicable, as nearly as equivalent as is
practicable, in relation to any shares of stock thereafter deliverable
upon the conversion of the shares of Series C Convertible Preferred
Stock.
(ii) In case of any merger, consolidation,
reclassification or other similar reorganization, to the extent the
Corporation is not the surviving entity, and the Corporation
- 8 -
<PAGE> 10
or the holders do not otherwise redeem or convert all outstanding
shares of Series C Convertible Preferred Stock, the Series C
Convertible Preferred Stock shall be converted into or exchanged for
and shall become shares of the surviving corporation having, in respect
of the surviving corporation, substantially the same powers,
preferences and relative participating, optional or other special
rights, and the qualifications, limitations or restrictions thereon,
that the Series C Convertible Preferred Stock had immediately prior to
such transaction. In the case the Corporation is not the surviving
entity, the Conversion Price shall be adjusted at the closing of the
transaction to equal the Conversion Price in effect immediately prior
to the Closing divided by the fair market value of the Common Stock at
the Closing multiplied by the fair market value of the Common Stock of
the surviving entity at the Closing.
(iii) References in this Section 5 to "Common
Stock" shall include all stock or other securities or property
(including cash) into which Common Stock is converted following any
merger, reorganization or reclassification of the capital stock of the
Corporation.
(i) Adjustments. The number of shares of Common Stock
issuable upon conversion of shares of the Series C Convertible Preferred Stock
that are then outstanding and the Conversion Price shall be subject to
adjustment from time to time as follows:
(i) Stock Dividends; Stock Splits; Reverse Stock
Splits. In case the Corporation shall (A) declare or pay a dividend
on its outstanding Common Stock in shares of Common Stock or make a
distribution to all holders of its outstanding Common Stock in shares
of Common Stock, (B) subdivide its outstanding Common Stock into a
greater number of shares or reclassify its outstanding Common Stock,
or (C) combine its outstanding Common Stock into a smaller number of
shares, the number of shares of Common Stock issuable upon conversion
of each share of Series C Convertible Preferred Stock shall be
adjusted so that the holder of each such share shall thereafter be
entitled to receive the kind and number of shares of Common Stock that
such holder would have owned or have been entitled to receive after
the happening of any of the events described above, had such share
been converted in full immediately prior to the happening of such
event or any record date with respect thereto (with any record date
requirement being deemed to have been satisfied), and, in any such
case, the number of shares of Common Stock issuable upon conversion of
each such share shall be subject to further adjustments under this
Section 5(i). An adjustment made pursuant to this Section 5(i)(i)
shall become effective at the record date, if any, for such event.
(ii) Distributions to Stockholders. In case the
Corporation shall issue to holders of its Common Stock rights,
options, warrants or convertible or exchangeable securities
(collectively, the "rights") entitling them to subscribe for or
purchase Common Stock at a price per share of Common Stock (determined
by dividing (A) the total amount receivable by the Corporation in
consideration of the issuance of such rights plus the total
consideration payable to the Corporation upon exercise, conversion or
exchange thereof, by (B) the total number of shares of Common Stock
covered by such rights) that is lower than
- 9 -
<PAGE> 11
the Current Market Price per share of Common Stock in effect
immediately prior to such issuance, then the number of shares of Common
Stock issuable upon conversion of all shares of Series C Convertible
Preferred Stock shall be increased in a manner determined by
multiplying the number of shares of Common Stock theretofore issuable
upon the conversion of all shares of Series C Convertible Preferred
Stock by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to the issuance of
such rights plus the number of additional shares of Common Stock
offered for subscription or purchase, and the denominator of which
shall be the number of shares of Common Stock outstanding immediately
prior to the issuance of such rights plus the number of shares of
Common Stock which the aggregate consideration to be received by the
Corporation in connection with such issuance (as defined in the
following sentence) would purchase at the then Current Market Price per
share of Common Stock. For purposes of this Section 5(i), the "Current
Market Price" per share of Common Stock for any date shall mean average
of the closing prices of the Common Stock for the 10 trading days
prior to such date. For purposes of this Section 5(i)(ii), the
"aggregate consideration to be received by the Corporation" in
connection with any issuance of such rights shall be deemed to be the
consideration received by the Corporation for such rights plus any
consideration or premiums stated in such rights to be paid for the
shares of Common Stock covered thereby.
