UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. __)*
SPECIALTY TELECONSTRUCTORS, INC.
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(Name of Issuer)
COMMON STOCK, $.01 PAR VALUE
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(Title of Class of Securities)
847517 10 9
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(CUSIP Number)
Tommie R. Carpenter
4740 Ridge Drive Ne
Salem, Oregon 97303
(503) 393-3889
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(Name, Address and Telephone Number
of Person Authorized to Receive
Notices and Communications)
June 28, 1997
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(Date of Event which Requires
Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are
to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter the disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of the
Act (however, see the Notes).
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SCHEDULE 13D
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CUSIP No. 847517 10 9
1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Tommie R. Carpenter
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2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
3) SEC USE ONLY _____________________________________________________________
4) SOURCE OF FUNDS
OO
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5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6) CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
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7) SOLE VOTING POWER
NUMBER OF 2,380,000
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SHARES
8) SHARED VOTING POWER
BENEFICIALLY
OWNED BY --------------------------------------------------
EACH 9) SOLE DISPOSITIVE POWER
REPORTING 2,380,000
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PERSON
10) SHARED DISPOSITIVE POWER
WITH
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11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,380,000
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12) CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
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13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
30.6
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14) TYPE OF REPORTING PERSON*
IN
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Item 1. SECURITY AND ISSUER.
Common Stock, par value $.01 per share, of Specialty Teleconstructors, Inc.
(the "Issuer"), the principal executive offices of which are located at 12001
State Highway 14 North, Cedar Crest, New Mexico 87008.
Item 2. IDENTITY AND BACKGROUND.
(a)-(f) This statement is filed by Tommie R. Carpenter, in his individual
capacity (the "Reporting Person"). Mr. Carpenter is Chief Executive Officer of
Microwave Tower Service, Inc., and his business address is at 4740 Ridge Drive
NE, Salem, Oregon 97303. During the last five years, the Reporting Person has
not been convicted in a criminal proceeding (excluding traffic violations and
similar misdemeanors) nor has the Reporting Person been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and as
a result of such proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws. The Reporting Person is a citizen of the United States.
Item 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
On June 28, 1997, pursuant to a certain Agreement and Plan of Merger
("Merger Agreement") among Microwave Tower Service, Inc.("Microwave Tower"),
each of the Shareholders of Microwave Tower Service, Inc., Speciality
Teleconstructors, Inc. ("Issuer"), and MTS Acquisition, Inc. ("MTS"), the
shareholders of Microwave Tower agreed to merge with Issuer. In return for such
agreement to merge, the shareholders of Microwave Tower received forty-seven
thousand six-hundred (47,600) shares of Common Stock, par value $.01 per share,
of the Issuer in exchange for each share of Microwave Tower Common Stock, no par
value. Pursuant to the Merger Agreement, the Reporting Person exchanged all of
the 50 outstanding shares of Microwave Tower owned by him for a total of
2,380,000 shares of the Issuer's Common Stock.
Item 4. PURPOSE OF TRANSACTION.
Mr. Carepnter does not have any present plans or proposals which result to
or would result in any of the actions or events enumerated in clauses (a)
through (j) of Item 4 of Schedule 13D.
Item 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) Mr. Carpenter beneficially owns 2,380,000 shares of the Issuer's Common
Stock, representing 30.6% of the class.
(b) Of the shares of Common Stock beneficially owned by Mr. Carpenter, Mr.
Carpenter has the sole power to vote, or to direct the vote of, and to dispose,
or to direct the disposition of all 2,380,000 shares.
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(c) Except for shares of Common Stock issued as a result of the merger
discussed in Item 3 above the Reporting Person has not effected a transaction in
the Common Stock of the Issuer during the past sixty days.
(d) Not Applicable.
(e) Not Applicable.
Item 6. CONTRACTS, ARRANGEMENT, UNDERSTANDINGS OR
RELATIONSHIP WITH RESPECT TO SECURITIES OF THE ISSUER.
Under the terms of the Merger Agreement, Mr. Carpenter is restricted in his
ability to sell, pledge, transfer or otherwise dispose of Issuer's shares of
Common Stock received in the Merger until such time as Issuer has published
consolidated financial results that cover at least thirty (30) days of combined
post-merger operations of Issuer and MTS. This restriction is in addition to
restrictions on transfer as a result of the fact that the Common Stock received
in the Merger has not been registered under the Securities Act of 1933
("Securities Act") In addition, Mr. Carpenter has a right to have one-hundred
thousand (100,000) of the shares of Common Stock registered under the Securities
Act on a Form S-3 no later than forty-five (45) days after the closing of the
Merger to permit public sales in non-underwritten transactions for a period of
six (6) months, which may be extended by Reporting Persons to June 28, 1998.
Item 7. MATERIAL TO BE FILED AS EXHIBITS.
7.1 Agreement and Plan of Merger among Microwave Tower Service, Inc., each
of the Shareholders of Microwave Tower Service, Inc., Speciality
Teleconstructors, Inc., and MTS Acquisition, Inc., dated June 30,
1997.
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
July 3, 1997 TOMMIE R. CARPENTER
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Date Tommie R. Carpenter
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EXHIBIT INDEX
Exhibit No. Description Sequential
Page No.
7.1 Agreement and Plan of Merger among Microwave
Tower Service, Inc., each of the Shareholders of
Microwave Tower Service, Inc., Speciality
Teleconstructors, Inc., and MTS Acquisition, Inc.,
dated June 28, 1997.
AGREEMENT AND PLAN OF MERGER
AMONG
MICROWAVE TOWER SERVICE, INC.,
EACH OF THE STOCKHOLDERS OF
MICROWAVE TOWER SERVICE, INC.,
SPECIALTY TELECONSTRUCTORS, INC.
AND
MTS ACQUISITION, INC.
DATED AS OF JUNE 30, 1997
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter called this "Agreement"), dated
as of June 30, 1997, among Microwave Tower Service, Inc., an Oregon corporation
(the "Company"), each of the stockholders of the Company whose name, address and
the number of Company Shares (as defined in Section 4.1(a)) owned appears on
Exhibit 1 hereto and who, collectively, constitute the owners of 100% of the
issued and outstanding shares of capital stock of the Company (the "Company
Stockholders"), Specialty Teleconstructors, Inc., a Nevada corporation ("STI")
and MTS Acquisition, Inc., an Oregon corporation and a wholly-owned subsidiary
of STI ("Merger Sub," the Company and Merger Sub sometimes being hereinafter
collectively referred to as the "Constituent Corporations.")
RECITALS
WHEREAS, the respective boards of directors of each of STI, Merger Sub and
the Company have approved the merger of Merger Sub with and into the Company
(the "Merger") and approved and adopted the Merger upon the terms and subject to
the conditions set forth in this Agreement;
WHEREAS, it is intended that, for federal income tax purposes, the Merger
shall qualify as a reorganization under the provisions of Section 368(a) of the
Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder (the "Code");
WHEREAS, for financial accounting purposes, it is intended that the Merger
shall be accounted for as a "pooling-of-interests;" and
WHEREAS, the Company, the Company Stockholders, STI and Merger Sub desire
to make certain representations, warranties, covenants and agreements in
connection with this Agreement.
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE I
THE MERGER; CLOSING; EFFECTIVE TIME
1.1. The Merger. Upon the terms and subject to the conditions set forth in
this Agreement, at the Effective Time (as defined in Section 1.3) Merger Sub
shall be merged with and into the Company and the separate corporate existence
of Merger Sub shall thereupon cease. The Company shall be the surviving
corporation in the Merger (sometimes hereinafter referred to as the "Surviving
Corporation") and shall continue to be governed by the laws of the State of
Oregon, and the separate corporate existence of the Company with all its rights,
privileges, immunities, powers and franchises shall continue unaffected by the
Merger. The Merger shall have the effects specified in the Oregon Business
Corporation Act (the "OBCA").
1.2. Closing. Subject to fulfillment or waiver of the conditions set forth
in Article VII (other than those conditions that by their nature are to be
satisfied at the Closing, but subject to the fulfillment or waiver of those
conditions), the closing of the Merger (the "Closing") shall take place (i) at
the offices of the Company at 4740 Ridge Road N.E., Salem, Oregon at 5:00 P.M.
on June 28,
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1997 or (ii) at such other place and time and/or on such other date as the
Company and STI may agree in writing (the "Closing Date").
1.3. Effective Time. On the day of the Closing, the Company and STI will
cause Articles of Merger (the "Articles of Merger") to be signed, acknowledged
and delivered for filing with the Secretary of State of Oregon as provided in
Section 60.494 of the OBCA. The Merger shall become effective at the time when
the Articles of Merger have been duly filed with the Secretary of State of
Oregon or at such other time as shall be agreed upon by the parties and set
forth in the Articles of Merger and in accordance with the OBCA (the "Effective
Time").
ARTICLE II
ARTICLES OF INCORPORATION AND BY-LAWS
OF THE SURVIVING CORPORATION
2.1. The Articles of Incorporation. The articles of incorporation of the
Company as in effect immediately prior to the Effective Time shall be the
articles of incorporation of the Surviving Corporation (the "Articles") until
duly amended as provided therein or by applicable law, except that the Articles
will be amended and restated in connection with the Merger as provided in the
Articles of Merger.
2.2. The By-Laws. The by-laws of Merger Sub in effect at the Effective Time
shall be the by-laws of the Surviving Corporation (the "By-Laws"), until
thereafter amended as provided therein or by applicable law.
ARTICLE III
OFFICERS, DIRECTORS AND MANAGEMENT
3.1. Directors of Surviving Corporation. The directors of Merger Sub at the
Effective Time shall, from and after the Effective Time, be the directors of the
Surviving Corporation until their successors have been duly elected or appointed
and qualified or until their earlier death, resignation or removal in accordance
with the Articles and the By-Laws.
3.2. Officers of Surviving Corporation. The officers of the Company at the
Effective Time shall, from and after the Effective Time, be the officers of the
Surviving Corporation until their successors have been duly elected or appointed
and qualified or until their earlier death, resignation or removal in accordance
with the Articles and the By-Laws.
3.3. Election to STI's Board of Directors. At the Effective Time of the
Merger, STI shall use its best efforts to (i) cause the size of its Board of
Directors to be increased in order to enable Ernie L. Carpenter (the "Director
Designee"), to be appointed to the STI Board of Directors, and (ii) cause the
Director Designee to be appointed the STI Board of Directors as soon as
practicable after the Effective Time.
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ARTICLE IV
EFFECT OF THE MERGER ON CAPITAL STOCK;
EXCHANGE OF CERTIFICATES
4.1. Effect on Capital Stock. At the Effective Time, as a result of the
Merger and without any action on the part of the holder of any capital stock of
the Company:
(a) Merger Consideration. Subject to Section 4.2(d), each share of the
Common Stock, no par value per share, of the Company (each a "Company Share" and
together the "Company Shares") issued and outstanding immediately prior to the
Effective Time shall be converted into the right to receive, and become
exchangeable for, 47,600 shares (the "Merger Consideration") of Common Stock,
par value $.01 per share, of STI ("STI Common Stock"). At the Effective Time,
all Company Shares shall no longer be outstanding, shall be canceled and retired
and shall cease to exist, and each certificate (a "Certificate") formerly
representing any of such Company Shares shall thereafter represent only the
right to receive the Merger Consideration and the right, if any, to receive
pursuant to Section 4.2(d) cash in lieu of fractional shares into which such
Company Shares have been converted pursuant to this Section 4.1(a) without
interest.
(b) Merger Sub. At the Effective Time, each share of Common Stock, no par
value per share, of Merger Sub issued and outstanding immediately prior to the
Effective Time shall be converted into one share of common stock of the
Surviving Corporation, and the Surviving Corporation shall be a wholly-owned
subsidiary of STI.
4.2. Exchange of Certificates for Shares.
(a) Exchange Procedures. At the Closing, upon surrender to STI of a
Certificate or Certificates representing all Company Shares, STI will deliver to
each Stockholder, a certificate or certificates issued by American Stock
Transfer & Trust Company, Inc. (the "Transfer Agent") representing that number
of shares of STI Common Stock that such Stockholder is entitled to receive
pursuant to this Article IV and the Certificate or Certificates so surrendered
shall forthwith be canceled.
For the purposes of this Agreement, the term "Person" shall mean any
individual, corporation (including not-for-profit), general or limited
partnership, limited liability company, joint venture, estate, trust,
association, organization, or other entity of any kind or nature.
(b) Transfers. After the Effective Time, there shall be no transfers on the
stock transfer books of the Company of the Company Shares that were outstanding
immediately prior to the Effective Time.
