SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
APRIL 1, 1999
_______________________________________
Date of Report (Date of earliest event reported)
USN COMMUNICATIONS, INC.
______________________________________________________
(Exact name of Registrant as specified in its charter)
DELAWARE 333-16265 36-3947804
______________ _____________________ ________________
(State of (Commission File No.) (IRS Employer
Incorporation) Identification No.)
10 SOUTH RIVERSIDE PLAZA, SUITE 2000, CHICAGO, ILLINOIS 60606
____________________________________________________________
(Address of principal executive offices, including zip code)
(312) 906-3600
____________________________________________________
(Registrant's telephone number, including area code)
N/A
_____________________________________________________________
(Former name or former address, if changed since last report)
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
As a condition to the consummation of the transactions contemplated
by the CoreComm Agreement (as hereinafter defined), as approved by the Board
of Directors of USN Communications, Inc. (the "Company"), the Company
agreed to provide CoreComm Limited ("CoreComm") with audited consolidated
financial statements of the Company for the fiscal year ended December 31,
1998. Upon the mutual agreement of CoreComm and the Company, Ernst & Young
LLP ("E&Y") was engaged to perform the audit. The accounting firm of
Deloitte & Touche LLP ("Deloitte") audited the financial statements of the
Company for the fiscal years ended December 31, 1996 and 1997 and issued
reports thereon which did not contain any adverse opinion or disclaimer of
opinion, nor were such reports qualified or modified as to uncertainty,
audit scope or accounting principles, except that with respect to
Deloitte's report dated March 14, 1997, the report noted that the Company's
recurring losses from operations raised substantial doubt about the
Company's ability to continue as a going concern. Deloitte has not audited
any financial statements of the Company for any dates or periods subsequent
to December 31, 1997. As of April 7, 1999, the client-auditor relationship
between the Company and Deloitte ceased. The Company and Deloitte have had
no disagreements and there have been no reportable events for the periods
audited by Deloitte or periods subsequent to that time.
ITEM 5. OTHER EVENTS
On April 2, 1999, the United States District Court for the District
of Delaware (the "Court") entered a final order authorizing the Company and
twelve of its subsidiaries (collectively, the "Debtors") to, among other
things, sell substantially all of their assets, excluding the Company's
Connecticut wireless subsidiaries ("USN Wireless"), to CoreComm for up to
$85 million in cash plus warrants to purchase common stock of CoreComm. As
previously announced, the agreement provides for approximately $25 million
in cash, plus the warrants, to be paid at closing in addition to up to $60
million payable to the Company depending on future operating results.
The Court also approved the sale of USN Wireless under an agreement
entered into pursuant to the Court's auction procedures established for
such sale. Under the terms of the Stock Purchase Agreement (the "Stock
Purchase Agreement"), dated as of April 1, 1999, among the Company, Unified
Signal Corporation, a Georgia corporation, and Unified Signal Corporation,
a Delaware corporation (together, "Unified Signal"), Unified Signal will
acquire all of the capital stock of USN Wireless for an aggregate purchase
price of $20 million to be paid to the Company at closing, less (a) $1
million required to be paid to the Company as a deposit on April 16, 1999
in the event the transaction has not been consummated prior to such time
and (b) $1 million to be deposited in escrow for the satisfaction of
certain indemnifiable claims and other matters.
Under the terms of the Stock Purchase Agreement, USN Wireless is
obligated, among other things, to conduct its business in the ordinary
course prior to closing. The consummation of the transactions contemplated
by the Stock Purchase Agreement is subject to a number of customary
conditions including receipt of necessary state and federal regulatory
approvals. The Stock Purchase Agreement is terminable, among other events,
by either party if required regulatory approval of the transactions is not
obtained or if the closing shall not have occurred by May 15, 1999. The
Company is obligated to pay Unified Signal a termination fee of $750,000 in
the event the Company enters into an alternative transaction for the sale
of USN Wireless, as specified in the Stock Purchase Agreement.
In addition, the Court gave final authorization to the Debtors to
borrow up to $20 million of a previously announced debtor-in-possession
financing facility to continue operations, pay employees, purchase goods
and services going forward and repurchase the Company's $15 million
aggregate principal amount prepetition senior secured notes. The financing
facility was amended as of March 15, 1999 and again as of March 24, 1999
to, among other things, extend the maturity date of the notes issued
thereunder to May 14, 1999.
The descriptions set forth above of the Stock Purchase Agreement and
the Note Purchase Agreement and all amendments thereto do not summarize all
of the material provisions of such documents. Copies of such documents
have been previously filed or are filed herewith as exhibits as noted
below. The terms of such documents are hereby incorporated herein by
reference. Investors are urged to obtain and fully review copies of such
documents.
This Report contains statements which constitute "forward-looking
statements" within the meaning of the Securities Act of 1933 and the
Securities Exchange Act of 1934, as amended by the Private Securities
Litigation Reform Act of 1995. "Forward-looking statements" in this Report
include the intent, belief or current expectations of the Company and
members of its management team with respect to the timing of, completion of
and scope of the sales to CoreComm Limited and Unified Signal Corporation
financing, and the Company's future liquidity, as well as the assumptions
upon which such statements are based. While the Company believes that its
expectations are based upon reasonable assumptions within the bounds of its
knowledge of its business and operations, investors are cautioned that any
such forward-looking statements are not guarantees of future performance,
involve risks and uncertainties, and that actual results may differ
materially from those contemplated by such forward-looking statements.
Important facts currently known to management that could cause actual
results to differ materially from those contemplated by the forward-looking
statements in this Report include, but are not limited to, further adverse
developments with respect to the Company's liquidity position or operations
of the Company's various businesses, adverse development in the Company's
efforts to complete the financing and/or sales agreements; and the ability
of the Company to realize the anticipated general and administrative
expense savings and overhead reductions presently contemplated. Additional
factors that would cause actual results to differ materially from those
contemplated within this Report can also be found in the Company's Reports
on Form 8-K during 1998 and 1999, Form 10-Q for the quarter ended September
30, 1998, and Form 10-K for the year ended December 31, 1997.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
The following exhibits are included with this Report:
Exhibit 10.1 Stock Purchase Agreement, dated as of April
1, 1999, by and among the Company, Unified
Signal Corporation, a Georgia corporation,
and Unified Signal Corporation, a Delaware
corporation.
Exhibit 10.2 First Amendment to Note Purchase Agreement,
dated as of March 15, 1999, by and between
the Company and Merrill Lynch Global
Allocation Fund, Inc. and CoreComm.
Exhibit 10.3 Second Amendment to Note Purchase Agreement,
dated as of March 24, 1999, by and between
the Company and Merrill Lynch Global
Allocation Fund, Inc. and CoreComm.
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
USN COMMUNICATIONS, INC.
By: /s/ Thomas A. Monson
------------------------
Thomas A. Monson
Senior Vice President, General Counsel
and Secretary
Exhibit 10.1
STOCK PURCHASE AGREEMENT
by and among
USN COMMUNICATIONS, INC.
and
UNIFIED SIGNAL CORPORATION, a Georgia corporation
and
UNIFIED SIGNAL CORPORATION, a Delaware corporation
April 1, 1999
TABLE OF CONTENTS
Page
ARTICLE I
PURCHASE AND SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.1 Purchase and Sale . . . . . . . . . . . . . . . 1
SECTION 1.2 Purchase Price . . . . . . . . . . . . . . . . . . 1
SECTION 1.3 Closing . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.4 Bankruptcy Court Order. . . . . . . . . . . . . . 3
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . . . . . . 3
SECTION 2.1 Organization . . . . . . . . . . . . . . . . . . . 3
SECTION 2.2 Capitalization . . . . . . . . . . . . . . . . . . 4
SECTION 2.3 Ownership of Stock . . . . . . . . . . . . . . . . 4
SECTION 2.4 Authorization; Validity of Agreement . . . . . . . 5
SECTION 2.5 Consents and Approvals; No Violations . . . . . . 5
SECTION 2.6 Financial Statements . . . . . . . . . . . . . . . 6
SECTION 2.7 No Undisclosed Liabilities . . . . . . . . . . . . 6
SECTION 2.8 Absence of Certain Changes . . . . . . . . . . . . 6
SECTION 2.9 Employee Benefit Plans; ERISA . . . . . . . . . . 7
SECTION 2.10 Litigation . . . . . . . . . . . . . . . . . . . 8
SECTION 2.11 No Default; Compliance with Applicable Laws . . . 8
SECTION 2.12 Taxes . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.13 Affiliated Transactions . . . . . . . . . . . . 10
SECTION 2.14 Intellectual Property . . . . . . . . . . . . . 10
SECTION 2.15 Environmental Matters . . . . . . . . . . . . . 10
SECTION 2.16 Contracts . . . . . . . . . . . . . . . . . . . 11
SECTION 2.17 Title to Assets . . . . . . . . . . . . . . . . 11
SECTION 2.18 Brokers or Finders . . . . . . . . . . . . . . 11
SECTION 2.19 Residual Commissions. . . . . . . . . . . . . . 12
SECTION 2.20 Regulatory Matters. . . . . . . . . . . . . . 12
SECTION 2.21 No Dividends or Intercompany Payments. . . . . 12
SECTION 2.22 Cellular Paging Subscribers; Subscribers
Turnover; Accounts Receivables . . . . . . . . 12
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER . . . . . . . . . . . . . . 13
SECTION 3.1 Organization . . . . . . . . . . . . . . . . . . 13
SECTION 3.2 Authorization; Validity of Agreement . . . . . . 13
SECTION 3.3 Consents and Approvals; No Violations . . . . . 14
SECTION 3.4 Absence of Certain Changes . . . . . . . . . . . 14
SECTION 3.5 Litigation . . . . . . . . . . . . . . . . . . . 14
SECTION 3.6 Financing Commitment . . . . . . . . . . . . . . 15
SECTION 3.7 Investment Purpose . . . . . . . . . . . . . . . 15
SECTION 3.8 Brokers or Finders . . . . . . . . . . . . . . . 15
ARTICLE IV
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 4.1 Interim Operations of the Company . . . . . . . 15
SECTION 4.2 Access to Information . . . . . . . . . . . . . 17
SECTION 4.3 Employee Benefits . . . . . . . . . . . . . . . 17
SECTION 4.4 Publicity . . . . . . . . . . . . . . . . . . . 18
SECTION 4.5 Approvals and Consents; Cooperation;
Notification . . . . . . . . . . . . . . . . . 19
SECTION 4.6 Further Assurances . . . . . . . . . . . . . . . 19
SECTION 4.7 Transfer Taxes . . . . . . . . . . . . . . . . . 20
SECTION 4.8 Name Change . . . . . . . . . . . . . . . . . . 20
SECTION 4.9 Deposit. . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.10 Certain Contracts . . . . . . . . . . . . . . . 20
SECTION 4.11 Intercompany and IntraCompany Accounts . . . . 20
ARTICLE V
CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 5.1 Conditions to Each Party's Obligation to
Effect the Closing . . . . . . . . . . . . . . 21
SECTION 5.2 Conditions to the Obligations of Purchaser . . . 21
SECTION 5.3 Conditions to the Obligations of Seller . . . . 22
ARTICLE VI
TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 6.1 Termination . . . . . . . . . . . . . . . . . . 23
SECTION 6.2 Procedure and Effect of Termination . . . . . . 23
ARTICLE VII
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 7.1 Indemnification by the Seller . . . . . . . . . 24
SECTION 7.2 Indemnification by the Purchaser . . . . . . . 25
SECTION 7.3 Notice of an Indemnified Liability. . . . . . . 25
SECTION 7.4 Indemnified Liability Not Involving a
Third Party . . . . . . . . . . . . . . . . . 25
SECTION 7.5 Indemnified Liability Involving a Third Party. . 25
SECTION 7.6 Objections. . . . . . . . . . . . . . . . . . . 26
ARTICLE VIII
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 8.1 Amendment and Modification . . . . . . . . . . . 26
SECTION 8.2 Notices . . . . . . . . . . . . . . . . . . . . 26
SECTION 8.3 Interpretation . . . . . . . . . . . . . . . . . 28
SECTION 8.4 Counterparts . . . . . . . . . . . . . . . . . . 28
SECTION 8.5 Entire Agreement; Third Party Beneficiaries . . 29
SECTION 8.6 Severability . . . . . . . . . . . . . . . . . . 29
SECTION 8.7 Governing Law . . . . . . . . . . . . . . . . . 29
SECTION 8.8 Jurisdiction . . . . . . . . . . . . . . . . . . 29
SECTION 8.9 Service of Process . . . . . . . . . . . . . . . 29
SECTION 8.10 Specific Performance . . . . . . . . . . . . . 30
SECTION 8.11 Termination of Representations and Warranties . 30
SECTION 8.12 Assignment . . . . . . . . . . . . . . . . . . 31
SECTION 8.13 Expenses . . . . . . . . . . . . . . . . . . . 31
SECTION 8.14 Headings . . . . . . . . . . . . . . . . . . . 31
SECTION 8.15 Waivers . . . . . . . . . . . . . . . . . . . . 31
SECTION 8.16 Schedules . . . . . . . . . . . . . . . . . . . 31
TABLE OF ANNEXES
Index to Defined Terms Annex A
Index to the Company Disclosure Schedule Annex B
Index to the Purchaser Disclosure Schedule Annex C
Form of Bankruptcy Order Annex D
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of April 1, 1999 (this
"Agreement"), by and among USN Communications, Inc., a Delaware
corporation, and debtor and debtor-in-possession in Case No. 99-383 (PJW)
pending in the United States Bankruptcy Court for the District of Delaware
(the "Bankruptcy Court") ("Seller"), and Unified Signal Corporation, a
Georgia corporation and Unified Signal Corporation, a Delaware corporation
(collectively, "Purchaser").