(iii) Issuance of Common Stock at Lower Values. In
case the Corporation shall, in a transaction to which Section 5(i)(i)
is inapplicable (and, in any event, other than upon conversion of
Series A Preferred Stock, Series B Preferred Stock, or Series C
Convertible Preferred Stock, or upon exercise of any warrants or
employee stock options that were outstanding on the Initial Issuance
Date or pursuant to contractual commitments to which the Corporation
was bound on the Initial Issuance Date), issue or sell shares of
Common Stock, or rights, options, warrants or convertible or
exchangeable securities containing the right to subscribe for or
purchase shares of Common Stock, at a price per share of Common Stock
(determined, in the case of rights, options, warrants or convertible
or exchangeable securities, by dividing (A) the total amount
receivable by the Corporation in consideration of the issuance and
sale of such rights, options, warrants or convertible or exchangeable
securities, plus the total consideration payable to the Corporation
upon exercise, conversion or exchange thereof, by (B) the total number
of shares of Common Stock covered by such rights, options, warrants or
convertible or exchangeable securities) that is lower (at the date of
such sale or issuance) than the Current Market Price per share of
Common Stock in effect immediately prior to such sale or issuance or
for no consideration, then in each case the number of shares of Common
Stock thereafter issuable upon the conversion of the shares of Series
C Convertible Preferred Stock shall be increased in a manner
determined by multiplying the number of shares of Common Stock
theretofore issuable upon the conversion of all shares of Series C
Convertible Preferred Stock by a fraction, of which the numerator
shall be the number of shares of Common Stock outstanding immediately
prior to the sale or issuance, plus the number of additional shares of
Common Stock offered for subscription or purchase or to be issued upon
conversion or exchange of such convertible or exchangeable securities,
and of which the denominator shall be the number of shares of Common
Stock outstanding immediately prior to the sale or issuance plus the
number of shares of Common Stock which the aggregate consideration to
be
- 10 -
<PAGE> 12
received by the Corporation (as defined in the following paragraph) in
connection with such sale or issuance would purchase at the then
Current Market Price per share of Common Stock.
For the purpose of such adjustments the "aggregate
consideration to be received by the Corporation" therefor shall be
deemed to be the consideration received by the Corporation for such
rights, options, warrants or convertible or exchangeable securities
plus any consideration or premiums stated in such rights, options,
warrants or convertible or exchangeable securities to be paid for the
shares of Common Stock covered thereby.
In case the Corporation shall issue or sell shares of Common
Stock or rights, options, warrants or convertible or exchangeable
securities containing the right to subscribe for or purchase shares of
Common Stock for a consideration consisting, in whole or in part, of
property other than cash or its equivalent, then in determining the
"price per share of Common Stock" and the "consideration" receivable
by or payable to the Corporation for purposes of Sections 5(i)(ii) and
5(i)(iii), the Board of Directors of the Corporation shall determine,
in good faith, the fair value of such property. In case the
Corporation shall issue and sell rights, options, warrants or
convertible or exchangeable securities containing the right to
subscribe for or purchase shares of Common Stock, together with one or
more other securities as part of a unit at a price per unit, then in
determining the "price per share of Common Stock" and the
"consideration" receivable by or payable to the Corporation for
purposes of Sections 5(i)(ii) and 5(i)(iii), the Board of Directors of
the Corporation shall determine, in good faith, the fair value of the
rights, options, warrants or convertible or exchangeable securities
then being sold as part of such unit.
Any increase of the number of shares of Common Stock issuable
upon conversion of shares of Series C Convertible Preferred Stock
pursuant to this Section 5(i)(iii) shall be allocated among such
Series C Convertible Preferred Stock on a pro rata basis.
(iv) Expiration of Rights, Options and Conversion
Privileges. Upon the expiration of any rights, options, warrants or
conversion or exchange rights that have previously resulted in an
adjustment under this Section 5(i), if any thereof shall not have been
exercised, the number of shares of Common Stock issuable upon
conversion of Series C Convertible Preferred Stock shall be readjusted
and shall thereafter, upon any future exercise, be such as they would
have been had they been originally adjusted (or had the original
adjustment not been required, as the case may be) as if (i) the only
shares of Common Stock so issued were the shares of Common Stock, if
any, actually issued or sold upon the exercise of such rights,
options, warrants or conversion or exchange rights and (ii) such
shares of Common Stock, if any, were issued or sold for the
consideration actually received by the Corporation upon such exercise
plus the consideration, if any, actually received by the Corporation
for issuance, sale or grant of all such rights, options, warrants or
conversion or exchange rights whether or not exercised; provided that
no such readjustment shall have the effect of decreasing the number of
shares issuable upon conversion of Series C Convertible Preferred
Stock by a number that is in excess of the amount or number of the
adjustment initially made in respect of the issuance, sale or grant
- 11 -
<PAGE> 13
of such rights, options, warrants or conversion or exchange rights or
shall have the effect of decreasing the number of shares of Common
Stock that have been issued upon conversion of any shares of Series C
Convertible Stock prior to the date of such readjustment.