(c) Fractional Shares. Notwithstanding any other provision of this
Agreement, no fractional shares of STI Common Stock will be issued and any
holder of Company Shares entitled to receive a fractional share of STI Common
Stock but for this Section 4.2(d) shall be entitled to receive a cash payment in
lieu thereof, which payment shall represent such holder's proportionate interest
in a share of STI Common Stock based on the closing price of a share of STI
Common Stock, as reported in
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The Wall Street Journal, Dallas, Texas edition, on the trading day immediately
prior to the Effective Time.
(d) Lost, Stolen or Destroyed Certificates. In the event any Certificate
shall have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the Person claiming such Certificate to be lost, stolen or
destroyed and the posting by such Person of a bond in the form customarily
required by STI as indemnity against any claim that may be made against it with
respect to such Certificate, STI will cause the Transfer Agent to issue in
exchange for such lost, stolen or destroyed Certificate the shares of STI Common
Stock, and any cash payment in lieu of a fractional share in respect thereof
issuable and/or payable pursuant to this Article IV upon due surrender of and
deliverable in respect of the Company Shares represented by such Certificate
pursuant to this Agreement, in each case, without interest.
(e) Affiliates. Notwithstanding anything herein to the contrary,
Certificates surrendered for exchange by any "affiliate" (as determined pursuant
to Section 6.5) of the Company shall not be exchanged until STI has received a
written agreement from such Person, if required by Section 6.5 hereof.
4.3. Dissenters' Rights. No dissenters' or appraisal rights as provided in
Section 60.554 of the OBCA shall be available to holders of Company Shares in
connection with the Merger.
4.4. Adjustments to Prevent Dilution. In the event that prior to the
Effective Time there is a change in the number of Company Shares or shares of
STI Common Stock or securities convertible or exchangeable into or exercisable
for Company Shares or shares of STI Common Stock issued and outstanding as a
result of a distribution, reclassification, stock split (including a reverse
split), stock dividend or distribution, or other similar transaction, the number
of shares of STI Common Stock comprising the Merger Consideration shall be
equitably adjusted to eliminate the effects of such event.
4.5 Company Stockholders' Undertaking with Respect to Unregistered
Securities; STI Covenants.
(a) Undertaking of the Company Stockholders and Stock Certificate Legends.
(i) Undertaking of the Company's Stockholders - SEC Rule 144. Each of the
Company Stockholders hereby severally represents and undertakes that:
(A) The Company Stockholder is familiar with Securities and Exchange
Commission ("SEC") Rule 144. The shares of STI Common Stock that are being
acquired by such Company Stockholder in exchange for his Company Shares are
being and will be acquired for himself and not for other persons and are not
being and will not be acquired with a view to the transfer or distribution
thereof, except to the extent permitted by the Securities Act of 1933, as
amended, (the "Securities Act") and the rules and regulations thereunder.
(B) None of the shares of STI Common Stock to be received by him in the
Merger will be sold, pledged, transferred or otherwise disposed of by or through
such Company Stockholder in violation of the Securities Act or any state
securities laws. In addition, the Company Stockholder shall not sell, pledge,
transfer or otherwise dispose of the shares of STI Common Stock to be
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received by him in the Merger until such time as STI has published consolidated
financial results that cover at least thirty (30) days of combined post-merger
operations of STI and the Surviving Corporation.
(C) The Company Stockholder understands that the STI Common Stock has not
been registered under the Securities Act and, therefore, cannot be resold or
otherwise transferred unless such shares are registered under the Securities Act
or unless an exemption from registration is available.
(D) The certificates representing the shares of STI Common Stock to be
delivered to the Company Stockholder pursuant to this Agreement may, and will,
bear a restrictive legend in substantially the following form and an appropriate
stop transfer order may, and will, be placed against the transfer of the share
certificates with the transfer agent of such shares:
"The securities represented by this certificate have been issued or
transferred to the registered holder as a result of a transaction to
which the exemption provided by Section 4(2) under the Securities Act
of 1933, as amended (the "Securities Act") applied. The securities
represented by this certificate have not been issued to such holders
pursuant to an effective registration under the Securities Act and may
not be sold, transferred or assigned, and the issuer is not required
to give effect to any attempted sale, transfer or assignment, except
(i) pursuant to a current or then effective registration statement
under the Securities Act; (ii) in a transaction permitted by Rule 144
under the Securities Act and as to which the issuer has received
reasonably satisfactory evidence of compliance with the provisions of
Rule 144; or (iii) upon receipt of a legal opinion reasonably
acceptable to the issuer to the effect that the transaction does not
require registration under the Securities Act, or other evidence
reasonably satisfactory to the issuer, that such registration is not
required. Furthermore, the securities represented by this certificate
may not be sold, transferred or assigned, prior to the publication by
the issuer of consolidated financial results covering at least thirty
(30) days of post-merger combined operations, and the issuer is not
required to give effect to any sale, transfer or assignment attempted
prior to such date."
(E) The Company Stockholder also understands that (1) an exemption for any
public sale of his STI Common Stock under Rule 144 will not be available for at
least one (1) year from the date the said shares are fully paid for, which will
be the Closing Date; (2) thereafter limited amounts of the said shares can be
sold publicly in unsolicited brokers' transactions under Rule 144 if all the
conditions of the Rule are satisfied and if the Rule is then applicable; (3)
Rule 144 is available only if all its conditions are satisfied and, in
particular, if STI is making current public disclosures about itself and there
is a trading market for the said shares; (4) as of this date, not all of the
above conditions have been satisfied; and (5) if Rule 144 is not available, then
any public sales of the said shares cannot be made unless they are registered
under the Securities Act or in compliance with Regulation A issued by the SEC
pursuant to the Securities Act or some other exemption to the registration
requirements of the Securities Act.
(b) Representations of the Company Stockholders. Each of the Company
Stockholders hereby severally represents and warrants that:
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(i) The Company Stockholder has had access to, and has reviewed and
understood, all material information, including financial statements, concerning
the Company which the Company Stockholder deems necessary or advisable in order
to evaluate the risks and merits of entering into the transactions contemplated
by this Agreement and including, without limitation, the Company Stockholder's
acquiring the STI Common Stock to be issued to the Company Stockholder under
this Agreement. The Company Stockholder has had access to, and has reviewed and
understood, all material information, including, without limitation, the STI
Reports (as defined in Section 5.2(e)), concerning STI which the Company
Stockholder deems necessary or advisable in order to evaluate the risks and
merits of acquiring the STI Common Stock to be issued to the Company Stockholder
under this Agreement. STI has made available to the Company Stockholder the
opportunity to ask questions and receive answers concerning the terms and
conditions of the transactions contemplated by this Agreement and to obtain
additional information which STI possesses or could acquire without unreasonable
effort or expense that is necessary to verify the accuracy of the information
furnished under this Agreement and has obtained such additional information.
(ii) The Company Stockholder has such knowledge and experience in financial
and business matters that the Company Stockholder is capable of evaluating the
merits and risks in acquiring the STI Common Stock.
(iii) The Company Stockholder understands that the Company Stockholder must
bear the economic risk of investment in the STI Common Stock for an indefinite
period of time because such shares have not been registered with the SEC under
the Securities Act and, therefore, cannot be sold unless they are subsequently
registered under the Securities Act or an exemption from registration is
available.
4.6 Registration of STI Common Stock. In connection with the shares of STI
Common Stock issuable in connection with the Merger, the parties agree as
follows:
(a) As soon as practicable (but in any event, not later than forty-five
(45) days) after the closing of the Merger, STI shall file a registration
statement under the Securities Act on Form S-3 ("Registration Statement") to
register 100,000 of the shares of STI Common Stock issued in connection with the
Merger (the "Shares"), to permit sale or transfer of the Shares by the Company
Stockholders or by their Permitted Transferees in non-underwritten transactions,
including open market or private transactions which may be with or through a
broker-dealer or agent, hedging transactions, loan transactions or other
transactions from time to time. STI shall use its best efforts to cause the
Registration Statement to become effective under the Securities Act as soon as
practical after the filing of the Registration Statement and to maintain the
effectiveness of the Registration Statement under the Securities Act for a
period of not less than 180 days following the date on which the Registration
Statement becomes effective or until the intended distribution of the Shares is
completed, whichever occurs first, provided, however, that if requested by the
Company Stockholders within 60 days immediately preceding the expiration of such
180-day period, STI will use its best efforts to maintain the effectiveness of
the Registration Statement beyond the expiration of such 180-day period until
the first anniversary of the Closing Date or until the intended distribution of
the Shares is completed, whichever occurs first. STI shall also use its best
efforts to register or qualify the Shares for public sale under the securities
or blue sky laws of the state of principal residence of each Company
Stockholder, if such registration or qualification is necessary; provided,
however, that STI shall not be required to qualify to do business as a foreign
corporation
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or otherwise to subject itself to taxation therein or to file any general
consent to service of process in any state.
(b) For so long as the Registration Statement is effective, STI shall use
its best efforts to maintain its eligibility to use Form S-3. If, during the
effectiveness of the Registration Statement, an event should occur which, in the
reasonable opinion of STI's counsel, makes the prospectus included in the
Registration Statement no longer comply with the Securities Act, after notice
from STI to the Company Stockholders of the occurrence of such event, the
Company Stockholders shall make no further sales or their dispositions, or
offers therefor, of the Shares until the Company Stockholders receive from STI
copies of a new, amended or supplemented prospectus complying with the
Securities Act. STI shall keep the Company Stockholders fully informed as to the
status of its efforts, which shall be prompt and diligent, to cause such new,
amended or supplemented prospectus to be available for use by the Company
Stockholder.
(c) STI shall provide to the Company Stockholders the number of
prospectuses relating to the Shares as the Company Stockholders shall reasonably
request to enable Company Stockholders to comply with the applicable prospectus
delivery requirements under the Securities Act and shall at all times keep
Company Stockholders informed about the status of the Registration Statement,
including any comments relating thereto from the SEC, any proposed amendment or
any other matters related to the Registration Statement or the effectiveness
thereof.
(d) STI shall bear all expenses of any registration except that the Company
Stockholders shall bear the underwriter's commissions and expenses and brokerage
fees, if any, with respect to STI Common Stock sold by the Company Stockholders
and the fees and expenses of legal counsel to the Company Stockholders.
(e) The Company Stockholders and any Permitted Transferee then holding
Shares included or to be included in the Registration Statement (herein "Other
Holders") shall furnish STI as promptly as possible such information as may be
reasonably requested from them by STI in connection with any registration
statement filed pursuant hereto and shall cooperate with STI to the extent that
it may be reasonably required in order to cause any the Registration Statement
or any amendment thereto to become effective.
(f) In connection with any registration statement filed pursuant to this
Section 4.6, each Company Stockholder and each Other Holder shall and hereby
agrees to severally indemnify and hold harmless STI, its officers and directors
and the other Company Stockholders and each Other Holder from and against any
and all losses, liabilities, claims, damages and expenses (including reasonable
costs of investigation and counsel fees) arising out of or based upon any untrue
statement of a material fact in any writing furnished by such Company
Stockholder or such Other Holder for use in any such registration statement or
by such Company Stockholder's or such Other Holder's failure to furnish a
material fact pertaining to such Company Stockholder or such Other Holder and
required to be stated therein or necessary to make the statements therein not
misleading. Similarly, STI shall indemnify and hold harmless the Company
Stockholders or such Other Holder from and against any and all such losses,
liabilities, claims, damages and expenses (including reasonable costs of
investigation and counsel fees) arising out of or based upon any untrue
statement of a material fact in any such registration statement or by its
failure to include in any such registration statement a material fact required
to be stated therein or necessary to make the statements therein not misleading,
except insofar as such liability arises out of or is based on any such untrue
statement or
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omission in any writing furnished to STI by the Company Stockholder, or the
Other Holders for use therein.
(g) For purposes of this Section 4.6, STI Common Stock means and includes
the STI Common Stock issued at the Effective Time and any securities issued or
issuable with respect to the STI Common Stock by way of stock dividend or stock
split or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization or otherwise.
(h) Notwithstanding the filing or effectiveness of the Registration
Statement, none of the Shares may be sold, transferred or assigned in violation
of Section 6.5 hereof.
4.7 Permitted Transferee. For purposes of this Agreement, the term
Permitted Transferee shall mean spouses or family members of the Company
Stockholders; trusts created by the Company Stockholders for the benefit of a
Company Stockholder or his or her spouse or other family members or their
spouses or to a corporation, partnership or limited liability company, all of
the capital stock or interests of which is owned by a Company Stockholder, his
or her family members or their spouses; or (b) pledgees the Shares as security.