WHEREAS, Seller is the owner of all of the outstanding shares of
capital stock (the "Shares") of USN Wireless, Inc., a Connecticut
corporation (the "Company"); and
WHEREAS, Purchaser desires to purchase from Seller, and Seller
desires to sell to Purchaser, the Shares subject to the terms and
conditions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties, intending to be legally bound hereby,
agree as follows:
ARTICLE I
PURCHASE AND SALE
SECTION 1.1 Purchase and Sale. Upon the terms and subject to
the conditions set forth in this Agreement, at the Closing (as hereinafter
defined), Seller shall sell, assign, transfer and deliver to Purchaser, and
Purchaser shall purchase from Seller, the Shares, free and clear of all
options, pledges, security interests, liens or other encumbrances or
restrictions on voting or transfer ("Encumbrances"), other than
restrictions imposed by Federal or state securities laws.
SECTION 1.2 Purchase Price. (a) Subject to paragraph (b) below,
on the Closing Date and subject to the terms and conditions set forth in
this Agreement, in reliance on the representations, warranties, covenants
and agreements of the parties contained herein and in consideration of the
sale, assignment, transfer and delivery of the Shares, Purchaser shall pay
to Seller Twenty Million Dollars ($20,000,000) (the "Purchase Price") by
wire transfer of immediately available funds to an account designated by
Seller.
(b) The Purchase Price shall be reduced by an amount equal
to the product of (i) $300 multiplied by (ii) the amount, if any, by which
the number of Active Mobile Numbers (as hereinafter defined) set forth on
the Closing Date Statement (as hereinafter defined) is less than 68,000;
provided, however that the maximum amount of any such reduction shall be
equal to the Escrow Amount.
SECTION 1.3 Closing.
(a) The sale and purchase of the Shares contemplated by
this Agreement shall take place at a closing (the "Closing") to be held at
the offices of Skadden, Arps, Slate, Meagher & Flom (Illinois) at 10:00
A.M. Chicago time on the third business day following the satisfaction or
waiver of all conditions to the obligations of the parties set forth in
Article V hereof or at such other place, time or date as Seller and
Purchaser may mutually agree upon in writing (the day on which the Closing
takes place being the "Closing Date").
(b) At the Closing, Seller shall deliver or cause to be
delivered to Purchaser (i) stock certificates evidencing the Shares, duly
endorsed in blank or accompanied by stock powers duly executed in blank;
(ii) the minute books, stock books, corporate seals and other corporate
records for the Company and the Company Subsidiaries and (iii) all other
previously undelivered certificates and other documents required to be
delivered by Seller to Purchaser at or prior to the Closing Date in
connection with the transactions contemplated hereby.
(c) At the Closing, Purchaser shall deliver to Seller (i)
the Purchase Price less the Deposit (as hereinafter defined) and less the
Escrow Amount (as hereinafter defined) by wire transfer in immediately
available funds to an account designated by Seller and (ii) all other
previously undelivered certificates and other documents required to be
delivered by Purchaser to Seller at or prior to the Closing Date in
connection with the transactions contemplated hereby.
(d) At the Closing, Purchaser shall deliver the sum of One
Million Dollars ($1,000,000) (the "Escrow Amount") to an escrow holder
mutually agreed upon by the parties (the "Escrow Holder"), to establish an
escrow (the "Escrow") to be managed and disbursed pursuant to an escrow
agreement to be negotiated in good faith and executed by the parties on or
prior to the Closing. Such escrow agreement shall provide, among other
matters, that the Escrow Holder shall reimburse the Purchaser from the
Escrow for severance payments pursuant to Section 4.3(c) and for all claims
for indemnification under this Agreement made on or before the second
anniversary of the Closing and that, on the second anniversary of the
Closing, the Escrow Holder shall release to Seller any amount remaining in
the Escrow, less the amount of any pending claims.
SECTION 1.4 Bankruptcy Court Order. This Agreement shall not be
effective unless and until it is approved by the Bankruptcy Court without
material changes or modifications and the Bankruptcy Court has issued an
order substantially as set forth in Annex D attached hereto.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser as follows:
SECTION 2.1 Organization. Each of Seller and the Company is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and, subject to any required
approvals of the Bankruptcy Court, has all requisite corporate power and
authority to own and operate its properties and to carry on its business as
it is now being conducted, except where failure to be so existing and in
good standing or to have such power and authority would not have a Company
Material Adverse Effect (as hereinafter defined). Except as disclosed in
Section 2.1 of the written statement delivered by Seller to Purchaser at or
prior to the execution of this Agreement (the "Company Disclosure
Schedule"), the Company is duly qualified or licensed to do business as a
foreign corporation and is in good standing in each jurisdiction in which
the nature of the business conducted by it makes such qualification or
licensing necessary, except where the failure to be so duly qualified,
licensed and in good standing would not have a Company Material Adverse
Effect. The Company owns all of the issued and outstanding capital stock of
Connecticut Telephone and Communications Systems, Inc., Connecticut
Mobilecom, Inc., USN Wireless of Massachusetts, Inc. and USN Wireless of
Rhode Island, Inc. (together, the "Company Subsidiaries"). Each Company
Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has
all requisite corporate power and authority to own and operate its
properties and to carry on its business as it is now being conducted except
where failure to be so existing and in good standing or to have such power
and authority would not have a Company Material Adverse Effect. Seller has
heretofore made available to Purchaser a complete and correct copy of each
of the articles of incorporation and by-laws of the Company and each
Company Subsidiary, as currently in effect. As used in this Agreement,
"Company Material Adverse Effect" means any material adverse change in, or
material adverse effect on, the business, financial condition or operations
of the Company and the Company Subsidiaries taken as a whole; provided,
however, that, the effects of changes that are generally applicable to (i)
the industry and markets in which the Company or the Company Subsidiaries
operate or (ii) the United States economy shall be excluded from the
determination of Company Material Adverse Effect; and provided, further,
that any adverse effect on the Company or the Company Subsidiaries
resulting from the execution of this Agreement and the announcement of this
Agreement and the transactions contemplated hereby shall also be excluded
from the determination of Company Material Adverse Effect.
SECTION 2.2 Capitalization. The capitalization of the Company
and each Company Subsidiary is set forth on Section 2.2 of the Company
Disclosure Schedule. All the outstanding shares of capital stock of the
Company and the Company Subsidiaries are duly authorized, validly issued,
fully paid, non-assessable and free of preemptive rights. Except as
disclosed in Section 2.2 of the Company Disclosure Schedule, there are no
existing (i) options, warrants, calls, subscriptions, pre-emptive rights or
other rights, convertible securities, agreements or commitments of any
character obligating the Company or any Company Subsidiary to issue,
transfer or sell any shares of capital stock or other equity interest in,
the Company or any Company Subsidiary or securities convertible into or
exchangeable for such shares or equity interests; (ii) contractual
obligations of the Company or any Company Subsidiary to repurchase, redeem
or otherwise acquire any capital stock of the Company or any Company
Subsidiary or (iii) voting trusts or other agreements that restrict the
voting or transfer of the capital stock of the Company or any Company
Subsidiary or similar agreements to which the Company or any Company
Subsidiary is a party with respect to the voting of the capital stock of
the Company or any Company Subsidiary.
SECTION 2.3 Ownership of Stock. Except as set forth in Section
2.3 of the Company Disclosure Schedule, the Shares are owned by Seller free
and clear of all Encumbrances, other than restrictions imposed by Federal
or state securities laws. The Company owns all of the outstanding shares
of capital stock of each of the Company Subsidiaries, free and clear of all
Encumbrances, other than restrictions imposed by federal or state
securities laws. Upon the consummation of the transactions contemplated
hereby, Purchaser will acquire title to the Shares, free and clear of all
Encumbrances, other than restrictions imposed by Federal or state
securities laws. Except for the Company Subsidiaries and except as set
forth in Section 2.3 of the Company Disclosure Schedule, the Company does
not own, directly or indirectly, any capital stock or other equity
securities of any corporation or have any direct or indirect equity or
ownership interest in any partnership, joint venture or business.
SECTION 2.4 Authorization; Validity of Agreement. Seller has
full power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery
and performance by Seller of this Agreement, and the consummation by it of
the transactions contemplated hereby, have been duly authorized and no
other corporate proceedings on the part of Seller are necessary to
authorize the execution and delivery by Seller of this Agreement and the
consummation by it of the transactions contemplated hereby. This Agreement
has been duly executed and delivered by Seller and (assuming due and valid
authorization, execution and delivery hereof by Purchaser and upon receipt
of any required approval of the Bankruptcy Court) is a valid and binding
obligation of Seller enforceable against Seller in accordance with its
terms, except that (i) such enforcement may be subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws,
now or hereafter in effect, affecting creditors' rights generally and (ii)
the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought.
SECTION 2.5 Consents and Approvals; No Violations. Except as
disclosed in Section 2.5 of the Company Disclosure Schedule and except for
(a) filings pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"); (b) applicable requirements under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"); (c)
approvals of the Federal Communications Commission (the "FCC"), and the
Connecticut Department of Public Utility Control, the Massachusetts Public
Utilities Commission and the Rhode Island Public Utilities Commission, if
required (collectively, the "PUCs"); and (d) matters specifically described
in this Agreement, neither the execution, delivery or performance of this
Agreement by Seller nor the consummation by Seller of the transactions
contemplated hereby will (i) violate any provision of the articles of
incorporation or by-laws of Seller, the Company or the Company
Subsidiaries; (ii) result in a violation or breach of, or constitute (with
or without due notice or lapse of time or both) a default (or give rise to
any right of termination, cancellation or acceleration) under, or result in
the creation of any Encumbrance upon any of the Shares under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument or obligation to
which Seller, the Company or any Company Subsidiary is a party or by which
any of them or any of their properties or assets may be bound; (iii)
violate any order, writ, judgment, injunction, decree, law, statute, rule
or regulation applicable to Seller, the Company or any Company Subsidiary
or any of their properties or assets or (iv) require on the part of Seller,
the Company or any Company Subsidiary any filing or registration with,
notification to, or authorization, consent or approval of, any court,
legislative, executive or regulatory authority or agency (a "Governmental
Entity"); except in the case of clauses (ii), (iii) or (iv) for such
violations, breaches or defaults which, or filings, registrations,
notifications, authorizations, consents or approvals the failure of which
to obtain individually or in the aggregate, (A) would not have a Company
Material Adverse Effect or (B) would become applicable as a result of the
business or activities in which Purchaser is or proposes to be engaged or
as a result of any acts or omissions by, or the status of any facts
pertaining to, Purchaser.
SECTION 2.6 Financial Statements. Section 2.6 of the Company
Disclosure Schedule contains the audited consolidated financial statements
of the Company as of and for the twelve month period ended April 30, 1997,
the unaudited consolidated financial statements of the Company as of and
for the eight month period ended December 31, 1997 and the unaudited
consolidated financial statements of the Company as of and for the twelve
month period ended December 31, 1998 and the one-month period ended January
31, 1999 (collectively (including the related notes), the "Company
Financial Statements"). The Company Financial Statements present fairly,
in all material respects, the financial position of the Company as of the
date thereof, and the results of operations of the Company for the
respective periods or as of the respective dates set forth therein. The
Company Financial Statements have been prepared in accordance with GAAP,
applied on a consistent basis during the periods involved, except as
otherwise noted therein, subject to normal year-end adjustments.
SECTION 2.7 No Undisclosed Liabilities. Except as disclosed in
Section 2.7 of the Company Disclosure Schedule and except (a) for
liabilities and obligations incurred in the ordinary course of business
after December 31, 1998; (b) for liabilities and obligations outside of the
ordinary course of business which individually or in the aggregate do not
exceed $100,000; (c) for liabilities and obligations disclosed, reflected
or reserved for in the Company Financial Statements and (d) for liabilities
and obligations incurred in connection with the transactions contemplated
hereby or otherwise as contemplated by this Agreement (which shall not
include professional fees incurred in connection with this transaction),
since December 31, 1998, neither the Company nor any Company Subsidiary has
incurred any liabilities or obligations that would be required to be
reflected or reserved against in a consolidated balance sheet of the
Company, prepared in accordance with GAAP as applied in preparing the
consolidated balance sheet of the Company, as included in the Company
Financial Statements, and that would individually or in the aggregate
constitute a Company Material Adverse Effect.