(v) De minimis Adjustments. No adjustment in the
number of shares of Common Stock issuable under any Series C
Convertible Preferred Stock shall be required unless such adjustment
would require an increase or decrease of at least one percent (1%) in
the number of shares of Common Stock purchasable upon a conversion of
Series C Convertible Preferred Stock; provided, that any adjustments
which by reason of this Section 5(i) are not required to be made shall
be carried forward and taken into account in any subsequent
adjustment. All calculations shall be made to the nearest
one-thousandth of a share.
(vi) Notice of Adjustment. Whenever the number
of shares of Common Stock or other stock or property issuable upon the
conversion of Series C Convertible Preferred Stock is adjusted, as
herein provided, the Corporation shall deliver to the holders thereof
a certificate of a firm of independent public accountants selected by
the Board of Directors of the Corporation (who may be the regular
accountants employed by the Corporation) setting forth the number of
shares of Common Stock or other stock or property issuable upon the
conversion of each share of Series C Convertible Preferred Stock after
such adjustment, setting forth a brief statement of the facts
requiring such adjustment and setting forth the computation by which
such adjustment was made and shall promptly mail by first class mail,
postage prepaid, to each holder notice of such adjustment or
adjustments.
(vii) Adjustment of Conversion Price. Whenever the
number of shares of Common Stock issuable upon conversion of the
Series C Convertible Preferred Stock is adjusted as provided in this
Section 5(i), the Conversion Price shall be adjusted by multiplying
such Conversion Price immediately prior to such adjustment by a
fraction, the numerator of which shall be the number of shares
issuable upon conversion of a share of Series C Convertible Preferred
Stock immediately prior to such adjustment, and the denominator of
which is the number of shares so issuable immediately thereafter.
6. OPTIONAL REDEMPTION
(a) Redemption Price. Beginning on ____________, 2001
[third anniversary of closing], the Corporation, at its sole option, may redeem
all, but not less than all, shares of the Series C Convertible Preferred Stock
for cash, at any time or from time to time, for the redemption price per
share set forth below:
<TABLE>
<CAPTION>
DATE OF REDEMPTION REDEMPTION PRICE
------------------ ----------------
<S> <C>
__________, 2001 to ________, 2002 105.0% of Redemption Value
</TABLE>
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<PAGE> 14
<TABLE>
<CAPTION>
DATE OF REDEMPTION REDEMPTION PRICE
------------------ ----------------
<S> <C>
__________, 2002 to ________, 2003 102.5% of Redemption Value
After ________, 2003 100.0% of Accreted Stated Value
</TABLE>
.
For purposes hereof, "Redemption Value" for a share of Series
C Convertible Preferred Stock shall equal the greater of (i) Accreted Stated
Value, and (ii) if the Current Market Price of the Common Stock on the date of
the notice of redemption is greater than the Conversion Price, then an amount
determined in accordance with the following formula:
RV = (CMP)(SV)/CP
For purposes of this formula:
RV = Redemption Value per share
SV = Accreted Stated Value per share
CMP = Current Market Price
CP = Conversion Price
"Accreted Stated Value" per share means the Stated Value per
share plus accrued and unpaid dividends, if any, on such share through the date
of redemption.
(b) Notice of Redemptions. Notice of redemptions shall
be given by first class mail, postage prepaid, not less than 20 nor more than
60 business days prior to the redemption date or, if such notice period is not
feasible in connection with a transaction described in Section 5(g), such
notice period as is practicable in the circumstances, to each holder of record
of the shares to be redeemed, at such holder's address as the same appears on
the books of the Corporation. Each such notice shall state: (i) the redemption
date; (ii) the place or places where certificates for such shares are to be
surrendered for payment of the redemption price; and (iii) that dividends on
the shares to be redeemed will cease to accrue on the redemption date.
(c) Cessation of Dividends on Shares Redeemed. Notice
having been mailed as stated in subsection (c) above, from and after the close
of business on the redemption date (unless default shall be made by the
Corporation in providing money for the payment of the redemption price of the
shares called for redemption), dividends on the shares of the Series C
Convertible Preferred Stock redeemed shall cease to accrue, and said shares
shall no longer be deemed to be outstanding, and all rights of the holders
thereof as stockholders of the Corporation (except the right to receive from
the Corporation the redemption price) shall cease. Upon surrender in
accordance with said notice of the certificates for any shares so redeemed
(properly endorsed or assigned for transfer, if the Board of Directors of the
Corporation shall so require and the notice shall so state), such shares shall
be redeemed by the Corporation at the redemption price aforesaid.
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<PAGE> 15
(d) Status of Redeemed or Converted Shares. Upon
redemption or conversion, any shares of the Series C Convertible Preferred
Stock which have been so redeemed or converted shall be retired and thereafter
have the status of authorized but unissued shares of preferred stock, without
designation as to series until such shares are once more designated as part of
a particular series by the Board of Directors or a duly authorized committee
thereof.