For purposes of this Agreement, "family members" shall mean lineal or adopted
descendants of the Company Stockholders.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1. Representations and Warranties of the Company Stockholders. Except as
set forth in the corresponding sections or subsections of the disclosure letter,
dated the date hereof, delivered by the Company to STI (the "Company Disclosure
Letter"), the Company Stockholders represent and warrant to STI and Merger Sub,
that:
(a) Organization, Good Standing and Qualification; No Subsidiaries. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Oregon and has all requisite corporate or similar
power and authority to own and operate its properties and assets and to carry on
its business as presently conducted and is qualified to do business and is in
good standing as a foreign corporation in each jurisdiction where the ownership
or operation of its properties or conduct of its business requires such
qualification, except where the failure to be so qualified or in good standing
is not, when taken together with all other such failures, reasonably likely to
have a Material Adverse Effect (as defined below) on it. The Company has made
available to STI a complete and correct copy of its articles of incorporation
and by-laws, each as amended to date. Such articles of incorporation and by-laws
as so made available are in full force and effect. The Company has no
Subsidiaries (as defined below).
As used in this Agreement, (i) the term "Subsidiary" means, with respect to
the Company, STI or Merger Sub, as the case may be, any entity, whether
incorporated or unincorporated, of which at least fifty percent of the
securities or ownership interests having by their terms ordinary voting power to
elect at least fifty percent of the board of directors or other persons
performing similar functions is directly or indirectly owned by such party or by
one or more of its respective Subsidiaries or by such party and any one or more
of its respective Subsidiaries, (ii) the term "Material Adverse Effect" means,
with respect to any Person, a material adverse effect on the total enterprise
value of such Person and its Subsidiaries, taken as a whole, other than general
changes
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in (A) the telecommunications industry, (B) economic conditions or (C) the
securities markets that, in any of (A), (B) or (C), affect the total enterprise
value of such Person and its Subsidiaries, taken as a whole, on the one hand,
and the other party and its Subsidiaries, on the other hand, substantially
proportionately relative to the other party, and (iii) reference to "the other
party" means, with respect to the Company, STI and means, with respect to STI,
the Company.
(b) Capital Structure. The authorized capital stock of the Company consists
of 100 Company Shares, of which 50 Company Shares were issued and outstanding
and 0 Company Shares were held in treasury as of the close of business on June
12, 1997 and the Closing Date. All of the outstanding Company Shares are owned
by the Company Stockholders in the amounts set forth opposite such Person's
names on Exhibit 1 hereto. All of the outstanding Company Shares have been duly
authorized and are validly issued, fully paid and nonassessable. The Company has
no Company Shares reserved for issuance. There are no preemptive or other
outstanding rights, options, warrants, conversion rights, stock appreciation
rights, redemption rights, repurchase rights, agreements, arrangements or
commitments to issue or sell any shares of capital stock or other securities of
the Company or any securities or obligations convertible or exchangeable into or
exercisable for, or giving any Person a right to subscribe for or acquire, any
securities of the Company, and no securities or obligations evidencing such
rights are authorized, issued or outstanding. The Company does not have
outstanding any bonds, debentures, notes or other obligations the holders of
which have the right to vote (or convertible into or exercisable for securities
having the right to vote) with the stockholders of the Company on any matter.
(c) Corporate Authority; Approval. The Company has all requisite corporate
power and authority and has taken all corporate action necessary in order to
execute, deliver and perform its obligations under this Agreement and to
consummate, subject only to approval of this Agreement by the holders of a
majority of the outstanding Company Shares (the "Company Requisite Vote") and
the Company Required Consents (as defined in Section 5.1(d)), the Merger. This
Agreement is a valid and binding agreement of the Company enforceable against
the Company in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles (the "Bankruptcy and Equity Exception"). The board of directors of
the Company has unanimously approved this Agreement and the Merger and the other
transactions contemplated hereby.
(d) Governmental Filings; No Violations. (i) Other than the filings and/or
notices (A) pursuant to Section 1.3, the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and the Securities Act, (B) to comply with state
securities or "blue-sky" laws, (such filings and/or notices of STI being the
"STI Required Consents" and of the Company being the "Company Required
Consents"), no notices, reports or other filings are required to be made by the
Company with, nor are any consents, registrations, approvals, permits or
authorizations required to be obtained by it from, any governmental or
regulatory authority, court, agency, commission, body or other governmental
entity ("Governmental Entity"), in connection with the execution and delivery of
this Agreement by it and the consummation by it of the Merger and the other
transactions contemplated hereby, except those that the failure to make or
obtain are not, individually or in the aggregate, reasonably likely to have a
Material Adverse Effect on it or prevent, materially delay or materially impair
its ability to consummate the transactions contemplated by this Agreement.
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(ii) The execution, delivery and performance of this Agreement by the
Company and the Company Stockholders do not, and the consummation by the Company
of the Merger and the other transactions contemplated hereby will not,
constitute or result in (A) a breach or violation of, or a default under, the
Company's articles of incorporation or by-laws, (B) a breach or violation of, or
a default under, the acceleration of any obligations or the creation of a lien,
pledge, security interest or other encumbrance on the Company's assets (with or
without notice, lapse of time or both) pursuant to, any agreement, lease,
contract, note, mortgage, indenture, arrangement or other obligation
("Contracts") binding upon the Company or the Company Stockholders or any Law
(as defined in Section 5.1(i)) or governmental or non-governmental permit or
license to which the Company is subject or (C) any change in the rights or
obligations of any party under any of the Company's Contracts, except, in the
case of clause (B) or (C) above, for any breach, violation, default,
acceleration, creation or change that, individually or in the aggregate, is not
reasonably likely to have a Material Adverse Effect on the Company or prevent,
materially delay or materially impair its ability to consummate the transactions
contemplated by this Agreement. The Company Disclosure Letter sets forth a
correct and complete list of the Company's Contracts pursuant to which consents
or waivers are or may be required prior to consummation of the transactions
contemplated by this Agreement other than those where the failure to obtain such
consents or waivers is not reasonably likely to have a Material Adverse Effect
on it or prevent or materially impair its ability to consummate the transactions
contemplated by this Agreement.
(e) Financial Statements; Employment Agreements or Arrangements. The
Company has delivered to STI its reviewed financial statements for the fiscal
years ended October 31, 1995 and 1996 (the "Company Audit Date"), and its
unaudited financial statements for the 10-month period ended March 31, 1997
(collectively, the "Company Financial Statements"). Each of the balance sheets
included in or incorporated by reference into the Company Financial Statements
(including the related notes and schedules) fairly presents the financial
position of the Company as of its date and each of the statements of income,
cash flows and changes in stockholders' equity included in or incorporated by
reference into the Company Financial Statements (including any related notes and
schedules) fairly presents the results of operations, retained earnings, cash
flows and changes in stockholders' equity, as the case may be, of the Company
for the periods set forth therein (subject, in the case of unaudited statements,
to notes and normal year-end audit adjustments that will not be material in
amount or effect), in each case in accordance with generally accepted accounting
principles ("GAAP") consistently applied during the periods involved, except as
may be noted therein. The Company has delivered to STI true and correct copies
of (i) all written employment agreements between the Company and any of its
employees and (ii) all written agreements between the Company and any Person
acting as an independent contractor to the Company. The Company has also
delivered to STI written summaries of all unwritten employment or other
agreements, arrangements or policies pursuant to which any Person is serving as
an employee of or an independent contractor to the Company. The Company
Stockholders have, to the best of their knowledge, disclosed to STI all facts
relating to the Company and its operations and assets material to the
transactions contemplated by this Agreement. No representation or warranty made
by the Stockholders in this Agreement and in any certificate furnished to STI
pursuant to this Agreement and in the Company Disclosure Letter contains or as
of the Closing Date will contain any untrue statement of a material fact or
omits to state a material fact necessary to make the statements contained herein
or therein not misleading. The representations and warranties made herein are
made by the Stockholders and the Company with the knowledge and expectation that
STI is placing reliance thereon.
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(f) Absence of Certain Changes. Except as disclosed in the Company
Disclosure Letter or as expressly contemplated by this Agreement, since the
Company Audit Date, the Company has conducted its business only in, and has not
engaged in any material transaction other than according to, the ordinary and
usual course of such business and there has not been (i) any change in the
financial condition, properties, prospects, business or results of operations of
the Company, except those changes that are not, individually or in the
aggregate, reasonably likely to have a Material Adverse Effect on it; (ii) any
damage, destruction or other casualty loss with respect to any asset or property
owned, leased or otherwise used by the Company, whether or not covered by
insurance, which damage, destruction or loss is reasonably likely, individually
or in the aggregate, to have a Material Adverse Effect on it; (iii) any
declaration, setting aside or payment of any dividend or other distribution in
respect of the Company's capital stock; or (iv) any change by it in accounting
principles, practices or methods. Since the Company Audit Date, except as
provided for herein or in the Company Disclosure Letter, there has not been any
increase in the compensation payable or that could become payable by the Company
to officers or key employees or any amendment of any of the Company Compensation
and Benefit Plans (as defined in Section 5.1(h)(i)).
(g) Litigation and Liabilities. There are no (i) civil, criminal or
administrative actions, suits, claims, hearings, investigations or proceedings
pending or, to the knowledge of the Company's executive officers or the Company
Stockholders, threatened against the Company or any of its Affiliates (as
defined in Rule 12b-2 under the Exchange Act) or (ii) obligations or
liabilities, whether or not accrued, contingent or otherwise and whether or not
required to be disclosed, including those relating to matters involving any
Environmental Law (as defined in Section 5.1(k)), or any other facts or
circumstances, in either such case, of which the Company's executive officers or
the Company Stockholders have actual knowledge that are reasonably likely to
result in any claims against or obligations or liabilities of it or any of its
Affiliates, except for those that are not, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect on the Company or prevent or
materially impair the Company's or the Company Stockholders' ability to
consummate the transactions contemplated by this Agreement.
(h) Employee Benefits.
(i) A true and correct copy of each bonus, deferred compensation, pension,
retirement, profit-sharing, thrift, savings, employee stock ownership, stock
bonus, stock purchase, restricted stock, stock option, employment, termination,
severance, compensation, medical, health or other plan, agreement, policy or
arrangement, including, without limitation, any "pension plan" ("Pension Plan"),
as defined in Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and any "welfare plan", as defined in Section 3(1)
of ERISA, whether or not any of the foregoing is funded, (a) to which the
Company is a party or by which it is bound; or (b) with respect to which the
Company has made any payments or contributions during the preceding six years or
may otherwise have any unsatisfied liability (the "Company Compensation and
Benefit Plans") and any trust agreements or insurance contracts forming a part
of such Company Compensation and Benefit Plans have been delivered by the
Company to STI prior to the date hereof and each such Company Compensation and
Benefit Plan is listed in Section 5.1(h) of the Company Disclosure Letter.
"Company Compensation and Benefit Plans" shall not include any
government-sponsored employee benefit arrangements.
(ii) All of the Company Compensation and Benefit Plans are in substantial
compliance with all applicable law, including the Code and the Employee
Retirement Income Security Act of 1974,
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as amended ("ERISA"). Each Company Compensation and Benefit Plan, the
administrator and fiduciaries of each Company Compensation and Benefit Plan and
the Company have at all times complied, in all material respects, with all
applicable requirements of ERISA, the Code, and of any other applicable law
(including regulations and rulings thereunder) governing each Company
Compensation and Benefit Plan, and each Company Compensation and Benefit Plan
has at all times been administered in all material respects in accordance with
its terms and the terms of any applicable employment agreement or arrangement.
No lawsuits or complaints to, or by, any person or government entity have been
filed, are pending, or to the knowledge of the Company Stockholders and the
Company, are anticipated by the Company, with respect to any Company
Compensation and Benefit Plan.
(iii) All contributions required to be made under the terms of any of the
Company Compensation and Benefit Plans as of the date hereof have been timely
made.
(iv) Except as set forth in Section 5.(h) of the Company Disclosure Letter,
(a) the Company is not bound by, nor contributes to or has any obligation with
respect to any Pension Plan and (b) the Company has no obligations for retiree
health and life benefits under any Company Compensation and Benefit Plan. To the
knowledge of the Company Stockholders and the Company, neither any Company
Compensation and Benefit Plan, any administrator or fiduciary of any Company
Compensation and Benefit Plan, the Company, nor any other person has any
liability to any plan participant, beneficiary or other person under any
provision of ERISA or any other applicable law by reason of any payment of
benefits or other amounts or failure to pay benefits or any other amounts, or by
reason of any credit or failure to give credit for any benefits or rights (such
as, but not limited to, vesting rights) with respect to benefits under or in
connection with any Company Compensation and Benefit Plan except as disclosed on
the Company Financial Statements and except for liabilities incurred in the
ordinary course of administration of such plans during the period from the
Company Audit Date through the Closing Date.