SECTION 2.8 Absence of Certain Changes. Except as (a) disclosed
in the Company Financial Statements; (b) disclosed in Section 2.8 of the
Company Disclosure Schedule or (c) contemplated by this Agreement, since
December 31, 1998, the Company has not suffered any change constituting a
Company Material Adverse Effect.
SECTION 2.9 Employee Benefit Plans; ERISA
(a) Section 2.9(a) of the Company Disclosure Schedule sets
forth a list of each material employee benefit plan (including but not
limited to plans described in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), maintained by the
Company or any Company Subsidiary, or by any trade or business, whether or
not incorporated (an "ERISA Affiliate"), which together with the Company or
any Company Subsidiary would be deemed a "single employer" within the
meaning of Section 4001(b)(15) of ERISA for the benefit of any employee of
the Company or any Company Subsidiary ("Benefit Plans") and all material
employment and severance agreements with employees of the Company or a
Company Subsidiary that provide for either an annual salary in excess of
$100,000 or a severance payment in excess of $50,000 ("Employee
Agreements"). True and complete copies of all Employee Agreements,
including all amendments to date, have been made available to Purchaser by
Seller. Except as disclosed in Section 2.9(a) of the Company Disclosure
Schedule, the Company and the Company Subsidiaries do not have an aggregate
of accrued, unpaid deferred employee compensation or accrued, unpaid
employee severance payments in excess of $100,000.
(b) Except as set forth in Section 2.9(b) of the Company
Disclosure Schedule, with respect to each Benefit Plan: (i) if intended to
qualify under Section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), such plan has received a determination letter from
the Internal Revenue Service stating that it so qualifies and nothing has
occurred to the knowledge of Seller since the date of such determination
that could materially adversely affect such qualification; (ii) such plan
has been administered in all material respects in accordance with its terms
and applicable law; (iii) no disputes are pending, or, to the knowledge of
Seller, threatened that give rise to or might reasonably be expected to
give rise to material liability on the part of the Company or any Company
Subsidiary; (iv) no prohibited transaction (within the meaning of Section
406 of ERISA) has occurred that gives rise to or might reasonably be
expected to give rise to material liability on the part of the Company or
any Company Subsidiary; and (v) all contributions required to be made to
such plan as of the date hereof (taking into account any extensions for the
making of such contributions) have been made in full.
(c) No Benefit Plan has incurred an accumulated funding
deficiency, as defined in Section 302 of ERISA or Section 412 of the Code,
whether or not waived.
(d) Except as disclosed in Section 2.9(d) of the Company
Disclosure Schedule, with respect to each Benefit Plan that is a "welfare
plan" (as defined in Section 3(1) of ERISA), no such plan provides medical
or death benefits with respect to current or former employees of the
Company or any Company Subsidiary beyond their termination of employment
other than (i) to the extent required by applicable law, (ii) death
benefits under any "pension plan" or (iii) benefits the full cost of which
is borne by current or former employees (or their beneficiaries).
(e) Except as set forth in Section 2.9(e) of the Company
Disclosure Schedule, no material liability has been or is reasonably
expected to be incurred by the Company, any Company Subsidiary or any ERISA
Affiliate (either directly or indirectly) under or pursuant to Title IV of
ERISA, relating to its or their employee benefit plans, and no event,
transaction or condition has occurred or exists that has resulted in or
would reasonably be expected to result in any such material liability to
the Company, any Company Subsidiary or any ERISA Affiliate or any employee
benefit plan of the Company, any Company Subsidiary or any ERISA Affiliate.
(f) The Company and the Company Subsidiaries have not
materially increased their employee benefits since December 31, 1998.
SECTION 2.10 Litigation. Except as disclosed in Section 2.10 of
the Company Disclosure Schedule, there is no action, suit, proceeding
(other than any action, suit or proceeding resulting from or arising out of
this Agreement or the transactions contemplated hereby) pending or, to the
knowledge of Seller, threatened, involving the Company or any Company
Subsidiary or the Shares by or before any Governmental Entity or by any
third party that is reasonably likely to have a Company Material Adverse
Effect.
SECTION 2.11 No Default; Compliance with Applicable Laws.
Except as disclosed in Section 2.11 of the Company Disclosure Schedule,
neither the Company nor any Company Subsidiary is in default or violation
of any term, condition or provision of (i) its articles of incorporation or
by-laws or (ii) any statute, law, rule, regulation, judgment, decree,
order, permit or license or other governmental authorization or approval
applicable to the Company or any Company Subsidiary excluding defaults or
violations which would not have a Company Material Adverse Effect or which
become applicable as a result of the business or activities in which
Purchaser is or proposes to be engaged or as a result of any acts or
omissions by, or the status of any facts pertaining to, Purchaser.
SECTION 2.12 Taxes. (a) Except as disclosed in Section 2.12(a)
of the Company Disclosure Schedule, the Company or Seller has (i) timely
filed all material Tax Returns (as hereinafter defined) required to be
filed by any of them (taking into account applicable extensions) with
respect to the Company and the Company Subsidiaries and all such Tax
Returns were true, correct and complete in all material respects when filed
and (ii) paid or accrued (in accordance with GAAP) all material Taxes (as
hereinafter defined) of the Company and the Company Subsidiaries shown to
be due on such Tax Returns other than such Taxes as are being contested in
good faith by the Company or the Company Subsidiaries.
(b) With respect to Taxes for which the Company or a
Company Subsidiary is liable, except as disclosed in Section 2.12(b) of the
Company Disclosure Schedule, there are no material ongoing federal, state,
local or foreign Tax audits or Tax examinations.
(c) With respect to Taxes for which the Company or a
Company Subsidiary is liable, except as disclosed in Section 2.12(c) of the
Company Disclosure Schedule, there are no outstanding written requests,
agreements, consents or waivers to extend the statutory period of
limitations applicable to the assessment of any Taxes or deficiencies.
(d) Except as disclosed in Section 2.12(d) of the Company
Disclosure Schedule, neither the Company nor any Company Subsidiary is a
party to any agreement providing for the allocation or sharing of Taxes.
(e) Except as disclosed in Section 2.12(e) of the Company
Disclosure Schedule, there are no material liens for Taxes upon the assets
of the Company or any Company Subsidiary which are not provided for in the
Company Financial Statements, except liens for Taxes not yet due and
payable and liens for Taxes that are being contested in good faith.
(f) "Taxes" shall mean any and all taxes, charges, fees,
levies or other assessments, including, without limitation, income, gross
receipts, excise, real or personal property, sales, withholding, social
security, occupation, use, service, service use, value added, license, net
worth, payroll, franchise, transfer and recording taxes, fees and charges,
imposed by any taxing authority (whether domestic or foreign including,
without limitation, any state, local or foreign government or any
subdivision or taxing agency thereof (including a United States
possession)), whether computed on a separate, consolidated, unitary,
combined or any other basis; and such term shall include any interest,
penalties or additional amounts attributable to, or imposed upon, or with
respect to, any such taxes, charges, fees, levies or other assessments.
"Tax Return" shall mean any report, return, document, declaration or other
information or filing required to be supplied to any taxing authority or
jurisdiction (foreign or domestic) with respect to Taxes.
SECTION 2.13 Affiliated Transactions. Set forth in Section 2.13
of the Company Disclosure Schedule is a list of all contracts, arrangements
or obligations between the Company or any of the Company Subsidiaries, on
the one hand, and Seller or any of its affiliates on the other hand, either
(i) entered into since October 30, 1998 or (ii) in force and effective as
of the date of this Agreement.
SECTION 2.14 Intellectual Property. Except as disclosed in
Section 2.14 of the Company Disclosure Schedule, and except for such
claims, which individually or in the aggregate, would not have a Company
Material Adverse Effect, there are no pending or threatened claims of which
the Company or any Company Subsidiary has been given written notice, by any
person against their use of any trademarks, trade names, service marks,
service names, mark registrations, logos, assumed names and copyright
registrations, patents and all applications therefor which are owned by the
Company or any Company Subsidiary and used in its operations as currently
conducted (collectively, the "Company Intellectual Property"). The Company
and the Company Subsidiaries have such ownership of or such rights by
license, lease or other agreement to the Company Intellectual Property as
are necessary to permit them to conduct their respective operations as
currently conducted, except where the failure to have such rights would not
have a Company Material Adverse Effect.
SECTION 2.15 Environmental Matters. Except as set forth in
Section 2.15 of the Company Disclosure Schedule or except as failure of the
following to be true and correct would not, individually or in the
aggregate, have a Company Material Adverse Effect, none of the Seller, the
Company nor any of the Company Subsidiaries has received any written notice
alleging the past or present violation of any applicable federal, state or
local laws and regulations related to the protection of human health or the
environment ("Environmental Laws"), and (i) each of the Company and the
Company Subsidiaries is in compliance in all material respects with all
Environmental Laws; (ii) each of the Company and the Company Subsidiaries
has obtained and complies in all material respects with all required
governmental environmental permits with respect to the businesses of the
Company and the Company Subsidiaries as currently conducted; (iii) no
storage, treatment or disposal of hazardous waste, substance or material on
the real estate owned, and to the knowledge of Seller, leased or managed by
any of the Company and the Company Subsidiaries has been made except in
compliance in all material respects with applicable Environmental Laws; and
(iv) each of the Company and the Company Subsidiaries has lawfully disposed
in all material respects of its hazardous waste products with respect to
the operations of the businesses.
SECTION 2.16 Contracts. Except as set forth in Section 2.16 of
the Company Disclosure Schedule, (a) each of the material contracts,
agreements and understandings to which the Company or any Company
Subsidiary is a party or by which any of its assets or operations may be
bound is in full force and effect, except where the failure to be in full
force and effect would not have a Company Material Adverse Effect and (b)
there are no existing defaults by the Company or any Company Subsidiary or,
to the knowledge of Seller, any other party, thereunder, which default
would result in a Company Material Adverse Effect.
SECTION 2.17 Title to Assets. Except as set forth in Section
2.17 of the Company Disclosure Schedule, the Company and each Company
Subsidiary has good and marketable title to its assets, free and clear of
all Encumbrances, except for (a) zoning laws and other land use
restrictions that do not materially impair the present or anticipated use
or occupancy of the property subject thereto; (b) any Encumbrances for
taxes, assessments and other governmental charges not yet due and payable
or due but not delinquent or due and being contested in good faith; (c) any
mechanics', workmen's, repairmen's, warehousemen's, carriers' or other
similar Encumbrances arising in the ordinary course of business, consistent
with past practice or being contested in good faith; (d) any Encumbrances
which alone or in the aggregate have not had and are not reasonably likely
to have a Company Material Adverse Effect and (e) with respect to any real
property, any defects, easements, rights of way, restrictions, covenants,
claims or other similar charges, which do not, individually or in the
aggregate, have a material adverse effect on the use or possession of such
real property (clauses (a) through (e) being referred to collectively as,
the "Permitted Encumbrances").
SECTION 2.18 Brokers or Finders. Seller represents, as to
itself and the Company, that no agent, broker, investment banker, financial
advisor or other firm or person is or will be entitled to any brokers' or
finder's fee or any other commission or similar fee in connection with any
of the transactions contemplated by this Agreement, except Daniels &
Associates, L.P., whose fees and expenses will be paid by the Company in
accordance with the Company's agreement with such firm and approval of the
Bankruptcy Court.
SECTION 2.19 Residual Commissions. Neither the Company nor any
Company Subsidiary has any contract or agreement with any sales agent that
will obligate the Company or any Company Subsidiary to pay any residual or
other commission with respect to any revenue of the Company or any Company
Subsidiary after the Closing.
SECTION 2.20 Regulatory Matters. All tariff schedules and all
other filings by the Company and the Company Subsidiaries with the FCC and
the PUCs are complete and accurate in all material respects. The Company's
and the Company Subsidiaries' billing practices and procedures conform to
their tariff schedules. The Company and the Company Subsidiaries have all
licenses, permits, orders, and approvals from all federal, state, and local
governmental and regulatory authorities that are required in order to
conduct their businesses, and all such licenses, permits, orders, and
approvals are current and are in full force and effect. Neither the
Company nor any Company Subsidiary is in violation of any law or regulation
with respect to any such license, permit, order, or approval that would
have a Company Material Adverse Effect.