7. MANDATORY REDEMPTION.
On ___________, 2010 [twelfth anniversary of closing] (the "Final
Redemption Date"), the Corporation shall redeem from any source of funds
legally available therefor, in the manner provided in Section 6(c) above, all
of the shares of the Series C Convertible Preferred Stock then outstanding at a
redemption price equal to the Stated Value per share, plus, without
duplication, an amount in cash equal to all accrued and unpaid dividends per
share to the Final Redemption Date.
8. PREEMPTIVE RIGHTS.
No shares of Series C Convertible Preferred Stock shall have any
rights of preemption whatsoever as to any securities of the Corporation, or any
warrants, rights or options issued or granted with respect thereto, regardless
of how such securities or such warrants, rights or options may be designated,
issued or granted.
9. TRANSFERABILITY.
No shares of Series C Convertible Preferred Stock shall be
transferable without the consent of the Corporation until _______________,
_____ [18 months after closing]; provided, however, this provision shall
terminate and be of no further force or effect immediately upon the occurrence
of a Problematic Regulatory Change of Control. A "Problematic Regulatory
Change of Control" is a Change of Control which causes the Holder and/or its
affiliates to receive an attributable interest in any radio spectrum or FCC
Service with respect to which the FCC or applicable law imposes a spectrum cap
(including, without limitation, spectrum caps imposed on the holding of
broadband CMRS or narrowband PCS spectrum), multiple ownership restriction, or
other material limitation. "FCC Service" shall mean any service subject to FCC
(or successor agency) regulation or oversight.
- 14 -
<PAGE> 1
EXHIBIT 2.3
STOCKHOLDERS VOTING AGREEMENT AND PROXY
STOCKHOLDERS VOTING AGREEMENT AND PROXY, dated as of June 26, 1998
(this "Agreement"), by and among AT&T Wireless Services, Inc., a Delaware
corporation ("Wireless"), and the stockholders identified on Annex A hereto
(each, an "MC Stockholder" and collectively, the "MC Stockholders") of
Metrocall, Inc., a Delaware corporation ("MC").
WHEREAS, MC and Wireless have entered into a Stock Purchase Agreement
of even date herewith (the "Stock Purchase Agreement"), pursuant to which
Wireless and certain of its affiliates have agreed to sell their paging and
messaging business and a 50KHz/50KHz Narrowband Personal Communications Service
license to MC upon the terms and subject to the conditions set forth therein
(the "Transaction");
WHEREAS, as of the date hereof, each of the MC Stockholders is the
beneficial owner of, and has the sole right to vote and dispose of, the number
of shares (the "Owned Shares") of the common stock, par value $.01 per share,
of MC (the "MC Shares") which is set forth opposite such MC Stockholder's name
in Annex A;
WHEREAS, the issuance of Series C Convertible Preferred Stock of MC as
part of the consideration for the Transaction (the "Convertible Preferred
Stock") will be subject to approval by MC's stockholders; and
WHEREAS, as a condition to its willingness to enter into the Stock
Purchase Agreement, Wireless has required that each of the MC Stockholders
agree to vote their Owned Shares as described herein.
NOW, THEREFORE, in consideration of the foregoing and the agreements
set forth below, the parties hereto agree as follows:
1. Representation and Warranty of the MC Stockholders. Each of
the MC Stockholders, individually and not jointly, represents and warrants to
Wireless with respect to itself that:
(a) such MC Stockholder is the beneficial owner of the
number of MC Shares set forth opposite such MC Stockholder's name under the
column "Total Shares" in Annex A hereto, free and clear of any security
interests, liens, charges, encumbrances, equities, claims, options (other than
pledges pursuant to commercially customary brokers margin accounts) or
limitations of whatever nature and free of any other limitation or restriction
(including any restriction on the right to vote, sell or otherwise dispose of
the Owned Shares), other than those arising under the Securities Act of 1933,
as amended, and applicable state securities laws;
(b) other than the MC Shares set forth by such MC
Stockholder's name in Annex A hereto as "Total Shares," such MC Stockholder
does not own, of record or beneficially, any MC Shares;
<PAGE> 2
(c) this Agreement has been duly authorized by all
necessary action on the part of such MC Stockholder, has been duly executed by
such MC Stockholder and constitutes a valid and binding agreement of such
stockholder enforceable against such stockholder in accordance with its terms;
and
(d) neither the execution and delivery of this Agreement
by such MC Stockholder nor the consummation of the transactions contemplated
hereby will (i) require any consent, approval, authorization or permit of, or
filing with or notification to, any governmental or regulatory authority or
other person or (ii) conflict with or result in any breach or violation of any
provision of any charter, by-law or agreement to which such MC Stockholder is a
party or by which it or he or she is bound.