(v) The Company is not now, and has not been, a participating employer in a
multi-employer plan (as defined in Section 3(37) of ERISA).
(vi) To the knowledge of the Company Stockholders and the Company, neither
any of the Pension Plans, any trust created thereunder, nor any trustee or
administrator thereof, has engaged in any transaction in violation of Section
406(a) or (b) of ERISA (for which no exemption exists under Section 408 of
ERISA) or any prohibited transaction (as defined in Section 4975(c)(1) of the
Code) for which no exemption exists under Section 4975(c)(2) or (d) of the Code
which could subject such persons or entities to any tax, penalty or other cost
or liability.
(vii) The most recent determination letter issued by the Internal Revenue
Service with respect to each Pension Plan, and Annual Reports (5500's) required
to be filed for each Company Compensation and Benefit Plan for the plan years
ended October 31, 1994, 1995 and 1996 have heretofore been delivered by the
Company to STI.
(viii) Except as set forth in Section 5.1(h) of the Company Disclosure
Letter, all obligations of the Company, whether arising by operation of law, by
contract, by past custom or practice or otherwise, for salaries, vacation and
holiday pay, bonuses and other forms of compensation which were or are payable
to its respective officers, directors or other employees either have been paid
or
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have been accrued as a liability in the Company Financial Statements and as of
Closing, such payments and accruals will be made on the books and records of the
Company.
(ix) The consummation of the Merger (or in the case of the Company, its
approval by its stockholders) and the other transactions contemplated by this
Agreement will not (a) entitle any of the Company's employees or directors to
severance pay, directly or indirectly, upon termination of employment, (b)
accelerate the time of payment or vesting or trigger any payment of compensation
or benefits under, increase the amount payable or trigger any other material
obligation pursuant to, any Company Compensation and Benefit Plan or (z) result
in any breach or violation of, or a default under, any Company Compensation and
Benefit Plan.
(i) Compliance with Laws. Except as set forth in the Company Disclosure
Letter, the business of the Company has not been, and is not being, conducted in
violation of any law, statute, ordinance, regulation, judgment, order, decree,
injunction, arbitration award, license, authorization, opinion, agency
requirement or permit of any Governmental Entity or common law (collectively,
"Laws"), except for violations or possible violations that are not, individually
or in the aggregate, reasonably likely to have a Material Adverse Effect on it
or prevent or materially impair its ability to consummate the transactions
contemplated by this Agreement. Except as set forth in the Company Disclosure
Letter, no investigation or review by any Governmental Entity with respect to
the Company is pending or, to the actual knowledge of its executive officers or
the Company Stockholders, threatened, nor has any Governmental Entity indicated
an intention to conduct the same. To the actual knowledge of its executive
officers and the Company Stockholders, no material change is required in the
Company's processes, properties or procedures in connection with any such Laws,
and the Company has not received any notice or communication of any material
noncompliance with any such Laws that has not been cured as of the date hereof,
except for such changes and noncompliance that are not, individually or in the
aggregate, reasonably likely to have a Material Adverse Effect on it or prevent
or materially impair its ability to consummate the transactions contemplated by
this Agreement. The Company has all permits, licenses, franchises, variances,
exemptions, orders and other governmental authorizations, consents and approvals
(collectively, "Permits"), necessary to conduct its business as presently
conducted, except for those the absence of which are not, individually or in the
aggregate, reasonably likely to have a Material Adverse Effect on it or prevent
or materially impair its ability to consummate the transactions contemplated by
this Agreement.
(j) Takeover Statutes. No other "fair price," "moratorium," "control share
acquisition" or other similar anti-takeover statute or regulation (each a
"Takeover Statute") is, as of the date hereof, is applicable to the Merger or
the other transactions contemplated by this Agreement.
(k) Environmental Matters. Except as disclosed in the Company Disclosure
Letter, and except for such matters that, alone or in the aggregate, are not
reasonably likely to have a Material Adverse Effect on it: (i) the Company has
complied with all applicable Environmental Laws (as defined below); (ii) the
properties currently owned or operated by the Company (including soils,
groundwater, surface water, buildings or other structures) are not contaminated
with any Hazardous Substances (as defined below); (iii) the properties formerly
owned or operated by the Company were not contaminated with Hazardous Substances
during the period of ownership or operation by it; (iv) the Company is not
subject to liability for any Hazardous Substance disposal or contamination on
any third party property; (v) the Company has not been associated with any
release or threat of release of any Hazardous Substance; (vi) the Company has
not received any notice, demand, letter,
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claim or request for information alleging that it may be in violation of or
liable under any Environmental Law; (vii) the Company is not subject to any
orders, decrees, injunctions or other arrangements with any Governmental Entity
or is subject to any indemnity or other agreement with any third party relating
to liability under any Environmental Law or relating to Hazardous Substances;
and (viii) there are no circumstances or conditions involving the Company that
could reasonably be expected to result in any claims, liability, investigations,
costs or restrictions on the ownership, use, or transfer of any of its
properties pursuant to any Environmental Law.
As used herein, the term "Environmental Law" means any Law relating to: (A)
the protection, investigation or restoration of the environment, health, safety,
or natural resources, (B) the handling, use, presence, disposal, release or
threatened release of any Hazardous Substance or (C) noise, odor, wetlands,
pollution, contamination or any injury or threat of injury to persons or
property in connection with any Hazardous Substance.
As used herein, the term "Hazardous Substance" means any substance that is:
listed, classified or regulated pursuant to any Environmental Law, including any
petroleum product or by-product, asbestos-containing material, lead-containing
paint or plumbing, polychlorinated biphenyls, radioactive materials or radon.
(l) Accounting and Tax Matters. As of the date hereof, neither the Company
nor any of its affiliates (as determined in accordance with Section 6.5) has
taken or agreed to take any action, nor do the Company's executive officers or
the Company Stockholders have any actual knowledge of any fact or circumstance,
that would prevent STI from accounting for the business combination to be
effected by the Merger as a "pooling-of-interests" or prevent the Merger and the
other transactions contemplated by this Agreement from qualifying as a
"reorganization" within the meaning of Section 368(a) of the Code.
(m) Taxes. (i) The Company has prepared in good faith and duly and timely
filed (taking into account any extension of time within which to file) all
material Tax Returns (as defined below) required to be filed by it and all such
filed tax returns are complete and accurate in all material respects and: (a)
the Company has paid all Taxes (as defined below) that are shown as due on such
filed Tax Returns or that it is obligated to withhold from amounts owing to any
employee, creditor or third party, except with respect to matters contested in
good faith or for such amounts that, alone or in the aggregate, are not
reasonably likely to have a Material Adverse Effect on it; (b) as of the date
hereof, there are not pending or, to the actual knowledge of the Company's
executive officers or the Company Stockholders, threatened, any audits,
examinations, investigations or other proceedings in respect of Taxes or Tax
matters; and (c) there are not, to the actual knowledge of its executive
officers or the Company Stockholders, any unresolved questions or claims
concerning the Company's Tax liability that are reasonably likely to have a
Material Adverse Effect on it. The Company has no liability with respect to
income, franchise or similar Taxes in excess of the amounts accrued in respect
thereof that are reflected in the financial statements included in the Company
Financial Statements or accrued in the ordinary course of business thereafter,
except such excess liabilities as are not, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect on it.
As used in this Agreement, (i) the term "Tax" (including, with correlative
meaning, the terms "Taxes", and "Taxable") includes all federal, state, local
and foreign income, profits, franchise, gross receipts, environmental, customs
duty, capital stock, severance, stamp, payroll, sales, employment,
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unemployment, disability, use, property, withholding, excise, production, value
added, occupancy and other taxes, duties or assessments of any nature
whatsoever, together with all interest, penalties and additions imposed with
respect to such amounts and any interest in respect of such penalties and
additions, and (ii) the term "Tax Return" includes all returns and reports
(including elections, declarations, disclosures, schedules, estimates and
information returns) required to be supplied to a Tax authority relating to
Taxes.
(ii) Except as disclosed in Section 5.1(m) of the Company Disclosure Letter
and except as reflected in the current tax accrual included in the Company
Financial Statements, the Company is not, and will not be, liable for any
material amounts of Taxes with respect to the Company, any existing or
previously existing subsidiaries or affiliates (any such existing or previously
existing subsidiaries or other corporation shall be referred to in this Section
5.1(m) as the "Tax Subsidiaries"), or predecessors, or any joint venture,
partnership, trust or other entity in which any of them have been or are members
or owners (such Tax Subsidiaries, joint ventures, partnerships, trusts and other
entities are herein collectively called "Tax Affiliates"), relating to actions,
omissions, transactions, business, operations, or matters that occurred or
relate to any period ending on or before the day prior to the Closing Date or
with respect to any period of such entities ending prior to the Closing Date
(including, without limitation, any transactions contemplated herein to occur
before the Closing Date). As set forth in Section 5.1(m) of the Company
Disclosure Letter, the Company and its Tax Affiliates have duly prepared and
properly filed with the indicated tax authorities, the tax returns for the
periods indicated, such tax returns were correct and complete in all material
respects and have paid all taxes shown on such returns to be due, or which have
become due, pursuant to any judgment, settlement, assessment, deficiency,
notice, 30-day letter or similar notice received by any of them. The Internal
Revenue Service has audited the federal income tax return, or to the knowledge
of the Shareholders, the applicable statute of limitations has expired with
respect to, the periods ending on or before December 31, 1993 for the Company
and the Tax Affiliates. The Company is a small business corporation and has duly
and properly elected (with all necessary consents) to be treated as an S
Corporation under Subchapter S, Chapter 1, Subtitle A of the Code, effective
November 1, 1991. In addition, the Company has duly and properly elected (with
all necessary consents) to be treated as an S Corporation for all states in
which the Company is otherwise subject to state taxation except as disclosed in
Section 5.1(m) of the Company Disclosure Letter. The S Corporation election for
federal and state tax purposes has not been terminated or revoked and has
remained in effect for all relevant taxable periods since November 1, 1991, and
shall remain valid through and including the day before the Closing Date.
Neither the Company nor its past or current Shareholders have taken any action
or omitted to take any action which would result in the termination or
revocation of the Company's treatment as a valid S Corporation (other than upon
consummation of this Merger). All monies required to be withheld by the Company
or any Tax Affiliate from employees have been collected or withheld, and either
paid to the respective tax authorities or set aside for such purpose, or accrued
or reserved as a current liability. None of the Company nor any Tax Affiliate
has consented to the provisions of Code Section 341(f).
(iii) With respect to any period of time through the day prior to the
Closing Date for which tax returns have not yet been filed, or for which taxes
are not yet due or owing, the Company and its Tax Affiliates have only incurred
and shall only incur normally recurring liabilities for taxes in the ordinary
and regular course of their business. Any income tax liability relating to the
Company's income attributable to the Company Stockholders under the federal S
Corporation statutes and similar state tax laws for tax periods ending prior to
the Closing Date shall be the
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responsibility of the Company Stockholders and in the case of states not
allowing Subchapter S tax treatment, the tax liability shall be the
responsibility of the Company for tax periods ending prior to the Closing Date,
and any income tax liability relating to the Company for the tax periods ending
on or after the Closing shall be the responsibility of the Company.
(iv) No presently effective agreement extending the period for assessment
or collection of any taxes has been executed or filed with any applicable taxing
authority.
(v) Except as disclosed in Section 5.1(m) of the Company Disclosure Letter,
none of the Company or Tax Affiliate is a party or parties to any pending claim,
action, proceeding or examination, nor to the knowledge of the Company
Stockholders is any claim, action, proceeding, examination, review, audit or
investigation being threatened or asserted by any governmental authority for
assessment or collection of taxes.
(vi) At the Company's expense, the Company Stockholders or their respective
authorized representatives shall prepare, execute (if lawful) and file the
Company's and the Tax Affiliates' applicable U.S. federal, foreign (if any),
state, municipal, city, county, parish and local tax returns for all required
taxable periods ending before the Closing Date, including, without limitation,
the period (the "Company Short Year") between October 31, 1996 and the Closing
Date. Such returns shall be prepared on a lawful basis consistent with the past
practices of the Company and the terms of this Agreement. STI shall have the
right to review such returns before filing.