SECTION 2.21 No Dividends or Intercompany Payments. Since
December 31, 1998, (i) the Company has neither declared nor paid any
dividend or distribution with respect to the Shares, and (ii) neither the
Company nor any Company Subsidiary has made any intercompany payment to the
Seller or any of its affiliates (other than to the Company or any Company
Subsidiary).
SECTION 2.22 Cellular Paging Subscribers; Subscriber Turnover;
Accounts Receivable. Within ten days following the Closing Date, Seller
shall deliver to Purchaser an unaudited consolidated financial statement of
the Company and the Company Subsidiaries for the full one-month period
ending immediately prior to the Closing Date (the "Closing Date
Statement"). The Closing Date Statement shall fairly present, in all
material respects, the Company's position with respect to Active Mobile
Numbers, subscriber turnover and accounts receivable of the Company and the
Company Subsidiaries for the period set forth therein. For purposes of
this Agreement, "Active Mobile Numbers" means at a specified date, a mobile
cellular number, including analog and digital cellular and personal
communications services, that (a) incurred current charges in the billing
cycle immediately prior to the specified date, and (b) at the specified
date, had a past due balance no greater than eighty-nine (89) days measured
from the invoice date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller as follows:
SECTION 3.1 Organization. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its
business as is now being conducted, except where the failure to be so
organized, existing and in good standing or to have such power and
authority would not materially adversely affect the ability of Purchaser to
consummate the transactions contemplated by this Agreement (a "Purchaser
Material Adverse Effect"). Purchaser and each of its Subsidiaries (as
hereinafter defined) is duly qualified or licensed to do business and is in
good standing in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification or licensing necessary, except where the failure to be so
duly qualified or licensed and in good standing would not result in a
Purchaser Material Adverse Effect. As used in this Agreement, the word
"Subsidiary" means, with respect to any party, any corporation, partnership
or other entity or organization, whether incorporated or unincorporated, of
which (i) such party or any other Subsidiary of such party is a general
partner (excluding such partnerships where such party or any Subsidiary of
such party does not have a majority of the voting interest in such
partnership) or (ii) at least a majority of the securities or other
interests having by their terms ordinary voting power to elect a majority
of the Board of Directors or others performing similar functions with
respect to such corporation or other organization is directly or indirectly
owned or controlled by such party or by any one or more of its
Subsidiaries, or by such party and one or more of its Subsidiaries.
SECTION 3.2 Authorization; Validity of Agreement. Purchaser has
full corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution,
delivery and performance by Purchaser of this Agreement, and the
consummation of the transactions contemplated hereby, have been duly
authorized by its Board of Directors and no other corporate action on the
part of Purchaser is necessary to authorize the execution and delivery by
Purchaser of this Agreement and the consummation by it of the transactions
contemplated hereby. This Agreement has been duly executed and delivered
by Purchaser (and assuming due and valid authorization, execution and
delivery hereof by Seller and approval of the Bankruptcy Court) is a valid
and binding obligation of Purchaser and may be, enforceable against it in
accordance with its respective terms, except that (i) such enforcement may
be subject to applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws, now or hereafter in effect, affecting creditors'
rights generally and (ii) the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to equitable defenses
and to the discretion of the court before which any proceeding therefor may
be brought.
SECTION 3.3 Consents and Approvals; No Violations. Except as
set forth in Section 3.3 of the Purchaser Disclosure Schedule and except
for (a) filings pursuant to the HSR Act (b) applicable requirements under
federal and state securities laws; (c) approvals of the FCC and the PUCs
and (d) as described in this Agreement, neither the execution, delivery or
performance of this Agreement by Purchaser nor the consummation by
Purchaser of the transactions contemplated hereby will (i) violate any
provision of the articles of incorporation or by-laws of Purchaser; (ii)
result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, lease,
license, contract, agreement or other instrument or obligation to which
Purchaser or any of its Subsidiaries is a party or by which any of them or
any of their properties or assets may be bound; (iii) violate any order,
writ, judgment, injunction, decree, law, statute, rule or regulation
applicable to Purchaser, any of its Subsidiaries or any of their properties
or assets or (iv) require on the part of Purchaser any filing or
registration with, notification to, or authorization, consent or approval
of, any Governmental Entity; except in the case of clauses (ii), (iii) or
(iv) for such violations, breaches or defaults which, or filings,
registrations, notifications, authorizations, consents or approvals, the
failure of which to obtain would not have a Purchaser Material Adverse
Effect.
SECTION 3.4 Absence of Certain Changes. Except as (a) disclosed
in the Purchaser Financial Statements or (b) contemplated by this
Agreement, since December 31, 1998, Purchaser has not suffered any change
that would materially adversely affect the ability of Purchaser to
consummate the transactions contemplated by this Agreement.
SECTION 3.5 Litigation. Except as set forth in Section 3.5 of
the Purchaser Disclosure Schedule, there is no action, suit, proceeding
(other than any action, suit or proceeding resulting from or arising out of
this Agreement or the transactions contemplated hereby) pending or, to the
knowledge of Purchaser, threatened, involving Purchaser by or before any
Governmental Entity or by any third party that is reasonably likely to
result in a Purchaser Material Adverse Effect.
SECTION 3.6 Financing Commitment. As of the Closing Date
Purchaser will have sufficient funds to consummate the transactions
contemplated hereby.
SECTION 3.7 Investment Purpose. Purchaser is acquiring the
Shares solely for the purpose of investment and not with a view to, or for
offer or sale in connection with, any distribution thereof.
SECTION 3.8 Brokers or Finders. Purchaser represents, as to
itself, its Subsidiaries and its affiliates, that no agent, broker,
investment banker, financial advisor or other firm or person is or will be
entitled to any brokers' or finders' fee or any other commission or similar
fee in connection with any of the transactions contemplated by this
Agreement.
ARTICLE IV
COVENANTS
SECTION 4.1 Interim Operations of the Company. Seller covenants
and agrees that, except (i) as contemplated by this Agreement; (ii) as
disclosed in the Company Disclosure Schedule or (iii) with the prior
written consent of Purchaser (which consent shall not be unreasonably
withheld), after the date hereof and prior to the Closing Date:
(a) the business of the Company and the Company
Subsidiaries shall be conducted only in the ordinary and usual course of
business;
(b) neither the Company nor any Company Subsidiary shall
amend its articles of incorporation or by-laws;
(c) neither the Company nor any Company Subsidiary shall
(i) split, combine or reclassify the Shares; (ii) declare, set aside or pay
any dividend or other distribution payable in cash, stock or property with
respect to the Shares; (iii) issue or sell any additional shares of, or
securities convertible into or exchangeable for, or options, warrants,
calls, commitments or rights of any kind to acquire, its capital stock or
(iv) redeem, purchase or otherwise acquire directly or indirectly any of
its capital stock;
(d) neither the Company nor any Company Subsidiary shall
(i) adopt any new employee benefit plan or employee welfare or amend any
existing employee benefit plan in any material respect, except for changes
which are less favorable to participants in such plans or as may be
required by applicable law or (ii) increase any compensation or enter into
or amend any employment, severance, termination or similar agreement with
any of its present or future officers or directors, except for normal
increases in the ordinary and usual course of business and the payment of
cash bonuses to employees pursuant to and consistent with existing plans or
programs;
(e) neither the Company nor any Company Subsidiary shall,
except as may be required or contemplated by this Agreement or in the
ordinary and usual course of business acquire, sell, lease or dispose of
any assets which, in the aggregate, exceed $500,000.00;
(f) neither the Company nor any Company Subsidiary, and
with respect to clause (iv) below none of Seller, the Company or any
Company Subsidiary shall (i) incur or assume any long-term or short-term
debt or issue any debt securities except for borrowings under existing
lines of credit in the ordinary course of business consistent with past
practice; (ii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the material
obligations of any other person except in the ordinary and usual course of
business consistent with past practice in an amount not material to the
Company and the Company Subsidiaries taken as a whole; (iii) make any
material loans, advances or capital contributions to, or investments in,
any other person other than in the ordinary and usual course of business
consistent with past practice; (iv) pledge or otherwise encumber the Shares
or (v) mortgage or pledge any of its material assets, tangible or
intangible, or create any material mortgage, lien, pledge, charge, security
interest or encumbrance of any kind with respect to any such asset;
(g) neither the Company nor any Company Subsidiary shall
acquire (by merger, consolidation or acquisition of stock or assets) any
corporation, partnership or other business organization or division thereof
or any equity interest therein;
(h) neither the Company nor any Company Subsidiary shall
adopt a plan of complete or partial liquidation or resolutions providing
for or authorizing such liquidation or a dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization;
(i) neither the Company nor any Company Subsidiary shall
materially change any of the accounting methods used by it unless required
by GAAP or applicable law; and
(j) neither the Company nor any Company Subsidiary shall
authorize or enter into an agreement to do any of the foregoing.
SECTION 4.2 Access to Information. Seller shall cause the
Company and the Company Subsidiaries to afford Purchaser's officers,
employees, accountants, counsel and other authorized representatives full
and complete access during normal business hours throughout the period
prior to the Closing Date or the date of termination of this Agreement, to
it and its properties, contracts, commitments, books and records (including
but not limited to Tax Returns) and to use its reasonable best efforts to
cause representatives to furnish promptly to Purchaser such additional
financial and operating data and other information as to its business and
properties as Purchaser or its duly authorized representatives may from
time to time reasonably request; provided, however, that nothing herein
shall require either Seller, the Company or any Company Subsidiary to
disclose any information to Purchaser if such disclosure (i) would cause
significant competitive harm to Seller, the Company, the Company
Subsidiaries or their affiliates if the transactions contemplated by this
Agreement are not consummated or (ii) would be in violation of applicable
laws or regulations of any Governmental Entity or the provisions of any
confidentiality agreement to which either Seller, the Company or any
Company Subsidiary is a party. Unless otherwise required by law and until
the Closing Date, Purchaser will hold any such information in confidence in
accordance with the provisions of the Confidentiality Agreement between
Seller and Purchaser, dated as of [bullet], 1999 (the "Confidentiality
Agreement").
SECTION 4.3 Employee Benefits.
(a) Purchaser agrees that, effective as of the Closing Date
and for a six-month period thereafter, Purchaser shall provide those
persons who, immediately prior to the Closing Date, were company employees
(as hereinafter defined) of the Company or a Company Subsidiary on the
Closing Date with employee benefits that are no less favorable in the
aggregate than those provided to Company Employees immediately prior to the
date hereof, provided that Purchaser will not be required to provide such
employee benefits to the extent that the Company would incur additional
expense following the Closing Date other than historical costs to provide
such employee benefits. With respect to any employee benefits that are
provided to Company Employees under Purchaser's employee benefit plans
("Purchaser Plans"), service accrued by Company Employees during employment
with the Company prior to the Closing Date shall be recognized for all
purposes, except to the extent necessary to prevent duplication of
benefits. With respect to any medical, dental or other welfare benefits
that are provided at any time to Company Employees under Purchaser Plans,
any applicable pre-existing condition exclusions (except to the extent not
satisfied under the comparable Benefit Plan as of such time) shall be
waived, and any expenses incurred before such time under the comparable
Benefit Plan shall be taken into account under such Purchaser Plan for
purposes of satisfying applicable deductible, coinsurance and maximum out-
of-pocket provisions.
(b) Except for employee stock, stock option and profit
sharing plans, Purchaser agrees to honor, and cause the Company and the
Company Subsidiaries, as applicable, to honor, without modification, all
employment, severance, retention, other incentive agreements and
arrangements, postretirement medical, dental and life insurance
arrangements and all supplemental pension plans, as amended through the
date hereof (each, an "Employee Arrangement"), for the benefit of any
employees and former employees of the Company or a Company Subsidiary,
including, without limitation, those Employee Arrangements set forth in
Section 4.3 of the Company Disclosure Schedule.
(c) Purchaser acknowledges that the transactions
contemplated by this Agreement shall constitute a "change in control" for
purposes of any Employee Arrangement. The Seller shall reimburse the
Purchaser from the Escrow for the amount of any severance payment liable to
be paid to any Company Employee as a result of such "change in control."
(d) For purposes of this Section 4.3, the term "Company
Employees" shall mean all employees of the Company or a Company Subsidiary
immediately prior to the Closing Date, including those on lay-off,
disability or leave of absence, paid or unpaid.
SECTION 4.4 Publicity. The initial press releases with respect
to the execution of this Agreement shall be acceptable to Purchaser and
Seller. Thereafter, so long as this Agreement is in effect, neither
Purchaser nor Seller nor any of their respective affiliates shall issue or
cause the publication of any press release with respect to the transactions
contemplated hereby or this Agreement without the prior agreement of the
other party, except as may be required by law, rule, regulation,
Governmental Entity or by any listing agreement with a national securities
exchange, in which case the party proposing to make such publication shall
provide advance notice and an opportunity to comment to the extent
practicable.
SECTION 4.5 Approvals and Consents; Cooperation; Notification.