2. Agreement to Vote or Consent. Each MC Stockholder hereby
agrees to attend the meeting of stockholders of MC to be called pursuant to
Section 6.5 of the Stock Purchase Agreement (including any adjournment or
adjournments thereof) ("MC Meeting"), in person or by proxy, and to vote, or
cause to be voted (or, if the stockholders of MC act by written consent, to
consent in writing, or cause to consent in writing, with respect to) all MC
Shares, whether issued heretofore or hereafter, that such MC Stockholder owns
or has the right to vote or consent: (a) in favor of the issuance of the
Convertible Preferred Stock in the Transaction and (b) in favor of a proposed
amendment to the Amended and Restated Certificate of Incorporation of MC, as
amended, to increase the authorized number of MC Shares to 100,000,000.
3. Proxy. To secure each MC Stockholder's commitments set forth
in Section 2, each MC Stockholder constitutes and appoints Wireless or its
officers, and each of them, with full power of substitution, to be its true and
lawful proxy and attorney-in-fact from the date hereof until conclusion of the
MC Meeting (including any adjournment or adjournments thereof) to vote all MC
Shares then beneficially owned by such MC Stockholder in accordance with
Section 2. This proxy shall be deemed coupled with an interest, and is
irrevocable during the term of this Agreement and will survive the death,
incompetency and disability of any MC Stockholder who is an individual and will
survive the merger, liquidation, dissolution or other termination of any MC
Stockholder that is an entity.
4. Revocation of Proxies and Consents. To the extent
inconsistent with Section 2 hereof, each MC Stockholder hereby revokes any and
all previous proxies or written consents with respect to such MC Stockholder's
Owned Shares.
5. Transfer. From the date hereof until the first to occur of
the closing of the Transaction or the termination of the Stock Purchase
Agreement, no MC Stockholder will, directly or indirectly, sell, transfer,
pledge (other than pledges pursuant to commercially customary brokers margin
accounts) or otherwise dispose of, any Owned Shares (collectively, a
"Transfer") to any person other than Wireless or its designee, or grant an
option with respect to any of the foregoing, or enter into any other agreement
or arrangement with respect to any of the foregoing, unless such Owned Shares
remain subject to the MC Stockholder's obligations hereunder in the hands of
any transferee, provided, that nothing in this Agreement shall preclude
2
<PAGE> 3
the MC Stockholder from transferring that number of MC Shares in excess of the
number of Owned Shares free and clear of any obligations hereunder.
6. Specific Enforcement. The parties hereto acknowledge that
damages would be an inadequate remedy for a breach of this Agreement and that
the obligations of the parties hereto shall be specifically enforceable, in
addition to any other remedy which may be available at law or in equity.
7. Termination. This Agreement shall terminate on the earliest
of (i) the conclusion of the MC Meeting (including any adjournment thereof),
(ii) the agreement of the parties hereto to terminate this Agreement, or (iii)
termination of the Stock Purchase Agreement, but in any event shall terminate
no later than nine (9) months from the date of the Stock Purchase Agreement.
8. Successors and Assigns. This Agreement shall not be assigned,
except by operation of law or otherwise without the prior written consent of
the other parties hereto. This Agreement will be binding upon, inure to the
benefit of and be enforceable by each party and such party's respective heirs,
beneficiaries, executors, representatives and permitted assigns.
9. Scope of Agreement. Nothing in this Agreement shall, is
intended to, or shall be construed to, limit or in any way restrict the ability
of any MC Stockholder to act in such MC Stockholder's capacity as an officer or
director of MC or to exercise or carry out such MC Stockholder's fiduciary
duties as an officer or director of MC, so long as such MC Stockholder fulfills
his obligations under this Agreement.
10. Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
upon receipt, if delivered personally or by nationally recognized overnight
courier service, or mailed by registered or certified mail (postage prepaid,
return receipt requested) to the parties at the following addresses (or at such
other address for a party as shall be specified by like changes of address) or
sent by electronic transmission to the telecopier number specified below:
If to Wireless, to both:
AT&T Corp.
295 North Maple Avenue
Basking Ridge, NJ 07920
Attention: Michael Waks, Director, Mergers and Acquisitions
Facsimile Number: (908) 221-2150
and
3
<PAGE> 4
AT&T Corp.
295 North Maple Avenue
Basking Ridge, NJ 07920
Attention: Marilyn Wasser, Esq.
Facsimile Number: (908) 221-4408
With copies (which shall not constitute notice) to:
AT&T Wireless Services, Inc.
Suite 200
110 110th Avenue, N.E.