(vii) The Company Stockholders and STI agree to cooperate with each other
in connection with any official tax inquiry, tax examination or tax-related
legal proceeding affecting a tax liability of the Company or any Tax Affiliate
or any Company Stockholder with respect to matters occurring or relating to any
period on or prior to the Closing Date or in connection with a determination of
any taxes or treatment of any item on a return of any of them, and to make
available to the other party a reasonable amount of time, at no cost to such
party, or relevant personnel or individuals, together with documents,
correspondence, reports and other materials bearing on such tax inquiry,
examination or proceeding, provided that each party shall be reimbursed for any
out-of-pocket expenses that it or they incur in assisting another party
hereunder (except that STI shall not be obligated to reimburse the Company
Stockholders for expenses relating to any matter that is indemnified hereunder).
Any information obtained by another party will be kept confidential except as
otherwise required by applicable law or in connection with such tax inquiry,
examination or proceeding.
(viii) In order to allow for the payment of income taxes (the "Estimated
Company Stockholder Short Year Tax Liability") estimated to be imposed on the
Company Stockholders solely by reason of the inclusion in their income of the
net income of the Company for the period between October 31, 1996 and the
Closing Date (the "Company Short Year"), the Company shall make a distribution
to the Company Stockholders in the amount of $_______________ (the "Estimated
Company Stockholder Short Year Tax Liability Distribution"). In addition, the
parties understand and agree that so long as the payment thereof does not result
in the breach of any other representation, warranty or obligation of the Company
or the Company Stockholders set forth in this Section 5.1(h), the Company may
repay a note payable to Wireless Components, Inc. in the amount of $500,000,
which the Company Stockholders represent and warrant is 100% of the monies
properly due and owing from the Company to Wireless Components on and as of the
Closing Date.
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(ix) On the Closing Date, in exchange for the execution and delivery by the
Company of the Promissory Note (the "Tax Note") attached hereto as Exhibit
5.1(h)(ix), the Company Stockholders will make a loan to the Company in an
amount equal to the Estimated Company Stockholder Short Year Tax Liability
Distribution.
(x) Notwithstanding anything to the contrary contained in the Tax Note, to
the extent that the income taxes (the "Actual Company Stockholder Short Year Tax
Liability") imposed on the Company Stockholders solely by reason of the
inclusion in their income of the net income of the Company for the Company Short
Year, as reflected on the federal income tax return of the Company Stockholders
for the taxable year in which the income of the Company for the Company Short
Year is reported by the Company Stockholders is less than the Estimated Company
Stockholder Short Year Tax Liability, then the Company Stockholders agree to pay
to the Company within 30 days following the filing of such federal income tax
return an amount equal to the amount by which the Actual Company Stockholder
Short Year Tax Liability exceeds the Estimated Company Stockholder Short Year
Tax Liability.
(n) Labor Matters. The Company is not the subject of any material
proceeding asserting that it has committed an unfair labor practice or seeking
to compel it to bargain with any labor union or labor organization nor is there
pending or, to the knowledge of its executive officers and the Company
Stockholders, threatened, nor has there been for the past five years, any labor
strike, dispute, walkout, work stoppage, slow-down or lockout involving the
Company, except in each case as is not, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect on it.
(o) Brokers and Finders. Neither the Company nor any of its executive
officers, directors or employees nor the Company Stockholders has employed any
broker or finder or incurred any liability for any brokerage fees, commissions
or finders, fees in connection with the Merger or the other transactions
contemplated in this Agreement.
5.2. Representations and Warranties of STI and Merger Sub. Except as set
forth in the corresponding sections or subsections of the disclosure letter,
dated the date hereof, delivered by STI to the Company (the "STI Disclosure
Letter"), STI, on behalf of itself and Merger Sub, hereby represents and
warrants to the Company and the Company Stockholders, that:
(a) Organization, Good Standing and Qualification. Each of STI and its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of organization and has
all requisite corporate or similar power and authority to own and operate its
properties and assets and to carry on its business as presently conducted and is
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction where the ownership or operation of its properties or conduct
of its business requires such qualification, except where the failure to be so
qualified or in good standing is not, when taken together with all other such
failures, reasonably likely to have a Material Adverse Effect on it. STI has
made available to the Company a complete and correct copy of its certificate of
incorporation and by-laws, each as amended to date. Such certificates of
incorporation and by-laws as so made available are in full force and effect.
(b) Capital Structure. (i) The authorized capital stock of STI consists of
10,000,000 shares of STI Common Stock, of which 5,405,247 shares were issued and
outstanding and 0 shares were
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held in treasury as of the close of business on May 31, 1997. All of the
outstanding shares of STI Common Stock have been duly authorized and are validly
issued, fully paid and nonassessable. As of May 31, 1997, there were not more
than (A) 5,000 shares of STI Common Stock reserved for issuance upon exercise of
outstanding Redeemable Common Stock Purchase Warrants ("STI Redeemable
Warrants"), each of which entitles the holder thereof to purchase one share of
STI Common Stock for a price of $6.00 until November 3, 1999, subject to earlier
redemption by STI, (B) 24,000 shares of STI Common Stock reserved for issuance
upon exercise of 8,000 outstanding Underwriters' Warrants, each of which
entitles the holder thereof to purchase one Unit, consisting of two shares of
STI Common Stock and one Redeemable Warrant, until November 3, 1999, and (C)
400,000 shares of STI Common Stock that STI was obligated to issue pursuant to
STI's Amended and Restated 1994 Stock Option Plan and Outside Directors' Stock
Option Plan (collectively, the "STI Stock Plans"). Each of the outstanding
shares of capital stock of each of STI's Subsidiaries is duly authorized,
validly issued, fully paid and nonassessable and owned by STI or a direct or
indirect wholly-owned subsidiary of STI, free and clear of any lien, pledge,
security interest, claim or other encumbrance. Except as set forth above, there
are no preemptive or other outstanding rights, options, warrants, conversion
rights, stock appreciation rights, redemption rights, repurchase rights,
agreements, arrangements or commitments to issue or to sell any shares of
capital stock or other securities of STI or any of its Subsidiaries or any
securities or obligations convertible or exchangeable into or exercisable for,
or giving any Person a right to subscribe for or acquire, any securities of STI
or any of its Subsidiaries, and no securities or obligation evidencing such
rights are authorized, issued or outstanding. STI does not have outstanding any
bonds, debentures, notes or other obligations the holders of which have the
right to vote (or convertible into or exercisable for securities having the
right to vote) with the stockholders of STI on any matter.
(ii) The authorized capital stock of Merger Sub consists of 1,000 shares of
Common Stock, no par value per share, 100 all of which are validly issued and
outstanding. All of the issued and outstanding capital stock of Merger Sub is,
and at the Effective Time will be, owned by STI, and there are (A) no other
shares of capital stock or other voting securities of Merger Sub, (B) no
securities of Merger Sub convertible into or exchangeable for shares of capital
stock or other voting securities of Merger Sub and (iii) no options or other
rights to acquire from Merger Sub, and no obligations of Merger Sub to issue,
any capital stock, other voting securities or securities convertible into or
exchangeable for capital stock or other voting securities of Merger Sub. Merger
Sub has not conducted any business prior to the date hereof and has no, and
prior to the Effective Time will have no, assets, liabilities or obligations of
any nature other than those incident to its formation and pursuant to this
Agreement and the Merger and the other transactions contemplated by this
Agreement.
(c) Corporate Authority; Approval. STI and Merger Sub each has all
requisite corporate power and authority and each has taken all corporate action
necessary in order to execute, deliver and perform its obligations under this
Agreement and to consummate, the Merger, subject only to final approval of this
Agreement by a majority of the members of the Board of Directors of STI (the
"STI Requisite Vote"). This Agreement is a valid and binding agreement of STI
and Merger Sub, enforceable against each of STI and Merger Sub in accordance
with its terms, subject to the Bankruptcy and Equity Exception. The shares of
STI Common Stock, when issued pursuant to this Agreement, will be validly
issued, fully paid and nonassessable, and no stockholder of STI will have any
preemptive right of subscription or purchase in respect thereof.
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(d) Governmental Filings; No Violations. (i) Other than the filings and/or
notices (A) pursuant to Section 1.3, the Securities Exchange Act and the
Securities Act, (B) to comply with state securities or "blue-sky" laws, (such
filings and/or notices being the "STI Required Consents", no notices, reports or
other filings are required to be made by it with, nor are any consents,
registrations, approvals, permits or authorizations required to be obtained by
it from, any Governmental Entity, in connection with the execution and delivery
of this Agreement by it and the consummation by it of the Merger and the other
transactions contemplated hereby, except those that the failure to make or
obtain are not, individually or in the aggregate, reasonably likely to have a
Material Adverse Effect on STI or prevent, materially delay or materially impair
its ability to consummate the transactions contemplated by this Agreement.
(ii) The execution, delivery and performance of this Agreement by it do
not, and the consummation by it of the Merger and the other transactions
contemplated hereby will not, constitute or result in (A) a breach or violation
of, or a default under, its certificate of incorporation or by-laws or the
comparable governing instruments of any of its Subsidiaries, (B) a breach or
violation of, or a default under, the acceleration of any obligations or the
creation of a lien, pledge, security interest or other encumbrance on its assets
or the assets of any of its Subsidiaries (with or without notice, lapse of time
or both) pursuant to Contracts binding upon it or any of its Subsidiaries or any
Law or governmental or non-governmental permit or license to which it or any of
its Subsidiaries is subject or (C) any change in the rights or obligations of
any party under any of its Contracts, except, in the case of clause (B) or (C)
above, for any breach, violation, default, acceleration, creation or change
that, individually or in the aggregate, is not reasonably likely to have a
Material Adverse Effect on STI or prevent, materially delay or materially impair
its ability to consummate the transactions contemplated by this Agreement. The
STI Disclosure Letter sets forth a correct and complete list of STI's Contracts
and Contracts of its Subsidiaries pursuant to which consents or waivers are or
may be required prior to consummation of the transactions contemplated by this
Agreement other than those where the failure to obtain such consents or waivers
is not reasonably likely to have a Material Adverse Effect on STI or prevent or
materially impair its ability to consummate the transactions contemplated by
this Agreement.
(e) Reports; Financial Statements. It has delivered to the Company and each
Stockholder, each registration statement, report, proxy statement or information
statement prepared by it since June 30, 1996 (including exhibits, annexes and
any amendments thereto), including, without limitation, its (i) Annual Report on
Form 10-KSB for the year ended June 30, 1996 (the "STI Audit Date"), (ii)
definitive proxy statement filed in connection with such annual report; and
(iii) quarterly reports on Form 10-QSB for the quarters ended September 30,
1996, December 30, 1996 and March 31, 1997 (collectively, including any such
reports filed subsequent to the date hereof and prior to the Closing Date, the
"STI Reports"). As of their respective dates, the STI Reports did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances in which they were made, not misleading. Each of
the consolidated balance sheets included in or incorporated by reference into
the STI Reports (including the related notes and schedules) fairly presents the
consolidated financial position of STI and its Subsidiaries as of its date and
each of the consolidated statements of income, cash flows and changes in
stockholders' equity included in or incorporated by reference into the STI
Reports (including any related notes and schedules) fairly presents the results
of operations, retained earnings, cash flows and changes in stockholders'
equity, as the case may be, of it and its Subsidiaries for the periods set forth
therein (subject, in the case of unaudited statements, to notes and normal
year-end audit adjustments that will not be material in amount or
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effect), in each case in accordance with GAAP consistently applied during the
periods involved, except as may be noted therein. To the best of their
knowledge, STI's executive officers have disclosed to the Company all facts
relating to the STI and its operations and assets material to the transactions
contemplated by this Agreement. No representation or warranty made by STI in
this Agreement and in any certificate furnished to the Company or the Company
Stockholders pursuant to this Agreement and in the STI Disclosure Letter
contains or as of the Closing Date will contain any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
contained herein or therein not misleading. The representations and warranties
made herein are made by STI with the knowledge and expectation that the Company
and the Company Stockholders are placing reliance thereon.
(f) Absence of Certain Changes. Except as disclosed in the STI Reports
delivered to the Company prior to the date hereof or the STI Disclosure Letter
or as expressly contemplated by this Agreement, since the STI Audit Date, STI
and its Subsidiaries have conducted their respective businesses only in, and
have not engaged in any material transaction other than according to, the
ordinary and usual course of such businesses and there has not been (i) any
change in the financial condition, properties, prospects, business or results of
operations of STI and its Subsidiaries, except those changes that are not,
individually or in the aggregate, reasonably likely to have a Material Adverse
Effect on STI; (ii) any damage, destruction or other casualty loss with respect
to any asset or property owned, leased or otherwise used by STI or any of its
Subsidiaries, whether or not covered by insurance, which damage, destruction or
loss is reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect on STI; (iii) any declaration, setting aside or payment of any
dividend or other distribution in respect of its capital stock; or (iv) any
change by STI in accounting principles, practices or methods.