(a) The parties hereto shall use their respective
reasonable efforts, and cooperate with each other, to obtain as promptly as
practicable all governmental and third party authorizations, approvals,
consents or waivers, including approval of the Bankruptcy Court, required
in order to consummate the transactions contemplated by this Agreement,
except for any third party authorizations, approvals, consents or waivers,
the failure of which to obtain would not impair in any material respect the
transactions contemplated hereby.
(b) Seller and Purchaser shall take all actions necessary
to file as soon as practicable all notifications, filings and other
documents required to obtain all governmental authorizations, approvals,
consents or waivers, including, without limitation, under the HSR Act and
under the regulations of the FCC and the PUCs, and to respond as promptly
as practicable to any inquiries received from the Federal Trade Commission,
the Antitrust Division of the Department of Justice, the FCC, the PUCs and
any other Governmental Entity for additional information or documentation
and to respond as promptly as practicable to all inquiries and requests
received from any Governmental Entity in connection therewith.
(c) Seller shall give prompt notice to Purchaser of the
occurrence of any Company Material Adverse Effect, and Purchaser shall give
prompt notice to Seller of the occurrence of any Purchaser Material Adverse
Effect. Each of Seller and Purchaser shall give prompt notice to the other
of the occurrence or failure to occur of an event that would, or, with the
lapse of time would, cause any condition to the consummation of the
transactions contemplated hereby not to be satisfied.
(d) The Seller and the Purchaser shall update the Company
Disclosure Schedule and the Purchaser Disclosure Schedule, respectively, as
of a date no greater than two (2) business days prior to the Closing Date,
and deliver such updated disclosure schedules to the other party at the
Closing.
SECTION 4.6 Further Assurances. Each of the parties hereto
agrees to use its respective reasonable efforts to take, or cause to be
taken, all action, and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and
make effective the transactions contemplated by this Agreement.
SECTION 4.7 Transfer Taxes. Notwithstanding anything to the
contrary contained herein. Purchaser shall be responsible for the timely
payment of all sales (including, without limitation, bulk sales), use,
value added, documentary, stamp, gross receipts, registration, transfer,
conveyance, excise, recording, license and other similar taxes and fees
("Transfer Taxes"), arising out of or in connection with or attributable to
the transactions effected pursuant to this Agreement. Purchaser shall
prepare and in a timely manner file all returns in respect of Transfer
Taxes.
(a) Purchaser and Seller shall cooperate with each other in
attempting to minimize Transfer Taxes.
(b) Purchaser shall provide to Seller, and Seller shall
provide to Purchaser, all exemption certificates with respect to Transfer
Taxes that may be provided for under applicable law. Such certificates
shall be in the form, and shall be signed by the proper party, as provided
under applicable law.
SECTION 4.8 Name Change. Prior to the Closing, Seller will
change the names of the Company and the Company Subsidiaries so that they
do not contain any name, mark, logo, trade dress or other identifying words
or images which are similar to "USN" or "USN Communications" or any
combination thereof. When changing such names, Seller agrees to use any
name recommended by Buyer, provided that such recommended name does not
contain any of the names listed above or any combination thereof or is not
otherwise prohibited by law.
SECTION 4.9 Deposit. On or before April 16, 1999, the Purchaser
shall deliver to the Seller a refundable deposit (the "Deposit") of One
Million Dollars ($1,000,000). The Seller shall hold the Deposit in a
separate account and shall not commingle the Deposit with other funds of
the Seller. At the Closing, the Deposit shall be released to the Seller as
a portion of the Purchase Price. If this Agreement is terminated by either
party pursuant to Section 6.1, then the Seller shall immediately return the
Deposit to the Purchaser, without any deduction for any counterclaim or
offset.
SECTION 4.10 Certain Contracts. After the date hereof, neither
the Company nor the Company Subsidiaries will enter into any agreement with
Celltech Cellular Information Systems, Inc. for the provision of software
products and services to the Company or the Company Subsidiaries.
SECTION 4.11 Intercompany and IntraCompany Accounts. Effective
as of the Closing Date, all intercompany and intracompany receivables,
payables and loans then existing between Seller on the one hand and the
Company or Company Subsidiaries on the other hand shall be contributed to
the Company and the Company or Company Subsidiaries shall have been
released from any obligations thereunder.
ARTICLE V
CONDITIONS
SECTION 5.1 Conditions to Each Party's Obligation to Effect the
Closing. The obligations of Seller, on the one hand, and Purchaser, on the
other hand, to consummate the Closing are subject to the satisfaction (or,
if permissible, waiver by the party for whose benefit such conditions
exist) of the following conditions:
(a) no court, arbitrator or governmental body, agency or
official shall have issued any order, decree or ruling, and there shall not
be any statute, rule or regulation, restraining, enjoining or prohibiting
the consummation of the transactions contemplated by this Agreement;
provided that the parties shall have used their best commercial efforts to
cause any such order, decree, ruling, statute, rule or regulation to be
vacated or lifted;
(b) any waiting period applicable to the transactions
contemplated hereby under the HSR Act shall have expired or been
terminated;
(c) the Bankruptcy Court shall have approved the
consummation of the transactions contemplated by this Agreement;
(d) the FCC and the PUC, if required, shall have approved
the consummation of the transactions contemplated by this Agreement; and
(e) all authorizations, approvals or consents required to
permit the consummation of the transactions contemplated hereby shall have
been obtained and be in full force and effect, except where the failure to
have obtained any such authorizations, approvals or consents would not have
a Company Material Adverse Effect or a Purchaser Material Adverse Effect,
as the case may be.
SECTION 5.2 Conditions to the Obligations of Purchaser. The
obligations of Purchaser to consummate the transactions contemplated hereby
are subject to the satisfaction (or waiver by Purchaser) of the following
further conditions:
(a) the representations and warranties of Seller shall be
true and correct in all material respects as of the Closing Date as if made
at and as of such time (other than those representations and warranties
that address matters only as of a particular date or only with respect to a
specific period of time which need only be true and accurate as of such
date or with respect to such period);
(b) Seller shall have performed in all material respects
its obligations hereunder required to be performed by it at or prior to the
Closing Date;
(c) Purchaser shall have received a certificate signed by
an appropriate officer of Seller, dated as of the Closing Date, to the
effect that, to the best of such officer's knowledge, the conditions set
forth in Section 5.2(a) and Section 5.2(b) have been satisfied.
SECTION 5.3 Conditions to the Obligations of Seller. The
obligations of Seller to consummate the transactions contemplated hereby
are subject to the satisfaction (or waiver by Seller) of the following
further conditions:
(a) the representations and warranties of Purchaser shall
be true and correct in all material respects as of the Closing Date as if
made at and as of such time (other than those representations and
warranties that address matters only as of a particular date or only with
respect to a specific period of time which need only be true and accurate
as of such date or with respect to such period);
(b) Purchaser shall have performed in all material respects
all of the obligations hereunder required to be performed by Purchaser, at
or prior to the Closing Date;
(c) Seller shall have received a certificate signed by an
appropriate officer of Purchaser, dated as of the Closing Date, to the
effect that, to the best of such officer's knowledge, the conditions set
forth in Section 5.3(a) and Section 5.3(b) have been satisfied; and
(d) the cash collateral securing certain obligations to
Southern New England Telephone Company shall have been released to Seller.
ARTICLE VI
TERMINATION
SECTION 6.1 Termination. Anything herein or elsewhere to the
contrary notwithstanding, this Agreement may be terminated and the
transactions contemplated herein may be abandoned at any time prior to the
Closing Date:
(a) by the mutual consent of Seller and Purchaser;
(b) by either Seller or Purchaser:
(i) if the Closing shall not have occurred on or
prior to May 15, 1999; provided, however, that the right to
terminate this Agreement under this Section 6.1(b)(i) shall not
be available to any party whose failure to fulfill any obligation
under this Agreement has been the cause of, or resulted in, the
failure of the Closing to occur on or prior to such date;
(ii) if the Bankruptcy Court or other Governmental
Entity shall have issued an order, decree or ruling or taken any
other action (which order, decree, ruling or other action the
parties hereto shall use their best commercial efforts to lift),
in each case permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement and
such order, decree, ruling or other action shall have become
final and non-appealable; or
(iii) if Seller's Board of Directors
determines in good faith, after consultation with outside
counsel, and evidenced by a duly adopted board resolution, that,
in order to comply with its fiduciary duties under applicable
law, it is advisable to enter into a definitive agreement with
respect to a qualified bid (a "Qualified Bid"), as set forth in
the terms of the bid procedures approved by the Bankruptcy Court
and Seller executes and delivers such a definitive agreement with
respect to a Qualified Bid.
SECTION 6.2 Procedure and Effect of Termination. In the event
of the termination and abandonment of this Agreement by Seller or Purchaser
pursuant to Section 6.1 hereof, written notice thereof shall forthwith be
given to the other party. If the transactions contemplated by this
Agreement are terminated as provided herein:
(a) Each party will redeliver all documents, work papers
and other material of any other party relating to the transactions
contemplated hereby, whether so obtained before or after the execution
hereof, to the party furnishing the same;
(b) All confidential information received by any party
hereto with respect to the business of any other party or its subsidiaries
or affiliates shall be treated in accordance with the provisions of the
Confidentiality Agreement, which shall survive the termination of this
Agreement; and
(c) No party to this Agreement will have any liability
under this Agreement to the other except (i) as stated in subparagraphs (a)
and (b) of this Section 6.2; (ii) for any breach of any provision of this
Agreement and (iii) as provided in the Confidentiality Agreement. In the
event that the Seller terminates this Agreement pursuant to Section
6.1(b)(iii), then the Seller shall pay Purchaser a fee in the amount of
$750,000 to compensate the Purchaser for, among other things, its internal
and external costs incurred in connection with this Agreement. This
payment is in addition to the refund of the Deposit.
ARTICLE VII
INDEMNIFICATION
SECTION 7.1 Indemnification by the Seller. The Seller shall
indemnify, save, defend, and hold the Purchaser harmless from and against
any and all losses, liabilities, damages, deficiencies, demands, claims,
actions, judgments, causes of action, assessments, costs, and expenses,
including but not limited to interest, penalties, court costs, and
attorneys' fees (collectively, "Losses") based upon, arising out of, or
otherwise in respect of (i) any inaccuracy in any representation or
warranty, including any inaccuracy alleged by a third party, or any breach
of any covenant or agreement of the Seller contained in this Agreement, the
Company Disclosure Schedule, or any document or instrument delivered by the
Seller in connection with this Agreement or (ii) Mazzarella and McWay v.
USN Communications, Inc. et al., Case No. 99-00383 United States
Bankruptcy Court, Delaware; provided, however that the maximum aggregate
liability of Sellers hereunder shall not exceed $1,000,000 and provided,
further that any obligations of Seller hereunder shall be satisfied fully
from the Escrow Amount which shall be Purchaser's sole and exclusive remedy
hereunder. The Purchaser may not bring the first claim for indemnification
until the aggregate amount for all claims for indemnification shall exceed
Fifty Thousand Dollars ($50,000), but may then receive indemnification for
all amounts claimed.
SECTION 7.2 Indemnification by the Purchaser. The Purchaser
shall indemnify, save, defend, and hold the Seller harmless from and
against any and all Losses based upon, arising out of, or otherwise in
respect of any inaccuracy in any representation or warranty, including any
inaccuracy alleged by a third party, or any breach of any covenant or
agreement of the Purchaser contained in this Agreement, the Purchaser
Disclosure Schedule, or any document or instrument delivered by the
Purchaser in connection with this Agreement. The Seller may not bring the
first claim for indemnification until the aggregate amount for all claims
for indemnification shall exceed Fifty Thousand Dollars ($50,000), but may
then receive indemnification for all amounts claimed.
SECTION 7.3 Notice of an Indemnified Liability. Within a
reasonable time after receipt by one party (the "Indemnified Party") of
notice of any indemnified liability, the Indemnified Party shall give
written notice thereof to the other party (the "Indemnifying Party"), and
to the Escrow Holder if applicable. The notice shall describe the
indemnified liability in reasonable detail and shall indicate the amount
(estimated, if necessary and to the extent feasible) of the Losses that
have been or may be suffered by the Indemnified Party. The failure to give
such notice shall not affect the Indemnified Party's right to seek
indemnification from the Indemnifying Party.
SECTION 7.4 Indemnified Liability Not Involving a Third Party.
Upon receipt of a notice of an indemnified liability not involving a third
party, unless the Indemnifying Party provides written objections as set
forth in Section 7.6, the Indemnifying Party shall promptly reimburse the
Indemnified Party for the Losses suffered by the Indemnified Party, or give
written instructions to the Escrow Holder to pay the Indemnified Party the
amount of the Losses from the Escrow if applicable.