Bellevue, Washington 98004
Attn: Michael C. Schwartz, Esq.
Facsimile Number: (425) 990-4634
and
Frank C. Woodruff
Graham & James LLP/Riddell Williams P.S.
Suite 4500
1001 Fourth Avenue Plaza
Seattle, Washington 98154
Facsimile Number: (206) 389-1708
If to the MC Stockholders, to:
c/o Wilmer, Cutler & Pickering
2445 M Street, N.W.
Washington, D.C. 20037-1420
Attention: George P. Stamas and Thomas W. White
Telecopier No.: (202) 663-6363
11. Amendments. This Agreement may not be amended, changed
supplemented, waived or otherwise modified or terminated except by an
instrument in writing signed by Wireless and each MC Stockholder.
12. Entire Agreement. This Agreement embodies the entire
agreement and understanding among the parties hereto relating to the subject
matter hereof and supersedes all prior agreements and understandings relating
to such subject matter. There are no representations, warranties or covenants
by the parties hereto relating to such subject matter other than those
expressly set forth in this Agreement.
13. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the
4
<PAGE> 5
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that transactions contemplated
hereby are fulfilled to the extent possible.
14. Governing Law. This Agreement and all disputes hereunder
shall be governed by and construed and enforced in accordance with the laws of
the State of Delaware.
[Execution Page Following]
5
<PAGE> 6
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the MC Stockholders and a duly authorized officer of Wireless on
the day and year first written above.
AT&T WIRELESS SERVICES, INC.
/s/ DAVID J. PESTER
By: ---------------------------
Name: David J. Pester
Title: Authorized Signatory
6
<PAGE> 7
ANNEX A
MC STOCKHOLDERS
<TABLE>
<CAPTION>
Number of Total
Name and Signature Owned Shares Shares
------------------ ------------ ------
<S> <C> <C>
/s/ RONALD V. APRAHAMIAN
- -------------------------- 70,000 70,000
Ronald V. Aprahamian
/s/ HARRY L. BROCK, JR.
- -------------------------- 3,545,200 3,545,200
Harry L. Brock, Jr.
/s/ SUZANNE S. BROCK
- -------------------------- 200,000 200,000
Suzanne S. Brock
/s/ WILLIAM L. COLLINS, III
- -------------------------- 300,000 339,956
William L. Collins, III
/s/ MAX D. HOPPER
- -------------------------- 9,000 9,000
Max D. Hopper
/s/ RICHARD M. JOHNSTON
- -------------------------- 305 305
Richard M. Johnston
/s/ EDWARD E. JUNGERMAN
- -------------------------- 900 900
Edward E. Jungerman
</TABLE>
<PAGE> 8
ANNEX A
MC STOCKHOLDERS
<TABLE>
<CAPTION>
Number of Total
Name and Signature Owned Shares Shares
------------------ ------------ ------
<S> <C> <C>
/s/ JACKIE R. KIMZEY
- -------------------------- 39,765 39,765
Jackie R. Kimzey
/s/ FRANCIS A. MARTIN, III
- -------------------------- 50,000 50,000
Francis A. Martin, III
/s/ RYAL POPPA
- -------------------------- 10,000 10,000
Ryal Poppa
/s/ RAY RUSSENBERGER
- -------------------------- 1,900,000* 2,151,107
Ray Russenberger
/s/ ELLIOT H. SINGER
- -------------------------- 865,763 865,763
Elliot H. Singer
/s/ ROYCE R. YUDKOFF
- -------------------------- 12,061 12,061
Royce R. Yudkoff
</TABLE>
* Approximately 250,000 shares are subject to stock options previously granted
by Mr. Russenberger.
<PAGE> 9
ANNEX A
MC STOCKHOLDERS
<TABLE>
<CAPTION>
Number of Number of
Name and Signature Owned Shares Owned Shares
------------------ ------------ ------------
<S> <C> <C>
UBS CAPITAL LLC 970,365
By: /s/ MICHAEL GREENE
--------------------------
Name: Michael Greene
Its: Partner
By:
--------------------------
Name:
Its:
WILMINGTON SECURITIES, INC. 1,154,185
By: /s/ ANDREW H. MCQUARRIE
--------------------------
Name: Andrew H. McQuarrie
Its: Vice President
JULIET CHALLENGER, INC. 644,366
By: /s/ ANDREW H. MCQUARRIE
--------------------------
Name: Andrew H. McQuarrie
Its: Vice President
</TABLE>
<PAGE> 10
ANNEX A
MC STOCKHOLDERS
<TABLE>
<CAPTION>
Number of
Name and Signature Owned Shares
------------------ ------------
<S> <C>
C.G. Grefenstette and Thomas G. 14,130
Bigley, Trustees U/A/T Dated
8/28/68 for Juliet Lea Hillman
C.G. Grefenstette and Thomas G. 14,130
Bigley, Trustees U/A/T Dated
8/28/68 for Audrey Hilliard
Hillman
C.G. Grefenstette and Thomas G. 14,130
Bigley, Trustees U/A/T Dated
8/28/68 for Henry Lea
Hillman, Jr.