(g) Litigation and Liabilities. Except as disclosed in the STI Reports
delivered to the Company prior to the date hereof or the STI Disclosure Letter,
there are no (i) civil, criminal or administrative actions, suits, claims,
hearings, investigations or proceedings pending or, to the knowledge of its
executive officers, threatened against it or any of its Affiliates (as defined
in Rule 12b-2 under the Exchange Act) or (ii) obligations or liabilities,
whether or not accrued, contingent or otherwise and whether or not required to
be disclosed, including those relating to matters involving any Environmental
Law, or any other facts or circumstances, in either such case, of which its
executive officers have actual knowledge that are reasonably likely to result in
any claims against or obligations or liabilities of it or any of its Affiliates,
except for those that are not, individually or in the aggregate, reasonably
likely to have a Material Adverse Effect on STI or prevent or materially impair
its ability to consummate the transactions contemplated by this Agreement.
(h) Compliance with Laws. Except as set forth in the STI Reports delivered
to the Company prior to the date hereof or the STI Disclosure Letter, the
businesses of each of it and its Subsidiaries have not been, and are not being,
conducted in violation of any Laws, except for violations or possible violations
that are not, individually or in the aggregate, reasonably likely to have a
Material Adverse Effect on STI or prevent or materially impair its ability to
consummate the transactions contemplated by this Agreement. Except as set forth
in the STI Reports delivered to the Company filed prior to the date hereof, no
investigation or review by any Governmental Entity with respect to it or any of
its Subsidiaries is pending or, to the actual knowledge of its executive
officers, threatened, nor has any Governmental Entity indicated an intention to
conduct the same, except for those the outcome of which are not, individually or
in the aggregate, reasonably likely to have a Material Adverse Effect on STI or
prevent or materially impair its ability to consummate the
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transactions contemplated by this Agreement. To the actual knowledge of its
executive officers, no material change is required in its or any of its
Subsidiaries' processes, properties or procedures in connection with any such
Laws, and it has not received any notice or communication of any material
noncompliance with any such Laws that has not been cured as of the date hereof,
except for such changes and noncompliance that are not, individually or in the
aggregate, reasonably likely to have a Material Adverse Effect on STI or prevent
or materially impair its ability to consummate the transactions contemplated by
this Agreement. Each of it and its Subsidiaries has all Permits necessary to
conduct their business as presently conducted, except for those the absence of
which are not, individually or in the aggregate, reasonably likely to have a
Material Adverse Effect on STI or prevent or materially impair its ability to
consummate the transactions contemplated by this Agreement.
(i) Environmental Matters. Except as disclosed in the STI Reports delivered
to the Company prior to the date hereof or the STI Disclosure Letter, and except
for such matters that, alone or in the aggregate, are not reasonably likely to
have a Material Adverse Effect on STI: (i) each of STI and its Subsidiaries has
complied with all applicable Environmental Laws; (ii) the properties currently
owned or operated by STI or any of its Subsidiaries (including soils,
groundwater, surface water, buildings or other structures) are not contaminated
with any Hazardous Substances; (iii) the properties formerly owned or operated
by STI or any of its Subsidiaries were not contaminated with Hazardous
Substances during the period of ownership or operation by it or any of its
Subsidiaries; (iv) neither STI nor any of its Subsidiaries is subject to
liability for any Hazardous Substance disposal or contamination on any third
party property; (v) neither STI nor any Subsidiary has been associated with any
release or threat of release of any Hazardous Substance; (vi) neither STI nor
any Subsidiary has received any notice, demand, letter, claim or request for
information alleging that it or any of its Subsidiaries may be in violation of
or liable under any Environmental Law; (vii) neither STI nor any of its
Subsidiaries is subject to any orders, decrees, injunctions or other
arrangements with any Governmental Entity or is subject to any indemnity or
other agreement with any third party relating to liability under any
Environmental Law or relating to Hazardous Substances; and (viii) there are no
circumstances or conditions involving STI or any of its Subsidiaries that could
reasonably be expected to result in any claims, liability, investigations, costs
or restrictions on the ownership, use, or transfer of any of its properties
pursuant to any Environmental Law.
(j) Accounting and Tax Matters. As of the date hereof, STI has not taken or
agreed to take any action, nor do its executive officers have any actual
knowledge of any fact or circumstance, that would prevent STI from accounting
for the business combination to be effected by the Merger as a
"pooling-of-interests" or prevent the Merger and the other transactions
contemplated by this Agreement from qualifying as a "reorganization" within the
meaning of Section 368(a) of the Code.
(k) Taxes. STI and each of its Subsidiaries have prepared in good faith and
duly and timely filed (taking into account any extension of time within which to
file) all material Tax Returns required to be filed by any of them and all such
filed tax returns are complete and accurate in all material respects and: (i) it
and each of its Subsidiaries have paid all Taxes that are shown as due on such
filed Tax Returns or that it or any of its Subsidiaries is obligated to withhold
from amounts owing to any employee, creditor or third party, except with respect
to matters contested in good faith or for such amounts that, alone or in the
aggregate, are not reasonably likely to have a Material Adverse Effect on STI;
(ii) as of the date hereof, there are not pending or, to the actual knowledge of
its executive officers threatened in writing, any audits, examinations,
investigations or other proceedings in respect of Taxes or Tax matters; and
(iii) there are not, to the actual knowledge of
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its executive officers, any unresolved questions or claims concerning STI's or
any of its Subsidiaries' Tax liability that are reasonably likely to have a
Material Adverse Effect on STI. Neither STI nor any of its Subsidiaries has any
liability with respect to income, franchise or similar Taxes in excess of the
amounts accrued in respect thereof that are reflected in the financial
statements included in the STI Reports delivered to the Company prior to the
date hereof, except such excess liabilities as are not, individually or in the
aggregate, reasonably likely to have a Material Adverse Effect on STI.
(l) Labor Matters. Neither STI nor any of its Subsidiaries is the subject
of any material proceeding asserting that it or any of its Subsidiaries has
committed an unfair labor practice or is seeking to compel it to bargain with
any labor union or labor organization nor is there pending or, to the knowledge
of its executive officers, threatened, nor has there been for the past five
years, any labor strike, dispute, walkout, work stoppage, slow-down or lockout
involving it or any of its Subsidiaries, except in each case as is not,
individually or in the aggregate, reasonably likely to have a Material Adverse
Effect on STI.
(m) Brokers and Finders. Neither STI nor any of its officers, directors or
employees has employed any broker or finder or incurred any liability for any
brokerage fees, commissions or finders, fees in connection with the Merger or
the other transactions contemplated in this Agreement.
ARTICLE VI
COVENANTS
6.1. Interim Operations. (a) The Company and STI each covenants and agrees
that, after the date hereof and prior to the Effective Time (except for
subsection (iii) below which will continue after the Effective Time) (unless STI
or the Company, as the case may be, shall otherwise approve in writing, which
approval shall not be unreasonably withheld or delayed, and except as otherwise
expressly contemplated by this Agreement or in its respective Disclosure Letter
or as required by applicable Law):
(i) the business of it and its Subsidiaries shall be conducted in the
ordinary and usual course and, to the extent consistent therewith, it and
its Subsidiaries shall use all reasonable efforts to preserve its business
organization intact and maintain its existing relations and goodwill with
customers, suppliers, regulators, distributors, creditors, lessors,
employees and business associates;
(ii) it shall not (A) amend its certificate of incorporation or
by-laws; (B) split, combine, subdivide or reclassify its outstanding shares
of capital stock; (C) declare, set aside or pay any dividend payable in
cash, stock or property in respect of any capital stock, or (D) repurchase,
redeem or otherwise acquire, except in the case of STI, in connection with
the redemption of outstanding STI Redeemable Warrants or permit any of its
Subsidiaries to purchase or otherwise acquire, any shares of its capital
stock or any securities convertible into or exchangeable or exercisable for
any shares of its capital stock;
(iii) neither it nor any of its Subsidiaries shall knowingly take or
fail to take any action if the result of such taking or failure would be to
(A) prevent the Merger from qualifying for "pooling of interests"
accounting treatment or as a "reorganization" within the
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meaning of Section 368(a) of the Code or (B) cause any of its
representations and warranties herein to become untrue in any material
respect;
(iv) neither it nor any of its Subsidiaries will authorize, or enter
into an agreement to do any of the foregoing; and
(v) each shall cause its respective Affiliates not to knowingly take
or fail to take any action which it has agreed to do, or not do, herein.
(b) STI and the Company agree that any written approval obtained under this
Section 6.1 may be relied upon by the other party if signed by the President or
another executive officer of the other party.
6.2. Stockholders Meeting. The Company will take, in accordance with
applicable law and its certificate of incorporation and by-laws, all action
necessary to convene a meeting of holders of Company Shares (the "Stockholders
Meeting") as promptly as practicable after the effective date of this Agreement.
6.3. Filings; Other Actions; Notification.
(a) The Company and STI shall cooperate with each other and use all their
respective reasonable efforts to take or cause to be taken all actions, and do
or cause to be done all things, necessary, proper or advisable on its part under
this Agreement and applicable Laws to consummate and make effective the Merger
and the other transactions contemplated by this Agreement as soon as
practicable, including preparing and filing as promptly as practicable all
documentation to effect all necessary applications, notices, petitions, filings
and other documents and to obtain as promptly as practicable all consents,
registrations, approvals, permits and authorizations necessary or advisable to
be obtained from any third party and/or any Governmental Entity in order to
consummate the Merger or any of the other transactions contemplated by this
Agreement.
(b) The Company and STI each shall keep the other apprised of the status of
matters relating to completion of the transactions contemplated hereby,
including promptly furnishing the other with copies of notice or other
communications received by STI or the Company, as the case may be, or any of its
Subsidiaries, from any third party and/or any Governmental Entity with respect
to the Merger and the other transactions contemplated by this Agreement. Each of
the Company and STI shall give prompt notice to the other of any change that is
reasonably likely to result in a Material Adverse Effect on it.
6.4. Access. Upon reasonable notice, and except as may otherwise be
required by applicable law, the Company and STI each shall (and shall cause its
Subsidiaries to) afford the other's officers, employees, counsel, accountants
and other authorized representatives ("Representatives") reasonable access,
during normal business hours throughout the period prior to the Effective Time,
to its properties, books, contracts and records and, during such period, each
shall (and shall cause its Subsidiaries to) furnish promptly to the other all
information concerning its business, properties and personnel as may reasonably
be requested, provided that no investigation pursuant to this Section shall
affect or be deemed to modify any representation or warranty made by the
Company, STI or Merger Sub hereunder, and provided, further, that the foregoing
shall not require the Company or STI to permit any inspection, or to disclose
any information, that in the reasonable judgment of the
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Company or STI, as the case may be, would result in the disclosure of any trade
secrets of third parties or violate any of its obligations with respect to
confidentiality if the Company or STI, as the case may be, shall have used all
reasonable efforts to obtain the consent of such third party to such inspection
or disclosure. All requests for information made pursuant to this Section shall
be directed to the President of the Company or STI, as the case may be, or such
Person as may be designated by any such officer, as the case may be.
6.5. Affiliates. (a) Each of the Company and STI shall deliver to the other
a letter identifying all Persons whom such party believes to be, at the Closing
Date, "affiliates" of such party for purposes of Rule 145 under the Securities
Act. Each of the Company and STI shall use all reasonable efforts to cause each
Person who is identified as an "affiliate" in the letter referred to above and
who is not a party to this Agreement, to deliver to STI prior to the Closing
Date a written agreement providing that each such Person will agree not to sell,
pledge, transfer or otherwise dispose of shares of STI Common Stock until such
time as STI has published consolidated financial results that cover at least
thirty (30) days of combined post-merger operations of STI and the Surviving
Corporation.