SECTION 7.5 Indemnified Liability Involving a Third Party. Upon
receipt of a notice of an indemnified liability involving a third party,
unless the Indemnifying Party provides written objections as set forth in
Section 7.6, the Indemnifying Party shall promptly reimburse the
Indemnified Party for the Losses and defense costs suffered or incurred by
the Indemnified Party, whether by judgment, order, award, settlement,
compromise, or otherwise, including but not limited to all expenses. The
Purchaser shall have the election to settle, compromise, or defend by its
own counsel any indemnified liability, at its expense if it is an
Indemnifying Party or at the Indemnifying Party's expense if it is an
Indemnified Party; provided that the Purchaser may not settle or compromise
any claim without the prior written consent of the Seller, if the Seller is
the Indemnifying Party, which consent may not be unreasonably withheld or
delayed; provided further that the Purchaser may settle or compromise any
claim without the prior written consent of the Seller, if the Seller is the
Indemnifying Party, if the Seller has provided written objections as set
forth in Section 7.6 and such written objections have not been resolved.
The Indemnifying Party may elect to be represented by its own legal counsel
at its own expense. The Indemnifying Party may settle or compromise any
claim if (i) the Indemnifying Party pays the full amount of such settlement
or compromise and all expenses, and (ii) the settlement or compromise does
not require the Indemnified Party to perform any act or to refrain from
performing any act.
SECTION 7.6 Objections. If the Indemnifying Party disputes any
notice of an indemnified liability, then the Indemnifying Party shall have
ten (10) business days from receipt of such notice to give written
objections to the Indemnified Party or such objections shall be deemed
waived. On delivery of the written objections, the Indemnified Party and
the Indemnifying Party shall have until the earlier of thirty (30) days
from the date of receipt of the written objections or five (5) days before
the Indemnified Party must file a response with a court, arbitrator, or
similar entity with respect to the indemnified liability to negotiate and
attempt to resolve their differences.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Amendment and Modification. This Agreement may only
be amended, modified and supplemented by written agreement of the parties
hereto.
SECTION 8.2 Notices. All notices, consents and other
communications hereunder shall be in writing and shall be deemed to have
been duly given (a) when delivered by hand or by Federal Express or a
similar overnight courier to; (b) five days after being deposited in any
United States Post Office enclosed in a postage prepaid, registered or
certified envelope addressed to or (c) when successfully transmitted by
telecopier (with a confirming copy of such communication to be sent as
provided in clauses (a) or (b) above) to, the party for whom intended, at
the address or telecopier number for such party set forth below (or at such
other address or telecopier number for a party as shall be specified by
like notice, provided, however, that any notice of change of address or
telecopier number shall be effective only upon receipt):
(a) if to Purchaser, to:
Paris Holt
Chief Executive Officer
Unified Signal Corporation
7230 Brookwood Way
Cumming, Georgia 30041
Telephone No. (770) 754-9381
Telecopier No. (770) 754-9385
with a copy to:
Gerald N. Casale, Jr., Esq.
Casale Coffee Nojima LLP
11755 Wilshire Boulevard
Suite 1200
Los Angeles, California 90025
Telephone No. (310) 312-1860
Telecopy No. (310) 477-3481
(b) if to Seller, to:
USN Communications, Inc.
10 South Riverside Plaza, Suite 2000
Chicago, Illinois 60606
Telephone No. (312) 906-3620
Telecopy No. (312) 474-0814
Attention: Mr. J. Thomas Elliott
and:
USN Communications, Inc.
10 South Riverside Plaza, Suite 2000
Chicago, Illinois 60606
Telephone No. (312) 906-3592
Telecopy No. (312) 474-0814
Attention: Thomas A. Monson, Esq.
with a copy to:
Skadden, Arps, Slate, Meagher &
Flom (Illinois)
333 West Wacker Drive
Chicago, Illinois 60606
Telephone No. (312) 407-0700
Telecopy No. (312) 407-0411
Attention: Gary P. Cullen, Esq.
SECTION 8.3 Interpretation. The words "hereof," "herein" and
"herewith" and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole and not to any particular
provision of this Agreement, and article, section, paragraph, exhibit and
schedule references are to the articles, sections, paragraphs, exhibits and
schedules of this Agreement unless otherwise specified. Whenever the words
"include," "includes" or "including" are used in this Agreement they shall
be deemed to be followed by the words "without limitation." The words
describing the singular number shall include the plural and vice versa, and
words denoting any gender shall include all genders and words denoting
natural persons shall include corporations and partnerships and vice versa.
The phrase "to the knowledge of Seller" or any similar phrase shall mean
such facts and other information which as of the date of determination are
actually known to the Chairman of the Board, the Chief Executive Officer,
the President, any Senior Executive Vice President and Chief Financial
Officer of Seller or the Company. The phrase "made available" in this
Agreement shall mean that the information referred to has been made
available if requested by the party to whom such information is to be made
available. The phrases "the date of this Agreement," "the date hereof" and
terms of similar import, unless the context otherwise requires, shall be
deemed to refer to April 1, 1999. As used in this Agreement, the term
"affiliate(s)" shall have the meaning set forth in Rule l2b-2 of the
Exchange Act. As used in this Agreement, the term "business day" means a
day, other than a Saturday or a Sunday, on which banking institutions in
The City of New York are required to be open. The parties have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement
shall be construed as if drafted jointly by the parties and no presumption
or burden of proof shall arise favoring or disfavoring any party by virtue
of the authorship of any provisions of this Agreement.
SECTION 8.4 Counterparts. This Agreement may be executed in
multiple counterparts, all of which shall together be considered one and
the same agreement.
SECTION 8.5 Entire Agreement; Third Party Beneficiaries. This
Agreement (including the documents and the instruments referred to herein),
the Confidentiality Agreement, the Company Disclosure Schedule and the
Purchaser Disclosure Schedule (a) constitute the entire agreement and
supersede all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof, and (b) except
as provided herein, are not intended to confer upon any person other than
the parties hereto any rights or remedies hereunder.
SECTION 8.6 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction
or other authority to be invalid, void, unenforceable or against its
regulatory policy, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and
shall in no way be affected, impaired or invalidated.
SECTION 8.7 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware applicable
to contracts to be made and performed entirely therein without giving
effect to the principles of conflicts of law thereof or of any other
jurisdiction.
SECTION 8.8 Jurisdiction. Each of the parties hereto hereby
expressly and irrevocably submits to the non-exclusive personal
jurisdiction of the United States District Court for the District of
Delaware and to the jurisdiction of any other competent court of the State
of Delaware (collectively, the "Delaware Courts"), preserving, however, all
rights of removal to such federal court under 28 U.S.C. Section 1441, in
connection with all disputes arising out of or in connection with this
Agreement or the transactions contemplated hereby and agrees not to
commence any litigation relating thereto except in such courts. If the
aforementioned courts do not have subject matter jurisdiction, then the
proceeding shall be brought in any other state or federal court located in
the State of Delaware, preserving, however, all rights of removal to such
federal court under 28 U.S.C. Section 1441. Each party hereby waives the
right to any other jurisdiction or venue for any litigation arising out of
or in connection with this Agreement or the transactions contemplated
hereby to which any of them may be entitled by reason of its present or
future domicile. Notwithstanding the foregoing, each of the parties hereto
agrees that each of the other parties shall have the right to bring any
action or proceeding for enforcement of a judgment entered by the Delaware
Courts in any other court or jurisdiction.
SECTION 8.9 Service of Process. Each party irrevocably consents
to the service of process outside the territorial jurisdiction of the
courts referred to in Section 8.8 hereof in any such action or proceeding
by mailing copies thereof by registered United States mail, postage
prepaid, return receipt requested, to its address as specified in or
pursuant to Section 8.2 hereof. However, the foregoing shall not limit the
right of a party to effect service of process on the other party by any
other legally available method.
SECTION 8.10 Specific Performance. Each of the parties hereto
acknowledges and agrees that in the event of any breach of this Agreement,
each non-breaching party would be irreparably and immediately harmed and
could not be made whole by monetary damages. It is accordingly agreed that
the parties hereto (a) will waive, in any action for specific performance,
the defense of adequacy of a remedy at law and (b) shall be entitled, in
addition to any other remedy to which they may be entitled at law or in
equity, to compel specific performance of this Agreement in any action
instituted in accordance with Section 7.8 hereof.
SECTION 8.11 Termination of Representations and Warranties.
Except as set forth in this Agreement, including the Company Disclosure
Schedule and the Purchaser Schedule, neither party is making any
representation or warranty to the other party. Notwithstanding any right
of a party to fully investigate the business and financial condition of the
other party, and notwithstanding any knowledge of facts determined or
determinable by a party pursuant to such investigation or right of
investigation, each party shall have the right to rely fully upon the
representations, warranties, covenants and agreements of the other party
contained in this Agreement, the Disclosure Schedules, or any document or
instrument delivered in connection with this Agreement; provided that a
party does not have actual knowledge that any such representation or
warranty is materially incorrect. All such representations and warranties
of each party shall survive the execution and delivery of this Agreement
and the Closing until the second (2nd) anniversary of the Closing Date;
provided that all representations and warranties relating to any Tax matter
shall survive until the later of (i) three (3) years from the date of
filing of the last federal tax return required to be filed by the Company
or any Company Subsidiary for the period ending on the Closing Date, or
(ii) the first day after all applicable statutes of limitations for all
state and local tax returns required to be filed by the Company or any
Company Subsidiary for the period ending on the Closing Date; provided
further that all representations and warranties relating to any matter
regarding title to the Shares or any asset of the Company or any Company
Subsidiary, or any Encumbrance thereon, shall survive in perpetuity.
Notwithstanding the foregoing, there shall not be any termination of any
representation or warranty with respect to fraud or intentional
misrepresentation by the giver of such fraudulent or intentionally
misleading representation or warranty.
SECTION 8.12 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties, except that (i) Purchaser may assign
this Agreement to any Subsidiary of Purchaser; provided that Purchaser
shall remain primarily liable for its obligations under this Agreement and
(ii) Seller may assign a security interest in this Agreement to any
creditor or creditors of Seller. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties and their respective permitted successors and assigns.
SECTION 8.13 Expenses. Except as otherwise provided herein, all
costs and expenses incurred in connection with the transactions
contemplated hereby, this Agreement and the consummation of the
transactions contemplated hereby shall be paid by the party incurring such
costs and expenses, whether or not the transactions contemplated hereby is
consummated.
SECTION 8.14 Headings. Headings of the Articles and Sections of
this Agreement, the Table of Contents and the Index of Defined Terms are
for convenience of the parties only, and shall be given no substantive or
interpretative effect whatsoever.
SECTION 8.15 Waivers. Except as otherwise provided in this
Agreement, any failure of any of the parties to comply with any obligation,
covenant, agreement or condition herein may be waived by the party or
parties entitled to the benefits thereof only by a written instrument
signed by the party granting such waiver, but such waiver or failure to
insist upon strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to,
any subsequent or other failure.
SECTION 8.16 Schedules. The Company Disclosure Schedule and the
Purchaser Disclosure Schedule shall be construed with and as an integral
part of this Agreement to the same extent as if the same had been set forth
verbatim herein. Any matter disclosed pursuant to the Company Disclosure
Schedule and the Purchaser Disclosure Schedule shall be deemed to be
disclosed for all purposes under this Agreement but such disclosure shall
not be deemed to be an admission or representation as to the materiality of
the item so disclosed.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be signed by their respective officers thereunto duly authorized as of
the date first written above.