C.G. Grefenstette and Thomas G. 14,130
Bigley, Trustees U/A/T Dated
8/28/68 for William Talbott
Hillman
</TABLE>
By: /s/ C.G. GREFENSTETTE
---------------------------
C.G. Grefenstette, Trustee
By: /s/ THOMAS G. BIGLEY
--------------------------
Thomas G. Bigley, Trustee
<PAGE> 11
ANNEX A
MC STOCKHOLDERS
<TABLE>
<CAPTION>
Number of
Name and Signature Owned Shares
------------------ ------------
<S> <C>
Henry L. Hillman, Elsie Hilliard 166,028
Hillman and C.G. Grefenstette,
Trustees of the Henry L. Hillman
Trust U/A Dated November 18, 1985
</TABLE>
By: /s/ C.G. GREFENSTETTE
---------------------------
C.G. Grefenstette, Trustee
<PAGE> 1
EXHIBIT 2.4
VOTING AGREEMENT
VOTING AGREEMENT, dated as of June 26, 1998 (this "Agreement"), by
and among AT&T Wireless Services, Inc., a Delaware corporation ("Wireless"),
and Page America Group, Inc. ("Stockholder").
WHEREAS, Metrocall, Inc. ("MC") and Wireless have entered into a Stock
Purchase Agreement of even date herewith (the "Stock Purchase Agreement"),
pursuant to which Wireless and certain of its affiliates have agreed to sell
their paging and messaging business and a 50KHz/50KHz Narrowband Personal
Communications Service license to MC upon the terms and subject to the
conditions set forth therein (the "Transaction");
WHEREAS, as of the date hereof, Stockholder is the beneficial owner
of, and has the sole right to vote and dispose of, the number of shares of the
common stock, par value $.01 per share, of MC (the "MC Shares") which is set
forth opposite such Stockholder's name on the signature page hereof;
WHEREAS, the issuance of Series C Convertible Preferred Stock of MC as
part of the consideration for the Transaction (the "Convertible Preferred
Stock") will be subject to approval by MC's stockholders; and
WHEREAS, as a condition to its willingness to enter into the Stock
Purchase Agreement, Wireless has requested that the Stockholder agree to vote
its MC Shares as described herein.
NOW, THEREFORE, in consideration of the foregoing and the agreements
set forth below, the parties hereto agree as follows:
1. Representation and Warranty of the Stockholder. The
Stockholder represents and warrants to Wireless that:
(a) the Stockholder is the beneficial owner of the
number of MC Shares set forth opposite its name on the signature page hereof,
free of any other limitation or restriction on the right to vote such MC
Shares;
(b) other than the MC Shares set forth opposite its name
on the signature page hereof, the Stockholder does not own, of record or
beneficially, any MC Shares;
(c) this Agreement has been duly authorized by all
necessary action on the part of the Stockholder, has been duly executed by the
Stockholder and constitutes a valid and binding agreement of such stockholder
enforceable against such stockholder in accordance with its terms; and
(d) neither the execution and delivery of this Agreement
by the Stockholder nor the consummation of the transactions contemplated hereby
will (i) require any
<PAGE> 2
consent, approval, authorization or permit of, or filing with or notification
to, any governmental or regulatory authority or other person (except for
filings required pursuant to the Securities Exchange Act of 1934) or (ii)
conflict with or result in any breach or violation of any provision of any
charter, by-law or agreement to which the Stockholder is a party or by which it
is bound.
2. Agreement to Vote or Consent. The Stockholder hereby agrees
to attend the meeting of stockholders of MC to be called pursuant to Section
6.5 of the Stock Purchase Agreement (including any adjournment or adjournments
thereof) ("MC Meeting"), in person or by proxy, and to vote, or cause to be
voted (or, if the stockholders of MC act by written consent, to consent in
writing, or cause to consent in writing, with respect to) all MC Shares,
whether issued heretofore or hereafter, that the Stockholder owns or has the
right to vote or consent: (a) in favor of the issuance of the Convertible
Preferred Stock in the Transaction and (b) in favor of a proposed amendment to
the Amended and Restated Certificate of Incorporation of MC, as amended, to
increase the authorized number of MC Shares to 100,000,000.
3. Revocation of Proxies and Consents. To the extent
inconsistent with Section 2 hereof, the Stockholder hereby revokes any and all
previous proxies or written consents with respect to the Stockholder's MC
Shares.