(b) If the Merger would otherwise qualify for pooling-of-interests
accounting treatment, shares of STI Common Stock issued to such affiliates of
the Company in exchange for Company Shares shall not be transferable until such
time as financial results covering at least 30 days of combined operations of
STI and the Company have been published within the meaning of Section 201.01 of
the SEC's Codification of Financial Reporting Policies, regardless of whether
each such affiliate has provided the written agreement referred to in this
Section, except to the extent permitted by, and in accordance with, SEC
Accounting Series Release 135 and SEC Staff Accounting Bulletins 65 and 76. Any
Company Shares held by any such affiliate shall not be transferable, regardless
of whether such affiliate has provided the applicable written agreement referred
to in this Section, if such transfer, either alone or in the aggregate with
other transfers by affiliates, would preclude STI's ability to account for the
business combination to be effected by the Merger as a pooling of interests. The
Company shall not register the transfer of any Certificate, unless such transfer
is made in compliance with the foregoing.
6.6. Publicity. The Company and STI each shall consult with each other
prior to issuing any press releases or otherwise making public announcements
with respect to the Merger and the other transactions contemplated by this
Agreement and prior to making any filings with any third party and/or any
Governmental Entity (including any national securities exchange) with respect
thereto, except as may be required by law or by obligations pursuant to any
listing agreement with or rules of any national securities exchange.
6.7. Employment Agreements; Employee Compensation and Benefits.
(a) Employment Agreements. Prior to the Effective Time, the Company will
enter into employment agreements (in most cases with a form of attached stock
option agreement) with each of Ernie L. Carpenter, Michael D. Brunick, Maralyn
S. Davis, Michael J. Kitzmiller, Michael S. Nelson, Bob T. Paswalk, Kevin R.
Paswalk, John J. Williamson and Darin L. Zundel in substantially the form
attached hereto as Exhibits 6.7(a) through (i), respectively, which employment
agreements shall become effective from and after the Effective Time. Effective
from and after the Effective Time, STI will grant to the other employees of the
Company listed on Exhibit 6.7(j) with options (together with options issued to
the employees whose employment agreements are attached hereto
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as Exhibits 6.7(a) through (h), the "Former MTS Employee Options") to purchase
STI common stock under STI's Amended and Restated 1994 Stock Option Plan or a
new, substantially equivalent stock option plan, in such amounts as are set
forth opposite such employees name on Exhibit 6.7(c), subject to normal vesting
requirements that are no less favorable to such employees as similar options
granted to other similarly situated employees of STI and its Subsidiaries and
subject to the approval of STI stockholders of an amendment to STI's Amended and
Restated 1994 Stock Option Plan or a new, substantially equivalent stock option
plan, to increase the number of options available thereunder to an amount
sufficient to enable the issuance of the Former MTS Employee Options.
(b) Employee Compensation and Benefits. STI agrees that it shall cause the
Surviving Corporation for at least two years after the Effective Time to provide
or cause to be provided to employees of the Company other than those listed in
Section 6.7(a) above, compensation and employee benefits that are no less
favorable, in the aggregate, than the Company's compensation and employee
benefits disclosed on Section 6.7(b) of the Company Disclosure Letter; provided,
however, that (i) the foregoing will not require STI or the Surviving
Corporation to maintain or prevent STI or the Surviving Corporation from
amending, terminating, or merging any particular Company Compensation and
Benefit Plan and (ii) if during this period STI implements any widespread
increase or decrease in benefits under its compensation and benefit plans or in
the cost thereof to participants under compensation and benefit plans applicable
to employees of STI and its Subsidiaries (other than the Surviving Corporation
and its Subsidiaries), the Surviving Corporation shall, subject to compliance
with applicable Laws and the terms of any then existing employment agreement,
proportionately adjust the compensation and employee benefits then being
provided to employees of the Surviving Corporation or the cost thereof to
employees or participants.
6.8. Expenses. Whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the Merger and the other
transactions contemplated by this Agreement shall be paid by the party incurring
such expense.
6.9. Indemnification of STI.
(a) If the Merger is consummated, the Company Stockholders agree to
indemnify and hold each of STI and its respective Subsidiaries (collectively,
the "STI Indemnified Parties"), harmless from and against any and all
liabilities, damages, losses, claims, demands, costs or expenses (including
interest, penalties, reasonable attorneys' and accountants' fees and expenses,
court costs and fees of expert witnesses) whether liquidated or unliquidated,
accrued or contingent, (all of the foregoing hereinafter collectively referred
to as the "Claims") which the STI Indemnified Parties shall suffer or incur,
resulting from, related to, or arising out of (i) any inaccuracy in any
representation or warranty of the Company Stockholders or the Company contained
in this Agreement or (ii) any failure of the Company or the Company Stockholders
to perform their obligations in connection with this Agreement. Anything to the
contrary herein notwithstanding, (i) the Company Stockholders shall not be
liable for any such Claim if, at the Closing Date, STI had knowledge of such
inaccuracy in representation or warranty of the Company or the Company
Stockholders or of the Company's or the Company Stockholders' failure to perform
an obligation that is an obligation required to be performed prior to the
Closing Date; (ii) the Company Stockholders shall only be liable to the STI
Indemnified Parties for inaccuracies in any representation or warranty of the
Company or the Company Stockholders contained in this Agreement to the extent
the aggregate amount of the STI Indemnified Parties' Claims thereunder exceeds
$25,000; (iii) each Company Stockholder's several liability shall be limited to
its
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proportionate share of the Claims; (iv) the aggregate liability of the Company
Stockholders pursuant to this Section 6.9 shall not exceed in any event
$28,000,000; and (v) the Company Stockholders shall have no obligation hereunder
with respect to any particular Claim unless the STI Indemnified Parties shall
have given written notice thereof in the manner provided in Section 6.11 below
on or prior to one year after the Effective Time (the "Release Date"). Any such
claim for indemnification shall be adjusted, to take into account (a) the
receipt of any insurance proceeds by the STI Indemnified Parties with respect to
any Claims and (b) any tax benefit to, or tax burden on, the STI Indemnified
Parties incident to the matter giving rise to such claim for indemnification or
to the indemnification payment hereunder.
(b) No Exhaustion of Remedies or Subrogation. The Company Stockholders
acknowledge that their obligation is independent of the obligations of the
Company pursuant to this Agreement, and that the Company Stockholders waive any
right to require the STI Indemnified Parties to (i) proceed against the Company
or exhaust any security, if any, held from the Company; or (ii) pursue any other
remedy whatsoever in the power of the STI Indemnified Parties; provided,
however, that the STI Indemnified Parties agree that they will make a claim
against any applicable insurance policy available to the STI Indemnified
Parties, and the STI Indemnified Parties may provide notice of but will not
further proceed against the Company Stockholders for payment of a Claim until
any related insurance claim has been denied. The STI Indemnified Parties will
not be required to pursue any other remedies against any insurance policy if a
claim thereunder is denied. To the extent the STI Indemnified Parties elect not
to further pursue any claim, the Company Stockholders shall be entitled to
pursue such claim. Any such action by the Company Stockholders shall not affect
or further delay the rights of the STI Indemnified Parties to proceed against
the Company Stockholders for payment of a Claim. The Company Stockholders
further waive any right of subrogation, reimbursement, contribution or indemnity
against or from either of the Constituent Corporations and shall have no right
or recourse to or with respect to either of the Constituent Corporations or any
right to participate in any security pledged by either of the Constituent
Corporations, if any, all of which is waived by the Company Stockholders.
6.10. Indemnification of the Company Stockholders.
(a) If the Merger is consummated, STI agrees to indemnify and hold the
Company Stockholders harmless from and against any and all liabilities, damages,
losses, claims, demands, costs or expenses (including interest, penalties,
reasonable attorneys' and accountants' fees and expenses, court costs and fees
of expert witnesses) whether liquidated or unliquidated, accrued or contingent,
(all of the foregoing hereinafter collectively referred to as the "Claims")
which the Company Stockholders shall suffer or incur, resulting from, related
to, or arising out of (i) any inaccuracy in any representation or warranty of
the STI contained in this Agreement or (ii) any failure of STI to perform its
obligations in connection with this Agreement. Anything to the contrary herein
notwithstanding, (i) STI shall not be liable for any such Claims if, at the
Closing Date, the Company Stockholders had knowledge of such inaccuracy in
representation or warranty of STI or of STI's failure to perform an obligation
that is an obligation required to be performed prior to the Closing Date; (ii)
STI shall only be liable to the Company Stockholders for inaccuracies in any
representation or warranty of STI contained in this Agreement to the extent the
aggregate amount of the Company Stockholders' Claims thereunder exceed $25,000;
(iii) the aggregate liability of Parent pursuant to this Section 6.10 shall not
exceed in any event $28,000,000; and (iv) STI shall have no obligation hereunder
with respect to any particular Claim unless the Company Stockholders shall have
given written notice thereof in the manner provided in Section 7.4 below
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on or prior to the Release Date. Any such claim for indemnification shall be
adjusted, to take into account (a) the receipt of any insurance proceeds by the
Company Stockholders with respect to any Claims and (b) any tax benefit to, or
tax burden on, the Company Stockholders incident to the matter giving rise to
such claim for indemnification or to the indemnification payment thereunder.
6.11. Procedure for Indemnification Claims.
(a) If, prior to the Release Date, a party shall incur or receive notice of
the existence of any Claim for which such party claims indemnity hereunder (the
"Indemnitee"), the Indemnitee shall promptly give written notice thereof to the
other party (the "Indemnitor"). The Indemnitee shall furnish to the Indemnitor
in reasonable detail such information as the Indemnitee may have with respect
thereto (including in any case, copies of any summons, complaint or other
pleading which may have been served on it and any written claim, demand,
invoice, billing or other document evidencing or asserting the same); provided,
however, that no failure or delay by the Indemnitee in the performance of the
foregoing prior to the Release Date shall reduce or otherwise affect the
obligation of the Indemnitor to indemnify and hold the Indemnitee harmless,
except to the extent that such failure or delay shall have actually impaired the
Indemnitor's ability to defend against, settle or satisfy such liability,
damage, loss, claim or demand, or increased the cost thereof.
(b) In the event of asserted liabilities to and claims and demands of third
parties, including any action, suit or proceeding related thereto, with respect
to matters set forth in Section 6.9 and 6.10 hereof, the Indemnitee shall have
the right to pay, compromise, settle or otherwise dispose of any claim or
conduct the defense or settlement of any action, suit or proceeding as the
Indemnitee shall deem appropriate; provided, however, that if the Indemnitee
shall pay any claim or settle any suit, action or proceeding without the written
consent of the Indemnitor, the right of the Indemnitee to make any claim against
the Indemnitor shall neither be deemed conclusively established nor conclusively
denied. The Indemnitor shall have the right to be represented by advisory
counsel and accountants (at its own expense) in connection with any action, sit
or proceeding, and the Indemnitor shall be kept reasonably informed by the
Indemnitee of such action, suit or proceeding at reasonable times at all stages
thereof, whether or not the Indemnitor is so represented. The Indemnitee and
Indemnitor agree to make available to each other, their counsel and accountants
all information and documents reasonably available to them which relate to such
action, suit or proceeding, and Indemnitee and Indemnitor agree to render to
each other such assistance as they may reasonably require of each other in order
to ensure the proper and adequate defense of any such action, suit or
proceeding.
(c) Satisfaction of Claims. Notwithstanding anything in this Agreement to
the contrary, any liabilities of the Indemnitor on account of any
indemnification hereunder shall be satisfied solely by exercise of the
Indemnitee's rights under this Agreement, provided that nothing in this
Agreement shall be deemed to limit any right or remedy of the Indemnitee or any
other person against any other person for the fraud or criminal activity of such
other person.
6.12. Takeover Statute. If any Takeover Statute is or may become applicable
to the Merger or the other transactions contemplated by this Agreement, each of
STI and the Company and its board of directors shall grant such approvals and
take such actions as are necessary so that such transactions may be consummated
as promptly as practicable on the terms contemplated by this Agreement or by the
Merger and otherwise act to eliminate or minimize the effects of such statute or
regulation on such transactions.
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6.13. Confidentiality. The Company, STI and Merger Sub each agrees not to
disclose or permit the disclosure for any purpose other than the transactions
contemplated hereby of any non-public, confidential or proprietary information
furnished to such party by another party hereto in connection with the
transactions contemplated by this Agreement, provided that such disclosure may
be made (a) to any Person who is an officer, director or employee of such party,
or to counsel, accountants and financial advisors to such party solely for their
use in evaluating the transactions contemplated by this Agreement, (b) with the
prior written consent of all parties to this Agreement or (c) pursuant to a
subpoena or order issued by a court, arbitrator or governmental body, agency or
official.
6.14. Control of the Company's Operations. Nothing contained in this
Agreement shall give STI, directly or indirectly, rights to control or direct
the Company's operations prior to the Effective Time. Prior to the Effective
Time, the Company shall exercise, consistent with the terms and conditions of
this Agreement, complete control and supervision of its operations.