USN COMMUNICATIONS, INC.,
a Delaware corporation
By: /s/ Ronald W. Gavillet
-----------------------------
Name: Ronald W. Gavillet
Title: Senior Vice President
UNIFIED SIGNAL CORPORATION,
a Georgia corporation
By: /s/ Paris Holt
--------------------------------------------
Name: Paris Holt
Title: Chairman and Chief Executive Officer
UNIFIED SIGNAL CORPORATION,
a Delaware corporation
By: /s/ Paris Holt
-------------------------------------------
Name: Paris Holt
Title: Chairman and Chief Executive Officer
ANNEX A
INDEX OF DEFINED TERMS
Defined in
Terms Section
----- ---------
Active Mobile Numbers . . . . . . . . . . 2.22
Agreement . . . . . . . . . . . . . . . . Preamble
Bankruptcy Court . . . . . . . . . . . . Preamble
Benefit Plans . . . . . . . . . . . . . . 2.9(a)
Business Day . . . . . . . . . . . . . . 8.3
Closing . . . . . . . . . . . . . . . . . 1.3(a)
Closing Date . . . . . . . . . . . . . . 1.3(a)
Closing Date Statement . . . . . . . . . 2.22
Code . . . . . . . . . . . . . . . . . . 2.9(b)
Company . . . . . . . . . . . . . . . . . Preamble
Company Disclosure Schedule . . . . . . . 2.1
Company Employees . . . . . . . . . . . . 4.3(d)
Company Financial Statements . . . . . . 2.6
Company Intellectual Property . . . . . . 2.14
Company Material Adverse Effect . . . . . 2.1
Company Subsidiaries . . . . . . . . . . 2.1
Confidentiality Agreement . . . . . . . . 4.2
Delaware Courts . . . . . . . . . . . . . 8.8
Deposit . . . . . . . . . . . . . . . . . 4.9
Employee Agreements . . . . . . . . . . . 2.9(a)
Employee Arrangement . . . . . . . . . . 4.3(b)
Encumbrances . . . . . . . . . . . . . . 1.1
Environmental Laws . . . . . . . . . . . 2.15
ERISA . . . . . . . . . . . . . . . . . . 2.9(a)
ERISA Affiliate . . . . . . . . . . . . . 2.9(a)
Escrow . . . . . . . . . . . . . . . . . 1.3(d)
Escrow Amount . . . . . . . . . . . . . . 1.3(d)
Escrow Holder . . . . . . . . . . . . . . 1.3(d)
Exchange Act . . . . . . . . . . . . . . 2.5
FCC . . . . . . . . . . . . . . . . . . . 2.5
GAAP . . . . . . . . . . . . . . . . . . 2.6
Governmental Entity . . . . . . . . . . . 2.5
HSR Act . . . . . . . . . . . . . . . . . 2.5
Indemnified Party . . . . . . . . . . . . 7.3
Indemnifying Party . . . . . . . . . . . 7.3
Losses . . . . . . . . . . . . . . . . . 7.1
Permitted Encumbrances . . . . . . . . . 2.17
PUCs . . . . . . . . . . . . . . . . . . 2.5
Purchase Price . . . . . . . . . . . . . 1.2(a)
Purchaser . . . . . . . . . . . . . . . . Preamble
Purchaser Disclosure Schedule . . . . . . 3.3
Purchaser Financial Statements . . . . . 3.4
Purchaser Material Adverse Effect . . . . 3.1
Puchaser Plans . . . . . . . . . . . . . 4.3(a)
Qualified Bid . . . . . . . . . . . . . . 6.1(b)(iii)
Seller . . . . . . . . . . . . . . . . . Preamble
Shares . . . . . . . . . . . . . . . . . Preamble
Subsidiary . . . . . . . . . . . . . . . 3.1
Taxes . . . . . . . . . . . . . . . . . . 2.12(f)
Tax Return . . . . . . . . . . . . . . . 2.12(f)
Transfer Taxes . . . . . . . . . . . . . 4.7
ANNEX B
INDEX TO COMPANY DISCLOSURE SCHEDULE
Title Section
----- -------
Organization 2.1
Capitalization 2.2
Ownership of Stock 2.3
Consents and Approvals; No Violations 2.5
Financial Statements 2.6
No Undisclosed Liabilities 2.7
Absence of Certain Changes 2.8
Employee Benefit Plans:ERISA 2.9(a)
Employee Benefit Plans:ERISA 2.9(b)
Employee Benefit Plans:ERISA 2.9(e)
Employee Benefit Plans:ERISA 2.9(f)
Litigation 2.10
No Default: Compliance With Applicable Laws 2.11
Taxes 2.12(a)
Taxes 2.12(b)
Taxes 2.12(c)
Taxes 2.12(d)
Taxes 2.12(e)
Affiliated Transactions 2.13
Intellectual Property 2.14
Environmental 2.15
Contracts 2.16
Title to Assets 2.17
Interim Operations of the Company 4.1
Employee Benefits 4.3(b)
ANNEX C
INDEX TO PURCHASER DISCLOSURE SCHEDULE
Title Section
----- -------
Absence of Certain Changes 3.5
Litigation 3.6
Exhibit 10.2
AMENDMENT NO. 1
TO
NOTE PURCHASE AGREEMENT
THIS AMENDMENT NO. 1 TO NOTE PURCHASE AGREEMENT, dated as of
March 15, 1999 (this "Agreement"), among USN COMMUNICATIONS, INC., a
Delaware corporation (the "Company"), MERRILL LYNCH GLOBAL ALLOCATION FUND,
INC. ("MLGAF") and CORECOMM LIMITED ("CoreComm"; Merrill Lynch and CoreComm
are individually referred to as a "Purchaser" and collectively as the
"Purchasers").
W I T N E S S E T H:
WHEREAS, the Company and the Purchasers are parties to the Note
Purchase Agreement, dated as of February 23, 1999 (the "Existing Note
Agreement"); and
WHEREAS, the Company has requested that, as of the Effective
Date, the Existing Note Agreement be amended as herein provided; and
WHEREAS, the Purchasers are willing, subject to the terms and
conditions hereinafter set forth, to make such amendment as of the
Effective Date;
NOW, THEREFORE, in consideration of the agreements herein
contained, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Certain Definitions. The following terms (whether
or not underscored) when used in this Agreement shall have the following
meanings:
"Agreement" is defined in the preamble.
"Amended Note Agreement" means the Existing Note Agreement as
amended by this Agreement as of the Effective Date.
"Company" is defined in the preamble.
"CoreComm" is defined in the preamble.
"Effective Date" is defined in Section 4.1.
"Existing Note Agreement" is defined in the first recital.
"MLGAF" is defined in the preamble.
"Purchasers" is defined in the preamble.
Section 1.2 Other Definitions. Unless otherwise defined or the
context otherwise requires, terms used herein (including in the preamble
and recitals hereto) have the meanings provided for in the Existing Note
Agreement.
ARTICLE II
AMENDMENTS
Effective on (and subject to the occurrence of) the Effective Date,
the Existing Note Agreement is amended as follows:
Section 2.1 Amendments to Sections 3.2 and 11.1(l). The (a)
fourth line of Section 3.2 is amended by deleting reference to "March 15,
1999" and inserting in lieu thereof "March 22, 1999" and (b) the second
line of Section 11.1(l) of the Existing Note Agreement is amended by
deleting reference to "March 15, 1999" and inserting in lieu thereof "March
19, 1999".
Section 2.2 Amendments to Sections 2.2 and 11.1(l). Section
9.22 of the Existing Note Agreement is amended and restated in the entirety
as follows:
"9.22 Chapter 11 Claims
The Company will not permit any of its Subsidiaries to incur,
create, assume, apply for, suffer or exist or permit any other
superpriority claim or other claim which is pari passu with or senior to
the claims of the holders of the Notes, against the Company, any of its
Subsidiaries or any of their properties or assets. The Liens and
Superpriority Claims granted to the DIP Agent and the Lenders pursuant
to the Credit Agreement and the Order shall be subject and subordinate
to a carve-out (the "Carve-Out") for (a) following the occurrence and
during the pendency of a Default or an Event of Default, the payment of
(I) allowed professional fees and disbursements incurred by the
professionals retained, pursuant to Bankruptcy sections 327(a) or (e)
under a general retainer (excepting ordinary course professionals) or
1103(a), by the Debtors and any statutory committees appointed in the
Chapter 11 cases and (ii) the expenses of any member of any such
committee allowed under Bankruptcy Code section 503(b)(3)(F), in an
aggregate amount not to exceed the Carve-Out Amount (as defined below)
and (b) quarterly fees required to be paid pursuant to 28 U.S.C. section
1930(a)(6) and any fees payable to the Clerk of the Bankruptcy Court;
provided, however, that the Carve-Out shall not include professional
fees and disbursements incurred in connection with the prosecution of a
complaint, motion or other pleading which asserts (x) claims or causes
of action against the Lenders and/or (y) challenges or raises any
defenses to the Obligations or Prepetition Obligations or any
prepetition or postpetition lien of the Lenders. As long as no Default
or Event of Default shall have occurred and be continuing, the Debtors
shall pay compensation and reimbursement of expenses as authorized by
any applicable order of the Bankruptcy Court, as the same may be
payable, and the amount so paid shall not reduce the Carve-Out. The
Carve-Out Amount shall equal the sum of $500,000 plus an amount equal to
the lesser of (a) the cumulative unpaid budgeted amount, or pro rata per
diem portion of the cumulative unpaid budgeted amount to the extent the
Carve-Out is triggered during a calendar month, as the case may be, for
the period ending as of the date of such Default (the "Computation
Period") for incurred professional fees shown on Schedule II and (b) the
amount of professional fees previously or subsequently allowed by the
Bankruptcy Court for the Computation Period (including such amounts
permitted to be paid pursuant to any interim compensation order entered
by the Bankruptcy Court)."
Section 2.3 Amendments to Section 4.5. Section 4.5 of the
Existing Note Agreement is amended by inserting after the word "Emery" on
the third line thereof" and Young Conaway, Stargatt & Taylor".
Section 2.4 New Section 4.B.4.6. A new Section 4.B.4.6 is added
to the Existing Note Agreement as follows:
"4.6 Payment of Special Counsel Fees.
Without limiting the provisions of Section 14.1, there shall be
paid from the proceeds of the Second Closing Notes the reasonable fees,
charges, and disbursements of McDermott, Will & Emery and Young,
Conaway, Stargatt & Taylor that are incurred in connection with the
Transaction".
Section 2.5 Amendments to Section 14.1. Section 14.1 of the
Existing Note Agreement is amended by adding (a) after the word "counsel"
on the fourth line thereof the phrase "(including, without limitation, the
fees and expenses of Young, Conaway, Stargatt & Taylor)", and (b) after the
word "with" on the fifteenth line thereof the phrase "the participation of
the Purchasers in the Chapter 11 case, and".
Section 2.6 New Schedule II. A new Schedule II is added to the
Existing Note Agreement in the form of Schedule I hereto, and "Schedule II
- Incurred Professional Fees" is added after reference to Schedule I in the
table of contents.
Section 2.7 Schedule I - New Defined Term. The following
defined term is added to Schedule I of the Existing Note Agreement:
"Computation Period has the meaning provided in Section 9.22."
Section 2.8 Schedule I - Revised Defined Term. The definition
of "Transaction" is amended by adding after the word "including" on the
second line the phrase "the participation of the Purchasers in the Chapter
11 case,".
ARTICLE III
REPRESENTATIONS AND WARRANTIES
In order to induce the Purchasers to make the amendments provided
for in Article II, the Company hereby represents and warrants as of the
Effective Date that each of the representations and warranties of the
Company contained in the Existing Note Agreement and in the other Note
Documents is true and correct in all material respects as of the Effective
Date (except, if any such representation and warranty relates to an earlier
date, such representation and warranty shall be true and correct in all
material respects as of such earlier date).
ARTICLE IV
CONDITIONS TO EFFECTIVENESS, ETC.
Section 4.1 Effective Date. The amendments set forth in Article
II shall become effective on such date (herein called the "Effective Date")
when the relevant conditions set forth in this Section 4.1 have been
satisfied.
Section 4.2 Execution of Agreement. Counterparts of this
Agreement shall have been duly executed and delivered on behalf of the
Company and each Purchaser.
Section 4.3 Representations and Warrants. The representations
and warranties made by the Company pursuant to Article III as of the
Effective Date shall be true and correct.
Section 4.4 Letter of Clarification. The Company and the
Purchasers shall have entered into a mutually acceptable letter of
clarification with respect to Section 3.21 of the CoreComm Asset Purchase
Agreement.
Section 4.5 Opinion of Counsel. On or prior to the Second
Closing the Purchasers shall have received the legal opinion(s) in
substantially the form attached hereto at Annex I.
ARTICLE V
MISCELLANEOUS
Section 5.1 Cross-References. References in this Agreement to
any Article or Section are, unless otherwise specified, to such Article or
Section of this Agreement.
Section 5.2 Note Document Pursuant to Credit Agreement. This
Agreement is a Note Document executed pursuant to the Amended Note
Agreement. Except as expressly amended hereby, all of the representations,
warranties, terms, covenants and conditions contained in the Note Agreement
and each other Note Document shall remain unamended or otherwise unmodified
and in full force and effect.
Section 5.3 Limitation of Amendments. The amendments set forth
in Article II shall be limited precisely as provided for herein and shall
not be deemed to be a waiver of, amendment of, consent to or modification
of any other term or provision of the Existing Note Agreement or of any
term or provision of any other Note Document or of any transaction or
further or future action on the part of the Company or any of the Company's
Subsidiaries which would require the consent of any of the Lenders under
the Existing Note Agreement or any other Note Document.
Section 5.4 Counterparts. This Agreement may be executed by the
parties hereto in several counterparts, each of which shall be deemed to be
an original and all of which shall constitute together but one and the same
agreement.
Section 5.5 Successors and Assigns. This Agreement shall be
binding upon an inure to the benefit of the parties hereto and their
respective successors and assigns.
Section 5.6 Costs and Expenses. The Company agrees to pay all
reasonable costs and expenses incurred by legal counsel for MLGAF incurred
in connection with the execution and delivery of this Agreement and the
other agreements and documents entered into in connection herewith.