4. Transfer. Nothing contained in this Agreement shall prevent
the Stockholder from selling, transferring, pledging or otherwise disposing of,
any MC Shares. Notwithstanding anything to the contrary contained in this
Agreement, the parties hereto understand that the MC Shares have been pledged
by the Stockholder to secure obligations under its Credit Agreement and the
Stockholder's obligations hereunder are subject to continued compliance by the
Stockholder with its obligations under such Credit Agreement and the Security
Agreement related thereto. The Stockholder represents that it presently is in
compliance with its obligations under the Credit Agreement and Security
Agreement.
5. Specific Enforcement. The parties hereto acknowledge that
damages would be an inadequate remedy for a breach of this Agreement and that
the obligations of the parties hereto shall be specifically enforceable, in
addition to any other remedy which may be available at law or in equity.
6. Termination. This Agreement shall terminate on the earliest
of (i) the conclusion of the MC Meeting (including any adjournment thereof),
(ii) the agreement of the parties hereto to terminate this Agreement, or (iii)
termination of the Stock Purchase Agreement, but in any event shall terminate
no later than nine (9) months from the date of the Stock Purchase Agreement.
In addition, this Agreement shall terminate with respect to MC Shares when they
are no longer beneficially owned by the Stockholder.
7. Successors and Assigns. This Agreement shall not be assigned,
except by operation of law or otherwise without the prior written consent of
the other parties hereto. This Agreement will be binding upon, inure to the
benefit of and be enforceable by each party and such party's respective heirs,
beneficiaries, executors, representatives and permitted assigns.
2
<PAGE> 3
8. Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
upon receipt, if delivered personally or by nationally recognized overnight
courier service, or mailed by registered or certified mail (postage prepaid,
return receipt requested) to the parties at the following addresses (or at such
other address for a party as shall be specified by like changes of address) or
sent by electronic transmission to the telecopier number specified below:
If to Wireless, to both:
AT&T Corp.
295 North Maple Avenue
Basking Ridge, NJ 07920
Attention: Michael Waks, Director, Mergers and Acquisitions
Facsimile Number: (908) 221-2150
and
AT&T Corp.
295 North Maple Avenue
Basking Ridge, NJ 07920
Attention: Marilyn Wasser, Esq.
Facsimile Number: (908) 221-4000
With copies (which shall not constitute notice) to:
AT&T Wireless Services, Inc.
Suite 200
110 110th Avenue, N.E.
Bellevue, Washington 98004
Attn: Michael C. Schwartz, Esq.
Facsimile Number: (425) 990-4634
and
Frank C. Woodruff
Graham & James LLP/Riddell Williams P.S.
Suite 4500
1001 Fourth Avenue Plaza
Seattle, Washington 98154
Facsimile Number: (206) 389-1708
If to the Stockholder, to:
David A. Barry
Bariston Associates
3
<PAGE> 4
One International Place
Boston, MA 02110
Facsimile Number: (617) 330-8951
and
Martin H. Neidell
Stroock & Stroock Lavan LLP
180 Maiden Lane
New York, NY 10038
Facsimile Number: (212) 806-6006
Copy (which shall not constitute notice) to:
Thomas W. White
Wilmer, Cutler & Pickering
2445 M Street, N.W.
Washington, D.C. 20037
Facsimile Number: (202) 663-6363
9. Amendments. This Agreement may not be amended, changed
supplemented, waived or otherwise modified or terminated except by an
instrument in writing signed by Wireless and the Stockholder.
10. Entire Agreement. This Agreement embodies the entire
agreement and understanding among the parties hereto relating to the subject
matter hereof and supersedes all prior agreements and understandings relating
to such subject matter. There are no representations, warranties or covenants
by the parties hereto relating to such subject matter other than those
expressly set forth in this Agreement.
11. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that transactions contemplated hereby are fulfilled to the
extent possible.
12. Governing Law. This Agreement and all disputes hereunder
shall be governed by and construed and enforced in accordance with the laws of
the State of Delaware.
4
<PAGE> 5
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by a duly authorized officer of the Stockholder and a duly authorized
officer of Wireless on the day and year first written above.
AT&T WIRELESS SERVICES, INC.
By: /S/ DAVID J. PESTER
-------------------
Name: David J. Pester
Title: Authorized Signatory
MC Shares Beneficially Owned: PAGE AMERICA GROUP, INC.
- -----------------------------
3,161,856*
By: /S/ DAVID A. BARRY
------------------
Name: David A. Barry
Title: Chairman & CEO
* In addition, PageAmerica owns shares of Series B Junior Convertible
Preferred Stock which are convertible into Common Stock but do not have voting
rights on the matters covered by this Agreement.