ARTICLE VII
CONDITIONS
7.1. Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver at or prior to the Effective Time of each of the
following conditions:
(a) Stockholder Approval. This Agreement shall have been duly approved by
holders of Company Shares constituting the Company Requisite Vote and have been
duly approved by the sole stockholder of Merger Sub.
(b) Litigation. No court or Governmental Entity of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any Law (whether
temporary, preliminary or permanent) that is in effect and restrains, enjoins or
otherwise prohibits consummation of the Merger or the other transactions
contemplated by this Agreement (collectively, an "Order"), and no Governmental
Entity shall have instituted any proceeding or threatened to institute any
proceeding seeking any such Order.
(c) Affiliates and Accountants' Letters. STI and the Company shall have
received the letters described in Section 6.5(a). STI shall have received such
assurances as it deems necessary from its independent public accounting firm to
the effect that the Merger will qualify for "pooling-of-interests" accounting
treatment.
(d) Employment Agreements. The Company and each of the employees listed in
Section 6.7(a) shall have executed and delivered to the other party thereto the
employment agreement referred to in Section 6.7(a) to which they are a party.
7.2. Conditions to Obligations of STI and Merger Sub. The obligations of
STI and Merger Sub to effect the Merger are also subject to the satisfaction or
waiver by STI at or prior to the Effective Time of the following conditions:
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(a) Representations and Warranties. The representations and warranties of
the Company and the Company Stockholders set forth in this Agreement shall be
true and correct as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the Closing
Date as though made on and as of the Closing Date, and STI shall have received a
certificate signed on behalf of the Company by the President of the Company and
on behalf of each Company Stockholder by such Company Stockholder to such
effect.
(b) Performance of Obligations of the Company and the Company Stockholders.
The Company and the Company Stockholders shall have performed in all material
respects all obligations required to be performed by them under this Agreement
at or prior to the Closing Date, and STI shall have received a certificate
signed on behalf of the Company by the President of the Company and on behalf of
each Company Stockholder by such Company Stockholder to such effect.
(c) Consents Under Agreements. The Company shall have obtained the consent
or approval of each Person whose consent or approval shall be required in order
to consummate the transactions contemplated by this Agreement under any Contract
to which the Company is a party, except those for which the failure to obtain
such consent or approval, individually or in the aggregate, is not reasonably
likely to have, a Material Adverse Effect on the Company or is not reasonably
likely to materially adversely affect the ability of the Company to consummate
the transactions contemplated by this Agreement.
(d) STI Board of Directors Approval. This Agreement shall have been duly
approved by members of the Board of Directors of STI constituting the STI
Requisite Vote.
7.3. Conditions to Obligation of the Company and the Company Stockholders.
The obligation of the Company and the Company Stockholders to effect the Merger
is also subject to the satisfaction or waiver by the Company and the Company
Stockholders at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. The representations and warranties of
STI and Merger Sub set forth in this Agreement shall be true and correct as of
the date of this Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing Date as though made on
and as of the Closing Date, and the Company shall have received a certificate
signed on behalf of STI by the President of STI to such effect.
(b) Performance of Obligations of STI and Merger Sub. Each of STI and
Merger Sub shall have performed in all material respects all obligations
required to be performed by it under this Agreement at or prior to the Closing
Date, and the Company shall have received a certificate signed on behalf of STI
and Merger Sub by the President of STI to such effect.
(c) Consents Under Agreements. STI shall have obtained the consent or
approval of each Person whose consent or approval shall be required in order to
consummate the transactions contemplated by this Agreement under any Contract to
which STI or any of its Subsidiaries is a party, except those for which failure
to obtain such consents and approvals, individually or in the aggregate, is not
reasonably likely to have a Material Adverse Effect on STI or is not reasonably
likely to materially adversely affect the ability of STI to consummate the
transactions contemplated by this Agreement.
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ARTICLE VIII
TERMINATION
8.1. Termination by Mutual Consent. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time by mutual
written consent of the Company and STI, by action of their respective boards of
directors.
8.2. Termination by Either STI or the Company. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time by action of the board of directors of either STI or the Company if (i) the
Merger shall not have been consummated on or before June 30, 1997, provided,
however, that if STI or the Company determines that additional time is necessary
in connection with obtaining a required approval or consent, the Termination
Date may be extended by STI or the Company from time to time by written notice
to the other party to a date not beyond July 30, 1997 (the "Termination Date"),
or (ii) any Order permanently restraining, enjoining or otherwise prohibiting
consummation of the Merger shall become final and non-appealable; provided, that
the right to terminate this Agreement pursuant to clause (i) above shall not be
available to any party that has breached in any material respect its obligations
under this Agreement in any manner that shall have proximately contributed to
the failure of the Merger to be consummated.
8.3. Effect of Termination and Abandonment. In the event of termination of
this Agreement and the abandonment of the Merger pursuant to this Article VIII,
this Agreement (other than as set forth in Section 9.1) shall become void and of
no effect with no liability on the part of any party hereto (or of any of its
directors, officers, employees, agents, legal or financial advisors or other
representatives); provided, however, no such termination shall relieve any party
hereto from any liability for any breach of this Agreement.
ARTICLE IX
MISCELLANEOUS AND GENERAL
9.1. Survival. This Article IX and the agreements of the Company, Company
Stockholders, STI and Merger Sub contained in Sections 4.5, 4.6, 4.7, 4.8,
5.1(m)(vi), 5.1(m)(vii), 5.1(m)(ix), 5.1(m)(x), 6.1(a)(iii), 6.1(a)(v), 6.7(b),
6.9, 6.10, and 6.11 shall survive the consummation of the Merger. All other
representations, warranties, covenants and agreements in this Agreement shall
not survive the consummation of the Merger or the termination of this Agreement.
9.2. Modification or Amendment. Subject to the provisions of the applicable
law, at any time prior to the Effective Time, the parties hereto may modify or
amend this Agreement, by written agreement executed and delivered by duly
authorized officers of the respective parties.
9.3. Waiver of Conditions. The conditions to each of the parties'
obligations to consummate the Merger are for the sole benefit of such party and
may be waived by such party in whole or in part to the extent permitted by
applicable law.
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9.4. Counterparts. This Agreement may be executed in any number of
counterparts, each such counter part being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.
9.5. GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL. (a) THIS AGREEMENT
SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE INTERPRETED,
CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW
MEXICO WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF, EXCEPT THAT
OREGON LAW SHALL APPLY TO THE EXTENT REQUIRED IN CONNECTION WITH THE
EFFECTUATION OF THE MERGER. The parties hereby irrevocably submit to the
jurisdiction of the Federal courts of the United States of America located in
the States of Oregon and New Mexico solely in respect of the interpretation and
enforcement of the provisions of this Agreement and of the documents referred to
in this Agreement, and in respect of the transactions contemplated hereby and
thereby, and hereby waive, and agree not to assert, as a defense in any action,
suit or proceeding for the interpretation or enforcement hereof or of any such
document, that it is not subject thereto or that such action, suit or proceeding
may not be brought or is not maintainable in said courts or that the venue
thereof may not be appropriate or that this Agreement or any such document may
not be enforced in or by such courts, and the parties hereto irrevocably agree
that all claims with respect to such action or proceeding shall be heard and
determined in such a Federal court. The parties hereby consent to and grant any
such court jurisdiction over the Person of such parties and over the subject
matter of such dispute and agree that mailing of process or other papers in
connection with any such action or proceeding in the manner provided in Section
9.6 or in such other manner as may be permitted by law, shall be valid and
sufficient service thereof.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND
THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH SUCH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH SUCH
PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH SUCH PARTY HAS BEEN INDUCED
TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 9.5.
9.6. Notices. Any notice, request, instruction or other document to be
given hereunder by any party to the others shall be in writing and delivered
personally or sent by registered or certified mail, postage prepaid, or by
facsimile:
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if to STI or Merger Sub:
Specialty Teleconstructors, Inc.
12001 Hwy 14 North
Cedar Crest, New Mexico 87008
Attention: Michael R. Budagher
President and Chief Executive Officer
Fax: (505) 281-8652
with copies to:
Jeffrey A. Howard
Jordaan, Howard & Pennington, PLLC
300 Crescent Court, Suite 1670
Dallas, Texas 75201
Fax: (214) 871-6560
if to the Company:
Microwave Tower Service, Inc.
4740 Ridge Drive N.E.
Salem, Oregon 97302
Attention: Ernie Carpenter
President
Fax: (503) 393-9792
with copies to:
Ron MacDonald
MacDonald Jensen Pagel & Jones
180 Church Street S.E.
Salem, Oregon 97301
Fax: (503) 371-2495
if to the Company Stockholders:
To the Persons and the Respective Addresses
Set forth on Exhibit 1, in each case
with copies to:
Ron MacDonald
MacDonald Jensen Pagel & Jones
180 Church Street S.E.
Salem, Oregon 97301
Fax: (503) 371-2495
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or to such other persons or addresses as may be designated in writing by
the party to receive such notice as provided above.
9.7. Entire Agreement. This Agreement (including any exhibits hereto), the
Company Disclosure Letter and the STI Disclosure Letter constitute the entire
agreement, and supersede all other prior agreements, understandings,
representations and warranties both written and oral, among the parties, with
respect to the subject matter hereof. EACH PARTY HERETO AGREES THAT, EXCEPT FOR
THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT, NEITHER STI OR
MERGER SUB NOR THE COMPANY OR THE COMPANY STOCKHOLDERS MAKES ANY OTHER
REPRESENTATIONS OR WARRANTIES, AND EACH HEREBY DISCLAIMS ANY OTHER
REPRESENTATIONS OR WARRANTIES MADE BY ITSELF OR HIMSELF OR ANY OF ITS OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS, FINANCIAL AND LEGAL ADVISORS OR OTHER
REPRESENTATIVES, WITH RESPECT TO THE EXECUTION AND DELIVERY OF THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE
TO THE OTHER OR THE OTHER'S REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER
INFORMATION WITH RESPECT TO ANY ONE OR MORE OF THE FOREGOING.
9.8. No Third Party Beneficiaries. Except as provided in Sections 6.09
(Indemnification of STI) and 6.11 (Procedure for Indemnification Claims), this
Agreement is not intended to confer upon any Person other than the parties
hereto any rights or remedies hereunder.
9.9. Obligations of STI and of the Company. Whenever this Agreement
requires a Subsidiary of STI to take any action, such requirement shall be
deemed to include an undertaking on the part of STI to cause such Subsidiary to
take such action. Whenever this Agreement requires a Subsidiary of the Company
to take any action, such requirement shall be deemed to include an undertaking
on the part of the Company to cause such Subsidiary to take such action and,
after the Effective Time, on the part of the Surviving Corporation to cause such
Subsidiary to take such action.
9.10. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability or the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
9.11. Interpretation. The headings herein are for convenience of reference
only, do not constitute part of this Agreement and shall not be deemed to limit
or otherwise affect any of the provisions hereof. Where a reference in this
Agreement is made to a Section or Exhibit, such reference shall be to a Section
of or Exhibit to this Agreement unless otherwise indicated. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation."
9.12. Assignment. This Agreement shall not be assignable by operation of
law or otherwise; provided, however, that STI may designate, by written notice
to the Company, another
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wholly-owned direct or indirect Subsidiary to be a Constituent Corporation in
lieu of Merger Sub, in which event all references herein to Merger Sub shall be
deemed references to such other Subsidiary except that all representations and
warranties made herein with respect to Merger Sub as of the date of this
Agreement shall be deemed representations and warranties made with respect to
such other subsidiary as of the date of such designation.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officers of the corporate parties hereto, the duly
authorized representatives of any trust or other party hereto acting in a
fiduciary capacity and the individual parties hereto, all as of the date first
written above.
MICROWAVE TOWER SERVICE, INC.
By: /s/ ERNIE L. CARPENTER
-------------------------------------
Name: Ernie L. Carpenter
Title: President
SPECIALTY TELECONSTRUCTORS, INC.
By: /s/ MICHAEL R. BUDAGHER
-------------------------------------
Name: Michael R. Budagher
Title: President and Chief Executive
Officer
MTS ACQUISITION, INC.
By: /s/ MICHAEL R. BUDAGHER
-------------------------------------
Name: Michael R. Budagher
Title: President and Chief Executive
Officer
COMPANY STOCKHOLDERS:
/s/ TOMMIE R. CARPENTER
-----------------------------------------
Tommie R. Carpenter
/s/ VIRGINIA L. CARPENTER
-----------------------------------------
Virginia L. Carpenter
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