Section 5.7 GOVERNING LAW; WAIVER OF JURY TRIAL; ENTIRE
AGREEMENT. THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. EACH PERSON A PARTY HERETO
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION ARISING UNDER OR IN CONNECTION WITH THIS
AGREEMENT OR ANY AGREEMENT OR DOCUMENT ENTERED INTO IN CONNECTION HEREWITH.
THIS AGREEMENT CONSTITUTES THE ENTIRE UNDERSTANDING AMONG THE PARTIES
HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDES ANY PRIOR
AGREEMENT, WRITTEN OR ORAL, WITH RESPECT HERETO.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers hereunto duly authorized as of
the day and year first above written.
COMPANY
-------
USN COMMUNICATIONS, INC.
By: /s/ Thomas A. Monson
_________________________
Name: Thomas A. Monson
Title: Senior Vice President
and General Counsel
PURCHASERS
----------
MERRILL LYNCH GLOBAL ALLOCATION
FUND, INC.
By: /s/ Lisa Ann O'Donnell
___________________________
Name: Lisa Ann O'Donnell
Title: Vice President, Merrill
Lynch Asset Management
CORECOMM LIMITED
By: /s/ George S. Blumenthal
__________________________
Name: George S. Blumenthal
Title: Chairman
Exhibit 10.3
AMENDMENT NO. 2
AND WAIVER
TO
NOTE PURCHASE AGREEMENT
THIS AMENDMENT NO. 2 AND WAIVER TO NOTE PURCHASE AGREEMENT, dated
as of March 24, 1999 (this "Agreement"), among USN COMMUNICATIONS, INC., a
Delaware corporation (the "Company"), MERRILL LYNCH GLOBAL ALLOCATION FUND,
INC. ("MLGAF") and CORECOMM LIMITED ("CoreComm"; MLGAF and Corecome are
individually referred to as a "Purchaser" and collectively as the
"Purchasers").
W I T N E S S E T H:
WHEREAS, the Company and the Purchasers are parties to the Note
Purchase Agreement, dated as of February 23, 1999, as amended pursuant to
Amendment No. 1, dated as of March 24, 1999 (the "Existing Note
Agreement"); and
WHEREAS, the Event of Default exists under Section 11.1(l) of the
Existing Note Agreement (the "Existing Event of Default"); and
WHEREAS, the Company has requested that, as of the Effective
Date, the Existing Note Agreement be further amended as herein provided and
the Existing Event of Default be waived; and
WHEREAS, the Purchasers are willing, subject to the terms and
conditions hereinafter set forth, to make such further amendments and waive
the Existing Event of Default as of the Effective Date;
NOW, THEREFORE, in consideration of the agreements herein
contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Certain Definitions. The following terms (whether
or not underscored) when used in this Agreement shall have the following
meanings:
"Agreement" is defined in the preamble.
"Amended Note Agreement" means the Existing Note Agreement as
amended by this Agreement as of the Effective Date.
"Company" is defined in the preamble.
"CoreComm" is defined in the preamble.
"Effective Date" is defined in Section 5.1.
"Existing Event of Default" is defined in the second recital.
"Existing Note Agreement" is defined in the first recital.
"MLGAF" is defined in the preamble.
"Purchasers" is defined the in preamble.
Section 1.2 Other Definitions. Unless otherwise defined or the
context otherwise requires, terms used herein (including in the preamble
and recitals hereto) have the meanings provided for in the Existing Note
Agreements.
ARTICLE II
AMENDMENTS
Effective on (and subject to the occurrence of ) the Effective Date
following amendments are made to the Existing Note Agreement:
Section 2.1 Amendments to Section 1. Section 1 of the Existing
Note Agreement is amended by deleting reference to "$6,000,000" on the
first line and inserting in lieu thereof "$3,169,930".
Section 2.2 Amendments to Section 3.2. Section 3.2 of the
Existing Note Agreement is amended by deleted on the fourth line reference
to "March 22, 1999" and inserting in lieu thereof "May 14, 1999".
Section 2.3 Amendments to Section 4.B. The first sentence of
Section 4.B of the Existing Note Agreement is amended by inserting after
the phrase "subject to" on the second line thereof the phrase "two Business
Days notice by the Company to you and to".
Section 2.4 Amendments to Section 11.1. Section 11.1(l) of the
Existing Note Agreement is amended by deleting reference to "March 22,
1999" and inserting in lieu thereof "April 6, 1999".
Section 2.5 Amendments to Annex I. Section I of the Existing
Note Agreement is amended by deleted each reference therein to "$2,000,000"
and inserting in lieu thereof "$584,965".
ARTICLE III
WAIVER
Effective on (and subject to the occurrence of) the Effective Date,
the Existing Event of Default is waived.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
In order to induce the Purchasers to make the amendment provided
for in Article II and the waiver provided for in Article III, the Company
hereby represents and warrants, as of the Effective Date, that each of the
representations and warranties of the Company contained in the Existing
Note Agreement and in the other Note Documents is true and correct in all
material respects as of the Effective Date (except, if any such
representation and warranty relates to an earlier date, such representation
and warranty shall be true and correct in all material respects as of such
earlier date) and both immediately before and after giving effect to the
provisions of this Agreement no Default or Event of Default (other than the
Existing Event of Default being waived hereby) has occurred and is
continued.
ARTICLE V
CONDITIONS TO EFFECTIVENESS
Section 5.1 Effective Date. The amendments set forth in Article
II and the waiver set forth in Article III shall become effective on such
date (herein called the "Effective Date") when the relevant conditions set
forth in this Section 5.1 have been satisfied.
Section 5.1.1 Execution of Agreement. MLGAF or its counsel
shall have received fully executed counterparts of the Agreement.
Section 5.1.2 Representations and Warranties. The
representations and warranties made by the Company pursuant to Article III
as of the Effective Date shall be true and correct.
Section 5.1.3 Reservation of Rights Agreement. MLGAF or its
legal counsel shall be received fully executed counterparts of the
Reservation of Rights Agreement, dated as of the date hereto, among the
parties hereto.
Section 5.1.4 Final DIP Order. The Final DIP Order (a) shall
have been entered upon an application of the Company satisfactory in form
and substance to each Purchaser, (b) shall be in full force and effect and
(c) shall not have been vacated, stayed, reversed, rescinded, modified or
amended in any respect.
Section 5.1.5 Payment of Legal Fees. The Company shall have
paid all invoiced legal fees that are payable pursuant to Section 6.6.
Section 5.2 Expiration. If the Effective Date shall not have
occurred on or prior to April 6, 1999 the agreement of the parties in this
Agreement shall, unless otherwise agreed by the Purchasers, terminate
automatically on such date without further action or notice to any Person.
ARTICLE VI
ACKNOWLEDGMENT OF SUBSIDIARIES
By executing the acknowledgment to this Agreement, each of the
Subsidiaries of the Company set forth on the signature pages hereto
confirms and agrees that their obligations under the Note Documents are,
and shall continue to be, in full force and effect and are hereby ratified
and confirmed in all respects, except that on or after the Effective Date
each reference to the Note Agreement therein shall refer to the Note
Agreement after giving effect to this Agreement and all prior amendments to
the Note Agreement.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Cross-References. References in this Agreement to
any Article or section are, unless otherwise specified, to such Article or
Section of this Agreement.
Section 7.2 Note Document Pursuant to Credit Agreement. This
Agreement is a Note Document executed pursuant to the Amended Note
Agreement. Except as expressly amended hereby, all of the representations,
warranties, terms, covenants and conditions contained in the Existing Note
Agreement and each other Note Document shall remain unamended or otherwise
unmodified and in full force and effect.
Section 7.3 Limitation of Amendments, etc. The amendments set
forth in Article II and the waiver set forth in Article III shall be
limited precisely as provided for herein and shall not be deemed to be a
waiver of, amendment of, consent to or modification of any other term or
provision of any other Note Document or of any of the Company's
Subsidiaries which would require the consent of any of the Lenders under
the Existing Note Agreement or any other Note Document.
Section 7.4 Counterparts. This Agreement may be executed by the
parties hereto in several counterparts, each of which shall be deemed to be
an original and all of which shall constitute together but one and the same
agreement.
Section 7.5 Successors and Assigns. This Agreement may be
executed by the parties hereto in several counterparts, each of which shall
be deemed to be an original and all of which shall constitute together but
one and the same agreement.
Section 7.6 Costs and Expenses. The Company agrees to pay all
reasonable costs and expenses incurred by legal counsel for MLGAF and
CoreComm incurred in connection with the execution and delivery of this
Agreement and the other agreements and documents entered into in connection
herewith; provided that the aggregate amount paid to legal counsel for
CoreComm in connection with this Agreement and the Transaction shall not
exceed $12,000.
Section 7.7 GOVERNING LAW; WAIVER OF JURY TRIAL; ENTIRE
AGREEMENT. THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. EACH PERSON A PARTY HERETO
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION ARISING UNDER OR IN CONNECTION WITH THIS
AGREEMENT OR ANY AGREEMENT OR DOCUMENT ENTERED INTO IN CONNECTION HEREWITH.
THIS AGREEMENT CONSTITUTES THE ENTIRE UNDERSTANDING AMONG THE PARTIES
HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDES ANY PRIOR
AGREEMENT, WRITTEN OR ORAL, WITH RESPECT HERETO.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers hereunto duly authorized as of
the day and year first above written.
USN COMMUNICATIONS, INC.
By: /s/ Ronald W. Gavillet
--------------------------
Name: Ronald W. Gavillet
Title: Senior Vice President
MERRILL LYNCH GLOBAL ALLOCATION FUND, INC.
By: /s/ Bryan N. Ison
--------------------------
Name: Bryan N. Ison
Title: Vice President
CORECOMM LIMITED
By: /s/ Richard J. Lubasch
-----------------------------
Name: Richard J. Lubasch
Title: Senior Vice President and
General Counsel
Acknowledged and Agreed:
U.S. NETWORK CORPORATION
By: /s/ Ronald W. Gavillet
------------------------------
Name: Ronald W. Gavillet
Title: Senior Vice President
FONENET/OHIO, INC.
By: /s/ Ronald W. Gavillet
------------------------------
Name: Ronald W. Gavillet
Title: Senior Vice President
USN COMMUNICATIONS MIDWEST, INC.
By: /s/ Ronald W. Gavillet
------------------------------
Name: Ronald W. Gavillet
Title: Senior Vice President
USN COMMUNICATIONS NORTHEAST, INC.
By: /s/ Ronald W. Gavillet
------------------------------
Name: Ronald W. Gavillet
Title: Senior Vice President
QUEST UNITED, INC.
By: /s/ Ronald W. Gavillet
------------------------------
Name: Ronald W. Gavillet
Title: Senior Vice President
USN COMMUNICATIONS LONG DISTANCE, INC.
By: /s/ Ronald W. Gavillet
------------------------------
Name: Ronald W. Gavillet
Title: Senior Vice President
USN SOLUTIONS, INC.
By: /s/ Ronald W. Gavillet
------------------------------
Name: Ronald W. Gavillet
Title: Senior Vice President
USN COMMUNICATIONS ATLANTIC, INC.
By: /s/ Ronald W. Gavillet
------------------------------
Name: Ronald W. Gavillet
Title: Senior Vice President
USN COMMUNICATION VIRGINIA, INC.
By: /s/ Ronald W. Gavillet
------------------------------
Name: Ronald W. Gavillet
Title: Senior Vice President
USN COMMUNICATIONS SOUTHWEST, INC.
By: /s/ Ronald W. Gavillet
------------------------------
Name: Ronald W. Gavillet
Title: Senior Vice President
USN COMMUNICATIONS MAINE, INC.
By: /s/ Ronald W. Gavillet
------------------------------
Name: Ronald W. Gavillet
Title: Senior Vice President
USN WIRELESS, INC.
By: /s/ Ronald W. Gavillet
------------------------------
Name: Ronald W. Gavillet
Title: Senior Vice President
CONNECTICUT TELEPHONE AND COMMUNICATION SYSTEMS, INC.
By: /s/ Ronald W. Gavillet
------------------------------
Name: Ronald W. Gavillet
Title: Senior Vice President
CONNECTICUT MOBILECOM, INC.
By: /s/ Ronald W. Gavillet
------------------------------
Name: Ronald W. Gavillet
Title: Senior Vice President
USN WIRELESS OF RHODE ISLAND, INC.
By: /s/ Ronald W. Gavillet
------------------------------
Name: Ronald W. Gavillet
Title: Senior Vice President
USN WIRELESS OF MASSACHUSETTS, INC.
By: /s/ Ronald W. Gavillet
------------------------------
Name: Ronald W. Gavillet
Title: Senior Vice President
USN COMMUNICATIONS WEST, INC.
By: /s/ Ronald W. Gavillet
------------------------------
Name: Ronald W. Gavillet
Title: Senior Vice President
